This country desperately needs better gas mileage. But it does not come free. The most efficient and equitable way to both increase mileage and reduce gasoline use (increased mileage alone can induce people, perversely, to drive more) is with a new gasoline tax, refunded by means of reduced payroll taxes to make it revenue neutral. But there is absolutely no congressional or administration support for that, because it is too honest and open an acknowledgment that there is no free lunch. The reason Congress loves corporate average fuel economy (CAFE) standards is precisely that they hide the cost -- in the sticker price of a new car. Whatever blame there is for the unfairness of life -- that energy efficiency is not free -- goes to the auto company rather than the mandating body, namely Congress.
Good luck Elizabeth - I hope you have fun with the rest of your planning!
I also hope everyone else in blogland is as ready for their weekend as I am. As I said before, we're throwing a shower for some good couple friends. I promise some pictures for you all next week.
Striking down an antitrust rule nearly a century old, the Supreme Court ruled on Thursday that it was not automatically unlawful for manufacturers and distributors to agree on minimum retail prices....The Bush administration, along with economists of the Chicago school, had argued that the blanket prohibition against resale price maintenance agreements was archaic and counterproductive because, they said, some resale price agreements actually promote competition.Here is a previous post on the topic, including an excerpt from my favorite textbook.
You might wonder how Mr Buffett managed such a low tax rate. Most likely, it arose because corporate dividends and capital gains are taxed at only 15 percent. But the corporate income that funded those returns was already taxed at the corporate level, where the tax rate is 35 percent. Mr Buffett seems to be ignoring the first round of taxation. Is it possible that the world's most successful has failed to pierce the corporate veil? (If you want to more reliable data on the progressivity of the tax code, see this old post for numbers from the CBO.)Warren E. Buffett was his usual folksy self Tuesday night at a fundraiser for Sen. Hillary Rodham Clinton (D-N.Y.) as he slammed a system that allows the very rich to pay taxes at a lower rate than the middle class.
Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent.
Notice that raising tax rates, as Mr Buffett seems to want to do, would not much affect any of these tax avoidance strategies. Even if tax rates were raised substantially, the tax savvy Mr Buffet probably wouldn't be paying much in taxes as a proportion of his wealth or as a proportion of his true income.
He could have written:Since 1980, as union membership has dropped sharply, the share of economic output going to corporate profits has more than doubled.
Since 1980, as union membership has dropped sharply, the natural rate of unemployment has dropped sharply as well.I have no doubt that making it easier for workers to form cartels would raise wages--at least for those workers in the cartels. But demand curves slope downward. When unions push wages above the equilibrium of supply and demand, the side effects are not entirely benign.
How does someone like Warren Buffett contribute to the economy? It seems investing in old line industrial businesses is more of a rent-seeking activity. I take it that people on Wall Street are in some sense parasitical ... yes? Do you still think it makes sense for me to go to work on Wall Street and be, say, an investment manager at a hedge fund? Can one improve an economy's productivity gains by working on Wall street?I believe it is wrong to view investors, including long-term investors like Buffett and short-term investors like hedge fund managers, as parasitical rent-seekers. Yes, they are motivated by self-interest, but by buying undervalued securities and selling overvalued ones, their actions bring the prices of capital assets closer to fundamental value. Those asset prices govern the allocation of investment resources, which in turn is paramount for the success of the economy. So, while making themselves rich, investors make the economy more productive for everyone--as if led by an invisible hand.
My father had been reared a Republican, but he switched parties to vote for Roosevelt and never switched back. His memory of being abandoned by society and big business never left him and, for all his paternal kindness and humorousness, communicated itself to me, along with his preference for the political party that offered �the forgotten man� the better break. Roosevelt made such people feel less alone. The impression of recovery--the impression that a President was bending the old rules and, drawing upon his own courage and flamboyance in adversity and illness, stirring things up on behalf of the down-and-out--mattered more than any miscalculations in the moot mathematics of economics. Business, of which Shlaes is so solicitous, is basically merciless, geared to maximize profit. Government is ultimately a human transaction, and Roosevelt put a cheerful, defiant, caring face on government at a time when faith in democracy was ebbing throughout the Western world. For this inspirational feat he is the twentieth century�s greatest President, to rank with Lincoln and Washington as symbolic figures for a nation to live by.My view: When evaluating political leaders, it is better to trust "the moot mathematics of economics" than "the impression of recovery."
If we are all so concerned about consumer sentiment, and FDR's famous statement that the only thing we have to fear is "fear itself," then we should take Robert Higgs's argument of the effect of uncertainty on sentiment seriously. Higgs said that FDR caused fear itself with his relentless experimentation. I came to appreciate Higgs a lot writing this book. Keynes too was concerned abt the arbitrary aspect of FDR's policy, telling FDR that he should either nationalize the utilities or leave them alone, but not chase them around the lot every week or so.
What else? Going over the period came to like three people, Irving FIsher, Ray Moley and Benjamin Anderson, a lot. Also Rex Tugwell. His profile is the profile of the economist in government and in policy agony. The policy agony of economists is a big part of the 'thirties story. That period is not much different from today in that regard. Politicians surrounded themselves with name economists and then didn't listen to the economists. Or should I say listened only intermittently.
So I spent the weekend getting prepared for the shower next weekend and helping my dad, father -in-law & husband build a small outdoor patio. I learned a lot about the principles of being level. Hope everyone had a great weekend!
A local currency has sprouted up in western Massachusetts. It is called BerkShares. The details of the system suggest that it is motivated largely by price discrimination: People who go through the trouble of converting U.S. dollars to BerkShares get a 10 percent discount on things they buy. In this sense, the system is like discount coupons coupled with a new medium of exchange.
We recognize that there are risks in eliminating early admission....Yet our hope is that the very best applicants�the ones we seek most assiduously�will appreciate the principled stand we�along with Princeton and the University of Virginia�have taken and will resist the pressure to commit to a college before they are fully ready. Historically such outstanding students have exhibited a level of confidence, maturity, and thoughtfulness that separates them from others who may approach the college admissions process more from a game-theoretic point of view.I have not figured out the optimal strategy for applying to college in a world where some colleges offer early admission and others (such as Harvard now) do not. But if the optimal strategy puts Harvard at a competitive disadvantage, then we had better rethink our policy. I hope Harvard does not make the mistake of thinking those high school students who act strategically "from a game-theoretic point of view" are somehow lacking in "confidence, maturity, and thoughtfulness."
