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

1

Ecuador, attempting to prove that it's indistinguishable from Costa Rica, tricks a tour group thinking they've gone to Costa Rica into believing that they were going to Costa Rica when in fact, they were taken to a part of Ecuador that was, apparently, indistinguishable from Costa Rica.

I'm really not kidding:

As Ecuador residents arrived, not in Costa Rica but another Ecuador airport, Tena, where they were given fake stamps in their passports as they went through a staged passport control. No attention to detail was spared as huge posters were placed over the welcome billboards at the airport. Adverts depicting Imperial beer and 'Esencial Costa Rica,' Costa Rica's national brand, were displayed in the airport to throw the group off the scent.

Even fictitious immigration documents and car licence plates were created to make the group think they were in Golfito, a port town in Costa Rica. On top of all that organisers used mobile phone and GPS blockers to keep passengers from using technology to discover the hoax. (...)

2

In more serious airline news, the Congressional Research Service, a policy-analysis agency within the Library of Congress, released a 20-page report titled Terrorist Databases and the No Fly List: Procedural Due Process and Hurdles to Litigation. Footnote 41 (of 201!) reads:

Prior to 9/11, aviation security was handled by the Federal Aviation Administration (FAA). The FAA ordered air carriers not to board certain individuals who were deemed a threat to aviation safety. On 9/11, this "no fly" list contained 12 names.

Somehow, I guess I assumed that there were more than twelve people on the no-fly before 2001. But then again, in hindsight,