Things to Read on the Morning of July 9, 2014

Should-Reads:

1. Nick Bunker: What the Beveridge Curve may tell us about the U.S. labor market: “Researchers at the Federal Reserve Bank of Cleveland used historical data on printed job advertisements to create a jobs opening rate for years prior to 2000. And if you look at their Beveridge Curve for economic recoveries going back over 60 years, you see the current shift is actually quite typical. The curve appears to shift quite a bit (up and over to the right) after large recessions and shifts back (down and over to the left) after the labor market recovers from the large shock…”

2. Dean Baker: Three paths to full employment: “The prospect of waiting another five years to reach full employment is not acceptable. It means that millions of people are being needlessly denied the opportunity to earn a living…. Continued high unemployment means that most of the gains from economic growth will go to those at the top. That the current jobs situation is better than during the worst of the downturn is hardly something to cheer about. The absurdity is that economists know how to get back to full employment…. There are three ways to deal with this shortfall in demand. The first is the simplest and most obvious: Get the government to spend more money…. We also have the route of trade…. Reduce the value of the dollar against foreign currencies…. Finally, if we can’t increase aggregate demand, we can reduce the supply of labor. The way to do this is by encouraging firms to reduce work hours as an alternative to laying people off…”

3. Carola Binder: The Unemployment Cost of Below-Target Inflation: “Svensson notes that inflation expectations that are statistically and economically higher than inflation for many years do not pass standard tests of rationality. He builds upon the ‘near-rational’ expectations framework of Akerlof, Dickens, and Perry (2000). In Akerlof et al.’s model, when inflation is fairly close to zero, a fraction of people simply neglect inflation, and behave as if inflation were zero. This is not too unreasonable–it saves them the computational trouble… and isn’t too costly if inflation is really low…. In the case of Sweden, the near-rational model is modified because people are not behaving as if inflation were zero, but rather as if it were 2%, when in fact it is lower than 2%. Instead of permitting higher output and employment, the reverse happens…”

4. Ed Kilgore: Moderation in the Pursuit of Policies Is No Virtue: “Yes, it is far past time to put to rest the idea there is some sort of moderate ideology identified with the views of Mike Bloomberg or Thomas Friedman or Jon Huntsman or the Bowles-Simpson Commission that would sweep the country if only the cowardly and unimaginative party hacks would embrace it. As Ezra suggests, the notion… is almost entirely backwards…. I don’t buy this idea that us virtuous lefties and the Tea Folk share an anticorporate agenda; I’d personally rather be governed, if I have to be, by Republican Establishment hacks serving the interests of the Fortune 500 than by ideologues who think liberal Protestants are Satanists or that the Medicaid program is slavery imposed by theft. But in the end, we’re at a point in political history where at some point America needs to choose a stable and internally coherent governing ideology for a while. Trying to govern via some sort of mushy middle path is not only a recipe for policy disaster, but anti-(small-d)democratic as well…”

Should Be Aware of:

• Martin Wolf: “Conducting irreversible experiments with the only planet we have is irresponsible. It would only be rational to refuse to do anything to mitigate the risks if we were certain the science of man-made climate change is bogus. Since it rests on well-established science, it would be ludicrous to claim any such certainty…”
• Harold James and Domenico Lombardi: “Bretton Woods demonstrated that it takes a major crisis to produce a political dynamic of reform. Today’s world, for all of its troubles, is simply not dangerous enough – at least not yet – for the countries at the helm of the global economy…”
• John Aziz: Obama isn’t killing coal. It’s dying anyway
• Dart-Throwing Chimp: Another Chicken Little Post on China
• MaxSpeak
• Mallory Ortberg: Dirtbag John Milton

And:

1. David Brockman: Moderate voters are a myth: “What happens, explains David Broockman, a political scientist at the University of California at Berkeley, is that surveys mistake people with diverse political opinions for people with moderate political opinions. The way it works is that a pollster will ask people for their position on a wide range of issues: marijuana legalization, the war in Iraq, universal health care, gay marriage, taxes, climate change, and so on. The answers will then be coded as to whether they’re left or right. People who have a mix of answers on the left and the right average out to the middle–and so they’re labeled as moderate. But when you drill down into those individual answers you find a lot of opinions that are well out of the political mainstream…. Voters who hold gentle opinions that are all on the left or the right end up looking a lot more extreme than voters who hold intense opinions that fall all over the political spectrum…”

2. Miles Kimball: Safe, Legal, Rare and Early: “I agree with the majority of Americans. It makes sense to me that someone ought to have the right not to be killed the day before they would otherwise have been born. And it makes sense to me that, despite its potential, the interests of a single human cell from a recently fertilized egg cannot weigh as much in the balance as the interests of a woman in choosing one of the most basic aspects of what her future will look like. In between, I see the ethical weight of nascent human life as increasing gradually over time. There are milestones along the way: fertilization, implantation, getting a heartbeat, becoming able to feel pain, being born. But even those transitions, seen up close, are gradual ones…”

3. Lynn Parramore: Seven Weird Things Money Does to Your Brain: “1. Money kills empathy…. 2. Losing money hurts, literally…. 3. More money, fewer ethics…. 4. The more money you make, the more you think about money…. 5. Men with a lot of testosterone do weird things with money…. 6. Your brain treats credit differently from cash…. 7. The wealthy are perceived as evil-doers…”

4. Ed Kilgore: The Q-Pac Pack: “a new national survey from Quinnipiac…. On the Democratic side… HRC still leads Warren by better than five-to-one…. On the Republican side, you have seven—that’s right, seven—potential candidates bunched within three points of each other: Paul at 11; Bush, Christie and Huckabee at 10; and Cruz, Ryan and Walker at 8…. I’m still pleased that after a long season of frenetic pandering to the GOP’s conservative activist base, Bobby Jindal’s support level has dropped from 3% to 1%…”

5. Matt Bruenig: Desert Theory, Rehashed: “In response to Pope Francis’ call for nations to distribute their resources more evenly, Sean Hannity unleashed an ugly tirade. In it, he refers to the poor as stupid and lazy, which is more or less the reality of how the right-wing regards them. Despite their various shell arguments to the contrary, the core reason right-wingers oppose egalitarian policies is that they don’t think poor people are deserving of the income such policies deliver to them. In sophisticated circles, this desert theory approach is usually expressed as a kind of productivity ethic. Adherents claim that we should construct our distributive institutions so as to create a patterned distribution in which economic benefits flow to their producers, people usually said to have ‘earned’ them. Adherents seem to think that laissez-faire institutions create such a patterned distribution, but they are sorely mistaken…”

Already-Noted Must-Reads:

1. Kenneth Rogoff: Economic Recovery Require Debt Restructuring or Rescheduling: “Eurozone leaders continue to debate how best to reinvigorate economic growth, with French and Italian leaders now arguing that the eurozone’s rigid “fiscal compact” should be loosened. Meanwhile, the leaders of the eurozone’s northern member countries continue to push for more serious implementation of structural reform. Ideally, both sides will get their way, but it is difficult to see an endgame that does not involve significant debt restructuring or rescheduling…. In general, neither pure austerity nor crude Keynesian stimulus can help countries escape high-debt traps…. debt rescheduling, inflation, and various forms of wealth taxation (such as financial repression), have typically played a significant role. It is hard to see how European countries can indefinitely avoid recourse to the full debt toolkit…. It is high time for a conversation on debt relief for the entire eurozone periphery…”

2. Max Speak: Who cares about inequality?: “A lot of people are enjoying cheap dates with expressions of concern…. Take President Barack Obama…. He pairs up inequality with upward mobility, notwithstanding their utterly different meanings…. The alternative to mobility-meritocracy is… economic security for those with no assets but their own labor… [and] the non-proliferation of extreme levels of wealth, levels having no conceivable relationship to contribution, levels that render democratic institutions impotent. Levels like we have now…. My jaundiced interpretation of [Obama’s] ‘that bargain’ is that inequality is fine as long as the rising tide is lifting all boats. You may think it’s fine, so you’re a liberal and God love you. I love you. But I suggest that the search for that rising, beneficent tide, constrained by meritocratic, market-loving rhetoric, is doomed…. If you follow the president’s closing paragraphs–his proposals for action–you will find they are focused on economic growth (how well is a different question), with a generous serving of opportunity, and scant regard for compression of the income and wealth distribution, or the expansion of social insurance. (Beware vague calls to “strengthen Social Security.”) So who really cares about inequality?…”