New Issue of Econ Journal Watch is Out

For those of you who don’t know, co-editor Fred Foldvary is an editor for the Journal, and Warren Gibson is the math reader. From the website:

James Tooley on Abhijit Banerjee and Esther Duflo’s Poor Economics: Banerjee and Duflo propose to bypass the “big questions” of economic development and focus instead on “small steps” to improvement. But, says Tooley, they proceed to make big judgments about education in developing countries, judgments not supported by their own evidence.

Why the Denial? Pauline Dixon asks why writers at UNESCO, Oxfam, and elsewhere have denied or discounted the success and potentiality of private schooling in developing countries.

Neither necessary nor sufficient, but… Thomas Mayer critically appraises Stephen Ziliak and Deirdre McCloskey’s influential writings, particularly The Cult of Statistical SignificanceMcCloskey and Ziliak reply.

Was Occupational Licensing Good for Minorities? Daniel Klein, Benjamin Powell, and Evgeny Vorotnikov take issue with a JLE article by Marc Law and Mindy Marks. Law and Marks reply.

Mankiw vs. DeLong and Krugman on the CEA’s Real GDP Forecasts in Early 2009: David Cushman shows how a careful econometrician might have adjudicated the debate among these leading economists over the likelihood of a macroeconomic rebound.

Rating Government Bonds: Can We Raise Our Grade? Marc Joffe, a former Senior Director at Moody’s Analytics, discusses limitations of the methods employed at the credit rating agencies and problems in trying to infer default risks from market prices, suggesting another approach.

Also, if you’re unsatisfied with the status quo in terms of political parties, including the Libertarian party, Dr. Foldvary has established the Free Earth Party for you to look at. Be sure to check it out!

A Libertarian sales-tax party?

Is the Libertarian Party becoming a sales tax party?  The past several LP candidates for president have favored excise taxes.  I don’t recall any of them declaring, “Taxation is Theft!”  Now we have former New Mexico governor Gary Johnson as a leading candidate for the LP nomination for president, having abandoned the quest for the Republican Party nomination.  His tax plan as a Republican was a national sales tax, and that remains his tax plan as a Libertarian.

The main organization pushing for a national sales tax calls it a “Fair Tax.”  That is excellent propaganda, but a sales tax is no more fair or just than a tax on wages.  A sales tax violates free trade, makes products more expensive, and indirectly taxes wages and other incomes.  The advocates claim that a shift from income to sales taxes would not raise prices, since the income tax already raises prices, but they are wrong, because much of the burden of a tax on wages is on labor.  A sales tax has about the same excess burden or deadweight loss as an income tax.  Income taxes punish savings, but sales taxes punish borrowing, and there is no logical reason to favor savings over borrowing.  Savings and borrowing should be voluntary individual choices not skewed by taxes or subsidies.

The “Fair Tax” plan exempts business purchases, putting the burden on households.  That invites massive tax evasion, as folks would claim to be buying stuff for a business.  The response of government would be a sales tax gestapo.  If you did not have a receipt for your purchase and could not prove it was for business, you could go to prison.

If the Libertarian Party becomes a sales tax party, it will be unpopular and get little support.  Historically, sales tax advocacy has been a political loser.  This may well be why Gary Johnson got so little support as a Republican candidate for president.  If the LP nominates a sales taxer, I for one will promote the Free Earth Party (http://free-earth.foldvary.net/) as a truly libertarian alternative.