Tag: Marshall Steinbaum

Must-read: Marshall Steinbaum: “Uber’s Antitrust Problem”

Posted on by Brad DeLong

Must-Read: Are Uber and companies like it anti-rent seeking plays? Yes. Are they regulatory arbitrage plays? Yes. Are they behavioral economics plays–exploiting their workers who don’t properly calculate depreciation? Plausibly. What’s the proper balance? Allowing Uber to claim that its workers are in no sense its employees is surely wrong. Shielding existing rent-seeking monopolies created by regulatory capture from competition from Uber and its ilk is also surely wrong:

Marshall Steinbaum: Uber’s Antitrust Problem: “The Uber lawsuit captures the key question facing policymakers struggling to regulate the ‘gig’ and ‘platform’ economies…

…Are the new behemoths of the tech sector innovators that make the economy more efficient by ‘disrupting’ antiquated business models? Or are they just the trusts of a second Gilded Age, their new-fangled apps the equivalent of the railroad networks that monopolized commerce and access to markets 126 years ago, when the Sherman Act first took effect?

Until now, Uber and its fellow tech giants have managed to mystify policymakers and judges with double-speak regarding their relationship with employees. But in his decision allowing the case to move forward, Judge Rakoff wrote: ‘The advancement of technological means for the orchestration of large-scale price-fixing conspiracies need not leave antitrust law behind.’ Now one court has the chance to decide whether Uber can continue to have it both ways.

Must-read: Marshall Steinbaum: “Should the American Middle Class Fear the World’s Poor?”

Posted on by Brad DeLong

Must-Read:The very sharp young whippersnapper Marshall Steinbaum:

Marshall Steinbaum: Should the American Middle Class Fear the World’s Poor?: “Politicians responsible to the public cannot sell the idea that the domestic middle class must suffer…

…to the benefit of foreigners. The tradeoff idea instead serves the folk mythology of an elite class of economic policy consensus–enforcers, who push policies that enrich the already wealthy. Democracy is supposed to operate as a natural check to bring the elite policy-making consensus in line with popular opinion and interest; playing the domestic middle class against a foreign one is one of many ways to keep that from happening. Asking which ought to suffer to benefit the other distracts attention from the real issue: their joint exploitation at the hands of globally mobile capital.

In my card-carrying neoliberal view, policies in the Global North to restrict trade (or restrict immigration either below or at rates not far above current ones!) would do relatively little to improve the domestic distribution of income and impose great harm on development prospects in emerging markets. The “China Shock” of the GWB administration is the only trade-related episode that is even plausibly as important as other policy moves. And it would be trivial to compensate for even its net distributional harm.

In my view, the focus of left-wing attention on trade restrictions is due not to the importance of international trade flows in altering income distribution, but rather springs from different motives: from attempts to hook up some of the energy that for two centuries now has been abundantly focused on nation and cross-connect it to class. As Ernst Gellner wrote, leftists have been faced with what they regard as a historical anomaly in the rise of nationalism, and have reacted by embracing:

The Wrong Address Theory…. Just as extreme Shi’ite Muslims hold that Archangel Gabriel made a mistake, delivering the Message to Mohamed when it was intended for Ali, so Marxists basically like to think that the spirit of history of human consciousness made terrible boob. The awakening message was intended for classes, but by some terrible postal error was delivered to nations. It is now necessary for revolutionary activists to persuade the wrongful recipient to hand over the message, and the zeal it engenders, to the rightful and intended recipient. The unwillingness of both the rightful and the usurping recipient to fall in with this requirement causes the activist great irritation…

Policies to enhance intellectual property rights and preserve rents are, of course, another kettle of fish entirely…

Must-read: Bernard Weisberger and Marshall Steinbaum: “Economists of the World, Unite!”

Posted on by Brad DeLong

Must-Read: Bernard Weisberger and Marshall Steinbaum: Economists of the World, Unite!: “The original draft of that [American Economic Association] founding document…

…stated the group’s objectives as the encouragement of economic research and of ‘perfect freedom in all economic discussion.’ Then it went on:

We regard the state as an educational and ethical agency whose positive aid is an indispensable condition of human progress. While we recognize the necessity of individual initiative in industrial life, we hold that the doctrine of laissez-faire is unsafe in politics and unsound in morals; and that it suggests an inadequate explanation of the relations between the state and the citizens. We do not accept the final statements which characterized the political economy of a past generation…. We hold that the conflict of labor and capital has brought to the front a vast number of social problems whose solution is impossible without the united efforts of Church, state, and science.

This undisguised manifesto of rebellion against the economic orthodoxy of the Gilded Age raised eyebrows among the established preachers of ‘political economy.’ The state as an ‘ethical agency’ whose aid was ‘indispensable’? The ‘conflict of labor and capital’? Even after the denunciation of laissez-faire as ‘unsafe in politics and unsound in morals’ was removed from the final document, lest it appear that the new association had any motives beyond scientific advancement, the AEA was still understood as a challenge to the status quo. Indeed, the AEA was founded both to conduct scientific research and to agitate for reform, both inside academia and in the public sphere. At its start, the two missions were inextricably linked…

Inequality, technocracy, utility, and the Federal Reserve

Posted on by Brad DeLong

Storify: Inequality, Technocracy, Utility, and the Federal Reserve: A Short Twitter Dialogue on Various Matters of Moral Philosophy, or, IT’S OK FOR THE FED CHAIR TO TALK ABOUT INEQUALITY!!!!

Must-Read: Marshall Steinbaum: Thomas Piketty at the University of Chicago

Posted on by Brad DeLong

Must-Read: It is genuinely surprising to me that Kevin Murphy thinks that Katz and Murphy (1992) is still close to the last word on inequality. And it is beyond genuinely surprising that Steve Durlauf thinks that Bill Gates’s wealth was acquired by merit and John D. Rockefeller’s by monopoly when they are both winners in gigantic winner-take-all natural-monopoly markets–a natural-monopoly created by economies of scale in refining and distribution in the case of oil, and by write-once run-everywhere protected by patent and copyright in the case of operating systems:

Marshall Steinbaum: Free-Market Dogmatism Still Going Strong at the University of Chicago: “A discussion between Piketty and… Kevin Murphy and Steven Durlauf…

…with Jim Heckman acting as moderator…. [Murphy] thinks that his 1992 paper with Lawrence Katz, which tried to explain the dynamics of the college wage premium in the 1970s and 1980s with reference to the supply and demand for skilled labor in the form of workers with a college degree, constitutes the final word… [even though] its model fails at explaining… labor market outcomes… since… [and relies on the residual of] skills-biased technical change: the Ghost in the Free Market Economics Machine….

Piketty started things off by claiming that… globalization and skill-biased technical change… don’t explain the phenomena… closed with what I consider a profound restatement of why Capital in the 21st Century is such an important book:

The gap between [the] official discourse and what’s actually going on is enormous. The tendency is for the winner to justify inequality with meritocracy. It’s important to put these claims up for public discussion.

Durlauf… said, quite reasonably, that the key mechanism of inequality is segregation, because it translates individual inequality into entrenched deprivation, and that its policy implications are therefore to foster integration in a variety of contexts….

Murphy’s presentation was where the wheels came off, intellectually speaking. He declared… by regurgitating his 1992 paper… [saying] “that theory has done an amazing job,” including a cryptic statement about how it explains the rise of tail inequality “if you extrapolate,” whatever that means…. Murphy stepped forward once again to declare that the economy’s “natural supply response of supplying capital” will help workers by reducing the capital share and increasing their productivity…. Durlauf asserted in his JPE review of C21 that no one thinks like Clark anymore, with his quasi-moralistic view of the efficient functioning of capital formation and the adjustment of its rate of return. Unfortunately, Durlauf’s empirical prediction was falsified by Murphy right there on that stage…. Murphy added that in the absence of better education, “The march of technology over time means there’s little for someone with no human capital to do.”… Then things got weird. Durlauf… [said] what mattered was [Americans’] perception of [inequality’s] source: whether justified by merit, as in the case of Bill Gates, or extracted through monopolization, as with John D. Rockefeller. At that, Piketty quipped that Bill Gates certainly agrees….

Murphy[‘s]… idea seems to be that the poor, benighted though they are, will adopt the morally correct position of looking out for their own interest by acquiring an education, so long as the incentive to do so is preserved by avoiding progressive taxation. Usually the fallacy in the moral philosophy of economics… is to argue that whatever reality exists is for the best…. In this case, though, the “ought” is a priori: people should be selfish. For that reason, they probably will be, so long as the status quo is maintained as an instructive lesson in the disaster befalling anyone not born rich…. Durlauf made a final, inscrutable point… saying that we should directly address the harms caused by inequality, by which he was referring to capture of the political system by the wealthy…

Must-Read: Marshall Steinbaum: How Much Would Increasing Top Income Tax Rates Reduce Inequality?

Posted on by Brad DeLong

Must-Read: Marshall Steinbaum: How Much Would Increasing Top Income Tax Rates Reduce Inequality?: “William Gale, Melissa Kearney, and Peter Orszag… increasing top-bracket ordinary income tax rates…

would have little impact on inequality…. There are two key reasons why [their] tax scenarios do not affect [their measure of] inequality very much. First of all, the rich earn a great deal of their income in categories other than “ordinary income,” to which these tax rates apply…. The other reason… is that GKO measure inequality by the Gini Coefficient. But the scenarios only affect individuals comfortably within the top 1% of the income distribution…. The Gini Coefficient is insensitive to measuring inequality in that group….. [But] the reduction in the top 1% income share as a result of the GKO scenario is just under 20% of the total increase in inequality over the whole period the CBO analyzes…