Thoughts from a Quirky Llama

Matt Yglesias discusses Republican intransigency is his latest post .  I'm not particularly interested in the partisan implications here, but Matt makes a good point about one specific policy issue: Republicans have hammered away at the idea that Obama's environmental commitments are stifling the short-term job creating impact of investment in fossil fuel extraction and transportation. And precisely because  this isn't a crazy idea , over time Obama administration policy has evolved to become increasingly enthusiastic about the short-term economic impact of fossil fuel extraction and less and less focused on the long-term environmental problems involved.   Obama's willingness to make concessions on this point hasn't changed partisan politics, but has had impact in the real world. As expected, we have both more pollution  and more mining sector employment  than we would had this pivot not taken place.   But America's way too big a country f...

Matt Yglesias makes a good point about the Chicago teacher's strike : The most salient difference, completely absent from his armchair psychologizing, is surely that  public school teachers work for the government . If AT&T workers get a better deal for themselves, that may well mean a worse deal for people who bought AT&T stock in past years but I'm not going to cry on their behalf. By contrast, if Chicago public school teachers get a better deal for themselves that may well mean a worse deal for Chicago taxpayers. I completely agree with Matt here.  Matt's not afraid to criticize his own side- it's one of the reasons I read Matt despite his being a raving lefty. In fact, I think Matt will eventually come around to the Libertarian side of the force.  He's smart enough to recognize that unions don't create wealth- they just redistribute it.  In the case of city unions, they redistribute wealth from taxpayers to union employees.  Matt can understand...

Here's Felix Salmon talking about  US fuel efficiency standards : Fuel-efficiency standards are a way of preventing car companies from being forced to hedge their bets by working on gas guzzlers as well as efficient runabouts. As a result, those companies can take the money they’d otherwise spend on developing six-ton monsters, and invest it instead in the efficient cars of the future. Everybody wins, and the cost —  contra  Porter — is negligible. He’s absolutely right that higher gas taxes are a very good idea. But that’s no reason at all not to implement higher fuel-economy standards as well. Felix has written a 2 page editorial complete with color charts without considering the curious question of why Ford sells so many inefficient SUVs.  He says "everybody wins", except that is, the people who currently choose to buy Ford Explorers over Ford Fiestas.  These people will be prevented by law from using their own money to buy the car they want. Felix coul...

I keep reading these blogs talking about Keynesian economics and NGDP, etc... What bothers me most is that it seems like Keynesian solutions can be be applied regardless of the underlying reality. That is, the solution is always more spending and more inflation, without regard to what is actually going on. For instance Matt Yglesias talks about Italy's debt issue : Since your debt is denominated in nominal terms in your own currency, all you need is for your nominal GDP to grow fast enough to ensure that your debt:GDP ratio shrinks. And since shrinking debt:GDP ratio reduces the interest burden on your budget, if you can hold that primary surplus flat soon enough you’ll be making enormous progress. Alternatively, your central bank might be so stingy as to insist on NGDP growing so slowly that your debt:GDP ratio rises despite the primary surplus. That means your interest burden rises and your situation spirals into disaster. Except no country’s central bank would be that insane...

Kevin Drum posts this showing tax share by income in 1979 vs 2007. This purports to show that: 1) Our tax system is not progressive (i.e. the rich don't pay outsized tax rates) 2) Tax rates on the rich have declined. The biggest differences between this graph and graphs favored by the right: 1) "Average" is probably a very misleading way to present a comparison. 2) This graph includes state/local taxes. 3) This graph includes payroll taxes (Medicare, Social Security) Thinking about "Average" tax share It's not clear what "average" mean here. I'm presuming it's the simple mathematical average: tax rate = sum(all taxes) / sum(all income) If that's the case, then it's a highly misleading way to try and show the progressiveness of a tax system. The average almost by definition cannot show the progressiveness of a distribution. Consider the most progressive tax system imaginable: Top 1%: 50%...

Instead of thinking of increasing marginal rates as "taxing the rich", think of it as "taxing the harder working". Here's a graph showing hours worked by income quintile: Russel Sage Chartbook The top income quintile household works more the 2x hours per year. And their reward for all that hard work? Higher marginal taxes!

Here's my Grand Unified Theory of GroupOn (GUTOGON): GroupOn is at heart a coupon site. They've done 2 things to separate themselves from normal coupon sites: Pre-purchasing & Very short-deal duration. This model has helped preserve retailer margins by preventing widespread use of coupons by casual customers. It's also a good model for forcing customers to make "mistakes" (i.e pre-purchasing deals they will not really want/use). Over the long-term though, it's a very customer-hostile model. There are very few business which try to force a pre-purchase model, and when they do it reflects the underlying business reality where capacity is limited (such as a non-refundable plane ticket). Even a single "bad" experience where a coupon goes unused, will tend to turn customers away as people remember bad experiences more strongly than good ones. I think GroupOn has also done a few things which have helped them but are not sustainable. First, the co...