WORÞY READS: from 2021-03-05

A preview of my weekly read-around for the Washington Center for Equitable Growth

Home base for this: <https://equitablegrowth.org/insights-expertise/value-added/>

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Worthy Reads from Equitable Growth:

1) My friends among the Biden plan doubters—they do not seem to have internalized exactly hoq devastating the slow recovery of the 2010’s was. They do not seem to recognize how great the uncertainty about the economy’s likely trajectory is. Those factors militate very strongly in favor of taking steps to make sure that you do not repeat that decade by making the same mistake. On the other side, I see little in the way of argument save what I regard as an unwarranted suspicion that the federal reserve will not do its proper job—plus a fear that the financial system could not cope without a crisis with an even moderate revaluation of the asset price structure. Austin Clemens is here, trying to focus attention where it should be focused:

Austin Clemens: New Great Recession Data Suggest Congress Should Go Big <https://equitablegrowth.org/new-great-recession-data-suggest-congress-should-go-big-to-spur-a-broad-based-sustained-u-s-economic-recovery/>: ‘Joe Biden’s proposed $1.9 trillion American Rescue Plan, critics now argue that it will “overshoot”…. Undershooting the policy response would be a far more dangerous prospect and could lead to a repeat of the slow and inequitable economic growth that followed the previous U.S. recession…. A new data series from the U.S. Department of Commerce’s Bureau of Economic Analysis—its Distribution of Personal Income series—shows just how devastating this pattern was for most U.S. workers and their families…. In the bottom 50 percent… because disposable personal income incorporates transfers from the federal government to households, so losses in this group were partially compensated for by rising Unemployment Insurance payments, Supplemental Nutrition Assistance Program benefits, and other government benefits. But this group then became mired in years of stagnant, or even declining, income as these benefits ended amid a still-tepid economic recovery, and did not experience substantial income gains until 2015. By comparison, households in the top 10 percent of income recovered almost immediately after the end of the Great Recession and ended 2018 up 22 percent compared to 2007…

2) Under the Trump administration, taking care that the laws be faithfully executed appears to have been among their very last priorities. Here David Mitchell has a very good list of things that Biden and his staff could do to start to turn that around:

David Mitchell: Executive Action To-Do List for Achieving Strong, Stable, And Broad-Based U.S. Economic Growth<https://equitablegrowth.org/executive-action-to-do-list-for-achieving-strong-stable-and-broad-based-u-s-economic-growth/>: ’Executive action to coordinate federal countercyclical regulatory policy…. Executive action to combat wage theft…. Executive action to coordinate antitrust and competition policies…. Executive action to reform the cost-benefit analysis of U.S. tax regulations…. Executive action to improve U.S. economic measurements…

3) I want to highlight two things that I have done this week. The first is my attempt to understand what is really worrying my friends among the new inflation hawks. For reasons I do not understand, they let what I think are their real concerns stay submerged in subtext. They do not stress that they do not trust the Federal Reserve. They do not stress that they worry that the financial web is on the point of another crisis and would collapse in response to even moderate shifts in the asset price structure. Yet their worries and their focus make no sense to me, unless such considerations are in the very forefront of their minds:

Brad DeLong: PROJECT SYNDICATE: What Are the New Inflation Hawks Thinking? <https://www.project-syndicate.org/commentary/american-rescue-plan-inflation-critics-fear-monetary-policy-normalcy-by-j-bradford-delong-2021-03>: ‘These warnings… all reflect a fear that the Fed might have to hike the federal funds rate and return it to the range we used to consider normal. I say “might” because, as the aforementioned critics acknowledge, any inflationary pressures generated by the $1.9 trillion package remain merely a possibility, not a certainty. It is equally likely that the new spending will end up filling holes in aggregate demand. In any case, if the past 15 years of debates about “secular stagnation” and “global savings gluts” have taught us anything, it is that we should want to create the conditions in which a higher federal funds rate is warranted…

4) Let us be very optimistic about the long run. Yes, global warming will be catastrophic for tens of millions and deadly for millions. But it is unlikely to shake our civilization to bits. We are likely to avoid bombing ourselves back to the Stone Age with our weapons of war. And we remain an inventive anthology intelligence, with lots left to discover, develop, and deploy. Thus the long run future for humanity‘s economy looks very bright:

 Brad DeLong: DeLongTODAY VIDEOCAST: Looking Forward to 2525… <https://www.delongtoday.com/>: Let us look at our great- and great2-grandchildren and what are their economic possibilities in 2100, then our great5-grandchildren in 2200, and then all the way out to the year 2525: our great15-grandchildren. That is not that far out. Yesterday Amazon drop-shipped me a book about one of my ancestors back in the 1500s: Thomas Wyatt the Younger, executed on Tower Hill on orders of Bloody Mary for being an unwise catspaw for nobles who wondered if they could persuade Parliament to take control over the Queen’s marriage, to prevent the accession of a Spanish King who would bring the Inquisition to England. The answer was no: they could not persuade Parliament to mobilize the military force to threaten convincingly. We are connected to him, and there are those in 2525 who stand in a similar connection to us…

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Worthy Reads from Elsewhere:

1) Ronald Reagan convinced enough of the center of the American electorate that it was “morning in America” back in 1984 to set America on a much, much worse trajectory than it might have attained. Clinton in 1994 and Obama in 2010 were unable to convince the center that they needed another two years of congressional support to have even a chance of turning things around. Now the _Financial Times_ editorial board hopes the policies will work well enough and the center of the American electorate will be wise enough to give Biden a full four-year chance. As it is, the combination of Reagan, the Bushes, and Trump have lost America a generation of societal progress and have accelerated by a generation the shift from an America- to an other-centered world. This may turn out to be an even faster loss of economic and geopolitical paramouncy than that experienced by the British Empire in the first half of the 1900s:

Financial Times Editorial Board: Stimulus Could Change the Biden Presidency <https://www.ft.com/content/6e392ae6-4384-4070-a0d8-d4bacc3af060>: ‘The US has softened the economic costs of the virus with all the skill that it failed to bring to its actual containment…. If Biden gets his bill (Democrats want it signed by March 14) he will have something bold to show for his early efforts. It could also shape the rest of his time in office. The previous two Democratic presidents lost Congress at their first midterm elections… healthcare reform…. If Biden’s stimulus aids the economy without overheating it, he can hope to buck the trend of prematurely neutered Democrats…. Last Saturday, not one Republican voted for the Biden bill as it cleared the House of Representatives. This was despite public supermajorities in its favour, including plenty of conservative voters. “I’m coming from a state where people are saying we need some help,” reports Senator Lisa Murkowski of Alaska, one of the reddest places in the nation. She is almost alone among Republicans in her openness to the bill. As fair as some of its quibbles are, the party must ask itself if it wants to go into 2022 with no credit at all for a hugely popular law. The Democratic midterm campaign would more or less write itself…

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2) Consider the ideology of utopia and economic growth that grew up on both sides of the year 1800. It hoped for the proper tuning of sociology to technology for the enlargement of the human empire in a strongly positive—indeed a utopian—direction. We are once again undergoing the same intellectual cycle. We once again do not have big enough brains to understand well enough how technology and society interact. So we cannot even plan for how we might get to a a utopian future. Kieran Healy provides some tips for how we can think better about this:

Kieran Healy (2016): SASE Panel on The Moral Economy of Technology <https://kieranhealy.org/blog/archives/2016/06/28/sase-panel-on-the-moral-economy-of-technology/>: ‘Silicon Valley… evangelizes social progress through technological disruption…. The precursors of modern social science were “ideologues of progress”, in Krishan Kumar’s (1986) phrase. They had vivid ideas about what the future would look like; they insisted on the connection between social change and moral progress; and they had strong views about the role of science in this process… the Scottish Enlightenment… the philosophes… Turgot, and Condorcet, and especially Henri Saint-Simon. They coined words like “individualism”, “industrialism”, “socialism”, “the organization of labor”, stages of development, or used them in their modern sense for the first time…. The Saint-Simonian vision became what Hayek called “the religion of the engineers”, full of faith in the power of rational expertise. That religion is very much still with us…. Does the thing Really Work? In his book, The Sneetches (1961), Dr Seuss discusses the disruptive entrepreneur Sylvester McMonkey McBean, a pioneer in the development of smart devices that satisfy the needs of socially connected groups with strong community values…. McBean’s device was a pernicious technology of social classification. But I think it’s important to keep in mind that, as Seuss points out, the thing really worked. It really did put stars on the bellies of the Sneetches who had none upon thars, and they loved it. If it hadn’t really worked it would have been pernicious as well, just in a different way…. Social theorists consistently underestimate the value of technology’s delightful aspects. When it works, people really love it. They pay money for it. Theorists tend to react by assuming there must be something wrong with people who have that feeling…. The same theorists also consistently overestimate how often software and hardware actually works properly…. It matters which technologies are going to work, and which ones are just going to be billion dollar cargo-cults…. A future where individual tastes and and potentials are accurately and predictably sifted from gigantic datasets in an ongoing flow of profitable mutual co-ordination and anticipation. If it doesn’t really work… technologies are… “money laundering for bias”, or ritualized applications of nonsensical or procrustean methods…

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3) Jason Furman and William Powell once more try to keep people from looking at the official unemployment rate and taking it as a reliable guide to any dimension of the economic situation. Please listen to them:

Jason Furman & Wilson Powell: US Unemployment Remains Worse <https://www.piie.com/blogs/realtime-economic-issues-watch/us-unemployment-remains-worse-it-seems-millions-still-out-labor>: ‘Throughout the pandemic the official unemployment rate has been kept down by a misclassification error and the unusually large withdrawal of millions of people from the workforce. Our estimate of the realistic unemployment rate for February was 8.2 percent…. Another concept, the fixed participation rate unemployment rate, cited by Federal Reserve Chair Jay Powell and Treasury Secretary Janet Yellen, was 9.5 percent; the comparable concept peaked at 11.8 percent in the financial crisis. The headline unemployment rate was 6.2 percent in February, down slightly from 6.3 percent in January. This concept works well in normal times but has had some deficiencies in the context of the pandemic… 

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4) A very good employment day summary from the Biden Council of Economic Advisers headed by Ceci Rouse:

Cecilia Rouse: The Employment Situation in February <https://www.whitehouse.gov/briefing-room/blog/2021/03/05/the-employment-situation-in-february/>: ‘The economy remains down 9.5 million jobs from February 2020 and will require more than two years of job growth at February’s pace just to get back to pre-pandemic levels…. Accounting for labor force dropouts and misclassification issues related to BLS’s survey questions would result in an unemployment rate around 9.5 percent. This is not to say the headline unemployment rate is wrong, simply that in a pandemic, getting a full view of the economy requires looking at the data in multiple ways…. The labor force participation rate for women 20 years and over is down 2.2 percentage points relative to February 2020, compared to a decline of 2.0 percentage points for men. The overall male-female difference in labor force participation changes masks wide variation by race. White men and women have declines in labor force participation rates that are relatively similar (2.0 percentage points for white men and 1.9 for white women). On the other hand, the labor force participation rate is down 1.8 percentage points for Black men, but 4.2 percentage points for Black women…. Black women were only 14 percent of the female labor force in February 2020, but have accounted for a disproportionate 26 percent of female labor force dropouts since then…

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5) Republican senators grandstand to try to delay the legislative process. Out of their incompetent lack of organization, they fail to do so. And most of the journalistic community and all of the Republican base simply does not notice. As Nicholas Grossman says, this is, in capsule form, the quintessence of Trumpianism:

Nicholas Grossman: ’How perfectly Trumpian <https://twitter.com/NGrossman81/status/1367856772128636933>. Be a jerk in a showy way, get that covered on TV, but be too lazy or ignorant to follow through in Congress, so the original action ends up having no practical effect, just some coverage on friendly outlets that you were a jerk to people they don’t like: Jim Sciutto: "Dems seem to have outplayed GOP on the Covid delay. After the all-night reading, Chris Van Hollen simply got up, proposed shortening the debate from 20 hours to 3 and no Republican including Ron Johnson was around to contest. In the end, the dramatic Bill reading delayed nothing…

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6) As Janet Yellen pointed out four years ago, economic policymakers and policy advisors have absolutely no business today recommending policies that run a substantial risk of generating a low-pressure economy that could not then be rapidly heated up with our available policy tools. No business at all:

Janet Yellen (2016): The Influence of Demand on Aggregate Supply <https://www.federalreserve.gov/newsevents/speech/yellen20161014a.htm>: ’Prior to the Great Recession, most economists would probably have answered… a qualified “no.”… Aggregate demand… was seen as explaining shorter-term fluctuations around the mostly exogenous supply-determined longer-run trend.1 This conclusion deserves to be reconsidered in light of the failure of the level of economic activity to return to its pre-recession trend in most advanced economies…. If we assume that hysteresis is in fact present to some degree after deep recessions, the natural next question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a “high-pressure economy,” with robust aggregate demand and a tight labor market…. Hysteresis would seem to make it even more important for policymakers to act quickly and aggressively in response to a recession, because doing so would help to reduce the depth and persistence of the downturn, thereby limiting the supply-side damage that might otherwise ensue. In addition, if strong economic conditions can partially reverse supply-side damage after it has occurred, then policymakers may want to aim at being more accommodative during recoveries than would be called for under the traditional view that supply is largely independent of demand…

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7) Running a substantial chunk of our hi-tech economy on the financial flows obtained from selling ads to glued eyeballs is a huge societal mistake along many dimensions. The fact that Google’s search engine today is substantially inferior to what it was when Google started out is just one such dimension. I had naïvely imagined, back when I thought about this two decades ago, that by now Google would be able to provide me with a good index to the collective online library of humanity. It cannot. It does not seem to have any desire to do so:

John Gruber: Google’s Search Results Have Gotten Worse <https://daringfireball.net/linked/2021/03/04/fowler-google-search>: ‘Google’s biggest weakness in search is… Google’s own search results have clearly gotten worse…. It’s been a slow boil from the Google of old to today, but if you took a Google search user from 2005 and showed them Google search today, they’d think it was halfway to Idiocracy…

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8) Eric Alterman observes, once again, that the internal culture of the _New York Times_ appears to take people who were once good reporters and focus them on doing things other than working for their readers:

Eric Alterman: Times Scoop! Republicans Don’t ‘Advance Working People’s Economic Interests’ <http://americanprospect.activehosted.com/index.php?action=social&chash=15de21c670ae7c3f6f3f1f37029303c9.604&s=5c0f20f039bc103aad05cec590c71835>: ‘When the New York Times publishes articles with headlines that read like this one in Thursday’s edition—“Republicans Won Blue-Collar Votes. They’re Not Offering Much in Return”—they are missing quite a few points simultaneously. This subhed—“Party leaders want to capitalize on Donald Trump’s appeal to the white working class. But in recent weeks, they’ve offered very little to advance working people’s economic interests”—deserves a Golden Globe award in the category of cluelessness. At what point in history, pre- or post-Donald Trump, did the modern Republican Party “advance working people’s economic interests”? Have the Times journalists, their editors, headline (or subhed) writers ever heard of Ronald Reagan, George W. Bush, George H.W. Bush, or Trump himself? Good God, as far as working people’s economic interests go, it has been the party of “Let them eat rhetoric,” one that unashamedly enriches the rich and impoverishes tens of millions. What’s changed primarily is the brazenness on both ends of this bad bargain, as with Trump’s trillion-dollar giveaway to the wealthy coupled with his ratcheting up of the hate that his party and its proponents in the media sell as a sop to the suckers. Everyone at the Times presumably knows this, but they publish this crap to try to protect themselves from working-the-ref-style attacks from the right. It never works, but it never stops just the same…