Things to Read at Night on July 4, 2014

Should-Reads:

1. Joseph P. Newhouse and Thomas G. McGuire: How Successful Is Medicare Advantage?: “Beneficiaries make ‘mistakes’ in their choice of MA plan options that can be explained by behavioral economics…. The high prevalence of ‘zero-premium’ plans signals inefficiency in plan design and in the market’s functioning…. The adverse selection problem, in which healthier, lower-cost beneficiaries tend to join MA, appears much diminished. The available measures, while limited, suggest that, on average, MA plans offer care of equal or higher quality and for less cost than traditional Medicare…. Medicare policies regarding lock-in provisions and risk adjustment that were adopted in the mid-2000s have mitigated the adverse selection problem previously plaguing MA…. Policy changes in Medicare that reform the way that beneficiaries are charged for MA plan membership are warranted to move more beneficiaries into MA…”

2. Nick Bunker: What is compensation? And what should it be?: “Given the wide range of employee benefits provided by employers and the difficulty in sometimes providing those benefits, we have to ask if employers are the right vehicles for providing some non-wage benefits. Perhaps the provision of some these benefits are better handled by the federal government. And some benefits might be best left for workers to purchase in the market with their wage earnings. These questions about the proper role of employer and government in providing benefits are some of the most controversial in our policy debates. But that intensity is just a sign that they are the questions we should be asking and need to answer…”

3. Paul Krugman: Build We Won’t: “The aftermath of the bursting bubble was (and still is) a very good time to invest in infrastructure…. But what actually happened was exactly the opposite: an unprecedented plunge in infrastructure spending. Adjusted for inflation and population growth, public expenditures on construction have fallen more than 20 percent since early 2008. In policy terms, this represents an almost surreally awful wrong turn; we’ve managed to weaken the economy in the short run even as we undermine its prospects for the long run. Well played!And it’s about to get even worse…. How did things go so wrong? As with so many of our problems, the answer is the combined effect of rigid ideology and scorched-earth political tactics…. It’s hard to think of any good reason why taxes on gasoline should be so low, and it’s easy to think of reasons, ranging from climate concerns to reducing dependence on the Middle East, why gas should cost more…. The collapse of public investment was, therefore, a political choice. What’s useful about the looming highway crisis is that it illustrates just how self-destructive that political choice has become. It’s one thing to block green investment, or high-speed rail, or even school construction. I’m for such things, but many on the right aren’t. But everyone from progressive think tanks to the United States Chamber of Commerce thinks we need good roads. Yet the combination of anti-tax ideology and deficit hysteria (itself mostly whipped up in an attempt to bully President Obama into spending cuts) means that we’re letting our highways, and our future, erode away…”

Should Be Aware of:

• David Blumenthal and Sara R. Collins: Health Care Coverage under the Affordable Care Act — A Progress Report
• David Atkins: No, Barry Ritholtz. It’s not an “incompetent Congress.” It’s immoral Republicans
• Ursula Moffitt: Experts Talk: An Interview with Dr. Mark Thoma
• Heather Boushey and Nick Bunker: “If the current share of prime-age workers with a job becomes the new standard, then the long-run growth rate of the economy is at risk…. The result would be a less prosperous future…”
• Thomas Palley: Milton Friedman’s economics and political economy: an old Keynesian critique
• Tim Cook:An Alabama day that forever changed my life
• Jim Sleeper: New shots heard ’round the world
• Hannah Giorgis: The Soapbox: Black Nerds, Escapism, & Why We Need More Diverse Books

And:

1. Noam Scheiber: Hillary Clinton’s Inequality Strategy: “‘Inequality’ encompasses two separate but related issues… economic stagnation afflicting people in the middle and bottom… the rapidly improving fortunes of the ultra-rich…. When Democrats use the term inequality these days, they typically mean the latter…. But the working-folks stagnation issue is certainly real and emotional enough that Democratic voters are quite concerned about it, too…. And so Clinton is able to deliver a mostly compelling response to questions about inequality by focusing on this question, and mostly leaving the uncomfortable-sounding plutocracy stuff unmentioned…. I suspect Clinton, like most left-of-center politicians, has simply spent a lot more time thinking about how you boost the fortunes of struggling workers than reining in the power of the very rich…. Still, I have a hard time believing there isn’t some serious calibration going on here—a bit of needle-threading designed to address the topic that most exercises Democratic voters without alienating the people she’ll need to fund her presidential campaign…”

2. Robert Johnson: Ugly Money Politics:

3. Louis Johnston: Hobby Lobby ruling: The crux of the problem is employer-provided health insurance | MinnPost: “The old saying, ‘If you find yourself in a hold, stop digging’ applies here. Yes, we’ve fought over the Affordable Care Act and yes, it passed muster with the Supreme Court two years ago.  But the court’s latest ruling only sets up another round of litigation that gets us no closer to what really matters for public policy: ensuring that all Americans have access to health care.  Let’s acknowledge our mistake in not getting rid of the employer-based base for our health insurance and get on with building a new foundation that will serve us in the future…”

Already-Noted Must-Reads:

1. Jordan Ellenberg: The Summer’s Most Unread Book Is…: “Every book’s Kindle page lists the five passages most highlighted by readers. If every reader is getting to the end, those highlights could be scattered throughout…. Thus, the Hawking Index (HI): Take the page numbers of a book’s five top highlights, average them, and divide by the number of pages in the whole book. The higher the number, the more of the book we’re guessing most people are likely to have read…. “The Goldfinch” by Donna Tartt: 98.5%…. “Catching Fire” by Suzanne Collins : 43.4%…. “The Great Gatsby” by F. Scott Fitzgerald : 28.3%…. “Fifty Shades of Grey” by E.L. James: 25.9%…. “Flash Boys” by Michael Lewis : 21.7%…. “Lean In” by Sheryl Sandberg : 12.3%…. “Thinking Fast and Slow” by Daniel Kahneman : 6.8%…. “A Brief History of Time” by Stephen Hawking: 6.6%…. “Capital in the Twenty-First Century” by Thomas Piketty : 2.4%…. Mr. Piketty’s book is almost 700 pages long, and the last of the top five popular highlights appears on page 26…”

2. Scott Lemieux: 5 Men on Supreme Court Impose Substantial Burden on Women in Illogical Decision: “It is extraordinary implausible that Congress intended for any bare assertion of religious conflict to trigger strict scrutiny for every federal regulation. It is proper for the courts to be highly deferential on the question of whether a litigant’s religious beliefs are sincere, but whether the burden on these beliefs is substantial is an inquiry the courts are not merely permitted but obligated to make. This inquiry should dispose of the challenge to the mandate, because in this case the burden on employers is trivial. The ACA’s regulations do not require anybody to use contraceptives contrary to their religious beliefs, and the employers are not implicated in the decision to include contraceptives as part of the package that employers must provide employees in order to maintain the tax benefits of paying employees in health insurance in lieu of wages. The triviality of the burden involved here is particularly obvious, given that Hobby Lobby covered several of the contraceptives it now challenges in its employee insurance package until 2012—an alleged burden onits religious beliefs that it failed to notice until it became convenient for a larger political purpose. That’s pretty much the definition of an ‘insubstantial’ burden…”

3. Matt O’Brien: Is this the jobs recovery we’ve been looking for?: “just a few weeks ago, the Federal Reserve forecast that unemployment would be 6.0 to 6.1 percent by the end of the year. It’s 6.1 percent already. But the big question is whether this will be enough to bring back the shadow unemployed. It hasn’t yet. In June, there were 275,000 more people working part-time for economic reasons. And though it sounds like good news that long-term unemployment fell by 293,000, it probably isn’t when you consider that, as Ben Casselman shows, most of them are giving up rather than finding work. In other words, there’s still plenty of shadow slack, and that probably explains why average hourly earnings have barely kept up with inflation, up just 2 percent the past year…”

4. Andrew Fieldhouse: 5 Years After the Great Recession, Our Economy Still Far from Recovered: “This June marks the five-year anniversary of the end of the Great Recession, but champagne toasts would be distastefully premature, as the U.S. economy remains far from fully recovered. The partial recovery that has materialized has been quite uneven, favoring growth of corporate profits and stock prices over employment and wage growth, while wide discrepancies persist in regional economic health…. 57 percent of surveyed American adults believed the United States was still in a recession…. Early into the recovery, roughly 11 million jobs were needed to restore the unemployment rate to pre-recession levels. Today, that number stands at an improved, but still staggering 7 million jobs needed…. The economy has added 198,000 jobs per month on average over the last year…. If this pace of hiring is sustained, it will take nearly another five years to restore pre-recession employment rates…. The unemployment rate has been an exceptionally misleading economic indicator in recent years, primarily falling because workers have been dropping out of the labor force, not because a rising share of the population is employed. The Economic Policy Institute estimates that nearly 6 million workers are still “missing” from the labor force because of the lack of jobs…. In the year before the Great Recession… 79.9 percent; in May, only 76.4 percent of prime-age workers were employed, and less than one-third of the decline from the Great Recession has been recovered…”

5. Nick Rowe: Insufficient Demand vs?? Uncertainty: “Let’s assume that increased political uncertainty caused a reduction in willingness to ‘hire, lend, or invest’…. The sign is right, but I don’t know about the magnitude. A monetarist would say that would increase the demand for money, and that would cause a recession, unless the central bank took sufficient offsetting action. A New Keynesian/Neo Wicksellian would say that would reduce the natural rate of interest, and that would cause a recession, unless the central bank took sufficient offsetting action…. It’s not just an either/or thing. Nor is it even a bit-of-one-plus-bit-of-the-other thing. Increased political uncertainty can cause a recession via its effect on demand. Unless monetary policy responds appropriately. (And that, of course, would mean targeting NGDP, because inflation targeting doesn’t work when supply-side shocks cause adverse shifts in the Short Run Phillips Curve.)”

6. Mark Thoma: “On Whether Supply or Demand Shocks are the source of aggregate fluctuations, Blanchard and Quah (1989), Shapiro and Watson (1988), and others had it right (though the identifying restriction that aggregate demand shocks do not have permanent effects seems to be undermined by the Great Recession ). It’s not an either/or question, it’s a matter of figuring out how much of the variation in GDP/employment is due to supply shocks, and how much is due to demand shocks…. Overall, across all these papers, it is demand shocks that play the most prominent role. Supply shocks do matter, but not nearly so much as demand shocks when it comes to explaining aggregate fluctuations…”