Assorted links


4. What price should a carbon tax be? Show your work.

Does googling count as work?

I think the important part of that request was to show your work. The linked article doesn't show how they come up with the surprisingly round figure of $25 per ton.

I'm considering $25.00 to be a round figure, though some might quibble.

"$25.00" is a bit dishonest, as the linked FAQ doesn't add those last two significant digits.

The reality is, there's a great uncertainty in the social cost of carbon. (Enough so that even the site rounding to the nearest five-dollar mark gives a misleading impression of the level of precision best knowledge suggests we have.) Some portion of this is related to uncertainty in climate models, but the much larger influence is the choice of discount rate.

"Some portion of this is related to uncertainty in climate models, but the much larger influence is the choice of discount rate. "

I'm doubtful it either of those are the reasons that $25 per ton was chosen. Until I see some evidence that the number was actually calculated using some kind of math, I'll continue to believe that someone just made up a number that they liked.

"Seeing the math" doesn't provide any real information here: it's pretty simple to choose which math you want to use after you've decided on the number. If you're ending up higher than you want, choose a different discount rate; if it's ending up lower than you want, pick different climate models. It's certainly possible to come up with some method that gives you that number. Write a big enough check and I'd be happy to do it.

As outsiders, it's impossible to know whether that kind of trial-and-error method was used to figure out which math to use, or if it happened via happenstance. And which is sort of irrelevant: the fact that calculations can have very different outcomes based on different stated assumptions is the big takeaway.

From the link: a recent U.S. federal interagency assessment recommended a value of $25 per ton

So I guess I'd have to find the work of that federal assessment...

Point being, andrew's usual snark was pretty hollow here, it going without saying that there have probably been hundreds of studies on the topic.

'goes without' not 'going'

Neither the number of studies on the topic nor the number of federal agencies who contributed to an estimate constitutes evidence that the correct price is ascertainable. Presumably the unknowability of the price, rather than whether someone has done some "work" of unknown validity, was Andrew''s point.

I don't do snark.

I do happy go lucky humor until politicians fuck up people's lives, then I say fuck them.

Andrew nailed it. Although Sumner is correct that Republicans have widely diverged from a carbon tax without much in the way of a consistent (and public) explanation, carbon needs to be priced correctly (!) in order for a carbon tax to be efficient. So while cap-and-trade is probably better than an equivalently "priced" command-and-control regulatory scheme, absent a correct price, it's probably prudent to do nothing.

You're not arguing for not establishing a price on carbon emissions; you're arguing for continuing to price carbon at $0.00/ton. Given another price on carbon--say, a wildly low estimate of $1/ton--if it's likely that the latter price is closer to the true price, then it's prudent to go with pricing carbon that amount instead of $0/ton.

And even that excludes the possibility that carbon taxes can replace other taxes. Even if the true social cost of carbon were actually $0/ton, it would make economic to replace even worse taxes--personal income taxes, payroll taxes, corporate taxes, tariffs--with them.

Well said. Good thread of comments so far...

That's a fair point Zephyrus, but as another commenter on Sumner's blog noted, politics is played for keeps; 1$/ton while probably closer than $0/ton to the real price, isn't being offered as an option.

The real option should be to simply replace the corporate income tax with a carbon tax that will bring in approximately equal amounts of revenue. That's the only way I see a carbon tax happening at this point, and hopefully Democrats get to the point where they realize sacrificing that totem for a real policy gain is worth it.

I challenge the validity of even the $1/ton price.

Let's assume for the sake of argument that the true cost of carbon is much higher than $1/ton. Still, the tax has to be justified on a cost/benefit basis. It is not the total cost of CO2 emissions but the benefit of a certain reduction in emissions that matters for the price. The benefit of emission reduction is surely not linear. Hypothetically, imagine that a 50% emissions reduction reverses the warming trend, bringing huge benefits, while a 5% emissions reduction brings little to no benefit. With an assumption like that, a $1/ton carbon tax is unlikely to be beneficial.

You really do have to show your work. A $1/ton tax may be worse than $0/ton and also worse than $25/ton. It all depends on the underlying relationships between CO2 emissions, warming, and the economy. Without knowing these, there is no way of knowing whether any price is doing good or harm.

You're leaving out the second half of any realistic carbon tax scenario: that other taxes -- corporate, income, capital gains, sales, whatever -- will be reduced. There are some sizeable efficiency gains there. To continue to tax good activities (people working, firms selling stuff) and to continue to leave bad activities (adding to carbon in the atmosphere) untaxed is not an efficient policy.

A carbon tax with no offsetting cuts in other taxes has zero chance politically. A carbon tax with tax cuts isn't looking highly likely at the moment either -- the Republicans would instantly kill any such proposal from a Democratic president. But if a Republican president made such a proposal, there might be a chance.

This is not a magic bullet (and I would dispute that Republicans are blocking it).

Utilities are the top carbon producer, then transport, then corporations. This illustrates that our entire standard of living is tied to this thing that so far has no observable costs.

If you price it wrong you may not collect any net taxes at all.

@mkt, that is an argument about political calculus rather than the merits of the carbon tax itself. Yes, I could imagine a combined package including a carbon tax that I would support--politics is always about messy compromise. But what is being discussed here is whether the carbon tax itself is a good idea.

As for "continu[ing] to leave bad activities...untaxed" being bad, if you make that argument apart from evidence that the tax is a net benefit, you are simply making a moral argument. Is there a moral imperative to punish carbon emission, even if the punishment might not do anyone any good?

Animals, dead things, forest fires, volcanoes, etc., have been producing carbon dioxide for over 4 billion years without turning Earth into Venus. Life on earth would be impossible without CO2, so the carbon that imposes a cost that theoretically should be paid is extraordinary or excess in some amount. What is that amount?

If we are able to calculate it to that degree, then we can just target something and make it illegal, like we do murder or dumping raw sewage in rivers. Say, banning SUV's, or telling economists to use video-conferencing instead of burning kerosene to fly to Bolivia.

That we're talking about a tax that, as always, consumers and not producers will actually pay suggests this is not really about eliminating "excess" carbon.

The carbon tax should be whatever price best achieves the goals. If the goal is to reduce carbon emissions by X, start with a wild guess and iterate until the price reduces them by X. Probably wise to start small and measure the effects.

If the goal were to decrease the American standard of living to somewhere nearer to the median SOL of the Global South, what should the price be? Or, who's goals should we be achieving?

Has a dual mandate ever been a problem before?

I caught my error. The reason iterating won't work is because the market will respond not to today's tax but to the expectations of tomorrow's tax. So we need to manage the tax expectations with a prediction market. A prediction market on next year's carbon tax would also give us a much better guess of what price the tax should be from the get go.

We don't know what carbon emissions should be.

This would not prevent iteration from working, because by raising today's tax you can also raise expectations for future taxes.

1. A little context: Sumner says that conservatives are being stupid, more or less with AGW "science."
My retort is that democrats don't care about the science, they just care about the issue as political football.

Thus, they are extremely cavalier about the price of carbon if they ever even get past the demagoguing conservatives as anti-science purely for partisan political objectives.

Even Sumner falls for this because he believes the democrats. But most conservatives do agree that AGW is a matter of degrees and the degree is the important part!

Here is why if you really cared about the issue you would NOT be cavalier about the actual important part. Total factor productivity (the black box of growth, progress, quality of life, and everything) is correlated to energy use efficiency. Except, that is not the efficiency you are thinking. It is the efficiency of getting the stuff used. Thus, the energy sectors throw off a lot of positive externalities. You might think you are internalizing by foisting all the taxes onto this sector, but what you might be doing is killing the golden goose if you get the price wrong. And nobody knows the right price. So, a lot of conservatives are rightly concerned with the cavalier treatment of "the science" which is only a very minor part of the actual science, and only used to paint conservatives as anti-science.

I suppose my "most conservatives" is speculative. But the issue certainly isn't about whether you accept appeal to authority from people who don't even understand their own math models.

That is not a knock on "scientists." Scientists don't understand what they are doing. That is why they are doing it.

OK. Can we start with $5 a ton and see how it goes?

As long as the money goes to me, I'm all for it. Otherwise, you need to show me some math.

No can do. What say I throw in an offsetting cut in the corporate tax rate, as some clever commenter upthread proposed?

Yes, that could quite possibly get my agreement. As long as 100% of the Carbon tax is used for an across the board corporate tax rate cut.

The carbon tax should be combined with a payout for removal of co2 from the air. I would start the co2 tax about 1 penny per pound ($.19 per gallon of gasoline for example) and payout 80% for gallon removed from the air. Then slowly raise by $.005 per pound per year until equilibrium is reached.

I should have said: Then slowly raise or lower by $.005 per pound per year until equilibrium is reached.

4. This an example of the anti-intellectualism of modern day liberalism and the more radical factions of conservatism. The GOP needs to stop fearing the fed, high tech immigration and deficits and return to the successful pro-growth,pro-innovation economic policies of Regan and Bush. The good news is neoconservatism cane make a comeback

We are all Socialists now.

I agree that Putin's popularity is in many ways consistent with Russian expectations of a national leader. Mostly, reading some literature and history might lead to similar conclusions. Strong influence of state media probably doesn't hurt either.

Existing market dynamics are almost certainly not conducive to comparatively high rates of growth and development, however.

"I'm claiming that the left and right are moving ever further apart, taking ever more extreme views, without good reasons."

I'm sure Sumner has read Hanson's thesis that politics isn't about policy. The question is why people are more interested in signaling that they have extreme positions these days. How about because of increasing status anxiety in the U.S.? Sumner says (elsewhere and often) he isn't concerned about the erosion of the middle class in America, but that erosion may be the root cause of why the left and right are moving ever further apart without good reason. There may also be other reasons for increasing status anxiety.

Both sides are saying what voters want to hear, regardless if it's good economic policy. But we're also seeing a convergence in left/right policy in opposition to high-tech immigration and globalization . Both sides are united against this caricature of the evil capitalist. Invocations of class warfare and scapegoating is common during these supposedly hard economic times.

Maybe I'm just not looking in the right places, and sorry if you think I'm making you do a bunch of useless work, but could you point to me to an sample mainstream source of each side arguing against high-tech immigration?

Don't hold your breath, he can't. Also, I can't recall ever seeing 'ummm' reply to anyone here.

For starters, there are some negative (and positive) takes on H1B Visas from the left:

It isn't hard to come up with at least one or two powerful groups that are opposed to high-tech immigration, although Ummm's claim is probably stretching the facts.

The left doesn't argue against high tech immigration because they don't have to. The existing law is on their side.

I would bet I could find someone on the left accusing someone arguing for high tech immigration of being elitist.

Also, if he weren't nearing retirement and rather had a wife who he had to keep explaining why things were not going to be like they were for her dad/family he might be a little more concerned.

And what if the rest of the world screws the pooch with all the capital? And what if all the immigrants end up way down the Maslow scale from thinking clearly about monetary policy? What if you knew (or just had a really strong feeling because, well, when have they let you down before?) the left was on the "science" of global warming like a pit bull on a chew toy so that they never have to get to the actual nuts and bolts of damaging the economy, trade, the world, and everything (see above)? What if The Fed sure didn't seem to be acting like they think money is neutral?

I probably agree with him in principal, but some of the examples are not that trivial.

Sumner's view, which is correct, is that the death of the American middle class has been wildly exaggerated.

The death may be wildly exaggerated, but it is perceptions and expectations that matter. The stock market bubble followed by the housing bubble seems a good indication that most people's expectations about where they thought they would be now were high, maybe irrationally high. As Tyler likes to say: "We weren't as rich as we thought we were." Retired people have less money for retirement than they thought they would, working people are earning less than they thought they would, a lot of younger people got later starts to their careers than they expected. If expectations had been lower, people would likely be less anxious about where they are now, but we are at a place in history where a lot of the population has experienced a lot of financial disappointment. Meanwhile, everyone is aware of how rich some people are getting, while the rich are aware of how envious others are of them. Add to the stew rapid cultural change: the rise of women and gays, the end of men, and racial demographic change and you have a pretty good recipe for a society with a lot of status anxiety. One way to respond to status anxiety is to associate yourself with a New Group: you can identify as an Atheist or Feminist with a progressive agenda or a Tea Partier or a Race Realist or Libertarian. Doing any of those things will signal to the world that you are Doing Something about things and it will signal to yourself that you aren't taking your status anxiety lying down.

Well said.

Gawd, is the whole century gonna be like this?

I'm not interested in catering to erroneous perceptions and unrealistic expectations or the universal human tendency to grouse, or hitching my wagon to some dumb group of sloganeers.

The one thing in there that really elicits my sympathy is the cohorts that entered the labor market in 2008-2010 and may see their lifetime incomes impaired through no fault of their own.

As for the rest, it's the richest country on Earth bellyaching its way through life. Depressing.

Also well said.

"I’m not interested in catering to erroneous perceptions and unrealistic expectations"

Maybe you aren't but politicians and pundits are.

some blog commenters too, for reasons I cannot fathom.

"Sumner’s view, which is correct, is that the death of the American middle class has been wildly exaggerated. ... As for the rest, it’s the richest country on Earth bellyaching its way through life. Depressing. "

For the most part, I tend to agree with your sentiment, but the one set of numbers that gives me pause, is the projected SS and Medicare deficits. The deficit numbers in those cases are large enough to significantly effect a large percentage of the populations future. At the minimum, in order to balance the books without a drastic change in taxes or direct benefits, the US would need a substantial raise in retirement age.

Granted, a raise in retirement age from 67 to 71 is certainly a classic example of a First World problem, but none the less it's a politically volatile problem

"some blog commenters too, for reasons I cannot fathom."

It's unclear whether you disagree with my comments or merely find them disagreeable.


How exaggerated does something have to be? One theory on the current recession/depression is we weren't as rich as we thought we were, thus we financed the expected lifestyle unsustainably, and by paying China to take our factories.

And my guess is we are only half way through the depression, and all tolled it will be a half century or more since the wage stagnation circa 1972.

If so, how bad does it need to be before we worry?

By the way, I'm on China's side. But China isn't catching up at the expense of our privilege.

They held the world back for nearly a century in favor of some cockamamie ideology and now they are disrupting the world as they undo that damage.

A little perspective. per capita gdp in the USA in 1929 was $7,166. In 1933, it was $5,133!

In 1972, its was $19,195. In 2008, it was $39,791.

OK, these series don't overlap so much, but here's a recent picture that shows 2008 per capita gdp of $45,431 and 2010 $43,234.

Bad recession? Yup. Depression? Nope.

There is something about the people who intentionally stir up as much status anxiety as they can by playing their (sexual orientation, gender, race, income, wealth, religious) inequality records on repeat, informing us that we have to Do Something about status anxiety that seems slightly in bad faith. I have an idea - but you'd never go for it.

180. I'm a child of the 80s, small town non religious midwesterner (plains, not rustbelt) and the world is completely different than I was expecting/told it was going to be as i was growing up. If it is a mindscrew for me, its a bigger one for my parents and my grandparents. The rapid cultural changes are surreal and disturbing. I've noticed a lot of people on the left don't like my white male cis privilege so it was pretty easy to choose which side I identify with.


> Granted, a raise in retirement age from 67 to 71 is certainly a classic example of a First World problem, but none the less it’s a politically volatile problem

In the U.S. that's very close to cancelling out 50 year's worth of life expectency gains. (You need to go back to the 60's for when life expectency
among the elderly was 4 years lower than today). I guess that still makes it a first-world problem, but shouldn't we still complain? Our (first-world)
society was supposed to have advanced and got richer in the last 50 years. Some economist told me so.

yes bxg, we may have reached the low hanging fruit long ago and now its being taken away despite extreme productivity gains through technology and efficiency. Something is massively wrong.

I don't expect sympathy from others. I also don't expect progress from them.

"In the U.S. that’s very close to cancelling out 50 year’s worth of life expectency gains. (You need to go back to the 60′s for when life expectency among the elderly was 4 years lower than today). "

No, those are incorrect numbers. Life expectancy in 1988 was 4 years less than today. Life expectancy in 1960 was 9 years less than today. And life expectancy in the 1930's (when the 65 retirement age was enacted) was less than the retirement age.

Life Expectancy: 2012 78.8 1988 74.8 1960 69.8


Or framed another way, the US retirement age was adjusted to be 67 in 1983. Since that time life expectancy has gone up roughly 4.5 years. So increasing retirement age by 4 years would still be a net gain of 1/2 a year of retirement for society.


FYI, just because life expectancy goes up by four years doesn't mean you have to work four more years. An extra year or two of saving and not drawing down retirement assets can easily finance an extra four years at the end of life.

"FYI, just because life expectancy goes up by four years doesn’t mean you have to work four more years."

Absolutely. But I was stating the worst case with my reply to bxg's comment.

Why are you trying so hard to signal your dislike for income inequality, dirk?

Because it's a contrarian position here.

I could try to sound like just another MR commenter but then I'd sound like Just Another MR Commenter.

I was just teasing you a bit for signaling within your explanation about why people are signaling.

How much of the polarization is due to being without having a single adversary like the Russian in the Cold War or Islamofascist in 2002 - 2004? (And yes there are groups both those.) This probably controled the Party Ideology for most of the post-War years and starting in 1990ish the ideology starting dominating the politics.

Not much, I imagine. There are other historical eras of constructive political consensus even in the absence of a common enemy (the domestic accomplishments of the Roosevelt administration are a prominent example).

No common enemy in the 1930s? How about mass starvation?

I was actually referring to the Theodore Roosevelt administration.

OK, well we united to fight those vicious Spaniards!

Yes I know that was was before Teddy was President.

4. It's Fukuyama's recent essays and his soon to be published book on political decay that prompted Sumner's post about intellectual decay. Sometimes circumstances change, and they often do. It's the inability to respond to change that has frustrated Fukuyama. It's not clear (to me) that Sumner appreciates that circumstances have changed and, with them, the better economic policy. It's not surprising that the rise in inequality has sharpened political differences; what's surprising is that it hasn't sharpened intellectual views - it's hardened them. I'm all for inequality, until it contributes to financial, economic, and political instability. It's as though we are all riding on the Titanic and the iceberg spotters are wearing blinders.

By arguing that inequality causes instability, is it the inequality or the argument causing the instability?

It might be that the iceberg spotters got the memo to "look for icebergs" and got it exactly backwards.

Is there a reasonable argument against inequality causing (or at least being a major contributory factor) instability? Seems almost common sense.

It's not at all obvious to me. Perhaps inequality due to exploitation breeds instability. Perhaps inequality plus widespread poverty breeds instability.

We don't have either of those.

Inequality in a land of mass affluence is a new thing.

I think msgkings highlights Sumner's point: one's own (contentious) political views are 'common sense'.

No, honestly, I'm pretty centrist on that and most issues. In good faith asking...doesn't it stand to reason that if inequality gets too out of hand the peasants revolt? Not because they 'should' but because envy is a thing.

Brian makes a good point, if the peasants are unequal but living decently, maybe it doesn't correlate. Maybe they have to be in dire straits to take it to the rich, and in the US at least they are not. Just putting it out there.

I agree with your second sentence. I find it hard to believe inequality per se increases political instability because if my wealth increased ten fold while Bill Gate's increased one hundred fold, I would still be ten times wealthier than I was. My life could only be worse if envy provided more disutility than wealth provided utility. In my view, that is why the income inequality debate is slightly amusing - an American earning $10/hour is better off than the majority of humans on earth and the vast majority of humans that have ever lived. Why should we shed tears and blood for them?

Because we expect better than "doing better than the global average." We used to be on top man. What did we do? We let the elites screw us for their own benefit under the guise of free trade, globalism, and equality. It isn't enough that the average schlub lives in materially better conditions than King George, its the regret that we could have done so much more with what we had.

We can type all we want. We don't need to extrapolate peoples' stated views. I do it too.

My point is simply that we hear a lot about how inequality will cause social unrest. We don't hear a lot about how to prevent social unrest. This could be the more important thing since no one collectively wants the inequality and it may be unavoidable.

Thomas, I see the Bill Gates x 100, me x 10 argument (or some version of it) a bunch, but isn't the real issue Bill Gates x 100, me holding steady? It is still true that I'm not *worse* off than I was before, but what if I'm not any better off, but others are? As someone said, envy is a thing.

Urso, that may be what the situation actually is, but I was responding to the argument that inequality is inherently destabilizing. My example addresses that claim.

Actually I think common sense suggests otherwise. How many people do you know, outside of those atypical Americans who are consumed by politics, really care that much how much more money Bill Gates, Warren Buffet or any other member of the 0.1% have than them? In my experience, next to none. Hell, when Steve Jobs died people openly grieved. In my experience people resent others who are perceived to have gotten ahead due to unfair advantages and the sense of a rigged game -- hence the anger at Wall Streeters, who failed but got bailed out. Those who profit handsomely from their provision of useful goods and services see very little resentment directed their way, and in the case of Steve Jobs and others even see adulation. Where people feel envy due to inequality I find that it usually is directed not towards the uber-rich, but towards those people in their own social circles -- the cousin, the neighbor, the co-worker, etc.

Beyond theory/common sense, we can also look at the historical record. Growing inequality in the US correlates with a decline in crime and, one can plausibly argue, more civilized politics. It wasn't so long ago that political disagreements in this country were expressed through the barrel of a gun: JFK, RFK, MLK, Reagan, Medgar Evers, George Wallace all readily come to mind. Now I'm not saying that rising inequality has caused greater civility, but it seems hard to make the case that it has led to boiling resentment that is ready to spill over into the streets either.

The overwhelming majority of Americans have seen their standard of living steadily rise over recent decades (if you don't think so, ask yourself if the average American would either favor or be indifferent to entering a time machine to take them back to 1980) -- this isn't the stuff that revolutions are made of.

We're also prospering on top a pile of debt and easy money. If that ends we're heading into some rocky waters.

The reason not to worry is that the rest of the world is way worse.

Or maybe that is the reason to worry.

Do I get to keep my memories? If so, then yes I do! Black Monday here I come!

We have a revolution every 2 years. The Founders were geniuses.

hence the anger at Wall Streeters, who failed but got bailed out.

Just to point out yet again, the money pukes were injected into Fannie Mae and Freddie Mac - "government sponsored enterprises" politically well connected and headquartered in Washington (K Street, not Wall Street), and into General Motors etc (Detroit, not Wall Street, and done to benefit the Auto Workers union). The banks and securities firms who received TARP financing paid dividends on the preferred stock issued and have re-purchased more than 90% of it to date. Also, some of the recipients (JP Morgan and Wells Fargo) had the money shoved down their throat and one other who received a discrete supplementary deal (Bank of America) was in parlous condition in part because it purchased Merrill Lynch and was threatened by the Federal Reserve and the Treasury when it tried to back out.

The one Wall Street firm on which the public agencies lost money was AIG, an insurance company. Even so, the losses were a fraction of those attending the Fannie Mae and Freddie Mac conservatorship and less than the losses associated with GM. (And, while we are at it, the unit of AIG that was responsible for the losses was headquartered in London and employed very few people).

to unfair advantages and the sense of a rigged game

They might ask themselves why so many politicians seem to get jobs in private equity firms. They might also ask why the right handed distribution in this graph of bimodality should exist.

"The overwhelming majority of Americans have seen their standard of living steadily rise over recent decades (if you don’t think so, ask yourself if the average American would either favor or be indifferent to entering a time machine to take them back to 1980)"

You have rigged the question to get the answer you want. How about asking average, middle-class people who raised families back in the 1980s whether they think they could afford to live in the same neighborhood today and send their children to the same schools while earning $50,000 per year (today's nominal median household income)?

You have rigged the question to get the answer you want. How about asking average, middle-class people who raised families back in the 1980s whether they think they could afford to live in the same neighborhood today and send their children to the same schools while earning $50,000 per year (today’s nominal median household income)?

For those people living outside coastal cities, my guess is that in most cases the answer is yes. Also unclear why your question is more relevant than mine, as it is focused on a narrower segment of the population.

6. To steal from Enrico Fermi's Paradox, if "r > g therefore wealth concentrates", then where are they?

If Piketty's idea is a trend that has been true for the long term*, shouldn't we have seen some of the great concentrationist fortunes accumulate already? I think previous MR chitchat has covered most of the trends that thwart this result, but I'm not sure why the 21st century is expected to be so different from the previous hundreds of years of capitalism.

*it's surely not true in the short term, since the rebuttal reprints Piketty's graph showing that the wealth share of the top 0.1% in the US (and in France) is considerably lower than it was 100 years ago.

Piketty's fundamental thesis is that r > g in a low (productivity) growth environment. That's an important condition that seems to often get overlooked when people discuss Piketty. From this fundamental thesis, Piketty then distinguishes away the 20th century as an historical aberration because of how it coupled (A) massive wealth destruction with (B) spectacular post-war growth, before predicting that the imminent return to a slow-growth environment is leading to new concentrations of wealth.

I'm skeptical of Piketty, but it's hardly a response to ask where all the time travelers are when he pretty explicitly predicts that they won't be able to show up until at least 2030.

#6 - nice rebuttal of Pikety's critics, with a nod to TC in the paper, who points out that capital is being substituted for labor. Paper: "Second of all, beyond the problem of inference from variation in the cross-section of industries or firms, the argument that the Elasticity of Substitution is low lacks plausibility because the trend over the past 40 years is so clearly the opposite."

Your comment would be right if it weren't entirely wrong.

#5 is not even wrong.

I agree with Nicholas Lardy that state-owned enterprises (SOEs) aren't as influential as we might think, but it depends on the sector. The four big banks, for example, are a serious impediment to China's eventual financial liberalization (Shanghai FTZ). SOEs also play an important role in the energy sector with companies like CNOOC, Sinopec, etc... The four big banks also fuel China's large informal financial sector, where crowded out SMEs get (high interest rate) loans. Beside low return on investments, the Chinese Communist Party (CCP), should reform SOEs to tackle corruption within its ranks.

#3) Mostly agree, though my one quibble would be that people haven't had a good opposition platform to rally around largely because those ideas and leaders (read: Navalny) have been pretty much banned from public life the past few years. Who knows, maybe the 2011-2013 protests would have turned into something concrete and viable if Putin had allowed any of it to flourish.

“””Who knows, maybe the 2011-2013 protests would have turned into something concrete - “””

Go look at pictures of those protests and look at the flags and signs, it was the communists, socialist and right wing who made of the vast majority of protesters, not Navalny. True the western press obsessed about Navalny but that happens all the time with them, they go look for people they agree with and make it sound like they are the majority of the protesters. The same happened during the ‘Arab Spring’,

we are romantics :)

5. Disruptive Innovation uber alles !
From Aswath Damodaran's link , referred to by Justin Singer in his article:

"The numbers seem to indicate that Uber is being overpriced by investors who have valued it at $17 billion. Since these investors are presumably sophisticated players, how would I explain their pricing? I will not try, since I did not pay the price, but it is worth remembering that even smart investors can collectively make big mistakes, especially if they lose perspective. The tech world is a cloistered one, where the leading players (venture capitalists, managers, serial entrepreneurs) immerse themselves in minutiae and know and talk to each other (and often only to each other). Not surprisingly, they develop tunnel vision where technology (or at least their version of it) is the answer to every problem, the status quo is both inefficient and easily disrupted and 50 times revenues is cheap! If history is any guide, tech geeks are just as capable of greed and irrational exuberance as bankers are."

The real value of Uber lies in the possibility of it being the de facto standard when driverless cars go mainstream. After that occurs upwards of 50% of Americans will drop the hassle and expense of owning their own vehicle. In such a scenario Uber acts as a monopolistic middle man and will be able to extract huge rents with barely any costs. The value of the firm would easily surpass any of the automakers.

Good point but here is Prof. Damodaran's observation on that from the blog:

" I know that there is talk of Uber becoming a player in a futuristic world of driverless electric cars, but even if that scenario unfolds, I don't see why Google and Tesla would let Uber have anything more than crumbs off the table."

Consider this imaginary line from 1995: ” I know that there is talk of Google becoming a player in a futuristic world where computers are web centric, but even if that scenario unfolds, I don’t see why Microsoft and Apple would let Google have anything more than crumbs off the table.”

At this point Uber has a large amount of name brand recognition and is a major player in the area. It's possible that a lot of the investors think that there is a 25% chance that Uber will be worth 4 times it's current value and a 75% chance it will be worth much less. This would still make the investment worth it.

Yes, it wouldn't be surprising if there's no real monopoly profits in the model.

The papers linked in 5 all talk about there being no technological or other innovation in the taxicab market after partial or full deregulation in various cities in the 1970s. I'm not sure how much necessarily that is connected to the current situation with Uber, Lyft, and others, where there clearly has been technological innovation-- innovation that the regulated taxicab industry itself has failed to lead on. Perhaps if they had led on that innovation, they could have achieved better service while cutting fares (as more efficient dispatch will allow), thus preventing the emergence of competitors.

Regarding 5, I find it interesting that the post and all the linked research apparently completely disregards the existence of gypsy cabs (and dollar vans, and so forth) in cities with medallion systems. Perhaps my experience is biased simply because New York is extreme in its number of medallions (the linked research refers to deregulating cities as having medallions worth up to $10,000 right now, compared to the million dollar medallions in New York), but that seems like a large oversight when talking about the number of cabs, etc.

re #5: I feel like i was tricked into clicking a link to gawker!

"This is why drivers tend to push for medallion systems: because only by capping the supply of vehicles can full-time drivers be assured a living wage. Market equilibrium in a wholly deregulated taxi industry comes only when the desperate have driven out the good."

I'm guessing the writer doesn't much like any kind of free market.

Ask Uber drivers how they feel about Uber's representations to them, especially those drivers who leased cars, only to later see rates dropped by Uber. But that story isn't getting out with all the gushing coverage of "innovation" and "disruption".

Uber will be the very first company to get rid of drivers and go robocar when that becomes feasible (legally, the tech is already feasible...5 years? 10?). The driver is the biggest deadweight of their business model.

#5. Uber seems to be a yuppified gypsy cab company. At the end of all the regulatory wrangling and lawsuits, either everybody has to get a taxi medallion or nobody has to get a taxi medallion. I frankly don't see them winning that battle. Is His Honor, Warren Wilhelm, Jr., going to stand on the steps of City Hall and lecture taxi companies on the superior efficiencies of unfettered capitalism? And even if he does, then Uber's margins will be no better than anybody else's. It's a pretty fungible service.

Driverless cars operating in urban areas is hard to foresee. There will be a lot of resistance to the required ban on human drivers. And even if that happens then, again, the hardware and programming seem pretty fungible. Uber will be nickel-and-diming with everybody else.

Bon bah ce poste va аtterrir sur mon blog personnel

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