The Myth of Healthcare Savings

The Washington Post gets it right.

Ferguson takes on Krugman

Harvard historian Niall Ferguson says Princeton economist Paul Krugman takes Keynes a bit too seriously.

The Case for Doing Little

As readers of this blog know, I have long been an advocate of Pigovian taxes, such as carbon taxes to deal with global climate change. (Here, also here ungated, is my most complete statement of the arguments.) On this topic, I was disappointed with the Bush administration, which did little to address the issue.

Their failure to act, while disappointing to me, was nonetheless principled and thoughtful. The logic for not doing much to address global climate change is spelled out in a recent blog post by former NEC director Keith Hennessey.

Clive Granger

Clive Granger, the great econometrician and Nobel laureate, has died. Here is his obituary.

Keeping Things in Perspective

The graph is from the Donald Marron's new blog.

The Cult of Utilitarians

Conor Clarke takes note of my paper with Matthew Weinzierl (earlier, ungated version) on taxing height and then comments:

I'm surprised to [see] the strong utilitarian view described as the consensus. I don't know much about utilitarian optimal tax theory, but I also don't know of any public finance or policy people who are dying to revive the prescriptive insights of Jeremy Bentham and Francis Edgeworth. Is there a cult of utilitarian social planners out there waiting to propose taxes on inputs like height, intelligence and race?

Well, no, to my knowledge no one is eager to tax height, intelligence, and race. But there is a prominent guy who lives at a nice home at 1600 Pennsylvania Avenue who wants to "spread the wealth around." The moral and political philosophy used to justify such income redistribution is most often a form of Utilitarianism. For example, the work on optimal tax theory by Emmanuel Saez, the most recent winner of the John Bates Clark award, is essentially Utilitarian in its approach.

The point of our paper is this: If you are going to take that philosophy seriously, you have to take all of the implications seriously. And one of those implications is the optimality of taxing height and other exogenous personal characteristics correlated with income-producing abilities.

A moral and political philosophy is not like a smorgasbord, where you get to pick and choose the offerings you like and leave the others behind without explanation. It is more like your mother telling you to clean everything on your plate. If you are a Utilitarian redistributionist, the height tax is like that awful tasting vegetable your mother served up because it is good for you. No matter how hard you might wish it wasn't there sitting on your plate, it just won't go away.

Google's Economist

Wired looks at what economist Hal Varian has been up to lately.