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Total 149 results found since Jan 2013.

Imaginary Squabbles Part 3: Krugman and DeLong’s Changing Theories and Missing Facts
Alan Reynolds Responding to a student question after a recent Kansas State debate with Brad DeLong I posed a conceptual puzzle.  I asked students to ponder why textbooks treat Treasury sales of government bonds as a “stimulus” to demand (nominal GDP) in the same sense as Federal Reserve purchases of such bonds.  “Those are very different polices,” I noted; “Why should they have the same effect?”   The remark was intended to encourage students to probe more deeply into what such metaphors as “stimulating” or “jump starting” really mean, not to accept as dogma that fiscal and monetary poli...
Source: Cato-at-liberty - May 24, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

Imaginary Squabbles Part 2: Krugman and DeLong on Ireland
Alan Reynolds A short 2010 article of mine in Politico, which still annoys Paul Krugman and Brad DeLong, dealt with Ireland’s brief effort to restrain spending, which (while it lasted) was smarter than imposing uncompetitive tax rates as Greece had done.  Krugman ridiculed my Politico article in at least four columns.  He imagines I predicted a “boom” in Ireland, because I wrote in June 2010 that, “the Irish economy is showing encouraging signs of recovery.”  That the Irish economy was turning up at the time is undeniable. Although I did not yet have the benefit of real GDP data, Ireland’s GDP w...
Source: Cato-at-liberty - May 23, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

Larry Summers Redefines Balanced Budgets as Stimulus and Big Deficits as Austerity
Alan Reynolds Former Treasury Secretary Larry Summers, in June 4 testimony before the Senate Budget Committee, offers a scatter diagram which allegedly shows “that countries that pursued harsher austerity policies in recent years also had lower real GDP growth.”  He acknowledges, but does not adequately explain, that the causality may well be backwards: Bond markets would not allow countries in severe economic distress (Portugal, Ireland, Greece and Spain) to continue financing deficits at the peak levels of 2010. Summers defines “austerity” as the three-year change (regardless of the level) from 2010 to 201...
Source: Cato-at-liberty - June 10, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

The Old Infrastructure Excuse for Bigger Deficits
Alan Reynolds Washington Post columnist/blogger Ezra Klein recently echoed the latest White House rationale for additional “stimulus” spending for 2013-15 and postponing spending restraint (including sequestration) until after the 2014 elections. Klein argues for “a 10- or 12-year deficit reduction plan that includes a substantial infrastructure investment in the next two or three years.” In other words, a “deficit-reduction plan” that increases deficits until the next presidential election year. Citing Larry Summers (who similarly promoted Obama’s 2009 stimulus plan while head of the National Economic Counc...
Source: Cato-at-liberty - June 16, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

Immigration Illusions Part Two: Rector and Richwine Rediscover Budget Deficits
Alan Reynolds A recent paper by Robert Rector and Jason Richwine  (“The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer”) went to a lot of unnecessary trouble to estimate that governments at all levels spent $54.5 billion more on services and benefits to households headed by unlawful immigrants (which includes children and spouses who are citizens) than was collected in taxes from them in 2010.   It is hardly shocking to learn that federal, state, and local governments spent more on unlawful immigrants than they received in taxes, since governments spent more on nearly everyone than they ...
Source: Cato-at-liberty - July 2, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

The Reynolds Model of Stock Prices
Alan Reynolds Mark Hulbert’s latest Wall Street Journal column criticizes the so-called Fed Model, which holds that P/E ratios should rise as interest rates decline, and vice versa. The strategy got its name in 1997, following a reference in a Federal Reserve report to the tendency of the S&P 500’s earnings yield—the inverse of its P/E ratio—to rise and fall with long-term interest rates.  During the 15 years before the Fed made that observation, the U.S. stock market’s P/E ratio did indeed tend to be higher when interest rates were low, and vice versa, Mr. [Javier] Estrada concedes. But, he poi...
Source: Cato-at-liberty - September 14, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

Delaying the Individual Mandate Will Delay Political Backlash until after the Election
Alan Reynolds Republican Senators Ted Cruz (TX) and Mike Lee (UT) and a few others have proposed that all Obamacare funding be cut off by a legislative “rider,” ostensibly forbidding funding of the 2010 law. They argued that public opinion polls trump mere laws enacted by Congress and vetted by the Supreme Court–an idea that sounds more like populism than conservatism. Even if such “defunding” could have magically attracted the 67 Senate votes needed to override a veto, it would not have undone the mandate to buy insurance, premium subsidies through refundable tax credits, planned cuts in payments to Me...
Source: Cato-at-liberty - September 27, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

Lindbeck’s Law: The Self-Destructive Nature of Expanding Government Benefits
Alan Reynolds Relevant foresight from Swedish economist Assar Lindbeck, “Hazardous Welfare State Dynamics,” American Economic Review, May 1995: The basic dilemma of the welfare state …  is that the more generous the benefits, the greater will be not only the tax distortions but also, because of moral hazard and benefit cheating, the number of beneficiaries. This is a field where Say’s Law certainly holds in the long run: the supply of benefits creates its own demand… . Serious benefit-dependency, or ‘learned helplessness’, may … emerge only in a long-run perspective. Possible examples ...
Source: Cato-at-liberty - November 3, 2013 Category: Health Medicine and Bioethics Commentators Authors: Alan Reynolds Source Type: blogs

Why Businesses Migrate from Greece to Bulgaria: Smaller Government Is Cheaper
Alan Reynolds What “prompted many Greek manufacturers to relocate to neighboring Bulgaria” is not just less-capricious regulation, as The Wall Street Journal suggests, but also the much lower cost of government. Bulgaria has a 10% flat tax on corporate and personal income and a 20% VAT. Greece has a 49% personal income tax, 26% corporate tax, 45% payroll tax and 23% VAT.  Unbearable tax rates drive a fourth of the Greek economy underground while businesses in the formal economy migrate or shut down. What about government spending (which Keynesian economists call “fiscal stimulus”)?  Government spending i...
Source: Cato-at-liberty - February 11, 2015 Category: American Health Authors: Alan Reynolds Source Type: blogs

Furman’s Folly: Nostalgia about 1973 and Nonsense about the Bottom 90 Percent
Alan Reynolds Jason Furman, chairman of the Council of Economic Advisers, set out to explain “middle-class economics” in the Wall Street Journal, March 11, in an earlier Vox blog and in a presentation to National Association of Business Economists (NABE), as well as the first chapter of the Economic Report of The President.  The intent is to make the recent economy look healthier (massaging 2.3-2.4 percent growth for 2013-14 into 2.7 percent), and to claim that “subpar” 2010-14 income gains for the middle class (generously defined as the bottom 90 percent) are not due to a subpar recovery but to something that h...
Source: Cato-at-liberty - March 11, 2015 Category: American Health Authors: Alan Reynolds Source Type: blogs

Familiar Yet Forgotten Tax Lessons from Ancient Greece and Rome
Alan Reynolds In Ancient Greece, “The politicians strained their ingenuity to discover new sources of public revenue… . The results of these imposts was a wholesale hiding of wealth and income, Evasion became universal, goods were seized, men were thrown into jail. But the wealth still hid itself, or melted away.” –Will Durant The Life of Greece, Simon and Schuster, 1939. P. 66.  In ancient Rome; “taxation rose to such heights that men lost incentive to work or earn, and an erosive contest began between lawyers finding devices to evade taxes and lawyers formulating laws to prevent evasion. The government issued...
Source: Cato-at-liberty - April 8, 2015 Category: American Health Authors: Alan Reynolds Source Type: blogs

Can Inequality Get Worse If Poverty Gets Better?
Alan Reynolds Jim Tankersley of the Washington Post believes he has discovered “The Big Issue With Hillary Clinton Running Against Inequality”: “Inequality got worse under Bill Clinton, not better. That’s true if you look at the share of American incomes going to the 1 percent, per economists Emmanuel Saez and Thomas Piketty. It’s also true when you look at the share of American wealth going to the super-super-rich, the top 0.1%, per research by Saez and Gabriel Zucman.” What this actually reveals is the absurdity of (1) defining inequality solely by top 1% shares of pretax income less government benefits, and...
Source: Cato-at-liberty - April 14, 2015 Category: American Health Authors: Alan Reynolds Source Type: blogs

Simon Johnson Claims the Warren Health Plan is a Gift to U.S. Businesses
Alan ReynoldsAn advisor to the Warren campaign,Simon Johnson of MIT, has written an impressively fact-freeWall Street Journalarticle claiming Senator Warren's "remedy for health care costs" would be a wonderful gift to American businesses."Americans currently spend nearly 18% of gross domestic product on healthcare. . . and a great deal of this burden falls directly on companies." He claims "this dead weight gets heavier each year" and "companies cannot by themselves easily constrain health-insurance premiums." The impression is that businesses shoulder a large and rising share of total spending on health care. And unlike ...
Source: Cato-at-liberty - December 2, 2019 Category: American Health Authors: Alan Reynolds Source Type: blogs

Did Mitigation Save Two Million Lives?
Alan ReynoldsIn the April 16 White House briefing, President Trump again said, as he often has before, that “models predicted between 1.5 and 2.2 million deaths” if we had not endured the various economic shutdowns imposed by the Governors of 42 States. The severity and breadth of those statewide shutdowns was initially encouraged, and is now justified, by just one dramatic statistic. That number was the 2.2 million U.S. deaths supposedly at risk from COVID-19.The famed 2.2 million estimate first reached viral status in the March 31 White House briefing by Doctors Anthony Fauci and Deborah Birx. They displayed a  grap...
Source: Cato-at-liberty - April 17, 2020 Category: American Health Authors: Alan Reynolds Source Type: blogs