Brad DeLong: Worthy reads on equitable growth, May 10–16, 2019

Worthy reads from Equitable Growth:

  1. Here’s the current scorecard on House of Representatives action on drug price reform, courtesy of Michael Kades, “U.S. Congress Continues to Make Progress on Drug Price Competition,” in which he writes: “Measures passed by the Judiciary Committee on April 30 focus on company efforts to block or delay the development and marketing of generic drugs, medications that are essentially identical to the original brand drugs but that are sold at far lower prices, saving consumers billions of dollars on both drug purchases and insurance premiums. The introduction of generic drugs, originally made possible by the Hatch-Waxman Act 35 years ago, provides meaningful competition where there essentially was none and therefore threatens the profits of drug companies. Some companies have adopted the strategy to prevent or delay the introduction of generics. And they have used gaps in Hatch-Waxman and in other laws, as well as in enforcement standards, to develop successful tactics for preventing competition.”
  2. If you miss Alyssa Fisher at the joint Equitable Growth-Hamilton Project event today on automatic stabilizers, then read her “Planning for the Next Recession by Reforming U.S. Macroeconomic Policy Automatic Stabilizers,” in which she writes: “Six big ideas … to be triggered when the economy shows clear, proven signs of heading into a recession [include] Gabriel Chodorow-Reich … and … John Coglianese [who] propose to expand eligibility for Unemployment Insurance and encourage take-up … Jason Furman and Wilson Powell III [who] aim to reduce state budget shortfalls during recessions … by increasing the federal matching rate for Medicaid and the Children’s Health Insurance Program … Hilary Hoynes … and … Diane Whitmore Schanzenbach [who] propose to limit or eliminate work requirements for supplemental nutrition assistance during recessions … Indivar Dutta-Gupta [who] proposes a countercyclical stabilization program through … Temporary Assistance for Needy Families … Andrew Haughwout [who] proposes an automatic infrastructure investment program … [and] Claudia Sahm [who] proposes to boost consumer spending during recessions by creating a system of direct stimulus payments to individuals.”
  3. I am not sure that it is right to say that advocates of “Mothers’ Pensions” believed that the woman’s sphere was in the home. They certainly believed that women’s work was important and believed that the first and most dire need for social insurance was to make sure that mothers of children had the resources they needed to raise the next generation. But they—and here, I am generalizing from my own family: my great-grandmother Fonnie and my great-great-grandmother Florence—also recognized that women in their generations were having four pregnancies, on average, while their grandmothers had had eight, and that they were assisted in the home by an increasing amount of modern technology in the form of consumer durables. And my mother-in-law Barbara maintains to this day that the thing that most changed her life was the clothes-washing machine. Half the number of pregnancies plus consumer durables meant that a lot of female energy could be—and was—directed outside the home. For another view, read Alix Gould-Werth, “After Mother’s Day: Changes in Mothers’ Social Programs Over Time,” in which she writes: “As Anna Jarvis was crusading to get Mother’s Day a place on the nation’s calendar, her peers—wealthy, white women who shared her progressive, reform-minded impulses—were laying foundation for our modern social safety net. Though most of these women chose to pursue social change rather than traditional family life, as architects of Mothers’ Pensions, they sided firmly with the view that the woman’s sphere was in the home. Mothers’ Pensions—which were passed into law state by state from 1911 to 1920—were targeted at widows and provided cash payments designed to simultaneously keep children out of orphanages and mothers out of the workplace.”
  4. Let me direct your attention to one of Equitable Growth’s young whippersnapper grantees writing smart things: Samir Sonti, who “studies 20th century U.S. labor and economic history. Sonti’s dissertation focuses on the politics of inflation in the United States from the 1930s to the 1980s. He received a bachelor of arts degree in political science and a bachelor of science degree in economics from the University of Pennsylvania.”

Worthy reads not from Equitable Growth:

  1. Replacing the legions of humans working as software bots doing routine and not-quite-so-routine information-classifying tasks may become one of the leading sectors of the next generation. It may not. But it may. As with all write-once, run-anywhere, basic-programs-easy-to-copy industries, it is hard to see how a profit-seeking market economy could focus its work productively here. Yet so far in the information age, the government has been useful more in throwing money and resources at problems than in directing activity. Read Martin Wolf, “China Battles the U.S. in the Artificial Intelligence Arms Race,” in which he writes: “What counts is implementation not innovation, and here the Chinese have big advantages … China [has] more internet users than the [United States] and Europe combined … a supportive government … [with] ambitious goals …. ‘internet AI’… tracks what you do on the internet; ‘business AI’… allows businesses to exploit their data … ‘perception AI’… that sees the world … and ‘autonomous AI’… interacts with us in the real world. At present … China is equal to the [United States] in the first, vastly behind in the second, a little ahead in the third, and, again, far behind in the fourth. But 5 years from now…”
  2. The next internet is a 50-year issue, not a 5-year or even a 20-year issue. But it is a rather important issue because a lot turns on whether the United States retains a middle-class income distribution. A wealthy middle class will have very strong demand for human connection in the form of individualized personal services. A plutocracy will not, if only because one plutocrat can only employ one psychiatrist each. Read Kara Swisher, “Can Anyone Tame the Next Internet?,” in which she writes: “which jobs will be impacted? … Not just factory workers, burger flippers, and long-haul truckers. Highly paid lawyers, skilled doctors … and, yes, even lowly journalists will need to find new lines of work … To thrive in this environment will require being in a profession that is creative, where analog interactions are critical … art … caring … anything in which being human trumps cyborg. And since AI becomes ever smarter, it will make sense to allow it to do more and more as we become ever less so.”
  3. At least as I read it, the decline in the female nonmotherhood penalty was primarily driven by the end of wage suppression in female-heavy occupations and is now over. Yes, blue-collar—and increasingly white—collar—American men do not have the standard of living that they expected. But that is overwhelmingly due to income redistribution upward and a productivity slowdown or two—not to gender dynamics. Read John Authers, “A Series of Non-Events Alters Fed Rate Cut Odds,” in which he writes: “The recovery … has still left male unemployment worse than at any point post-war … There are many men who are less productive than their fathers, and have reason to feel angry. That said, women have reason for unhappiness as well … Women are still putting up with [non]employment rates 10 points higher than for men. And so it does indeed seem possible, from my extremely swift look at the top-down data, that gender dynamics help explain why improving employment is not making many Americans happier.”
  4. People need productive and useful things to do, not necessarily jobs that are the focus of their lives. Read Per Kurowski, “We Need Worthy and Decent Unemployments,” in which he writes: “Two decades ago, concerned about growing unemployment, half in jest, in an Op-Ed in El Universal of Caracas, I asked something like whether it was better to have one hundred thousand unemployed running each on his side as broody hens, or to seat them all in a huge human circle where everyone would scratch the backs of one of his neighbors, charging a lot for his services, while his own back was scratched by his other neighbor, at an equally high price. The tragedy is that this question seems to me now less and less hypothetical.”
  5. I confess that I am much less optimistic about changing how macroeconomists think in American academia. Outside of a few places—the University of California, Berkeley among them—academic economists talk too little to forecasters and register too little of reality. This was brought home to me when I read how Robert Lucas and Edward Prescott decided that monetary policy did not affect employment just as Paul Volcker was hitting the U.S. economy on the head with a brick and sending it into the deep recession of 1982. Read Olivier Blanchard and Lawrence H. Summers, “Evolution or Revolution: An Afterword,” in which they write: “The notion that low rates largely reflected the after-effects of the financial crisis and would slowly fade away has simply proven wrong … Fiscal policy has … turned … expansionary … Inflation remains below target … Output is still below potential … For a long time, economists looking at Japan pointed to mistakes in policy and excessive reliance on deficits; it is now clear that the Japanese macroeconomic response was, on net, the right one … We noted … that both the Depression and the Great Inflation of the 1970s led to dramatic changes in macroeconomic thinking—much more dramatic than have yet occurred in response to the events of the last decade. We think it is increasingly likely that this gap will close in the next few years.”

May 16, 2019


Brad DeLong



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