tag:blogger.com,1999:blog-17232051.post4907070798637096099..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: Is a bailout a tax?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger40125tag:blogger.com,1999:blog-17232051.post-87956629578328475922012-12-18T14:45:25.065-05:002012-12-18T14:45:25.065-05:00Thanks For Blog Thanks For Blog Pençikhttp://osmanliansiklopedisi.blogspot.com/2012/07/pencik.htmlnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-11305863048202397782012-12-07T15:44:25.791-05:002012-12-07T15:44:25.791-05:00What a coincidence. Here's what I just posted...What a coincidence. Here's what I just posted in <a href="http://www.debatepolitics.com/economics/145146-paying-lunch-mmt-style.html" rel="nofollow">a forum thread</a> that's dedicated to a blog entry of yours...<br /><br />1. gavinfielder created this thread to share Dan Kervick's article...<a href="http://neweconomicperspectives.org/2012/12/paying-for-lunch-mmt-style.html" rel="nofollow">Paying for Lunch – MMT Style</a><br />2. Dan Kervick's article attempts to address the widely held economic belief that <a href="http://en.wikipedia.org/wiki/There_ain't_no_such_thing_as_a_free_lunch" rel="nofollow">there's no such thing as a free lunch</a>.<br />3. If you've read the Wikipedia entry that I linked to...then you'd know that "TANSTAAFL demonstrates <a href="http://en.wikipedia.org/wiki/Opportunity_cost" rel="nofollow">opportunity cost</a>"<br />4. Opportunity cost ensures "that scarce resources are used efficiently" <br />5. Pragmatarianism is based on the <a href="http://pragmatarianism.blogspot.com/2012/11/opportunity-cost-passages-quotes.html" rel="nofollow">opportunity cost</a> concept<br />6. Therefore, allowing taxpayers to spend their taxes in the public sector would ensure that scarce resources are used efficiently<br /><br />It would be super cool if you could join that forum and give your supporters a hand with my critique. Xerographicahttps://www.blogger.com/profile/14978832439622230018noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57516890015025961302012-12-07T14:17:50.245-05:002012-12-07T14:17:50.245-05:00But why do you use median income as the cutoff? It...But why do you use median income as the cutoff? It makes more sense to use the poverty line, in which case Mulligan's argument is more compelling.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-14261081887303626812012-12-07T12:44:48.378-05:002012-12-07T12:44:48.378-05:00Most of the government assistance involved is of a...Most of the government assistance involved is of an insecure and transitory nature, and so even if in an individual case it offsets lost wages 1 to 1, that doesn't mean the incentive to look for higher wages disappears. If my boss cuts my weekly salary by $50, and then hands me $50 as a "personal assistance" bonus that I will get for a finite period of weeks, but which might be shrunk or not extended at all after that. I still have plenty of incentive to start looking for a better job.<br /><br />Looking at this issue from the public direction rather than the individual direction, if we end up in a situation where we are paying people a secure income not to work, perhaps it is time we institute a public Job Guarantee program and begin paying people to work.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57592927079456239592012-12-07T09:28:48.050-05:002012-12-07T09:28:48.050-05:00Noah,
what a pleasure to have a blog where the aut...Noah,<br />what a pleasure to have a blog where the author participates in the ongoing conversation. (I also like that you address Casey's ideas. I'd much prefer not having to wade through the dismissive comments about him, even though I understand why people feel that way)<br /><br />Their is an underlying conceit that rich people are rich due to their hard work, and it's corollary conceit, that people who need assistance are lazy and indolent.<br /><br />Gussy up the ideas in econo speak and you can get away with calling people lazy. I simply don't think that increases in unemployment reflect increases in laziness, and I don't think decreases in unemployment reflect decreases in incentives to be lazy.<br /><br />Assertions that this is so need to be refuted.<br /><br />Thank you<br /> Danhttps://www.blogger.com/profile/15136541075745913165noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-4341345266155725212012-12-07T03:32:25.151-05:002012-12-07T03:32:25.151-05:00I've made this point before about Casey Mullig...I've made this point before about Casey Mulligan - he is almost always "not even wrong". <br /><br />Always the argument he makes has general validity in some cases. But almost always not in the specific cases to which he applies it. If he were to say for instance, that the micro-economic design of public assistance in the US could be improved considerably - would people think he was a fool (as they mostly do)?reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-9575627024784487472012-12-06T21:53:19.157-05:002012-12-06T21:53:19.157-05:00From the White House..."For too long, the U.S...From the <a href="http://www.whitehouse.gov/omb/factsheet/paying-for-success" rel="nofollow">White House</a>..."For too long, the U.S. Government has funded programs based upon metrics that tell us how many people we are serving, but little about how we are improving their lives."<br /><br />Eh. Minor detail. <a href="http://www.coordinationproblem.org/2012/12/other-peoples-money.html" rel="nofollow">It's not like it's their money</a>.Xerographicahttps://www.blogger.com/profile/14978832439622230018noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-81690079829184330512012-12-06T21:40:28.888-05:002012-12-06T21:40:28.888-05:00I didn't read Mulligan's post, and I don&#...I didn't read Mulligan's post, and I don't care to if what you say is correct. If he truly doesn't believe poverty rates went up, ever, during the Great Recession, well, a claim like that speaks for itself.Something Cleverishhttp://somethingcleverish.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-65019151717519175402012-12-06T14:12:39.068-05:002012-12-06T14:12:39.068-05:00I mean, if "Mulligan's point" is jus...I mean, if "Mulligan's point" is just that anti-poverty policies in general end up hurting some poor people, then sure, it's possible to find theoretical Econ 101 type examples of that. How big a factor they are, of course, depends on careful empirics.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-58754033316328461722012-12-06T14:11:23.396-05:002012-12-06T14:11:23.396-05:00Well, the minimum wage is not an implicit tax, it&...Well, the minimum wage is not an implicit tax, it's a price floor, so this doesn't really support Mulligan's argument...Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46176351773201051242012-12-06T13:58:13.334-05:002012-12-06T13:58:13.334-05:00Thanks for that response. Mulligan is really reall...Thanks for that response. Mulligan is really really sloppy in his argument, which pisses me off as someone with a Chicago economics degree. However, Bernstein's logic is really not better. <br /><br />I am going to channel Mulligan for a moment and create a thesis that supports his point. One way to stop the poverty rate from rising in a recession is to raise the minimum wage and this was done during this recession. I think most economists agree that puts at least a few people out of work, ensuring that they fall below or stay below the poverty line. However, those who remain employeed have a very good chance of creeping over the line. Statistically, this looks positive from the % poor perspective. But its not necessarily a sign of sign of a "far more civilized society". That would really depend on the proportions of newly unemployeed to the somewhat more well off and the social utility of various outcomes. Again, the poverty line is not the way to measure this since it implies an entirely binary utility function. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79345917116199243942012-12-06T13:49:21.653-05:002012-12-06T13:49:21.653-05:00The problem for Casey is not lack of empathy but a...<i>The problem for Casey is not lack of empathy but a misunderstanding of individual vs aggregate outcomes.</i><br /><br />Yes.<br /><br />Though I'm sure that conservative political bias is what allowed him to make that glaring error without stopping to think carefully about what he was saying.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34623042965224488392012-12-06T13:38:02.223-05:002012-12-06T13:38:02.223-05:00Mulligan has explicitly said it is NOT good being ...Mulligan has explicitly said it is NOT good being poor, and it IS GOOD to help poor people (by, say, giving them money). But if you are poor and your marginal tax rate is 100% (the disputed premise hear), you don't have an incentive to earn a marginal dollar (I'm ignoring the issue of in-kind transfers worth less to the recipient than their nominal cost), because it won't improve your situation at all but instead just result in loss of benefits. The problem for Casey is not lack of empathy but a misunderstanding of individual vs aggregate outcomes.<br /><br />"But they themselves keep working rather than receive the benefits. What explains the disconnect?"<br />A major part of Mulligan's argument is that different people face different marginal tax rates and different incentives. So when he sees employment shifting differently across different groups (young vs old, skilled vs unskilled, married vs unmarried etc) he tries to use that to argue that the cause is not a broad drop in aggregate demand but other factors which differ among those groups. The argument against that should be that there is a "norm of reaction" issue where certain people might, say, become Zero Marginal Product workers after an AD shock while others still produce positive marginal product.TGGPhttps://www.blogger.com/profile/11017651009634767649noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35477497055691943692012-12-06T12:28:54.544-05:002012-12-06T12:28:54.544-05:00What kinds of income support programs kick in *not...<i>What kinds of income support programs kick in *not* in response to a change in your personal situation?</i><br /><br />Ones that kick in in response to a recession.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79080813871789398702012-12-06T12:27:22.074-05:002012-12-06T12:27:22.074-05:00Also, your last two posts have had about the same ...<i>Also, your last two posts have had about the same form. In the case of both Mulligan and Beckworth, you are basically saying they make the mistake of thinking fact A implies effect B when you think there are other possible explanations.</i><br /><br />Similar, yes. But a little bit different. Beckworth's problem was interpreting a reduced-form relationship as structural. That's not valid, but still, reduced-form relationships may point us in the direction of structural relationships.<br /><br />Mulligan, in contrast, just completely fails to understand the nature of individual incentives. It is a remarkable failure for a professional economist. And note that the implicit marginal tax rate that he discusses is actually observable, so he doesn't even need to (wrongly) infer it from aggregate poverty rates.<br /><br /><i>But, as a matter of your opinion, what do you really think? It's not clear to me. I think that both exaggerated the relationship (Mulligan more than Beckworth), but that both are partially correct.</i><br /><br />I'm not sure, and I'd rather live with uncertainty than portray myself as knowing more than I do. That said, my guess is that the fiscal multiplier is highly dependent on the type of stimulus, with government investment having a high multiplier (in countries where there is an infrastructure deficit, like the US), government consumption having a lower multiplier, and tax credits having a multiplier that is essentially zero.<br /><br />As for Mulligan's thesis, I highly doubt that recession-fighting programs have made any person substantially less willing to work in order to escape or avoid poverty.<br /><br /><i>Also, even some economists who should know better throw around observations based on the poverty line without remembering what a arbitrary measure it is (a single nationwide threshold based on regional cost of living surveys).</i><br /><br />Yes, this is a very good point.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-25593533683542022412012-12-06T12:25:48.531-05:002012-12-06T12:25:48.531-05:00Noah,
Yup. I hadn't noticed that your thresho...Noah,<br /><br />Yup. I hadn't noticed that your threshold was far above the poverty level. <br /><br />What kinds of income support programs kick in *not* in response to a change in your personal situation? Were there a lot of poor people who were previously doing nothing who suddenly started getting government checks as a result of the recession? Or was it maybe a change in the minimum wage? Khttps://www.blogger.com/profile/09226058602565040485noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-11817092034769416382012-12-06T12:19:14.642-05:002012-12-06T12:19:14.642-05:00Yes, extensive margin matters too...the list of re...Yes, extensive margin matters too...the list of reasons Mulligan is wrong stretches into the horizon...Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-38370268347433624312012-12-06T12:15:01.600-05:002012-12-06T12:15:01.600-05:00Noah, another point is that Mulligan assumes that ...Noah, another point is that Mulligan assumes that people's choice is continuous. For example, whether to work a few extra hours or not. Maybe that would be the case for people working part-time. But as Hansen has pointed out, there are a lot of discontinuities in labor choice. If a person had to choose between earning $10,000 in government support by not working and $16,000 by getting a full-time job it is not clear at all that they would choose to not work. It all depends on the value they place on having the extra $6,000 dollars. CAnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47241413492544500412012-12-06T12:11:25.539-05:002012-12-06T12:11:25.539-05:00Noah,
It's apparent from your comments that f...Noah,<br /><br />It's apparent from your comments that few of your commenters actually bothered to read Mulligan's original article despite the link you provided. <br /><br />Also, your last two posts have had about the same form. In the case of both Mulligan and Beckworth, you are basically saying they make the mistake of thinking fact A implies effect B when you think there are other possible explanations. As a matter of logic, I think you are correct both times. But, as a matter of your opinion, what do you really think? It's not clear to me. I think that both exaggerated the relationship (Mulligan more than Beckworth), but that both are partially correct. <br /><br />Also, even some economists who should know better throw around observations based on the poverty line without remembering what a arbitrary measure it is (a single nationwide threshold based on regional cost of living surveys). In this recession, there have been a ton of regional effects because the slowing was far from uniform. There also are likely tons of boundary effects (i.e. 1 person falling by a lot to get below the poverty line, 2 people gaining slightly to come out over it). <br /> Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57741953823391711342012-12-06T12:08:47.353-05:002012-12-06T12:08:47.353-05:00Uhh... you're paying attention to Casey Mullig...Uhh... you're paying attention to Casey Mulligan ... why, exactly? Has there been anything the fellow's written in years that hasn't been preposterous?<br /><br />Now, were there a recent article or post by CAREY Mulligan, that'd be something entirely different. Pathttp://berlinmusings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-33876666160387726382012-12-06T10:58:24.992-05:002012-12-06T10:58:24.992-05:00Income effects on labor/leisure choice are not cou...Income effects on labor/leisure choice are not counted as tax rates, actually...Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-29956397918632886462012-12-06T10:57:07.760-05:002012-12-06T10:57:07.760-05:00So, the key here is to think on the margin. Imagin...So, the key here is to think on the margin. Imagine you make $8,000 before tax, the poverty line is $10,000, and the median income is $50,000. Because you are below the median, the government hands you a check for $10,000, so that your after-tax income is $18,000.<br /><br />Now, suppose you were to go out and work and earn one extra dollar, raising your pretax income to $8,001. Your after-tax income goes up to $18,001. In other words, your added work effort has not been taxed at all. See?<br /><br />Now, in this simple example, someone who makes $49,999 - in other words, someone who is just below the cutoff for the $10,000 check - faces a huge disincentive to work. Earning an extra dollar, for that person, means losing $10,000 in benefits. So an implicit labor tax exists <i>somewhere</i> in the economy, due to the means testing. It just doesn't exist anywhere near the poverty line. So looking only at what happens at the poverty line doesn't tell us <i>anything</i> about the effect of the implicit labor tax.<br /><br />Does this make sense?Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32293758682090809822012-12-06T09:53:19.571-05:002012-12-06T09:53:19.571-05:00This comment has been removed by the author.Danhttps://www.blogger.com/profile/15136541075745913165noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47783232407552411102012-12-06T09:04:37.612-05:002012-12-06T09:04:37.612-05:00The Econo pundit incentives seem to be to stretch ...The Econo pundit incentives seem to be to stretch economic theory as far as you can to make a 'counter-intuitive' and 'controversial' claim. Then publish a book.<br /><br />Beats actual rigorous research, for both fun and profit, I'll bet.OGTnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90820588488410818592012-12-06T08:10:03.079-05:002012-12-06T08:10:03.079-05:00Noah,
I don't get it. If the government made ...Noah,<br /><br />I don't get it. If the government made a lump sum payment to all *poor* people, that necessarily involves a means test for each individual poor person. I don't see how any means tested payment, to the extent that it is expected, is not an income disincentive. <br />Khttps://www.blogger.com/profile/09226058602565040485noreply@blogger.com