Gruesome New Year's Eve thought

Somewhere in this country tonight, on New Year's Eve, an old, dying man or woman is being kept alive through undue "heroic measures," when he or she is ready to go, because the next of kin want him/her to make it to 2010 so they can avoid the estate tax (if the one-year repeal isn't called off through legislation in the new year).

And someone, somewhere, is talking elliptically (but not too much so) to a doctor about reporting the death as 2010 even if the individual doesn't actually quite make it to midnight.

The stakes could be tens of millions of dollars, so I would have to think that someone, somewhere, is likely doing these things.

Best albums of the decade - missing entry

I was looking over various best-albums-of-the-decade lists, and couldn't seem to find the Wrens' Meadowlands (from 2003) anywhere. Very strange, as it was rightly acclaimed upon release and would certainly be at or very near the top of my personal list, if I were to perform the due diligence needed to make one.

Possibly because they very annoyingly haven't put out a follow-up in the six=plus years since, a gap that approaches the length of the Beatles' entire recording career. But no reason to downgrade this thrilling magnum opus paean to despair.

Queen of the roost

The last 3+ months have been at times tense in our household - not for the humans, fortunately, but for our cats. Having added Seymour in early September to join Buddy and Ursula (replacing the sadly fallen Shadow), we had front row seats at a series of tense face-offs between the two boys, Seymour and Buddy. Both are young (albeit neutered) males, and the vet told us we should simply accept some ongoing hostilities until they decided which of them was the boss.

Well, the verdict is in, and the top-ranked cat is ... Ursula. The quietest and seemingly the meekest of the three, as well as by a good margin the smallest (8 to 9 pounds instead of 12 plus), and never one to hiss or start a fight (she'll sometimes play but doesn't generally initiate), she nonetheless has serenely seized the top slot. Proof comes at the food bowls. Preferring their food to hers (which is designed for cats with kidney issues), she will walk over to their bowls while they are eating and silently, calmly shove her way in. They simply accept this, sometimes leaving to go to her bowl in the hope that there's something there. They would never do this to each other (though they'll check each other's food bowls when unoccupied), presumably because they realize it would lead to an international incident. But her right to shove her way in, and have them (with their 40% greater body weight) simply, at most, try to stay in the game by her side, apparently is well accepted.

Serene self-confidence? Silky, non-threatening smoothness and an absence of (the feline equivalent of) chest-beating? I don't know how she does it, but it's clear that she has.

Perhaps I should give her a high-five the next time she comes over (as she generally does) to nuzzle me while I'm doing my floor exercises. We would all have been rooting for her had we thought there was any chance that she would rise to such eminence.

Kind of like the ending of Jane Eyre, without any need for Rochester?

Republican healthcare blunder?

Assuming Lieberman doesn't bolt and the Democrats get healthcare reform through Congress, Jonathan Chait thinks this shows an enormous blunder (at least ex post) by the Republicans. Democrats were so desperate for a "bipartisan" bill that they would have made massive concessions to get it through with Republican help.

Instead, Chait says of the Republicans: "They lost. In the end, they'll walk away with nothing. The Republicans may gain some more seats in 2010 by their total obstruction, but the substantive policy defeat they've been dealt will last for decades."

For this to be a failure even ex post, one would have to assume that the Republicans in Congress actually care what healthcare policy the U.S. follows. I don't think they care in the slightest. They are only into power, not governing. Hence it makes perfect sense for them to be indifferent to improving (from their claimed policy standpoint) the content of enacted legislation, and to focus purely on trying to recapture the White House and Congress through unmitigated obstructionism. And if you recall Medicare prescription drugs, it often wasn't much different when they WERE in power.

Another semester ends

Put it in the books, as the New York Mets announcers would say after an all too rare win. The fall 2009 semester is now over, with the exception of grading.

That would be a pretty big exception to how over it feels if I had exams to grade. Nearly all law professors will agree, I think, that grading exams is BY FAR the worst part of our jobs (although writing exams isn't that much fun either). Our working conditions are good in many respects, but one difference between us and, say, people in some liberal arts areas is that we generally must do all of our grading ourselves - no handing it off to teaching assistants and the like.

But this semester I taught a seminar in which the students were required to write short papers, rather than taking an exam. So I now have 24 papers to grade. The great thing is, they are on 20 or more different topics, with only very limited overlap. I am hoping they'll be interesting and good (the students' oral presentations had promise), but at a minimum the soul-deadening experience of reading answers to the same question again and again and again - while needing to distinguish between them for grading purposes - is something I will get to miss this time around.

Tax-side vs. spending-side progressivity

Bruce Bartlett has a new post in which he says the following:

"I think we should simply give up trying to redistribute income on the tax side and accept that it can only be done meaningfully on the spending side. This would require both the right and left to give up some of their pet ideas. The left would accept that the only purpose of the tax system is to raise revenue and the right would accept that a fairly extensive social welfare state is here to stay. In essence, conservatives would raise the revenue and liberals would spend it. That's more or less the way it works in Europe, where conservatives accepted the welfare state in return for having it financed conservatively through a value-added tax. Liberals accepted this regressive form of taxation in return for conservatives accepting the legitimacy and permanence of the welfare state.

"Over the years, I have asked a number of liberal friends if they would take this deal."

Subject to some quibbles, such as concerning what it means for a program to be on the tax side vs. the spending side, count me in. For starters, I agree with Bartlett (per his comments elsewhere in the same post) that the biggest progressivity issue is helping people on the bottom, not leveling down at the top. This tends to follow, by the way, from a utilitarian social welfare norm if one uses what I believe are relatively plausible assumptions about the rate of declining marginal utility. Educated people on the left sometimes think more about the top than the bottom because they are acting out their own resentments and self-pity more than focusing on general beneficence.

As a further point, suppose we have the choice between a flat tax, which is somewhat progressive given its zero bracket, and a VAT that hits everyone at the same tax rate. The latter, however, would be paired with a demogrant (i.e., a uniform cash grant to each individual or household). If we keep the parameters otherwise sufficiently the same, the VAT plus demogrant is clearly more progressive.

To illustrate: Suppose we have a choice between (a) a 25 percent flat tax with a $30,000 zero bracket and (b) a 30 percent VAT plus a $9,000 demogrant. If you earn $30,000, you pay a net of zero either way. Nothing paid or received under the flat tax; $9,000 tax and offsetting $9,000 grant under the VAT + demogrant. But if you earn less than $30,000, you do better under the VAT + demogrant (reaping a net gain from their combined application). And if you earn more than $30,000, you do worse under it (since the tax now exceeds the grant).

The example helps to show that one could think of the flat tax's zero bracket as a variant of a demogrant in which grants are, for some odd reason, phased down for low-income individuals. The motivation for such a design feature is hard to fathom, once one starts thinking about it that way.

To be sure, graduated rates that go beyond the flat tax's two-rate structure (e.g., the David Bradford X-tax with higher brackets) provide more progressivity at the top than you can get via the VAT + demogrant, at least if you don't want the latter feature to grow too great. But this returns to the point of progressivity's relative importance at the top versus the bottom.

If you don't like the demogrant (most people don't, though often for confused and incoherent reasons), substitute for it some form of in-kind government spending that happens to have relatively uniform per-person benefits. The analysis remains pretty much the same. And government supply of goods and services can actually be designed to provide greater benefits at the bottom than the top (e.g., public schooling, if spending per enrolled student is equalized across districts and higher-income people opt out more for private school).

Anyway, I'm not a standard liberal (e.g., ask me about Social Security, the minimum wage, or my generally dark view of collective / political decision processes), but if offered the deal I would certainly take it.

Is the veil available?

I haven't commented here on the filibuster angle in the healthcare debate. I do believe that the rise of the Senate filibuster as a routine rather than extraordinary legislative tactic is among the factors making the U.S. both (a) ungovernable and (b) likely to end up defaulting (at least implicitly) on the national debt. But it's hard for me to avoid entirely feeling differently about it in 2009 than, say, 2003, especially given that there would be a better case for it if legislative behavioral norms kept it as a rarely, rather than a routinely, invoked minority tool.

Nicholas Stephanopoulous has a piece arguing that, if everyone agrees that the filibuster is terrible but no one wants to be the first to give it up, Congress should simply pass a rule (which both parties might be able to support) abolishing it as of, say, 2017. He thanks John Rawls for coming up with the "veil of ignorance" concept that we can use to motivate people to choose things for the general good once they don't know if they would win or lose in the particular circumstances.

Never mind that it was actually the utilitarian John Harsanyi who came up with the veil of ignorance, which Rawls egregiously misused by making an ad hoc assumption of infinite risk aversion. (Under which, who knows if the parties would agree to get rid of the filibuster, even if otherwise favorably inclined? With infinite risk aversion, they might focus just on the worst case scenario where they were in the minority and wanted to block the other side.)

With that bit of snark out of the way, Stephanopoulous' suggestion is an interesting one. Although, I wonder if pure Senate majoritarianism is actually the best rule - the problem is that we've gone too far in the super-majority direction (given current political dynamics, such as Republicans' 100% party line voting and commitment to obstructionism).

But a further problem is that the veil of ignorance may not actually be available. Repealing it now, even to take effect in 8 or more years, in a sense condemns it and could affect the current climate of opinion when it is used. Thus, today's Republicans, even in the counter-factual where they were sane and interested in governance, could well conclude that this would undermine their current ability to use it, whereas Democrats might support the change today based on the same calculation.

A still further problem is that, if Republican minorities are more willing and able to filibuster than Democratic minorities - being more of a block voting unit and also more unwilling to cooperate with a president from the other party, as I think no reasonable person can deny the Republicans are - then they may actually favor it from behind the veil, however willing they might be to get rid of it for short-term reasons when back in the majority.

New music

One wants to stay current if one can, both to hear new & fresh things and to limit (though without illusions) feeling too dated. That said, I really just don't get the enthusiasm continually expressed in some circles (such as the Pitchfork and Popmatters websites) either for Grizzly Bear or Animal Collective. And Fleet Foxes have a pretty sound (Renaissance folk or some such thing meets the Beach Boys) but it's hard to get very excited. But Album, the debut release by Girl, is doing better for me on early listens - though perhaps, overall, it's a bit thin.

NYU Tax Policy Colloquium, Jan - April 2010, current status of the schedule

All sessions meet on Thursdays from 4-5:50 pm in Vanderbilt 208, NYU Law School. Mihir Desai and I will be the co-convenors. The speakers are all set, but a few of the listed paper titles could change.

1. January 14 – Lily Batchelder, NYU Law School, “$750 Billion Misspent? Getting More from Tax Incentives” (with Austin Nichols and Eric Toder).
2. January 21 – Kimberley Brooks, McGill Law School, “Tax Sparing: A Needed Incentive for Foreign Investment in Low Income Countries, or an Unnecessary Revenue Sacrifice?”
3. January 28 – Michael Knoll, Penn Law School, and Ruth Mason, University of Connecticut Law School, “What Is Tax Discrimination?”
4. February 4 – Michael Devereux, Said Business School, Oxford University, “Taxation of Outbound Direct Investment: Economic Principles and Tax Policy Considerations.”
5. February 11 – David Walker, Boston University Law School/NYU Law School, “Tax Penalties and the Legislative Process.”
6. February 18 – Jeffrey Brown, University of Illinois Business School, “Automatic Lifetime Income as a Path to Retirement Income Security.”
7. February 25 – Matthew Adler, Penn Law School., “Social Welfare Functions and Policy Analysis.”
8. March 4 – Rebecca Kysar, Brooklyn Law School, “Lasting Legislation.”
9. March 11 – David Weisbach, University of Chicago Law School, “Trade and Carbon Taxes.”
10. March 25 – Robert Peroni, University of Texas School of Law, “Can Tax Expenditure Analysis Be Divorced From a Normative Tax Base?: A Critique of the ‘New Paradigm.’”
11. April 1 – Douglas Shackelford, Kenan-Flagler Business School, University of North Carolina, “Capital Gains Taxes and the Return-Risk Tradeoff.”
12. April 8 – Joel Slemrod, University of Michigan Economics Department and Business School, “Car Notches.”
13. April 15 – Michael Schler, Cravath, Swaine, and Moore. [Title to be supplied.]
14. April 22 – James R. Hines, University of Michigan Business School and Law School, and Edward McCaffery, USC Law School, “The Last Best Hope for Progressivity in Tax.”

They don't make bad decades like they used to (I hope)

Michael Lind, in a recent Salon column, says:

"In a few weeks, the second decade of the 21st century will be upon us. (Note to purists who insist that it will begin on Jan. 1, 2011: Get a life.) The first decade of this century is likely to be remembered as the Decade From Hell. It began with a stock market crash and the 9/11 attacks. It ended with the greatest global economic crisis since the Great Depression and deepening U.S. military involvement in Afghanistan and Pakistan. A decade's worth of stock market gains were swiftly erased and for 10 years there has been no new net job creation outside the areas of healthcare, education and government.

"The oughts can't end a moment too soon."

Fair enough. But I'm currently reading a book about the 1930s, Piers Brendon's The Dark Valley. Now THERE was an unrelievedly horrific decade, which makes the oughts seem relatively mild.

Perhaps the Wall Street Journal's news operation isn't defunct after all

I'm naturally suspicious of the Rupert Murdoch-era Wall Street Journal. Under the prior ownership, the editorial pages were shockingly slanted and dishonest during the GW Bush years. And they had gotten worse. At one time, while the WSJ editorials were predictably on the political right, they were less flagrantly propagandistic, and the op-eds had more of a range of views (e.g., Albert Hunt). Throughout the pre-Murdoch era, however, the news operation seemed pretty straight-up, including when compared with, say, the NY Times or Washington Post.

Under Murdoch, while the editorial pages don't seem to have gotten worse (and perhaps even are a hair better), one would expect the news operation gradually to lose its independence and some of its integrity, just from what one hears has happened in Murdoch vehicles elsewhere. Hence I noted with interest the recent WSJ news stories calling the federal estate tax the "death tax."

Whatever one thinks of the estate tax, calling it the "death tax" is pure Orwellian propaganda. The estate tax is its official name, and this is not a bogus label like the names Congress always gives major tax legislation (e.g., the Create Jobs, Fiscal Responsibility, Freedom for Americans, and Give Everyone a Free Toaster Tax Act of 20__). It predates the political wars, and is accurately descriptive. People are not taxed just for dying - their estates are taxed if they die with sufficiently large estates. So there's an honest and accurate name with a historical pedigree, and a dishonest, inaccurate, tendentious name created, presumably after Republican strategists had done some research with focus groups, in the 1990s.

BTW, I happen to support retention of the estate tax. But this would be a close call if it could be traded in on a revenue-neutral and distributionally neutral basis. The key consideration for me is empirical evidence that people don't plan for it by reducing work and saving quite as much as they "should" in a rational actor model with altruistic bequests. Even if I opposed it, however, as I might in a different political setting and if our understanding of the empirics changed sufficiently, I'd still take the same view of the labeling game.

Anyway, against this background I was glad to hear that the WSJ, in response to reader complaints, apparently is dropping the use of the term "death tax" in its news stories.

I still think the Murdoch operation has made the news pages less quirky and interesting, though I understand this as mainly a marketing decision to make them more like the news pages in a conventional daily newspaper. But that is a lesser complaint.

Best plan for reducing the fiscal gap that I've yet seen

From Jeffrey Frankel. Too bad it's entirely politically unfeasible (showing once again that what makes the prospect of default so scary is that the core underlying problem is political, not economic).

The logical final step in 99-cent pricing

Street corner fruit stalls in NYC list the price for a container of blackberries as $1.99. But they don't actually offer you the penny of change (to my relief given the transaction cost of putting it away). Someone should run an empirical study on their sales under this approach versus stating a $2 price.

Important experiment

I've always been fond of the monkeys-in-the-British-Museum meme (e.g., think of how many times they come within a final letter of completing King Lear, or indeed, albeit much more rarely, vastly improve it). But now comes this bracing dose of empiricism.