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December 20, 2007 • 7:49 am 0
December 16, 2007 • 6:48 pm 0
Jon Henke thinks my description of the economic right is “obstructively cynical.”
He’s probably correct. Perhaps I’ve spent too much time debating Heritage Foundation economists.
John Irons at ArgMax offers a competing list of his own characterizations of the Right. They are, I think, obstructively cynical…but interesting, nonetheless.
December 14, 2007 • 6:24 pm 0
Since Huckabee’s rise in the polls, I’m getting more and more press calls about the so-called “Fair Tax.” The bottom line is that the FairTax — a flat sales tax that would replace all other federal taxes including income, corportate, estate, etc — really has no chance of going anywhere; so most of us economists don’t spend too much time thinking about it.
The president’s tax reform panel from a couple years ago devoted a chapter to a national retail sales tax and does a good job as anyone of taking it seriously and then dismissing it (see chapter 9 of the final report).
Their analysis shows the obvious — a flat rate sales tax would indeed mean a substantial tax increase on the middle-class and a massive cut at the top. (See figure below).
Getting back to Huckabee – I’m not sure how he is getting away with adopting the fair tax as part of his platform. Wouldn’t democrats be skewered in the media if they proposed a tax increase on people making between $30,000 and $200,000?
An aside, this came from the NYTimes article on Huckabee, and Fair Tax…
“Some reputable economists think the scheme is practicable.” Note they don’t say desirable or politically viable… Not exactly a vote of confidence…
Huckabee’s answer to his opponents on the fiscal right has been his Fair Tax proposal. The idea calls for abolishing the I.R.S. and all current federal taxes, including Social Security, Medicare and corporate and personal income taxes, and replacing them with an across-the-board 23 percent consumption tax.
Governor Huckabee promises that this plan would be ”like waving a magic wand, releasing us from pain and unfairness.” Some reputable economists think the scheme is practicable. Many others regard it as fanciful. (For starters, it would require repealing the 16th Amendment to the Constitution.) In any case, the Fair Tax proposal is based on extremely complex projections.
Huckabee does not have an impressive grasp of its details. When I suggested, for example, that consumers might evade the tax simply by acquiring goods and services for cash on the black market, he seemed genuinely surprised.
December 12, 2007 • 11:05 pm 0
I think Mankiw gets it wrong here. I think Mankiw’s definition of the “right” economists is too idealistic (at least by inside-the-beltway standards.) His description of the “right” is really center, or even center-left. My characterization of the right is below.
How do the right and left differ?
The conclusion of today’s ec 10 lecture:
In today’s lecture, I have discussed a number of reasons that right-leaning and left-leaning economists differ in their policy views, even though they share an intellectual framework for analysis. Here is a summary.
- * The right sees large deadweight losses associated with taxation and, therefore, is worried about the growth of government as a share in the economy. The left sees smaller elasticities of supply and demand and, therefore, is less worried about the distortionary effect of taxes.
- * The right sees externalities as an occasional market failure that calls for government intervention, but sees this as relatively rare exception to the general rule that markets lead to efficient allocations. The left sees externalities as more pervasive.
- * The right sees competition as a pervasive feature of the economy and market power as typically limited both in magnitude and duration. The left sees large corporations with substantial degrees of monopoly power that need to be checked by active antitrust policy.
- * The right sees people as largely rational, doing the best the can given the constraints they face. The left sees people making systematic errors and believe that it is the government role’s to protect people from their own mistakes.
- * The right sees government as a terribly inefficient mechanism for allocating resources, subject to special-interest politics at best and rampant corruption at worst. The left sees government as the main institution that can counterbalance the effects of the all-too-powerful marketplace.
- * There is one last issue that divides the right and the left–perhaps the most important one. That concerns the issue of income distribution. Is the market-based distribution of income fair or unfair, and if unfair, what should the government do about it? That is such a big topic that I will devote the entire next lecture to it.
Here, I think, is a better description of “the right” in Mankiw’s approach.
December 12, 2007 • 12:11 am 0
This can’t be good for consumption during the holiday season…
More than half the American public — 57 percent — now believe the nation is in a recession, compared to 42 percent who do not, according to new CNN/Opinion Research Corporation poll released Tuesday. (Full poll results [PDF])
That number is up significantly from the October survey, when only 46 percent believed the U.S. economy was in recession.
December 10, 2007 • 7:52 pm 0
Rant of the day…
I know people who are literally throwing out all of their kids’ toys. Salvation army is bringing thousands of volunteers to check their toys, or even removing them from their shelves all together. I’ve had to take a Baby Einstein block away from my 9-month old because it had lead paint.
Bush’s leadership at the consumer products safety commission appears to be as inept as “heckuvajob” Brown at pre-katrina FEMA — chairman Nord is still doing her best to not do her job.
If there’s lead in toys, who knows what’s in the $billions worth of cheap crap at wal-mart?
Why the heck aren’t politicians having a field day on this?
December 8, 2007 • 12:40 pm 0
ArgMax is #1! Ok, so they’re in alphabetical order… but still…
Dec 3 Schiff Ranking: 69.
The Economics at About.com has had only two guides in its 10+ year history. I am the second, John Irons, who runs ArgMax, was the first.
Why I visit: Among other things, ArgMax has intelligent discussion of economic policy from (in my view) a slightly left-of-centre view. A lot of the better U.S. economics blogs seem to be written by Republicans (not that there’s anything wrong with that!), so guys like Irons and Brad De Long make for a welcome counterbalance.
December 7, 2007 • 9:08 am 0
The mortgage deal coordinated by the White House initially seemed to be to be a good idea. Freezing rates for several years might strike a balance which would be cheaper to home lenders and borrowers, and also reduce the potential spillover to the macroeconomy.
However, as details emerge on the specifics, I’m not so sure this will have a sizeable impact. The odd restrictions on who would qualify would seem to undermine macro-stabilization. (This is especially of concern when you consider that the risk to the economy is not just from foreclosures, but also from reduced consumer spending that would result from higher payments).
It looks like there is a squeeze in who qualifies. If you are struggling to get by (or had a temporary financial issue which caused you to miss a payment or two): no help. If you were cautious and can afford (by industry’s definition) higher payments and/or have a good credit score: no help.
Only those in the middle would seem to gain.
I’m afraid this will impact too few people to impact the macroeconomy.
One of the financial industry’s lead negotiators estimated that at most 20 percent of subprime borrowers whose payments will increase sharply over the next 18 months — 360,000 out of 1.8 million people — would qualify for rapid consideration of a special five-year freeze on interest rates.
The number of people who actually obtain help would be smaller, because each borrower would face tests aimed at weeding out those considered too hopelessly in debt and those who make too much money to justify relief.
In one curious twist, the plan could eliminate many who have good credit scores or managed to improve their credit scores, because the good ratings would be a sign they do not need help.
December 4, 2007 • 1:30 pm 0
Obviously not good news…
American teenagers have less mastery of science and mathematics than peers in many industrialized nations, according to scores on a major international exam released today.
Education experts say results of the 2006 Program for International Student Assessment highlight the need for changes in classrooms and in the federal No Child Left Behind law. The average science score of U.S. 15-year-olds lagged that of students in 16 of 30 countries in the Organization for Economic Cooperation and Development, a Paris-based group that represents the world’s richest countries. U.S. students were further behind in math, trailing counterparts in 23 countries.
On the science portion, U.S. students, most of them 10th-graders, earned an average score of 489 on a 1,000-point scale, 11 points below the average of the 30 countries. Canada, Japan and Korea were among the countries in which students outperformed American counterparts. U.S. students were on par with eight countries and outperformed five.
In math, only four countries had average scores lower than the United States. Students in 23 countries earned a higher average score, and those in two countries did about the same as the Americans.
The ranking of U.S. students in math and science is about the same as it was in 2003.
December 2, 2007 • 11:23 pm 0
What makes for good graphic design for graphs? That is the question on my mind as of late.
Below is a graph from the St. Louis federal reserve publication National Economic Trends. Simple and to the point for a brief time series. The publication also has other, more complicated time-series charts, most of which are nicely done with a minimum of chart-junk.
But more complicated graphics stress the limits of the black-and-white, for-print design.
Political scientist turned graphic designer Edward Tufte used to be the go-to guy for this kind of question, but the Visual Display of Quantitative Information is starting to look a bit dated.
It would be nice to have a collection of well-done data-based charts and graphs to use as reference and for brainstorming…. just a thought.