We are Bentley University faculty from the departments of Economics, Law and Taxation, Global Studies, Taxation, Natural and Applied Sciences and Mathematics, here to answer questions on the First Months of the Biden Administration.

How do you see the Fed’s printing of record amounts of money affecting the US and global economy? I’ve heard arguments this will cause inflation, deflation, and everything in between.

mrob1,

Good question. The Fed has pursued an expansionary policy (note: they don't actually print any currency--it's all electronic) to increase aggregate demand in response to the COVID shock. It has helped a lot--the COVID downturn would have been worse without the Fed's response. Employment and income didn't fall by as much as they would've otherwise. It's likely that as the economy begins to really bounce back (consider the very good March employment report--916,000 jobs), that inflation will pick up. How much is open to question. The Fed is fine with let inflation go above its 2% average target, but will not repeat past errors of letting inflation get too high (I think that they'd start to get nervous if inflation stays at or above 3% for any length of time. Below that, I think they'd be ok). So: some inflation is coming, but it won't get out of hand. Deflation was a risk early in the pandemic, but that is highly unlikely to happen. Overall, the US economy is likely to soon be a driver of the world economy.

Dave Gulley, economics.

Is there a worry that this policy may lead to asset bubbles? The stock market appears to have somewhat decoupled from the economy and housing prices in some segments of the economy have skyrocketed. Is this a sane evaluation of projected future metrics or is this going to become a problem later?

HF,

Another good question. Right now, the equity market is looking forward and seeing a strong economy recovery (translation: lots of profits). If the markets are right, then valuations may make sense. Housing markets are dealing with currently constrained supply (which may change if homebuilders start really ramping up new construction) and solid demand for flush buyers. Is this a bubble? It may be, but it's less likely to be a bubble than the housing boom in the mid 2000s as it's unlikely that the supply will skyrocket as it did then. Still, asset prices may well fall if there's disappointment in earnings, etc.

The Fed's expansionary policies are partly transmitted through higher asset prices. There are risks to this in that inequality may worsen and we might get bubbles. This doesn't mean that the Fed shouldn't have taken action back in March 2020.

Dave Gulley, economics.

HF,

I wrote an answer to your question. Did it come through? I don't see it.

Dave Gulley, economics.

Glad it came through! Thanks Jack and R4.

Thanks for the response Dave. Can you elaborate as to why inflation is ok in the Fed's eyes? Historically, inflation has been detrimental to any economy. Why is the fed ok with losing purchasing power? Is it simply because it can print more?

You're welcome. Inflation, within reason, is ok, or even good. In the 1970s, when inflation hit 15% in the US, that wasn't good--it was really bad. Hyperinflation, when it hits the hundreds of percent, causes collapse. A 2% inflation rate that's relatively steady and predictable won't have any notable detrimental impacts on the US economy. Note that the goal of maintaining purchasing power of the USD (that is, averaging no inflation), risks deflation--the decline in prices. If that's caused by weak overall demand, that's not good. If some prices fall due to tech advances (think computers, TVs, etc), that's fine--it doesn't happen at the aggregate level.

Dave Gulley, economics

According to some perceptions of "popular opinion", the US economy is becoming more integrated and more dominated by "near monopoly" corporate entities than any time since the break-up of the Bell System. Most of the Bell children have re-merged, tech companies have a stranglehold on many digital goods and services, and the barriers to entry for smaller business to break into critical industries like infrastructure and healthcare have risen rapidly. While most industries are still defined by some amount of competition within their oligopoly, the number of major player seems to be shrinking

Given this, my question has two parts:

1.) Is the above truly an accurate assessment of the current nature of the US economy, or are there less apparent factors at play that are mitigating these monopolistic trends?

2.) Are the actions of the Biden administration going to push the US towards more monopolistic business practices, are we returning to an era of trust-busting, or somewhere in between?

TUS,

In general, there has been an increase in concentration in many US industries--large companies get larger by buying other large companies. However, as long as these large companies face competition, then the harm might be minimized. Indeed, larger companies often have lower cost structures, and competition helps to force prices down (think cell phone minutes/data). And, even if the US is filled with just large firms, as long as foreign firms are able to compete (low or no tariffs, etc), then the concentration may not be a big problem.

The administration has appointed a number of lawyers and others who are skeptical of large firms in general and of large tech firms in particular, so there could well be increased anti trust activity. The government has a mixed record of success in anti trust cases.

Dave Gulley, economics

How will the insulin price cap affect the supply of product?

I assume your question is referring to the recent congressional FTC inquiries into insulin price hikes. Notably, Eli Lilly, Novo Nordisk, and Sanofi raised prices nearly simultaneously. This comes after a few states, such as Colorado, Illinois, and New Mexico, have passed laws forcing insurers to cap out-of-pocket monthly insulin costs. The most effective measures at cost control for pharmaceuticals have involved cooperation between the government and companies through rebates and other programs. Many companies have argued that their efforts have narrowed actual net pricing, while increasing wholesale prices. All in all, it likely isn't going to be as much of an issue with product supply as it is with production and the overall supply chain efficiency.

-- Chris Skipwith, Natural & Applied Sciences

So then it sounds similar to what is going on with the Sallie Mae education situation where the suplier can still increase cost on demand and recieve their rebate. How would that solve the problem when the goverment would need to get the money for those rebates from somewhere else?

It is fundamentally different because of the sheer scope of rebate programs and their connections to programs such as Medicare. The ruling on the rebate final rule, which is currently on hold, will go a long way into making any concrete conclusions here. It could "swing the balance" significantly either way for the private sector versus government.

-- Chris Skipwith, Natural & Applied Sciences

This is a bullshit answer. Rebates are a main driver to the increase of drug costs to patients. They’re the worst thing to happen to the industry in terms of transparency, and they had to be specifically excused from Safe Harbor regulations to not be considered a bribe.

They’re a bribe. They. Are. A. Bribe.

You know what corruption does? It increases costs. Always. Every industry.

Anyone seriously promoting rebates as one of the most effective measures to cost control is a sold out shill. I got the heeby jeebies just typing it out. Gross.

I should clarify that my response is specifically highlighting government-industry collaboration on cost-control measures as being among the most effective and sustainable. What's important to distinguish here is the difference between standard rebates (requiring minimal collaboration) and proposed inflation rebates (requiring significant collaboration), the latter of which is the topic of this discussion.

Standard rebates are basically a price concession paid by companies to health plan sponsors or PBMs. As you've noted, the terms of these rebates are generally confidential, and the rebates are typically in exchange for improved market access.

The proposed inflation rebates are devised to limit yearly price increases to inflation as a condition for Medicare coverage. Inflation rebates would be required for brand-name, biosimilars, and generic drugs. The CBO estimated net savings of $36 billion from 2020–2029 for this measure.

The part of my response I'd like to highlight was in the assertion by companies that net pricing is narrowed while wholesale prices are increased. This illustrates the big problem being in how out-of-pocket costs are determined. Cost sharing can be reconfigured to lower out-of-pocket costs for patients by calculating the patient’s out-of-pocket costs on the basis of the payer’s expected net price for the drug after rebates, rather than on the basis of list price. For this to work, amounts would need to be estimated because actual rebate amounts are often determined after (this is the part requiring significant collaboration). To your point, I can definitely see payers and companies arguing that providing point-of-sale rebates would jeopardize proprietary info like the size of the rebate.

-- Chris Skipwith, Natural & Applied Sciences

As a follow up question, has there been any indicators that Covid vaccine production is/will be effecting other pharmaceutical production or pricing?

From a product/process innovation standpoint, the significant resources devoted to improving manufacturing, validity testing, and compound validation as a result of Covid vaccine production efforts stand to greatly improve further production of innovative pharmaceuticals. In addition, the process innovations surrounding structuring and recruitment for clinical trials will likely have impacts on the future of clinical trial design and implementation.

The pricing issue is a bit of a different story. As you probably know, the pricing issue is not solely impacted by market conditions and is heavily influenced by infrastructure. This is a significant research area (with many of the world's top groups pursuing it), but isn't suitable for a simple correlational analysis.

-- Chris Skipwith, Natural & Applied Sciences

I’m sorry, but effective precedents for cost control don’t exist in the US, which is a hill Pharma will die on. The most effective policy interventions for bending the cost curve on IP-protected treatments exist, but in the UK and Netherlands and even Thailand - in the form of public authorities like NICE which negotiate on prices based on a rational assessment of their relative benefit to population health rather than saddling that on sick patients.

The answer is there, it’s just politicised as nonsense about “death panels” when most Americans actually already face this every time they get to the hospital and have a bill they can’t pay, including for insulin

You're correct that we don't have an overwhelming amount of data on effectiveness of these types of measures specifically in the U.S.--primarily because of the infrastructure, transparency issues, and slow rates of change. Most of the information used in the field for modeling and projections (and championed by scholars who analyze the potential impacts of healthcare policy changes) are based on data from places like the U.K., Netherlands, and France, among others. This is the basis for most analysis on cost-control effectiveness.

-- Chris Skipwith, Natural & Applied Sciences

What kind of sanctions would be more appropriate for the uighur situation in China than this proposed boycott of the Olympics? It feels like a cheap way because all countries are too afraid of real confrontation with China

A boycott of the Olympic Games would indeed be mostly symbolic, but it might have somme effect, as it will affect the reputation of the Chinese government hosting the event. Most likely a suite of measures and sanctions and a concerted effort with other countries and blocs - over a longer period of time - would be helpful. Indeed, it is a delicate balance of interests, however, it appears more countries are stepping up to address the treatment of Uyghurs and other minorities in China

--Johannes Eijmberts (GLS)

US Congress passed the Uyghur Human Rights Act Policy just last year, and there is consistent and strong denunciation of atrocities by members of government from the right and left, as well as consistent US media news coverage, for example. This is a consistent discussion point, public and private, at nearly ever high-level US-PRC engagement. Sanctions and 'hard' measures are likely to bolster the PRC government and its performative nationalist discourse to its domestic audience and be counter-productive to trying to mitigate Ugyhur incarceration and genocide. Other spheres of action include multilateral and international institutional action (fortunately the Biden administration believes in international institutions and working with and through them to address just these kinds of issues; US Ambassador to the UN Linda Thomas Greenfield made Uyghur issue a front and center priority in her first days of office) as well as bottom-up (consumer demands for corporate accountability over labor rights and human rights abuses) pressure. Getting US corporations that operate manufacturing and other business in the PRC to take more overt positions - via US government condemnation and legislative pressure and popular bottom-up campaigns - is a key area that I think needs continual pressure.

​

-Pon Souvannaseng, Global Studies Dept

Is Biden doing enough to compete against foreign subsidies and the growing power of State-Owned Enterprises (E.g. China) and should he reverse the tariffs from the Trump era?

State-owned enterprises (SOEs) are a difficult issue facing the United States trading situation. One of the things which makes it hard to counter is that information about their true cost structure is murky. Tariffs are designed to counteract government interventions which unfairly lower a company/industries' costs. But these costs are difficult to estimate for SOEs as they do not disclose the same level of information as private companies. There have not been any substantive reforms of Chinese government assistance to SOEs since the tariffs were instituted. The tariffs are most likely going to stay in place until there is some resolution either through bilateral negotiations or through the WTO (if that gets a full panel of judges again). The United States is not going to drop these tariffs unless there is some quid pro quo from the Chinese government regarding assistance being provided to SOEs.

Michael Quinn, Economics Department

Is Biden doing enough to compete against foreign subsidies and the growing power of State-Owned Enterprises (E.g. China) and should he reverse the tariffs from the Trump era?

Hi, great questions – under the previous Trump administration there was bipartisan passage of the 2018 BUILD Act which reconfigured the previous Overseas Private Investment Corp into the Development Finance Corp (DFC) with the intent that the DFC and perhaps USEXIM would work together with a ‘whole of government’ approach the way that the PRC’s policy banks do to support their own firms and international firms (for ex: Tesla production in mainland China) but the short answer to your question is that given the institutional constraints built into US political economy (yearly congressional budgets; agencies having to balance their budgets, etc) the scale and magnitude of subsidies is unlikely to compete in the same way as PRC SOEs, but they are also focusing in some ways on different markets and sectors. At the sub-national level, local governments in the US (state and municipal level) governments are ‘competitive’ in the types of indirect subsidies to attract investment. Janet Yellen’s recent proposal of a global corporate wealth tax is an interesting and important regulatory step in getting non-OECD countries like China and their firms to adhere to more market-competitive norms. USTR Catherine Tai has recently announced tariffs from the previous administration are unlikely to be reversed anytime soon.

-Pon Souvannaseng, Global Studies & Wilson China Fellow

How do yall feel about the buying halts on various securities but allowing selling? We saw that happen in January.

FD,

I'm assuming here that your talking about GME? Robinhood, for example, faced the equivalent of a multibillion dollar margin call, and so restricted trading in GME and other stocks. It was a very bad look and resulted in some pretty bad publicity, but I don't think that it was nefarious and directed by the hedge funds.

Dave Gulley, economics.

Yes GME. But also we saw lots of stocks halted on multiple brokerages like NOK etc. Melvin Capital and Citadel also were apperently involved enough to have to testify which seems nefarious from a publics perception.

Would you believe that allowing this to happen in the first place is a huge oversight that should be revisited? I say this because the rules seemed to have magically changed that day to benefit Wall Street.

It's likely that regs will be adjusted (Liz Warren was all over this). Note that Melvin took a giant bath, and so it's not clear that they were made better off. The rules were not changed for that day--Brokerages do, in rare situations restrict trading. Robinhood got the margin call from their clearing houses.

Dave Gulley, economics

Is Thursday night Nugget Night still on?

This is not verified but my sources say yes.

Michael Quinn, Economics Department

Why Is it general accepted or allowed for Oil producers and or OPEC to adjust production to affect prices up or down? Is that not hoarding or price fixing which is frowned up or considered illegal when it comes to other products or services ?

Cartels are illegal for companies to form. Cartels are illegal because of national laws against them. OPEC is a cartel formed by countries which is why it can exist. OPEC does indeed intervene to try and control prices.

Michael Quinn, Economics Department

Why do you think Biden has such limited interaction with the press and waited longer than any president in the last 100yrs to hold his first press conference?

I disagree with the premise that Biden has limited interaction with the press. His press secretary Jen Psaki has given press briefings on a daily basis from the beginning of the administration, whereas Trump stopped giving press briefings on a regular basis. The nature of presidential relationships with the media has changed radically over the last century, of course, so it is hard to know where a comparison like this would come from.
- Liz Brown, Law and Taxation

Student loan forgiveness or tuition reform?

From a legal perspective, tuition reform is a political hot potato. If the federal government attempts to force private university tuition reform by regulation, opponents will say that this is undue government interference in private enterprise. However, without government incentives and/or regulations, private universities have not made much, if any, progress on this on their own. Another proposed approach is to have the federal government more heavily subsidize college tuition with expanded Pell Grants, for example, but this also would need bipartisan support--which may or may not exist at the moment. For a legal answer to loan forgiveness as an alternative to tuition reform, see my reply to another post.

Ultimately, however, this is not necessarily and either/or answer.

-Marianne Kulow, Law & Taxation

Please see Marianne Kulow's response to ShiznazTM's question on this topic.

- Liz Brown, Law and Taxation

I keep seeing people complain about rising gas prices and blaming it on Biden. Does the presidents policies really have that much effect on gas prices?

A president's policies can affect gas prices. However, there have not been any policy changes over the last few months which would be driving up the gas prices. The federal gas tax has not been changed. And any change in exploration or investments would be a long-term effect. The short-term variations tend to be because of demand (people are starting to drive more again) and delays such as the blockage of the Suez Canal. As the economy recovers and more people start going into work again, we naturally see gas prices rise. Suppliers will need to adjust their production, which fell when demand plummeted.

Michael Quinn, Economics Department

And the bulk of gasoline production costs are embedded in the price of unrefined petroleum, which is controlled by more of those global factors that Michael mentions.--

--Dave Szymanski, Natural and Applied Sciences

No mention of the move to kill the Keystone XL permits?

By the time the political football of the Keystone XL pipeline made it to the Biden Administration (who likely finally quashed the permitting), the overall demand for oil had already fallen significantly. Since the tar sands are much more energy intensive and expensive to process, and given the complex pricing of raw petroleum, it's not likely that the pipeline decision would impact gasoline prices in either direction, regardless.

--Dave Szymanski, Natural and Applied Sciences

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The media landscape has changed such that rather than a few common media outlets from which most of the country receives their news, there is now a proliferation of news outlets. This means that individuals can seek out news outlets that reflect their pre-existing political views. This "narrowcasting" can contribute to political division in the sense that individuals are existing in separate news universes, not sharing a common understanding of what is happening in the country. At the same time, for the mainstream media, bias tends to come in the form of agenda-setting (which stories are seen as important), not in terms of explicit partisan bias. Mainstream media follows established journalistic norms.

--Juliet Gainsborough, Global Studies

Does the Biden/Harris administration’s handling of illegal immigrants at the border (concentration camps, ignoring COVID requirements,etc) constitute a human rights violation?

Not necessarily. Human rights violations are determined in reference to international treaties that set standards for humane treatment of refugees and migrants. Having a holding area for the large number of immigrants doesn't constitute a concentration camp, which is an especially significant term and is usually used in reference to genocides. such as the Holocaust.

-- Liz Brown, Law and Taxation

Marijuana lol? I watched kamala say weed would be legal in a biden harris administration. So what's your guys read? Think they got a plan or something?

As marijuana has been legalized in more states, the federal government's stance on marijuana seems increasingly difficult to maintain. For instance, there are huge challenges around banking for the marijuana industry which may operate legally in an individual state but have trouble participating in the interstate banking system because marijuana is still illegal on the federal level. To legalize at the federal level would require legislation--so not something that Biden administration can do on their own. Congress would have to pass changes to the federal regulatory scheme for drugs that currently classifies marijuana as a schedule 1 drug--always illegal. However, the Biden administration can direct its Justice Department not to go after marijuana use in states where it's legal. This was the approach taken by the Obama administration. The Trump administration initially said that they would not hold off from pursuing marijuana, even in states where it was legal, but ultimately backed away from that.

---Juliet Gainsborough, Global Studies

When corporations get taxed more don't they just pass that cost on to their customers? Tyson pays more in taxes doesn't everyone, including the poor, pay more for chicken?

Interesting question. This actually varies a lot by industry. If the industry has a lot of companies in it and the profit margins are low then taxes are more likely to get passed on to consumers. This is because the companies cannot absorb the increased costs. It also depends on how much consumers demand for a product is influenced by prices. For products like cigarettes, taxes are passed on to consumers. Because firms know that people won't stop smoking because of small increases in price. It depends how many alternatives the consumer has for a product.

Michael Quinn, Economics Department

• How do you feel US foreign policy towards Iran will change from the Trump administration to the US administration?
• With the US increasingly finding itself at odds with Chinese economic supremacy, how do you see manufacturing and raw material production shifting towards the west? How is the current administration planning on addressing this? (Recently I read china produces 95% of pharma raw materials, produces 30% REM's and controls 80% of REM global supply especially in Africa)

REM's and controls 80% of REM

I can't speak to the first question. As to the second, certain types of manufacturing and mining have been moving out of the US for decades. Low value added manufacturing just isn't profitable on a large scale in the US. High value manufacturing is profitable (think Caterpillar). In terms of REM (rare earth metals), this is a very environmentally unfriendly activity and unless there are severe limitations from other sources, isn't likely to come back to the US (we have lots of REM, which really aren't that rare, but it's a dirty business getting them out of the ground).

Dave Gulley, economics.

- Agreed with Hans below re: shift in tone of Biden administration towards Iran, they will definitely seek a way out of past impasse over nuclear production and the real test will be concerning sanctions, there are a lot of moving parts to this beyond bilateral relations. For example, the warming of relations between UAE/Israel under the Abraham Accords and wider regional shifts make this an on-going diplomatic process.

-There was a triple commodities 'super cycle' in hard/soft minerals/energy throughout the early 2000s from 2003-2013 before the crash in 2014 from which the PRC's 'go out' strategy to engage developing country commodity exporters in Latin America (Venezuela, Ecuador for ex) and Africa (Ghana, Zambia, Tanzania) and Southeast Asia has played some role in the building of raw material supply chains that have gone into overcapacity/glut by some sectors by PRC firms (solar panels, tires, etc). For more on this, Nicholas Jepson has a great new book. For semiconductor chains, here's a different focus on US-Eas Asian relations. As for pharmaceuticals however, US allies (India, S Korea, Taiwan, Japan, EU countries, Australia, NZ) and the US itself as evidenced in the US government's co-production of Covid-19 vaccines through the Defense Production Act are likely to build on advanced and mature domestic and global industrial and pharmaceutical links. Concerns about PRC vaccines through PRC pandemic aid and their efficacy (ex: mass vaccination in Chile for example and increasing C-19 rates raise concerns that some PRC vaccines may have mitigated death tolls and spread, but may not be effective in staving off new strains) may become an issue in the future. The US is still the largest contributor to the World Health Organization's COVID-19 Vaccine Global Access Facility (COVAX)- there is both soft power and real logistical might there that the US has to exercise in terms of leadership and resources. There's a large literature on supply chains, suffice to say the concern about 'control' of Pharma materials and supply chains is a somewhat overblown narrative.

​

-Pon Souvannaseng, Global Studies Department

The Biden Administration is likely to change at least its tone towards Iran. It's likely that the US will join in multilateral efforts to renegotiate the Iran Nuclear Deal, though it might not go as far as rejoining the agreement. The ongoing talks in Vienna, which saw the US return to the discussions, it a sign of a change of approach, but not an actual pivot. Note that Biden, of course, was quite involved with the previous rounds of negotiations as VP under Obama.

Johannes Eijmberts (GLS)

What negative effects might we see as a result of further increasing the national debt?

Fedexed,

Like any borrower, the federal government is limited in its capacity to borrow by its ability to make good on its payments related to the debt. Right now, the government has sufficient borrowing capacity. The evidence for this is that there is a deep market for government debt by banks, pension funds, foreign central banks, etc.

However, the expanded debt doesn't come without cost or risk. A higher fraction of government expenditure will go to debt service, possibly constraining other forms of spending. If financial market participants believe the government is reaching its capacity, then demand for US debt will fall, pushing up yields on Treasuries. This will increase government borrowing costs and push up other interest rates (mortgage rates, etc). In general, governments that borrow too much relative to their capacity to borrow get in trouble. The US government is not there yet, but is on path that may get us there.

Dave Gulley, economics

How can we compare Covid case numbers across different countries when testing rates are so varied, and the methods that are used in each to determine cause of death are so divergent?

Hi onemanclic,

I would say that the basic premise of your assertion is correct, however I'm not certain it's very productive to simply compare Covid case numbers across countries, rather than analyzing trends in cases over time relative to each other.

For what it's worth, a more troubling (and important for interventional efforts) issue with data collection is that countries--and individual states in the US--don’t have strong systems to document how frequently people are reinfected. Better data collection and analysis around second cases of Covid are very important for tracking progress.

-- Chris Skipwith, Natural & Applied Sciences

You think the administration will cancel student loans like they promised?

The answer to this question depends on laws, policy and political will. Biden has asked the Department of Education to conduct a legal review of his authority to cancel student loans unilaterally, without congressional approval. This question was also analyzed by the Trump Department of Education, which decided that the president did not have this authority. The governing law here is Section 432(a) of the Higher Education Act of 1965 which gives the U.S. Secretary of Education the authority “to modify, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” Supporters of student loan cancellation interpret this provision to give the president (through the Secretary of Education) authority to cancel student loans for all student loan borrowers by executive order. Opponents of student loan cancellation say that Congress never intended to grant the president unlimited, unchecked authority to cancel everyone’s student loan debt — and if Congress intended this, Congress would have written it explicitly in the text of legislation, which Congress didn’t. While Biden has already cancelled some student loan payments, his stated view is that he does not believe that he has unilateral authority — without any further authorization from Congress — to enact widespread student loan cancellation, even if he wanted to, and that instead he wants Congress to pass the relevant legislation on student loan cancellation. Ultimately, cancellation of student loans will likely be challenged in court so it may take awhile.

-Marianne Kulow, Law and Taxation

STM,

Good question. It isn't clear yet. There are a lot of political hurdles to overcome. And many practical ones. Who, for example, foots the bill? Owners of bonds backed by student loans are not going to accept losses. For borrowers, they may have to pay taxes on the value of the forgiven debt.

Dave Gulley, economics

Role of media question - In your analysis/opinion, do you feel modern media (on both ends) is beholden to advertising dollars, thus perpetuating confirmation bias disinformation? Do you feel there are any accurate news portrayals at all?

Market imperatives of the media can be a source of bias--the need for advertisers is one issue, also the need for customers that can lead to more coverage of sensational stories that capture public interest. However, that is not the same as saying that there are not any accurate news portrayals. Mainstream journalists follow professional journalistic norms that preclude them making up information--bias tends to come more in the form of which stories get highlighted and how they get covered (for example, does the media focus on the horse-race aspect of politics--who's winning, who's losing--and less on explaining complex policy disagreements in a substantive way).

--Juliet Gainsborough, Global Studies

What kind of tax implications should the pharmaceutical/biotechnology industries expect from Biden? R&D credits? Do you see any significant regulatory pricing pressures materializing? Not sure if this is anyone’s real expertise, but is there any expectation for a more stringent, slower FDA?

Hi godlords!

Pharmaceutical giants benefited greatly from the Trump tax cuts, and I'd say that they aren’t in line to benefit as greatly from the Senate Democrats’ plan. One of the biggest changes that I can see impacting pharma/biotech would increase the tax rate for international income derived from intangible assets (patents being the most important for pharma/biotech), which could shift the balance by hundreds of millions in costs for companies.

As far as regulatory pricing pressures, the biggest impacts are proposed to be felt post-market, through inflationary rebates, Part D restructuring, and rolling back some Trump-era attempts to prevent drug makers and middlemen from negotiating rebates. There are significant proposed benefits for R&D, including domestic R&D credits.

The FDA has recently been very good at meeting goals for deciding on drug applications (better than normal, in fact), which I don't foresee being significantly impacted by the aforementioned tax policies.

It's a great question, however, as much of the tax impacts on R&D are based on more of speculation than anything!

-- Chris Skipwith, Natural & Applied Sciences

How will the Fed’s handle the abusive short selling and market manipulation by hedge funds? The GAME needs to STOP!

The 'gamification' of investing through apps like Robinhood has decreased the cost of trading and increased its accessibility, which has only grown in popularity during this pandemic. What's interesting is how these newer trends intersect with a longer and more broadbased and comprehensive coalition and network of actors interested in financial sector reform and regulation, most visibly consistent and vocalized through Sen. Elizabeth Warren. Its early days in the Biden administration, its an interesting space to watch as to whether Warren and allies will be successful in getting enough votes and support (and this is related to wider zeitgeist and whether there is enough popular pressure on Schumer and others) for more SEC oversight and other reforms.

-Pon Souvannaseng, Global Studies Dept.

why didnt the biden administration stay true to their word about sending $2000 checks in january or recurring monthly payments! how is anyone to survive or get back on their feet if they cant get any real financial help?

Freakfarm,

Your question suggests that Biden can unilaterally decide to implement relief measures without collaborating with the legislative and judicial branches, and that is not how the U.S. government works. The Democrats and Republicans are split on a number of critical issues, including the amount of relief checks (qualifying people have received $1400) and minimum wage (Republicans blocked the passage of a hike to $15 that would have helped a *lot* of Americans "survive or get back on their feet." Restoring the economy that suffered so much due to the pandemic, which the Trump administration did little to stem, will help many Americans get back to work.

- Liz Brown, Law and Taxation

Are any economists concerned with the national debt or rate of spending currently taking place by the United States government? Is there a level that is deemed unsafe? And how do bond yields and interest rates play into the risk of the governments debt?

HD,

See my response to a question above.

Dave Gulley, economics

Shouldn't Biden/Harris Admin do a massive solar build-out like Ike built-out the highway system? Why isn't this a top priority?

Good question, radii314. The solar industry certainly thinks the $2T infrastructure proposal should be bolder with respect to solar capacity. But the administration is looking to use ~$100B of that to modernize the grid, which would be a necessary precursor for incorporating all renewables in to the U.S. energy mix (and thus hit the 2030 and 2035 goals for cutting emission by 50% and decarbonizing the electricity sector, respectively). I think the focus on extending the investment and production tax credits is the aim to build capacity without "picking winners" (which in itself is often a loaded statement in energy). In short, I think the administration is trying to go as broad as possible to avoid putting all its eggs into one basket. Certainly the other aims -- like electrification of transportation -- are linked to to the overall goals of expanding renewables.

--Dave Szymanski, Natural and Applied Sciences

It has often been predicted throughout history that major technological changes will lead to mass unemployment due to entire job categories disappearing. These days, that change is "AI". Do you believe that this time the prediction is different or somehow more likely to come true?

Indeed, this dire prediction has been made for centuries. One of the reasons for this prediction is that it's possible to see the jobs lost from technological change but not to see the new industries which are not yet created. For example, if you talked to someone in the 1990s about the job of app developer they would have no idea what you are talking about. Technological change has consistently created new industries and jobs. However, from an individual perspective technological change can be damaging to jobs. While new jobs are created, workers in existing industries may not be able to adapt into those positions. Economies overall gain from technological changes because in the long-run workers can do the new jobs. But for existing workers, especially those who lack easily transferable skills, rapid technological change can be economically damaging.

Michael Quinn, Economics Department

How does increasingly aggressive disinformation campaigns by organizations like Americans For Prosperity and The Heritage Foundation affect your research, if at all?

As a legal scholar, I look carefully at the sources of information I use in my research. Institutions that are funded largely by special interests or that have clear political agendas have to be viewed especially carefully. I expect that is true in most other areas of research as well. It helps to have a general knowledge of which research journals are peer reviewed and independent.

- Liz Brown, Law and Taxation

And some of us directly study disinformation campaigns so this gives us more data points to study :)

-Noah Giansiracusa, Mathematical Sciences

Oooo! How do you use math to study something like political propaganda or disinformation? Do you have a model for differentiating between spin(presenting your preferred idea in the best light) vs disinformation(presenting misleading facts or narrative for a political objective) and do you even draw a distinction between the two?

Great question! There are many ways in which mathematical tools come up in the study of disinformation, but detecting and characterizing the different types as you mention here through data-driven methods is very challenging and problematic--I'd be skeptical of claims of a model that can do what you ask. Here are some examples (just a few, there's plenty more out there) of, shall we say, "safer" uses of mathematical investigations of disinformation---including but investigations and helpful tools:

(1) Natural language processing (NLP, as another user mentioned), especially recent developments like the BERT system (which literally transforms words into vectors, a mathematical object) Google now uses to power its keyword search, is used to try to determine whether different claims are basically rewordings of the same underlying claim (think of this sort of like "clustering" disinformation). This allows fact-checkers to check just one instance of the claim instead of many many slight variants. It also powers algorithms to automatically match up claims with fact-checks. So overall the mathematically-based NLP here is used to make fact-checking much more efficient and allow it to scale up.

(2) Many different groups have studied how (dis)information spreads across social media. One fascinating study published in Science a couple years ago looked at all the claims that have appeared on a handful of fact-checking sites like Snopes then searched Twitter for posts about these claims then studied the networks of retweets and quotes for each (using a lot of mathy tools along the way). What was found is that claims that have been confirmed as false spread faster and deeper than ones that have been confirmed as true (the original paper has various different precise ways of quantifying this).

(3) The original question here mentioned "disinformation campaigns," and to tie back to your question here: the "disinformation" part is unlikely to be addressed in a fully automatic way (i.e. don't hold your breath waiting for an algorithm that can read an article and tell you if it's true or not---basically the best we have so far is one that can look at an article and try to identify factual claims in it then try to search fact-checking sites for closely related claims to see if each one has been rated true or false, but at the end of the day it is still humans not computers providing those ratings)---but the "campaigns" part has been much more successful addressed using mathematical approaches. What I mean is that coordinated social media campaigns (both "bots" meaning automated accounts and human run ones) tend to exhibit different network behavior dynamics than organic social media behavior and this can be quantified mathematically and used for detection purposes. For instance, one of the main ingredients in Facebook's system for detecting fake accounts is to take the network of friends of a user and look at things like the distribution of ages and even the detailed network structure itself---it turns out it's easy to make a fake Facebook account but it's very hard to make one with a network of friends that looks "realistic" from these mathematical perspectives.

-Noah Giansiracusa, Mathematical Sciences

In your opinion from a legal standpoint, do you think that vaccine passports can be viably implemented or will it be too complex and intrusive to do?

Additionally on a financial front, what impacts do you think younger generations will face because of the large spending initiatives (COVID relief/Infrastructure plan). Can we realistically expect higher tax brackets to cover this spending without decreasing/offsetting their taxable income?

I think vaccine passports can be viably implemented, in much the same way that regular passports and drivers licenses are implemented. Yes, it is complex, but the only viable way to make sure that companies are acting reasonably - that is, not negligently - is for them to have reliable information about who is and who is not vaccinated. As for privacy, there is no absolute right of privacy under US law - it's always a balancing act against other interests. And there is a very, very strong public interest in determining who is vaccinated.

As for your financial question, that's not my area, but in general, investing in infrastructure usually decreases expenses in the long run, despite the big initial expense. It's a little bit like climate change in that regard: a critical investment. Having a sound infrastructure makes for a stronger economy for many years to come because it enables people, goods and information to move safely and efficiently. We can't afford not to fix some of these truly dire problems.

-Liz Brown, Law and Taxation.

Why isn't the right to privacy fully protected by the 4th and 9th amendments?

xPlasma, this is a really important question. Privacy isn't mentioned anywhere in the Constitution, including those amendments. Every right protected in the Bill of Rights is a qualified right, including privacy. That means that it may have to give a little if there is some other really important competing concern, like public safety. The 4th Amendment, for example, protects against "unreasonable" searches and seizures, not any search or seizure. Even the rights of free speech and freedom of religion are qualified by balancing them against other important government interests. The question of how much privacy people are entitled to has also been a big issue in determining whether some people could get access to contraceptives and in the area of reproductive rights in general.

Liz Brown, Law and Taxation

In addition to the posted reply from my colleague, I would point out that the laws governing the use of vaccine passports will vary depending on the context and the availability of vaccines. In addition, in the face of medical and religious bases for vaccine refusal, there will likely be arenas where vaccine passport requirements might violate some individual rights. This does not mean that we will not have vaccine passports, just that there will likely be exceptions to their widespread use.

-Marianne Kulow, Law & Taxation

How do you feel about the Biden administration continuing construction on the border wall when they previously condemned it?

There are always some sorts of construction projects on the border fences/wall. This is necessary for maintenance and replacement. This has been occurring under administrations of both parties. The current administration is doing this type of work on the border wall using previously allocated funds. This is different from expanding the overall length of the border wall. It is still unclear whether that will eventually occur or not, although it seems unlikely right now.

Michael Quinn, Economics Department

We are not here to share personal opinions, but maybe you would like to rephrase your question?

I consider myself a independent voter, and am content with Biden's presidency. (Let me open up with that please)

Do you all think that the infrastructure plan that President Biden has set forth will be a net positive for the economy? History has shown us that updated and maintained infrastructure is always a net positive. Are there any projections or data showing how this will impact our economy in a positive (or, hopefully not, negatively)? Surely, 2 trillion is no small sum

In the infrastructure plan, a lot of the spending isn't on traditional infrastructure items (aid for long term care for the elderly, for example). Still, things like expanding broadband internet access may have the highest returns. Overall, infrastructure projects have a very mixed bag in terms of impacting economic growth and development. In the US, the interstate highway program had a very high return. Subsequent projects--adding lanes, etc-- have lower returns. The $2 trillion in spending will have direct impacts on aggregate demand and will likely increase income, spending and employment, but the gain to productivity and longer run growth might be pretty limited.

Dave Gulley, economics

Should Biden be doing more to combat climate change?

While "more" is arguable based on what needs to happen with international targets, the Biden Administration has integrated climate change and carbon emissions considerations into a far larger portfolio of federal activities than previous administrations, at least in planning -- including the aim of decarboninzing the electric power sector by 2035 and overall cutting carbon emissions in half by 2030.

--Dave Szymanski, Natural and Applied Sciences Department

Has increasing taxes or regulation ever been proven to reduce offshoring white collar American jobs?

This is industry specific and I am not sure if you are asking about US taxes/regulations or foreign ones. An example of the latter is in IT. This article ( https://swer.wtamu.edu/sites/default/files/Data/73-94-69-258-1-PB.pdf )details that impact and states, in part:

"During the last decade, globalization and deregulation of service industries in both developed and developing countries contributed to the increase trade in services. Deregulation in the developing countries in service sectors such as transportation, telecommunication, and financial services has increased access to foreign service providers. By doing this, developing countries have adopted new technologies at a faster rate and become the destination for most of the outsourcing of jobs for the U.S. and other developed countries."

-Marianne Kulow, Law & Taxation

I see differing data on whether the the upper income levels have increased over the past few decades much more than the middle and lower incomes. Do you believe the wealth disparity has increased, decreased or stayed the same?

There have been larger gains in the upper income levels than in the middle and lower income levels. We use the Gini coefficient to measure income inequality. 0 represents absolute equality and 1 represents absolute inequality. So higher numbers represent more inequality. From 1990-2019, the United States Gini coefficient increased from .43 to .48.

There has actually been a larger increase in the disparities of wealth (rather than income). Wealth for the upper income levels has increased considerably more than for the middle and lower income levels.

Michael Quinn, Economics Department

Prof Jacob Hacker (Yale) & Paul Pierson (Cal Berkeley) have published on the 0.01% quite a bit. I.e., between the 'Haves', 'Have Notes', and 'Have it Alls'. This Bill Moyers segment, particularly around the 10min mark onwards is what came to mind in reading your question.

-Pon Souvannaseng, Global Studies Dept.

Can you step through the likely distributional impacts in the stimulus package -- Medicaid expansion, child credit, &c. -- in moving the dial on income inequality? A lot, a little, it depends?

The American Recovery Act includes a number of policies that are expected to have a significant impact on poverty--reducing it significantly. As you mention in your question, the expansion of the child credit in particular (and making it refundable so that it benefits those who pay little in the way of income tax) is likely to have a major impact on the percentage of children living in poverty. This expansion is temporary, however. So, in terms of lasting impacts the question is really whether a provision like this will be extended and made permanent. Certainly, proponents hope that once it's in place, it will be easier to keep it--political dynamics are different if it's something that already exists.

--Juliet Gainsborough, Global Studies

How much of the Biden Administration's $2trillion infrustructure and jobs bill do you think they will be able to pass?

The key question is what will happen in the Senate. Because of the filibuster, most legislation requires 60 votes to pass in the Senate and that would mean that the infrastructure bill would require substantial support from Republican senators. This is not likely to happen, at least for large sections of the bill. If the Democrats were to get rid of the filibuster (or to change the way it works to make it harder to use) that would increase the prospects for the legislation. In the last day or so, however, the parliamentarian for the Senate has ruled that the reconciliation process can be used more than once in the fiscal year, opening up the possibility that the Democrats could use reconciliation to enact infrastructure legislation. Reconciliation only requires a simple majority, making it feasible to pass legislation without Republican votes.

---Juliet Gainsborough, Global Studies

r/NYC is having a debate on tax flight as new mayoral candidates talk about raising income taxes on high-earners. There was data from 2011 around NJ that showed that "Tax Flight is a Myth". But people are saying that the data is too old because of ...Zoom!

Any thoughts on this as it relates to cities, states, or maybe even the country as a whole?

OMC,

See my answer to a similar question below. Higher earners are more likely now to be able to work from more or less anywhere. Other factors equal, trying to raise taxes on something that's mobile (a person, financial capital, etc), isn't likely to raise a lot of revenue. Not that many cities are attractive enough to have relatively high tax rates--it's easy to live (or work, maybe) out of the city.

Dave Gulley, economics

How much influence does the President have on the economy? Sometimes when I see people debating about how the economy during a president's term, I have to wonder just how much they are actually able to directly affect it. Would you be willing to share your thoughts on this?

A lot of the short-run management of the economy is done by the Federal Reserve's monetary policy. In times of crisis, you can see the President have a short-run impact on the economy through big stimulus bills. But those are usually only in times of recessions.

Presidents can have a long-run impact on the economy, however. Presidents can change tax rates and regulations. They can sign new trade treaties or make investments in infrastructure, research/development and/or education. All of these actions have an impact on the economy but usually over the course of many years, they are not immediate. Presidents often take actions which impact future administrations. For example, deregulation started under the Carter administration in the late 1970s and then had economic benefits in the 1980s.

Michael Quinn, Economics Department

What is your assessment of the danger of this moment to American democracy and what can realistically be done about it?

Villamanin24680,

We probably all have views on that. Since you are asking about democracy, my response as a law person is that the most important things to do in the short term are to protect voting rights for all and to oppose laws like Georgia's that tend to suppress voting by lower-income people and BIPOCS. More voters = stronger democracy. Another critical issue is supporting people so that they can make educated, informed decisions about the policies they want to support when they vote. People who feel hungry, threatened, anxious and unsupported are going to find it harder to think beyond their very real short term needs (you could think of Maslow's Hierarchy of Needs here). It is also critically important to build community and fight the kinds of intolerance that foster division. Finally, media education - helping people learn to sort out facts from fiction - is increasingly important when there is a virtually infinite range of news sources people can choose from. Again, discerning the truth helps people make better voting decisions.

Liz Brown, Law and Taxation

Hi.

I'm wondering what you think will happen with healthcare. Biden has proposed a public option. I think most of us would like to see a single-payer system. What do you fellas think?

Hi DualitySquared!

This is a great topic of discussion that has come up in our healthcare systems course very often! While I will stray away from providing an opinion about what I would like to see, I'll focus on the ramifications of the proposal of a public option.

One approach to your question is to consider the potential expansiveness of the public option. A more expansive public option would likely cost the federal government but protect more people, especially those losing employer insurance during the pandemic. A more targeted public option would likely focus on insurer competition in less competitive markets and cost the federal government less, although the downfall is that more people would likely remain uninsured.

The big thing that we tend to stress when thinking about the systems framework is that a public option could also face some distinct challenges. Slowing spending may be difficult without cuts to benefits or prices, which could threaten access to care. We have to consider this especially for lower-margin practices, such as those in rural areas and underserved communities. Lower prices may cause physicians and hospitals to be more inclined to accept a patient with private insurance who is on the margin than one with the public option (although I will say that this is mostly speculation, and not supported well by research). Ultimately, the attractiveness and sustainability of a public option will depend on how trade-offs between access to care, equity, and spending are navigated.

-- Chris Skipwith, Natural & Applied Sciences

The challenge for any changes to healthcare--from adding a public option or moving to a single-payer system--is getting the policy through Congress. Given the Democrat's slim majority in the Senate and the strong opposition from Republicans to any of these changes, it's hard to see how either becomes law. Adding the public option is the easier sell politically because it keeps the existing system of private insurance but just adds this additional choice to the mix. However, both supporters and opponents see this as a step on the way to single-payer (the idea being that the public option will become increasingly popular) and therefore political hurdles to adding a public option are also significant. Of course, if the filibuster goes away or is weakened, then the chances of adding a public option are much higher. It's also worth noting that the public option was removed from the original Affordable Care Act Legislation as a way to keep conservative Democrats on board with the legislation--so in 2010 there wasn't even agreement among Democrats about this.

---Juliet Gainsborough, Global Studies

What do you think about the legal theory of "non-delegation"? I know the GOP has been hoping this could seriously change the role of government. I thought this was fringe stuff, but then I heard a state supreme court cited the doctrine in the recent court cases around the election, which scared me!

Onemanclinic,

I'm not sure which state court case you are referring to, but there are two ways to answer your question about changing the role of government. The first is that the Constitution determines the basic roles of federal and state government, including checks and balances on the roles of the president and his cabinet vs. Congress vs. the court system. There is not a whole lot that the GOP or anyone else can do about that. Whether an administration takes an expansive or narrow view of the powers given to it by the Constitution - whether it is good to have "big government" or not - is a political question. The pendulum seems to be moving more toward big government, especially with the ARA, which may upset people who think that capitalism works just fine and people don't need help from the government, a viewpoint some associate with the GOP.

Liz Brown, Law and Taxation

Law and Taxation vs. Taxation

Is this tax-heavy inter-departmental set up you guys have got going on mainly collaborative or competitive?

Entirely collaborative! Law and Taxation are the two disciplines in our particular department. There are important syntheses among law and many other disciplines, including all of the ones represented in this AMA.

- Liz Brown, Law and Taxation

From the inside the long term care (Nursing Home) sector appears to be nearing a collapse. Prior to the pandemic Medicare policies have left SNFs cutting costs to keep up with smaller reimbursement rates. The pandemic created a large financial burden on these companies and now face recovery. What is the likely course the Biden administration will take to support the long term care market?

Gamedoc,

The sector is indeed having some serious problems. It's not clear yet what the new admin will do. The new infrastructure bill subsidizes home care, and not SNFs. Note that SNFs have been bought up by private equity outfits who apparently see opportunities. Granted, the number of elderly is rising dramatically, but with lower medicaid and medicare reimbursement rates, revenue is still crimped.

Dave Gulley, economics

Should wage gains match productivity gains as they did in the post-WWII era when the middle class was formed and grew?

As you no doubt no from 1979 to today that link was willfully fractured by Republican and corporatist policies and thus real earnings for the bottom 80% have been negative or zero.

What would the minimum wage be today if wage gains had kept pace with productivity increases, I've heard $24.32?

There is still a significant relationship between education, productivity and wages on the individual and state level in the United States. Workers with higher levels of education have higher levels of productivity and higher wages (on average). This is also true at the state level. States with higher average levels of education have higher levels of productivity and higher median wages in the state.

Several things have occurred since the 1970s on a national level in the United States affecting wages. Productivity gains overall in the United States started to slow dramatically in the early 1970s from what they had been 1946-1972. Also, changes in technology and the movement away from a manufacturing based economy both combined to increase the returns to education. Education has become a more significant barrier to an individual's wage growth than in the pre-1980 period.

Increases in the minimum wage have different effects by industry. In jobs that can be more easily automated, dramatic increases in the minimum wage tend to lower employment levels. But for jobs that cannot be easily automated and for which demand can support higher prices (or firms can absorb the costs), increasing the minimum wage can benefit those workers. This is why studies find conflicting results on the impact of the minimum wage on jobs. Different industries have different results.

Michael Quinn, Economics Department

Radii314,

The minimum wage is set by a federal law called the Fair Labor Standards Act, and it sets a floor for most hourly workers. States and cities can raise the minimum wage locally; for example, the minimum wage in some cities is $15 or higher. In many Southeastern and Midwest states, however, there is only the federal minimum. There are few communities where someone working 40 hours a week at that minimum wage will not be living below the poverty line, especially with a family. There is a lot of political will behind keeping wages low, and this is often fueled by corporate interests. Especially after the Supreme Court's decision in Citizens United, some politicians are more influenced by those interests than by the demands of their working-class constituents - and many voters are influenced by corporate-funded messaging that can be deeply misleading. One way to affect that balance is to improve voting access, voter education, and voter activism.

Liz Brown, Law and Taxation.

Current housing prices have risen dramatically in the past year as people have embracing the philosophy of "social distancing" from their neighbors and opting for suburbia vs city living. With the vaccination rollout appearing to be in its exponential phase do we expect to housing bubble to burst or continue rising? How will the trend of many employers embracing a hybrid working model (part on-site/part remote) contribute to these trends.

It is a very interesting time for the housing market. Both remote work and the closing of restaurants/other activities in urban areas has been shifting demand into the suburbs. As workplaces reopen and people are able to take advantage of amenities in the cities, it is expected that some of the demand for the suburbs will fall. At the same time as the rise in demand, there has been a shortage of supply in the suburban market. Some people are hesitant to put their house on the market due to the pandemic and construction takes time to adjust to increases in demand. If offices reopen to a majority of time in the office (60-80% in office) then we can expect a substantial adjustment in housing prices. If a majority of remote workers stay remote then there will be much less of an adjustment in prices. Current surveys suggest that most workers do not want to stay fully remote. I expect to see an adjustment downwards in the suburban markets which have seen the most rapid increases over the last year.

Michael Quinn, Economics Department

I know this isn't exactly a topic of question you said you would answer, but what is the setup for all of you and responding to this AMA? Is it everyone for themselves answering questions first come, first serve? Or do you have someone pre-screening questions and directing them to the best expert to answer?

We're all sitting in a collaboration meeting room discussing the questions and who should answer which. And everyone is logged into the site and answering questions directly.
-- Jason Wells (Academic Technology/The supercomputer & Reddit guy at Bentley)

Some of these questions could fall into one or more of our areas of expertise, so we are talking with each other about who is best situated to answer each one.

- Liz Brown, Law and Taxation

What are your thoughts on the growing US national debt?

Piet^212,

Please see my response to another poster.

Dave Gulley, economics.

With more people and businesses buying into bitcoin and other cryptocurrencies, how do you think these will be regulated in the coming years by the US government? Will it be different from how other companies are handling it (such as India’s proposed all out bans)?

Right now, it's regulated as a security. The IRS for example treats gains in BTC like gains in a stock: if you sell it for more than you paid, you pay a tax on the difference. That makes it hard for it to be used for ordinary transactions, like buying a cup of coffee. It's unlikely it'll be banned in the US. Heck, the Fed may at some point introduce its own digital central bank currency. Other countries are banning it because BTC is helpful to avoid capital controls and taxes that other governments might impose.

Dave Gulley, economics

For another question about inflationary spending, I thought the Fed had dropped interest rates to close to zero in order to promote business activity, which I also thought was inflationary. Is it reasonable to say we have somewhat propped up the current inflation level, and we might actually want to pursue non-Fed inflationary policies to allow interest rates to rise again?

Osthato,

The Fed's expansionary policies are intended to be inflationary--but not too inflationary. In general, they're intended to increase aggregate demand. That will increase inflation, but also GDP and employment if the economy is below it's normal sustainable capacity.

Note that the costs of deflation (lower prices, not just lower inflation) is pretty high. This can happen with very low demand (think the Great Depression).

If interest rates rise, that can be a sign of underlying economic strength. The really low interest rates (on risk free assets) was a sign of economic weakness. That rates have risen a bit recently is a sign of economic strength.

Dave Gulley, economics.

I remember a while back reading about how taxes across income tiers are all relatively equal, when you consider all the different types of taxes. That is to say, progressive income taxes, but also regressive sales taxes and other types of tax that we don't consider when having these discussions.

Have you done any recent analysis on this or could you point me to a good source on the subject?

OMC,

​

Piketty would have us think that the tax system at the US level is now less progressive than days gone by:

https://eml.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

Looking at just taxes at the national level paints a bit of a different picture:

http://www.davidsplinter.com/Splinter-TaxProgressivity-NTJ.pdf

If progressivity is defined by tax paid relative to income, it's really hard to sort out given all of the various types of taxes. If progressivity is defined relative to wealth, the overall US system is likely fairly regresssive.

Dave Gulley, economics

Can you point to any research looking at taxation elasticity for wealthy individuals or corporations? It seems obvious that both groups a move can be obviously a net win (e.g. Dubai), but I never see it addressed when talking about rate hikes

Sroyston,

See below for just a couple of examples. In general, the results are all over the map. It depends on the types of taxes being changed, on whom the taxes actually fall, and the type of behavior that is being examined. Wealthy people might move in response to higher taxes, or delay income, for example. In general, tax increases, especially on higher income people, don't generate as much tax revenue as expected because the wealthy are expert at (or can hire experts) to minimize the impact of the tax hike. This is not a criticism of either the taxing authority or the wealthy.

Dave Gulley, economics

https://www.aeaweb.org/conference/2013/retrieve.php?pdfid=418

https://inequality.stanford.edu/sites/default/files/media/_media/pdf/pathways/summer_2014/Pathways_Summer_2014_YoungVarner.pdf

Qualitative question here: Should the US focus on increasing its economic position rather than attempting to regulate China's humanitarian violations through unfavorable tariffs/trade wars, with the underlying logic that moral values can only be imposed from a position of economic strength?

If higher education becomes free/subsidized, is it likely to pay for itself in the form of a more educated work force?

What factors go into the decision regarding a wealth tax/what is the best way to tackle wealth inequality as it related to the lower and middle classes ability to participate in the market and wealth/business creation?

On your higher education question, some have certainly argued that a more educated work force would ultimately pay for fee/subsidized higher education. Whether this would actually occur is currently only a matter of speculation.

-Marianne Kulow, Law & Taxation

[removed]

I cannot speak to how the Biden administration "feels" about anything, nor can I (or anyone) reliably predict long-term psychological effects of transgender athletes. I can point out that very, very few of the 3,000 male high school students to which you refer are trans (and that not all male high school students run faster than all female high school students). I can also point out that it is increasingly common for cisgender female athletes to join male teams and vice versa.

I can also address the relevant legal framework for inclusion/exclusion of high school trans athletes (professional and Olympic athletes are governed by different laws) from gendered sports. Title IX sets out a framework for when one "sex" can be excluded from a school team. The legal issue at the moment is how to define a student's "sex." Should it be defined as the sex one is assigned at birth or the gender with which one currently identifies? A recent Supreme Court interpreting a different federal statute (Title VII, dealing with the workplace) indicates that it might interpret the term broadly but it is right now an open question. The other open legal issue, which gets at the heart of your question about unfair competition, is whether, regardless of gender identity, schools can use a hormone level rule to decide who gets to play on which gendered teams.

-Marianne Kulow, Law & Taxation

What steps has the administration taken in order to stop mass shootings in USA? Here in Europe every other morning we here about a new one happening.

Biden is expected to announce an executive order addressing guns tomorrow. As with other policies though, federal legislation needs to be able to pass through Congress. A lot of action around gun control is also happening at the state level--leading to lots of variation. Some states are enacting more gun control measures in response to acts of violence; other states are loosening gun restrictions--making it easier to open carry weapons for example. Another issue is conflict between states and local governments, with some conservative states restricting the ability of local governments that want to enact gun control measures from doing so. Finally, the courts are important--conservative judges can strike down gun legislation, even when it makes it through the political process, depending on their interpretation of the second amendment.

---Juliet Gainsborough, Global Studies

How do you think the vaccine rollout and our handling of covid in general would be doing right now had trump won again?

Had Trump won, do you think that we'd have passed the point of no return in the next 4 years in the right's push toward legit fascism and holding power by any means?

It's hard to answer this without veering into the kind of personal opinion we are not here to give, but in response to your first question, the Biden administration has a completely different attitude towards and approach to the pandemic, including accepting science. The collaborations with drug manufacturers, state governments, private companies, and public agencies to roll out vaccinations has been unprecedented. Unfortunately, the President can't change state laws, so states that remove mask mandates tend to undo some of that progress. I can't think of any scenario in which we would not be in a far, far worse position vis a vis Covid had Trump won a second term.

Liz Brown, Law and Taxation

What's his dog's name?

Major.

Liz Brown, Law and Taxation