- Nick Bunker: Sex, drugs, and the proper measurement of economic activity | Washington Center for Equitable Growth
- John Quiggin Searches for a Use for and Explanation of Labor-Market Search Theory: Afternoon Comment | Washington Center for Equitable Growth
- Lunchtime Must-Read: Bill Davidow: The Invisible Virtual Economy | Washington Center for Equitable Growth
- Lunchtime Must-Read: Sarah Kliff: For millions Who Signed Up, Obamacare Is Working | Washington Center for Equitable Growth
- What Is the Macroeconomic Cost of Not Expanding Medicaid?: Thursday Focus: July 10, 2014 | Washington Center for Equitable Growth
- Morning Must-Read: Robert Waldmann: Flows From Unemployment to Employment & Extended Unemployment Insurance | Washington Center for Equitable Growth
- Morning Must-Read: Tim Duy: QEInfinity Not | Washington Center for Equitable Growth
- I Think Paul Krugman Is Wrong on "Class and Monetary Policy"... | Washington Center for Equitable Growth
- Over at Equitable Growth: What Is the Macroeconomic Cost of Not Expanding Medicaid?: Thursday Focus (Brad DeLong's Grasping Reality...)
- Where Has John Boehner's Power Gone? Long Time Passing...: CCXV: July 10, 2014 (Brad DeLong's Grasping Reality...)
- Over at Equitable Growth: Nick Bunker: The Beveridge Curve and the U.S. Labor Market (Brad DeLong's Grasping Reality...)
- Liveblogging the American Revolution: July 10, 1776 (Brad DeLong's Grasping Reality...)
- @LarryMishel re http://equitablegrowth.org/2014/07/10/think-paul-krugman-wrong-class-monetary-policy/: .@delong You may be right, but profits being historically high despite high unemployment ⇨ rich may not need full employment anymore
- (1/3) .@LarryMishel: Yes, that’s the worrisome thing—that the rich might benefit from lower wages more than they lose from slack capacity
- (2/3) the sophisticated “welfare capitalism” argument was that mass production changed the game—made high-pressure economy
- (3/3) optimal for (nearly) everyone—good for the country good for GM, and vice versa. But what has made this false now?
- @LarryMishel: (1)What's changed? Wages are suppressed for vast majority, incl college grads, even computer-types. Result of policy decisions imho.
- @LarryMishel: Argument laid out: http://t.co/BChfLpl25J ⇧unemp, ⇩unions, ⇩labor standards, changed norms
- .@LarryMishel #kalecki (1/10) Collapsing unions and changing norms seems to me to be mostly a level effect: the high-pressure economy of the
- (2/10) 1990s did little to reverse the trends. Consider a top 1% that reaps 20% of national income.
- (3/10) Austerity policies that push actual output 10% below the pre-crisis path of potential
- (4/10) would have to also drive a 2%-point upward shift in that share to even keep the top 1%
- (5/10) even. Where in the tracks of the income shares is there evidence that austerity
- (6/10) and depression also effective at wage suppression? Historically, the top
- (7/10) 1% of those badly in downturns--largely because downturns are not good for the
- (8/10) stock market at all. If the wage suppression effect dominated, Shouldn't
- (9/10) downturns be good news for the stock market, in real terms at least, if you
- (10/10) and Paul Krugman are right about this? .@LarryMishel #kalecki
- @nothingsmonstrd: @delong I fear that much of our 1% enjoys the power & deference that inequality gives them. No "servant problem" these days.
- @LarryMishel: (1/2) .@delong I'm not arguing that downturns good for top 1%, just that they may not be motivated to have 4% rather than 6% unemployment
- @LarryMishel: (2/2) .@delong Top 1%, profits/stocks seem to be faring very well at 6% unemployment. System structure allows them to prosper w high unemp
- @LarryMishel: .@delong I haven't seen NAM, Chamber, Corporate America fight for fiscal/monetary expansionary policies. You? Just ideology? GOP? Interests?
- @HPublius: .@LarryMishel @delong I would add: mon policy clearly suffers from unequal distribution benefiting those in top wealth/income percentiles.
- @jonathanlennox: .@delong You're assuming that the 1% care about absolute position, not relative. Evidence?
- .@LarryMishel profits/stocks would be doing a lot better at 4% unemployment than they are doing at 6%
- .@LarryMishel and at 6% unemployment stocks/profits are doing much better than they did at 9% unemployment
- .@rortybomb (1/2) Do you mean: the superrich resent the money that the tax system takes away from them? cc: @LarryMishel
- .@rortybomb (2/2) but the superrich do not (much) resent the money they do * .@rortybomb so what is the logical endpoint for the NAoM and the CoC? cc:
- @yeselson: @delong @rortybomb @LarryMishel That's the solidarity/class resentment in a unique US way, getting ahead of dispassionate analysis. Anti-
- @yeselson: unionism at pathological levels also part of this.
- @rortybomb: @delong @LarryMishel Me: both 1 + lost capital income > 2 (using your tweets) and Kalecki point they want control and no public goal of FE.
- @selinadavis73: @rortybomb @delong @LarryMishel : @rkuttner asked ystrdy why low/middle income don't grasp own econ interests. Cd be better said of CC, NAM!
- @dsquaredigest: @delong "Intellectual myopia, often called stupidity, is no doubt a reason."
- @dsquaredigest: @delong "People of privilege will always risk complete destruction rather than surrender any material part of their advantage" - JKG
- @Brett_: @rortybomb @delong @LarryMishel Seems a little disconnected except in downturns. 2000's more profitable than late '90s despite weaker growth
- @rortybomb: @delong @LarryMishel Yes, and lower if U was 12%+. But full employment isn't the logical endpoint of elites wanting to avoid a depression.
- @yeselson: @LarryMishel @delong @6 Doubt most corporate/banking elites even think in these terms. As Krugman says, they're not macroeconomists.
- @rortybomb: @delong @LarryMishel It's telling that their marginal influence is being spent not on FE but against taxes, social insurance, regulation.* @larrymishel: .@yeselson @delong Really? If C of C, NAM, Bank Associations, AEI don't think of economic conditions to ⇧ profits, not doing their job
- @yeselson: @LarryMishel @delong Fair--there's a distinction between discrete CEOs and associations/trade groups.
- @larrymishel: (1/2) @delong Really? beat historically high profits @6% unemployment. I wish 1% saw 4% unemp as beneficial. Business isn't pushing for this
- @larrymishel: (2/2) @delong Would you agree that top 1% incomes, profits less tied to vast majority getting ahead now than in the 1950's, 1960's?
- @rortybomb: @delong @LarryMishel Revenues would certainly be better at 4%. But profits? Payouts to shareholders? Returns to capital? Unclear to me.
- @daveashelman: @LarryMishel @delong Just answering DeLong's 8-10/10 question. U3 can't measure anything real, so I'll say high U6 does suppress wages.
- @Jonathan Lennox: .@delong You're assuming that the 1% care about absolute position, not relative.
- @HPublius: @LarryMishel @delong I would add: mon policy clearly suffers from unequal distribution benefiting those in top wealth/income percentiles.
- @loganb: @delong this argument seems to confuse the timeline. The hard money fanatics were at it in 2009, well before assets recovered
- @daveashelman: @LarryMishel @delong U3 counts those getting part time min wage jobs as "employed." A useless measure for today's retail based labor market
- @papicek: @rortybomb @delong @LarryMishel I'm not especially worried about profits. Here's why: http://pic.twitter.com/VA6A9KAgcc
- @litherunes_smk: @delong Isn't it just standard loss aversion that superrich would think like that? 'Bird in the hand is worth two in the bush' etc.
Noam Scheiber: Hillary Clinton's Inequality Rhetoric Is Weak: "Let’s set aside the question of where she got it and sort out the fallacies that underlie it, the biggest being that it’s almost literally untrue. When it comes to inequality, the numbers show a tiny group of ultra-rich amassing a shockingly large and rapidly accelerating share of income and wealth. (To her credit, even Clinton has pointed this out elsewhere.)... The bottom 99 percent of us are in some sense very much 'in this together'. But, in economic terms, we are emphatically not in it with the richest .1 percent or .01 percent.... Some have suggested we can solve the problem of inequality by growing the whole economy more and giving the poor and middle class a bigger share of the extra pie.... But given the rate at which the ultra-rich are increasing their earnings, there’s no plausible rate of economic growth that would allow the share of income going to the poor, middle class, and merely affluent to collectively gain on them.... Middle-class prosperity is a critical issue in its own right. And if Hillary Clinton wants to take a pass on the plutocracy question, that’s entirely her right. But she should have the courtesy to level with us rather than insult our intelligence."
Richard Mayhew: Deep penetration is oh so good: "I think there are a couple of things going on. First, the awareness of the mandate and the massive marketing campaign (both for and against enrollment in health insurance (and yes, it is lunacy that there has been and will be a multi-hundred million dollar marketing campaign aimed at getting people to not enroll in health insurance)) has made plenty of people aware of their options. Secondly, and more importantly in my mind, is the fact that the federal government is picking up 100% of the cost of Expansion for the first three years. This removes the institutional incentive structure of state and county workers from not signing up everyone as legacy Medicaid would have seen the state pick up 40% to 50% of the costs of coverage. Now this is effetively “free” coverage from the point of view of the bosses of the field workers who process applications and find people who can benefit from publci programs. I’ll be curious to see if the 10% state cost-share in 2017 reintroduces creative and quasi-deliberate incompetence in outreach efforts."
Shane Ferro (shaneferro) on Twitter: 'Shane Ferro @shaneferro: Journalist Past / Ex-Husbands / Great Rooms / Cosmo Wisdom RT @matt_levine: A ton going on here: http://t.co/sEtNJt9l14 * @matt_levine Also when the lede is about what type of hydration was offered at an event * “There’s a lot of sex,” she said, twice, “and a lot of social dysfunction.” Also, “a stock-fixing scheme.” * I'm just going to keep live-tweeting my reading of this article * She "said the book has not really helped her dating life, as it attracts mostly female readers." * “When you marry for money, you work for it every day.”'
Paul Waldman: The GOP’s problem: Governing requires working with Obama: "When congressional Republicans decided literally on the day Barack Obama was inaugurated to obstruct and oppose everything he wanted to do, it was a decision that could be justified both politically and substantively. Making the President’s tenure as difficult as possible would be good for them, because they were unlikely to get too much blame so long as he looked like he was failing to get things done, and most of what he wanted to do they disagreed with anyway. But they may not have realized at the time how a kind of absolutist fetish would overtake their party, making even the most basic kinds of legislating all but impossible.... But what do you do when there’s an acute problem that you claim to want to solve--and may even sincerely want to solve--but solving it means coming to an agreement with the President? That’s what Republicans are facing right now on these issues, and they have a rather profound choice to make..."
Should Be Aware of:
- Danny Vinik: The Long-Term Unemployed Are Not Finding Jobs as the Economy Recovers
- Henry J. Kaiser Family Foundation: Medicaid Enrollment: An Overview of the CMS April 2014 Update
- Nick Bunker: The potential hazards of a global savings glut
- Lisa Graves: Like His Dad, Cha (New Documents) | The Progressive
- Nicholas Johnson (2012): Kansas’ Big and Damaging Tax Cut
- David Beckworth: Inflation Targeting: A Monetary Policy Regime Whose Time Has Come and Gone
- Chris Lough: "Today marks the 158th birthday of Nikola Tesla, a man so bizarre and scientifically curious.... Tesla brought true advancements to the fields of electrical engineering, mechanical engineering, and talking about death ray urban legends while tipsy at parties... his scientific achievements are vital to the way we live today..."
- David Naimon: Between The Covers
- Cosma Shalizi: The Singularity in Our Past Light-Cone
Barry Ritholtz: What to Do in a Market Correction: "1. Respond emotionally, giving in to your lizard brain. It does a good job of keeping you alive, so you might as well hand over management of your portfolio to it. 2. Rely on your gut instinct to lead you out of trouble. After all, your instincts helped you buy gold at $400 and sell Apple at $700, right? 3. Deviate from your plan, because really, what’s the point of having a plan if you can’t change it on a whim? 4. Aggressively overtrade, because all of those capital gains taxes are helpful in reducing the federal deficit. 5. Rely on the pundits’ market calls, because their sole interest is making sure you are comfortable in retirement. 6. Flail aimlessly, and with any luck, something you do will turn out well. 7. Hope is good. Hoping that things turn out for the best never did anyone any harm. 8. Panic is always an option, because that always works out so well for people..."
Cory Doctorow: Pickpocketing as applied neuroscience: "Sleights of the Mind, an excellent 2013 book, explored the neuroscience of magic and misdirection.... The BBC has an excellent summary of this work, with the latest word on the way that the systematic, experimental study of pickpocketing is revealing important truths about the biological limits of our attention. They talk to James Brown (no relation) a UK stage pickpocket, about his study of Romanian pickpocket gangs in London Bridge, and how a pickpocket who can select the most vulnerable victims can get by with very little skill indeed..."
Shadee Ashtari: Republican Calls Climate Change A Hoax Because Earth And Mars Have 'Exactly' Same Temperature: "In a condemnatory speech last week against the Obama administration’s new Environmental Protection Agency carbon emission regulations, Kentucky state Sen. Brandon Smith (R) claimed that man-made climate change is scientifically implausible because Mars and Earth share 'exactly' the same temperature. Smith, the owner of a mining company called Mohawk Energy, argued that despite the fact that the red planet doesn’t have any coal mines, Mars and Earth share a temperature. Therefore, Smith reasoned, coal companies on Earth should be exempt from emission regulations.... Smith, the Senate majority whip..."
Sarah Kliff: For millions who signed up, Obamacare is working: "The people who bought Obamacare during the law's first open enrollment period are largely pretty satisfied customers, a big new study from the Commonwealth Fund shows. Most adults with new coverage have used it to go to the doctor; and about 80 percent say they're satisfied with their purchase. That Obamacare's new enrollees would be happy with their new coverage wasn't necessarily a given. Many enrolled in plans with narrow networks, which limit which doctors and hospitals patients can see, restrictions that can frustrate subscribers. Others gained coverage through Medicaid, which pays doctors less than most private insurance plans--and has fewer providers to see patients as a result. But about six months into the insurance expansion, Obamacare's buyers seem to be, on balance, not as much frustrated with these types of challenges as they are happy with having insurance coverage to begin with..."
Robert Waldmann: Flows From Unemployment to Employment & Extended Unemployment Insurance: "I have long thought that the best guess of the matching function is that hires of the unemployed are proportional to vacancies to the 0.7 times number unemployed to the 0.3. To be kind to the conservatives, I calculate the ratio of monthly flows from unemployed to employed to the square root of the product of vacancies and number unemployed. There isn’t any sign of a shift in January. One might claim that the increase in December was due to anticipation of the end of extended unemployment but I think that is nonsense (the failure to extend was a surprise). By the way, this shows I was wrong to be skeptical of claims that matching had worsened (based on the Beveridge curve) and that Krugman was right (I know you are shocked).... There is little support for the conservative’s story. The data are noisy and I am looking at all of the unemployed not specifically those affected by the change, so Vinik is right it is hard to tell. But really, the conservatives don’t seem to have a case."
Tim Duy: QEInfinity Not: "My own view is: 1. The existing mix of data and forecasts suggest the first rate hike in the second quarter of 2015 with a gradual increase in rates thereafter. This is my baseline. 2. If unemployment continues to drop at the same rate as recent months, bring forward the rate hike to the first quarter but continue to assume a gradual increase. 3. If core-PCE inflation exceeds 2.25% and wage growth is accelerating , expect first quarter liftoff and a steeper path of rate hikes. Obviously, the data could suggest a delay in the first rate hike, but I do not believe the risks are weighted in that direction. I think the risks are weighted toward tighter than expected policy. Bottom Line: Fairly straightforward minutes. Policy is data dependent. The Fed, like all of us, are simply waiting to see how that data evolves."
Bill Davidow: The Invisible Economy: "Our techniques for measuring economic performance are obsolete. So we reach improper conclusions about the state of the economy. The economic recovery is probably more robust than we realize.... Many economists, policy makers, and politicians think otherwise, because they are using 20th-century methods to analyze our 21st-century economy.... Almost everything we do in the physical economy is paid for with money. We use dollars to measure most of the activity. If more dollars are spent or earned, we conclude that the economy is growing. The virtual economy is robust... and growing at staggering rates, everywhere.
"A lot of the services provided to us in the virtual economy are free. If we paid dollars for those services, they would be counted as part of the GDP and would add to economic growth. But we don’t, so they are not counted.... Consumers can substitute Google News for their newspaper. The cost of a USA Today subscription is $275. His earnings will look the same, but he has more money at his disposal and more or less the same consumption. Essentially, he is earning more, but neither his income nor GDP will show it.... The virtual economy... has become very large and is having a broad impact.... The current measurement systems ignore our virtual salaries. We earn these salaries by selling our privacy and attention for zero and spending hours deleting targeted emails. Using those salaries, we purchase services that are worth billions....
"If advertisers paid us directly for the sale of our privacy and attention and we turned around and spent the money to purchase Google searches, music, and phone calls, the government would count both our pay as income and the sale of the services as part of the GDP.... The annual cost of a Honda Civic used for, say, 7,500 miles per year, is around $6,500 per year, or 85 cents per mile. Using a Zipcar for 500 hours a year, approximately the same amount of driving, would cost only $4,250.... It is important to realize the effects of the virtual economy do not fall evenly across the economic spectrum. The lower your income, the more likely it is that you are paying a greater portion of your salary for essentials such as food and healthcare in the physical economy..."