Paid leave, which allows workers to take time away from work for personal medical reasons or to care for family members, is increasingly popular among policymakers. In fact, presidential candidates from both major parties support the idea of paid leave, even if the mechanisms for funding and delivering paid leave differ quite a bit.
But while the idea itself is catching on, actual instances of paid leave programs in the United States are relatively rare among the states. So far, just three states have implemented comprehensive paid leave programs: California has had a program for more than a decade, with only New Jersey and Rhode Island joining the ranks relatively recently. (New York and Hawaii have more limited temporary disability insurance programs.) Looking at these states’ experiences can be instructive when thinking about what a federal policy might look like.
In a recently released report, four researchers—Ann Bartel of Columbia Business School; Maya Rossin-Slater of the University of California, Santa Barbara; Christopher Ruhm of the University of Virginia; and Jane Waldfogel of the Columbia School of Social Work—explore how the new paid leave program affects employers in Rhode Island, which in 2014 became the most recent state to implement a paid leave program. Called Temporary Caregiver Insurance, the program was an expansion of its already existing temporary disability insurance program. It gives workers in Rhode Island four weeks of paid leave and is financed by a payroll tax on employees. The payout is a certain percentage of workers’ pay, capped at $795 a week.
In short, Rhode Island decided to take a social-insurance-style approach to the program instead of one that would rely on individual employers to give their workers leave on their own. It’s like the difference between Social Security and the 401(k) system.
The researchers surveyed employers before and after the implementation of the Temporary Caregiver Insurance program and found that it really doesn’t affect the employers much, at least according to their survey responses. For the most part, employers feel pretty positive about the program: 61 percent of employers said they were either “strongly in favor” or “somewhat in favor” of it.
(The authors note their sample size isn’t particularly large, but their results are very much in line with studies of California’s much bigger program.)
Why would employers like such a program? When economists, analysts, and policymakers talk about the economic ramifications of paid leave programs, they usually talk about the potential benefits for labor force growth. A robust paid leave program might be able to boost the U.S. labor force participation rate—which has been on the decline since 2000—by allowing workers time to temporarily step back from the labor force instead of dropping out entirely.
Stronger labor force attachment also helps employers. Turnover can be quite costly for employers, with the cost of replacing a worker registering at somewhere around 20 percent of their annual salary. So it could be quite beneficial for employers if workers come back to the job after a temporary leave. Of course, the Temporary Caregiver Insurance program doesn’t require employers to administer the benefits (as they do with employer-sponsored paid leave programs), but rather leaves that to the state government. (I’m sure employers appreciate having one less HR process to run.)
To be fair, this is just the experience of one state of only three that have implemented paid leave programs. But their positive experiences, along with those of other countries with similar programs, show the large potential for the concept in the United States.
Wal-Mart Stores Inc. announced late last week that it will close 154 of its stores nationwide, sparing the District of Columbia (where I live) yet also disclosing that the discount retailer will not be expanding as promised in the city. The decision to close about 3 percent of its stores nationwide means as many as 10,000 workers in the United States could lose their jobs, according to The New York Times. The move also means that Washington, D.C. will not see the creation of scores of new jobs in parts of town that desperately need new employment opportunities.
It’s been a tough year for Walmart as competition from online retailers has hit its bottom line. But instead of focusing on the failure of Walmart’s business model—and its management—local leaders are using the company’s announcement as an opportunity to focus on driving down benefits for workers.
Take the District of Columbia. Although Walmart isn’t closing any stores in D.C., its representatives told Mayor Muriel Bowser that the company will not move forward with two Supercenters planned for east of the Anacostia River—one in Skyland Town Center in Southeast, and the other in Capitol Gateway Marketplace in Northeast.
Not following through on these two stores violates a “handshake” agreement that former Mayor Vincent Gray made with Walmart in 2013. Having Walmart operate in the District was contentious from the start. Many were concerned about the company’s employment practices, including its low wages, limited benefits, unpredictable schedules, and anti-union policies. Gray negotiated that in order for Walmart to become a retailer in the District, the company had to build at least two stores in Washington’s poorest neighborhoods.
While Walmart got what it wanted, the District did not. Walmart got to open stores in up-and-coming, gentrifying parts of our city. They opened one near Union Station, one in the Brightwood neighborhood along Georgia Avenue, and a third in the Fort Totten neighborhood. But residents of the neighborhoods who needed access to a large grocery store and new jobs the most have been left out. Further, the District had already committed $90 million to make the Skyland development possible and spent resources working through the District’s permit process.
But that’s not the story that Councilmember Jack Evans told The Washington Post. Evans, who represents Ward 2 where I live, was in the meeting with the Mayor and the Walmart officials. While Walmart’s public statements were about the tough times in retail, Evans said Walmart’s change of plans in D.C. were because of the District’s rising minimum wages and the potential that the District City Council will vote for a paid family and medical leave bill this session.
In fact, Walmart was very explicit about its reasoning. It is losing customers to online retailers and hasn’t figured out a sound strategy to compete with the likes of Amazon. The company added that it also has had problems figuring out how to compete in urban markets like the District of Columbia. Walmart built its success on large, suburban locations, but hasn’t been able to dominate urban markets in the same way. In 2011, it began a strategy of creating smaller “Express Stores” that the company hoped would appeal to urban consumers. But Friday’s announcement included an end to those urban small stores, too.
Councilmember Evans should not be encouraging his colleagues to temper their support for reducing economic inequality and strengthening families living in Washington, D.C. Instead, this is an opportunity to point out that a firm’s bottom line isn’t just about labor market policy. Good economics isn’t just the short-term corporate bottom line but rather a vibrant economy where families are economically secure, good jobs are available, and firms are innovative and constantly adjusting their business models to meet long-term objectives. Always-low wages are simply not a path to consistently strong firm performance or strong, sustainable economic growth.
The District of Columbia should support policies that create living wages and give workers the time and income support they need when they have to be away from work because they have a new child or a family member has a serious illness. Ideas such as the paid family leave bill before the D.C. Council would be one such step forward that would both reduce inequality and support working families as well as strengthen our economy. Walmart’s failure to adjust its business strategies is its problem, not that of the citizens of the District of Columbia.
Heather Boushey is Executive Director and Chief Economist at the Washington Center for Equitable Growth.
The Martin Luther King Jr. holiday this year sparked some reflection from former Federal Reserve Bank of Minneapolis president Narayana Kocherlakota. He notes that as the president of a regional reserve bank and a member of the Federal Open Markets Committee, he heard quite a bit about regional variation in the economy. In fact, the Federal Reserve system with its regional banks was set up to foster this kind of appreciation.
But Kocherlakota is also aware that he wasn’t reminded of other kinds of variations and inequality, particularly when it came to race. Looking through the meeting transcripts of 2010 FOMC meetings, he realized the committee never talked about the state of the labor market for African Americans—even though the unemployment rate for black Americans never dipped below 15.5 percent that year. (The overall U.S. unemployment rate averaged 9.6 percent in 2010, and 8.7 percent for white Americans.)
Kocherlakota argues that the Federal Reserve’s “vision of economic diversity” has a blind spot when it comes to the matters of race. But is the solution merely to have more information about the levels of racial inequality in the country? As Stephen Williamson, a vice president at the Federal Reserve Bank of St. Louis, points out, the Federal Reserve system is quite aware of the variety of inequalities in the United States. The central bank and the regional banks collect data on inequality and host conferences about wealth and income inequality and its interaction with monetary policy.
So what is there to do? Williamson argues that while monetary policy definitely has distribution effects, the Federal Reserve needs to focus on its mandate as legislated by Congress. That is, the central bank needs to stick to its job: maximizing employment and stabilizing inflation. But it’s important to note the relative weighting the bank gives on its two mandates.
Consider, for example, the distribution effects of promoting maximum employment. Specifically, think about the potential effects on racial inequality if the Federal Reserve put more emphasis on full employment in the United States. Jared Bernstein points out that the black unemployment rate is usually about twice the unemployment rate for white workers. And tighter labor markets disproportionately help black workers: A 1 percentage point decline in the overall U.S. unemployment rate often translates to a 2 percentage point decline in the black unemployment rate. So while promoting maximum unemployment and drawing more workers into the U.S. labor force, the Federal Reserve would also help chip away at some of the racial inequality in the country.
Of course, this isn’t to say that the Federal Reserve has to tackle the problem on its own. But the Fed should be aware that in upholding its dual mandate, it can make progress in dealing with significant inequalities in the U.S. economy.
Must-Read: At least this has produced some useful work in how to teach the ignorant today things about convergence to equilibrium that Frank Fisher, Tom Sargent, and many others knew very well back at the end of the 1970s:
: Neo-Fisherian Equilibrium with Upper and Lower bounds: “Naryana [Kocherlakota]… [thinks] models should have relatively robust predictions….
If what happens in the limit is totally different from what happens at the limit, we have a problem…. If each boy racer had wanted to drive at 90% of the average speed, we get exactly the same Nash equilibrium, where they all drive at 0km/hr and stay in Ottawa, only now it’s a ‘stable’ equilibrium. We do not get multiple equilibria by adding an upper (or negative lower) bound to their speed. Any plausible equilibrium should be like that; it should be robust to minor changes in the boundary conditions. But if each boy racer wants to drive at 110% of the average speed, so driving at 0km/hr becomes an unstable equilibrium, adding boundary conditions creates new equilibria that are more plausible than the original unstable equilibrium, simply because they are stable….
We can see what Narayana is doing, when he considers a finite horizon version of the same game, as being like adding boundary conditions. If the game’s equilibrium is very fragile when you add or subtract or change those boundary conditions, there is something wrong with that equilibrium. We ought to get the same results in the limit as at the limit. If we don’t, we have a problem. Something like the Howitt/Taylor principle (or controlling a monetary aggregate or NGDP rather than a nominal interest rate) can convert an unstable equilibrium into a stable one.
: Reforming or Deforming the Fed?: “Some… proposals by Bernie Sanders… deserve to be taken seriously…
…The fact that three of the nine directors of the Fed’s regional reserve banks are private bankers is an anachronism that creates the appearance, and potentially the reality, of a conflict of interest. Sanders’ suggestion that the US president, rather than their own directors, nominate the regional reserve banks’ presidents is also worthy of consideration…. The peculiar arrangements prevailing today were designed to overcome the financial sector’s opposition to the establishment of a central bank when the Federal Reserve Act was passed in 1913. This, clearly, is no longer the problem….
Other proposals… are more dubious…. To release full transcripts six months after Fed meetings would guarantee a scripted debate. Meaningful discussion would simply move to the anteroom. The result, perversely, would be a decline in policy transparency.
: The Return of Public Investment: “If one looks at the countries that, despite strengthening global economic headwinds, are still growing very rapidly…
…one will find public investment is doing a lot of the work. In Africa, Ethiopia is the most astounding success story of the last decade…. The country is resource-poor and did not benefit from commodity booms, unlike many of its continental peers. Nor did economic liberalization and structural reforms of the type typically recommended by the World Bank and other donors play much of a role. Rapid growth was the result, instead, of a massive increase in public investment…. The Ethiopian government went on a spending spree, building roads, railways, power plants, and an agricultural extension system that significantly enhanced productivity in rural areas, where most of the poor reside. Expenditures were financed partly by foreign aid and partly by heterodox policies (such as financial repression) that channeled private saving to the government. In India, rapid growth is also underpinned by a substantial increase in investment, which now stands at around one-third of GDP…. These days, it is public infrastructure investment that helps maintain India’s growth momentum…. Bolivia is one of the rare mineral exporters that has managed to avoid others’ fate in the current commodity-price downturn…. Much of that has to do with public investment, which President Evo Morales regards as the engine of the Bolivian economy….
Today it may be the advanced economies of North America and Western Europe that stand to gain the most from ramping up domestic public investment. In the aftermath of the great recession, there are many ways in which these economies could put additional public spending to good use…. Such arguments are typically countered in policy debates by objections related to fiscal balance and macroeconomic stability. But… public investment serves to accumulate assets, rather than consume them. So long as the return on those assets exceeds the cost of funds, public investment in fact strengthens the government’s balance sheet…. Ethiopia, India, or Bolivia… are examples that other countries, including developed ones, should watch closely as they search for viable growth strategies in an increasingly hostile global economic environment.
(1955): Punchbowl Speech (October 19, 1955): “In framing the Federal Reserve Act great care was taken to safeguard…
…this money management from improper interference by either private or political interests. That is why we talk about the overriding importance of maintaining our independence. Hence we have our system of regional banks headed up by a coordinating Board in Washington intended to have only that degree of centralized authority required to discharge effectively a national policy. This constitutes, as those of you in this audience recognize, a blending of public interest and private enterprise uniquely American in character. Too few of us adequately recognize or adequately salute the genius of the framers of our central banking system in providing this organizational bulwark…
The decline in U.S. labor market mobility—meaning workers are less likely to move from one job to another—has major implications for wages and productivity. Yet the decline in job-to-job mobility and voluntary separations, also known as quits, started in 2000 around the same time that the Baby Boom generation started hitting retirement age.
This timing has sparked some concerns that a considerable amount of this decline in labor market mobility can be explained by the aging of workers. A look at data broken down by age, however, should assuage those concerns.
Very briefly, let’s explain why quitting is a good sign for the labor market. When the labor market is healthy, workers are more likely to voluntarily leave their jobs, as there are more opportunities at other employers. These options allow workers to move to new jobs that are better matches, boosting wages, productivity, and workers’ bargaining power. Conversely, declining rates of workers quitting and moving from job to job are troubling signs for a labor market.
The most commonly cited data when it comes to quitting is the quits rate from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, also known as JOLTS. Yet this survey, while quite valuable, only goes back to the end of 2000. And since it’s a survey of employers, it doesn’t allow us to look at what’s happening for different kinds of workers.
In our case, we’d like to see how the quits rate and the job-switching rate have changed for different age groups. If these rates have declined for workers across age groups, it weakens the case that demographics are a major force pushing down labor market mobility.
Luckily, we do have access to datasets that let us see the trends in quitting and job-switching by age. These sources are the Quarterly Workforce Indicators, which lets us look at the rate of quitting going back to 1992, and the Job-to-Job Flows dataset, which lets us see the rate of job-switching since late 2000. Here’s what those data tell us:
The quits rate and the job-switching rate are clearly on the decline for all age groups. Younger workers are more likely to quit their jobs and move to another one, but their rates have declined since 2000, meaning that demographics can’t explain this trend. In fact, it’s striking how much the overall quits rate from the QWI tracks the quits rate for workers 25 to 34 years old, and how the overall employment-to-employment switching rate tracks the same rate for workers ages 35 to 44.
Demographics cannot fully explain the major decline in quitting and job-to-job transitions over the past 15 years. We should focus our efforts on other potential causes and policies that could remedy these trends.
Notes for My Comment at the URPE-AEA Session: Causes of the Great Recession and the Prospects for Recovery
The most constructive thing I can do here is to back up and lay out what the three live mainstream interpretations of what our current macroeconomic problems here in the North Atlantic are, and then to lay out how URPE critiques position themselves in and around the mainstream-interpretation space.
(I should note, in passing, that there are actually four mainstream interpretations. One of them, however, is, in my estimation, dead. That one is the position of John Taylor and others—the position that I summarize these days as “everyone needs to shut up and fall in line.” It has, I think, no intellectual weight. The claim is, essentially, that Say’s Law has been working since 2010. Thus our problems have not been and are not those of slack demand but of insufficient motivation. Our problems need to be solved by taxing the rich less so that they can work to acquire more riches. Our problems need to be solved by taxing the poor more so that they must work harder to escape dire poverty. That is a mainstream perspective. But I think it is intellectually dead. And, anyway, I am tired of dealing with it.)
There are, however, as I said, three mainstream perspectives that I regard as live: intellectually interesting, and at least suggesting possibly productive directions in which policy ought to move. Today I will identify those three positions with three people: (1) our—unfortunately absent—discussant here Bob Gordon; (2) my friend Tim Geithner, former U.S. Treasury Secretary; and (3) my long-time friend and patron Larry Summers. But in so doing I should issue a warning: I firmly expect that when I post this discussion on my weblog, all three will protest. All three will say: “that’s not fair”. They will hunt me with nunchucks and Bowie knives. They will say that in stripping down their thought to something that will fit in this discussion, I have not stripped it down to its essentials but rather stripped it down to much less than its essentials in a very unfair and misleading way—that I have presented a mere caricature, so much so as to be unrecognizable, unhelpful, and destructive, of what they actually think.
To parody Bob Gordon: Bob Gordon on our current economic malaise is the second coming of David Ricardo. In Gordon’s case, however, the scarce resource that we are running out of is not Ricardo’s arable land that can be productively farmed, but rather fertile fields for technological innovation and economic development. Technology is in Gordon’s thought, the deus. Whether it will actually emerge ex machina is not something we can control. It emerged first in the age of the Industrial Revolution in the coal-steam-iron-machinery (plus Eli Whitney’s cotton gin and the American cotton south) complex. It emerged, more powerfully, in the late-nineteenth century era of the Second Industrial Revolution. It stuck around for a century or so. Now it has gone away. This is the song that Bob Gordon has been singing for the past six years. This is the song that he will sing, albeit in absentia, in his discussion to follow.
Whether Gordon’s view that we are facing a kind of Ricardian exhaustion of innovation possibilities considered as an exploitable natural resource is true or not is up for grabs. I doubt it. But he can ably defend himself, and does. I am fairly confident it is not true of measured economic growth. Measured economic growth omits the overwhelming bulk of the value inherent in the invention of new types of goods and services. Measured economic growth is simply how much more cheaply and efficiently we can this year make the things that people were willing to pay for last year. There are extraordinary amounts of money to be gained by figuring out how to make more cheaply things that were made, priced, sold, and that people were willing to pay for last year. That is what we measure as economic growth, no matter whether it is true growth or just labor speed-up, increased relative surplus-value, or simply not goods but bad: confusing your customers or deceiving them or addicting them or giving them cardiac problems.
I do not see how the absence of startling major new inventions and innovations bears on that process. Gordon’s arguments are about the prevalence and salience of major new macro inventions. But our numbers are about an ongoing process of micro-efficiency-innovation that is, I think, largely orthogonal to the big issues Gordon worries about.
The techno-utopians are wandering around today arguing against Gordon. They say that it may or may not be true that major new macro inventions in making new types of goods may now be scarce. However, they say that societal and human economic well-being is not produced by the piling-up of stuff in some contest of “who dies with the most toys wins”. Rather, they say, societal and human economic well-being are produced by combining the material products of our civilization with information and communication in order to accomplish our valid purposes. And, they say, leaps ahead at distributing information and amplifying communication in our age are astounding. They allow us to do what we really want to do usefully much more cheaply and at much greater scale. They are thus plausibly at least as important for the true production of societal and human economic well-being as were the leaps ahead at producing stuff of past generations.
They have a powerful case, as does Gordon. I think Gordon’s task, however, is somewhat harder to make than is the techno-utopian.
To parody Tim Geithner: He is essentially the second coming of Alfred and Mary Marshall, who in their Economics of Industry back in 1895… or was it 1885… Michael Perelman, you would know… 1885… said that the real problem in the business cycle, in the failure of Say’s Law, was the disappearance of business confidence. If only, they wrote, confidence would reappear, and would fly around, and would touch businessmen with her magic wand, then all would be well again. I count this as the first mention of the “confidence fairy”. The word “fairy”, it is true, is not used. But female, flying, magic wand—come on! I thus reject both Paul Krugman’s and Joe Stiglitz’s claims to have invented the concept, and assign it to Alfred and Mary Marshall.
Tim Geithner is the second coming of Alfred and Mary Marshall: His view is that that the capitalist economy runs at full employment with rising wages and general prosperity only when corporate executives are confident enough to invest on a large scale—and not in financial engineering or labor outsourcing but in productive capital the installation of which raises the bargaining power of labor—and only when financiers are confident enough that they are willing to unlock the keys to finance and fund the projects of corporate executives, either through raising new money on the capital markets or postponing their demands for dividends and stock buybacks. Thus, in Geithner’s view, the bankers and the corporate executives have us all by the plums. All we can do is try to make them as happy and confident as possible. If we do not, then we face what earlier generations of URPE’s ancestors would have called a capital strike.
Hence: low interest rates, low taxes, regulatory forbearance with respect to finance, and a desperate desire not to send any bankers or executives to jail for representations on documents that were perhaps economical with the truth—that is, in the Geithner view of the situation, the most effective and indeed the only road to restoring general prosperity in the North Atlantic economy as it stands today. The waves of Obama administration policy that people in this room like least comes out of this view that I have associated with the name of Tim Geithner: confidence is essential, anything we can do to restore confidence is well-done, and anything that might do something to restore confidence on the part of the business and the finance structure is worth trying as the only practical-political way out of our current dilemmas.
To parody Larry Summers: Summers is the second coming of John Hobson. Hobson identified the problems of the pre-World War I western European economy as due to an excess of savings relative to opportunities for productive and profitable investment. This chronic excess savings created a world in which booms could only come during times of unrealistic bubbly overestimates of possibilities for profitable investment. These then led to crashes, malinvestment, and so forth. Most of the time, however, you had chronic semi- or full-depression.
Hobson saw only one practical solution that pre-WWI western European governments had adopted to deal with this savings glut: imperialism. Governments could soak up savings money and restore full employment by borrowing to build up their armaments. Governments could use those armaments to conquer, and then force those regions to serve as vents for surplus in the form of exports. Those governments that adopted such imperialist policies and focused on armaments, expansion, and exports to captive markets found themselves more prosperous. Those governments tended to survive. Governments that did not embrace imperialism found themselves with poorly-performing economies, and tended to fall. That was the world as Hobson saw it.
Thus, Hobson said—back before WWI—western Europe was facing a very dangerous situation. At some point these armaments might be used. And they were.
Summers is neither as radical nor as pessimistic as Hobson. He does not see socialist revolution as the only ultimate escape. He does not see global total war as an increasing likelihood along our current path. But he sees the same strong excess of savings over investment. In Summers’s view, the source of the excess savings driving secular stagnation has four origins:
All these produce an excess of savings over investment, an excess that is not terribly elastic with respect to the interest rate. So we need to find a vent. Summers sees the vent as not armaments or colonies but, rather, as the moral equivalent of war in the form of investments in infrastructure, biotechnology, and the energy-environment sector.
Now let me position the three papers here on the field created by these three live and the one dead mainstream position as the boundaries.
Mario Seccareccia and Marc Lavoie
David M. Kotz and Deepankar Basu, and also Robert McKee—or Michael Roberts, I have never before discussed a paper written by someone’s secret identity—provide us, I think with a left-wing radical inversion of the Geithner-Marshall perspective. The key is a Social Structure of Accumulation to provide business and finance with the confidence and the reality that investment will be sufficiently profitable on a large scale. They will thus be willing to commit to large-scale investment to make Say’s Law true in practice. The problem Kotz and Basu see is that that is no longer true—the old SSA, the old mechanisms and practices that produced a high demand for investment, are gone. And it cannot be quickly or substantially repaired in any time of less than decades.
This may be a true theory. But it is a politically-unproductive theory. We saw that back in the early 1930s, when Rudolf Hilferding at the head of the German SPD laid down the party line that until the time came for revolution—which was not yet—the most that a socialist party in power could do was try as hard as it could to be a good steward of the capitalist economy. That, he said, required doing whatever was needed to support business and restore confidence: to follow policies or orthodoxy and austerity.
The problem, of course, is that a socialist party in power by definition does not make businessmen and financiers confident.
People protested: people like Wladimir Woytinsky—ending as a staff economist at the 20th Century Fund, before then a staff economist at the U.S. Department of Agriculture, before that a leading economist in the SPD, before then foreign minister of independent Georgia (and lucky enough to be in Paris on a diplomatic mission when Stalin moved in), before that chairman of the post-February Revolution Petrograd Soviet (and lucky enough to get out of town quickly when Lenin moved in). The Nazis had a plan to restore prosperity, Woytinsky said. The Communists had a plan, Woytinsky said. The SPD needed to have a plan too—to offer a “New Deal”—lest voters desert it, and power over Germany’s destiny fall into the hands of Hitler or Stalin.
Woytinsky was right, and Hilferding wrong, in practice if not in theory. And the fact that the policies of FDR, Hjalmar Horace Greeley Schacht, and Takahashi Korekiyo did a remarkably large amount of good given how hobbled they were by their circumstances suggests that Hilferding was wrong in theory too: there are things you can do other than frantically try to restore confidence by making noises pleasing to businessmen. Alternatives are worth trying.
And, of course, the alternative I like is the Summers position: the Keynesian solution to the Hobsonian problem:
Do everything you can think of to soak up savings, ideally in the most societally-productive way possible. Borrow-and-spend by the government. Use taxes and transfers to move as much wealth as you can from people with high to people with low propensities to save. Have the government be willing to bear risk. Raise the target rate of inflation to push the safe real rate of interest negative to make it costly to be a rentier.
All four of the positions I have set out seem to me to have both mainstream-right and URPE-left versions (except possibly for the Taylor position). Geithnerism comes in both a right and a left version. Keynesianism—or Hobsonism—comes in both a right and a left version. I will have to think more about Gordonism, but I see different versions there as well—most notably in Dean Baker’s demands for work-sharing as a way to create a good society given the exhaustion of forces that had previously produced a society that was working too hard at over-full employment.
It is not clear to me what the right answer is. I find myself strongly allegiant to the Summers view. But how much of that is its superiority? And how much of it is simply my own intellectual training and social network position?
What is disappointing to me is the extent to which both the mainstream and URPE are in the same box. They see the same world. They develop very similar analytical perspectives. They evaluate and phrase them differently, true. But there is no magic key in URPE to the lock of the riddle of history that the mainstream has overlooked. And—if you include Hobsonians within the URPE ekumene—there is no magic key in the mainstream that URPE has overlooked.
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