Must-Read: Ben Thompson: Grantland and the (Surprising) Future of Publishing

Must-Read:Ben Thompson: Grantland and the (Surprising) Future of Publishing: “As a reader this is frustrating…

…Vox stripped down to the political and policy coverage that is its raison d’être would almost certainly rate as a destination site for me; instead, faced with a deluge of rewrites and summarized videos, I miss most of the good stuff save for what I stumble across on social media. I’m certainly not going to waste my time wading through the filler on the homepage…. Still… Vox is… thriving while Grantland… is dead…. The only destination sites that really seem to be working either have massive brand equity that is being leveraged into subscriptions… or are tiny one-person operations that leverage the Internet to keep costs sustainably low while monetizing through small-scale native advertising (e.g. Daring Fireball and the now-retired Dooce.com, for example) or subscriptions (e.g. The Timmerman Report and the site you’re reading)…. The lesson of Grantland is that there is no room in the middle: not enough scale for advertising, and costs that are far too high for a viable subscription business…

Rising U.S. mortality and its potential economic causes

Doctor checking blood pressure of his patient by mangostock, veer.com

One of the promises of economic growth and advancement is that things will get better for everyone. A rising tide is supposed to lift all boats, even if we’ve acknowledged that some boats have risen higher lately. But a new study shows that this promise isn’t always fulfilled—and that sometimes, things can actually get worse. The paper, written by Princeton University economists Anne Case and Angus Deaton (the recent winner of the Nobel Prize), shows an increasing mortality rate for white Americans ages 45 to 54 since 2000. In other words, a middle-aged white person was more likely to die in 2013 than they were in 1999. This alarming new health trend coincides with a multitude of economic data documenting increasing economic insecurity over this same period—something the authors comment on in their paper and in reports about their findings.

Indeed, this health reversal stands in stark contrast to the trends in mortality prior to the start of this century. According to Case and Deaton, the mortality rate fell considerably for middle-aged Americans from 1978 to 1998. For middle-aged whites, the rate fell on average by 2 percent a year. This trend was quite similar to declines in other high-income economies like those in Western Europe. But in 1999, the mortality rates for middle-aged white workers in the United States begin to increase, in contrast to their European counterparts whose death rates continued to fall.

What’s more, the self-reported rate of morbidity—the frequency of sickness or disease—has also increased among American middle-aged white workers since 1999. They are much more likely to report their physical health as “not good” and that they are in pain. Such health problems put these men more at risk for mental health problems and heavy drinking.

What’s at the root of these huge problems for middle-aged white Americans? A likely cause, which Case and Deaton flagged, is a rise in general chronic pain among this population. The same time period (1999–2013) saw an increase in the use of opioids, first in the form of prescription drugs and increasingly in the form of heroin. The report doesn’t specify, however, whether the increase in self-described pain came first or if the increased use of opioids did. Either way, the increased amount of pain also shows up in higher suicide rates and alcohol abuse.

It’s very likely that increased economic insecurity since 1999 has been a factor in driving these health problems. In a Wall Street Journal article this week, Case notes that the inflation-adjusted median household income for high-school educated whites peaked in 1999. The downward trend in median household income that followed isn’t just for those with a high school degree—the median household income for all white Americans peaked in 2000, and the median market income for all households peaked in 1999 according to the Congressional Budget Office. At the same time, the share of white 45- to 54-year-olds with a job reached its zenith in 2000, just like the overall U.S. employment rate and the employment-to-population ratio for all prime-age workers. Of course, these declines in income and employment are happening to all racial groups, so they can’t be the sole cause of rising mortality for whites. But they certainly seem to be a major contributor.

This last trend and the increased pain among the U.S. population could also help explain both the rising number of workers on disability insurance and part of the decline in the U.S. labor force participation rate. Case and Deaton’s results, if they hold up, would show that rising disability claims aren’t due to workers being attracted to more generous benefits, but rather because they are increasingly unable to actually work.

On a number of fronts, the startling results from Case and Deaton’s research should cause us to think deeply about what’s been happening in the U.S. economy during this new century.

Noted for the Morning of November 4, 2015

Must- and Should-Reads:

Might Like to Be Aware of:

Must-Read: Martin Wolf: America’s Labour Market Is Not Working

Must-Read: Martin Wolf: America’s Labour Market Is Not Working: “In 2014… close to one in eight…

…of US men between the ages of 25 and 54 were neither in work nor looking for it… far higher than in other members of the group of seven leading high-income countries: in the UK, it was 8 per cent; in Germany and France 7 per cent; and in Japan a mere 4 per cent…. The proportion of US prime-age women neither in work nor looking for it was 26 per cent, much the same as in Japan and less only than Italy’s…. Participation rates for those over 16. These fell from 65.7% at the start of 2009 to 62.8% in July 2015… 1.6 percentage points of this decline was due to ageing and 0.3 percentage points due to (diminishing) cyclical effects…. Yet… the UK experienced no decline in labour-force participation after the Great Recession, despite similar ageing trends…. Back in 1991, the proportion of US prime-age men who were neither in work nor looking for it was just 7 per cent. Thus the proportion of vanished would-be workers has risen by 5 percentage points since then…. What has been happening to participation of prime-aged women is no less striking….

The comforts of idleness cannot be a plausible explanation since the US has the least generous welfare state among high-income countries. High minimum wages cannot be blocking job creation…. In the case of prime-aged women, the absence of affordable childcare would seem a plausible explanation…. The numbers with criminal records created by mass incarceration might also help explain the difficulty in finding jobs…. The relentless decline in the proportion of prime-aged US adults in the labour market indicates a significant dysfunction. It deserves attention and analysis. But it also merits action.

Must-Read: Ezra Klein: Were the Questions at CNBC’s Debate Really so Hostile?

Must-Read: As one moderately-senior editor once told me: “On an average day, I learn more from Ezra Klein than from their entire national news staff.” This is why:

Ezra Klein: Were the Questions at CNBC’s Debate Really so Hostile?: “Fox News moderators were more aggressive in their questioning…

…and more focused on creating conflict–but… its choice of targets, and its angles of attack, suggested it had the GOP’s best interests at heart…. [In] CNN’s Republican debate… it was clear… that… tough questions were meant to strengthen the GOP…. CNBC… focus[ed] its debate around economic policy, and so its angles of attack reflected critiques of the candidates’ plans on taxes, immigration reform, monetary policy, and more. But since the candidates’ plans on those issues tend to broadly reflect Republican thinking on those issues, the questions put CNBC in opposition to the Republican Party broadly….

Ted Cruz… lamented that the moderators weren’t asking substantive questions, when the questions, up till that point, were more substantive…. But he was right that the questions were different from those asked by other networks, harder for the assembled candidates to answer, and more embarrassing for them to flub…. CNBC, in focusing on policy concerns, picked a more journalistically important line of questioning, but one that the organizing party found much more offensive. The resulting backlash is the organizing party’s effort to remind CNBC and all other networks that, ultimately, it controls these debates, and media organizations that want to host a debate and benefit from the accompanying ratings and the prestige need to remember that they are meant to act as the party’s partner in these debates, not as its critic.

How readily can we get the long-term unemployed back to work?

Job interview by stokkete, veer.com

The debate about the Phillips curve and the amount of “slack” in the U.S. labor market has to do with the prospects of long-term unemployed workers. In the wake of the Great Recession of 2007-2009, the share of unemployed workers who were unemployed for 27 weeks or longer hit historical highs. In fact, the share is higher now than it was at its previous peak in June 1983. The question is whether the long-term unemployed are locked out of the labor market or if they can return to work in the short term.

Princeton economist Alan Krueger has argued that the long-term unemployed really shouldn’t be counted as part of labor market slack as they don’t influence wage growth. Stephen Williamson, Vice President at the Federal Reserve of St. Louis, presents historical data that show the long-term unemployed being more likely to drop out of the labor force. A National Bureau of Economic Research working paper released this week, however, presents evidence that we might be able to get long-term unemployed workers back into employment more readily than many have assumed.

With the high levels of long-term unemployment staying elevated as the labor market recovered from the Great Recession, many economists and commenters worried that these workers would be unable to find work again. Their story was that employers would discriminate against long-term unemployed workers and instead hire workers who had been unemployed for a shorter time or already had a job. Several papers backed up this concern, including one by economist Rand Ghayad, now of the Brattle Group. By sending out fake resumes to prospective employers—in which he varied how long these job seekers had been out of work, how frequently they switched jobs, and how much industry experience they had—Ghayad tried to figure out how much discrimination the long-term unemployed faced. His answer: quite a bit. Other research found similar results.

But the new working paper released this week finds some contradictory evidence. The paper, by economists Henry Farber of Princeton University, Dan Silverman of Arizona State University, and Till von Wachter of the University of California, Los Angeles, also uses a resume field experiment. In order to make sure they were looking just at the effects of unemployment length, the economists sent out resumes from women with college degrees looking for office administrative jobs. Unlike the earlier research, the economists find no connection at all between the likelihood a resume gets a call back from an employer and the length of unemployment on the resume. Other recent research also finds little relationship between the two, so Farber, Silverman, and von Wachter aren’t on an island by themselves.

What could explain the discrepancy between this new paper and the older research? The three authors compare their data and analysis to one of the earlier papers to see what factors could be driving the different results. While they don’t find a smoking gun, their analysis points to a difference in the ages of the fictitious workers whose resumes they sent out. The earlier research tended to have more resumes of younger workers while Faber, Silverman, and von Wachter focus on workers between their mid-30s and mid-50s. It could be that employers are more likely to brush aside concerns about long spells of unemployment if the worker has a longer resume. Or it could be, as the authors note, that their result only holds up for the specific group their experiment looks at.

This paper is part of a larger debate that certainly won’t get settled anytime soon. But these results should give us pause in thinking that employer discrimination against the long-term unemployed is a pervasive phenomenon across the labor market. And if there’s less discrimination, that means these workers are more likely to be able to get a job. In other words, this paper might give some of them new hope.

Must-Read: Robinson Meyer: The Decay of Twitter

Robinson Meyer: The Decay of Twitter: “Anthropologists who study digital spaces have diagnosed that a common problem of online communication…

…is ‘context collapse.’ This plays with the oral-literate distinction: When you speak face-to-face, you’re always judging what you’re saying by the reaction of the person you’re speaking to. But when you write (or make a video or a podcast) online, what you’re saying can go anywhere, get read by anyone, and suddenly your words are finding audiences you never imagined you were speaking to. I think Stewart is identifying a new facet of this. It’s not quite context collapse, because what’s collapsing aren’t audiences so much as expectations. Rather, it’s a collapse of speech-based expectations and print-based interpretations. It’s a consequence of the oral-literate hybrid that flourishes online. It’s conversation smoosh…

Noted for Lunchtime on November 2, 2015

Must- and Should-Reads:

Might Like to Be Aware of:

Must-Read: Ken Rogoff: The Fed’s Communication Breakdown

Must-Read: I guess I must be a foaming polemicist then :-)…

Ken Rogoff: The Fed’s Communication Breakdown: “Personally, I would probably err on the side of waiting longer…

…and accept the very high risk that, when inflation does rise, it will do so briskly, requiring a steeper path of interest-rate hikes later. But if the Fed goes that route, it needs to say clearly that it is deliberately risking an inflation overshoot. The case for waiting is that we really have no idea of what the equilibrium real (inflation-adjusted) policy interest rate is right now, and as such, need a clear signal on price growth before moving.

But only a foaming polemicist would deny that there is also a case for hiking rates sooner, as long as the Fed doesn’t throw random noise into the market by continuing to send spectacularly mixed signals about its beliefs and objectives. After all, the US economy is at or near full employment, and domestic demand is growing solidly…

I look at this graph:

A kink in the Phillips curve Equitable Growth

And I think: One always disagrees with the very sharp Ken Rogoff at one’s grave analytical peril…

But: Inflation expectations anchored at 2%/year, wage growth at 0%/year real, the prime-age employment-population ratio far below historical norms–that does not smell like an economy “at or near full employment” to me. And so I cannot see a “very high risk that, when inflation does rise, it will do so briskly”, or agree that “only a foaming polemicist would deny that there is also a case for hiking rates” not “sooner” but “right now”…

Intellectual Broker: (Trying to) Make Sense of Current (Small) Analytical Disagreements Between Paul Krugman and Larry Summers: Where Is the Can Opener?

Larry Summers tweets:

David Wessel picks it up:

And I attempt to Twittersplain, with how much success I do not know:

Larry Summers: Where Paul Krugman and I differ on secular stagnation and demand: “Paul Krugman suggests that I have had some kind of change of heart on secular stagnation…

…and converged towards his point of view…. I certainly appreciate the gravity of the secular stagnation issue more than I did…. But I think Paul exaggerates the change in my views considerably. The topic… was: ‘North America faces a Japan-style era of high unemployment and low growth.’ Paul argued in favor. I opposed the motion–not on the grounds that the US economy was in good shape, but on the grounds that our demand deficiency problems should be easier to solve than Japan’s… [because] it is dimensionally much less than the problems that Japan faced in four respects. Japan’s problems were different in magnitude, different in the depth of their structural roots, different in the… perspective… relative to the rest of the world… different in the degree of resilience [of] their system…. Paul responded in part by saying:

The question is, are we going to be stuck in a state of depressed demand of the kind that Larry has talked about. Larry and I agree that that is what has been happening… I think Larry and I agree almost entirely on the economics, on what needs to be done….

I think we have both been focused on demand and the liquidity trap for a long time. There are, though, two areas where I have had somewhat different views from Paul. I believe that structural issues are often important for demand and growth…. Second, I have never related well to Paul’s celebrated liquidity trap analysis. It has always seemed to me be a classic example of economists’ tendency to ‘assume a can opener’. Paul studies an economy in liquidity trap that will, by deus ex machina, be lifted out at some point in the future. He makes the point that if you assume sufficiently inflationary policy after this point, you can drive ex ante real rates down enough to stimulate the economy even before the deus ex machina moment.

This is true and an important insight. But it seems to elide the main issue. Where is the deus ex machina? Where is the can opener? The essence of the secular stagnation and hysteresis ideas that I have been pushing is that there is no assurance that capitalist economies, when plunged into downturn, will over any interval revert to what had been normal. Understanding this phenomenon and responding to it seems the central challenge for macroeconomics in this era. Any analysis that assumes restoration of previous equilibrium is, from this perspective, missing the main issue. I was glad to see Paul recognize this point recently.  I suspect it will lead to more emphasis on fiscal rather than monetary actions in depressed economies.

Paul Krugman: Liquidity Traps, Temporary and Permanent: “Larry Summers reacts to an offhand post of mine, seeking to draw a distinction between our views…

…I actually don’t think our views differ significantly now, but he’s right that what he has been saying differs from the approach I took way back in 1998. And I’ve both acknowledged that and admitted that the approach I took then seems inadequate now…. Japan now looks like an economy in which a negative natural rate is a more or less permanent condition. So, increasingly, does Europe. And the US may be in the same boat, if only because persistent weakness abroad will lead to a strong dollar, and we will end up importing demand weakness. And if we are in a world of secular stagnation–of more or less permanent negative natural rates–policy becomes even harder.

And I commented on Paul’s webpage thus: But, as I was tweeting to David Wessel, you scorn the Confidence Fairy while having some hope for the Inflation-Expectations Imp, while he scorns the Inflation-Expectations Imp but has some hope for the Confidence Fairy, no? And he has more hope for pump-priming small fiscal expansion to trigger virtuous circles and give the economy escape velocity, no? Small differences relative to those of the two of you vis-a-vis Rogoff, Mankiw, Feldstein, Bernanke, and, I think, even Blanchard. But differences, no?…