Sorry I have been pretty AWOL for awhile. It took a nice article in today’s NYTimes and last night’s Saturday Night Live show to spur me to post again. I loved last night’s SNL “cold open” (and Kate McKinnon’s brilliant rendition of Elizabeth Warren talking about how she would pay for “Medicare for All”) for its reference to how moms talk about stuff (vs. dads), and how economists explain things (see back of whiteboard in the skit). And a bonus for me: in this morning’s New York Times, Jim Tankersley quotes me about how little economists *actually* know about what the economic effects of a 6% tax on the highest wealth of the very wealthy would be:
Perhaps the biggest unknown is how the capitalist American economy would function with levels of taxation and spending more comparable to the social democracies of Scandinavia.
“It’s as much an art as a science, trying to figure out the economic effects of policies we haven’t seen before,” said Diane Lim, a former economist for congressional Democrats and senior economist at the White House Council of Economic Advisers, who now works for the Penn Wharton Budget Model. “I’m worried it’s unrealistic. It’s just unknown.”
Jim Tankersley, New York Times, Nov. 3, 2019, Section A, Page 1, “Trillion-Dollar Pledges Cement Democrats’ Bet on Taxing Rich.”
I’ve been working for Penn Wharton Budget Model as a “senior advisor” for a few months now–hoping to better connect their highly sophisticated, academically “rigorous” economic models to real-world policymaking, especially as the presidential campaigns heat up and begin to include (more specific) policy platforms. The policy ideas we’re already hearing about–like Warren’s Medicare for All and the taxes to pay for it–are really big and bold but also huge in terms of economists’ unfamiliarity with them. We will be relying on a lot of economic theory but not a lot of “economic practice” in offering our “expert” perspective. (In other words, we’re not exactly “experts” on this.)
Here is where the “art” within an economic model can actually inform the science, because where we don’t have previous real-world experience with such a policy, we can kind of “make up” and “try on” different kinds of behavior at the individual household and business levels and see how they add up to different outcomes for different types of households and the entire macroeconomy–and we can evaluate how likely the candidates’ tax proposals would actually raise the levels of revenue needed to pay for the candidates’ spending proposals.
I’ll try to keep my blog updated with news of Penn Wharton Budget Model’s analyses on presidential candidate proposals; we are still working on them now. My take here will always have that perspective that comes from my being a mom first (who will talk about the hard choices and realities very openly) and an economist second (who can translate the “econ-speak” of my profession into plain(er) and hopefully more useful English).