24
Jun
2019
Potpourri
I have a lot going on right now–good stuff!–so my blogging will be sparse. Here are some things to placate you:
==> My conversation with Karl Smith. It may lead you to think about fiscal stimulus in a new way.
==> Ep . 194 of Contra Krugman, in which we bust Krugman’s attempt to say progressives are policy wonks who follow the evidence.
==> Can’t remember if I already posted this, but my article at IER on a new working paper from Kotlikoff, Jeffrey Sachs, et al. shows Krugman is doubly wrong. They show (1) government debt can burden future generations and (2) a carbon tax, even a modest one, would hurt early generations on net.
==> We’re #1–twice in a row! (I.e. we’re #11.)
The IER post is extremely interesting.
The authors of the paper Bob is reviewing make 2 points
– Imposing a $30 a ton carbon tax will be a net cost to those living in the first decades after its imposition but will be a net benefit to those living in later decades
– Smart use of government debt and taxation policy can be used to pass some of the costs from those living in the earlier decades onto those living in the later decades so that everyone ‘wins’
Bob embraces the first point (and uses it to promote a ‘do nothing’ policy) but rejects the second as follows:
‘This is shocking. And to be clear, this is putting aside the other government debt. What the authors are saying is that we, our kids, and our grandkids should give ourselves a big tax cut, letting the government debt mushroom to an additional 52 percent of GDP a half-century after the tax, and hand that off to our heirs, who will be saddled with a large tax hike to service this extra burden of Treasury debt.’
First off, it seems a bit inconsistent to be prepared to pass all the costs of addressing global warming to future generations, while being shocked at possibility that it may be optimal to start addressing global warming now AND to pass some of the associated costs onto the future. The paper is clearly saying that that future generation will be better off paying higher taxes to fund (in effect) consumption by earlier generations than paying even higher taxes on carbon use if climate change action if delayed.
Bob is one of the best known proponents (and popularizers) of the idea that debt can be used to affect intergenerational welfare transfers. The paper proposes to use this dea to effect something that would (if taken at face value) be good for all concerned,. The future tax burden (based on the $30 tax) would involve fairly modest sounding peak 8% additional income tax. I can think of several reason why free-market advocates may be skeptical of the findings of the paper. I wish Bob had (given his interest in intergenerational welfare theory) spent more time looking at this part of the paper and not just cherry-picked the bits he felt helped with his own agenda.
https://debunking.podbean.com/e/153-steve-bannister-pours-cold-fusion-on-climate-deniers/
Some of the slightly loopy economists competing against the LMR for top podcast. Their conclusion? More money (presumably tax money) for fringe research because otherwise extinction. Tipping points … m’kay?
I hope Steve Keen is enjoying London but the Fabians are slowly but surely assimilating him into the Borg. I liked him better as a debt hawk.