Things to Read on the Morning of February 2, 2014

Must-Reads:

1. Chris Dillow: Why inequality matters: “We lefties care about inequality… because… three things that would make inequalities tolerable are–to some extent–missing. Firstly, inequalities don’t all arise from fair processes…. Secondly, we fear that inequality has adverse effects… economic growth, social cohesion… other aspects of well-being… inequality is, as Sean McElwee says, an ‘affront to democracy’…. Thirdly, we’ve no great beef with inequality if it is combined with some form of risk-pooling…. We’d favour some redistribution to mitigate the effects of bad luck–be it the bad luck of a bad draw in the genetic lottery or of being hurt by a recession…. Libertarians should worry about income inequality as it is often the product of statism…. Getting the rich to pay more tax is nowhere near enough to reduce the inequalities we should tackle.”

2. David Beckworth: The Two Big Failures of the Bernanke Fed: “The Bernanke Fed never tried Abenomics. That is, for all the Fed has done over the past five years it never tried to do the kind of monetary regime change now being done by the Bank of Japan…. So for all the praise the Bernanke Fed gets for preventing the second Great Depression, it should be equally noted that it allowed the long slump… effectively kept monetary policy tight for the past five years… failed to meaningfully address the endogenous fall in the money supply and the decrease in money velocity…. In my view, this is the biggest failure…. But it was not the only serious failure…. In the second half of 2008, housing prices, many commodity prices, inflation expectations and stocks all suggested deflation was coming. Fed officials, though, kept talking about backward-looking measures of inflation that made it look high. Their hawkish pronouncements effectively tightened monetary policy by shaping market expectations about its future direction…. Looking back, the Fed’s response from about mid-to-late 2008 was amazingly bad…. Though this Bernanke failure was big, I do view it as less heinous than the failure to do an Abenomics-like program.”

3. Cardiff Garcia: The Fed’s converging misses on inflation and unemployment: “The unemployment rate… has been falling quickly towards the Fed’s central tendency forecast of 5.2-5.8 per cent for the long-term rate…. Inflation (1.1 and 0.9 per cent respectively) [has] remained well below the Fed’s explicit 2 per cent target–as they have for nearly two years…. If… current trends hold, the extent of the Fed’s miss on inflation will start to converge with its miss on its full-employment mandate. To increasingly emphasise the former as a signal that policy will remain loose… wouldn’t be too difficult to justify.”

4. Jay Rosen: Keep me informed: parsing the logic of Ezra Klein’s move to Vox Media » Pressthink: “If you want to understand… look at these phrases…. Keep me informed. Help me understand this. Don’t give me updates when you have them, but when I need them to stay on top of things. Missing background often prevents me from understanding the news; solve that problem for me and I will rely on you for my information. Here’s Klein: ‘New information is not always–and perhaps not even usually–the most important information for understanding a topic. We are better than ever at telling people what’s happening, but not nearly good enough at giving them the crucial contextual information necessary to understand what’s happened. We treat the emphasis on the newness of information as an important virtue rather than a painful compromise. The news business, however, is just a subset of the informing-our-audience business–and that’s the business we aim to be in.’ The product is not ‘news’ but understanding and that steady state of feeling well informed. The news system we have is simply not organized that way. And so it’s no surprise to me that Ezra Klein had to leave the Washington Post to find backers who understood what he wanted to do.”

5. Rich Yeselson: James Madison’s Worst Nightmare: Today’s Republicans have become the very kind of obstructionist faction—with apocalyptic politics—that the primary author of our Constitution warned us against

6. Sahil Kapur: Requiem For The Filibuster
7. Ludwig Siegele: Cheap and ubiquitous building blocks for digital products and services have caused an explosion in startups

Should-Reads:

1. Luke Sharrett: Life after Jan. 1: Kentucky clinic offers early glimpse at realities of health-care law: “Nine days into the new year, the 41-year-old call-center worker headed to the health clinic on Highway 15. She saw a doctor about her chronic stomach ulcers, had her blood drawn for tests and collected referrals for all the specialists she had been told she needed but could never afford. The next week, she saw a neurologist, who found lesions on her brain and prescribed medicine for the cluster headaches, which are also called ‘suicide headaches’ for pain that is far more intense than a migraine and which Combs had been treating with an alcohol-soaked cloth wrapped around her head. She lined up a gynecologist for abnormal uterine bleeding and a hematologist for anemia and an ophthalmologist for an affliction she called ‘arthritis of the eye’, which was diagnosed on one of the rare occasions she decided to see a specialist, a $250 visit her husband paid for by selling his lawn mower…. This is the world that many critics of the new health-care law have worried about, one in which the sick and the poor expand the ranks of Medicaid while other Americans see premiums rise, policies canceled or favorite doctors booted out of networks.”

2. Stephen Kinsella: Economics and Finance Teaching Before and After the Crisis: “Brian Lucey and I conducted a survey of all university teachers of economics and finance in December 2013…. The main results from the sample of respondents are: 1. Teaching has not changed much in response to the crisis. 2. Attitudes to newer, or more critical material appear mixed at best.3. Respondents emphasised the need for broader contextualisation and increased mathematical competence. We find it hard to see how to reconcile these findings.”

3. Felix Salmon: Who’s to blame for the emerging-market crisis?: “The stories being told be both Krugman and Rodrik are consistent, then, with the ‘taper tantrum’… emerging-market economies have become reliant on the constant flow of very cheap dollars being printed by the Fed; now that QE is coming to an end, they’re finding themselves in a real pickle…. Krugman… is saying that if only US economic policy had worked better… a much more vibrant economy… Americans… would naturally look to invest their money abroad, and the flows to emerging markets would remain healthy…. Instead, we have too few employed Americans… and the markets have come to the collective (and self-fulfilling) decision that the end of QE will mean the end of substantially all capital flows to emerging markets. The result is a ‘sudden stop’…. Rodrik, on the other hand, says that the current crisis is the emerging markets’ own fault, for opening themselves up to fickle and volatile capital flows in the first place… a story which is bound to end in tears, no matter what the Fed does. The two narratives aren’t entirely contradictory, but ultimately Rodrik’s is more important, and more correct…. The trick to preventing sudden stops isn’t to keep the money flowing: the trick to preventing sudden stops is to not make yourself susceptible to them in the first place.”

Matthew Yglesias: Satya Nadella: New Microsoft CEO brings cloudy outlook | William Black: Let’s End Politico and Deal Book’s “Competition in Sycophancy” | Don Taylor: Patient CARE Act Post | Brian Buetler: GOP’s Obamacare fiction series: Latest horror story a creation from start to finish | Kathleen Geier: The New York Times publishes an open letter from Dylan Farrow, accusing her adoptive father Woody Allen of sexual assault | Economist: Putin’s Russia: The conspicuous dazzle of the games masks a country, and a president, in deepening trouble | John Holbo: The Ring of Gyges |

Should Be Aware of:

1. Edwin Park: The Federal Financial Commitment to the Medicaid Expansion Stands: “Health reform’s Medicaid expansion is a great deal for states. The federal government will finance nearly all… picking up 100 percent of expansion costs for the first three years (2014-2016) and no less than 90 percent on a permanent basis…. Pressures to cut Medicaid and shift costs to states as a strategy to cut the deficit have dissipated. For example, policymakers didn’t seriously target Medicaid as a source of savings in crafting either of the last two major federal budget agreements…. The Obama Administration has said that it will oppose any cost-shifts to states that would deter states from taking up the Medicaid expansion…. As National Economic Council Director Gene Sperling stated last January, states should expand Medicaid ‘with the understanding that the rug will not be pulled out from underneath them’ and that ‘[w]e are not willing to accept even the Medicaid savings that we had once put on the table… Medicaid savings, Medicaid cuts, for this administration, are not on the table’.”

2. Jacob Sullum: Obama, an “outside observer of his own administration”: “Obama often speaks as if he is an outside observer of his own administration–condemning excessively long prison sentences while hardly ever using his clemency power to shorten them, sounding the alarm about his own abuses of executive power in the name of fighting terrorism, worrying about the threat to privacy posed by surveillance programs he authorized. Now here he is, trying to distance himself from his own administration’s refusal to reclassify marijuana.”

3. Lionel Robbins (1971): What was the Greatest Mistake of Lionel Robbins’s Life?: “As an explanation of what was going on in the early ’30s… [the Austrian theory] was misleading. Whatever the genetic factors of the pre-1929 boom, their sequelae, in the sense of inappropriate investments fostered by wrong expectations, were completely swamped by vast deflationary forces…. The theory was inadequate to the facts. Nor was this approach any more adequate as a guide to policy. Confronted with the freezing deflation of those days, the idea that the prime essential was the writing down of mistaken investments and the easing of capital markets by fostering the disposition to save and reducing the pressure on consumption was completely inappropriate… as unsuitable as denying blankets and stimulants to a drunk who has fallen into an icy pond, on the ground that his original trouble was overheating.”

4. Paul Krugman: I Am Not A Wise Man – NYTimes.com: “Chris House is right, even though he refuses to say what nutty things I’ve said that come remotely close to Ed Prescott. What he’s right about is that having a medal from Sweden doesn’t mean that you’re wise, or even sensible. And it certainly doesn’t grant you the right to have your opinion treated as gospel…. If an economist, no matter how credentialed, consistently makes low-quality arguments, he should be tuned out–whereas someone who consistently makes very good arguments deserves attention…. House is also right… people smart enough to win a big prize… [can be] experts in one narrow area with little sense of others. Worse, it’s pretty common to have done one big thing which turns out to be wrong. And it’s a natural human tendency to refuse to accept that…. But while this is a natural human tendency, it’s also a mortal sin…. It takes a real effort to… mark your beliefs to market…. But you have to make the effort. Unfortunately, not enough famous economists do.”

And:

Ta-Nehisi Coates: The Champion Barack Obama | The Epicurean Dealmaker: * Mirror, Mirror, on the Wall… | *STiLT: Explain Everything |