That is the topic of my latest Bloomberg column, and here is one part of my argument:

This argument for a corporate tax cut — “let’s borrow more now while rates are relatively low” — is remarkably like the argument that Keynesians have been using for more government infrastructure spending for years. The main difference is that here the spending would be done by private corporations rather than the federal government. You may or may not believe the private expenditures will be more socially valuable than the government expenditures, but if you think we can afford one kind of stimulus we probably can afford the other. And as I said, the private rate of return on investment probably is higher than the government’s borrowing rate, even if you think that government spending would yield higher returns yet.

Of course that argument does not require unemployed resources.  On the micro side, I find it amusing when people suggest that the rate of return on government infrastructure is high, but that corporations have nothing better to do than to sit on their cash.  It is hard to have it both ways!  Imagine arguing that biomedical R&D through the NIH yields high returns, but that pharma investment to commercialize the resulting drugs or devices does not.  National parks aside, most government investment is in inputs, and thus for it to have a high marginal rate of return someone on the output side has to have a high marginal rate of return as well.

Here is another part of my argument:

The pessimist might wonder whether companies would take their windfall and invest it at all. Many companies might simply hold the gain in money management accounts. In this scenario, the tax plan probably won’t be worth passing, as American companies would have nothing useful to do with the free resources, even when given a nudge to invest. That should induce a fairly panicky response, including radical deregulation of business and fiscal austerity on entitlements, but I don’t see critics of the tax plan following up on this view consistently.

There is much more at the link, and do note my rather significant caveats on the plan.  And here is Kevin Williamson on the plan.

What I’ve been reading

by on April 27, 2017 at 12:19 am in Books, Uncategorized | Permalink

1. Édouard Louis, The End of Eddy.  LitHub wrote: “Even in the wake of Knausgaard and Ferrante it is hard to find a literary phenomenon that has swept Europe quite like the autobiographical project of Édouard Louis.”  I don’t know that I enjoyed this book very much, but it was an effective fictional experience.  Most of all it scared me that such a tale of poverty and abuse could be so popular in Europe these days.  Recommended, but in a sobering way; I would rather this had been a bestseller in 1937.

2. Karan Mahajan, The Association of Small Bombs.  A novel about the consequences of a Delhi terrorist bombing that is both deep and compelling to read, full of surprises as well.  Here is a useful NYT review.

3. Edward T. O’Donnell, Henry George and the Crisis of Inequality: Progress and Poverty in the Gilded Age.  This focuses more on George’s connection to social and labor movements, and less on George as an economist or land theorist, than I would have liked.  Still, it is an information-rich narrative that most of all brings the times and movements surrounding George to life.

4. Andrew Marr, We British: The Poetry of a People.  A good introduction to its topic, most of all for the mid-twentieth century, with plenty of poems reproduced.  Here is a Louis MacNeice poem, Snow:

The room was suddenly rich and the great bay-window was

Spawning snow and pink roses against it

Soundlessly collateral and incompatible:

World is suddener than we fancy it.

 

World is crazier and more of it than we think,

Incorrigibly plural. I peel and portion

A tangerine and spit the pips and feel

The drunkenness of things being various

 

And the fire flames with a bubbling sound for world

Is more spiteful and gay than one supposes —

On the tongue on the eyes on the ears in the palms of your hands —

There is more than glass between the snow and the huge roses.

Hindu fact of the day

by on April 26, 2017 at 1:43 pm in Education | Permalink

96% of Hindus in the US have at least a college degree or its equivalent.

Here is the source.

Wednesday assorted links

by on April 26, 2017 at 11:56 am in Uncategorized | Permalink

Facts about trade deficits

by on April 26, 2017 at 8:17 am in Economics | Permalink

A series of research studies identifies the fundamental factors behind trade imbalances (Chinn and Prasad 2003 (link is external); Gruber and Kamin 2008 (link is external); Chinn, Eichengreen, and Ito 2011 (link is external); Gagnon 2012; IMF 2012 (link is external); Gagnon 2013; Bayoumi, Gagnon, and Saborowski 2015 (link is external); and Gagnon et al. 2017 (link is external)).2 The most important factors include fiscal policy, intervention in currency markets, trend economic growth rates, per capita income levels, and prospective population aging. Barriers on financial flows have an important interaction with these factors; when financial markets are open, these factors generally have a larger effect on trade imbalances. Many studies focused on long-term factors, but business cycles may also be an important temporary factor. None of the studies found any role for trade barriers.

Figures 1 and 2 show little apparent correlation between average tariff rates or overall trade barriers and trade balances. If anything, higher tariffs are associated with lower trade balances (larger deficits). Including tariffs in regression analysis that controls for other factors yields an effect that is close to zero.

That is from Joe Gagnon, via Mark Thoma.  There are some useful pictures at the link.

 Oeindrila Dube and S.P. Harish have a new NBER working paper called “Queens”:

Are states led by women less prone to conflict than states led by men? We answer this question by examining the effect of female rule on war among European polities over the 15th-20th centuries. We utilize gender of the first born and presence of a female sibling among previous monarchs as instruments for queenly rule. We find that polities led by queens were more likely to engage in war than polities led by kings. Moreover, the tendency of queens to engage as aggressors varied by marital status. Among unmarried monarchs, queens were more likely to be attacked than kings. Among married monarchs, queens were more likely to participate as attackers than kings, and, more likely to fight alongside allies. These results are consistent with an account in which marriages strengthened queenly reigns because married queens were more likely to secure alliances and enlist their spouses to help them rule. Married kings, in contrast, were less inclined to utilize a similar division of labor. These asymmetries, which reflected prevailing gender norms, ultimately enabled queens to pursue more aggressive war policies.

Why would the kings have been less likely to marry for purposes of war?  Is it because they actually were entranced with love, whereas queens are more practical?

That is the title of a new paper by Christopher McConnell, Yotam Margalit, and Neil Malhotra.  The main (and sad) point is that even in non-political settings we trust other people less if they have different political views than ours:

With growing affective polarization in the United States, partisanship is increasingly an impediment to cooperation in political settings. But does partisanship also affect behavior in non-political settings? We show evidence that it does, demonstrating its effect on economic outcomes across a range of experiments in real-world environments. A field experiment in an online labor market indicates that workers request systematically lower reservation wages when the employer shares their political stance, reflecting a preference to work for co-partisans. We conduct two field experiments with consumers, and find a preference for dealing with co-partisans, especially among those with strong partisan attachments. Finally, via a population-based, incentivized survey experiment, we find that the influence of political considerations on economic choices extends also to weaker partisans. Whereas earlier studies show the political consequences of polarization in American politics, our findings suggest that partisanship spills over beyond the political, shaping cooperation in everyday economic behavior.

For the pointer I thank Daniel Klein.

The central government told the Supreme Court on Monday that it wants an Aadhaar-like unique identification system for cows to track their movement and prevent inter-state and inter-country smuggling. Adducing a report by a committee appointed by the Union Home Ministry, Solicitor General Ranjit Kumar told a bench led by Chief Justice of India J S Khehar that the Centre has approved the recommendations in principle. The bench posted the matter for detailed hearing on Tuesday.

The committee, headed by a Joint Secretary in the MHA, was constituted after the apex court prodded the government to stop smuggling of cattle, especially through the porous borders with Nepal and Bangladesh. “Each animal (should) be tagged with a unique identification number with proper records of identification details such as age, breed, sex, lactation, height, body, colour, horn type, tail switch, special mark etc,” says the report.

Here is further information, via James Crabtree.

Tuesday assorted links

by on April 25, 2017 at 11:30 am in Uncategorized | Permalink

I loved The Dispossessed as a kid, though The Left Hand of Darkness was considered the best of her novels.

I am about to read The Word for World Is Forest. The idea of space travel privileging homosexuality really struck me as a child. Perfectly practical and nifty idea. Why shouldn’t there be something that gay people are more suited for?

That is interesting.

Reproduction in space travel is a really bad idea. So gay people are the way to go.

The interview is interesting throughout.

Mishpacha Magazine featured an article by Philanthropist, Shlomo Yehuda Rechnitz of Los Angeles California discussing his view and approach to the age gap problem in frum circles and calling the current situation a Shidduch Catastrophe. In the article he discussed an idea to help solve the age gap and offered an incentive to marry off older girls for the upcoming year…

INCENTIVE: Subsidize money paid to the matchmaker:

For the upcoming calendar year of 5775, Mr. Rechnitz is offering to supplement the shadchanus of anyone successful in marrying off a girl age 25 or older, to a boy her age or younger, so that they receive a total compensation of $10,000. Certain minor conditions apply. This offer isn’t only for professional shadchanim. It applies to anyone and everyone, every age, race, or gender who makes a successful Shidduch that meets the criteria.

Shlomo Yehuda Rechnitz has approached the mission of marrying off all the girls in Los Angeles with the same intensity as he does for his own daughters. All the major shadchanim are aware that when any Los Angeles girl doesn’t have the funds for plane fare for a date, the shadchan can — without asking — automatically book the tickets and rental car, if necessary, for either the boy or girl, on the Rechnitz account. In addition, any shadchan who marries off a Los Angeles girl has his shadchanus supplemented to $4,000. If the shadchan can get a couple to date at least four times, they receive $500.

There is video at the link, and the comments offer several points of interest as well.  I am told by one reader that the 19k bounty has been discontinued.  Here is related coverage from Time, with an extensive discussion of the Mormon dating crisis as well.  Here is a very interesting article on Orthodox dating in Jerusalem.

For the pointers I thank Yehuda S.

(By the way, if you’re feeling superior and taking comfort that Europe will go first off the cliff, Kotlikoff disagrees. Europe’s debts are larger, but their social programs are better funded, so their fiscal gaps are much lower than ours. The winner, it turns out, is Italy with a negative fiscal gap. Answering the obvious question, Kotlikoff offers

“What explains Italy’s negative fiscal gap? The answer is tight projected control of government- paid health expenditures plus two major pension reforms that have reduced future pension benefits by close to 40 percent.”Don’t get sick or old in Italy, but perhaps buying their bonds is not such a bad idea.)

That is from John Cochrane, with many more interesting points at the link, most of all about debt monetization and why these days it won’t prove very effective.

But the revered Icelandic language, seen by many as a source of identity and pride, is being undermined by the widespread use of English, both in the tourism industry and in the voice-controlled artificial intelligence devices coming into vogue.

…A number of factors combine to make the future of the Icelandic language uncertain. Tourism has exploded in recent years, becoming the country’s single biggest employer, and analysts at Arion Bank say that half of new jobs are being filled by foreign workers.

…The problem is compounded because many new computer devices are designed to recognize English but not Icelandic.

“Not being able to speak Icelandic to voice-activated fridges, interactive robots and similar devices would be yet another lost field,” Mr. Jonsson said.

Here is the interesting NYT piece.

Monday assorted links

by on April 24, 2017 at 11:51 am in Uncategorized | Permalink

Lim had told me that Singapore holds a strategic sand reserve, for emergencies.  It lies somewhere near the area called Bedok, I said.  I spotted it one day as I rode past in a taxi.  The site was strewn with No Trespassing signs, installed by the Housing and Development Board, a government agency.  Fenced off from the public, the giant trapezoidal dunes shone bone-white in the sun and caramel in the shade, as the sand waited to be summoned.

That is from an excellent piece by Samanth Subramanian (NYT), about Singapore, land, and preparing for climate change.  The Singaporean constitution also devotes several pages to outlining how the government will manage its investments.