Things to Read on the Afternoon of January 15, 2014

January 15, 2014

Must-Reads:

  1. Larry Mishel, and 80+ Others: Economist Statement on the Federal Minimum Wage: “Dear Mr. President, Speaker Boehner, Majority Leader Reid, Congressman Cantor, Senator McConnell, and Congresswoman Pelosi: July will mark five years since the federal minimum wage was last raised. We urge you to act now and enact a three-step raise of 95 cents a year for three years—which would mean a minimum wage of $10.10 by 2016—and then index it to protect against inflation. Senator Tom Harkin and Representative George Miller have introduced legislation to accomplish this. The increase to $10.10 would mean that minimum-wage workers who work full time, full year would see a raise from their current salary of roughly $15,000 to roughly $21,000. These proposals also usefully raise the tipped minimum wage to 70% of the regular minimum…”

  2. Beth Kutscher: Insurers optimistic about exchanges: “Health insurers are expressing measured optimism for enrollment in the coverage they’re selling on the health insurance exchanges after quietly grumbling for weeks that the fumbled rollout was undermining their business plans. Some health insurance executives expressed some modest bullishness on the exchanges Tuesday at the JP Morgan Healthcare conference in San Francisco, even though a day earlier HHS revealed that the enrollees so far are skewing older than many had hoped.”

  3. Vinod Khosla: Open Letter to 60 Minutes and CBS: “On January 5, 2014, CBS’ 60 Minutes aired a segment titled, ‘The Cleantech Crash’ that grossly misrepresented the state of the sustainable energy industry…. The pontificators at 60 Minutes, with their agenda-driven bastardization of news reporting, failed to do the most elementary fact checking and source qualification, as was the case with your Benghazi reporting. No wonder one major media outlet wrote that you have been ‘widely criticized for leaving out crucial information about the state of the clean tech sector’. Is this the new CBS standard?…. I have not invested over a billion dollars of my own money into cleantech… the U.S. Department of Energy (DOE) Loan Guarantee Program has created 55,000 new cleantech jobs… has a 97% success rate…. A substantial portion of DOE loans is allocated to nuclear… a fact conveniently left out despite your being aware of it…. The U.S. spent $502 billion subsidizing fossil fuels in 2011… [plus] $80 billion of taxpayer money was spent patrolling just the oil sea-lanes in the Arabian Gulf…. You fundamentally do not understand how innovation works…. To get to the energy-independent future we need, we must continue to try and sometimes fail, but the consequence for not trying is guaranteed failure. We will keep accepting intelligent and selective failure…”

  4. Heather Boushey: Economists come together to weigh in on a most important economic issue: “Nothing gets the day going like an economist sign-on letter in support of an important economic policy. I’m happy to share the news that the two Larrys (Mishel from the Economic Policy Institute and Katz from Harvard) have combined their considerable forces to compile an all-star list of economists in support of a $10.10 minimum wage…. Check it out here: Economist Statement on the Federal Minimum Wage | Economic Policy Institute.”

Should-Reads:

  1. David Corn: New Memo: Kissinger Gave the “Green Light” for Argentina’s Dirty War: “The memo recounts Hill describing the Kissinger-Guzzetti discussion this way: ‘The Argentines were very worried that Kissinger would lecture to them on human rights. Guzzetti and Kissinger had a very long breakfast but the Secretary did not raise the subject. Finally Guzzetti did. Kissinger asked how long will it take you (the Argentines) to clean up the problem. Guzzetti replied that it would be done by the end of the year. Kissinger approved. In other words, Ambassador Hill explained, Kissinger gave the Argentines the green light.’ That’s a damning statement: a US ambassador saying a secretary of state had egged on a repressive regime that was engaged in a killing spree.”

  2. Barkley Rosser: Are People Being Mean To Those Doing DSGE Models, Or Is It The Other Way Around?: “Positivist instrumentalism is used to justify making obviously unrealistic assumptions in order to achieve empirical understanding and especially forecastibility. While the calibration of DSGE models have allowed them to be able to replicate past outcomes, their ability to forecast the future or provide even conditional policy advice, the latter what they are supposed to do best given their supposed ability to satisfy the Lucas Critique, has proven very poor…. So why has all this back and forth become so heated and nasty? Part of it is that the defenders of DSGE have been fully arrogant… even as they have been ridiculed and attacked…. Let me recognize that DSGE modelers are trying hard to make their models more useful… heterogeneous agent… endogeneity of the distribution… bounded rationality… price and wage stickiness… Calvo pricing mechanism fairy…. Given the combination of arrogant self-satisfaction and defensiveness by the DSGE modelers in their various redoubts and the clear annoyance and dismissal of these models, most crucially by many who should be their main customers, policymakers, with this added rub of their complete non-use by the private sector, this fight is likely to continue…”

  3. Evan Soltas: Bye Bye, Budget Deficit: “We’ve cut the budget deficit by half since last year. It is shrinking nearly as fast as it grew as crisis broke out in 2008. Just think about that. It’s pretty easy to see how you might have expected a second recession with that amount of contraction. Which raises a question. Someone explain to me how the level of fiscal contraction we’re seeing is at all consistent with the view that fiscal policy matters a lot at the zero lower bound. The last year of data would suggest that the fiscal multiplier can’t be very large at all, right? I bring this up because what I think market monetarists are looking for is a story from the fiscalists about how the U.S. has gotten away with this without Great Recession 2.0. Every version of the story seems to require relatively potent monetary policy and relatively impotent fiscal policy.”

Steve Randy Waldmann: “Overcapacity” | John Carney: How the crash of safe assets fueled the financial crisis | Mattrhew Yglesias: Job guarantee: Bad news bears | Mark Thoma: 5 reasons why your pay isn’t rising as fast as it should | Alan Blinder: * How Government Wages War on the Poor | *Mark Thoma: Why is the Recovery so Agonizingly Slow? | John Cassidy: How the War on Poverty Succeeded (in Four Charts) | The Heritage Foundation attacks “one man, one vote” as contrary to the rule of law |

Should Be Aware of:

  1. Jonathan Chait: Marriage Is the Republican Answer to Inequality: “Rubio at least gestures in the direction of a pro-marriage policy by proposing to change the Earned Income Tax Credit…. It’s questionable whether Rubio’s policy would actually do much to encourage marriage, and it’s certain it would have enormously noxious side effects, by impoverishing single parents and their children. But at least there is a policy…. That is more than can be said about [Ari] Fleischer’s op-ed, which embraces marriage for no reason other than as a cudgel against any policy to reduce inequality….. After citing the contribution of marriage to economic inequality, Fleischer executes an incredible, and incredibly revealing, pivot… cease[s] to merely extoll the benefits of marriage and begun using marriage as a reason to oppose any economic transfer to help the poor…. Most amazing, Fleischer castigates Democrats for failing to promote ‘initiatives that might address’ marriage, but he fails to mention what such initiatives might be. His column does not contain a single marriage-promoting policy. He does not even bother to go through the pretense of urging somebody to think about the issue and come up with a solution…. This, surely, is the spirit in which Republicans can most enthusiastically take up the new fascination with marriage and inequality.”

  2. Martin Wolf: Failing elites threaten our future: “First, the economic, financial, intellectual and political elites mostly misunderstood the consequences of headlong financial liberalisation. Lulled by fantasies of self-stabilising financial markets, they not only permitted but encouraged a huge and, for the financial sector, profitable bet on the expansion of debt. The policy making elite failed to appreciate the incentives at work and, above all, the risks of a systemic breakdown…. The policy making elite was discredited by its failure to prevent disaster. The financial elite was discredited by needing to be rescued. The political elite was discredited by willingness to finance the rescue. The intellectual elite – the economists – was discredited by its failure to anticipate a crisis or agree on what to do…. Second, in the past three decades we have seen the emergence of a globalised economic and financial elite…. In the process, the glue that binds any democracy – the notion of citizenship – has weakened…. Third, in creating the euro, the Europeans took their project beyond the practical into something far more important to people: the fate of their money…”

  3. Jared Bernstein: The Conservative Response to the War on Poverty Discussion: “There’s a lot of silliness, and worse, of course.  I’d assign the Reagan quip (‘we fought a war on poverty and lost’) to that category, as well as the misleading $20 trillion talking point (see this Mike Konczal piece out today on this). But once they get past the canned stuff, there’s some interesting substance…. Robert Samuelson claims that we haven’t done much of anything to ‘catapult the poor into the economic mainstream’…. This critique too fails to stand up to scrutiny.  First, the largest expansion of poor support outside of health care has been the Earned Income Tax Credit… benefits like the EITC and even nutritional support have lasting impacts that improve key outcomes—health, high-school completion, employment and earnings—later in life…. Other stuff… standard issue stuff—deregulate (e.g., less professional licensing), subminimum wage, more marriage—and some less standard ideas, including helping those with criminal backgrounds get back into the workforce…. So, nothing exceptionally path-breaking here, but it’s a good conversation, and I’m struck by some conservatives’ interest in raising the EITC for adult workers without kids.”

  4. Greg Sargent: Mitch McConnell’s grand, ingenious strategy: “Here’s Mitch McConnell, sobbing hot tears in Politico magazine about the long lost days when legislation used to pass the Senate with bipartisan support…. Guess who has usefully confirmed for us that Republicans actively worked to deny Obama bipartisan support for his proposals for strategic reasons? Mitch McConnell, that’s who. Here is what McConnell said just after the 2010 elections, back when his strategy was looking fearsomely brilliant…. The complaint McConnell makes in his Politico oped is best understood as the goal of what had been his strategy all along…. We know this was the game plan because McConnell told us so himself, though he didn’t put it that way. This strategy didn’t work out as planned in 2012, of course. But it remains alive and well all the same. Since the Affordable Care Act cannot turn out to be anything other than an unmitigated catastrophe, blaming the ‘chaos visited on our country’ (as McConnell puts it in Politico) on Obama’s tyrannical flouting of American governing norms will inevitably be enough to hand them the Senate in 2014. This has to work eventually. It just has to.”

  5. William R. White: Ultra Easy Monetary Policy and the Law of Unintended Consequences: “There are limits to what central banks can do. One reason for believing this is that monetary stimulus, operating through traditional (‘flow’) channels, might now be less effective in stimulating aggregate demand than previously. Further, cumulative (‘stock’) effects provide negative feedback mechanisms that over time also weaken both supply and demand. It is also the case that ultra easy monetary policies can eventually threaten the health of financial institutions and the functioning of financial markets, threaten the ‘independence’ of central banks, and can encourage imprudent behavior on the part of governments. None of these unintended consequences is desirable. Since monetary policy is not ‘a free lunch’, governments must therefore use much more vigorously the policy levers they still control to support strong, sustainable and balanced growth at the global level.”

And:

Francis Wilkinson: Christie’s Damage Control Promises More Damage | Brian Buetler: Terrible news for Obamacare haters: The law is not going to collapse | Lydia DiPillis: Retail in the age of Amazon: Scenes from an industry running scared | Nicholas Bagley: A resounding victory for the administration in the exchange litigation | Matthew Yglesias: Lighter Ford F-150: New truck will make George Will sad |

January 15, 2014

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