Results for “from the comments” 1664 found
Scott Sumner, from the comments
This is on “The People’s Budget“:
Matt Yglesias has a much better solution for progressives; a progressive consumption tax.
This capital gains proposal is especially silly. I’m 99% sure they won’t allow unlimited write-offs of capital losses, which means the effective cap gains rate would be even higher, and risk-taking would be discouraged. And why even have a corporate income tax system? Even from a progressive perspective it makes no sense at all.
This proposal taxes rich guys who live a hedonistic lifestyle at a much lower rates than equally rich guys who are thrifty, and leave something for others. That’s progressive?
A progressive consumption tax system composed of a mixture of modestly progressive VAT and steeply progressive payroll taxes and carbon taxes and land taxes. That’s all you need. K.I.S.S.
From the comments: what does the fiscal endgame look like?
Slocum writes:
Nonetheless it is naive to think spending cuts can do the job alone, and insisting on no tax hikes drives us faster along the path of fiscal ruin.
This is a political, not economic judgement on Tyler's part — that a majority won't accept the necessary cuts. But I think it's much less politically feasible to imagine enacting VAT (which, in the past, has been Tyler's preferred approach). That's an idea that practically demagogues itself (A EUROPEAN-style Tax! A regressive, HIDDEN tax on EVERYTHING you buy! A tax that will hit the savings of RETIREES the hardest –people who 'worked hard and played by the rules' who were taxed when they earned and saved the money and are now going to be hit by a REGRESSIVE, EUROPEAN, HIDDEN TAX on EVERYTHING when they try to spend the money).
Republicans are so married to 'no new taxes' and Democrats to 'higher taxes only for the rich', that a VAT (or any other new broad-based tax) seems out of the question. So I can much more easily imagine spending cuts eventually getting bipartisan approval with only nominal tax increases included in the bargain.
A few points:
1. A VAT has never been my preferred outcome, rather I warn that it may be necessary if we do not act soon.
2. Balancing the budget within five to ten years with spending cuts alone would be difficult but by no means impossible. I am all for doing that, but a) it won't happen as stated, and b) it still won't balance the budget over a ten to twenty year time frame.
3. The path toward long-run fiscal balance involves recalibrating Medicare, Medicaid, and Social Security to lower rates of indexation, reimbursement, benefit increase, and so on. We need to start that process now. It cannot be done overnight or even over a few years' time. It takes a long time for those gains to come in, cumulatively. No one is going to vote for a "thirty percent cut to Medicare, today," although they might vote for changes in rates, which over time would amount to large reductions.
4. The time for a Grand Fiscal Bargain is now. If we don't do it fairly soon, we won't get spending under control at all. Furthermore the number and percentage of elderly voters will only increase, which will make spending cuts more difficult as time passes.
5. Let's say a proposal for long-run balance were presented, with $3 in spending cuts for every $1 in tax hikes. That is still a good deal for the anti-tax, anti-spending conservative. Rejecting such a deal means we will end up with something closer to $3 in tax hikes for every $1 in spending cuts. (And no, I don't know what is the "break even" point for a good bargain in this regard.)
6. Bill Niskanen's research shows that by taking tax hikes off the table we simply encourage governments to spend more. Spending then looks like a free lunch.
7. Making it a priority to "avoid any tax hike today" is the same kind of short-run view which brings us to fiscal catastrophe in the longer run. In the medium-run, much less the long run, this attitude will lead to higher taxes. However much it may masquerade as a low-tax attitude, it is in reality a high-tax attitude. Unintended consequences is a fundamental economic idea and it is very much operating here.
8. If I called on President Obama to push for a budget deal, and I cite CAP in support, it was not to criticize the Democrats, or Obama (as DeLong and Krugman mysteriously suggested), but rather because I see him as by far the most influential player in this process.
In short, I am asking for the true fiscal conservatives to step up to the plate, and bring about lower taxes in the long run, rather than simply "playing team on the tax issue" in the short run. Time is not on our side, and if we think it is we are fooling only ourselves.
From the comments
I never really bought the "conservatives are fearful" argument; after all, the left is the one arguing for more economic protection.
I think a more useful distinction is that people want free-market competition in areas where they are strong, and protection and regulation in areas where they are weak. Conservatives want free competition in the economic sphere but moral protections in social interactions; liberals want protection from market forces but are happy to take their licks in status-seeking competitions.
In a state of nature, the highest-status people get away with much more bad behavior than low status folks. Therefore, strict social rules are essentially a progressive tax on status!
From the comments
Master of None, Just to be clear, I am not one of those monetarists who argues that you should expect to find a correlation between current movements in M, however defined, and future movements in AD. Indeed if you did find this sort of correlation, it would suggest extraordinary incompetence on the part of the Fed. If they are inflation targeting, there should be no correlation between M and P. And yet M would still be causing P.
These studies don't seem to incorporate recent advances in monetary theory, such as the Woodford model where current movements of AD are caused by changes in the future expected path of monetary policy. It's almost impossible to pick that up with Granger causality.
I agree with the logic of Scott's point, but I might interpet it differently than he does. I would file this one under "Good macroeconomic knowledge is hard to come by."
From the comments
From Ezra's comments, this is ctown_woody:
Ezra,
To what extent is the Fed worried about making a visible commitment and failing? If Tyler Cowen and others are right that this slump is the end of family-deficit spending, it is quite conceivable that the Fed will fail to deliver that which it promises to deliver. At that point, the institutional players in the Fed will have lost credibility, which would lead to a lose of independence from politics.
So, to what extent is the Fed acting like Peter LaFleur from Dodgeball, "If you never try anything, you'll never fail"?
From the comments
…in 1981 Margaret Thatcher cut UK government spending in the middle of a recession, and against the advice of 391 economists that it would worsen the recession, and UK GDP started its recovery the same quarter. In 1991 Ruth Richardson in NZ cut government spending against the advice of 15 economists, and NZ GDP started its recovery the same quarter. There are a number of other cases of expansionary fiscal consolidations, and there's a causal theory to explain why this can happen – see http://ideas.repec.org/p/cpr/ceprdp/417.html (shortly, it's that cutting government spending improves people's expectations about the future of the economy and taxes, so they start investing more right now). Of course, correlation does not prove causation, and perhaps there is something about the EU countries now that is so different as to the cases I cite as to make those results no longer likely to hold, but Krugman writes as if he has forgotten entirely about the 1980s and 1990s.
That is by TracyW. Later in the thread she refers us to this paper, on how "contractionary" fiscal policy can be expansionary, and vice versa.
From the comments, on the inevitability of utilitarian judgments
Mario Rizzo writes:
Tyler, please. You should have taken my course this past semester. Benthamite reasons. Bentham is a total mess. One commentator said that Benthamite utilitarianism is a philosophy that tells you what to do when you have the data that you cannot obtain. This is it in a nutshell.
I very often agree with Mario and even here I think I agree with Mario, though Mario doesn't think he agrees with me.
To be sure, I am not a Benthamite utilitarian, if only because I believe rights should sometimes trump utilitarian recommendations. Furthermore, schema for making interpersonal comparisons involve value judgments, which means the Benthamite calculation is never purely descriptive but rather contains significant elements of other, non-Benthamite moral theories.
That said, Benthamite reasoning is hard to escape. Everyone relies on it when making decisions in everyday life, whether it be voting on a job candidate or buying one car rather than another or putting a bus line on one road rather than another. Even a lot of the arguments for following rules rely on an ultimate Benthamite judgment about good vs. bad consequences.
The fact that one might be wrong in any particular estimation — always the case — doesn't change the need to make a final judgment. "Benthamite" makes it sounds more scientistic than it needs to be, since Bentham had some unusual views, but still an assessment needs to be made.
Mario offers an instructive comment: "Bentham is a total mess." Is this an aesthetic critique, or is the suggestion that following Benthamite maxims won't lead to utility-positive results? If the latter, which is what I suspect, Mario is himself a Benthamite broadly speaking and in that sense we (at least partially) agree.
Maybe you're a preference utilitarian, but when it comes to aggregation, or how you interpret "veil of ignorance" results, you're still going to rely on utilitarian constructs to do a lot of the final work in the theory. If your imaginary people are behind a veil of ignorance, they've got to estimate the cardinal utilities (broadly interpreted) associated with different results. You're just shifting the cardinal comparison to a different place, away from the theorist (supposedly) and into the hands of the veiled ones.
Benthamite reasoning is inescapable, though it is a big mistake to make cardinal utility the only relevant value. We're all pluralists now, but cardinal utility should be a major part of the relevant pluralist bundle.
From the comments
Natasha C. writes:
I have not seen this mentioned in any comments (or Tyler's post) but consider this: there are at least some men who would support the idea of cloning themselves, I doubt there are many women who would do so. Are men more narcissistic or is there something else at work?
One possibility is that men are more insecure about paternity than women are about maternity, and so they demand greater similarity. The lower variance of female reproduction results is related to this, noting that the would-be male cloners are outliers of some kind rather than the median. What other explanations can you think of?
From the comments
Steve S writes:
Steve Entin at the National Center for Policy Analysis has written on the very issue of the subsidies vs the tax exclusion. His conclusion:
Adding the subsidies for premiums and cost sharing, the family getting the health exchange policy would receive a total subsidy of $17,400, while the family receiving employer-based insurance would receive a total subsidy of $4,143.
That is a huge differential. The whole piece is here: http://www.ncpa.org/pdfs/Health-Insurance-Exchange-Subsidies-Create-Inequities.pdf
File under "Not a political equilibrium."
From the comments
It seems to me that the American political system is simply broken. Canada could reduce the size of government and keep health care spending in check because in a parliamentary system with strong party loyalty, individual politicans are given 'cover' by their parties and are not held personally responsible for the taxes and benefits of their constituents. If the party in power makes a decision to cut benefits which will harm an individual politician's district, that politician isn't necessarily on the hook for it. The voters know that he has to vote the party line even if he disagrees with the legislation. He gets re-elected so long as the public feels his party in general is better than the opposition.
In the U.S. system, where every vote is a free vote, each member of Congress has to answer for his/her votes, and this drives NIMBY-ism and ever-increasing benefits without the tax hikes to pay for them, and it also causes wheeling and dealing which ultimately makes large regulatory packages like health care reform incoherent and bloated with pork.
I think American government works well when it's strictly limited. When Americans try to implement Euro-style social democracy, they fail due to the nature of American government. It is uniquely unsuited to centralized technocratic governance.
That's from Dan H. and he has more to say at the link.
From the comments (at EconLog)
From the comments
People are not always eager to lay down good vs. evil thinking. I don't mean to pick on any single commentator but here is one example:
…E T Jaynes is spinning in his grave that you used Bayes to justify an increase[d] belief in AGW based on scientist's personal beliefs when they lacked the to support their own conclusion.
They believed something so strongly they faked data? A scientist should only believe something so strongly because they have the data to support their belief!
This was perhaps the most misunderstood blog post (including by other bloggers) I've written, yet the original text is quite literally clear, though perhaps it confuses people by not offering up the emotional valence they are expecting. I did not try to justify any absolute level of belief in AGW, or government spending for that matter. I'll repeat my main point about our broader Bayesian calculations:
I am only saying that #2 [scientists behaving badly because they think the future of the world is at stake] deserves more than p = 0.
Nor is my point that p is large, but rather if you don't consider this p at all your reasoning is incomplete. People simply do not wish to hear that sometimes they should pay heed — incomplete heed at that — to the opinions of evil others. It's remarkable how many people responded to this blog post by attacking either the scientists or, in some cases, me.
From the comments
Isn't it only fair that if companies can bribe and threaten politicians
(by contribution to them or their opponents), politicians should be
able to bribe and threaten companies?
The source is here, from comments on the last post. Arnold Kling comments on related matters.
From the comments
I'm out of my depth in economics here, but perhaps one reason it's
different when there's a bubble inflating rather than bursting is
*information*. When the housing bubble or the dot.com bubble is
inflating, it's fairly easy for people to know that it's inflating, and
thus where the new jobs are. People from hundreds of other parts of the
economy know that there are jobs to be had (and pretty good investment
opportunities to be had) in housing (real estate, construction, selling
mortgages) or in dot.coms (software, selling development tools,
investing in startups).
When the bubble pops, the information about where jobs are is much
more diffuse. It's not "go west (to the Bay Area) young man," but
rather "go back wherever you came from and see what's available."
And here is comment by Russ Roberts.
From the comments
MR commentator Liberalarts offered up this insight:
To other professors of economics, I might add that it is a bit shocking
for past undergraduate students to explain their memories of your class
to you!
I would request that MR readers offer up examples, either from their time as teachers or, more aptly, from their time as students, of what they remember from a particular class.
The wise man expunges "positive v. normative" from his vocabulary. Ises and oughts are easily and naturally translated into one another, based on the purposes of the interlocutors and the discourse situation.
The words "positive" and "normative" do not mean nothing, but what they mean can always be expressed in better terms. "Normative" often means outspoken, unconventional, strident, etc. It can also mean loose, vague, and indeterminate.
Tell me "positive" or "normative" for each of the following:
(1) The minimum wage ought to be repealed.
(2) I think the minimum wage ought to be repealed.
(3) The minimum wage reduces social welfare.
(4) Wise people oppose the minimum wage.
The primary verb of (1) is an ought, while the primary verbs of (2), (3), and (4) are ises. But all four statements are really the same.
Coase used the term "affectation" for posing as "positive" and not "normative."