J. Bradford DeLong's Blog, page 66

EG: A Valentine���s Day love letter to the Unemployment Insurance program - Equitable Growth

EG: Alix Gould-Worth: A Valentine���s Day love letter to the Unemployment Insurance program - Equitable Growth: "UI���s social insurance structure is part of its allure. Both means-tested and social insurance programs are vital to the health and well-being of the U.S. population. But research shows that claimants feel less stigma when applying for and receiving benefits from social insurance programs than means-tested programs. And typically, social insurance programs enjoy support that protects them from being dismantled by overeager budget cutters.
But what makes UI different from all other social insurance programs? Why does it hold a special place in my heart? Let me count the reasons...

... ...

#noted

Kate Bahn and Austin Clemens: Equitable Growth���s Jobs G...

Kate Bahn and Austin Clemens: Equitable Growth���s Jobs Graphs: January 2020 Report Edition https://equitablegrowth.org/equitable-growths-jobs-day-graphs-january-2020-report-edition/: 'On February 7th, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of January. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data. Prime-age employment-to-population ratio increased to 80.6% in January, reflecting a healthy labor market 10 years into the expansion...

#noted #2020-02-17

Once again, playing my position requires not playing my p...

Once again, playing my position requires not playing my position, and stating that Bill Barr does not speak like an official of the American government should. He is a civil servant, not an uncivil master: Scott Lemieux: Those Who Want Equal Protection of the Laws Give Unquestioned Deference to the Authoritiesy http://www.lawyersgunsmoneyblog.com/2019/12/those-who-want-equal-protection-of-the-laws-give-unquestioned-deference-to-the-authorities: 'Trump Family Capo Bill Barr expresses his view of the appropriate relationship between law enforcement and the citizenry.... "Today, American people have to focus on... the sacrifice and the service that is given by our law enforcement officers.... They have to start showing, more than they do, the respect and support that law enforcement deserves.... If communities don���t give that support and respect, they might find themselves without the police protection they need.��� I dunno, I���m beginning to think that making a mobbed-up authoritarian President of the United States was bad...

#notetoself #orangehairedbaboons #2020-02-17

Equitable Growth's great new hire Claudia Sahm on diversi...

Equitable Growth's great new hire Claudia Sahm on diversity in innovation: Claudia Sahm: The U.S. House Committee on Small Business https://twitter.com/Claudia_Sahm/status/1217559995597971462 had an important meeting on Enhancing Patent Diversity for America���s Innovators https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=110372. They heard from Andrea Ippolito��� from W.E. Cornell.... ���Who Becomes an Inventor in America? The Importance of Exposure to Innovation".... Why it is important for the government to collect demographic information on who receives patents.... Chaleampong Kongcharoen.... Rick Wade shared facts about the need for more diversity among our innovators...

#noted #2020-02-17

Milton Friedman on Trump Fed nominee Judy Shelton. Uncle ...

Milton Friedman on Trump Fed nominee Judy Shelton. Uncle Milton would be really, really unhappy to see this nomination approved: Milton Friedman (1994): Free-Floating Anxiety https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_09_12_1994.pdf: 'In a recent Wall Street Journal op-ed piece (July 15) recommending a return to gold, Judy Shelton started her concluding paragraph: ���Until the U.S. begins standing up once more for stable exchange rates as the starting point for free trade...��� It would be hard to pack more error into so few words. A true gold standard���a unified currency���is indeed consistent with free trade. But a system of pegged exchange rates, such as the original IMF system or the European Monetary System, is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital...

#noted #2020-02-17

Study Questions: Pre-Commercial Revolution Economies

Study Questions for the History of Economic Growth: For Midterm 1: Econ 135

Explain in words what the steady-state balanced-growth path Solow-Malthus equilibrium equation for real living standards https://delong.typepad.com/.a/6a00e551f0800388340240a50c1a9a200b-pi tells us about what the level of income will be in a Malthusian society.
Explain in words what the steady-state balanced-growth path Solow-Malthus equilibrium equation for the level of population https://delong.typepad.com/.a/6a00e551f0800388340240a50c1aa8200b-pi tells us about what the level of population will be in a Malthusian society.
What do you think are the three most reasons not to take the Solow-Malthus model as gospel in understanding pre-Industrial Revolution economic growth���and its absence?
What are three data sources that economic historians rely on to try to get a handle on the pace of economic growth in pre-modern times?
Why did average incomes and prosperity levels remain so low back before the year 1500?
What were the most important changes that made the Industrial Revolution possible?
Where and when did the Industrial Revolution take place?
What theory about why the Industrial Revolution happened when and where it did do you find most attractive?
What are the limitations of and problems with the theory that you find most attractive about why the Industrial Revolution happened when and where it did?
Were income and standards of living under the Roman Empire subject to Malthusian constraints?
How, so far in this course, has the concept of economic class been important in shedding light on understanding processes of economic growth?
Based on what we have covered in this course so far, what do you expect to see in economic growth in the world economy over the next 50, 100, and 1000 years?
In the Solow growth model, what are the important determinants of prosperity in the sense of income per worker, and how do those determinants interact?
Why is Michael Kremer's (and Paul Romer's, and Jared Diamond's) theory of growth���that much of economic growth can be explained by the facts that ideas are non-rival and that two heads are better than one���attractive?
Why is Michael Kremer's (and Paul Romer's, and Jared Diamond's) theory of growth���that much of economic growth can be explained by the facts that ideas are non-rival and that two heads are better than one���inadequate?
Why is it probably wrong to suppose that humanity's effective effort at innovation and technology development at any point in time is proportional to the human population then?
What kinds of innovative effort are positive-sum? What kinds of innovative effort are negative-sum?
Why do extensive empires often appear to have higher standards of living than other, more divided societies that possess the same level of useful ideas about technology and organization?
Why do extensive empires often appear to have greater population densities than other, more divided societies that possess the same level of useful ideas about technology and organization and the same quality of natural resources?
What was the "Columbian Exchange" and why was it important for economic growth?
What was the impact of the Spanish Conquest on the population levels and the living standards of the Amerindian population living in the Americas when the conquistadores arrived?
Explain why you are annoyed by Jared Diamond's claim that the invention of agriculture was a big mistake.
On what evidence does Greg Clark base his conclusion that English working-class standards of living were roughly $2.50 a day in the eight centuries before 1800?
Was the standard of living of the English working class highest in 1310, 1450, or 1800; and why was it highest when it was highest?
Why does Lant Pritchett believe the world today is much more unequal than it was back in 1800? Do you buy his argument?
Why, in Partha Dasgupta's view, is money an extremely useful societal invention?
Why, in Partha Dasgupta's view, does "Becky" have so much more social power and opportunities than does "Desta"?
At what rate does income per worker grow in the Solow growth model when an economy is on its equilibrium balanced-growth path? Why does it grow at that rate?
At what rate does society's total income grow in the Solow growth model when an economy is on its equilibrium balanced-growth path? Why does it grow at that rate?
What changes would tend to make an economy following the Solow growth model and on its equilibrium balanced-growth path richer?
What changes would tend to make an economy following the Solow growth model and on its equilibrium balanced-growth path poorer?
What is meant by saying that an economy is a "Malthusian economy"?
What is meant by the "demographic transition"?
Why doesn't technological progress raise standards of living in a Malthusian economy on its steady-state balanced-growth path?
What do economic theorists think is the reason that the much larger global STEM workforce today than in 1870-1900 has not led to a faster proportional rate of technological progress now than back then?
What does Aristotle claim are the four branches of household resource management, and which of the four does he think is most important?
How much does Aristotle think a philosopher���or any aristocratic Greek male���should know about economic matters: market prices of commodities and production technologies?
Why does Aristotle believe that markets and merchants are useful for a city-state, and for a Greek aristocratic male?
Why does Aristotle believe that markets and merchants and too much knowledge about them are dangerous and destructive for a city-state, and for a Greek aristocratic male?
Why does Gilgamesh deserve to be King of Uruk? And what should his people do when they recognize that he has turned into an overbearing tyrant?
Why does Willem Jongman believe that the classical Mediterranean became so rich and prosperous, so much so that, in the words of the historian Edward Gibbon: "If a man were called to fix the period in the history of the world, during which the condition of the human race was most happy and prosperous, he would, without hesitation, name that which elapsed from the death of [the Emperor] Domitian [in 96] to the accession of [the Emperor] Commodus [in 180]..."?
Why, in Willem Jongman's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of or even the maintenance of equal prosperity?
What happened to the living standards of peasants and craftsmen in western Europe in the two centuries after the 1346-1348 Bubonic Plague, and why do economic historians (led by Robert Brenner) think what happened happened?
What happened to the living standards of peasants and craftsmen in eastern Europe in the two centuries after the 1346-1348 Bubonic Plague, and why do economic historians (led by Robert Brenner) think what happened happened?
Consider the course of history in western Europe after the Bubonic Plague of 1346-8, the course of history in eastern Europe after the Bubonic Plague of 1346-8, and the course of history in the Roman Empire after the Antonine Plague of 165-180. Which two do Willem Jongman and Melissa Dell think are more closely analogous? Why and how?
Why, in Peter Temin's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of prosperity and a 1500 years-earlier Industrial Revolution?
Why, in Peter Temin's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of prosperity that carried the proportional growth rate of the value of the stock of useful human ideas about technology and organization up from the 0.06%/year of the year -1000 to year 1 Axial Age to something like the 0.15%/year of the year 1500 to year 1700 Commercial Revolution Era?
Why, in Moses Finley's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of or even the maintenance of equal prosperity?
What factors made it so that the year 1 was much more likely to have seen the Mediterranean dominated by a Rome-based formal empire of conquest and legions first and trade and cultural influence second than an Athens-based informal empire of trade and cultural influence first and conquest and fleets second?
What, in Josh Ober's view, was the likelihood that classical Mediterranean civilization might have attained something like the pace of commercial activity and productivity growth of the 1500-1700 Commercial Revolution Era?
What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the long Agrarian Age between the invention of agriculture in the year -8000 and the year 1500? Why was this rate of growth so low?
What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Commercial Revolution Era of 1500-1770? Why was this rate of growth so much higher than in the previous Agrarian Age? Why was this rate of growth so much lower than in the subsequent Industrial Revolution Era?
What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Industrial Revolution Era of 1770-1870? Why was this rate of growth so much higher than in the previous Commercial Revolution Era? Why was this rate of growth so much lower than in the subsequent Modern Economic Growth Era?
What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Modern Economic Growth Era of 1870-today? Why was this rate of growth so much higher than in the previous Industrial Revolution Era?
What is Brad DeLong's guess of what the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization will be in the next five centuries? Why doesn't he think it will be higher? Why doesn't he think it will be lower?
What is Brad DeLong's guess of what the average proportional rate of growth of human living standards was between the year -6000 and 1500. What factors made it so low?
What is Brad DeLong's guess of what the average proportional rate of growth of human living standards was between the year -6000 and 1500. What factors made it so much lower than the rate of growth of the useful ideas stock?
Suppose that the rate of growth of the real value of the stock of useful human ideas about technology and organization in the world had stuck at its Commercial Revolution Era 1500-1770 pace. What would you guess the world economy would look like today in terms of total human population and average living standards and productivity levels?
Suppose that the rate of growth of the real value of the stock of useful human ideas about technology and organization in the world had stuck at its Industrial Revolution Era 1770-1870 pace. What would you guess the world economy would look like today in terms of total human population and average living standards and productivity levels?
Suppose population growth in the "advanced west"���the European North Atlantic coast countries that were the most technologically advanced and became militarily powerful in the Commercial Revolution Era 1500 to 1770���had been at its historic level of 0.4%/year over 1500 to 1770, that invention and innovation had proceeded as in actual world history, but that the rest of the world had managed to fight off European colonialism and retain control of the Americas and of Indian Ocean trade in non-European hands. Would living standards in the European North Atlantic coast countries have then been likely to increase between 1500 and 1770? (In our history they increased by some 40% over that period.)



#berkeley #economicgrowth #economichistory #highlighted #teachinggrowth #teachinghistory #2020-02-14

Worthy Reads from February 13, 2019

Worth Reads at Equitable Growth:

Excellent testimony from Heather Boushey. But am I allowed to whimper that focusing too much on the EITC and the CTC may distract attention from the fact that SSI and SSDI are broken, and that the interface between the safety net for the employed and the safety net for the non-employed is very broken?: Heather Boushey: Testimony Before the Ways and Means Committee: "At the bottom end, one easy step is to preserve and expand evidence-backed refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit, which lifted 8.9 million American out of poverty in 2017. In the middle, it is important to make sure the fruits of growth are widely shared and to make the economy work for workers and families. Some proven ways to do this include making sure every family can afford to send their children to high quality, affordable childcare and offering a national paid family and medical leave. It can also mean investing in infrastructure. And we need to know much more about the top. Many of the statistics we rely on to inform us about the state of our economy are measures of the average...

And it is time for Equitable Growth's monthly charticle about the most useful monthly employment report���not the (usually) first-Friday report, but rather the JOLTS report: Kate Bahn and Raksha Kopparam: JOLTS Day Graphs: December 2018 Report Edition: "Every month the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. Today, the BLS released the latest data for December 2018. This report doesn���t get as much attention as the monthly Employment Situation Report, but it contains useful information about the state of the U.S. labor market. Below are a few key graphs using data from the report...

An excellent catch from Equitable Growth's Michael Kades here. The debate over hospital mergers was mostly about whether scale-driven improvements in quality and reductions in cost would or would not be outweighed by the harm done by greater monopoly-power margins in charges to insurance companies and to patients. But it is looking increasingly likely that there are no scale driven improvements in quality or reductions in costs. He sends us to the extremely sharp Austin Frakt: Michael Kades: "The hospital industry, perhaps more than any other, had argued that consolidation will improve quality. Data increasingly says no: Austin Frakt: Hospital Mergers Improve Health? Evidence Shows the Opposite: "The claim was that larger organizations would be able to harness economies of scale and offer better care...

Kate Bahn sends us to Equitable Growth alumnus Nick Bunker. Nick continues his campaign to get people to look not at inflation but at wage growth���which has been slowly inching up since 2014���to gauge how close we are to that mysterious "full employment". Bottom line: we are not there yet: Nick Bunker: "Inflation-adjusted average hourly earnings up 1.7% over the past year. A friendly-reminder that real wage growth isn���t a good metric for assessing short-term health/slack of labor market. (Unless, of course, you think swings in energy prices are telling you something very important about the US labor market.) Far less volatility when you look at core inflation, but at this point why not just look at nominal wage growth?...

I must confess that my knee-jerk reaction given my socialization into the neoliberal cult when young to paid leave programs is to worry that loading responsibility for providing social insurance onto employers is a hazardous activity���it is not the 1920s, and we are not the tarry-eyed Edward Filene certain that paternalistic companies engaged in welfare capitalism can do more to enhance societal well-being than the ardent socialists and social democrats. But evidence is piling up from the laboratories of social insurance that are the states that my knee-jerk reaction is wrong: Heather Boushey: Increasing Evidence of the Benefits of Paid Leave Means Congress Needs to Consider a Federal Program like the FAMILY Act: "The existing state programs���the oldest, in California, dates back to 2004���have provided a laboratory for researchers to study labor and health outcomes for individuals, performance and productivity outcomes for firms, and broader macroeconomic outcomes of paid family and medical leave. This work builds on a considerable body of research from long-established programs in some European countries. The answers to many questions are already coming into focus.... In states with paid leave insurance programs, mothers who use paid leave are more likely to remain in the workforce in the year following a birth. The women experiencing the benefits of these new programs are more likely to be less educated, which makes sense given that they are less likely to have had access to paid leave in the absence of a state program.... In instances where paid leave is provided there is less reliance on public assistance to contend with family medical emergencies. Moreover, there has been no evidence of higher employee turnover or rising wage costs for businesses. Research on parental leave programs abroad also suggests that paid leave of the length contemplated by the FAMILY Act, up to 12 weeks, has a positive effect on women���s income and likelihood of remaining in the workforce...

 

Worthy Reads Elsewhere:

Information technology does not fit into a market economy very well. Organizations that focus on profit to the exclusion of all other goals have had a hard time staying dominant in technology industries. Perhaps Google has decided that it is time to focus on profit rather than on leading humanity into the information age: Graydon Saunders: I'm Going to Miss Google: "I mean, it'll be awhile, but they've gone and decided to die.... Rumour���highly plausible rumour���has it that the business decision to kill the Inbox app, rather than the Gmail app, comes down to 'Inbox makes it too easy to dodge promo emails'. Google's original business model was 'let's get more people using the Internet'.�� That worked, in large part because there was a vast amount of unrealized utility available.�� Now, though, it's turning into 'let's glue eyeballs to ads'.��Which, well. You can have success, or you can have control.��Both is not an option. This is Google deciding that it MUST have control. That'll kill ya...

What is going on with "Brexit"? To everybody outside Britain���no, not outside Britain, outside England���it is a bizarre and incomprehensible mystery. But here, I believe, Hari Kunzru gets as close as an outsider can to understanding why the English political class is engaged in this farcical tragedy of policy: Hari Kunzru: Fool Britannia: "Heroic Failure: Brexit and the Politics of Pain, by Fintan O���Toole.... The battle over Europe has been fought not over the... open border between Northern Ireland and the Republic... NHS funding, or traffic flow through Dover, let alone harmonized airline regulations or the trading benefits of a Canada-plus model... but through Spitfires, Cornish pasties, singing 'Jerusalem' on the last night of the Proms, and what the Irish historian and journalist Fintan O���Toole calls 'the strange sense of imaginary oppression that underlies Brexit'...

This has become a classic for all wishing to think clearly about progressive income taxation. Note that their conclusions in favor of a high top marginal rate do rest on strong and proper state actions to close loopholes and shut down tax havens: Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva (2011): Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities: "A model where top incomes respond to marginal tax rates through... (1) the standard supply-side channel... the tax avoidance channel, [and] (3) the compensation-bargaining channel through efforts in influencing own-pay setting.... The first elasticity (supply side) is the sole real factor limiting optimal top tax rates. The optimal tax system should be designed to minimize the second elasticity (avoidance) through tax enforcement and tax neutrality... in which case the second elasticity becomes irrelevant. The optimal top tax rate increases with the third elasticity (bargaining) as bargaining efforts are zero-sum in aggregate..... There is a strong correlation between cuts in top tax rates and increases in top 1% income shares since 1975, implying that the overall elasticity is large. But top income share increases have not translated into higher economic growth, consistent with the zero-sum bargaining model. This suggests that the first elasticity is modest in size and that the overall effect comes mostly from the third elasticity. Consequently, socially optimal top tax rates might possibly be much higher than what is commonly assumed...

Put me, for one, down as welcoming a sensible technocratic debts-and-deficits debate: Brendan Greeley: Give the Kids Permission to Fool Around: "Several weeks ago Alphaville was forwarded a panicked email from the Committee for a Responsible Federal Budget.... The subject... 'Be wary of mischaracterisations of Olivier Blanchard's debt report'.... Here's Mr Blanchard, in his own words, talking to Alphachat... 'use it for the right things. If the economy is very weak and monetary policy cannot be used, use it. If there is public investment to be done, the infrastructure is in terrible shape, use it.... It's a tool, it's not a tool you should avoid to use at any price. It's a tool you should use when you need to'.... He wants a 'richer discussion of the costs of debt and of fiscal policy than is currently the case'.... Alphaville believes that the discussion alone is what the Committee for a Responsible Federal Budget finds so alarming...

Migration���temporary and permanent���is turning out to be one of the magic bullets for global economic growth: Ricardo Hausmann (2013): The Tacit-Knowledge Economy: "Know-how resides in brains, and emerging and developing countries should focus on attracting them, instead of erecting barriers to skilled immigration. Because knowledge moves when people do, they should tap into their diasporas, attract foreign direct investment in new areas, and acquire foreign firms if possible.... Recent research at Harvard University���s Center for International Development (CID) suggests that tacit knowledge flows through amazingly slow and narrow channels. The productivity of Nuevo Le��n, Mexico, is higher than in South Korea, but that of Guerrero, another Mexican state, resembles levels in Honduras. Moving knowledge across Mexican states has been difficult and slow. It is easier to move brains than it is to move tacit knowledge into brains, and not only in Mexico. For example, as the CID���s Frank Neffke has shown, when new industries are launched in German and Swedish cities, it is mostly because entrepreneurs and firms from other cities move in, bringing with them skilled workers with relevant industry experience.... Knowledge moves when people do...

Olivier Coibion, Yuriy Gorodnichenko, and Mauricio Ulate: Is Inflation Just Around the Corner? The Phillips Curve and Global Inflationary Pressures: "An expectations-augmented Phillips curve can account for inflation not just in the U.S. but across a range of countries, once household or firm-level inflation expectations are used.... We find that the implied slack was pushing inflation below expectations in the years after the Great Recession but the global and U.S. inflation gaps have shrunk in recent years thus suggesting tighter economic conditions. While we find no evidence that inflation is on the brink of rising, the sustained deflationary pressures following the Great Recession have abated...

Yes, it looks lie the world economy is now entering a recession���one that the U.S. is so far escaping: Brad Setser: China's Slowdown and the World Economy: "China, it now seems, has entered into a real slump.... China's total imports remained pretty strong though until the last couple of months. But they have now turned down. Sharply.... China (still) isn���t that important a market for the rest of the world���s manufactures. China���s overall imports (of goods) are significant, at around $2 trillion. But about a third are commodities, about a third are parts for re-export (think $800 billion of processing imports vs. exports of around $2.4 trillion), and a bit less than a third are imports of manufactures that China actually uses at home.... A fall in Chinese auto demand has a big impact on Chinese domestic output (most Chinese cars are made in China, with largely Chinese parts, thanks to China���s tariff wall), a measurable impact on the profits of some foreign firms with successful Chinese JVs, a modest impact on German exports and, at the margin, a measurable impact on global growth in oil demand...

There is no Phillips Curve-breakdown puzzle in the behavior of infaltion over the past decade once one recognizes that (a) the employment-to-population ratio and not the unemployment rate is the right measure of how bad the job market is, and (b) that people have been���I think largely because of misinformation from the press���thinking that inflation is higher than it in fact is: Laurence M. Ball and Sandeep Mazumder: The Nonpuzzling Behavior of Median Inflation: "Inflation behavior is easier to understand if we divide headline inflation into core and transitory components, and if core inflation is measured by the weighted median of industry inflation rates... [that] filters out large price changes in all industries. We illustrate the usefulness of the weighted median with a case study of inflation in 2017 and early 2018. We also show that a Phillips curve relating the weighted median to unemployment appears clearly in the data for 1985-2017, with no sign of a breakdown in 2008...

The American electorate contains very few libertarians���very few who want a (largely) unregulated markets economy and also a (largely) tolerant society in which flying your personal freak-flag in public is encouraged. Americans are, rather, much more likely to be egalitarian with respect to the distribution of economic wealth and status and socially tolerant, or hierarchical���seeking a society in which everybody knows their place and toes the line both economically and socially. And the people who don't fit into those two liberal and conservative baskets? They are, overwhelmingly, believers in a social order that also produces an egalitarian economy for those who toe the social-order line. This poses problems for those billionaires who would like to become president but also wish to speak honestly to the electorate: Paul Krugman: The Empty Quarters of U.S. Politics: "Socially liberal, economically conservative voters... the people Schultz thought he could appeal to; but basically they don���t exist, accounting for only around, yes, 4 percent of the electorate.... The absence of economically liberal, socially conservative politicians... There are plenty of voters who would like that mix, and Trump pretended to be their man; but he wasn���t, and neither is anyone else. Understanding these empty quarters is, I���d argue, the key to understanding U.S. politics. Once upon a time there were racist populists... segregationist Dixiecrats. But this was always unstable. In practice, advocating economic inclusion seems to spill over into advocacy of racial and social inclusion, too.... Meanwhile, the modern Republican Party is all about cutting taxes on the rich and benefits for the poor and the middle class. And Trump, despite his campaign posturing, has turned out to be no different. Hence the failure of our political system to serve socially conservative/racist voters who also want to tax the rich and preserve Social Security. Democrats won���t ratify their racism; Republicans, who have no such compunctions, will���remember, the party establishment solidly backed Roy Moore���s Senate bid���but won���t protect the programs they depend on...

#equitablegrowth #noted #weblogs #worthyreads #2020-02-14

Alix Gould-Worth: A Valentine���s Day love letter to the ...

Alix Gould-Worth: A Valentine���s Day love letter to the Unemployment Insurance program - Equitable Growth: "UI���s social insurance structure is part of its allure. Both means-tested and social insurance programs are vital to the health and well-being of the U.S. population. But research shows that claimants feel less stigma when applying for and receiving benefits from social insurance programs than means-tested programs. And typically, social insurance programs enjoy support that protects them from being dismantled by overeager budget cutters.
But what makes UI different from all other social insurance programs? Why does it hold a special place in my heart? Let me count the reasons...

#noted

Weekend Reading: Peter Temin: Land Tenure and Exploitation from the Roman Empire to Lord Peter Wimsey

Peter Temin: The Roman Market Economy https://delong.typepad.com/files/temin-roman.pdf: Land Ownership: 'For at least four centuries... the Roman Empire preserved peace around the Mediterranean basin and allowed the system of land ownership and taxation to continue. Starting in the fifth century, the ability of the western Empire to preserve peace began to erode. Rome was sacked early in the fifth century, a traumatic event that led Augustine to write the City of God distinguishing belief in the Catholic Church from the defense of any earthly city. More important if less visible to most people living through it was the capture of Africa by the Vandals in 439. This loss deprived the central government of an important component of its tax base and made it impossible for the government to mount effective counterattacks against the various invaders of the Roman Empire. This clearly set up a cumulative process that led in a few decades to the demise of the western Empire (Heather 2005; Wickham 2009). What was the effect of this cataclysmic change on Roman property own- ers? I suggest that many landowners were unaffected as the decline of central authority began. Most of their activities were local, and local authorities continued to guide local economies. Invasions were sporadic and affected only swaths through the vast empire. Landowners in the path of the invaders must have experienced problems with their land ownership, but landowners in other areas probably carried on as they and their fathers had done before. Imported goods to any area became more rare and expensive as travel became more dangerous. ���Across the sixth and seventh centuries African goods are less and less visible in the northern Mediterranean; they vanish first from inland sites, and then from minor coastal centres��� (Wickham 2009, 218). The process of Roman decline was not one of uniform decline that affected everyone alike. Instead it was a selective process that involved more and more people over time...

...The spread of violence was sporadic and uneven. As more and more areas were affected, land ownership under Roman rules became more and more localized. Land ownership in the form described earlier was confined to Roman islands in a barbaric sea (with apologies to Pirenne 1956). These islands shrank over time as the violence overspread the declining empire until most of them disappeared at some undetermined time (McCormick 2001).

We see remnants of the Roman land system in an account of taxes due from tenants to the Abbey of St. Martin de Tours around 700 listing four-teen hundred tenants and the modii of wheat, rye, barley, oats and spelt due (Gasnault 1975, 95ff). There is more detail in a list of tenants of the Abbey of St. Germain-des-Pres a century later. There is a list of more than fifteen hundred farms with ���at least��� ten thousand residents. Almost all of these farms were were ���inge��nuilles���, but some were ���lidiles��� and ���serviles.��� Most of islands of Roman land tenures must have clustered around abbeys, the most stable landholders in Merovingian and Carolingian times (Longon 1978, Tome I, 243).

The eastern Empire did not collapse, although it lost control of Egypt in 698. The Byzantine state remained strong and land taxation continued to provide a fiscal base to the state. ���Indeed, payment of the [land] tax was itself proof of ownership. Since the early eighth century, perhaps earlier, the tax was estimated on the value of the land��� (Laiou and Morrisson 2007, 50). High-quality land was worth the most; second-quality land, less; and pasture, even less. The tax rate, which appears to have endured into the twelfth century, was about one quarter of cereal production.... Agricultural production was divided between what can be called estates and village. Estates were the successors to Roman latifundia, and villages were composed of independent proprietors. The latter paid taxes to the state as in Roman times, and their tax rate was only half the dues paid by tenant farmers. This major difference was due partly to the protection offered by the estate and partly to services and capital provided by the lord of the estate..... The Byzantine system of land tenure was taken over by the Ottoman Empire and continued into modern times. In fact, the land tax in modern Israel is known as the arnona, a Hebrew term that goes back to the Talmud, where it denoted a tax on livestock and grain. It is most likely derived from the Latin word, annona, the Roman land tax to finance food distribution in the city of Rome.

In contrast, invasions of Western Europe multiplied and violence spread after the western Empire collapsed, and the Roman organization of society broke down entirely. We know little about the terms of land tenure in the Carolingian period as the terms used disappeared in later centuries.... There was no land tenure in the period of chaos when you only had authority over a plot of land if you were physically present and could fight off other claimants. It was hard even to grow a crop in such a situation as there was no way to ensure you could reap the harvest from seeds you had sown. Population consequently was very small, declining sharply to the extent we know it after the western Roman Empire collapsed. Travel was so hazardous that it was easier to bring people to food than food to people. ���The nobleman with his entourage moved round constantly from one of his estates to another; and not only in order to supervise them more effectively. It was necessary for him to consume the produce on the spot, for to transport it to a common center would have been both inconvenient and expensive��� (Bloch 1961, 63). Land ownership was exceedingly tenuous.

This chaotic period when central authority disappeared was traumatic in European history. Shakespeare employed the memory of this period many centuries later to set the stage for the tragedy of King Lear.... The king says he will travel with a large armed escort from place to place to consume the local produce. The many knights were to protect him; the traveling was to take him to the food instead of vice versa.... There was no ownership of land in this situation, as control could not be exerted at a distance. There was instead possession by people on the land who could and would defend it. This kind of possession was called a fief.... A fief lasted only as long as the person possessing the land gave service; it was not inherited. It was far different and less stable than land ownership or possession in Rome.... The society changed from one based on taxes to one based on personal service. What does it mean to own land if taxes on the land no longer sustain a government?

Feudalism was the way out of this chaos. It is best seen as a way to organize defense in a violent world. There was not enough security for a central government to collect taxes and field a military force, and all action had to be local. Subject to this constraint, it was natural for families and then close acquaintances to band together for their mutual defense. Adam Smith told us that labor specialization is limited by the extent of the market. Markets in these conditions were local and small, and the labor differential was limited to two classes of people, those who fought and those who farmed���knights and farmers.

A fief allowed a knight to fight for the defense of the farmers in the fief, but isolated knights were not much use against concerted attack. Feudalism was a way for knights to come together through lord and vassal arrangements that constructed a hierarchy of vassals under a lord who could field a group of knights. Vassals then used the resources of their fiefs to support their military activities, which were used in the service of their lords. The farming that underlay all this was done by the lords��� villeins and other serfs. The lords in return for the vassals��� support used their military resources to preserve the vassals��� fiefs. Fiefs were retained as long as vassals fulfilled their part of the bargain, giving rise to elaborate rituals to assure lords that vassals would come forth when needed. The feudal system succeeded in bringing more peaceful conditions to Western Europe, and problems changed from defending from invaders to defending against neighbors. There developed a small arms race in armaments for knights and their horses.... The nonhereditary fief eventually was supplanted by a hereditary model as lords needed a reliable source from which to obtain vassals. The most convenient way to obtain future vassals was by making new acts of homage with the children of current vassals. Once this practice started, the converse situation where children of vassals were denied the fiefs of their fathers made it harder to add more vassals. Fiefs consequently took on a hereditary character....

Society thus was divided into two parts. Knights and clerics did not work and paid no taxes. Peasants worked and paid for the consumption of the upper class as well as their own, a division of society that lasted into the eighteenth century.... There were many restrictions on land and land transfers as the need for service and the desire for inherited land got in each other���s way. There must have been an evolution of these restrictions, but many different approaches appear to have been in use at the same time. This appearance may reflect the scarcity of historical evidence, but it more probably reflects a combination of regional differences in customs and uneven evolution even in local areas. Travel was difficult and transport was expensive; regions were far more isolated than in Roman times. ���Regional differences were sharp, even between neighboring regions��� (Van Bavel 2008, 14)....

The burden of rents and feudal dues on peasants has been calculated as about 40 percent of their production, although it varied quite a bit between manors (Allen 2005, 36; Van der Beek, 2010a). This is higher than the commonly accepted levels of taxation in the early Roman Empire, which hover around 10 percent of production. If these estimates are even approximately accurate, then one of two things must have happened in the first millennium. Either farming must have become vastly more efficient, or the after-tax income of farmers must have shrunk dramatically.The latter choice appears more likely at our current state of knowledge.

Feudal warfare relied on direct hand-to-hand combat, which established the knight as the primary military unit. Over time, military armies employed greater use of archers, which provided key advantages over knights in battle, and the knight as a military unit decreased in importance and gradually disappeared. With the introduction of firepower, archers made way for musketeers who used muskets as a means of offense. Although early firearms were less accurate and efficient than the bow and arrow, continual technological improvements in guns eventually rendered archers obsolete. Considering that it usually took many years of training to make an archer, while only days were required to train and field a musketeer, it became more efficient to employ musketeers as a military unit. The lower costs and faster production associated with training and fielding musketeers allowed for significant increases in army sizes....

In the feudal age, when chaos was the issue, there were economies of scale for individual fighters, that is, knights. There were few economies of scale after this limited scope. As security increased and warfare changed, archers and musketeers provided economies of scale that extended to larger numbers of soldiers. Economies of scale near the origin were reduced as archers and then musketeers needed less equipment and training than knights, while economies of scale for groups of soldiers increased as the power of firing in volleys became apparent. The new economies of scale came more from military organization than individual training. The new system was clear enough to be described clearly around 1600. ���Maurice of Nassau and Gustavus Adolphus developed a system of organization, tactics, and drill that harked back to the Roman legions��� (Boot 2006, 103). The economics of warfare had come full circle.

Land tenures had been advancing as military technology improved, at least in the most urbanized parts of Europe in northern Italy and the Low Countries. Land sales by peasants are recorded as early as the eighth and ninth centuries when northern Europe was in chaos. The clarification of property rights and the introduction of civil courts stimulated land markets in the later twelfth century.The Low Countries caught up by the fourteenth century when voluntary registration of private land transfers by public courts became common. Although these two regions developed differently, the growth of private land ownership and transfer increased in both during the medieval period (Van Bavel 2011).... States achieved a monopoly of violence and carried out varied activities of organized violence: making war, creating states, protection, and extraction of resources through taxes.
Independent lords... could not defend themselves from the new states and were subject to capture or submission. Lords stopped being vassals and turned into landowners. The land that they owned, however, had the restrictions that had been imposed when the land had been a fief, when fee tails had evolved into entails. These impediments to market activity were retained by the aristocracy to preserve the integrity of the family estate. Lord Peter Wimsey is a fictional character of the early twentieth century, but his role as the landless younger son of the mythical Duke of Denver was a staple of British aristocracy for many centuries...

#economichistory #weekendreading #2020-02-13

Read this very nice piece by Equitable Growth young whipp...

Read this very nice piece by Equitable Growth young whippersnapper Raksha Kopparam summarizing the strong evidence that societal well-being is badly damanged by yet another pharmaceutical industry market failure: "killer acquisitions": Raksha Kopparam: Killer Acquisitions Lead to Decreased Innovation and Competition in the U.S. Prescription Drug Market https://equitablegrowth.org/killer-acquisitions-lead-to-decreased-innovation-and-competition-in-the-u-s-prescription-drug-market/: "Colleen Cunningham... Florian Ederer and Song Ma... consolidation in the pharmaceutical industry is probably stifling rather than promoting innovation. Approximately 6 percent of pharmaceutical acquisitions are what the authors refer to as 'killer acquisitions', in which an incumbent firm acquires a product in development that could compete with the incumbent���s own product and then subsequently terminates development of the target firm���s product, thus killing competition and innovation.... Questor Pharmaceuticals Inc.���s acquisition of the drug Synacthen from Novartis International AG of Switzerland. United States-based Questor in 2000 held a monopoly over an adrenocorticotropic hormone drug called Acthar, the then-dominant treatment for rare epileptic diseases such as infantile spasms. In 2000, Acthar was priced at roughly $40 a vial. In the mid-2000s, however, Novartis began developing Synacthen, a synthetic version of Acthar. In 2013, Questor acquired the production rights for Synacthen and shut down development of the drug shortly thereafter...

#noted #2020-02-11