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Recent quotes:
Evening Must-Read: Janet Currie: Obamacare and Long-Term Competitiveness - Washington Center for Equitable Growth
the federal government will have recouped at least 56 cents for each dollar spent on childhood health care…. Better public health care among low-income children in the 1980s and 1990s resulted in higher graduation rates from high school and college for these kids…
Morning Must-Read: Carter Price: Is a Line of Code More Like a Factory or a Painting? - Washington Center for Equitable Growth
If we believe that once code is written, it is good forever (maybe with a few tweaks or upgrades over time), then the stock of code would grow rapidly. If that stock of code is a substitute for future code, then demand for high-tech workers would decrease over time… push down wages not just for high-tech workers but also for other workers…. But… what if it is more like art?
Evening Must-Read: Lemin Wu: If Not Malthusian, Then Why? - Washington Center for Equitable Growth
Problems of measuring living standards properly go way, way, way back, as Lemin Wu demonstrates:
Lemin Wu: If Not Malthusian, Then Why?: “The pre-industrial stagnation of living standards…
…Technological improvement in luxury production… faster than improvement in subsistence production, would have kept living standards growing…. [There is] a puzzle of balanced growth between the luxury sector and the subsistence sector…. [The hypothesis is of] group selection in the form of biased migration. A tiny bit of bias in migration can suppress a strong tendency of growth. The theory reexplains the Malthusian trap and the prosperity of ancient market economies such as Rome and Song…”
Over at Project Syndicate: Making Do with More - Washington Center for Equitable Growth
If we as a species can avoid nuclear war; curb those among us who are violent because they are God-maddened, state-maddened, or ethnicity-maddened; properly coordinate global action to reduce global warming from its current intolerable projected path to a tolerable one, adapt to the global warming that occurs, and distribute paying for the costs of that adaptation–well, if we can do all of those things, the human race can have a very bright future indeed.
Long-Run Real GDP Forecasts: The Hopeless Task of Trying to Pierce the Veil of Time and Ignorance Weblogging: Focus - Washington Center for Equitable Growth
OK: Now that I am awake and coherent and caffeinated, we may resume…
I draw somewhat different conclusions from the wavering track of potential GDP since 1990 than do the viri illustres Steve Cecchetti and Kermit Schoenholtz:
First, I think that monetary policymakers should not be looking at potential output and the output gap at all. They should be looking at the labor market
Weekend Reading: Peter Temin (1997): Two Views of the Industrial Revolution (Brad DeLong's Grasping Reality...)
Peter Temin (1997): Two Views of the British Industrial Revolution:1
ABSTRACT: There are two views of the British Industrial Revolution in the literature today. The more traditional description sees the Industrial Revolution as a broad change in the British economy and society. This broad view of the Industrial Revolution has been challenged by Crafts and Harley who see the Industrial Revolution as the result of technical change in only a few industries. This article presents a test of these views using the Ricardian model of international trade with many goods. British trade data are used to implement the test and discriminate between the two views of the Industrial Revolution.
Over at Value-Added: Nick Bunker: What to Worry About on the Supply Side - Washington Center for Equitable Growth
Nick Bunker: What to Worry About on the Supply Side: “The… crisis in 2008 and 2009 caused a massive decline in demand…. Perhaps it is [now] time to consider the potential problems on the supply side of the U.S. economy…. Greg Ip does just that…
…issues with both the growth rate of productivity and the supply of labor… John Fernald… on the lack of new advancements in information technology… Stephen G. Cecchetti… and Enisse Kharroubi… [on the] over-bloated financial sector… Equitable Growth’s Robert Lynch… [on] educational inequality…. Supply and demand aren’t… easily untangled…. With the lack of acceleration of wage growth, the labor market appears to still have some slack…. Short-term considerations can help alleviate our long-run problems…. We can’t forget about the supply-side problems that lurk further downstream. Our future prosperity depends on it.
Evening Must-Read: Stephen G Cecchetti and Enisse Kharroubi: Why Does Financial Sector Growth Crowd Out Real Economic Growth? - Washington Center for Equitable Growth
Stephen G Cecchetti and Enisse Kharroubi (2014): Why Does Financial Sector Growth Crowd Out Real Economic Growth? (Basel: BIS) http://www.bis.org/publ/work490.pdf “We… concluded that the level of financial development is good only up to a point…
…after which it becomes a drag on growth, and that a fast-growing financial sector is detrimental…. Financial sector growth benefits disproportionately high collateral/low productivity projects… the strong development in sectors like construction, where returns on projects are relatively easy to pledge as collateral but productivity (growth) is relatively low…. Where financiers employ the [most] skilled workers… productivity growth is lower than it would be had… entrepreneurs attract[ed] the [most] skilled labour…. [Thus] financial booms in which skilled labour work for the financial sector, are sub-optimal when the bargaining power of financiers is sufficiently large…. We focus on manufacturing industries and find that industries that are in competition for resources with finance are particularly damaged by financial booms… manufacturing sectors that are either R&D-intensive or dependent on external finance suffer disproportionate reductions in productivity growth when finance booms…
Morning Must-Read: Matthew Klein: Crush the Financial Sector, End the Great Stagnation? - Washington Center for Equitable Growth
Matthew Klein: Crush the Financial Sector, End the Great Stagnation?: “Productivity growth in the rich world started slowing…
…down around the same time that the financial sector’s share of economic activity started rising rapidly…. The interesting question, then, is whether this process can be put into reverse. Maybe there is a deeper wisdom behind financial regulations that appear to be (at best) pointless. Harassment that encourages an unproductive, resource-hoarding industry to get smaller might be exactly what’s needed in economies plagued by chronically slow growth.
