Essential Economics for Politicians
- Thread starter Bruddah IZ
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Bruddah IZ
DA
Good news for California Uber and Lyft drivers. They get to remian independent contractors (1099 workers). Both stocks up 10% yesterday
Bruddah IZ
DA
Californian’s said NO on Prop 15; taxing properties based on current market value rather than purchase price and increasing property taxes on commercial properties for funding local government...
What government needs a capital gains tax when they can tax you on unrealized gains. Damn crooks!
And commercial properties are getting killed during this pandemic. California wants to kick those companies and their employees in the gut by raising their taxes too!
I am shaking my head as to why 5 million plus Californian’s voted for such tyrannical measures during a pandemic.
Grateful though that 40k plus more Californian’s were able to figure it all out and $quash prop 15.
What government needs a capital gains tax when they can tax you on unrealized gains. Damn crooks!
And commercial properties are getting killed during this pandemic. California wants to kick those companies and their employees in the gut by raising their taxes too!
I am shaking my head as to why 5 million plus Californian’s voted for such tyrannical measures during a pandemic.
Grateful though that 40k plus more Californian’s were able to figure it all out and $quash prop 15.
What did Prop 15 have to do with capital gains tax?
Coo Coo
Bruddah IZ
DA
Who said it did? Read-spola.
Bruddah IZ
DA
The possibility of investment also renders relevant the increased satisfactions that the rich person’s investment today makes possible for other people to experience in the future. If Bezos’s investment is successful in the market, this investment creates more goods and services for many consumers. The additional satisfactions that these consumers enjoy from these goods and services would not exist without Bezos’s investment. Therefore, when comparing the amount of satisfaction that a poor person would experience today from spending a dollar taxed away from a rich person, the comparison must be not only to the consumption satisfaction that the rich person would eventually experience from using this dollar, but also to the consumption satisfaction that many other consumers would eventually experience from the rich person’s successful investment of this dollar.
Because rich(er) people generally invest a larger portion of their incomes than do poor(er) people, as a practical matter the ‘economic’ (or utilitarian) case for progressive income taxation and for income redistribution – a case built on comparing the “marginal utility” of income or wealth enjoyed by poor(er) people to that enjoyed by rich(er) people is not as straightforward as many professors, pundits, and politicians suppose. As is so often true in economics, being attuned to more than what is immediately obvious yields insights very different from those that arise from looking only at what is immediately obvious.-- by DON BOUDREAUX
Because rich(er) people generally invest a larger portion of their incomes than do poor(er) people, as a practical matter the ‘economic’ (or utilitarian) case for progressive income taxation and for income redistribution – a case built on comparing the “marginal utility” of income or wealth enjoyed by poor(er) people to that enjoyed by rich(er) people is not as straightforward as many professors, pundits, and politicians suppose. As is so often true in economics, being attuned to more than what is immediately obvious yields insights very different from those that arise from looking only at what is immediately obvious.-- by DON BOUDREAUX
Bruddah IZ
DA
Lockdown Harms and the Silence of Economists
The lockdowns of Spring of 2020 were likely responsible for much more of the decline in economic activity than the consensus among economists admits.
That lockdown would, in principle, impose overwhelming costs on the population at large is not surprising. The scope of human activity touched by lockdown is overwhelming. Lockdowns closed schools and playgrounds, shuttered businesses, and barred international travel. Lockdowns told children they could not visit their friends, put masks on toddlers, and dismissed university students from campus. They forced elderly people to die alone and prevented families from gathering to honour their elders’ passing. Lockdowns cancelled screening and even treatment for cancer patients and made sure that diabetics skipped their check-ups and regular exercise. For the world’s poor, lockdown ended the ability of many to feed their families.
Economists, who study and write about these phenomena for a living, had a special responsibility to raise the alarm. And though some did speak, most either stayed silent or actively promoted lockdown. Economists had one job—notice costs. On COVID, the profession failed.
There are personal reasons for this docility that are easy to understand. First, when public health officials first imposed lockdowns, the intellectual zeitgeist was actively hostile to any suggestion that there might be costs to pay. The lazy formulation that lockdowns pitted lives versus dollars took hold of the public mind. This provided lockdown proponents with an easy way to dismiss economists whose inclination was to point out costs. Given the catastrophic toll in human life that epidemiological modellers projected, any mention whatsoever about pecuniary harm from lockdown was morally crass. The moral zeal with which lockdown proponents pushed this idea undoubtedly played an important role in side-lining economists. No one wants to be cast as a heartless Scrooge, and economists have a particular aversion to the part. The charge was unfair given the costs in lives that the lockdowns have imposed, but no matter.
The lockdowns of Spring of 2020 were likely responsible for much more of the decline in economic activity than the consensus among economists admits.
That lockdown would, in principle, impose overwhelming costs on the population at large is not surprising. The scope of human activity touched by lockdown is overwhelming. Lockdowns closed schools and playgrounds, shuttered businesses, and barred international travel. Lockdowns told children they could not visit their friends, put masks on toddlers, and dismissed university students from campus. They forced elderly people to die alone and prevented families from gathering to honour their elders’ passing. Lockdowns cancelled screening and even treatment for cancer patients and made sure that diabetics skipped their check-ups and regular exercise. For the world’s poor, lockdown ended the ability of many to feed their families.
Economists, who study and write about these phenomena for a living, had a special responsibility to raise the alarm. And though some did speak, most either stayed silent or actively promoted lockdown. Economists had one job—notice costs. On COVID, the profession failed.
There are personal reasons for this docility that are easy to understand. First, when public health officials first imposed lockdowns, the intellectual zeitgeist was actively hostile to any suggestion that there might be costs to pay. The lazy formulation that lockdowns pitted lives versus dollars took hold of the public mind. This provided lockdown proponents with an easy way to dismiss economists whose inclination was to point out costs. Given the catastrophic toll in human life that epidemiological modellers projected, any mention whatsoever about pecuniary harm from lockdown was morally crass. The moral zeal with which lockdown proponents pushed this idea undoubtedly played an important role in side-lining economists. No one wants to be cast as a heartless Scrooge, and economists have a particular aversion to the part. The charge was unfair given the costs in lives that the lockdowns have imposed, but no matter.
Bruddah IZ
DA
Our supposition of economists’ sense of duty to the world’s poorest was well justified. For decades economists have fiercely defended the global economic system on the grounds that it has helped lift more than a billion people out of extreme poverty and increase life expectancy everywhere. The global economy has some significant flaws—vast inequality and climate change are often noted. But the worldwide network of trade has an essential role in facilitating economic development that brings sustained improvements to the lives of the world’s poorest, economists have argued.
The expected rush to quantify the global collateral damage from rich countries’ lockdowns never materialized. With few exceptions, economists most decidedly did not lean into quantifying lockdown harms either in developing countries or rich countries.
You're not alone case clowns.
The expected rush to quantify the global collateral damage from rich countries’ lockdowns never materialized. With few exceptions, economists most decidedly did not lean into quantifying lockdown harms either in developing countries or rich countries.
You're not alone case clowns.
Bruddah IZ
DA
Precautionary Principle and Lockdown Love
Already in March 2020, economists considered lockdowns to be worthwhile. Their reasoning was a glorified version of the precautionary principle. Several research teams quantified how large the economic damage would have to be for lockdowns to be beneficial on net. Using epidemiologists’ guesses of how many lives lockdowns might save, these analyses calculated the dollar value of the life years saved by lockdowns.
In the early days of the epidemic, there was fundamental scientific uncertainty about the nature of the virus and the risk it posed. Faced with this uncertainty, many economists (joining other scientists less well trained in thinking about decision-making under uncertainty) adopted a peculiar form of the precautionary principle. The implicit counterfactual exercise in these analyses took at face value the output from compartment models with dubious assumptions about critical parameters, such as the infection fatality rate from the model and compliance with lockdown policy. Unsurprisingly, these early analyses concluded that lockdowns would be worthwhile, even if they were to cause extensive economic disruptions.
Applied to the COVID crisis, the precautionary principle says that when you have scientific uncertainty, it may make sense to assume the worst-case about the biological or physical phenomenon you want to prevent. This is what the early economic analyses of lockdowns did by taking at face value the early estimates produced by epidemiological models (such as the Imperial College Model) of alarming COVID deaths in the absence of lockdowns.
The idea was that since we do not know with certainty, for instance, about the infection fatality rate, immunity after infection, and the correlates of disease severity, it is prudent to assume the worst. Therefore, we must act as if two or three out of a hundred infected people will die; there is no immunity after infection; and everyone, no matter what age, is equally at risk of hospitalization and death after infection.
Every one of these extreme suppositions turned out wrong, but of course, we could not have known that with certainty at the time, although there was already some evidence to the contrary. Scientific uncertainties are notoriously hard to resolve in advance of the time-consuming scientific work to resolve them, so maybe it was prudent to assume the worst. Unfortunately, fixating on the worst-case scenario then spurred long-lasting unfounded fears among the public and economists.
This all sounds very reasonable, but there was a curious asymmetry in the application of the precautionary principle in these analyses. With the benefit of hindsight, it should be clear that this application of the precautionary principle to the uncertainties of March 2020 was shockingly incomplete. In particular, it was not reasonable to assume the best case about the harms from the interventions you want to impose while at the same time accepting the worst case about the disease.
There are harms from the lockdown policies that any responsible economist should have considered before deciding that lockdowns were a good idea even then. A consistent application of the precautionary principle would have considered the possibility of such collateral lockdown harms, assuming the worst as the principle dictates.
In the panic of March 2020, economists assumed the best about these collateral harms. They adopted the implicit position that the lockdowns would be costless and that there was no other choice but to enforce lockdowns, at first for two weeks and then for as long as it might take to eliminate community disease spread. Under these assumptions motivated perhaps by a curiously asymmetric application of the precautionary principle, economists stayed silent while governments adopted lockdown policies wholesale.
Already in March 2020, economists considered lockdowns to be worthwhile. Their reasoning was a glorified version of the precautionary principle. Several research teams quantified how large the economic damage would have to be for lockdowns to be beneficial on net. Using epidemiologists’ guesses of how many lives lockdowns might save, these analyses calculated the dollar value of the life years saved by lockdowns.
In the early days of the epidemic, there was fundamental scientific uncertainty about the nature of the virus and the risk it posed. Faced with this uncertainty, many economists (joining other scientists less well trained in thinking about decision-making under uncertainty) adopted a peculiar form of the precautionary principle. The implicit counterfactual exercise in these analyses took at face value the output from compartment models with dubious assumptions about critical parameters, such as the infection fatality rate from the model and compliance with lockdown policy. Unsurprisingly, these early analyses concluded that lockdowns would be worthwhile, even if they were to cause extensive economic disruptions.
Applied to the COVID crisis, the precautionary principle says that when you have scientific uncertainty, it may make sense to assume the worst-case about the biological or physical phenomenon you want to prevent. This is what the early economic analyses of lockdowns did by taking at face value the early estimates produced by epidemiological models (such as the Imperial College Model) of alarming COVID deaths in the absence of lockdowns.
The idea was that since we do not know with certainty, for instance, about the infection fatality rate, immunity after infection, and the correlates of disease severity, it is prudent to assume the worst. Therefore, we must act as if two or three out of a hundred infected people will die; there is no immunity after infection; and everyone, no matter what age, is equally at risk of hospitalization and death after infection.
Every one of these extreme suppositions turned out wrong, but of course, we could not have known that with certainty at the time, although there was already some evidence to the contrary. Scientific uncertainties are notoriously hard to resolve in advance of the time-consuming scientific work to resolve them, so maybe it was prudent to assume the worst. Unfortunately, fixating on the worst-case scenario then spurred long-lasting unfounded fears among the public and economists.
This all sounds very reasonable, but there was a curious asymmetry in the application of the precautionary principle in these analyses. With the benefit of hindsight, it should be clear that this application of the precautionary principle to the uncertainties of March 2020 was shockingly incomplete. In particular, it was not reasonable to assume the best case about the harms from the interventions you want to impose while at the same time accepting the worst case about the disease.
There are harms from the lockdown policies that any responsible economist should have considered before deciding that lockdowns were a good idea even then. A consistent application of the precautionary principle would have considered the possibility of such collateral lockdown harms, assuming the worst as the principle dictates.
In the panic of March 2020, economists assumed the best about these collateral harms. They adopted the implicit position that the lockdowns would be costless and that there was no other choice but to enforce lockdowns, at first for two weeks and then for as long as it might take to eliminate community disease spread. Under these assumptions motivated perhaps by a curiously asymmetric application of the precautionary principle, economists stayed silent while governments adopted lockdown policies wholesale.
Bruddah IZ
DA
The one you paid for? Lol! Always fun watching the smartest guy in the room tell us how smart he is without telling us how smart he is. Your technocratic bent is showing.
Bruddah IZ
DA
Was it the "case clown" that set the hook?
Essential Economics for Politicians
Money, without government setting interest rate, is like a bird withouFree market in the purest sense cannot exist without government enforcement.How does that bird feel about negative interest rates? Again, government does not enforce interest rates.
www.socalsoccer.com
Bruddah IZ
DA
In addition to the asymmetric treatment of scientific uncertainty about COVID epidemiology and lockdown harms, economists erred in two additional ways in applying the precautionary principle. First, when evidence arose contrary to the worst case, economists insisted on continuing to believe the worst case. One example of this rigidity is the negative reaction by many (including many economists) to studies that showed the infection fatality rate from COVID to be much lower than initially feared. Motivating much of this reaction was the thought that this new evidence might lead the public and policymakers to not believe the worst about the disease’s deadliness and thereby not comply with lockdown orders.[1] A second example is economists’ support (with some exceptions) in 2020 for continued school closures in the U.S. in the face of ample evidence from Europe that showed that schools could be opened safely.
Second, while the precautionary principle is useful for aiding decision-making (particularly, it can help avoid decision paralysis in the face of uncertainty), we must still consider alternate policies. Unfortunately, in the Spring of 2020, economists—in their rush to defend lockdowns—largely closed their eyes to any alternatives to lockdowns, such as age-targeted focused protection policies. These mistakes further solidified the economics profession’s ill-advised support for lockdowns.
Second, while the precautionary principle is useful for aiding decision-making (particularly, it can help avoid decision paralysis in the face of uncertainty), we must still consider alternate policies. Unfortunately, in the Spring of 2020, economists—in their rush to defend lockdowns—largely closed their eyes to any alternatives to lockdowns, such as age-targeted focused protection policies. These mistakes further solidified the economics profession’s ill-advised support for lockdowns.
Bruddah IZ
DA
Rational Panic?
A second strand of analysis by economists in Spring 2020 was perhaps even more influential in turning economists in favour of lockdowns. Economists observed that most of the decline in movement and economic activity occurred before governments imposed any formal lockdown orders. The conclusion? The decline in economic activity in Spring 2020 was driven not by lockdowns but by voluntary changes in behaviour. Fear of the virus induced people to engage in social distancing and other precautionary measures to protect themselves, economists reasoned.
Having concluded that lockdowns do not significantly impede economic activity, economists have seen little need to quantify any domestic or global collateral damage from lockdowns.
To governments, this consensus among economists provided considerable relief and arrived just in time. At around the same time in the Spring of 2020, it became evident that the depth of the economic contraction was much larger than first anticipated. It was essential to politicians to blame this economic damage on the virus itself rather than the lockdowns since they were responsible for the latter but not the former. And economists obliged.
https://collateralglobal.org/article/lockdown-harms-and-the-silence-of-economists/
A second strand of analysis by economists in Spring 2020 was perhaps even more influential in turning economists in favour of lockdowns. Economists observed that most of the decline in movement and economic activity occurred before governments imposed any formal lockdown orders. The conclusion? The decline in economic activity in Spring 2020 was driven not by lockdowns but by voluntary changes in behaviour. Fear of the virus induced people to engage in social distancing and other precautionary measures to protect themselves, economists reasoned.
Having concluded that lockdowns do not significantly impede economic activity, economists have seen little need to quantify any domestic or global collateral damage from lockdowns.
To governments, this consensus among economists provided considerable relief and arrived just in time. At around the same time in the Spring of 2020, it became evident that the depth of the economic contraction was much larger than first anticipated. It was essential to politicians to blame this economic damage on the virus itself rather than the lockdowns since they were responsible for the latter but not the former. And economists obliged.
https://collateralglobal.org/article/lockdown-harms-and-the-silence-of-economists/
Bruddah IZ
DA
Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020 Austan Goolsbee & Chad Syverson
The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries--symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.
The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries--symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.
Bruddah IZ
DA
Having concluded that lockdowns do not significantly impede economic activity, economists have seen little need to quantify any domestic or global collateral damage from lockdowns.
To governments, this consensus among economists provided considerable relief and arrived just in time. At around the same time in the Spring of 2020, it became evident that the depth of the economic contraction was much larger than first anticipated. It was essential to politicians to blame this economic damage on the virus itself rather than the lockdowns since they were responsible for the latter but not the former. And economists obliged.
To governments, this consensus among economists provided considerable relief and arrived just in time. At around the same time in the Spring of 2020, it became evident that the depth of the economic contraction was much larger than first anticipated. It was essential to politicians to blame this economic damage on the virus itself rather than the lockdowns since they were responsible for the latter but not the former. And economists obliged.
Bruddah IZ
DA
From "larger" link in the post above