Chicago economist says: Unemployed? You must be lazy or have bad morals...

Here's a working paper from a real live U Chicago economist, and its every bit as *good* as you'd expect. The line: The downturn is not caused by the burst of the housing bubble, the tightening of the credit market, the reduction in consumer durables caused by the market crash, but rather, the downturn is the result of laziness. I.e., people decide not to work b/c they'll get help w/ their house foreclosure! Lol... It's just too much. Check it out...

For the record, I remember when Harold Uhlig came out in the past year to give a talk on capital gains taxes. His conclusion was that the US, on capital gains taxes, was dangerously close to the flat area of the laffer curve -- and predicted, that even if they US raised cap gains taxes, it could only increase revenue 5-6%! I asked, how could that be, cap gains taxes are 0 for someone in my bracket, if i want to save, i've got no choice but to pay cap gains... Lol-- he was so ignorant, he didn't even have any idea what the cap gains rates in the US were! He'd just done a bunch of math and plugged in some absurdly high "average business taxes" number he got from the Heritage foundation...

One problem with both models is that they assumed everyone was the same. This is a standard assumption, of course, in macro models, but most results are sensitive to it.

I spent a full 10 minutes on Mulligan's paper, after the Ambrosini critique recommended it, and here was my take:

Real wages and productivity often rise in recessions when non-essential people are laid off. Say you’re the president of a two person firm. You’re firm makes $100k. Sales go down $10K due to recession, so you lay off your secretary/personal asssistant. Total hours worked at your firm dropped, and although sales are way down, productivity is up!

Replace labor with capital, redo the same calculations, and you could conclude that machines have decided to take more vacation time…