WORÞY READS: from 2021-04-08
A preview of my weekly read-around for the Washington Center for Equitable Growth...
Worthy Reads from Equitable Growth:
1) This was an excellent hour-and-a-half event. These "Research on Tap" events have been some of the best that we have done here at Equitable Growth. And this, I think, was an especially good show. You will profit enormously from watching and listening to it:
Equitable Growth: Research on Tap: Investing in an Equitable Future
LINK: <https://www.youtube.com/watch?v=Q227k4Xp58s>
2) Very interesting evidence that those of us who have been seeing a low rather than a high multiplier as governing the effect of direct-transfer fiscal expansion this winter and spring are likely to be correct. Thus I now see it as more likely that fears of an explosion of inflation of any kind this year or simply whistling past the graveyard:
Carmen Sanchez Cumming & Raksha Kopparam: What the U.S. Census Household Pulse Survey Reveals About the First Year of the Coronavirus Recession, in Six Charts: ‘Eight months after the CARES Act was enacted, a second $600 Economic Impact Payment was sent to most U.S. households. By this time, multiple waves of coronavirus cases damaged employment opportunities and the general livelihood of many U.S. workers and their families. One of the results was more debt: Approximately 30 percent of adults reported having increased credit card debt, taking out loans, or asking for financial help from friends and family between June and December 2020. When the $600 stimulus payments arrived, households across all races and income groups—but especially Black, Latinx, and low-income households—used this money to begin paying off the debt they had accumulated rather than spending it on household expenses. The disparities in use of the two stimulus payments highlight the importance of providing timely relief…
LINK: <https://equitablegrowth.org/what-the-u-s-census-household-pulse-survey-reveals-about-the-first-year-of-the-coronavirus-recession-in-six-charts/>
3) There was a substantial infrastructure gap before the coming of the Great Recession. Since the start of the Great Recession, it has been an absolute disaster as far as public investment in America is concerned. And we are now greatly poorer for it:
Equitable Growth: More than 200 Economists to Congress: Seize “historic opportunity to make long-overdue public investments” to boost economic growth: ‘Led by Hilary Hoynes, Trevon Logan, Atif Mian, William Spriggs, statement implores Congress to “invest in a prosperous and equitable future”…
LINK: <https://equitablegrowth.org/press/more-than-200-economists-to-congress-seize-historic-opportunity-to-make-long-overdue-public-investments-to-boost-economic-growth/>
4) I would have expected the large surge of job growth in March to have also significantly diminished the pace at which workers lost their jobs and applied for unemployment benefits. Apparently it did not. I am coming to the conclusion that I do not understand what is going on in Americas labor market right now. That disturbs me greatly:
Kate Bahn: ‘For the week ending April 3, 740,787 workers filed for regular unemployment benefits. While the U.S. labor market is showing signs of a recovery after adding more than 900,000 jobs last month, UI claims remain alarmingly high. States reported that another 151,752 workers filed for initial PUA, which extended UI to some workers who are not eligible for regular benefits. In total, 892,539 workers filed initial PUA or regular unemployment benefits last week…
LINK: <https://twitter.com/LipstickEcon/with_replies?lang=en>
Worthy Reads from Elsewhere:
1) Alexis de Tocqueville said that one of the things that made America great was that while people pursued self interest, they pursued self interest "rightly understood". Here JPMC CEO Jamie Dimon argues that JP Morgan Chase should and does pursue shareholder value maximization "rightly understood":
Jamie Dimon: Letter to Shareholders: Annual Report 2020: ‘We should not be buttonholed by the debate about whether there are “fiduciary” reasons to think of “shareholder value” narrowly and to the exclusion of those who work at the company, our clients and communities…. To a good company, its reputation is everything. That reputation is earned day in and day out with every interaction with customers and communities. This is not to say that companies (and people) do not make mistakes—of course they do. Often a reputation is earned by how you deal with those mistakes. While all businesses are different, there are some fundamentals…. Banks, in particular, have to be rigorous about standards. Unlike many companies that will simply sell you a product if you can pay for it, banks must necessarily turn customers down or enforce rules that a customer may not like (for example, covenants). This makes open and transparent dealings even more important…. We must always strive, particularly in tough times, to earn the trust of our customers and communities…. If you live in a small town and run a corner bakery, it is very easy to understand the value of being a responsible community citizen. Most businesses on “Main Street” keep the sidewalk in front of their store clean so people don’t slip and fall…. A bakery or a restaurant will often donate surplus food at the end of the day to a local homeless shelter…. Doing their part to make the community a better place is both the moral thing to do and a driver of better commercial outcomes for the town… LINK: <https://reports.jpmorganchase.com/investor-relations/2020/ar-ceo-letters.htm>
2) History does not repeat, but it does rhyme. Bill Janeway attempts to drill down and draw the lessons for today from the fact that Roosevelt’s New Deal was so extraordinarily successful:
Bill Janeway: Lessons from the First New Deal for the Next One: ‘FDR’s New Deal… was complicated and conflicted…. FDR’s own statement of purpose…. “The country needs and unless I mistake its temper the country demands bold persistent experimentation. It is common sense to take a method and try it If it fails admit it frankly and try another. But above all try something…” Successive experiments… characterized the New Deal… illustrate the conflicts—even contradictions—that… result from improvising policy responses to crisis…. Three prime lessons…. (Re)Building State Capacity…. The new agencies created during the famous First Hundred Days were starting from scratch. For example, the Public Works Administration… hired some 6,000 staff in two months. The Deputy Administrator, Henry M. Waite, subsequently recalled: “First they hired lawyers, many lawyers—more than 100 for the Washington office alone… After the lawyers came the engineers… Added to all these were the platoons of accountants, clerks, stenographers, and typists, until there were more than 2,300 jammed into the Interior Department building. Another 3,700 new recruits staffed the PWA’s 10 regional offices.” The same was true of all the other alphabet soup…. Strategic Missions…. FDR’s New Deal encompassed three strategic missions: recovery… reform of particular aspects… and regime change in the fundamental structure of the American political economy…. Today: The immediate strategic priority facing the Biden Administration embodies no conflict: to accelerate Recovery from the pandemic in order to Restore economic prosperity…. Measures such as expanded child and earned income tax credits may be formally time limited, but they suggest this Administration knows how to exploit crisis for progressive ends, very much in the spirit of the second phase of FDR’s New Deal…
LINK: <https://noahpinion.substack.com/p/guest-post-bill-janeway-on-lessons>
3) The plague year has been marked by both bold policy successes and extraordinary, horrible, and pitiful policy failures—which continue today with the failure of global coordination of vaccine production and distribution. History will, I think, judge—and not kindly:
Monica de Bolle, Maurice Obstfeld, & Adam S. Posen: Economic Policy for a Pandemic age: An Introduction: ‘A year ago, there were 132,492 confirmed cases of COVID–19 and 4,917 deaths worldwide, of which the United States accounted for… 43 deaths. Now… The world lost 8.3 percent of a year’s combined income, with the distribution of economic losses mapping largely to where the infection was least controlled, and the poorest in each country suffering the most for the failures of the Group of Twenty (G20) governments…. Cooperative forward-looking policy action will materially improve our chances of truly escaping today’s plague and making future plagues less costly…. Nowhere are the policy implications of the pandemic age more evident than in the area of vaccine distribution…. Guard against inequities in disease incidence…. Mitigate the aggregate economic costs of pandemics…. The comparatively good experience in East Asia and the Pacific shows what may be possible…. Where the leaders failed even to attempt significant collective action, notably in vaccine production and distribution, lives and livelihoods were indeed unnecessarily lost. Agreements on transparent common standards of behavior, all governments pulling in the same direction or forswearing the same bad actions simultaneously, matter…
LINK: <https://www.piie.com/sites/default/files/documents/piieb21-2.pdf>
4) The Financial Times Editorial Board is 100% behind Biden’s proposed corporate tax reform:
Financial Times Editorial Board: A Step Forward on Global Corporation Tax Reform: ‘US proposal to break deadlock should be embraced by Europe…. The mooted compromise would… be a victory for multilateralism and break the deadlock…. The global system of corporation tax… has long needed an overhaul. It was created for an age when capital investment meant spending on physical assets such as factories or farms with a presence in a defined location. But it has struggled to cope with the rise of “intangibles”…. This has encouraged a “race to the bottom”…. Biden’s latest offer is based on twin pillars suggested by the Organisation for Economic Co-operation and Development… establish[ing] a “taxing right” for countries based on the portion of sales of “consumer-facing” companies in their territory… create a new global minimum rate… [to] prevent… “beggar-thy-neighbour”…. A pact… would allow both the Europeans and Americans to get what they want. It would also enable Biden, and his Treasury secretary Janet Yellen, to show that the hard edges of globalisation can be smoothed better through engagement with allies than the go-it-alone “America First” policy of his predecessor…. India is also toughening its taxes on foreign tech companies. Europe should now embrace the US proposal and make the most of the opportunity…
LINK: <https://www.ft.com/content/3811d39f-c4be-481b-9713-5246d5016040>
5) China’s recent policy actions do not look to me like the rational acts of a geostrategist—like something driven by a government that assigns primacy to external politics and that both understands the situation and has rational goals. Rather, it smells to me like something driven by a government focused on internal politics, and that thinks potential opposition can be disarmed or defocused by playing a strong nationalism card. The idea is to “busy giddy minds with foreign quarrels”, as Shakespeare’s King Henry IV Lancaster advised his son Prince Hal to do in order to distract people from the illegitimacy of the Lancastrian dynasty’s claim to the throne. Pre-WWI Germany had much the same idea—distract attention from questions of the elite’s warrant to rule and of distribution by stirring up disputes with other nations. That ended very, very badly. Wilhelmine China could end very, very badly as well. And I find myself remembering the Germans in 1914 saying: “of course Britain would not go to war over a technical and temporary violation of Belgium’s neutrality!” I hope history does not rhyme with respect to the status of the Chinese island of Taiwan:
Economist: China Is Betting That the West Is in Irreversible Decline: ‘CIts gaze fixed on the prize of becoming rich and strong, China has spent the past 40 years as a risk-averse bully. Quick to inflict pain on smaller powers, it has been more cautious around any country capable of punching back. Recently, however, China’s risk calculations have seemed to change…. China’s foreign ministry declares that horrors such as the Atlantic slave trade, colonialism and the Holocaust, as well as the deaths of so many Americans and Europeans from covid–19, should make Western governments ashamed to question China’s record on human rights. Most recently Chinese diplomats and propagandists have denounced as “lies and disinformation” reports that coerced labour is used to pick or process cotton in Xinjiang. They have praised fellow citizens for boycotting foreign brands that decline to use cotton from that region. Still others have sought to prove their zeal by hurling Maoist-era abuse. A Chinese consul-general tweeted that Canada’s prime minister was “a running dog of the US”…. Chinese leaders, if their own words and writings are any guide, think that assertiveness is rational…. China is increasingly sure that America is in long-term, irreversible decline…. China’s rulers are majoritarians. Their hold on power involves convincing most citizens that prosperity, security and national strength require iron-fisted, one-party rule…. China’s rulers are duly preparing for a protracted struggle. The risks are clear…
LINK: <https://www.economist.com/china/2021/04/03/china-is-betting-that-the-west-is-in-irreversible-decline>
7) I do remember the late Lee Atwater fiercely denying that modern Republicans were racists and white supremicists—if they were, he said, they would be trying to roll back the Voting Rights Act, and trying to disenfranchise American Africans. Well, John Roberts and his posse at the Supreme Court rolled back the VRA, and the writers of National Review—including one, Kevin Williamson, whom the honchos of the Atlantic Monthly really wanted to hire for their magazine—are not apologetic about how too many youngs, urbans, and Blacks are voting, and how this should be stopped:
Scott Lemieux: Time to Set the “Days Since National Review Published Article Explicitly Calling For the Intentional Disenfranchisement of Voters” Meter Back to Zero: ‘The lines of communication between the luminaries at America’s premier journal of vote suppression since 1957 appear to be crossed. On the one hand, you have the Respectable Republican Elite assertions that the restrictions that Georgia Republicans placed on the vote at the behest of Donald Trump don’t actually restrict the vote at all, Scout’s honor, I have a study from a professor at Trump University to prove it. But, this being the National Review, they can hardly be expected to keep up the pretense for even a couple of weeks, so here’s Kevin Williamson’s latest entry, “we should have fewer but ‘better’ voters if you know what I mean and I know you do, and what I mean is whiter and older and more rural”…. Bill Buckley must be pleased that his spirit lives on…
8) The attempt continues to construct a less-dysfunctional public sphere than the evolving techno-Silicon Valley one, in which the money is made by scaring and radicalizing viewers. Now it is SubStack’s turn in the barrel. All platforms that draw sharp lines between acceptable and unacceptable behavior wind up being gamed, to their substantial detriment. “Gestalt” and “we know it when we see it” seem to be the only sustainable and healthy moderation practices:
Rick Paulas: Substack’s Graham Linehan Conundrum: ‘In June of 2020, Twitter permanently banned Graham Linehan for “repeated violations of our rules against hateful conduct and platform manipulation.”… Linehan made the logical next step for anyone looking to rid themselves from the tyranny of editorial constraint. He started a Substack…. It’s been obvious… Linehan would be a big hurdle for Substack’s techno-libertarian view on content moderation…. Linehan’s posts have always been something extra…. Platform rules… [a]re written vague enough that Substack can interpret them however they want. Is posting screenshots from a dating app a from of doxxing? Does Linehan’s constant misgendering constitute attacks based on gender and/or sexual orientation?… Substack… [has] already answered… simply by allowing Linehan to continue…. What remains to be seen is if those working with/for Substack can force the company to change its mind. As Feinberg put later, Substack currently feels “up for grabs”: “Nothing about Substack right now is inevitable.… There is nothing intrinsic to the idea of a newsletter platform that ensures it swings to the right. There are no algorithms here favoring angry disputation and reactionary s-—-stirring…” Whether or not Substack writers can actually force the company to bend in any direction other than reactionary s----stirring will likely be answered by how long Linehan is allowed to use their platform. Every post that goes by without the company taking a stance is one more notch in the “nope” column…
LINK: <https://domstack.substack.com/p/substacks-graham-linehan-conundrum>