Month: March 2014

“@nicholas_bagley: Dream of entrepreneurship but fear losing health coverage? @afrakt's : http://t.co/DLjpKm5n5O” pic.twitter.com/Utqant3s4G

— Pat Bagley (@Patbagley) March 31, 2014

Austin Frakt: Job lock: Entrepreneurship lock

Eric Rauchway: Going off gold and the basis for Bretton Woods: “Experience is teaching us a counterintuitive lesson: the way to control leads away from stability.

Aim at growth – moderate growth in safer quarters, even if it means a bit of inflation and debt – and we will achieve stability. It is a lesson that our predecessors learned in the Great Depression, and which led them to establish the Bretton Woods system for precisely those purposes. The essential feature of Bretton Woods was a conditional commitment to exchange stability – with conditionality as essential as stability. The commitment was predicated on the Depression-begotten recognition that monetary stability took a back seat to the promotion of widespread prosperity.

When we talk about Bretton Woods, quite often we emphasize the conflict before and at the conference between the UK and the US, and generally between the persons of John Maynard Keynes and Harry Dexter White… [who] won out – not because [his plan] was intellectually superior, but because the United States had more money and power and US congressmen wanted to see a plan that looked like it was more sparing of American resources.

The White plan did not survive – in 1947, the international monetary system became more Keynesian, with the Marshall Plan, and in 1969 more Keynesian still, with the introduction of Special Drawing Rights as a reserve asset. Despite this early and lasting convergence on a Keynesian consensus, scholarly discussion of Bretton Woods generally focuses on the initial conflict and its detrimental impact specifically on Britain. Focusing on this conflict is misleading and I believe impoverishes our understanding of the fundamental, shared ideas underlying Bretton Woods…

Over at the New York Times Room for Debate:

I have long thought that Marx’s fixation on the labor theory of value made his technical economic analyses of little worth. Marx was dead certain for ontological reasons that exchange-value was created by human socially-necessary labor time and by that alone, and that after its creation exchange-value could be transferred and redistributed but never enlarged or diminished. Thus he vanished into the swamp, the dark waters closed over his head, and was never seen again.

Continue reading “Over at the New York Times Room for Debate: Relevance of Marx?: Monday Focus: March 31,2014” →

Must-Reads:

1. Atif Mian and Amir Sufi: Measuring Wealth Inequality: “Emmanuel Saez and Gabriel Zucman have preliminary work: http://gabriel-zucman.eu/files/SaezZucman2014Slides.pdf

2. Duncan Black: On Robert Lucas: The E-con: “There are a couple of versions, but this one is basically: We should focus on economic growth because that greatly expands our ability to improve human welfare. But, well, let’s not worry about the human welfare part, just the growth.”

3. Charles Gaba: California: Suggestions of even larger numbers?: “I included the 80K in 4 days info yesterday but didn’t realize the implications of the second sentence until a commentor pointed it out: ‘The Covered California exchange said sign-ups have been building throughout the week with about 80,000 people picking a health plan Monday through Thursday. An additional 150,000 households created an online account and started the shopping process in the last three days, officials said.’ That’s 50,000 households–not individuals–PER DAY who JUST ceated an account for 3 days straight. Pretty sure most of those are actually enrolling even as I type this. I think this final weekend surge is going to be MUCH larger than even I’ve been projecting. Gotta run for the moment, but I’m going ahead and calling it 6.7 million exchange-based QHPs as of now.”

4. Ryan Avent: Interest rates and inflation: Zero forever: “WHICH do central banks hate more: low interest rates or rising inflation? They really, really hate low rates…. Searching the Federal Reserve’s website for “reach for yield” returns a nice long list of speeches in which Fed officials warn against the dangers of a long period of low rates. And yet…. Markets think both America and Britain will by 2016 be closing in on nearly a decade of ultra-low rates…. Alone among big rich economies, Japan is now actively trying to raise inflation…. Last November Fed economists published a paper arguing that lifting the inflation target to 3% would rapidly lower unemployment while allowing the Fed’s policy rate to rise higher, faster. The argument does not seem to have swayed the Fed’s monetary-policymaking committee, which continues to project inflation of at most 2% until the end of 2016. Markets reckon prices will rise even more slowly.
   Not only is the Fed not raising its inflation target, it is tightening while inflation remains well below the 2% target…. Just today we learned that the Fed’s preferred inflation gauge rose at just 0.9% in the year to February, down from 1.2% in January…. The rich world’s central banks are behaving with a dangerous complacency. Low and falling inflation will retard ongoing recoveries. Perhaps more important, this path forward leaves the rich world with virtually no cushion against future shocks…. I’m not sure how the Fed can expect anyone to take its word seriously when it has undershot its target nearly every month that target has been in place, when its forecasts make clear that it fully intends to undershoot that target for years to come and indeed on average, and when it is busy pulling away support to the economy while inflation falls ever farther below 2%. It’s a joke.”

Continue reading “Things to Read on the Morning of March 30, 2014” →

Ryan Avent: Interest rates and inflation: Zero forever: “WHICH do central banks hate more: low interest rates or rising inflation?

They really, really hate low rates…. Searching the Federal Reserve’s website for “reach for yield” returns a nice long list of speeches in which Fed officials warn against the dangers of a long period of low rates. And yet…. Markets think both America and Britain will by 2016 be closing in on nearly a decade of ultra-low rates…. Alone among big rich economies, Japan is now actively trying to raise inflation…. Last November Fed economists published a paper arguing that lifting the inflation target to 3% would rapidly lower unemployment while allowing the Fed’s policy rate to rise higher, faster. The argument does not seem to have swayed the Fed’s monetary-policymaking committee, which continues to project inflation of at most 2% until the end of 2016. Markets reckon prices will rise even more slowly.

Not only is the Fed not raising its inflation target, it is tightening while inflation remains well below the 2% target…. Just today we learned that the Fed’s preferred inflation gauge rose at just 0.9% in the year to February, down from 1.2% in January…. The rich world’s central banks are behaving with a dangerous complacency. Low and falling inflation will retard ongoing recoveries. Perhaps more important, this path forward leaves the rich world with virtually no cushion against future shocks…. I’m not sure how the Fed can expect anyone to take its word seriously when it has undershot its target nearly every month that target has been in place, when its forecasts make clear that it fully intends to undershoot that target for years to come and indeed on average, and when it is busy pulling away support to the economy while inflation falls ever farther below 2%. It’s a joke.”

Atif Mian and Amir Sufi: Measuring Wealth Inequality: “Emmanuel Saez and Gabriel Zucman have preliminary work:

http://gabriel-zucman.eu/files/SaezZucman2014Slides.pdf

Duncan Black: On Robert Lucas: The E-con: “The E-con:

There are a couple of versions, but this one is basically: We should focus on economic growth because that greatly expands our ability to improve human welfare. But, well, let’s not worry about the human welfare part, just the growth.

Charles Gaba: California: Suggestions of even larger numbers?: “I included the 80K in 4 days info yesterday…

but didn’t realize the implications of the second sentence until a commentor pointed it out:

The Covered California exchange said sign-ups have been building throughout the week with about 80,000 people picking a health plan Monday through Thursday. An additional 150,000 households created an online account and started the shopping process in the last three days, officials said.

That’s 50,000 households–not individuals–PER DAY who JUST ceated an account for 3 days straight. Pretty sure most of those are actually enrolling even as I type this. I think this final weekend surge is going to be MUCH larger than even I’ve been projecting. Gotta run for the moment, but I’m going ahead and calling it 6.7 million exchange-based QHPs as of now.

Must-Reads:

1. Paul Krugman: The Skills Zombie – NYTimes.com: “One of the most frustrating aspects of economic debate… has been the preference of influential people for stories about our troubles that sound serious as opposed to those that actually are serious. The reality… our economy is depressed because there isn’t enough spending… we need… something, almost anything, that increases total spending. But policymakers and pundits want to hear about tough decisions and hard choices, and they just recoil from any suggestion that terrible problems might have easy answers. The most destructive example is, of course, the deficit obsession…. Rhe same kind of policy machismo was an important reason so many people who really, really should have known better supported the Iraq war…. This new EPI report is a useful reminder of the extent to which another doctrine that sounds serious retains a grip on discourse — namely, the notion that we have big problems because our work force lacks essential skills. This is very much a zombie doctrine…. The Boston Consulting Group… the only hints of a skills shortage it found were in unglamorous skilled blue-collar work… [in] only five of the nation’s 50 largest manufacturing centers (Baton Rouge, Charlotte, Miami, San Antonio, and Wichita) appear to have significant or severe skills gaps. Occupations in shortest supply are welders, machinists, and industrial-machinery mechanics. Some readers may recall that when we finally had a really clear-cut example of a skill so much in demand that wages were soaring, the skill was … operating a sewing machine…. Yet the skills story just keeps showing up in supposedly informed discussion. Again, I think that this is because it sounds like the kind of thing serious people should say…”

2. David Beckworth: Ad Hoc Monetary Policy: “One of the defining features of U.S. monetary policy over the past five years has been its incredibly ad hoc nature… QE1, QE2, Operation Twist, QE3, and the Evans Rule…. This stop-go approach to monetary policy was politically costly and prevented the Fed from fully utilizing its ability to manage expectations of future nominal growth… the Fed failed to clearly spell out how it would systematically respond to differing states of the future economy…. Now imagine the Fed’s monetary stimulus programs during this time had be done in a more systematic and predictable manner… assume the Fed had announced a NGDP level target from the start and said asset purchases will continue until a certain level target was hit…. FOMC meetings would have been more predictable and consequently less important. We would not be hanging on the every word of our Fed chairs. Fed watchers and bloggers would be far fewer. It is true that implementing something like a NGDP level target would have used up a lot of the Fed’s political capital…. My reply is that it may have politically cheaper for the Fed to do a NGDP level target than it was to do all the impromptu programs it adopted over the past five years…”

Continue reading “Things to Read at Lunchtime on January 29, 2014” →

Paul Krugman: The Skills Zombie – NYTimes.com: “One of the most frustrating aspects of economic debate… has been the preference of influential people for stories about our troubles that sound serious as opposed to those that actually are serious.

The reality… our economy is depressed because there isn’t enough spending… we need… something, almost anything, that increases total spending. But policymakers and pundits want to hear about tough decisions and hard choices, and they just recoil from any suggestion that terrible problems might have easy answers. The most destructive example is, of course, the deficit obsession…. Rhe same kind of policy machismo was an important reason so many people who really, really should have known better supported the Iraq war…. This new EPI report is a useful reminder of the extent to which another doctrine that sounds serious retains a grip on discourse — namely, the notion that we have big problems because our work force lacks essential skills. This is very much a zombie doctrine…. The Boston Consulting Group… the only hints of a skills shortage it found were in unglamorous skilled blue-collar work… [in] only five of the nation’s 50 largest manufacturing centers (Baton Rouge, Charlotte, Miami, San Antonio, and Wichita) appear to have significant or severe skills gaps. Occupations in shortest supply are welders, machinists, and industrial-machinery mechanics. Some readers may recall that when we finally had a really clear-cut example of a skill so much in demand that wages were soaring, the skill was … operating a sewing machine…. Yet the skills story just keeps showing up in supposedly informed discussion. Again, I think that this is because it sounds like the kind of thing serious people should say.