Month: February 2014

Paul Krugman: CBO: ACA OK – NYTimes.com: “What with the fuss over the CBO estimates of employment effects of health reform–Appendix C–everyone seems to have overlooked Appendix B….

How has the disastrous initial rollout affected CBO’s projections about reform’s near future?…. The number of uninsured will fall 13 million, not 14 million!… CBO thinks that reform has been only mildly set back by the healthcare.gov mess… [and] these are predictions we’ll be able to test in real time, unlike the labor force estimates, which will get lost in statistical noise.

Jonathan Chait: Obamacare, Jobs, and ‘What Matters Politically’: “Imagine that the United States had a national health-care system in place for long enough that it was no longer the subject of frenetic controversy….

Now imagine a new president just proposed to eliminate that system and replace it with the one that has existed in the United States until January 1 of this year. Then suppose the Congressional Budget Office analyzed the effect of this plan on the labor market…. Would the firestorm of terrible headlines about Obamacare killing jobs that dominated the actual news yesterday be, in this imagined world, a heavenly chorus of hallelujahs?… There would be more people working, more economic output, and more national wealth. Hooray!

Continue reading “Afternoon Must-Read: Jonathan Chait: Obamacare, Jobs, and ‘What Matters Politically’” →

Chris Cilizza is one of the best reporters the Washington Post has now that the Wonkblog crew is heading off to Vox Media. Chris Cilizza also sees nothing odd or ironic in writing:

Chris Cilizza: Why the CBO report is (still) bad news for Democrats: “My job is to assess not the rightness of each argument…

but to deal in the real world of campaign politics in which perception often (if not always) trumps reality…

Note that assumptions here:

• That what actually happens to Americans as ObamaCare is implemented is not the “real world”
• That the real world is the world of “campaign politics”
• That in this real world of campaign politics reality does not count–“perception trumps”
• That it is not his job to report on the “rightness of the argument” about what the consequences of ObamaCare implementation will be for all those Americans who do not live in the real world of campaign politics but, instead live somewhere else
• That it is his job to report on the perceptions of campaign politics–because that is the real world

And at this point, all you can do is quote extensively from Plato’s Republic, the passage on the Allegory of the Cave, and urge Jeff Bezos to immediately change the culture of the Washington Post completely so that it can at least try to step up its game:

Continue reading “One Reason Why American Public Policy Is Going to H— in a Handbasket…: Wednesday Focus: February 5, 2014” →

So I see a twitter squib that makes me think that the article it links to must be really interesting and would teach me a lot, and so I click, and I find…

Continue reading “The Worm Ouroboros on the Internet” →

Noah Smith: Heroes of NoahSmithian Weblogging: James Pethokoukis:

American conservatism needs to start thinking again. The Reagan-era package… reached the end of its usable shelf life sometime in the late 90s and went plunging off a cliff in the Bush years, finally degenerating into the dead end that is the Tea Party. Many people have been cited as thinkers who were destined to reform the movement…. But as I see it, Jim Pethokoukis, a blogger for the American Enterprise Institute, is the best of the crop…. He has aggressively promoted the monetarism of Milton Friedman… that inflation is not the big danger when there is slack in the economy… actively worries about the plight of the unemployed, the unemployed, and families for whom income has fallen… the ‘rise of the robots’ and the replacement of human jobs with automation. But he’s no liberal convert – he’s trying to find a new way for conservatism to be relevant to the majority of working, struggling Americans, not to cave in and embrace the positions of the Left.

Paul Krugman: Changing Circumstances: “You can pretty clearly see three things:

1. Until 2008, the Fed leaned against the wind, raising rates when inflation was high or unemployment low.
2. After 2008, the Fed would have liked to cut rates but couldn’t.
3. Also after 2008, as a result of the zero constraint, monetary policy no longer leaned against the wind.

Point 3 strongly suggests that you would expect different results from many kinds of economic policies, such as cutting unemployment benefits. Now, there are a couple of points that will predictably come up here. Some people will argue that the Fed coulda and shoulda and maybe even did make up for its inability to lower short-term rates with other policies. My view would be that making monetary policy truly effective at zero rates, if it was possible at all, would have required more radical action than the Fed was willing or politically able to take.

Continue reading “Evening Must-Read: Paul Krugman: Changing Circumstances, Monetary Policy, and Fiscal Policy” →

Ryan Avent and Karl Smith are having a debate about Thomas Piketty’s Capital in the Twenty-First Century, and both are, I must say, getting rather (Henry) Georgist about it:

Ryan Avent: Inequality: Capital and land: “FOR a book that hasn’t even been published in English yet, Thomas Piketty’s Capital in the Twenty-first Century has prompted quite a lot of discussion….

I think it’s worth addressing some points made in a recent Alphaville post by Karl Smith. Mr Smith… writes:

Importantly, however, the resurgence in [the importance of] capital is driven almost exclusively by a rise in housing values, and those values stem almost entirely from what classical economists would have termed land… the value of land… the value of… structures… [and] in the modern world… the option value induced by zoning and land use restrictions. Paris is the perfect example of the powerful effects of such land use restrictions. The demand for housing in Paris is extremely high…. If you wish to be doing business at a certain level in France then you must live in or around Paris… [or if you] wish to experience the legendary culture and beauty of the city and to live in proximity with others who value it. Paris maintains the latter demand in large part by severe restrictions on the height and architecture of buildings… preserve the history of Paris, but also make it impossible for it to house all of the millions who would come today to live and work….

Continue reading “Land Rather than Capital the Long-Run Oppressor of the Workers…” →

So this morning I am reading Phil Mirowski’s presidential address to the historians of economic thought, and trying to keep my ire contained…

Mirowski has one good point: that Paul Samuelson, in his Economics principles textbook, started or at least greatly amplified the movement of economists citing Adam Smith’s “Invisible Hand” as his summary statement of his belief in the magic of the market–and that is not what the “Invisible Hand” did in Smith’s writings.[1]

Phil Mirowski: Does the Victor Enjoy the Spoils?: Paul Samuelson as Historian of Economics: “There are a number of articles repeatedly pointing out that Adam Smith intended nothing resembling Pareto optimality or general equilibrium by his use of the [invisible hand] metaphor; but Gavin Kennedy (2010) has demonstrated that it was Samuelson’s 1948 introductory textbook that first ushered us down that particular cul-de-sac…”

But Mirowsky takes off from there and uses that as a springboard to say things that strike me as completely false:

Phil Mirowski: Does the Victor Enjoy the Spoils?: Paul Samuelson as Historian of Economics: “The whole fallacious drive to recast Adam Smith as a proto-neoclassical… was largely instigated by Samuelson….

Adam Smith was, in order:

1. An Enlightenment Scottish moral philosopher, a la David Hume…
2. A contributor to the existing eighteenth-century literature on “Political Oeconomy”…
3. The founder of Economics, and an extraordinarily strong believer in the efficacy, power, and natural justice of the properly-structured and properly-regulated competitive free market.

But when he talked about (3), he used not the metaphor of the “Invisible Hand”, but spoke instead about the “system of natural liberty”.

Thus when Mirowski says that Paul Samuelson erroneously painted Adam Smith as a “proto-neoclassical… [when he actually] intended nothing resembling Pareto optimality or general equilibrium”, it is Mirowski who is wrong, and not Samuelson

Here are five examples of how Smith uses the concept of the “system of natural liberty”–and, yes, it is something that he sees as something like general equilibrium, and something he sees as like Pareto optimality:

Continue reading “The Invisible Hand and the System of Natural Liberty: Tuesday Focus: February 4, 2014” →

Josh Barro: CBO Report Obamacare Discouraging Work: “The law will reduce work hours through several mechanisms, some of which are desirable and some of which aren’t….

The decline in work will be almost entirely because people choose to work less, not because employers choose to hire less. Republicans tend to talk about Obamacare as ‘forcing people into part-time work’. But CBO expects the law to have ‘small or negligible’ effects on labor demand…. This has important implications for wages: While a decline in labor demand will tend to reduce wages, a withdrawal of labor supply may actually help push them up, as employers compete to hire from a reduced pool of available workers….

Continue reading “Evening Must-Read: Josh Barro: How Obamacare Discourages Work — And Why That Could Be A Good Thing” →

Dylan Scott: The GOP Has It Wrong: Obamacare Won’t ‘Cost’ 2 Million Jobs: “The CBO report, in fact, specifically undermines that [Republican] claim.

Those lost hours will ‘almost entirely’ be the result of people choosing to work fewer hours because of Obamacare–not because they lost their jobs or can’t find a full-time job.

The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).

The report explicitly says that Obamacare isn’t going to force businesses to cut jobs on any grand scale. What it is going to do is change how much Americans work. ‘I think it’s important to distinguish between people choosing to work less and jobs being lost’, Larry Levitt, vice president at the non-partisan Kaiser Famiy Foundation, told TPM. ‘That is something important to keep an eye on, since you don’t want to discourage work. But, it’s not in all cases a bad thing’.