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Assorted links
1. One calculation of implicit marginal tax rates on the poor.
2. The rise of Andrew Ross Sorkin at the NYT.
3. The problems of health care transition: "drop your bad risks ASAP" is another one.
5. "Salvaged [nuclear] bomb material now generates about 10 percent of electricity in the United States..." -- read more here.
6. Debunking of Senate vote chart.
7. UK list of best movies of the decade.
8. New Mark Thoma blog at CBS MoneyWatch.
Posted by Tyler Cowen on November 10, 2009 at 12:23 PM in Web/Tech | Permalink
Comments
@1:
So, if we structured welfare programs such that implicit marginal tax rates on the poor allowed a monotonically-increasing net income Mr. Thies wouldn't have a problem?
I'd say that's less a stunning takedown of taxation and subsidy as policy tools as it is evidence of a poor current implementation that could be solved by a good round of well-planned welfare reform.
(Whether that's a political possibility is an entirely different question.)
Posted by: a goddamn communist at Nov 10, 2009 1:38:38 PM
New Mark Thoma blog at CBS MoneyWatch.
Awesome! Now I can see him commentlessly parrot the writings of other people on CBS instead of his own blog!
Posted by: Silas Barta at Nov 10, 2009 1:38:59 PM
4. I live in Detroit. Few people realize the heights from which we have fallen. History is against a major comeback. I compare it to Florence – once the center of the universe and now just a quaint Italian city.
Posted by: Ted Craig at Nov 10, 2009 1:50:19 PM
@4:
How many economics undergraduates are planning their graduate research with Detroit as their laboratory?
"In Detroit, the incapacity of the government is actually an advantage in many cases." This natural experiment may clarify whether it is a lack of institutions causing economical underdevelopment in many African countries.
"...Her goal is to triple the amount of land under cultivation in Detroit every year. All food grown by Urban Farming is given free to the poor...."
and this one, whether aid will crowd out endogenous food production.
Posted by: adam at Nov 10, 2009 1:55:35 PM
@5. So salvaged nuclear material represents 45% of the fuel for nuclear plants. The article mentions worries about the risk that "the pipeline could run dry, with ramifications for consumers." Let's investigate this.
Presumably salvaged bomb material is cheaper than the other 55% of nuclear fuel, otherwise there wouldn't be a worry. But then the marginal cost of nuclear power should be based on the more expensive uranium (the 55%), meaning the salvaged material is simply windfall profits for nuclear power companies. So, yes, running out of bombs to salvage may hurt utilities, but it shouldn't hurt consumers much, unless the marginal cost of obtaining non-bomb uranium is rises significantly when we run out of bombs.
Posted by: libert at Nov 10, 2009 2:05:30 PM
Highlights of 7.
#94: An Inconvenient Truth
#77: Bowling for Columbine
#62: Anchorman: The Legend of Ron Burgundy
#54: Bad Santa
#50: LOTR: The Return of the King (only LOTR on the list)
#34: Finding Nemo (one of 3 Pixar movies on the list)
#32: Gladiator
#26: Minority Report
#11: Borat
#8: Casino Royale
#5: Team America: World Police
#4: Grizzly Man
#3: No Country for Old Men
#2: The Bourne Supremacy / The Bourne Ultimatum
#1: Hidden (Cache)
Can't say I agree with much of the list, but it is pretty much what I expected.
Posted by: Bob Montgomery at Nov 10, 2009 2:26:44 PM
From that calculation of marginal tax rates and basic economics we infer a permanent unemployment rate far above what is observed so one model or the other is flawed.
Posted by: michael vassar at Nov 10, 2009 2:35:53 PM
"In the Mood for Love" should be in the top ten.
Posted by: C at Nov 10, 2009 2:54:18 PM
On Detroit, the story is told by the historical population figures, brought to you by Wikipedia:
1820 1,422
1830 2,222
1840 9,102
1850 21,019
1860 45,619
1870 79,577
1880 116,340
1890 205,877
1900 285,704
1910 465,766
1920 993,678
1930 1,568,662
1940 1,623,452
1950 1,849,568
1960 1,670,144
1970 1,514,063
1980 1,203,368
1990 1,027,974
2000 951,270
2008* 912,062
The population went from 285,000 in 1900 to 1.5 million in 1930. It peaked in 1950 at 1.8 million, then started to decline. This very nicely coincides with the start, rise, and height of the automobile era. The US hit peak oil production in 1970.
Also Detroit is almost unique among Northeast-Midwest cities in having its major population growth spurt after World War I. The only other major example might be the DC metro region.
For comparison, here are the post-1900 figures for the region:
1900 664,771
1910 867,250
1920 1,639,006
1930 2,655,395
1940 2,911,681
1950 3,700,490
1960 4,660,480
1970 5,289,766
1980 5,203,269
1990 5,095,695
2000 5,357,538
2008* 5,354,225
We are not dealing just with white flight and suburbanization, though the city's share of the regional population has declined over the decades. The population of the region stagnated after 1970, same with the metro area.
Detroit is on a major waterway and is well situated as an industrial center. The trick is trying to determine its population ex-auto industry. My guess is its about the same as Milwaukee's and Michigan's ex-auto industry population is about the same as Wisconsin's.
Posted by: Ed at Nov 10, 2009 3:27:07 PM
Michael Vassar,
I think unemployment actually is what you'd expect. Here are some ideas:
1) There is more than monetary reward to working. Most families can earn more than $45,000, at least with 2 incomes, and choose to do so.
2) Many people in the lowest income quartile are students, teenagers, and retired people, who would either choose not to partake of subsidies, or would be ineligible for them.
3) Of the remaining groups of people who would have a hard time getting enough income to get past the dead zone, you do see very high long-term unemployment. Young single black males, for starters.
4) Despite all the rhetoric about the poor-getting-poorer, most of the lower income households are temporary, so you have students and young families where a $40,000 salary isn't so much an end in and of itself, but merely a necessary step to having a $80,000 job 15 years from now.
Posted by: kebko at Nov 10, 2009 3:39:20 PM
In response to adam's point about Detroit's institutions being comparable to those of Africa, the author of the article is clearly referring to an absence of city government. Since people have recourse to state and federal government if they choose to do so, the situations are not really comparable.
Posted by: Millian at Nov 10, 2009 4:17:17 PM
I'm imagining the Detroit version of fox hunting turned to raccoons. ATVs and pit bulls instead of horses and beagles.
Posted by: Alex J. at Nov 10, 2009 4:47:34 PM
While the City of Detroit is in decline, the Metro Detroit area is not.
Posted by: Vincent Clement at Nov 10, 2009 6:15:41 PM
@1 - The author is somewhat cherry-picking by choosing a single parent with two kids. But it is clear from his graph that we should phase out these benefits in a more gradual and coordinated way.
Posted by: jonm at Nov 10, 2009 8:05:30 PM
According to Theis: "Everywhere, the government's desire (meaning the left-liberal do-gooders' desire) to be generous to the poor is destroying the positive incentives to work and to save that are so necessary for a well-functioning economy."
Of course he points out that the situation is really the voter's fault.
So, I conclude that since Newt, with his Contract With America, and compassionate conservative Bush and their Republican majority Congresses that didn't even come close to proposing any solution, (and in fact fought phase outs because people earning $60K in States like Virginia would get aid, not just up to $40K,) qualify as left-liberal do-gooders seeking to destroy the incentive to work.
Although, I judge the conservatives preferring the negative incentives to work, like if you can't make enough you get to chose between homelessness or going hungry, and for his example, the added negative incentive of having your kids taken by child services for failing to provide for them, and if you fight that and earn money the wrong way by serving unmet needs, you go to jail.
Nixon proposed a negative income tax biased system, but to account for the vast differences in living costs, the wealthy liberal states were going to add generous benefits to the Federal negative income tax, but to get that high enough to match Federal aid to the wealthier state Federal aid, the benefits to the poor conservative States were going to extremely generous. Basically, the southern States weren't going need to put much into the programs at all except for administration, yet the money going to the poor was going to increase with many millions more qualifying.
As I recall, Pat Moynihan saw the problem in Congress as liberals on the one hand being suspicious of Nixon and not wanting to deal with him (Ted Kennedy from the 80s on admitted he made a big mistake in that), and the conservatives on the other hand objecting to raising the living standards of so many poor, disrupting the southern class structure which kept a lot of whites share cropping.
I consider myself liberal, and am well aware of the problems identified, but I see the conservatives as the biggest obstacle to fixing the problems, but I won't call them names, nor argue the problem is simple.
Given the conservatives near 12 year of near total control of Congress until a few years ago, I think they would object to being called "left-liberal do-gooders" for failing to even propose the only "intelligent" person's solution.
And I don't think the solution is simple, even without the partisan politics. Real life is just way too complicated. If it were simple, all those tax cuts of the past nine years would eliminate poverty because of all the jobs they would have created.
Posted by: mulp at Nov 10, 2009 8:24:45 PM
3. "But it does make me wonder why the schedule can't be tweaked at least a little. Certainly changes as big as these can't happen over night. But you could see where early 2012 as opposed to 2013 could make a pretty big difference."
These people don't understand anything other than getting over.
So anyway, Mulp, you think that we think the people in Congress are incarnations of Burkean Conservativism?
Posted by: Andrew at Nov 11, 2009 3:11:59 AM
Hey mulp, check this out.
http://finance.yahoo.com/tech-ticker/article/369201/Why-Jamie-Dimon-Wants-to-Silence-Paul-Volcker?
I've never thought people who pretend to be humble conservatives are the cat's pajamas, just that they are better than people who pretend to be crusading liberals, at least until the nation is in a mood for war, and they both jump in with both feet until my predictions about WMDs and military capabilities and assertions about defense principle are proven true and the Dems finally get religion, but hey, I can't save the world.
It seems to me that your guys have been working on the same things for 100 years and most of them have gotten worse. Didn't they promise to end the business cycle? How's that working out? And Bill Clinton repeals Glass-Steagull. Now, don't get me wrong. The problem wasn't deregulation, it was regulation. The government went from subsidizing bank risk and fractional reserve and too big to fail to subsidizing investment bank risk and shadow fractional reserve and even too bigger to fail. Alread bad, to worse.
What supposedly national problems have they actually fixed? Now, I think that Congressmen are just part of the government. But hey, that's just me. But it seems to me that since your guys have been in charge for a century, the only card you have to play is that it is always the obstructionist conservatives' fault that your guys don't get to do what they want. You start calling the conservatives liberal do-gooders and that may work for an election or two but it leaves you in a sticky spot eventually.
Posted by: Andrew at Nov 11, 2009 3:49:17 AM
5. Now, I'm the kind of guy who thinks the gov't can manage to mess up even the best ideas. For example, you take this element that can produce energy for years and governments make bombs of the stuff to blow it all in seconds, possibly hurting bystanders in the process.
So, qualms aside for now, wouldn't it be easier to just go ahead and cut out the middle man and make nuclear power from the stuff without having to make bombs, then unmake bombs to do it?
Posted by: Andrew at Nov 11, 2009 7:30:51 AM
Much of Detroit is literally ruins, abandoned buildings left to be overtaken by nature. This is not a unique situation either, Detroit, Cleveland, Baltimore, and many other cities are unlivable. Even our nicest cities have no-go zones. Welcome to the Great Society. The future is all around us.
Posted by: josh at Nov 11, 2009 7:53:53 AM
"(and in fact fought phase outs because people earning $60K in States like Virginia would get aid, not just up to $40K,) qualify as left-liberal do-gooders seeking to destroy the incentive to work."
Mulp, since WW2 Congress has been > 80% controlled by left-liberal do-gooders. We have thrown trillions at the problem, yet it gets worst.
"seeking to destroy the incentive to work." is the most honest thing you've posted here in a long time. You would get an A+ if add that it's all about keeping to poor poor in order to lock in their vote.
Posted by: Tom at Nov 11, 2009 9:13:36 AM
and young families where a $40,000 salary isn't so much an end in and of itself, but merely a necessary step to having a $80,000 job 15 years from now.
This identifies the basic flaw with looking only at marginal rates as the incentive. Suppose you made $50,000/yr., taxed at 25%, and had the option of changing jobs, working harder, and earning $60,000, where the incremental $10K was taxed at 50%. High marginal rate, big disincentive, right? But if the new job offered a good chance to earn even more income, agian taxed at 25%, or even 30%, then surely we need to re-evaluate the incentives.
The point I'm making is that the definition of "marginal rate" for incentive purposes is not so clear at lower income levels.
Posted by: Bernard Yomtov at Nov 11, 2009 12:07:46 PM
High marginal rate, big disincentive, right? But if the new job offered a good chance to earn even more income, agian taxed at 25%, or even 30%, then surely we need to re-evaluate the incentives.
Sure, escaping to the right side of the curve is a good incentive. It's when you're on the left side that it's ugly. If that chart is accurate somebody making $20k could *double* their income and still be worse off. That's just absurd.
Posted by: Brian 2 at Nov 11, 2009 6:52:46 PM
I have long noticed that the government seems dedicated to high tax rates on single males and single females to fund welfare to single females with children and married couples with children.
What's really bad is the other taxes. Specifically the implicit taxes of imports not balanced by exports, or by differential immigration of unskilled workers not balanced by immigration of skilled workers.
If we paid for our imports, the jobs would be in balance. If we imported as many skilled workers (college graduates) as unskilled workers (no high school diploma) the poor wouldn't be so poor.
Posted by: wkwillis at Nov 12, 2009 6:38:17 AM
