"There Speaks the Nineteenth Century!": For the Weekend

Worthy Reads for December 20, 2018

Worthy Reads at Equitable Growth:

  1. Equitable Growth Steering Committee member Karen Dynan in a conversation what about whether the US government is properly prepared to fight the next recession. The answer is no: Karen Dynan, Jay Shambaugh, and Eduardo Porter: What Tools Does the U.S. Have to Combat the Next Recession?: "Today's lower equilibrium interest rates make it more likely that monetary policy would need to make use of unconventional tools to spur the economy. On the fiscal front, we have a much larger level of government debt relative to GDP than we did prior to the financial crisis. However, viewing this level of debt to GDP as a reason to restrain stimulus spending in case of a crisis could make the problem worse. Whether the government uses fiscal policy to stimulate the economy will depend more on political willingness, than on the actual limits on fiscal policy...

  2. Patent publication turns out to be a very valuable societal institution indeed, viewed as a way of diseminating knowledge: Deepak Hegde, Kyle Herkenhoff, and Chenqi Zhu: Patent Publication and Technology Spillovers: "Invention disclosure through patents (i) increases technology spillovers at the extensive and intensive margins (ii) increases overlap between distant but related patents and decreases overlap between similar patents (iii) lowers average inventive step, originality, and scope of new patents (iv) decreases patent abandonments and (v) increases patenting...

  3. Workers, but only high-paid workers, capture about $0.30 of every extra dollar in revenue generated by the monopoly power conferred by a patent. This is another piece of evidence that workers, but only high-paid workers, are to a substantial but not overwhelming extent effective equity holders in America is business is: Patrick Kline, Neviana Petkova, Heidi Williams, and Owen Zidar: Who Profits from Patents? Rent-Sharing at Innovative Firms: "Comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected... patent allowances lead firms to increase employment, but entry wages and workforce composition are insensitive to patent decisions.... Workers capture roughly 30 cents of every dollar of patent-induced surplus in higher earnings.... These earnings effects are concentrated among men and workers in the top half of the earnings distribution, and are paired with corresponding improvements in worker retention among these groups...

  4. An excellent interview with Equitable Growth's Lisa Cooke: Lisa Cook: On invention gaps, hate-related violence, discrimination, and more: "One of the first things I do is to buy a Bic pen.... Each one was 10 dollars! Ten dollars! This completely stunned me. I knew how poor most people were. I knew students had to have these pens to write in their blue books. It just started this whole train of thought...

  5. Scale economies are not growing in the American economy. But monopoly power is: Jonathan Baker: Market Power or Just Scale Economies?: "Growing market power provides a better explanation for higher price-cost margins and rising concentration in many industries, declining economic dynamism, and other contemporary US trends, than the most plausible benign alternative: increased scale economies and temporary returns to the first firms to adopt new information technologies (IT) in competitive markets. The benign alternative has an initial plausibility.... Yet six of the nine reasons I gave for thinking market power is substantial and widening in the US in my testimony cannot be reconciled with the benign alternative.... None of the reasons is individually decisive: there are ways to question or push back against each. But their weaknesses are different, so, taken collectively, they paint a compelling picture of substantial and widening market power over the late 20th century and early 21st century...

 

Worthy Reads Elsewhere:

  1. Educating people who tend to think right wing about the IQ nature-nurture debate is probably impossible, but Cosma Shalizi tries: Cosma Shalizi (2007): .In Different Voices: "Q: How would you react to the idea that a psychological trait, one intimately linked to the higher mental functions, is highly heritable? A: With suspicion and unease, naturally. Q: It's strongly correlated with educational achievement, class and race. A: Worse and worse. Q: Basically nothing that happens after early adolescence makes an impact on it; before that it's also correlated with diet. A: Do you work at the Heritage Foundation? Such things cannot be. Q: What if I told you the trait was accent? A: I'm sorry? Q (in a transparently fake California accent): When you, like, say words differently than other people? who speak, like, the same language? because that's how you, you know, learned to say them from people around you?...

  2. I keep saying that Equitable Growth should cozy up to these people: they are our mirror image—and not in an evil-Mr.-Spock-with-a-beard way: Brink Lindsey, Will Wilkinson, Steven Teles, and Samuel Hammond: The Center Can Hold: Public Policy for an Age of Extremes: "We need both greater reliance on market competition and expanded, more robust, and better-crafted social insurance... government activism to enhance opportunity... less corrupt and more law-like governance... a new ideological lens: one that sees government and market not as either-or antagonists, but as necessary complements...

  3. But there is a lot in China's success that simply cannot be called "mainstream economics": Dani Rodrik: China’s Boldest Experiment: "China’s leadership did not follow any guidebook and resolutely marched to the beat of its own drummer.... China has not violated the tenets of mainstream economics so much as it has offered a master class in applying them creatively in complicated political and economic terrain...

  4. A very strange reversal of direction here. Marco Rubio could have done something about this a year ago, but did not: Laura Davison: [Rubio Tweets Tax Bill He Voted For Helps Companies Over Workers(https://www.bloomberg.com/news/articles/2018-12-13/rubio-slams-trump-tax-law-for-helping-corporations-over-workers): "Florida Republican aligns himself with Democrats on tax law Stock buybacks have jumped as wages show modest increase...

  5. Carlos Lozada: Anti-Trump Conservatives Want to Reverse the GOP’s Destruction. But They Helped Light the Fuse: "What kind of conservatism can survive, let alone thrive, in American politics today? The question hangs over the Never Trump volumes.... Flake... keeps the faith. 'With hard work... and maybe a little luck, we will right this ship'...

  6. Tony Yates is profoundly unhappy with Mervyn King's embrace of Brexit. I do not understand why Prime Minister Teresa May doesn't call for a revote, on the grounds that the initial "Leave" campaign was poisoned by its misrepresentations: Tony Yates: Why Mervyn King’s Defence of Brexit “Isn’t Worthy of a Bank of England Governor”: "Mervyn King, Mark Carney’s predecessor as the governor of the Bank of England, has burnished his Brexit credentials in an opinion piece for Bloomberg. King has made his pro-Brexit views known already. The trigger for reprising them was the publication of the Bank of England’s assessment of different trajectories either through or without Brexit...

  7. I think that the very sharp Jacob Levy may well be wrong here. The "Culture War" was never about "culture". It was about women, or atheists and Jews, or Negroes who did not know their place. Placing a high priority on demanding upright behavior from powerful men was never how they rolled. Carter was a churchgoing Christian. Reagan not so much: Jacob Levy: Populism's Dangerous Companions: "It’s an interesting and illuminating exercise to single out a shift from debates about cultural moralism to those about nationalism as the important destabilizing influence. It’s certainly true that the culture war fights of the 1960s, 70s, and 80s have lost a great deal of their political force.... Jerry Falwell Jr.’s sycophancy toward a serial adulterer, multiple divorcé, and seeker of sexual favors from nude models and porn actresses is a nice synecdoche for the apparent surrender of the old religious right, even in the United States, on everything except abortion...

  8. Wise words from Yale's Jason Stanley. I do think that he gets it wrong in one respect. Neo-fascism (or fascism) is not a mode of government, but a mode of organization and distraction. What policies the government follows are largely independent of this mode. Mussolini was expansionist. Franco was not. Huey Long was genuinely populist. Augusto Pinochet was not: Sean Illing: What Is Fascism? Yale Philosopher Jason Stanley Explains How It Works: "This is probably a good time to pivot to the glittering elephant in the room: Donald Trump. Is he a fascist?" Jason Stanley: "I make the case in my book that he practices fascist politics. Now, that doesn’t mean his government is a fascist government. For one thing, I think it’s very difficult to say what a fascist government is...

  9. I still do not understand why this "kooky legal theory" is any kookier than any of the other anti-ObamaCare legal theories: Matthew Yglesias: Ruling Obamacare Unconstitutional: A Pattern of Undemocratic GOP Conduct: "Misha Tseytlin... had just been working as an attorney in the West Virginia Attorney General’s office... suing the Obama administration and he thought the Wisconsin gig would be... fun.... He cooked up this lawsuit, persuaded his bosses in state government to sign on, and eventually got 20 state governments to pursue his argument. Friday night he scored his triumph—his kooky legal theory is the law of the land, according to at least one federal judge...

  10. This by the very sharp Henry Farrell seems to me to be largely wrong. Farrell thinks that parties, plural, became "unwilling to compete for voters across tricky political issues". I see it as right-wing party, singular, taking the neo-fascist turn to which the system was always vulnerable—winning mass support for policies of plutocracy and kleptocracy by mobilizing fear and hatred of a distinct and sinister internal and external other. Four times in the past hundred yeras have we seen this in the United States. Teddy Rooevelt vs. the Malefactors of Great Wealth, Ike Eisenhower vs. the McCarthyites, and Richard Nixon's Flaws vs. Richard Nixon and Pat Buchanan were three earlier episodes. In the past we were lucky. We won through because of conservative elitss that valued liberty and an open society. We may win through again: Henry Farrell: The Hollowing Out of Democracy: "There are strong similarities between what is happening in the United States, Hungary, the United Kingdom, and France... where democracy is backpedaling rapidly, such as the Philippines. This is the product both of common shocks... and of cross-national reinforcement... the family resemblances are undeniable. What Davies arguably gets wrong though is the significance of these changes...

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