Ramifications of a Flat Tax—Shifting the Burden to the Middle Class

An alternative to the current US tax system would be a flat tax. According to its supporters, the flat tax would decrease the complexity of the tax system. Opponents contend that the flat tax will shift the tax burden to the middle class. The current research tested the claim that the flat tax will shift the tax burden to the middle class by developing simulations of two flat tax proposals, the Steve Forbes Plan and the Hall and Rabushka Plan, and then examining the change in the tax burden for different income levels as compared to the current tax system. The results show that both plans shift more of the tax burden to middle income class taxpayers than under the current US tax system.

A cost evaluation method for dynamic line balancing

A procedure is presented for calculating stochastic costs, which include operator (labor) and inventory costs, associated with dynamic line balancing. Dynamic line balancing, unlike the traditional methods of assembly and production line balancing, assigns operators to one or more operations, where each operation has a predetermined processing time and is defined as a group of identical parallel stations. Operator costs and inventory costs are stochastic because they are functions of the assignment process employed in balancing the line, which may vary throughout the balancing period, and the required flow rate. Earlier studies focused on the calculation of the required number of stations and demonstrated why the initial and final inventories at the different operations are balanced.The cost minimization method developed in the article can be used to evaluate and compare the assignment of operators to stations for various assignment heuristics. Operator costs and inventory costs are the components of the cost function. The operator costs are based on the operations to which operators are assigned and are calculated for the entire work week regardless of whether an operator is given only a partial assignment which results in idle time. It is assumed that there is no variation in station speeds, no learning curve effect for operators' performance times, and no limit on the number of operators available for assignment. The costs associated with work-in-process inventories are computed on a “value added” basis. There is no charge for finished goods inventory after the last operation or raw material before the first operation.The conditions which must be examined before using the cost evaluation method are yield, input requirements, operator requirements, scheduling requirements and output requirements. Yield reflects the output of good units at any operation. The input requirement accounts for units discarded or in need of reworking. The operator requirements define the calculation of operator-hours per hour, set the minimum number of operators at an operation, and require that the work is completed. The scheduling requirements ensure that operators are either working or idle at all times, and that no operator is assigned to more than one operation at any time. The calculation of the output reflects the yield, station speed, and work assignments at the last operation on the line.An application of the cost evaluation method is discussed in the final section of the article. Using a simple heuristic to assign operators, the conditions for yield, inputs, operators, scheduling, and output are satisfied. The costs are then calculated for operators and inventories.In conclusion, the cost evaluation method for dynamic balancing enables a manager to compare the costs of assigning operators to work stations. Using this method to calculate the operator and inventory costs, a number of different heuristics for assigning operators in dynamic balancing can be evaluated and compared for various configurations of the production line. The least cost solution procedure then can be applied to a real manufacturing situation with similar characteristics.     

Monetary and central banking problems of mini states

This paper surveys the economic raisons d'être for a central bak in a mini state. The economic characteristics of a mini state are shown to be such that monetary policy is more circumscribed than in the conventional open economy model. In view of the inherent ineffectiveness of monetary policy and the need to hold substantial foreign exchange reserves, the paper considers whether the mini state should: (a) enact a currency cover requirement; (b) adopt the currency of a major country as legal tender; or (c) join a monetary union, as well as whether central banking functions should be incorporated within the finance ministry.     

Anatomy of financial retardation in a less developed country: The case of Sri Lanka, 1951–1976

An attempt is made in this paper to analyse the experience of Sri Lanka during 1951–1976, particularly in relation to its financial sector development. It is shown that the interventionist regime held the key to the pace and pattern of the economy's development. Whether it was the skimpy growth of the financial system, the faltering progression of GNP, the precarious foreign exchange position, or the persistence of inflationary pressure, they were all traceable to the impact on the financial system of a particular set of policies pursued. The year 1977, however, marked a watershed in Sri Lanka's long quest for economic development. The Government began to unwind the entire paraphernalia of administered controls on consumption, investment and foreign exchange. Most of the price controls were removed, subsidies phased out and public corporations were allowed greater autonomy in their pricing and distribution policies. It is necessary to contrast this situation with what existed prior to 1977 in order to assess its impact on the real economy of Sri Lanka. Only then can the cost of financial retardation be measured.