Category: Equitablog

Matthew O’Brien: The Fed Absolutely Shouldn’t Give Up on the Long-Term Unemployed: “Are the long-term unemployed just doomed today or doomed forever?

That’s the question people are really asking when they ask if labor markets are starting to get “tight.” Now, it’s hard to believe that this is even a debate when unemployment is still at 6.7 percent and core inflation is just 1.1 percent. But it is. The new inflation hawks argue that these headline numbers overstate how much slack is left in the economy. That the labor force is smaller than it sounds, because firms won’t even consider hiring the long-term unemployed. That our productive capacity is lower than it sounds, because we haven’t invested in new factories for too long. And that wages and prices will start rising as companies pay more for the workers and work that they want. In other words, they think that the financial crisis has made us permanently poorer. That the economy can’t grow as fast as it used to, so inflation will pick up sooner than it used to—and we need to get ready to raise rates. (Notice how that’s always the answer no matter the question).

Continue reading “Evening Must-Read: Matthew O’Brien: The Fed Absolutely Shouldn’t Give Up on the Long-Term Unemployed” →

Must-Reads:

1. Robert Skidelsky: The Programmed Prospect Before Us: “Head’s indictments are impressive, but at heart his book is a lament for a vanished world, that of the 1950s and 1960s, when gentlemen were still gentlemen, when digital controls were still in their infancy, when manufacturing was the main occupation of Western workforces, when services were still personalized, and when academics were paid to think, and not to produce useless papers to meet Key Performance Indicators. Of course, in Britain (at least) the gentlemen were grossly incompetent, the cars often broke down, the services were often grumpy (expressing something of the British attitude to such things), shops opened late and closed early and stayed closed over the weekends, the food was mostly dreadful, consumer goods shoddy, consumer durables clunky, and the unions rampaged. Still, there was something undeniably ‘human’ about those years that gives them an elegiac charm. In his effort to recreate a worthwhile world of work, Head never faces the possibility that the machines may be destroying jobs permanently…”

2. Annie Lowrey: Income Gap, Meet the Longevity Gap: “Fairfax County, Va., and McDowell County, W.Va., are separated by 350 miles, about a half-day’s drive. Traveling west from Fairfax County, the gated communities and bland architecture of military contractors give way to exurbs, then to farmland and eventually to McDowell’s coal mines and the forested slopes of the Appalachians. Perhaps the greatest distance between the two counties is this: Fairfax is a place of the haves, and McDowell of the have-nots. Just outside of Washington, fat government contracts and a growing technology sector buoy the median household income in Fairfax County up to $107,000, one of the highest in the nation. McDowell, with the decline of coal, has little in the way of industry. Unemployment is high. Drug abuse is rampant. Median household income is about one-fifth that of Fairfax. One of the starkest consequences of that divide is seen in the life expectancies of the people there. Residents of Fairfax County are among the longest-lived in the country: Men have an average life expectancy of 82 years and women, 85, about the same as in Sweden. In McDowell, the averages are 64 and 73, about the same as in Iraq…”

3. Nate Silver Interview: The New FiveThirtyEight: “JC: So if you all are the foxes, who’s a hedgehog? NS: Uhhhh, you know… the op-ed columnists at the New York Times, Washington Post, and Wall Street Journal are probably the most hedgehoglike people. They don’t permit a lot of complexity in their thinking. They pull threads together from very weak evidence and draw grand conclusions based on them. They’re ironically very predictable from week to week. If you know the subject that Thomas Friedman or whatever is writing about, you don’t have to read the column…. It’s people who have very strong ideological priors, is the fancy way to put it, that are governing their thinking. They’re not really evaluating the data as it comes in, not doing a lot of [original] thinking. They’re just spitting out the same column every week and using a different subject matter to do the same thing over and over. It’s ridiculous to me that they undermine every value that these organizations have in their newsrooms. It’s strange. I know it’s cheaper to fund an op-ed columnist than a team of reporters, but I think it confuses the mission of what these great journalistic brands are about…”

4. MOAR on the “slack” debate: Ryan Avent: Monetary policy: A few points on slack: “A DEBATE has broken out over just how close America is to full employment. I recommend comments on the subject from Tim Duy and Cardiff Garcia. I’ll make a few points…. 1) The labour market is tightening, as it has for at least the last two years, but it is objectively not tight…. 2) Having said that, we are approaching the point in the business cycle at which the Fed would historically begin tightening…. 3) There is some concern that there is less slack in the American economy than we would normally expect at an unemployment rate of 6.7%…. 4) The question is, should the Fed begin tightening at this point in the slack cycle?5) Wait, that’s not the right question at all! 6) The real question is, why, nearly five years into a recovery from the worst recession of the postwar period, with labour markets looking as bad as in the worst moments of most recent recessions, with full employment another year or two away, with inflation well below the official target, and with interest rates at the zero lower bound: why is the Fed not figuring how to accelerate the recovery? 7) And then, actually, the real question is why the real question, at least where most pundits are concerned, is… (4) rather than… (6). Answer that and you have a pretty good idea why the labour-market recovery has been so awful.”

Continue reading “Things to Read on the Afternoon of March 16, 2014” →

Robert Skidelsky: The Programmed Prospect Before Us: “Head’s indictments are impressive,

but at heart his book is a lament for a vanished world, that of the 1950s and 1960s, when gentlemen were still gentlemen, when digital controls were still in their infancy, when manufacturing was the main occupation of Western workforces, when services were still personalized, and when academics were paid to think, and not to produce useless papers to meet Key Performance Indicators. Of course, in Britain (at least) the gentlemen were grossly incompetent, the cars often broke down, the services were often grumpy (expressing something of the British attitude to such things), shops opened late and closed early and stayed closed over the weekends, the food was mostly dreadful, consumer goods shoddy, consumer durables clunky, and the unions rampaged. Still, there was something undeniably “human” about those years that gives them an elegiac charm. In his effort to recreate a worthwhile world of work, Head never faces the possibility that the machines may be destroying jobs permanently.

Continue reading “Afternoon Must-Read: Robert Skidelsky: Review of Simon Head’s “Mindless”” →

Annie Lowrey: Income Gap, Meet the Longevity Gap: “Fairfax County, Va., and McDowell County, W.Va., are separated by 350 miles, about a half-day’s drive.

Traveling west from Fairfax County, the gated communities and bland architecture of military contractors give way to exurbs, then to farmland and eventually to McDowell’s coal mines and the forested slopes of the Appalachians. Perhaps the greatest distance between the two counties is this: Fairfax is a place of the haves, and McDowell of the have-nots. Just outside of Washington, fat government contracts and a growing technology sector buoy the median household income in Fairfax County up to $107,000, one of the highest in the nation. McDowell, with the decline of coal, has little in the way of industry. Unemployment is high. Drug abuse is rampant. Median household income is about one-fifth that of Fairfax.

One of the starkest consequences of that divide is seen in the life expectancies of the people there. Residents of Fairfax County are among the longest-lived in the country: Men have an average life expectancy of 82 years and women, 85, about the same as in Sweden. In McDowell, the averages are 64 and 73, about the same as in Iraq…

No paper, just notes–a not-very-successful attempt to deliver on my promise to Larry Summers to think about “secular stagnation” issues. What I think economists need to be thinking about if we are semi-permanently in a world in which demand for safe assets is very high, trust in the private-sector ability to create and guarantee such assets is very low, and inflation remains low…

• Slides: Fiscal Policy in a Depressed Interest-Rate Environment: .pdf | .key
• Notes on Fiscal Policy in a Low-Interest Rate Environment:
  • The Historical Pattern of Interest Rates: .pdf | .pdf
  • Countercyclical Fiscal Policy: .pdf | .pages
  • The Treasury as Renaissance Banker for the Twenty-First Century: .pdf | .pages
  • Reinhart-Rogoff Issues: .pdf | .pages

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Cardiff Garcia: Jobs of the future and the gender-norm challenge: “Women hold about 60 per cent of the total jobs in the thirty occupations projected by the US Bureau of Labor Statistics to have the most net job growth in the decade through 2022….

If those trends don’t change, then the recent struggles of men–and especially young men–finding work in a labour market that continues to shift towards traditionally female-dominated occupations will only worsen…. ‘The most female-dominated majors remained that way; the male-dominated majors had continued increases in female representation through the early 2000s…. The same is largely true of occupations…. There is a deep social stigma that attaches to men who are perceived as feminine….’ Cohen’s useful point is that the present course is bad for everyone….

Continue reading “The Gender-Norm Challenge: Thinking About Cardiff Garcia’s Thoughts: Friday Focus: March 14, 2014” →

Nate Silver Interview: The New FiveThirtyEight: “JC: So if you all are the foxes, who’s a hedgehog?

NS: Uhhhh, you know… the op-ed columnists at the New York Times, Washington Post, and Wall Street Journal are probably the most hedgehoglike people. They don’t permit a lot of complexity in their thinking. They pull threads together from very weak evidence and draw grand conclusions based on them. They’re ironically very predictable from week to week. If you know the subject that Thomas Friedman or whatever is writing about, you don’t have to read the column…. It’s people who have very strong ideological priors, is the fancy way to put it, that are governing their thinking. They’re not really evaluating the data as it comes in, not doing a lot of [original] thinking. They’re just spitting out the same column every week and using a different subject matter to do the same thing over and over. It’s ridiculous to me that they undermine every value that these organizations have in their newsrooms. It’s strange. I know it’s cheaper to fund an op-ed columnist than a team of reporters, but I think it confuses the mission of what these great journalistic brands are about.

Continue reading “Nighttime Must-Read: Nate Silver Interview” →

Surgei Guriev: The Economic Costs of Russia’s Intervention in Ukraine: “What is not clear is whether Russia can bear the costs….

First, there are the direct costs of military operations and of supporting the Crimean regime and its woefully inefficient economy… several billion dollars per year….Then there are the costs related to the impact of sanctions on trade and investment…. Annual inward foreign direct investment is estimated to have reached $80 billion in 2013. A significant decline in FDI… would hit Russia’s long-term economic growth hard. And denying Russian banks and firms access to the US (and possibly European) banking system–the harshest sanction applied to Iran–would have a devastating impact.

Continue reading “Morning Must-Read: Sergei Guriev: Putin Costs the Russian Economy a Lot” →

On the career of the Washington Monthly:

Nicholas Lemann: A bygone age…: “In… 1976… our mission was to help [Jimmy] Carter make liberalism, the country’s reigning creed, function better.

Our name for this project was neoliberalism…. The Monthly was always more about an idea of the good society…. The magazine was from the very beginning wary of social fragmentation, overemphasis on market values, exaggerated mistrust of the public sector, and disproportionate elite power…. On these dimensions, it’s impossible to argue that things are better today than in the early days of the magazine….

Continue reading “On Nicholas Lemann’s Partial Recantation of His “Neoliberalism”: Thursday Focus: March 13, 2014″ →

Justin Fox: America’s Long and Productive History of Class Warfare: “Six days before the election, the Republican nominee for president attended a fund-raising dinner at a posh New York restaurant.

Two-hundred of the country’s richest and most powerful men were on hand. The next day, they were confronted with this… drawing… in the now-defunct New York World on Oct. 30, 1884. The candidate was James G. Blaine (the droopy-eyed fellow in the center of the picture who is about to dig in to some Lobby Pudding), and the man who subjected him to this harsh treatment was Joseph Pulitzer….

Continue reading “Morning Must-Read: Justin Fox: America’s Long and Productive History of Class Warfare” →