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BadEconomics Discussion Thread, 18 October 2015 (self.badeconomics)

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[–]arktouros 0ポイント1ポイント  (1子コメント)

Bobby Jindal tax plan: good economics or bad? I was maybe hoping for a point by point.

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 0ポイント1ポイント  (0子コメント)

Link?

[–]earnbabyearnDefinitely not /u/urnbabyurn 5ポイント6ポイント  (0子コメント)

I've heard that one of the reasons to support a minimum wage is because firms have market power in the labor market and can thus pay workers less than MPL. Why not try to fix the market power problem directly by strengthening unions instead?

Also, more generally what's this sub's view on labor unions?

[–]mobysniperProponent of Geckonomics 2ポイント3ポイント  (0子コメント)

TPP outrage in a nutshell.

[–]devinejohSecretary of the Bitcoin Treasury 3ポイント4ポイント  (6子コメント)

So I found out today that the green party candidate in my riding has an economics degree from Harvard and was a trader on wall street for 10 years, might be a game changer.

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 1ポイント2ポイント  (3子コメント)

Why don't they just run as a Democrat? If a candidate on the left has very good credentials, they'll still not win unless they're a Democrat.

[–]TheRealKrugman 0ポイント1ポイント  (0子コメント)

It's Canada

[–]devinejohSecretary of the Bitcoin Treasury 2ポイント3ポイント  (1子コメント)

Do you mean run as NDP or Liberal?

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 3ポイント4ポイント  (0子コメント)

Oh, you're from the 51st state. We have a Green Party in America too, but no one really pays attention to them.

[–]say_wot_againThe one true Noah Smith 3ポイント4ポイント  (1子コメント)

You know what else is green? Money.

[–]Litmus2336Chicago = Best 3ポイント4ポイント  (3子コメント)

Speeches part 2 this week. My Solow explanation went really well even though there weren't any econ majors in the audience. Next part is on why the US should adopt the X-tax

[–]bdubs91Maestro Today and Maestro Forever 1ポイント2ポイント  (2子コメント)

You're the poster talking to a group of libertarians correct? That's interesting. Though solow seems somewhat market economist friendly.

[–]Litmus2336Chicago = Best 2ポイント3ポイント  (1子コメント)

No, that's another guy actually. I'm just in a public speaking class so I talk a lot about econ because I find it easy.

[–]bdubs91Maestro Today and Maestro Forever 1ポイント2ポイント  (0子コメント)

Oh sorry. I'm surprised. That's awesome though!

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 1ポイント2ポイント  (7子コメント)

So, I could be very wrong on this, but wouldn't a flexible sales tax/consumption tax be an extremely useful countercyclical tool?

For example, during an economic boom we could have a 10% sales/consumption tax, but we could then lift that tax during a recession temporarily in order to make everyone act like it's the Steam summer sale and raise aggregate demand.

Would this work (theoretically)? Has it been tried before?

[–]bdubs91Maestro Today and Maestro Forever 2ポイント3ポイント  (1子コメント)

I would say tax policy should be about maximizing long run growth. Let monetary policy smooth output.

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 0ポイント1ポイント  (0子コメント)

I don't necessarily disagree, I was just thinking aloud.

[–]grevemoeskrHumans are horses! 1ポイント2ポイント  (1子コメント)

The questions I have is how would you determine if this were a boom or bust? And is it an either/or tax or a "this is x% boom, so the tax is y%"?

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 0ポイント1ポイント  (0子コメント)

Well, I hadn't thought of the specifics of how to determine between booms and busts, but I figure this kind of policy would only have a significant psychological effect on people if it was either/or; that is, if things suddenly became much cheaper- or if the tax was in increments, say of 2.5% up to 10% or something like that.

[–]say_wot_againThe one true Noah Smith 1ポイント2ポイント  (2子コメント)

When interest rates are positive, the central bank can and will definitely counteract any aggregate demand effects of fiscal policy like taxes, so this would ultimately have the same effect as doing nothing (except with possible distributional changes, which is more the realm of fiscal than monetary policy anyways).

When interest rates hit zero, it's very plausible that the central bank can do nothing more, or at least little more. So in that case, this policy would in fact boost aggregate demand and be stimulative. The issue is that fiscal policy tends to move very slowly, and Congress is both less qualified and less focused on aggregate demand than the Fed is, so it would be logistically/politically impossible to pull this off. However, this has been tried before; the Bush payroll tax cuts and the tax breaks in the ARRA were both attempts at using tax cuts to stimulate aggregate demand in an essentially Old Keynesian manner.

[–]Shiloh86I didn't choose the Krug life, the Krug life chose me 0ポイント1ポイント  (1子コメント)

Thanks! How often do interest rates hit zero?

Also, I was specifically referring to a sales or consumption tax rather than the ARRA tax breaks and the Bush payroll tax cuts. I was under the impression that other Keynesian-style tax cuts don't really work because of the permanent income hypothesis (I could be very wrong on that, though, too). But the PIH wouldn't apply at all to temporary and noticeable price changes, would it?

[–]say_wot_againThe one true Noah Smith 1ポイント2ポイント  (0子コメント)

Well, they've been at zero in Japan for approximately 1234712958712049847513 years and at zero for the US and Europe ever since the recession. But it takes either a massive recession or some secular stagnation type problems (aging population, savings glut, etc.) for it to happen usually. Moving forward, ZIRP may be extremely relevant for developed countries, but historically it hasn't been.

And you're right and I forgot about that; PIH does affect income/payroll tax cuts much more than it does consumption tax cuts. With income/payroll tax cuts, the only reason spending would increase would be the income effect, which PIH negates. With consumption tax cuts, spending would increase both from the income effect (due to a lower after-tax price level but constant nominal incomes), which PIH negates, and the substitution effect (spending is now comparatively cheaper than saving), which PIH doesn't affect.

[–]MrPresidentSir 2ポイント3ポイント  (3子コメント)

If you had to emulate one (or multiple) countries healthcare systems to reform the U.S. healthcare system, which countries would you pick? I would pick Switzerland and Singapore.

[–]prillin101Fiat currency has a 27 year lifespan 0ポイント1ポイント  (2子コメント)

I would pick the French system with some forced-savings like Singapore and competing non-profit firms like Germany. However if your forced medical savings can't pay for it the government will.

[–]grevemoeskrHumans are horses! 0ポイント1ポイント  (1子コメント)

So you basically institute a flat or regressive tax? Also, why do think people saving money by themselves is better than pooling all the savings together? I think, without having anything to back me up, that healthcare has increasing returns to scale

[–]prillin101Fiat currency has a 27 year lifespan 0ポイント1ポイント  (0子コメント)

A flat or regressive tax?

A flat tax that directly contributed to a personal medical savings account.

why do think people saving money by themselves is better than pooling all the savings together?

It would be a mix of both. Most of the money for healthcare would be done by the government, not from the personal account. And, for how it would be better than mixing all savings together, most of government healthcare spending would then be focused on people who can never really pay for healthcare (Poor people and people with chronic illnesses) and the rest of the people wouldn't usually need government assistance in healthcare because of their savings account.

I think, without having anything to back me up, that healthcare has increasing returns to scale

HE3 has talked about this, and while I don't have a direct link he says he doesn't think this is true and explained a bit more about it and why not. So, I don't think it's true but I'm not sure.

Plus, if hypothetically there was returns to scale, I'd assume most of the savings would come from the fact the national healthcare scheme has so much bargaining power. But that could be captured by an all-payer system as well, I think.

[–]VodkaHazereligion+gvt=economics 2ポイント3ポイント  (0子コメント)

Just started doing consulting for a friend starting a bike shop.

They've haven't been doing great in the first year, largely because of low sales volume and generally starting the business up. Luckily, they've logged the data in detail for all the first year's sales in an integrated point of sale system.

So before they present the business model to investors and start marketing for the "real" start, they want to get rid of inefficiencies in the supply chain. They assemble bikes on location from parts acquired from lots of different sources, which means lots of different supply chain models depending on the end product, all of which vary wildly in profitability and risk of wasted capital investment.

From the first meeting, I can tell that just having an outside perspective and asking questions like "why are you doing x instead of y" can get rid of tons of problems small businesses tend to have. This is before doing any sort of data magic.

[–]prillin101Fiat currency has a 27 year lifespan 1ポイント2ポイント  (0子コメント)

One Punch Man 3 is out! Wohooo!

[–]prillin101Fiat currency has a 27 year lifespan 0ポイント1ポイント  (0子コメント)

So, someone mentioned the petrodollar in the BE thread to make fun of it. It would be great if a BEer wrote an actual write up showing how stupid the idea of a petrodollar is as none of that exists on the Internet.

[–]grevemoeskrHumans are horses! 0ポイント1ポイント  (2子コメント)

Krugman weighs in on Denmark.

Surprisingly, /r/Denmark is totally quiet in that thread. That's weird, considering Krugman slams the way the Krone follows the Euro

[–]deckerparkes 0ポイント1ポイント  (1子コメント)

It's annoying how taboo the peg is to discuss in Denmark. Considering how influential it is on our monetary policy yet the political argument is stuck on whether or not we should cut benefits and top marginal taxes.

[–]grevemoeskrHumans are horses! 0ポイント1ポイント  (0子コメント)

To be fair, removing the peg is pretty dicey, legally. It's part of the EUs ERM-II. Also, considering we have negative (real?) interest ATM, how much effective monetary policy we can do is limited

[–]TophattingsonUndefined Neoliberal Object 2ポイント3ポイント  (22子コメント)

I'm sure there's something worthwhile (bad) in here: https://np.reddit.com/r/SandersForPresident/comments/3p8d3i/wealth_distribution_in_america/

[–]brauer1Undergrad newbie 1ポイント2ポイント  (0子コメント)

This is just such badpolitics

[–]IntegraldsI am the rep agent AMA 3ポイント4ポイント  (20子コメント)

I'm just not sure why I should care about the wealth distribution.

I know why I care about the (life-cycle) consumption distribution. Consumption goes into utility functions and there's a direct sense in which unequal consumption translates, probably, into unequal utility. (At the same time, we know that not everyone has the same utility function. If Alice saves her income while Bob blows it on whiskey, so that Alice is richer than Bob when both hit 65, it's not clear that there's any economic inequality going on -- just differences in preferences.)

I know why I care about health, leisure, or status inequality, for similar reasons.

I don't know why I care about wealth inequality, except to the extent that wealth inequality may lead to economically relevant kinds of inequality.

[–]Tiakoneo-mercantilist 4ポイント5ポイント  (0子コメント)

If Alice saves her income while Bob blows it on whiskey, so that Alice is richer than Bob when both hit 65, it's not clear that there's any economic inequality going on -- just differences in preferences.

If this were a realistic portrayal of the origins of inequality I think this might be a stronger argument. I'm also not entirely certain how you can say this:

I know why I care about health, leisure, or status inequality, for similar reasons.

But not be concerned about wealth inequality. It's like being concerned with health but not disease.

Anyway, I think the most obvious issue is that increasing wealth inequality increases the tendency for wealth to become dynastic and decreases social and economic mobility.

[–]besttrousers 4ポイント5ポイント  (18子コメント)

What do you think of the Deaton/Acemoglu/Piketty argument that it is important because of the political economy effects? From Great Escape:

The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy. If democracy is compromised, there is a direct loss of wellbeing because people have good reason to value their ability to participate in political life, and the loss of that ability is instrumental in threatening other harm.

The very wealthy have little need for state-provided education or health care… They have even less reason to support health insurance for everyone, or to worry about the low quality of public schools that plagues much of the country. They will oppose any regulation of banks that restricts profits, even if it helps those who cannot cover their mortgages or protects the public against predatory lending, deceptive advertising, or even a repetition of the financial crash. To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.

[–]wumbotarianKeynesian-on-a-cob 1ポイント2ポイント  (16子コメント)

because people have good reason to value their ability to participate in political life, and the loss of that ability is instrumental in threatening other harm.

Only 55% of the voting age population voted in 2012. By revealed preference, people don't value their ability to participate in political life.

This isn't because we don't have democracy (because we do).

or to worry about the low quality of public schools that plagues much of the country.

Why not? A good education should increase prospects for longer term growth, which would benefit the rich.

They will oppose any regulation of banks that restricts profits, even if it helps those who cannot cover their mortgages or protects the public against predatory lending, deceptive advertising, or even a repetition of the financial crash.

Wait, so a pharmaceutical CEO will oppose banking regulation? What? "The wealthy" is an ominous but vague group of people. Also, some regulation is supported by industry players - generally to reduce competition even if that reduction in competition comes at the cost of profits (because competition could lower profits even more).

To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.

Why can't we simultaneously have uber wealthy people and strong institutions? Furthermore, why do we want unfettered democracy? Also, are there any examples where a country like the United States got super rich then devolved into a dictatorial hellhole run by the wealthy? Or is this all pure speculation?

I find the political economy arguments to be better than the "eat the rich" arguments, but still borderline science fiction more than anything. Also there is hardly ever discussion about forming good institutions, just "if we tax the rich, they won't be rich enough to influence politics!" which is just fucking stupid for numerous of reasons.

[–]besttrousers 0ポイント1ポイント  (5子コメント)

I find the political economy arguments to be better than the "eat the rich" arguments, but still borderline science fiction more than anything. Also there is hardly ever discussion about forming good institutions, just "if we tax the rich, they won't be rich enough to influence politics!" which is just fucking stupid for numerous of reasons.

Alternately, this has been a major area of research for 30 years, and I've pointed you to relevant papers on multiple occasions.

[–]wumbotarianKeynesian-on-a-cob 0ポイント1ポイント  (4子コメント)

sigh

I'll bookmark them this time. What do you want me to read?

[–]besttrousers 0ポイント1ポイント  (3子コメント)

I'd start with "Why Nations Fail", but I'll note that AJR's peer reviewed stuff will go into more detail.

[–]IntegraldsI am the rep agent AMA 0ポイント1ポイント  (1子コメント)

AJR's peer reviewed stuff

cough Albouy cough

[–]besttrousers 0ポイント1ポイント  (0子コメント)

Oh sure, read that to! I'm just saying w should familiarize himself with the literature, and not just make strong claims.

[–]wumbotarianKeynesian-on-a-cob 0ポイント1ポイント  (0子コメント)

alright.

[–]say_wot_againThe one true Noah Smith 1ポイント2ポイント  (4子コメント)

Only 55% of the voting age population voted in 2012. By revealed preference, people don't value their ability to participate in political life.

Couldn't that also be due to a perception that the game is "rigged" and that their votes won't matter as much as donations and lobbyists?

A good education should increase prospects for longer term growth, which would benefit the rich.

More education increases potential for long term growth, which should help the rich, but it also increases the pool of high skilled labor that can compete with the nouveau riche, which is bad for them. It's not obvious a priori that the former dominates the latter.

Also, are there any examples where a country like the United States got super rich then devolved into a dictatorial hellhole run by the wealthy?

Rome? Pre-revolution France?

[–]wumbotarianKeynesian-on-a-cob 0ポイント1ポイント  (0子コメント)

Couldn't that also be due to a perception that the game is "rigged" and that their votes won't matter as much as donations and lobbyists?

Some, definitely. But 45%? That's a tough pill to swallow.

More education increases potential for long term growth, which should help the rich, but it also increases the pool of high skilled labor that can compete with the nouveau riche, which is bad for them.

This is true, sure. But public education is generally K-12, so I don't think a high school degree is going to cut into the share of national income the nouveau riche have. And I don't think I'm bad economics in saying that publicly funded secondary education is not a necessary thing given high costs of doing so compared to - relatively - low positive wage externalities, which means that the only way the rich would oppose secondary education is passing a law that states that people can't pay for college privately.

Also, many of the wealthy - including the nouveau riche - are patrons of the academy. Many rich people sit on boards of directors or give to charities that help K-12 education.

Rome?

Did Rome have a completely literate society like the US does? I mean, the US is pretty radically different than Rome.

I don't know much about pre-Revolution Frace, to be honest.

[–]IntegraldsI am the rep agent AMA 0ポイント1ポイント  (1子コメント)

a perception that the game is "rigged" and that their votes won't matter

This game is rigged, man. We're like them little bitches on the chess board.

[–]besttrousers 0ポイント1ポイント  (0子コメント)

Couldn't that also be due to a perception that the game is "rigged" and that their votes won't matter as much as donations and lobbyists?

Yep. Can't reason from a quantity change.

[–]Tiakoneo-mercantilist 4ポイント5ポイント  (4子コメント)

Why can't we simultaneously have uber wealthy people and strong institutions?

A specter is haunting /r/badeconomics...

[–]wumbotarianKeynesian-on-a-cob -1ポイント0ポイント  (3子コメント)

Riveting commentary, truly.

[–]IntegraldsI am the rep agent AMA 0ポイント1ポイント  (2子コメント)

A spectre is haunting Europe...

[–]wumbotarianKeynesian-on-a-cob -1ポイント0ポイント  (1子コメント)

Oh. Marx. Okay.

riveting commentary

[–]Tiakoneo-mercantilist 0ポイント1ポイント  (0子コメント)

Man, Marx tried. He isn't the most engaging writer but in the Manifesto he at least tried to be. I give him props, even if it doesn't make up for how soul crushingly boring Kapital can be.

But all joking aside, I do think we can do a bit of praxing to see that:

  1. Humans act in accordance with their interests.

  2. The interests of the wealthy are not the same as those of the poor.

  3. Wealth grants greater access to influence and power.

  4. A sufficiently great inequality of wealth allows for the interests of the wealthy to override the interests of the poor.

I think the concern of Piketty et al, if I remember correctly, isn't so much Literally Hitler as it is a return to the sort of social system of the late 1800s.

[–]IntegraldsI am the rep agent AMA 1ポイント2ポイント  (0子コメント)

Political economy spillovers are, I think, the best arguments for caring about wealth inequality per se.

I don't yet have a strong opinion on how important those effects are, but if anyone's going to convince me that wealth inequality matters, it's probably going to be through that channel.

[–]brauer1Undergrad newbie 1ポイント2ポイント  (0子コメント)

Krugman on Hilary, Bernie, Republicans and Bank Regulations.

http://www.nytimes.com/2015/10/16/opinion/democrats-republicans-and-wall-street-tycoons.html

[–]MoneyChurchChairman of the Kennywood Park Central Bank 0ポイント1ポイント  (2子コメント)

I get how the CAPM is an equilibrium model with microfoundations. But how can we interpret other factor models like the Fama-French three factor and five factor models as equilibrium models? As far as I can tell from those papers, there are no agents in these factor models; they're just regressions of returns excess of risk free on returns of the market portfolio and portfolios constructed around the different factors. My understanding is that the factors are supposed to account for different types of risk. My question is, how can we claim that's the case without a microfounded model to explain why agents care about that kind of risk? Why are these types of risk not captured by the market portfolio? And if there are investors who want to take on this kind of risk, are there investors who want to hedge against this risk? I know both value and growth investing exist, but do people invest against SMB or momentum?

Tagging /u/alexhoyer and /u/ocamlmycaml , you guys do securities, right?

[–]ivansmlhotshot with a theory 0ポイント1ポイント  (0子コメント)

My question is, how can we claim that's the case without a microfounded model to explain why agents care about that kind of risk?

Yes, we'd need an explicit economic model for that. One possibility is that even though households may care only about consumption, there are several types of macroeconomic shocks and firms are heterogeneous in their exposure to them - so their risk premia will depend on several priced risk factors. Presumably then, e.g. in FF model individual firm's book/market ratio is a proxy for this heterogeneity, while HML portfolio is a proxy for the macroeconomic shock. Kogan & Papanikolau (2012) surveys some papers in this direction.

[–]IntegraldsI am the rep agent AMA 2ポイント3ポイント  (0子コメント)

Cochrane's asset pricing book talks about this.

Recall the basic asset pricing equation: p=E(mx) (price equals expected discounted return).

All factor models are parametrizations of m, typically of the form m=bf where f are factors and b are factor loadings.

Specifically,

Fama and French (1993) describe the currently most popular multifactor model, and their introduction describes it as an ICAPM in which the factors are state variables.

I agree that you're probably not going to get the FF factors out of a consumer optimization program unless you rigged it in advance. Cochrane provides tantalizing hints:

What are the macroeconomic risks for which the Fama-French factors are proxies or mimicking portfolios? There are hints of some sort of “distress” or “recession” factor at work...

I don't want to copy and paste whole sections of the book, so read Cochrane's Asset Pricing, sections 20.2.2 and 20.2.3.

[–]a_s_h_e_nA stable currency, like bitcoin 2ポイント3ポイント  (3子コメント)

I'm looking to learn about healthcare in the United Kingdom - how much is spent, what taxes fund it, quality of services provided, how has it evolved etc. Obviousy HCE3 is the person to ask but I don't know his current username (/u/HealthcareEconomist3 still?) and obviously I'd like to hear from anyone else as well.

What I'm really looking for is the data, but lit would be helpful as well. Super broad I know, but I currently know far too little.

[–]prillin101Fiat currency has a 27 year lifespan 0ポイント1ポイント  (0子コメント)

Look up "UK healthcare by HealthcareTriage" on YouTube. It's not in depth but it's a nice layman analysis.

[–]say_wot_againThe one true Noah Smith 1ポイント2ポイント  (1子コメント)

/u/he3-1

But he took his winter sabbatical from reddit and only came back briefly for the TPP aftermath, so I don't know if you'll be able to ask him.

[–]a_s_h_e_nA stable currency, like bitcoin 0ポイント1ポイント  (0子コメント)

ah, thanks, worth a shot I guess

[–]wshanahana slightly less shitty libertarian 4ポイント5ポイント  (5子コメント)

How can economics be real if math isn't real?

[–]wumbotarianKeynesian-on-a-cob 2ポイント3ポイント  (0子コメント)

How Can Economics Be Real If Math Isn't Real

FTFY

[–]grevemoeskrHumans are horses! 4ポイント5ポイント  (2子コメント)

Because math isn't real, it's complex, just like the economy

[–]say_wot_againThe one true Noah Smith 2ポイント3ポイント  (0子コメント)

Simple. We prax it out.

[–]CatFortuneにゃんぱす! | Only understands simple explanations 7ポイント8ポイント  (7子コメント)

I hear so many incorrect opinions on the internet and in real life, and while mostly I’d like to leave them alone, I would at least like to be able to regurgitate the basic line of reasoning for why what they just said was bullshit. Maybe you can help me. I’m going to list some issues that I come across, and if you could just give me the brief point-by-point argument for why the right argument is correct, I would appreciate. Don’t worry about details, terms, links, complex explanations. and certainly not data; I can look that up. I’m just looking for something I can copy down and drill in my head. Think index cards, with big writing even. If you’re sitting on some brief explanations for things I haven’t mentioned, feel free to bring it up.

Here are some things I’d like quick, practical explanations for:

  1. Why Glass Steagull is not a panacea/Why it didn’t cause the financial crisis

  2. Why the lump of labor fallacy is wrong

  3. Why cheap labor across seas isn’t as bad for those workers

  4. Why low skilled and/or skilled immigration is good for domestic workers. If this is only true under a particular plan or immigration status, feel free to name names, but you don’t have to lay out your immigration plan

  5. Why infrastructure spending is so hard to direct effectively. If there is a simple solution to this, feel free to mention it. Otherwise, just the phenomena is fine.

  6. Why trade negotiations have to be secretive

  7. As I understand, a carbon tax creates disincentives to use carbon and incentivizes alternative fuel investment, while subsidies and tax credits are second best because you’re not sure what could succeed, and you might distort the market. If that’s not correct or there is a better argument, let me know

  8. I know there isn’t a consensus about what the minimum wage should be, other than maybe it should be higher. A simple explanation of the factors that go into what makes a justifiable minimum wage would be helpful. This was explained to me before, but I forgot it. I’ll copy it down this time

  9. I understand some people believe the wage gap is either exaggerated or an outright myth. A simple explanation of why people think this would help

  10. Why we currently should/shouldn’t generally cut spending more than we should cut taxes

  11. Why high frequency taxes are a good/bad idea

That turned out to be a lot, but just grab one or two.

Seriously, you don’t have to write paragraphs. If you feel the basic argument can’t be explained in a few sentences just forget about it. Again, don’t feel like you have to dumb down or explain your terms. I plan to use good comments here as reference, so I can just look them up.

[–]deckerparkes 4ポイント5ポイント  (0子コメント)

Frances Coppola has a great article on Glass-Steagall. I will do a poor attempt at summarizing it:

  • Most of the institutions that are associated with the problems in 08 wouldn't have been subject to it anyway (Lehman Brothers and Merill Lynch were both standalone investment banks, AIG is an insurance company, Fannie and Freddie are GSEs)

  • It was more wholesale money markets than deposits that were relied on to fund these ventures

  • Forcing banks to divest their investment banks wouldn't suddenly make them disappear - they're still in the financial system and can pose a systemic risk.

http://www.pragcap.com/glass-steagall-is-dead-get-over-it/

[–]say_wot_againThe one true Noah Smith 8ポイント9ポイント  (5子コメント)

1) Why Glass Steagull is not a panacea/Why it didn’t cause the financial crisis

Most of the major institutions that failed, like Lehman, AIG, Fannie and Freddie, or Countrywide, wouldn't have been affected by Glass Steagall in the first place.

2) Why the lump of labor fallacy is wrong

People want lots of things, so there will always be demand for more products and services and thus for the labor necessary to provide them.

3) Why cheap labor across seas isn’t as bad for those workers

Sweatshop labor, shitty though it may be, is often better than the alternatives that exist for those workers at the time.

4) Why low skilled and/or skilled immigration is good for domestic workers. If this is only true under a particular plan or immigration status, feel free to name names, but you don’t have to lay out your immigration plan

Low skilled the jury is still out. High skilled provide valuable labor that we need and don't supply enough of domestically; they also tend to be more entrepreneurial than average and thus can provide new services, products, and opportunities that didn't exist before.

5) Why infrastructure spending is so hard to direct effectively. If there is a simple solution to this, feel free to mention it. Otherwise, just the phenomena is fine.

Government bureaucrats don't have strong incentives to make sure infrastructure spending is done efficiently but DO have strong incentives to let infrastructure spending enrich their friends.

6) Why trade negotiations have to be secretive

While being negotiated, letting trade agreements be public lets lobbyists have open season to influence the public or the negotiators to get terms friendly to them. After being negotiated, trade agreements should absolutely not be secretive, nor are they in practice.

7) As I understand, a carbon tax creates disincentives to use carbon and incentivizes alternative fuel investment, while subsidies and tax credits are second best because you’re not sure what could succeed, and you might distort the market. If that’s not correct or there is a better argument, let me know

That's about right.

8) I know there isn’t a consensus about what the minimum wage should be, other than maybe it should be higher. A simple explanation of the factors that go into what makes a justifiable minimum wage would be helpful. This was explained to me before, but I forgot it. I’ll copy it down this time

Since workers greatly outnumber firms and are usually not organized, firms have some monopoly power when buying labor and can thus pay workers less than their productivity and employ fewer workers than is efficient. (If you've taken a formal economics course, this is the same situation as monopolistic competition, only from the demand side rather than the supply side.) A good minimum wage adjusts for this, a bad minimum wage goes way above the productivity of minimum wage workers and thus makes them unemployable.

9) I understand some people believe the wage gap is either exaggerated or an outright myth. A simple explanation of why people think this would help

Women currently get roughly equal pay for equal work. However, various factors (such as societal pressures, latent biases, or the shittiness of parental leave policies) mean that women typically don't have equal access to the highest paying jobs. So the problem isn't equal pay for equal work but rather unequal opportunities for work.

10) Why we currently should/shouldn’t generally cut spending more than we should cut taxes

Not touching this one.

11) Why high frequency taxes are a good/bad idea

Pro: HFTs extract profit from the firms who actually bring information to the market, meaning that they disincentivize research and will in the long run make markets less efficient. Also, at current margins HFT is a zero sum game that doesn't produce extra value but just divides it in new ways, so it's a waste of human and physical capital from society's point of view.

Against: HFTs provide liquidity, which can help prevent panic selling and random crashes. They also help information be reflected in markets faster and thus make markets more efficient.

I side more with pro, although Bernie's proposed tax is absurdly high. Talk to /u/alexhoyer for someone smarter than me on the other side of the issue.

[–]irondeepbicycleI got 99 problems but technological unemployment ain't one 3ポイント4ポイント  (2子コメント)

High skilled provide valuable labor that we need and don't supply enough of domestically

I like to ask if Dirk Nowitzki took a job from a hardworking American power forward. Jury's out if it's an effective debating tactic, but sports analogies can be an effective way for people to see first-hand how immigrants effect firms.

Acting could work too, did Daniel Craig take a job from a hardworking American action star?

[–]say_wot_againThe one true Noah Smith 3ポイント4ポイント  (1子コメント)

I like to ask if Dirk Nowitzki took a job from a hardworking American power forward.

I mean, yes. Lump of labor definitely applies to a sports league where the total number of players on rosters is capped. Nowitzki almost certainly brought the NBA more revenue through his international appeal and, ya know, quality than he's cost in salary, meaning that he's made money for other players in aggregate, but he hasn't created new jobs.

[–]irondeepbicycleI got 99 problems but technological unemployment ain't one 1ポイント2ポイント  (0子コメント)

Nowitzki almost certainly brought the NBA more revenue through his international appeal and, ya know, quality than he's cost in salary, meaning that he's made money for other players in aggregate,

Yeah but this is basically the point. I guess he technically "took a job" but his overall effect on domestic workers is undeniably positive. Which helps frame the debate for immigrants in general.

Or my analogy isn't persuasive at all and I'm not as smart as I think I am. :)

[–]CatFortuneにゃんぱす! | Only understands simple explanations 1ポイント2ポイント  (0子コメント)

Great! Great! Great!

This is perfect, thanks! I feel like I understand so much more now…

[–]besttrousers 5ポイント6ポイント  (0子コメント)

Broad agreement with the above answers.