Tag: Mike Konczal

Must-Read: Nell Abernathy, Mike Konczal, and Kathryn Milani: How to Check Corporate, Financial, and Monopoly Power

Posted on by Brad DeLong

Must-Read: Nell Abernathy, Mike Konczal, and Kathryn Milani: How to Check Corporate, Financial, and Monopoly Power: “The policies we propose specifically address rules that have distorted private sector behavior and provided benefits to multinational corporations and rich individuals at the expense of average workers and the economy…

…If taxed and regulated properly, big business, banks, and wealth-holders can contribute to broadly shared prosperity. But tailoring the rules to serve their interests—in essence, leaving these powerful forces untamed—promotes rent-seeking and greater inequality and leads to weaker long-term growth and a less productive economy. Untamed builds on recent analysis of economic inequality and on our 2015 report, Rewriting the Rules, in which we argued that changes to the rules of trade, corporate governance, tax policy, monetary policy, and financial regulations are key drivers of growing inequality…

Must-Read: Patrick Iber and Mike Konczal: Karl Polanyi for President

Posted on by Brad DeLong

Must-Read: Patrick Iber and Mike Konczal: Karl Polanyi for President: “Today, Polanyian arguments are once again in the air…

…Polanyi’s work… show[s] that markets are planned everywhere they exist… always the result of the state…. A pure free-market society is a utopian project, and impossible to realize, because people will resist the process of being turned into commodities. In fact, he calls labor a ‘fictitious commodity,’ along with land and money….

The drive for laissez-faire inevitably produces a protective countermovement that insists on shelter from the damaging effects of the market…. If markets are interfering with other social priorities (like democracy, for example), or producing bad outcomes, you can change the rules that govern what parts of society operate with what kinds of markets…

No: We can’t wave a magic demand wand now and get the recovery we threw away in 2009

Posted on by Brad DeLong

The estimable Mike Konczal writes:

Mike Konczal: Dissecting the CEA Letter and Sanders’s Other Proposals: “I would have done Gerald Friedman’s paper backwards…

…He gives a giant headline number and then you have to work into the text and the footnotes to gather all the details. But a core assumption within the paper is that we are capable of getting back to the 2007 trend GDP through demand. We can get the recovery we should have gotten in 2009…

He is wrong.

We cannot get back to the 2007 trend GDP through demand alone.

For one thing, demand for investment spending has now been low for almost a decade. Since 2007, we have foregone relative to the then-trend:

  1. 16%-point-years of GDP of housing investment.
  2. 6%-point-years of GDP of equipment investment
  3. 5%-point-years of government purchases–of which roughly half have been investments.
  4. 4% of our labor force from their attachments to the labor market.
  5. A hard-to-quantify amount of development of business models and practices.
FRED Graph FRED St Louis Fed

These are principal causes of “hysteresis”. I do not believe that the output gap is the zero that the Federal Reserve currently thinks it is. But it is very unlikely to be anywhere near the 12% of GDP needed to support 4%/year real growth through demand along over the next two presidential terms.

We could bend the potential growth curve upward slowly and gradually through policies that boosted investment and boosted the rate of innovation. But it would be very difficult indeed to make up all the potential output-growth ground that we have failed to gain during the past decade of the years that the locust hath eaten