Brad DeLong: Worthy reads on equitable growth, August 2-8, 2019

Worthy reads from Equitable Growth:

  1. At each stage of the process by which the innovation workforce is built, being black and being female is a powerful disadvantage at making it through the filter and proceeding to the next stage. Read Lisa Cook and Jan Gerso, “The implications of U.S. gender and racial disparities in income and wealth inequality at each stage of the innovation process,” in which they write: “Gender and racial disparities exist at each stage of the innovation process, from education to training, and from the practice of invention to the commercialization of invention, and can be costly to the U.S. economy. These disparities can also lead to increased income and wealth inequalities at each stage for those who would otherwise participate in the innovation economy. Let’s look at each stage to assess this problem in further detail.”
  2. A better-run IRS would devote much more in the way of resources to investigating “independent contractor” fraud and abuse. Read Corey Husak, “How U.S. companies harm workers by making them independent contractors,” in which he writes: “Being classified as either an employee or an independent contractor can determine whether workers in the United States have access to reliable pay, benefits, and protection from discrimination. Intense fights are cropping up across the country as companies try to argue that their workers are just ‘independent contractors’ and do not qualify for many protections under U.S. labor law, while workers and some courts say the opposite, that some workers are actually employees. Many ‘gig economy’ companies, such as Uber Technologies Inc., base their business models around misclassifying their workers as self-employed. Billions of dollars in worker pay is at stake.”
  3. Heather Boushey interviews the great Gabriel Zucman. The most important point is that the increase in inequality in the United States has been largely a choice—a choice of those elected, even if the one elected was done so by a margin of 5-4 Supreme Court justices or collected 3 million fewer popular votes. Read “In Conversation with Gabriel Zucman,” which he explains: “There is this widespread view that rising inequality is a mechanical consequence of globalization and technical change, spurred in large part by competition with China and the substitutions between workers and machines. But, you know, France has computers too, and also trades with China—and generally trades more than the United States. So, it does not seem possible to explain the stagnation of U.S. working-class income by globalization and technical change. It’s more likely that this stagnation of income for the bottom half of the U.S. income distribution comes from policy changes. Things such as the collapse of the federal minimum wage, the declining power of unions, changes to taxation, to access to higher education.”


Worthy reads not from Equitable Growth:

  1. Martin Wolf has an aggressive thumbs-down on Facebook Inc.’s Libra payments system. Basically, it is “fool me once, shame on you; fool me twice, shame on me.” Facebook’s claim that it is built on “blockchain technology” seems simply wrong, and a grift—a second-order grift, given that “blockchain technology” is already a grift. Plus, he writes that “Facebook has been grossly irresponsible over its impact on our democracies. It cannot obviously be trusted with our payments systems. … Beware.” The fact that Facebook’s past behavior has created such a strong anti-Facebook presumption in somebody as reasonable and fair as Martin is, I think, a powerful thing to note. Read Martin Wolf, “Facebook Enters Dangerous Waters With Libra Cryptocurrency,” in which he writes: “Facebook seems likely to dominate Libra’s technical development. That will surely give it predominant influence … The claim that it is based on ‘blockchain’ technology seems rather questionable … There is indeed potential for greatly improved payment systems. But the emergence of a payment system on a network of Facebook’s scale would raise some huge questions … This would be true even if the lead sponsor were not Facebook. But it is. So beware.”
  2. This baseline assumption seems, to me, to be a very useful position to start from—that groups of people who behave differently have different powers and face different constraints, not that they want different things. Read George J. Stigler and Gary S. Becker, “De Gustibus Non Est Disputandum,” in which they write: “The establishment of the proposition that one may usefully treat tastes as stable over time and similar among people is the central task of this essay. The ambitiousness of our agenda deserves emphasis: We are proposing the hypothesis that widespread and/or persistent human behavior can be explained by a generalized calculus of utility-maximizing behavior, without introducing the qualification ‘tastes remaining the same.’”

August 8, 2019


Brad DeLong



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