Things to Read on the Night of June 8, 2014

Should-Reads:

1. Jonathan Chait: Obama Has Now Fulfilled His 4 Big Promises: “On January 20, 2009, when Obama delivered his inaugural address as president, he outlined his coming domestic agenda… economic recovery measures, health-care reform, a response to climate change, and education reform. (To the justifiable dismay of immigration advocates, Obama did not call for immigration reform at the time, and immigration reform is now the only possible remaining area for significant domestic reform.) With the announcement of the largest piece of his environmental program last Monday, Obama has now accomplished major policy responses on all these things. There is enormous room left to debate whether Obama’s agenda in all these areas qualifies as good or bad, but ‘ineffectual’ seems as though it should be ruled out at this point…”

2. Gavyn Davies: Can the Great Recession ever be repaired?: “The case for believing that the trendlines can indeed be re-attained is that this has always happened after recessions in the past, at least in the US, though it has sometimes taken many years… none of the growth fundamentals in the system – the state of technological knowledge, the available labour force, and the amount of fixed investment that is profitable to deploy – has been permanently destroyed by the Great Recession. Therefore, they say, it is incumbent upon policy makers to try to re-attain the trendlines…. Lawrence Ball’s most interesting result is that there is a very strong association between the actual loss of output since 2007, and the loss in potential output…. Ball concludes that ‘hysteresis effects’ have been at work…. Can anything be now done to reverse these losses in capacity? It is becoming increasingly clear that monetary policy alone will not work…. Those in charge of fiscal and monetary policy are barely, if at all, addressing these problems in their public pronouncements. In fact, a de facto consensus appears to be developing that the losses in potential GDP should be accepted as an unfortunate fact of life. It is a recipe for too easily accepting the second best.”

Should Be Aware of:

• Rachel Courtland: Robots Will Pave the Way to Mars
• Vijay Kiran: How to make Gold from Mercury
• Peter Thiel and Blake Masters: Zero to One
• Paul Glastris: Four Pinocchios for Glenn Kessler
• Timothy Hatton: Public opinion on immigration: Has the recession changed minds?
• George Pickett Answers the Question: “Why Lost the Battle of Gettysburg, Robert E. Lee or James Longstreet?”: “I’ve always thought the Yankees had something to do with it…”
• Felix Salmon: Lessons from a $110 million penthouse
• Steve M.: “Ross [Douthat], wake me when reform conservatism actually happens. Right now it’s mostly just a bunch of people writing position papers for you to swoon over, and nothing more.”

And:

1. Will Bunch: America…what the hell is wrong with us?: “A politician who’s in a tough re-election fight deleted a Twitter posting earlier today because he thought would offend voters in his home state. I know, I know, these days “politician-deletes-thoughtless-tweet” articles are the dog-bites-man stories of American journalism. So let’s see what outrageous and offensive thing Sen. Thad Cochran wanted to hide from the world…. Yikes! Welcoming home an American soldier after five years of captivity? No wonder Cochran is on the brink of getting the boot from the good people of Mississippi. Nor was he alone. Other politicians have been scrambling to hide the fact that they briefly thought an American gaining his freedom after a terrorist kidnapping in Afghanistan was a cause for celebration…”

2. David Leonhardt: Private Jobs Have Recovered. Government Jobs Still Lag

3. Dan Li and Geng Li: Are Household Investors Noise Traders? Evidence from Belief Dispersion and Stock Trading Volume: “We document a robust positive relationship between the belief dispersion about macroeconomic conditions among household investors and the stock market trading volume, using more than 30 years of household survey data and a novel approach to measuring belief dispersions. Notably, such a relationship prevails even after various series of professional analysts’ belief dispersions are controlled for. Consistent with a causal effect, such a relationship is most pronounced for belief dispersion among individuals who are most likely to own stocks and for trading volume of stocks that are most visible to household investors. Finally, we present suggestive evidence that the dispersion of changes in belief is also positively associated with the stock trading volume. On balance, our analysis implies that household investors, frequently believed to trade randomly as noise traders, appear to trade on their beliefs.”

Already-Noted Must-Reads:

1. Alex Tabarrok: Depreciating Capital: “There are no contradictions [in Piketty] but many a slip ‘twixt the cup and the lip. Namely, will [n+]g fall? If [n+]g does fall, will K/Y increase? If K/Y increases will capital’s share of income increase? My answers: Will [n+]g fall? Uncertain. Piketty’s forecast is as good as anyone’s…. If g does fall, will K/Y increase? Yes, but probably less than Piketty estimates and more in line with Solow. If K/Y increases will capital’s share of income increase? Uncertain but more likely no than yes. It depends on the elasticity of substitution between K and L and as Rognlie and Summers argue, the elasticity that Piketty needs is higher than current estimates suggest is the case…”

2. Nouriel Roubini: The Great Backlash: “In the immediate aftermath of… 2008… policymakers’ success in preventing… into Great Depression II held in check demands for protectionist and inward-looking measures. But now the backlash against globalization… has arrived. This new nationalism… trade barriers, asset protection, reaction against foreign direct investment, policies favoring domestic workers and firms, anti-immigration measures, state capitalism, and resource nationalism… populist, anti-globalization, anti-immigration… outright racist and anti-Semitic parties…. The main causes of these trends are clear. Anemic economic recovery has provided an opening for populist parties, promoting protectionist policies, to blame foreign trade and foreign workers for the prolonged malaise. Add to this the rise in income and wealth inequality in most countries, and it is no wonder that the perception of a winner-take-all economy that benefits only elites and distorts the political system has become widespread…”

3. Paul Krugman: The War on Coal Already Happened: “I’m trying to pull together some thoughts about interests and ideology in the fight over climate policies, and found myself wondering what exactly is at stake in the supposed “war on coal”…. There used to be a lot of coal miners, but not any more…. It’s a job that was destroyed by technology long ago…. So what is this fight about?… Capital invested in coal and coal-related stuff, hiding behind the pretense of caring about the workers. And there’s also ideology…. But the war on coal already happened, it had nothing to do with liberals and environmentalists, and coal lost…”

4. Matthew Yglesias: The deafening silence of “reform conservatives” on climate change: “With climate change policy in the news this week, I thought I might take the time to broaden my horizons by checking out the energy policy ideas contained in a recent policy book Room to Grow published by the YG Network… widely hailed as representing the best, freshest conservative thinking… “evidence that conservatism may be experiencing an intellectual resurgence as well as a political one.” On climate, as it happens, it has nothing to say. They don’t mount an argument that the scientific consensus on anthropogenic global warming is mistaken. They don’t mount an argument that despite the scientific consensus, inaction is nonetheless the right policy. They don’t mention it at all. Not even as something their political opponents wrongly care about…”