Stats for nerds
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What Hacker News says
- My adopted home also doesn't have a capital gains tax. I agree that if you want to have a capital gains tax, it should be inflation adjusted. (You can put in place an explicit wealth tax, if that's what you want.)
> When inflationary systems are well controlled, they do create some positive incentives (primarily to spend money and put capital to productive use).
I find that those incentives are a bit silly. First, the central bank can print enough money to get any level of aggregate nominal spending they fell like. No need for inflation. George Selgin's book 'Less than Zero' even makes a convincing argument in favour of deflation. (He essentially argues for a fixed nominal GDP, and an economy that's growing in real terms would thus see the price of goods decline.)
Inflation is also not an incentive to put capital to good use. That's because money isn't real capital. If I have a factory or a piece of land that sits idle, that's a real cost to the economy. But if I have a hundred dollar bill that's siting idle under my pillow, nothing of value has been lost: hundred dollar bills are essentially free to print.
The central bank can put them in and out of circulation by buying and selling assets. So when I remove my bill from under my pillow to spend it, the central bank can react by selling assets. (They don't need to monitor my pillow. They can just go by statistical measures of spending or inflation.)
In fact, in order for me to have a hundred dollar bill under my pillow, it means I refrained from consuming some real goods earlier. So those real goods are available for investment by the wider economy while my pillow serving as a piggy bank.
- Depends on what target you want to set. (Mostly, the exact target doesn't matter, as long as you meet it.)
NGDP levels in America have mostly been on a straight line since 2009 or so. (But they had a big change in trend compared to before.)
Still, that doesn't answer anything about the effects of minimum wage. An NGDP target would still make minimum wage laws a bad idea. But since NGDP evolution is fixed, you'd see an RGDP decrease and hence an inflation hike.
The American sort-of Fed fixes inflation instead.
If you are into this kind of thing, do read George Selgin's Less Than Zero. (Eg at https://iea.org.uk/publications/research/less-zero). It gave me an appreciation of the classic gold standard---and how it managed to keep NGDP stable under the right regulatory circumstances, that I was missing before.
- What's your explanation for the much-observed fact that most of the productivity gains of the last thirty years haven't trickled down to most of the workforce?
Monetary policy is one of the main reasons. Instead of letting a secular deflation emerge with growths in total factor productivity, central banks still do price level stabilization instead. The monetary disequilibrium economists have written much on this. George Selgin has a great and relatively accessible essay called Less Than Zero that discusses this.
No one in modern economic theory belieces the Marshallian tradition is identical to modern neoclassicism - never mind neoliberalism.
But there is no single "modern neoclassicism," that's the point. Yet to somehow deny that Marshall was a neoclassical is to make the term meaningless. The approaches of Marshall, Menger, Walras and others all had important differences despite being ultimately lumped as "neoclassical".
Neoliberalism isn't even an economic idea. It's a political term used by people opposed to it to describe what they perceive as a shift into corporate rule since the 1970s. Yet this narrative is full of holes, not least of which is the history of mercantilism, imperialism and later corporation-state cooperation. I'll be writing a book on this subject at some point.
