Quick Hitters

1.  Sven was remiss in not mentioning another sound Nobel decision this year: selecting Mario Vargas Llosa for the prize in literature.  According to Michael Moses of Duke University, Llosa “is one of the greatest novelist of the last half-century and a leading champion of liberty.” 

I’m hoping to find time over Christmas break to remedy a serious deficiency in my education by reading The War of the End of the World. 

2.   Greg Mankiw has an indulgent? informative article in the New York Times on how taxes affect the decision of high earners like himself to work more or not.

However, it does surprise me that an economist would fail to mention inflation in his accounting, especially since inflation is essentially a disguised tax imposed by the government via monetary policy.  As Milton Friedman noted long ago in Free to Choose, it is “the worst of the hidden taxes.”

3.  Funny campaign punch line from future Congressman Tim Scott.  “I was flunking out of high school. I failed geography, civics, Spanish and English. When you fail Spanish and English, you are not bilingual, you are bi-ignorant.”

One thought on “Quick Hitters

  1. I’ve never been convinced of the “inflation is a hidden tax” argument. Why don’t we expect, say, 2% inflation to increase all nominal interest rates by 2%, so that the real return is the same?

    I can see that it is a tax on cash in your pocket or money in your checking account, but Mankiw is talking about money (at the margin) he wants to save for his children, which is surely in a long term savings account.

    There is also the fact that capital gains tax is calculated without accounting for inflation, thereby exaggerating your real capital gain. However, since Mankiw has included capital gains tax in his calculation, I think he has accounted for this particular hidden tax.

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