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In French Polynesia with spotty connectivity. For now:
Posted by Mark Thoma on Sunday, December 31, 2017 at 05:30 PM in Economics, Links |
5 Questions for the Fed in 2018, by Tim Duy: The Federal Reserve anticipates continued monetary tightening in 2018, as it seeks to match 2017’s pace of interest-rate hikes with another three quarter-point moves. As always, however, that projection depends on actual economic outcomes. With that in mind, here are five questions the Fed will face in 2018 as it charts a course for policy: ...Continued here on Bloomberg Prophets...
Posted by Mark Thoma on Thursday, December 28, 2017 at 11:37 AM in Economics, Monetary Policy |
Posted by Mark Thoma on Tuesday, December 26, 2017 at 05:19 PM in Economics, Links |
"it’s going to be up to the American people":
America Is Not Yet Lost, by Paul Krugman, NY Times: Many of us came into 2017 expecting the worst. And in many ways, the worst is what we got.
Donald Trump has been every bit as horrible as one might have expected; he continues, day after day, to prove himself utterly unfit for office, morally and intellectually. And the Republican Party ... turns out, if anything, to be even worse than one might have expected. At this point it’s evidently composed entirely of cynical apparatchiks, willing to sell out every principle — and every shred of their own dignity — as long as their donors get big tax cuts.
Meanwhile, conservative media have given up even the pretense of doing real reporting, and become blatant organs of ruling-party propaganda. ...
Yet I’m ending this year with a feeling of hope, because tens of millions of Americans have risen to the occasion. ... What we’ve seen ... is the emergence of a highly energized resistance...
Let’s be clear: America as we know it is still in mortal danger. Republicans still control all the levers of federal power, and never in the course of our nation’s history have we been ruled by people less trustworthy. ...
So we can’t count on the consciences of Republicans to protect us. In particular, we need to be realistic about the likely results of Robert Mueller’s investigation. The best bet is that no matter what Mueller finds ... Republican majorities in Congress will back up their president and continue to sing his praises. ...
So it’s going to be up to the American people. They may once again have to make themselves heard in the streets. They’ll certainly have to make their weight felt at the ballot box.
It’s going to be hard, because the game is definitely rigged. ... Gerrymandering and the concentration of Democratic-leaning voters in urban districts have created a situation in which Democrats could win a large majority of votes yet still fail to take the House of Representatives.
And even if voters rise up effectively against the awful people currently in power, we’ll be a long way from restoring basic American values. Our democracy needs two decent parties, and at this point the G.O.P. seems to be irretrievably corrupt.
Even at best, in other words, it’s going to take a long struggle to turn ourselves back into the nation we were supposed to be. Yet I am, as I said, far more hopeful than I was a year ago. America is not yet lost.
Posted by Mark Thoma on Tuesday, December 26, 2017 at 05:14 PM in Politics |
Posted by Mark Thoma on Sunday, December 24, 2017 at 11:11 AM in Economics, Links |
I should explain -- taking a few days away -- will be back soon.
Posted by Mark Thoma on Saturday, December 23, 2017 at 10:47 AM in Travel, Weblogs |
"Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can’t contain it":
Republicans Despise the Working Class, by Paul Krugman, NY Times: You can always count on Republicans to do two things: try to cut taxes for the rich and try to weaken the safety net for the poor and the middle class. ...
But ... something has been added to the mix. ...Republicans ... don’t treat all Americans with a given income the same. Instead, their bill ... hugely privileges owners, whether of businesses or of financial assets, over those who simply work for a living. ...
The nonpartisan Tax Policy Center has evaluated the Senate bill, which the final bill is expected to resemble. It finds that the bill would reduce taxes on business owners, on average, about three times as much as it would reduce taxes on those whose primary source of income is wages or salaries. For highly paid workers, the gap would be even wider, as much as 10 to one. ...
If this sounds like bad policy, that’s because it is. More than that, it opens the doors to an orgy of tax avoidance. ... We’re pitting hastily devised legislation, drafted without hearings over the course of just a few days, against the cleverest lawyers and accountants money can buy. Which side do you think will win?
As a result, it’s a good guess that the bill will increase the budget deficit far more than currently projected. ...
So why are they doing this? After all, the tax bill appears to be terrible politics as well as terrible policy. ... The ... public overwhelmingly disapproves of the current Republican plan.
But Republicans don’t seem able to help themselves: Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can’t contain it.
When I realized the extent to which G.O.P. tax plans were going to favor business owners over ordinary workers, I found myself remembering what happened in 2012, when Eric Cantor — then the House majority leader — tried to celebrate Labor Day. He put out a tweet for the occasion that somehow failed to mention workers at all, instead praising those who have “built a business and earned their own success.” ...
Cantor, a creature of the G.O.P. establishment if ever there was one, had so little respect for working Americans that he forgot to include them in a Labor Day message.
And now that disdain has been translated into legislation, in the form of a bill that treats anyone who works for someone else — that is, the vast majority of Americans — as a second-class citizen.
Posted by Mark Thoma on Friday, December 15, 2017 at 11:19 AM in Economics, Politics, Taxes |
Posted by Mark Thoma on Friday, December 15, 2017 at 10:48 AM in Economics, Links |
Posted by Mark Thoma on Wednesday, December 13, 2017 at 04:13 PM in Economics, Links |
Trump, Macron: same fight. LeMonde: It is customary to contrast Trump and Macron: on one hand the vulgar American businessman with his zenophobic tweets and global warming scepticism; and on the other, the well-educated, enlightened European with his concern for dialogue between different cultures and sustainable development. All this is not entirely false and rather pleasing to French ears. But if we take a closer look at the policies being implemented, one is struck by the similarities. ...
Posted by Mark Thoma on Monday, December 11, 2017 at 11:02 PM in Economics, Politics |
Expect the Fed to Stand By Its 2018 Outlook, by Tim Duy: As the Federal Reserve prepares to hike interest rates at this week’s Open-Market Committee meeting, market participants are bidding up short-term rates -- moving toward the Fed expectations of more increases in 2018. That move could continue when the central bank reaffirms its commitment to further tightening next year. ...Continued here at Bloomberg Prophets...
Posted by Mark Thoma on Monday, December 11, 2017 at 11:02 AM in Economics, Monetary Policy |
Posted by Mark Thoma on Monday, December 11, 2017 at 11:00 AM in Economics, Links |
"Less-educated workers are disproportionately likely to move up the job ladder during expansions, but they also slide down during downturns."
This is from Dwyer Gunn at the NBER Digest:
Exploring the Job Ladder to High-Productivity Firms, NBER Digest: Upward movement of workers on a "job ladder" from low-productivity to high-productivity firms is heavily dependent on the business cycle. During booms, net employment at high-productivity firms grows faster than at low-productivity firms, resulting in workers moving up the ladder. During busts, these upward job-to-job changes essentially stop. Net employment flows are instead driven by layoffs, with low-productivity firms losing comparatively more workers than their higher-productivity counterparts.
In Who Moves Up the Job Ladder? (NBER Working Paper No. 23693), John Haltiwanger, Henry Hyatt, and Erika McEntarfer examine demographic patterns in job ladder mobility over the business cycle. Using several datasets from the U.S. Bureau of the Census, they analyze earnings, employment, productivity, and demographic data for 65 percent of the national private sector workforce for the years 1998–2011. Their analysis relies on firm productivity data for a shorter period, 2003–11.
The researchers find that younger workers are disproportionately likely to climb the ladder by moving to more productive firms. Workers under 25, for example, account for only 16 percent of the workforce but 37 percent of the outflows from low-productivity firms and 29 percent of the inflows to high-productivity firms.
Less-educated workers also are disproportionately likely to move up the job ladder during expansions. More-educated workers are less likely to enter employment at low-productivity firms in the first place, but once in such firms they are less likely to separate from them. The researchers hypothesize that more-educated workers may be more specialized, and thus less mobile across firms.
The positive rate of job ladder mobility for younger and less-educated workers is not observed during tough economic times. During contractions, younger and less-educated individuals who are unemployed or out of the labor force are less likely to be hired at all. If working, they are less likely to move up the job ladder to more productive firms, and they are more likely to be knocked off the ladder entirely as a result of job loss. Economic slowdowns, while imposing costs throughout the labor market, are particularly harmful to the employment prospects of younger, less-educated workers.
The researchers note that much of the previous research on the consequences of labor market dynamics during a recession has focused on college graduates, and they suggest that more attention should be paid to the long-term effects on less-educated workers. Because mobility up the job ladder plays a particularly important role in the career paths of younger, less-educated workers, labor market frictions may play an important role in explaining wage differentials between them. In particular, the declining fluidity of the labor market, which has been recently noted, may make it more difficult to climb the job ladder.
Posted by Mark Thoma on Sunday, December 10, 2017 at 01:36 PM in Economics, Income Distribution, Unemployment |
The Republican War on Children, by Paul Krugman, NY Times: ...The Children’s Health Insurance Program, or CHIP, is basically a piece of Medicaid targeted on young Americans. It was introduced in 1997, with bipartisan support. Last year it covered 8.9 million kids. But its funding expired more than two months ago. Republicans keep saying they’ll restore the money, but they keep finding reasons not to do it; state governments, which administer the program, will soon have to start cutting children off.
What’s the problem? The other day Senator Orrin Hatch, asked about the program..., declared, “The reason CHIP’s having trouble is that we don’t have money anymore.” Then he voted for an immense tax cut.
And one piece of that immense tax cut is a big giveaway to inheritors of large estates. Under current law, a married couple’s estate pays no tax unless it’s worth more than $11 million, so that only a handful of estates — around 5,500, or less than 0.2 percent of the total number of deaths a year — owe any tax at all. The number of taxable estates is also, by the way, well under one one-thousandth of the number of children covered by CHIP.
But Republicans still consider this tax an unacceptable burden on the rich...
So ... let’s talk dollars. CHIP covers a lot of children, but children’s health care is relatively cheap compared with care for older Americans. In fiscal 2016 the program cost only $15 billion, a tiny share of the federal budget. Meanwhile, under current law the estate tax is expected to bring in about $20 billion, more than enough to pay for CHIP. ...
By their actions, Republicans are showing that they consider it more important to give extra millions to one already wealthy heir than to provide health care to a thousand children. ..., it’s still hard to believe that a whole political party would balk at doing the decent thing for millions of kids while rushing to further enrich a few thousand wealthy heirs.
That is, however, exactly what’s happening. And it’s as bad, in its own way, as that same party’s embrace of a child molester because they expect him to vote for tax cuts.
Posted by Mark Thoma on Sunday, December 10, 2017 at 12:43 PM in Economics, Social Insurance, Taxes |
Posted by Mark Thoma on Friday, December 8, 2017 at 11:23 AM in Economics, Links |
The conclusion of a post by Harold Feld at ProMarket:
Will Repeal of Net Neutrality Accelerate the Trend in Media Consolidation? The History of Cable Suggests “Yes,” by Harold Feld, ProMarket: ...Based on the history of both the cable industry and the broadband industry (which is, after all, almost entirely derived from the cable industry), we should expect repeal of the net neutrality to rules to accelerate the trend toward vertical and horizontal consolidation. This is particularly true in light of the public statements of chairman Pai and other Republican commissioners indicating they believe that consolidation can offer benefits to consumers and that the dangers of anticompetitive behavior are exaggerated. This is not only true about net neutrality, but generally. Although chairman for less than a year, Pai has already announced that the FCC will simply defer to the Department of Justice on antitrust and to the Federal Trade Commission on consumer protection, and has either repealed or begun the process of repealing the FCC’s longstanding limits on vertical and horizontal media ownership.
Additionally, although Pai and the other Republican commissioners repeatedly refer to state consumer protection laws as providing an additional layer of protection, the draft order repealing net neutrality also contains sweeping language preempting the states from any laws “inconsistent” with the “deregulatory policy” the FCC will adopt on December 14. Charter Communication (which now owns Time Warner Cable) has already rushed to use this language to file a motion to dismiss a lawsuit by the New York state attorney general relating to Time Warner Cable’s 2014 conduct denying New York subscribers access to Netflix. Whether or not this particular motion to dismiss succeeds, we can expect broadband provider to use the broad preemption language in the net neutrality repeal order to block precisely the kind of state consumer protection statutes chairman Pai claims will make FCC oversight unnecessary.
In short, the net neutrality repeal order does for broadband exactly what the 1984 Cable Act did for cable—create an environment with virtually no effective restraint on the ability of providers to favor their own content and discriminate against rivals. We should therefore expect the same result: rapid horizontal and vertical consolidation. While chairman Pai and other supporters of the repeal order dismiss these concerns, they offer no plausible explanation for why this round of deregulation should produce different results beyond an airy wave that all that consolidation is ancient history and how could that possibly happen again?
As we all know, those who refuse to learn from history are doomed to repeat it.
Posted by Mark Thoma on Wednesday, December 6, 2017 at 10:57 AM in Economics, Market Failure, Regulation |
"offsetting those deficits will require going after the true big-ticket programs, namely Medicare and Social Security":
Republicans Are Coming for Your Benefits, by Paul Krugman, NY Times: ...During the Senate debate over the Tax Cuts and Jobs Act, Senator Orrin Hatch was challenged over support for the Children’s Health Insurance Program, which covers nine million U.S. children — but whose funding lapsed two months ago... Hatch ... insisted that “the reason CHIP’s having trouble is because we don’t have money anymore” — just before voting for a trillion-and-a-half-dollar tax cut that will deliver the bulk of its benefits to the richest few percent....
He then went on to say, “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.”
So who, exactly, was he talking about...?
Was he talking about food stamps, most of whose beneficiaries are children, elderly or disabled? ... Was he talking about the earned-income tax credit, which rewards only those who work? Was he talking about Medicaid, which again mainly benefits children, the elderly and the disabled, plus people who work hard but whose jobs don’t provide health benefits?
We can go on down the list. The simple fact is that big spending on people who “won’t lift a finger” doesn’t actually happen in America — only in Hatch’s meanspirited imagination.
Now, to be fair..., some people ... get lots of money they didn’t lift a finger to earn — namely, inheritors of large estates. ...Republican legislation would give these people ... billions and billions of dollars... How can this be justified if it’s supposedly hard to find money for children’s health care?
Well, Senator Chuck Grassley explained it all last week: “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” ...
The important thing to realize, however, is that the hypocrisy and contempt for the public we’ve seen ... is just the beginning..., budget deficits are going to soar... And offsetting those deficits will require going after the true big-ticket programs, namely Medicare and Social Security.
Oh, they’ll find euphemisms to describe what they’re doing, talking solemnly about the need for “entitlement reform” as an act of fiscal responsibility — while their huge budget-busting tax cut for the rich gets shoved down the memory hole. But whatever words they use to cloak the reality of the situation, Republicans have given their donors what they wanted — and now they’re coming for your benefits.
Posted by Mark Thoma on Wednesday, December 6, 2017 at 10:57 AM in Budget Deficit, Economics, Politics, Social Insurance, Taxes |
Will Growth Slow In 2018? And Why?, by Tim Duy: Thinking about the path of policy next year, this quote from Chicago Federal Reserve President Charles Evans (via the New York Times), seems like an important issue:
I think the economy is doing very well. I think it continues to show strength. The second half is looking like very good growth: 2.5 to 3 percent growth. And this is to be measured against our assessment that sustainable growth is more like 1.75 percent. So 2.5 to 3 percent is very strong growth, which should continue to lead to improved labor market activity.
Unless something structural improves to increase trend growth, we’re going to be decelerating to something under 2 percent — and that will still be a pretty good economic picture.
On the surface, this is a fairly straightforward analysis. The supply side of the economy currently grows at roughly 1.75 percent. The demand side is growing at 2.5-3 percent. So it must be true that activity slows to something under 2 percent. ...Continued here...
Posted by Mark Thoma on Wednesday, December 6, 2017 at 10:57 AM in Economics, Monetary Policy |
Posted by Mark Thoma on Monday, December 4, 2017 at 01:04 PM in Economics, Links |
I'm a bit late posting this one:
Republicans’ Tax Lies Show the Rot Spreads Wide and Runs Deep, by Paul Krugman, NY Times: ...Steven Mnuchin, the Treasury secretary, has been lying ... about Republican tax plans. Mnuchin has repeatedly claimed the existence of a Treasury report that — unlike every independent, nonpartisan assessment — found that these plans would pay for themselves... But there is no such report...
Also on Thursday, John McCain — who has delivered sanctimonious lectures on the importance of “regular order”... — declared his support for the G.O.P. tax bill. Remember, Senate leaders rushed this bill to the floor without holding any hearings or soliciting expert testimony..., at the time McCain declared his support, some key provisions were still secret, so they could be presented for a vote with no time for debate.
McCain declared that he had made his decision after “careful consideration.” Careful consideration of what?...
Later that day the joint committee delivered its predictable verdict: Like all other reasonable studies, its review found that the Senate bill would do little for U.S. economic growth, while directly hurting tens of millions of middle-class Americans, blowing up the deficit, lavishing benefits on the wealthy and opening up new frontiers for tax avoidance. ...
But aren’t politicians always cynical? Not to this degree..., there’s no precedent for this frantic rush to pass major legislation... And there’s a world of difference between normal political spin ... and the outright lies that have marked every aspect of the selling of this thing.
Mnuchin said his department had a study showing great effects on growth; that was a lie. Donald Trump says the bill is “not good for me”; that’s a lie. Senator John Cornyn said, “This is not a bill that is designed primarily to benefit the wealthy and the large businesses”; that was a lie. Senator Bob Corker said he wouldn’t support a plan “adding one penny to the deficit”; that was a lie. ...
There are ... further things worth pointing out about this moral rot.
I’m not just talking about Republican politicians... It was remarkable, for example, to see a group of Republican-leaning economists with serious professional credentials put out an open letter clearly intended to lend aid and comfort to Mnuchinesque promises of miraculous growth. ...
And weasel-wording aside, it turns out that the letter misrepresented the research on which it was supposedly based. ...
So what will it take to clean out the rot? The answer, basically, is overwhelming electoral defeat. Until or unless that happens, there’s no telling how low the G.O.P. will sink.
See also: La Trahison des Clercs, Economics Edition.
Posted by Mark Thoma on Sunday, December 3, 2017 at 03:55 PM
Posted by Mark Thoma on Friday, December 1, 2017 at 11:15 AM in Economics, Links |