Category: Equitablog

Must-Read: Facundo Alvaredo et al.: Global Inequality Dynamics: New Findings from WID.WORLD: “Global inequality dynamics involve strong and contradictory forces…

…We observe rising top income and wealth shares in nearly all countries in recent decades. But the magnitude of rising inequality varies substantially across countries, thereby suggesting that different country-specific policies and institutions matter considerably. High growth rates in
emerging countries reduce between-country inequality, but this in itself does not guarantee acceptable within-country inequality levels and ensure the social sustainability of globalization…

Should-Read: Mary Amiti and David Weinstein: Why shocks to large banks cause big GDP swings: “Banks are large relative to the economies they serve…

… [Using] comprehensive data on Japanese banks from 1990 to 2010… the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries…

Should-Read: Republican ACA Repeal Circular Firing Squad of Flying Attack Monkeys Lollapalooza:

Scott Lemieux: There Will Never Be A Republican Replacement for the ACA, Cont’d: “There’s no alternative to the ACA that 1) could get a non-trivial amount of Republican support and…

…2) wouldn’t be massively unpopular, because kicking millions of people off of insurance while making insurance much worse for many of those who still have it can’t be made popular. Having a clown without even the most basic understanding of the issues involved in the White House doesn’t help, but the fundamental dilemma would be there no matter what.

Andrew Prokop: Republicans in Utter Disarray on Obamacare Repeal: “Congressional Republicans went off to Philadelphia…

…hop[ing] to make at least some progress toward… repealing and replacing Obamacare…. The party remains divided, uncertain, and deeply concerned about how to move forward…. [Nearly all] questions remains completely unsettled… [with] at least some within the party have grave concerns about all…. Republican House members representing blue states appear to be particularly worried…. Trump’s top domestic policy staffer, Andrew Bremberg… [spoke] in only the vaguest banalities and broadest strokes, offering no substantive guidance whatsoever besides saying that HHS Secretary nominee Tom Price is a “compassionate” guy and a good doctor…. Even though… Republicans in Congress don’t have to defend any specific points that are unpopular, they’re clearly worried already…

Michael Hiltzik: U.S. judge finds that Aetna deceived the public about its reasons for quitting Obamacare: “Aetna claimed… it was pulling out of… Obamacare individual insurance… [as] a business decision…

…it was simply losing too much money on the Obamacare exchanges. Now a federal judge has ruled that that was a rank falsehood…. Aetna threatened federal officials with the pullout before the lawsuit was filed, and followed through on its threat once it was filed…. Aetna executives had moved heaven and earth to conceal their decision-making process from the court… by discussing the matter on the phone rather than in emails, and by shielding what did get put in writing with the cloak of attorney-client privilege, a practice [Judge] Bates found came close to “malfeasance”…

Matt Lewis: Maybe, on Obamacare, Republicans Should Just Punt: “I’ve been through all the conservative alternatives, and many of them have good components…

…But it’s like a novice trying to solve a Rubik’s Cube. Every conceivable scheme or solution creates new problems…. The most plausible (and simplistic) plan would (A) retain the employer-based system (replacing the “Cadillac tax” with a better designed upper limit), (B) provide tax credits for people outside the system, and (C) provide Medicaid for everyone who can’t afford health insurance.
“You can look at this,” Capretta conceded, “and say, ‘Boy, doesn’t this sound like the Affordable Care Act’? And the answer is ‘yes.’”…

By winning the presidential election, Republicans are now like the dog that caught the car. “It feels like Bush’s Social Security all over again,” one senior industry official told me. “It’s really hard to see how this ends up with as many people being covered at the same or lower costs. It’s a mess.” Even that may be a best-case scenario…. Republicans didn’t repeal Social Security. There is always the danger that this could go catastrophically wrong. Should Republicans actually kick off a new administration by engaging in a fool’s errand that is almost guaranteed to backfire?…

Should-Read: Robert Reich: Five Questions for Robert Reich about Saving Capitalism: For the Many, Not the Few: “America has repeatedly reformed itself with regard to excessive concentration of income and its attendant political consequences…

…We have a strong track record of expanding the circle of prosperity when capitalism gets off track…. I want to reach average Americans who are confused and frustrated about the current political-economic system, who don’t want to scapegoat immigrants or the poor for their problems, and who are open to uniting with others in order to mobilize and organize a movement to regain control over our democracy and make our economy work for the many rather than the few…. The rules that define the basic building blocks are hidden from view, and most people don’t see them or understand them….

Nothing should be controversial in a partisan sense. On this book tour, I’ve talked with many people who call themselves “conservative Republicans” who agree with almost every point I make. They want to end crony-capitalism; they think the biggest Wall Street banks are way too big; they’re opposed to “corporate welfare”; they want to get big money out of politics…. Even my political point—that we need to reestablish what John Kenneth Galbraith once described as “countervailing power”—is not really controversial. I don’t condemn big corporations, big banks, CEOs, or wealthy individuals. My concern is that political power has become too concentrated in the hands of too few, and we need to reestablish countervailing power—perhaps not the same sources of countervailing power as we had in the 1950s and 1960s, but new sources that act as a check and balance upon concentrated power…

Must-Read: Matthew Yglesias: Beyond wild allegations, what’s clearly true about Trump and Russia is disturbing: “The Russian blackmail theory is composed of two sub-elements…

…both of which are clearly true based on publicly available information. One is that Donald Trump has a curious and wrongheaded affection for the present government of Russia and its foreign policy. The other is that Donald Trump has engaged in scandalous conduct, the public revelation of which would cause a rational person to reduce their opinion of him…. Trump’s strange ideas about Russia date back to at least 1987, when Trump called for a US-Soviet alliance against France and Pakistan.
During the 2016 campaign, Trump publicly called into question America’s commitment to defending NATO allies from Russian attack.
Trump praised Russia’s intervention in the Syrian Civil War. Trump has also pointedly declined to criticize Putin on any front, whether it’s about killing journalists or invading Ukraine. Trump’s former campaign manager, Paul Manafort, made a lot of money working for Putin’s proxy party in Ukraine…. Trump’s Russia policy is both a bit bizarre and also quite clear. Maybe the Russians are bribing him into it. Maybe he just has bad ideas. Maybe they are blackmailing him.

I have no idea. But if you’re wondering whether there is dirt on Trump out there, then the answer is clearly yes. Trump was recorded telling a casual acquaintance that he routinely sexually assaults women and escapes culpability because “when you’re a star they let you do it.” Trump paid $21 million in damages to students at his fake university who alleged he’d defrauded them. Trump’s foundation broke a wide range of rules about how it is legal to raise funds for charity and how it is legal to manage charitable funds…. Trump’s Atlantic City comeback was fueled by bilking shareholders…. There is at least one thing — and perhaps several things — lurking in Trump’s tax returns that would be highly damaging to his political standing…. A special congressional select committee investigation — or maybe some kind of independent prosecutor — seems clearly appropriate…

Should-Read: Noah Smith: The Wisdom and Madness of Crowds: “Prelec… Seung, and… McCoy ask… what people think others will guess. If herd behavior is present, some people will know it, and will be contrarians…

…they’ll guess something different from what they think other people will say. Prelec et al. find that the forecasts that receive the most contrarian support–the guesses that people pick even though they think others will guess differently–tend to be the right ones. They find that these forecasts, which they label the “surprisingly popular” options, tend to outperform standard crowd averages in a number of applications, with error rates more than 20 percent lower…. This method obviously has some very important potential applications for finance…. In the search for the ultimate forecast, the wisdom of crowds might turn out to be very good, but not quite the best.

Must-Read: The word on what a “Malthusian” analysis of the pre-industrial agrarian-age economy means these days:

Dietrich Vollrath: Who are you calling Malthusian?: “Living standards are negatively related to the size of population…

…This would occur if we had some sort of fixed factor of production. Typically, one might say it was agricultural land, but you could just say resources if you like…. Population growth is positively related to living standards…. Then you’ve got what I’d call a Malthusian economy…. Everything in the system is pushing back towards some middle ground where the resource per person, and hence the living standard, is at just the right level so that population growth is zero. With no change in population, there is no change in living standards, so there is no change in population growth, so there is again no change in population. The economy becomes stagnant at the living standard which delivers zero population growth….

Let me offer a few [more] observations…. The stagnant level of living standards is not necessarily at a biological minimum…. All Malthusian economies do not stagnate at the same level of living standards. Shocks to technology/productivity will only temporarily raise living standards, but will permanently raise population size. Positive shocks to productivity raise living standards immediately for those alive, but this induces them to have more kids (or induces their kids to not die as quickly, so to speak), leading to population growth, which lowers living standards. Variation in productivity across countries will thus show up in higher population, but not necessarily in higher living standards…. The adjustment back to the stagnant level of living standards can take a long time….

What about other uses of the term Malthusian?… Brenner and Bois use the term Malthusian to describe their opponents and their theories. And to me, this is an incorrect use…. There is nothing Malthusian about Postan, Le Roy Ladurie, and North and Thomas, at least when it comes to their explanation of institutional change. This doesn’t make Brenner and Bois wrong. It makes them semantically confusing…. I don’t consider myself a Malthusian in this sense of… [a] finite limit of resources…. Technological change will make some resource constraints less binding…. The income elasticity of demand for resource-intense goods is low…. [Assuming] that no matter how high productivity got, we are always producing goods using the same resource-intense production function… may be fine if you are just describing the stagnant economies prior to sustained growth – or maybe it isn’t… if you read Lemin Wu’s paper – but breaks down if you allow for any appreciable non-resource based sector…

Should-Read: I see no reason why this could not have been written and published in, say, August of 2009. No reason, that is, save that Mitch McConnell and John Boehner had passed the word that Obama was to get as few policy “victories” as possible.

Then it would have done good. Now? I may be wrong, but I can’t see it having any impact at all. Anytime you begin an oped with “crazy as it may sound…” and “call us nuts…”, I see you:

Martin Feldstein, Ted Halstead and Greg Mankiw: A Conservative Case for Climate Action: “CRAZY as it may sound, this is the perfect time to enact a sensible policy to address the dangerous threat of climate change…

…Before you call us nuts, hear us out….
Our co-authors include James A. Baker III, Treasury secretary for President Ronald Reagan and secretary of state for President George H. W. Bush; Henry M. Paulson Jr., Treasury secretary for President George W. Bush; George P. Shultz, Treasury secretary for President Richard Nixon and secretary of state for Mr. Reagan; Thomas Stephenson, a partner at Sequoia Capital, a venture-capital firm; and Rob Walton, who recently completed 23 years as chairman of Walmart….

The federal government would impose a gradually increasing tax on carbon dioxide emissions… at $40 per ton…. The proceeds would be returned to the American people on an equal basis via quarterly dividend checks…. American companies exporting to countries without comparable carbon pricing would receive rebates on the carbon taxes they’ve paid on those products, while imports from such countries would face fees on the carbon content of their products…. Finally, regulations made unnecessary by the carbon tax would be eliminated, including an outright repeal of the Clean Power Plan…