Ah. A correspondent informs me that he has John Cochrane's response to my claims that:
- 36.5/85 ≠ 20%,
- he should not write that 36.5/85 = 20%, and
- the Wall Street Journal should not print that 36.5/80 = 20%.
Could somebody at Hoover please do an intervention?
And if Hoover won't, could somebody at Stanford please do an intervention on Hoover?
Comment of the Day: Marc C.: Monday Smackdown: The Elementary Arithmetic of a Value-Added Tax (VAT): "Asked Cochrane if he would respond. [Cochrane wrote]:
No. The response is obvious and elementary. It's easy to calculate the VAT rate under various assumptions. Brad's insults, slanders, ad hominem attacks, and outright lies do not merit responses.
He then added:
Brad's attack was also really weird. My point was, we argue too much about tax rates. If spending is 20% of GDP, the VAT rate will be, eventually, whatever it takes to raise 20% of GDP. Yes, I had 5 words to make that point in WSJ, so I kept it really simple. But you're smart enough to figure that out if you want a more complex calculation. But what does Brad object to in that point? Is that his best shot against a VAT? Is Brad in favor of the massively complex, cronyist tax code with its huge swath of deductions for favored businesses? In an economics discussion about VAT vs income tax, Brad's best shot is he wants a more complex calculation of the VAT rate -- in the 5 words I have at WSJ? Other than a chance to make a twerpy personal attack, I just don't get it.
Do note that when Cochrane writes "I had 5 words to make that point in WSJ" he is lying. He had 25 words:
Well, if the federal government is going to spend 20% of gross domestic product, the VAT will sooner or later have to be about 20%...
It would have taken him 20 words—five words fewer than he used—to have been truthful and written: "The rate needed to raise 20% of GDP in net revenue from the VAT tax base would be about 43%..."
A professional person does not claim that 36.5/85 = 0.20.
A normal professional person does not say he has no response, and then blather on with 200 words of word-salad.
A normal person does not claim that for reasons of space he couldn't write a shorter true and had to write a longer false statement.
Yet this is what we get in the Republican Wall Street Journal. And this is what we have gotten for more than forty years now. And yet this was, once, an economist...