The Keynesian Revolution, the Monetarist Counterrevolution, the New Classical Purge, the Neo-Keynesian Restoration: Saturday Focus (December 14, 2013)
Things to Read on the Evening of December 15, 2013

Things to Read on the Morning of December 14, 2013


  1. Paul Krugman: The Biggest Losers: "The pundit consensus seems to be that Republicans lost in the just-concluded budget deal.... But... the unemployed lost even more... 1.3 million workers will be cut off at the end of this month, and many more... in the months that follow. And if you take a longer perspective... what you see is a triumph of anti-government ideology that has had enormously destructive effects... we’ve been living through an era of unprecedented government downsizing.... What has been cut?... Education, infrastructure, research, and conservation. While the Recovery Act (the Obama stimulus) was in effect, the federal government provided significant aid to state and local education. Then the aid went away.... Meanwhile, public investment fell sharply.... These harsh cuts... were unnecessary. The Washington establishment may have hyperventilated about debt and deficits, but markets have never shown any concern at all.... The cuts did huge short-term economic damage... [and] cut... investing in the future..."

  2. Cardiff Garcia: Stanley Fisher’s views on monetary policy: "He does believe in the efficacy of asset purchases when rates have hit the zero lower bound... "by the provision of liquidity... by changing interest rates other than the central bank’s interest rates...". But he does add that asset purchases are imperfect: their benefits simply outweigh the costs.... He appeared to favour a tapering.... have raised questions about whether he would support the Fed’s use of forward guidance.... Fischer said he tried, on becoming governor of the Bank of Israel in 2005, to give signals to the market – but quickly gave up as he realized it restricted the bank’s future actions when circumstances changed..."

  3. Https courseworks columbia edu access content group c5a1ef92 c03c 4d88 0018 ea43dd3cc5db Working 20Papers 20for 20website Anchored 20SPM December7 pdf Christopher Wimer et al.: Trends in Poverty with an Anchored Supplemental Poverty Measure: "Poverty measures set a poverty line or threshold and then evaluate resources against that threshold. The official poverty measure is flawed... it uses thresholds that are outdated and are not adjusted appropriately... and it uses an incomplete measure of resources which fails to take into account the full range of income and expenses that individuals and households have.... In recent work, we have produced SPM-like estimates for the period 1967-2012.... In this report we apply an alternative poverty measure which differs from the SPM in only one respect. Instead of having a threshold that is re-calculated over time, we use today’s threshold and carry it back historically by adjusting it for inflation using the CPI-U-RS. Because this alternative measure is anchored with today’s SPM threshold, we refer to as an anchored supplemental poverty measure or anchored SPM for short.... Another advantage of an anchored SPM (or any absolute poverty measure, for that matter) is that poverty trends resulting from such a measure can be explained by changes in income and net transfer payments (cash or in kind)..."

  4. Kevin Drum: Repeat After Me: There's No Such Thing as Socialsecurityandmedicare: "You may see some headlines today that report on a new study showing that boomer retirees will receive way more in Social Security and Medicare benefits than they pay in taxes. But be careful. Technically, that's true, but it's like saying the combined population of China and Vietnam is 1.4 billion. It's true, but all the heavy lifting is being done by China. In this case, all the heavy lifting is being done by Medicare..."


  1. Stan Dorn: It's too early to panic over ACA enrollment: "News media have hyperventilated about the first days and months of ACA enrollment. But low enrollment during the ACA’s first few years is both likely and entirely consistent with past state experience. It would certainly not doom ACA to eventual failure in covering the eligible uninsured.Opening its doors in 1998, CHIP is now remarkably effective, along with Medicaid, enrolling nearly 9 in 10 eligible children (87.2 percent). Nevertheless, CHIP struggled during its early years. The Congressional Research Service observed in 2001 that, ;there was general disappointment with... low enrollment rates early in the program.' Recent reports from First Focus and the Center on Budget and Policy Priorities remind us that, nationally, CHIP took five years to reach an enrollment 'steady state', with significant variation among states. Enrollment under the ACA is likely to take a similar path..."

  2. Ben Armbruster and Judd Legum: 33 Times Our Efforts To Shill For Defense Contractors Went Horribly Wrong: "A New York Times article [by Eric Lipton] on Friday said that '[t]he defense contractor Northrop Grumman gave money to the left-leaning Center for American Progress, founded by John D. Podesta, as the nonprofit group at times bemoaned what it called the harmful impact of major reductions in Pentagon spending'. But how does this claim line up against CAP’s policies, writing and reporting? The Times linked to one article on CAP’s website highlighting some of the negative effects that sequestration will have.... CAP experts have... regularly advocated against Northrop Grumman’s financial interests.... slowing down and reducing procurement of the Virginia-class nuclear attack submarine... against the military buying more F-35s... questioned the effectiveness of the Littoral Combat Ship which Northrop Grumman... called to limit procurement of the DDG-51... highlighted the tremendous cost-overruns of the DDG 1000 Zumwalt Class destroyer... called for the cancellation of the V-22 Osprey.... Beyond Northrop Grumman, CAP’s criticism of bloated military spending and defense industry profits--on this blog and from our policy experts--is extensive. Here are a few examples..."

  3. Martin Longman: Enough Already: "Here’s what I don’t understand. Does anyone seriously think that people are saving enough for retirement?... So, why would anyone talk about cutting people’s Social Security benefits when it is as clear as day that the current benefits are going to be completely inadequate for a whole lot of people? Jim Kessler, senior vice president for policy and a co-founder of Third Way, said Friday morning that Sen. Elizabeth Warren’s (D-Mass.) backing of a plan to expand Social Security compelled him and the president of the group to hit back with a Wall Street Journal op-ed lambasting the plan and economic populism.... 'That Social Security plan had been out there but really languishing--because Senator Warren has such a powerful compelling voice, she started talking about it, and it suddenly it became much more talked about and viable alternative.' These Third Way folks have been flogging this horse for decades at this point. It is a dead horse."

Should Be Aware of:

  1. Richard Florida: Where 'Eds and Meds' Industries Could Become a Liability: "The reasons many cities turn to eds and meds for economic development are easy to understand.... America’s aging population needs medical care, and the knowledge economy demands an increasingly skilled and educated workforce. Both are personal service industries that require face-to-face interaction. This... makes them locationally 'sticky'.... But eds and meds seem set to follow in the clustering pattern seen in other industries.... These trends... will have vastly uneven geographic impacts, hitting hardest the smaller cities and metros where there is little left to make up the difference.... Across the nation, eds and meds make up roughly 13 percent of total employment in U.S. metros.... from roughly 4 percent in the metro with the lowest share to nearly 30 percent in the metro with the highest share..."

  2. Jonathan Chait: The Heritage Uncertainty Principle: "One of the more amusing developments in the Obamacare debate has been watching conservatives turn from denouncing the health-care law for its lack of high-deductible insurance to denouncing the health-care law for its high-deductible insurance.... Until quite recently, conservatives seemed to believe that Obamacare prevented such plans from existing, which was totally false. As they’ve come into existence, conservatives have transitioned seamlessly into denouncing these plans for their horrible, high deductibles.Episodes like this one have grown so familiar that they’ve lost all capacity to surprise. Conservative health-care-policy ideas reside in an uncertain state of quasi-existence....Any attempt to reproduce them in physical form will cause such proposals to disappear instantly....Call it the 'Heritage Uncertainty Principle'....The Heritage Uncertainty Principle could likewise be seen at work throughout Obamacare’s torturous legislative path to enactment. Republicans had all kinds of health-care ideas.... Olympia Snowe... Charles Grassley flitted tantalizingly...liked the idea of a bipartisan plan that wasn’t Obama’s. Any attempt to turn these ideas into an actual law would cause them to disappear instantly..."

  3. Economists for Peace and Security and New America Foundation: Jobs, Investment, and Rebuilding America

  4. Alice Rivlin: The Federal Reserve: Balancing Multiple Mandates
  5. David Cutler and Fiona Scott Morton: Hospitals, Market Share, and Consolidation
  6. Heather Boushey and Adam Hersh: The American Middle Class, Income Inequality, and the Strength of Our Economy
  7. Sahil Kapur: Requiem For The Filibuster


Jamelle Bouie: Demography Is Not Destiny | Nick Rowe: We know the economy needs a bubble; but how big? | Sam Baker: Take Two Aspirin and Blame Everything on Obamacare | Laura Tyson: Raising the Minimum Wage: Old Shibboleths, New Evidence | Jared Bernstein: Powerpoint: Inequality and Opportunity | Nick Crafts: If only it were the 1930s | Child Gun Access Prevention Policy | Paul Krugman: Rudi Dornbusch and the Salvation of International Macroeconomics | Simon Wren Lewis: The UK recovery and the pessimists’ refrain | Liah Greenfeld: Nationalism, Madness, and Terrorism | Taylor Rule as proposed by several economists | Simon Johnson: Which Stan Fischer Would Be Fed’s No. 2? | Greg Sargent: Obamacare class warfare in Kentucky