Things to Read on the Evening of January 8, 2014

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.”