Category: Equitablog

Must-Read: Nick Bunker: On Twitter: “Prime-age (25-54) EPOP up to 78.5%, Prime-age LFPR up as well to 81.6%…” https://twitter.com/nick_bunker/status/883302743401799680

Should-Read: Brian Dow and Dean Baker: Obamacare: Big Problem in Republican States: “The lack of competition in the exchanges is a serious problem… http://cepr.net/blogs/cepr-blog/the-collapse-of-obamacare-big-problem-in-republican-states

…However, there is an important part of the story that Trump and other Republicans forget to mention. The lack of competition in the exchanges is overwhelmingly a problem for people living in states controlled by Republican governors…. As can be seen over 40 million of the people in counties with only one insurer in the exchanges live in states with Republican governors…. While North Carolina does now have a Democratic governor, he just took office at the start of the year…. This means that there are almost 20 times as many people with no choice of insurers in the exchange in states with Republican governors as in states other than North Carolina that have Democratic governors…. 20.7 percent of the people living in states with Republican governors have only one insurer in the exchange. By comparison… 1.8 percent of people living in states other than North Carolina controlled by Democratic governors only have one insurer in their exchange…

Must-Read: Roy Elis, Stephen Haber, and Jordan Horrillo: Climate, Geography, and the Evolution of Economic and Political Systems https://economics.barnard.edu/sites/default/files/elis_haber_and_horrillo_march_25_2017.pdf: “The agricultural economies of the hinterlands of the largest city in every country or proto-country circa 1750 predict roughly half of the variance in countries’ per capita GDP today and one-fifth of the variance in countries’ levels of democracy today….

…These facts are: the potential production of storable food kilocalories, the loss of work effort from endemic malaria, and the frequency of droughts severe enough to wipe out all storable food kilocalorie production…. For example, conditional on the historical malarial environment (which reduced potential work effort), and the historical drought proneness of a hinterland, a one standard deviation increase in the ability to generate storable food kilocalories produces roughly half a standard deviation increase in the level of democracy today. These results are robust to the addition of possible confounders such as colonial heritage, participation in the slave trade, or having a petroleum-intensive economy….

Potential production of storable food… endemic malaria, and the frequency of droughts… are also good predictors of the level of urbanization of societies circa 1800 and their level and distribution of human capital circa 1820, 1870, and 1950….

Should-Read: Diane Coyle: Economics in Transition: Adaptive Markets: “Adaptive Markets, by MIT’s Andrew Lo, gives a superb and fascinating account of thinking on the frontier… https://www.project-syndicate.org/onpoint/economics-in-transition-by-diane-coyle-2017-06

…the kind of approach rooted in biology and psychology that Richard Bookstaber… advocates in the final part of The End of Theory….One of the most effective points made by advocates of Fama’s now-notorious Efficient Markets Hypothesis is that it is in fact difficult to beat the market; profit-making opportunities are swiftly arbitraged away. And, indeed, Lo argues that when financial markets are stable enough for long enough, the rationality-based model is appropriate. But the moment there is any instability, human fear, greed, culture, behavioral norms, storytelling, and imagination kick in. The environment determines the way market participants behave….

The test of the adaptive markets approach, though, must be how it helps to predict, avert, or respond to financial crises…. Financial markets need to be viewed–by investors and regulators alike–as an ecosystem. The lesson from biology is that systems require feedback loops in order to regulate themselves…. Lo urges regulators to think of these feedback loops–literally–systematically, and proposes using network theory to map the whole of the financial regulatory system. Not surprisingly, the outcome of this exercise for the United States is not reassuring…

Should-Read: Martin Sandbu: Central bank rush to ‘normalise’ monetary policy is ill-advised: “An understanding to “normalise” together, if one exists, would not be a suicide pact… https://www.ft.com/content/3ad81df6-6161-11e7-8814-0ac7eb84e5f1

…unlike the universal and premature switch to severe fiscal consolidation in 2010. But it would be one of self-mutilation. As Gavyn Davies explains in his latest column, the global recovery is showing up in economic growth but not in accelerating inflation. Many had expected that… inflation would pick…. But there is no sign of this…. This looks like a positive global supply shock that would push activity and inflation in the opposite direction, as productive capacity expands more than anticipated. If that is indeed the cause of the present “lowflation” regime, monetary policy ought “to shift policy in the same direction as the signal from inflation, in this case towards less tightening”. That is not happening…. We might all be better served by ditching the term normalisation altogether. It implies, incorrectly, that there is something wrong or excessive about the current monetary policy stance. If today’s policy conditions are abnormal, it is an abnormality that policymakers should embrace rather than avoid…

Should-Read: David Cashin, Jamie Lenney, Byron Lutz, and William Peterman: Fiscal Policy and Aggregate Demand in the U.S. Before, During and Following the Great Recession: “We examine the effect of federal and subnational fiscal policy on aggregate demand in the U.S. by introducing the fiscal effect (FE) measure… https://www.federalreserve.gov/econres/feds/files/2017061pap.pdf

…FE can be decomposed into three components. Discretionary FE quantifies the effect of discretionary or legislated policy changes on aggregate demand. Cyclical FE captures the effect of the automatic stabilizers—changes in government taxes and spending arising from the business cycle. Residual FE measures the effect of all changes in government revenues and outlays which cannot be categorized as either discretionary or cyclical; for example, it captures the effect of the secular increase in entitlement program spending due to the aging of the population.

We use FE to examine the contribution of fiscal policy to growth in real GDP over the course of the Great Recession and current expansion. We compare this contribution to the contributions to growth in aggregate demand made by fiscal policy over past business cycles. In doing so, we highlight that the relatively strong support of government policy to GDP growth during the Great Recession was followed by a historically weak contribution over the course of the current expansion…

Should-Read: Josh Barro: GOP healthcare bill will poll badly no matter what: “Now I have to call those providers’ offices and get duplicate receipts and upload them and allow seven to 10 days for processing… http://www.businessinsider.com/gop-healthcare-bill-polls-bad-changes-2017-6

…Until I do that, I have been cut off from access to the money in the account—my own money—that got in the account only because Congress chose to offer a tax preference that I could get only by using such an account.

Who wants to deal with this crap?

Nobody wants to deal with this crap, that’s who

Officially, the Republican healthcare vision involves even more of this—tracking your healthcare funds in a special account, paying at the point of delivery for care you receive, and shopping around for your surgery as if it’s a dream vacation. For the past seven years, Republicans haven’t been saying the problem with Obamacare was too little out-of-pocket spending. They’ve been saying the opposite… that Obamacare plans have deductibles… coinsurance payments are too high. That insurance under Obamacare isn’t good insurance because people have to pay so much after they’ve already paid premiums. This was an effective political argument because this is, in fact, one of the things people hate about Obamacare….

The problem is, fixing that problem would have cost money. So Republicans lied. They said they would give people insurance with lower deductibles. But then they wrote a law that would result in eye-wateringly high deductibles—for example, a deductible of about $6,000 for somebody with a family income of $16,000. Of course that’s unpopular. (News flash: Someone with an income of $16,000 doesn’t have $6,000 to pay toward a deductible.) But it’s what you have to do if you want the bill to cut a trillion dollars in government spending on healthcare without actually doing anything to make healthcare cheaper. But then, this bill was never about improving healthcare or making healthcare consumers happy. It was about repealing the tax increases that Obamacare imposed. Both the House and Senate bills would indeed do that. And as long as that’s the core goal, there’s no way to restructure the law to make people not hate it…

Should-Read: Dan Diamond: On Twitter: Many GOP senators, home for recess, woke up today to front-page stories about the local damage their health bill would cause… https://twitter.com/ddiamond/status/881613460014063623

…Sen. @BillCassidy (R-La.) and the New Orleans Advocate. Sen. @TedCruz (R-Texas) and the Houston Chronicle. Sen. @JerryMoran and the Lawrence Journal-World. @SenCapito (R-W.V.) and the Dominion Post. Sen. @LisaMurkowski (R-Alaska) and the Alaska Dispatch News. Sen. @RandPaul and @SenateMajLdr (R-Ky.) and the Lexington Herald-Leader. There’s been a lot of focus on what the media is, and isn’t, covering. Credit to local press for using platform to spotlight real issues…