Results for “from the rooftops” 79 found
Assorted links
1. Is this a golden age for inventors? And what is the asteroid-mining business plan?
2. Is this a golden age of Hunger Games econometrics?
3. Should gamblers be made to stand?
4. “The fundamental question is: “Why is government’s share of the voluntary donations market so damn small?” “, more here. Furthermore “There are plenty of redistributionist goals which do not require concerted collective action or threshold levels of contribution.”
5. Shout it from the rooftops! (some results about auction pricing)
A message for all our readers in the United Kingdom
From Scott Sumner, but endorsed by me in full:
Take the current situation in the UK. If I’m not mistaken, the British political system is different from that in America. British governments are basically elected dictatorships, with no checks and balances. Even though the Bank of England is independent, the government can give it whatever mandate it likes. If I’m right then both fiscal and monetary policy are technically under the control of the Cameron government.
So I read the UK austerity critics as saying:
“Because you guys are too stupid to raise your inflation target to 3%, or to switch over to NGDP targeting, fiscal austerity will fail. We believe the solution is not to be less stupid about monetary policy, but rather to run up every larger public debts.”
Is that right? Is that what critics are doing?
Some will argue that my views are naive, that Cameron would be savagely attacked for a desperate attempt to print money as a way of overcoming the failures of his coalition government. Yes, but by whom? Would this criticism come from Ed Balls? Perhaps, but in that case he would essentially be saying:
“It’s outrageous that the Cameron government is trying to use monetary stimulus to raise inflation from 2% to 3%, whereas they should be using fiscal stimulus to raise inflation from 2% to 3%.”
I’m sorry to have to repeat this over and over again, but what 99% of pundits on both sides of the Atlantic are treating as a debate about “stimulus” and “austerity” is actually a debate about stupidity. I’m not saying the pundits are stupid (Krugman certainly understands what I’m saying) but rather they are addressing their audience as if the audience was stupid.
Don’t talk down to Cameron and Osborne! Don’t say “austerity will fail.” Say “austerity will work, but only if the BOE becomes much more aggressive, otherwise it will fail.” That sort of advice would be USEFUL. Instead we are getting a bunch of pundits getting ego boosts because they can say “I told you so.”
Scream it from the rooftops!
Questions that are rarely asked
From Arnold Kling (and the graph is from Karl Smith):
I challenge any supporter of the sticky-wage story (Bryan? Scott?) to write a 500-word essay explaining how this graph does not contradict their view. If employment fluctuations consisted of movements along an aggregate labor demand schedule, then employment should be at an all-time high right now.
My view is “sticky nominal wages for some, negative AD shock, ongoing stagnation and thus low job creation, and the progress we have is in some sectors immense but typically labor-saving rather than job-creating, all topped off with a liquidity shock-induced revelation that two percent of the previous work force was ZMP.” (Try screaming that from the rooftops.) I read the above graph as consistent with that mixed and moderate view. As Arnold notes, it’s harder to square with an AD-only view. If I wanted to push back a bit on Arnold’s take, and save some room for AD stories, I would cite the “Apple Fact of the Day,” and also note that stock prices have not responded nearly as well as have measured corporate profits. Still, we economists are not taking this graph seriously enough.
Addendum: Arnold Kling responds to responses.
The newest and best data on income inequality
The paper is by Bakija, Cole, and Heim, find it here.
There is much to say about this paper, but first of all the Kaplan and Rauh work, which I have cited several times, seems to offer incorrect estimates of the professions of the higher earners. Here is the authors' corrective chart:
Here is a summary of their broader results:
Our findings suggest that the incomes of executives, managers, supervisors, and financial professionals can account for 60 percent of the increase in the share of national income going to the top percentile of the income distribution between 1979 and 2005. We also demonstrate significant heterogeneity in income growth across and within occupations among people in the top percentile of the income distribution, suggesting that factors that changed in the same way over time for all high income people are probably not the main cause of increasing inequality at the top. The incomes of executives, managers, financial professionals, and technology professionals who are in the top 0.1 percent of the income distribution are found to be very sensitive to stock market fluctuations. Most of our evidence suggests that financial market asset prices, corporate governance, entrepreneurship, and income shifting across corporate and personal tax bases may be especially important in explaining the dramatic rise in top income shares.
I would reword this as a) "it's complicated," and b) "a lot of them made the money in capital markets." It does remain the case that top incomes in finance rose by far most rapidly.
In this very careful and rigorous paper, here is a "scream it from the rooftops" result:
…we find that a one percent increase in the net of tax share is associated with an 0.7 percent reduction in incomes earned by people in the top 0.1 percent of the income distribution, which would imply that if we were to raise top marginal tax rates further on these taxpayers, the increase in deadweight loss would be substantially larger than the increase in revenue raised [emphasis added]. However, we find essentially no evidence at all of any responsiveness of people below the top 0.1 percent…
Better stock up on those cough drops.
For the pointer I thank Adam Looney.
How uncertainty reduces investment
Brad DeLong writes (do read his entire post on my post, it is too long to excerpt; also read the comments on his post):
In this environment, an increase in uncertainty–a mean-preserving spreading-out of ex ante investment project return distributions–causes a greater share of investment projects to fail to make the 1/β guaranteed gross-rate-of-return hurdle. So production of investment goods falls…
…and production of consumption goods rises, as labor is redirected.
There is no employment-reducing fall that I can see in aggregate supply in response to an increase in uncertainty. Yes, there is a structural readjustment as investment-goods industries shed labor and consumption-goods industries gain labor. But this is no more a fall in aggregate supply that leaves an extra 5% of the labor force with nothing productive to do than there was a fall in aggregate supply earlier, when perceived uncertainty fell and labor moved into investment-goods production–remember, back when financial engineering guaranteed by S&P and Moody's offered a way to create more of the AAA assets that the representative worker wanted to hold. There is a fall in aggregate supply in the sense that the value added by investment projects falls–but that fall shouldn't have implications for employment.
I think Brad is assuming I've fallen into the "Paul Krugman is right and Austrian Business Cycle theory is wrong" trap, but it's a different story. I have in mind a model of costly-to-reverse investment where many entrepreneurs decide to wait. It's also the case that producing consumption goods can be risky, even non-durable consumption goods: look at the decline in the number of luxury food items in a Whole Foods over the last few years. Brad may not be convinced, but there's no logical problem in the story.
Here is one of the empirical pieces on how uncertainty reduces investment and yes RW this is also a negative supply shock, as it makes extant resources less productive, at least for the time being. Here are more papers in the area. Here is one recent relevant model or see the papers of Robert Pindyck. Again, I don't wish to push "uncertainty" as the only story, it's rather the simplest means of seeing that it's not all just about weak aggregate demand.
Scott Sumner likes to scream from the rooftops about how Bernanke has forgotten his previous work on monetary economics. I like to note that there is more than one — indeed more than two — Ben Bernankes. He wrote his MIT dissertation on uncertainty and irreversible investment. One of the Ben Bernankes I follow is in part a real business cycle theorist.
Brad also writes:
…the cost of borrowing for the government has fallen–the market value troday of future cash tax flow earmarked for debt repayment has gone way, way up–therefore we should dedicate more future cash flow to debt repayment by borrowing more. There is no "but even." Expansionary fiscal policy is a good idea.
I'll blog more on that soon, in a separate post. For the time being I'll repeat my point that the monetary authority moves last anyway, so it's ultimately a matter of monetary rather than fiscal policy, whether we like that fact or not.
Buried scary ledes
The [ECB] bank reversed itself on buying bonds amid signs that the debt crisis was spreading to the banking system.
“The situation was already starting to get worse on Thursday afternoon and throughout Friday of the week before last,” Mr. Trichet said. “A number of markets were no longer functioning correctly. It looked somewhat like the situation in mid-September 2008 after the Lehman Brothers’ bankruptcy.”
I suppose…I am glad they have not screamed that from the rooftops. The full story is here.
Update: The scary lede has been removed altogether from any NYT story.
Two notes on liquidity traps and decreases in wages
1) A fall in wages
increases the incentive to hire (call this the substitution effect) but it
decreases the income of people who already have jobs and this in turn
decreases their spending and other people’s income (call this the macro income effect). In essence, Krugman and others are arguing that the macro
income effect can dominate under certain situations. See Tyler (here and here) and Scott Sumner (Whom I cannot resist quoting–"no respected macroeconomic theory has ever been so decisively refuted
by the data as the theory that high wage policies can actually help the
economy during a Depression") on this point. I, however, will ignore this debate and take it as given that this is possible.
Now one reason that people are talking about
a cut in the minimum wage in this context is that it follows exactly the two-part logic given above. But bear in mind that the real policy choice
we have is to cut the payroll tax and cutting the payroll tax increases the
incentive to hire and increases the income of people who already have jobs.
2) The idea of the
liquidity trap with its notion of lack of movement, inactivity and firms which "just aren't hiring" is hard to reconcile
with the fact that millions of new jobs are being created every month. I have said this before but I should have shouted it from the rooftops because this error is very common.
MR vocabulary guide
1. “Self-recommending”: the very nature of the authors and project suggest it will be good or very good. This also often (but not always) means I haven’t read it yet. I am reluctant to recommend *anything* I haven’t read, but I am signaling it is very likely recommendation-worthy and I wish to let you know about it sooner rather than later.
2. An “Assorted link” that ends with a question mark: Worth thinking about, but I wish to distance myself from the conclusion and the methods of the study, without being contrary per se.
3. Hansonian: of, or relating to Robin Hanson.
4. The Jacksonian mode of discourse. I am opposed to this. Political and economic pamphlets in the Jacksonian era were excessively polemical and sometimes the Jacksonian mode is still used today, in 2009, believe it or not.
5. Wunderkind: Take the average age of that person’s relevant peers. If said person is either under twenty or less than half that average, that person may qualify for “Wunderkind” status.
6. Markets in everything: Some of these are celebratory but many of these are sad or tragic. Usually I am trying to get you to think about — as a philosophical question — why the market exists at all and not whether it should be legal.
7. Tyrone is my brother and alter-ego who believes the opposite of what Tyler believes. Trudie offers personal advice. Neither has good time management skills and thus they don’t write very much these days.
8. “Shout it from the rooftops”: What to do with wordy, obscure truths which the world badly needs to learn.
What have I left out?
What should we do instead of the Obama health reform bill?
A lot of people think you have no right to criticize a bill unless you propose a better bill. I don't agree (if the aforementioned bill is bad on net), but in any case I will give this a try. These are not my first best reforms or even my second best reforms. They're my "attempt to work with some of the same moving pieces which are currently on the table" set of reforms. I would trade away the Obama bill for these in a heart beat. Keep in mind people, with a "no insurance" penalty of only $750, the current bill isn't going to work (and that's ignoring the massive implicit marginal tax rates on many individuals and families, or the "crowding out" of current low-reimbursement-rate Medicaid patients), so we do need to look for alternatives.
Here goes:
1. Construct a path for federalizing Medicaid and put it on a sounder financial footing; call that the "second stimulus" while you're at it. It's better and more incentive-compatible than bailing out state governments directly and the program never should have been done at the state level in the first place.
2. Take some of the money spent on subsidizing the mandate and put it in Medicaid, to produce a greater net increase in Medicaid than the current bill will do, while still saving money on net. Do you people like the idea of a public plan? We already have one!
2b. Make any "Medicare to Medicaid" $$ trade-offs you can, while recognizing this may end up being zero for political reasons.
3. Boost subsidies to medical R&D by more than the Obama plan will do. Establish lucrative prizes for major breakthroughs and if need be consider patent auctions to liberate beneficial ideas from P > MC.
4. Make an all-out attempt to limit deaths by hospital infection and the simple failure of doctors to wash their hands and perform other medically obvious procedures.
5. Make an all-out attempt, working with state and local governments (recall, since the Feds are picking up the Medicaid tab they have temporary leverage here), to ease the spread of low-cost, walk-in health care clinics, run on a WalMart sort of basis. Stepping into the realm of the less feasible, weaken medical licensing and greatly expand the roles of nurses, paramedics, and pharmacists.
6. Make an all-out attempt, comparable to the moon landing effort if need be, to introduce price transparency for medical services. This can be done.
7. Preserve current HSAs. The Obama plan will tank them, yet HSAs, while sometimes overrated, do boost spending discipline. They also keep open some path of getting to the Singapore system in the future.
8. Invest more in pandemic preparation. By now it should be obvious how critical this is. It's fine to say "Obama is already working on this issue" but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.
9. Establish the principle that future extensions of coverage, as done through government, will be for catastrophic care only.
10. Enforce current laws against fraudulent rescission. If these cases are so clear cut and so obviously in the wrong, let's act on it. We can strengthen the legal penalties if need be.
11. Realize that you cannot tack "universal coverage" (which by the way it isn't) onto the current sprawling mess of a system, so look for all other means of saving lives in other, more cost-effective ways. If you wish, as a kind of default position, opt for universal coverage if the elderly agree to give up Medicare, moving us to a version of the Swiss system and a truly unified method of coverage. But don't bet on that ever happening.
Separate issues:
12. If you can tax health insurance benefits and cut a Pareto-improving deal overall, fine, but I am considering this to be too politically utopian and it's not clear what the rest of that deal looks like. The original tax break makes no economic sense but you don't want to end up with a big tax increase and a lot more people on the public books with little in return.
13. If the current bill were voted down, you can imagine some version of the above happening, although not necessarily all at once in one big bill.
14. Commission a study of how much the Obama plan is spending per QALY saved. I agree that more health insurance saves lives, but a) the study should adjust appropriately for the superior demographics of those who hold or buy insurance, and b) the study should adjust for the income that would be lost through mandates and the safety that income would purchase. I worry greatly that we have never, ever seen this number presented and that if we did it would not be pretty. In any case, do the study, scream the number from the rooftops, and reread points 1-11. Enact.
That's my recipe. It's better than what we are doing now. You don't have to adhere to any extreme form of economistic or free market ideology to buy it. It might even be politically easier than the current path, as it "sounds less socialistic."
Assorted links
1. Geithner meets with bloggers, and here: "We were offered a tray of cookies at the meeting, from which I
abstained on principle. Those of you who think that's silly have no
idea how much I like cookies."
2. Assuming a can opener, more on health care costs.
3. More on the multiplier (shout it from the rooftops).
What does the Dale and Krueger education paper really say?
It was reported in the media as showing that, controlling for all the right variables, going to an elite college or university as an undergraduate doesn't really matter for your future prospects or income. But Robin Hanson, with money on the line, investigated further. After reading the relevant pieces closely, he reports [what follows is Robin, not me, but with the multiple indentations I haven't indented everything again]:
"In fact his original 1998 working-paper abstract said:
Half Sigma screams from the rooftops:
23 percent is quite a bit of money, it’s almost like getting two college degrees instead of one! They also discovered that there was a benefit to attending a more expensive school. The more expensive tuition resulted in a lifetime internal rate of return of 20% for men and 25% for women."
Sherry Glied’s new health care paper
It is one of the best health care papers in recent times, it is here, I cannot find an ungated version. Glied reminds us that only about 1/3 of American health care spending comes from private insurance. Moving to international comparisons, the more general point is that:
…there is no persistent and regular relationship between the structure of system financing and the rate of growth in per capita health expenditures in a health system…the efficiency of operation of the health care system itself appears to depend much more on how providers are paid and how the delivery of care is organized than on the method used to raise the funds.
In other words, as I’ve stressed before, the health care cost problem comes from immediate suppliers, namely doctors and hospitals, and not from health insurance companies.
The best parts of the paper concern equity. It is GPs which help the poor, not additional spending on technology or surgery; see p.18 for other comparisons along these lines. Furthermore, and this you should scream from the rooftops, consider this:
…patterns of health service utilization in developed countries suggest that the marginal dollar of health care spending — money used to purchase high tech equipment or specialist services — is less progressively spent than the average dollar.
In other words, egalitarians should not allocate marginal government spending to health care. And there is evidence that the more a government spends on health care, the less it spends helping people in money ways. That is, there is crowding out.
Finally, Glied offers a summary comparison:
Putting $1 of tax funds into the public health insurance system
effectively channels between $0.23 and $0.26 toward the lowest income
quintile people, and about $0.50 to the bottom two income quintiles.
Finally, a review of the literature across the OECD suggests that the
progressivity of financing of the health insurance system has limited
implications for overall income inequality, particularly over time.
Highly recommended.
The best caption I read this morning
Nine-party coalitions are fragile, and Italy’s 61st postwar cabinet was no exception.
Here are related articles, I cannot find this caption on-line but it is in the print NYT.
Elsewhere in the Times today, David Brooks has an excellent column on Wall Street and the recent financial mess. Scream it from the rooftops, as they say.
Against Historic Preservation II
In Manhattan, once famed for its ever-evolving skyline, an astonishing 27 percent of the borough’s lots now fall under the purview of the landmarks commission.
That’s from Jacob Andinder’s What Historic Preservation Is Doing to American Cities in the Atlantic. It’s a pretty good history of the movement for historic preservation focusing (of course) on some of the racist motivations and effects. But it has little to say about what to do about the consequent difficulties of building anything new. Similarly, here’s Binyamin Applebaum in the NYTimes correctly decrying the fact that historic preservation laws mean you can’t put solar panels on the rooftops of many homes in Washington, DC. Applebaum suggests a tiered approach.
I am more radical. All historical preservation laws should be repealed.
It’s one thing to require safety permits but no construction project should require a historic preservation permit. Here are three reasons:
First, it’s often the case that buildings of little historical worth are preserved by rules and regulations that are used as a pretext to slow competitors, maintain monopoly rents, and keep neighborhoods in a kind of aesthetic stasis that benefits a small number of people at the expense of many others.
Second, a confident nation builds so that future people may look back and marvel at their ancestor’s ingenuity and aesthetic vision. A nation in decline looks to the past in a vain attempt to “preserve” what was once great. Preservation is what you do to dead butterflies.
Ironically, if today’s rules for historical preservation had been in place in the past the buildings that some now want to preserve would never have been built at all. The opportunity cost of preservation is future greatness.
Third, repealing historic preservation laws does not mean ending historic preservation. There is a very simple way that truly great buildings can be preserved–they can be bought or their preservation rights paid for. The problem with historic preservation laws is not the goal but the methods. Historic preservation laws attempt to foist the cost of preservation on those who want to build (very much including builders of infrastructure such as the government). Attempting to foist costs on others, however, almost inevitably leads to a system full of lawyers, lobbying and rent seeking–and that leads to high transaction costs and delay. Richard Epstein advocated a compensation system for takings because takings violate ethics and constitutional law. But perhaps an even bigger virtue of a compensation system is that it’s quick. A building worth preserving is worth paying to preserve. A compensation system unites builders and those who want to preserve and thus allows for quick decisions about what will be preserved and what will not.
The performance of the NIH during the pandemic in 2020
“A new research study by one of us and his Johns Hopkins colleagues found that of the $42 billion the National Institutes of Health spent on research last year, less than 2% went to Covid clinical research…
Here is the WSJ source. Here is the full report from Johns Hopkins, and here is the executive summary:
● Of the $42 Billion 2020 NIH annual budget, 5.7% was spent on
COVID-19 research
● Public health research was underfunded at 0.4% of the 2020 NIH
budget
● Only 1.8% of the 2020 NIH budget was spent on COVID-19 clinical
research
● Average COVID-19 NIH funding cycle was 5 months
● Aging was funded 2.2 times more than COVID-19 research
● By May 1, 2020, 3 months into the pandemic, the NIH spent 0.05%
annual budget on COVID-19 research
● Of the 1419 grants funded by the NIH:
• NO grants on kids and masks specifically
• 58 studies on social determinants of health
• 57 grants on substance abuse
• 107 grants on developing COVID-19 medications
• 43 of the 107 medication grants repurposed existing drugs
Ouch. Here is a not entirely random sentence from the report:
The COVID-19 pandemic has only exacerbated the NIH institutional challenges and inability to reallocate funds quickly to
critical research.
Here is another damning sentence, though it damns someone other than the NIH:
…to date, no research has investigated NIH COVID-19 funding patterns to the best of our knowledge.
Double ouch. Might the NIH have too much influence over the allocation of funds to be investigated properly? Rooftops, people…