WORÞY READS: 2021-02-22

My Equitable Growth Worthy Reads column from a week ago

This lives at: <https://equitablegrowth.org/?s=delong>

Worthy Reads from Equitable Growth

What economic policy levers can we pull to make advancing technologies complements to work or skills and capabilities rather than substitutes for them? We cannot count on large, oligopolistic firms to do this job. Well they can, by the nature of their business and market position, capture a substantial amount of the net returns from worker-substitute technologies, they cannot do the same thing for worker-complement technologies. There we must rely on the public and the nonprofit sectors, and we need to start doing so at scale as soon as possible:

Equitable Growth: ‘Register for Our Event on Tuesday! “A Future for All Workers: Technology & Worker Power” https://equitablegrowth.org/event/a-future-for-all-workers-technology-and-worker-power/ : featuring a keynote from SEIU International President Mary Kay Henry…. Change is inevitable, but the form it takes is not. At issue are how workplaces implement new technologies and the impact these technologies have on workers’ lives. How these technological changes are implemented, in turn, depends on the underlying economic and legal structures, as well as the extent to which workers are empowered to be full and active partners in technological adoption and integration…

Fiscal automatic stabilizers are highly effective because they are state-dependent rather than time-dependent policies. We very much need to learn from and then generalize that state-dependent feature that makes those policies so effective and cost-effective:

David Mitchell & Corey Husak: How to Replace Covid Relief Deadlines with Automatic ‘Triggers’ that Meet the Needs of the U.S. Economy https://equitablegrowth.org/how-to-replace-covid-relief-deadlines-with-automatic-triggers-that-meet-the-needs-of-the-u-s-economy/ : ‘The next coronavirus relief bill can be written to keep critical benefits in place until they are no longer needed. So-called off-triggers that depend on economic data can ensure that benefits phase out as the economy recovers, not on a random date. There are a number of possible mechanisms that can serve as off-triggers…. What was lacking in the Great Recession, and what is needed now, is a mechanism for ensuring that benefits remain available as long as they are necessary, with no need to wait for Congress to act. There are a number of solid, evidence-based ideas for such a mechanism. In 2019, the Washington Center for Equitable Growth and The Brookings Institution’s Hamilton Project published Recession Ready, a book of essays with comprehensive plans to strengthen automatic stabilizers, including recommendations for automatic triggers to activate supplemental benefits to families and state governments, and automatic triggers to turn them off…

Policy mistakes and acts of malfeasance in one generation echo substantially into future history for very long periods of time:

Jonathan Colmer & John Voorheis: Reductions In Air Pollution Have Intergenerational Consequences https://equitablegrowth.org/new-research-shows-that-reductions-in-air-pollution-have-intergenerational-consequences/ : ‘It was not only the children of women who benefited from regulatory reductions in exposure to air pollution during pregnancy, but also their grandchildren. The grandchildren of women who were exposed to lower levels of air pollution during pregnancy were more likely to attend college and less likely to drop out of high school 40 years later. A 10 percent reduction in prenatal exposure to particulate matter for individuals born around 1970 is associated with a 3.2 percentage point to 3.8 percentage point increase in the likelihood that their children attend college 40 years later. This corresponds to an 8 percent increase in attendance…

Mike Konczal of the Roosevelt Institute has written a very nice book of moral philosophy and public policy. He investigates the question: “Why is so much of American thinking about political economy and public policy issues in the mode of ‘the market giveth, the market taketh away: blessed be the name of the market’, why is it wrong, and what can we do about it?”:

Brad DeLong: DeLongTODAY: Enthusiastically Reading Mike Konczal: “Freedom from the Market” http://delongtoday.com: ‘It was in that election that Supreme Court Chief Justice William Rehnquist won his spurs by running “ballot security” efforts in which “every Black or Mexican[-looking] person was being challenged.”… Why did Goldwater decide to throw away that… founding principle?… The answer, I think, is that African-American aspirations—hopes for an equal voice, and then that with that equal voice they could ask and get a redistribution and redefinition of property to redress at least some of past injuries and abuses—made Goldwater and company extremely uneasy. They were asking for real democracy. And real democracy—especially African-American democracy—for Rehnquist… and for many others… [that] touched uncomfortably on matters of governance…

Worthy Reads from Elsewhere:

I think we can now afford to forget about the risk that those vaccinated for COVID-19 will still be as infectious as the unvaccinated population is. The Moderna Phase III trial looks to me to be decisive on this:

A Marm Kilpatrick: ‘(I think) We can now estimate the (minimum) reduction in transmission from the Moderna vaccine https://twitter.com/DiseaseEcology/status/1359213744937598976. tl;dr Moderna vaccine blocks 90% (87–93%) of infections and 91% (89–94%) of transmission…. The big remaining question is… will vaccination reduce transmission or just disease?… Does reduced symptomatic infection imply reduced infections?… A CRUCIAL bit of data was shared from Moderna trial based on swabs taken on day of 2nd dose…. The swabs represent truly asymptomatic infections. This is fantastic because it indicates we have… reductions of 95% in symptomatic and 61.5% in asymptomatic infections…. A very recent paper from Roy Kishony from Israel suggested that infections following vaccination reduces viral load…. Another recent set of papers showed that lower viral loads are strongly correlated with lower transmission…. I think we can estimate the (minimum) reduction in both infection & transmission from vaccinated individuals. Minimum because reduction in asymptomatic infections & viral load is based on data BEFORE 2nd dose. Efficacy should improve with 2nd dose… median reductions of 90% (87–93%) in infection and 91% (89–94%) of transmission…

And I also I think we can now safely conclude that it is overwhelmingly the first dose in the mRNA vaccine protocol that does the overwhelming share of the work:

Danuta M. Skowronski & Gaston De Serres: Safety & Efficacy of the BNT162b2 mRNA Covid–19 Vaccine https://www.nejm.org/doi/full/10.1056/NEJMc2036242: ‘Polack et al. (Dec. 31) report a vaccine efficacy of 94.8% against Covid–19 after two doses of the messenger RNA (mRNA) vaccine BNT162b2 (Pfizer–BioNTech). The authors also report a vaccine efficacy of 52.4% from after the first dose to before the second dose, but in their calculation, they included data that were collected during the first 2 weeks after the first dose, when immunity would have still been mounting. We used documents submitted to the Food and Drug Administration to derive the vaccine efficacy beginning from 2 weeks after the first dose to before the second dose (Table 1). Even before the second dose, BNT162b2 was highly efficacious, with a vaccine efficacy of 92.6%, a finding similar to the first-dose efficacy of 92.1% reported for the mRNA–1273 vaccine (Moderna)…

The rule of thumb I was taught—by Olivier Blanchard—is that one basis point of long-term Treasury bond rate increase offsets 0.02%-points of national income’s worth of fiscal stimulus. A fiscal program that—unlikely—would notionally push us $600 billion in annual national income above potential—3%-points—would thus be offset by a 150 basis-point increase in long Treasury rates, which standard gearing suggests would be delivered by a 4.5%-point increase in the federal funds rate. A world in which appropriate monetary policy near a business-cycle peak is a 4.5% rather than a 0% federal funds rate seems to me vastly preferable to our current secular-stagnation zero-lower-bound Fed-out-of-ammunition enormous-downside-risk world. It seems to me a place that we really do want to go. I do not understand this. I do not understand this at all:

Olivier Blanchard: In Defense of Concerns Over the $1.9 Trillion Relief Planhttps://www.piie.com/blogs/realtime-economic-issues-watch/defense-concerns-over-19-trillion-relief-plan: ‘If inflation were to take off, there would be two scenarios: one in which the Fed would let inflation increase, perhaps substantially, and another—more likely—in which the Fed would tighten monetary policy, perhaps again substantially. Neither of these two scenarios is ideal. In the first, inflation expectations would likely become deanchored, cancelling one of the major accomplishments of monetary policy in the last 20 years and making monetary policy more difficult to use in the future. In the second, the increase in interest rates might have to be very large, leading to problems in financial markets. I would rather not go there…

Those who fear that a $15 an hour minimum wage is too risky a policy should have long since I've gotten behind an expansion of the Earned Income Tax Credit. In fact, those who advocate for a $15 an hour minimum wage should also be behind an EITC expansion. That is what the research says:

Cynthia Miller & Lawrence F. Katz: Biden Wants to Boost the EITC for Workers without Dependent Children—What Does the Research Say? https://thehill.com/opinion/finance/538298-biden-wants-to-boost-the-eitc-for-workers-without-dependent-children-what?rl=1#.YCUykA0cLq8.twitter: ‘Many commentators have expressed the hope that the inequalities exposed by the pandemic will lead to renewed efforts to address them by expanding the social safety net and by providing basic protections for workers. An expanded EITC can be an effective part of this effort, increasing workers’ incomes (without depressing work effort) and putting them in a better position to recover from this crisis and weather the next…

The question Wall Street was considering—Ryan Cohen vs. Gabriel Plotkin—was this: GameStop now is a sustainable enterprise: it pays its bills. Suppose GameStop wants to raise an extra $300 million on the equity markets to spend on reorienting itself as it tries to find a path forward. Should those willing to invest that $300 million get, in return, a half-ownership of the firm? Or should they get a 20% ownership of the firm? Gabriel Plotkin believes and bets on the first, and Ryan Cohen believes and bets on the second. Then along comes WallStreetBets, saying: IT SHOULDN'T BE 50%! IT SHOULD BE 2%!! GAMESTOP—WORTH $20 BILLION !!!! And yet David Atkins of the Washington Monthly, in some way, and for some reason, approves. Very, very, very strange indeed: 

David Atkins: Hedge Funds Shouldn’t Get To Decide Who Has Fundamental Value https://washingtonmonthly.com/2021/01/30/hedge-funds-shouldnt-get-to-decide-who-has-fundamental-value/: ‘[Financial firms,] most of them, would have been bankrupt multiple times over without assistance from the Federal Reserve.... They have become... guaranteed against failure. Within a modern capitalist system that is probably good macroeconomic policy.... But crucially, that leeway has not been given to brick-and-mortar firms. Your local chain store–to say nothing of your local mom-and-pop corner store–has not been provided the same assurances against failure or the same easy money…. Keynesian liquidity... gives predatory hedge funds enormous leeway to stake out short positions on struggling firms, devaluing them and then selling off the remains for pieces... obliterating companies that might have survived for a long time otherwise, such as Toys R Us...

This was actually much more hopeful and positive than I thought it would be about political-economy and racial politics changes in the American north in the aftermath of the Great Migration of African-Americans from the south:

Alvaro Calderon, Vasiliki Fouka, & Marco Tabellini: Racial Diversity, Electoral Preferences, & the Supply of Policy https://voxeu.org/article/racial-diversity-electoral-preferences-and-supply-policy: ‘The 1940–1970 Great Migration of African Americans…. How resulting changes in the racial composition of local constituencies affected voters’ preferences and politicians’ behaviour…. Democrats and union members supported blacks’ struggle for racial equality, but that backlash against civil rights erupted among Republicans and among whites who more exposed to racial mixing…. Politicians largely responded to demands of their constituencies…. Under certain conditions, cross-race coalitions…. Changes in the composition of the electorate can polarise both voters and politicians…

This I enthusiastically endorse: Figuring out that on Twitter you have a right—nay, stronger than a right: you have a duty—to not mute but block people even if all they do is justwaste your time is essential to having a good life. Either that, or drop Twitter entirely. In an attention economy, grabbing your attention uselessly is a cognitive attack on your mind. Such cognitive attacks need to be stopped:

Zeynep Tufekci: ’I try not to block actual criticism <https://twitter.com/zeynep/status/1361680717416177664> but things I’ve started pretty much automatically blocking to make Twitter usable…. “Oh you’re surprised?” reply guys; People who respond to an article I wrote with a point made in the article…. I’ve never had a useful interaction with any of the above categories, and they are just cluttering up my mentions especially since others then respond to them, and it’s an endless, pointless series of pings that hide any signal that may hide in my mentions…. Why not mute? I tried. Because people reply to them (which I see) and others see them and affects the quality of the discussion I do want to have…. This is an attempt to be able to hear real criticism and feedback… 

Tom Gara: ’We joked a lot about sending various 2020 headlines back in time to 2005https://twitter.com/tomgara/status/1362606805470359557 to freak people out, but “CDC survival guidance for Texans considering melting snow for drinking water” would be a great one to send back to 2020…

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