Leaky buckets

Arthur Okun likened taxes to leaky buckets. The leaks are the unintended consequences and lost revenue caused by the change of peoples behaviour in response to the imposing of the tax.

Roger Lowenstein wrote a piece about the latest omnibus bill passed by the US Senate replaced a proposed bucket with very small leaks with one with a giant hole in it.

The awfulness of the tax on buybacks is that it gives tax relief to companies gifting shares to their own executives. A pure win for the executive class. More details.

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Basically, Wall Street has decided that we’re going to get a soft landing. Weaker PPI figures, and initial claims data suggests a softening landing, and that although a YoY CPI print is 9.8%. Yields at the long and short end dropped, both the longer-term outlook for inflation and expectations of continued Fed hikes subsided (i.e. both lower).

Is this rational? I am not so sure. There was an article in the FT saying that there are huge sectoral imbalances in the job market, with some firms laying people off and others desperately trying to hire. In some rare cases, the same firm is laying off staff in some functions, but desperately trying to hire elsewhere. It seems that the part of the labour market which is hottest is the one for shit jobs, such as delivering newspapers from the printing works (you have to start work at 5am, and you are expected to take another job from 9am so you are not paid much), but the part which is cooling rapidly is the one where life is traditionally easy: working for a startup like Coinbase, or Redfin (I’m not sure if those firms are the ones laying off, or just pausing hiring, but it’s that sort of sector).

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