The Agenda

Stray Links for Christmas 2012

Sadly, these links have no shared Christmas theme, but I hope you have a Merry Christmas regardless.

(1) James Alan Fox, a criminologist at Northeastern University, has an informative post addressing some of the myths surrounding mass shootings. Every one of his observations merits close attention, but the following struck me as particularly worthwhile:

Myth: Greater attention and response to the telltale warning signs will allow us to identify would-be mass killers before they act.

Reality: While there are some common features in the profile of a mass murderer (depression, resentment, social isolation, tendency to blame others for their misfortunes, fascination with violence, and interest in weaponry), those characteristics are all fairly prevalent in the general population. Any attempt to predict would produce many false positives. Actually, the telltale warning signs come into clear focus only after the deadly deed.

(2) When it rains, it pours. The speed with which the case for nominal GDP level targeting has been gaining ground is extraordinary. Recently, Jeffrey Frankel, who served on President Clinton’s CEA, explicitly made the case for NGDPLT. The widely-respected Kemal Dervis has said that NGDPLT “deserves to be discussed,” which represents significant progress. And Mohamed A. El-Erian has offered a veiled critique of NGDPLT that is so sotto voce as to underscore the fact that the train has left the station:

As much as Bernanke and others wish otherwise – and as much as bickering politicians seek to dump policy responsibilities on others – central banks do not have the proper tools to deal with the component of the unemployment crisis that results from insufficient investment in education, training, and physical capital. Likewise, they cannot fix debt overhangs, repair broken home financing, or address medium-term fiscal-reform challenges on their own.

The best that central banks can do is to buy time, albeit at an increasing cost, for other policymaking entities to get their act together. If this window closes, the monetary-policy paradigm shift now visible in the US, Britain, and Japan would risk a damaging loss of credibility and political independence for institutions that are critical to well-managed economies.

It will be very interesting to see what happens on this front in 2013, particularly in Britain and the U.S. Scott Sumner should be very proud, though he’s not the boastful type. Among NGDPLT enthusiasts, there are those who believe that fiscal expansion ought to be playing a much bigger role (generally on the center-left) and those who believe that expansionary austerity will only work if monetary policy authorities “hit the right target.” It’s a big tent.

(3) Evan Soltas has a post on climate policy initiatives that could be more politically attractive than a full-blown economy-wide carbon pricing regime. One of his more ambitious suggestions involves transforming the gasoline tax into an oil tax, an option Keith Crane, Nicholas Burger, and Martin Wachs of the Rand Corporation explored last year:

A percentage tax on oil would have several advantages over existing transportation funding systems. It could simplify the tax system by replacing several existing taxes used to finance transportation with a single, upstream tax. It could be adjusted automatically to fully fund appropriated expenditures on transportation, regardless of inlation. It could transfer external costs of producing and consuming oil that are currently borne by the general public to be borne only by oil producers and consumers. It would spread the burden of these external costs across all users of petroleum products, not just motorists and truckers. It could help fund national security expenditures employed to safeguard sources and sea-lanes used to import oil. Finally, while the public is generally opposed to most taxes, given the national security concerns associated with oil consumption, an oil tax might be more politically palatable than raising existing motor fuel taxes.

This seems non-crazy to me, at least insofar as it represents a somewhat more attractive alternative to motor fuel taxes. One rejoinder is that if we’re shifting from motor fuel taxes to an oil tax on the grounds that it will simplify the tax system, a (low) carbon price might be more attractive still. 

(4) Stephen Eide of the Manhattan Institute has a report on how tax reform might encourage greater efficiency at the state and local level.


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