Results for “Larry Summers” 194 found
Friday assorted links
Investment, investment, investment — how to think about the Biden stimulus proposal
Here is my Bloomberg column on the stimulus, excerpt for those who are arguing for aid rather than stimulus:
Leave aside the political question of how aggressively to pursue an agenda of a larger, more activist government (and keep in mind that I am more libertarian than many of the participants in this debate). Take a Big Government as a given. History shows that consumption still ought not be the priority.
First, wise public-sector investments are better for the poor than one-time wealth transfers. The U.S. is still reaping the benefits of the great public-health and public-works achievements of the 20th century. Second, the most enduring and beneficial government-transfer programs, such as Social Security, have been built on sustainable majorities.
Progressive societies are fundamentally based on a valorization of investment — in physical structures, in software, in sustainable policies. This argues against a “Let’s grab this policy win while we can” attitude, no matter how popular that stance may currently be on social media. It’s foolish to think that no other policy combination is politically feasible, and if the president’s advisers and supporters really believe that, they are in for a long and unsatisfying four years.
It’s not as if there aren’t obvious candidates for alternative investment: green energy, broadband and public-health infrastructure for the next pandemic, to name a few. Yes, I am familiar with the argument that spending the extra trillion or so now will make it possible to spend more trillions later, including on such policies. But whatever kind of complicated political story you might tell, the basic laws of economics have not been repealed. Increasing current expenditures does, in fact, involve foregone future opportunities.
Another possible direction would be to rework Senator Mitt Romney’s proposed child support plan and turn it into an enduring policy. It is an expensive idea, but at least it would represent a greater investment in America’s future than mere one-off cash transfers.
The defenders of the president’s plan argue that inflation and an overheated economy are not major risks. Maybe so, maybe not — but that is not the crucial issue. Instead, ask yourself this question: Does this program, or this rhetoric, recognize the paramount importance of investment, whether public or private? If not, you needn’t look much further.
I say you can divide the commenters here into two groups. Those who produce complicated arguments about why opportunity cost reasoning does not apply here, and those who stress the relevance of the opportunity cost of allocating another trillion dollars or two. I believe that once you recognize that distinction, you know what to do with it next.
The anti-science presidency?
…recent Congressional Budget Office estimates suggest that with the already enacted $900 billion package — but without any new stimulus — the gap between actual and potential output will decline from about $50 billion a month at the beginning of the year to $20 billion a month at its end. The proposed stimulus will total in the neighborhood of $150 billion a month, even before consideration of any follow-on measures. That is at least three times the size of the output shortfall.
In other words, whereas the Obama stimulus was about half as large as the output shortfall, the proposed Biden stimulus is three times as large as the projected shortfall…
Looking at incremental deficits relative to GDP gaps is only one way of assessing the scale of a fiscal program. Another is to look at family income losses and compare them to benefit increases and tax credits. Wage and salary incomes are now running about $30 billion a month below pre-covid-19 forecasts, and this gap will likely decline during 2021. Yet increased benefit payments and tax credits in 2021 with proposed stimulus measures would total about $150 billion — a ratio of 5 to 1. The ratio is likely even greater for low-income individuals and families, given the targeting of stimulus measures…
If the stimulus proposal is enacted, Congress will have committed 15 percent of GDP with essentially no increase in public investment to address these challenges. After resolving the coronavirus crisis, how will political and economic space be found for the public investments that should be the nation’s highest priority?
Here is more from L. Summers. And just wondering — what is it you all think the multiplier is these days? Asking for a friend.
Tuesday assorted links
From the comments, on the new Republican tax plan
The non-deductibility of imports is simply crazy. It will immediately increase inflation. Take IKEA, for example, they cannot source locally, they will increase prices immediately by 20%, or whatever the tax will be. At all effects, it is a flat tariff of 20% on every import. This guy seems to want to transform the US into North Korea. And think about the distortions: Boeing will become a purchasing company, making more money using the tax-credit to buy prosciutto and Camembert to sell to retailers at prices lower than the marginal cost, than producing planes.
That is Coasean reasoning from Massimo, there are other good comments as well. For instance Bob noted:
There will be a huge move to asset based leasing. So Wal-mart, instead of borrowing money will sell thier real estate to a REIT and lease it back. They essentially can keep the deduction.
Thursday assorted links
1. “For nearly 40 years he played host every May to a carriage parade from his house to the annual steeplechase races in Winterthur, the former du Pont estate in Delaware, followed by a celebration and pig roast at Chadds Ford…A bon vivant and a character, Mr. Weymouth was a toff of the old school, with a global network of friends in high places. He rarely turned on a television, in part because he never mastered a remote control, or light switches, for that matter. He preferred candlelight. Computers he regarded as an abomination.” NYT obituary here.
2. “You cannot talk about aggregate productivity growth without talking about both technology and the distribution of workers across sectors. Anecdotes – positive or negative – about individual technologies are not informative about the aggregate level of productivity growth.” Link here.
3. “Have you tried turning it off and on again?” That too, can be automated.
4. Interview with Jessa Crispin. And why is it hard to pick up Singlish?
6. FT Alphaville: “…we tend to think, if anything, endowments at the biggest schools are actually far too small, rather than too large.”
7. An actual case of cement shoes (NYT). And Stadt Zug will accept Bitcoin for small sums (in German).
Monday assorted links
Mexico (America) fact of the day
Mexican non-oil exports to USA in December (y/y): -4.5%. Excluding autos: -8.7%.
That is from Genevieve Signoret, via this source.
It’s funny how these numbers seem to indicate someone is starting to enter a recession. Who might that be? Maybe it’s just noise, I don’t see any other mediocre economic reports wandering around these parts… Or maybe it’s Mexico that’s the problem…
Friday assorted links
Sunday assorted links
1. Is the last known antibiotic beginning to fail? (speculative)
3. Austan Goolsbee is blogging again, this time on the Bernie Sanders budget. And Kling on Summers.
Monday assorted links
1. A polemic attack on Indian liberals.
2. Cambodian betting markets in everything.
3. Geminoid F — a robot actress — cast in a lead movie role in Japan. And machine accepts reincarnation.
4. Was Snoopy the reason for the decline of Peanuts?
5. Atlas Shrugged TV serial on the way? (NYT). And a new Star Trek?
6. Summers on Krugman and Summers and secular stagnation. And Krugman responds. And Scott Sumner on the natural rate of interest. And Arnold Kling on depreciation and negative rates. Here is Curdia from the SF Fed.
TPP
“If this [TPP] collapses, Pacific Rim countries will be aghast,” said Shunpei Takemori, a professor at Keio University in Japan, the largest economy in the would-be trade zone after the United States. “China is pushing, and if the U.S. just stands aside, it would be a tragedy.”
And:
“If you don’t do this deal, what are your levers of power?” Singapore’s foreign minister, K. Shanmugam, said in Washington on Monday. “The choice is a very stark one: Do you want to be part of the region, or do you want to be out of the region?”
He argued that “trade is strategy” and that without economic leverage, the United States was left with only military clout in Asia “and that’s not the lever you want to use.”
“It’s absolutely vital to get it done,” he added, referring to the bill’s passage.
The full article is here. I find the willingness of progressiveness to toss this bill into the wind, for the purposes of indulging the usual memes, to be one of the most depressing features of American political life in years.
You will find an alternative perspective from David Henderson here: “If the U.S. government is a “less reliable ally,” that could be a good thing.” I don’t think they feel that way in Singapore, South Korea, or Taiwan.
By the way, the fourth edition of Doug Irwin’s trade book is coming out.
How much of the value of the internet is not captured in gdp?
I have been hearing this question more and more lately, even in China. Overall I think it has gone from an underrated effect to an overrated effect. Tim Worstall offers an introduction to this debate.
Let’s not forget that you do in fact pay for Facebook access, indirectly, when you pay for your cable connection, your iPad, and your smart phone. including the monthly bill, all of which are part of measured gdp. The more value Facebook brings you, the more you would be willing to pay for these goods and services. The same is true for Google and the like. So Facebook and other internet services are part of a bundled package of market value, but that is very different from claiming they are not measured in gdp at all.
There is of course consumer surplus from the internet and Facebook, just as there is from Dunkin’ Donuts. Might that consumer surplus be especially high? Well, we don’t know, but don’t assume it will be. I did some casual googling, and found a number of estimates suggesting that smart phone demand is relatively price elastic, with the iPhone a possible exception to that regularity. That implies consumer surplus isn’t especially high, because many people aren’t willing to buy at the higher price. I thus think Brad DeLong is far too optimistic in his estimates of ratio consumer surplus to market price.
You also could look at the literature on the demand for cable internet services. The results are mixed, but again I don’t see a strong case for a disproportionately high consumer surplus from these services, if anything the contrary.
Now maybe these estimates are wrong, or looking at the wrong margin in some way, but the fact that I hear them mentioned so rarely gives me pause. Cowen’s Third Law.
There is also advertising over the internet. Let’s say Facebook is a profit maximizer. Insofar as Facebook is of value to consumers, the company can get away with putting a lot of ads on the site. These will spur additional market purchases, and so part of the value of the site is again captured in gdp. Obviously some of these ad effects are simply expenditure-switching, and so there is no full capture of value, but still Facebook shows up in gdp statistics in yet another way.
Here are some previous posts on this topic.
Tuesday assorted links
1. Santoor music from Iran (short video).
2. Dean Baker on inequality and mobility and me.
3. Delong on Bernanke, Summers, and Krugman and how they think.
4. An ideological Turing simulation of certain Straussian ideas. By Will Wilkinson.
5. Brad DeLong’s arguments for more government, Paul Krugman comments. I see too quick a move from “funder” to “provider” in both sets of remarks. Furthermore most of the hyperbolic argument doesn’t imply much more than a series of low budgetary cost legal mandates, or perhaps nudges. It does not imply a massive expansion of the state sector, quite the contrary. On top of that, government agents and voters presumably are hyperbolic as well.
Assorted links
1. Soda taxes don’t seem to work.
2. Can a health care company actually satisfy the customer?
3. How hard is it to become really good at table tennis? And the common law origins of the infield fly rule.
4. Summers responds to Bernanke. And Robert Moses responds to Robert Caro. And Bernanke on the global savings glut.