Historical GDP Growth v Top Marginal Tax Rates

How about this chart?

Should we raise the top marginal tax rate?

Is there a positive correlation between the top marginal tax rate and GDP growth? Cursory analysis says yes.

Also note that for over 60 non-consecutive years (70 years with an 8 year gap in the middle), the top marginal tax rate was over 50%.

Water, Google, Christianity, and Energy

A new chip can cleanse water to be suitable for drinking. The eight inches of these (postage stamp sized) chips can produce four gallons of water per hour, while using as much electricity as a light bulb. If these things become mass produced and affordable, that'll rock the developing world! What a news report to hear in the same week as World Water Day.

Google pessimists ask what the point was, while tech-savvy Googlers are unaffected. Can Google incite larger change?

These maps of Christianity make me think about how religious views intersect with political views.

How will traveling wave reactors affect the energy scene? On a side note, TED is pretty neat.

Job Advice, Saving Money, and the Planet

Jon Brooks gets a job! And this is how he did it. Job seeking advice is abundant this time of business cycle.

Also, remember that you need to save money for retirement. After you find a job, that's something you need to think about. That way, you can become the richest man in the world.

I can't say that I agree, but a couple of ecologists are worried about how our current economic model interacts with the world. I can't say I agree, but it's worth thinking about, certainly. Change isn't necessarily a bad thing.

Climate change, exchange rates, education, and new frontiers in economics

John Whitehead on climate change. The science hasn't been settled. Professor Whitehead doesn't go into this, but the consequences haven't been settled either.

Chavez is still trying to fix his economy, this time by playing with his fixed exchange rate. The blind lead the blind.

Tyler Cowen makes a partial list of over- and under-explored areas of economics. There are a lot of really interesting under-studied areas of economics.

Ed Glaeser looks at the link between GDP per capita and school enrollment in 1900. Education benefits seem to be very, very persistent.

Caballero's story

David Beckworth considers the proximity of economists to the financial system and their view of the effect of interest rates in the housing and credit boom. The idea is that, essentially, business economists see the Fed's lowering of interest rates as a key factor in the boom because of their keen, first-hand knowledge of the situation, rather than academic economists who have less contact. I'll ignore the obvious problems of Professor Beckworth's hypothesis to point out something that struck me as odd: Cabellero's story. Caballero seems to believe that the demand for safe assets rose...

By 2001, as the demand for safe assets began to rise above what the U.S. corporate world and safe mortgage‐ borrowers naturally could provide, financial institutions began to search for mechanisms to generate triple‐A assets from previously untapped and riskier sources. Subprime borrowers were next in line, but in order to produce safe assets from their loans, “banks” had to create complex instruments and conduits that relied on the law of large numbers and tranching of their liabilities.

... does this make sense? So, financial institutions poorly measured risk, sure. But, in order for complex instruments to be made from subprime loans, more subprime loans had to be made. Meaning, there had to be incentives for subprime borrowers to receive subprime loans. Does Caballero really believe that lower interest rates couldn't have been among these incentives? And that had interests rates been higher, there wouldn't have been less incentive? Ricardo Caballero's story can't be the one held by most academic economists, can it?

Media woes

Did everyone forget that the current recession (or, at least, the remnants thereof) was originally started by a housing crisis and financial crisis? And that these crises started before the Obama administration? And that, at the time, many people said that unemployment may not return to normal levels until 2012? It seems disingenuous for news anchors to discuss when the Obama administration's use of the word 'inherit' just becomes an excuse. Must they contrive issues for the sake of seeming unbiased?

Also, does no one realize that banks make money, at least partially, by lending money? They don't need political pressure to continue lending, they have monetary incentives, and that's how they work. If they're not lending, there aren't enough monetary incentives for them to do so.

On the other hand, it seems like Republicans are claiming fiscal responsibility merely by disassociating themselves from Democrats, no matter what the issues actually are, and forgetting that the Bush administration ever happened. While the Obama administration is too classy to take advantage of Bush's unpopularity (a good move, in my opinion), the Democratic party leadership shouldn't let people forget so easily. So far, Republicans need to consider themselves lucky for getting off so easily.

A giant has fallen.

Good bye, Paul Samuelson.

Thank you for formalizing Economics.