Links (11/06/19)

• How and why economics forgot Keynes’ warnings on panics - FT Alphaville 
  In a new paper (hat-tip to the University of Washington’s Fabio Ghironi for drawing our attention to it), Nobel Prize winning economist George Akerlof does a brilliant job of explaining how and why, in the decades before the financial crash, macroeconomists failed to include any meaningful role of the financial system in their economic models.
• The End of Neoliberalism and the Rebirth of History - Joseph E. Stiglitz 
  For 40 years, elites in rich and poor countries alike promised that neoliberal policies would lead to faster economic growth, and that the benefits would trickle down so that everyone, including the poorest, would be better off. Now that the evidence is in, is it any wonder that trust in elites and confidence in democracy have plummeted?
• Attack of the Wall Street Snowflakes - Paul Krugmn 
  Why can’t financial tycoons handle criticism?
• Is Rising Concentration Hampering Productivity Growth? - FRBSF 
  U.S. productivity is growing slower than in the past. Meanwhile, sales have become increasingly concentrated in the largest businesses. Analysis suggests that IT innovation may have facilitated the rise in concentration by reducing the cost for large firms to enter new markets. This contributed to booming productivity growth from 1995 to 2005. Though large firms are more profitable, their expansion may have increased competition and reduced profit margins within markets. Lower profit margins in a given market could have deterred innovation, eventually lowering growth.
• Automation and its enemies - VoxEU 
  Mechanisation during the Industrial Revolution accelerated economic growth and prosperity in the long term, but it was fiercely opposed by workers who did not share in its short-term gains. This column argues that similar forces are at play today. A new revolution in automation is eliciting resistance since it threatens to render jobs redundant. The column proposes policy interventions to raise productivity and prosperity in the short term, to reap the benefits of the new technologies in the long term.
• Economy Creates 128,000 Jobs in October; Unemployment Edges Up to 3.6 Percent - Dean Baker 
  Employment rates for prime-age workers (ages 25 to 54) hit a new high for the recovery.
• Did Warren Pass the Medicare Test? I Think So - Paul Krugman 
  Last week I worried that Elizabeth Warren had painted herself into a corner by endorsing the Sanders Medicare-for-all plan. It was becoming obvious that she couldn’t stay vague about the details, especially how to pay for it; and some studies, even by center-left think tanks, suggested that any plan along these lines would require large tax hikes on the middle class. So what would she come up with? Well, the Warren plan is now out. And I’d say that she passed the test.
• The United States, Japan, and the Global Economy - Richard Clarida 
  I appreciate this opportunity to speak today at the Japan Society, a respected institution dedicated to studying, advocating, and expanding interactions between the United States and Japan.1 While the society's remit is broad and includes arts, culture, and education, I will, perhaps not surprisingly, focus my remarks on our two economies. Japan is an important economic partner of the United States, and our economies are linked through trade in goods and services as well as capital flows that affect interest rates and other aspects of financial markets. Through these channels, developments in Japan can affect economic conditions in the United States, and vice versa. More broadly, beyond bilateral linkages, economic conditions in United States and Japan are tightly linked to global economic developments, and today I will discuss several of the global factors that are relevant to the outlook for both economies. First, I will review the current U.S. outlook and some key global risks to that outlook that we are monitoring at the Federal Reserve. I will next elaborate on the channels through which global factors affect domestic economic conditions in the United States and, in some cases, also Japan. I will conclude with some remarks about the monetary policy decision we announced on Wednesday.