Monday, January 24, 2011

Keith & George | The Big Picture

Keith & George | The Big Picture: "Its amazing that Keith Richards and George Bush have the #1 & 2 non-fiction NYT best sellers at the same time.

One is the story of a man beloved by his fans, despite his drinking and drug abuse, who reaches the very pinnacle of his profession.

The other is the story of Rolling Stones guitarist . . ."

The Market and Inequality:

Mechanisms for Upward Redistribution:
- Big bailouts
- patent and copyright protection
- pattern of trade, overvalued dollar
- Fed employment versus inflation tradeoff
- Corporate governance favoring high CEO pay

The Market and Inequality: Progressives Lose When They Accept the Right's Framing | TPMCafe

Sunday, January 23, 2011

Real purpose of competitiveness council

It is kinda like reverse lobbying.

Stephen Williamson: New Monetarist Economics: Obama and Competitiveness: "Hopefully Obama will use this Council only to cozy up to the business community, and no legislation will result."

Saturday, January 22, 2011

Where Do Bad Ideas Come From?

This makes me feel better about all my bad ones. I am not alone.

Where Do Bad Ideas Come From? - By Stephen M. Walt | Foreign Policy

One nitpick. There are many critics of the domino theory. But in the short term, on a limited basis it was true; Cambodia and Laos did fall. 

GE Symbol of What is Wrong with US Corporates

GE financials are about tax arbitrate (tax fraud).

Obama Picks Jeffrey Immelt, GE CEO, To Run New Jobs-Focused Panel As GE Sends Jobs Overseas, Pays Little In Taxes: "In 2009, the Connecticut-based firm effectively had a negative tax rate, thanks to the $498 million loss it booked on U.S. operations versus the $10.8 billion in earnings it booked abroad. GE realized a $1.1 billion tax benefit in 2009.

In 2008, it paid $1.1 billion in taxes for a 5.3 percent tax rate. In 2007, it paid $4.2 billion in taxes for a 15.1 percent tax rate."

Friday, January 21, 2011

The Phantom 15 Million - Friday, January 21, 2011

It is not just about demand. There were only 7 million jobs created in the naughts versus 21 million in the 90's. - The Phantom 15 Million - Friday, January 21, 2011

Scott Summers differs.  Labor force participation was high and unemployment was low. Where is th 15 million?

Thursday, January 20, 2011

Wednesday, January 19, 2011

Vermont Releases Draft Proposal for Single Payer and Other Health Systems | FDL Action

Bill Hsiao never sleeps.
He helped China rewrite its health care system. Now he is turning his eyes to ... Vermont?

Vermont Releases Draft Proposal for Single Payer and Other Health Systems | FDL Action

China v America: The end of the end of history | The Economist

Fukuyama is one of those amazing pundits that makes a few splashy calls that grab the attention of the media. Only difference is that he has only made two calls. And both are wrong.

China v America: The end of the end of history | The Economist

Why is the U.S. so awful at job creation?

Why is the U.S. so awful at job creation? - How the World Works - "How about this? In comparison to the rest of the G-7, the U.S. boast higher levels of income inequality, does a poorer job of educating its workforce, enjoys the double jeopardy of weaker labor unions and a sketchier social welfare net, and, at the government policy level, appears relatively� more influenced by the financial sector than by Main Street."

When Moralities Collide

Economist's View: When Moralities Collide: "We can now give a fairly simple explication of illiberal thinking as well. It is moral, religious, or political fundamentalism -- the idea that one's own moral convictions are so compelling that no democratic process could legitimately override them. It is the idea that the individual has a persistent right to oppose the state when the state's actions are inconsistent with one's own moral convictions. It is authoritarian -- it endorses the idea that one's own group or party has the right to override the majority's will when the state contradicts one's fundamental convictions. And it is, of course, a position that is fundamentally disrespectful of democracy and of the equal dignity and worth of one's fellow citizens."

Tuesday, January 18, 2011

Lower Costs and Better Care for Neediest Patients : The New Yorker

A gated Gawande article on some solutions for rising medical costs; change and improve treatment for the high cost users.

Lower Costs and Better Care for Neediest Patients : The New Yorker

Productivity Over the Business Cycle (Wonkish)

From the comments: Why there is less labor hoarding during recessions.

Productivity Over the Business Cycle (Wonkish) - Readers' Comments - "1
3:09 pm

4. Training of business managers. Managers schooled in perfect market theories and taught to view stock market reactions as the arbiter of success are likely to over-emphasize the gain to current earnings from quickly firing employees during recessions, and to under-estimate the difficulties (and lost profits) of having to institution build later on. It is the same dynamic that so consistently leads to losses for business acquisitions, where quick cuts get stock market plaudits and leave long lasting damage that managers have trouble seeing.

5. Ever faster turn-over among managers. Managers who won't be around to see the long term consequences of their actions have a very strong incentive to manage for current profits. Cutting temporarily redundant employees when demand is low, like cutting R&D, increasing leverage, or growing through acquisitions-and-accounting-gimmicks works splendidly in the short term. The problems are likely to become most visible under someone else's watch.

6. Increased profits from cutting employment are very visible. Lost profits from having to find and train and integrate new employees and rebuild lost expertise later are just opportunity costs, completely invisible to casual observers or managers who have no tools to measure them."

Why it's harder than before to get into your favorite college

Marginal Revolution: Why it's harder than before to get into your favorite college

Solar Power Eclipse -

Industrial policy should be about infrastructure and education, not about stock picking.

Review & Outlook: Solar Power Eclipse -

And Ed Glaeser's take. 

Monday, January 17, 2011

Endogenize ideology

interfluidity � Endogenize ideology: "One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net — morally superior to the capitalism red in tooth and claw we had before the New Deal. It’s only right, this side believes, for the affluent to help the less fortunate.

The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That’s what lies behind the modern right’s fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.

There’s no middle ground between these views. One side saw health reform, with its subsidized extension of coverage to the uninsured, as fulfilling a moral imperative: wealthy nations, it believed, have an obligation to provide all their citizens with essential care. The other side saw the same reform as a moral outrage, an assault on the right of Americans to spend their money as they choose.

This deep divide in American political morality — for that’s what it amounts to — is a relatively recent development."

Twenty Years of War

Twenty Years of War on Iraq | Firedoglake

Quote of the year (so far)

On why Yves Smith blogs:

On the Lack of Left Wing Discourse in the Blogosphere � naked capitalism: "If you are not angry about the ongoing plutocratic land grab in this country, you are either not paying attention, deluded, or part of the problem."

Saturday, January 15, 2011

Who Got the Wage Gains, 2000-2009 � Mandel on Innovation and Growth

Wages grew in the government and healthcare sector. This is not adjusted for levels of education.

Who Got the Wage Gains, 2000-2009 � Mandel on Innovation and Growth

Theories on the causes of Inequality and the crash

From DeLong:

So here are five things that I thought I knew three or four years ago that turned out not to be true:
  1. I thought that the highly leveraged banks had control over their risks. With people like Stanley Fischer and Robert Rubin in the office of the president of Citigroup, with all of the industry's experience at quantitative analysis, with all the knowledge of economic history that the large investment and commercial banks of the United States had, that their bosses understood the importance of walking the trading floor, of understanding what their underlings were doing, of managing risk institution by institution. I thought that they were pretty good at doing that.
  2. I thought that the Federal Reserve had the power and the will to stabilize the growth path of nominal GDP.
  3. I thought, as a result, automatic stabilizers aside, fiscal policy no longer had a legitimate countercyclical role to play. The Federal Reserve and other Central Banks were mighty and powerful. They could act within Congress's decision loop. There was no no reason to confuse things by talking about discretionary fiscal policy--it just make Congress members confused about how to balance the short run off against the long run.
  4. I thought that no advanced country government with as frayed a safety net as America would tolerate 10% unemployment. In Germany and France with their lavish safety nets it was possible to run an economy for 10 years with 10% unemployment without political crisis. But I did not think that was possible in the United States.
  5. And I thought that economists had an effective consensus on macroeconomic policy. I thought everybody agreed that the important role of the government was to intervene strategically in asset markets to stabilize the growth path of nominal GDP. I thought that all of the disputes within economics were over what was the best way to accomplish this goal. I did not think that there were any economists who would look at a 10% shortfall of nominal GDP relative to its trend growth path and say that the government is being too stimulative.

     I have five theories:
    1. Perhaps the collapse of the union movement means that politicians nowadays tend not to see anybody who speaks for the people in the bottom half of the American income distribution.
    2. Perhaps Washington is simply too disconnected: my brother-in-law observes that the only place in America where it is hard to get a table at dinner time in a good restaurant right now is within two miles of Capitol Hill.
    3. Perhaps we are hobbled by general public scorn at the rescue of the bankers--our failure to communicate that, as Don Kohn said, it's better to let a couple thousand feckless financiers off scot-free than to destroy the jobs of millions, our failure to make that convincing.
    4. I think about lack of trust in a split economics profession--where there are, I think, an extraordinarily large number of people engaging in open-mouth operations who have simply not done their homework. And at this point I think it important to call out Robert Lucas, Richard Posner, and Eugene Fama, and ask them in the future to please do at least some of their homework before they talk onsense.
    5. I think about ressentment of a sort epitomized by Barack Obama's statements that the private sector has to tighten its belt and so it is only fair that the public sector should too. I had expected a president advised by Larry Summers and Christina Romer to say that when private sector spending sits down then public sector spending needs to stand up--that is is when the private sector stands up and begins spending again that the government sector should cut back its own spending and should sit down.

Does my view of the recession fit the data?

Job loss in aggregate is not related to technological change or globalization. It is a function of falling NGDP.

TheMoneyIllusion � Does my view of the recession fit the data?

Jeremy Grantham On Ignoring Eisenhower And The Two Most Dangerous Industries In America

Jeremy Grantham of GMO writes a great summary on the anniversary of Eisenhower's farewell speech. The three most dangerous industries in America: energy, defense and finance.

MUST READ: Jeremy Grantham On Ignoring Eisenhower And The Two Most Dangerous Industries In America

Thursday, January 13, 2011

Involuntary Commitment and the Prison Population

Although there was not a direct transfer from involuntary commitment to prison the graph looks that way. Twenty percent of prisoners are reported to have mental health issues.

Involuntary Commitment and the Prison Population � Rortybomb

Obama Classic

Rather than pointing fingers or assigning blame, let’s use this occasion to expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy and remind ourselves of all the ways that our hopes and dreams are bound together. (Applause.)
After all, that’s what most of us do when we lose somebody in our family -– especially if the loss is unexpected. We’re shaken out of our routines. We’re forced to look inward. We reflect on the past: Did we spend enough time with an aging parent, we wonder. Did we express our gratitude for all the sacrifices that they made for us? Did we tell a spouse just how desperately we loved them, not just once in a while but every single day?
So sudden loss causes us to look backward -– but it also forces us to look forward; to reflect on the present and the future, on the manner in which we live our lives and nurture our relationships with those who are still with us. (Applause.)
We may ask ourselves if we’ve shown enough kindness and generosity and compassion to the people in our lives. Perhaps we question whether we're doing right by our children, or our community, whether our priorities are in order.
We recognize our own mortality, and we are reminded that in the fleeting time we have on this Earth, what matters is not wealth, or status, or power, or fame -– but rather, how well we have loved -- (applause)-- and what small part we have played in making the lives of other people better. (Applause.)
And that process -- that process of reflection, of making sure we align our values with our actions –- that, I believe, is what a tragedy like this requires.

Remarks by the President at a Memorial Service for the Victims of the Shooting in Tucson, Arizona | The White House

Wednesday, January 12, 2011

The Stranger

Stephen Kroninger - Brilliant Cover

The Road to Economic Crisis Is Paved With Euros

Classic Krugman: an excellent summary of the euro crisis.

The Road to Economic Crisis Is Paved With Euros -

Even some of his detractors like it:
"Read the whole thing. It appears to have come from Krugman in the mid-1990's, not the evil twin columnist. In the end, he lays out four scenarios. I prefer "debt restructuring" to "revived Europeanism." Otherwise, there is not much for me to disagree with here."

Wednesday, January 05, 2011

Sunday, January 02, 2011

Marginal Revolution: Advice for a future regulator

Marginal Revolution: Advice for a future regulator: "If order to be prepared to take advantage of what you find just 'round the bend, here are some seemingly trite, but nonetheless useful, principles:

a. No assignment is too trivial to deserve your best effort.

b. Network. Whatever you're doing today, there may be somebody tomorrow who will know about it and who might be important to you next week.

c. Never burn a bridge. No matter how frustrated you are, remember that your [professional] actions should always be calculated, not merely for emotional relief.

d. Most important, and well served by the foregoing, remember that each job is most likely a waypoint along the route to the next. William Howard Taft knew that."