Monday, December 15, 2014

New article in Tax Notes

I have an article in today's Tax Notes, entitled "Evaluating the Case for 1986-Style Tax Reform."  You can download it here.

This is the piece, expressing skepticism about the degree of policy gain that would result from lowering the corporate tax rate plus broadening the business tax base, that I presented at the Boston College-Tax Analysts Conference on Reforming Entity Taxation on October 10, 2014.  As per earlier blog posts, you can find slides for the talk here, and an account of the day's proceedings (from a Tax Notes article by Amy Elliott) here.

UPDATE: I gather that I am not supposed to post the paper publicly until two weeks after it has appeared in Tax Notes.  Accordingly, I have revised my SSRN submission so that the paper CAN'T currently be downloaded through the link at the top of this blog post (or otherwise).

The piece appeared in Tax Notes on December 15.  Accordingly, on December 29, I will revise the SSRN submission so that the article once again CAN be downloaded there.  I will of course also offer a new blog post here regarding its availability.

Wednesday, December 03, 2014

Spring 2015 Tax Policy Colloquium

The time is now drawing near - January 20, or just under 7 weeks away - when I'll be co-leading my/the twentieth (!) NYU Tax Policy Colloquium.  I've previously posted the speaker schedule, and noted that my co-convenor will be Alan Viard of the American Enterprise Institute, but the following is a first-time-posted full schedule with tentative paper titles (many of them placeholders and/or subject to change):

SCHEDULE FOR 2015 NYU TAX POLICY COLLOQUIUM
(All sessions meet on Tuesdays from 4-5:50 pm in Vanderbilt 208, NYU Law School)

1.  January 20 – Brigitte Madrian, Harvard Kennedy School.  “Does Front-Loading Taxation Increase Savings? Evidence from Roth 401(k) Introductions.”
2.  January 27 – David Kamin, NYU Law School.  "In Good Times and Bad: Designing Legislation That Responds to Fiscal Uncertainty."  
3.  February 3 – Kimberly Blanchard, Weil, Gotshal & Manges.  "The Tax Significance of Legal Personality: A U.S. View."
4.  February 10 – Linda Sugin, Fordham Law School.  “Invisible Taxpayers.”
5.  February 24 – Eric Toder, Urban Institute.  “What the United States Can Learn From Other Countries’ Territorial Tax Systems.”
6.  March 3 – Ruth Mason, University of Virginia Law School.  “Citizenship Taxation.”
7.  March 10 – George Yin, University of Virginia Law School.  “Protecting Taxpayers from Congressional Lawbreaking.”
8.  March 24 – Leigh Osofsky, University of Miami School of Law, “Tax Law Non-Enforcement.”
9.  March 31 – Shu-Yi Oei, Tulane Law School.  “Human Equity? Regulating the New Income Share Agreements.”

10.  April 7 – Lillian Mills, University of Texas Business School.  “Topics [to be determined] in Financial Reporting and Corporate Tax Compliance.”
11.  April 14 – Lawrence Zelenak, Duke University School of Law.  “Up in the Air over the Taxation of Frequent Flyer Benefits: the American, Canadian, and Australian Experiences.”
12.  April 21 – David Albouy, University of Illinois Economics Department. “Should we be taxed out of our homes? Leisure and housing as complements and optimal taxation.”
13.  April 28 – David Schizer, Columbia Law School.  “Tax and Energy Policy.”
14.  May 5 – Gregg Polsky, University of North Carolina School of Law, "Private Equity Tax Games and Their Implications for Tax Practitioners, Enforcers, and Reformers."

Tuesday, November 18, 2014

You take what you can get

Harry Grubert has published a thoughtful review of my book, Fixing U.S. International Taxation, in the latest issue of the National Tax Journal.  It's a good read, not just for anything it says about my book, but perhaps even more so for its addressing some topics (such as formulary apportionment) that I mention in the book, but that have been been of especial long-term interest to him.

Although Harry is an economist and I'm a lawyer, he might actually have preferred a more "lawyer"-type book, whereas I wrote a conceptually more "economist"-type one.  Thus, take what I consider to be an important conceptual advance from the book and my related prior articles: distinguishing between (a) the tax burden on outbound investment and (b) the incentive to minimize foreign taxes.  To me, this is inherently important, in the sense that it relates to clear thinking.

Harry agrees that I have advanced the ball on thinking about U.S. companies' incentives with respect to foreign taxes, and that this may be "particularly useful" to keep in mind as the international tax reform process goes forward.  But he notes that there are also plenty of other important issues in international taxation relating to lots of margins.  Some might even have greater practical importance than this one.  (As I would agree.)

Harry's focus is thus, in a sense, more practically grounded than mine - as it should be, given how much he knows about the empirical interrelationships, across decades, of multiple moving pieces.  But there is certainly room for both types of approaches.  I very much look forward to our further exchanges on international tax topics.

Monday, November 17, 2014

I forgot to post this a couple of weeks ago

Posing with Lee Sheppard before a discussion of Ed Kleinbard's book, on Halloween at NYU Law School.

My own paper presentation at NTA

In addition to commenting on the Green-Phillips paper noted in the preceding blog entry, I also presented one of my recent papers, forthcoming in the Connecticut Law Review, entitled "Multiple Myopias, Multiple Selves, and the Under-Saving Problem."  Jason Seligman of Ohio State offered thoughtful and helpful comments.  This was my first, and perhaps last, presentation of this paper, which I finished early last summer, as consumer demand has generally been higher for my Piketty paper (as well as for a short piece on corporate tax reform that I will post on SSRN after it appears in Tax Notes next month).

A link of the slides for my talk is available here, and a link for the paper is available here.

Slide 5 contains a little table that ought to have been in my paper, and that will indeed be (with some expansion) in the final version.  Here is an initial expansion over what I had in the slide:

Table 1 - Summary of (Some) Possible Explanations for Low Retirement Saving
           
Cause for low                        Representative           Potential
retirement saving                 Figure                         Policy Response


Naïve myopia                          Grasshopper                Mandatory saving?
                                               
                                                                       
Sophisticated myopia              Odysseus (Sirens)       Opportunity to choose (and
                                                                                    lock in) saving pre-temptation?


Regret aversion re.                  Fantasy sports player   Good defaults, require active choice?
 "active" choice                      who won’t trade        
                                                           
                                                                                   
Procrastination                        Hamlet                        Good defaults, require active choice?
                                                                                                                             

Inattentiveness                        Voters                         Good defaults, require attention?


Multiple selves                        Sybil                            ???       

Comment I gave at the NTA Annual Meeting

At the recently-concluded NTA Annual Meeting, I was asked to offer a brief comment on a nice paper by Richard Green and Mark Phillips of USC, entitled "Demand for the 1%: Tax Incidence and Implications for Optimal Income Tax Rates."  I myself can access a link for the paper here, but I'm not sure the link will work for readers who didn't register for the NTA conference.

Anyway, here is an approximate reconstruction of my comments:

Assigning me to comment on this paper is a great example of the NTA at either its best or its worst.  That’s for all of you to judge, depending on how much value you think I add.

Reflecting the NTA’s interdisciplinary aspirations, we have here a lawyer – that would be me – commenting on an economics paper that is full of math, including numerous propositions and proofs.  In the words of Martin Short, playing a Hollywood agent in a movie called The Big Picture with respect to a stack of scripts that his client was naïvely hoping he had fully evaluated, “I read almost all of them almost all the way through.”  But perhaps I can try to add value in a different way.  In particular, I’d like to offer six quick comments in the 5 minutes that I have available today.

First, the paper is interesting and important because the question it examines – how optimal tax analysis might be affected if the incidence of a personal income tax may be shifted, such as through effects on pre-tax wage levels – clearly matters, yet has often been ignored.  But it’s a shame that the paper is interesting and important!  Life would certainly be easier if we could simply assume away any such effects.  The paper is convincing, however, when it argues that we cannot necessarily do this.

Two areas in which the literature has wrestled with income tax incidence are the taxation of saving, and corporate income taxation.  As to the first, if the overall level of saving doesn’t respond much to the taxation of saving – which some evidence, admittedly not entirely conclusive, suggests – then incidence-shifting would presumably be slight.  As to the latter, the reason we need to worry about the incidence of the corporate tax is not that it’s paid by a legal entity – pretty clearly, that makes it a tax on the shareholders who own the residual – but rather that its being shifted is highly plausible, especially when national-level corporate taxes are operating within an integrated global economy.

Second, in a sense that the paper nicely explains, incidence-shifting with respect to high-end wages makes the tax on them what I will call “as if lower.”  If pre-tax wages at the top of the income distribution rise in response to highly graduated rates, that partly reverses both the intended distributional effects and the tax’s dampening effect on labor supply.  So in some respects it is as if the tax rate were lower than if there were no incidence-shifting through wage effects.

This causes me to entertain the intuition that perhaps the optimal rate might turn out to be higher, rather than lower, in the presence of wage effects, so as to get back to approximately the same place.  But in the paper’s model it comes out the other way.  This presumably is due to how things work out with respect to the lower 99 percent of the wage distribution.  It would be nice for the paper to explain more fully what gives rise to its result, in which wage-shifting lowers, rather than raises, the optimal rate.

Third, a question of interest is how robust the paper’s finding would be to other inputs into the determination of optimal tax rates.  Suppose, for example, that optimal high-end rates reflect the policymaker’s belief that extreme high-end income or wealth inequality imposes negative distributional externalities on other in the society.  It seems plausible to me that the pattern of effect would be similar (lowering the optimal rate relative to the case of no wage-shifting).  But given my prior comment, I suppose I shouldn’t assume that my intuitions about how the model works are correct.

Fourth, the paper assumes competitive high-end wage markets, while noting that a desirable extension might be to test the consequences of changing this assumption.  Clearly, this could be important, given that there may in fact be non-competitive wage markets at the top of the distribution.  However, one challenge in incorporating this extension is that we don’t necessarily understand how noncompetitive wage markets actually operate.  Suppose initially that one is extracting the maximum available rent, and that changing the high-end tax rate won’t affect this.  That’s a pretty simple case to evaluate (the optimal rate presumably should be higher than otherwise if the pre-tax wage is fixed), but it is only one possibility.

But suppose instead that, say, CEO salaries set by sweetheart boards of directors are more responsive than this.  Might it conceivably go in either direction?  One scenario is that the board restores the CEO’s after-tax position by raising the pre-tax wage.  But for an opposite scenario, consider the claim (made, for example, by Thomas Piketty) that lowering high-end individual marginal tax rates led to higher pretax wages for CEOs, as it was now more worthwhile playing the entire over-compensation game.  Whether one agrees with that claim or not, it’s a real world claim about how CEO wages respond to marginal tax rates that might actually come out predicting that the pretax wage is lower, not higher, if the tax rate on the CEO goes up.  But my main point here is simply that we have to understand how particular noncompetitive wage markets work in order to be confident about how best to extend the paper’s analysis to such settings.

Fifth, the paper assumes away special sectoral taxes in response to noncompetitive wages in particular settings, noting that these would present both administrative and political economy challenges.  But at least as a political economy matter, it’s unclear if setting high wages in particular settings where the markets aren’t functioning well would be harder or easier than raising high rates generally.  For example, you might avoid needing to fight with the entire high-wage sector if only some of them are having their taxes raised.  My point here, however, is just to note that political economy effects can be complicated, hard to model, and can go in various directions.

Finally, a quick point about the earned income tax credit or EITC.  As the paper notes, if it bids down pretax wages at the bottom of the distribution, that would partly undo the intended distributional effects of the EITC.  Depending on one’s reasons for having the EITC, this might not be all bad.  For example, suppose that reduced pretax wages trigger expanded low-wage employment through their supply side effects, and that this would be desirable for other reasons (e.g., building the workforce affiliation, skills, and habits of low-wage potential workers, in ways those individuals have not anticipated).  This might further the EITC’s aim of increasing low-wage employment.  Then again, there might be lots of other ripple effects on wages in the low end of the distribution that one would want to think about.  (For example, suppose it also drove down other low-end wages.)

Again, my point here is simply that the paper’s unavoidable embrace of new areas of complication points the way to yet more complications that we may want to try to add to the analysis.


In sum, this is a good paper that should stimulate extensions and further thought.

Sunday, November 16, 2014

A defense of cats (not that they need it)

For some reason, I have been annoyedly mulling over, for a couple of weeks now, an article that appeared in Ezra Klein's Vox blog concerning cats.  The case it sought to make, essentially, was "cats are bad."

Okay, I'll grant Vox the fact that cats kill a whole lot of birds.  But that obviously is only outdoor cats.  Our four have no chance of meeting wildlife other than creatures that we unabashedly classify as vermin if they cross the threshold into our house.  (I am far more benign towards these creatures when they remain outside.)

Then there was another point I suppose I have to grant, concerning the risk of getting diseases from your cat.  But lots of things that one may want to do have downside risk - and if that's dispositive, why ever leave your house or cross the street.

The point that really annoyed me in the Vox article was this section about how cats don't really love us.  Although in a sense, ahem, not entirely, completely, 100 percent untrue, my thought was: How pathetic and neurotic one would have to be to find oneself thinking, about one's cats:  "Do they love me? Are my feelings not fully requited? (whimper, sob)."

BTW, as I type this I have little Gary sitting on the tabletop next to the keyboard - he finds the cursor interesting and I have to save occasionally and keep him off the keyboard if I want to keep going.  But I digress.  Back to the "love" question.

If you are spending your life with a (human) significant other, the question of whether there is genuinely reciprocal love strikes me as rather important.  But suppose instead that we are talking about a pet.  Suppose that he* is beautiful, active, interesting, at times hilarious, playful, has strong feelings and distinctive personality traits, is definitely interested in you, often follows you around, sometimes likes to be petted and/or held (depending on individual feline taste), likes to rub against you sometimes (OK, granted that they also rub against the furniture), is extra friendly if he hasn't seen you for a while (this is true of ours, though not of all cats), puts you to some extent in the "mother" slot in his brain, purrs when you pet or hold him and he is in the mood, etcetera.  If, despite all this, you are going to start blubbering to yourself: "But does he love me as much as I love him?," then you are way too needy.  Enjoy the good things, and if that's not enough for you stick to dogs (or get yourself some helpful psychoactive medication) but recognize that it is your problem, not cats'.  (BTW, I have nothing bad to say about dogs - I agree that they're great, it's just that they're a whole lot of work, especially in an urban setting.)

If cats are simply not to your taste, then fine, no quarrel here, lots of us have different tastes in various respects and yet can have mutual respect, some of my best friends don't like cats, etcetera, although I'll admit to not counting it as a point in one's favor.

*I say "he" because all four of our cats are boys.

Saturday, November 15, 2014

What can and will Paul Ryan do over the next two years as Ways and Means chair?

So far as enacting important substantive legislation is concerned, I think the answer is: virtually nothing.  This is no reflection on him; rather, it reflects the prevailing political and policy landscape.

So far as enacting legislation with the full expectation of its being vetoed is concerned, that is a matter of his choice and internal Republican legislative politics.  I personally see nothing wrong with the Republicans' enacting big bills that they would actually like, but that they know President Obama will veto without serious prospect of override.  That can be a legitimate way of framing the Republican side of the 2016 policy debate.  But I don't think the Republicans will be able to unite behind responsible tax reform legislation that is genuinely budget-neutral even over the next ten years.  This was well shown by the cool reception that Republicans offered Ways and Means Chair Camp's very serious set of business tax reform proposals.  While Congressman Ryan would presumably be better situated than Camp to sell such proposals to his own caucus, I doubt that even he could, and also that he would want to.

The really big question is whether Ryan and the Senate Republicans will decide to make major changes in revenue estimating, designed to score tax cut proposals as generally raising revenue, sharply reducing unemployment, etc., even when in fact there is no serious prospect of the proposals actually having the claimed effects.  Ryan has been talking this up publicly in aggressive terms.  I am willing to credit him with being completely sincere, in the sense of believing that the existing estimating process results in under-measuring the positive effects that he believes enactment of his policy preferences would have.  To him, it may therefore seem win-win to push for what is sometimes (on the whole inaccurately) described as more "dynamic" revenue forecasting.  Win-win, in the sense that the revenue estimates become both genuinely more accurate and more favorable to his policy views.

But - as the Republicans found in 1994 when they tried to move towards more "dynamic" forecasting - the results they want cannot in fact be yielded by an honest revenue estimating process.  And I suspect that leadership figures such as Congressman Ryan, even if they don't currently know this, are about to find out.  The conservative or Republican economists who have been named publicly as possible new heads of the Congressional Budget Office are all reputable and honorable people, and they know that an honest, even if "dynamic," revenue estimating process simply can't yield anything close to the numbers that the Republican leadership may not just want, but genuinely believe to be more accurate.

Accordingly, getting the desired numbers, as a regular product of a revised estimating process, would require crossing a Rubicon that at present remains somewhat in the distance.  Essentially, it would require dishonestly destroying valuable public institutions that produce information of value to everyone in the process.  I am very hopeful that the Republican leadership, once they realize that this is the choice, will recognize that it is neither good policy nor truly in their interest.  There is value to a legitimate process, both to provide oneself with better information and to maintain public credibility.  And note, of course, that the Democrats may well get back the Senate in 2016, so this really is a two-party game if you look more than two years out into the future.

Again, the Republican leadership in 1995, with Doug Holtz-Eakin playing an important and positive role at the Congressional Budget Office, swiftly came to realize that it made sense to do the right thing (i.e., preserve the legitimacy and honesty of the revenue estimating process).  Fingers crossed that it happens again.  And while I am not invariably inclined to lean sharply to the most optimistic side when making guesses about the future, I do think there are very good structural and institutional reasons to hope for a positive outcome here.

National Tax Association Annual meeting in Santa Fe, part two


Okay, more on the general sessions at this year’s National Tax Association Annual Meeting.  The Day 2 luncheon speaker was Mark Masur, Assistant Secretary of the Treasury for Tax Policy.  He mainly discussed the prospects for business tax reform in the next Congress.  I was struck by how measured and realistic he was concerning (a) the merits of the reform, which even if net-positive are not exactly a slam dunk, home run, or whatever sports metaphor denoting a huge triumph you happen to prefer, and (b) the prospects for enactment of the reform in the near term, which even a confirmed optimist might rate no higher than, say, 10 to 15 percent  He views the playout of the current issue in Congress regarding extension of expiring tax benefits as likely to provide instructive information regarding how the big players in Congress are likely to be interacting over the next two years.  Obviously, finding a mutually acceptable approach to the expiring tax benefits (including, for example, regarding whether and how they might be financed) ought to be a great deal easier politically than working out business tax reform (which I myself view as a non-starter anyway, unless Congress decides to accept significantly reduced tax revenues).  So if they can’t even do the easier task without a lot of sturm und drang, the significance will be easy to discern.

Next up, in terms of general sessions, was a colloquy concerning three different approaches to business tax reform / taxing capital income, each considerably more ambitious than just broadening the base (from an income tax perspective) and cutting the corporate rate.  Eric Toder, Alan Auerbach, and Ed Kleinbard each discussed their particular reform proposals, after which the audience succeeded in its aim of prodding them to say what they thought was wrong with each other’s proposals.

Toder, along with Alan Viard, has proposed repealing the entity-level corporate income tax, which would be replaced with an individual-level tax on the accrual of gain and loss (without regard to realization) on shares of publicly traded corporate stock.  In other words, shareholders of publicly traded companies would be taxed on a mark-to-market basis.

This proposal would clearly solve a lot of problems with the existing regime.  As I attempt to explain in some length in my books Decoding the U.S. Corporate Tax and Fixing U.S. International Taxation, once you are taxing corporate income at the entity level, rather than the owner level, you have guaranteed yourself a number of very serious problems, made worse in practice by “unforced errors” such as distinguishing as we do between debt and equity.

The big concern is about its non-application to non-publicly traded businesses.  Suppose, for example, that this regime had been in place before Facebook went public.  Would it still have done so?  And how effectively would we be taxing Mark Zuckerberg if it didn’t?  The pass-through regimes we have under existing law (partnership taxation and subpart S) have their own set of very serious problems that are not easily mitigated.

Auerbach would replace the existing corporate tax (and the current rules for taxing non-corporate businesses) with what is essentially a destination-based VAT, modified to (a) reach all cash flows, financial as well as real, and (b) allow wages to be deducted, as they are being taxed to workers.  This could easily be part of an overall X-tax regime, as advocated by David Bradford, and more recently by Robert Carroll and Alan Viard, in which, once again, we would pretty much solve most of the problems I analyze in my corporate and international tax books.  Concerns that might be raised about it include (a) relating it properly to the taxation of individuals, if not accompanied by the enactment of a broader X-tax, and (b) whether its treatment of financial flows, which are deductible / includable or not depending on whether or not they in effect cross the U.S. border, would invite abusive gaming that was hard rather than easy to address.

Kleinbard has proposed a business enterprise income tax (BEIT) in lieu of current rules for both corporate and non-corporate businesses.  Businesses would get interest on basis via a cost of capital allowance (COCA).  This resembles proposals (just for corporations) to address the distinction between debt and equity by providing an allowance for corporate equity (ACE) – in effect, an imputed interest deduction on equity to match the actual interest deduction for corporate debt – except that Kleinbard would use the COCA in lieu of actual interest deductions, an important distinction from ACE proposals given that financial instruments denominated debt can be used to pay out a lot more than just the normal risk-free rate of return.  The proposal would in effect make the entity-level tax a consumption tax, since interest on basis is present value equivalent to expensing, but rents and owner-employees’ undistributed labor income would face the entity level tax.  At the individual level, Kleinbard would impute a taxable return to holding debt, stock, etcetera, but the income being imputed here would exceed the COCA deductions being claimed at the entity level, if the basis of these financial assets exceeded the basis of business assets at the entity level.  This might often be the case, due, e.g., to owner-level sales of stock that had appreciated at faster than the normal rate of return, along with cost recovery deductions being taken at the entity level.

The BEIT as envisioned by Kleinbard would also involve worldwide taxation for all U.S. companies, at the full domestic rate and without the deferral that present law generally provides for amounts earned through foreign subsidiaries.  In other words, full global consolidation.  He would allow a foreign tax credit, which I of course don’t like (I’ve argued extensively elsewhere in favor of lowering the US tax rate on foreign source income in lieu of providing foreign tax credits).

One of the main challenges one could raise to Kleinbard’s proposal is that taxing U.S. companies on a current basis on their foreign extra-normal returns (i.e., those in excess of the COCA deduction), at the full domestic rate albeit with foreign tax credits, would be problematic in a world that has lots of countries with territorial systems for taxing multinationals (although it is true that some of these countries use residence-based rules to address income-shifting to tax havens).  He argues that meaningful corporate residence rules, based on such factors as where the managers are rather than just where the company at the top of the chain is incorporated, would make it extremely hard for existing U.S. companies to expatriate.  The current inversion problem reflects that our corporate residence rules are so formalistic and porous.  But even if existing U.S. companies can’t readily expatriate under a BEIT with much tougher corporate residence rules - which is very plausible - there are serious issues about the long-term sustainability and impact of a global regime for U.S. businesses if other countries are doing it very differently.

One point of general agreement was that all three proposals might offer enormous improvement over current law if they could actually be enacted without being wrecked by political considerations.  But none seems likely to be imminent, which of course is no argument against making sure that people hear about them.

The last general session at this year’s NTA Annual Meeting honored Jim Poterba, this year’s Holland Award winner for lifetime contributions to the field of public finance.  Even leaving aside Jim’s outstanding academic work over decades, which by itself amply supported the prize, the session permitted dozens of leading public finance economists around the country, to whom he has been a tremendous mentor and inspiration, to express their gratitude.  Jim proves the proposition that sometimes virtue and merit are duly rewarded.

Once I'm back in NYC, I will post here the slides for my talk on my behavioral economics / retirement saving paper, Multiple Myopias, Multiple Selves, and the Under-Saving Problem.  I will also probably post my comments on a very nice paper for which I was the discussant, presented there by USC economist Mark Philips.  I had planned to simply post here remarks that I had written out in advance.  But as I was thinking about my remarks at the actual session, which I had time to do as Mark went third, I decided I wasn't entirely happy with what I had in hand, and spoke extemporaneously instead.  If I get a chance to write that up briefly, I will do so and post it.

National Tax Association Annual Meeting in Santa Fe, part one


Today will be the third and last day of the National Tax Association’s 107th Annual Meeting, being held in Santa Fe.  It’s been nice to see lots of old friends here, from economics, law, and accounting.  Obviously economists are the largest group, but the law contingent is significant these days, and a bunch of junior people appear to be making it a regular thing, which is great both for them and the NTA.  There is some tendency for the economists and lawyers to do things separately, but there is also a fair amount of interaction, and in any event the optimal mixing percentage is less than 100 percent given distinct professional interests and styles.

Next year’s NTA Annual Meeting will be held in Boston, which is certainly easier to get to for many of us than Santa Fe, and the program chairs will be Matthew Weinzierl of the Harvard Business School and Dhammika Dharmapala of the University of Chicago Law School.

With lots of good panels in each time slot, one had to miss a lot of good things.  (I also ended up missing the Georgia O’Keefe Museum, even though it’s right next door.)  But there were four general sessions, each meriting a brief mention here.

The first day’s lunch speaker was Joe Stiglitz.  He argues that, with proper use of Pigovian taxes such as a carbon tax, along with Henry George land or site value taxes, the U.S. government can raise more than enough revenue over the long run without doing serious economic harm.  He also pointedly dissented from academic uses of the 1976 Atkinson-Stiglitz theorem regarding equal commodity taxation to draw pro-consumption tax, anti-income tax, conclusions.  But when asked what would be wrong with using a progressive consumption tax plus inheritance/gift tax, in lieu of a capital income tax that may have a hard time getting away from realization problems, his answer appeared to focus mainly on rents, which would in principle generally be reached under a progressive consumption tax and also, to the extent not spent during their lifetimes by those earning the rents, by the inheritance/gift tax.

Stiglitz criticized Thomas Piketty’s economic analysis (as distinct from statistical analysis) in Capital in the Twenty-First Century on the ground that Piketty has confused “capital,” in the sense of productive inputs, with “wealth,” in the sense of the market value of existing resources.  To illustrate (using his example), suppose that in France there is a huge run-up in the value of real estate – reflecting, say, the global popularity of Paris and the French Riviera as attractive destinations.  This increases the wealth held by people in France (ignoring the issue of French versus overseas ownership of French land).  But it does nothing to increase the capital that can be deployed in economic production.  So while the landowners would presumably now be earning r (the normal return) on a higher valuation, they would not have increased productive resources in the economy, hence there would be no tendency for the increased wealth – unlike increased capital being deployed productively – to bid down r.

Perhaps this is enough for one post, so I will add a second one on the other general sessions at this year’s NTA.

Saturday, November 08, 2014

Life with Pandora

I've been using elliptical machines in the health club for at least 15 years now - vital, as you move on in life, not just to maintain conditioning but also, I think, to slow down aging - and I can only tolerate it if listening to music.  At first I'd take CDs and hope the battery didn't run out mid-session.  Then I switched to the iPhone and playlists.  Being a member of the Album Generation, I tended to want to have whole albums (actual or constructed by me).  But you can only fit so many on your phone, and even if you keep dozens of favorites available, often on a given day you don't want to hear any of them.  Plus it's a nuisance to have to keep on adding and deleting playlists.  So recently I switched to Pandora.

Generally it does the job, especially as one can skip ahead when needed.  The ads are annoying (I haven't upgraded to ad-free), but this just means taking off my headphones, and holding them in my hands for 30 second stretches, twice in the course of a 35 minute workout session.

Somehow I wish the algorithm could be more insightful, regarding not just my overall tastes, but even my mood on a given day.  But then again, a world in which it could read my mood might on the whole be a bit dystopian.

The variety of selections that you get in rapid succession can be fun.  Today I decided to keep track of the playlist it gave me, which went like this:

XTC, Hendrix, Belle and Sebastian, Fiona Apple, Arthur Alexander, Led Zeppelin (not one of my picked artists, and I pushed "next" after about 2 minutes), Pavement, Dylan, Queen (also not one of mine, and this lasted less than a minute), Sex Pistols, Kinks, Shins, Velvet Underground, Rancid (also not one of mine), Buddy Holly.

UPDATE: At the suggestion of a reader of this blog, I've now added Spotify to my repertoire, and have tailored it to have generally different coverage for me than does Pandora.