Month: January 2014

Must-Reads:

1. Steve Randy Waldmann: interfluidity » Followup: Pro-family, pro-children, anti-”marriage promotion”: “James Pethokoukis misreads the views of people like me. He writes: ‘Folks who agree with [Waldman’s] view often advocate a hugely expanded government safety net — universal pre-K, one-year paid parental leave, a universal basic income among other programs — to do the work of transmitting social and intellectual capital that intact families no longer can.’ Folks who are me do advocate for vastly expanded government benefits for families…. But the purpose… is not to ‘do the work… that intact families no longer can’… I support these programs because they would enable and assist the work that couples must do to stay together and in love and raise children well…”

2. Noah Smith: The Econ Nobel Prize Is Not a Serious Institution: “A lot of people thought it was strange, and a little funny, to see the 2013 Econ Nobel Prize awarded to two people (Gene Fama and Robert Shiller) whose theories contradict each other, and who hold deeply opposing views of the way the world works. But… you can actually see Shiller’s work as building on Fama’s…. The 2004 and 2011 Econ Nobels…. 2004… Ed Prescott… in an email… he very recently wrote…. “It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed”…. Bond buying [by the Fed], he wrote, “is as effective in bringing prosperity as rain dancing is in bringing rain.” Wow!… Prescott has made some… odd… claims in recent years, but these recent remarks were totally consistent with his prize-winning research…. 2011… Chris Sims… monetary policy does have real effects…. It is not possible to see Sims’ work as an expansion on or a correction to Prescott’s…. It’s as if the Nobel Prize in Physics went to one person who made a theory saying that electricity doesn’t exist, and then seven years later was awarded to a person who took measurements showing that electricity does exist. That seems like it would never happen…”

3. Paul Krugman: Soup Kitchens Caused the Great Depression, AFF Edition: “The blog Social Democracy for the 21st Century has a fascinating post about Austrian patron saint Ludwig von Mises in the Great Depression… it bears so much resemblance to current right-wing flailing… von Mises, faced with the reality of depression, basically dropped Austrian business cycle theory, and for the very reason people like me have always had trouble taking it seriously…. ABCT is essentially a story about the excesses of the boom; it offers no clear or plausible story about how that boom leads to a sustained slump. And von Mises was in effect already conceding that point by 1931…. According to vM, it was excessive wages… and unemployment benefits were leaving workers insufficiently desperate. Sound familiar? It should–it is, essentially, the current Republican story, in which unemployment is high because we’re being too nice to the unemployed–that, as I like to say, soup kitchens caused the Great Depression…. It’s a nonsense story. But it turns out that it’s always the story the right turns to when market economies go bad–because the alternative would be to admit that market economies can in fact go bad, and that sometimes government is the solution, not the problem.”

4. Dylan Scott: New GOP Plan Makes Everything They Hate About Obamacare Even Worse: “For the last couple months, the Republican critique of Obamacare has been founded on President Barack Obama’s broken promise: ‘If you like your health plan, you can keep it’. It was a pledge that the health care reform law wouldn’t disrupt the existing insurance system…. It’s been an effective line of attack…. Which makes the new GOP alternative to Obamacare, proposed Monday by three Republican senators… baffling… another fundamental disruption of the individual insurance market… [plus] it could upend the employer insurance universe…. That was the conclusion of several health policy wonks who spoke with TPM about the new proposal, put forward by… Burr… Coburn… and… Hatch (UT)… millions of people would likely lose the plan they already have.”

Continue reading “Things to Read on the Morning of January 28, 2014” →

Steve Randy Waldmann: interfluidity » Followup: Pro-family, pro-children, anti-”marriage promotion”: “James Pethokoukis misreads the views of people like me.

He writes: ‘Folks who agree with [Waldman’s] view often advocate a hugely expanded government safety net — universal pre-K, one-year paid parental leave, a universal basic income among other programs — to do the work of transmitting social and intellectual capital that intact families no longer can.’ Folks who are me do advocate for vastly expanded government benefits for families…. But the purpose… is not to ‘do the work… that intact families no longer can’… I support these programs because they would enable and assist the work that couples must do to stay together and in love and raise children well….

Continue reading “Morning Must-Read: Steve Randy Waldmann: Pro-Family, Pro-Children, Anti-”Marriage Promotion”” →

Noah Smith: The Econ Nobel Prize Is Not a Serious Institution:

A lot of people thought it was strange, and a little funny, to see the 2013 Econ Nobel Prize awarded to two people (Gene Fama and Robert Shiller) whose theories contradict each other, and who hold deeply opposing views of the way the world works. But… you can actually see Shiller’s work as building on Fama’s…. The 2004 and 2011 Econ Nobels…. 2004… Ed Prescott… in an email… he very recently wrote…. “It is an established scientific fact that monetary policy has had virtually no effect on output and employment in the U.S. since the formation of the Fed”…. Bond buying [by the Fed], he wrote, “is as effective in bringing prosperity as rain dancing is in bringing rain.” Wow!… Prescott has made some… odd… claims in recent years, but these recent remarks were totally consistent with his prize-winning research…. 2011… Chris Sims… monetary policy does have real effects…. It is not possible to see Sims’ work as an expansion on or a correction to Prescott’s…. It’s as if the Nobel Prize in Physics went to one person who made a theory saying that electricity doesn’t exist, and then seven years later was awarded to a person who took measurements showing that electricity does exist. That seems like it would never happen…

The kicker, of course, is that Prescott does not say “I doubt that monetary policy has had any significant effect” or “it was just coincidence that when Paul Volcker tightened monetary policy in 1979-1982 the economy fell into a deep recession”. He says “it is an established scientific fact”. That shows–to me–an astonishing and extraordinary degree of disconnection from any approximation to reality.

Paul Krugman: Soup Kitchens Caused the Great Depression, AFF Edition:

The blog Social Democracy for the 21st Century has a fascinating post about Austrian patron saint Ludwig von Mises in the Great Depression… it bears so much resemblance to current right-wing flailing… von Mises, faced with the reality of depression, basically dropped Austrian business cycle theory, and for the very reason people like me have always had trouble taking it seriously…. ABCT is essentially a story about the excesses of the boom; it offers no clear or plausible story about how that boom leads to a sustained slump. And von Mises was in effect already conceding that point by 1931…. According to vM, it was excessive wages… and unemployment benefits were leaving workers insufficiently desperate. Sound familiar? It should–it is, essentially, the current Republican story, in which unemployment is high because we’re being too nice to the unemployed–that, as I like to say, soup kitchens caused the Great Depression…. It’s a nonsense story. But it turns out that it’s always the story the right turns to when market economies go bad–because the alternative would be to admit that market economies can in fact go bad, and that sometimes government is the solution, not the problem.

Thinking a bit about Philip Klein’s coverage of Coburn, Burr, and Hatch…

My first two thoughts are: (a) this doesn’t add up, and (b) continuous coverage as a replacement for the individual mandate is a really bad idea…

Philip Klein: GOP Senators Unveil First Health Care Plan in an Obamacare World: Tom Coburn… Richard Burr… and Orrin Hatch…. Insurers would be barred from imposing lifetime limits… required to allow individuals to remain on their parents’ policies until… 26… allow… insurers to charge older Americans five times as much [as the young]… require insurers to offer coverage to anybody who has applied as long as they have maintained continuous coverage…. The theory is that this would offer some protection to those with pre-existing conditions without having… Obamacare’s full ban…. At the same time, the idea is that this would create an incentive for everybody to maintain their insurance coverage, thus negating the need for the individual mandate….

Continue reading “No, It Does Not Look Like the Republican Senators’ Health-Care Proposal Adds Up Arithmetically. Why Do You Ask?” →

Must-Reads:

1. Justin Fox: We Can’t Afford to Leave Inequality to the Economists: “That’s the thing about this rise in ‘extreme upper tail inequality/…. It is one of the most dramatic economic developments of the past quarter century. And it seems like it might be bad thing. But conclusive economic evidence for its badness is hard to find. Yes, there are theories: All that wealth sloshing around in the top 1% leads to more bubbles and crashes. Extreme wealth corrupts the political process.  Income inequality may be slowing overall economic growth. And… ‘given the diminishing marginal utility of income, it’s hugely wasteful for the super rich to have so much income.’… There’s some truth to all four of those. But there are also lots of counterarguments and some counterevidence…. Which leads me to another theory: I think we’re eventually going to have to figure out what if anything to do about exploding high-end incomes without clear guidance from the economists. This is a discussion where political and moral considerations may end up predominating.”

2. Matt O’Brien: Why Is the American Dream Dead in the South?: “The top 1 percent aren’t killing the American Dream. Something else is–if you live in the wrong place…. The good news is that people at the bottom are just as likely to move up the income ladder today as they were 50 years ago. But the bad news is that people at the bottom are just as likely to move up the income ladder today as they were 50 years ago. We like to tell ourselves that America is the land of opportunity, but the reality doesn’t match the rhetoric—-and hasn’t for awhile. We actually have less social mobility than countries like Denmark…. [And] even though mobility hasn’t gotten worse lately, it has worse consequences today because inequality is worse. But it’s a little deceiving to talk about ‘our’ mobility rate. There isn’t one or two or even three Americas…. Raj Chetty, Nathaniel Herndon, Patrick Kline, and Emmanuel Saez…. Kids born into the bottom 20 percent of households, for example, have a 12.9 percent chance of reaching the top 20 percent if they live in San Jose…. But kids born in Charlotte only have a 4.4 percent chance of moving from the bottom to the top 20 percent. That’s worse than any developed country…. So what makes northern California different from North Carolina? Well, we don’t know for sure…”

3. Chris Miles: America’s New Lost Generation, in One Map: “It’s been 58 straight months with millennial unemployment above the 10% mark. This is a critical problem for the American economy, as many young people are failing to build the work experience needed to excel in the modern business world. It’s hard to say what this trend has done to American innovation, competitiveness, and economic output, but it’s clear that if the trend continues we’ll see the makings of the next American economic crisis.”

4. Philip Klein: GOP senators unveil first health care plan in an Obamacare world: “Sens. Tom Coburn… Richard Burr… and Orrin Hatch…. Insurers would be barred from imposing lifetime limits on medical claims and required to allow individuals to remain on their parents’ policies until the age of 26…. Obamacare [allows] insurers [to] only charge three times as much to older Americans as they charge younger Americans…. Coburn-Burr-Hatch proposal would… allow… insurers to charge older Americans five times as much. However, states would be permitted to set their own ratio…. The GOP proposal would require insurers to offer coverage to anybody who has applied as long as they have maintained continuous coverage, regardless of whether they are switching health plans or shifting from employer-based health care to the individual market. The theory is that this would offer some protection to those with pre-existing conditions without having the same effect on premiums as Obamacare’s full ban on the practice. At the same time, the idea is that this would create an incentive for everybody to maintain their insurance coverage, thus negating the need for the individual mandate…”

Continue reading “Things to Read on the Afternoon of January 27, 2014” →

Philip Klein: GOP senators unveil first health care plan in an Obamacare world:

Sens. Tom Coburn… Richard Burr… and Orrin Hatch…. Insurers would be barred from imposing lifetime limits on medical claims and required to allow individuals to remain on their parents’ policies until the age of 26…. Obamacare [allows] insurers [to] only charge three times as much to older Americans as they charge younger Americans…. Coburn-Burr-Hatch proposal would… allow… insurers to charge older Americans five times as much. However, states would be permitted to set their own ratio…. The GOP proposal would require insurers to offer coverage to anybody who has applied as long as they have maintained continuous coverage, regardless of whether they are switching health plans or shifting from employer-based health care to the individual market. The theory is that this would offer some protection to those with pre-existing conditions without having the same effect on premiums as Obamacare’s full ban on the practice. At the same time, the idea is that this would create an incentive for everybody to maintain their insurance coverage, thus negating the need for the individual mandate.

Continue reading “Afternoon Must-Read: GOP Senators Unveil First Health Care Plan in an Obamacare World” →

Chris Miles: America’s New Lost Generation, in One Map:

It’s been 58 straight months with millennial unemployment above the 10% mark. This is a critical problem for the American economy, as many young people are failing to build the work experience needed to excel in the modern business world. It’s hard to say what this trend has done to American innovation, competitiveness, and economic output, but it’s clear that if the trend continues we’ll see the makings of the next American economic crisis.

Matt O’Brien: Why Is the American Dream Dead in the South?: “The top 1 percent aren’t killing the American Dream. Something else is–if you live in the wrong place….

The good news is that people at the bottom are just as likely to move up the income ladder today as they were 50 years ago. But the bad news is that people at the bottom are just as likely to move up the income ladder today as they were 50 years ago. We like to tell ourselves that America is the land of opportunity, but the reality doesn’t match the rhetoric—-and hasn’t for awhile. We actually have less social mobility than countries like Denmark…. [And] even though mobility hasn’t gotten worse lately, it has worse consequences today because inequality is worse. But it’s a little deceiving to talk about ‘our’ mobility rate. There isn’t one or two or even three Americas…. Raj Chetty, Nathaniel Herndon, Patrick Kline, and Emmanuel Saez…. Kids born into the bottom 20 percent of households, for example, have a 12.9 percent chance of reaching the top 20 percent if they live in San Jose…. But kids born in Charlotte only have a 4.4 percent chance of moving from the bottom to the top 20 percent. That’s worse than any developed country…. So what makes northern California different from North Carolina? Well, we don’t know for sure….

Continue reading “Afternoon Must-Read: Matt O’Brien: Why Is the American Dream Dead in the South?” →

Mike Konczal gives his view on the issues I wrestled with during the week of January 5:

Mike Konczal: In 2013, the Fed showed why fiscal policy is still important: “Last spring, I wrote a piece in Wonkblog saying we’d get to see whether or not the expansion of monetary policy by the Federal Reserve would offset fiscal austerity in 2013…. I concluded that it wasn’t looking too good for the Fed… but that QE3 was a smart idea anyway (and should go further)…. Recently, there’s been a wave of posts by Scott Sumner and David Beckworth calling me and others out, saying that the votes are in and it’s a victory for the market monetarists, the team that said monetary policy would offset austerity in 2013 and that fiscal policy wouldn’t matter….

Continue reading “How to Read What We Learned About Government Policy and the Business Cycle from 2013: Monday Focus (January 27, 2014)” →