If you do it they will believe by Scott Sumner
Saturday, January 17, 2015
Switzerland ends its peg fest
Sokrates and Friends in Davos, or, the SNB and the Berne Whale: The Honest Broker for the Week of January 18, 2014 by DeLong
Felicia "Snoop" Pearson on The Wire
video of Snoop
Obama said his favorite character was Omar Little. Snoop and Bodie were good too. So many.
Obama said his favorite character was Omar Little. Snoop and Bodie were good too. So many.
Friday, January 16, 2015
Robert Wisdom and The Wire coincidence
Yesterday I had this post about The Wire and Colvin's Hamsterdam.
Tonight, Robert Wisdom the actor who played Colvin was on SyFy's show 12 Monkeys. His character mentions a "Senator Royce" who of course shares a name with The Wire's Baltimore Mayor Royce.
Tonight, Robert Wisdom the actor who played Colvin was on SyFy's show 12 Monkeys. His character mentions a "Senator Royce" who of course shares a name with The Wire's Baltimore Mayor Royce.
Swiss, Baker versus Krugman
I think Dean Baker is wrong.
Paul Krugman and the Swiss Movement
Friday, 16 January 2015 06:01
It isn't often that I think Paul Krugman gets one wrong, but I think he wrongly attacks those chocolate loving cuckoo clock making Swiss in his column today. His complaint is that the Swiss central bank abandoned its commitment to keep down the value of the Swiss franc against the euro. Krugman sees this a failure of will, with the central bank giving up a commitment to pursue an inflationary policy. This is part of a larger saga of feckless central banks that continue to obsess about inflation when the real problem facing world economies is an inflation rate that is too low.
While the general point is right, it is hard to see how this story applies to Switzerland. Switzerland did not see the same sort of downturn as the rest of the OECD in 2008. Furthermore, it has fully recovered from its downturn with a GDP that is 8 percent above its pre-recession level and an unemployment rate of 3.5 percent.
In this context, it is actually doing what we should want Switzerland to do as a good world citizen. By allowing its currency to rise, it will make its goods and services less competitive internationally. This means it will import more from its trading partners and export less, effectively providing them with an economic boost. This is what we should want to see. The countries that are at or near full employment should be running larger trade deficits or smaller surpluses.
So give the Swiss a gold star. They called this one right. (Now if we can get them to talk to China ....)
Paul Krugman and the Swiss Movement
Friday, 16 January 2015 06:01
It isn't often that I think Paul Krugman gets one wrong, but I think he wrongly attacks those chocolate loving cuckoo clock making Swiss in his column today. His complaint is that the Swiss central bank abandoned its commitment to keep down the value of the Swiss franc against the euro. Krugman sees this a failure of will, with the central bank giving up a commitment to pursue an inflationary policy. This is part of a larger saga of feckless central banks that continue to obsess about inflation when the real problem facing world economies is an inflation rate that is too low.
While the general point is right, it is hard to see how this story applies to Switzerland. Switzerland did not see the same sort of downturn as the rest of the OECD in 2008. Furthermore, it has fully recovered from its downturn with a GDP that is 8 percent above its pre-recession level and an unemployment rate of 3.5 percent.
In this context, it is actually doing what we should want Switzerland to do as a good world citizen. By allowing its currency to rise, it will make its goods and services less competitive internationally. This means it will import more from its trading partners and export less, effectively providing them with an economic boost. This is what we should want to see. The countries that are at or near full employment should be running larger trade deficits or smaller surpluses.
So give the Swiss a gold star. They called this one right. (Now if we can get them to talk to China ....)
Thursday, January 15, 2015
Piketty and DeLong
Link
Over at Equitable Growth: As I have said before in Very Rough: Exploding Wealth Inequality and Its Rent-Seeking Society Consequences (backed up by the numbers of "Roughing Out a Piketty Model") and elsewhere, in my view Thomas because he really needed a rent seeking society chapter in his Capital in the 21st Century. The underlying logic of his argument seems to be that wealth can take two forms: investments in capital-embodied technological wealth that boost wages in the economy, or investments in rent-seeking wealth that erode wages in the economy. And, I think, his argument is that we are headed for a society with a higher wealth-to-income ratio, and in such a society a greater share of wealth will find its way into the second channel. READ MOAR
Thomas Piketty: On the Elasticity of Capital-Labor Substitution: "I do not believe in the basic neoclassical model...
Cf.: Suresh Naidu: Capital Eats the World, and The Slack Wire: Notes from Capital in the 21st Century Panel; and me: The Hourly Piketty: Paul Krugman, "Gattopardo Economics", and Economic Modelling, and The Honest Broker: Mr. Piketty and the “Neoclassicists”: A Suggested Interpretation: For the Week of May 17, 2014.
Over at Equitable Growth: Thomas Piketty: On the Elasticity of Capital-Labor Substitution
Maybe that is not what Pikitty's argument is. But I at least think that it is what Piketty's argument should be--because I think it is highly likely to be true...
...But I think it is a language that is important to use in order to respond to those who believe that if the world worked that way everything would be fine. And one of the messages of my book is, first, it does not work that way, and second, even if it did, things would still be almost as bad....My response to Summers and others is... what we observe... [is] a rise in the capital/income ratio and a rise in the capital share... [in] the standard neoclassical model... the only possible logical... expla[nation]... would be an elasticity of substitution somewhat bigger than 1... that there are more and more different uses for capital over time and maybe in the future robots will make substitution even more.... Now, does this mean that it is the right explanation for what we have seen in recent decades? Certainly not....All I am saying to neoclassical economists is this: if you really want to stick to your standard model, very small departures from it like an elasticity of substitution slightly above 1 will be enough to generate what we observe in recent decades. But there are many other, and in my view more plausible, ways to explain it.... It is perfectly clear to me that the decline of labor unions, globalization, and the possibility of international investors to put different countries in competition... have contributed to the rise in the capital share...
The Wire and legalization
HBO ran all 5 seasons of the Wire in 5 days. I recorded them and have been re-watching the show at a leisurely pace. Season 3 had the plot line with Major Colvin, Hamsterdam, and drug legalization. That was in 2004 and ten years later pot is legal in Colorado, Washington, Oregon and Alaska.
Obama is right, it's one of the best shows ever on television and Omar Little is probably my favorite character too although there are a lot of good characters. The creators of Game of Thrones explicitly said they modeled their vast canvas on The Wire.
Tuesday, January 13, 2015
JW Mason on asymmetry
Discussion on Wolfers
when the wage share falls, this is attributed to "technology" and is seen as inevitable, while when the wage share rises, this must generate inflation and should be prevented
That's a good point. There is a funny asymmetry in the mainstream discussion of wages. For liberals like Wolfers, if wages are rising faster labor productivity, that's a sign of excess demand that the Fed needs to do something about. But if wages are rising more slowly than productivity, as they most have been for decades, that's a sign of technological change, or China, or something else that has nothing to do with demand.
when the wage share falls, this is attributed to "technology" and is seen as inevitable, while when the wage share rises, this must generate inflation and should be prevented
That's a good point. There is a funny asymmetry in the mainstream discussion of wages. For liberals like Wolfers, if wages are rising faster labor productivity, that's a sign of excess demand that the Fed needs to do something about. But if wages are rising more slowly than productivity, as they most have been for decades, that's a sign of technological change, or China, or something else that has nothing to do with demand.
Monday, January 12, 2015
wage growth
The Non-Accelerating What Now Rate of Inflation by JW Mason
Annual wages growth is running at 1.7%. Yellen says "normal" is 3.5-4%. The recovery has a long way to run before the Fed needs choke it off
Sunday, January 11, 2015
growth and wages
Captain Recovery gets awfully close to liftoff but is held back by stagnating wage growth by Jared Bernstein
But policy makers who want our support must articulate the policy architecture — the connective policy tissue — that will reunite growth and broadly shared prosperity.
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