by Tyler Cowen
on January 18, 2015 at 1:06 pm
1. A bigger and better classical music meta-list (the mega-meta list?).
2. Did the Romans (Tiberius) try QE? And John Quiggin has three predictions for 2015.
3. Claims about teeth. And the Obama tax plan.
4. Edward Snowden on cyberwarfare.
5. Can nudges help students? And a short history of Kim Fowley.
6. Paul Krugman on Mongols and the herring trade.
7. Scott Sumner responds on the Swiss central bank. And here is James Hamilton.
Regarding the Obama tax plan:
“Obama wants to make the top 1 percent and Wall Street do so. Republicans don’t.”
I’m not so sure this is true anymore. The Republican strength in the South, Midwest and Mountain West and weakness in East Coast and West Coast financial centers (NY and SF for example) will make them more disposed to shifting the tax burden to financial interests and away from manufacturing interests. They won’t agree with all the details of Obama’s plan, and for ideological reasons will prefer to see a lower rather than higher overall tax burden, but much of their coalition will favor changing the distributional nature of taxation to favor producers over financial interests. This is even more true of newer Tea Party types as opposed to the older GOP establishment types. Ad in some elements strengthening marriage and rewarding children in the tax code to bring in social conservatives and much of the GOP could be interested.
The real question in my mind is does Obama (and a significant chunk of the Dems in the Senate) really want to work out a compromise that could garner 60% support in each party – or does he (and they) want a class war banner to take into the 2016 election?
Of course the smart money is to bet against any grand bargain ever getting through the legislative and lobbying process…
The Republican voter base doesn’t exactly perfectly overlap with the donor base, so the lack of votes in NYC is never going to be sufficient to get the R’s on board with sticking it to the financial sector.
Ha! Obama is going full on, 100% red meat in his tax proposal.
Obama has completely given up passing any legislation through, he is now resigned to ‘helping’ the 2016 democratic nominee. He isn’t helping through competence, but rather through proposing policies of dubious economic benefit.
A fitting end to perhaps the most partisan president in history.
I am not sure I believe Obama or the Democratic establishment actually want many of these taxes, either. If they did, they could have passed them in 2009-2010. After all, these just affect the super rich, right? The claim is these people aren’t even really going to miss this money. Heck some of these only affect the dead, super-rich, who don’t even vote. The Democratic party is just as beholden to Wall Street for money as the GOP now, though, for donations. We all know who pays those speaker fees to Hillary, and they are not plumbers and car mechanics.
My prediction: Of all these taxing ideas, which are not that terrible, the bank tax will be the first shut down by Wall Street. The others, they can figure out ways to avoid, like using life insurance, gifts, living trusts, etc. But that bank tax hits too many people who rather like their TBTF rate subsidy.
On the tax credit side, many of those will pass as they are already in older GOP plans. The worst idea here is the tax credit designed to entice stay at home moms to work. Why should we want stay at home mom’s to work? Raising children is very important. Is this some kind of shot against home-schooling? Its so small, too. Probably just added in to appeal to women, as part of some checklist.
Finally, what there probably should be is a one-off $20,000 tax credit (or higher) for anyone who finds a job and gets off SSI. Many of the discouraged workers migrated into SSI by claiming disability but that makes it very hard for them to re-enter the workforce. (Example would be my ex-landlord, who despite being “disabled” and on SSI, managed to re-roof his rental property by himself. Srsly, if there is any job that requires physical ability, its roofing.)
You get people back to looking for work, and then getting employed, they not only are saving you a lot of SSI payments, but they start paying taxes too.
Maybe lowe that SSI tax credit, but have it pay over several years, too, to cement employment.
I was saddened to hear about Kim Fowley’s death while driving to NJ yesterday afternoon. He had a great show on XM’s Underground Garage. OTOH it was a bit strange to hear a 70+ year old man talk about his unending quest for love.
#6. Krugman is onto something there, though I the real causes are a bit less specific. Steppe Nomad advantage was based not just on Horse + Bow, but the whole lifestyle. Similarly the European advantage in sailing probably has more to do with the Americas than with Herring. But Herring should not be ignored.
I sometimes wonder what the world would be like if the people of Sindbad had crossed the Atlantic before the Spanish. A dar al-Islam comprised of many nations and empires, but united by a maritime trading network stretching from Jakarta to Panama.
“I sometimes wonder what the world would be like if the people of Sindbad had crossed the Atlantic before the Spanish.”
According to the president of Turkey, they did: http://www.the-american-interest.com/2014/11/21/erdogan-muslims-not-columbus-discovered-america/.
Krugman’s has it exactly backwards in his reference to Asimov’s psychohistorians. The Foundation didn’t tell Just So stories about societies after the fact. They mathematically predicted the exact path of civilizations thousands of years into the future.
Krugman’s boyhood dreams are doomed to forever remain “frustrated”. His continued fetish for those technocratic fantasies says a lot about him.
If you really want to help poor kids, I don’t see how making more of them spend 4 years drinking, partying, sleeping in, and not showing up to class will help them. That’s mostly what college consists of, for all students, rich, poor, middle, etc.
It only helps the rent-seekers of academia who need and want a continuous flow of taxpayer subsidized warm bodies to keep the scheme going.
Re #4, can we please stop pretending that Snowen is some gifted hacker? It is clear that his representations of some of the earliest leaks fundamentally misunderstood the technology. Furthermore, considering it was his job to migrate the data that he eventually leaked, it didn’t involve any real technological skills to leak the data that he did. Who here can use a USB thumb drive?
Whatever your thoughts about the validity and morality of his leaks, they showed absolutely no genuine technical skills, nor insight.
The guy is just a messenger. He can speak because he has nothing to lose. Other people with real knowledge can safely leak data anonymously through “stupid” Mr. Snowden.
#3 has some odd issues when trying to explain the end of step-up basis. The added payments are deductible from the estate tax, which now only hits over $11 million. Which means that, despite the rhetoric, the required capital gains tax payments will only on net affect medium sized estates. (Where the gain is higher than $200k, which will be a new exemption point.)
Also interesting to see the assertion that something being “good for the economy” does “nothing for the lower 4 quintiles.”
The consolidation of education tax credits is interesting– ends deductibility of student loan interest and basically eliminate the federal tax preferences of 527 plans and Coverdale ESAs.
I imagine the step-up issue is a way to try to effectively reduce the estate tax exemption level, but with apparently a new type of exemption for the most sympathetic type of estates (family farms and businesses, old furniture and houses all basically exempt), hitting liquid assets only.
Would the feds really net any additional tax to pay for their universal community college plan? For example, currently a $20 million estate with $16 million of capital gains, would have an estate tax bill of $4.5 million ($20 million less the exemption of $10 million taxed at 45%) and no future capital gains tax. Is it Obama’s proposal impose a $4.5 million capital gains tax ($16 million at 28%) but to apply that against the estate tax? Wouldn’t the result merely be to substitute the capital gains tax for the estate tax with no additional revenue?
Tax credits for work and a tax to encourage big banks to become many smaller banks are both good. Capital gains taxation needs to be based on deflated gains and then taxed as ordinary income.
3) After wearing braces for all of my teens years (some of it paired with a monoblock) and a bunch of really painful jawbone surgery (jointly done by one of the best orthodontists around and some of the most innovative dental surgeons in the world), I too have too teeth that are almost too perfect to be true.
Except, only professionals ever comment about it. Of course, unlike the writer, I am male. Go figure.
You’ve never had women comment on your smile? I certainly did.
#2 Couldn’t the actions of Septimius Severus be considered a kind of QE also?
In order to maintain his enlarged military he debased the Roman currency drastically. Upon his accession he decreased the silver purity of the denarius from 81.5% to 78.5%. However, the silver weight actually increased, rising from 2.40 grams to 2.46 grams. Nevertheless the following year he debased the denarius substantially because of rising military expenditures. The silver purity decreased from 78.5% to 64.5% — the silver weight dropping from 2.46 grams to 1.98 grams. In 196 he reduced the purity and silver weight of the denarius again, to 54% and 1.82 grams respectively. Severus’ currency debasement was the largest since the reign of Nero, compromising the long-term strength of the economy.
Generally historians believe Rome fell (from Republic to Empire) due to political machinations and (from Empire to Dark Ages) due to military failures (pace the Eastern Roman Empire, which had good defenses), not for economic reasons like inflation (see more here: http://socialdemocracy21stcentury.blogspot.com/2011/06/inflation-and-fall-of-roman-empire.html) Like the Krugman piece, #2 was weakly argued.
6: hasn’t this same hypothesis been made for decades if not centuries about the roots of British naval domination? Lots of citizens with nautical experience.
I’ve read books which claim that American tinkering culture, especially after the invention of the automobile, gave it an advantage during WW II: lots of potential mechanics and repair personnel who needed little training to be able to work at high efficiency and high performance. So damaged US tanks could be repaired close to the front line whereas German tanks were more likely to have to go back to the factory for repairs (the high complexity of many German tanks vs the lower quality but mass-produced easy-to-repair nature of Shermans was also a factor). Similarly, a damaged Japanese airplane was more likely to sit discarded by the airstrip for lack of ability to repair it, whereas the US maintenance crews were more likely to be able to patch up an aircraft. I don’t know if these claims are true, they seem a little excessive but it’s easy to to imagine there’s some truth to them.
My favorite was the article claiming that Americans had an advantage in grenade-tossing because we play baseball, not soccer.
6. Interesting speculation in a vein similar to William McNeill (who was a well-respected professional historian, not a dilettante). McNeill noted the pattern of conquest by pastoralists from the fringe of civilization, which well antedates the use of cavalry. Think Sargon, Philip and Alexander, etc. McNeill also connected Western dominance in the late modern era with (i) the widespread raising and eating of large animals (he thought the annual butchery made Westerners more inured to bloodshed) and (ii) the inheritance of feudalism, which meant that (since feudalism unified political and military domination) warriors had a prestige in Western culture which they didn’t have elsewhere.
McNeill noted the pattern of conquest by pastoralists from the fringe of civilization, which well antedates the use of cavalry. Think Sargon, Philip and Alexander, etc
very, very wrong with regards to the macedonians: https://en.wikipedia.org/wiki/Companion_cavalry
Can Krugman really suppose he’s being original by comparing steppe nomads (or the Arabs explosion, come to that) with sailors? The poor old thing.
#3 Obama tax plan:
Interesting that Obama proposes a plan than has no chance at all of passing this Congress, regardless of its theoretical merits.
The elimination of the step-up basis at death (which is a huge loophole in current law) would have to be phased in somehow, because of the lack of old records. Example: We 5 children inherited some Chevron stock from my father, who in turn had inherited (as part of 5 children) from my grandmother. My grandparents already owned this (then Standard Oil of Kentucky stock) in the 1950s, because I remember them mentioning receiving a dividend. But did they inherit it? I can tell you for certain I have no idea who bought how much when, and I doubt anyone else does.
It is nice to have one’s suspicions confirmed about Krugman. I always get the feeling he thinks he is a psychohistorian.
Maybe just a psycho. Or a neurotic.
#6. Come on guys, a very Tyler-like Krugman post. It’s got Mughals, Mongols, horsemen with arrows, sailors and tries to explain World history. Does Krugman know that Mongols would likely today be republicans?
Has anyone experimented with Xylitol sugars as a dental treatment? I’ve found that NOTHING clears plaque like a 3/4 teaspoon of Xylitol swished about the mouth for 2 to 3 minutes. But I’ve also found very little in the way of research on the long term effects of such treatment.
I use Xylitol mints, although only irregularly. I do not know if they have helped my teeth but they certainly do no harm.
Krugman is rehashing Michael Pye’s The Edge of The World. Which arrived in your pile, Tyler.
#3: Ok I give up, what’s the connection between dental health and the Obama tax plan? Is it just a play on words? (i.e. his plan has teeth?)
I don’t understand how eliminating the step-up in basis is closing a “pretty big loophole. Won’t it just work to substitute revenue from capital gains for revenue from the estate tax…and at a lower rate? The capital gains will reduce the taxable estate so instead of collecting estate tax at 45% the feds will collect capital gains tax at 28%. And won’t the uber-wealthy will use the same strategy…charitable giving…to avoid the capital gains tax that they use now to avoid the estate tax?
3. So a health article that concludes with an oil-pulling recommendation *doesn’t* earn the “speculative” label?
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