Jay Zagorsky on the economy
The Ohio State research economist answers alumni questions about the levers that move the world.
Economics is having a moment of sorts. "Freakonomics" is a hit book, podcast and radio show. New York Times columnist Paul Krugman is something of a household name (not to mention a Nobel laureate). Economists are constantly sought by media outlets to help explain how things work. Ohio State’s own Jay Zagorsky is routinely quoted in newspapers, magazines and even morning TV.
Zagorsky splits his time between Columbus, where he is a research economist in the Center for Human Resource Research at Ohio State, and Boston, where is an adjunct associate professor in the Questrom School of Management at Boston University. He writes and thinks primarily about wealth and income, but we invited Ohio State alumni to put his skills to the test with questions about anything related to economics.
- One reason cited for decreasing the corporate tax rate is competition with other countries, such as Ireland. Would Ireland’s approach work in the U.S.? — Cindy McAllister ’80
The World Bank ranks Ireland as the fourth-best country in the world for taxing business. It not only has low rates, but Irish businesses spend about half the time as U.S. companies do on calculating and paying taxes. Because of this favorable environment, lots of companies have moved their European headquarters to Ireland. What Ireland teaches the world is that it is not just low rates that are important to businesses. Simple tax rules and easy tax forms also matter.
I do not think the Irish method can be replicated in the U.S. Lowering rates in the U.S. will shift some business here. However, I don’t think we will see the same boost that Ireland got, since many of the world’s largest companies are already located here.
- How are baby boomers, who are working later in life than previous generations, affecting the U.S. economy? — Gregory Cook ’71
For generations, most people thought of work as toil. People worked hard in fields or factories. Over time, many jobs have become much less based on physical strength and stamina and focused more on intellect, problem solving and creativity. Early wagon drivers had to be extra strong to control unruly teams of horses. Today’s truck drivers have power steering, brakes and GPS. Strength is no longer a criterion for driving a modern 18-wheeler down the highway.
This shift away from muscle and toward brains has enabled baby boomers to work longer. I think it is a wonderful development, because trends that keep people active and involved in the labor force not only boost the U.S. economically, but also keep people happier, since they feel useful and productive to society.
- What is your view of universal minimum income as a policy? — Erik Clarke ’16
Minimum-income policy is a wonderful idea that will likely never be implemented. These policies are wonderful because there is a very good chance that large numbers of workers will be displaced by robots and computers. For example, truck drivers might soon be replaced by self-driving vehicles. Minimum-income policies ensure displaced workers get enough money to live.
Unfortunately, these policies will also encourage some people who are not displaced by machines to stop working. As a society, we are always torn between helping those in need and preventing people from being free-loaders. I believe politicians will not enact minimum-income policies because public anger against free-loading usually outweighs compassion for those in need.
- Are politicians congratulated or blamed too much when economies succeed or fail? — JH. Todd Starkey ’13
Politicians are a lot like skiers. It is relatively easy for any politician to drive an economy downhill and into ruin fairly quickly. However, it is much harder for a politician to improve matters, and it takes much effort to boost an economy and make it go uphill.
It is hard for a politician or a political party to improve economic conditions because each new law and rule designed to improve circumstances will help some people, but also hurt others. For every piece of legislation, there are winners, losers and unforeseen side effects. For example, President Franklin D. Roosevelt believed his New Deal policies helped end the Great Depression. But 80 years later, economic historians are still debating exactly how much impact the New Deal had on ending hard times.