Brad DeLong: Worthy reads on equitable growth, June 8-14, 2018

Worthy reads on Equitable Growth:

  1. The development of the idea that economics—labor economics especially—needs to focus more on power needs to be highlighted anew. Read our former colleague Ben Zipperer’s conversation with David Card and Alan Krueger: “Equitable Growth in Conversation: An interview with David Card and Alan Krueger.” Here’s Krueger in the interview: “I think Orley [Ashenfelter] … set the tone for the Industrial Relations Section … used to like to tell a story, which I remember vividly, where he met with some restaurant group when he worked, I think, at the Labor Department. And they said, we’ve got a problem in our industry: The minimum wage is too low and we can’t get enough workers. And that’s inconsistent with the kind of view that the market determines the wage.”
  2. Kate Bahn sends us to a guy who used to work at Equitable Growth who is on fire on Twitter about how the gig economy is not (at least not yet) a big deal—John Schmitt @nytimes: ‘Maybe the Gig Economy Isn’t Reshaping Work After All,’ in which he says that “maybe it is regular work (low pay and benefits, insufficient and unpredictable hours, lack of voice on the job, etc.) that is shaping the gig economy?”
  3. Get up to speed on the puzzle of low wage growth going with low unemployment. Much worth reading from Nick Bunker in his post “Puzzling over U.S. wage growth,” in which he notes that “hiring has not been particularly strong during this recovery.”

Worthy reads not on Equitable Growth:

  1. My review of the superb and extremely thought-provoking book by Richard Baldwin published in 2016, The Great Convergence: Information Technology and the New Globalization, appears in Nature: “The iron-hulled oceangoing steamships and submarine telegraph cables of the second half of the 19th century set off a first wave of economic globalization. The intercontinental transport of both staple commodities and people became extraordinarily cheap. The container of the second half of the 20th century made the transport of everything non-spoilable—and some things spoilable—essentially free. It set off a second wave of economic globalization.”
  2. Take a look at global corporate tax avoidance here: Gabriel Zucman, T. Tørsløv, and L. Wier, “The Missing Profits of Nations.”
  3. I am confused here: Do we have an “eastern heartland” problem? Or do we have a “prime age male joblessness” problem? Those two problems would seem to me to call for different kinds of responses. Read Edward L. Glaeser, Lawrence H. Summers, and Ben Austin’s “A Rescue Plan for a Jobs Crisis in the Heartland,” in which they write that “in Flint, Mich., over 35 percent of prime-aged men—between 25 and 54—are not employed.”
  4. How George Borjas p-hacked his way to his conclusion that immigrants have big negative effects on native-worker wages. For a reality check, read Jennifer Hunt and Michael Clemens’s “Refugees have little effect on native worker wages,” in which they note that “Card (1990) found that a large inflow of Cubans to Miami in 1980 did not affect native wages or unemployment.”
  5. Lawrence Summers plumps for nominal GDP targeting in “Why the Fed needs a new monetary policy framework,” in which he and his co-authors David Wessel and John David Murray write: “A monetary framework … should … [have] enough room to respond to a recession … nominal interest rates in the range of 5 percent in normal times.”
  6. Kim Clausing, in her tweet ‘How will the #TCJA Impact American Workers?’, argues that “(1) Overall, the benefits of the #taxcuts are skewed toward the wealthy. (2) When the tax cuts are eventually paid for, the vast majority of American households will be worse off.” These two charts from the Tax Policy Center make the point.
  7. Would faster productivity growth raise wage growth? That is, would other things stay not equal but at least not become more adverse? Probably. Read Anna Stansbury and Lawrence H. Summer’s “Productivity and Pay: Is the Link Broken?,” where they write: “Since 1973 median compensation in the United States has diverged starkly from average labor productivity.”
  8. Joe Gagnon is right here. Listen to him in “There Is No Inflation Puzzle,” in which he says that “Inflation is behaving exactly as the Phillips curve would predict.”
  9. So, you think you want to become an economist? First read Masayuki Kudamatsu’s “tips4economists.”
  10. The parallels between the Great Recession and the Great Depression remain a very fruitful area to think about, argues Noah Smith in “How many parallels can we think of?” He writes: “Interestingly, it’s the very existence of all those parallels that lets us see how differently the 21st century is unfolding, compared to the 20th. We staved off the worst of the Great Recession. But this time, unlike before, we elected a xenophobic authoritarian President. What would 20th century American history had looked like if we had gone off the gold standard early, but then elected Lindbergh instead of Roosevelt? Maybe we’re about to find out!”
  11. Opposition to Medicaid expansion was one of the cruelest deeds of reactionaries in the 2000s. But a kinder counterreaction came earlier this month in Virginia, where Gov. Ralph Northam presents his winning argument: “As a doctor, I believe ensuring all Virginians have access to the care they need is a moral and economic imperative. This budget expands Medicaid and will empower nearly 400,000 Virginians with access to health insurance, without crowding out other spending priorities.”
  12. Long-run changes in the nature of work and jobs happen, but they happen in the long run. In the short run in which we live, low-pressure and high-pressure economies dominate. Why do people find this surprising? Larry Mishel tackles this conundrum: “One reporter told me there’s quite a ‘furor’ over the new BLS Contingent worker data. Not sure why that should be, except if you bought the hype about a rapidly changing nature of work and an explosion of freelancing and gig work. @EconomicPolicy.”
  13. I still have a hard time believing the United States is launching a trade war that no domestic interest group wants. Barry Eichengreen, Sean Randolph, and Jonathan R. Visbal confront the question in “A War of Trade? Protectionist Policies Under Trump,” in which they discuss: “1,300 Chinese products … a 25% tariff … over $46 billion worth of goods. In response, China produced its own list.”
  14. Yes, Europe may well be facing another crisis, write Olivier Blanchard, Silvia Merler, and Jeromin Zettelmeyer in “How Worried Should We Be about an Italian Debt Crisis?” The three authors highlight “two conditions … that rising interest rates reflected economic recovery; and … that the Italian government would be prepared to cooperate with European authorities … no longer hold.”
  15. If you believe Robert Barro and his posse, we ought to be seeing annual-rate investment spending suddenly and discontinuously leaping upward by $800 billion this year. But we are not, demonstrates Pedro Nicolaci da Costa in “Tax cuts fail to boost corporate investment plans, Fed survey shows.” He notes that “Trump claimed the tax bill would lead to a huge boost in business spending—but there’s no sign of it yet.”
  16. The Committee for a Responsible Federal Budget is only one of many organizations that took House Speaker Paul Ryan (R-WI) at the estimation of his communications staff. We have a significantly less responsible federal budget as a consequence, writes Michael Grunwalde in “Paul Ryan’s Legacy of Red Ink.” The Politico senior writer wonders how “The speaker of the House’s reputation as a budget hawk has somehow survived his actual record.”

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Brad DeLong

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