Things to Read While Insomniac on the Night of January 16-17, 2014

January 17, 2014

Must-Reads:

  1. Kevin O’Rourke: “L’offre crée même la demande”: “I can’t quite believe that he said it, but he apparently did. Go tell it to the small businesses in my favourite French village who have had to close since 2008. Arguing against Say at a time like this is like shooting fish in a barrel, so let’s not even bother. The more alarming point is what this tells us about the European left: to all intents…. Now, if you’re on the right I suppose you might welcome the fact that the left is committing hara kiri on the altar of European orthodoxy, but you shouldn’t. For the reality is that orthodoxy is letting the people badly down, as Martin Wolf pointed out today, and the people aren’t stupid. If the left is not going to offer them an alternative, then Eurosceptic parties will. And unfortunately most of those are on the extreme right.”

  2. John Aziz: Why stopping the next financial crash is an impossible dream: “Are financial crashes really preventable? I don’t think so. The world is just too unpredictable…. [And] as… Hyman Minsky put it, stability is destabilizing…. How do people react to a stable world?… They become more tolerant of risk…. Successful regulations [thus] became victims of their own success…. We need to move beyond the impossible dream of preventing financial crises before they occur. Laws to prevent theft, fraud, intentionally misleading investors, and gambling with other people’s money or with an implicit guarantee (like Glass-Steagall) are prudent…. But booms and busts are normal behavior in markets, because the future is so hard to predict and people are so unpredictable…”

  3. Michael Hiltzik: The housing market is still a drag on the economy–but why?: “The 30-year fixed mortgage is still the bedrock… and still should be. That means restoring Fannie Mae and Freddie Mac to their traditional roles as the backers of that market…. [Felix] Salmon thinks… the 30-year fixed mortgage… should be phased out…. That’s too facile…. The 30-year fixed is what got us out of the housing morass of the ’30s and could do so again…. An entirely private housing finance system is a ‘pipedream’…. Take the shackles off Fannie and Freddie, and let the 30-year fixed mortgage work its magic.”

  4. Paul Krugman: France by the Numbers: “‘You shall not crucify mankind upon a croissant d’or’. That was Alan Taylor’s response (in correspondence) to François Hollande’s embrace of Say’s law — he literally said that ‘supply actually creates demand’–together with a shift to, again in his own words, supply-side policies…. Mark Thoma is your go-to site for the rapidly growing avalanche of horrified snark. The amazing thing… is the extreme pessimism that has evidently enveloped French elite opinion. You’d think that France was a disaster area…. You do have to wonder why the French elite is so easily intimidated into making a hard right turn while the elites of much worse cases like Finland and the Netherlands remain steadfast in their notion that the worse things get, the more committed they have to be to inflicting further pain.”

  5. David Wessel et al.: Central Banking after the Great Recession: Lessons Learned and Challenges Ahead: “The Hutchins Center on Fiscal and Monetary Policy at Brookings will host its inaugural event exploring these topics with a panel moderated by Director of the Hutchins Center and Brookings Senior Fellow David Wessel. Papers will be presented by: San Francisco Federal Reserve President and CEO John Williams on unconventional policy, with a response by Harvard University’s Martin Feldstein; Former Deputy Governor of the Bank of England Paul Tucker on regulation, with a response by Sullivan & Cromwell’s H. Rodgin Cohen; and a panel discussion on central bank independence with Brookings’ Donald Kohn, Harvard’s Kenneth Rogoff, and the University of California’s Christina Romer. Following the panel, former CEO of Fischer Francis Trees and Watts, Inc., Pulitzer- Prize winning author, and Brookings trustee Liaquat Ahamed will interview Federal Reserve Chairman Ben Bernanke about the Federal Reserve’s first and next century. All speakers will take questions from the audience.”

Should-Reads:

  1. Jay Livingstone: Montclair SocioBlog: Correlation and Causation: Marriage, Poverty, and Teeth: “A couple of days ago, I commented (here) on the idea that marriage was the solution to poverty.  Or as the Heritage Foundation (and Sen. Rubio) put it, ‘Being raised in a married family reduced  child’s probability of living in poverty by about 82 percent.’… PolitiFact… [gave] Rubio a ‘Mostly True’. And now The Wall Street Journal has given Bush’s press secretary Ari Fleischer space to repeat this idea…. Rubio, Heritage, Fleischer, and PolitiFact are committing a fallacy most undergraduates would see through in two seconds…. Here’s an analogy that comes via the Christian Science Monitor…. ‘Visiting the dentist once a year reduced a person’s probability of being poor by 50%’…. We can easily see the logic of the dentistry-poverty connection and its implication for policy. People with bad teeth or no teeth wind up with bad jobs or no jobs. They are not attractive as potential employees. Because of their poor personal decisions regarding dental care, they suffer economically. If only they would visit the dentist annually, they would almost certainly rise from poverty. Needless to say, the government should not do anything directly to alleviate their poverty or dental care.  These are matters of personal virtue, and the government’s role should be only to exhort them to visit the dentist regularly…”

  2. Aaron Carroll: JAMA Forum: Do Employee Wellness Programs Improve Health and Reduce Spending?: “PepsiCo… 2003… Healthy Living program… a “lifestyle” offering and a disease management component…. The program reduced health care spending by $30 per member per month…. For each dollar spent on disease management, the company saw a return of $3.78. For each dollar spent on lifestyle management, they only saw a return of $0.48…. Wellness programs… are pitched more as lifestyle management than as disease management…. Those who do not comply with the program can be subject to penalties of $100 a month…. Disease management is… money spent only on those who already have chronic conditions…. This study, along with those that come before it, adds to the body of literature that shows that lifestyle management wellness programs do not offer the reductions in health care spending that many attribute to them.”

  3. Ryan Avent: Secular stagnation: Purchasing power disparity: “The most effective and straightforward way to reduce the real value of existing claims is to intervene directly in foreign-exchange markets to devalue the currency in which they are denominated. The dirty secret of macroeconomics is that everyone knows this works…. The problem, of course, is that a depreciation like that just isn’t cricket…. But we should be realistic…. It is not as though… rich… economies have never done such a thing…. Rich economies want to behave in the white-glove manner that was seen as appropriate for rich economies over the past generation while confronting a crisis that more closely resembles a pre-1950s or emerging-market downturn than one of the genteel post-1980s recessions. That won’t do. Fixing rich-world problems requires a more ‘eclectic’ approach. We will see how long it takes rich-world governments to come to that realisation.”

  4. Jonathan Chait: The Death of the Death of Obamacare: Last night, Douglas Kamerow and I debated Megan McArdle and Scott Gottlieb at Intelligence Squared over the notion, ‘Obamacare is now beyond rescue’…. The arguments McArdle and Gottlieb made last night bore little resemblance to the sorts of failure predictions that were widely circulating last November…. They argued that Medicaid does not make people healthier, that healthy people ought to be able to enjoy the financial benefits of being skimmed out of the insurance pool, and that politicians will reverse all the mechanisms needed to finance the law. In other words, they argued that the law was doomed for the reasons opponents had argued it was doomed in 2010, or for reasons a conservative could offer to suggest Medicare and Social Security are also doomed…. My favorite moment from the debate, and I’m obviously biased, occurred when McArdle denied that she philosophically opposes national health insurance, prompting me to quote the headline of this 2009 McArdle column, ‘Why I Oppose National Health Care’.”

Anthea Mitchell: Fed President Fisher on 2014: Inflation and Economic Growth | Carola Binder: On Euler Equations |

Should Be Aware of:

  1. Charles Stross: Optimal Diversification: “The laser-sharp focal point of my writing is crime. And humour. And espionage. And Lovecraftian horror. And space opera. And time travel. And politics. And urban fantasy. With side-orders of LGBTQ interest and traditional romance and hard SF on top. This has worked for me because if something comes into fashion and then goes out again I’ve still got something else that can sell…”

  2. Claudia Steinwender: Information Frictions and the Law of One Price: “When the States and the Kingdom became United”: “The establishment of the transatlantic telegraph connection in 1866… daily data on information flows across the Atlantic… daily information on prices and trade flows of cotton. Information frictions result in large and volatile deviations from the Law of One Price…. Exports respond to information about foreign demand shocks. Average trade flows increase after the telegraph and become more volatile…. I estimate the welfare gains from information transmission through the telegraph to be roughly equivalent to those from abolishing a 6% ad valorem tariff.”

  3. Heebie-Geebie: Swashbuckling Bodice Ripper: “When I was at home, I found a twelve page story that I’d written when I was probably 13 or 14. It was a long wandering adventure epic, with plenty of sex, beer and drugs that made it very clear that I only had the faintest notion of how these things played out in real life. The part that struck me as so very poignant was that it was written in first person, and the narrator is male, and there is a side character with Heebie’s real name, who shows up to play the role of the elusive most beautiful person in the world. The narrator is occasionally distracted by her, and then gets on with adventures, and then she is part of the Shangri-La paradise at the end.

    “The whole set-up might be harmless and funny, except that I vividly remember feeling so unhappily split. Being the narrator who gets to have adventures was entirely divorced from being the object of desire. The only path to romance was by being the object of desire. Therefore you could either have adventures or romance, but not both. Reading the story made me feel sad all over again that I got so suckered by society, and for so many years.

    “And also a bit angry.”

And:

Kevin Drum: It’s Time to Fix the Housing Market | Peter Eavis and Jessica Silver-Greenberg: As Refinancing Wanes, Banks Are Wary of New Loans | Felix Salmon: Why banks aren’t lending to homebuyers | Annalee Newitz: From Bitcoin millionaires to robot philosophy, on Person of Interest | David Silbey: Frenzied Finance | Richard Moser: Overuse and Abuse of Adjuncts Threaten Academic Values |

January 17, 2014

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