Things to Read on the Evening of February 13, 2014

Must Reads:

1. Saroj Bhattarai, Gauti Eggertsson, and Raphael Schoenle: Is Increased Price Flexibility Stabilizing? Redux: “In a simple DSGE model… more flexible prices always amplify output volatility for supply shocks and also amplify output volatility for demand shocks if monetary policy does not respond strongly to inflation. More flexible prices often reduce welfare, even under optimal monetary policy if full efficiency cannot be attained…. Using post-WWII U.S. data… we find that if prices and wages are fully flexible, the standard deviation of annualized output growth more than doubles.”

2. Jeffrey Frankel: The Startling Decline of Market-Based Approaches to Regulation: “Markets can fail. But, as has been demonstrated in areas like air pollution, traffic congestion, spectrum allocation, and tobacco consumption, market mechanisms are often the best way for governments to address such failures. So why are such mechanisms now in retreat?… Today, however, politics is killing ‘cap and trade’… cap-and-trade… for sulfur-dioxide emissions has effectively vanished. In Europe, the Emissions Trading System… has become increasingly irrelevant as well…. Market-oriented environmental regulation has in effect been superseded over the last five years by older ‘command-and-control’ approaches…. There is a fascinating parallel between the evolution of American political attitudes toward market mechanisms in environmental regulation and Republican hostility to ‘Obamacare’…. This was originally a conservative approach…”

3. Felix Salmon: News Genius: Annotated: Janet Yellen – Semiannual Monetary Policy Report to the Congress: Read the whole thing! For example: “Translation: QE isn’t just about dropping money from helicopters onto rich investors and financial institutions. It also creates jobs!” “Yellen here is going out of her way to draw a distinction between “maximum sustainable employment”, on the one hand, and the unemployment rate, on the other. You can use the latter as a tool to measure how close you are to the former, but it’s not an exact tool, and you want to look at other things too, like the long-term unemployment rate and the underemployment rate. The Fed’s full-employment mandate is not about hitting some unemployment-rate number, it’s about getting as many Americans to work as possible.” “Remember the government shutdown, and all those debt-ceiling antics? Yellen does. And, she’s saying, they hurt the economy hard — specifically, they hurt consumer spending. Which is not surprising, given the number of federal employees who had to live without any income.”

4. Ezra Klein: Republicans Discover Evidence of Jobs Crisis: “The U.S. has been in a jobs emergency since at least 2008. The cause of the crisis… isn’t mysterious, and neither are the solutions… invest in infrastructure to create construction jobs… give tax breaks to employers who hire… restore the payroll tax cut… help state and local governments hire back some of the employees they laid off…. But in recent years, these policies have been either blocked or canceled by congressional Republicans…. That’s the proper context in which to view this week’s hysteria about Obamacare…”

5. Gavyn Davies: A dose of humility from the central banks: “It is now quite difficult to generalise about what central bankers think. However, a few of the necessary pieces of the jigsaw puzzle slotted into place in the past week…. Ms Yellen… has declared herself… the agent of continuity…. A regime shift designed to shock the US economy back towards the pre-2008 trend line…. Why has she not done this?… She does not seem convinced that a further large dose of asset purchases would be successful anyway, in the context of a large drop in both productivity growth and the labour participation rate… supply-side pessimism… more of the post-2008 output losses are now thought to be permanent. Ms Yellen said on Tuesday that she was not sure how much of the decline in the labour participation rate could be reversed. Her uncertainty about this scarcely supports dramatic policy action either way.”

Should-Reads:

• John Holbo: Reason and Persuasion
• Francis X. Diebold: No Hesitations: NBER Econonometrics “Methods Lectures” Videos
• Federal Reserve: Monetary Policy Report
• Jason Furman: The Economic Case for Raising the Minimum Wage

• Nick Hanauer and Eric Beinhocker: Capitalism Redefined

• Jens Christensen: When Will the Fed End Its Zero Rate Policy?

• Alexander J. Field: The Savings and Loan Insolvencies in the Shadow of 2007-2023

• Jeffrey Williamson: Why Was British Growth So Slow During the Industrial Revolution?

• John Noble Wilford: Camels Had No Business in Genesis: “There are too many camels in the Bible, out of time and out of place. Camels probably had little or no role in the lives of such early Jewish patriarchs as Abraham, Jacob and Joseph, who lived in the first half of the second millennium B.C., and yet stories about them mention these domesticated pack animals more than 20 times…. These anachronisms are telling evidence that the Bible was written or edited long after the events it narrates…. Dr. Mizrahi likened the practice to a historical account of medieval events that veers off to a description of ‘how people in the Middle Ages used semitrailers in order to transport goods from one European kingdom to another’…”

• Paul Krugman: The 2,000 Year Apartment: “Bloomberg reports on the soaring prices of trophy apartments in Manhattan. The biggest sale so far was former Citigroup head Sandy Weill’s apartment, which he sold for $88 milion to the daughter of a Russian oligarch. But $100 million listings are out there. For a bit of perspective: the median full-time worker in the United States makes about $40,000 a year. So it would take the typical worker 2,000 years to earn enough to buy the Weill apartment. Still, people like Weill are exemplars of the free market at work. They work in an industry that delivers clear value to the economy, and has never relied on government bailouts. Oh, wait.”

• Jim Romanesko: » Brent Bozell fibs about writing a column: “The column with Bozell’s name is distributed by Creators Syndicate…. I asked Creators about its ghostwriting policy… got a response from Creators president Rick Newcombe. He wrote…. ‘Obviously someone is spreading malicious gossip about someone else, whether it is true or not. If you know of one of our columnists who supposedly is not writing the column but rather “assigning an underling to pen them (an underling who is not credited),” I think it only fair that you tell us who has been accused of this so we can talk to the columnist. Yes, we expect all of our columnists to write their own columns, though we understand that some work closely with researchers.’ On Wednesday afternoon, I gave Bozell’s name to the Creators president. Newcombe responded this morning…. ‘It is absolutely false to say that Brent Bozell does not write his column.… I remember years ago when Brent suggested that he share the byline for his column with Tim, and I said it would be better for us to promote a single individual. We have decided, however, that since Tim works so closely with Brent on the column, we have changed it to a joint byline. But I will say it again, it is absolutely incorrect to claim that “Brent Bozell does not write the column you distribute”‘. I read that statement to the ex-MRC staffer who tipped me off about the column. His response: ‘Oh wow, that is classic’–and wrong, he said. ‘What they really need to do is make it Tim’s column and take Brent’s name off it’…”

John Holbo: Reason and Persuasion On Coursera – or – Look, Ma, I’m a MOOC | David Glasner: Paul Krugman and Roger Farmer on Sticky Wages | Alan Blinder: Alan Blinder: ObamaCare Is a Job-Killer? Not at All | Austin Frakt: Why conference calls should be more like Twitter | Mark Thoma: How Keynes Would Handle an Abnormally Slow Recovery | Amina Kahn: Nuclear fusion reactions mark a ‘milestone’ | Mark Kleiman: Corporate Lysenkoism | Mike Konczal
: Conservatives Concerned About the CBO and the Dignity of Work Should Consider a Higher Minimum Wage | Sahil Kapur: GOP’s New Obamacare Attack: Hitting Medicare Cuts They Voted For |

Should Be Aware of:

1. Kevin Drum: Here’s the Pitiful Micro-Drama Behind Yesterday’s Debt Ceiling Vote: “It all started when Ted Cruz insisted on filibustering the bill because it gave him a chance to pull off some cheap tea party theatrics…. Then the vote got up 58 ayes, and sort of stalled…. Miffed that they have long been asked to take tough votes when the GOP leaders voted ‘no’, Sens. Susan Collins of Maine and Lisa Murkowski, privately pressured McConnell and Cornyn to vote to break the filibuster…. So McConnell and Cornyn–both facing reelection this year and battling tea party-inspired challengers in their states–took the plunge and risked the political backlash by voting to break a filibuster, the type of vote the two wily leaders have long sought to avoid in this election season…. But McConnell managed a small, almost touchingly meager victory. Apparently Harry Reid took pity on him and played along with a plan to keep the votes semi-private by not having the clerk call the roll…. Weigel: ‘If this sounds pathetic, that’s because it is. Carl Hulse puts it very well here: Most Republicans want the country to keep running, but don’t want to provide tough votes if they can be used against them in primaries…. Individually, they’re totally safe. Collectively, they often can’t act. So the only real pressure exerted on a party is the external backlash that follows a big, collective failure — the definitive case this year being the government shutdown, the definitive case in 2011 being the collapse of a House Republican debt limit bill.’ Four incumbents! But that’s all it takes to make all the rest of them petrified with fear of the Koch brothers and the Club for Growth…. The result is a gutlessness in the face of mau-mauing from blowhards like Cruz that makes you want to avert your eyes. Even when it’s being done to a bunch of guys you can’t stand, it’s just too painful to watch.”

2. Erika Eichelberger: Wednesday Was Full of Good News for Obamacare. Here Are the Charts That Prove It: “More Americans enrolled in Obamacare plans in January than expected, according to data released Wednesday by the Obama administration. The Department of Health and Human Services (HHS) had expected to sign up 1,059,900 people last month. Instead, about 1.14 million people purchased health plans through the federal and state health insurance exchanges. This is the first time since the uninsured started buying insurance on the exchanges in October that the administration has beaten a monthly enrollment goal…”

3. Buce: Underbelly: Man’s Work: “Christian Wolmar, The Great Railroad Revolution… makes a few more general points about railway labor in the golden age of railroad construction–say, 1863 to 93.  He shows that the owners were avid for  manpower to chop trees, blast away rock faces, spread gravel and lay track.  Most of these were awful jobs–fit only for Irish or Chinese (sarcasm).  But nobody in those days worried about the end of work.”

And:

Noam Scheiber: Tea Party Is Folding on the Debt Limit | Robert Costa: How John Boehner decided to give up on the debt limit fight| Josh Barro: If Liberals Hate Job Lock, Why Do They Like Defined Benefit Pensions So Much? | Rick Perlstein: Failing upward at the Democratic Leadership Council with Al From |