Source: http://www.boston.com/bigpicture/2011/04/cricket_passion.html

It has been a good number of years since I last rode the Bombay-Bangalore Udyan Express. The journey used to be an annual ritual, most often taken in the second week of June to mark the start of another school year. Almost taking up a full twenty-four hour cycle, the Udyan makes for an ideal rail journey, long enough to savor the experience without being so long that it crosses from the pleasant to the prosaic.

The train would usually arrive at Yelahanka, little over an hour away from Bangalore City, a little ahead of schedule. Udyan rookies were easily identified: they were the city-bound that would start preparing for disembarkation as the train ground to a halt at Yelahanka. The more experienced amongst us would settle down for the extended delay that invariably occurred at Yelahanka; some mighty evil gremlins must inhabit the short strip between Yelahanka and Bangalore City. Hot chai in hand, we would greet the onrushing heat and dust of a June morning.

There used to be a laziness about Yelahanka station in the early morning, a laziness punctuated only by the obligatory cricket games that took place on the maidaan just behind the station. Those cricket games became a part of the Yelahanka routine; chai, delays and cricket. I could never make out the score, or indeed, follow how the game was placed. The players were destined to be nameless, one year’s gangly pacer blending with the next year’s pudgy batsman.

Still, those games stay with me. There was something hugely comforting about seeing the cricket in full swing every time we pulled into Yelahanka, breaking the monotony of the subsequent delay. I daresay that I paid only peripheral attention to the game in play, but scurried singles and rip-roaring fights (the latter a vital component of any self-respecting game of gully cricket) became a part of the Yelahanka landscape.

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Back in boarding school, a place where students did not watch or own a television, we relied on an excess of goodwill to watch cricket matches. There was the government mandate that required all cricket matches featuring India to be broadcast on Doordarshan; in a place starved of cable tv, Doordarshan, and its endless Kumble-at-the-Kotla filler segments, was the best that we could do. Then there were the teachers that owned tv sets (few) who were kind enough to open their doors at all hours of the day to us cricket kooks (fewer still). With over thirty students sometimes crammed into a space designed for half that number, we watched many an Indian victory…and defeat.

Sometimes though, we had to make do with the radio. I still take joy in pointing out to old-timers that I too have had to follow cricket matches on a transistor set, ears pinned to the speaker in a vague effort to cut through the static. My memories of the 2003 World Cup are liberally interspersed with the BSNL jingle that greeted every boundary. And who could forget the air of incredulity with which the commentators announced every Ashish Nehra wicket at Kingsmeade? As India’s campaign got back on track after a disappointing start, some of the powers that be came to believe that the World Cup could prove too much of a distraction for those of us preparing for our tenth standard exams. Overtly banned from sneaking our way into an obliging teacher’s residence, my buddy Vikrant and I caught most of Pakistan’s innings in the Centurion game on the radio. Perched atop the dorm’s table tennis table, we listened as Saeed Anwar worked his way to a century before Wasim Akram and Rashid Latif added a late flourish to lift the team to a competitive total. We were not getting any work done and when somebody mentioned the prospect of Akhtar versus Tendulkar, we knew that we were not likely to get any done either. Hotfooting it halfway across campus, we made it in time to catch the start of the Indian innings and what would go on to be a famous 98 and an equally famous Indian win.

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Boxing Day at the MCG is not a particularly old tradition, but it is one that has attained a privileged status in short time. Waking up at 4 am in Bombay seemed the natural thing to do for an India-Australia series kicking off in Melbourne. I caught the first session, long enough to be reassured that Zaheer Khan was fit. Despite my best efforts to delay our departure on a family holiday until the tea session, the family demurred. We were on the road and relegated to the now-unfamiliar role of listening in on the radio. The ghats brought a whole lot of static with them and before long, loss of radio reception entirely. Text message updates from obliging friends were all that I had to go on, coming in short pings whenever something of substance happened. Sadly, a test match cannot be reduced to short pings; it is the moments between the pings that make for the substance of a test match. Try conveying the pressure exerted by Zaheer Khan as he toys with the batsman over the course of an entire spell: outswinger, outswinger, inswinger, outswinger, Oh My! That One Held Its Line, bouncer. Some complexities are beyond the text message world.

Arrival at our hotel by the sea saw some minor panic in the ranks when my cousin and I found the television to be wholly dysfunctional. Repeated nagging of the staff saw the problem rectified. The first and second days at the MCG were thus experienced alternately on television, by radio and text message during power cuts, and then by television again. Breakfast was wolfed down in a bid to catch the post-tea session, while the actual day did not get started before stumps in the afternoon. Most significantly, I was off the web, disconnected from the alternate world that many of us inhabit on a constant basis. Initially, I would wonder what other folks on Twitter thought of James Pattinson’s breathless examination of the the Indian batsmen, or of Tendulkar’s jaw-dropping knock in the first innings. Gradually, the urge subsided. I was transported back to an earlier cricket-watching time, no better or worse, just different. I was taken back to school.

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There is a lai (rhythm) that sports commentary is expected to follow. The more mundane occurrences are expected to be narrated in steady, noncommittal pulses, while more momentous news should be conveyed with the appropriate air of drama. There is a balance that is needed, indeed expected. Curse the commentator that brings down the house over a dime-a-dozen play-and-miss, or maintains a tone of equanimity when a bouncer sends a hapless batsman hopping.

On Day 3, I found myself relying on the observance of these commentary conventions more desperately than ever. When static forms the bulk of a radio broadcast, one is forced to rely on the occasional background swell to distinguish important events from less reportable ones.  So it came to be that as my cousin and I lazed on the back seat in the sun, we picked out Zaheer Khan and Umesh Yadav bringing India back into the match during Australia’s second innings. We had paused by a small school when Brad Haddin’s wicket fell. Even with the sun at its peak, a game of cricket was on in the school yard.

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Do the IPL and the Big Bash represent the pinnacle of professionalism and commercialization of the sport? To this question, I am afraid I do not have an answer. They are no doubt at a remove from bucolic days on the village green, when amateurism and the Hambledon Club represented the soul of cricket. I, we, will need to see.

Here is what I, we, have seen: there are two crickets, two cricketing cultures that live alongside each other. Look for the soul of cricket in commercial cricket and you might be disappointed; you will also most certainly be misguided. For the living, breathing soul of the sport is out on every street in the subcontinent, out in every yard, gully, maidaan. Out in every space. It fills gaps, it provides backgrounds, it takes center stage, it buzzes, it drifts, it entices, it irritates, it distracts. It is there.

People go to great lengths to live this sport. Why? Because people go to great lengths to do a lot of things. To put three square meals on the table. To get somewhere. To just get by and when possible, do a little more than that. Living in a non-cricketing country, I sometimes forget how fundamental that impulse can be. It envelops you, without letting on that it is even there, that it is even a “thing”. The soul of cricket is dead. Long live the soul of cricket.

Christopher Hitchens is dead. When I think of Hitchens, one word comes to mind above all else: Iraq. Specifically, his support for a war that was ill-intentioned, ill-conceived and ill-executed from the outset, followed by his even more egregious refusal to back down from his initial stance. Surely even the most ardent of Hitchens fans cannot fail to see the irony in his lifelong excoriation of Henry Kissinger over Vietnam, in the context of his unending support for the war in Iraq.

So yes, Christopher Hitchens is dead. As are hundreds of thousands in Iraq. For me, his death will eventually come to be yet another that I toss onto the mental pile that is deaths associated with the war. Note, not caused by, for that was a fate that Hitchens was careful to steer away from, even as he freely condemned others to it. And this is before we get to his other sins, for they were manifold; from the inexcusable, such as his willingness to conflate Islamofascism, Islam, chauvinism and women’s rights into one muddled mess (for a takedown, see below), to the mildly irritating, such as his smug prescription on how to make a proper cup of tea (the water, milk and tea must be brought to a boil together Mr. Hitchens.)

For those of you sick of the canonization of Hitchens by Slate and other outlets, here are a few pieces that should be read in the wake of Hitchens’ death (click through and read each in its entirety):

Corey Robin:

Hitchens had a reputation for being an internationalist. Yet someone who gets excited by mass murder—and then invokes that excitement, to a waiting audience, as an explanation of his support for mass murder—is not an internationalist.  He is a narcissist, the most provincial spirit of all.

Only a writer of Hitchens’s talents could do justice to the culture that now so shamefully mourns him.

Glenn Greenwald:

The blood on his hands — and on the hands of those who played an even greater, more direct role, in all of this totally unjustified killing of innocents — is supposed to be ignored because he was an accomplished member in good standing of our media and political class. It’s a way the political and media class protects and celebrates itself: our elite members are to be heralded and their victims forgotten. One is, of course, free to believe that. But what should not be tolerated are prohibitions on these types of discussions when highly misleading elegies are being publicly implanted, all in order to consecrate someone’s reputation for noble greatness even when their acts are squarely at odds with that effort.

John Cook:

It was something else for 113,000 civilians who died in the chaos unleashed. The great tragedy of Hitchens’ life was that, toward its end, he aligned himself so stridently with the very fools, cowards, and charlatans who most desperately invited exposure by his prodigious skills as butcher. How can someone who devoted so much of his life to as noble a cause as destroying the reputation of Henry Kissinger blithely stand shoulder to shoulder with Rumsfeld?

People make mistakes. What’s horrible about Hitchens’ ardor for the invasion of Iraq is that he clung to it long after it became clear that a grotesque error had been made. In September 2005, he defended the debacle in Rupert Murdoch’s Weekly Standard in terms that are simply breathtaking in their lack of concern for the victims of his Mesopotamian adventure. It was headlined “A War to Be Proud Of.”

Mukul Kesavan:

In Hitchens’s bizarre world, the world’s largest pluralist democracy, home to the third-largest Muslim population in the world, would make common cause with the likes of Amis and Steyn whose prescriptions for saving civilization include systematic discrimination against Muslims, collective punishment, deportation and strategic “culling”. Hitchens argues that it’s important for liberals to stake out this rhetorical position because he doesn’t want anti-Islamism (his term for being anti-Muslim in a respectable way) to become the monopoly of fascists. Muscular liberals like Amis and Hitchens would deny them that space.

Finally, because Aaron Bady generally writes more intelligently about more things than most of us could ever hope to do, here is a rant that he wrote in reaction to the Hitchens column linked to above.

Early on in the book, Hacker and Pierson confront the skeptical view that government cannot influence the earnings people receive before taxes and before receiving any benefits. This is crucial to their central premise that political decisions have been responsible for the rise in income inequality in the United States, since the data shows that this inequality is chiefly driven by divergences in pre-tax earnings. Hacker and Pierson provide a few rebuttals, including the following:

Skeptics suggest that the only way government can change the distribution of income is through taxation and government benefits. This is a common view, yet also an extraordinarily blinkered one. Government actually has enormous power to affect the distribution of  ”market income”, that is, earnings before government taxes and benefits take effect. Think about laws governing unions; the minimum wage; regulations of corporate governance; rules for financial markets, including the management of risk for high-stakes economics ventures; and so on. Government rules make the market, and they powerfully shape how, and in whose interests, it operates. This is a fact, not a statement of ideology. And it is a fact that carries very big implications [Pp. 44; emphases added].

Some examples of just how political actors can work in subtle ways to affect pre-tax income are found in this long post at Naked Capitalism by Matt Stoller, on how the Fed fights. For instance:

…the pattern, of promising crackdowns [on the Fed] while delivering little, is consistently [sic]. While year [sic], Barney [Frank, D-MA] introduced a bill to make the powerful President of the New York Fed a Presidential appointment instead of hired by banks on the Reserve Bank board, he actually killed such a provision during the conference negotiations over the final Dodd-Frank bill (when it would have mattered and structurally changed the Fed in a critical manner). This is just part of the posturing that goes on around policy reform – being loud against powerful interests when the vote isn’t being held, and then using that posture as a negotiating chip to get something else you think is important when the game is on the line.

Set aside twenty minutes and go read the Stoller post in its entirety; at the end of it, you could be forgiven for having neo-Austrian sentiments coursing through you. The broad point is: Washington has worked and continues to work in subtle ways to perpetuate and entrench income inequality trends in this country. But don’t just take my word on it. Go read Hacker and Pierson.

Ezra Klein has done a terrific job breaking down the latest proposal, put forward by Ron Wyden and Paul Ryan (see here and here.) I am going to quote at length from those two pieces. First, on two generally opposing ways of looking at healthcare:

Liberals and conservatives disagree about how best to control costs in the health-care system. Conservatives believe health care can be a market like any other, in which competition leads to innovation, and innovation leads to higher quality and lower costs. The problem, they say, is that government, mainly through Medicare and subsidies for employer-based health insurance, is interfering in this market. Remove the government interference, and we could finally control costs.

Liberals believe that health care is not a market like any other. If you don’t like the price Best Buy is offering on a 42-inch Sony plasma TV, you walk out. You can’t do that when you collapse on the street and wake up in the ICU. And even in calmer circumstances, health care is devilishly complex, and the stakes are as high as they can possibly get. That’s why we listen to experts with many, many years of medical training. And as the insurance industry found out when HMOs began trying to deny care in the mid-1990s, woe be unto the bureaucrat who stands between a patient and her doctor.

So health care is unique because it’s a sector in which consumers can’t say no. Other countries have tried to solve this problem by putting the government between patients and drug companies — and they’ve largely succeeded. The main reason health-care costs in America are far higher than health-care costs in any other industrialized country is that in other countries, the government negotiates prices. So Pfizer has to make a decision: Do they want access to the 34 million potential customers who live in Canada? If so, then they have to charge a price the Canadian government considers reasonable.

And in Wonkblog this morning:

There are ultimately two ways of looking at health-care politics right now. One is that the two parties actually agree on quite a lot. Partisan politics often obscures that, but the fact of the matter is that Republicans want a competitive-bidding process with a public option in Medicare and Democrats want one for the under-65 set. Wyden is an example of this kind of politician. The other is that there is no policy consensus, and these are just tactical battles in which Republicans want choice reforms in order to break down the Medicare program but will never accept that sort of universal structure on the under-65 market. Democrats look at Ryan’s positions and see him more in this camp.

If the center of American politics is where Wyden is, then it’s possible that the two parties will be able to hammer out a deal. If it’s where Ryan is, they won’t.

Does Paul Ryan, or the GOP for that matter, have any coherent basis for opposing the PPACA at that point? Or does the desire to use market forces (with a public option included!) to control costs for seniors, but not for the majority of the population, have any sort of non-arbitrary basis? Partisanship is one thing, but the lack of coherence from a purported wonk is getting disgusting at this point.

So where does that leave Ryan-Wyden? Remember, cost-containment in the PPACA largely comes out of the individual mandate, which brings in low cost consumers into the insurance pool in order to bring costs down for everyone else (which is why the viability of the individual mandate is critical to Obamacare; without it, the entire PPACA is in a lot of trouble), not from the competition mechanism alone. Here’s Klein again:

many health-care experts think seniors are the population among which its least likely to work, as many of their health costs are already locked in, and people with many health problems and established relationships with doctors don’t want to switch plans midstream.

I am not going to hold my breath on Ryan-Wyden.

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For my first set of posts for Critical Twenties (thank you to Suhrith and Arghya for bringing me on board), I thought it apposite to write about a subject that I have been fortunate to be associated with: randomized controlled trials in development economics. From press in The Economist to two recent books, Poor Economics and More Than Good Intentions, randomized controlled trials, or RCTs, have carved out a large niche in the development economics academia. The work of people like Abhijit Banerjee and Esther Duflo at MIT’s Jameel Poverty Action Lab, much of it conducted in India, has gone a long way towards helping us understand what “works” in development. In this first post, I outline the methodology and motivation for RCTs. In a follow-up post, I shall look at RCTs in practice and some substantive findings coming out of recent experiments in India. In the future, I also hope to address some of the issues with RCTs and ultimately to provide a holistic sense of their uses and limitations specific to development in India. Readers are asked to bear with this methodology-heavy post; while it may not be of as much interest as the substantive findings in subsequent posts, it is critical to understanding how we arrive at such results.

RCTs are borne out of the innate desire to establish causality, necessary to any form of positivist social science. A lot of money is pumped into development and aid, but it is still unclear as to how these funds could be best utilized. With funds being limited in many cases, it is imperative that aid interventions be evaluated rigorously. However, such evaluation is not always easy. Even blockbuster projects like Jeff Sachs’ Millennium Villages Project have been heavily criticized for failing to incorporate appropriate evaluation mechanisms in the project design.

The motivation behind conducting a randomized controlled trial is a simple one: to isolate the effect of a particular policy intervention. The scope of these interventions is wide-ranging, from the provision of a commitment contract to help smokers quit smoking, to the provision of microcredit to low income families. Each of these interventions seeks to find a causal explanation for the effects of a certain policy intervention, or treatment i.e. to answer the question “what is the difference in outcomes for a subject that receives a certain treatment X as opposed to the outcome for the same subject who does not receive said treatment X?” in the formulation of economists Joshua Angrist and Jorn-Steffan Pitschke. The standard approach involving observational data typically involves a multiple regression, in which various controls are included along with the independent variable of interest: thus, to find the impact of the stimulus package on total employment, one might run a regression with employment as the dependent variable and the stimulus amount as the key independent variable, along with controls for say cyclical employment fluctuations, other exogenous shocks, etc. One problem that readily becomes apparent is: Are all the unobservables  controlled for here? Despite including a whole host of controls, researchers may miss certain controls that have potentially significant confounding effects on the causal relationship between the stimulus package and employment. Given the sheer multitude of unobservables that may be present (along with data limitations), it is entirely plausible that certain controls will be left out. This worry compromises the internal validity (i.e. the solidity of the context-specific findings) of a non-experimental study, casting doubt on the causal relationships identified.

To borrow the parlance of medical trials, one can think of subjects receiving a policy intervention as the “treatment” subjects and subjects not receiving the policy intervention as the “control” subjects. The controls provide one with a counterfactual scenario; without this counterfactual, one cannot be certain that treatment and control groups are not exhibiting different outcomes by virtue of factors that are unrelated to the actual treatment/policy being enacted. In the context of the stimulus example, researchers need to ask if the effects on employment would have been observed in the absence of a stimulus package as well, a question that calls for a comparison control group.

In order to evaluate the effects of a policy intervention/treatment in a rigorous manner, experimentalists advocate conducting targeted policy experiments. Such experiments usually involve the identification of a target population, followed by a representative sample within said population. Subjects receiving the policy intervention (the “treatment” group) are then randomly chosen from within the sample, with the non-treated sample subjects forming the control group. Randomization ensures that unobservables are controlled for ex ante, since a treatment subject i is the same as a control subject j in expectation. Although one cannot be sure of what all the unobservables are, randomization ensures that the unobservables are balanced- in theory- between the two groups. It is our best approximation of including a countably infinite number of control variables in one’s regression. The difference in outcomes between the treatment and control groups is known, in formal terms, as the Local Average Treatment Effect, or LATE. (As a short aside: The central role played by randomization here prompted venerable development economist Angus Deaton to dub practitioners of such experiments as “randomistas”. In response to the critiques of Deaton and others, fellow economist Guido Imbens was moved to write a rebuttal with the title “Better LATE Than Nothing“.)

By controlling for multiple unobservables, RCTs thus give one a tremendous amount of internal validity in one’s studies: the randomization ensures that the parameter of interest (the policy intervention, or “treatment”) is the only variable to vary across the two groups, allowing one to isolate the context-specific effects of a particular policy intervention.

Consider the following illustrative example, an experiment conducted by economists Dean Karlan and Jonathan Zinman on expanded microenterprise credit access in Manila. In partnership with a lender in Manila, the researchers identified a pool of marginal creditworthy applicants; owing to lender constraints, only a limited number of applicants could be provided with a loan. The treatment group, comprising recipients of loans, was randomly chosen and the average impact of the loans was compared to the average impact for the control group of those for whom a loan could not be provided. The researchers found that “the canonical case for microcredit- that access increases profits, business scale, and household consumption- is not supported on average…in all, [the] results suggest that microcredit may work broadly through risk management and investment at the household level, rather than directly through the targeted businesses.” A similar methodology was used by another set of researchers in looking at the impact of expanded loan access for marginal applicants in Hyderabad.

As a concluding note, it should be emphasized that RCTs will not, nor were they ever intended to, provide us with a silver bullet or an all-encompassing prescription to “end” poverty. Furthermore, it is clear that RCTs cannot be used to answer every question: using an example from above, one would be hard pressed to run a stimulus experiment. However, one could argue that for those questions that RCTs are equipped to answer, they do a good job of giving us a handle on context-specific causality, as with the case of expanded loans access in amongst marginal applicants in Manila. The hope is that by building our knowledge of what works in small steps, from specific policies in specific contexts to broader policies in broader contexts (see Innovations for Poverty Action’s list of “Proven Impact Initiatives”, initiatives that research has shown to be broadly applicable across multiple contexts in a cost-efficient way), we can work towards a better approach to development. Issues persist: how does one generalize from a specific context to broader applicability? How confident can one be of one’s LATE estimates? Can such incremental steps ever translate into change on a grand scale? These are issues that I hope to work through in subsequent, hopefully less dry, posts.

Watch this space!
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In the interests of full disclosure: Dean Karlan (co-author of More Than Good Intentionsand the aforementioned Manila study) is one of the professors that I work for and founder of Innovations for Poverty Action, the organization that currently employs me. However, views expressed in this, and all posts to come, are mine alone.

And just like that, it was done. A nonchalant flick wide of the man at square leg, followed by a light jog over to the non-striker’s end. Helmet off, arms raised, eyes as always raised towards his father. _______ trotted over from the covers to congratulate the great man on achievement the entire cricket world had been waiting for. Depending on one’s perspective, either cricket’s longest running melodrama had finally been resolved, or a journey towards yet another summit- momentarily delayed- had concluded. Even _______, responsible for delivering the laddoo down leg-side, looked mildly dazed at having been part of such a historic moment. The _______ faithful rose as one; like Roger Federer, Sachin Tendulkar can lay claim to hometown fans in stadiums the world over.

Although _______ was at stake in the series, it would not have mattered even if _______ had been at stake; the ton of tons had taken on a life of its own. It was always the series within the series, a storyline that ran parallel and concomitant with the team and the individual. The chance of achieving the milestone always approached certainty asymptotically, more so as the milestone came nearer. 70s, 80s, 90s…stumble. The crowning achievement of the entire saga may not have been the milestone itself, but the redefinition of failure. 100 or broke. As it has been throughout his career, Sachin Tendulkar recalibrated our benchmarks.

In achievement, it was unremarkable; in expectation and legacy it was and will remain monumental. In the final reckoning, we will not remember the 91 at The Oval, the 94 at the Wankhede, the 85 at Mohali, the _______ at _______, or even the _______ against _______. As soon as number 99 was completed on the 12th of March, 2011, number 100 was destined to be scored on the Elysian Fields.

With the truly great achievements, context is not a choice. It is a right. Sachin Tendulkar earned it a while back, so the interregnum  between numbers 99 and 100 is precisely that: an interregnum. As is so often the case, Sidvee says it best:

The wait continues but the result is a given. It has always been. Barring his walk-on-water epics at Sharjah, Tendulkar’s achievements aren’t bolts out of the blue; they’re inevitable tidal waves. The hundred will arrive, come hell or high water. Ever since he was 16, greatness has been expected of him. There’s been no question of him not delivering on the promise. He knows it. We know it. And history, sure as hell, knows it.

One looks down on a variety of things from the summit. But one always looks down.

Really, that is the only context that matters.

We obtain three policy recommendations from basic research that we believe can satisfy these three criteria reasonably well. First, very high earners should be subject to high and rising marginal tax rates on earning. In particular, we discuss why the famous zero marginal tax rate at the top of the earnings distribution is not policy relevant. Second, the earnings of low-income families should be subsidized, and those subsidies should then be phased out with high implicit marginal tax rates. This result follows because labor supply responses of low earners are concentrated along the margin of whether to participate in labor markets at all (the extensive as opposed to the intensive margin). These two results combined imply that the optimal profile of transfers and taxes is highly nonlinear and cannot be well approximated by a flat tax along with lump sum “demogrants.” Third, we argue that capital income should be taxed. We will review certain theoretical results- in particular those of Atkinson and Stiglitz (1976), Chamsley (1986), and Judd (1985)- implying no capital income taxes and argue that these findings are not robust enough to be policy relevant. In the end, persuasive arguments for taxing capital income are that there are difficulties in practice in distinguishing between capital and labor incomes, that borrowing constraints make full reliance on labor taxes less efficient, and that savings rates are heterogeneous.

(Diamond and Saez, 166-7, emphases added)

The paper takes a little time to get through, but the initial model is relatively simple and well worth your time. The authors find an optimal tax rate on the highest earners of around 70%; by comparison, here are some estimates that Dylan Matthews compiled of where some economists see the Laffer Curve as “bending”. One of the more compelling points to think about coming from the “right” is Mankiw’s caution to think about the long-run effects of ramping up top marginal tax rates. Here are Diamond and Saez:

Perhaps, more critically, does an estimate based on a single period model still apply when recognizing that people earn and pay income taxes year after year? First, earlier decisions such as education and career choices affect later earnings opportunities. It is conceivable that a more progressive tax system could reduce incentives to accumulate human capital in the first place. The logic of the equity-efficiency tradeoff would still carry through, but the elasticity e should reflect not only short-run labor supply responses but also long-run responses through education and career choices. While there is a sizable multiperiod optimal tax literature using life-cycle models and generating insights, we unfortunately have little compelling empirical evidence to assess whether taxes affect eanring through those long-run channels.

Second, there is significant uncertainty in future earnings. Such uncertainty gives and insurance role for earnings taxation and, as we shall see, has consequences for the taxation of savings. However, the applicability of results for policy seems unclear to us.

Bottom-line: we don’t have convincing empirical evidence either way on the long-run earnings effects. Nope, not even Greg Mankiw’s tragic declaration that he will stop writing op-eds if it costs him too much, constitutes compelling evidence. The single-period model seems to give us very compelling reasons for the progressive tax case laid out by Diamond and Saez and the multi-period model is ambiguous at best. On the optimal taxation of capital income in a two/multi-period model, I recommend going through the authors’ discussions of Chamley (1986), Judd (1985) and Atkinson-Stiglitz (1976).

So 1-percenters, whaddaya say?

In addition, do watch this discussion at Columbia University, titled Understanding #OCCUPYWALLSTREET:

There is a little bit for everyone there: Suresh Naidu on the political economy aspect, Saskia Sassen from Sociology, Nadia Urbinati on political theory and Stathis Gourgouris from ICLS. 1 hour and 20 minutes well spent.

Meanwhile: Some cricket fans I have come to know over the past few months just launched a new cricket website, The Sightscreen. Full disclosure, etc: I am a contributor to The Sight Screen. My first piece, on how we view intent vs. execution, is now up here. All my contributions should be available at this link, for those of you interested.  Some other highlights from the early days of The Sightscreen:

Mahesh Sethuraman remembers a special, special innings from Nathan Astle (video links included).

Jon Hotten on England in One Day Internationals.

Minal and Aashish remind us of Sanjay Manjrekar’s incredible promise; we forget sometimes that he was, in many ways, the natural heir to Sunil Gavaskar.

Ahmar Naqvi on what cricket means to Pakistan.

Finally, Shoaib interviews Dan “the man” Vettori.

These are early days for The Sightscreen and we would dearly appreciate feedback.

I don’t usually read the Tom Friedmans and David Brooks’ of the world. And neither should you. Unfortunately, the ‘stache managed to suck me in with the title of today’s column. Wouldn’t you be curious if Thomas “Suck on this” Friedman wrote a piece with the word “suckers” in the title?

Today’s column is a doozy even by Friedman’s appallingly low standards. One has to hand it to him: he always manages to set the bar lower. Most of the op-ed is dedicated towards arguing against stationing US troops in Iraq and Afghanistan. That, by itself, is hardly an offensive proposition. However, the ‘stache comes through at the end with this:

America today needs much more cost-efficient ways to influence geopolitics in Asia than keeping troops there indefinitely. We need to better leverage the natural competitions in this region to our ends. There is more than one way to play The Great Game, and we need to learn it.

Friedman must have had his head buried so far in Kim that he failed to notice the prevailing theme in American foreign policy since God-knows-when.

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P.S: As an added bonus, we get Friedman’s Middle East Anthro for Dummies:

Why? Well, for starters, centuries of history teach us that Arabs and Persians do not play well together. Yes, Iraq has a Shiite Muslim majority and so does Iran. But Iraqi Arab Shiites willingly fought for eight years against Persian Iranian Shiites in the Iran-Iraq war.

All in one, neat little paragraph. The man is a force of nature.