Erik Brynjolfsson and Andrew McAfee: The Second Machine Age:
Now comes the second machine age. Computers and one digital advances are doing for mental power… what the steam engine and its descendants did for muscle power… to blow past previous limitations…. Whether or not the new machine age bends the curve as dramatically as Watt’s steam engine, it is a very big deal indeed…
Bob Forester: Daily Kos: I signed up for health insurance, told my GOP Congressman about it, and made the local news:
My healthcare saga began in 2002…. No longer did I have a group plan selected by an employer. I had to shop for my own coverage. At first it was easy…. But each year the dreaded renewal letter arrived, and the premiums increased by leaps and bounds…. But the big shock was yet to come… renewal letter… $756 instead of $463–a staggering 63% increase…. I applied for a very-high-deductible plan that would keep my monthly payment in the $400 range. Given that I was still insured, the insurance folks got a copy of the blood test, which they proceeded to search line by line…. Out of two pages of data, there was a single thyroid reading was outside of “normal” range (side note: there’s nothing wrong with my thyroid; it was simply their excuse to make me pay that outrageous premium). They’d found their so-called preexisting condition, and denied me access to the new plan with the lower premium. With the help of my doctor, who wrote a letter on my behalf, I appealed…. “It wasn’t a government bureaucrat that came between me and my doctor; it was an insurance-company bureaucrat….”
Mike Konczal: It’s still too early for Congress to stop worrying about unemployment: “This is the month that unemployment officially fell off the agenda in Washington, D.C…. There are three major levers that policymakers can use to push for full employment… additional deficits… monetary stimulus… fix the broken housing market to allow for quicker deleveraging and to prevent destabilizing foreclosures. But policymakers are now easing up on all three levers… “taper”… emergency unemployment insurance is unlikely to be extended in 2014. But there are other, less-noticed ways…. One example: There’s the looming expiration of the Mortgage Forgiveness Debt Relief Act…. Is this pullback justified? Some economists have suggested that broad-based unemployment is no longer the nation’s biggest problem…. But I find this story incomplete, and too narrow. For one: The economy isn’t just terrible for people who have been out of work for a long time. It’s still terrible even for people with jobs. Quit rates, for instance, are still much lower than they were on the eve of the Great Recession. The rate at which people are voluntarily quitting their jobs has only recovered approximately half of its value. It dropped a point from 2.2 percent, and it stands at only roughly 1.7 percent. Wage growth is also still anemic…”
Paul Krugman: Bits and Barbarism: “This is a tale of three money pits… of monetary regress… the strange determination of many people to turn the clock back…. The first money pit is an actual pit–the Porgera open-pit gold mine in Papua New Guinea…. The mine has a terrible reputation…. But gold prices… are still three times what they were a decade ago, so dig they must. The second money pit is a lot stranger: the Bitcoin mine in Reykjanesbaer, Iceland. Bitcoin is a digital currency that has value because… well, it’s hard to say exactly why, but for the time being at least people are willing to buy it because they believe other people will be willing to buy it…. The third money pit is hypothetical. Back in 1936 the economist John Maynard Keynes argued that increased government spending was needed to restore full employment. But then, as now, there was strong political resistance to any such proposal. So Keynes whimsically suggested an alternative: have the government bury bottles full of cash in disused coal mines, and let the private sector spend its own money to dig the cash back up. It would be better, he agreed, to have the government build roads, ports and other useful things–but even perfectly useless spending would give the economy a much-needed boost. Clever stuff–but Keynes wasn’t finished. He went on to point out that the real-life activity of gold mining was a lot like his thought experiment…”
Continue reading “Things to Read on the Evening of December 23, 2013”
So the Fearless Leader of the Washington Center for Equitable Growth, John Podesta, has departed for the Obama White House.
In the late 1990s John Podesta stabilized and made effective the nine-ring-circus that was the late-Clinton White House. In the 2000s he built the Center for American Progress into a politically-influential progressive think tank that outpunched the sum of Cato, AEI, Heritage, CEI, AAF, and five more Republican-oriented thinktanks (no, I went call them “conservative” until they do some shaping up and acquire some spine vis-a-vis their political masters) on one-twentieth the budget. Having accomplished two miracles of organization and institution-building and -management in little more than a decade, I thought his next project was going to be Equitable Growth: the WCEG–refocusing the public sphere’s economic policy debate around what really matters, growth and equity, and playing our position so that, when the politics once again makes technocratic economic policy possible, we will be ready. But no.
The hawk-eyed Cardiff Garcia writes:
Piketty previews Piketty: A hat tip to reader @zapatique for sending us to Thomas Picketty’s recent lecture, which previews the forthcoming English-language edition of his new book…
and so reminds me that the English-language translation (by Arthur Goldhammer) of Tomas Piketty’s Capital in the Twenty-First Century is coming out in March. And Tomas gave a talk on it in Helsinki.
And the esteemed and eminent Kevin Drum writes:
New French Book Will Become Important When It’s In English: Tyler Cowen says today that “The forthcoming Thomas Piketty book will be very important.” That “will be” is sort of interesting. You see, the name of the book is Le capital au xxie siècle, and it was published three months ago. But no one is talking about it. Presumably, it will become very important—and very talked about—only next March, when Capital in the 21st Century hits the shelves.
I don’t have any grand point to make. It’s just interesting that fluent French is now so rarely spoken among American academics that an important French book can’t even get the time of day until its English translation comes out. It makes sense that widespread conversation would have to wait, since you can’t very well have that until lots of people have read the book, but you’d think there would be at least a few reviews out there along with a bit of discussion. But if there has been, I’ve missed it.
Well, you would need somebody who is:
Why is everybody all of a sudden looking at me?
Reuters: Counterparties:
Larry Mishel: Twitter @LarryMishel:
Chart on my tombstone will be: “Root of American inequality: wages detached from productivity”: http://t.co/NuOBquIztn
Senate votes preliminary OK for Yellen to lead Fed:
WASHINGTON (AP)–The Senate has cleared the way for Janet Yellen to succeed Ben Bernanke as head of the Federal Reserve. Senators voted 59-34 Friday to end debate on the president’s nomination of Yellen. Approval is expected Jan. 6, the day the Senate returns from winter recess.
But… But… But… I was told last summer that a big argument for Janet Yellen was that she was clearly so well-qualified that lots of Republicans would vote for cloture, and she would clear the 60-vote cloture threshold easily…
Not so.
Duncan Black: Eschaton: Buses Are Good Things: “I do think the ‘tech buses’ in San Francisco should be paying an appropriate impact fee if they’re going to be using public bus stops, but the alternative to the buses is, you know, many many more road clogging cars. Basically the Bay Area just needs more housing, especially where there are decent transportation options…. I don’t worry about poor people being driven out of the city [of Philadelphia] anytime soon, but I do worry that the neighborhoods with better public transit (high frequency bus routes, trolleys, subway) might, eventually, become unaffordable.”
Martin Wolf: We still need to learn the real lessons of the crisis: “Everybody could see the glare of the fiscal deficits left by the crisis. It was easy to agree that this was where the government needed to look for its priorities…. But the real story is of the impact of the financial crisis on output and productivity. The correct focus is on how to recover the lost output and productivity. Fiscal irresponsibility was not the cause of these disasters; eliminating it cannot be the cure…”
Michael Darda: How is Abenomics Doing?: “Leading indicators in Japan have been on the upswing…. Abeonomics is working. One reason that the previous round of QE in Japan didn’t lift growth much is that it was expected to be temporary and proved to be temporary as occasioned by a 20% collapse in the monetary base in 2006. This time, however, at least part of the increase in the base is expected to be permanent, hence the new 2% inflation target. In short, the BoJ has to do enough to satiate a broad money demand function that has been growing 2-3% per annum…. Reflation should help to ease Japan’s debt and fiscal burden… restoring at least moderate NGDP growth should help Japan’s budgetary fortunes. This is one reason that the rise in Japan’s inflation breakeven spreads has been inversely related to credit default swap spreads on Japan’s debt. Broad money growth in Japan has begun to recover convincingly, which should also be bullish for the equity market…. We believe Japan equities have 20-40% upside…”
Paul Krugman: Microfoundations and the Parting of the Waters: “Phelps… [made] two observations… nominal shocks had large real effects… [and] with everyone acting rationally, money should have been neutral even in the short run. Traditional Keynesian analyses… [only provided] ex-post rationalizations…. So the Phelps crowd came up with a lovely story…. Individuals and firms couldn’t tell… whether a rise in the price… represented a shock specific to them… or a general change in demand… confusion could explain why short-run aggregate supply seemed upward-sloping…. This meant that the apparent tradeoff between unemployment and inflation would be unstable…. The stagflation of the 70s seemed to confirm this prediction, and brought the microfoundations project immense prestige…. Freshwater economists gleefully proclaimed Keynes dead, the subject of nothing but ‘giggles and whispers’.
“But… Phelps-Lucas/type microfoundations quickly collapsed both intellectually and empirically. Intellectually… rational individuals simply should not have been confused in [that] way…. Empirically… slumps last too long…. Microfoundations in macroeconomics… failed utterly at the one thing it was sold, above all, as being able to do…. Time, you might think, to reconsider…. But many… had so committed themselves to the idea that Keynes was dead and rationality roolz that they simply dug in deeper….
“Now we have people debating whether models with microfoundations lead to better predictions… [even though] the microfoundations are wrong…. But what you want to realize is that this isn’t going to convince the microfoundations crowd. After all, more than thirty years ago they decided that the joy of microfoundations trumped the utter failure of microfounded models to work… and… have now trained successive cohorts of students in this view. There are, it’s true, some hints of a guilty conscience… the odd tendency of freshwater types to immediately accuse anyone with saltwater ideas of being dishonest. (I’m not a nice guy, but if look at what I said about, say, Cochrane, it was that he was ignorant, not corrupt.)…
“The notion that there had been a convergence of views by 2007, which was then ruptured by the crisis, was a saltwater delusion. People like Olivier Blanchard convinced themselves that the other side was listening; it wasn’t. The hysterical reaction to the notion that fiscal policy is effective at the zero lower bound demonstrated that the freshwater types had never bothered to learn…”
Continue reading “Things to Read on the Morning of December 21, 2013”
Duncan Black: Eschaton: Buses Are Good Things:
I do think the “tech buses” in San Francisco should be paying an appropriate impact fee if they’re going to be using public bus stops, but the alternative to the buses is, you know, many many more road clogging cars. Basically the Bay Area just needs more housing, especially where there are decent transportation options…. I don’t worry about poor people being driven out of the city [of Philadelphia] anytime soon, but I do worry that the neighborhoods with better public transit (high frequency bus routes, trolleys, subway) might, eventually, become unaffordable.
Simply carrying it through the Berkeley Economics Department in the afternoon of the Friday before Christmas–a time when the building is close to dead because they are about to turn off what heat there is–gets me stopped for four conversations: “It’s the anti-Kuznets!” “It’s the updated Marx!” “It’s the anti-Summers!” “It’s the anti-Marx!”…
Really, I gotta either finish my painfully-slow reading of the French edition and write a review of that, or figure out how long this thing is under embargo…