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Preview: Grasping Reality with Opposable Thumbs

Grasping Reality with All Tentacles: bradford-delong.com:





Updated: 2017-06-25T20:19:19-07:00

 




2017-04-24T15:16:37-07:00

Highlighted Teaching Reading, Videos, etc. ---- ### **Plus: Five Very Recent Must- and Should-Reads:** 1. **Jens H.E. Christensen and Glenn D. Rudebusch**: New Evidence for a Lower New Normal in Interest Rates: "Inflation-indexed bond prices include a real term premium... face appreciable liquidity risk... 2. **CHM Live**: Putting Your Finger On It: Creating the iPhone: "Nitin Ganatra, Scott Herz, and Hugo Fiennes in Conversation with John Markoff... 3. **Donald A. Yerxa**: AN INTERVIEW WITH BRYAN WARD-PERKINS ON THE FALL OF ROME : "'AT THE HOUR OF MIDNIGHT THE SALERIAN GATE WAS silently opened, and the inhabitants were awakened by the tremendous sound of the Gothic trumpet... 4. **Robert Waldmann** (2007): The Simple Analytics of Progressive Income Redistribution: "Economists generally agree that redistribution reduces money-metric welfare... 5. **Nick Bunker**: Weekend reading: “If you liked those links, check out these” edition: "Discrimination in the U.S. labor market is a very real thing... ---- ### **Plus: Five Very Recent Links:** 1. **Sarah Kliff**: The Better Care Reconciliation Act: the Senate bill to repeal and replace Obamacare, explained 2. **James Hamilton**: Why you should never use the Hodrick-Prescott: "The HP filter has serious drawbacks.... For random walk series, subsequently observed patterns are likely to...



For the Weekend...

2017-06-23T21:12:55-07:00

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2017-06-23T17:21:36-07:00

**Must-See: CHM Live**: Putting Your Finger On It: Creating the iPhone: "Nitin Ganatra, Scott Herz, and Hugo Fiennes in Conversation with John Markoff... >...It seemed that innovation in mobile devices was beginning to slip away from Silicon Valley.... That all changed abruptly when Steve Jobs stepped onstage at Moscone Center in San Francisco and asserted he was introducing “three revolutionary products” in one package—the iPhone.... Four members of the original development team will discuss the secret Apple project, which in the past decade has remade the computer industry, changed the business landscape, and become a tool in the hands of more than a billion people around the world...

Must-See: CHM Live: Putting Your Finger On It: Creating the iPhone: "Nitin Ganatra, Scott Herz, and Hugo Fiennes in Conversation with John Markoff... https://www.youtube.com/watch?v=5xDRdWFdsoQ&ab_channel=ComputerHistoryMuseum

...It seemed that innovation in mobile devices was beginning to slip away from Silicon Valley.... That all changed abruptly when Steve Jobs stepped onstage at Moscone Center in San Francisco and asserted he was introducing “three revolutionary products” in one package—the iPhone.... Four members of the original development team will discuss the secret Apple project, which in the past decade has remade the computer industry, changed the business landscape, and become a tool in the hands of more than a billion people around the world...

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Ten Years Ago at Grasping Reality: June 21, 2017

2017-06-21T08:52:46-07:00

Five pieces definitely worth rereading: (1) Tanta watches the gathering financial crisis, which is still in *schadenfreude* mode; (2) Peter Orszag lays out health care reform options; (3) As You Know Bob has fun with electromagnetism; (4-6) are a bunch of well-paid journalists being dicks, and Dan Froomkin and the staff of McClatchy doing their proper jobs. * The Late, Great Tanta of Calculated Risk: The Bear Stearns Reporting Contest * Peter Orszag on Health Care Opportunities and Challenges : "Jared Bernstein says that we must all troop off and read what Peter Orszag, our Nonpartisan High Priest of Policy and Budgetary Rationality, has to say about health care..." * Possibilities for Really Cheap Entertainment : As You Know, Bob: "Come sunset, I went down to the basement and dug out a couple of 48" fluorescent bulbs, and threw them and the family into the car. We drove over to the nearest high-voltage power line, and we watched the fireflies while we waited for full dark, and then we played light sabers in the gloaming..." * Slate and Ron Rosenbaum pwn themselves completely by complaining about the salacious picture of Angelina Jolie they republish: Self-Pwnage Department * **Rick Perlstein**: :...




2017-06-21T07:27:07-07:00

**Must-Read: Nick Bunker**: Is the Fed being misguided by the Phillips curve?: "Looking at the prime-age employment rate, the labor market might have a bit more tightening to do before wage growth is going to pick up significantly... >...But if and when significantly higher wage growth does arrive, will it necessarily translate into higher inflation? That would require a strong passthrough of wage growth into higher inflation. But perhaps the recent increase in the share of income going to labor as the U.S. economy recovers indicates that companies are more willing to cut into their own share of income before hiking prices. Certainly, the relationship between wage growth and inflation today is quite flat.... >Cardiff Garcia points out at FT Alphaville that the members of the Federal Open Market Committee have continuously underestimated how low the U.S. unemployment rate can go. Perhaps inflation will pick up once the effects of nearly 4 percent unemployment are felt, but if unemployment can go lower, then underestimating inflation again will result in fewer people with jobs and lower wage growth for those with them. That would be an unfortunate miscalculation based on perhaps misguided reliance on the Philips curve...




2017-06-21T07:20:36-07:00

**Should-Read: Sergio Espuelas**: The inequality trap. A comparative analysis of social spending between 1880 and 1930: "Using social transfers as an indicator of redistribution and three alternative proxies for inequality... >...the top income shares, the ratio of the GDP per capita to the unskilled wage, and the share of non-family farms... inequality did not favour the development of social policy between 1880 and 1930.... Social policy developed more easily in countries that were previously more egalitarian, suggesting that unequal societies were in a sort of inequality trap, where inequality itself was an obstacle to redistribution...




2017-06-21T06:51:31-07:00

**Must-Read**: **Mark Thoma** sends us to: **Jens H.E. Christensen and Glenn D. Rudebusch**: New Evidence for a Lower New Normal in Interest Rates: "Inflation-indexed bond prices include a real term premium... face appreciable liquidity risk... >...To estimate the equilibrium rate of interest from TIPS in the presence of liquidity and real term premiums, we use an arbitrage-free dynamic term structure model of real yields augmented with a liquidity risk factor.... The identification of the liquidity risk factor comes from its unique loading for each individual TIPS. This loading assumes that, over time, an increasing proportion of any bond’s outstanding inventory is locked up.... By observing prices from a cross section of TIPS that have different age characteristics, we can identify the liquidity factor. With estimates of both the liquidity premium and real term premium, we calculate the equilibrium interest rate as the average expected real short rate over a five-year period starting five years ahead. Our finance-based estimate of the natural rate of interest is shown as the green line in Figure 1...




2017-06-21T06:25:26-07:00

**Must-Read**: Low-end labor markets simply do not appear to work like competitive markets. Rather, they work like markets in which employers have substantial market power—and thus minimum wage laws have the same efficiency benefits as does natural-monopoly rate regulation. Why low-end labor markets do not appear to work like competitive markets is a very interesting—and, I believe, unsolved—question. But it is in all likelihood a fact to deal with: **Michael Reich, Sylvia Allegretto, and Anna Godoey**: Seattle’s Minimum Wage Experience 2015-16: "Seattle implemented the first phase of its minimum wage law on April 1, 2015... >...raising minimum wages from the statewide $9.47 to $10 or $11, depending upon business size, presence of tipped workers and employer provision of health insurance. The second phase began on January 1, 2016, further raising the minimum to four different levels, ranging from $10.50 to $13, again depending upon employer size, presence of tipped workers and provision of health insurance.... We analyze county and city-level data for 2009 to 2016 on all employees counted in the Quarterly Census of Employment and Wages and use the “synthetic control” method.... Our study focuses on the Seattle food services industry... an intense user of minimum wage workers; if...




2017-06-21T06:17:14-07:00

**Should-Read: Eugene Wei** (2012): Amazon, Apple, and the beauty of low margins: "Amazon's core retail business is, I'd argue, still very secure... >...I can't think of a tech retail competitor that is a legitimate threat to Amazon in selling most physical goods. Where Amazon is most vulnerable in retail is those areas where the game shifted on them, and that's in the media lines where physical books, CDs, and DVDs are being digitized. Since no physical product must be transported through a distribution system, Amazon's operational efficiency advantages there are less effective against competition. But in the arena of buying something online and having a box delivered to your doorstep, who really scares Amazon? >Another advantage to low margin models is increased customer loyalty. Most of the products Amazon sells are commodity items.... In that world, the lowest price tends to win.... If you're the low-cost leader, customers will forgive a lot of sins. That margin of error, like the competitive moat, buys you peace of mind. I could spend time price-shopping every item on Amazon, but these days, I don't really bother. Amazon's website design is not going to win any design awards, it's a bit of a Frankensteinian...



Ten Years Ago in Grasping Reality: June 20, 2017

2017-06-20T22:30:38-07:00

* Three Links for 2007-06-21 : "Spencer Ackerman: There are about 200 Foreign Service Officers in the U.S. Embassy in Baghdad. Ten are fluent in Arabic..." * Your #1 Source for DC News Ought to Be: McClatchy Washington Bureau * Joshua Micah Marshall thinks Rudy Giuliani Is Toast * Dogs Are Allowed * International Income Comparisons Once Again 2007-06-20 * Guest Lecture on John Maynard Keynes * Greg Ip Writes About Ben Bernanke, Mortgages, the Financial Accelerator, and the Macroeconomic Consequences of "Financial Fragility" * Mark Thoma Is Irate This Morning: Modelling the Social Value of Microsoft * Weblog Organization * Sheryl Sandberg Interviews Michael Bloomberg * Ten Links for 2007-06-20



Procrastinating on June 20, 2017

2017-06-20T12:24:19-07:00

**Over at [Equitable Growth](http://EquitableGrowth.org): Must- and Should-Reads:** * Hoisted from the Archives from 2007: How Supply-Side Economics Trickled Down… * **Donald A. Yerxa**: AN INTERVIEW WITH BRYAN WARD-PERKINS ON THE FALL OF ROME : "'AT THE HOUR OF MIDNIGHT THE SALERIAN GATE WAS silently opened, and the inhabitants were awakened by the tremendous sound of the Gothic trumpet... * **Heather Boushey**: The unfortunate power of stereotypes: "If stereotypes lead judges to snap judgements that are racially biased... * **Nick Bunker**: Weekend Reading: Shifting Targets Edition: "Some critics of the disability insurance system in the United States think it is too easy to access... * **Ben Thompson**: Amazon’s New Customer: "the key to understanding the purchase of Whole Foods... is that Amazon is buying a customer—the first-and-best customer that will instantly bring its grocery efforts to scale... * **Mark Thoma**: Trump’s Apprenticeships are Based upon a Problem That Doesn’t Exist: "The evidence... points to a skills mismatch... * **Izabella Kaminska**: On the rise of unproductive entrepreneurs like Travis Kalanick : "Robert E. Litan and Ian Hathaway... citing the work of William Baumol, who passed away last month... * **Paul Krugman**: A Finger Exercise On Hyperglobalization: "I find myself trying to find...




2017-06-15T16:00:30-07:00

**Should-Read: Brad DeLong** (2007): Tom Grubisich Is One Unhappy Camper: "Tom Grubisich... a former _Washington Post_ reporter and editor [says]... >..."In any community in America, if Mr. anticrat424 refused to identify himself, he would be ignored and frozen out of the civic problem-solving process. But on the Internet, Mr. anticrat424 is continually elevated to the podium, where he can have his angriest thoughts amplified through cyberspace as often as he wishes. He can call people the vilest names and that hate-mongering, too, will be amplified for all the world to see..." Tom Grubisich says that it is time for another weblogger ethics panel.... >[Yet] on February 8, 2005, I opened my virtual _Washington Post_ to find Post reporters Jonathan Weisman and Ben White writing that a series of calculations made by me, Dean Baker, and Paul Krugman were "absurd... they ignore global economic growth and investment in countries unaffected by the demographic slowdown," according to people whom Jonathan Weisman and Ben White described as "White House economists."... >Every political appointee Ph.D. economist who had an office in the White House on February 8, 2005 has denied that they did or would characterize Dean's, Paul's, and my arguments as "absurd"—wrong (I...




2017-06-16T06:27:50-07:00

**Should-Read: Bridget Ansel**: A research roundup on unpredictable schedules in the United States: "For Americans with a 9-to-5 job, it can be hard to imagine the life of a worker with an unpredictable, constantly shifting schedule... >...But this is the reality for 17 percent of workers in the United States, whose schedules are often a product of “lean labor strategies” that try to align the number of staff working with consumer demand in as close to real time as possible...




2017-06-15T15:58:52-07:00

**Should-Read: Kavya Vaghul**: Conservation easements and tax policies in the United States: "Deductions for conservation easement donations are taken by taxpayers in states that have small shares of conserved land... >...What’s more, the donated easement land is concentrated in places with large real estate developments, including golf and country clubs, and high-cost resort areas, such as Martha’s Vineyard in Massachusetts and Jackson Hole in Wyoming. In many ways, this indicates that conservation easements are not being used for the purposes for which they were established...




2017-06-15T15:18:21-07:00

**Should-Read**: So has anybody ever produced a CalTech freshman level lecture on why spin-1/2 particles obey Fermi-Dirac statistics? Bose-Einstein statistics I kinda sorta get why, but Fermi-Dirac... **David Goodstein**: Richard Feynman: "Feynman was a truly great teacher... prided himself on being able to devise ways to explain even the most profound ideas to beginning students... >...Once, I said to him, "Dick, explain to me, so that I can understand it, why spin one-half particles obey Fermi-Dirac statistics." Sizing up his audience perfectly, Feynman said, "I'll prepare a freshman lecture on it." But he came back a few days later to say, "I couldn't do it. I couldn't reduce it to the freshman level. That means we don't really understand it."...




2017-06-15T09:23:32-07:00

**Must-Read**: Janet Yellen gets it right. As I find myself saying a lot these days, if I were the Fed I would appoint an Inflation Target Level Technical Advisory Commission to write a report, and make Ben Bernanke and Larry Summers co-chair it: **Janet Yellen and Nancy Marchall Genzer**: Janet Yellen Interested in Reevaluating 2% : "Nancy Marchall Genzer, Marketplace: 'Recently, a group of economists sent the Fed a letter... >...disagreeing with your 2% inflation target and saying they would like the economy to run a bit hotter. They don't think the labor market is so tight. You say you're committed to the 2% target, but what do you say to them?" >Janet Yellen: "At the time when we adopted the 2% target... in 2012... we have a very thorough discussion of the factors that should determine what our inflation objective should be. I believe that was a well thought out decision.... At the moment, we are highly focused on trying to achieve our 2 percent objective, and we recognize the fact that inflation has been running below and its essential for us to move inflation back to that objective. >"Now we've learned a lot in the meantime. And assessments... Must-Read: Janet Yellen gets it right. As I find myself saying a lot these days, if I were the Fed I would appoint an Inflation Target Level Technical Advisory Commission to write a report, and make Ben Bernanke and Larry Summers co-chair it: Janet Yellen and Nancy Marchall Genzer: Janet Yellen Interested in Reevaluating 2% https://www.c-span.org/video/?c4673824/janet-yellen-interested-reevaluating-2: "Nancy Marchall Genzer, Marketplace: 'Recently, a group of economists sent the Fed a letter... ...disagreeing with your 2% inflation target and saying they would like the economy to run a bit hotter. They don't think the labor market is so tight. You say you're committed to the 2% target, but what do you say to them?" Janet Yellen: "At the time when we adopted the 2% target... in 2012... we have a very thorough discussion of the factors that should determine what our inflation objective should be. I believe that was a well thought out decision.... At the moment, we are highly focused on trying to achieve our 2 percent objective, and we recognize the fact that inflation has been running below and its essential for us to move inflation back to that objective.  "Now we've learned a lot in the meantime. And assessments of the level of the neutral likely level currently and going forward of the neutral federal funds rate have changed and are are quite a bit lower than where they stood in 2012 or earlier years. That means that the economy has the potential where policy could be constrained by the zero lower bound more frequently than at the time when we adopted our 2% objective.... "It's that recognition that causes people to think that we might be better off with a higher inflation objectives. This is one of our most critical decisions and one we're attentive to evidence and outside thinking. It's one that we will be reconsidering at some future time. It's important for our decisions to be informed by a wide range of views and research, which is ongoing inside and outside the Fed. But a reconsideration of that objective needs to take into account not only benefits of a higher inflation target, but also the potential costs. It needs to be a balanced assessment. "I would say that this is one of the most important questions facing monetary policy around the world in the future. We very much look forward to seeing research by economists that will help inform our future decisions on this..." width=512 height=330 src=//www.c-span.org/video/standalone/?c4673[...]




2017-06-15T05:24:13-07:00

**Must-Read: Lawrence Summers**: 5 reasons the Fed may be making a mistake : "The... paradigm... is highly problematic. Much better would be a “shoot only when you see the whites of the eyes of inflation” paradigm... >...more credible, more likely to result in the Fed’s satisfying its dual mandate, reduce risks of recession, and increase the economy’s resilience when recession comes. Many of my friends have recently issued a statement asserting that the Fed should change its inflation target.... 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.... First, the Fed is not credible with the markets.... Markets do not share the Fed’s view that inflation acceleration is a major risk. Indeed they do not believe the Fed will attain its 2 percent inflation target for a long time to come....Second, the Fed regularly proclaims that it has a symmetric commitment.... So why would the Fed want to be projecting only 2 percent inflation entering the 11th year of recovery with an unemployment rate clearly below their estimate of the NAIRU?... The PCE core price level is a full 4.3 percent...




2017-06-15T05:01:46-07:00

**Should-Read: Dodge Cahan and Niklas Potrafke**: The Democratic-Republican Presidential Growth Gap and the Partisan Balance of the State Governments: "Higher economic growth was generated during Democratic presidencies compared to Republican presidencies... >...Blinder and Watson (2016) explain that the Democratic-Republican presidential growth gap (D-R growth gap) can hardly be attributed to the policies under Democratic presidents, but Democratic presidents–at least partly–just had good luck, although a substantial gap remains unexplained. A natural place to look for an explanation is the partisan balance at the state level. We show that pronounced national GDP growth was generated when a larger share of US states had Democratic governors and unified Democratic state governments. However, this fact does not explain the D-R growth gap. To the contrary, given the tendency of electoral support at the state level to swing away from the party of the incumbent president, this works against the D-R growth gap. In fact, the D-R presidential growth gap at the national level might have been even larger were it not for the mitigating dynamics of state politics (by about 0.3-0.6 percentage points). These results suggest that the D-R growth gap is an even bigger puzzle than Blinder and Watson’s findings would suggest...




2017-06-15T05:01:35-07:00

**Should-Read: David Cutler and Emily Gee**: Coverage Losses Under the ACA Repeal Bill for Congressional Districts in All States: "Within a decade, on average, an additional 55,000 more individuals in each congressional district, or nearly 8 percent... would lack coverage... >...We provide estimates of coverage losses for all 435 congressional districts of the 115th Congress as well as the District of Columbia... people who would be uninsured under the House bill instead of having health insurance through the workplace, Medicaid, and the exchanges and other private coverage. Our numbers reflect that states that have expanded Medicaid to low-income adults under the ACA would face drastic cuts to federal matching funds for the program starting in 2020 and that expansion would no longer be a viable option by 2026 for states that have not already done so.




2017-06-14T20:31:29-07:00

**Must-Read**: The misperceptions of the Overclass are on display here in the very sharp Barry Ritholtz's offhand observation that "Ronald Reagan... oversaw a... 'once in a generation' economic boost that resonated for the next 30 years..." There was no such thing as far as economic growth was concerned: what Reagan presided over was the recovery to normal levels of activity from the 1979-1982 Volcker Deflation. The growth of the economy's productive potential he presided over was the same then-thought sub-par rate of growth as Carter. It was Clinton who presided over what looked to be a speed-up—hopes for which, have, alas!, been catastrophically dashed under his now-three successors. But Reagan did not just preside over but initiated the enormous upward shift in the distribution of wealth that has so benefitted people like Barry Ritholtz, and me. But it was not an economic boost for the country—just one for people like him and me, purchased with what has been the worst more-than-a-generation in terms of economic growth that America's middle and working classes have ever experienced: **Barry Ritholtz**: Tax Reform Is Dead: "The long-awaited 'pivot towards being presidential' hasn’t arrived, and by all indications never will... >...Those of us who harbored...




2017-06-13T18:33:37-07:00

**Must-Read: David Grabowski, Jonathan Gruber, and Vincent Mor**: You’re Probably Going to Need Medicaid: "Imagine your mother needs to move into a nursing home... >...It’s going to cost her almost $100,000 a year. Very few people have private insurance to cover this. Your mother will most likely run out her savings until she qualifies for Medicaid. >This is not a rare event. Roughly one in three people now turning 65 will require nursing home care at some point during his or her life. Over three-quarters of long-stay nursing home residents will eventually be covered by Medicaid. Many American voters think Medicaid is only for low-income adults and their children—for people who aren’t “like them.” But Medicaid is not “somebody else’s” insurance. It is insurance for all of our mothers and fathers and, eventually, for ourselves. >The American Health Care Act that passed the House and is now being debated by the Senate would reduce spending on Medicaid by over $800 billion, the largest single reduction in a social insurance program in our nation’s history. The budget released by President Trump last month would up the ante by slashing another $600 billion over 10 years from the program. Whether the Senate...




2017-06-13T13:21:26-07:00

**Should-Read: Laura Tyson**: Labor Markets in the Age of Automation: "Skill-biased and labor-displacing intelligent machines and automation drive income inequality in several other ways... >...including winner-take-all effects that bring massive benefits to superstars and the luckiest few, as well as rents from imperfect competition and first-mover advantages in networked systems. Returns to digital capital tend to exceed the returns to physical capital and reflect power-law distributions, with an outsize share of returns again accruing to relatively few actors.... Whether the benefits of smart machines are distributed broadly will depend not on their design, but on the design of the policies surrounding them.... Unfortunately, Trump’s team hasn’t gotten the message...



Procrastinating on June 13, 2017

2017-06-13T13:07:57-07:00

**Over at [Equitable Growth](http://EquitableGrowth.org): Must- and Should-Reads:** * No, It Is Really Not Harder to Make the Case for Free Trade These Days… * I Am Heartened by the Improvement in the Prime-Age Employment Rate. Now Let Us Let It Continue Rather than Stopping It… * **Nick Bunker**: Who loses disability insurance when it’s harder to apply?: "What actually happened when the closest Social Security field offices closed and the cost of applying increased?... * **William J. Collins and Marianne H. Wanamaker**: Up from slavery? African American intergenerational economic mobility since 1880: "We document the intergenerational mobility of black and white American men from 1880 through 2000... * **Nick Bunker**: Time for the Fed to look beyond 2 percent target inflation?: "The idea that a stable and credible inflation target must be 2 percent is an accident of history... * **Nick Bunker**: On Twitter: "That staffer was probably looking for a long time..." * **Robert Waldmann** (2007): The Simple Analytics of Progressive Income Redistribution: "Economists generally agree that redistribution reduces money-metric welfare... * **B.G.**: Because I said so: Why the Fed is likely to raise rates, despite low inflation: "Like a parent teaching a child it means business, the Fed... Over at Equitable Growth: Must- and Should-Reads: No, It Is Really Not Harder to Make the Case for Free Trade These Days… http://equitablegrowth.org/equitablog/no-it-is-really-not-harder-to-make-the-case-for-free-trade-these-days/ I Am Heartened by the Improvement in the Prime-Age Employment Rate. Now Let Us Let It Continue Rather than Stopping It… http://equitablegrowth.org/equitablog/i-am-heartened-by-the-improvement-in-the-prime-age-employment-rate-now-let-us-let-it-continue-rather-than-stopping-it/ Nick Bunker: Who loses disability insurance when it’s harder to apply?: "What actually happened when the closest Social Security field offices closed and the cost of applying increased?... http://equitablegrowth.org/equitablog/value-added/who-loses-disability-insurance-when-its-harder-to-apply/ William J. Collins and Marianne H. Wanamaker: Up from slavery? African American intergenerational economic mobility since 1880: "We document the intergenerational mobility of black and white American men from 1880 through 2000... http://equitablegrowth.org/working-papers/african-american-intergenerational-mobility/ Nick Bunker: Time for the Fed to look beyond 2 percent target inflation?: "The idea that a stable and credible inflation target must be 2 percent is an accident of history... http://equitablegrowth.org/equitablog/value-added/time-for-the-fed-to-look-beyond-2-percent-target-inflation/ Nick Bunker: On Twitter: "That staffer was probably looking for a long time..." Robert Waldmann (2007): The Simple Analytics of Progressive Income Redistribution: "Economists generally agree that redistribution reduces money-metric welfare... http://rjwaldmann.blogspot.com/2007/06/possible-efficiency-gains-due-to-taxes.html B.G.: Because I said so: Why the Fed is likely to raise rates, despite low inflation: "Like a parent teaching a child it means business, the Fed may feel it must hike to preserve its credibility with financial markets... http://www.economist.com/blogs/freeexchange/2017/06/because-i-said-so Cardiff Garcia: US capex, investment, and growth—re-re-upped: "Srinivas Thiruvadanthai... has passed along his interesting new note about capex... https[...]




2017-06-13T11:23:14-07:00

**Should-Read: Nick Bunker**: Time for the Fed to look beyond 2 percent target inflation?: "The idea that a stable and credible inflation target must be 2 percent is an accident of history... >...a figure “plucked out of the air” in New Zealand more than a quarter century ago and which has since been adopted by other high-income countries, including the United States. Inflation this low may have been a positive development in the past, but it presents problems now. With nominal interest rates so low, a 2 percent inflation target limits how low inflation-adjusted, short-term interest rates can go. Josh Bivens of the Economic Policy Institute argues persuasively that a higher inflation target would make monetary policy more effective the next time interest rates need to be slashed to cope with the next U.S. economic downturn...




2017-06-13T11:23:53-07:00

**Should-Read: William J. Collins and Marianne H. Wanamaker**: Up from slavery? African American intergenerational economic mobility since 1880: "We document the intergenerational mobility of black and white American men from 1880 through 2000... >...by building new datasets to study the late 19th and early 20th century and combining them with modern data to cover the mid- to late 20th century. We find large disparities in intergenerational mobility, with white children having far better chances of escaping the bottom of the distribution than black children in every generation. This mobility gap was more important than the gap in parents’ status in proximately determining each new generation’s racial income gap. Evidence suggests that human capital disparities underpinned the mobility gap...




2017-06-13T11:24:47-07:00

**Should-Read**: Who loses disability insurance when it’s harder to apply? Disabled people: **Nick Bunker**: Who loses disability insurance when it’s harder to apply?: "What actually happened when the closest Social Security field offices closed and the cost of applying increased?... >...The number of applications dropped quite a bit, 11 percent after a few quarters, and stayed at that lower level. At the same time, the number of recipients of disability insurance in ZIP codes near the closed field offices dropped 13 percent and also remained low. The fact that the number of recipients dropped more than the number of applicants—the difference is statistically significant—means that the people not applying were more likely to have been accepted if they had applied. Deshpande and Li also find that the field office closings discouraged people with lower education levels and low earnings levels from applying...




2017-06-13T09:36:08-07:00

**Must-Read**: The joke here: At the very top of the ADP Employment Report website it says: CHANGE IN US NONFARM PRIVATE SECTOR EMPLOYMENT. **PRIVATE**. ADP has no government jobs subset, because ADP doesn't do any payroll processing for governments. Yet neither Trump OMB Director Mark Mulvaney nor beat-sweetener-writer journamalist Alex Pappas have a clue. Clown show: **Nick Bunker**: On Twitter: "That staffer was probably looking for a long time..."



FoucaultAlthusserDerridaJameson

2017-06-13T09:16:03-07:00

**Hoisted from Ten Years Ago**: FoucaultAlthusserDerridaJameson : In comments and elsewhere, those with a sharp distaste for cultural studies "theory" in moral philosophy see it as one undifferentiated reactionary mass: FoucaultAlthusserDerridaJameson. I want to draw some distinctions: (1) **Fredric Jameson**: A number of very interesting hypotheses about the relationship between material life, culture, and ideology in the age after the age of mass communication--hypotheses that may be true and may be false, but that are certainly worth investigating. (2) **Jacques Derrida**: I'm not sure there's anything there: he traps himself into a nihilistic philosophical box, which he gets out of only by declaring his arguments immune to the destabilizations he performs on the arguments of others. (3) **Louis Althusser**: There's something there, but (a) it's reductionist, simplistic, and largely wrong; and (b) the violation of discourse ethics in calling it an interpretation of Marx is so gross and grotesque to compel the conclusion that he was either always a con man or always a madman. (4) Michel Foucault: The bill of indictment against Foucault is: 1. He was a naive enthusiast for a bunch of nasty Iranian terrorists and thugs. 2. He was French. 3. He trusted sources he shouldn't...



No, It Is Really Not Harder to Make the Case for Free Trade These Days...

2017-06-13T09:06:43-07:00

**Hoisted from Ten Years Ago**: Still, I think, true today. Thus I continue to hoist my neoliberal freak flag here: Is It Really Harder to Make the Case for Free Trade These Days? : Paul Krugman wonders if it is harder to make the case for free trade these days. There are more losers from trade liberalization, he thinks, and it is much less clear that the losers are in some sense "undeserving". Mark Thoma writes: >Economist's View: Krugman: Distribution and Trade Policy: Paul Krugman adds a few more thoughts via email related to the recent trade policy discussion: >>Paul Krugman: Another thought or two on distribution and trade policy: The problem of losers from trade isn't new, obviously, either as a fact or concept. But if you look at the history of trade policy - say, in Matt Destler's book it's hard to avoid the sense that the issue has gotten bigger and harder. His final chapters have a definite sense both of nostalgia for the good old days and foreboding. >>I'd put it like this: in the old days, when GATT negotiations were mainly with other advanced countries, the groups hurt tended to be highly specific and local...




2017-06-13T08:57:46-07:00

**Must-Read:** I really object to "money-metric social welfare" as a phrase. I prefer "false Negishi-price plutocratic weights for interpersonal utility comparisons". When you say the standard goal is to maximize consumer plus producer surplus, you are making interpersonal utility comparisons in a particularly stupid and cruel way. But that is largely orthogonal to Robert's—very, very good—point here: **Robert Waldmann** (2007): The Simple Analytics of Progressive Income Redistribution: "Economists generally agree that redistribution reduces money-metric welfare... >...that is the welfare effects of tax and transfer policies are equivalent to the welfare effects of a set of lump sum taxes and transfers which add up to less than zero. Thus desirable redistribution comes at a price and the standard question is how large is this price worth paying (Brad DeLong explained this to me in 1979). I certainly think that it is and would support massively increased redistribution from the rich to the poor even if I assumed that reality were well described by standard models. Indeed the general view of public economists who developed those models is very egalitarian (see Diamond , Mirrlees , and Vickrey ). >In this post, I discuss the possibility that redistribution from the rich to the...



Ten Years Ago in Grasping Reality: June 11-13, 2007

2017-06-13T08:42:00-07:00

Two very much worth highlighting and hoisting: * Is It Really Harder to Make the Case for Free Trade These Days? : I think I have answers: (1) The kinds of win-win deals that Paul says we don't make are in fact deals that Democratic presidents do make--when they aren't blocked from making them, that is... * FoucaultAlthusserDerridaJameson ---- And them all: * Yet somehow Zizek has never managed to be both honest and bright since the fall of communism—I think because now one cannot be all of honest, bright, and non-supportive of the régime: **Slavoj Zizek**: The Trilemma: "The Dreams of Others: Of the three features—-personal honesty, sincere support of the régime, and intelligence—-it was possible to combine only two, never all three. If one was honest and supportive, one was not very bright; if one was bright and supportive, one was not honest; if one was honest and bright, one was not supportive..." * Nine Links for 2007-06-14 , of which the most interesting is: Julian Dibbell: The Life of the Chinese Gold Farmer * "Connecticut for Lieberman" Party Demands Lieberman's Resignation * Free or Common or Shared Speech : Aaron Swartz is a national treasure.... * Not...