Confessions of a Supply-Side Liberal

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Charles Lane on Thomas Piketty and Henry George

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Link to Wikipedia article on Henry George

Charles Lane compares Thomas Piketty to Henry George in hi May 15, 2014 Washington Post op-ed,  

Thomas Piketty identifies an important ill of capitalism but not its cure.

Charles gives a succinct evaluation of both Thomas’s and Henry’s proposals:

Alas, Piketty’s global wealth tax and George’s single tax suffer from the same defect, and it’s not political impracticality — after all, George nearly got himself elected mayor of New York City in 1886.

It’s the inherent difficulty of separating the productive, untaxed component of the return on land or capital from the unproductive, taxed part. …

As a result, it’s hard to devise a tax on wealth that raises a significant amount of revenue but doesn’t discourage at least some socially beneficial saving or entre­pre­neur­ship. The potential for adverse unintended consequences — economic and political — is greater than Piketty seems to realize.

Quite distinct from this concern about incentives, Charles goes on to a positive note about having power in the hands of private individuals:

Great private fortunes can indeed entitle their owners to an undue share of society’s current income and political power. At times, however, private wealth can serve as a font of charity or, indeed, a bulwark against government overreach.

These are indeed the key issues to think about in relation to wealth taxation. 

I have always liked Henry George’s proposal, and pointed out how a carbon tax can be seen as akin to Henry George’s single tax in my post “‘Henry George and the Carbon Tax’: A Quick Response to Noah Smith.” And I like Noah’s application of Henry George’s idea to San Francisco. But Thomas Piketty himself points to the difficulty of getting enough revenue from taxing the value of unimproved land alone:

In particular, it seems impossible to compare in any precise way the value of pure land long ago with its value today. The principal issue today is urban land: farmland is worth less than 10 percent of national income in both France and Britain. But it is no easier to measure the value of pure urban land today, independent not only of buildings and construction but also of infrastructure and other improvements needed to make the land attractive, than to measure the value of pure farmland in the eighteenth century. According to my estimates, the annual flow of investment over the past few decades can account for almost all the value of wealth, including wealth in real estate, in 2010. …

… the fact that total capital, especially in real estate, in the rich countries can be explained fairly well in terms of the accumulation of flows of saving and investment obviously does not preclude the existence of large local capital gains linked to the concentration of population in particular areas, such as major capitals. It would not make much sense to explain the increase in the value of buildings on the Champs-Elysées or, for that matter, anywhere in Paris exclusively in terms of investment flows. Our estimates suggest, however, that these large capital gains on real estate in certain areas were largely compensated by capital losses in other areas, which became less attractive, such as smaller cities or decaying neighborhoods. (Capital in the Twenty-First Century, p. 197.)

Thomas Piketty’s example of the unearned rise in the value of one’s urban land may seem like an opening for non-distortionary taxation, but in fact from the standpoint of efficiency these positive externalities suggest subsidizing all activities that create these positive externalities for land values, of which just as many are private activities as are activities of the government. (And many activities of the government do not raise land values.) Also, I worry that urban governments often make land prices for certain favored plots go up while reducing the total value of land (and social welfare) by putting tight restrictions on building. This is a concern that Matthew Yglesias raises in his book The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think.

Filed under longrunfiscal

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Timothy Dolan: The Pope’s Case for Virtuous Capitalism

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Cardinal Timothy Dolan with Pope Francis. Image from a book review for Life Lessons from Life with My Brother, Timothy Cardinal Dolan in the Catholic Sun

Cardinal Timothy Dolan is the Catholic Archbishop of New York, and was President of the United States Conference of Catholic Bishops from 2010–2013. So Timothy’s interpretation in his May 22, 2014 Wall Street Journal op-ed,  The Pope’s Case for Virtuous Capitalism of what Pope Francis has said about capitalism is of some interest.  

Defending Capitalism. In his op-ed, Timothy make this strong statement in capitalism’s defense:

… the answer to problems with the free market is not to reject economic liberty in favor of government control. The church has consistently rejected coercive systems of socialism and collectivism, because they violate inherent human rights to economic freedom and private property. When properly regulated, a free market can certainly foster greater productivity and prosperity.

And he writes that “The spread of the free market has undoubtedly led to a tremendous increase in overall wealth and well-being around the world.” Further, “One does not have to subscribe uncritically to the notion that ‘a rising tide lifts all boats’ to acknowledge that all people, including the poor, benefit from a general increase in the overall wealth of society.”

Why then does capitalism often have a bad name, and why does Pope Francis sometimes sound as if he is speaking against Capitalism? Timothy writes:

… what many people around the world experience as “capitalism” isn’t recognizable to Americans. For many in developing or newly industrialized countries, what passes as capitalism is an exploitative racket for the benefit of the few powerful and wealthy. Americans must remember that the holy father is speaking to this world-wide audience.

In other words, it isn’t American capitalism that is the problem, it is what passes for “capitalism” in countries that have not yet fully passed the acid test of true capitalism: making the people of a country rich, at least on average. 

In this passage, Timothy even sounds like an economic libertarian:

The church believes that prosperity and earthly blessings can be a good thing, gifts from God for our well-being and the common good. It is part of human nature to work and produce, and everyone has the natural right to economic initiative and to enjoy the fruits of their labors.

But this should not be overinterpreted, since he also writes “abundance is for the benefit of all people” and 

Fortunately, few people subscribe to an inhumane philosophy of radical economic individualism, and even fewer consider the “Wolf of Wall Street” to be a good role model.

The Duty to Take Care of the Poor. Timothy condemns fraud, which I hope even the most ardent apologist for unfettered capitalism would not try to justify. Beyond that, to the extent capitalism needs to be tempered, it is in order to take care of the poor and downtrodden, something that is also a central Supply-Side Liberal imperative, as I recently wrote in my second anniversary post “Three Revolutions.” Timothy states the imperative of taking care of the poor and downtrodden in these three passages:

1. … Pope Francis is certainly correct that “an important part of humanity does not share in the benefits of progress.” Far too many people live in poverty and have few opportunities to achieve prosperity. And so the pope, and many others, are deeply concerned about the development of a “throwaway culture,” an “economy of exclusion” and a “culture of death” that corrode human dignity and marginalize the poor.

It is in this context that the holy father’s earlier criticism of “trickle-down economics” can be properly understood. 

2. But the church certainly disapproves of any system of unregulated economic amorality, which leaves people at the mercy of impersonal market forces, where they have no choice but to sink, swim or be left with the scraps that fall from the table. That kind of environment produces the evils of greed, envy, fraud, misuse of riches, gross luxury and exploitation of the poor and the laborer. 

3. The great Renaissance humanist Erasmus once said, “He does not sail badly who steers a middle course.” This advice would be well worth keeping in mind. By maintaining a sound middle course on economic issues, Pope Francis is able to remind us that free economic activity should indeed be pursued, but the human dignity of our needy brothers and sisters must always be at the center of our attention.

Minimizing the Need for Government Control by Realizing that Most People Do Care, and Can Be Encouraged to Care More. If government control is not the answer, then how will the poor be taken care of? Timothy emphasizes the kind of altruism that motivates voluntary efforts to help the poor. He is not clear about when a failure of individual altruism to take care of the poor would justify government intervention. My answer is a public contribution system that insists that those who are well off do in fact contribute to public goods, including especially taking care of the poor, but allows individuals to choose within broad parameters exactly how they will contribute to public goods. (Ordinarily, those contributions would be made through the nonprofit sector. A few might choose to give to particular arms of the government. This is not a libertarian solution, since if someone in the relevant income range refused to make contributions—which few would—they would be taxed the equivalent amount.) I believe such a system would be much less distortionary than the equivalent in taxes because most people really do care about others. In addition to creating less distortion, and allowing for creativity (and therefore technological progress) in providing public goods, one of the great advantages of a public contribution system is that, over time, it will encourage people to strengthen their altruism and public-spiritedness. They may grumble at the requirement to contribute, but then their minds will soon turn to the choice of exactly which cause to contribute to, and many will come to love the causes they have chosen and the people they are able to help with their contributions. 

Although I am much too small a fish for Timothy to be likely to take any notice of my proposal without support from heavier hitters, I hope that if he did become aware of it, that he would favor the kind of public contribution system I am advocating. Although direct contributions to churches would not be part of this system, associated humanitarian organizations, such as Catholic Relief Services, would be included (with the usual fights about whether church-associated humanitarian organizations are pushing religion too much in the course of their humanitarian activities). I believe that a public contribution system would do a lot to foster exactly the kind of virtues that Timothy calls for. I want you to consider that as you read these passages:

1. From media reports, one might think that the only thing on the pope’s mind was government redistribution of property, as if he were denouncing capitalism and endorsing some form of socialism. This is unfortunate, because it overlooks the principal focus of Pope Francis' economic teaching—that economic and social activity must be based on the virtues of compassion and generosity.

2. … as the pope continually emphasizes, the essential element is genuine human virtue.

3. The church has long taught that the value of any economic system rests on the personal virtue of the individuals who take part in it, and on the morality of their day-to-day decisions. Business can be a noble vocation, so long as those engaged in it also serve the common good, acting with a sense of generosity in addition to self-interest.

4. … Pope Francis recalled the story of Zacchaeus, in which Jesus inspires the repentant tax collector to make a radical decision to put his economic wealth at the service of others. This reminds us that a spirit of sharing and solidarity with others, in the words of Francis, “should be at the beginning and end of all political and economic activity.” 

In his final paragraph, which I will not quote here, Timothy loses focus. To summarize the message I want to get across, I instead like Timothy’s third-to-last paragraph:

In other words, virtuous people, acting justly, compassionately and honestly, are the foundation of good economic or business activity that can produce prosperity for all, and not just for a few.

Filed under religionhumanitiesscience longrunfiscal

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Matthijs Lof and Tuomas Malinen: The Growth and Sovereign Debt Correlation

It is close to the anniversary of the revelations of problems in the Reinhart and Rogoff data, which also inspired many substantive reanalyses. The article linked above cites my column with Yichuan Wang, "After Crunching Reinhart and Rogoff’s Data, We Found No Evidence High Debt Slows Growth." For more links, see my followup column with Yichuan: "Examining the Entrails: Is There Any Evidence for an Effect of Debt on Growth in the Reinhart and Rogoff Data?"

See also Salim Furth’s article "Reinhart, Rogoff and the Spreadsheet Error a Year Later," noting how few economists seem to have publicly admitted to changing their minds. In a tweet, Salim specifically exempts me from that criticism, in view of my column "An Economist’s Mea Culpa: I Relied on Reinhart and Rogoff" and my work with Yichuan, inspired in part by my chagrin at my mistake. 

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Capital Budgeting: The Powerpoint File

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Writing “One of the Biggest Threats to America’s Future Has the Easiest Fix" with Noah Smith about capital budgeting inspired the seminar presentation I am giving today at the Congressional Budget Office, Here is a link to my Powerpoint file for the presentation:

The Applied Theory of Capital Budgeting

It is quite technical, and is a work in progress. If you do want to brave it, I recommend that you first read ”One of the Biggest Threats to America’s Future Has the Easiest Fix.”

Update: I learned today that the Congressional Budget Office put out a document on “Capital Budgeting” in 2008. I hope they now put out a new document on capital budgeting!

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Quartz #46—>One of the Biggest Threats to America’s Future Has the Easiest Fix

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Link to the Column on Quartz

Here is the full text of my 46th Quartz column, coauthored with Noah Smith, "One of the biggest threats to America’s future has the easiest fix," now brought home to supplysideliberal.com. (I expect Noah will post it on his blog Noahpinion as well.) It was first published on February 4, 2014. Links to all my other columns can be found here.

Writing this column inspired a presentation on capital budgeting I gave at the Congressional Budget Office. See my post "Capital Budgeting: The Powerpoint File."

If you want to mirror the content of this post on another site, that is possible for a limited time if you read the legal notice at this link and include both a link to the original Quartz column and the following copyright notice:

© February 4, 2014: Miles Kimball, as first published on Quartz. Used by permission according to a temporary nonexclusive license expiring June 30, 2015. All rights reserved.

Noah has agreed to allow mirroring of our joint columns on the same terms as I do, after they are posted here.

I talked about some of the issues of capital budgeting addressed in this column a while back in my post "What to Do When the World Desperately Wants to Lend Us Money" and Noah has talked about the importance of infrastructure investment a great deal on his blog .

Other Threats to America’s Future: Our editor wanted to title the column “The biggest threat to America’s future has the easiest fix.” I objected that I didn’t think it was the very biggest threat to America’s future. I worry about nuclear proliferation. Short of that, I believe the biggest threat to America’s future is letting China surpass America in total GDP and ultimately military might by not opening our doors wider to immigration—a threat I discuss in my column "Benjamin Franklin’s Strategy to Make the US a Superpower Worked Once, Why Not Try It Again?"

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In the 1990s, with its economy stagnating after a financial crisis, Japan lavished billions on infrastructure investment. The Japanese government lined rivers and beaches with concrete, turned parks into parking lots, and built bridges to nowhere. The splurge of spending may have allowed Japan to limp along without a full-blown depression, but added to the mountain of government debt that remains to this day.

Given Japan’s experience, it may seem odd for us to call for an increase in America’s infrastructure investment. In terms of infrastructure, the US now is not Japan in the 1990s. They didn’t need to build … but we do.

First, the United States is a lot larger than Japan, and larger than the densely populated countries of Europe. We have a lot more ground to cover with highways, bridges, power lines, and broadband infrastructure. We need to be spending a higher fraction of our GDP on these transportation and communication links—but instead, we spend about the same or less.

Second, where Japan’s infrastructure was in good condition when the spending binge started, America’s infrastructure is in hideous disrepair. The American Society of Civil Engineers gives America’s infrastructure a “D+”. Although infrastructure opponents typically dismiss the opinions of civil engineers (who, after all, stand to personally gain from increased infrastructure spending), McKinsey released a recent report saying much the same thing. McKinsey notes that Japan is spending about twice as much as it needs to on infrastructure. But the US is spending only about three-fourths of what we should be spending. The Associated Press piles on, saying that 65,000 American bridges are “structurally deficient.” A former secretary of energy says our power grid is at “Third World” levels. The list of infrastructure woes goes on, and on, and on.

This is not the picture of a country with a healthy infrastructure.

We need to rebuild our infrastructure, and now is the perfect time to do it. Interest rates are at historic lows, but they are unlikely to stay there forever. Our government has a unique opportunity to borrow cheaply to fund infrastructure projects that will generate a positive return for the country. (If the increased spending acts as a Keynesian “stimulus,” so much the better.)

But infrastructure budgets have been cut, not expanded. Why? One reason is that in the race to cut the deficit, infrastructure spending has been lumped in with other types of spending. That is a tragic mistake. Unlike government “transfers,” which simply take money from person A and give it to person B, infrastructure leaves us with something that helps the private sector do business, and thus boosts our GDP growth. Infrastructure is a small percentage of overall federal spending, but tends to be a politically easy target.

One idea to boost infrastructure spending, therefore, is to treat government investments differently from other kinds of government spending by having aseparate capital budget.  A separate capital budget has been suggested, but so far, the effort has foundered. There is a lot of confusion over which types of spending represent an “investment in the future.” Some politicians tend to argue that almost anything that helps people is an investment in the future, and so is a legitimate part of a capital budget. But of course everything in the government’s budget is something that someone thinks will help people!  So what is needed is a clear criterion to determine what should be in the capital budget and what should be in the regular budget.

There should be a fairly stringent set of criteria for what belongs in a capital budget. Furthermore, these criteria should appeal to both parties. Here is what we suggest as criteria to keep the capital budget “pure”:

1.     If experts agree that an expenditure will raise future tax revenue by increasing GDP, then it belongs in the capital budget. If it can pay for itself entirely out of extra tax revenue in the future then it should be 100% on the capital budget. If it can pay for half of its cost out of extra tax revenue in the future, than it should be 50% on the capital budget. The provision “experts agree” requires some sort of independent commission doing an economic analysis with appointees from both parties, and with, say, two-thirds of the commissioners needing to agree that the value of future tax revenue is likely to be above a given level.

2.     Even if an expenditure will not raise future tax revenue, it can count as a capital expenditure if it is a one-time expenditure—that is, if it makes sense to have a surge in spending followed by a much lower maintenance level of spending in that area. This will only be true if it pushes the existing stock of infrastructure, other government capital, or knowledge to a higher level than before, not if it just keeps things even. Crucially, by this logic, anything that lets the stock of infrastructure or other government capital decline would count as anegative capital expenditure. This principle enables the capital budget accounting to sound a warning when the nation is letting its infrastructure crumble away, and also allows sensible decisions about shifting funds from older forms of infrastructure toward modern forms of infrastructure needed by a fast-moving economy.

As our mention of the stock of knowledge suggests, a capital budget can also be a good way to make sure that America doesn’t underinvest in basic scientific research. However great the importance of better roads and bridges, it makes sense to weigh the benefits of those roads and bridges against the benefits of research that might someday conquer Alzheimer’s disease, or research on how to make the way math is taught in our public schools so exciting that every high school graduate in America is able to do the math needed to, say, operate computerized machine tools.

With proposals like these on the table, we believe there is a chance that Republicans and Democrats could agree to set infrastructure and other legitimate capital spending aside as an issue that should not be a victim of titanic political battles over the deficit. Of course, someday, if we find ourselves in Japan’s position of spending so much on infrastructure that it starts adding significant amounts to the debt, then the capital budget should become an issue in deficit fights as well. But we are far from that point.

Both Republicans and Democrats want to govern a country that is as rich and prosperous as possible. America’s businesses need good infrastructure to move their goods from place to place—and there is no question that we need the solid new ideas that research can provide. Economists of all stripes will agree that if a nation is under-spending on infrastructure and other legitimate capital spending—as America is right now —then boosting that spending is a win-win. It’s time to look beyond our fights over how to divide America’s pie, and focus on making the pie bigger.

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Technical Afterword

There is a very interesting feature to our proposed capital budgeting system that we should highlight. How can the capital budget ever be negative? The capital budget plus the non-capital budget must add up to the total budget. So for a given total budget, a negative capital budget makes the non-capital budget bigger. What is going on is this: regular maintenance is like a quasi-entitlement within the non-capital budget. In any given year, regular maintenance as a component of the non-capital budget is fixed in advance and can’t be altered by the legislature. The only way it changes is that it is gradually reduced if the quantity of capital to be maintained gets lower, or gradually increased if the amount of capital to be maintained gets bigger.

In this lack of discretion about regular maintenance as a component of the non-capital budget, there is no real tying of the hands of the legislature: they could always choose to have a very negative capital budget, which would increase the non-capital budget enough to cover that maintenance. So if the legislature as a whole acted like a fully rational actor, this principle is not a constraint at all. But as political economy, it makes a difference, and a good one. The legislature can increase the non-capital budget and reduce the capital budget. But what the legislature can’t do is get more funds for other things by letting capital decay without it showing up in the accounting as an increase in the regular budget and reduction in the capital budget. 

Filed under fullcolumns longrunfiscal

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One of the Biggest Threats to America’s Future Has the Easiest Fix

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Here is a link to my 46th column on Quartz, “One of the biggest threats to America’s future has the easiest fix,” coauthored with Noah Smith. I talked about some of the issues of capital budgeting addressed in this column a while back in my post "What to Do When the World Desperately Wants to Lend Us Money" and Noah has talked about the importance of infrastructure investment a great deal on his blog Noahpinion.

Other Threats to America’s Future: Our editor wanted to title the column “The biggest threat to America’s future has the easiest fix.” I objected that I didn’t think it was the very biggest threat to America’s future. I worry about nuclear proliferation. Short of that, I believe the biggest threat to America’s future is letting China surpass America in total GDP and ultimately military might by not opening our doors wider to immigration—a threat I discuss in my column "Benjamin Franklin’s Strategy to Make the US a Superpower Worked Once, Why Not Try It Again?" 

Technical Afterword to the Column (Please Read Column First)

There is a very interesting feature to our proposed capital budgeting system that we should highlight. How can the capital budget ever be negative? The capital budget plus the non-capital budget must add up to the total budget. So for a given total budget, a negative capital budget makes the non-capital budget bigger. What is going on is this: regular maintenance is like a quasi-entitlement within the non-capital budget. In any given year, regular maintenance as a component of the non-capital budget is fixed in advance and can’t be altered by the legislature. The only way it changes is that it is gradually reduced if the quantity of capital to be maintained gets lower, or gradually increased if the amount of capital to be maintained gets bigger.

In this lack of discretion about regular maintenance as a component of the non-capital budget, there is no real tying of the hands of the legislature: they could always choose to have a very negative capital budget, which would increase the non-capital budget enough to cover that maintenance. So if the legislature as a whole acted like a fully rational actor, this principle is not a constraint at all. But as political economy, it makes a difference, and a good one. The legislature can increase the non-capital budget and reduce the capital budget. But what the legislature can’t do is get more funds for other things by letting capital decay without it showing up in the accounting as an increase in the regular budget and reduction in the capital budget. 

Filed under longrunfiscal columns

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Josh Barro: We Need a New Supply Side Economics—Here Are 8 Things We Can Do

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Josh Barro

Noah Smith and Christopher Cordeiro tweeted that Josh Barro’s column "We Need A New Supply Side Economics — Here Are 8 Things We Can Do" sounded like ideas I would favor. They are right. 

I fully agree with Josh’s lead-in:

Demand stimulation remains the right goal today, but it’s not going to be the right goal forever. …

We’re going to need a new supply side economics that encourages people to work, invest and innovate.

Some of Josh’s proposals cost money, for which he proposes more progressive income taxes as a revenue source (as his 8th point). I have proposed tapping the resources of the rich in a different way. I want to  finance an expansion of the nonprofit sector (see the links in "The Red Banker on Supply-Side Liberalism"). To get there politically, I enunciated the principle of "No Tax Increase Without Recompense." So I cannot go along with Josh’s proposal raise income taxes at the upper end in a conventional way. (Also see the Twitter discussions "Daniel Altman and Miles Kimball: Should We Expand Government or Expand the Nonprofit Sector?" and "Daniel Altman and Miles Kimball: Is It OK to Let the Rich Be Rich As Long As We Take Care of the Poor?") The expansion of the nonprofit sector that I propose will help the poor tremendously in many ways beyond the dimension Josh is focuses on. 

More generally, I think it is better to build progressivity into the spending side of the government’s activities—including transfers—than into the tax side. Instead, I think Josh’s proposed enhancements of programs to direct more resources toward the poor can also serve as ways to compensate the poor for increases in increases in taxes on externalities such as carbon dioxide emissions and the consumption of soft drinks and junk food that affect the behavior of all those around us through not-fully-conscious social influences

Here is Josh’s list, minus the income tax increase, with my comments:

1. Invest in smart infrastructure, ideally without building much.

Yes! Noah and I have an column on infrastructure investment. And I agree with Josh that it is a bad habit to get into to think of infrastructure investment as a demand-side thing. We need to keep in our sights getting supply-side benefits from the infrastructure investments that we make.  

I would emphasize government support for basic research in the same breath as infrastructure investment. Indeed, I think there is even more supply-side benefit to be had from government support for basic research than from additional infrastructure investment. 

2. Reform means-tested entitlements without soaking the poor.

Josh wants to phase out aid to the poor more slowly with higher income, in order to avoid discouraging people from working hard and avoid discouraging people from building their careers through education and other means. This is great, but it will cost the government more money. I would like to reward healthy eating and not contributing too much to global warming across the whole population, as well as rewarding the poor for working hard and getting an education. That combination can finance itself.    

3. Move the deregulatory agenda down to the state and local level.

This is one of Josh’s points that I think needs to be shouted from the rooftops. Here is the full text of what he said on this point:

In the 1970s, the big deregulation fights were properly at the federal level. Then the government deregulated airlines and trucking. Though technological change, regulation has become less important in broadcasting and telecommunications. Bank deregulation has been a mixed bag over this period; people talk about it as a cautionary tale, but some of the deregulations (such as ending the limit on savings account interest and allowing interstate banking) have served consumers very well.

The big federal regulatory fights that remain are in mostly areas where the federal government properly uses a heavy hand: banking and securities, and environmental protection.

The next round of big deregulation fights should be at the state and local level. Governments impose pro-incumbent regulations on a variety of industries from barbering to interior design to medicine to restaurants. These rules raise incomes for existing practitioners, but they make it difficult for new practitioners to enter the fields, and they raise consumer prices.

State and local governments should stop doing this.

In the interest of promoting interstate commerce, the federal government should pre-empt many of these regulations. For example, states should be forced to allow a broad scope of practice for nurse practitioners so they can serve as independent primary care providers. This would reduce doctors’ incomes, but it would reduce the cost of health care, raise patients’ real incomes and help to control government expenditure.

What I have said on this topic can be found in my post

4. Deregulate America’s most overregulated industry: real estate.

Here, Josh is on the same side as Matthew Yglesias, who wrote the book on this issue: The Rent is Too Damn High. I am part of the cheering section for their efforts. Given the fraction of household budgets spent on housing, this is a huge issue.  

5. Reform intellectual property — by weakening it. 

I endorse this idea in my link post "The Wonderful, Now Suppressed, Republican Study Committee Brief on Copyright Law." I also muse on how much protection is necessary in my post "Copyright." Wonderful, amazing new things will happen if we shift to less restrictive intellectual property rules. And if we overshoot in a way that undercompensates creators, that can easily be fixed later. It is high time we experimented with more fluid rules. 

Given the pace of innovation and the rate at which things become obsolete, one change that almost certainly a winner is to shorten the term for patents and copyrights. The only place this seems problematic is in retaining adequate incentives for the development of new drugs. There, combining a shorter period of exclusivity with the government paying for half of the cost of drug trials would probably keep just as much innovation while still helping the government budget, since the government pays for drugs as part of Medicare now.  

6. Improve education, somehow.

I have written a fair amount about education. Improving education will be an ongoing theme for me. Here is a link to my sub-blog on education, and here are some of the most important posts:

7. Admit more high-skill immigrants.

More open borders is something I am passionate about. But I would not limit it to high-skill immigrants. Helping the poor who are currently in other countries is also important. Here are some of my more important posts in that vein:

Filed under growth longrunfiscal