Brad DeLong: Worthy reads on equitable growth, August 3–9, 2018

Worthy reads from Equitable Growth:

  1. “Economic developments over the past 20 years have taught—or ought to have taught—the U.S. Federal Reserve four lessons,” I write in “The Ahistorical Federal Reserve.” But as I note, “the Fed’s current policy posture raises the question of whether it has internalized any of them. … The proper inflation target … should be 4 percent per year. … The two slope[s of] the Phillips Curve … are smaller. … Yield-curve inversion … monetary policy is too tight. … Principal shocks have not been inflationary.”
  2. “Multiple identities cannot readily be disaggregated in an additive fashion,” write Mark Paul, Khaing Zaw, Darrick Hamilton, and William Darity Jr. in their working paper, “Returns in the labor market: A nuanced view of penalties at the intersection of race and gender.” Instead, the four co-authors note that “the penalties associated with the combination of two or more socially marginalized identities interact in multiplicative or quantitatively nuanced ways.”
  3. Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu write in their 2017 working paper, “Do Americans want to tax capital? Evidence from online surveys,” that “our regression results yield roughly linear desired tax rates on income of about 14 percent … positive desired wealth taxation … 3 percent when the source of wealth is inheritance, far higher than the 0.8 percent rate when wealth is from savings. … These tax rates are consistent with reasonable parameterizations of recent theoretical optimal wealth tax formulae.”
  4. Read Equitable Growth’s latest JOLTS charticle: “The quit rate … historically high level. … The ratio of unemployment-to-job openings trended upward slightly in June to just under 1.0. … The Beveridge Curve continues to be at levels similar to those in the expansion of the early 2000s.”

Worthy reads not from Equitable Growth:

  1. I am confident that there will be jobs. I am much less confident that there will be enough middle-class jobs after reading Adam Ozimek’s “Robots and Jobs: A Check on Fear,” in which he writes: “When it comes to discussing the effects of automation on labor markets, I see far too much partial equilibrium thinking.”
  2. If you take the appropriate measure of labor market tightness to be the prime-age employment rate, there is no wage growth puzzle. So, why does the Federal Reserve take the unemployment rate as the relevant labor market tightness variable and wring its hands about the wage-growth puzzle, rather than taking the prime-age employment rate as its relevant labor market tightness variable? It is a mystery, says Adam Ozimek in his tweet “Wage growth is right on target folks!
  3. The rise of the factory—the shift from home production to production under the eye of a boss, at a workplace—was underway long before mechanization in numeric calculation, as well as in craft piecework, writes Lorraine Daston in his 2017 paper, “Calculation and the Division Of Labor, 1750-1950.”
  4. Successful place-based policies require what we used to call “local boosters.” One problem with so much of the so-called red states is that the local rich are no longer boosters for their communities—indeed, no longer feel a part of the community in any meaningful way, writes Noah Smith in “How to Save the Troubled American Heartland” after reading the new book by James Fallows and Deborah Fallows, who he says “notice a number of common approaches among towns that are on the mend. Two of these … universities and immigration.”
  5. I find myself wishing that Ricardo Hausmann had given us some numbers here: How much in the way of resources has the government raised from society via its inflation? And how have those resource flows declined since the 2015 decision to monetize the fiscal deficit? Read his “The Venality of Evil,” in which he writes that “inflation in Venezuela … [at] 1,000,000 percent by year’s end … GDP … 45 percent below its 2013 level by the same time.”
  6. Noah Smith wonders if he can make a supply-and-demand argument to people who are allergic to “supply and demand” with a spoonful of sugar. He has three types of housing: newly built yuppie fish tanks, old housing that can switch between working class and yuppie, and newly built “affordable housing,” unattractive to yuppies. Read his “YIMBYism explained without ‘supply and demand’,” in which he writes: “YIMBYism is the idea that cities need to build more housing in order to relieve upward pressure on rents.”

August 9, 2018


Brad DeLong


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