Category: Equitablog

Must- and Should-Reads: March 16, 2017

Posted on by Brad DeLong

Interesting Reads:

Must-Read: Heather Boushey: The Appealing Logic That Underlies Trump’s Economic Ideas

Posted on by Shonda Williams

Must-Read: Heather Boushey: The Appealing Logic That Underlies Trump’s Economic Ideas: “For [President Trump], the way to create economic prosperity is to “follow two simple rules: Buy American and hire American”…

…While Trump’s economic doctrine may fall apart when it comes to the specifics, which in the end is the only measure that will really matter, there is a certain undeniable logic to it. It answers the core question that millions have about economic policy over the past three decades or so: What about me? Instead of saying, “Just wait—this will all work out in the end,” the Trump economic doctrine delivers an emotionally and psychologically satisfying response: You first…

Should-Read: Stan Collender: “This is not a budget…

Posted on by Brad DeLong

Should-Read: Stan Collender: “This is not a budget…

“…It’s a Trump campaign press release masquerading as a government document. The Trump skinny budget includes proposals for just one-third of all federal spending, doesn’t mention revenues, conveniently doesn’t include any forecasts about the economy, and doesn’t bother to include a table showing the federal deficit and debt. Bottom line: Like most of the other plans from the Trump White House, this “budget” was released prematurely and is not well-conceived or complete. And, also just like many of the other Trump initiatives, this will be walked back and revised in the not-too-distant future.

Must-Read: Walter Schiedel: Economics: The architecture of inequality

Posted on by Brad DeLong

Must-Read: The first review of our After Piketty http://amzn.to/2myMCTE book. In Nature:

Walter Scheidel: Economics: The architecture of inequality: “Income inequality is an ancient and intractable social, economic and political condition…

…Now, five books examine its inevitability…. Piketty’s Capital in the Twenty-First Century (Belknap, 2014) tries to hold economics and politics together. He argues that inequality is a product of fundamental laws of capitalism, and would be amenable to change through a global tax on financial transactions…. After Piketty, edited by Heather Boushey, Bradford Delong and Marshall Steinbaum, responds to what the editors describe as academic economists’ less-than-healthy reaction to Piketty. It asks an interdisciplinary crowd of social scientists to tug at the various threads of his argument to see whether it unravels. (It also includes a fascinating essay from an emboldened Piketty on issues such as the potential of collective bargaining to reduce inequality generated by capitalism.) The book serves as a fantastic introduction to Piketty’s main argument in Capital, and to some of the main criticisms, including doubt that his key equation — r > g, showing that returns on capital grow faster than the economy — will hold true in the long run.

It also contains thoughtful interventions in debates about the political economy of inequality. Economist Branko Milanović, for instance, documents how sharing capital more equally across the population could weaken the impact of a rising capital share (when those who own capital gain more of an economy’s income). Stemming the tide of rising inequality in a period of slow growth may require redistribution of capital, not just income…

JOLTS Day Graphs: January 2017 Report Edition

Posted on by Nick Bunker

Every month the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. Today, the BLS released the latest data for January 2017. This report doesn’t get as much attention as the monthly Employment Situation Report, but it contains useful information about the state of the U.S. labor market. Below are a few key graphs using data from the report.

The rate at which U.S. workers are quitting their jobs increased in January to 2.2 percent. That’s close to pre-recession levels, but that might not be a good standard to judge job mobility.

The lack of change in the unemployment-to-job opening ratio is due to both a slowdown in the growth of job openings and leveling of the number of unemployed. If the trend of rising prime-age labor force participation increases, then this ratio could possibly increase.

The vacancy yield, or the ratio of hires to job openings didn’t change much in January, perhaps a sign its decline has ended. The decline in hiring appears to be not of unemployed workers, or those out of the labor force, but rather workers already with jobs.

Must-Read: Jonathan Portes: What’s the role of experts in the public debate?

Posted on by Brad DeLong

Must-Read: Intellectual garbage disposal from Jonathan Portes on BREXIT and Michael Gove:

Jonathan Portes: What’s the role of experts in the public debate?: “We have three really important functions…

…To explain our basic concepts and most important insights in plain English…. Second is to call bullshit.  Recently, Change Britain supposedly a “thinktank backed by Michael Gove” claimed that leaving the customs union–and concluding new free trade deals with countries ranging from India to Korea–could “create 400,000 new jobs”, because of the projected increase in UK exports. Michael was quoted in the Telegraph as saying that the report showed how new trade deals would create hundreds of thousands of jobs…. Change Britain took some estimates from the European Commission of the potential boost to both exports and imports…. They translated the increased exports into extra jobs. They forgot to translate the increased imports into fewer jobs. Now, a moderately intelligent 12 year old could understand the problem here…. For better or worse, a large part of my job is in fact intellectual garbage disposal….

Perhaps most difficult… is in synthesising… a difficult topic… putting it in context, and explaining why it does, or doesn’t, matter. And this is perhaps where politicians and the public need us most…. The text for today’s debate is Michael Gove’s famous interview with Faisal Islam. I know Michael insists that he’s been taken out of context, so I’ll give the quote in full:

I think the people of this country have had enough of experts with organisations with acronyms saying that they know what is best and getting it consistently wrong…

The problem is that Michael is entirely happy to quote exactly those experts from exactly those acronyms when it suits him. Just 3 weeks before the referendum, Boris Johnson and Michael Gove, in a joint statement, said:

The Bank of England has said that a ten per cent rise in the proportion of new people coming here is associated with a two per cent cut in pay for working people…

The Bank of England was precisely one of the organisations with acronyms that Faisal Islam had cited and that Michael was ridiculing. But it’s much worse than that.  Michael’s… interpretation… was from the Daily Express, not from actual experts. Had he wanted to get it right, he would have asked an expert… [who would have said] quite a different story. Nor does Michael have to take my word for this. He can just ask Steve Nickell… one of the authors… [who] expressed his regret that he couldn’t complain during the campaign about the way his paper was being distorted by people like Michael…. Michael and Boris didn’t think it was enough to simply assert their point without evidence. On the contrary, they wanted to appeal to the authority of experts–indeed, the authority of the very experts at the Bank of England who Michael then claimed the people have had enough of…. Michael believes that the question of whether free movement is good or bad, and whether it does indeed drive down wages, is an empirical one, and that you should look at the empirical evidence, analysed by experts, before making up your mind.

So the question I have for Michael–apart from suggesting he might want to apologise to Steve–is whether, now that he knows the empirical evidence says almost the exact opposite of what he thought it said, whether  that changes his mind in any way about free movement?  In other words, are his beliefs on this topic–and by extension on other topics–faith-based or evidence-based? If they are in fact faith based… he should tell the voters that. If… he’s claiming to rely on evidence, then he has a duty to listen to… that evidence…

Should-Read: Harold Pollack: Will “Repeal and Replace” Implode?

Posted on by Brad DeLong

Should-Read: I think that this bunch of Republicans will double down–will shift from “repeal and replace” to “undermine it so that it will crash and then replace”. I’m not terribly optimistic:

Harold Pollack: Will “Repeal and Replace” Implode?: Republicans just proposed a $12,900 annual premium increase on low-income 64-year-olds…

…A shambolic performance… politically self-immolating. I just don’t understand what Republicans are trying to do here…. A 64-year-old with a yearly income of $26,500 would see his annual net premium increase from $1,700 to a whopping $14,600—and this for a markedly less generous plan…. This was utterly predictable, too, given the main features of the Republican bill. Which raises a strange question: How and why did Republicans propose such a politically damaging plan in the first place?… I have never seen a less-professional, more shambolic legislative process….

Most Americans, including most Trump supporters, support ACA’s Medicaid expansion… higher taxes on Americans making more than $250,000… more generous subsidies to people of modest incomes who have trouble affording coverage. Democrats are united in opposition to AHCA. That’s unsurprising. As one Republican congressman told me: “The Democrats can’t work with us, not after the way Trump campaigned.” More impressive, Republicans have managed to propose something opposed by nearly every major interest group: the American Hospital Association, the American Medical Association, AARP, and the health insurance industry. Anti-ACA conservative commentators hate the bill. Republican governors in Ohio, Illinois, Massachusetts, Arizona, and Nevada have also come out against key pillars of AHCA, as have key Republican Senators. From a policy-wonk perspective, Republicans are doing scarcely better….

Perhaps this fiasco is the result of simple incompetence. But AHCA is such a fiasco that I wonder, alongside many others, whether Republicans are even trying to pass it. Whatever the cause, the driving dynamic behind this fiasco is noteworthy…. Republicans failed to put in the work at the interface of politics and policy….

Not that ACA is perfect—far from it…. [And] out of partisan spite, deep-red states shut out three million poor people from coverage under the new law…. Most realistic fixes to ACA require more spending, not less….

[But] whatever ACA’s defects, AHCA looks visibly rushed and shoddy….In theory, President Trump and his administration could step in to coordinate Republican efforts…. So far, anyway, the President lacks the expertise, the personal credibility, or consistent focus to play this unifying role…. Well-liked among Republican primary voters, he is disliked and distrusted by most Republican political professionals. That’s an obstacle, too. Republicans have also been dishonest about what Obamacare actually is and what is required to make it better. Since 2010, Republicans such as Rep. Tom Price honed their legislative chops by preparing “repeal and replace” bills that would snatch coverage from twenty million people while damaging state budgets and punishing health care providers. Since these measures would never be enacted, Republicans in Washington paid no political price. Out of power, they could market to their core constituents who distrusted Democrats…. Once Republicans unexpectedly seized power in Washington, their previous political pitch doesn’t work….

There is another thing, too. Democrats and Republicans across the country have big political differences. But it turns out that many want ACA to work. Medicaid expansion is the public health jewel of ACA. In Ohio, Indiana, Kentucky, and elsewhere, Republican governors and the Obama administration have admirably negotiated, spending billions of dollars to expand coverage, keep open rural hospitals, address the opioid epidemic in rural America. In my own research, I’ve talked with addiction professionals around the country who work for Republican governors and legislators. Many are proud of what they have accomplished. In part because Republican governors helped to craft and run it, Medicaid expansion seems surprisingly durable….

I confess I have no idea what will happen…. Republicans have a huge stake in passing something, given that repealing Obamacare was a central campaign promise…. I’d wager Republicans will find some way to pass something….. Perhaps if they are wise, they will cut ACA’s taxes on the wealthy and leave everyone’s insurance alone. Perhaps that is the best bipartisan compromise on health reform.

As Cosma Shalizi Says, “The Singularity Is in Our Past”

Posted on by Brad DeLong
Cursor and Preview of As Cosma Shalizi Says The Singularity Is in Our Past Hoisted from the Archives

: As Cosma Shalizi (2010) Says, “The Singularity Is in Our Past”: Look at the bleeding edge of urban North Atlantic or East Asian civilization, and you see a world fundamentally unlike any human past. Hunting, gathering, farming, herding, spinning and weaving, cleaning, digging, smelting metal and shaping wood, assembling structures–all of the ‘in the sweate of thy face shalt thou eate bread’ things that typical humans have typically done since we became jumped-up monkeys on the East African veldt–are now the occupations of a small and dwindling proportion of humans.

And where we do have farmers, herdsmen, manufacturing workers, construction workers, and miners, they are overwhelmingly controllers of machines and increasingly programmers of robots. They are no longer people who make or shape things–facture–with their hands–manu.

At the bleeding edge of the urban North Atlantic and East Asia today, few focus on making more of necessities. There are enough calories that it is not necessary that anybody need be hungry. There is nough shelter that it is not necessary that anybody need be wet. There is enough clothing that it is not necessary that anybody need be cold. And enough stuff to aid daily life that nobody need feel under the pressure of lack of something necessary. We are not in the realm of necessity.

What do modern people do? Increasingly, they push forward the corpus of technological and scientific knowledge. They educate each other. They doctor each other. They nurse each other. They care for the young and the old. They entertain each other. They provide other services for each other to take advantage of the benefits of specialization. And they engage in complicated symbolic interactions that have the emergent effect of distributing status and power and coordinating the seven-billion person division of labor of today’s economy. We have crossed a great divide between what we used to do in all previous human history and what we do now. Since we are not in the realm of necessity, we ought to be in the realm of freedom.

But although we have largely set these post-agrarian post-industrial patterns for the next stage of human history, the human world of this next stage is only half-made. The future is already here–it is just not evenly distributed. Of the 7.2 billion people alive in the world today, at least 25% billion still live lives that are hard to distinguish from the lives of our pre-industrial ancestors. Only 5% of today’s world population lives in countries where income per capita is greater than $40,000 per year; only 10% lives in countries where income per capita is greater than $20,000 per year.

The bulk of the world’s population is on the stairway to modernity. The patterns are set. The top of the stairway is visible–although it is not clear which top we shall reach: many possible tops are immanent in the patterns. Nevertheless, the climb will be hard. And that is what much of the history of the twenty-first and twenty-second centuries is likely to be about.

So how did this great transformation happen? And how did the way it happened shape who we are now and who we will be in the future?

The traditional tools, practices, patterns, and molds of history are not as much help in telling this story as one might hope. The history of how the world was greatly transformed is primarily economic and technological, and secondarily political and social. But historians are not used to placing the economic and technological in first place. In the study of any period back before 1800, there is no way that economic history can be seen as even one of the principal axes. Before 1800, most history at even the century-level–let alone the decade-level or the year-level–could not be economic history. History is change. And before 1800 economic factors changed only slowly. The structure and functioning of the economy at the end of any given century was pretty close to what it had been at the beginning.

The economy was then was much more the background against which the action of a play takes place than like a dynamic foreground character. Changes in humanity’s economy–how people made, distributed, and consumed the material necessities and conveniences of their lives–required long exposures to become visible. Economic history could be–indeed, had to be–a specialized ‘long duration’ history. It required a scope of perhaps 500 years, if not more, to be properly placed in the foreground of any historical canvas. And even then the story told was of recurrent patterns and cycles rather than development and change.

But since 1750 or so things have been different. The pace of economic change has been so great as to shake the rest of history to its foundation. For perhaps the first time, the making and using the necessities and conveniences of daily life–and how production, distribution, and consumption changed–has been the driving force behind a single century’s history. Even in the most long-established of professions, the pattern and rhythm of work life today is so very different from that of our ancestors as to be almost unrecognizable. It is these changes in production and also in home life and consumption, and the reactions to them, that make up the center ring action of the history that has made us who we are.

This post-1750 history takes place in two stages. The first stage is the nineteenth century: the century of the British Industrial Revolution. Call it 1750-1870. It opens up the possibilities. The second stage is the twentieth century. Call it 1870-2010. It sets the patterns into which the human world is likely to grow in the future.

Cosma Shalizi (2010): The Singularity in Our Past Light-Cone (November 28) http://bactra.org/weblog/699.html

What Happened to the Trump Infrastructure Push?: Bunga-Bunga Policy, or No Policy at All

Posted on by Brad DeLong
Cursor and Preview of What Happaned to Trump Infrastructure Bunga Bunga Policy or No Policy at All

There seemed, back in November, two ways the Trump infrastructure fiscal expansion could have gone.

The first was driven by the facts that Trump seemed to have ambitions that were “Pharoahnic”, and that Trump had been a real estate developer.

There were then no Trump plans for the infrastructure program. There were, however, plans to have plans. And the plans to have plans were aided by the fact that building things was what you would expect someone who had been a real estate developer to focus on. Since there were no plans, there was an opportunity to develop for Donald Trump with a real, technocratic infrastructure plan. It would have had, from Trump’s perspective, three advantages:

  • It would actually work–it would boost American economic growth, and so make people happy.

  • It would be Pharoahnic. Trump would leave his mark on America’s landscape in a visible way–something that is, for somebody who has for two decades been playing the game of celebrity, a big win.

  • It would make Trump’s presidency both be and appear to be a success, from the desired perspective of helping to make America even greater than ever.

And the idea that the economy was already at full employment, and did not need additional stimulus of any kind? That extra stimulus would be offset by the Federal Reserve, and that the overall effect on employment would be very small? That, taking into account the Federal Reserve reaction, the only major effect would be to raise interest rates? Perhaps. But that would not have been a downside. If you do seek–as we do–to normalize interest rates in the medium term, and if you want to see whether there are discouraged workers out there, moving away from monetary to fiscal as the stimulative balancing item is exactly the right thing to do. An extra $300 billion/year of bond funded infrastructure would substantially normalize interest rates.

The second was driven by the fact that there are an awful lot of small-government fanatics and some fiscal conservatives in the Trump coalition. That way would have generated a politics in which the normal fiscal infrastructure stimulus that both the situation and Trump’s background seemed to call for would not happen. It would simply not be done.

Instead, the Trump infrastructure plan would wind up building infrastructure on the government’s dime. That infrastructure which would then have been given away to friends of the administration. They would then have charged monopoly prices for access to it.

Little good as infrastructure–monopolists charging monopoly prices are rarely public benefactors on any large scale. No good of stimulus. Think of Silvio Berlusconi, but not on an Italian but on a North American scale.

Another pointless episode of bunga-bunga policy.

The U.S. would have been likely to lose, substantially, if that was what the Trump fiscal expansion had turned out to be. And then, of course, there would be the Trump tax cut: another nail in the coffin of sane and prudent fiscal policy, and another brick in the wall of the Second Gilded Age.

We may still have this bunga-bunga policy.

But with each day that passes with not even a plan to plan to have a plan, it looks more as though there is no Trump administration–just the reality TV simulacrum of one, cabinet members following their own administrative agendas, White House propaganda aides following their own propaganda agendas, and a Congress that seems to lack any sort of positive leadership. Not constructive infrastructure policy. Not bunga-bunga infrastructure policy. Simply no policy at all.

Constructive infrastructure policy now looks completely off the table.

Destructive bunga-bung infrastructure policy is still a possibility, but a low probability one.

No infrastructure policy now looks like the way to bet at even odds…