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Back in October, I caught part of an NPR show in which they asked five economists to agree on an economic policy for the country.  Now I consider myself a fact-and reality-based person, so when I heard that five different experts on the economy were in agreement on economic policy for the country, I felt those ideas deserved serious and careful consideration.  Yet when I heard the policy ideas of the five economists, I was shocked.  The five economists all agreed that some of my most sacred of liberal cows were bad for the country.  Tax deductions for home mortgages: bad.  Corporate income taxes: bad.  Taxing employer health benefits: good.  How could it be that a group of economists could agree that some of my most cherished liberal ideas were bad for the country?  Was the world of facts and reality now conflicting with my liberal sensibilities?  

The NPR piece started with a question: if you put a group of economists together in a room, are there any economic ideas they can agree on?  So the NPR team put together a panel of prominent and respected economists from across the political spectrum, and asked them to identify any national economic policies they could all support.  (Links to the article: http://www.washingtonpost.com/...
http://www.npr.org/...)

The five economists:  
Dean Baker, co-director of the Center for Economic and Policy Research.  He describes himself as “”left-of-center”.
Katherine Baiker, professor of health economics at Harvard University's Dept. of Health Policy and Management.  She was identified as a “centrist”.
Robert Frank a professor at Cornell University's Johnson Graduate School of Management.  He says he is a registered Democrat and a “radical pragmatist”.
Russ Roberts, professor of economics at George Mason Univ.  He describes himself as “a hard-core free market guy...probably called a libertarian”
Luigi Zingales, a professor at the University of Chicago's Booth School of Business.  He describes himself as “pro-market, but not necessarily pro-business”.

And the policies supported by all the collected economists:

1. End the tax deduction for home mortgages
2. End the tax benefit for employee health care
3. Eliminate entirely corporate income tax
4. Reform the entire tax code to tax consumption, not income
5. Put a tax on carbon emissions
6. Legalize marijuana – and tax it
Let look at each of these in turn.

The mortgage interest tax deduction.  Every American who pays a mortgage gets to claim the interest they pay on their mortgage as a tax deduction.  This part of the tax code is very popular with the American public, such that no politician (not even Mitt Romney) will suggest removing the tax deduction.  All the economists say this is a bad policy and all five economists agreed that the mortgage interest tax deduction should be eliminated altogether.  Their reasoning: in essence, the mortgage interest deduction gives a check to every American who owns a home and pays a mortgage on it, and the more expensive the home you own, the bigger your check.  This is unfair to those Americans who do not own homes and therefore do not get any such check.  (N.B.  In this article, I am merely reporting the opinions of the above-cited economists, so don't attack me for these opinions.  I will clearly identify my own opinions as such if they appear in this article, and you can attack me for my own opinions if you want.)  And wealthier people who buy more expensive homes get a bigger check than those less well off, so that wealthier people have even more money which they can spend on buying even more expensive homes.  This has the effect of driving up housing prices, making home ownership more difficult for those less well off, and furthering the divide between the haves and the haves-less.  In addition, the mortgage interest tax deduction costs the US tax-payers about $100 billion/yr. in tax revenue.  Public acceptance of this idea: 53% oppose, 25% support, 21% neutral or no opinion*.

End the tax benefit for employee health care.  In America, if you get a health benefit from your employer, you pay no taxes on that benefit.  Additionally, employers pay no taxes on the health benefits they offer employees.  All the economists favored having Americans pay taxes on their employee health benefits.  The thinking here is that the wealthiest Americans tend to have the greatest health benefits from their employment, and therefore get a greater tax break than Americans who have lesser health benefits, or who have no health benefits.  Such a tax policy unfairly benefits the wealthy.  In addition, the panel of economists suggest that tax-free health benefits result in more use of health care benefits, thereby driving up the costs of healthcare for everyone.  It is estimated that not taxing employee health benefits costs the US tax-payers $185 billion/yr in tax revenue.  Public acceptance of this idea: 46% oppose, 26% support, 28% neutral or no opinion*.

Eliminate the corporate income tax entirely.  All the economists agreed that taxing corporate income is a bad idea, and that corporate income taxes should be eliminated entirely.  To the panel of economists, taxing corporate income discourages corporations from investing their money in improving their products and growing their business.  Companies that grow their businesses are more likely to need more employees and create more jobs, and more jobs means a healthier economy.  Companies that improve their products are more likely to sell more products, which also stimulates the economy.  All the economists agreed that encouraging companies to make better products and grow their business is better overall for the national economy.  Public acceptance of this idea: 43% oppose, 32% support, 25% neutral or no opinion*.

End all income and payroll taxes.  All the economists agreed that the tax code should be reformed to eliminate all income taxes. To the economists, if income is a good thing (and I think we all agree it is), it makes no sense to apply a tax to it and thereby have a disincentive to making more income.  This goes against the logic of the economists.  Payroll taxes discourage companies from hiring people, and in order to encourage greater hiring, should be eliminated.  Instead, all the economists agreed that a better tax policy would be to tax consumption and consumer goods.  All the economists agreed that such a consumption tax should be progressive to protect lower income households (the devil is in the details – the panel did not say how this could be accomplished, and there might be a good deal of disagreement among the economists on this point).  And eliminating income taxes would remove the home mortgage tax deduction and the employee health benefits tax deduction, which the economists have already agreed need to go anyways.  Public acceptance of this idea: 38% oppose, 36% support, 27% neutral or no opinion*.

Tax carbon emissions.  All the economists agreed that carbon emissions are harmful and taxing harmful things to reduce or discourage use is a good idea.  A tax on carbon emission works as a sort of consumption tax, and is consistent with the idea of a tax policy based on consumption and not income.  All the economists agreed that such a tax would mean an increase in the price of both gasoline and electricity, and such a tax would have to be carefully structured to be progressive and not fall unduly on the less wealthy.  Public acceptance of this idea: 42% oppose, 29% support, 29% neutral or no opinion*.

Legalize marijuana.  All the economists agreed that marijuana should be legalized, regulated, and taxed.  Legalizing marijuana would save tax-payers billions in law enforcement and prosecutions, add to the tax base and overall revenues, provide a whole host of new jobs in agriculture, distribution, and sales, and stop making drug lords rich and powerful.  To the economists, the only reason to continue prohibiting marijuana involve morality, not economics, and outdated notions of racial identity, which are in general, economically unprofitable.  Public acceptance of this idea: 35% oppose, 51% support, 14% neutral or no opinion*.

(*The poll was conducted for NPR by Penn Schoen Berland of 542 “people” - who are not otherwise identified or categorized.)

Part of the NPR article was to show how publicly unpopular these ideas are and how politically impossible it would be to implement any of these policies, even when economists are in agreement that these policies are needed to improve the overall national economy.  And having heard the collected wisdom from a group of experts on the economy, now I have to re-examine my previously strongly-held liberal ideas.  Until today, it has been my conviction that the government should of course encourage home-ownership through tax policy.  But the experts tell me that is unfair to the 40% of Americans who do not own homes and bad for the housing market.  Until today, I was convinced that of course corporations should pay a tax on their income, just as I pay tax on my own income.  However, experts on the economy tell me my ideas on corporations and taxes are wrong, and can give some pretty good reasons why I am wrong.  On the plus side, I have no problem supporting a consumption tax, a tax on carbon emissions, or the legalization of marijuana, and am pleased to see what I thought to be my radical ideas get approval from mainstream experts on the economy.

Being a fact- and reality-based person, I have to give special credence to the thinking of experts in a field where I have no expertise, especially when a group of those experts are in agreement.  This means that from time to time, facts and reality will intrude on my preconceptions.  Then, I have a choice: I can continue to hold my now wrong-headed opinions, or I can revise my thinking to accommodate new information:  This can mean killing off some of my sacred cows.  I am ready (no, eager!) to criticize conservatives for maintaining whole herds of fact-free opinions in the face of overwhelming real-world evidence that contradicts those opinions.  Now it is my turn: can I be as flexible in my thinking as I demand of those others?

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Comment Preferences

  •  Tip Jar (6+ / 0-)

    "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

    by Hugh Jim Bissell on Thu Nov 15, 2012 at 11:07:07 AM PST

  •  History of the 20th Century Would Seem to Suggest (10+ / 0-)

    the exact opposite of these expert opinions. Other than the marijuana.

    I think you'll see some much more detailed criticism of those ideas and the practice of economics over the past 40 years shortly.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Thu Nov 15, 2012 at 11:10:01 AM PST

    •  I look forward to the discussion (0+ / 0-)

      Yes, it seems that we are now engaged in a national debate over tax rates and deficits, and this might be a good time to consider other aspect of our tax policy.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:43:41 PM PST

      [ Parent ]

      •  I'm quite willing to talk about pollicy (1+ / 0-)
        Recommended by:
        FishOutofWater

        the kind that is known to work.

        Most of what you write about are quite old proposals, and the pro & con fairly well documented.

        Finally the tax cuts create jobs shit is retreaded old Austrian BUllshit

        Payroll taxes discourage companies from hiring people, and in order to encourage greater hiring, should be eliminated.
        Dude you just killed Social Security.

        You suck.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Thu Nov 15, 2012 at 12:59:03 PM PST

        [ Parent ]

        •  Shooting the messanger (0+ / 0-)

          From the article above - which I take it you did not read fully before commenting.

          (N.B.  In this article, I am merely reporting the opinions of the above-cited economists, so don't attack me for these opinions.  I will clearly identify my own opinions as such if they appear in this article, and you can attack me for my own opinions if you want.)  
          When experts agree on something, us non-experts better pay attention.  Otherwise, we run the risk of behaving like conservatives do with regards to climate change.

          "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

          by Hugh Jim Bissell on Thu Nov 15, 2012 at 01:57:26 PM PST

          [ Parent ]

      •  False premise "across the political spectrum" (1+ / 0-)
        Recommended by:
        Roger Fox

        You make a false assertion then reach conclusions based on that false assertion.

        So the NPR team put together a panel of prominent and respected economists from across the political spectrum
        Your conclusions are baseless because this small group does not include Keynesians and/or leftists.

        look for my eSci diary series Thursday evening.

        by FishOutofWater on Thu Nov 15, 2012 at 01:59:19 PM PST

        [ Parent ]

  •  Apparently these economists are idiots (6+ / 0-)
    Their reasoning: in essence, the mortgage interest deduction gives a check to every American who owns a home and pays a mortgage on it, and the more expensive the home you own, the bigger your check.
    No, it's not the expense of the house, it's the size of the loan. The more you BORROW the bigger the potential interest write-down. But wait, they're wrong on that as well, because unless your mortgage is large enough that it makes sense to itemize your deductions AND your income is low enough that you don't bump into the AMT there isn't an opportunity to get the government to subsidize your McMansion.

    Hard for me to take much of the rest seriously after that load of horse excrement.

    To me progress is not so much a goal as it is a process and I believe it will not follow a straight course. Remember, the drops of water that form the river may not take the shortest path but they will still reach the ocean.

    by ontheleftcoast on Thu Nov 15, 2012 at 11:25:14 AM PST

    •  you sound so sure (0+ / 0-)

      facts are facts and the facts are that most people don't look at the cost of the house they are buying as much as what the size of their payment will be.  The mortgage deduction is factored into those calculations.  Take it away and payments go up so in turn prices would have go down.  Measures like this are examples of the law of unintended consequences.  The deduction was set up to help people afford homes but what happened instead was homes actually became less affordable.  Same thing happened when restrictions on student loans were lessened.

      •  The real problem with any of discussion (1+ / 0-)
        Recommended by:
        inclusiveheart

        on the mortgage deduction is nobody wants to talk about the group that benefits most from it -- banks. As you mention, they can raise the rates because they can convince homeowners they'll "make it back in tax deductions". But as I point out, that isn't always the case. So the real advantage to removing the deduction would be to remove a huge cash cow for the banking industry. Of course there's another way to do that -- regulation. Prevent the banks from jacking up the mortgage rates to artificially milk profits from government on the backs of middle class homeowners.

        To me progress is not so much a goal as it is a process and I believe it will not follow a straight course. Remember, the drops of water that form the river may not take the shortest path but they will still reach the ocean.

        by ontheleftcoast on Thu Nov 15, 2012 at 12:16:58 PM PST

        [ Parent ]

      •  Why do we give bankers the right to (3+ / 0-)

        skim money off of the top of the transaction between a student and an educational institution?

        In some countries, people are accepted and get to go to school without having to put their future into hock.

        As for the mortgage deduction, the housing market which is still shaky is probably not going to get stronger if they remove it.  People who can't afford to lose it are going to be screwed.

    •  Not complete BS but I must (3+ / 0-)

      agree that anyone that lets Koch Bros. shill Russ Roberts describe himself as a libertarian is shoveling hard.

      The point about the politically popular mortgage interest deduction is more nuanced,I'd say,because it is a deduction that favors the wealthier among us.Currently,we allow this deduction on mortgages up to 1M,and include both 2nd homes and yachts. In the spirit of bipartisany,I support Simpson-Bowles changes on this. 500K mortgage cap,no second home deduction,no home equity deduction. (kinda wobbly on the last bit I admit) Here is why:

      But it does have an impact in states where income and housing prices are higher. Melissa Labant, technical manager at the American Institute of Certified Public Accountants, calculated two situations for middle- and upper-income homeowners in more expensive states.

      lIn the first situation, consider a couple who earn $137,300 a year and are in the 25 percent tax bracket. If they owned a $350,000 house paying 5 percent interest on their mortgage, they would save $4,375 a year on interest of about $17,500.

      For the wealthiest homeowners the deduction is far better. People with $1 million homes with the same 5 percent rate would be paying $50,000 a year in interest. As they would most likely be in the top 35 percent tax bracket, they would save $17,500 a year in federal taxes through the deduction.

      Whole article is here  http://www.nytimes.com/...

      A similar take is here http://www.sfgate.com/...

      "George RR Martin is not your bitch" ~~ Neil Gaiman

      by tardis10 on Thu Nov 15, 2012 at 12:22:15 PM PST

      [ Parent ]

    •  The "Dismal Science" (0+ / 0-)

      I don't know much about economics.  I think it is called the "dismal science" because economists are so often wrong, and so rarely agree with each other.

      After all, wasn't Ben Bernake convinced that banks should be allowed to bundle mortgages together to form a unique investment product?  And that turned out really bad.

      I am thinking there is a large positive correlation of the expense of the house and the size of the loan.  But what do I know: I am not an economist.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:51:46 PM PST

      [ Parent ]

      •  Then cap it. Don't kill the weak housing rebound. (1+ / 0-)
        Recommended by:
        tardis10

        And eliminating corporate taxes is just plain wrong.

        look for my eSci diary series Thursday evening.

        by FishOutofWater on Thu Nov 15, 2012 at 02:03:19 PM PST

        [ Parent ]

        •  Eliminating corporate taxes makes sense (0+ / 0-)

          ...if all Americans benefit equally from corporations.  But we don't.

          The direct benefit of incorporation is legal protection from personal bankruptcy and liability.  That's useful for business, I guess.  But it allows the owners of a business to cap their losses and leave the whole country to sweep up the debris--privatizing the profit and sticking the public with the losses.

    •  Amt allows the mortgage deduction (0+ / 0-)

      Most deductions are not allowed under AMT, but that one certainly is.

  •  So there were no Keynsians on the panel? (10+ / 0-)

    That's how NPR found agreement among their panel on all of those points.

    That's called stacking the deck.

    •  Dean Baker is (2+ / 0-)
      Recommended by:
      condorcet, JFactor

      I'm not sure what the deal is with the corporate income tax, but in general, economists ave a bias towards solutions that don't "distort" behavior.  Baker may well believe that corporations do things to avoid taxes that are not productive behaviors.

      Also, remember that macro economics and micro are separate sets of ideas;  Baker may like Neo-Keyenesian macro, but economists tend to agree much more on basic micro economics.

      [I]t is totally not true that Mitt Romney strapped Paul Ryan to the top of a car and drove him to Canada. Stop spreading rumors! -- Gail Collins

      by mbayrob on Thu Nov 15, 2012 at 11:42:41 AM PST

      [ Parent ]

      •  I don't get the sense that there is (5+ / 0-)

        anyone on that panel who values the role of government - the collective investment the way a more traditional Keynsian would.

        The problem we face in this era is that people are not convinced that the common good is relevant beyond the walls of the Pentagon - and even there the concept is pretty shaky as that building has just become a place where billions of dollars are routed to what really is only a handful of private contractors who are getting top dollar for varying degrees of quality services and goods.

        When the Iraq War was in full strength and we were bombing schools and bridges and then rebuilding them, I kept wondering if having the military come back here and take out some of our schools and buildings might inspire the politicians to start rebuilding stuff HERE in the US for once - to spend money on our country.  If the military takes it out, then congress considers rebuilding - that's because the military contractors still have a piece of the action.  UGH

        •  That really isn't what Keynes wrote (1+ / 0-)
          Recommended by:
          gzodik

          You're making a legitimate argument there -- that there are efficiency benefits of government and that we can make collective investments that pay off -- but isn't a Keynesian argument per se.

          Keynes' main idea is that a complete economy is constrained in certain ways.  "Classical" (i.e., pre-Keynesian) econ looks at individual actors, like consumers or firms, and assumes that what one unit does won't effect other units.  But Keynes pointed out that if you spend money, you pay it off to somebody else, and if you borrow money to build something, somebody else gave you that money, so that if over the economy as a whole, the aggregate affects of these decisions can cause economic activity to expand or contract, and make the economy behave in non-intuitive ways, like change price levels, or create depressions.

          21st century conservatives like to ignore these effects, since they have an ideological allergy to government taking decision making power away from firms, and particularly, away from the rich.  So they either claim that the government can't competently take advantage of these effects (Hayak, some Friedman) or that somehow, these effects don't really exist.

          21st century Neo-Keynesians like Baker or Krugman point out that ideology be damned, Keynesian style models actually describe what the real world is doing, and if you care whether your models have predictive value, you have to use the approach that actually predicts accurately.  Which Neo-Keynesian models have done beautifully over the last decade.

          But folks like Krugman and Baker still think that people typically act like people who try to "maximize" the benefits to themselves given the constraints they see locally.  Which is the core of what classical economics analyzes.

          [I]t is totally not true that Mitt Romney strapped Paul Ryan to the top of a car and drove him to Canada. Stop spreading rumors! -- Gail Collins

          by mbayrob on Thu Nov 15, 2012 at 04:12:33 PM PST

          [ Parent ]

      •  About 13% of Fed revenues come from corporations (2+ / 0-)
        Recommended by:
        inclusiveheart, FishOutofWater

        So I guess the VAT will make up for it.

        What a doozey.....

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Thu Nov 15, 2012 at 12:43:27 PM PST

        [ Parent ]

      •  Dean Baker wrote an explanation for these (3+ / 0-)
        Recommended by:
        mbayrob, MGross, ricklewsive

        proposals.,entitled The Disagreement Behind Our Economic Platform. http://www.npr.org/... What was actually agreed to by these economists is obviously far less than some might presume. As ever,the devil is in the details. And NPR,just isn't that into details these days.

        The real world also interferes with the idea of getting rid of the corporate income tax. As Robert Frank and I both suggested in the segment, the idea should be to tax the wealthy people who are getting large incomes from the corporation (either as shareholders or top executives), not to tax the corporation itself.

        However as a practical matter, I don't see much likelihood of the sort of increase in individual income taxes on the wealthy that would come close to offsetting the impact of lost corporate income taxes. For example, if we could raise the marginal tax rate on those earning above $250,000 to 45 percent, and for those earning above $1,000,000 to 60 percent (with no special treatment for dividends or capital gains), then we might be in the ballpark of offsetting the elimination of the corporate income tax.

        Unfortunately, I don't see anyone about to include tax rates of this size in their presidential platform. In the absence of a large increase in individual taxes on high-income households, I would not want to see the corporate income tax eliminated, since again it would imply a large upward redistribution of income.

        Worth the read if only to be clear on just how far apart these 5 economists actually are.

        "George RR Martin is not your bitch" ~~ Neil Gaiman

        by tardis10 on Thu Nov 15, 2012 at 01:52:23 PM PST

        [ Parent ]

        •  That's consistent with what I thought (1+ / 0-)
          Recommended by:
          tardis10

          Short version of his write up:  "the income tax is a better tax than the corporate tax in theory, but in practice, you can't get a better tax than the corporate tax".

          He thinks it's a bad tax (i.e., the bad behavior it engenders via tax evasion behavior have serious economic costs), but since we can't get the rich to pony up via the better income tax, he prefers to keep it.

          There's lots of literature going back on decades on the income tax.  It turns out to be one of the less distortionary taxes.   Lauffer and other quacks aside, it turns out to be about the most efficient (in the economic sense -- you get the maximum revenue with the minimum distortion of behavior) way to finance government.

          [I]t is totally not true that Mitt Romney strapped Paul Ryan to the top of a car and drove him to Canada. Stop spreading rumors! -- Gail Collins

          by mbayrob on Thu Nov 15, 2012 at 03:56:59 PM PST

          [ Parent ]

    •  Actually, a lot of Keynesians agree with those (5+ / 0-)

      ideas, since there's nothing there that contradicts the basic Keynesian principles.  And there's nothing there that's not POTENTIALLY progressive.  First of all the mortgage deduction & non-taxability of employer-supplied health insurance are both very regressive tax policies.  And most of the European social democracies depend more on value-added taxes than income taxes but make the system progressive by supplying extremely generous public benefits like almost fee-free health care & higher education.

      The problem with the recommendations is that they're almost all politically impossible absent some enormous calamity that would give one party & leader an FDR-like mandate and power to overhaul our entire method of taxing & providing public benefits -- and even FDR really didn't accomplish anything like that.

    •  Chosen for political orientation (0+ / 0-)

      The NPR article specifically mentions choosing economists "from across the political spectrum".  They might have ignored orientation to various schools of economic thinking.

      You are perhaps correct that there might be greater disagreement among Keynesians and non-Keynesians than between left and right.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:56:13 PM PST

      [ Parent ]

      •  Also "freshwater vs saltwater" i.e. Chicago school (1+ / 0-)
        Recommended by:
        inclusiveheart

        vs sensible coastal economists  :) who believe in public expenditures and fiscal policy.

      •  They were technically "from across the (0+ / 0-)

        political spectrum", but they did not represent a very large spread and the group certainly did not include anyone who describes themselves as "left" or progressive.

        Also, they all seem to be ideologues.  A decent economist isn't going to be wed to their political label at the expense of the "science".  

  •  Retired CPA, here (3+ / 0-)
    Recommended by:
    polecat, RosyFinch, condorcet

    I'd be willing to go along with all those ideas if they were part of a simplified tax code that was at least as progressive as what  we have now.

    CPA's make their living from tax complexity. There is an enormous multi-billion dollar industry dedicated to reducing taxes by gaming the system. If taxes were simplified most of that non-productive activity becomes productive activity in other professions; the GDP would go up and every company would be making smarter business decisions.

    Our reason is quite satisfied ... if we can find a few arguments that will do to recite in case our credulity is criticized... Our faith is faith in someone else's faith, and in the greatest matters this is most the case. - William James

    by radical empiricist on Thu Nov 15, 2012 at 11:37:11 AM PST

    •  Running this government on consumption (2+ / 0-)
      Recommended by:
      RandomNonviolence, Roger Fox

      taxes?  First of all, that is the very least progressive option on the planet; and second of all it is the very least progressive option on the planet.

      Around the time of the debate when these cuts were implemented, CNN ran a story that was in about three of the afternoon hours and then suddenly disappeared.  It was a brief outline of what 2% meant to someone annually who was earning $40,000 vs. what 2% of income for someone in the multimillion dollar category.  They showed "things" like x number of cups of coffee for a person earning $40,000 and a Mazerati for the millionaire.

      Apply that to things like taxes on groceries which in some states are as high at 8 or 9% then just for the sake of argument assume that the millionaire and the worker buy about the same amount of food annually - that millionaire is not going to feel the pain of high taxes on groceries while the worker certainly will - especially with food prices going up the way they are these days.

    •  but (3+ / 0-)
      Recommended by:
      rigcath, ER Doc, inclusiveheart

      how can a consumption tax ever be progressive?  

      It's been a hundred years, isn't it time we stopped blaming Captain Smith for sinking the Titanic?

      by happymisanthropy on Thu Nov 15, 2012 at 11:53:33 AM PST

      [ Parent ]

    •  Parts vs. the Whole (0+ / 0-)

      Thank you for your comment.

      It occurred to me as I was writing the article that the ALL the six ideas taken together make a sort of sense, but separately each idea seems bad.  So the Whole seems greater than the sum of the Parts.

      For example: getting rid of the home mortgaged interest deduction by itself seems like a bad idea.  But as part of a plan that includes elimination of the income tax in favor of a consumption tax, then it sort of makes sense.

      So maybe what the panel of economists were getting at was an overall tax overhaul, rahter than six different ideas to implement separately.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:18:52 PM PST

      [ Parent ]

      •  Consumption taxes are anti-progressive. (0+ / 0-)

        A wealthy billionaire can't consume that much more than someone else.  Sure they can buy more, but if you took that billion and spread it out over a million people you'd yield far more consumption who would pay a greater percentage of that billion in consumption taxes than just one guy could.  Plus you don't want to discourage consumption in the marketplace.  That doesn't help improve an economy.  That depresses an economy.

        •  That is why Govt spending e.g. hiring teachers (1+ / 0-)
          Recommended by:
          inclusiveheart

          has so much more stimulative effect on the economy than do tax-cuts for the rich. The middle class and below spend the vast majority of their income. The rich invest it somewhere that does not spin off immediate expenditures. So the consumption economy (as opposed to the Wall Street bubble) is starved by tax cuts and fed by govt. hiring.

        •  5 economists disagree with you (0+ / 0-)

          This article points out five respected economists who disagree with you.  

          That five economists all agree is in my opinion, a pretty powerful argument.

          When conservatives began hearing that academics were in agreement about climate change, they steadfastly held on to their opinions, rather than accept empirical evidence.

          As a liberal, I want to be wiser than those conservatives.

          "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

          by Hugh Jim Bissell on Thu Nov 15, 2012 at 02:04:31 PM PST

          [ Parent ]

          •  That's not what it says here > > > (0+ / 0-)

            "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

            by leftreborn on Thu Nov 15, 2012 at 03:01:40 PM PST

            [ Parent ]

          •  First of all, there is no indication that (0+ / 0-)

            these economists believe that their ideas are "progressive".

            Secondly, an awful lot of economists take government for granted - they don't appreciate its intrinsic value - until it is gone - and they haven't a clue what that's really like not to have a government like ours.

            I have experience living in the so-called "third world" and I can assure you that some of these proposals like the consumption tax fuck economies up and prop up a rich elite class that is impossible for anyone else to enter if they aren't already "in".  It is not only anti-American, but also ultimately bad for the economy and economic prospects of those countries.

            This country was built on opportunity.  Instead of relying upon inbred heirs and heiresses to lead our country, we have always benefitted from new blood, smart people who aren't necessarily rich, and people who want to work hard to build "stuff" to make this country great and successful.  

            If you asked these economists if they think that innovation is important to our economy, I am sure that they would all agree that it is.  The thing is that they don't believe in the government helping to fuel innovation and advancement.  They think that the free market should play that role to the exclusion of all else.

            Thankfully, they weren't around when people decided that it would be good for the country to build a nation-wide electrical grid because if they were, we'd still be building it out or relying on battery or fossil fuel powered electricity.

    •  Dont worry too much (0+ / 0-)

      cause those policies will increase wealth and income disparity, contract the economy. And you'll join the ranks of U6.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Nov 15, 2012 at 01:16:59 PM PST

      [ Parent ]

  •  Consumption taxes are regressive. (7+ / 0-)

    If you consume the vast majority of your income, say $40,000, you will be taxed at whatever the rate is on all of that.  At 8% you would pay $2400 in taxes if you spend $30,000 on transactions subject to the tax.  That's an effective rate of 6%

    Now take a person making $250,000.  Even if they spend $100,000, more than three times the amount of money, on transactions subject to the tax, paying 8000 dollars in tax, that is still only 3.2% effective tax rate, almost half the rate of someone making $40,000.

    But more to the point, eliminating income taxes would gut the federal treasury and cripple our ability to support programs like SS and Medicare.  That is, and always has been, the goal of those who favor eliminating income taxes or going to a flat tax.

    •  Great point! (0+ / 0-)

      You make a great point about the consumption tax in general and the income tax as support for SS and Medicare.

      So my question to you is: how did five different economists all decide to favor such an idea about the consumption tax?  Do all economists want to get rid of SS and Medicare, or only these five?

      This article coming from NPR was short on a lot of details, but did stress that every economist on the panel agreed a consumption tax needed to be progressive in nature

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:24:08 PM PST

      [ Parent ]

      •  There are plenty of economists around (1+ / 0-)
        Recommended by:
        FishOutofWater

        these days who are fool enough to think it would be a keen idea to wrest control of all of that Social Security money and put into the market instead.  They obviously learned nothing from the 2007/2008 collapse which would have had an even more significant impact were it not for Social Security checks remaining stable income for seniors unlike their pensions and other invested retirement funds that were severely compromised.

      •  I heard this story too... (0+ / 0-)

        and even the "left of center" economist was obviously not terribly left of center.  It struck me as a markedly right-of-center group of economists.  Probably another lame attempt by the NPR editors to create "balance."

        There are plenty of respected economists who support the notion of a progressive income tax, foremost among them a guy named Paul Krugman.  You might have heard of him - Princeton economist, Nobel Prize Laureate, prominent columnist for the NYT.  There's also Joseph Stiglitz, another Nobel laureate.

        Obviously not all economists want to get rid of SS and Medicare, but I can guarantee you that anyone who calls themselves a "centrist" -code for "moderate conservative," a libertarian or a radical free-marketer WOULD support the idea of axing all those programs.  So the composition of their panel was obviously stacked to the right.

    •  Only flat rate consumption taxes. (0+ / 0-)

      What they're proposing, I believe, is a variable rate based on how much you've spent that year.  The more you spend, the higher the rate goes.  The poor only ever pay the low rate, since they can only expend limited amounts of money in a given year.

  •  i would have loved to hear their answers/opinions (5+ / 0-)

    on a financial transaction tax (aka Robin Hood Tax).

     

    ... At a meeting of European finance ministers on October 9, 11 governments committed to implementing the tax. This is two more than the minimum number needed for an official EU agreement. And it is a huge victory for those of us -- not just in Europe but also in the United States and around the world -- who've been pushing for such taxes as a way to curb short-term speculation and generate massive revenue for job creation, global health, climate, and other pressing needs.  ...  
    http://www.ips-dc.org/...

    Faux News ruined my state

    by sc kitty on Thu Nov 15, 2012 at 11:45:08 AM PST

  •  Corporate income tax can go (0+ / 0-)

    Then the IRS can quit chasing through all the shell corporations and offshore corporations and all that other bullshit the rich erect as a dodge.  

    Then they can go up to Bill Gates, say "last year you had 30 billion in assets; this year you have 35 billion. Please write us a check for 2 billion".

  •  corporations are sitting on historic (2+ / 0-)
    Recommended by:
    Marion Delgado, Roger Fox

    levels of cash, not investing, not building up product quality by r&d, not hiring, just sitting on it.  So would they invest it in their businesses in America if we promised them no tax?  Or would that money flee offshore as fast as the wire transfers could go?

    Tax policy covers all sorts of issues, more than revenue, more than just progressivity, which I support in concept but not as the exclusive yardstick for effective tax policy.

    The assumption is that we should maximize income,  but we've seen that haven't we,  and it accumulates at the top,  not because we tax it, but because we don't.  And income accumulated at the top doesn't go to building things but investing in Financial Instruments, which we have learned to our sorrow the last four years, don't have to represent real anything and can by unimaginable factors exceed real economies, world GDP, etc.    

  •  Consumption tax? No. (2+ / 0-)
    Recommended by:
    tommymet, FishOutofWater

    I'm familiar with value added tax from time spent in France.  If it works there it's because income is also taxed and the public doesn't faint at the thought of 75% at the upper end of a graduated scale.  They're not afraid of words like 'socialism' and 'redistribution' either.  For the amount of tax paid the people can expect to have an education with high standards, healthcare that is judged favorably against other countries, and a retirement.  There's none of the 'government is the problem' nihilism that infects Americans.  

    In the US, a consumption tax would just be an easy way to  stick it to people who can least afford to be stuck.  You'd see the GINI coefficient number continue to move away from the standard of a developed western country.

    "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

    by leftreborn on Thu Nov 15, 2012 at 12:02:22 PM PST

  •  Rec'd for the discussion and feedback. Learning (3+ / 0-)
    Recommended by:
    ricklewsive, Azazello, SamSinister

    by discussion is a good education in my book.

    •  That's why I wanted to write about it (0+ / 0-)

      Thanks.  That's exactly why I wanted to write about this.  This economic ideas seemed pretty foriegn to my liberal sensitivities, and I was wondering what other liberals thought about these ideas.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:30:16 PM PST

      [ Parent ]

  •  This is not fact- or reality-based at all (6+ / 0-)

    This is Nice Polite Republicanism and High Broderism at its most annoying.

    I think the Capitol Steps-derived (UGH!) "Hugh Jim Bissel"  poster should look into killing sacred David Brooks cows. Seriously look into it.

    Worthless nonsense, debunked in some parts decades ago.

    •  Your response is nonsense, unfortunately (0+ / 0-)

      Did you say why the ideas in the diary are not worth considering? No. Furthermore, these ideas haven't been "debunked decades ago" - perhaps in your mind, yes, but not in mainstream economic discussion that includes progressive economists.

      There are other ways to get a more progressive society than tax the rich with high marginal income tax rates and tax the corporations etc. I'm not saying you are representative of this thinking, I don't know, but in order to be a reality-based community we need to be open to discussion. Your worthless nonsense response was just that, worthless nonsense.

    •  What is fact-based (0+ / 0-)

      I know very little about the economy or economics in general.  I don't really have any agenda here, except to examine further the ideas present above.

      What is fact-based is that five economists all agreed on the value of these policy ideas.  That made me sit up and take notice.  It should get your attention as well.  Harvard, Cornell, Univ. of Chicago; we are not talking about Christian Jesus U., of a Rove-sponsored think tank.  And that these economists all agreed - which is pretty unusual in itself.

      It seems to me that if economists from major US universities agree on something, we should be considering it fully, and not simply writing it off as some kind of "hoax".

      I don't know what you are referring to with "sacred David Brooks cows".  If you give me some idea, I'll look into it.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 12:41:12 PM PST

      [ Parent ]

      •  It's nonsense in both title and claim (2+ / 0-)
        Recommended by:
        Roger Fox, tardis10

        It's "a fact" that Andrew Breitbart said many things. That doesn't make the many things fact-based. Or reality-based. You seem, still, unclear on this concept. Beltway journalism's staple trope is that if "Democrats claim" gravity works and you also cite a Republican claiming it doesn't, your job is done, and you're fact-based. After all, it's a fact, that two people were quoted. It's a fact they disagree. That sort of, again, nonsense is absolutely valueless. It depends on believing that no matter where the little "center" moves to - and it's a Beltway media-defined center - the Truth is following it. There are always two sides (in this case a bogus center-left and a typical American market fundamentalist "right") and all sides are always equally right and wrong. Because of the magic law of complexity confuses me. This is explicitly, HJB, what David Broder built his career on. If you haven't seen Atrios - www.eschatonblog.com - dissect this, you should. He's an economist, by the way, and actually trained in the mainstream of American academic economics. He doesn't agree with most of the 5 allegedly reality-based economic dogmas you're supporting. Doesn't that, by what passes for "reasoning" with you, refute the ones he doesn't agree with? For that matter, Brad DeLong, another essentially centrist economist doesn't agree with all of them either. And this leaves out, not just the Keynesians, as pointed out above, but any number of others - your restriction is to the Washington Consensus and about a 1% deviation from it. You're probably entirely unaware of the spectrum of economics. How much of this do you think Rick Wolff would agree with? Or Jim Gailbraith? Heck, Paul Krugman? Joe Stiglitz? Krugman and Stiglitz both won that "Economics Nobel" that Americans set such great store by. What about Prout? Ravi Batra's variation? The entire "post-autistic economics" school and the Real-World Economics Review?

        Several decent and thoughtful specific refutations have been posted above. It's not worth my time duplicating them. I mention the Capitol Steps because they exemplify the "partisanship is the problem, both sides need to be parodied equally, etc. etc." nonsense that's put the US in the dire straits it's in. Real reality, vs. Beltway "fact-based" and Beltway "reality-based", again, nonsense, is quite often partisan.

        Finally, you are in no way, shape or form killing any liberal sacred cows with this nonsense. You are simply navelgazing and showing what a Washington Consensus, American neoliberal bubble Beltway obsessed people live in.

        Hope that helped.

        •  Krugman and Stiglitz understand what actually (0+ / 0-)

          works.

          Repackaging 40 to 100 year old failed policy, and then smacking me cause I dont respect you for that... well hit me again. I love it.

          One detail VAT. It is inherently regressive from the get go . Adding deductions, exemptions and shelters just adds complexity in the attempt to make VAT progressive. And when one is done, one still has in its foundation a regressive system.

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Thu Nov 15, 2012 at 03:29:52 PM PST

          [ Parent ]

        •  You mischaracterize me n/t (0+ / 0-)

          "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

          by Hugh Jim Bissell on Thu Nov 15, 2012 at 03:40:36 PM PST

          [ Parent ]

  •  i agree with all of those. (1+ / 0-)
    Recommended by:
    JFactor

    key is to have a progressive and simple tax system.

    we would probably have to have a wealth tax, though, to tax the extra money of the rich.  also an inheritance tax.

  •  My thoughts (1+ / 0-)
    Recommended by:
    tardis10

    Good thoughtful post.

    1 and 2, from a political acceptability standpoint can be met by simply limiting the size of the deductions allowed. This would eliminate the major criticism of the deductions; that they are manipulated to benefit the wealthy and the imprudent.

    3. May be a good idea for industrial corporations but makes no sense for rentier or financial service corporations. Everyone would simply incorporate under in that case.

    4. From a revenue perspective this makes no sense (for example, it also benefits the wealthy in that is encourages them to save and invest and spend less on goods). On the other hand adding a consumption tax scheme like VAT to the mix of revenue sources reduces pressure to fund general government on income taxes alone thereby reducing the political effectiveness of so-called tax revolts.  

    4. Good idea. Cap and trade is only a compromise.

    5. I believe that in most cases economists are smoking something. In this case I am happy they are.

  •  i think the diarist is giving too much credit (2+ / 0-)
    Recommended by:
    tardis10, Roger Fox

    I find NPR stories like this frequently feel back engineered--like they started with the notion that they wanted a result that challenges convention and public opinion.  I mean, I would never change my beliefs based on the result of a poll of any random 5 people no matter how evenly distributed on the ideological spectrum they may be.  I would also point out that economic philosophies are contingent, so the average of disparate opinions may likely be inferior to a cohesive plan.  I wonder if that averaging is how they can come to agree to something like a progressive consumption tax.  You could have that in relation to a progressive income tax, but I don't see how instead.  Not taxing food and highly taxing luxury is progressive and exists, but I don't see how you run the US economy on caviar taxed at 2000%.  The rich will just import their luxuries or sit on top of their money.  Carbon tax also appears inherently regressive in absence of withhout something funky like an income tax system that credits people back based on economic class.  

    I find NPR's magical realist mix of human interest and newsy talk pretty toxic these days.

    •  You need revenues of 18-20% of GDP (0+ / 0-)

      and by eliminating 12-13% of federal revenues in the form of no corporate taxes...... thats now 20-22%......

      From there on ... get your boots, waders.....

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Nov 15, 2012 at 01:09:39 PM PST

      [ Parent ]

    •  Except these are not random people (0+ / 0-)

      These are not the opinions of five randome people.  They are highly educated, highly accomplished, and all well-respected in their fields, all talking about a subject they know thoroughly.

      I too would not change my thinking based on the agreement of five random people, but when five well-respected economists all agree on tax policy, I think we have to consider it seriously.

      There are many reason why we could not have a carbon tax, or a consumption tax; mostly having to do with politics and not necessarily the economics involved.

      I don't know much about climate science either, but I think it is stupid when I hear people saying an agreement among climate scientists is bunk.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 02:15:11 PM PST

      [ Parent ]

  •  Great diary (2+ / 0-)
    Recommended by:
    ricklewsive, SamSinister

    I love it. We should be definitely talking more about policy here - what kind of policies are the best to spur income and economic growth and bring forth a more progressive society (less income inequality etc.)

    I'm not completely sure about the consumption tax. Sure, some sort of a VAT might work (it's implemented in all other advanced economies) but to get rid of income tax alltogether? I would need more information on how the consumption tax would be designed but my first reaction is skepticism - to make it progressive might also make it extremely complicated and difficult to implement.

    Carbon tax. Sure, absolutely. Legalizing marijuana? Absolutely, there are only moral arguments against it and I don't share those views. I also agree that mortgage deduction is creating wrong incentives and it should be seriously reconsidered - at least make it more progressive.

    A very good diary, thanks for writing it. We need more discussion that questions the basic talking points about policy around here. Yeah, it's fun to ridicule conservatives (they often do come across as laughable) and so on but we also need to come up with our own ideas that don't rely just on "conventional liberal wisdom" - sometimes it is not the best way.

    •  please explain how VAT and Carbon tax can be made (1+ / 0-)
      Recommended by:
      FishOutofWater

      progressive?

      Over 20 years I've listened to advocates of a VAT, no one has convinced me its possible. No one has convinced me it wont contract the economy and make income disparity worse.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Nov 15, 2012 at 01:06:10 PM PST

      [ Parent ]

      •  Depends on whether it's used for deficit reduction (0+ / 0-)

        Here's a short summary on the carbon tax: http://www.carbontax.org/...

        Basically the idea is that rebates would mitigate the impact on low-income households and actually make it more progressive. Of course, that means it can't be used to bring down the debt which is a reason why it's unlikely to come up in the current "fiscal cliff" discussions. It would have to be revenue neutral. And, of course, there are the concerns of implementing that unilaterally without China or other emerging economies on board which might have very unpredictable and harmful effects on the US economy.

        I'll get back to you about the consumption tax - I might also write a diary later about different tax policies that might work including VAT.

        •  Ahem, lets stimulate the economy first (0+ / 0-)

          cause the carbon tax is going to initially slow the economy down.

          Incentivize capital flow to Wind, Solar, HVDC supergrid, pumped hydro & Solar thermal storage.

          Once the infrastructure to actually make this stuff in the US has been established, start applying the carbon tax.

          And throw that VAT idea into the garbage with the gold standard.

          FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

          by Roger Fox on Thu Nov 15, 2012 at 01:35:49 PM PST

          [ Parent ]

          •  Sure (1+ / 0-)
            Recommended by:
            Roger Fox

            Yes, stimulatory measures at this point are needed more. However, the sooner we could implement the carbon tax the better. I don't see it happening any time soon but the longer we wait, the more we're just kicking the can down the road (cap and trade is even more unlikely and has some problems of its own)

            And VAT is not a terrible idea if it's done along with other fundamental changes to the tax code (to make it more progressive). Is this likely to happen? Am I an enthusiastic advocate of VAT? No. But to say VAT is like the gold standard is ridiculous (Europe has something to say to you).

            •  How to make a VAT progressive (0+ / 0-)

              Well, 47% dont pay a net income tax, right, so to approach that same figure, 47% need to not pay a VAT, in fact some people make out quite well with the Earned Income tax credit.

              SO folks who get money back, when they buy something the VAT has to give them money......

              And thats just the basics of dealing with making a VAT somewhat similar for households making 50k or less.

              Then the 200k Ferrari needs a good 200k-400k VAT

              Cause some working class dude gets a rebate, cause he has a job that when we had income tax he got 1k back.

              FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

              by Roger Fox on Thu Nov 15, 2012 at 03:39:33 PM PST

              [ Parent ]

    •  Thank you (0+ / 0-)

      I too think we need to consider a variety of ideas  - ESPECIALLY when those ideas counter our "conventional wisdom".

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 02:17:27 PM PST

      [ Parent ]

  •  How do these economists (0+ / 0-)

    allow for the fact that taxing consumption will reduce demand for goods and services and and is regressive in that poor people will pay a greater part of their income in taxes than the wealthy?

    •  Right.... VAT and Carbon tax will contract (1+ / 0-)
      Recommended by:
      tommymet

      economy, and there is no stimulus.......

      SO income disparity increases.......... and the economy becomes even more unstable.

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Nov 15, 2012 at 01:02:51 PM PST

      [ Parent ]

  •  Beyond what's been said above, (4+ / 0-)

    anyone that treats "income" as a normal good in a simple supply-demand model to extrapolate behavior effects has lost some measure of credibility. Income is a means for barter, not a good or service, and so the measures, models, and tools for analysis are different from the models used for estimating and anticipating market behaviors for goods and services. Indeed, income is a unit of measure used to construct market behavior models for analysis. A central tenet of economic theory is predicated on assuming demand and supply for a good or service can be quantitatively measured by the price paid because price is a function of willingness-to-pay and income. In a very basic sense, it makes little sense to use models and tools of analysis derived from a measurement of demand and supply to forecast the effects tax rates will have on demand and supply of that measurement itself. Essentially, because income is the intermediary necessary for the acquisition of goods, services, and necessities, it has an infinite demand curve (more will always be better). There are some labor/leisure trade-off considerations, but marginal income tax rates, beyond a certain point, only affect people already at full employment. In other words, framing income taxes as a "disincentive to earn income" is an incredibly stupid and simplistic way to discuss the economics of income taxes that would be (and is) disputed in the profession itself.

    Not to mention treating five economists as "consensus" and not consulting the wealth of economic literature using data and statistical modeling to actually estimate real world economic effects and map that back to theory is not "reality-based." In other words, this diary was about as much a waste of time as the NPR segment it essentially regurgitates.

    Ever since Republicans have started threatening NPR funding, the organization has really allowed itself to be used as a microphone for specious conservative talking point dissemination a lot under the guise and tone of "objective reason" that NPR became known for over decades of quality journalism. Sad, really. Another example of how conservatives (seemingly run by MBA's and marketing boards) "build things:" let someone else do the leg work of building a trustworthy brand and then leverage financial resources to buy it out (and in this case co-opt it to push your own agenda).

    Blogs: http://mediadeconstruction.com/ Twitter: realsteveholt

    by steveholt on Thu Nov 15, 2012 at 12:51:25 PM PST

    •  Wonderful repartee (1+ / 0-)
      Recommended by:
      tardis10

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Thu Nov 15, 2012 at 01:00:57 PM PST

      [ Parent ]

    •  Somewhat agree (1+ / 0-)
      Recommended by:
      ricklewsive

      I agree that the way income was mentioned in the diary/NPR article was not true to reality. Indeed, while there are some disincentives associated with higher marginal tax rates, the effects are much murkier as you well explained.

      However, I disagree with your second point about the uselessness of the NPR article or the diary. So bringing up these points is a complete waste of time if it's not thoroughly academic and rigorous in its economic analysis? What do you want to see more, diaries here laughing at conservatives and articles by NPR writing about the horse race aspect of politics or stuff like this? Also, your conspiracy theory of how this article is just another way of pushing a conservative agenda is not convincing. I wouldn't say the NPR piece is groundbreaking journalism (I would treat is as a light article on policy) but it is way better use of our time than most of the stuff out there. By the way, Dean Baker is not a conservative tool and is definitely not pushing a conservative agenda.

      Again, in general (not talking about you specifically), just because your views don't exactly correspond with the views you're reading doesn't mean the article/diary deserves to get attacked as worthless or propaganda etc. I personally share the skepticism about the validity of a consumption tax (especially if it's intended to replace the income tax) but I still appreciate the points the article raises. It's better we're talking about this than reading a 1000th diary on how "we must keep SS and Medicare exactly the way they are and let's tax rich people and corporations and conservatives are stupid". Yeah, I agree with the general gist of that but to read it over and over again without any nuance or openness to other ideas or perspectives (for example, we DO need to find cost savings in Medicare so the best strategy is definitely not putting it off the table which will marginalize us but to come up with ideas that preserve the benefits but bend the cost curve) is just tiring.

      •  Fair enough. (0+ / 0-)

        I agree it may have been a little unfair to have criticized the diarist so heavily. Conservative framing of the discourse about taxation has become so ubiquitous that it seems to have hijacked public understanding of economic theory at a fundamental level in ways that I find both infuriating and frightening. Consequently, my reaction to the very silly framing from the contributors to the story and the complicit spread of unchallenged, faulty economic "theory" by NPR, in conjunction with the title of the diary, elicited a bit of a knee-jerk dispatching of baby, bathwater, messenger, etc. (pick your anecdote).

        To your point about actual policy...while I understand and sympathize with your sentiments that there is a heavy emphasis on the politics and electioneering and messaging on the site, there are some substantive policy diaries that I've seen. I agree, we could use more, but Kos offers more than other information outlets, particularly MSM sources.

        Finally, on Medicare, progressives have long offered alternatives that will bend the cost curve of health services (as I'm sure you know, the real underlying driver of Medicare cost growth): a single payer system or Medicare for all. Unfortunately, the notion has been regularly and summarily dismissed or kept out of the mainstream discussion (except to be mockingly trotted out by the occasional Republican or shit-eating beltway pundit as an example of "Democratic extremism" or "scary Democratic Party socialisms"). PBS ran a great, detailed, nuanced, and fairly objective look at the world's best health care systems on Frontline, called "Sick Around the World," that I think reflects news and journalism done right. If it could get more than three viewers or if the standards of analysis and depth applied to that could be picked up by mainstream media outlets, then maybe we could have more technical policy discussions as part of general discourse.

        To get to that point, though, we need to have responsible academics not serving as mouthpieces for bad policies and misrepresenting their own discipline's theories. And we need journalistic enterprises to not recruit 5, screened economists who are nominally ideologically diverse to give people the impression that there is general academic and professional consensus that those bad policy are empirically validated or theoretically sound.

        Blogs: http://mediadeconstruction.com/ Twitter: realsteveholt

        by steveholt on Thu Nov 15, 2012 at 07:06:52 PM PST

        [ Parent ]

    •  Keep in mind (1+ / 0-)
      Recommended by:
      JFactor

      Keep in mind that you are reading these ideas filtered though my understanding of the subject filtered through the NPR presentation of the subject.

      I suspect each economist could write entire chapters on any one of these ideas.  I have neither the time nor knowledge for such a comprehensive treatment.  So I suspect that the economist's acceptance of any of these policies includes knowledge of factors that you and I are ignorant of.

      Not to mention treating five economists as "consensus" and not consulting the wealth of economic literature using data and statistical modeling to actually estimate real world economic effects and map that back to theory is not "reality-based."
      I suspect that each economists cited already knows thoroughly the relevant literature and the models when stating their opinions.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 02:26:20 PM PST

      [ Parent ]

      •  Diarist, as I mentioned above... (1+ / 0-)
        Recommended by:
        tardis10

        and I won't repeat myself here, I may have been a little insensitive and overly aggressive in dismissing your diary, and for that I apologize.

        Now to your points above. First,

        I suspect that the economist's acceptance of any of these policies includes knowledge of factors that you and I are ignorant of.
        To be frank, and I mean this in the least offensive way possible, you don't know me or my background. I don't mean that in any kind of arrogant or dismissive way, but just as a simple matter of fact. Without getting into the details about myself and my life, applied economics, econometric modeling, and economic policy research methods was a major part of my graduate studies. That's not to say I am an expert, but I know "economic opinion based on little more than personal beliefs hidden behind the pass we give those with credentials" when I see it. Anyone will tell you that even things you've researched before, details slip away and need to be refreshed occasionally. I keep my micro-economics references close at hand for exactly this reason. I know theory pretty well, and I have at least some working knowledge of what is purely theory, what is still an open question, and what has empirically validated research behind it that renders it relatively irrefutable.
        I suspect that each economists cited already knows thoroughly the relevant literature and the models when stating their opinions.
        Perhaps. Economics, like many fields in academia, has really been driven into extreme specialization. Most economists have a (very) niche area that they work in and know well enough to have the most recent and relevant work in mind when they form opinions or make their case. Beyond that, said economists have enough working knowledge of fundamental theory to comment on things, but that doesn't mean they have the weight of expertise behind them, and it certainly doesn't make their view "reality-based" or definitive. Given the major disagreements on all of these issues in the broader economics field, the ambiguity of the theories informing them, and the thinness of a lot of the empirical research, it's obvious this panel either was not appropriately vetted for expertise or were vetted for a specific set of positions to imply unity and consensus where there isn't much.

        Blogs: http://mediadeconstruction.com/ Twitter: realsteveholt

        by steveholt on Thu Nov 15, 2012 at 07:46:48 PM PST

        [ Parent ]

    •  That's ridiculous (0+ / 0-)

      I can't believe someone would even suggest in passing that income has a infinite demand curve, this is demonstratably not true (and there's hordes of empirical evidence) unless the income has no cost of any kind attached to it.

      Furthermore, income at any given time isn't a prerequisite for consumption at all... that would be wealth.  

      Seriously, could you even quote an economist who doesn't feel income taxes are a disenctive to earn income at any rate?   You'd have to completely throw out the idea of a rational actor.

      •  Let's see it (0+ / 0-)
        this is demonstratably not true (and there's hordes of empirical evidence) unless the income has no cost of any kind attached to it.
        Let's see it. You misunderstood what I said. The "cost of income" you refer to comes out of the labor-leisure trade-off that I mentioned, a theory that gets bandied about by the Right and has been taken to an extreme as a means to reduce marginal income tax rates in perpetuity. Unfortunately, the labor-leisure trade-off has only limited applicability to marginal income tax rates. That's why in the 1950's, 1960's and 1970's, under higher marginal rates (yes, yes...loopholes, loopholes), GDP in the U.S. grew at significantly higher rates than preceding and following decades. That's why most international empirical models show a positive correlation between marginal rates and GDP growth (to a certain breaking point where the tax rate is too high). Several economists (Stiglitz, Krugman the most visible of them) have pointed this out.

        Now, most of the research I've seen only makes the point that differentiated tax rates on different kinds of income shifts behavior towards the lower taxed form of income. Not really the same thing as the point I was making, certainly not definitive evidence of disincentives for earning income (indeed, the behavior shifts to a different form of income, not abandoning income receipt all together), and definitely not a wealth of empirical evidence. And it has very little bearing on marginal income tax rates and even less on the relative efficacy of income taxes versus consumption taxes for efficiency considerations.

        Now, to be fair, you are right about the distinction, and I should have been more clear about this, that wealth and income are distinct, wealth more likely has an infinite demand curve, and income only has an infinite demand curve in the presence of certain market conditions (caps on work weeks and work days, income contingent upon full-time employment, etc.). But given that I wasn't intending to give a dissertation on the economic theory behind incentives or wasn't assuming a technical audience, I was okay with not setting up the full series of assumptions in which my statement was true.

        My point was that marginal income taxes are a very progressive and relatively efficient way to go about raising public revenues, and for many reasons grounded in solid economic theory, are superior to using consumptions taxes. Additionally, I made a point that while labor can be analyzed in a supply-demand model (like goods and services), income cannot, as there are different, more complex variables involved, some of which are not easily quantified. Finally, I made the point that consensus among these 5 economists in no way represents the field.

        Now, about that horde of empirical evidence, please share. I'm not familiar with it and would like to read it. But, as I said, there is by no means of consensus on this in the field.

        •  Severence of cause and effect (0+ / 0-)
          Let's see it.
          Well, the easiest example would be the years of decline in revenue after the capital gains tax in the mid-1980s.  Some seem to want to dismiss that as the revenues recovered a decade later, but their rather blithely pretending that there's no outside variables.

          Oil and mineral concession agreements are another excellent example, as they provide a near perfect example of the mechanism in action:  The government is essentially rent-seeking, and is attempting to maximize return through both the agreement and taxation, while still getting the outside company to conduct the economic transaction.

          One of the most famous examples was Ecuador's windfall tax wiping out the market.

          That's why in the 1950's, 1960's and 1970's, under higher marginal rates (yes, yes...loopholes, loopholes), GDP in the U.S. grew at significantly higher rates than preceding and following decades.
          You're attributing to higher marginal rates what was really just lower taxation.  In 1960, you'd have to been in the top 95% of income to pay 20% effective federal tax.  By 2004, you'd have hit 20% federal tax at around P70, or in 2000, just P40.

          See P. 13 (PDF)

          Furthermore, the federal government was taking in several percentage points less of the GDP in taxation. It only declines in 2009-2011 because of the massive deficit.

          That's why most international empirical models show a positive correlation between marginal rates and GDP growth (to a certain breaking point where the tax rate is too high).
          This is, unfortunately, coincidence rather than causation.  You certainly wouldn't see the same result examining historical data in China or most other countries.
          •  You're shifting goal posts and arguments a lot... (1+ / 0-)
            Recommended by:
            tardis10
            Well, the easiest example would be the years of decline in revenue after the capital gains tax in the mid-1980s.  Some seem to want to dismiss that as the revenues recovered a decade later, but their rather blithely pretending that there's no outside variables.
            Covered that already. Result of differential rates on sources of personal income, relaxed enforcement, etc. Not relevant to my point.
            Oil and mineral concession agreements are another excellent example, as they provide a near perfect example of the mechanism in action:  The government is essentially rent-seeking, and is attempting to maximize return through both the agreement and taxation, while still getting the outside company to conduct the economic transaction.
            Irrelevant to a point about personal income incentives.
            You're attributing to higher marginal rates what was really just lower taxation.  In 1960, you'd have to been in the top 95% of income to pay 20% effective federal tax.  By 2004, you'd have hit 20% federal tax at around P70, or in 2000, just P40.
            There's a lot of hand-waiving and misdirection in here. First, partially due to the progressive marginal rates, income inequality was not anywhere near what it is today. You're using an argument about more horizontal income distribution to make a point about behavior effects and incentives to earn income from marginal tax rates. And by using effective tax rates, you're again distorting the conversation: effective rates will always be lower than nominal marginal rates. That's how a progressive tax system on income using marginal rates works. Back in the 60's, when rate on income over $363,000 (ish, I'm citing this from memory) was 72% (again, ish), the rate only applied to income OVER $363,000. No one expected, argued for, wanted an effective rate of 72% on these people. Yes, there were some loopholes and such that lowered the effective rate slightly from what a pure effective rate would have been under the nominal marginal rates, but that doesn't change the fact there was not a resistance to higher wages or incomes because of the marginal rates attached to them, which was my argument. Sound economic theory will tell you that someone at full employment will take a raise from 361,000 to 363,000 even if the additional $2,000 is taxes at 72% because they are already at full-employment and are not sacrificing leisure. In other words, the additional income is cost-free income.

            Now, going back to my point about income distribution, we have had 4 decades of population and market growth, and the 70's, 80's, and 90's have seen large expansions of income (although much less even distributed growth rates in the 80's, 90's and 00's). Comparing effective rates in a highly unequal society with a vastly different economic scale to effective rates of a society with a more equal income distribution is silly, misleading, and irrelevant to the point I was making. As I pointed out, effective rates are meaningless in discussing the incentives behind income taxation from an economic standpoint because they are an aggregate of many different kinds of taxes on many different kinds of income and behaviors, all with different incentive and behavior effects that should be measured independently and within their own "markets."

            While the paper you cite is interesting, and thank you for sharing it, the paper itself points out that there is disagreement with how to measure, analyze and approach this topic, which only further my point that the field does not have consensus on this issue.

            This is, unfortunately, coincidence rather than causation.  You certainly wouldn't see the same result examining historical data in China or most other countries.
            Finally, I come to this. Now, if you'll be so kind as to re-read the quote you responded to with this, you'll notice I said nothing of causation. Indeed, my entire comment had no mention of causation. I deliberately and intentionally said "correlation," which, as I'm sure you know, is not the same thing. However, while correlation does not alone prove causation, it does say two things: one, it is much more indicative of a relationship than "coincidence" or "random chance" (a fundamental point of econometric modeling), and two, consistent evidence of correlation, while not definitive, goes a long way as evidence. Most theories and relationships and knowledge about economics are built on a evidence of correlations. Given the complexity of the systems, the multitude of variables, and the inability to use laboratory controlled experiments, most empirical evidence in economics is built on arguments about correlations. Hence the disagreement in the field on most issues.

            As for examining China, most models use international comparisons and complex fixed-effects models that take advantage of policy variance to create a natural (though imperfect) comparison group. I'll take the validity of an international model with a larger number of observations and data points from a more diverse pool of economies than a historical analysis of one country for reliable evidence, thank you very much.

            Anyway, you can agree to disagree all you want, but I would prefer to be 1) afforded some measure of respect, since I would assume we are all friends and political allies here, and 2) debated on what I've actually said using evidence on the specific (very specific) sect of micro-economic theory and taxation policy that I have brought up. Don't post three links, only two of which are actual studies, as evidence that there is consensus that what I've said is incorrect (it isn't).

            •  The world's tiniest goalposts, apparently. (0+ / 0-)
              Irrelevant to a point about personal income incentives.
              How is it irrelevant?  Are you implying that corporations are sensitive to income tax, but people aren't?  Why would that be?
              And by using effective tax rates, you're again distorting the conversation: effective rates will always be lower than nominal marginal rates. That's how a progressive tax system on income using marginal rates works...  but that doesn't change the fact there was not a resistance to higher wages or incomes because of the marginal rates attached to them, which was my argument.
              Why wouldn't you discuss effective tax rates?  They're what actually matters.  There wasn't a resistance to high marginal tax rates because people only care about effective tax rates.  

              Is there some lobby that advocates high marginal (but low effective) tax rates for the wealthy?  Who would they be?

              Sound economic theory will tell you that someone at full employment will take a raise from 361,000 to 363,000 even if the additional $2,000 is taxes at 72% because they are already at full-employment and are not sacrificing leisure. In other words, the additional income is cost-free income.
              Well, yes, but once again you're using a "raise" example because there's no actual additional effort involved.  We both agree that people will accept free money up to virtually a 100% tax rate in return for neither risk nor effort on their part.  That's not really controversial.  It's also not a situation that comes up much.
              Finally, I come to this. Now, if you'll be so kind as to re-read the quote you responded to with this, you'll notice I said nothing of causation. Indeed, my entire comment had no mention of causation. I deliberately and intentionally said "correlation," which, as I'm sure you know, is not the same thing. However, while correlation does not alone prove causation, it does say two things: one, it is much more indicative of a relationship than "coincidence" or "random chance" (a fundamental point of econometric modeling), and two, consistent evidence of correlation, while not definitive, goes a long way as evidence. Most theories and relationships and knowledge about economics are built on a evidence of correlations. Given the complexity of the systems, the multitude of variables, and the inability to use laboratory controlled experiments, most empirical evidence in economics is built on arguments about correlations. Hence the disagreement in the field on most issues.
              If you advocate a policy based on a given trend, you must assume some level of causation, otherwise your suggested political action is nothing more than a random guess, and taking people's money based on a guess is hardly sound government.
              As for examining China, most models use international comparisons and complex fixed-effects models that take advantage of policy variance to create a natural (though imperfect) comparison group. I'll take the validity of an international model with a larger number of observations and data points from a more diverse pool of economies than a historical analysis of one country for reliable evidence, thank you very much.
              You can take as many data points as you wish, the issue is that the high marginal tax rates during GDP growth in the US is a statistical outlier compared to other countries.
              Given the sheer amount of unsupported verbiage you've posted, I think I've been pretty polite.  "Ridiculous" is a rather mild pejorative, and it was directed at your argument, not your person.

               

              and 2) debated on what I've actually said using evidence on the specific (very specific) sect of micro-economic theory and taxation policy that I have brought up. Don't post three links, only two of which are actual studies, as evidence that there is consensus that what I've said is incorrect (it isn't).
              What, precisely, would be the ideal number of links for a forum post in someone's diary about economics?  

              As I stated above, there's no reason to assume that corporations are rational actors and individuals are not, in regard to income tax.

              •  Sorry, didn't see you responded... (0+ / 0-)

                Okay, so this will be my last response on this. It's become clear to me that you're either not terribly knowledgeable of economic theory and economic research or you are a conservative troll (or both, not mutually exclusive). I think I recognize your screenname from a previous trolling encounter. I know, I know...you're going to act all hurt and offended that I would make such a claim, implying that I am only saying it to avoid arguing. But, really, your last post shows that you aren't interested in dialogue. You think you are irrefutably right, and ignore my points, taking snippets out of context in order to continue to fight with me, even if it's over points I've already addressed. That behavior strongly resembles trolls I encounter in other forums, and usually, if it quacks, walks, and looks...

                Okay, so we'll just go in order here.

                Are you implying that corporations are sensitive to income tax, but people aren't?  Why would that be?
                Yes. Because businesses, particularly large businesses like corporations, respond to much different incentive structures and make decisions regarding different variables than people. This is true in both economic theory and research, so unless you believe corporations are people, friend, it should be relatively easy to understand even if you aren't familiar with economic theory. Of course, if you aren't familiar enough with economic theory to understand something from Econ 101, I'm not sure why you decided to pick a fight with me over a very specific and technical assertion about a niche aspect of economic theory...but whatever.
                Why wouldn't you discuss effective tax rates?  They're what actually matters.  There wasn't a resistance to high marginal tax rates because people only care about effective tax rates.  

                Is there some lobby that advocates high marginal (but low effective) tax rates for the wealthy?  Who would they be?

                I explained, pretty comprehensively, why marginal rates will always be higher than effective rates. It's simple math. Let's take a more concrete example to make it clearer to you (and anyone else still reading this) how marginal tax rates work and why this is true. Okay, in our fictional world we have the following tax structure on personal income:

                10k-20k = 10%
                20k-30k = 15%
                30k-40k = 20%
                50k + = 25%

                Okay, so in this world, steveholt makes 100k per year. That means steveholt's total tax burden would be 17K ([.10*10k]+[.15*10k]+[.20*10k]+[.25*50k]). steveholt's effective tax rate (in a pure world, without deductions) would be 17%. Although steveholt have income that reaches the highest marginal bracket of 25%, steveholt's effective tax rate is much lower at 17%. Of course, adding in deductions could lower it further, but, as I said before, deductions are different kinds of taxes with different incentives that require different analytic tools. Deductions are associated with some kind of consumption or investment behavior incentive (either encouraging or discouraging different market behaviors), and thereby are irrelevant to discussions about income tax rates and their effects on incentives to earn income (e.g. one's incentive for additional work is not to take advantage of a deduction on private jet depreciation write-offs. One's decision to consume a private jet with income earned may be influenced by that deduction, however).

                So, given that marginal rates by definition will always be higher than effective rates, and effective rates also include tax deductions that have no impact on income earning incentives, effective rates are irrelevant when discussing the economic incentive effects of marginal taxation rates on personal income. People do not acquiesce to higher marginal rates because their effective rates are low. That will always be the case, so, by that argument, people would always acquiesce to higher marginal rates (warping effects such as political ideology aside, of course).

                So now you know how marginal income tax systems work.

                Well, yes, but once again you're using a "raise" example because there's no actual additional effort involved.  We both agree that people will accept free money up to virtually a 100% tax rate in return for neither risk nor effort on their part.  That's not really controversial.  It's also not a situation that comes up much.

                I agree that it's not controversial and is founded on economic theory. I'm glad you don't dispute it. Imagine my surprise that stating it elicited such bluster from you....

                Also, it is a situation that comes up more often than anything else, particularly in the higher brackets of income. Marginal tax rates on income only apply to income from wages, tips, and salaries. In other words, the only increase from bracket to bracket will come in the form of a raise (either with the same company or a new one). Unless you think that small business owners submit their income from their business as personal income, in which case, you'd be wrong. So, in all actuality, you don't disagree with what I said, but don't seem to fully understand how our tax system works, and so mistakenly believe that the most common form of income is not common. And that is the reason for these blustering responses full assertions made with an unjustified tone of certitude?

                If you advocate a policy based on a given trend, you must assume some level of causation, otherwise your suggested political action is nothing more than a random guess, and taking people's money based on a guess is hardly sound government.
                I'm not being paid to teach you the finer points of empirical research or academic research on economics, so I'll leave it at this: you might want to look up the difference between "correlation" and "random guess (or chance in most literature)." Aside from that, this statement makes it seem like you don't understand how government makes decisions well enough to understand what "sound government" is.
                You can take as many data points as you wish, the issue is that the high marginal tax rates during GDP growth in the US is a statistical outlier compared to other countries.
                I'm guessing this was intended to not be in block quote; it's not something I said, so you're not quoting me. Anyway, no, that's just flat out false. As I said, several international studies have shown positive correlation between marginal rates on personal income and GDP growth. That is the opposite of making the U.S. an outlier. I am not responsible for doing homework for you. You challenged something I said rather emphatically, and I asked for evidence to the contrary because my statement was based on knowledge of both the field and recent literature on the subject (also, you were the one who claimed to be privy to hordes of empirical evidence). You provided a handful of links that were irrelevant to my statement. I don't care if you disagree with me. But don't pretend empirical research definitively agrees with you when I know for a fact that it doesn't. You can look up the literature on international econometric models on income taxation yourself.
                What, precisely, would be the ideal number of links for a forum post in someone's diary about economics?
                You're the one that brought up "hordes of evidence," not me. If hordes is three, okay. Whatever. My point was not that your number was suboptimal, but that three links, two of which are irrelevant, does not a consensus make.
                As I stated above, there's no reason to assume that corporations are rational actors and individuals are not, in regard to income tax.
                No one is making that case, and it's a distraction to even bring it up. The two are rational actors, but face very different decision incentives and variable inputs when making decisions, so their rational choices are different and should be (and in the academic study of economics, are) analyzed, modeled, and studied differently.

                Anyway, that's it for this thread. Maybe I'll one day make a diary providing information about the economics of income taxes and the structure of marginal tax rates, since the misunderstanding of these things seems endemic (not just with you, but I encounter it a lot...there are a lot of people who seem to equate the marginal rate of the highest bracket with the intended effective rate for someone making that level of income). And then maybe you can troll that diary too, haha.

                Anyway, as I said before, we can agree to disagree. Have a nice life.

      •  Come to think of it... (1+ / 0-)
        Recommended by:
        tardis10

        I'm pretty sure a group of economists recently released an empirical analysis showing that a more efficient tax system in the U.S. would have a highest bracket marginal rate at anywhere between 50-70%. In addition, a study from NBER covering a comparison of OECD countries found that income inequality created significant drags on the economy and inefficiencies. Higher tax rates on income creates positive externalities by eliminating these inefficiencies. While that doesn't say much about income incentive effects, it does get at the larger point that there are many empirical studies showing that income tax revenues are more efficient and economically preferable to consumption taxes.

  •  Note that the NPR story contained only those ideas (2+ / 0-)
    Recommended by:
    JFactor, FishOutofWater

    which were acceptable to all the economists. This is the economic version of media "false equivalency" or "balance", the running of "on the other hand, some say the shape of the world is flat" stories.

    JUST BECAUSE they could all agree on these ideas doesn't mean that individually or as a group these ideas are peachy keen. There's a great deal of astonishing group-think among economists, because they don't test their models against the real world. Stieglitz and Krugman are actually kind of outliers in their positions, but you know, there's actually a good reason why they won Nobel prizes and no, it's not because they speak good Swedish.

    •  I agree with some of this (0+ / 0-)

      It's very true that as a package these reforms would probably not work. Although I must slightly disagree with always hoisting Stieglitz and Krugman up to a pedestal - they often make good points but to dismiss all others as being inflicted by group-think is not quite true. Sure, economists have a herd mentality like anyone else but it is also true that they agree on a lot of things because it's simply sound economics. And that includes Krugman and Stieglitz. People would be surprised how much there actually is that 99% of the economists agree on and that includes Krugman et al. as well.

      •  Agree Krugman and Stieglitz not gods- but follow (0+ / 0-)

        Brad DeLong's blog () for a while and you'll see a lot of detailed, technical critique of "accepted wisdom by established economists" which, according to him (I'll cheerfully admit I don't follow the details) is contradicted by sound, well-tested economic theory and reality. In other words, a lot of what passes for Serious Economics is actually navel-gazing divorced from reality.

        Krugman and Stieglitz have been proven right, a lot more than the "freshwater" economists, thus I invoke them. Find a Chicago School economist who's right more often than them and I'll change my tune.

    •  Please see my comment above. (0+ / 0-)

      Better yet,read what Baker actually wrote about this NPR exercise.
      http://www.npr.org/...

      "George RR Martin is not your bitch" ~~ Neil Gaiman

      by tardis10 on Thu Nov 15, 2012 at 01:57:26 PM PST

      [ Parent ]

  •  home tax deduction (2+ / 0-)
    Recommended by:
    FishOutofWater, Roger Fox

    The economists say the home deduction is unfair to people who rent.  They don't take into account that the apartment owner gets a tax deduction for his mortgage and so could pass on the lower operating costs to the tenants.  So they do benefit.  There isn't any indication that cutting taxes on businesses causes them to hire more workers or improve their products.  Businesses already hire the number of workers they need to meet demand, and make the best product they can.  If yo cut their taxes, they simply make more profit which today is normally split between (low taxed) dividend payments and higher bonuses to upper management.  
    Basically the economists have no idea how money really moves.  

  •  So one of these economists, Dean Baker, doesn't (2+ / 0-)
    Recommended by:
    JFactor, tardis10

    "Those who deny freedom to others, deserve it not for themselves." - Abraham Lincoln

    by leftreborn on Thu Nov 15, 2012 at 02:52:13 PM PST

  •  Also "an NPR show" - wasn't that Planet Money? (1+ / 0-)
    Recommended by:
    tardis10

    Because, boy, I kind of think it is, from what Dean Baker, one of The Five, wrote here:

    http://www.npr.org/...

    So is this "fact-based" or is the  following set of facts too dissonant to the narrative that somehow one rather vague blog post is going to transform everyone's political positions as they realize what economic ignoramuses they were and come to Friedman? That sort of fantasy is a mainstay of science-denying pop-economists like the Freakonomics fabulists.

    http://shameproject.com/...

    Because, to me, "I was listening to the ethically-challenged, right-wing vehicle Planet Money" seems way, way more fact-based than "an NPR show." The problem is, lots of someones might be offended by my facts and only people who can reason are offended by your facts.

    Tbogg did a good job highlighting the issues with NPR via Planet Money if you want the Cliffs Notes version:

    http://tbogg.firedoglake.com/...

    •  Not "my" facts (1+ / 0-)
      Recommended by:
      JFactor

      Yes, Planet Money put together the piece which I heard on my local NPR station.  It also got newsplay on a variety of other media outlets, including the Washington Post and ShameProject.com, etc.

      No doubt, you can find someone who thinks each and every single media outlet out there is biased in some way or another.  Certainly, many republicans curse the "liberal media bias" that reports on the agreement among climate scientist about global climate change.  

      What I have written here is NOT "my" facts.  I have reported on a story that appeared on NPR, or Planet Money if you prefer, and my reaction to that story.  I beleive I have correctly characterized that story and the topics raised therein, and so far no one has said I mischaracterized the story (I appreciate the response from Dean Baker you cited, and hope to read it entirely soon).  

      If you don't like what these economists have to say, you are always welcome to ignore the thoughts of highly educated knowledgable people discussing the field of their own expertise.  Sadly many Americans do just that on issue like climate change and rape, and others.

      Being a fact-based person, when a group of economists advance ideas that counter my own pre-conceptions, I HAVE to acknowledge that and give those ideas serious consideration, and put them up for discussion.  that is what I am doing here.  I am sorry if you find these facts (not "my" facts) disturbing.

      "The fool doth think he is wise: the wise man knows himself to be a fool" - W. Shakespeare

      by Hugh Jim Bissell on Thu Nov 15, 2012 at 03:38:08 PM PST

      [ Parent ]

  •  it may be true, but (0+ / 0-)

    i need to read more before i define you as a huge imbecile.

    * Join: The Action: End the Bush Tax Cuts for Richest Two Percent * Addington's Perpwalk: TRAILHEAD of Accountability for Bush-2 Crimes.

    by greenbird on Thu Nov 15, 2012 at 04:11:42 PM PST

    •  This is classic trolling, actually (2+ / 0-)
      Recommended by:
      tardis10, greenbird

      1. The troller posts something false, arrogant, and a little deliberately offensive,
      2. Then simply reiterates his or her post in comments and makes no substantive replies.

      For the first part, the most obvious evidence is that 2 of the points ARE liberal sacred cows if anything is: a carbon tax and legalizing marijuana. No sincere person would have titled their post like this, someone trolling would. And the simple repetition of "These people are experts, NPR is right, therefore whatever they say is a fact" is the final proof this is just trolling coupled with obfuscating (feigned) stupidity.

      Hugh Jim Bissel is a Capitol Steps detective character in their allegedly musical allegedly political alleged comedy.

      And the evidence that the person trolling here is not an imbecile is that the mission (hit-whoring) was accomplished.

  •  Great discussion! (0+ / 0-)

    I believe that was the point.

    GOP: Bankers, billionaires, suckers, and dupes.

    by gzodik on Fri Nov 16, 2012 at 04:34:34 PM PST

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