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Assorted links
1. China Law of the Day: forced to visit your parents
2. What do we know about innovation?
3. Data from Wellsley; could be better, could be worse.
4. Barack Obama names the very excellent Jason Furman to be Director of Economic Policy.
Posted by Tyler Cowen on June 10, 2008 at 12:44 PM in Web/Tech | Permalink
Comments
The basic concept is simple: generally the tax system should strive to be neutral so that decisions are made on their economic merits and not for tax reasons.
-from Senate testimony by Jason Furman
I like this guy. More evidence that Obama is a left libertarian.
Posted by: Michael F. Martin at Jun 10, 2008 3:27:32 PM
Obama: "I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," he said in a speech in Raleigh, N.C.
Does not sound "neutral" to me.
Posted by: Mr. Econotarian at Jun 10, 2008 4:33:14 PM
Econotarian: There is an important and didactic sense in which Obama's idea is consistent with the minimum-distortion principal that Furman spoke of. A random tax -- one in which the person to be taxed and the amount of the tax is chosen randomly -- is minimally distorting: everyone behaves as if they had slightly less money, to account for the possibility of being taxed, but their investment and consumption decisions are the same as they would have been on that lower budget line. To the extent that the oil companies didn't expect a windfall profit tax, and that consumers didn't expect to get that money, Obama's proposal is minimally distorting. Of course, if the proposal gets promoted from a one-time measure toa principal of taxation that producers and consumers expect to be applied in the future, it becomes quite distortionary.
Posted by: David Wright at Jun 10, 2008 6:56:26 PM
Sounds maximally distorting to me. Lotteries are pretty good at making people do irrational things based on minuscule probabilities, and those are voluntary.
Oil companies and consumers don't expect market fluctuations? Not being able to bank money in boom times would force people to be highly conservative in lean times. A random tax would force everyone to do so. No one entity would be highly distorted for a particular behavior, but everyone would have to act as if they could be economically.
I don't think distortions are avoidable. We have to choose what to distort. I think Obama is choosing to distort reality. Is he going to go back and get the money once he's in office? By the time he's there the money will be gone.
Posted by: Andrew at Jun 11, 2008 7:06:12 AM
In several areas - energy policy, health care, college education - it seems that Obama (and Democrats generally) prefer policies that they say "level the playing field" or "help the neediest". But the help, in the form of subsidies for those below certain income levels, do nothing to increase supply and definitely increase demand with the very predictable result that prices rise. It's the middle class that bears the burdens imposed by these policies - the expense of the subsidies, the higher prices, and, marginally, being unable to afford that which they could have absent government tinkering. Never mind the elimination of the incentive to work and save for people on both sides of the subsidy.
This "war on the middle class" by the Democrats seems to me an opportunity for Republicans. It's a complicated message, though, and takes time to sink in.
Posted by: at Jun 11, 2008 8:19:23 AM
Within 6 weeks Furman will quit or he will be Obama's stooge. Obama is a machine politican form Chicago, Illinois. That's the land of special interest monopolies. It's also saying one thing and doing another. Obama's comments on NAFTA are instructive. He says one thing for public consumption. Another to the Canadian trade reps. Furman will have to leave his sense of decency and common sense at the front door.
Posted by: jorod at Jun 11, 2008 9:36:44 AM
I thought Austen Goolsbee was Obama's main economic adviser. What's Austen's position within the campaign now that Jason is Director of Economic Policy? Or is Austen gone?
Posted by: jason voorhees at Jun 11, 2008 12:09:31 PM
4. Barack Obama names [deleted] Jason Furman to be Director of Economic Policy.
Hopefully this guy isn't a keeper. It's only a matter of time before some dirt sends him and Goolsbee packing.
This "war on the middle class" by the Democrats seems to me an opportunity for Republicans
Not going to happen. Republicans have largely been responsible for "prosperity for Wall Street at the cost of Main Street". This is the first shot in about 30 years to reverse it, and it will be done.
The only opportunity would come out of Republicans hiring straight from the unions to economic posts.
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