Must- and Shall-Reads:

• Richard Sutch:
  The Liquidity Trap, the Great Depression, and Unconventional Policy: Reading Keynes at the Zero Lower Bound
• Laurence Ball, Brad DeLong, and Larry Summers:
  Fiscal Policy and Full Employment
• John G. Fernald:
  Productivity and Potential Output Before, During, and After the Great Recession
• George Selgin:
  A 1920-21 Recovery Myth

1. Mark Thoma:
   Economist’s View: ‘What’s Causing the Increase in Long-Term Unemployment?’: “Salim Furth, who ‘is senior policy analyst in macroeconomics at the Heritage Foundation’s Center for Data Analysis’: ‘What’s Causing the Increase in Long-Term Unemployment?: Some economic indicators, including the short-term unemployment rate, have recovered to levels associated with ‘normal times.’ But long-term unemployment remains high…. Many economists, myself included, expected that the expiration of long-term unemployment benefits at the end of 2013 would sharply lower the long-term unemployment rate. Instead, the rate has continued its slow, steady decline…. Economists have not yet found convincing explanations…. The problem is worth studying.’ They will have to find another social insurance program to blame… instead of, say, lack of demand (a policy failure) combined with the stigma attached to the long-term unemployed.”
2. Jonathan Chait:
   4 New Studies: Obamacare Working Incredibly Well:
   “Four major new sources of information have come out this week, all of which have further demonstrated the law’s success. 1. Increasing access to the uninsured…. Conservatives widely denied that the law would even succeed at its basic goal of increasing access to health insurance. Obamacare ‘created more uninsured people than it gave insurance to. And it promises to create even more,’ argued National Review’s Jonah Goldberg. Fox News panelist Charles Krauthammer proclaimed the law would result in ‘essentially the same number of uninsured.’… 2. Reducing overall health-care costs…. 3. Hospital errors…. 4. Insurance competition. Obamacare is based on an old Republican plan, developed by the Heritage Foundation and first tried by Mitt Romney, whose central feature was market competition…. Liberals did not place much faith in this dynamic…. But the dynamic has turned out to work much better than expected…”
3. David Beckworth:
   Are We Mismeasuring Productivity Growth?:
   “Noah Smith… observed that the Fernald TFP data can be decomposed into TFP in investment production and TFP in consumption production. TFP in investment looks better than the overall…. TFP in consumption… has basically flatlined since the early 1970s and is what is driving the Great Stagnation…. The Great Flattening does not seem reasonable. Has productivity growth in consumption really been flat since the early 1970s?… This suggests there are big measurement problems in consumption production. And I suspect they can be traced to the service sector…”
4. Mark Thoma:
   Economist’s View: ‘Entrepreneurship, Down-Side Risks, and Social Insurance’:
   “In 2009 I argued: A more extensive social safety net can reduce the risk of attempts at entrepreneurship. If there is an extensive social safety net to fall back upon if things don’t work out, you might be more willing to quit the job you hate (the one with health insurance for the kids) and sink everything you have into a small business that you’ve always wanted to run. But I’m not sure the data above support this interpretation, i.e. that there is an obvious positive association between the strength of social insurance and the prevalence of small business. But it is highly suggestive, and regressions that control for other cross-country differences could help to settle the issue. Nick Bunker discusses a paper that provides supporting evidence: ‘Entrepreneurship, down-side risks, and social insurance…. John Hombert… et al. looks at a reform in the French unemployment insurance system enacted in 2002. The reform allowed unemployed workers who start a new business to keep the right to their unemployment benefits for up to three years…. The rate at which firms were created increased by 25 percent after the 2002 reform…. ‘The evidence points toward these new entrepreneurs being capable businesspeople who just needed a safety net before starting a business. What’s more, these new firms had a positive impact on the overall economy….'””
5. Ezra Klein (2007):
   No Exit Revisited: “Andrew Sullivan tries to answer my post from yesterday on No Exit, the [Betsy McCaughey] article he published attacking the Clinton health plan. He says that ‘I don’t think it’s fair to expose the internal editing of a piece but there was a struggle and it’s fair to say I didn’t win every skirmish,’ which is interesting, and he says that ‘I was aware of the piece’s flaws but nonetheless was comfortable running it as a provocation to debate.’ What he doesn’t say is that he believes the piece accurately described the Clinton health care plan. Which is what’s at issue. There were reasons to criticize the delivery structure the Clintons sought to implement, but No Exit simply lied…”
6. Duncan Black:
   So Long, And Thanks For All The Shit):
   “[The New Republic] does publish people I like these days, but there is this weird worship of it as An Institution, as An Important Part Of The Discourse. Yah, thanks for Marty Peretz, Andrew Sullivan, The Bell Curve, Betsy McCaughey, Mickey Kaus, the Iraq War… oh God, I forgot Chuck Lane, who often manages to make Richard Cohen look good…”
7. Ezra Klein:
   Even the liberal New Republic needs to change: “The eulogy that needs to be written isn’t for The New Republic. It’s for the role once played by Washington’s small fleet of ambitious policy magazines. The internet is now thick with outlets that pride themselves on covering… policymaking apparatus. Vox… The New Republic… Wonkblog, the Upshot, Mother Jones, Storyline, FiveThirtyEight, and Politico, to name just a few. And that doesn’t even include the individual bloggers who are must-reads… Kevin Drum, and Tyler Cowen, and Brad DeLong, and Paul Krugman, and Ross Douthat, and Ramesh Ponnuru, and Jonathan Chait, and Scott Sumner, and Megan McArdle, and Jonathan Bernstein, and, again, the list goes on. This sprawling conversation over Washington policymaking used to be centered in a handful of elite-focused policy magazines, of which The New Republic was perhaps the best known and most ambitious…”

Should Be Aware of:

• Richard Mayhew:
  217-60-1-5
• Dana Nuccitelli:
  A new study estimates surface temperature cooling from volcanoes at 0.05–0.12°C since 2000
• Sharon K. Long et al.:
  Taking Stock: Health Insurance Coverage under the ACA as of September 2014
• Sean Davis:
  Hands Up, Don’t Choke: Eric Garner Was Killed By Police For No Reason

1. John Kay:
   The capitalists sold the mills and bought all our futures:
   “If you want to measure the capital possessed by a nation, there are two ways of doing it. One is to travel the length and breadth of the country counting the houses, the bridges, the factories, shops and offices, and adding up their total value. The other is to knock on doors and ask people how rich they are…. The totals are not… the same…. The wealth of Carlos Slim, Bill Gates or Warren Buffett is largely outside [physical capital] data because the market value of América Móvil, Microsoft and Berkshire Hathaway far exceeds the tangible assets of these companies…. If ‘capital is back’, as Prof Piketty contends, it is in a very different sense from the 19th-century view, in which the ownership of capital confers authority over the means of production. Messrs Slim, Gates and Buffett… did not acquire control of the means of production by virtue of their ownership of capital; rather they acquired capital from their control of the means of production, which they gained through political influence and success in the market…”
2. Rhoula Kalaf:
   The German club of Putin understanders:
   “Most German Putin understanders were embarrassed into silence after the July downing of Malaysia Airlines Flight MH17, and the separatists’ treatment of the bodies and the crash site. That was when public opinion swung decisively behind Ms Merkel’s tough line against Mr Putin…. Putin critics in Berlin worry that the understanders are rearing their heads again. They expect them to begin agitating for an easing of sanctions against Moscow in response to the Ukraine crisis. The most famous understander is Gerhard Schröder, the former chancellor, who counts Mr Putin among his friends… said Moscow had justifiable fears about being encircled…. celebrate[ed] his 70th birthday with the president in St Petersburg, and was pictured warmly embracing him…. Matthias Platzeck, chairman of the German-Russian business forum and former chief of the Social Democratic party (SPD)… suggest[ed] the west should accept the annexation of Crimea to ease tensions with Moscow…. A measure of understanding of Russian policy inevitably creeps in when you want to do business with Moscow. The Eastern Committee… is critical of Russian actions in Ukraine and supportive of Ms Merkel but strongly opposed to sanctions. A delegation was in Moscow last month and met Sergei Lavrov, Russian foreign minister. The visit was low key. “‘It goes without saying that no one wants to see pictures of anyone hugging Lavrov”, says a committee official.'”
3. Zandar:
   Even The “Liberal” New Republic » Balloon Juice:
   “Me?  The number of damns I give about TNR as a going concern at this point equals approximately the number of black voices writing for the magazine, which is to say zero, but YMMV.  The thing survived two world wars, the Great Depression, Watergate, the fall of the Soviet Union, 9/11, New Coke, and 74,927 episodes of Law and Order, but couldn’t handle one Silicon Valley douchebag with a giant checkbook…”

Ezra Klein:
Even the liberal New Republic needs to change: “The eulogy that needs to be written isn’t for The New Republic…

…It’s for the role once played by Washington’s small fleet of ambitious policy magazines. The internet is now thick with outlets that pride themselves on covering… policymaking apparatus. Vox… The New Republic… Wonkblog, the Upshot, Mother Jones, Storyline, FiveThirtyEight, and Politico, to name just a few. And that doesn’t even include the individual bloggers who are must-reads… Kevin Drum, and Tyler Cowen, and Brad DeLong, and Paul Krugman, and Ross Douthat, and Ramesh Ponnuru, and Jonathan Chait, and Scott Sumner, and Megan McArdle, and Jonathan Bernstein, and, again, the list goes on. This sprawling conversation over Washington policymaking used to be centered in a handful of elite-focused policy magazines, of which The New Republic was perhaps the best known and most ambitious….

The policy magazines had two dimensions. The first was what they covered–which was, for the most part, politics through the lens of policy…. The second was the angle and tone…. The New Republic oscillated from editor to editor, but tended towards a hawkish, contrarian neoliberalism (hence the ‘Even the liberal New Republic’ meme)…. To the wonk in the 1970s, ’80s, and ’90s, these magazines were the thrumming center of the policy conversation in Washington…. But they’re no longer the center….

A deeper tension in digital journalism: the pressure for convergence is strong. We feel it at Vox, and sometimes give into it. It’s easy to see which stories are resonating with readers. It’s obvious that John Oliver videos do big numbers. And that’s fine. Right now, almost all successful digital publications are partially built on internet best practices and partially built on that publication’s particular obsessions, ideas, and attitude. Digital publications need to be smart about their mix….

But what made the New Republic and its peer policy magazines so great was how restlessly, relentlessly idiosyncratic they were–that’s how they drove new ideologies and new ideas to the fore. They were worse at covering policy than their digital successors, but probably better at thinking…. I’m less pessimistic about TNR’s future than many… and, as someone who really loathed a number of TNR’s previous eras (see the Bell Curve, or No Exit, or A Fighting Faith, for examples)… a bit less nostalgic for its past. But something is being lost in the transition from policy magazines to policy web sites…

The Martin Peretz-Michael Kinsley New Republic was world-class at snarking, but thinking–I think of Mickey Kaus, Jacob Weisber, Charles Krauthammer, Fred Barnes, Morton Kondracke and a magazine known best for the phrase “even the liberal New Republic“, and I say “no”. Hertzberg, IIRC, dialed down the snark and dialed up the policy substance, but still… And I don’t see how anybody would claim that the post-Hertzberg TNR was good at “thinking”

Ezra Klein (2007):
No Exit Revisited: “Andrew Sullivan tries to answer my post from yesterday…

…on No Exit, the [Betsy McCaughey] article he published attacking the Clinton health plan. He says that ‘I don’t think it’s fair to expose the internal editing of a piece but there was a struggle and it’s fair to say I didn’t win every skirmish,’ which is interesting, and he says that ‘I was aware of the piece’s flaws but nonetheless was comfortable running it as a provocation to debate.’ What he doesn’t say is that he believes the piece accurately described the Clinton health care plan. Which is what’s at issue. There were reasons to criticize the delivery structure the Clintons sought to implement, but No Exit simply lied…

…all of which have further demonstrated the law’s success. 1. Increasing access to the uninsured…. Conservatives widely denied that the law would even succeed at its basic goal of increasing access to health insurance. Obamacare ‘created more uninsured people than it gave insurance to. And it promises to create even more,’ argued National Review’s Jonah Goldberg. Fox News panelist Charles Krauthammer proclaimed the law would result in ‘essentially the same number of uninsured.’… 2. Reducing overall health-care costs…. 3. Hospital errors…. 4. Insurance competition. Obamacare is based on an old Republican plan, developed by the Heritage Foundation and first tried by Mitt Romney, whose central feature was market competition…. Liberals did not place much faith in this dynamic…. But the dynamic has turned out to work much better than expected…

Cato Institute:
The Future of U.S. Economic Growth: Panel 1: Forecasting the Long-Term Growth Outlook

• Dale Jorgenson, Harvard University
• John Fernald, Federal Reserve Bank of San Francisco
• Martin Baily, Brookings Institution

If David Beckworth is here, I want him to ask his question–itself triggered by an observation from Noah Smith at Stonybrook. If he isn’t here, or is shy…

Here are the figures:

And the question is obvious: if this is mismeasurement of technological progress in consumption focused since 1973 on quality, choice, and information goods, how should we understand the past generation and a half? If this isn’t mismeasurement, what explains the end of technological progress in the production of consumer output?

…can be decomposed into TFP in investment production and TFP in consumption production. TFP in investment looks better than the overall…. TFP in consumption… has basically flatlined since the early 1970s and is what is driving the Great Stagnation…. The Great Flattening does not seem reasonable. Has productivity growth in consumption really been flat since the early 1970s?… This suggests there are big measurement problems in consumption production. And I suspect they can be traced to the service sector…

Panel 2: The Future of Innovation: Stagnation, Singularity, or Something in Between?:

• Erik Brynjolfsson, Massachusetts Institute of Technology
• Robert Gordon, Northwestern University
• Stephen Oliner, American Enterprise Institute

A Question: For us economists, intensive economic growth is the rate in percent per year at which the real cost of obtaining the currently-produced bundle of marketed goods and services decline. what I am hearing from Erik is that, in his view, that is missing much if not most of the action: that what we really ought to be doing is measuring the rate at which the real cost of staying on the same utility surface is declining. And that these two are very different right now.

The fearfully sharp Robert Barro says somewhere that, with competitively-produced and sold commodities, the consumer surplus generated was as a rule of thumb roughly equal to the total cost, and that order of magnitude seems about right to me. But there seems every reason to think that when the real value produced is in the process of attracting an audience–a product to be sold to advertisers–that rule of thumb is wrong, and that consumer surplus generated is orders of magnitude larger than market cost. If true, that suggests massive misallocation. Metric gigatons of not just low-hanging but dropped fruit.

If only we could think up better societal division-of-labor coordinating mechanisms than either pounding information goods into the Smithian market that works so well for rival-and-excludible commodities but not so well elsewhere, or making your nut by selling as product the eyeballs and attention of those who are your real customers.