Brad DeLong: Worthy reads on equitable growth, January 10-17, 2020

Worthy reads from Equitable Growth:

1. Lisa Cook and Jan Gerson provide a large estimated benefit of leveling the gender and racial playing field with respect to innovation in “The implications of U.S. Gender and Racial Disparities in Income and Wealth Inequality at Each Stage of the Innovation Process.” They write: “Since the 1960s, both women and underrepresented minorities in the United States have obtained an increasing share of bachelor’s … and other advanced degrees in … STEM … [y]et there has been no similar increase in patenting activity among these groups … The core problem is the continued discrimination experienced by disadvantaged minorities and women at every stage of the innovation process, from childhood and youth exposure and mentoring in the STEM fields to postsecondary educational barriers to advancement, and from discriminatory denials of patent applications to the lack of opportunity to participate in the development of patentable ideas in the technology workplace. Closing this gender and racial gap in the U.S. innovation process could increase U.S. Gross Domestic Product per capita by 2.7 percent.”
2. Here are some of my thoughts, now two decades old, on Piketty and other issues. Surprisingly, I still think much the same as I did then, in “Bequests: An Historical Perspective,” in which I wrote: “Practically every major aspect of our system of inheritance today is less than two hundred and fifty years old. Two hundred and fifty years ago, inheritance proceeded through primogeniture—as if those leaving bequests cared not for the well-being of their descendants but only for the wealth and power of the lineage head. Before the industrial revolution, inheritance played an overwhelming and crucial role in wealth accumulation and wealth distribution that it does not play today. Migration to the New World was accompanied by a rapid shift in the perception of the purpose of inheritance as the old patterns failed to flourish in a land-rich, rapidly-growing frontier-settler economy. By the start of the twentieth century inherited wealth was regarded with suspicion in America, with even some of the richest calling for estate taxes to keep the rich from diverting the public trust of their fortunes into the pockets of their descendants. Thus the coming of social democracy to America brought with it high statutory rates of tax on large estates, which nevertheless did not raise a great deal of revenue.”

Worthy reads not from Equitable Growth:

1. This is a must must read. This is a great paper by Alberto Alesina and Stefanie Stantcheva about why “Americans continue to regard their economic prospects more optimistically than Europeans, who fear that the poor are stuck in poverty.” Coming to grips with what generates this may be the most important question in political economy today. Read “Mobility: Real and Perceived,” in which they write: “Americans, by and large, view the market economy as fair: if one works hard, poverty can be left behind; and wealth is generally deserved by those who have accumulated it … Europeans, by contrast, believe that the poor will remain stuck in poverty, no matter how hard they try, and that many of the rich don’t deserve their wealth, which originated mostly from birth and connections in an “unfair” economy, based upon privileges. They believe that social mobility is low and that something like an American dream in their country is an illusion … A key difference in the responses of Europeans and Americans is … [that] European respondents are more pessimistic than Americans, though their statistical chances now look better … Individuals more pessimistic about social mobility favored government spending on programs designed to equalize opportunities and favored a progressive tax system. Interestingly, the respondents who believed that social mobility is low seem to favor equal-opportunity policies more than ex-post-redistribution of income. American respondents showed a distinctive—and counterintuitive—geographical pattern. In areas such as the South and the Southeast, where upward mobility is relatively low, Americans were overly optimistic about prospects of upward mobility. The opposite was the case in areas where mobility is higher, as in the North and Northwest. This is an intriguing pattern that will require more study to understand.”
2. Populism—in today’s climate, neo-fascism would be a better phrase because the original populists actually had policies that were popular and effective (in some cases at least) in boosting the well-being of the people—is only strengthened by a small amount via the economic insecurity channel. But other factors boosting populism have currently made it influential enough that that small boost can be politically decisive. Read this excellent piece of work by Yotam Margalit, “Economic causes of populism: Important, marginally important, or important on the margin,” in which he writes: “A common explanation for the rise of populism is economic insecurity driven by forces such as trade, immigration, or the financial crisis. This column, part of the Vox debate on populism, argues that such view overstates the role of economic insecurity as a driver. In particular, it conflates economic insecurity being important in explaining the overall populist vote and being important by affecting election outcomes on the margin. The empirical findings indicate that the share of populist support explained by economic insecurity is modest.”
3. Economics’ woman-underrepresentation problem appears due to a drip, drip, drip, drip of small factors everywhere along the pipeline. Here Nagore Triberri and her coauthors find that there is a substantial slice of papers of high enough “quality” (as measured by future citations) to get published that do not get published because they are written by women. Yet referees assess papers written by men and women similarly. And editors do not seem biased in their use of referees. Read “Gender Neutrality in Economics: The Role of Editors and Referees,” in which they write: “Women economists are under-represented across the discipline, from university departments to academic conferences and publishing houses. This column focuses on the editorial process and asks whether the referees and editors of four leading economics journals made gender-neutral publishing decisions between 2003 and 2013. The findings suggest that the gender of the referee does not affect the valuation of a paper and that editors are gender-neutral in valuing advice from referees. However, papers written by women appear to face a higher bar in the quest to be published.”