Does a carbon tax make sense?

Proposals to levy taxes on carbon seem to be popular. A recent example is a proposal in the Wall Street Journal by a couple dozen economists, some of them famous. Why tax carbon dioxide (CO2)? The goal is to persuade people to use less fossil fuels, thereby reducing CO2 emissions and the risk of global warming. …

Sorry, AOC and de Blasio, only the middle class can pay for the Big Government you want

Alexandria Ocasio-Cortez (AOC) is the young, recently-elected Congresswoman from New York who has been in the news quite a bit lately. Bill de Blasio is the mayor of New York. Both have grand plans for expanding the size of government. Both also say they can pay for Big Government by taxing the rich. In a …

The economy is like a dog

Different people have different ideas of what the economy is like. Some people view the economy as a mysterious entity that just sort of automatically works. They think the economy will achieve prosperity almost regardless of incentives or burdens. Let’s call this the Inevitable Economy. Others view the economy as a machine that needs managed …

First things first

I often talk about the eternal struggle between liberty and control. In today’s world, that mostly means liberty of the individual versus the control of Big Government. Liberty advocates and Big Government advocates agree quite a bit on the economic results they wish to see. Both sides want broad prosperity, good-paying jobs, and an improved …

Why defend free trade?

Over the past fifty years, Republican politicians generally supported free trade while Democrat politicians generally opposed it. Not always, but generally. Then along came Trump, who repeatedly voiced his displeasure with free trade. Some Republican politicians have followed him into opposing free trade. As for Democrats, they usually support with vigor whatever Trump opposes, but …

Rebutting “Five Myths About Capitalism”

The Washington Post recently published an article by Steven Pearlstein titled “Five Myths About Capitalism.” This is a rebuttal of the issues raised in that article. Myth 1: Greed makes markets work Pearlstein: According to Pearlstein, capitalists believe capitalism runs on greed. As evidence of this he cites Adam Smith’s ‘invisible hand’ and Gordon Gekko from …

Has employment fully recovered from the Great Recession?

In mid-2017 I looked at whether unemployment had dropped to normal levels after the ‘Great Recession’ of 2008-2009. The conclusion was that unemployment had substantially improved since the recession but wasn’t as good as pre-recession levels. Where do we stand in late 2018? Let’s take a look. Definition of unemployment The Bureau of Labor Statistics …

Are middle-class incomes stagnant?

It’s a fairly common complaint that middle-class incomes have stagnated, or that the average worker is paid no better than in 1975 or 1980. How true is this? Let’s take a look. Hourly wage rate Let’s first look at the average hourly wage rate that gets a lot of press. The graph below shows average …

Is Social Security Going Broke?

Some people say Social Security is going broke. Others insist it’s not. Which view is right? Let’s look at some facts. Social Security explained First, let’s be sure we’re on the same page regarding the basic workings of Social Security. The primary cash inflow to Social Security is a 12.4% tax on workers, half paid …

What causes budget deficits, and how can we solve them?

My last couple posts have shown how much US government spending has mushroomed over the past century and in which categories. In this post we’ll look at federal budget deficits. History of budget deficits The graph below shows federal budget deficits and surpluses from 1955 to 2018. These are inflation-adjusted 2009 dollars from OMB. A …