Results for “corporate tax” 239 found
Was it wrong to hack and leak the Panama Papers?
Let’s say a group of criminal defense lawyers kept a database of their confidential conversations with their clients. That would include clients charged with murder, robbery, DUI, drug abuse, and so on. In turn, a hacker would break into that database and post the information from those conversations on Wikileaks. Of course a lot of those conversations would appear to be incriminating because — let’s face it — most of the people who require defense attorneys on criminal charges are in fact guilty. When asked why the hack was committed, the hacker would say “Most of those people are guilty. I want to make sure they do not escape punishment.”
How many of us would approve of that behavior? Keep in mind the hacker is spreading the information not only to prosecutors but to the entire world, and outside of any process sanctioned by the rule of law. The hacker is not backed by the serving of any criminal charges or judge-served warrants.
Yet somehow many of us approve when the victims are wealthy and higher status, as is the case with the Panama Papers. Furthermore most of those individuals probably did nothing illegal, but rather they were trying to minimize their tax burden through (mostly) legal shell corporations. Admittedly, very often the underlying tax laws should be changed, just as we should repeal the deduction for mortgage interest too. But in the meantime we are not justified in stealing information about those people, even if some of them are evil and powerful, as is indeed the case for homeowners too.
Once again, politics isn’t about policy, it is about which groups should rise and fall in relative status. And many people believe the wealthy should fall in status, and so they will entertain the morality of all crimes and threats against them. These revelations will of course lead to some subsequent cases of blackmail, against Chinese officials for one group.
I had tweeted “Are your views on privacy and #PanamaPapers consistent? Just asking…” and my goodness what a response, positive and negative. Most interesting of all, many people had never pondered the question before. Somehow “good things” such as “privacy” and “transparency” cannot stand in such conflict because all good things, like all bad things, must come together.
Here is a good Kaddim Shubber discussion on FT Alphaville.
Here is Veronique de Rugy on the Panama Papers.
Here is Ray Lopez on the same:
1. There’s a tension between US and foreign law firms and FATCA (United States Foreign Account Tax Compliance Act (FATCA) has the objective of reducing tax evasion by American taxpayers with foreign accounts). This is because law firms are exempt from reporting on clients past crimes, not future crimes, however, money laundering is considered a future crime. When a known criminal is setting up an offshore account with the help of a law firm, is the law firm an accessory to money laundering or not? The better view is they are not: it’s up to the client to report any offshore account to the government, and not the law firm’s responsibility. That’s the better view, but see point #2, which rebuts this.
2. There’s a tension between client confidentiality and tax treaties. Check this out: https://www.lawsociety.org.nz/practice-resources/practice-briefings/FATCA-and-New-Zealand-Law-Firms.pdf In New Zealand, which is probably representative of others, a passive non-financial foreign entity–which almost always will be a law firm trust account holding money from a client–has a duty under FATCA to report on the client to the US government (“know your customer” is the buzz phrase banks use, which as you know already are required to ‘spy’ on their customers).
Both points 1, 2 are relevant for the conduct of the law firm of Mossack Fonseca. Except for the alleged destruction of evidence by them, I don’t see them doing anything that bad (by law firm standards; remember, any law firm of decent size has former crooks as clients, and for a firm in Panama I would say that’s not the exception but the rule!)
From the comments, here is Kai:
I practice law in cross-border banking and finance in China. I am puzzled by how non-professionals in this field view offshore jurisdictions as categorically related to criminal activity, embezzlement and corruption, etc.
Almost all cross-border transactions involve offshore jurisdictions at some level. For instance most companies listed on the HK stock exchange are incorporated in the Cayman Islands. Anything to do with Bermuda, Cayman, BVI, etc. in cross border transactions is very, very mundane.
According to the papers, Xi Jinping has relatives who are owners of offshore companies. How is that any sort of evidence of wrongdoing by them (much less of Xi Jinping)? I doubt anyone can provide an intelligent answer.
Maybe yes, maybe no, but I don’t see that the people rendering judgment know more about it than he does.
Trump, the Republican Party, and the logic of bailouts
As the possible nomination of Trump approaches, many Republicans are worried about the Party crashing. That could occur through convention warfare, a Trump nomination and an electoral disaster, or a non-Trump nomination and an electoral disaster. Maybe all of the above!
And what is wrong with the Party crashing? (Please, dear reader, consider this question from a logistic rather than a partisan point of view.) The Party contains information. Relationships. Procedures and processes and established patterns of cooperation. A well-known brand name. Organizational capital is lost if those connections are blown up and then go away. It would cost a good deal to rebuild them, whether through a new third party or through a reconstitution of the Republican Party in some new guise.
Large blocs of voters are in essence needed to help cover those fixed costs. If you tell too many voters to go away, however that might be done, the fixed costs can’t be paid the next time around and a new organization must be created, backed by some other, partially-overlapping group of voters. So during “bad times” Republicans still may wish to keep the Republican Party afloat, especially if they believe it is a viable concern over the longer haul.
This, by the way, is the same logic behind bank and corporate bailouts If the afflicted company is allowed to go under, a lot of organizational capital will be lost in what otherwise might be viable enterprises. (I am not suggesting those bailouts have zero cost, or are necessarily good, only that there is some associated benefit.)
So if you are a Republican, and considering supporting Donald Trump “for the sake of the party.” you are in essence considering whether a bailout of the Party is a good idea. Except instead of bailing out a private company with your taxes, or guaranteed credit, you are bailing out a political party with your …[fill in the blank]…
I believe that many of the people who usually claim to oppose bailouts will favor this one.
I have high hopes for Stripe Atlas
Stripe Atlas [is] a new product the company unveiled this week at Mobile World Congress in Barcelona. It aims to make it easier for entrepreneurs to set up small businesses in the United States. If all goes according to Stripe’s plan, Atlas could let start-up founders sidestep some of the bureaucratic hurdles that often hamper building a new business.
Determining eligibility requires little more than filling out a form. After that, Stripe will incorporate an entrepreneur’s company as a business entity in Delaware, and provide the entrepreneur with a United States bank account and Stripe merchant account to accept payments globally.
The target audience is all of the entrepreneurs outside the United States who want access to the country’s well-developed banking infrastructure and business services. Stripe is particularly interested in attracting entrepreneurs from Africa, Latin America, the Middle East and parts of Asia, among other regions.
…Eligible entrepreneurs will also be offered access to basic tax and legal consulting and business services from partners like PricewaterhouseCoopers, and will receive free credit to run their online business on the Amazon Web Services hosting platform.
Atlas is to begin on Wednesday in an invitation-only beta test; entrepreneurs can apply for the program through Stripe or one of the 50-plus start-up accelerator programs that the company has teamed up with globally. The beta program’s cost is $500.
Here is the Mike Isaac NYT article.
On what grounds will Keynesians reject Marco Rubio’s fiscal policy?
I am myself of the belief that we are fairly close to full employment, with full employment likely on the way, and our growth problems stem from the supply-side, not from the demand-side in the Keynesian sense, at least not circa 2015. For those reasons, I am skeptical of any plan to cut taxes without offsetting spending cuts or some other kind of offsetting fiscal adjustment (how about selling off some federal land?).
But on what grounds should the prevailing Keynesian approach reject the fiscal policies of Marco Rubio? In the context of discussing Rubio, Paul Krugman writes:
So now we have candidates proposing “wildly unaffordable” tax cuts.
But what’s wrong with that? In most demand-side liquidity trap and secular stagnation models, there is a shortage of safe assets and that is a major problem which requires remedy. Rubio’s plan, as I understand it, would raise the budget deficit and by a lot because it is unlikely to prove self-financing in the Lafferian sense. By current Keynesian views, that should be a feature not a bug.
You might rather the deficit be increased by cutting taxes for the middle class, or by building productive infrastructure, but still the Rubio plan would be better than just sitting tight and doing nothing.
Furthermore the wealthy will take their new surplus of funds and invest most of it and maybe spend some of it too. That boosts aggregate demand, and…if you think the multiplier still is high…well, you can see where this is heading.
Are we all ready to turn “C + I + G” into a mere “C + G”? I hope not.
And while the Fed is legally constrained from buying corporate bonds and other non-zero-ROR assets, wealthy people most certainly are not, so they could spend their Rubio tax cuts on equity, venture capital, and the like. In essence we would be using wealthy people, and fiscal policy, to make asset swaps which the central bank cannot. So liquidity trap arguments should not make this tax cut impotent and arguably they should necessitate it all the more. You might even (heaven forbid) wish to target the tax cut toward the wealthy, if they are the most likely to take cash and buy relatively risky assets with it. Right?
So by the standards of the current New Old Keynesianism, what exactly is wrong with Marco Rubio’s fiscal plan? Except that some other plan might be better yet. Inquiring minds wish to know.
Marketing Pork
Here is a great little story by Danny Vinik from Politico’s The Agenda on how so-called marketing boards are surreptitiously turned into lobbying boards.
Industries with a large number of producers find it difficult to organize collectively because of the free rider problem. Mostly, that’s a good thing because it prevents cartels. Collective action, however, could also be used to perform research or marketing that’s good for the industry as a whole but too expensive for any small subset of producers. In theory, therefore, some type of collective action could be beneficial and in agriculture governments have created checkoff programs which force producers to pay a tax to fund collective goods.
Checkoffs exist for dairy farmers, mushroom producers, and even popcorn processors. Critics say they violate economic freedom and distort the market; big corporate farmers, they allege, easily find ways to influence the boards and siphon the money off to push their own causes.
“In one sense, it’s a classic case of the larger producers are the more powerful political forces within these organizations,” said Dan Glickman, the Agriculture Secretary at the end of the Clinton administration who largely supports checkoff programs.
For the unhappy hog farmers, the current problem started with the 1985 Pork Law, when Congress set up the National Pork Board and required all farmers to contribute. Today, hog farmers must hand over 40 cents out of every $100 in revenue from pork sales. The board uses the money, totaling nearly $100 million a year, to conduct research and promote the pork industry, but is not allowed to lobby.
But as Adam Smith said “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Quite so. And in this case by creating a National Pork Board the government is providing the meeting hall and paying for the conversation. According to the law, the money from the checkoff program isn’t supposed to go for lobbying but here is where the story gets interesting.
You may recall the slogan, “Pork: The Other White Meat.” The slogan hasn’t been used for years but the National Pork Board still pays $3 million a year every year for the rights. Why would the Pork Board pay millions for an unused slogan? The key is who they are paying. The slogan is owned by National Pork Producers Council. The NPPC is a lobby group and you won’t be surprised to know that it is closely connected with the NPB (having once even shared offices).
…critics say the two groups have never been as separate as the law calls for, and now are essentially colluding through a deal that lets the Pork Board funnel money to the NPCC by assigning an absurdly inflated value to the “other white meat” slogan; the money then goes to promote the NPPC’s lobbying agenda.
A neat trick. The story is also a good object lesson in Mancur Olson’s thesis about how special interest groups grow in power over time, slowly choking off innovation as they cartelize the economy.
Who benefits most from Uber?
The consumers, most of all. But how about amongst the workers? I think you have to slot French taxi drivers under “don’t benefit.” And otherwise? That is the topic of my latest New York Times column for The Upshot:
On the positive side, the so-called sharing economy allows workers to use their time more flexibly. Drivers can earn money without working full time, and without having to wait around at taxi stands for the next passenger. The workers can use their newly acquired spare time for other purposes, including studying for college, teaching themselves programming or simultaneously offering themselves out for different sharing services: If no one wants a ride, go help someone with repairs around the house.
In short, these developments benefit those workers who are willing and able to turn their spare time to productive uses. These workers tend to be self-starters and people who are good at shifting roles quickly. Think of them as disciplined and ambitious task switchers. That describes a lot of people, but of course, it isn’t everybody.
That’s where some of the problems come in. Uber drivers are much more likely to have a college degree than are taxi drivers or chauffeurs, according to the Hall and Krueger study. It found striking differences between the two groups: 48 percent of Uber drivers have a college degree or higher, whereas that figure is only 18 percent for taxi drivers and chauffeurs.
Only some workers benefit when each hour, or each 15-minute gap, is up for sale. One way to put the general principle is this: The more efficient market technologies become, the more important are human capabilities and backgrounds in determining who prospers and who does not.
The piece offers other ideas of interest, including about education. For instance, corporate investments in worker training may decline as the likelihood of freelance work rises. That too favors self-starters, who can learn on their own. Do read the whole thing.
Do government benefits for the poor subsidize large employers?
Adam Ozimek has a very good post on that topic, here is one of his final bits:
…many of these programs, including Medicaid and food stamps, are means-tested. That means as you earn more the programs become less generous, and as a result can generate extremely high marginal tax rates for low-income workers. This will reduce labor supply and create the exact opposite effect that “corporate subsidy” critics claim.
Unfortunately, there is little basis to claim that most public assistance programs benefit employers. This is unfortunate because such subsidies would incentivize firms to hire more low-income workers.
Do read the whole thing.
Assorted links
1. An impressive display of, um…Big Data (pdf), addressing how suppliers discriminate against customers in Singapore. There is also an NBER version, but I don’t see it on their site at this moment.
2. The religion that is Iceland.
3. “…the greatest work of journalism from the nineteenth century.”
4. The Hospital is no Place for a Heart Attack. And few from the EU side like the Greek debt swap idea.
5. Best films of the decade? Winter Sleep should be added to the list immediately, it is Ceylan’s masterpiece. That, along with Uncle Boonmee, should be very close to the top.
7. Timothy Taylor on the new corporate income tax proposals.
Sunday assorted links
1. Infovores.
2. The spiciest noodles in the world?
3. Unlike at Hinds, MRUniversity is open to goats too.
4. New David Autor paper on information technology and job polarization (pdf).
5. I agree with Greg Mankiw about tax reform.
6. The North Pond hermit (good story).
My interview with Ralph Nader
I interviewed him. You will find the full version here, the edited version here. Not surprisingly, I prefer the full version. Here is one excerpt:
TC: If I look back at your career, I see you’ve been fighting various kinds of wars or struggles against a lot of different injustices. If you look back on all those decades, during which time you’ve been right about many things, what do you think is the main thing you’ve been wrong about?
RN: Oh, a lot of things. Nobody goes through these kinds of controversies without making bad predictions. I underestimated the power of corporations to crumble the countervailing force we call government. We always knew corporations like to have their adherents to become elected officials; that has been going on for a long time. But I never foresaw the insinuation of corporatism as a policy in one agency after another in government. Franklin Delano Roosevelt foresaw some of this when he sent a message to Congress when he started the temporary national economic commission to investigate consecrated corporate power. That was in 1938. In his message he said that whenever the government is controlled by private economic power, that’s facism. Now, there isn’t a department or agency in Washington where anyone has more power—over it and in it, through their appointees, and on Congress, through lobbyists and political action committees. Nobody comes close. There’s no organized force that comes close to the daily power to twist government in the favor of Wall Street and corporatism, and to disable government from adequately defending the health, safety and economic well-being of the American people.
TC: Let’s say we look at the U.S. corporate income tax. The rate on paper is 35 percent, which is quite high. When you look at how much they actually pay after various forms of maneuvering or evasion, maybe they pay 17–18 percent, which is more or less in the middle of the pack of OECD nations. So if corporations have so much political power in the United States, why is our corporate income tax still so high?
…Sweden, a country you cited favorably, taxes capital income much more lightly than the United States does—not just on paper but in terms of what’s actually paid.
I also ask him about the Flynn effect, whether America needs a new kind of sports participation, and how much American churches have resisted corruption through corporatization, among a variety of other topics. I tried to avoid the predictable questions.
By the way, you can buy Nader’s new book, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State. I very much enjoyed my preparation for this interview, which involved reading or rereading a bunch of his books and also a few biographies of him.
John Roemer changes his mind on a bunch of things, including socialism
He has a new published paper, in Analyse & Kritik, entitled “Thoughts on Arrangements of Property Rights in Productive Assets,” here is the abstract:
State ownership, worker ownership, and household ownership are the three main forms in which productive assets (firms) can be held. I argue that worker ownership is not wise in economies with high capital-labor rations, for it forces the worker to concentrate all her assets in one firm. I review the coupon economy that I proposed in 1994, and express reservations that it could work: greedy people would be able to circumvent its purpose of preventing the concentration of corporate wealth. Although extremely high corporate salaries are the norm today, I argue these are competitive and market determined, a consequence of the gargantuan size of firms. It would, however, be possible to tax such salaries at high rates, because the labor-supply response would be small. The social-democratic model remains the best one, to date, for producing a relatively egalitarian outcome, and it relies on solidarity, redistribution, and private ownership of firms. Whether such a solidaristic social ethos can develop without a conflagration, such as the second world war, which not only united populations in the war effort, but also wiped out substantial middle-class wealth in Europe — thus engendering the post-war movement toward social insurance — is an open question.
There are some probably gated versions here. He also explains later in the paper that socialism cannot work because a generally solidaristic social ethos will be undermined by a selfish minority, driven by greed, which will turn social institutions to their favor and evolve into a new ruling class. In other words, Hayek’s The Road to Serfdom is not yet obsolete and still holds the power to sway men’s minds.
For the pointer I thank Kevin Vallier.
An “entrance fee” theory of why some real rates of return are persistently low
Some portion of the negative real returns on U.S. government securities can be explained by risk premia, but yet many other indicators of risk are these days not so extreme. Times appear pretty stable, if not exactly what we had hoped for. So how else might we fit these negative returns into a theory? Here is one attempt, by me:
1. Imagine that financial institutions and traders have to hold large quantities of T-Bills (and similar assets) to participate in financial markets. That may be to satisfy collateral requirements, to meet government regulations, to be credible in private market transactions, and so on.
2. The demand for these assets is now so high and so persistent that the assets have persistently low nominal returns and often negative real returns.
3. The holders of these assets do not however receive negative returns on their portfolio as a whole, when deciding to hold these T-Bills. Holding the T-Bills is like paying an entry fee into financial markets. And once they are in financial markets of the right kind, these market players can earn high returns by possessing special trading technologies (the technology may vary across market participants, but think HFT, hedge funds, prop trading, employing quants, and so on).
4. Let’s say you are not a major financial institution. Then you really will earn negative returns on your safe saving. You might try holding equities, but a) you are not wealthy and thus you are fairly risk averse, and b) as a small player you do not have access to these special trading technologies and indeed you must trade against those who do. You thus will often earn negative or low returns on your portfolio no matter what.
5. The implied prediction is that differential rates of wealth accumulation will be a driver of inequality over time. This seems to be the case.
6. This equilibrium is self-reinforcing. The crumminess of T-Bill returns drives some individuals into trading against those with special trading technologies, even though that means they do not get a totally fair deal. The ability to trade against these “suckers” increases the value of paying the entrance fee into the higher realms of financial markets and thus increases the demand for T-Bills and keeps their rate of return low.
6b. Bailouts and moral hazard issues may reinforce the high returns to the special trading technologies, at social and taxpayer expense.
7. In this equilibrium this is a misallocation of talent into activities which complement the special trading technologies.
8. Imagine a third class of agent, “Napoleon’s small shopkeepers.” These individuals earn positive rates of return on invested capital, though those returns are not as high as those enjoyed in the financial sector. You become a shopkeeper by saving some of your earnings and then setting up shop. Yet now it is harder to save and accumulate wealth for most people (the rate of return on standard savings is negative!), and thus the number of small shopkeepers declines. This hurts economic growth and it also thins out the middle class (“Average is Over”). Most generally, the quality of your human capital determines all the more what kind of returns you will earn on your financial portfolio and that is a dangerous brew for the long term.
9. Business cycles may arise periodically if those who control the special trading technologies periodically “empty out” the real economy to too high a degree; you can think of this as a collective action problem. Then the financial sector must shrink somewhat, but unfortunately the game starts all over again, following a period of recovery and consolidation.
10. The John Taylors and Stephen Williamsons of the world are right to suggest there is something screwy about the persistently low interest rates, and thus they grasp a central point which many of their critics do not. Yet they don’t diagnose the dilemma properly. Tighter monetary policy would simply add another problem to the mix without curing the underlying dysfunctionality.
11. In this model, fixing the negative dynamic requires financial sector reform of such a magnitude that real rates of return on safe assets rise significantly. That is hard to pull off, yet important to achieve.
11b. It would help for the Chinese and some other East Asian economies to diversify their foreign holdings into riskier and higher-earning investments. They need a new trading technology in a different way, and you can think of their demands for safe assets as a major market distortion. Edward Conard saw a significant piece of this puzzle early on, by noting that a globalized world will skew real rates of return on safe assets (it is easiest to overcome “home bias” on the safest and most homogenized assets of a foreign country). Singapore and Norway are to be lionized in this regard for their risk-taking abroad.
12. If you so prefer, monetary and fiscal policies can have the “standard” properties found in AS-AD models. Yet in absolute terms they will disappoint us, and this will lead to fruitless and repeated calls to “do much more” or “do much less,” and so on.
13. In this model, the activities of the Fed can be thought of in a few different ways. In one vision, the Fed is the world’s largest hedge fund and has the most special trading technology of them all. Forward guidance on rates is actively harmful and the Fed should instead commit to a higher rate of price inflation or a higher rate of ngdp growth.
13b. Under another vision of the Fed, they understand this entire logic. Interest on reserves is a last resort “finger in the dike” attempt to keep rates higher than they otherwise would be. Of course both visions may be true to some extent. (And here I am expecting Izabella Kaminska to somehow make a point about REPO.)
14. Unlike in models of demand-side “secular stagnation,” the observed negative real rates of return do not imply negative rates of return to capital as a whole and thus they do not have unusual or absurd implications. They do require some degree of market segmentation, namely that not everyone has access to the special trading technologies, but those who do have enough wealth to push around the real return on T-Bills, especially if China is “on their side.”
That is what I was thinking about on my flight to Tel Aviv. It should be thought of as speculative, rather than as a simple description of my opinions. Still, it fits some of the data we are observing today. Another way to put it is this: the recent secular stagnation theories need a much closer examination of the financial sector and its role in our current problems. We should focus on the gap in returns, rather than postulating a general negativity of returns per se.
China, and the soaring price of Bitcoin
Here is one clue as to what is going on:
To what does he [Zennon Kapron] attribute bitcoin’s popularity in China, and how could others benefit from it?
“There’s BTC China’s no-fee trading for starters. You can leave your money on the platform, your coins on the platform, and trade in and out for free,” he said.
The entry and exit points aren’t free, with a 0.5% Tenpay (China’s PayPal equivalent) cash in/out fee, and a 1% bank transfer fee.
Capital controls in China are strict. It’s easy to bring money into the country, but getting it out (to invest or spend) is more difficult. That means there are are plenty of wealthy Chinese citizens and residents looking to move their money around the world with greater freedom.
There is more here. And here is a map of Bitcoin flows, recommended. In other words, more entrepreneurs in China are holding Bitcoin and accepting the volatility of its value, in order to sell the asset to those looking to get money out of China.
Those using Bitcoin may wish to diversify their portfolios, they may need to make payments abroad, or they may think the Chinese currency is currently overvalued, or some mix of the above. Bitcoin has become increasingly popular in China, and the largest Bitcoin exchange is in China, yet the currency has hardly any retail use in the country. Still, the number of yuan-based Bitcoin trades has risen thirty-fold in the last two months, according to Bloomberg.
Right now, you can think of the value of Bitcoin being set in the same way that the value of an export license might be set through bids. If/when China fully liberalizes capital flows, the value of Bitcoin likely will fall. A lot. To the extent the shadow market value of the yuan rises, and approaches the level of the current quasi-peg, the value of Bitcoin will fall, by how much is not clear. Or maybe getting money out through Hong Kong (or Shanghai) will become easier and again the value of Bitcoin would fall. If Beijing shuts down BTC China, the main broker, which by the way accounts for about 1/3 of all Bitcoin transactions in the world, the value of Bitcoin very likely will fall. A lot. You will recall that the Chinese government shut down the virtual currency QQ in 2009; admittedly stopping Bitcoin could prove harder but still they could thwart or limit it.
If you are long Bitcoin for any appreciable amount of time, it seems you are betting that the Chinese economy will do poorly and capital controls will remain. Then more people will be increasingly desperate to get more money out of the country. Or you may be betting that the Chinese use of Bitcoin to launder money will increase due to the mere spread of the idea, through social contagion. According to this source, the value of Bitcoin is up by a factor of 66 this year in China.
To the extent the price of Bitcoin incorporates expectations about the future strength of the social contagion effect in China, the price of Bitcoin may become more volatile. Expectations about the future strength of social contagion effects are probably not so stable.
In theory these points might give you a way to hedge the value of Bitcoin. Or hedge the value of China. Here is an interesting post about how Bitcoin prices in yuan do not so closely mirror Bitcoin prices in dollars. If you are a resident of China and have a BTC account there are numerous interesting possibilities, none of which I recommend for the faint-hearted. (Justin Wolfers doesn’t have to like this, but how can he think it is not interesting?)
I do not recommend that you go either long or short in Bitcoin, unless it is a small amount of money and done “for kicks.”
By the way, Ben Bernanke, by “talking up” the price of Bitcoin, is placing an implicit tax on the Chinese Johnny-come-latelys to this market, whether he intends it or not. He also is raising the price for circumventing Chinese capital controls and perhaps thus delaying a fall in the actual market value of the yuan.
For related ideas behind this post, I am indebted to a series of tweets by Izabella Kaminska.
Addendum: Izabella comments here.
Visualization data for world development
From Damian Clarke:
I am a PhD student in economics at the University of Oxford, and a fan of your blog. Much of my work focuses on the microeconomics of development (principally fertility and education), however I am also working on the use of open data in economic development – quite an exciting area. I write you with regards to this open data work. Recently I have written a module for Stata which allows anyone to automatically import any of the over 5000 indicators maintained by the World Bank, and produces both a geographic and time series representation of the data (I provide a png attachment of this graph here if you are interested in seeing it)…
Whilst this program may be useful for researchers, I think its prinicipal benefit is in pedagogy – perhaps even users of MRUniversity would be interested in visualising for example fertility, GDP, current account balances, etc in a simple command. The syntax really is very easy: “worldstat Africa, stat(GDP)”.
I provide at the end of this email a brief description, and more details are available on my site: https://sites.google.com/site/damiancclarke/computation#TOC-worldstat
…worldstat is a module which allows for the current state of world development to be visualised in a computationally simple way. worldstat presents both the geographic and temporal variation in a wide range of statistics which represent the state of national development. While worldstat includes a number of “in-built” statistics such as GDP, maternal mortality and years of schooling, it is extremely flexible, and can (thanks to the World Bank’s module wbopendata) easily incorporate over 5,000 other indicators housed in World Bank Open Databases.
…it is automatically available from Stata’s command line by typing: “ssc install worldstat”
Sentences to ponder
Starting January 1 of 2013 the top tax rate on dividends in the US will officially become the highest in the developed world. If you live in NY for example, the top rate on stock dividends will be close to 50% – which is significantly higher than France.
…According to JPMorgan, this dividend tax will reduce mature firms’ valuations by $1.5 trillion. That’s going to hit private and state pensions as well as IRA, 401K, and 529 accounts.
And JPMorgan adds:
Capitalizing this foregone capital income generates a $1.5 trillion reduction in equity market value, or about 6% of the $24 trillion value of corporate equities at the end of 2Q. Standard wealth effects suggest this will reduce consumer spending by a little over $50 billion, or about 0.5%.