Hannah Green in Thinkprogress on Renewable Energy in India

She writes:

This August, power shortages in India that left 300 million in the dark made it very clear that one of the world’s fastest growing economies was facing an energy crisis. Less clear is how realistically to solve it. Many firms are looking for new sources of oil to fulfill India’s growing energy demands, but this could prove to be painfully expensive.  On the brighter side, solar energy and other renewable resources are already being rapidly harnessed in the non-Western world, and they are becoming cheaper and cheaper.
As of June 2012, 31 percent of India’s energy came from renewable resources, including hydroelectric power, while only 9 percent of the United States’ did as of the end of 2011. In a 2009 McKinsey & Company survey, India was rated the top producer of solar energy in the world, just above the United States, with an annual yield of 1,700 to 1,900 kilowatt hours per kilowatt peak (kWh/KWp). However, demand for energy in India will only continue to grow, and the question is whether energy will continue to come mainly from fossil fuels or from renewable energy sources...

The housing cycle is the business cycle--again

Ed Leamer said so.  I said so.  And I continue to think it so.

Run a simple bi-directional Granger Causality model of change in residential investment and GDP.  It turns out a model with one and three lags best fits the data going back to 1969.  That model's four quarter forecast for GDP growth is 2.6, 2.5, 2.1 and 2.5 percent; for residential investment growth is 6.2, 5.0, 4.9 and 4.9 percent.  (BTW, the model passes the stationarity test).

But residential investment has grown by between 8.5 and 20 percent over the past four quarters.  Let's say that an exogenous shock (kids moving out of their parents' houses) leads residential investment to grow by 10 percent.  The forecast for GDP growth now increases to 2.6, 2.9, 2.6 and 2.9, or about .4 percentage points higher than the baseline case.  This increase in GDP reflects more than the direct impact of residential investment on GDP.

What is Apple's objective function?

Walter Isaacson's biography of Steve Jobs is a lot of fun--at least in part because it is not a hagiography.

One of the most striking things about the book is that Jobs never pushed profit maximization per se--he pushed "great products."  When John Scully pushed out Jobs and ran the company, he did push profit maximization--and Apple nearly went out of business.  Re-enter Jobs with his products-first philosophy, and Apple eventually becomes the most valuable company in history.

When economists model firms, we inevitably assume profit maximization, and then allow firms to compete either through price or quality.  The exception to this is a principal-agent set-up, where managers are seeking to maximize their own compensation.  But this doesn't really work for Apple, where Jobs was both a principal and an agent.

Maybe none of this matters--that making great products is a sufficiently strong proxy for profit maximization.  But Job's desire to make great products led him to care a lot less about cost minimization than, say, Dell--the chapter on how fanatical Jobs was about the plastic case molding for the original Macintosh underscores how Jobs tended not to think about marginal revenue and marginal cost when making decisions.

It turns out Harry Hopkins didn't say it

After Mitt Romney's "gifts" comments, I couldn't help but remember that I thought FDR advisor and WPA director Harry Hopkins said "we shall tax and tax, and spend and spend, and elect and elect."  But it turns out this is likely apocryphal--indeed, Hopkins denied having said any such thing.

Here is a nice chronology from Bartleby:

AUTHOR:	Harry Lloyd Hopkins (1890–1946)
QUOTATION:	We shall tax and tax, and spend and spend, and elect and elect.
ATTRIBUTION:	Attributed to HARRY L. HOPKINS, administrator of the Works Progress Administration.   Although Frank R. Kent mentioned the subject of “spending, taxes, and election” in reference to Hopkins in his column, “The Great Game of Politics” (Baltimore, Maryland, Sun, September 25, 1938, pp. 1, 16) he first attributed “we are going to spend and spend and spend, and tax and tax and tax, and elect and elect and elect” to Hopkins in the Sun, October 14, 1938, p. 15.   Joseph Alsop and Robert Kintner in their column, “The Capital Parade” (Washington, D.C., Evening Star, November 9, 1938, p. A–11), elaborated Hopkins’s “probably apocryphal” words to: “Now, get this through your head. We’re going to spend and spend and spend, and tax and tax and tax, and re-elect and re-elect and re-elect, until you’re dead or forgotten.”   Arthur Krock, in his column, “In the Nation” (The New York Times,November 10, 1938, p. 26), reported the wording as “we will spend and spend, and tax and tax, and elect and elect.” He also repeated this wording in an article in The New York Times, November 13, 1938, sec. 4, p. E–3. A letter by Hopkins denying this attributed quotation and a response by Krock were published in The New York Times, November 24, 1938, p. 26.   Over the years the quotation attributed to Hopkins has evolved into the wording above.

Karen Chapple on the most reasonable way to create affordable housing

Housers need to listen to this:

The myth that taxes are too complicated for the typical American

I was listening to David Walker on the radio this morning, and he was going on about how tax preparation is too complicated for the vast majority of Americans.  This didn't seem right to me, so I went to the IRS SOI data Table 1.2 to see how many American's qualified for the 1040A return (a two-page form) or the 1040EZ return (a one page form).

The answer: of the 140 million tax returns filed in 2009, 90 million were filed by taxpayers that had adjusted gross income of less than $100,000 and that used the standard deduction.  These taxpayers qualify for using the 1040A or1040EZ.  So for more than 3/5 of US taxpayers, filing is not complicated at all.

Is the tax code too complicated for the other 50 million and for corporations?  Almost certainly.  But it is not a problem that afflicts the "vast majority" of Americans.

[update: according to this source, 32 percent of filers use 1040A or 1040EZ]

Mark Thoma suggests that Sheila Bair could be the next Treasury Secretary

He talks about the Fed and Treasury here.  Bair would be a superb choice.