Last week, I was surprised by an unusually disingenuous article by Greg Mankiw in the Sunday NYT column – “I Can Afford Higher Taxes. But They’ll Make Me Work Less.”

As I read it, I was struck how disconnected it was from the real world. I have been meaning to get to it, but the Fraudclosure issue pushed everything else aside.

I suggest you read Professor Mankiw’s piece, then come back here to consider the following questions..

Ten Many Questions for Greg Mankiw

1. Taxes were higher in 1990s then they were in the 2000s. Yet you left the lucrative private sector for a low paying job in the public sector. Why?

2. Which decade did you work more — the 1980s, 1990s, or 2000s ? How much of your work decisions were driven by marginal tax rates?

3. The article you wrote claimed you regularly turn down most job offers.

a. Do incentives not matter to you?
b. Are you a rational economic participant?
c. Are you motivated by maximizing income? Do other non financial factors weight significantly in your thought process?

4. You have a variety of income streams – speeches, textbooks, articles, etc. – yet you discuss tax consequences as if you were paying ordinary payroll income tax. Are you unfamiliar with the benefits of incorporation? Do you have an accountant or an attorney advising you on these matters?

5. You teach at Harvard and live in “Taxachusetts.” If state taxes are so important, have you considered teaching at Yale, and living in much lower state tax land of Connecticut?

6. You mentioned a stock that will generate 8% annual returns over the next 30 years. What stock is it?

7. You also stated the aforementioned mythical company pays 35% income tax. Is this company unlike most large S&P500 firms that generate more than half of their net profits overseas, then leave the monies there, giving them an effective tax rate around 10% ?

8. Are you unfamiliar with the benefits of 401ks and KEOGH plans that allow you to invest your pre-tax income? Do you know about matching contributions to retirement plans?

9. Why did you claim your heirs will have to pay estate taxes — Is your estate going to be greater than $7 million dollars? If it is > $7m, are you familiar with term life insurance?

10. You were Chairman of the CEA in George Bush’ White House. His administration passed the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. These tax cuts were unfunded by offsetting spending cuts. Indeed, his administration ran up spending dramatically.

Since you seem to be fond of making projections 30 years into the future, my final questions for you are: What will the total costs of those tax cuts be, projected out 30 years be? How about the costs of those spending increases? Indeed, what will be the total cost of that White House projected 3 decades into the future?

And, what will the final bill for these be for your children? How might THAT affect their decisions?

Thank you for your answers to these questions.

And if you need a good accountant, insurance man and lawyer, let me know — I can recommend quite a few.

>

Source:
I Can Afford Higher Taxes. But They’ll Make Me Work Less
N. GREGORY MANKIW
NYT October 9, 2010
http://www.nytimes.com/2010/10/10/business/economy/10view.html

Category: Really, really bad calls, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

99 Responses to “10 Questions for Greg Mankiw”

  1. Winston says:

    Your questions may provide great incentives for Professor Mankiw to write more books. He really should get on that project right away because, if for no other reason, the offerings in economics and finance at Goodwill have been thin of late.

    But seriously… threats to go Galt sound so hollow anymore. As for Mankiw’s threat: Go ahead. Working less might help reverse the spurious assertions from thirty years of public policy that revolves around supply-side economics.

  2. wunsacon says:

    Good questions.

  3. TacomaHighlands says:

    What a riot! Hope this one on Mankiw goes viral fast.

  4. drey says:

    Good post, Barry. Your BS detection meter has been spot on of late.

  5. Mannwich says:

    Brilliant, BR! Dear Mr. Mankiw: How about some responses, please?

    These people can’t even lie that well, even with all of their training over the years.

  6. Mannwich says:

    I would also venture to guess that if some of these clowns “go Galt” and stop working, our economy and country might be better off. Addition by subtraction. By all means fellas, go ahead.

  7. Marcus says:

    I’m not sure what the Mankiw article take away is (laments of an elitist Harvard Republican), or the Ritholtz reply (the soapbox of a moderate Wall Street Democrat Independent). Both address the future of individuals in an uncertain, over taxed, under regulated, dynamic economy with unfettered government spending and taxing (Federal, State and Local).

    The real message is that the U.S. needs coordinated study and planning. The individual is prostrate under a mountain of public debt, economic uncertainty, and dire predictions of gloom and doom from all sides.

    The only logical outcome of Mankiw-Ritholtz arguments is to move immediately to Hong Kong, where a 10% one-time tax finishes your entire external obligation, and enjoy life.

    The Gingrich Republicans succeeded with a “Contract for America”. It was a contract with loopholes, a lousy plan on careful reading, but a plan never-the-less. America gave 1994 Republicans the votes they needed and a chance to do something America wanted, shrink government, lower taxes, and promote entrepreneurs. A contract they promptly forgot and fouled up.

    Every business runs on a plan, the country should too. Make a plan, stick with it, and adjust it periodically. Include every cost and implication that falls on individual Americans. And implement the plan. Then an individual would know what’s coming and can adjust accordingly, or not. In any case the individual would be responsible for his or her own fate, not wiped out by an off balance sheet Bush Mideast Crusade, a failed Democrat socialist state, or cutesy California largesse by committee.

  8. “Last week, I was surprised by an…article by Greg Mankiw in the Sunday NYT column – “I Can Afford Higher Taxes. But They’ll Make Me Work Less.”

    As I read it, I was struck how disconnected it was from the real world.” BR(edited), above

    BR,

    Did you miss the Memo?

    it’s been circulating for quite awhile..as http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Mankiw+is+a+Hack will lead to..

    LSS: this, “by Greg Mankiw”, was all one had to see to See..
    ~~

    Also, here’s another one that’ll lay heavy odds that ol’ Greg will not proffer any, direct, Answers to your Q:s..

  9. louisv says:

    People like Mr. Mankiw worry me about the future of our country. The incentive is no longer to benefit society and improve our once great country. We only worry about ourselves and how much money we need to have to feel happy. Our population suffers from the belief that our standard of living should be ever increasing (not unlike those who believed RE prices would forever increase a few years back) yet our work ethic seems to be disappearing. Is our country the next big bubble to burst? Has it already burst?. We need taxes now more than ever with our infrastructure and educational systems decaying at alarming rates and now to reduce the gigantic deficits created by our insatiable greed. It is time for this country to suck it up like our ancestors did and pull ourselves out from this hole we’ve dug for ourselves.

  10. X on the MTA says:

    Last week I wrote a similar reply to this same article by Mankiw, except I focused more on his assumption that nobody would step in to fill his shoes. relevant section below…

    I’m sure that there is plenty of unemployed or underemployed economists who would be happy to take that work Greg doesn’t really want, many of which are probably adequately qualified, even if they lack his reputation. To Greg’s possible substitutes that fall under a lesser marginal tax-rate, this same work would yield more savings, meaning they’d be more willing to take on that extra work even if their supply curves are identical. Those who are less financially comfortable and are more willing to sell their labor may be willing to provide the same services for the lesser compensation they might be offered as a result of lacking Greg’s name-recognition. So my final comment to Greg is that it may be worth considering that maybe this is not so much about “how much the government should redistribute income” but about how much government should redistribute the opportunity to work. And right now, Greg, there is plenty of us that would be perfectly willing to provide our services for both income, and the opportunity to create a name for ourselves so that one day we too can turn down jobs because, after taxes, they don’t pay that much.

  11. DL says:

    Regarding question #1, I think that academic economists have a lot to gain financially, in the long run, by taking a high-level, high profile position in government. But I also think that, as a general proposition, the work output of tenured professors changes very little with changes in marginal tax rates.

    Regarding question #2, I don’t know what the answer is in Mankiw’s case, but for an academic generally, the #1 priority above all else is getting tenure. The #2 priority is making it to full professor; then once there, it’s usually a matter of gaining notoriety for academic contributions to his field.

    Regarding question #3, I think that one of the points is that among the various responses that people will exhibit in response to higher taxes (but not the only one) is the decision to value leisure more than work. If my own income were in the range of $250K-$275K (it’s nowhere near that), I would absolutely cut back to $249K in response to a higher marginal tax rate.

    Regarding question #4, if Mankiw were to set up a subchapter-S corporation, he would still have to pay taxes; the incentive issues would remain.

    Regarding question #8, I would assume that Mankiw is “maxed out” on his 401K.

    Regarding point #10, every dollar we give to the politicians, they will spend, and then some. Regardless of what the tax burden may be, we’re just going to keep piling on debt until the bond market collapses.

    ~~~

    BR: I don’t get the sense you fully understood Mankiw’s rhetoric nor my criticisms of it. You also seem to be unfamiliar with the S Corp; And as to #10, that is not remotely what it is about

  12. Guillermo says:

    Considering the high levels of unemployment, even amongst people with college educations, I am surprised Greg doesn’t consider someone else will step in and do the work he doesn’t want quite happily.

    I’m sure that there is plenty of unemployed or underemployed economists who would be happy to take that work Greg doesn’t really want, many of which are probably adequately qualified, even if they lack his reputation. To Greg’s possible substitutes that fall under a lesser marginal tax-rate, this same work would yield more savings, meaning they’d be more willing to take on that extra work even if their supply curves are identical. Those who are less financially comfortable and are more willing to sell their labor may be willing to provide the same services for the lesser compensation they might be offered as a result of lacking Greg’s name-recognition. So my final comment to Greg is that it may be worth considering that maybe this is not so much about “how much the government should redistribute income” but about how much government should redistribute the opportunity to work. And right now, Greg, there is plenty of us that would be perfectly willing to provide our services for both income, and the opportunity to create a name for ourselves so that one day we too can turn down jobs because, after taxes, they don’t pay that much.

    (Originally written as a reply to Greg’s post last week, available here)

  13. porterhouse says:

    Good questions in general.

    Barry surely you realize that there is a difference between tax rates and tax revenues.

    In a static model, cutting rates will lead to a decline in tax revenue. However, the economy is not static.

    Why the assumption that once the government receives a level of income, they are entitled to it?

  14. I read his article and and immediately thought of the bucket analogy.

    Stick your fist in a bucket of water. Pull it out fast. The amount of time it takes for the water to fill in space where your fist is, is the amount of time it takes to replace each one of us

    To make a short story long, If he’s turning down speaking jobs there are 1000 BRs out there waiting to fill the gap. He should be thankful his phone is still ringing

  15. whskyjack says:

    ” that once the government receives a level of income, they are entitled to it?”

    I love the assumption that government is some thing, over there
    As if one can seperate themselves from that thing called “government”

  16. whskyjack says:

    I think there is a real confusion between investment income and those who merely make a large salary/bonuses.
    One doesn’t want to choke of the former by too high taxation but the latter are just scorecards for status levels.
    all those CEO’s getting big bonuses for no risk, tax the hell out of them they will still show up for work. It is the status that attracts them not the money itself.

  17. Mannwich says:

    @DL: Are you Mankiw’s spokesperson or something? ;-)

  18. whskyjack says:

    Well if you taxed them back to the level of one of their office support people they might decide to take sometime off.

  19. barrem01 says:

    As the Professor rightly says, I don’t care about his services. What he seems to imply is that high priced labor is not at all fungible. He cites actors and writers as examples as if people stopped reading mysteries when Authur Connan Doyle died, or stopped going to the movies when Cary Grant passed.

    I also don’t particularly care about his kids. I’m kind of attached to the idea that America is (or at least strives to be) a meritocracy. Beyond all the benefits his kids will get from growing up in a well-to-do household, I don’t see why it’s a good thing for American society that his children should inherit anything. If they’re useful, productive members of society, they’ll do fine. In my opinion, insuring that baseline promise “if you work hard you’ll do fine” to all Americans is more important that any rich kid’s inheritance.

    So to me the important question is whether Mankiw turning down work actually means there is less work in the economy. In other words, of all those jobs the Mankiw turned down, how many of them were never done by anyone? I’ll bet the answer is zero, and his not working just gives someone else a chance to do the job.

    Mankiw as an example, degrades his argument. His work does not employ hundreds of people, and if he doesn’t do it, someone else can probably do an adequate job. The real argument against higher taxes is the mythical rich entrepreneur who has a great idea for a new business that would hire hundreds and change the world, but he decides that it wouldn’t be worth the effort for the compensation.

    I’m no expert on the subject, but from what I’ve read, most entrepreneurs are not rich, they’re hungry. They work very long hours and sink most of their money back into the business rather than take profits for themselves. And while they do want to be compensated, their primary motivation is their idea. They want to be proven “right” in the marketplace, and make their mark on the world. If they’re not dissuaded by the terrible odds for success and the long hours of hard work, I doubt the possible tax burden 20 years down the road will keep them from their dream.

    In the mean time, those taxes can go to maintaining the a social, legal, and economic environment necessary for economic prosperity that the rich benefit from far more than the poor.

  20. super_trooper says:

    @DL, and BR
    Regardin 1, to sit on his laurels
    which explains why he will have to work less as he gets oldes which normally is the case with tenured academics (point 2).

  21. wunsacon says:

    Mannwich, I wholeheartedly agree about “addition through subtraction”. Consider:

    a) Assumption: People are motivated by different factors (or by the same factors but weighted differently). E.g., some people place more emphasis on ethical behavior than others and will pass up deals/profits to maintain their standards. Some people care less about ethics. There’s a whole range, of course.

    b) Definition: to refer to a subgroup of workers for whom personal financial enrichment takes a higher relative priority over ethics (compared with the average workers’ baseline prioritization), we could use a few different terms: “less-ethical”, “greedier”, or “selfish”. Because I believe “greed is good — (but not great)”, I’ll use the term “selfish”.

    c) Inference: Higher taxes will disincentivize selfish workers faster than average workers.

    d) Inference: Lower taxes will incentivize selfish workers faster than average workers.

    Inference “d” is what I call “Revenge of the Laffer Curve”. For the past 25 years, we’ve seen huge scandals as selfish workers gut companies for their own personal gain (as we’d expect), screw shareholders, screw society, pollute the commons, and take over government (via effective lobbying) in order to make the law better preserve and extend their interests. Frankly, there are too many people who seem hell bent on building a financial empire and legacy akin to the industrial (or medieval) robber barons of yore. The volume and magnitude of their activity suggests to me that taxes are too low. We should raise taxes to disincentivize selfish people.

    In the course of doing so, we might (as Mankiw fears) discover that some people have been motivated to work so much for their personal financial gain to the relative exclusion of other factors that they wish to “go Galt” now that they’re paying higher taxes. I would like to encourage them to do so. If the job they were performing (or business they were running) is truly profitable over the long run (as opposed to a Ponzi scheme), then someone will take this “Galt”‘s place. And because the substitute chooses to work amidst a higher tax environment, more likely than not they’re less selfish than Galt. More likely than not, business ethics will improve.

    (FWIW to some readers, please do not construe my foregoing argument as support for expanding government’s share of GDP. I would personally like to balance the budget by raising taxes substantially and progressively within the top 1%…and also to cut government spending on counterproductive items like the “war on drugs”, replace our educational system with a voucher system, and more cuts.)

  22. bergsten says:

    I have a somewhat related question to anybody who might care to answer it…

    If taxes are raised on the one group without lobbyists, i.e. “the middle class” (whatever they are, if they even exist anymore, so let’s just use this as a position holder for “those earning a living solely by a salary”), and, if this group is just about making ends meet (meaning net salary minus expenses equals zero on a good month), how do THEY continue to pay their mortgages if taxes go up a few thousand a year?

    I don’t have facts and figures at hand, but my understanding is this is the group who has effectively already been bled dry, what with “true” inflation (cost of food, transportation, etc.) and with virtually no raises in the past few years.

    What happens when tens of millions of additional homes join the foreclosure queue (with the current and seeming future state of the real estate market, they can’t “trade down”)?

  23. Casual Observer says:

    KA-BOOM!!!!

    This is EXACTLY why I read this site…no partisan bullshit, just PURE perspective and HONEST questions which reveal myopia of the MSM.

    THANK YOU, Barry for your insight and for keeping me sane the past 3 years!!!

  24. fatelephant says:

    Pure aswesome-ness.
    We can fool ourselves (or try to fool others) into believing that we are rational actors acting sole-ly on the single dimension of price. But real life laughs at our self-deception.

  25. Tarkus says:

    “N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.”

    Well, some people do work that has huge negative effects on society…

  26. Mannwich says:

    Exactly my point, wunsacon. Glad you understood it without too much elaboration from me (not surprised though). ;-)

  27. NormanB says:

    Don’t take Mankiw too seriously. His writings are done in a manner that allows him to come before a Congressional committee for either and adminstrative appointment or a place on the FRB and not have either party ding him. Better yet, don’t even read him, its a waste.

  28. ToNYC says:

    Greg Mankiw is also handily around to be the poster child of his opposition. Clearly he should do a lot less work. The man is clearly institutionalized and works in the Master’s House. He works extra to select his children no matter how remote the chances are for the not-so-well-lathered and lubed type’s children to afford the 200K college and 500K entry home after QEx. The Plantation house is warm and he is ensconced.
    When we he begin to notice the lack of a consumer generation who are living forever in their parent’s houses with a 100K ticket to no job while slices and dices of student debt payments take every last drop except what they must pay to OPEC to drive to their significant others.
    When they repeal the law that smacked a generation Without Representation into a the only class of citizen debt that cannot be extinguished in bankruptcy?

  29. Jojo says:

    As some other wit wrote [paraphrasing]: “If higher taxes will result in less articles by Mankiw, then that would be a good thing!”

  30. DL says:

    Bergsten @ 3:23

    Much depends on what income range you’re referring to. And one should also take into account benefits provided by government.

    The Federal income tax burden on those earning less than $60K/yr is rather low (FICA taxes, another matter). As for benefits paid out to taxpayers, there is, for example, the Obamacare subsidy, the “lion’s share” of which will go to people earning less than $60K/yr (my point is not that this is “good” or that it’s “bad”, only that it “is”).

    I don’t see Obama as being particularly friendly to those in the $75K-$150K range, although he’s not “unfriendly” either; more or less neutral.

    My point (at the moment) is that in making an argument, it would help to specify an income range, rather than to paint the “middle class” with a broad brush.

  31. cfischer says:

    @DL: ” If my own income were in the range of $250K-$275K (it’s nowhere near that), I would absolutely cut back to $249K in response to a higher marginal tax rate. ”

    You understand that the higher rate only applies on the income ABOVE 249, right?

    @BR: Thanks, I was waiting for this. You didn’t disappoint.

    I honestly think this worthless partisan is doing nothing more but defending his failed economic policies in an attempt to protect his reputation, reality be damned.

  32. Revenue estimates are only done for 10 years. And keep in mind that all the Bush tax cuts expire at the end of the year. I suppose one could calculate the interest cost out 30 years based on the increase in debt caused by the tax cuts, but I haven’t seen that. One of the lefty tax groups like the Center on Budget and Policy Priorities may have done that, but you’d have to dig around. Here are the official revenue estimates.

    2001: http://www.jct.gov/publications.html?func=startdown&id=2001

    2003: http://www.jct.gov/publications.html?func=startdown&id=1746

  33. DL says:

    cfischer @ 5:17

    “…the higher rate only applies on the income ABOVE $249K”

    . . . . . . . . . . . . . . . . . . . . .

    Yes, I understand that. For me, it would be a question of work-versus-leisure for the amount above $250K.

  34. Sechel says:

    give me the harvard guys over the princeton guys any day of the week. I agree the piece seemed a bit disingenuous, but the point was made, people in general act in their own self-interest.

  35. franklin411 says:

    I think this is absolutely one of the best pieces you’ve ever written, Barry. I hope this goes viral!

  36. The Window Washer says:

    As Bruce has shown you should have taken the high road and skipped question 10. Snap

    Other than that a good take down of Greg overstating the issue. The first time he wrote this topic it was simple and informative. He seems to do it about every year now and acts like a simple econ equation is real life.

    Hence the needed thoughtfull take down.

  37. Buce says:

    Even without leaving Harvards, Greg could live in low-tax New Hampshire. For a further comparison, go here:

    http://underbelly-buce.blogspot.com/2010/10/cos-thats-where-big-bucks-are.html

  38. Joe Friday says:

    Marcus,

    “The only logical outcome of Mankiw-Ritholtz arguments is to move immediately to Hong Kong, where a 10% one-time tax finishes your entire external obligation, and enjoy life.”

    Actually, only the top 1.5% of income earners are subject to the single-rate tax in Hong Kong. The other 98.5% of taxpayers in Hong Kong pay a progressive graduated income tax which consists of four separate tax brackets and allows for sizable personal and dependent deductions (What a concept !).

    ~

    “The Gingrich Republicans succeeded with a ‘Contract for America’.”

    * Exit polling showed that the vast overwhelming majority of voters never heard of it.

    * The total votes garnered by all Republican congressional candidates in 1994 was less than the total votes garnered by all Republican congressional candidates in 1992.

    * The so-called “Contract For America” passed the House and died in the Senate.

  39. b_thunder says:

    There’s ONE answer for ALL these questions:

    “Professor” is only his title, his real job is an agitator, a provocateur, an apologist, a stooge and a water carrier for the dumbest, least responsible and most reactionary wing of the “conservative” (only in its name, like the title “professor” ) movement. Therefore, everything he says should not be viewed as any sort of economic research, but a political propaganda.

    The last question, however, deserves special attention: his children will have a choice of never having to work, and will pay DISPROPORTIONALLY less than working people. The money will be tax sheltered! But until then, Mankiw will participate in “capital formation” process, he’ll build as much capital as society allows him. On the other hand, most middle class Americans are unable to even save for their own retirement, and have no hope of building any sort of “capital.” Mankiw’s children will own much bigger slice of America than Mankiw himself. It’s been going on for #0+ years, especially after Reagan’s tax cut. The middle class is slowly turning into serfs, while the elites gain more and more wealth.

  40. dedalus says:

    I love it Barry.

  41. MidlifeNocrisis says:

    This article is just another example of why I come here everyday. Truth is very refreshing.

  42. gman says:

    cfischer @ 5:17

    “…the higher rate only applies on the income ABOVE $249K”

    . . . . . . . . . . . . . . . . . . . . .

    Yes, I understand that. For me, it would be a question of work-versus-leisure for the amount above $250K.
    DL,
    A 3% percent net change at the margin will have a huge impact on your decisions?…

    I guess that makes me and my family foolish for working hard over past 60 years trying build companies and personal skill sets, make money, pay taxes augment civil society. I guess the rational actors all have been “going galt” for the better part of a century

    Hearing stooges like Mankiw talk it is amazing that any economic output was generated during the vast socialist period in the US from 1945-2003

  43. boveri says:

    Fantastic piece Barry, I just loved it. Thank you

  44. Andy T says:

    Right on Barry. All those East Coast folks making so much money can definitely “kick in” some extra tax for “the cause.”

    In that regard, What’s your effective tax rate? How much more are you willing to give to Congress to make this country a better place?

  45. DL says:

    Andy T,

    Yeah, I propose a 50% hike in the marginal tax rate of hedge fund managers who live on Long Island.

    That’ll turn ‘em all into libertarians in a hurry.

  46. TakBak04 says:

    # Andy T Says:
    October 17th, 2010 at 8:22 pm

    Right on Barry. All those East Coast folks making so much money can definitely “kick in” some extra tax for “the cause.”

    In that regard, What’s your effective tax rate? How much more are you willing to give to Congress to make this country a better place?
    # DL Says:
    October 17th, 2010 at 8:26 pm

    Andy T,

    Yeah, I propose a 50% hike in the marginal tax rate of hedge fund managers who live on Long Island.

    That’ll turn ‘em all into libertarians in a hurry.

    ===========

    Low Blow…and beneath you Two! Just saying….

  47. sdonova says:

    This man is obviously more interested in himself than in his country or fellow countrymen and women – I say the loss of his opinions and writings is no loss at all – goodbye, greg, and good luck! Someone else will take your place sooner or later!!

  48. dad29 says:

    I was pretty sure that Mankiw was ….ahhh……living on another planet when he made it clear that manufacturing was NOT of any importance to the Bush Administration.

  49. TakBak04 says:

    Good Post, BR…

    Hypocrites just never get over themselves.

    Thanks for the SNARK…It’s needed these days!

  50. Andy T says:

    TakBak04: The premise of BR’s rhetorical questions to Professor Mankiw is that everyone will work just as hard, regardless of the tax rate. All I asked BR is how much more he’d like to give to Congress to make sure that America is a better place.

    As “sdonova” said above, anyone who doesn’t want to pay more in taxes is “more interested in himself than in his country or fellow countrymen.”

    So, I guess the question for the board is, how much more do we all want to give to Congress? In order to show that we really care about our country and fellow countrymen?

  51. The premise of my piece was:

    a) people are motivated by many things, money being but one of them — but not the only one.

    2) in the real world, no one changes their real behavior for a few % of marginal tax rates one way or another

    Lastly, I have no problems with tax cuts — if they are paid for. And I have no problem with cuts in SS, Medicaid, Military, etc. But the brigade that thinks tax cuts are the solution to every problem are hellbent on bankrupting the nation with their broken ideology. I do have a problem with that

  52. Mannwich says:

    Exactly, BR. Nevermind some of the negative nabobs here. Some of them spend a good portion of their time ripping you on OTHER blogs like little school girls (you should probably be flattered though) instead of coming here and doing it. At least AT has the balls to do it here on YOUR blog, but not do it that well, I might add.

  53. nylord1 says:

    BR question:

    Are there any economists whose viewpoints that you find are even remotely spot on? I seem to remember two in prior posts but can’t find them.

    ~~~

    BR: Well, most of them have stunk the joint up over the past 10 years (See these) — really awful and identifying what is happening in real time.

    Many are not bad — and a few are very good: Paul Kasriel is bang on. Simon Johnson is very savvy, as is Josh Shapiro (of MFR), Jon Hatzius is good (GS), David Rosenberg is very good (but too bearish this year), Gary Shilling (same). Krugman gets a lot right (but I disagree with him on things like securitization)

    As to Mankiw, he is generally good, but he sometimes has to feasance to the hard right, and this was an example.

  54. rch says:

    These attacks are so childish. Seems you all are bright enough to deal with the issue and not blast some guy trying to make a simple point.

    [BR: Some guy? WTF — are you really that clueless?]

    Seems to me the issue is the deficit. Seems to me spending is the issue not necessarily tax rates but they are the one thing that can easily be brought to the attention of the electorate. It also seems to be that Bush is thought to be the culprit. Do you remember that he inherited a recession from Clinton, experienced 911 and did what he could to get the nation to solid footing? I might also note he never blamed it on anyone. BR you are right, in my opinion, about the FED creating this mess with help from Barney Frank and company and the idea that everybody should own a home even if they couldn’t afford the payments. Let’s get the facts straight and discuss issues that are meaningful. OUR Government is out of control. And I doubt if they will be able to inflate the economy to get us out of this mess. Finally I believe it is the attitude of “government” that is the problem. Difficult to define and discuss but keeping tax rates down forces spending cuts and a recognition that the free for all is over. I suspect that none of you were around to experience tax rates of 70%. If you add some social security to a 70% top rate I suggest it is confiscatory. I was and I belive the trend in decreasing tax rates did have an impact on production, growth and innovation. My clients moveed to inovate becasue they got to keep more of what they produced. Maybe you guys have so much it dosn’t matter…is so wirght a bigger check. Make a contribution if that is your heart felt thought. I will bet nobody who commented on this piece wrights that extra check to the IRS. Cheers!

  55. Andy T says:

    BR@10.07

    Actually, agree with all that. Why didn’t you just say it that way in the first place?

    ~~~~~~~~~~~~~~~~~~~~~~~~
    P.S. Someday you should check out a sampling of your comments section from a few years ago and compare/contrast to what it is now. You’ve cultivated an audience of VERY progressive commenters here, which is in part of a reflection of your posts/tone. Just pointing this out because I know you consider yourself a “centrist” and “pragmatic thinking” type that appeals to a cross section. Recently, you highlighted some accolades you received where the reviewer said you attack both the left and right the same. Funny, I don’t remember a “left leaning” attack in quite some time here. :-) Just sayin’….

    I suppose it’s just a reflection of the time…the way that society ebbs and flows to extremes one way or another over time. We’re definitely in a progressive/anti-business “mood” right now and that’s understandable. And, I suppose that in order to remain relevant and popular, it’s necessary to appeal to the current “climate.” But, seriously, some of the comments I’ve read here in the last week are truly mind-blowing.

  56. Mannwich says:

    @AT: Perhaps it’s you who’s moved further to the right? Just asking. ;-)

  57. Thor says:

    I’m not so sure BR has drifted to the left. I think many other people are simply reverting to type. I mean seriously, you have people on here saying they are sympathetic to the Tea Party cause. By far, the most extreme right wing political movement this country has ever given birth to. The nation itself has been lurched so far to the right the last 20 years that people like AndyT actually believe that their views are center of the road. Andy – let me be the first of many who I’m sure will tell you this, you are most definitely not a centrist, not by a long shot buddy.

    BR – you’re doing fine, don’t let the closet Tea Baggers change a thing. That you’re getting them so rilled up, both here and in other places, is a sure sign you are doing something right.

  58. Andy T says:

    @Mann: “At least AT has the balls to do it here on YOUR blog, but not do it that well, I might add.”

    Jeff, in the future, I’ll strive to structure and articulate my thoughts as well as you do.

  59. Mannwich says:

    @AT: Just messing with you, man. I think if anyone can take it as well as you dish it out, you can. ;-)

  60. rbbrfish says:

    Am new to this site and have to say the discourse appears somewhat more civil than others. It’ll be a pleasure to return and read more.

    As for Prof. Mankiw’s editorial, it lost some of its shine when he started waving the expiring tax cuts around. His extra supposed $50 or so on that original $1000 didn’t garner any sympathy from this end.

  61. dss says:

    @Andy,

    I think all of us got what BR was saying, the first time around. For some strange reason known only to yourself, you needed to turn your response into a nasty attack on BR, east coast hedgies (you must be envious of these folks because you mention them so much) and totally ignore the point of his post in order to try to score some cheap insults.

    Your attacks on BR are as predictable as they are banal, you should strive for something more original at least try to be funny.

    BR had to very carefully, in small sentences, spell it out for you; then the light bulb went on and you agreed with him, but even then you couldn’t resist throwing another zinger.

    And you have the nerve to insult Manny?

  62. Bob A says:

    BR is so good with a knife he should been a butcher :)

  63. Andy T says:

    dss/Denise: You’re in an interesting person for interjecting yourself into a “conversation” in such a way so late in the game. For the record, I’ve never mentioned the phrase ‘east coast hedgie’ EVER; nor have I ever made any nasty remarks directed toward “hedgies,” whether they be on the East Coast or West Coast or “fly over.” You’re simply MISTAKEN on that account. Heck, there are even enough “light bulbs” going off over here that I know that BR is NOT a hedge fund guy–he’s a money manager. There is a difference in case you didn’t know….

    BR understood the gist of the commentary provided and he responded well.

    If you think I got him to spell it out more plainly for my benefit, then you’re mistaken. C’mon, have you read any of these comments?!?

    I like Jeff. Go do your “Mother Hen” thing somewhere else. It’s been worked out here.

  64. Bob A says:

    and BR’s absolutely right about that guy.. he’s fulla BS.

    People who make enough money to pay the top tax rates are generally living a very good life. And they know it. And all of them, with rare exceptions, want MORE and MORE and MORE and will never be satisfied with how much they have.

    For true acheiver the answer to “how much do I need to retire” is always “twice as much as I have”.

    Which is not only why they don’t wanna pay taxes, it’s also why they’re never gonna work any less.

  65. dss says:

    Andy,

    Your posts speak for themselves. Enough said.

  66. Frwip says:

    In the very specific case of Greg Mankiw himself, I would really love to see “his” “theory” proven right.

  67. wisedup says:

    my God, who would have thought that Mankiw was actually liberal
    “They will never lead lives of leisure, but I hope they won’t have to struggle to find down payments to buy their own homes or to send their kids to college.
    weakest piece of liberal crap yet! But what can you expect from an elitist professor?

  68. Snickers says:

    #10 FTW, cheers BR!

  69. Joe Friday says:

    rch,

    “Seems to me the issue is the deficit. Seems to me spending is the issue…”

    Nope.

    Numerous rounds of tax cuts for the Rich & Corporate are overwhelmingly responsible for the deficits and debt, according to the independent non-partisan CBO.

    ~

    “It also seems to be that Bush is thought to be the culprit. Do you remember that he inherited a recession from Clinton…”

    You must have a bad memory. There were no recessions during Clintons two terms.

    ~

    “…experienced 911…”

    That’s one word for it.

    ~

    “…and did what he could to get the nation to solid footing?”

    By illegally invading a sovereign nation that had not attacked us and was never a threat, after bungling the capture of those who had masterminded the attacks against us ? Then enacted failed policies that plunged us into two recessions and a depression ?

    ~

    “I might also note he never blamed it on anyone.”

    The Bushies blamed EVERYTHING they could think of on Clinton.

    ~

    “BR you are right, in my opinion, about the FED creating this mess with help from Barney Frank and company…”

    “Barney Frank and company were in the Congressional Minority. Couldn’t get anything passed if their life depended on it.

    ~

    “…and the idea that everybody should own a home even if they couldn’t afford the payments.”

    It’s called Predatory Lending. It’s also called criminal fraud.

    ~

    “Finally I believe it is the attitude of “government” that is the problem.”

    If by “attitude”, you mean non-regulation and/or lack of enforcement of regulations, I agree.

    ~

    “Difficult to define and discuss but keeping tax rates down forces spending cuts…”

    A) It’s never happened.

    B) Low taxes are not stimulative. A recent study by the independent non-partisan CBO found that out of the eleven methods they looked at, tax cuts were dead last at number eleven.

    ~

    “I suspect that none of you were around to experience tax rates of 70%.”

    No, but it was one of our greatest periods of economic prosperity.

    ~

    “If you add some social security to a 70% top rate I suggest it is confiscatory.”

    Not if you comprehend that it’s a bracket, not a percentage, and a marginal one at that.

    ~

    “I was and I belive the trend in decreasing tax rates did have an impact on production, growth and innovation.”

    It did. It decreased them.

    ~

    “My clients moveed to inovate becasue they got to keep more of what they produced.”

    The Galt stuff is nonsense:

    “there is no evidence of a negative correlation between the top tax rate and economic growth”

    http://golem.ph.utexas.edu/~distler/blog/archives/002279.html

  70. basquebob says:

    @rch

    so what did Bush do to get rid of the deficits? Nothing, not a thing. Bush didn’t blame Clinton? Really? Try here and here just a couple of examples but you can use the “googles” you know. In fact you are doing it. O yeah and Barney Frank was the one telling people to go buy houses. Maybe you did not catch this Bush’s ownership society.

    You are asking people to get the facts straight? Look in the mirror. It seems your ideology is fogging your thinking. Our government is out of control but you need to go back at least 30 years to see where it started getting really out of control.

    “Difficult to define and discuss but keeping tax rates down forces spending cuts” so you are asking us to believe you and not our lying eyes. We have seen how well this works, wonder why we find ourselves in the pickle that we are? The word that you are looking for is not necessarily the word “Difficult”. The things that force spending cuts are will and discipline and in the long term lack of credit.

    @Barry, great post.

  71. Permabear says:

    It was economists like Greg Mankiw who gave cover to presidents like George W. Bush to cut taxes, which in turn produced the massive budget deficits we’ve been experiencing. Whatever economic benefits have arisen from these tax cuts have more than been countered by the negative effects of the longterm debt they have produced. Not only that but the disparity in wealth has grown to levels not seen since the late 1920s. Is it any coincidence that the U.S. faces similar problems as we did during the Great Depression?

    The reality is that the only solution to the massive fiscal problems the U.S. faces is a combination of nasty spending cuts (entitlements and defense) along with tax increases. We aren’t going to solve our massive debt problems with one side of the ledger alone. Supply side economists like Mankiw have been totally discredited. It is their economic philosophy of tax cuts at all costs, along with deregulation, that produced the current mess in the first place. Voters should be running away from conservative politicians who gave the country not only the current Great Recession, but 80 years ago this same economic philosophy gave us the Great Depression. Have we learned nothing from history and experience?

  72. lalaland says:

    1 More Question: Most economists believe cutting the taxes of the rich the least effective means to stimulate the economy because they tend to save it rather than spend. Isn’t the major complaint of your article that higher taxes will reduce the amount of money you plan TO SAVE so you can pass it on, 30 years from now, rather than SPEND it now, as the economy demands?

    Isn’t your article proving that lowering the taxes of the rich is folly?

  73. Sircornflakes says:

    Yes, I am very interested in #6 too!

  74. Debating tax policy as though it were the decisive means by which our present economic vulnerability might be addressed is foolhardy. Instead, the focus need address the sacrosanct mountain of mispriced risk (most of which originates in the private sector), and the unavoidable necessity for replacing it with investment whose principle and interest will be paid back many times over.

    Presently the commercial banking system is insolvent. Let’s talk about fixing this before we talk about any tax policy venturing to make sure this never happens again.

  75. b_thunder says:

    wasn’t he on Squawk Box morning propaganda show? in 45seconds that i watched (before turning it off in disgust) they were totally serious. there was not a hint of what BR is asking here…

  76. gbgasser says:

    Barry

    While I was sweating at the gym this morning I saw a TV with CNBC on and it was advertising that in their next segment Greg Mankiw was going to be a guest. I guess that’s how he decides to answer questions, surround himself with sycophants and they’ll collectively laugh and point at his detractors. I wish I didnt have to leave so I could watch the segment. Anyone here see it?

    I did see a couple days ago where he made a comment to the effect that he likes to say things to get under the skin of the left wing pundits. So I guess thats an admission we shouldnt take his writings seriously since they are simply barbs he is throwing at the other side, not truly intellectually honest ruminations about difficult issues.

  77. gbgasser says:

    sorry b_thunder

    Your post wasnt up when I started mine. I know i’m a slow typist but 14 minutes for about 150 words???

  78. [...] spurred a lot of discussion. Barry Ritholtz, author of the Big Picture blog, is now out with a list of pointed questions for Professor [...]

  79. carrottop says:

    that had to be said,
    neither the NYT nor his blog allowed a response,
    or a place to post comments.

  80. IS_LM says:

    A fine post, BR. Some more questions for Mankiw:

    1. Milton Friedman has said, “To spend is to tax.” Do you agree with that statement?

    2. In light of your answer, how do you propose we deal with the policies you advocated while in government that led to higher spending and higher deficits?

    3. Your Harvard colleague, Robert Barro, advocates a strict Ricardian equivalence in his writing, in which higher public spending is offset by rational consumers who reduce their consumption and increase their savings in anticipation for future taxes. What did the Bush deficits do the national savings rate and how does this square with your colleague’s conjecture?

  81. Great post! That will make Professor Mankiw brood upon it for a ong time I suppose, and the most peculiar question is about how much taxes were and are paid now by people. Also, it will be very necessary to know what kind of stock can give enough revenue to struggle with rising taxes and other commitments. Thanks!

  82. waxorchard says:

    Mankiw pwned! Love this post. It is a travesty that this guy still teaches intro Macro at Harvard, his textbook is a steaming pile of crap in my opinion.

  83. DeDude says:

    The less work a moron like that does the less damage to society. Let’s just jam em up. It may be the way to fix unemployment. There are lots of unemployed people ready to pick up and do the work these slackers refuse to do if taxes are higher.

  84. VennData says:

    DL,

    You say, “Regarding point #10, every dollar we give to the politicians, they will spend, and then some….”

    How did Clinton balance the budget and end the deficit then?

    Now you get why the GOP reviles Clinton? They want you to forget that datapoint. DL has. Have you?

  85. Bruman says:

    Sheer brilliance. Thank you!

  86. Tarkus says:

    Actually, the Prof’s “contributions” are actually an argument for raising his taxes, since you get less of what you tax.

  87. wunsacon says:

    >> How did Clinton balance the budget and end the deficit then?

    VennData, the internet came along and created a lot of temporary GDP and tax revenue. We cannot credit Clinton for that.

    More importantly, I don’t see why you would want to “claim” any kind of party association with Clinton either. He passed legislation exempting derivatives from regulation and passed tax cuts favoring capital gains for housing. You should disown Clinton the way righties mostly disown Dubya.

  88. wunsacon says:

    RiskAverse,

    >> Debating tax policy as though it were the decisive means by which our present economic vulnerability might be addressed is foolhardy.

    With wealth “distributed” the way it is in this country, tax policy is definitely on the table. And, as the economy gets worse, the peasants are going to make it more of an issue.

    It’s tangential to the issues you discuss on your blog but no one blog covers everything.

  89. Joe Friday says:

    wunsacon,

    >> How did Clinton balance the budget and end the deficit then?

    “VennData, the internet came along and created a lot of temporary GDP and tax revenue. We cannot credit Clinton for that.”

    Your chronology is off.

    The first web browser (Mosaic) wasn’t even invented until 1993, and wide-spread commercial dial-up didn’t exist until 1995. The federal budget was in NET surplus by the Summer of 1994, and the annual deficits were declining every year after. Not to mention when online revenues did begin later they were a teeny tiny fraction of the overall national economy.

    ~

    “More importantly, I don’t see why you would want to “claim” any kind of party association with Clinton either. He passed legislation exempting derivatives from regulation…”

    The Phil Gramm ‘Commodity Futures Modernization Act’ legislation was inserted into a more than 11,000 page omnibus budget bill on December 15th, 2000 that Clinton had to sign by December 21st, after Congress had already recessed and gone home for Christmas and one month before he was to leave office, to keep the entire federal government open and operating.

    If Clinton had vetoed the bill, and been slimed for allegedly shutting down the federal government and leaving office with the federal government without a budget, by the very Republicans who had shut the federal government down twice previously, it would have all been moot, as by then we knew who the occupant of the White House would be and that there would be a Republican Congressional Majority, which would have quite simply passed the very same legislation again in a few short weeks.

    Complaining about Clinton signing that omnibus budget bill is like Don Quixote tilting at windmills.

  90. ToNYC says:

    Tuition and Room and Board Costs. The cost of going to Harvard University for a year is $47215. The cost can be broken down as follows: …

    I might have paid $3,000 per year if I didn’t get a full ride in 1963 in a great private professional school in Brooklyn. I can’t imagine that clueless dullard I saw this early morning being worth listening to for 15 times that in one generation in a better name-branded school. The money is only to buy satisfaction; the number of dollars that might be required is completely individual. That fact that GW’s economic product might be curtained is eminently survivable and closer to the definition of de minimus preaching to the choir.

  91. Antoine says:

    I think louisv nailed it.

    What I found truly amazing here is that a man as successful as Professor Mankiw seems only motivated by money accumulation at this point of his career.

    He is financially comfortable, his house is paid. He benefits from a luxury fewer and fewer people enjoy: he doesn’t need to worry about the money.

    So he can afford to take an assignment not because of financial reasons but instead because he has a personal interest in that assignment.

    Don’t get me wrong, money is important. It will provide food and shelter, make life easier and even bring some happiness (as a study recently concluded).

    But once the necessities are covered, as well as a retirement plan, the education of the children and the future vacations, why one still obsesses with money above any other thing?

    Professor Mankiw says that he doesn’t fancy luxurious items. Then why does he put money as the main incentive for him? I do not understand that. I really don’t. (I need to say here that I am a French citizen born and raised in France who now lives on the East coast for a while.)

    Many readers will probably find this comment very naive but do not forget that money is just a needed tool that arose when humans started organizing themselves together.

    And we organized ourselves as a society to make our lives better, not to maximize the benefits of few individuals at the expenses of the whole.
    We wouldn’t have built the world we live in with only pure greed. A man educated like Professor Mankiw should realize that

  92. [...] [I wasn't the only one -- Barry Ritholtz has some very good questions for Professor Mankiw.] [...]

  93. inthewoods says:

    I too was frustrated by the lack of comments on the NY Times article and also on his blog – so I found his email address at Harvard and wrote him the following:

    ———————————————–
    Since you are a teacher:

    1. What is the actual tax on $1000 if your marginal tax rate is 39%?
    2. Please show me a corporation that is actually paying a 35% tax rate.

    For extra credit, please find me Goldman Sach’s 2008 tax rate and show me how $14m in taxes on billions in revenue is equal to 35%.

    For extra, extra credit, please tell me who created the current tax laws and required them to sunset?

    ———————————————–
    Needless to say I only got back an email saying “thank you for your comments” – no answers to my questions. He’s like a lot of Tea Party candidates – not willing to answer questions after he makes ridiculous statements – a coward. As many other have said, I can only hope that he decides to follow his own advice and go Galt.

  94. redline21 says:

    Mankiw replies:

    http://gregmankiw.blogspot.com/2010/10/mckinsleys-mistakes.html

    It appears The Bic Picture is wrong about the tax rates – Conn. vs. Mass.
    Regards my friend Barry,

    The Partisan

    ~~~

    BR: Here is what I am working with

    In Connecticut, if your income range is between $0 and $10,000, your tax rate on every dollar of income earned is 3%. If your income range is $10,001 and over, your tax rate on every dollar of income earned is 4.5% (Married joint file) or 5% (head of household). It appears cap gains in CT is your top tax rate. The change in CT for 2010 is > $500,000 rate of 6.5%.

    In Massachusets, the top rate is 5.3%, while Cap Gains is 12%.

    So prior to the recent change, the answer was Mass was higher. After the 2010 CT change, then answer depends upon your gross income, as well as your cap gains.

  95. 35% Corporate Tax Rate?

    Try 2.4%!

    Google 2.4% Rate Shows How $60 Billion Is Lost to Tax Loopholes

    - Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

    Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

  96. [...] week, in response to a NYT column by Greg Mankiw, I posed several questions relevant to that column. The questions challenged the Harvard Professor (and former CEA [...]

  97. Richard Tull says:

    It’s stunning how a Harvard economics professor can whine and whinge about taxes we he implies he has annuitized income with tenure and textbooks on excess of (I’d guess) on half million a year. He’s as bad ad that knucklehead law professor from Chicago. These should be spoken about in the Club, never in writing. Like you, Barry, I thought his comment about leaving a little something for his children was touching, but delivered without any consideration of the consequences of never ending budget deficits, unconscionable. We need athirs political party.

  98. [...] Barry Ritholz at his blog The Big Picture: Ten Questions for Greg Mankiw. [...]

  99. [...] Barry Ritholz at his blog The Big Picture: Ten Questions for Greg Mankiw. [...]