Think Economically

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Maximum understanding, minimum average total cost.

Hark! A Vagrant plug, and a link to a sad and touching comic

Kate Beaton is my favorite working comic artist. This one’s a touching story about loss, and small towns.

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Brief: rich people make more of the money, labor pays more of the taxes

So, via my friend (and rich person supporter extraordinaire) Bob Buschman, Ari Fleischer bloviates nonsensically about the rich being unfairly taxed. Buried in there is the following:

The top 20% in 1979 made 44.9% of the nation’s income and paid 55.3% of all federal taxes. Thirty years later, the top 20% made 50.8% of the nation’s income and their share of federal taxes paid had jumped to 67.9%.

And the top 1%? In 1979, this group earned 8.9% of the nation’s income and paid 14.2% of all federal taxes. In 2009, they earned 13.4% of the nation’s income but their share of the federal tax burden rose to 22.3%.

So the top 20% went from making 44.9% of income to making 50.8% of income, and the top 1%? From 8.9% of income to 13.4% of income. Fleischer’s upset that their share of the tax burden rose faster, but guess what–if they (and by they, I mean we, of course) made 100% of income, they’d pay 100% of the taxes.

Arm und Reich (flämisch 17 Jh)
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The *real* real problem with financial regulatory reform: closing our model

“How come good people do bad things?”

So people are thinking and talking about this and there are two glaring problems in the discussion. First, “the structure of regulation” will never be done, complete, finished–it’s a game we make up as we go along. Second, the question “How come good people do bad things?” is the wrong question.

Jim Surowiecki argues that regulators need to focus more on “preventing malfeasance from happening.” John Kay argues that we need “a structure of regulation” that fixes perverse incentives and makes people–or financial institutions–more trustworthy.

Felix Salmon shoots holes in both of them, basically saying “yeah, good luck with that.” Which I’d like to reinterpret: for real, good luck.

The answer: people do things, and smart people do creative things, and there is no fix–there is managing society, and if everyone does what people do, it’ll never end. There is no regulation to solve it–but we have to put up a dam and pile up the levees or the torrent of human intention will go places we don’t want it.

Tunnel under the embankment - geograph.org.uk - 1154526

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Training your elephant: how to make yourself do what you already promised yourself you would do.

Some of my students have asked me for advice on how to achieve, and as someone who almost failed out of college, then went on to finish a Ph.D., I suppose I’m in a position to provide some advice on the matter. I tried to boil it down for one of them, and the three most important things that I came to were:

  1. Making active decisions about how you spend your time.
  2. Setting long-term goals.
  3. Driving your discount rate down.
These are really important to me. I still feel like the person who almost ruined his life, and I think of the disciplined exercise of these as a bulwark against the loss of everything I hold dear. It’s been a decade since I really behaved badly, but it’s an ever-present fear.

 

The third one is the least straight-forward, and the first one is the hardest to do in practice, and I was thinking about what stands in the way. Time inconsistency of preferences is closely related to the interface between spending time wisely and your discount rate, and it can throw the whole thing off, though, and so I wanted to talk a little about it.

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Art, baseball, story and self-reference: post-modernism can’t make you more naked than naked.

So I got into a discussion this weekend about movies and television shows and books, and we were throwing stories around, by which I mean naming and recommending and panning narratives by title, and there wasn’t that much more to it, except that when you’re dropping the references to which the referents are hundreds or thousands of pages or dozens of hours as the final product of thousands of person-hours of writing and directing and costumery and millions of dollars or blood and tears invested, then the mind can reel a bit when you try to wrap your head around it.

by Zaphod

On the face of it, though, it was just a bunch of people talking about the books and movies and TV shows that they like. The idea that one could be entertained or enlightened by the exchange of references seems to be a source of some angst. It need not be a source of guilt. Postmodernism isn’t really going to destroy anything worth caring deeply about after all, except maybe its adherents’ career prospects, eventually. Read the rest of this entry »

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