Now Updated with proofreading! Political debates about taxes and tax rates in the U.S. often focus on the rich and claims about the incentive effects of different tax rates. Rarely mentioned these days are the poor. Indeed, the Republican demands in the last few years that tax rates should be cut for the high-income rich … Continue reading Taxes, Incentives, and Being Poor
A very interesting video by an Irish economist explaining how the current reduce government spending ("austerity") approach to the Eurozone debt and currency crisis is doomed to fail. It is doomed because cutting government spending in a recession only makes the recession worse, which in turn, reduces tax collections which then makes the government deficits … Continue reading David McWilliams Explains Why Austerity Is Doomed In Europe
Does anybody understand debt? Some - but not many. Today's post is less of my normal extended prose and more of an outline. I've been invited to speak at some writing classes here at the college and this is intended to serve as my speaking notes. Background: What have you heard? Krugman in New York … Continue reading Does Anybody Understand Debt?
Money is essential to a successful economy. But it's money in circulation that's useful. Money that's locked up in storage in vaults and savings doesn't help. The early economists understood this well and often used the analogy of money-is-to-economy as blood-is-to-human-body. Circulating money, money that is used to buy things is as important to the … Continue reading Rhetoric Is A Powerful Tool To Advance Moneyed Interests
There are many reasons why costs in higher education have been rising faster than inflation for many decades. A fundamental reason is because education is so labor-intensive and (so far) has been resistant to improved productivity via capital investment or technology. This is called Baumol's Cost Disease. But there are other reasons too. One is … Continue reading Oligopoly and the Costs of Higher Education – Journals Edition
Against Monopoly has a great graphic that shows a big part of the problem with our financial sector and our economy. The four banks shown above are the four largest banks in the U.S.: JP Morgan Chase, Citi, BofA, and Wells Fargo. Together they dominate the financial industry. If you add in Goldman Sachs and … Continue reading Too Big to Fail Should Be Too Big to Exist
First an update on a post I made a few days ago. When I commented last Monday on President Obama's jobs proposal, I was less than excited. Having read more detail of the proposal, I should correct some statements I made. I incorrectly left the impression that the payroll tax (Social Security/Medicare tax) cut that … Continue reading UPDATE on President Obama’s Jobs Proposal – Better, But Still Weak
Blogging time has been in short supply lately. To compound things, I've had a bunch of inter-woven ideas bouncing around in my head that I want to explain, but I've been struggling to figure out how to do it. I've been stuck in the "can't explain this until I explain that which in turn needs … Continue reading Politics and Job-Creation Policies – Disagreements and The Theories Behind Them
Averages, if you're not careful, can as easily mislead as enlighten. It matters a lot which statistical measure of the "average-ness" that's used. A good example comes in the case of the U.S. long-term trend of economic growth. What we're interested in is to what degree the amount of GDP the average household has available … Continue reading The Mean and the Median Tell Two Different Stories
When people think about "income distribution" there's a tendency to think of it only in terms of what different people or households have available to spend. In other words, we focus on the fairness or equity of whether some households should only have a small amount of money to live off of vs. others who … Continue reading Income Distribution Does Matter. It’s Wrong Now and Stopping Growth.