Worþy Reads: For 2021-09-24 Fr
A preview of my weekly read-around for Equitable Growth:
Worthy Reads from Equitable Growth:
1) It is very difficult to take over a running organization and then to strike the right note in one’s initial communications—neither anodyne platitudes, nor too great a shock to the organization, nor submerging one’s own agenda. I think incoming Equitable Growth President Michelle Holder managed this very well:
Michelle Holder: Equitable Growth President & CEO Addresses Conference Attendees in First Public Appearance: ‘The current moment calls for a vision of sustained public investment in structures and institutions to spur equitable economic growth…. The current moment also calls for addressing inequities… for centering people in that vision who have been ignored by policymakers for far too long… for a coherent and comprehensive vision for emerging from the pandemic stronger and more equitable, unafraid of addressing the ongoing and overlapping racial, climate, and care crises our nation faces. Public investments in these areas can spur strong, stable, and broad-based economic growth by addressing longstanding racial and income inequality, driving clean energy and creating good jobs, and jumpstarting a new era of innovation. This is a moment we must continue to face head on if we want an economy that works for everyone, not just the few…
2) Back in the real old days, large family sizes meant that the economies-of-scale in child care were captured for the most part within the family, and certainly within the extended family. In our time of nuclear families and low fertility a great deal of this essential work and life is done at a much greater societal resource load per child than a better organized society would do:
Sam Abbott: The Child Care Economy: ‘How investments in early care and education can fuel U.S. economic growth immediately and over the long term. Fast facts: Insufficient child care options can prevent parents who wish to work from doing so, with mothers often bearing the brunt of this challenge…. High-quality early care and education provides critical socialization and learning opportunities when the brain is developing rapidly…. Adequate funding is necessary for human capital development…. Supporting child care workers is crucial for promoting quality care and human capital development…. Investing in the nation’s children is one of the safest bets policymakers can make. Research on early care and education programs finds that $1 in spending generates $8.60 in economic activity…
LINK: <https://equitablegrowth.org/research-paper/the-child-care-economy/>
3) given the current structure of the US Senate, making legislative progress on promoting equitable growth requires the huge and enthusiastic cooperation and endorsement of at least a dozen Republican senators in the long run. And those who are interested in good public policy for the nation’s sake are likely to listen to the Niskanen Institute, where Steve Teles works. If the game is to have a chance of legislative progress via normal order—or, indeed, of legislative progress that is not reversed in short order—people like those at the Niskanen Institute need to be strongly on board:
Steve Teles, Noah Smith, & Brad DeLong: PODCAST: True, Neo-, and Illiberalism: ‘Key Insights: Today’s meaning of “neoliberalism” is the result of the collision of two different applications of the term—to Margaret Thatcher, and to the Washington Monthly…. Intermediary institutions are very suspicious to “liberalism”… [which] has a bias toward atomizing solutions to social problems…. YIMBY vs. NIMBY is the fundamental political debate in America today. Sometimes the answer will be command-and-control, sometimes the answer will be deregulation…. The need to detach “liberalism” from centrism or moderation…. Liberals are thinking about things that are important and visionary about productivity, and Biden is listening…
LINK: <https://braddelong.substack.com/p/podcast-hexapodia-is-e-key-insight-152>
4) This, I think, was the best session at last week’s Equitable Growth conference:
Hakeem Jeffries & Kate Bahn: How Do We Build a Just & Competitive Economy?…
LINK: <https://twitter.com/equitablegrowth/status/1440400526684815370>
Worthy Reads from Elsewhere:
1) This Martin wolf column seem to me to be very good… up until its end. He seems to be heading for the Hobsonian position that central banks face an impossible task without a major, major equalization of incomes. But where I expected to see a call for in the short-run a 4%/year inflation target or a massive increase in infrastructure investment and in investment tax credit incentives both to rebalance savings and investment and to alleviate bottlenecks, I find, instead… a call for increasing interest rates “a little”. I am not sure that that is wise, given the fiscal contraction that is entrained here in the United States. And I cannot quite follow the logic:
Martin Wolf: Inequality Is Behind Central Bank Dilemma: ‘What happens when the rich get richer and so try to save more? Interest rates must fall. It turns out that the impact of this on business investment is quite feeble…. So the offsets have had to come either from persistent fiscal deficits or from higher spending by the bottom 90 per cent. Both are fuelled by debt, while the latter is also powered by asset price bubbles, especially in house prices…. The financial crisis of 2007–12 should be seen as an outcome of these processes, resolved at the time by rescuing the financial system, tightening regulation and doubling down on low rates across the yield curve. The Covid crisis was a bolt from the blue but the response was more of the same, but on an even bigger scale…. So how might the story evolve?… There is an excellent reason for a huge investment boom, notably the climate transition. But that will not occur without consistent, determined, intelligent and globally aware policymaking, none of which we can expect…. The short term… if it goes wrong, is disturbing…. The worry must be that the price shocks persist and then get baked into expectations, which will then only be reversed by a period of significantly higher short-term rates… which would create painful dilemmas for central banks and surely cause devastating problems for weaker borrowers, notably but not exclusively heavily indebted emerging economies…. [But] bond yields ought to rise a little. When the facts change, central banks should change their minds. That time is now…
LINK: <https://www.ft.com/content/1b65d2c0-251c-467d-b924-42f0c78c3d34>
2) I think these are, for the most part, exactly the right people whom the Hamilton Project has put on this panel. I do, however, question Doug Holtz-Eakin and Paul Ryan. Holtz-Eakin did his best to try to get Ben Bernanke to slow the pace of recovery for reasons that made no technical macroeconomic sense, and has never satisfactorily explained why. At the very least, his judgment seems to me to be very poor <https://www.hoover.org/research/open-letter-ben-bernanke>. And as for former Speaker of the House Paul Ryan…. There are lots of younger, smarter Republicans and conservatives who would talk sense and add intellectual value to a conversation. And I do not see either Holtz-Eakin or Ryan as having any utility in actually getting legislators into any supporting coalition. I might be wrong, but I do want to raise the question:
Hamilton Project: Resilience After Recession: The Emerging Landscape for American Workers & Families: ‘The COVID–19 pandemic continues to have consequences for the U.S. economy and has exacerbated economic disparities facing American women, people of color, and low-wage workers… persistent inequities in labor market outcomes, greater housing insecurity, reduced access to child care, and widened disparities in educational attainment. Now is an opportune moment to assess where there have been positive developments and where new policies are needed to ensure long-term stability and opportunity for families and workers. On Wednesday, September 29, 2021, The Hamilton Project at the Brookings Institution will host a webcast examining how different groups are experiencing the economic recovery from the recession and policy solutions to ensure the recovery is more broadly felt…. Roundtable discussions with: David Autor (MIT), Douglas Holtz-Eakin (The American Action Forum), Wendy Edelberg (The Hamilton Project), Bradley Hardy (Georgetown University), Michelle Holder (Washington Center for Equitable Growth), Trevon Logan (The Ohio State University), Heather Long (The Washington Post), Sharon Parrott (Center on Budget and Policy Priorities), Former Speaker of the House Paul Ryan, Heidi Shierholz (Economic Policy Institute), and Betsey Stevenson (University of Michigan). The webcast event will coincide with the release of two Hamilton Project essays and an Economic Facts piece…
LINK: <https://www.hamiltonproject.org/events/resilience_after_recession>
3) There is a very large fiscal contraction coming down the tracks, targeted at America’s non-rich. It is not at all clear that macroeconomic forecasters optimistic about production and employment are taking full and proper account of it:
Asha Banerjee & Ben Zipperer: All Pain & No Gain: Unemployment Benefit Cuts Will Lower Annual Incomes By $144.3 Billion And Consumer Spending By $79.2 Billion: ‘Congress and the Biden-Harris White House have let expanded unemployment benefits expire in the middle of the ongoing COVID–19 pandemic, even while employment is still well below pre-pandemic levels. As a result, annual incomes across the U.S. will fall by $144.3 billion and annualized consumer spending will drop by $79.2 billion, according to the best available evidence on the effects of recent unemployment benefit cuts…. About half of states prematurely terminated these programs between June and late July 2021, and then, by letting the federal law expire in September, Congress and the White House cut off pandemic UI entirely. In total, more than 10 million workers lost all of their unemployment benefits because of either the state-level program terminations or the September program expiration. Claims that the pandemic unemployment benefits have slowed economy-wide job growth—which fueled the state-level terminations—are false. Instead, any potential gain to job growth driven by lower benefits chasing people into the labor market seems to have been offset by two counterweights: first, a consumer demand effect, in which there is a drag on growth stemming from reduced household spending when UI benefits are lost; and second, a “congestion” effect, in which job gains among former UI recipients crowd out other job seekers. In fact, new research from a team of economists shows that the early, state-level UI terminations significantly reduced total incomes and consumer spending. The study found the benefit losses following these early terminations led to only the smallest boost in job-finding: Earnings from work rose by only $14 per UI recipient per week in states that cut off benefits, but weekly UI income fell by $278, for an average weekly net income loss of $264 per recipient. Because of lower total incomes, UI recipients spent $145 less weekly. On an annualized basis, the average person losing UI saw their annual income drop by $13,728, leading to an annual spending reduction of $7,450…
4) No. The American economy was not supply-constrained by “lavish” government benefits. By chip and other shortages, yes. By fear of plague and death, yes. But not by “lavish” government benefits:
Colby Smith & Christine Zhang: End of US’s Extra Unemployment Benefits Gives Little Boost to Labour Market: ‘The end of extra federal unemployment benefits for millions of Americans this month is unlikely to provide a significant boost to the US labour market, according to an analysis by the Financial Times and studies by economists and industry analysts. Before September’s expiry — which left more than 7.5m people without access to enhanced pandemic-related benefits — unemployed people had this year received an extra $300 per week from the federal government in addition to state aid. The federal benefits have been politically divisive, with many Republican leaders arguing they have dissuaded people from returning to the workforce and fuelled a nationwide labour shortage that has inhibited the economic recovery. In June, 22 states withdrew the supplemental payments…. An FT analysis of monthly data from the US Department of Labor shows that states that ended benefits early did not report faster job growth than those that opted to keep additional aid flowing. Non-farm payrolls rose by about 1.3 per cent in both sets of states from May, when the bulk of the states laid out their plans to abandon the federal programme, to August…
LINK: <https://www.ft.com/content/d13b204d-a0c0-4eeb-bbfa-a4b0ce1d1c3f>
5) Behind the Republican belief that Black people just happen to make bad choices is blame: either of the culture, or (more often) of the genes—although that is mostly whispered in polite society. Until we can convince the overwhelming majority of Americans that people are, at bottom, the same, and that groups where “bad choices” are more common arise from structural causes, equitable growth will be a nearly impossible task:
Alberto Alesina, Matteo F. Ferroni, & Stefanie Stantcheva: Perceptions of Racial Gaps, Their Causes, C& Ways to Reduce Them: ‘Using new large-scale survey and experimental data, we investigate how respondents perceive racial inequities between Black and white Americans, what they believe causes them, and what interventions, if any, they think should be implemented to reduce them. We intentionally over- sample Black respondents, cover many cities in the US, and survey both adults and very young people aged 13 to 17. In the experimental parts, we consider the causal impact of information on racial inequities (such as the evolution of the Black-white earnings gap or the differences in mobility for Black and white children) and explanations for these inequities (i.e., the deep-seated roots and long-lasting consequences of systemic racism) on respondents’ views. Although there is heterogeneity in how respondents perceive the magnitude of current racial gaps in economic conditions and opportunities, the biggest discrepancies are in how they explain them.
There is a stark partisan gap among white respondents, particularly in the perceived causes of racial inequities and what should be done about them. White Democrats and Black respondents are much more likely to attribute racial inequities to adverse past and present circumstances and want to act on them with race-targeted and general redistribution policies. At the same time, white Republicans are more likely to attribute racial gaps to individual actions. These views are already deeply entrenched in teenagers based on their race and their parents’ political affiliation. A policy decomposition shows that the perceived causes of racial inequities correlate most strongly with support for race-targeted or general redistribution policies, a finding confirmed by the experimental results…
6) Very important: a successful movement needs to learn from, listen to, and communicate with the people whom it wants to have as its base—not fund itself via spam:
Nelson Minar: ’Just look at this deceptive fundraising spam I got from BOLD Dems. I support their goals but they and Ruben Gallego should be ashamed of this kind of insulting marketing. (And of course I never signed up for this mailing list at all.) There’s a distinctive design vernacular for political fundraising spam. It looks very much like itself and not much else except maybe the warning labels on cigarette packs…
LINK: <https://twitter.com/nelson/status/1441441982283272195>
7) The middle-income trap comes for China, specifically for the one billion people in the interior who have the living standards of Peru. “Dual circulation” will require that they make something of value that the rich coastal provinces are willing to pay handsomely for. And what could that be?:
Scott Rozelle: Invisible China: How the Urban-Rural Divide Threatens China’s Rise: ‘Terry Sicular and her colleagues have a fabulous paper written with national data that basically shows China has a huge middle-class, it’s 400 million people, but they have 950 million people that are in low-income. It’s a lot easier to solve poverty for 20 million people than it is to solve the low-income problem for 900 million people. The myopia problem, the nutrition problem, the intestinal worm problem, they’re invisible problems. China’s trying to develop 2,000 county seats, fourth and fifth tier cities, into little urban centers. They’re trying to make 2,000 Cincinnatis, right? I don’t see what people are going to do there. There’s not going to be any manufacturing in those cities. There’s not going to be any construction in the long run in those cities… and everybody’s low income! There’s not going to be any demand for services…
LINK: <https://chinatalk.substack.com/p/invisible-china-how-the-urban-rural>
8) Outside my wheelhouse, but this is very, very important indeed. If you have the power to enforce it, the form of words is unimportant save as it reacts back upon your power. But that back-reaction is very, very weak indeed: after the fact, there are lots of people who will agree with the form of words used—or who say that they agree with the form of words used—whatever it happens to be:
Ezra Klein: (’There’s a lot of laughing about how implausible this is but coups are ultimately about power. You need something to say, and then you need the power to enforce that reality. This was just the “something to say.” If Trump had the power to enforce it, he would’ve tried it…
LINK: <https://twitter.com/ezraklein/status/1440088104065372173>