"It is easy to confuse what is with what ought to be, especially when what is has worked out in your favor."
- Tyrion Lannister
"Lannister. Baratheon. Stark. Tyrell. They're all just spokes on a wheel. This one's on top, then that's ones on top and on and on it spins, crushing those on the ground. I'm not going to stop the wheel. I'm going to break the wheel."
- Daenerys Targaryen
"The Lord of Light wants his enemies burned. The Drowned God wants them drowned. Why are all the gods such vicious cunts? Where's the God of Tits and Wine?"
- Tyrion Lannister
"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."
- Jorah Mormont
"These bad people are what I'm good at. Out talking them. Out thinking them."
- Tyrion Lannister
"What happened? I think fundamentals were trumped by mechanics and, to a lesser extent, by demographics."
- Michael Barone
"If you want to know what God thinks of money, just look at the people he gave it to."
- Dorothy Parker
Sunday, October 23, 2016
Tuesday, October 18, 2016
Monday, October 17, 2016
Sunday, October 16, 2016
How Trump Happened by Joseph Stiglitz
What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy by Robert J. Shiller
Saturday, October 15, 2016
Anyhow, in spite of my respect, I feel the need to call him out on trying to pull the wool over folks' eyes in a recent column. The column touts many of the positive measures (in my view) to help people at the middle and the bottom under the Obama administration, such as expansion of the earned income tax credit, the child tax credit, and most importantly the Affordable Care Act which has extended health insurance coverage to 20 million people and allows people with serious health conditions to get insurance at the same price as every one else. These measures have been paid for by higher taxes on the wealthy. This is all very positive and the Obama administration deserves credit for these measures, even if I would have liked to see it go much further.
However, the reason my BS detector went off is that Furman tried to claim we had turned the corner in some big way on the upward redistribution of income from the last four decades. He tells readers:
"Partly as a result of these policy changes, the top 1 percent’s share of income after taxes was 12 percent in 2013 (the most recent year for which data are available), well below its 2007 peak and roughly equal to its share in 1997."
The problem with this story is that the 2013 numbers for the top 1 percent are skewed downward in a big way as a result of the tax increase on the rich that the administration put in place in 2012. The wealthiest 1 percent often have considerable control over the timing of their income. They knew the top tax rate would rise from 35.0 percent for 2012 to 39.6 percent in 2013. This gave them a very strong incentive to declare income in 2012 that would have otherwise appeared in 2013. This makes 2012 look really good for the 1 percent and 2013 much worse.
This shows up clearly in the data. According to the estimates from the Congressional Budget Office (Figure 7), the inflation-adjusted before-tax income of the top 1 percent rose by 37.9 percent in 2012. It then fell back by 22.0 percent in 2013. This is exactly what we would expect from this tax gaming. If we take the average of these two years, the before-tax income of the top 1 percent has risen by 73.3 percent from its 1997 level. On the plus side, it is down by 22.6 percent from the bubble peak of 2007.
I should point out that this tax timing issue is hardly a secret. CBO mentioned it explicitly in the summary of its report:
"In response to tax law changes that went into effect in 2013, some taxpayers—especially those at the top of the income distribution—shifted some income into 2012 to avoid the higher tax rates on that income in 2013."
Anyhow, it is too early to claim any big victories in turning around the rise in before-tax income inequality. (This is also the view of CBO which projects that the bulk of the wage gains in the next decade will go to high-end earners, as has been the case for the last 35 years.)
The Obama administration deserves credit for some big steps in the right direction, but we still have a very long way to go. This is why I wrote "Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer," coming this week to a website near you.
Friday, October 14, 2016
In the same way as with Brexit, the rise of Donald Trump and Bernie Sanders, the strength of rightwing nationalists in many European countries, Vladimir Putin’s strength in Russia and the return of Mao worship in China, it is hard to escape the conclusion that the world is seeing a renaissance of populist authoritarianism.
Sunday, October 09, 2016
Saturday, October 08, 2016
Sunday, October 02, 2016
Greg Ip: Fiscal Policy Makes a Quiet Turn Toward Stimulus:
Now... fiscal policy across the developed world is collectively turning more stimulative for the first time since the end of the recession...
...This may be the most underappreciated economic development of the year. While the scale of the stimulus is modest in dollar terms, it signals a more profound shift in the political winds. Globally, the rise of political populism has pushed deficits down the list of priorities while elevating tax cuts and benefits for the working class. With enough critical mass, such measures could persuade central banks to rethink their own super-easy monetary policies, which would undermine the case for today’s rock-bottom bond yields and pricey stocks.
The fiscal shift is easy to miss, because rhetorically at least, governments remain devoted to cutting their debts. But numbers tell a different story.... The near-term catalyst for the fiscal turn was Britain’s vote to leave the European Union on June 23. Not only did the resulting uncertainty threaten global economic growth, it also alerted centrist political parties to how unhappy voters are with the economic status quo....
For Japan, the impetus was both Brexit and the Bank of Japan’s introduction of negative interest rates this year, which failed to work as planned; the yen went up and stocks went down. In August, Prime Minister Shinzo Abe unveiled a $73 billion package of infrastructure spending, cash handouts to poor families, and other stimulative measures. In the U.S., budget caps enacted in 2011 have already been loosened. Meanwhile, Hillary Clinton, the Democratic nominee, is campaigning to boost spending on countless programs, from college education to infrastructure.... Mr. Trump’s rise demonstrates that austerity has lost the political energy it had in 2010....
Central bankers can take credit for the shift. As the benefits of zero to negative rates have shrunk and the side effects risen, they have exhorted finance ministers to take up the burden of supporting growth...
What DeLong and Ip don't tell us is that Hillary's plan of $275 billion over five years is too small. The Fed says it gave us the recovery it wanted for the most part.
Saturday, October 01, 2016
Hacked audio of a conversation between Hillary Clinton and donors during a February fundraising event shows the Democrat nominee describing Bernie Sanders supporters as "children of the Great Recession" who are "living in their parents’ basement."
Speaking at a Virginia fundraiser hosted by former U.S. ambassador Beatrice Welters, Clinton says in a clip released by the Free Beacon that many of her former primary opponent's supporters sought things like “free college, free health care,” saying that she preferred to occupy the space "from the center-left to the center-right" on the political spectrum.
During the conversation, also reported in the Intercept, Clinton confesses to feeling "bewildered" by those to her far-left and far-right in the election.
"There is a strain of, on the one hand, the kind of populist, nationalist, xenophobic, discriminatory kind of approach that we hear too much of from the Republican candidates," she said. "And on the other side, there’s just a deep desire to believe that we can have free college, free healthcare, that what we’ve done hasn’t gone far enough, and that we just need to, you know, go as far as, you know, Scandinavia, whatever that means, and half the people don’t know what that means, but it’s something that they deeply feel."
While stressing the need to not serve as a "wet blanket on idealism," Clinton paints fans of the then-surging Vermont senator as political newbies attempting to deal with an economy that has fallen short of their expectations.
"Some are new to politics completely. They’re children of the Great Recession. And they are living in their parents’ basement," she said. "They feel they got their education and the jobs that are available to them are not at all what they envisioned for themselves. And they don’t see much of a future."
Clinton added: "If you’re feeling like you’re consigned to, you know, being a barista, or you know, some other job that doesn’t pay a lot, and doesn’t have some other ladder of opportunity attached to it, then the idea that maybe, just maybe, you could be part of a political revolution is pretty appealing."
"I think we all should be really understanding of that," Clinton said.
The audio, which according to the Free Beacon was "revealed by hackers who breached the email account of a campaign staffer," surfaces the same week that Sanders hit the campaign trail to try to win those same young voters that Clinton has struggled to attract since clinching the Democratic nomination.
Editor’s note: The headline and lede of this story have been changed to better reflect Clinton’s tone. The audio was originally published on Sept. 27, not Friday as first reported.