I'm pleased that Krugman is taking the natural logarithm on some of his charts. A linear vertical scale can be misleading for people who are not economists, engineers or mathematicians. A log scale ensures that equal percentage changes look the same for all time periods. This also means that a constant annual percentage growth rate appears as a straight line with its slope proportional to the growth rate.
The main reason to not tax wealth or higher incomes to pay for infrastructure is simply that with a 50-50 split Senate throwing in big new taxes on wealth could delay or compromise the really important investments in clean energy and infrastructure. Tax increases could be considered later as a separate issue after the spending bill gets through Congress and is signed into law.
Recall the famous debt-to-GDP record: United Kingdom, 1815, 295%. (By one estimate, others are a bit different, say 260%). The true ratio was certainly high, but it's iffy on both sides. One, nobody had a halfway decent estimate of total British national product on any metric; the concepts hadn't been invented. Two, the Treasury had a nominal total for debt, but this did not mean much. It was mostly in Consols, perpetual bonds. What's more, they all had the same coupon, 3%. This had been picked by Pelham several wars back in 1757, and was usually lower than current interest rates. When governments needed to borrow yet more money to defeat the obstinate and expensive French, they just sold more 3% Consols at whatever discount the market imposed. So the nominal debt total was inflated, perhaps by 50%. Anyway, all that mattered was the interest payable, and this the Treasury and Bank knew exactly. Investors like Jane Austen's Mr. BIngley had an unmatchably liquid and safe long-term asset.
Meeting the basic needs of people eliminates the acts of desperation that result in avoidable costs and increases productivity, innovation and personal investment. The frictional costs of capitalism should be avoided when a universal need is met. Technology job loss can be remedied partially by new jobs from universal healthcare, education and other needs best met by interpersonal reliant jobs less likely to be replaced by technology. Sometimes doing the right thing for all people is also right economically.
To what extent is secular stagnation caused by income inequality rather than demographics? Perhaps we should pay for it (in part) through income, wealth, and inheritance taxes. I'd be interested in your thoughts.
“To what extent is secular stagnation caused by income inequality”?
NONE. Except to the extent that the income inequality narrative helps leftists get elected and implement policies inimical to economic growth.
In fact, secular stagnation usually leads to a reduction in income inequality. So by all means, if income inequality is to you the most important “evil” to be addressed, go ahead with leftist policies that tank the economy, and you will get some amount in income inequality reduction.
Those at the top who have been “leveled” will be able to handle the hardship. Those at and near the bottom, not so much. YOU might be pleased with the resultant reduction in income inequality, but most of them will not be.
Since a far more progressive tax regime would be a major good in and of itself, why not answer complaints about rising debt with proposed higher taxes on you know who?
Dear Mr. Krugman, regarding the need for coordinating monetary and fiscal policy, and thus directly relating to what you’ve written here, I have a proposed reform of the Fed, based on a new idea in applied economics, that I wish I could run by you for your feedback.
I’m a former senior adviser to the Fed (also NYT Op-Ed writer) wanting to reach you about a Fed reform idea (and some inside information on evidence of Fed bias). How can I reach you?
Prof Krugman, a person named James A who writes James A's substack has said to me when I told him I liked your ideas, that you have a Keynesian view of government spending, and I would like to know from you whether you agree with that. He is very upset that our government is running a deficit. I have to say that your explanations of economics sound rational to me, so I would like to know what you consider yourself in terms of economic philosophy if anything.
I'm pleased that Krugman is taking the natural logarithm on some of his charts. A linear vertical scale can be misleading for people who are not economists, engineers or mathematicians. A log scale ensures that equal percentage changes look the same for all time periods. This also means that a constant annual percentage growth rate appears as a straight line with its slope proportional to the growth rate.
The main reason to not tax wealth or higher incomes to pay for infrastructure is simply that with a 50-50 split Senate throwing in big new taxes on wealth could delay or compromise the really important investments in clean energy and infrastructure. Tax increases could be considered later as a separate issue after the spending bill gets through Congress and is signed into law.
Recall the famous debt-to-GDP record: United Kingdom, 1815, 295%. (By one estimate, others are a bit different, say 260%). The true ratio was certainly high, but it's iffy on both sides. One, nobody had a halfway decent estimate of total British national product on any metric; the concepts hadn't been invented. Two, the Treasury had a nominal total for debt, but this did not mean much. It was mostly in Consols, perpetual bonds. What's more, they all had the same coupon, 3%. This had been picked by Pelham several wars back in 1757, and was usually lower than current interest rates. When governments needed to borrow yet more money to defeat the obstinate and expensive French, they just sold more 3% Consols at whatever discount the market imposed. So the nominal debt total was inflated, perhaps by 50%. Anyway, all that mattered was the interest payable, and this the Treasury and Bank knew exactly. Investors like Jane Austen's Mr. BIngley had an unmatchably liquid and safe long-term asset.
Make infrastructure part of a jumbo Green New Deal package. We really need to own the MAGAts.
Meeting the basic needs of people eliminates the acts of desperation that result in avoidable costs and increases productivity, innovation and personal investment. The frictional costs of capitalism should be avoided when a universal need is met. Technology job loss can be remedied partially by new jobs from universal healthcare, education and other needs best met by interpersonal reliant jobs less likely to be replaced by technology. Sometimes doing the right thing for all people is also right economically.
To what extent is secular stagnation caused by income inequality rather than demographics? Perhaps we should pay for it (in part) through income, wealth, and inheritance taxes. I'd be interested in your thoughts.
Wealth taxes seem very difficult to enforce, but a LVT and inheritance tax look more doable.
“To what extent is secular stagnation caused by income inequality”?
NONE. Except to the extent that the income inequality narrative helps leftists get elected and implement policies inimical to economic growth.
In fact, secular stagnation usually leads to a reduction in income inequality. So by all means, if income inequality is to you the most important “evil” to be addressed, go ahead with leftist policies that tank the economy, and you will get some amount in income inequality reduction.
Those at the top who have been “leveled” will be able to handle the hardship. Those at and near the bottom, not so much. YOU might be pleased with the resultant reduction in income inequality, but most of them will not be.
Since a far more progressive tax regime would be a major good in and of itself, why not answer complaints about rising debt with proposed higher taxes on you know who?
Dear Mr. Krugman, regarding the need for coordinating monetary and fiscal policy, and thus directly relating to what you’ve written here, I have a proposed reform of the Fed, based on a new idea in applied economics, that I wish I could run by you for your feedback.
I’m a former senior adviser to the Fed (also NYT Op-Ed writer) wanting to reach you about a Fed reform idea (and some inside information on evidence of Fed bias). How can I reach you?
Prof Krugman, a person named James A who writes James A's substack has said to me when I told him I liked your ideas, that you have a Keynesian view of government spending, and I would like to know from you whether you agree with that. He is very upset that our government is running a deficit. I have to say that your explanations of economics sound rational to me, so I would like to know what you consider yourself in terms of economic philosophy if anything.