Month: February 2014

Must-Reads:

1. CBO: Frequently Asked Questions About CBO’s Estimates of the Labor Market Effects of the Affordable Care Act: “‘Q: Will 2.5 Million People Lose Their Jobs in 2024 Because of the ACA?’ A: No, we would not describe our estimates in that way. We wrote in the report: “CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor.”… Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people “losing” their jobs.”

2. John Quiggin: Macroeconomics made easy?: “I’ve just received a book entitled Big ideas in Macroeconomics: A nontechnical view by Kartik Athreya…. The new book is an attempt to simplify things…. The easiest way to see why the book is so striking is to list some topics that do not appear in the index (and are not discussed, or only mentioned in passing, in the text)… unemployment, inflation, recession, depression, business cycle, Phillips curve, NAIRU, Taylor Rule, money, monetary policy and fiscal policy. By contrast, the book includes a lengthy treatment of such topics as Bayes-Nash equilibrium in game theory, intertemporal optimization of consumption and the theory of mechanism design. If you think that this sounds like Hamlet not merely without the Prince, but without anyone in Elsinore, from King Hamlet’s Ghost to Fortinbras, that’s because you are expecting the wrong play…. There is almost zero intersection between Big Ideas in Macroeconomics and what I would think of as macroeconomics. It’s not so much that I think Athreya is wrong is that we are talking past each other. As Charles Goodhart said of DSGE, Athreya’s version of macro excludes everything in which I am interested.”

3. Ezra Klein: Comment on Paul Krugman’s “Who’s Savvy Now?”: “I don’t quite understand the model of politics underlying the backlash-to-the-backlash over the CBO report. The theory is that though the GOP’s initial spin on the report was wrong it’s meta-right because the lies will be used to power effective attack ads in the fall–and in politics, what’s true, and what voters can be tricked into believing is true, are two equally valid categories for inquiry. You see this model of politics… particularly during elections… wall-to-wall coverage of gaffes not because anyone believes the gaffe was important, but because they believe it might end up in attack ads. Beneath that model of politics lies an assumption that an important scarcity in politics is ‘lines that can be used in attack ads’, and so every time one party or the other finds one of those lines, it’s a big deal. This seems to me to wildly underestimate the creativity of the people who make attack ads…”

4. John Quiggin: Work and Beyond: “Ross Douthat… link[ed] to… [my] reflecting on Keynes ‘Economic Possibilities for our Grandchildren’…. Now he’s addressed the topic in the New York Times…. There’s some interesting food for thought… mixed up with some silly stuff reflecting his job as the NY Times token Republican…. He has to do some damage control over the… Repub lie… Obamacare will cost 2.5 million jobs. As Douthat delicately puts it ‘this is not exactly right’. But, although his heart clearly isn’t it, he tries to construct a narrative in which the Repubs might be right for the wrong reasons…. More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while… poorer men have withdrawn from the formal labour force….”

Continue reading “Things to Read on the Afternoon of February 10, 2014” →

CBO: CBO | Frequently Asked Questions About CBO’s Estimates of the Labor Market Effects of the Affordable Care Act:

Q: Will 2.5 Million People Lose Their Jobs in 2024 Because of the ACA?

A: No, we would not describe our estimates in that way. We wrote in the report: “CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor.”… Because the longer-term reduction in work is expected to come almost entirely from a decline in the amount of labor that workers choose to supply in response to the changes in their incentives, we do not think it is accurate to say that the reduction stems from people “losing” their jobs.

John Quiggin: Macroeconomics made easy?: “I’ve just received a book entitled Big ideas in Macroeconomics: A nontechnical view by Kartik Athreya….

The new book is an attempt to simplify things…. The easiest way to see why the book is so striking is to list some topics that do not appear in the index (and are not discussed, or only mentioned in passing, in the text)… unemployment, inflation, recession, depression, business cycle, Phillips curve, NAIRU, Taylor Rule, money, monetary policy and fiscal policy. By contrast, the book includes a lengthy treatment of such topics as Bayes-Nash equilibrium in game theory, intertemporal optimization of consumption and the theory of mechanism design. If you think that this sounds like Hamlet not merely without the Prince, but without anyone in Elsinore, from King Hamlet’s Ghost to Fortinbras, that’s because you are expecting the wrong play…. There is almost zero intersection between Big Ideas in Macroeconomics and what I would think of as macroeconomics. It’s not so much that I think Athreya is wrong is that we are talking past each other. As Charles Goodhart said of DSGE, Athreya’s version of macro excludes everything in which I am interested.

Yuri Gorodnichenko: Crisis in Ukraine: A personal View:

Kathleen Maclay: Yuriy Gorodnichenko, a UC Berkeley associate professor of economics and a native of Ukraine, recently gave a public lecture on campus about what’s happening in his homeland. His talk was organized by Berkeley’s Institute of Slavic, East European, and Eurasian Studies (ISEEES), and cosponsored by the EU Center as part of its Rapid Response Forum…. UC Berkeley Public Affairs followed up with Gorodnichenko with the following Q&A:

Continue reading “Yurii Gorodnichenko: Crisis in Ukraine: A Personal View: Monday Focus: Februrary 10, 2014” →

Ezra Klein: Comment on Paul Krugman’s “Who’s Savvy Now?”: “I don’t quite understand the model of politics underlying the backlash-to-the-backlash over the CBO report.

The theory is that though the GOP’s initial spin on the report was wrong it’s meta-right because the lies will be used to power effective attack ads in the fall–and in politics, what’s true, and what voters can be tricked into believing is true, are two equally valid categories for inquiry. You see this model of politics… particularly during elections… wall-to-wall coverage of gaffes not because anyone believes the gaffe was important, but because they believe it might end up in attack ads. Beneath that model of politics lies an assumption that an important scarcity in politics is ‘lines that can be used in attack ads’, and so every time one party or the other finds one of those lines, it’s a big deal. This seems to me to wildly underestimate the creativity of the people who make attack ads….

Continue reading “Night-Time Must-Read: Ezra Klein: I Don’t Quite Understand the Model of Politics in Which There Is Assumed to Be a Huge Scarcity of Lines to Use in Attack Ads…” →

This I had planned to push across the line on Sunday. But it is not done–and it is not going to be done by Sunday unless inspiration strikes. Why not? Because I find myself a Bear of Too-Little Brain to think these issues through sufficiently clearly.

Therefore let me push the first draft out the door now, in the hope that somebody smarter than I am will give me an intellectual nudge…

I: The Lesson

The first part of our lesson for today consists of a piece based on his AEA presentation by the terrifyingly brilliant Lawrence Summers: Strategies for sustainable growth: “Last month I argued that the U.S. and global economies may be in a period… in which sluggish growth and output, and employment levels well below potential… coincide… with problematically low real interest rates….

Continue reading “FiRST DRAFT: What Market Failures Underlie Our Fears of “Secular Stagnation”?: The Honest Broker for the Week of February 15, 2014″ →

John Quiggin: Work and Beyond: “Ross Douthat… link[ed] to… [my] reflecting on Keynes ‘Economic Possibilities for our Grandchildren’….

Now he’s addressed the topic in the New York Times…. There’s some interesting food for thought… mixed up with some silly stuff reflecting his job as the NY Times token Republican…. He has to do some damage control over the… Repub lie… Obamacare will cost 2.5 million jobs. As Douthat delicately puts it ‘this is not exactly right’. But, although his heart clearly isn’t it, he tries to construct a narrative in which the Repubs might be right for the wrong reasons…. More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while… poorer men have withdrawn from the formal labour force….

Continue reading “Morning Must-Read: John Quiggin: Economic Possibilities for Our Grandchildren–and For Us” →

Must-Reads:

1. Paul Krugman:

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2. Dani Rodrik: When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations: “Ideas are strangely absent from modern… political economy…. the dominant role is instead played by ‘vested interests’…. I will challenge the notion that there is a well-defined mapping from ‘interests’ to outcomes… ideas are subject to both manipulation and innovation, making them part of the political game. There is, in fact, a direct parallel, as I will show, between inventive activity in technology, which economists now routinely make endogenous… and investment in persuasion and policy innovation…. I focus specifically on models professing to explain economic inefficiency and argue that outcomes in such models are determined as much by the ideas that elites are presumed to have on feasible strategies as by vested interests…”

3. Austin Frakt: Cut out the noise and read the CBO report: “All right, enough. I’ve read enough… about what CBO said…. You know what the best thing I read was? The CBO report…. Obamacare will affect the labor market… the removal of… distortion[s]… the addition of [other] distortions… Cadillac tax… employer mandate…. You can cherry pick the anti- or pro-distortionary features to hang this number on, to make the law look awesome or terrible. That’s what you’re seeing in the debate. But skip it…. No other health reform plan that expands coverage would do so without affecting the labor market in good and bad ways. Ultimately, this is not really a debate about Obamacare but about the effects of almost any coverage-expanding reform…. Tune out the noise and read the damn report.”

4. David Weigel: CBOghazi: Journalists have no idea “what will matter” in an election: “Chris Cillizza… defending [his] post…. Journalists, in real time, are not the best arbiters of what people will come to believe months later. The fact that one party is spinning an incorrect story does not mean voters will buy that story…. [Cilizza’s] the Fix pronouncing that some misinterpreted news item was going to badly wound the Democrats. On June 10, 2012, Cillizza confidently predicted that a gaffe you’ve probably forgotten about—President Obama saying that ‘the private sector’s doing fine” compared with the state of social programs—would ‘be fodder in the general election’…. Fix writer Aaron Blake explained why Obama’s exhortation that ‘if you’ve got a small business, you didn’t build that’… would be a problem…. Did it matter? No. Mitt Romney did not win the election…”

Continue reading “Things to Read on the Afternoon of February 8, 2014” →

The incredibly industrious Mark Thoma sends us to Dani Rodrik: When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations: “Ideas are strangely absent from modern models of political economy. In most prevailing theories of policy choice, the dominant role is instead played by ‘vested interests’—elites, lobbies, and rent-seeking groups which get their way at the expense of the general public.

Any model of political economy in which organized interests do not figure prominently is likely to remain vacuous and incomplete. But it does not follow from this that interests are the ultimate determinant of political outcomes. Here I will challenge the notion that there is a well-defined mapping from “interests” to outcomes. This mapping depends on many unstated assumptions about the ideas that political agents have about: 1) what they are maximizing, 2) how the world works, and 3) the set of tools they have at their disposal to further their interests.

Continue reading “Morning Must-Read: Dani Rodrik: Ideas and Interests Are Dangerous for Good and Ill” →

Austin Frakt: Cut out the noise and read the CBO report: “All right, enough. I’ve read enough… about what CBO said….

You know what the best thing I read was? The CBO report itself… a discussion of myriad ways Obamacare will affect the labor market. Some are reasonably construed as the removal of a distortion…. Some other effects can be reasonably construed as the addition of distortions…. Then there’s the mixed bag of the Cadillac tax…. And there’s the employer mandate…. You can cherry pick the anti- or pro-distortionary features to hang this number on, to make the law look awesome or terrible. That’s what you’re seeing in the debate. But skip it…. No other health reform plan that expands coverage would do so without affecting the labor market in good and bad ways. Ultimately, this is not really a debate about Obamacare but about the effects of almost any coverage-expanding reform…. Tune out the noise and read the damn report.