WORÞY READS: from 2021-03-19

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

Worthy Reads from Equitable Growth:

1) it is time to re-up this from a year and a half ago. It would be a very good thing to have the Bureau of Economic Analysis do spadework on income distribution trends in America today. The focus on totals and averages that it currently pursues was a very political decision, and a very unwise one for the sake of sensible policy making in America:

Equitable Growth: Nobel Laureates, Former Fed Chair, Two Former CEA Chairs… Endorse the Measuring Real Income Growth Act of 2019: ‘Robert Solow and Joseph Stiglitz, former chair of the Federal Reserve Janet Yellen, and former chairs of the Council of Economic Advisers Jason Furman and Laura Tyson, endorsed the Measuring Real Income Growth Act of 2019, which was reintroduced in the U.S. Senate today by Senator Chuck Schumer (D-NY) and Senator Martin Heinrich (D-NM)…. The Measuring Real Income Growth Act would add a distributional component to the National Income and Product Accounts, breaking out income growth into deciles of income and allowing us policymakers and the American people see who prospers when the U.S. economy grows… LINK: <https://equitablegrowth.org/nobel-laureates-former-fed-chair-two-former-cea-chairs-and-58-economists-endorse-the-measuring-real-income-growth-act-of-2019/>

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2) Very well done. Solid evidence that migration benefits men's access to material resources and within-the-household status more than it benefits women. If I were at the labor department right now, I would be thinking about job search assistance for "trailing” spouses as one place where the fruit is very low-hanging and where the potential benefit-cost ratio is very very high:

Joanna Venator: Dual-Earner Migration Decisions, Earnings, & Unemployment Insurance: ‘Access to unemployment insurance (UI) for trailing spouses increases long-distance migration rates by 1.9–2.3 percentage points (38–46%) for married couples…. Women are the primary beneficiaries of this policy, with higher UI uptake following a move and higher annual earnings of $4,500-$12,000 three years post-move…. [My] structural model of dual-earner couples’ migration decisions… increasing the likelihood of joint distant offers substantively increases migration rates, increases women’s post-move employment rates, and improves both men and women’s earnings growth at the time of a move. However, unconditional subsidies for migration that are not linked to having an offer in hand at the time of the move reduce post-move earnings for both men and women, with stronger effects for women… LINK: <https://equitablegrowth.org/working-papers/dual-earner-migration-decisions-earnings-and-unemployment-insurance/>

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3) The intellectual panoply the social sciences currently possess is, unfortunately, much better tuned to analyzing the societies of western Europe between 1900 and 1950 than in analyzing any significant chunk of the world today. We academics need to figure out which political economy and social theory authors and schools will be most insightful as tools for understanding the world of 2045. And we then need to figure out how to best teach those authors and schools:

Brad DeLong: What Are We Doing When We Teach “Political Economy”?: ‘We have… more technological and organizational change in the world economy now in every two years than we had in any century back before 1500…. Political economy is thus social theory in the age of this extraordinary transformation of technology, understood as human powers to transform nature—not always in a good way—and to organize humans—not always in a good way at all… [and] not that economists or political scientists have any special expertise in figuring out what the appropriate social theory for this age of extraordinary transformation of technology is…. The economy is changing and changing so rapidly and those changes ramify so far that they pretty much have to be at the core of whatever analysis you might undertake. Now: rubber, meet road: What should we teach?… LINK: <https://braddelong.substack.com/p/what-are-we-doing-when-we-teach-political>

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4) We economists have been very lazy at thinking about how corporations in our economy both (1) are as economically efficient as they are, alongside (2) what prevents them from being even more efficient. Unfortunately, we economists have few answers, other than to gesture at outside market competition and at the effect of the buy-or-make a decision on internal processes. I wrote this 2 1/2 decades ago. I wish I did not think it was still so close to state of the art. I wish we had made more progress:

Brad DeLong (1997): The Corporation as a Command Economy: ‘We were all told, back when the Soviet Union collapsed, that hierarchical organizations simply did not work as modes of organizing economic life—that you needed a market in order to achieve anything better than low-productivity, bureaucracy-ridden economic stagnation. What, then, are all these large corporations… doing? What methods of corporate control have saved them from turning into smaller versions of the unproductive Soviet economy?… Our politics would be very different without corporations both as sources of pressure an influence on politicians and as intermediaries serving the purposes of politicians. It should not be surprising that the continued existence and, indeed, economic dominance of large corporations is due to a number of different forces. Very, very few things in this world have a single cause… LINK: <https://www.bradford-delong.com/2013/05/brad-delong-1997-the-corporation-as-a-command-economy.html>

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Worthy Reads from Elsewhere:

1) The extremely sharp Martin Sandbu calls for European policymakers to take a lesson from Joe Biden, Kamala Harris, Nancy Pelosi, Chuck Schumer, and the Democratic House and Senate legislative caucuses and prioritize a rapid reattainment of full employment as vaccination that kicks in and the possibility of ending the coronavirus plague of depression opens up:

Martin Sandbu: US Stimulus Package Leaves Europe Standing in the Dust: ‘Europe and the US will loom less large in the global economy as emerging countries outperform their growth. That is inevitable. What we do not know is how fast that US and European dominance will be whittled away…. US president Joe Biden has delayed his country’s relative decline. EU leaders, however, look set to accelerate theirs. Biden’s $1.9tn fiscal stimulus package, passed last week, may not be literally visible from space, but it is certainly of planetary scale. In the OECD’s March update to its forecasts, the organisation estimated that the US stimulus will add one whole percentage point to projected global growth. It more than doubled its 2021 growth forecast for the US itself, from 3.3 to 6.5 per cent. Biden’s own administration foresees US output returning to its potential three to four years faster because of the stimulus… LINK: <https://amp.ft.com/content/20096b0a-8a94-453d-8788-c3b15dc1704c>

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2) I have no idea whether this attempt by China to shift to an economic policy of self-reliance for both demand and technologically crucial links in the value chain will work. I cannot visualize how it could. But, when I look back, I find that at each point in the past I have been unable to visualize how the Chinese model might accomplish rapid growth for more than the subsequent five years. And yet it has always managed to do so:

Bates Gill: Endorsing “Self-Reliance”, Beijing Raises the Geopolitical Stakes: ‘The “dual circulation” strategy announced at the National People’s Congress… a framework first coined by Xi Jinping last year…. Greater reliance on China’s enormous internal market (“domestic circulation”) for growth and technological innovation, rather than on capital-intensive growth, low-value exports and imported technology which spurred the country’s economic success in the past. The other half of the strategy, “international circulation”, will double down on China’s long-standing effort known as “Made in China 2025” (MIC 2025)… to upgrade its manufacturing base through the integration of information technology to improve productivity, increase the indigenous content of higher-end technology products, reduce reliance on foreign inputs and become more self-sufficient technologically… position China as the leading source of critical technologies and industrial outputs of the future across the value chain—in design, manufacturing processes, technology and material inputs, and finished products—in high-priority sectors including next-generation information technology, robotics, aerospace, high-speed rail, green energy, biopharma and new materials…. The NPC is not a deliberative body, but rather a political pageant to formalise decisions already made by party higher-ups. As such, the announcements last week signal a profound rethinking in Beijing… LINK: <https://www.lowyinstitute.org/the-interpreter/endorsing-self-reliance-beijing-raises-geopolitical-stakes>

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3) I confess I am totally flummoxed here. Phil Stephens seems to have it right. If Britain’s Conservatives really do see Britain as having an important future role as global honest broker, then it is very important that, right now, they build—as rapidly as possible—a strong reputation for brokering honestly. And yet that is not what Boris Johnson is doing. He is busy setting his credibility on fire. He will leave himself with no potential allies anywhere in the world for whatever he wants to do on international diplomacy or economic policy. But do he and the Conservatives want to do anything, other than hold on to power as Britain’s economy undergoes its likely post-Brexit rapid economic relative decline?:

Philip Stephens: Squandering Trust Is No Route to a ‘Global Britain’: ’By seeking to renege on his Brexit commitments, Boris Johnson has made the UK an unreliable ally…. Middle-ranking and smaller states seek… sheltering behind alliances, coalitions of the like-minded and multilateral rules…. Boris Johnson’s government must start from this simple premise…. Unreliable partners do not get to act as conveners. Which renders all the more inexplicable Johnson’s efforts to renege on the Brexit agreement he signed with the EU…. Such things are noticed. Witness the remarks of Brendan Boyle, a congressional ally of US president Joe Biden. This was the second time, Boyle told BBC television’s Newsnight, “that this UK government has signed up to an international agreement and then immediately decided to go back on what it agreed to”. The move carried “all sorts of ramifications”. One of which could be a serious falling out with Washington. Biden has signalled he expects Johnson fully to uphold the Irish protocol… LINK: <https://www.ft.com/content/10ec8895-c84f-479e-9fc7-9dde0706dca3>

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4) One of the major pedagogical and intellectual-presentational revolutions of our time. For 70 years now, our civilizations ability to think through issues has been gravely humbled by the problem that C.P. Snow called "the two cultures". The coming of data science tools may give us an opportunity to repair the speech by making literacy in data analysis acceptable in a way that it is not when it has to be built on knowledge of the higher math. The model-simulate-generalize computational-experiment path to performing and evaluating data visualization and calculation exercises has, I think, great promise. Now if only we can construct a framework of tropes and methods that make it genuinely accessible:

Matt Asay: Jupyter Has Revolutionized Data Science, & It Started with a Chance Meeting Between Two Students: ‘If you want to do data science, you’re going to have to become familiar with Jupyter… create and share documents that contain live code, equations, visualizations and narrative text. This proves to be a great way to extract data with code and collaborate…. It started with a friendship. Fernando Pérez and Brian Granger… had no idea how much of an impact it would have within academia and beyond… LINK: <https://www.techrepublic.com/article/jupyter-has-revolutionized-data-science-and-it-started-with-a-chance-meeting-between-two-students/>

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5) I am not yet willing to say that the global south outside of China and India is on the road to "convergence" to the global north. I am willing to say that China and India have accomplished absolutely wonderful and historically unprecedented feats of poverty reduction and economic growth over the past two generations. I am willing to say that the era of "divergence" that lasted from 1800 to 2000 appears to be over. I am not yet willing to go farther than that in my economic-development optimism. But Noah Smith is:

Noah Smith: Checking in on the Global South: ‘To some, the idea of a Global South means that history is destiny—that the dead hand of colonialism, or the living hand of neocolonialism, is holding down the developing world. To others, it’s an expression of the idea that poor countries just don’t have what it takes to get rich. Either way, it’s a form of implicit defeatism—a belief that historical and/or cultural forces are stronger than economic forces. Southeast Asia hasn’t yet broken these ideas on the wheel of hard data, but it might not take much longer to do so. Bangladesh’s similar performance, meanwhile, suggests that South Asia might not be far behind… LINK: <https://noahpinion.substack.com/p/checking-in-on-the-global-south>

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6) A very, very nice talk—the intellectual grandchild of Ragnar Nurkse, by way of Nicola Gennaioli and Andrei Shleifer. The extremely sharp Ivan Werning is thinking very, very hard about the interaction of speculation, enthusiasm, regulation, monetary policy, and financial markets. Very much worth watching:

Ivan Werning: Taming a Minsky Cycle <https://www.youtube.com/watch?v=mzfqTWJ4JhU>:

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7) James Robinson is scared at the large-scale lack of public virtue on the part of Republican actual and wannabee office holders. But I do not think he is scared enough. It is not at all clear to me that Trumpian populism has failed. Trump has failed. But his flavor of neofascism remains a mighty powerful force. James Robinson should recognize that Trump did “deliver the goods” to his base—it imagines that, before the coming of the plague, there was an unparalleled economic boom; and it is not mistaken to think that Trump delivered the hate he had promised against immigrants, against uppity Blacks who did not know and stay in what Trumpists continue to think is their proper place, and against rootless cosmopolites. But, fortunately, the center of the electorate of non-suppressed voters is not—or is not yet—Trumpian:

James A. Robinson: Why Trumpian Populism Failed: ‘Trump worked to de-institutionalize America and enrich himself…. The Republican Party either sat on its hands or in some cases applauded…. At the end of the day, Trump’s “America First” was mostly posturing, because he couldn’t deliver real improvements in the lives of his base. All successful autocrats—like former Venezuelan President Hugo Chávez, postwar Argentine President Juan Perón, or current Ugandan President Yoweri Museveni—somehow “deliver the goods” for their core constituencies. Trump delivered, but only to the rich, by cutting taxes and regulations. His symbolic gestures won’t endure, and his “Make America Great Again” slogan is destined for burial at the back of millions of American closets… LINK: <https://www.project-syndicate.org/commentary/us-democratic-institutions-prevailed-over-trump-this-time-by-james-a-robinson-2021-03>

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8) Figuring out how to do antitrust in the age of the attention economy is really, really hard:

Ben Thompson: The FTC’s Google Documents, the Staff Memo, the Economists Memo: ‘The fundamental premise of the Politico article, along with much of the antitrust chatter in Washington, misses the point: Google is dominant because consumers like it. That doesn’t mean the company didn’t act anticompetitively, or that we shouldn’t think seriously about acquisitions or contracts or advertising. Such thinking, though, has to start with a certain degree of humility about the fundamentally different nature of the Internet and how it is leading to these Aggregator-type outcomes. It really might be different this time… LINK: <https://stratechery.com/2021/the-ftcs-google-documents-the-staff-memo-the-economists-memo/>