Friday, August 11, 2017
Thursday, August 10, 2017
agnotology
In 1979, a secret memo from the tobacco industry was revealed to the public. Called the Smoking and Health Proposal, and written a decade earlier by the Brown & Williamson tobacco company, it revealed many of the tactics employed by big tobacco to counter “anti-cigarette forces”.
In one of the paper’s most revealing sections, it looks at how to market cigarettes to the mass public: “Doubt is our product since it is the best means of competing with the ‘body of fact’ that exists in the mind of the general public. It is also the means of establishing a controversy.”
This revelation piqued the interest of Robert Proctor, a science historian from Stanford University, who started delving into the practices of tobacco firms and how they had spread confusion about whether smoking caused cancer.
...
Wednesday, August 09, 2017
4 depressing charts that show why many Americans don’t feel the economy has recovered by Pedro Nicolaci da Costa
Expectations are everything, especially in economics.
That’s why a distinct lack of progress in a few basic measures of economic progress, particularly relative to pre-crisis expectations, has left many Americans questioning how much they have personally benefitted from the economic recovery.
A new report from the Roosevelt Institute, a liberal think tank in Washington, highlights a number of ways in which "the recovery since 2009 is, in a sense, a statistical illusion."
The study finds the nation’s total economic output, its gross domestic product, "remains about 15% below the pre-recession trend, a larger gap than at the bottom of the recession." The first chart below shows that lag, while the second offers insights into just how badly the crisis dented expectations about the future.
Strong employment gains in recent months have brought the jobless rate down to a historically-low 4.3%. However, this decline has not been accompanied by rising incomes or consumer prices, generally associated with a sustainable economic boom. Some Federal Reserve policymakers have found this trend puzzling, while many labor economists point to underlying weaknesses in the job market, including high levels of underemployment and long-term joblessness, as drags on income.
Stagnant wages amid rising profits have meant that the wage share in US national income has fallen from 63% to 57% in the last 15 years, according to the report.
"It is impossible for the wage share to ever rise if the central bank will not allow a period of 'excessive' wage growth," writes J.W. Mason, who authored the report. "A rise in the wage share necessarily requires a period in which wages rise faster than would be consistent with longterm macroeconomic stability."
In other words, if Fed officials tighten monetary policy at the first sign of wage increases, they will never allow the imbalances that have built up, including deep income disparities, to be torn down. Average hourly earnings rose just 2.5% on a yearly basis in July, nothing to write home about and certainly not enough to begin the ground lost over the last decade and more.
Business investment, which is key to long-run economic growth, has also been dismal during the now eight-year expansion.
"There is no precedent for the weakness of investment in the current cycle. Nearly ten years later, real investment spending remains less than 10% above its 2007 peak," Mason writes.
"This is slow even relative to the anemic pace of GDP growth, and extremely low by historical standards. In the three previous [economic] cycles lasting that long, real investment spending had increased anywhere from 30% to 80%. Even shorter cycles saw substantially greater investment growth." Roosevelt 3 investment growth Roosevelt Institute
Finally, Mason looks at whether the economy is at risk of running hot, generating inflation, which central bank officials cite to justify interest rate increases. The Fed has raised interest rates three times since December 2015 to a range of 1% to 1.25%.
"On the contrary, we argue, while a myopic focus on one or another data series might support a story of binding supply constraints, the behavior of the economy as a whole is much more consistent with a situation of depressed demand—an extended recession," the report concludes.
"The overall picture also makes it unclear what actual danger is posed by overheating in the conventional sense. Most of the obvious costs of overheating — higher inflation, higher interest rates, a rising wage share — would be desirable under current circumstances."
Expectations are everything, especially in economics.
That’s why a distinct lack of progress in a few basic measures of economic progress, particularly relative to pre-crisis expectations, has left many Americans questioning how much they have personally benefitted from the economic recovery.
A new report from the Roosevelt Institute, a liberal think tank in Washington, highlights a number of ways in which "the recovery since 2009 is, in a sense, a statistical illusion."
The study finds the nation’s total economic output, its gross domestic product, "remains about 15% below the pre-recession trend, a larger gap than at the bottom of the recession." The first chart below shows that lag, while the second offers insights into just how badly the crisis dented expectations about the future.
Strong employment gains in recent months have brought the jobless rate down to a historically-low 4.3%. However, this decline has not been accompanied by rising incomes or consumer prices, generally associated with a sustainable economic boom. Some Federal Reserve policymakers have found this trend puzzling, while many labor economists point to underlying weaknesses in the job market, including high levels of underemployment and long-term joblessness, as drags on income.
Stagnant wages amid rising profits have meant that the wage share in US national income has fallen from 63% to 57% in the last 15 years, according to the report.
"It is impossible for the wage share to ever rise if the central bank will not allow a period of 'excessive' wage growth," writes J.W. Mason, who authored the report. "A rise in the wage share necessarily requires a period in which wages rise faster than would be consistent with longterm macroeconomic stability."
In other words, if Fed officials tighten monetary policy at the first sign of wage increases, they will never allow the imbalances that have built up, including deep income disparities, to be torn down. Average hourly earnings rose just 2.5% on a yearly basis in July, nothing to write home about and certainly not enough to begin the ground lost over the last decade and more.
Business investment, which is key to long-run economic growth, has also been dismal during the now eight-year expansion.
"There is no precedent for the weakness of investment in the current cycle. Nearly ten years later, real investment spending remains less than 10% above its 2007 peak," Mason writes.
"This is slow even relative to the anemic pace of GDP growth, and extremely low by historical standards. In the three previous [economic] cycles lasting that long, real investment spending had increased anywhere from 30% to 80%. Even shorter cycles saw substantially greater investment growth." Roosevelt 3 investment growth Roosevelt Institute
Finally, Mason looks at whether the economy is at risk of running hot, generating inflation, which central bank officials cite to justify interest rate increases. The Fed has raised interest rates three times since December 2015 to a range of 1% to 1.25%.
"On the contrary, we argue, while a myopic focus on one or another data series might support a story of binding supply constraints, the behavior of the economy as a whole is much more consistent with a situation of depressed demand—an extended recession," the report concludes.
"The overall picture also makes it unclear what actual danger is posed by overheating in the conventional sense. Most of the obvious costs of overheating — higher inflation, higher interest rates, a rising wage share — would be desirable under current circumstances."
DeLong jumps the shark
Should-Read: IMHO, the smart PGL does good here... by DeLong
What's the difference? 15 versus 10 percent? Suggesting we close the 15-10 percent output gap isn't promising "unicorns and rainbows." Well it is a big ask regarding the current Democratic Party. Maybe that's partly why Hillary lost to Trump.
What's the difference? 15 versus 10 percent? Suggesting we close the 15-10 percent output gap isn't promising "unicorns and rainbows." Well it is a big ask regarding the current Democratic Party. Maybe that's partly why Hillary lost to Trump.
Tuesday, August 08, 2017
Fully Automated Luxury Gay Space Communism
The Simple Clean Route on Corporate Tax Reform by Dean Baker
A Progressive Way to End Corporate Taxes by Dean Baker
Instead of taxes, make corporations give the government stock by Dean Baker
Modification
Shares go into a public fund that distributes the yearly dividends as a social wage based on hours worked perhaps
Uncle gets to keep zero
A Zero gravity credit system is the lynch pin
financial crisis 10 years on: turn into the curve
Looking Back: The Financial Crisis Began 10 Years Ago This Week by Schoenholtz and Cecchetti
The Fed blew it
everything EMichael writes is to exculpate the Democrats from blame nothing is ever their fault.
Monday, August 07, 2017
Sunday, August 06, 2017
remember to read "business bad for business"
Business Is Bad for Business by Andrew Elrod
tight labor markets bad for profits? Goldman Sachs warnings.
Marshall Steinbaum:
Exactly. As @JWMason1 has shown, corporations are pumping cash out to shareholders, rather than sucking it in for investment.
Gavin Wright paper
Joan Robinson on labor market and productivity gains
Cambridge capital controversy
tight labor markets bad for profits? Goldman Sachs warnings.
Marshall Steinbaum:
Exactly. As @JWMason1 has shown, corporations are pumping cash out to shareholders, rather than sucking it in for investment.
1:35 PM - 6 Aug 2017
Gavin Wright paper
Joan Robinson on labor market and productivity gains
Cambridge capital controversy
Some members of the Marxian school argue that even if the means of production "earned" a return based on their marginal product, that does not imply that their owners (i.e., the capitalists) created the marginal product and should be rewarded. In the Sraffian view, the rate of profit is not a price, and it is not clear that it is determined in a market. In particular, it only partially reflects the scarcity of the means of production relative to their demand. While the prices of different types of means of production are prices, the rate of profit can be seen in Marxian terms, as reflecting the social and economic power that owning the means of production gives this minority to exploit the majority of workers and to receive profit. But not all followers of Sraffa interpret his theory of production and capital in this Marxian way. Nor do all Marxists embrace the Sraffian model: in fact, such authors as Michael Lebowitz and Frank Roosevelt are highly critical of Sraffian interpretations, except as a narrow technical critique of the neoclassical view. There are also Marxian economists, like Michael Albert and Robin Hahnel, who consider the Sraffian theory of prices, wages and profit to be superior to Marx's own theory.
Anti-Trust
Oligopolies help create inflation via rent extraction and cost-push inflation. Competition makes inflation lower and the Fed's job easier.
Currently overseas competition keeping inflation down. Charles Evans.
Currently overseas competition keeping inflation down. Charles Evans.
billionaire benefactors
In Weary Wisconsin Town, a Billionaire-Fueled Revival
In Kalamazoo, Mich., a group of well-to-do town “elders” pay for every public school student in town to go to college. And Columbus, Ind., has become an architectural mecca thanks to the support of J. Irwin Miller, whose family made its riches manufacturing engines.
Saturday, August 05, 2017
DSA
9 questions about the Democratic Socialists of America you were too embarrassed to ask by Jeff Stein
DSA has certainly been a beneficiary of the Dirtbag Left and its iconoclastic rage; Chapo Trap House frequently directs its guests to support the socialist organization, and its founders are in Chicago for the DSA convention. Mother Jones called the podcast a “gateway drug” for democratic socialism, and DSA’s leaders recognize that’s correct. Even if DSA won’t adopt Chapo’s insult-humor shtick in its official platform, it’s hard to imagine that some of its beliefs won’t seep in some way into the organization through new membership.
Chapo’s “dirtbag” politics have alarmed other left-leaning writers. In an essay for the New Republic, Jeet Heer warned against what he called its “dominance politics” as counterproductive to building a coalition with center-left Democrats.
But in an interview last year, Chapo Trap House co-host Matt Christman countered that Donald Trump had captured the “transgressive thrill of defying the cultural expectations of the elite,” and that the left would be wise to reclaim it. Incisive put-down humor, he suggested, isn’t just useful for amassing a podcast following; it could also be helpful to an ascendant left-wing politics.
“The gonad element of politics is now totally owned by the right. All the left has now is charts and data. You cannot motivate people with charts and data and lecturing,” Christman said. “If we’re going to win, we cannot allow [right-wing provocateur] Milo Yiannopoulos and all of these carnival-barking Nazis to have all of the fucking fun.”
Friday, August 04, 2017
Kocherlakota
How a Fed inflation hawk changed his mind by Anna Saphir
Colleagues put it simply: he cares about on-the-ground data, and he knows how to listen.
That much was clear in August when Kocherlakota, who turns 49 on Friday, donned a pair of jeans and took his board's nine directors on a tour of the booming oil fields of North Dakota.
In a 14-hour, 300-mile bus trek, they visited a fracking rig, a pipeline, a workers' camp, and a natural gas plant. They heard locals speak of life in the heart of the U.S. energy boom.
"His style is to let everybody else do the talking and he listens intently," said Lawrence Simkins, one of the board members and president of Montana-based Washington Cos, a privately owned transportation and equipment firm.
As the bus maneuvered truck-clogged roads, Kocherlakota got into a discussion with another director about the mental health toll on workers separated for months on end from their families.
jinxed
Game of Thrones, People of Earth, Jeremy Corbyn, weird Twitter, Trumpcare fails, Mueller impanels grand jury. Feeling better.
Thursday, August 03, 2017
Chappelle; Econospeak circles the drain
Dave Chappelle: Trump is “a bad DJ at a good party” by Constance Grady
Chappelle also said the small Ohio town where he lives is a "Bernie Sanders island in a Trump sea." "A subversive, weird place." Colbert responded "The Austin of Ohio." Chappelle: "But with none of the money and fun stuff to do at night."
The Output Gap per the Gerald Friedman Defenders by Econospeak
Chappelle also said the small Ohio town where he lives is a "Bernie Sanders island in a Trump sea." "A subversive, weird place." Colbert responded "The Austin of Ohio." Chappelle: "But with none of the money and fun stuff to do at night."
Friedman scandal
Why are big-shot liberal economists hippie-punching Bernie Sanders? by Ryan Cooper (February 16, 2016)
Tuesday, August 01, 2017
Vox speculation on Game of Thrones
Game of Thrones season 7: Cersei Lannister is about to get a rude awakening
There is something in the previews, along with Jon Snow back in the north. Beric Dondarrion lights up his flame sword.
With Casterly Rock’s defenses, the Unsullied should be able to last long enough for Dany and her dragons to come swooping in and save the day. Since Euron doesn’t know about the sewer system, the Unsullied should be able to hold him off in time for some dragon-fueled reinforcements or to prepare a retreat.I think Daenerys is going to attack King's Landing or Jaime's army with dragons and Dothraki. She's done with holding back.
Meanwhile, it’s unclear what Jaime’s army is planning to do or where it’s going to go after plundering Highgarden. Perhaps they’ll team up with Euron to take back Casterly Rock.
There is something in the previews, along with Jon Snow back in the north. Beric Dondarrion lights up his flame sword.
Monday, July 31, 2017
Sunday, July 30, 2017
Friday, July 28, 2017
Mason/Roosevelt report
What Recovery?
Josh Bivens references Blanchard and Leigh (2013) and Fatas and Summers (2015)
Mason references DeLong and Summers (2012) among many others.
Josh Bivens references Blanchard and Leigh (2013) and Fatas and Summers (2015)
Mason references DeLong and Summers (2012) among many others.
Thursday, July 27, 2017
Wednesday, July 26, 2017
Lebowski
"Your revolution is over Mr. Lebowski. Condolences. The bums lost. My advice to you is to do what your parents did! Get a job, sir. The bums always lose! Do you hear me Lebowski?!? The bums will always lose!"
Tuesday, July 25, 2017
Trump and Yellen
Cohn and Yellen Are Among Trump’s Contenders to Lead Fed
“I like her; I like her demeanor. I think she’s done a good job,” he said. “I’d like to see rates stay low. She’s historically been a low-interest-rate person.”
poductivity slump by Neil Irwin with JW Mason, Covert on skills
The Central Contradiction of the Democrats’ “Better Deal” by Bryce Covert
Maybe We’ve Been Thinking About the Productivity Slump All Wrong by Neil Irwin
July 25, 2017
American businesses are doing a terrible job at making their workers more productive.
Productivity growth is the weakest it has been since the early 1980s — only 0.8 percent a year over the last half a decade, compared with 2.3 percent on average from 1947 to 2007. This is the root cause of slow growth in both G.D.P. and worker pay.
At least, that is the standard way of thinking about productivity and its relationship to the economy. In a mainstream view, productivity is a kind of magic force that helps explain rising output. New labor-saving inventions come along or new management practices are taken up that miraculously allow companies to produce more output with fewer hours of work.
You can’t really predict when and how those innovations will arrive, in this view. Henry Ford starts using a moving assembly line. Sam Walton perfects the just-in-time supply chain. Easy-to-use word processors result in fewer businesspeople whoneed secretaries. Voilà , the productive capacity of the nation rises, along with incomes and living standards.
But what if this is the wrong way of thinking about it? What if productivity growth is not so much an external force that proceeds in random fits and starts, but is rather deeply intertwined with the overall state of the economy and labor market?
It’s a chicken or egg problem: Does low productivity cause slow growth, or does slow growth cause low productivity?
The second possibility is the provocative argument of a new paper published Tuesday by the Roosevelt Institute, a liberal think tank. The paper argues that the United States economy is not actually closing in on its full economic potential and has plenty of room for continued growth — so long as the Federal Reserve doesn’t put on the brakes of the expansion prematurely.
J. W. Mason, the author of the report, argues that soft productivity growth reflects not some unlucky dearth of new innovations, but rather is a consequence of depressed demand for goods and services and a slack labor market that has depressed wages.
Maybe if the labor market were tighter and wages were rising faster, it would induce companies to invest more heavily in new labor-saving innovations.
What’s particularly interesting is that this diagnosis — though decidedly not the policy prescriptions — has some overlap with the arguments of influential conservative economists.
A recent paper published by the Hoover Institution and American Enterprise Institute argued that the productivity drought was caused by insufficient investment in capital equipment and software, and was poised to rebound. (Three of the four authors, Glenn Hubbard, John B. Taylor and Kevin Warsh, are potential candidates to be President Trump’s nominee to lead the Federal Reserve.)
And it comports with the view of some of the more sophisticated analysts of productivity trends from the business world.
For example, Marco Annunziata, the chief economist of General Electric, argues that many of the technological innovations now coming to market, like 3D printing and the use of augmented reality glasses in industrial settings, really are generating huge productivity gains where they are deployed.
But capital spending has been weak over all, and particularly weak for those more transformative innovations.
“The investment that should be most powerful in driving productivity for companies has been the weakest,” Mr. Annunziata said. “It means that all these innovations aren’t scaling. They’re only being implemented on an episodic basis, on a small scale.”
Companies, in his telling, are spending their capital budgets not on things that might cause a leap in their workers’ productivity, but on smaller projects to replace old machinery and software and make marginal efficiency gains.
What would change that? That’s what brings us back to Mr. Mason’s arguments about the interplay between demand and productivity growth.
Just maybe, if the labor market tightens and good workers are harder to find — and wages rise — that will be the impetus to get companies to consider more of those big-ticket innovations that generate productivity growth.
Consider a hypothetical (though one that isn’t actually that hypothetical right now). If your neighborhood fast food place employs 10 people during the lunch rush, with each making $10 an hour, what will happen if your state raises its minimum wage to $15?
The owner might raise prices, or accept lower profits, or close the store entirely. Or, just maybe, the owner will invest in new machinery to enable workers to do more with less. Perhaps the restaurant will be able to operate just fine with only five workers after investing in self-ordering kiosks and a hamburger-flipping robot.
There’s a term for a restaurant that can serve the same number of burgers with half as many employees, and it’s higher productivity. (While this can conjure scary notions of a work force made redundant by robots, economists see a more hopeful picture: that higher productivity enables faster economic growth and higher incomes, at the cost of some temporary disruption for the workers affected.)
In the context of the minimum wage debate, pretty much everyone agrees that this kind of response — “capital substitution,” to use the technical term — is to be expected. But there’s no reason it would happen only after a minimum-wage increase. You could imagine the same thing happening if wages rose because of market forces; that same fast food restaurant might invest in kiosks and robots if the labor market were so tight that no workers were willing to take the job for $10.
If you look at long-term patterns of productivity growth, they roughly fit this idea, that a booming job market tends to be followed by a productivity boom, and that deep recessions are followed by productivity slumps.
The strongest productivity growth in post-World War II America came in the late 1960s and early 2000s. The two periods of greatest weakness were the early 1980s and the last decade since the global financial crisis.
There are some historical roots for this argument, too. Some historians believe that the industrial revolution began in Britain instead of elsewhere because comparatively high wages for British workers prompted companies to invest in labor-saving devices.
Productivity growth is the weakest it has been since the early 1980s — only 0.8 percent a year over the last half a decade, compared with 2.3 percent on average from 1947 to 2007. This is the root cause of slow growth in both G.D.P. and worker pay.
At least, that is the standard way of thinking about productivity and its relationship to the economy. In a mainstream view, productivity is a kind of magic force that helps explain rising output. New labor-saving inventions come along or new management practices are taken up that miraculously allow companies to produce more output with fewer hours of work.
You can’t really predict when and how those innovations will arrive, in this view. Henry Ford starts using a moving assembly line. Sam Walton perfects the just-in-time supply chain. Easy-to-use word processors result in fewer businesspeople whoneed secretaries. Voilà , the productive capacity of the nation rises, along with incomes and living standards.
But what if this is the wrong way of thinking about it? What if productivity growth is not so much an external force that proceeds in random fits and starts, but is rather deeply intertwined with the overall state of the economy and labor market?
It’s a chicken or egg problem: Does low productivity cause slow growth, or does slow growth cause low productivity?
The second possibility is the provocative argument of a new paper published Tuesday by the Roosevelt Institute, a liberal think tank. The paper argues that the United States economy is not actually closing in on its full economic potential and has plenty of room for continued growth — so long as the Federal Reserve doesn’t put on the brakes of the expansion prematurely.
J. W. Mason, the author of the report, argues that soft productivity growth reflects not some unlucky dearth of new innovations, but rather is a consequence of depressed demand for goods and services and a slack labor market that has depressed wages.
Maybe if the labor market were tighter and wages were rising faster, it would induce companies to invest more heavily in new labor-saving innovations.
What’s particularly interesting is that this diagnosis — though decidedly not the policy prescriptions — has some overlap with the arguments of influential conservative economists.
A recent paper published by the Hoover Institution and American Enterprise Institute argued that the productivity drought was caused by insufficient investment in capital equipment and software, and was poised to rebound. (Three of the four authors, Glenn Hubbard, John B. Taylor and Kevin Warsh, are potential candidates to be President Trump’s nominee to lead the Federal Reserve.)
And it comports with the view of some of the more sophisticated analysts of productivity trends from the business world.
For example, Marco Annunziata, the chief economist of General Electric, argues that many of the technological innovations now coming to market, like 3D printing and the use of augmented reality glasses in industrial settings, really are generating huge productivity gains where they are deployed.
But capital spending has been weak over all, and particularly weak for those more transformative innovations.
“The investment that should be most powerful in driving productivity for companies has been the weakest,” Mr. Annunziata said. “It means that all these innovations aren’t scaling. They’re only being implemented on an episodic basis, on a small scale.”
Companies, in his telling, are spending their capital budgets not on things that might cause a leap in their workers’ productivity, but on smaller projects to replace old machinery and software and make marginal efficiency gains.
What would change that? That’s what brings us back to Mr. Mason’s arguments about the interplay between demand and productivity growth.
Just maybe, if the labor market tightens and good workers are harder to find — and wages rise — that will be the impetus to get companies to consider more of those big-ticket innovations that generate productivity growth.
Consider a hypothetical (though one that isn’t actually that hypothetical right now). If your neighborhood fast food place employs 10 people during the lunch rush, with each making $10 an hour, what will happen if your state raises its minimum wage to $15?
The owner might raise prices, or accept lower profits, or close the store entirely. Or, just maybe, the owner will invest in new machinery to enable workers to do more with less. Perhaps the restaurant will be able to operate just fine with only five workers after investing in self-ordering kiosks and a hamburger-flipping robot.
There’s a term for a restaurant that can serve the same number of burgers with half as many employees, and it’s higher productivity. (While this can conjure scary notions of a work force made redundant by robots, economists see a more hopeful picture: that higher productivity enables faster economic growth and higher incomes, at the cost of some temporary disruption for the workers affected.)
In the context of the minimum wage debate, pretty much everyone agrees that this kind of response — “capital substitution,” to use the technical term — is to be expected. But there’s no reason it would happen only after a minimum-wage increase. You could imagine the same thing happening if wages rose because of market forces; that same fast food restaurant might invest in kiosks and robots if the labor market were so tight that no workers were willing to take the job for $10.
If you look at long-term patterns of productivity growth, they roughly fit this idea, that a booming job market tends to be followed by a productivity boom, and that deep recessions are followed by productivity slumps.
The strongest productivity growth in post-World War II America came in the late 1960s and early 2000s. The two periods of greatest weakness were the early 1980s and the last decade since the global financial crisis.
There are some historical roots for this argument, too. Some historians believe that the industrial revolution began in Britain instead of elsewhere because comparatively high wages for British workers prompted companies to invest in labor-saving devices.
In this way of thinking about productivity, inventors and business innovators are always cooking up better ways to do things, but it takes a labor shortage and high wages to coax firms to deploy the investment it takes to actually put those innovations into widespread use.
Mr. Mason adds that this idea has some big implications for how to think about growth in worker compensation in the current economic environment. There has been a glaring contradiction around how much American workers’ wages can, or should, be rising.
“On Mondays and Wednesdays, economists argue that wages are low because robots are taking people’s jobs. On Tuesdays and Thursdays, it’s that we can’t have wages rise because productivity growth is low,” said Mr. Mason, an economist at John Jay College. “Both can’t be true.”
In other words, instead of worrying so much about robots taking away jobs, maybe we should worry more about wages being too low for the robots to even get a chance.
Mr. Mason adds that this idea has some big implications for how to think about growth in worker compensation in the current economic environment. There has been a glaring contradiction around how much American workers’ wages can, or should, be rising.
“On Mondays and Wednesdays, economists argue that wages are low because robots are taking people’s jobs. On Tuesdays and Thursdays, it’s that we can’t have wages rise because productivity growth is low,” said Mr. Mason, an economist at John Jay College. “Both can’t be true.”
In other words, instead of worrying so much about robots taking away jobs, maybe we should worry more about wages being too low for the robots to even get a chance.
Monday, July 24, 2017
Sunday, July 23, 2017
Saturday, July 22, 2017
Friday, July 21, 2017
DeLong quotes Avent on the recovery
Must-Read: Ryan Avent: MAKING MONETARY POLICY GREAT AGAIN: "Obama’s response to the economic crisis... the timidity of his stimulus plan... his failure to provide broad support to struggling homeowners... his premature pivot to deficit cutting...
http://democracyjournal.org/magazine/45/making-monetary-policy-great-again/
...While Roosevelt’s New Deal programs left an indelible mark on the American economy and society, it was his decisive monetary action that saved America from continuing depression. On just his third day... Roosevelt declared a bank holiday... suspended... the... gold standard... a policy of reflation. The economic response was immediate.... Obama would not pursue any comparably radical policy.... His Administration left the hard work of rehabilitating the economy to the Federal Reserve, while the federal government turned to deficit reduction....
The decades prior to the crisis taught political leaders that economic management was the Fed’s job, one it could handle ably. Experience since the financial crisis strongly suggests that assumption was mistaken. It should not have taken six years to return the unemployment rate to the pre-crisis level, nor should so much of the reduction in unemployment have come in the form of frustrated workers leaving the labor force. American incomes should not have been allowed to fall below the pre-crisis trend, and at least some of that shortfall ought to have been made up. Most critically, now, nearly ten years after the start of the Great Recession, the economy should be far better prepared to deal with the next crisis, not trapped with interest rates stuck near zero and the labor market still signaling that more people could be put to work for longer hours at higher rates of pay.
As the Great Recession recedes into the past, the sense that urgent change in the making of economic policy is needed also fades...
Thursday, July 20, 2017
Wednesday, July 19, 2017
Chapo Trap House
Calling them the "dirtbag left" is playing into the centrist Bernie Bro meme.
The Dirtbag Left and the Problem of Dominance Politics by Jeet Heer
The Dirtbag Left and the Problem of Dominance Politics by Jeet Heer
Tuesday, July 18, 2017
Monday, July 17, 2017
Game of Thrones season 7 episode 1
What's the gift Euron Greyjoy plans to bring Cersei? Tyrion's head. A horn which controls dragons?
Does Ayra wipe out Ed Sheeran and the nice Lannister soldiers? Probably.
Doesn't really matter who leads the Karstarks and Umbers. The White Walkers are heading straight for their castles in the north east and will overwhelm them.
I read speculation that the Night King is really in the west as the Hounds saw a mountain, which are only located in the west. That means the army of the dead traveled west pretty quickly. Bran will know!
Jim Broadbent!
Spoilers below!
Previews have Yara making out with the Red Viper's widow?
New Republic discussion
Ask the Maester
Saturday, July 15, 2017
It's the Debt Stupid by Steve Roth
It's the Debt Stupid by Steve Roth
If you go further and allow that wages and prices can inflate at different rates (which you must, given recent decades), you have extremely large and changing differentials between price inflation, wage inflation, and (especially) asset-price inflation.
Thursday, July 13, 2017
Tuesday, July 11, 2017
Monday, July 10, 2017
Sunday, July 09, 2017
THE CRISIS OF POSITIVE-SUM CAPITALISM by Chris Dillow
THE CRISIS OF POSITIVE-SUM CAPITALISM by Chris Dillow
- With savings low and debt high, households might respond to higher wages by saving more. If so, we’ll not get higher aggregate demand and hence incentives to invest. There’s a warning here from the 70s. One reason why the positive-sum game broke down then was that workers saved increasing proportions of their wages.
These doubts don’t make me side with neoliberalism. They just make me think that wage-led growth is nothing like sufficient.
Medicare, Medicaid
Medicare:
In 2015, Medicare provided health insurance for over 55 million—46 million people age 65 and older and nine million younger people.[2] On average, Medicare covers about half of the health care charges for those enrolled.
"Many look to the Veterans Health Administration as a model of lower cost prescription drug coverage. Since the VHA provides healthcare directly, it maintains its own formulary and negotiates prices with manufacturers. Studies show that the VHA pays dramatically less for drugs than the PDP plans Medicare Part D subsidizes.[138][139] One analysis found that adopting a formulary similar to the VHA’s would save Medicare $14 billion a year (over 10 years the savings would be around $140 billion).[140]"
In 2015, Medicare provided health insurance for over 55 million—46 million people age 65 and older and nine million younger people.[2] On average, Medicare covers about half of the health care charges for those enrolled.
payroll tax. universal, expensive, b/c government doesn't negotiate as in other countries.
Medicaid cost, care
Saturday, July 08, 2017
Socialize Finance by J.W. Mason
Socialize Finance by J.W. Mason
"We already live in a planned economy. Why not make it a democratic one?"
Thursday, July 06, 2017
David Frum interviews Edward Luce
“Western liberalism is under siege”
Frum:
Frum:
Let's talk about some of the drivers of the changing of society. I see three. You talk a lot about two, and less about the third.
The first is this giant question about the future of work — what is happening to the economic situation of people who don't own capital or have internationally traded skills.What an odd way of putting it. Isn't it the job of the Fed to keep unemployment low?
Wednesday, July 05, 2017
Franc thoughts on Bond Vigilantes by Krugman
Franc Thoughts on Bond Vigilantes
by Paul Krugman
NOVEMBER 23, 2012 12:48 PM
Suzy Khimm writes about the contrast between what financial industry honchos say worries them and what financial markets seem to be saying. The honchos declare that failure to reach a Grand Bargain would
spark a damaging loss of confidence in the U.S. government’s fiscal prospects, a run on Treasury bonds, and a spike in interest rates.
But the bond markets are saying what me worry, with long-term rates at near-record lows.
What Khimm doesn’t note, however, is that the problem with bond vigilante scare tactics runs even deeper than that — because it’s actually quite hard to tell a story in which a loss of confidence in U.S. bonds hurts the real economy. Why wouldn’t it just drive down the dollar, and thereby have an expansionary effect?
Yes, I know, Greece — but Greece doesn’t have its own currency. What’s the model under which a country that does have its own currency and borrows in that currency can experience a slump due to an attack by bond vigilantes? Or failing that, where are the historical examples?
The closest I can come to anything resembling the danger supposedly lurking for America is the tale of France in the 1920s, which emerged from World War I burdened by large debt, and which did in fact face an attack by speculators as a result. Yet the French story does not, if you look at it closely, offer any support to the deficit scare talk we keep hearing.
So, France did indeed have a big debt problem. Here’s debt as a percentage of GDP, from the IMF debt database:
[graph]
How did France achieve that big drop in debt after 1925? Basically by inflating it away.
And markets sort of saw that coming. This study (pdf) by the Bank of France show medium-term interest rates (black line) rising substantially for much of the 1920s, before dropping off sharply:
[graph]
It’s important to note, however, that France wasn’t a depressed economy in the 1920s, and therefore didn’t look much like America today:
[chart]
Meanwhile, the really big effect was a sharp depreciation of the franc, which made France highly competitive and strengthened the economy:
[chart]
But what about the brief but nasty slump in 1927? That wasn’t caused by spiking interest rates; it was, instead, caused by fiscal austerity, by the measures taken to stabilize the franc.
So even when we look at the closest thing I can find to the scenario the deficit scolds want us to fear, it doesn’t play out at all as described.
It’s quite remarkable: our policy discourse remains largely dominated by fears of an event that the fear-mongers can’t explain in theory, and for which they can offer no historical examples in practice.
by Paul Krugman
NOVEMBER 23, 2012 12:48 PM
Suzy Khimm writes about the contrast between what financial industry honchos say worries them and what financial markets seem to be saying. The honchos declare that failure to reach a Grand Bargain would
spark a damaging loss of confidence in the U.S. government’s fiscal prospects, a run on Treasury bonds, and a spike in interest rates.
But the bond markets are saying what me worry, with long-term rates at near-record lows.
What Khimm doesn’t note, however, is that the problem with bond vigilante scare tactics runs even deeper than that — because it’s actually quite hard to tell a story in which a loss of confidence in U.S. bonds hurts the real economy. Why wouldn’t it just drive down the dollar, and thereby have an expansionary effect?
Yes, I know, Greece — but Greece doesn’t have its own currency. What’s the model under which a country that does have its own currency and borrows in that currency can experience a slump due to an attack by bond vigilantes? Or failing that, where are the historical examples?
The closest I can come to anything resembling the danger supposedly lurking for America is the tale of France in the 1920s, which emerged from World War I burdened by large debt, and which did in fact face an attack by speculators as a result. Yet the French story does not, if you look at it closely, offer any support to the deficit scare talk we keep hearing.
So, France did indeed have a big debt problem. Here’s debt as a percentage of GDP, from the IMF debt database:
[graph]
How did France achieve that big drop in debt after 1925? Basically by inflating it away.
And markets sort of saw that coming. This study (pdf) by the Bank of France show medium-term interest rates (black line) rising substantially for much of the 1920s, before dropping off sharply:
[graph]
It’s important to note, however, that France wasn’t a depressed economy in the 1920s, and therefore didn’t look much like America today:
[chart]
Meanwhile, the really big effect was a sharp depreciation of the franc, which made France highly competitive and strengthened the economy:
[chart]
But what about the brief but nasty slump in 1927? That wasn’t caused by spiking interest rates; it was, instead, caused by fiscal austerity, by the measures taken to stabilize the franc.
So even when we look at the closest thing I can find to the scenario the deficit scolds want us to fear, it doesn’t play out at all as described.
It’s quite remarkable: our policy discourse remains largely dominated by fears of an event that the fear-mongers can’t explain in theory, and for which they can offer no historical examples in practice.
Tuesday, July 04, 2017
Marc Maron and Bill Hicks
Not being a comedy geek, I never put the two together until now.
video of a bit
Marc Maron Opens Up About Friend and Comedian Bill Hicks
video of a bit
Marc Maron Opens Up About Friend and Comedian Bill Hicks
Arguably, what stands out most in Maron's description of his old friend is how, unlike most comics, Hicks wasn't desperately eager to please the audience. In fact, he didn't seem to care whether they were pleased. And if you watch old clips on YouTube, you can see that sometimes they weren't. "Bill was very much in his own time zone," Maron says. "He went through his entire presentation, whether people were responding or not. There are a few guys who took his approach to details and description, but not many. It's hard. The stuff Bill wrote is positively Rabelaisian.
"If I could say anything about Hicks, it's that he was doing his best to destroy anything he perceived as hypocrisy," Maron concludes. "While also revealing stuff that was overly embraced by moralizers. He was a misanthropic moralist, who did his best to get to the bottom of religious hypocrisy, moral hypocrisy, and societal hypocrisy. But he also made you laugh when he did it. That's a tough trick. But it's what Bill did."
Sunday, July 02, 2017
moral consequences of economic growth
Vox interview with Benjamin Friedman
Will Wilkinson CATO review
Gregg Easterbrook New York Times review
Economist review
Brad DeLong's review
Krugman and Beauchamp are wrong:
No easy answers: why left-wing economics is not the answer to right-wing populism by Zack Beauchamp Mar 13, 2017
The Case for Countering Right-Wing Populism With ‘Left-Wing Economics’ by Eric Levitz
Populism and the Politics of Health by Paul Krugman March 14, 2017 1:43 PM
Why Zack Beauchamp’s piece arguing otherwise is wrong by eshhou
No Easy Answers, Just Bad History by Marshall Steinbaum
Will Wilkinson CATO review
Gregg Easterbrook New York Times review
Economist review
Brad DeLong's review
Krugman and Beauchamp are wrong:
No easy answers: why left-wing economics is not the answer to right-wing populism by Zack Beauchamp Mar 13, 2017
And yet, and yet: Trump did in fact win over white working-class voters, who thought they were voting for a populist; Democrats, who did a lot for those voters, got no credit — rural whites, in particular, who were huge beneficiaries of the ACA, overwhelmingly supported the man who may destroy their healthcare.
This ties in with an important recent piece by Zack Beauchamp on the striking degree to which left-wing economics fails, in practice, to counter right-wing populism; basically, Sandersism has failed everywhere it has been tried. Why?
The answer, presumably, is that what we call populism is really in large degree white identity politics, which can’t be addressed by promising universal benefits. Among other things, these “populist” voters now live in a media bubble, getting their news from sources that play to their identity-politics desires, which means that even if you offer them a better deal, they won’t hear about it or believe it if told. For sure many if not most of those who gained health coverage thanks to Obamacare have no idea that’s what happened.Any answer to right-wing populism requires left-wing economics:
Why Zack Beauchamp’s piece arguing otherwise is wrong by eshhou
No Easy Answers, Just Bad History by Marshall Steinbaum
Liberals and diversity by Matt Bruenig
Saturday, July 01, 2017
The Retreat of Western Liberalism
In ‘The Retreat of Western Liberalism,’ How Democracy Is Defeating Itself by Michiko Kakutani
...
Instead, he argues in “The Retreat of Western Liberalism,” Trump’s election is a part of larger trends on the world stage, including the failure of two dozen democracies since the turn of the millennium (including three in Europe — Russia, Turkey and Hungary) and growing downward pressures on the West’s middle classes (wrought by the snowballing forces of globalization and automation) that are fomenting nationalism and populist revolts. These developments, in turn, represent a repudiation of the naïve hopes, after the fall of the Berlin Wall, that liberal democracy was on an inevitable march across the planet, and they also pose a challenge to the West’s Enlightenment faith in reason and linear progress.
...
The strongest glue holding liberal democracies together, Luce argues, is economic growth, and when that growth stalls or falls, things tend to take a dark turn. With growing competition for jobs and resources, losers (those he calls the “left-behinds”) seek scapegoats for their woes, and consensus becomes harder to reach as politics devolves into more and more of a zero-sum game.
“Many of the tools of modern life are increasingly priced beyond most people’s reach,” Luce writes. One study shows it now takes the median worker more than twice as many hours a month to pay rent in one of America’s big cities as it did in 1950; and the costs of health care and a college degree have increased even more. There is rising income inequality in the West; America, which “had traditionally shown the highest class mobility of any Western country,” now has the lowest.”
As nostalgia for a dimly recalled past replaces hope, the American dream of self-betterment and a brighter future for one’s children recedes. Among the symptoms of this dynamic: a growing opioid epidemic and decline in life expectancy, increasing intolerance for other people’s points of view, and brewing contempt for an out-of-touch governing elite (represented in 2016 by Hillary Clinton, of whom Luce writes: “her tone-deafness towards the middle class was almost serene”).
...
Tuesday, June 27, 2017
Monday, June 26, 2017
Saturday, June 24, 2017
Jefferson quote
"Indeed, I tremble for my country when I reflect that God is just, that his justice cannot sleep forever."
--Thomas Jefferson, 1785
Friday, June 23, 2017
Thursday, June 22, 2017
Larry Summers comes out for NGDP target
5 reasons why the Fed may be making a mistake by Larry Summers
Many of my friends have recently issued a statement asserting that the Fed should change its inflation target. I suspect, for reasons I will write about in the next few days, that moving away from inflation targeting to something like nominal gross domestic product-level targeting would be a better idea. But I think that this issue is logically subsequent to the question of how policy should be made in the near term with the given 2 percent inflation target.
Wednesday, June 21, 2017
Tuesday, June 20, 2017
Sunday, June 18, 2017
young voting for socialists
Why Are So Many Young Voters Falling for Old Socialists? by Sarah Leonard (June 13, 2017)
At 68, Jeremy Corbyn has been on the Labour Party’s left flank longer than many of his most enthusiastic supporters — the ones who nearly propelled him to an upset victory in this month’s British general election — have been alive. Bernie Sanders, who won more votes from young people in the 2016 primaries than Donald Trump and Hillary Clinton combined, is 75, and has a demeanor that, honestly, reminds me of my Jewish grandfather. Jean-Luc Mélenchon, the Communist-backed candidate who, thanks to support from young people, surged in the polls ahead of the first round of France’s presidential election, is a sprightly 65.
What has driven so many young people into passionate political work, sweeping old socialists with old ideas to new heights of popularity? To understand what is going on, you have to realize that politicians like Mr. Sanders and Mr. Corbyn have carried the left-wing torch in a sort of long-distance relay, skipping generations of centrists like Bill Clinton and Tony Blair, to hand it to today’s under-35s. And you have to understand why young people are so ready to grab that torch and run with it.
Both Britain and the United States used to have parties that at least pledged allegiance to workers. Since the 1970s, and accelerating in the ’80s and ’90s, the left-wing planks have one by one been ripped from their platforms. Under Mr. Blair, Labour rewrote its famous Clause IV, which had committed the party to the goal of “common ownership of the means of production, distribution and exchange.” Under Mr. Clinton, the Democratic Party cut welfare programs and pushed anti-worker international trade deals. Writing in 1990, Kevin Phillips, a former strategist for Richard Nixon, called the Democrats “history’s second-most enthusiastic capitalist party.” Elsewhere in Europe, traditional socialist parties became sclerotic and increasingly business-friendly.
All of this left many voters with a sense that there is no left-wing party devoted to protecting the interests of the poor, the working class and the young.
Meanwhile, people my age — I’m 29 — are more in need of a robust leftist platform than ever. The post-Cold War capitalist order has failed us: Across Europe and the United States, millennials are worse off than their parents were and are too poor to start new families. In the United States, they are loaded with college debt (or far less likely to be employed without a college degree) and are engaged in precarious and non-unionized labor. Also the earth is melting.
There’s nothing inherently radical about youth. But our politics have been shaped by an era of financial crisis and government complicity. Especially since 2008, we have seen corporations take our families’ homes, exploit our medical debt and cost us our jobs. We have seen governments impose brutal austerity to please bankers. The capitalists didn’t do it by accident, they did it for profit, and they invested that profit in our political parties. For many of us, capitalism is something to fear, not celebrate, and our enemy is on Wall Street and in the City of London.
Because we came to political consciousness after 1989, we’re not instinctively freaked out by socialism. In fact, it seems appealing: In a 2016 poll conducted by Harvard, 51 percent of Americans between 18 and 29 rejected capitalism, and a third said they supported socialism. A Pew poll in 2011 showed that the same age bracket had more positive views of socialism than capitalism. What socialism actually means to millennials is in flux — more a falling out with capitalism than an adherence to one specific platform. Still, within this generation, certain universal programs — single-payer health care, public education, free college — and making the rich pay are just common sense.
At the ballot box, our options have been relatively limited. Clinton- and Blair-era liberals have hobbled their parties’ abilities to confront the ills of capitalism. But while left-of-center parties ran into the waiting arms of bankers, Mr. Sanders and Mr. Corbyn held fast to left-wing politics.
In May, when Labour’s manifesto calling for free university education and increased spending on the National Health Service was leaked, Britain’s mainstream press responded with derision: “Labour’s Manifesto to Drag Us Back to the 1970s” read a headline in the Daily Mail. (In fact, some of Mr. Corbyn’s proposals, like nationalizing rail and water companies, hark directly back to Labour’s Clause IV commitments.) To some readers it may have sounded like a threat, but to many young people it was a promise. Following the headlines, Labour’s poll numbers surged. In the election on June 8, the party finished with a shocking 40 percent of the vote, its highest share in years. And much of the success was thanks to young voters.
Of course, Mr. Corbyn, who is famous for cycling to work and being “totally anti-sugar on health grounds,” has a certain ascetic charm. And there’s something appealingly unpretentious about Mr. Sanders’s Brooklyn accent and disheveled appearance. But it seems safe to say that their success with young people has been based on their platforms, not their charisma.
That’s a good thing, too, since, sooner or later, those platforms will need to acquire new representatives. America’s working class is increasingly racially diverse. Hotly contested politics around race, gender and sexuality shape our political terrain (and our experience of downward mobility). Mr. Sanders suffered shortcomings on this front: He freely confessed to not comprehending the scale of American police brutality when he began his campaign; he can sound awkward when it comes to race and gender.
The upside is that Mr. Sanders’s campaign and Mr. Corbyn’s leadership of the Labour Party have paved the way for a socialist politics that doesn’t just look like them.
The day after the election in Britain, I flew to Chicago to speak at the People’s Summit, a national convention of progressive and left-wing activists organized by people from the Bernie Sanders campaign alongside National Nurses United.
Also attending were a next generation of leftist organizers and candidates: Linda Sarsour, a 37-year-old Palestinian-American organizer from New York known for her skill in building bridges among communities; Dante Barry, the 29-year-old executive director of the Million Hoodies Movement for Justice; and Maria Svart, also in her 30s, who became the national director of the Democratic Socialists of America in 2011.
I encountered many young people who found themselves radicalized over the last couple of years and are now joining campaigns in their communities for state-level single payer health care or for better housing. Those campaigns exist because older campaigners have carried the torch. Out of all this activity, a next generation of socialist candidates who actually reflect America is almost guaranteed to emerge.
When Mr. Sanders took to the stage, I looked around to see hundreds of young organizers cheering his democratic socialist agenda. I hit the convention floor and saw people my own age tabling for new lefty magazines and organizations. A friend texted me a Corbyn emoji: thumbs up.
Three days after Britain’s general election, Mr. Corbyn sat down for an interview with Andrew Marr on the BBC. Mr. Marr grilled the Labour leader on the feasibility of turning his platform into governing policy. Was Mr. Corbyn, at this point in his career, really in it for the long haul? “Look at me!” he said. “I’ve got youth on my side.”
Monday, June 12, 2017
voter turnout in French election
voter turnout in French election
49 percent in 2017
Turnout this year was lower than in the past two legislative elections, 57 percent in 2012 and 60 percent in 2007.
49 percent in 2017
Turnout this year was lower than in the past two legislative elections, 57 percent in 2012 and 60 percent in 2007.
Sunday, June 11, 2017
Saturday, June 10, 2017
Thursday, June 08, 2017
Monday, June 05, 2017
Sunday, June 04, 2017
Single-payer Democrats?
The Single-Payer Party? Democrats Shift Left on Health Care by ALEXANDER BURNS and JENNIFER MEDINA
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