Brad DeLong: Worthy reads on equitable growth, July 20–26, 2018

Worthy reads on Equitable Growth:

1. We economists spend a lot of time looking at aggregates and averages. But it is equally important to get thick descriptions of what happens to individual people’s lives so that you know what your aggregate and average numbers mean. Blythe George does so in her working paper, “Them old guys … they knew what to do: Examining the impact of industry collapse on two tribal reservations,” in which she uses “46 in-depth interviews conducted on the Yurok and Hoopa Valley reservations.”
2. GDP has its place in our national public-sphere conversation because a new number is released roughly once a month—each quarter of the year has its own GDP number, and the U.S. Commerce Department’s Bureau of Economic Analysis releases advance, second, and third estimates for each quarter. And then there are benchmarking revisions. To attain an equal place in public-sphere consciousness, the distributional national accounts component would have to appear also once a month. It is not clear to me how to do that, but for some insights read Equitable Growth’s “Measuring U.S. economic growth.”
3. Back in the 1990s, we in the Clinton administration put Stephen Breyer on the U.S. Supreme Court in the belief that the court needed somebody who genuinely understood antitrust. But the Republican justices have given him zero deference, even though he knows the issues and they do not. This is an increasing problem, as noted by Fiona Scott Morton in a piece titled “There is a lot to fix in U.S. antitrust enforcement today,” the first in Equitable Growth’s new blog series, “Competitive Edge.” She starts with this: “Last month’s court decision allowing AT&T Inc. to acquire Time Warner Inc. is an example of the inability of our current system of courts and enforcement to prevent the decline in competition in the modern U.S. economy … Judge Richard Leon demonstrated a lack of understanding of the markets, the concept of vertical integration, corporate incentives, and the intellectual exercise of forecasting what the unified firm would do … a poor decision.”
4. It seems highly likely that more money for teachers (and less money for financiers and specialists) would produce a richer and a happier America. Read Meg Benner, Erin Roth, Stephenie Johnson, and Kate Bahn’s “How to Give Teachers a $10,000 Raise,” in which they write: “While CAP believes that a new federal investment is necessary to dramatically improve teacher pay, other efforts at the federal, state, and local levels are essential to maximize compensation for all teachers.”

Worthy reads not on Equitable Growth:

1. I continue to fail to find a single credible competitor in terms of providing the highest-quality daily tickler-to-read list than Mark Thoma’s “Economist’s View.”
2. At least as true now as it was when John Kenneth Galbraith began saying it half a century ago: “The modern conservative … not even especially modern … is engaged … in one of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is the search for a superior moral justification for selfishness.”
3. Perhaps the biggest hole in growth economics is its inability to properly wrestle with the problem of how to build and entertain the communities of engineering practice that have the externalities that fuel so much of economic growth. The 2 percent per year rate of growth of labor efficiency seen over the past century comes from somewhere, after all. If it comes from activities such as research and development and science that together consume 2 percent of national income, that is a 60 percent per year net rate of return on such activities. We badly need to understand more about them. Read Pierre Azoulay, Erica Fuchs, Anna Goldstein, and Michael Kearney’s working paper, “Funding Breakthrough Research: Promises and Challenges of the “ARPA Model”.”
4. We really do not know what effect a trade war would have on the global economy. All of our baselines are based on what has happened in the past, long before the age of highly integrated global value chains. It could be small. It could be big. The real forecast is: We just do not yet know, writes Dan McCrum in “Trade tension and China.” He observes: “The war on trade started by the Trump administration is percolating through the world’s analytical apparatus. … Tariffs could be bad for the global pace of economic activity, but only if the economic warfare escalates.”
5. A very interesting paper by Achyuta Adhvaryu, Steven Bednar, Anant Nyshadham, Teresa Molina, and Quynh Nguyen: “When It Rains It Pours: The Long-run Economic Impacts of Salt Iodization in the United States.” My first reaction is that the effect of salt iodization is just too large—that iodine deficiency in utero is highly unlikely to rob you of 11 percent of your lifetime income. Thus I suspect that something has gone wrong with the identification. But I cannot figure out what. Great kudos to Nguyen and company for being willing to put this out there for us to look at.
6. Tim Duy writes in “Powell Wants to Create Some Mystery Around Fed Meetings” that “A slower or faster pace of rate hikes, an extended pause, or even a cut are all possibilities at this point.”