Jon Clifton, the head of Gallup, which has been tracking wellbeing around the world for many years, notes a polarisation in people’s life-evaluations. Compared with 15 years ago (before the financial crisis, smartphones and Covid-19) twice as many people now say they have the best possible life they could imagine (10 out of 10); however, four times as many people now say they are living the worst life they can conceive (0 out of 10). About 7.5 per cent of people are now in psychological heaven, and about the same proportion are in psychological hell.
1. Guests might pay up to 50k to be on a podcast (Bloomberg).
I can’t quite bring myself to call it the Inflation Reduction Act. One thing I have learned from experience is how hard it is to judge such bills upfront. For instance, I just learned that the electric vehicle tax credits do not currently apply to any electric vehicle whatsoever, nor will they obviously apply to any electric vehicle to be produced in the near future. Now the United States might take a larger role in battery production, or perhaps the law/regulation will be modified — don’t assume these standards will collapse. Still, the provisions are going to evolve. Or maybe there is a modest chance that provision of the bill simply will never kick in.
I don’t know.
How about the corporate minimum tax provisions? It sounds so simple to address unfairness in this way, and how much opposition will there be to a provision that might cover only 150 or so companies? But a lot of the incentives for new investment will be taken away, including new investment by highly successful companies. (You can get your tax bill down by making new investments, for instance, and that is why Amazon has paid relatively low taxes in many years.) Most of the companies covered are expected to be manufacturing, and didn’t we hear from the Democratic Party (and indeed many others) some while ago that manufacturing jobs possess special economic virtues? Furthermore, some of the tax incentives for green energy investments will be taken away. Has anyone done and published a cost-benefit analysis here? That is a serious question (comments are open!), not a rhetorical one.
Here are some other concerns (NYT):
“The evidence from the studies of outcomes around the Tax Reform Act of 1986 suggest that companies responded to such a policy by altering how they report financial accounting income — companies deferred more income into future years,” Michelle Hanlon, an accounting professor at the Sloan School of Management at the Massachusetts Institute of Technology, told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”
Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.
“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.
How bad is that? I do not know. Do you? My intuition is that the book profits concept cannot handle so much stress. By the way, kudos to NYT and Alan Rappeport for doing that piece. It is balanced but does not hold back on the skeptical side.
And here’s one matter I haven’t seen anyone mention: the climate part of the bill, and indeed most of the accompanying science and chips bill, assume in a big way that private sector investment is deficient in solving various social problems and needs some serious subsidy and direction.
Now the direction of that investment is a separate matter, but when it comes to the subsidy do you recall Kenneth Arrow’s classic argument that the private sector does not invest enough in risk-taking? Private investors see their private risk as higher than the actual social risk of the investment. This argument implies subsidies for investments, as much of the rest of the bill and its companion bill provide, not additional taxes on investment. This same kind of argument lies behind Operation Warp Speed, which most people supported, right?
And yet I see everyone presenting the new taxes on investment in an entirely blithe manner, ignoring the fact that the rest of the bill(s) implies private investment needs to be subsidized or at least taxed less.
Overall the ratio of mood affiliation and also politics in this discussion, to actual content, makes me nervous. The bills went through a good deal of uncertainty, and so a significant portion of the intelligentsia has been talking them up. Biden after all needs some victories, right? And at some point the green energy movement needs some major legislative trophies, right? What I’d like to see instead is a more open and frank discussion of the actual analytics.
It is very good when a top economist such as Larry Summers has real policy influence, in this case on Joe Manchin. But part of that equilibrium is that other economists start watching their words, knowing some other Democratic Senator might fall off the bandwagon. There is Sinema, Bernie Sanders has been making noise and complaining, someone else might have tried to extract some additional rents, and so on.
The net result is that you are not getting a very honest and open discussion of what is likely to prove a major piece of legislation.
This paper examines the role of student facial attractiveness on academic outcomes under various forms of instruction, using data from engineering students in Sweden. When education is in-person, attractive students receive higher grades in non-quantitative subjects, in which teachers tend to interact more with students compared to quantitative courses. This finding holds both for males and females. When instruction moved online during the COVID-19 pandemic, the grades of attractive female students deteriorated in non-quantitative subjects. However, the beauty premium persisted for males, suggesting that discrimination is a salient factor in explaining the grade beauty premium for females only.
7. Pilot testimony. Cites the data too. Virginia Beach area!
Then, crucially, the government stepped in with covid-relief funds, which were somehow granted to prisoners. (Congress did not bar us from getting stimulus cheques, though the Internal Revenue Service tried to.) That windfall came as a total shock…
Stimulus payments meant people habituated to scarcity suddenly had $1,200 in their hands (then $2,000 more as the government approved two additional payouts). And rather than splurge on items we usually go without – honey buns ($1.10 each), king-size chocolate bars ($2.40) or high-end toothpaste ($5.28) – more than a few of us chose to invest.
Cryptocurrencies have been popular too. Here is the full Economist/1843 story. And get this:
The perverse incentive structure of prisoner accounts makes things worse. The prison does not touch account balances below $25, the threshold at which a prisoner is considered indigent. But for those with more than $25, the prison deducts onerous fees totalling 55% of incoming transfers. “Every week I have to max out my commissary order and zero out my account,” Steve said. Prisoners are being conditioned to live pay cheque to pay cheque.
The authors are themselves incarcerated in Washington state. Via Mike Rosenwald.
The most shocking revelations were that soldiers killed civilians and dressed them up as guerrillas to inflate their body counts. In return, they received benefits and promotions. Last year, a tribunal identified more than 6,400 of these so-called “false positive” killings dating from the 2002-2010 rule of hawkish rightwing president Álvaro Uribe, who is under investigation in an unrelated case and could come under further scrutiny with Velásquez as minister.
Here is more from the FT. This is also an object lesson in why we do not use direct incentives to achieve all tasks.
2. “In contrast to many other growth models we find that the taxation of human capital has a substantial negative effect on its accumulation. This in turn reduces innovation and, consequently, the income growth rate.” Link here.
Fancy Feast is expanding into feline-inspired human cuisine, with a New York City Italian restaurant designed to celebrate the company’s new line.
Gatto Bianco, which means “white cat,” is described by Fancy Feast as an “Italian-style trattoria,” and will be open for dinner reservations on August 11-12 only, according to a news release from Purina, which produces Fancy Feast.
The human-friendly dishes were inspired by Fancy Feast’s new “Medleys” cat food line, which feature options like “Beef Ragú Recipe With Tomatoes & Pasta in a Savory Sauce” for the cat with discerning taste.
1. Lilia Moritz Schwarcz, Brazilian Authoritarianism: Past and Present. One of the best general books on where Brazil is right now, and yes it is sad that you can say that about a book on political authoritarianism. Don’t forget that most of the slaves brought to the New World were brought to Brazil, and the country now has the second largest African population in the world. The problem with this book is that while the first half on Brazil is quite good, too much of the second half is social science mumbo-jumbo.
2. Isaac Asimov, The End of Eternity. This novel is not so famous, but it is one of his best and also most literary creations. Like so many Asimov tales, it is fundamentally biblical in inspiration. Of course Asimov wrote numerous books about the Bible, so he knew it well. You can start with Adam and Eve, Abraham, and Samson, but it doesn’t end there.
Dan Slater and Joseph Wong, From Development to Democracy: The Transformations of Modern Asia is a good “state capacity” take on how democracies developed from strong states in Asia.
Richard M. Eaton, India in the Persianate Age. Among its other virtues, including excellent research, this book does a good job of recharacterizing the “Mughal” era as one of massive Persian influence in India.
Lindsey Hughes, Russia in the Age of Peter the Great. I only read part of this book, as it had more detail than what I was looking to consume, but it is clearly a major and very useful source on its topic. It focuses on the progress, science, and state-building sides of the reign of Peter.
Post title and everything, here I am just copying Greg Mankiw:
In calendar year 2022, enacting the bill would have a negligible effect on inflation, in CBO’s assessment. In calendar year 2023, inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law.”
TC again: I know you can be on Twitter, and honestly pledge this thing will reduce inflation, but…c’mon people….
2. “By my count, at least 29 of the 605 NBA players who saw the court last season had fathers who played in the league—almost 5 percent, a ludicrously high figure, and enough to fill two teams’ rosters.” About Bronny.
4. “Considering that it predates the Bank of Ireland and the State itself, it could even be said that Guinness is the longest-running successful large institution in Ireland.” Link here.
7. Is Google making the internet more boring? An interesting piece.
We are making all the same errors with monkeypox policy that we made with Covid but we are correcting the errors more rapidly. (It remains to be seen whether we are correcting rapidly enough.) I’ve already mentioned the rapid movement of some organizations to first doses first for the monkeypox vaccine. Another example is dose stretching. I argued on the basis of immunological evidence that A Half Dose of Moderna is More Effective Than a Full Dose of AstraZeneca and with Witold Wiecek, Michael Kremer, Chris Snyder and others wrote a paper simulating the effect of dose stretching for COVID in an SIER model. We even worked with a number of groups to accelerate clinical trials on dose stretching. Yet, the idea was slow to take off. On the other hand, the NIH has already announced a dose stretching trial for monkeypox.
Scientists at the National Institutes of Health are getting ready to explore a possible work-around. They are putting the finishing touches on the design of a clinical trial to assess two methods of stretching available doses of Jynneos, the only vaccine in the United States approved for vaccination against monkeypox.
They plan to test whether fractional dosing — using one-fifth of the regular amount of vaccine per person — would provide as much protection as the current regimen of two full doses of the vaccine given 28 days apart. They will also test whether using a single dose might be enough to protect against infection.
The first approach would allow roughly five times as many people to be vaccinated as the current licensed approach, and the latter would mean twice as many people could be vaccinated with existing vaccine supplies.
…The answers the study will generate, hopefully by late November or early December, could significantly aid efforts to bring this unprecedented monkeypox outbreak under control.
Another interesting aspect of the dose stretching protocol is that the vaccine will be applied to the skin, i.e. intradermally, which is known to often create a stronger immune response. Again, the idea isn’t new, I mentioned it in passing a couple of times on MR. But we just weren’t prepared to take these step for COVID. Nevertheless, COVID got these ideas into the public square and now that the pump has been primed we appear to be moving more rapidly on monkeypox.
Addendum: Jonathan Nankivell asked on the prediction market, Manifold Markets, ‘whether a 1/5 dose of the monkey pox vaccine would provide at least 50% the protection of the full dose?’ which is now running at a 67% chance. Well worth doing the clinical trial! Especially if we think that the supply of the vaccine will not expand soon.
Democrats opted to seek a new 1 percent tax on corporate stock buybacks, a move that would make up at least some of the revenue that might have lost as a result of the [Sinema-driven] changes.
Here is further detail. Something has to be taxed, and I don’t pretend to have a comprehensive ranking of tax options from best to worst. I can’t tell you where this might rank on the list. I can however tell you these three things:
1. This is flat out a new tax on capital, akin to a tax on dividends.
2. Are you worried about corporations being too big and monopolistic? This makes it harder for them to shrink! Think of it also as a tax on the reallocation of capital to new and growing endeavors.
3. The real reason this is being proposed is because so many Democratic and left-leaning public intellectuals have written “flat out wrong, doesn’t matter what your partisan stance is” pieces on stock buybacks.
And there you go.