J. Bradford DeLong's Blog, page 257

Fairly Recently: Must- and Should-Reads, and Writings... (January 1, 2019)

A Lazy New Year's Eve Morn on Twitter...: I had thought that my brilliant-but-at-times-highly-annoying coauthor @Econ_Marshall was making a more sophisticated point���that here in America "libertarianism" is a Frankenstein's monster that got its lightning-bolt juice from massive resistance to the Civil Rights Movement. Dismantling the New Deal and rolling back the social insurance state were not ideas that had much potential political-economy juice back in the 1950s and 1960s. But if the economic libertarian cause of dismantling the New Deal could be harnessed to the cause of white supremacy���if one of the key liberties that libertarians were fighting to defend was the liberty to discriminate against and oppress the Negroes... #publicsphere #economicsgonewrong #moralphilosophy #ontwitter

Note to Self: WTF?!?!: At a ten-percent pre-tax social return to investment, that would require a 1 trillion���a 5%-point of national income���permanent upward jump in the annual flow of investment into America. Given that it looks like Trump is raising the annual deficit by 400 billion, that would require a 1.4 trillion���a 75-point of national income���permanent upward jump in the sum of annual private savings plus the annual trade deficit. On what planet and on what definition of "reasonable" is it "reasonable" to argue that Trump's tax cuts are going produce such a thing?... #fiscalpolicy #economicsgonewrong #orangehairedbaboons #notetoself #wtf

Not Only No Wage But Minimal Investment Boosts from Trump-McConnell-Ryan...: Admittedly, making an argument that complex is far beyond the attention span of your standard NYT insider-access journalist. But do we really have any alternative other than to play our position and make the accurate and correct argument? Just saying "no wage growth" is met with parry "it will come in the long run" and being able to say "we told you so" a decade hence is of limited use in today's policy debate, no?... #publicfinance #equitablegrowth #orangehairedbaboons #economicsgonewrong #playingourposition #ontwitter

Would Small Minimum Wage Increases Raise or Have No Effect on Employment?: It is only a small minority of economists who follow David Neumark on this���who are confident that a higher minimum wage now would have a noticeable negative effect on employment. Thus Steve gets it wrong... #publicsphere #equitablegrowth #labormarket

J. Bradford De Long: America's Only Peacetime Inflation: The 1970s: "The 1970s were America's only peacetime inflation, as uncertainty about prices made every business decision a speculation on monetary policy. In magnitude, the total rise in the price level from the spurt in inflation to the five-to-ten percent per year range in the 1970s was as large as the jumps in prices from the major wars of this century. The truest cause of the 1970s inflation was the shadow of the Great Depression. The memory left by the Depression predisposed the left and center to think that any unemployment was too much, and eliminated any mandate the Federal Reserve might have had for controlling inflation by risking unemployment. The Federal Reserve gained, or regained, its mandate to control inflation at the risk of unemployment during the 1970s as discontent built over that decade's inflation. It is hard to see how the Federal Reserve could have acquired such a mandate without an unpleasant lesson like the inflation of the 1970s. Thus the memory of the Great Depression meant that the U.S. was highly likely to suffer an inflation like the 1970s in the post-World War II period �� maybe not as long, and maybe not in that particular decade, but nevertheless an inflation of recognizably the same genus... #monetarypolicy #macro #highlighted

Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Seattle: "An initial study said the increase to $15 would cost workers jobs and hours. That didn���t happen.... The increase was an 'economic death wish' that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks. The warnings were as unambiguous as they were specific... #minimumwage #labormarket #seattle #equitablegrowth

Patriarchy and DNA: We Know Little About the Origins of High Patriarchy and the Extinction of Most Y-Chromosome Lineages ca. 5000 Years Ago, But... #gender

Matthew Yglesias: Trump may be correct on Fed interest rate increases - Vox: "Premature interest rate increases hurt workers and the economy... #monetarypolicy

Dev Patel, Justin Sandefur and Arvind Subramanian: Everything You Know about Cross-Country Convergence Is (Now) Wrong: "A quarter-century after the empirical growth literature set out to explain why poor countries aren���t catching up with rich ones, cross-country regressions have mercifully gone out of fashion. But in the interim, the core facts have changed... #economicgrowth #convergence #divergence

Richard Thaler: The Power of Nudges, for Good and Bad: "All nudging should be transparent and never misleading.... It should be as easy as possible to opt out.... There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.... Government teams in Britain and the United States that have focused on nudging have followed these guidelines scrupulously. But the private sector is another matter. In this domain, I see much more troubling behavior... #behavioral #economics

Benjamin Page and William Gale: CBO estimates imply that TCJA will boost incomes for foreign investors but not for Americans: "CBO estimates that TCJA will increase U.S. GDP by 0.5 percent in 2028.... Most of that additional capital will be financed by foreigners... net payments of profits, dividends, and interest to foreigners also will rise... boost GNP by just 0.1 percent in 2028.... To maintain that larger capital stock a larger share of output must be devoted to offsetting depreciation.... Thus, long-run incomes for Americans as measured by NNP will be more or less unchanged by the TCJA... #publicfinance #orangehariedbaboons

Howard Shelanski and Michael Kades: Judge Kavanaugh-Would He Increase the Divide Between the Public and Judicial Debate Over Antitrust Enforcement?: "Over the past decade, the Supreme Court has, with one exception that we discuss below, followed a path of reduced enforcement, reflected in decisions weakening prohibitions against vertical restraints... #monopoly #equitablegrowth

Everybody in any way associated with National Review knows that ObamaCare must be repealed and replaced. Not a single person is qualified to say how; National Review: Obamacare Court Ruling���Republicans Can���t Rely on the Courts on Health Care: "Republican politicians have repeatedly counted on the courts to deliver them from Obamacare without their having to take any heat for abolishing its popular elements, to come up with workable alternatives, or to accommodate the interests of people who rely on the law while pleasing those who oppose it. O���Connor���s decision is giving them a new dodge: As it winds its way through the courts, they can continue telling the opponents of the law that victory is at hand, continue telling those who benefit from the law that they will protect them whatever happens, and���continue not working on health care. But the courts will almost certainly not, as they should not, deliver Republicans from their duties... #ObamaCare #orangehairedbaboons

Barbara Kiviat: The Art of Deciding with Data: Evidence From How Employers Translate Credit Reports into Hiring Decisions: "Half of US employers consider personal credit history when hiring.... They... reach beyond credit reports, both by inferring events that led to delinquent debt and by testing to see if candidates can offer morally redeeming accounts... #equitblegrowth

Jonathan Baker: Market Power or Just Scale Economies?: "Growing market power provides a better explanation for higher price-cost margins and rising concentration in many industries, declining economic dynamism, and other contemporary US trends, than the most plausible benign alternative: increased scale economies and temporary returns to the first firms to adopt new information technologies (IT) in competitive markets. The benign alternative has an initial plausibility.... Yet six of the nine reasons I gave for thinking market power is substantial and widening in the US in my testimony cannot be reconciled with the benign alternative.... None of the reasons is individually decisive: there are ways to question or push back against each. But their weaknesses are different, so, taken collectively, they paint a compelling picture of substantial and widening market power over the late 20th century and early 21st century... #monopoly

Paul Krugman (2013): Eco 348, The Great Recession #macro #teachingeconomics #greatrecession

If you missed Anne Case and Angus Deaton on "deaths of despair" when it came out at the start of this year, you need to go back and read it: Iris Marechal: The Opioid Crisis: A Consequence of U.S. Economic Decline?: "Anne Case and Angus Deaton at Princeton University attribute the sharp increase in drug overdoses between 1999 and 2015 to 'deaths of despair' rather than to the increased ease of obtaining opioids: That is, their research suggests that higher drug suicides are attributable to social and economic factors such as a prolonged economic decline in many parts of the United States. They show that white Americans are more affected by the opioid epidemic, yet less affected by economic downturns than other racial and ethnic groups in the country... #equitablegrowth

#noted

Howard Shelanski and Michael Kades: Judge Kavanaugh-Would...

Howard Shelanski and Michael Kades: Judge Kavanaugh-Would He Increase the Divide Between the Public and Judicial Debate Over Antitrust Enforcement?: "Over the past decade, the Supreme Court has, with one exception that we discuss below, followed a path of reduced enforcement, reflected in decisions weakening prohibitions against vertical restraints...

...(Leegin Creative Leather Products Inc. v. PSKS Inc.), limiting the role for antitrust in regulated industries (Credit Suisse Securities (USA) LLC v. Billing), and increasing burdens on plaintiffs challenging conduct by ���multisided platforms��� (Ohio v. American Express Co.). Senator Amy Klobuchar (D-MN) underscored this divergence when questioning Judge Brett Kavanaugh in his recent Supreme Court confirmation hearings about how he might further limit antitrust doctrine. Although antitrust issues are not a central issue in his confirmation, the evidence is strong that Judge Kavanaugh would cement a five-judge conservative majority that would likely raise, not lower, barriers to antitrust enforcement...

#noted #monopoly #equitablegrowth

Benjamin Page and William Gale: CBO estimates imply that ...

Benjamin Page and William Gale: CBO estimates imply that TCJA will boost incomes for foreign investors but not for Americans: "CBO estimates that TCJA will increase U.S. GDP by 0.5 percent in 2028.... Most of that additional capital will be financed by foreigners... net payments of profits, dividends, and interest to foreigners also will rise... boost GNP by just 0.1 percent in 2028.... To maintain that larger capital stock a larger share of output must be devoted to offsetting depreciation.... Thus, long-run incomes for Americans as measured by NNP will be more or less unchanged by the TCJA...

#noted #publicfinance #orangehariedbaboons

Richard Thaler: The Power of Nudges, for Good and Bad: "A...

Richard Thaler: The Power of Nudges, for Good and Bad: "All nudging should be transparent and never misleading.... It should be as easy as possible to opt out.... There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.... Government teams in Britain and the United States that have focused on nudging have followed these guidelines scrupulously. But the private sector is another matter. In this domain, I see much more troubling behavior...

...The Times of London... an offer to take out a one-month trial subscription for the price of just ��1.... I would have to provide credit card information and would be automatically enrolled as a subscriber when the trial period expired.... To cancel, I had to give 15 days��� notice.... I would have to call London, during British business hours, and not on a toll-free number.... As an absent-minded American professor, I figured there was a good chance I would end up subscribing for several months, and that reading the article would end up costing me at least ��100. I spoke to Chris Duncan, a spokesman for The Times of London. He said his company wanted readers to call before canceling to make sure that they appreciated the scope of the paper���s coverage, but when I pointed out the inconvenience this posed to readers outside Britain, he said that the company might rethink that aspect of the policy. In the meantime, that deal qualifies as a nudge that violates all three of my guiding principles: The offer was misleading, not transparent; opting out was cumbersome; and the entire package did not seem to be in the best interest of a potential subscriber, as opposed to the publisher...

#noted #behavioral #economics

A Lazy New Year's Eve Morn on Twitter...

Brad DeLong: Gee, I Have Argued Myself From Half-Agreeing With @EconMarshall To 90% Agreeing With Him, Haven���t I?_:

Suresh Naidu: Sorry that came out wrong, deleted. Straightforward: a substantial amount of economic power and inefficiency is not eliminated by deconcentration/free entry. Not clear, lots of problems are made worse by free entry/competition. Low margins mean harder to unionize. Innovation is done by big firms. On simple efficiency grounds things can get worse in market with advantageous selection (eg loans) or with any negative ext. It depends!

Mike Konczal: If we are worried about margins being too low, boy do I have exciting news for you:

Sure, but between that, Tobin's Q, "profit share", consistent rate of return under declining real rates, and the break of investment and profitability, something is broken. One can contest any of the individual methods, but together they paint a clear picture.

Suresh Naidu: The " always more competition" fix implies we want to expand output but it is not clear we do in every market (eg airline monopoly might be 10th best emissions regulation).

(((E. Glen Weyl))): 10th best reasoning is fine for policy technocrats, but I think a pretty poor basis for thinking about imaginaries for broad social change and democratic movement building. Imaginaries that move us beyond monopolistic corporate forms, but using market mechanisms, seem promising. I am talking about building coalitions and democratic discourse rather than just being technocratic experts.

Do you really think "allow monopolies to control the tobacco industry because it is a very mediocre way given our extremely imperfect and complex world to nonetheless somewhat control cigarette addiction" is useful way to be in discourse with a broad democratic public?

It seems to me that this sort of descent into endless technocratic 100th best calculation is precise the sort of bandage upon bandage reasoning with angels dancing on the heads of pins that people like @snaidunl usually decry as the worst sort of utilitarianism

Suresh Naidu: Right but my point was why antimonopoly politics, focusing on exercise of pricing power/market structure, are bad relative to more comprehensive criticisms of capitalist power and democratic remedies.

Marshall Steinbaum: Say what you will about antimonopolist politics, it most definitely was a "comprehensive criticism of capitalist power." That's exactly what it was���a fight for control over the process of economic production. Which the antimonopolists lost, for good reason (namely, they refused in the end to interpose state power against the power of capitalists).

(((E. Glen Weyl))): Anti-monopoly also uses the rhetoric of the free market to undermine capitalist power, which is often a far more effective strategy for building coalitions...how many libertarians have you won over, @snaidunl, with @DemSocialists?

Ilyana Kuziemko: Libertarians are incredibly rare outside of economics departments. I can imagine them as convenient anti-Trump allies, but given their views and their tiny numbers, is winning them over a high-return activity for a social movement?

Suresh Naidu: Right and too hard to distinguish real lovers of real freedom from reactionaries who like drugs

Ilyana Kuziemko: I mean, sure, intellectually it might be fun to try to convince libertarians (i feel like that's what I do on Twitter w most of my econ colleagues). But if you are serious about a social movement and have limited time/resources, it seems low on any to-do list.

(((E. Glen Weyl))): Frankly I could not disagree more. Most efficacious social movements are not 100% bottom up; they involve changing the ideas of elites in concert with building coalitions from below. And a very large chunk of elites build a lot of their identity around libertarian ideas.

Alice Evans: Just intervening on this one specific point, I wonder if that���s true..? I think most social movements succeed not by changing elite beliefs about what���s right/ wrong , but when by strengthening sympathetic but despondent people���s collective efficacy that change is possible?

(((E. Glen Weyl))): I didn't say most, I just said many. I think the examples I offered are good ones. Most "poor people's movements" were quite different, but also had important interactions with elite movements.

Alice Evans: Oh for sure. For example, the PT in Brazil secured broad support so long as it was a win-win coalition, benefitting everyone, and thus was contingent upon continued growth. I was just cautioning against optimism about converting others. And instead pointing to the importance of building collective efficacy. Raising hopes that change is possible.

(((E. Glen Weyl))): My project is not one so much of "converting others" as building coalitions that speak in many languages, both the language of social democracy and the language of liberty which, btw, used to be the same thing.

Ilyana Kuziemko: Maybe it���s a gendered thing but the whole ����freedom�� discourse just falls flat with me, personally. Some socialists have made the argument that ���socialism is freedom��� and I get it, and it���s clever to expropriate a right-wing word, but I don���t think it will move many people.

(((E. Glen Weyl))): I don't think it is a particularly gendered thing. Two of the people that self-identify or recently stopped self-identifying as libertarian who are both most prominent in the @RadxChange movement and who I most admire are both women, @devonzuegel and @rivatez.

(((E. Glen Weyl))): Literally all I was trying to argue is that willfully alienating and equating the deepest beliefs large sections of the elite with white supremacy is not a good strategy to help social democracy flourish.

Marshall Steinbaum: You might have noticed that I don't particularly care about "winning over" libertarians given their longstanding intellectual commitments, but ymmv

(((E. Glen Weyl))): I think that is wildly unfair, divisive and bigoted. There are enormous numbers of open-minded good people who self-identify as libertarians; I was once one of them. Writing them all off using guilt by association is no better than equating Islam with terrorism. I like a lot of Marshall's work, but it is this kind of attitude that I think is responsible for so much of the self-defeating nature of today's left. @rivatez @VitalikButerin

Marshall Steinbaum: If it is self-defeating to refuse to ally with white supremacy, then fine. Personally, I am moved by the contemporary criticism of the New Deal, which provided social democracy for white people & which white people burned to the ground rather than permit black people's inclusion.

(((E. Glen Weyl))): Are you equating libertarianism with white supremacy?

Marshall Steinbaum: I am indeed, with much in the historical record to back me up. For example: "the United States, with trivial exceptions, has never been a colonial country." ���Milton Friedman

(((E. Glen Weyl))): Not just vaguely associating, but literally equating? So @tylercowen,@ThomasSowell and @JeffFlake are literally a white supremacists just as much as @RichardBSpencer is?

Marshall Steinbaum: There are flavors, but they all serve one another's purposes and are part of the same political movement, yes.

(((E. Glen Weyl))): This is a good piece, written by people who are either libertarians or until recently self-identified as such. So how does this count as proof that self-identified libertarians are all white supremicists? https://t.co/tzsPzo2ekD

Swole Porter: ...did you actually read it? Because it���s a critique of the ways libertarians have long countenanced white supremacy as a primary motivation for many of their ideological fellow travelers.

(((E. Glen Weyl))): "Now, libertarian, individualist, and market-liberal ideas, concepts, slogans, and advocates aren���t alone in having a history that is entangled with white supremacy. Hardly any set of social ideas in American intellectual history lacks such an entanglement." The guy is a self-identified libertarian writing for a site that was designed for self-identified libertarians advocating for building a liberatarianism that is genuinely libertarian and non-racialized. That such people exist and can be our allies is precisely my point.

(((E. Glen Weyl)))(: Marshall is equating libertarianism with white supremacy. I think this is roughly equivalent to equating socialism with Stalinism, conservatism with Nazism or Islam with terrorism. This attitude of some of the left is unbelievably destructive and dangerous.
added,

Kim-Mai Cutler: Is there a theoretical world in which libertarianism /= white supremacy but the practical, real-world effect of libertarian policies over the last 40 yrs has been to extend white supremacy, given that different groups did not start out w/ equivalent resources & capital in the US?

Brad DeLong: I had thought that my brilliant-but-at-times-highly-annoying coauthor @Econ_Marshall was making a more sophisticated point���that here in America "libertarianism" is a Frankenstein's monster that got its lightning-bolt juice from massive resistance to the Civil Rights Movement. Dismantling the New Deal and rolling back the social insurance state were not ideas that had much potential political-economy juice back in the 1950s and 1960s. But if the economic libertarian cause of dismantling the New Deal could be harnessed to the cause of white supremacy���if one of the key liberties that libertarians were fighting to defend was the liberty to discriminate against and oppress the Negroes���than all of a sudden you could have a political movement that might get somewhere. And so James Buchanan and the other libertarians to the right of Milton Friedman made the freedom to discriminate���or perhaps the power to discriminate?���a key one of the liberties that they were fighting for in their fight against BIG GOVERNMENT. And this has poisoned American libertarianism ever since.

This���Marshall thinks, and I am more than half agree���is the right way to look at it.

For example, consider when Rand Paul Came out of the libertarian fever swamps to Washington https://www.google.com/amp/s/thehill.com/blogs/blog-briefing-room/news/161217-paul-says-he-would-have-opposed-civil-rights-act and began saying that he would have voted against the 1964 Civil Rights Act because it infringed On property holders��� rights to discriminate: ���This is the hard part about believing in freedom.... I'm sure you believe in the First Amendment so you understand that people can say bad things. It�����s the same way with other behaviors.... In a free society, we will tolerate boorish people, who have abhorrent behavior...���

No ���public accommodation��� category for him!

No argument that if you hold yourself out as a provider of goods or services in the public marketplace you must then not discriminate on the basis of race.

Of course, Rand Paul then quickly learned not to say what he thinks. He quickly learned that it is a loser in America today and say that your libertarianism Includes a strident commitment to the right to discriminate on the basis of race���that having a belief in FREEDOM understood as the freedom to discriminate on the basis of race beats be done privately and quietly rather than publicly and loudly. And so now Rand Paul only says it in private.

It is now 65 years since Murray Rothbard and his ilk began trying to harness the lightning bolt of white supremacy to animate the dead tissue of their Frankenstein���s monster of the anti-New Deal cause. Does it still matter? I think it does. I have heard a lot of people who call themselves "libertarians" say and sagely nod at others��� saying that utility derived from satisfying a taste for discrimination is a proper thing to include in a social welfare function���and they are often the same people who are outraged at counting utility from redistribution, envy, or theft.

Gee, I have argued myself from half-agreeing with @Econ_Marshall to 90% agreeing with him, haven���t I?

Marshall Steinbaum: It was inevitable.

Brad DeLong :-)

Oliver Beige: If you're trying to investigate the linkage between Rothbard and Peter Thiel, you should have a closer look at white flight suburbanization and how it shaped, among other things, Silicon Valley: https://techcrunch.com/2015/01/10/east-of-palo-altos-eden/

Kim-Mai Cutler: I wrote that...

[...]

(((E. Glen Weyl))) retweets: Ryan Lackey: Favorite 5 books that I read in 2018: The Bell Curve (Murray); Radical Markets (Posner); Eichmann in Jerusalem (Arendt); Influence (Cialdini); Principles (Dalio).

Brad DeLong: If you are trying to claim that white supremacy is not in inextricably intertwined with American libertarianism, it is really better not to retweet people who are excited by The Bell Curve and its strange sad fascination with genetic racial differences in IQ. This is what @Econ_Marshall means: you start out reading somebody, and then they have an unhealthy fascination with:

genetic racial differences in IQ, or
with how ���public accommodation��� doctrine is a grave and illegitimate overreach, or
know too much about the muzzle velocity of the Nazi armored battlewagon four.

I have found that if someone identified as a libertarian there was an unhealthy chance they would like to hang out with one of these groups.

Better, I think, in a benefit-cost sense, to confine you���re reading and interaction to people who say that they feel the strength of libertarian arguments but who accept the label only with many many asterisks...

#publicsphere #economicsgonewrong #moralphilosophy #ontwitter #highlighted


https://www.bradford-delong.com/2018/12/a-lazy-new-years-eve-morn-on-twitter.html

https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f080038834022ad3aae4d5200d/edit

WTF?!?! At a ten-percent pre-tax social return to investm...

WTF?!?! At a ten-percent pre-tax social return to investment, that would require a 1 trillion���a 5%-point of national income���permanent upward jump in the annual flow of investment into America. Given that it looks like Trump is raising the annual deficit by 400 billion, that would require a 1.4 trillion���a 75-point of national income���permanent upward jump in the sum of annual private savings plus the annual trade deficit. On what planet and on what definition of "reasonable" is it "reasonable" to argue that Trump's tax cuts are going produce such a thing? Greg Mankiw: The Bad Economics Behind Trump's Policies: "One might reasonably argue that Trump���s tax cuts will increase growth over the next decade by as much as half a percentage point per year...

#shouldread

Not Only No Wage But Minimal Investment Boosts from Trump-McConnell-Ryan...

The so brilliant as to be goddess-like Chye-Ching Huang gets this one, I think, wrong: In response to: Jared Bernstein: "For the [Trump-McConnell-Ryan tax] cuts to have more than near-term growth impacts, they���d have to boost biz investment a lot more than we���ve seen so far, though these are early days. Both WSJ and Slate show ���muted��� investment results..." She writes: Chye-Ching Huang: "My concern is the frame that "growth' is what we should be focused on. If what we care about is how workers are doing���and GOP lawmakers claimed the 2017 tax law would help workers���we should focus on the metric that directly shows how they're doing! If the claimed point of tax cuts for corporations was to raise wages, we should first and foremost look at real wage rates to assess the results...

But those economists shilling for Trump-McConnell-Ryan committed not just to wage increases, but to a particular mechanism for wage increases: (1) U.S. a small open economy -> (2) tax cuts produce a huge jump in investment -> (3) faster growth -> (4) factor shares revert -> (5) higher wages.

To see whether this argument makes sense we can���and should���look at this causal mechanism at every one of its five steps.

Simply focusing on (5) alone leaves vulnerability to the parry of "this is a long-run process". And & being able to say a decade hence that it did not work is of little use in the policy debate now. Better, I think, to say everything:

U.S not a small open economy
No sign of any jump in investment
Growth boost small and driven by Keynesian demand rather than by (nonexistent) supply-side investment jump
No sign of factor-share reversion
No sign of even short-term wage boost

Admittedly, making an argument that complex is far beyond the attention span of your standard NYT insider-access journalist. But do we really have any alternative other than to play our position and make the accurate and correct argument? Just saying "no wage growth" is met with parry "it will come in the long run" and being able to say "we told you so" a decade hence is of limited use in today's policy debate, no?

#shouldread #publicfinance #equitablegrowth #orangehairedbaboons #economicsgonewrong #playingourposition #highlighted #ontwitter


https://www.bradford-delong.com/2018/12/not-only-no-wage-but-minimal-investment-boosts-from-trump-mcconnell-ryan.html

https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f080038834022ad3aad364200d/edit

Would Small Minimum Wage Increases Raise or Have No Effect on Employment?

That is the current question���would (small) minimum wage increases have no effect on employment because labor-supply curves are steep, or would they boost employment by curbing employers with monopsony power from pushing both wages and employment below their competitive equilibirum values? Yet you would not know it from the very sharp and good-hearted ex-New York Times labor beat reporter Steven Greenhouse. What is he doing? He is, I think, reflexively saying "both sides!": Steven Greenhouse: "Some argue that it's foolish to support a higher minimum because it could reduce employment. But there's a huge debate among economists on this. One school���see David Neumark���finds that a higher minimum reduces employment. The other���see Arin Dube���finds little effect on employment...

Now this is simply wrong. The majority of economists believe that raising the minimum wage from its current level would significantly boost the incomes of the working poor and have little adverse effect on employment. A large minority of economists believe that raising the minimum wage would actually increase employment���that employers currently use their monopsony power to push wages and employment below their competitive equilibrium values, and that a higher minimum wage would reduce their ability to do this and so boost both. The majority and the large minority all, however, agree that there is uncertainty here. It is only a small minority of economists who follow David Neumark on this���who are confident that a higher minimum wage now would have a noticeable negative effect on employment. Thus Steve gets it wrong.

Why? I think it is because a career spent working at the New York Times has drilled into him the idea that he must be "fair", and "fairness" means (a) finding a position usually attributed to Democrats, (b) finding a position usually attributed to Republicans, and (c) presenting them both even-handedly, without affect or winky-winky as to which is most likely to be correct.

And this is a very unfair thing to do to your readers:

So I reacted, on Twitter: There's no debate on whether minimum wages at their current level are discouraging employment. They don't. The debate is over whether (a) there is a very small effect that we cannot statistically see that is vastly outweighed by wage gains to the working poor, or (b) higher minimum wages boost employment because they diminish the monopsony power of employers, who like to cut wages below the competitive equilibrium maximum-employment value when they can. People like David are stubbornly refusing to mark their beliefs to market. But that does not mean you should tell your readers that there are "both sides" here. Opinions of the shape of the earth do differ. But the round-earth and the flat-earth positions should not be set out as equally reasonable.

#shouldread #publicsphere #equitablegrowth #labormarket #minimumwage #highlighted


https://www.bradford-delong.com/2018/12/would-small-minimum-wage-increases-raise-or-have-no-effect-on-employment.html

https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f080038834022ad384ce7d200c/edit

Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Se...

Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Seattle: "An initial study said the increase to $15 would cost workers jobs and hours. That didn���t happen.... The increase was an 'economic death wish' that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks. The warnings were as unambiguous as they were specific...

...Alas, if only the critics has done their homework first, instead of using scare tactics. Much of the hand-wringing was based upon a deeply flawed University of Washington study... exclud[ing] large multistate businesses with more than one location... such as McDonald���s and other fast-food chains, or Wal-Mart and other major retailers.... There were two other glaring defects.... The first is that its findings contradicted the vast majority research on minimum wages.... Second, there potentially is a problem��with having a lead researcher���economist Jacob Vigdor, whose affiliations among others include the right-leaning Manhattan Institute���whose impartiality is open to question. I don���t wish to suggest people cannot have opinions, but researchers need to be open-minded....

We can���t emphasize enough just how wrong many of the initial analyses of the wage increase have been. Cognitive dissonance is a powerful force. If your ideology includes the belief that all government attempts at raising living standards are doomed, then of course you are going to be against mandated minimum wages. The problem occurs when these folks are confronted by facts that are at odds with their belief systems. The options are to either rethink your ideology or alternatively ignore the data. Most participants seem to have done the latter...

#shouldread #minimumwage #labormarket #seattle #equitablegrowth

Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Seattle

Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Seattle: "An initial study said the increase to $15 would cost workers jobs and hours. That didn���t happen.... The increase was an 'economic death wish' that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks. The warnings were as unambiguous as they were specific...

...Alas, if only the critics has done their homework first, instead of using scare tactics. Much of the hand-wringing was based upon a deeply flawed University of Washington study... exclud[ing] large multistate businesses with more than one location... such as McDonald���s and other fast-food chains, or Wal-Mart and other major retailers.... There were two other glaring defects.... The first is that its findings contradicted the vast majority research on minimum wages.... Second, there potentially is a problem��with having a lead researcher���economist Jacob Vigdor, whose affiliations among others include the right-leaning Manhattan Institute���whose impartiality is open to question. I don���t wish to suggest people cannot have opinions, but researchers need to be open-minded....

We can���t emphasize enough just how wrong many of the initial analyses of the wage increase have been. Cognitive dissonance is a powerful force. If your ideology includes the belief that all government attempts at raising living standards are doomed, then of course you are going to be against mandated minimum wages. The problem occurs when these folks are confronted by facts that are at odds with their belief systems. The options are to either rethink your ideology or alternatively ignore the data. Most participants seem to have done the latter...

#shouldread #minimumwage #labormarket #seattle #equitablegrowth