Krugman's got a book coming out!

He's been widely applauded for making the arguments for free trade digestible for the public. For some reason, when he turns to macroeconomics the applause trails off and whispers of "partisan hack" start popping up.

No matter, Krugman's new book on ending depressions is one I await eagerly. He is the indispensable economic commentator in this depression, and more broadly I'd say the indispensable public intellectual.

A capital gains tax argument I've never quite gotten...

Ira Stoll brings it up, which is the impetus for this post. But I've never quite understood the "don't tax capital gains because it's double taxation" logic.

What's so special about financial assets? I've taken my money (which is taxed when I earn it) and spent it on graduate education (not AU, that's covered - but GW). I now own some human capital. I invested in that human capital because I expected a return on it. That return that I earn comes in the form of more wages, which get taxed at income tax rates. What's so special about financial assets that returns on those assets should get taxed at a lower rate? I don't get it. Why is it that everyone pretends capital gains are not part of your return on investment? When it comes to thinking about capital gains taxes. From an accounting perspective the "double taxation" point is really strange. What income isn't from other income?

We should really have higher standards than this

I swear, if one more kid writes "complimentary good", I'm going to start taking points off.

Sullivan on Callahan

Andrew Sullivan links to Gene here. Congratulations!

If only he linked to one of your observations that libertarianism is not a non-coercive viewpoint, then maybe we'd dislodge his silly Ron Paul endorsement... until he read one of your "everyone else will bomb Iran posts", of course, in which case you'd get him back on the Paul bandwagon.

Speaking of Keynes related material

I saw Treatise on Money in the used bookstore the other day. This one is very hard to find, so I was excited to come across it...

...until I saw the $300 price tag.

Sigh...

Bretton Woods Transcript Found

Fascinating stuff. Thoughts here on the Indian delegation.

Things that have bugged me lately

1. The way changes to consumer surplus are discussed with respect to a price ceiling in intro classes. When you have a price ceiling, anyone wiling to pay at the level of the price ceiling can be in the market. You can't just assume that the people to the left of the point where the price ceiling intersects the supply curve are the ones who get the good. It's quite possible that those with lower reservation prices will get it. So the consumer surplus gains associated with price ceilings are almost certainly overstated. It's true that if you have a higher reservation price, you'll probably exert more (non-price) effort towards getting the product. But to the extent that is true, the actual cost expended to get the project will begin to approach the market price. This is basically the discussion of scalping.

2. I hate the argument by retailers that you have to make a minimum purchase with a credit card because there's a fee for each credit card transaction. The argument is bullshit. It would be trivial to spread that fee cost by raising the retail mark-up. This is no obstacle whatsoever for them. That's not the reason they have minimum credit card purchases. The reason why they have these minimums is to get the guy that doesn't have cash to frantically purchase three bucks worth of extra stuff to meet the minimum requirement. They know enough people are going to do this, rather than leave the store without a purchase. Push back on this - they can run your credit card, after all. Say "but the cashier I had the other day let me run it" or complain about how prominently they post the minimum requirement.

What?!?!

Two Don Boudreaux posts in a row that I agree completely with (here and here)? He would probably take the conclusions of the second link farther than I would, but as it stands it's good. I'm guessing Don would get into areas of fighting against a natural emergence of a social organization that free people construct for themselves that I wouldn't. But it's still quite good as written (of course it is - the Stossel segment he references was written with full knowledge that attacking certain regulations would get a better reaction than others). I liked this point especially:

"One bit of good news is that while there may be so many laws that no one knows if he’s a lawbreaker, it has never been easier to “watch the watchmen.” Tiny cameras in our iPods and cell phones allow citizens to film law enforcement and hold our government accountable."

This, of course, is the whole point of constitutional democracy - watching the watchers and holding them accountable. Unfortunately, some people are suspicious of such democratic feedback loops, and would rather short-circuit the whole democratic process, relying on constitutional restrictions more exclusively to guarantee liberty. I think that's probably unwise. You need both.

Why do so many people WANT there to be disagreement?

Isn't it a good thing when we agree?

Why do Austrians want to think people who like markets actually don't like markets?

Why does Scott Sumner want to think Keynesians are lukewarm about monetary stimulus despite the fact that, along with the market monetarists, we've been the strongest backers of monetary stimulus?

And now, why do the MMTers want to think that non-MMT Keynesians are worried about large deficits from fiscal stimulus?

All of you guys - we agree with you! Shouldn't you be glad about that? Don't we have enough drama in this world already - aren't there enough genuine disagreements we can fight about? Why do you need to act like we disagree so much on these issues?

A Toast to Bob Reischauer!

Last night, I had the honor of being asked to attend and give some brief thoughts at a celebration of Bob Reischauer's retirement from the Urban Institute. Bob served as the Institute's president for the last 12 years, and for several of those years I served as his research assistant.

When Bob got to work on policy and research issues, he mainly dealt with the budget, particularly as it related to Medicare and long-term budget problems.

- Here is a video of Bob speaking at the University of Arizona in 2008 on the politics and economics of health care.

- Ezra Klein discusses an interesting proposal by Bob to tie the employer provided health insurance tax break to cost reduction measures. I hadn't heard this before, and I've always fallen in the camp of "just end the tax advantage" that Klein describes.

- Paul Krugman discussed Bob's views on the deficit in this article.

- And here, Bob advocates additional fiscal stimulus (an issue he did not usually jump into). Bob was always deeply concerned about long-term deficits (indeed, he's been a big influence on my own long-term-deficit-hawkery). In this call for additional short-term stimulus, he advocates the Christina Romer plan to include long-term deficit reduction measures in any additional stimulus bill. I agree strongly.

I never spent too much of my time to working with Bob - it varied between 10 and 20 percent of my time for the first three years I was at the Urban Institute. But he's been a big impact on me. Bob was director of the CBO, a MedPAC member, chairman of the Harvard Corporation, and a Senior Fellow at Brookings. An impressive career. An impressive guy.

Thanks for twelve great years of leadership at the Urban Institute, Bob! Enjoy your well-earned retirement!