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Economic News, Data and Analysis

Opinions on Taxes for Tax Day


Views of Income Taxes Among Most Positive Since 1956

A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is “about right,” with 46% saying “too high” — one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low.

Filed under: Economics, Fiscal Policy

J. Hamilton Comments on Housing and the Monetary Transmission Mechanism

Jim Hamilton has some interesting thoughts on the housing market and monetary policy. I found the last paragraph in his comments to the Fed conference at Jackson Hole to be particularly interesting.
He posits that to the extent that institutional changes are a response to interest rates, monetary policy will have longer impacts than otherwise. (Emphasis added below).
I don’t think that the institutional changes that we have seen recently are due only to interest rate changes, (although low interest rates probably played a part), but do agree that these changes might lead to longer impacts of rate changes. Indeed, the impact of rate changes (such as the increase a few years ago), could in fact accelerate over time, not diminish.

Econbrowser: Comments on Housing and the Monetary Transmission Mechanism

[...]

Finally, in closing, suppose that I’m wrong about all of this. Suppose that the developments I’ve been talking about– the appearence of loan originators in every strip mall, anxious to lend to anyone, and other parties just as anxious to buy those loans up– suppose that it is all a response to the traditional monetary instrument, the manipulation of the short-term interest rate. After all, a 1% short-term rate, 6% 30-year mortgage rate, and 13% house price appreciation, such as we saw in 2004, is plenty of incentive to borrow and repay. I used to believe that this was sufficient to account for all that we were seeing, and many of you perhaps still think that way. But if it were the case that all these institutional changes are just a response to interest rates, it means that the lags in the monetary transmission process are substantially longer than many of us had supposed. If people were still buying houses in 2006 as a result of institutions that sprung up from the conditions in 2004,it means that, if we thought in 2004 that overstimulation could easily be corrected by bringing rates back up, then we would have been wrong. And likewise, suppose you believe that the pain we’re seeing now, and may continue to see for a matter of years, until the new loan originators all go out of business, and recent buyers are forced out of their homes, is simply a response to a monetary tightening that ended a year ago. If so, then if we think today that, if things get really bad, we can always fix things by rapidly bringing interest rates back down– well, then, once again, we’d be wrong.

Filed under: Economics

Should Economists Rule the World?

Apparently the evidence is not favorable. I suppose it makes sense that this should appear in a political science journal.
Two thoughts:

  • I wonder what the evidence might say for developed countries. (Although I suppose the sample size is rather small.) Perhaps one could look at the percentage of economists in the congresses or parliaments around the world.
  • All economists are not the same. How much of the results are driven by free-market ideologues (the “Chicago school” economists) vs. more mainstream practitioners?

Abstract below. Story in Chronicle of Higher Education.

Should Economists Rule the World? Trends and Implications of Leadership Patterns in the Developing World, 1960–2005
Anil Hira
Department of Political Science, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6 Canada
This article examines more carefully the oft-made hypotheses that (1) “technocrats” or politicians with an economics background are increasingly common and (2) that this “improvement” in qualifications will lead to improvements in economic policy. The article presents a database on the qualifications of leaders of the world’s major countries over the past four decades. The article finds that while there is evidence for increasing “technification,” there are also distinct and persistent historical patterns among Asian, African, Middle Eastern, and Latin American leaders. Using statistical analysis, the article finds that we cannot conclude that leadership training in economics leads to better economic outcomes.

Filed under: Economics

Economy’s Gains Fail to Reach Most Workers’ Paychecks

For labor day, two of my EPI colleagues have put together some updated wage numbers:

Economy’s Gains Fail to Reach Most Workers’ Paychecks
by Jared Bernstein and Lawrence Mishel
Research assistance from James Lin
As of Labor Day 2007, the economic recovery that began in 2001 is six years old, and the economy has consistently expanded over this period. Productivity growth, though slower of late, has been particularly strong, and after a long, slow start, employment has been consistently growing, albeit slower than past recoveries.
But most American workers have not shared in the growth and prosperity they have been helping to create. Surely, one measure of the success of an economic growth period is how much of that growth finds its way into workers’ paychecks. In a period of sharply rising inequality, however, this is no “slam dunk.” In fact, as much of the data in this brief reveal, many workers’ wages have been stagnant for a number of years, after adjusting for inflation, particularly those at the middle and lower end of the pay scale. For example, while productivity is up nearly 20% since 2000, the real median hourly wage is up 3% overall and 1% for men, with none of this growth occurring over the three-and-a-half years since 2003. At the top of the wage scale–at the 95th percentile–real wages are up 9%.

Read the rest of this entry »

Filed under: Economics

Content is King

ArgMax has gone a number of years with the same overall look, navigation, tools, etc. I’ve also been lax about updating the site. Time for a change.
Since staking my claim to this small corner of the web, a lot has changed in how information is presented. The rise of blogs, user generated content (and other so-called “Web 2.0″), digg, video, etc has led to a wider variety of sites and styles.
One common trend that I have seen in the blog / news / commentary / magazine webWorld has been growing “feature creep” – both in terms of tools as well as presentation. Your typical blog or news site today has places for comments, ads, navigation, search, rss links, calendars, links to authors’ bios, log-in boxes, “recommend me!”, disclaimers, links to friends/sister sites/parent sites/corporate sponsors, tabs for
topics, etc.

You can go just about anywhere to find this – just two examples: TPM Cafe or USA Today. (Not that they are bad sites, just a bit cluttered) I see two reasons for this. First, these tools are widely available and easy to implement, even for novices. Popular blogging software and websites makes it easier to use these tools as well. Second, everyone is game to experiment a little (or a lot)–throw lots of stuff at the wall, and see what sticks.
There is a down-side, of course. First, the junking up of websites is not aesthetically appealing. Second, with soooo much stuff, if becomes mildly disorienting surfing from one cluttered site to anther. Finally, for repeat users, 90% of the junk on the page (including navigation) does not change from visit to visit, so what’s new is lost in what’s old.
So, what to do.
For my part, I want to experiment with simplicity. You can still get to the old site – all the features, tools, archives, etc, but this page will be a study of how to slim down and let the content speak. Minor navigational links are below to take you to more content. But I hope that less is indeed more at this point in web design.
… and this is an experiment, subject to revision, extension, modification. Hope you like it.

Filed under: Economics

Income in 2006

The income story from Census today – quick first take. Not much jumped out at me besides the drop in full-time, year round earnings (see below).
* While median household income increased by $356 between 2005 and 2006, it is still $1,043 below its peak in 1999.
* The household increase was due entirely to an increase in full-time workers and changes in family composition:
— Median earnings of full-time, year-round workers fell by $482 for men, and $388 for women.
— These median earnings are $2,353 below peak levels for men, and $1,335 below peak levels for women.
* Little change in income distribution – the top quintile still has more income than the bottom 80%.

Filed under: Economics

New Gig

As of Monday, I have left the Center for American Progress, and have moved to the Economic Policy Institute to become their Research and Policy Director.
Looks like I need to update my bio
Of course you can still find me at occasionally at ArgMax.com.
Old CAP bio:
______
John S. Irons, Director of Tax and Budget Policy
John S. Irons, Ph.D., is the Director of Tax and Budget Policy at the Center for American Progress, where he specializes in federal tax policy, federal budget issues, and the U.S. economy. Prior to joining American Progress, he was a Senior Economic Research and Policy Analyst and Staff Economist at OMB Watch, a nonprofit organization dedicated to promoting government accountability and citizen participation. Prior to coming to Washington, D.C., Dr. Irons was a tenure-track Assistant Professor of Economics at Amherst College. He has also worked at the Federal Reserve Board of Governors and briefly at the Brookings Institution and the National Bureau of Economic Research.
Dr. Irons’ academic publications have appeared in several journals including the Journal of Monetary Economics, Journal of Applied Econometrics, Review of Financial Economics and the Eastern Economic Journal. He is co-editor (with N. Ericsson) of Testing Exogeneity, published by Oxford University Press. He has authored numerous reports and articles on tax and budget policy, as well as on the economy. He has been quoted in numerous national and local print publications and has appeared on television and radio programs commenting on various economic policy issues. He has been a guest lecturer and has presented research at many colleges and universities including American University, Harvard University, Middlebury College, MIT, University of Missouri, University of Nebraska, and others.
Dr. Irons was awarded a National Science Foundation Graduate Fellowship, as well as a Graduate Fellowship from the Harvard/MIT Research Training Group in Positive Political Economy. He has won several awards for his economics websites, including top-5 awards from The Economist and Forbes. He has also been an occasional “econo-blogger” for the Wall Street Journal.
He currently serves on the Committee on Electronic Publishing of the American Economic Association, and on the board of nonprofit institutions, including the Coalition on Human Needs. He was recently elected to the Board of Governors of the National Economists Club.
Dr. Irons holds a B.A. with High Honors in Economics from Swathmore College, and a Ph.D. in Economics from the Massachusetts Institute of Technology.

Filed under: Economics

Taxes a pleasure

Apparently, I’m not (that) crazy. I like doing my taxes.

Taxes a Pleasure? Check the Brain Scan – New York Times
The University of Oregon announced a new piece of research last week with a startling headline: “Paying taxes, according to the brain, can bring satisfaction.”
Could this be true? The research is in the new issue of Science, so it’s got the right pedigree, but still. How could politicians have gotten it so wrong? Even the most liberal Democratic candidates never imagined a lot of voters whistling as they merrily write out checks to the I.R.S.

Filed under: Economics

Inequality.org

This looks like a potentially interesting and useful website from Demos.

inequality.org
What We’re About
Ten or fifteen years ago, we can attest, the growing concentration of income and wealth in America was not a focus of great national concern. While the problem itself has grown worse over the past few years, America has taken a huge step forward in awareness…

Filed under: Economics

FactCheck.org on so-called Faritax

I think it’s worth reading the tax reform panel’s description as well as the factcheck.org summary below.


FactCheck.org: Unspinning the FairTax
In our recent article on the second GOP debate, we called out Gov. Mike Huckabee as well as Reps. Tom Tancredo and Duncan Hunter for their support of the FairTax. We wrote that the bipartisan Advisory Panel on Tax Reform had “calculated that a sales tax would have to be set at 34 percent of retail sales prices to bring in the same revenue as the taxes it would replace, meaning that an automobile with a retail price of $10,000 would cost $13,400 including the new sales tax.” A number of readers pointed out that H.R. 25, the specific bill mentioned by Gov. Huckabee, calls for a 23 percent retail sales tax and not the 34 percent used by the Advisory Panel on Tax Reform. That 23 percent number, however, is misleading and based on some extremely optimistic assumptions. We found that while there are several good economic arguments for the FairTax, unless you earn more than $200,000 per year, fairness is not one of them.

Filed under: Economics,

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