Hannes Malmberg commented on my review of Saez and Zucman in response to a point I made about the elasticity of capital supply:

I think you are confusing demand and supply elasticities of capital.

The revenue calculations hinge on the elasticity of capital supply, i.e., how fast capital supply rise with the interest rate (how much more do people decide to save).

The Piketty spiral, in contrast, hinges on the elasticity of capital demand, i.e., how fast the interest rate fall with increasing capital (i.e., how fast firms and companies switch away from using capital when it gets more expensive).

There is nothing theoretically preventing us from having an almost horizontal capital demand curve, and an almost vertical capital supply curve. In such a world, a capital tax raises a lot of revenue, but increasing the savings propensity increase the capital stock without reducing the interest rate. (...)

I think he is basically right, and I'll partially retract section 3A of my prior post. (The rest of the post basically stands independently.)

"Partially", here, because reconciling the TToI revenue assumptions and the Piketty wealth spiral requires taking a specific stance on the slope of the capital demand curve, which should be considered a nontrivial burden that the authors don't even purport to defend. But we'll get there, hold on.

(1)

First, how did I make this mistake? Basically, by forgetting the Intro Econ that I never took, and making an implicit assumption about capital demand.

Specifically, I implicitly assumed (and didn't realize I had assumed) that the capital demand curve was downward-sloping. Why? Probably for the same reason that Bryan

Or, the coming debate on moral incidence of taxes

You're going to hear a lot about the triumph of injustice in the next 6-12 months. Or rather, you're going to hear a lot about The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, by Emmanuel Saez and Gabriel Zucman (2019).

For one thing, the two economists have signed on as economic advisors to 2020 presidential candidate Elizabeth Warren, who has for years been putting questions of economics and notions of justice front-and-center. But more generally, economic justice is having a moment, and I prophesy that you'll hear more about it before you hear less.

So this is my first real attempt to understand exactly what kind of moment it is, in the best way I know how -- by writing. Specifically, by writing a review that unpacks TToI for non-economists. (I am an economist, but not the kind that helps p— I mean, not a macroeconomist. I have macro­economists in my blogroll; that's my primary qualification here.)

One note before we begin: I really don't want to wade into the Economics-Twitter debate about academic standards and practices that arose around the publication of TToI, when review copies were circulated to journalists before economists, and the data tables were delayed from the book release by a few weeks. I think that that discussion of Saez and Zucman's work is framed to produce heat rather than light, and I'm not particularly interested.

So we start the discussion with what we know now, setting aside the question of how we got here. Go somewhere else if you want

One of the things I've appreciated about living abroad is that it's helped me better understand context that I used to be swimming in. Sometimes it's context on the breadth of the human condition, but sometimes it's just my daily lesson on filter bubbles.

Google knows enough at this point to show me SCMP articles about the MTR/Cathay Pacific thing (no I'm not going to link this, because my point is precisely that maybe five people reading this know enough not to have to look it up). If it was the MTA that had banned an American Airlines ad depicting a you don't know what goes here, do you?, then I'm near-certain that it'd be all over (my) Facebook. But no, I logged in today just to check, near-certain that I wouldn't find a single mention of it. I was right.

This isn't an objective fact about the world; it's a subjective fact about who I'm talking to. Somewhere, someone has a Facebook feed full of this; they're just not talking to me. The people who are talking to me are talking about other things. I'm talking about other things to them.

The conversations that everyone knows everyone is having are optional. The "everyone" that everyone knows everyone means by "everyone" involves a choice. Not in the sense that you or I could choose different ones, but in the sense that all of us could. No moral ontology where some things must always be talked about survives contact with a world in which sometimes everyone chooses to just not talk about them, to talk about something else.

So then, what will we talk about