Things to Read on the Morning of June 27, 2014
Should-Reads:
- Jeffrey Frankel: Emerging and developing countries should target nominal GDP growth: “In the 1980s, major advanced countries tried the money supply. After the monetarist approach failed, some switched to targeting the inflation rate. But they repeatedly missed their targets…. The problem with these approaches to monetary-policy targeting is that even though a particular numerical target may be reasonable when it is set, subsequent unexpected developments often make the target hard to live with. The monetary authorities are then confronted with a harsh choice between violating their announced target, and thus undermining the credibility that was the point of the exercise, or setting policy too tight or too loose, thus doing unnecessary damage to the economy. Major central banks can generally withstand failure to achieve targets without a fatal loss of credibility…. The situation is different in emerging and developing economies…. Emerging-market countries ought to consider targeting nominal GDP. Relative to inflation targeting, the great virtue of NGDP targeting is that it is robust…”
Ezra Klein: Hardcore conservative agree with liberals on a lot. They just don’t want to compromise: “The most important conflict in American politics right now isn’t ideological. It’s operational. It’s about whether politicians should bend their principles and compromise to get things done…. The conflict is located in the Republican Party… centered in the House Republican Conference. The disagreements between the various factions of House Republicans are modest…. But the disagreements on how to achieve those goals are vast…. Pew… sort[ed Americans] into seven different political camps…. Only one of the seven groups–the ‘steadfast conservatives’–says they prefer politicians to stick to their positions rather than compromise… 12 percent of the country… 19 percent of the politically engaged…. Thus far, though, the Republican Party has somewhat uncomfortably adopted the positions of the business conservatives and the political style of the steadfast conservatives. The result is a congressional coalition where the votes exist for immigration reform but the compromises required to pass it are too politically dangerous, and where Wall Street is unpopular but where there’s no chance of Republicans joining Democrats to impose stricter regulations on financiers…”
Should Be Aware of:
- Melinda Taub: The Wikipedia Entry for Guam, Retold as a YA Novel
- Ta-Nehisi Coates: How Racism Invented Race in America
- Jeff Madrick: Inequality Begins at Birth
- Jeff Spross: Why A National Carbon Tax Would Be Amazing — In Four Charts
And:
- Josh Marshall: Did Chris McDaniel Himself Commit Voter Fraud?: “Here’s the [Mississippi] statute’s language… ‘No person shall be eligible to participate in any primary election unless he intends to support the nominations made in the primary in which he participates.’ You don’t just have to intend to vote for the person you’re voting for. You have to intend to vote for whoever wins the primary…. Just before the runoff when asked whether he would vote for Cochran if Cochran won, McDaniel said: ‘I’ll have to think about it, depending on what happens that evening. I’ll let you know that evening.’… By McDaniel’s own public statement, he was at best uncertain whether he planned to vote for the winner of the primary he was participating in… it sounds like he was himself ineligible to vote on Tuesday. That may be true of thousands of other[s]… But none of them were quoted on the eve of the primary essentially disqualifying themselves from participating. But McDaniel was. And for what it’s worth, the laws un-enforcability was, I think, judged on the basis of impossibility of proving intent…. Have they ever had someone who, at a minimum, suggested they hadn’t decided whether they would vote for the nominee?…”
- David Weigel: In Defense of Parachute Political Reporting: “A few readers in North Carolina, mostly in media, think I parachuted into the state and insulted their work…. I assume that the ‘ignorant, stereotyping’ line implies that I was calling local reporters lazy. Nope! North Carolina reporters have been filing deeply reported scoops about the legislature’s surge of conservative bills all year, and I’ve been sending readers their way. In June, when Charlotte Observer reporter Tim Funk got arrested covering a Moral Monday protest, I put up video and linked to his account…. I’d argue that the outlets that rip off local content are a bigger problem than parachuters, but, whatever—it’s annoying when national reporters arrive, when you’ve got the story covered perfectly well, thanks. Understandable, but it misses the point. A political movement needs… to reach beyond the local media…. The local malefactors don’t want the national media attention. That was what my story was about, and, nope, I’m not sorry that I took the time to report it in person.”
Already-Noted Must-Reads:
- Greg Ip: The inflation panic: The spontaneous combustion theory of inflation: “I find the panic over inflation perplexing…. Factual. Yes, core CPI inflation has rebounded to 2% from 1.6% in February…. What should we infer from this? Nothing…. Theoretical. If you have a forecast of higher inflation, it helps to have a theory of the inflation determination process…. Many critics think the prolonged period of low real rates and the large size of the Fed’s balance sheet are in and of themselves inflationary, but this is divorced from any consideration for why real rates are negative and the Fed’s balance sheet so large in the first place. Charlie Evans, president of the Federal Reserve Bank of Chicago, calls this ‘the spontaneous combustion theory of inflation… Households and businesses simply wake up one day and expect higher inflation is coming without any further improvement in economic fundamentals’…. Strategic…. Hoover Institution… scholars were deeply concerned…. Many cited the 1970s…. What these analyses ignore is the asymmetry of risks…. The Fed… knows how to get inflation back down…. By contrast, recent history shows how few effective tools central banks have for reversing inflation that falls too far…”
- John Quiggin: Douthat squares the circle on climate change: “Matt Yglesias… ‘For smart, up-and-coming conservatives to mention climate change, they would have to… sound like rubes by siding with the conspiracy theorists, or… alienate the rubes by acknowledging the basic facts and the coming up with some other reason to favor inaction? The optimal choice is not to choose.’ I made much the same point a year ago in response to Ramesh Ponnuru’s plaintive observation that ‘To be a good reformer [in liberal eyes] a conservative has to agree that the vast bulk of conservatives are insane’…. Ross Douthat tries to respond to Yglesias. He ends up both confirming the point regarding climate change and illustrating the true nature of reform conservatism.
“Since Douthat can’t refute Yglesias’ point about the craziness of the Republican base, he doesn’t try. Rather, he dismisses the point as ‘silly’ and moves straight to his own apologia for lining up with the crazies…. Supposedly, a relatively modest slowdown in economic growth means that it is now imperative to do nothing about climate change. The best way to understand Douthat’s piece is by reverse engineering his argument as a constrained minimization problem The objective is to minimize the craziness he needs to embrace, subject to the constraint that he must end up in line with the denialist conspiracy theorists who dominate the base. The best approach is to combine the most inflated estimates of the cost of mitigation, with the rosiest projections of the implications of doing nothing…. The Republican party is a coalition of crazies, racists and plutocrats. But there is a political requirement to talk about policy in a way that is not obviously crazy, racist or pro-rich. The task of conservative intellectuals is to square this circle…”
- Owen Zidar sends us to Jeanne Lafortune, José Tessada, and Ethan Lewis: People and Machines A Look at The Evolving Relationship Between Capital and Skill In Manufacturing 1850-1940 Using Immigration Shocks: “[Did the] Second Industrial Revolution change the way inputs were used in the manufacturing sector[?]… We estimate the impact of immigration-induced changes in skill mix in local areas in the United States between 1860 and 1940 on input ratios within manufacturing…. Production functions were strongly altered over the period under study: capital began our period as a q-substitute for high skill workers and a strong complement of low-skill workers. This changed around the turn of the twentieth century when capital became a complement of skilled workers and decreased its complementary with low-skilled workers…. Within-industry changes in production technique were the dominant manner in which areas adapted to immigration driven skill shocks…. We nevertheless fail to find significant impact of changes in skill mix on wages…
- Joseph Kane and Robert Puentes: The Enormous Wage Potential of Infrastructure Jobs: “Cutting across multiple industries and geographies, infrastructure jobs offer needed stability. Since these jobs also typically require less formal education and pay competitive wages across a variety of occupations, they give workers from all backgrounds a chance to make a decent living in today’s unforgiving economy… pay 30 percent more to lower income workers—wage earners at the 10th and 25th percentile—relative to all jobs nationally…. Infrastructure occupations not only employ thousands of workers with a high school diploma or less, but they also frequently offer higher wages compared to many other jobs, particularly those involved in sales, maintenance, production, and other support activities. For example, paving equipment operators, recyclable material collectors, and industrial truck operators are among the largest infrastructure occupations that fall into this category, paying significantly more to workers without an advanced degree who might otherwise be employed as assemblers, counter attendants or cashiers. Plumbers, bus drivers and electrical power-line installers illustrate these patterns as well…. On-the-job training, in particular, is essential for these workers, many of who undertake apprenticeships and certifications to operate our infrastructure systems for decades…”