1) The general flow of news and misinformation in today's media gives people who are not following closely a very false impression. It greatly understates how far we still are away from full employment. There remain considerable supply constraints on people’s willingness and ability to work—fear of catching the plague and then giving the plague to immunocompromised and elderly relatives and friends, plus the logistical difficulties that stubbornly remain large, due to the inability to get all of the pieces of the family weekly schedule together, and due to failures of supply chain management in the economy as a whole. As these supply constraints are relaxed in the future, there will then need to be the demand to pull people back into work, and into the best attainable work for themselves and the economy. That will require a transitory burst of inflation. That is how the market works. Price signals make it individually advantageous to take the jobs that are the most opportunity laden for the economy as a whole. We should welcome this—transitory—ongoing inflation as a healthy and indeed a necessary part of rapid recovery. The large remaining gap between our current and our full-employment employment-to-population ratio should guide our thinking about how much such transitory inflation is likely to be desirable over the next year or so:
Kathryn Zickuhr & Carmen Sanchez Cumming: Equitable Growth’s Jobs Day Graphs: October 2021 Report Edition: ‘Total nonfarm employment rose by 531,000 in October, and the prime-age employment rate for prime-age workers rose to 78.3 percent.
The unemployment rate declined to 4.6 percent in October… higher for Black workers (7.9 percent) and Latinx workers (5.9 percent)…. Unemployment rates are markedly higher for workers with lower levels of education, at 7.4 percent for those with less than a high school degree and 5.4 percent for high school graduates…. Public-sector employment fell in October and remains significantly below pre-crisis levels, while private sector employment continued to see more rapid gains…. The proportion of unemployed U.S. workers facing long-term unemployment… remains elevated, as 45.0 percent of unemployed workers have now been out of work for more than 15 weeks.
2) Reproductive autonomy—the ability to effectively engage in family planning—has always been key to what opportunities women have had and what freedom to live their lives as they choose women have been able to grasp. Abortion rights have been a very powerful part of enabling women's opportunities in America over the past two generations. They now appear to be under considerable threat in Texas, Louisiana, and elsewhere:
Kate Bahn & Maryam Janani-Flores: Economic Security & Opportunity for Women Under Threat After U.S. Supreme Court Takes Anti-Abortion Stance in Texas: ‘Nearly 1 in 4 women in the United States… will have an abortion by the age of 45, and nearly 1 in 20 women will have an unintended pregnancy…. Research by economists and other social scientists repeatedly demonstrates how this link between bodily autonomy and a person’s ability to decide when, how, and under what circumstances to plan for a family is critical to economic security and stability…. The early broad-based dissemination of the birth control pill and on restrictions for abortion services, including gestational limits and targeted restrictions of abortion providers, or TRAP laws, finds that autonomy over family planning choices is directly linked to a woman’s job opportunities and financial security…
3) The American workforce and job system has so much month-to-month churn, and the value of the local information present in a business’s knowledge of the quirks of an employee and an employee’s knowledge of the quirks of a business and a boss is so large, that I have never, ever understood why the American private sector has not done a better job of maintaining employer-employee ties across all the accidents and disruptions of life that lead people to need to step away from the job for a week, a month, or a season. The hope is that requiring that medical and caregiving leave be offered, and making it paid leave, will jumpstart a more general shift to preserve much of this valuable information—information now lost when employee-employer ties are completely severed—across time:
Julia M. Goodman & Daniel Schneider: The Association of Paid Medical & Caregiving Leave with the Economic Security & Wellbeing of Service Sector Workers: ‘Our objective was to determine whether paid leave was associated with improved economic security and wellbeing for workers…. Data collected in 2020 by the Shift Project from 11,689 hourly service-sector workers…. Twenty percent of workers needed medical or caregiving leave in the reference period. Workers who took paid leave reported significantly less difficulty making ends meet, less hunger and utility payment hardship, and better sleep quality than those who had similar serious health or caregiving needs but did not take paid leave. Access to paid leave enables frontline workers to take needed leave from work while maintaining their financial security and wellbeing…
1) Treasury Tax Policy rightly focuses our attention on exactly how much money the build back better act can raise for the government by simply collecting taxes that are already owed but have not been collected due to the understanding of the IRS in the past:
Lily Batchelder: Preliminary Estimates Show Build Back Better Legislation Will Reduce Deficits: ‘The Build Back Better Act invests meaningfully in American families and workers, while laying the foundation for meeting imperative climate goals…. The legislation would, as the President proposed, generate more than $2 trillion in savings. These savings come from ensuring large multinational corporations and wealthy Americans pay their fair share and reducing the cost of prescription drugs. These provisions will not raise taxes on any taxpayer making less than $400,000…. At the crux of reforms to the tax code is a historic overhaul of the international tax regime, whose global adoption has been successfully negotiated with 136 countries representing nearly 95% of the world’s economy. As a result of these changes, the ability of large corporations to shift profits abroad will be substantially limited, and the race to the bottom in corporate taxation will no longer be a driving force weakening capital taxation…. The largest pay-for in the bill is not a tax increase at all. By collecting taxes that are already owed—and disproportionately unpaid by the highest-earners—the Build Back Better Act will generate at least $400 billion in additional revenue. Over the last decade, an under-resourced IRS has been unable to appropriately focus attention on top earners who are most responsible for the tax gap…. These are historic policy achievements in and of themselves—and they also pay for transformational investments that will improve the lives of American workers, our children, and the generations that will follow…
2) John D. Rockefeller, Henry Clay Frick, Andrew Carnegie, and George Fisher Baker—the top four wealthholders (we think) in America in 1913 collectively then held only 2/3 as large a share of the wealth in the American economy then as their counterparts do today. I think it is time to change the name of our age from “Second Gilded Age” to “Greater Gilded Age”. Gabriel Zucman is on the case:
Gabriel Zucman: ’Wealth inequality update: In 1913, the top 0.00001% (—Rockefeller, Frick, Carnegie, Baker) owned 0.85% of total US wealth Today the top 0.00001% owns 1.5% of total US wealth. Their share is sky-rocketing…
3) A very interesting take on how the inability to be sure that you will get to the job, or the appointment, greatly hobbles many people’s ability to successfully maneuver day-by-day in our society of sprawl:
Alexandra K. Murphy, Alix Gould-Werth, and Jamie Griffin: Validating the Sixteen-Item Transportation Security Index in a Nationally Representative Sample: A Confirmatory Factor Analysis: ‘We developed a preliminary Transportation Security Index (TSI): a 16-item measure that captures the experience of transportation insecurity at the individual level…. We use confirmatory factor analysis to replicate and validate the 16-item TSI. Our results show that a slightly modified TSI16 is an effective tool that can be used to uncover transportation insecurity across different samples. They also suggest that, counter to the results of our previous study, transportation insecurity is a unidimensional condition that is experienced both materially and relationally…
4) One of the shrewdest of all of the observers of China. Xi Jinping is now attempting to fight China’s Gilded Age, primarily, I think, to maintain the monopoly of the party as an ideological coalition vis-a-vis those who would turn the party into, well, an executive committee for managing the affairs of the nation on behalf of the plutocracy. But, secondarily, the desire to make China a better society is there, and is strong. Pettis sees three problems with Xi’s “Common Prosperity” initiatives—they seem based on a false analogy between income inequality in China and in the U.S., they do not draw heavily enough on the government to manage the burdens of the redistribution process, and it assumes that a “culture of philanthropy” can be rapidly built among China’s rich. None of those seem reasonable things to bet on to Michael Pettis:
Michael Pettis: Will China’s Common Prosperity Upgrade Dual Circulation?: ‘Will China’s Common Prosperity Upgrade Dual Circulation? Chinese leaders know that they want to discontinue the country’s existing growth model, but they haven’t yet landed on what the sustainable alternatives are. Beijing’s new common prosperity policy will only help shift domestic demand at the margins, but a full-fledged rebalancing will require a more radical transformation…. There is a contradiction at the heart of the dual circulation formulation…. The goal of the common prosperity campaign, it seems, is to rebalance income levels through transfers from those who are rich to those who are not…. First, donations by foundations set up by Chinese businesses and wealthy individuals accounted for roughly 0.2 percent of GDP in 2017. (By comparison, charitable giving in the United States amounted to around 2.3 percent of GDP in 2020.)… Second, by forcing the private sector to bear the brunt of the adjustment costs for rebalancing Chinese income distribution, the common prosperity campaign risks undermining the dynamism of the Chinese economy…. But the third reason is by far the most important one for why it would be prudent to be cautious about the projected success of the common prosperity campaign: Beijing may be seeking to resolve Western forms of income distortion instead of Chinese forms of income distortion in China’s very different economic context…
5) Another very good study strongly suggesting that current news-flow fears of a return to 1970s-style inflation vastly overstate the true risks here:
Davide Brignone, Alistair Dieppe, & Martino Ricci: Quantifying Risks of Persistently Higher Us Inflation: ‘Using the ECB-Global model, this column estimates the impact on inflation of the fiscal stimulus to be limited. Three scenarios… a steeper Phillips curve, stronger fiscal multipliers, and rising inflation expectations. The results suggest that the impact on inflation from these sources of risk is likely to be moderate, unless all of the risks materialise simultaneously, and the Fed does not depart from the assumed monetary policy path…
6) Jane Jacobs, long ago, critiqued planners who thought that one kind of activity should be carried on (and one “kind” of people live) in any block or neighborhood. A healthy city has a wide mix of activities and people working cheek-by-jowl. Yes, there are negative externalities from local diversity of activities. But more often there are very strong positive ones:
Addison Del Mastro: Main Street Manufacturing: ‘Operations like microbreweries and coffee roasteries were often zoned as light industrial… located in industrial/office-type areas outside of downtown, often accessible only by car and by following a number of winding roads into the office parks…. Iit’s obviously not a great idea to more or less force people to drive to a place where they’ll be drinking. Second, these kinds of businesses draw a lot of people, and are great ways to enliven main streets. Third, I get the sense that zoning hasn’t caught up to reality here…
It will be hard to inculcate Chinese philanthropy. Charity was always a much bigger thing in the Judeo-Christian tradition. Jews and Christians were expected to be charitable, and charity is one of the pillars of Islam. There are all sorts of charitable customs, traditions and institutions that have been developed over the last several thousand years that Xi would need to develop. What puzzles me is why Xi, being nominally a communist, hasn't pushed for a better public safety net in China.
Some years back, I believe on this blog, I commented that the Romans sometimes seemed a lot like modern westerners, especially in comparison to the ancient Greeks. Another commenter remarked that the Romans were very similar to us in many ways, but had notion of charity or mercy but the Greeks were completely alien.
It will be hard to inculcate Chinese philanthropy. Charity was always a much bigger thing in the Judeo-Christian tradition. Jews and Christians were expected to be charitable, and charity is one of the pillars of Islam. There are all sorts of charitable customs, traditions and institutions that have been developed over the last several thousand years that Xi would need to develop. What puzzles me is why Xi, being nominally a communist, hasn't pushed for a better public safety net in China.
Some years back, I believe on this blog, I commented that the Romans sometimes seemed a lot like modern westerners, especially in comparison to the ancient Greeks. Another commenter remarked that the Romans were very similar to us in many ways, but had notion of charity or mercy but the Greeks were completely alien.