debating progressive politics in Europe and beyond
I like teaching Ricardian Equivalence. Ricardian Equivalence is the idea that consumers will respond to a tax cut by saving the full amount, and not spending any of it. (Here we are concerned only with the impact of the tax cut on income, and we ignore any incentive effects.) It is counterintuitive, so it makes [...]
Forty years ago a British Conservative Prime Minister coined the phrase ‘the unacceptable face of capitalism’ to describe the practices of some companies. This month David Cameron, the current British Conservative Prime Minister, honourably returned to the same theme. Like any Conservative, Cameron recognizes that good companies are essential for mass prosperity. Their core attribute [...]
With the election behind us I had hoped we’d get beyond games of chicken. No such luck. But first you need to understand that the game of chicken isn’t about how much or when we cut the budget deficit. Or even whether the upcoming “fiscal cliff” poses a danger to the economy. The non-partisan Congressional Budget Office [...]
Some people are getting excited about paying tax. They’re salivating at the prospect of European Transaction Tax, which, though continuing to face opposition from the UK under both Labour and Conservative governments, is widely seen as a just way of increasing government revenue and enabling social justice. As readers to SEJ would know, a European [...]
Mitt Romney’s income taxes have become a major issue in the American presidential campaign. Is this just petty politics, or does it really matter? In fact, it does matter – and not just for Americans. A major theme of the underlying political debate in the United States is the role of the state and the [...]
One of the most pernicious falsehoods you’ll hear during the next seven months of political campaigning is there’s a necessary tradeoff between fairness and economic growth. By this view, if we raise taxes on the wealthy the economy can’t grow as fast. Wrong. Taxes were far higher on top incomes in the three decades after [...]
Via a circuitous Internet chain – Paul Krugman of Princeton University quoting Mark Thoma of the University of Oregon reading the Journal of Economic Perspectives – I got a copy of an article written by Emmanuel Saez, whose office is 50 feet from mine, on the same corridor, and the Nobel laureate economist Peter Diamond. Saez and [...]
We live in an era in which the most important forces affecting every economy are global, not local. What happens “abroad” – in China, India, and elsewhere – powerfully affects even an economy as large as the United States. Economic globalization has, of course, produced some large benefits for the world, including the rapid spread [...]
With Congress in recess and our lawmakers now back in their districts, there is presumably a slight chance of meeting one of them in the street. If, like me, your representative in the House is not of your political persuasion – mine, Virginia Foxx, most definitely is not – it might just be worth letting [...]
Debate on the euro area crisis – or the Greek crisis, as it is usually and misleadingly called – has recently centred on the participation of private-sector creditors in the so-called bail-out. This then becomes a so-called bail-in, a nonsensical expression if ever there was one. The basic idea of involving private sector creditors in [...]
Forty years ago, wealthy Americans financed the U.S.government mainly through their tax payments. Today wealthy Americans finance the government mainly by lending it money. While foreigners own most of our national debt, over 40 percent is owned by Americans – mostly the very wealthy. This great switch by the super rich – from paying the government taxes to lending the government money — has gone almost unnoticed. But it’s critical [...]
Public ignorance of the reality of how the economy actually works is a lamentably common fault these days (I count myself among the guilty), and frequently results in crude, polarising debates that are easily dismissed by decision-makers for their inaccurate insignificance and predilection for ideological posturing. While I do not like it, in fact it [...]
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