Jorge Ramírez

What could've been

[Jorge Ramírez @chillaxmachine]

Mandamientos

[Robot James 🤖🏖 @therobotjames]

Rules.

- Never speak of a position that is going well. Do not anger the market gods.
- Never gloat about PnL
- Especially, never gloat about PnL when the broad market is down or others are hurting.
- Speak only of trades that went disastrously wrong in an amusing way.

[Jorge Ramírez @chillaxmachine]

@stonezh2 @SimonsFdn @UChicago @stonybrooku @UofT @nyuniversity @Institut_IHES It was leaked

[Jorge Ramírez @chillaxmachine]

@austrosillyism That would actually help them acquire 4-5 years experience before graduating

[Jorge Ramírez @chillaxmachine]

@dynn__3 Pidiendo mano y penal a cada rato

[Jorge Ramírez @chillaxmachine]

@darioelque JAJAAJA genio

[Jorge Ramírez @chillaxmachine]

@ojoenlagente Naah, estuvo aburridísimo el partido

[Jorge Ramírez @chillaxmachine]

@HabibiBall More like a week

[Jorge Ramírez @chillaxmachine]

@Rapsodycholenia @DeputySecState Snitch

[Jorge Ramírez @chillaxmachine]

@wesyang Some leftist in the comments is somehow claiming Slobodian is engaging in scholarly debate

[Jorge Ramírez @chillaxmachine]

@chaumian Context: A ChatGPT 5.5 Pro proof!

[Vincent Geloso @VincentGeloso]

Okay, I had the time to read this over. In the past, I did not mince words much. I do not see the reason to do any mincing now.

There are six replies that must be made to this piece.

First: Zucman (I am assuming he also speaks for the other two musketeers) is goalpost-shifting. The argument that used to be made was that inequality followed a strong U-curve with a precipitated fall between 1941 and 1947. The trough lasted to 1980 and continued since and exceeding the level of the 1920s. That narrative and timing makes it easy to justify tax policy correctives. However, they now say "inequality is higher than in the 1960s" which is not the same statement. Indeed, saying it increased allows for a rapid level-change from 1980 to 2000 with no change since (I am speaking pre-tax and pre-transfers). That is not "denying" inequality (a cheap shot against Splinter and Auten). This obfuscates from the obliteration of two previous goalposts they used. The first is that the levelling of the U-curve is actually more gradual and most of it happens during the 1930s with the depression -- 80% to 85% of the decline in the top 1%'s share happens from 1929 to 1941. That makes it harder to focus on tax policy as the driving force (the wiping of capital gains during the depression is). Second, it eliminates the claim that inequality is forever rising. Shifting goalposts is what this is! But these two points that they had been making been making for a decade no longer apply regardless of the criticism here.

Second: The issue at hand is how to harmonize the definition of income according to different sources so that they become consistent. This can be broken down into two periods (pre-1960 and post-1960). PSZ claim that since fiscal income accounts for 60-70% of national income, any levelling would have to be because the rest has become more equally distributed. That assumes that they made no mistake on the treatment of tax data. But, as we have shown, they do many errors for the pre-1960 period. And I do mean many! First, they include Hawaii and Alaska in the tax data pre-1959 but not in the national accounts. Second, they forgot to consider that pre-1938, state and local government employees were exempt from filing federal taxes. Third, they forgot to consider issues like the combat zone tax exclusion (which matters in times of war). Fourth, they poorly dealt with missing filers issues by using a war year (which alters the labor market in an exceptional way) to adjust the married-to-single ratio. Fifth, they "ballparked" how to assign deductions. As such, the entire pre-1960 period is poorly made from their work. None of the replies in this paper rescue the pre-1960 estimates. It is thus to throw the entire pre-1960 part of the PSZ estimates.

This comment is indepdenent of the reply Auten and Splinter made here: https://t.co/A1dTLzr8fR

Third: Which leads me to the third reply. To adjust the definitions post-1960, PSZ use a "misreported income" adjustment which they mostly take as an indicator of tax evasion and which must be assigned to richer households. The idea here is to match tax data to national accounts definition (rather than match national accounts with tax definition) But the problem is that if we follow their logic, the variations of misreported income make NO historical sense (see image). PSZ depict a sharp drop in this category to a low of just over 2 percent, coinciding with the steeply progressive federal income tax hikes of 1932. Less evasion when tax rates increase in an era of voluntary filing? Dream on Suzie! Next, PSZ show a sharp rise in "evasion and other" between 1943 and 1945, peaking at almost 17 percent of national accounts income. Both findings are in tension with the well-documented proliferation of tax evasion after the Depression-era tax hikes, when income earnings were self-reported to the IRS. Tax evasion also rapidly declined after the adoption of automatic payroll withholding in 1943. So, basically, PSZ data assumptions should lead to assume that when the federal government began enforcing tax filing more aggressively, people evaded more? Again, dream on Suzie! Also, we know from historians and economic historians that tax evasion declined in the 1920s and that more income was truthfully reported (because of falling rates). PSZ show the opposite -- at odds with historians. Then PSZ find falling evasion to 1980 when tax rates were high and enforcement was steady. And then it rose when tax rates fell? Again, that makes no sense. The issue is that this series is not what they say it is. Its not tax evasion. Its not even misreported income. In fact (see second image), the BEA says explicitly to not do what PSZ do! Its literally there, on paper! And yet, they do it! The "misreporting and AGI gap" that PSZ use is not what they say it is.

Fourth: PSZ pretend that they were parsimonious in their data assumptions. They were not. They had to make numerous arbitrary assumptions in getting the estimates ready for their "DIstributional National Accounts (DINA)". I get that this is normal. I mean, I get it! I am an economic historians, you just gotta do it sometimes. However, if you don't do it if you have a simpler method with fewer degrees of freedom available to yourself as a researcher.

And that is what I chose to do in this paper with @PhilWMagness. We decided to harmonize in the opposite direction. Since the tax data is what it is and the national accounts are far richer, why don't we adjust the national accounts so that we arrive at a definition of fiscal income. That is far better since this is what used to be done by people like Kuznets, Goldsmith and many others. This is what we dub "tax reconciliation approach" and the object of the paper in reference at the end of this X. We simply went through all the items of national accounts and the tax code and reconciled them. This is a single method for the entire period from 1917 to today. The result is that, first, PSZ clearly tend to miss the mark as their fiscal income drifts relative to the BEA's measure of AGI (see figure 1 in the article) as we move from 1980 to today (i.e., they gradually overestimate more and more). Second, when you do correct, you find exactly what Auten-Splinter find (with fewer assumptions) (see third image). Namely that there is a pronounced rise of inequality from 1980 to 2000 and stabilization since.

Fifth: What is most interesting is that doing this more parsimonious approach appears to explain 40% of the gap between Auten-Splinter and Piketty-Saez-Zucman (see fourth image). This is akin to saying that 40% of the gap is based on an improper use of the "misreporting adjustment". Phrased differently, the "misreported income and AGI gap" that PSZ call explains only 40% of their differences with AS. The rest is stuff that they are not contesting in any meaningful way. So, essentially, PSZ are conceding that 60% of the differences between them and AS are indisputable and the rest is due to how they refused to follow the BEA's admonition to not do what their hearts wanted them to do.

Sixth: The point that is being made by critics is not that inequality is not high or has not risen since the low point of the 1960s. What is being criticized is the accuracy of the measurements and how they are being used to justify policy proposals. I actually care alot about inequality when its generated by the powerful gaming institutions to shape rules the way that privilege them and their buddies. I care about promoting social mobility. The ad hominem of "deniers" is cruel. It is in fact nasty because I am French-speaking and I know that in French, "denier" is not what it is in English. Denier in French is "négationniste" (in French, we speak of "négationnistes des changements climatiques") and that is the word used to qualify people who question the holocaust, climate change, school shootings (e.g., Alex Jones) etc. It is an insanely pernicious term and as a French speaker, I cannot think that this is not a deliberate attempt at slander. At the very least, it is a salacious innuendo.

This bad behavior adds itself to a long litany: the misrepresentation of steps taken in PS (2003), the goalpost shifting, the shadow-editing, the strawmanning of historical sources and alternative assumptions, the misrepresentation of source materials, the arbitrariness of multiple assumptions. I mean, all of this (documented here: https://t.co/LEd8g6kveh) is now topped with what is nothing else that salacious innuendos and political gamesmanship. It is not a good look!

Summary: PSZ essentially admit -- by their reply -- that criticisms that we can throw the pre-1960 part of their estimates is correct. I am happy with that. They misused the source material (against the recommendations of the BEA) in a way that generates historically and economically non-sensical implications. They used a non-parsimonious method while a better alternative out there exists. When that better method is used, it essentially shows that 60% of the difference between PSZ and AS are in AS's favor.

#econtwitter @BachmannRudi

[Pablo Secada @psecadae]

Conversé con Omar Mariluz anoche
https://t.co/cRd28N3pba

[Jorge Ramírez @chillaxmachine]

@AlexaaSounds Sacó menos del 0,3% de votos. Tan basado no es

[Jorge Ramírez @chillaxmachine]

@nonregemesse Would you prefer a male companion?

[Jorge Ramírez @chillaxmachine]

@Azzaghoth @lictuslictus No sabes lo que te pierdes

[Neuralink @neuralink]

Life with ALS or a spinal cord injury often means navigating a gradual or sudden loss of independence.

Neuralink aims to restore autonomy to those with unmet medical needs—starting with device control and communication, and expanding toward vision and other applications.

[Jorge Ramírez @chillaxmachine]

https://t.co/9I1W1vEdl5

[Anyone @anyxne]

Nunca permitas que tu preparación cultural, literaria y académica, te quite lo gracioso, alburero y mal hablado.

[Jorge Ramírez @chillaxmachine]

Cómo hace falta un buen sistema de educación en el Perú.

[Shining Science @ShiningScience]

🚨: Mia Heller, high school student, 18, invents water filter that eliminates 95.5% of microplastics.

[Jorge Ramírez @chillaxmachine]

@angelica960622 Las LLM