Greg Mankiw of Harvard University and Greg Mankiw's Blog talks about the state of modern macroeconomics and Keynes vs. the Chicago School. He defends his proposal to raise gasoline taxes and discusses the politics of tax policy.
Keynesian economics, IS-LM. Do government budget deficits stimulate the economy? Do the big statistical models work?
The Keynesian multiplier. Does government spending crowd out private spending? Natural rate of unemployment. Do tax cuts stimulate the economy? Incentives, tax rates.
Do government budget deficits matter? Medicare, Medicaid, Social Security. Does the annual budgetary process itself help rein in spending?
Laffer Curve. Do tax cuts stimulate growth, thereby recouping or even increasing tax revenue? Tax rates and incentives, tax structure. "Broaden the base, lower the rates." Political process complicates those changes.
Income tax progressivity. Political incentive is for base to keep narrowing. Rawls vs. Nozick. What is government's role? role of economics?
Pigou Club: Some economists argue that taxes can correct externalities, e.g., gas taxes reduce fumes, congestion, etc. Pigou and Marshall anecdote. Second-best solutions, Pigouvian taxes. But what happens with revenue collected? Does government just spend more, or does it simultaneously lower other taxes?
Does taxing individual products, as suggested by Pigouvian taxes, open the political door to more inefficient taxes? Pigouvian taxes do not take taxes out of the political process. Glaeser, Thaler podcasts on libertarian paternalism. Mankiw's experience as Chairman of the Council of Economic Advisers.
Stigler vs. Friedman debate: Do economists merely observe politics as scientists or do they involve themselves in the political process? Tobacco settlement. Friedman podcast. Coase vs. Pigou. What is the optimal solution to an externality? Unintended consequences.
What would you do if you were an economic czar for the day? What policy changes do you think have the biggest bang for the buck?