Brad DeLong: Worthy reads on equitable growth, February 2–8, 2021

Worthy reads from Equitable Growth:

1. Ultimately—no, not ultimately, but rather immediately—whose property the law will protect is a political decision made in the interests of those whom the government listens to, in the triple senses of protecting it from theft or expropriation, protecting it from damage, and protecting it from devaluation. If you don’t have a political voice, whatever property you do accumulate is likely to be evanescent and to be worth little. Read David Mitchell, Austin Clemens, and Shanteal Lake, “The consequences of political inequality and voter suppression for U.S. economic inequality and growth,” in which they write: “Those who enjoy market power are, not coincidentally, often the same citizens who enjoy outsized political influence, creating a feedback loop that perpetuates economic inequality, instability, and slow growth. This report examines cutting-edge research on how economic and racial inequality interact around the country among those Americans who vote, those who try to vote but face obstacles in doing so, and those who do not vote altogether. The evidence-based research we explore pinpoints the myriad ways that economic and racial inequality together subvert our democracy by aiding and abetting political inequality and voter suppression.”

2. After a very, very rocky initial start, the augmented Unemployment Insurance benefits system in the United States has, in many states, worked very well during the coronavirus recession. Without it the economic disaster, and likely the pandemic disaster, would have been significantly worse. I remain puzzled about the form unemployment has taken over the past year. Why are initial claims still so large? Exactly who and why is being fired in such large numbers right now? Check out Equitable Growth’s Unemployment Insurance graphics, “For the week ending January 30.”

Worthy reads not from Equitable Growth:

1. The data underlying this observation from Noah Smith are the reason that I have considerable sympathy for the “mismeasurement” theories about the growth of total factor productivity since 1973. I do not know about you, but the nondurables and services that I consume are substantially transformed from those I consumed back in 1973 in a very good quality- and sophistication-adjusted way. There is no comparison between TV dinners now and TV dinners then, between home-produced coffee now and home-produced coffee then, between information and entertainment technologies now and information and entertainment technologies then. What picture of the changing shape of technology can we hold in our minds’ eyes that generates extraordinary technological advances in the production of durables, extraordinary quality augmentation in the commodities we consume,  extraordinary transformation of our information and information-related technologies, and yet non-durable and service TFP stagnation? My first reaction is: there is none—the process of producing durables overlaps a lot with the process of producing nondurables and services. The difference is that with durables we can better measure quality changes because the old versions hang around for generations with market valuations attached. Now I am not sure that this position is right. And certainly the consensus of those who study these issues carefully and are not fascinated by technology is otherwise. But it does make me wonder. Read Noah Smith, “About that TFP stagnation,” I which he writes: “Wow! If you look only at the durables sector, there was no Great Stagnation at all … Durables TFP has been growing more strongly post–1993 than it ever did in the post-WWII boom! Consider this: In the 26 years from ’47 to ’73, durables TFP nearly doubled, but in the 15 years from ’94-’09, durables TFP more than doubled … Something big did happen to technological progress … not in 1973 … but a decade earlier. In the 15 years to 1963, the two sectors progressed pretty much in tandem. But sometime in the early- to mid–60s, they diverged wildly, with nondurables [and services] TFP rising anemically through the late 70s and then basically flatlining until now … I think we should look at the “Great Stagnation” as a more subtle phenomenon than simply the exhaustion of the “low-hanging fruit” of nature. Our technologies for producing durable goods are improving faster than ever.”

2. I think that this is 100 percent correct. There is now effectively zero net cost to moving to net-zero CO2 emissions in the United States over the next generation. And we could—and should—do it more rapidly and incur some costs. The benefits to the world will be greatly worth it. Read James H. Williams and his co-authors, “Carbon‐Neutral Pathways for the United States,” in which they write: “Modeling the entire U.S. energy and industrial system … we created multiple pathways to net zero and net negative CO2 emissions by 2050. They met all forecast U.S. energy needs at a net cost of 0.2–1.2 percent of GDP in 2050, using only commercial or near‐commercial technologies, and requiring no early retirement of existing infrastructure. Pathways with constraints on consumer behavior, land use, biomass use, and technology choices (e.g., no nuclear) met the target but at higher cost. All pathways employed four basic strategies: energy efficiency, decarbonized electricity, electrification, and carbon capture … In the next decade, the actions required in all pathways were similar: expand renewable capacity 3.5 fold, retire coal, maintain existing gas generating capacity, and increase electric vehicle and heat pump sales to >50% of market share. This study provides a playbook for carbon neutrality policy with concrete near‐term priorities.”

February 8, 2021


Brad DeLong


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