What do economists say?

[MarkBarbieri]

A while back, someone was bemoaning the lack of economists being quoted in the mainstream press. That surprised me because I see them quoted all the time. The problem is that news shows rarely give you a perspective on what economists agree on and what they disagree on. For example, a large number of economists believe that increased government spending during times of high unemployment will help the economy and a large number believe that it will hurt. There is no consensus on that subject.

So what do economists agree on? Harvard professor Greg Mankiw posted a summary of various polls showing some of the subjects on which economists tend to agree and the extent to which they agree. Here is the list:

1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
2. Tariffs and import quotas usually reduce general economic welfare. (93%)
3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
6. The United States should eliminate agricultural subsidies. (85%)
7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
11. A large federal budget deficit has an adverse effect on the economy. (83%)
12. A minimum wage increases unemployment among young and unskilled workers. (79%)
13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

 

[wall*e2008]

#13 - I have heard this also called a stepped flat rate tax. I agree with the economist on the statements.

 

[MarkBarbieri]

A negative income tax is a tax rate that is negative. You can read a description of the concept on Wikipedia here. The basic idea is to have a tax bracket for very low incomes that is negative. This would replace welfare programs and act as an incentive to work. If you had a negative tax rate, every dollar you earned would be increased by additional taxpayer money. So at low incomes, the incentive to work would be even higher than the normal pay incentive. That would encourage more poor people for find some type of paying work rather than just accepting non-work related benefits.