Editor’s note: This is the second of two columns on the economics of tax cuts. The first column is Economists agree: Tax cuts don’t create revenue. Tax cuts don’t raise revenues. Economists identified with both political parties believe that. However,…
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Job retraining pays off for society, but is it fair?
Last week’s news that the State of Minnesota has run short of money to retrain jobless workers drew reader criticism of the whole idea behind the program. Most of the comments posted online opposed the training aid, questioning the need…
Economists agree: Tax cuts don’t create revenue
Editor’s note: This is the first of two columns on the economics of tax cuts. The second column is Look at the record: Tax cuts did not boost revenue. Self-paying tax cuts are a popular delusion, except among economists. University…
Defense bargains unlikely in this bilateral monopoly
Real World Economics by Edward D. Lotterman Defense bargains unlikely in this bilateral monopoly My student asked a good question: ‘Does it really make all that much difference if you have only a monopoly for this tanker contract instead of…
Tracing the impact of appliance rebate isn’t easy
The appliance version of ‘cash for clunkers’ came and went in Minnesota within about 24 hours last week. Much of the news coverage was negative, focusing on administrative glitches and disappointed rebate-seekers who were unable to get through overloaded switchboards…
Fed needs to rethink extending low interest rates
I have not been to a revival meeting for decades, but once in a while I feel moved to say, “Amen!” That happened as I read the news recently. An article reported that Thomas Hoenig, president of the Federal Reserve…
U.S. bailout actions speak far louder than words
Not every Nobel-winning idea applies to daily life, but Ed Prescott’s work on ‘time consistency’ and the need for credibility in economic policies explains both why I may buy a Toyota when my Ford pickup wears out and why Goldman…
Boosting liquor taxes a viable budget solution
Here’s a recommendation for state legislators, grounded in years of research: Raise taxes on alcohol. The advice holds whether your state faces big budget deficits, as does Minnesota, or not. While the most recent study was conducted by a University…
Nobel winner’s euro criteria mostly unmet
One of my brightest students recently asked if Robert Mundell would be stripped of his 1999 Nobel Prize because of the problems stemming from Greece’s fiscal problems. It won’t happen, but the slow-motion train wreck unfolding in the euro zone…
Wise officials calculate risk as matter of course
Maybe I am overly critical, but a recent headline, “Budgeting for snow clearance is often based on calculated risk,” struck me as silly beyond belief. The article scolded Washington, D.C., for not having snow-removal capabilities equal to Chicago’s, and even…