Sunday assorted links

by on October 22, 2017 at 8:08 am in Uncategorized | Permalink

1.  Is the BBC tailoring some content to do away with the plot?

2. Mark Koyama reviews Peter Leeson.

3. Paul Krugman responds on corporate tax incidence.  I see this as a classic case of “as usual the truth lies somewhere in between.”  In response to Paul, foreign capital goes after American rents all the time (ask Toyota), exchange rate overshooting models have little validity in the data (“news” moves exchange rates), and I don’t see why the long-run is a bad guide to tax policy.  That said, I do think more of the burden of capital taxation falls on capital than labor, but plenty falls on labor nonetheless.  See the most recent comments from Summers, stronger arguments overall.

4. “The Seattle Sperm Bank categorizes its donors into three popular categories: “top athletes,” “physicians, dentists and medical residents,” and “musicians.””  Link here.

5. Excellent Scott Sumner post on an excellent John Cochrane post.

6. The Saudis and the Kurds.

1 Dahlgren October 22, 2017 at 8:42 am

#5

It is year 2017 and professional economists still cannot agree on what “Inflation” is …. much less its causes & cures

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2 anon October 22, 2017 at 9:29 am

The big turning point for me revolved around consumer inflation. Most people hear the sober reports that “inflation was X” and assume it applies to them. They worry about wage growth and savings relative to that X.

In fact, you can choose your own inflation to a large degree. Owning a moderate home rather than renting, or maintaining a huge one, means you experience less inflation. Driving a 30 mpg car rather than 15 mpg, etc. Insulate your home. Buy Energy Star. (Learn to enjoy chicken, ha!)

The government has a heck of a job picking one number for “consumer price inflation,” but if you are really worried, you can get on the right side of the average.

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3 Sam Haysom October 22, 2017 at 11:44 am

Live off beans and rice and live under an overpass.

You clearly don’t understand inflation. In an inflation environment you can buy less chicken each month. Less beans too. The best way to take advantage of inflation is to borrow money not maximize thrift.

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4 anon October 22, 2017 at 12:15 pm

People do change their bundle of goods, and hedonic adjustment is a real thing.

https://www.bls.gov/cpi/quality-adjustment/home.htm

No reason to be a jerk about it. And to the extent you get ahead of it, you experience lower costs.

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5 Ray Lopez October 22, 2017 at 2:13 pm

@#5 – Sumner ” Unfortunately, nominal wages are sticky…” – what proof do we have that nominal wages are that sticky? That it even matters? Unions now are not the 30% of the 1950s but something like 11%, same as in FDR’s day (which also undercuts any theory that increased money supply would have ‘cured’ the Great Depression). So every year, non-union wages are readjusted. If prices drop due to lack of demand, wages are either cut, or some ZMP workers are fired. Unemployment goes up, but so what? Without demand, keeping workers around (even with a pay cut) won’t solve anything. Keeping workers even with a pay cut when there’s no demand is about as smart as Hoover’s strategy of keeping wages high to beat the Great Depression. A better strategy is: “liquidate everything!” ala Andrew Mellon’s advice, and let the natural cleansing power of depressions work their magic, Austrian style.

Bonus trivia: https://en.wikipedia.org/wiki/Richard_Mellon_Scaife the founder of many a conservative cause, as per Jane Mayer’s excellent polemic “Dark Money”, was a descendant of the Mellon family.

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6 William Jennings Bryan October 22, 2017 at 5:26 pm

Ray,

Just stop. I’m only a simple country lawyer from the turn of the last century that doesn’t grok evolution, yet I’ve forgotten more about monetary policy than you’ll ever know.

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7 Ray Lopez October 22, 2017 at 7:43 pm

You were just a mouthpiece W.J Bryan, as is pretty well known to your biographers. A great talker but like modern pols of today who just speak from teleprompters, very little substance behind the rhetoric.

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8 Ted Craig October 22, 2017 at 8:50 am

1. Whenever people talk about Fox’s mistake in canceling “The Family Guy” in 2001, only to bring it back in 2005, I point out what happened in between: YouTube. As a traditional show, it’s not very good, but as a source of two-minute bits, it’s fantastic. And it still performs well on Sunday nights.

This is the way TV has been headed for a while.

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9 A Truth Seeker October 22, 2017 at 10:32 am

So that’s Fox became: YouTube’s serf. I cnnot imagine a Brazilian network humiliating itself that much.

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10 Sam Haysom October 22, 2017 at 11:16 am

Yep the humiliation on Brazilian tv is confined to the actors, writers, producers, and viewers. So I guess the joke would be on you if it weren’t for the fact that you’ve never seen any Brazilian tv in zanesville.

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11 A Truth Seeker October 22, 2017 at 1:07 pm

Yes, I have seen lots of Brazilian TV, even if I am mkre an Internet and books person.

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12 Careless October 22, 2017 at 12:24 pm

Except Family Guy was renewed before Youtube existed

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13 Ted Craig October 22, 2017 at 3:47 pm

That’s true, it was renewed due to DVD sales. But the show really took off once you could watch the cut aways in isolation.

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14 Ted Craig October 22, 2017 at 3:50 pm

Remember, FG returned in May 2005, three months after YouTube launched. DVDs allowed for a similar effect, although not as well as YouTube.

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15 Steve October 22, 2017 at 5:37 pm

The first three seasons of Family Guy were very very good for full episodes. It got awful soon after its renewal because two of its head writers left to start the excellent American Dad, and so there weren’t real comic minds there to ground and rein in MacFarlane’s constant “zaniness.”

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16 Dan Lavatan-Jeltz October 22, 2017 at 5:43 pm

Wait, were the idea balls property of the show, or the individual writers?

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17 Roy LC October 22, 2017 at 8:37 pm

Some TV, but other stuff… what exactly is the demographic here?

The shows mentioned in that article have something in common besides be dreary and formulaic, and that is they are long running dramas with 40-50 min runtimes and lots of subplots. This was a design for when entire families watched one tv. As to this idea people are catching up during commutes, aside from a subset of Londoners I would be curious as to what this market is, and even then how much are you going to monetize people who won’t sit through a 45 minute drama. At best they are catching up on shows they fundamentally don’t care about and are not upset by advertising breaks.

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18 rayward October 22, 2017 at 10:37 am

Investors (i.e., owners of capital) like some forms of inflation (rising asset prices) but not others (rising wages). Larry Summers credits smart economists like himself with the trick(?) of simultaneously avoiding “inflation” while enjoying rising asset prices. It’s quite a trick. Or treat. Meanwhile, economists who don’t seem to get the trick go on and on with discussions about the meaning of “inflation” and its causes. It brings to mind those “meaning of life” discussions during my undergraduate years.

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19 rayward October 22, 2017 at 10:38 am

5. To be clear, I do admire Mr. Sumner. He’s had some very good “meaning of life” posts on his blog this past 12 months.

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20 GoneWithTheWind October 22, 2017 at 10:43 am

Krugman misses the point of corporate tax cuts completely. His blindness can be summed up in one of his quotes; “they will confer huge benefits on the wealthy…”. His position on this is absolutely socialist/alt-left. Of course tax cuts confer benefits on the wealthy they pay most of the taxes. But the real meat of the issue is that corporate tax cuts will confer enormous benefits on America and all citizens with a booming economy and jobs for everyone. You would think any honest and informed person would welcome this enormous benefit. But of course a socialist cannot. A socialist is someone who stays awake at night worrying that someone somewhere gets to keep some of their earnings. Krugman cannot stand the idea that a wealthy person might keep more of their own money, so much so that he would prefer to punish everyone rather than let that happen. This fear of someone somewhere keeping some of their money is also propped up by the fear that the government foes not get to confiscate all that money. To a socialist this is sacrilege. Their mantra is MGGA (Make Government Great again) and don’t worry about the hoi polloi. And last, of course, is to a lefty the very idea that they would let a conservative help the people and show the left up for what they are is terrifying. For all these reasons Krugman and the Democrats would prefer to create another great depression rather than let Trump’s agenda succeed.

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21 byomtov October 22, 2017 at 3:46 pm

You have completely misunderstood the criticism.

But the real meat of the issue is that corporate tax cuts will confer enormous benefits on America and all citizens with a booming economy and jobs for everyone.

This is false, as Krugman, Summers, and Jeffrey Sachs, among others, have pointed out. So forget all the BS about socialists and whatnot. Hassett is simply being a political tool.

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22 GoneWithTheWind October 22, 2017 at 4:56 pm

“You have completely misunderstood the criticism.”

No, I got it. The left mantra is tax and spend, tax and spend, tax and spend! The facts get in their way so they have to make this wild ass claim that they are “just taxing the rich” don’tcha know. But in fact all they care about is having money to spend, to buy favors with and to skim off some for themselves. To do this they must tax business, the middle class and anyone who is productive. To get reelected they have to dole out a large portion of this revenue as “free stuff” to their unproductive base. This only works until you run out of other people’s money. The handwriting is on the wall. The free ride is over. Either we become fiscally responsible or we perish. A nation built on “free stuff” cannot stand.

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23 byomtov October 22, 2017 at 10:01 pm

You don’t remotely get it. Your comments on the subject are idiotic, uninformed repetition of crap you’ve heard on talk radio.

Worried about deficits? OK. Do you have any idea what the Trump tax plan will do to them? No, you don’t. You believe a lot of BS from the world’s biggest liars.

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24 GoneWithTheWind October 23, 2017 at 11:21 am

You are uninformed about what causes deficits. Deficits are caused by excess spending not insufficient taxation. We need a constitutional amendment that would require the federal government to balance their budget every year and to prevent any borrowing.

Currently the federal budget is around $4 trillion. IMHO it should be about $1.2 trillion (with SS removed from their budget and control).

25 Iskander October 22, 2017 at 10:50 am

We know the causes of inflation. Has everyone forgotten the 70’s?

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26 Mark Thorson October 22, 2017 at 11:48 am

Why yes, yes we have. Jimmy Carter? He’s that guy that builds houses, right?

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27 Dick the Butcher October 22, 2017 at 12:54 pm

Recently, central planners have been unsuccessful in raising inflation to the 2% target.

To be fair Nixon, Ford, and their administrations bear much responsibility.

I am not praising him. I count Carter as the second-worst POTUS grossly edged out by Obama.

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28 Al October 22, 2017 at 1:41 pm

+1

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29 djw October 22, 2017 at 1:53 pm

Yeah, they make those POTUS that let the country spiral into civil war in the 1850’s look good.

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30 peri October 22, 2017 at 11:33 am

#2: As I had been curious about this cockroach/cricket business, I was grateful that the reviewer focused on the vermin trials, but his secondhand account still leaves me confused. Tidy Freakonomics this ain’t. So the Church supposedly wanted to suggest to peasants that the vermin were beasts under the Church’s control, that feared the threat of damnation? Was this meant to impress the peasants into paying the tithe?

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31 Dick the Butcher October 22, 2017 at 12:48 pm

That is truly weird and that’s the point.

If the author wanted to expose the Church’s power over medieval and early Renaissance Christians, there would be more cogent subjects. One area would be dread of eternal damnation and related penances (crusades, donations, pilgrimages, etc.), Another: The Inquisition and how economies and polities evolved in areas (like France and Spain) where the Inquisition was strong and those (such as England and Germanic areas) where it was relatively weak. All that was fully accepted and actively supported by most of the people, high- and low-born.

Point of information: In addition to the tithe, the local lord took one-third of the peasants/serfs’ produce. It was like the feudal incarnation of state, county and municipal taxes and the IRS.

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32 A Truth Seeker October 22, 2017 at 1:12 pm

According to famous Portuguese priest/writer Bernardes, one of the greatest writers of Portuguese language, the ants refused to attack the Portuguese Jesuits’ crops in Colonial Brazil after the Jesuits reprimanded them. So that is not just about money or power.

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33 rayward October 22, 2017 at 12:33 pm

6. What a tangled web. Iraq, under the Sunni dictator Saddam Hussein, was Saudi Arabia’s ally even though Iraq is a Shia-majority country. Indeed, I’m not the only person who has speculated that the Saudis used Hussein’s Iraq to funnel funds to Sunni terrorists including those who attacked the U.S. on 9/11. Having overthrown Hussein, the U.S. delivered Shia Iraq to Shia Iran, but not before Saudi-funded Sunni insurgents in Iraq killed and maimed thousands of U.S. soldiers in Iraq. Now it’s the Kurds turn to be the pawn in Sunni Saudi Arabia’s sectarian war against Shia Iran. Where does the Trump administration stand on this war, with the Saudis and their Sunni terrorist brothers who are funded by the Saudis and are inflicting unspeakable violence and mayhem in the region, or with the Iranians who Israel identify as the source of terrorism in the region and as supporters of the destruction of Israel. As for the Kurds, they are just as likely to be betrayed by Iraq, Iran, or the U.S.

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34 dearieme October 22, 2017 at 12:46 pm

“I’m not the only person who has speculated that the Saudis used Hussein’s Iraq to funnel funds to Sunni terrorists including those who attacked the U.S. on 9/11.”. Good God, still trying to justify the wicked and hare-brained attack on Iraq? Pathetic.

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35 rayward October 22, 2017 at 1:22 pm

I know this may be a challenge for some, but try to follow along. GWB, having learned of the Saudi’s complicity in the 9/11 attack, could have invaded Saudi Arabia. Whatever one might think of the Saudis, that course of action would have devastated more than oil markets, including the international order. GWB, also having learned of Saddam Hussein’s complicity by allowing funds to flow from Saudis through Iraq to Sunni terrorists, chose the lesser of two evils and invaded Iraq to depose the Sunni dictator and thereby cut off the flow of funds from Sunni Saudis through nominally Shia Iraq to Sunni terrorists. That by invading Iraq and deposing Hussein GWB opened the Gates of Hell was an unintended consequence. This explanation for the invasion of Iraq has the benefit of treating GWB and his advisers as something besides village idiots. It also has the benefit of subsequent events in the region. Some prefer the village idiot interpretation. I don’t believe GWB and his advisers were village idiots. Just as I don’t believe all Republicans are village idiots, even though some sometimes act like it. As for some of the commenters at this blog, village idiots have the right to express their views.

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36 A Truth Seeker October 22, 2017 at 4:54 pm

I think themvillage idiots should be tarred and feathered.

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37 dearieme October 22, 2017 at 5:05 pm

“GWB, also having learned of Saddam Hussein’s complicity by allowing funds to flow from Saudis through Iraq to Sunni terrorists”. But there’s no evidence that that happened. You said so yourself: you said you “speculated”. Do you really believe that in the gabbiest capital in the world no hint of such a reality would have leaked out? Bollocks.

It’s no challenge to follow: it’s complete drivel that’s being trotted out as an excuse for one of the most evil, foolish and reckless acts of aggression in US history – an enormous error and a huge strategic defeat.

You claim that it’s wrong to believe that W blundered and then say “…. by invading Iraq and deposing Hussein GWB opened the Gates of Hell [as] an unintended consequence”. So the non-blunderer committed a huge blunder? Make your ruddy mind up.

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38 dearieme October 22, 2017 at 12:44 pm

#4: hats off to Seattle. No mention of lawyers or economists.

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39 BC October 22, 2017 at 1:23 pm

#3) One notable aspect in common between the Krugman and Summers articles — besides that neither can seem to resist tainting what could otherwise have been unemotional economic analysis with ad hominem attacks — is that neither offers an alternative analysis where the increase in wages is less than the cut in corporate tax. The fact that “Ramsey models” may not capture all salient aspects of the issue does not imply that the ratio of wage increase to corporate tax automatically flips from greater than 1 to less than 1, though you wouldn’t know that from the two articles.

Krugman’s illustration (Fig. 1) especially shows very nicely the deadweight loss of corporate tax (c+e). So, a corporate tax that raises b for the government causes the rest of us to lose more than b; we lose b+c+e. Thus, the gain from reversing that tax exceeds the size of the tax cut. That doesn’t seem to be a point that Krugman makes clear in his narrative, for some reason. Yes, one can quibble with the Ramsey model assumptions that lead to the conclusion that all of the tax cut b goes to labor. But, neither Krugman nor Summers offered any model that definitively demonstrates that *none* of the deadweight loss of corporate tax is borne by labor and, hence, wouldn’t be recovered by labor by reversing the corporate tax.

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40 byomtov October 22, 2017 at 5:37 pm

There is a difference between criticizing someone personally because they put forth a foolish argument when they should know better, and calling an argument foolish just because it was put forward by someone you don’t like, or often disagree with.

Only the latter is ad hominem.

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41 BC October 23, 2017 at 12:29 am

Krugman: “It’s obvious to pretty much everyone – I suspect even those pushing the cuts – that they will confer huge benefits on the wealthy, do little if anything for the middle class, and greatly increase the deficit. Indeed, in some ways those are not only the likely results, *but the goals*” (emphasis added).

Summers: “I served with 7 CEA chairs…[that] refused to cheerlead for Administration policies at the expense of their professional credibility….Chairman Hassett should for the sake of his own credibility, that of the Administration he serves and the institution he leads, back off.”

Maybe, ad hominem is the wrong word, but they sure seem to be impugning motives of anyone that is unwilling to reject out of hand the possibility that the benefits to labor can exceed the size of the tax cut, i.e., that a significant portion of corporate taxes are incident on labor and/or that taxes impose significant deadweight losses. If either Krugman or Summers were to walk into any economics classroom and see a lecture on the “Ramsey model” in a non-political context, I doubt either of them would find the lecture to be out of place or heterodox. Mankiw’s blog post, along with Cochrane’s posted solution, seemed to me to be standard textbook economics that would be taught to economics students everywhere as the type of economic analyses used to analyze economics problems. Sure, one can argue that actual corporate tax analyses should consider other factors. However, it seems highly ironically self-unaware to impugn political motives to someone else for applying what in any non-political context would just be considered standard economic arguments.

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42 Affe October 23, 2017 at 9:00 am

Facile historical comparison of the day: current Kurdistan is somewhat like the Grand Duchy of Warsaw, only in existence so long as Napoleon was strong enough to support it against Russia, Prussia and Austria. Took another hundred years or so, several bloody uprisings and the collapse of three empires as a result of a world war for the Poles to get independence. Hope the Kurds have better luck.

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