This national conversation [on income inequality] has generated renewed attention to the highly influential Piketty-Saez data. It is worth pointing out, therefore, some limitations of these data, which have been stressed by Cornell economist Richard Burkhauser: The data are on tax units rather than households, they do not include many government transfer payments, they are pre-tax rather than post-tax, they do not adjust for changes in household size, and they do not include nontaxable compensation such as employer-provided health insurance.
Speaking of Obamacare (and DeMuth’s essay), Jonah Goldberg has more on some of the unprincipled cronyism in play.
Bob Murphy has some discouraging, but unsurprising, data on employment trends. I agree with Bob’s diagnosis of the malady.
All of the drama surrounding the Bali agreement reflects a very common view of international trade, one that is held by many policy makers, journalists, and voters. In this view, trade is a complicated power struggle that pits American producers against foreign ones. That’s because the main benefit our nation gets from free trade is the ability to export to other countries; imports can only hurt our economy. And as a result, we lose out if policy makers reduce trade barriers without other countries doing the same.
But this argument is exactly backwards. The real benefit from trade comes from importing, not exporting. Indeed, consumers can benefit from lowering our trade barriers even if other countries do not reciprocate. This implies that our current approach to trade is contrary to the broad national interest. Rather, it represents the interests of small but powerful groups of domestic producers.