Tag Archives: Real

An Economist Answers Some of My Questions About "Capital in the 21st Century"

by BoydWooreycu Posted on April 13, 2014

Mother Jones

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On Thursday I posted a couple of very rudimentary comments regarding Thomas Piketty’s blockbuster new book, Capital in the 21st Century. I had questions about Piketty’s estimates of r (return on capital) and g (economic growth) in the past and—much more importantly—how they were likely to play out in the future. But all I had were amateur musings because I am, after all, only an amateur.

However, yesterday Brad DeLong tackled some of the questions I asked in a far more rigorous and disciplined way, teasing out a lot of unstated implications along the way—including the importance of various measures of r and how they relate to the probability of increasing future wealth concentration in the real world. It’s a long post, and complex in places, but highly recommended. If you’re willing to work your way through it, DeLong provides a framework for thinking about Piketty’s model that helps you start to make sense of both the book and its conclusions.

POSTSCRIPT: I’ve gotten a couple of questions about why I seem unduly skeptical, or even harsh, about Piketty’s book. It’s obviously a landmark work, I don’t really mean to be unfair. But it’s a book with innovative and untested ideas that has obvious appeal to anyone left of center, and I think this is precisely the time to avoid unquestioning hosannas. Affinity bias makes us all sympathetic to Piketty’s arguments, and that’s why we should instead question it carefully and thoroughly.

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An Economist Answers Some of My Questions About "Capital in the 21st Century"

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S&P 500 Sets Yet Another Fake Record This Year

by HarrietAMRO Posted on April 1, 2014

Mother Jones

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From the Wall Street Journal:

U.S. stocks kicked off the second quarter with broad gains Tuesday, propelling the S&P 500 index to a seventh record close of the year.

I’ll cop to being sort of pedantic here, but no, the S&P 500 didn’t set a record today, let alone its seventh of the year. Time series like this only make sense if you adjust for inflation, and if you do that the S&P closed 10 percent below its August 2000 peak. Granted, the S&P 500 has more than doubled since 2008, an immensely more impressive performance than, say, median income or the unemployment rate, but it’s still not in record territory.

If you’re curious to see what the real S&P 500 looks like, it’s in the chart below.

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S&P 500 Sets Yet Another Fake Record This Year

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Incompetent Scheming Is Just as Bad As Competent Scheming

by AlissaVigna Posted on March 25, 2014

Mother Jones

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A couple of months ago I wrote about new evidence suggesting that several big Silicon Valley firms had explicitly agreed not to hire away each others’ workers. This case has now gotten more attention, and Tyler Cowen comments about it:

I would suggest caution in interpreting this event. For one thing, we don’t know how effective this monopsonistic cartel turned out to be. We do know that wages for successful employees in this sector are high and rising. Many a collusive agreement has fallen apart once one or two firms decide to break ranks, as they usually do. More follows about how this might play out in the real world

Cowen is an economist, and I don’t want to knock him for doing some economic analysis. Still, this is the kind of thing that gives economics a bad name. Who cares if this scheme was effective? Maybe it was the Keystone Kops version of collusion. What matters is merely that they tried. These companies felt perfectly justified in conspiring to hold down wages in a tight labor market. Like so many titans of capitalism, they think free markets are great just as long as workers who are in high demand don’t get any fancy ideas about what that means.

Throw the book at them. If their scheme didn’t work, it just means they’re incompetent plotters. But they’re plotters nonetheless.

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Incompetent Scheming Is Just as Bad As Competent Scheming

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Italian Magazine Giant Steals My Pope Idea

by LKCWilliams Posted on March 5, 2014

Mother Jones

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The New York Times reports today on a new magazine about Pope Francis:

The 68-page Il Mio Papa (My Pope) will hit Italian newsstands on Ash Wednesday, offering a glossy medley of papal pronouncements and photographs, along with peeks into his personal life. Each weekly issue will also include a pullout centerfold of the pope, accompanied by a quote.

“It’s a sort of fanzine, but of course it can’t be like something you’d do for One Direction,” the popular boy band, said the magazine’s editor, Aldo Vitali. “We aim to be more respectful, more noble.”

Uh huh. Look, can I call it, or can I call it? Below left is my cover mockup cover from a year ago. On the right is the real thing. I demand royalties.

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Italian Magazine Giant Steals My Pope Idea

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More than 20 Million Families Would Benefit From an Increase in the Minimum Wage

by Margherit Posted on February 19, 2014

Mother Jones

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The CBO released a study today on the effect of raising the minimum wage to $10.10. The chart below shows their main finding: millions of families outside the upper middle class would see a net increase in income (partly from higher wages and partly from higher economic growth) while families in the top 20 percent would see a decline (primarily from having to pay slightly higher prices for goods and services):

The cost of this higher income is fewer jobs: CBO estimates that employment would fall by about 0.3 percent, or 500,000 workers. That strikes me as being on the high side of consensus estimates, but it’s probably in the right ballpark.

As economic policies go, that’s not bad. In the real world, there’s no such thing as a policy that has benefits with zero costs. There are always compromises. In this case, in return for the small job losses, 16 million workers would get a direct wage increase; another 8 million would get an indirect wage increase; and nearly a million workers would be lifted out of poverty. That’s about as good as it gets.

All that said, this is a report that I suspect CBO shouldn’t have bothered doing. Their value-add lies in assessing the effects of legislation that no one else is studying. But the minimum wage has been studied to death. CBO really has nothing to add here except its own judgment about how to average out the dozens of estimates in published academic papers. In other words, they aren’t adding anything important to the conversation at all. This report is going to get a lot of attention, but it really doesn’t teach us anything new.

UPDATE: This post originally said that 80 percent of all families would benefit from a minimum wage increase. But the CBO figures don’t actually say that. Families throughout the bottom 80 percent of the income spectrum would benefit, and each individual income bucket that CBO studied would see a net increase in income, but that doesn’t mean every single family would benefit. I’ve corrected the text to reflect this.

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More than 20 Million Families Would Benefit From an Increase in the Minimum Wage

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The Fed Chairman Wore Sensible Shoes Today

by MoseBodincktsh Posted on February 12, 2014

Mother Jones

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Elizabeth Williamson of Real Time Economics, the home for “economic insight and analysis from the Wall Street Journal,” analyzes Janet Yellen’s first appearance before Congress today:

She took her seat at 10:01 a.m., clad in a monochrome suit and sensible shoes, carrying a black vinyl binder with rainbow-colored tabs. Once chided by an uncharitable commentator for wearing the same black dress twice in a row, Ms. Yellen hadn’t bought a new suit for the occasion, her spokeswoman, Michelle Smith, confided to a reporter. “I’ll try to come up with some color for you,” she whispered.

Seriously?

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The Fed Chairman Wore Sensible Shoes Today

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The Fifth Ring: How Conspiracy Theories are Born

by Curtis Tangredi Posted on February 8, 2014

Mother Jones

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As we all know, there was a glitch in the Olympic opening ceremonies yesterday. But not everyone saw it:

Somehow it seemed fitting when a set of floating snowflakes suddenly transformed themselves into Olympic rings — but only four of them. The fifth snowflake never changed.

Russian television viewers, however, saw all five rings, as the show’s producer Konstantin Ernst recognized the malfunction shortly before it occurred and immediately ordered an image from rehearsals to be transmitted in its place. “It would be ridiculous to focus on the ring that would not open,” said Ernst later. “It would be silly.”

That’s quick thinking! But I suspect it’s going to give birth to a thousand conspiracy theories. After all, millions of Russians saw all five rings, so why are all the Americans and Europeans saying there were only four? It must be Photoshop trickery from westerners designed to make Russia the butt of jokes. Right?

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The Fifth Ring: How Conspiracy Theories are Born

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In Rare Break With Tradition, Congress Might Actually Do Something Constructive Soon

by ArlenUAVqa Posted on February 7, 2014

Mother Jones

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In 1997, in an effort to rein in rising Medicare spending, Congress created a formula for paying doctors called the “sustainable growth rate” (SGR). Unfortunately, a few years later, this formula started calling not for sustainable growth, but for actual pay cuts. Doctors went ballistic, and Congress hastily passed a “doc fix” that deferred the scheduled cuts. Then they did the same thing the next year, and the year after that—and then in every year since then. At this point, the SGR is obviously deader than the proverbial doornail, but officially killing it would also officially count as a spending increase, which would officially increase the deficit by a lot. Nobody wants to face up to that, so every year Congress just passes a temporary extension to the doc fix and calls it a day.

But wait! In a rare display of constructive bipartisanship, Congress might actually do something about this. Sarah Kliff explains:

The problem with the sustainable growth rate is it isn’t sustainable at all….But because the doc-fix could cost as much as $300 billion to fix, legislators have stuck with [] short-term patches, which cost significantly less and are a whole lot easier to find offsets to pay for. The math changed this year, however, as health care cost growth has slowed, and the Congressional Budget Office has essentially cut in half the amount it thinks fixing the doc-fix would cost. Now, the CBO says it will cost $153 billion to repeal the sustainable growth rate, and legislators see that lower price tag as making it easier — although by no means certain — to pass legislation.

The proposal released Thursday is a thorough outline of the policies that would replace the doc-fix. What Congress wants to do differently this time around is, by 2021, put as much as nine percent of doctors’ reimbursements at stake if providers can’t hit certain quality standards. It would also include a bonus pool of $500 million for the doctors who do provide really great care.

This is no slam dunk. Congress still has to find $153 billion in offsets, after all. And it’s certainly possible to put a cynical spin on this: there’s no money available for the long-term unemployed, but for doctors? No problem! But I’d be less cynical. After all, it’s not as if doctors won’t get their current pay rates one way or another. This is just a matter of facing up to reality and admitting that SGR didn’t work and never will. That’s basic good governance, and we can use all of that we can get.

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In Rare Break With Tradition, Congress Might Actually Do Something Constructive Soon

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Big Brother Turns Out to Be a Little Less Big Than We Thought

by s02xc3x Posted on February 7, 2014

Mother Jones

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Here’s the latest on the NSA’s phone record collection program:

The National Security Agency is collecting less than 30 percent of all Americans’ call records because of an inability to keep pace with the explosion in cellphone use, according to current and former U.S. officials.

….In 2006, the officials said, the NSA was collecting nearly all records about Americans’ phone calls from a number of U.S. companies under a then-classified program, but as of last summer that share had plummeted to less than 30 percent.

….The bulk collection began largely as a land-line program, focusing on carriers such as AT&T and Verizon Business Network Services. At least two large wireless companies are not covered — Verizon Wireless and T-Mobile U.S., which was first reported by the Wall Street Journal.

Wait a second. If you’re a terrorist planning, say, the destruction of electric power west of the Rockies, all you have to do is make sure everyone on your team has a Verizon cell phone? Huh.

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Big Brother Turns Out to Be a Little Less Big Than We Thought

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Rick Santorum is Still the Same Creepy Guy He Was in 2012

by JosefHueber Posted on February 7, 2014

Mother Jones

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A quick note on the Republican presidential field. In the course of making the case for Paul Ryan as the front runner a few days ago, I failed to mention Rick Santorum as a possible challenger. That was a mistake. He’s going to run, and he belongs on the list.

That said, come on. Is anyone taking him seriously? Yes, he won a few primaries in 2012, but only as the last man standing in the Anyone But Romney marathon. That doesn’t demonstrate an ability to win, it just demonstrates an unusual level of pigheadedness. Santorum was willing to stay in the race for months even though he never polled more than a few percent and was obviously widely disliked. Only when everyone else was gone did conservative voters reluctantly turn to him as their final, forlorn hope of stopping the Romney juggernaut.

So sure, Santorum is going to run. He might do better this time around because his name recognition is higher. But he’s still the same creepy dude he was last time and he still has the charisma of a sea slug. Even the Christian Right obviously finds him a little too self-righteous and a little too shudder inducing. I wouldn’t put him even in the top five of possible 2016 contenders.

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Rick Santorum is Still the Same Creepy Guy He Was in 2012

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