Brad DeLong: Worthy reads on equitable growth, February 15–21, 2019

Worthy reads from Equitable Growth:

1. Read Alix Gould-Worth, “A Valentine’s Day love letter to the Unemployment Insurance program,” in which she writes: “UI’s social insurance structure is part of its allure. Both means-tested and social insurance programs are vital to the health and well-being of the U.S. population. But research shows that claimants feel less stigma when applying for and receiving benefits from social insurance programs than means-tested programs. And typically, social insurance programs enjoy support that protects them from being dismantled by overeager budget cutters. But what makes UI different from all other social insurance programs? Why does it hold a special place in my heart? Let me count the reasons.”
2. Save for white baby boomers and pre-baby boomers who rode the post-World War II wave of government-sponsored housing finance and inflation on the one hand and union and white-collar defined-benefit pensions on the other, by and large the “middle class” in terms of wealth has always been a multigenerational phenomenon. What with keeping-up-with-the-Joneses and the slings-and-arrows-of-fortune, several generations of middle-class incomes are required to build up anything that can be called a middle-class wealth stock. And racial discrimination has made it impossible for African Americans to have such a run of security. Read Equitable Growth grantee Darrick Hamilton’s “Racial Equality Is Economic Equality,” in which he writes: “Race is a stronger predictor of wealth than class itself. The 2017 Survey of Consumer Finances indicates that the typical black family has about $17,600 in wealth (inclusive of home equity); in contrast, the typical white family has about $171,000. This amounts to an absolute racial wealth gap where the typical black family owns only 10 cents for every dollar owned by the typical white family! This disparity has endured over time. The racial wealth gap is an inheritance that began with chattel slavery, when blacks were literally the capital assets for a white landowning plantation class. The gap continued after Emancipation, when discriminatory laws and institutions established insurmountable barriers to the American middle class for black families. Today, hundreds of years removed from chattel slavery, there has virtually never been a substantive black middle class when defined by wealth. In contrast, the implementation of FDR’s New Deal and post-war vision facilitated an asset-based white middle class to cumulatively build wealth and pass it on to their heirs.”
3. It looks as though declining rates of marriage and increasing rates of cohabitation among the American working class are not—whatever hordes of American Enterprise Institute funders are eager to pay people to say—in any sense a “sociological breakdown,” but rather economic precarity. Read Daniel Schneider, Kristen Harknett, and Matthew Stimpson, “Job Quality and the Educational Gradient in Entry into Marriage and Cohabitation,” in which they write: “Men’s and women’s economic resources are important determinants of marriage timing … Declining job quality and rising precarity in employment and suggests that this transformation may matter for the life course … The 1980–1984 U.S. birth cohort from the National Longitudinal Survey of Youth … Men and women in less precarious jobs—jobs with standard work schedules and jobs that provide fringe benefits—are more likely to marry. Further, differences in job quality explain a significant portion of the educational gradient in entry into first marriage. However, these dimensions of job quality are not predictive of cohabitation.”
4. There are many, many ways of generating adverse selection effects that confound statistical studies, and very, very few good instruments. Thus, I have found myself always very suspicious of the working paper by Patrick L. Baude, Marcus Casey, Eric A. Hanushek, Greg Phelan, and Steven G. Rivkin, “The Evolution of Charter School Quality,” in which they write: “Quality dynamics among Texas charter schools from 2001–2011 … Exits, improvement of existing charter schools, and higher quality of new entrants increased charter effectiveness relative to traditional public schools … Reduced student mobility and an increased share of charters adhering to ‘No Excuses’-style curricula contribute to these improvements. Although student selection into charter schools becomes more favorable over time in terms of prior achievement and behavior, such compositional improvements appear to contribute little to the charter sector gains. Moreover, accounting for student composition in terms of prior achievement and behavior has only a small effect on estimates of the higher average quality of ‘No Excuses’ schools.”

Worthy reads not from Equitable Growth:

1. One of my hobbyhorses is that a “semi-skilled” worker is an unskilled worker with a union. Read Byron Auguste, “Low Wage, Not Low Skill: Why Devaluing Our Workers Matters,” in which he writes: “Such jobs require optimizing time trade-offs, quality control, emotional intelligence, and project management. They are not low skill, but they are low wage. Why does this matter? When we stereotype or lazily assume low-wage workers to be ‘low skill,’ it reinforces an often unspoken and pernicious view that they lack intelligence and ambition, maybe even the potential to master ‘higher-order’ skilled work. In an economy that is supposed to operate as a meritocracy—but rarely does—too often, we see low wages and assume both the work and workers are low-value.”
2. Here is a group of economists who seem, to me, to be aiming for the “equitable growth” space. Check out “Economists for Inclusive Prosperity,” in which they write: “We believe the tools of mainstream economists not only lend themselves to, but are critical to the development of a policy framework for what we call ‘inclusive prosperity.’ While prosperity is the traditional concern of economists, the ‘inclusive’ modifier demands both that we consider the interest of all people, not simply the average person, and that we consider prosperity broadly, including nonpecuniary sources of well-being, from health to climate change to political rights.”
3. And here is the launch explanation of the analytical perspective that the brand-new group Economists for Inclusive Prosperity hopes to take. It is good. Read Suresh Naidu, Dani Rodrik, and Gabriel Zucman, “Economics After Neoliberalism,” in which they write: “Economists of the real world … understand that we live in a second-best world rife with market imperfections and in which power matters enormously … The competitive model is rarely the right benchmark … This requires an empirical orientation, an experimental mindset, and a good dose of humility to recognize the limits of our knowledge … Throughout [our] proposals is the sense that economies are operating well inside the justice-efficiency frontier, and that there are numerous policy ‘free-lunches’ that could push us towards an economy that is morally better without sacrificing (and indeed possibly enhancing) prosperity.”
4. Read Hilary Hoynes and Jesse Rothstein, “Universal Basic Income in the US and Advanced Countries,” in which they write: “Advanced economies … [have] well developed, if often incomplete, safety nets … a framework … compare various UBIs to the existing constellation of programs.”
5. The real lesson from AI-machine learning is that AI-machine learning is a lot like “human judgment,” observes Andrew Hill. Read his “Amazon offers cautionary tale of AI-assisted hiring,” in which he writes: “Amazon, one of the most innovative and data-rich companies in the world, leapt on that possibility as early as 2014. It built a recruiting engine that analysed applications submitted to the group over the preceding decade and identified patterns. The idea was it would then spot candidates in the job market who would be worth recruiting … Unfortunately, the data were dominated by applications from men, and the AI taught itself to prefer male candidates, discriminating against CVs that referred to ‘women’s’ clubs, and setting aside graduates from certain all-women’s colleges. The initiative was downgraded and the research team scrapped.”