More Support on U.S. Debt

I linked an article on growth patterns, wages and debt this morning. Here is some additional supporting data.

Read the article that produced this quote

From The Atlantic:

In this time of economic uncertainty and political strife, the United States must play to its strengths. Our most enduring strength – the thing that sets us apart and ahead – has always been that we are the country where the world’s best want to live. In return for the chance to live here, immigrants have time and again helped our nation to maintain its pole position among the nations of the Earth.

The Appropriate Subject of Every Obama-Romney Debate or The Best Thing I’ve Read All Week

Exports as a Percentage of Output

Writing in The American Interest, Tyler Cowen suggests:

Export success will resurrect the United States as a dominant global economic power. America will be wealthier, its products will have greater global reach, and it will largely cure its trade imbalance with China. The fear of American foreign policy being determined by Beijing, or constrained by the financial resources of the Chinese central bank, will be forgotten. No one will view the United States as the borrowing supplicant in the U.S.-China economic relationship, and, all else equal, our exports to China will increase friendly feelings toward that country.

To which Ryan Avent responds:

During the industrial revolution, there were far fewer obstacles to the sweeping economic change generated by transformative technologies. That lack of obstacles generated more than a few nasty outcomes, including labour and environmental conditions at which we now recoil. We’re nonetheless grateful, I think, that it occurred and was so transformative. Today’s economies simply aren’t as flexible as they used to be. If that leaves whole sectors of the economy walled off from change, then the impact on growth in incomes, employment, and especially living standards could be significant.

Read both posts. They are interesting, especially Cowen’s article. As my title suggests this should be the topic of the Obama-Romney debates.

If you like graphs you’ll like this

The Brookings Institute has released its “How We’re Doing Index” today.

Follow the jump for a graphic of everything they show in this release.

The Great Gatsby Curve: The Economics Debate Du Jour

The world of economics debating, blogging, and discussing is alive this week with a debate involving what the Chairman of the Council of Economic Advisors, Alan Krueger, referred to in a January 12 speech at the Center for American Progress as the “Great Gatsby Curve.” Everyone is getting into this debate; first it was Scott Winship, then Miles Corak, then Tyler Cowen, then Scott Winship again, then Miles Corak again, then Scott Winship once more and at some point Paul Krugman and Matt Yglesias added some commentary.

A Fair Look at Capital Gains Taxation

From David Frum’s article on capital gains taxation:

A capital gains tax is a tax on the transfer of control of assets. If that tax is set too high, it can discourage even the most glaringly urgent transfers of control. Under Joe’s management, the value of the company may rise 30%. But if the capital gains rate is set at 50%, then the transaction from Jane to Joe will not occur—and everybody will be worse off.

He goes on to say:

That said, there are problems with the capital gains system of the United States, and two seem especially pressing right now…

I’ll let you read the article to get the two problems he references. This is a great example of reasonably analyzing an issue, and, for that reason, I wanted to share it with others.

A brief response to Ken Rogoff’s column

Earlier today I posted a link to Ken Rogoff’s recent Project-Syndicate column examining the sustainability of modern (Western) capitalism. Rogoff lists what he sees as the five major flaws of capitalism in its present, dominant incarnation, which are:

1. Failure in pricing public goods (e.g. clean air and water)
2. “[E]xtraordinary levels of inequality”
3. Market failures in medical care
4. Undervaluation of future generation needs, welfare, etc.
5. Financial crises

While Rogoff identifies five unique failures of capitalism, however I would synthesize all of his observations into one, a failure to account for the long-run. (more after the jump)

Love for Calvin Coolidge from the Economist

It may not necessarily be “love” for Silent Cal, but this article in this week’s Economist uses President Coolidge to make a good point. The article observes:

This ideological civil war has led to the marginalisation of corporate America. In the Republican Party country-club types have been elbowed aside by Rush Limbaugh listeners. In the Democratic Party the business-friendly centrists who flourished under Bill Clinton have been sidelined by Ivy League intellectuals and trade-union and minority activists.