- Morning Must-Read: http://equitablegrowth.org/?p=9531 <-- continuing to watch the persistence of the inflation cult... : The Regrettable Man
- http://equitablegrowth.org/news/weekend-reading-26 <--Nick's five must-reads plus a chart... : Weekend Reading
- http://io9.com/rip-leonard-nimoy-who-showed-us-what-it-truly-means-to-1688470007 <--Spock: not just for adolescent male nerds hoping that intelligence and quiet humor could help them be loved and make them insiders even though they were outsiders... : "In the hands of most... Spock would have been a one-note joke character: the guy who spouts off formulas and equations in a monotone.... But Nimoy imbued Spock with a life and complexity that were impossible to deny.... From his inner torment to his quiet amusement at the humans around him to his occasional flashes of anger, Spock was a constantly surprising mystery..."
- http://www.vox.com/2015/2/27/8121571/leonard-nimoy-spock-best <--a good start on thinking about perhaps the greatest character of the TV era... : Star Trek is great, and Leonard Nimoy's Spock was the greatest thing about it
- http://www.economist.com/blogs/easternapproaches/2014/04/russia <--political coalition-building and seisin in a failing state... : "How, why and when did Putin decide to build a Kleptocratic and Authoritarian Regime in Russia and what is its Future?"
- Lunchtime Must-Read: http://equitablegrowth.org/?p=9534 <--Weimar Russia... : A Final Interview
- http://mobile.nytimes.com/2015/02/28/magazine/after-boris-nemtsovs-assassination-there-are-no-longer-any-limits.html <--Moscow's downward spiral continues... : After Boris Nemtsov’s Assassination, ‘There Are No Longer Any Limits’
The Rise in Inequality: A Young Lady or Gentleman's Illustrated Primer: The Honest Broker for the Week of March 8, 2015
The policy debate on the sources, causes and potential solutions to rising income and wealth inequality has intensified in the past few years. Recently, French economist Thomas Piketty’s popular book 'Capital in the Twenty-First Century' garnered much attention and ignited further debate about these issues. Piketty argues that wealth will inevitably become more concentrated under capitalism because the returns to wealth are larger than economic growth rates. The solution he proposes is a coordinated global tax on wealth. The Baker Institute's Tax and Expenditure Policy Program will host two renowned economists to discuss the underlying causes and consequences of inequality, evaluate the empirical evidence of rising inequality, and examine potential solutions for dealing with these problems in the United States.
- WELCOME AND INTRODUCTION: John W. Diamond, Ph.D., Edward A. and Hermena Hancock Kelly Fellow in Public Finance, Baker Institute
- R. Glenn Hubbard, Ph.D.: Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School
- J. Bradford DeLong, Ph.D.: Professor of Economics, University of California, Berkeley
- MODERATOR: George R. Zodrow, Ph.D., Allyn R. and Gladys M. Cline Chair of Economics; and Baker Institute Rice Faculty Scholar.
As prepared for delivery:
J. Bradford DeLong :: U.C. Berkeley, NBER, WCEG, INET :: February 3, 2015 :: http://tinyurl.com/dl20150202a
I am very happy to be here, especially as Texas is a state I get to relatively rarely. I have unusually few relatives in it, you see. When the DeLongs got to Wichita they decided to turn north rather than south and wound up in DeKalb County, Illinois. And those who did end up here decamped to North Carolina, leaving me with none until last year when my cousin Annie and her husband moved to Dallas. The last time my wife and I spent any extended time in Texas was on our honeymoon, when we were washed out of our campsite in a swamp near the Louisiana border by a midnight mid-June thunderstorm, so we bypassed Galveston and Houston and then spent a week and a half going Austin-San Antonio-Permian Basin-El Paso.
Over at Equitable Growth: Vir illustris Martin Feldstein starts by saying: downward nominal price stickiness is such a thing that we do not have to worry about deflationary spirals in consumer prices. I agree. But I do not understand where his argument ends up:
SUBJECT: Food Relief for Belgium and Liberated Holland.
General Eisenhower informed us in his message (SCAF 210) that a serious situation exists in the 21st Army Group (Montgomery’s command) area by reason of retarded deliveries of civilian supplies and urgently requested that 100,000 tons of food be made available immediately from UK stocks for the 21st Army Group.
The continued willingness of right-wing economists to declare their allegiance to the inflation cult continues to amaze:
Weekend Reading: Thomas Piketty vs. Daron Acemoglu and James Robinson: I Must Say, I Score This One as Well for Piketty
...between income inequality and r − g and argue that r − g does not seem to have much impact on inequality. However, I do not find these regressions very convincing, for two main reasons.
Weekend Reading: John Maynard Keynes: On Speculation, from The General Theory of Employment, Interest and Money
...is forced to concern himself with the anticipation of impending changes, in the news or in the atmosphere, of the kind by which experience shows that the mass psychology of the market is most influenced. This is the inevitable result of investment markets organised with a view to so-called ‘liquidity’.
Weekend Reading: Thoughts on Breaking the Web and the Blog--and Rebuilding Them. Can We Have Nice Things?
Breaking the Web: "The Deane Barker column was touching...:
...in its sincerity and simplicity. Of course mobile apps break the web, are isolated from each other, and do not link to anything. You are supposed to PAY for them, not GET them for FREE. Welcome to the Market Based Universe.
Must- and Shall-Reads:
- More New Jobs Are in City Centers, While Employment Growth Shrinks in the Suburbs <--yet another fixed cost about to be imposed on the working and lower classes... :
- "Low-income higher achievers tend not to apply to selective colleges despite being extremely likely to be admitted with financial aid.... Control students, who experienced no intervention, are seriously misinformed." <--serious low-hanging education fruit here... :
- The Californian Ideology <--Silicon utopias of the left and right, from 15 years ago... :
- "Ray Dalio’s $165 billion Bridgewater Associates will start a new, artificial-intelligence unit.... Half a dozen people... will report to David Ferrucci... [and] create trading algorithms that make predictions based on historical data and statistical probabilities..." <--trying to create artificial judgment... :
- Weekend Reading <--Nick's five must-read plus a chart... :
- The Closed Minds Problem <--ridicule as the ultima ratio intelletualum against the closed-minded :
- The Equilibrium Real Funds Rate: Past, Present and Future <--uncertainty calls for highly "inertial" policy followed by rapid response... :
- Greece in Light of the Past and Future of the Euro <--political economy and societal welfare require that macroeconomic policy deliver full employment... :
- Is a Line of Code More Like a Factory or a Painting? <--we don't know, and can't know, because innovation is by definition new... :
- Quantitative Easing and Monetary Aggregates <--the failure of inflation to emerge over the past half-decade is on surprise to anyone who understood Hicks (1937)... :
- Evening Must-Read: If Not Malthusian, Then Why? <--implications of technological change in making "luxuries"... :
- Rents from Trade and Coercive Institutions: Removing the Sugar Coating <--how apparently competitive labor markets can stay very far indeed from having wages equal marginal products... :
- Must-Read: Paul Krugman: The Closed-Minds Problem
- Must-Read: James D. Hamilton, Ethan S. Harris, Jan Hatzius, and Kenneth D. West: The Equilibrium Real Funds Rate: Past, Present and Future
- Must-Read: Barry Eichengreen: Greece in Light of the Past and Future of the Euro
- Must-Read: Carter Price: Is a Line of Code More Like a Factory or a Painting?
- Must-Read: Paul Krugman: Quantitative Easing and Monetary Aggregates
- Must-Read: Lemin Wu: If Not Malthusian, Then Why?
- Weekend reading :
The smart young dude Carter Price nails one to the wall and to the floor at the same time! Something very pertinent--and important:
Liveblogging from Underneath My Electric Blanket: Yes, the Internet Is a Big Cognitive Science Experiment. Why Did You Ask?
Liveblogging from Beneath My Electric Blanket: If you think I am going to leave this room today, you are wrong:
Liveblogging World War II: February 27, 1945: Liberation of Bergenhausen and Arnoldsweiler Concentration Camp
Problems of measuring living standards properly go way, way, way back, as Lemin Wu demonstrates:
Live from La Farine: Izabella Kaminska: "How Nuts Are Markets When the Most Reasonable Analysis of an Asset Class Pumped by the Great and Good in Tech Is a Parody Sub-Reddit Entitled 'Buttcoin'?"
I missed this when it went by last September...
BitCoin's blockchain: wonderful, promising innovation in distributed trustworthy computing. BitCoin: not a safe liquid store of value--hence unlikely to be a durable unit of account, or even medium of exchange...
- What Is the Interaction of the Supreme Court's Forthcoming King v. Burwell Decision with Health Policy? Is There an Interaction?: Focus
- Over at Project Syndicate: Making Do with More
- Arindrajit Dube, Laura Giuliano, and Jonathan Leonard: Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior
- Must-Read: Ann Marie Marciarille: Teeth Whitening at the Supreme Court: Occupational Licensing and Antitrust Law
- Must-Read: Deane Barker: Breaking the Web
- Must-Read: Matthew Yglesias: Newsletters Are the New Weblogs
Must- and Shall-Reads:
- "Ezra Klein is pushing back against the Healthcare Reform 2.0 talk with an interesting and I think wrong post at Vox..." :
- The simple reason Walmart & TJ Maxx are handing out raises — people are quitting :
- The Financialization Project :
- The Gender Pay Gap: How Has It Evolved Over Time? :
- A Guide to Statistics on Historical Trends in Income Inequality :
- Teeth Whitening at the Supreme Court: The Antitrust Limits of Professional Sovereignty :
- Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior :
- Breaking the Web :
- I'm writing a newsletter :
- Is There a Site That Is the Opposite of Zero Hedge? :
And Over Here:
Evening Must-Read: Ann Marie Marciarille: Teeth Whitening at the Supreme Court: Occupational Licensing and Antitrust Law
Afternoon Must-Read: Arindrajit Dube, Laura Giuliano, and Jonathan Leonard: Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior
Live from the Roasterie: For those who missed this last fall...
Paul Krugman on Allan H. Meltzer:
...when you look at the pronouncements of seemingly reputable economists. In May 2009, Allan Meltzer, a well-known monetary economist and historian of the Federal Reserve, had an Op-Ed article published in The New York Times warning that a sharp rise in inflation was imminent unless the Fed changed course...
What Is the Interaction of the Supreme Court's Forthcoming King v. Burwell Decision with Health Policy?
Over at Equitable Growth: For the first time, we have a clue as to what Republican plans are for what to do with respect to health policy in the event of an anti-government Supreme Court decision in King v. Burwell. And the Republican plan of Nebraska Senator Ben Sasse is the same as the Democratic plan--override the Supreme Court. The difference is that the Democratic override would be permanent, while Sass is only proposing a temporary override. For now. READ MOAR
Over at Project Syndicate: If we as a species can avoid nuclear war; curb those among us who are violent because they are God-maddened, state-maddened, or ethnicity-maddened; properly coordinate global action to reduce global warming from its current intolerable projected path to a tolerable one, adapt to the global warming that occurs, and distribute paying for the costs of that adaptation--well, if we can do all of those things, the human race can have a very bright future indeed.
The other two witnesses--Larry Kotlikoff from Boston University, and Heather Pfitzenmaier from Heritage--did not seem to me to do very well at all...
Worth Watching: The Coming Crisis: America's Dangerous Debt...:
I want to label something that I see "cognitive capture", and think about it.
The vir illustris Ron Rosenbaum, however, disagrees. Rosenbaum is writing about David Corn's story that Bill O'Reilly was not in fact in a "war zone" in 1982, and about how O'Reilly is responding by saying: "you can tell that I am a truth-teller because the liberals attack me so much". And he thinks that "cognitive capture" is not a useful concept. We should pretend it does not exist. We should instead just tell the truth day by day as if we were having a reasoned discussion. And we should hope that eventually, with enough truth-telling, the chips will fall where they should:
Some Hoisted from the Archives from Six Years Ago, Most Newer...: Speaking of people who had not done their homework, were spreading lots of wrong information, and who lack the ovaries to have ever marked their beliefs to market or apologize for their purveying misinformation, we have Allan Meltzer starting in February 2009 as the Paul Revere of the coming upward breakout of inflation.
It is a real clown show.
- FEBRUARY 2012 VERSION: Budgeting and Macroeconomic Policy: A Primer: The Honest Broker
- Long-Run Real GDP Forecasts: The Hopeless Task of Trying to Pierce the Veil of Time and Ignorance Weblogging: Focus
- I Am Beginning to Think That the Backlash Against the Skills-Gap Story of Wage Inequality Has Gone Too Far...: Focus
- Must-Read: Òscar Jordà, Moritz Schularick, and Alan Taylor: Monetary Policy and Housing Prices: Lessons from 140 Years
- Must-Read: Paul Krugman: Phantom Phiscal Crises
- Must-Watch: Elizabeth Warren, Elijah Cummings, et al.: Middle Class Prosperity Project Forum
- Must-Read: David Howell: Links Between Institutions and Shared Growth
- Must-Read: Mark Thoma: The Best Investment the U.S. Could Make Is Affordable Higher Education
Must- and Shall-Reads:
- "It's misleading to say the wage gap is a myth by pointing at occupational controls. It is much sounder to follow Goldin's lead in her AEA presidential address and treat them as clues for understanding the various factors driving a very non-mythical wage gap..." :
- Obama's newest plan might drive investment advisers out of business. Good :
- Inequality and One City: Bill de Blasio and the New York Experiment, Year One :
- "The belief that monetary policy does not matter is not just “the most dangerous idea in Federal Reserve economic history," as the economists Christina and David Romer have noted; it is exceedingly hazardous to any economy. Europe faces enough serious risks already; it should not needlessly add to them." :
- "TA one-decade delay in addressing climate change would lead to about a 40% increase in the net present value cost of addressing climate change.... Uncertainty and the possibility of tipping points provide a motivation for more action as a form of insurance against worse outcomes..." :
- "It was once believed that the rise of index investing would make markets less efficient and thus create new opportunities for active money managers... [but] perhaps the opposite is true.... Josh Brown, summing up... Larry Swedroe and Andrew Berkin.... '[W]ith all the unskilled investors departing, pros will be left to square off against only other pros. The lack of retail punters and their harvestable mistakes cuts off one of the most reliable historical sources of alpha for sharp-eyed managers...'" :
- Semiannual Monetary Policy Report to the Congress--February 24, 2015 :
- Brief history of middle-class economics :
- Disability Insurance: An Essential Part of Social Security :
- The Coming Crisis: America's Dangerous Debt :
- The links between institutions and shared growth :
- The Best Investment the U.S. Could Make Is Affordable Higher Education :
- Monetary Policy and Housing Prices: Lessons from 140 Years :
- Middle Class Prosperity Project Forum :
- Phantom Phiscal Crises - NYTimes.com :
And Over Here:
If there were a thousand people all anxious to feed their families who had little in the way of alternative job prospects who could demonstrate that they could do my job well--well, then, it would be very difficult for my job to be a "decent" one, would it? It would still be a very interesting job. But it would also be a very low-paying job, unless I could figure out some way to extract a large share of the increasing-returns joint-production common pool and attach it to me in some durable way. And that requires that I figure out some way to block the others on my increasing-returns productive team from figuring out how to drive my wage down to the reservation wage of the unemployed guy now in Kerala who could do my job almost as well as I can.
David Howell is going to try to figure this out:
I Am Beginning to Think That the Backlash Against the Skills-Gap Story of Wage Inequality Has Gone Too Far...: Focus
Over at Equitable Growth: I have always been impressed by vir illustris Mark Hoekstra's regression-discontinuity story of the value of being admitted to U.T. Austin. As the very sharp Jordan Weissman reports:
...AM I DOOMED? Actually, yeah. You might be.... Mark Hoekstra... compared the earnings of white, male students who had barely missed the admissions cut-off for an unnamed public flagship university to those of students who had barely been accepted.... Enrolling at the flagship increased wages by 20 percent... READ MOAR
Morning Must-Read: Mark Thoma: The Best Investment the U.S. Could Make Is Affordable Higher Education
Morning Must-Read: Òscar Jordà, Moritz Schularick, and Alan Taylor: Monetary Policy and Housing Prices: Lessons from 140 Years
Mediterranean: The Samnites, seizing their chance when Rome is engaged on the Lombard plain, start the third Samnite War with a collection of mercenaries from Gaul, Sabine, and Etruscan allies to help them.
China: The state of Qin attacks eight cities of the state of Chu. Chu then sends an envoy to ask the King of Huai to go to Qin to negotiate peace. Qu Yuan risks his life to go up to the court to persuade the King of Huai not to go to the negotiation. King Wuling of Zhao abdicates the throne of Zhao to his son.
Socialism has demonstrated its right to victory, not on the pages of Das Kapital, but in an industrial arena comprising a sixth part of the earths surface--not in the language of dialectics, but in the language of steel, cement and electricity. Even if the Soviet Union, as a result of internal difficulties, external blows and the mistakes of leadership, were to collapse--which we firmly hope will not happen--there would remain an earnest of the future this indestructible fact, that thanks solely to a proletarian revolution a backward country has achieved in less than 10 years successes unexampled in history.
I spent August 2005 getting ready to reach intermediate macroeconomics:
- Economics 101b: Fall 2005: First-Half Syllabus http://delong.typepad.com/sdj/2005/08/economics_101b_.html 2005-08-29
- Notes: URAP Project 3: Fall 2005: Analyzing the Cyclical State of the Labor Market http://delong.typepad.com/sdj/2005/08/notes_urap_proj.html 2005-08-22
watching the corruption--no other word for it--of the Washington Village's "elite" press corps:
Long-Run Real GDP Forecasts: The Hopeless Task of Trying to Pierce the Veil of Time and Ignorance Weblogging
Over at Equitable Growth: OK: Now that I am awake and coherent and caffeinated, we may resume...
I draw somewhat different conclusions from the wavering track of potential GDP since 1990 than do the viri illustres Steve Cecchetti and Kermit Schoenholtz:
First, I think that monetary policymakers should not be looking at potential output and the output gap at all. They should be looking at the labor market. You can determine whether monetary policy is such as to accord with people's previous expectations and thus balance supply and demand in the labor market much more easily than you can track whether actual production and demand are above or below what your retrospective estimate of potential output will turn out to be.
- If the Rise of the Robots Is Moved from the Ten-Year to the Fifty-Year Agenda, What Replaces It on the Ten-Year Agenda?: Focus
- Stephen G. Cecchetti and Kermit L. Schoenholtz: Forecasting Trend Growth: Living with Uncertainty
- Larry Mishel: Even Better Than a Tax Cut
- The Case for Inaction on Interest Rates :
- ICYMI: Milanović on how US income distribution changed between 2007 and 2013 :
- The Future of Retirement Savings :
Must- and Shall-Reads:
Austerity and the Costs of Internal Devaluation:
- The Effect of Conflicted Investment Advice on Retirement Savings :
- "On the nights when she has just seven hours between shifts at a Taco Bell in Tampa, Fla., Shetara Brown drops off her three young children with her mother. After work, she catches a bus to her apartment, takes a shower to wash off the grease and sleeps three and a half hours before getting back on the bus to return to her job..." :
- The Future of Retirement Savings :
- Forecasting Trend Growth: Living with Uncertainty :
- Even Better Than a Tax Cut :
- The Case for Inaction on Interest Rates :
And Over Here:
The consciousness of my duty and my work does not allow me to leave headquarters at the moment when, for the twenty-fifth time, that date is being commemorated on which the fundamental program of our movement was proclaimed and approved in Munich.
The evening of the twenty-fourth of February was, under the auspices of prudence, a development the significance of which probably only today becomes clear to us in its terrible meaning. An irreconcilable enemy was already at that time united in a common struggle against the German people, in the same manner as it is today. The unnatural alliance between exploiting capitalism and destructive bolshevism that threatens to strangle the entire world today has been the enemy to which we threw down the gauntlet on Feb. 24, 1920, in order to safeguard the existence of our nation. The same as in these years, the apparently contradictory factor in the cooperation of such extreme forces was only the expression of a unique desire of a common instigator and profiteer. International Jewry has long used both forms for the annihilation of the liberty and social welfare of nations.
Can we finally all admit that even though the defined-benefit pension system was inadequate the 401(k) system is worse? And that we need not a smaller but a larger Social Security system?
...on... participation.... The participation rate among working-age households... was close to 80 percent between 1989 and 2007. But... has dropped to... 75 percent.... [And] younger workers’ participation rate has fallen below the level of previous generations of young workers—today’s young workers aren’t saving as much younger workers in years past... [with] the biggest decline... among workers in the bottom half...
Morning Must-Read: Stephen G. Cecchetti and Kermit L. Schoenholtz: Forecasting Trend Growth: Living with Uncertainty
I draw somewhat different conclusions from the wavering track of potential GDP than do the vires illustres Steve Cecchetti and Kermit Schoenholtz. But let me reserve that until some moment later on in the day when I am more awake...
...who claims to be able to forecast trend growth accurately and reliably. Even after the fact, it takes some time to discern the underlying trend. As a result, we need to build decision frameworks--for businesses and for policymakers--that are robust to the sorts of forecast errors we have seen in the past. Consider that approach the economist’s version of Keats’ negative capability. Second, our inability to get a precise fix on the output gap presents significant challenges for monetary policy, as this is commonly used as a prime indicator of inflationary pressures in the economy. If central bankers are unsure of the size of the output gap (or even its sign), then the likelihood of policy errors rises substantially. That reinforces the view of monetary policy setting as a problem of risk management in which policymakers must balance the hazards and costs associated with potentially large errors.
Sixteen years ago I was told that I really needed to consult and hire a "web designer". Eight years ago I was told I needed to consult and hire a "web content management system wrangler".
Now I am being told I need to consult and hire a "web content strategist".
What is a "web content strategist"?
Over at Equitable Growth: If the Rise of the Robots Is Moved from the Ten-Year to the Fifty-Year Agenda, What Replaces It on the Ten-Year Agenda?: Focus
Over at Equitable Growth: There are the different agendas at different time frames--say two years, ten years, and fifty years. The smart young whippersnapper Marshall Steinbaum reports on the growing consensus that dealing with the Rise of the Robots is on our fifty-year agenda, and not on our two-year or our ten-year agenda. On the two-year and ten-year agendas, he says, are dealing with and reversing the enormous upward redistribution that has taken place with the rise in the social, political, and economic power of the Overclass. That is:
- Restoring full employment as a priority...
- Rebalancing the corporation so that shareholders and the financiers top managers who can initiate corporate control transactions are no longer the only stakeholders that matter...
- Restore long-run productive investment as a priority in public budgeting... READ MOAR
Underlying this position is a belief, perhaps, that so much of what is produced is so close to a joint Leontief product that something like the marginal product theory of distribution is profoundly unhelpful, and that questions of distribution are overwhelmingly resolved by economic bargaining power conditioned by social mores and politically-chosen institutions. Perhaps there used to be three sources of bargaining power, and thus three sources of durable advantage:
- Possession of the intellectual property and expertise needed to construct the high-throughput mass-production assembly lines of what used to be called "Fordist" capitalism...
- Control over the brands and other distribution channels necessary in order to sell the products of high-throughput mass-production factories to the middle classes of the North Atlantic who could afford to buy them at a good price...
- A blue-collar working class that had sufficient class consciousness to bargain for itself, and that was insulated by the requirement that the factories be located near to the engineers and to the corporate headquarters which needed to be placed so as to keep their eyes on the market...
And then, perhaps, over the past generation the third has dropped away, with the coming of globalization and the successful war against private sector unions. The rest are now themselves in flux. And perhaps they have been joined as a source of rent-extraction by those with the ability to tap into the savings produced in this age of the Global Savings Glut...
But I think that the sources of this enormous upward redistribution have not yet been properly sorted-out.
...when it comes to the consequences of rapid technological change on the U.S. workforce... techno-optimist[s].. [and] the pessimistic view that better technology substitutes for workers and... harms them. A debate between the two... was probably what the organizers intended for an event last week hosted by The Brookings Institution’s Hamilton Project entitled ‘The Future of Work in the Age of the Machine.’... Yet the debate last week actually highlighted a third position. If either the techno-optimists or the techno-pessimists are right, then we should see a major positive impact on worker productivity. But it just isn’t there... [even though] we definitely see worker displacement, stagnant earnings, a failing job ladder, rising inequality at the top, ‘over-education’ (workers taking jobs for which they’re historically overqualified), and declining rates of employment-to-population and household and small business formation.... Former Treasury Secretary Larry Summers made this point forcefully....
So if not technology, what explains labor displacement?... Market practices and public policies that favor managers over workers, and those who make their living by owning capital over those who make their living by earning wages. That choice lurks behind the decline in full employment as a priority... a shift in the legal standards, mores, and incentives of corporate management in favor of the interests of [equity] owners over other stakeholders... the abandonment of long-term productive investment as a priority in public budgeting.... In 1988, Summers wrote an article fleshing out the idea that the division of rents between corporate stakeholders is what drives rising inequality. More than a quarter century later, he could not have been more prescient. The good news is that if such a profound shift played out over only three or four decades, then it’s reversible. That wouldn’t be true if it were the result of the technological trends detailed in [Brynjolffson and McAfee's] ‘The Second Machine Age.’... We know what needs to be done and how to do it, because we’ve done it before...
...grow along with profits and productivity. There is no silver bullet, but the key is... to reverse decades of decisions that have undercut wage growth. We need to start with monetary policy.... The most important decisions... are those of the Federal Reserve Board.... Before raising rates, it is essential we achieve a robust recovery, with roughly 3.5 to 4 percent annual [nominal] wage growth.... Another short- to medium-term policy decision affecting wage growth is to avoid trade deals, such as the proposed Trans-Pacific Partnership, that would further erode Americans’ wages and send jobs overseas. And... bolster... labor standards and institutions... [by] raising the minimum wage... rais[ing] the salary threshold for overtime.... Protecting and expanding workers’ right to unionize... moderniz[ing] our New Deal-era labor standards to include earned sick leave and paid family leave... stronger laws and enforcement to deter and remedy wage theft.... Wage stagnation is... a result of a policy regime that has undercut the individual and collective bargaining power of most workers. Because wage stagnation was caused by policy, it can be reversed by policy, too.