Tuesday assorted links

by on January 31, 2017 at 3:17 pm in Uncategorized | Permalink

1. There is no great caffeine bracelet stagnation.

2. Greg Mankiw seems to favor the new Republican tax plan.  And Krugman comments.  I say anything complicated they will just screw up, and the lack of transparency in the plan means eventually it will lead to a tax hike and furthermore a good deal of favoritism and rent-seeking along the way.  Best hope is simply that they cut the corporate tax rate and don’t do much else on that front.

3. Chinese social media as a form of surveillance.

4. The economic problems of famous aging artists (NYT).

5. Measures of wage discrimination are overstated, once you adjust for how much time people spend actually working.

1 Boonton January 31, 2017 at 3:24 pm

#2 In light of airport fiasco, all proposals by Trump or the Congressional GOP should be considered suspect unless proven worthy of support.

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2 ClickByCommenter January 31, 2017 at 3:41 pm

Why shouldn’t we treat all Trump or Congressional proposals as suspect unless proven otherwise? Extending this thought, I would argue that we should treat all political proposals as suspect even when proven worthy of support.

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3 Boonton January 31, 2017 at 3:46 pm

You fail to leave room for those who make innovate in the field of failure. Trump proves the failure average is over!

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4 dearieme January 31, 2017 at 3:34 pm

“I say anything complicated they will just screw up”: isn’t that the Zeroth Law of Government?

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5 Rich Berger January 31, 2017 at 5:46 pm

I don’t recall TC making this observation about Obamacare, but maybe I missed it.

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6 WC Varones January 31, 2017 at 3:38 pm

2. Cutting the tax rate is important, but going to a territorial taxation like every other developed country is extremely important too.

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7 inertial January 31, 2017 at 3:39 pm

5. Better title: Minorities spend a greater fraction of their workdays not working than do white non-Hispanics.

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8 Joël January 31, 2017 at 3:56 pm

Yes, but the study if very doubtful. Based entirely on self-reported estimate of time really spent “working” when one is at work, which seems very subjective and ill-defined, and there may very well be different way to count and report that according to ethnicity.

For instance, I have a couch in my office and sometimes I lay on it eyes closed, thinking about mathematics. I would report it as work, if asked, but I may imagine people coming from a background where manual labor is more present declaring this as not-working.

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9 Ricardo January 31, 2017 at 5:35 pm

But those people are not reporting their views of whether *you* are working.

The authors do attempt to control for the vagueries of self-reporting. Furthermore, if I were to describe the methodology to you without letting you see the data first, what sign would you expect to see on the coefficients?

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10 Joël January 31, 2017 at 7:17 pm

To your last question, I confess I wouldn’t have known. I still would have thought that the methodology was unlikely to yield rock-solid result. I find the paper by Heckman, quoted below by Philippe Lemoine, which argues in the same direction more convincing, but perhaps it is because it much easier to criticize some empirical works, than to do one.

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11 Willitts January 31, 2017 at 8:49 pm

I’m generally less impressed by studies relying on survey data. In this case, the revelation is a statement against interest, and hence is inherently believable. Unless of course one derives status from claiming to have avoided work.

I agree though that measurability is highly suspect. I couldn’t tell you how many minutes I didn’t perform work today. But I’m a workaholic with a well disciplined quitting time to spend with family.

12 Tristan January 31, 2017 at 3:41 pm

Is your conversation with Patrick Collison posted/going to be posted soon?

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13 Tyler Cowen January 31, 2017 at 9:42 pm

Mid-April, Patrick was great!

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14 JWatts January 31, 2017 at 3:43 pm

“1. There is no great caffeine bracelet stagnation.”

There never was Tyler, there never was.

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15 Mark Thorson January 31, 2017 at 4:45 pm

Though Beyond Nature makes the patches in an FDA-approved facility, the patches themselves are not FDA-approved. They are made using Current Good Manufacturing Practices, a set of FDA regulations for a product’s monitoring and manufacturing processes and as well as the package design. This distinction allows them to be sold in the US, Paulin says.

If you want to try one of these things, you better buy it right away. I think somebody has a major misunderstanding of FDA regulations.

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16 Philippe Lemoine January 31, 2017 at 3:45 pm

James Heckman published a good paper (http://www2.econ.iastate.edu/classes/econ321/rosburg/Heckman%20-%20Detecting%20Discrimination.pdf) in 1998 in which he criticizes studies that purport to show that minorities are discriminated against by employers. It’s about discrimination in hiring, not in remuneration, but it’s still something worth reading.

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17 JWatts January 31, 2017 at 3:53 pm

“2. Best hope is simply that they cut the corporate tax rate and don’t do much else on that front.”

That’s what a group of smart politicians would do. So, it seems exceedingly unlikely.

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18 Alain January 31, 2017 at 4:06 pm

Agreed.

Lowering marginal rates on income has merit, but not if a new tax is created to fill the gap. That will simply be gamed by subsequent adminstrations.

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19 Scott Mauldin January 31, 2017 at 4:14 pm

Subsequent administrations misusing a policy instrument for unintended purposes? Never!

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20 CM January 31, 2017 at 5:17 pm

I get that taxes on corporate profits are distortionary and inefficient. But I don’t get why we shouldn’t replace the lost revenue with a more efficient tax. Even if you prefer less government spending, isn’t it preferable to have sufficient tax revenue to pay for government spending (leaving out special situations like wars and recessions)? Cutting taxes without cutting spending just means we will pay for that spending in the future with interest as well as suffer other negative consequences of running deficits.

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21 chuck martel January 31, 2017 at 8:46 pm

Manana, manana.

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22 Harry January 31, 2017 at 6:15 pm

: “That’s what a group of smart politicians would do.”

Yes, but evaluating tax-reform proposals from a group of politicians is fool’s game to begin with.

The Potomac crowd can’t even pass a legitimate annual budget, much less do anything smart about taxes.

Plus, tax policy is the wrong focus — the key issue is what the government “Spends”.

Taxes are but one leg of the debt/inflation/tax triad — total spending tells you the real fiscal problem (have you noticed the staggering National Debt?)

Good tax policy is simple– always cut taxes whenever & wherever possible… and never increase taxes for any reason whatsoever.

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23 Greg January 31, 2017 at 4:05 pm

The Hamermesh et.al paper is characteristic of NBER research that seems to have, as a working Null Hypothesis, that the inferior equilibrium outcomes of Black Americans can be explained by their cultural, perhaps even genetic pathologies. No doubt, this reflects in part the vulgar underrepresentation of Black economists at NBER, which receives a nontrivial amount of tax-subsidized research support (e.g. NSF, NIH), who would potentially contest research frameworks that deliberately theorize/parameterize the presumed pathologies of Black Americans in econometric specifications.

One could think of many reasons, in coherent efficiency wage models, why effort/shirking would vary across racial groups without slanderous appeals to “culture”………..eh?

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24 Floccina January 31, 2017 at 5:21 pm

Wanting to work less is in no way a pathological.

Why not, whites are pathological in that they work more than needed to sustain a reasonable level of consumption. One could say that black American have a healthier and more sensible view of study and work.

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25 So Much For Subtlety January 31, 2017 at 6:41 pm

The Hamermesh et.al paper is characteristic of NBER research that seems to have, as a working Null Hypothesis, that the inferior equilibrium outcomes of Black Americans can be explained by their cultural, perhaps even genetic pathologies. No doubt, this reflects in part the vulgar underrepresentation of Black economists at NBER

I like how that flows from one sentence to the other without a moments pause. Why might there be such an underrepresentation of Black economists at NBER I ask myself idly?

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26 anon January 31, 2017 at 4:39 pm

2. We are well short of the concrete plan and modeling stage. Are you suggesting that if they fly by seat of their pants, they will collect too much tax? Pull the other one.

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27 GoneWithTheWind January 31, 2017 at 4:42 pm

Taxes are essential and will always be with us. The trick is to have a tax that does the least harm and encourages those things we want. In other words tax things you want to discourage and do not tax things you want to flourish. Taxing businesses is counter productive, that should be obvious even to a liberal. But of course the reason we tax businesses is the same reason Dillinger robbed banks, because that’s where the money is. But not taxing businesses creates more money and more jobs. So it depends on what you want.

Taxing earned income stifles productive people and encourages the unproductive. This one is a no brainer.

Taxing home ownership is also counter productive.

About the only tax that both produces revenue and doesn’t discourage things we as a society want to promote is a sales tax or value added tax.

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28 Floccina January 31, 2017 at 5:29 pm

An important part of the art of modern politics is to hide the tax and highlight the benefit. Consider the PPACA 3 to 1 rule. It taxes an age group that votes less and subsidizes a group that votes more regardless of income, but those who pay the tax are completely unaware of what is happening.

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29 Joan February 1, 2017 at 2:01 am

Why do we assume that non distortionary tax policies from micro considerations .that defines efficiency as maximizing consumption will be the best ones to promote growth of GDP. In the high growth economy in decades after WWII we had high taxes on dividends and individual income combined with lower taxes on corporations. and capital gains that were distortionary, but provided an incentive for corporations to retain earning and use then to increase the value of their business. As the tax code was reformed to make it less distortionary, consumption share of GDP increased nearly 8%.

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30 Dave Smith January 31, 2017 at 5:02 pm

Krugman’s abrasive tone and irrelevant hyperbole (Trump/Putin administration) make him very difficult to read, even when he is spot on like he is here. I wonder if he knows how much he has in common with Rush Limbaugh?

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31 Ray Lopez January 31, 2017 at 8:11 pm

Krugman’s not that bad. I don’t agree with a lot of what he says but he’s a pretty good writer, even with the rhetoric. Self-congratulatory but very few people are as laid back as our host TC. Mankiw also strikes me as self-righteous. Note all these economists are cut from the same cloth: they are either Keynesians (like Mankiw) or monetarists (same difference really, both sides believe short term money is not neutral and in sticky prices, money illusion), whether right or left, and believe in increased Q (quantity) is the solution to all problems. Consequently if you do a CNTRL + F + “PATENTS” search you’ll rarely if ever catch them talking about how to increase total factor productivity (except to say like our own AlexT does on occasion, that ‘patent monopolies are bad’, citing the Amazon single-click patent and trolls). It’s a joke, and unless you see my point, whether or not you agree with me, you reader are part of the problem.

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32 Ricardo January 31, 2017 at 5:31 pm

Curious as to how many of us read #5 on the job……

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33 john smith January 31, 2017 at 9:28 pm

#3 “The policy of letting a hundred flowers bloom and a hundred schools of thought contend is designed to promote the flourishing of the arts and the progress of science.”

Mao Zedong

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34 jorod January 31, 2017 at 10:20 pm

Sooner or later I expect read why Trump can’t be elected.

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35 bob January 31, 2017 at 10:23 pm

Let’s abolish the corporate income tax. AS an example a corporation makes 10 million dollars. The controlling owners decide to distribute one million dollars to themselves and pay taxes at the top rate for that income and retain nine million dollars in corporation. While there is nothing wrong with the owners retaining the income it does put a hole in revenues of the government. So we need some method to tax these profits.

Corporate profits in the United States are taxed at a maximum rate of 48% (35% corporate and if all profits are distributed as dividends 20% of the remainer). If some of the profits are retained some of the tax liability is deferred. Individual federal rates top out at a little over 40%. Is it worth it to administer two tax codes with similar rates?

I think all individuals should be taxed on their prorated share of the corporation’s income at thier individual rates. Taxes rates are going to be cut anyway. Instead of reducing the top corporate rate to 20% and the individual rate to 32% just reduce the top rate to 35% or wahtever but tax the prorated share of corproate profits and only have one tax code, not two.

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36 The Original D February 1, 2017 at 12:43 am

The corporate tax accounting lobby will never allow it.

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37 chuck martel February 1, 2017 at 6:42 am

A corporate tax rate of 48% makes the state a half-owner of every corporation, or at least junior partner. That’s pretty close to the definition of fascism.

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38 Greg January 31, 2017 at 11:26 pm

Why might Black economists be underrepresented at NBER? I don’t claim to know with metaphysical certainty why. However, I conjecture that to the extent that Black economists are less inclined to attribute unexplained residuals to unobserved cultural/genetic pathologies, their presence at NBER would not be valued.

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39 Maya Angelou February 1, 2017 at 11:06 am

In what way is a survey where blacks self-report less time working during the work day an attribution of unexplained residuals to unobserved pathologies?

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40 chuck martel February 1, 2017 at 7:08 am

4. So sad that artistic frauds have a problem with the preservation of the wealth that nincompoop rich people have paid them for junk.

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41 Jon February 1, 2017 at 7:29 am

Actually–the way I interpret this paper is the affect is rather minor. white non-hispanics spend 6.5% of their day on non-work stuff and minorities spend about 8% of their day not working; i.e. a gap of about 1-2% of the workday. These differences shrink when various controls are added; but nonetheless they account for 10% of the gap—about 1.5% of the 14% wage gap.

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42 Hazel Meade February 1, 2017 at 10:12 am

#2. Krugman mentioned Greg Mankiw’s name in a column. Does this mean he’s gone back on his policy of not even bothering to address his opponents by name because he thinks they aren’t worthy of being mentioned in public?

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43 zach February 1, 2017 at 10:43 am

Substituting a VAT and eliminating tax subsidies for corporate tax or individual income tax reductions in a way that has little distributional impact I could get behind as a liberal that doesn’t like dumb tax policy.

But as far as I can tell what’s being proposed instead is maintaining most of the complicated stuff with modified rates and adding a new tax that’s complicated only so that Republicans don’t have to call it a tax on Americans even though it really is…

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44 Steven Kopits February 1, 2017 at 10:49 am

The BAT is a tariff. It is not a VAT.

Here’s how to test your economist friends on the BAT: Should Canada, Mexico, Germany, Japan or Korea implement one? If it’s a great idea for the US, isn’t it also a great idea for our trading partners, say, China?

As for cutting the corporate tax rate. Great idea, except we’re running a 3.4% Federal budget deficit at the top of the cycle with a 75%+ Federal debt-to-GDP ratio. Shouldn’t we be running a surplus of, say, 2% of GDP at this point?

So how do you want to pay for the corporate cut? As Mankiw does, by pushing through a big new consumer tax? All that will do is increase gun sales…by Tea Party Congressmen so they can go out and shoot themselves in the head.

The discussion point hasn’t changed, and that’s entitlement reform, whether Trump acknowledges that or not.

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45 zach February 1, 2017 at 11:07 am

“The discussion point hasn’t changed, and that’s entitlement reform, whether Trump acknowledges that or not.”

Why not just stop wasting a trillion on healthcare every year? UK has similar demographics, similar outcomes, half cost per capita. Do what they do. Long term budget fixed.

The cumulative shortfall of like a century of projected social security benefits is on the order of a decade of wasted healthcare spending… easiest way to solve entitlement shortfall is to make a new one for universal government health care.

From a Trumpian viewpoint this is also a good way to kick the world in the balls since other countries rely on American largesse to incentivize medical innovation throughout the world.

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46 Massimo Heitor February 8, 2017 at 1:43 pm

#2: Can someone explain the “lack of transparency” in the proposed corporate tax plan? Are the proposed tax rules being purposefully obfuscated in some way?

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