Deciphering MMT (wonkish)

One of the most interesting debates blowing up the econ blogosphere is between mainstream macro and modern monetary theory (MMT) (see here, here, here, and here). MMT seems to flip the conventional wisdom surrounding money, banking, and monetary and fiscal policy on its head—the federal government, as the monopoly issuer of the currency, has no budget constraint; budget deficits lower interest rates instead of raising them; and fiscal policy should be the primary tool used to achieve full employment.

Nope, We Still Don't Have An Income Inequality Problem

A follow up piece to my original post on inequality is up at The Federalist. 

A slice regarding the myth of wage stagnation:

The myth of wage stagnation is commonly perpetrated by looking at average real wage statistics. But there are several problems with using average wages as a measure, which I’ve explained before, here, here and here. Briefly, one big problem is that average wage statistics are skewed downward due to the large wave of immigration we experienced in the 1980s and 1990s. Even though many immigrants were finding work and improving their lives, the influx of low-skilled work pulled wage averages downward, which makes it appear like there was stagnation when there really wasn’t.

Read the full piece here.

The Moral Case For Low Taxation

The economic case for low taxation is familiar enough, but in my piece at the Daily Caller I make the moral case.

A slice:

Important as these matters are, however, the case for reduced taxation is also compelled by moral considerations.

Every generation of Americans has understood that taxation is a fact of life. Ben Franklin famously remarked that in life “nothing can be said to be certain, except death and taxes.” However, our founders worked to keep taxes limited and uniform. “[A]ll duties, imposts and excises shall be uniform throughout the United States,” reads the U.S. Constitution. [emphasis added] That is why they not only rejected progressive income taxation, but income taxation entirely. The early republic instead applied taxes primarily to goods, which provided maximum personal choice (to avoid the tax one could avoid purchasing the product).

This vision generally held until the early 20th century, although there were two brief experiments with an income tax prior to that period. The first involved income taxation as high as ten percent during the civil war, which was repealed shortly thereafter. The second was in 1894, when congress passed an income tax that applied to the top two percent of wealth holders. However, it was quickly struck down by the Supreme Court as unconstitutional. As historian Burt Folsom notes, “At age 77, [Stephen] Field,” who was a Supreme Court justice at the time, “not only repudiated Congress’s actions, he also penned a prophecy. A small progressive tax, he predicted, ‘will be but the stepping stone to others, larger and more sweeping, till our political contests will become a war of the poor against the rich.’”

Read the full piece here.

We Don't Have An Income Inequality Problem, We Have An Ego Problem

In my recent piece at the Federalist I argued that we don't have an income inequality problem, we have a culture of entitlement problem.

A snippet:

Despite what we routinely read in the news, we do not have an income inequality problem.

First, as I’ve previously argued, we don’t refer to height differences as “height inequality.” Nor should we speak of income differences as “income inequality.” Doing so implies the deck is stacked for the “haves” and against the “have nots” before scrutinizing the facts.

Second, the statistics are often misleading.

A common tactic is to paint a dire economic picture by looking at statistical units— “households,” “families,” “income quintiles,” etc.—instead of individuals. For example, a headline from The New York Times reads: “Household Incomes Have Remained Flat Despite Improving Economy.”

Another article claims that, “after adjusting for inflation, U.S. median household income is still 8 percent lower than it was before the recession, 9 percent lower than at its peak in 1999, and essentially unchanged since the end of the Reagan administration.” Moreover, we are repeatedly warned that increasing shares of income go to the “top one percent” of earners while the rest stagnate or worse.

For the full piece, click here. 

Do We Have a "Right" to Health Care?

My explanation is up in a piece at The Federalist.

A snippet:

Buried beneath the Obamacare replacement debates is the philosophical question of whether health care is a “right.” Article 25 of the United Nations’ Declaration of Rights, for instance, declares it so. While this is correct as a means, it’s wrong as an end. Understanding the distinction is vital.

For the first time in human history, the Declaration of Independence announced that “all men are created equal.” As Abraham Lincoln argued, everyone is equal because everyone is free, and everyone is free because everyone is equal. Hence no man has the authority to rule over another without the other’s consent. Furthermore, because this equality emanates from the “Laws of Nature and of Nature’s God,” it imbues every individual with the rights to life, liberty, and the pursuit of happiness.

Read the full article here.

The Great Recession: This Time Really is Different

David has a piece up at the Daily Caller highlighting an article by economist Robert Barro, who claims that the U.S. economy should have recovered much faster from the recession than it did. David expands on this point, arguing that too much focus on fiscal stimulus is to blame for the anemic recovery. I don’t find either of these arguments very convincing.

The Myth that Tax Cuts Don't Work

My piece is up at the Daily Caller.

It begins:

Despite the preponderance of contrary evidence, myths persist that tax cuts primarily benefit “the rich” and have no discernible impact on economic growth.

Months ago, for instance, Hillary Clinton charged that “slashing taxes on the wealthy hasn’t worked. And a lot of really smart, wealthy people know that.”

She’s right that it hasn’t worked, but she failed to mention that it’s also never happened. The tired “tax cuts for the rich” canard is disproven by the 1920s, the 1960s, the 1980s and the 2000s, when tax rates were reduced for all—and especially low—income groups.

Read the full piece here.