fiscal policy, DeLong and Ip

Must-Read: Five years late, and many trillions of dollars short. But still...

Greg Ip: Fiscal Policy Makes a Quiet Turn Toward Stimulus:

Now... fiscal policy across the developed world is collectively turning more stimulative for the first time since the end of the recession... 

...This may be the most underappreciated economic development of the year. While the scale of the stimulus is modest in dollar terms, it signals a more profound shift in the political winds. Globally, the rise of political populism has pushed deficits down the list of priorities while elevating tax cuts and benefits for the working class. With enough critical mass, such measures could persuade central banks to rethink their own super-easy monetary policies, which would undermine the case for today’s rock-bottom bond yields and pricey stocks. 

The fiscal shift is easy to miss, because rhetorically at least, governments remain devoted to cutting their debts. But numbers tell a different story.... The near-term catalyst for the fiscal turn was Britain’s vote to leave the European Union on June 23. Not only did the resulting uncertainty threaten global economic growth, it also alerted centrist political parties to how unhappy voters are with the economic status quo.... 

For Japan, the impetus was both Brexit and the Bank of Japan’s introduction of negative interest rates this year, which failed to work as planned; the yen went up and stocks went down. In August, Prime Minister Shinzo Abe unveiled a $73 billion package of infrastructure spending, cash handouts to poor families, and other stimulative measures. In the U.S., budget caps enacted in 2011 have already been loosened. Meanwhile, Hillary Clinton, the Democratic nominee, is campaigning to boost spending on countless programs, from college education to infrastructure.... Mr. Trump’s rise demonstrates that austerity has lost the political energy it had in 2010.... 

Central bankers can take credit for the shift. As the benefits of zero to negative rates have shrunk and the side effects risen, they have exhorted finance ministers to take up the burden of supporting growth...

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What  DeLong and Ip don't tell us is that Hillary's plan of $275 billion over five years is too small. The Fed says it gave us the recovery it wanted for the most part.

Clinton on Sanders supporters

Clinton gives her take on Sanders supporters in leaked fundraising recording

Hacked audio of a conversation between Hillary Clinton and donors during a February fundraising event shows the Democrat nominee describing Bernie Sanders supporters as "children of the Great Recession" who are "living in their parents’ basement."  

Speaking at a Virginia fundraiser hosted by former U.S. ambassador Beatrice Welters, Clinton says in a clip released by the Free Beacon that many of her former primary opponent's supporters sought things like “free college, free health care,” saying that she preferred to occupy the space "from the center-left to the center-right" on the political spectrum. 

During the conversation, also reported in the Intercept, Clinton confesses to feeling "bewildered" by those to her far-left and far-right in the election. 

"There is a strain of, on the one hand, the kind of populist, nationalist, xenophobic, discriminatory kind of approach that we hear too much of from the Republican candidates," she said. "And on the other side, there’s just a deep desire to believe that we can have free college, free healthcare, that what we’ve done hasn’t gone far enough, and that we just need to, you know, go as far as, you know, Scandinavia, whatever that means, and half the people don’t know what that means, but it’s something that they deeply feel." 

While stressing the need to not serve as a "wet blanket on idealism," Clinton paints fans of the then-surging Vermont senator as political newbies attempting to deal with an economy that has fallen short of their expectations. 

"Some are new to politics completely. They’re children of the Great Recession. And they are living in their parents’ basement," she said. "They feel they got their education and the jobs that are available to them are not at all what they envisioned for themselves. And they don’t see much of a future." 

Clinton added: "If you’re feeling like you’re consigned to, you know, being a barista, or you know, some other job that doesn’t pay a lot, and doesn’t have some other ladder of opportunity attached to it, then the idea that maybe, just maybe, you could be part of a political revolution is pretty appealing." 

"I think we all should be really understanding of that," Clinton said. 

The audio, which according to the Free Beacon was "revealed by hackers who breached the email account of a campaign staffer," surfaces the same week that Sanders hit the campaign trail to try to win those same young voters that Clinton has struggled to attract since clinching the Democratic nomination. 

Editor’s note: The headline and lede of this story have been changed to better reflect Clinton’s tone. The audio was originally published on Sept. 27, not Friday as first reported.

Corbyn wins Labour election

Jeremy Corbyn Is Re-elected as Leader of Britain’s Labour Party by Steven Erlanger

...

Mr. Corbyn, a 67-year-old hard-left politician, won 61.8 percent of the more than 500,000 votes cast, up from the 59.5 percent he won a year ago, when his victory shocked and divided the party.

 ...

Waldmann on macro

Macroeconomic Puzzles by Robert Waldmann

Macroeconomic Puzzles II Aggregate Supply by Robert Waldmann

Snowden - Peter Gabriel "The Veil"

I liked the movie. Powerful stuff.

Warren and Wells Fargo; Trump's first term

ELIZABETH WARREN AND THE WELLS FARGO SCANDAL By Sheelah Kolhatkar

PRESIDENT TRUMP’S FIRST TERM by Evan Osnos

Judis on populist revolts

All the Rage by John Judis

Emmy's 2016

Game of Thrones, Tatiana, Maslany or Orphan Black, Veep, July-Louise Dreyfus, Rami Malek for Mr. Robot.

B&B won writing for Battle of the Bastards.

Obama recovery

Obama Thanks Himself—for a Slow, Partial Recovery by David Dayen

Star Trek

THE ENDURING LESSONS OF “STAR TREK” By Manu Saadia 

It is hard to overstate how much of a departure the “Star Trek” franchise’s eighties-and-nineties-straddling incarnation, “The Next Generation,” was from the original series. It retained much of the nomenclature and established codes (the inscrutable techno-scientific babble, the ship’s name, the naval ranks, the canonical alien species) but swung almost entirely toward the second, more cerebral form of science fiction. It had no anchor in the present, nor did it genuflect before America’s frontier myths. “The Next Generation” was wholesale utopia, a thought experiment on how humans would behave under terminally improved material circumstances. Civilization, and the future, had won. 

And what a future! At the end of the show’s first season, the new captain, Jean-Luc Picard, laid bare his world’s parameters. In “The Neutral Zone,” a reverse-time-travel episode, cryogenically preserved twentieth-century humans awake on the Enterprise. One of them, a take-charge Wall Street tycoon, is particularly eager to reclaim his stock portfolio and his status as master of the universe. “People are no longer obsessed with the accumulation of things,” Picard tells him—and us, the audience—sternly. “We’ve eliminated hunger, want, the need for possessions. We’ve grown out of our infancy.”

Baker on infrastructure spending

Big Numbers and Confusion on Infrastructure Spending by Dean Baker

Konczal and Vox on Clinton's plans

The "new liberal economics" is the key to understanding Hillary Clinton's policies by Mike Konczal

Summers on infrastructure investment

Building the case for greater infrastructure investment by Larry Summers

First of the Year (Equinox) by Skrillex

The Fed, Hillary, Baker, and Brainard

Hillary Clinton and the Church of the Sacred Fed by Dean Baker

The “New Normal” and What It Means for Monetary Policy by Lael Brainard

Summers on infrastructure

Building the case for greater infrastructure investment by Larry Summers

How much more do we need to invest? For the foreseeable future, there is no danger that the US will overinvest in infrastructure. An increase in investment of 1 per cent of gross domestic product over a decade would total $2.2tn and permit substantial steps both to catch up on deferred maintenance and embark on new projects.

Bernstein on Fed Targets

New paper from our full employment project: Binder/Rodrigue on updating Fed toolbox by Jared Bernstein

Note to self:

Good think tanks or "centers:"

Center for Budget and Policy Priorities

Center for Economic and Policy Research

Bake on employment rate and America's stinginess

NPR Reports on the Mystery of Rivers Flowing Downstream and Men Leaving the Workforce by Dean Baker

Okay, they only consider the latter a mystery, but for those who follow the data both are equally mysterious. The piece was titled "an economic mystery: why are men leaving the workforce?" The piece noted the reduction in the percentage of prime-age men in the workforce from nearly 100 percent in the 1960s to 88.3 percent at present. It then said that no one really knows why there has been this decline.

Actually, it really is not much of a mystery. While the piece wants to attribute it to the peculiar situation men face in the labor market, it is worth noting that there has also been a sharp decline in the percentage of prime-age women in the labor market. (Actually, a better measure is simply looking at the share of people who are employed. Many workers stop saying they are looking for jobs when they are no longer eligible for unemployment benefits. With a sharp reduction in eligibility for benefits over the last three decades, people who are not working are now much less likely to say they are looking for work.)

The figure below shows the percentage of prime-age women that are working since 1990.

[figure]

The chart shows that after rising sharply from 1993 to 2000. It then fell sharply following the 2001 recession and again in 2007–2009 recession. It has since risen in the recovery but it is still 3.8 percentage points below the peak hit in 2000. The pattern among prime-age men is similar, although the employment rate is now 4.8 percentage points below the 2000 peak. (Remember the EPOP for women had been rising before the 2001 recession and was projected at the time to continue to rise.)

The fact the EPOP for men and women has followed a very similar pattern since 2000, and the declines have been associated with weak demand in the economy, suggests that the explanation might be weak demand. In other words, the problem is not too many men getting disability or lacking the skills needed in a 21st century economy, but rather just not enough demand.

If we could get the trade deficit down or got the government to spend more money then we could boost demand and get the prime-age men discussed in this piece back to work. We would do the same for prime-age women. (We could also follow the German model and reduce the length of the average work year, thereby spreading around available work.)

So the villains are not lazy men, but rather folks like Paul Ryan, Peter Peterson, and the Washington Post who insist that we have to keep our budget deficits low even in a context of near record low interest rates and very low inflation.

It is also worth mentioning that the lazy welfare cheat story doesn't fit the data at all. Benefits of various stripes have gotten more stingy over the period when men's EPOPs were declining. Also, as the report cited in the piece from the President's Council of Economic Advisers notes, the United States ranks near the bottom among wealthy countries in the generosity of benefits. It also ranks near the bottom in prime age EPOPs.

after Neoliberalism

After neoliberalism: a snippet by John Quiggin

Bullard doesn't like the plebes

St. Louis Bank President Jim Bullard Tells Us Why the Fed Needs to Be Reformed by Dean Baker