Obama proposes lowering corporate tax rate to 28 percent

That is circa early 2012, and presumably Obama’s CEA signed off on the idea.  Romney at the same time proposed a rate of 25 percent.

I believe that, in a rush to criticize a proposed Trump tax cut, we are in danger of forgetting the wisdom of 2012.

Here is one bit of description:

In these books, the young German protagonist, Wilhelm Heinrich Sebastian Von Troomp, better known as Baron Trump, travels around and under the globe with his dog Bulger, meeting residents of as-of-yet undiscovered lands before arriving back home at Castle Trump. Trump is precocious, restless, and prone to get in trouble, with a brain so big that his head has grown to twice the normal size—a fact that, as we have seen, he mentions often. No one tells Trump that his belief that he looks great in traditional Chinese garb—his uniform for both volumes—is unwarranted.

Lockwood’s books are spring break meets Carmen Sandiego meets Jabberwocky; at the start of each story, Trump sets out eager to find new civilizations—and manages to get distracted by more than one lady along the way. One of the first places he visits in Travels and Adventures is the land of the toothless and nearly weightless Wind Eaters, who inflate to beach-ball size after a meal. They are generous hosts until Trump starts a fire. The intrigued Wind Eaters draw near, and promptly explode after the air they have ingested expands thanks to the flames. As Captain Go-Whizz, “a sort of leader among them,” chases the murderer, the dog Bulger bites one of the Wind Eaters until he deflates like a punctured balloon. The pair eventually escape, leaving the briefly betrothed Princess Pouf-fah without a mate, and Chief Ztwish-Ztwish and Queen Phew-yoo with many a funeral to plan.

Here is the full story.

One of the most blatant violations of the rules against touching saliva among other taboos is described by Dubois…in his [1906] account of one of the “disgusting religious orgies” he so meticulously depicts.  In these orgies, not only do men and women eat meat and drink alcoholic beverages, but they transgress the normal saliva prohibition.  I cannot possibly improve upon Dubois’ vivid word picture: “In this orgy called sakti-puja, the pujari, or sacrificer who is generally a Brahman, first of all tastes the various kinds of meats and liquors himself, then gives the others permission to devour the rest.  Men and women thereupon begin to eat greedily, the same piece of meat passing from mouth to mouth, each person taking a bite until it is finished.  Then they start afresh on another joint, which they gnaw in the same manner, tearing the meat out of each other’s mouths.  When all the meat has been consumed, intoxicating liquors are passed around, every one drinking without repugnance out of the same cup.

That is from the quite interesting Two Tales of Crow and Sparrow: A Freudian Folkloristic Essay on Caste and Untouchability, by Alan Dundes.

She is the author of the new and superb Ants Among Elephants: An Untouchable Family and the Making of Modern India.  I will be interviewing her later in the month, with a podcast and transcript forthcoming, no public event.  Here is her Macmillan bio:

Sujatha Gidla was born an untouchable in Andhra Pradesh, India. She studied physics at the Regional Engineering College, Warangal. The author of Ants Among the Elephants, her writing has appeared in The Oxford India Anthology of Telugu Dalit Writing. She lives in New York and works as a conductor on the subway.

Here is BBC coverage of her work.  Here is the NYT review of her book.  Here are further links about herThe Economist wrote: “Ants Among Elephants is an arresting, affecting and ultimately enlightening memoir. It is quite possibly the most striking work of non-fiction set in India since Behind the Beautiful Forevers by Katherine Boo, and heralds the arrival of a formidable new writer.”

So what should I ask her?

That is a new paper by Matthew T. Gregg, forthcoming in Journal of Development Economics.  Here is the abstract:

This paper explores some long-standing questions of the legacy of American Indian boarding schools by comparing contemporary Indian reservations that experienced differing impacts in the past from boarding schools. Combining recent reservation-level census data and school enrollment data from 1911 to 1932, I find that reservations that sent a larger share of students to off-reservation boarding schools have higher high school graduation rates, higher per capita income, lower poverty rates, a greater proportion of exclusively English speakers, and smaller family sizes. These results are supported when distance to the nearest off-reservation boarding school that subsequently closed is used as an instrument for the proportion of past boarding school students. I conclude with a discussion of the possible reasons for this link.

And this is from the paper’s conclusion:

Last, the link drawn here between higher boarding school share and assimilation should not be misinterpreted as an endorsement of coercive assimilation. Unobserved costs generated by the first generation of students might outweigh the estimated gains in long term assimilation. The program itself was extremely costly, which is one of the reasons for the change in policy towards on-reservation schooling during the 1930s. These results do, however, suggest that the assimilation gains from boarding schools are sizable, but, due to data limitations, this study does not reflect a complete assessment of the trade-offs of boarding school attendance.

Here are earlier ungated versions.  For the pointer I thank the excellent Kevin Lewis.

I’m not by any means convinced that conflict [between China and America] is inevitable. I don’t believe in the Thucidydes Trap, and here’s why not. North Korea so far has been China’s thorn in our side. I feel that’s flipped. Chinese public opinion has flipped. Opinion within the Chinese government is in the middle, but has been changing a lot. China would like to undo the current North Korea situation but they don’t know how to do it in a way that doesn’t harm their national interests. North Korea will become our thorn in China’s side over time, pretty quickly. And so if there’s North Korea and a rearming and maybe eventually someday nuclear Japan, and also India, the first line of China containment is India, North Korea (oddly enough) and Japan. I don’t know how that will go, but it’s a kind of buffer between China and us, it can be a force that pulls us into conflict, it could be a kind of buffer that allows us to stay somewhat removed from it.

That is from my dialogue with Bill Kristol, the transcription (with commentary) is from Sam Roggeveen.  He also transcribes this bit:

…for the first time in my life time, in a way the first time ever, America finally has a peer country. The Soviet Union was a peer with its nuclear weapons but not in general. But in terms of human talent, GDP, China right now is in most ways a peer country to the United States. We’re not ready for that, mentally or emotionally.

Draft animals as common property

by on September 29, 2017 at 1:27 am in Economics, History, Law | Permalink

The full title is “There Will Be Killing: Collectivization and Death of Draft Animals,” by Shuo Chen and Xiaohuan Lan.  Here is the abstract:

The elimination of private property rights can lead to inefficient use of productive assets. In China’s collectivization movement from 1955 to 1957, instead of transferring draft animals to the ownership of the collectives, peasants slaughtered them to keep the meat and hide. By comparing 1,600 counties that launched the movement in different years, the difference-in-differences estimates suggest that the animal loss during the movement was 12 to 15 percent, or 7.4–9.5 million head. Grain output dropped by 7 percent due to lower animal inputs and lower productivity.

Here are earlier, ungated copies.

That is the new, excellent, and detailed book by Eric Schliesser, a political scientist at Amsterdam.  I would say that Schliesser is a very learned “left Smithian,” and that you should take the subtitle very very seriously.  Here is one excerpt:

1. I argue that while Smith certainly took experience and empirical science seriously, he should not be understood as a empiricist in epistemology and his moral epistemology; he relies crucially on innate ideas and innate mental structure.

2. This book gives the first extensive (albeit not exhaustive) study and taxonomy of Smith’s theory of the passions, which I treat as elements of his system (cf. Hume’s treatise  In fact, I argue that the content of a social passion is inherently normative in Smith’s approach.

3. I argue that Smith is decidedly reserved about deploying mathematics within his political economy.

4. I argue that Smith’s account of liberty should not be identified with the so-called liberty of the moderns, or freedom of contract.  While Smith certainly was a defender of freedom of contract, his account of liberty is more expansive (and more attractive).

Sometimes I draw a distinction between “branching” books, whose arguments spread out in many different directions and draw many distinctions, and “channeling” books, which try to put the material into a narrower, common framework.  (Reading each requires quite distinct sets of skills!)  This is a branching book.  You can order it here.

I thank my colleague David Levy for the pointer to this work.


That is the topic of my latest Bloomberg column, here is one bit:

Worse yet, the island has about $123 billion in debt and pension obligations, compared with a gross domestic product of slightly more than $100 billion, a number that is sure to fall. In the last decade, the island has lost about 9 percent of its population, including many ambitious and talented individuals. In the past 20 years, Puerto Rico’s labor force shrank by about 20 percent, with the health-care sector being especially hard hit. The population of children under 5 has fallen 37 percent since 2000, and Puerto Rico has more of its population over 60 than any U.S. state.

And then came Hurricane Maria.  According to a recent NYT piece, almost half of American’s don’t know that Puerto Ricans are American citizens.

In my considered opinion, using government money to help Puerto Rico has a much higher humanitarian return than devoting it to the further subsidization of health care.

I say no, in my latest Bloomberg column.  Here is one bit:

We live in a country where very often the concession stands don’t stop operating during the anthem, nor do fans stop walking through the concourse. We’re fooling ourselves to think that current practices are really showing respect for the nation or its military.


Anthem practices shouldn’t be viewed as sacrosanct, and no one would think the absence of an anthem unpatriotic if expectations were set differently. Professional sports don’t start their competitions with the Pledge of Allegiance, and that is hardly considered an act of treason. Nor do we play the anthem before movies, as is mandatory in India. Furthermore, “The Star-Spangled Banner” wasn’t sanctioned by Congress as our national anthem until 1931. Earlier in the history of baseball, the anthem was played during the seventh-inning stretch. It was only during World War II that the anthem was played regularly at the beginning of each game, rather than for special games alone, such as the World Series.

Might we consider moving back to some of these earlier practices? To play the anthem before the players are present or during a mid-game break, or perhaps to cease the practice altogether?


The awkward, hard-to-admit truth is that the American national anthem is a form of right-wing political correctness, designed to embarrass or intimidate those who do not see fit to sing along and pay the demanded respect.

Here is a piece by Cass Sunstein also on the theme of right-wing political correctness.

I will be doing a Conversation with Doug in early October, although with no associated public event, just a later podcast and transcript.  Here is Wikipedia on Doug:

Douglas Irwin is the John Sloan Dickey Third Century Professor in the Social Sciences in the Economics Department at Dartmouth College and the author of seven books. He is an expert in both past and present U.S. trade policy, especially policy during the Great Depression. He is frequently sought by media outlets such as The Economist and Wall Street Journal to provide comment and his opinion on current events.[1][2]

Prior to Dartmouth, Irwin was an Associate Professor of Business Economics at the University of Chicago Graduate School of Business, an economist for the Board of Governors of the Federal Reserve System, and an economist for the Council of Economic Advisers Executive Office of the President.

Doug has a very exciting new book on the history of trade coming out, which I covered here.  Here is Doug on Twitter.  Here is Doug’s recent WSJ Op-Ed on Steve Bannon, trade, and the history of America’s greatness.

So what should I ask Doug?  Your grace and wisdom are always appreciated and never in short supply.

The co-authors on this paper (pdf) are Andrew Leigh and Mike Pottenger, here is the abstract:

The paper estimates long run social mobility in Australia 1870–2017 tracking the status of rare surnames. The status information includes occupations from electoral rolls 1903–1980, and records of degrees awarded by Melbourne and Sydney universities 1852–2017. Status persistence was strong throughout, with an intergenerational correlation of 0.7–0.8, and no change over time. Notwithstanding egalitarian norms, high immigration and a well-targeted social safety net, Australian long-run social mobility rates are low. Despite evidence on conventional measures that Australia has higher rates of social mobility than the UK or USA (Mendolia and Siminski, 2016), status persistence for surnames is as high as that in England or the USA. Mobility rates are also just as low if we look just at mobility within descendants of UK immigrants, so ethnic effects explain none of the immobility.

Social mobility is indeed difficult to pull off.  Hat tip goes to Ben Southwood.

The Color of Law

by on September 19, 2017 at 7:25 am in Books, Economics, History, Law | Permalink

Richard Rothstein’s The Color of Law is a good history of government discrimination against African-Americans in the housing market. Most notably, the FHA and the VA refused to guarantee mortgage loans or loans to builders unless the neighborhood was segregated. Indeed, the FHA wouldn’t even insure a project if there were too many African Americans living nearby.

In 1940, for example, a Detroit builder was denied FHA insurance for a project that was near an African American neighborhood. He then constructed a half-mile concrete wall, six feed high and a foot thick, separating the two neighborhoods, and the FHA then approved the loan.

Rothstein is no libertarian but to his credit he does acknowledge that one of the few anti-segregation forces in the early twentieth century was the Lochner influenced reasoning of the Supreme Court. In Louisville, Kentucky, wealthy blacks began to buy houses in previously white neighborhoods. In response, the city passed an ordinance making it illegal for blacks to move into majority-white neighborhoods and vice-versa. The NAACP organized a test case. Warley, an African American, agreed to buy a house from Buchanan, if not prevented by law from doing so. Buchanan then argued that the law reduced the value of his house because he could not sell to Warley or other African-Americans. Thus, the ordinance was a taking which violated the 14th Amendment right not to be deprived of property without due process of law.

The State of Kentucky responded with a brief arguing that segregation was divinely ordained and that “negroes carry a blight with them wherever they go.” The racism was sickening but Kentucky also had the great mass of intellectuals behind it because they were asserting the progressive belief that the state’s police powers could and should overrule individual rights, especially property rights. Under Lochner, however, “unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract” violated the 14th Amendment. Rothstein writes:

“In 1917, the Supreme Court overturned the racial zoning ordinance of Louisville, Kentucky, where many neighborhoods included both races before twentieth-century segregation….The Court majority was enamored of the idea that the central purpose of the Fourteenth Amendment was not to protect the rights of freed slaves but a business rule: “freedom of contract.” Relying on this interpretation, the Court had struck down minimum wage and workplace safety laws on the grounds that they interfered with the right of workers and business owners to negotiate individual employment conditions without government interference. Similarly, the Court ruled that racial zoning ordinances interfered with the right of a property owner to sell to whomever he pleased.”

Sure, it’s a grudging acknowledgment, but most people don’t even do that so give Rothstein credit where credit is due.

Governments evolved other measures to promote segregation such as zoning laws and the white-subsidy systems of the FHA and VA. Nevertheless, Buchanan v. Warley was likely an very important decision. Bill Fischel goes so far as to argue that Buchanan v. Warley prevented apartheid in America.

Addendum: On segregation and Lochner, see David Bernstein’s excellent book Rehabilitating Lochner from which I have also drawn.

*The Color of Money*

by on September 18, 2017 at 2:08 pm in Books, Economics, History | Permalink

The author is Mehrsa Baradaran, and the subtitle is Black Banks and the Racial Wealth Gap.  Here is one excerpt:

Not only were black bankers stuck in a perpetual money pit, but they were often cast as the villains when thing went wrong.  That their loans went primarily to the black middle class and were out of reach of the majority of blacks sometimes made black banks the targets of criticism.  Abram Harris was one of these critics.  Harris was the first nationally renowned black economist and the first to do a comprehensive study of black banks, called The Negro as Capitalist (1936).  Harris headed the Howard economics department from 1936 to 1945, when he became the first black economist at the University of Chicago.  He was recruited there by Frank Knight…Harris had held Marxist sympathies while at Howard, but with his move to Chicago, his economic philosophy became more traditional.

Here is Wikipedia on Harris.  As for Baradaran, I found this to be “two books in one.”  First, it was an OK and useful but not original look at the evolution of the racial wealth gap.  Second, it was a very interesting but interspersed history of black banking in America.  Overall recommended.  Here is the book’s home page.