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

If you do it they will believe by Scott Sumner

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.

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.

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 ....)

Piketty and DeLong

Link

Over at Equitable Growth: Thomas Piketty: On the Elasticity of Capital-Labor Substitution

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

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...

Thomas Piketty: On the Elasticity of Capital-Labor Substitution: "I do not believe in the basic neoclassical model...

...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...

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.

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.

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.

wage growth

The Non-Accelerating What Now Rate of Inflation by JW Mason

Justin Wolfers tweeted:

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

Philomena

Philomena

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.

wages and inflation

Economists Should Not Have Been Surprised by the December Drop In Wages by Dean Baker

Golden Globes

Best Drama: Imitation Game, Selma, Boyhood

Actress Drama: Rosamund Pike (Gone Girl)

Actor Drama: Cumberbatch (Imitation Game), Oyelowo (Selma)

Best Comedy: Grand Budapest Hotel

Actress Comedy: Amy Adams (Big Eyes), Emily Blunt (Into the Woods)

Actor Comedy: Michael Keaton (Birdman), Joaquin Phoenix (Inherent Vice)

Director: David Fincher (Gone Girl), Richard Linklater (Boyhood), Ava DuVernay (Selma)

Screenplay: Anderson (Grand Budapest Hotel), Flynn (Gone Girl), Linklater (Boyhood), Moore (Imitation Game)

TV Drama: Game of Thrones

Drama Actress: Viola Davis

Drama Actor: Clive Owen

TV Comedy: Silicon Valley

TV Comedy Actress: Juliet Lous-Dreyfus

Mini-series: The Normal Heart

Mini series actor: Mark Ruffalo

Mini series supporting: Matt Boemer

Mini series actress; Maggie Gyllenhal (An Honorable Woman), Frances McDormand (Olive Kitteridge)

Fed Fail: labor force participation rate edition

America’s Workforce: The Mystery of the “Missing Millions” Deepens by John Cassdiy

The Labor Department’s participation-rate figures tell the story, but they don’t really convey what it means in human terms. For that, it’s useful to do a bit of back-of-the-envelope arithmetic and convert them into an estimate of the number of workers who have gone “missing” from the labor force, for whatever reason. Early last year, based on a report from the Congressional Budget Office, I did that exercise and came up with a figure of roughly six million, which isn’t much short of the entire population of the Dallas-Fort Worth metropolitan area. 

Based on the latest job figures, six million might even be an underestimate of the number of missing workers. In December, 2007, the participation rate was sixty-six per cent, more than three percentage points above the current figure of 62.7 per cent. If the rate had rebounded to its pre-recession level, there would now be roughly eight million more people in the labor force.

The Wire

HBO just ran all 5 seasons of The Wire over 5 days.

In the Life of ‘The Wire’ by Lorrie Moore

Realism and Utopia in The Wire by Fredric Jameson

But it is the genius of Lester Freamon (Clarke Peters) not only to solve these problems in ingenious ways, but also to displace some of the purely mystery and detective interest onto a fascination with construction and physical or engineering problem solving—that is to say,something much closer to handicraft than to abstract deduction. In fact, when first discovered and invited to join the special investigative unit, Freamon is a virtually unemployed officer who spends his spare time making miniature copies of antique furniture (which he sells): it is a parable of the waste of human and intelligence productivity and its displacement—fortunate in this case—onto more trivial activities that nonetheless absorb his energy and creative powers more productively than crossword puzzles, say. But Lester is also the type of the archivist-scholar capable of spending long hours on minutiae and in dusty files, which ultimately cracks open financial conspiracies all over the city; and he has deep, unostentatious, yet invaluable, roots in the community, as when he first uncovers an old photo of the youthful Barksdale in an old boxing hangout not many of his fellow officers would be likely to have any knowledge of: and to many of them he is also an inestimable mentor. This is then the sense in which The Wire not only offers a representation of collective dynamics (on both sides) but also one of work and productivity, of praxis. In both instances, then, there is at work a virtual Utopianism, a Utopian impulse, even though that somewhat different thing, the Utopian project or program, has yet to declare itself.  

But Lester’s creativity may also be said to have a counterpart on the other side. We have not yet mentioned Barksdale’s sidekick, Stringer Bell (Idris Elba), who is something like his executive officer or prime minister in the classic political situation: the police themselves also have a degraded version of this dual structure, where the second in command is however by no means as disinterested or as efficient as Bell...

...This episode then adds something to The Wire that cannot be found in most other mass-cultural narratives: a plot in which Utopian elements are introduced, without fantasy or wish fulfillment, into the construction of the fictive, yet utterly realistic, events.

Yet Sobotka’s Utopianism would remain a mere fluke or idiosyncrasy if it did not have its equivalents in later seasons of The Wire. (We could write it off, for example, by observing that the creators of the show, in their local patriotism, had taken this occasion to add in some more purely local statement.) But in fact it does, and at this point I can only enumerate the later incidence of a Utopian dimension in succeeding seasons. In season 3, Utopianism is certainly present in Major Colvin’s “legalization” of drugs; that is, his creation of an enclave of drug use closed to police intervention. In season 4, on education, it is to be found in Pryzbylewski’s classroom experiments with computers and his repudiation of the exam evaluation system imposed by state and federal political entities. Finally, in season 5, the most problematical, it is to be located in Jimmy’s invention of a secret source for funding real and serious police operations outside the bureaucracy and its budget—and this, despite the artificial crime panic he deliberately fosters, and also somewhat on the margins of what was to have been a series dominated by the newspaper and the media (for each season of The Wire, like Zola’s great series, or like Sara Paretsky’s Chicago crime novels, is also organized around a specific industry).

The future and future history have broken open both high- and masscultural narratives in the form of dystopian Science Fiction and future catastrophe narratives. But in The Wire, exceptionally, it is the Utopian future that here and there breaks through, before reality and the present again close it down.

Inherent Vice

Based on the Thomas Pynchon novel. Scored by Radiohead's Jonny Greenwood.




I like the commercial with Neil Young's "Harvest." Can't find it though.

Milanovic on Stiglitz and the "Piketty puzzle"

Stiglitz: Theories of just deserts and of exploitation by Branko Milanovic

2) Stiglitz proposed an interesting view of drivers of inequality in today’s US. The principal role belongs to finance (where he agrees with Galbraith) which made credits more easily available which in turn led to over-investment in housing, and to the increase in the wealth/GDP ratio, discussed by Piketty. But that increase while real was not conducive to greater productivity because what increased was value of land, not the physical quantity of productive capital. Banks, instead of lending to companies to invest in new capital, lent to the public which spent the money on housing and unproductive assets. Stiglitz here rejoins, with some twists, Kumhoff and Rancière, and Rajan, and even (if I may say so) myself who wrote about that in March 2009. But Stiglitz presents it as a solution to the “Piketty puzzle”: how come that the wealth/income ratio went up but the marginal product of capital did not godown and, most importantly, wages did not increase.

irony: red states blues states

Can't generalize though.

Is Life Better in America’s Red States?

To the surprise of many, voters in four red states — Alaska, Nebraska, South Dakota and Arkansas — supported referendums in November to raise their state minimum wage. And not just by a little. Controlling for the cost of living, they will have wage floors that are higher than those of many blue states. Once Obamacare is factored in, voters in these states ironically benefit from a somewhat strengthened social safety net, even though it is one that their elected politicians mainly oppose and that is heavily subsidized by blue state tax dollars.

NGDP path level targets

In defence of NGDP targets by Simon Wren-Lewis

DeLong: try everything

Over at Project Syndicate: Try Everything by DeLong

Game of Thrones: Shireen

I copied out the wiki entry on Stannis the other day.

Stannis orders Justin Massey to go with Tycho Nestoris to Braavos, where Justin will use the money given to him by the Iron Bank of Braavos to hire sellsword companies till he has a force no less than twenty thousand strong and then sail back to Westeros. Stannis also gives orders that if he is slain in the coming battle, Justin is still to do as instructed, with the intention of using the army to place his daughter, Shireen Baratheon, on the Iron Throne.

If Stannis die, and I hope he doesn't, Shireen could be the Third Dragon, ahead of an army twenty thousand strong. Maybe she'll marry Rickon and clean the North of the Boltons and Freys.