Things to Read on the Morning of July 3, 2014

Should-Reads:

1. Mark Thoma sends us to Dietz Volrath: Pricing Power and Lower Potential GDP: “One of the results of the Great Recession has been a severe downward revision in potential GDP across many countries…. Declining measures of TFP do not necessarily imply that our ability to innovate or bring innovations to market is declining. Measured aggregate TFP can decline, or grow more slowly, even though firms are just as technically productive as before, and are innovating at the same rate as before. Instead, measured TFP growth may be slowing down because of changes in the market power of firms during the recession…”

2. Robert Johnson: How We Broke the Bank of England:

3. Ed Kilgore: ‘Religious Liberty’ Revisited In Hobby Lobby’s Wake: “Stepping back a moment from… Burwell v. Hobby Lobby, I am struck by the decision’s central role in the culture wars of the early 21st century. Think about it: a large swath of conservative Christendom has convinced itself (and its allies in the Republican Party) that the maintenance of religious liberty depends on a for-profit company’s ability to avoid any remote complicity in the supply of contraceptive services that according to an exotic and extra-scriptural theory of human life might risk the further development of a microscopic zygote…. Many… look sympathetically at the plaintiffs in the Hobby Lobby and Conestoga Wood cases as people who just want to be left in peace to nourish their eccentric and non-scientific views about the sacred human dignity of zygotes. But it’s impossible, of course, to divorce those views from the consequences for the affected employees…. It’s not just unbelievers who are puzzled and dismayed by Hobby Lobby. Those who ask ‘WWJD?’ and can’t imagine the Son of God fighting to protect corporate rights are largely silent witnesses of all the Christian Right celebrations over this decision…”

Should Be Aware of:

• Shane Ferro: Woman can have it all–if families pitch in
• Ashok Rao: Reasons to Reject Secular Stagnation
• Max Fisher: How Israel is punishing ordinary Palestinians for three murdered Israeli students

And:

1. Jörn-Steffen Pischke: Weak Instruments: “y(i)=βx(i)+η(i) (structural equation); x(i)=πz(i)+ξ(i) (first stage)…. If π is truly zero… variation in x-hat(i) in the sample just comes from ξ(i). So, the variation in x-hat(i) is no different from the variation in x(i), and hence OLS and 2SLS have to estimate the same quantity on average. If π is not truly zero but F is small, then 2SLS will be biased towards OLS.”

2. John Judis: Supreme Court Hobby Lobbing Ruling Could be a Boon for Democrats: “In July 1989, the court handed down Webster…. The right to abortion became a hot issue in the 1990 elections… abortion-rights supporters came out ahead…. Lawton Chiles defeated incumbent Republican Governor Bob Martinez… Ann Richards defeated… Clayton Williams…. There was no gender gap between male and female supporters of Democratic congressional candidates in 1988. In 1990, gender gap was ten percentage points–the highest ever…. If Webster improved Democratic chances in 1990… Burwell… could prove a boon to Democrats. Abortion rights remain controversial but contraception is not…”

3. Dahlia Remler: Casey Mulligan Worships Market Icons and Denounces Apostate Health Economists: “Leaving the plenary furious, I wondered if I was seeing Mulligan through partisan eyes…. I decided to ask conservative health economists… what they thought… a sample size in the single digits. The consensus… ‘same stuff over and over again’ and ‘not a lot of content’. The most complimentary responses were: ‘he didn’t explain very well’ and ‘there was a lot to be conveyed, but it didn’t happen’…. Mulligan… dismissed [Sarah Kliff]… saying that that he does not ‘blame’ journalists for ‘not doing market analysis’, because ‘their job is to sell newspapers’…”

4. Ben Chabot:Is there a trade-off between low bond risk premiums and financial stability?: “It has been suggested that financial instability may be more likely following periods of low bond market risk premiums. The timing of past episodes of instability casts doubt upon the hypothesis that low levels of risk premiums sow the seeds of future instability…”

5. A Philosophical Profile of Elizabeth Anderson: “

Already-Noted Must-Reads:

1. Noah Smith: Austrian Economists, 9/11 Truthers and Brain Worms: “The Austrian worldview is like a brain worm that has infected large swathes of our financial industry, commentariat and general public…. When the Austrian brain-worm invades, you start believing things like: 1) Federal Reserve money-printing is a government plot to boost big banks, 2) prices are rising much faster than anyone thinks, 3) real ‘inflation’ means money-printing, not an increase in prices, 4) printing money can never boost the economy, 5) academic economics is a plot to use mathematical mumbo-jumbo to cover up government giveaways to big banks, etc., etc…. The years 2011 and 2012 were to Austrians like sunrise is to a vampire. It was simply amazing to sit there and watch Austrians writhe and contort under the pure, burning light of extant reality. Massive torrents of Fed ‘money-printing’ failed to budge prices; this fact directly cracked the central foundations of Austrian thought…. How did Austrians deal with this assault by the forces of extant reality?…. They attempted to deny it…. They redefine[d] reality…. You can define inflation to be a rare poisonous South American tree frog if you want, and the only consequence will be that people think you’re off your rocker…. But brain worms have a way of just burrowing deeper to escape the light, and my Twitter feed is still occasionally hijacked by true believers screeching that inflation really is off the charts, that I’m a corrupt spokesman for big banks and government overlords…. If you’re one of the people who has been fully or partially enslaved by this brain worm, I implore you: Resist…. I don’t expect many of you to heed my call, but a couple of you will…. That’s how brain worms get defeated–a few minds are liberated, and then a few more, and then a few more…”

2. Matt O’Brien: Nevermind the headlines, tomorrow’s jobs report is all about discouraged workers: “Is the stronger labor market bringing back discouraged workers?… The Great Recession didn’t just create an unemployment crisis. It created a shadow unemployment crisis, too. These are the millions of Americans who want a job, but have given up hope of finding one. That means they’re not officially ‘unemployed’, because they’re not actively looking for work, but they de facto are. The question is whether they’ll come back to the labor market now that it’s looking better. As you can see below, that’s historically what has happened…. That’s why you should pay almost as much attention to how much the labor force grows—if it does—as you do on how much employment grows…”