Grasping Reality on TypePad, by Brad DeLong

World War II Today: The ‘Kinder Aktion’ in the Kovno ghetto:

As the Red Army approached from the East the Nazis began to close down the remaining Jewish ghettoes left in eastern Europe. There were tensions within the Nazi high command. Some argued that the remaining jews were needed as a work force, others were ideologically committed to killing all Jews.

The survivors of the Kovno ghetto, the largest of the Jewish ghettoes established in Lithuania by the Nazis, knew that their only chance of survival lay in being able to provide a useful service to the Germans. The Germans had no space for anyone who could not work – the young, the old and the infirm.

Tony Atkinson and Salvatore Morelli: The chartbook of economic inequality: "Inequality – long ignored – is now centre stage....

This column introduces the Chartbook of Economic Inequality, a summary of long-run changes in economic inequality for 25 countries over more than 100 years.... Public discourse has started to openly debate the economic implications as well as the legitimacy of increasingly powerful elites seizing a growing share of the national pie year after year. These concerns, led the Managing Director of the IMF, Christine Lagarde to indicate the need for “addressing inequality and building inclusive growth” as one of three ‘milestones’ of the future global economy, in her October 2012 Annual Meetings Speech in Tokyo.... Researchers and scholars have also began to single out inequality as one of the structural causes of the recent financial crisis. This has led us to compile the Chartbook of Economic Inequality...

Paul Krugman: Data as Slogan, Data as Substance: "what would real data-driven reporting look like?...

Charles Gaba’s ACASignups.net. Gaba, a website developer, realized that nobody was systematically keeping track of enrollment data for Obamacare, and has turned himself into one-stop shopping.... And he really fills a need: when you read news reports on Obamacare, you can tell right away which reporters have been reading Gaba and know what’s happening and which reporters are relying solely on official announcements--or, worse, dueling political spin. For the record, Gaba’s take on the program so far is fairly optimistic: he projects 6.3 million... by March 31.... The main point is that he’s filling a niche by using a lot more data than the mainstream media. That’s what we thought Nate Silver would be doing, and maybe he eventually will. But for now, Gaba is the model.

Suppose that it is December 2020, current forecasts are for a year-2022 level of real GDP of $19.5 trillion without policy changes. Suppose further that you have just moved to Washington to work for the newly-chosen President-Elect as Special Assistant to the Chief Economist of the Office of Management and Budget. Suppose still further that the short-term safe interest rates the Federal Reserve controls are still very close to zero and that the Federal Reserve has promised to keep them very close to zero until at least 2023. Suppose still further that risk spreads on interest rates of different assets are at normal levels.

Suppose that it is June 2015 and you are working in New York forecasting the 2016 economy for Medium-Sized Hedge Fund Named After a Local Geographic Feature. Your bosses want you to inform them about the likely shape of the economy in 2016--not just the total level of real GDP Y, but the levels of consumption spending C, investment spending I, government purchases G, and exports X. Your baseline forecasts--which you get via a painfully-expensive subscription to Mississippi Valley Forecasters--are that for 2016 real GDP (measured in dollars of 2009 purchasing power) and its components will be:

• X: Exports: $2.3T
• G: Government Purchases: $3.0T
• I: Investment Spending: $2.9T
• C: Consumption of Domestically-Produced Commodities: $8.9T
• Y: TOTAL: $17.1T

Suppose that you believe the marginal propensity to consume c_y= 0.6667.

Suppose that the aggregate supply curve for 2016 is given by:

• P = 1.10 for Y < $18.9T (2009)
• P > 1.10 for Y = $18.9T (2009)
• No possibility of Y > $18.9T (2009)

With the price level in 2015 being 1.08, so that expected inflation over the year from 2015 and 2016 is 1.85%.

You are working in New York forecasting the 2016 economy for Medium-Sized Hedge Fund Named After a Local Geographic Feature. Your bosses want you to inform them about the likely shape of the economy in 2016--not just the total level of real GDP Y, but the levels of consumption spending C, investment spending I, government purchases G, and exports X. Your baseline forecasts--which you get via a painfully-expensive subscription to Larry Meyer and company's Macroeconomic Advisors http://www.macroadvisers.com/tag/larry-meyer/--are that for 2016 real GDP (measured in dollars of 2009 purchasing power) and its components will be:

• X: Exports: $2.3T (2009)
• G: Government Purchases: $3.0T (2009)
• I: Investment Spending: $2.9T (2009)
• C: Consumption of Domestically-Produced Commodities: $8.9T (2009)
• Y: TOTAL: $17.1T (2009)

and your estimate of the marginal propensity to consume c_y=0.667.

Brad DeLong (January 26, 2008): New York Times Death Spiral Watch: David Leonhardt Needs His Own Weblog: "January 26, 2008

This morning, David Leonhardt gets a story about John McCain on page A1--and buries the lead in paragraph 23:

The real lead in paragraph 23:

McCain’s Fiscal Mantra Becomes Less Is More: On several occasions over the last year, Mr. McCain has said that tax cuts can reduce the deficit by spurring additional activity that, in turn, leads to more taxes being paid. But numerous studies have found that not to be the case.... During his campaign, Mr. McCain has focused much more on spending [cuts] than on taxes. He has called for the end of earmarks.... They are “a very small part of the budget,” he said, “but so symbolic.”... McCain would consider cutting the programs that the White House has identified as ineffective... has not specified which ones it would cut. In addition to Amtrak, the list includes various programs dealing with Defense Department communications, veterans’ disability and low-income heating assistance...

Noah Smith: fivethirtyeight.com Needs to Step Up Its Game: "I'm a big Nate Silver fan, but let me join the chorus...

looking at his new 'data-driven' blog site... it's barely data-driven at all! For example, take this post about how climate change is not increasing the cost of natural disasters.... Let's focus on the idea that this post represents "data-driven" journalism at all. It doesn't. The "data" in the post consists of one annual time series with a sample size of 23. That's too small to do any sort of statistical analysis on, but then again, the post doesn't do any statistical analysis. It shows a trendline, and from that trendline it draws broad, sweeping conclusions.... Every newbie blogger and his dog draws a trendline and extrapolates it--and if the blogger is worth his salt, he'll at least have the common decency to qualify his extrapolation with "if this trend continues", which Pielke does not. Furthermore, Pielke's analysis is just sloppy. What happens if you strip out earthquakes, tsunamis, volcanoes, etc. from the data? What if you extend the trend back 40 years? How does the recent trend compare with the trend from before climate change started significantly affecting global temperatures?... And the economic theory behind the conclusion is even sloppier... costs of mitigation... variance... people [are] risk-averse?....

James Fallows: Another Bloomberg Editor Explains Why He Has Resigned, Over Its China Coverage: "The New York Times... contend[ed] that Bloomberg editors had quashed an investigative report about corruption among leaders in China...

Higher-ups at Bloomberg were worried that the story would hurt the company's sales of financial terminals—the mainstay of its business—inside China, since the main purchasers would be directly or indirectly subject to government control... Bloomberg was already "on probation" with the Chinese government, because of some very brave and probing official-corruption stories the previous year—including the one on "Red Nobility".... The FT did a similar report... saying that Matthew Winkler, Bloomberg's editor-in-chief, had ordered the story killed, for fear of ramifications.... Amanda Bennett... promptly resigned as head of Bloomberg's investigative unit.... Michael Forsythe... joined the NYT staff. Bloomberg continued to deny the allegation of knuckling-under but refused to address any specifics. The story that reportedly was underway has not yet appeared.... I wrote to the man who reportedly gave the spiking order, editor-in-chief Matthew Winkler, and did not hear back....

The latest news... is Ben Richardson's resignation as a Bloomberg editor.... I wrote to Richardson asking if he would say more about the situation.... Ben Richardson:

I was one of the two editors on the story that was spiked last year, and one of three who helmed the 2012 stories on the hidden wealth of China's Communist Party leaders, so I have a pretty intimate knowledge of what happened. Unfortunately, I am bound by a confidentiality agreement that prevents me from disclosing the details. That said, much has already become a matter of public knowledge. I felt the NYT and FT articles were a fair account...

Trial of 75th German Army Corps Commander Anton Dostler:

On the night of 22nd March, 1944, two officers and 13 men of a special reconnaissance battalion disembarked from some United States Navy boats and landed on the Italian coast about 100 kilometres north of La Spezia. The front at the time was at Cassino with a further front at the Anzio beach head. The place of disembarkation was therefore 250 miles behind the then established front.

David Streitfeldfeb: Engineers Allege Hiring Collusion in Silicon Valley: "A class-action lawsuit that accuses industry executives of agreeing between 2005 and 2009 not to poach one another’s employees.

Headed to trial in San Jose this spring, the case involves 64,000 programmers and seeks billions of dollars in damages. Its mastermind, court papers say, was the executive who was the most successful, most innovative and most concerned about competition of all--Steve Jobs....

Over at the Washington Center for Equitable Growth: Dialogue: Eleven (so Far) Worthwhile Reviews of and Reflections on Thomas Piketty’s “Capital in the Twenty-First Century”: Wednesday Focus: March 26, 2014

1. Ryan Avent
2. Doug Henwood
3. Edward Lambert
4. Dean Baker
5. Kathleen Geier
6. John Cassidy
7. Paul Krugman
8. Ed Kilgore
9. Jacob S. Hacker and Paul Pierson
10. Lawrence Summers
11. Tim Noah
12. Heather Boushey (and Me) on Thomas Piketty: Tuesday Focus: March 11, 2014

READ MOAR

Over at the WCEG: A Dialogue on the Resolution of the Financial Crisis of 1989 and the Non-Resolution of the Financial Crisis of 2007: Tuesday Focus: March 25, 2014:

Sokrates: Production is currently mired some 8% below the growth trend that back in 2008 we confidently thought of as normal and highly unlikely to be disturbed.

Glaukon: It is indeed.

Thrasymakhos: And employment is currently mired some 7% below the proportion of the population that back in 2008 we confidently thought of as normal and highly likely to be quickly reattained after macroeconomic shocks.

Khremistokles: What will you say next, Thrasymakhos? That the sky is blue?

Aristokles: Nobody now expects a return to the "old normal"...

Glaukon: Indeed.

Thrasymakhos: Actually, the sky is grey here in Berkeley, California where we exist, and the morning fog has not yet burned off...

Khremistokles: But why doesn't anyone expect a return to the "old normal"?

Sokrates: If you can say that we "exist" at all, being simply of figments of Brad DeLong's imagination, as he sits at Espresso Roma, drinking coffee, trying to wake up, writing this dialogue, intermittently watching lectures from the "Reason and Persuasion" MOOC of John Holbo, and waiting for Nicholas Lemann... READ MOAR

Sokrates: Production is currently mired some 8% below the growth trend that back in 2008 we confidently thought of as normal and highly unlikely to be disturbed.

Glaukon: It is indeed.

Thrasymakhos: And employment is currently mired some 7% below the proportion of the population that back in 2008 we confidently thought of as normal and highly likely to be quickly reattained after macroeconomic shocks.

Khremistokles: What will you say next, Thrasymakhos? That the sky is blue?

Aristokles: Nobody now expects a return to the "old normal"...

Glaukon: Indeed.

Thrasymakhos: Actually, the sky is grey here in Berkeley, California where we exist, and the morning fog has not yet burned off...

Khremistokles: But why doesn't anyone expect a return to the "old normal"?

Sokrates: If you can say that we "exist" at all, being simply of figments of Brad DeLong's imagination, as he sits at Espresso Roma, drinking coffee, trying to wake up, writing this dialogue, intermittently watching lectures from the "Reason and Persuasion" MOOC of John Holbo, and waiting for Nicholas Lemann...

Ardeatine Massacre - Wikipedia:

On 23 March 1944, a column of the German 11th Company, 3rd Battalion, SS Police Regiment 'Bozen', was attacked by an ambush of Partisans while marching and singing on a prescribed route that led through the Piazza di Spagna into the narrow street of Via Rasella. Organized by the Nazis to intimidate and suppress the Resistance, the battalion had been raised in October 1943 from ethnic German-speakers of the northern Italian province of South Tyrol, a territory that Hitler had annexed to the German Reich after the September "betrayal" by the Italian government. Many of its citizens had since opted for German citizenship. The soldiers of the battalion were veterans of the Italian Army who had seen action on the Russian Front and had chosen service in the SS rather than face another tour in the East with the Wehrmacht.

Mallory Ortberg: The Case For Making Columbo America’s Doctor Who: "'I worry. I mean, little things bother me. I’m a worrier. I mean, little insignificant details — I lose my appetite. I can’t eat. My wife, she says to me, “You know, you can really be a pain.”' - Lt. Columbo, Ransom For A Dead Man

“Behold, I am sending you out as sheep among wolves; be therefore as cunning as serpents and as harmless as doves.” - Matthew 10:16

I have a specific axe to grind; I will not attempt to disguise my motives. It is my belief that we live in an era of entirely too many Sherlock Holmes adaptations and not nearly enough Columbo adaptations. Moreover, I believe that this modern proliferation of Sherlocks — the BBC’s Sherlock, of course, but also the recent Robert Downey, Jr. films and Elementary – is the reason we have no Columbo film franchises, no new Columbo TV series, no Columbo-Cons. If you will pardon the colloquialism, it is the Cumberbitches who are holding down the Columbros. I say this as someone who still enjoys a good trip to Baker Street every now and again: we must love Sherlock a little less, that we might love Columbo a little more....

Marty Lederman: How to understand Hobby Lobby: "It is hard to recall a Supreme Court case that has been so commonly misunderstood,

in so many respects, as... Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius.... Lower court opinions... as well as a majority of the more than eighty briefs filed in the Supreme Court, have been devoted to a question... whether corporations... can exercise religion in a way protected by the Religious Freedom Restoration Act... that is, at best, a distraction.... Those opinions and briefs also repeatedly mischaracterize the relevant statute and regulations... failed to critically examine the facts.... And, contrary to what the plaintiffs and many lower courts have argued, it is untrue that the government’s compelling interests are undermined by an alleged vast network of exemptions that will leave “millions” of women unprotected....

Over at Equitable Growth--The Equitablog

• Evening Must-Read: Narayana Kocherlakota on Monetary Policy
• Notes for Debate with Jeff Miron on Marty Nemko’s Radio Show: Monday Focus: March 24, 2014
• No, I Really Do Not Think That We Were Doomed to the Lesser Depression Plus the Greater Stagnation: I Think Paul Krugman Gets One Wrong Here…: Monday Focus: March 24, 2014
• Morning Must-Read: James Besson: How Technology Creates Jobs for Less Educated Workers
• Morning Must-Read: Marc Duggan et al.: Who Benefits when the Government Pays More? Pass-Through in the Medicare Advantage Program
• FRED Dashboard

Plus:

• Things to Read on the Evening of March 24, 2014

And:

Must-Reads:

1. Narayana Kocherlakota: "I view the March 19 Federal Open Market Committee (FOMC): statement as an unusually significant one. In that statement, the FOMC adopted new forward guidance about the evolution of its target for the federal funds rate. I see that new guidance as being intended to describe the Committee’s decisions for some time to come. I dissented from the new guidance for two reasons. The first reason is that the new guidance weakens the credibility of the Committee’s commitment to target 2 percent inflation. The second reason is that the new guidance fosters policy uncertainty and thereby suppresses economic activity. In what follows, I’ll elaborate on these reasons, discuss an alternative form of forward guidance, and conclude by strongly endorsing one aspect of the FOMC’s new forward guidance."

2. Kevin Otterson: The other oral argument on Tuesday: "To the Cato Institute, the tax credit cases (Halbig v. Sebelius and a related case in the Fourth Circuit, King v. Sebelius) represent their last shot to cripple the four-year-old law by wiping health insurance subsidies to millions of people in the 36 states that did not create state exchanges.... The amicus brief filed on Thursday March 20, 2014 by the Commonwealth of Virginia in King v. Sebelius... the Pennhurst doctrine, which requires Congress to give states 'clear notice' if conditions on states are attached to federal spending.... Did Congress give 'clear notice' that the penalty for failing to build a state exchange would be the loss of billions of dollars of health insurance subsidies?  When you put it that way, Cato’s argument collapses. From the brief: 'For no one can reasonably claim that the federal government gave Virginia clear notice that its citizens would be denied premium tax-credit assistance as punishment for the Commonwealth’s decision to forgo building its own health insurance exchange.... [The Plaintiffs argue] that everyone in Congress silently but mistakenly assumed that every State would create its own Exchange. (Appellants’ Br. 6, 42.) That claim finds no support in the record....' The brief also notes that no Member of Congress expressed such a view and even the architects of this litigation (Cannon and Adler) were surprised by this 'glitch' after the fact. The brief also reviews the official correspondence to and from the Governor on this issue; any notice whatsoever is lacking, much less 'clear notice'. What bothers me the most about this litigation is Cato’s willingness to hurt millions of vulnerable people in order to score political points, even after losing the 2012 Presidential election and the first bite of the Supreme Court apple in NFIB v. Sebelius. The Virginia brief puts the emphasis on the people: 'Two sovereign interests compel the Commonwealth of Virginia to file this brief. First, the Commonwealth represents the interests of the hundreds of thousands of Virginians who depend on federal premium tax-credit assistance to afford the health insurance that is now available under the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act” or “ACA”). Their interests are not represented by the Appellants here, four individual Virginians who do not want health insurance. Second, the Appellants’ legal theory contradicts the fundamental assumption on which the Commonwealth elected to forgo building its own health insurance exchange in favor of a federally-facilitated exchange: that doing so would not harm the interests of Virginians...'"

3. James Bessen: How Technology Creates Jobs for Less Educated Workers: "Since 1999, however, the number of LPNs has risen nearly 50% and wages have grown substantially. The reason: a combination of new technology and a new business model. New technologies, including advances in in electronics, fiber optics and anesthetics, allowed the widespread adoption of techniques for minimally invasive surgery. Using these techniques, surgical patients recover quickly enough to return home the same day.... Medical outcomes improved while avoiding the extra cost of a hospital stay and the complications that tend to arise from more invasive procedures.... Hospitals treat all sorts of patients with all sorts of symptoms. Many diseases, however, are difficult to diagnose.... The ambulatory surgery centers, by contrast, work in specialized areas where diagnoses are well identified, patients are screened for complications, therapies are well known and medical outcomes are predictable, if not always successful.... Because the procedures are standardized, an LPN learns valuable skills on the job.... Increasingly, doctors and dentists are performing a smaller share of the work and a variety of mid-skill providers, from LPNs and dental hygienists to nurse practitioners and physician’s assistants, are performing more. Over the last two decades this shift has created two million new jobs for mid-skill healthcare providers..."

4. Mark Duggan, Amanda Starc, and Boris Vabson: Who Benefits when the Government Pays More? Pass-Through in the Medicare Advantage Program: "In the Medicare Advantage (MA) program the federal government contracts with private insurers to coordinate and finance health care for more than 15 million Medicare recipients.... Additional reimbursement leads more private firms to enter this market and to an increase in the share of Medicare recipients enrolled in MA plans... [but] only about one-fifth of the additional reimbursement is passed through to consumers in the form of better coverage. A somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures. Our results have implications for a key feature of the Affordable Care Act that will reduce reimbursement to MA plans by $156 billion from 2013 to 2022."

The President of the Minneapolis Federal Reserve Bank:

Narayana Kocherlakota: "I view the March 19 Federal Open Market Committee (FOMC): statement as an unusually significant one.

In that statement, the FOMC adopted new forward guidance about the evolution of its target for the federal funds rate. I see that new guidance as being intended to describe the Committee’s decisions for some time to come. I dissented from the new guidance for two reasons. The first reason is that the new guidance weakens the credibility of the Committee’s commitment to target 2 percent inflation. The second reason is that the new guidance fosters policy uncertainty and thereby suppresses economic activity. In what follows, I’ll elaborate on these reasons, discuss an alternative form of forward guidance, and conclude by strongly endorsing one aspect of the FOMC’s new forward guidance.

[Pre-Debate Notes:](http://www.martynemko.com/radio-show) * The first question, I think, is how much does each of us owe to all the rest for there being here to help us? The answer is, I think, everything: drop any of us naked and alone into the pre-human settlement Missouri Valley and we are chewy and taste good with ketchup to grizzly bears. Life is then nasty, British--and very short. Thus each of us owes the others who came before us and now surround us and who kept the grizzly bear population down and rebuilt the civilization--well, each of us owes the others everything.

.ppt | .pdf | .key

Kevin Otterson: The other oral argument on Tuesday: "To the Cato Institute, the tax credit cases (Halbig v. Sebelius and a related case in the Fourth Circuit, King v. Sebelius) represent their last shot to cripple the four-year-old law by wiping health insurance subsidies to millions of people in the 36 states that did not create state exchanges....

The amicus brief filed on Thursday March 20, 2014 by the Commonwealth of Virginia in King v. Sebelius... the Pennhurst doctrine, which requires Congress to give states “clear notice” if conditions on states are attached to federal spending.... Did Congress give “clear notice” that the penalty for failing to build a state exchange would be the loss of billions of dollars of health insurance subsidies?  When you put it that way, Cato’s argument collapses. From the brief:

For no one can reasonably claim that the federal government gave Virginia clear notice that its citizens would be denied premium tax-credit assistance as punishment for the Commonwealth’s decision to forgo building its own health insurance exchange.... [The Plaintiffs argue] that everyone in Congress silently but mistakenly assumed that every State would create its own Exchange. (Appellants’ Br. 6, 42.) That claim finds no support in the record....

The brief also notes that no Member of Congress expressed such a view and even the architects of this litigation (Cannon and Adler) were surprised by this “glitch” after the fact. The brief also reviews the official correspondence to and from the Governor on this issue; any notice whatsoever is lacking, much less “clear notice.” What bothers me the most about this litigation is Cato’s willingness to hurt millions of vulnerable people in order to score political points, even after losing the 2012 Presidential election and the first bite of the Supreme Court apple in NFIB v. Sebelius. The Virginia brief puts the emphasis on the people:

Two sovereign interests compel the Commonwealth of Virginia to file this brief. First, the Commonwealth represents the interests of the hundreds of thousands of Virginians who depend on federal premium tax-credit assistance to afford the health insurance that is now available under the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act” or “ACA”). Their interests are not represented by the Appellants here, four individual Virginians who do not want health insurance. Second, the Appellants’ legal theory contradicts the fundamental assumption on which the Commonwealth elected to forgo building its own health insurance exchange in favor of a federally-facilitated exchange: that doing so would not harm the interests of Virginians...

Ken Reese at the Great Escape from Stalag Luft III:

The weather outside was as grim as it could be – well below freezing with lots of snow – so I dressed accordingly: long-johns, long-sleeved vest, thick pullover from my parcel, greatcoat and cloth cap. Our pockets were stuffed with matches, escape rations, maps, a compass, a tin oil light and tin can hopeful for any hot drink. Gloves, spare socks and some toiletries completed the kit; we thought we looked bad enough without having to add a few days stubble to our convict-like appearance.

Nelson Polsby (1934-2007) was one of the more powerful reasons that Berkeley punched and still punches well above its financial weight among universities...

Dan Tompkins's notes on Polsby and McCarthy:

Dan Tompkins: Nelson Polsby's breakout essay: Getting McCarthy Wrong:

This may interest only a few of you. I threw it together for my own purposes and found enough to make it worth exposing to others.

Two Berkeley political scientists, Nelson Polsby and Michael Rogin, did very good analytic work on the question, "who supported McCarthy."  Rogin and Polsby are now both, sadly, deceased.  Both, each in his own way, took on the established political scientists who blamed McCarthyism on particular social groups.  Rogin focused on elite notions that McCarthy had a "mass" or  "populist movement."   He's very worth reading, but what follows mainly concerns Polsby, who at age 26 published "Towards an Explanation of McCarthyism" in the journal Political Studies 8 (1960).  

Apropos of: Brad DeLong: Washington Center for Equitable Growth | I Continue to Fail to Understand Robert Rubin Thought…: Wednesday Focus: March 5, 2014

and:

We have:

Daniel Davies: "I really hate that first chart.

Over at the WCEG: I read Paul Krugman, and I want to sharply dissent:

Paul Krugman: Did Inflation Phobia Cause the Great Recession?: "Even avoiding the financial panic almost surely wouldn’t have meant avoiding a prolonged economic slump.

How do we know this? Well, what we actually know is that the panic was in fact fairly short-lived, ending in the spring of 2009. It doesn’t really matter which measure of financial stress you use.... Yet the economy didn’t come roaring back, and in fact still hasn’t. Why? Because the housing bust and the overhang of household debt are huge drags on demand, even if there isn’t a panic in the financial market... READ MOAR

James Bessen: How Technology Creates Jobs for Less Educated Workers: "Since 1999, however, the number of LPNs has risen nearly 50% and wages have grown substantially.

The reason: a combination of new technology and a new business model. New technologies, including advances in in electronics, fiber optics and anesthetics, allowed the widespread adoption of techniques for minimally invasive surgery. Using these techniques, surgical patients recover quickly enough to return home the same day.... Medical outcomes improved while avoiding the extra cost of a hospital stay and the complications that tend to arise from more invasive procedures.... Hospitals treat all sorts of patients with all sorts of symptoms. Many diseases, however, are difficult to diagnose.... The ambulatory surgery centers, by contrast, work in specialized areas where diagnoses are well identified, patients are screened for complications, therapies are well known and medical outcomes are predictable, if not always successful.... Because the procedures are standardized, an LPN learns valuable skills on the job.... Increasingly, doctors and dentists are performing a smaller share of the work and a variety of mid-skill providers, from LPNs and dental hygienists to nurse practitioners and physician’s assistants, are performing more. Over the last two decades this shift has created two million new jobs for mid-skill healthcare providers..."

Mark Duggan, Amanda Starc, and Boris Vabson: Who Benefits when the Government Pays More? Pass-Through in the Medicare Advantage Program: "In the Medicare Advantage (MA) program...

the federal government contracts with private insurers to coordinate and finance health care for more than 15 million Medicare recipients.... Additional reimbursement leads more private firms to enter this market and to an increase in the share of Medicare recipients enrolled in MA plans... [but] only about one-fifth of the additional reimbursement is passed through to consumers in the form of better coverage. A somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures. Our results have implications for a key feature of the Affordable Care Act that will reduce reimbursement to MA plans by $156 billion from 2013 to 2022.

: Vladimir Putin:

Federation Council members, State Duma deputies, good afternoon.  Representatives of the Republic of Crimea and Sevastopol are here among us, citizens of Russia, residents of Crimea and Sevastopol!

Dear friends, we have gathered here today in connection with an issue that is of vital, historic significance to all of us. A referendum was held in Crimea on March 16 in full compliance with democratic procedures and international norms. More than 82 percent of the electorate took part in the vote. Over 96 percent of them spoke out in favour of reuniting with Russia. These numbers speak for themselves.

: World War II Today: Captain Shosaku Kameyama near the Irawaddy River:

From our experience in China we were confident of the success of the night attack, but we had to expect that a mass of bullets from the overwhelming enemy automatic weapons would result in much greater casualties.

When 8th Company broke through the enemy front line, 5th and 6th tried to advance, but very fierce enemy firing made their progress impossible. Under a strong counter—attack the commander and most soldiers of 8th Company were killed or wounded. Though we wanted to advance we could not even lift our heads because of the heavy fire which we had never before experienced.

Over at the : Washington Center for Equitable Growth: FRED Dashboard:

http://research.stlouisfed.org/dashboard/215

Why a complex, unjust, expensive, error-prone system might end up providing the best health care:

Ezekiel Emanuel is Vice Provost for Global Initiatives and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. A breast oncologist with a doctorate in political philosophy, he served for many years as chair of the Department of Bioethics at The Clinical Center of the National Institutes of Health. From 2009 to 2011, he helped to craft the Affordable Care Act (ACA) as a special advisor for health policy to the director of the White House Office of Management and Budget. While serving in that role, Emanuel was the target of one of the most unfounded political attacks I have witnessed in health policy.

If you could only read one book about the American health system and ACA’s valuable (albeit imperfect) contribution to improving that system, his new book Reinventing American Health Care: How the Affordable Care Act will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System might be the best one.

Over at Equitable Growth--The Equitablog

• Washington Center for Equitable Growth | Lunchtime Must-Read: Jared Bernstein: Where Do the Fiscal Headwinds Come From?
• Washington Center for Equitable Growth | Abenomics a Short-Run Success: Reading Hausman and Wieland: Friday Focus: March 21, 2014
• Washington Center for Equitable Growth | Morning Must-Read: Cardiff Garcia on Janet Yellen
• Washington Center for Equitable Growth | Evening Must-Read: Angus Deaton: The Great Escape

Plus:

• Washington Center for Equitable Growth | Things to Read at Lunchtime on March 22, 2014

And:

Must-Reads:

1. Jared Bernstein: Where Do the Fiscal Headwinds Come From?: "Richard Kogan and William Chen shows that relative to projections that were made in 2010, spending reductions... [have] generated deficit savings of $2.5 trillion over the current 10-year budget window (2015 to 2024).  Adding in the associated reduced interest payments of about $650 billion amounts to $3.2 trillion in deficit savings from spending cuts. Revenue added about $950 billion and technical and economic changes added savings of about $840 billion.... $5 trillion in savings over the budget window relative to the 2010 baseline... 77 percent of the savings that come from policy changes... are from spending cuts.... Neither of these developments should be seen as... great achievements.  The stimulus response to the Great Recession was too short-lived, and many of the program cuts... have been thoughtless slash-and-burn.... And from the perspective of the macroeconomy... [are] the source of the fiscal headwinds that have consistently held back the recovery."

2. Cardiff Garcia: Yellen’s words vs what you heard: "[Yellen] doesn’t think inflation will threaten to breach the 2 per cent level so long as unemployment is 'quite high'. his could be read either hawkishly or dovishly. The potentially hawkish interpretation is... that such language reinforces the implicit, extant policy of 2 per cent as an inflation ceiling.... The dovish reading is that if she doesn’t think this tradeoff is likely to be an issue, then it’s because she also thinks there is more labour slack than the unemployment rate is communicating.... It’s also possible to mash together the two interpretations: policy will stay looser for longer, but only because the health of the labour market is worse off than the unemployment rate suggests. No change relative to the status quo on the hawkish-dovish spectrum.... Markets gravitated instead to two hawkish signals. One was the median forecast for the federal funds rate at the end of 2015 and 2016.... The other hawkish signal was Yellen’s definition of what constitutes 'a considerable time after the asset purchase program ends' before the first rate hike... 'on the order of around six months'.... As for the rest of the presser, I believe this extended passage was especially important: 'I have talked in the past about indicators I like to watch or I think that are relevant in assessing the labor market. In addition to the standard unemployment rate, certainly look at boarder measures of unemployment.... U6... five percent of the labor force working part time on an involuntary basis... is an exceptionally high number... discouraged and marginally attached workers... immensely high and can be very stubborn in bringing down... a cyclical component in the fact that labor force participation is depressed... quit rates now are below normal pre-recession levels... hires rate, however, remains extremely depressed... wage growth has really been very low...'"

3. Angus Deaton: The Great Escape:

Should-Reads:

• Andrew Gelman and Eric Loken: The AAA Tranche of Subprime Science

  1. Jay Rosen: Review and comment on the launch of Nate Silver’s FiveThirtyEight.com for ESPN: "One way of introducing a product: make it like the other products, but try to find better people. Nate Silver and ESPN aren’t doing that. Neither is Ezra Klein with Vox, or Pierre Omidyar with First Look, or Jessica Lesson with The Information. These ventures may go nowhere.... To illuminate a different starting point is easy. To practice differently by starting from that point: way harder.... Benjamin Wallace-Wells[:]... 'The hope invested in these projects is that as the industry shrank, perhaps, at the very least, what was left might become smarter. The profession has retreated, but maybe it has retreated to higher ground. Which explains, I think, some of the big talk that has accompanied their introduction....' The rise of Nate Silver’s FiveThirtyEight has been an important marker of… we can be way smarter.... He isolates three 'your practices are weak, I have a better way' opportunities: * what counts as explanation in advanced news writing today; * the making of generalizations by journalists steeped in the particulars; * the art of prediction, the science of likelihood, and products in between. In these areas he thinks he can make improvements by bringing the discipline of data science to the topsy turvy of news..."

  2. J.F.: Data and straw men: In defence of the numbers: "Leon Wieseltier, the New Republic's literary editor, seems to train by destroying straw men... his characteristically overblown explosions: Nate Silver is... ignorant of public reason... John Judis, Peter Beinart and Andrew Sullivan... are, respectively, a tourist, a naif and an anti-Semite.... Mr Silver's project is eminently worthwhile.... First, it does not scream. This may sound like a joke; it is not.... I will lay the facts as I understand them before you, explain why I think the facts matter, show you where I think they lead, and leave you to your own conclusions—surely is preferable to the unspoken attitude underpinning much American political discourse.... There is, in fact, a near-total consensus among scientists that climate change is happening and is 'unpredictable' and 'highly damaging'. Many people deny this. Best to lay the facts before them, over and over again.... There are sound data-driven arguments to be made over... whether the Earned Income Tax Credit helps make people less poor, or if receiving food stamps promotes sloth and dependence. Concrete, answerable questions are better than opinionated hunches for framing policy discussions.... Mr Silver's mission is to shrink bullshit's share of our national conversation, I can only wish him Godspeed."

Robert Moffitt: Three Better Bipartisan Health Policies To Pay For Repealing Medicare’s SGR | Laudan Aron: What really accounts for how long we'll live? |

Should Be Aware of:

1. Kos: Third Way['s Matt Bennett and Jim Kessler] put words in my mouth to defend Zell Miller: "So Third Way took a shot at me today, using Politico as their vehicle, because I guess having no constituency is no barrier to access if you have enough hedge fund managers on your board.... It happened because Third Way co-founder Jonathan Cowan was once an aide to Andrew Cuomo, who is the second coming of Joe Lieberman. I've been beating up on Cuomo lately, so Third Way is leaping to his defense by attacking me.... What's truly funny about their attacks on me is that they have to invent words in my mouth to make a coherent argument. I've written over 10 million words the past decade, and yet we get passages like this: 'A charge implicit in the Moulitsas post is that moderate Democrats lack political courage—that they would do the right thing if only they were brave enough. This just doesn’t withstand scrutiny.' You rarely see that blatant an example of a strawman argument. It's actually a thing of beauty. 'He didn't say this thing, but let's pretend that he did, and OMG that pretend argument that we invented out of thin air fails scrutiny!' Note that bullshit arguments are part and parcel of Third Way's repertoire..."

2. Andrew J. Bacevich: Tom Clancy: "Tom Clancy qualifies as a great writer in the same sense that Texas senator Ted Cruz qualifies as a great orator.... Clancy did for military pop-lit what Starbucks did for the preparation of caffeinated beverages: he launched a sprawling, massively profitable industrial enterprise that simultaneously serves and cultivates an insatiable customer base. Whether the item consumed provides much in terms of nourishment is utterly beside the point. That it tastes yummy going down more than suffices to keep customers coming back.... Yet to argue that Clancy’s books and ancillary byproducts offer little in terms of lasting value is not to say that they have lacked influence. Indeed, just the reverse is true. As a shaper of the zeitgeist, Tom Clancy may well rate as one of the most influential creative entrepreneurs of the last several decades.... Clancy’s abiding theme is the never-ending struggle between good guys and bad guys.... Clancy, who never served in the military, imagined a world of selfless patriots performing feats of derring-do to overcome evil—a world that large numbers of Americans were certain had once existed.... Soon after Clancy’s death, the Washington Post published an appreciation entitled 'How Tom Clancy Made the Military Cool Again', written by a couple of self-described Gen-Xer policy wonks. 'Clancy’s legacy lives on in the generations he introduced to the military', they gushed.... But any understanding gained by either soldiers or society,whether engaged in Patriot Games or fending off The Sum of All Fears, was illusory, rooted in fantasies that sanitized war and conveyed a false sense of what military service really entails.... He contributed in no small way to the conditions breeding the misguided and costly military adventurism that has become the signature of U.S. policy. Clancy did prove to be a figure of consequence. Alas, almost all of those consequences have proven to be pernicious. And there’s no Jack Ryan anywhere in sight to come to our rescue."

And:

• Tim Harford: Behavioural economics and public policy

Andrew Fieldhouse: Chained CPI Is Dead, and the Grand Bargain with It |

Jared Bernstein: Where Do the Fiscal Headwinds Come From?: "Richard Kogan and William Chen shows that relative to projections that were made in 2010, spending reductions...

[have] generated deficit savings of $2.5 trillion over the current 10-year budget window (2015 to 2024).  Adding in the associated reduced interest payments of about $650 billion amounts to $3.2 trillion in deficit savings from spending cuts. Revenue added about $950 billion and technical and economic changes added savings of about $840 billion.... $5 trillion in savings over the budget window relative to the 2010 baseline... 77 percent of the savings that come from policy changes... are from spending cuts.... Neither of these developments should be seen as... great achievements.  The stimulus response to the Great Recession was too short-lived, and many of the program cuts... have been thoughtless slash-and-burn.... And from the perspective of the macroeconomy... [are] the source of the fiscal headwinds that have consistently held back the recovery.

: Letter from Niccolo Machiavelli to Francesco Vettori: "10 December 1513: Magnificent Ambassador: 'Never late were favors divine.'

I say this because I seemed to have lost--no, rather mislaid--your good will; you had not written to me for a long time, and I was wondering what the reason could be. And of all those that came into my mind I took little account, except of one only, when I feared that you had stopped writing because somebody had written to you that I was not a good guardian of your letters, and I knew that, except Filippo and Pagolo, nobody by my doing had seen them. I have found it again through your last letter of the twenty-third of the past month, from which I learn with pleasure how regularly and quietly you carry on this public office, and I encourage you to continue so, because he who gives up his own convenience for the convenience of others, only loses his own and from them gets no gratitude.

Winston Churchill:

The Prime Minister (Mr. Churchill): The object of giving medals, stars and ribbons is to give pride and pleasure to those who have deserved them. At the same time a distinction is something which everybody does not possess. If all have it it is of less value. There must, therefore, be heartburnings and disappointments on the border line. A medal glitters, but it also casts a shadow.

Of those whom I think are the three best young macroeconomists who got their Ph.D. degrees in the past year, all three got their degrees from Berkeley, and two of the three--Johannes Wieland and Joshua Hausman--ajsut presented their rapid-response survey of the effects of Japan's Abenomics at the Brookings Panel on Economic Activity: "Abenomics: Preliminary Analysis and Outlook". I am not there: I am on the other coast, teaching and waiting for my mother to fly in from Albuquerque. But as I follow along it is clear to me that they have done a very good job:

Joshua K. Hausman and Johannes F. Wieland: Abenomics Preliminary Analysis and Outlook: "Japan’s great economic experiment known as Abenomics appears to be increasing the country’s immediate economic growth,

May 2003: Tom Friedman explains the Iraq War to us:

Court issues order to garnish Emanuel Cleaver’s congressional wages in car wash case:

The Jackson County court clerk issued a wage garnishment order against Cleaver’s employer — the U.S. House — on behalf of Bank of America. The order instructs the House to withhold part of Cleaver’s salary to help repay more than $1.3 million he and his wife now owe the bank. It’s the second time the bank has asked the court to garnish Cleaver’s wages for the debt, first incurred more than a decade ago....

Via Making Light:

Cardiff Garcia: Yellen’s words vs what you heard: "[Yellen] doesn’t think inflation will threaten to breach the 2 per cent level so long as unemployment is 'quite high'.

This could be read either hawkishly or dovishly. The potentially hawkish interpretation is... that such language reinforces the implicit, extant policy of 2 per cent as an inflation ceiling.... The dovish reading is that if she doesn’t think this tradeoff is likely to be an issue, then it’s because she also thinks there is more labour slack than the unemployment rate is communicating.... It’s also possible to mash together the two interpretations: policy will stay looser for longer, but only because the health of the labour market is worse off than the unemployment rate suggests. No change relative to the status quo on the hawkish-dovish spectrum.... Markets gravitated instead to two hawkish signals. One was the median forecast for the federal funds rate at the end of 2015 and 2016.... The other hawkish signal was Yellen’s definition of what constitutes 'a considerable time after the asset purchase program ends' before the first rate hike... 'on the order of around six months'.... As for the rest of the presser, I believe this extended passage was especially important:

I have talked in the past about indicators I like to watch or I think that are relevant in assessing the labor market. In addition to the standard unemployment rate, certainly look at boarder measures of unemployment.... U6... five percent of the labor force working part time on an involuntary basis... is an exceptionally high number... discouraged and marginally attached workers... immensely high and can be very stubborn in bringing down... a cyclical component in the fact that labor force participation is depressed... quit rates now are below normal pre-recession levels... hires rate, however, remains extremely depressed... wage growth has really been very low...

Angus Deaton: The Great Escape:

Over at Equitable Growth--The Equitablog

• Afternoon Must-Read: Paul Krugman: Notes on Piketty’s “Capital in the Twenty-First Century”
• Conference Draft Papers from Brookings Panel on Economic Activity: Spring 2014
• This Spring’s Brookings Panel on Economic Activity Looks Very Good…
• On the Pace of Growth: I Think the Very Smart Joe Stiglitz Gets One Wrong: Thursday Focus: March 20, 2014
• Morning Must-Read: Austin Frakt: Job Lock
• Morning Must-Read: Quoctrung Bui: Who Had Richer Parents, Doctors or Artists?
• Morning Must-Read: Tim Mulaney: Here’s What I Thought the Biggest Difference [Between Bernanke and Yellen] Was

Plus:

• Things to Read on the Afternoon on March 20, 2014

And:

Philippe Martin and Thomas Philippon: Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone

Paul Krugman: Notes on Piketty: "Piketty’s big idea is that we are in the early stages of returning to a society dominated by great dynastic fortunes, by inherited wealth.

And he has an analytic argument to back up that idea.... Imagine a wealthy family that has managed, somehow or other, to guarantee that a large fraction of its income is used to accumulate more wealth. Can this family thereby acquire a dominant position in society? The answer depends on the relationship between (the risk) r, the (risky) rate of return on assets, and g, the overall rate of economic growth. If r is less than g, dynasties are doomed to erode.... So what determines r-g? Piketty stresses the effects of changes in economic growth.... Piketty tells us something remarkable: historically, r has almost always exceeded g--but there was an exceptional period in the 20th century, a period of rapid labor force growth and technological progress, when r was less than g. And he asserts that the kind of society we consider normal, in which high incomes reflect personal achievement rather than inherited wealth, is in fact an aberration driven by this exceptional period. It’s a remarkable, sweeping vision. A couple of questions: 1. How much of the decline in r relative to g in the 20th century reflected fast growth, and how much reflected policies? 2. How relevant is this story to what has happened so far? In the United States, as Piketty himself stresses, soaring inequality has to date been largely been driven by labor income – by 'supermanagers'

Joshua K. Hausman and Johannes F. Wieland: Abenomics: Preliminary Analysis and Outlook

In early 2013, Japan enacted a monetary regime change. The Bank of Japan set a two percent inflation target and specified concrete actions to achieve this goal by 2015. Shinzo Abe’s government is supporting this change with fiscal policy and structural reforms. We show that Abenomics ended deflation in 2013 and raised long-run inflation expectations. Our estimates suggest that Abenomics also raised 2013 output growth by 0.9 to 1.7 percentage points. Monetary policy alone accounted for up to a percentage point of growth, largely through positive effects on consumption. In the medium and long-run, Abenomics will likely continue to be stimulative. But the size of this effect, while highly uncertain, thus far appears likely to fall short of Japan’s large output gap. In part this is because the Bank of Japan’s two percent inflation target is not yet fully credible. We conclude by outlining how to interpret future data releases in light of our results.

And we're off! You can download all the Brookings Papers on Economic Activity, right here: http://t.co/8tkWWBFSgO #BPEA

— Justin Wolfers (@JustinWolfers) March 20, 2014

Alas! I am not there--I am on the other coast, teaching and waiting for flights to arrive for spring break...