Category: Equitablog

Should-Read: I understand that Gerry Baker would probably fire Eli Stokols if he said what he thinks—which is that Trump does not know enough about either the House or the Senate tax strike cut for idle rich people bill to be “wedded” to it or for it to be “fully backed” by him or for him to be able to judge whether it would or would not be “fully popular”. The lead should be: “Once again, President Trump disheartened both his aides and his audience by making it very clear that whatever briefings he was given had not sunk in at all…”

And I do not think it is good for Eli Stokols in the long run for him to trade his reputation for cash by not having that be the proper lead:

Eli Stokols: Trump Says Democrats Will Like Senate Tax Plan More Than House Version: “President Donald Trump moved to assuage centrist Democratic senators’ concerns about the House Republican tax overhaul by telling them the Senate version will be more to their liking…

…The comments risk complicating Republican efforts to present a united front on both the Senate and House versions of the tax bill to keep it on track…. His comments could fuel doubts among lawmakers about how wedded he is to that version. Many GOP lawmakers in competitive districts already have concerns about supporting the bill, and could balk at being asked to cast a politically risky vote on a plan that may never become law. “I don’t think that’s the president’s bill,” said Sen. Joe Manchin (D., W.Va.) about the House tax bill, speaking after the meeting. Asked if the Senate bill would be the plan fully backed by the administration, Mr. Manchin responded, “we haven’t seen it yet” to know….

The GOP is eager to avoid a replay of the failure of Congress to get a health-care overhaul bill to Mr. Trump’s desk…. National Economic Council Director Gary Cohn echoed Mr. Trump… “Don’t get too hung up on the House bill,” Mr. Cohn said….

Shortly after the meeting began, Mr. Cohn stepped out of the room after receiving a call on his cellphone. When he returned minutes later, he announced that he had the president, then in Seoul, South Korea, on speaker phone. Amid 10 minutes of wide-ranging comments—people in the room say he outlined the itinerary of his trip to Asia and expressed to Democrats his desire for filibuster reform because it’s “terrible” for Republicans—he addressed the tax overhaul, urging Democrats to get behind legislation that he said would be “very popular”…

Should-Read: Nick Bunker: Policy rules and central bank independence: “The general public and their elected officials are not simply passengers on a ship…

…They have a right and an obligation to set the role of the Federal Reserve because the central bank has tremendous influence over the health of the U.S. economy, and it should be bound to hit targets and goals that are set in a democratic manner. But there is room for sensible delegation—not fixing the navigational points regardless of economic conditions…

Must-Read: Roger Farmer: How to Fix the Curse of the Five: “I recently came across this video link to a session held at the 2017 ASSA meetings on the ‘Curse of the Top Five’…

…Jim Heckman… George Akerlof, Angus Deaton, Drew Fudenberg and Lars Hansen. I’m going to concentrate here on… Heckman and Akerlof. Heckman made several points…. The top five journals… influence… is increasingly important in promotion and tenure decisions… concentrates power in the hands of a small group of insiders and that makes it much harder for new ideas to emerge….

A friend of mine… related the following story…. A junior colleague…. In a departmental discussion, the point was made that hir tenure decision would be contingent on whether the paper was accepted there. As my friend remarked; why would we delegate our tenure decision to the editor of the AER?

George Akerlof has five recommendations…. Editors should take more responsibility… referees are advisors rather than… rewrit[ers]… diminish the role of top-five publications in tenure decisions… ‘shame’ deans who act as top-five bean counters…. broaden the scope of areas that we deem to be intellectually acceptable….

I have two recommendations of my ownn…. More than five journals be given equal weight… junior faculty… should be judged on their best three articles…. When I first moved to UCLA in the late 1980s, the senior faculty would read the work of our junior colleagues…

Should-Read: Emmanuel Saez and Gabriel Zucman: Republican tax plan slams workers and job creators in favor of the rich and inherited wealth: “The tax plan… is a remarkable document… most notably in that it achieves the opposite of its stated goal…

…Presented as a tax cut for workers and job-creating entrepreneurs, it is instead a giant tax cut for the rich and inherited wealth…. Cuts the top rate on profits recorded by so-called pass-through businesses from 39.6 percent to 25 percent…. Investors… [who] do not work will pay 25 percent…. Entrepreneurs who work to earn income from start-ups… will pay the higher rate of 39.6 percent. Wealthy investors win bigly. More jobs are not created. Workers get nothing…. The Republican plan… eliminates the estate tax…. The proposed bill cuts corporate income taxes by $846.5 billion…. In contrast, the successful start-up owner who is actively growing his business in Silicon Valley sees his marginal tax rate increase from 47.6 percent to 52.9 percent… because of the repeal of the deductibility of state income taxes….

The share of national income going to the top 1 percent has doubled from 10 percent to more than 20 percent, while income accrued by the bottom 50 percent has been almost halved, from 20 percent to 12.5 percent. There has been no growth at all in the average pretax income of the bottom half of the population over the past 40 years—during which trickle-down enthusiasts promised just the opposite. Now they’re doing it again. Will we listen?

Should-Read: Noah Smith: The U.S. and Japan Don’t Have a Trade Problem: “When Japan buys U.S. bonds, stocks, or car factories…

…and the U.S. fails to do the same in Japan, it pumps up the trade deficit. Japan’s government has been a big buyer of U.S. bonds…. Should the U.S. demand that Japan sell off some of these holdings?… But Japan dumping U.S. bonds could also lead to higher interest rates in the U.S. If the Federal Reserve were unwilling to… fill the gap by easing monetary policy… that could slow the U.S. economic recovery. A far better strategy for reducing trade deficits would be to get the Fed to hold off on its tightening plans…

Should-Read: Brink and Steve are making a good try, but there is a conservative argument that even past generations’ ill-gotten property is deserving of respect that they do not get into…

Brink Lindsey and Steve Teles: Economic Inequality & Crony Capitalism: Conservatives Should Rethink Their Views: “Conservatives have two intellectual commitments that are increasingly incompatible…

…They believe that the American economy is clogged up with crony-capitalist corruption that hands out special favors and protections to organized interests. They also hold that economic inequality—in particular, the surging share of total income earned by those at the very top—is morally justified by the rights of property and the tendency of free markets to raise living standards overall…

Should-Read: As I see it, the Republicans in congress set out to write a tax bill that would (a) reward Donald Trump and his family as much as possible, (b) ensure that nobody in a state represented by a Republican senator got an immediate tax increase, and (c) stayed under 1.5 trillion dollars in its 10-year cost. They did not succeed. But that was their goal. And it created a real dog’s breakfast:

Paul Krugman: On Twitter: GOP tax bill is awesomely bad: “GOP tax bill is awesomely bad, raising taxes on half of middle class while mainly benefiting the idle rich. Why?…

…I think the way to see it is as result of tension between two goals: minimize taxes for Trump and friends versus limit deficit impact. So we have estate tax repeal, of course, and low taxation of pass-through income—e.g. on family businesses like Trump org. But this, plus corporate cuts-gotta pay off big business—costs a lot. So bunch of limits on top end and deductions lost lower down.

Rules to prevent every highly paid doctor and lawyer from becoming a pass-thru tax haven privilege passive investors, i.e., idle rich. Meanwhile, removal of many deductions, for medical expenses, state and local tax, etc. hurt many in middle class. The result is a tax bill that effectively rewards those who are rich but don’t work for it, preferably because they inherited the money. And it penalizes people who actually work for a living, even high-paid professionals. Populism!

Sounding more and more like healthcare: after years to prepare Rs completely unready for obvious downsides of plan:

Brian Faler: Republicans thrown on defensive after study shows tax hike: “Republicans are on the defensive after a new analysis shows some middle-income people would see tax increases under their plan to rewrite the tax code…. 20 percent would pay higher taxes by 2027, the Joint Committee on Taxation said Tuesday…. It promises to be an explosive issue, especially given President Donald Trump and other Republicans’ promises to make the middle class the focus of their tax plans…”

Should-Read: Asad Abbasi: After Piketty: The Agenda for Economics and Inequality: “In the final chapter, Piketty explains, defends and elaborates…

Capital, Piketty notes, embodies multidimensional history, rooted as much in politics as in economics. Capital serves as an ‘introduction’ to this history (548-53). ‘Had I believed’, Piketty quips, ‘in the one dimensional neoclassical model of capital accumulation […] then my book would have been 30 pages long rather than 800 pages’. Piketty argues that capitalism contains an inherent capacity to produce unequal societies… hopes that his work provokes discussion on wealth and inequality. After Piketty not only generates such debate, but also deepens it by highlighting the gaps missed by Piketty. For this reason, After Piketty ticks the box as being as much an ‘homage’ to, as a critique of, Piketty’s Capital. After Piketty is not your typical holiday read. It is work of serious scholarship. The academic language of some chapters pinpoints its intended audience: scholars, students, policymakers and politicians. Yet, the topics discussed in the book affect all citizens. High inequality should concern everyone because it is a moral, social and political issue…