Things to Read on the Morning of June 26, 2014

Should-Reads:

David Gaffen: Climbing the Wall: “Eventually, lack of volatility, rock-bottom rates and this accommodating monetary policy will realize the build-up of excesses that causes some kind of market crack…. But it won’t be today, and investors should continue to ride that so-called Wall of Worry through the 2,000 mark on the S&P 500 before long. Goldman Sachs strategists… [feel] that the buildup of those speculative excesses is happening at a much slower rate…. bank regulation and other issues have reduced that so-called accelerator, where activity in the economy amplifies risk-taking in credit markets and use of leverage, and vice versa… the economy plods along…. We’re so far only about midway through the business cycle, at best. The emerging signs of additional spending on capex are there, and investors, per Bank of America/Merrill Lynch, are practically begging for more capex…”
Jason Gubbles sends us to Esther Duflo: Patronizing The Poor: “The puzzle comes from the fact that the potential beneﬁt of taking up the program seems an order of magnitude larger than the change in the price. Bed nets and immunization can save your child’s life. VCT will not actually save your life, but it could potentially prolong it and it could deﬁnitely save the lives of your loved ones. Deworming will help your child grow stronger and get more out of his/her schooling. If people are still not willing to take them up, it ought to be because there are some commensurately large costs: The psychological cost of ﬁnding out that you have HIV, the fear that the evil-eye will ﬁnd your child when you take him out to be immunized, or the fear that the immunization drug will make your children unable to give birth (as it is occasionally rumored) are all (plausible) examples of things that are invoked to explain the lack of take up. But if this is why they are being resisted, why would 10 cents get them to change their mind? Or even 60 cents? Yet we seem to be comfortable making policies that turn entirely on the poor having the necessary motivation.”

Should Be Aware of:

Claudia Sahm: Deleveraging: Is it over and what was it?
Inder Malhotra: Once upon an Emergency
Harry Stein: How the Government Subsidizes Wealth Inequality
Dylan Matthews: The Insane Clown Posse’s lawsuit against the FBI: how does it work?
Danielle Kurtzleben: The food stamps cookbook: how to eat for $4 a day
Timothy B. Lee: “Broadcasters sued Aereo, arguing that streaming their content without permission was copyright infringement…. In a 6-3 decision written by Justice Stephen Breyer, the court sided with the broadcasters. Three of the court’s conservatives — Antonin Scalia, Clarence Thomas, and Samuel Alito, dissented. Some observers were concerned that a loss for Aereo would place music lockers and other cloud computing services in legal jeopardy. The majority was at pains to say that wasn’t the case…”
Walter Bagehot: : “Lombard Street: A Description of the Money
Market
Brad DeLong: Friedrich A. von Hayek
Brad DeLong: The Monetarist Counterrevolution
John Maynard Keynes: A Tract on Monetary Reform
John Hicks: Mr. Keynes and the ‘Classics’: A Suggested Interpretation
Alfred and Mary Marshall: The Economics of Industry
Alfred Marshall: The Present Position of Economics
Scott Lemieux: “The fact that noting that a candidate will not vote to eliminate basic government benefits is considered ‘race-baiting; by many conservatives is an excellent illustration of why 10% of the African American vote is a benchmark the national Republican Party is unlikely to reach for the foreseeable future.”
Dani Rodrik: The Plot Against the Turkish Generals

And:

Marshall Steinbaum: Piketty’s Treatment of Housing as Capital Is not an Excuse to Ignore His Predictions: “The housing-based critique of Piketty’s book is not what its proponents have been desperately looking for–an excuse to throw Piketty’s data, theory, and predictions away…”
Matthew Yglesias: John Roberts rules that iPhones aren’t really phones: “Chief Justice John Roberts, writing for the Supreme Court in the case of Riley v California this morning established an important precedent about the need for law enforcement officers to secure a warrant before searching someone’s cell phone. He also established a crucial cultural precedent by ruling, accurately, that iPhones and Androids and such aren’t really phones at all…. ‘Cell phones differ in both a quantitative and a qualitative sense from other objects that might be kept on an arrestee’s person. The term “cell phone” is itself misleading shorthand; many of these devices are in fact minicomputers that also happen to have the capacity to be used as a telephone. They could just as easily be called cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers.’This makes the decision not just a win for privacy, but an important victory for those of us who hate phone calls but love our iPhones. Steve Jobs did many great things, but giving that particular device that particular name was a mistake.”

Already-Noted Must-Reads:

The highly respected Bruce Bartlett sends us to a brand-new cracking o the recent PSID from Fabian Pfeffer, Sheldon Danziger, and Rovert Schoeni: Wealth Levels, Wealth Inequality, and the Great Recession: “By 2013, in spite of the Great Recession, wealth at the 90th and 95th percentiles were higher than in 2003… net worth at the median was about $32,000 lower…. The median of net wealth not held in real estate… declined by only $6,900 between 2007 and 2013… compared to a decline in median total net worth of about $42,500…. Through at least 2013 there are very few signs of significant recovery from the losses in wealth experienced by American families during the Great Recession…”
Amartya Sen (1982): Just Deserts: “The personal production view is difficult to sustain in cases of interdependent production, i.e., in almost all the usual cases…. A common method of attribution is according to ‘marginal product’…. This method of accounting is internally consistent only under some special assumptions, and the actual earning rates of resource owners will equal the corresponding marginal products only under some further special assumptions. But even when all these assumptions have been made… marginal product accounting, when consistent, is useful for deciding how to use additional resources… ut it does not “show” which resource has “produced” how much…. The alleged fact is, thus, a fiction, and while it might appear to be a convenient fiction, it is more convenient for some than for others…. The personal production view… confounds the marginal impact with total contribution, glosses over the issues of relative prices, and equates “being more productive” with “owning more productive resources”… is richer in powerful rhetoric than in substance…. An Indian barber or circus performer may not be producing any less than a British barber or circus performer–just the opposite if I am any judge–but will certainly earn a great deal less…. The smaller earnings… need not, in fact, reflect only failure of what [P.T.] Bauer calls [the Indians’] “aptitudes and motivations for economic achievement…”
The eminent Matthew Yglesias sends us to Jason Furman and comments: Matthew Yglesias: Health care: spending vs prices: “The prices paid for health care services and the quantity of health care services received are different things. Outside the health care sector, we take it for granted that people getting more stuff is one thing (rising living standards) while rising prices for stuff is another (inflation)…. This is super important. The only caveat is that in the health care sector there’s a third wrinkle. More doctors visits is a lot better than pricier doctors visits, but what we really want out of the health care system is good health outcomes.”
Ryan Cooper: Hear that, Janet Yellen? The economy is screaming for help: “If we accept the increasingly plausible view that without this stimulus the economy would immediately crash, this suggests that even for hawks who are deeply uncomfortable with unconventional stimulus, the quickest way to get the Fed to stop doing it is to stimulate so aggressively that interest rates can be gotten off the zero lower bound. As Ryan Avent argued two years ago: ‘One wants to scream, try overshooting for once. Try overshooting for once! Try it! Try pushing inflation up above 2 percent for a while and see if you can’t generate enough growth to soak up some slack in the economy, thereby greatly reducing the risk that any little headwind that comes along knocks the economy back below stall speed. Try it! There is no way that a year of 3 percent inflation is bad enough to justify this pitiful hiccuping recovery. Try overshooting! [The Economist]’ If the actual explanation for the Fed’s behavior is a monomaniacal concern for inflation above all things, then we’re basically screwed. But if hawkish Fed elites are actually prolonging their own agony, they might be convinced to change their mind. The worst quarter of GDP in five years is an opportune time to do it…”