Results for “piketty”
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*The Economics of Inequality*

That is the new — well sort of new — Thomas Piketty book.  It was first published in France in 1997 and then updated several times through 2014, though we are told most of the book has kept its original structure.  It is a good, short read and will appeal to anyone with an interest in Piketty and “that sort of thing.”  The full-blown g > r model is not here, but you can see Piketty edging into being Piketty, with plenty of talk about capital-labor substitutability.

Ricardo Hausmann on Greece

From his Facebook page:

So Greece said no to a plan that was no longer on the table. Paul Krugman and Jeffrey Sachs celebrate the decision. They hope to get a debt write-down for Greece. I honestly do not understand their position. To me, the Greek debt is pretty much irrelevant. The country is not paying a single euro in interest on its debt in net terms. It has been running primary deficits ( a shortage of revenues over spending excluding interest payments). Its debt is high but the interest rate is super-low, courtesy of European taxpayers.

If Greece writes down its debts, its banks will be bankrupted. The ECB will not be able to bail them out and the banking freeze will continue, accelerating the economic collapse. I don’t see how the banks can be bailed out in a week and I don’t see how the economy can avoid the catastrophe. Sachs in Project Syndicate says that Greece has the right to remain in the euro. I don’t know what that means in practical terms. The Greeks may be as euphoric with this “victory” as Europeans were in the summer of 1914.

By the way, here is Thomas Piketty on Germany.

Greece and Syriza lost the public relations battle

One of the most striking aspects of the Greek situation is just how much the Greek government has lost the public relations battle.  They have lost it among the social democracies, and they have lost it most of all with the other small countries in Europe.  They retain some sympathy in the American government, but we are not willing to put any money on the table and basically we want the European Union to clean up the problems for us.

If you look at the progressive economists, Stiglitz, Krugman, Piketty and Sachs all recommend a “no” vote on the referendum.  Though they would not frame it this way, they are advocating a kind of extra austerity for the purposes of a greater long-run good; Greece’s primary surplus vanished some time ago, so signaling a break with Europe will only make matters tougher.  You could call this “properly mood affiliated austerity,” cloaked by strange presumptions about bargaining, namely the view that a “no” vote will induce a more favorable offer.  It seems, with their on the ground understanding, most Greek economists are strongly in the “yes” camp.

The progressives do have some good points and I absolutely favor significant debt relief for Greece.  That said, the Greek government has handled the last few months so badly it really is incumbent on them to show they will do better.  I don’t see many signs in that direction, quite the contrary, and any reasonable democratic government will ask for Greek institutional progress before putting up much more in the way of money.  The entire handling of Greferendum should alert the progressives that they have been egging on the wrong horse; the heroic Hugo Dixon nails it.

I take the progressive “clustering out on a limb” here as a sign that, for better or worse, progressivism as an ideology has reached and indeed gone beyond its high water mark.  The progressives are siding with a corrupt, clientist state, which won’t cut its defense spending down to Nato norms, against some admittedly imperfect social democracies, thereby sustaining the meme of powerful aggressor vs. victim, Arnold Kling telephone.

Interfluidity has an interesting but quite wrong post on how to think about Greece.  International relations simply could not be run on the principles he advocates, most of all in conjunction with democratic nation states.  His weakest point becomes evident when he writes:

Among creditors, a big catchphrase now is “moral hazard”. We cannot be too kind to Greece, we cannot forgive their debt with few string attached, because what kind of precedent would that set? If bad borrowers, other sovereigns, got the idea that they can overborrow without consequence, if Spanish and Portuguese populists perceive perhaps a better deal is on offer, they might demand that. They might continue to borrow and expect forgiveness, and where would it end except for the bankruptcy of the good Europeans who actually produce and save?

The nerve. The fucking nerve. Lenders, having been made nearly whole on their ill-conceived, profit-motivated punts, now fear that if anybody is nice to somebody who doesn’t deserve it, where will it end? I’d resort to that cliché about chutspa, the kid who murders his parents then seeks leniency ‘cuz he’s an orphan. But it’s really too cute for the occasion.

That’s a non-answer, with anger filling in for the required substance as to why Germany and others should allow this.  “Your government is making things much worse.  If you want to borrow so much more from us, you have to play by the rules and also stop spitting in our face and calling us Nazis and terrorists while negotiating” is more relevant — and yes relevant is the right word here — than any point he makes.

A political program has to be something that voters could at least potentially believe, and international negotiations therefore cannot stray too far from common-sense morality, including when it comes to creditor-debtor relations.  That is the point which today’s progressive economists are running away from as fast as is humanly possible.  And for all the Buchanan-esque and public choice points about “rules of the game” this one about common sense morality unfortunately has ended up as the most important.

Look at this way: if you lost a public relations battle to Germany, you are probably doing something very badly wrong.

Saturday assorted links

1. In fact, people get annoyed pretty easily at a whole lot of different things.  What would Bryan Caplan say?

2. Hadrian, the robot bricklayer.  And commercial jetpack coming for 150k.

3. FT lunch with Piketty.

4. An insider’s guide to better eating in Chinese detention centers.

5. Google Sheep View.

6. Swedish scientists build artificial neurons to connect with organic neurons.

7. “Please, someone, buy me…

Friday assorted links

1. The world’s largest employers.

2. Rates of return seem to be falling.

3. ” I think it’s fair to say he doesn’t have any argument against my claim, because there are no good arguments against my claim.”  I agree.

4. Ben Casnocha on my dialogues with Thiel and Sachs.

5. Why various Republican proposals would make the problems with Obamacare worse.

6. More on Alice Goffman.

7. Virginia Postrel has further detail on the Paulson grant to Harvard.

8. William Upton on Kansas fiscal policy.  And what is the nature of Rand Paul’s tax plan?

Thursday assorted links

1. What if Canada can’t become a major tech cluster?  And what does the Canadian trade balance look like without oil?

2. Broken windows theory tests.

3. “Austerity evidently killed GDP, but not the labor market. That’s a very interesting hypothesis, but I’m wondering which textbook theory is consistent with it?”  That’s the UK, folks.

4. Does hiking cigarette taxes drive poor people to enroll in food stamps (pdf)?  And which colleges have the best food?

5. Not a surprise, but a clarification: the U.S. won’t give up what is in effect its IMF veto.

6. Olivier Blanchard is leaving the IMF for the Peterson Institute.  And Piketty will be joining LSE, it seems.

7. UberCopter, pretty cheap, considering…

Does war drive progressive income taxation?

Here is evidence for the Roberts Higgs thesis and, if I recall correctly, some recent remarks by Thomas Piketty on revolution and tax progressivity (does anyone know the link?).  Juliana Londoño Vélez writes:

Abstract    I argue that progressive income taxation in the twentieth century is a product of the exigency of war and not of democracy. I obtain long-run series of the top marginal personal income tax rate for a large sample of OECD countries, and use data on wars of mass mobilization and democracy from the Correlates of War data set and Scheve & Stasavage (2012) to test this hypothesis. My results suggest that wars of mass mobilization (i.e. wars in which more than 2% of the population served in the military) cause substantial increases in tax progressivity. These effects are persistent and do not vanish upon the conclusion of war.

The full paper is here (pdf), taken from the generally interesting Berkeley Economic History Lab list, as cited by Barry Eichengreen.  As Barry notes, see also the revised and much improved version of Lemin Wu’s paper on the Malthusian trap (pdf).

Should you tell your children how much you make?

This NYT article has been widely read and emailed.  Ron Lieber argues yes, you should tell your children, but I’m not sure I can pull out the exact thread of his argument from the piece.

I say no you should not tell them.  But you should tell them something about your monetary situation.  If you are not so well off, you should tell your children that you are upwardly mobile, and will someday be more prosperous, through hard work.  At the very least then they won’t be scared.  If you are middle class, tell them a somewhat scaled-up version of the same.  You don’t want to tell them anything they can use as a “club” against their possibly poorer friends, so leave creative ambiguity in your answer.  If they boast about the family income, they will mostly end up embarrassing themselves, in addition to the negative externalities they might impose on others.

That said, you are marking out a range, so when they grow up and the time comes for them to learn the exact truth, they won’t feel you were tricking them or keeping family secrets.  In the meantime you are a role model for upward mobility.

If you are well off or very well off, tell them “Yes, we are well off but the real metric of success is X,” depending on what you think they need to hear, within the bounds of realism of course.  X might be how many friends you have, how happy your children are, how holy or pious or God-fearing you are, how many books you have read, or how much you have helped the world, among other candidates.  Serve them up a weighted average of those Xxs over time, so as to a) avoid seeming like a monomaniac, and b) give them a sense that many values are important, and c) drive home that money is not at the top of the list, even if you think it is.  They’ll have enough chances to learn to feel that way.

Remember, you’re trying to maximize some weighted average of covering your bases for future revelations, moral instruction, not scaring them with Piketty-like reasoning, stopping your kids from making fools of themselves with the information you give them, and stopping your children from making you look foolish or like a bad parent.  You’re in essence the central bank here, and it’s creative ambiguity all the way.

Assorted links

1. A bigger and better classical music meta-list (the mega-meta list?).

2. Did the Romans (Tiberius) try QE?  And John Quiggin has three predictions for 2015.

3. Claims about teeth.  And the Obama tax plan.

4. Edward Snowden on cyberwarfare.

5. Can nudges help students?  And a short history of Kim Fowley.

6. Paul Krugman on Mongols and the herring trade.

7. Scott Sumner responds on the Swiss central bank.  And here is James Hamilton.

Assorted links

1. How Amazon tricks you into thinking it always has the lowest prices.

2. Most neoclassical economists don’t understand most of these.  I think not one in fifty actually understands the Heckscher-Ohlin theorem, for instance.

3. In one restaurant in China, beautiful people eat for free.

4. The blockchainiacs?

5. 3-D printed drones.

6. British markets in everything: fish and chips chips.

7. In praise of Piketty’s translator.

Top Ten MR Posts of 2014

Here is my annual rundown of the top MR posts of 2014 as measured by page views, tweets and shares.

1. Ferguson and the Debtor’s Prison–I’d been tracking the issue of predatory fining since my post on debtor’s prisons in 2012 so when the larger background of Ferguson came to light I was able to provide a new take on a timely topic, the blogging sweet spot.

2. Tyler’s post on Tirole’s win of the Nobel prize offered an authoritative overview of Tirole’s work just when people wanted it. Tyler’s summary, “many of his papers show “it’s complicated,” became the consensus.

3. Why I am not Persuaded by Thomas Piketty’s Argument, Tyler’s post which links to his longer review of the most talked about economics book of the year. Other Piketty posts were also highly linked including Tyler’s discussion of Rognlie and Piketty and my two posts, Piketty v. Solow and The Piketty Bubble?. Less linked but one of my personal favorites was Two Surefire Solutions to Inequality.

4. Tesla versus the Rent Seekers–a review of franchise theory applied to the timely issue of regulatory restrictions on Tesla, plus good guys and bad guys!

5. How much have whites benefited from slavery and its legacy–an excellent post from Tyler full of meaty economics and its consequences. Much to think about in this post. Read it (again).

6. Tyler’s post Keynes is slowly losing (winning?) drew attention as did my post The Austerity Flip Flop, Krugman critiques often do.

7. The SAT, Test Prep, Income and Race–some facts about SAT Test Prep that run contrary to conventional wisdom.

8. Average Stock Returns Aren’t Average–“Lady luck is a bitch, she takes from the many and gives to the few. Here is the histogram of payoffs.”

9. Tyler’s picks for Best non fiction books of 2014.

10. A simple rule for making every restaurant meal better. Tyler’s post. Disputed but clearly correct.

Some other 2014 posts worth revisiting; Tyler on Modeling Vladimir PutinWhat should a Bayesian infer from the Antikythera Mechanism?, and network neutrality and me on Inequality and Masters of Money.

Many posts from previous years continue to attract attention including my post from 2012, Firefighters don’t fight fires, which some newspapers covered again this year and Tyler’s 2013 post How and why Bitcoin will plummet in price which certainly hasn’t been falsified!