Things to Read While Insomniac on January 10-11, 2014

Must-Reads:

1. Robert Waldmann: Poverty and the “Laboratories of Democracy”: “Marco Rubio proposes… the bold new idea of block grants. [Kevin] Drum… writes that there have been some advantages from Fedralism. I throw a cow. He wrote: ‘state experimentation, a la welfare reform in the early 90s, could be pretty valuable’. ‘if each of the various state policies were rigorously studied’…. What have we learned from a state level welfare reform experiment? Well, we now know that welfare reform kills people: http://angrybearblog.com/2013/06/welfare-reform-kills.html…. AFDC ‘participants in the experimental group had a 16 percent higher mortality rate than members of the control group (hazard ratio: 1.16; 95% confidence interval: 1.14, 1.19; p < 0.01). This amounts to nine months of life expectancy lost between the ages of thirty and seventy for people in FTP’…. This statistically significant result… has had no influence…. There is little point having laboratories of democracy if people ignore the experimental results and just go with their prejudices, as we do…”

2. Kevin Drum: Obamacare’s Saving Grace: The Middle Class Uses It Too: One of the guiding principles… is that programs for the poor can be managed badly and nobody cares. But if a program for the middle class is badly managed, there’s hell to pay…. Peter Super… notes that the rollout of Obamacare’s federal exchange was actually fairly typical for a new… low-income [program…. ‘But the recovery has been startlingly fast’… The Obamacare website rollout might have been a fiasco, but its saving grace was that it was very public and had a big clientele among the middle class. So it got fixed. Pronto.”

3. Robert Laszewski: A health industry expert on ‘the fundamental problem with Obamacare’: “If an entrepreneur had crafted Obamacare he would’ve gone to a middle class family… of four… $54,000 a year… pay $400 in premiums net of subsidy… silver plan… deductible around $2,500… narrow network…. The entrepreneur would say: ‘I’ve got $5,000 in premium and all this deductible, what do they want for that?’ And they probably would’ve said: ‘We want office visits and lab tests because the kids need to go in occasionally and then we want catastrophic care.’ The problem with Obamacare is it’s product driven and not market driven…. I think that’s the fundamental…. It meets the needs of very poor people because you’re giving them health insurance for free. But it doesn’t really meet the needs of healthy people and middle-class people.”

Should-Reads:

1. Paul Krugman: The Zombie Confidence Fairy: “Surely the worse thing about [Robert] Rubin’s [Financial Times] piece is that its whole premise is that the confidence fairy is alive and well: ‘The US recovery remains slow…. One reason is that our unsound fiscal trajectory undermines business confidence….’ Do business leaders really express those kinds of concerns? Maybe — if they’re guests at a Peterson-hydra event, where that’s the kind of thing they’re expected to say. But there isn’t a shred of evidence that long-term deficit fears are actually exerting any drag… let alone that some kind of medium-term austerity plan would be expansionary through the confidence channel…. The US economy has suffered an extraordinary, persistent plunge in residential investment; the fall in business investment was only normal for recessions and aftermaths…. There’s just nothing in this picture that would lead you to believe that you need to invoke some special factor like deficit fears to explain business behavior…. I keep hearing the same argument in Europe.”

2. Casey Johnson: With Smart TVs, What We Have Is a Failure to Communicate: “Smart TVs are the new fashionable thing…. But we’ve still yet to see a really compelling, easy-to-use product… a failure to communicate, or more appropriately, a failure to receive communication…. The TV is insistent on remaining at a distance… out of necessity—once a screen is in someone’s lap, it becomes a solo experience, difficult to share…. But as smart TV functionality grows our ability to communicate across the living room needs to grow with it… make our wishes known to that increasingly thin box. Even going as far back as plain TV remotes, the control experience of TVs has nearly always been user-hostile. Modern remotes are littered with often-inscrutable buttons (‘sub.code’?) some with multiple functions (‘comp/mix’?), and only a few are used regularly. Multiply that by a remote for every component connected to your TV, and reading a book instead doesn’t sound so bad after all. Though some third parties had success unifying control of various devices with one remote, like the Logitech Harmony series, the industry failed to solve the control scheme problem for TV even when TVs were only a matter of channels, volume, and inputs…”

3. Lars Christenson: The “Weidmann rule” and the asymmetrical budget multiplier: “Jens Weidmann: ‘The euro zone is recovering only gradually from the harshest economic crisis in the post-war period and there are few price risks. This justifies the low interest rate…. Low price pressure however cannot be a licence for arbitrary monetary easing and we must be sure to raise rates at the right time should inflation pressure mount.’ It is the second part of the quote which is interesting…. Weidmann… wants an asymmetrical monetary policy rule–when inflation drops below the ECB’s 2% inflation target the ECB should not “arbitrary” cut its key policy rate, but when inflation pressures increase he wants the ECB to act immediately…. [Thus] we can think of the euro zone as being at least 50% ‘keynesian’, in the sense that fiscal shocks will not be fully offset by monetary policy. As a result it would be wrong to assume that the budget multiplier is zero in the euro zone–or, rather, it is not always zero. The budget multiplier is asymmetrical…. The fact that the budget multiplier is positive could be seen as an argument against fiscal austerity in the euro zone. However, interestingly enough, it is not an argument for fiscal stimulus…”

And

• Marty Whitman: 2013 Letter

Phil Swagel: A Transition in Fannie and Freddie Oversight | Michael Hiltzik: How not to sugarcoat a bad employment report | Noah Smith: Noahpinion: The most damning critique of DSGE |

Should Be Aware of:

1. Maria Popova: A Brief History of the To-Do List and the Psychology of Its Success: “Our brain appears to be wired to nag about unfinished to-do list items as uncompleted tasks and unmet goals continue to pop up into our minds. This is called the Zeigarnik effect and explains phenomena like earworms…. Recent research has shed new light on the relationship between the conscious and the unconscious in our cognitive to-do lists…. ‘The Zeigarnik effect is not, as was assumed for decades, a reminder that continues unabated until the task gets done. The persistence of distracting thoughts is not an indication that the unconscious is working to finish the task. Nor is it the unconscious nagging the conscious mind to finish the task right away. Instead, the unconscious is asking the conscious mind to make a plan… with specifics like time, place, and opportunity. Once the plan is formed, the unconscious can stop nagging the conscious mind with reminders.'”

And:

Juliet Eilperin: Iowa’s GOP governor expands Medicaid program Thursday | Willem Buiter: Why fiscal sustainability matters |