I’ll be back on Tuesday, June 14th. Remember, until then don’t believe anything you read in the newspaper.
I’ll be back on Tuesday, June 14th. Remember, until then don’t believe anything you read in the newspaper.
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Neil Irwin has an interesting piece in the Upshot section of the NYT noting factors that people may not consider in deciding between renting and buying their home. One item I would add to the list is the tendency to overstate the value of the mortgage interest tax deduction.
It is common for realtors to push houses on prospective buyers by telling them that their mortgage interest is tax deductible. This is true, but the value of the deduction is only equal to the difference between the household’s deductions including mortgage interest and the standard deduction.
Most people will have few deductions other than their mortgage interest deduction. Typically, they may have state income taxes, and that will be pretty much it.
Suppose these taxes come to $5k a year for a couple and their mortgage interest is $10,000 a year. If they are in the 25 percent bracket, they might be inclined to think that they are saving $2,500 a year from their taxes due to the mortgage interest deduction. In fact, since the standard deduction for this couple is $12,600, they are only benefiting to the extent that the mortgage interest deduction puts them above this number. In this case their combined deductions are now $15,000, which is $2,400 above the standard deduction. That will save them $600 a year on their taxes, not $2,500.
Furthermore, as time goes on, interest will be a smaller share of this couple’s mortgage payment as the mortgage is gradually paid off. This will reduce the amount that can be deducted against their taxes. This means that the mortgage interest deduction will be of less use to this couple over time.
Many homebuyers are unaware of these facts, these realtors can be misleading. They are worth keeping in mind by potential homebuyers.
Neil Irwin has an interesting piece in the Upshot section of the NYT noting factors that people may not consider in deciding between renting and buying their home. One item I would add to the list is the tendency to overstate the value of the mortgage interest tax deduction.
It is common for realtors to push houses on prospective buyers by telling them that their mortgage interest is tax deductible. This is true, but the value of the deduction is only equal to the difference between the household’s deductions including mortgage interest and the standard deduction.
Most people will have few deductions other than their mortgage interest deduction. Typically, they may have state income taxes, and that will be pretty much it.
Suppose these taxes come to $5k a year for a couple and their mortgage interest is $10,000 a year. If they are in the 25 percent bracket, they might be inclined to think that they are saving $2,500 a year from their taxes due to the mortgage interest deduction. In fact, since the standard deduction for this couple is $12,600, they are only benefiting to the extent that the mortgage interest deduction puts them above this number. In this case their combined deductions are now $15,000, which is $2,400 above the standard deduction. That will save them $600 a year on their taxes, not $2,500.
Furthermore, as time goes on, interest will be a smaller share of this couple’s mortgage payment as the mortgage is gradually paid off. This will reduce the amount that can be deducted against their taxes. This means that the mortgage interest deduction will be of less use to this couple over time.
Many homebuyers are unaware of these facts, these realtors can be misleading. They are worth keeping in mind by potential homebuyers.
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In an article on the decision by Japan’s Prime Minister, Shinzo Abe, to delay a long scheduled increase in its sales tax, the NYT told readers:
“Its [Japan’s] debt may be large, but it is almost entirely funded by domestic savers, making a crisis like the one in Greece much less likely.”
While it is true that most Japanese debt is held domestically, an even more important difference is that Japan’s debt is almost entirely in yen. This means that Japan can never be in the situation Greece faced where it was unable to meet payments on its debt. Japan could always print the money to pay the bonds. Greece could not, since it is not allowed to print euros.
There is a risk that printing large amounts of yen would lead to inflation, but that is a very difference situation that the one Greece faces. Also, the idea that Japan will face a risk of excessive inflation at any point in the near future does not seem very plausible.
In an article on the decision by Japan’s Prime Minister, Shinzo Abe, to delay a long scheduled increase in its sales tax, the NYT told readers:
“Its [Japan’s] debt may be large, but it is almost entirely funded by domestic savers, making a crisis like the one in Greece much less likely.”
While it is true that most Japanese debt is held domestically, an even more important difference is that Japan’s debt is almost entirely in yen. This means that Japan can never be in the situation Greece faced where it was unable to meet payments on its debt. Japan could always print the money to pay the bonds. Greece could not, since it is not allowed to print euros.
There is a risk that printing large amounts of yen would lead to inflation, but that is a very difference situation that the one Greece faces. Also, the idea that Japan will face a risk of excessive inflation at any point in the near future does not seem very plausible.
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That is a headline I would love to see. Of course, Donald Trump would threaten to have them investigated.
That is a headline I would love to see. Of course, Donald Trump would threaten to have them investigated.
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All NYT readers know that protectionism is stupid and self-defeating. It hurts everyone involved. So where were all the economic experts to give the usual lines on protectionism in response to efforts to change the Digital Millennium Copyright Act?
The NYT reported on these efforts without ever once mentioning the economic costs that would be implied by making listeners pay more money for music and the cost that intermediaries like YouTube would have to incur to comply with stronger copyright protection. The failure to mention these costs is remarkable given how space the NYT and other media outlets have devoted to denouncing proposals from Donald Trump to impose higher tariffs and plans by Bernie Sanders to chart a different course for trade policy.
Economics works the same regardless of whether the item in question is a car, a ton of steel, or a song. Imposing barriers that raise the price imposes costs on consumers and the economy. The biggest difference is that in proportionate terms the barriers involved with copyright protection are likely to be far larger than any trade barriers that Trump or anyone else might impose on imported manufactured goods. While the latter are unlikely to exceed 50 percent of the sale price, and would almost certainly be far less, copyright protection can make music that would otherwise be available for free very costly.
To get an idea of how costly such protections can be, New Zealand’s government estimated that increasing the length of copyright protection from 50 to 75 years, as required by the Trans-Pacific Partnership, would cost it 0.24 percent of annual GDP, the equivalent of $4.3 billion in the U.S. economy in 2016. It would have been helpful to include some estimates of the costs associated with the stronger protections being discussed in this piece.
It is also worth noting that only a very small portion of the costs associated with this protection is likely to end up in the pockets of the performers. Much of it is simply deadweight loss — the lost benefit that consumers would have had from being able to listen to music at its marginal cost which they will forego now that it is selling at its higher protected price. A large portion will go to costs associated with enforcement, including new locks that would be put in place. And, much would go to intermediaries in the process, including the lawyers and lobbyists working on changing the law.
It is likely that performers will get less than ten cents for every dollar of lost benefits to consumers and their take may well end up being less than one cent per dollar. Unfortunately, the NYT never mentioned these losses at all, ignoring the well-known benefits of free trade.
Yes, musicians and singers need to be paid for their work, but there are more modern and efficient mechanisms for this task.
All NYT readers know that protectionism is stupid and self-defeating. It hurts everyone involved. So where were all the economic experts to give the usual lines on protectionism in response to efforts to change the Digital Millennium Copyright Act?
The NYT reported on these efforts without ever once mentioning the economic costs that would be implied by making listeners pay more money for music and the cost that intermediaries like YouTube would have to incur to comply with stronger copyright protection. The failure to mention these costs is remarkable given how space the NYT and other media outlets have devoted to denouncing proposals from Donald Trump to impose higher tariffs and plans by Bernie Sanders to chart a different course for trade policy.
Economics works the same regardless of whether the item in question is a car, a ton of steel, or a song. Imposing barriers that raise the price imposes costs on consumers and the economy. The biggest difference is that in proportionate terms the barriers involved with copyright protection are likely to be far larger than any trade barriers that Trump or anyone else might impose on imported manufactured goods. While the latter are unlikely to exceed 50 percent of the sale price, and would almost certainly be far less, copyright protection can make music that would otherwise be available for free very costly.
To get an idea of how costly such protections can be, New Zealand’s government estimated that increasing the length of copyright protection from 50 to 75 years, as required by the Trans-Pacific Partnership, would cost it 0.24 percent of annual GDP, the equivalent of $4.3 billion in the U.S. economy in 2016. It would have been helpful to include some estimates of the costs associated with the stronger protections being discussed in this piece.
It is also worth noting that only a very small portion of the costs associated with this protection is likely to end up in the pockets of the performers. Much of it is simply deadweight loss — the lost benefit that consumers would have had from being able to listen to music at its marginal cost which they will forego now that it is selling at its higher protected price. A large portion will go to costs associated with enforcement, including new locks that would be put in place. And, much would go to intermediaries in the process, including the lawyers and lobbyists working on changing the law.
It is likely that performers will get less than ten cents for every dollar of lost benefits to consumers and their take may well end up being less than one cent per dollar. Unfortunately, the NYT never mentioned these losses at all, ignoring the well-known benefits of free trade.
Yes, musicians and singers need to be paid for their work, but there are more modern and efficient mechanisms for this task.
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The Trans-Pacific Partnership (TPP) must be in deep trouble. The NYT has apparently abandoned any pretext of objectivity in covering the trade deal. The second paragraph of a news article on the political obstacles confronting the TPP equated the deal with “the cause of free and open trade.” While that may be effective rhetoric for a pro-TPP politician, it has nothing to do with the reality of the deal.
The TPP actually does very little to advance free and open trade, primarily because the trade barriers between the countries in the pact are already low. This is why the International Trade Commission (ITC) found that removal of these barriers would add just over 0.01 percentage point to annual growth over the next 16 years.
In fact, because it increases barriers in the form of longer and stronger patent and copyright protection, the TPP may on net actually increase protectionism among the countries in the pact. (The ITC did not factor in the impact of higher prices for prescription drugs and other protected products in its analysis.)
In addition to these protectionist measures, the TPP may also restrict labor mobility through its clause on industrial secrets. This could require states to enforce non-compete agreements that prevent workers from moving from one company to another or starting their own business.
The TPP also effectively brings in through the backdoor, the far right-wing legal doctrine of regulatory takings. Under the rules in the TPP, foreign investors would have to be compensated for any regulatory action that reduced their profits. This is a major issue for many opponents of the deal.
However, the NYT article ignores the long set of issues around the TPP. It completely equates the TPP with the cause of free trade, using the term “pro-trade” at five different points in the article to describe supporters of the TPP.
The piece also refers to the alleged loss of $300 million in export markets due to a trade deal between Japan and Australia. (It implies this market would be regained with the TPP.) According to the National Cattlemen’s Beef Association, this is equal to a bit less than 0.4 percent of current production in the United States.
The Trans-Pacific Partnership (TPP) must be in deep trouble. The NYT has apparently abandoned any pretext of objectivity in covering the trade deal. The second paragraph of a news article on the political obstacles confronting the TPP equated the deal with “the cause of free and open trade.” While that may be effective rhetoric for a pro-TPP politician, it has nothing to do with the reality of the deal.
The TPP actually does very little to advance free and open trade, primarily because the trade barriers between the countries in the pact are already low. This is why the International Trade Commission (ITC) found that removal of these barriers would add just over 0.01 percentage point to annual growth over the next 16 years.
In fact, because it increases barriers in the form of longer and stronger patent and copyright protection, the TPP may on net actually increase protectionism among the countries in the pact. (The ITC did not factor in the impact of higher prices for prescription drugs and other protected products in its analysis.)
In addition to these protectionist measures, the TPP may also restrict labor mobility through its clause on industrial secrets. This could require states to enforce non-compete agreements that prevent workers from moving from one company to another or starting their own business.
The TPP also effectively brings in through the backdoor, the far right-wing legal doctrine of regulatory takings. Under the rules in the TPP, foreign investors would have to be compensated for any regulatory action that reduced their profits. This is a major issue for many opponents of the deal.
However, the NYT article ignores the long set of issues around the TPP. It completely equates the TPP with the cause of free trade, using the term “pro-trade” at five different points in the article to describe supporters of the TPP.
The piece also refers to the alleged loss of $300 million in export markets due to a trade deal between Japan and Australia. (It implies this market would be regained with the TPP.) According to the National Cattlemen’s Beef Association, this is equal to a bit less than 0.4 percent of current production in the United States.
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Before the West Virginia primary, former Secretary of States Hillary Clinton made a comment about how environmental regulations would lead to a loss of jobs in coal mining. The comment was in the context of a commitment to retraining miners and providing aid to hard-hit communities, but her critics have seized on it to say that she wants to get rid of coal mining jobs.
Emma Roller picked up on this theme in a NYT column on how the presidential election will affect candidates lower down on the ticket. Roller quotes Andrea Bozek, the communications director for the National Republican Senatorial Committee:
“‘Her [Clinton’s] comments on coal are going to really hurt Katie McGinty in Pennsylvania and Ted Strickland in Ohio,’ she said. ‘That’s a huge issue for voters in those states, and I think you’re going to see a lot of TV ads this summer and fall tying Hillary Clinton’s comments — not only on coal, but on her national security record, economic record — to these candidates as well.'”
According to the Bureau of Labor Statistics, Ohio has a labor force of just under 5.6 million. It has 11,600 jobs in the category logging and mining. This means that just over 0.2 percent of Ohio’s workforce would be employed in coal mining if all of the jobs in this category were coal mining. Since the state probably has some jobs in logging and in other types of mining, coal mining would have to be a smaller share of the total workforce.
Pennsylvania has 6,000 people employed in coal mining with a total workforce of 5.9 million. This means that the coal industry accounts for just over 0.1 percent of total employment in Pennsylvania.
It seems questionable that comments relating to an industry that employees between 0.1–0.2 percent of a state’s workforce are likely to have much impact on the outcome of an election.
Before the West Virginia primary, former Secretary of States Hillary Clinton made a comment about how environmental regulations would lead to a loss of jobs in coal mining. The comment was in the context of a commitment to retraining miners and providing aid to hard-hit communities, but her critics have seized on it to say that she wants to get rid of coal mining jobs.
Emma Roller picked up on this theme in a NYT column on how the presidential election will affect candidates lower down on the ticket. Roller quotes Andrea Bozek, the communications director for the National Republican Senatorial Committee:
“‘Her [Clinton’s] comments on coal are going to really hurt Katie McGinty in Pennsylvania and Ted Strickland in Ohio,’ she said. ‘That’s a huge issue for voters in those states, and I think you’re going to see a lot of TV ads this summer and fall tying Hillary Clinton’s comments — not only on coal, but on her national security record, economic record — to these candidates as well.'”
According to the Bureau of Labor Statistics, Ohio has a labor force of just under 5.6 million. It has 11,600 jobs in the category logging and mining. This means that just over 0.2 percent of Ohio’s workforce would be employed in coal mining if all of the jobs in this category were coal mining. Since the state probably has some jobs in logging and in other types of mining, coal mining would have to be a smaller share of the total workforce.
Pennsylvania has 6,000 people employed in coal mining with a total workforce of 5.9 million. This means that the coal industry accounts for just over 0.1 percent of total employment in Pennsylvania.
It seems questionable that comments relating to an industry that employees between 0.1–0.2 percent of a state’s workforce are likely to have much impact on the outcome of an election.
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