[y66]

From The Experts Keep Getting the Economy Wrong by David Leonhardt at NYT:

Quote

President Trump likes to brag about the supposedly booming economy. So do other Republican politicians. Some journalists have gotten into the habit too, exaggerating the strength of the economic expansion, because it makes for a good story.

Here’s the truth: There is no boom. The economy has been mired in an extended funk since the financial crisis ended in 2010. G.D.P. growth still has not reached 3 percent in any year, and 3 percent isn’t a very high bar.

Last week, while attending an economics conference in Washington, I discovered one particularly clear sign of the economy’s struggles — namely, that it keeps performing worse than the experts have predicted. I put together this chart to show the trend: [see link]

Again and again, Federal Reserve officials have overestimated how quickly the economy would grow. They keep having to revise their forecasts downward, only to discover that they didn’t go far enough down. Economists on Wall Street and other parts of the private sector have made the same mistake.

Over time, the differences between the experts’ predictions and the economy’s performance have added up. The American economy would be about 6 percent larger today — producing $1.3 trillion more in goods and services this year — if the forecasts had come true. And for most families, real-life experience has been more disappointing than the G.D.P. numbers, because much of the bounty of the economy’s growth has flowed to the affluent.

So what is ailing the American economy?

Several years ago, Lawrence Summers — the economist and former Treasury secretary — began using the phrase “secular stagnation” to describe the problem. The term was originally coined during the Great Depression, and it describes an economy that can’t quite get healthy.

When Summers first made his case in 2013, some other economists criticized it as too pessimistic. But the repeated growth shortfalls of recent years suggest he was onto something. At last week’s conference, hosted by the Brookings Institution, Olivier Blanchard — the former chief economist of the International Monetary Fund — said he was now more persuaded by the secular-stagnation story than he first had been. It is, Blanchard said, “more likely than not.”

There are two main culprits. The first is a savings glut. Americans are saving more and spending less partly because the rich now take home so much of the economy’s income — and the rich don’t spend as large a share of their income as the poor and middle class. The aging of society plays a role too, because people are saving for retirement.

The second big cause is an investment slump. Despite all the savings available to be invested, companies are holding back. Some have grown so large and monopoly-like that they don’t need to invest in new projects to make profits. Think about your internet provider: It may have terrible customer service, but you don’t have a lot of alternatives. The company doesn’t need to invest in new technology or employees to keep you as a customer.

Beside a lack of competition, the investment slump stems from what Summers calls the de-massification of the economy. Developers aren’t building as many malls and stores, because goods now go straight from warehouses to homes. Offices don’t need as much storage space. Cellphones have replaced not just desktop computers but also cameras, stereos, books and more. Many young people have decided they’re happy living in small apartments, without cars.

For all of these economic problems, there are promising solutions. But the United States is not giving those solutions a try.

The 2017 Trump tax law is a useful case study. It is a dreadful piece of economic policy — essentially a giant effort to aggravate income inequality. Tax cuts that benefit the wealthy most are huge and permanent. Tax cuts focused on everyone else are smaller and temporary.

But the law still pumped money into the economy last year, thanks largely to those temporary tax cuts for the middle class and poor. And guess what? G.D.P. growth finally met some forecasters’ expectations, as you can see from the first chart above. The economy expanded 2.9 percent in 2018. Unfortunately, the boost seems to have been temporary. In the first quarter of this year, growth has slowed markedly, probably to about 0.5 percent. It will most likely grow faster over the rest of 2019, but not 3 percent. Once again, economists have started downgrading their expectations.

A better policy response would start with a tax cut focused on the majority of Americans, not the wealthy. And there are many other ways to take on secular stagnation. When I spoke to Summers last week, he rattled off a list:

Infrastructure projects, to jump-start investment. The retirement of coal-fired power plants, which would also lead to new investment. Stronger safety-net programs, including Social Security, to reduce the savings glut. More aggressive antitrust policies, to combat monopolies. And a Federal Reserve that, at long last, stopped making the same mistake — of overestimating both growth and inflation.

After a decade of negative economic surprises, maybe we shouldn’t be surprised anymore. Maybe we should try some new solutions.

Edit: Here is Larry Summers' WaPo op-ed in which he summarizes a paper he presented at Brookings last week which ends thusly:

Quote

All of this is to suggest that if secular stagnation is avoided in the years ahead it will not be be because it is somehow impossible in a free market economy, but instead because of policy choices. Our conclusions thus underscore the urgent priority for governments to find new sustainable ways of promoting investment to absorb the large supply of private savings and to devise novel long-term strategies to rekindle private demand.

[Winstonm]

 y66, on 2019-March-11, 05:25, said:

From The Experts Keep Getting the Economy Wrong by David Leonhardt at NYT:


Edit: Here is Larry Summers' WaPo op-ed in which he summarizes a paper he presented at Brookings last week which ends thusly:

Larry Summers from the article:

Quote

Infrastructure projects, to jump-start investment. The retirement of coal-fired power plants, which would also lead to new investment. Stronger safety-net programs, including Social Security, to reduce the savings glut. More aggressive antitrust policies, to combat monopolies. And a Federal Reserve that, at long last, stopped making the same mistake — of overestimating both growth and inflation.

I don't see any of the Republican agenda mentioned.

[cherdano]

As a German taxpayer, I contributed to various reparation payments the German government made over the years, e.g. to Holocaust survivors, and to victims of German war crimes. What do I have to do with it?

My father saw his father (who had been pastor in the "Bekennende Kirche", the faction of the protestant church that resisted the Nazis) only once, at the age of 4 months, before he died as a soldier in the war. My mother was displaced at the age of four (long story) at the end of the war. Her parents were neither resistance heroes nor Nazi supporters, rather, as best as I could tell, part of the majority who tried to stay out of politics to focus on their job and family.

Does anyone think I should have opposed these reparation payments because I, personally, had nothing to do with the original crimes? Or would people argue that I, by growing up in Western Germany and accepting my German citizenship, inherited not only the draw of luck to grow up in one of the richest countries, but also some responsibility for its history, the good and the bad (in this case, the ugly)?

[kenberg]

 cherdano, on 2019-March-11, 11:22, said:

As a German taxpayer, I contributed to various reparation payments the German government made over the years, e.g. to Holocaust survivors, and to victims of German war crimes. What do I have to do with it?

My father saw his father (who had been pastor in the "Bekennende Kirche", the faction of the protestant church that resisted the Nazis) only once, at the age of 4 months, before he died as a soldier in the war. My mother was displaced at the age of four (long story) at the end of the war. Her parents were neither resistance heroes nor Nazi supporters, rather, as best as I could tell, part of the majority who tried to stay out of politics to focus on their job and family.

Does anyone think I should have opposed these reparation payments because I, personally, had nothing to do with the original crimes? Or would people argue that I, by growing up in Western Germany and accepting my German citizenship, inherited not only the draw of luck to grow up in one of the richest countries, but also some responsibility for its history, the good and the bad (in this case, the ugly)?

Each situation is different. regardless of what's different and what's similar, the important thing is that each situation is different and it doesn't work to say "this is what we did, you should do the same".

Here is one difference: Here in the U.S., I think, I am pretty sure, most African-Americans wish to stay in the U.S. and I have known a reasonable number of Africans who have moved or who wish to move to the U.S. I have known many people from other countries who wish to be here. When I was a grad student there was a sizable Indian population who very much wished to stay here and would work on how to bring this about. So we are not speaking of what could be called a divorce settlement where some money changes hands and nobody ever has anything to do with the other afterward. I think we need to do a lot of work on opportunity. I'm not minimizing difficulties, but we have had a lot of people come here and overcome difficulties. I think of a cash settlement as part of a good-bye agreement. For people who are staying, it's in everyone's interest to make this a success. Giving someone a large lump of cash is not in my best interest, helping to set things up so that people of all races have a decent chance for a good life is very much in my interest and in the interest of everyone else. This makes it far more likely to be supported and to succeed.

This might not appeal, but then I'll just leave it as saying that every situation is different. I am prepared to fund better schools and other gateways, I am not prepared to hand over a large lump of cash.

[helene_t]

 cherdano, on 2019-March-11, 11:22, said:

Does anyone think I should have opposed these reparation payments because I, personally, had nothing to do with the original crimes? Or would people argue that I, by growing up in Western Germany and accepting my German citizenship, inherited not only the draw of luck to grow up in one of the richest countries, but also some responsibility for its history, the good and the bad (in this case, the ugly)?

Maybe it is meant as a rhetorical question but I will try to answer anyway.

- You should pay your taxes (duh).
- You don't have to agree with the reparations.
- You are not personally responsible for anything other than your own behaviour.

(West) Germany has assumed responsibility for the Holocaust. This is quite unique - school children all over the World learn that their own leaders have always been glorious while all other countries have sometimes had evil, barbaric leaders. In my opinion the (West) German approach is admirable. I think that they made the right choice. It may be a bit frustrating for young Germans that so many foreigners have negative stereotypes about them because of what some of their grandparents did, but I think in many ways the current state of Germany, as well as its international relations, are a lot better than they would have been if Germany had sugarcoated the Holocaust.

[awm]

Reparations are often depicted as a direct cash payment to the descendants of slaves. Even though slavery was in every way awful, there's a lot to dislike about this proposal. Slavery in the USA ended over 150 years ago, so the vast majority of potential beneficiaries have never even met a relative who lived through those times. This is quite different from Germany's holocaust reparations, much of which went to the survivors or the victims' immediate relatives.

Of course, there is quite a bit of racism in the USA today (and it was quite a bit worse 50 years ago than it is today), and one could argue that these reparations are at least in part for things that happened after slavery. But I'm not convinced that the modern Latino-American or Muslim-American experience is much better than the African-American experience... so why shouldn't these groups receive "reparations" too?

There is also the longer-term issue; a direct cash payment will certainly help some people. But it won't make racism go away. In fact, the short-term effect will surely be to make racism worse, confirming the impressions of poor white people that government benefits are all about offering free money to "undeserving minorities."

It seems likely that some sort of preferential investment of funds to improve schools, housing, childcare, and work opportunities in heavily minority communities would be a better use for this money than a straight cash payment, both in terms of helping the situation in the longer term and reducing the immediate racist backlash to the programs. I've seen such investments also referred to as "reparations" at times, weirdly by their proponents (even though this term seems very politically loaded and referring to the programs in this way would seem to reduce their chances of passing).

[hrothgar]

 awm, on 2019-March-11, 16:11, said:

But I'm not convinced that the modern Latino-American or Muslim-American experience is much better than the African-American experience... so why shouldn't these groups receive "reparations" too?

The ancestors of the overwhelming majority of Latin Americans and American Muslims came to the United States voluntarily. In contrast, enormous numbers of African Americans are the descendents of slaves who

1. Were forcibly brought to the United States
2. Had the product of their labor stolen from them (labor that built enormous wealth for their white owners)

In addition to this, the current descendents of these slaves were forced into slums via red lining and property covenants.
In many cases, when African Americans were able to build successfully communities, these were destroyed by rioting whites.

And of course, when blacks had the effrontery to try and make use of the public education system, whites fled these school districts en mass and then started defunding the commons. When blacks were granted the right to vote, white started introducing massive racial gerrymandering.

I agree that Latin Americans and American muslims face horrible discrimination, but I don't think it comes close to the past or current experience that African Americans face.

[y66]

I think you deal with this by making the case for fixing parts of the system that are broken including gerrymandering, voter suppression, the justice system and the way we fund public schools. Targeting specific subpopulations and calling this reparations undermines the goal.

[barmar]

 cherdano, on 2019-March-11, 11:22, said:

As a German taxpayer, I contributed to various reparation payments the German government made over the years, e.g. to Holocaust survivors, and to victims of German war crimes. What do I have to do with it?

My father saw his father (who had been pastor in the "Bekennende Kirche", the faction of the protestant church that resisted the Nazis) only once, at the age of 4 months, before he died as a soldier in the war. My mother was displaced at the age of four (long story) at the end of the war. Her parents were neither resistance heroes nor Nazi supporters, rather, as best as I could tell, part of the majority who tried to stay out of politics to focus on their job and family.

Does anyone think I should have opposed these reparation payments because I, personally, had nothing to do with the original crimes? Or would people argue that I, by growing up in Western Germany and accepting my German citizenship, inherited not only the draw of luck to grow up in one of the richest countries, but also some responsibility for its history, the good and the bad (in this case, the ugly)?

I think it's easier to understand Holocaust reparations, because this atrocity is much more recent, and you can find direct descendants of people who were displaced to concentration camps, or lost family members in the gas chambers.

I can understand Ken not wanting to pay reparations out of his pocket. He personally doesn't discriminate against black people, and perhaps his ancestors were abolitionists.

But reparations don't come from individuals, they come from the country as a whole. As a society, America did horrible things to black people centuries ago. Although we put and end to the worst of it (slavery), the current status of black people as a group (higher unemployment, poorer education, lower wages, more violence in their communities, higher incarceration rates) is clearly a direct consequence of that history.

Ideally we should solve those ongoing social problems. But that's incredibly hard. We have loads of laws against discrimination, but it's hard to prove that someone is violating them. And most of the problems black people face are not due to overt discrimination. Mostly it's due to a vicious cycle -- if you grow up in a poor neighborhood you'll go to a poor school, get a not-great education, and have little chance of "movin' on up". No amount of legislation can erase unconscious biases.

[barmar]

 Winstonm, on 2019-March-10, 17:37, said:

Why would Individual-1 lie about this? Because he has to. He has no choice.

I think he just can't help himself. A major aspect of his narcissism is the inability to let any slight go. He thinks he's perfect, one of the smartest people in the world, so he can't admit a little slip of the tongue.

Although that was his excuse in Helsinki after he told the world that he believed Putin.

[kenberg]

 barmar, on 2019-March-11, 17:55, said:

I think it's easier to understand Holocaust reparations, because this atrocity is much more recent, and you can find direct descendants of people who were displaced to concentration camps, or lost family members in the gas chambers.

I can understand Ken not wanting to pay reparations out of his pocket. He personally doesn't discriminate against black people, and perhaps his ancestors were abolitionists.

But reparations don't come from individuals, they come from the country as a whole. As a society, America did horrible things to black people centuries ago. Although we put and end to the worst of it (slavery), the current status of black people as a group (higher unemployment, poorer education, lower wages, more violence in their communities, higher incarceration rates) is clearly a direct consequence of that history.

Ideally we should solve those ongoing social problems. But that's incredibly hard. We have loads of laws against discrimination, but it's hard to prove that someone is violating them. And most of the problems black people face are not due to overt discrimination. Mostly it's due to a vicious cycle -- if you grow up in a poor neighborhood you'll go to a poor school, get a not-great education, and have little chance of "movin' on up". No amount of legislation can erase unconscious biases.

I want to take out a part:

"I can understand Ken not wanting to pay reparations out of his pocket. He personally doesn't discriminate against black people, and perhaps his ancestors were abolitionists.

But reparations don't come from individuals, they come from the country as a whole."

If most people are approximately like me, which I think they are, then taking it from the country as a whole is taking it from a large number of individuals. Unless we believe that the money comes from the tooth fairy, it comes from individuals. I just yesterday signed off on my tax return. I believe it is called an individual tax return, and it's not just a name. I, an individual, pay taxes. If we decide, as a country, to pay reparations, I, as an individual, will be forking up my share of the cash to do so. It's true that so will others, just as others are paying taxes for roads, schools and defense, but the money comes from my individual bank account. For roads, schools and defense, and for a good many other things, I am ok with this. For some things, I am not ok with it. I figure if I am forking over the money, I have a say. My individual say. If I am out voted, so be it. But I don't think I will be.

[Chas_P]

 barmar, on 2019-March-11, 17:55, said:

But reparations don't come from individuals, they come from the country as a whole.

The "country as a whole" is made up of INDIVIDUALS. All of us...one by one...as INDIVIDUALS are a part of the "country as a whole". Taxes are not paid by the "country as a whole". They are paid by INDIVIDUALS. Corporations do not pay taxes; they just collect taxes; taxes are considered a cost of doing business and added to the price of the product, so the taxes ultimately are paid by INDIVIDUALS. Therefore reparations, if considered being paid by the "country as a whole" would also ultimately be paid by INDIVIDUALS...all of us, one by one.

[johnu]

 Chas_NoDignity_NoIntegrity, on 2019-March-11, 20:01, said:

...

[johnu]

 Winstonm, on 2019-March-10, 17:37, said:

This may seem an innocuous story, but from my perspective it shows the incredible risk of having a malignant narcissist as president.



Why would Individual-1 lie about this? Because he has to. He has no choice.

Why would Dennison lie about winning a golf tournament he didn't even play in?

Golf Magazine: Trump won a tournament he never played in

Quote

Golf Magazine is reporting that the President has a plaque in his golf club in West Palm Beach stating that he won the club's annual golf championship last year. But he never actually played in that tournament.

I hear he had 6 hole in ones that tournament, and shot a 39 under par round (beating Kim Jung-un's record score of 38 under par in a round) to set a world record for best golf score ever.

There is no evidence that Time Magazine named him golfer of the year and put him on the cover to commemorate that occasion.

[cherdano]

 kenberg, on 2019-March-11, 15:32, said:

Each situation is different. regardless of what's different and what's similar, the important thing is that each situation is different and it doesn't work to say "this is what we did, you should do the same".

No. But comparing different but similar situation may help avoiding cognitive biases. No reasoning is stronger than motivated reasoning, and no motivation is stronger than "it would cost me money".

For example, do you think German reparation payments to Holocaust victims were contingent on the victim living outside of Germany? No? Then maybe that distinction isn't all that important.

[cherdano]

Let's say you read a cartoon version of US history. 150 years of slavery, ended only in a bitter civil war. Segregationist laws for another century, followed by 50 years of systematic housing discrimination (in part enabled by loan underwriting by the federal government) that helped keep up segregation in practice (along with highly localised funding structures for schools ect.). One of the founders of the country is still revered to as a demi-god even though he literally had a sex slave.

Wouldn't you think that at some point there should be a genuine collective apology, and an attempt to make up for things?

Of course, there is a reason restorative justice puts an admission and acknowledgment of guilt before restitution. Clearly, the US isn't there yet. Which can already be seen that protesters against persisting systemic disadvantages are being told off for being too disruptive, because of their acts of terrorism street riots kneeling during the national anthem.

[hrothgar]

 Chas_P, on 2019-March-11, 20:01, said:

The "country as a whole" is made up of INDIVIDUALS. All of us...one by one...as INDIVIDUALS are a part of the "country as a whole". Taxes are not paid by the "country as a whole". They are paid by INDIVIDUALS. Corporations do not pay taxes; they just collect taxes; taxes are considered a cost of doing business and added to the price of the product, so the taxes ultimately are paid by INDIVIDUALS. Therefore reparations, if considered being paid by the "country as a whole" would also ultimately be paid by INDIVIDUALS...all of us, one by one.

So what?

[kenberg]

 cherdano, on 2019-March-12, 02:01, said:

No. But comparing different but similar situation may help avoiding cognitive biases. No reasoning is stronger than motivated reasoning, and no motivation is stronger than "it would cost me money".

For example, do you think German reparation payments to Holocaust victims were contingent on the victim living outside of Germany? No? Then maybe that distinction isn't all that important.

I have not thought much about German reparations. I am vaguely aware of some apology or possibly financial settlement that the Japanese made regarding how some people. especially women used as "comfort girls", were used during the war but I never looked at the details. I figure other countries have their past, and their present and their future, to deal with, we have ours.

Dismissing views as cognitive bias seems to be all the rage these days. Someone sees things differently? Well, obviously they are suffering from cognitive bias. People who agree with me are rational, those who disagree have cognitive bias.

I favor the use of money, personal and collective, to improve life.My life is comfortable enough, I have no, or at least little, interest in luxuries, so spending to advance education and other forms of opportunity appeals to me. I don't see it as a burden, I see it as something worth doing. But that doesn't mean I favor all forms of spending. Reparations are something I do not favor.

To just take a moment to address "do you think German reparation payments to Holocaust victims were contingent on the victim living outside of Germany?". No, of course not, and I never said such a thing. I do think, although I have not studied the matter, that starting from the late '30s onward Jews wanted very much to get out of Germany and after the war most Jews who were still there and still alive would not be interested in staying there no matter what they were paid. So the situation was different. That's what I was describing. The situation was different.

[hrothgar]

 kenberg, on 2019-March-12, 06:14, said:

after the war most Jews who were still there and still alive would not be interested in staying there no matter what they were paid.

My experience is quite different.

Germany is currently considered one of the best countries for Jews in Europe.
I'd certainly rate it higher than, say, France, England, Poland, Russia, or Turkey

I think that your claim is almost certainly correct in the immediate post war period. Not so sure since, say the late 80s / early 90s

[y66]

From David Leonhardt at NYT:

Quote

Gene Sperling has been the common denominator of Democratic economic policymaking over the past three decades. After joining Bill Clinton’s 1992 presidential campaign, he spent eight years working in the Clinton White House and, later, five years in the Obama administration. Name a major Democratic policy push related to the economy — anti-poverty programs, taxes, health care — and Sperling has been involved.

Yesterday, he published an essay in the journal Democracy reflecting on the single biggest lesson he’s learned. It is the power of economic dignity — which, he argues, should be “the singular end goal for economic policy.”

It’s an important essay, because many leading Democrats are now talking directly about dignity or about ideas related to it. Sperling tries to offer a framework for the subject. He explains the history of economic dignity in the American context, from colonial days to Martin Luther King Jr. to today’s progressive activists. He also offers a three-part definition: being able to care for one’s family; having the opportunity to reach one’s potential; and being free from domination and humiliation.

As Sperling said to me yesterday: If people were asked on their deathbed what had mattered most in their economic lives, what would their answer likely be? It would involve dignity, he argued.

“Focusing only on hard economic metrics — even ones other than G.D.P. — can make many people’s pain invisible and shield policymakers from seeing what matters most in people’s lives,” he told me. “If you are a care or domestic worker, whether you are treasured or harassed and treated with abuse can matter most deeply to your sense of economic dignity and never show up in any economic metric.”

The essay is full of policy ideas: a more skeptical approach to trade deals and to large corporations; a higher minimum wage and larger earned-income tax credit (but not a Universal Basic Income); increased pay for “double-dignity” jobs, like home care workers and preschool teachers.

Yet perhaps the essay’s sharpest point is the notion that politicians shouldn’t focus on policy mechanisms. They should focus on principles. When a political debate revolves around means rather than ends — like private vs. public health insurance — people often retreat to their tribal corners. When a debate instead revolves around principles — people with serious illnesses shouldn’t have to pay more health insurance — progress becomes easier.

Principles before implementation? Good idea.

Edit: Sperling's essay includes these lines

Quote

FDR always explained his vision of the New Deal through compact values: “What do the people of America want more than anything else? To my mind . . . two things . . . .  work and security . . . . They are the spiritual values, the true goal toward which our efforts of reconstruction should lead.” In his book on FDR’s Second Bill of Rights, Cass Sunstein indeed points out that New Deal policymakers were willing to opt for economic support through employment even if it was more expensive than pure cash relief, because it honored our American sense of a social compact. Social Security was based less on “giving old people money” than it was on the compact values that “[o]ur old-age pension system . . . must be given in a manner that will respect the dignity of the life of service and labor which our aged citizens have given to the nation” [emphasis added].

and concludes thusly:

Quote

Debates over political trends, warring policy camps, economic metrics, and winning economic strategies are the lifeblood of our national political and economic dialogue. But they can also come at a cost: It becomes too easy for too many of us to dig in on specific policies and strategies as if they were ends in themselves. Having a clear view of what our end goal for human well-being is—and keeping it front and center—can help all of us be open to new evidence and committed to continually evaluating what works best to achieve economic dignity for all.

Government cannot guarantee happiness. But there is little question that with wise and just policy, we do have the power to say to all our people that if you do your part, you can care for family, pursue potential and purpose without ever feeling that you have been given up on, and participate in our economy with a degree of fairness and respect as opposed to domination and humiliation. That much—that basic promise of economic dignity for all—is something that is within our grasp.