Brad DeLong: Worthy reads on equitable growth, June 1-7, 2018

Worthy reads on Equitable Growth:

  1. That monetary policy is best which avoids creating needless unemployment while still maintaining confidence in the value of the unit of account. Yet surprisingly little thought has been devoted to figuring out which monetary policy jumps the highest with respect to this objective. Nick Bunker’s “Getting on the level with the Fed’s targeting of prices” makes this point: “John Williams’s move to New York is a sign that the Federal Reserve may soon reconsider its target for monetary policy. It’s not clear whether a new target would emerge from such a process or how radical a change current members of the [Federal Open Market Committee] would consider. The current inflation targeting structure may have gotten the U.S. economy to where it is, but it took some time. A quicker recovery from the next recession would be to the benefit of everyone in the U.S. economy. So, a rethink is needed. Hopefully it’s coming soon.
  2. There was a lot of noise about how giving repatriated profits a tax break would boost investment in America. As near as I can see it, none of it was well-founded at all. Listen to what Kimberly Clausing has to say in “Equitable Growth in Conversation: Kimberly A. Clausing.” She points out in her conversation: “We are distorting repatriation decisions by having this repatriation tax. But I don’t think we’re dramatically changing the investments found in the United States. The companies that have profits abroad can borrow against them to finance any desired investment. And some of the money isn’t really truly abroad—it’s invested in U.S. assets.
  3. Read Kate Bahn’s piece over on Slate: “Education Won’t Solve Inequality:Not without workers’ power too.” And looking forward to what we can learn from this BLS initiative that Kate also highlighted earlier this week: “New data on contingent workers in the United States.” The details break on Thursday, June 7.

Worthy reads not on Equitable Growth:

  1. A very interesting study of what appears to be highly successful job search assistance in Nevada comes our way from Day Manoli, Marios Michaelides, and Ankur Patel in “Long-Term Effects of Job-Search Assistance: Experimental Evidence Using Administrative Tax Data.” They note: “Administrative tax data … examine the long-term effects of an experimental job-search assistance program operating in Nevada in 2009.”
  2. I suspect that other countries will prove much more effective at compensating the losers from a trade war than President Donald Trump will be. Paul Krugman makes the point in “Oh, What a Stupid Trade War.” Krugman writes: “My professional training wants me to dismiss the jobs question as off-base. But … we … want to know whether the Trump trade war … would add or subtract jobs holding monetary policy constant, even though we know monetary policy won’t be constant. … This trade war will actually be a job-killer. … Trump is putting tariffs on intermediate goods. … Whatever gains there are in primary metals employment will be offset by job losses in downstream industries. … Other countries will retaliate. … We’re dealing with real countries … they have pride; and their electorates really, really don’t like Trump. This means that even if their leaders might want to make concessions, their voters probably won’t allow it. … This is a remarkably stupid economic conflict to get into. And the situation in this trade war is likely to develop not necessarily to Trump’s advantage.”

June 7, 2018


Brad DeLong
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