Things to Read on the Afternoon of February 9, 2015
Must- and Shall-Reads:
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Mark Thoma sends us to: : Only Raise Rates when Whites of Inflation’s Eyes are Visible: “I cannot recall a moment when the gap between what markets expect the US Federal Reserve to do and what the Fed itself has forecast it will do has been as large. Markets predict that the Fed will raise rates only to 1.6 per cent by the end of 2017; the Federal Open Market Committee’s average forecast is 3.5 per cent. Such a divergence raises the risk of volatility and poses a communications challenge for the Fed. More important, it raises the question of what should guide future policy…. Available inflation data suggests little cause for concern. The core consumer price index has averaged 1.1 per cent over the past six months; if housing costs were stripped out it would be zero. Wages actually fell in December and over the past year employment costs have risen 2.25 per cent…. In such circumstances efforts to reduce demand and growth require a compelling justification. Yet the idea that below normal unemployment will necessarily lead to accelerating inflation as suggested by the so called Phillips curve is very uncertain…. [Moreover,] if inflation were to accelerate a bit this would be a good thing…. A plane that accelerates too rapidly as it takes off may cause passengers discomfort while a plane that accelerates too slowly may crash…. The US has never been more intertwined with the global economy…”
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: Interview Barack Obama: Teaser: “Ezra Klein: How had we gotten to the point where we can have high corporate profits and businesses can be doing so well, but the workers don’t necessarily share in that prosperity? Barack Obama: Well, this has been at least a three decade-long trend. There are a whole bunch of reasons for that. Some of it has to do with technology and entire sectors being eliminated–travel agents, bank tellers, a lot of middle management. A lot of it has to do with globalization–the rest of the world catching up. Post-World War II we had just some enormous structural advantages because our competitors had been devastated by war and we had made investments that put us ahead of the curve–education and infrastructure. Those advantages went away at the same time that workers had increasingly less leverage because of changes in labor laws. You combine all that stuff and it puts workers in a tougher position. So some people who just control enormous amounts of wealth–we don’t resent their success, but, just as a practical matter, we’re going to have problems making sure that we are investing enough in the common good to move forward. -
: Knowledge Units: “There are two models of online education: Preparatory knowledge, in the form of course-based video-delivered teachings: Coursera, Udacity, Thinkful, etc. On demand knowledge: Wikipedia, StackOverflow, Genius, etc. Of the two, the latter has been much more widely spread and far more influential… pull based… in digestible chunks… Wikipedia and StackOverflow are the knowledge you need, now…. Khan Academy fits somewhere in between… original[ly]… each video solved the problem at hand…. The platforms that lean towards smaller on demand units of knowledge are the ones that are created collaboratively…. There is, of course, something fundamentally missing when we only have on demand knowledge…. We do not want engineers whose only mode problem solving is searching StackOverflow instead of working from their own understanding of the data structures. This is the difference between an education… and… the solution…. A really great model would be one that combined small on-demand knowledge units with a laddered system. Khan Academy is the closest to this that I’ve seen, but I think they have gone too far down the class model…” -
: The Divine Coincidence: “The Divine Coincidence is the idea that by controlling inflation we also bring the output gap to zero, so we do not need separate targets for both…. Imagine a parallel universe where the monetary authority targeted the output gap, and not inflation…. In this parallel universe they too had a Great Recession, and (being parallel and all) their recovery was of a very similar shape to ours. How would the output gap-targeting monetary authority in this parallel universe perceive its performance? The story would be one of complete failure. After six years of trying, the output gap had still not been closed. A huge amount of resources had been wasted as a result…. I do not think, in our inflation targeting world, the monetary authorities have this view…. They believe performance over the last six years has not been too bad…. Over the last six years, the Divine Coincidence has been distinctly unholy…. I suspect in thirty years students will look back on this period with the same disbelief that we look back on the 1930s. How could they have allowed the recession to continue for so long, they will ask, when they had the tools to do much better? Part of the answer will be inflation targeting.”
Should Be Aware of:
- Capital and Main
- Migrate from Typepad or Movable Type to WordPress
- SageMath
- : RStudio in the Cloud, for Dummies
- : The Pmarca Blog Archive Is Back… as an Ebook
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: Meet the Unusual Plaintiffs Behind the Supreme Court Case That Could Destroy Obamacare: “Three of the four plaintiffs are nearly eligible for Medicare, meaning their objections to Obamacare will soon be moot. Two of them appear… not forced to acquire insurance… so it’s unclear how Obamacare had burdened them. These two plaintiffs seemed driven by their political opposition to President Obama; one has called him the ‘anti-Christ’ and said he won election by getting ‘his Muslim people to vote for him.’… One of the plaintiffs did not recall exactly how she’d been recruited for the case and seemed unaware of the possible consequences if she wins. Told that millions could lose their health coverage if the Supreme Court rules in her favor, she said that didn’t want this to happen…”