Macro Roundup

There isn't a transcript available for the panel discussion so I transcribed the parts I think you would be most interested in. Summer’s by far was the most interesting.

Saez opened using Amazon and Jeff Bezos as an example that wealth inequality is driven by monopoly rents

Saez starting around ~6:25 "... if you want you know what makes Amazon as a company you know Amazon isn't you know founded by Jeff Bezos the richest man in the world so valuableit's not so much the computers they have but it's the belief that they will be able to extract you know monopoly rents for decades to go because they are in such a dominant position.."
Larry Summers starting around ~20:45 goes after Saez and makes the point that a wealth tax wouldn't decrease the political power of the rich as it isn't very expensive to play in politics in the United States:

"…. I have made a very close study of the Twitter Wars of the last week surrounding the work of Saez and Zucman and I have to say I find myself about 98 and a half percent persuaded by their critics that the data are substantially inaccurate and substantially misleadingto take just one example the wealthiest Americans filed their tax returns within the last week for 2018 and so data on their taxes for 2018 is at best problematic. I did an experiment I used their algorithm on my tax return to figure out my wealth and it was not within a country mile of reality either in total or on a category by category basis I do not think a focus on wealth inequality as a basis for being concerned about a more just society is terribly well designed for three reasonsfirst the arguments around political power have almost no validity the truth is you can become one of the most powerful money people around the Democratic or the Republican Party for four or five million dollars a year. nothing in this world is going to stop the wealthiest people in America from being able to come up with a vast multiple of four or five millions dollars a year…”

Catherine Rampell, Greg Mankiw, Lawrence Summers and Emmanuel Saez, "Combating Inequality: Rethinking Policies to Reduce Inequality in Advanced Economies, Session Six, The (re)distribution of financial capital," Peterson Institute For International Economics, October 17, 2019, https://www.piie.com/events/combating-inequality-rethinking-policies-reduce-inequality-advanced-economies

“…to keep in mind that rich people differ from one another so let's consider two hypothetical CEOs of major corporations each of them earn a lot of money ten or twenty million dollars a year say putting them safely in the top 1/100 of 1% of the income distribution but other than their incomes which are the same these two executives are very different the first executive I'll call Sam Spendthrift he uses all his money living the highlife drinks expensive wine dries Ferraris flies his private jet to lavish vacations he gives large amounts to political parties and candidates hoping these contributions will get him an ambassadorship someday when that doesn't work he spends large sums financing his own quixotic running for the Presidency I don't have any pay particular in mind could the other executive I'll call Frank Frugal he makes just as much money as Sam but he takes a very different approach to his good fortune he lives modestly saves most of his earnings and accumulating a sizeable nest egg he forego the opportunity to influence the political process he's not really very political and today he invests his money in successful startups which he happens to be quite good at identifying he plans to leave some of his wealth to his children grandchildren nephews and nieces most of his wealth however he plans to bequeath to his to the endowment his alma mater maybe Harvard where we'll support financial aid for generations to come ok now ask yourself who should pay higher taxes Sam Spendthrift or Frank Frugalnow I can see the case for taxingthem the same after all they have the same earnings one might say to how they choose to spend their is not an issue for the government to judge or influence personally however I'm more inclined to think that Mr. Frugal should be taxed less than Mr. Spendthrift and the arguments really pigouvian has to do with externalities Mr. Frugal behavior confers positive externalities both on members of his extended family and on the beneficiaries of his charitable bequests moreover by increasing the economy's capital stock he reduces the way the return to capital increases labor productivity and real wages economists will recognize that as a pecuniary externality but if one is concerned about the income distribution this Pecunia externality can also be viewed as desirable and when I find hard to believe is that Mr. Frugal should face higher taxes than Mr. Spendthrift…”

Mankiw made his Sam Spendthrift versus Frank Frugal point (~37:30)

“…- I'm supportive of the idea that people should work on and develop and think about ways of doing capital gains taxation on accrual there are two primary reasons one practical and the other conceptual why I think it's kind of unlikely ever to be the ultimate answerthe practical one is that there are a ton of assets that are effectively indivisible and that you don't really have a way of paying the accrual taxation I've got my family hardware store retail things have gone up even if you can even if you can figure out what my family hardware store is worth in some good way and you can figure out what it was worth this year and you can figure out what it was worth next year and then you can tax beyond the difference like I don't want somebody else to own 2% of my family hardware store it I don't want after 10 years a bunch of other people who own 20% of my family hardware store and if other people own family 10 to 20 percent of my family hardware store I just arrange to pay myself more salary so they didn't get any money and they wouldn't really own itso I think there are ahuge set of issues around illiquid assetsI have enough trouble when I file my tax returns figuring out what my basis is on stuff that I bought or somebody bought or something thirteen years ago and that I'm sellingthat if you told me that when I filed my tax return I had to figure out the whole path of the value of the things I think would be a nightmare of complexityso I just think there's a feasibility problem that makes it hardsecond problem is conceptual which is what we count as capital gain and what do we not count as a capital gain if I owned a company and the company used to think was gonna pay me a hundred thousand dollars a year for the next ten years and then now we think the company is gonna pay me a hundred and twenty thousand dollars a year for the next ten years we say that in addition to the fact that I'll pay tax on 120 thousand dollars each year we say that I have a capital gain of 20% suppose I will teach at Harvard and I'm gonna teach it Harvard for ten more years and they declare that there's a 20 percent raise at Harvard and so my salary is going to go up by 20 percent and I'm for sure gonna teach at Harvard for 10 more years andthat income is there and it's something that's part of the present value of everything that I think about that's kind of a capital gain too if you think about my wealth if you think about my capacity to consume and so how we decide which future flows we're gonna present value in congeal and call wealth and then tax on the Delta and which we're not is I think a difficult problemand I I just predict that the world won't get there and if we still had eight percent interest rates I would think it was a huge priority to figure out the answer to this problem but since now we have relatively low interest rates the fact that people are getting some deferral by selling their capital gains later doesn't seem like such a big problem and the last thing I'll say is that whatever accrual scheme you make up I promise the tax lawyers who advise the investment community will find a set of ways of doing a ton of accruing losses and offsetting other income and I wouldn't quickly assume that it's going to be a big success in achieving your objectives of greater progressivity but in principle I don't have any problem with what you're saying all right on…”

Summers talks about how hard it would be to tax capital gains annually as opposed to when realized (~1:16)

"...is that wealth inequality reflects many things that happen in a society suppose we successfully in the United States adopted a more generous complete and progressive Social Security system and a better and more satisfactory health insurancesystem I would assume that the lower half of the population would have much less need to accumulate and hold liquid assets because they were being properly insured and so measuring the ratio of the wealth of the wealthy to the wealth of the less wealthy may reflect something about accumulation at the top or it may reflect something about the adequacy or inadequacy of social insurance arrangements or length..."

Summer's makes another great point @ ~24:30 that as our safety net grows more generous the need for recipients to save is reduced.

“…second there is a distinction between wealth and permanent income presumably what we care about is the capacity to spend overtime wealth can go up because future income streams go up that's what Emanuel focused onor wealth can go up because the discount factor goes down it's a complicated question to know their relative importanceEmanuel suggested that wealth had gone up from about 300 percent of GDP to about 500 percent of GDPone crude measure is the Shiller price earnings ratio the Shiller price earnings ratio is 76% more than its post-war average that would explain all of the increase in wealth relative to income and those assets that are most affected by that are those disproportionately held at the disproportionately held at the top and so once one recognizes permanent income it seems to me that the point loses but the emphasis on wealth loses a fair amount of its of its force…”

He then goes on to draw out the distinction btw wealth and “permanent income”

He also makes the point that a wealth tax would not address special interest lobbying (he cites the NRA and realtors as examples, and suggests that it could also increase political spending as the rich give money to favored non-profits.

Editorial Board, "Pre-Existing Condition Fiction,"Wall Street Journal, September 30, 2020, https://www.wsj.com/articles/pre-existing-condition-fiction-11601507970

Gary Claxton, Cynthia Cox, Anthony Damico, Larry Levitt and Karen Pollitz, "Pre-Existing Condition Prevalence for Individuals and Families," Kaiser Family Foundation, October 4, 2019, https://www.kff.org/health-reform/issue-brief/pre-existing-condition-prevalence-for-individuals-and-families/

DHHS, “Health Insurance Coverage for Americans with Pre-Existing Conditions: The Impact of the Affordable Care Act,“ Department of Health And Human Services, January 5, 2017, https://aspe.hhs.gov/system/files/pdf/255396/Pre-ExistingConditions.pdf

Rachel Fehr, Cynthia Cox and Larry Levitt, “Data Note: Changes In Enrollment In The Individual Health Insurance Market Through Early 2019,” Kaiser Family Foundation, August 21, 2019, https://www.kff.org/private-insurance/issue-brief/data-note-changes-in-enrollment-in-the-individual-health-insurance-market-through-early-2019/

I haven’t found an estimate of what % of the 13.8mm persons have a pre-existing condition.

So that’s plans accessed though an exchange. Anotherstudyby the Kaiser Family Foundation found that in 2018 13.8mm individual were insured through plans purchased on the exchange (however that’s not everyone buying individuals plans, I have always purchased directly from Blue Cross/Blue Shield without going through an exchange)“…Total individual market enrollment, measured on an average monthly basis, increased from 10.6 million in 2013 to a peak of 17.4 million in 2015, before declining to13.8 million in 2018….”If you use Kiser’s 27% of non-elderly adults who had pre-existing conditions against that total enrolment 13.8mm *.27 that would imply3.726mm individuals with such a condition were accesses health care on the exchanges cheaper than they otherwise would be. Now that’s prob not a fair assumption as the exchanges tend to be younger people who don’t get health care though their employer.

"... The question is not how many Americans have a health condition,but how many Americans buying insurance in the individual insurance market have a condition that makes them difficult to insure at prices they can pay. Keep in mind that the Affordable Care Act set up a subsidized transitional plan for anyone with pre-existing conditions denied insurance in the individual market. Peak enrollment: about 115,000 in 2013.The White House in an executive order last week noted that, by the Obama Administration’s own report, a mere 2.7% of an estimated roughly 130 million people with pre-existing conditions gained access to health insurance through the Affordable Care Act.... "

Okay, so basically the WSJ editorial board argued that the number that really matters is the number of American’s who are not covered by Medicare/Medicaid nor employer provided health insurance who get covered though plans purchased on exchange.

Table from HHS:

Kaiser goes on to note, and I think this is a good answer to your questions, 53.8mm (non-elderly) have a condition that would have left them uninsurable in the individuals markets, however most of these people are getting insurance though their employer so they can avoid individual plans“…A larger share of non-elderly adult women (30%) than men (24%) have declinable pre-existing conditions in 2018, unchanged from 2015. We estimate that23.7 million men have a pre-existing condition that would have left them uninsurable in the individual market pre-ACA, compared to 30.1 million women. Pregnancy explains part (about 2 million women) but not all of this difference….”

Using HHS’s narrow definition that number goes to61mm non-elderly Americans.That HHS estimate was mirrored by the Kaiser Family Foundation, "... estimate that 27% of nonelderly adults have a declinable health condition, which is about53.8 million people in 2018…. The prevalence of declinable conditions also increases with age among non-elderly adults: ranging from 18% of those in the 18-34 age group to 44% for those in the 55-64 age group….”

You are correct Biden was using a pretty broad definition of “Pre-existing condition” including high blood pressure and behavioral issues, using HHS’s broad definition you can say 133mm. HHS“…As shown in Table 1, we find that theACA is protecting between 23 and 51 percent of nonelderly Americans--61 to 133 million people--with some type of pre-existing health condition from being denied coverage, charged significantly higher premiums, subjected to an extended waiting period, or having their health insurance benefits curtailed should they need individual market health insurance coverage….”

I think a good answer to your question, how many people (non-elderly) have a condition significant enough to have an impact on the price of insurance is somewhere btw 53.8mm-61mm.

This is driven by the rise of intangibles assets, “…investors sought out companies trading for less than their book value—the assets on its balance sheet minus debt and other liabilities. Today, most value comes from intangible assets that typically don’t appear in book value: intellectual property such as patents and software, brands, and user networks. Between 1995 and 2018, intangible assets rose from 68% to 84% of the enterprise value (which includes equity and debt) of companies in Standard & Poor’s 500 stock index, Mr. Thomas estimates….”