"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

Friday, July 21, 2017

Felicia Wong in Time

The First Thing Democrats Must Do to Fix the Economy by Felicia Wong

DeLong quotes Avent on the recovery

Must-Read: Ryan Avent: MAKING MONETARY POLICY GREAT AGAIN: "Obama’s response to the economic crisis... the timidity of his stimulus plan... his failure to provide broad support to struggling homeowners... his premature pivot to deficit cutting...

...While Roosevelt’s New Deal programs left an indelible mark on the American economy and society, it was his decisive monetary action that saved America from continuing depression. On just his third day... Roosevelt declared a bank holiday... suspended... the... gold standard... a policy of reflation. The economic response was immediate.... Obama would not pursue any comparably radical policy.... His Administration left the hard work of rehabilitating the economy to the Federal Reserve, while the federal government turned to deficit reduction....
The decades prior to the crisis taught political leaders that economic management was the Fed’s job, one it could handle ably. Experience since the financial crisis strongly suggests that assumption was mistaken. It should not have taken six years to return the unemployment rate to the pre-crisis level, nor should so much of the reduction in unemployment have come in the form of frustrated workers leaving the labor force. American incomes should not have been allowed to fall below the pre-crisis trend, and at least some of that shortfall ought to have been made up. Most critically, now, nearly ten years after the start of the Great Recession, the economy should be far better prepared to deal with the next crisis, not trapped with interest rates stuck near zero and the labor market still signaling that more people could be put to work for longer hours at higher rates of pay. 
As the Great Recession recedes into the past, the sense that urgent change in the making of economic policy is needed also fades...

Wednesday, July 19, 2017

Chapo Trap House

Calling them the "dirtbag left" is playing into the centrist Bernie Bro meme.

The Dirtbag Left and the Problem of Dominance Politics by Jeet Heer

Monday, July 17, 2017

Dylan Matthews on UBI

A basic income really could end poverty forever by Dylan Matthews

Game of Thrones season 7 episode 1

What's the gift Euron Greyjoy plans to bring Cersei? Tyrion's head. A horn which controls dragons?

Does Ayra wipe out Ed Sheeran and the nice Lannister soldiers? Probably.

Doesn't really matter who leads the Karstarks and Umbers. The White Walkers are heading straight for their castles in the north east and will overwhelm them.

I read speculation that the Night King is really in the west as the Hounds saw a mountain, which are only located in the west. That means the army of the dead traveled west pretty quickly. Bran will know!

Jim Broadbent!

Spoilers below!

Previews have Sansa making out with a Sand Snake from Dorne???

New Republic discussion

Ask the Maester

Saturday, July 15, 2017

It's the Debt Stupid by Steve Roth

It's the Debt Stupid by Steve Roth
If you go further and allow that wages and prices can inflate at different rates (which you must, given recent decades), you have extremely large and changing differentials between price inflation, wage inflation, and (especially) asset-price inflation.
Asset-price inflation?

"Asset price inflation" is not inflation by Noah Smith

DeLong on economic growth

Must-Read: As I say, repeatedly, calling it "populism" is not a good thing—it does not need to clear thinking. Hitherto "populism" has meant one to two things:

Sunday, July 09, 2017


- With savings low and debt high, households might respond to higher wages by saving more. If so, we’ll not get higher aggregate demand and hence incentives to invest. There’s a warning here from the 70s. One reason why the positive-sum game broke down then was that workers saved increasing proportions of their wages. 
These doubts don’t make me side with neoliberalism. They just make me think that wage-led growth is nothing like sufficient.

Medicare, Medicaid


In 2015, Medicare provided health insurance for over 55 million—46 million people age 65 and older and nine million younger people.[2] On average, Medicare covers about half of the health care charges for those enrolled.

payroll tax. universal, expensive, b/c government doesn't negotiate as in other countries.

"Many look to the Veterans Health Administration as a model of lower cost prescription drug coverage. Since the VHA provides healthcare directly, it maintains its own formulary and negotiates prices with manufacturers. Studies show that the VHA pays dramatically less for drugs than the PDP plans Medicare Part D subsidizes.[138][139] One analysis found that adopting a formulary similar to the VHA’s would save Medicare $14 billion a year (over 10 years the savings would be around $140 billion).[140]"

Medicaid cost, care

Saturday, July 08, 2017

America's First Postmodern President by Jeet Heer

America’s First Postmodern President by Jeet Heer

Socialize Finance by J.W. Mason

Socialize Finance by J.W. Mason

"We already live in a planned economy. Why not make it a democratic one?"

Thursday, July 06, 2017

Beutler and Yglesias go rogue; Reich on jiu-jitsu

Bernie Sanders and the Progressive Left’s Selfless Defense of Obamacare by Brian Beutler

Bernie Sanders is the Democrats’ real 2020 frontrunner by Matt Yglesias


David Frum interviews Edward Luce

“Western liberalism is under siege”
Let's talk about some of the drivers of the changing of society. I see three. You talk a lot about two, and less about the third. 
The first is this giant question about the future of work — what is happening to the economic situation of people who don't own capital or have internationally traded skills.
What an odd way of putting it. Isn't it the job of the Fed to keep unemployment low?

Wednesday, July 05, 2017

Franc thoughts on Bond Vigilantes by Krugman

Franc Thoughts on Bond Vigilantes
by Paul Krugman
NOVEMBER 23, 2012 12:48 PM

Suzy Khimm writes about the contrast between what financial industry honchos say worries them and what financial markets seem to be saying. The honchos declare that failure to reach a Grand Bargain would

spark a damaging loss of confidence in the U.S. government’s fiscal prospects, a run on Treasury bonds, and a spike in interest rates.

But the bond markets are saying what me worry, with long-term rates at near-record lows.

What Khimm doesn’t note, however, is that the problem with bond vigilante scare tactics runs even deeper than that — because it’s actually quite hard to tell a story in which a loss of confidence in U.S. bonds hurts the real economy. Why wouldn’t it just drive down the dollar, and thereby have an expansionary effect?

Yes, I know, Greece — but Greece doesn’t have its own currency. What’s the model under which a country that does have its own currency and borrows in that currency can experience a slump due to an attack by bond vigilantes? Or failing that, where are the historical examples?

The closest I can come to anything resembling the danger supposedly lurking for America is the tale of France in the 1920s, which emerged from World War I burdened by large debt, and which did in fact face an attack by speculators as a result. Yet the French story does not, if you look at it closely, offer any support to the deficit scare talk we keep hearing.

So, France did indeed have a big debt problem. Here’s debt as a percentage of GDP, from the IMF debt database:


How did France achieve that big drop in debt after 1925? Basically by inflating it away.

And markets sort of saw that coming. This study (pdf) by the Bank of France show medium-term interest rates (black line) rising substantially for much of the 1920s, before dropping off sharply:


It’s important to note, however, that France wasn’t a depressed economy in the 1920s, and therefore didn’t look much like America today:


Meanwhile, the really big effect was a sharp depreciation of the franc, which made France highly competitive and strengthened the economy:


But what about the brief but nasty slump in 1927? That wasn’t caused by spiking interest rates; it was, instead, caused by fiscal austerity, by the measures taken to stabilize the franc.

So even when we look at the closest thing I can find to the scenario the deficit scolds want us to fear, it doesn’t play out at all as described.

It’s quite remarkable: our policy discourse remains largely dominated by fears of an event that the fear-mongers can’t explain in theory, and for which they can offer no historical examples in practice.

Comic-Con 2017

Comic-Con 2017 Line-up

Tuesday, July 04, 2017

Marc Maron and Bill Hicks

Not being a comedy geek, I never put the two together until now.

video of a bit

Marc Maron Opens Up About Friend and Comedian Bill Hicks
Arguably, what stands out most in Maron's description of his old friend is how, unlike most comics, Hicks wasn't desperately eager to please the audience. In fact, he didn't seem to care whether they were pleased. And if you watch old clips on YouTube, you can see that sometimes they weren't. "Bill was very much in his own time zone," Maron says. "He went through his entire presentation, whether people were responding or not. There are a few guys who took his approach to details and description, but not many. It's hard. The stuff Bill wrote is positively Rabelaisian. 
"If I could say anything about Hicks, it's that he was doing his best to destroy anything he perceived as hypocrisy," Maron concludes. "While also revealing stuff that was overly embraced by moralizers. He was a misanthropic moralist, who did his best to get to the bottom of religious hypocrisy, moral hypocrisy, and societal hypocrisy. But he also made you laugh when he did it. That's a tough trick. But it's what Bill did."

Sunday, July 02, 2017

moral consequences of economic growth

Vox interview with Benjamin Friedman

Will Wilkinson CATO review

Gregg Easterbrook New York Times review

Economist review

Brad DeLong's review

Krugman and Beauchamp are wrong:

No easy answers: why left-wing economics is not the answer to right-wing populism by Zack Beauchamp Mar 13, 2017

The Case for Countering Right-Wing Populism With ‘Left-Wing Economics’ by Eric Levitz

Populism and the Politics of Health by Paul Krugman March 14, 2017 1:43 PM
And yet, and yet: Trump did in fact win over white working-class voters, who thought they were voting for a populist; Democrats, who did a lot for those voters, got no credit — rural whites, in particular, who were huge beneficiaries of the ACA, overwhelmingly supported the man who may destroy their healthcare. 
This ties in with an important recent piece by Zack Beauchamp on the striking degree to which left-wing economics fails, in practice, to counter right-wing populism; basically, Sandersism has failed everywhere it has been tried. Why? 
The answer, presumably, is that what we call populism is really in large degree white identity politics, which can’t be addressed by promising universal benefits. Among other things, these “populist” voters now live in a media bubble, getting their news from sources that play to their identity-politics desires, which means that even if you offer them a better deal, they won’t hear about it or believe it if told. For sure many if not most of those who gained health coverage thanks to Obamacare have no idea that’s what happened.
Any answer to right-wing populism requires left-wing economics: 
Why Zack Beauchamp’s piece arguing otherwise is wrong by eshhou

No Easy Answers, Just Bad History by Marshall Steinbaum

Liberals and diversity by Matt Bruenig

Saturday, July 01, 2017

Gillibrand comes out for single-payer

Kirsten Gillibrand becomes latest Democrat to come out in favor of single-payer health care

The Retreat of Western Liberalism

In ‘The Retreat of Western Liberalism,’ How Democracy Is Defeating Itself by Michiko Kakutani
Instead, he argues in “The Retreat of Western Liberalism,” Trump’s election is a part of larger trends on the world stage, including the failure of two dozen democracies since the turn of the millennium (including three in Europe — Russia, Turkey and Hungary) and growing downward pressures on the West’s middle classes (wrought by the snowballing forces of globalization and automation) that are fomenting nationalism and populist revolts. These developments, in turn, represent a repudiation of the naïve hopes, after the fall of the Berlin Wall, that liberal democracy was on an inevitable march across the planet, and they also pose a challenge to the West’s Enlightenment faith in reason and linear progress.
The strongest glue holding liberal democracies together, Luce argues, is economic growth, and when that growth stalls or falls, things tend to take a dark turn. With growing competition for jobs and resources, losers (those he calls the “left-behinds”) seek scapegoats for their woes, and consensus becomes harder to reach as politics devolves into more and more of a zero-sum game.

“Many of the tools of modern life are increasingly priced beyond most people’s reach,” Luce writes. One study shows it now takes the median worker more than twice as many hours a month to pay rent in one of America’s big cities as it did in 1950; and the costs of health care and a college degree have increased even more. There is rising income inequality in the West; America, which “had traditionally shown the highest class mobility of any Western country,” now has the lowest.” 
As nostalgia for a dimly recalled past replaces hope, the American dream of self-betterment and a brighter future for one’s children recedes. Among the symptoms of this dynamic: a growing opioid epidemic and decline in life expectancy, increasing intolerance for other people’s points of view, and brewing contempt for an out-of-touch governing elite (represented in 2016 by Hillary Clinton, of whom Luce writes: “her tone-deafness towards the middle class was almost serene”).


For Labour, Victory Next Time

For Labour, Victory Next Time by Martin O'Neill

Tuesday, June 27, 2017

Saturday, June 24, 2017

Jefferson quote

"Indeed, I tremble for my country when I reflect that God is just, that his justice cannot sleep forever."
--Thomas Jefferson, 1785           

Thursday, June 22, 2017

Larry Summers comes out for NGDP target

5 reasons why the Fed may be making a mistake by Larry Summers
Many of my friends have recently issued a statement asserting that the Fed should change its inflation target. I suspect, for reasons I will write about in the next few days, that moving away from inflation targeting to something like nominal gross domestic product-level targeting would be a better idea. But I think that this issue is logically subsequent to the question of how policy should be made in the near term with the given 2 percent inflation target.

Evans, Amazon and low inflation

Amazon Has at Least One Fed Official Rethinking Inflation By Matthew Boesler

Wednesday, June 21, 2017

Sunday, June 18, 2017

young voting for socialists

Why Are So Many Young Voters Falling for Old Socialists? by Sarah Leonard (June 13, 2017)
At 68, Jeremy Corbyn has been on the Labour Party’s left flank longer than many of his most enthusiastic supporters — the ones who nearly propelled him to an upset victory in this month’s British general election — have been alive. Bernie Sanders, who won more votes from young people in the 2016 primaries than Donald Trump and Hillary Clinton combined, is 75, and has a demeanor that, honestly, reminds me of my Jewish grandfather. Jean-Luc Mélenchon, the Communist-backed candidate who, thanks to support from young people, surged in the polls ahead of the first round of France’s presidential election, is a sprightly 65. 
What has driven so many young people into passionate political work, sweeping old socialists with old ideas to new heights of popularity? To understand what is going on, you have to realize that politicians like Mr. Sanders and Mr. Corbyn have carried the left-wing torch in a sort of long-distance relay, skipping generations of centrists like Bill Clinton and Tony Blair, to hand it to today’s under-35s. And you have to understand why young people are so ready to grab that torch and run with it. 
Both Britain and the United States used to have parties that at least pledged allegiance to workers. Since the 1970s, and accelerating in the ’80s and ’90s, the left-wing planks have one by one been ripped from their platforms. Under Mr. Blair, Labour rewrote its famous Clause IV, which had committed the party to the goal of “common ownership of the means of production, distribution and exchange.” Under Mr. Clinton, the Democratic Party cut welfare programs and pushed anti-worker international trade deals. Writing in 1990, Kevin Phillips, a former strategist for Richard Nixon, called the Democrats “history’s second-most enthusiastic capitalist party.” Elsewhere in Europe, traditional socialist parties became sclerotic and increasingly business-friendly. 
All of this left many voters with a sense that there is no left-wing party devoted to protecting the interests of the poor, the working class and the young. 
Meanwhile, people my age — I’m 29 — are more in need of a robust leftist platform than ever. The post-Cold War capitalist order has failed us: Across Europe and the United States, millennials are worse off than their parents were and are too poor to start new families. In the United States, they are loaded with college debt (or far less likely to be employed without a college degree) and are engaged in precarious and non-unionized labor. Also the earth is melting
There’s nothing inherently radical about youth. But our politics have been shaped by an era of financial crisis and government complicity. Especially since 2008, we have seen corporations take our families’ homes, exploit our medical debt and cost us our jobs. We have seen governments impose brutal austerity to please bankers. The capitalists didn’t do it by accident, they did it for profit, and they invested that profit in our political parties. For many of us, capitalism is something to fear, not celebrate, and our enemy is on Wall Street and in the City of London. 
Because we came to political consciousness after 1989, we’re not instinctively freaked out by socialism. In fact, it seems appealing: In a 2016 poll conducted by Harvard, 51 percent of Americans between 18 and 29 rejected capitalism, and a third said they supported socialism. A Pew poll in 2011 showed that the same age bracket had more positive views of socialism than capitalism. What socialism actually means to millennials is in flux — more a falling out with capitalism than an adherence to one specific platform. Still, within this generation, certain universal programs — single-payer health care, public education, free college — and making the rich pay are just common sense. 
At the ballot box, our options have been relatively limited. Clinton- and Blair-era liberals have hobbled their parties’ abilities to confront the ills of capitalism. But while left-of-center parties ran into the waiting arms of bankers, Mr. Sanders and Mr. Corbyn held fast to left-wing politics. 
In May, when Labour’s manifesto calling for free university education and increased spending on the National Health Service was leaked, Britain’s mainstream press responded with derision: “Labour’s Manifesto to Drag Us Back to the 1970s” read a headline in the Daily Mail. (In fact, some of Mr. Corbyn’s proposals, like nationalizing rail and water companies, hark directly back to Labour’s Clause IV commitments.) To some readers it may have sounded like a threat, but to many young people it was a promise. Following the headlines, Labour’s poll numbers surged. In the election on June 8, the party finished with a shocking 40 percent of the vote, its highest share in years. And much of the success was thanks to young voters. 
Of course, Mr. Corbyn, who is famous for cycling to work and being “totally anti-sugar on health grounds,” has a certain ascetic charm. And there’s something appealingly unpretentious about Mr. Sanders’s Brooklyn accent and disheveled appearance. But it seems safe to say that their success with young people has been based on their platforms, not their charisma.
That’s a good thing, too, since, sooner or later, those platforms will need to acquire new representatives. America’s working class is increasingly racially diverse. Hotly contested politics around race, gender and sexuality shape our political terrain (and our experience of downward mobility). Mr. Sanders suffered shortcomings on this front: He freely confessed to not comprehending the scale of American police brutality when he began his campaign; he can sound awkward when it comes to race and gender. 
The upside is that Mr. Sanders’s campaign and Mr. Corbyn’s leadership of the Labour Party have paved the way for a socialist politics that doesn’t just look like them. 
The day after the election in Britain, I flew to Chicago to speak at the People’s Summit, a national convention of progressive and left-wing activists organized by people from the Bernie Sanders campaign alongside National Nurses United. 
Also attending were a next generation of leftist organizers and candidates: Linda Sarsour, a 37-year-old Palestinian-American organizer from New York known for her skill in building bridges among communities; Dante Barry, the 29-year-old executive director of the Million Hoodies Movement for Justice; and Maria Svart, also in her 30s, who became the national director of the Democratic Socialists of America in 2011. 
I encountered many young people who found themselves radicalized over the last couple of years and are now joining campaigns in their communities for state-level single payer health care or for better housing. Those campaigns exist because older campaigners have carried the torch. Out of all this activity, a next generation of socialist candidates who actually reflect America is almost guaranteed to emerge. 
When Mr. Sanders took to the stage, I looked around to see hundreds of young organizers cheering his democratic socialist agenda. I hit the convention floor and saw people my own age tabling for new lefty magazines and organizations. A friend texted me a Corbyn emoji: thumbs up. 
Three days after Britain’s general election, Mr. Corbyn sat down for an interview with Andrew Marr on the BBC. Mr. Marr grilled the Labour leader on the feasibility of turning his platform into governing policy. Was Mr. Corbyn, at this point in his career, really in it for the long haul? “Look at me!” he said. “I’ve got youth on my side.”

Monday, June 12, 2017

voter turnout in French election

voter turnout in French election

49 percent in 2017

Turnout this year was lower than in the past two legislative elections, 57 percent in 2012 and 60 percent in 2007.

Sunday, June 11, 2017

Tuesday, May 30, 2017

Sunday, May 28, 2017

Taliesin Myrddin Namkai-Meche

"He's just the kind of person, if he saw somebody being mistreated, he would have spoken up," GhaneaBassiri said.

The Oregonian/OregonLive

Clinton TV ads policy free

Dayen on HAMP

A Needless Default by David Dayen (February 8, 2015)

The administration’s foreclosure relief program was designed to help bankers, not homeowners. That disgrace will haunt Democrats.

Saturday, May 27, 2017

Thursday, May 25, 2017

Game of Thrones Season 7 Trailer

2 more seasons.

Tuesday, May 23, 2017

Saturday, May 20, 2017

Thursday, May 18, 2017

Tuesday, May 16, 2017

Saturday, May 13, 2017

Thursday, May 11, 2017


Lessons from the Anti-Globalists by Joseph Stiglitz
The lesson of all of this is something that Scandinavian countries learned long ago. The region’s small countries understood that openness was the key to rapid economic growth and prosperity. But if they were to remain open and democratic, their citizens had to be convinced that significant segments of society would not be left behind. 
The welfare state thus became integral to the success of the Scandinavian countries. They understood that the only sustainable prosperity is shared prosperity. It is a lesson that the US and the rest of Europe must now learn.

universal basic income

No Strings Attached by Ioana Marinescu

Tuesday, May 09, 2017

Blade Runner 2049 trailer 10.6.17

Larry Summers on Yellen, flat Phillips Curve

Less is more when it comes to Federal Reserve policy by Larry Summers

Flat Phills, all around by Jared Bernstein

unionization drive at colleges

 The Higher-Education Crisis Is a Labor Crisis

" A unionization drive at Vanderbilt University shows how austerity in higher education is hurting educators and students."

Wren-Lewis: rightwing populism, economic determinism

Why are the UK and US more vulnerable to right wing populism? by Simon Wren-Lewis

It seems to me that these various explanations are quite compatible with each other. Where what we might call neoliberal policies had been strong - weak unions, declining welfare state, stagnant wages - these policies created a very large group in society that were looking for someone to blame. In a managed economy that allowed the parties of the right either to use nationalism and anti-immigration rhetoric to deflect blame from themselves, or for the far right to capture those parties. As that rhetoric also hit out at globalisation it potentially was a direct threat to global business interests, but those interests could either do nothing about this or felt they could manage that threat.

Monday, May 08, 2017

Krugman on the EU

What’s the Matter With Europe? by Paul Krugman
Which brings me back to the French election. We should be terrified at the possibility of a Le Pen victory. But we should also be worried that a Macron victory will be taken by Brussels and Berlin to mean that Brexit was an aberration, that European voters can always be intimidated into going along with what their betters say is necessary. 
So let’s be clear: Even if the worst is avoided this Sunday, all the European elite will get is a time-limited chance to mend its ways.

Dean Baker on economists


The Wrongest Profession by Dean Baker

March 2017

OVER THE PAST TWO DECADES, the economics profession has compiled an impressive track record of getting almost all the big calls wrong. In the mid-1990s, all the great minds in the field agreed that the unemployment rate could not fall much below 6 percent without triggering spiraling inflation. It turns out that the unemployment rate could fall to 4 percent as a year-round average in 2000, with no visible uptick in the inflation rate.
As the stock bubble that drove the late 1990s boom was already collapsing, leading lights in Washington were debating whether we risked paying off the national debt too quickly. The recession following the collapse of the stock bubble took care of this problem, as the gigantic projected surpluses quickly turned to deficits. The labor market pain from the collapse of this bubble was both unpredicted and largely overlooked, even in retrospect. While the recession officially ended in November 2001, we didn’t start creating jobs again until the fall of 2003. And we didn’t get back the jobs we lost in the downturn until January 2005. At the time, it was the longest period without net job creation since the Great Depression.
When the labor market did finally begin to recover, it was on the back of the housing bubble. Even though the evidence of a bubble in the housing sector was plainly visible, as were the junk loans that fueled it, folks like me who warned of an impending housing collapse were laughed at for not appreciating the wonders of modern finance. After the bubble burst and the financial crisis shook the banking system to its foundations, the great minds of the profession were near unanimous in predicting a robust recovery. Stimulus was at best an accelerant for the impatient, most mainstream economists agreed—not an essential ingredient of a lasting recovery.
While the banks got all manner of subsidies in the form of loans and guarantees at below-market interest rates, all in the name of avoiding a second Great Depression, underwater homeowners were treated no better than the workers waiting for a labor market recovery. The Obama administration felt it was important for homeowners, unlike the bankers, to suffer the consequences of their actions. In fact, white-collar criminals got a holiday in honor of the financial crisis; on the watch of the Obama Justice Department, only a piddling number of bankers would face prosecution for criminal actions connected with the bubble.
There was a similar story outside the United States, as the International Monetary Fund, along with the European Central Bank and the European Union, imposed austerity when stimulus was clearly needed. As a result, southern Europe is still far from recovery. Even after another decade on their current course, many southern European countries will fall short of their 2007 levels of income. The situation looks even worse for the bottom half of the income distribution in Greece, Spain, and Portugal.
Even the great progress for the world’s poor touted in the famous “elephant graph” turns out to be largely illusory. If China is removed from the sample, the performance of the rest of the developing world since 1988 looks rather mediocre. While the pain of working people in wealthy countries is acute, they are not alone. Outside of China, people in the developing world have little to show for the economic growth of the last three and a half decades. As for China itself, the gains of its huge population are real, but the country certainly did not follow Washington’s model of deficit-slashing, bubble-driven policies for developing countries.
In this economic climate, it’s not surprising that a racist, xenophobic, misogynist demagogue like Donald Trump could succeed in politics, as right-wing populists have throughout the wealthy world. While his platform may be incoherent, Trump at least promised the return of good-paying jobs. Insofar as Clinton and other Democrats offered an agenda for economic progress for American workers, hardly anyone heard it. And to those who did, it sounded like more of the same.

Sunday, May 07, 2017

Wednesday, May 03, 2017

Monday, April 10, 2017

Tuesday, April 04, 2017

Thursday, March 23, 2017

Tuesday, March 21, 2017

Krugman on DBCFT

A Party Not Ready to Govern by Krugman
Then there’s corporate tax reform — an issue where the plan being advanced by Paul Ryan, the House speaker, is actually not too bad, at least in principle. Even someDemocratic-leaning economistssupport a shift to a “destination-based cash flow tax,” which is best thought of as a sales tax plus a payroll subsidy. (Trust me.)
But Mr. Ryan has failed spectacularly to make his case either to colleagues or to powerful interest groups. Why? As best I can tell, it’s because he himself doesn’t understand the point of the reform.
The case for the cash flow tax is quite technical; among other things, it would remove the incentives the current tax system creates for corporations to load up on debt and to engage in certain kinds of tax avoidance. But that’s not the kind of thing Republicans talk about — if anything, they’re in favor of tax avoidance, hence the Trump proposal to slash funding for the I.R.S.
No, in G.O.P. world, tax ideas always have to be presented as ways to remove the shackles from oppressed job creators. So Mr. Ryan has framed his proposal, basically falsely, as a measure to make American industry more competitive, focusing on the “border tax adjustment” which is part of the sales-tax component of the reform.
This misrepresentation seems, however, to be backfiring: it sounds like a Trumpist tariff, and has both conservatives and retailers like WalMart up in arms.

Sunday, March 19, 2017

DNC chair Perez

Progressives Slam Tom Perez’s New DNC Transition Team

center-left and Zack Beauchamp

Any answer to right-wing populism requires left-wing economics

by eshhou

Why Zack Beauchamp’s piece arguing otherwise is wrong

Zack Beauchamp of Vox has written an article entitled “No easy answers: why left-wing economics is not the answer to right-wing populism.” In this piece, he argues that “tacking to the left on economics won’t give Democrats a silver bullet to use against the racial resentment powering Trump’s success [and] could actually wind up [making] Trump [stronger.]” Matt Bruenighas written about the piece’s odd moral implications; I want to discuss some of the evidence Beauchamp provides, and why I don’t find it all that convincing.


Bottom line

Assuming the Democratic party does not totally abandon redistributive politics, racism will always pose a problem. The question then is: what redistributive programs and policies are most capable of overcoming this and generating cross-racial coalitions? There is little reason to believe that the means-tested programs favored by the Democratic mainstream are more capable of doing this than the more universal programs favored by those on the Left.

Thursday, March 16, 2017

Lisa Hannigan cover of Bowie on Legion

Oh you Pretty Things
Don't you know you're driving your
Mamas and Papas insane

JW Mason: misc thoughts including on health care

JW Mason:
The health policy tightrope. The Republican plan health care plan, the CBO says, would increase the number of uninsured Americans by 24 million. I don’t know any reason to question this number. By some estimates, this will result in 40,000 additional deaths a year. By the same estimate, the Democratic status quo leaves 28 million people uninsured, implying a similar body count. Paul Ryan’s idea that health care should be a commodity to be bought in the market is cruel and absurd but the Democrats’ idea that heath insurance should be a commodity bought in the market is not obviously less so. Personally, I’m struggling to find the right balance between these two sets of facts. I suppose the first should get more weight right now, but I can’t let go of the second. Adam Gaffney does an admirable job managing this tightrope act in his assessment of the Obama health care legacy inJacobin. (But I think he’s absolutely right, strategically, to focus on the Republicans for the Guardian’s different readership .)

Tuesday, March 14, 2017

Krugman and the center-left

Populism and the Politics of Health by Krugman

"This ties in with an important recent piece by Zack Beauchamp on the striking degree to which left-wing economics fails, in practice, to counter right-wing populism; basically, Sandersism has failed everywhere it has been tried. Why?

The answer, presumably, is that what we call populism is really in large degree white identity politics, which can’t be addressed by promising universal benefits. Among other things, these “populist” voters now live in a media bubble, getting their news from sources that play to their identity-politics desires, which means that even if you offer them a better deal, they won’t hear about it or believe it if told. For sure many if not most of those who gained health coverage thanks to Obamacare have no idea that’s what happened.

That said, taking the benefits away would probably get their attention, and maybe even open their eyes to the extent to which they are suffering to provide tax cuts to the rich.

In Europe, right-wing parties probably don’t face the same dilemma; they’re preaching herrenvolk social democracy, a welfare state but only for people who look like you. In America, however, Trumpism is faux populism that appeals to white identity but actually serves plutocrats. That fundamental contradiction is now out in the open."

Sunday, March 05, 2017

SNL on Democrats

SNL on Democrats

at about 3:50

Friday, February 24, 2017

Thursday, February 23, 2017

"I bet you could operate a nice gas shower."

"I bet you could operate a nice gas shower.
I could see you with a couple of Ses on your collar
Stiff goose in your step."

Tuesday, February 21, 2017

Bernstein on automation

Before you blame the robots, look to the policy (and the data) by Jared Bernstein

Trump and trade, Dean Baker

Trump and Trade: He’s Largely Right by Dean Baker

There are an awful lot of things to really dislike about Donald Trump and his conduct as president to date, but that doesn’t mean everything his administration does is wrong. In particular, there is considerable truth to what he has said about trade costing a large number of good paying manufacturing jobs and hurting the living standards of the middle class.

Unfortunately, rather than acknowledging this point, the media show the same determination as global warming denialists in saying that trade cannot be a problem. We got two examples of this sort of denialism in recent days.

The first was a piece in the Washington Post criticizing Trump adviser Peter Navarro’s view of trade and the trade deficit. While Navarro makes many questionable arguments in pushing his views on trade, his point that the trade deficit can reduce growth and employment is absolutely correct.

Ever since the crash in 2008 the bulk of economics profession has agreed that we faced a situation of “secular stagnation,” where the economy faced a persistent shortfall of demand. In this context, anything that boosts demand, such as an increase in government spending, private consumption, or a reduction in the trade deficit, leads to more output and employment.

In this context, the piece’s comment, taken from Harvard University economics professor N. Gregory Mankiw, “that a smaller trade deficit means lower investment along with possibly higher interest rates and less consumption” is completely wrong. If the economy is operating below full employment, as it certainly has been through most of the period from 2008 then reducing the trade deficit certainly can be a net addition to growth. As Mankiw says, “even a freshman at the end of ec 10 knows that.”

In this context, Navarro’s claim that a lower trade deficit could bring in $1.74 trillion in tax revenue over the course of a decade cannot be so easily dismissed even though the Post tells us:

“Hooey, say economists across the political spectrum.”

The key question here is whether the economy is now at potential GDP and whether it is likely to be over the next decade, even with a trade deficit that is close to 3.0 percent of GDP ($538 billion in the most recent quarter). On this question, the Congressional Budget Office (CBO) might be on the side of Navarro.

According to CBO, potential GDP for the 4th quarter of 2016 was $19,049 billion. This is 1.0 percent higher than the estimate of GDP for the quarter of $18,860.8 billion. This means that if CBO is right, if there had been more demand in the economy, for example due to imports being replaced by domestically produced goods, GDP could have been 1.0 percent higher last quarter.

Of course CBO’s estimates of potential GDP are not especially accurate. Its most recent estimates for potential GDP in 2016 are more than 10 percent below what it had projected for potential GDP in 2016 back in 2008, before the severity of the crash was recognized. It is possible it overstated potential by a huge amount in 2008, but it is also possible it is understating potential today. It also hugely understated potential GDP in the mid-1990s, with 2000 GDP coming in more than 5 percent above the estimate of potential that CBO made in 1996. In other words, it would not be absurd to think that the economy could sustain a level of output that is 2.0 percent above the current level. (The fact that the employment rate of prime age workers [ages 25-54] is still 4.0 percentage points below the 2000 peak is certainly consistent with this view.)

Suppose that GDP were consistently 2.0 percent higher than current projections over the next decade due to a lower trade deficit. This would imply an additional $4.6 trillion in output over this period. If the government captures 30 percent of this in higher taxes and lower spending on transfer programs like unemployment insurance and food stamps, this would imply a reduction in the projected deficit of $1.38 trillion over the decade. That’s not quite the $1.74 trillion projected by Navarro, but close enough to make the derision unwarranted.

In terms of how you get a lower trade deficit, Navarro’s strategy of beating up on China is probably not the best way to go. But there is in fact precedent for the United States negotiating a lower value for the dollar under President Reagan, which had the desired effect of reducing the trade deficit.

There is no obvious reason it could not pursue a similar path today, especially since it is widely claimed in business circles that China actually wants to raise the value of its currency. The U.S. could help it.

The second area of seemingly gratuitous Trump trade bashing comes from a Wall Street Journal news article on the Trump administration’s efforts to correct for re-exports in trade measures. Before getting to the article, it is important to understand what is at issue.

Most of what the United States exports to countries like Mexico, Japan, or elsewhere are goods and services produced in the United States. However, some portion of the goods that we export to these countries consists of items imported from other countries which are just transshipped through the United States.

The classic example would be if we offloaded 100 BMWs on a ship in New York and then 20 were immediately sent up to Canada to be sold there. The way we currently count exports and imports, we would count the 20 BMWs as exports to Canada and also as imports from Germany. These re-exports have zero impact on our aggregate trade balance, but they do exaggerate out exports to Canada and our imports from Germany.

If we wanted better data on bilateral trade flows, then it would be desirable to pull out the re-exports from both our exports to Canada and our imports from Germany. This adjustment would make our trade deficit with Canada appear larger and trade deficit with Germany smaller, but would leave our total trade balance unchanged.

This better measure of trade flows would be useful information to have if we wanted to know what happened to trade with a specific country following a policy change, for example the signing of a trade deal like NAFTA. The inclusion of re-exports in our export data would distort what had happened to actual flows of domestically produced exports and imports for domestic consumption.

The United States International Trade Commission already produces a measure of trade balances that excludes imports that are re-exported. However this measure is still not an accurate measure of bilateral trade balances since it still includes the re-exports on the import side. In the case mentioned above, it would include the BMWs imported from Germany that were immediately sent to Canada, as imports. In principle, we should be able to construct a measure that excludes these items on the import side as well. If this is what the Trump administration is trying to do, then it is asking for a perfectly reasonable adjustment to the data.

This is where we get to the WSJ article. According to the piece, the Trump administration was asking the Commerce Department to produce measures of bilateral trade balances that took out the re-exports on the export side, but left them in on the import side. This would have the effect of artificially inflating our trade deficit with a bogus number. If this is in fact what the Trump administration is trying to do, then we should be shooting at them with all guns. (This is metaphorical folks, I’m not advocating violence.)

However some skepticism might be warranted at this point. No one with a name actually said the Trump administration asked for this bogus measure of trade balances. The sole source listed is “one person familiar with the discussions.”

There was an official statement from the Commerce Department’s Bureau of Economic Analysis (BEA), which collects and compiles the data:

“Any internal discussions about data collection methods are no more than the continuation of a longstanding debate and are part of the bureau’s normal process as we strive to provide the most precise statistics possible.”

I take very seriously efforts to mess with the data. We are fortunate to have independent statistical agencies with dedicated civil servants who take their work very seriously. However we should wait until we have a bit more solid evidence before assuming that the Trump administration is trying to interfere in their independence, as opposed to trying to make a totally legitimate adjustment to the data that the BEA staff would almost certainly agree is an improvement.

Monday, February 20, 2017


4chan: The Skeleton Key to the Rise of Trump

It was still a group of hikikomori — a group of primarily young males who spent a lot of the time at the computer, so much so they had retreated into virtual worlds of games, T.V., and now the networks of the internet. This was where most or all of their interaction, social or otherwise took place. The real world, by contrast, above their mothers’ basements, was a place they did not succeed, perhaps a place they did not fundamentally understand.

Sunday, February 19, 2017


The lessons of 1937 by Christine Romer

Krugman 38 depression, Bernstein dynamic scoring

New Deal economics by Krugman

NOVEMBER 8, 2008

INSERT DESCRIPTIONLimited fiscal force

Now, you might say that the incomplete recovery shows that “pump-priming”, Keynesian fiscal policy doesn’t work. Except that the New Deal didn’t pursue Keynesian policies. Properly measured, that is, by using the cyclically adjusted deficit, fiscal policy was only modestly expansionary, at least compared with the depth of the slump. Here’s the Cary Brown estimates, from Brad DeLong:
Net stimulus of around 3 percent of GDP — not much, when you’ve got a 42 percent output gap. FDR might have been more of a Keynesian if Keynesian economics had existed — The General Theory wasn’t published until 1936. Note in particular that in 1937-38 FDR was persuaded to do the “responsible” thing and cut back — and that’s what led to the bad year in 1938, which to the WSJ crowd defines the New Deal.
If only we could apply dynamic scoring to the rest of life by Jared Bernstein

Baker on taxes, Reich on Republican plan, Weregild, Corey Robin

A Progressive Way to End Corporate Taxes by Dean Baker

Republican tax sham by Robert Reich

It’s time to start thinking about a realignment: 2 things for the left to do by Corey Robin

Sunday, February 12, 2017

Baker on Tax reform, Fernholz on DBCFT

Neil Irwin Warns of Financial Crisis from Corporate Tax Reform by Dean Baker

This is the Republican plot to kill the US corporate income tax as we know it by Tim Fernholz
Yet border adjustment—and the consumption tax behind it—deserves consideration because it is what Trump might propose if he were interested in crafting policy not with the aim of offending trade partners, liberals, and the Republican establishment, but rather with the goal of bringing investment back to the US while still conceding the reality of a globalized economy. It also would fit with the world view of his trade advisor Peter Navarro, who is eager to tear down the global supply chains that undergird the success of US multinationals today. And, together with the other big changes under consideration in Congress, it might actually shift more investment toward the US without the negative consequences of punitive tariffs or the ad hoc cronyism of Trump’s twitter bullying.

Atrios, DBCFT, Buttigieg

Your Moment Of Zen

Liberals Can’t Wait for Republicans to Adopt the Border-Adjusted Tax by VERONIQUE DE RUGY

Deluded Republicans are accidentally pushing for progressive corporation tax reform by Ben Chu

Everything You Ever Wanted to Know about Border-Adjustable Taxation, but Were Afraid (or too Bored) to Ask by Dan Mitchell

Trump Calls House GOP Tax Plan ‘Too Complicated.’ He May Be Right. by Dan Mitchell

Indiana Mayor Running for D.N.C. Chairman

Joseph A. Buttigieg, professor at Notre Dame.

"He is also the editor and translator of the multi-volume complete critical edition of Antonio Gramsci's Prison Notebooks, a project that has been supported by a major grant from the National Endowment for the Humanities. Several of his articles on Gramsci have been translated into Italian, German, Spanish, Portuguese, and Japanese. He was a founding member of the International Gramsci Society of which he is president. The Italian Minister of Culture appointed him to a commission of experts to oversee the preparation of the "edizione nazionale" of Gramsci's writings. Buttigieg serves on the editorial and advisory boards of various journals, and he is a member of the editorial collective of boundary 2."

Tuesday, February 07, 2017

Setser on Germany

Brad Setser:
I suspect the politics around trade would be a bit different in the U.S. if the goods-exporting sector had grown in parallel with imports. 
That is one key difference between the U.S. and Germany. Manufacturing jobs fell during reunification—and Germany went through a difficult adjustment in the early 2000s. But over the last ten years the number of jobs in Germany’s export sector grew, keeping the number of people employed in manufacturing roughly constant over the last ten years even with rising productivity. Part of the “trade” adjustment was a shift from import-competing to exporting sectors, not just a shift out of the goods producing tradables sector. Of course, not everyone can run a German sized surplus in manufactures—but it seems likely the low U.S. share of manufacturing employment (relative to Germany and Japan) is in part a function of the size and persistence of the U.S. trade deficit in manufactures. (It is also in part a function of the fact that the U.S. no longer needs to trade manufactures for imported energy on any significant scale; the U.S. has more jobs in oil and gas production, for example, than Germany or Japan).

demagogues and stagnation

We’re re-learning today what we should have learned in the 30s…economic stagnation breeds reaction and intolerance
Chris Dillow

how Vancouver got its housing bubble under control

How Vancouver got its housing bubble under control: a lesson for cities like London and San Francisco

Saturday, February 04, 2017

General Strike

Whose Strike? by Alex Gourevitch

Trump voters

The Fight in the Borderlands by Josh Marshall
We hear people constantly saying 'Nothing will change his supporters' minds. They're with him no matter what.' First of all this is enervating defeatism which is demoralizing and loserish. But it also misses the point. It is factually wrong. For the supporters those people have in mind, they're right. They're true believers, authoritarians who are energized by Trump's destructive behavior. But there are not that many of those people. A big chunk of Trump's voters voted for him in spite of their dislike. Those people can be carved away. But Democrats will regain power by winning it in what amount to our 21st century internal American borderlands, not in the big cities or rural areas mainly but in between. So what's happening now to lay that groundwork for 2018?

Friday, February 03, 2017

how to disagree

How to Disagree by Barry Ritholtz

Monbiot on neoliberalism

Neoliberalism – the ideology at the root of all our problems by George Monbiot

When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations. 
With their help, he began to create what Daniel Stedman Jones describes inMasters of the Universe as “a kind of neoliberal international”: a transatlantic network of academics, businessmen, journalists and activists. The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.

Thursday, February 02, 2017



The Auerbach Tax and Automobile Multinationals

Bloomberg reports:
A proposed tax on imports that President Donald Trump is said to be warming to could upend the competitive landscape for carmakers, boosting Ford Motor Co. while hindering manufacturers that rely more on overseas factories including Toyota Motor Corp. House Republican leaders have proposed a so-called border-adjusted tax, which would place a levy on vehicles imported into the U.S. and fully exempt those exported. Though Trump initially deemed the idea too complicated, White House Press Secretary Sean Spicer last week said it was under consideration and could help pay for a wall along the Mexico border. The overhaul to the U.S. tax system could hand an advantage to Ford, Honda Motor Co. and General Motors Co., which rely the least on imported vehicles among major automakers. The shake-up would also undermine Toyota
Is Bloomberg assuming a fixed yen/$ exchange rate so these border adjustments boost exports and discourage imports? Greg Mankiw and Paul Krugman take a very different view. Greg breaks down this Destination Based Cash Flow tax as a three-fer:
Impose a retail sales tax on consumer goods and services, both domestic and imported; Use some of the proceeds from the tax to repeal the corporate income tax.; and Use the rest of the proceeds from the tax to significantly cut the payroll tax.
Greg is assuming the rise in sales taxes is greater than the cut in income taxes, which is not clear. But let’s hear from Paul:
Greg and I disagree on whether replacing profits taxes with sales taxes is a good idea, but agree that all of this has nothing to do with trade and international competition – because it doesn’t. I suspect, however, that Greg is being naïve here in assuming that we’re just seeing confusion because border tax adjustment sounds as if it must involve competitive games. There’s some of that, for sure, but one reason the competitiveness thing won’t go away is that it’s an essential part of the political pitch. “Let’s eliminate taxes on profits and tax consumers instead” is a hard sell, even if you want to claim that the incidence isn’t what it looks like. Claiming that it’s about eliminating a dire competitive disadvantage plays much better, even though it’s all wrong.
Alan Auerbach – the proponent of this idea – joined with Douglas Holtz-Eakin to state why this competitiveness argument is all wrong: These two (AHE) wrote:
Unlike tariffs on imports or subsidies for exports, border adjustments are not trade policy. Instead, they are paired and equal adjustments that create a level tax playing field for domestic and overseas competition; Border adjustments do not distort trade, as exchange rates should react immediately to offset the initial impact of these adjustments. As a corollary, border adjustments do not distort the pattern of domestic sales and purchases
So if this is not going to advantage Ford and GM to the disadvantage of Toyota, could something else be driving Ford’s support and the opposition from companies like Toyota. I have been looking more at the transfer pricing angle objecting to this claim from AHE:
Border adjustments eliminate the incentive to manipulate transfer prices in order to shift profits to lower-tax jurisdictions
A lot of people read this and think transfer pricing manipulation goes away. But this is clearly wrong if our trading partners have positive corporate tax rates that are sourced based. Even AHE admits this later:
Thus, the multinational would have no incentive to use transfer prices to shift profits away from the United States, even if the tax rate in the foreign country is very low. Indeed, it would benefit by shifting profits to the United States, to reduce the taxes it pays in the low-tax country.
Lawrence Summers adds:
Businesses that invest heavily, hire extensively and export a large part of their product will have negative taxable income on a chronic basis .. Fourth, the combination of a sharply lower rate, new opportunities for tax arbitrage and the fact that any revenue gains from bringing overseas cash home are one-shot means the Federal revenue base would erode. The result would be cuts in entitlement payments to consumers who spend heavily, tax hikes on individuals and reductions in government spending. Over time, this will slow growth and burden the middle class.
He is correct about the “new opportunities for tax arbitrage" which is what I referring to with my Trump Toaster Oven example where I noted:
While currently Tiffany might want to raise the intercompany price – she knows the IRS could object. Of course Auerbach’s DBCFT would change her incentives as she might want to lower this price to only $80 to eliminate the Canadian income tax – assuming the Canadian Revenue Agency does not object.
Of course the Canadian Revenue Agency would strongly object. Toyota is a lot like our example. The Auerbach proposal would raise its U.S. taxes and give it an incentive to ship their cars to the U.S. at cost costs only. Toyota’s 10-K indicates that its 2015 sales were $260 billion with over $100 billion to the U.S. Its operating margin was 10 percent with the U.S. getting about half of that on its U.S. sales. So on U.S sales, Toyota has U.S. profits near $5 billion and Japanese profits near $5 billion – both taxes at fairly high rates. The Auerbach tax would give Toyota the incentive to have all $10 billion sourced in the U.S. But one would certainly expect the Japanese tax authorities to strongly object. Summers example reminds me of Boeing which sells over $90 billion a year with 58 percent of those sales to foreign customers. It currently incurs near $1.9 billion in U.S. taxes given its 7.5 percent profit margin and the fact that it allocates over 95 percent of its income to the U.S. The Auerbach tax would cut this tax bill to zero. It would also cut the U.S. tax bill for companies such as Starbucks. So what about Ford and GM? Alas Dylan Matthews has this all wrong with:
For example, suppose that a car company — let’s just call it, uh, General Motors — makes $1 billion in profit manufacturing cars in the US and selling them domestically and exporting them to subsidiaries abroad. That would normally subject it about $350 million in taxes, since the US has a 35 percent corporate tax rate. But GM could instead have its foreign subsidiaries pay $1 billion less for the cars they buy from the US branch of the company. That wipes out GM’s US profits, leaving it with no US tax liability and shifting the profits to the subsidiaries abroad. If those subsidiaries are in countries with a low or nonexistent corporate income tax, that could wind up being a very good deal ... This makes most tax evasion schemes pointless.
I doubt Dylan looked at the 10-K filings of either Ford or GM when he drafted this base erosion fairy tale. Ford sources less than 17 percent of its income to foreign affiliates and GM sources almost none of its income abroad. So the Auerbach tax would represent a major reduction in their U.S. tax bills. These foreign affiliates are not in tax havens unless you think Canada, Mexico, and our European trading partners have zero corporate tax rates (hint – their tax rates are 20 percent or more). Think of their operations as having a European component and a North American component. The European affiliates produce and distribute cars paying royalties back to the U.S. parent. Under the Auerbach proposal, they might want to increase those royalties to bleed their European affiliates dry. But of course the tax authorities in France, Germany, and the UK are not stupid. In North America, Mexican maquiladoras make the components, Detroit assembles, and a Canadian distributor sells to Canadian customers. The Auerbach tax would give Ford and GM the incentives to manipulate transfer pricing to strip all Canadian and Mexican income so the last line from Dylan that I quoted is quite wrong. But it would also be wrong to assume that the Canadian Revenue Agency and the Mexican authorities would just roll over.