Assorted Links (4/30/2014)

Here’s a list of articles that I have been reading lately:

The Piketty Panic

Upon reading one of Professor Krugman’s latest missives about Thomas Piketty’s new book entitled “Capital in the Twenty-First Century,” I was fascinated to learn that just because I am not philosophically favorably inclined toward some of Professor Piketty’s policy recommendations (e.g., the imposition of a global wealth tax), this apparently means that I must therefore be an “apologist for America’s oligarchs”…

First Thoughts on Piketty

Harvard econmist Greg Mankiw provides an excellent synopsis of the strengths as well as weaknesses of Piketty’s new book on inequality…

In Illinois, Tax Increases Become an Article of Faith

“In The Wall Street Journal, Heather Williams discusses a religious coalition that is advocating progressive income taxation for Illinois.”

The Jewish Conductor and the Polish Pope

“In The Wall Street Journal, Matthew Kaminski interviews conductor Gilbert Levine about his experiences with Pope John Paul II.”

Partners in Ethanol Crime

“The Wall Street Journal writes that the corn-fuel mandate has been an invitation to mass fraud.”

Why Obama’s Keystone opposition reeks of politics

“There are at least 100 million reasons why the president has held up the decision on the Keystone pipeline, POLITICO’s Ben White says.”

How to Energize a Lackluster Recovery

Excellent tutorial on the economics of taxation by Stanford University economist Ed Lazear. “In The Wall Street Journal, Edward Lazear writes that allowing the full and immediate deductibility of capital investment would spur economic growth and raise wages.”

Hedging Away Our Future

“Al Lewis comes across a new Federal Reserve Bank of San Francisco study that says hedge funds may contribute more to instability in the financial system than previously thought. Well, duh!”

How Americans Die

“Americans die in smaller portions each year, but what kills us is changing.”

Bubble to Bust to Recovery: Housing and the U.S. Economy

Fantastic data visualization that succinctly summarizes the causes of the housing bubble and what is happening now as real estate markets recover…

Google now spends more on lobbying than almost every other corporation

A case study on rent seeking, provided by none other than Google!…

House of Debt

House of Debt –

This 1 hour long video (@ featuring Amir Sufi (who is the Chicago Board of Trade Professor of Finance at the University of Chicago Booth School of Business) was recorded last Monday evening as part of the Myron Scholes Global Markets Forum at Chicago Booth. Here’s a description of his talk:

“The Great American Recession resulted in the loss of eight million jobs between 2007 and 2009. More than four million homes were lost to foreclosures. Is it a coincidence that the United States witnessed a dramatic rise in household debt in the years before the recession—that the total amount of debt for American households doubled between 2000 and 2007 to $14 trillion? Definitely not. Armed with clear and powerful evidence, Professor Sufi will discuss his forthcoming book, House of Debt, and how it reveals the Great Recession and Great Depression, as well as the current economic malaise in Europe, were caused by a large run-up in household debt followed by a significantly large drop in household spending.”

The Economist: Essay on the history of finance in five crises

From The Economist:

“This week we publish an essay on the history of finance in five crises. They have a common theme: in each case the state increased the subsidies and guarantees it gave to finance—and helped set up the next crisis. Our cover leader points out that this is happening again. An American can now blindly put $250,000 in a bank, knowing his deposit is insured by the state. Finance, we say, should be treated more like other industries.”

The '77 Cents on the Dollar' Myth About Women's Pay

The ’77 Cents on the Dollar’ Myth About Women’s Pay

In The Wall Street Journal, Mark J. Perry and Andrew G. Biggs write that once education, marital status and occupations are considered, the ‘gender wage gap’ all but disappears.
An important problem with the “equal pay” canard is its simplistic comparison of female versus male wages; as if the sole determinant of compensation were gender. We live in a multivariate world where all sorts of factors jointly determine outcomes.  Economists June and David O’Neill understand this and find, after controlling for various wage determinants such as education, experience, industry, occupation, time spent as an active labor force participant, risk, and so forth (see “The Declining Importance of Race and Gender in the Labor Market: The Role of Employment Discrimination Policies”), that labor market discrimination is unlikely to account for more than 5% but may not be present at all.

But then the “equal pay” canard really has nothing to do with economics. It has everything to do with identity politics. Identity politics is a long-time, proven formula for political success. You divide people into groups based upon ethnicity, gender, sexual preference, income, and so forth and then promise to deliver group-specific benefits at the expense of the rest of society. Politicians get away with this because the public at large is innumerate and not able (or lack incentives) to grasp even the basic statistical concepts and principles (such as the idea that there are multiple determinants of wages other than gender differences).