August 2008 Archives
While there may be some notable and annoying gaps in Obama's economics plan, like his strange demurral of free-trade agreements and his not-so-infrequent pandering to nonsensical union interests, it is a mostly reasonable plan from a purely economic perspective. It is not necessarily clear that McCain is significantly better. Moreover, the Obama camp's recent courting of Clinton-era economics advisors gives additional hope.
In this context, a recent interview between conservative commentator Larry Kudlow and Obama's top economics advisor Austan Goolsbee is too precious to not post. It is fairly clear who is more intelligent here--or at least who is the better debater. As a side note, during his days as an undergraduate at Yale, Mr. Goolsbee was runner up for the American Parliamentary Debate Association's Team of the Year (where I compete). In high school he was the first competitor in extemporaneous speaking history to go through the entire year winning only first. Mr. Kudlow ain't got nothin' on that.
A big, big, big, BIG mistake. The fact that the New York Times is already comparing Palin's nomination to Dan Quayle's in 1988 only makes the matter more laughable. Romney would have been light-years better. If it weren't for the corrupting distortions of party politics and the kinds of pandering it inspires, I would probably have voted for Mr. McCain. And I'm even registered to vote in a possible swing state. Sorry, Mr. McCain.
After authoring this blog for the past six years (almost!), I have noticed that its one persistent flaw is that nobody reads it. Readers come and go, but the regular readership is probably less than six or eight, and one-time viewers are few and very quiet. The reason for this is obvious: my content is a blatantly self-indulgent series of tracts on whatever I happen to be thinking about or doing at a particular time. The effect is that the uncertainty as to whether a reader will find the upcoming entry interesting is so enormous that they are better off spending their time reading, say, The Times or The Economist or The Becker-Posner Blog (I concede that it probably helps that the latter is written by a Nobel laureate). It is simply ludicrous to expect a nontrivial number of readers to be compelled by enough of my ephemeral pet-interests, like Monte Carlo methods in tax policy or Esperanto, to justify regular readership.
With this obvious insight and some experience from my recent dealings, I decided to launch a new blog, caffeinophilia. Its purpose is nominally to provide commentary on places and methods for caffeine-consumption, principally in Chicago, written for the marginalized and oppressed minority that does not drink coffee. Its meta-purpose is to test out blogging with tightly-focused thematic content and particularly its relationship with readership. Regardless of whatever conclusions or success that I obtain, it should be fun to author for a little while. I recommend giving it a visit, and I hope you enjoy it.
I was thinking about two things recently. One was Monte Carlo simulations and their potential applications. The other was an argument about flat taxes and consumption taxes that I recently had with my friend Leeor. One of the principle benefits of flat taxes and consumption taxes, according to proponents, is a significant simplification of the tax code which reduces loopholes and cause tax-evasion to become more difficult.
Loopholes in laws are often inadvertently created by poor foresight, particularly in the convoluted morass of federal tax law. The public typically discovers loopholes with surprise and shock some time after their creation. These unintended consequences could easily be discovered and solved by simply running some kind of adaptive Monte Carlo simulation of the entire tax code. It would be a straightforward matter to randomly generate several billion tax returns according to some kinds of realistic income and deduction "distributions". Such a simulation could then proceed by simulating rational taxpayers by optimizing every deduction and intricacy of the tax code to minimize taxation. To identify potential loopholes, one could, at the very crudest, apply a sort of loophole "threshold" for the difference between taxation under the rational case, and taxation under a simplified taxation regime with no loopholes--say by just applying the federal income tax brackets and no deductions.
Although implementation of such a simulation would be tedious and daunting given the current complexity of the US tax code, it would not surprise me if something similar already exists. A quick Google search for 'Monte Carlo tax policy' did not reveal anything, however. If nothing else, it would be a very simple matter to implement "partial tax models" that could simulate a particular new piece of tax policy in conjunction with a few other preexisting pieces of tax law to check for loopholes. It would also be useful in evaluating the effectiveness of the numerous radical tax-reform proposals, such as a flat tax or the "Fair Tax", in combating tax evasion.
