Potpourri
==> I know, I know, I have a grudge when it comes to Krugman. When he says things that will mislead 98% of his readers on what the published literature says, I feel the need to blog about it. Call me crazy. In this case, I contrast Krugman’s remarks about the irrelevance of tax cuts to economic growth, with a 2010 Romer paper.
==> Speaking of the US history of marginal income tax rates and economic growth, check out this post. I particularly liked the author’s link to this CRS report contrasting the statutory top rates with the effective marginal rates; I need to look into that to see if it’s valid. If so, that goes a long way to explaining the mystery here (for those who think incentives affect economic decisions).
==> David R. Henderson takes a nuanced position on the new laureate Jean Tirole. Henderson argues that Tirole actually was not the huge foe of big business that the Nobel committee describes; instead (David claims) Tirole is being pigeon-holed. I don’t know enough about him to independently weigh in; we used some of his stuff in game theory in NYU, but that was more theoretical rather than pertaining to policy.
==> Jeff Tucker on government quarantines. Is this worth me writing again on? (Recall I wrote on Ebola back in August.) If so, tell me what gaps are missing in the libertarian position. And remember…I’m not a medical doctor.
If tax cuts do not boost growth, then tax increases do not impair growth. If tax increases do not impair growth, then raising taxes to 75%, or 90%, or 95%, even 100%, do not impair growth.
What Krugman is referring to is that if real growth is sufficiently increased (for reasons apart from taxes) to offset the decrease caused by tax increases, then “increasing taxes does not VISUALLY impair growth”. After all, if growth stays flat at 2% because the tax increase reduced it to 2% from what otherwise would have been 3% growth, then visually we can’t correlate the increase in taxes with a reduction in growth.
Or, in Krugman’s case, “Derp corporations are bad, government is good, amen.”
Good catch on the “sharply” knee slapper.
For what it’s worth, your quote of Christina Romer is a negative, i.e. investment falls when taxes increase, and is not the same as investment rises when taxes fall. The rest of the quote is neutral: output consequences of tax changes are large. Since your Mises blog is about Krugman’s fudging quotes you haven’t quite pinned him down unless you quote Romer specifically saying decreasing taxes lead to investment increases.
Logical implication. One implies the other.
“the adverse consequences would be much less than people imagine.”
Yeah, right, so if unemployment rises a percent or two, then he’ll claim victory because “what people imagined” according to Nostrugman, was a one hundred and eleventeen percent increase.
Krugman was on Charlie Rose:
http://www.charlierose.com/watch/60460939
The idea that higher marginal income tax rates somehow spur prosperity and lower ones crash the economy is the clearest indication possible that the average person on the left subscribes not to a belief in some Keynesian model of the economy, but instead to a Conspiracy Theory of Economics. The economy does badly when the rich are allowed to somehow gobble up all the wealth-which is a magic thing that comes from nowhere-and well when they aren’t allowed to.
The fact that this doesn’t make sense to anyone who actually knows anything about economics is unimportant, it just makes sense to them that when their income decreases or the they lose their job, it must be that someone was allowed to take it.
In that same vein, notice the 180 the typical left Keynesian makes? More “spending” is what spurs growth, and when the government does it we’re supposed to ignore the real wealth. But when rich people spend, then all of a sudden spending isn’t the issue, it’s the real wealth!
Doesn’t all that yacht and helicopter and mansion buying “spur economic growth” and “create jerbs”?
Right, the real question is not how much is spent, or on what, but who decides what ends to pursue with what means.
The more formal description is a “zero sum game” theory of economics. That is to say, there exists a fixed size pie and the only thing we do is divide up that pie in various ways. Also the envy based world view (he has something because I don’t have it, so my job is to figure out how to take what I want).
Let’s suppose humans were cats, and we each have some territory we roam in search of good hunting. With bigger territory I get to eat more, or with richer territory I get to eat more. The only way I can improve my position is to get more territory, and that implies you get less. It actually makes sense for an apex predator or scavenger to think in these terms. Cats are not entrepreneurial, they are opportunistic. Cats don’t create new wealth, they keep an eye out for any existing wealth they can pounce on.
I have in mind more than that, though. It’s the idea that the rich shrink the pie on purpose out of spite.
That is, they make it a negative sum game.
Speaking of minimum wage…this is not The Onion:
http://freebeacon.com/issues/seattle-socialist-group-pushing-15hour-minimum-wage-posts-job-with-13hour-wage/
Everyone has a grudge when it comes to Krugman, I would presume he wanted it that way.
Captain America The Winter Soldier
Go see it.
Figure out if Hydra has tricked you into forfeiting your freedom. Decide if you have given into the side that pretends pain is the path to order.
Pain can indeed bring about order. It’ just at the cost of other stuff.
No, you need to watch the movie to understand context. This movie has a gigantically huge libertarian theme, I am surprised it has went so unnoticed. Grown up version of the Lego movie, I really bet Bob and the crew would enjoy it.
Are you saying order as code for an authoritarian hierarchy derived from pain (coercion, theft and violence), that never achieves stated goals, i.e. peace and harmony and in all reality perpetuates and causes the cycle of chaos?
You can keep it, no thanks
BTW, this movie is on DVD, VUDU, et. all. Hardcore action flick with tons of explosions and gunfire but a surprisingly libertarian undertone. See it and tell me I am wrong.
“Government” quarantines as opposed to…what? “Private” or “free market” quarantines?
As a profit seeking business owner, I would never let a sicky trash my ride, problem solved.
That’s not a quarantine and you should damn well know it.
And I love how you so graciously refer to them as a “sicky”. The fact of the matter is that you’re not proposing anything new. Business owners can already kick people out. So what?
Airlines and most transportation don’t have full authority, also there are discrimination laws.
Point is, a hard border quarantine would not necessarily be need if thousands of tiny soft micro quarantines were allowed to freely transpire.
Dot be so angry, sicky.
Gamble and S.C., you guys both need to dial it back a bit, all right?
Let’s put it like this: secession “solves” social strife the same way property resolves disputes. In other words, it doesn’t. I support the two-state solution over in the Middle East not because I know it’ll end the conflict between the Israelis and the Palestinians—all you need to do is examine the more extremist rhetoric—but rather because it is fair and neither side will be deprived of a polity to call their own.
Then again, maybe dissolving both Israel and Palestine and uniting them could work, too.
Ignore this. Wrong post.
Bob, the effective tax rate chart is correct, it comes from this paper —
Historical Tax Rates: Rhetoric vs. Reality, Nov 14 2012
http://www.jec.senate.gov/republicans/public/index.cfm?p=Studies&ContentRecord_id=E523A7A6-5387-4EE5-B6E4-932D29984E06