Things to Read on the Morning of December 2, 2014
Must- and Shall-Reads:
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Amazon Reveals the Robots at the Heart of Its Epic Cyber Monday Operation | WIRED - :
Real World Contradicts Right-Wing Tax Theories - :
Anton’s Econ History Reading List - :
Dornbusch’s Overshooting Model After 25 Years
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Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms:
“This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40% of the incidence, while workers and landowners bear 30-35% and 25-30%, respectively” - :
It’s Not Black People Who Have Progressed. It’s White People:
“When we talk about race relations… it’s all nonsense. There are no race relations. White people were crazy. Now they’re not as crazy. To say that black people have made progress would be to say they deserve what happened to them before…. To say Obama is progress is saying that he’s the first black person that is qualified to be president. That’s not black progress. That’s white progress. There’ve been black people qualified to be president for hundreds of years. If you saw Tina Turner and Ike having a lovely breakfast over there, would you say their relationship’s improved?… A smart person would go, ‘Oh, he stopped punching her in the face.’… Ike and Tina Turner’s relationship has nothing to do with Tina Turner. Nothing. It just doesn’t. The question is, you know, my kids are smart, educated, beautiful, polite children. There have been smart, educated, beautiful, polite black children for hundreds of years. The advantage that my children have is that my children are encountering the nicest white people that America has ever produced. Let’s hope America keeps producing nicer white people…” - :
The Potential Impact of Large-Scale Monetary Accommodation:
“The Bank of Japan introduced the QQE to achieve the price stability target of 2 percent at the earliest possible time, with a time horizon of about two years… to dispel a view that… prices would not rise… to raise inflation expectations through a strong and clear commitment to achieve the price stability target of 2 percent, and at the same time to exert downward pressure across the entire yield curve through massive purchases of government bonds. As a result, real interest rates will decline, thereby stimulating such private demand components as business fixed investment, private consumption, and housing investment. The upward pressure on prices will grow stronger as demand increases and the output gap narrows accordingly. Rises in actual inflation rates will be translated into higher expected rates of inflation and thus lower real interest rates. This will reinforce the virtuous cycle as the economy is provided with additional stimulus. Since its inception, the QQE has been producing the intended effects…. In recent months, however… the decline in demand following the consumption tax hike has been somewhat protracted… crude oil prices have declined substantially… slowing the CPI inflation rates… down to 1.0 percent in September…. The temporary weakness in demand associated with the consumption tax hike has already started to wane. Meanwhile, the decline in crude oil prices will have positive effects on economic activity and push up prices over the longer-run. Nevertheless… we decided to take preemptive actions to expand the QQE at the Monetary Policy Meeting held on October 31…. I would like to address a frequently cited remark that unconventional monetary stimulus could destabilize financial markets and the economy at large by encouraging ‘search for yield’ activities…. A rise in asset prices and a decline in volatility are intended effects of the QQE…. [But] we should be mindful of the risk that ‘search for yield’ activities enter into a self-fulfilling cycle…. If a rise in asset prices creates overly bullish expectations among non-financial entities such as the corporate and household sectors, it could trigger excessive risk-taking behavior in these sectors as well. Thus far, we have not observed signs of self-fulfilling, overheated price movements…” - :
Famous Fake Prediction Failures:
“Dean Baker is annoyed, and rightly so, at claims like this from Robert Samuelson that Keynesians failed to predict the slow recovery. Dean and I were both tearing our hair out in early 2009, warning that the Obama stimulus was too small and too short-lived…. Samuelson is taking the fact that this business cycle didn’t look like previous cycles as evidence that we don’t understand macroeconomics, so we shouldn’t even try to help the economy. But I was predicting a protracted jobless recovery long before the recession was official, and explained carefully why. But then I also fairly often get comments along the lines of ‘If you’re so smart, how come you didn’t see the housing bubble’, when I not only did see it (although Dean saw it much earlier), but got a lot of flak for daring to raise questions about the Bush Boom. Well, I guess you can’t expect people to be aware of what I was saying, seeing as how I only write for an obscure publication nobody has heard of.” - :
Thanksgiving weekend reading – Washington Center for Equitable Growth: “Secular stagnation: Greg Ip argues that the growing tide of elderly in wealthy countries explains a lot of secular stagnation [the economist]. The Economist also created a series of accompanying graphics [the economist]. Shane Ferro looks at the troubling demographic situation in Japan [business insider]. Hidden wealth of nations: Matthew Klein looks at London School of Economics professor Gabriel Zucman’s research on the offshoring of wealth and profits [ft alphaville part 1, part 2]. The roots of upward mobility: Richard Reeves looks at research that finds a link between inequality of non-cognitive skills and intergenerational mobility [brookings]. Derek Thompson poses a dilemma for Millennials: move to a city with affordable housing or a city with a good track record of upward mobility [the atlantic]. More work and less play than expected: Dylan Matthews tries to figure out why we don’t have 3-hours workdays as Keynes predicted [vox]. Timothy Taylor considers two approaches to encouraging work: tax incentives and social support [conversable economist] :: Free exchange: No country for young people | The Economist | “Secular stagnation” in graphics: Doom and gloom | The Economist | How a Limo Ride With Paul Krugman Changed the Course of Abenomics – Bloomberg | The costs of offshore tax avoidance, part 1 | FT Alphaville | The costs of offshore tax avoidance, part 2 | FT Alphaville | The “Great Gatsby Curve” for Character Skills and Mobility | Brookings Institution | Why It’s So Hard for Millennials to Find a Place to Live and Work – The Atlantic | Why 3-hour workdays haven’t happened yet – Vox | CONVERSABLE ECONOMIST: Encouraging Work: Tax Incentives or Social Support?“ - :
Yes, I Am Optimistic:
“As long as people have babies, capital depreciates, technology evolves, and tastes and preferences change, there is a powerful underlying (and under-appreciated) impetus for growth that is almost certain to reveal itself in any reasonably well-managed economy. This ultimately is the reason that despite the seemingly persistent belief that the recessionary bogeyman is just around the corner, recessions are remarkably rare events…. Bottom Line: Perhaps, just perhaps, the US economic expansion has been consistently undersold, and continues to be undersold. It is worth considering that maybe it is time to just accept the good news without the desperate search for every dark cloud.” -
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How TED (Really) Works: How One Hairdresser Behind the Scenes, and Émile Durkheim, Says More About TED than All the Viral Videos:
“Check this Slate ad for a journalist who will write about education policy on the high-traffic site: no need to be an expert in the topic, just an interest in the beat, and the ability to write really fast (part-time, of course while you juggle other, likely unrelated, jobs)…. There are, of course, advantages to acquiring breadth as well as depth, as one should, but it still remains true: to do something well, you need to specialize, over time, and most organizations run on the fuel that is people dedicated to taking care of their corner. These people are rarely the ones on stage, or highlighted as interesting people, or celebrated as glamorous. It’s the nurse who really understands preemie babies, the electrician who takes care of the aging air-conditioning in the building that nobody else knows how to fix, and the programmer that makes the creaky legacy scheduling database work…. It’s why you can walk onto a big stage without having looked at a mirror, because you know you can trust the person whose job it is to take care of this. And the opposite is the anxiety we feel in situations where institutions don’t function as well, and where one keeps having to acquire competencies just to take care of basic functions: most places on the planet. The inability to trust this division of labor is among the most tiring aspects of living in less developed countries…. And my talk? Oh, it was about whether digital technology is helping social movements scale up without building deep organizations, and hence hitting the big time without the capacity to weather the challenges. So, yeah. Sometimes, the real magic is in the details, the specialization, and a division of labor you can rely on.”
Should Be Aware of:
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Mocks 60 Minutes on Last Week Tonight - :
A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Busines - :
Obama is a lonely western liberal on immigration – FT.com
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Don’t blame liberals for Elizabeth Lauten, the Obama daughters scold, resigning:
“Liberals don’t have any power to force [Elizabeth] Lauten to resign nor do they have any power to make her Republican boss ask for her resignation. If Rep. Fincher wanted all this to blow over, it really would have…. I suspect Lauten had to go [because] she let the mask slip. Right now, there is a Republican full frontal assault on abortion rights and contraception access–which Rep. Fincher is a big part of–and Republicans are very touchy about this assault being called a ‘war on women’. They insist that attacks on abortion rights are supposedly about helping women and that the attacks on contraception access are about ‘religious freedom’ and that sexism and hostility towards female sexuality has nothing to do with it. Having some congressional staffer reveal that she thinks that you’re being immodest if you show your knees in public blows their cover and shows that nope, it’s all about their hysterical attitudes about women and sexuality…” -
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Bad Memories Down South:
“I’ve just spent nearly a week back home in exurban Atlanta, and I regret to report that the events in and in reaction to Ferguson have brought back (at least in some of the older white folks I talked with) nasty and openly racist attitudes I haven’t heard expressed in so unguarded a manner since the 1970s… the intensity of the hostility I heard towards ‘the blacks’ (an inhibition against free use of the n-word, at least in semi-public, seems to be the only post-civil-rights taboo left), who have the outrageous temerity to protest an obvious act of self-defense by a police officer…. There seems to be a complete lack of reflection on the fact that it’s the black kid who is dead and the cop who is alive and free. This skewed perception of the equities of the matter is what most reminds me of the very bad old days back home…. I don’t know if the good conservative Christian white people of Georgia will eventually hold rallies to honor Darren Wilson the way they did for William Calley, but it would not surprise me at this point.” - :
The Scary Mystery of Angela Merkel Is….Still a Mystery | Mother Jones:
“Take the eurozone crisis, for example. Over the past five years, Germany has seemed almost spitefully hellbent on destroying the European economy simply because Germans disapprove of the spendthrift southerners responsible for the mess—all the time self-righteously refusing to admit that they themselves played a role that was every bit as lucrative and self-serving in the whole debacle. Because of this, the European economy is now headed for its third recession since 2008. Does Merkel share this view of things? Or does she recognize what needs to be done but simply doesn’t have either the will or the courage to challenge German public opinion? That’s never clear. And yes, I guess I find that a little scary. This is why I don’t quite get the comparison Packer makes between Merkel and Obama…. Personality-wise, perhaps, Obama and Merkel are similar. ‘No drama’ could apply equally well to either of them. But politically? I don’t see it. Obama doesn’t strike me as someone with no vision who hews as close as possible to public opinion.”