Must-Read: Matthew Yglesias: If you really respect Trump voters, tell them the truth

Must-Read: Matthew Yglesias: If you really respect Trump voters, tell them the truth: “A wave of recent columns argue that what Trump superfans… http://www.vox.com/policy-and-politics/2017/4/24/15375206/respect-trump-voters-truth

…or at least some hazily imagined, hard-pressed Northern working-class version of them—really want is respect. By all appearances, though, the opposite is the case. Those voters want what most voters want from politicians: to be disrespected, via shameless pandering and the occasional blatant lie. This was true of the men I spoke to in Bucksport, Maine, in the summer of 2016…. They seemed most of all to want to be told that reopening the [paper] mill was a realistic dream, even though it almost certainly is not. That doesn’t make Trump fans unique. It makes them normal….

But if you really respect people and really want to help them, you need to level with them…. When my grandparents were growing up in Brooklyn, it was a great hub of American manufacturing. Those jobs vanished, hard times ensued, and between 1950 and 1980 the borough lost nearly 20 percent of its population. Things have turned around over the course of my lifetime. But the specific lost jobs never came back…. Seattle, San Francisco, and other prosperous metropolitan areas, similarly, aren’t rich today because they never lost any good-paying jobs or industries. They’re rich today because they are home to brand-new industries….

Texas is successful because it’s grown big cities that anchor modern service economies, has built a world-class public university system, and has K-12 schools that, despite stingy funding, perform extremely well on a demographically adjusted basis. Successfully navigating this sort of transition is objectively difficult, especially if you don’t have Southern California’s weather or Texas’s fossil fuel resources…. But to change and adapt successfully, you need to want to do it. To accept that your kid may grow up to wear cowboy boots but probably won’t be an actual cowboy….

Claire Garofalo of the Associated Press recently published a brilliant examination of the small city of Lewiston, Maine—a long-declining factory town that has in many ways been revitalized by an influx of refugees from Somalia…. But… the majority of local whites don’t seem to like it—they wanted Lewiston’s glory days restored, not for culturally alien newcomers to transform their hometown…. The ultimate irony of today’s era of nostalgia politics, after all, is that the era people are nostalgic for was itself an era of incredibly rapid change. The “good old days” were a time when new industries were rising, the population was growing fast, and the built environment shifted rapidly in the direction of suburbanization….

Telling people that their community needs to change is probably not what they want to hear. But when you really respect people, you tell them the truth.

Must-Read: Ezra Klein: The GOP’s biggest health care achievement has been making Obamacare more popular

Must-Read: Ezra Klein: The GOP’s biggest health care achievement has been making Obamacare more popular: “It is bizarre watching House Republicans persuade themselves that the problem they face on health care… https://www.vox.com/obamacare/2017/4/20/15373092/republicans-made-obamacare-more-popular

…is cutting a deal between the Freedom Caucus and the Tuesday Group rather than crafting legislation that people actually like, and that will actually make some part of the health care system noticeably better. But the GOP’s refusal to take public opinion even mildly into account has put them in a disastrous position.

I’m not sure Republicans realize how deep a hole they’re in on this issue. But here’s a way to make it clear. Obamacare is now significantly more popular than Donald Trump, Mike Pence, Paul Ryan, the Republican Party, or the American Health Care Act…

Should-Read: Fatih Guvenen and Greg Kaplan: Top Income Inequality in the 21st Century: Some Cautionary Notes

Should-Read: Fatih Guvenen and Greg Kaplan: Top Income Inequality in the 21st Century: Some Cautionary Notes: “IRS and SSA data reveal diverging patterns in top income shares… http://papers.nber.org/w23321.pdf

…due to the increasing importance of income accruing to pass-through entities (partnerships and S-corporations)… included in the IRS measure of total income but not in either the IRS or SSA measure of labor income…. The bulk of this growth… was concentrated at the very top… above the 99.99th percentile, a group that contains only about 12,000 households. The share of incomes above the 99th percentile (around $372,000 in 2012) but below the 99.99th percentile (around $7.2 million in 2012) has barely changed in the last two decades…

Must-Read: Kevin Drum: We’re Now In the Second Biggest Housing Boom of All Time

Must-Read: There were three good reasons in the mid-2000s to believe that housing prices should jump substantially. The coming of secular stagnation—then called the “global savings glut”—greatly boosted demand by boosting how much households could afford to pay for America. The filling-up of America restricted supply: first cars and superhighways had meant that for nearly three generations there were greenfield potential housing sites within thirty minutes of everywhere, but that ended with the twentieth century. At some point the anti-global warming carbon tax will come, and when it does auto transportation will become much more expensive and that will tilt the location price gradient. How much were these worth? Not enough to boost housing prices to their 2005 values. But plausibly enough to boost housing prices to their values today. IMHO, the best way to view the graph is as a positive “displacement” boom caused by true fundamentals, a bubble upward overshoot, a crash downward undershoot, and now (we hope) equilibrium:

Kevin Drum: We’re Now In the Second Biggest Housing Boom of All Time: “The most remarkable feature of this chart… http://www.motherjones.com/kevin-drum/2017/04/were-now-second-biggest-housing-boom-all-time

We re Now In the Second Biggest Housing Boom of All Time Mother Jones

…is that between 1953 and 1997, average housing prices increased by zero percent. Zero…. The second most remarkable feature of this chart is, of course, the insane Bush-era boom. Here in California we considered the 80s boom to be a very, very big deal. But it was a mere blip. The Bush boom was without precedent. Finally, we get to the third most remarkable feature of this chart: the Obama-Trump era boom that’s happening right now…. So what happens next? Are things really different this time, and home prices will stay permanently high? Or are we due for another housing bust? Beats me…

Must-Read: Òscar Jordà, Moritz Schularick, and Alan M. Taylor: Monetary Policy Medicine: Large Effects from Small Doses?

Must-Read: Òscar Jordà, Moritz Schularick, and Alan M. Taylor: Monetary Policy Medicine: Large Effects from Small Doses?: “How do we know that higher interest rates will bring prices under control?… http://www.frbsf.org/economic-research/publications/economic-letter/2017/april/monetary-policy-medicine-using-quasi-random-experiments/

…And how do we know how much of the monetary “medicine” to administer?… The long history of international finance turns out to be an excellent laboratory to conduct monetary experiments…. Interest rates have sizable effects….

Economies that fix their exchange rate but allow capital to move freely across borders effectively relinquish control of domestic monetary policy. In such situations, monetary policy may not respond to domestic conditions and hence may produce quasi-random variation in interest rates that is less sensitive to unobserved factors. We take advantage of this…. Figure 1 shows the response of inflation-adjusted GDP per capita in response to a 1 percentage point increase in short-term interest rates in year 0 calculated two different ways… controlled variation… peg variation…. In the first case, interest rates barely cause a ripple, whereas in the second, real GDP per capita is about 2% lower in year 4 than it was at the start…. The measured response of prices using controlled variation in interest rates is muted—prices are about 0.5% lower by year 4 relative to year 0. The same response calculated with peg variation is estimated to be nearly 2%. In other words, assuming a constant rate of price decline, inflation is about 0.4 percentage point per year lower…

Should-Read: Chris Hayes: On escaping the “doom loop” of Trump’s presidency

Should-Read: Chris Hayes: On escaping the “doom loop” of Trump’s presidency: “I tend to think of it in terms of my own behavior… https://www.vox.com/2017/4/19/15356534/chris-hayes-donald-trump-media-elections-2016-criminal-justice

…Like, what am I going to do? How am I going to avoid the doom loop? My whole approach to the Trump era is to act as if reality matters, facts matter, the basic political gravity of whether you make people’s lives better or worse matters, rigorous thinking, nonconspiratorial thinking, logical skepticism — all of these things, these principles I hold as a journalist, as a thinker, as a writer, as a citizen, they all matter. Act as if that’s the case, even with the knowledge they may not.

I don’t know if in the end they will matter, but I can’t figure out how to conduct myself in my life or in my work if they don’t…

Weekend reading: “This post is tax-ing” edition

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

 Nick Bunker writes about a new working paper that looks at how income inequality in the United States has changed in the 21st century. The research finds that the increase in income inequality since 2000 is largely driven by higher capital income among the top .01 percent of earners.

With tax day 2017 having come and gone this past week, Kavya Vaghul compiles a roundup of graphics showing interesting trends in U.S. tax policies over the years.

In the aftermath of almost a decade of unconventional monetary policy to fight the Great Recession, many political actors are contemplating new rules on monetary policy. But Nick Bunker cautions that when it comes to creating rules-based monetary policy these politicians should be aware of what aspects of monetary policy the rule is trying to govern.

Links from around the web

In the face of big job declines within some U.S. service sectors, Paul Krugman asks why the discussion on job loss focuses almost exclusively on mining and manufacturing. [nytimes]

In the past 10 years, student loan debt in the United States has grown by a whopping 170 percent, to $1.4 trillion, which is more than car loans or credit card debt. As more debt is transferred out of the private sector and into the public “in an eerie echo of the housing crisis,” Rana Foroohar says that increasing economic anxiety is well founded. [ft]

Claire Cain Miller looks about a new study that shows how investments in childcare pay off for mothers and kids alike, especially for boys, and returned $7.30 for every dollar spent. The study’s researchers (who include Nobel Laureaute James Heckman) found that children who were enrolled in a free, full-time childcare program in North Carolina earned more later in life, were healthier, and had fewer misdemeanor arrests. The mothers of these children also earned more. [the upshot]

Vanessa Williamson debunks the myth that Americans hate paying taxes. Instead, her research finds that many Americans are angered by their belief that some people aren’t paying their fair share. Williamson argues that, not only are these beliefs untrue, but as the country gears up to debate tax reform, these misperceptions can have a profound effect on our future policies. [washington post]

One sign that monopolies are a problem in the United States? The University of Chicago, where economists have argued that growing concentration is not a threat to economic growth, recently held a conference around antitrust concerns. [the economist]

Friday figure

Figure from “Taxing the rich more—evidence from the 2013 federal tax increase,” by Emmanuel Saez

 

Should-Read: Hyun Song Shin: Accounting for global liquidity: reloading the matrix

Should-Read: Hyun Song Shin: Accounting for global liquidity: reloading the matrix: “In emerging market economies especially, a weakening of the domestic currency against the dollar saps both cross-border bank lending and investment… http://www.bis.org/speeches/sp170419.htm

..Such effects flow through the dense interconnections of dollar lending in the global financial system. In devising policy for financial stability, a tight focus on underlying causes (excess leverage and funding risk) rather than on the symptoms (capital flows) stands a better chance of being more effective in addressing the vulnerabilities as they emerge…

Must-and Should-Reads: April 21, 2017


Interesting Reads:

Against Alasdair Macintyre’s “After Virtue”

Alasdair Macintyre, at least in his After Virtue mode, believes that good civilizations are ones with moral consensus led by prophets, rather than ones with moral confusion managed by managers. It is Macintyre’s belief that we should hope for a civilization led by Trotskys (less preferred) or St. Benedicts (more preferred), but in either event it is to be preferred to managerial Keyneses.


If you step back, however, and inquire into the content of the this-world secular ideologies of the Trotskys, it then becomes very difficult to prefer the prophetic Trotskys to the managerial Keyneses.

Trotsky’s gospel, it turns out, is in reality little more than a managerialist gospel.

Trotsky says that History speaking through Marx and him knows how to build a Communist utopia. What is a Communist utopia? It is a society in which humans pull together and coordinate their activities. It is a society in which people are free to do what they want, within reason of what is not destructive for the community. It is a society in which people are prosperous: well-fed, well-clothed, well-housed, and well-entertained. Trotsky’s gospel is that Keynes’s market economy is incapable of even approaching such a utopia, while Marx and History have together told him how to accomplish it.

And here we have to bring in history: the regimes that accepted versions of Trotsky’s gospel in the twentieth century and tried to implement it range from Pol Pot’s to Fidel Castro’s, with Stalin’s and Mao’s regimes at the worst, and something like Erich Honecker’s Stasi-spies-on-everyone East Germany close to the best.

The whole point of saying that you would prefer Trotsky to Keynes is that Trotsky has a gospel which, if not true, is true enough to hold society together in moral consensus and produce a modicum of prosperity. But what if Keynes’s managerialism does better at fulfilling what Trotsky claims will be the accomplishments of Trotsky’s gospel more effectively than Trotsky does?

It does.

We can see that Keynes was totally correct in wanting to reduce the influence of a Trotsky in the public square, because a Trotsky’s ideas about good organization of the economy were seen immediately by Keynes as, and turned out to be a horrible disaster, even from the perspective of Trotsky’s values–especially from the perspective of Trotsky’s values.

In a similar fashion, many of the same conclusions follow if you step back and inquire into the content of the other-worldly gospels of the St. Benedicts.

Their lodestones swing from following the ethical teachings of Rabbi Yeshua of Nazareth to worshipping the Anointed Λόγος that is of a higher order of reality than we—with a certain tension between them. But whenever Rabbi Yeshua spoke of what the Anointed Λόγος commanded his followers to do in this world, his followers were commanded to successfully attain managerial ends:

Then shall the king say to them that shall be on his right hand: “Come, ye blessed of my Father, possess you the kingdom prepared for you from the foundation of the world. For I was hungry, and you gave me to eat; I was thirsty, and you gave me to drink; I was a stranger, and you took me in: Naked, and you covered me: sick, and you visited me: I was in prison, and you came to me.”

Then shall the just answer him, saying: “Lord, when did we see thee hungry, and fed thee; thirsty, and gave thee drink? And when did we see thee a stranger, and took thee in? or naked, and covered thee? Or when did we see thee sick or in prison, and came to thee?” And the king answering, shall say to them: “Amen I say to you, as long as you did it to one of these my least brethren, you did it to me.”

That is a very powerful statement that what is sought after is successful managerialism–a successful managerialism with a preferential option for the poor: one that feeds the hungry, clothes the naked, heals the sick, welcomes the immigrant, and visits the imprisoned. Right ritual, right moral orientation, right faith seem to be nowhere–at least in this part of The Gospel According to St. Matthew.