Chief Justice Roberts disses economists

From his recent opinion on the health care law, page 24:

To an economist, perhaps, there is no difference between activity and inactivity; both have measurable economic effects on commerce. But the distinction between doing something and doing nothing would not have been lost on the Framers, who were "practical statesmen," not metaphysical philosophers.

The Latest from Merle Hazard

SCOTUS on the Health Care Mandate

Well, the Supreme Court said today that the health care mandate is ok.  I am no constitutional scholar, but from what I can tell from the news reports, the Court's logic is similar to mine in this old blog post.

Should Germany exit the euro?

Yes, say Ken Griffin and Anil Kashyap.

Niall Ferguson on the Generational Compact

The Harvard historian says it is badly frayed.

Anna Schwartz has passed away

Here is the NY Times obituary of the great monetary economist.

I inspire a contest

The folks over at New Economic Perspectives are sponsoring a contest "offering t-shirts to the top three readers who identify passages that contain the worst predictive and policy follies in Mankiw’s textbook."

That is very helpful.  Thanks!  I am always trying to find mistakes, omissions, and ambiguities in the book so I can improve the next edition.  I look forward to seeing what they come up with.

Elinor Ostrom has passed away

Here is the Nobel prize winner's NY Times obituary.

Data > Ideology

Emi Nakamura, Jon Steinsson and Nicolas Vincent stand up for data collection.

On my to-read pile

A new book by economist Ariel Rubinstein.  You can read it for free by clicking here.  (And in case you are wondering, the second link is legit, not pirated.)

Addendum: Here is a review of the book.

Barro on the Slow Recovery

Robert says incentives are the key:

Consider the expansion of social-safety-net programs, including food stamps, unemployment insurance, Medicaid (prospectively) and housing and mortgage programs. In a study published last month by the National Bureau of Economic Research, University of Chicago economist Casey Mulligan observed that, because these programs were means-tested (falling or ending as income rises), expanding them raised the effective marginal tax rate on labor income.

Specifically, Mr. Mulligan estimates that the effective marginal tax rate for low-income households went from around 40% in 2007, before the recession started, to about 48% in 2009, at the start of the recovery. Thus, while these programs may be attractive from the standpoint of assisting poor families, they dilute incentives to work.

To achieve a real recovery, government policy should focus on individual incentives to work, produce and invest. Central here are tax rates and regulations, including especially clarity about future policies. In a successful policy package, the government would get its fiscal house in order and make meaningful long-term reforms to entitlement programs and the tax structure.

Summers on Quantitative Easing

Larry is skeptical:

There is also an oddity in this renewed emphasis on quantitative easing. The essential aim of such policies is to shorten the debt held by the public or issued by the consolidated public sector comprising both the government and central bank. Any rational chief financial officer in the private sector would see this as a moment to extend debt maturities and lock in low rates – exactly the opposite of what central banks are doing. In the U.S. Treasury, for example, discussions of debt-management policy have had exactly this emphasis. But the Treasury does not alone control the maturity of debt when the central bank is active in all debt markets.

Macro 8e is now available!

Click here to learn more.