Things to Read on the Morning of June 5, 2014

Should-Reads:

1. Carter Price: A regional look at single moms and upward mobility: “Why is it that the West Coast states of California, Oregon, and Washington stand out for having relatively high rates of single mothers while also having relatively high rates of economic mobility?… The upsho… is that states with more family friendly laws, such as paid sick days so that parents can take care of sick children and relatively generous parental leave policies so that new parents can spend more time with their newborn children, are more likely to have a relatively high rates of economic mobility despite high rates of single mothers—among them California, Oregon, and Washington. Conversely, parts of America, particularly parts of the Rust Belt, are significantly less mobile than one would expect given the relatively low share of households headed by single mothers…”

2. Marc Andreesen: Abundance: “Thought experiment: Posit a world in which all material needs are provided for free, by robots and material synthesizers…. Imagine six, or 10, billion people doing nothing but arts and sciences, culture and exploring and learning. What a world that would be. The problem seems unlikely to be that we’ll get there too fast. The problem seems like to be that we’ll get there too slow…”

3. Nick Bunker: Where are the gains from productivity?: “Data show a decoupling between productivity and compensation in the U.S. labor market since 1973…. Mishel finds that three main factors contributed to the divergence… different price indices used to deflate the output and wage data… a shift from income from labor to capital… the largest source of divergence is the rise in the inequality of compensation…. Increasing productivity is a necessary part of increasing wages for workers. But the last several decades have shown that it’s not… sufficient…”

4. James Pethokoukis: What conservatives don’t understand about the modern U.S. economy: “A new manifesto making the rounds in conservative circles is as much a time-travel tale as the new comic-book movie, X-Men: Days of Future Past. Activists hope that embracing… tax cuts and balanced budgets, will unite and then ignite the Republican Party. Reagan-era nostalgia, unfortunately, is not much of a superpower…. The 10-page document emerged from a recent hush-hush meeting of top conservative leaders, including Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah), co-organized by Reagan Attorney General Ed Meese. Titled “Reform, Restore, Modernize — An Agenda To Restore The American Dream,” the plan covers foreign policy and cultural issues, as well as economic policy. From the get-go, the manifesto stumbles…. It bemoans the Not-So-Great Recovery. But there is no suggestion the economy faces longer-term problems that predate Obamanomics. There have been jobless recoveries after each of the past three downturns…. It’s not all about Obama’s economy. Such a potential scenario demands a policy agenda including education reform, a national innovation policy encouraging more startups and federal research spending, and wage subsidies for low-income workers. But if your analytical lens is a simplistic ‘Barack Obama is Jimmy Carter’, then a different policy path naturally follows…. Light taxation and small government are principles worth preserving. But they must be applied in a modern fashion…”

Should Be Aware of:

• Jason Kottke: More views of the Tiananmen Tank Man
• Danny Vinik: Senate Deal to Extend Unemployment Insurance Benefits Is Dead
• Yuriy Gorodnichenko: Economic prospects for Ukraine
• Laura Clawson: McCain, other Republicans called for Obama to get Bergdahl’s release, then condemned it
• Ryan Cooper: Will the vanity of centrists doom us to climate disaster? Knee-jerk moderation is not the same thing as sensible risk management
• Rex Nutting: How to solve inequality and restore the American Dream
• Bill Black: The WSJ Suggests Hollande May Redefine Chutzpah by Complaining to Obama about BNP Paribas – on the 70th Anniversary of D-Day!
• Felix Salmon: The economics of “everyone’s private driver”
• Alicia Munnell: Retirement, 20 years from now
• Matt Stoller: The Con-Artist Wing of the Democratic Party
• Sean Treacy: How the ‘Thermal Grill’ Illusion Tricks the Mind

And:

1. Kevin Roose: Uber Anxiety: “I am not quite an Uber mensch…. I asked my Uber driver about my passenger rating… the 1-to-5-star grade passengers receive from drivers… shown to drivers before they agree to take a hail. ‘You’re a 4.8’, he replied. ‘I usually don’t pick people up if they’re a 4 or less.’… Many riders don’t even know that they have ratings. (The only ratings visible on the passenger version of the Uber app are for drivers…. When I informed my friends that they were being rated by their Uber drivers, just as they’re allowed to rate drivers after a trip, what followed was usually a panic-regret cocktail. ‘Dammit, now I am thinking about the time we piled eight girls in a van and made the driver play “Trouble” by Taylor Swift on his iPhone’, one told me…”

2. Brian Buetler: McDaniel-Cochran Race Exposes Republican White Reactionary Problem : “Tea Party-branded conservative advocacy groups are a minor problem compared to the bigger problem of the Republican primary electorate. McDaniel’s victory merely suggests that Republicans have solved their smaller problem in places like Kentucky, but will need to turn further rightward to solve it in still-redder states. A mild mannered old guy like Cochran just didn’t have it in him…”

3. Duncan Black: Eschaton: He Crashed The Party And Pissed In The Punchbowl And He’s Such A Jerky Jerk: “I really have never quite understood the enmity that Greenwald inspires, mostly from the ‘Center’ to the ‘Left’. Journalists against journalism are bizarre, as are people who think revelations about the Surveillance State are somehow direct attacks on Obama. Yes, ultimately, the guy in charge is the guy in charge and I haven’t seen a lot of evidence he disapproves of much of this stuff, but it isn’t really that simple. One can think in combination that the surveillance state is out of hand, some programs might be “worth it” but not all, that Obama doesn’t sign off directly on every program, and that even if he doesn’t support all of these things it isn’t so simple to turn over the bugged applecart instantly. Even if I trusted Obama completely (I don’t), and even if I thought he knew as much about this stuff as he should (I doubt it), I can’t imagine trusting the massive unaccountable agency. Even if I trusted the nice patriotic government workers, I wouldn’t trust the massive private contractor system that has grown up around it. Snowden showed how easy it was to ‘abuse’ his access. You think he’s the only one? (We know he isn’t, of course, we just don’t know how bad it is).”

4. Markus K Brunnermeier and Yuliy Sannikov: Repairing the transmission of monetary policy through asset-backed securitisation: “Eurozone monetary policy transmission is broken. A key aspect of this is the failure of credit to get to small and medium enterprises, and consumers. This column uses the ‘I theory of money’ to diagnosis the problem and propose ‘prudently designed’ asset-backed securitisation as the cure. This would transform illiquid SME and consumer loans into a liquid asset class that would broaden the transmission mechanism while providing a lasting intermediation market for this segment in the Eurozone…”

5. John Judis: Why Has There Been No Great Recession Backlash Against Plutocracy?: “The surprising thing, though, is just how limited the backlash has been. Public alarm about economic inequality could have sparked the sort of tumult that buffeted American politics in the late 19th century and again during the 1930s. But a powerful movement has not emerged. Warren and Piketty remain well outside the mainstream. Occupy Wall Street petered out after a few months. And after coasting to victory as a foe of plutocracy, Obama couldn’t even win support ending the tax loopholes that benefit hedge fund operators—or for a mere hike in the minimum wage. Republicans, generously funded by business leaders eager to roll back regulations on corporations and taxes on the wealthy, are poised to win control of the Senate in November…. If the economy stays in a low-growth limbo, as it has during the last four years, that is more likely to stir the self-protective instincts of middle and upper-middle class conservatives that to provoke a class-wide revolt against the very rich. Something very similar happened during the 1920s recessions (before the crash) and during the late 1970s and early 1980s. But if the pattern of slow and uneven growth and rising inequality spawns bubbles, busts, and even more recessions, these could eventually spark a populist revolt, as happened during the 1890s and the 1930s, in which leftwing opposition to inequality trumps anti-government conservatism. What’s clear is that for the time being, there will be no effective counter to rising inequality.”

Already-Noted Must-Reads:

1. Michael Albertus and Victor Menaldo: Gaming Democracy: Elite Dominance during Transition and the Prospects for Redistribution: “Inequality and democracy are far more compatible empirically than social conflict theory predicts….

There is a relationship between democracy and redistribution only if elites are politically weak during a transition; for example, when there is revolutionary pressure. Redistribution is also greater if a democratic regime can avoid adopting and operating under a constitution written by outgoing elites and instead create a new constitution that redefines the political game. This finding holds across three different measures of redistribution and instrumental variables estimation. This article also documents the ways in which elites ‘bias’ democratic institutions…

1. Martin Wolf: Legitimate business unlocks growth: “If Narendra Modi, India’s prime minister, seeks an example of a democratically elected leader embarked on radical reform, he could look to Enrique Peña Nieto. True, the latter is president of a far-smaller country, and a richer one – Mexico’s average standard of living is double India’s…. Both need to generate market-oriented growth in economies that show a huge gulf between a high-productivity formal sector and a low-productivity informal one. Mr Peña Nieto has embarked on bold reforms. Is his the model to be followed?… For those who believe that opening up to trade is a guarantee of rapid growth, this is a sobering tale: the ratio of trade to GDP jumped from 39 per cent in 1990 to 65 per cent in 2011. Exports to the US rose sixfold under Nafta. Yet the economy underperformed…. While productivity rose at a compound rate of 5.8 per cent a year between 1999 and 2009 in companies employing more than 500 people, it rose at just 1 per cent a year in companies employing between 10 and 500 people, and fell at a rate of 6.5 per cent in companies employing fewer than 10…