Things to Read on the Afternoon of October 9, 2014

Must- and Shall-Reads:

• Ngozi Okonjo-Iweala: Nigeria shows that Ebola is not unstoppable
• Matt O’Brien: Austerity has been an even bigger disaster than we thought
• Brian Blackstone and Hans Bentzien: Bundesbank’s Weidmann Criticizes ECB’s Stimulus Measures
• Peter Piot: ‘In 1976 I discovered Ebola–now I fear an unimaginable tragedy’
• Jared Bernstein: It’s Not a Skills Gap That’s Holding Wages Down: It’s the Weak Economy, Among Other Things
• William Langewiesche: Should Airplanes Be Flying Themselves?
• • John G. Fernald, Eric Hsu, and Mark M. Spiegel: Has China’s Economy Become More “Standard”?
• Jesse Rothstein: Revisiting the Impacts of Teachers

1. Brian Blackstone and Hans Bentzien: Bundesbank’s Weidmann Criticizes ECB’s Stimulus Measures: “German Bundesbank President Jens Weidmann criticized the European Central Bank’s decision to buy private-sector bonds and signaled his fierce opposition to purchasing government bonds, underscoring his reluctance to back additional stimulus measures to combat weakness in the eurozone economy. Mr. Weidmann said he stands by the conservative principles that have characterized the Bundesbank throughout its nearly 60-year history: keeping inflation low; protecting the central bank’s balance sheet from risks and strict separation from the financial needs of governments…. Mr. Weidmann said he is aware of the risks of too-low inflation…. However, ‘the trough of inflation should soon be behind us’, Mr. Weidmann said…. He was similarly skeptical of fiscal stimulus, despite low government borrowing costs…. ‘The cyclical situation and outlook do not require fiscal stimulus’ in Germany, he said…. ‘The concept of an independent central bank clearly focused on price stability is neither old-fashioned nor outdated’, he said. ‘It is about not falling into the trap of “This time is different”‘.”

2. Peter Piot: ‘In 1976 I discovered Ebola–now I fear an unimaginable tragedy’: “I still remember exactly. One day in September, a pilot from Sabena Airlines brought us a shiny blue Thermos and a letter from a doctor in Kinshasa in what was then Zaire. In the Thermos, he wrote, there was a blood sample from a Belgian nun who had recently fallen ill from a mysterious sickness in Yambuku, a remote village in the northern part of the country. He asked us to test the sample for yellow fever. We had no idea how dangerous the virus was. And there were no high-security labs in Belgium. We just wore our white lab coats and protective gloves. When we opened the Thermos, the ice inside had largely melted and one of the vials had broken. Blood and glass shards were floating in the ice water. We fished the other, intact, test tube out of the slop and began examining the blood for pathogens, using the methods that were standard at the time…”

3. Martin Wolf: We are trapped in a cycle of credit booms: “The eurozone seems to be waiting for the Godot of global demand to float it off into debt sustainability…. China is struggling with the debt it built up…. Without an unsustainable credit boom somewhere, the world economy seems incapable of generating growth in demand sufficient to absorb potential supply…. Financial sectors have deleveraged in the US and UK… so, too, have households…. Meanwhile, public debt has risen sharply…. Since 2007 the ratio of total debt, excluding the financial sector, has jumped by 72 percentage points in China, to 220 per cent of GDP…. Credit cycles matter because they frequently prove so damaging…. [Maybe] the pre-crisis trend was unsustainable… the damage to confidence… the debt overhang…. Mass bankruptcy, as in the 1930s, is devastating. But working out of debt is likely to generate a vicious circle from high debt to low growth and back to even higher debt…. Managing the post-crisis predicament requires a combination of prompt recognition of losses, recapitalisation of the banking sector and strongly supportive fiscal and monetary policies… use both blades of the scissors: direct debt reduction and recapitalisation on the one hand and strong economic growth on the other…. Yet the biggest lesson of these crises is not to let debt run ahead of the long-term capacity of an economy to support it in the first place. The hope is that macroprudential policy will achieve this outcome. Well, one can always hope…

4. William Langewiesche: Should Airplanes Be Flying Themselves?: “The Human Factor: Airline pilots were once the heroes of the skies. Today, in the quest for safety, airplanes are meant to largely fly themselves. Which is why the 2009 crash of Air France Flight 447, which killed 228 people, remains so perplexing and significant. William Langewiesche explores how a series of small errors turned a state-of-the-art cockpit into a death trap.”

Should Be Aware of:

• Jeff Spross: America’s Biggest Solar Provider Has A New Way To Make Rooftop Systems More Affordable
• Anne McCants: The Economic History of Work and Family | Additional Materials | Medieval Economic History in Comparative Perspective
• Matt O’Brien: Austerity has been an even bigger disaster than we thought
• Randall Munroe: xkcd: What If?

1. Steven Levy: Why I Started Backchannel: “I think… the secret is… not going away. That’s been my somewhat accidental strategy to making a mark as a technology writer…. This broad world of tech writing is crowded and confusing. Much of it is redundant…. Millions of readers are lured by sensational headlines, only to be disappointed to find a superficial dispatch with no new information, dashed off by a harried journalist tasked with producing three stories a day… wonderful, well-researched and written stories… [are] all too often… buried by the flotsam…. That’s why I am starting Backchannel…. We won’t even try to cover everything…. If there’s nothing original to say, we’ll keep quiet…”

2. Richard Mayhew: Who doesn’t like higher wages?: “Sally Pipes at Forbes is spewing fear, uncertainty and doubt at Forbes magazine on Obamacare again.  Her ‘argument’ this time is that Obamacare is bad for wage earners and she commits the usual sins of trusting Avik Roy and his ilk to be good faith brokers…”

3. Paul Krugman: The Long Cryptocon: “Bitcoin prices are down by two-thirds from their peak, and Izabella Kaminska, who has stayed with the subject, finds the sad story of a gullible rube who appears to have impoverished himself by believing in the hype. She comments: ‘Some extremely wealthy libertarians have a lot to answer for if these sorts of ppl lose all due to believing in them’. But this is nothing new. Back in 2012 Rick Perlstein published an eye-opening piece titled The Long Con, in which he documented the close association that has always existed between right-wing organizing and direct-mail commercial scams–in fact, it’s pretty much impossible to tell where one ends and the other begins. Send us money to keep Obama from imposing Sharia law; invest in this sure-fire scheme to profit from the coming hyperinflation. Was Glenn Beck selling paranoid politics or Goldline? Yes. Bitcoin… solve[s] an interesting information problem…. But the psychology and sociology of the phenomenon are the same old same old.”

4. Paul Krugman: The Deficit Is Down, and Nobody Knows or Cares: “The CBO tells us that the federal deficit is way down — under 3 percent of GDP. And Jared Bernstein notes that Obama seems to get no credit. You may ask, what did you expect? But the truth is that a few years ago many pundits claimed that Obama would reap big political rewards by being the grownup, the responsible guy who Did What Had To Be Done. Worse, some reports said that the White House political staff believed this. It was, of course, nonsense on multiple levels. While pundits may like to script out elaborate psychodramas about voter perceptions, real perceptions bear no relationship to their scripts — in fact, a majority think the deficit has gone up on Obama’s watch, while only a small minority know that it’s down. And the deficit scolds themselves are unappeasable — nothing that doesn’t involve severely damage Social Security and/or Medicare will satisfy them. Why, it’s almost as if shredding the safety net, not reducing the deficit, was their real goal. Deficit obsession has been immensely destructive as an economic matter. But it has also involved major political malpractice.”