Over at Equitable Growth: The trouble that is the King v. Burwell case arises because of one sub-sub-section of the law which says "established by the state" rather than "established in the state" or "established for the state". The purpose of "established by the state" in its context:
...the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311... READ MOAR
UPDATE: Oh, excellent! Here is the transcript.
Heather Boushey and Larry Summers posted their prepared thoughts for last week's Brookings-Okumn event. They are very good, and are well worth reading. The others--Wessel, Mankiw, Kearney, Wolfers--alas, did not. I am told that they were very good in the panel discussion. But where am I going to find the hour and a half to listen to it? And there appears to be no transcript. Serious bummer.
Over at Equitable Growth: Mark Thoma directs us to Paul Romer. And Paul Romer gets remarkably exercised about George Stigler's long and successful war against the use of the theory of monopolistic competition in economics, with its consequence that even today we have "scientifically unacceptable" people who say:
We will never, as a matter of principle, consider a model in which there are ever any monopolies. We will dogmatically stick only to models of price-taking competition...
From my perspective it is not the contemporary implications of this train of thought for growth theory that are important--for as best I can tell there are people who write growth models where every market has price-taking competition but there is nobody outside who reads them--but rather the historical implications of this train of thought for industrial organization, antitrust, and the rise of the rent seeking sector in the American economy.
I eagerly want to read and hope to see more work in this area. READ MOAR
Over at Equitable Growth: I find myself perseverating over the awful macroeconomic policy record of the Conservative-Liberal Democrat government of the past five years in Britain, and the unconvincing excuses of those who claim that the austerity policies it implemented were not a disaster--and that the austerity policies it ran on would not have come close to or actually broken the back of the economy.
Leaving to one side the fact that it is ludicrous that a depression that originates in overbuilding in the desert between Los Angeles and Albuquerque and overleverage in New York has a larger impact shock on the UK than on the US: READ MOAR
Over at Equitable Growth: A good review by Jonathan Knee of the exteremely-sharp Richard Thaler's truly excellent new book, Misbehaving. The intellectual evolution of the Chicago School is very interesting indeed. Back in 1950 Milton Friedman would argue that economists should reason as if people were rational optimizers as long as such reasoning produce predictions about economic variables--prices and quantities--that fit the the data. He left to one side the consideration even if the prices and quantities were right the assessments of societal well-being would be wrong. READ MOAR
Over at Equitable Growth: From last week:
The "free trade because Adam Smith comparative advantage BAM" stuff has got to stop! http://t.co/c5q1Oxkvf7— Noah Smith (@Noahpinion) April 25, 2015
Alma Mater Blogging: Greg Mankiw's desire to move Harvard to someplace better adapted to human life than Massachusetts was triggered by:
Greg Mankiw's Blog: Time for Harvard to Move?: The Wall Street Journal reports one of the most pernicious ideas I have heard of late:
Massachusetts legislators, demonstrating a growing resentment against the wealth of elite universities in tight economic times, are studying a plan to levy a 2.5% annual tax on the portion of college endowments that exceed $1 billion. The effort takes aim at one of the primary economic engines of the state...
Over at Equitable Growth: Back in 1959 Arthur Burns, lifelong senior Republican policymaker, Chair of the Council of Economic Advisers under President Eisenhower, good friend of and White House Counselor to President Nixon, and Chair of the Federal Reserve from 1970 to 1978 gave the presidential address to the American Economic Association. In it, he concluded that the United States and a lot of choices to make as far as its future economic institutions and economic policies were concerned. And, he said:
These... choices will have to be made by the people of the United States; and economists--far more than any other group--will in the end help to make them...
That's you. "Economists", that is. And I am glad to be here, because I am glad that you are joining us. For we--all of us in America--need you. Arthur Burns was right: you are better-positioned than any other group to help us make the right choices, at the level of the world and of the country as a whole, but also at the level of the state, the city, the business, the school district, the NGO seeking to figure out how to spend its limited resources--whatever. READ MOAR
J. Bradford DeLong on May 04, 2015 at 04:46 PM in Economics: History, Economics: Macro, Political Economy, Streams: (BiWeekly) Honest Broker, Streams: (Wednesday) Economic History, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Twentieth Century Economic History | Permalink | Comments (2)
| | | |
Over at Equitable Growth: I have never gotten it straight whether Vladimir Lenin actually did say: "The worse, the better." But Eduardo Porter does!:
The bloated incarceration rates and rock-bottom life expectancy, the unraveling families and the stagnant college graduation rates amount to an existential threat to the nation’s future. That is, perhaps, the best reason for hope. The silver lining in these dismal, if abstract, statistics, is that they portend such a dysfunctional future that our broken political system might finally be forced to come together to prevent it.
Talk about grasping at straws... READ MOAR
There is no point in including entire John Holbo posts in Weekend Reading--Crooked Timber (unlike most of the rest of the online world) is highly unlikely to suffer from linkrot, and those who want to read his posts at their Holbonian length can do so over there. But there is a need for a Shorter John Holbo.
Me? I see five political dimensions as one tries to maneuver through the weeds:
(with none of any of the poles being entirely bad--or entirely good, for that matter). The Nazis thus tended to be: militarist nationalist hierarchical authoritarian communicatarian, except for the Strasser-Roehm bunch who tended to be militarist nationalist egalitarian authoritarian communitarian. (And someone like Jonah Goldberg would tend to be militarist nationalist hierarchical authoritarian individualistic.)
Shorter John Holbo:
J. Bradford DeLong on May 03, 2015 at 11:34 AM in History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Sorting: DeLong: Academic CV, Streams: (Wednesday) Economic History, Streams: Cycle, Streams: Highlighted, Twentieth Century Economic History | Permalink | Comments (3)
| | | |
Sokrates: Internet Media and the Fall of GigaOm
Adeimantos: What? Are you now intellectually flirting with both Hinduism and techno-transhumanism?
Felix Salmon: I told you so. If I may quote myself:
Over at Project Syndicate: For the past twenty-five years those of my elders whom I regard as the barons of policy-relevant academic macroeconomics--at least the reality-based and sane barons--have been asking themselves fundamental questions. The first question was whether the business-cycle pattern of the post-World War II generation of full employment, a bias toward moderate inflation, and rapid growth had in fact come to an end. The second question was how best to think about the business cycle after the end of the post-WWII era's "Thirty Glorious Years." READ MOAR
...[They say that because] the FOMC's projections of economic growth have been too high... monetary policy is not working and efforts to use it to support the recovery should be discontinued. It's generous of the WSJ writers to note... that 'economic forecasting isn't easy.' They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent.... READ MOAR
...It's generous of the WSJ writers to note... that 'economic forecasting isn't easy.' They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent.... They fail to note... unemployment, which has fallen more quickly than anticipated.... The relatively rapid decline in unemployment in recent years shows that the critical objective of putting people back to work is being met...
No, no, no, no, no, no, no, no, no. NO! NO!!!! READ MOAR
Francis Fukuyama (2006): After Neoconservatism: "How did the neoconservatives end up overreaching to such an extent that they risk undermining their own goals?...
He gets himself tangled up in knots because he bends over not just backward but completely upside down to provide a sympathetic view of the Neoconservatist impulse.
I have always had a much more jaundiced view:
Over at Equitable Growth: The extremely-sharp Dean Baker writes:
E.J. Dionne and Harold Meyerson... interesting columns... suffer from the same major error.... The loss of manufacturing jobs and downward pressure on the wages of non-college educated workers... as... the result of a natural process of globalization. This is wrong. The downward pressure on wages was the deliberate outcome of government policies designed to put U.S. manufacturing workers in direct competition with low-paid workers in the developing world. This was a conscious choice. Our trade deals could have been designed to put our doctors and lawyers in direct competition with much lower paid professionals in the developing world. READ MOAR
Over at Equitable Growth: Nick Bunker is out of the gate with his take on the surprisingly low 0.2%/year first-quarter US real GDP growth rate:
...during the recovery, we should be standing by the alarms but not quite sounding them yet. Personal consumption expenditures... contributed 1.31 percentage points... a deceleration.... Net exports were the biggest drag... 1.25 percentage points... a dramatic decrease in the level of exports.... Gross fixed investment was also a drag... shaving off 0.4 percentage points.... READ MOAR
Over at Equitable Growth The advocates for the TPP and TATIP should be making the following points:
Those are the arguments that should be made--if they can--to command general support for the TPP and the TATIP.
But, as Dean Baker points out, those are not the arguments that are being made: READ MOAR
Over at Equitable Growth: As I say, repeatedly: everything that Ken Rogoff writes is very interesting, nd almost everything is correct.
This part of Ken Rogoff's piece appears to me to be very much on the wrong track:
small changes in the market perception of tail risks can lead both to significantly lower real risk-free interest rates and a higher equity premium.... Martin Weitzman has espoused a different variant of the same idea.... Those who would argue that even a very mediocre project is worth doing when interest rates are low.... It is highly superficial and dangerous to argue that debt is basically free. READ MOAR
Over at Equitable Growth: Ken Rogoff--of whom my standard line is: everything he says is very interesting, and almost everything he says is completely correct--is weighing in: on secular stagnation, the global savings glut, the safe-asset shortage, the balance-sheet recession, whatever you want to call it. His view is that excessive debt issue and overleverage are at the roots of most of our problems. He thus believes that our difficulties will end when deleverage has reduced the overhang of risky and underwater debt to a sustainable level: READ MOAR
Across the Wide Missouri: Does George Packer really think the purpose of American politics is to thrill him?
...The author, Nate Cohn, concluded, ‘It will be fun to watch.’ That was when he lost me.... The 2016 campaign doesn’t seem like fun to me.... If this is any kind of fun, it’s the kind of fun I associate with reading about seventeenth-century French execution methods, or watching a YouTube video of a fight between a python and an alligator. Fun in small doses, as long as you’re not too close....
Over at Equitable Growth: Before fees, the performance of Ken Griffin's Citadel is almost surely above the market's risk/return line. After fees and since 2007, I doubt it. After fees, investors in Ken Griffin's Citadel hedge fund appear have lagged the S&P500's 6%/year nominal return since its peak in 2007. And it is not as though Griffin is selling a greater degree of safety than the S&P500 offers: Citadel came very, very close to blowing up in 2008, and the most I can say is that I do not know what its true beta is. READ MOAR
Over at Equitable Growth: Trying to get the issues straight in my mind here...
>firstname.lastname@example.org: Dear Mr. Delong: I hope this note finds you well. In light of recent activity in Congress related to the Trade Promotion Authority legislation, I write to invite you to join an off-the-record conference call with XXXXXX senior staff for an update on the current state of play. The call is scheduled for today, Tuesday, April 21 at 3:45 p.m. ET
Dear Mr. White:
Thank you very much for your invitation. I will try. I will have to move a couple of things--and I am not the most important person involved in them...
But if you want to know where my concerns are, let me start by quoting something that I wrote before http://www.bradford-delong.com/2015/03/the-debate-over-the-trans-pacific-partnership.html: READ MOAR
Over at Equitable Growth:: How is it that people can think that an excess supply of money can show up as an excess demand for financial assets--and thus produce large losses on leveraged portfolios and thus a financial crisis when it unwinds--without also showing up as an excess demand for currently-produced goods and services--and thus as inflation? That is the question that perplexes Paul Krugman as he tries to decode the thought of John Taylor and the BIS financial-stabilistas. It perplexes me too:
Over at Equitable Growth: This is what Ben Friedman wrote about in the late 1970s:
...Chapter 4, on business investment... weak... [because of] a special problem of lack of business confidence, driven by fiscal worries, failure to make needed structural reforms, and maybe even careless rhetoric... [or] weak because the economy is weak[?]... The IMF comes down strongly for the second view....
But wait, there’s more.... To deal with... reverse causation... it looks for episodes of weak growth... clearly caused by... fiscal consolidation... [and] manages in passing both to refute a very widely held but false belief... that government deficits necessarily ‘crowd out’ investment, so that reducing deficits should free up funds that lead to higher investment. Not so, says the IMF: when governments introduce deficit-reduction measures, investment falls instead of rising. This says that the deficits were crowding investment in, not out... empirical confirmation of the existence of the paradox of thrift! Remarkable stuff. Someone tell Wolfgang Schäuble. READ MOAR
On Robert A. Heinlein (1964):
So the banker is the son of a bitch in the deal--Or is he, now? Bankers never handle their own money to any important extent; they are custodians of other people’s money. If the banker thinks that it is a bad deal in the long run [because of discrimination], is it not his solemn duty to his stockholders and his depositors to refuse it? No matter how it offends the “human rights” of purple people eaters? Is he morally justified in hypothecating other people’s money in a deal which he considers risky--whether the risk be on that one piece of paper, or long-term risk for his whole crazy structure of loans and futures and so forth? I say he is not; he is a steward and must behave as one--not as a social reformer. Are you and I entitled to a backseat veto over his judgment? No, it ain’t our money. So far, I think, no argument--You, the banker, and the subdivider are each morally entitled to turn down the purple people eater...
And me on Twitter via Storify:
Over at Equitable Growth: In the Oil Patch, probably yes--lost demand from the failure to expand Medicaid is likely to push them over the edge and into recession. Elsewhere it will be close, but probably not:
...is leaving red states poorer and sicker.... King v. Burwell.... If the Supreme Court rules for the plaintiffs, those states, including Arizona, will lose their subsidies. That would be a disaster for those states. As Sarah Kliff writes: READ MOAR
Thank you for a wonderful talk. A comment, and a question:
The comment: I have long had a bone to pick with Amy Finkelstein and company and their Oregon Medicaid study. They use “significant” in two different ways in their paper. Improvements in blood pressure and in blood sugar levels in their study were not statistically significant. Not a lot of people in the sample had high blood pressure or high blood sugar, and so the drops seen were not big enough to be confident in a statistical sense that they were not just the luck fo the draw. But the drops in blood pressure and in blood sugar levels were in line with what we expect to follow from prescribing first line lisinopril and metphormin to those who need them, and those drops are clinically significant. I’ve been trying to get them to say that the improvements in the physical health indicators they found were clinically but not statistically significant — but without conspicuous success. READ MOAR
It could have turned out very differently.
It could have been that the money-center universal banks did understand their derivatives books. It could have been that, after the financial crisis, trust in financial intermediaries would rebuild itself quickly. It could have been that the North Atlantic's central banks would have been able to nail market expectations to a rapid return to normalcy, thus providing cash holders with powerful incentives to spend. It could even have been the case that fiscal expansion would have proven ineffective. It was Karl Smith who pointed out to me that in the guts of even the IS-LM model, fiscal policy expands
I+G private spending [satisfied, RJW?] by reducing the perceived average riskiness of and thus getting households to hold more. In the model it is guaranteed that a sovereign that issues more debt thereby necessarily reduces the perceived riskiness of average debt. In the world not. READ MOAR
Take the mechanics of demand stabilization and management off the table. Move, in our imagination at least, into a world in which short-term safe nominal interest rates rarely if ever hit the zero nominal bound. In that world, as a result, the full employment and price stability stabilization-policy mission could be left to central banks and monetary policy. Furthermore, confine our thinking to the North Atlantic, possibly plus Japan.
It seems to me then that there are four big remaining questions:
Can, in a political-economy sense, central banks be trusted with this mission? Are they not captured, to too great an extent, by the commercial-banking sector that, myopically, favors higher nominal interest rates to directly improve bank cash flows and indirectly dampen inflation and so redistribute wealth to nominal creditors--like banks?
What is the proper size of the twenty-first century public sector?
What is the proper size of the public debt for (a) countries that do possess exorbitant privilege because they do issue reserve currencies, and (b) countries that do not?
What are the real risks associated with the public debt in the context of historically-low present and anticipated future interest rates?
It could have turned out very differently.
It could have been--as those of us who more-or-less hooted Raghu Rajan down at Jackson Hole in August 2005 wrongly thought—-that the money-center universal banks did understand their derivatives books; that asset-price innovation variances did drift up or down with time relatively slowly; that the weak point in the global economy in the mid 2000s was the global imbalance of the US trade deficit, and the possibility that some large bad actor had been selling unhedged dollar puts on a very large scale--not the subprime mortgages on houses built in the desert between Los Angeles and Albuquerque, and the use of securities based on those subprime mortgages as core banking reserves. READ MOAR
Paul Krugman endorses Hillary Rodham Clinton--or, rather, endorses the Democratic Party and her as its overwhelmingly-likely standard bearer:
...read significance into what she says or doesn’t say about President Obama, endless thumb-sucking.... Please pay no attention. Personality-based political analysis is always a dubious venture.... Pundits are terrible judges.... We were assured that George W. Bush was a nice, affable fellow who would pursue moderate, bipartisan policies.... There has never been a time in American history when the alleged personal traits of candidates mattered less.... Each party is quite unified on major policy issues--and these unified positions are very far from each other....
...which none of us can deny is the outstanding conundrum of today. We all agreed that, whatever the best remedy may be, we must reject all those alleged remedies that consist, in effect, in getting rid of the plenty. It may be true, for various reasons, that as the potential plenty increases, the problem of getting the fruits of it distributed to the great body of consumers will present increasing difficulties. But it is to the analysis and solution of these difficulties that we must direct our minds.
If you haven't read Bruce Bartlett's complete history of the Laffer Curve, you should. The upshot is that you do not need special circumstances for high tax rates to be capable of inflicting significant damage on the underlying economy. But you do need exceptional circumstances to actually get a free lunch out of the Laffer Curve...
Over at INET: As I wrote in my introductory "Tap... Tap... Tap..." http://beta.ineteconomics.org/ideas-papers/blog/tap-tap-tap-is-this-thing-on-website-relaunch post last week, there are four gaps--between what economists should and do say, say among themselves and are heard to say, are heard to say and what the public sphere concludes, and what the public sphere concludes and actual policies. It is INET's business to focus primarily on the first and second of these gaps. And it is this weblog's place to provide a space for discussion and debate--for new economy thinking--about how to close these gaps.
After one week, how are we doing?
Over at INET: Welcome to our website, and thus weblog, relaunch.
Almost everybody looking around today agrees that there are four gaps in economic thought:
Glaukon: So: Blogging...
Hypatia: I would like to start by offering the floor to the Great and Good Felix Salmon:
Felix Salmon: To All the Young Journalists Asking for Advice...: I’m also very flattered by the lovely things you said... about how you’d love to have a career in journalism... do[ing] the kind of thing... I do. You won’t.... By the time you’re my age... you’ll... be doing something... nobody today... foresee[s]....The obstacles facing you are much greater than anything I managed to overcome.... The exact same forces which are good for journalism and good for owners are the forces which are bad for journalists....
J. Bradford DeLong on April 12, 2015 at 12:52 PM in Economics: Information, Information: Internet, Long Form, Philosophy: Moral, Political Economy, Politics, Science: Cognitive, Streams: (BiWeekly) Honest Broker, Streams: Economics, Streams: Highlighted, Web/Tech, Weblogs | Permalink | Comments (5)
| | | |
Over at Equitable Growth: Martin Sandbu has a truly interesting and excellent comment on my first, inital draft of thoughts for next week's Blanchard-Rajan-Rogoff-Summers "Rethinking Macroeconomics" conference.
But I do think he oversimplifies one crucial issue: dynamic efficiency.
Elementary neoclassical growth theory tells us that to the extent that patience and tolerance for intergenerational inequality between the past and the future allows, societies should try to push their accumulation of capital toward the point of the Golden Rule: the point at which the marginal product of capital r has fallen to the economy's labor-force growth rate n plus its labor productivity growth rate g. And it tells us that an economy that has pushed accumulation beyond that point--that has g+n > r--has overdone it. Such an economy is dynamically inefficient, and it should disinvest in its accumulation of capital. READ MOAR
The United States economy today is surely not dynamically inefficient as far as its private capital stock goes. Its accumulated and properly-depreciated capital stock is equal to no more than four times annual net income. The 30% of net output paid as income to capital thus sets an average net product of capital of 7.5% per year. And the marginal product of capital is unlikely to be much lower. As this is a real return, it is to be compared with the sum of the 0.75% per year labor-force growth rate and a current trend labor-productivity growth rate of 1.5% per year. We see a very substantial wedge by which r is greater than n+g, for private capital.
But we as a society and as taxpayers invest not just in private capital wealth but in the wealth of our government as well. Our investments in the wealth of our government produce cash flows through the government's infrastructure and organization. We invest in the wealth of our government by paying taxes used to build up infrastructure and organization and by buying back the debt that the government has previously issued. And it is here, I think, that the neoclassical growth-model dynamic-efficiency framework becomes relevant. The current ten-year TIPS rate for U.S. government debt is zero. Yes, that is: 0. There is no real resource cost to the U.S. government from selling a TIP today, using the money for a decade, and paying it back in 2025. n+g > r.
And n+g > r for a long, long time. Since the start of the twentieth century, only during the Great Depression has the interest on the debt as a share of its face value been more than the smoothed decade-average growth rate of the American economy.
What does this tell us about the value of using our tax money to pay down or even slow the growth rate of the national debt? Nothing good. It tells us that we taxpayers should disinvest our wealth from the government, and keep on doing so until, for claims on the government as well as for claims on the private sector, r > n + g.
But, you may ask, why is there this very wide gap between the marginal return to investments in private capital and the marginal return to investments in government wealth via paying down the government debt? Why a 7.5%/year real return on physical and organizational capital, a 5%/year return on investments in diversified equities, a 2.5%/year real return--4.5%/year nominal--on seasoned Baa corporate bonds, 0%/year real for investments in long-term government securities, and -1%/year at the moment for Treasury bonds purged of duration risk?
That is a great puzzle. It is strongly suggestive of major, major financial market dysfunction. Systematic risk can, we know, account for at most 100 basis points of that 850 basis point spread. But the origins, and the potential cures, of these enormous spreads have no bearing on the Golden Rule lessons--that it strongly looks like we need to invest a lot more in private physical and organizational capital, for the gap between 7.5% and 2.5% is far more than taxes, fees, enterprise, and other middle intermediaries can justify. And it strongly looks like we taxpayers need to invest a lot less in government wealth via being in a hurry to pay down our current debt, for the gap between 2.5% and 0% on that side is wide as well.
Over at Equitable Growth: Very good points from Ryan Avent, Matt O'Brien, Larry Summers, Paul Krugman, and Ben Bernanke. And rereading all these has convinced me of one additional thing: with the North Atlantic plus Japan as a group clearly in a situation in which the Wicksellian natural rate of short-term safe nominal interest is less than zero, how could it ever be part of an optimal policy for the U.S. to raise its short-term safe nominal interest rates above the zero lower bound?
Highlights: READ MOAR
Over at Equitable Growth: Picking up on In Lieu of a Focus Post: March 2, 2015: I also found on the internet a fine rant by the engaged and thoughtful femina spectabilis Frances Coppola attacking another one of my teachers, the vir illustris Olivier Blanchard, saying that his:
call for policymakers to set policy in such a way that linear models will still work should be seen for what it is–the desperate cry of an aging economist who discovers that the foundations upon which he has built his career are made of sand. He is far from alone…
It’s not quite that bad. READ MOAR
Over at Equitable Growth We all know this.
But it is highlighted by the work of the very sharp Carter Price and David Evans, who have the infographic of the month:
...access to expanded Medicaid... and how a ruling by the Supreme Court in... King vs. Burwell... would affect ACA coverage...
From the perspective of any individual state, both the Medicaid expansion funds and the health-exchange subsidy funs are free money: READ MOAR
Over at Equitable Growth: I forgot to note Ben Zipperer's post on the labor market and the BLS Employment Report last Friday. And if I had, I would have stressed what the employment numbers tell us about how extraordinarily far to go we have before even semi-complete recovery.
For the past decade Stanford's John Taylor has been loudly crying:
And we all have said: This makes no sense! If the original derivation of the Taylor rule is accurate, minor deviations from it have small consequences. If minor deviations from optimal policy rules have major consequences, than the original Taylor rule simply cannot be the optimal policy rule.
And we have never gotten a coherent answer.
Over at Equitable Growth: So I believe that Noah Smith has changed my mind about something…
I was thinking out loud to him about the key conundrum of Modern Monetary Theory...
Modern Monetary Theory, or perhaps we had better call it old Abba Lernerian fiscal theory, holds that the government's fiscal-balance condition is not independent of the economy's macroeconomic price-stability condition. Anything that pushes the government out of fiscal balance and requires raising taxes to avoid a real default on the debt will also immediately produce higher inflation, and so require macroeconomic austerity. And part of such austerity is, yes, raising taxes. READ MOAR