By Eric Kramer
The Case for Carbon Taxes, Part II:  Political Sustainability
In a prior post, I argued that carbon taxes are not vulnerable to political subversion by hostile courts and regulators, and that this is an important advantage of carbon taxes over traditional regulation based on mandates, and also an advantage over subsidies.  Once they are passed, carbon taxes can work more or less on auto-pilot to drive a clean energy transition, unless they are affirmatively repealed by Congress.  In this post I consider whether carbon taxes are likely to sustain the support they need to remain in place.  There is certainly no guarantee of this; any ambitious climate policy is likely to remain controversial.  However, there are reasons to be optimistic that a

Via Naked Capitalism  comes an explanation of what income inequality looks like in the US.  It stands in contrast to the Bloomberg article pointed to by Yves in her introduction.  I pulled the quotes with a non-economic person in mind.

THE WOLF STREET REPORT    transcript of podcast by Wolf Richter.

Subprime doesn’t mean poor or uneducated. Subprime means having a credit score below 620…

(Dan here) For example:

Aggressive subprime lending went into overdrive starting in 2014, and private equity firms piled into it, and smaller banks went after it, and it’s now coming home to roost  . . .

This includes healthcare costs, and it includes food costs, and apartment rentals, and cars have gotten a lot more expensive, and the like. But cars and

By Eric Kramer
The Case for Carbon Taxes, Part I:  Political Subversion
Economists support carbon taxes on efficiency grounds.  By putting a price on carbon dioxide emissions, a carbon tax creates a strong incentive for people reduce their carbon footprint.  They can do this by switching to clean technologies or simply by reducing their use of fossil fuels – by driving less or turning down the air conditioning, for example.  Other policies can also be used to get people to reduce their use of fossil fuels, but carbon taxes allow people to reduce their carbon footprint in the least costly way.  Given that decarbonizing the economy will be a large and expensive undertaking, keeping costs as low as possible is clearly important.
Economists have made some

By New Deal democrat
The consumer is still alright, November 2019 edition
I have a new post up at Seeking Alpha.
A few months ago I took a look at the order in which I would expect the dominoes to fall if there were to be a consumer-led recession. One more domino has fallen, but several important ones are still upright.
As usual, clicking over and reading puts a couple of pennies in my pocket, and should be educational for you.

By David Zetland  (originally published at One handed economist)
Real decentralization is radical
Visionaries, consultants and public speakers love to explain how they are embracing distribution over decentralization over centralization, using an image like this:
Figure 1
What drives me crazy about this image is that it actually undersells true decentralization, i.e., when everyone is connected to everyone:

Really decentralized (D)

We already have such systems for email (anyone on Earth can connect with anyone else without going through a censor, “chokepoint,” or authority), and cryptocurrencies offer the same connectivity for money.
Note that mobile phones are not decentralized because they need to be connected to carriers, which also means that

By Eric Kramer
Russ Roberts and The Rat Hole Fallacy
Liberals believe that unregulated markets do not adequately supply public goods like roads, parks, and scientific research, and that government should use its taxing and spending powers to provide these goods.  Conservatives agree that markets fail to provide ideal quantities of public goods, but they emphasize that government spending is often wasteful and inefficient, and they argue that waste and inefficiency justifies limiting government spending.  Market failure is real a problem, but so is government failure, and nothing is gained by shoveling tax dollars down a rat hole.
The belief that government inefficiency justifies reducing the size of government is one of the most common and influential

Excellent October housing report is good news for employment

I’ll have a more comprehensive report up at Seeking Alpha, and I’ll link to it when it goes up, (UPDATE: It’s finally up, here ) but in the meantime let me just share the least volatile most leading component which is single family permits:

These made a new expansion high. The housing rebound, following lower mortgage rates, is firmly in place.

Additionally, both housing completed and under construction have also increased from recent bottoms. These aren’t as leading as housing permits and starts, but they correlate much more closely with residential building jobs, and they argue strongly that residential construction employment, a leading sector of the jobs market, is likely to continue to

By Eric Kramer
Liberal economists are open to persuasion.  What about conservatives?
There are many examples within the economics profession of cases where liberals have been persuaded by conservative arguments that raise doubts about the value of government intervention in markets.
Harold Demsetz argued that it is a mistake to call for government intervention simply because markets depart from perfect efficiency, because not all inefficiencies can be corrected by government.  Specifically, he pointed out that government cannot correct the inefficiency caused by moral hazard in insurance markets, because if private parties do not have the information needed to control moral hazard then the government generally will not have this information either.

By David Zetland (originally published at One handed economist)
Big data helps monopolies, not you
Economists say competition in markets rages from “perfect” (no company can charge a price over cost without losing 100% of its customers to another company) to “monopoly” (one company sets prices to maximize profits).
Two caveats are important. First, the monopolist doesn’t charge as much as possible but whatever maximizes profits. There might be a lot of trading going on, but also a lot of missing trades. Second, businesses seek monopoly power in different ways, from having a unique product with zero substitutes (pretty rare) to being open for business at a certain time and place (pretty common). Businesses often try to create monopoly power by making it

By New Deal democrat
Weekly Indicators for November 11 – 15 at Seeking Alpha
My Weekly Indicators post is up at Seeking Alpha.
Although a few indicators backed off some this week, the overall tone, ex-manufacturing, across all timeframes is positive.
You may be reading a few takes today about the poor nowcasts out of the NY and Atlanta Feds, after yesterday’s face-plant of an industrial production reading. Keep in mind that they are mechanically applying that result and not accounting for the GM strike (which is what I would do if I were in their shoes as well). So take those with a healthy dose of salt for now.
As usual, clicking over and reading rewards me with a couple of pennies for my efforts.

(Dan here…Eric will be posting some of his work.  He has read many econ blogs but has not published in the econ blogosphere.  He is experienced otherwise…welcome  Eric.)
Bio for Eric Kramer
I am an economist and lawyer by training and I am currently writing a book on political economy and the role of government.  The book defends the liberal idea that government should actively regulate markets to promote efficiency and to ensure that opportunity and prosperity are widely shared against the leading arguments for limited government, especially the consequentialist arguments of Friedrich Hayek and James Buchanan and their intellectual heirs.  Prior to starting work on the book, I was a finance and strategy executive for The Plymouth Rock Companies for many

By New Deal democrat
Weekly Indicators for November 4 – 8 at Seeking Alpha

 My Weekly Indicators post is up at Seeking Alpha.

The biggest story of the week was the move higher in long term interest rates. This means that the “yield curve inversion” you’ve read so much about in the past year is over. At the same time, long term interest rates (e.g., for mortgages) haven’t moved back high enough to pose a danger to the housing market. In other words, they’re at a “sweet spot.”

A note on the political implications: my specialty is telling you what the economy is likely to look like a year from now. And one year from now is the 2020 Presidential election. That all of the recent news in the long leading indicators has been improvement means that the economy

David Zetland….”For years, I have complained that “nobody wakes up in the morning, looks at GDP statistics, and changes their plans for the day.” Listen to this podcast on mis-measuring productivity and manufacturing statistics, which may have given populists excuses to “fix” problems that never existed. (My impression is that many more people would be happier if they looked at their quality of life instead of a [random? inaccurate?] reference point that supposedly tells them how well they are doing compared to peers.”
(Dan here….I found the podcast hard to follow.   Go here for a cogent argument, start arround 17 minutes in to hear Susan Houseman explain:   I’LL QUICKLY REVIEW SOME OF THE RESEARCH. SO THIS CHART SHOWS MANUFACTURING SHARE OF PRIVATE

By Joseph Joyce
The Changing Nature of FDI
The OECD has published its data on flows of foreign direct investment (FDI) for the first half of 2019. They reveal how multinational firms are responding to the slowdown in global trade and the U.S.-Chinese tariffs. They may also reflect longer-term trends in FDI as multinationals reconfigure the scope of their activities.
Overall global FDI flows fell by 20% in the first half of the year as compared to the previous half-year. Much of the decrease was due to lower investments in the OECD economies, including the U.S., the United Kingdom, and the Netherlands, and disinvestments in Belgium and Ireland. FDI inflows to the non-OECD members for the Group of 20 countries, on the other hand, increased, with higher

(Dan here….written last year, still relevent)
By Steve Roth  (originally published at Evonomics)
Bernie Sanders and Chuck Schumer’s New York Times op-ed, “Limit Corporate Stock Buybacks,” has thrown internet gasoline on the buyback debate. The left is waving the flag, and the right is trying to tear it down.
The core Sanders/Schumer argument: buybacks extract money from firms, money that could be used to pay workers more, and fund productive investment (including worker training and upskilling).
The counterargument: how are buybacks any different from dividend distributions that way? Both transfer cash from firms to households. We don’t hear people complaining about dividend distributions stealing money from workers and investment.
That counterargument is

By David Zetland    (Via One handed economist)
Innovative bureaucrats?
The Dutch are fond of subsidies for arts, sustainability and… innovation.
These subsidies arise when bureaucrats with “topical portfolios” award cash to winners of various “promise to stimulate [topic]” contests.
On the one hand, I am pleased to see the government providing public goods, i.e., stimulating efforts to help everyone.
On the other hand, these programs tend to find the least-productive incentives to advance the “topic”
(My one-handed view is that this structure is wrong… keep reading…)
So the irony is that the bureaucracy in charge of innovation…
…has permanent employment contracts and long vacations;
…gains nothing from success but loses nothing from failure;
…works in

Dear Readers,  Commenters, and Bears,
Bill and I are looking for an additional editor:
 a participant in running the Angry Bear site and interact with contributors and readers to encourage responses and moderate threads as administrator
add consistent points of view in posts and finding topics to supplement contributors efforts,
become knowledgeable with the administration of our site ranging from problem solving WordPress to registrations like Go-daddy, updates, liaison to host platform and advertisers,
and add new ideas and counsel with us.
Angry Bear is an older site (2003) which has been ahead of the national and global trends and events.   [We think we are good and also believe we can be better].
Please contact  me ([email protected]) or Bill

(Dan here…lifted from Robert’s Stochastic Thoughts)
by Robert Waldmann
To Be Sure Jennifer Senior
I just read an op-ed by Jennifer Senior. I am not 100% satisfied. To be sure, she denounces the Republican Party in no uncertain terms. The op-ed is not completely Balanced. However, old habits die hard. The op-ed contains a good bit of nonsense. Some of it is there to give the essay a beginning a middle and an end. More of it is a bit of reflexive bothsidesing.
First it begins “It’s that time of the campaign season when some Democrats are starting to feel — as President Jimmy Carter might have put it — malaise.” This is a reference to anectdotal evidence. It is not supported by polls of voter interest and enthusiasm or data on the number of campaign

By New Deal democrat
Weekly Indicators for October 21 – 25 at Seeking Alpha
My Weekly Indicators post is up at Seeking Alpha.
The producer side of the economy generally, and manufacturing specifically, remains weak or even contracting. But the larger consumer side, benefitting from lower mortgage rates, continues to power ahead.
As usual, clicking over and reading helps reward me a little bit for my efforts.

By New Deal democrat
The divergent nowcast and one model’s forecast at Seeking Alpha

Over 10 years ago I found a good, quick-and-dirty way of looking at the Index of Leading Indicators. It only matters at turning points, which means, for the first time since the 2015-16 “shallow industrial recession,” it’s worth looking at now.
That, plus a concise look at the bifurcation in the producer vs. consumer economy as it stands now, is a post I’ve put up over at Seeking Alpha.
As usual, clicking over and reading should hit you with a little dose of knowledge, and me with a little dose of coin to reward me for my efforts. After all, those books I’m reading on the historical antecedants to the American Republic aren’t boing to pay for themselves!