Is There Really a Profits-Investment Disconnect?: (Late) Friday Focus for October 24, 2014

I think Paul Krugman gets one wrong--or, at least, I need more convincing before I think he gets this one right, in spite of the extraordinary empirical success of my rules (1) and (2): Paul Krugman: The Profits-Investment Disconnect: "Profits are very high... ...so why are companies concluding that they should return cash to stockholders rather than use it to expand their businesses? After all, we normally think of high profits as a signal: a profitable business is one people should be trying to get... More >

Afternoon Must-Read: Larry Mishel: The Wage Message

Larry Mishel: The Wage Message: "The intellectual basis for [skill-biased technological change, SBTC]... ...in my view has collapsed. It has very little to contribute to the understanding over inequality over the last 20 years, and is not the basis for thinking about the future so much. That still leaves 1970-1994, no? And even though shifting numbers of non-college and college-educated workers relative to requirements don't have much any purchase on rising inequality since the mid-1990s, any labor-force strategy that spends money and gets people to... More >

Afternoon Must-Read: David Drake: Newsletter #82

David Drake: Newsletter #82: "I was a conservative kid... ...Dad worked with his hands–he was an electrician–but he was anti-union and identified with the middle class rather than radical labor. Our family had middle-class values, read slick magazines rather than pulps, and voted Republican.... A lot of people raised the way I was think that Something Should Be Done about this or that world problem... Boko Haram’s kidnapping... the Lord’s Resistance Army... the Islamic State.... All of these organizations do horrific things by the standards... More >

Afternoon Must-Read: Fabian Kindermann and Dirk Krueger: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk

Fabian Kindermann and Dirk Krueger: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk: "Very high marginal labor income tax rates are an effective tool for social insurance... ...even when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. To make this point we construct a large scale Overlapping Generations Model with uninsurable labor productivity risk, show that it has a wealth distribution that matches the data... More >

Noted for Your Lunchtime Procrastination for October 24, 2014

Must- and Shall-Reads: Matt O'Brien: The bottom 90 percent are poorer today than they were in 1987 - The Washington Post Mark Thoma: Will the big banks ever clean up their act? Richard Mayhew: Calling the consolidation efficiency bluff   Michela Giorcelli and Petra Moser: Copyright and Creativity: Evidence from Italian Operas: "This paper exploits variation in the adoption of copyright laws within Italy – as a result of Napoleon’s military campaign – to examine the effects of copyrights on creativity. To measure variation in... More >

Lunchtime Must-Read: Larry MIshel: Income and Wealth Inequality Hurts Economic Mobility

Larry Mishel: Chair Yellen Is Right: Income and Wealth Inequality Hurts Economic Mobility | Economic Policy Institute: "Janet Yellen gave a speech this week... ...no mincing of words as to what has happened: ‘It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our... More >

Morning Must-Read: Michela Giorcelli and Petra Moser: Copyright and Creativity: Evidence from Italian Operas

Michela Giorcelli and Petra Moser: Copyright and Creativity: Evidence from Italian Operas: "This paper exploits variation in the adoption of copyright laws within Italy... ...as a result of Napoleon’s military campaign – to examine the effects of copyrights on creativity. To measure variation in the quantity and quality of creative output, we have collected detailed data on 2,598 operas that premiered across eight states within Italy between 1770 and 1900. These data indicate that the adoption of copyrights led to a significant increase in the... More >

Lunchtime Must-Read: Gavyn Davies: China’s Slowdown Is Secular, Not Cyclical

Gavyn Davies: China’s Slowdown Is Secular, Not Cyclical: Is China bouncing back from a weak patch of growth... ...or is it headed for a prolonged slowdown lasting many years?... Both are probably true. Cyclical fluctuations are occurring around a clearly slowing long-term trend.... Until 2011, mainstream economic forecasters... believed that the trend growth rate in China would remain in the 9-10 per cent region for as far ahead as the eye could see. Now almost no one thinks that.... The Conference Board forecast this week... More >