J. Bradford DeLong's Blog, page 1172

Noted for Your Evening Procrastination for July 24, 2014

Over at Equitable Growth--The Equitablog

Nick Bunker: The very real success of the Earned Income Tax Credit | Washington Center for Equitable Growth
Casey Schoeneberger: Washington Center for Equitable Growth Announces Inaugural Class of Grantees | Washington Center for Equitable Growth
Lunchtime Must-Read: Ezra Klein: Paul Ryan's Poverty Plan | Washington Center for Equitable Growth
Morning Must-Read: Brian Buetler: The Adler-Cannon Halbig v. Burwell Argument Is a Fraud—Just Ask Scott Brown | Washington Center for Equitable Growth
Morning Must-Read: Guido Matias Cortes et al.: The Micro and Macro of Disappearing Routine Jobs: A Flows Approach | Washington Center for Equitable Growth
Morning Must-Read: James Pethokoukis: The Weird Obsession That's Ruining the GOP | Washington Center for Equitable Growth
Nighttime Must-Read: Eric Chemi and Ariana Giorgi: For CEOs, Correlation Between Pay and Stock Performance Is Pretty Random | Washington Center for Equitable Growth
Additional Dimensions of Inequality: Wednesday Focus for July 23, 2014 | Washington Center for Equitable Growth

Plus:

Things to Read at Night on July 24, 2014 | Washington Center for Equitable Growth

Should-Reads:

Aida Caldera Sánchez et al.: Improving Well-Being in the United States: "Life is quite good in the United States compared to other OECD countries, thanks to strong economic growth and technological progress having lifted average income to high levels. Nonetheless, there is evidence that the benefits from growth have not been sufficiently broad based. Self-reported happiness increases with income, an issue particularly resonant in a country with among the highest levels of income inequality in the OECD and a pattern of inequality that appears to be moving toward even more concentration at the very top at the expense of the middle class and the poor. Working hours that remain among the longest in the OECD are also creating challenges for work-life balances, child education, personal care and leisure. These pressures are contributing to higher job strain and work-related stress with unhealthy consequences, including for mental health, and a detrimental impact on employability and medical costs. While these trends cannot be easily reversed, a number of policy options are being usefully rolled out and other initiatives are being considered: federal-level policies improving access to health care and early-childhood education, state-level initiatives favouring workplace flexibility, firm-level investments in job quality and greater attention to the health consequences of job-stress. If successfully adopted, they would go a long way toward improving the well-being of American working families..."

Cory Doctorow: When all the jobs belong to robots, do we still need jobs?: "Where Tufekci's analysis falls short is in her willingness to think outside the market box. She implies that the solution to this all is some kind of market reform, but doesn't suggest that, perhaps, markets can't efficiently organize abundant things--only scarce things. If we persist in the view that the dividends from robots' increased productivity should accrue to robot owners, we'll definitely come to a future where there aren't enough owners of robots to buy all the things that robots make.... There's a real scarcity of economists willing to think about the possibility that abundance makes markets obsolete altogether. Property rights may be a way of allocating resources when there aren't enough of them to go around, but when automation replaces labor altogether and there's lots of everything, do we still need it?..."

James Heckman (2010): I could tell you a story about... Milton Friedman. In the nineteen-seventies, we were sitting in the Ph.D. oral examination.... After he’d left, Friedman turned to me and said, 'Look, I think it is a good idea, but these guys have taken it way too far.' It became a kind of tautology that had enormously powerful policy implications, in theory. But the fact is, it didn’t have any empirical content. When Tom Sargent, Lard Hansen, and others tried to test it using cross equation restrictions, and so on, the data rejected the theories. There were a certain section of people that really got carried away. It became quite stifling.... The further down the food chain you go, the more the zealots take over.... We knew Keynesian theory was still alive in the banks and on Wall Street. Economists in those areas relied on Keynesian models to make short-run forecasts. It seemed strange to me that they would continue to do this if it had been theoretically proven that these models didn’t work.... The underlying ideas of the Chicago School are still very powerful. The basis of the rocket is still intact. It is what I see as the booster stage--the rational-expectation hypothesis and the vulgar versions of the efficient-markets hypothesis--that have run into trouble.... People got too far away from... confronting ideas with data.... When Friedman died... we had a symposium.... Lucas was talking about rational expectations.... One woman... said, 'Look at the evidence on 401k plans and how people misuse them, or don’t use them. Are you really saying that people look ahead and plan ahead rationally?' And Lucas said, 'Yes, that’s what the theory of rational expectations says, and that’s part of Friedman’s legacy.' I said, 'No, it isn’t. He was much more empirically minded than that'..." Via Lars Syll

Jesse Rothstein: Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence: "The EITC is intended to encourage work. But EITC-induced increases in labor supply may drive wages down. I simulate the economic incidence of the EITC. In each scenario that I consider, a large portion of low-income single mothers’ EITC payments is captured by employers through reduced wages. Workers who are EITC ineligible also see wage declines. By contrast, a traditional Negative Income Tax (NIT) discourages work, and so induces large transfers from employers to their workers. With my preferred parameters, $1 in EITC spending increases after-tax incomes by $0.73, while $1 spent on the NIT yields $1.39..." Via Owen Zidar

And:

Claire Cain Miller: How Technology, Aided by Recession, Is Transforming the Work World
Margot Sanger-Katz: Two Americas on Health Care, and Danger of Further Division

And Over Here:

What Should fivethirtyeight.com Do?: Thursday Dutch Uncle Weblogging Advice (Brad DeLong's Grasping Reality...)
Liveblogging World War II: July 24, 1944: Preparations for COBRA (Brad DeLong's Grasping Reality...)
Sam Brownback of Kansas: Live from La Farine CCXXV: July 24, 2014 (Brad DeLong's Grasping Reality...)
Equitable Growth: Additional Dimensions of Inequality: Wednesday Focus for July 23, 2014 (Brad DeLong's Grasping Reality...)

Should Be Aware of:

Thomas Ricks: Why Am I Moving Left?: "In my late 50s, at a time of life when most people are supposed to be drifting into a cautious conservatism, I am surprised to find myself moving steadily leftward.... During the time I was a newspaper reporter, I didn’t participate in elections, because I didn’t want to vote for, or against, the people I covered. Mentally, I was a detached centrist.... But since leaving newspapers, I have again and again found myself shifting to the left... wondering just what happened to this country over the last 15 years, and what do to about it.... Our wars in Afghanistan and Iraq were the first big shocks.... Torture. I never expected my country to endorse torture.... How we fought. I never thought that an American government would employ mercenaries in a war. And yet we did this in Iraq by hiring thousands of armed 'security contractors' who in practice were subject neither to local law nor to the American military justice system, and so could and often did treat Iraqis badly.... Intelligence officials run amok.... Growing income inequality.... The middle class used at least to get lip service from the rich—'backbone of the country' and such. Now it is often treated like a bunch of saps not aware enough to evade their taxes."


Already-Noted Must-Reads:

Guido Matias Cortes et al.: The Micro and Macro of Disappearing Routine Jobs: A Flows Approach: "The U.S. labor market has become increasingly polarized since the 1980s, with the share of employment in middle-wage occupations shrinking over time. This job polarization process has been associated with the disappearance of per capita employment in occupations focused on routine tasks. We use matched individual-level data from the CPS to study labor market flows into and out of routine occupations and determine how this disappearance has played out at the 'micro' and 'macro' levels. At the macro level, we determine which changes in transition rates account for the disappearance of routine employment since the 1980s. We find that changes in three transition rate categories are of primary importance: (i) that from unemployment to employment in routine occupations, (ii) that from labor force non-participation to routine employment, and (iii) that from routine employment to non-participation. At the micro level, we study how these transition rates have changed since job polarization, and the extent to which these changes are accounted for by changes in demographic composition or changes in the behavior of individuals with particular demographic characteristics. We find that the preponderance of changes is due to the propensity of individuals to make such transitions, and relatively little due to demographics. Moreover, we find that changes in the transition propensities of the young are of primary importance in accounting for the fall in routine employment..."

James Pethokoukis: The weird obsession that's ruining the GOP: "Call it doomsday prepper economics. For more than five years, many Republicans and conservatives have warned that catastrophe is nigh. Washington's deficit spending and the Federal Reserve's excessive money printing will lead to a financial crisis worse than the Great Recession, they prophesied. Inflation will skyrocket, the dollar will collapse, and the Chinese will dump treasuries, they swore. As Ron Paul, the libertarian former GOP congressman and presidential candidate, said back in 2009: 'More inflation is absolutely the wrong way to go. We're taking a recession and trying to turn it into a depression. We're going to see a real calamity'. Many GOP politicians have since echoed Paul's prediction. But the Next Great Inflation never happened....

 

"The inflation alarmism driving them is taking a weird turn.... Conservative author Amity Shlaes approvingly cites ShadowStats as supporting her thesis that 'inflation is higher than what the official data suggest'. Others fans include conservative intellectual Niall Ferguson, Sen. Tom Coburn (R-Okla.), and a good chunk of the conservative blogosphere. ShadowStats' popularity on the right is crazy.... If GOP inflationistas had their way, the weak U.S. recovery would almost surely be even weaker. Just look at Europe.... Why this GOP inflation obsession? Maybe it's a legacy of how rapidly rising prices in the 1970s swept conservatives into power in both America and Great Britain. Maybe it's how many conservative talk radio shows are sponsored by gold companies who stand to benefit from inflation hysteria. Maybe it's a belief that every single economic metric must be a nightmare under President Obama. But whatever the reason, the GOP's preoccupation with phantom price increases is distracting it from the actual problems afflicting the U.S. economy..."

Eric Chemi and Ariana Giorgi: For CEOs, Correlation Between Pay and Stock Performance Is Pretty Random: "With all the public chatter about exorbitant executive compensation and income inequality it’s useful to look at the relationship between chief executive officer pay and corporate performance. Typically, when the subject of their big pay packages arises, CEOs—usually through their spokespeople—say they are paid for performance. Does data back that up?... Equilar ranked the salaries of 200 highly paid CEOs. When compared to metrics such as revenue, profitability, and stock return, the scattering of data looks pretty random.... Check the comparison of the ranking of the 200 CEOs Equilar looked at to their company’s stock returns.... If 'pay for performance' was really a factor in compensating this group of CEOs, we’d see compensation and stock performance moving in tandem.... They certainly wouldn’t look like this..."

Brian Buetler: The Adler-Cannon Halbig v. Burwell Argument Is a Fraud--Just Ask Scott Brown: "It is now an article of faith on the right that Congress meant to condition the subsidies as an inducement to states, but overestimated the power of that inducement. I suspect many of the people advancing this claim realize that it is false, and are engaged in an elaborate gaslighting campaign. Others have probably convinced themselves that they are correct.... They need both an elaborate theory of legislative intent, and judges who are happy to treat the theory as plausible, even though it makes no sense. They've now found two such judges. Maybe their argument will carry in the Supreme Court, too. Or maybe the conservative justices will just say Congressional intent doesn't matter and rule against the government anyhow. (I still tend to think that the government will prevail, assuming the case ever reaches the Supreme Court.)

 

"But as far as... what Congress intended... there can be no debate. You can ask the people who wrote the bill. You can ask the reporters who chronicled the legislative process.... You can ask state officials, who were advised that federal Medicaid dollars were conditional upon the Medicaid expansion (as originally envisioned) but not that the subsidy dollars were conditional upon establishing an exchange.... You can ask Democratic legislators.... Or you can ask Scott Brown. When he was still a senator from Massachusetts, Brown sponsored legislation with Senator Ron Wyden of Oregon to hasten the availability of Wyden's State Innovation Waivers.... Neither the existence of the waiver program, nor the desire among members to hasten its implementation, are consistent with the idea that Congress intended to allow states to essentially waive out of these same requirements simply by doing nothing..."

Ezra Klein: Paul Ryan's Poverty Plan: "P
The most important idea in Paul Ryan's poverty plan reverses the most important idea in Paul Ryan's budgets. Those budgets... [made] deep cuts to spending on programs for the poor the cornerstone of Republican fiscal policy... cut spending on the programs that fight poverty. Ryan's poverty plan is... a sharp break with his budgets... an attempt to change the Republican Party's view--a view driven, in large part, by Paul Ryan and his budgets--of what to do with programs for the poor....
 

"This was a bit like hearing the Kool-Aid Man say that he only ever drank Kool-Aid for the money, and in truth, he thinks kids should drink more tap water, instead. But... this is a return to Ryan's roots. Though he's made his name as the GOP's chief crusader against deficits... Ryan's actual record... included a series of votes that massively increased the deficit... to wrench policy... conservative... George W. Bush's tax cuts... the war in Iraq... the unfunded Medicare Prescription Drug Benefit. Prior to Barack Obama's presidency, Ryan was best known for the Social Security Personal Savings Guarantee and Prosperity Act... $2.4 trillion in additional costs over the first 10 years... [that] the Bush administration ultimately dismissed... as 'irresponsible'..."

What Should fivethirtyeight.com Do?: Thursday Dutch Uncle Weblogging Advice

A correspondent writes, apropos of http://fivethirtyeight.com:

Nate Silver's extraordinary and unique excellence is to take a look at a complicated but relatively unsophisticated spreadsheet model of a situation and then, every day, telling an excellent narrative story about a piece of the model. That is the way that http://fivethirtyeight.com could be a huge success. But he seems to be following a different strategy. The stories are more:

Here is some data, here is how we built it, here is the chart, here is an interesting fact about the chart...

That is unlikely to get Nate to where he wants to be, and should be...

I think this is insightful. If I were Nate Silver, therefore, I would focus on building a relatively small number of quantitative models of complicated situations, and then turn my energy to successfully telling a series of narrative stories about each of them...

Liveblogging World War II: July 24, 1944: Preparations for COBRA

Richard Atkinson: The Guns at Last Light:

Operation COBRA, that biggest thing, was Bradley’s plan, although not his plan alone. Montgomery for one had encouraged a sledgehammer blow on a narrower front than the Americans commonly preferred; this was sound advice, deftly delivered. “Take all the time you need, Brad,” the British commander had urged, pressing two slender fingers together against a map. “If I were you, I think I should concentrate my forces a little more.” Joe Collins, whose VII Corps would serve as the point of the spear, had chosen the precise spot to attack: a bocage copse just west of St.-Lô, on the old Roman road to Périers. Fifteen U.S. divisions—six in Collins’s corps alone—would blow through the battlefront to eventually reach Avranches, thirty miles south, opening the route to Brittany and the vital Breton ports. “Pursue every advantage,” Eisenhower had urged, “with an ardor verging on recklessness.”

That advantage lay mainly in airpower, particularly since artillery ammunition continued in short supply. A single heavy bomber carried the explosive punch of more than one hundred howitzers firing simultaneously, and Bradley wanted fifteen hundred heavies dropping sixty thousand 100-pound bombs within an hour on a rectangular swatch five miles wide and a mile deep—one bomb every sixteen feet. For a week he had made his case to his air brethren, even traveling to Leigh-Mallory’s headquarters at Stanmore in Middlesex on July 19, as GOODWOOD was coming unstitched. The use of small bombs with instant fuzes would prevent the deep cratering that had bedeviled tanks crossing the carpet-bombed terrain at Cassino and at Caen, Bradley argued. To forestall fratricide, the bomber fleets should fly parallel to the front, using the perfectly straight St.-Lô–Périers road for guidance. Army assault battalions would pull back eight hundred yards as a precaution against errant bombs, yet this would leave them near enough to rush forward before the enemy recovered his wits, as apparently had happened in GOODWOOD.

Very little in Bradley’s vision appealed to airmen. The Army Air Forces’ “Handbook for Bombardiers” included 125 pages on—among other arcane topics—ballistic coefficients, dropping angles, and Williamson’s probability, all of which suggested that the general’s proposed attack route was impossible. Fifteen hundred planes could not funnel into a one-mile corridor in the single hour that First Army allotted before the ground attack began; such a bombardment would take closer to three hours. Other technical problems also obtained, including the difficulties of dropping in the prevailing crosswind and of flying over intense antiaircraft defenses. Only if the planes attacked perpendicular to the front line—approaching from the north, over the heads of American troops—could they drop several thousand tons of bombs in an hour. Moreover, even in daylight and good weather, the margin of safety for dug-in troops was three thousand yards from the bomb line, almost two miles. Anything closer amounted to what one air commander called “bombing between the Army’s legs.”

Bradley agreed to pull his assault battalions back twelve hundred yards rather than eight hundred, but he balked at further concessions. Warned that 3 percent of the munitions would likely fall awry—some 1,800 bombs in the proposed COBRA payload—he accepted the risk. If GIs died, they were “nothing more than tools to be used in the accomplishment of the mission,” he later wrote. “War has neither the time nor heart to concern itself with the individual and the dignity of man.” As he had once told Ernie Pyle, “I’ve spent thirty years preparing a frame of mind for accepting such a thing”...

Sam Brownback of Kansas: Live from La Farine CCXXV: July 24, 2014

Scott Lemieux: "And, In Conclusion, KU's Teams Will Now Be Known As the Kansas Reagans": "Shorter Sam Brownback:

My crazy Democratic opponent thinks that raising taxes is a way to solve the disastrous fiscal meltdown caused by the tax cuts I favored. But everyone knows this solution is insufficiently Reagan because Reagan, and in addition Reagan.

Note: this “Reagan” bears no resemblance to the actual Reagan...

David Weigel: Gov. Sam Brownback will keep floundering in Kansas because Reagan: "Manu Raju's report from Kansas is worth a read....

...Gov. Sam Brownback, elected in the 2010 wave, was bolstered in 2012 when conservatives primaried the moderate Republicans who used to run the state. He pushed through deep tax cuts, nixing business taxes and phasing the top income tax rate from 6.45 percent to 3.9 percent, to prove that the supply-side gospel was due for a second great awakening. The subsequent economic slump in the state is probably the best-covered in the country. 'The immediate effect has been to blow a hole in the state’s finances without noticeable economic growth', reported Peter Coy in Businessweek. 'What's wrong with Kansas' tax reform?' asked Governing magazine. In the hearth of the Koch family, it's impossible to find anyone who'll jiggle the balance sheets and pretend the tax cuts work.

Back to Raju, who was in Kansas when more than 100 current and former Republican officeholders endorsed, en masse, Democratic candidate Paul Davis. To the disbelief of Republicans and surprise of pollsters, Davis is consistently tied with Brownback in a state that's steadily trended Republican. Brownback's dismissal of Davis indicates just how he thinks about the long term.... To delay a tax cut is to 'raise taxes', and to be Reaganesque is to rule out any tax raises. The second part of the answer is actually the weakest—-anyone who forgets that Ronald Reagan course-corrected on taxes, 11 times, has mentally substituted a fantasy of Ronald Reagan for the one who governed the country for a bit. But maybe this points to Brownback's salvation. Like Scott Walker, he needs to recast his experiments as a twilight struggle against liberalism. If he loses, so do tax cuts, for now and ever.

Equitable Growth: Additional Dimensions of Inequality: Wednesday Focus for July 23, 2014

Over at Equitable Growth: Lawrence Summers: Advantages the Rich Have That Money Cannot Buy: "The primary reason for concern about inequality is that lower- and middle-income workers have too little...

...not that the rich have too much... the criterion should be... [the] impact... on the middle class and the poor.... Important aspects of inequality are unlikely to be transformed just by limited income redistribution. Consider... health and... opportunity for children. Barry Bosworth and his colleagues... [the] cohort[s]... born in 1920 and... 1940.... The richest men gained roughly six years in life expectancy... the lowest... two years... lifestyle and variations in diet and stress [rather] than the ability to afford medical care.... READ MOAR

Over the past two generations... the college enrollment rate for children from the lowest quarter... has increased from 6% to 8%, the... highest quarter... from 40% to 73%.... The average affluent child now receives 6,000 hours of extracurricular education... read to, taken to a museum, coached in a sport... other... stimulus... more than the average poor child.... It would be a tragedy if this new focus on inequality and on great fortunes diverted attention from the most fundamental tasks... supporting the health and education of all its citizens...

Members of America's relatively-rich upper-middle class are, says Larry Summers, different from members of America's native-born working class in more then their ability to earn high incomes in the marketplace and so gain the resources to spend in order to achieve an upper middle-class standard of living. Diet, stress, smoking, exercise, and a host of other lifestyle factors play a bigger role then does income in giving the upper-middle class longer life expectancy than the native-born working class. And within-the-family investment in children's experiences and capabilities plays an important role in preparing the next generation to navigate the social and educational obstacle course to productive adulthood.

That reducing income and wealth inequalities will not proportionately reduce all inequalities is not, of course, an argument to eschew smart policies to reduce income and wealth inequalities. It is, however, an argument to do more: to try to act on the health and lifestyle and family structure margins as well as on the after-tax income margin and on the wealth-accumulation margin.

But how?

Naomi Cahn and June Carbone have long argued that the successes come from evolving sociological institutions that cope with the consequences of the coming of reliable birth control and the shrinkage in the average number of pregnancies from eight to two. They see as successful:

a Blue Family Paradigm [that] emphasizes the importance of women's as well as men's workforce participation, egalitarian gender roles, and the delay of family formation until both parents are emotionally and financially ready...

And they contrast it with:

a Red Family Paradigm--associated with the Bible Belt, the mountain west, and rural America--[that] rejects these new family norms, viewing the change in moral and sexual values as a crisis. In this world, the prospect of teen childbirth is the necessary deterrent to premarital sex, marriage is a sacred undertaking between a man and a woman, and divorce is society's greatest moral challenge.

Yet, increasingly, the RFP is unsustainable, both because men without college degrees can no longer fulfill the requirements of their RFP social-gender role, and because most women do not wish to:

The stable, blue collar jobs that have historically supported young families, and early marriage and childbearing derail the education needed to prosper. The result is that the areas of the country most committed to traditional values have the highest divorce and teen pregnancy rates, fueling greater calls to reinstill traditional values...

And here things become truly dicey: calling for a revolution in culture and an abandonment of values is rarely an easy solution to problems of inequality.

Noted for Your Nighttime Procrastination for July 23, 2014

Over at Equitable Growth--The Equitablog

Nick Bunker: Saving our way to less wealth inequality? | Washington Center for Equitable Growth
Evening Must-Read: Mike Konczal: Dodd-Frank Reforms Are Finally Paying Off | Washington Center for Equitable Growth
Evening Must-Read: James Hamilton: The Changing Face of World Oil Markets | Washington Center for Equitable Growth
Does Ms Market Reject the National Income Identities?: Afternoon Comment | Washington Center for Equitable Growth
Afternoon Must-Read: Sarah Kliff: Halbig Says Congress Meant to Limit subsidies. Congress Disagrees | Washington Center for Equitable Growth

Plus:

Things to Read on the Evening of July 23, 2014 | Washington Center for Equitable Growth

Should-Reads:

Tim Jost:Will Was the ACA Dicision Based on a Mistake?: "In a recent blog post, Cato scholar Michael Cannon admitted that he and his colleague, Case Western University professor Jonathan Adler, had made a mistake in an amicus brief they submitted to the courts in the Halbig and King cases.... This mistake... goes to the central argument that he and Jonathan have relied on.... Cannon’s error is one of a flood of misstatements that the opponents of the ACA have propagated, from 'death panels' at the outset to 'no federal exchange tax credits' now.  The real danger is the disinformation about the ACA could infect a decision in the Halbig case.... I can find no evidence in the extensive debates that accompanied the Affordable Care Act or in the relevant committee reports  that Congress modeled the ACA premium tax credit structure after the Trade Adjustment Act tax credit program.... An individual’s receipt of a Trade Adjustment Act tax credit was not dependent on a state doing anything.... The ACA is quite different from the Trade Adjustment Act in that under the ACA exchanges are in effect in every state, while there is no such system set up in the Trade Adjustment Act.... Other misunderstandings on the part of Judge Randolph abounded in the argument.... One hopes that by the time the D.C. Circuit announces a decision in this case, the judges will have reread the briefs and supporting record and have corrected any erroneous first impressions.... The courts have to get this right."

Michael Cannon: Erratum In The Adler-Cannon Amicus Briefs Filed In 'Halbig' & 'King': "On pages 11-12 of our Halbig brief and pages 14-16 of our King brief, we claimed the bipartisan Small Business Health Options Program Act, introduced in 2008 (S.2795) and again in 2009 (S.979) by Sen. Richard Durbin (D-IL), conditioned tax credits to small businesses on states establishing 'SHOP' Exchanges.  Those bills in fact explicitly authorize tax credits to participating employers whether a state or the federal government established the Exchange. The error was mine. I apologize to the courts and my coauthor."

Jonathan Cohn: Halbig and King Rulings: What They Mean for Obamacare: "According to the lawsuits, which are the brainchild of Michael Cannon from the Cato Institute and Jonathan Adler from Case Western University... Obamacare’s architects intended to use the subsidies as incentive for states to manage their own marketplaces.... As many experts (and I) have written before, the theory is inconsistent with the rest of the statute, the discussions of the law prior to passage, and what the people who wrote the statute say now. An amicus brief from the law's sponsors attests to the fact that they never intended to deny anybody subsidies just because states asked HHS to handle the work of regulating its insurance policies. Also among those who think the Cannon-Adler theory is nonsense is Liz Fowler... chief health care counsel on the Senate Finance Committee during the law's crafting probably understood congressional intent better than anybody.... That argument prevailed in two lower federal courts.... And it prevailed again on Tuesday, in the Fourth Circuit Court of Appeals, when a three-judge panel ruled unanimously that the subsides are ok. But a three-judge panel from the D.C. Circuit, also ruling on Tuesday, split along partisan lines. The two Republican appointees ruled in favor the lawsuits..."

Scott Lemieux: They Criticize What They Can't Understand: "To the extent that there’s an argument against reading the ACA to include subsidies on the federal exchanges, it has to be that while Congress intended the subsidies to be available on both, reading the literal language of an isolated provision it says that the subsidies are only available on state exchanges, so tough luck.  This is, to be clear, a terrible argument, but it’s the best one available.... [But] some conservatives are arguing that Congress actually intended for the federal exchanges not to include subsidies.... Ramesh Ponnuru.... 'If Obamacare had proven more popular... most states would have established exchanges. And if the law were put in place as written... the few holdouts would be under pressure to establish exchanges to get credits.... It’s wrong, then, to say that Congress obviously didn’t intend to include this restriction.' This argument is... amazing.... We also know that Congress anticipated that some states would not create their own exchanges... because the statute gave the federal government the power to create exchanges when states wouldn’t.... The actually existing Congress assumed that some states would not participate but wanted the exchanges available in all 50 states.... There’s a more fundamental problem with the arguments made.... The ACA was... written by public officials who wanted to substantially increase access to medical care. The central function of the subsidies wasn’t to create incentives for state governments; it was to ensure that the non-affluent uninsured who didn’t qualify for Medicaid could purchase insurance on the exchanges.... Conservatives trying to evaluate the goals of the ACA are like elephants trying to play a toy piano..."

James J. Heckman: Randomization and Social Policy Evaluation: "This paper considers the recent case for randomized social experimentation and contrasts it with older cases for social experimentation. The recent case eschews behavioral models, assumes that certain mean differences in outcomes are the parameters of interest to evaluators and assumes that randomization does not disrupt the social program being analyzed. Conditions under which program disruption effects are of no consequence are presented. Even in the absence of randomization bias, ideal experimental data cannot estimate median (other quantile) differences between treated and untreated persons without invoking supplementary statistical assumptions. The recent case for randomized experimentation does not address the choice of the appropriate stage in a multistage program at which randomization should be conducted. Evidence on randomization bias is presented..."

And:

Andrew Odlyzko: The early British railway system, the Casson counterfactual, and the effectiveness of central planning
Mike Konczal: Dr. Strangelove and the Halbig Decision
Richard Mayhew: Obamacare in an import-export regional economic modeling view
John Authers: Long-term returns boosted by illiquidity
Michael Tomasky: Conservatives Find Typo in Obamacare, Try to Kill People with It

And Over Here:

We Need a Better Berkeley: Live from La Farine CCXXIV: July 23, 2014 (Brad DeLong's Grasping Reality...)
I Which I Am Bitterly Disappointed by Tanvi Misra...: Wednesday What's on teh Internet? Blogging (Brad DeLong's Grasping Reality...)
Liveblogging World War I: July 23, 1914: The Austro-Hungarian Ultimatum to Serbia (Brad DeLong's Grasping Reality...)

Should Be Aware of:

Steve M.: If Your Argument Is "They'd Never Go That Far", You Still Don't Understand Republicans: "Maybe I'm overly pessimistic about Obamacare's fate, but Ezra Klein believes the Supreme Court simply wouldn't use the Halbig case to gut the law, and his argument strikes me as exceedingly naive.... 'The Court simply isn't going to rip insurance from tens of millions of people due to an uncharitable interpretation of congressional grammar. For five unelected, Republican-appointed judges to cause that much disruption and pain... would be a disaster for the institution....' But Republican governors, especially from the tea party class of 2010, have been harming large numbers of people quite openly... and, apart from Pennsylvania's Tom Corbett, they all have a shot at reelection. Voters who aren't specifically targeted by these governors sure don't seem to be displaying much empathy for those who are. A lot of the people harmed by a Supreme Court evisceration of Obamacare will be Democratic voters who wouldn't have voted GOP anyway.... Maybe the Court's Republicans are going to game this out and conclude that a ruling against the law will be too much for the GOP and conservative movement to handle. But I wouldn't bet the rent money on that."

Paul Krugman: Debt Disaster Dead-Enders: "I got some correspondence from people telling me to read Rob Portman’s op-ed in the WSJ, intended to refute the growing evidence that the budget deficit has been grossly overrated as an issue. And it is an interesting piece--it’s a very good illustration both of the desperate desire to see a debt crisis, and what happens when someone (Portman, or more likely the staffer who wrote it) tries to be a Very Serious Person without actually understanding the numbers or having followed any of the analysis.... The policy recommendations [are] written as if he knows nothing about the ongoing discussion of these issues over the past decade and more. Portman wants us to raise the Medicare and Social Security ages. But raising the Medicare age doesn’t save money, and the Social Security age is already on an upward track to 67--while life expectancy at age 65 has risen very little for the bottom half of workers.... For sure we need serious efforts to control health-care costs--which we seem to be getting in Medicare, but face relentless Republican demagoguery. Finally, whenever someone warns about the supposedly unsupportable costs of entitlements decades into the future, you should ask why, exactly, it’s urgent that we solve that conjectural future problem now--and why it has any bearing at all on current fiscal issues.... But the deficit scolds do love their looming disaster, and they love making tough proposals that someone always involve sacrifices by the little people."

Richard Mayhew: En Bancing on Halbig: "The two 'intellectual fathers”'of the anti-Obamacare lawsuits are Michael Cannon and Jonathan Adler.  Their major brief on the Halbig case contains a massive factual error that invalidates their argument.... Michael Cannon and Jonathan Adler did not withdraw their brief.... It is almost like Cannon and Adler are neo-feudalists who want to f--- the poor, the middle class and anyone else in this strand of the multiverse who is slightly less privileged than themselves.... NB Remember legal 'history' is not concerned with verifiable truth, rather it is concerned with creating a patina of 'truthiness' to win an argument."

Already-Noted Must-Reads:

James Hamilton: The Changing Face of World Oil Markets: "1. World oil demand is now driven by the emerging economies.... 2. Growth in production since 2005 has come from lower-quality hydrocarbons.... 3. Stagnating world production of crude oil meant significantly higher prices.... 4. Geopolitical disturbances held back growth in oil production.... 5. Geological limitations are another reason that world oil production stagnated.... More recently, the decline in U.S. production has turned around dramatically with the exploitation of tight oil formations.... Many analysts are optimistic that the trend of growing production from this resource will continue.... But even if this forecast proves accurate, it is abundantly clear that it would not return real oil prices to their values of a decade ago.... Rather than a force pushing oil prices back to historical lows, it seems more accurate to view the emerging tight-oil plays as a factor that can mitigate for a while what would otherwise be a tendency for prices to continue to rise in the face of growing demand from emerging economies and stagnant supplies from conventional sources..."

Sarah Kliff: Halbig says Congress meant to limit subsidies. Congress disagrees: "Did Congress intend for Obamacare's federal-run exchanges to distribute tax credits to millions of enrollees? Two circuit courts have spent a combined 116 pages opining on the issue.... For staffers who helped write Obamacare though, there isn't really a debate at all. The answer, for them, is crystal clear: they definitely meant to have subsidies available in all 50 states, regardless on who ran the marketplace. 'It was always intended that the federal fallback exchange would do everything that the statute told the states to do, which includes delivering the subsidies',"says Chris Condeluci, who worked as tax and benefits counsel for the Senate Finance Committee Republicans during the Affordable Care Act debate.... 'The evidence of Congressional intent here is overwhelming', John McDonough, who worked on the Health, Education, Labor and Pension committee during the health reform debate, wrote in an email. 'There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state, regardless of exchange status'..."

Mike Konczal: Dodd-Frank Reforms Are Finally Paying Off: "This past year has seen significant advances with at least four major wins. And crucially, the battles that still remain are coming clearly into focus. First, banks are now required by regulators to hold higher levels of capital.... Last fall, the Commodity Futures Trading Commission oversaw the launch of the exchanges for trading derivatives.... Part of the goal of this reform was to enforce price transparency.... Another win was the ruling on the Volcker Rule.... There will be a long implementation process as regulators make calls about what falls inside and outside of the rule, but the fact that it survived this process is important.... The FDIC this past year started to put serious meat on the process of how it would create a death panel for a failed large financial firm.... Conservatives should rejoice. I consistently hear about how Dodd-Frank is a 'corporatist' bill that protects firms by labeling them systemically important. And if being seen as systemically important and subject to Dodd-Frank rules was an implicit subsidy—-the 'biggest kiss', as Mitt Romney put it during the 2012 debates—then firms should be running toward the designation. The opposite of that happened in 2013....

 

"The Tea Party narrative [now] officially absolv[es]... Wall Street from any and all dubious activity or need for reform.... Jeb Hensarling... mocks the idea that 'an alchemy of Wall Street greed, outsized risk and massive Washington de-regulation almost blew up the planet'.... In recent years Republicans would at least reference the idea that some reforms were needed, even if they were minimal. That is no longer in play. [Peter] Suderman and other critics are wrong in arguing that there’s no logic behind Dodd-Frank. Dodd-Frank was to port the regulatory system of banks that had kept the economy working during the Golden mid-century period over to the capital markets that have exploded in the past 30 years. This process is slowly working..."

We Need a Better Berkeley: Live from La Farine CCXXIV: July 23, 2014

NIMBYism taken to extremes with astroturf "neighborhood associations":

April Gilbert: Berkeley restaurant has been approved: Let’s let it open: "I am a homeowner on Russell Street just below College...

and thus an Elmwood resident. A year ago, I heard that the owners of Comal on Shattuck Avenue were proposing a restaurant for the old Wright’s Garage space on Ashby and I was thrilled. It sounded like just the ticket to round out the dining options in our little neighborhood. Finally, we would have an upscale spot with a nice atmosphere and a small bar space--just what I felt had been missing. Then, I heard there was opposition from a group called the “Elmwood Neighborhood Association”(ENA)--strange given that I’d never heard of this organization despite living smack in the middle of Elmwood for eight years.... In all my years in Berkeley, I have never encountered this group. I have not gotten an email, a phone call, or a flyer in my mailbox. ENA is positioning itself as the voice of our neighborhood, which it is not. In contrast, I am quite familiar with CENA, the Claremont-Elmwood Neighborhood Association. CENA has not taken a stand on the proposed new restaurant on Ashby, but when it polled its members, the majority of its Elmwood resident members was enthusiastic about having a good restaurant open and supported the Comal owners’ efforts.

I Which I Am Bitterly Disappointed by Tanvi Misra...: Wednesday What's on teh Internet? Blogging

She writes:

Tanvi Misra: How Turbans Helped Some Blacks Go Incognito In The Jim Crow Era: "There's a weekly trial on the Internet...

...about who may be stealing culture from whom. Earlier this week, the defendants were Iggy Azalea and white gay men. A while back, it was Macklemore and the Harlem Shakers...

But after diligent searching for the website at which the records of these weekly trials are held, I am forced to conclude that she was just using a metaphor. There are not any real such trials--and that is a bitter disappointment to me...

Liveblogging World War I: July 23, 1914: The Austro-Hungarian Ultimatum to Serbia

The Austro-Hungarian Ultimatum to Serbia:

Vienna, July 22, 1914

Your Excellency will present the following note to the Royal Government on the afternoon of Thursday, July 23:

On the 31st of March, 1909, the Royal Serbian Minister at the Court of Vienna made, in the name of his Government, the following declaration to the Imperial and Royal Government:

Serbia recognizes that her rights were not affected by the state of affairs created in Bosnia, and states that she will accordingly accommodate herself to the decisions to be reached by the Powers in connection with Article 25 of the Treaty of Berlin. Serbia, in accepting the advice of the Great Powers, binds herself to desist from the attitude of protest and opposition which she has assumed with regard to the annexation since October last, and she furthermore binds herself to alter the tendency of her present policy toward Austria-Hungary, and to live on the footing of friendly and neighborly relations with the latter in the future.

Now the history of the past few years, and particularly the painful events of the 28th of June, have proved the existence of a subversive movement in Serbia, whose object it is to separate certain portions of its territory from the Austro-Hungarian Monarchy. This movement, which came into being under the very eyes of the Serbian Government, subsequently found expression outside of the territory of the Kingdom in acts of terrorism, in a number of attempts at assassination, and in murders.

Far from fulfilling the formal obligations contained in its declaration of the 31st of March, 1909, the Royal Serbian Government has done nothing to suppress this movement. It has tolerated the criminal activities of the various unions and associations directed against the Monarchy, the unchecked utterances of the press, the glorification of the authors of assassinations, the participation of officers and officials in subversive intrigues; it has tolerated an unhealthy propaganda in its public instruction; and it has tolerated, finally, every manifestation which could betray the people of Serbia into hatred of the Monarchy and contempt for its institutions.

This toleration of which the Royal Serbian Government was guilty, was still in evidence at that moment when the events of the twenty-eighth of June exhibited to the whole world the dreadful consequences of such tolerance.

It is clear from the statements and confessions of the criminal authors of the assassination of the twenty-eighth of June, that the murder at Sarajevo was conceived at Belgrade, that the murderers received the weapons and the bombs with which they were equipped from Serbian officers and officials who belonged to the Narodna Odbrana, and, finally, that the dispatch of the criminals and of their weapons to Bosnia was arranged and effected under the conduct of Serbian frontier authorities.

The results brought out by the inquiry no longer permit the Imperial and Royal Government to maintain the attitude of patient tolerance which it has observed for years toward those agitations which center at Belgrade and are spread thence into the territories of the Monarchy. Instead, these results impose upon the Imperial and Royal Government the obligation to put an end to those intrigues, which constitute a standing menace to the peace of the Monarchy.

In order to attain this end, the Imperial and Royal Government finds itself compelled to demand that the Serbian Government give official assurance that it will condemn the propaganda directed against Austria-Hungary, that is to say, the whole body of the efforts whose ultimate object it is to separate from the Monarchy territories that belong to it; and that it will obligate itself to suppress with all the means at its command this criminal and terroristic propaganda. In order to give these assurances a character of solemnity, the Royal Serbian Government will publish on the first page of its official organ of July 26/13, the following declaration:

The Royal Serbian Government condemns the propaganda directed against Austria-Hungary, that is to say, the whole body of the efforts whose ultimate object it is to separate from the Austro- Hungarian Monarchy territories that belong to it, and it most sincerely regrets the dreadful consequences of these criminal transactions.

The Royal Serbian Government regrets that Serbian officers and officials should have taken part in the above-mentioned propaganda and thus have endangered the friendly and neighborly relations, to the cultivation of which the Royal Government had most solemnly pledged itself by its declarations of March 31, 1909.

The Royal Government, which disapproves and repels every idea and every attempt to interfere in the destinies of the population of whatever portion of Austria-Hungary, regards it as its duty most expressly to call attention of the officers, officials, and the whole population of the kingdom to the fact that for the future it will proceed with the utmost rigor against any persons who shall become guilty of any such activities, activities to prevent and to suppress which, the Government will bend every effort.

This declaration shall be brought to the attention of the Royal army simultaneously by an order of the day from His Majesty the King, and by publication in the official organ of the army.

The Royal Serbian Government will furthermore pledge itself:

to suppress every publication which shall incite to hatred and contempt of the Monarchy, and the general tendency of which shall be directed against the territorial integrity of the latter;

to proceed at once to the dissolution of the Narodna Odbrana to confiscate all of its means of propaganda, and in the same manner to proceed against the other unions and associations in Serbia which occupy themselves with propaganda against Austria-Hungary; the Royal Government will take such measures as are necessary to make sure that the dissolved associations may not continue their activities under other names or in other forms;

to eliminate without delay from public instruction in Serbia, everything, whether connected with the teaching corps or with the methods of teaching, that serves or may serve to nourish the propaganda against Austria-Hungary;

to remove from the military and administrative service in general all officers and officials who have been guilty of carrying on the propaganda against Austria-Hungary, whose names the Imperial and Royal Government reserves the right to make known to the Royal Government when communicating the material evidence now in its possession;

to agree to the cooperation in Serbia of the organs of the Imperial and Royal Government in the suppression of the subversive movement directed against the integrity of the Monarchy;

to institute a judicial inquiry against every participant in the conspiracy of the twenty-eighth of June who may be found in Serbian territory; the organs of the Imperial and Royal Government delegated for this purpose will take part in the proceedings held for this purpose;

to undertake with all haste the arrest of Major Voislav Tankosic and of one Milan Ciganovitch, a Serbian official, who have been compromised by the results of the inquiry;

by efficient measures to prevent the participation of Serbian authorities in the smuggling of weapons and explosives across the frontier; to dismiss from the service and to punish severely those members of the Frontier Service at Schabats and Losnitza who assisted the authors of the crime of Sarajevo to cross the frontier;

to make explanations to the Imperial and Royal Government concerning the unjustifiable utterances of high Serbian functionaries in Serbia and abroad, who, without regard for their official position, have not hesitated to express themselves in a manner hostile toward Austria-Hungary since the assassination of the twenty-eighth of June;

to inform the Imperial and Royal Government without delay of the execution of the measures comprised in the foregoing points.
The Imperial and Royal Government awaits the reply of the Royal Government by Saturday, the twenty-fifth instant, at 6 p.m., at the latest.

A reminder of the results of the investigation about Sarajevo, to the extent they relate to the functionaries named in points 7 and 8 [above], is appended to this note.

Appendix: The crime investigation undertaken at court in Sarajevo against Gavrilo Princip and his comrades on account of the assassination committed on the 28th of June this year, along with the guilt of accomplices, has up until now led to the following conclusions:

The plan of murdering Archduke Franz Ferdinand during his stay in Sarajevo was concocted in Belgrade by Gavrilo Princip, Nedeljko Cabrinovic, a certain Milan Ciganovic, and Trifko Grabesch with the assistance of Major Voija Takosic.

The six bombs and four Browning pistols along with ammunition -- used as tools by the criminals -- were procured and given to Princip, Cabrinovic and Grabesch in Belgrade by a certain Milan Ciganovic and Major Voija Takosic.

The bombs are hand grenades originating from the weapons depot of the Serbian army in Kragujevatz.

To guarantee the success of the assassination, Ciganovic instructed Princip, Cabrinovic and Grabesch in the use of the grenades and gave lessons on shooting Browning pistols to Princip and Grabesch in a forest next to the shooting range at Topschider.

To make possible Princip, Cabrinovic und Grabesch's passage across the Bosnia-Herzegovina border and the smuggling of their weapons, an entire secretive transportation system was organized by Ciganovic. The entry of the criminals and their weapons into Bosnia and Herzegovina was carried out by the main border officials of Shabatz (Rade Popovic) and Losnitza as well as by the customs agent Budivoj Grbic of Losnitza, with the complicity of several others.

On the occasion of handing over this note, would Your Excellency please also add orally that -- in the event that no unconditionally positive answer of the Royal government might be received in the meantime -- after the course of the 48-hour deadline referred to in this note, as measured from the day and hour of your announcing it, you are commissioned to leave the I. and R. Embassy of Belgrade together with your personnel.

Noted for Your Afternoon Procrastination for July 22, 2014

Over at Equitable Growth--The Equitablog

Afternoon Must-Read: Bob Laszewski: Halbig Decision Puts Obamacare Back on the Menu | Washington Center for Equitable Growth
The 4th Circuit Bigfoots the Republican DC Panel's Attempt to Win the Day with Its Anti-ObamaCare Decision... | Washington Center for Equitable Growth
Investment in Equipment (and Software): What Are Neil Irwin and Tyler Cowen Thinking? Tuesday Focus: July 22, 2014 | Washington Center for Equitable Growth
Morning Really Must-Read: Nicholas Bagley: ObamaCare and Halbig: What Does This Morning's Decision Mean? | Washington Center for Equitable Growth
Morning Must-Read: Robert Waldmann: Anchored Perceived Inflation, or How Fox News Helped Obama | Washington Center for Equitable Growth
Morning Must-Read: Scott Lemieux: The Teleological Fallacy | Washington Center for Equitable Growth
Nick Bunker: The curious incidence of the corporate income tax | Washington Center for Equitable Growth

Plus:

Things to Read on the Afternoon of July 22, 2014 | Washington Center for Equitable Growth

On Twitter:

@shaneferro: Today is full of much-needed explainer journalism takedowns.
.@shaneferro I need an explainer to explain the various explainer journalism takedowns. Can U provide 1?
@shaneferro: @delong When you try to provide nuanced statistical analysis quickly and cheaply for a mass audience often it comes out pretty sloppy.
.@shaneferro & so it’s better to report one probably-unrepresentative anecdotal case that you can (sometimes) thickly-describe?
@shaneferro: @delong No, and the argument isn't that explainer or data journalism is bad, just that a lot of the posts from the new sites have been bad
@shaneferro: @delong Tl;dr the new sites overpromised and underdelivered, which I largely agree with.
@shaneferro: @delong But the solution isn't going back to the old model. The new sites just need to get better.
@BenDWalsh: @shaneferro @delong Also: "all you need to know" is a reductionist cliche , but the information contained in said posts can be informative

 

Edpilkington: Top US judge calls for return of firing squad - no really!
.@Edpilkington @moorehn Is the firing-squad federal judge also the nude-women-painted-to-look-like-cows judge?‏
@moorehn: @delong @Edpilkington if only. history is never that kind to us
@TeamAir:** @delong Yes. Was in my law school class.

 

@dmarron: Are there any ACA opponents who disagree with Halbig ruling? ACA proponents who agree? Policy views need not = legal views.
.@dmarron I think John Roberts is an ACA opponent who disagrees with the Halbig ruling…

Should-Reads:

Nicholas Bagley: The government may have lost in D.C., but it just won in the Fourth Circuit: "Just hours after the D.C. Circuit invalidated an IRS rule extending tax credits to federally established exchanges, the Fourth Circuit issued an opinion upholding the very same rule.... In the Fourth Circuit’s view, the relevant ACA language—the language that pins the calculation of tax credits to the cost of a plan purchased on an exchange that was 'established by the State under 1311'--is 'ambiguous and subject to multiple interpretations'.... The context... cuts against the challengers’ interpretation.... In the court’s view, 'it makes sense to read § 1321(c)’s directive that HHS establish "such Exchange" to mean that the federal government acts on behalf of the state when it establishes its own Exchange'.... At the end of the day, the court said that it could not definitively 'discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated exchanges'. As such, the court reasoned, under basic principles of Chevron deference, the IRS’s interpretation of the ambiguous statute was owed deference. That’s especially so, the court reasoned, since 'the plaintiffs do not dispute that the premium tax credits are an essential component of the Act’s viability'..."

Mary Daly and Bart Hobijn: Downward Nominal Wage Rigidities Bend the Phillips Curve: "Both the slope and curvature of the Phillips curve depend on the level of inflation and the extent of downward nominal wage rigidities.... Downward nominal wage rigidities likely have played a role in shaping the dynamics of unemployment and wage growth during the last three recessions and subsequent recoveries."

Brianna Cardiff-Hicks et al.: Do Large Modern Retailers Pay Premium Wages?: "With malls, franchise strips and big-box retailers increasingly dotting the landscape, there is concern that middle-class jobs in manufacturing in the U.S. are being replaced by minimum wage jobs in retail. Retail jobs have spread, while manufacturing jobs have shrunk in number. In this paper, we characterize the wages that have accompanied the growth in retail. We show that wage rates in the retail sector rise markedly with firm size and with establishment size. These increases are halved when we control for worker fixed effects, suggesting that there is sorting of better workers into larger firms. Also, higher ability workers get promoted to the position of manager, which is associated with higher pay. We conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores..."

Josh Barro: Not Everyone Is Addicted to Inflation: "The fight over monetary policy is rather similar to the fight over Common Core curriculum standards. These reforms, born out of a years-long bipartisan consensus process and supported by policy wonks on both sides of the aisle, have become the latest object of conservative opposition now that President Obama is taking credit for them. The obvious move for a Republican politician wishing to please the conservative base is to oppose Common Core.... Bobby Jindal... who listed Common Core as a plank of his education reform agenda in 2012, is now an ardent foe. Yet withdrawing from Common Core has proved surprisingly hard, even in places where Republicans control all branches of government.... Look at Wisconsin. Gov. Scott Walker has decided he wants out of Common Core. But Common Core opponents have run into a roadblock in the form of the Republican chairmen.... It’s one thing to oppose Common Core when your career is not steeped in education policy; it’s another thing to throw away years of work toward a policy you’ve long thought was good. On inflation, as on curriculum, the conservatives who matter most have been generally able to resist the demands of their base."

Ryan Sweet and Adam Ozimek: The U.S. Labor Market's Chicken-Egg Dilemma: "Policymakers can approach the situation in several ways. One would be to assume that labor force participation will not respond to wage growth... and unless the Fed raises rates soon inflation will accelerate. Second, they can assume the labor force will respond... and simply wait for that to happen, holding to the current course of near-zero interest rates.... A third approach would focus on productivity growth, which could remain suppressed by underinvestment over the next couple of years. This would hurt wages and thus keep many out of the labor force longer. Since higher interest rates would likely undermine investment, the Fed should be patient. One advantage of the wait-and-see approach is that will at least allow economists and policymakers to see which story is correct.... In contrast, acting now by raising rates will leave the answer unknown to the structural-versus-cyclical question..."

And Over Here:

The 4th Circuit Bigfoots the Republican DC Panel's Attempt to Win the Day with Its Anti-ObamaCare Decision... (Brad DeLong's Grasping Reality...)
Liveblogging World War II: July 22, 1944: Bretton Woods (Brad DeLong's Grasping Reality...)
Over at Equitable Growth: Investment in Equipment (and Software): What Are Neil Irwin and Tyler Cowen Thinking? Tuesday Focus: July 22, 2014 (Brad DeLong's Grasping Reality...)
Morning Really Must-Read: Nicholas Bagley: ObamaCare and Halbig: What Does This Morning's Decision Mean? (Brad DeLong's Grasping Reality...)
The New Yorker Has a New Website! (Brad DeLong's Grasping Reality...)
California's Uninsured Cut in Half Under Obamacare: Live from La Farine CCXXIII: July 22, 2014 (Brad DeLong's Grasping Reality...)
Reading Francis Parkman's "Montcalm and Wolfe": Tuesday Books You Should Read Blogging (Brad DeLong's Grasping Reality...)

Should Be Aware of:

Fabius Maximus: Tom Clancy, manufacturer of myths that kept us happy & ignorant
Seth Borenstein: World Breaks Monthly Heat Record 2 Times in a Row

And:

Charles Stross: App Store Annoyances: "For most mobile apps I use iOS.... Walled gardens may be prisons, but the bigger they are the less you notice the walls: also... the best iOS apps are pretty, and if I'm going to be interacting with a device from dawn 'til dusk I do not want it to offend my eyes every time I look at it.... But now for my main gripe.... The App Store has usability flaws that are becoming crippling.... The iTunes app store offers virtually zero library management and curation tools.... My app library is slowly sinking under a pile of... Abandonware.... Take-overware.... Forced upgrade-ware.... Get-out-of-my-face-ware.... Excessively-updated-ware.... Over to you folks. What do you acutely feel the lack of in these curated app collections?"

Guido Matias Cortes et al.: The Micro and Macro of Disappearing Routine Jobs: A Flows Approach: "The U.S. labor market has become increasingly polarized since the 1980s, with the share of employment in middle-wage occupations shrinking over time. This job polarization process has been associated with the disappearance of per capita employment in occupations focused on routine tasks. We use matched individual-level data from the CPS to study labor market flows into and out of routine occupations and determine how this disappearance has played out at the “micro” and “macro” levels. At the macro level, we determine which changes in transition rates account for the disappearance of routine employment since the 1980s. We find that changes in three transition rate categories are of primary importance: (i) that from unemployment to employment in routine occupations, (ii) that from labor force non-participation to routine employment, and (iii) that from routine employment to non-participation. At the micro level, we study how these transition rates have changed since job polarization, and the extent to which these changes are accounted for by changes in demographic composition or changes in the behavior of individuals with particular demographic characteristics. We find that the preponderance of changes is due to the propensity of individuals to make such transitions, and relatively little due to demographics. Moreover, we find that changes in the transition propensities of the young are of primary importance in accounting for the fall in routine employment..."

Already-Noted Must-Reads:

Robert Waldmann: Anchored Perceived Inflation, or How Fox News Helped Obama: "A huge recession, sluggish recovery and gigantic persistent output gap.... Core PCE inflation... fell from sticking close to 2% to fluctuating in the range of 1% to 2%. The standard lowbrow backward-looking forecasting equation... completely failed.... There are two candidate explanations for this surprising behavior of inflation. One is that there is strong downward nominal rigidity.... Another quite different explanation is that expected future inflation has a very important role in wage and price setting and that inflation expectations are anchored.... The median respondent in the Michigan University/IPSOS Reuters survey persistently expected future inflation of almost exactly 3% in almost all surveys since mid 2009... in period after period a majority of survey participants have been surprised by actual inflation lower than their forecast. This is a new phenomenon.... [Perhaps,] like inflation expectations, inflation perceptions have delinked from reality.... I give the credit to Fox news.... People... [who] rely on Fox News... are out of touch with reality--their expectations and perceptions are what Roger Ailes wants them to be.... Fox News convinces people that inflation has been and will be high.... [Thus] actual inflation is low but positive. It fits the facts which I reported. You decide."

Scott Lemieux: The Teleological Fallacy: "A good point about... Thomas Frank... [by] fearless navigator of our new comment system JeremyW.... '[W]hat strikes me... is that... rather than a system where actual progressive change is difficult to win support for and subject to several veto points, he seems to think we have one where radical changes are constantly on the cusp of occurring and the whole neoliberal enterprise must be held together by a dastardly sellout president who can subvert the will of the people.'

"The most crucial underlying premise of Frank’s argument is that the American political economy was on the verge of a radical transformation in 2008, and this was prevented from happening because Barack Obama saved neoliberalism’s bacon. This is a rather problematic for his argument given its transparent falsity. It’s simply not true that most Americans drew the same conclusions from the financial meltdown that Frank did, and even they did the elites who control or strongly influence many key veto points in the American system certainly didn’t.... Similar premises are also generally seen on attacks on the ACA from the left. To argue that the ACA isn’t better than the status quo ante from a progressive standpoint would be ridiculous, so the strategy is to change the baseline and compare the ACA to another alternative. In policy terms, this isn’t challenging, since you could throw a dart and Western Europe and get a health care system preferable to the ACA. But it’s also completely irrelevant...

"Left ACA critics smart enough not to argue that Barack Obama could have forced the Senate to pass single payer through such brilliant strategery as promising senators that he would campaign for them in states where he’s enormously unpopular turn to assertions that the American insurance industry was on the verge of collapse before Barack Obama saved it... sheer lunacy.... To people who confuse American politics with the Oxford debating society, the success of Medicare should make Medicare for all highly popular. In reality, the overwhelmingly conservative white beneficiaries of Medicare are much more likely to take the lesson of 'I’ve got mine and to hell with you'.... What’s going on with Republican statehouses and the Medicaid expansion should draw a line under that. The typical Republican state politician is willing to turn down huge pots of free money from the federal government to validate the principle that if the working poor get sick it should be left to the Great Market in the Sky to sort things out. To believe in this context that the collapse of the private American health insurance industry was inevitable absent the ACA is to enter a land of fantasia."

Nicholas Bagley: ObamaCare and Halbig: What Does This Morning's Decision Mean?: "In a major setback for the Affordable Care Act the D.C. Circuit just released a fractured opinion invalidating the IRS’s rule extending tax credits to federally facilitated exchanges.... About two-thirds of the states... declined to establish exchanges. In those states, the federal government stepped in and established the exchanges on the states’ behalf. In today’s opinion, the D.C. Circuit held that a federally facilitated exchange isn’t “established by the State under 1311.” As a result, the IRS can’t offer tax credits to those who purchase plans on such exchanges... the average estimated tax credit in 2014 is $4,700..."

Bob Laszewski: Halbig Decision Puts Obamacare Back on the Front Burner and Will Give Republicans a Huge Political Headache: "In the DC Court ruling one of the majority judges said: 'The fact is that the legislative record provides little indication one way or the other of the Congressional intent, but the statutory text does. Section 36B plainly makes subsidies only available only on Exchanges established by states.'... This issue never came up.... About everyone also believed some states would not establish their own exchanges. Smaller states, for example, might opt out because they just didn't have the scale needed to make the program work. I don't recall a single member of Congress, Republican or Democrat, who believed that if this happened those states would lose their subsidies. At worst, this is clearly a drafting error that in the old days would have been quickly fixed in a technical corrections bill. But these aren't the old days.... No one risks losing their subsidies until this issue is finally decided....

"This would put Republicans in the federal exchange states in a heck of a political bind.... The political consequences for all of these people losing their subsidies and their coverage would immediately shift to the Republicans who control these state governments. Proponents of Halbig argue that the fault for people losing their coverage would be on the Obama administration because they have operated Obamacare in an illegal manner.... Millions of people would have their insurance yanked out from under them in what people will see as part of the ongoing partisan political wars being waged by people out of touch with life in the rest of the country. The fundamental problem the Halbig proponents have here is that common sense, whatever a court rules, tells people that denying subsidies in half the states was never the intent of the Congress--that this is all about political point scoring and stopping a law Republicans hate.... Obamacare's most partisan and ideologically opposed enemies scored a big victory today.... But below the surface lots of sensible Republicans must be sweating bullets."