July 19, 2019: Weekly Forecasting Update

Cursor and FRED Graph FRED St Louis Fed

The right response to almost all economic data releases is: Next to nothing has changed. We are where we were a year ago: Stable growth at 2% per year with no signs of rising inflation or a rising labor share.

The only significant difference that the Fed has recognized that its hope of normalizing the Fed Funds rate in the foreseeable future is vain, and has now recognized that its confidence over the past six years that we were close to full employment was simply wrong:

Federal Reserve Bank of New York: Nowcasting Report: Jul 19, 2019: "1.4% for 2019:Q2 and 1.9% for 2019:Q3.News from this week's data releases decreased the nowcast for 2019:Q2 by 0.1 percentage point and increased the nowcast for 2019:Q3 by 0.1 percentage point. Negative surprises from housing data accounted for most of the decline for 2019:Q2, while positive surprises from survey data accounted for most of the increase in 2019:Q3...

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Anne is wrong: the turning point came long, long ago: Anne Applebaum: Conservative Intellectuals Are at a Turning Point: Normalize Trump or Resist Him?: "We have consistently spoken about civic patriotism and not nationalism in the United States.... We are not... held together by ethnic blood ties.... Our imagined community is based on... a more complex, more cerebral national ideal... democracy and justice as opposed to blood and soil.... Those who promote a... nativist definition of America... weaken and divide us, as the president [does].... I have some sympathy [for] the conservative movement[. It] is at a real turning point... decide whether they will continue to normalize Trump, providing him with the intellectual framework to indulge the dangerous impulses on display in Greenville, or whether they will try to create something that gives the Republican Party, at least, some viable alternative once Trumpism fails. If they can bring themselves to abandon the word “nationalism,” that will be a good sign...

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Samuel P. Huntington: The Hispanic Challenge: "Unlike past immigrant groups, Mexicans and other Latinos have not assimilated into mainstream U.S. culture, forming instead their own political and linguistic enclaves—from Los Angeles to Miami—and rejecting the Anglo-Protestant values that built the American dream.... The Hispanization of Miami is without precedent.... The Cuban takeover had major consequences... a Cuban-led, Hispanic city... in which assimilation and Americanization were unnecessary and in some measure undesired..... By 1999, the heads of Miami’s largest bank, largest real estate development company, and largest law firm were all Cuban-born or of Cuban descent... the mayor of Miami and the mayor, police chief, and state attorney of Miami-Dade County, plus two-thirds of Miami’s U.S. Congressional delegation and nearly one half of its state legislators.... Anglos (as well as blacks)... outside minorities that could often be ignored. Unable to communicate with government bureaucrats and discriminated against by store clerks, the Anglos... could accept their subordinat[ion]... assimilate into the Hispanic community... or... leave... their exodus reflected in a popular bumper sticker: 'Will the last American to leave Miami, please bring the flag'...

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Right-wing U. Penn professor Amy Wax brings the racism pure: Joe Patrice: Professor Amy Wax Declares Black Students ‘Rarely’ Graduate In The Top Half Of Law School Class: "And have never graduated in the top quarter as far as she can remember: Comedian Cristela Alonzo has this bit about walking through a racist locale and facing shouts of 'Mexicans are lazy' and that 'Mexicans are taking all our jobs', forcing her to wonder 'well, which one is it?' Professor Amy Wax of Penn Law would do well to remember this little life lesson in racist contradiction.... Right after she’s finished explaining how black people would be better off if they understood that they’re better at menial tasks... Wax claims that a black student has never finished in the top quarter of a graduating class Penn Law as far as she can remember and that they 'rarely, rarely' finish in the top half. That prompts.... [Glenn] Loury: 'Do you have a racial diversity mandate for law review appointments at Penn?' [Amy] Wax: 'Yes. Yes.' Loury: 'So you’re telling me that students of color who have served on law review are pretty much in the bottom half of their law classes at Penn?' Wax: '…' Silence. The audience is just treated to long beats of dead air as she rolls her eyes back into her head to access whatever part of the reptilian brain controls explicit bias and scrambles to put together something to justify her wildly unsupported claim...

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Dwight D. Eisenhower (1954): Letter to Edgar Newton Eisenhower: Weekend Reading

Dwight D. Eisenhower (1954): Letter to Edgar Newton Eisenhower: "Dear Ed: I think that such answer as I can give to your letter of November first will be arranged in reverse order–at least I shall comment first on your final paragraph. You keep harping on the Constitution; I should like to point out that the meaning of the Constitution is what the Supreme Court says it is. Consequently no powers are exercised by the Federal government except where such exercise is approved by the Supreme Court (lawyers) of the land. I admit that the Supreme Court has in the past made certain decisions in this general field that have been astonishing to me. A recent case in point was the decision in the Phillips case. Others, and older ones, involved 'interstate commerce.' But until some future Supreme Court decision denies the right and responsibility of the Federal government to do certain things, you cannot possibly remove them from the political activities of the Federal government...

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Francis Wilkinson: Gun Safety Takes a Back Seat to Gun Culture and Children Die: Weekend Reading

Millie Drew Kelly Girl Fatally Shot by 4 Year Old Brother Heavy com

Francis Wilkinson: Gun Safety Takes a Back Seat to Gun Culture and Children Die: "A mother stored a gun in her car to protect her children. It killed her daughter instead.: On Monday, April 8, Courtney Kelly’s Hyundai Elantra failed. Kelly had just gotten all three kids packed into their car seats in the back. Millie, 6, was on the passenger side. Maddox, 4, was on the driver’s side. Lucas, 2, was strapped in the middle. It was about 5:45 p.m. They were on their way to Maddox’s baseball practice. With the children settled, Kelly was poised to pull out of her driveway on Laurelcrest Lane in Dallas, Georgia. The car wouldn’t start...

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Barry Eichengreen does not appear pleased with Facebook's non-blockchain blockchain called Libra. As I have said, it looks like a second-order grift. There might be real value there—competing with visa and the others is a worthwhile task. But calling it "blockchain"? And calling it "blockchain" when it isn't? There do appear to be several levels here at which Facebook is not on the level. And that makes one wonder about the value to society of the project:

Barry Eichengreen: Questions on Facebook's Libra: "In light of my Washington Post op-ed on Libra, I thought I might pose some questions about this new blogpost from Facebook’s David Marcus https://www.facebook.com/notes/david-marcus/libra-2-weeks-in/10158616513819148/ on the same subject: Still no details on what will ensure that Libra continuously trades at par vis-à-vis the underlying basket? Is the idea that Libra will function like an ETF (which won’t work) or like a currency board (which will be incredibly expensive)? Will the members of the Libra Association have the power to decide later to hypothecate the underlying assets? If this is against the rules, what prevents them from changing the rules?... Would Osama Bin Landen have been able to operate a wallet on his own? Would his wallet have had to first be approved by the members of the Libra Association? On what basis can regulators be confident that those members have the information to make a reliable determination? You write that you will have 'proper know-your-customer practices'. What information will you collect from your customers to make this determination? How will you collect it? Ensure its confidentiality?...

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Steve M.: 2020 Strategy: Everyone Should Scorch Earth The Way Trump Does: "I didn't see this coming, though I probably should have: 'Kellyanne Conway Snaps Back at Reporter: "What’s Your Ethnicity?": When White House reporter Andrew Feinberg posed a question to Kellyanne Conway on Tuesday about the president’s racist tweets against the four congresswomenknown as the “Squad,” he found himself taken aback by her response.... Instead of answering that question, Conway asked him, “What’s your ethnicity?”... Conway still would not answer Feinberg’s question, instead insisting that [the] question was relevant because Trump said “originally” from—he didn’t—and going on a rant about how “a lot of us are sick and tired in this country of America coming last”...'It's not news that Conway would rather kneecap reporters than inform them of the truth. But she hasn't been in the habit of tossing ethnicity into the mix. That's been the president's specialty. That, however, seems to be the Trump team's strategy for 2020: Everyone should become even more like Trump...

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Ezra Klein: Trump Was Right, and Justin Amash Was Wrong, About Conservatives: "For most conservatives, whether they were prominent pundits or everyday voters... no contradiction between conservatism and Trumpism.... Conservatism isn’t, for most people, an ideology. It’s a group identity.... Michael Barber and Jeremy Pope.... 'There has never been a president (or any party leader) who shifts back and forth so often between liberal and conservative issue positions'.... If conservatism was an ideology... a stronger attachment to that ideology should provide a stronger mooring against the winds of Trump.... Instead, 'we observe exactly the opposite: strong "conservatives" are the most likely to be partisan loyalists—following Trump in a liberal direction when told of his support for a liberal policy.'... Our political language fails us. The terms we use to describe ideologies are often describing social identities. And what matters to an identity group is whether their group is winning or losing. Trump understood this better than most...

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Kevin Drum: Trump Hits a New Low... Again: "A very non-exhaustive list of things that have been called new lows for Trump over the past few years. Enjoy:

2015

July 20: Attacks John McCain for being a POW.
November 13: Compares Ben Carson to child molester.
November 21: Proposes Muslim registry.
November 23: Retweets claim that 81 percent of white people are killed by blacks.
November 26: Mocks a reporter’s disability.
December 8: Calls for ban on Muslim entry.

2016....

March 23: Attacks Ted Cruz’s wife.
March 30: Says that women who get abortions should be punished.
May 3: Suggests that Ted Cruz’s father killed JFK.
June 3: Attacks federal Judge Gonzalo Curiel.
July 27: Asks Russia to please find and release Hillary Clinton’s 30,000 emails.
August 1: After Khizr Khan accuses Trump of never sacrificing anything for his country, Trump attacks Khan and says that he has too made a lot of sacrifices, such as “building great structures.”
August 10: Suggests his supporters might want to shoot Hillary Clinton.
October 8: “Grab ’em by the pussy” tape.
October 12: More women accuse Trump of sexual assault....

2017

February 22: Attacks transgender children.
March 4: Accuses Obama of tapping his wires.
June 29: Accuses Mika Brzezinski of “bleeding badly from a face-lift” during a New Year’s party.
July 2: Retweets video of CNN being attacked.
August 15: Suggests that there were “very fine people on both sides” at Charlottesville.
September 30: Attacks mayor of San Juan after Hurricane Maria hits Puerto Rico.
October 13: Ends Obamacare cost-sharing program.
November 29: Retweets three anti-Muslim videos from the leader of an extremist British group.

2018

January 12: Shithole countries.
June 8: Begins separating children from their parents at the border.
July 5: Insists on meeting with Vladimir Putin with no one else present.
September 13: Says the 3,000 dead from Hurricane Maria is “fake news” invented by Democrats.
October 18: After murder of Jamal Khashoggi, reminds everyone that Saudi Arabia is a good customer.
October 19: Calls Stormy Daniels “horseface.”
October 19: Applauds Rep. Greg Gianforte’s body slam of a reporter.
November 1: Runs racist ad just before midterm elections.
November 7: Suspends CNN reporter Jim Acosta.
November 12: As wildfires are raging, threatens to cut off federal aid to California unless they change their “forest management” practices.
December 29: Says any deaths of children along the border are strictly the fault of the Democrats.

2019

February 9: Mocks native American genocide.
March 8: Accuses Democrats of being the “anti-Jewish party.”
March 20: Attacks John McCain yet again.
May 24: Retweets doctored video of Nancy Pelosi.
July 11: Attacks British prime minister Theresa May.
July 14: Tells Democratic congresswomen to go back where they came from...

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I want my country back! I want my country back now!!: Great^10-Grandfather William Bradford: The Project Gutenberg eBook of Bradford's History of 'Plimoth Plantation', by William Bradford: "So being ready to departe, they had a day of solleme humiliation, their pastor taking his texte from Ezra 8:21: And ther at þe river, by Ahava, I proclaimed a fast, that we might humble ourselves before our God, and seeke of him a right way for us, and for our children, and for all our substance. Upon which he spente a good parte of þe day very profitably, and suitable to their presente occasion. The rest of the time was spente in powering out prairs to þe Lord with great fervencie, mixed with abundance of tears. And þe time being come that they must departe, they were accompanied with most of their brethren out of þe citie, unto a towne sundrie miles of called Delfes-Haven, wher the ship lay ready to receive them. So they lefte þt goodly & pleasante citie, which had been ther resting place near 12. years; but they knew they were pilgrimes, & looked not much on those things, but lift up their eyes to þe heavens, their dearest cuntrie, and quieted their spirits...

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I did not pay enough attention to the racist animus underlying Tea Party Republicans in the early 2010s. Vanessa Williamson, Theda Skocpol, and John Coggin tried to warn me. I ignored them. Shame on me: Vanessa Williamson, Theda Skocpol, and John Coggin: The Tea Party and the Remaking of Republican Conservatism: "In the aftermath of a potentially demoralizing 2008 electoral defeat, when the Republican Party seemed widely discredited, the emergence of the Tea Party provided conservative activists with a new identity funded by Republican business elites and reinforced by a network of conservative media sources. Untethered from recent GOP baggage and policy specifics, the Tea Party energized disgruntled white middle-class conservatives and garnered widespread attention, despite stagnant or declining favorability ratings among the general public. As participant observation and interviews with Massachusetts activists reveal, Tea Partiers are not monolithically hostile toward government; they distinguish between programs perceived as going to hard-working contributors to US society like themselves and “handouts” perceived as going to unworthy or freeloading people. During 2010, Tea Party activism reshaped many GOP primaries and enhanced voter turnout, but achieved a mixed record in the November general election. Activism may well continue to influence dynamics in Congress and GOP presidential primaries. Even if the Tea Party eventually subsides, it has undercut Obama’s presidency, revitalized conservatism, and pulled the national Republican Party toward the far right...

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A sensible model conveying useful and understandable information about the state of American productivity growth. Why we have speedups and slowdowns, and why it seems to be a matter of regimes rather than a randomly walking parameter, remain mysteries on which this approach sheds no light But other else has shed light here either: James A. Kahn and Robert W. Rich: Trend Productivity Growth: "Through 2019Q1... with probability 0.93 productivity remains in a low-growth (1.33% annual rate) regime.... Productivity growth in 2019Q1 in the nonfarm business sector was 3.6% (annual rate), the highest rate in more than four years. The four-quarter change was 2.4%, the highest year-over-year reading since 2015Q1. The near-term forecast profile, however, is little changed, with... a predicted 5-year trend of 1.9%... | James A.Kahn and Robert W.Rich (2007): Tracking the New Economy: Using Growth Theory to Detect Changes in Trend Productivity...

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A healthy macroeconomy continues to be the best of all labor-side policies. The past decade of bitter experience has taught us that monetary policy cannot do the entire job on its own: a healthy macroeconomy requires planning, and some of that planning must be on the fiscal-policy side. And the evidence that expansionary fiscal policy is a very effective tool to cure a depressed economy, and cure it with minimal blowback costs of any kind, continues to mount:

Jérémie Cohen-Setton, Egor Gornostay, and Colombe Ladreit de Lacharrière: Aggregate Effects of Budget Stimulus: Evidence from the Large Fiscal Expansions Database: "This paper estimates the effects of fiscal stimulus on economic activity using a novel database on large fiscal expansions for 17 OECD countries for the period 1960–2006. The database is constructed by combining the statistical approach to identifying large shifts in fiscal policy with narrative evidence from contemporaneous policy documents. When correctly identified, large fiscal stimulus packages are found to have strong and persistent expansionary effects on economic activity, with a multiplier of 1 or above. The effects of stimulus are largest in slumps and smallest in booms https://delong.typepad.com/lfe_database.zip...

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Geoffrey Parker: Emperor: A New Life of Charles V: "In 1504, Charles’s father paid £15 to a bookbinder for ‘making wooden covers for five large books, and for repairing and re-gilding several other works’; and £36 to ‘Jeronymus van Aeken, called Bosch’ for ‘a very large painting measuring nine feet high and eleven feet wide which will show the Last Judgement, that is to say Heaven and Hell, which My Lord has ordered him to paint’. The following year, Philip paid £23 to ‘a man who played a strange Spanish instrument, and to a young girl from Lombardy’ who ‘played several songs and performed acrobatics for him while he dined’, as well as £25 to a painter who presented him with ‘a picture of a naked woman’ (payments that put the gift of £10 to Brother Erasmus of Rotterdam in perspective)...

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Why have the more polite modern-day neo-Nazis picked transgender people as those seek to demonize—as tree equivalent of what the Jews were for the original Nazis?:

Zack Beauchamp: Trump and the Dead End Of Conservative Nationalism: "Their vision of social conservatism... is not focused on classic issues like abortion and same-sex marriage—two issues little mentioned at the conference (although there were multiple cruel attacks on trans people in major speeches)... [but on] bucking libertarians to use the power of the state at home to address problems like the opioid crisis, the use of pornography by teenagers, and the overweening influence of Silicon Valley... going against neoconservatives in limiting the United States’ role abroad....

"It’s... arguing that liberalism (in the political philosophy sense, not the partisan one) is too focused on the 'atomized' individual and not focused enough on building social ties.... chipping away at the separation of church and state and the philosophical framework underpinning liberal rights... end[s] up justifying excluding groups of individuals from those rights—transgender people, for example. This new 'national conservatism' is no exception. And nowhere is this clearer than its discussion of immigration and race....

"Wax, the Penn professor, made this subtext the text during her address—even positively citing Trump’s 'shithole [countries]' comments. She argued for what she called a 'cultural distance' approach to immigration... that... 'preserves the United States as a Western and First World nation'.... She favorably quoted John Derbyshire, a writer who once penned a piece telling his white children to avoid going places where black people hang out in groups and was fired from his job at National Review as a result... VDARE... Taki... an outright argument for white supremacy—exactly the sort of thing that Brog claimed to abhor and reject....

"[Brog] is trying to do something impossible.... That is most obvious on immigration, where politicians and intellectuals can speak openly about banning certain types of people from entering the country entirely. But it inevitably rebounds on citizens as well. Just ask Ilhan Omar....

"It was striking to be at this conference as Trump’s assault on the Squad unfolded. The self-identified nationalist president was telling nonwhite citizens that they do not belong on the basis of their skin color. If there was ever a golden opportunity to distance national conservatism from racism, this was it. And yet no one took it... not... a single attempt to tackle Trump’s comments or to distance the conference organizers from the president’s racist assault. When Hazony mentioned Trump’s racist tweets, in the very last speech of the conference, it was only to mock reporters who kept asking him about them....

"There is no non-racist explanation for telling four American congresswomen of color to 'go back' to their countries, as if the United States does not truly belong to them. There is no non-racist explanation for making up claims that a black Muslim congresswoman, Omar, is an al-Qaeda sympathizer. Yet it is this rhetoric that attracts people to Trump’s brand of nationalism....

"'National conservative' conference attendees may dream of a better conservatism, but they already have what they’re trying to create. And it’s much uglier than they can admit...

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Jamie Powell: The best of Morgan Stanley's Adam Jonas: "Morgan Stanley's Adam Jonas is a renowned Tesla bull... until yesterday.... [He] proceeded to lay into the future prospects of Elon Musk's company, holding nothing back.... To pick one, of many possible, quotes from the call is hard. But this is a standout: '[Tesla's]... seen more as a distressed credit story and a restructuring story. So from a growth story to a distressed credit and restructuring story [in a quarter]. At the heart of this though, is demand'. Jonas' change of heart comes as a surprise to Alphaville, as for many years he's been a vocal bull.... So to commemorate the mood swing, here are five of our favourite Adam Jonas quotes from Tesla's various quarterly conference calls over the years...

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You gotta wonder about any definition of "cognitive elite" that proposes to include Stephen Pinker: When Alan Dershowitz comes up to you and says, "I'm defending a rich pedophile. Hey me for free!" why would anyone not-insane ever say yes? "Even pedophiles deserve to be represented in court" is a thing—but only for lawyers. "I joined the pedophile defense team because the money was good" is a thing. It's not something to be proud of, but at least the money can partially assuage the humiliation. But Pinker got no money, and incurred the repetitional hit as a cheerleader for a sleezebag: Colleen Flaherty: Steven Pinker's Aid in Jeffrey Epstein's Legal Defense Renews Criticism of the increasingly Divisive Public Intellectual: "In 2007, Epstein’s attorneys—including Harvard legal scholar Alan Dershowitz—submitted a letter to federal prosecutors arguing that their client hadn’t violated a law against using the internet to lure minors across state lines for sexual abuse. 'To confirm our view of the "plain meaning" of the words, we asked' Pinker, 'a noted linguist, to analyze the statute to determine the natural and linguistically logical reading or readings of the section', the letter said. 'We asked whether the statute contemplates necessarily that the means of communication must be the vehicle through which the persuading or enticing directly occurs. According to Dr. Pinker, that is the sole rational reading.'...

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A healthy macroeconomy continues to be the best of all labor-side policies. Two centuries of bitter experience have taught us that the macroeconomy can only stay healthy if it is planned—and properly planned. Not least among the necessary planning institutions for the macroeconomy is the central bank. And two centuries of bitter experience have taught us that the central bank has a very delicate task, one that can only be successfully accomplished if it is staffed by highly competent and good-hearted people. Here we have the American Enterprise Institute raising the alarm with respect to the chaos-monkey nature of President Trump's Federal Reserve nominations: Desmond Lachlan: Trump's Bizarre Federal Reserve Nomination: "Among President Trump’s more bizarre nominations for office has to be his nomination of Judy Shelton to fill one of the Federal Reserve Board governor vacancies.... Shelton manages to hold two contradictory views of monetary policy at the same time... strident advocacy of the return to the gold standard is totally inconsistent with the Trump administration’s economic policy approach.... Normally a person would be in favor of either an easy monetary policy to stimulate the economy or a hard monetary policy to exert discipline on the government. Either way, one would not expect her to hold both views at the same time. Yet Ms. Shelton does exactly that...

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Olivier Blanchard and Jeromin Zettelmeyer believe that Italy right now is one of those rare cases in which fiscal expansion is likely to be contractionary: Olivier Blanchard and Jeromin Zettelmeyer: The Italian Budget: A Case of Contractionary Fiscal Expansion?: "Putting fiscal multiplier effects and contractionary interest rate effects together—and being generous about the size of the multiplier and conservative about the effect of the interest rate increase—arithmetic suggests that the total effect on growth will be 0.8 * 1.5 – 0.8 * 1.6 ≈ –0.1... [with] risks are skewed to the downside. This means that the planned fiscal expansion will probably fail to increase growth—and may even reduce it. The deficit will come in larger than predicted. Supporters of the government will be disappointed. The government may double down, and investors may flee, leading to a serious crisis. It is possible that Italy will suffer a debt run before it even gets a chance to implement its expansionary budget...

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Economist: Britain’s Brexit Debate Regresses to 2016: The Tory Time Warp: "Jeremy Hunt and Boris Johnson make much of their Trump-like dealmaking ability.... Red lines of leaving the single market, customs union and European Court of Justice... threatening to walk away with no deal is the best way to extract further concessions from Brussels... adamant that they can get Brexit done by October 31st.... The list of implausible Tory claims is long, including old assertions that Britain holds all the cards in the negotiation, that what is needed is simply more determination, that the EU is desperate for Britain’s money and that a new prime minister can bypass Brussels and deal directly with Berlin and Paris. Equally unbelievable arguments are made about trade. German carmakers and Italian vintners need the British market, it is claimed. Because Britain runs a trade deficit in goods, no-deal would do more damage to the eu. A fall in the pound would offset any tariffs. Most of the world trades on WTO terms, so Britain would be fine doing the same. As for Ireland, the two governments can agree bilaterally not to impose a hard border with customs controls.... The truth about power and red lines is less forgiving.... A shift of Brexit talk towards the extreme, epitomised by the two candidates’ embrace of no-deal. The linguistic changes are telling. Mrs May’s deal used to be termed a 'hard' Brexit, as it would take Britain out of the single market and customs union. Now it is widely derided as 'Brexit in name only'.... Although most Tory party members like the sound of a no-deal Brexit, a majority of mps and voters are firmly against it. Manoeuvring round all these obstacles would test any prime minister, never mind one who still believes old myths from 2016.

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Kim England and Kate Boyer: Women's Work: The Feminization and Shifting Meanings of Clerical Work: "Up to about the 1940s clerical work illustrated a story of women's expansion into the wage-labor market, and the coding of office work as a good respectable job for (certain kinds of) women: notably young, white, educated women prior to marriage. By the middle third of the twentieth century clerical work became an increasingly important source of income for married women. By this time clerical work was emblematic of women's waged work, and provided a primary source of income for women who were single as well married, including a small but growing number of women of color...

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Few people today want to say "Uber is a bad investment". But its track record of no signs of convergence to profitability gives nobody any reason to believe that it is a good investment. And its prospectus and other documents gives nobody any reason to believe that it is a good investment either. Surely if it were to be a good investment, there would be something you could point to suggesting that it is? I find myself puzzled it has gotten this far—not that ridesharing does not promise to be a sustainable productive activity, but that is a very different question from whether ridesharing will be a wildly profitable activity for the first mover. I think Uber is probably a societal plus: a little creative destruction in taxis and a little destruction of monopoly medallion value is a good thing, plus there is a transfer from rich investors to middle-class riders and working-class drivers. But a good investment going forward? What is the road to pumping value equivalent to a flow of 3.5 billion a year starting now out of the system through control of the hailing-and-billing website?:

Ben Thompson: Uber’s Rocky IPO, What Went Wrong, The Perils of Private: "I think the private funding model that Uber pioneered, which puts off going public for years, is terrible for nearly all of the relevant stakeholders.... The private investment market is bad for private investors... dramatically less oversight and accountability.... Most importantly, I think that these private investment rounds are bad for the companies themselves. Being able to attract investors on a vision is a wonderful thing when a company is small, and something that makes Silicon Valley great. Being able to do so when a company is large is a recipe for a lack of discipline and a dismissal of economic realities.... The only way to use the proceeds of such a large round is to take on massive operating losses. Historically, as a company neared an IPO level of revenues (say $50-$100mm), investors would expect convergence toward profitability. As these late-stage private companies digest these large fund raises, they are pushing profitability further and further into the future, as well as the proof that their business model actually works. Let me be clear: I am not saying that Uber is a bad investment. I am reiterating the fact that I don’t know, and that I believe that extremely large late-stage rounds not only denied me that knowledge, but very well may have denied that knowledge to Uber itself...

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A Year Ago on Equitable Growth: Twenty Worthy Reads from the Past Week or so: July 19, 2018

stacks and stacks of books

TOP MUST REMEMBER: Here is the website for Zucman, Wier, and Torslavon's work on missing profits from tax avoidance and tax evasion (yes, I have decided I should spend some time occasionally listing paper authors in reverse alphabetical order): Gabriel Zucman et al.: The Missing Profits of Nations: [Working paper][1], June 2018. [Online appendix][2], June 2018. [Presentation slides][3], June 2018...


Worthy Reads on and from Equitable Growth:

  1. Here is the website for Zucman, Wier, and Torslavon's work on missing profits from tax avoidance and tax evasion (yes, I have decided I should spend some time occasionally listing paper authors in reverse alphabetical order): Gabriel Zucman et al.: The Missing Profits of Nations: [Working paper][1], June 2018. [Online appendix][2], June 2018. [Presentation slides][3], June 2018...

  2. I have not yet welcomed the extremely sharp Kate Bahn to Equitable Growth: Equitable Growth: Kate Bahn: "Her areas of research include gender, race, and ethnicity in the labor market, care work, and monopsonistic labor markets.... She was an economist at the Center for American Progress. Bahn also serves as the executive vice president and secretary for the International Association for Feminist Economics.... She received her doctorate in economics from the New School... and her Bachelor of Arts... from Hampshire...

  3. Wealth inequality measures have been grossly understating concentration because of tax evasion and tax avoidance in tax havens: Annette Alstadsæter, Niels Johannesen, and GabrielZucman: Who owns the wealth in tax havens? Macro evidence and implications for global inequality: "This paper estimates the amount of household wealth owned by each country in offshore tax havens...

  4. The "optimal tax" literature in economics has always been greatly distorted by the fact that models simple enough to solve bring with them lots of baggage that leads to misleading—and usually anti-egalitarian and anti-equitable growth—conclusions that would not follow if we had better control over our theories. Here Saez and Stantcheva make significant progress in resolving this problem: Emmanuel Saez and Stefanie Stantcheva: A simpler theory of optimal capital taxation: "We first consider a simple model with utility functions linear in consumption and featuring heterogeneous utility for wealth..

  5. Very much worth reading from Equitable Growth alum Nick Bunker: Nick Bunker: Puzzling over U.S. wage growth: "Hiring has not been particularly strong during this recovery...

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