Asymptosis: Always Approaching

Category: Economics

  • Cutting Taxes Creates Growth: Yeah, Right

    Cactus at Angry Bear does yeoman’s work yet again to drive a spike into the heart of voodoo/trickle-down/supply-side Reaganomic ideology, demonstrating what economists have known for decades: Keynes was right. Over the short term–one to three years–raising taxes hurts economic growth. Deficit spending (read: low taxes and high spending) promotes economic growth over the short…

  • Yeah, Right, The Recession’s Over

    We’ve been hearing more about “jobless recoveries” over the years, but it’s pretty profound how rapidly the trend is increasing. Calculated Risk: Months to Return to Full Employment 1981:  28 1990:  31 2001:  47 2007:  ?? This multi-decade trend suggests to me that there’s something secular and structural at play. I suggest this. Related posts:…

  • Investment Bankers are *Victims!*

    Responding to a U.K. tax on bank bonuses: “This is extreme victimisation,” said one senior investment banker. “A lot of people have been working their tails off, never seeing their families to try and fix the problems of the past and now they are being discriminated against. It just makes me want to quit the…

  • Volcker: “Give me one shred of neutral evidence that financial innovation has led to economic growth”

    I pointed out recently that: From 2003 to 2008, the value of global over-the counter derivatives increased 300%–by a factor of four, while U.S. fixed capital (read: productive assets) increased by only 25%. Profits (or so-called profits) for U.S. financial companies have gone up 258% since Q4 2008, while profits for nonfinancials have gone up…

  • Bush/McCain Economic Advisor Sez: Raise Taxes

    Douglas Holtz-Eakin was Chief Economist for the Council of Economic Advisers from 2001-2002. He was Director of the Congressional Budget Office from 2003-2005. He was John McCain’s chief economic advisor during the presidential campaign. In the WSJ, he says Obama “should call on Congress to pass a comprehensive reform of our income and payroll tax…

  • Does Having Kids Make You Happier?

    I can’t even begin to match the thinking and research that Bryan Caplan has done on the subject of kids and happiness (he’s writing a book titled Selfish Reasons to Have More Kids), but I can add my two bits, which generally support everything he says. Short story, the research generally says “no.” Over large…

  • To claim “objectivism” at 20 is predictable. To claim “objectivism” at 60 is plain idiocy.

    Apologies to Churchill for the ripoff. No apologies to Ms. Rand. I remember quite clearly at age 13 saying to my mother and my sister, “why can’t people just be objective?” Pretty amusing in hindsight. Related posts: We Should Make Janitors Work Longer Because Lawyers Are Living Longer Two Thirds of Tea Partiers Want to…

  • Teenage Moms and Welfare Incentives

    Bryan Caplan has done yeoman’s duty for us all by reviewing “all the major research on the response of fertility to economic incentives.” He finds a “striking contrast” between two types of literature: In the “birth subsidy” literature, researchers usually find fairly large effects in the expected direction.  In the welfare literature, in contrast, most…

  • Musings on Efficient Market Theory

    Justin Fox, author of The Myth of the Rational Market, is in an interesting interchange with Eugene Fama, patriarch of efficient-market theory. Which led me to some musings on the subject. I find that a great deal of the discussion of EM theory is befuddled because the discussors don’t distinguish clearly between different but related…

  • One Completely False Statement in Superfreakonomics

    Then there’s this little-discussed fact about global warming: While the drumbeat of doom has grown louder over the past several years, the average global temperature during that time has in fact decreased. This “fact” is true…but only if you calculate forward from 1998–one of the two hottest years in history (2005 was hotter). It’s not…

  • Most Regressive Taxes? My Home State 🙁

    I’m finally getting around to following up on a graph I posted sort of in passing a while back, a graph that to my eyes makes a profound statement about our country and our economic system. It shows total taxes paid–local, state, and federal combined. People making $55-90K (fourth quintile, approx.) pay the same share…

  • The Problem with “Socialism”

    As an attack term, “socialism” packs a lot of wallop. But that’s mainly because it’s used to attack things that aren’t actually socialism. Socialism, defined: “various theories of economic organization advocating public or direct worker ownership and administration of the means of production.” But when attackers go after “socialistic” policies, they’re usually imprecating against something…

  • Socialism and Prosperity: Does One Cause the Other?

    Regular readers will find me beating something of a dead horse here, but I felt it necessary to respond to a recent post by Bryan Caplan, who continues to speculate on the putative negative economic effects of “socialism.” >”Lots of developed countries have some significant socialistic elements,” … would be an understatement. Every developed country…

  • Ratings Agencies and Real-Estate Appraisers: How Do You Keep ’em Honest?

    Megan McArdle points to an interesting suggestion from Joe Wiesenthal at Clusterstock: form a pool of say, ten certified ratings agencies. When an issuer wants a rating, they are assigned an agency by lottery. They can’t go shopping for the best rating. I’ve suggested exactly the same lottery-type system for real-estate appraisers. We’ve been hearing…

  • Global Warming Caused by Sex!

    More sex, more people. More people, more global warming. Pretty simple. If people would just stop having sex, we could solve the global warming problem! (Envision: Just-Say-No types happily twirling their fingers in their cheeks.) Right. But my tongue-in-cheek wise-guyism is spurred by something quite real: reducing unprotected sex worldwide could be the most cost-effective…

  • “More Investment Needed!” Oh, Really?

    Following up on posts here, here, and here questioning the supply-side orthodoxy that more money for the rich results in more investment, hence prosperity for all (see the long-discredited Say’s Law), I give you this (click for source): Between 2003 and 2008, US gross fixed capital increased by about 25 percent, a reasonable number during…

  • The American President: Why IQ Matters

    In a recent post I pointed out that Humans are Pathologically Nuts. In particular they’re forever playing obvious win-win games as if they were zero-sum or worse, and everybody loses as a result. Now I come across this study (PDF) showing that there’s a significant correlation between lower IQ and that very type of irrational…

  • Humans are Pathologically Nuts: Proof Positive

    I’ve often commented that if human beings are the (or a) result, it wasn’t a very intelligent designer. The most telling demonstration I’ve seen recently is a series of experiments conducted between 1959 and 1962, reported in wonderfully readable form in Morton Davis’s Game Theory: A Nontechnical Introduction. I recommend this book not only for…

  • The Global Great Depression: Then and Now

    Barry Eichengreen and Kevin H. O’Rourke give the global perspective. Just look at the pictures and read their last paragraph. Viz: The X scale is in months. Bottom line: While U.S. indicators hold hints of promise, the world as a whole is looking worse than it did in the Great Depression. The good news: policy…

  • NoNoNoNoNoNoNo! There Is No Global Warming!

    The Cato Gang really went off the edge recently with their ad (pdf) in the New York Times, claiming that: temperature changes over the past century have been episodic and modest and there has been no net global warming for over a decade now.1,2 … The computer models forecasting rapid temperature change abjectly fail to…

  • Small is Beautiful? Maybe. But Big is Bad.

    At least this headline holds true for banks. Steve Randy Waldman, as so often, gives us cogency–in this case on why big banks are a problem. My favorite part (and my emphasis): Scale breeds agency problems. Earning an extra five basis points on $100B in assets amounts to $50M in extra income a year, a…