Category: Equitablog

A couple of weeks ago Matthew Miller and Peter Newcomb gave Bloomberg News’s take about how, in 2013, it was very good to be the billionaire. Insanely good. Crazy good:

Matthew G. Miller and Peter Newcomb: Billionaires Worth $3.7 Trillion Surge as Gates Wins 2013: “The richest people on the planet got even richer in 2013, adding $524 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 wealthiest individuals… aggregate net worth… stood at $3.7 trillion at the market close on Dec. 31, according to the ranking…. Bill Gates… was the year’s biggest gainer… fortune increased by $15.8 billion to $78.5 billion… as… Microsoft… rose 40 percent… recaptured the title of world’s richest person… from… Carlos Slim….

Continue reading “In 2013 It Was Very Good to Be the Billionaire: Up from $3.2 to $3.7 Trillion: Monday Focus” →

Since I already published roughly the first half of What Market Failures Underlie Our Fears of “Secular Stagnation”?: The Honest Broker for the Week of January 12, 2014 in draft form last week, let me publish the second half here now a second time for those of you who would otherwise say: “tl;dr”…

Continue reading “What Policy Conclusions Follow from Our Fears of “Secular Stagnation”?” →

Steve M.: Paul Krugman has responded to an article by National Review’s Kevin Williamson about poverty in Appalachia “‘Williamsons piece… has a moral: the big problem, it argues, is the way government aid creates dependency. It’s the Paul Ryan notion of the safety net as a ‘hammock’ that makes life too easy for the poor…. The underlying story of Appalachia is in fact one of declining opportunity…’

Williamson thinks the proper response to that is self-righteous smugness, with a dose of class warfare….

Continue reading “Lunchtime Must-Read: Steve M. on the Class War Dialogue” →

Mike Konczal: No, we don’t spend $1 trillion on welfare each year:

If you’ve read any conservative commentary on the war on poverty in the past week, you’ve likely seen this talking point: “We spend $1 trillion each year on welfare and there’s been no reduction in poverty.” That’s crazy! Then, a sentence later, you’ll probably see a line like this: “It’s true. According to a recent report, we spend a trillion dollars on means-test programs each year, yet the official census numbers show no reduction in poverty.”… If you are reading that second line quickly, you probably think it bolsters the credibility of the first line…. The second sentence is actually used as an escape hatch to say something that isn’t true. We don’t spend anywhere near a trillion dollars on welfare unless you mangle the term “welfare” to be meaningless, and we do reduce poverty…. Dylan Matthews has already dissected the claim that poverty hasn’t declined…. It’s just that the ‘official’ poverty rate doesn’t factor in the earned-income tax credit or food stamps in its calculations….

The claim about $1 trillion on ‘welfare’ is more interesting and complicated. It shows up in this recent report from the Cato Institute…. The federal government spends just $212 billion per year on what we could reasonably call ‘welfare’…. We can’t have a productive conversation unless we make it clear what the government is, and is not, doing. And it is spending a lot less on welfare than conservatives claim, and getting fantastic results for what it does spend.

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Jared Bernstein: Will the Real Unemployment Rate Please Stand Up?:

Let’s be conservative and say that 2/3 of the decline in the labor force [participation] rate is “fixable,” i.e., at full employment it would eventually be reversed. Then the unemployment gap is: 6.7 + (2/3 x 3.4) – 5.5 or about 3.5 ppts (that 3.4 is the drop in the labor force rate using quarterly data since its pre-recession peak).  And you will very quickly notice that 3.5 > 1.2, the latter being the naïve gap as per u – u*. One last thing.  I wouldn’t be so quick to plug 5.5 [as the natural rate of unemployment] into all those equations above.  As Dean and I argue, the NAIRU is probably biased up as well.  If you use, say, 4.5 instead that’s another percentage point of slack.

Fed chair Janet Yellen (still getting used to writing that!) knows this stuff but it’s still worth making a lot of noise about.  It’s certainly not well understood by those members of Congress arguing that the decline in the jobless rate means they don’t need to extend UI. The real unemployment rate is a good bit higher than 6.7%–forget the speedometer: we’re not going 60… we’re going 40.  So keep that foot off the brake for now.

Must-Reads:

1. Paul Krugman: A Hammock In Kentucky?: “National Review has an actually interesting report by Kevin Williamson on the state of Appalachia… [the] moral: the big problem, it argues, is the way government aid creates dependency. It’s the Paul Ryan notion of the safety net as a ‘hammock’…. But do the facts about Appalachia actually support this view? No, they don’t. Indeed, even the facts presented in the article don’t….

   “Williamson dismisses suggestions that economic factors might be driving social collapse: ‘If you go looking for the catastrophe that laid this area low, you’ll eventually discover a terrifying story: Nothing happened.’ But he almost immediately contradicts himself, noting that employment in eastern Kentucky has fallen with the decline of coal and what little manufacturing the area once had…. The underlying story of Appalachia is in fact one of declining opportunity…. Is it any surprise that people have turned to food stamps? And what would they do if they didn’t have food stamps? Williamson is too good a reporter to argue that people could find jobs in eastern Kentucky if only they really wanted to work.

   “Instead, he implicitly argues that the ‘dole’ fosters dependency by allowing people to stay in their home counties rather than going someplace else. Maybe–but as he also notes, many people are leaving…. My take on Williamson’s report (like my take on Charles Murray’s recent book) is that it basically says that William Julius Wilson was right. Wilson famously argued that the social troubles of urban blacks emerged, not because there was something inherently wrong with their culture, but because job opportunities in inner cities dried up. Sure enough, when the God-fearing (and definitely white) people of Appalachia face a loss of employment opportunity, their region turns into what Williamson calls the Great White Ghetto.

   “And this in turn says that the problem isn’t that we’re becoming a nation of takers; it’s the fact that we’re becoming a nation that doesn’t offer enough economic opportunity to the bottom half, or maybe even the bottom 80 percent, of its citizens.”

2. Jared Bernstein: Bob (Rubin), Paul K, Brad DL, and the Changing Budget Outlook: “Rubin’s piece had some redeeming qualities–he calls for a jobs stimulus and getting rid of the sequester–… [but] it’s a) very strange, and b) suggestive that his friends are telling him what they think he wants to hear. Re ‘a,’ the damn deficit has come down from 10% of GDP in 2009 to 4% in 2013, the largest four-year drop since 1950–that’s even before I was born! And what business person thinks this way?: “Hmmm…let me see.  There’s a lot of demand for the thing I produce, and I can still borrow very cheaply.  But despite the sharp decline in the budget deficit, CBO says that by 2040, the debt-to-GDP ratio will be really high.  So… better not expand.”  If there is someone out there doing that calculus, then with respect, they probably should go out of business.

   “But here’s the part of Bob’s piece that stuck me as misguided: ‘Recent reductions in deficit projections do not change the basic structural picture – except that healthcare cost increases are slowing – and are partly based on sequestration, a terrible policy that already looks too onerous to stick.’ According to our own long-term forecasts here at CBPP and to CBO’s recent estimates of the impact of the health cost slowdown on the budget, the structural picture has in fact changed significantly….

   “It’s essential to update one’s fiscal outlook to account for both recent and future improvements in that outlook. I see no reason to be impenetrable to that evidence…. Anyone who’s basing their fiscal analysis on such data needs to account for these facts.  Anyone who’s basing their hiring or investment plans on them is kinda crazy.”

Continue reading “Things to Read at Brunchtime on January 12, 2014” →

Jared Bernstein: Bob (Rubin), Paul K, Brad DL, and the Changing Budget Outlook:

Rubin’s piece had some redeeming qualities–he calls for a jobs stimulus and getting rid of the sequester–… [but] it’s a) very strange, and b) suggestive that his friends are telling him what they think he wants to hear. Re ‘a,’ the damn deficit has come down from 10% of GDP in 2009 to 4% in 2013, the largest four-year drop since 1950–that’s even before I was born! And what business person thinks this way?: “Hmmm…let me see.  There’s a lot of demand for the thing I produce, and I can still borrow very cheaply.  But despite the sharp decline in the budget deficit, CBO says that by 2040, the debt-to-GDP ratio will be really high.  So… better not expand.”  If there is someone out there doing that calculus, then with respect, they probably should go out of business.

Continue reading “Lunchtime Must-Read: Jared Bernstein on Bob Rubin in the Financial Times” →

Paul Krugman: A Hammock In Kentucky?:

National Review has an actually interesting report by Kevin Williamson on the state of Appalachia… [the] moral: the big problem, it argues, is the way government aid creates dependency. It’s the Paul Ryan notion of the safety net as a ‘hammock’…. But do the facts about Appalachia actually support this view? No, they don’t. Indeed, even the facts presented in the article don’t….

Continue reading “Morning Must-Read: Paul Krugman: We Are Not Becoming a Nation of Takers, We Are Becoming a Nation of Less Opportunity” →

Must-Reads:

1. Robert Waldmann: Poverty and the “Laboratories of Democracy”: “Marco Rubio proposes… the bold new idea of block grants. [Kevin] Drum… writes that there have been some advantages from Fedralism. I throw a cow. He wrote: ‘state experimentation, a la welfare reform in the early 90s, could be pretty valuable’. ‘if each of the various state policies were rigorously studied’…. What have we learned from a state level welfare reform experiment? Well, we now know that welfare reform kills people: http://angrybearblog.com/2013/06/welfare-reform-kills.html…. AFDC ‘participants in the experimental group had a 16 percent higher mortality rate than members of the control group (hazard ratio: 1.16; 95% confidence interval: 1.14, 1.19; p < 0.01). This amounts to nine months of life expectancy lost between the ages of thirty and seventy for people in FTP’…. This statistically significant result… has had no influence…. There is little point having laboratories of democracy if people ignore the experimental results and just go with their prejudices, as we do…”

2. Kevin Drum: Obamacare’s Saving Grace: The Middle Class Uses It Too: One of the guiding principles… is that programs for the poor can be managed badly and nobody cares. But if a program for the middle class is badly managed, there’s hell to pay…. Peter Super… notes that the rollout of Obamacare’s federal exchange was actually fairly typical for a new… low-income [program…. ‘But the recovery has been startlingly fast’… The Obamacare website rollout might have been a fiasco, but its saving grace was that it was very public and had a big clientele among the middle class. So it got fixed. Pronto.”

3. Robert Laszewski: A health industry expert on ‘the fundamental problem with Obamacare’: “If an entrepreneur had crafted Obamacare he would’ve gone to a middle class family… of four… $54,000 a year… pay $400 in premiums net of subsidy… silver plan… deductible around $2,500… narrow network…. The entrepreneur would say: ‘I’ve got $5,000 in premium and all this deductible, what do they want for that?’ And they probably would’ve said: ‘We want office visits and lab tests because the kids need to go in occasionally and then we want catastrophic care.’ The problem with Obamacare is it’s product driven and not market driven…. I think that’s the fundamental…. It meets the needs of very poor people because you’re giving them health insurance for free. But it doesn’t really meet the needs of healthy people and middle-class people.”

Continue reading “Things to Read While Insomniac on January 10-11, 2014” →

I gave my thoughts on what we learned about the structure of the modern macroeconomy here: Washington Center for Equitable Growth | The Relative Efficacy of Fiscal and Monetary Policy at the Zero Lower Bound: Where Are the Goalposts, Anyway?: The Honest Broker for the Week of January 5, 2014

Now Mike Konczal gives his thoughts:

Continue reading “Where Are the Goalposts, Anyway?: The Relative Efficacy of Fiscal and Monetary Policy at the Zero Lower Bound II” →