Economics

"Democrats running for California governor need to stop talking about Trump and start talking about public pensions"

Column in the LA Times:

Why the silence? We all know. Any real solutions make too many enemies. And that’s deemed politically dumb, especially during an election year.

Public employee unions are cash cows for Democratic candidates. And the unions get very angry when politicians try to reduce future retirement packages for state and local government workers.

Related: "How the U.S. Ended Up Enthralled by Unions".

Even labor-friendly Paris uses fewer workers than New York City, and for a fraction of the cost. American public unions pervert the process.


"Williston, ND's Junk Debt Is the Punchline to Paul Krugman's Delusions"

Nice example of the need for a policy of no dillying dallying, just cut government expenditures.

Readers doubtless know where this story is going.  Williston’s politicians spent with abandon when the economy was booming because they could, and the theoretical bill is coming due.  The city now has over $200 million in outstanding debt, and in 2016 Williston’s municipal bonds were downgraded to junk status. 


"Seattle Residents Will Outsmart Its Soda Tax"

The whole piece is good, but this part is just excellent:

Seattle’s tax differs in some particulars, but it has been justified on various grounds at different times, which lends a degree of incoherence to how it was formulated and implemented. . . .

The City of Seattle denies that consumers respond to higher prices. On the city government’s website explaining the tax, the Finance & Administrative Services Department takes pains to mention explicitly that the “tax is not collected by the retailer nor is the tax burden intended to fall onto the consumer. The intent of the sweetened beverage tax is to tax the distributions of sweetened beverages into Seattle for retail sale in Seattle.”  

If the burden of the tax is supposed to completely bypass the consumer, as unlikely as that might be, what would drive them to substitute away from the unhealthy products that the government is taxing in the first place?


"Will Tax Reform Spur States to Embrace School Choice?"

That would be so cool.

One of the unforeseen consequences of the Republican tax reform bill will be to increase pressure on state and local unions to soften their half-century opposition to school choice. To be sure, this would be a remarkable reversal for public labor. But the emerging incentive is a powerful one: The modest subsidy of public school alternatives is now the only way to both rescue government public pension plans — the cumulative underfunding of which has been estimated as high as $6 trillion — and thus keep promised benefits reasonably intact.


Follow-up to Deaton and Cartwright

Andrew Gelman agrees that randomized trials are often overrated.

(I hadn't  known there was a little literature mocking overreliance on randomized trials. See, for examples, "Parachute use to prevent death and major trauma related to gravitational challenge: systematic review of randomised controlled trials" and "Does usage of a parachute in contrast to free fall prevent major trauma?: a prospective randomised-controlled trial in rag dolls".)


"Looks like time’s up for New Jersey’s pension fund"

Pro tip: when you, for a long time, spend money you don't have, sooner or later things will get very ugly.

When Phil Murphy becomes New Jersey’s 56th governor on Tuesday, he’ll face a stark choice: Ship all new tax dollars to the state pension fund and freeze all other outlays — or sit back and watch the fund head to collapse.

Related: "Collapsing pensions will fuel America’s next financial crisis".