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23 Dec 09
The terror and triumph of free markets
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Only 8 of top global 25 companies in 1999 are still in top 25 in 2009, and some of them have shed a lot of market cap.
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The consumer is king: in 2009, the consumer wants iPhones in their Xmas stocking and not whatever Worldcom had been pretending to be producing. The radical uncertainty of how to please consumers is an argument FOR free markets
30 Nov 09
The Poor-Rich Gap is Shrinking (Follow up on consumption data)
See also "The Economic Condition of Poor Americans (and the rest of us) Continues to Improve" by the same author.
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that same data set does let me compare the percentage of households below the poverty line and the percentage of top quintile households with various consumer goods across years. Just for simplicity's sake, I have compared 2003 and 2005 along those lines below.
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As you can see, the gap has narrowed in 10 of 13 categories.
28 Nov 09
The Economic Condition of Poor Americans (and the rest of us) Continues to Improve
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So whatever one hears about stagnating wages and the like, the bottom line is ultimately what we can afford to buy and have in our households to improve our lives. By those measures, life for the average American is better today than 35 years ago, life for poor Americans is much better than it was 35 years ago, and poor Americans today largely live better than the average American did 35 years ago. Hard to square with a narrative of economic stagnation or decline.
05 Nov 09
Public option: Treatment worse than the disease
Jeffrey Miron strikes at the root of the arguments for government involvement in health insurance. Being poor sucks. Some people, <em>by accident of birth</em>, have higher costs of living or lower income than other people. Hardcore egalitarian statists believe the government should compensate the unfortunate at the expense of the fortunate, but they should recognize that not everyone agrees with their notion of fairness, and that their approach would degrade everyone's standards of living.
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Government should not subsidize health insurance -- for the uninsured, the poor, the elderly or anyone else -- or regulate health insurance markets.
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Subsidizing health insurance means that patients and doctors are insulated from the costs of health care, so they utilize too much -- often in the form of unnecessary tests or medical procedures whose value hasn't been proven. This excess demand, along with technological progress, means rapidly growing deficits, so governments limit reimbursements to health providers or ration care. This kills innovation and creates its own inequities. The taxes necessary to fund subsidies are a drag on economic growth.
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24 Aug 09
More Evidence That We're All Getting Richer
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Let me repeat that: over 30% of US households in 2006 earned above $75K compared to under 20% in 1980. Over the same period, the percentage of US households earning under $35K fell from 42.8% to 36.7%. Fewer households are poor, fewer are middle class, and a hunk more are above $75K.
26 May 09
Nostalgianomics: Liberal economists pine for days no liberal should want to revisit
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The Great Compression is a term coined by the economists Claudia Goldin of Harvard and Robert Margo of Boston University to describe the dramatic narrowing of the nation’s wage structure during the 1940s. The real wages of manufacturing workers jumped 67 percent between 1929 and 1947, while the top 1 percent of earners saw a 17 percent drop in real income.
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Yet the return to peacetime and prosperity did not result in a shift back toward the status quo ante. The more egalitarian income structure persisted for decades. For an explanation, Krugman leans heavily on a 2007 paper by the Massachusetts Institute of Technology economists Frank Levy and Peter Temin, who argue that postwar American history has been a tale of two widely divergent systems of political economy. First came the “Treaty of Detroit,” characterized by heavy unionization of industry, steeply progressive taxation, and a high minimum wage.
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30 Oct 08
Is Barack Obama really a socialist?
Don Boudreaux distinguishes classical socialism from a milder strain which Barack Obama and many other Westerners believe in.
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If, say, the low cost of Dell computers comes mostly from government policies (such as government schooling for an educated workforce) and from culture (such as Americans' work ethic) then Michael Dell's wealth is due less to his own efforts and more to the features of the society that he luckily inhabits.
Wealth, in this view, is produced principally by society. So society's claim on it is at least as strong as that of any of the individuals in whose bank accounts it appears. More important, because wealth is produced mostly by society (rather than by individuals), taxing high-income earners more heavily will do little to reduce total wealth production.
23 Sep 08
Taking Revenge on the Rich Will Not Bring Recovery
The Great Depression was not the crash of 1929. It was more than ten years of stagnation and recession, caused by anti-business government actions. The lesson for the present crisis is clear, but it will probably not be heeded.
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The signal Washington emitted in these years was clear: Not Open for Business. A poignant moment came in August, 1937, when Mellon died in Southampton, N.Y. When this star of their old firmament winked out, investors felt themselves in uncharted waters. Other negatives -- rising labor costs, regulatory tightening, a doubling of reserve requirements for banks -- suddenly seemed insurmountable. The market dropped from 189 in August to 120 by the next February, well below the lowest ebb in 1929.
03 Mar 08
Declining marginal utility, progressive taxes, and fairness
Designing a "fair" tax system is more difficult than many people realize.
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He argued, however, that fairness required greater progressivity. Asked to explain and defend the basis for that belief, he offered the usual argument for declining marginal utility of income, claimed that fairness required equal utility burdens on rich and poor, and concluded that the tax system ought to be highly graduated.
As some of you may realize, he was making a mathematical mistake. His argument, if true, implies that richer people should pay more dollars in taxes than poorer people. But it does not tell us whether they should pay a larger or smaller proportion of their income.
28 Feb 08
An Upside for the Middle Class
In spite of what politicians say, living standards are improving, not declining.
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But as Americans' wage growth has slowed, their rate of consumption has accelerated, leaving some economists dubious about claims that the middle class is worse off than before.
22 Feb 08
Real Net Household Wealth Hits a New High
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I like to keep track of what I call “real net household wealth”. That is, household net worth, subtracting out federal government debt, and adjusting for inflation. In effect, this measure assumes that households will have to eventually pay back all of the debt, and it accounts for debt owned to foreigners as well.
31 Dec 07
Who Benefits from the Federal Government?
See also "The Rich Pay for the Federal Government."
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Thus in a generous accounting the rich get 26% of the benefits of federal spending and pay 68.7% of the costs. In percentage terms the rich get about 37 cents on the dollar.
The Rich Pay for the Federal Government
See also "Who Benefits from the Federal Government?"
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The chart below with data from the Congressional Budget Office, shows the effective tax rate by income class from all federal taxes. Effective tax rates are considerably higher on the rich than the poor.
14 Dec 07
Guess Who Really Pays the Taxes
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The wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.
03 Feb 05
Inequality
Don Boudreaux chides egalitarians for caring only about money.
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Why the exclusive focus on money, on $$$, on the material rather than the spiritual and non-material? If Jones chooses to work 100 hours each week as an attorney in order to earn an annual income of $250,000, while Smith scratches out a modest $25,000 annually by writing poetry for 40 hours a week, is it really so obvious that Jones and Smith are unequal? It’s obvious and indisputable only if the only thing that truly matters in life is current monetary income.
27 Oct 04
... and the Poor Get Poorer??
Don Boudreaux provides several counterexamples to the old saw, "The rich get richer while the poor get poorer."
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Perhaps the most famous fabulously rich American of all time is John D. Rockefeller, founder of Standard Oil. He hailed from a poor, hard-scrabble farm in upstate New York, then moved with his family as a young boy to Ohio. He began his career at the age of 16 in Cleveland as a bookkeeper. He was quite the opposite of wealthy.
25 Sep 04
Wage Gap Reflects Women?s Priorities
The median female full-time wage is less than the median male full-time wage. That does not mean the difference is wholly explained by sex discrimination.
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[T]he wage gap is not a problem to be solved. It is merely an interesting statistic indicating that men and women, when offered a level playing field will tend to express different priorities and, so, end up at different places.
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