Links to what I’ve been reading.
Jared Bernstein looks deeper into taxable rates and income:
Looking a bit more into this question of the link between higher income tax rates and lower levels of inequality, I stumbled on this paper examining precisely this correlation from the perspective of executive pay.
Check out these two figures, which appear to tell a pretty clear story.
Noah Smith, in the think of it with his paper, helps explain asset bubbles:
But the real question is why we care about bubbles. Some people believe that bubbles are merely responses to changes in expected fundamental value of an asset (the “fundamental value” is the expected present value of the income you get from owning an asset). According to this view, the NASDAQ bubble happened because people thought that internet companies were going to make lots and lots of profit, and when those expectations didn’t materialize, prices went down again. This view is held by many eminent financial economists, including Eugene Fama, the most cited financial economist in the world.
Raghu Rajan, from the quickly emerging Chicago Booth, writes about a “fundamental narrative” with fixing the economy:
With the world’s industrial democracies in crisis, two competing narratives of its sources – and appropriate remedies – are emerging. The first, better-known diagnosis is that demand has collapsed because of high debt accumulated prior to the crisis. Households (and countries) that were most prone to spend cannot borrow any more. To revive growth, others must be encouraged to spend – governments that can still borrow should run larger deficits, and rock-bottom interest rates should discourage thrifty households from saving.
George Packer thinks it’s unlikely that a President Romney would be all that moderate:
The great puzzle of the Republican campaign is that, in an era of unprecedented ideological fervor, the party will almost certainly nominate the candidate who is the blandest, least ideological, and least trusted by conservatives of them all (that would be Mitt Romney—Jon Huntsman doesn’t count as long as he’s in the low single digits). The reasons for this are not easy to see, and in some ways they’re fluky. Romney, forever stuck at twenty-five per cent, understands his situation acutely, and he’s telling anyone in Iowa who will listen that he loves America, prays and reads Scripture (while wishing he did it more), hates illegal immigrants as much as the next guy, and thinks that Obama has destroyed this country at home and abroad. […]