- In its most recent report on uncollected taxes, the IRS estimated that an average of $441 billion (16 percent) of the taxes owed annually between 2011 and 2013 was not paid in accordance with the law. Most of the unpaid taxes were the result of taxpayers’ underreporting their income. Through enforcement, the IRS collected an average of $60 billion of those unpaid taxes annually, reducing the gap between taxes owed and taxes paid in those years to $381 billion per year, on average.
- The IRS’s appropriations have fallen by 20 percent in inflation-adjusted dollars since 2010, resulting in the elimination of 22 percent of its staff. The amount of funding and staff allocated to enforcement activities has declined by about 30 percent since 2010.
- Since 2010, the IRS has done less to enforce tax laws. Between 2010 and 2018, the share of individual income tax returns it examined fell by 46 percent, and the share of corporate income tax returns it examined fell by 37 percent. The disruptions stemming from the 2020 coronavirus pandemic will further reduce the ability of the IRS to enforce tax laws.
- CBO estimates that increasing the IRS’s funding for examinations and collections by $20 billion over 10 years would increase revenues by $61 billion and that increasing such funding by $40 billion over 10 years would increase revenues by $103 billion.
Global economic and financial activity depends on the ability of US dollar funding to flow smoothly and efficiently between users. The broad international use of a dominant funding currency generates significant benefits to the global financial system, but also presents risks. Benefits arise from economies of scale and network effects, which reduce the costs of transferring capital and risks around the financial system. At the same time, financial globalisation, coupled with the dominant role of the US dollar in international markets, may have led to a more synchronised behaviour of actors in the global financial system, at least in part because many international investors and borrowers are exposed to the US dollar. As a consequence, it is possible that shocks stemming from US monetary policy, US credit conditions or general spikes in global risk aversion get transmitted across the globe. These dynamics increase the need for participants to manage the risk of a retrenchment in cross-border flows.
The prospect of a severe economic downturn drove a significant increase in demand for US dollar liquidity. Many businesses around the globe, anticipating sharp declines in their revenues, sought to borrow funds (including US dollars) to meet upcoming expenses such as paying suppliers or servicing debts. US dollars were in particularly high demand given the dollar’s extensive international use in the invoicing of trade, short-term trade finance and long-term funding … Faced with uncertainty about how large such needs would be, many firms, as a precaution, chose to draw on any source of US dollar funding they could obtain.
The activities of NBFIs [non-bank financial institutions] also appear to have contributed to strong demand for US dollar liquidity. In recent years, non-US insurers and pension funds have funded large positions in US dollar assets by borrowing US dollars on a hedged basis … The appreciation of the US dollar meant that these NBFIs in some jurisdictions were required to make margin payments, potentially adding to demand for US dollar funding. … At the same time, US dollar funding became much more difficult to obtain in global capital markets as suppliers of funding shifted into cash and very liquid assets. …
Finally, EMEs [emerging market economies] that raise US dollar funding have faced particular strain. Over the past decade, corporations, banks and sovereigns in EMEs had issued large volumes of US dollar debt securities, partly owing to a shift away from bank-intermediated funding … The pandemic has seen fund managers substantially shift their portfolios away from US dollar bonds issued by EME borrowers … At the same time, many EME governments and corporations have an increased demand for funding (across currencies), owing to fiscal expansions and sharply lower revenues, including from commodity exports. Together, these pressures have contributed to a spike in US dollar bond yields for EME sovereigns and corporations …
Franklin Zimring lays out some useful background (citations omitted):
Police shoot and kill about a thousand civilians each year, and other types of conflict and custodial force add more than one hundred other lives lost to the annual total death toll. This is a death toll far in excess of any other fully developed nation, and the existing empirical evidence suggests that at least half and perhaps as many as 80 percent of these killings are not necessary to safeguard police or protect other citizens from life-threatening force. …
One reason why U.S. police kill so many civilians is that U.S. police themselves are vastly more likely than police in other rich nations to die from violent civilian attacks. In Great Britain or Germany, the number of police deaths from civilian attack most years is either one or zero. In the United States—four or five times larger—the death toll from civilian assaults is fifty times larger. And the reason for the larger danger to police is the proliferation of concealable handguns throughout the social spectrum. When police officers die from assault in Germany or England, the cause is usually a firearm, but firearms ownership is low, and concealed firearms are rare. There are, however, at least 60 million concealable handguns in the United States and the firearm is the cause of an officer’s death in 97.5 percent of intentional fatal assaults, an effective monopoly of life-threatening force even though more than 95 percent of all assaults against police and an even higher fraction of those said to cause injury are not gun related. …
A theme that runs loosely through a number of these essays is that police-citizen interactions can involve \”tight coupling,\” which is organizational behavior jargon for an interrelated system with lots of stresses and little slack. A \”tightly coupled\” system is bad at dealing with unexpected shocks, which can cause catastrophic breakdowns. A situation where a police officer is feeling threatened and stress, and as if there is a need for immediate urgent action, is also a situation where racial prejudices about who poses a danger and what actions are justified in response more easily boil to the surface.
One important problem in the governmental control of unnecessary police use of deadly force is the fact that police officers have been operating with near impunity when efforts are made by citizens or law enforcement to prosecute police officers for criminal misuse of their lethal weapons. The thousand or so killings of civilians by police officers in the United States each year have in recent history produced about one felony conviction of a uniformed officer per year. According to research by Philip Stinson of Bowling Green University, there were in the years 2000 to 2014 an average of 4.4 cases per year in the United States where police killings resulted in murder or manslaughter charges against one or more officers, and the prospects for obtaining felony conviction in these cases were low. The odds of a death producing a felony conviction were close to one in one thousand. …
If the high death rates generated by police activity in the United States were for the most part the result of blameworthy activity by a few bad cops, then criminal law would make sense as a primary control strategy. But the problems are a mix of ineffective administrative controls, vague regulations, and the absence of administrative policy analyses and incentives for reducing death rates. It is hard to pin 100 percent of the blame for this mess on one or two officers. … The critical problem with reform priorities in the first years after Ferguson, Missouri, was the exclusive emphasis on criminal prosecutions and criminal prosecutors. Ineffective police administrators—and the vague and permissive nonspecificity of their deadly force standards—have been unjustly spared in the reexamination of why the epidemic of civilian deaths is a chronic part of our national experience.
So what is to be done to adjust the system of policing. There are a number of There are a number of proposals for improving police performance across-the-board, including a hoped-for reduction in the number of shootings. But the evidence in support of the efficacy of these steps is somewhere between weak and nonexistent. Robin S. Engel, Hannah D. McManus, Gabrielle T. Isaza write: \”Of the litany of recommendations believed to reduce police shootings, five have garnered widespread support: body-worn cameras, de-escalation training, implicit bias training, early intervention systems, and civilian oversight. These highly endorsed interventions, however, are not supported by a strong body of empirical evidence that demonstrates their effectiveness.\”
This is the approach we used to facilitate the reform efforts within the UCPD. Our first step was to redesign data collection systems to include the data necessary to evaluate the impact of our work. Our executive team modified existing data collection processes and also mandated the collection of new data. Changes in data collection instruments and practices resulted in new data generated during traffic and pedestrian stops, during the citizen complaint process, through the review and cataloging of BWC footage, during potential use-of-force encounters (e.g., when officers draw their Tasers or firearms but do not deploy them), along with multiple citizen and officer surveys. Each of these data collection changes required an accompanying change in policy, training, and supervisory oversight to ensure that the data were being properly collected and used. The UCPD is now in a better position to test specific propositions about the effectiveness of our own reform efforts.
What other factors might matter? Greg Ridgeway writes in his essay:
Using data from the New York City Police Department (NYPD) and the Major Cities’ Chiefs Association (MCCA), the analysis finds that police officers who join the NYPD later in their careers have a lower shooting risk: for each additional year of their recruitment age, the odds of being shooters declines by 10 percent. Both officer race and prior problem behavior (e.g., losing a firearm, crashing a department vehicle) predict up to three times greater odds of shooting, yet officers who made numerous misdemeanor arrests were four times less likely to shoot.
When President Obama asked my White House Task Force cochair, Chuck Ramsey, and me if there was one area we would have delved into if given more time, we said that area was recruitment. American policing in the future will be shaped by the men and women now coming into the police academies, yet at a time when there are calls for advancing a “guardian” culture in policing, many training academies are still organized as military-style boot camps emphasizing a “warrior” approach ……
Larger police agencies are, in fact, taking steps to revise their use of force policies, and it is having an impact. According to a survey of forty-seven of the largest law enforcement agencies in the United States from 2015 to 2017 conducted by the Major Cities Chiefs Association (MCCA) and the National Police Foundation, 39 percent of the departments changed their use of force policies and revised their training to incorporate de-escalation and beef up scenario-based training approaches. Significantly, officer-involved shootings during this period dropped by 21 percent in the agencies surveyed …
These proposals are
- to empower police to seize guns without a court order, as may appear necessary to them in a “split-second decision”;
- to develop the core tactics underlying systems that seek to reduce “tight coupling” that creates “split-second decisions” and leave too little time to save lives; and
- to equip police with more powerful first aid strategies, from hi-tech bandages in every police car to policies enabling police to “scoop and run” with every shooting or stabbing victim.
There is also one important foreign model of a national fact-gathering institution that could also be incorporated into the U.S. government’s Department of Justice, perhaps in the civil rights division. Police departments in England and Wales have decentralized administrations, not unlike the United States. But the United Kingdom also created an Independent Office for Police Conduct (formerly known as the Independent Police Complaints Commission) that has become a statistical and analysis resource that is worthy of emulation on this side of the Atlantic …
Except for a few clinical preventive services, most hospitals and physician offices are repair shops, trying to correct the damage of causes collectively denoted “social determinants of health.” Marmot has summarized these in 6 categories: conditions of birth and early childhood, education, work, the social circumstances of elders, a collection of elements of community resilience (such as transportation, housing, security, and a sense of community self-efficacy), and, cross-cutting all, what he calls “fairness,” which generally amounts to a sufficient redistribution of wealth and income to ensure social and economic security and basic equity. …
The power of these societal factors is enormous compared with the power of health care to counteract them. One common metaphor for social and health disparities is the “subway map” view of life expectancy, showing the expected life span of people who reside in the neighborhood of a train or subway stop. From midtown Manhattan to the South Bronx in New York City, life expectancy declines by 10 years: 6 months for every minute on the subway. Between the Chicago Loop and west side of the city, the difference in life expectancy is 16 years. At a population level, no existing or conceivable medical intervention comes within an order of magnitude of the effect of place on health. …
How do humans invest in their own vitality and longevity? The answer seems illogical. In wealthy nations, science points to social causes, but most economic investments are nowhere near those causes. Vast, expensive repair shops (such as medical centers and emergency services) are hard at work, but minimal facilities are available to prevent the damage. In the US at the moment, 40 million people are hungry, almost 600 000 are homeless, 2.3 million are in prisons and jails with minimal health services (70% of whom experience mental illness or substance abuse), 40 million live in poverty, 40% of elders live in loneliness, and public transport in cities is decaying. …
Decades of research on the true causes of ill health, a long series of pedigreed reports, and voices of public health advocacy have not changed this underinvestment in actual human well-being. Two possible sources of funds seem logically possible: either (a) raise taxes to allow governments to improve social determinants, or (b) shift some substantial fraction of health expenditures from an overbuilt, high-priced, wasteful, and frankly confiscatory system of hospitals and specialty care toward addressing social determinants instead. Either is logically possible, but neither is politically possible, at least not so far.
[T]he practice of giving or selling indulgences … operated in the Middle Ages on the principle that some persons were better than they needed to be in order to escape temporal or purgatorial punishments, whereas many others, known as sinners, fell short. Under the terms of the granting of indulgences, credits built up by the good could be transferred to those who had fallen short, or even to those who anticipated falling short. The transfer could be gratuitous, it could be in answer to prayers and petitions, or it could be for money. The anticipation of credits for forgiveness of sin, according to the record, moved William of Aquitaine to establish the monastery of Cluny with the instruction that the monks pray continuously for his salvation while be went about his work of war, pillage, rapine, and other activities. This procedure is perfectly echoed in an amendment to the Senate\’s version of the Clean Air bill, which would allow, for example, the aerospace industry in California to buy from a local supervisory authority pollution rights in excess of its allotted amount and then allow the authority to use the money to subsidize or pay for pollution reduction somewhere else in the region, by some other person or company.
The study measured a number of data points including:
- whether testers were able to make appointments to see the properties;
- how many units housing providers told testers about or showed them;
- whether housing providers offered financial incentives;
- whether housing providers made positive or negative comments about the housing units; and
- whether housing providers offered testers an application.
Results indicate that White market-rate testers— meaning White testers not using vouchers—were able to arrange to view apartments 80% of the time. Similarly situated Black market-rate testers seeking to view the same apartments were only able to visit the property 48% of the time. Testers who had vouchers, regardless of their race, were prevented from viewing apartments at very high rates. White voucher holders were able to view rental apartments only 12% of the time. Black voucher holders were able to view apartments they were interested in renting only 18% of the time. … In addition, housing providers showed White market-rate testers twice as many apartment units as Black market-rate testers, and provided them with better service as measured by a number of different variables. The results also showed that testers who were offered a site visit by the housing provider received differential treatment at the visit based on race and voucher status.
Alfred Marshall argued that students of social science are bound to dwell on the \”limitations and defects and errors\” of whatever is popular and whatever will sell more newspapers. Conversely, any economist who receives popular approval should assume that they have failed in their intellectual mission. The sentiment is actually attributed from A.C. Pigou to Marshall. It reads:
Students of social science, must fear popular approval: Evil is with them when all men speak well of them. If there is any set of opinions by the advocacy of which a newspaper can increase its sales, then the student who wishes to leave the world in general and his country in particular better than it would have been if he had not been born, is bound to dwell on the limitations and defects and errors, if any, in that set of opinions: and never to advocate them unconditionally even in ad hoc discussion. It is almost impossible for a student to be a true patriot and to have the reputation of being one in his own time.
The source of the quotation is \”In Memoriam: Alfred Marshall,\” a speech given by A.C. Pigou in 1924 and published as part of a Memorials of Alfred Marshall volume in 1925 (pp. 81-90). The quotation attributed to Marshall appears on p. 89.
A number of interesting questions lurk here. Does an economist have a duty, to self and to society, to play the role that Marshall describes in public discourse? What about in ad hoc discussion? Is that duty appropriately called \”patriotism\”? It does seem to me that if you find yourself in a specific setting where you know more, there is some ethical or moral duty not to use your knowledge to take undue advantage of others. This applies to all professions–car mechanics and sommeliers, as well as financial advisers and economists. But it also seems to me that people wear different hats at different times, and a commitment to live all aspects of one\’s life enunciating \”the limitations and defects and errors\” of popular opinions seems to exalt an attitude of grumpy oppositional monasticism, which may not be a utility-maximizing way for economists (or anyone else) to live.
In the 21st century, I\’m not sure how many Americans would ever actually say \”my country, right or wrong.\” After all, it\’s not \”countries\” that are right or wrong, but actions of governments and people, and it seems ingrained in the American character (and thankfully so!) that criticizing one\’s government is not only acceptable, but often expected.
But perhaps the ultimate put-down for that point of view came from G.K. Chesterton, In a 1901 collection of essays, The Defendant, he includes an essay called \”A Defense of Patriotism.\” Chesterton writes:
\’My country, right or wrong,\’ is a thing that no patriot would think of saying except in a desperate case. It is like saying, \’My mother, drunk or sober.\’ No doubt if a decent man\’s mother took to drink he would share her troubles to the last; but to talk as if he would be in a state of gay indifference as to whether his mother took to drink or not is certainly not the language of men who know the great mystery.
One can loosely divide American preferences about the role of government into two groups: those who think that because people and markets are not angels, more government actions are needed, and those who think that because people and government are not angels either, fewer government actions are needed. A classic statement behind this dilemma comes from James Madison in the Federalist Papers #51. In discussing the design of the US government, he wrote:
\”Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.\”
In arguing for the government to control itself, Madison laid out a system with a separation of powers with two different legislative houses; an executive branch headed by a separately elected president; and an appointed-but-subject-to-confirmation judicial branch. The idea wasn\’t new to Madison, of course. Arguments for the separation of legislative and executive are made in John Locke\’s (1690) Second Treatise on Government, although Locke tended to view the power of judging, via magistrates, as an offshoot of legislative power. Montesquieu is often credited with the the first explicit division of governing powers into legislative, executive and judiciary in his 1748 book The Spirit of the Laws. For example, Montesquieu writes (in translation) in Book XI, Chapter 6:
When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner. Again, there is no liberty if the judiciary power be not separated from the legislative and executive. Were it joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control; for the judge would be then the legislator. Were it joined to the executive power, the judge might behave with violence and oppression.
Economics is not willing to assume that angels are taking human form–not among business executives, workers, consumers, taxpayers, voters, nor among who are elected, appointed, or hired to government posts. It can feel frustrating when society and government seems to struggle against itself and may even become unable to act, with conflicts between branches and their differentiated responsibilities. But the alternative of a government in which acts without such constraints is, at least to me, a considerably less attractive prospect.
The foreign-born population of the United States was 46 million in 2018, representing 1 out of every 7 people. Twenty years earlier, in 1998, 1 out of every 10 people had been born abroad. Over the past two decades, the foreign-born population increased by 61 percent, outpacing the 13 percent increase in the native-born population. A key component of that growth was the increase in the number of foreign-born people with legal status; by CBO’s estimate, that number grew from 20 million, or 72 percent of foreign-born people, in 1998 to 35 million, or 76 percent of foreign-born people, in 2018. At least 90 percent of foreign-born people with legal status were naturalized citizens or lawful permanent residents, according to data from the Department of Homeland Security; the rest had temporary legal status usually associated with study or work. The numbers of foreign-born people both with and without legal status grew between 1998 and 2007, according to CBO’s estimates, but most of the growth thereafter was among people with legal status.
Moreover, the CBO report shows an ongoing shift toward higher education levels for the foreign-born in the last couple of decades.
Foreign-born workers—ranging from long-term U.S. residents with strong roots in the United States to more recent immigrants—account for 30% of workers in S&E occupations. The number and proportion of the S&E workforce that are foreign born has grown. In many of the broad S&E occupational categories, the higher the degree level, the greater the proportion of the workforce who are foreign born. More than one-half of doctorate holders in engineering and in computer science and mathematics occupations are foreign born.
I\’m sure that part of the shift toward encouraging more immigration is less about the issue itself, and is just politics: in this case, a pushback against President Trump\’s anti-immigration rhetoric. For example, Democrats rather abruptly began to increase their support of free trade after Trump took office threatening protectionism early in 2017. But these underlying shifts in attitudes toward immigration, along with shifts in numbers and skill levels, didn\’t just start in the last few years: they have been evolving over time.