Grasping Reality on TypePad, by Brad DeLong

The Armistice Agreement with Rumania; September 12, 1944:

Agreement Between the Governments of United States of America, the United Kingdom, and the Union of Soviet Socialist Republics, on the One Hand, and the Government of Rumania, on the Other Hand, Concerning an Armistice:

The Government and High Command of Rumania, recognizing the fact of the defeat of Rumania in the war against the Union of Soviet Socialist Republics, the United States of America, and the United Kingdom, and the other United Rations, accept the armistice terms presented by He Governments of the above mentioned three Allied Powers, acting in the interests of all the United Nations. On the basis of the foregoing the representative of the Allied (Soviet) High Command, Marshal of the Soviet Union, R. Y. Malinovski, duly authorized hereto by the Governments of the United States America; the Soviet Union, and the United Kingdom, acting in the interests of all the United Nations, on the one hand, and the representatives of the Government and High Command of Rumania, Minister of State and Minister of Justice L Patrascanu, Deputy Minister of Internal Affairs, Adjutant of His Majesty the King of Rumania General D. Damaceanu, Prince Stirbey, and Mr. G. Popp, on the other hand, holding proper full powers have signed the following conditions:

Over at Equitable Growth--The Equitablog

• Nick Bunker: * Comment on: Janice Eberly and Arvind Krishnamurthy: Efficient Credit Policies in a Housing Debt Crisis - Washington Center for Equitable Growth
• Department of "Huh?!" John J. Mearsheimer Thinks the West Caused the Ukraine Crisis?: The Honest Broker for the Week of September 19, 2014 - Washington Center for Equitable Growth
• Two Comments on Matthew Weinzerl's "Seesaws and Social Security Benefits Indexing" - Washington Center for Equitable Growth
• Morning Must-Read: Matthew Weinzerl: Seesaws and Social Security Benefits Indexing - Washington Center for Equitable Growth
• Morning Must-Read: Lucia Foster, Cheryl Grim, and John Haltiwanger: Reallocation in the Great Recession: Cleansing or Not? - Washington Center for Equitable Growth
• Afternoon Must-Read: Amanda KowalskI: The Early Impact of the Affordable Care Act State-By-State - Washington Center for Equitable Growth
• Morning Must-Read: Cardiff Garcia: Slacking to Stand Still - Washington Center for Equitable Growth A new and useful measure of inequality - Washington Center for Equitable Growth

Plus:

• Things to Read on the Morning of September 12, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Sarah Cohen: The State of Data Journalism: What Reporters Need to Know
• Dani Rodrik (2011): The Future of Economic Convergence
• Matthew Yglesias: We don't know which countries have the hardest workers

1. Cardiff Garcia: Slacking to Stand Still: "A paper released last week by [Stephanie Aaronson et al.]... concludes that most of the decline in the labour force participation rate since the recession has been structural.... 'Our cohort-based model suggests that cyclical weakness was depressing the participation rate by about ¼ percentage point in 2014:Q2'.... The wider issue is that trends thought to be structural aren’t necessarily irreversible.... The dovish argument, to which we still subscribe, is that the only way to know is for the Fed to aggressively pursue [expansion until]... the labour market becomes so tight that employers feel they have no choice but to make work more attractive.... Year-on-year headline PCE inflation is 1.6 per cent through July, the last available reading--which also happens to be its average rate since the recession. That’s not only an extended period of undershooting 2 per cent, but also a staggering demand fail given what happened to labour markets in that period.... To further make incoming data, rather than time, the clear contingency on which to base monetary policy would be perfectly sensible...

2. Amanda Kowalski: The Early Impact of the Affordable Care Act State-By-State: "In the individual health insurance market... at least 13.2 million people were covered in the second quarter of 2014, representing an increase of at least 4.2 million increase beyond pre-ACA state-level trends.... Market participants in 'direct enforcement; states that ceded all enforcement of the ACA to the federal government are worse off by approximately $245 per participant on an annualized basis relative to participants in all other states.... Market participants in the six states that had severe exchange glitches are worse off by approximately $750 per participant on an annualized basis relative to participants in other states with their own exchanges..."

3. Lucia Foster, Cheryl Grim, and John Haltiwanger: Reallocation in the Great Recession: Cleansing or Not?: "The high pace of reallocation across producers is pervasive in the U.S. economy. Evidence shows this high pace of reallocation is closely linked to productivity. While these patterns hold on average, the extent to which the reallocation dynamics in recessions are “cleansing” is an open question. We find downturns prior to the Great Recession are periods of accelerated reallocation even more productivity enhancing than reallocation in normal times. In the Great Recession, we find the intensity of reallocation fell rather than rose and the reallocation that did occur was less productivity enhancing than in prior recessions."

4. Matthew Weinzerl: Seesaws and Social Security Benefits Indexing: "The indexation of Social Security benefit payments may seem like an issue about which only an economist could get excited, but it has emerged in recent years as a áashpoint of debate in the United States. In his 2014 budget, President Obama proposed changing the price index with which retiree benefits are adjusted for inflation. In brief, the change was expected to lower the growth rate of benefits for all retirees, though at advanced ages that change would have been offset by progressive "benefit enhancements." Because it was not tied to an increase in the starting level of those benefits, the Presidentís proposal was expected to reduce the total present value of benefits. The President's proposal was explicitly intended to appeal to Congressional Republicans eager to reduce future spending on Social Security, but it was deeply unpopular with many of his fellow Democrats. When negotiations on more general fiscal policy challenges yielded little progress over the subsequent year, the President removed the proposal from his 2015 budget. His spokesperson made clear, however, that changes to indexation were still on the table if included in broader budget deals..."

5. Stephanie Aaronson et al. (2006) The Recent Decline in the Labor Force Participation Rate and Its Implications for Potential Labor Supply: "Increases in the participation rate of adult women likely stem from numerous structural factors.... It seems likely that new generations internalized many of these changes more easily than did mature cohorts, who had already made “sticky” choices.... Much of the change in the aggregate female participation rate appears to have resulted from progressively higher average participation rates of successive cohorts..... The participation rate for men in their prime working years... held steady during the strong labor market of the mid- to late-1990s. After turning down again during the 2001 recession, it has been fairly flat since 2002..."

6. Tony Yates: A Mauling Minsky Moment: Comment on Martin Wolf: "Minsky’s reading of economic systems was a stroke of creative, imaginative but informal genius.  But it’s highly conjectural.  It may be part of the story of the financial collapse that financial system stability is inherently destabilising, or it may not.  Just because intermediation was cheap and plentiful before it became expensive and scarce does not validate Minsky.  There are plenty of other preceding and coincident events which don’t fit.... Besides, as a theoretical conjecture, it needs working through. Before we accept Minsky’s verbal conjecture, what would an artificial economy do if you peopled it with agents with imperfect apprehensions of risk? Would such artificial systems be characterised by a ‘stability is destabilising’ dynamic?... If you follow Paul Krugman’s reasoning, the financial crisis, at least as manifest in spreads, is over and done with.  And it’s lasting consequences for demand and inflation are down to insufficiently stabilising fiscal policy.  There’s no room for a ‘stability is destabilising’ dynamic here.  The future would be bright if Governments simply spent more money raising the natural rate. But suppose we accept the idea at face value. One reading of it suggests that we restricting bank leverage as Martin Wolf urges won’t work by itself.  A long period of stability breeding complacency would presumably erode the support for these restrictions..."

And Over Here:

Matthew Weinzerl: Seesaws and Social Security Benefits Indexing: "The indexation of Social Security benefit payments...

...may seem like an issue about which only an economist could get excited, but it has emerged in recent years as a áashpoint of debate in the United States. In his 2014 budget, President Obama proposed changing the price index with which retiree benefits are adjusted for inflation. In brief, the change was expected to lower the growth rate of benefits for all retirees, though at advanced ages that change would have been offset by progressive "benefit enhancements." Because it was not tied to an increase in the starting level of those benefits, the Presidentís proposal was expected to reduce the total present value of benefits. The President's proposal was explicitly intended to appeal to Congressional Republicans eager to reduce future spending on Social Security, but it was deeply unpopular with many of his fellow Democrats. When negotiations on more general fiscal policy challenges yielded little progress over the subsequent year, the President removed the proposal from his 2015 budget. His spokesperson made clear, however, that changes to indexation were still on the table if included in broader budget deals...

First:

Let me try to widen the scope of this discussion...

When I think about vehicles to provide retirement-income security...

1. I think that encouraging people to invest in 401(k)s leads them, because of poor financial education, to pay a 2%/year tax on their asset accumulations to Wall Street--a transfer that is 100% a dissipative minus for any utilitarian societal welfare calculation given how rich the princes of Wall Street already are.

2. I think that having firms provide defined-benefit pensions hasn't worked out that well in the long run: firms do not survive long enough, and if they do along comes Bain Capital to exploit the legal gap between the cash-flow and the control rights of future pension beneficiaries and put the scraps of the mostly-expropriated pension assets to the PBGC.

3. I think that Social Security indexed to prevailing wages provides an extraordinarily efficient way of providing a form of retirement savings that--given the enormous risk premia we see in financial markets--value extremely high. If we were to ask, say, Citicorp here how much it would charge to write a contract matching the return on your Social Security benefits, it would be astronomical. The only major drawback of relying more on Social Security that gives me pause is Marty Feldstein's long-time worries about the effect of Social Security on national capital accumulation and thus on the level of economy-wide real wages.

Given that the first rule of market economics is that you should do less of what dissipates wealth and more of what creates wealth, I am--as I have long been--somewhat puzzled by the focus here...

And:

When back in 1994 Joe Stiglitz came up with the bright or perhaps not-so-bright idea of proposing changes in the Social Security benefits indexation formula, the key piece was tying changes in Social Security benefits indexation to changes in tax bracket breakpoints. This was both because it made sense to view the social-insurance system as a whole--both taxes and benefits--and as a way to assemble a proposal that would make it past the multiple veto points of our eighteenth-century mechanistic orrery of a governmental system and also increase utilitarian societal welfare. So if I may channel Joe Stiglitz, I think he would say that there ought, somewhere, to be a wealth tax component to this proposal somewhere. If there were, what would it be?

Matthew Weinzerl: Seesaws and Social Security Benefits Indexing: "The indexation of Social Security benefit payments...

...may seem like an issue about which only an economist could get excited, but it has emerged in recent years as a áashpoint of debate in the United States. In his 2014 budget, President Obama proposed changing the price index with which retiree benefits are adjusted for inflation. In brief, the change was expected to lower the growth rate of benefits for all retirees, though at advanced ages that change would have been offset by progressive "benefit enhancements." Because it was not tied to an increase in the starting level of those benefits, the Presidentís proposal was expected to reduce the total present value of benefits. The President's proposal was explicitly intended to appeal to Congressional Republicans eager to reduce future spending on Social Security, but it was deeply unpopular with many of his fellow Democrats. When negotiations on more general fiscal policy challenges yielded little progress over the subsequent year, the President removed the proposal from his 2015 budget. His spokesperson made clear, however, that changes to indexation were still on the table if included in broader budget deals...

Should be good:

Stephanie Kelton, Joseph Haslag, Mike Shanin: The Economy: Does More Government Help or Hurt? | Kansas City Public Library:

How much does the government really know about people’s wants and needs? And is there a clear market failure that policy can address? A back-and-forth expression of conflicting views spills into this event featuring Stephanie Kelton, chair of the University of Missouri-Kansas City’s Department of Economics, and University of Missouri economics professor Joseph Haslag, who will discuss the government’s proper role in the economy and take audience members’ written questions. Mike Shanin, who leads the weekly roundtable of conservatives and liberals on KCPT-TV’s Ruckus, will moderate.

Co-sponsored by the Jobs Now! Coalition and the Show-Me Institute.

Lucia Foster, Cheryl Grim, and John Haltiwanger: Reallocation in the Great Recession: Cleansing or Not?: "The high pace of reallocation...

...across producers is pervasive in the U.S. economy. Evidence shows this high pace of reallocation is closely linked to productivity. While these patterns hold on average, the extent to which the reallocation dynamics in recessions are “cleansing” is an open question. We find downturns prior to the Great Recession are periods of accelerated reallocation even more productivity enhancing than reallocation in normal times. In the Great Recession, we find the intensity of reallocation fell rather than rose and the reallocation that did occur was less productivity enhancing than in prior recessions.

When I looked at this, it seemed to me that it made a lot of difference whether your unit of observation was the firm or the worker. The average existing firm did indeed become more productive in a recession, in part through "shooting the wounded" and in part because the fear of being hanged tomorrow concentrates a person's mind remarkably. But the average worker and the average unit of capital became less productive: after all, can you think of something worse for overall economic efficiency than shifting workers into the "unemployed" sector and shifting capital into the "idle" sector?

And, no, I do not have an explanation of why the financial crisis Great Recession Lesser Depression was destructive of average productivity at the firm level...

Over at Equitable Growth: John Mearsheimer is only one of a surprising number claiming that the current crisis in Ukraine is predominantly the U.S.'s, and NATO's, and the Ukraine's fault:

John Mearsheimer: How the West Caused the Ukraine Crisis: Why the Ukraine Crisis Is the West’s Fault: "The United States and its European allies share most of the responsibility...

...The taproot of the trouble is NATO enlargement.... For Putin, the illegal overthrow of Ukraine’s democratically elected and pro-Russian president--which he rightly labeled a “coup”--was the final straw.... Realpolitik remains relevant--and states that ignore it do so at their own peril. U.S. and European leaders blundered in attempting to turn Ukraine into a Western stronghold on Russia’s border....

Soviet leaders... and their Russian successors did not want NATO to grow any larger and assumed that Western diplomats understood their concerns. The Clinton administration evidently thought otherwise.... The first round of enlargement... 1999... the Czech Republic, Hungary, and Poland. The second... 2004... Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Moscow complained bitterly.... The alliance considered admitting Georgia and Ukraine.... Putin maintained that admitting those two countries to NATO would represent a “direct threat” to Russia.... READ MOAR

Comment on: Janice Eberly and Arvind Krishnamurthy: Efficient Credit Policies in a Housing Debt Crisis:

The banks got at lot of money very cheaply--5%/year preferred-stock money giving up neither equity nor debt control rights at a time when Warren Buffett, front-running the Treasury, was able to extract 10%/year plus enormous option kickers for the money he committed to bank rescue. The auto companies--they got money, but the unions took a substantial hit, and the top executives lost their jobs. The homeowners got...

It still is a mystery to me why we did not offer all underwater and above water homeowners a conforming-loan refi with equity kickers depending on how far underwater the homeowner was. We didn't do that. We got rid of the debt overhang via foreclosures and (some) case-by-case renegotiations, and as Paul Willen says it was brutal and ugly.

But right now... we built, during the housing bubble, about 1 million single-family houses above trend. Since 2007 we have built between 500 and 600 thousand houses per year when long-run trend used to be 1.2 million a year. Netting out the 1 million extra houses built, we are now 4 million single-family houses short--4 million families who in a normal economy would be in their own homes are now living in their sisters' basements, with little sign that the by-now enormous underhang relative to 1948-2008 housing trends is exerting any pressure for a single-family housing construction recovery.

SO why is this? Are potential homeowners unwilling to take on the types of risk they routinely took on? Is it lenders who are unwilling to take on the types of risk they routinely took on? Of course it is both. But what is clear is we haven't unclogged the single-family housing credit channel. And the question is: is this an enormous social loss? Or should we never have established the previous housing-finance pattern in the first place?

Via Alan Taylor:

Amanda Kowalski: The Early Impact of the Affordable Care Act State-By-State: "In the individual health insurance market...

...at least 13.2 million people were covered in the second quarter of 2014, representing an increase of at least 4.2 million increase beyond pre-ACA state-level trends.... Market participants in 'direct enforcement; states that ceded all enforcement of the ACA to the federal government are worse off by approximately $245 per participant on an annualized basis relative to participants in all other states.... Market participants in the six states that had severe exchange glitches are worse off by approximately $750 per participant on an annualized basis relative to participants in other states with their own exchanges...

http://tinyletter.com/braddelong | http://tinyletter.com/braddelong/letters/curation-and-self-aggregation-for-september-11-2014-a-baker-s-dozen

This Week's Baker's Dozen:

1. Over at Equitable Growth: IS-LM as "obfuscation"? No!: http://delong.typepad.com/sdj/2014/09/over-at-equitable-growth-is-lm-as-obfuscation-no-thursday-focus-for-september-11-2014.html

2. Over at Equitable Growth: Can we get out of our macroeconomic dark corner: http://delong.typepad.com/sdj/2014/09/trapped-in-the-dark-corners-thoughts-on-olivier-blanchards-where-danger-lurks-the-honest-broker-for-the-week-of-sep.html

3. Over at Equitable Growth: Breaking my heart by reading my archives: me, five years ago, on generating a robust recovery: http://delong.typepad.com/sdj/2014/09/over-at-equitable-growth-hoisted-from-the-weblog-archives-reading-which-breaks-my-heart-from-five-years-ago-generating-a.html

4. Over at Equitable Growth: There is no government debt constraint as long as we remain in an n + g > r world: http://delong.typepad.com/sdj/2014/09/over-at-equitable-growth-aint-it-fun-living-in-an-r-ng-world-tuesday-focus-for-september-9-2014.html

5. Richard Mayhew on the (lack of) morals of the Halbig Troofers: http://www.balloon-juice.com/2014/08/12/shame-would-be-a-good-thing/

6. Destructive policies bring red-state recessions closer to reality: http://econbrowser.com/archives/2014/08/wisconsin-forecasted-to-lag-further-behind-minnesota

7. Trolling: Why Is Noah Smith Surprised at the Continuing Job Shortage?: http://delong.typepad.com/sdj/2014/09/20140908-over-at-equitable-growth-why-is-anybody-surprised-that-the-job-shortage-continues-for-so-long-in-which-i-troll-no.html | What Does Nick Rowe Think Is Special About Recessions in a Monetary Economy?: http://delong.typepad.com/sdj/2014/09/over-at-equitable-growth-what-is-special-about-recessions-in-a-monetary-economy-trollng-nick-rowe.html (Over at Equitable Growth)

8. SHARK WEEK!!!!: http://delong.typepad.com/sdj/2014/09/shark-week.html

9. Robert Waldmann from 2012 on counter-clockwise Beveridge Curve loops without shifts in structural unemployment: http://delong.typepad.com/sdj/2014/09/evening-must-read-robert-waldmann-2012-beveridge-curve-loops.html

10. Bobby Jindal and other "you really could not make this stuff up" red-state politics shenanigans: http://delong.typepad.com/sdj/2014/09/20140904-across-the-wide-missouri-gov-bobby-jindals-bizarre-scheme-to-stop-his-own-education-plan-by-suing-the-obama-ad.html

11. Over at Equitable Growth: Claims that the Bulk of the Post-2008 Decline in Labor Force Participation Are "Structural" Need to Surmount a Very High Bar Indeed: http://equitablegrowth.org/2014/09/05/claims-bulk-post-2008-decline-labor-force-participation-structural-need-surmount-high-bar-indeed-friday-focus-september-5-2014/

12. Daniel Kuehn on how minimum wage studies with better controls show much less disemployment effect2: http://www.epi.org/publication/importance-study-design-minimum-wage-debate/

13. A Truly Worthwhile Semi-MOOC1: Cosma Shalizi on Big Data (yes, I know he doesn't want me to call it that...) http://vserver1.cscs.lsa.umich.edu/~crshalizi/weblog/1103.html

Cardiff Garcia: Slacking to Stand Still: "A paper released last week by [Stephanie Aaronson et al.]... concludes that most of the decline in the labour force participation rate since the recession has been structural.... 'Our cohort-based model suggests that cyclical weakness was depressing the participation rate by about ¼ percentage point in 2014:Q2'...

As I said before, this smells to me like overfitting: I want a reconciliation with Moffitt et al. (2012) and also a much better reconciliation with the behavior of the prime-aged participation rate as well:

To quote Aaronson et al. (2006):

Increases in the participation rate of adult women likely stem from numerous structural factors.... It seems likely that new generations internalized many of these changes more easily than did mature cohorts, who had already made “sticky” choices.... Much of the change in the aggregate female participation rate appears to have resulted from progressively higher average participation rates of successive cohorts..... The participation rate for men in their prime working years... held steady during the strong labor market of the mid- to late-1990s. After turning down again during the 2001 recession, it has been fairly flat since 2002.

That is not the lead-in that would lead us to expect a conclusion that the 2.5%-point decline in prime-age participation since 2007 is "structural"...

Cardiff goes on:

The wider issue is that trends thought to be structural aren’t necessarily irreversible.... The dovish argument, to which we still subscribe, is that the only way to know is for the Fed to aggressively pursue [expansion until]... the labour market becomes so tight that employers feel they have no choice but to make work more attractive.... Year-on-year headline PCE inflation is 1.6 per cent through July, the last available reading--which also happens to be its average rate since the recession. That’s not only an extended period of undershooting 2 per cent, but also a staggering demand fail given what happened to labour markets in that period.... To further make incoming data, rather than time, the clear contingency on which to base monetary policy would be perfectly sensible...

One of the things that holds our society together is that our arms-length market transactions are not completely arms-length--that in nearly all (except our transactions with used-car salesmen and financial-market counterparties) have some element of reciprocal social solidarity-generating gift-exchange in them.

To try to break that is not "hospitality"--is not treating somebody like a guest. It is, rather, the reverse.

And so Kevin Drum is annoyed:

Kevin Drum: A Brief Note on Texas Hospitality "Jay Nordlinger had an unusual experience...

...with a taxi wrangler at the Dallas airport yesterday:

The man put my suitcase in a taxi’s trunk. I handed him a tip. He said, “No, no, we’re not allowed to take that.”I have been a fair number of places over the years — and I bet I could count refusals of a tip on one hand.... There is something I tell people who think they don’t like Texas: Just go there. That’ll cure you. Texas is distinctively hospitable, and the food, girls, etc., cannot be surpassed (though they can be matched).

For what it's worth, 'hospitable' is not the same thing as 'airport authorities don't allow employees to accept tips.' The former is a trait of people who are just being nice. The latter is something that CEOs force on their low-paid employees. There's a difference.

Over at Equitable Growth--The Equitablog

• Alexandra Mitukiewicz: A tale of two family-friendly policies - Washington Center for Equitable Growth
• Nick Bunker: The importance of workplaces in rising income inequality - Washington Center for Equitable Growth
• IS-LM as "Obfuscation"? No: Thursday Focus for September 11, 2014 - Washington Center for Equitable Growth
• Morning Must-Read: Henry Aaron, David Cutler, and Peter Orszag: Stop the Anti-Obamacare Shenanigan - Washington Center for Equitable Growth
• Morning Must-Read: Helene Jorgensen and Dean Baker: The Affordable Care Act: A Family Friendly Policy - Washington Center for Equitable Growth
• "Trapped in the 'Dark Corners'"?: Thoughts on Olivier Blanchard's "Where Danger Lurks": The Honest Broker for the Week of September 12, 2014 - Washington Center for Equitable Growth
• Exorbitant Privilege, Debt Capacity, and the Eurozone: A Puzzle in Economic Theory - Washington Center for Equitable Growth
• Afternoon Must-Read: Ryan Sweet and Adam Ozimek: U.S. Employment Outlook: Solving the Wage Puzzle - Washington Center for Equitable Growth
• Sam Wang Proposes a Senate Election Bet to Nate Silver - Washington Center for Equitable Growth
• What Is Special About Recessions in a "Monetary Economy": Trollng Nick Rowe: Wednesday Focus for September 10, 2014 - Washington Center for Equitable Growth
• Medicaid Expansion: Missed Opportunities by Red States - Washington Center for Equitable Growth
• Morning Must-Watch: Adam Posen: The Old Normal for The World Economy - Washington Center for Equitable Growth
• Over at Equitable Growth: Hoisted from the Weblog Archives, Reading Which Breaks My Heart, from Five Years Ago: Generating a Robust Recovery - Washington Center for Equitable Growth

Plus:

• Things to Read on the Morning of September 11, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Barry Eichengreen: The Rules of Central Banking Are Made to Be Broken
• Jared Bernstein: Larry Summers adds concerns about insufficient supply to those about inadequate demand… to which I ask, “why go there?”
• Matthew C. Klein: Wealth effect may one day stop being so great for wealthy, says wealthy person

1. Adam Posen: The Old Normal for The World Economy

2. Ryan Sweet and Adam Ozimek: U.S. Employment Outlook: Solving the Wage Puzzle: "The U.S. labor market has tightened, but wage growth remains mediocre at best. This appears counterintuitive: All else equal, falling rates of unemployment should prompt faster wage growth. Several potential explanations have been offered.... One is that the unemployment rate could be sending a false signal about the amount of slack in the job market. Another... blames pent-up wage deflation... firms could not cut nominal wages by as much as they wanted during the recession, and are thus reluctant to raise wages now.... Because the economies of U.S. states experienced different rates of recession and recovery, they offer a laboratory in which to test the pent-up wage deflation hypothesis.... In six states the unemployment rates are below NAIRU, while in four states it is 1.5 percentage points above full employment.... The pent-up wage deflation hypothesis predicts that wages will accelerate not steadily, but quickly once the tipping point is reached. While the data show some relationship between wages and the unemployment gap, the results show little evidence of an acceleration in wage growth as the economy approaches full employment. This suggests there is no pent-up wage deflation.... We believe the labor market still has considerable slack... includ[ing] workers unemployed longer than six months, those who left the workforce but will return once job opportunities appear, and part-timers who would prefer to work full time.... Because the unemployment rate is no longer an accurate measure of labor force, assumptions about the unemployment gap can produce incorrect expectations of when wages will accelerate..."

3. Helene Jorgensen and Dean Baker: The Affordable Care Act: A Family Friendly Policy: "Table 3 gives a breakdown of the distribution of part-time employment by age, gender, and whether or not the household has children. As can be seen, women accounted for the entire rise in voluntary part-time employment, with an increase of 3.2 percent in 2014 compared with 2013. By contrast, voluntary part-time employment for men actually fell slightly. Furthermore, it is younger workers, ages 16-35, who account for the bulk of the increase. The number of people in this age group voluntarily working part-time rose by 5.0 percent. By comparison it dropped by 5.2 percent for workers between the ages of 45-55. There were small rises of less than 1.0 percent for the other two age groups. The biggest increase in voluntary part-time is for young people with children. The percentage of employed young people with children working part-time increased 11.3 percent from 2013 to 2014. For young people with three or more children the percentage working part-time increased by 15.4 percent."

4. Henry Aaron, David Cutler, and Peter Orszag: Stop the Anti-Obamacare Shenanigans: "So far, opponents of the Affordable Care Act have lost every major battle to repeal or invalidate it. Some of them are now urging the courts to interpret the health reform law in a way that would guarantee its failure.... Having failed to undo the individual mandate to buy health insurance, opponents now claim that, under the law, subsidies for low- and moderate-income Americans to buy insurance may be paid only in those states--currently 14--that have set up their own online insurance exchanges. This would torpedo a central goal of the law: the expansion of coverage. At first, those of us who support Obamacare thought these claims were a joke. On July 22, the federal appellate court in Richmond, Va., rejected one such claim, but the same day, astonishingly, the federal appellate court for the District of Columbia Circuit ruled, 2 to 1, in favor of the plaintiff in a similar case, Halbig v. Burwell.... Now the opponents of Obamacare are asking the Supreme Court to immediately hear an appeal of the Richmond decision.... The law specifically instructed the secretary of health and human services to create and manage the exchanges for states that chose that option. And when the law was passed, everyone involved in the law’s passage understood that this directive vested federal exchanges with the same mission and authority as state-mandated exchanges.... Whatever one thinks of the Affordable Care Act, it is absurd to argue that its drafters intended to make insurance unaffordable."

5. Ricardo Hausmann: Why Are Growth Rates Converging Among Some and Diverging Among Others?: "When Adam Smith wrote The Wealth of Nations in 1776, per capita income in the world’s richest country--probably the Netherlands--was about four times that of the poorest countries. Two centuries later, the Netherlands was 40 times richer than China, 24 times richer than India, and ten times richer than Thailand. But, over the past three decades, the trend reversed. Now, the Netherlands is only 11 times richer than India and barely four times richer than China and Thailand.... Yet some countries are still diverging. While the Netherlands was 5.8, 7.7, and 15 times richer than Nicaragua, Côte D’Ivoire, and Kenya, respectively, in 1980, by 2012 it was 10.5, 21.1, and 24.4.... The economic expansion of the last two centuries has been based on an explosion of knowledge about what can be made, and how. An apt metaphor is a game of Scrabble.... Countries with few 'letters' lack incentives to accumulate more letters, because they cannot do much with any additional one: you would not want a TV remote control if you didn’t have a TV, and you would not want a TV broadcasting company if your potential customers lacked electricity. This trap becomes deeper the longer the alphabet and the longer the words..."

6. Duncan Black: Who Cares?: "I have theories, but I do get a bit puzzled by the intensity of general anti-immigrant (read: anti-latino immigrant) sentiment in this country. Not surprised that it exists, just surprise at the intensity of the issue in certain segments of the population. I'll switch back and forth between undocumented and documented immigrants a bit here probably, but what the hell could possibly motivate people to picket and scream at a bus full of refugee kids? On the flip side, here in the urban hellhole nobody seems to care. My fair city is hardly a shining example of racial harmony, but anti-immigrant sentiment appears to be incredibly muted. Of course it exists, it just doesn't seem to exist with any intensity in the city."

7. Kessler: Don't Be Fooled by Recent Hawkish Fed Commentary: "As we go into next week’s Fed meeting, the market has become consumed with the idea that the Fed funds rate may be raised earlier than the market expects.... A San Francisco Federal Reserve paper has pointed out that the Fed’s own expectations of when they will raise rates is on-average sooner than what the market... some Fed members have suggested it is time to remove a piece of language in the Fed statement promising a ‘considerable time' between the end of QE3 and the first rate rise.... The Fed’s own expectation of rate rises comes from a survey of the 16 FOMC participants.... Doing this math suggests that the Fed expects the Fed funds rate to be 1.20% by the end of 2015 but, the Fed Funds futures market is priced such that the Fed Funds rate will be 0.77% at the end of 2015, a difference of nearly two 0.25% rate hikes (0.43%). This is the crux of the SF Fed paper.... The markets are not simply unaware... the markets are... more dovish... because... Plosser... Lacker... and... Fisher... have wanted to raise rates with any excuse tracing back to 2008.... These three (and a few others), are afraid of something they have no evidence of (runaway inflation around any corner), and are too insulated from main street.... If the highest three votes in the Fed expectations survey are removed, the average Fed expectations align... with... the market.... The housing market has clearly rolled over, consumer spending hasn't shown life, and the all-important wage growth is lackluster. The mostly academic Fed is too smart to use the excuse of the ‘air’ of recovery to make a hawkish move. There is simply no reason for it.

8. Matthew C. Klein: Wealth effect may one day stop being so great for wealthy, says wealthy person

Over at Equitable Growth: Lars Syll reminds me of a snarky passage I have never approved of from Hyman Minsky:

Hyman Minsky: Minsky on the IS-LM obfuscation: "The glib assumption made by Professor Hicks...

...in his exposition of Keynes’s contribution that there is a simple, negatively sloped function, reflecting the productivity of increments to the stock of capital, that relates investment to the interest rate is a caricature of Keynes’s theory of investment... which relates the pace of investment not only to prospective yields but also to ongoing financial behavior.... The conclusion to our argument is that the missing step in the standard Keynesian theory was the explicit consideration of capitalist finance within a cyclical and speculative context... then the full power of the revolutionary insights and the alternative frame of analysis that Keynes developed becomes evident.... The greatness of The General Theory was that Keynes visualized [the imperfections of the monetary-financial system] as systematic rather than accidental or perhaps incidental attributes of capitalism.... Only a theory that was explicitly cyclical and overtly financial was capable of being useful... READ MOAR

FDR: Day by Day:

• 12:30am: FDR's train crossed the border at Rouse's Point, NY. At 0130 they were joined by a detail of four Royal Canadian Mounted Police who would accompany them to Quebec City, P. Q. and back from Quebec City, P. Q. to the border.

• 9:00am: FDR's train arrived at Wolfe's Cove station which is on the banks of the St. Lawrence River just below the Plains of Abraham.

• 9:45am: The Governor General of Canada (The Earl of Athlone), Her Royal Highness Princess Alice (The Countess of Athlone), and the Right Honorable William L. Mackenzie King (Prime Minster of Canada) called on FDR on his train.

• 10:00am: Prime Min. Churchill's train pulled up at Wolfe's Cove station. FDR's party and Prime Min. Winston S. Churchill's party exchanged greetings. Accompanying Winston S. Churchill were Lord Moran (Winston S. Churchill's private physician), Lord Leathers (Minister of War), Lord Cherewell (British Paymaster General); Adm. of the Fleet Sir Andrew B. Cunningham, First Sea Lord Field; Marshal Sir Alan F. Brooke, Chief of Imperial General Staff; Sir Charles Portal, Chief of Air Staff; Gen. Sir Hastings L. Ismay, Chief of Staff to Prime Min. Winston S. Churchill as Minister of Defense; and Maj. Gen. R. E. Laycock, Chief of Combined Operations.

• 10:25am: FDR and Prime Min. Churchill arrived at the Citadel. Here FDR was officially received into Canada. A composite guard of honor of approximately 150 men, made up of equal detachments of Royal Canadian Navy, Army, and Air Force personnel was drawn up on the parade ground. News photographers and members of the press, some one hundred strong were present at the ceremonies.

• 1:30pm: FDR, Prime Min. Winston S. Churchill, ER, Mrs. Churchill and Prime Min. William L. Mackenzie King were luncheon guests of the Gov. Gen. Earl of Athlone and Princess Alice at the Citadel.

• 3:00pm: FDR and Prime Min. Winston S. Churchill met in FDR's Map Room to review the latest news of the war.

• 4:30pm: Ray Atherton, United States Ambassador to Canada, called on FDR.

• 8:30pm: FDR, ER, attended a viceregal dinner at the Citadel as guests of the Gov. Gen. Earl of Athlone and Her Royal Highness Princss Alice. The guest list also included Prime Min. and Mrs. Churchill; Prime Min. William L. Mackenzie King; Cardinal Villeneuve; Right Reverend Phillip Carrington, Anglican Archbishop of Quebec; Premier Duplessis of Quebec; Ray Atherton and Mrs. Atherton; Adm. William D. Leahy, Gen. George C. Marshall, Gen. Henry H. Arnold, Adm. Ernest J. King, Stephen T. Early; Lt. Gen. B. B. Somervell, Commanding General, Army Service Forces; Rear Adm. Wilson Brown; Vice Adm. Ross T. McIntire; Maj. Gen. Edwin M. Watson; Miss Malvina Thompson; Right Honorable Malcolm MacDonald, United Kingdom High Commissioner to Canada; Adm. of the Fleet Sir Andrew B. Cunningham; Field Marshal Sir Alan Brooke; Marshal of the Royal Air Force Sir Charles Portal; Maj. Gen. R. Laycock; Gen. Sir Hastings L. Ismay; Field Marshal Sir John Dill, Chief of the British Joint Staff Mission to the United States; Adm. Sir Percy Noble; Lt. Gen. G. N. Macready; Air Marshal Sir William Welsh; Lord Cherwell; Comdr. C. R. Thompson, Naval Aide to Prime Min. Winston S. Churchill; John Martin, Secretary to Prime Min. Winston S. Churchill; Sir Eugene Fiset, Lt. Gov. of Quebec and Lady Fiset; Dr. E. H. Coleman, Canadian Under-Secretary of State; the Canadian Chiefs of Staff Air Marshal R. Leckie, Lt. Gen. J. C. Murchie, and Vice Adm. G. C. Jones; Maj. Gen. Maurice Pope, Military Aide to Prime Min. Winston S. Churchill; and Col. D. B. Papineau, Aide to Prime Min. William L. Mackenzie King. Quebec, Canada

• 11:00pm: Retired

Henry Aaron, David Cutler, and Peter Orszag: Stop the Anti-Obamacare Shenanigans: "So far, opponents of the Affordable Care Act...

...have lost every major battle to repeal or invalidate it. Some of them are now urging the courts to interpret the health reform law in a way that would guarantee its failure.... Having failed to undo the individual mandate to buy health insurance, opponents now claim that, under the law, subsidies for low- and moderate-income Americans to buy insurance may be paid only in those states--currently 14--that have set up their own online insurance exchanges. This would torpedo a central goal of the law: the expansion of coverage. At first, those of us who support Obamacare thought these claims were a joke. On July 22, the federal appellate court in Richmond, Va., rejected one such claim, but the same day, astonishingly, the federal appellate court for the District of Columbia Circuit ruled, 2 to 1, in favor of the plaintiff in a similar case, Halbig v. Burwell.... Now the opponents of Obamacare are asking the Supreme Court to immediately hear an appeal of the Richmond decision.... The law specifically instructed the secretary of health and human services to create and manage the exchanges for states that chose that option. And when the law was passed, everyone involved in the law’s passage understood that this directive vested federal exchanges with the same mission and authority as state-mandated exchanges.... Whatever one thinks of the Affordable Care Act, it is absurd to argue that its drafters intended to make insurance unaffordable.

I must say that Republican governors and state-level legislators are already furious at John Roberts for how he forced them to alienate either their activist Tea Party base or their fund-raising medical base over Medicaid expansion. They would be even more furious if Roberts forced them to go through the same thing again--this time not over Medicaid expansion but over state exchange establishment.

Helene Jorgenson and Dean Baker think that ongoing labor-force and work-hour reductions are good things--people being freed from job lock by the availability of health insurance via ObamaCare:

Helene Jorgensen and Dean Baker: The Affordable Care Act: A Family Friendly Policy: "Table 3 gives a breakdown of the distribution of part-time employment by age, gender, and whether or not the household has children. As can be seen, women accounted for the entire rise in voluntary part-time employment, with an increase of 3.2 percent in 2014 compared with 2013. By contrast, voluntary part-time employment for men actually fell slightly. Furthermore, it is younger workers, ages 16-35, who account for the bulk of the increase. The number of people in this age group voluntarily working part-time rose by 5.0 percent. By comparison it dropped by 5.2 percent for workers between the ages of 45-55. There were small rises of less than 1.0 percent for the other two age groups. The biggest increase in voluntary part-time is for young people with children. The percentage of employed young people with children working part-time increased 11.3 percent from 2013 to 2014. For young people with three or more children the percentage working part-time increased by 15.4 percent."

Over at Equitable Growth: "Trapped in the 'Dark Corners'"?: Thoughts on Olivier Blanchard's "Where Danger Lurks"

Olivier Blanchard, inveighing against "ergodicity" and "linearity" as assumptions, sounds like some post-Keynesian from the 1980s. They were right then. He is right now:

Olivier Blanchard: Where Danger Lurks: "One has to go back to the so-called rational expectations revolution...

...What was new was the development of techniques to solve models under the assumption that people and firms did the best they could in assessing the future. (A glimpse into why this was technically hard: current decisions by people and firms depend on their whole expected future. But their whole expected future itself depends in part on current decisions.) These techniques... made sense only... [if] economic fluctuations were regular enough so that, by looking at the past, people and firms (and the econometricians)... could understand their nature and form expectations... and simple enough so that small shocks had small effects.... Thinking about macroeconomics was largely shaped by those assumptions....

How different are reserve-currency issuing sovereigns with exorbitant privilege?

With the exception of the Great Contraction of 1929-1933, ever since 1914 with the beginning of World War I--no, ever since 1896 and the full-scale exploitation of the gold mines of the Witwatersrand--the rate of interest on the world's fundamental monetary security, the bonds of the sovereign or four whose assets serve as global reserves, has invariably been less than the growth rate of the global economy's potential output, and has often in real terms been less than zero. The deflation of 1929 to 1933 will never come again.

A little more evidence to move you slightly, slightly toward the position that the unemployment rate is exaggerating the extent to which the economy has moved toward full employment...

Ryan Sweet and Adam Ozimek: U.S. Employment Outlook: Solving the Wage Puzzle: "The U.S. labor market has tightened...

...but wage growth remains mediocre at best. This appears counterintuitive: All else equal, falling rates of unemployment should prompt faster wage growth. Several potential explanations have been offered.... One is that the unemployment rate could be sending a false signal about the amount of slack in the job market. Another... blames pent-up wage deflation... firms could not cut nominal wages by as much as they wanted during the recession, and are thus reluctant to raise wages now.... Because the economies of U.S. states experienced different rates of recession and recovery, they offer a laboratory in which to test the pent-up wage deflation hypothesis....

In six states the unemployment rates are below NAIRU, while in four states it is 1.5 percentage points above full employment.... The pent-up wage deflation hypothesis predicts that wages will accelerate not steadily, but quickly once the tipping point is reached. While the data show some relationship between wages and the unemployment gap, the results show little evidence of an acceleration in wage growth as the economy approaches full employment. This suggests there is no pent-up wage deflation.... We believe the labor market still has considerable slack... includ[ing] workers unemployed longer than six months, those who left the workforce but will return once job opportunities appear, and part-timers who would prefer to work full time.... Because the unemployment rate is no longer an accurate measure of labor force, assumptions about the unemployment gap can produce incorrect expectations of when wages will accelerate...

Sam Wang: Is Nate Silver a little too excited about his model?: "Really, the GOP has an 25% chance (3-1 odds)...

...of getting 54 or more seats? I’d put it at more like 5%. Even 53 GOP seats is a fairly outside outcome. If a betting person were offered the chance to put up $3000 against Nate Silver’s $1000 on that outcome... that would be taking his money...

Over at Equitable Growth: Nick Rowe has a nice, intuitive, monetarist take on the core of macroeconomics. But he keeps failing to convince me completely. And I keep failing to make my objections clear in a way that convinces him I have a point rather than simply being a Crazy-Old-Keynesian-Yelling-at-Clouds. Let me try it again:

The way Nick sees it, The key is money demand and money supply (at full employment). When money demand is greater than money supply, people try to cut their spending hello their income in order to build up cash balances. The problem, of course, is that one person spending is another person's income. So everyone's income falls until everyone's income is so low that people in aggregate no longer wish to build up their cash balances right now. And there the economy sits, depressed, until something happens to balance money demand and money supply (at full employment). [READ MOAR:]

I put this aside at the time because the CEA's analysis seemed to me to be likely to be wrong in two areas:

1. Their short-run Keynesian multipliers looked low to me for large states, and for states surrounded by other non-expanding states.

2. In a long-run model in which we assume "full" or "normal" employment, increased federal government spending does not add to national GDP, but where the federal government dollars are spent redistributes economic activity around the country: Texas, Kansas, Missouri, Virginia, Louisiana, and company lose; and California, Oregon, Colorado, Illinois, New York, and Massachusetts gain; to the tune of a Moretti-style regional multiplier by which $1 of extra federal spending acts as do $1 of regional exports and so attract enough labor, capital, and enterprise to boost state-level economic product by $1.

But I never wrote up my long comment on the CEA's report, and so it is time to declare commenting bankruptcy on this one...

Adam Posen: The Old Normal for The World Economy:

Over at Equitable Growth: Hoisted from the Archives from Five Years Ago: [Generating a Robust Recovery}(Generating a Robust Recovery) Economic Policy Institute:

Macroeconomic Policy for a Stronger Recovery

J. Bradford DeLong
Professor of Economics, U.C. Berkeley
Research Associate, NBER

September 30, 2009

A Little Background

About a year and a half ago—in the days after the forced merger of Bear Stearns into J.P. MorganChase, say—there was a near consensus of economists that an additional dose of expansionary fiscal policy was unlikely to be necessary. The Congress had passed a first round of tax cut-based stimulus, the impact of which in the summer of 2008 is clearly visible in disposable personal income and perhaps visible in the tracks of estimated monthly real GDP. The near-consensus belief back then, however, was that that was the only expansionary discretionary fiscal policy move that was appropriate. READ MOAR

World War II Today: From Victor Klemperer: The Bitter End: The Diaries of Victor Klemperer 1942-45:

What is happening in the war? This morning Frau Cohn relates: ‘They fetched five women (Aryans, that is) from the Sachsenwerk plant, because they said [the Allies] had already reached Metz, a soldier’s wife denounced them.’ In the afternoon Eva reported from the military bulletin: ‘Engagements by Metz’.

And Eva reports via Winde and Simon: The English have declared, the larger part of the island is no longer being blacked out, it is no longer necessary. They have also declared, however, that there is a pause in the advance, troops have to be brought up.

Over at Equitable Growth--The Equitablog

• Morning Must-Read: Walter Frick: Social Insurance and Surmounting Anti-Entrepreneurial Job Lock - Washington Center for Equitable Growth
• Morning Must-Read: Jonathan Chait: Why the Worst Governments in America Are Big Small Local Governments - Washington Center for Equitable Growth
• Lunchtime Must-Read: Marika Cabral, Michael Geruso, and Neale Mahoney: Does Privatized Health Insurance Benefit Patients or Producers? Evidence from Medicare Advantage - Washington Center for Equitable Growth
• Lunchtime Must-Read: Jens H.E. Christensen and Simon Kwan: Assessing Expectations of Monetary Policy - Washington Center for Equitable Growth
• Afternoon Must-Read: Andrew Harless: Employment, Interest, and Money: An Ultraminimalist Model of the Beveridge Curve, or, How I Learned to Start Worrying and Love Structural Unemployment - Washington Center for Equitable Growth
• Inbox Zero Again!! - Washington Center for Equitable Growth
• Morning Must-Read: Andreas Fuster, Basit Zafar, and Matthew Cocci: Why Aren’t More Renters Becoming Homeowners? - Washington Center for Equitable Growth
• Morning Must-Read: Ryan Cooper: It's Time for a Universal Basic Income - Washington Center for Equitable Growth
• Ain't It Fun, Living in an r < n+g World?: Tuesday Focus for September 9, 2014 - Washington Center for Equitable Growth
• Morning Must-Read: Martin Wolf: Europe Must Do Whatever It Takes - Washington Center for Equitable Growth

Plus:

• Things to Read on the Morning of September 10, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• James Hamilton: Other perspectives on the new bond market conundrum
• Paul Krugman: Scots, What the Heck?
• Antonio Fatas: Antonio Fatas on the Global Economy: Whatever it takes to see helicopter Mario (Draghi)
• Cordell Eddings: You Missed $1 Trillion Return Agreeing With Fed Naysayers
• Thomas Picketty and Emmanuel Saez: “A Theory of Optimal Inheritance Taxation,” Econometrica 81 (2013)
• Adair Turner: Facing Reality in the Eurozone
• Jérémie Cohen-Setton: The shift in the Beveridge curve

Martin Wolf: Europe has to do whatever it takes: "In the second quarter of this year...

...real domestic demand in the eurozone was 5 per cent lower than in the first quarter of 2008. The eurozone’s unemployment rate has risen by just under 5 percentage points since 2008. In the year to July 2014, consumer price inflation in the eurozone was 0.4 per cent.... The eurozone is in a depression; lack of demand has played a crucial role; and the European Central Bank has failed to deliver on its own price-stability target. This is not just sad. It is dangerous. It is folly to assume continued stability if economic performance does not improve. A necessary, though not sufficient, condition for grappling with these challenges is understanding them.... Mario Draghi... the one senior eurozone policy maker who shows a grasp of the issues, made a vital contribution at this year’s Jackson Hole symposium.... The capacity of the peoples of member states to tolerate high unemployment and deep slumps has been impressive. But it cannot be unlimited. If that is what the powers that be continue to advocate, the result will probably be a populist reaction.... Who is sure Marine Le Pen, leader of the far right National Front party, will not be the next president of France? Who would follow Matteo Renzi, Italy’s prime minister, if he failed? Yes, these member states need to act. But they surely need support. Mr Draghi has shown the way. The eurozone must follow.

Over at Equitable Growth: Consider r, the required real rate of interest on government debt, and the sum of n, the labor-force growth rate, and g, the labor productivity growth rate.

When r > n+g, the case for budget surpluses and lowering the debt is strong. We believe that private investments are even more productive to society than the market rate of return on private capital formation tells us. We believe that there are private knowledge and other spillovers from private capital formation. We believe that the quasi-rents from past investments are shared among all those with market power who participate in production. Thus when the government borrows and spends, it crowds out private investments that are very profitable to society as a whole. This point is strengthened by the danger of a runaway government financial crisis should a default premium begin to incorporate itself into government borrowing rates. This point is limited only by intergenerational equity considerations: that if we think the future will be richer than the present, committing funds now to private capital formation rather than to private and government consumption worsens intergenerational inequality. READ MOAR

From Sewell Tyng: The Campaign of the Marne:

The day of September 8th had been a particularly hard one for the French. The Ninth Army heavily engaged on its left, with its centre yielding and its right almost broken, had engaged every available battalion and no further reserves remained. In vain Foch appealed to De Langle, his neighbour to the east. The Fourth Army too was fighting a desperate battle around Vitry-le-François and had no means of lending support. The 21st Army Corps (Legrand-Girarde) which Joffre had brought from Lorraine to fill the gap between the Fourth and Ninth Armies was still ten kilometres away at nightfall.... It was at this crisis that Foch is reported to have sent his celebrated dispatch to Joffre:

Hard pressed on my right. My centre is yielding. Impossible to manoeuvre. Situation excellent. I am attacking....

The extremely thoughtful Adrianna Macintyre looks down the Mississippi:

Adrianna Macintyre: GAO slams HHS over Arkansas’s Medicaid expansion budget: "On Monday, the Government Accountability Office issued a report...

...taking HHS to task for failing to assure budget neutrality in Arkansas’s Medicaid expansion, which uses Medicaid dollars to fund enrollment in private plans through the state exchange. Excerpted....

HHS did not ensure budget neutrality. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data to support the state’s assumptions.... The 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services provided to adult beneficiaries under the traditional Medicaid program.

Ryan Cooper: America is running out of jobs. It's time for a universal basic income: "The politics of a guaranteed income get a lot easier...

when you acknowledge that the U.S. is no longer the land of opportunity.... The fundamental bargain of American society is that for anyone willing to hustle, there is a decent job to be found, or one that will at least prevent abject destitution. It underpins our national mythos as the land of opportunity and self-reliance. It has always been less true than anyone wanted to admit, but for an increasingly large fraction of the population--start with the 16 percent of Americans who regularly don't have enough to eat--it's a sick joke.... One can easily imagine the historical process described by Marx going in reverse. In today's labor market, where there are still twice as many job seekers as job openings, the constant conservative carping about the 'dignity of work' sounds more jarring and vindictive by the day. As someone with a nice, stimulating job, I agree that work can help people flourish. But in an economy that is flatly failing to produce enough jobs to satisfy the need, a universal basic income will start to seem more plausible--even necessary.

Andreas Fuster, Basit Zafar, and Matthew Cocci: Why Aren’t More Renters Becoming Homeowners?: "With a stronger economy and eased credit standards...

...flows into homeownership would pick up. However, one caveat is that many potential buyers with relatively low credit scores (35 percent of renters in our sample think that their credit score is below 680) might now be 'discouraged', meaning that they are convinced that they would not be granted credit and thus may fail to apply for a mortgage even after an easing in standards. Also, relaxing credit standards may, of course, have undesirable consequences down the road, since borrowers with lower credit scores are at higher risk of default.

World War II Today :The V2:

Allied intelligence knew about the V2 but had little information on how close the Germans were to making them operational. In fact the Germans had been struggling with the problem of the V2 rockets exploding in mid air. On 30th August they had introduced modifications which seemed to have solved the problem. Just before noon on the 8th a German rocket battery in occupied Belgium had pumped eight tons of alcohol and liquid oxygen into their rocket and fired it at Paris. Six people were killed and thirty-six injured.

At 6.43pm that day Chiswick, west London was rocked by a massive explosion, closely followed by another boom that was heard across London. The first explosion had been real enough--caused by 760 kilos of Amatol. The explosion that was heard just after it was the supersonic missile breaking the sound barrier as it re-entered the atmosphere. It had been just minutes since the missile had left the Hague in Holland.

Three people had been killed in Staveley Road, Chiswick, although casualties were light given the thirty feet wide, eight foot deep crater.

The Brentford and Chiswick Air Raid Precautions centre reported Incident 636 of the war:

Eleven houses demolished, 15 seriously damaged and evacuated. Blast damage to 516 houses. St Thomas rest centre opened to house sixteen. The WVS [Women’s Voluntary Service] incident inquiry point opened to the 10th. 14 families re-housed, three billeted.

Attempts by the Press to report the ‘Mystery Explosion’, the site of which had been visited by several unusually senior military figures and politicians, were blocked by the censor. Locally the reason given was ‘a Gas Main explosion’. Over the following weeks Londoners were to become familiar with this phrase.

See Christy Campbell: Target London: Under attack from the V-weapons during WWII

Outsourced to Richard Mayhew:

Richard Mayhew: Shame would be a good thing Public shame would be a wonderful thing...

for our political and policy processes. Abbe Gluck at Politico notes another hole and potential legally sanctionable set of statements from the Halbig team:

It is no secret that the people bringing the challenge to the Obamacare subsidies in the Halbig and King cases—challenges now seeking review from both the full D.C. federal appellate bench and the U.S. Supreme Court after federal appellate courts in Virginia and D.C. came out in opposite ways last month—are some of the same people who brought the 2012 constitutional challenge to the Affordable Care Act before the high court (the same counsel, and one of the same plaintiffs). What’s less known, however, is that in the 2012 constitutional case, these same challengers filed briefs describing Obamacare to the court in precisely the way they now say the statute cannot possibly be read. Namely, they assumed that the subsidies were available on the federal exchanges and went so far as to argue that the entire statute could not function as written without the subsidies…. From their reply brief…

Annalee Newitz: 8 Things We Can Do Now to Build a Space Colony This Century: "We talked to scientists and experts about the fundamental things they think we should do right now...

...if we want to have a space colony in the next 100 years.

1. Save Earth: NASA astronomer Amy Mainzer, who studies Near Earth Objects at JPL, says our number one priority has to be here on our home planet. She told io9 that it's a pretty inhospitable universe out there, so our space colonies will probably never replace home:

   From my perspective, the most important thing we can do to be prepared for any activity far in the future is try not to wipe out life here.... The defining challenge of the next hundred years is to come to grips with creating a sustainable future here, as a minimum precursor to building a sustainable future anywhere else.

2. Change the Way the U.S. Government Plans Space Missions: Ariel Waldman....

   If the nation decides to begin a space colony outside of low Earth orbit, you need to talk about changing the way NASA does business. Currently, NASA engages in a capabilities-based and/or "flexible path" approach in which technologies are developed with no specific set of missions in mind.... The National Academy of Sciences' Committee on Human Spaceflight... recommend[s]... NASA switch to a "pathways" approach... [with[ a horizon goal... [and] a very specific set of stepping stones along the way.... As far as technologies needed for a pathway that leads to Mars, the committee assessed 10 high priority areas in terms of the technical challenges. The 10 high priority areas are: Mars Entry, Descent and Landing (EDL), Radiation Safety, In-Space Propulsion and Power, Heavy Lift Launch Vehicles, Planetary Ascent Propulsion, Environmental Control and Life Support System (ECLSS), Habitats, Extravehicular Activity (EVA) Suits, Crew Health, and In-Situ Resource Utilization (ISRU - using the Mars atmosphere as a raw material).

3. Develop 3D Printing in Space: Les Johnson suggests:

   3D printing and the rocket engine are the two inventions that will eventually enable space settlement. With 3D printing you can cut that supply chain and make all the spare parts you need locally.... A colony cannot survive if it is dependent upon a supply chain from Earth. We must mine asteroids for their raw materials (making solar arrays, colony structural materials, etc from the raw materials in Near Earth Asteroids)....

4. Let Space Tourists Take Vacations in Orbital Hotels: Seth Shostack... heads up the SETI Institute.... He said that our best bet is to create a thriving space tourism industry today.... He told io9:

   At space conferences, people interested in commercializing space want to build small hotel rooms in orbit.... The big problems here are not technical--they are liabiltiy. But there is a market.... at any price point for putting people in orbit. So the first eight space hotel rooms are expensive, but then it's cheaper for next eight....

5. Figure Out How Ecosystems Work:... Hedvig Nenzen... gave us the lowdown on all the things we need to research now if we ever hope to terraform a barren world:

   I'm going to assume that we find a new planet without an ecosystem already on it. Thus, in order to live in space we will have to build something from scratch with species we bring us. Scientists are realizing that it's more and more difficult to make an ecosystem from nothing, and to know how exactly the new ecosystem might work. There are just so many details and parts in an ecosystem that we don't understand yet....

6. Build a Giant Sun Umbrella with Robots: UC Berkeley economist Brad De Long, who has written a great deal about how robots will change our future economy, noodled around late one night with a few robot-fueled ideas he shared with io9:

   It seems clear to me at least that anything done at or inside the moon's orbit over the next century will be better done by teleoperated robots, because beyond the van Allen belt and the atmosphere we become very heavy creatures that need not only water but also sheaths of lead. So I have been trying to think of something we might need to do far enough outside the moon's orbit that teleoperated robots won't do it, and that would be wildly profitable--as the late Jim Baen liked to say, successful space travel and space colonization will be exothermic, not endothermic....

   The big one, of course, is the giant sun umbrella at L1, 930,000 miles away. That is far enough that teleoperated robots controlled from a local station shielded against solar storms and cosmic rays might do much better then robots with a 10 second response leg controlled from earth, and that might be a vastly cheaper way of dealing with global warming successfully then hoping for the nuclear/better solar fairies to show up.

   Were I NASA, I would be planning for the sunshade now—both the Earth-control 10 second lag teleoperated robot and the local station controlled versions. And, of course, the moon base—perhaps robot only, alas!—for manufacturing the station would make lifting it out of the gravity well to L1 much cheaper.

7. Study How DNA Repairs Radiation Damage: Sylvain Costes is a molecular biologist at Lawrence Berkeley Labs.... He has some advice.... He told io9:

   To colonize another planet, you need to focus on biology. The best way to deal with radiation is to take nutrients that will protect you, like antioxidants. Of course, you need the right ones. NASA and other groups have shown that there are a lot of nutrients blueberries, and more efficient ones, that will protect you against radiation. It won't stop radiation, but it can mitigate the effects....

   Costes believes we need to plan for space colonies by discovering better anti-oxidants, adopting a "risk management" approach to space travel. He also notes that it's possible that some people simply may not be able to thrive in space, because their DNA doesn't recover from damage as easily as other people's.

8. Educate People About Our Connection to Space: Mae Jemison... the most important first step is education:

   If we are to have any hope of having a robust, healthy nation of humans living, working, growing up and excelling happily in space we have to reconnect people here on Earth today with their ancient space heritage! The task is to get people to feel that we, like our ancestors, are linked to the stars above, not just the ground beneath our feet. And to know that what we prepare now builds the future. Teach that the reason we can predict aspects of flooding today is because everyday people thousands of years ago noticed the connection of the tides to phases of the moon. And they created calendars based on the movement of the stars. Call weather and crop satellite pictures "images from space," or GPS directions "satellite navigation."... But just a rational discussion won't do it; to feel it, let's make sure that at least once a year we go outside at night with all the lights off and experience a star-studded vista!

This time only 295 conversations snoozed to later. We are making progress!

Cf. September 3, 2014: Is It Really "Inbox Zero" If You Have Snoozed 335 Conversations to "Later"?

Andrew Harless: Employment, Interest, and Money: An Ultraminimalist Model of the Beveridge Curve, or, How I Learned to Start Worrying and Love Structural Unemployment: "The cumulative sum of the residuals peaks in July 2006...

...suggesting that there may be a structural break in August. A casual look at the residuals strongly suggests another structural break in July 2010. Both purported structural breaks go in the same direction: a decline in the number of hires associated with any given number of job openings. So, contrary to what I said in 2010, it does look like we are seeing more structural unemployment now than in the past.... So what does all this imply about the natural rate of unemployment?... If the relationship between hiring and unemployment is stable, as it appears to be, then my model implies that shifts in the matching function will determine a shifting relationship between the (assumed constant) NAIRV and the NAIRU (Non-Accelerating Inflation Rate of Unemployment, a.k.a. the natural rate of unemployment). For what it’s worth, my estimates suggest that the hypothesized August 2006 and July 2010 shifts in the matching function would, collectively, increase the NAIRU by a factor of about one and a third. So if the NAIRU was 4.5% (my best guess, which happens to be conveniently divisible by 3) in July 2006, it is 6% now...

Jens H.E. Christensen and Simon Kwan: Assessing Expectations of Monetary Policy: "An ongoing concern has been that the public might misconstrue the Fed’s forward guidance...

...about future monetary policy and underappreciate the extent to which short-term interest rates may vary with future news about the economy. Evidence based on surveys, market expectations, and model estimates show that the public seems to expect a more accommodative policy than Federal Open Market Committee participants. The public also may be less uncertain about these forecasts than policymakers."

Marika Cabral, Michael Geruso, and Neale Mahoney: Does Privatized Health Insurance Benefit Patients or Producers? Evidence from Medicare Advantage: "The debate over privatizing Medicare...

...stems from a fundamental disagreement about whether privatization would primarily generate consumer surplus for individuals or producer surplus for insurance companies and health care providers. This paper investigates this question by studying an existing form of privatized Medicare called Medicare Advantage (MA). Using difference-in-differences variation brought about by payment floors established by the 2000 Benefits Improvement and Protection Act, we find that for each dollar in increased capitation payments, MA insurers reduced premiums to individuals by 45 cents and increased the actuarial value of benefits by 8 cents. Using administrative data on the near-universe of Medicare beneficiaries, we show that advantageous selection into MA cannot explain this incomplete pass-through. Instead, our evidence suggests that insurer market power is an important determinant of the division of surplus, with premium pass-through rates of 13% in the least competitive markets and 74% in the markets with the most competition.

**Walter Frick: If Your Kids Get Free Health Care, You’re More Likely to Start a Company: "Starting a business is risky enough in the best of circumstances...

...Most new ventures fail, and the prospect of forgoing a salary is enough to keep many would-be entrepreneurs from taking the plunge. But think about how much harder it would be if your child had a health condition, and you couldn’t get her insurance if you struck out on your own. That’s less of a problem in the U.S. than it was a few years ago, thanks to Obamacare, but until recently it was a very real conundrum.... Gareth Olds of Harvard Business School... analyzed Census data from before and after the passage of the Children’s Health Insurance Program in the U.S.... The self-employment rate for CHIP recipients increased from just under 15% of those eligible to over 18%. That amounts to an a 23% increase. The rate of ownership of incorporated businesses--a better proxy for sustainable, growth entrepreneurship--increased even more dramatically, from 4.3% to 5.8%, an increase of 31%.... The basic intuition behind his methods is that a family just above the CHIP cutoff isn’t all that different from a family just below it...

Jonathan Chait: Why the Worst Governments in America Are Big Small Local Governments: "Police militarization bore only the faintest responsibility for the tragedy in Ferguson....

...Old-fashioned policing tools were all the Ferguson police needed to engage in years of discriminatory treatment, to murder Michael Brown, and to rough up journalists covering the ensuing protests.... Ferguson has exposed a genuine opening for thinking about public life in a way that cuts across traditional ideological lines. The problem is what you might call Big Small Government.... Ferguson... is an Orwellian monstrosity. Its racially-biased Police Department is the enforcement wing of a predatory system of government described in scathing detail in a recent report by ArchCity Defenders... an instrument of fiscal (in additional to social) domination. Court fines account for a fifth of the city’s revenue. Police officers disproportionately search black drivers.... The city issues three warrants per household, and its draconian justice system appears designed to bleed its victims. The report notes, 'A Ferguson court employee reported that the bench routinely starts hearing cases 30 minutes before the appointed time and then locks the doors to the building as early as five minutes after the official hour, a practice that could easily lead a defendant arriving even slightly late to receive an additional charge for failure to appear.'...

There are not many people who find their freedom so unjustly impaired by the government in Washington as the people of Ferguson are by their local government.... Big Small Government is all around us. We simply haven’t trained our minds to notice it... both right and left have exhibited forms of this mental block.... Why do coastal states lack affordable housing? Because regulations prevent dense construction.... Here is a genuine case of onerous regulation with dire economic consequences.... Or consider occupational licensing. Some 29 percent of American workers need a state-issued license in order to legally do their job.... Income inequality isn’t just about low taxes for the rich and generous compensation for executives; it’s also about the difficulty working-class Americans have getting a job as a barber or a dental hygienist. These regulations don’t exist because of a popular outcry from voters terrified that the person they hire to help them pick out new drapes may lack formal training for the job. They exist because they serve the narrow interests of tradesmen...

Menzie Chinn: Wisconsin Forecasted to Lag Further Behind Minnesota, and Kansas travels its own path...

...Bruce Bartlett brings my attention to this article noting Minnesota’s economic performance. This reminded me to check on the Philadelphia Fed’s forecast.... The cumulative growth gap between Minnesota and Wisconsin (relative to 2011M01) is forecasted to grow--rather than shrink--over the past six months.... The cumulative growth gap between Kansas and the Nation is also forecasted to rise, from the current gap of 2.7%, to 3.2%, in just the next six months...

The blue states have shot themselves in the foot with respect to overall economic growth--although not with respect to growth in per-capita income, and definitely not with respect to growth in per-capita wealth--via excessive NIMBYism. (And, I would argue, via blowback from Republican state-level tax-limitation initiatives like Proposition 13 and Proposition 2 1/2: with development population growth make the lives of state and local government officials harder and not easier, you greatly diminish the political voices for American pro-development boosterism. Blame Howard Jarvis for the fact that people from Texas cannot afford to move to the better-paying jobs waiting for them in California.)

Now the red states are shooting themselves in the foot definitely with respect to growth in per-capita income, definitely definitely with respect to growth in per-capita wealth, and now--perhaps--respect to the pace of overall economic growth as well. It will be interesting to see how much of a drag this "We don't need no infrastructure/We don't need no Medicaid expansion/No common core in the classroom/Biologists! Leave them kids alone!" red-state political equilibrium exerts on the regional distribution of economic activity over the next decade. Will it be enough to offset the Hispanic population influx and the continued transition to the full air-conditioning equilibrium?

Over at Equitable Growth--The Equitablog

• Why Is Anybody Surprised That the Job Shortage Continues for so Long? In Which I Troll Noah Smith for a Lazy Monday Morning...: Featured for September 8, 2014 - Washington Center for Equitable Growth
• Weekend Night Thoughts on the Rhetoric of Policy Argument Today - Washington Center for Equitable Growth
• EVENT - Building a Strong Foundation: Understanding Whether and How Economic Inequality Affects Economic Growth - Washington Center for Equitable Growth
• Evening Must-Read: Peter Diamond: Unemployment: On the Beveridge Curve - Washington Center for Equitable Growth
• Evening Must-Read: Michael Hiltzik: That Double-Digit Rise in Obamacare Premiums? Not Happening - Washington Center for Equitable Growth
• Me at Bloomberg: The Low U.S. Job Participation Rate Looks to Be (Mostly) (Still) Cyclical - Washington Center for Equitable Growth
• Evening Must-Read: Michael Strain: Conservatives, Wake Up: The Tax Code Is Not Your Biggest Problem - Washington Center for Equitable Growth

Plus:

• Things to Read at Night on September 7, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Noah Smith: Macroeconomics Gets Sucked Into Dark Corners
• Tim Harford: Why inflation remains best way to avoid stagnation
• Daniel Drezner: Has Politico Hit Peak Strawman?
• Eric Wemple: 7 problems with Politico Magazine’s [Michael Hirsh's] hit piece on Glenn Greenwald

1. Michael Strain: Conservatives, wake up: The tax code is not your biggest problem: "Our health-care system is in need of serious reforms. The Affordable Care Act is an ugly package filled with unintended consequences. One of those consequences is a significantly smaller labor force. It should be repealed and replaced with a conservative alternative. And health-care costs are projected to put Medicare and Medicaid spending on an unsustainable and destructive path, and are putting downward pressure on wages and salaries. I would make progress with conservative health-care reforms before worrying about tax reform. It’s a bigger economic problem today--and it’s a problem that will only grow in importance over the coming years..."

2. Michael Hiltzik: That predicted double-digit rise in Obamacare premiums? Not happening: Another stake in the heart of a popular anti-Obamacare claim has arrived from the Kaiser Family Foundation, which compiled the projected premium changes for 2015 in 15 states and the District of Columbia. Its finding is that premiums for the lowest-cost, most popular individual health plans will be dropping for next year, by a nationwide average of 0.8%.... 'Now that insurers have been able to see what their competitors are charging... they are making strategic adjustments in how they price...' [said the] Kaiser Family Foundation, explaining why healthcare premiums are holding steady.... That's just one of several indicators recently released that demonstrate that the Affordable Care Act is working as planned and that the parade of horribles so deeply relished by its opponents hasn't materialized."

3. Peter Diamond: Video: Unemployment "Debates about higher structural unemployment occur when unemployment has stayed high. With monthly publication of the US Beveridge curve (the relationship between the unemployment and vacancy rates), the recent debate has focused on the shift in the Beveridge curve and whether the shift will be lasting long enough to move the full-employment point. The curve appears stable through the NBER identified business cycle through in June 2009 or possibly the month of the maximal unemployment rate in October 2009. This shift in the Beveridge curve, with the economy experiencing a higher level of unemployment than before for the same level of the vacancy rate, suggests a deterioration in the matching/hiring process in the economy. It is tempting to interpret this decline as a structural change in the way that the labor market works and thus assume that it is orthogonal to changes in aggregate demand. Indeed, an assumption that a shift in the curve is structural has been a staple of the academic literature since at least 1958. This interpretation has an obvious policy implication: however useful aggregate stabilization policies while unemployment is very high, they are likely to fail in lowering the unemployment rate all the way to the levels that prevailed before the recession, since the labor market is structurally less efficient than before in creating successful matches. This lecture reviews the theory underlying the Beveridge curve and US evidence on the ability to draw an inference of structural change from its shift or a shift in the hiring (matching) function." | Mark Thoma: Economist's View: A Conversation with Peter Diamond

4. Bryan Caplan: What Every High School Junior Should Know About Going to College: "College is a good deal for good students, a mediocre deal for mediocre students, and a poor deal for poor students. Once in a long while, a poor student morphs into good student. But expecting any particular poor student--yourself included--to morph into a good student is wishful thinking. How do you know if you're a good, mediocre, or poor student? Look at your past academic performance - your grades and standardized test scores.... The main reason why college is a good deal for good students, a mediocre deal for mediocre students, and a poor deal for poor students: good students usually finish college, mediocre students usually don't, and poor students almost never do. And most of the payoff for college comes from finishing.... When you decide whether to go to college, you should consider the college experience as well as the career benefits.... A good rule of thumb: If your studies bore you in high school, they'll probably bore you in college too.... Suppose your 150-pound friend dreams of being a professional football player. Would a true friend urge him on? No, he'd warn his mid-weight friend that he is astronomically unlikely to succeed.... I'm trying to play the same role for mediocre and poor students who expect to succeed in college. Please don't get mad at me. I am only a messenger..."

5. Rajiv Sethi: The CORE Project "Back in October 2012 I got an unexpected email from Wendy Carlin.... 'I think that a curriculum that places before students the best of the current state of economic knowledge addressed to the pressing problems of concern... could succeed.' I attended the meeting, and joined a group that would swell to incorporate more than two dozen economists spread across four continents... with funding from the Institute of New Economic Thinking, we began to assemble a set of teaching materials under the banner of Curriculum Open-Access Resources in Economics (CORE). A beta version of the resulting e-book, simply called The Economy, is now available free of charge worldwide to anyone interested in using it.... So if you're teaching an introductory economics course, or enrolled in one, or just interested in the material, just register here for complete access without charge. We will eventually set up instructor diaries to consolidate feedback, and welcome suggestions for improvement. This is just the start of a long but hopefully significant and transformative process of creative destruction." 

6. Robert Waldmann: "This post endured the test of 5 years, that is 35 dog years, or 563 @intenetyears. I think the key word is 'taboo'. Yes, exactly: 'The "lowbrow" theories of 1920-1980 from Fisher, Wicksell, Keynes, and Hicks through Metzler, Tobin, and Friedman--are taboo. They would be demonstrating to their peers that they were not serious highbrow economists if they consulted them.' That's the thing about taboos--you can't violate them just a little, you aren't allowed to mention the possibility of considering maybe violating them some day. Other slighly less useful words are 'orthodoxy', 'doctrine', 'heresy', and 'betrayal'. You can't expect an Eastern Orthodox theologian to consider the possibility that the holy spirit proceeds mostly from the father but maybe 1 or 2% of it proceeds from the Son (in any case at least when the Federal Funds rate is under 0.25%). Similarly you can't expect a Midwestern Orthodox Macroeconomist to consider the possibility that Keynes might have said something useful on some Easter Sunday."

On Twitter:

• https://twitter.com/delong/status/508000245205450752 .@djsziff agreed: Toobin shd hv wren: “fed exch Nvalid §1311 exchange & cannot prvd sbsds” & not “fed exch Nvalid”. Big deal? Not really…
• §1311 says the state establishes the exchange. §1321 says that if the state doesn't then the federal government establishes
• a §1311 exchange--"establish... such exchange" it says. Now along comes Jonathan Adler to complain that even though §1321
• empowers and commands the federal government to establish a §1311 exchange, it is so crystal clear and obvious that
• established exchanges are not §1311 exchanges as to pass the Chevron test and make insurance buyers ineligible for
• subsidies. And U say Toobin has problems understanding the ACA? Seems to me ur priorities R misplaced. Badly so... .@djsziff (5/5)

And Over Here:

Over at Equitable Growth: Noah Smith: Job Shortage or Stagnation Vacation?: "Are Americans working less because the government is paying them not to work?...

...A large number of people seem to think this.... Mitt Romney’s infamous '47 percent' speech.... Casey Mulligan.... Kurt Mitman.... Jordan Weissmann.... But... if government programs are paying people not to work, then that should put upward pressure on real wages.... But... that’s not what we see happening.... Economics 101 says that when the price of something and the quantity produced both fall, demand, not supply, has fallen. In America, the price of labor and the quantity of labor have both fallen and stayed low since 2009. That is a hint that the government’s welfare programs are having only a minimal impact.... So what is it? Well, I don’t think anyone really knows why these long stagnations happen. I suspect that it has something to do with the aftermath of financial crises, but the link is not yet well understood.

I, by contrast, think that we do understand very well why it is that stagnations continue once the economy has gotten wedged. READ MOAR

Two things that came across the transom this weekend:

First, Elizabeth Stoker Buenig writing on Civility [and] Outrage after being attacked for writing that it is morally questionable to seek fame and fortune by kicking down against those unfortunate enough not to have been born to the right parents or who have been unlucky in other ways.

I have always thought that there are three major sins of the intellect:

1. Cruelty--that is, kicking down in the hope that it will make the lives of the unlucky worse for, relative to the unlucky, contra John Donne the writer is indeed an island.

2. Laziness--that is, failing to inform oneself about the issues, and failing to think through the problems: failing to use your intelligence to any purpose.

3. Stubbornness--that is, failing to properly update one's beliefs when new evidence comes in, and turning instead to elaborating reasons for why the new evidence doesn't mean what it means: using one's intelligence for a malign purpose to keep yourself from properly marking one's beliefs to market.

Low U.S. Job Participation Rate Is Cyclical: DeLong: Video - Bloomberg

Michael Hiltzik: That predicted double-digit rise in Obamacare premiums? Not happening: Another stake in the heart of a popular anti-Obamacare claim...

...has arrived from the Kaiser Family Foundation, which compiled the projected premium changes for 2015 in 15 states and the District of Columbia. Its finding is that premiums for the lowest-cost, most popular individual health plans will be dropping for next year, by a nationwide average of 0.8%.... 'Now that insurers have been able to see what their competitors are charging... they are making strategic adjustments in how they price...' [said the] Kaiser Family Foundation, explaining why healthcare premiums are holding steady.... That's just one of several indicators recently released that demonstrate that the Affordable Care Act is working as planned and that the parade of horribles so deeply relished by its opponents hasn't materialized...