J. Bradford DeLong's Blog, page 170
June 5, 2019
Martin Wolf: The Looming 100-year US-China Conflict: "Chi...
Martin Wolf: The Looming 100-year US-China Conflict: "China���s ideology is not a threat to liberal democracy in the way the Soviet Union���s was. Rightwing demagogues are far more dangerous. An effort to halt China���s economic and technological rise is almost certain to fail. Worse, it will foment deep hostility in the Chinese people. In the long run, the demands of an increasingly prosperous and well-educated people for control over their lives might still win out. But that is far less likely if China���s natural rise is threatened.... Managing China���s rise must include co-operating closely with like-minded allies and treating China with respect.... The administration is simultaneously launching a conflict between the two powers, attacking its allies and destroying the institutions of the postwar US-led order... the wrong war, fought in the wrong way, on the wrong terrain...
#noted
Oya Aktas (2015): Intellectual History of the Minimum Wag...
Oya Aktas (2015): Intellectual History of the Minimum Wage and Overtime: " This debate dates back to the early 20th century, before the minimum wage even existed in the United States and when overtime pay was unheard of.... Rapid industrialization created the Gilded Age of American wealth, and people credited the free market with their increased prosperity. But along with increasing growth, industrialization also sharpened economic inequalities.... Debates over hour and wage limits focused on which groups required labor protections and the best mechanisms for protecting these groups. Labor regulations began in the 1890s as state-level maximum hour and minimum wage protections, which the U.S. Supreme Court repeatedly struck down. Federal standards were not created until four decades later, when president Franklin Delano Roosevelt and his Secretary of Labor, Frances Perkins, guided the Federal Labor Standards Act into law.... This issue brief details the arguments that shaped hour and wage limits in the early 20th century...
#noted
So far the paid leave proposals I have seen out of the Re...
So far the paid leave proposals I have seen out of the Republican side are not really "paid leave": they are "drain your 401(k) without a tax penalty" leave. But at least there is bipartisan acknowledgement that there is a problem, and there should be some congressional fix: Equitable Growth: On Twitter: "The @SenateFinance Committee has formed a bipartisan working group on #paidleave���a great chance to consider the evidence and establish a paid leave program that protects everyone. See our resources...
#noted
What to Do About China?: Live at Project Syndicate
Live at Project Syndicate: What to Do About China?: BERKELEY���In a recent issue of The New York Review of Books, the historian Adam Tooze��notes that, ���across the American political spectrum, if there is agreement on anything, it is on the need for a firmer line against China.��� He���s right: On this singular issue, the war hawks, liberal internationalists, and blame-somebody-else crowd all tend to agree. They have concluded that because the United States needs to protect its relative position on the world stage, China���s standing must be diminished.... But that is the wrong way to approach the challenge.... It is entirely foreseeable that America���s attempt to ���get tough��� with China could accelerate its own relative decline, effectively handing China the semi-hegemony it is already approaching.... So, what should the US do to shore up its position vis-��-vis China?... The US could start to become what it would have been if Al Gore had won the 2000 presidential election, if Hillary Clinton had defeated Trump, and if the Republican party had not abandoned its patriotism... Read MOAR at Project Syndicate
#projectsyndicate #highlighted #globalization #strategy #orangehairedbaboons #neofascism
June 4, 2019
A Year Ago on Equitable Growth: Twenty Must- and Should-Reads from the Week of May 31, 2018 for si...
Five Worthy on Equitable Growth:
From two years ago: a minimum wage meta-analysis: Arindrajit Dube and Ben Zipperer: Pooling multiple case studies using synthetic controls: An application to minimum wage policies | Equitable Growth
Worth reading from last October: Darrick Hamilton: Post-racial rhetoric, racial health disparities, and health disparity consequences of stigma, stress, and racism | Equitable Growth
Also worth reading from last October: Papers from our co-hosted antitrust symposium: Michael Kades: Unlocking Antitrust Enforcement: New Yale symposium examines proposals to make antitrust enforcement more effective | Equitable Growth
Nick Bunker gathers scattered threads and sets out the issues: Nick Bunnker: Puzzling over U.S. wage growth
As I say, this is exactly the kind of debate we should be hosting and encouraging: Jesse Rothstein: Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income: "Chetty et al. (2014b) show that children from low-income families achieve higher adult incomes... in some commuting zones (CZs) than in others...
Fifteen Worthy Not on Equitable Growth:
I am looking for somebody else to highlight who serves as a good aggregator. I am failing to find anybody currently posting links who I judge to be in Mark Thoma's class. So, once again, from the University of Oregon, Mark Thoma's Economists' View continues to be the single best link aggregator in economic policy and theoretical economics: read him, and the things he links to, and in addition read:
If you do not make the Roosevelt Institute one of your trusted information intermediaries, you are doing it wrong. Badly wrong.
Nils Gilman: "Radical individualism produces anomie. But is traditional-social-hierarchy-based (e.g. right-wing, repressive) communitarianism really what people prefer? People for centuries have been voting with their feet to escape such situations..."
I am confused here: Do we have an "eastern heartland" problem? Or do we have a "prime age male joblessness" problem? Those two problems would seem to me to call for different kinds of responses. Edward L. Glaeser, Lawrence H. Summers and Ben Austin: A Rescue Plan for a Jobs Crisis in the Heartland: "The Eastern Heartland['s]... relative G.D.P. would have been more than 50 percent higher had it grown at the rate of America���s Coastal statesThe earned-income tax credit has been effectively promoting employment for over 40 years, but its design makes it poorly suited to fighting the ocean of male joblessness..."
Arithmetically, the big increases in price inflation in the 1970s came from (i) the oil shocks of 1973 and 1979, and (ii) the productivity growth slowdown. Milton Friedman tried to claim that those were both the result of too-rapid money growth permitted by the Fed, but was never convincing. Yet the folk memory of the 1970s is that... the big increases in price inflation in the 1970s came from too-rapid money growth permitted by the Fed that pushed the unemployment rate well below the NAIRU. Simply not true. Go figure: Noah Smith: Don���t Raise Rates Just to Keep Wages in Check: "Policy makers and macroeconomic analysts should rethink the basic mental model that they use to evaluate the state of the economy.... Rising wages don���t seem to trigger a wage-price spiral... not at moderate levels of wage growth.... If those experts keep relying on the conventional wisdom imparted from the 1970s and 1980s, big mistakes could result..."
Scott Lemieux: The Stickiness of the Medicaid Expansion: "Good Democratic policy that provides important benefits to people may not benefit the Democratic Party, and in Arkansas it hasn���t at either the state or federal level. But the policies themselves tend to be sticky, and that���s important in itself! And while universal programs in some cases are more desirable on policy grounds, it���s simply not true that programs that predominantly help the non-affluent are never popular or robust..."
Authors Alliance: "Authors Alliance promotes authorship for the public good by supporting authors who write to be read. We embrace the unprecedented potential digital networks have for the creation and distribution of knowledge and culture. We represent the interests of authors who want to harness this potential to share their creations more broadly in order to serve the public good..."
Patrick Iber: How Neoliberalism Changed the World: "Neoliberalism often connotes a form of liberal politics that has embraced market-based solutions to social problems.... The [interwar Austrian] neoliberals sought, Slobodian writes, to 'encase' markets... a global system that sufficiently ordered the world so that capitalism would be safe from certain forms of political interference.... The things that neoliberalism has trouble seeing are, at the present, far more consequential: deep inequalities, accompanied by a sense of powerlessness, of being left behind by a global system that operates with no regard for the interests or voice of the majority..."
Ernie Tedeschi: Will Employment Keep Growing? Disabled Workers Offer a Clue: "A seemingly inexorable economic trend has changed direction in the past few years, as people who cited health reasons for not working are returning to the labor force..."
Karl Walentin and Andreas Westermark: Stabilising the real economy increases average output: "DeLong and Summers (1989)... argue that (demand) stabilisation policies can affect the mean level of output and unemployment...
Michael Tomasky: We Are Truly Living Through the Amateur Hour Presidency: "From the moment when Donald Trump surprised even his own staff by announcing a summit with North Korea, it was obvious, I mean achingly obvious, that the president had no idea what he was doing...
Noah Smith: The Rich Get the Most Out of College: "Tim Bartik... Brad Hershbein... the college earnings premium���the lifetime difference in earnings between those who get a bachelor���s degree and those who only finish high school���was substantial for people from all income backgrounds...
It seems to me more likely than not that the Federal Reserve's current fear of a high-pressure economy is based on a misreading of a historical experience now a generation and a half past: Neel Kashkari: The Fed should not move too quickly to raise rates: "The US recovery took place after the Federal Reserve undertook extraordinary monetary policies...
Paul Krugman attempts to summarize the state-of-play on the slack-and-wages puzzle: Paul Krugman: Opinion | Monopsony, Rigidity, and the Wage Puzzle: "The unemployment rate... suggest[s] an economy pretty much at full employment...
Adam Tooze: "Do you think Italian bond markets maybe had been dozing a bit? Its politics sure, but sovereign debt markets ARE political..."
#noted #weblogs #hoistedfromthearchives
Michael Gelman, Shachar Kariv, Matthew D. Shapiro, Dan Si...
Michael Gelman, Shachar Kariv, Matthew D. Shapiro, Dan Silverman: Rational Illiquidity and Excess Sensitivity: Theory and Evidence from Income Tax Withholding and Refunds: "There is a tight relationship between having low liquidity and a high marginal propensity to consume both in theoretical models and in econometric evidence about behavior. This paper analyzes the theory and behavior surrounding income tax withholding and refunds. It develops a model where rational cash management with asymmetric cost of increasing or decreasing liquidity endogenizes the relationship between illiquidity and excess sensitivity. The analysis accounts for the finding that households tend to spend tax refunds as if they were liquidity constrained despite the fact that they could increase liquidity by reducing withholding. The model���s predictions are supported by evidence from a large panel of individuals...
#noted
Interview: "NAFTA Is Just Not a Big Deal for the U.S.": Hoisted from the Archives from 2017
Joseph Ford Cotto: J. Bradford DeLong says "NAFTA is just not a big deal for the U.S.", explains why: "Support for Bernie Sanders and the Donald did not rise out of nowhere, after all.
In such turbulent waters as these, it is important to seek the guidance of a wise, seasoned captain. Insofar as the sea of dollars and cents is concerned, J. Bradford DeLong is just that fellow.
He is��"a professor of economics at UC Berkeley, a weblogger for the Washington Center for Equitable Growth http://equitablegrowth.org/blog, a research associate of the National Bureau of Economic Research, and former deputy assistant secretary of the U.S. Treasury in the Clinton administration .... He also writes the weblog Grasping Reality: http://bradford-delong.com," as DeLong's U.C.B. biography explains. Dr. DeLong recently spoke with me about many topics relative to our nation's economy. Some of our conversation is included below....
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...Joseph Ford Cotto: Prominent economists and politicians often say that free trade will benefit America in the long run. Many Americans disagree strongly. What is your take on this situation?
Dr. J. Bradford DeLong:��Well, typically and roughly, the average import we buy from other countries we get for 30% off���we use foreign currency that costs us $1.40 to purchase goods and services made abroad that would cost us $2.00 worth of time, energy, resources and cash to make at home. But there's more. Typically and roughly, we sell the typical export to foreigners for about 40% more than we would get if we had to find a market for it at home: it costs us $1.00 worth of time, energy, resources and cash to make stuff that we can sell to foreigners for $1.40 worth of foreign currency. Thus for the country as a whole our foreign trade sector���exports and imports���is a way to get $2.00 worth of value for $1.00 worth of work. That's a very good deal. Our foreign trade sector takes advantage of this good deal on a mammoth scale: in the fourth quarter of 2016 we were trading goods and services at a rate of $2.8 trillion a year���17.5% of national income. That means that in a typical year we sell exports that we could get $2 trillion for if we had to sell them here at home and get imports that would cost us $4 trillion. That makes us $2 trillion per year���$25,000 per family each year���richer and more prosperous.
That is a big deal.
Now you can complain that the benefits from international trade are inequitably distributed. And they are. But they are less inequitably distributed than what we produce here at home: serous worriers about economic equity do not start with foreign trade, only non-serious worriers do.��
If you ask me why many Americans "disagree strongly" that trade benefits America, my answer is that they have been successfully grifted by some of the many, many grifters we have at all levels of our society. Think of it: If international trade is bad���if we should be self-reliant at the national level���then the same argument applies at the state level. If interstate trade is bad������if we should be self-reliant at the state level���then the same argument applies at the municipality level. If inter-municipality trade is bad���if we should be self-reliant at the municipality level���then the same argument applies at the neighborhood level. And so we get all the way down to the basic bedrock of human society: the hamlet or band community of less than 100, say 75. How much could any 75 of us produce as a group if we couldn't trade with outsiders? About $1,000 a year per worker. A United States that tried to be self-sufficient at the hamlet or band level would be lucky to have a national income of $160 billion, one hundredth of the $16 trillion we have.��
Now we certainly can manage our international trade account badly���the Reagan administration, in particular, was especially disastrous. But Americans who "disagree strongly" that trade has benefits ��have been misled. Perhaps "free" in your question is supposed to serve as a weasel-word escape hatch?
Cotto: Libertarian economic theorists tend to believe that trade deficits are of minimal importance. Do these deficits really have a great impact on America's economy?
DeLong: If the president and congress are not doing their job through fiscal policy���regulating government spending and taxing���and the Federal Reserve is not doing its job through monetary policy���regulating the supply and price of liquid purchasing power���in order to maintain full employment, then, yes, a trade deficit can make matters much worse.
Given that President Obama was much too cautious in 2009-10 when he had congressional majorities, that congressional majorities over 2011-2016 were focused mostly not on keeping America great but on making Obama look like a failure, that Fed Chair Bernanke was much too cautious over 2008-2014, and that Fed Chair Yellen has been somewhat too cautious since, yes, the trade deficits have made our problems significantly worse.
But before 2009 and going forward into the future in which the unemployment rate is���we hope���6% or below, the trade deficit was not and will not be among the five biggest errors of economic management the U.S. government was and will be making.
Cotto: Since it went into effect during late 1995, the North American Free Trade Agreement has formed a trilateral commerce bloc between Canada, the United States, and Mexico. From your research, has this proven to be of benefit to our country?��
DeLong:��NAFTA is just not a big deal for the U.S. We import $100 billion of goods and services a year from Mexico���that's $1,250 per family per year. If NAFTA had never been negotiated, we would, roughly and approximately, be importing about $75 billion of goods and services from Mexico���$940 per family per year. Since we get a good deal on the stuff we buy from Mexico, shrinking that down would make use poorer, but only by about $100 per family per year. If we did not have NAFTA, we would have about 400,000 fewer people working in���for the most part good, high-paying���manufacturing at jobs that sell goods to Mexico, and we would have about 600,000 more people working in���for the most part bad, low-paying���manufacturing at jobs making things that we buy from Mexico because of NAFTA.
If you want to say that NAFTA is not a benefit to America, you have to believe that (a) getting an extra 600,000 mostly bad, low-paying manufacturing jobs is worth (b) losing 400,000 mostly good, high-paying manufacturing jobs plus (c) lowering the annual income of the typical family by $100 per year���that's total income losses of $80 billion a year. For the country as a whole to pay more than $400,000 a year to increase the number of bad, low-paying manufacturing jobs... that looks like a very bad deal to me...
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#hoistedfromthearchives #freetrade #economicgrowth #politicaleconomy #orangehairedbaboons #neofascists #globalization #highlighted
Judea Pearl and Dana Mackenzie: On the Meaning of the Mon...
Judea Pearl and Dana Mackenzie: On the Meaning of the Monty Hall Problem: "Even today, many people seeing the puzzle for the first time find the result hard to believe. Why? What intuitive nerve is jangled?... Causeless correlation violates our common sense. Thus, the Monty Hall paradox is just like an optical illusion or a magic trick: it uses our own cognitive machinery to deceive us.... on the Meaning of the Monty Hall problem.... Our brains are not wired to do probability problems, but they are wired to do causal problems. And this causal wiring produces systematic probabilistic mistakes, like optical illusions. Because there is no causal connection between My Door and Location of Car... we find it utterly incomprehensible that there is a probabilistic association... [because] our brains are not prepared to accept causeless correlations, and we need special training���through examples like the Monty Hall paradox or the ones discussed in Chapter 3���to identify situations where they can arise...
#noted
Moreover, who says that workers are paid anything like th...
Moreover, who says that workers are paid anything like their marginal products? Luck and market power seem to me to be much more important than anything that could be called net social value of the work. As I often say, a skilled worker is an unskilled worker with a strong union:
Paul Campos: Talent Is Not Scarce: "Existing social hierarchies, and especially the compensation structures that undergird them, require the constant denial of the fact that almost everyone is easily replaceable at any time.�� After all, if there are 500 people standing at the ready who could do just as good or better a job than Chairman Smith or President Jones or Senior Executive Vice President for West Coast Promotion Johnson or Distinguished Professor of the Newly Endowed Chair for the Worship of Capitalism Cowan, then why do these people get treated and most of all paid as if they were as unique as unicorns, as precious as Vermeer portraits, as irreplaceable as Billy Shakespeare or Willie Mays? Because if we didn���t treat them (us) in that way, that would mean the entire structure of our society is radically unjust, root and branch.�� And that can���t be true, obviously...
#noted
Note to Self: Lecture: African Retardation https://www.ic...
Note to Self: Lecture: African Retardation https://www.icloud.com/keynote/0O8TxLOzM1gvGwSZYkWBV97rw
#notetoself #berkeley #teaching #teachingeconomics #teachinghistory #economichistory #teachinggrowth
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