EconLog Archive
Fiscal Policy
Social Security Tax Cut?
A proposal from former Labor Secretary Robert Reich: The best and the fastest way to get more money into the pockets of people who are likely to spend it quickly is to cut the taxes of average working people. Most people pay more in payroll taxes — primarily for Social Security and Medicare — than .. MORE
Austrian Economics
Capitalism as a Benevolent System
Critics of capitalism see it as a cruel system that fosters injustice and exploitation. An alternative view is offered by many economists, particularly those of the Austrian School. George Reisman, for example, speaks of what he calls twelve insights into the benevolent nature of capitalism. For example, A continuing increase in the supply of economically .. MORE
Fiscal Policy
Comment of the Week, 2003-04-30
On the subject of job-creation arithmetic, Paul Zrimsek writes, It’s a pity that the great divide-by-ten controversy has diverted everyone’s attention from what ought to be the main point: that the comparison Krugman drew between tax losses to the government and the salaries of the created jobs is meaningless whether he’s doing the math correctly .. MORE
Efficient Markets Hypothesis
Stock Market Regulation
‘Jane Galt’ casts doubt on the deterrence value of the settlement in which Wall Street investment firms agreed to pay a large fine. I don’t want this to be the opening act in some morality play, directed by Spitzer, in which the rest of America is absolved for speculating wildly on investments they don’t understand. .. MORE
Energy, Environment, Resources
Regulatory Pollution
Discussing a forthcoming study of air pollution by Joel Schwartz, Ronald Bailey writes, For example, [Schwartz argues that] a proposal to raise the prices of conventional cars and use the extra money to lower the prices of electric cars—which are estimated to cost $17,000 more than conventional cars—would be counterproductive. Since new conventional cars will .. MORE
Fiscal Policy
The Budget Debate, IX
Jonathan Rauch has a nice summary of the issues in the Budget debate. The economists note that if tax cuts are paid for through higher deficits instead of lower spending, the government borrows back from the economy the capital that it injects. The administration retorts that its dividend tax cut will improve the allocation of .. MORE
Fiscal Policy
Spend Less on Education?
Sometimes, an economist argues against conventional wisdom, as in this essay, where I question the view that the government needs to increase its spending on education. If we combine the limited extent to which education is a public good with the factors that make government the highest-cost producer, it becomes almost certain that the cost-benefit .. MORE
Fiscal Policy
Job-Creation Arithmetic, II
On his web site, Paul Krugman has posted the textbook macroeconomics of fiscal policy for stimulating employment. In a related post, Krugman explains how this basic macroeconomic model explains what some people (like me, for instance) found puzzling about a recent column in the New York Times. No, I didn’t forget to divide by 10…no .. MORE
Economic Growth
Savings, Capital Deployment, and Growth
I was taught in graduate school that economic growth has two main drivers: the savings rate, which determined the steady-state capital-labor ratio; and the efficiency of labor, which increases over time due to technological change and better human capital. Yesterday at a seminar, I heard IMF chief economist Ken Rogoff mention another parameter: the efficiency .. MORE
Trade Barriers
Trading with Weasels
In this essay, I argue against excluding France, Germany, and Russia from trading with Iraq. Private-sector companies from France, Germany, and Russia should be allowed to compete for Iraq’s business, along with other private-sector companies. Even if we have a quarrel with the governments of the Weasels, it is not productive to take revenge on .. MORE
Microeconomics
Basic Supply and Demand
Reading this story about unemployment among computer programmers left me feeling amused and vindicated. “This is the worst I’ve seen,” said … an out-of-work systems integration analyst, who has been involved in the tech industry since 1974. “I’m running into people who have been out of work a year or a year and a half. .. MORE
Economics of Education
Comment of the Week, 2003-04-23
On the subject of productivity in the government sector Scott (no last name included) wrote, …All of the educational proposals currently in vogue specifically involve reducing productivity. They keep looking for smaller class sizes and higher teacher pay with the promise of better educational achievement for the students. But no one is promising as large .. MORE
International Macroeconomics
Optimum Currency Areas
Martin Feldstein explains why Europe is not an optimum currency area, even though the United States is one. First, American employees move within the country when demand is relatively weak in a particular region, facilitated by a common language and a culture that regards moving across the country as perfectly normal. Germans are not leaving .. MORE
Fiscal Policy
Job-Creation Arithmetic
Paul Krugman writes, The average American worker earns only about $40,000 per year; why does the administration, even on its own estimates, need to offer $500,000 in tax cuts for each job created? Krugman’s arithmetic is to take the ten-year revenue loss from the tax cut, divide that by the number of jobs that supposedly .. MORE
Productivity
Cost Disease
If the government is taking more in taxes than it did forty years ago, then why does the typical citizen not feel that he or she is getting more in services? Kevin Drum proposes an answer. In fact, most of the per capita increase in government expenditure over the past 40 years has come from .. MORE
Austrian Economics
Leftist Austrian Economics
I don’t know how else to describe this article by Richard Florida (recommended with reservations by Stephen Karlson). In the later 20th century, the pace of creativity quickened while the profit from routinized production plummeted. A new version of capitalism began evolving in which creativity was not just perennial but constant, in which rapid-fire innovation .. MORE
Energy, Environment, Resources
Fishy Economics
How can we deal with the problem that unrestricted access to fish leads to over-fishing? This is almost a textbook exercise in Coase economics. One solution is fish farming, in which a business owns the fish that it breeds in a particular area. In The Skeptical Environmentalist, Bjorn Lomborg argues that fish farming is increasing .. MORE
Growth: Consequences
Elastic Economy
In this essay, I suggest that the economy has grown more diverse over the past fifty years, making it more elastic. One way to describe the elastic economy is that it has become more complex. Human wants continue to be relatively simple and basic. The fundamental resources, such as land and labor, are the same. .. MORE
Tax Reform
More Tax Day Thoughts
Virginia Postrel writes, most Americans want the tax system to do three things: to be progressive, to treat households with the same incomes equally, and to treat all individuals with the same incomes equally, whether or not they’re married. The problem is, we can have any two of those things at the same time, but .. MORE
Tax Reform
Tax Day Thoughts
April 15th is an appropriate day to consider the complexity of the tax code. Here is a piece by Chris Edwards written in October of 2001 on the case for a consumption-based tax. The key factor that causes rising income tax complexity is that the tax base is inherently difficult to measure. The Haig-Simons measure .. MORE
Energy, Environment, Resources
Economics of Hydrogen, II
Lynne Kiesling quotes an engineering analysis of hydrogen as a fuel source for automobiles. I can assure you that there is no way that spending heat energy to make hydrogen to be burned to make heat energy can be anything but a losing proposition… thermodynamically, and hence – with certainty – economically, this is a .. MORE