J. Bradford DeLong's Blog, page 267

Larry Mishel: Bonuses Are Up $0.02 Since the Gop Tax Cuts...

Larry Mishel: Bonuses Are Up $0.02 Since the Gop Tax Cuts Passed: "the GOP���s Tax Cuts and Jobs Act... tax cutters claimed that their bill would raise the wages of rank-and-file workers.... The Trump administration���s chair of the Council of Economic Advisers��argued in April��that we were already seeing the positive wage impact of the tax cuts: 'A flurry of corporate announcements provide further evidence of tax reform���s positive impact on wages. As of April 8, nearly 500 American employers have announced bonuses or pay increases, affecting more than 5.5 million American workers.'... New data allows us to examine nonproduction bonuses.... The $0.02 per hour (inflation-adjusted) bump in bonuses between December 2017 and September 2018 is very small.... The White House contention that corporate tax cut-inspired widespread provision of bonuses that led to greater paychecks through bonuses or wage increases for workers is not supported...

#shouldread

John Authers: "The Tax Cuts and Jobs Act has so far displ...

John Authers: "The Tax Cuts and Jobs Act has so far displayed none of the magical revenue-increasing properties that some of its supporters claimed for it...

#shouldread #orangehairedbaboons #fiscalpolicy

The Great American Tax Heist Turns One: Live at Project Syndicate

Time has passed: a year's worth of water under the bridge. But I have not become less angry at and disappointed with how the Republican economists behaved in what my Project Syndicate editors call the Great American Tax Heist of last December.

But I do need to offer a correction���I missed this in editing. There is daylight between Greg Mankiw and the others. It is not true that Greg Mankiw "claimed that the productivity gains stemming from the tax package would primarily boost wages". Rather, Mankiw claimed that in analyzing the proposed Trump tax cut the "relevant exercise... [was] an open economy... [in which] he capital stock adjusts so that the after-tax marginal product of capital equals the exogenously given world interest rate r" and thus that the productivity gains stemming from the tax package would primarily boost wages.

There is daylight in the distinction between "claimed" and "relevant exercise shows"...

I regret my error.

Live at Project Syndicate: The Great American Tax Heist Turns One: Last December, Republicans relied on the support of conservative economists who predicted that the party's corporate tax cuts would boost productivity and investment in the United States substantially. The forecasts were wrong, and the silence of those who made them suggests that they knew it all along....

Critics of the ���Tax Cuts and Jobs Act��� described it as a cynical handout for wealthy shareholders. But a substantial number of economists came out in support of it.... One prominent group, most of whom served in previous Republican administrations, predicted in The��Wall Street Journal that the tax cuts would boost long-run GDP by 3-4%, with an ���associated increase��� of about 0.4% ���in the annual rate of GDP growth��� over the next decade. And in an open letter to Congress, a coterie of over 100 economists asserted that ���the macroeconomic feedback generated by the [tax cuts]��� would be ���more than enough to compensate for the static revenue loss,��� implying that the bill would be deficit-neutral over time... Read MOAR at Project Syndicate

#shouldread #macro #economicgrowth #fiscalpolicy #highighted #orangehairedbaboons #moralrsponsibility

For the Weekend: Let's Have Another Cup Of Coffee (1932)

Irving Berlin and Waring's Pennsylvanians (1932): Let's Have Another Cup Of Coffee

Just around the corner,

There's a rainbow in the sky.

So let's have another cup of coffee

And let's have another piece o' pie!

Trouble's just a bubble,
And the clouds will soon roll by'
So let's have another cup of coffee
And let's have another piece o' pie!

Let a smile be your umbrella,

For it's just an April show'are.

Even John D. Rockefeller

Is looking for a silver lining.

Mister Herbert Hoover

Says that now's the time to buy.

So let's have another cup of coffee

And let's have another piece o' pie

#shouldread #fortheweekend #GreatDepression #HerbertHoover #music

I keep saying that Equitable Growth should cozy up to the...

I keep saying that Equitable Growth should cozy up to these people: they are our mirror image���and not in an evil-Mr.-Spock-with-a-beard way: Brink Lindsey, Will Wilkinson, Steven Teles, and Samuel Hammond: The Center Can Hold: Public Policy for an Age of Extremes: "We need both greater reliance on market competition and expanded, more robust, and better-crafted social insurance... government activism to enhance opportunity... less corrupt and more law-like governance... a new ideological lens: one that sees government and market not as either-or antagonists, but as necessary complements...

...Our approach to public policy begins with deep commitments to the basic liberal principles of a free and open society: individualism, understood as the belief that the ultimate standard for judging laws and policies is the dignity and welfare of actual, living, individual human beings; pluralism, or the recognition that there are many different conceptions of truth and the good life and that disagreement among reasonable people is therefore an inescapable fact of life; the rule of law; representative democracy; a competitive market economy; and a government that secures those collective goods that private efforts cannot supply well.... There is no substitute for ongoing empirical investigation and critical scrutiny....

Although we hold to high ideals, we do not believe there is any clear theoretical blueprint for realizing those ideals in practice. Many political philosophers, and most adherents of well-defined political ideologies, believe that an ideal vision of the best social, economic, and political system serves a useful and necessary orienting function. The idea that a vision of an ideal society can serve as a moral and strategic star to steer by is both intuitive and appealing, but it is wrong.... The greater the distance between an ideal vision of the best society and the historical examples that supply us with evidence about how social systems function, the more likely you are to be mistaken about how your ideal would work.... Counterfactual visions of the best society are more likely to lead us astray than to set us on the path of progress.

However, we aren���t therefore condemned to do without ideals. We proudly uphold the broadly liberal ideal of the free and open society, but we do so without being committed irrevocably to some specific conception of ideal freedom and openness, or a specific vision of the social system that best realizes it. This doesn���t mean we won���t be able to recognize���or fight���corruption, oppression, and exploitation when we see it. You don���t need a theory of the perfect shoe to feel where your shoe pinches, and you don���t need a theory of perfect justice to grasp the injustice of the boot on your neck. We can make real headway toward a better society by spotting and rectifying the most obvious and egregious injustices. We don���t need to know what awaits on the mountain���s summit as long as we can tell the difference between ���down��� and ���up.��� Emphasizing the minimization of cruelty and abuse, rather than relying on an orienting ideological lodestar, is how we combine moral idealism with a firm appreciation of the complexity of the social world and the limits of our knowledge....

We reject both market fundamentalism on the right and democratic fundamentalism on the left. In other words, we don���t believe that either a well-functioning market economy or a well-functioning representative democracy is self-creating, self- executing, or self-sustaining. Market fundamentalists are prone to arguing that all you need to get markets up and running is to get government out of the way���in other words, the less government, the better. Democratic fundamentalists make the mirror-image mistake, arguing that all you need to get democracy to work better is to grant government more powers���that is, to shift more and more decision-making from private actors to officials of a democratically elected government. We, by contrast, believe that the functioning of both markets and democracy depends on how they are structured: The right structures produce good results, while the wrong structures can cause disaster...

#shouldread #moralphilosophy

Note to Self: Feeling sad that Berkeley is not giving me ...

Note to Self: Feeling sad that Berkeley is not giving me access to: The Tocqueville Review: Vol 39, No 2: "Thinking with Raymond Aron and Stanley Hoffmann...

#shouldread #history #moralphilosophy #moralresponsibility

This is a strange article by Joe Stiglitz. The first sent...

This is a strange article by Joe Stiglitz. The first sentence is right. The second sentence is wrong: Joseph E. Stiglitz: The Myth of Secular Stagnation: "There are many lessons to be learned as we reflect on the 2008 crisis, but the most important is that the challenge was���and remains���political, not economic: there is nothing that inherently prevents our economy from being run in a way that ensures full employment and shared prosperity. Secular stagnation was just an excuse for flawed economic policies..." Larry Summers, I think, gets it 100% right here: Lawrence Summers: Setting the Record Straight on Secular Stagnation: "Echoing conservatives like John Taylor, the Nobel laureate economist Joseph Stiglitz recently suggested that the concept of secular stagnation was a fatalistic doctrine invented to provide an excuse for poor economic performance during the Obama years. This is simply not right...

...Secular stagnation... holds that..., the private economy may not find its way back to full employment��following a sharp contraction, which makes public policy essential. I think this is what Stiglitz believes, so I don���t understand his attacks.... Aecular��stagnation... [is] an argument... for policies to promote demand, especially through fiscal expansion.... I also highlighted the role of rising inequality in increasing saving and the role of structural changes toward the demassification of the economy in reducing demand....

Stiglitz condemns the Obama administration���s failure to implement a larger fiscal stimulus policy and suggests that this reflects a failure of economic understanding.... We on the Obama economic team... were told by those on the new president���s political team to generate as much validation as possible for a large stimulus.... We worked to encourage a variety of economists, including Stiglitz, to offer larger estimates.... Despite the incoming president���s popularity and an all-out political effort, the Recovery Act passed by the thinnest of margins, with doubts about its ultimate passage lingering until the last moment. I cannot see the basis for the argument that a substantially larger fiscal stimulus was feasible....

I have not seen a convincing causal argument linking the repeal of the Glass-Steagall Act and the financial crisis. The observation that most of the institutions involved���Bear Stearns, Lehman Brothers, Fannie Mae, the GSE Freddie Mac, AIG, WaMu, and Wachovia���were not covered by Glass-Steagall calls into question its centrality. Yes, Citi and Bank of America were centrally involved, but the activities that generated major losses were fully permissible under Glass-Steagall. And, in important respects, the repeal of Glass-Steagall actually enabled the resolution of the crisis, by permitting the merger of Bear and JPMorgan Chase and by allowing the US Federal Reserve to open its discount window for Morgan Stanley and Goldman when they otherwise could have been sources of systemic risk...

It is worth holding on to thee three points:

Repeal of Glass-Steagall ought to have significantly amplified financial risks. But it, apparently, did not...

The Obama economic policy team did catastrophically fail to understand the gravity of the situation. But the problem did not lie with Larry Summers or Christie Romer. The problem, rather, lay with Barack Obama���and Tim Geithner, Ben Bernanke, Peter Orszag, and company...

As long as we live in a g > r world, debt is not a drain but a profit center for the government...

Paul Krugman: On the Debt Non-Spirals: "Joe Stiglitz... one of our greatest living economists, seems to have misunderstood what secular stagnation means.... He accused Larry of inventing the doctrine to justify the Obama administration���s policy shortfalls. Urk. Secular stagnation means that situations like 2008-16, in which monetary policy alone can���t restore full employment, should be seen as highly likely and maybe the norm...

...It���s hardly an excuse for Obama-era failures. I spent 2009-10 screaming that the stimulus was inadequate, precisely because I didn���t expect the slump to be rapidly self-correcting; I based this lack of faith partly on the tendency of financial crises to have long shadows, but I also simultaneously and independently arrived at the same secular stagnation conclusions as Larry did. So can we just chalk this one up to communication problems, and let it go? And can we talk about more interesting implications of the economy���s apparent need for low real interest rates on average? One implication, which I and others have pushed, is that the underlying case for a 2 percent inflation target is all wrong....

Another implication, which I don���t think has gotten enough attention, is that there is even less reason than before to obsess over government debt.... Debt spiral[s] can only happen if the interest rate on the debt is higher than the economy���s growth rate. And this hasn���t been true for a while.... Debt doesn���t spiral. On the contrary, it tends to fall as a share of GDP unless the government runs large primary deficits. I���m not saying that we shouldn���t worry about debt at all, because there may be future contingencies when real interest rates rise and debt becomes an issue. But debt is way, way down on the list of things to worry about���absolutely trivial compared with, say, crumbling infrastructure, which should be fixed without worrying about paying as you go...

#shouldread

Simon Wren-Lewis: Helping the Left Behind: Its (Economic)...

Simon Wren-Lewis: Helping the Left Behind: Its (Economic) Geography, Stupid: "Martin Sandbu points us to a report from the Brookings Institution.... 'For much of the 20th century, market forces had reduced job, wage, investment, and business formation disparities between more- and less-developed regions. By closing the divides between regions, the economy ensured a welcome convergence among the nation���s communities.' But from the 1980s onwards, they argue that digital technologies increased the reward to talent-laden clusters of skills and firms...

...The big cities started growing faster than the small cities, and the small cities grew faster than the large towns etc. This trend has continued following the GFC, as this chart clearly illustrates...

#shouldread

The blockchain grifters have driven Nouriel Roubini into ...

The blockchain grifters have driven Nouriel Roubini into a state in which he is no longer his normal calm reasoned self: Nouriel Roubini*: The Big Blockchain Lie: "In cases where distributed-ledger technologies ��� so-called enterprise DLT ��� are actually being used, they have nothing to do with blockchain. They are private, centralized, and recorded on just a few controlled ledgers. They require permission for access...

...Which is granted to qualified individuals. And, perhaps most important, they are based on trusted authorities that have established their credibility over time. All of which is to say, these are ���blockchains��� in name only. It is telling that all ���decentralized��� blockchains end up being centralized, permissioned databases when they are actually put into use. As such, blockchain has not even improved upon the standard electronic spreadsheet, which was invented in 1979. No serious institution would ever allow its transactions to be verified by an anonymous cartel operating from the shadows of the world���s authoritarian kleptocracies. So it is no surprise that whenever ���blockchain��� has been piloted in a traditional setting, it has either been thrown in the trash bin or turned into a private permissioned database that is nothing more than an Excel spreadsheet or a database with a misleading name...

#shouldread

Jonathan Stearns: EU, Japan Clinch Record Trade Accord in...

Jonathan Stearns: EU, Japan Clinch Record Trade Accord in Shadow of Protectionism: "The European Parliament approved a draft free-trade agreement with Japan, removing the last political hurdle to the entry into force of Europe���s biggest market-opening accord. The European Union assembly���s green light on Wednesday paves the way for the pact to take provisional effect on Feb. 1. Already endorsed by EU governments and the Japanese parliament, the agreement will eliminate virtually all tariffs between the two partners, expand markets for services and public procurement, and bolster regulatory cooperation...

#shouldread