What will be the next economic reform gimmick policy to catch on in the U.S.?

[Mr.Phips]

I don't know anybody who thinks VAT is left-of-center except "socialism is when the government levies taxes; the more taxes the government levies, the socialister it is" mouth-breathers (which, to be fair, many Americans are). Taxes on consumption almost inevitably have a regressive effect.

Ah, this takes me back to my early days of following politics, when people called Stephen Harper's VAT cut regressive... and then my provincial NDP raised it. Good times.

I think it's basically a sure thing that the next Republican trifecta will do a VAT and lower income tax rates further to offset it. 

That would be politically very difficult. 

Trump and House Republicans already flirted with it, but the senate majority was too narrow and too traditional to consider it.  That won't be the case for the next Republican president.

The Democratic ads write themselves for this.  They can easily tar every Republican with voting to raise taxes on everything people buy.

[Benjamin Frank]

Not anytime soon. Inflation remains low and almost unaffected by this year.

The proponents of zero inflation have traditionally said that low rates of inflation are the second best option, but there are some very authoritative economists who prefer zero inflation.

Zero inflation is a silly idea.  In addition to whatever costs there might be of trying to achieve it i.e there might be increasing marginal costs of going from 1% inflation to 0.5% to 0%, not only is there no benefit to it, there are practical reasons for a low inflation rate.

Given the stickiness of wages, a low inflation rate allows a firm in some trouble a few years to sort out problems.  With an inflation rate of 0%, this firm would need to lower wages or lay off staff likely causing dissent among employees, with an inflation rate of 2% per annum, although it is the 'real' same thing, simply not increasing wages doesn't have the same negative psychological impact for two or three years before many employees start feeling 'really' poorer.

Of course, this may depend on what components make up the inflation increases.  If it's rent, food or energy, the decrease in wages in real terms might be noticed right away.  It still might not have the same negative psychological impact as seeing a $ decrease in wages though.

[Kingpoleon]

Then they are ivory tower idiots of the sort who thought bimetalism could work.

It has been repeatedly shown that it impossible to fix any economic value at a constant, so it is impossible to achieve sustained zero inflation. Moreover, any attempt to achieve such a thing is likely to bring about deflation which is far more damaging to economies than modest inflation. Yes, we do need to guard against hyperinflation, but deflation is at least as poisonous. Whatever the theoretical benefits of zero inflation might be, they are unachievable in reality.

Essentially zero inflation could become reality through a series of Fed targets. The GDP’s immediate decline would be 6%. But an annual permanent dividend of 1% would result, with a present GDP value of at least thirty percent.

See:
Martin Feldstein, Capital Income Taxes and the Benefits of Price Stability
Narayana Kocherlakota and Harold Cole, Zero Nominal Interest Rates: Why They’re Good and How To Get Them

[Benjamin Frank]

Then they are ivory tower idiots of the sort who thought bimetalism could work.

It has been repeatedly shown that it impossible to fix any economic value at a constant, so it is impossible to achieve sustained zero inflation. Moreover, any attempt to achieve such a thing is likely to bring about deflation which is far more damaging to economies than modest inflation. Yes, we do need to guard against hyperinflation, but deflation is at least as poisonous. Whatever the theoretical benefits of zero inflation might be, they are unachievable in reality.

Essentially zero inflation could become reality through a series of Fed targets. The GDP’s immediate decline would be 6%. But an annual permanent dividend of 1% would result, with a present GDP value of at least thirty percent.

See:
Martin Feldstein, Capital Income Taxes and the Benefits of Price Stability
Narayana Kocherlakota and Harold Cole, Zero Nominal Interest Rates: Why They’re Good and How To Get Them

What are (some of) the assumptions behind this modeling?

[True Federalist (진정한 연방 주의자)]

Then they are ivory tower idiots of the sort who thought bimetalism could work.

It has been repeatedly shown that it impossible to fix any economic value at a constant, so it is impossible to achieve sustained zero inflation. Moreover, any attempt to achieve such a thing is likely to bring about deflation which is far more damaging to economies than modest inflation. Yes, we do need to guard against hyperinflation, but deflation is at least as poisonous. Whatever the theoretical benefits of zero inflation might be, they are unachievable in reality.

Essentially zero inflation could become reality through a series of Fed targets. The GDP’s immediate decline would be 6%. But an annual permanent dividend of 1% would result, with a present GDP value of at least thirty percent.

See:
Martin Feldstein, Capital Income Taxes and the Benefits of Price Stability
Narayana Kocherlakota and Harold Cole, Zero Nominal Interest Rates: Why They’re Good and How To Get Them

As I said, "ivory tower idiots".  We have repeatedly shown we have neither the information nor the skill needed to achieve stable zero inflation outside theoretical simulations. Feldstein's paper assumes that stable zero inflation is achievable and then goes on to present econobabble purporting to show it would be desirable. Kocherlakota and Cole's paper similarly avoids dealing with the messy real world and operates within a fantasy abstract economic model.

[True Federalist (진정한 연방 주의자)]

Then they are ivory tower idiots of the sort who thought bimetalism could work.

It has been repeatedly shown that it impossible to fix any economic value at a constant, so it is impossible to achieve sustained zero inflation. Moreover, any attempt to achieve such a thing is likely to bring about deflation which is far more damaging to economies than modest inflation. Yes, we do need to guard against hyperinflation, but deflation is at least as poisonous. Whatever the theoretical benefits of zero inflation might be, they are unachievable in reality.

Essentially zero inflation could become reality through a series of Fed targets. The GDP’s immediate decline would be 6%. But an annual permanent dividend of 1% would result, with a present GDP value of at least thirty percent.

See:
Martin Feldstein, Capital Income Taxes and the Benefits of Price Stability
Narayana Kocherlakota and Harold Cole, Zero Nominal Interest Rates: Why They’re Good and How To Get Them

What are (some of) the assumptions behind this modeling?

You can find freely available PDFs of both papers on regional Federal Reserve Bank websites by googling the titles. I didn't bother looking in detail at the econobabble in either paper because they both presume policy makers would have perfect information about the macroeconomy and don't even bother to look at what happens under typical measurement errors for the current state of the economy. Granted, that would heavily complicate things, even assuming we'd be able to accurately judge what typical errors are and accurately determine the results of making policy decisions with imperfect information.

Problem is, historical results don't jive with the assumptions of these brief papers, effectively making them GIGO, even if the econobabble that tries to predict what happens if their assumptions are true is otherwise without error.

[Benjamin Frank]

Then they are ivory tower idiots of the sort who thought bimetalism could work.

It has been repeatedly shown that it impossible to fix any economic value at a constant, so it is impossible to achieve sustained zero inflation. Moreover, any attempt to achieve such a thing is likely to bring about deflation which is far more damaging to economies than modest inflation. Yes, we do need to guard against hyperinflation, but deflation is at least as poisonous. Whatever the theoretical benefits of zero inflation might be, they are unachievable in reality.

Essentially zero inflation could become reality through a series of Fed targets. The GDP’s immediate decline would be 6%. But an annual permanent dividend of 1% would result, with a present GDP value of at least thirty percent.

See:
Martin Feldstein, Capital Income Taxes and the Benefits of Price Stability
Narayana Kocherlakota and Harold Cole, Zero Nominal Interest Rates: Why They’re Good and How To Get Them

What are (some of) the assumptions behind this modeling?

You can find freely available PDFs of both papers on regional Federal Reserve Bank websites by googling the titles. I didn't bother looking in detail at the econobabble in either paper because they both presume policy makers would have perfect information about the macroeconomy and don't even bother to look at what happens under typical measurement errors for the current state of the economy. Granted, that would heavily complicate things, even assuming we'd be able to accurately judge what typical errors are and accurately determine the results of making policy decisions with imperfect information.

Problem is, historical results don't jive with the assumptions of these brief papers, effectively making them GIGO, even if the econobabble that tries to predict what happens if their assumptions are true is otherwise without error.

Yes, I agree.  I was just trying to point out that all economic models, especially those based on mathematical calculations predicting the future, have built into them myriad assumptions.  So, if these studies show a 1% per year increase in GDP (or whatever the number was) where did the numbers come from that formulated this calculation.  What assumptions were behind the numbers?

I don't dismiss all economic forecasting, it depends on how far out they go and on how speculative they are, but with something this hypothetical, I think the calculations of future benefit need to be regarded with a great deal of skepticism.  

That is, of course, if it were even possible outside of academic models.  As you have correctly pointed out here, the Federal Reserve can not mandate zero inflation as if by waving a magic wand. They can have a zero inflation target, but from what the modeling posted here claims, it seems that it requires actual guaranteed zero inflation and not a zero percent target to achieve the hypothetical benefit.

[Kingpoleon]

Yes, I agree.  I was just trying to point out that all economic models, especially those based on mathematical calculations predicting the future, have built into them myriad assumptions.  So, if these studies show a 1% per year increase in GDP (or whatever the number was) where did the numbers come from that formulated this calculation.  What assumptions were behind the numbers?

I don't dismiss all economic forecasting, it depends on how far out they go and on how speculative they are, but with something this hypothetical, I think the calculations of future benefit need to be regarded with a great deal of skepticism.  

That is, of course, if it were even possible outside of academic models.  As you have correctly pointed out here, the Federal Reserve can not mandate zero inflation as if by waving a magic wand. They can have a zero inflation target, but from what the modeling posted here claims, it seems that it requires actual guaranteed zero inflation and not a zero percent target to achieve the hypothetical benefit.

Consistent inflation below 1% (near zero inflation) would presumably approach the benefits of actual zero inflation. Price stability is supposed to balance out the risk analysis of savings and investments. At .7% inflation, prices would double every ~99.5 years. It is also supposed to achieve that goal of wages outpacing prices even quicker than previously, because wages in a climate of stable prices can be increased almost solely through increasing a company’s efficiency. This would operate best if stock buybacks were restricted, forcing companies to use any increased funds in dividends, reinvestment, lower prices, higher wages, or some combination thereof.

[True Federalist (진정한 연방 주의자)]

Consistent inflation below 1% (near zero inflation) would presumably approach the benefits of actual zero inflation.

Except it can't be realistically be achieved.

Between disasters, both natural and man-made, plus new technologies, the discovery and depletion of natural resources, and other ever-changing economic factors, we'll never have an economy sufficiently static that inflation could be tuned that exactly. Maybe a medieval economy could do that, assuming no pestilence or barbarian hordes plague the land, but such bucolic economies don't have a track record of providing for the people.

[Motorcity]

Banning self driving cars and trucks

[True Federalist (진정한 연방 주의자)]

Banning self driving cars and trucks

Let's compromise and ban self-serve refuelling for self-driving cars, but only in New Jersey.

[The Houstonian]

Trying to build a classification for these ideas is a fool's errand, but I'm gonna try.

Neat little proposals that Europeans/East Asians/most of the developed world has thought of but is just completely alien to Americans: Short work/technical unemployment/Wage Guarantee Fund, paid sick leave*, subsidized childcare, the Biden buy American public works project(??)

Revolutionary for Americans but existent in other countries: Medicare For All (single-payer or other form of UHC), Federal Jobs Guarantee, Land Value Tax (in its full Georgist form, either as a single tax or in countries like Singapore or Hong Kong** where land can only be leased from the government)

Sweeping ways of thinking: MMT, Universal Basic Income (both in its libertarian negative tax conception or in a sci-fi post-scarcity fully automated luxury space communist forms), the Green New Deal, One Billion Americans

* wait no, that's just a common policy, Samof94 must've been trolling

** not 100% clear if that's how it actually works in those two examples

The Single Tax/Land Value Tax is hardly new though it's deservedly fringe, as its inventor, Henry George, lived from 1839-1897.

I agree with others here on universal health care, it's hardly a gimmick.

It is not fringe and does not deserve to be fringe. Singapore, Hong Kong, Taiwan, Pennsylvania, and other jurisdictions have taxes on land. Perhaps it would be more prevalent if wealthy land owners and speculators didn't oppose it.

[Benjamin Frank]

Trying to build a classification for these ideas is a fool's errand, but I'm gonna try.

Neat little proposals that Europeans/East Asians/most of the developed world has thought of but is just completely alien to Americans: Short work/technical unemployment/Wage Guarantee Fund, paid sick leave*, subsidized childcare, the Biden buy American public works project(??)

Revolutionary for Americans but existent in other countries: Medicare For All (single-payer or other form of UHC), Federal Jobs Guarantee, Land Value Tax (in its full Georgist form, either as a single tax or in countries like Singapore or Hong Kong** where land can only be leased from the government)

Sweeping ways of thinking: MMT, Universal Basic Income (both in its libertarian negative tax conception or in a sci-fi post-scarcity fully automated luxury space communist forms), the Green New Deal, One Billion Americans

* wait no, that's just a common policy, Samof94 must've been trolling

** not 100% clear if that's how it actually works in those two examples

The Single Tax/Land Value Tax is hardly new though it's deservedly fringe, as its inventor, Henry George, lived from 1839-1897.

I agree with others here on universal health care, it's hardly a gimmick.

It is not fringe and does not deserve to be fringe. Singapore, Hong Kong, Taiwan, Pennsylvania, and other jurisdictions have taxes on land. Perhaps it would be more prevalent if wealthy land owners and speculators didn't oppose it.

??

There are property taxes all over.  The single tax is not just a land tax, it's meant to be the only tax, hence the name.  Property taxes make sense, but not as the sole tax.

[The Houstonian]

Trying to build a classification for these ideas is a fool's errand, but I'm gonna try.

Neat little proposals that Europeans/East Asians/most of the developed world has thought of but is just completely alien to Americans: Short work/technical unemployment/Wage Guarantee Fund, paid sick leave*, subsidized childcare, the Biden buy American public works project(??)

Revolutionary for Americans but existent in other countries: Medicare For All (single-payer or other form of UHC), Federal Jobs Guarantee, Land Value Tax (in its full Georgist form, either as a single tax or in countries like Singapore or Hong Kong** where land can only be leased from the government)

Sweeping ways of thinking: MMT, Universal Basic Income (both in its libertarian negative tax conception or in a sci-fi post-scarcity fully automated luxury space communist forms), the Green New Deal, One Billion Americans

* wait no, that's just a common policy, Samof94 must've been trolling

** not 100% clear if that's how it actually works in those two examples

The Single Tax/Land Value Tax is hardly new though it's deservedly fringe, as its inventor, Henry George, lived from 1839-1897.

I agree with others here on universal health care, it's hardly a gimmick.

It is not fringe and does not deserve to be fringe. Singapore, Hong Kong, Taiwan, Pennsylvania, and other jurisdictions have taxes on land. Perhaps it would be more prevalent if wealthy land owners and speculators didn't oppose it.

??

There are property taxes all over.  The single tax is not just a land tax, it's meant to be the only tax, hence the name.  Property taxes make sense, but not as the sole tax.

The single tax would take the place of all other taxes according to the principle that all taxes come out of rent. If taxes on profit were eliminated, then they would be absorbed by rent.