Matthew Yglesias: Why Yellen and Obama shouldn't celebrate last week's jobs numbers: "According to data released last Friday, the US economy added 288,000 jobs in April. It was a good report... [that] even shocked people out of their partisan silos, with Larry Kudlow explaining to conservatives that there's no sense in trying to debunk the strong number.... [But] to fill in [our] 7.1 million gap, we'd need to add 288,000 jobs per month every month for... three full years to get us back to normal. And the really scary thing is that there's absolutely no indication that we will add 288,000 jobs a month. The May report was a big deal because job growth that strong has been extremely rare in recent years..."
Christina D. Romer and David H. Romer: Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Changes, 1952-1991: "From the early 1950s to the early 1990s, increases in Social Security benefits in the United States varied widely in size and timing, and were only rarely undertaken in response to short-run macroeconomic developments. This paper uses these benefit increases to investigate the macroeconomic effects of changes in transfer payments. It finds a large, immediate, and statistically significant response of consumption to permanent changes in transfers. The response appears to decline at longer horizons, however, and there is no clear evidence of effects on industrial production or employment. These effects differ sharply from the effects of relatively exogenous tax changes: the impact of transfers is faster, but much less persistent and dramatically smaller overall. Finally, we find strong statistical and narrative evidence of a sharply contractionary monetary policy response to permanent benefit increases that is not present for tax changes. This may account for the lower persistence of the consumption effects of transfers and their failure to spread to broader indicators of economic activity."
Digby: Four Dead in Ohio: "I know this seems like ancient history. And it sort of is. But it was scary and abnormal even then. This sort of thing happens when there are too many loaded guns and too many people high on adrenaline with itchy trigger fingers. And it doesn't matter which "side" is armed, if it's the jackboots or the 'militia'--or both, innocent people get killed:"
Should Be Aware of:
Paul Krugman: Macroeconomics and Class Warfare: "Back when Obama was proposing a spending plan to boost the economy, and some of us were pleading for a bigger plan, it was common to hear people from both the right and the crazy center declaring that it was all a ruse, an attempt to smuggle in liberal priorities under the guise of fiscal stimulus. This was, as it happens, completely false--and in the case of the right-wingers, a case of projection. After all, Obama didn’t try to sell permanent spending increases as short-run stimulus--but Bush did exactly that when pushing his tax cuts.... [And] shouldn’t it be easier to sell win-win ideas, which will make everyone or almost everyone better off? Well, it would be if the public “got” Keynesian economics. But even educated readers tend not to get the idea that the economy as a whole can suffer from inadequate demand (hey, lots of U. of Chicago professors don’t get it either.) And I don’t think it’s for want of efforts to get the point across.
"The key sticking point is... the very notion that the economy can suffer from too little spending turns out to be inherently difficult... the appeal of the economy-as-household metaphor usually takes over. I’m not making this judgment entirely based on gut feelings.... Has there ever been a monster bestseller about fighting recessions, or even about growth for its own sake? I don’t think so. The blockbusters are always, one way or another, about us versus them.... Piketty’s book is awesomely good, and deserves all the acclaim it’s getting. But it is notable that in a time of deeply depressed labor markets, our biggest thing is long-run inequality. Or, closer to home, I do of course track how my columns do on the most-emailed list; and there’s no question that inequality gets a bigger response than demand-side macro. This doesn’t mean that we should (or that I will) stop trying to get the truth about depression economics across. But it’s an interesting observation, and I think it has implications for how politicians should go about doing the right thing.
Tyler Cowen: A simple Bayesian updating on Ukraine: "Putin didn’t carve off the eastern parts of the country, although he could have. I now infer he wishes to take the whole thing. There are sometimes reasons why you do not wish to stop and take the free lunch and create a focal line, namely that it can constrain you for the future. I don’t mean that Putin will conquer Ukraine by military force, but rather bit by bit he will harass the current government into losing legitimacy, until a strongly pro-Russian, pro-Putin government is running that country. By hook or by crook..."
Ricardo Hausmann: Technological Diffusion and Economic Theory: "One idea about which economists agree almost unanimously is that huge income difference between rich and poor countries [are] attributable to neither capital nor education, but rather to 'technology'... [which] sounds more meaningful than confessing our ignorance, [but] it really is not.... Devices can be put in a container and shipped around the world, while recipes, blueprints, and how-to manuals can be posted online.... So the Internet and free trade should make the ideas and devices that we call 'technology' available everywhere.... Daron Acemoglu and James Robinson’s book Why Nations Fail... [argues] essentially that technology does not diffuse because the ruling elite does not want it to.... I am also struck by how often governments that embrace the goal of shared growth--post-apartheid South Africa is a good example--fail to achieve it. Such governments promote schooling, free trade, property rights, social programs, and the Internet, and yet their countries’ economies remain stuck. If technology is just devices and ideas, what is holding them back? The problem is that a key component of technology is knowhow, which... neither involves nor can be acquired through comprehension... tacit knowledge... an ability to recognize patterns and respond with effective actions.... Knowhow moves to new areas when the brains that hold it move there. Once there, they can train others. Moreover, now that knowhow is becoming increasingly collective, not individual, diffusion is becoming even slower.... Progress happens by moving into what the theoretical biologist Stuart Kauffman calls the 'adjacent possible'... technology does not diffuse because of the nature of technology itself."
Richard Mayhew: Rural Hospitals, DSH payments, and Vegas hotels: "A commenter asked why so many rural hospitals in Georgia are closing... a decent chunk of the explanation is PPACA via the a---ole Chief Justice et al, and the remainder of the explanation is the economics of running a hospital or a Vegas hotel.... Hospitals have very high costs to open up the doors.... However, the marginal cost of treating the next patient for most situations (high end drug treatments excluded) are not that high. Hospitals with high census or heads in beds counts are able to use the high usage of their facilities to cover fixed costs and then operating costs.... So how did this hospital survive so long despite serving a very poor and underinsured area?... Disprorpotionate Share Hospital payments... Medicaid reimbursement bonuses to hospitals that serve underinsured and overly poor areas.... PPACA reduced the pool.... The policy logic... was that the Medicaid expansion and Exchange subsidies should significantly reduce the number of people who are uninsured... therefore the need for DSH payments would decrease. That logic is sound... as long as... Medicaid... and expansion was a single program that every state in the nation would take as the deal was too damn good to pass up. It is working in the Expansion states. [But] tThanks to the a---oles on the Supreme Court and the sadists and sociopaths in the Republican Party, half the states have not taken up free federal money to cover their poor... massive resistance to Exchange implementation... Georgia as a particularly egregious example..."