Things to Read at Lunchtime on March 11, 2014

Must-Reads:

1. Mark Thoma: Inequality in Capitalist Systems is Not Inevitable: “At some point, one I believe we’ve passed already, the benefits of inequality in terms of incentives are surpassed by the costs. As Joseph Stiglitz argues: ‘Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset – its people – is not being fully used. Many at the bottom, or even in the middle, are not living up to their potential, because the rich, needing few public services and worried that a strong government might redistribute income, use their political influence to cut taxes and curtail government spending. This leads to underinvestment in infrastructure, education, and technology, impeding the engines of growth.’ Capitalism is a wonderful economic system, but it is not perfect. Government intervention is needed to soften the impact of recessions, to overcome market failures, and to offset the rising inequality that threatens capitalism’s ability to serve the vast majority of households to the fullest possible extent.”

2. Kevin Drum: Dianne Feinstein Upset that CIA Is Spying on Dianne Feinstein: “If the CIA has lost Dianne Feinstein…. ‘The head of the Senate Intelligence Committee on Tuesday sharply accused the CIA of violating federal law and undermining the constitutional principle of congressional oversight as she detailed publicly for the first time how the agency secretly removed documents from computers used by her panel to investigate a controversial interrogation program.’ Sen. Dianne Feinstein (D-Calif.) said that the situation amounted to attempted intimidation of congressional investigators, adding: “I am not taking it lightly.” In the end, I suspect that she will indeed take it lightly. Still, if there’s one thing an intelligence agency shouldn’t do, it’s get caught monitoring the Senate committee that oversees it. The intelligence community can spy on millions of Americans and Dianne Feinstein yawns. But spy on Dianne Feinstein and you’re in trouble.”

3. Yuriy Gorodnichenko and Gérard Roland: What is at stake in Crimea? “Annexing Crimea [is not] likely to be his ultimate objective: Crimea obtains almost all of its fresh water and electricity from continental Ukraine, many of its people will resist a return to Russia…. What are the real reasons for Putin’s actions and what is at stake?… There is a strong determination among a large majority of Ukrainians to live under democratic institutions of high quality, similar to those in the West…. The success of this revolution is Putin’s worst nightmare, because such a revolution could extend to Russia too…. Putin is therefore determined to do everything he can to make the young Ukrainian democratic experience a failure. The invasion of Crimea was a first step…”

4. Joe Weisenthal reports on Vince Reinhart: Economy’s Growth Potential Is Now 2 percent – Business Insider: “So what’s behind the new slow potential growth rate for the U.S. economy?… Declining Labor Force Participation… [and] declining productivity [growth]…. The big ramifications here are probably for the Fed, which may get unwanted levels of inflation faster than they want or expect. Bigger picture is that this is something that a lot of folks are talking about right now: The end of extensive slack in the economy. Just as an example, this is a chart from a new chartbook from Deutsche Bank’s Torsten Slok, who spends a lot of time look at wage inflation trends.”

Should-Reads:

• Bill Gurley: A Deeper Look at Uber’s Dynamic Pricing Model
• Piketty’s Triumph
• Marc J Melitz and Stephen J. Redding: Missing Gains from Trade?

• Òscar Jordà, Moritz Schularick, and Alan M. Taylor: Private Credit and Public Debt in Financial Crises

• Jonathan Chait: Rand Paul’s Plan to Save Ukraine Completely Nuts: “Everything about Paul’s argument is weird. Part of the weirdness is conveyed by the prose, which is bereft of specific facts, repetitive, and reads as if it were run through a foreign-language translation program…. He begins by endorsing the basic Republican talking points…. Paul adds other ideas, too. Some of them reflect an apparent inability to follow the news, like his ringing call for a boycott of the next G-8 summit in Russia…. Paul goes on to argue, ‘America is a world leader, but we should not be its policemen or ATM’. So he’s saying the United States should lead the world, but this leadership should not entail any new financial or military commitment?… Paul’s plan entails stiffing the Ukrainians: ‘We should also suspend American loans and aid to Ukraine because currently these could have the counterproductive effect of rewarding Russia.’ Yes, you read that right – in the face of a massive threat from Russia, the United States should impose financial penalties on Ukraine.”

• John Stoltzfus: 11 Reasons Why America’s Baby Boomers Don’t Have The Money To Retire: “The wholesale demise or dismantling of traditional defined benefit pension programs…. The widespread underuse of 401k plans…. Potential for increasingly later age requirements ahead to get full social security benefits…. Reduced cost of living increases likely… in a pro-austerity environment. A pronounced and general ignorance by the general public of the importance of asset allocation and long-term planning…. The tendency for 401k participants to select low-yielding non-fluctuating choices on 401K menus as a result of the tech bubble, the financial crisis of 2008, other past bubbles, along with prominent news items that accentuate the negatives of investing…. General lack of discipline and commitment to a personal investment program…. Emphasis by too many individuals on DIY programs that focus mostly on fee containment…. Taking early distributions from 401k plans to meet nonemergency needs. Taking early distributions from 401k plans as the result of personal emergencies…. Low interest rates in traditional savings vehicles…. ‘All 11 of these points add up to a veritable recipe for trouble for a generation as well as for the society and generations that will have to support those unprepared for “the long haul” ahead once they can no longer work’.”

Duncan Black: “I don’t agree with the policy predictions (either that they should or (hopefully) will happen), but, yes, the retirement catastrophe is here. If only there were some simple low cost program that could be easily expanded to meet the needs of current and near retirees. Thinking, thinking…” |

Should Be Aware of:

1. Donna Cassata: Senate Passes Military Sexual Assault Bill Scrapping ‘Good Soldier Defense’: “The Senate overwhelmingly approved a bill late Monday making big changes in the military justice system to deal with sexual assault, including scrapping the nearly century-old practice of using a ‘good soldier defense’ to raise doubts that a crime has been committed…. 97-0… a bipartisan plan crafted by three female senators — Democrat Claire McCaskill of Missouri and Republicans Kelly Ayotte of New Hampshire and Deb Fischer of Nebraska — that would impose a half-dozen changes to combat the pervasive problem of rape…. That unanimous support was in sharp contrast to last week, when military leaders vigorously opposed a measure by Sen. Kirsten Gillibrand, D-N.Y., that would have stripped commanders of their authority to prosecute cases and given that power to seasoned military lawyers outside the chain of command. The Senate voted 55-45 for that farther-reaching bill, but that was five votes short of the necessary 60. Though expressing certain reservations, the Pentagon had been generally accepting of the new bill. The House could act on the legislation as a stand-alone measure or incorporate it into the massive defense policy bill that it pulls together in the spring.”

2. Bill Janeway: What I Learned by Doing Capitalism:

And:

Lydia DiPillis: This is what a job in the U.S.’ new manufacturing industry looks like | Ryan Cooper: When the 1 percent opposes long-term economic growth |