Miscellaneous bitter thoughts

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1. Many people believe that it is quite moral not to pay rent. Hardly anyone believes that it is moral not to pay taxes. I think that the intuition is that taxes are fair, but rent is not fair. If I owned rental property, I would not think it fair to pay taxes to a government that tells people they do not have to pay rent.

2. Here is a nursing home in which many patients got the virus but as of the date of the story only one had died. But it is not a feel-good story, at least as far as half the country is concerned.

3. In 2009, when we had the stimulus, the models forecast that unemployment would rise to 8 percent without the stimulus. The stimulus passed, and unemployment hit 10 percent. But the conventional wisdom is that the stimulus worked, and unemployment would have been worse without it. How do we know this? Model simulations.

In 2020, suppose that, contrary to model forecasts, the death rate drifts down after lockdowns are lifted. We will be told that there would have been many fewer deaths had the lockdowns stayed in place. How will we know this? Model simulations.

18 thoughts on “Miscellaneous bitter thoughts”

  1. “Many people believe that it is quite moral not to pay rent. Hardly anyone believes that it is moral not to pay taxes.”—ASK.

    I have the opposite impression. Any type of tax evasion is okay, part of the hustle, but welching on a signed agreement with a landlord is wrong. I think many retailers, for example, take their commitment to building owners seriously, but would not dream of reporting cash sales.

    People or businesses that skip out on the rent feel guilty about it, but people who cut their taxes (by code or otherwise) feel crafty about it.

    But I have only anecdotal observations. I have been renter, landlord and, yes, taxpayer.

    • Of course, if you lower or avoid taxes legally, by hiring an accountant or tax lawyer, structuring things in certain ways, etc., that’s, well, not breaking the law.

    • Yup. I think this post is conflating the “stock” and “flow” of morality. The stock is the total of what people think. The “flow” is what the sort of people who want to opine about morality and perhaps change it are saying.

      Economists generally look at the flow. At the margin. I’ve found that sometimes that’s just flat out wrong, especially in non-economic situations.

      Sure “many people” might think it’s moral to not pay rent, but in another, more accurate sense (comparing the number who think this to the number who don’t) more more people think it’s immoral to not pay rent. Likewise with taxes. Most consider it moral to pay as little as they can get away with.

      Arguing for/against changes in morality is perfectly reasonable, but I don’t think losing sight of the actual relative positions of opposing moral stances is particularly helpful.

    • It depends on whether you see the government as “something you’re a part of” or “a stationary bandit you just have to pay protection money to.”

      Similarly, is your landlord someone who built/financed this structure you are living in through their productive efforts, or some dilettante absentee landlord that probably never deserved this property in the first place (certainly Russian peasants paying rent to some noble in 1917 felt that way).

      And of course there is the simple fact that getting out of paying your rent feels like a more achievable goal then getting out of paying your taxes.

  2. I thought the consensus among economists was more that the stimulus didn’t help much, but among Keynesians that was because it wasn’t big enough? Among ordinary people I think it splits by political view. Even re FDR’s New Deal (where popular consensus is that it saved us), Paul Krugman has “conceded” that it didn’t really work but because it was too small (he thinks it would’ve worked if it weren’t for those meddling Supreme Court justices).

    Christina and David Romer (who I think of as very close to the current New Keynesian economic consensus) wrote a big paper concluding that fiscal policy has had little role in stopping recessions historically, that it’s most monetary policy (which I know you disagree with). So my impression is that (and it seems almost like dirty little secret of the profession) the success of fiscal stimulus is far less supported than among non-economists, with even most zealous Keynesian often taking the position that stimulus has hardly been tried before (where have we heard that before).

  3. I don’t think it is true anymore that most people think it is immoral to evade taxes. Almost everyone with the ability to get away with it cheats on their taxes at least a little. It is a bit like people’s attitudes towards speeding. Most people drive a bit over the speed limit regularly and think that is OK but also think that anyone driving substantially faster than them should maybe be ticketed.

    When it was revealed that Trump has long been one of the biggest tax cheats in America, his reaction was that this merely showed how smart he was and how well he understood the system. America shrugged at that explanation as it did with his violation of a longstanding and bi-partisan norm that Presidential candidates make their tax returns public. IRS enforcement funds have been cut relentlessly in recent years despite the fact that this funding brings in more money to the Treasury than it costs those actually paying taxes. And the enforcement focus has shifted largely from wealthy people suspected of tax evasion to poor people suspected of cheating on EITC.

    It is true that people relying on formal models to justify their policy views rarely change those views due to a failure of the models. But this is just a specific example of a larger phenomenon of people relying on easily adjusted and untestable counterfactuals to justify all sorts of views.

    • I just calculated testing rates and new cases April 23rd vs May 6th. On April 23rd, New York had run 15% of the total tests and found 30% of the total confirmed cases. On May 6th, the numbers were 13% of the tests and 26% of the confirmed cases.

      I picked April 23rd for a specific reason- the US plateau of 140,000/day testing rate that had persisted for 17 days suddenly jumped to to 240,000/day testing rate and has persisted since- now over two weeks. What happened, if you bother to go examine the data in the spreadsheets is that New York began relatively less testing, while the rest of country began significantly more testing.

      The key point is that the positivity rate over the last three days has fallen to less than 10% over the entire country. The only thing that has changed is that New York’s daily positive rate has fallen more than the rest of the country.

      I written this until I am blue in the face- the more you test, the more new cases you will find- this is an iron law. That is all the data in the AngryBear link shows. It is dispiriting that people either can’t think a level higher than that writer does, or intentionally lies by omission.

  5. Some evidence against [1] is that I’ve seen frequent posts on NYC-related ‘subreddits’ on Reddit arguing that all three of rent, mortgage payments, and property taxes should be forgiven or deferred. I think a lot, if not most, people understand that rent is just one part of a much larger financial system and that everyone in it is being hammered by the pandemic.

    The dynamics seem particularly fraught due to the uncertainty – I’m much more sympathetic with some of the early inclinations to ‘let it [the pandemic] rip’! It still ‘seems’ mostly heartless but this agonizing and protracted period of adjustment (or adjustment to an overall non-adjustment) seems really terrible too. All of the internal logics make sense on their own. If the pandemic is relatively temporary, ‘non-adjustment adjustments’ make more sense. Unfortunately, it’s unclear that it’s likely that it will be relatively temporary. But it also doesn’t seem likely that ‘adjustment adjustments’ are feasible either.

    The moral calculus is very difficult to analyze. For one, in what way or to what degree is the bankruptcy of an individual or household not during a global pandemic comparable to the bankruptcy of tens of thousands or millions of individuals, households, landlords, and financial organizations?

    I still suspect that we should we be engaging in more ‘adjustment adjustments’ but I admit that it’s effectively impossible to defend that with any real confidence.

  6. One could make a good argument that economic rent is immoral, especially when it comes to natural resources.

  7. Question 1.
    If you saw an analog to story 2 from a San Francisco MSNBC affiliate describing a nursing home in which hydroxychloroquine was administered and more than expected died, what would your reaction be?

    Question 2.
    You’ve been adamant throughout this pandemic that we run the proper controlled experiments and have expressed deep frustration that we haven’t done so. You’ve expressed dismay and frustration regarding poorly controlled or anecdotal stories. Where does this article play-out in that respect?

    I understand the move towards bitterness and I’ve felt similarly. The Goldhill and John Mandrola articles seem like better ways of articulating this to me.

  8. I wonder what renters would think if landlords decided it was no longer worth leasing property (which seems an inevitability if this phenomenon continues to spread). What replaces it as a housing solution? What’s the recommended alternative?

  9. Arnold, A law of Klingon prose?: The ratio of insight to word-count in your blogposts is greatest when you are cranky or bitter.

  10. Another bitter thought: In addition to Fear of Others Liberty (FOOL)

    there is also

    FOSL – fear of self liberty.

    If government commands that ones does not go back to work, then one need not feel guilty about not working, one need not weigh risks and costs, and one need not figure out how to arrange child care.

    Likewise, if government proclaims that one’s work is essential, well in a way that feels great doesn’t it? And again, one need not weigh risks, just gulp down fear and off to work one goes.

    This of course doesn’t apply to everybody, but it seems clear to me that it’s a real thing.

    As for landlords and taxes – the most noise I see is from (a) people who’ve been forcibly laid off by lockdowns and politicians who wish to exploit their plight, (b) those same politicians showing their deep socialist lack of understanding of how property, mortgages, banking, and money work.

    A note on nursing homes (a tragic note) – [I’ll hunt the links if you to see them]

    1. Yakima County WA has a high per-capita death rate, the majority of it from nursing homes and like facilities. Their high per capita infection rate arises from essential (truly essential – food!) workers going to their jobs, and then going home to dense cramped quarters.

    2. For WA state as a whole, even including the infamous choir practice superspreader event, deaths from nursing home residents, and staff, and visitors, are more than half the state’s fatalities. So not only is covid-19 a terrible hazard to nursing home residents (who cannot “shelter in place” elsewhere), but also to the staff and to visitors. The economics of the places mean that staff often worked in multiple facilities, which probably added to the spread.

    I take #1 and #2 to mean there’s an absolute limit to what lockdown can achieve, and that some part of the death rate is set by demographics and density and luck.

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