Here’s a list of articles that I have been reading today, accompanied in some cases with some of my own commentary (organized by topic):
The Economy
- In the Battle for Stimulus Jobs, Shoe Store Owner Tells War Story, by Louise Radnofsky
Here’s a practical, step-by-step guide to “creating or saving” 9 jobs for only $889! Thanks to Greg Mankiw for the pointer! Professor Mankiw has previously written on “Create or Save“, where he notes, among other things, that while this “statistic” is politically clever, it is based upon counterfactual reasoning and not measurable in any meaningful sense.
The White House uses this created or saved “metric” regularly; e.g., last Friday, the White House claimed that the $787 billion economic stimulus plan approved early this year “…has generated or saved more than 1 million jobs” and that “…it is on track to create or save 3.5 million jobs by the end of next year.” (Source: “White House: 1 million jobs created or saved”).
Finance and the Financial Crisis
- Is Market Efficiency the Culprit?, by Eugene Fama
“Justin Fox (“The Myth of the Rational Market”) and many other financial writers claim that much of the blame for the financial meltdown is attributable to a misguided faith in market efficiency that encouraged market participants to accept security prices as the best estimate of value rather than conduct their own investigation. Is this a fair assessment? If so, how should policymakers respond?”
Health Care Reform
- Yes, the House Health Bill Costs More than $1.2 Trillion, by Donald Marron
- Disincentives from Reform: House Edition, by Greg Mankiw
Professor Mankiw points out an important unintended consequence associated with the House of Representatives’ version of health reform unveiled last Thursday by Speaker Nancy Pelosi. Specifically, the House bill imposes very high implicit marginal tax rates on labor income. For example, a family of four earning $54,000 would pay only about 1/3 of the actual cost for health insurance. However, if that same family earns additional income of $12,000, then the health insurance subsidy falls by $3,800, which translates into an implicit marginal tax rate of 3,800/12,000 = 32 percent. This is an implicit tax that must be “paid” on top off of all the other explicit (income and payroll) taxes which normally apply to $66,000 of personal income.
Politics
- Obama and the Liberal Paradigm, by John Stele Gordon
“The sheep are quite capable of looking out for themselves. Someone tell the Democrats.”