Must-Read: Naomi Janowitz: Office Hour Podcast: “NAFTA with Special Guest Brad DeLong”:

https://officehourucdpodcast.files.wordpress.com/2017/11/delong-redo.mp3?_=4

Should-Read: Laura Tyson and Susan Lund: Rage Against the Machine?: “Almost every aspect of our economies will be transformed by automation in the coming years…

…But history and economic theory suggest that fears about technological unemployment, a term coined by John Maynard Keynes nearly a century ago, are misplaced…. Marvelous new technologies promise higher productivity, greater efficiency, and more safety, flexibility, and convenience. But they are also stoking fears about their effects on jobs, skills, and wages. Feeding these fears is a recent study by the University of Oxford’s Carl Frey and Michael Osborne, and another by the McKinsey Global Institute (MGI), which find that large shares of employment in both developing and developed countries could technically be automated….

Under a moderate scenario for the speed and breadth of automation, about 15% of the global workforce, or 400 million workers, could be displaced between now and 2030…. The good news is… projected increases in demand… rising incomes, the growing health-care needs of aging populations, and investment in infrastructure, energy efficiency, and renewables…. But the new jobs will differ mightily from the jobs displaced by automation, imposing painful transition costs…. Jobs in major occupational categories like production and office support, and jobs requiring a high school education or less, are likely to decline, while jobs in occupational categories like health and care provision, education, construction, and management, and jobs requiring a college or advanced degree, will increase….

So, what can be done?… Fiscal and monetary policies to sustain full-employment levels of aggregate demand are critical. Policies to promote investment in infrastructure, housing, alternative energy, and care for the young and the aging can boost economic competitiveness and inclusive growth, while creating millions of jobs in occupations likely to be augmented, rather than displaced, by automation. A second response must be a dramatic expansion and redesign of workforce training programs…. Lifelong learning needs to become a reality…. For mid-career workers with children, mortgages, and other financial responsibilities, training that is measured in weeks and months, not in years, will be necessary, as will financial support…. Nanodegrees and stackable credentials are likely to gain in importance. German-style apprenticeships combining classroom work and practical work, and enabling participants to earn a salary while learning, could be important solutions even for middle-aged displaced workers…

Should-Read: But is this—global—productivity slump really like any of the previous—much more local—productivity slumps? A very promising intellectual exercise to do in prospect, but I am going to find Barry and ask him what we really learn from it: Barry Eichengreen, Donghyun Park, and Kwanho Shin: The Global Productivity Slump:  Common and Country-Specific Factors: “Productivity growth is slowing around the world…

…In 2015, the growth of total factor productivity (TFP) hovered around zero for the fourth straight year, down from 1 percent in 1996–2006 and 0.5 percent in 2007–12. In this paper we identify previous episodes of sharp and sustained decelerations in TFP growth using data for a large sample of countries and years. TFP slumps are ubiquitous:  We find as many as 77 such episodes, depending on definition, in low-, middle- and high-income countries. Low levels of educational attainment and unusually high investment rates are among the significant country-specific correlates of TFP slumps, and energy-price shocks are among the significant global factors…

Barry Eichengreen: I remain a techno-optimist. I see no evidence that the progress
of science and technology is slowing down. What I see is the need to further reorganize how enterprises interact with their customers and organize their workforce to better exploit the productivity-enhancing potential of new technologies. My own favorite example is electronic medical records. At the moment, with the transition from handwritten charts and transcriptions, doctors are being forced to grapple with unfamiliar software and awkward laptops, and to re-input old information along with new. Different electronic recordkeeping systems are incompatible, and it remains impossible to transmit information across platforms. New technology is therefore a drag on productivity rather than a boost. With more time to adjust and more work on systems compatibility, we can be confident that this will change. We just can’t say when.

Should-Read: So it turns out that “Brexit means Brexit” means: The United Kingdom loses its voice in Brussels, but for all other intents and purposes remains part of the EU. Who knew that this was the hill Boris Johnson and Teresa May wanted to die on? It may still be a political winner: May and Johnson and company will use “we are no longer part of the EU” to get their constituencies to look down on continental Europeans. But the U.S. southern Democratic Party got its constituency to look down on Negroes so that the constituency’s pockets could be picked—it made cruel, sadistic, and pragmatic sense. There is no pragmatic sense here: Simon Wren-Lewis: First Stage Reality and Brexiters… see… the important facts… and… apply them relentlessly despite what politicians say…

…A Single Market and Customs Union needs a border…. to comply with all the tariffs, standards and regulations of the Single Market. The UK has now agreed, as I thought it would, that this must also apply to the UK as a whole…. After Brexit, the UK will to the first approximation continue to obey all the rules of the Single Market and Customs Union… as if we are still in the EU… [but] we no longer have any say on what those rules are….

But, you may respond, all the UK have signed up to is that this is a default position, if they fail to find a technological fix for the border, or if they fail to conclude a trade agreement with the EU in stage 2, and what does “alignment” mean anyway?… We also know… the UK desperately want a trade agreement with the EU and the EU will not allow any agreement that implies a hard border in Ireland….

Why then are the Brexiters not up in arms?… Partly because the agreement plays on their lack of realism…. Why is it important that this deceit continues? Because if everyone was honest, and respected the reality of the border issue, people would rightly ask whether our final destination (obeying the rules but with no say on the rules) is worth having. They would note that being to all intents and purposes part of the Customs Union means Mr. Fox cannot make new trade agreements. People might start asking MPs why are we doing this, and the line that we have to do this because the people voted for it would sound increasingly dumb….

[If] we… end up with the softest of soft Brexits…] there is a huge irony…. The Brexiters’ dream was to rid the UK of the shackles of the EU so it could become great again, but it is a legacy of empire that has brought this dream to an end…. Instead we will still be acting under the rules of the EU, but because we are not part of it the UK will be largely ignored…

Should-Read: Ann Marie Marciarille: Hey, Hey, New York Times: Just What Are the “Increasingly Blurred Lines” in Health Care?: “I don’t get it…

…Does anyone who really understands pharmaceutical pricing or compensation systems in commercial health insurance really think that health care hasn’t had plenty of “blurred lines” for quite some time—try decades?… Like Austin Frakt, I do not lament the apparent beginning of the end for the stand-alone pharmacy benefit manager (PBM) industry but, unlike Austin Frakt, I am not optimistic that  migrating all that stand-alone PBM power into the hyper-concentrated drug store and health insurance industries is necessarily going to benefit consumers. If the data on concentration in complementary industries in health care teaches us anything, concentration in ownership has not produced efficiencies  that have trickled down to the health care consuming public. If the problems are little choice, no transparency, and conflicts of interest, how will this re-arrangement of the deck chairs change anything?…

Must-Read: Matt O’Brien: For the last time: Tax cuts don’t pay for themselves: “Republican politicians will pretend their tax cuts will largely pay for themselves, and… Republican economists will largely indulge them…

…Susan Collins (R-Maine). On Sunday, she seemed to suggest that, because of all the growth it would supposedly generate, the Senate’s $1.5 trillion tax cut bill wouldn’t actually cost a thing and might even “lower the debt.”… Collins said that three top Republican economists… Glenn Hubbard… Douglas Holtz-Eakin and… Larry Lindse… told her that something close to this was possible….

There are varying degrees of wishful thinking going on here. First, “no serious economist” thinks that tax cuts fully pay for themselves. Anyone who does is “detached from empirical reality.” That, at least, is what Holtz-Eakin—yes, one of the economists Collins talked to—said in April…. Most economists don’t think this is anywhere near a close call. “At best, according to the prevailing consensus, the positive feedback effect from tax cuts would recoup in the range of 25 percent to 35 percent of the cost,” wrote, you guessed it, Holtz-Eakin.

Which makes you wonder, then, why he and other Republican economists seem to think that the Senate plan might pay for… as much as 67 percent of its costs…. Their answers weren’t the most rigorous…. Holtz-Eakin… “it has elements that are atypical”… a territorial tax system… immediately deduct their investments…. Hubbard said that while he hadn’t run the numbers, the “feedback effects from corporate tax reform can be larger depending on the type of reform.” In other words, these are extra special tax cuts. Just take their word for it. You have to because there isn’t really an economic model that tells the same story they do. The only one that comes close is from the right-wing Tax Foundation, but, as I’ve reported, there are serious concerns about its methodology. Mainstream estimates, meanwhile… show… nowhere near the additional 3 percent to 4 percent jump that the Republican economists are predicting.

How do they come up with such optimistic numbers? Easy… assume the best and then say that if this scenario played out over the next 10 years—which it almost certainly wouldn’t—then these tax cuts really would add 0.3 to 0.4 percentage points to growth…. The Republican economists also seem to have misstated or misunderstood some of the studies that they claim show the economy would grow…. The point… is more about coming up with a case that these tax cuts would recoup much of their costs than it is about coming up with a convincing case  that they would—without, of course, explicitly saying so. Better to let the politicians make that leap….

We shouldn’t be having this debate again. We know that tax cuts don’t pay for themselves. Ronald Reagan’s didn’t in 1981, George W. Bush’s didn’t in 2001, and there’s no reason to think Donald Trump’s would…. And yet here we are playing the same game…. Republican politicians… trying to convince themselves that deficit-financed tax cuts would not be fiscally irresponsible… Republican economists are trying to come up with reasons that might be right…

Should-Read: Enghin Atalay, Phai Phongthiengtham, Sebastian Sotelo, and Daniel Tannenbaum: The evolving U.S. occupational structure: “Using the text from help wanted ads, we construct a new data set of occupational task content from 1960 to 2000…

…We document that within-occupation task content shifts are at least as important as employment shifts across occupations in accounting for the aggregate decline of routine tasks. Motivated by these patterns, we first apply our new task measures to a reduced-form statistical decomposition. We then embed our measures in an equilibrium model of occupational choice. These two exercises indicate that shifts in the relative demand for tasks account for a 25 log point increase in 90-10 earnings inequality over our sample period…