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Tag Archives: productivity

Did the 2017 Tax Cut Leave the Majority of Americans Behind?

In his recent State of the Union speech, President Biden stated, “Unlike the $2 trillion tax cut passed in the previous administration that benefited the top 1 percent of Americans, the American Rescue Plan helped working people — and left no one behind.” Excuse me? It’s true that the Trump tax cut benefited the top 1 percent of Americans. But it also helped Americans at all income levels. It helped in two ways. First, it cut taxes for virtually everyone and often by...

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Abandoning the Gold Standard Undermined Labor Productivity

Labor market productivity has been dropping for decades. And you can trace the plunge back to the demise of the gold standard.US labor market productivity plummeted in the third quarter of 2021. Revisions to the data showed a 5.2% drop in productivity, even worse than the dismal initial reading last month. It was the worst productivity decline since 1960.Workers earned more and hours worked increased, but output plunged.Labor productivity is calculated by dividing an index of real output...

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Infrastructure All the Way Down

I have argued on this blog that the best practical definition of infrastructure is “whatever the government wants to pay for because it benefits from the expenditure.” The adoption by the House of a $1-trillion bipartisan infrastructure bill reinforces this argument. (See Gabriel T. Rubin and Eliza Collins, “What’s in the Bipartisan Infrastructure Bill? From Amtrak to Roads to Water Systems,” Wall Street Journal, November 6, 2021.) The standard argument for public...

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Is restaurant productivity booming? (Probably not)

This tweet caught my eye: Notice that sales have recently increased much faster than employment.  A bit of that might be inflation, but surely that cannot explain such a massive divergence occurring over just a few months.  Another part of the increase might reflect a make-up rise in productivity after the recent recession.  But even that cannot explain the size of the increase. More likely, the productivity numbers seem higher because restaurants are understaffed. ...

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The stories we tell

The field of economics is a set of stories that we tell to better understand the economy. I thought of this when reading a new post by Matthew Klein: If I had to pick one chart to tell the story of the U.S. economy since the end of WWII, it would be this: Indeed Klein views the post-2006 slowdown in RGDP per capita as being so important that his Substack is entitled ‘The Overshoot”, an indication that we need to work on reversing the recent undershoot. Of course...

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Do Labor Unions Really Raise Wages?

The US House of Representatives recently passed The Protecting the Right to Organize Act, known as the PRO Act by a 224 to 194 margin. What are its provisions? . It would pretty much “cancel” right to work laws now prevailing in 27 different states. . It would further empower the National Labor Relations Board to exact fines on corporations for so-called “unfair practices.” . It would require employers to give unions information about their employees’ . It would allow...

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The Economic Way of Travel

Thinking like an economist about travel. Here’s what happened yesterday. A good friend called me and asked me for advice. I often hesitate to give advice but I don’t hesitate to ask lots of questions. At the end, usually the person can figure it out for himself or come close with a little intellectual nudging. He’s a fellow academic and I don’t want to reveal his identity so I’ll call him Fred. Fred took Amtrak last week from California to his boyhood home in the...

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More Capital Per Worker Makes Workers More Productive

In a recent blog post, I wrote: Aside for non-economists: Why would reductions in income tax rates on corporations and on high-income individuals even be expected, at a theoretical level, to increase real wages? By increasing the incentive to invest in capital. The greater the capital to labor ratio, the higher are real wages. Commenter Robert asked: Could someone expand on this a bit for me? Does investing in capital, mean investing in capital goods (i.e., land,...

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A Minimum Wage Puzzle

Two new studies show that giving pay raises to low-wage workers is good for consumers, too. That finding could add momentum to efforts to help grocery store clerks, nursing home workers and delivery drivers who are being paid a minimum wage despite their efforts being so essential during the current pandemic. The new research shows that raising the minimum wage improves workers’ productivity, which translates into businesses offering higher-quality service. These...

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Second Richest Man Spouts Nonsense

In a New Year’s Eve blog post, multi-billionaire Bill Gates Jr. called for raising taxes even higher on rich people like himself. Here are some relevant parts of his post (in boxes) along with my comments. Although I’m not an expert on the tax code, here are some steps I think America should take to make its tax system more fair. We should shift more of the tax burden onto capital, including by raising the capital gains tax, probably to the same level as taxes on...

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