Things to Read on the Afternoon of June 3, 2014

Should-Reads:

1. Christopher Smith: FRB: FEDS Notes: The effect of labor slack on wages: Evidence from state-level relationships: “Some have argued that the unemployment rate may overestimate labor market slack, because the LTU are largely structurally unemployed and exert significantly less wage and price pressure. If so, then using the aggregate unemployment rate to forecast wage or price inflation may be misleading. However, this Note, along with the companion note showing that a state’s LTU rate normalizes as its STU rate normalizes, and the cross-city inflation-based evidence presented in Kiley (2014), suggest against the idea that the LTU should be strongly discounted from measures of labor market slack. This Note also provides some suggestive empirical support for possibly considering broader measures of labor market slack, such as those including non-participants who may be somewhat attached to the labor market, when assessing wage and price pressures…. Moreover, because some segments of those not in the labor force also appear to generally apply downward pressure to wages as well, the unemployment rate may somewhat understate the degree of labor slack that matters for aggregate wage and price movements…”

2. Jonathan Chait: Here Are the Papers That Think You’re an Idiot: “The Obama administration just unveiled one of the most consequential and far-reaching proposals of this presidency. One might think that, for good or ill, this constitutes an important story…. Some publications are covering this enormous policy story. Others find that way too boring and have moved on to the vital question of how will this affect the midterm elections?… The Washington Post leads with a story about the midterm ramifications. Politico leads with–ha-ha, you don’t really need to ask, do you?… The New York Times leads with a policy story…. The Huffington Post — mocked by the journalistic establishment as sideboob/aggregation clickbait — leads with links to nine stories, eight of which deal with policy…”

3. Nick Bunker: Workers’ declining share of income: “The recent decline in the labor share of income is verified by any number of researchers—here’s a good summary…. The share of income going to capital may have increased because the price of capital goods has declined…. This is exactly the result found by economists Loukas Karabarbounis and Brent Neiman, both of the University of Chicago, who estimate about half of the decline is due to the lower price of investment goods…. Michael Elsy… Bart Hobkin… and Aysegul Sahin… find that the increasing offshoring is a ‘leading potential explanation’… Tali Kristal… finds that the decline in unionization, added by technological change, was the primary driver of the decline…”

Should Be Aware of:

• Muhammed Idrees Ahmad: A Dangerous Method: Syria, Sy Hersh, and the Art of Mass-crime Revisionism
• Fred Anderson: George Washington Remembers: Reflections on the French and Indian War
• The Internet in Real-Time
• Yohanes E. Riyanto and Jianlin Zhang: An Egalitarian System Breeds Generosity: The Impact of Redistribution Procedures on Pro‐Social Behavior
• Esther George: The Path to Normalization
• Ken Ward: Coal and climate: Leaders out of step with public
• James Risen: ‘I will continue to fight’

And:

1. Ezra Klein: How the American Prospect changed policy journalism – Vox: “The American Prospect is laying off or losing most of its staff, pulling back its web operations and returning to its roots as a quarterly policy journal. This is deeply sad for those of us who love TAP. But respect must be paid. The American Prospect won. It’s now a victim of its own success. The Prospect… began as a policy journal co-founded by Bob Kuttner, Paul Starr, and Robert Reich…. William Julius Wilson on race-neutral policymaking… Deborah Stone on the challenges predictive diagnoses posed… Christopher Jencks on welfare reform. It’s a wonderful read, even today. But… what changed journalism–and, honestly, my life–was Tapped. Tapped was the group blog of the American Prospect. It was started by Nick Confessore (now of the New York Times) and Chris Mooney (now of Mother Jones). And it was awesome. It married the Prospect’s policy writing to the early blogosphere’s experiments with voice and form. The result was something truly new: policy writing that was smart, short, accessible, and constant…. Newsprint was a rough format for policy writing. The ruthless competition for space and the relentless focus on newness made it hard to give tricky issues the length or the repetition… to go deep enough, often enough…. The studiously neutral voice made it impossible for readers to pick apart competing claims. The crowded pages had little room for graphs and maps. The lack of hyperlinks meant everything needed to be explained and reexplained…. The deepest policy journalism was found in magazines and journals…. But they had one huge flaw: they were slow…. They couldn’t explain what Washington was doing in real-time. But Tapped could. And it did…. The combination… created a place where young journalists could go and experiment…. It turned out the internet loved charts… policy writing could be short, or even just a link… a conversational tone didn’t destroy the writer’s authority… blogs benefitted at least as much from diligent reporting as magazine articles…. As for Vox, well, two of the three founders are Tapped alumnus. Without Tapped, there would certainly be no Vox…”

2. Duncan Black: Eschaton: The Worst Person In The World: “Matt Miller. Back in the day we used to joke about ‘blogger ethics panels’ because ‘real’ journalists were obsessed with imposing standards on people who spouted off on the internet that didn’t apply anywhere else in the universe. I don’t know how many of them were just utterly blind to the conflicts of interest that existed in their worlds, or if they were just full of shit, but it was mildly entertaining…”

3. Warwick J. McKibbin et al.: The Economic Consequences of Delay in U.S. Climate Policy: “We analyze four policy scenarios using an economic model of the U.S. economy embedded within a broader model of the world economy. The first… imposes an economy-wide carbon tax that starts immediately at $15 and rises annually at 4 percent over inflation. The second two scenarios impose different (and generally higher) carbon tax trajectories that achieve the same cumulative emissions reduction as the first scenario over a period of 24 years, but that start after an eight year delay…. The fourth policy imposes the same carbon tax as the first scenario but uses the revenue to reduce the tax rate on capital income…. Delayed policies produce worse economic outcomes than the more modest policy implemented now, while achieving no better environmental benefits. We find that all three scenarios in which carbon tax is used solely to reduce the federal budget deficit produce declines in U.S. GDP, investment, consumption, and employment compared to our baseline simulation. However, the declines are small compared to the annual growth of each of those variables…. In contrast to the scenarios in which the carbon tax reduces the federal deficit, our fourth scenario shows that a carbon tax can actually strengthen macroeconomic conditions when its revenue is used to reduce current distortionary taxes…”

4. Rick Perlstein: There Are No More Honest Conservatives, So Stop Looking For One | The Nation: “Last November I received a friendly request from an editor at a political publication. A liberal himself, surrounded by liberal colleagues, he wanted to make sure that the journalists he was hiring were not drawn exclusively from the left. He wondered if I might help him out with a list of ‘conservative reporters, writers and commentators’ whom I admired most. ‘Who on the right does the best job of covering politics or the economy or anything else, for that matter, in a thoughtful, fair and accurate way?’ Maybe if I had a time machine and could travel back to the 1970s or 1980s, I could name names. Now, though, I can’t think of a single one. Sure, the right in previous decades was jam-packed with the same sorts of haters, hustlers, hacks and conspiratorial lunatics that are familiar to us now. But there were lively exceptions. George Nash… Kevin Phillips… William F. Buckley Jr., a problematic figure in so many ways…. But at least Buckley himself was intelligent and honest—and granted his adversaries on the left, like Noam Chomsky, the respect of debating them seriously on TV. Now, however, Buckley is dead—very, very dead. Will… is ensconced exactly where he belongs, with the haters, hustlers, haters, hacks and conspiratorial lunatics…. If you put a gun to my head I could name some right-wing journalists who are, at the very least, as they say, ‘smart’. But every time I think I can sign on to the promise of one of these folks, they just end up disappointing me…. Sean Trende… Paul Ryan… informs us on one page that ‘child care subsidies have negative effects on child development’, and on the next that they have ‘significant positive effects…on children’s academic performance’. The problem with our media ecology is—just as the question from my editor friend suggests—that conservatives are protected from any consequence for their intellectual failings. That the Ryan report was a self-contradictory joke didn’t prevent The Washington Post from publishing… an ‘unintentionally humorous puff piece’ on it by a former National Review blogger…”

Already-Noted Must-Reads:

1. Isabel Gorsk Belarus plans to bring back serfdom: “Alexander Lukashenko is living up to his reputation as Europe’s last remaining dictator. The president of Belarus has decided to bring back serfdom on farms in a bid to stop urban migration… prohibiting farm labourers from quitting their jobs and moving to the cities. “Yesterday, a decree was put on my table concerning–we are speaking bluntly–serfdom,” the Belarus leader told a meeting on Tuesday to discuss improvements to livestock farming, gazeta.ru reported. The serfdom decree would beef up the power of regional governors and “teach the peasants to work more efficiently,” Lukashenko said. Governors who failed to ensure timely and efficient harvests in their regions would get the sack, he added….Low agricultural wages and limited prospects have persuaded many farm workers to leave the countryside to seek opportunities in the cities or in neighbouring Russia…”

2. Ben Adler: The nine things you need to know about Obama’s new climate rules: “1.  What will the rules do?… The EPA intends to create a “rate-based” limit on greenhouse gas emissions from power plants for each state… a standard for how much CO2 is emitted per megawatt hour of electricity…. 2. How much will the plan cut emissions? Nationwide… reduce power plants’ CO2 emissions from 2005 levels by 26 or 27 percent by 2020 and about 30 percent by 2030…. The targets make more sense politically than policy-wise…. 3. Why are these referred to as regulations on “coal-fired power plants,” and why are opponents calling this a “War on Coal”? Coal is the most carbon-intensive fossil fuel, and it accounts for more than 40 percent of American electric generation and 74 percent of the CO2 emissions from the electricity sector. Under the proposed rules, only coal plants will have to be cleaned up, reduce their usage, or be retired…. 4. What do states have to do? Each state will be required to submit its own plan… make coal plants more efficient… increase natural gas-burning capacity, increase non-carbon energy producing capacity… and reduce demand for electricity through improved efficiency…. 5. How will this affect the mix of fuels the U.S. uses? It’s bad for coal and it’s good for natural gas. It’s good for renewables too. Controversially among environmentalists, the plan also specifically encourages nuclear energy…. 6. How much of a difference will it make in the big scheme of things? It is expected to cut U.S. CO2 emissions by more than 6 percent from 2005 levels by 2020… a significant step…. Moving away from coal has many other environmental benefits… mercury… and sulfur… asthma attacks…. 7. Are there any downsides? Increased natural gas production has its drawbacks…. 8. Will it hurt the economy? No…. 9. What happens now? There will be a public comment period for 120 days, and during the week of July 28, EPA will hold hearings in Denver, Atlanta, Pittsburgh, and Washington, D.C. Denver and Pittsburgh are both in states with large reserves of coal and natural gas. The rules will then be finalized by June 2015…”

3. Peter Orszag: Toward a Progressive Tax Policy – Bloomberg View: “A progressive consumption tax… already embraced by many conservative[s]… because it is, compared with other types of taxes, economically efficient. But it is efficient in no small part because it imposes a tax on wealth…. As William Gale and Benjamin Harris of the Brookings Institution have pointed out, the efficiency benefits from a consumption tax occur from a combination of effects… imposing a one-time tax on existing wealth [during the transition]… ‘is a major component of the efficiency gains because of the creation of a consumption tax’. The dirty little secret about consumption taxes is that their putative benefits come largely from Piketty’s core idea: a tax on wealth. The inherent problem with a [flat] consumption tax, though, is that it is regressive…. The solution to this dilemma is a progressive consumption tax…. David Bradford… wages are subject to a progressive tax, and business cash flow is taxed at the highest wage-tax rate. The result is a consumption tax that imposes larger proportionate burdens on high-income families than on low-income ones… promoted by the conservative American Enterprise Institute, whose economists are most unlikely to embrace a simple wealth tax…”

4. Robert Hall: Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis: “The financial crisis and ensuing Great Recession. left the U.S. economy in an injured state. In 2013, output was 13 percent below its trend path from 1990 through 2007. Part of this shortfall—2.2 percentage points out of the 13—was the result of lingering slackness in the labor market in the form of abnormal unemployment and substandard weekly hours of work. The single biggest contributor was a shortfall in business capital, which accounted for 3.9 percentage points. The second largest was a shortfall of 3.5 percentage points in total factor productivity. The fourth was a shortfall of 2.4 percentage points in labor-force participation. I discuss these four sources of the injury in detail, focusing on identifying state variables that may or may not return to earlier growth paths. The conclusion is optimistic about the capital stock and slackness in the labor market and pessimistic about reversing the declines in total factor productivity and the part of the participation shortfall not associated with the weak labor market.”