The · Psychohistorian

Famously dubbed "voodoo economics" by George Bush (father), supply side economics is associated with the Laffer curve describing taxes. But neither voodoo nor taxes have to do with supply - so why the "supply side" in "supply side economics"?

To understand this, we need to go back to basic economics: supply and demand. ( Read more... )

Generally when you hear calls for tax reforms, they involve lowering tax rates and broadening the tax base. That's the type of tax reform that was done to some extent by Reagan, that was called for by the bipartisan Simpson Bowles commission, and that Romney talks about. But what exactly does that mean?

Well, here's an example. ( Read more... )

What's the difference between a recession and a depression? A friend of mine once put it this way: a recession is when jobs are lost. A depression is where jobs are lost and they don't come back.

The following graph shows how, unlike every other downturn since World War II, the jobs recovery profile is substantially depressed from a time reversal of the job loss profile:



It's looking like we're in a depression. Not a great depression, just an ordinary depression, but a depression still. The graph is current as of late 2011; a straight line extrapolation indicates we won't see a full employment recovery until 2016. Adjusting for population makes things look even worse, as the line is basically parallel to population increase.

For comparison, here's a graph for the great depression, which while choppier also demonstrates a delayed recovery:

The health care individual mandate case is difficult for the supreme court. First, it's a high profile case, so people are going to focus on the politics, which is always a problem for the supreme court, which focuses on legal issues. But circumstances have conspired to make this case extra hard.

( Read more... )

A long time ago, I mentioned something here about contractarian and utilitarian philosophies, and someone asked me what the difference was. That seemed a long essay, so I put it off. Now I've thought of an example that should illustrate the difference succinctly, so I'm finally ready to answer. I'll start with brief descriptions of the philosophies, then I'll give the example.

( Read more... )

In part 1, we identified approximate capital gains tax rates that seem to maximize the associated government revenues. Those rates are below the earned income tax rates which seem to yield maximum tax revenues on wages.

What's different about capital gains that makes the revenue maximizing tax rate lower than for wages? ( Read more... )

Everyone seems to agree that capital gains should be taxed at a lower rate than wages - even if some would put it as taxing wages at a higher rate than capital gains. However, there seems to be some confusion about the economic reasons for this.

One claim is that lower capital gains tax rates stimulate the economy. ( Read more... )

Worrying about "restoring American manufacturing" today is like worrying about "restoring American agriculture" during the Long Depression.

During our last pregnancy, I kept my expectations in check by remembering that we had had embryos which had not survived past the dates we were at. Margaret's pregnancy included a disappearing twin that reached about a 6 week size. Thus, even when we saw a heartbeat at a little less than 6 weeks, I figured we had a one in three chance of miscarriage, since of the three embryos that reached that size - the disappearing twin, Margaret, and Duncan - one hadn't survived. That kept the miscarriage from being too much of an emotional blow for me when it actually happened.

When our current pregnancy survived past that size with a healthy checkup at 8 weeks, ( Read more... )