Sep 15, 2009

Bob Shiller

Here is a "must read" profile of the Yale professor who saw the crisis coming in house prices. It explains The Chart and his behavioral methods.
I particularly liked the idea of a "Rising Tide Tax System", where "tax rates would automatically adjust along with levels of income inequality. If the incomes of the middle class and the poor were growing at a faster pace than the incomes of the rich -- as happened during the 1950s and '60s -- tax rates on the rich would fall. But if the incomes of the rich were growing the fastest -- as has happened over most of the last 35 years -- their tax rates would rise."
The recent growing inequalities, he explains, have "made it harder for policy makers to take steps, such as removing trade barriers, that would lift the economy...The Rising Tide Tax System is meant to make people feel that the economy is fair, that they can trust the institutions around them, that they can have the confidence to take risks that, in the end, will benefit the larger economy."

1 comment:

Christoph said...

"Rising Tide Tax System" --- Nice Idea! Here is the related paper (it even comes with a great abstract):