Worþy Reads: For 2021-07-02 Fr
A preview of my weekly read-around for Equitable Growth:
Worthy Reads from Equitable Growth:
1) The first reason that tax cuts on capital income and on income for the rich did not produce higher investment and faster economic growth is this: In an economy at full employment (or in an economy where the Federal Eeserve has a very strong sense of the wedge it should maintain vis-à-vis full employment), any incentive effects of tax cuts on investment will be offset by the drag imposed by the larger government deficit on investment. Only when the economy is not at full employment, and the federal reserve either is or thinks it is out of ammunition, can tax cuts have any significant effect on aggregate demand. And, even then, it is not clear that the component of aggregate demand that will be boosted is the investment component. There is an income as well as a substitution effect associated with tax cuts for the elite and for capital income. And I have never seen any convincing evidence that the substitution effect dominates–and I have locked, hard:
Corey Husak: The Relationship Between Taxation & U.S. Economic Growth: ‘In the 1980s, policymakers followed these models and drastically lowered the top individual marginal income tax rate, from about 70 percent down to 28 percent, and lowered the top corporate rate from 46 percent down to 34 percent.5 But instead of booming, income growth slowed. As the government reduced statutory tax rates, especially for those at the top, inequality exploded, and income growth rates went down…. Broad empirical data are the opposite of what neoclassical models predict. The U.S. national savings rate, for example, declined in the 1980s after taxes on capital dropped, and it again declined after capital tax cuts in the 1990s and 2000s…
LINK: <https://equitablegrowth.org/the-relationship-between-taxation-and-u-s-economic-growth/>
This I find depressing, but not surprising. I am enough of a material list utilitarian to believe that ex-ante skepticism about the value of these tax refunds does not translate into ex-post lower utility. But it does mean that these tax refunds are not perceived as as large of benefit as they should be, and thus have a difficult time attaining political economy salience:
Sydnee Caldwell, Scott Nelson, & Daniel Waldinger: Tax Refund Uncertainty: Evidence and Welfare Implications: ‘Transfers paid through annual tax refunds are a large but uncertain source of income for poor households. We document that low-income tax-filers have substantial subjective uncertainty about these refunds. We investigate the determinants and consequences of refund uncertainty by linking survey, tax, and credit bureau data. On average, filers’ expectations track realized refunds. More uncertain filers have larger differences between expected and realized refunds. Filers borrow in anticipation of their refunds, but more uncertain filers borrow less, consistent with precautionary behavior. A simple consumption-savings model suggests that refund uncertainty reduces the welfare benefits of the EITC by about 10 percent.
LINK: <https://equitablegrowth.org/working-papers/tax-refund-uncertainty-evidence-and-welfare-implications/>
3) My view: the first policy priority here is anti-NIMBYism: make it easy and profitable for those people who want to move to the growth polls to move to them. Then we can see what remaining regional opportunity problems we have. Our ability to make public investments is limited. Having them having to be made in an environment in which housing costs trap people in low opportunity places—places in which government expenditures have relatively low returns in terms of boosting overall productivity—strikes me as a lose-lose:
Equitable Growth: ‘People just can’t move, says Gbenga Ajilore, regarding the idea that entire swaths of the country are beyond assistance. Fiscal-federalism increases economic distortion, says Whitney Tucker. We need to reform the way we finance public goods. The question, why don't you just move?, is problematic, says Dominique Derbigny Sims, to Gbenga Ajilore’s point. That's the wrong questions. Asking someone to uproot their community, their whole history, is dismissive of their lived experience. Plus: It's really expensive. When you deplete the tax base, you can't give the public services…. Then those firms move from the South to overseas. You're left with no tax base and a low-wage workforce, with no spending on education, etc…
LINK: <https://twitter.com/equitablegrowth/status/1410313292975902727>
4) It now looks to me like end of 2022 is going to be our moment of retaining full employment. There is still a year and a half long slog before us, and that is if nothing else goes wrong:
Equitable Growth: ‘For the week ending June 26—359,130 workers filed for regular unemployment benefits. Regular initial claims continue to trend down. States reported that another 115,267 workers filed for initial PUA. Many states prematurely withdrew from the program before June 26. In total, 474,397 workers filed initial PUA or regular unemployment benefits last week. Regular continued claims, also referred to as insured unemployment, was 3.3 million the week ending June 19. Adding all Unemployment Insurance programs—including PUA, PEUC, and Extended Benefits—a total of 14.7 million workers claimed benefits the week ending June 12
LINK: <https://twitter.com/equitablegrowth/status/1410579184527806474>
Worthy Reads from Elsewhere:
1) I would not say that the household survey tells a slightly less-promising story than the employment survey. I would say that the household survey tells a disturbingly less-promising story then the employment service. I am going to dig deeper into this and try to figure out what the firm birth-death adjustments and what the seasonal adjustments are doing right now, because, as Ceci Rouse rightly says, the noise these days is so great that a single datapoint should not move your beliefs by more than a smidgen:
Elise Gould: ‘Latest jobs report shows the economy added 850,000 jobs in June, a promising sign that the recovery continues on track… a significant uptick in job growth, increasing the speed of the recovery. Average monthly job growth over the last three months comes in at 567,000. At that pace, we will likely get down to 4% unemployment this time next year with a full recovery by the end of 2023. The largest rebound continues in leisure and hospitality, adding 343,000 jobs in June. Most of these gains were in food and drinking places. There were also significant gains in education, professional and business services, retail trade, and other services. The household survey tells a slightly less promising story…. Most measures were little changed and the unemployment rate ticked up slightly to 5.9% as 151,000 additional workers returned to the labor force…
LINK: <https://twitter.com/eliselgould/status/1410940926227255298>
2) It is so nice to see smart, intelligent, rational, things from the CEA. For four years we had a combination of obsequious toad-eating towards the kleptocrat and his posse, and out-and-out lies:
Cecilia Rouse & al.: Distinguishing Between Signal & Noise in Recent Jobs Data: ‘The onset of the COVID–19 pandemic resulted in historically large job losses, and its retreat this spring has allowed millions of Americans to return to work. On average since January 2021, the U.S. has added about 500,000 new jobs per month. However, job growth has also been noticeably volatile month-to-month since January. This volatility in job growth during the pandemic reflects both real volatility—economic reverberations of the pandemic shock—as well as heightened measurement error due to the challenge of collecting statistical data amidst a pandemic. These considerations warn against placing too much weight on any single data point in assessing the current state of the economy, even as the worst of the pandemic in the U.S. fades away…
3) I must say that I am extremely, extremely pleased with the highly competent and highly technocratic job that Brian Deese is doing. Here he says smart things, and receives very wise counsel From some of the very best in the business:
Hamilton Project: Policies to Protect Workers and Families: Rethinking Social Insurance: ’pening remarks from former U.S. Health and Human Services Secretary Sylvia Matthews Burwell, as well as Q&A with former Chair of the Council of Economic Advisors Jason Furman…. Brian Deese… and Robert Greenstein…
4) And no sooner do I find one video that becomes a must-watch as I find another. Here, again, is Brian Deese being very very smart. Watch this as well:
Atlantic Council Front Page: A Special Event with Director of the National Economic Council, Brian Deese
5) Here is Phil Lubin, one of the managerial and entrepreneurial forces behind Evernote and the video presentation program mmhmm, He’s talking his book here. But it is a very good book to talk. We are still trying to figure out what our stuffing a decade of virtual and hybrid managerial business-model experimentation into a decade will do to the pattern of future economic growth. It will certainly do something. And we need to find this out pronto:
Phil Libin: Lessons for CEOs: ‘Imagine a parallel universe where we never had to commute before, and I came in and said, “Listen up guys, I need you to waste two hours of your day sitting in traffic. No, you won’t get any work done, no, it won’t be time spent with your friends or family, and yes, it’s terrible for the environment, but two hours a day, you have to sit in traffic.” Essentially that’s what companies are asking employees to do by telling them to come back to the office. So rather than saying that we’re only doing this because we have to, think about the amazing new powers we have, and how much better our lives are if we embrace them…
LINK: <https://foundersfactory.com/news/lessons-for-ceos-from-phil-libin-evernote>
6) This is another serious silicon valley guru trying to figure out what the play gear will bring us in terms of office reconfiguration. The coming of high-voltage alternating current electricity eventually, after a generation, brought us the assembly line as we have known it. The plague is cramming into a shorter time, we think. But what changes? We still do not know, and need to find out:
Steven Sinofsky: Creating the Future of Work. From Trauma to Opportunity: ‘What comes next for work?… We have learned a whole new and improved way many things can work, and it isn’t likely we will go back to our prior ways…. The post-pandemic world will provide the impetus and tools to rethink the Corporation, and more broadly innovation, and how work is structured and how individuals contribute…. Making things, extracting things, and moving them around the world remains remarkably difficult in its own right, but all of those businesses are now constrained and enhanced by software as a primary source of innovation and operation. Every business is now a software business…. The biggest change has been the move of technology from a supporting role to a central role. It isn’t just that messaging became more important or that video meetings began to work, but that people quickly realized these can actually be superior. The next step is to take these tactical lessons and apply them more broadly…. Those that believe things will return to normal except maybe for that one thing, or that we’ll do what we always did just with this one extra step, will be the ones that are ultimately disrupted…. We’re emerging from a generation-defining event and there’s every reason to think in the years to come that the reinvention of work and what it means to be a corporation will change as much going forward as those did in the period following the return from the War…
LINK: <https://medium.learningbyshipping.com/creating-the-future-of-work-449c66707e35>
7) It seems to be nobody’s job to figure out how to do coalition maintenance and low-information voter briefings about items of real substance in the 21st-century. And right-wingers are as bad off here as centrists and liberals:
Matthew Yglesias: “Future“ & the Future of Media: ‘The crucial thing is this wouldn’t just be a news site with a left-of-center brand (there are plenty of those), but rather one that deliberately tried to elevate left-of-center ideas that are popular with swing voters. Conventional media… [has] young college graduates who live in big cities making stuff that appeals to their friends, who are also young college graduates who live in big cities. It gives a leftward spin… but also a politically toxic framing…. Cultivate an older, more working-class audience… mix straight news with coverage that focuses on the concrete material stakes in government. Jon Tester delivering for Montana public lands. Joe Biden delivering an expanded Child Tax Credit. ARP funding keeping cops and teachers alike employed. You could also do inverse-Fox and elevate the most unpopular right-wing ideas. Bring a well-connected Republican economist on to talk about how the minimum wage should be $0. Find a House backbencher who agrees and interview him. Get conservatives talking about how this is what they’d do if political considerations didn’t stop them…
8) This is, I think, 100% right. COVID-19 Was not made by human hands from RaTG13 In any form of gain of function research or otherwise. What Covid came from, or something much much much closer, is still out there. And that we have not found it’s near cousins means that our failure to find it exactly carries no information. And those who claimed that it does carry information should be ashamed of themselves, if they can be ashamed of themselves:
Lindsay Beyerstein: Covid: Why a Natural Origin Story Is More Likely: ‘“Even if you’re doing the most sophisticated gain-of-function research you could possibly be doing, you have to start with a virus that’s at least close. We would estimate 99 percent, [or] even higher than that, 99.9,” Dr. Robert F. Garry…. There’s no way to use laboratory tricks to overcome this need for a close source virus…. If RaTG13 were used as a backbone for Covid–19… you’d expect to see big chunks of exact similarity with coherent chunks of new information…. Instead… over 1,000 point mutations…. There’s at least one wild virus that’s at least 99 percent similar to Covid–19 somewhere in nature…. It’s more likely that it got out naturally (like SARS and MERS) than that it took an undetectable detour through a secure biolab…. Meanwhile, the natural-origin theory just involves countless bat roosts with millions of bats doing what they do best: generating new viruses like the world’s most chaotic supercomputer…
LINK: <https://newrepublic.com/article/162689/bats-covid-19-lab-leak-theory>
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One more comment, re: Matthew Yglesias's piece: isn't it time for Democrats and progressives, in this "off-year", to advertise concrete policy positions that *everyone* likes, and say "this is what Democrats stand for"? Rather than campaign for specific candidates who are not actually running in 2021 and may trigger knee-jerk negative reactions from more conservative folks?
Auto-complete is not always your friend. But, turning "toadying" into "toad-eating" is just plain delightful, so I have to say I am a fan today. Or is that, a fantod, eh?