Brad DeLong: Worthy reads on equitable growth, October 12–18, 2019

Worthy reads from Equitable Growth:

1. Heather Boushey “On Reddit”: “I’m Heather Boushey, president and CEO of the Washington Center for Equitable Growth, and author of the forthcoming book, Unbound: How Inequality Constricts Our Economy and What We Can Do About It. The latest economic research from across academic disciplines shows the many ways that high economic inequality—in incomes, wealth, and across firms—serves to obstruct, subvert, and distort the processes that lead to widespread improved economic well-being.”
2. Unpredictable and chaotic work schedules are turning out to be an extra source of inequity that is, at least to me, surprisingly large. About the only half-silver lining is that Great Britain appears to be even worse. Read Cesar Perez and Alix Gould-Werth, “How U.S. workers’ just-in-time schedules perpetuate racial and ethnic inequality,” in which they write: “In an attempt to minimize labor costs, employers in today’s U.S. economy saddle workers with last-minute and low-quality schedules. These schedules, sometimes referred to as ‘just-in-time schedules,’ are unpredictable, unstable, and often provide workers with an insufficient number of hours. Today, sociologists Kristen Harknett at the University of California, San Francisco and Daniel Schneider at the University of California, Berkeley released new analyses drawing from surveys with 30,000 retail and food workers at 120 of the largest retail and food service companies in the United States to show who suffers from these schedules.”
3. An excellent piece from Fiona Scott Morton on the current state-of-play in antitrust is well worth re-elevating amid rising concern about market power among U.S. policymakers. Read her “Modern U.S. antitrust theory and evidence amid rising concerns of market power and its effects: An overview of recent academic literature,” in which she writes: “The experiment of enforcing the antitrust laws a little bit less each year has run for 40 years, and scholars are now in a position to assess the evidence. The accompanying interactive database of research papers for the first time assembles in one place the most recent economic literature bearing on antitrust enforcement … Horizontal mergers … Vertical mergers … Exclusionary conduct … Loyalty rebates … Most Favored Nation clause … Predation … Common ownership … Monopsony power … Macroeconomics and market power.”

Worthy reads not from Equitable Growth:

1. Let me highlight this once again: The very sharp Martin Wolf reacts to the Business Roundtable’s recognition that it and the corporations of which it consists need to take on a much broader system-stabilization role. In my view, the first thing the Business Roundtable and its fellow travelers need to do is to recover control of the political right from the armies of political and media grifters. They need to weigh in on what right-wing politicians ought to stand for. So far they have not. Read Martin Wolf, “Why rigged capitalism is damaging liberal democracy,” in which he writes: “Economies are not delivering for most citizens because of weak competition, feeble productivity growth, and tax loopholes … The U.S. Business Roundtable, which represents the chief executives of 181 of the world’s largest companies, abandoned their longstanding view that ‘corporations exist principally to serve their shareholders’ … What does—and should—[this] moment mean? The answer needs to start with acknowledgment of the fact that something has gone very wrong. Over the past four decades, and especially in the United States, the most important country of all, we have observed an unholy trinity of slowing productivity growth, soaring inequality, and huge financial shocks … The economy [is] not delivering … in large part … [because of] the rise of rentier capitalism … Market and political power allows privileged individuals and businesses to extract a great deal of such rent from everybody else … If one listens to the political debates in many countries, notably the United States and the United Kingdom, one would conclude that the disappointment is mainly the fault of imports from China or low-wage immigrants, or both. Foreigners are ideal scapegoats. But the notion that rising inequality and slow productivity growth are due to foreigners is simply false … Members of the Business Roundtable and their peers have tough questions to ask themselves. They are right: Seeking to maximize shareholder value has proved a doubtful guide to managing corporations. But that realization is the beginning, not the end … We need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality, and, not coincidentally, an increasingly degraded democracy. Fixing this is a challenge for us all, but especially for those who run the world’s most important businesses.”
2. There is no single effect of “automation” on the workforce and the labor market. It is long past time for us to dig deeper, and here is a good piece of spadework. Read Sotiris Blanas, Gino Gancia, and Tim Lee, “How different technologies affect different workers,” in which they write: “Since the early 1980s, technology has reduced the demand for low- and medium-skill workers, the young, and women, especially in manufacturing industries. The column investigates which technologies have had the largest effect, and on which types of worker. It finds that robots and software raised the demand for high-skill workers, older workers, and men, especially in service industries … From 1982 to 2005, using data from 30 industries spanning roughly the entire economies of 10 high-income countries … We used the Dictionary of Occupational Titles and the Occupational Information Network to evaluate which jobs are more prone to automation based on the type of tasks they require … Industrial robots decrease low-skill employment, while they increase the income shares of high- and medium-skill workers, old workers, and men … In manufacturing, robots lower low-skill, young, and female employment, while in services, they increase medium-skill and male employment. In both sectors, robots increase the income shares of high-skill, old, and male workers. Our results are consistent with the view that robots replace workers who perform routine tasks, especially in sectors where automation is more widespread, such as manufacturing. By contrast, they increase employment and incomes in sectors where automation has started more recently, such as in services, a sector in which new occupations are appearing. Given the industrial and occupational composition of these sectors, that robots are likely to complement engineers, product designers, and managers—that is, occupations that are dominated by high-skill, more senior, and male workers. Software has a similar effect to robots, whereas Information and Communications Technology, or ITC, capital is associated with employment gains mostly for medium- and low-skill workers.”
3. Moving to carbon-free electricity by 2050 is remarkably cheap, argues Geoffrey Heal. Read his “The Cost of a Carbon-Free Electricity System in the U.S.,” in which he writes: “I calculate the cost of replacing all power stations in the United States using coal and gas by wind and solar power stations by 2050, leaving electric power generation in the country carbon free. Allowing for the savings in the cost of fossil fuel arising from the replacement of fossil fuel plants, this is roughly $55 billion annually. Allowing, in addition, for the fact that most fossil plants in the United States are already old and would have to be replaced before 2050 even if we were not to go fossil free, this annual cost is reduced to $23 billion.”
4. Yes, rural Kansas is now, in some ways, reminiscent of 17th century England. Read Cory Doctorow, “In Kansas’s poor, sick places, hospitals and debt collectors send the ailing to debtor’s prison,” in which he writes: “Kansas is a living laboratory for far-right experimentation with extreme economic cruelty: a state where Medicare expansions were thwarted, where xenophobia has penetrated the state bureaucracy, where a grifty, incompetent lawyer has apologized for slavery and driven women out of his own party, even as neighboring states thrive by tending to the needs of working people, rather than the super-rich. As Kansas sinks into poverty and ruin, its people are growing ever-sicker: Poverty is strongly correlated with poor health outcomes, especially in America, where being poor means you can’t afford preventative care, and even more especially in Kansas, where limits on Medicare expansion exclude even very poor people from access to subsidized care. Enter hospital debt collectors. Propublica’s Lizzie Presser reports from Coffeyville, Kansas, home to Coffeyville Regional Medical Center, the only hospital for 40 miles, now that its rivals have all shut down. In Coffeyville, magistrate judges are appointed, and need no special training to hold the office. Judge David Casement—a cattle rancher who never studied law—presides over medical debt cases, which he hears quarterly at ‘debtor’s exam’ days. At these proceedings, debt collectors—who do have law degrees, and whom the judge relies heavily on for legal advice—are allowed to quiz sick people, or the parents or spouses of critically ill or dying people, about their assets and income and to ask the judge to order them to divert what little they have to Coffeyville Regional Medical Center, minus the debt collector’s healthy cut. But sick, poor people can’t always afford to travel to the courthouse: Sometimes, it’s because they have to go see a specialist (or take their kid or spouse to see one); sometimes it’s because they had to sell their car to make a previous debt payment. When this happens, debt collectors like Michael Hassenplug from Account Recovery Specialists Inc. can ask the judge to issue a warrant for the debtor, who is taken to the local jail and hit with $500 in bail. Many can’t pay it, and stay in jail (Hassenplug insists that they’re not in jail for their debts, but rather for their failure to appear), while others who manage to borrow the $500 often find that it is then surrendered to the hospital and its arm-breakers. Meanwhile, the debts mount: In addition to punitive, usurious interest, the hospital and its debt-collectors reserve the right to lard on fees, fines, and penalties.”