Brad DeLong: Worthy reads on equitable growth, June 15-21, 2018

Worthy reads on Equitable Growth:

  1. Very nice to see “Janet Yellen Joins Equitable Growth Steering Committee“. “There are few economists with the depth of academic and policymaking experience that Janet Yellen possesses,” said Heather Boushey, Equitable Growth’s executive director and chief economist. “She has worked tirelessly, in her research and in her high government positions, to promote strong economic growth that benefits workers and to ensure that the American Dream is within reach for all.”
  2. Suggestions for what kinds of information economists and policymakers will want to be capturing in 20 years are very welcome, courtesy of Michael Strain in “Equitable Growth in Conversation.” In the interview, he says “to the extent that you are figuring out ways to update this statistical system to account for the way that we live and work now would be important. But more importantly, to account for the ways that we might live and work 20 years from now, to really have a plan, to have statistically valid surveys that capture the information that we want to capture is, I think, a very worthy research program.”
  3. Really surprised that there is no evidence of boom-bust asymmetry here. I am going to have to dig into what reasonable alternatives are and how much power the authors’ techniques have against them after reading the new working paper by Adam M. Guren, Alisdair McKay, Emi Nakamura, and Jon Steinsson, “Housing Wealth Effects: The long View.” They find that: “1) Large housing wealth effects are not new … substantial effects back to the mid 1980s; 2) Housing wealth effects were not particularly large in the 2000s … 3) There is no evidence of a boom-bust asymmetry.”
  4. Susan Helper and Timothy Krueger worry that the organizational disaggregation produced by this age of supply chains is harming the development of our communities of engineering practice in their 2016 report “Supply Chains and Equitable Growth.” They write: “Deregulation, market failures, and corporate policies have led to the rise of supply chains comprised of small, weak firms that innovate less and pay less. These problems in supply chains threaten U.S. competitiveness by undermining innovation, and also contribute to the erosion of U.S. workers’ standard of living. A different kind of outsourcing is possible.” Annalee Saxenian’s Regional Advantage: Culture and Competition in Silicon Valley and Route 128 is now 20 years old, and yet somehow I do not think we know as much about this as we should.

Worthy reads not on Equitable Growth:

  1. Somebody who I have long thought deserves more attention and mindshare, and is very much worth following, is Karl Smith at Bloomberg View, at the Niskanen Center, and on Twitter.
  2. In the internet economy, traditional antitrust doctrines and nostrums are much less helpful than we would wish. We need new thinking and new legislating here. Not that I know what we need, exactly, but we do need it, after reading Ben Thompson’s “AT&T, Time Warner, and a Framework for Neutrality,” in which he concludes that “Unfortunate[ly]… a bad case by the government has led to … a merger … never examined for its truly anti-competitive elements.”
  3. A search model that produces the right cyclical elasticity of wages but does not produce the right cyclical volatility of employment has the wrong micro-foundations. It is producing the right cyclical elasticity of wages because it is producing the wrong cyclical volatility of employment. Thus I think this approach is pretty much tapped out. Read Christopher A Pissarides’ “The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?,” in which he writes that in “an equilibrium search model … focus on the model’s failure to match the observed cyclical volatility of unemployment.”
  4. Very wise words from close to where the rubber meets the road about how the rise of the robots is likely to work out for the labor market over the next generation or so. Read Shane Greenstein’s “Adjusting to Autonomous Trucking,” in which he writes, “Let’s come into contact with a grounded sense of the future. … Humans have invented tools for repetitive tasks, and some of those tools are becoming less expensive and more reliable.”
  5. Blame the Pollyanna-ish fecklessness of the Bank of England and the feckless indolence of Britain’s reporters. Read Simon Wren Lewis’ “How UK deficit hysteria began,” in which he writes, “Monetary policy ran out of reliable levers to manage the economy. However, journalists wouldn’t know that from the Bank of England, who tended to talk as if Quantitative Easing was a close substitute to interest rates as a monetary policy instrument.”
  6. This comes as no surprise from Paul Krugman. He says in “Tax Cuts and Leprechauns” that “the immediate effect of cutting the corporate tax rate … a big fall in taxes collected from corporations.”
  7. The thoughtful and pulls-no-punches Amitabh Chandra snaps on Twitter: “GOP thinktanks are the biggest milksops. From healthcare policy to environmental policy, from national security policy to fiscal policy, they have tacitly endorsed a mountain of anti-market + anti-growth + anti-America policies to not upset their political masters. … I don’t consider myself a Democrat, but the quality of the conversation at CAP or Brookings is orders of magnitude richer, and more sophisticated, than what is happening at GOP thinktanks. And I say this as someone who often disagrees.”
  8. I missed this! Ed Cara writes in “Fed-Up Hospitals Are Starting Their Own Drug Company so They Can Lower Generic Drug Prices” that “a coalition of U.S. hospitals … is going to start its own drug company to compete with big pharma.”
  9. I am still clinging to the probably vain hope that the slowdown in measured productivity growth is a problem of measurement. I cannot see anything that has happened in the world that would have eroded both the incentives and our collective ability to make the things we made last year 2 percent more cheaply this year. Read Martin Wolf for some insights: “The long wait for a productivity resurgence,” in which he writes, “We live in an age judged to be one of exciting technological change, but our national accounts tell us that productivity is almost stagnant. Is the slowdown or the innovation an illusion? If not, what might explain the puzzle? … Mismeasurement … diminished competition and expensive rent capture … new technologies are simply not what they are claimed to be.”
  10. Looking back at the Piketty debate, it appears to me that much of the virulence of the criticism arose because the empirical and reality-based case against Piketty’s arguments was so weak. Read Ryan Avent from 2014 in his “Inequality: “Capital” and its discontents,” in which he asks: “Is inequality the defining issue of our era? … Not everyone is convinced … [by] Mr Piketty’s magnum opus. [It] is certainly not without its weaknesses, but the quality of the criticism it has attracted provides a sense of the strength of the argument he makes.”

June 21, 2018


Brad DeLong
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