Archive for the ‘Political Economy’ Category

estate taxes and inequality

Monday, November 18th, 2019

Brookings Senior Fellow Henry J. Aaron (born 1936) last month published an op-ed in the New York Times that is now freely available online at Brookings:

If you play by the rules, working to earn a living and saving to provide for the future, taxes take a piece of your earnings. If you win a state lottery, you owe tax. But if you get lucky in the lottery of life and land an inheritance, you owe no federal tax. That isn

the 3.5% rule

Thursday, May 30th, 2019

In a 2013 TED talk, Harvard political scientist Erica Chenoweth (born 1980) focused on what she calls a “3.5% rule”

collaboration is important

Saturday, May 4th, 2019

Sixty years ago the British scientist and novelist C.P. Snow (1905-1980) delivered his famous lecture The Two Cultures and the Scientific Revolution, published later the same year in book form. FT columnist Tim Harford celebrates the occasion this week in a column that reminds me that IIASA, the Austrian research institute with which I have been associated since my retirement from the UN in 2004, provides a meeting place for mathematicians, statisticians, social scientists -from sociologists to economists- and natural scientists -from biologists to physicists- to work together. This is an important public service, as Snow’s lecture and Harford’s column clearly show. (more…)

Adam Smith and basic needs

Tuesday, April 30th, 2019

Mark Twain is reputed to have said “A classic is something everybody wants to have read, but no one wants to read.” This is certainly true for the writings of dead economists. I recently saw an example in criticism of Adam Smith, the author of Wealth of Nations, first published in 1776. The economist, whom I will not cite, correctly wrote that the now-dead Adam Smith broke with the tradition of his day by explaining that it is consumption, not production or saving, that satisfies the wants of men and women.

But the contemporary economist went on to criticize Smith for not distinguishing between needs and wants, known also as necessities and luxuries. This distinction between types of consumption, he asserted, was done more than a century later, with the 1890 publication of Cambridge University economist Alfred Marshall’s Principles of Economics. This assertion is wrong. Alfred Marshall founded neo-classical economics, so is justly famous, but he was not the first to distinguish between necessary and luxury consumption. In the Wealth of Nations, Smith devotes considerable attention to this in a section titled “Consumable commodities are either necessaries or luxuries”: (more…)

Nick Rowe, exemplary professor of economics

Tuesday, December 25th, 2018

Carleton University professor Nick Rowe received a well-deserved tribute, on his retirement from teaching, in The Economist magazine. I was fortunate to have known him as a colleague, but regret that I never had the opportunity to enroll in one of his macroeconomics courses. Sadly for me, he completed his PhD in 1985, long after I did. Current and future generations of economists will also miss the opportunity of learning from him. But all of us can continue to benefit from reading his many posts online at Worthwhile Canadian Initiative (WCI).

Professors may find themselves ill-prepared for the macro classroom. To become academics they had to answer erudite questions posed by more senior members of the discipline. To become good teachers of introductory macro, they have to give clear answers to muddled students. That requires an intuitive feel for the subject. It is not enough to crank through the equations.

Indeed, Mr Rowe attributes part of his success as a teacher to his shortcomings as a mathematician. He quotes Joan Robinson, another clear expositor of macroeconomics:

universal vs targeted transfers

Sunday, November 11th, 2018

Two Boston economists, Rema Hanna from Harvard and Benjamin A. Olken from MIT, have drafted a paper on basic incomes for the Journal of Economic Perspectives, a publication of the American Economic Association. They argue that, though a universal basic income (UBI) might be appropriate for wealthy countries, it is not appropriate for developing countries.

The paper is well-written, but fails to support their thesis. In fact, drawing on a phrase from William Shakespeare’s play Hamlet, they “hoist themselves with their own petard”.

targeting the poor does not work

Tuesday, September 4th, 2018

Targeting the poor provides opportunity for corruption in delivery of benefits, even when the beneficiaries are older persons. Here is an example from Nueva Ecija, a province in the Central Luzon region of the Philippines. (more…)

the rise of American authoritarianism

Wednesday, July 25th, 2018

More than two years ago Amanda Taub, a journalist and former human rights lawyer, published an amazing article that I somehow missed. Drawing on the work of several political scientists, Ms Taub explains why Donald Trump was elected, and why we can expect US voters to elect authoritarian figures similar him in the future. In other words, Trump is not a passing phenomenon. (more…)

immigration policies of Republican presidents

Monday, June 25th, 2018

FT columnist Edward Luce, in an op-ed last week, highlighted the rise of anti-Americanism in the world. “US pollsters”, he wrote, “routinely find that more of the world trusts China to uphold global stability than America”. What caught my attention, though, was Luce’s point that Trump’s treatment of immigrants is so different from that of his Republican predecessors:

Both Reagan and Bush junior were keen to create new citizens. Reagan gave amnesty to 3m [3 million] illegal immigrants. Mr Bush said if Mexicans could make it across the border,

Adam Smith for our troubled times

Saturday, June 23rd, 2018

An old joke is that a classical book is one that everyone cites, but no-one reads. By this measure, each of the two books that Adam Smith wrote are classics. If his followers today took time to read then, they would disagree with much of what he wrote. (more…)