Economist here. I guess I mostly agree with Richard in the general sense that we should all do more of a thing that has public benefits. I am less certain though if I take inventory and ask how it becomes more like other fields. At a individual level, how much of my time am I supposed to further spend on this topic? I think I do a lot of relevant research that matters, plus I try hard to be a good teacher, things I think that matter. If I try to post a correction on a NYT article, its not at all clear to me I make a dent. The internet is just so awash in misinformation, it feels futile for me to spend any more time on trying to correct it. I do have real admiration for the Don Boudreaux's who are so indefatigable on this, but for me it feels like I'm just repeating the same things the field has already known for decades to centuries.
It probably wouldn't be noticed if all of us economists individually did 5% more, so perhaps the difference in effort is perceived by high visibility associations. Perhaps it is the various professional associations commenting on climate change, public health, etc. misinofrmation that gives the perception of them "doing more" than econmomists. But culturally, economists really don't like delegating opinions to the American Economics Association. The point of the AEA should be to help me and the profession grow in our skills, not claim to speak for me on matters of public policy. The AEA did this kind of stuff at its origination, it was a terrible mistake, and I'm glad that there is no appetitie for its return. I can speak for myself, thank you very much. I have to say that seeing the other major associations take positions on what should be considered as misinformation during COVID did not exactly manage to reliably cover themselves in glory.
Seems right. But I have to say, employing correct economic arguments about the tragedy of the commons to justify not correcting economic misinformation is pretty funny.
Maybe there ought to be an organization that takes the consensus displayed in the US Economic Experts Panel as its ideological position, and advocates for that?
One of the problems is that you can make good faith rebuttals all day, but in the end someone like Paul Krugman has a massive audience and they're going to push the "all praise the bureaucratic state and the political donors" economic rhetoric that is all smoke and mirrors.
So some people will see you and recognize truth, or at least they'll recognize you trying your best to present what you believe to be truth....but the majority of people who see the viewpoints of economists are going to mostly see the ones pushing the preferred narrative of either political party's leadership.
This is a reasonable point. The better the group is at good faith rebuttals, the more gain there is to being one of the defectors who trades away the credibility of the group for political gain and attention. I'm not sure what to do about that. Staying out means that a larger share of my group's interaction with the public will be politically motivated, but it also implies I'll entice more defectors by joining in.
I have a history degree, and I focused my course load on all the classes I could take related to American foreign policy in the 20th century.
I often hesitate to jump into arguments where people are pushing factually incorrect versions of events simply because I've grown tired of being told I need to read a history book on a particular subject when I've read several books on that subject and the person condescending to me hasn't read any.
I think it's wrong to call most of Krugman's arguments "misinformation". As misguided as I think he often is, his arguments are at least — to my understanding — a good faith attempt to seek the truth.
I believe Hanania is speaking about, say, Trump and his defenders arguing on behalf of tariffs, using utterly made-up / bullshit reasoning that no economist would agree with, with full awareness that it is total fabrication. And media often both-sidesing this, like _who's to say who's right?_ That is "misinformation".
Problem is that its not even ideological stuff like "is free trade good". Its misinformation regarding basic facts.
People believe a lot of dumb shit.
Example: lefwingers believe that "billionaires dont pay any taxes". Rightwingers believe that cutting foreign aid can substantially reduce the deficit. Leftwingers believe everyone's working at minimum wage. Rightwingers believe there's massive social security fraud. Etc.
As someone with over 10 years' experience in tax, I can say that "billionaires don't pay any taxes" is not a myth. "Any" is too strong, but the US definitely has a bunch of tax loopholes that allow billionaires to pay very little in taxes.
I seriously doubt you have 10 years of experience in tax *with billionaires*. And what you say is simply not true. Super wealthy ("billionaires") pay between 50 and 60 of their income in taxes. Very large chunk of overall tax revenue comes from the super wealthy. Whatever loopholes exist, they dont change the aggregate numbers.
(Step up basis is indeed wack, it made sense when the estate tax wack substantial as a way of avoiding double taxation, but since the estate tax has been gutted it no longer does. However the extent of its impact is exaggerated and that Forbes article is just pushing the same ol' click bait myth)
Actually, I'm a tax preparer/advisor to high net worth people and I concur with ToSummarise. Hardly any pay anything like 50-60%. The max Federal rate is 37%. A lot of HNW folks have residency in places like Florida so they can avoid state taxes altogether. Most are business owners and are able to layer losses against income, and recognize windfalls under lower LT capital gains rates.
And then there is charity. You can donate appreciated property and take the deduction at FMV without ever recognizing the gain in the first place. This has the abiluty to wipe out huge amounts of income. I've seen returns where the taxpayer is making $50 million a year, but paying 3 or 4% of it in taxes.
The schmucks who pay 50% in taxes are high salary earners like NBA players and actors. Everyone else hires people like me.
What is the source for your claim that billionaires pay between 50-60% of their income in taxes? And how are you defining "income" here - taxable income or economic income? If you're just using the taxable income definition, that's circular - the whole point being argued is that the definition of "taxable income" is too narrow and doesn't include importance sources of economic income.
I agree that there are some highly publicised claims about billionaires paying no taxes that are misleading because they treat losses and all deductions as somehow "illegitimate", and they don't account for foreign tax paid on foreign income.
But that doesn't detract from the fact that there *are* a lot of loopholes in the US tax system - including the buy, borrow, die, strategy - that a billionaire could use, if they wanted, to achieve a near-0% tax rate on their economic income. How frequently these get used in practice is hard to tell because of tax secrecy laws (data on billionaires is notoriously scarce), and I'm sure some billionaires are more aggressive in their tax "planning" than others. But I seriously doubt *any* billionaire in the US regularly pays 50-60% on their *economic income* - if so, that billionaire needs to fire their tax advisors.
AGI, so youre right, 50/60% is not the share of total income. Still means that the very rich pay a substantial amount in taxes. Source is tax foundation but its easy to look it up. You can also look at share of revenue by percentile.
Regarding the "buy, borrow, die" strategy, no, a billionaire could not do it "if they wanted to". The whole thing is a bit of a myth (originating with ProPublica, spread around on reddit - note also that the Forbes article you linked references it mostly in the headline while the article itself is very thin on the details/substance. BTW, Forbes has been junk for awhile now). First for it to actually work interest rates have to be really low, otherwise the "borrow" part breaks down - you end up paying more in interest than you save on your tax bill. Second, youre taking on certain kinds of risk with the strategy, so it can come back and bite you in the ass. Which is probably good part of the reason why its not used "if they wanted to" (though youre also right that individual data is hard to get, for obvious reasons, but aggregate numbers on total revenue do suggest that its not). Having said all that let me repeat that I agree that the step up provision should be eliminated. That doesnt mean that "billionaires dont pay any taxes" though.
If so, it's worth looking at the underlying Treasury report being discussed (https://www.irs.gov/pub/irs-soi/24rpestimatingtaxburdens.pdf), because the Tax Foundation is not as "non-partisan" as they like to pretend. Table 1 of that Treasury report shows that for the top 0.001% (squarely in "billionaire" territory), AGI as a % of wealth is only 4.26%. But if you keep going higher to the top 0.00005% (people with at least tens of billions), AGI as a % of wealth is only around 1.5-3%. I'm sure their economic income is quite a lot higher than this, as it's hard to believe the wealthiest billionaires earn returns that barely match inflation.
Anyway, the data shows that the billionaires are paying high *rates* of tax as you say, around 50-60% on their AGI. But their AGI equates to annual returns of < 3% of their wealth - in the 2018-2020 dataset, it was only 1.7%. I agree that's not "nothing", but it suggests effective tax rates likely below 30%, and possibly much lower (we can't tell without knowing what their economic income is). There's also likely to be variation within these averages - some billionaires will be more aggressive with their tax planning, others less so.
Re: buy, borrow die - I agree this strategy involves a certain amount of risk and is more feasible with low interest rates (though billionaires can usually borrow at much lower rates than you or I can, and we have had low interest rates for a long time now). Since we both agree step-up on death should be eliminated, this is somewhat moot. I also don't want to suggest BBD is the *only* strategy needed - successful tax avoidance usually requires combining multiple strategies, and the ones that are suitable will depend on each's billionaire particular circumstances.
Richard called out a few polls from the Kent Clark Center / Chicago Booth.
I just want to point out that these weren't isolated polls; they've actually been regularly doing these polls of economists -- with many highly prestigious economists contributing -- since 2011. I almost never hear it cited. You can also click on the polls and see that some economists include explanatory notes regarding their answers, which can also be illuminating.
It's a really useful tool for laymen to get a quick check on where there are points of consensus, disagreement, and uncertainty regarding various political questions of the day that touch on economics.
So to me, spreading the word about that site feels like a good starting point for what Richard is talking about.
I'm not so sure economics has the same finality and predictive power as the kind of hard sciences that do combat misinformation (biology, climatology). There is a name for this idealism as well: "Physics Envy".
Though, to your point, if there is some consensus amongst economists on some idea when polled, they could do more to publicly assert that idea with specificity and depth rather than just saying "lump of labor fallacy, kid" and moving on.
Yeah that’s similar to what I was thinking. There seems to be less coordination amongst economists to fight misinformation, and they don’t seem to have as much of a presence from strong public-facing institutions especially compared to those in health or climate science. It seems more economists tend to function as individuals with less collective effort to fight misinformation.
Also, misinformation today is often pushed in rapid, repetitive soundbites by populists, which is asymmetrical compared to economists’ tendency to reply more slowly.
Also vaccines or climate is somewhat different because those fields have visceral “hook” events and sense of moral urgency while economics lacks catastrophic moments that force consensus into view. Or at least there are too many preemptive attempts to control economics related narratives with misinformation and those tend to stick around because economists aren’t responding quick enough to get the truth out nor are they doing so in a way that’s likely to ever compete the misinformation on virality, especially since most people seem to look at narratives around data (and ones that confirm their priors) over the data itself.
A major reason economists don’t devote more effort to combatting misinformation is that they believe voters are a mix of rationally ignorant and locked into particular organized interests and privately beneficial but socially detrimental positions. It is extremely difficult to steer public beliefs, especially about economics, when that is the case.
I think the short answer is that Bernie Sanders lost. There hasn't been much economic misinformation to fight, because until now the worst of it had just been privately held beliefs among rank and file voters without influencing policy. Sanders earned far fewer votes than both Clinton and Biden, suggesting that whatever the masses believe, their passion for it isn't enough to translate into real results. The tariff insanity has changed the script, but there really hasn't been such economic illiteracy from an American president in modern history. Maybe this is some kind of free market 4D chess on the part of economists, since they have faith that, whatever ignorance might afflict the masses, in the end the adults will be in charge and things will work out relatively alright. Or, if a policy is so bad, markets will respond appropriately and we'll self-correct.
Effects on policy notwithstanding, I'm still concerned about masses of people believing untrue things, but then I'm not sure economists want that sort of target on their backs. Like you pointed out, economic misinformation historically comes from the left. The left's heuristic of "trusting experts" is very good, but speaking as someone on the left: if they make the connection that economists are experts, they're more likely to ditch experts than suddenly trust economists.
Reagan, Clinton, Bush Jr, Obama, Trump, Biden, and now Trump again were all economically illiterate.
I think Bush Sr was the last modern president who understood that maybe blowing up the deficit every year was a bad idea, and he paid the price in the 1992 election for raising taxes. Bill Clinton benefited from the dot.com bubble making his economy and deficit look better than it actually was, but he was certainly no fiscal hawk.
There's an apples-to-oranges you (really, Caplan) are making here. Excerpt:
"In the late 1970s, Kearl et al. asked economists whether “wage-price controls should be used to control inflation.” Almost three-quarters of economists generally disagreed. In contrast, the General Social Survey (henceforth, GSS) reports that solid majorities of noneconomists think it should be government’s responsibility to “keep prices under control.” Those who agree outnumber those who disagree by at least 2:1 and often 3:1."
Those 2 questions are not asking about the same thing. One could think that price and wage controls are bad, while also thinking it's the government's responsibility to keep prices under control via not-too-inflationary monetary policy. Not via price controls.
I don't care if 95% of sociologists agree that white supremacy is a fundamental principle of the universe. The whole field is disreputable.
Economics isn't much better. As soon as we are talking about "the general welfare of society" as something objectively measurable any reasonable person is already on guard.
"Another place where economists and the public diverge is on the costs of housing, one of the most important challenges facing society. A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism."
And yet it isn't, because there are cases where higher prices have followed additional housing inventory. Housing markets are complicated and trickle-down affordability doesn't always work.
Except that would require economists to understand the misinformation in their own field first. They don’t even know what they are assuming in their theory (let alone why the assumption is being made), so good luck with that…
> A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism.
I sort of feel like what society needs is a new kind of journalist: professional skeptic. Someone who would make it their job to pick apart popular narratives and expose their logical and empirical weaknesses, whether they are coming from the government or outside it. Like they could lay out what is an is not supported by evidence in a coherent way so that even low IQ people could understand it. And do outreach, don't just be a passive repository of information, but go on the Joe Rogan show and talk about the evidence *against* vaccines causing autism.
And it's worse than that: Most people don't really agree with setting prices by supply and demand. Just this morning in my local newspaper (the one in our city for the educated people) had an article about the nearby gay summer mecca. There's tight building control so the number of summer hotel rooms/rentals is strictly limited. It's becoming ever more popular so naturally the prices are rising. But the reporter didn't seem to grasp that, and seemed to be groping toward an explanation that it was some sort of monopoly behavior by an investor group that had bought five or six small hotels.
OTOH the complainers are sort-of right. They understand that the hotel owners haven't been motivated to actually produce a better product, they are just getting the benefit of a change in the market conditions. But of course, the voters *like* rent control...
>> "If antiforeign bias really exists, these are the patterns you would expect."
IMHO, you've got the argument exactly backward. The High Human Capital/economist/conventional conservative view is that the goal of people is to increase their income/consumption and that anti-foreign sentiment is a bias that interferes with that. But the reality is a lot closer to the goal of people being winning intergroup rivalries and when no rivalry is active at the moment, they turn their attention to increasing their income.
Go to a small town and examine the life of ordinary people with ordinary jobs. Do they put their passion into their jobs or into the high-school football team?
Back in the last 1970s, IIRC, when Japanese competition was starting to really cut into US manufacturing, someone did a survey to find out what sort of policy the public thought the US government should follow. The winner was "the policy should seek to maintain US economic predominance over Japan, regardless of whether it reduced incomes in Japan and/or the US".
Yes, we see these patterns and it's clear that people *prioritize* anti-foreign action.
Interesting piece. Couple thoughts. First one is, if you look at a catchy narrative, like “immigrants steal jobs,” “the Fed is printing money and destroying the dollar,” “developers cause higher rents,” it tends to spread through repetition and emotional resonance, and also simplicity. They exploit identity/ emotion (“our jobs, their threat,” “evil landlords vs. honest tenants.”) i think people engage with and share these narratives because they’re intuitively vivid and easy for people to remember and retell. They don’t care if they’re empirically backed. That’s why they persist even when data that contradicts them arises (similar to the continued influence effect), because they fulfill explanatory or moral needs.
Also, while you have the aforementioned emotionally resonant narratives spreading via memes and X posts, economists on the other hand often communicate in things like models/regression tables/conditional claims, which are persuasive to other experts or informed individuals but fail as memes because people resonate more with the narrative around them than the data. They’re not as prone to virality or moral-emotional impact of stories that cast clear villains and victims.
For example, many people believe “rent control helps tenants.” It’s easy for them to imagine a poor family saved from eviction by a simple sounding solution, but harder for them to picture unseen consequences or think longer term about things like less construction or higher rents in the future. Probably because the actual economic dynamic lacks a compelling protagonist or villain.
So I guess that leaves me with a question, which is if economists want to take on misinformation, are they going to fail so long as they simply fact-check? Might they need to craft counter-narratives that fit the simplicity model but are grounded in evidence. For example: “When you block new housing, you’re making your kids move away.” Okay, not a great example but has a more viral likelihood than “supply elasticity reduces equilibrium prices.”
One other thought is that in a solid institutional environment, professional bodies like the AMA for medicine or NAS for science act as “truth-broadcasting mechanisms.” They coordinate elites to produce unified narratives that can compete with viral stories/memes. Economics doesn’t seem to have equally strong public-facing institutions. There’s the AEA, Fed staff reports, a few think tanks but as far as I know, none with the cultural authority of the CDC during a pandemic or the IPCC for climate.
Am I right to think that the road to policy sanity has to run through economics becoming a fundamental part of the K–12 curriculum?
It's ridiculous that it's not; the only exculpatory reason being that economics was still coalescing as a science when the standard curriculum was frozen in stone, at the start of the 20th century.
(FWIW, I'm part of a team that's addressing this.)
Economist here. I guess I mostly agree with Richard in the general sense that we should all do more of a thing that has public benefits. I am less certain though if I take inventory and ask how it becomes more like other fields. At a individual level, how much of my time am I supposed to further spend on this topic? I think I do a lot of relevant research that matters, plus I try hard to be a good teacher, things I think that matter. If I try to post a correction on a NYT article, its not at all clear to me I make a dent. The internet is just so awash in misinformation, it feels futile for me to spend any more time on trying to correct it. I do have real admiration for the Don Boudreaux's who are so indefatigable on this, but for me it feels like I'm just repeating the same things the field has already known for decades to centuries.
It probably wouldn't be noticed if all of us economists individually did 5% more, so perhaps the difference in effort is perceived by high visibility associations. Perhaps it is the various professional associations commenting on climate change, public health, etc. misinofrmation that gives the perception of them "doing more" than econmomists. But culturally, economists really don't like delegating opinions to the American Economics Association. The point of the AEA should be to help me and the profession grow in our skills, not claim to speak for me on matters of public policy. The AEA did this kind of stuff at its origination, it was a terrible mistake, and I'm glad that there is no appetitie for its return. I can speak for myself, thank you very much. I have to say that seeing the other major associations take positions on what should be considered as misinformation during COVID did not exactly manage to reliably cover themselves in glory.
Seems right. But I have to say, employing correct economic arguments about the tragedy of the commons to justify not correcting economic misinformation is pretty funny.
Maybe there ought to be an organization that takes the consensus displayed in the US Economic Experts Panel as its ideological position, and advocates for that?
One of the problems is that you can make good faith rebuttals all day, but in the end someone like Paul Krugman has a massive audience and they're going to push the "all praise the bureaucratic state and the political donors" economic rhetoric that is all smoke and mirrors.
So some people will see you and recognize truth, or at least they'll recognize you trying your best to present what you believe to be truth....but the majority of people who see the viewpoints of economists are going to mostly see the ones pushing the preferred narrative of either political party's leadership.
This is a reasonable point. The better the group is at good faith rebuttals, the more gain there is to being one of the defectors who trades away the credibility of the group for political gain and attention. I'm not sure what to do about that. Staying out means that a larger share of my group's interaction with the public will be politically motivated, but it also implies I'll entice more defectors by joining in.
It is a hard choice.
I have a history degree, and I focused my course load on all the classes I could take related to American foreign policy in the 20th century.
I often hesitate to jump into arguments where people are pushing factually incorrect versions of events simply because I've grown tired of being told I need to read a history book on a particular subject when I've read several books on that subject and the person condescending to me hasn't read any.
I think it's wrong to call most of Krugman's arguments "misinformation". As misguided as I think he often is, his arguments are at least — to my understanding — a good faith attempt to seek the truth.
I believe Hanania is speaking about, say, Trump and his defenders arguing on behalf of tariffs, using utterly made-up / bullshit reasoning that no economist would agree with, with full awareness that it is total fabrication. And media often both-sidesing this, like _who's to say who's right?_ That is "misinformation".
Problem is that its not even ideological stuff like "is free trade good". Its misinformation regarding basic facts.
People believe a lot of dumb shit.
Example: lefwingers believe that "billionaires dont pay any taxes". Rightwingers believe that cutting foreign aid can substantially reduce the deficit. Leftwingers believe everyone's working at minimum wage. Rightwingers believe there's massive social security fraud. Etc.
All of that is just brain dead nonsense.
As someone with over 10 years' experience in tax, I can say that "billionaires don't pay any taxes" is not a myth. "Any" is too strong, but the US definitely has a bunch of tax loopholes that allow billionaires to pay very little in taxes.
Step-up basis on death is probably the largest loophole, and the US is a real anomaly in this regard - see https://www.forbes.com/sites/davidrae/2022/07/14/how-the-rich-use-the-buy-borrow-die-strategy-to-avoid-large-tax-bills/ (Forbes is hardly a left-wing site)
I seriously doubt you have 10 years of experience in tax *with billionaires*. And what you say is simply not true. Super wealthy ("billionaires") pay between 50 and 60 of their income in taxes. Very large chunk of overall tax revenue comes from the super wealthy. Whatever loopholes exist, they dont change the aggregate numbers.
(Step up basis is indeed wack, it made sense when the estate tax wack substantial as a way of avoiding double taxation, but since the estate tax has been gutted it no longer does. However the extent of its impact is exaggerated and that Forbes article is just pushing the same ol' click bait myth)
Actually, I'm a tax preparer/advisor to high net worth people and I concur with ToSummarise. Hardly any pay anything like 50-60%. The max Federal rate is 37%. A lot of HNW folks have residency in places like Florida so they can avoid state taxes altogether. Most are business owners and are able to layer losses against income, and recognize windfalls under lower LT capital gains rates.
And then there is charity. You can donate appreciated property and take the deduction at FMV without ever recognizing the gain in the first place. This has the abiluty to wipe out huge amounts of income. I've seen returns where the taxpayer is making $50 million a year, but paying 3 or 4% of it in taxes.
The schmucks who pay 50% in taxes are high salary earners like NBA players and actors. Everyone else hires people like me.
What is the source for your claim that billionaires pay between 50-60% of their income in taxes? And how are you defining "income" here - taxable income or economic income? If you're just using the taxable income definition, that's circular - the whole point being argued is that the definition of "taxable income" is too narrow and doesn't include importance sources of economic income.
I agree that there are some highly publicised claims about billionaires paying no taxes that are misleading because they treat losses and all deductions as somehow "illegitimate", and they don't account for foreign tax paid on foreign income.
But that doesn't detract from the fact that there *are* a lot of loopholes in the US tax system - including the buy, borrow, die, strategy - that a billionaire could use, if they wanted, to achieve a near-0% tax rate on their economic income. How frequently these get used in practice is hard to tell because of tax secrecy laws (data on billionaires is notoriously scarce), and I'm sure some billionaires are more aggressive in their tax "planning" than others. But I seriously doubt *any* billionaire in the US regularly pays 50-60% on their *economic income* - if so, that billionaire needs to fire their tax advisors.
AGI, so youre right, 50/60% is not the share of total income. Still means that the very rich pay a substantial amount in taxes. Source is tax foundation but its easy to look it up. You can also look at share of revenue by percentile.
Regarding the "buy, borrow, die" strategy, no, a billionaire could not do it "if they wanted to". The whole thing is a bit of a myth (originating with ProPublica, spread around on reddit - note also that the Forbes article you linked references it mostly in the headline while the article itself is very thin on the details/substance. BTW, Forbes has been junk for awhile now). First for it to actually work interest rates have to be really low, otherwise the "borrow" part breaks down - you end up paying more in interest than you save on your tax bill. Second, youre taking on certain kinds of risk with the strategy, so it can come back and bite you in the ass. Which is probably good part of the reason why its not used "if they wanted to" (though youre also right that individual data is hard to get, for obvious reasons, but aggregate numbers on total revenue do suggest that its not). Having said all that let me repeat that I agree that the step up provision should be eliminated. That doesnt mean that "billionaires dont pay any taxes" though.
Are you referring to this Tax Foundation report? https://taxfoundation.org/blog/super-rich-pay-effective-tax-rates/
If so, it's worth looking at the underlying Treasury report being discussed (https://www.irs.gov/pub/irs-soi/24rpestimatingtaxburdens.pdf), because the Tax Foundation is not as "non-partisan" as they like to pretend. Table 1 of that Treasury report shows that for the top 0.001% (squarely in "billionaire" territory), AGI as a % of wealth is only 4.26%. But if you keep going higher to the top 0.00005% (people with at least tens of billions), AGI as a % of wealth is only around 1.5-3%. I'm sure their economic income is quite a lot higher than this, as it's hard to believe the wealthiest billionaires earn returns that barely match inflation.
Anyway, the data shows that the billionaires are paying high *rates* of tax as you say, around 50-60% on their AGI. But their AGI equates to annual returns of < 3% of their wealth - in the 2018-2020 dataset, it was only 1.7%. I agree that's not "nothing", but it suggests effective tax rates likely below 30%, and possibly much lower (we can't tell without knowing what their economic income is). There's also likely to be variation within these averages - some billionaires will be more aggressive with their tax planning, others less so.
Re: buy, borrow die - I agree this strategy involves a certain amount of risk and is more feasible with low interest rates (though billionaires can usually borrow at much lower rates than you or I can, and we have had low interest rates for a long time now). Since we both agree step-up on death should be eliminated, this is somewhat moot. I also don't want to suggest BBD is the *only* strategy needed - successful tax avoidance usually requires combining multiple strategies, and the ones that are suitable will depend on each's billionaire particular circumstances.
Richard called out a few polls from the Kent Clark Center / Chicago Booth.
I just want to point out that these weren't isolated polls; they've actually been regularly doing these polls of economists -- with many highly prestigious economists contributing -- since 2011. I almost never hear it cited. You can also click on the polls and see that some economists include explanatory notes regarding their answers, which can also be illuminating.
https://kentclarkcenter.org/us-economic-experts-panel/
It's a really useful tool for laymen to get a quick check on where there are points of consensus, disagreement, and uncertainty regarding various political questions of the day that touch on economics.
So to me, spreading the word about that site feels like a good starting point for what Richard is talking about.
I'm not so sure economics has the same finality and predictive power as the kind of hard sciences that do combat misinformation (biology, climatology). There is a name for this idealism as well: "Physics Envy".
Though, to your point, if there is some consensus amongst economists on some idea when polled, they could do more to publicly assert that idea with specificity and depth rather than just saying "lump of labor fallacy, kid" and moving on.
Yeah that’s similar to what I was thinking. There seems to be less coordination amongst economists to fight misinformation, and they don’t seem to have as much of a presence from strong public-facing institutions especially compared to those in health or climate science. It seems more economists tend to function as individuals with less collective effort to fight misinformation.
Also, misinformation today is often pushed in rapid, repetitive soundbites by populists, which is asymmetrical compared to economists’ tendency to reply more slowly.
Also vaccines or climate is somewhat different because those fields have visceral “hook” events and sense of moral urgency while economics lacks catastrophic moments that force consensus into view. Or at least there are too many preemptive attempts to control economics related narratives with misinformation and those tend to stick around because economists aren’t responding quick enough to get the truth out nor are they doing so in a way that’s likely to ever compete the misinformation on virality, especially since most people seem to look at narratives around data (and ones that confirm their priors) over the data itself.
A major reason economists don’t devote more effort to combatting misinformation is that they believe voters are a mix of rationally ignorant and locked into particular organized interests and privately beneficial but socially detrimental positions. It is extremely difficult to steer public beliefs, especially about economics, when that is the case.
I think the short answer is that Bernie Sanders lost. There hasn't been much economic misinformation to fight, because until now the worst of it had just been privately held beliefs among rank and file voters without influencing policy. Sanders earned far fewer votes than both Clinton and Biden, suggesting that whatever the masses believe, their passion for it isn't enough to translate into real results. The tariff insanity has changed the script, but there really hasn't been such economic illiteracy from an American president in modern history. Maybe this is some kind of free market 4D chess on the part of economists, since they have faith that, whatever ignorance might afflict the masses, in the end the adults will be in charge and things will work out relatively alright. Or, if a policy is so bad, markets will respond appropriately and we'll self-correct.
Effects on policy notwithstanding, I'm still concerned about masses of people believing untrue things, but then I'm not sure economists want that sort of target on their backs. Like you pointed out, economic misinformation historically comes from the left. The left's heuristic of "trusting experts" is very good, but speaking as someone on the left: if they make the connection that economists are experts, they're more likely to ditch experts than suddenly trust economists.
Reagan, Clinton, Bush Jr, Obama, Trump, Biden, and now Trump again were all economically illiterate.
I think Bush Sr was the last modern president who understood that maybe blowing up the deficit every year was a bad idea, and he paid the price in the 1992 election for raising taxes. Bill Clinton benefited from the dot.com bubble making his economy and deficit look better than it actually was, but he was certainly no fiscal hawk.
There's an apples-to-oranges you (really, Caplan) are making here. Excerpt:
"In the late 1970s, Kearl et al. asked economists whether “wage-price controls should be used to control inflation.” Almost three-quarters of economists generally disagreed. In contrast, the General Social Survey (henceforth, GSS) reports that solid majorities of noneconomists think it should be government’s responsibility to “keep prices under control.” Those who agree outnumber those who disagree by at least 2:1 and often 3:1."
Those 2 questions are not asking about the same thing. One could think that price and wage controls are bad, while also thinking it's the government's responsibility to keep prices under control via not-too-inflationary monetary policy. Not via price controls.
I don’t think it matters how you ask the questions. Here’s a poll from last year showing 65% support for price controls on groceries
https://today.yougov.com/politics/articles/50369-kamala-harris-economic-platform-resonates-across-party-lines
Unlikely voters are thinking about monetary policy in a question like this.
Fair. I think the point you (and Caplan) are making is correct anyways.
Aren't you the guy who voted for Trump due to "economic" reasons?
I don't care if 95% of sociologists agree that white supremacy is a fundamental principle of the universe. The whole field is disreputable.
Economics isn't much better. As soon as we are talking about "the general welfare of society" as something objectively measurable any reasonable person is already on guard.
"Another place where economists and the public diverge is on the costs of housing, one of the most important challenges facing society. A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism."
And yet it isn't, because there are cases where higher prices have followed additional housing inventory. Housing markets are complicated and trickle-down affordability doesn't always work.
Except that would require economists to understand the misinformation in their own field first. They don’t even know what they are assuming in their theory (let alone why the assumption is being made), so good luck with that…
> A recent poll showed that only 24% of Americans believed that building more housing in their communities would reduce prices, while 44% thought it would raise them. This is plain flat earthism.
I think you just called Scott a flat-earther:
https://open.substack.com/pub/astralcodexten/p/change-my-mind-density-increases
Look at the disclaimer at the top of the article.
I sort of feel like what society needs is a new kind of journalist: professional skeptic. Someone who would make it their job to pick apart popular narratives and expose their logical and empirical weaknesses, whether they are coming from the government or outside it. Like they could lay out what is an is not supported by evidence in a coherent way so that even low IQ people could understand it. And do outreach, don't just be a passive repository of information, but go on the Joe Rogan show and talk about the evidence *against* vaccines causing autism.
And it's worse than that: Most people don't really agree with setting prices by supply and demand. Just this morning in my local newspaper (the one in our city for the educated people) had an article about the nearby gay summer mecca. There's tight building control so the number of summer hotel rooms/rentals is strictly limited. It's becoming ever more popular so naturally the prices are rising. But the reporter didn't seem to grasp that, and seemed to be groping toward an explanation that it was some sort of monopoly behavior by an investor group that had bought five or six small hotels.
OTOH the complainers are sort-of right. They understand that the hotel owners haven't been motivated to actually produce a better product, they are just getting the benefit of a change in the market conditions. But of course, the voters *like* rent control...
>> "If antiforeign bias really exists, these are the patterns you would expect."
IMHO, you've got the argument exactly backward. The High Human Capital/economist/conventional conservative view is that the goal of people is to increase their income/consumption and that anti-foreign sentiment is a bias that interferes with that. But the reality is a lot closer to the goal of people being winning intergroup rivalries and when no rivalry is active at the moment, they turn their attention to increasing their income.
Go to a small town and examine the life of ordinary people with ordinary jobs. Do they put their passion into their jobs or into the high-school football team?
Back in the last 1970s, IIRC, when Japanese competition was starting to really cut into US manufacturing, someone did a survey to find out what sort of policy the public thought the US government should follow. The winner was "the policy should seek to maintain US economic predominance over Japan, regardless of whether it reduced incomes in Japan and/or the US".
Yes, we see these patterns and it's clear that people *prioritize* anti-foreign action.
Interesting piece. Couple thoughts. First one is, if you look at a catchy narrative, like “immigrants steal jobs,” “the Fed is printing money and destroying the dollar,” “developers cause higher rents,” it tends to spread through repetition and emotional resonance, and also simplicity. They exploit identity/ emotion (“our jobs, their threat,” “evil landlords vs. honest tenants.”) i think people engage with and share these narratives because they’re intuitively vivid and easy for people to remember and retell. They don’t care if they’re empirically backed. That’s why they persist even when data that contradicts them arises (similar to the continued influence effect), because they fulfill explanatory or moral needs.
Also, while you have the aforementioned emotionally resonant narratives spreading via memes and X posts, economists on the other hand often communicate in things like models/regression tables/conditional claims, which are persuasive to other experts or informed individuals but fail as memes because people resonate more with the narrative around them than the data. They’re not as prone to virality or moral-emotional impact of stories that cast clear villains and victims.
For example, many people believe “rent control helps tenants.” It’s easy for them to imagine a poor family saved from eviction by a simple sounding solution, but harder for them to picture unseen consequences or think longer term about things like less construction or higher rents in the future. Probably because the actual economic dynamic lacks a compelling protagonist or villain.
So I guess that leaves me with a question, which is if economists want to take on misinformation, are they going to fail so long as they simply fact-check? Might they need to craft counter-narratives that fit the simplicity model but are grounded in evidence. For example: “When you block new housing, you’re making your kids move away.” Okay, not a great example but has a more viral likelihood than “supply elasticity reduces equilibrium prices.”
One other thought is that in a solid institutional environment, professional bodies like the AMA for medicine or NAS for science act as “truth-broadcasting mechanisms.” They coordinate elites to produce unified narratives that can compete with viral stories/memes. Economics doesn’t seem to have equally strong public-facing institutions. There’s the AEA, Fed staff reports, a few think tanks but as far as I know, none with the cultural authority of the CDC during a pandemic or the IPCC for climate.
Am I right to think that the road to policy sanity has to run through economics becoming a fundamental part of the K–12 curriculum?
It's ridiculous that it's not; the only exculpatory reason being that economics was still coalescing as a science when the standard curriculum was frozen in stone, at the start of the 20th century.
(FWIW, I'm part of a team that's addressing this.)