Prince of the Lake

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Wassily Leontief (1906–99) was a Russian-born American economist who pioneered Input-Output analysis, which models the interdependence of an economy’s various productive sectors.

In a 1953 article, he examined the relation between domestic production and foreign trade in the US economy. 

From the text:

“Contrary to widely held opinion, our exchange of domestically produced goods for competitive imports serves as a means to compensate for the comparative shortage of our domestic capital supply and a corresponding oversupply of American labor. Let me merely mention here a few questions whose answers might be seriously affected by the results of this preliminary investigation. Foremost is the problem of the changing position of the United States in the natural resources—as compared with capital and labor—that dominated our early development and our trade relations with foreign countries up to about 1910. From the fact that at the present time capital appears to be comparatively more scarce than labor, one might surmise that this scarcity has dominated our entire economic development until now. This would mean that our capital supply, while steadily growing, has still not caught up with the increase in our labor force, if the peculiarly high effectiveness of that labor force is taken into account. A larger supply of domestic capital, if not matched by a corresponding increase in domestic manpower, will in any case reduce rather than increase the comparative advantage in labor supply on which our present exchange of goods and services with foreign countries seems to be based. In other words, a more rapid rise in our average productive investment per worker would diminish rather than increase the advantage derived by the United States from its foreign trade.” 

+ “Accelerated development in developing regions is possible only under the condition that from 30 to 35% and in some cases up to 40%, of their gross product is used for capital investment.” A 1977 report by Leontief on the world economy. Link

+  “The new technology diminishes the role of human labor in production to such an extent that it is bound to bring about not only long- run technological unemployment, but also a shift toward a more skewed and, because of that, socially unacceptable distribution of income.” A 1983 paper by Leontief on automation. Link

+  “Leontief used the Soviet interest in input-output to plead his case for more funding and government investment in assembling the data needed to introduce more planning to the United States.” By Yakov Feygin. Link. A recent paper by Isabella Weber, Jesus Jauregui, Lucas Teixeira, and Luiza Nassif Pires takes an I/O approach to inflation and “sectorally significant prices.” Link. And a collection of papers by Leontief that use input-output models. Link


Electronic Tax Filing

OYEBOLA OKUNOGBE is an economist in the World Bank Development Research Group. In a recent paper, she and co-author Victor Pouliquen examine how electronic tax filing has reduced corruption in Tajikistan.

From the abstract

“Many e-government initiatives introduce technology to improve efficiency and avoid potential human bias. Using experimental variation, we examine the impact of electronic tax filing (to replace in-person submission to tax officials) using data from Tajikistan firms. E-filing reduces the time firms spend on taxes by 40 percent. Further, among firms previously more likely to evade, e-filing doubles taxes paid. Conversely, evidence suggests that e-filing reduces tax payments among firms previously less likely to evade. These firms also pay fewer bribes, as e-filing reduces extortion opportunities. These patterns are consistent with differential treatment of firms by tax officials prior to e-filing.”

+ + +

+  “Those countries that were quick to respond in unity to Russia’s invasion of Ukraine have been much slower to attend a summit addressing developing nations’ concerns about finance.” New from The Polycrisis newsletter, Kate Mackenzie and Tim Sahay on the New Global Financing Pact. Link

+  “What BlackRock wants for their investment products is very different from how the IRA is structured.” Also new on The Polycrisis, a transcript of a panel discussion on “the varieties of derisking,” featuring Skanda Amarnath, Melanie Brusseler, Daniela Gabor, Chirag Lala, and JW Mason. Link

+  “Focusing on child welfare and supporting families has been a really big selling point.” Two in the New York Times featuring JFI’s Halah Ahmad on Colorado’s new Child Tax Credit program. Link and link

+  Melanie Ford Lemus on urban water infrastructure in Guatemala City. Link

+  “The paper uses fifty social tables, ranging from Greece in 330 BC to Mexico in 1940, to estimate the share and level of income of the top 1 percent in pre-industrial societies.” By Branko Milanović. Link

+  Krista Brown on Live Nation/Ticketmaster’s dominance of the live event industry. Link

+  Velomahanina Razakamaharavo and Lalatiana Rakotondranaivo on the colonial legacy of Madagascar’s new foreign investment law. Link

+  “Our evidence suggests that the Mexican Drug War affected local export growth by eroding the accumulation of productive capital, which in turn limited potential gains in labor productivity.” By Jesús Gorrín, José Morales-Arilla, and Bernardo Ricca. Link

+  Andrew McNeil, Davide Luca, and Neil Lee on “birthplace economic adversity” in the UK. Link

+  “Since the Treaty of Lisbon, the European Union already claims the following responsibilities: everything concerning the common market; key areas of economic, heath, industrial, regional, educational, pensions, and youth policies. Environment, climate, energy, research, technology, consumer protection, immigration and asylum, civil law, criminal law, internal security—no field is left untouched. The numerous examples speak for themselves. For instance, limits are laid down for ‘hand, arm and overall body vibrations’ for someone working with a pneumatic drill. But the Commission also passes judgement on rules for dentures. Which cheese is matured in brine has to be noted on the packaging. The case of the cucumber regulation (1677-88) has become famous. It rules that the ‘Extra’ grade of this vegetable many only be offered for sale if the curve does not not exceed 10 millimeters for every 10 centimeters. The producers’ associations of some countries with large agricultural sectors not only supported these criteria but also vigorously defended them. Only after 20 years was the Commission willing to abolish it, along with 25 of the 36 rules it had invented for beans, cauliflower and melons.” By Hans Magnus Enzensberger. Link

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