WORÞY READS: From 2021-02-05 Fr

My Equitable Growth survey from last week...

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

Worthy Reads from Equitable Growth:

1. This is when the deadline is for submission of proposals https://equitablegrowth.org/research-paper/2021-request-for-proposals/ to Equitable Growth: Countdown Timer: _ -Countdown to Feb 7, 2021 11:59 am in Washington DC_ https://www.timeanddate.com/countdown/generic?iso=20210207T1159&p0=263&msg=Countdown+Timer&font=sanserif… 

2. Ultimately—no, not ultimately: immediately—whose property the law will protect, in the triple senses of protecting it from theft or expropriation, protecting it from damage, and protecting it from devaluation, is a political decision made in the interests of those whom the government listens to. If you don’t have a political voice, whatever property you do accumulate is likely to be evanescent and to be worth little: David Mitchell, Austin Clemens, & Shanteal Lake: The Consequences of Political Inequality & Voter Suppression for U.S. Economic Inequality & Growthhttps://equitablegrowth.org/research-paper/the-consequences-of-political-inequality-and-voter-suppression-for-u-s-economic-inequality-and-growth/: ’Those who enjoy market power are, not coincidentally, often the same citizens who enjoy outsized political influence, creating a feedback loop that perpetuates economic inequality, instability, and slow growth. This report examines cutting-edge research on how economic and racial inequality interact around the country among those Americans who vote, those who try to vote but face obstacles in doing so, and those who do not vote altogether. The evidence-based research we explore pinpoints the myriad ways that economic and racial inequality together subvert our democracy by aiding and abetting political inequality and voter suppression…

3. After a very, very rocky initial start, the augmented unemployment insurance benefits system in the United States has, in many states, worked very well during the coronavirus plague depression. Without it the economic disaster, and likely the plague disaster, would have been significantly worse. I remain puzzled about the form unemployment has taken over the past year: why our initial claims still so large? Exactly who and why is being fired in such large numbers right now?: Equitable Growth: ’For the week ending January 30

, 816,247 workers filed for regular unemployment benefits. Initial regular claims have now remained above 700k for 46 weeks. Another 348,912 workers filed for initial PUA, which extended UI to some workers who are not eligible for regular benefits. In total, 1.2 million workers filed initial PUA or regular unemployment benefits last week. Regular continued claims, also referred to as insured unemployment, fell to 5.1 million the week ending Jan. 23. Adding all Unemployment Insurance programs—including PUA, PEUC, and Extended Benefits—a total of 17.8 million workers claimed benefits the week ending Jan. 16. UI is one of the most important tools the U.S. has to stabilize the economy and reign in the negative effects of downturns. And the Coronavirus Recession is changing the way scholars and policymakers think about jobless benefits…

4. This week my half-hour videocast is on why I think that the Biden team has done a very good political-economic job at designing its proposed $1.9 billion stimulus. If you have a valid criticism of it, it is almost surely a criticism that the policy designers thought of, and then decided—rightly—that other concerns, whether narrowly economic, or distributional, or political, or administrative, overrode: DeLongTODAYhttp://delongtoday.com: ’Nudging us back to full employment…


Worthy Reads from Elsewhere :

1. Outside of my wheelhouse. But what happened on January 6 and why is really, really important it is still to a substantial degree unclear. I endorse Kieran Healy’s gets here: key actors at DoD and elsewhere wanted to go the extra mile to appease Donald Trump, and Donald Trump wanted the crowd to threaten violence and to try to string up Pence, Pelosi, Schumer, AOC, and company—but probably? did not really? want them to succeed—just make a lot of noise, scare people, and postpone the counting of electoral votes until he could persuade Republicans that they had less to lose from blocking the certification permanently than from going along with it. And if viewed that way, it almost worked: he won a twelve hour delay, and the Republican House’s applause for their Jewish Space Lasers Q-Anon colleague and public scorn for Liz Cheney suggests that not much more would have been required for a 48- or more hour delay, during which time lots might have happened. Chaos is a ladder, or something:

Kieran Healy: What Happened?https://kieranhealy.org/blog/archives/2021/01/08/what-happened/: ‘My current theory…. The plan… was… a big mass of people demanding something be done…. Cleansing… DoD leadership… made sure there… the crowd… [would] get… real close and mak[e]… a lot of noise. The optics would be good.… Trump would call some Senators…. Between the direct pressure from Trump and the noise from the masses gathered outside (just look at those TV pictures!)… Senators… would vote to reject the Electoral votes and send everything back to the States.… Or something….[In] the crowd… some… absolutely did want to get inside… find Pence, and Pelosi… take them hostage and string them up…. It pleases the White House to see that sort of person hanging around looking vaguely menacing…. The Ziptie guys and the woman who was eventually shot—were… prepped and making a beeline for… people they wanted to capture and harm…. The Senators and Representatives ended up being successfully secured…. The regular MAGAs also had little to do… vandalizing stuff, shitting on the floor, and accidentally tasering themselves to death while trying to steal things…. CNN’s Jim Acosta tweeted that “A source close to the White House who is in touch with some of the rioters at the Capitol said it’s the goal of those involved to stay inside the Capitol through the night.”… This is all just speculation on my part. There are many other plausible scenarios. People who know much more about American history than me have argued that some subset of people in the Administration and the GOP really did want protestors to get inside the Senate chamber and gum up the works such that an 1877-style “compromise” would be the wise way for cooler heads to prevail. There’s a lot to be said for this view…

2. The data underlying this observation from Noah Smith are the reason that I have considerable sympathy for the “mismeasurement” theories of the TFP stagnation since 1973. I do not know about you, but the nondurables and services that I consume are substantially transformed from those I consumed back in 1973 in a very good quality- and sophistication-adjusted way. There is no comparison between TV dinners now and TV dinners then, between home-produced coffee now and home-produced coffee then, between information and entertainment technologies now and information and entertainment technologies then. What picture of the changing shape of technology can we hold in our minds’ eyes that gnerates (i) extraordinary technological advances in the production of durables, (ii) extraordinary quality augmentation in the commodities we consume, (iii) extraordinary transformation of our information and information-related technologies, and yet (iv) non-durable and service TFP stagnation? My first reaction is: there is none—the process of producing durables overlaps a lot with the process of producing nondurables and services. The difference is that with durables we can better measure quality changes because the old versions hang around for generations with market valuations attached. Now I am not sure that this position is right. And certainly the consensus of those who study these issues carefully and are not fascinated by technology is otherwise. But it does make me wonder:

Noah Smith: _About that TFP Stagnation… https://noahpinionblog.blogspot.com/2011/04/tfp-and-great-stagnation.html: ‘Wow! If you look only at the durables sector, there was no Great Stagnation at all…. Durables TFP has been growing more strongly post–1993 than it ever did in the post-WW2 boom! Consider this: In the 26 years from ’47 to ’73, durables TFP nearly doubled, but in the 15 years from ’94-’09, durables TFP more than doubled…. Something big did happen to technological progress… not in 1973… but a decade earlier. In the 15 years to 1963, the two sectors progressed pretty much in tandem. But sometime in the early- to mid–60s, they diverged wildly, with nondurables [and services] TFP rising anemically through the late 70s and then basically flatlining until now…. I think we should look at the “Great Stagnation” as a more subtle phenomenon than simply the exhaustion of the “low-hanging fruit” of nature. Our technologies for producing durable goods are improving faster than ever…

3. I think that this is 100% correct. There is now effectively zero net cost to moving to net-zero CO2 emissions in the U.S. over the next generation. And we could—and should—do it more rapidly and incur some costs. The benefits to the world will be greatly worth it:

James H. Williams & al.: Carbon‐Neutral Pathways for the United States: ‘Modeling the entire U.S. energy and industrial system… we created multiple pathways to net zero and net negative CO2 emissions by 2050. They met all forecast U.S. energy needs at a net cost of 0.2–1.2% of GDP in 2050, using only commercial or near‐commercial technologies, and requiring no early retirement of existing infrastructure. Pathways with constraints on consumer behavior, land use, biomass use, and technology choices (e.g., no nuclear) met the target but at higher cost. All pathways employed four basic strategies: energy efficiency, decarbonized electricity, electrification, and carbon capture. Least‐cost pathways were based on >80% wind and solar electricity plus thermal generation for reliability…. In the next decade, the actions required in all pathways were similar: expand renewable capacity 3.5 fold, retire coal, maintain existing gas generating capacity, and increase electric vehicle and heat pump sales to >50% of market share. This study provides a playbook for carbon neutrality policy with concrete near‐term priorities… LINK: https://agupubs.onlinelibrary.wiley.com/doi/10.1029/2020AV000284

4. GameStop looked and looks to me like a classic short squeeze, amplified exponentially by Wall Street firms that sell calls, delta-hedge, and never bother to think about whether the Black-Scholes Brownian-motion price processes that make delta-hedging an appropriate portfolio strategy are in fact the price processes the market follows. In this case, NO!!!: It’s not a geometric Brownian motion. Delta-hedging is not the right thing to do. But they did it. And so it turned into a pump-&-dump for the ages. The remaining question lis whether there was a manipulative seed of actors hoping to profit massively who attempted to trigger positive-feedback trading so that they could pump-&-dump, or whether it was an emergent social-network plus overleverage-leading-to-positive-feedback accident, with nobody planning in advance to take advantage and massively profit from it. Running the Harlem Corner or the Stutz Bearcat Squeeze took a lot of energy and skill, after all. Did this also, or did it take no skill at all on the part of the initiators? As of this writing, GameStop is at to $53/share, down from a high of $483, up from a fundamental value of either $5 (if you believe Gabriel Plotkin) or $20 (if you believe Ryan Cohen):

Timothy B. Lee: No, WallStreetBets Isn’t Robbing Wall Street to Help the Little Guy: ‘The effort has been so effective in part because its architects have convinced people that it’s not just a pump and dump scheme… a seductive story in which retail investors found a loophole that allows them to make money at the expense of hedge funds…. In reality, most of the gains captured by early GameStop investors will come at the expense of later investors who will be left holding the bag when the stock falls… LINK: https://arstechnica.com/tech-policy/2021/01/the-gamestop-bubble-is-going-to-hurt-a-lot-of-ordinary-investors/

5. In my opinion, the best way to understand the macro economic world right now starts with the observation because of extremely high wealth inequality and remarkable amounts of non-market-oriented actors holding wealth, the world economy is desperately short of nominal-safe assets needed for the smooth functioning of a financialized economy with enormous gross long and short positions. Hence governments that can supply more in the way of nominal-safe assets should, and they and their people can benefit enormously thereby. But what about emerging market governments? As Justin Sandefur rightly says, this from Olivier Blanchard and Armand Subraminian is genius. Absolute genius:

Justin Sandefur: On Twitter

Twitter avatar for @JustinSandefurJustin Sandefur @JustinSandefur
This exceeded my high expectations. Come for a crash course in contemporary thinking about debt sustainability from @ojblanchard1 and stay for @arvindsubraman's depressing but compelling case that India is different. Full video is now online:
youtu.be/RM_QXhBLwQ4

Justin Sandefur @JustinSandefur

Does the new fiscal consensus apply to emerging markets? Really looking forward to this: https://t.co/Pfu5l3S3LI https://t.co/un17cN2vzx

: ‘This exceeded my high expectations. Come for a crash course in contemporary thinking about debt sustainability from @ojblanchard1 and stay for @arvindsubraman’s depressing but compelling case that India is different…

6. I think that this is vastly too Panglossian. If I were Dan Dresner, I would be much more Eeyore-like here. Not that many Senate Republicans are willing to cross Trump. And very few House Republicans are. Remember: McConnell thought it was worth spending Senate time after the election on the Judy Shelton nomination—he thought the odds were reasonable that she would get through, even though there is no case there for her appointment whatsoever:

Dan Drezner: What Scares Senate Republicans?https://www.washingtonpost.com/outlook/2020/11/17/what-scares-senate-republicans/: ‘In two recent instances, Senate Republicans have partially or completely broken with Trump. The first issue is Afghanistan…. The other area where some Republicans are pushing back on Trump is his appointments to the Federal Reserve… Judy Shelton… so out there that even the National Review thinks she should not be confirmed…. Opposing Trump on these issues does not matter politically. Few in Trump’s base care about foreign policy, and no one understands monetary policy. On these issues, standing athwart Trump yelling “Stop!” carries minimal costs. Publicly contradicting him on his election narrative, on the other hand, does alienate his base. Trump has nine weeks left as president. He will attempt to lock in as many of his policies as possible. The congressional wing of the GOP will kowtow to his whims on issues of high salience to his base. On everything else, however, expect to see a purely transactional partnership…

7. As I have said elsewhere, the issues of what kind of and how big a relief, support, and stimulus package we need right now do not seem to me to be partisan. I could understand if the right wing of the Republican Party—with its ideological blinders, its deficiencies, its inability to avoid thinking of an optimal policy is very different when a Democrat than when a Republican is president—were to show up with a $600 billion proposal as an alternative to Biden’s $1.9 trillion reconciliation bill. I am rather embarrassed for the moderate, non-fantasy-based wing of the Republican Party when that is what they brings to the pot-luck. It is a very bad sign:

Scott Lemieux: Party that Won Election to Govern https://www.lawyersgunsmoneyblog.com/2021/02/party-that-won-election-to-govern: ‘Fortunately, it looks like Senate Dems aren’t going to let a bad faith decoy offer from the Gang of Collins meant to stall the process from using the same procedural mechanisms Republicans use to pass bad and unpopular legislation to pass popular and urgently needed legislation…. Meanwhile, I am pleased to inform you that The Daily Beast has put the latest Matt Lewis monument to bad faith, “Biden’s About to Steamroll the GOP. Here’s Why That’s Wrong,” behind a paywall. I have no idea who on Earth they think is going to pay for this s—, but I applaud them from doing their little bit to prevent someone in this country from being made a little stupider…

8. And another piece outside of my wheelhouse, but I ran across this while reading Scott’s other piece on congressional coalition maneuvering, and have to include this as my eighth. This is, I think, very important. Mussolini hypnotized the minds of Italians in order to seize power, rule, and try to Make Italy Great Again. Facebook (and Google, and Twitter and Fox) do it to… sell ads for overpriced gold funds and fake diabetes cures:

Scott Lemieux: The Church of the Poisoned Mind https://www.lawyersgunsmoneyblog.com/2021/02/the-church-of-the-poisoned-mind: ‘Ronan Farrow has an excellent piece about how Rachel “Bullhorn Lady” Powell was a normal, relatively apolitical woman completely radicalized by Mark Zuckerberg’s firehose of conspiracy bulls—…. In related news, the disruption of vaccinations at Dodger stadium was planned on Facebook…. Sure, Facebook could try to severely curb anti-vaxx disinfo campaigns, but Mark Zuckerberg’s 11th generation of heirs might inherit slightly less money, so you can see the dilemma here…