Category: Equitablog

I had always thought that dynamic scoring was a bad idea because it leads to a ratchet–Democrats when they are in power claim deficit reduction from a stronger economy if their policies are enacted , and then Republicans when they are in power claim deficit reduction from a stronger economy if they undo what the Democrats did. You have no chance of getting policy-effect forecasts that are unbiased on average if you allow the party in power to shape CBO’s estimates of macroeconomic impacts.

The vir clarissimus Robert Lynch has a good look at all the other issues in this can of worms:

Matthew Yglesias: Why Politicians Are so Boring (and the MSM Is so Bad): “Gaffe-coverage… signif[ies] nothing and leav[es] nothing behind…

…distracts from more consequential, but complicated, debates…. In an internet world of limited time but unlimited newshole the ‘gaffe’ story offers easy content…. Last… the old-time division between ‘news’ and ‘opinion’ continues to saddle much mainstream political coverage with a perverse bias toward tactics and process… that a politician gaffed is a fact… while the fact that a politician’s agenda might be bad for the world is opinion…

Now that James Pethokoukis has decided to all Greg Ip “great”, I think I have to escalate by calling him a vir spectabilis…

• WSJ Staff: Greg Ip Returns to Wall Street Journal as Chief Economics Commentator http://blogs.wsj.com/economics/2014/12/10/greg-ip-returns-to-wall-street-journal-as-chief-economics-commentator

And:

• Greg Ip: Benefit of ECB’s Bond Buying: Fiscal Breathing Room http://www.wsj.com/articles/benefit-of-ecbs-bond-buying-fiscal-breathing-room-1423700220
• Greg Ip: When Is It Time for Mindful Austerity? http://blogs.wsj.com/economics/2015/02/09/when-is-it-time-for-mindful-austerity

Context:

Wikipedia: Vir illustris – Wikipedia, the free encyclopedia: “The title vir illustris (‘illustrious man’) is used…

…as a formal indication of standing in late antiquity to describe the highest ranks within the senates of Rome and Constantinople. All senators had the title vir clarissimus (‘very famous man’); but from the mid fourth century onwards, vir illustris and vir spectabilis (‘admirable man’, a lower rank than illustris) were used to distinguish holders of high office…. The first instance is in 354, used of the praetorian prefect. For some decades it occurs inconsistently, then its appearances become more regular,[4] perhaps in connection with a formal codification of honours under Valentinian I in 372….

The Notitia Dignitatum in the early fifth century attaches [the title] to the following offices:

1. praefectus praetorio (‘praetorian prefect’);
2. praefectus urbi (‘urban prefect’);
3. magister militum (‘master of the soldiers’);
4. praepositus sacri cubiculi (‘officer of the sacred chamber’);
5. magister officiorum (‘master of offices’);
6. quaestor;
7. comes sacrarum largitionum (‘count of the sacred expenditure’);
8. comes rerum privatarum (‘count of the emperor’s private property’);
9. comes domesticorum equitum sive peditum (‘count of the household cavalry or infantry’).

Beyond these, the title is also frequently given to consuls, occasionally to lower offices…

Must- and Shall-Reads:

• Simon Wren-Lewis: “‘Mediamacro’ is the term I use to describe macroeconomics as it is portrayed in the majority of the media… emphasis… on the financial markets, and on the views of participants… prefers simple stories… fond of analogies between governments and individuals, even when those analogies are… false…”

1. Derek Thompson: The Richest Cities for Young People: 1980 vs. Today: “Today, the ten cities in the country with the highest median income for young people are… San Jose, San Francisco, Washington, D.C., Boston, New York, Baltimore, Seattle, Minneapolis, Philadelphia, and Chicago…. Forecast what this list would look like in 20 years, [you] would offer something very much like this…. The agglomeration of talent on the coasts will continue to attract…. But… history has a way of intervening with such crudely extrapolated trends. Five of the ten richest cities from 33 years ago have seen median wages for young people fall by at least 15 percent. The turnover rate of the list is 50 percent…. Extrapolating the present forward isn’t the same thing as knowing the future.”

2. Robert Litan: What ‘Audit the Fed’ Really Means–and Threatens: “Words matter…. Think of the success tax reformers had when they called the inheritance tax the ‘death tax.’ Or how opponents of the president’s health-care law gathered political strength… calling a medical reimbursements panel the ‘death panel.’ And so it is with Washington’s latest craze, the movement spearheaded by Sen. Rand Paul to ‘audit the Fed,’ an effort launched by the senator’s father, Ron Paul…. The Fed’s financial statements have long been audited by professionals, but Sen. Paul’s bill is not about that… [it’s about the] Government Accountability Office… giv[ing] Congress annual reports on monetary policy functions…. The economists employed by the GAO are no match for the economists at the Fed. It is not within their domain of expertise…. It’s fine for Congress to regularly ask the Fed… to report…. But why create… a ‘shadow Fed’ elsewhere within the government?… If backers of the ‘audit the Fed’ movement want to get rid of the agency, they should say so, and let that debate begin. If it does, central banks will win…. If ending the Fed is not the objective… economic evidence makes clear that truly independent central banks keep inflation lower…”

3. Thomas Philippon: Finance vs. Wal-Mart: Why are Financial Services so Expensive?: “Despite its fast computers and credit derivatives, the current financial system does not seem better at transferring funds from savers to borrowers than the financial system of 1910. The role of the finance industry is to produce, trade and settle financial contracts that can be used to pool funds, share risks, transfer resources, produce information and provide incentives. Financial intermediaries are compensated for providing these services. Total compensation of financial intermediaries (profits, wages, salary and bonuses) as a fraction of GDP is at an all-time high, around 9% of GDP. What does society get in return? Or, in other words, what does the finance industry produce? I measure the output of the finance industry by looking at all issuances of bonds, loans, stocks (IPOs, SEOs), as well as liquidity services to firms and households. Measured output of the financial sector is indeed higher than it has been in much of the past. But, unlike the income earned by the sector, it is not unprecedentedly high. Historically, the unit cost of intermediation has been somewhere between 1.3% and 2.3% of assets. However, this unit cost has been trending upward since 1970 and is now significantly higher than in the past. In other words, the finance industry of 1900 was just as able as the finance industry of 2010 to produce loans, bonds and stocks, and it was certainly doing it more cheaply. This is counter-intuitive, to say the least. How is it possible for today’s finance industry not to be significantly more efficient than the finance industry of John Pierpont Morgan?… Technological improvements in finance have mostly been used to increase secondary market activities, i.e., trading. Trading activities are many times larger than at any time in previous history. Trading costs have decreased, but I find no evidence that increased liquidity has led to better (i.e., more informative) prices or to more insurance.”

4. Henry Decker: 5 Policies That Republicans Loved (Until Obama Did, Too): “Ted Cruz… offered a resolute defense of the 2009 stimulus law…. Representing the Texas Retired Teachers Association, Cruz declared that stimulus money ‘will directly impact the [Texas] economy…and will directly further the greater purpose of economic recovery for America.’… As recently as 2008, former Massachusetts governor Mitt Romney considered his health care law… to be ‘the ultimate conservative plan’,” and a ‘model’ for the rest of the nation…. Louisiana governor Bobby Jindal has compared Common Core to “centralized planning” in the Soviet Union…. Senator Cruz has vowed to repeal it (even though it’s not a law passed by Congress)…. But… Jindal… once defended it by promising that his state would not /move one inch off more rigorous and higher standards for our kids’…. Almost every Republican candidate in 2012 backed… [Cap and Trade] until they decided to run against Obama…. ‘While Washington is still racking up debt, this budget doesn’t even try to balance the books’, House Majority Leader Kevin McCarthy complained…. But back during the Bush administration, McCarthy and his fellow Republicans didn’t seem to mind budgets that never balanced…. But no Republican illustrates President Obama’s effect on the GOP better than Senator Marco Rubio (R-FL). Rubio helped craft the 2013 bill in the first place, arguing that the issue is a question of human rights. But a year later, he had abandoned his plans…”

Should Be Aware of:

• Simon Maloy: Yes, Bush lied about Iraq: Why are we still arguing about this?
• Richard Karp: A Personal View of Computer Science at Berkeley
• Jeet Heer: The Pilgrim’s Progress of Richard John Neuhaus
• Benjamin J. Dueholm: The Public Square’s New Clothes

1. Erik Loomis: Class Warfare: “Republican presidential possibilities… are going to focus on income inequality… as a problem that exists because the rich pay too much in taxes and the poor don’t pay enough…. Reinventing the reasons for income inequality to fit Republican preferences to concentrate resources among the 1 percent is just another front in that party’s class warfare it has declared on working and middle class Americans. Krugman…. ‘So, can anyone show me an example of a prominent Republican politician proposing anything that would reduce after-tax-and-transfer inequality? Bank shots don’t count–saying that slashing food stamps will help the poor by making them less dependent, or that cutting capital gains taxes will bring the confidence fairy to everyone’s door, don’t qualify…. I’m not demanding… every part… I just want to see one significant piece that goes in that direction…. Even when there’s something that sounds like it might be in that direction–say, Paul Ryan proposing that the EITC be extended to childless workers–there’s no talk of an increase in funding, so it’s coming at the expense of current recipients…. This is the acid test… because it’s how you see whether reformicons… are willing to do anything beyond putting the same old pro-plutocratic policies in new bottles. Show me the downward-flowing money!’ Of course there’s isn’t any downward-floating money. Nor will there be any. And the same will be the case if a Republican wins in 2016, despite their attempt to co-opt the issue of income inequality.”

2. Hillary Clinton and Bill Frist: Health Care for America’s Kids: “For the past 18 years, the Children’s Health Insurance Program has provided much-needed coverage to millions of American children. And yet, despite strong bipartisan support, we are concerned that gridlock in Washington and unrelated disputes over the Affordable Care Act could prevent an extension of the program. As parents, grandparents and former legislators, we believe that partisan politics should never stand between our kids and quality health care…. Both of us have dedicated our careers to supporting the health of children and their families. This shared commitment inspired us to work together in the late 1990s to help create CHIP to address the needs of the two million children whose families make too much money to be covered by Medicaid, but cannot afford private insurance…. While it is possible that private, family-wide policies offered by employers and marketplaces may one day render CHIP unnecessary, for now substantial gaps still exist–and too many children can still fall through them…. We already know what happens when CHIP is no longer an option for families. According to a recent report from the Georgetown University Health Policy Institute, as many as 14,000 children in Arizona lost their health insurance after 2010, when it became the only state to drop CHIP. We don’t want to see the same thing happen across the country…. This isn’t about politics. It’s about our kids and our nation’s future. What could be more important than that?”

3. Felix Salmon: To all the young journalists asking for advice…: “Your success… is… governed in large part by luck…. Get[ting] your foot in the door churning out listicles, and then somehow work[ing] your way up… might have worked for a few early BuzzFeed employees, but they, too… [won] the pick-the-right-startup lottery…. There’s no particular reason to believe that the advice I’d give five or six years ago, which was basically ‘start a blog and get discovered’, still works. With the death of RSS, blogs are quaint artifacts…. If you… want a good chance at a well-paid middle-class lifestyle down the road, I don’t really know what to tell you. Except that the chances of getting there… [in] journalism… have probably never been lower.”

Must- and Shall-Reads:

• Andrew Mayeda: Yes, Yellen Can Have It All as She Gets Ready to Raise Rates
• Paul Krugman: “Simon Wren-Lewis… how successful mainstream Keynesian macro… has been…. That’s exactly right…. In a rational world these past five years would be viewed as a triumph for mainstream economic analysis; the world has behaved the way the models said it would. And in the long run I think it will be seen that way…”
• Greg Ip: Benefit of ECB’s Bond Buying: Fiscal Breathing Room

1. John Fernald and Bing Wang: The Recent Rise and Fall of Rapid Productivity Growth: “Information technology fueled a surge in U.S. productivity growth in the late 1990s and early 2000s…. The exceptional pace of productivity growth has disappeared, returning to roughly its pre-1995 pace…. The important factor after 2003 is slower growth in innovation…. Fernald (2014a)… finds that the slowdown was in sectors that produce IT or use IT intensively….One slice of the data focuses on the “bubble” industries of the mid-2000s, that is, construction, real estate, finance, and natural resource[s]…. The contribution of bubble industries to overall TFP fell–becoming more negative–between the 2000–04 and 2004–07 periods. But the contribution of the remaining three-quarters of the economy fell even more…. The non-bubble industries are divided into three mutually exclusive groups: IT producers, intensive IT-users, and other industries that do not use IT intensively…. The TFP slowdown is concentrated in industries that produce IT or that use IT intensively…. Three out of the past four decades have seen business-sector productivity growth near 1½%. We could well see future growth in that range. Of course, such a forecast would completely discount the fast growth of 1995 to 2003…. Pessimists argue that IT is less important than great innovations of the past that dramatically boosted productivity, such as electricity or the internal combustion engine. Optimists point to the possibilities offered by robots and machine learning…”

2. AFP: ‘Mega-Drought’ Risk in 21st-Century Western U.S.: “Currently the western United States has been experiencing a drought for about 11 of the past 14 years…. ‘I was honestly surprised at just how dry the future is likely to be,’ said co-author Toby Ault…. ‘We are the first to do this kind of quantitative comparison between the projections and the distant past, and the story is a bit bleak,’ said Jason Smerdon…. ‘Even when selecting for the worst mega-drought-dominated period, the 21st century projections make the mega-droughts seem like quaint walks through the Garden of Eden.’… Researchers applied 17 different climate models to analyze the future impact of rising temperatures on regions from Mexico to the United States and Canada…. ‘The results… are extremely unfavorable for the continuation of agricultural and water resource management as they are currently practiced in the Great Plains and southwestern United States,’ said David Stahle… who was not involved in the study…”

3. Matthew Buettgens et al.: Health Care Spending by Those Becoming Uninsured if the Supreme Court Finds for the Plaintiff in King v. Burwell: “We estimate that there would be 8.2 million more uninsured people if the court rules in favor of the plaintiff, including 6.3 million people losing tax credits for Marketplace coverage, 1.2 million people purchasing nongroup coverage without tax credits and 445,000 enrolled in Medicaid or the Children’s Health Insurance Program (CHIP), all of whom would become uninsured…. Under the current law, these 8.2 million people will spend an estimated $27.1 billion on health care in 2016, with $11.1 billion spent on hospital care, $4.5 billion for physician services, $5.3 billion for prescription drugs and $6.2 billion for other health care. If these people became uninsured, they would spend $5.3 billion on their own care; another $12.0 billion in uncompensated care for this population would be provided if governments continue to fund such care at historic rates and health care providers continue to make in-kind contributions to the uninsured at the same rates as they have in the past…. This significant decrease in expenditures and the rise in the demand for uncompensated care would adversely affect both the amount of health care received by those losing coverage and health care providers’ revenues. This is particularly true for hospitals because the ACA reduces Medicare and Medicaid disproportionate share hospital (DSH) payments, which are historical sources of funding for uncompensated hospital care…”

4. Felix Salmon: To all the young journalists asking for advice….: “I spent a long time paying my dues at a series of very dry publications…. Only then did I start blogging professionally: first for Nouriel Roubini, then for Condé Nast Portfolio, then for Reuters…. Old-fashioned trade-magazine economics… allowed me to make a good living writing one or two articles per month… constituted a very high-level education in debt capital markets…. [So] when I found myself blogging the credit crisis, all that education paid off in spades. And the fact that I found myself blogging at all was itself an act of luck: I pretty much just happened to be in the right place at the right time… when the blogosphere was basically happy hour at The Magician…. Nouriel Roubini decided that he needed a full-time blogger at almost exactly the same time that Euromoney decided that it couldn’t afford to keep on paying me…. That gig… lasted long enough for me to get noticed by Jesse Eisinger…. Obviously, that kind of career path isn’t replicable…. It doesn’t matter how good you are at what you do, your success, in this industry, is always going to be governed in large part by luck…. There’s no particular reason to believe that the advice I’d give five or six years ago, which was basically ‘start a blog and get discovered’, still works. With the death of RSS, blogs are quaint artifacts at this point, and I can’t remember the last time I discovered a really good new one…”

Should Be Aware of:

• Robert Farley: “Francis Sempa made a go at rehabilitating the reputation of James Burnham…. What’s odd… is that very few try to resurrect the reputation of… the people who argued that the only problems with the war in Indochina are that the United States didn’t squander enough blood and treasure and didn’t slaughter enough Asians. America’s historical memory has struggled to flush such voices from its consciousness, and has largely succeeded. It also bears note that the National Review itself rarely enjoys being reminded of the sort of sentiments it published during the 1950s and 1960s…”
• Saint-Julien-Beychevelle

1. Duncan Black: How Does This Keep Happening): “Maybe the only way to win is not to play? ‘Nick Rasmussen, who directs the National Counterterrorism Center, told the Senate intelligence committee that Yemen’s American-funded army failed to oppose advancing Houthi rebels in the same way the U.S.-supported Iraqi military refused to fight Islamic State militants last year. What happened in Iraq with the onslaught of the Islamic State group “happened in Yemen” on “a somewhat smaller scale,” he said. “As the Houthi advances toward Sanaa took place … they weren’t opposed in many places. …The situation deteriorated far more rapidly than we expected.”‘Let’s just keep adding weapons, arming whichever ‘side’ John McCain thinks are the good guys who want guns. It always works!”

2. Charlie Jane Anders: Tor.com Explains Why Novellas Are The Future Of Publishing: “Carl Engle-Laird explains. When asked why Tor.com is focusing on publishing shorter works as e-books, Engle-Laird tells io9: ‘When the book wars sweep across the galaxy, and the blood of publishers runs down the gutters of every interstellar metropolis, the resource we fight for will not be paper, or ink, or even money. It will be time. For our readers, time is the precious commodity they invest in every book they decide to purchase and read. But time is being ground down into smaller and smaller units, long nights of reflection replaced with fragmentary bursts of free time. It’s just harder to make time for that thousand-page novel than it used to be, and there are more and more thousand-page novels to suffer from that temporal fragmentation. Enter the novella, an old form with a new lease on life. We expect that the reader who has to fit their reading into their daily commute will appreciate a novella they can finish in a week, rather than a year. We’ll be releasing books that can be begun and completed on just one of those rare evenings of uninterrupted reading pleasure. And we think this will resonate especially with those readers who have so much reading to do that they’ve compressed their habit into a portable device. Of course, Tor.com won’t just be a science fiction publisher. Our fantasy sensibilities insist on reminding you that novellas aren’t just the future of genre, they’re also our past. Science fiction and fantasy were born in penny dreadfuls, came of age in magazines, and novellas have been essential to their development, from The War of the Worlds to The Shadow Over Innsmouth to Empire Star. Tor.com wants to carry that fantastical history into a future that is beginning to outgrow its magazine predicates, but has no need to outpace its love of excellent stories at the length in which they were meant to be told.'”