Random Observations for Students of Economics
I will be giving a webinar on Wednesday October 23 on The Fiscal Challenges Facing the Next President. For more information, click here.
According to the recent NBC poll, among white voters, those with a college degree favor Harris by a margin of 21 points, while those without a college degree favor Trump by a margin of 28 points.
Races other than white may be similar, but that comparison is not reported in the article.
It had been about 30 years since I first read it. I did not remember it well, but I did remember liking it very much. After the second read this summer, I can report that I liked it just as much, maybe more.
Crossing to Safety is not a book of high drama. It is a book about friendship, marriage, aging, and life's other challenges, focusing on two couples as they traverse their lives from their youth as struggling academics to their later years of greater wisdom and inevitable loss.
I read somewhere that, though fiction, the book is autobiographical. That makes sense. It reads like a thoughtful and honest memoir, which is a genre I love.
I plan to vote for Kamala Harris. Why? Simply because she is not Donald Trump. In my judgment, Trump is (1) an authoritarian narcissist whose rhetoric is mean-spirited and untethered from reality and (2) an isolationist with wrong-headed views on trade and immigration and downright scary views on national security issues like NATO, Ukraine, and Taiwan.
But every time Harris says something specific about economic policy, she makes my voting for her more painful. For example: No taxes on tips, stricter rules against price gouging, expanded price controls on pharmaceuticals.
My take on these issues:
1. The janitor who cleans the restaurant after it closes should not face a higher tax rate than the waiter who earns much of his income in tips.
2. Inflation is about supply and demand, not price gouging. Ask Janet Yellen or any of the other excellent economists in the Biden-Harris administration.
3. Greater pharmaceutical price controls mean less research and fewer cures in the future, as the Wall Street Journal points out today.
I read that, in the coming days, Harris plans to be vague about her policy plans. I hope that is true because by advocating specific ill-advised (if politically attractive) policies during the campaign, she might feel compelled to follow through on them after she is elected. After the election, good policy is more likely to win out against good politics. At least I hope so.
Ms. Harris, you have my vote, but please, don't make it any more painful for me.
From the New York Times:
One peer reviewer suggested that Darwin drop all the evolution stuff and expand the chapter on raising pigeons. (“Everybody is interested in pigeons,” the reviewer explained.)
I was recently a panelist at an NBER conference, organized by Larry Ball and Yuriy Gorodnichenko, on inflation. You can read my remarks here.
Update: Here is the published version.
A question that many pundits have been asking is: Why does the general public seem to feel bad about the current economy, when many traditional indictors suggest it is doing okay? Here is a hypothesis: People are comparing things to 2021, the first year of the Biden administration, when things looked much better for them.
Consider real disposable income per capita. In the latest reading, for May 2024, it was $50,491. For the year 2021, the figure was $51,567. That is, average income is down about 2 percent over this period. By contrast, average income grew by more than 3 percent per year from 2017 to 2021.
Similarly, consider credit card debt. From 2017 to 2021, it was up a mere 4 percent (in nominal terms). From its trough in April 2021 until now, it is up 44 percent.
To be sure, one might say that 2021 was an unusual year. Disposable income was goosed by numerous, temporary fiscal policies aimed to ease the pain of the pandemic. Covid also reduced consumers' ability to spend, so they used more of their incomes to pay off their debts. No economist expected these unusual conditions to persist.
That is all true. But do most people take this fact into account? Maybe they think, "A few years ago, my income was higher, and my debts were lower. So, yes, I am glad the pandemic is over, but my finances are worse."
I am the Robert M. Beren Professor of Economics at Harvard University. I use this blog to keep in touch with my current and former students. Teachers and students at other schools, as well as others interested in economic issues, are welcome to use this resource.
