Asymptosis: Always Approaching

Month: January 2011

  • Savings ≠ “Savings.” Investment ≠ “Investment.” Spending ≠ “Spending.”

    And guess what? Saving ≠ Investment. Even though it’s the fundamental “identity” of national capital accounting. Update 2/2/2011: It’s no wonder people think economics is confusing. I’m being facetious. As defined, the Savings Identity is obviously true. But what is an “accounting identity”? It’s basically a definition of terms, a statement of accounting methods. And…

  • What Caused The Great Inflation, ’65-’83?

    I’ve been befuddled about this for a while. The widespread belief is that government deficit spending caused the inflation of the sixties, seventies, and early eighties. But: • Government debt as a percent of GDP was steadily declining until 1981. and • Government debt/GDP started to soar in the early eighties (for the first time…

  • New Comment-Spam Filter for Asymptosis

    I’ve gotten a few comments over the years that comments were getting bounced as spam — generally, it seems, because they contained URLs, or too many URLs. I could never figure out why this was; according to its documentation, WP-Spam Free, the plug-in I’ve been using, doesn’t filter based on that. And I’ve found no…

  • Who “Prints” Money? And Who Gets to Have It? It’s Up to The Banks

    The following paper was a real Aha! for me. It lays out in very clear language the understanding of economies that I think is embodied in Modern Monetary Theory or Chartalism. (Though I’m not a well-versed theorist; I could have that wrong.) It also very convincingly explains the ultimate (as opposed to proximate) cause of…

  • Do High Marginal Tax Rates Kill Economic Growth? Again: No

    Mike Kimel once again does yeoman’s duty to compare the two: Tax Rates v. Real GDP Growth Rates, a Scatter Plot | Angry Bear. In this post commenter Kaleberg adds a very cool scatterplot. Each dot is a year (t), compared to another year one to four years later (t+1, t+2, etc.). Bottom axis is the…

  • Taxing Businesses, Encouraging Investment: Running the Numbers

    Both Mike Kimel and commenter Jazzbumpa have suggested recently that higher personal tax rates encourage business owners to invest in their businesses — “investment spending” in truly productive fixed capital — as opposed to “investing” the money in financial instruments (IOW, “saving” it). (If you’re not totally clear on “investment” versus “savings,” and versus investment…

  • Government Consumption Spending Revisited

    I really love it when somebody points out that I’m wrong. (At least, when they’re right that I’m wrong.) Jazzbumpah in an email pointed out a whopper of an error in a previous post, in this graphic: The blue slice is State and Local. The red slice is Federal. Here’s the real picture: (Expenditures: NIPA…

  • Tyler Cowen’s The Great Stagnation: Government Spending Section

    I’m quite taken with the central notion of Tyler’s new mini-book — that America has been picking the economic low-hanging fruit for decades or centuries, and that there’s a lot less of it around over the last three to six decades. Before I get to the parts I like, I have to instantly respond to…

  • Name one Really Big Invention since 1970 (besides the internet)

    Prompted by: 1) My curiosity about what might have changed in the ’70s 2) My sister’s suggestion that this Andrew Sullivan post might be a clue (we invent ipods now, not particle accelerators) 3) Tyler Cowen’s new e-book(let), The Great Stagnation (talking about America’s slow growth of the last 30 years), and 4) A realization…

  • Two Thirds of Tea Partiers Want to Raise Taxes on the Well-To-Do

    …rather than increase the retirement age for Social Security. Somebody just asked them. See Question 11: Would you rather have people pay social security taxes on salaries above $106,800, or would you rather see benefits cut and the retirement age increased to age 69? Self-identified tea party members:* 67%: Raise taxes 20%: Cut benefits, raise…

  • Line of the Week

    The always fabulous Steve Randy Waldman: the fabulously successful strategy of governing incompetently while using each failure as evidence that government action cannot help but be corrupt and inept. Heckuva job, Brownie! via interfluidity » Endogenize ideology. Related posts: Beckworth Promotes Platinum Coins as Obama’s “FDR Moment”! Small is Beautiful? Maybe. But Big is Bad.…

  • 1798: Congress Passes Socialized Medicine and Mandates Private Health Insurance

    In July of 1798, Congress passed “and President John Adams signed – An Act for the Relief of Sick and Disabled Seamen. The law authorized the creation of a government operated marine hospital service and mandated that privately employed sailors be required to purchase health care insurance. Congress Passes Socialized Medicine and Mandates Health Insurance…

  • I Was Wrong: There Is a Substitute for Investment (Investment)

    In a recent post I pointed out that taxing financial investments doesn’t discourage financial investment, because there is no substitute for financial investment. If you have money, you either put it in financial investments or your put it in your mattress and watch if dwindle with inflation. But I was wrong: the substitute for investment…

  • Equality, Growth, Lane Kenworthy, and the Earned Income Tax Credit

    Update 10/26/2011: Lane has a great article on upping the EITC here. I’ve long been meaning to post about the Earned Income Tax Credit (EITC), which I believe we should expand significantly. Much of my thinking on the subject has its roots in work done by Lane Kenworthy, so it’s not surprising that his latest post…

  • Canadians Flooding Over the Border for Health Care! (Not)

    Health is priceless. Given that, and given the widespread meme that Canadians wait months for crucial, life-saving tests and procedures, you’d expect them to flood into the U.S. in large numbers to buy health care services. Do they? Apparently not. Like really, really not. In fact, an astonishingly small number do. You guessed it: somebody…

  • Line of the Week: “A better world is by definition not the world we live in.”

    Will Wilkinson This is a gem, IMO. It utterly undercuts the (a?) central premise of most “conservative’s” creed: the presumption that wherever we are now is where we should be — because it’s the best we’ve managed to work out so far, right? I can only say that I’m extraordinarily happy that the British parliament…

  • What Conservatives Should Ask Themselves Every Day: What Would Dwight David Eisenhower Do?

    These posts by Arnold Kling and Will Wilkinson prompt me to write up a post I’ve had in mind for a long time. I don’t want to write a history paper here, so I’ll just share a few facts, and some quotes from Wikipedia to highlight the differences between Eisenhower’s prudence and responsibility,  and the…

  • Sarah: On Target

    We gotta give Sarah Palin credit. She took this map off her site. Today. We should also give her credit for being right: It’s time to take a stand. H/T Barry Ritholtz Related posts: Stockman: How the GOP Destroyed the U.S. Economy | The Big Picture Banks’ “Bigger Concern”: “Republicans will no longer defend Wall…

  • Economic Growth in Postwar America: Looking At GDP

    I wanted to bring a discussion from comments into a post so we could see all the pretty pictures. Jazzbumpa: “since roughly 1980 … GDP growth has been in decline” Chris T: “It’s true annual growth rates have slowed, but so has the decline in GDP during recessions (at least prior to the most recent…

  • Bleg: What Changed in the Late 70s?

    Gentle readers will be aware that I look at (and graph) a lot of data sets, slicing and dicing them every which way to try and suss out how the world — or at least the economy — works. One thing I and many others keep running across is what seems to be a fundamental…