Friday, August 31, 2012

Best NPR commercial ever

“There are people who count on you to be witty, at least smart. They don’t know what to think about Goldman Sachs or fracking in the Catskills. They expect you to tell them. And if you let them down, who knows what will happen to the world…or at least New York, which for some people is the world. You owe it to them to listen to WNYC all the time, so please don’t do a half-assed job, that’s not like you. WNYC. Never turn it off.”  (as read by Stanley Tucci, couldn't find a recording online but the ironic smugness in his voice is perfect)

Thursday, August 30, 2012

Stupid Debt Ceiling Histrionics

Aaron Sorkin likes to think he understands economics. His president in the show West Wing has a Nobel Prize in Economics (nevermind that a Notre Dame economics professor who wins the Nobel Prize might and someday become president is so absurdly implausible). Still I'm a sucker for Sorkin-esque dialogue and post-partisan idealism, so I've become a watcher of his new show Newsroom.

Excited to see Olivia Munn (whom I've known since she was the co-host on a little game show channel variety show) playing an economist (PhD from Duke, lecturing at Columiba), but just got annoyed and very disappointed whenever her character spoke.

Because she (like Sorkin) speaks not the language of real economists (like the NPR planet money or Freakonomics guys do) but instead the economics of know-it-all pundits like Thomas Friedman, who talk with authority but get most things wrong.

Among them, her (Sorkin's) hyper reaction to the Debt ceiling debate where Republicans asked for a debate on whether the US should be allowed to  borrow more money (which is being talked about again because of Paul Ryan, election season and a few books and tell-alls on the topic), which was full of hyperbolic superlatives that really didn't play out. First, the claim that the debt ceiling is not meant to be debated in Congress is stupid. If Congress really thought so, they could just eliminate it, but they *choose* to tempoarily renew it each time *to allow for debate*.  Second, the idea that playing with the debt ceiling will lead to distrust of US treasury bonds is a theoretically possibility, but empirically, the debt ceiling debates and the S&P downgrades only led to record low interest rates as people fled to American treasury notes because they are still deemed safer than anything else in the world (monetary policy also played a role here of course, but the idea still is that all the political turmoil had at best a 2nd order effect). Finally, as a practical matter, not raising the debt ceiling wouldn't necessitate default. There are lots of short term measures (like withholding social security checks) that would have allowed the US to continue to make its interest payments.

Having wrong-headed ideas is one thing. Having wrong-headed ideas wrapped up in trademarked Sorkin-style supercillious righteous indignation is just annoying.

Monday, August 20, 2012

Apple, Amazon and Google : Tax Evaders

Masters of Tax Evasion
Created by:
I was asked to post the following infographic that someone made. I don't endorse their site in any way, but I think their graphics are quite pretty and it makes an excellent point (though I find it odd it leaves off the tax rate on oil companies who pay amongst the highest tax rates). A nice counterpoint to the kerfuffle over Romney taking advantage of tax laws. Since Apple does the same.

Although I would add that everyone that buys or uses google, amazon or apple products are complicit because while the government suffers from the loss in tax revenue, the consumers (along with Apple shareholders) share in the benefits. Whether it is consumers or shareholders who benefit more depends on the relative elasticities (essentially, the more consumers are willing to trade their Apple phone for a Google phone, the more they benefit from lower taxes on Apple and Google).

There is also good reason why maybe apple should pay less in taxes. As the recent NPR planet money pointed out, economists are largely agreed that (in an ideal world) corporations (and people living off capital income) should pay essentially zero in taxes. This is particularly true for corporations engaged in innovation, which arguably characterizes google, apple and amazon.

(See my nerdwallet post or any textbook on public finance for more on both of these issues)

Wednesday, August 15, 2012

"Little evidence exists thus far that corporations are rushing into the fray [of campaign spending]" - Time

"Little evidence exists thus far that corporations are rushing into the fray [of campaign spending]" - Time

This line from last week's Time Magazine struck me because it comports to my intial reaction to the Citizens United ruling. I thought the histrionic reactions were ridiculous because I expected the ruling to have minmial effect. This is not really my field of study anymore, but all the research I am aware of argues that previous limits against corporate campaign spending were not binding because corporate spending was so low (Ansolabehre, de Figuereido, Snyder), that what spending there is does little to sway how a politician votes (ibid, and the empirical tests of Grossman-Helpman) and that money is largely not very effective at buying votes (Levitt). (For those political scientists out there, please correct me if there are other papers I should be aware of)

Thus it makes perfect sense that the ruling would have minimal effect on corporate spending despite all the media and pundit bloviation. There has been a lot of spending by wealthy individuals this season, but as Time noted, this is nothing new, for example George Soros spent a ton of money attacking Bush in 2004. Perhaps the ruling made wealthy individuals think they could hide their spending more easily but that also largely seem not to have been the case as intrepid reporters have been good ferreting out the sources.

Sunday, August 05, 2012

My online course: Energy and Environmental Economics

For those who are interested, an online version of my course on Energy and Environmental Economics is now available for free at

Friday, August 03, 2012

The Economic Consensus : Planet Money Style

I talk about the Economic Consensus all the time in class and other venues. There are so many policies that economists across the political spectrum would almost all agree on that don't get adopted, mostly for political reasons. Planet Money did a good job (and picked great people) laying out a 6 plank platform that most every economist would get behind but pretty much no politician would.

1. eliminate the mortgage tax deduction
2. eliminate the health care tax deduction
3. eliminate corporate taxes
4. replace income and payroll taxes with consumption taxes
5. tax carbon
6. legalize marijuana (not sure about this one)