Why it’s so hard to simplify the tax code
By Dee Gill – Simplifying the tax code ostensibly has bipartisan backing. Both the Bush and Obama administrations advocated for simplification, in reports, as have House Speaker Paul Ryan (Republican of Wisconsin) and Senator Elizabeth Warren (Democrat of Massachusetts). But when the Senate passed a tax bill this past December, there was no postcard.
What happened? The same thing that always does, suggest researchers. While simplicity is a stated goal, complexity wins the day. Hence companies and individuals will hire accountants to wade through the latest bill, interpret the new rules, offer guidance, and help work through the inevitable corrections and amendments.
And this comes at an economic cost. Research by James Mahon and Chicago Booth’s Eric Zwick, and others, collectively indicates that the complexity leads individuals and companies to fail to take advantage of billions of dollars in offered breaks, many of them presumably intended to stimulate the economy. In this way, complexity undermines what tax incentives are purported to accomplish. more>
Posted in Business, CONGRESS WATCH, Economy, History, Media, Regulations
Tagged Chicago Booth, Complexity, Inequality, refunds, Tax deduction, Taxes
By David Dollar and Zhi Wang – Two-thirds of world trade now occurs through global value chains that cross at least one border during the production process, and often many borders. As a result, the typical “Chinese product” that the United States imports has a lot of value-added from countries other than China.
Furthermore, in computers and electronics, more than half of China’s exports come from multinational firms operating in China.
U.S. firms are also involved in production chains. Thirty-seven percent of U.S. imports from China are intermediate products used by American firms to make themselves more competitive. Putting tariffs on intermediate products is shooting oneself in the foot. The list of targeted products posted by the United States includes some intermediates, such as aircraft propellers.
Many of the targeted products are consumer goods such as televisions and dishwashers.
What all this means is that tariffs are a very poor instrument for punishing China for any unfair trading practices. Some of the cost will be borne by American consumers; some by American firms that either produce in China or use intermediate products from China; some by firms in countries (mostly U.S. allies) that supply China; and some by Chinese firms (mostly private ones). more>
Posted in Business, CONGRESS WATCH, Economic development, Economy, History, Net, Product, Regulations, Technology, Transportation
Tagged Business, Government, Jobs, Manufacturing, Regulations, Technology, Trade, United States
Why fake news is bad for business
By Rose Jacobs – Many social-media websites struggle to maximize user engagement while minimizing the amount of misinformation shared and re-shared. The stakes are high for Facebook, Twitter, and their rivals, which generate most of their revenue from advertising. Viral content leads to higher user engagement, which in turn leads to more advertising revenue.
But content-management algorithms designed to maximize user engagement may inadvertently promote content of dubious quality—including fake news.
The researchers’ models assume platform operators can tell the difference between factual and fictitious posts. They demonstrate that engagement levels fall when users aren’t warned of posts that contain misinformation—to levels lower than when users are discouraged from clicking on the dubious material.
A limitation of the research is the models’ assumption that the people using social networks and the algorithms running them know whether posts are true, false, or shaded somewhere in between. more>
Cornered: The New Monopoly Capitalism & The Economics of Destruction, Author: Barry Lynn.
By Nick Cassella – The year was 1904, and Lizzie Maggie wanted to create a board game that acted as “a harsh criticism of wealth disparity.” Upset by the the inequality around her, Maggie aspired to ridicule and condemn the dire outcomes of unbridled capitalism. So she constructed the Landlord’s Game, which intended to educate players on the rules and regulations of realty and taxation. Eventually, it ended up being the precursor to the game-which-nobody-ever-finishes, Monopoly.
A long time has passed since then and it’s safe to say that Maggie’s hope has not been realized. Monopoly’s creator would look at today’s economic landscape and be disheartened.
It appears as if Hasbro is trying to draw attention to Monopoly’s original purpose by releasing a new “cheaters edition” this autumn.
The cheaters edition follows the rules of classic Monopoly, except this version encourages players to break them…They encourage players to cheat in various ways, from collecting rent on another player’s property or stealing money from the bank.
Posted in Banking, Book review, Business, Economic development, Economy, History, Leadership, Media, Net, Regulations
Tagged Banking reform, Capital, Debt, Financial crisis, Game, Government, Internet, Leadership
Google and Facebook have an effective duopoly on online advertising. For the average person, why is that a problem? Prices haven’t gone up. Why should we care?
By Luigi Zingales, Tyler Cowen – Most people don’t perceive that as a problem. The perceived price [for using Google or Facebook] is zero. It’s not really zero, because we are giving up our data in exchange. Google and Facebook’s market power in advertising increases the cost of advertising, which eventually will be reflected in the price of goods.
Antitrust in Europe is much more effective. Look at the price of cell phones and cell-phone services. They are a fraction of the price in the US, with better services. The EU is at the front end of enforcement of competition, while the US has become complacent. In the EU, they have a new directive requiring every bank to give customers access to their data at the customer’s request. That transfer creates competition because it reduces the friction and creates more opportunity for new entry. The monopoly that Facebook and Google have of our data, number one, prevents entry, and number two, gives them tremendous power. more>
Posted in Broadband, Business, CONGRESS WATCH, Economic development, Economy, Education, History, Leadership, Media, Net, Regulations, VIDEO
Tagged Broadband, Business, Capital, Chicago Booth, Congress Watch, Financial crisis, Government, Internet, Leadership
By Joseph E. Stiglitz – I’ve been attending the World Economic Forum’s annual conference in Davos, Switzerland – where the so-called global elite convenes to discuss the world’s problems – since 1995. Never have I come away more dispirited than I have this year.
The world is plagued by almost intractable problems. Inequality is surging, especially in the advanced economies. The digital revolution, despite its potential, also carries serious risks for privacy, security, jobs, and democracy – challenges that are compounded by the rising monopoly power of a few American and Chinese data giants, including Facebook and Google. Climate change amounts to an existential threat to the entire global economy as we know it.
Perhaps more disheartening than such problems, however, are the responses.
But, by the end of their speeches this year, any remaining illusion about the values motivating Davos CEOs was shattered. The risk that these CEOs seemed most concerned about is the populist backlash against the kind of globalization that they have shaped – and from which they have benefited immensely.
They may lack the candor of Michael Douglas’s character in the 1987 movie Wall Street, but the message hasn’t changed: “Greed is good.” What depresses me is that, though the message is obviously false, so many in power believe it to be true. more>
Posted in Banking, Business, CONGRESS WATCH, Economy, Education, Energy & emissions, Healthcare, History, Leadership, Media, Nature, Net, Regulations, Technology
Tagged Business improvement, Capital, Climate change, Financial crisis, Inequality, Internet, Leadership, World Economic Forum