Results for “singapore best” 97 found
Assorted links
1. Big ice cubes.
2. The Lebanese connection behind Haitian art markets.
3. Meet Harry Egipt, forgotten genius of Soviet TV commercials. Good link, and the two attached videos are interesting.
4. Some of the best Singapore food experiences.
5. Capital controls are not stopping Cypriot deposit flight, and largest Bitcoin exchange now to require user identification.
6. Refrigerator repair queries are more countercyclical than I would have thought.
U.S. clothing chains do not support pact on Bangladesh reforms
From Brad Plumer:
Nearly all U.S. clothing chains, citing the fear of litigation, declined to sign an international pact ahead of a Wednesday deadline, potentially weakening what had been hailed as the best hope for bringing about major reforms in low-wage factories in Bangladesh.
Companies including Wal-Mart, Gap, Target and J.C. Penney had been pressed by labor groups to sign the document in the wake of last month’s factory collapse in Bangladesh that killed at least 1,127 people. More than a dozen European retailers did so. But U.S. companies feared the agreement would give labor groups and others the basis to sue them in court.
…Wal-Mart reiterated Wednesday that it would not sign the accord at this time, because it “introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals.”
…Most U.S. companies, however, balked at the language in the accord. Some said it would would expose them to excessive legal liability — particularly in America’s litigious courts. Written by labor groups, the agreement would require retailers who source clothing from Bangladesh to commit to pay for inspections, building upgrades and training — all enforced by binding arbitration.
Here is more. Most likely, the damage done to Bangladesh will continue. Note that the prospect of successful litigation was not what drove FDI into the 19th century United States, or twentieth century Singapore, to the point where wages rose significantly.
*Catastrophic Care*
That is the new book by David Goldhill and the subtitle is How American Health Care Killed My Father — and How We Can Fix It. I don’t actually like that subtitle, but still this is the best popular health care book from recent times. It has a crystal clear account of what has gone wrong and how to fix it, with the author settling upon a version of the Singaporean system. I would describe Goldhill as a market-friendly Democrat who is skeptical about ACA and for the right reasons.
Recommended.
In which countries is crude libertarianism most and least true?
For least true, I nominate South Korea. Other than comparing it to North Korea, how much do you hear libertarians claiming South Korean policies as their own? It seems the government there did a lot and mostly it paid off. The best the libertarian can manage is something like “their economy would have grown rapidly in any case,” and that may not even be true.
For “most true” you might say North Korea, but that is too easy a pick. How about India? Government there has done lots but most of it has worked out quite badly, whereas their deregulations generally have gone well (see our India unit on MRUniversity.com). Further deregulation of the economy would likely be a good idea.
Singapore can be claimed for either category.
In which country is Marxism most true (“least untrue?”)? Least true? How about other ideologies?
On the Origin of Specie
An article in The Economist (from which I have nabbed the title of this post) argues that money, particularly coins, had to have “developed not as a private-sector attempt to minimise the costs of trading, but as a government operation.” In fact, there are many examples of private coinage. In an earlier post on George Selgin’s excellent book Good Money I wrote about private coinage in Britain:
At the dawn of the industrial revolution as workers left the fields and moved to industrial employment the demand for a means of payment increased dramatically. Workers, once paid in kind, needed to be paid in a medium they could use to buy the necessities of life. Small-tender bank notes, however, were illegal and in Great Britain the production of coin was monopolized by the Royal Mint which failed to provide enough high quality coin to meet the demands of workers and business.
The Royal Mint had neither the will nor the technology to meet demand. In a story reminiscent of the Soviet nail factory one historian explained the incentives of the Royal Mint:
The public coiner, the Royal Mint, was charged with providing a stipulated amount of coinage each year rather than a stipulated number of coins. It did not take the eighteenth-century equivalent of rocket science to figure out that it was far easier to strike, say, a thousand golden guineas than 504,000 copper halfpence (24 x 21 x 1,000). The less-than-overworked denizens of Tower Hill cheered the discovery… But even had the Royal Mint been more co-operative, more inclined to rise to the challenge presented by the new wage earners, it would have been hard-put to assist. It still relied on antiquated machinery inherited from an earlier epoch….
The private sector responded, if the public sector would not.
To meet this shortage, Birmingham button makers started to coin tokens which circulated widely as money. Counterfeits and forgeries were common, however. Frustrated with the shortage of good money, Matthew Boulton, James Watt’s business partner, hit on the idea of using Watt’s steam engine to create steam presses. The new presses could apply more force thereby creating precise edging that would be difficult to forge or clip and they could do so on a mass scale. You can read the fascinating story in Selgin’s Good Money but suffice it to say that Boulton was eventually successful in producing the best coinage the world had ever seen not only for Great Britain but also for India, Singapore, Bermuda and elsewhere. Nor was Boulton’s the only example of private coinage. See Selgin’s post at Free Banking for U.S., Japanese and other examples.
Here are some of the coins from Boulton’s Soho Mint.
Aaron Carroll on Medicaid Wars
Enough people have linked to this piece that I thought I should write a response, which you will find under the fold…
To start with a general remark. Often defenders of ACA request some kind of conservative engagement with the policy, rather than voting for the 34th (?) time for outright repeal with no coherent story of replacement. I’ve laid out a coherent scenario of how ACA could evolve into something which I consider better, and actually with only modest changes to the law itself. The mandate gets narrowed, the system as a whole evolves into means-tested vouchers (which proponents such as Zeke Emanuel favor), and possibly HSAs are given a larger role again. I say states will try to limit Medicaid growth, not that they should but that probably they can over the longer run. Defenders of the current ACA don’t have to favor my analysis, but in fact what I get back is sheer annoyance from Carroll, repetition of Carroll from various others, and an attack from Krugman, with no substantive engagement on the policy proposal at all.
Carroll writes five times that he is annoyed by my piece, but in hardly any of those cases is he disagreeing with any position I took. Let’s go through them one-by-one:
I get a bit annoyed when people claim that we can’t “afford” more government intervention or, god-forbid, single-payer. That kind of statement willfully ignores the fact that every country that has MORE government intervention spends LESS.
I most definitely did not say this and in fact I mentioned that single payer systems lower cost. Spending more on Medicaid, however, will not save the U.S. money (the Oregon study shows this), whether or not we can normatively “afford” it.
I get a bit annoyed by the claim that an expansion of government insurance leads to lines and waiting when lots of countries have universal access and less of a wait-time problem than we do.
A significant influx of people into Medicaid, under current institutions, will lead to more queuing. That is true whether or not you think other countries with single-payer have big queueing problems. What I wrote was this:
Unfortunately, Medicaid has some of the worst features of single-payer systems. Typically, a single-payer system will bargain down medical prices, thus adding to affordability, but at the risk of having long lines of patients waiting for care. As it stands now, though, the low reimbursement rates of Medicaid already lead to long lines, or an inability to find a good doctor altogether, while the higher reimbursement rates of Medicare and private insurance keep health care costs high.
It’s even carefully worded “…at the risk of having long lines of patients waiting for care.” Supply elasticities are positive and so single-payer systems do run this risk. Yet I am clear that in critical regards the systems of other countries get the better end of this deal compared to the United States.
Another bit:
I get a bit annoyed by blanket claims that doctors won’t accept Medicaid. Such statements often ignore the fact that the majority of Medicaid beneficiaries are children and pregnant women. We don’t need all types of doctors to accept Medicaid patients in equal numbers. They also ignore the fact that lots of doctors won’t accept new patients with Medicare or private insurance, either.
It is very difficult to find a good doctor in northern Virginia who takes Medicaid and I speak from personal experience (helping others). Or try any number of basic websites, with common quotations such as “Finding a Medicaid doctor constitutes a challenge…” Medicaid dentists are hard to find. Try calling say the Washingtonian “best doctors” list and see how many of them take Medicaid. Large numbers of doctors do take Medicaid but overall they tend to be much worse and there are also problems with queuing. Think about it: why would the lower payers end up first in line?
There is more annoyance:
I get a bit annoyed when people just claim government programs are “unpopular”. Like Medicare? I don’t think so. Is there any evidence that Medicaid is unpopular? I’d like to see it. Personally, I think that the fact that (a) all 50 states have bought in over time and (b) the Supreme Court just ruled that threatening to take it away is “coercive” speaks to the opposite. Additionally, polling shows the opposite of what Tyler (and lots of others) suggest.
I am sorry but this is a total “read fail.” I am saying Medicaid (not “government programs” or “Medicare”) will become increasingly unpopular. (In fact I am known for arguing that big government as a whole is quite popular.) Every day in the newspaper there is handwringing by governors, not all Republican ones, about wishing to limit or escape Medicaid obligations. A lot of them would prefer to get block grants and spend the money elsewhere (a simple question for Carroll: if Medicaid is so popular with voters, there is no reason to fear block grants to the states, right? Voters surely will insist that Medicaid spending be kept at current levels or perhaps even increased.) Daily Kos serves up plenty of evidence for the lukewarm support for Medicaid, as does Ezra Klein: “But, for a host of reasons, Democrats worry that Medicaid is more endangered than people realize.” Also note how skimpy Medicaid coverage is in many states. A lot of states don’t really try to cover poor adults, without children, at all. Frankly this is standard fare, especially on the left, but somehow if I write it he gets annoyed.
If you poll people and ask them whether they favor health care for the poor, of course they will say yes. The bottom line is this: right now we are borrowing about forty cents of every dollar spent. As we move toward fiscal balance, which are among the most vulnerable programs? Defense spending may be cut somewhat, but Medicaid is far more vulnerable than either Social Security or Medicare. I didn’t know that was under dispute and in fact it really isn’t.
Some more annoyance from Carroll:
I get a bit annoyed at the blanket acceptance of the awesomeness of the free market in health care, when there is no phenomenal evidence of its success. And again, those countries with less free market are cheaper, universal, and often just as good. So why are we always trying to run away from them?
That is another “read fail.” What did I call for in the column?
We would then have government-subsidized and mandated catastrophic insurance, and a freer market for other health care expenditures. We might even return to a health savings account approach on the noncatastrophic side.
I also note in the column that is not my first best, but we Americans probably cannot get easily to a first best system (for me a Singapore-style system, with single payer on the catastrophic side rather than mandates for private insurance purchase). My accompanying blog post even noted that the HSAs could be supplemented with government funds, if it was so desired.
The real argument of the column is that ACA will fall apart for political reasons because it creates too many different groups with different treatment. The “mood affiliation” of the column is something other than celebration of ACA, and so Carroll pulls out all of the old chestnuts and attacks them, rather than responding to the actual argument. Basically he should go back and reread the piece itself.
What kind of mandate should “the right” have supported?
The conservatives and libertarians who earlier supported a mandate, ideally, should have been looking for the following qualities in a health care policy:
1. A very small number (one?) of categories for health care coverage and also reimbursement rates. Mandates for everyone, in other words. No Medicare, no Medicaid, no separate set of people in an employer-based, tax-subsidized health insurance sector, rather a unified system. Switzerland comes relatively close to this, and of course some commentators hope ACA will evolve into this (“means-tested vouchers”), though I suspect the scope of the mandate and the cost of the subsidies will prevent this.
2. A rejection of health care egalitarianism, namely a recognition that the wealthy will purchase more and better health care than the poor. Trying to equalize health care consumption hurts the poor, since most feasible policies to do this take away cash from the poor, either directly or through the operation of tax incidence. We need to accept the principle that sometimes poor people will die just because they are poor. Some of you don’t like the sound of that, but we already let the wealthy enjoy all sorts of other goods — most importantly status — which lengthen their lives and which the poor enjoy to a much lesser degree. We shouldn’t screw up our health care institutions by being determined to fight inegalitarian principles for one very select set of factors which determine health care outcomes.
3. A modest bundle of guaranteed coverage and services. I am very influenced by David Braybrooke’s book on meeting basic needs. Yet for me basic needs truly are basic and do not involve cable TV or small probability chances of delaying death from prostate cancer.
4. Price transparency (mandated if need be) and real competition in the health care sector, including freer immigration for doctors, nurses, and other caregivers, and relaxation of medical licensing and encouragement of retail medical clinics, a’la WalMart style. This helps keep the cost of the mandate to reasonable levels. Most cost-saving innovation should come through markets. The man strapped to a gurney, bleeding, while negotiating a price with his doctor is the exception in this sector, not the rule. In any case the insurance companies can prearrange the price for that one.
5. If you wish to move away from the strictly conservative direction, you could consider price controls on some areas of medicine. Singapore does them.
6. Always convert dollars of benefits, usually a private good, into dollars of support for medical research and development, a public good. You will never end up at a margin where this is a bad trade.
7. Society should firmly believe that it is the duty of the government, first and foremost, to protect us against foreign enemies, environmental catastrophes, pandemics, and other existential threats. History shows that such existential threats are real. Alleviating individual sufferings through governmental charity can be a useful source of mutual advantage but it should be subordinate to these broader goals. Furthermore we should be determined to resist the creation of a large class of perpetual beneficiaries who will strangle the government fiscally and pull it away from these more basic duties.
I would think that such a mandate would be a serious policy option, though maybe not a first best choice. (There are also mixes of single payer backstops and HSAs, as in Singapore, and a variety of provincial systems.) Yet that is far from the ACA. We should not “blame” Obama for that difference (it’s not clear what his more utopian preferences might be, though it is clear he could not have passed them), but still it seems to me that observers can support some version of an individual mandate and oppose ACA.
I agree, by the way, with Ezra Klein’s analysis of the “motivated reasoning” of many particular individuals when confronted with ACA a few years ago. You can think of this post as an “ideal type” analysis which may or may not apply to many actual people.
Assorted links
1. Various sentences to ponder.
2. How Singapore Air plans its meals.
3. The man who liquidates Dutch churches; the organs are hard to sell and “demolition” is sometimes an option.
4. Andres Marroquin picks the ten best economics papers of 2011.
Common mistakes of left-wing economists?
T., a loyal MR reader, asked for a compendium. This is my off-the-cuff list, but in the interests of fairness I'm doing one on market-oriented economists as well. What are some of the common views found on the left which I consider not just disagreements but more along the lines of a mistake?
By no means is everyone is guilty of these mistakes, nor does it have to mean that the associated conclusions are wrong. Still I see these frequently:
1. Suggesting that money matters in politics far more than the peer-reviewed evidence indicates.
2. Evaluating government spending on a program-by-program basis, rather than viewing the budget as a series of integrated accounts. Cross check with the phrase "Social Security," or for use to take many discretionary spending cuts off the table.
3. A reluctance to incorporate sophisticated "public choice" theories into the analysis of favored programs.
4. Sins of omission: there are plenty of bad policies, such as occupational licensing, which fail to come under much attack from the left. Sometimes this is because the critique would run counter to the narrative of needing more government or needing more regulation.
5. Significantly overestimating the quality of the political economy of an America with more powerful labor unions and underestimating the history of labor unions as racist, corrupt, protectionist, and obstructions to positive change.
6. Overestimating the efficacy of fiscal policy, underestimating the power of monetary policy, and sometimes ignoring or neglecting how the two interact ("the monetary authority moves last").
7. Citing weak versions of structural unemployment theories and dismissing them with a single sentence or graph, while relying on stronger versions of structural theories in other, non-cyclical contexts.
8. Lack of interest in discussing ethnicity and IQ as relevant for social policy, except in preferred contexts.
9. Overly optimistic views of the fiscal positions of state governments. Since the states don't have the same tax-raising powers that the feds do, and since state government spending is favored, there is a tendency to see these fiscal crises as not so severe, or as caused by mere obstructionists who will not raise taxes to the required levels.
10. A willingness to think that one has "done one's best" in the realm of policy, and to blame subsequent policy failures on Republican implementation, rather than admitting that a policy which cannot be implemented by both political parties is perhaps not a good policy in the first place.
11. Use of a strong moral argument for universal health care coverage, combined with a fairly practical, hard-headed approach to the scope of the mandate, and not realizing the tension between the two. Failure to indicate where the "bleeding heart" argument actually should stop and at what margins we should (and will) let non-elderly people die, if only stochastically.
12. Implicitly constructing a two-stage moral theory, which first cordons off the sphere of the nation-state (public goods provision, etc.) and then pushing cosmopolitan questions off the agenda in the interests of expanding a social welfare state. (In fairness, many individuals on the right don't give cosmopolitan considerations even this much consideration, although right-oriented economists tend to be quite cosmopolitan.)
13. What about countries? Classical liberals are increasingly facing up to the enduring successes of the Nordic nations. There is not always a similar reckoning with the successes of Chile and Hong Kong and Singapore; often this is a sin of omission. (Addendum: comment from Matt here.)
14. Reluctance to admit how hard the climate change problem will be to solve, for fear of wrecking any emerging political consensus on taking action.
In most cases you can find evidence and links by searching back through the MR archives.
Genetic Enhancement v. Artificial Intelligence
Will robots and artificial intelligences take human jobs? Perhaps but the nature of humanity is not carved in stone. Genetic enhancement (GE) is within a hairsbreadth of reality.
It's true that the practical applications of AI are moving faster than GE but GE has a head start of over a billion years. Moreover, although GE is still impractical, the costs of GE are falling fast. The costs of sequencing a genome (shown at right, click to enlarge), for example, are falling far faster than even Moore's Law would predict. Sequencing takes us only part of the way towards H+ but it's an important part.
Genetic engineering already works wonders, even when used haphazardly. My own efforts at GE (I had the help of a PhD microbiologist) have produced two promising NIs. When used in a more controlled manner the results of GE will be even better ("it's still us, only the best of us.")
I used to worry that religious objections would prevent the evolution of H to H+, especially in the United States. But should courage fail us, the Chinese, the Indians, the Russians or perhaps even the Singaporeans will move humanity forward. In this case, the slippery slope works in favor of progress: from avoiding genetic disease towards making improvements will prove irresistible. You can't keep a better man down.
The contrast of GE and AI in the title is meant to remind us that AI is not the only technology relevant to debates about future jobs but the opposition of GE and AI is obviously false. AI is helping to create GE, of course, but it's deeper than that. In the not so long run it's not about computers substituting for labor or even complementing labor, it's about designing labor to complement computers (and vice-versa). Think about how quickly the phone has migrated from the desk, to the hand, to the ear, to the ear canal. The technology to enhance humanity with access to the internet is literally burying itself into our heads, call it I-fi. There is more to come.
And now for some music.
What do twin adoption studies show?
"A case in point is provided by the recent study of regular tobacco use among SATSA's twins (24). Heritability was estimated as 60% for men, only 20% for women. Separate analyses were then performed for three distinct age cohorts. For men, the heritability estimates were nearly identical for each cohort. But for women, heritability increased from zero for those born between 1910 and 1924, to 21% for those in the 1925-39 birth cohort, to 64% for the 1940-58 cohort. The authors suggested that the most plausible explanation for this finding was that "a reduction in the social restrictions on smoking in women in Sweden as the 20th century progressed permitted genetic factors increasing the risk for regular tobacco use to express themselves." If purportedly genetic factors can be so readily suppressed by social restrictions, one must ask the question, "For what conceivable purpose is the phenotypic variance being allocated?" This question is not addressed seriously by MISTRA or SATSA. The numbers, and the associated modeling, appear to be ends in themselves."
What should we do instead of the Obama health reform bill?
A lot of people think you have no right to criticize a bill unless you propose a better bill. I don't agree (if the aforementioned bill is bad on net), but in any case I will give this a try. These are not my first best reforms or even my second best reforms. They're my "attempt to work with some of the same moving pieces which are currently on the table" set of reforms. I would trade away the Obama bill for these in a heart beat. Keep in mind people, with a "no insurance" penalty of only $750, the current bill isn't going to work (and that's ignoring the massive implicit marginal tax rates on many individuals and families, or the "crowding out" of current low-reimbursement-rate Medicaid patients), so we do need to look for alternatives.
Here goes:
1. Construct a path for federalizing Medicaid and put it on a sounder financial footing; call that the "second stimulus" while you're at it. It's better and more incentive-compatible than bailing out state governments directly and the program never should have been done at the state level in the first place.
2. Take some of the money spent on subsidizing the mandate and put it in Medicaid, to produce a greater net increase in Medicaid than the current bill will do, while still saving money on net. Do you people like the idea of a public plan? We already have one!
2b. Make any "Medicare to Medicaid" $$ trade-offs you can, while recognizing this may end up being zero for political reasons.
3. Boost subsidies to medical R&D by more than the Obama plan will do. Establish lucrative prizes for major breakthroughs and if need be consider patent auctions to liberate beneficial ideas from P > MC.
4. Make an all-out attempt to limit deaths by hospital infection and the simple failure of doctors to wash their hands and perform other medically obvious procedures.
5. Make an all-out attempt, working with state and local governments (recall, since the Feds are picking up the Medicaid tab they have temporary leverage here), to ease the spread of low-cost, walk-in health care clinics, run on a WalMart sort of basis. Stepping into the realm of the less feasible, weaken medical licensing and greatly expand the roles of nurses, paramedics, and pharmacists.
6. Make an all-out attempt, comparable to the moon landing effort if need be, to introduce price transparency for medical services. This can be done.
7. Preserve current HSAs. The Obama plan will tank them, yet HSAs, while sometimes overrated, do boost spending discipline. They also keep open some path of getting to the Singapore system in the future.
8. Invest more in pandemic preparation. By now it should be obvious how critical this is. It's fine to say "Obama is already working on this issue" but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.
9. Establish the principle that future extensions of coverage, as done through government, will be for catastrophic care only.
10. Enforce current laws against fraudulent rescission. If these cases are so clear cut and so obviously in the wrong, let's act on it. We can strengthen the legal penalties if need be.
11. Realize that you cannot tack "universal coverage" (which by the way it isn't) onto the current sprawling mess of a system, so look for all other means of saving lives in other, more cost-effective ways. If you wish, as a kind of default position, opt for universal coverage if the elderly agree to give up Medicare, moving us to a version of the Swiss system and a truly unified method of coverage. But don't bet on that ever happening.
Separate issues:
12. If you can tax health insurance benefits and cut a Pareto-improving deal overall, fine, but I am considering this to be too politically utopian and it's not clear what the rest of that deal looks like. The original tax break makes no economic sense but you don't want to end up with a big tax increase and a lot more people on the public books with little in return.
13. If the current bill were voted down, you can imagine some version of the above happening, although not necessarily all at once in one big bill.
14. Commission a study of how much the Obama plan is spending per QALY saved. I agree that more health insurance saves lives, but a) the study should adjust appropriately for the superior demographics of those who hold or buy insurance, and b) the study should adjust for the income that would be lost through mandates and the safety that income would purchase. I worry greatly that we have never, ever seen this number presented and that if we did it would not be pretty. In any case, do the study, scream the number from the rooftops, and reread points 1-11. Enact.
That's my recipe. It's better than what we are doing now. You don't have to adhere to any extreme form of economistic or free market ideology to buy it. It might even be politically easier than the current path, as it "sounds less socialistic."
Assorted links
1. Is Viagra bankrupting Brazilian pensions?
2. The decline of the super-rich.
3. Markets in everything: North Korean restaurant comes to NYC.
4. Brahms Complete Edition, 46 discs for $62.
5. Via Chris Masse, Hal Varian on how the web challenges managers (for the video version click on "launch interactive" and "all videos"). Chris also refers us to the Avatar trailer, which he describes as the best science fiction movie ever.
6. The Singapore model: sign me up too.
Palermo notes
I had been expecting "Naples squared" when it comes to raucous, but it's peaceful. The best dishes apply flavors of mint, orange, and pistachio to pasta and seafood. Wrapping pumpkin in a fish slice is yummy. How about sardines pasta, with raisin, pine nuts, and bread crumbs; capers are optional? Imagine a counterfactual retracing of food history, piling New World ingredients on top of Arabic and medieval roots — without the French culinary interventions of the eighteenth century and beyond — and you get some notion of dining in Sicily. Imagine Moroccan bistillah but with a fruit jam inside.
The remaining traces of Norman Sicily are mingled with Roman, Arabic and Catalonian architectural influences. There are numerous seventeenth-century baroque oratorios. All over you see photocopy shops, which I suppose means few homes or workplaces have printers.
The young people look like they're from Rome, the old people look like they're from New Jersey.
When there is a traffic dispute, people yell back at the cops.
At least two-thirds of all restaurants are closed for August, including most of the best-known places. Yet even random eating in major public squares (usually a no-no) reveals a food culture which has to rank among the world's best, up there with Tokyo, Bangkok, Singapore, Bombay, and the Puebla/Oaxaca axis, among a few select others.
What instead? 2
Matt Ygelsias asks what’s the
stimulus-skeptics’ alternative prescription? Tyler offers his recommendations below. I'm somewhat less of a skeptic about fiscal policy than Tyler – there is a good case for moving up useful infrastructure spending (both public and private) today – but I agree with Tyler that it is too early to think that monetary policy is ineffective. M1 is rising sharply, M2 is up. Monetary policy works with lags. As to what to do instead I have offered a number of possibilities including:
1) Investment Tax Credit Unlike traditional fiscal policy an investment tax credit cannot be
fully crowded out and it works best when it is expected to be
temporary. Cuts in income taxes stimulate the least when they are
expected to be temporary. But in contrast, an investment tax credit
stimulates the most when it is expected to be temporary because a temporary
credit must be used now or lost while a permanent credit gives you the
option to wait.
2) A supply side stimulus: The IRS knows how much income that each taxpayer reported last
year. So let's cut everyone's marginal tax rate based on last year's
income. In other words, suppose that last year Joe earned $66,520
which puts him in a 25% tax bracket. Joe's tax schedule this year will
be exactly the same as last year except for every dollar earned above
$66,520 the tax rate drops
to 15%. We do this for all
taxpayers so that each taxpayer has their own schedule and for each
taxpayer there is a decreasing marginal tax rate.Note that this plan increases the incentive to work and it doesn't
increase the deficit. In fact, the Tabarrok plan increases tax
revenues! The key is a marginal tax cut with a different margin for
every taxpayer based upon last year's return.
3). A cut in the payroll tax ala Singapore. If employment is down reduce the cost of employing labor. This policy has lot to recommend it because unlike a fiscal stimulus it lets the reallocation process work towards its long run equilibrium. A construction stimulus, for example, pushes people into construction (or keeps them there) when perhaps labor could ultimately be more productive in other sectors of the economy. The payroll tax cut enhances this reallocation effort it doesn't impede it.
4) Don't Panic. This is the policy that has cured most recessions. The do anything and do it now mindset feeds panic. I do think this recession will be longer than average and quite deep, it is a concern that it is worldwide. But recessions are normal and we have unemployment insurance and other assistance programs to help people through tough times. The economy will recover and its very possible to make things worse by trying to make things better.