segunda-feira, 30 de dezembro de 2013

Os Primeiros Cartomantes da Economia: Irving Fishser, Moody e Babson

Este livro parece bem interessante, descreve os primeiros que tentaram racionalizar a economia ao ponto de prever o futuro. Resultado deles: medíocre.

Bom, minha tese de doutorado trata do tema, por isso achei o livro interessante. Mas leiam o artigo do Financial Times sobre o livro:

Fortune Tellers, by Walter Friedman

Fortune Tellers: The Story of America’s First Economic Forecasters, by Walter Friedman, Princeton University Press, RRP£19.95, 288 pages
There are few things more terrifying than randomness, whether in the realm of mortality, meteorology or markets. Our best-laid plans fall prey to unpredictable heart attacks, tornadoes and popping bubbles in asset prices. So it is not surprising that profitable business opportunities lie in claims to reduce randomness and replace it with a sense of predictability and order. With some combination of eating our greens, weather forecasts and investment advice, we hope to know what tomorrow holds.

In Fortune Tellers, Walter Friedman, director of the Business History Initiative at Harvard Business School, brings to life the men who first created businesses based on the idea that people will pay to reduce randomness in economic life. Working in the early decades of the 20th century, each claimed to be able to find order and predictability in chaos, and each has an intellectual legacy that is visible today.

Roger Babson was a pioneer in technical analysis, a forecasting approach that seeks patterns in weather-type charts of asset prices. Irving Fisher, by contrast, saw the economy as a mechanical affair, and believed that its behaviour could be predicted through the study of money and prices. John Moody founded what would become one of the world’s largest financial information concerns, and was perhaps the first proponent of fundamental analyses, or the notion that reams of data on individual companies could predict future performance. Charles Bullock and Warren Persons built the first data-based macroeconomic models, which later evolved into widely used leading and lagging indicators.

As intellectual and business history, Fortune Tellers succeeds admirably. Friedman marshals sources of all kinds to compile detailed histories of each business: its customers, marketing strategies, business models and employees. At the same time, he is a captivating guide to the intellectual landscape, illuminating the development of the methods and ideas behind early forecasting, and comparing and contrasting the embedded assumptions of the different approaches.

The men themselves, however, are less fully formed, and appear to be portfolios of quirks rather than people we come to know. And what we do know is not terribly likeable or even interesting: they are petty in their rivalries, and prone to distasteful beliefs and strange causes such as eugenics and “calendar reform” (a movement to deal with the failure of the moon to line up neatly with months and years). The businesses and ideas are compelling reading; the characters and their personal lives, less so.

Although these pioneers left us much that is of lasting value, their records as forecasters were decidedly mediocre. None of the new ideas – the charts, the dividend forecasts, the leading indicators – worked very well in predicting the economic future; even today, macroeconomic forecasting models earn a gentleman’s C at best. Skill in predicting the worst macroeconomic outcomes – crashes and sustained slumps – appears not to have progressed at all between the crashes of 1929 and 2008. Yet forecasters continue to sell predictions about tomorrow and investors continue to buy them.

Could there be a correl­ation between the fact that the forecasters in Fortune Tellers are not terribly likeable and the fact that their predictions are so poor? I think so, but not in the way we might expect. We do not dislike these men because they have been wrong, but rather because they are so sure they are right.

Each of the men profiled in Fortune Tellers has nothing if not hubris; such overconfidence was not new then, nor is it obsolete now. It has even generated an academic literature of late, with studies finding that “high-hubris” individuals are more likely to overpay for acquisitions or commit fraud. Those who believe they have predictive power, in other words, tend to behave predictably.

There is a research group that boasts of using 2,000 variables and 1,500 equations to make 30-year (!) forecasts of US economic performance. A television talking head looks us in the eye and says things like, “We’re going to see 7.7 per cent growth in China next year.” A billion-plus people, an opaque government, swings in commodity prices, employment, birth rates, interest rates and weather – and they’ve figured it out to a tenth of a per cent? It’s a marvel, really, this hubris thing. It is also, the research shows, a mostly male thing. Just sayin’.

But Fortune Tellers is a marvel too. It is scholarship of the highest quality, without shortcuts or gimmicks. We may not be able to trust the forecasters, but when it comes to their stories we are in excellent hands.

Pietra Rivoli is a professor at the McDonough School of Business at Georgetown University

sábado, 28 de dezembro de 2013

Os Três Es: Educação, Economia e "Everything Else"


O presidente da American Chesterton Society, Dale Alhquist, explicou como do capitalismo surgiu o socialismo, na visão do Distributismo.

Na palestra, Alhquist expõe o que Chesterton pensa em matéria de educação, economia e tudo mais. Fazendo isso, Alhquist detalha os fundamentos do Distributismo. Para quem deseja entender a base da Doutrina Distributista, é um exposição brilhante, como costuma ser Alhquist.

O vídeo da palestra tem 50 minutos e vale cada segundo. Fiquei pensando em traduzir algumas passagens, mas mesmo podendo ser uma ótima parte, eu correria o risco de diminuir a profundidade e abrangência da palestra. Então, torço para que você, leitor, entenda inglês.

A palestra ocorreu durante a 32a Annual Chesterton Conference no Assumption College in Worcester, Massachusetts.

Eu mesmo coloquei o vídeo da palestra no Youtube, que estava disponível apenas no Vimeo.

Assista abaixo

quarta-feira, 25 de dezembro de 2013

Malthus e Adam Smith no Conto de Natal de Charles Dickens

Interessante artigo de Jerry Bowyer na Forbes, ele viu que Charles Dickens criticou a abordagem de crescimento zero da população de Thomas Malthus no Conto de Natal.

Ou melhor, eu diria, Dickens ressaltou o valor do humano no seu Conto de Natal e dessa forma viu perversidade em Malthus.

Vejam o artigo abaixo:

What Was Charles Dickens Really Doing When He Wrote 'A Christmas Carol'?

By Jerry Bowyer

 Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas and I can’t afford to make idle people merry. I help to support the establishments I have mentioned: they cost enough: and those who are badly off must go there.” “Many can’t go there; and many would rather die.” “If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population.”


That phrase–surplus population–is what first tipped me off to Dickens’ philosophical agenda. He’s taking aim at the father of the zero-growth philosophy, Thomas Malthus. Malthus’ ideas were still current in British intellectual life at the time A Christmas Carol was written. Malthus, himself, had joined the surplus generation only nine years before. But his ideas have proved more durable.

What was Dickens really doing when he wrote A Christmas Carol? Answer: He was weighing in on one of the central economic debates of his time, the one that raged between Thomas Malthus and one of the disciples of Adam Smith.

Malthus famously argued that in a world in which economies grew arithmetically and population grew geometrically, mass want would be inevitable. His Essay on Population created a school of thought which continues to this day under the banners of Zero Population Growth and Sustainability.

The threat of a “population bomb” under which my generation lived was Paul Ehrlich’s modern rehashing of the Malthusian argument about the inability of productivity to keep pace with, let alone exceed, population growth.

Jean Baptiste Say, Smith’s most influential disciple, argued on the other hand, as had his mentor, that the gains from global population growth, spread over vast expanses of trading, trigger gains from a division of labor which exceed those ever thought possible before the rise of the market order.
Guess whose ideas Charles Dickens put into the mouth of his antagonist Ebenezer Scrooge.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation? … If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population.”
Interesting, isn’t it? Later in the story, the Ghost of Christmas Present reminds Scrooge of his earlier words and then adds about Tiny Tim:

“What then? If he be like to die, he had better do it, and decrease the surplus population.” Scrooge hung his head to hear his own words quoted by the Spirit, and was overcome with penitence and grief.

“Man,” said the Ghost, “if man you be in heart, not adamant, forbear that wicked cant until you have discovered What the surplus is, and Where it is. Will you decide what men shall live, what men shall die? It may be, that in the sight of Heaven, you are more worthless and less fit to live than millions like this poor man’s child. Oh God! To hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust.”

Interesting also, that Ehrlich was not an economist, agronomist or even demographer but rather an etymologist, an expert in insect biology. Malthusianism is, indeed, the philosophy of the bug heap, of man as devouring swarm rather than ennobling angel.

The Ghost of Christmas Present is the key to understanding Dickens’ political and economic philosophy. He is the symbol of abundance. He literally and figuratively holds a cornucopia, a horn of plenty. While he wears a scabbard at his side, it is bereft of sword and neglected in care. Peace and plenty.

When Scrooge asks him how many brothers he has, the ghost replies “More than 1,800.” When Scrooge declares that this is a ‘tremendous family to provide for,” the ghost rises in anger. And then he takes Scrooge where? To the university economics department? To the socialist meeting house? No, he takes Scrooge to the market, and shows him the abundance there, especially the fruits (sometimes literal) of foreign trade:

“There were great, round, pot-bellied baskets of chestnuts, shaped like the waistcoats of jolly old gentlemen, lolling at the doors, and tumbling out into the street in their apoplectic opulence. There were ruddy, brown-faced, broad-girthed Spanish Friars… There were pears and apples, clustered high in blooming pyramids; there were bunches of grapes, made, in the shopkeepers’ benevolence to dangle from conspicuous hooks, … there were piles of filberts, mossy and brown, … there were Norfolk Biffins, squab and swarthy, setting off the yellow of the oranges and lemons, and, in the great compactness of their juicy persons, urgently entreating and beseeching to be carried home in paper bags and eaten after dinner.”

Onions from Spain, grapes from the Mediterranean and citrus from the equatorial regions. How else could one eat oranges in England in winter? At the end of their Christmas feast, the poor Cratchits eat, yes, oranges. How else, other than through international trade, could the poor afford oranges? Surely, Christmas Present, and his creator Mr. Dickens, and his teacher Mr. Say, are true disciples of Mr. Smith.

Ironically, this made Scrooge a much less wealthy man than he could have been. He was a miser, not an entrepreneur, because his economic philosophy was a miserly one, not an entrepreneurial one. Look at Scrooge’s mentor Fezziwig, who had two apprentices and dozens of employees.

By contrast Scrooge, even as an old man, had no apprentices and only one employee, a low wage and low skilled one at that. Where was Scooge’s ambition? What was his plan for expansion?
Michael Dell is reported to have started his dream with an image of a large building filled with employees with a flag pole outside. But Scrooge didn’t even update his Scrooge and Marley sign upon the death of his partner seven years after the event, preferring to let rust simply erase the latter’s name. What entrepreneur thinks that way? Scrooge and Marley is basically a collection agency micro-business, whose proprietor did not even make the Forbes 15 List of Wealthiest Fictional Characters.

When Scrooge’s nephew Fred presses his uncle to reveal the cause of their alienation, Scrooge exclaims “Why did you marry?” This is not a change of subject; it is another bitter fruit of the old man’s anti-natal philosophy. Small wonder then, that after Scrooge’s conversion he spends Christmas day with his nephew’s family and cheerfully watches Topper court Fred’s wife’s “plump sister.”

If Scrooge has modern counterparts, they’re more likely to be found among those sad, self-sterilizing minimizers of carbon footprints than in the circles of supply-side entrepreneurs. Who, after all, could claim to a smaller carbon footprint than the man who tried to heat his office with a single piece of coal?

The question is, how did Scrooge’s economics get to be so confused? The answer is that this fictional character would have grown up during the ‘lean years’ in British history, before the supply-side tax cuts of Adam Smith had been implemented. The adult Scrooge, living in a time of growing global trade and strong economic growth, still retained the stagnation mindset of the ‘lean years,’ even when the ‘fat years’ at the prosperous end of the Laffer Curve were upon him. More on this next time.

(Agradeço a indicação do texto de Bowyer ao site American Catholic)

segunda-feira, 18 de novembro de 2013

Dinheiro público vai para bancos privados que investem em títulos públicos, e o povo?

Bundesbank diz que bancos da Europa investem em títulos públicos e não no mercado e com isso a crise bancária e econômica na Europa se torna endêmica. É a velha história, dinheiro público vai para bancos que investem em títulos públicos, enquanto o povo fica desempregado.

Ambrose Evans-Pritchard escreveu sobre isso hoje, em um texto muito bom, mas um pouco contraditório, ao pedir mais dinheiro público nos bancos.

Bundesbank says Italian and Spanish banks still hooked on home state debt

The Bundesbank always like to spoil the party. Tucked away on page 33 if its November monthly report is a reminder that the banking systems and sovereign states of southern Europe remain stuck in a vicious circle:

Italian banks have increased their holdings of Italian public debt from €240bn to €415bn since November 2011 (+ 73pc).

Spanish banks have raised their holdings of Spanish debt €166bn to €299. (+81pc). Ditto Irish banks, up 60pc; and Portuguese banks, up 51pc.

The EU summit pledge made in June 2012 to end this dangerous and incestuous linkage has come to little. As the Buba report said testily, "the mutual dependency of the banks and the state sector has grown most in those countries where the links were already particularly high at the start."

It is not a crisis as such. It is a chronic malaise. There is still an acute credit crunch for small business in Italy and Spain. The banks are hunkering down and living off their coupons from the state, even as the rest of the economy screams for credit. Their appetite for sovereign debt – boosted first by the ECB's €1 trillion long-term loans (LTRO), then by Mario Draghi's debt backstop (OMT) — is touted as a sign of recovery, but it is equally a sign of deformed EU policy.

Note too that these banks are buying the bonds of sovereign states where the debt trajectory is rocketing upwards, an effect made worse by Euroland's slide towards deflation. Italy's public debt has jumped from 119pc to 133pc of GDP since 2010, and average maturity has been sliding for two years as the treasury relies more heavily on short-term debt backed by the ECB. Spain's debt has risen from 62pc to 94pc. The longer the banks keep betting on this state debt, the greater the risk.

We heard this morning from the Bank of Spain that bad debts in the Spanish banking system have reached 12.68pc, the highest since records began half century ago. Loans under water have reached €188bn.

Daragh Quinn and Jaime Hernandez at Nomura warn that a number of Iberian banks look vulnerable under the Texas Ratio. This is the rule of thumb used in America's S&L crisis in the 1989 when 130 banks failed in Texas. The ratio is calculated by taking bad loans and property assets divided by tangible equity and total provisions. A ratio above 100pc typically leads to failure.

Nomura says the ratio for Banco Popular is 123pc (up from 109pc last year). Nationalised Bankia is off the charts of at 372pc. Sabadell is near 100pc.

As for Italy, the Banca d'Italia's Financial Stability Report this month says the banks are facing a "rapid increase in non-performing loans, principally to businesses, as a result of the protracted recession." Banca d'Italia warned that tensions could "resurface next year" as the ECB's three-year loans draw to a close.

Nothing has really been resolved. There will be a crunch in 2014 when the ECB carries out its next stress tests, with no proper EMU-wide backstop yet in place, or likely to be in place. Eurozone ministers agreed last week to "burden-sharing" rules that put investors in the front line for the first hit if there is a shortfall in bank capital.

Fair enough, but ex-ECB board member Lorenzo Bini-Smaghi says this risks repeating the sort of error made by Angela Merkel and Nicholas Sarkozy at the walk on the beach in Deauville, when they famously changed their minds and decided to impose a haircuts on holders of Greek debt (against vehement ECB advice) – without first putting in place any safety net to deal with the panic that was sure to follow.

The national governments will have to swallow the next layer of losses, if necessary with a loan from the ESM bail-out fund, even if they are dire trouble themselves and cannot safely take on more debt.
We don't know yet whether this burden-sharing (or bail-in) will be limited to junior debt, or senior debt as well as the Germans want. Nor do we know exactly what will happen to depositors (Cyprus again?), when push comes to shove. This is surely a recipe for trouble.

A monetary reflation blitz along the lines of Abenomics in Japan would make it a great deal easier to cope with this bad debt legacy. All the ECB has to do is to is target nominal GDP growth of 5pc a year (easily within its power) — or 5pc M3 growth, to mimic the effect – and a big part of the problem would disappear.

As I have written many times, the health of banking system and debt structure in both Italy and Spain is a simple mathematical function of the denominator effect. The higher the nominal GDP path, the easier it is to outgrow the debt burden. A real central bank can achieve this with a flick of the fingers. If it wants.

Italy and Spain are formidable countries. They are entirely savable within EMU under expansionary policies, yet all too easily lost under contractionary policies.

If I were an Italian or a Spaniard, I would have a few caustic words to say about the Bundesbank's report today. Had Frankfurt not pushed for two premature and destructive rate rises in 2011, and had it not opposed any pre-emptive stimulus over recent months to avert incipient deflation, and had it not let eurozone M3 money growth go negative over the last five months, the banks in Italy and Spain would now be in far better shape.

terça-feira, 12 de novembro de 2013

"Perdão pelo Quantitative Easing"

Bom, posso me orgulhar de já ter dito há muito tempo que os QEs não iam dar certo: é dinheiro barato para quem já tem, e não alavanca a economia. Em suma, bolha financeira. 

Foi o Rerum Novarum quem me ensinou isso.

Andrew Huszar: Confessions of a Quantitative Easer

Andrew Huszar
Nov. 11, 2013 7:00 p.m. ET

I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

Five years ago this month, on Black Friday, the Fed launched an unprecedented shopping spree. By that point in the financial crisis, Congress had already passed legislation, the Troubled Asset Relief Program, to halt the U.S. banking system's free fall. Beyond Wall Street, though, the economic pain was still soaring. In the last three months of 2008 alone, almost two million Americans would lose their jobs. 

The Fed said it wanted to help—through a new program of massive bond purchases. There were secondary goals, but Chairman Ben Bernanke made clear that the Fed's central motivation was to "affect credit conditions for households and businesses": to drive down the cost of credit so that more Americans hurting from the tanking economy could use it to weather the downturn. For this reason, he originally called the initiative "credit easing."

My part of the story began a few months later. Having been at the Fed for seven years, until early 2008, I was working on Wall Street in spring 2009 when I got an unexpected phone call. Would I come back to work on the Fed's trading floor? The job: managing what was at the heart of QE's bond-buying spree—a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months. Incredibly, the Fed was calling to ask if I wanted to quarterback the largest economic stimulus in U.S. history.

This was a dream job, but I hesitated. And it wasn't just nervousness about taking on such responsibility. I had left the Fed out of frustration, having witnessed the institution deferring more and more to Wall Street. Independence is at the heart of any central bank's credibility, and I had come to believe that the Fed's independence was eroding. Senior Fed officials, though, were publicly acknowledging mistakes and several of those officials emphasized to me how committed they were to a major Wall Street revamp. I could also see that they desperately needed reinforcements. I took a leap of faith.

In its almost 100-year history, the Fed had never bought one mortgage bond. Now my program was buying so many each day through active, unscripted trading that we constantly risked driving bond prices too high and crashing global confidence in key financial markets. We were working feverishly to preserve the impression that the Fed knew what it was doing.

It wasn't long before my old doubts resurfaced. Despite the Fed's rhetoric, my program wasn't helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash. 

From the trenches, several other Fed managers also began voicing the concern that QE wasn't working as planned. Our warnings fell on deaf ears. In the past, Fed leaders—even if they ultimately erred—would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street's leading bankers and hedge-fund managers. Sorry, U.S. taxpayer.

Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank's bond purchases had been an absolute coup for Wall Street. The banks hadn't just benefited from the lower cost of making loans. They'd also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed's QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.

You'd think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2. Germany's finance minister, Wolfgang Schäuble, immediately called the decision "clueless."

That was when I realized the Fed had lost any remaining ability to think independently from Wall Street. Demoralized, I returned to the private sector.

Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history.

And the impact? Even by the Fed's sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn't really working.

Unless you're Wall Street. Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.

As for the rest of America, good luck. Because QE was relentlessly pumping money into the financial markets during the past five years, it killed the urgency for Washington to confront a real crisis: that of a structurally unsound U.S. economy. Yes, those financial markets have rallied spectacularly, breathing much-needed life back into 401(k)s, but for how long? Experts like Larry Fink at the BlackRock investment firm are suggesting that conditions are again "bubble-like." Meanwhile, the country remains overly dependent on Wall Street to drive economic growth.

Even when acknowledging QE's shortcomings, Chairman Bernanke argues that some action by the Fed is better than none (a position that his likely successor, Fed Vice Chairwoman Janet Yellen, also embraces). The implication is that the Fed is dutifully compensating for the rest of Washington's dysfunction. But the Fed is at the center of that dysfunction. Case in point: It has allowed QE to become Wall Street's new "too big to fail" policy.

Mr. Huszar, a senior fellow at Rutgers Business School, is a former Morgan Stanley managing director. In 2009-10, he managed the Federal Reserve's $1.25 trillion agency mortgage-backed security purchase program.

terça-feira, 5 de novembro de 2013

A Ética do Trabalho sendo Destruída pelo Governo - Livro "Recessão da Redistribuição"

O professor de economia da Universidade de Chicago, Casey Mulligan, discute no livro acima o impacto de ajuda de governo aos pobres na ética do trabalho, no incentivo para se trabalhar. A gente ouve muito falar disso quando se discute o bolsa família no Brasil.

É um assunto que me interessa bastante.

Recentemente, prof. Mulligan escreveu sobre o assunto no jornal Wall Street Journal, com ênfase na nova lei de saúde dos Estados Unidos, a "lei assinatura" do governo Obama, conhecida como Obamacare.

Vejamos o texto de Mulligan no Wall Street Journal abaixo (neste texto, ele menciona um artigo dele publicado no National Bureau Research, clique aqui para acessá-lo)

Casey Mulligan: How ObamaCare Wrecks the Work Ethic

A new wave of redistribution will arrive in America on Jan. 1, primarily thanks to the Affordable Care Act. The president's health-insurance plan forces those who hire, work and produce to pay full price for health care, while creating generous discounts for practically everyone else.
This second redistributionist wave of the Obama era will follow a first wave of tax hikes, additional unemployment benefits, food-stamp expansions, waived work requirements for welfare benefits, etc. These measures were supposed to be temporary, intended to help people cope with the recession. The recession officially ended in mid-2009, but many of the administration's measures continue.

Regardless of whether redistribution is achieved by collecting more taxes from families with high incomes, levying employment taxes on businesses, providing more subsidies to families with low incomes, or all of the above, an essential consequence is the same: a reduction in the reward for working. In a National Bureau of Economic Research paper issued in August, I quantify the combined effect of the two redistribution waves and higher payroll taxes on the financial reward for working.

The chart nearby shows an index of marginal tax rates for non-elderly household heads and spouses with median earnings potential. The index, a population-weighted average over various ages, occupations, employment decisions (full-time, part-time, multiple jobs, etc.) and family sizes, reflects the extra taxes paid and government benefits forgone as a consequence of working.
The 2009-10 peak for marginal tax rates comes from various provisions of the "stimulus" programs in the American Recovery and Reinvestment Act of 2009 and the extension of unemployment benefits to 99 weeks in some states. At the end of 2012, the marginal tax rate index reached its lowest value since 2008: 43.9%. A little over a year later (January 2014), the index will be close to 50%, driven up by the expiration of the payroll tax cut and multiple provisions of the Affordable Care Act. The ACA employer penalty, delayed until 2015, adds more than a percentage point in that year alone, while other ACA provisions strengthen their disincentives for the various reasons cited above.
The Affordable Care Act signup page on the website
By 2016, the index exceeds 50%, which is at least 10 percentage points greater than it was in early 2007.
The 50% rate is even higher than the rates that prevailed when the so-called Recovery and Reinvestment Act's redistribution was at its peak. Without new federal legislation and a departure from the strategy of forcing workers and employers to finance everyone else's health care, the new 50%+ rate will not be a peak, but rather a new normal for tax rates.
To appreciate the added burden that the two redistribution waves put on the labor market, look at what people keep, on average, when they decide to retain or accept a job, or to take on a longer work schedule. Before the recession, a decision to work would benefit public treasuries by an amount equal to 40% of the compensation from the job. The worker and his family got the other 60%.
In the years 2015 and beyond, full-time workers with median incomes will keep only half of the compensation created by their decisions, with the other half going to the government in the form of additional taxes and savings on subsidy payments. By keeping 50% rather than 60%, workers will find that the reward for holding a job will have fallen a damaging 17%.
Advocates of redistribution try to perpetuate the income-maximization fallacy that business continues as usual as long as tax rates are less than 100%, because receiving even 1% of your compensation is supposedly better than getting no compensation at all. But even if full confiscation were the only way that taxes would depress the labor market, recall that the nearby chart is just an average: The average rate rising to 50% and above involves millions of people with rates far higher.
America absolutely must have taxes and safety-net programs, even though they reduce the reward for working. But advocates for the recent program expansions have failed to acknowledge that redistribution necessarily increases marginal tax rates and contracts the labor market.
Don't be surprised if the second redistribution wave coincides with a recessionary double-dip.
Mr. Mulligan is a professor of economics at the University of Chicago and the author of "The Redistribution Recession" (Oxford, 2012).

sábado, 19 de outubro de 2013

Eu já sabia, Greenspan!

Alan Greenspan põe a culpa no crescimento exgerado do estado do bem-estar social para a destruição da economia e para as dificuldades políticas. E também critica as previsões dos economistas.  Ressaltando a importância da psicologia.

Fico muito feliz de ter visto um mundo mais perfeitamente do que Greenspan, pois minha tese de doutorado de 2006 já defendia a abordagem de Daniel Kahneman. Para acessar minha tese, clique aqui. Mas fico triste em ver que ele demorou muito para ver isto.

O texto sobre Greenspan saiu no Wall Street Journal.

Abaixo vai o texto do jornal.

Alan Greenspan: What Went Wrong

Alan Greenspan, the former chairman of the Federal Reserve, goes to a lot of parties. He and his wife, the TV journalist Andrea Mitchell, "sort of get invited everywhere," he says, sitting in front of the long bay window in his office on Connecticut Avenue in Washington, D.C. Lately, though, cocktails and dinners seem to have guest lists drawn almost exclusively from one political party or the other. "It used to be a ritualistic 50-50 at parties—the doyennes of culture and partying were very strict about bipartisanship," he adds. "That doesn't exist anymore."

In his new book "The Map and the Territory," to be released on Tuesday, Mr. Greenspan, 87, goes on a hunt for what has gone wrong in American politics and in the U.S. economy. He doesn't blame the current administration for today's partisan divide. The culprit? "It's the benefits," he says, pointing to the disagreements between Republicans and Democrats over how to deal with the growth of entitlements.

In the book, he also ponders why the Fed failed to predict the financial crisis, where he himself went wrong and how that discovery has completely changed his worldview.

Mr. Greenspan's biggest revelation came one day about a year ago when he was playing with gross domestic savings numbers. What he found, to his surprise and initial skepticism, was that an increase in entitlements has closely corresponded to a decline in the country's savings. "We had this extraordinary increase in benefits, with each party trying to outbid the other," he says. "That practice has been eroding the country's flow of savings that's so critical in financing our capital investment." The decline in savings has been partly offset by borrowing from abroad, which brings us to our current foreign debt: "$5 trillion and counting," he says.

He said he is baffled by all the blame that has been piled on him. Since the recession, critics have said the increased money supply and low interest rates during his tenure at the Fed from 1987 to 2006 led to bubble investments. Mr. Greenspan first heard that theory, he says, in 2007, when John Taylor, a professor of economics at Stanford University who has advised Republicans, made the connection between easy money and the housing bubble. "It had absolutely nothing to do with the housing bubble," he says. "That's ridiculous."

Instead, he says Prof. Taylor's statement "served a lot of political purposes of people who have been picking on the Fed from both sides of the aisle." Mr. Greenspan wrote a rebuttal in a paper for the Brookings Institution, going through Prof. Taylor's points one by one. "I thought, that'll kill it," he remembers. "It didn't, because nobody read the paper."

Mr. Greenspan said he didn't press the issue because Prof. Taylor is a friend, but he had no idea how far Prof. Taylor's idea would go. "The trouble, unfortunately, with the argument is there's no evidence that happened, but he's won the battle, and his view is conventional wisdom," he says.

Prof. Taylor stands by the paper in which he presented the idea. "The paper provided empirical evidence…that unusually low interest rates set by the Fed in 2003-2005 compared with policy decisions in the prior two decades exacerbated the housing boom," he wrote in an email. Other economists have corroborated the findings, he added, and "the results are quite robust."

This disagreement is now the centerpiece of a long-running debate among economists, even inside the Fed today, that has yet to be resolved.

"I've always considered myself more of a mathematician than a psychologist," says Mr. Greenspan. But after the Fed's model failed to predict the financial crisis, he realized that there is more to forecasting than numbers. "It all fell apart, in the sense that not a single major forecaster of note or institution caught it," he says. "The Federal Reserve has got the most elaborate econometric model, which incorporates all the newfangled models of how the world works—and it missed it completely."

He says JP Morgan had put out a forecast three days before the crisis saying the economy was on the rise. And as late as 2007, the International Monetary Fund also said that global risk was declining. "A few days [after the crisis hit], I run into an article, and it is titled, 'Do we economists know anything?' " he says.

Mr. Greenspan set out to find his blind spot step by step. First he drew the conclusion that the nonfinancial sector of the economy had been healthy. The problem lay in finance, because of its vulnerability to spells of euphoria and irrational fear. Studying the results of herd behavior provided him with some surprises. "I was actually flabbergasted," he says. "It upended my view of how the world works."

He concluded that fear has at least three times the effect of euphoria in producing market gyrations. "I wouldn't have dared write anything like that before," he says.

Studying the minutiae of the events leading to the financial crisis brought to mind some lessons from his famous friendship, from the 1950s on, with the late Objectivist philosopher Ayn Rand. He says that Rand didn't influence him politically—he was always a libertarian—but she did point out tensions in his philosophy about life. "She caught me in contradictions, which shook me, and I said, 'My God, she is right,' " he says.

Mr. Greenspan then believed in analysis based mainly on hard science and empirical facts. Rand told him that unless he considered human nature and its irrational side, he would "miss a very large part of how human beings behaved." At the time they weren't discussing economics, but today he realizes the full impact of emotions and instincts on markets. He also has come to admire psychologist and Princeton University professor emeritus Daniel Kahneman's work applying psychological insights to economic theory, for which he won a Nobel Prize in 2002.

Mr. Greenspan won't say whether he has agreed with the decisions of current Fed chairman Ben Bernanke, but he will comment on the Fed's broader policies, which have become more aggressive since his time. "I'm not in favor of intervention, because markets so effectively function and work unless they are broken," he says. He did support TARP, the Troubled Asset Relief Program, because at the time the market needed sovereign credit during "the most debilitating financial crisis ever." But, he says, "eventually I think they carried the extent of what they did well beyond what was necessary."

With his new book, Mr. Greenspan hopes to provide politicians and the public with a road map to avoid making the same mistakes again. His suggestions include reducing entitlements, embracing "creative destruction" by letting facilities with cutting-edge technology displace those with low productivity, and fixing the political system by encouraging bipartisanship. He hasn't yet sent a copy to Janet Yellen, the nominee to be the next Fed chief. Though they are good friends, he says, "she and I don't agree on lots of things and never have, but I enjoy talking to her because she has arguments and logic behind it."

Mr. Greenspan often finds himself in the position of a middleman. Now one of the last prominent Washington figures to socialize across the partisan aisle, he says that these days, "politics is broke." He suggests that the last time the country's leadership was this divided was during the Civil War. And he doesn't see Wednesday's budget deal as a long-term breakthrough. Still, he was heartened that the government found a way to end the shutdown.

"I thought it was not a bad deal, all in all, considering how far along the whole thing got," he says. "That's not to say they solved anything fundamental."