Things to Read on the Afternoon of February 8, 2014

February 8, 2014

Must-Reads:

  1. Paul Krugman:

    The Colbert Report
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  2. Dani Rodrik: When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations: “Ideas are strangely absent from modern… political economy…. the dominant role is instead played by ‘vested interests’…. I will challenge the notion that there is a well-defined mapping from ‘interests’ to outcomes… ideas are subject to both manipulation and innovation, making them part of the political game. There is, in fact, a direct parallel, as I will show, between inventive activity in technology, which economists now routinely make endogenous… and investment in persuasion and policy innovation…. I focus specifically on models professing to explain economic inefficiency and argue that outcomes in such models are determined as much by the ideas that elites are presumed to have on feasible strategies as by vested interests…”

  3. Austin Frakt: Cut out the noise and read the CBO report: “All right, enough. I’ve read enough… about what CBO said…. You know what the best thing I read was? The CBO report…. Obamacare will affect the labor market… the removal of… distortion[s]… the addition of [other] distortions… Cadillac tax… employer mandate…. You can cherry pick the anti- or pro-distortionary features to hang this number on, to make the law look awesome or terrible. That’s what you’re seeing in the debate. But skip it…. No other health reform plan that expands coverage would do so without affecting the labor market in good and bad ways. Ultimately, this is not really a debate about Obamacare but about the effects of almost any coverage-expanding reform…. Tune out the noise and read the damn report.”

  4. David Weigel: CBOghazi: Journalists have no idea “what will matter” in an election: “Chris Cillizza… defending [his] post…. Journalists, in real time, are not the best arbiters of what people will come to believe months later. The fact that one party is spinning an incorrect story does not mean voters will buy that story…. [Cilizza’s] the Fix pronouncing that some misinterpreted news item was going to badly wound the Democrats. On June 10, 2012, Cillizza confidently predicted that a gaffe you’ve probably forgotten about—President Obama saying that ‘the private sector’s doing fine” compared with the state of social programs—would ‘be fodder in the general election’…. Fix writer Aaron Blake explained why Obama’s exhortation that ‘if you’ve got a small business, you didn’t build that’… would be a problem…. Did it matter? No. Mitt Romney did not win the election…”

Should-Reads:

  • CBO: Labor Market Effects of the Affordable Care Act: Updated Estimates
  • Dani Rodrik: When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations
  • Moses Abramovitz: Resource and Output Trends in the United States Since 1870
  • Paul Krugman (1998): Baby-Sitting the Economy
  • Joan Sweeney and Richard James Sweeney (1977): Monetary Theory and the Great Capitol Hill Baby Sitting Co-op Crisis
  • Bruce Bartlett: The Roots of the Tax Reform Act of 1986

  • Daniel Cooper: The Effect of Unemployment Duration on Future Earnings and Other Outcomes

  • Tara Culp-Ressler: Republicans Talk A Lot About Lowering The Abortion Rate, But They Don’t Actually Deliver: “Republicans often oppose the exact policies that would get the country closer to their preferred society with fewer abortions… resisted efforts to expand social programs that would provide support for struggling Americans… opposed putting taxpayer dollars toward family planning programs; and insisted on clinging to abstinence-only education…. It’s easy to see this play out time and time again on both a national and a state level…. Texas has some of the highest rates of teen and unintended pregnancy in the nation, and it’s not hard to see why…. The state’s dwindling number of [family-planning]… an abstinence-only website…. Last year, their exasperated Democratic colleagues urged them to study the research on what can actually lower the rate of unintended pregnancies.”

  • Jed Graham: Did the Federal Reserve Succeed in 2013?: “Evidence would suggest that there is a limit to how much weight monetary policy can pull — particularly in the early stages of a recovery. The simple reason is that one of the principal ways quantitative easing works is via a wealth effect… the wealth effect, particularly from stock market gains, is a lagged one… [and] might have been more muted than usual for some time in the wake of such a big collapse. Thus, the obvious downside in relying to a large extent on a Fed-induced wealth effect to cure an unemployment crisis such as began in 2008 is that it takes too much time to work its magic. The biggest difference maker in 2013 may have been a change in Fed policy — but it may have been that the wealth effect finally packed a punch…. At the start of 2013, household equity and mutual fund assets were already $6.4 trillion higher than at the end of 2008…. By the end of the third quarter, that reached $9 trillion. Given this wind at the Fed’s back, which helped counter the fiscal head winds, the Fed’s performance in 2013 — as the recovery turned four years old — tells us little about what is appropriate for fiscal policy during a severe downturn and early in a recovery.”

  • Noah Smith: Noahpinion: What can Abenomics teach us about macro (so far)?: “Suppose we grant that Abenomics represents a real regime change…. What conclusions can we draw? * Headline and core inflation are both up, now into positive territory. Core inflation is higher than it has been in decades. * Real GDP growth is up, but current growth levels are not higher than other peaks that have been observed since 2000. * Imports and exports are both up, with imports up more than exports, increasing the size of Japan’s trade deficit. So what does this tell us? (1) QE does not cause deflation…. (2) QE is not a surefire way to stimulate an export boom…. There are some more tentative suggestions… consumption in Japan has increased… business investment, not so much…. QE, if it boosts the economy, does so mainly through consumption channels…. QE’s biggest effect is to boost asset prices…. So is Abenomics good for Japan? The answer is: So far, it’s looking that way…”

David Weigel: Political documentaries lionize candidates: It worked for Mitt Romney, Rick Santorum, and Barack Obama | Memo explains why the U.S. can kill its own citizens without trial | Koch seizes on “Obamacare Kills Jobs” message | The CBOghazi of Chris Cilizza and Many Others: Journalists have no idea “what will matter” in an election | Vornado | Paul Krugman: Milton Friedman, Unperson | Jason Furman: Six Economic Benefits of the Affordable Care Act |

Should Be Aware of:

  1. Dana Stevens: The Lego Movie, reviewed: “The Lego Movie had so much going against it. First off, it’s a movie inspired by a system of interlocking plastic blocks. Second, it’s a branded entertainment—an ominous category if ever there was one…. I’m going to level with you: I went in hoping at best for something intermittently amusing, not too visually and sonically assaultive, and over soon. But Chris Miller and Philip Lord… have gone and done it… a clever, vividly imagined, consistently funny, eye-poppingly pretty and oddly profound movie… about Legos. Miller and Lord do not grovel before their corporate overlords, and at times even appear to be conveying the subversive message that, when it comes to Legos, less may be more (or at least that a random bucket of unsorted blocks may be preferable to a brand-new boxed set)…. As Lord and Miller skillfully balance an impressive array of narrative and thematic spinning plates—order and chaos, adults and children, practicality and magic, the real and the imaginary—it becomes clear even if this anarchic celebration of the creative capacity of play centers around the struggles of one-and-a-half-inch-tall minifigures, it’s built on a distinctly human scale.”

  2. Oliver Willis: The Republican Party Is A Corpse | The Daily Banter: “Reince Preibus, the titular party chairman… can show up on the Sunday shows and Hannity and flap his gums, but he doesn’t have the power to pick and choose must-win or cut-loose races that chairmen used to have. Where Howard Dean designed and implemented a ’50 state strategy’ for Democrats, Priebus can just cross his fingers and hope the Koch Brothers can win enough races for him. The right built this world. They decided money equals speech and appointed the judges that have made Citizens United the law of the land. Money runs political campaigns, and the money is in the super PACs now…. There’s no de facto leader to tell the outside groups to quit it and Republican efforts to freeze out those affiliated with the outsiders has been sketchy at best…. It also doesn’t help that some of the rich guys with money on the right are a little nuts. Witness Sheldon Adelson, who spent millions in a quixotic campaign in favor of Newt Gingrich, who’s biggest impact in 2012 was introducing Bain Capital to American voters. There was nobody to tell Adelson to stop, or to stop Karl Rove from burning outside money in the final weeks of the election on bad ads in unwinnable states. Nobody is listening. The Republican Party’s outreach efforts to minorities and women are also dead in the water, because the party’s communication functions have also been excised from the corpse and given over to Fox News and talk radio…. Republicans can still win elections and will win elections, but when they wear the party brand in the future, it will have more in common with Hannibal Lecter wearing his victims as a trophy than any significant advance for what we used to know as the Grand Old Party.”

  3. Paul Krugman: Econ 348 class 2: “So, what’s different about these times? Not just severe recession and depressed economy, but loss of the usual tools to fight a slump. Monetary policy is the usual line of defense – but now has hit limits, and unconventional monetary policy faces fierce opposition. Fiscal policy becomes much more effective – but deficits soared in the slump, and many people pushing to spend less, not more. In short, confusion, conflict, and ineffective policy. Otherwise, things are great” | WWS 594E class 1: “Political economy of the welfare state: What’s the matter with Kansas? What’s the matter with Connecticut?”

And:

Robert Reich : Why Widening Inequality is Hobbling Equal Opportunity |

February 8, 2014

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