Brad DeLong: Worthy reads on equitable growth, September 14–20, 2018

Worthy reads from Equitable Growth:

  1. Back at the end of the 19th century, the quest for better economic statistics was a bipartisan, bi-ideology, bianalytic effort. Liberals and conservatives, reactionaries and Social Democrats, socialists and centrists in America—all thought that good statistics would reveal that the United States matched their images of it and would show that their policies were good ones. We need to recover that unity of purpose. Read Austin Clemens: “In an age of inequality, aggregate and mean economic statistics don’t tell us enough,” in which he writes: “I have argued that we should disaggregate the reporting of GDP growth so we can understand who prospers when the economy grows. But we don’t need to stop there. As income inequality increases and we increasingly see two Americas—one for rich and one for everyone else—it is more important than ever to see more granular breakdowns.”
  2. A timely reminder: Read Sarah Jane Glynn, “Gender wage inequality,” in which she writes: “Across countries, women’s labor force participation rates and per capita income have a U-shaped relationship.”
  3. Will McGrew directs us to David Leonhardt’s rant against the mainstream media’s addiction to gauging the overall health of the economy by statistical measures that are relevant only to the rich in “Weekend Reading: “Earnings Inequality” Edition,” in which McGrew notes: “Criticizing the relevance of the economic data the government makes available, David Leonhardt echoes an argument … that while stock values and GDP growth have increased in the past few years, the income and net worth of most families have remained stagnant.”
  4. Perhaps the best of the “Equitable Growth in Conversation” interviews: “Equitable Growth in Conversation: An Interview with David Card and Alan Krueger.”

Worthy reads not from Equitable Growth:

  1. Mark Thoma says that he does not write as many op-eds and webloggy literature summaries and takes these days because he has largely said what he had to say. But he is still the keenest-eyed aggregator and link generator for those who want a high-quality and balanced view of what is going on in economics these days. Peruse his recent “Economist’s View: Links (9/11/18).”
  2. This is the best short video on the blindnesses of economics in general in the mid-2000s that I have seen, by George Akerlof: “Why Economists Failed to Predict the Financial Crisis.”
  3. I continue to think that we should focus on people rather than places—that place-based policies have to be justified because the people in them lack opportunity. And I think we need a renewed focus on improving local governance: In places that are poor because the political system is captured by parasitic kleptocrats, pouring more resources into the places will merely further enrich the kleptocrats. The Hamilton Project, however, thinks differently, arguing that “depending on where they live, people across the United States experience drastically different economic outcomes.” Read its “Place-Based Policies for Shared Economic Growth.”
  4. The replication crisis comes for (some of) those who claim to have rock-solid identification; or, instrumental variables considered harmful, and difference-in-differences considered dangerous. Abel Brodeur says that “P-hacking is a substantial problem in research employing DID and (in particular) IV,” in his discussion paper “Methods Matter: P-Hacking and Causal Inference in Economics.” His take: “The economics ‘credibility revolution’ has promoted the identification of causal relationships using difference-in-differences (DID), instrumental variables (IV), randomized control trials (RCT) and regression discontinuity design (RDD) methods. The extent to which a reader should trust claims.”
  5. We continue to see little sign where the rubber hits the road of an “overheating” economy, says Adam Ozimek in his “Wider Labor Market Slack Implies Lower Rates.” He writes: “Wider slack measured using the prime non-employment rate—the share of people age 25 to 54 who don’t have a job—does a better job explaining wage growth over the last few decades than the unemployment rate, making it a plausibly better recent measure of labor slack…. Continued slack is consistent with strong monthly job growth alongside near-target inflation.”
  6. Larry Summers recommends “The Best Books on Globalization.”
  7. But when, if not now, would it be appropriate to relitigate the decision to let Lehman fail? Read Peter Doyle, “Crisis Firefighters Still Uninterested In Fire Prevention,” in which he writes: “Call[ing] out the elephants in the room at a time when everyone wants to agree that things are ‘safer’, but absolutely no-one wants to be asked if things are safe.”
  8. This is mistitled: The “consensus assignment” of stabilization to monetary policy alone ought to be dead. But it is not. Read Simon Wren-Lewis’s “Another Lesson of the GFC Unlearnt: The Consensus Assignment Is Dead,” in which he writes: “There was broadly shared understanding. … Fiscal and budgetary policy should be set to achieve microeconomic and distributive goals, and the desired share of the state in the economy; while monetary policy should take care of stabilising aggregate demand.’ … This is what I call the Consensus Assignment.”
  9. From my perspective, here we have Mariana Mazzucato picking up on themes (not original to us by any means!) of Steve Cohen’s and my Concrete Economics. In her “Who Really Creates Value in an Economy?” she writes: “Investment remains weak … [because] economic policy continues to be informed by neoliberal ideology … rather than by historical experience.”
  10. Depressing news: Hints that we are not still far from “full employment” and thus have little room to grow rapidly come courtesy of Rob Valletta and Nathaniel Barlow, “The Prime-Age Workforce and Labor Market Polarization,” in which they write: “U.S. labor force participation by people in their prime working years fell substantially … and it remains depressed.”

September 20, 2018


Brad DeLong


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