[Al_U_Card]

y66, on 2019-February-19, 20:28, said:

From Martin Wolf at FT:

Meteorite impact - end of humankind
Solar Carrington event - end of civilisation
500 ppm CO2 and 1.5C global warming - mostly beneficial

More what you say?

[y66]

From On Paying for a Progressive Agenda by Paul Krugman at NYT:

Quote

Whoever gets the Democratic nomination, she or he will run in part on proposals to increase government spending. And you know what that will mean: There will be demands that the candidate explain how all this will be paid for. Many of those demands will be made in bad faith, from people who never ask the same questions about tax cuts. But there are some real questions about the fiscal side of a progressive agenda.

Well, I have some thoughts about that, inspired in part by looking at Elizabeth Warren’s proposals on both the tax and spending side. By the way, I don’t know whether Warren will or even should get the nomination. But she’s a major intellectual figure, and is pushing her party toward serious policy discussion in a way that will have huge influence whatever her personal trajectory.

In particular, Warren’s latest proposal on child care – and the instant pushback from the usual suspects – has me thinking that we could use a rough typology of spending proposals, classified by how they might be paid for. Specifically, let me suggest that there are three broad categories of progressive expenditure: investment, benefits enhancement, and major system overhaul, which need to be thought about differently from a fiscal point of view.

So, first off, investment – typically spending on infrastructure or research, but there may be some room at the margin for including spending on things like childhood development in the same category. The defining characteristic here is that it’s spending that will enhance society’s future productivity. How should we pay for that kind of outlay?

The answer is, we shouldn’t. Think of all the people who say that the government should be run like a business. Actually it shouldn’t, but the two kinds of institution do have this in common: if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow. And Federal borrowing costs are very low – less than 1 percent, adjusted for inflation – while we are desperately in need of public investment, i.e., it has a high social return. So we should just do it, without looking for pay-fors.

Much of what seems to be in the Green New Deal falls into that category. To the extent that it’s a public investment program, demands that its supporters show how they’ll pay for it show more about the critics’ bad economics than about the GND’s logic.

My second category is a bit harder to define, but what I’m thinking of are initiatives that either expand an existing public program or use subsidies to create incentives for expanding some kind of socially desirable private activity – in each case involving sums that are significant but not huge, say a fraction of a percent of GDP.

The Affordable Care Act falls into that category. It expanded Medicaid while using a combination of regulation and subsidies to make private insurance more available to families above the new Medicaid line. Warren’s childcare proposal, which reportedly will come in at around 1/3 of a percent of GDP, also fits. So would a “Medicare for All” proposal that involves allowing people to buy in to government insurance, rather than offering that insurance free of charge.

It’s harder to justify borrowing for this kind of initiative than borrowing for investment. True, with interest rates low and demand weak it makes some sense to run persistent deficits, but there are surely enough investment needs to use up that allowance. So you want some kind of pay-for. But the sums are small enough that the revenue involved could be raised by fairly narrow-gauge taxes – in particular, taxes that hit only high-income Americans.

That is, in fact, how Obamacare was financed: the revenue component came almost entirely from taxes on high incomes (there were some small items like the tax on tanning parlors.) And Warren has in fact proposed additional taxes on the wealthy – her proposed tax on fortunes over $50 million would yield something like four times the cost of her child care proposal.

So benefit enhancement can, I’d argue, be paid for with taxes on high incomes and large fortunes. It doesn’t have to impose on the middle class.

Finally, my third category is major system overhaul, of which the archetype would be replacing employer-based private health insurance with a tax-financed public program – the purist version of Medicare for all. A really major expansion of Social Security might fall into that category too, although smaller enhancements might not.

Proposals in this category are literally an order of magnitude more expensive than benefit enhancements: private health insurance currently amounts to 6 percent of GDP. To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class.

You can argue that most middle-class families would be better off in the end, that the extra benefits would more than compensate for the higher taxes. And you’d probably be right. But this would be a much heavier political lift. You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to.

My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance. Investment can and should be debt-financed; benefit enhancements can be largely paid for with high-end taxes. Howard Schultz won’t like it, but that’s his problem.

[hrothgar]

Al_U_Card, on 2019-February-19, 21:48, said:

Meteorite impact - end of humankind
Solar Carrington event - end of civilisation
500 ppm CO2 and 1.5C global warming - mostly beneficial

Two non-sequiturs and a lie...

Par for the course.

[kenberg]

y66, on 2019-February-20, 07:11, said:

From On Paying for a Progressive Agenda by Paul Krugman at NYT:

"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
Well put. His main point is that people who disagree with him are stupid. That has always been Krugman's main point.

[barmar]

kenberg, on 2019-February-20, 08:03, said:

"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
Well put. His main point is that people who disagree with him are stupid. That has always been Krugman's main point.

Economics is complicated. Even trained economists have a hard time with it, and there are many disagreements among them.

Telling someone that they're unqualified to make judgements on complex fiscal policies is no more of an insult than telling them that they don't know enough math and physics to be a rocket scientist. Ignorant is not the same as stupid, although making judgements and decisions about things you're ignorant of could be (I qualified this because sometimes you have to make a decision with minimal information, and you just have to go with your gut).

The difference, though, is that many people think they understand economics enough to comment on it, perhaps because they manage their personal finances, or because it impacts them directly. Kind of like the way many Brits thought their opinion on Brexit was meaningful, even though they knew little about all the complexities (I expect that most based their vote on one or two aspects of EU membership).

[andrei]

Quote

If we were willing to give away $3 billion for this deal, we could invest those $3 billion in our district ourselves, if we wanted to.
We could hire out more teachers.
We can fix our subways.
We can put a lot of people to work for that money, if we wanted to.

Green New Deal is in good hands.

[Winstonm]

kenberg, on 2019-February-20, 08:03, said:

"My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance."
Well put. His main point is that people who disagree with him are stupid. That has always been Krugman's main point.

Hey, Ken,

I really don't get your apparent antipathy toward Krugman (But maybe that is me). From my reading of the article, Krugman explains his reasoning or argument for each of three types of government spending - and he explains it quite simply. The only people I noticed Krugman being condescending toward were those who substitute political bias or rhetoric for a reasoned argument.

Perhaps you disagree with his logic. If you do, I'm sure you have reasoning other than "capitalism good, socialism bad!", and that, to me, is the point he made.

[y66]

It's funny what keeps us from thinking about stuff with an open mind and a cold eye, whether it's Sanders' arm waving, Warren's DNA testing or Krugman's snarky bedside manner. If someone knows of a more rational way to think about financing universal childcare and other stuff for which a strong productivity argument can be made than Krugman's -- if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow -- I'd love to hear it.

[kenberg]

Krugman's short article is neither substantial nor convincing. And if he wants to say tings such as " To the extent that it’s a public investment program, demands that its supporters show how they’ll pay for it show more about the critics’ bad economics than about the GND’s logic." it is to be expected that there will be some response in the same spirit. If he has any wish to encourage open discussion, he needs to re-think his approach.
My training in econ consists of Econ 1 and 2 out of Paul Samuelson's book in the 1950s. I am more than prepared to accept that I lack expertise. In fact I insist that I lack expertise. Maybe we could think of a four way classification. People might or might not have a high level of training in economics. People might or might not agree with Krugman. I claim that each of these four categories has some individuals in it. Krugman seems to acknowledge only two categories. If I were to agree with Krugman then he would happily place me in the group of intelligent well-informed people who agree with him , even if I got a C in Econ 2 which I think I did. (Not a difficult class, just boring) If a well-trained economist disagrees with Krugman, then he is placed in the ignorant biased disagree with Krugman category. In his article, he makes no mention of intelligent well-trained people who disagree with him I doubt he thinks that they exist.

I see myself as someone who is fully aware of his lack of depth in Econ, but who is willing to listen and think about it. I don't see Krugman as helping me with this.

[y66]

From Moody's Analytics:

Quote

The additional cost to the federal government of providing universal child care under Warren's proposal is estimated to be approximately $70 billion per annum on average, or $700 billion over a 10-year budget horizon on a dynamic basis (after accounting for the economic impacts of the proposal).

This is based on a number of assumptions, including that the proposal becomes law this year and becomes effective in calendar year 2020 (see Table 1). We also assume that it takes two years before there is full take-up on the program. It will take time for the centers and family child-care homes to become fully operational across the country and for families to work out what options are best
for them.

The budget cost estimates also depend on the assumption that almost two-thirds of families that use formal child care will use center care, which is more expensive than family child-care homes. We assume that the cost of center care by 2020 will be $14,500 per child, compared with almost $11,000 per child for family child-care homes. These costs also reflect the proposal’s mandate to pay child-care workers substantially more than they earn currently to ensure consistently higher quality of care.

To help defray some of the federal government’s costs, for low-income children the local administrator will cover 20% of the cost and the federal government the remaining 80%. For children in families with higher incomes, 50% of the cost of care will be covered by the local administrator through the collection of parental co-payments and other means, and the federal government will pick up the remaining half. Regardless of the arrangement between the federal government and the local administrator, no family will be required to spend more than 7% of their income on public child care.

The proposed universal child care and early learning services could be paid for by revenues generated by Warren’s proposed 2% tax on
household net worth above $50 million and 3% tax on net worth above $1 billion. That is, $700 billion out of the total 10-year revenues generated by the proposed net worth tax could be used to pay for the child-care proposal.

The Universal Child Care and Early Learning Act is thus deficit neutral over the 10-year budget horizon on a dynamic basis.

This does not look silly or unaffordable to me either.

[Winstonm]

kenberg, on 2019-February-20, 13:23, said:

Krugman's short article is neither substantial nor convincing. And if he wants to say tings such as " To the extent that it’s a public investment program, demands that its supporters show how they’ll pay for it show more about the critics’ bad economics than about the GND’s logic." it is to be expected that there will be some response in the same spirit. If he has any wish to encourage open discussion, he needs to re-think his approach.
My training in econ consists of Econ 1 and 2 out of Paul Samuelson's book in the 1950s. I am more than prepared to accept that I lack expertise. In fact I insist that I lack expertise. Maybe we could think of a four way classification. People might or might not have a high level of training in economics. People might or might not agree with Krugman. I claim that each of these four categories has some individuals in it. Krugman seems to acknowledge only two categories. If I were to agree with Krugman then he would happily place me in the group of intelligent well-informed people who agree with him , even if I got a C in Econ 2 which I think I did. (Not a difficult class, just boring) If a well-trained economist disagrees with Krugman, then he is placed in the ignorant biased disagree with Krugman category. In his article, he makes no mention of intelligent well-trained people who disagree with him I doubt he thinks that they exist.

I see myself as someone who is fully aware of his lack of depth in Econ, but who is willing to listen and think about it. I don't see Krugman as helping me with this.

Thanks for clarifying. I read him as saying counter-arguments stem from a false premise based on political bias. I agree that in a short article leaves little room for more in-depth analysis. I read into your position that one problem you have is that Krugman does not address the question of should we do these things?

[kenberg]

y66, on 2019-February-20, 16:22, said:

From Moody's Analytics:


This does not look silly or unaffordable to me either.

I would separate them Let us suppose the figures are correct. Then there are two questions. Should we impose the suggest tax to raise 700B over ten years, and should we spend 700B over ten years for the suggested child care program? Perhaps we should do both. I do not see it as clear cut that if the answer to the first question is yes that it also follows that the answer to the second question is yes.
I favor children having good care, who doesn't. I amhappy to listen to arguments about the merits of a specific proposal. I am also happy to here arguments about why we should reduce the national debt, and arguments about why it is important to do so. Or arguments about why it is not important to do so.

Any plan to raise 70B per year, and any plan to spend 70B per year, is a significant plan. The fact that the two amounts are the same does not, in itself lead me to conclude that the money should be raised in that way or spent in that way.

Perhaps this is what should be done but I don't think that being cautions makes me, or anyone, a biased ignoramus. I don't think it is obviously a good thing to do, or obviously a bad thing to do.

And of the various things Krugnan refers to, this is the one which I most immediately take an emotional leaning toward. Again I am cautious. Maybe it's right. Maybe.

[Winstonm]

kenberg, on 2019-February-20, 17:12, said:

I would separate them Let us suppose the figures are correct. Then there are two questions. Should we impose the suggest tax to raise 700B over ten years, and should we spend 700B over ten years for the suggested child care program? Perhaps we should do both. I do not see it as clear cut that if the answer to the first question is yes that it also follows that the answer to the second question is yes.
I favor children having good care, who doesn't. I amhappy to listen to arguments about the merits of a specific proposal. I am also happy to here arguments about why we should reduce the national debt, and arguments about why it is important to do so. Or arguments about why it is not important to do so.

Any plan to raise 70B per year, and any plan to spend 70B per year, is a significant plan. The fact that the two amounts are the same does not, in itself lead me to conclude that the money should be raised in that way or spent in that way.

Perhaps this is what should be done but I don't think that being cautions makes me, or anyone, a biased ignoramus. I don't think it is obviously a good thing to do, or obviously a bad thing to do.

And of the various things Krugnan refers to, this is the one which I most immediately take an emotional leaning toward. Again I am cautious. Maybe it's right. Maybe.

Krugman classified this $70 billion per year as investment. The return ROI he suggested was increased productivity by freeing more people to work. Are you concerned that the revenues from increased productivity will not offset the investment cost?

[kenberg]

Winstonm, on 2019-February-20, 18:18, said:

Krugman classified this $70 billion per year as investment. The return ROI he suggested was increased productivity by freeing more people to work. Are you concerned that the revenues from increased productivity will not offset the investment cost?

I am simply suggesting that we look carefully.

Here are some things to look at.

A program such as this could be sold as good for the kids. Perhaps it is. But the program could also be sold as a sound economic investment. It is my guess that "good for the kids" is a more appealing argument then "sound financial investment". But if Krugman wants to argue "sound financial investment" then we can go that way and see whether the evidence justifies this.

When I said that this is the part of the article I found most emotionally appealing I was in fact thinking of "good for the kids". And so I was thinking that would be the part we looked at.

Of course perhaps it is both a good investment and good for the kids. Also, perhaps it is neither.

My original response to the Krugman post was only a line or two, and it concerned what I see as a very recurring feature of Krugman's writing, his total dismissiveness of any views other than his own.

Of course he is under no obligation to present views he disagrees with. He can present his views and let others present theirs. But he simply seems unable to present his views without mixing in several comments about how stupid or ignorant or biased or whatever the people are who have the gall to not simply accept that he is right in whatever he says.

[y66]

kenberg, on 2019-February-20, 19:26, said:

I am simply suggesting that we look carefully.

Here are some things to look at.

A program such as this could be sold as good for the kids. Perhaps it is. But the program could also be sold as a sound economic investment. It is my guess that "good for the kids" is a more appealing argument then "sound financial investment". But if Krugman wants to argue "sound financial investment" then we can go that way and see whether the evidence justifies this.

When I said that this is the part of the article I found most emotionally appealing I was in fact thinking of "good for the kids". And so I was thinking that would be the part we looked at.

Of course perhaps it is both a good investment and good for the kids. Also, perhaps it is neither.

My original response to the Krugman post was only a line or two, and it concerned what I see as a very recurring feature of Krugman's writing, his total dismissiveness of any views other than his own.

Of course he is under no obligation to present views he disagrees with. He can present his views and let others present theirs. But he simply seems unable to present his views without mixing in several comments about how stupid or ignorant or biased or whatever the people are who have the gall to not simply accept that he is right in whatever he says.

Krugman is dismissive of views like the one Tucker Carlson expressed on Fox News today, namely, that government sponsored daycare is a nefarious Democratic plot to increase immigration. I suspect Krugman is working on clarifying some of the ideas he put out there in today's op-ed and that more details will be forthcoming. I also suspect he would not disagree with your advice that we look at this stuff carefully.

[y66]

From Jordan Weissmann at Slate:

Quote

Predicting the impact of Warren’s bill of course takes a bit of guesswork. While the balance of international and domestic evidence suggests that subsidizing child care does lead more women to work, careful empirical studies have shown some mixed results about the effects. But Moody’s Analytics is about as mainstream of an economic forecasting crew as you’ll find, and its worth considering their results. Chief Economist Mark Zandi told me that just by lifting labor force participation, mostly among women, its model predicts that Warren’s bill would add 0.08 percentage points to economic growth per year, over a decade. “It’s meaningful,” Zandi told me. To put that figure in a bit of perspective, he said Moody’s anticipated that cutting the corporate tax rate from 35 percent to 21 percent, as Republicans did in 2017, would have raised growth by 0.04 percent per year, if Congress had bothered to pay for the plan (their model assumes that the law’s increased deficits will eventually negate some of the growth impact).

[Winstonm]

kenberg, on 2019-February-20, 19:26, said:

I am simply suggesting that we look carefully.

Here are some things to look at.

A program such as this could be sold as good for the kids. Perhaps it is. But the program could also be sold as a sound economic investment. It is my guess that "good for the kids" is a more appealing argument then "sound financial investment". But if Krugman wants to argue "sound financial investment" then we can go that way and see whether the evidence justifies this.

When I said that this is the part of the article I found most emotionally appealing I was in fact thinking of "good for the kids". And so I was thinking that would be the part we looked at.

Of course perhaps it is both a good investment and good for the kids. Also, perhaps it is neither.

My original response to the Krugman post was only a line or two, and it concerned what I see as a very recurring feature of Krugman's writing, his total dismissiveness of any views other than his own.

Of course he is under no obligation to present views he disagrees with. He can present his views and let others present theirs. But he simply seems unable to present his views without mixing in several comments about how stupid or ignorant or biased or whatever the people are who have the gall to not simply accept that he is right in whatever he says.

So, I'm taking it that you're not voting for him.

[cherdano]

Ken, I think you miss the point that one can be highly knowledgeable in economics, and still be biased. I tend to believe that accusing a human being of motivated reasoning is about as likely to be right as accusing them of breathing air. And the economics profession makes no exception. It is a remarkable coincidence how many elaborate studies in economics tend to reinforce the authors prior political opinions, whether they are left-leaning or right-leaning.

Moreover, Krugman didn't attack those who disagree with him. He attacked those who ridicule "ambitious" progressive proposals. Take Howard Schultz as an example, who I suppose, unlike Ken Berg, was one of Krugman's targets. I am happy to have been able to avoid most of the coverage about his presidential run. But I suppose it is based on the premise that such a successful businessman must understand a lot about economics. He claimed that universal healthcare in the US is impossible to pay for. So either there is some universal law of economics that says such a thing is possible in every industrialized nation, but not in the USA. Or he is showing some ignorance and/or bias. Which do you think it is?

[kenberg]

cherdano, on 2019-February-20, 23:31, said:

Ken, I think you miss the point that one can be highly knowledgeable in economics, and still be biased. I tend to believe that accusing a human being of motivated reasoning is about as likely to be right as accusing them of breathing air. And the economics profession makes no exception. It is a remarkable coincidence how many elaborate studies in economics tend to reinforce the authors prior political opinions, whether they are left-leaning or right-leaning.

Moreover, Krugman didn't attack those who disagree with him. He attacked those who ridicule "ambitious" progressive proposals. Take Howard Schultz as an example, who I suppose, unlike Ken Berg, was one of Krugman's targets. I am happy to have been able to avoid most of the coverage about his presidential run. But I suppose it is based on the premise that such a successful businessman must understand a lot about economics. He claimed that universal healthcare in the US is impossible to pay for. So either there is some universal law of economics that says such a thing is possible in every industrialized nation, but not in the USA. Or he is showing some ignorance and/or bias. Which do you think it is?

Taking a coule of sentences:

" I tend to believe that accusing a human being of motivated reasoning is about as likely to be right as accusing them of breathing air."
I absolutely fully agree. I include myself in this. I'll let others, you, or Krubman, or Winston, whomever, decide for themselves whether it includes them. But it would be highly unrelistic to think of myslef as completely dispassionate in my reasoning. I am not all that sure I would want to be, but some self-awareness of where one's ideas are rooted is desirable.
"Moreover, Krugman didn't attack those who disagree with him. He attacked those who ridicule "ambitious" progressive proposals."Yes, this occurred to me as I was writing. I expected this to be pointed out early on. But I think it is not really a defense. In any public argument there will always be sme people whose rhetoric gets out of hand. Krugman could have made that point, saying that people of all stripes often go off the deep end in expressing their views. Bu no, he didn't. He expressed his views and sarcastically referred to other views. It's not really credible to say that "Of course he respects the views of intelligent informed people who disagree with him he was referring only to those who present their views badly" is not really convincing. Take "Much of what seems to be in the Green New Deal falls into that category. To the extent that it’s a public investment program, demands that its supporters show how they’ll pay for it show more about the critics’ bad economics than about the GND’s logic." To me, this is saying "People who do not see things my way are stupid". I really do not see another way to read it.

My view of Krugman's style is long standing and I very much doubt I will be changing my mind. He is one of those people that I describe as "He had better be really smart because he is not going to be making it on personal charm". My guess is that he would happily accept that description since he believes, with some justification, that he is really smart.

Putting aside tact in the interest of being straightforward is a quality I often praise. We need the truth, we need to deal with it. Krugman puts aside tact with no purpose other than to be insulting. That's less praiseworthy. And a good deal less productive.

[hrothgar]

kenberg, on 2019-February-21, 07:34, said:

My view of Krugman's style is long standing and I very much doubt I will be changing my mind. He is one of those people that I describe as "He had better be really smart because he is not going to be making it on personal charm". My guess is that he would happily accept that description since he believes, with some justification, that he is really smart.

Putting aside tact in the interest of being straightforward is a quality I often praise. We need the truth, we need to deal with it. Krugman puts aside tact with no purpose other than to be insulting. That's less praiseworthy. And a good deal less productive.

FWIW, the following article by Krugman might help understand his writing style. For better or worse, Krugman believes that there is a class of "professional conservative economists" who don't deal in good faith and that it is pointless to show them much in the way of respect. They are, for all intents and purposes, better paid version of forum trolls like Al_U_Card, Lukewarm, Chas, Drews, and the like. There's no point in trying to convince any of them to change their minds, rather, the goal is to marginalize them.

https://www.nytimes....-bad-faith.html