Jeff Bercovici Interviews Gawker’s Nick Denton About the Dialogue: Wednesday Focus: February 26, 2014

As we attempt to figure out how to carry out a proper technocratic dialogue in the public sphere of the future, one of the people we pay very close attention to is Nick Denton:

Jeff Bercovici: The Playboy Interview: A Candid Conversation with Gawker’s Nick Denton: “BERCOVICI: You’ve said the mission of Gawker is to publish the stories that journalists talk about with one another in private but never write.

DENTON: Yeah, the founding myth of Gawker happens to be true. I was… at the Financial Times… struck by the gap between the story that appears in the paper the next day and what the journalist who wrote that story will tell you about it after deadline… much more interesting—legally riskier, sometimes more trivial, and sometimes it fits less neatly into the institution’s narrative. Usually it’s a lot truer. The very fact that a journalist will ask another journalist who has a story in the paper, “So what really happened?”—now, just think about that question. It’s a powerful question…. We need reader help. If we’re covering you, we need your colleagues to rat you out or your exes to put in bits and pieces. It has to be a collaborative effort….

When people take a look at the change in attitudes toward gay rights or gay marriage, they talk about… celebrities who came out…. But even more powerful are all the friends and relatives, people you know… no longer some weird group of faggots on Christopher Street…. My presumption is the internet is going to be… big…. You’re going to be bombarded with… information, humanity, texture…. The internet is a secret-spilling machine, and the spilling of secrets has been very healthy for a lot of people’s lives.

Continue reading “Jeff Bercovici Interviews Gawker’s Nick Denton About the Dialogue: Wednesday Focus: February 26, 2014”

Evening Must-Read: Matthew O’Brien: How the Fed Let the World Blow Up in 2008

NewImage

Matthew O’Brien: How the Fed Let the World Blow Up in 2008: “It was the day after Lehman failed, and the Federal Reserve was trying to decide what to do….

The Fed was blinded. It had been all summer. That’s when high oil prices started distracting it from the slow-burning financial crisis. They kept distracting it in September, even though oil had fallen far below its July highs. And they’re the reason that the Fed decided to do nothing on September 16th… and said that “the downside risks to growth and the upside risks to inflation are both significant concerns.” In other words, the Fed was just as worried about an inflation scare that was already passing as it was about a once-in-three-generations crisis…. The world changed on August 9, 2007. That’s when French bank BNP Paribas announced that it wouldn’t let investors withdraw money…. You can see this credit crunch in the chart… [that] shows the TED spread… during a financial crisis, it blows up: banks charge each other punitively high interest rates, and pile into government bonds they know are safe…. We might [have] muddle[d] through with something like the 1990 recession…. This is the three-chapter story of why that didn’t happen, the story of the three Fed meetings that took place during the summer of 2008….

Continue reading “Evening Must-Read: Matthew O’Brien: How the Fed Let the World Blow Up in 2008”

When Measuring Mobility, Location Still Matters

When the Equality of Opportunity Project released new data on mobility at the end of January the initial headlines focused on the authors’ overarching finding that mobility at the national level had basically stayed the same while inequality had risen over the past half century. Most of the media coverage, however, missed the nuances at local and regional levels that were discussed in the paper. So we decided to use the data to make some visuals that help pull those nuances out.

In this post you’ll find five maps that examine changes in local and regional mobility measured by income mobility, college mobility, and a composite mobility measure. The different presentations of the data demonstrate that intergenerational mobility over this period of time in the United States has changed substantially by region even if the national average remained stable.

As you’ll see, the first three maps show that by several measures of mobility the South and West experienced the highest gains in mobility over this period, while much of New England, the Rust Belt and upper Midwest saw declines in mobility.  But when looking at the level of mobility, the South has remained among the lowest despite the improvements while most of the West started with fairly high mobility and has generally gotten better.

Let’s start with changes in composite economic mobility at the local level. Check out Map 1 below. (Note: Green areas saw an increase in mobility, red areas saw a decline, and the color intensity reflects by how many standard deviations mobility changed—how much mobility increased or decreased.

Map 1

 

Source: Washington Center for Equitable Growth

To make these maps, we standardized the mobility changes for each measure. In technical language, we divided the difference between the initial measure and the weighted mean value by the weighted standard deviation. Thus, for each of the standardized variables, the average value is zero and the standard deviation is one.

The data in the map above are a composite measure of mobility that uses the income and college mobility data from the Chetty et al (2014) data. To get an idea about how economic mobility changed over time, we calculated the change in mobility across birth cohorts. For income mobility, this is simply the difference between the 1986 value of relative mobility and the 1980 value. Likewise, the change in college mobility was determined by taking the difference between the 1993 and 1984 values. The composite measure was constructed by summing the standardized income and college mobility changes for each commuting zone. It is important to note that because both the college and income measures include the years 1984-1986, those years are double-counted in the composite measure—though this does not appear to impact the results substantively.

To be clear, the years referenced in the data set are the years an individual was born. The data for 1987, for example, captured information on individuals born in 1987.

Now you may be asking if the trends look different for the different data sources. To help answer those questions, we have Map 2, which uses data on income mobility and Map 3, which uses data on college mobility.

Map 2

 

Source: Washington Center for Equitable Growth

Map 3

 

Source: Washington Center for Equitable Growth

Looking at Map 1, we noticed that this seemed to be very different from the places that had high mobility in the starting period (which can be seen in the first working paper by the Equality of Opportunity team).  Map 4 has the income mobility from 1980 shaded by decile. The red portions in the South, Rust Belt, and Southwest regions of the United States indicate that those are parts of the country with the lowest absolute mobility. Those with dark green, mostly in the West, Midwest and New England, have the highest economic mobility. Map 5 has the income mobility from 1986 shaded by decile which looks similar but distinctly different.

Map 4

 

Source: Washington Center for Equitable Growth

Map 5

 

Source: Washington Center for Equitable Growth

The take away: Not only does intergenerational mobility vary quite a bit in the United States but the changes in mobility vary quite a bit by region as well. And while mobility in the United States may not have changed overall, mobility has changed for individual local labor markets. If we want to understand the roots of intergenerational mobility then our best shot seems to be understanding the differences at the local level.

Interested in more about the data? Here’s some more information.

I’ll first try to provide an idea of what the data look like. Table 1 has the information from the new data set for the Johnson City, TN commuting zone:

Table 1: Sample of the Mobility Data Set

Commuting Zone CZ Name Birth Cohort Income Age 26 Slope Income Age 26 Intercept College Age 19 Slope College Age 19 Intercept  Number of Children

100

Johnson City, TN

1980

0.275

0.353

   

5,941

100

Johnson City, TN

1981

0.29

0.348

   

6,202

100

Johnson City, TN

1982

0.304

0.332

   

6,337

100

Johnson City, TN

1983

0.31

0.335

   

6,108

100

Johnson City, TN

1984

0.284

0.349

0.942

-0.014

6,240

100

Johnson City, TN

1985

0.295

0.35

0.933

-0.012

6,433

100

Johnson City, TN

1986

0.3

0.341

0.903

-0.018

6,341

100

Johnson City, TN

1987

   

0.929

-0.028

6,355

100

Johnson City, TN

1988

   

0.885

0.012

6,449

100

Johnson City, TN

1989

   

0.854

0.009

6,725

100

Johnson City, TN

1990

   

0.873

0.018

6,831

100

Johnson City, TN

1991

   

0.838

0.025

6,735

100

Johnson City, TN

1992

   

0.827

0.014

6,557

100

Johnson City, TN

1993

   

0.831

0.02

6,261

 

The column titled “Income Age 26 Slope” is the difference in the average income rank at age 26 of someone from a high-income family compared to someone from a low-income family. This was calculated from 1980 to 1986 for each commuting zone and serves as one measure of economic mobility as described in Chetty et al. (2014). We used this “Income Age 26 Slope” data for the income mobility measure.  The column titled “College Age 19 Slope” is the gap in the college attendance rate at 19 between people from high-income families compared to those from low-income families. In both cases, higher numbers indicate lower economic mobility. We used this data for the college mobility measure.

For the Johnson City commuting zone, the income mobility of 26-year-olds born between 1980 and 1986 decreased slightly because the gap in the outcomes between the children of low-income and high-income families grew. For people born between 1984 and 1993 in the Johnson City, Tennessee area, the college mobility increased slightly.

Table 2 has the mean, standard deviation, population-weighted mean (for these, the population is the cohort size), and population-weighted standard deviation for the changes in mobility for the income, college, and composite mobility measures. For each of these measures, a negative value indicates a smaller gap between people born into low-income and high-income and thus higher mobility.

Table 2: Summary Statistics for the Various Measures

  Mean St. Dev. Weighted Mean Weighted St. Dev.
Income 0.0082 0.0546 0.0088 0.0568
College -0.0613 0.1059 -0.0583 0.1123
Composite -0.0536 0.1249 -0.0500 0.1310

 

For each mobility measure we plot a histogram that shows the number of commuting zones that display a particular range of mobility changes. Each of the histograms peaks near zero, which suggests the most common change in mobility is little or no change in mobility. (Recall that, based on the way the variables were constructed, a higher negative value means higher mobility over time.) For the change in income mobility there is little variation over time, but the change in college mobility has a much higher variation over time, as reflected in the higher range of values displayed on the horizontal axis. In part, this may be due to the longer time frame for the college variation (10 years) compared to income (7 years).

Histogram 1

 

Histogram 2

 

Histogram 3

 

For the income mobility measure, the average among the commuting zones is basically zero but there is substantial variation in the trajectory over time (you can tell this from the breadth of the histograms or from the size of the standard deviation in Table 2). There is a slight increase in college mobility overall, which leads to a slight increase in the composite mobility. The spread for the college mobility is even higher than for income indicating a large distribution in trajectories between regions.

We tested the relationship between the change in the mobility and the starting mobility and found a significant “reversion to the mean,” which is to say that local mobility has been trending toward a national rate over time.  Table 3 has the regression coefficients for the change in income mobility and college mobility as a function of the starting mobility (mobility in 1980 for income and 1984 for college).  The negative coefficients indicate that the trend has been for a lower change in mobility for places with a higher initial mobility. Essentially, this means that the places that were good have been tending to get worse and the places that were bad have been tending to get better.

Table 3: Regression Results of Initial Income Mobility on the Change in Mobility

  Coefficient P-Value Adjusted R^2
Income Mobility 1980-86 -0.36 <0.001 0.24
College mobility 1984-93 -0.55 <0.001 0.25

 

While this is statistical evidence that regional variations are becoming less important, these regional differences are still significantly stronger than temporal differences. We have only scratched the surface of these data and we hope to come out with some more analysis in the future. If you are interested in some of our other analysis of these economic mobility studies, you can read about it here: mobility vs. manufacturing employment, the Gatsby Curve, and mobility vs. growth. We hope that this analysis can further the discussion.

Morning Must Read: Jon Hilsenrath Looks at the Fed in 2008

Jon Hilsenrath: Geithner Among Fed Losers in 2008, Dudley Among Winners: “The story on Chairman Ben Bernanke has been written many times: He was slow to respond… but moved with command and authority… once he recognized what was at stake.

How about everyone else? Here’s a subjective rundown….

WINNERS: William Dudley, head New York Fed’s markets group: He got it…. His presentations to the Fed’s policy making Federal Open Market Committee throughout the crisis were thorough and raised the right red flags….He almost always handled questions from doubting policy hawks—the officials who tended to be more focused on inflation risks– with a cool hand…. Boston Fed President Eric Rosengren: At almost every point in the crisis, he put his fingers on real problems…. San Francisco Fed President Janet Yellen: We’ve already reported that transcripts from 2008 and earlier Fed policy meetings showed Ms. Yellen, now Fed chairwoman, had pretty good judgment about risks brewing in housing, the financial markets and the broader economy….

LOSERS: New York Fed President Timothy Geithner: Mr. Geithner, a future Treasury Secretary, ran the New York Fed through most of 2008. He was supposed to be the Fed’s eyes and ears on Wall Street, but events spun out of his control. His commentary at meetings lacked Mr. Dudley’s precision and he often appeared engrossed in disagreements with the Fed’s policy hawks…. Mr. Geithner was asked by a colleague if he was in touch with the bond insurers. He responded vaguely…. Later at that January meeting he offered this assessment of financial conditions: ‘In the financial markets, I think it is true that there is some sign that the process of repair is starting’…. Fed Vice Chairman Donald Kohn felt the need to gently push back in that case in January: ‘The repair process that President Geithner referenced among financial institutions strikes me as very fragile and quite incomplete’. Bear Stearns collapsed several weeks later….

Continue reading “Morning Must Read: Jon Hilsenrath Looks at the Fed in 2008”

Things to Read on the Morning of February 26, 2014

Must-Reads:

  1. Evan Soltas: Why Unions Can’t Be Saved: “I’m grateful to Michael Wasser of ‘Jobs With Justice’, a labor-rights organization, for writing a reply to my Bloomberg post this week on the death of American labor unions. Wasser’s argument is straightforward: Unions aren’t dead yet, and they are the only way to get public policies that advance labor and reduce inequality…. I disagree…. I think unions are far more likely to grow weaker over, say, the next ten years than they are to grow stronger. And I think that there are many other ways to advance labor–ways that are, to my taste, preferable to re-unionization…. [I think the] union decline has been driven by economic competition… [and] that U.S. labor law had limited impact. If the decline is permanent, furthermore, Wasser’s claim about uniqueness… is merely a statement of pessimism. Yet I still find that pessimism implausible if one considers this graph (via Jared Bernstein) showing the broad increase in wages in the 1990s…. Unionization was also low then. How did wages rise so quickly, then, for the bottom half of the wage distribution? You can thank full employment. The chart Wasser puts at the top of his post–the strong negative relationship between unionization and inequality–is the reason he thinks unions are needed. As for me, it’s the reason I think unions are doomed.”

  2. Elizabeth Nolan Brown: Weak Government Regulations Made Me Do It, Legal Sea Foods CEO Claims: “Over the weekend, a carbon monoxide leak in a Long Island Legal Sea Foods restaurant resulted in 27 hospitalizations and one death. Now the head of the upscale chain is trying to pin the blame for the leak—the result of a defective heating system, authorities say—on inadequate government regulations. New York state fire code requires carbon monoxide detectors in locations where people sleep but not in restaurants, shops, or other commercial establishments. In a statement Sunday, Roger Berkowitz, president and CEO of Legal Sea Foods, said the tragedy ‘highlights the inadequacy of the codes for carbon monoxide detectors in commercial spaces’. How about the inadequacy of Legal Sea Foods’ efforts to protect its customers and workforce? Conspicuously lacking from Berkowitz’s statement was any hint of personal responsibility for the poisonings…. It’s absurd to suggest this tragedy is rooted in a failure of regulatory oversight…. The Long Island mall in which Legal Sea Foods operates is fitted with multiple carbon monoxide detectors, according to Newsday. And it seems the mall’s owners got the gumption to do this without any sort of legal requirement. After all, not killing or sickening employees and customers is only good business sense…. For under $25 and 10 minutes of forethought, this Legal Sea Foods tragedy could have been prevented. Instead, the restaurant’s leadership decided to meet only the bare minimum of safety requirements—and that’s on them.” 

  3. Daniel Kuehn: Facts & other stubborn things: Caplan on the college premium: “The earnings advantage of college students has been substantial, but graduation rates have barely moved. Why? Bryan offers evidence that these earnings are highly conditional on graduation, and that since expected graduation rates vary many students with low expected graduation rates are not going to be enticed by the premium. I think this is a great example of differentiating between marginal behavior properly understood and naive assumptions about what the outcomes of marginal behavior should be…”

  4. Joe Deaux: The Story of the Federal Reserve the Day After Lehman Brothers Collapsed: “Hours after Lehman Brothers tumbled into history as the largest bank failure in U.S. history, Federal Reserve Chairman Ben Bernanke’s concerns focused elsewhere. Opening remarks on Sept. 16, 2008, according to transcripts released by the central bank on Friday, revealed that Bernanke and members of the Fed’s policy-making wing–the Federal Open Market Committee–were uncertain how the Lehman bankruptcy would affect the broader economic system…. The Fed… turned its attention to a discussion of whether to raise the federal funds rate, which on that day sat at 2%…. Lockhart predicted that the federal funds rate target would remain around the current 2% level for ‘several months’ going into 2009, and he recommended that the Fed not change the rate at that meeting. Boston Fed President Eric Rosengren, whose comments pushed for the most accommodative monetary policy, offered a grim outlook…. ‘The failure of a major investment bank, the forced merger of another, the largest thrift and insurer teetering, and the failure of Freddie and Fannie are likely to have a significant impact the real economy…. Individuals and firms will become risk averse, with reluctance to consume or to invest’ Rosengren said he supported a 25 basis-point cut to the Fed funds rate…”

  5. Jose Pagliery: Mt.Gox Site Disappears, Bitcoin Future in Doubt: “What was once the world’s largest trading platform for bitcoins is now a blank page. The Bitcoin-trading website Mt.Gox was taken offline late Monday…. The exchange also deleted all of its tweets…. Mt. Gox CEO Mark Karpeles resigned from the Bitcoin Foundation’s board of directors on Sunday…. An unverified document called ‘Crisis Strategy Draft’ that is being circulated online claims Mt.Gox has lost 744,408 of its users’ bitcoins, worth nearly $367 million…. Mt.Gox has been mired in problems ever since Feb. 7, when it halted withdrawals from its trading accounts…. By the time trading at Mt. Gox was halted entirely late Monday, the price of a Bitcoin there had dropped significantly, to $130. Meanwhile it was trading for more than four times that on other exchanges. Late on Monday, several other Bitcoin exchanges sought to reassure investors and took a harder line with Mt. Gox. ‘This tragic violation of the trust of users of Mt.Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry’, the groups said in a statement…”

Continue reading “Things to Read on the Morning of February 26, 2014”

Mt.Gox Site Disappears, Bitcoin Future in Doubt

Jose Pagliery: Mt.Gox Site Disappears, Bitcoin Future in Doubt: “What was once the world’s largest trading platform for bitcoins is now a blank page.

The Bitcoin-trading website Mt.Gox was taken offline late Monday…. The exchange also deleted all of its tweets…. Mt. Gox CEO Mark Karpeles resigned from the Bitcoin Foundation’s board of directors on Sunday…. An unverified document called ‘Crisis Strategy Draft’ that is being circulated online claims Mt.Gox has lost 744,408 of its users’ bitcoins, worth nearly $367 million…. Mt.Gox has been mired in problems ever since Feb. 7, when it halted withdrawals from its trading accounts…. By the time trading at Mt. Gox was halted entirely late Monday, the price of a Bitcoin there had dropped significantly, to $130. Meanwhile it was trading for more than four times that on other exchanges. Late on Monday, several other Bitcoin exchanges sought to reassure investors and took a harder line with Mt. Gox. ‘This tragic violation of the trust of users of Mt.Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry’, the groups said in a statement…

Afternoon Must-Read: Evan Soltas: To Say Unions Are Essential to Reduce Inequality Is a Counsel of Despair

Evan Soltas: Why Unions Can’t Be Saved: “I’m grateful to Michael Wasser of ‘Jobs With Justice’, a labor-rights organization, for writing a reply to my Bloomberg post this week on the death of American labor unions.

Wasser’s argument is straightforward: Unions aren’t dead yet, and they are the only way to get public policies that advance labor and reduce inequality…. I disagree…. I think unions are far more likely to grow weaker over, say, the next ten years than they are to grow stronger. And I think that there are many other ways to advance labor–ways that are, to my taste, preferable to re-unionization…. [I think the] union decline has been driven by economic competition… [and] that U.S. labor law had limited impact. If the decline is permanent, furthermore, Wasser’s claim about uniqueness… is merely a statement of pessimism. Yet I still find that pessimism implausible if one considers this graph (via Jared Bernstein) showing the broad increase in wages in the 1990s…. Unionization was also low then. How did wages rise so quickly, then, for the bottom half of the wage distribution? You can thank full employment. The chart Wasser puts at the top of his post–the strong negative relationship between unionization and inequality–is the reason he thinks unions are needed. As for me, it’s the reason I think unions are doomed.

Yes, Christina Romer and Jared Bernstein Were Far on the Pessimistic (and Correct) Side of Forecast Consensus in December 2008. Why Do You Ask?

One of the many, many interesting things in the Federal Reserve’s 2008 transcripts is the staff briefing materials for the mid-December FOMC meeting, which include:

Www federalreserve gov monetarypolicy files FOMC20081216material pdf
Www federalreserve gov monetarypolicy files FOMC20081216material pdf 2

Continue reading “Yes, Christina Romer and Jared Bernstein Were Far on the Pessimistic (and Correct) Side of Forecast Consensus in December 2008. Why Do You Ask?”

Department of “Huh?!”: How You Play Your Hand Determines What Hand You Hold Weblogging

But the very things that allow Putin to “play the great game more effectively” in foreign policy are, in domestic policy, the sources of Russia’s corruptness, unattractiveness, and weakness! Neoconservative alls for America’s foreign policy to be more like Russia’s spill over into domestic affairs and make America weaker, less attractive, and more corrupt:

Ross Douthat: The Games Putin Plays: “Which is not to say that Putin’s geopolitical approach is all folly.

On the contrary, he often plays the great game far more effectively than his European and American counterparts. But the weakness of Russia, its government’s corruption and the unattractiveness of its alleged traditionalism all combine to foreclose his grandest ambitions…