Results for “Larry Summers”
194 found

Elsewhere

1. Top-down cosmology, from Stephen Hawking: "Out of this profusion of beginnings, the vast majority withered away without leaving any real imprint on the Universe we know today. Only a tiny fraction of them blended to make the current cosmos, Hawking and Hertog claim."  Hat tip to Jason Kottke.

2. France yields on iTunes, sort of.

3. A listing of libertarian professors; apparently I still make the grade.

4. Bryan Caplan doubts himself.  Beware the intelligent argument, it may seduce you.

5. "People are going to be having sex with robots within five years."

6. Larry Summers offers investment advice: poor countries should buy fewer U.S. Treasury securities and more equities.

The lies of (some) economists

Let’s start with five:

1. Believe in comparative statics, the income effects will wash out in the aggregate.  (Larry Summers once taught me: "Economics is a theory of substitution effects but we live in a world of income effects.")

2. The model predicts well, don’t worry about the assumptions.  (As Paul Samuelson pointed out, don’t false assumptions, by their nature, involve a very large number of (sometimes implicit) false predictions?)

3. People may make mistakes when the stakes are small, but as they become more decisive over larger prizes, the irrationality goes away.  (Name any major politician or how about Tom Cruise on Oprah?)

4. IS-LM models make sense.

5. There are many firms in the sector, they must be price-takers.  (Does demand go to zero when your local Chinese restaurant raises prices by a penny?  Or for that matter by a dollar?)

Do you wish to suggest other lies in the comments?

Here is Guy Kawasaki with The Top Ten Lies of EngineersThe Top Ten Lies of EntrepreneursThe Top Ten Lies of Venture Capitalists.  Thanks to Chris F. Masse for the idea and the pointer to Kawasaki.

Reserve Reverse?

Around the world, reserves of US dollars and Treasury securities have more than doubled over the past 5 years.  It’s nice for us when we get to buy goods and pay in paper but what will happen when we face reserve reverse?  And why, asks Eduardo Porter, do poor countries continue to fund our consumption?

The amount that poor countries are giving up by holding low yield Treasuries is not inconsiderable.  Larry Summers calculates that India has reserves in excess of those required for prudent insurance in the realm of 100 billion dollars – if invested in higher paying assets those reserves could raise Indian GDP by 1-1.5%, more than double the amount that India spends on health care.

Interesting links

1. Creativity in the fashion industry might be a more general model for the entertainment industry.  But let us not forget differing levels of fixed and capital costs.

2. People in small, tribal societies have the most violence in their dreams.

3. Richard Epstein’s new book.

4. Markets in Everything, this time Hasidic reggae.

5. "Brincos" are special sneakers, equipped with secret storage compartments, for illegal aliens to cross the border.  Now they are hip.

6. Matt Yglesias on the bureaucratic infighting behind the resignation of Larry Summers.  Here is more.

7. Quantum computers that work even without running.

Exporting Pollution?

Long before Larry Summers shocked the elite by suggesting that men and women might be different he signed on to a World Bank memo noting:

"I think the economic logic behind dumping a load of toxic waste in the
lowest wage country is impeccable and we should face up to it."

A number of people suggested that the US was doing just this as lower tariff barriers made it easier to export dirty manufacturing industries and import the goods.  An NBER paper, however, finds no evidence for this effect.  Quoting from the NBER Digest:

Imports overall grew by 318 percent during the period. But according to World Bank data that characterizes industries by their pollution intensity, imports of goods manufactured in highly polluting processes grew at a much slower rate. In other words, just as the U.S. manufacturing sector was growing while simultaneously shifting toward clean industries, the same thing was happening to our imports: they were rising, but the percentage of goods coming from polluting industries was going down. "The cleaner U.S. manufacturing composition is not offset by dirtier imports," the authors write. "Rather, the composition of imports has also become cleaner."

One reason pollution hasn’t been exported may be that the dirtier (older) industries have more political power and have resisted tariff reductions.  The authors find, however, that even if one eliminated all tariffs on manufactured goods pollution would still not be exported.

It’s not that this wouldn’t be a good idea, it’s just that it so happens that poor countries don’t have a comparative advantage in producing the goods that require a lot of pollution.  Of course, if we tax pollution in the United States at higher levels it will make more sense to export it – an interesting dilemma.

Does capital taxation hurt an economy?

Following my Econoblog debate with Max Sawicky, Kevin Drum writes:

Basically, I’m on Max’s side: I think taxation of capital should be at roughly the same level as taxation of labor income. However, I believe this mostly for reasons of social justice, and it would certainly be handy to have some rigorous economic evidence to back up my noneconomic instincts on this matter. Something juicy and simple for winning lunchtime debates with conservative friends would be best. Unfortunately, Max punts, saying only, "As you know, empirical research seldom settles arguments."

Let me repeat the chosen comparison: capital taxes vs. gasoline taxes and no subsidies for housing.  That is a no-brainer.  But still you might be interested in the question of capital taxes vs. labor taxes.  Here are some points:

1. Supply-siders writing on capital taxation often make exaggerated claims.  Even if you like their conclusions, beware. 

2. Taxing dividends, corporate income, returns to savings, and capital gains all involve separate albeit related issues.  I am willing to consider zero for the lot.  Of that list, the corporate income tax is probably the biggest mess.  The capital gains tax is the least harmful.  The tax on dividends is the least well understood (in perfect markets theory, the level of dividends should not matter at all).  By the way, if you are worried about noise traders, a transactions tax is a better way to address this problem than a capital gains tax.

3. The U.S. currently lacks exorbitantly high levels of capital taxation.  Joel Slemrod estimates a rate of about fourteen percent, albeit with many complications and qualifications.  N.B.: We lower the rate of tax on capital by engaging in crazy-quilt and distortionary adjustments.  Nonetheless it is incorrect to argue "we have high rates of capital taxation and are doing fine, better than Europe."  Do not confuse real and nominal tax rates.

Take the capital gains tax.  Once you consider bequests and options on loss offsets, the effective rate of tax is arguably no more than five percent.  But it is still set up in a screwy way.  Bruce Bartlett points me to this short piece on real tax burdens on capital.

4. Peter Lindert has good arguments that favorable capital taxation has helped European economies finance their welfare states.

5. Larry Summers did the best empirical work on how abolishing capital income taxation would boost living standards. 

6. Encouraging savings will have a big payoff.  If you tax capital at zero, in the long run you will have much more of it.  This holds in most plausible views of the world.  Max’s examples aside, the supply curve for savings does not generally slope downwards; nor need you write me about various strange counterexamples from Ramsey models.  Sooner or later, more capital will kick in to mean a much higher standard of living.

7. Bruce Bartlett points me to this excellent CBO study.  It shows how much capital is taxed unevenly; one virtue of a zero rate is to eliminate many of those distortions in a simple way.

8. Remember those arguments about how more money doesn’t make you happier?  And we are all in a rat race where we work too hard to win a negative-sum relative status game?  I’ve never bought into them, but it’s funny how they suddenly stop coming from the left once the topic is capital vs. labor taxation.

9. The same excellent Slemrod paper (and he is no right-wing supply-side exaggerator) also suggests that the revenue lost from a zero rate on capital would be small.  N.B.: The references to this paper are the place to start your reading on this whole topic.

10. Kevin Drum’s belief in social justice should not necessarily lead him to look for arguments for taxing capital.  Even if we accept his normative views, there is the all-important question of incidence.  Taxing capital can hurt labor.  If you are truly keen to tax capital, this is a sign of a high time preference rate, not concern for the poor.

11. Some forms of human capital also should receive favorable tax treatment.  Vouchers for primary education and state universities are two examples.  I am also happy — in part for equity reasons — to subsidize human capital acquisition through an Earned Income Tax Credit.

12. What is really the difference between capital and labor?  Is it simply measured elasticities?  The size of each potential tax base?  The greater "future orientation" of capital and the possibility for compound returns?  All of the above?  How much does your answer depend on whether you view capital as a "fund" or as a "collection of capital goods"?

The bottom line: It all depends on the margin.  If your levels of government spending allow you to keep labor rates of taxation below 40 percent, I don’t see comparable gains from lowering tax rates on labor.  If you have equity concerns, express them through other policy instruments.  But if your marginal tax on labor is 65 percent and your tax rate on capital is 15 percent, cut the tax on labor first.

I know it hurts, but all of you non-right-wingers out there should consider a zero rate of taxation on capital.  Comments are open.

Bad Rap

In his Washington Post column Eugene Robinson viciously attacks Larry Summers for his recent comments.

First, is there a pattern here? When Summers arrived at Harvard, one
of his first acts was to dress down one of the university’s best-known
black scholars, Cornel West, for spending too much time on outside
projects and not enough on research. Offended, West decamped to
Princeton University. But Harvard is lousy with peripatetic rock-star
professors. One of Summers’s most vocal defenders is Harvard law school
professor Alan Dershowitz, who found time amid his busy academic
schedule to serve on the O.J. Simpson defense team, for heaven’s sake.
Why start with West? Was he doing anything his white colleagues don’t
do?

Oh, this one is just too easy.  Why yes, Cornel West’s colleagues were not cutting rap albums with Derek "DOA" Allen and Killa Mike.  (“In all modesty, this project constitutes a watershed moment in musical history”).  Nor were they appearing in the movies as wise Councilor West of the last free human city of Zion, or leading a leading a political committee for Al Sharpton’s presidential campaign.  (Sharpton helpfully threatened to sue over the Summers-West donnybrook.)

I’m open to the argument that West is practicing an unorthodox but compelling form of pedagogy.  At the very least he isn’t resting on his laurels but however you slice it the comparison with Dershowitz is bizarre.  Dershowtiz teaches criminal law.  For him to be involved in the "trial of the century" is directly relevant to his work and redounds to Harvard’s advantage.  Who wouldn’t want to study defense law from a master?

Robinson may be offended by Summers’ remarks but his insinuations are unfair and irresponsible.

Why Do Women Succeed, and Fail, in the Arts?

Given the recent brouhaha over Larry Summers, I have posted my 1996 essay "Why Women Succeed, and Fail, in the Arts."  Here is one brief excerpt:

Eleanor Tufts (1974), in her highly regarded book on women artists, presented biographies of 22 of the most prominent female artists in Western history.  Biographical research reveals that of the first 14 painters surveyed, 12 had artist fathers.

Women with artists in the family had opportunities to receive training, critical feedback, artistic materials, and studio space.  Without strong family connections, women had few means of painting at all…Male artists, who had superior resources and superior access to outside training, were not generally sons of artists…most prominent male artists received formal instruction from an art school or a private teacher.  If the development of male artists had been restricted to those who had learned from their families, the artistic record of males would be far poorer than what we observe.

The likelihood of having an artist father, however, declines precisely when training opportunities open up; women then achieve greater success in the nineteenth century art world.  The paper also finds that women have achieved much greater representation in "Naive art," (which does not require formal training), watercolors (which involve lower capital costs), and that women have done far better in painting and photography than in sculpture or architecture (the latter two involve higher capital costs and require more cooperation from other people).  Leading female painters tend to have been childless, although the remarkable Rachel Ruysch had ten kids.  In the textile arts, which are often complements to child-rearing, women have a superior record to that of men.

Read the whole thing; I am arguing that remediable external obstacles have prevented women from achieving close to their maximum potential.  I am not trying to argue there are no intrinsic differences between the sexes.

Do people have cultural rights?

Culture talk is not so very far from the race talk that it would supplant in liberal discourse…

No, that is not Larry Summers.  Kwame Anthony Appiah, a Princeton professor, argues that culture is too often used as a not totally legitimate means of separating in-groups from out-groups.  In his view we should sooner reform cultural identities — encourage more tolerance and polyglot interests — than respect current cultures and cultural views as a matter of legal or moral right.

That is from his new The Ethics of Identity, highly recommended.

Here is an interview with Appiah.  This is one good bit:

Look, farming as a way of life is dying in the United States, but it’s not dying because people are shooting the children of farmers, or abusing them, or denying them food or loans or anything–in fact, we massively subsidize them. It’s just that people don’t want to be farmers. Do I think that it would be a great tragedy if the form of life of a Midwestern farmer disappeared? Well, I don’t want to sound un-American, but no, I don’t.

And the guy isn’t even an economist.

The next Fed chairman?

The popular press has begun to mention Martin Feldstein as a possible successor to Alan Greenspan. The other listed candidates, Stanley Fischer and Larry Summers, probably do not have sufficient “right-wing credentials” to get the job. Feldstein offers some recent thoughts on monetary policy. He also endorsed the Bush tax cuts, arguably a sign that he is angling for the job. Feldstein tends to favor targeted fiscal incentives in lieu of traditional Keynesian remedies. Overall he commands the respect of his peers and has had significant administrative experience in building up the National Bureau of Economic Research. But it is hard to tell what kind of monetary policy he would pursue, and how strong an independent stance he could define, if he held the office.

Monday assorted links

1. Noah Smith on the California Forever Project.

2. Corporations defending DEI.

3. More on ice deposits on Mars? (speculative)

4. Larry speaks the truth about Harvard.

5. “A rich literature explores gender differences between men and women, but an increasing share of the population identifies their gender in some other way. Analyzing data on roughly 10,000 students and 1,500 adults, we find that such gender minorities are less confident and provide less favorable self-evaluations than equally performing men on a math and science test.”  Link here.

6. These two cicada broods will emerge at the same time (NYT).

7. “Dana-Farber Cancer Institute is reviewing more than 50 papers, including work of the hospital’s CEO.” (WSJ)  That is at Harvard.

How young did the person start?

By the time he was in the sixth grade, Larry [Summers] had created a system to calculate the probability that a baseball team would make it to the playoffs in October based on its performance through the Fourth of July.  In 1965 the Philadelphia Bulletin described Summers as the most qualified eleven-year-old oddsmaker in baseball.

That is from the new and very good Jon Hilsenrath book on Janet Yellen.

Tuesday assorted links

1. How to run surveys.

2. German wives listen more to German husbands than vice versa.

3. “Currently, women are 3-15 times more likely to be selected as members of the AAAS and NAS than men with similar publication and citation records.

4. Haiti is truly collapsing.  Yet few people wish to talk about what happens when a nation-state is no longer a viable nation-state.

5. What is going wrong in Principles classes?

6. Part of why I think AGI will prove difficult, namely that human use their whole body to compute.

7. Summers and Biden.

8. Good review of Vesper, a good movie on the big screen.

Monday assorted links

1. Summers on the Fed and whether we can expect inflation to diminish much.  Some points I have not seen him make in earlier presentations.

2. A hypothesis as to why Russia is focusing on Mariupol.

3. Can you beat the football bookmakers?

4. “…we estimate that juvenile detention leads to a 31% decline in the likelihood of graduating high school and a 25% increase in the likelihood of being arrested as an adult.

5. New results on whether NBA referees are racially biased.

6. UCLA zero wage job listing update.  I blame the whole fracas on HR departments, not that UCLA as a school did anything wrong.

The wisdom of Scott Sumner

Meanwhile, young tweeters seem to forget the Great Inflation happened, or perhaps that it was caused by some sort of oil shock. How oil shocks cause double digit NGDP growth has never been explained. Everything we learned about unreliable Phillips Curves and shifting inflation expectations seems to have been forgotten. You simply can’t have too much stimulus.

I suppose their ignorance is understandable. If parents expertly adjust the thermostat to keep the house temperature at 71 to 73 degrees for 20 years, with a 72 degree target, can you blame the kids who grew up in that house for thinking that thermostats don’t have much impact on temps? (Let’s hope Powell knows!)

My views are orthogonal to this intra-Keynesian debate. I don’t think the fiscal stimulus is a good idea, but not because I expect much inflation. The inflation rate will be determined by the Fed. Rather it’s a reckless policy because it will lead to higher tax rates in the future and won’t do much to generate growth beyond Q3. (Deficits do cause higher interest rates, but only slightly higher in a country like the US.)

For 250 years of American history, politicians have held the peacetime budget deficit in check because of fears of either inflation or higher interest rates (or perhaps a loss of confidence in the gold standard.) What would happen if they begin to sniff out that the actual risk is not inflation or much higher interest rates next year, rather the risk is higher taxes in 20 years, after they’ve safely retired? How would they respond to this information?

I fear that we are about to find out.

There is more at the link.  As an aside, I am amazed how much “but the job market recovered so slowly last time” is considered a relevant argument here.