Should-Read: Sidney Blumenthal (2017): Wrestling with His Angel, 1849-1856

Posted on by Brad DeLong

Should-Read: When Yale made the long overdue decision to dename the Residential College Formerly Named After the Odious John C. Calhoun, a bunch of alumni–who had never before remarked on how odious John C. Calhoun had been–came out of the woodwork to protest that we will be impoverished if we do not memorialize even the bad parts of our history.

It seemed to me it would have been much better–shame on you, Financial Times–to mark the event by reprinting Hofstadter’s Calhoun chapter on “The Marx of the Master Class”, or the “Young Calhoun” chapter from Sidney Blumenthal’s A Self-Made Man–the first volume of his in-progress series: The Political Life of Abraham Lincoln. So I wrote to Sidney asking permission to reprint the “Young Calhoun” chapter on my weblog. He passed it along to Simon & Schuster. Silence…

But the galleys of Blumenthal’s second volume: Wrestling with His Angel showed up in my mailbox. It is excellent:

Sidney Blumenthal (2017): Wrestling with His Angel, 1849-1856 <http://amzn.to/2mgAPd9>: “Lincoln had no expectation that restoring the Missouri Compromise would ever occur…

…In my humble sphere, I shall advocate the restoration of the Missouri Compromise, so long as Kansas remains a territory; and when, by all these foul means, it seeks to come into the Union as a Slave-state, I shall oppose it. I am very loath, in any case, to wishhold my assent to the enjoyment of property acquired, or located, in good faith; but I do not admit that* good faith, in taking a negro to Kansas, to be held in slavery, is a *possibility with any man. Any man who has sense enough to be controller of his own property, has too much sense to misunderstand the outrageous character of this whole Nebraska business. But I digress.

Bad faith, according to Lincoln, was not restricted to the pro-slavery invaders of Kansas, but infected the entire matter from beginning to end, and the beginning was located with Douglas. Far from being a principled act, Douglas’s bill was the product of bribery and coercion. It came from politics, and it was only through politics that Lincoln believed its corrosive effects could be countered.

In my opposition to the admission to Kansas I shall have some company; but we may be beaten. If we are, I shall not, on that account, attempt to dissolve the Union. On the contrary, if we succeed, there will be enough of us to take care of the Union. I think it probable, however, we shall be beaten. Standing as a unit among yourselves, you can, directly and indirectly, bribe enough of our men to carry the day–as you could on an open proposition to establish monarchy Get hold fo some man in the North, whose position and ability is such, that he can make support of your measure–whatever it may be–a Democratic Party necessity, and the thing is done.

Apropos of this, let me tell you an anecdote. Douglas introduce the Nebraska bill in January. In February afterwards, there was a call session of the Illinois Legislature. Of the one hundred members comping the two branches of that body, about seventy were Democrats. These latter held a caucus, in which the Nebraska bill was talked of, if not formally discussed It was thereby discovered that just three, and no more, were in favor of the measure.

In a day or two Douglas’s orders came on to have resolutions passed approving the bill; and they were passed by large majorities!!! The truth of this is vouched for by a bolting Democratic member. The masses too, Democratic as well as Whig, were even nearer unanimous against it ;but as soon as the party necessity of supporting it became apparent the way the Democracy began to see the wisdom and justice of it was perfectly astonishing….

Amid the chaos, where did Lincoln pace himself? In short, who did he think he was? And what was he? That was the central question Speed had asked him six months earlier:

You enquire where I now stand. That is a disputed point I think I am a Whig; but others say there are no Whigs, and that I am an abolitionist. When I was at Washington I voted for the Wilmot Proviso as good as forty times, and I never heard of anyone attempting to unwhig me for that. I now do no more than oppose the extension of slavery.

Lincoln was not really arguing with Speed, but with the velocity of events…. Not least in the forefront of his thinking was the threat of the Know-Nothings, attracting many of “my old political and personal friends”, as he had told Lovejoy, and absorbing the Whig Party itself:

I am not a Know-Nothing. That is certain. How could I be? How can anyone who abhors the oppression of negroes, be in favor of degrading classes of white people? Our progress in degeneracy appears to me to be pretty rapid. As a nation, we began be declaring that ‘all men are created equal’. We now practically read it ‘all men are created equal, except negroes‘. When the Know-Nothings get control, it will read ‘all men are created equal, except negroes, and foreigners, and Catholics….

Within two years of shedding the husk of the Whig Party and assuming the identity of a Republican, Lincoln sounded his own Emersonian note about destiny, but edged with a resonant biblical tone… his “House Divided” speech of June 16, 1858. His sense of time and timing had become acute. “The fight must go on”, he would write to a friend two weeks after his defeat to Douglas in the 1858 Senate race:

The cause of civil liberty must not be surrendered at the end of one or even one hundred defeats. Douglas had the ingenuity to be supported in the late contest both as the best means to break down and to uphold the Slave interest. No ingenuity can keep those antagonist elements in harmony long. Another explosion will soon come….

Lincoln’s political education was long, but the moment of Lincoln’s awakening from his political slumber was sudden. In early 1855, traveling the county court circuit, staying overnight in a boardinghouse, his discussion with a former judge and a fellow lawyer, T. Lyle Dickey, a conservative Old Whig, went on deep into the night. “Judge Dickey contended that slavery was an institution, which the Constitution recognized, and which could not be disturbed. Lincoln argued that ultimately slavery must become extinct”, recalled another Illinois lawyer, William Pitt Kellogg. “After a while”, said Dickey, “we went upstairs to bed. There were two beds in our room, and I remember that Lincoln sat up in his nightshirt on the edge of the bed, arguing the pint with me. At last, we went to sleep. Easy in the morning I woke up, and there was Lincoln half sitting up in bed”.

“Dickey”, said Lincoln, “I tell you this nation cannot exist half slave and half free”.

“Oh, Lincoln”, replied Dickey, “go to sleep”.

If a kingdom is divided against itself, that kingdom cannot stand. And if a house is divided against itself, that house will not be able to stand–Mark 3:24-5

Every kingdom divided against itself is laid waste, and a divided household falls–Luke 11:17

Should-Read: Angus Deaton: Rent Seeking

Posted on by Brad DeLong

Should-Read: Angus Deaton: Rent Seeking: “What is not OK is for rent-seekers to get rich…

…All that talent is devoted to stealing things, instead of making things….I, who do not believe in socialized health-care, would advocate a single-payment system… because it will get this monster that we’ve created out of the economy and allow the rest of capitalism to flourish without the awful things that healthcare is doing to us…. The key is to somehow find a way of tackling rent-seeking, crony capitalism, and corruption legal and illegal and build fairer, more equal society without compromising innovation or entrepreneurship,

The connection between U.S. unemployment and rising opioid abuse

Posted on by Emilie Openchowski

Hydrocodone pills, also known as Vicodin, are arranged for a photo at a pharmacy in Montpelier, Vt.Opioid abuse, or more accurately the upsurge in opioid abuse, is a headline-grabbing concern for many policymakers, who alongside a number of researchers are wading through the causes and implications of this epidemic. Research showing rising mortality rates among white Americans suggests that increasing economic insecurity for this group may play a role in increasing mortality. New research shows that one form of insecurity—higher unemployment rates—is strongly associated with higher opioid death rates.

The paper, released last month as a National Bureau of Economic Research working paper, looks at the connection between unemployment and opioid abuse. The three researchers—Alex Hollingsworth of Indiana University, Christopher J. Ruhm of the University of Virginia, and Kosali I. Simon of Indiana University—look at both deaths and emergency room visits due to opioid abuse. (It’s worth noting that the data on emergency room visits aren’t as comprehensive as the data on deaths because they don’t cover the entire United States.)

In short, what the authors find is that higher unemployment rates across both time and place are associated with higher rates of opioid abuse. A 1 percentage point increase in a county’s unemployment rate predicts an increase of 0.19 opioid deaths per 100,000 residents—a 3.6 percent increase. To put it another way, an increase in the unemployment rate from, for example, 5 percent to 6 percent would be associated with a 3.6 percent increase in opioid deaths. The authors also find an increase in opioid-induced emergency room visits. These results broadly hold up when different measures of labor-market health—the share of workers with a job—is used instead of the unemployment rate.

Two aspects of their findings are of interest. The first is that the increased opioid death rate associated with higher unemployment is driven mostly by increased deaths for white Americans. The relationship is significant for Hispanics, but the relationship is strongest for whites. When it comes to emergency room visits, the relationship with unemployment is significant for both white and black Americans.

The second nuance is that the relationship between unemployment and opioid abuse holds for all time periods. In other words, increased opioid abuse isn’t only because of recessions, which increase unemployment. Areas with higher unemployment rates, even during expansions, are predicted to have higher opioid-induced deaths and emergency room visits. Weak labor markets, regardless of the health of the national economy, are strongly tied to opioid abuse.

These findings are important not only for pointing out a potential cause of the opioid crisis, but also for reinforcing the real human damage that unemployment and weak labor markets can inflict. It’s a reminder—one that many policymakers should bear in mind—about the real damage joblessness can wreak.

Should the U.S. tax deduction for charitable contributions be more equitable?

Posted on by Emilie Openchowski

The analysis “Should the U.S. tax deduction for charitable contributions be more equitable?” contained errors that had been identified by Equitable Growth. Before the errors could be corrected, Congress enacted major tax legislation that substantially changed the policies discussed in the piece. As a result, Equitable Growth no longer plans to post a corrected version of the analysis and has removed the original.

 

A childcare plan for wealthy families in the United States

Posted on by Emilie Openchowski
Saryah Mitchell, sits with her mother, Teisa, Gay, left, a rally in Sacramento, Calif.

The vast majority of children up and down the income scale grow up in dual-earner or single-parent homes. Without a parent who is able to care for children at home, American families are in search of affordable, safe childcare, but rising prices are making it hard for workers to access childcare in pursuit of balancing their work and personal responsibilities. During his presidential campaign, Donald Trump proposed three new tax benefits for childcare aimed at bringing relief to middle-class families. A recent analysis of his proposals by Lily Batchelder of New York University and her coauthors, however, shows that this plan fails at providing relief to middle-class families. Both in terms of dollars and as a share of household income, these benefits would be much larger for high-income families than for low- and middle-income families in America.

As part of President Trump’s overall tax-reform plan, he proposes an expanded credit for low-income families, a deduction for higher-income families, and a childcare savings account, as compared to the current small nonrefundable credit for childcare known as the Child and Dependent Care Tax Credit. In general, the proposal allows a couple making less than $500,000 annually ($250,000 for single parents) to deduct the cost of childcare from their taxable income (up to the state average cost of childcare), while those who earn too little to owe any income tax would be eligible to receive a smaller refundable credit. In addition, his proposal would allow families to set up an account to save tax-free for childcare expenses and other related expenses such as private-school tuition and extracurricular activities.

This proposal relies most heavily on a deduction. Indeed, this deduction is worth most per dollar spent on childcare to higher-income families who face higher marginal tax rates, while the credit available to lower-income families is worth much less per dollar spent on childcare than the deduction—tilting the benefits toward higher-income families. What’s more, the tax-free savings accounts for childcare and other related expenses is unlikely to benefit low- and moderate-income families because they tend to be strapped for cash.

Batchelder and her coauthors illustrate the regressivity of Trump’s child tax credit proposal by considering how these policies would affect the tax liability of a hypothetical family. They consider a married couple with a 4-year-old living in Michigan, where the average annual childcare cost for a child that age is $8,238, close to the median in America. (See Figures 1 and 2.)

Figure 1

Figure 2

If both parents make the same amount earning the federal minimum wage, then their household income would be $30,000 and this proposal would reduce their tax liability by $574 in 2017. Meanwhile, if the same family had combined earnings of $250,000, then its tax liability would be reduced by $1,460 more than the currently allowed deduction. Overall, the low-income family still pays 26 percent of its income in childcare costs after the tax credit, whereas the high-income family pays only 2 percent of its income for childcare services after applying the tax credit.

Although Trump’s plan attempts to tackle the issue of rising childcare costs, it fails at doing so for the families that need it most. Helping low- and middle-income families cope with rising childcare costs is imperative for parents, their kids, and the broader U.S. economic growth and productivity. In her book, “Finding Time,” Equitable Growth’s Heather Boushey offers a broad-based policy agenda to address the economic issues of family and life, including the burdensome childcare costs that American families face today. Many experts have suggested replacing the current Child and Dependent Care Tax Credit and dependent care flexible spending accounts with a refundable credit that limits childcare to a fixed proportion of household income, which would make Trump’s childcare support more progressive and would benefit those who need the most help.

Should-Read: Jonathan Chait: Obamacare-Repealer Explains Poor Don’t Want to be Healthy

Posted on by Brad DeLong

Should-Read: Chait is right: this makes absolutely no sense at all. People who won’t go to the doctor don’t cost Medicaid anything…

Jonathan Chait: Obamacare-Repealer Explains Poor Don’t Want to be Healthy: “Representative Roger Marshall is a Kansas Republican…

…a former obstetrician, and a first-year member of Congress, and opponent of the Affordable Care Act. In an interview with Stat, Marshall draws upon his medical experience to explain why the law’s expansion of Medicaid is a bad thing. It is quite an interesting explanation:

“Just like Jesus said, ‘The poor will always be with us,’” he said. “There is a group of people that just don’t want health care and aren’t going to take care of themselves.… Just, like, homeless people.… I think just morally, spiritually, socially, [some people] just don’t want health care,” he said. “The Medicaid population, which is [on] a free credit card, as a group, do probably the least preventive medicine and taking care of themselves and eating healthy and exercising. And I’m not judging, I’m just saying socially that’s where they are. So there’s a group of people that even with unlimited access to health care are only going to use the emergency room when their arm is chopped off or when their pneumonia is so bad they get brought [into] the ER.”

There are a few points to make here:

  1. Measuring the impact of any medical treatment is usually hard. But the overwhelming weight of studies suggests eligibility for Medicaid makes people physically, mentally, and financially better off.

  2. If Marshall thinks poor people need to do more preventative care, there are programs that can encourage it. Eliminating their access to regular medical care is the opposite of that. Indeed, he is complaining that Medicaid-eligible people only use health care when their arm is chopped off or they get pneumonia and visit the emergency room, and his solution is to deny them access to medical care other than the emergency room (which by law has to treat anybody who comes in).

  3. Note that Marshall is not merely proposing to identify those poor people who refuse to take care of themselves and to cut off their insurance. He has decided this applies to Medicaid-eligible people as a group, and the punishment should be meted out to all of them. Medicaid doesn’t force anybody to go to the doctor, so if Marshall is sure the poor don’t want health care, he can let them stay on the program, and then only the poor people who do want health care will use it to visit the doctor. Taking away people’s right to choose something on the grounds that they don’t want it anyway is a proposal suffering from a basic conceptual problem.

  4. While I am not a theologian, I feel confident in asserting that Jesus’ message about the poor is not most accurately summarized as “Let them suffer, they’re animals anyway.”

Should-Read: Jared Bernstein: Clashing with the Fed: Should they stay or should they go?

Posted on by Brad DeLong

Should-Read: The very sharp Jared Bernstein swings and misses…

Of his five reasons for raising interest rates, [5] is simply wrong–wanting to avoid the ZLB in the future strongly calls for not raising rates in any way that fighter be premature; [4] is incoherent–since the point of raising is to slow job growth, claiming that it won’t is not an argument for raising; [3] is contradictory; and [2] and [1] seem based on a forecasting gestalt that has been overoptimistic for nine years now:

Jared Bernstein: Clashing with the Fed: Should they stay or should they go?: “Should the Fed raise their benchmark interest rate at their meeting later this month?…

…Financial markets put the likelihood of a March rate hike of another 25 basis points at 77.5 percent. That’s about twice what it was a few weeks ago…. Should they stay or should they go? Reasons not to raise: –The job market is… not there yet; both the underemployment rate and the prime-age employment rate remain elevated…. –While the recovery is about eight years old… middle- and low-wage workers have only recently started seeing real paycheck gains…. –Moreover, there’s little evidence that wage growth is bleeding into price growth…. –The strong dollar… is doing the Fed’s work for them!… –core inflation gauge remains below their 2 percent target… has been holding steady at around 1.7 percent….

Reasons to raise: –[1] The Fed… often moves before utilization constraints are fully binding. –[2] The economic headwinds typically cited in favor of holding have somewhat dissipated…. –[3] The Fed may view the stock market rally as a bit overdone… [but] not [to] raise would signal that the Fed is less optimistic…. That could tank the rally…. –[4] The job market, or more precisely, labor demand, is in a solid groove and won’t be slowed by a small hike. –[5] “Normalization” of the Fed funds rate is necessary to avoid the zero-lower-bound problem when the economy weakens…. I see both sides and think it’s a close call

Weekend reading: “From gender norms to level targeting” edition

Posted on by Nick Bunker

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is the work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Bridget Ansel writes on new research about what happens to marriage in areas where work, specifically manufacturing work, disappears. Spoiler: gender norms play a role.

Why should policymakers care about a decline in business dynamism in the United States? New research suggests that slowing productivity growth and dynamism may be linked.

Two new papers were released as part of Equitable Growth’s working paper series. This week’s papers cover the effects of increased credit access on employment and proposed changes to corporate taxation in the United States.

One concern about the potential gains from pre-Kindergarten programs is that the gains appear to fade overtime. Kavya Vaghul argues that perhaps this fadeout could be eliminated by smoothing transition into educational levels.

Should policymakers be celebrating gross domestic product soon set to hit its potential growth rate? Should they feel the same if and when inflation hits 2 percent? Here’s the case that they shouldn’t.

Links from around the web

How much of the consumption binge during the 2000s in the United States was due to rising income inequality? Contra some new research, Matthew Klein argues that inequality played an important role. [ft alphaville]

For more than 25 years, the Japanese economy has been stuck in a funk. And despite innovative efforts to boost the economy by the Bank of Japan, a deflationary mindset seems to still have a hold, John Lyons and Miho Inada report. [wsj]

Immigration and increased exposure to international trade are now popular culprits for increasing U.S. income inequality and wage stagnation. But Eduardo Porter argues that domestic factors—namely outsourcing and changing structures of work—are more likely causes. [nyt]

Automation could potentially displace millions of U.S. workers from their jobs in years to come. Such a reality causes anxiety. But what if unpleasant jobs are among those eliminated? Alana Semuels looks at trucking and automation. [the atlantic]

“Despite generations of generally rising college-graduation rates, higher education’s promise of significantly reducing income and wealth disparities across all races and ethnicities remains largely unfulfilled,” write William Emmons and Lowell Ricketts. [in the balance]

Friday figure

Figure from “U.S. homeownership tax policies are expensive and inequitable” by Nisha Chikhale

Must- and Should-Reads: March 3, 2017

Posted on by Brad DeLong

Interesting Reads:

Rethinking Productivity Growth

Posted on by Brad DeLong

Rethinking Productivity Growth: Fresh at Project Syndicate: Today, the world’s population is, on average, about 20 times richer than it was during the long Agrarian Age. Between 7000 BC and 1500 BC, resources were scarce, technological progress was slow, and Malthusian pressures kept almost all human populations at a near-subsistence level, with per capita daily income of less than $1.50 in today’s terms. In 2017, only around 7% of the world’s population is that poor. Read MOAR at Project Syndicate