Things to Read at Nighttime on January 14, 2015
Must- and Shall-Reads:
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Here’s why wages aren’t growing: The job market is not as tight as the unemployment rate says it is - :
Getting Back to Full Employment: A Better Bargain for Working People - :
How We Got to Now: Six Innovations That Made the Modern World – Boing Boing - Via Mark Thoma: :
“Let us hope for a Syriza victory: If you think this sentiment is dangerous, because you have read that if this left wing party formed a government after the forthcoming Greek elections the Eurozone would be plunged into crisis, I suspect you should reconsider where you get your information…” - :
“I was chatting about that ‘why’ question with EPI research director Josh Bivens this morning and he said, ‘the Fed’s interest rate increase is the new deficit reduction. Everyone just knows it needs to happen.’ It’s an awfully apt analogy, if you ask me. For years, even when the evidence of pre-emptive fiscal contraction, aka austerity, was known to be clearly negative, serious people insisted that deficits had to come down. Now many of those same finger-waggers just feel it in their bones: the Fed needs to liftoff…”
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Response to Marc Andreessen on Secular Stagnation:
“The essence of the secular stagnation issue is not whether technology has stopped advancing; but rather whether there is a mismatch between desired saving and investment opportunities that results in low equilibrium real interest rates, precipitates financial instability, and may inhibit economic growth…. For the roughly 30 years after World War II, the American economy generated consistent growth in living standards with business cycles of relatively low amplitude. From the early 1980s until the late 1990s, the economy again preformed quite well…. We have plenty of experience with satisfactory economic performance to set as an aspiration…. Markets–in the form of 30-year indexed bonds–are now predicting that real rates well below 2 percent will prevail for more than a generation…. I think it is quite plausible and consistent with Marc’s picture that equilibrium real rates were roughly constant at around 2 percent until the mid-1990s and have trended downward since that time…. Marc and I agree that we are headed into a period of soft real interest rates, where there will be more money available than great deals. This may, as he suggests, not be all bad; as it will make it easier for risky ideas to get funded. The danger… is that the zero lower bound on nominal rates will prevent the attainment of full employment as desired investment falls short of desired saving. A related danger is that the very low interest rates will encourage risk-taking and asset price inflation in ways that will ultimately give rise to financial instability…. The experience of the US economy in the 1930s demonstrates [that] even with rapid innovation it is possible for economic performance to be very poor when finances are not successfully managed…”
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(June 2010):
A Trip Down Euromemory Lane:
“As regards the economy, the idea that austerity measures could trigger stagnation is incorrect … In fact, in these circumstances, everything that helps to increase the confidence of households, firms and investors in the sustainability of public finances is good for the consolidation of growth and job creation. I firmly believe that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today…”
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America’s Real Criminal Element: Lead:
“Washington, DC, didn’t have either Giuliani or Bratton, but its violent crime rate has dropped 58 percent since its peak. Dallas’ has fallen 70 percent. Newark: 74 percent. Los Angeles: 78 percent…. Howard Mielke… Sammy Zahran… lead and crime… six US cities that had both good crime data and good lead data going back to the ’50s, and they found a good fit in every single one. In fact, Mielke has even studied lead concentrations at the neighborhood level in New Orleans and shared his maps with the local police. ‘When they overlay them with crime maps,’ he told me, ‘they realize they match up.’… We now have studies at the international level, the national level, the state level, the city level, and even the individual level. Groups of children have been followed from the womb to adulthood, and higher childhood blood lead levels are consistently associated with higher adult arrest rates for violent crimes. All of these studies tell the same story: Gasoline lead is responsible for a good share of the rise and fall of violent crime over the past half century…. The gasoline lead hypothesis helps explain some things we might not have realized even needed explaining…. Murder rates have always been higher in big cities than in towns… big cities have lots of cars in a small area, they also had high densities of atmospheric lead during the postwar era. But as lead levels in gasoline decreased, the differences between big and small cities largely went away. And guess what? The difference in murder rates went away too…”
Should Be Aware of:
- (2013):
Some Thoughts on Michael Kelly - :
EMU and the Cyclical Behavior of Fiscal Policy: A Suggested Interpretation
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Surprising New Findings Point to “Perfect Storm” Brewing in Your Financial Future: “This basic aggregate measure of gearing or leverage is telling us that today’s advanced economies’ operating systems are more heavily dependent on private sector credit than anything we have ever seen before. Furthermore, this pattern is seen across all the advanced economies, and isn’t just a feature of some special subset (e.g. the Anglo-Saxons).”