Revising History

From Econ Journal Watch:

Paul Krugman Denies Having Concurred With an Administration Forecast: A Note
by David O. Cushman

Abstract

In a previous article for Econ Journal Watch, I attributed to Paul Krugman a concurrence with the optimistic economic forecast put forward in early 2009 by the incoming Administration. Krugman reacted by denying that he had concurred with that forecast, pointing to a blog entry of his from January 2009. But Krugman apparently did not read my paper. It concerned not a blog entry from January 2009 but rather one from March 2009. In this note, I take greater pains to show how Krugman’s March entry, made in support of Brad DeLong’s criticism of Greg Mankiw’s doubts about the Administration forecast, can be interpreted as having effectively concurred with that forecast. I conclude with discussion of the shortcomings of the model that DeLong put forward when making his Krugman-endorsed criticism of Mankiw’s doubts.

He didn't know the secret handshake

Some news from across the atlantic:

Fake Portuguese economist unmasked

And to some lighter news out of Portugal, where a fake economist duped the nation for months. Our correspondent Giles Tremlett reports:

Artur Baptista da Silva had become one of the most authoritative voices on Portuguese television, using his experience as an economist and United Nations consultant to explain why so much austerity was bad for the bailed-out country's economy.

But now it turns out that the 61-year-old economist who explained so seriously – and clearly – the damage being inflicted on the country by the austerity measures demanded by the troika of lenders (EU, IMF and ECB) was a conman with at least two jail terms behind him.

The fake economist earnestly debated with journalists and other experts on television shows, claiming that the European Union has become a farce.

Baptista da Silva became so popular that he was invited to talk to the socialist party's summer school and some of the country's most prestigious debating societies. He claimed to have been a professor at a now defunct US university and to have worked with the World Bank.

“He said what people wanted to hear,” explained Antonio Costa, editor of the Diario Economico newspaper. That may explain why fans have now launched Facebook groups supporting him, including one called "I worked at the United Nations with Baptista da Silva."
 

More on the fake economist here. 

Is the financial sector too large?

Here are two attempts at addressing this question:

1. Robin Greenwood and David Scharfstein.
2. John Cochrane.

A Reading for the Pigou Club

From the National Journal.

Hyperinflation in Hell

Allocating Inauguration Tickets

Here is a good topic for class discussion.

Background: The Congress allocates free tickets to the presidential inauguration, often by lottery.  Some winners of the lottery try to sell them for thousands of dollars.  Senator Schumer objects to the resale.

Question 1: When David,  a lottery winner, sells his ticket to Anne, both David and Anne are better off.  Who is worse off?

Question 2: Senator Taxcut proposes auctioning off the tickets and rebating the revenue lumpsum to all taxpayers.  Who would be better off?  Who would be worse off?  Which group is larger?

Question 3: Senator Deficithawk proposes auctioning off the tickets from the get-go to reduce the national debt.  What are the pros and cons of that proposal?

The Gains from Trade

A story of how a model employee outsourced his own job.

A Comic on GDP Accounting

A friend recommends this comic as a way to motivate a class discussion of GDP.

Very Quick Reviews

My older son and I saw Zero Dark Thirty over the weekend.  Great movie.  On par with Argo.  Much better than Lincoln, which seems to be the Oscar favorite.

By the way, I have heard that the revival of Pippin I saw and loved is moving to New York after its Boston run is over.  Highly recommended.

A Reading for the Pigou Club

And also about the Pigou Club, from the NY Times.

How much are your taxes going up?

The Tax Policy Center has a calculator to answer that question.

ASSA Humor Session

Many of the world's professional economists are spending the next few days in San Diego for the annual ASSA meeting, where economists network, get some publicity for themselves, and learn what other economists are up to. I am skipping this year's meeting to spend more time with family.  You might think that is lazy of me.  But heck, my marginal tax rate just went up.  A bit of extra laziness is optimal.

If I were there, one event I would certainly attend is the annual humor session.  Here is some information about it, in case you are interested:  It is 8 pm on Saturday January 5 in the Manchester Foyer of the Manchester Grand Hyatt. Unlike most of the sessions at the meeting, the humor session is free and open to the public. And best of all: the benefit of attending is entirely nonpecuniary, so it won't be reduced by the new higher tax rates!

The Dearth of Bestselling Economists

Last October, Amazon introduced a new feature: a list of bestselling authors, aggregating across all books an author has written. Here is the list of the top 100 authors.

For an economist, perusing the list is a humbling experience. As far as I can tell, not a single member of our profession made the list.  I wonder whether Galbriath might have made it in his day, as he had written a large number of books accessible to general audiences. But these days, not a single one of us has wide enough readership to make it onto the list. The next time you are tempted to lament the sad state of the public discussion of economic policy, remember that we economists are probably not doing enough to educate the public. We just don't write things that people want to read.

If you want to know what economists come closest, you can look at this list of bestselling authors in business and investment, a category that includes economics. Several of us make this less selective list.

Tax Progressivity: Update

Here are the effective federal tax rates (total taxes as a percentage of income) for 2013 under the new tax law, as estimated by the Tax Policy Center, for various income groups:

Bottom fifth: 1.9
Second fifth: 9.5
Middle fifth: 15.6
Fourth fifth: 19.0
Top fifth: 28.1

80-90 percentile: 21.5
90-95 percentile: 23.4
95-99 percentile: 26.3
Top 1 percent: 36.9

Top 0.1 percent: 39.6

Anne Pringle

All ec 10 students know David Johnson, the course's charismatic head teaching fellow.  What they likely do not know is that David's lovely wife, Anne Pringle, is also on the Harvard faculty.  Today's NY Times has an article about Anne and her research.

President rejects his bipartisan commission

The fiscal deal struck last night makes one thing clear: President Obama must have really hated the recommendations of the bipartisan Bowles-Simpson commission that he appointed. The commission said that we needed to reform entitlement programs to rein in spending and that increased tax revenue should come in the form of base broadening and lower marginal tax rates. The deal appears to offer no entitlement reforms, no tax reform, and higher marginal tax rates. After all the public discussion over the past couple years of what a good fiscal reform would look like, it is hard to imagine a deal that would be less responsive to the ideas of bipartisan policy wonks.