Category: Equitablog

Yuri Gorodnichenko: Crisis in Ukraine: A personal View:

Kathleen Maclay: Yuriy Gorodnichenko, a UC Berkeley associate professor of economics and a native of Ukraine, recently gave a public lecture on campus about what’s happening in his homeland. His talk was organized by Berkeley’s Institute of Slavic, East European, and Eurasian Studies (ISEEES), and cosponsored by the EU Center as part of its Rapid Response Forum…. UC Berkeley Public Affairs followed up with Gorodnichenko with the following Q&A:

Continue reading “Yurii Gorodnichenko: Crisis in Ukraine: A Personal View: Monday Focus: Februrary 10, 2014” →

Ezra Klein: Comment on Paul Krugman’s “Who’s Savvy Now?”: “I don’t quite understand the model of politics underlying the backlash-to-the-backlash over the CBO report.

The theory is that though the GOP’s initial spin on the report was wrong it’s meta-right because the lies will be used to power effective attack ads in the fall–and in politics, what’s true, and what voters can be tricked into believing is true, are two equally valid categories for inquiry. You see this model of politics… particularly during elections… wall-to-wall coverage of gaffes not because anyone believes the gaffe was important, but because they believe it might end up in attack ads. Beneath that model of politics lies an assumption that an important scarcity in politics is ‘lines that can be used in attack ads’, and so every time one party or the other finds one of those lines, it’s a big deal. This seems to me to wildly underestimate the creativity of the people who make attack ads….

Continue reading “Night-Time Must-Read: Ezra Klein: I Don’t Quite Understand the Model of Politics in Which There Is Assumed to Be a Huge Scarcity of Lines to Use in Attack Ads…” →

This I had planned to push across the line on Sunday. But it is not done–and it is not going to be done by Sunday unless inspiration strikes. Why not? Because I find myself a Bear of Too-Little Brain to think these issues through sufficiently clearly.

Therefore let me push the first draft out the door now, in the hope that somebody smarter than I am will give me an intellectual nudge…

I: The Lesson

The first part of our lesson for today consists of a piece based on his AEA presentation by the terrifyingly brilliant Lawrence Summers: Strategies for sustainable growth: “Last month I argued that the U.S. and global economies may be in a period… in which sluggish growth and output, and employment levels well below potential… coincide… with problematically low real interest rates….

Continue reading “FiRST DRAFT: What Market Failures Underlie Our Fears of “Secular Stagnation”?: The Honest Broker for the Week of February 15, 2014″ →

John Quiggin: Work and Beyond: “Ross Douthat… link[ed] to… [my] reflecting on Keynes ‘Economic Possibilities for our Grandchildren’….

Now he’s addressed the topic in the New York Times…. There’s some interesting food for thought… mixed up with some silly stuff reflecting his job as the NY Times token Republican…. He has to do some damage control over the… Repub lie… Obamacare will cost 2.5 million jobs. As Douthat delicately puts it ‘this is not exactly right’. But, although his heart clearly isn’t it, he tries to construct a narrative in which the Repubs might be right for the wrong reasons…. More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while… poorer men have withdrawn from the formal labour force….

Continue reading “Morning Must-Read: John Quiggin: Economic Possibilities for Our Grandchildren–and For Us” →

Must-Reads:

1. Paul Krugman:

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2. Dani Rodrik: When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations: “Ideas are strangely absent from modern… political economy…. the dominant role is instead played by ‘vested interests’…. I will challenge the notion that there is a well-defined mapping from ‘interests’ to outcomes… ideas are subject to both manipulation and innovation, making them part of the political game. There is, in fact, a direct parallel, as I will show, between inventive activity in technology, which economists now routinely make endogenous… and investment in persuasion and policy innovation…. I focus specifically on models professing to explain economic inefficiency and argue that outcomes in such models are determined as much by the ideas that elites are presumed to have on feasible strategies as by vested interests…”

3. Austin Frakt: Cut out the noise and read the CBO report: “All right, enough. I’ve read enough… about what CBO said…. You know what the best thing I read was? The CBO report…. Obamacare will affect the labor market… the removal of… distortion[s]… the addition of [other] distortions… Cadillac tax… employer mandate…. You can cherry pick the anti- or pro-distortionary features to hang this number on, to make the law look awesome or terrible. That’s what you’re seeing in the debate. But skip it…. No other health reform plan that expands coverage would do so without affecting the labor market in good and bad ways. Ultimately, this is not really a debate about Obamacare but about the effects of almost any coverage-expanding reform…. Tune out the noise and read the damn report.”

4. David Weigel: CBOghazi: Journalists have no idea “what will matter” in an election: “Chris Cillizza… defending [his] post…. Journalists, in real time, are not the best arbiters of what people will come to believe months later. The fact that one party is spinning an incorrect story does not mean voters will buy that story…. [Cilizza’s] the Fix pronouncing that some misinterpreted news item was going to badly wound the Democrats. On June 10, 2012, Cillizza confidently predicted that a gaffe you’ve probably forgotten about—President Obama saying that ‘the private sector’s doing fine” compared with the state of social programs—would ‘be fodder in the general election’…. Fix writer Aaron Blake explained why Obama’s exhortation that ‘if you’ve got a small business, you didn’t build that’… would be a problem…. Did it matter? No. Mitt Romney did not win the election…”

Continue reading “Things to Read on the Afternoon of February 8, 2014” →

The incredibly industrious Mark Thoma sends us to Dani Rodrik: When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations: “Ideas are strangely absent from modern models of political economy. In most prevailing theories of policy choice, the dominant role is instead played by ‘vested interests’—elites, lobbies, and rent-seeking groups which get their way at the expense of the general public.

Any model of political economy in which organized interests do not figure prominently is likely to remain vacuous and incomplete. But it does not follow from this that interests are the ultimate determinant of political outcomes. Here I will challenge the notion that there is a well-defined mapping from “interests” to outcomes. This mapping depends on many unstated assumptions about the ideas that political agents have about: 1) what they are maximizing, 2) how the world works, and 3) the set of tools they have at their disposal to further their interests.

Continue reading “Morning Must-Read: Dani Rodrik: Ideas and Interests Are Dangerous for Good and Ill” →

Austin Frakt: Cut out the noise and read the CBO report: “All right, enough. I’ve read enough… about what CBO said….

You know what the best thing I read was? The CBO report itself… a discussion of myriad ways Obamacare will affect the labor market. Some are reasonably construed as the removal of a distortion…. Some other effects can be reasonably construed as the addition of distortions…. Then there’s the mixed bag of the Cadillac tax…. And there’s the employer mandate…. You can cherry pick the anti- or pro-distortionary features to hang this number on, to make the law look awesome or terrible. That’s what you’re seeing in the debate. But skip it…. No other health reform plan that expands coverage would do so without affecting the labor market in good and bad ways. Ultimately, this is not really a debate about Obamacare but about the effects of almost any coverage-expanding reform…. Tune out the noise and read the damn report.

The household-survey seasonally-adjusted employment-to-population ratio jumped a surprisingly large amount in January: from 58.6% to 58.8%. The household-survey not-seasonally-adjusted employment-to-population ratio fell a surprisingly small amount in January: from 58.5% to 58.1%. The seasonal-adjustment factor did its standard recent thing for January: jumped from -0.1%-point to -0.7%-point:

We had this surprising dip in raw employment-to-population in October, when businesses are usually staffing-up for the Christmas rush. Is that connected? That is what I want to know this morning. And I cannot find anybody with both (a) the time and (b) the knowledge to tell me this morning…

Household employment seasonal adjustment factors since 1980 (January 2014 missing–it’s -0.7%-points):

Continue reading “The Employment Report: Friday Focus: February 7, 2014” →

David Weigel: CBOghazi: Journalists have no idea “what will matter” in an election.: “Chris Cillizza… defending [is] post he wrote about the political damage the CBO’s report might inflict on Democrats….

Here’s the problem: Journalists, in real time, are not the best arbiters of what people will come to believe months later. The fact that one party is spinning an incorrect story does not mean voters will buy that story…. From some previous instances of [Cilizza’s] the Fix pronouncing that some misinterpreted news item was going to badly wound the Democrats. On June 10, 2012, Cillizza confidently predicted that a gaffe you’ve probably forgotten about—President Obama saying that “the private sector’s doing fine” compared with the state of social programs—would “be fodder in the general election.”… In July of that year, Cillizza’s fellow Fix writer Aaron Blake explained why Obama’s exhortation that “if you’ve got a small business, you didn’t build that”… would be a problem…. Did it matter? No. Mitt Romney did not win the election….

Continue reading “Morning Must Read: David Weigel: The CBOghazi of Chris Cilizza (and Others): Journalists have no idea “what will matter” in an election.” →

Must-Reads:

1. Mark Peters and David Wessel: More Men in Prime Working Ages Don’t Have Jobs: “Mark Riley was 53 years old when he lost a job as a grant writer for an Arkansas community college. ‘I was stunned’, he said. ‘It happened on my daughter’s 11th birthday’. His boss blamed state budget cuts. That was almost three years ago and he still hasn’t found steady work…. More than one in six men ages 25 to 54, prime working years, don’t have jobs—a total of 10.4 million. Some are looking for jobs; many aren’t…. Having so many men out of work is partly a symptom of a U.S. economy slow to recover from the worst recession in 75 years. It is also a chronic condition that shows how technology and globalization are transforming jobs faster than many workers can adapt, economists say.”

2. Robert M. Solow: The One Percent: “Mankiw’s… paper… without making an explicit claim, carries on tacitly as if the One Percent consists mainly of entrepreneurs whose innovations generate a lot of consumer surplus for the world. There would be less alarm if that were so. But… the financial services industry… trading profits… the payoff to asymmetric information, and generates precious little in the way of aggregate consumer surplus…. From 1970 to about 1995, the median realized compensation for chief executive officers in Standard and Poor’s 500 broker-dealer firms was essentially indistinguishable from that of Standard and Poor’s 500 banks and industrials. Rather suddenly, between 1996 and 2006, the median broker-dealer chief executive officer started to collect anywhere between 7 and 10 times the median compensation of the other two groups. This does not smell like the Goldin and Katz (2008) story. I’ll swallow “innovation,” but socially productive innovation, no thanks. Extreme inequality is not primarily about useful entrepreneurs. On financial profits and inequality, Mankiw waffles uncomfortably.”

3. Jonathan Chait: The Lonely Death of the Republican Health Plan: “Last week, Republican Senators Tom Coburn, Richard Burr, and Orrin Hatch unveiled a health-care proposal – or, at least, a close approximation of one. Conservatives hailed it as a seminal event, the moment when the Republican Party would finally dispel the accusation of mindless obstructionism and assert its full equal status as a vessel for serious health-care policymaking. Ross Douthat rejoiced, ‘mirabile dictu, an actual health care reform proposal!’ The new plan ‘explode[s] the myth’, exulted a National Review editorial, that ‘Obamacare or something like it is the only game in town’…”

4. Tim Duy: Markets Tumble. How Will the Fed React?: “The Fed’s decision to taper despite the obvious challenge to their inflation target looks increasingly questionable…. Across the Curve points us to the Wall Street Journal’s anecdotal account of intense pricing pressures (and still weak demand) facing firms…. Despite the Fed’s claim that tapering is not tightening, that it is the stock of assets held, not the flow, that matters, that they could change the policy mix without changing the level of accommodation, market participants are acting as if tapering is indeed tightening…. Bond market participants, who had been starting to get optimistic that improving economic conditions would prompt the Fed to tighten sooner than later are now rethinking that scenario…. If this keeps up, it looks like Yellen will face an early test in her first few weeks as Chair. And I would say there is a good chance this does keep up until the Fed changes direction and decides that the US economy may not have reached escape velocity as believed…. The hawks fought long and hard for the taper; they will not be easily dissuaded from by a few sloppy days on Wall Street….”

Continue reading “Things to Read at Dinnertime on February 6, 2014” →