Category: Equitablog

Larry Summers: IMF Economic Forum, November 8, 2013:

Now think about the period after the financial crisis. I always like to think of these crises as analogous to a power failure, or analogous to what would happen if all the telephones were shut off for a time. The network would collapse. The connections would go away. Output would of course drop very rapidly. There’d be a set of economists who would sit around explaining that electricity was only four percent of the economy, and so if you lost eighty percent of electricity you could not possibly have lost more than three percent of the economy. There would be people in Minnesota and Chicago and stuff who’d be writing that paper. But it would be stupid. It would be stupid…

Must-Reads:

1. Paul Krugman: Nowhere Near The Exit: “Greg Mankiw… suggesting that the time for a Fed exit strategy may be drawing near. Dean focuses mainly on Greg’s use of what he considers a [single] misleading wage number…. We have multiple measures of wage developments…. One of these numbers, wages of production and nonsupervisory workers, shows a modest uptick, the others not. All three remain well below their pre-crisis rates of increase. Is this the kind of evidence on which you want to base a major policy change? Not in my world…. [And] it makes no sense at all to tighten until we see wage inflation rise, not just from its current level, but several points higher…. Arguments that the full-employment rate of unemployment has risen tend to rely on the claim that sustained high unemployment, even if it starts out cyclical, eventually becomes structural. But if that’s true, there are very high costs to premature policy tightening… this adds up to a strong argument for waiting to see overwhelmingly clear evidence of an overheated economy before beginning any kind of policy exit…”

2. Tim Jost: Implementing Health Reform: State Exchange Enrollment: “”Covered California, the California exchange, reported that as of November 19, 2014, almost 80,000 Californians had selected a health plan through the exchange. Almost 31,000 had enrolled in October.  Of these, almost 5,000 were subsidy-eligible while 26,000 were not, suggesting that the Californians at the front of the line were higher-income applicants, who likely understand the need for insurance and may well need it for immediate health needs.  Almost 83 percent of enrollees were English speaking, while fewer than 5 percent spoke Spanish. Twenty-two percent of enrollees were between the ages of 18 and 34, roughly equal to the percentage of the total population in this age group. But 34 percent of enrollees were between the ages of 55 and 64, compared to 11 percent of the total population.  Adverse selection is thus a concern…”

3. Sy Mukherjee: Stubborn Opposition To Medicaid Expansion Is Forcing Hospitals In The Poorest States To Shut Down: “At least five public hospitals have shuttered their doors and many more are cutting staffing and services in non-Medicaid expansion states, according to Bloomberg. Three such hospitals have shut down in Georgia, while North Carolina and Virginia are experiencing similar closures…. The closures are tied directly to Republicans’ refusal to accept generous federal funding to expand Medicaid. And experts warn that even more closures may be on the horizon in poor states… that have also refused the Medicaid expansion. Safety-net hospitals… depend on federal money to make up for the uncompensated care costs…. The health law reduced payments to these so-called “disproportionate share hospitals”…. Lawmakers figured that Obamacare’s Medicaid expansion… would mitigate the cuts’ effects…. But… the Supreme Court ruled Obamacare’s Medicaid expansion to be optional, and about 26 states with GOP chief executives or legislatures have have refused to expand the program. Congress also rejected the Obama administration’s proposal to delay DSH payment cuts by a year to give safety net hospitals some breathing room…”

Should-Reads:

1. Matthew Yglesias: Bay Area: If you want to talk housing, you have to talk zoning: “Another day, another frustrating article about rising housing prices in the Bay Area that doesn’t mention the supply-side at all…. The high-tech economy is booming… affluent skilled workers want to move to the Bay Area… naturally the prices that people are willing to pay for housing are skyrocketing…. The city of San Francisco… [has] many low-rise districts of the city [that] could and should be redeveloped as denser high-rise areas. I’m often accused of wanting every city to turn itself into my native Manhattan, but San Francisco has about half the population density of Brooklyn…. But the even more egregious issues are in the suburban areas stretching south of San Francisco…. The reasonable thing to do would be to use the land intensively—some more apartment buildings, some more rowhouse neighborhoods, some more detached houses on slightly smaller plots—-but Valley politics have been relentlessly hostile to real-estate development. The shortage of both houses and commercial office space that results from this dynamic is a substantial driver of economic problems in the Bay Area… [and] also throughout the country. The supercharged growth in the high-tech sector ought to be creating massive spillovers of prosperity…. Instead, it’s mostly creating windfall profits for a relatively small number of people and cost-of-living spirals for others…

2. Miles Kimball and Noah Smith: The shakeup at the Minneapolis Fed is a battle for the soul of macroeconomics–again: “A personnel shakeup at the US Federal Reserve Bank of Minneapolis last week… may be a part of big changes… at the Fed, as well as a tectonic shift in the field of economics itself. Two of the Minneapolis Fed’s most eminent and long-serving economists, Patrick Kehoe and Ellen McGrattan, have been fired…. They believed that… recessions are not economic failures, but instead are inevitable, healthy outcomes of economies responding to the uneven pace of technological progress…. If the Fed prints money to try to stimulate demand, they say, it will only succeed in creating inflation…. The researchers at the University of Minnesota and the Minneapolis Fed have largely hung onto the belief that monetary policy can affect inflation, but can’t fight recessions…. In 2008, on the eve of the crisis, even as Saltwater economist Olivier Blanchard published a paper arguing that the two schools had essentially reached agreement, Kehoe published his own paper arguing vehemently that models with any Saltwater taint (in particular, the so-called “New Keynesian” models) were fundamentally flawed. A few months later, at the end of 2008, America tumbled into its biggest economic slump since the Great Depression, soon followed by much of the rest of the world. Freshwater macroeconomists were left scratching their heads. How could this calamity represent the efficient outcome of a well-functioning economy?…”

Should Be Aware of:

1. Scott Lemieux: Four Reasons the Nuclear Option Was a Liberal Win: “Here are some of the major arguments being made against the deal from a Democratic perspective–and why they’re wrong. 1. Democrats Will Be Sorry, Because This Means Republicans Will Keep Doing What They’ve Been Doing Since the Reagan Administration…. 2. Pretending that the Filibuster Is the Only Political Constraint on the President…. 3. But Isn’t the House of Representatives Terrible?…. 4. Liberal Sentimentality about the Filibuster…”

2. John Cole: Resentment: “Just read this on facebook from a guy I know from the military: ‘After having to spend almost $200 on work boots,the hell happened to the America I grew up with. Are people and ceo’s that stupid. We are selling out at an alarming rate. Try finding american made anything without paying arm an leg.We need to make a stand an take our country back/ I use to wear only Levis’s. After buying some that ripped in 2 weeks I bought something else.The country we have sent our manufactoring jobs to also owns most of out debt.I remember when made in USA meant something. I remember when I joined military an heard star spangled banner, it had a whole differnt meaning. I also think you need to be a citizen to own a buisness. Take a look who owns motels,subways,gas stations and even kfc. This is America or it was. There should be no second langauge. People use to think it was honor to come here. Now we hand money out at airport.There should be a limit to time in office. Also no trust fund babies.’ This guy isn’t a white supremacist, but there are a whole lot of people who feel that way.”

Paul Krugman: Bubblephobia and Monetary Policy | Izabella Kaminska: Non-monetary effects of research evolution | Dean Baker: Technology didn’t kill middle class jobs, public policy did | Ann Marie Marciarille: Physician Boundary Crossing in the Face of Health Care System Failure | Martin Longman: High on Their Own Supply |

Must-Reads:

1. Stephanie McCrummen: In rural Kentucky, health-care debate takes back seat as the long-uninsured line up: “On the campaign trail, Senate Minority Leader Mitch McConnell was still blasting the new health-care law as unsalvageable. At the White House, President Obama was still apologizing for the botched federal Web site. But in a state where the rollout has gone smoothly, and in a county that is one of the poorest and unhealthiest in the country, Courtney Lively has been busy signing people up: cashiers from the IGA grocery, clerks from the dollar store, workers from the lock factory, call-center agents, laid-off coal miners, KFC cooks, Chinese green-card holders in town to teach Appalachian students…. Now it was the beginning of another day, and a man Lively would list as Client 375 sat across from her in her office at a health clinic next to a Hardee’s…. This is how things are going in Kentucky: As conservatives argued that the new health-care law will wreck the economy, as liberals argued it will save billions, as many Americans raged at losing old health plans and some analysts warned that a disproportionate influx of the sick and the poor could wreck the new health-care model, Lively was telling Noble something he did not expect to hear. ‘All right’, she said. ‘We’ve got you eligible for Medicaid’. Places such as Breathitt County, in the Appalachian foothills of eastern Kentucky, are driving the state’s relatively high enrollment figures, which are helping to drive national enrollment figures…”

2. Joe Blasi et al.: The Citizen’s Share: Putting Ownership Back into Democracy: “As a result, surprisingly large numbers of American workers share in some way in their employers’ success. Based on a series of national surveys, the authors reckon that some 47% of full-time workers have one or more forms of capital stake in the firm for which they work, whether from profit-sharing schemes (40%), stock ownership (21%) or stock options (10%). About a tenth of Fortune 500 companies, from Procter & Gamble to Goldman Sachs, have employee shareholdings of 5% or more. Almost a fifth of America’s biggest private firms, including behemoths like Cargill and Mars, have profit-sharing or share-ownership schemes. Some 10m people work for companies with ESOPs.”

Should Reads:

1. Matthew O’Brien: The Singular Waste of America’s Healthcare System in 1 Remarkable Chart: “The U.S. spends far, far more per person than any other rich country on healthcare. We don’t get more for it….
   
   Something has to change. We can’t afford our healthcare exceptionalism.

2. Josh Marshall: Boehner Fails to Fail on Obamacare: “Late last week Speaker John Boehner (R-OH) made a big show of trying but failing to sign up for Obamacare because of the notoriously buggy website. (Actually he appears to have been using the DC exchange site.) He even did a special tweet noting his hopeless situation. Not terribly surprising given the frustrating experiences so many have had. Actually, it turns out he had successfully enrolled and got a call confirming that about an hour after his tweet. But it gets better. According to Scott MacFarlane, a reporter for the local NBC affiliate in Washington, reports that a DC Health Care exchange representative actually tried to contact Boehner by phone during the enrollment process but was put on hold for 35 minutes, after which time the representative finally hung up.”

3. The Economist: Post-crisis economics: Keynes’s new heirs: “It is not just students who are dissatisfied with economics. Professional economists can spot easy wins too. Many think economic history should be more widely taught, citing the fact that Ben Bernanke’s Federal Reserve, influenced by his knowledge of the Great Depression and of Japan’s slump in the 1990s, outperformed rich-world peers. It is not merely American financial history that matters, either. Stanley Fischer, governor of Israel’s central bank between 2005 and 2013, says he found economic history (including Walter Bagehot’s famous rule—to provide generous amounts of cash to troubled banks, but to charge them for it) useful in combating the 2008 crisis. This material had long fallen off the syllabus in most universities before the crash. A new group of teachers is now listening. Led by Wendy Carlin, an economist at University College London, they are designing a new university-level curriculum. The project, which aims to launch for the 2014-15 academic year, will change things in a number of ways.”

4. Daniel Davies: If this is “secular stagnation”, I want my old job back: “Here’s my version of the economic history of the pre-crisis years…. Welcome to the world you made guys. These are the consequences of globalization, entirely predictable and in fact predicted (by Dean Baker, among others). The final conclusion is probably the same as if it was a mysterious secular stagnation; fiscal policy. But the need for fiscal policy is such an obviously correct and obvious fact that more or less any economic argument is going to end up there unless it has major logical or accounting errors. But really–there is no need to tell ourselves ghost stories about animal spirits. There’s no puzzle here. We got this outcome because we wanted it…”

Should Be Aware of:

1. Ed Kilgore: Republicans and Health Insurance Exchanges: “Ezra Klein reminds us today in a more comprehensive way than we’ve seen so far that the Republican caterwauling about complex government-run private insurance exchanges and the disruption of existing insurance plans disguises the fact that their own health reform plans involve both… would very deliberately disrupt existing insurance plans more than fifty Obamacares…. But hey, I guess the Ted Cruz health reform plan, due any day now, will solve all these problems and avoid all these massive acts of hypocrisy…”

2. Michelle Goldberg: Right-Wing Author Abandons Cultural Populism, Decries ‘White Trash’: “Charlotte Hays… has a new book out, titled When Did White Trash Become the New Normal? A Southern Lady Asks the Impertinent Question. A broadside against the moral and aesthetic failures of the lower orders, it’s… fascinating work… the right are abandoning the NASCAR-fetishizing Palinesque faux-populism of recent decades for a more overt style of class warfare. A chapter on the foreclosure crisis and crushing student debt, for example, is called ‘White Trash Money Management’. ‘There are, I thus adduce, two keys to not being White Trash: having a job and paying your bills on time’, Hays sniffs…”

3. David Abrams et al.: Patent Value and Citations: Creative Destruction or Strategic Disruption?: “We attempt to explain… innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy…”

4. Free Exchange (October 22, 2008): Analysis!: “We faced the risk, the experts said, of a breakdown in the markets…. Had we done nothing, to paraphrase Ben Bernanke, we might have woken up one day to find ourselves without an economy. Or so they would have you believe, says Alex Tabarrok! For some time now, he has been pushing the argument that we may face recession, but that the financial crisis never threatened the real economy…. And now he has proof. Three economists [Chari, Christiano, and Kehoe] from the research department of the Federal Reserve Bank of Minneapolis have produced a working paper purporting to debunk four myths about the financial crisis…. There are a few problems with all of this. First of all, some of the conclusions drawn are simply false… the broader, unwarranted credulity of the authors…. Maybe at some point we’ll see some careful research that suggests that the threat the financial crisis posed to the real economy was drastically oversold. This, I’m afraid, isn’t it.”

Ed Kilgore: It’s The Fundamentals, Stupid: Elections Aren’t Determined By Short-Term ‘Game Changes’ | James Plunkett and Joao Paulo Pessoa: A Polarising Crisis: The changing shape of the UK and US labour markets from 2008 to 2012 | Harriet Beecher Stowe (1854): Key to Uncle Tom’s Cabin: “Poor White Trash” | Brian Buetler: Whoops! Obamacare turns out to be great deal personally for Boehner | Fed chair nominee Janet Yellen wins Senate committee backing |

Must-Reads:

1. Dan Baum reports John Ehrlichman said: When Someone Claims the War on Drugs Is a War on Minorities…: “The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar Left, and black people. You understand what I’m saying? We knew we couldn’t make it illegal to be either against the war or black. But by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did…”

2. Noam Levey: Healthcare industry vested in success of Obamacare: “Insurance companies, doctor groups and hospitals… are committed to the law’s success despite persistent tensions with the White House. Many healthcare industry leaders are increasingly frustrated with the Obama administration’s clumsy implementation…. Nearly all harbor reservations about parts of the sweeping law. Some played key roles in killing previous Democratic efforts…. But since 2010, they have invested billions…. Few industry leaders want to go back to a system that most had concluded was failing, as costs skyrocketed and the ranks of the uninsured swelled. Nor do they see much that is promising from the law’s Republican critics. The GOP has focused on repealing Obamacare, but has devoted less energy to developing a replacement. Healthcare industry officials generally view several GOP proposals, such as limiting coverage for the poor and scuttling new insurance marketplaces created by the law, as more damaging than helpful to the nation’s healthcare system…”

Should-Reads:

1. Miles Kimball: Even Economists Need Lessons in Quantitative Easing, Bernanke Style: “Feldstein’s argument boils down to saying, ‘The Fed has done a lot of QE, but we are still hurting, economically. Therefore, QE has failed’. But here he misunderstands the way QE works. The special nature of QE means that the headline dollar figures for quantitative easing overstate how big a hammer any given program of QE is. Once one adjusts for the optical illusion that the headline dollar figures create for QE, there is no reason to think QE has a different effect than one should have expected. To explain why, let me lay out again the logic of one of the very first posts on my blog…. In that post I responded to Stephen Williamson, who misunderstood QE… in a way similar to Martin Feldstein…”

2. Timothy Egan: The South’s New Lost Cause: “What is distressingly similar today is how the South is once again committed to taking a backward path. By refusing to expand health care for the working poor through Medicaid… most of the old Confederacy is committed to keeping millions of its own fellow citizens in poverty and poor health… out of spite…. In the states that have embraced… [expansion] almost 500,000 people have signed up for health care in less than two months time… good for business… for state taxpayers… can do much to lessen the collateral damages of poverty…. In Kentucky, which has bravely tried to buck the retrograde tide, Medicaid expansion is projected to create 17,000 jobs…. Beyond Medicaid, the states that have diligently tried to make the private health care exchanges work are putting their regions on a path that will make them far more livable…. And those states aren’t going to turn back the clock… no matter how Republicans try to kill health care reform…. What we could see, 10 years from now, is a Mason-Dixon line of health care… the insured North… where health care coverage was affordable and available… the uninsured South, where health care for the poor would amount to treating charity cases in hospital emergency rooms…. But most of the South is defiant–their own Lost Cause for the 21st century.”

3. Ed Kilgore: The Pure Meanness Litmus Test: “Partly as a byproduct of conservative optimism about rolling back ObamaCare and partly in conjunction with the Republican Governors Association meeting… there’s a lot of buzz right now about Medicaid expansion… a litmus test for conservative orthodoxy…. It’s no coincidence, of course, that one of the governors who did accept the expansion, Chris Christie, is the early MSM/Republican Establishment favorite for putting the Tea Folk back in their place and retaking the White House…. No one is being forced to drop private health insurance to enroll in Medicaid. No one can claim the president “lied” about Medicaid eligibility. The performance or non-performance of http://healthCare.gov isn’t really an issue. The pace at which eligible folks sign up mainly just affects them. And there’s no ‘premium shock’…. And that is sort of why the issue makes the perfect ideological litmus test: opposing the expansion can’t be and isn’t being justified as a prudent objection to an unworkable program or as disruptive to the health care status quo… states refusing the Medicaid expansion are doing so on grounds that they don’t want their own citizens to benefit from it. And since opposition has centered in the South, there’s not any real doubt a big motive has been a continuation of that region’s longstanding effort to–choose your verb–(a) reduce dependence on government among, or (b) keep down–those people…”

4. Felix Salmon: Why guru ETFs beat human gurus: “Wall Street is no place for shrinking violets, but even by New York standards, Jason Ader has some serious chutzpah…. In principle, [he] makes sense. One common criticism of passive investing is that if everybody did it, then there would be no price discovery–and that the more passive investors there are… the easier it becomes to take advantage of them…. But the point at which passive investing becomes self-defeating is a bit like the point at which the gradient of the Laffer curve turns negative… far beyond any state of the world that obtains in real-life…. It’s a simple mathematical truth that activist investing has not outperformed passive investing this year…. Of course, if your dream is to beat the market, then you’re going to have to invest in something other than a passive index fund…. And don’t kid yourself, either, that paying 2-and-20 to anybody is a sensible way to try to achieve your goal. Indeed, there’s an increasing number of relatively low-fee ETFs which aim to replicate the results you’d get from investing with some of the biggest-name investors…. Buying one of these guru ETFs is no sillier than buying a typical actively-managed mutual fund. In fact, it’s probably more sensible, since the discipline of the ETF strategy is baked in to its structure, and it’s harder for an all-too-human manager to make silly mistakes… [and] the fees… will never come anything close to the kind of fees being charged by Jason Ader and his ilk…”

5. Harold Pollack: This drug could make a huge dent in heroin addiction. So why isn’t it used more?: “This week, the New York Times’ Deborah Sontag published an extensive two-part series, ‘Addiction treatment with a dark side’, on buprenorphine misuse. The piece is vividly written. It shows the human faces of many drug users. She frankly depicts underground market in buprenorphine, and describes unethical providers…. Like many addiction researchers, I’m uneasy…. The specific facts are well-researched. There’s some beautiful reporting…. Yet the very vividness of the human portraits leaves readers with powerful… misimpressions… that buprenorphine is more widely abused than it actually is, that buprenorphine is more dangerous than it generally is, and that buprenorphine providers are less ethical than they generally are. Sontag cites a statistic that buprenorphine was involved on the order of 42 deaths per year…. That’s a frightening thing, but it matters that these occur in a population that now experiences 19,000 overdose deaths every year…”

Things You Should Be Aware of:

Andy Harless: Can Knut Wicksell Beat Up Chuck Norris? | Iván Werning: Managing a Liquidity Trap: Monetary and Fiscal Policy | Killer Martinis: Why I Make Terrible Decisions, or, poverty thoughts | Krugman v Stiglitz on whether rising inequality is what’s holding back the recovery | Garance Franke-Ruta: Why Is Maternity Care Such an Issue for Obamacare Opponents? |

1. John Aziz: The central banker who changed his mind: “When Narayana Kocherlakota was appointed president of the Federal Reserve Bank of Minneapolis in 2009, the University of Chicago-educated theoretical economist was best known for his insight that money is a system of memory…. In the year before his appointment, he had signed a CATO Institute petition to protest President Obama’s fiscal stimulus program. And after his appointment to the Fed, he was concerned that the central bank was being too accommodative…. But by August 2012 he seemed to have changed his mind, noting that ‘increasing policy accommodation might well be appropriate’ and voting later that year for the new quantitative easing asset-purchasing program (QE3)…. I don’t think that Kocherlakota’s shift has really been so very dramatic…. Inflation is currently below the Federal Reserve’s target, while unemployment is above the target, so the Fed seems ‘dovish’…. I think Kocherlakota simply updated his policy prescriptions based on new evidence about the state of the economy and the persistently high rate of unemployment…”

2. McSweeney’s Internet Tendency: Retail Therapy: Inside the Apple Store: It’s a Trap!: “New York Times… Catherine Rampell… ‘Cracking the Apple Trap’. Online… ‘Why Apple Wants to Bust Your iPhone’, and I am still dumbfounded that it was considered news fit to print…. The piece meanders through pontifications… the author’s aggrieved imagination… the New York Times has stooped to link-baiting, and I fell for it… rather than state… that all batteries… degrade over time, Rampell deliberately writes that ‘Apple phone batteries’ do so, implying peculiarity and intention. One expects Fox News to lead off thinly veiled editorials posing as economics coverage with phrasing like, ‘Some say’, or ‘Many may believe’, but the Gray Lady? Say it ain’t so!… Rampell wrote a follow-up… ‘Planned Obsolescence, as Myth or Reality?’ Referencing no less than three economists by name and ‘a lot of technology experts’ not by name, she successfully recycled half of her first piece, which inferred Apple’s evil motives, to arrive at a new conclusion, ‘It’s actually very hard to infer a company’s motives’. What a wonderful non-apology. Ironically, it rendered the older article obsolete. Was that planned? That’s pretty f^&%ing meta…”

It is a great puzzle: tell me, what is to be done to raise the level of the debate in a politics that includes such people in high federal office?

Kevin Drum: Republicans Refuse to Cover the Poor, Then Complain that Obamacare Isn’t Covering the Poor:

The New York Times has gotten hold of the “House Republican Playbook” on Obamacare, and I have to admit that it brought back warm memories. It’s just like the launch kits I used to produce for our sales force…. It’s all pretty predictable stuff: Obamacare is an abomination; people are losing their insurance; small companies are being ruined; etc. etc. But I have to say that this is my favorite talking point:

Millions more uninsured: the number of Americans left uninsured by ObamaCare has risen by 8 million from the initial estimate.

Needless to say, this is primarily because Republicans governors have refused to implement Obamacare’s Medicaid expansion, even though it’s 100 percent paid for at first and 90 percent paid for forever. These governors literally prefer to have their state’s residents pay taxes and get nothing in return rather than give so much as an extra dime to poor people who need health care. It’s truly hard to fathom what kind of human being is callous enough to do this, but apparently there are a bunch of them in the Republican Party. And then, just to add a cherry of chutzpah on top of this ice cream sundae of spitefulness, they crow about how Obamacare isn’t covering as many people as Obama hoped it would. You really have to marvel.

Must-Reads:

1. Maryn McKenna: Imagining the Post-Antibiotics Future: “A few years ago, I started looking online to fill in chapters of my family history…. My great-uncle Joe…. Through one of the scrapes, an infection set in…. Desperate to save his life, the men from his firehouse lined up to give blood. Nothing worked. He was thirty when he died, in March 1938…. Five years after my great-uncle’s death, penicillin changed medicine forever. Infections that had been death sentences—–from battlefield wounds, industrial accidents, childbirth–suddenly could be cured in a few days…. Lately, though, I read it differently. In Joe’s story, I see what life might become if we did not have antibiotics any more…”

2. Tim Duy: Desperate to Taper: “The minutes of the October FOMC meeting leave little doubt that the Fed increasingly desires to end the asset purchase program, enough so to contemplate tapering regardless of seeing satisfactory improvement in labor markets…. The discussion of the specifics of the asset purchase program began with: ‘During this general discussion… participants reviewed issues specific to the Committee’s asset purchase program. They generally expected that the data would prove consistent with the Committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.’ The mythical taper–just a few months away.  And it will always be just a few months away given the broad weakness in the labor chart. Recall the Yellen Charts: Unless they narrow their focus to only the unemployment rate, the argument to taper is challenged to say the least. It is even more challenged considering inflation indicators. Knowing that the data continuously refuses to cooperate, the Fed explores plan B: ‘However, participants also considered scenarios under which it might, at some stage, be appropriate to begin to wind down the program before an unambiguous further improvement in the outlook was apparent…”

3. Ashok Rao The Intellectual Evolution of Larry Summers on the Possibility of a Long-Lasting Negative Real Natural Rate of Interest: November 14, 2011, February 11, 2013, and November 8, 2013…

Should-Reads:

1. Norm Ornstein: Republicans Forced Reid’s Hand On The Nuclear Option: “For whatever reason, the Republicans decided to go nuclear first, with this utterly unnecessary violation of their own agreement and open decision to block the president from filling vacancies for his entire term, no matter how well qualified the nominees. It was a set of actions begging for a return nuclear response. McConnell’s threat, it seems to me, makes clear the strategy: let Dems take the first step, and we will then bear no blame when we entirely blow up the Senate’s rules after we take all the reins of power. That other Republicans like Corker, McCain, Alexander, Murkowski and so on, went along, shows how much the radicals and anti-institutionalists now dominate the Republican Party. Which is sad indeed.”

2. Rachel Pearson: Life and Death in the “Safety Net”: “The first patient who called me ‘doctor’ died a few winters ago…. His belly was swollen, his eyes were yellow and his blood tests were all awry. It hurt when he swallowed and his urine stank…. His disease seemed serious, but… the tests… are beyond our financial reach…. We decided to send him to the emergency room…. There’s a popular myth that the uninsured–in Texas, that’s 25 percent of us–can always get medical care through emergency rooms…. The myth is based on a 1986 federal law called the Emergency Medical Treatment and Labor Act (EMTALA), which states that hospitals with emergency rooms have to accept and stabilize patients who are in labor or who have an acute medical condition that threatens life or limb. That word ‘stabilize’ is key: Hospital ERs don’t have to treat you. They just have to patch you up to the point where you’re not actively dying…. My patient went to the ER, but didn’t get treatment…. He’d finally gotten so anemic that he couldn’t catch his breath, and the University of Texas Medical Branch (UTMB), where I am a student, took him in. My friend emailed me the results of his CT scans: There was cancer in his kidney, his liver and his lungs. It must have been spreading over the weeks that he’d been coming into St. Vincent’s…. UTMB sent him to hospice, and he died at home a few months later. I read his obituary in the Galveston County Daily News. The shame has stuck with me through my medical training—not only from my first patient, but from many more…”

3. Benjamin Wallace-Wells: 50 Years of Conspiracy Theories: “Every good conspiracy theory begins with the pawn…. Consider… Ricky Donnell Ross circa 1980… high-school dropout… part-time [crack] dealer…. Oscar Danilo Blandon…. Within two years, as drug use exploded and he supplied crack to both the Bloods and Crips, Ross became one of the dominant dealers in Los Angeles, moving 100 kilos each week…. Blandon was… a contra, a member of the militias organized and deployed by the CIA to overthrow the left-wing government in Managua. The contras had, it seems, long supplemented the funds Washington sent by helping Colombian traffickers ship cocaine north…. Because of Ross’s pivotal role in the early crack trade in L.A., this episode soon became fuel for perhaps the last great conspiracy of the twentieth century: that the CIA had spread crack throughout America’s inner cities…. The wider the aperture around this theory, the harder its proponents work to implicate Washington, the shakier it seems…. But keep the aperture tighter, around Ross himself, and you see American intelligence officials working comfortably in close proximity to drug traffickers in Central America and a remarkably short chain from powerful figures in American intelligence to this crack dealer in Los Angeles. What is left is a general sense that something is amiss…. If Ross sensed that he had been a pawn for forces he could barely understand, he probably wasn’t wrong. The question was: What forces? That the Ricky Ross story follows a familiar plot, that we know what a pawn is and that we understand the patterns of conspiracy, owes a great deal to the Kennedy assassination, which took place 50 years ago this month and which gave birth to the modern golden age of conspiracy…”

4. Joseph Cotterill: The Fed and Treasury default: a coda: “At some point in the great collective peyote dream that was last month’s debt ceiling crisis, we asked you to imagine the Fed buying defaulted US Treasuries. Fortunately, the US central bank was thinking about it too: ‘Meeting participants saw no legal or operational need in the event of delayed payments on Treasury securities to make changes to the conduct or procedures employed in currently authorized Desk operations, such as open market operations, large-scale asset purchases, or securities lending, or to the operation of the discount window. They also generally agreed that the Federal Reserve would continue to employ prevailing market values of securities in all its transactions and operations, under the usual terms…’ That’s from the latest Fed minutes’ account of an unscheduled videoconference held on October 16–ironically, the day John Boehner cracked, leading to a late-night House vote to raise the ceiling. Still, the Fed knows what to do next time.”

5. Jérémie Cohen-Setton: Blogs review: Understanding New-Keynesian models: “A recent tractable formulation of the New-Keynesian liquidity trap by Ivan Werning has helped streamline the model to its essence and has generated important contributions that help clarify its mechanics…. Johannes Wieland writes that New-Keynesian models… robustly make two predictions at the ZLB… demand-side policies are very stimulative and, second, negative supply shocks are expansionary…. Paul Krugman writes the liquidity trap is puts us in a world of topsy-turvy…. Paul Krugman writes that the reason the classic Keynesian multiplier isn’t in NK models is not because it has been disproved, but because such models deliberately give hostages…. Johannes Wieland… writes that a less restrictive Euler equation is needed… if nominal wages are sticky and a large fraction of consumers are hand-to-mouth, then a negative supply shock can be contractionary… negative supply shocks [may] endogenously raise uncertainty…. Johannes Wieland focuses on another mechanism… In the calibrated model with credit frictions, demand-side policies are up to 50% less effective than in a standard new Keynesian model.”

Things to Be Aware of:

Stan Collender: Nuclear Option Increases Chances Of Another Shutdown, Sequestration | Sarah Binder: Boom! What the Senate will be like when the nuclear dust settles | Brad DeLong: Genuinely New Ways of Understanding IS-LM Watch: Karl Smith Is Really Smart and Thoughtful: Wednesday Hoisted from the Archives Weblogging | Jon Schwarz: Wow, 2013 Samantha Power Was Just EXCORIATED by 2003 Samantha Power | Joe Romm: Shell Oil [Internal Accounting] Self-Imposes Carbon Pollution Tax High Enough To Crash Coal, Erase Natural Gas’s Value-Added | Kevin Drum: The Media [John Harris, Mike Allen, and Company] Once Again Refuses to Answer Questions From the Media |

This Is Ashok: The Evolution of Larry Summers: November 14, 2011, February 11, 2013, and November 8, 2013:

Continue reading “Morning Must-Read: Ashok Rao on the Intellectual Evolution of Larry Summers on the Possibility of a Long-Lasting Negative Real Natural Rate of Interest” →

The National Memo Interviews Romneycare/Obamacare Architect Jonathan Gruber:

Aside from the bartender who recorded the notorious “47 percent” video, Jonathan Gruber may have become Mitt Romney’s least favorite person during the 2012 campaign. Gruber damned the former governor of the Bay State with praise that certainly did little to shore up his standing in the Republican base: “He is in many ways the intellectual father of national health reform.”… Recently, Gruber spoke with National Memo executive editor Jason Sattler….

Jason Sattler:  You’re estimating that a few million of the insured are in that so-called “losers” category. And you’ve recently described these people as winning the “genetic lottery” — suggesting they’ve been underpaying in the past?

Jonathan Gruber:  So basically there’s two different issues. One of them is, what does it mean to be a “loser?”… How many people are being asked to find more generous plans than before? That’s probably about six million people…. The other issue is, how many people going to end up paying more than they did before? That’s probably about four million people…. The point is that a lot of people who are healthier have benefited from existing discrimination in the market….

Sattler: Is the refusal of 25 states to expand Medicaid distorting the market?

Gruber: I think in those states, by my own estimates, it’s going to raise premiums by about 15 percent in the exchange because sicker people will be in the exchange. I think it’s really disgusting that these states aren’t providing their poorest residents free insurance [financed] by the federal government. It’s pretty amazing that they can get away with that.

Sattler: What do you think about the right-wing argument that having no insurance at all is better than Medicaid?

Gruber: It’s just incorrect. There’s no credible evidence to support that….

Sattler: What would success for this law look like?

Gruber: We’re looking for several million people to sign up by March 31. And we’re looking for a reasonable mix of not just sick people, but also healthy people joining too…

Sattler: What did the proportions look like in Massachusetts during the first year?

Gruber: The New England Journal of Medicine study [that] I was part of found that the healthiest people tended to wait until the very end. There was a huge spike among the healthy right near the end of the enrollment period…

That the political maneuvering so often–like now–appears incomprehensible: foolish actions by people who do not understand their own position or incentives–is why I am much happier talking and thinking about policy substance.

But let me note this from Markos Moulitsas Zuniga:

Continue reading “Markos Moulitsas Zuniga Expresses My Puzzlement About Today’s Political Maneuverings…” →