Worþy Reads: For 2021-07-16 Fr
A preview of my weekly read-around for Equitable Growth:
Worthy Reads from Equitable Growth:
1) I think this is a great decision, and is going to lead to great and wonderful things:
Michelle Holder: A Note from Incoming Equitable Growth President & CEO: ‘I’ve admired the Washington Center for Equitable Growth since its inception in 2013, so I am thrilled to become its next leader. Equitable Growth’s mission—to accelerate research on how inequality affects economic growth and stability—hits home for me…. Examining how inequality inhibits growth, and promoting effective and actionable policies, is absolutely critical if we want to improve our economy and society more broadly. As a second-generation immigrant, first-generation college graduate, and working mom, my lived experience lies at the nexus of characteristics associated with marginalization and cuts right to the heart of many topics Equitable Growth studies…. The present moment is charged with opportunities…. I could not be more excited to lead the Washington Center for Equitable Growth through this next chapter…
LINK: <https://equitablegrowth.org/a-note-from-incoming-equitable-growth-president-and-ceo-michelle-holder/>
2) Our now-Interim Chief Economist hit this one out of the park, I think:
Kate Bahn et. al.: JEC Hearing: A Second Gilded Age?
3) And it is Child Tax Credit week. We have very solid projections of all the good it will do from studies of partially similar programs in the past, but it would be nice to confirm or disconfirm our expectations as rapidly as possible:
Liz Hipple: The Child Allowance Will Pay Dividends for the Entire U.S. Economy far into the Future: ‘Research into positive, long-term benefits of the Earned Income Tax Credit and the Supplemental Nutrition Assistance Program is directly translatable to the benefits we can expect to see from the new child allowance. Economic research clearly demonstrates that an investment in families today is an investment in their future economic mobility, as well as in broad-based, stable economic growth. Making the newly enacted child allowance permanent will pay dividends for all Americans far into the future.
4) A very important, bracing, and heartening story, if you have not heard it before—or even if you have:
Nina Banks: The Story of Sadie Alexander
Worthy Reads from Elsewhere:
1) I tell you, it is very, very nice to have a Council of Economic Advisers that you can rely on not to tell misleading lies about the state of the world and the impacts of policies:
Ceci Rouse et al.: ‘Without cars and pandemic-affected services, core inflation rose 0.22 percent month-over-month, relative to 0.28 percent in May and 0.31 percent in April <https://t.co/ZQsigWt5OL>. The year-over-year numbers were impacted by base effects from last year, although the impact of base effects is starting to move out of the data. Starting in July, year-over-year changes in CPI will be calculated off of a price level that is above the pre-pandemic level. Controlling for base effects by smoothing across the 16 months since February 2020, the rate of CPI inflation was 3.5%. In core inflation, controlling for base effects the rate of annualized CPI inflation was 3.1%…
LINK: <https://twitter.com/WhiteHouseCEA/status/1414940736907358209>
2) If you had told me a generation ago that we would let local control of zoning get to this dysfunctional a pass, I would not have believed you:
Joseph Gyourko & Jacob Krimmel: The Impact of Local Residential Land Use Restrictions on Land Values Across and Within Single Family Housing Markets: ’The amount by which land prices are bid up due to supply side regulations… [is] especially burdensome in large coastal markets…. Price impacts in the big west coast markets now are the largest in the nation. In the San Francisco, Los Angeles, and Seattle metropolitan areas, the price of land everywhere within those three markets having been bid up by amounts that at least equal typical household income…. In the San Francisco metropolitan area (which includes San Francisco, Alameda, Contra Costa, Marin and San Mateo counties), the median “zoning tax” for a quarter-acre of land was $409,000—more than four times the region’s median household income…
LINK: <https://www.nber.org/system/files/working_papers/w28993/w28993.pdf>
3) The possibility that Cuba today is actually poorer in material living-standard terms than it was under Battista in the late 1950s is hard to square with its human-development index scores—if, indeed, those can be trusted:
Marianne Ward and John Devereux (2010): The Road Not Taken: Pre-Revolutionary Cuban Living Standards in Comparative Perspective: ‘All indications are that Cuba was once a prosperous middle-income economy. On the eve of the revolution, we find that incomes were fifty to sixty percent of European levels. They were among the highest in Latin America at about thirty percent of the US. In relative terms, however, Cuba was richer earlier on. The crude income comparisons that are possible suggest that income per capita during the 1920’s was in striking distance of Western Europe and the Southern States of the US. After the revolution, Cuba has slipped down the world income distribution. As best we can tell, current levels of income per capita are below their pre-revolutionary peaks…
LINK: <https://web.archive.org/web/20121217122436/http://econweb.umd.edu/~davis/eventpapers/CUBA.pdf>
4) The pace of reform has been slow and subject to many restrictions, disincentives, and taxes because the point of reform—to the army at least—is for the army to engross all opportunities to profit by foreign trade, and to keep the rest of the population from benefitting so that they remain a pliable and easily exploited servile labor force. Chinese reform worked because Hu Yaobang and Zhao Ziyang and Xi Zhongxun and company figured out a way to align the interests of the bureaucracy and the bureaucrats with the nascent entrepreneurial class. But the Cuban Army is a separate estate, without any ties with the potential Cuban bourgeoisie:
Carmelo Mesa-Lago (2019): There’s Only One Way Out for Cuba’s Dismal Economy: ‘For the past 60 years, Cuba has been unable to finance its imports with its own exports and generate appropriate, sustainable growth without substantial aid and subsidies from a foreign nation. This is the longstanding legacy of Cuba’s socialist economy…. Between 1960 and 1990, the Soviet Union gave Cuba $65 billion (triple the total amount of aid that President John Kennedy’s Alliance for Progress gave Latin America). At its peak in 2012, Venezuelan aid, subsidies and investment amounted to $14 billion, or close to 12 percent of the gross domestic product…. Cuba’s woes are a result of the inefficient economic model of centralized planning, state enterprises and agricultural collectivization its leaders have pursued…. In his decade in power, President Raúl Castro tried to face his brother Fidel’s legacy of economic disaster head on by enacting a series of market-oriented economic structural reforms…. The pace of reforms has been slow and subject to many restrictions, disincentives and taxes that have impeded the advance of the private economy and desperately needed growth. It is time to abandon this failed model and shift to a more successful one as in China and Vietnam…
LINK: <https://www.nytimes.com/2019/03/28/opinion/cuba-economy.html>
5) Cuban reform is always on the verge of paying big dividends. Always. Without fail. Every year. This from seven years ago is not atypical:
Alexa van Sickle (2014): Viva la Revolución: Cuban Farmers Re-Gain Control Over Land: ‘As the state loosens its grip on food production, Cuban farmers and independent co-operatives will need support to help solve the country’s agriculture crisis: Last year, Cuba spent over $1.6bn (£1bn) on food imports… 60% of its domestic food requirement…. Since 2007, President Raul Castro, noting its connection with national security, has made food security a priority. State farms hold over 70% of Cuba’s agricultural land; about 6.7m hectares. In 2007, 45% of this land was sitting idle. In 2008 Castro allowed private farmers and co-operatives to lease unused land with decentralised decision-making, and loosened regulations on farmers selling directly to consumers. Since 2010, Cubans with small garden plots, and small farmers, have been allowed to sell produce directly to consumers. However, agriculture in Cuba remains in crisis. A government report issued in July 2013 showed that productivity had not increased…
6) A very good reflection on the romance of world communism—how the last generation’s leaders, parties, and movements were obviously, in retrospect, brutally inadequate and just brutal and destructive, but this time things are different, for sure. It means that there is always both an “internal” and an external history: the history that is romantic fantasy about what is happening, and the history that is retrospective reality-checks:
James Kurth: “If Men Were Angels…” Reflections on the World of Eric Hobsbawm: ’Why are the catastrophes of Soviet communism during the 1920s–1930s described not… where they chronologically belong, but in Part Two dealing with the period 1945–1970s?… Why is the treatment of the catastrophes of Chinese communism and Third World Marxism during the 1960s–1970s postponed from… where they chronologically belong, to Part Three?… Hobsbawm’s first chapter on Soviet communism… presents an historical elaboration on the romantic ideas that the young Hobsbawm held about Soviet communism at the time…. Hobsbawm… has written a second chapter on the same subject… [with] much more of the actual history…. He delays this, however, to Part Two… the period during which the mature Hobsbawm gave up his youthful romantic ideas…. Hobsbawm [then]… redirected his romanticism to Third World Marxism. Consequently, we see a repetition of the pattern of disjuncture. Hobsbawm’s first chapter on Third World Marxism and Chinese communism does not present the actual history… [but] an historical elaboration of the romantic ideas that… middle-aged Hobsbawm held…. However, Hobsbawm’s present identity as a distinguished historian must also be expressed. Consequently, he has written a second account of Third World Marxism and Chinese communism…
LINK: <https://www.jstor.org/stable/pdf/42896912.pdf?refreqid=excelsior%3A59278a437a45f3830c4bd1988828547d>
7) As far as I know, there are very few people satisfied with the sluggish recovery from the Great Recession. Bernanke certainly is not. Geithner tends to say: “We did the best we could, but we were sabotaged by the Republican Party, and the electorate did not reward us for making the hard choices. I blame Bernanke’s and Yellen’s failures at the Fed not on their being economists, but on their being saddled with a large number of people on the FOMC who were not qualified for the job, unwilling to mark their beliefs to market—and Bernanke and Yellen neither having the confidence and personality to split the committee but rather to always seek “consensus”, nor having the bureaucratic political skills of Powell to mange the consensus to where they wanted it to go:
Matthew Yglesias: When Experts Go Astray: ‘On the specifics of full employment, what happened after the 1970s inflation experience is that economists promulgated a view that democracy naturally tends toward inflation…. Elected officials always want to err on the side of less unemployment, even if that means more inflation. They say you can worry about the inflation later. But there’s a “time consistency problem” where once it’s later, you still want to defer addressing inflation…. The solution to this, according to economists, was to create central banks that are staffed by experts (i.e., economists), pay higher salaries than normal civil service agencies, and also receive unusual levels of insulation from the political process—to the point where the president criticizing their decisions is considered inappropriate…. But just as biology lab insiders are reluctant to conclude that biology labs are running reckless risks, economists are reluctant to conclude that this set of special arrangements might have some downsides. I don’t think it’s a coincidence that Jay Powell is not an economist—e’s not intellectually, emotionally, or professionally invested in the community of practice that looks at the sluggish recovery from the Great Recession and says “yeah, we did a great job”…
8) When I say that this is Cultural Revolution-level obsequious toad-eating, I am not kidding or engaging in hyperbole:
Jonathan Chait: J.D. Vance Apologizes on Fox News for Opposing Trump: ‘In 2016, J.D. Vance, the successful author turned venture capitalist, was a hard-core critic of Donald Trump. The Republican nominee was “unfit,” his attacks on “immigrants, Muslims, etc.” were “reprehensible,” and his policy proposals ranged from “immoral to absurd.” Vance publicly endorsed Never Trump Republican Evan McMullin and expressed a fervent wish: “In four years, I hope people remember that it was those of us who empathized with Trump’s voters who fought him most aggressively.” Now Vance hopes fervently that his aggressive fight against Trump is not remembered…. “Like a lot of people, I criticized Trump back in 2016,” Vance conceded. “and I ask folks not to judge me based on what I said in 2016, because I’ve been very open that I did say those critical things and I regret them, and I regret being wrong about the guy.” Lots of people were calling Trump a lying predatory huckster back in 2016. Now they all know better—or, at least, the ones who want to run for office as Republicans do…
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Kate Bahn is terrific! I may have missed it, but I don't believe she included the intentional use of undocumented workers to drive wages down. My brother-in-law saw his fork lift operator hourly wage plummet from $30 to $16 as additional workers arrived, many of whom had the same Social Security number.