Yes, David Brooks actually said this. The context is his column noting the complaints against the big tech companies. After going through the list Brooks tells readers:
“The political assault on this front [against the monopoly power of the big tech companies] is gaining steam. The left is attacking tech companies because they are mammoth corporations; the right is attacking them because they are culturally progressive. Tech will have few defenders on the national scene.”
It is hard to believe that anyone with even a passing knowledge of U.S. politics could say something so ridiculous. Tech has hundreds of billions of dollars to throw at politicians, think tanks and other academics, and to buy media outlets in addition to the Internet sites it already controls.
Everywhere outside of David Brooks’ World, people respond to money. The one thing we can be absolutely certain of is that there will no shortage of prominent individuals happy to defend tech on the national scene. My guess is that the tech giants won’t see the need to follow Brooks’ agenda as the only road to salvation. They are more likely to just buy up another think tank or two.
Yes, David Brooks actually said this. The context is his column noting the complaints against the big tech companies. After going through the list Brooks tells readers:
“The political assault on this front [against the monopoly power of the big tech companies] is gaining steam. The left is attacking tech companies because they are mammoth corporations; the right is attacking them because they are culturally progressive. Tech will have few defenders on the national scene.”
It is hard to believe that anyone with even a passing knowledge of U.S. politics could say something so ridiculous. Tech has hundreds of billions of dollars to throw at politicians, think tanks and other academics, and to buy media outlets in addition to the Internet sites it already controls.
Everywhere outside of David Brooks’ World, people respond to money. The one thing we can be absolutely certain of is that there will no shortage of prominent individuals happy to defend tech on the national scene. My guess is that the tech giants won’t see the need to follow Brooks’ agenda as the only road to salvation. They are more likely to just buy up another think tank or two.
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Tyler Cowen tells us in this Bloomberg piece that the Republicans are right to say that their plans for a big cut in the corporate tax will boost investment. (He is still opposed to the overall package.) I’ve had several people ask me about this one. I’ll give the usual economists’ answer: it depends.
If the argument is that other things equal, more cash in corporate coffers means more investment, I’m with Tyler. If we throw a huge pile of money at corporate America, at least some of it has to end up being invested, so Tyler is right on this point.
On the other hand should we expect the investment boom projected by the White House and Tax Foundation, where the capital stock will be 30 percent higher in ten years as a result of the tax cut? That one seems pretty nutty. (Tyler doesn’t endorse this view.) There are and have been large disparities in after-tax rates of return between countries. The argument for an investment boom depends on an equalization in after-tax rates of return across countries. (I know, we can wave our hands and explain that by risk premia, but that is just hand waving.) There is little reason to believe that a change in the corporate income tax rate will have a huge effect on investment, even if we can say the direction is to raise it.
It is also worth asking about the other things equal assumption. Suppose that the Fed sees higher projected deficits and decides it has to raise interest rates faster and further. It is entirely possible that these interest rate hikes more than offset any positive effect that the tax cuts have on investment, resulting in a net negative.
Another possibility is that the larger deficits embolden the deficit hawks who then take the hatchet to transfer programs like Social Security, Medicare, and food stamps. The vast majority of this money is spent quickly by the people who get it. The reduction in demand from cuts to these programs could lead to a fall in demand in the economy, thereby reducing the incentive for firms to invest.
We can also envision a story in which state governments are forced to reduce taxes, since their residents can no longer deduct state and local taxes from their federal income taxes. This could lead to a reduction in spending on infrastructure and education, which could also have a negative effect on private investment.
In addition, taxing tuition waivers for grad schools could drastically reduce the supply of new graduates in computer sciences, biotech, and other areas requiring highly skilled workers. This could also lead to less investment.
In all of these cases, the net effect of the Republican tax package could be to reduce investment, but Tyler is right that the immediate effect of a cut in corporate taxes should be to raise investment.
Tyler Cowen tells us in this Bloomberg piece that the Republicans are right to say that their plans for a big cut in the corporate tax will boost investment. (He is still opposed to the overall package.) I’ve had several people ask me about this one. I’ll give the usual economists’ answer: it depends.
If the argument is that other things equal, more cash in corporate coffers means more investment, I’m with Tyler. If we throw a huge pile of money at corporate America, at least some of it has to end up being invested, so Tyler is right on this point.
On the other hand should we expect the investment boom projected by the White House and Tax Foundation, where the capital stock will be 30 percent higher in ten years as a result of the tax cut? That one seems pretty nutty. (Tyler doesn’t endorse this view.) There are and have been large disparities in after-tax rates of return between countries. The argument for an investment boom depends on an equalization in after-tax rates of return across countries. (I know, we can wave our hands and explain that by risk premia, but that is just hand waving.) There is little reason to believe that a change in the corporate income tax rate will have a huge effect on investment, even if we can say the direction is to raise it.
It is also worth asking about the other things equal assumption. Suppose that the Fed sees higher projected deficits and decides it has to raise interest rates faster and further. It is entirely possible that these interest rate hikes more than offset any positive effect that the tax cuts have on investment, resulting in a net negative.
Another possibility is that the larger deficits embolden the deficit hawks who then take the hatchet to transfer programs like Social Security, Medicare, and food stamps. The vast majority of this money is spent quickly by the people who get it. The reduction in demand from cuts to these programs could lead to a fall in demand in the economy, thereby reducing the incentive for firms to invest.
We can also envision a story in which state governments are forced to reduce taxes, since their residents can no longer deduct state and local taxes from their federal income taxes. This could lead to a reduction in spending on infrastructure and education, which could also have a negative effect on private investment.
In addition, taxing tuition waivers for grad schools could drastically reduce the supply of new graduates in computer sciences, biotech, and other areas requiring highly skilled workers. This could also lead to less investment.
In all of these cases, the net effect of the Republican tax package could be to reduce investment, but Tyler is right that the immediate effect of a cut in corporate taxes should be to raise investment.
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I had a post that took issue with a WaPo Fact Checker saying that the Republican tax plan will not actually kick 13 million people off insurance. Rather, they will opt not to buy it if they are not required to. I had misunderstood the Congressional Budget Office’s analysis and thought it projected premiums would rise 10 percent a year as a result of this change. In fact, they project a cumulative increase of 10 percent.
I had a post that took issue with a WaPo Fact Checker saying that the Republican tax plan will not actually kick 13 million people off insurance. Rather, they will opt not to buy it if they are not required to. I had misunderstood the Congressional Budget Office’s analysis and thought it projected premiums would rise 10 percent a year as a result of this change. In fact, they project a cumulative increase of 10 percent.
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Everyone knows that Amazon founder Jeff Bezos is a genius. After all, he made himself one of the richest people in the world by avoiding the requirement that retailers collect state sales taxes. Yes, Amazon now collects these taxes, but the savings on tax collections in the years it didn’t collect taxes almost certainly exceed Amazon’s cumulative profits since it’s been in business.
While Amazon’s tax avoidance may have been legal, it was 100 percent brain-dead as public policy. In effect, state and local governments were directly subsidizing an Internet giant at the expense of their homegrown mom and pop retail stores. It is very difficult to imagine a world in which this policy makes sense.
Anyhow, the NYT apparently feels some need to carry water for Amazon, implying there is some ambiguity about state efforts to require Amazon to collect taxes for sales of its affiliates. It tells us that states are “thirsty” for unpaid sales taxes, as opposed to trying to correct an abuse of the law that benefits a huge company and one of the richest people in the world at the expense of their own retailers.
It is also very generous in presenting Amazon’s case, explaining that the company is concerned that it could be held liable for taxes that its affiliates fail to properly assess. This is called “too damn bad.” Amazon is making money off its affiliates sales. This means that it carries certain responsibilities for those sales, including that taxes are properly collected. In a market economy, if a company like Amazon can’t conduct its business competently, then it should go under and be replaced by businesses run by people who know what they are doing.
Everyone knows that Amazon founder Jeff Bezos is a genius. After all, he made himself one of the richest people in the world by avoiding the requirement that retailers collect state sales taxes. Yes, Amazon now collects these taxes, but the savings on tax collections in the years it didn’t collect taxes almost certainly exceed Amazon’s cumulative profits since it’s been in business.
While Amazon’s tax avoidance may have been legal, it was 100 percent brain-dead as public policy. In effect, state and local governments were directly subsidizing an Internet giant at the expense of their homegrown mom and pop retail stores. It is very difficult to imagine a world in which this policy makes sense.
Anyhow, the NYT apparently feels some need to carry water for Amazon, implying there is some ambiguity about state efforts to require Amazon to collect taxes for sales of its affiliates. It tells us that states are “thirsty” for unpaid sales taxes, as opposed to trying to correct an abuse of the law that benefits a huge company and one of the richest people in the world at the expense of their own retailers.
It is also very generous in presenting Amazon’s case, explaining that the company is concerned that it could be held liable for taxes that its affiliates fail to properly assess. This is called “too damn bad.” Amazon is making money off its affiliates sales. This means that it carries certain responsibilities for those sales, including that taxes are properly collected. In a market economy, if a company like Amazon can’t conduct its business competently, then it should go under and be replaced by businesses run by people who know what they are doing.
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Okay, that’s not quite what the article said. Instead it told readers:
“Republicans have long championed free trade, believing that by allowing markets to operate unhindered, nations can boost domestic industries, lift their wages and improve living standards.”
Wow, so Republicans are motivated by a concern over workers’ living standards. It’s good we have the NYT to tell us this because we certainly wouldn’t know about Republicans’ concern for workers based on their behavior. (Yes, Democrats are politicians too and it is reasonable to assume that politicians of both parties are first and foremost concerned about their re-election, which means appeasing powerful interest groups.)
The piece misrepresents many other issues, especially with its repeated use of the term “free trade.” What exactly about longer and stronger patent and copyright protection is “free trade?” It’s fine that the NYT likes these forms of protectionism and apparently approves of the massive upward redistribution that results from these market interventions, but it is a lie of Trumpian proportions to call them “free trade.”
Also our “free trade” deals have done almost nothing to free up trade in highly paid professional services, like those offered by doctors and dentists. As a result our doctors and dentists are paid roughly twice as much as their counterparts in other wealthy countries.
The piece also notes the rise of populism on the left and right and then incredibly tells readers:
“The fissures over trade are a product of a surge in populism on both the political right and left. …
“Growing anxieties about the unforeseen costs of globalization, the overhang of the financial crisis and the stagnation of the middle class have deeply damaged voters’ faith in the ability of free markets to deliver prosperity — and fractured the Republican Party in the process.”
The costs of globalization were hardly “unforeseen.” Many of us tried as hard as we could to warn of the costs of exposing large segments of the U.S. workforce to competition with much lower paid workers in the developing world. The more appropriate word here would be “ignored,” as in the people in positions of authority deliberately chose to ignore both evidence and the predictions of standard trade theory in pushing trade deals that had the predicted effect of redistributing income upward.
It is also misleading to refer to “free markets” in this context. Trade deals that protect the most highly paid workers, longer and stronger patent and copyright protection, and bailouts of the financial industry when it faces bankruptcy are not characteristics of a free market.
(Yes, all this is covered in my (free) book Rigged: How Globalization and the Rule of the Modern Economy Were Structured to Make the Rich Richer.)
Okay, that’s not quite what the article said. Instead it told readers:
“Republicans have long championed free trade, believing that by allowing markets to operate unhindered, nations can boost domestic industries, lift their wages and improve living standards.”
Wow, so Republicans are motivated by a concern over workers’ living standards. It’s good we have the NYT to tell us this because we certainly wouldn’t know about Republicans’ concern for workers based on their behavior. (Yes, Democrats are politicians too and it is reasonable to assume that politicians of both parties are first and foremost concerned about their re-election, which means appeasing powerful interest groups.)
The piece misrepresents many other issues, especially with its repeated use of the term “free trade.” What exactly about longer and stronger patent and copyright protection is “free trade?” It’s fine that the NYT likes these forms of protectionism and apparently approves of the massive upward redistribution that results from these market interventions, but it is a lie of Trumpian proportions to call them “free trade.”
Also our “free trade” deals have done almost nothing to free up trade in highly paid professional services, like those offered by doctors and dentists. As a result our doctors and dentists are paid roughly twice as much as their counterparts in other wealthy countries.
The piece also notes the rise of populism on the left and right and then incredibly tells readers:
“The fissures over trade are a product of a surge in populism on both the political right and left. …
“Growing anxieties about the unforeseen costs of globalization, the overhang of the financial crisis and the stagnation of the middle class have deeply damaged voters’ faith in the ability of free markets to deliver prosperity — and fractured the Republican Party in the process.”
The costs of globalization were hardly “unforeseen.” Many of us tried as hard as we could to warn of the costs of exposing large segments of the U.S. workforce to competition with much lower paid workers in the developing world. The more appropriate word here would be “ignored,” as in the people in positions of authority deliberately chose to ignore both evidence and the predictions of standard trade theory in pushing trade deals that had the predicted effect of redistributing income upward.
It is also misleading to refer to “free markets” in this context. Trade deals that protect the most highly paid workers, longer and stronger patent and copyright protection, and bailouts of the financial industry when it faces bankruptcy are not characteristics of a free market.
(Yes, all this is covered in my (free) book Rigged: How Globalization and the Rule of the Modern Economy Were Structured to Make the Rich Richer.)
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