Back in 2008, when President Obama was running for his first term, he promised to be a post-partisan leader. While a Democrat, he said he would accept good ideas when they came from Republicans. At the time, I believed him, at least to some degree. And I wrote about it in this NY Times column.
Sadly, I was wrong. The short version of the story is this: As a candidate, President Obama campaigned on a platform of raising taxes on the rich. Yet he and his economic advisers also said they wanted to raise dividend taxes only slightly, from 15 to 20 percent. For reasons I explained in the Times article, keeping dividend taxes low was a position bolstered by good economics. Now, however, the president wants to raise dividend taxes to ordinary income tax rates (plus, for high-income taxpayers, the new tax of 3.8 percent that is part of the Obamacare legislation).
To put it another way, he campaigned as a moderate, willing to concede that the other party had some good ideas on tax policy. Once in office, he gave up on those ideas.
A similar thing happened with Bowles-Simpson. During his first term, he appointed a bipartisan panel, which concluded we could address our long-term fiscal problem with lower tax rates and a broader tax base. Now, the President goes around the country lambasting that approach.
Reasonable people can disagree about whether President Obama is a good or bad president. But the claim that he has tried to transcend partisanship and find a middle ground is just impossible to square with the facts.
5 Aralık 2012 Çarşamba
Longevity increased much before the Industrial Revolution
There is no doubt that average human lifetimes have considerably lengthened since Antiquity (except, maybe, Biblical times...). Improvements in living standards through better nutrition, salubrity and medicine likely were the major factors in this dramatic evolution. When this improvements started kicking in is a subject of debate, which is not helped by the fact that good data about lifetimes is difficult to come by. Written genealogical records go only so far back, and their quality and comprehensiveness declines considerably with age. And working from cemeteries is also quite unreliable, especially for longer horizons.
David de la Croix and Omar Licandro provide a very significant step towards a better understand of longevity in human history by compiling a database of 300,000 famous people spanning 25 centuries. The data includes information about location, religion, occupation, and nationality, which should take care of the major selection biases. They find that longevity was mostly flat throughout human history until it started increasing with the cohort born in the 1640s. This is before Malthus, whose assumption of stagnation is thus wrong. And this is much before the Industrial Revolution and has happened across the world and across occupations, thus the two events seem unrelated.
David de la Croix and Omar Licandro provide a very significant step towards a better understand of longevity in human history by compiling a database of 300,000 famous people spanning 25 centuries. The data includes information about location, religion, occupation, and nationality, which should take care of the major selection biases. They find that longevity was mostly flat throughout human history until it started increasing with the cohort born in the 1640s. This is before Malthus, whose assumption of stagnation is thus wrong. And this is much before the Industrial Revolution and has happened across the world and across occupations, thus the two events seem unrelated.
4 Aralık 2012 Salı
Are smart meters worth it?
Smart meters that allow you to monitor and manage electricity consumption are all the rage now. Power companies push them to consumers as the best deal that has ever been offered. And it looks enticing, as it promised more flexibility and the possibility of applying peak pricing in areas where this is not yet current. But is there really that much to gain? After all, these meters are not inexpensive technology.
Thomas-Olivier Léautier helps us here. He estimates how the responses of French households would be once they have smart meters and they can adjust their consumption to market prices. The outcome is humbling: the yearly savings would amount to 1-4€, which is likely less than forgetting to close a window one day in winter and much less than the 25 &euro/year cost of a smart meter. I see two reasons for this result. First, most households consume little energy. Second, their consumption pattern is not that flexible.
But would this result extend to other countries? North American households use a lot more electricity than French households due harsher climates and more carelessness about energy consumption. A smart meter there may in particular make people more aware of their power consumption and how one can reduce it to save money. This is much like a car that shows current gas consumption entices the driver to use less fuel. And this effect may make it worth it.
Thomas-Olivier Léautier helps us here. He estimates how the responses of French households would be once they have smart meters and they can adjust their consumption to market prices. The outcome is humbling: the yearly savings would amount to 1-4€, which is likely less than forgetting to close a window one day in winter and much less than the 25 &euro/year cost of a smart meter. I see two reasons for this result. First, most households consume little energy. Second, their consumption pattern is not that flexible.
But would this result extend to other countries? North American households use a lot more electricity than French households due harsher climates and more carelessness about energy consumption. A smart meter there may in particular make people more aware of their power consumption and how one can reduce it to save money. This is much like a car that shows current gas consumption entices the driver to use less fuel. And this effect may make it worth it.
3 Aralık 2012 Pazartesi
A Reading for the Pigou Club
From The New Yorker. One disappointing quotation:
"We would never propose a carbon tax, and have no intention of proposing one," [White House spokesman Jay] Carney told reporters.
Dealing with congestion: fast lane or toll booth?
In densely populated areas, road congestion is a fact of life. As time lost in traffic has an economic value, it is then quite obvious that road pricing with flexible tolls that depend on the current level of demand should provide for the most efficient allocation of cars through time and space. But there are some logistic problems with this, and depending on the actual implementation, some privacy issues as well.
Mogens Fosgerau claims one can get a Pareto improvement with a toll lane that is reserved for particular users if demand is inelastic. The lane set-up is similar to airport check-in, where privileged people get their own lane and others can use it if it is available. I question, though, that demand is inelastic. That may well be the case in the short-run, but people do adapt to road prices on a longer horizon by changing schedules and locations. Also, I find the comparison to tolls unfair in the sense that the benchmark is a coarse toll: there is a single toll price that is only activate when there is congestion. Obviously, it creates peak loads right before and after it is in place. That can easily be improved with more flexible pricing.
Mogens Fosgerau claims one can get a Pareto improvement with a toll lane that is reserved for particular users if demand is inelastic. The lane set-up is similar to airport check-in, where privileged people get their own lane and others can use it if it is available. I question, though, that demand is inelastic. That may well be the case in the short-run, but people do adapt to road prices on a longer horizon by changing schedules and locations. Also, I find the comparison to tolls unfair in the sense that the benchmark is a coarse toll: there is a single toll price that is only activate when there is congestion. Obviously, it creates peak loads right before and after it is in place. That can easily be improved with more flexible pricing.
Some Advice on Tax Planning
I don't normally give advice on personal finances, but in light of the fiscal situation we are facing, I will pass along one tidbit. Consider converting some of your retirement savings into a Roth IRA. Over the past few years, I have converted all that I can, which is about half of my retirement savings.
To make the best of a Roth conversion, you need liquid assets outside of retirement accounts to pay the resulting tax liability. But if you can do this, you will shelter more of your savings from capital taxation, and you will avoid required minimum distributions when you turn 70 1/2, which means tax-free accumulation for a longer period of time.
To read more about this option, click here.
To make the best of a Roth conversion, you need liquid assets outside of retirement accounts to pay the resulting tax liability. But if you can do this, you will shelter more of your savings from capital taxation, and you will avoid required minimum distributions when you turn 70 1/2, which means tax-free accumulation for a longer period of time.
To read more about this option, click here.
1 Aralık 2012 Cumartesi
Why the President is Not So Keen on Just Limiting Deductions
From the White House blog. Bottom line: If you apply a $25,000 deduction cap only to households with income above $250K, phase in the cap gradually as income rises above $250K, and exclude charitible giving from the cap, you increase revenue by only $450 billion over ten years.
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Kayıtlar (Atom)
5 Aralık 2012 Çarşamba
An Unfortunate Broken Promise
Back in 2008, when President Obama was running for his first term, he promised to be a post-partisan leader. While a Democrat, he said he would accept good ideas when they came from Republicans. At the time, I believed him, at least to some degree. And I wrote about it in this NY Times column.
Sadly, I was wrong. The short version of the story is this: As a candidate, President Obama campaigned on a platform of raising taxes on the rich. Yet he and his economic advisers also said they wanted to raise dividend taxes only slightly, from 15 to 20 percent. For reasons I explained in the Times article, keeping dividend taxes low was a position bolstered by good economics. Now, however, the president wants to raise dividend taxes to ordinary income tax rates (plus, for high-income taxpayers, the new tax of 3.8 percent that is part of the Obamacare legislation).
To put it another way, he campaigned as a moderate, willing to concede that the other party had some good ideas on tax policy. Once in office, he gave up on those ideas.
A similar thing happened with Bowles-Simpson. During his first term, he appointed a bipartisan panel, which concluded we could address our long-term fiscal problem with lower tax rates and a broader tax base. Now, the President goes around the country lambasting that approach.
Reasonable people can disagree about whether President Obama is a good or bad president. But the claim that he has tried to transcend partisanship and find a middle ground is just impossible to square with the facts.
Sadly, I was wrong. The short version of the story is this: As a candidate, President Obama campaigned on a platform of raising taxes on the rich. Yet he and his economic advisers also said they wanted to raise dividend taxes only slightly, from 15 to 20 percent. For reasons I explained in the Times article, keeping dividend taxes low was a position bolstered by good economics. Now, however, the president wants to raise dividend taxes to ordinary income tax rates (plus, for high-income taxpayers, the new tax of 3.8 percent that is part of the Obamacare legislation).
To put it another way, he campaigned as a moderate, willing to concede that the other party had some good ideas on tax policy. Once in office, he gave up on those ideas.
A similar thing happened with Bowles-Simpson. During his first term, he appointed a bipartisan panel, which concluded we could address our long-term fiscal problem with lower tax rates and a broader tax base. Now, the President goes around the country lambasting that approach.
Reasonable people can disagree about whether President Obama is a good or bad president. But the claim that he has tried to transcend partisanship and find a middle ground is just impossible to square with the facts.
Longevity increased much before the Industrial Revolution
There is no doubt that average human lifetimes have considerably lengthened since Antiquity (except, maybe, Biblical times...). Improvements in living standards through better nutrition, salubrity and medicine likely were the major factors in this dramatic evolution. When this improvements started kicking in is a subject of debate, which is not helped by the fact that good data about lifetimes is difficult to come by. Written genealogical records go only so far back, and their quality and comprehensiveness declines considerably with age. And working from cemeteries is also quite unreliable, especially for longer horizons.
David de la Croix and Omar Licandro provide a very significant step towards a better understand of longevity in human history by compiling a database of 300,000 famous people spanning 25 centuries. The data includes information about location, religion, occupation, and nationality, which should take care of the major selection biases. They find that longevity was mostly flat throughout human history until it started increasing with the cohort born in the 1640s. This is before Malthus, whose assumption of stagnation is thus wrong. And this is much before the Industrial Revolution and has happened across the world and across occupations, thus the two events seem unrelated.
David de la Croix and Omar Licandro provide a very significant step towards a better understand of longevity in human history by compiling a database of 300,000 famous people spanning 25 centuries. The data includes information about location, religion, occupation, and nationality, which should take care of the major selection biases. They find that longevity was mostly flat throughout human history until it started increasing with the cohort born in the 1640s. This is before Malthus, whose assumption of stagnation is thus wrong. And this is much before the Industrial Revolution and has happened across the world and across occupations, thus the two events seem unrelated.
4 Aralık 2012 Salı
Are smart meters worth it?
Smart meters that allow you to monitor and manage electricity consumption are all the rage now. Power companies push them to consumers as the best deal that has ever been offered. And it looks enticing, as it promised more flexibility and the possibility of applying peak pricing in areas where this is not yet current. But is there really that much to gain? After all, these meters are not inexpensive technology.
Thomas-Olivier Léautier helps us here. He estimates how the responses of French households would be once they have smart meters and they can adjust their consumption to market prices. The outcome is humbling: the yearly savings would amount to 1-4€, which is likely less than forgetting to close a window one day in winter and much less than the 25 &euro/year cost of a smart meter. I see two reasons for this result. First, most households consume little energy. Second, their consumption pattern is not that flexible.
But would this result extend to other countries? North American households use a lot more electricity than French households due harsher climates and more carelessness about energy consumption. A smart meter there may in particular make people more aware of their power consumption and how one can reduce it to save money. This is much like a car that shows current gas consumption entices the driver to use less fuel. And this effect may make it worth it.
Thomas-Olivier Léautier helps us here. He estimates how the responses of French households would be once they have smart meters and they can adjust their consumption to market prices. The outcome is humbling: the yearly savings would amount to 1-4€, which is likely less than forgetting to close a window one day in winter and much less than the 25 &euro/year cost of a smart meter. I see two reasons for this result. First, most households consume little energy. Second, their consumption pattern is not that flexible.
But would this result extend to other countries? North American households use a lot more electricity than French households due harsher climates and more carelessness about energy consumption. A smart meter there may in particular make people more aware of their power consumption and how one can reduce it to save money. This is much like a car that shows current gas consumption entices the driver to use less fuel. And this effect may make it worth it.
3 Aralık 2012 Pazartesi
A Reading for the Pigou Club
From The New Yorker. One disappointing quotation:
"We would never propose a carbon tax, and have no intention of proposing one," [White House spokesman Jay] Carney told reporters.
Dealing with congestion: fast lane or toll booth?
In densely populated areas, road congestion is a fact of life. As time lost in traffic has an economic value, it is then quite obvious that road pricing with flexible tolls that depend on the current level of demand should provide for the most efficient allocation of cars through time and space. But there are some logistic problems with this, and depending on the actual implementation, some privacy issues as well.
Mogens Fosgerau claims one can get a Pareto improvement with a toll lane that is reserved for particular users if demand is inelastic. The lane set-up is similar to airport check-in, where privileged people get their own lane and others can use it if it is available. I question, though, that demand is inelastic. That may well be the case in the short-run, but people do adapt to road prices on a longer horizon by changing schedules and locations. Also, I find the comparison to tolls unfair in the sense that the benchmark is a coarse toll: there is a single toll price that is only activate when there is congestion. Obviously, it creates peak loads right before and after it is in place. That can easily be improved with more flexible pricing.
Mogens Fosgerau claims one can get a Pareto improvement with a toll lane that is reserved for particular users if demand is inelastic. The lane set-up is similar to airport check-in, where privileged people get their own lane and others can use it if it is available. I question, though, that demand is inelastic. That may well be the case in the short-run, but people do adapt to road prices on a longer horizon by changing schedules and locations. Also, I find the comparison to tolls unfair in the sense that the benchmark is a coarse toll: there is a single toll price that is only activate when there is congestion. Obviously, it creates peak loads right before and after it is in place. That can easily be improved with more flexible pricing.
Some Advice on Tax Planning
I don't normally give advice on personal finances, but in light of the fiscal situation we are facing, I will pass along one tidbit. Consider converting some of your retirement savings into a Roth IRA. Over the past few years, I have converted all that I can, which is about half of my retirement savings.
To make the best of a Roth conversion, you need liquid assets outside of retirement accounts to pay the resulting tax liability. But if you can do this, you will shelter more of your savings from capital taxation, and you will avoid required minimum distributions when you turn 70 1/2, which means tax-free accumulation for a longer period of time.
To read more about this option, click here.
To make the best of a Roth conversion, you need liquid assets outside of retirement accounts to pay the resulting tax liability. But if you can do this, you will shelter more of your savings from capital taxation, and you will avoid required minimum distributions when you turn 70 1/2, which means tax-free accumulation for a longer period of time.
To read more about this option, click here.
1 Aralık 2012 Cumartesi
Why the President is Not So Keen on Just Limiting Deductions
From the White House blog. Bottom line: If you apply a $25,000 deduction cap only to households with income above $250K, phase in the cap gradually as income rises above $250K, and exclude charitible giving from the cap, you increase revenue by only $450 billion over ten years.
Kaydol:
Kayıtlar (Atom)