Things to Read at Lunchtime on February 25, 2014
Must- and Shall-Reads:
- : “It’s misleading to say the wage gap is a myth by pointing at occupational controls. It is much sounder to follow Goldin’s lead in her AEA presidential address and treat them as clues for understanding the various factors driving a very non-mythical wage gap…”
- : Obama’s newest plan might drive investment advisers out of business. Good
- : Inequality and One City: Bill de Blasio and the New York Experiment, Year One
- : “The belief that monetary policy does not matter is not just “the most dangerous idea in Federal Reserve economic history,” as the economists Christina and David Romer have noted; it is exceedingly hazardous to any economy. Europe faces enough serious risks already; it should not needlessly add to them.”
- : “TA one-decade delay in addressing climate change would lead to about a 40% increase in the net present value cost of addressing climate change…. Uncertainty and the possibility of tipping points provide a motivation for more action as a form of insurance against worse outcomes…”
- : “It was once believed that the rise of index investing would make markets less efficient and thus create new opportunities for active money managers… [but] perhaps the opposite is true…. Josh Brown, summing up… Larry Swedroe and Andrew Berkin…. ‘[W]ith all the unskilled investors departing, pros will be left to square off against only other pros. The lack of retail punters and their harvestable mistakes cuts off one of the most reliable historical sources of alpha for sharp-eyed managers…'”
- : Semiannual Monetary Policy Report to the Congress–February 24, 2015
- : Brief history of middle-class economics
- : Disability Insurance: An Essential Part of Social Security
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: The links between institutions and shared growth: “[Standard] arguments leave little or no room for labor market institutions and public policies in the determining changes in the distribution of earnings up and down the income ladder. An alternative view is that institutionally-driven bargaining power is a critical piece of the story…. All rich countries face challenges from technology and globalization, but only the United States and the United Kingdom show inequality rising to extreme levels…. I will compare the United States with Canada, Australia, Germany, and France…. The United States can do a better job of generating decent jobs, and a sensible first step is to learn from the experiences of other countries.” -
: The Best Investment the U.S. Could Make Is Affordable Higher Education: “The skills-gap story ignores the fact that education will never be the answer for everyone…. However… a college degree is a worthwhile investment…. Fortunately for me, CSU Chico, which was nearby, only charged approximately $100 per semester…. If it hadn’t been for the cheap tuition, I would have been stuck in that town with little hope of finding my potential. I am grateful to this day that the State of California gave me that opportunity for an education, and that I was able to eventually make it through graduate school with very little debt…. How many people who are in a situation like I faced will be stuck there, unable to afford to go to the college that best suits them, or can’t go at all? When that happens, when so much potential is unrealized, it makes us all worse off…. We can do better than this.” -
: Monetary Policy and Housing Prices: Lessons from 140 Years: “Housing played a major role in the Global Crisis, and some worry that the ultra-low interest rate environment is inflating new housing bubbles. Using 140 years of data from 14 advanced economies, this column provides a quantitative measure of the financial stability risks that stem from extended periods of ultra-low interest rates. The historical insights suggest that the potentially destabilising by-products of easy money must be taken seriously and weighed carefully against the stimulus benefits. Macroeconomic stabilisation policy has implications for financial stability, and vice versa. Resolving this dichotomy requires central banks greater use of macroprudential tools.” -
: Phantom Phiscal Crises – NYTimes.com: “Matthew Klein takes on…the mysterious, persistent fear that Japan and other countries that borrow in their own currencies could suddenly face a Greek-style fiscal crisis…. It’s not just BowlesSimpsonGreenspan who believe in the threat; Taka Ito… is a good and sensible economist; so is Olivier Blanchard…. The answer I seem to get is fear of a dramatic flip in circumstances–that Japan, say, could engage in a sort of macroeconomic quantum tunneling, suddenly transitioning from deflation to crashing currency and runaway inflation…. It does seem an odd thing to be worrying about right now.. does… obsessing about the state of Social Security in 2030, really make that much difference to the prospect of such an abrupt transition? I don’t see the plausibility–and it seems really strange for that concern to loom so large in the face of everything else going wrong.”
Should Be Aware of:
- : Gadgetopia
- : Unstoppable Robot Ninja
- : The disappeared: Chicago police detain Americans at abuse-laden ‘black site’
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: A different cluetrain: “Axioms about politics…. Automation privileges capital over labour (because capital can be substituted for labour, and the profit from its deployment thereby accrues to capital…. A side-effect of the rise of capital is the financialization of everything…. Since the collapse of the USSR and the rise of post-Tiananmen China it has become glaringly obvious that capitalism does not require democracy. Or even benefit from it…. The iron law of bureaucracy states that for all organizations, most of their activity will be devoted to the perpetuation of the organization…. Governments are organizations…. We observe the increasing militarization of police… the priviliging of intelligence agencies… and in the media a permanent drumbeat of fear, doubt and paranoia directed at “terrorists”…. Money can buy you cooperation from people in government, even when it’s not supposed to. The internet disintermediates supply chains…. Our mechanisms for democratic power transfer date to the 18th century. They are inherently slower to respond to change than the internet and our contemporary news media…. The expansion of the security state is seen as desirable by the government… because… the legitimacy of government is becoming increasingly hard to assert…. We’re all doomed. Have a nice century!”