J. Bradford DeLong's Blog, page 413

Should-Read: I think the very smart Jeffrey Friedman gets...

Should-Read: I think the very smart Jeffrey Friedman gets this... not quite right. The case for the empirical benefits of capitalism is very strong���but only if one is willing to remove libertarian blinders and focus on eliminating the market failures (in distributions, in aggregate demand, in externalities, in information, etc.) that keep the function the market maximizes from being a good proxy for societal well-being. And once one has the market properly supported and disciplined, the philosophical discussion can commence: Jeffrey Friedman: What's Wrong with Libertarianism: "Libertarian arguments about the empirical benefits of capitalism are, as yet, inadequate...

...to convince anyone who lacks libertarian philosophical convictions. Yet "philosophical" libertarianism founders on internal contradictions that render it unfit to make libertarians out of anyone who does not have strong consequentialist reasons for libertarian belief. The joint failure of these two approaches to libertarianism explains why they are both present in orthodox libertarianism they hide each other's weaknesses, thereby perpetuating them. Libertarianism retains significant potential for illuminating the modern world because of its distance from mainstream intellectual assumptions. But this potential will remain unfulfilled until its ideological superstructure is dismantled...

Thus John Maynard Keynes was not the enemy but, indeed, about the best and only friend of the True Friends of Liberty: John Maynard Keynes (1936): : "In some other respects the foregoing theory is moderately conservative...

...It indicates the vital importance of establishing certain central controls.... The State will have to exercise a guiding influence on the propensity to consume.... It seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself to determine an optimum rate of investment. I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private initiative. But... if the State is able to determine the aggregate amount of resources devoted to augmenting the instruments and the basic rate of reward to those who own them, it will have accomplished all that is necessary....

If our central controls succeed in establishing an aggregate volume of output corresponding to full employment as nearly as is practicable, the classical theory comes into its own again.... When 9,000,000 men are employed out of 10,000,000 willing and able to work... the complaint... is not that these 9,000,000 men ought to be employed on different tasks, but that tasks should be available for the remaining 1,000,000.... Thus I agree with Gesell that the result of filling in the gaps in the classical theory is not to dispose of the 'Manchester System', but to indicate the nature of the environment which the free play of economic forces requires if it is to realise the full potentialities of production....

The modern classical theory has itself called attention to various conditions in which the free play of economic forces may need to be curbed or guided. But there will still remain a wide field for the exercise of private initiative and responsibility. Within this field the traditional advantages of individualism will still hold good. Let us stop for a moment to remind ourselves what these advantages are:

They are partly advantages of efficiency��the advantages of decentralisation and of the play of self-interest.
The advantage to efficiency of the decentralisation of decisions and of individual responsibility is even greater, perhaps, than the nineteenth century supposed; and the reaction against the appeal to self-interest may have gone too far.
But, above all, individualism, if it can be purged of its defects and its abuses, is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice.
It is also the best safeguard of the variety of life, which emerges precisely from this extended field of personal choice, and the loss of which is the greatest of all the losses of the homogeneous or totalitarian state.

For this variety preserves the traditions which embody the most secure and successful choices of former generations; it colours the present with the diversification of its fancy; and, being the handmaid of experiment as well as of tradition and of fancy, it is the most powerful instrument to better the future...

Should-Read: You really cannot do the history of economic...

Should-Read: You really cannot do the history of economic thought without being willing to do counterfactuals! Now it is true that many times the counterfactual will be "somebody else would have done exactly this same work five or fifteen years later: it was immanent in the structure of the theory and in the empirical data being fed to the profession by the world". But not always: John Maynard Keynes: Essays In Biography "If only Malthus, instead of Ricardo, had been the parent stem from which nineteenth-century economics proceeded, what a much wiser and richer place the world would be to-day!...

...We have laboriously to rediscover and force through the obscuring envelopes of our misguided education what should never have ceased to be obvious.... Malthus proceeded to apply these principles ���to the Distresses of the Labouring Classes since 1815.��� He points out that the trouble was due to the diversion of resources, previously devoted to war, to the accumulation of savings; that in such circumstances deficiency of savings could not possibly be the cause, and saving, though a private virtue, had ceased to be a public duty; and that public works and expenditure by landlords and persons of property was the appropriate remedy....

The whole problem of the balance between Saving and Investment had been posed in the Preface to the book, as follows:

Adam Smith has stated, that capitals are increased by parsimony, that every frugal man is a public benefactor, and that the increase of wealth depends upon the balance of produce above consumption. That these propositions are true to a great extent is perfectly unquestionable.... But it is quite obvious that they are not true to an indefinite extent, and that the principles of saving, pushed to excess, would destroy the motive to production. If every person were satisfied with the simplest food, the poorest clothing, and the meanest houses, it is certain that no other sort of food, clothing, and lodging would be in existence....

The two extremes are obvious; and it follows that there must be some intermediate point, though the resources of political economy may not be able to ascertain it, where, taking into consideration both the power to produce and the will to consume, the encouragement to the increase of wealth is the greatest...

Surely it was a great fault in Ricardo to fail entirely to see any significance in this line of thought...

John Maynard Keynes: The General Theory of Employment, Interest and Money: "The idea that we can safely neglect the aggregate demand function is fundamental to the Ricardian economics...

...which underlie what we have been taught for more than a century. Malthus, indeed, had vehemently opposed Ricardo's doctrine that it was impossible for effective demand to be deficient; but vainly. For, since Malthus was unable to explain clearly (apart from an appeal to the facts of common observation) how and why effective demand could be deficient or excessive, he failed to furnish an alternative construction; and Ricardo conquered England as completely as the Holy Inquisition conquered Spain. Not only was his theory accepted by the city, by statesmen and by the academic world. But controversy ceased; the other point of view completely disappeared; it ceased to be discussed.

The great puzzle of effective demand with which Malthus had wrestled vanished from economic literature. You will not find it mentioned even once in the whole works of Marshall, Edgeworth and Professor Pigou, from whose hands the classical theory has received its most mature embodiment. It could only live on furtively, below the surface, in the underworlds of Karl Marx, Silvio Gesell or Major Douglas.

The completeness of the Ricardian victory is something of a curiosity and a mystery. It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.

But although the doctrine itself has remained unquestioned by orthodox economists up to a late date, its signal failure for purposes of scientific prediction has greatly impaired, in the course of time, the prestige of its practitioners. For professional economists, after Malthus, were apparently unmoved by the lack of correspondence between the results of their theory and the facts of observation;��a discrepancy which the ordinary man has not failed to observe, with the result of his growing unwillingness to accord to economists that measure of respect which he gives to other groups of scientists whose theoretical results are confirmed by observation when they are applied to the facts.

The celebrated optimism of traditional economic theory, which has led to economists being looked upon as Candides, who, having left this world for the cultivation of their gardens, teach that all is for the best in the best of all possible worlds provided we will let well alone, is also to be traced, I think, to their having neglected to take account of the drag on prosperity which can be exercised by an insufficiency of effective demand. For there would obviously be a natural tendency towards the optimum employment of resources in a society which was functioning after the manner of the classical postulates. It may well be that the classical theory represents the way in which we should like our economy to behave. But to assume that it actually does so is to assume our difficulties away...

Should-Read: Murat Iyigun, Nathan Nunn, and Nancy Qian: T...

Should-Read: Murat Iyigun, Nathan Nunn, and Nancy Qian: The Long-run Effects of Agricultural Productivity on Conflict, 1400-1900: "A newly digitized and geo-referenced dataset of battles...

...in Europe, the Near East and North Africa covering the period between 1400 and 1900 CE. For variation in permanent improvements in agricultural productivity, we exploit the introduction of potatoes from the Americas to the Old World after the Columbian Exchange. We find that the introduction of potatoes permanently reduced conflict for roughly two centuries. The results are driven by a reduction in civil conflicts...

Should-Read: Zeynep Tufekci: @zeynep on Twitter: "Anyone ...

Should-Read: Zeynep Tufekci: @zeynep on Twitter: "Anyone who is concerned about security online...

...this awesome, accessible security guide by @citizenlab. Try it out! I will also put some more specific suggestions for high-risk people in thread below!...

Should-Read: Noah Smith: How Affordable Urban Housing Sta...

Should-Read: Noah Smith: How Affordable Urban Housing Stays Affordable: "San Francisco���s black population has declined... Hispanic population has... fallen in some historically Hispanic neighborhoods like the Mission District...

...The obvious explanation is economic: Rents in San Francisco have gone way up. Despite measures like rent control designed to shield existing occupants, rising rents put inexorable pressure on low-income residents to move out���they increase local prices for food and other goods, and they give landlords an incentive to evict rent-controlled tenants by any means they can find. Higher rents also discourage new low-income tenants from moving into the city.

How can rising rents be checked? One way is... an economic slump, possibly severe. A safer approach would be to build more housing... worth trying, for anyone worried about the exodus of low-income residents and disadvantaged minorities from the city. That���s why it���s so puzzling to see progressive activists fighting tooth and nail against the idea of allowing more housing development....

Zelda Bronstein... falls back on the old argument that new apartments in expensive cities are expensive:

Private developers don���t take advantage of permissive zoning or incentives to build affordable housing, because doing so doesn���t yield the profits that they and their investors demand...Because affordable housing doesn���t yield acceptable profits to real estate investors, the only way a substantial amount of it is going to get built is if it���s publicly funded.

Bronstein���s notion that housing is only affordable if government builds ���affordable housing��� is a common fallacy. The affordability of an apartment doesn���t depend solely on the inherent value of its roof and walls; it depends on the market. There are plenty of rentals in San Francisco that used to be affordable housing, and now are luxury units. Conversely, if prices go down, existing luxury units might morph into affordable housing.... We shouldn���t let suspicion of developers override rational consideration of the economics of housing...

For the Weekend: Stephen Vincent Ben��t: John Brown's Body I

For the Weekend: Stephen Vincent Ben��t: John Brown's Body I: INVOCATION

American muse, whose strong and diverse heart

So many men have tried to understand

But only made it smaller with their art,

Because you are as various as your land,

As mountainous-deep, as flowered with blue rivers,

Thirsty with deserts, buried under snows,

As native as the shape of Navajo quivers,

And native, too, as the sea-voyaged rose.

Swift runner, never captured or subdued,

Seven-branched elk beside the mountain stream,

That half a hundred hunters have pursued

But never matched their bullets with the dream,

Where the great huntsmen failed, I set my sorry

And mortal snare for your immortal quarry.

You are the buffalo-ghost, the broncho-ghost

With dollar-silver in your saddle-horn,

The cowboys riding in from Painted Post,

The Indian arrow in the Indian corn,

And you are the clipped velvet of the lawns

Where Shropshire grows from Massachusetts sods,

The grey Maine rocks--and the war-painted dawns

That break above the Garden of the Gods.

The prairie-schooners crawling toward the ore

And the cheap car, parked by the station-door.

Where the skyscrapers lift their foggy plumes

Of stranded smoke out of a stony mouth

You are that high stone and its arrogant fumes,

And you are ruined gardens in the South

And bleak New England farms, so winter-white

Even their roofs look lonely, and the deep

The middle grainland where the wind of night

Is like all blind earth sighing in her sleep.

A friend, an enemy, a sacred hag

With two tied oceans in her medicine-bag.

They tried to fit you with an English song

And clip your speech into the English tale.

But, even from the first, the words went wrong,

The catbird pecked away the nightingale.

The homesick men begot high-cheekboned things

Whose wit was whittled with a different sound

And Thames and all the rivers of the kings

Ran into Mississippi and were drowned.

They planted England with a stubborn trust.

But the cleft dust was never English dust.

Stepchild of every exile from content

And all the disavouched, hard-bitten pack

Shipped overseas to steal a continent

With neither shirts nor honor to their back.

Pimping grandee and rump-faced regicide,

Apple-cheeked younkers from a windmill-square,

Puritans stubborn as the nails of Pride,

Rakes from Versailles and thieves from County Clare,

The black-robed priests who broke their hearts in vain

To make you God and France or God and Spain.

These were your lovers in your buckskin-youth.

And each one married with a dream so proud

He never knew it could not be the truth

And that he coupled with a girl of cloud.

And now to see you is more difficult yet

Except as an immensity of wheel

Made up of wheels, oiled with inhuman sweat

And glittering with the heat of ladled steel.

All these you are, and each is partly you,

And none is false, and none is wholly true.

So how to see you as you really are,

So how to suck the pure, distillate, stored

Essence of essence from the hidden star

And make it pierce like a riposting sword.

For, as we hunt you down, you must escape

And we pursue a shadow of our own

That can be caught in a magician's cape

But has the flatness of a painted stone.

Never the running stag, the gull at wing,

The pure elixir, the American thing.

And yet, at moments when the mind was hot

With something fierier than joy or grief,

When each known spot was an eternal spot

And every leaf was an immortal leaf,

I think that I have seen you, not as one,

But clad in diverse semblances and powers,

Always the same, as light falls from the sun,

And always different, as the differing hours.

Yet, through each altered garment that you wore,

The naked body, shaking the heart's core.

All day the snow fell on that Eastern town

With its soft, pelting, little, endless sigh

Of infinite flakes that brought the tall sky down

Till I could put my hands in the white sky

And taste cold scraps of heaven on my tongue

And walk in such a changed and luminous light

As gods inhabit when the gods are young.

All day it fell. And when the gathered night

Was a blue shadow cast by a pale glow

I saw you then, snow-image, bird of the snow.

And I have seen and heard you in the dry

Close-huddled furnace of the city street

When the parched moon was planted in the sky

And the limp air hung dead against the heat.

I saw you rise, red as that rusty plant,

Dizzied with lights, half-mad with senseless sound,

Enormous metal, shaking to the chant

Of a triphammer striking iron ground.

Enormous power, ugly to the fool,

And beautiful as a well-handled tool.

These, and the memory of that windy day

On the bare hills, beyond the last barbed wire,

When all the orange poppies bloomed one way

As if a breath would blow them into fire,

I keep forever, like the sea-lion's tusk

The broken sailor brings away to land,

But when he touches it, he smells the musk,

And the whole sea lies hollow in his hand.

So, from a hundred visions, I make one,

And out of darkness build my mocking sun.

And should that task seem fruitless in the eyes

Of those a different magic sets apart

To see through the ice-crystal of the wise

No nation but the nation that is Art,

Their words are just. But when the birchbark-call

Is shaken with the sound that hunters make

The moose comes plunging through the forest-wall

Although the rifle waits beside the lake.

Art has no nations--but the mortal sky

Lingers like gold in immortality.

This flesh was seeded from no foreign grain

But Pennsylvania and Kentucky wheat,

And it has soaked in California rain

And five years tempered in New England sleet

To strive at last, against an alien proof

And by the changes of an alien moon,

To build again that blue, American roof

Over a half-forgotten battle-tune

And call unsurely, from a haunted ground,

Armies of shadows and the shadow-sound.

In your Long House there is an attic-place

Full of dead epics and machines that rust,

And there, occasionally, with casual face,

You come awhile to stir the sleepy dust;

Neither in pride not mercy, but in vast

Indifference at so many gifts unsought,

The yellowed satins, smelling of the past,

And all the loot the lucky pirates brought.

I only bring a cup of silver air,

Yet, in your casualness, receive it there.

Receive the dream too haughty for the breast,

Receive the words that should have walked as bold

As the storm walks along the mountain-crest

And are like beggars whining in the cold.

The maimed presumption, the unskilful skill,

The patchwork colors, fading from the first,

And all the fire that fretted at the will

With such a barren ecstasy of thirst.

Receive them all--and should you choose to touch them

With one slant ray of quick, American light,

Even the dust will have no power to smutch them,

Even the worst will glitter in the night.

If not--the dry bones littered by the way

May still point giants toward their golden prey.

Weekend Reading: Sidney Blumenthal on the Finances of Stephen "The Little Giant" Douglas

Weekend Reading: From Sidney Blumenthal: Wrestling With His Angel: The Political Life of Abraham Lincoln: "In 1836, the legislature granted a charter for a railroad running from Galena in the northwest corner to the southernmost tip of Illinois at the confluence of the Mississippi and Ohio Rivers...

...The company that got the charter was the partnership of Darius B. Holbrook, a Boston investor, and Sidney Breese, then a district court judge. Holbrook purchased the land that would be the southern terminus to be called Cairo, and the company was called the Cairo City and Canal Company. But when the Panic of 1837 struck and its whirlwind destroyed the London bond house financing the scheme, it collapsed.

Breese was elected U.S. senator in 1842, became chairman of the Committee on Public Lands, and sought a federal charter for a land grant to a new company based on the old one, called the Great Western Railway, of which he and Holbrook remained the partners. The bill passed the Senate, but failed in the House, where it was undercut by Douglas, who thought it was a confidence game to jack up the value of the virtually worthless tract at Cairo to make a windfall profit for Breese. After Douglas���s election to the Senate, he battled Breese for two years over their competing proposals. Finally, Douglas succeeded in ousting Breese from the Senate by securing the election of his ally James Shields, chief of Illinois��� Irish Democrats. The Great Western Railway bid evaporated.

On the first day of the Senate session, January 3, 1850, Douglas introduced his bill for the construction of the Illinois Central Railroad, which was referred to the Committee on Public Lands, where Shields now sat. Douglas���s Illinois Central would not originate at Galena, but Chicago, where Douglas had moved in 1847. He bought vast tracts of land along the Illinois and Michigan Canal, opened in 1848, a sluiceway of commerce to Chicago. These lucrative real estate opportunities were almost certainly made possible by his relationship with William B. Ogden, the wealthiest man in Chicago, its first mayor, a Democrat with whom Douglas dined in his lakefront mansion and who was also the chief investor in the canal.

At that moment there was not a single train track in the city; by 1860 Chicago would be the junction of more railroads than anyplace else on earth. Ogden would become known as the Railway King of the West, involved in dozens of railroads, and crown his success in 1869 as president of the Union Pacific, the first transcontinental line. (His attorney, Samuel Tilden, based in New York, became the biggest corporate lawyer in the country, and as the Democratic presidential candidate in 1876 won the popular vote but was denied victory through a deal that ended Reconstruction.)

As Douglas laid the groundwork for the Illinois Central, he strategically purchased large tracts of real estate whose value would skyrocket with the building of the railroad. He began in 1849 with lakefront property that he expanded soon to seventy-five acres that happened to run exactly along the planned IC right-of-way. Meanwhile, he acquired thousands of acres on the west side of Chicago as well as along the Chicago River and near Lake Calumet, which would directly profit from the railroad. It is likely that his financing came from Ogden and other friendly bankers who were counting on his political leverage for their own mutually beneficial projects.

���He had an inspiration for land,��� wrote John W. Forney. ���He justly believed that where there are large risks there should be large recompense.��� Forney floated effortlessly through government, politics, and journalism as a Democratic operative (until he metamorphosed into a Republican)���editor of various Pennsylvania newspapers, deputy collector at the Philadelphia customs house, and, by the early 1850s, clerk of the House of Representatives while at the same time editor of the Washington Union, the Democratic organ.

���To him,��� Forney wrote in tribute to Douglas, ���I am indebted for my first and only speculation���the better to be recollected because it was successful.��� Douglas confided to him the planning begun in 1853 for the Northern Pacific Railroad, unfolding a map of its route:

���How would you like to buy a share in Superior City, at Fond du Lac, the head of Lake Superior?�����.��.��. ���But,��� I said, ���old fellow, I have no money, and to buy a share in the proposed location will require much.��� ���No,��� he replied, ���I can secure you one for $2500, and you can divide it with��� naming one of the best of the future Confederates, ���and he will be greatly obliged.��� I knew nothing of the location, had never been there, had no money of my own, but I saw Judge Douglas was in earnest and wanted to serve me, and when he left, I borrowed the $2500, bought a share, divided it with the Southern gentleman referred to, who honorably paid his $1250; and after cutting my share into five parts, sold and gave three fifths to other friends, and with my two fifths bought the Waverley House, in Washington. The proceeds of my moiety of the one share of Superior City realized $21,000. For that I was indebted to Stephen A. Douglas���God bless him!

Douglas���s grandiose plan for the Illinois Central and not so incidentally for the profitability of his real estate had been thwarted in the 30th Congress. His bill passed the Senate, but was blocked in the House. Still in the game, Holbrook had bribed a clerk of the Illinois legislature to sneak into a measure the transfer to his cabal of any land rights for the railroad the federal government intended to give to Illinois. When Douglas discovered the skullduggery, Holbrook offered him half the profits from the Cairo property. But Douglas vowed that federal land grants for the railroad would only be made directly to the state. Finally, he ended the Holbrook-Breese threat by ousting Breese from his Senate seat and installing his sidekick Shields.

Douglas, however, faced a bigger obstacle. In the Senate, his bill had been attacked as an unconstitutional violation of states��� rights, the old Jacksonian hostility to internal improvements, by Foote and Davis of Mississippi and King and Clemens of Alabama���and the unified delegations of those states in the House.

So, in November 1849, Douglas decided to outflank them through an excursion to his other family property���his Mississippi plantation. Douglas, once rejected by Mary Todd as louche, had at last found his lovely Southern belle in Martha Martin, who had been educated at finishing schools and spoke French. Her father, Colonel Robert Martin, nephew of a U.S. senator and governor of North Carolina, owned an eight-hundred-acre plantation on the Dan River, just across the border from Danville, Virginia, and a large cotton plantation of 2,500 acres worked by 150 slaves on the Pearl River near Philadelphia, Mississippi. Martha was the cousin of the North Carolina congressman, David S. Reid, who sat next to Douglas when he first arrived in the House.

On their wedding day in 1847, Colonel Martin presented the Mississippi plantation as a gift to the couple. Douglas persuaded Martin that he should still hold the title for political reasons. Upon Martin���s death a year later he deeded the plantation to his daughter and her heirs, while Douglas served as property manager for which he received 20 percent of its annual income. (When his wife died in 1853, the plantation was inherited by the two Douglas sons while Douglas continued as manager.) It was a characteristically artful arrangement allowing Douglas to have it both ways, legally not to be a slave owner yet to profit from slavery. The Little Giant stood on the pedestal of the cotton kingdom���and above it...

Live from... Well, Near Gehenna: The downward spiral of I...

Live from... Well, Near Gehenna: The downward spiral of Israel continues. A long way yet to fall, but the direction is not good: Associated Press: Palestinian Girl Praised as Hero After Confronting Soldiers: "BSoldiers had fired a rubber bullet from close range at 15-year-old Mohammed Tamimi...

...The teen remained in intensive care Wednesday after surgeons removed the bullet that had entered from his mouth and lodged in his brain, said officials at Ramallah's Istishari Hospital.... Bassem Tamimi said his daughter was upset.... The video shows Ahed Tamimi and a young woman walking toward the two soldiers. Tamimi tells the soldiers to leave. She pushes and kicks them, and then slaps one of them.... "When I watched that, I felt humiliated, I felt crushed," said Miri Regev, an Israeli Cabinet minister and former military spokeswoman. She called the incident "damaging to the honor of the military and the state of Israel."... Ben Caspit, a journalist for the Maariv daily... called for retaliation against the Tamimi family. "In the case of the girls, we should exact a price at some other opportunity, in the dark, without witnesses and cameras," he wrote...

Must-Read: Ezra Klein: @ezraklein on Twitter: "I don���t ...

Must-Read: Ezra Klein: @ezraklein on Twitter: "I don���t know what the [New York] Times should���ve done with Thrush. But I watched the efforts to plant oppo and smear @lkmcgann in the aftermath of her reporting. Anyone who thinks coming forward with these experiences is easy, even now, is wrong. I am beyond proud to be her colleague..."

Must-Read: If you are neither a plutocrat nor an activist...

Must-Read: If you are neither a plutocrat nor an activist seeking validation of your ethno-cultural grievances, you are not of concern to today's Republican Party. We're looking at you, the entrepreneurial and enterprising white upper-middle class who were both Teddy Roosevelt and Ronald Reagan's core supporters: Laura J Keller, Ben Steverman, and Charles Stein: Inside Wall Street's Towers, Traders Grouse Over Trump Tax Plan: "Many are figuring out greater benefits will go to billionaires. One, sipping a Bloody Mary, vows to quit the Republican party...

...Wall Street traders who rake in hundreds of thousands of dollars a year or more eagerly awaited a Republican overhaul of the U.S. tax code. Now, many are huddling with accountants and concluding the real gains will go to billionaires and other captains of the industry. Those in trenches���the merely wealthy���are grousing. Atop their list of worries: New limits on deductions for mortgage interest and state and local taxes... will cost them thousands of dollars annually while depressing the value of their homes... chop local tax revenues and erode the quality of schools and other amenities.... Most spoke on the condition they not be named. Many were self-aware enough to realize they won���t garner sympathy. One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he���s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill. A pair of hedge fund managers said they���ll stop donating to Republicans they���ve long supported. One of them said he spent weeks berating a politician who���s taken his money, arguing the tax bill is too tilted toward corporations, rather than individuals who should get more relief.

���My clients are hard-working young professionals on Wall Street. I don���t have a lot of good news for them,��� said Douglas Boneparth, a financial adviser in lower Manhattan who counsels people throughout the industry. Most are coming to terms with it. ���I don���t think anyone is going to be surprised by the economic reality.���... The biggest source of pain in the tax bill is its limits on deductions. It eliminates the deduction for unreimbursed employee expenses, for example, and caps at $10,000 the deduction for local and state taxes. Homeowners can still deduct mortgage interest, but the cap for new loans would be $750,000, down from $1 million. The median asking price for a resale home in Manhattan is almost $1 million....

Manhattan���s army of salaried financial professionals are in a niche where the benefits thin out. They���ll still get goodies such as a higher threshold for the alternative minimum tax, and a drop in the top marginal rate to 37 percent from��39.6 percent. But, along with losing key deductions, they���re explicitly barred from a new 20 percent tax deduction aimed at business owners. Like doctors, lawyers and other service professionals, they can only get the full pass-through break if they own their own firm and earn less than $315,000 for a married couple, and half that for single taxpayers...