Must- and Shall-Reads:

• Paul Marshall:
  “Put simply, the economy is run by the rich for the rich…”
• Dina ElBoghdady:
  Obama announces plan that could save home buyers hundreds of dollars a year
• Roberto A. Ferdman:
  “There is little empathy at the top. Most of America’s richest think poor people have it easy in this country, according to a new report released by the Pew Research Center…”
• Jordan Weismann:
  Thomas Piketty’s Capital: How the French Professor Changed Economics Conversation in 2014

1. Megan McArdle:
   Republicans Are Making Obamacare Harder to Repeal:
   “Weakening the employer mandate is not going to get [Republicans] any closer to repealing Obamacare…. If they actually succeeded in getting this bill passed… they… further entrench the 2010 health-care bill…. A weaker employer mandate will push more people onto the exchanges. Many of those people would be receiving subsidies. The more people who receive subsidies, the harder repeal of the whole law will be…. It’s hard to see why Republicans want to push more people into that part of the system, and hasten the sclerosis that makes programs so hard to kill or change once they have accumulated a lot of users. We haven’t even discussed the extra cost of providing subsidies to millions more people. Republicans seem to like taking votes against Obamacare so much that they’ll vote for anything that undoes what Democrats put in place–even if that thing costs a bunch of money, and takes them further from their stated goal of repealing the whole bill. They need a better hobby…”
   

2. Simon Wren-Lewis:
   Sachs and the Age of Diminished Expectations):
   “I am getting increasingly fed up with people telling me that US growth disproves the idea that austerity is bad for you at the Zero Lower Bound (ZLB). Jeffrey Sachs just joins a long list…. With recent US experience, there is no case against Keynesian analysis to answer. This suggests to me two things. First, lots of people are desperate to show that critics of austerity at the ZLB are wrong, and are prepared to make nonsense arguments to that end. This may be particularly true if you very publicly proclaimed the need for austerity in 2010…. Second, it is a sad day when anyone thinks that 2.3% growth is ‘brisk’ when we are recovering from a deep recession and interest rates have remained at the ZLB. It is so very dangerous when these diminished expectations become internalised by the elite…”
   

3. Aidan Regan:
   Europe’s ‘Structural Reform’ Agenda Little More than a Fairytale:
   “So what is the core economic idea that [Europe’s power-brokers] share? It is the magic economy dust formula of ‘structural reforms’. It is the idea that if national governments just sprinkle enough structural reforms into the economy to enhance market competition they will, eventually, generate the conditions for employment growth. This is captured perfectly in a recent analysis by Marco Buti, the Director General (DG) of the Economic and Finance Commission. He outlines a trilemma for the Eurozone: we cannot have the welfare state in a fixed monetary union that requires reducing fiscal deficits to 3 per cent of GDP. This is true. In order to keep the welfare state, he proposes a consistent policy ‘trinity’: banking union, symmetric adjustment (i.e. inflation in the core) and deep structural reforms. These, we are told, will generate the conditions for economic growth. In turn, with full employment, the welfare state is secure. This is the core idea behind the policy response to the Eurozone crisis and it is worth stating clearly if its merits can be tested against rational argument and empirical evidence…”
   

4. Laurence Ball and Sandeep Mazumder:
   Understanding Recent US Inflation:
   “Researchers have put forward two explanations for the failure of the US inflation rate to fall as far during the Great Recession as the Phillips curve would predict. Either expectations have been successfully anchored by the Fed’s inflation target, or the Phillips curve is focusing on the wrong thing–aggregate unemployment instead of short-term unemployment. This column shows that the two explanations are complementary; together, they explain the puzzle, but separately they cannot…”
   

5. BLS:
   Employment Situation Summary:
   “Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent…. The unemployment rate declined by 0.2 percentage points… and the number of unemployed persons declined by 383,000 to 8.7 million…. The civilian labor force participation rate edged down by 0.2 percentage point
   to 62.7 percent in December.”
   

Should Be Aware of:

• Chris Blattman:
  Please Don’t Write Well, Write Clearly
• Leah Goodman:
  David Miranda and the Human-Rights Black Hole

1. Neil Collins:
   Archaic BoE was ill-equipped to prevent financial crisis:
   “Spare a sympathetic thought… for the 15 non-executive directors of the Court of the Bank of England in 2007…. There… for the burnishing of their CVs, curiosity, and perhaps a sense of public duty… none is a central banker… all jolly busy with day jobs…. When it comes to the technical consequences of rescuing Northern Rock, they have little to add. Actually, it is worse than that. Their chairman, John Parker, reprimands them for leaking the appointment of a deputy governor (to the FT, naturally) and implies that if they cannot keep quiet, they will be told even less…. Given this environment, it is hardly surprising that the volumes covering the Great Banking Crisis portray Court members as flapping around like fish on a slab. Since even the technocrats were bewildered by the speed and novelty of the events… it seems particularly unfair to savage the non-execs. The whole set-up was archaic, but it suited the executives to keep it that way…”
   

Must- and Shall-Reads:

• Nick Bunker:
  How patents might hold back innovation
• Helaine Olen:
  All of Us Worried, None of Us Angry About Inequality
• Charlie Warzel:
  “‘Move fast and break things’ doesn’t work when the ‘things’ are real people”
• Jon Stewart:
  On Charlie Hebdo: “Very few people go into comedy as an act of courage”

1. Gillian Tett:
   US Export Economy Fails to Import Jobs:
   “In 2009, exports created 9.7m jobs; by 2013 the tally was 11.3m…. Back in 2009, each billion dollar’s worth of exports was creating 6,763 jobs. In 2013, it was 5,590 jobs. That is a fall of 17 per cent–in just four years…. American companies are becoming more innovative and competitive on the world stage…. There is a more pessimistic twist to all this: what will the surplus workers do?… Mr Kleinfeld has recently started working with community colleges on retraining programmes, in a bid to help workers to adapt. Other companies are doing the same. But what is lamentably missing is any coherent policy from Washington to support such endeavour…. That needs to change–well before the current recovery loses steam.”
   

2. Financial Times:
   Markets Prophesy Secular Stagnation:
   “This is indeed a downbeat story. It is neither healthy nor sustainable for long-term rates to stay this low for this long…. Savers cannot survive on negative real returns. Pension funds are already struggling…. Although finance ministries sell bonds more easily in such an environment, they should not look to prolong it. Their policies should aim at restoring growth to levels that would lead to a higher level of interest rates…. he first recourse is for central banks to show fewer qualms in pursuit of higher inflation. But a useful next step would be for governments to take advantage of these cheap rates to borrow and invest…. It is hard to imagine a future finance minister wishing he had borrowed less when the price was negative.”
   

3. Jon Hilsenrath:
   Could Lower 10-Year Yields Spark A More Aggressive Fed?:
   “Falling long-term interest rates pose a quandary for Federal Reserve officials…. If falling yields are a reflection of diminishing inflation prospects… it ought to prompt the Fed to hold off on raising short-term interest rates…. If… lower long-term rates are a reflection of investors pouring money into U.S. dollar assets, flows that could spark a U.S. asset price boom, it might prompt the Fed to push rates higher sooner…. The latter interpretation is less conventional, but it is one that New York Fed President William Dudley made…. ‘During the 2004-07 period, the (Fed) tightened monetary policy nearly continuously, raising the federal funds rate from 1 percent to 5.25 percent in 17 steps. However, during this period, 10-year Treasury note yields did not rise much… the availability of mortgage credit eased…. With the benefit of hindsight, it seems that either monetary policy should have been tightened more aggressively or macroprudential measures should have been implemented in order to tighten credit conditions in the overheated housing sector.’ Mr. Dudley’s conclusion was that the pace of the Fed’s short-term interest rate moves this time around ought to be dictated in part by whether the rest of the financial system is moving with or against the Fed’s intentions when it decides it ought to start restraining credit creation: ‘When lift-off occurs, the pace of monetary policy normalization will depend, in part, on how financial market conditions react to the initial and subsequent tightening moves.’… The challenge for the Fed is that one can make any number of arguments about the cause of falling long-term rates today…. The Fed’s next policy meeting is three weeks away. It is clear officials will spend a considerable time debating the correct response to a perplexing lurch down in long-term rates.”
   

4. Joshua Green:
   Why the Fight Over the Keystone Pipeline is Completely Divorced From Reality:
   “Several years ago, liberals… settled on Keystone because the oil it would transport… is especially damaging to the environment…. Conservatives seized on Keystone because it offered a clear example of liberals prioritizing the environment over the jobs the pipeline’s construction would create, an effective political attack in a lousy economy. President Obama’s… only added to the appeal…. Keystone has attained tremendous symbolic importance for both Democrats and Republicans. But… the pipeline’s actual importance to oil markets, the economy and the environment has steadily diminished. Whoever wins, the ‘victory’ will be pointless and hollow…”
   

5. Peter Beinart:
   Jeb Bush Presidential PAC:
   “If Jeb Bush is trying to show Republicans that he’s conservative enough to be their nominee, he has a strange way of showing it…. His… political action committee, The Right to Rise… income inequality as a core economic problem…. In a Pew poll last spring, only 19 percent of Republicans called the divide between rich and poor a ‘very big problem.’ And when asked why that gap exists, a plurality of Republicans said it was because the poor don’t work as hard…. The notion that… Americans… have rights to a minimum standard of economic well-being was made famous by Franklin Roosevelt…. Ever since FDR outlined these ‘positive rights,’ rejecting them has constituted an important part of what it means to be an American conservative…. ‘The right to rise’ may sound more entrepreneurial than the right to health care, housing, and a decent job, but it amounts to the same thing…. In the 2011… op-ed… [Bush] did say that Americans also have the right to fall…. But now that he’s running for president as the Republican who can win over non-Republicans, Jeb has jettisoned that part…. His rhetoric effectively makes upward mobility a government obligation…. It’s unlikely to impress real conservatives, who will sooner or letter realize that a politician they already distrust is trying to have it both ways.”
   

Should Be Aware of:

• Tinyletter Archive: Yet, Somehow, Reality Continues to Elude My Grasp… http://tinyletter.com/braddelong/archive
• Francis Wilkinson:
  Charlie Hebdo and the War on Cosmopolitanism
• Hussein Ibish:
  The False Piety of the Hebdo Hoodlums

1. James Pethokoukis:
   The GOP said Obamanomics would kill the economy. It didn’t. Now what?:
   “Making the case that an improving economy would be improving even faster with smarter GOP policies isn’t as politically compelling as simply pointing to an economy in flames…. Also, a lot harder…. The GOP’s recent aversion to the Federal Reserve makes it tough to offer up active monetary policy as an alternate theory–despite its explanatory power–for why the U.S. is doing far better than other advanced economies…. It’s not just that Republicans need to offer a positive agenda; they also need one that goes beyond an obsession with deficits and debt and that tackles the everyday concerns of most Americans…. One big worry for many parents is that their kids will have less opportunity than they did…. The U.S. economy has plenty of pressing problems, just often not the ones Republicans have been most worried about.”
   

2. Paul Krugman:
   Professors, Politicians, and Moments of Truth: “Simon Wren-Lewis… whether US growth despite sequestration is a huge problem for Keynesians…. Look at the scatterplot…. [Has the U.S.] done… better enough to be considered a serious challenge?… Really? The question then becomes, why would… [an] economist with a reputation to defend… make that claim?… Wren-Lewis points us to a 2010 article… co-authored by Jeff Sachs and… George Osborne… all about the invisible bond vigilantes and the confidence fairy…. 2010 was a real moment of truth…. Being a forthright Keynesian at the time meant sticking out your neck… running very much counter to… the Very Serious People…. As it turned out, however, the Keynesian view came out looking very good, and siding with the VSPs was not a good move after all…. If you’re an economist… it’s not so easy to walk away unscathed…. Enough said.”
   

3. Justin Fox:
   Samsung Gets Mugged in Androidland:
   “What just happened here? What happened is that Samsung had a fun little run as the premium maker of devices in a burgeoning technology ecosystem it doesn’t control, and now the inexorable forces of competition, commoditization, modularity and the like have brought it back to earth… selling smartphones is turning out to be less lucrative than it looked to be a couple of years ago. This shouldn’t surprise anyone who was reading the business pages in the 1990s…. History never repeats itself, it only rhymes, so there are also differences…. Nobody controls the Android ecosystem the way that Microsoft and Intel controlled PCs…. Apple has done a much better job this time around of defining a role for itself. It’s got… 11.7 percent to Android’s 84.4…. But that 11.7 percent represents the most affluent, profitable customers…. I have no idea how long Apple can maintain this lock on unimaginative affluent people. (I needed to buy a new phone this week, spent about 30 seconds thinking about it, then ordered an iPhone 6.)… In the… Android ecosystem… consumers… especially [the] less-affluent… are getting the windfall. Thanks, Google! Sorry, Samsung! And now let me go check if my new iPhone 6 has arrived yet.”