, 8 tweets, 2 min read Read on Twitter
Well, well. In addition to repaying TPC's generosity by impugning its integrity, Kevin Hassett said stupid things taxpolicycenter.org/taxvox/will-co… 1/
He claimed that transfer pricing driven by corporate taxes inflates the measured US trade deficit, which is possible. Here's how: 2/
Suppose a multinational operating in the US either buys inputs from or sells inputs to a subsidiary in a lower-tax jurisdiction. 3/
It can cause profits to disappear here and reappear overseas by overpaying for what it buys and underpricing what it sells. 4/
Reduce the tax and it might stop doing that; so measured imports will fall and measured exports rise. Hence smaller paper trade deficit 5/
But Hassett claims this means more jobs -- which is stupid. NOTHING REAL HAS CHANGED. It's just accounting, with no effect on production 6/
I can't help thinking back to Dow 36K. In that book Hassett didn't just make a bad prediction; he engaged in multiple dumb misconceptions 7/
Summary here: web.mit.edu/krugman/www/do… At the time, there were people saying, "Oh, he can't have been that dumb." Yes he could -- and can. 8/
Missing some Tweet in this thread?
You can try to force a refresh.

Like this thread? Get email updates or save it to PDF!

Subscribe to Paul Krugman
Profile picture

Get real-time email alerts when new unrolls are available from this author!

This content may be removed anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member and get exclusive features!

Premium member ($3.00/month or $30.00/year)

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!