Things to Read at Lunchtime on February 15, 2015
Must- and Shall-Reads:
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: The Richest Cities for Young People: 1980 vs. Today: “Today, the ten cities in the country with the highest median income for young people are… San Jose, San Francisco, Washington, D.C., Boston, New York, Baltimore, Seattle, Minneapolis, Philadelphia, and Chicago…. Forecast what this list would look like in 20 years, [you] would offer something very much like this…. The agglomeration of talent on the coasts will continue to attract…. But… history has a way of intervening with such crudely extrapolated trends. Five of the ten richest cities from 33 years ago have seen median wages for young people fall by at least 15 percent. The turnover rate of the list is 50 percent…. Extrapolating the present forward isn’t the same thing as knowing the future.” -
: What ‘Audit the Fed’ Really Means–and Threatens: “Words matter…. Think of the success tax reformers had when they called the inheritance tax the ‘death tax.’ Or how opponents of the president’s health-care law gathered political strength… calling a medical reimbursements panel the ‘death panel.’ And so it is with Washington’s latest craze, the movement spearheaded by Sen. Rand Paul to ‘audit the Fed,’ an effort launched by the senator’s father, Ron Paul…. The Fed’s financial statements have long been audited by professionals, but Sen. Paul’s bill is not about that… [it’s about the] Government Accountability Office… giv[ing] Congress annual reports on monetary policy functions…. The economists employed by the GAO are no match for the economists at the Fed. It is not within their domain of expertise…. It’s fine for Congress to regularly ask the Fed… to report…. But why create… a ‘shadow Fed’ elsewhere within the government?… If backers of the ‘audit the Fed’ movement want to get rid of the agency, they should say so, and let that debate begin. If it does, central banks will win…. If ending the Fed is not the objective… economic evidence makes clear that truly independent central banks keep inflation lower…” -
: Finance vs. Wal-Mart: Why are Financial Services so Expensive?: “Despite its fast computers and credit derivatives, the current financial system does not seem better at transferring funds from savers to borrowers than the financial system of 1910. The role of the finance industry is to produce, trade and settle financial contracts that can be used to pool funds, share risks, transfer resources, produce information and provide incentives. Financial intermediaries are compensated for providing these services. Total compensation of financial intermediaries (profits, wages, salary and bonuses) as a fraction of GDP is at an all-time high, around 9% of GDP. What does society get in return? Or, in other words, what does the finance industry produce? I measure the output of the finance industry by looking at all issuances of bonds, loans, stocks (IPOs, SEOs), as well as liquidity services to firms and households. Measured output of the financial sector is indeed higher than it has been in much of the past. But, unlike the income earned by the sector, it is not unprecedentedly high. Historically, the unit cost of intermediation has been somewhere between 1.3% and 2.3% of assets. However, this unit cost has been trending upward since 1970 and is now significantly higher than in the past. In other words, the finance industry of 1900 was just as able as the finance industry of 2010 to produce loans, bonds and stocks, and it was certainly doing it more cheaply. This is counter-intuitive, to say the least. How is it possible for today’s finance industry not to be significantly more efficient than the finance industry of John Pierpont Morgan?… Technological improvements in finance have mostly been used to increase secondary market activities, i.e., trading. Trading activities are many times larger than at any time in previous history. Trading costs have decreased, but I find no evidence that increased liquidity has led to better (i.e., more informative) prices or to more insurance.” -
: 5 Policies That Republicans Loved (Until Obama Did, Too): “Ted Cruz… offered a resolute defense of the 2009 stimulus law…. Representing the Texas Retired Teachers Association, Cruz declared that stimulus money ‘will directly impact the [Texas] economy…and will directly further the greater purpose of economic recovery for America.’… As recently as 2008, former Massachusetts governor Mitt Romney considered his health care law… to be ‘the ultimate conservative plan’,” and a ‘model’ for the rest of the nation…. Louisiana governor Bobby Jindal has compared Common Core to “centralized planning” in the Soviet Union…. Senator Cruz has vowed to repeal it (even though it’s not a law passed by Congress)…. But… Jindal… once defended it by promising that his state would not /move one inch off more rigorous and higher standards for our kids’…. Almost every Republican candidate in 2012 backed… [Cap and Trade] until they decided to run against Obama…. ‘While Washington is still racking up debt, this budget doesn’t even try to balance the books’, House Majority Leader Kevin McCarthy complained…. But back during the Bush administration, McCarthy and his fellow Republicans didn’t seem to mind budgets that never balanced…. But no Republican illustrates President Obama’s effect on the GOP better than Senator Marco Rubio (R-FL). Rubio helped craft the 2013 bill in the first place, arguing that the issue is a question of human rights. But a year later, he had abandoned his plans…”
Should Be Aware of:
- : Yes, Bush lied about Iraq: Why are we still arguing about this?
- : A Personal View of Computer Science at Berkeley
- : The Pilgrim’s Progress of Richard John Neuhaus
- : The Public Square’s New Clothes
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: Class Warfare: “Republican presidential possibilities… are going to focus on income inequality… as a problem that exists because the rich pay too much in taxes and the poor don’t pay enough…. Reinventing the reasons for income inequality to fit Republican preferences to concentrate resources among the 1 percent is just another front in that party’s class warfare it has declared on working and middle class Americans. Krugman…. ‘So, can anyone show me an example of a prominent Republican politician proposing anything that would reduce after-tax-and-transfer inequality? Bank shots don’t count–saying that slashing food stamps will help the poor by making them less dependent, or that cutting capital gains taxes will bring the confidence fairy to everyone’s door, don’t qualify…. I’m not demanding… every part… I just want to see one significant piece that goes in that direction…. Even when there’s something that sounds like it might be in that direction–say, Paul Ryan proposing that the EITC be extended to childless workers–there’s no talk of an increase in funding, so it’s coming at the expense of current recipients…. This is the acid test… because it’s how you see whether reformicons… are willing to do anything beyond putting the same old pro-plutocratic policies in new bottles. Show me the downward-flowing money!’ Of course there’s isn’t any downward-floating money. Nor will there be any. And the same will be the case if a Republican wins in 2016, despite their attempt to co-opt the issue of income inequality.” -
: Health Care for America’s Kids: “For the past 18 years, the Children’s Health Insurance Program has provided much-needed coverage to millions of American children. And yet, despite strong bipartisan support, we are concerned that gridlock in Washington and unrelated disputes over the Affordable Care Act could prevent an extension of the program. As parents, grandparents and former legislators, we believe that partisan politics should never stand between our kids and quality health care…. Both of us have dedicated our careers to supporting the health of children and their families. This shared commitment inspired us to work together in the late 1990s to help create CHIP to address the needs of the two million children whose families make too much money to be covered by Medicaid, but cannot afford private insurance…. While it is possible that private, family-wide policies offered by employers and marketplaces may one day render CHIP unnecessary, for now substantial gaps still exist–and too many children can still fall through them…. We already know what happens when CHIP is no longer an option for families. According to a recent report from the Georgetown University Health Policy Institute, as many as 14,000 children in Arizona lost their health insurance after 2010, when it became the only state to drop CHIP. We don’t want to see the same thing happen across the country…. This isn’t about politics. It’s about our kids and our nation’s future. What could be more important than that?” -
: To all the young journalists asking for advice…: “Your success… is… governed in large part by luck…. Get[ting] your foot in the door churning out listicles, and then somehow work[ing] your way up… might have worked for a few early BuzzFeed employees, but they, too… [won] the pick-the-right-startup lottery…. There’s no particular reason to believe that the advice I’d give five or six years ago, which was basically ‘start a blog and get discovered’, still works. With the death of RSS, blogs are quaint artifacts…. If you… want a good chance at a well-paid middle-class lifestyle down the road, I don’t really know what to tell you. Except that the chances of getting there… [in] journalism… have probably never been lower.”