Things to Read on the Evening of January 20, 2015

Must- and Shall-Reads:

• Bill Gale: “President Obama’s new proposal to tax capital gains at death is a welcome change that would close a huge loophole…. [But] for some assets, it would be a record-keeping nightmare…. There is an easy fix…. We should allow taxpayers to have a ‘standard basis’… 20% percent of current asset value…”
• Noah Smith: “5 Questions About the ‘Victory’ of the Right: 5. Did the Left Win the Economics Debate Over 1900s-1930s, and since then Left and Right Have Been Haggling Over Details?”
• Kansas Center for Economic Growth Weblog
• Nick Bunker: Capital taxation: What is it good for?
• Simon Wren-Lewis: When Central Bank Losses Matter
• Austin Frakt: NICE’s application of cost-effectiveness threshold(s)

1. Shane Ferro: Robots Won’t Save Us From Secular Stagnation: “It’s time to welcome our robot overlords, says University of Manchester economist Diane Coyle in the Financial Times.… Coyle gives the historical example of the washing machine…. Sure, if the robots come and take everyone’s jobs, but then people find ways to work the same amount doing different things, productivity will increase drastically. The economy will probably boom. But this assumes that nothing blows up the global economy before we get to that point…. If low interest rates continue to create asset bubbles that then pop dramatically–which seems to be the real fear of some people who are talking about secular stagnation–the economy could be in rough shape for a long time before the robot (or demographic) saviors come. It is possible to be afraid of robots and of asset bubbles at the same time.”

2. Mike Konczal sends us to:

   Danny Yagan: Capital Taxes and the Real Economy: The 2003 Dividend Tax Cut: “Policymakers frequently propose to use capital tax reform to stimulate investment and increase labor earnings. This paper tests for such real impacts of the 2003 dividend tax cutó one of the largest reforms ever to a U.S. capital tax rateó using a quasi-experimental design and a large sample of U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment, with an upper bound elasticity with respect to one minus the top statutory tax rate of .08 and an upper bound e§ect size of .03 standard deviations. This null result is robust across speciÖcations, samples, and investment measures. I similarly Önd no impact on employee compensation. The lack of detectable real e§ects contrasts with an immediate impact on Önancial payouts to shareholders. Economically, the Öndings challenge leading estimates of the cost-of-capital elasticity of investment, or undermine models in which dividend tax reforms a§ect the cost of capital. Either way, it may be di¢ cult for policymakers to implement an alternative dividend tax cut that has substantially larger near-term e§ects.”

3. Paul Krugman: The European Scene: “The ECB’s plan… the German media are already howling, with Bild warning that Draghi’s expected actions will reduce the pressure for reform in ‘crisis-hit countries such as… France.’… Look at ‘crisis-hit’ France; investors are so worried about France that they won’t hold its bonds unless offered, um, 0.64 percent, the lowest rate in history. But never mind… the French must be in crisis, because they still believe in social insurance, and besides, they’re French. Notice also that crisis-hit Spain is now paying a lower interest rate than Britain…. This should… put an end to all the talk about how low British rates are the reward for austerity, and so on…. Very low rates reflect market expectations that (a) the European economy will remain very weak and (b) that the ECB will continue to fall far short of its inflation target…. The market is saying both that there are very few good investment opportunities out there–few enough that paying the German government to protect the real value of your wealth is a good move–and that inflation over the next five years will be around 0.4 percent, not the target of 2 percent…. The markets don’t believe that the US is immune to these ills. Market expectations of inflation… have fallen off a cliff…. [Yet] Fed officials seem weirdly complacent…”

Should Be Aware of:

• Emily Badger: “Uber and Lyft have become so popular so quickly in large part because they’ve filled a big gap in the urban transportation market. The smartphone-enabled ride services have offered more predictability than cabs, faster travel than transit, and fewer hassles–no parking, for one–than personal cars…”
• Peter Brown (2013): Recovering Submerged Worlds

1. Tim Murphy: Mike Huckabee’s PAC Paid His Family Almost $400,000: “Huck PAC… ‘is committed to electing conservatives across the nation at all levels of government’…. Since its inception, Huck PAC has never spent more than 12 percent of its funds on candidates or other PACs. It gave only 5 percent of its revenues—that is $47,000 of $1,063,142—to candidates during the 2012 cycle…. Last July, Politico reported on Huckabee’s penchant for charging state Republican parties for expensive, chartered flights—$15,944 for one trip to Iowa—when traveling for meetings and fundraisers. In 2009, an Alabama congressional candidate was forced to take out a loan after Huckabee’s $33,990 speaking fee ended up costing more than the candidate had raised at the fundraiser…”

2. Jamelle Bouie: Robert E. Lee Day: “This is the Gen. Robert E. Lee who led Confederate armies in war against the United States, who defended a nation built on the ‘great truth’ that the ‘negro is not equal to the white man,’ and whose armies kidnapped and sold free black Americans whenever they had the opportunity…. He sold children and oversaw brutal punishments, including sewing brine into the wounds of returned fugitives…. ‘If the image of Lee changes in history, the man himself did not, even in the face of the greatest provocations,’ writes Paul Greenberg for the Arkansas-Democrat Gazette in its annual editorial on the life of Lee, ‘His victories were great, but his honor greater.’”

3. Lauren Davis: He Went In For A Tune-Up And Came Out With A Full Cerebral Upgrade): “As the mask clicked over his face and the new neural pathways lit up, Zourn immediately wondered if he had paid too much for the upgrade. ‘That’s normal,’ the tech told him as she gave his mask a quick polish. ‘The upgrade makes you a savvier shopper, but only after we’ve debited your account.'”

4. Mark Joseph Stern: American Sniper Lawsuit: Chris Kyle Told Lies About Jesse Ventura: “The Ventura story wasn’t true, and Ventura meant to prove it. So he took Kyle to trial, suing him–and, after he died, his estate…. On July 29, 2014, a federal jury returned from six days of deliberations to award Ventura $1.845 million in damages…. Kyle’s widow… is currently appealing the decision; her odds of winning appear quite low. All of this presents a very big problem for HarperCollins…. Ventura brought another lawsuit for unjust enrichment, this time against HarperCollins. The lawsuit explains that while Kyle is the one who defamed Ventura, HarperCollins played up those defamatory statements in order to boost its sales—and with reckless disregard to the truth of Kyle’s claims. This suit is the second of Ventura’s one-two punch, and from here, it looks like a knockout. During the first trial, Ventura’s attorneys uncovered records of HarperCollins’ negligence in fact-checking Kyle’s book, as well as evidence that HarperCollins specifically touted the Ventura story to drum up publicity…”

5. Charles Pierce: Ron Fournier’s Idiocy Reappears As He Attempts To Counsel President Obama On Progress And Partisan Gains: “Tell me I didn’t call this 150 words ago. The areas of ‘potential agreement’ that Clinton found involved repealing the Glass-Steagall Act and deregulating the commodities futures market. I don’t think we should burn down the world economy so that Ron Fournier can feel comfortable about how well the system works…”