Posts

Call it 'Too Depressed to Blog'

Though the contemporary Republican Party has never been libertarian enough for me or many others focused on economic issues, we at least imagined the GOP would lead a President Trump, who came into office with no governing experience and a platform that was populist and nationalist.

The GOP has failed to do much practical at all. If you, like me, at least hoped Trump would be contained by party orthodoxy, the year has been nothing but disappointment after disappointment.

Civil Rights: Hard to think of anything the GOP or Pres. Trump has proposed with which I agree, from gender issues to voting rights, the GOP is allowing Trump to lead on these subjects — in the wrong direction.

Gay marriage should never have been a national issue. Private matters are private, between consenting adults. The libertarians and social conservatives will always be in conflict on these issues.

On voting rights, I am okay with a basic national ID standard, as is being implemented for the TSA via new d…

More on the 90 Percent Tax Myth

Image
The marginal and effective U.S. income tax rates mentioned in my 2011 post The 90 Percent Tax Myth have been supported by research conducted by Thomas Piketty (Paris School of Economics), Emmanuel Saez (UC Berkeley and NBER), and Gabriel Zucman (UC Berkeley and NBER). These economic researchers are well-respected by progressives. Data are data, though we differ on interpretations. "Income" vs. "Wealth" presents much of the challenge, as wealth accumulates but is not taxed in the United States. Distributional National Accounts: Methods and Estimates for the United States published July 6, 2017, includes the following table:



As the table shows, the effective tax rate for the top 1 percent peaked at 45 percent of income in 1944-45. Unfortunately, the overall revenue intake of the United States kept growing and the burden has been falling most on the bottom 50 percent. Tax increases on the middle and lower classes reduce potential economic growth since these individual…

Democracy in Chains and Inter-Disciplinary Problems

Image
American economist James Buchanan won the 1986 Nobel Prize in Economics. (Photo credit: Wikipedia)Democracy in Chains by Historian Nancy MacLean was worthy of a few online posts earlier this summer, when I first read a loaned copy and was pained by how often the text misstated economic theories associated with libertarians (and some conservatives). As a historian, she makes the all too common mistake of conflating the "radical right" (named on the book's cover) with standard, rather unexceptional and mundane, free-market economic models and theories. She presents common knowledge and well-known debates over theories within economics as some sort of secret plot to destroy democracy when, in fact, the people and theories she discusses seek to protect minority rights and freedoms from an easily manipulated government.

I didn't post my columns to my blogs because others, including the economists and political scientists from perspectives other than the Chicago or Austria…

Seattle’s Minimum Wage Hike May Have Gone Too Far | FiveThirtyEight

Image
Minwage3 (Photo credit: Wikipedia) Researchers at the University of Washington, asked by Seattle to study the increase in the city's minimum wage have some difficult news for the city and previous research on wages:

Seattle’s Minimum Wage Hike May Have Gone Too Far | FiveThirtyEight: The study is far from the last word on the impact of Seattle’s law, let alone the $15 minimum wage movement more generally. Indeed, just last week another study used similar methods to reach seemingly the opposite conclusion: A report from the Institute for Research on Labor and Employment at the University of California, Berkeley, found that Seattle’s minimum wage, “raises pay without costing jobs,” as a press release on the study announced.   The UW study was the most data-complete study of its kind. The UW researchers work in only one of four states with complete hourly wage data. The other studies? Done in states that required "estimating" and "models" in the more extreme sense.…

The U.S. Budget and Compromises

Image
English: A graph of the US GDP compared with Federal budget outlay. (Photo credit: Wikipedia) The United States' federal budget spends a lot of money: between $3.5 and $4.0 trillion annually.

How much do citizens of the United States earn each year? A little more than $6 trillion. In other words, the U.S. government is spending roughly two-thirds of the amount earned by all working Americans. Two-thirds.

The top 10% of income earners represent $1 trillion in earnings, certainly a lot, equal to the entire stock valuation of Apple (not the same as Apple's earnings, which are $9 billion per quarter, $36 billion annually).

If every penny earned by the top 10% were confiscated it would have no material effect on the federal budget. That's how out of sync spending is today.

The total wealth in the United States is nearly $70 trillion, meaning everything owned by every person or company, at current "fair value" is worth $70 trillion. Yet, if you were to sell off…

Trump and Brownback and the GOP

If socialists and statists wanted to damage limited government and republicanism they could not have chosen better men as Manchurians than Trump and Brownback.

Trump is the poster child for crony capitalism and everything against the ideals of a free and open society you could imagine. Open: as in trade, borders, tolerance, speech....

Brownback apparently never completed a serious economics course and certainly never read Adam Smith, Hayek, or Milton Friedman. You balance budgets with mildly progressive taxes that recognize the commons must be funded or the middle-class will revolt. (Smith noted all rebellions in English politics are from the monied classes, not the bottom.)

Low taxes are ideal. As low as the community will tolerate, ideally. Low and fair, rewarding hard work. But you cannot cut taxes without a plan to determine what should be funded and why.

In my ideal world, only first-responders and a handful of other priorities are funded through taxes. As little as possib…

Economics of the Minimum Wage

Image
Map of U.S. Minimum Wage laws (Photo credit: Wikipedia) Minimum wage debates tend to overstate the estimated and real effects of any changes to the minimum wage in the Unites States. Most studies show a minor increase in a place with wages already rising has no significant effect on employment. But, there is a cost when wages rise quickly and there is an effect when wages fail to keep pace with the cost of living. The problem is that the minimum wage is not, contrary to any mythologies, the income of most adults with full-time work.

As the debates below suggest, there is a limit to what a local economy can bear in terms of wage growth. At the same time, we know that low wages also reflect jobs that can be or will be automated away in many instances. We are in a new era of creative destruction, with no real plan for the displaced workers without skills.

Allow me to provide an example of how silly on all sides the debate on wages is. Mark Perry gets the facts right in his piece on th…