Things You Should Read on the Evening of November 25, 2013

Must-Reads:

1. Paul Krugman: Nowhere Near The Exit: “Greg Mankiw… suggesting that the time for a Fed exit strategy may be drawing near. Dean focuses mainly on Greg’s use of what he considers a [single] misleading wage number…. We have multiple measures of wage developments…. One of these numbers, wages of production and nonsupervisory workers, shows a modest uptick, the others not. All three remain well below their pre-crisis rates of increase. Is this the kind of evidence on which you want to base a major policy change? Not in my world…. [And] it makes no sense at all to tighten until we see wage inflation rise, not just from its current level, but several points higher…. Arguments that the full-employment rate of unemployment has risen tend to rely on the claim that sustained high unemployment, even if it starts out cyclical, eventually becomes structural. But if that’s true, there are very high costs to premature policy tightening… this adds up to a strong argument for waiting to see overwhelmingly clear evidence of an overheated economy before beginning any kind of policy exit…”

2. Tim Jost: Implementing Health Reform: State Exchange Enrollment: “”Covered California, the California exchange, reported that as of November 19, 2014, almost 80,000 Californians had selected a health plan through the exchange. Almost 31,000 had enrolled in October.  Of these, almost 5,000 were subsidy-eligible while 26,000 were not, suggesting that the Californians at the front of the line were higher-income applicants, who likely understand the need for insurance and may well need it for immediate health needs.  Almost 83 percent of enrollees were English speaking, while fewer than 5 percent spoke Spanish. Twenty-two percent of enrollees were between the ages of 18 and 34, roughly equal to the percentage of the total population in this age group. But 34 percent of enrollees were between the ages of 55 and 64, compared to 11 percent of the total population.  Adverse selection is thus a concern…”

3. Sy Mukherjee: Stubborn Opposition To Medicaid Expansion Is Forcing Hospitals In The Poorest States To Shut Down: “At least five public hospitals have shuttered their doors and many more are cutting staffing and services in non-Medicaid expansion states, according to Bloomberg. Three such hospitals have shut down in Georgia, while North Carolina and Virginia are experiencing similar closures…. The closures are tied directly to Republicans’ refusal to accept generous federal funding to expand Medicaid. And experts warn that even more closures may be on the horizon in poor states… that have also refused the Medicaid expansion. Safety-net hospitals… depend on federal money to make up for the uncompensated care costs…. The health law reduced payments to these so-called “disproportionate share hospitals”…. Lawmakers figured that Obamacare’s Medicaid expansion… would mitigate the cuts’ effects…. But… the Supreme Court ruled Obamacare’s Medicaid expansion to be optional, and about 26 states with GOP chief executives or legislatures have have refused to expand the program. Congress also rejected the Obama administration’s proposal to delay DSH payment cuts by a year to give safety net hospitals some breathing room…”

Should-Reads:

1. Matthew Yglesias: Bay Area: If you want to talk housing, you have to talk zoning: “Another day, another frustrating article about rising housing prices in the Bay Area that doesn’t mention the supply-side at all…. The high-tech economy is booming… affluent skilled workers want to move to the Bay Area… naturally the prices that people are willing to pay for housing are skyrocketing…. The city of San Francisco… [has] many low-rise districts of the city [that] could and should be redeveloped as denser high-rise areas. I’m often accused of wanting every city to turn itself into my native Manhattan, but San Francisco has about half the population density of Brooklyn…. But the even more egregious issues are in the suburban areas stretching south of San Francisco…. The reasonable thing to do would be to use the land intensively—some more apartment buildings, some more rowhouse neighborhoods, some more detached houses on slightly smaller plots—-but Valley politics have been relentlessly hostile to real-estate development. The shortage of both houses and commercial office space that results from this dynamic is a substantial driver of economic problems in the Bay Area… [and] also throughout the country. The supercharged growth in the high-tech sector ought to be creating massive spillovers of prosperity…. Instead, it’s mostly creating windfall profits for a relatively small number of people and cost-of-living spirals for others…

2. Miles Kimball and Noah Smith: The shakeup at the Minneapolis Fed is a battle for the soul of macroeconomics–again: “A personnel shakeup at the US Federal Reserve Bank of Minneapolis last week… may be a part of big changes… at the Fed, as well as a tectonic shift in the field of economics itself. Two of the Minneapolis Fed’s most eminent and long-serving economists, Patrick Kehoe and Ellen McGrattan, have been fired…. They believed that… recessions are not economic failures, but instead are inevitable, healthy outcomes of economies responding to the uneven pace of technological progress…. If the Fed prints money to try to stimulate demand, they say, it will only succeed in creating inflation…. The researchers at the University of Minnesota and the Minneapolis Fed have largely hung onto the belief that monetary policy can affect inflation, but can’t fight recessions…. In 2008, on the eve of the crisis, even as Saltwater economist Olivier Blanchard published a paper arguing that the two schools had essentially reached agreement, Kehoe published his own paper arguing vehemently that models with any Saltwater taint (in particular, the so-called “New Keynesian” models) were fundamentally flawed. A few months later, at the end of 2008, America tumbled into its biggest economic slump since the Great Depression, soon followed by much of the rest of the world. Freshwater macroeconomists were left scratching their heads. How could this calamity represent the efficient outcome of a well-functioning economy?…”

Should Be Aware of:

1. Scott Lemieux: Four Reasons the Nuclear Option Was a Liberal Win: “Here are some of the major arguments being made against the deal from a Democratic perspective–and why they’re wrong. 1. Democrats Will Be Sorry, Because This Means Republicans Will Keep Doing What They’ve Been Doing Since the Reagan Administration…. 2. Pretending that the Filibuster Is the Only Political Constraint on the President…. 3. But Isn’t the House of Representatives Terrible?…. 4. Liberal Sentimentality about the Filibuster…”

2. John Cole: Resentment: “Just read this on facebook from a guy I know from the military: ‘After having to spend almost $200 on work boots,the hell happened to the America I grew up with. Are people and ceo’s that stupid. We are selling out at an alarming rate. Try finding american made anything without paying arm an leg.We need to make a stand an take our country back/ I use to wear only Levis’s. After buying some that ripped in 2 weeks I bought something else.The country we have sent our manufactoring jobs to also owns most of out debt.I remember when made in USA meant something. I remember when I joined military an heard star spangled banner, it had a whole differnt meaning. I also think you need to be a citizen to own a buisness. Take a look who owns motels,subways,gas stations and even kfc. This is America or it was. There should be no second langauge. People use to think it was honor to come here. Now we hand money out at airport.There should be a limit to time in office. Also no trust fund babies.’ This guy isn’t a white supremacist, but there are a whole lot of people who feel that way.”

Paul Krugman: Bubblephobia and Monetary Policy | Izabella Kaminska: Non-monetary effects of research evolution | Dean Baker: Technology didn’t kill middle class jobs, public policy did | Ann Marie Marciarille: Physician Boundary Crossing in the Face of Health Care System Failure | Martin Longman: High on Their Own Supply |