Things to Read at Night on April 8, 2014

April 8, 2014

Must-Reads:

  1. Bryan Covert: Here’s Why We Know The Gender Wage Gap Really Does Exist: “Here’s why we know there is still an unfair difference between what women and men make: Women earn less when they get the same education. The first year out of college… women make less than men… even when factors such as schools, grades, majors, and others are taken into account…. Women earn less in virtually every job… category tracked by the Bureau of Labor Statistics…. Women earn less thanks to discrimination…. Not all of the gap is due to discrimination…. Francine Blau and Lawrence Kahn found that while experience, occupation, and industry explain much of the gap, there is still more than 40 percent of it that remains unexplained…. Women earn less when they balance children and careers…. Our country is also unique in making it difficult for both parents to remain in the workforce…. Paid leave and affordable, consistent child care help boost women’s wages. The choice to be a caretaker may not always be such a free choice…”

  2. Matthew Yglesias: The short guide to Capital in the 21st Century: “Can you give me Piketty’s argument in four bullet points? * The ratio of wealth to income is rising in all developed countries. * Absent extraordinary interventions, we should expect that trend to continue. * If it continues, the future will look like the 19th century, where economic elites have predominantly inherited their wealth rather than working for it. * The best solution would be a globally coordinated effort to tax wealth…. Does this have anything to do with Karl Marx’s Das Kapital? Quite a bit… his bottom line is that Marx was right to worry about capitalism. During the Cold War years it appeared that Marx was simply wrong to assert that market societies would be dominated by owners of capital. Wages for ordinary workers were high and rising. Economic elites were largely business executives or skilled tradespeople (lawyers and surgeons, say) rather than owners of enterprises. And iconic ‘capitalist’ figures were entrepreneurs who built businesses rather than heirs to old fortunes…. Piketty says that this was essentially a happy coincidence reflecting the unique circumstances of the post-war era…. Unless drastic measures are taken, the future belongs to people who simply own stuff they inherited from their parents…. Piketty’s vision of a class-ridden, neo-Victorian society dominated by the unearned wealth of a hereditary elite cuts sharply against both liberal notions of a just society andconservative ideas about what a dynamic market economy is supposed to look like…”

  3. Danny Vinik: Glenn Hubbard’s Critique of Obama’s Stimulus Makes No Sense: “Former Romney Adviser Blames Obama for Problems Republicans Created: Hubbard criticizes the Obama administration for focusing too much on ‘shovel-ready’ projects while not implementing a sustained infrastructure program. In fact, that’s the exact sort of thing that the administration has been pushing for, and Hubbard’s fellow Republicans have been blocking…. [Hubbard] admits that ‘activist demand policies by the federal government may make sense’… [and] blames the Obama administration for problems with fiscal policy that Republicans created…. As Mike Grunwald lays out in his book The New New Deal, the White House wanted a larger stimulus…. Obama has repeatedly called for more infrastructure spending—often in the form of an infrastructure bank—in the past few years. Republicans have blocked those proposals. While the administration has not offered a comprehensive tax reform proposal, Republicans ran as fast as they could away from Dave Camp’s plan…”

  4. Paul Krugman: Euphemistic At The IMF: “Ever since the financial crisis struck we’ve suffered grievously from the tyranny of respectable opinion. As I’ve often argued, the problem with our inadequate and often perverse response to mass unemployment isn’t that we lack a workable economic framework; basic IS-LMish macroeconomics has, in fact, provided quite good guidance. The problem, instead, has been that following economic logic has been deemed unserious…. Respectable people grab on to academic papers that present dubious nonstandard results — expansionary austerity! A debt cliff at 90 percent!–while radicals like me are the ones citing Econ 101. In all of this, the IMF has played a somewhat strange role. It is, institutionally, the very model of respectability…. Yet it has a sophisticated, fairly Keynesian research department–and management that actually listens to that department (as opposed to, say, the European Commission, whose attitude seems to be: ”If I want your opinion I’ll tell you what it is.”)… The result is a proliferation of euphemisms. There’s a fine example in the latest World Economic Outlook, which makes a strong case that “normal” real interest rates have fallen substantially over time, and not just because of the financial crisis. What does this imply for policy? Here we go: ‘With respect to monetary policy, a period of continued low real interest rates could mean that the neutral policy rate will be lower than it was in the 1990s or the early 2000s. It could also increase the probability that the nominal interest rate will hit the zero lower bound in the event of adverse shocks to demand with inflation targets of about 2 percent. This, in turn, could have implications for the appropriate monetary policy framework.’ What does that actually say? Well, my subtitled version says this: Raise the inflation target to 4 percent, dummies. But the IMF wouldn’t, and presumably can’t, say that outright. And I suspect that the people who need to hear that won’t at all get what the Fund is really saying. Secular stagnation, here we come…”

  5. Brian Buetler: WSJ Obamacare editorial supports ACA fixes, slams conservative critics: “We know that GOP leaders are suddenly, tepidly, willing to allow minor, bipartisan improvements to Obamacare to clear the House of Representatives. But for the party’s shift away from an obstinance-only strategy to evolve into something more substantial—something that really undermines the repeal fantasy—influential voices within the conservative tent are going to have to pressure hardliners…. The Wall Street Journal editors picked today to attack the GOP members who are furious about party leaders doing anything at all to facilitate implementation of the law: ‘[S]ome conservatives have become so politically disoriented by ObamaCare that preserving its mistakes is more important than helping Americans hurt by the law. The theory seems to be that “improving” ObamaCare will weaken the coalition for repeal and therefore the economic torture dials should be turned up to 11. If the law is more punitive and dysfunctional, more people will want to get rid of it in toto. But… rooting for voters to be harmed is not a helpful electoral coping strategy. A better political strategy is to offer an agenda going into the 2014 election that addresses the damage ObamaCare is doing to the individual and small-business insurance markets until a larger fix is possible.’… The conservative position is slowly shifting from repeal and replace, to replace and repeal. Much like you’d never tear down a structurally weak bridge without first building a sound one parallel to it, the right has awakened to the fact that Obamacare can’t be scrapped on the basis of a promise to clean up the incredible mess sometime in the future…. Count it as progress of a sort…”

  6. Jon Gruber and Harold Pollack: Reports of ACA demise: greatly exaggerated: “For this edition, I Skyped with Dr. Jonathan Gruber who is the Ford Professor of Economics at the Massachusetts Institute of Technology and director of the health care program at the National Bureau of Economic Research…. One tragedy deserves attention: Jon: I think, Harold, the single thing we probably need to keep the most focus on is the tragedy of the lack of Medicaid expansions…. A life-costing tragedy has taken place in America as a result of that Supreme Court decision… half the states in America are denying their poorest citizens health insurance paid for by the federal government…. I’m offended because I believe we can help poor people get health insurance, but I’m almost more offended…. When the Supreme Court decision came down, I said, ‘It’s not a big deal. What state would turn down free money from the federal government to cover their poorest citizens?’ The fact that half the states are… is nothing short of political malpractice…”

Should-Reads:

  1. Noah Smith: The Foxy Fed: “A few days ago, the Fed released its workhorse model of the macroeconomy…. Why didn’t the Fed fully reveal FRB/US model before now? It always seemed to me that it was basically because of – for lack of a better word – embarrassment. Academic macroeconomists haven’t used or studied this type of model in decades (having abandoned everything else in favor of DSGE). In 2010, Chris Sims appeared to call models like FRB/US ‘something close to a spreadsheet’. Since most Fed employees are drawn from the same pool of people as academic macro (and interact with academic macroeconomists quite frequently), the fact that they use something like FRB/US must have seemed a bit awkward. In fact, I’ve heard academic macroeconomists make fun of FRB/US a number of times. So if my guess is right, the Fed’s publication of FRB/US indicates that whatever embarrassment existed is now essentially gone. That is kind of interesting…”

  2. Jamelle Bouie: Jonathan Chait’s look at race during the Obama era is missing one thing: black Americans: “If I were outlining a racial history of the Obama administration, it would begin with policy: A housing collapse that destroyed black Americans’ wealth; a health care law attacked as ‘reparations’ and crippled by a neo-Calhounite doctrine of ‘state sovereignty’; a broad assault on voting rights and access to the polls, concentrated in the states of the former Confederacy. Indeed, it would focus on the deep irony of the Obama era: That the first black president has presided over a declining status quo for many black Americans. In short, it would treat race as a real force in public life that has real consequences for real people. You should contrast this with Jonathan Chait’s most recent feature for New York magazine, where the story of race in the Obama administration is a story of mutual grievance between Americans on the left and right, with little interest in the lived experiences of racism from black Americans and other people of color. It’s a story, in other words, that treats race as an intellectual exercise—a low-stakes cocktail party argument between white liberals and white conservatives over their respective racial innocence…”

Should Be Aware of:

  1. Jon Stewart: Things We’d Like To Erase From Our Memory Lane from the Bush Administration:

  2. Ed Kilgore: The Vetting of Rand Paul Begins: “I’m pretty much willing to write off Paul’s chances of winning the 2016 Republican presidential nomination…. Paul… all but attributes the entire change in Bush 41 and Bush 43 policies towards the invasion and occupation of Iraq to Cheney’s personal enrichment by Halliburton. Had he gone ahead and accused Cheney of treason, it would have been entirely logical. And he also comes close to saying Republicans who supported the Iraq invasion—you know, nearly all of them—were dupes complicit in Cheney’s evil. It hasn’t been all that long since Republicans—again, nearly all of them—were celebrating the Iraq War…. A great many of them believe we should still be fighting there…. And even those Republicans who now think the occupation was a mistake generally think getting rid of Saddam Hussein was ‘worth it’. And here’s Rand Paul telling them all his old man was right and they were wrong—not just wrong, but stupidly, immorally wrong—from the get-go. But that’s not all.”

And:

April 8, 2014

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