WORÞY READS: From 2021-01-15 Fr

Something I do every week for þe extremely-worthwhile Washington Center for Equitable Growth...

The real place where this will be deployed is over at <http://equitablegrowth.org>. I put it here in case you want an advance look…

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Worthy Reads from Equitable Growth:

1. The big news breaking right now is the Biden-Harris Administration’s $1.9 billion Rescue plan, itself only the first tranche, as it will be followed by a subsequent Recovery plan of equal or of greater size. I want to wait to talk about that until I have a better sense of the pathway to legislative passage. Biden-Harris is not repeating The mistake that Obama made over and over again: setting out what he thought would be a reasonable consensus compromise as his opening bid, and then letting Boehner and McConnell bargain him back to something that was all but indistinguishable from the moderate Republican position. In many cases, with the Obama legislative affairs effort, we were rescued only because the Democratic Left and the Republican Right united in rejecting the moderate Republican position–the Democratic Left because it was bad policy, and the Republican Right because it involved offering Obama respect. 

But I digress. 

What I mean to say is this: Biden-Harris appear to be in the groove. But I want to wait to see a little bit more before I talk about their plans. So, in the meantime, go watch and read the very excellent joint project of Equitable Growth and Berkeley‘s Labor Center on how to boost wages here in America:

Equitable Growth: Boosting Wages for U.S. Workers in the New Economy < https://equitablegrowth.org/boosting-wages-for-u-s-workers-in-the-new-economy-book/ >: ‘The U.S. labor market is shackled by decades of wage stagnation for the majority of workers, persistent wage disparities by race, ethnicity, and gender, and sluggish economic growth. The steady increase of income inequality since the 1970s leaves generations of U.S. workers and their families unable to cope with the daily costs of living, let alone save for emergencies or invest in their futures—conditions that have left many families ill-prepared for the “stress test” of the coronavirus recession. These labor market ills particularly affect women and workers of color…. There is increasing evidence that broad structural inequality leads to a misallocation of talent and the undervaluation of different types of work, which contributes to anemic economic growth and slower productivity gains. Boosting Wages for U.S. Workers in the New Economy, a joint effort of Equitable Growth and the Institute for Research on Labor and Employment at the University of California, Berkeley, presents a series of essays from leading economic thinkers, who explore alternative policies for boosting wages and living standards, rooted in different structures that contribute to stagnant and unequal wages…

2. Here is, I think, the most interesting idea about how to boost wages in America I have seen recently. It comes from my colleague Benjamin Schoeffer. He proposes a framework of bargained sector-wide minimum wages for different worker skill levels. This has the possibility of getting us more quickly to wage levels that the market would eventually reach after he sustained period of high-pressure growth, and thus make growth more equitable: 

Benjamin Schoefer: Collective bargaining as a path to more equitable wage growth in the United States < https://equitablegrowth.org/collective-bargaining-as-a-path-to-more-equitable-wage-growth-in-the-united-states/ >: ‘Rising wage inequality in the United States means that the median wage has not kept pace with the mean wage in recent decades. Moreover, the United States has performed worse in this regard than many of its international peers…. I will first examine the decoupling of median wage growth from mean wage growth and, in turn, the decoupling from productivity growth…. I will then consider the role of collective bargaining institutions in these patterns…. Finally, I will review policies the United States could pursue that have the potential to foster more equitable wage growth… industrywide and cross-industry wage boards to set minimum wages for workers in the middle rungs of the wage distribution, not just those on the lower rungs…. The coronavirus recession… has led to a uniquely slack labor market among many segments of the economy and has hurt the bargaining position of many low-wage workers in particular. Without strong and sustained wage growth that is broadly distributed across the U.S. labor force, the eventual economic recovery will almost certainly take longer to reach the vast majority of U.S. workers…

3. I am becoming increasingly scared that there will be no further recovery until vaccination has proceeded far enough that we are within shouting distance of herd immunity. 

Equitable Growth: ’For the week ending January 9

…1,151,015 workers filed for regular unemployment benefits. As many states resumed reporting claims and the crisis in the labor market continues, initial regular claims have once again surpassed the Great Recession peak. States reported that another 284,470 workers filed for initial PUA, which extended UI to some workers who are not eligible for regular benefits. In total, 1.4 million workers filed initial PUA or regular unemployment benefits last week. Regular continued claims, also referred to as insured unemployment, rose to 5.8 million the week ending January 2. Adding all Unemployment Insurance programs—including PUA, PEUC, and Extended Benefits—a total 18.4 million workers claimed benefits the week ending December 26. Between this week and last, most states started paying an extra $300 in weekly benefits to UI recipients. The boost is currently set to expire by mid-March…

4. Both the Reagan and the George W. Bush recessions landed the labor market In a deep hole. But, while the Reagan recession was followed by the Reagan boom, the George W. Bush recession was followed by the extraordinarily anemic Obama recovery. I believe there are very powerful lessons to be drawn. And I believe that Biden-Harris, the Democratic congressional caucuses, and the Republican congressional caucuses should take bold steps to learn from what worked in generating the Reagan recovery. And I say so, over at DeLong today:

Brad DeLong: DeLongTODAY: What Comes After HI—Herd Immunity—Day for the Economy? < https://www.delongtoday.com/ >: So how do we get the Reagan rather than the Obama recovery? We got the Reagan recovery through aggressively expansionary monetary policy: because Paul Volker at the Federal Reserve responded with rapid and enormous interest rate cuts. We got it through aggressively expansionary fiscal policy: because Reagan’s wanting to heat up the Cold War produced massive defense spending increases...

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Worthy Reads from Elsewhere:

1. Duke sociologist Kieran Healy looks at the extraordinary 20 year gap between business economists’ forecasts of interest rates and actual interest rate outcomes. They never learn. They always expect a rapid return to the old normal. It is simply crazy. And Kieran is amused at the combination of (a) their possession of enough data to understand that their theory is really wrong, and (b) yet their failure to ever mark their beliefs to market: 

Kieran Healy: ’On the one hand…

…this is pretty strong evidence that something is wrong with your theory. On the other hand, at least you’re in a position to collect pretty strong evidence that something is wrong with your theory, which is more than I can say for a lot of theories https://pbs.twimg.com/media/EozYXhcWEAIFmtg?format=jpg&name=medium

2. This, from Bloomberg, is well worth reading If you want to orient yourself as to the likely changes in the macro configuration of the world economy that we are likely to see over the next generation. Tom or Lickwar is also my favorite book author for 2020: 

Tom Orlik & Bjorn Van Roye: An Economist’s Guide to the World in 2050 < https://www.bloomberg.com/graphics/#2020-global-economic-forecast-2050/ >: ‘China’s rise is just one part of a larger shift that’s already under way and looks set to accelerate in the decades ahead.... A remarkable period of stability, stretching from the end of World War II through to the early 21st century, is coming to an end. The center of economic gravity is shifting from West to East, from advanced economies to emerging markets, from free markets to state controls and from established democracies to authoritarian and populist rulers. The transition is already upending global politics, economics and markets. This is just the beginning…. For the past forty years, since the Reagan and Thatcher revolutions, the free-market ideal has been the organizing principle for the global economy…. The rise of alternative models, in government as in economics, poses questions that the West has so far proved unable to answer…. For businesses, investors and policy makers, history isn’t over. It’s just getting started…

3. No. There will be no significant further recovery until we are within at least shouting distance of heard immunity. And then there are serious risks that we will thereafter get a recovery like the extremely Anemic and in adequate Obama recovery rather than some thing like the rapid Reagan recovery:

Justin Wolfers: The Recovery Was Always Going to Be a Play In Two Acts…

…The first act was firms re-opening and recalling furloughed workers. The second act is harder: Millions lost their jobs permanently &amp; there aren't many new opportunities opening up for them. The second act is a grim slog. Payrolls in November rose a mere +245k. That's the sort of number you might see in a "normal" month, and definitely not what you're hoping for in the snapback from a covid-induced shutdown. Remember, the economy lost 22 million jobs, then gained roughly half of them back. We still have 10 million fewer jobs than we did in February. Clawing the rest back at +245k per month will take basically forever. If this is the second half of the recovery, it's going to be grim.... The economy is in a deep hole—as deep as in the darkest days following the financial crisis—and the recovery is faltering. Barely there. Making no progress. Stalled. Stopped.... The virus is back, which hobbles the service sector, and stimulus has basically petered out.... The household survey suggests that employment actually declined (by -74k) last month. So the fall in unemployment from 6.9% to 6.7% largely reflect the fact that an additional 400k people dropped out of the labor force.... We're already seeing the recessionary impulse from state and local governments cutting back.... Over half of this month's job growth is in the stay-at-home-because-of-the-virus sector…

4. The very intelligent Michael Schuman believes that the reign of Xi Jinping may well be a disaster for China’s future economic growth. So far, China has managed to hit the sweet spot between market, forward-looking industrial-policy guidance, and command-and-control to keep financial flows that would be totally unsustainable in a neoliberal market economy somehow in balance. This has been an extremely complex balancing act. Michael thinks that Xi Jinping does not understand how it has been accomplished. He is focused on cementing his power and eliminating any possibilities of the growth of strong forces pushing for political liberalization. Achieving those goals may well be incompatible with maintaining the balance that has produced such rapid economic growth. 

On the other hand, China has done many things over the past four decades that outside observers, especially those of us of even slightly neoliberal persuasion, thought would be impossible:

Michael Schuman: The Undoing of China’s Economic Miracle <https://www.theatlantic.com/international/archive/2021/01/xi-jinping-china-economy-jack-ma/617552/?=> : ‘The country’s paramount leader is turning away from reforms that helped it grow and develop. That will have consequences beyond its borders: China’s economic “miracle” wasn’t that miraculous. The country’s high-octane ascent over the past 40 years is, in reality, a triumph of basic economic principles: As the state gave way to the market, private enterprise and trade flourished, growth quickened, and incomes soared. This simple lesson appears, however, to be lost on Xi Jinping…. Classically trained economists frown upon Xi’s program. He’s ticking just about every box of what not to do to propel incomes and innovation. Yet we shouldn’t immediately dismiss his plans as doomed to fail. As a gargantuan market of 1.4 billion people, China can develop local companies of size and scope without bothering much with the outside world. (Ma’s Ant is a prime example.) If the program works, economists may have to rewrite their textbooks. Yet the undertaking is fraught with risks. By favoring the state sector, Xi is funneling valuable money and talent to notoriously bloated and inefficient government enterprises instead of far more nimble and creative private firms. The negative effect shows up in miserably poor productivity—a disaster for an aging society still catching up with the richest nations—and mounting debt, now nearly three times the size of national output…. Xi is preparing for protracted conflict between the world’s two largest economies by attempting to fireproof China from measures President-elect Joe Biden might use against him. Yet in doing so, he is also repositioning the Chinese economy in the world…

5. OK. For the second half of my reads from outside Equitable Growth, it is time for me to step outside my wheelhouse again. 

I think that the smart Matthew Yglesias is 100% right here. He says that the fact that we still have a democracy is the result not of the strength of American political institutions but of American society, and of the willingness of key actors to step outside the bounds and norms of our constitution when necessary. We had, it turns out, just enough people who were patriots first and proceduralists second. They outweighed the bad actors acting badly. But it was a close thing. And I still do not understand why the Maryland national guard was held up at Takoma Park for 90 minutes, and how they were finally given permission to move into DC:

Matthew Yglesias: The System Doesn’t Work <https://www.slowboring.com/p/the-system-doesnt-work>: ‘To look at this situation and conclude that “the system worked” would be a huge mistake. What happened is that the system did not work, and several actors in key positions inside the system simply chose to disregard it. They’ve been backed in this regard by other actors in American society. A bunch of business leaders came out publicly against efforts to overturn the election. Both Facebook and Twitter have deactivated Trump’s accounts. Arguably more importantly, while the official conservative position seems to be that the social media companies are doing the wrong thing, the President is not currently live on Fox News denouncing his enemies. Has he forgotten that he has other communications channels available besides twitter, or is Fox declining to book him? The Murdoch-owned Wall Street Journal has already called for Trump to resign, which I think is perhaps an indication that while Fox hosts will continue doing anti-anti-Trump stuff for ratings they are not actually interested in continuing the struggle. All of this is to say that what’s working, to the extent that anything is working, is that American society, and the American State, are capable of working around the flawed design of the system when in a crisis. But the system as designed does not work, and the solution may not be as elegant next time. It’s important for everyone to keep that in mind, in case things ever go far enough off the rails that we need to start all over again…

6. For the people who I talk to regularly, the fact that anyone is attracted to and convinced by Donald Trump is completely inexplicable. He is a lying conman. Anyone who believes him on anything is an easily-grifted moron. 

Yet I can understand and get how people find Bill Clinton so persuasive. I grok it. I feel it myself when I have been in the same room with him. I have to make a mental effort to remember that I have a purpose in that room, and that it is probably not well-served by becoming starry-eyed and enthusiastically agreeing with Bill Clinton. I remember Obama having the same impact before 2010–although, curiously, not since. 

But Trump is so completely, obviously, phony. And fake. And out to manipulate you. So where is the attraction coming from? Yes, 40 million people voted for him because you always pull the lever for the Republican. But there are 35 million more who are enthusiastic Trump supporters. Why? 

And do Ron Rosenbaum’s and William Shirer’s reflections on Germany in the 1930s have any relevance?:

Ron Rosenbaum: Explaining Hitler < https://books.google.com/books?id=xLoOUy0iNOUC >: ‘I found myself impressed with Shirer’s reporter’s eye. For Hitler. For the still inexplicable power of the “spell.”…. Those who were eyewitnesses, those who were ear witnesses as well… all somehow knew something beyond the ken of those who experienced it secondhand. There is a phrase I neglected to use in the first edition: Führerkontakt. The transformative personal charisma that turned his rival, Berlin-based Goebbels, into a gibbering sycophant in a single meeting, according to Goebbels’s own diary. Führerkontakt that had mind-scrambling effects on august German General Staff strategists and radiated out from the inner circle to all those tens of thousands in Sportzplatz- and Nuremberg-style rallies within the sound of his voice, the access to his appearances in real time. Different, almost incomprehensible, to those of us consigned to a remote viewing…

7. Still well outside my wheelhouse: Noah Smith thinks the key is the desire of Fox News, Facebook, and Twitter to sell ads to gullible right-wing audiences, and their discovery that the best way to do that is to terrify their audiences. Plus there are the other bad actors: those who want donations from gullible right-wing audiences, and have also discovered that the best way to do that is to terrify them. Until we find a way to D platform this Particular bunch of slick suit-wearing domestic cyberterrorists, we are going to have grave governmance and public-sphere problems in this society:

Noah Smith: Short Thoughts on the Insurrection < https://noahpinion.substack.com/p/insurrection-thoughts-113 >: ‘I think Republicans who still support the insurrectionists—or who are still on the fence—are motivated not by hate but by fear. To understand the mind of American conservatives, you have to understand the constant diet of fear that they consume every day. For decades, right-wing talk shows and Fox News have understood that they could get conservatives to tune in by constantly pumping up the fear—fear of a War on Christmas, fear of gay culture, fear of terrorism, fear of Black crime, fear fear fear. During the Trump Era, the chief bugaboos have been A) wokeness, B) immigration, and C) antifa. To be a conservative in America is to exist in a constant state of having people trying to scare you. Now, in the era of Trumpist insurrection, the chief threat that the fearmongers are hawking is that Republicans and conservatives will become a persecuted class in America..... Some Republicans will see this threatening warning and think “Ehh, that’s hysteria; let’s focus on the real threat of insurrection and then things will be back to normal.” But some will think “OMG it’s true…. I’m going to be hunted and persecuted in my own country just because I’m a conservative…. Who can protect me from this terror?” And for many, the only possible answer to the question of “Who can protect me from this terror?” will be “Trump, and the people who stormed the Capitol”. Having been told that the institutions of America are an existential threat to them, they will cling to the only force they feel might be capable of protecting them.... All the insurrectionists have to do to retain Republican support is to keep pumping up the threat, and keep presenting themselves as the only port in the storm. And some Republicans, tragically, will cling ever tighter to the very monster that is at their throats...

8. The other way I like of putting this thought is Alasdair Grey’s: “work as though you were living in the early days of a better nation” (itself an adaptation of Dennis Lee’s “best of all is finding a place to be in the early years of a better civilization”). But this is, perhaps, more optimistic, hence more true:

Ken Untener: Prophets of a Future Not Our Own < https://www.usccb.org/prayer-and-worship/prayers-and-devotions/prayers/prophets-of-a-future-not-our-own >: ‘It helps, now and then, to step back and take a long view. The kingdom is not only beyond our efforts, it is even beyond our vision. We accomplish in our lifetime only a tiny fraction of the magnificent enterprise that is God's work. Nothing we do is complete, which is a way of saying that the Kingdom always lies beyond us. No statement says all that could be said. No prayer fully expresses our faith. No confession brings perfection. No pastoral visit brings wholeness. No program accomplishes the Church's mission. No set of goals and objectives includes everything. This is what we are about. We plant the seeds that one day will grow. We water seeds already planted, knowing that they hold future promise. We lay foundations that will need further development. We provide yeast that produces far beyond our capabilities. We cannot do everything, and there is a sense of liberation in realizing that. This enables us to do something, and to do it very well. It may be incomplete, but it is a beginning, a step along the way, an opportunity for the Lord's grace to enter and do the rest. We may never see the end results, but that is the difference between the master builder and the worker. We are workers, not master builders; ministers, not messiahs. We are prophets of a future not our own…