Brad DeLong: Worthy reads on equitable growth, May 25-31, 2018

Worthy reads on Equitable Growth:

1. Nick Bunker gathers scattered threads and sets out the issues on wage growth and unemployment in “Puzzling over U.S. wage growth.”
2. As I say in a Value Added blog post, exactly the kind of debate we should be hosting and encouraging is by Jesse Rothstein: “Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income.” In the paper, he writes that “Chetty et al. (2014b) show that children from low-income families achieve higher adult incomes … in some commuting zones (CZs) than in others.”
3. Michael Kades, in “Unlocking Antitrust Enforcement: New Yale symposium examines proposals to make antitrust enforcement more effective,” highlights the papers from our co-hosted antitrust symposium in October 2017.
4. From two years ago, here is a minimum wage meta-analysis well worth re-reading: Arindrajit Dube and Ben Zipperer: “Pooling multiple case studies using synthetic controls: An application to minimum wage policies.”
5. Also worth reading from this past October is Darrick Hamilton’s “Post-racial rhetoric, racial health disparities, and health disparity consequences of stigma, stress, and racism.”

Worthy reads not on Equitable Growth:

1. 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 the column by Edward L. Glaeser, Lawrence H. Summers, and Ben Austin, “A Rescue Plan for a Jobs Crisis in the Heartland.” They write: “The Eastern Heartland[‘s] … relative G.D.P. would have been more than 50 percent higher had it grown at the rate of America’s Coastal states. The earned-income tax credit has been effectively promoting employment for over 40 years, but its design makes it poorly suited to fighting the ocean of male joblessness.”
2. Arithmetically, the big increases in price inflation in the 1970s came from the oil shocks of 1973 and 1979, and the productivity growth slowdown. Milton Friedman tried to claim that those were both the result of too-rapid money growth permitted by the Fed, but was never convincing. Yet the folk memory of the 1970s is that the big increases in price inflation in the 1970s came from too-rapid money growth permitted by the Fed that pushed the unemployment rate well below the NAIRU. Simply not true. Read “Noah Smith: Don’t Raise Rates Just to Keep Wages in Check.” He writes: “Policy makers and macroeconomic analysts should rethink the basic mental model that they use to evaluate the state of the economy. … Rising wages don’t seem to trigger a wage-price spiral … not at moderate levels of wage growth. … If those experts keep relying on the conventional wisdom imparted from the 1970s and 1980s, big mistakes could result.”
3. In “The Stickiness of the Medicaid Expansion,” Scott Lemieux writes that “Good Democratic policy that provides important benefits to people may not benefit the Democratic Party, and in Arkansas it hasn’t at either the state or federal level. But the policies themselves tend to be sticky, and that’s important in itself! And while universal programs in some cases are more desirable on policy grounds, it’s simply not true that programs that predominantly help the non-affluent are never popular or robust.”
4. In “How Neoliberalism Changed the World,” Patrick Iber writes that “Neoliberalism often connotes a form of liberal politics that has embraced market-based solutions to social problems. … The [interwar Austrian] neoliberals sought, Slobodian writes, to ‘encase’ markets … a global system that sufficiently ordered the world so that capitalism would be safe from certain forms of political interference. … The things that neoliberalism has trouble seeing are, at the present, far more consequential: deep inequalities, accompanied by a sense of powerlessness, of being left behind by a global system that operates with no regard for the interests or voice of the majority.”
5. Ernie Tedeschi, in “Will Employment Keep Growing? Disabled Workers Offer a Clue,” says that “A seemingly inexorable economic trend has changed direction in the past few years, as people who cited health reasons for not working are returning to the labor force.”
6. Karl Walentin and Andreas Westermark note in “Stabilising the real economy increases average output,” that “DeLong and Summers (1989) … argue that (demand) stabilisation policies can affect the mean level of output and unemployment.”
7. Noah Smith says in “The Rich Get the Most Out of College” that “the college earnings premium—the lifetime difference in earnings between those who get a bachelor’s degree and those who only finish high school—was substantial for people from all income backgrounds.”
8. It seems to me more likely than not that the Federal Reserve’s current fear of a high-pressure economy is based on a misreading of a historical experience now a generation and a half past. Neel Kashkari, in “The Fed should not move too quickly to raise rates,” says that “The US recovery took place after the Federal Reserve undertook extraordinary monetary policies.”
9. Adam Tooze asks: “Do you think Italian bond markets maybe had been dozing a bit?” He says “It’s politics sure, but sovereign debt markets ARE political.”