Things to Read on the Evening of November 25, 2014
Must- and Shall-Reads:
- Lars Svensson: Monetary policy tradeoffs in CESEE
- : Measuring Europe’s investment problem
- : Lies, damned lies, and liquidity expectations
- : Left, Right and Macroeconomic Competence
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: Three Words and the Future of the Affordable Care Act:
“To help people like my kids’ piano teacher, the ACA extends tax credits to anyone earning between one and four times the poverty level who buys a qualified health plan so long as the individual is ineligible for Medicaid and doesn’t have access to employer-sponsored coverage…. As Michael Cannon and Jonathan Adler read the ACA, however, my kids’ piano teacher can’t get tax credits at all. Nor should roughly 9.5 million other people… Yet… the government’s alternative reading makes much better sense of the statute as a whole and avoids assigning a meaning to the ACA that is blatantly at odds with what the statute aims to accomplish…. To make out their case, however, it’s not enough for Adler and Cannon to show that it’s possible to read the ACA to withdraw tax credits from refusal states. If the statute is ambiguous on that point, it’s black-letter law that the courts must defer to the IRS’s authoritative interpretation (Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837 [1984]). Adler and Cannon… have to demonstrate that the statute unambiguously withdraws tax credits…. They haven’t come close to making such a demonstration…” -
: Obama’s Immigration Order: A Vote for American Exceptionalism: “American exceptionalism, you’ll remember, is something Obama’s critics claim he doesn’t believe in. ‘Our president doesn’t have the same feelings about American exceptionalism that we do,’ Mitt Romney said during the 2012 presidential campaign. In a 2010 cover story in National Review, Rich Lowry and Ramesh Ponnuru declared, ‘At the heart of the debate over Obama’s program is the survival of American exceptionalism.’… One consistent feature of exceptionalist discourse has been the idea that America permits greater upward mobility than does the Old World…. In recent decades, sadly, the reality of American mobility has diverged sharply from the myth…. America, Marco Rubio said a few years back, ‘is the only economy in the world where poor people with a better idea and a strong work ethic can compete and succeed against rich people in the marketplace.’ That’s not actually true. But it’s truer today than it was last week because the president who supposedly wants to make America more like Europe has instead made America more like its best vision of itself.” -
Lars E.O. Svensson http://larseosvensson.se: Monetary policy’s best contribution to financial stability?: “Inflation on target and resource utilization at long-run sustainable rate. Suppose 2% inflation and 3% real growth, nominal growth 5% of asset prices and disposable income, doubling every 14 years. For any given nominal debt, LTV and DTI ratios halved in 14 years. Pretty good for repair of balance sheets. Monetary policy should only be the very last line of defense of financial stability, normally not to be used…”
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: The bond market’s dance over European debt will not last forever: “Are the circumstances confronting Europe’s heavily indebted governments today at all similar? To be sure, those governments face strong external pressures from the bond market. But they also face strong internal pressures from voters, who are unlikely to sit patiently for 10 to 15 years while 5 per cent of national income goes to pay off the debt of previous generations. The countries in question clearly lack the strong fiscal institutions needed for this task. The implication is that Europe’s official strategy for resolving its debt crisis will not work. Fortunately, there are feasible alternatives… grow the denominator of the debt/GDP ratio…. But sadly growth cannot be conjured up out of thin air. European policy makers have shown an inability to conjure it up any other way. The other alternative is debt restructuring. European officials continue to dance around the idea of writing down public debt, promising Greece lower interest rates and longer maturities but denying the need for more fundamental restructuring and for applying such measures more widely. The events of recent weeks make clear that they will not be able to dance much longer.”
Should Be Aware of:
- : Threshold of War: Franklin D. Roosevelt and American Entry into World War II
- : The Astonishing Rise of Angela Merkel, the Most Powerful Woman in the World
- : Ferguson Grand Jury: No Indictment for Darren Wilson in Brown’s Death
- : The University of Virginia Finally Confronts Its Rape Problem
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Come On, Feel the Buzz – The Baffler:
“Joe Williams, a reporter for the political newspaper and web news site Politico, said… Republican presidential nominee Mitt Romney appeared comfortable only around white people…. Williams was quickly and rather publicly fired…. In August, Politico reporter David Catanese defended GOP Rep. Todd Akin’s bizarre lecture on where babies come from. Akin, running for U.S. Senate from Missouri, revealed that he believed a common conservative myth: that in the event of ‘legitimate rape,’ the female body somehow prevents pregnancy from taking place, thus negating the need for a rape exemption from a prospective abortion ban. Catanese tweeted that the negative response to Akin’s comments was overblown, because ‘we all know what he was trying to say.’ He continued digging, suggesting that Akin might have a point about this legitimate rape thing. After all, Catanese wrote, some unknown number of ‘reported’ rapes are surely fake (though it’s not ‘PC’ to admit as much), and it is certainly possible (not that he had checked out ‘the science’) that actual rapes are unlikely to lead to pregnancy. ‘The left is often 1st to shut down debate as ‘off limits’ when it deems so,’ he finally tweeted. ‘Aren’t these moments supposed to open up a larger debate?’ Catanese was reprimanded and taken off the Akin beat, but he kept his job. The difference between these two episodes speaks volumes about D.C.-based access journalism and the highly toxic, incestuous variant of it that Politico has perfected. Or to put things a bit more baldly: in all likelihood, David Catanese and Joe Williams suffered divergent professional fates because the leaders of Politico are more concerned about losing access to the Romney campaign than they are about losing access to victims of rape. How deep does this craving for access run?…”
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: On Presidential Medal of Freedom Recipient Robert Solow: “We applaud President Barack Obama’s selection of Robert Solow as a Presidential Medal of Freedom recipient. Solow’s transformative research in the field of economics and ongoing contributions to our understanding of long-term economic growth, productivity and inequality cannot be overstated…. Solow remains a scholar ahead of his time. Few intellectuals can effectively communicate the real-world implications of theoretical economic research, but Professor Solow’s brilliance is his ability to engage with diverse audiences and at the same time influence how generations of emerging scholars participate in empirical debates. Our nation is without a doubt better equipped to deal with tough economic challenges because of Professor Solow’s theoretical contributions to the field, but above all else because of his influence as a teacher to generations of scholars and policymakers.”
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: Deal Me Out : “The modern finance industry is at a loss when it comes to justifying its own existence. Its finest minds can’t explain why we wouldn’t be better off with a much simpler and more heavily circumscribed model of capital formation. Sorkin likewise can’t make his readers fully grasp why the current system—which turns large amounts of other people’s money and even more people’s debt into huge paper fortunes for a small super-elite, and in such a way as to regularly imperil the entire worldwide economic order—is beneficial or necessary. But the New York Times and Wall Street each need him to try. Like a bloated and overleveraged global financial company, he’s far too crucial to be held to a regular standard of conduct. Our subprime lenders proved, in the final analysis, too big too fail; and now, certain of our name-brand financial writers are too big to practice journalism.”