From 1966 to 1980 was a very inflationary period, but the federal budget was essentially balanced throughout that period.  After that, there were deficit spikes in 2002, 2009, and 2020, but there was no increase in inflation.  Instead there were simultaneous decreases in inflation, the opposite of what is orthodoxically predicted.  Why do we pay any attention to such theoretical predictions of causation when there is not even any correlation in the real world? 

A new book by Emanuel Saez and Gabriel Zucman reveals how seriously regressive our actual tax system is, and how it has become much more regressive in recent decades.  The Triumph of Injustice, W.W. Norton (2019).  Saez and Zucman have compiled tax, income, and wealth data for all adults and calculated how they are distributed among income groups.  They include federal income taxes, state and local income taxes, sales and excise taxes, residential property taxes, estate and gift taxes, and government social contributions (payroll taxes). 

When one looks at all these taxes together as a percentage of income, the system is slightly progressive except within the top 0.1% of earners, where it becomes strongly regressive.  Indeed, the top 400 earners (average income $500 million) pay a smaller percentage of their income in taxes (23.0%) than do people in the bottom 50%, who pay on average 24.2%.  See the blue bars in the first chart below. 

However, ability to pay is even more dependent on wealth—or lack of wealth—than on income.  In 2018, taxes paid by people in the bottom 50% of the income distribution were equal to 86.4% of their wealth.  Within this group, millions had little or no wealth, or had negative net worth, and paid taxes ten times, a hundred times, or an infinite multiple of their wealth.  In contrast, total paid by the top 400 earners were equal to only 1.7% of their enormous wealth.  The green bars in the chart above show this highly regressive situation. 

Perhaps the most comprehensive way to estimate “ability to pay” is to add income and wealth together.  That result is shown by the red bars in the chart above.  In 2018, the bottom 50% of earners paid taxes of 18.9% of this comprehensive measure of their ability to pay—12 times higher than the rate paid by the top 400 earners.

Other data from The Triumph of Injustice reveal that the tax system was much fairer 40 years ago, even 20 years ago.  The bottom 50% and the middle class (50-90%) have always paid higher rates than the top 10%, but in 1978 (brown bars in the chart below) there was progressivity within the top 10%.  By 1998 (gold bars), that progressivity was gone, and had become regressive for the top 400.  In 2018 (red bars), the whole system—from poorest to richest—had become regressive.  These changes were not inevitable but resulted from deliberate public policy choices that could now be corrected. 

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post)  Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken. Obviously, it is the latter.

John Maynard Keynes argued in 1933 that globalization had been oversold. A doctrinaire free trader in 1923, in April 1933 Keynes gave a formal lecture, National Self-Sufficiency, to acknowledge that, while economic internationalization has important benefits, it also has important costs, and he makes a case for relatively more self-sufficiency. "National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it." He discusses the reasons why we may want it, including the suggestion that, contrary to the assumption just before the start of WWI, when economic globalization was at its highest point ever, peace may be easier to keep if national economies are not highly integrated.  Includes a long quotation from the lecture.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post)  Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.

Paul Krugman didn't always have the "Conscience of a Liberal." Describing Krugman's evolution from enthusiastic free trader and conservative economist in the Reagan Administration to self-described liberal. By 2010 he had come to this: "Major growth effects from trade policy, if they exist, must come from unconventional channels.  Conventional trade theory DOES NOT justify claims of huge positive payoffs from free trade. In the politics of trade policy, distributional effects can easily swamp concerns about efficiency."

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken. Obviously, it is the latter.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post)  Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken. Obviously, it is the latter.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.

Paul Krugman didn't always have the "Conscience of a Liberal." Describing Krugman's evolution from enthusiastic free trader and conservative economist in the Reagan Administration to self-described liberal. By 2010 he had come to this: "Major growth effects from trade policy, if they exist, must come from unconventional channels.  Conventional trade theory DOES NOT justify claims of huge positive payoffs from free trade. In the politics of trade policy, distributional effects can easily swamp concerns about efficiency."

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

What will the new economy look like? And when will it be here? The Great Recession officially ended in June 2009 but we didn't know that when this was written in July 2009. Relying on several experts and the data, there did not seem to any good reason to expect a recovery to pre-recession prosperity soon—or ever. (Five years later we are still waiting.)

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post)  Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

John Maynard Keynes argued in 1933 that globalization had been oversold. A doctrinaire free trader in 1923, in April 1933 Keynes gave a formal lecture, National Self-Sufficiency, to acknowledge that, while economic internationalization has important benefits, it also has important costs, and he makes a case for relatively more self-sufficiency. "National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it." He discusses the reasons why we may want it, including the suggestion that, contrary to the assumption just before the start of WWI, when economic globalization was at its highest point ever, peace may be easier to keep if national economies are not highly integrated.  Includes a long quotation from the lecture.

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson, Joseph Stiglitz, and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post)  Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

John Maynard Keynes argued in 1933 that globalization had been oversold. A doctrinaire free trader in 1923, in April 1933 Keynes gave a formal lecture, National Self-Sufficiency, to acknowledge that, while economic internationalization has important benefits, it also has important costs, and he makes a case for relatively more self-sufficiency. "National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford, if we happen to want it." He discusses the reasons why we may want it, including the suggestion that, contrary to the assumption just before the start of WWI, when economic globalization was at its highest point ever, peace may be easier to keep if national economies are not highly integrated.  Includes a long quotation from the lecture.

US health care efficiency did not go off the rails until about 30 years ago. Updates to this post show that the rate of increase in US life expectancy at birth, especially for females, abruptly slowed in 1982 and that this was apparently unrelated to healthcare spending which continued rising at a very steady rate.

How mortgage backed securities increased systemic risk The securitization of mortgages and other debt obligations gives senior tranche holders less risk of individual defaults, but increases the risk to a general economic downturn. The increase in systemic risk was not generally appreciated but is demonstrated by Coval, Jurek, and Stafford in The Economics of Structured Finance. The paper contains exceptionally lucid descriptions of how structured finance works and uses simple examples to demonstrate the sources and magnitudes of systemic risks. This post is my summary of the paper. 

Obama's Legacy—If Any Just before Obama's second inauguration, I examined pundits' lists of first term accomplishments and concluded, "If Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term."

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

We don't need a stimulus package—just more tax cuts for the well off—say 36 Republican Senators. When the fate of the stimulus bill was on the line in February 2009, 36 Republican Senators and nobody else voted for an amendment to strike out the entire contents and substitute nothing but permanent tax reductions benefitting high income individuals and corporations.

Will we bring back manufacturing or outsource innovation too? Business leaders and economists agree that innovation needs to be collocated with manufacturing and that good American R&D jobs and most of the benefits of innovation are increasingly moving to Asia. I updated this post with supporting material many times, mostly in early 2010.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

US health care efficiency did not go off the rails until about 30 years ago. Updates to this post show that the rate of increase in US life expectancy at birth, especially for females, abruptly slowed in 1982 and that this was apparently unrelated to healthcare spending which continued rising at a very steady rate.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Reporting on the results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might get into an all-out war with Iran by accident.

Consensus, the ultimate dog's breakfast. In praise of just enough votes. Arguing that supermajority requirements and efforts to achieve bipartisan support for legislation tend to make the results worse, not better, in a legislature where there is little or no ideological overlap between the parties. Obamacare is an example where many diluting, counterproductive, and complicating concessions were made to Republicans but no Republican votes were received in exchange.

How mortgage backed securities increased systemic risk The securitization of mortgages and other debt obligations gives senior tranche holders less risk of individual defaults, but increases the risk to a general economic downturn. The increase in systemic risk was not generally appreciated but is demonstrated by Coval, Jurek, and Stafford in The Economics of Structured Finance. The paper contains exceptionally lucid descriptions of how structured finance works and uses simple examples to demonstrate the sources and magnitudes of systemic risks. This post is my summary of the paper. 

Obama's Legacy—If Any Just before Obama's second inauguration, I examined pundits' lists of first term accomplishments and concluded, "If Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term."

The other American Dream of rising incomes—Horatio Alger stories  One of my earliest and longest inquiries into upward socioeconomic mobility in America. The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

We don't need a stimulus package—just more tax cuts for the well off—say 36 Republican Senators. When the fate of the stimulus bill was on the line in February 2009, 36 Republican Senators and nobody else voted for an amendment to strike out the entire contents and substitute nothing but permanent tax reductions benefitting high income individuals and corporations.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

Will we bring back manufacturing or outsource innovation too? Business leaders and economists agree that innovation needs to be collocated with manufacturing and that good American R&D jobs and most of the benefits of innovation are increasingly moving to Asia. I updated this post with supporting material many times, mostly in early 2010.

US health care efficiency did not go off the rails until about 30 years ago. Updates to this post show that the rate of increase in US life expectancy at birth, especially for females, abruptly slowed in 1982 and that this was apparently unrelated to healthcare spending which continued rising at a very steady rate.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

In reporting about a rigorous statistical analysis showing different rates of intergenerational income mobility, NYT leads with stuff they just made up. The article bungles the reporting of a significant new study by saying that commuting difficulties were found to cause reduced intergenerational income mobility. The study does not say anything like that, as the author (David Leonhardt) clarifies in a blog post pointing out a striking similarity between the map of immobility and the map of race. The Executive Summary of the study is quoted in my post.