Things to Read at Night on January 9, 2015
Must- and Shall-Reads:
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“Put simply, the economy is run by the rich for the rich…” - :
Obama announces plan that could save home buyers hundreds of dollars a year - :
“There is little empathy at the top. Most of America’s richest think poor people have it easy in this country, according to a new report released by the Pew Research Center…” - :
Thomas Piketty’s Capital: How the French Professor Changed Economics Conversation in 2014
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Republicans Are Making Obamacare Harder to Repeal:
“Weakening the employer mandate is not going to get [Republicans] any closer to repealing Obamacare…. If they actually succeeded in getting this bill passed… they… further entrench the 2010 health-care bill…. A weaker employer mandate will push more people onto the exchanges. Many of those people would be receiving subsidies. The more people who receive subsidies, the harder repeal of the whole law will be…. It’s hard to see why Republicans want to push more people into that part of the system, and hasten the sclerosis that makes programs so hard to kill or change once they have accumulated a lot of users. We haven’t even discussed the extra cost of providing subsidies to millions more people. Republicans seem to like taking votes against Obamacare so much that they’ll vote for anything that undoes what Democrats put in place–even if that thing costs a bunch of money, and takes them further from their stated goal of repealing the whole bill. They need a better hobby…”
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Sachs and the Age of Diminished Expectations):
“I am getting increasingly fed up with people telling me that US growth disproves the idea that austerity is bad for you at the Zero Lower Bound (ZLB). Jeffrey Sachs just joins a long list…. With recent US experience, there is no case against Keynesian analysis to answer. This suggests to me two things. First, lots of people are desperate to show that critics of austerity at the ZLB are wrong, and are prepared to make nonsense arguments to that end. This may be particularly true if you very publicly proclaimed the need for austerity in 2010…. Second, it is a sad day when anyone thinks that 2.3% growth is ‘brisk’ when we are recovering from a deep recession and interest rates have remained at the ZLB. It is so very dangerous when these diminished expectations become internalised by the elite…”
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Europe’s ‘Structural Reform’ Agenda Little More than a Fairytale:
“So what is the core economic idea that [Europe’s power-brokers] share? It is the magic economy dust formula of ‘structural reforms’. It is the idea that if national governments just sprinkle enough structural reforms into the economy to enhance market competition they will, eventually, generate the conditions for employment growth. This is captured perfectly in a recent analysis by Marco Buti, the Director General (DG) of the Economic and Finance Commission. He outlines a trilemma for the Eurozone: we cannot have the welfare state in a fixed monetary union that requires reducing fiscal deficits to 3 per cent of GDP. This is true. In order to keep the welfare state, he proposes a consistent policy ‘trinity’: banking union, symmetric adjustment (i.e. inflation in the core) and deep structural reforms. These, we are told, will generate the conditions for economic growth. In turn, with full employment, the welfare state is secure. This is the core idea behind the policy response to the Eurozone crisis and it is worth stating clearly if its merits can be tested against rational argument and empirical evidence…”
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Understanding Recent US Inflation:
“Researchers have put forward two explanations for the failure of the US inflation rate to fall as far during the Great Recession as the Phillips curve would predict. Either expectations have been successfully anchored by the Fed’s inflation target, or the Phillips curve is focusing on the wrong thing–aggregate unemployment instead of short-term unemployment. This column shows that the two explanations are complementary; together, they explain the puzzle, but separately they cannot…”
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Employment Situation Summary:
“Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent…. The unemployment rate declined by 0.2 percentage points… and the number of unemployed persons declined by 383,000 to 8.7 million…. The civilian labor force participation rate edged down by 0.2 percentage point
to 62.7 percent in December.”
Should Be Aware of:
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Archaic BoE was ill-equipped to prevent financial crisis:
“Spare a sympathetic thought… for the 15 non-executive directors of the Court of the Bank of England in 2007…. There… for the burnishing of their CVs, curiosity, and perhaps a sense of public duty… none is a central banker… all jolly busy with day jobs…. When it comes to the technical consequences of rescuing Northern Rock, they have little to add. Actually, it is worse than that. Their chairman, John Parker, reprimands them for leaking the appointment of a deputy governor (to the FT, naturally) and implies that if they cannot keep quiet, they will be told even less…. Given this environment, it is hardly surprising that the volumes covering the Great Banking Crisis portray Court members as flapping around like fish on a slab. Since even the technocrats were bewildered by the speed and novelty of the events… it seems particularly unfair to savage the non-execs. The whole set-up was archaic, but it suited the executives to keep it that way…”