The increasing immigration will temporarily help those Ponzi schemes (if
one keeps the payroll taxes), but it will make the eventual crashes worse.
So cut off the funding and increase the liabilities. That is
fundamentally UNSOUND. My preferred term is INSANE.
David
To compel a man to subsidize with his taxes the propagation of ideas
which he disbelieves and abhors is sinful and tyrannical
To compel a man to subsidize with his taxes the propagation of ideas
which he disbelieves and abhors is sinful and tyrannical.*--Thomas
**Jeff**erson*
On 12/16/2013 1:31 PM, Dr. Ernie Prabhakar wrote:
Not a bad start, at least to talk about. The killer question IMHO is
how we think about and fund retirement in the absence of payroll taxes
-- and presence of open immigration.
Any bright ideas?
E
How to fix everything.
http://www.slate.com/blogs/moneybox/2013/10/23/how_to_fix_everything.html
------------------------------------------------------------------------
Detroit's Fox Theater is making a comeback, and so can America!
Photo by MIRA OBERMAN/AFP/Getty Images
I'm going on vacation tomorrow morning, so before I go I thought I
might leave you with a few thoughts about how to fix all of America's
problems. Well not really /all/ of them. Problems will still exist.
But one of my core beliefs is that most people overestimate the
/number/ of important problems in America while underestimating the
/severity/ of the handful of really serious problems.
Matthew YglesiasMatthew Yglesias
<http://www.slate.com/authors.matthew_yglesias.html>
Matthew Yglesias is */Slate/*'s business and economics correspondent.
He is the author of /The Rent Is Too Damn High/
<http://www.amazon.com/gp/product/B0078XGJXO/ref=as_li_ss_tl?ie=UTF8&tag=slatmaga-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=B0078XGJXO>.
* Follow <https://twitter.com/mattyglesias>
So lets fix these five things:
Advertisement
*Step one---short-term unemployment:* Big problem. The fix is to
suspend the payroll tax that funds Social Security entirely, and
replace the lost funding with money printed by the Federal Reserve.
Promise that said printing will continue until nominal income catches
up with its pre-crisis trend path, and that in the future the Federal
Reserve will be targeting the level of nominal income and using this
payroll tax swap as an /instrument/ if needed to keep the target on
track. I think there is a persuasive case that nominal income
targeting alone would work, but pairing the target with the addition
of this instrument should address the objections raised by fiscalists
(since the instrument is fiscal policy) but also most of the
objectives raised by demand denialists (since the instrument is also a
pro-growth supply-side reform).
*Step two---tax reform for real:* Most tax reform proposals are lame
small-beer nonsense that barely solves anything. Real tax reform
starts with taxing land value
<http://www.slate.com/blogs/moneybox/2013/10/17/land_value_tax_revenue_how_much_can_we_raise_by_taking_unimproved_land.html>
(which should include the value of mineral resources), taxing
pollution, taxing traffic congestion, and taxing public health hazards
(alcohol, soon-to-be-legal marijuana, Fritos) in order to
/drastically/ reduce taxes on labor. There are meaningful positive
externalities associated with people having jobs, so at the low end of
the spectrum income taxes should be negative (mega-EITC, basically).
*Step three---upzone everywhere:* I've been tedious on this subject,
but you know the gospel. Raise the real wages of people currently
residing in high-cost metro areas by reducing housing costs. Raise the
real wages of people currently not living in high-cost metro areas by
expanding access to the higher nominal wages in expensive cities.
Raise real wages even more by allowing everyone to take advantage of
the agglomeration externalities and gains from trade (through larger
market size and greater specialization) associated with greater
density. Also note that if /everyplace/ upzones, the actual impact on
the vast majority of specific places will be modest. It's a large
quantity of marginal changes that will make a huge difference.
*Step four---target higher population growth through immigration:*
Legalize otherwise law-abiding unauthorized migrants currently
residing in the United States. For the future, aim to use immigration
as a tool to increase America's population growth rate back up to
where we were in the postwar decades. Auction the visas. Use the
revenue to pay for border security and to compensate local governments
for local fiscal impacts. Create clear pathways through which
foreign-born and foreign-trained people can qualify as medical
professionals in the United States.
*Step five---innovate with prizes, not monopolies:* Right now we
create financial incentives for authors and inventors by handing out
monopolies as rewards. This makes some sense as an idea, but it also
drastically raises the cost of innovation alongside the reward to
innovation. There's a point on the tradeoff curve where you want to
be, and we've gone well beyond that good point. We need to scale back
copyright terms, scale back the scope of what's patentable, stop
letting IP issues dominate trade talks, and recognize that the
socially optimal level of infringement is higher than zero. Then build
back in some of the financial incentives with large prizes for
inventions in key areas, especially battery technology (a key
complement to clean energy) and pharmaceutical cures that can treat
illness outside the scope of Baumol's disease.
Obviously even this five-point plan would still leave people with lots
to fuss and argue about, including notably the education and health
care systems and the question of what is owed to people who struggle
economically even in a healthy labor market with a generally growing
economy and a progressive tax code. But I think these are all problems
that appear to loom so large primarily because we don't have a healthy
labor market and a generally growing economy and over the past
generation have only rarely had a healthy labor market and a generally
growing economy.
------------------------------------------------------------------------
(via Instapaper <http://www.instapaper.com/>)
Sent from my iPhone
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