Author: Administrator

Inflation or Deflation?

That was the title of a talk this evening by UCGSB Booth School prof John Cochrane.  “I don’t make forecasts,” he said, “but I can offer scenarios.”  He actually offered only one scenario, which is basically one of inflation.  We are all aware of the huge and growing federal debt, but it’s much smaller relative to GDP than it was in 1945.  So how have the feds paid off big debts?  Thru growth.

But we’re not growing, and future growth will be difficult if taxes are increased.  And it seems the bailout pattern is continuing, so who knows how high the debt might go? So inflation seems more likely than the opposite.  Cochrane pointed out that inflation is based on what people anticipate rather than actual events, and noted that Japan continues to experience little inflation despite a large debt.

Of course, he apparently didn’t consider the possibility that taxes might be raised on things not produced by people.

Also:

(1) He acknowledged that the Phillips Curve, the alleged inflation-unemployment tradeoff, isn’t supported by actual data over the past several decades, and showed a couple of charts illustrating this.

(2) Why he isn’t making a forecast: “I’m an economist; I don’t know anything about political will.”

(3) “Every economist I know [apparently including himself] is buying TIPS [Treasury Inflation-Protected Securities].” If that turns out to have been a smart strategy, I guess we should assume that economists are able to advise themselves better than they can the rest of us.

(4) Reportedly, the talk will be posted somewhere, probably around here, in a few days.

Extra help for idlers, from Jim Houlihan

New data shows, once again in 2007, that Cook County Assessor Jim Houlihan doesn’t think our tax laws give enough subsidy to land speculators, so he’s doing something extra to underassess vacant land.

By law and ordinance, he is supposed to put assessments at a specific proportion of what he estimates the actual value of real estate to be. These ratios have been adjusted over the years, and documentation is sparse, but for 2007 it appears that parcels containing single family or apartment buildings up to six units are to be assessed at 16% of value, and vacant land at 22%.

Annually, the Illinois Department of Revenue calculates the ratio between value assessed by Mr. Houlihan’s staff, and actual sales prices. The results for 2007(pdf)? Residential 8.34%, vacant 7.81%. (Not quite as bad as some previous years, however.)

The County is not ignoring this problem. Since the Assessor seems unable to assess vacant land at a higher percentage of value than land people use, they have changed the assessment policy so that, beginning wtih 2009, both residential and vacant land are to be assessed at 10% of value. We shall see how this proceeds.

Carbon tax vs. cap & trade

If global warming is in fact a problem, and if it can be controlled by reducing carbon emissions, then Georgists point out that “cap & trade” is a lousy way to accomplish this.  Yoram Bauman says  that a cap becomes effectively a floor, and that British Columbia actually has a revenue-neutral carbon tax.

Even if there’s no need to reduce carbon emissions, I don’t see how a carbon tax could be worse than taxes on retail sales and earned income.

Remember the Laffer Curve?

As a result of high taxes on cigarettes, UIC economist David Merriman estimates that “75 percent of cigarettes smoked in Chicago come from packs that don’t bear city tax stamps.”  Many, of course, also lack county and state stamps. And according to the Tribune.

In 2006, city revenues from cigarette taxes came in at a little less than $32 million. By 2008, they had declined to about $25 million. This year, they’re projected to drop again.

Helluva way to run a railroad

According to the November issue of Trains Magazine (not on the web afaik):

[T]wo key players …on the Amtrak board, Federal Railroad Administrator Joe Szabo and Amtrak president Joseph Boardman, cannot have any contact or even be in the same room together for one year due to federal ethics rules, because Boardman was the previous FRA administrator.

Couldn’t they just hire a lobbyist, or maybe get one of BHO’s Chicago buddies,  to contrive a way around the ethics laws?

“Health” care reform

I don’t see much thoughtful discussion of “health” care reform. (The quotes are because we’re really just talking about medical care.  Health is much more impacted by things like sewers, water treatment, and garbage collection than by physicians and hospitals). So I enjoyed this discussion of the Australian system compared to the U. S., with some talk of  the UK and France thrown in.  Especially the comments are enlightening.

The conclusion seems to be that to make decent medical care available pretty much universally and at a reasonable price, we need to squeeze the providers and work around the insurance companies. One commenter proposes mandatory catastrophic insurance combined with 100% consumer-paid routine care (which, to give this item a Georgist theme, can be funded out of the citizens’ dividend).  This is too reasonable to gain a fair trial in my lifetime.

Global climate data disappeared?

That’s the inference from this article. The original global climate data compiled in the 1980s seems to have been lost.  Adjusted data remain, but the adjustment methods apparently aren’t fully documented.

I doubt that this development is going to change anybody’s mind, especially because it originated in National Review. But it will be interesting to see whether it even gets much media coverage.