John T. Harvey — Jobs Program: A Darn Good Idea From The Trump White House

I am accustomed to criticizing government economic policy in this blog so please forgive me if I fumble about a bit with this one. Kevin Hassett, the Chair of the Council of Economic Advisers, has suggested that in order to address our deep-seated economic stagnation, "government programs that directly hire people might be part of the solution" (Should government hire the long-term jobless?). Oh my God, yes! This is a fantastic idea and precisely the sort of thing I expected President Sanders to undertake....

Forbes — Pragmatic Economics

Jobs Program: A Darn Good Idea From The Trump White House
John T. Harvey | Professor of Economics at Texas Christian University

Trump's pick for Chief Economist wrote this ridiculous book, "Dow 36,000" at the top of the bull market in 1999. You pretty much can't do worse than this.

Kevin Hasset is Trump's pick to chair the Council of Economic Advisers. Hassett co-authored the book, "Dow 36,000" back in 1999, at the peak of the bull market in stocks. You pretty much can't do any worse than that. 

Another terrible pick by Trump.

I liked Trump and I voted for him, but now I just think he is a fucking idiot.

David F. Ruccio — Trumponomist

Like [Kevin] Hassett’s claim (which I discuss here) that “lowering corporate taxes is the only real cure for wage stagnation among American workers.”

Or his other major claim (which I discuss here), that poverty and inequality in the United States are merely figments of our imagination.

Let’s focus on that last claim. As regular readers of this blog know, income inequality—whether measured in terms of fractiles (e.g., the 1 percent versus everyone else) or classes (e.g., profits and wages)—has been increasing for decades now. But for conservative economists like Hassett (who was an economic adviser to Mitt Romney before being a candidate to join the Trump team), inequality has not been growing and poor people are actually much better off than they and the rest of us normally think. What they do then is substitute consumption for income and argue that consumption inequality has actually not been growing.

So, what’s the big problem?

But even in terms of consumption they’re wrong. As Orazio Attanasio, Erik Hurst, Luigi Pistaferri have shown, once you correct for the measurement errors in the Consumer Expenditure Survey (which Hassett and his coauthor, Aparna Mathur, don’t do), and bring in other sources of consumption information (including the well-regarded Panel Study of Income Dynamics), consumption inequality has increased substantially in recent decades—more or less at the same rate as inequality in the distribution of income....

Hassett's name is being floated for Chair of Economic Advisers in the Trump Administration.

Occasional Links & Commentary
Trumponomist
David F. Ruccio | Professor of Economics, University of Notre Dame

See also

Capitalocene

Matt Bruenig — Kevin Hassett Misrepresents Piketty

AEI’s Kevin Hassett knew Piketty was wrong before he ever read him. There is no possible world in which Kevin Hassett did anything else but say Piketty was wrong. That’s fine, but what’s not fine is this shit: 

If you look at what’s been going on in his data, then the share of income going to capital in the United States has gone up over time. And what he does is he gives a theory for why that is going to continue. And eventually capital is going to have everything unless we have 80 percent tax rates and so on. 

As with Larry Summers, Justin Wolfers, and so many countless others, Hassett is just not accurately describing Piketty. Like those others, his confusions/misrepresentations are extraordinarily basic. 

Here are the errors:

AEI says it all.

MattBruenig | Politics
Kevin Hassett Misrepresents Piketty
Matt Bruenig

Marshall Steinbaum — Piketty versus Hassett: a primer on after-tax income and inequality

In short, income-redistribution policies failed to counteract growing income stratification over the past four decades. What’s more, these policies did less to equalize post-tax income now than it did in percentage terms in 1979, directly contradicting Hassett’s contention. Indeed, all the studies that have been done confirm the magnitude of income inequality as it has evolved whether you’re looking at pre- or post-tax-and-transfer income. Hassett should go back to defending inequality as economically efficient—at least that argument isn’t refutable with a swift look at the data.

WCEG — The Equitablog
Piketty versus Hassett: a primer on after-tax income and inequality
Marshall Steinbaum

Dan Kervick — How Hassett Gets Piketty Wrong

So according to Hassett, Piketty has argued that eventually capital is going to “have everything” and “get all of income.” And the reason for this is that our economy can indefinitely substitute capital equipment for labor, so that all returns will eventually accrue to the owners of that capital. 

But Piketty makes no such argument.

Piketty says first that the capital/income ratio β – the ratio of total accumulated wealth to annual national income – tends toward s/g over the long run, where s is the nation’s savings rate and g is its growth rate. And the total capital share of national income is always rβ, where r is the rate of return on capital. So if the total accumulated wealth of some nation is 5 times its annual national income, and the annual rate of return on capital is 5%, then the total capital share of income will be 25%. Suppose also the savings rate is 9% and the growth rate is 1.5%, and that these rates are stable over an extended period of time. Then s/g is 6, and that initial 25% capital share will move in the direction of 30%, and stabilize there....

Rugged Egalitarianism
How Hassett Gets Piketty Wrong
Dan Kervick

See also, Nothing Magical about Piketty’s Mathematics

George Cooper worries that Thomas Piketty has advanced some “magical mathematics” in Capital in the Twenty-First Century: mathematics which lead to absurd results. And Cooper argues that when one repairs these absurdities in the most logical way, Piketty’s main policy prescription – a 2% global wealth tax – is seen as a recipe for economically disastrous effects. But the mathematical fix Cooper proposes is not at all plausible given the historical trends Piketty’s research has revealed. More importantly, I think Cooper has simply misconstrued Piketty’s mathematics, and that it doesn’t require any fix at all. When we interpret the mathematical formulae in the way Piketty has indicated, and impose economically natural conditions on their range of application, Cooper’s problem disappears, and Piketty’s historical analysis and projections emerge unscathed.

PBS NewsHour— Debating Piketty’s theory on how wealth begets wealth, widens the economic gap

Gwen Ifill interviews Heather Boushey of the Washington Center for Equitable Growth and Kevin Hassett of the American Enterprise Institute.

PBS NewsHour — video and transcript
Debating Piketty’s theory on how wealth begets wealth, widens the economic gap

Simon Wren-Lewis — Giving Economics a Bad Name

Prof. Wren-Lewis reflects on Kevin Hassett, Glenn Hubbard, Gregory Mankiw, and John Taylor, "The Romney Program for Economic Recovery, Growth, and Jobs"

This is sad, because it tells us as much about economics as an academic discipline as it does about the individuals concerned. In the past I have imagined something similar happening in physics. It actually stretches the imagination to do so, but if it did, the academics concerned would immediately lose their academic reputation. The credibility of their work would be questioned. Responding to evidence rather than ignoring it is what distinguishes real science from pseudo science, and doctors from snake oil salesmen.

Ouch — way beyond smack down.

mainly macro
Giving Economics a Bad Name
Simon Wren-Lewis | Professor of Economics, Oxford University

DeLong smacks down Hassett, Hubbard, Mankiw, And Taylor

Brad DeLong smack down Kevin Hassett, Glenn Hubbard, Gregory Mankiw, and John Taylor — bad — very bad. Even uses the "L" word. IF they had any shame, they would be looking for a rock to climb under.

Brad DeLong | Grasping Reality with Both Invisible Hands
Things Wrong With Hassett, Hubbard, Mankiw, And Taylor, "The Romney Program For Economic Recovery, Growth, And Jobs"
J. Bradford DeLong | Professor of Economics, University of California at Berkeley and a research associate of the National Bureau of Economic Research