Month: May 2014

Alicia Munnell: Is health reform working in Massachusetts?: “One fear following the Massachusetts health reform…

…and reiterated on the national stage, was decreased labor supply–making it easier to get health insurance not tied to employment might cause some individuals to stop working. It was also feared that employers would cut back on employees or hours to avoid the requirement to offer health insurance, which is based on the number of full-time equivalent workers…. Compar[ing] Massachusetts to four other states and found that the… employment rate followed a generally similar pattern…. Massachusetts did not see relative increases in the share of workers working part-time…. Another concern was that employer-sponsored insurance would be crowded out by public insurance, as employers simply dropped coverage and paid the $295 fine per employee. In fact, the percentage of employers offering coverage actually increased after the reform…. Insurance coverage and access to health care have increased, that health outcomes appear to be improving, and that the worst fears about employment have not come to pass in Massachusetts. Costs, however, remain an issue…

That is all…

Rob Wile: 10-Year Treasury Yield Tumbles: “The yield on the 10-year U.S. Treasury note has tumbled to 2.4413%, a new low for 2014, per Bloomberg data.

There are a variety of factors fueling the rally, some of which we’ve previously discussed. The main ones are ongoing uncertainty about the recovery and constrained inflation. “Long-dated Treasuries outperformed because of the perception that the U.S. is going to have moderate growth without inflationary pressure,” Salman Ahmed, a London-based global strategist at Lombard Odier Asset Management, told Bloomberg. “Or at least, that’s what the Fed is saying.” Other factors include fears that the European Central Bank will lower interest rates, making Europe’s bonds relatively less appealing; overseas demand for U.S. debt; and short covering among those who thought yields would rise.

Should-Reads:

1. Tim Duy: Policy Induced Mediocrity?: “It seems that monetary policy over the past year can be summarized as a missed opportunity to supercharge the recovery, thereby locking the US economy into a suboptimal growth path…. The Federal Reserve could have chosen to lean into this generally upbeat forecast.  Yet instead they chose to lean against it by turning to tapering and setting the stage for interest rate hikes. And the data so far suggests that once again the turn toward policy normalization was premature…. What is remarkable is that the Federal Reserve understood that their forecasts have tended toward optimism…. The Federal Reserve has set reasonably clear expectations that rates will remain low for a long time.  That path, however, seems to be a consequence of doing too little now to ensure a stronger recovery.  In other words, the Fed seems to be taking a lower-rate future as a given rather than as a result of insufficient policy.  Instead of acting to ensure a stronger forecast, they seem more interesting in acting to lock-in the lower path of activity.  And that in turn will tend to lock in a low level of long-term rates.  This, I think, is the best explanation for the inability of markets to sustain higher rates. It is simply reasonable to expect that the conditions which justify higher long rates will be met with tighter policy sufficient to contain growth to something closer to the current path of output than to current estimates of potential output…”

2. Henry Farrell: On Chris Giles of the Financial Times: Political Economy is Political: “The best explanation of the current Piketty-Financial Times brouhaha was written by Mike Konczal a few weeks before it actually happened…. ‘Understanding how the elite become what they are, and how their wealth perpetuates itself, is now a hot topic of scientific inquiry. Many have tried to figure out why the rich are freaking out…. Perhaps they are noticing that the dominant narratives about their role in society—avatars of success, job creators for the common good, innovators for social betterment, problem-solving philanthropists—are being replaced with a social science narrative in which they are a problem to be studied. They are still in control, but they are right to be worried.’ Political economy is political…. I would guess that one can explain the immediate reaction of 85% of economists and public writers to the book by looking to their priors on this question–whether they like to emphasize efficiency questions over distributional concerns, or vice versa (another 10% can be explained by whether the writer in question is miffed because he/she and his/her mates do or don’t get sufficient citations and respect). People who might have found the book interesting had it been an academic exercise, and perhaps even agreed with large parts of it, are freaking out because they worry that it has serious implications for political debate…. Even if the actual reason why people are casting around for Devastating Critiques is because they don’t like the book’s political implications, they may actually find good criticisms, and uncover real mistakes. Motivated reasoning, if properly harnessed, can be epistemologically very valuable…. Argument about politically divisive topics is only disinterested in rare and isolated instances–yet it still can have great benefits…. Plausibly, it’s the people who are least willing to acknowledge the political aspects of the debate who are most completely captured by them. Practical economists, who believe themselves to be quite exempt from any political influences, are usually slaves of some defunct political philosopher.”

3. Doug Henwood: The Top of the World: “[Piketty’s] core message… can be delivered in a few lines: Left to its own devices, wealth inevitably tends to concentrate in capitalist economies. There is no ‘natural’ mechanism… for inhibiting, much less reversing, that tendency. Only crises like war and depression, or political interventions like taxation (which, to the upper classes, would be a crisis), can do the trick…. It was once believed, during the decades immediately following the Great Depression and World War II, that vast disparities in wealth were features of youthful capitalism that had been left behind now that the thing was reaching maturity…. Economics as a discipline loves stories about equilibrium and convergence. Vast inequities should, in theory, be ‘competed away’, as neoclassical economics likes to say. But mostly they’re not. Globally, poorer countries should gain on richer ones as technology and education spread and mobile capital’s search for higher returns makes the poor less poor…. In the case of personal wealth, old fortunes should decline and be replaced by new ones…. The major frustration of the book is political…. Hs political thinking is hardly a model of complexity or effort. He mostly aspires to contribute to rational democratic deliberation about ‘the best way to organize society’…”

Should Be Aware of:

• Adrianna Macintyre: When Medicaid has premiums, enrollees drop out
• Adam Serwer: The case for reparations and the lies we tell ourselves
• Jonathan Cohn: EPA Power Plant Regulations: FAQ for a Big Step on Climate Change
• Ryan Grim: The Economists FT Relied on For Its Thomas Piketty Takedown Don’t Buy It
• Milton Friedman (1988): Immigration And The Cultural Prerequisites for Capitalism
• Taras Kuzio: Ukraine is moving overwhelmingly for Europe
• Sam Wang: The War of the Senate Models
• Jesse Eisinger: “I consider the Obama appointment of Geithner to be the single worst political mistake Obama made…”
• Frances Coppola: Categorising the poor

And:

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

It is here: Homepage

It has lots of new stuff on it. Let me especially recommend:

Jesse Rothstein: Extended unemployment insurance remains critical: “New analyses of recent data covering unemployed workers during the Great Recession…

…and its aftermath indicate that the impact of unprecedented extensions of Unemployment Insurance on job uptake were smaller than previously thought while the benefits were extremely important to maintaining family incomes. The program helped sustain families and communities during an unusually long period of weak labor demand, helping to promote long-term labor market resiliency and higher future prosperity by helping the long-term unemployed remain out of poverty and attached to the labor market. Extended Unemployment Insurance benefits expired at the end of 2013, and Congress is now considering whether and how to reinstate them. The new data and analysis detailed in this issue brief—based on the roll-out of extended benefits in 2008-2010 and the roll-back that began in late 2011—indicate that… the downsides of UI extensions are smaller than in past economic downturns, and there are some previously unanticipated upsides…

Extending UI benefits for the long-term unemployed is one of the largest, ripest pieces of low-hanging economic-policy fruit that we are not picking right now.

And let me especially recommend, from my step-second-cousin:

Ariel Kalil: Economic inequality and the parenting time divide: “Researchers have not until recently thought about parents’ time investments in children…

…as a mechanism for the intergenerational transmission of economic status…. Jonathan Guryan and his colleagues used data from national time diaries to show that mothers with a college education or greater spend roughly 4.5 hours more per week directly interacting with their children than mothers with a high school degree or less…. My own national time use research, with… Rebecca Ryan and… Michael Corey, finds… [that] highly educated parents not only spend more time… they spend that time differently… shift the composition of their time as the child grows in ways that adapt to children’s development at different developmental stages… preschool… reading and problem solving… middle school… management of children’s life outside the home…. We still don’t know precisely why these patterns have emerged…

And we have even more stuff on it:

Research:

Understanding how raising the federal minimum wage affects income inequality and economic growth
* A Video of an Event with Thomas Piketty, Author of “Capital in the 21st Century””
* Taxes as policy: A Review of “Capital in the 21st Century:
* “Expanding Economic Opportunity for Women and Families”
* Thomas Piketty’s big book: What do you really need to know?
* Extended unemployment insurance remains critical
* Piketty’s data deserve better analysis
* The aftermath of wage collusion in Silicon Valley
* Economic inequality and the parenting time divide
* Can letting kids watch TV make them better students?

Value Added:

Separate and unequal mobility
* Holding inequality in reserve
* Heather Boushey reviews “House of Debt”
* Tax cuts for the kids
* Unequal higher education
* The evidence on the minimum wage
* Senator Marco Rubio’s retirement plan
* Bailouts for bankers or homeowners?

Christian Broda and Jonathan A. Parker: The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption: “Using a survey of households in the Nielsen Consumer Panel…

…and the randomized timing of disbursement of the 2008 Economic Stimulus Payments, we find that a household’s spending rose by ten percent the week it received a Payment and remained high cumulating to 1.5–3.8 percent of spending over three months. Our estimates imply partial-equilibrium increases in aggregate demand of 1.3 percent of consumption in the second quarter of 2008 and 0.6 percent in the third. Spending is concentrated among households with low wealth or low past income; a household’s spending did not increase significantly when it learned about its Payment..”

David Cutler and Steven Walsh: JAMA Forum: Will the Country Look to Massachusetts Again?: “The centerpiece of the current Massachusetts reform effort…

…is a target for the growth of medical spending in the state. Spending on medical care should not increase more rapidly than the long-run growth of the state economy, a value forecast to be 3.6% annually…. There were a range of opinions about the target, ranging from the view that it was impossible to predict cost growth and so a target was not appropriate, to the view that medical costs were so high that the target ought to be set at no annual growth or even below…. If the target is breached, the entities—for example, clinicians and hospitals—found to be most responsible for the high rate increases are required to develop and implement a performance improvement plan. The plan can be negotiated over, but state government regulation of rates is prohibited under the law. The power of the target lies not in its enforcement backstop, but in the collective sense that the public and private leaders of Massachusetts have committed to it. Consistent with this, contracts between payers and those who offer health care services are being rewritten to ensure that cost increases do not exceed that goal…”

Carter Price: Piketty’s data deserve better analysis: “Perhaps the key claim by Giles is erroneous.

Giles bases his argument that there was not an increase in wealth concentration in the United Kingdom but rather a decrease on a single data point from a 2010 wealth survey in the UK. Because that survey did not exist in 2000, it cannot be directly compared to other time series data without harmonization. The entirety of the drop Giles claims is occurring can be explained by switching from one survey to another…. Piketty had to look at disparate data sources, harmonize them (so that he could compare apples to apples), and draw conclusions. Wealth is notoriously difficult to measure, which makes working with wealth data especially tricky. Piketty has been exceptionally transparent with the data sets…. Giles uses the raw, non-harmonized wealth data to claim that wealth inequality in the United States has been flat and that it has been decreasing in the United Kingdom. Yet by combining these non-harmonized data sets, Giles is comparing apples to oranges…

Mark Thoma sends us to Larry Summers at Michael Tomasky’s Democracy Journal:

Lawrence H. Summers: The Inequality Puzzle: “His policy recommendations are unworldly….

Success in combating inequality will require addressing the myriad devices that enable those with great wealth to avoid paying income and estate taxes. It is sobering to contemplate that in the United States, annual estate and gift tax revenues come to less than 1 percent of the wealth of just the 400 wealthiest Americans. With respect to taxation, as so much else in life, the real scandal is not the illegal things people do-—it is the things that are legal. And second, such efforts are likely to require international cooperation if they are to be effective in a world where capital is ever more mobile….

Beyond taxation, however, there is, one would hope, more than Piketty acknowledges that can be done to make it easier to raise middle-class incomes and to make it more difficult to accumulate great fortunes without requiring great social contributions in return… vigorous enforcement of antimonopoly laws, reductions in excessive protection for intellectual property… profit-sharing schemes that benefit workers and give them a stake in wealth accumulation, increased investment of government pension resources in riskier high-return assets, strengthening of collective bargaining arrangements, and improvements in corporate governance… the strengthening of financial regulation… an easing of land-use restrictions that cause the real estate of the rich in major metropolitan areas to keep rising in value…

Continue reading “Reviewing Lawrence H. Summers’s Review of Piketty IV: Combatting Inequality on Many Fronts: Tuesday Focus: May 27, 2014” →

Thomson Reuters: Reuters Insider:

STREAM: Larry Summers speaks in London,

http://reut.rs/1tdO1KZ