Corporate tax in America: How to stop the inversion perversion | The Economist →
#law and economics
Twenty years ago inversions were rare. But as other countries chopped their rates and America’s stayed the same, the incentive to flee grew. Until a decade ago Bermuda and other tax havens were the destination of choice, until Congress banned inversions where less than 20% of the company changed hands. Democrats have proposed expanding that prohibition to any transaction where less than 50% of the company changes hands—so an American company that bought a smaller foreign firm could not reincorporate abroad if its original shareholders remained in charge. Such a ban would be at best a temporary palliative. An American company paying higher taxes than its foreign competitors has a powerful incentive to find a way around the rules. Consultants are already coming up with dodges in case this proposal becomes law.
Toward a Run Free Financial Systems | John Cochrane →
The financial crisis was a systemic run. Hence, the central regulatory response should be to eliminate run-prone securities from the financial system. By contrast, current regulation guarantees run-prone bank liabilities and instead tries to regulate bank assets and their values. I survey how a much simpler, rule-based, liability regulation could eliminate runs and crises, while allowing inevitable booms and busts. I show how modern communications, computation, and financial technology overcomes traditional arguments against narrow banking. I survey just how hopeless our current regulatory structure has become.
A theory of the allocation of a Nobelist’s time | The University of Chicago Magazine →
This is wonderful:
As Nobel laureates, central bankers, Council of Economic Advisers chairs, and other distinguished guests made their way to assigned tables throughout the dining room, I was told a seat for me had been found, but I would have to be on my best behavior. Ronald Coase couldn’t make it to the dinner, and there was an open seat at the head table. It was Gary; Guity Becker, PhD’73; Milton; Rose Friedman, PhB’32; Jim Heckman; Lynne Heckman, AM’73; University President Don Randel and his wife, Carol; trustee Ned Jannotta; and me—a philosophy/political science/economics undergraduate who wasn’t even supposed to be in the room.
I sat next to Guity, who when I approached the open seat said, “You know, there’s supposed to be a Nobel laureate sitting here, so I hope you can keep up your end of the conversation.” I must have done all right, because she encouraged Gary when I asked him if he had any research positions available. He told me to come by his office and we’d figure something out—which I promptly chalked up to bar talk, and left for three months to study Western European civilization in Barcelona. It’s a testament to how much Gary trusted Guity’s judgment that there was a position waiting for me when I returned.