Thursday, December 10, 2009
That hire rate may be why the White House favors job summits. But Ed Morrissey noted yesterday that the threat of clean air regulation is creating job destruction in the coal industry. A local company filed papers to close its shop and lay off 93 workers; people I have spoken to in the last week indicate the firm was solvent, but saw no scope for growth of their capital. (Let this be a reminder -- the shutdown point for a firm can still be where capital earns an above zero return, but not as much as its opportunity cost.) As interest rates rise when inflation becomes a bigger concern than deflation, we will see more such decisions. Casey Mulligan offers the explanation for this pattern as a rise in marginal tax rates, rolling out over two years. His update yesterday shows the data generally following the pattern we see so far, though I would need to see almost two more years of data to be sure he was right.
Keith Hennessey highlights this morning one source of a tax increase: the Reid health care bill. Another is the use of credits and offsets in cap-and-trade; Ted Gayer of Brookings shows that a carbon tax would be less distorting and increase certainty for businesses. (h/t: Mankiw)