I just want to say that former Weeds co-host Jane Coasten's brilliant joke - "Between Biden, Blinken, and Yellen, I fear the US may soon descend into gerundocracy" has burned itself into my skull and now immediately springs to mind whenever Blinken/Yelllen are mentioned.
I think that a gerund does have to end in "ing." "Living is easy" contains a gerund; "To live is easy," does not. Still it is fun to think of Joe "Bidin' his time." or "Janet Yellin' at the Fed."
"To live" is a verb in it's infinitive form, not a verb being used as a noun. -Ing verbs are by far the most common way you see a gerund and so it's sort of used as a short hand when people are explaining it, but it isn't necessary.
I found this an excellent overview of his current thinking on how liberals/progressives should embrace a focus on expanding supply abundance. Also goes through the large and novel challenges on addressing supply issues relative to traditional supply-side economics (e.g., tax cuts and blanket deregulation) or traditional demand side interventions (e.g., stimulus checks and cash benefits).
And in general, I highly recommend the Odd Lots podcast. It’s an exceptionally entertaining and educational survey of numerous current economic themes.
Is there a market failure that justifies government subsidies for child care?
Yellen seems to imply that raising women's labor force participation is an end in itself, but as an economist she must know that isn't true. Mothers also want to spend time with their children, so there's an opportunity cost to working.
The main question here is whether well-designed pre-K programs can reliably improve children's life outcomes (a positive externality). There seems to be some debate about the empirical evidence, with Freddie de Boer being predictably skeptical.
If he's right, wouldn't a cash child benefit be better than spending the same amount of money as tied funding for group care?
Yea, the theory that childcare spending somehow fuels more growth seems pretty half baked. Like I guess the theory is that women with high productive capacity are wasted on childcare? But then the same plans all seem to want daycare employees to have a BA, so you're not actually creating useful employment for less credentialed people. So then you're left with the theory that childcare providers can be trained to be so much more effective at raising a child than their parents that you gain efficiency that way? But that seems really poorly supported to me, also just kind of a technocratic dystopia run amuck situation. It all seems like like a cup and ball game intended to to shift unpaid parenting labor into measurable GDP to make politicians look better with very little practical effect.
Yes. We have that insanity in prospect in DC where they want to raise the costs of providing child care by requiring a degree in Early Childhood education. Early Childhood Education is good and if parents could afford it, child care centers would probably be willing to pay more to people with that education. But restriking the supply instead of subsidizing demand is basakwards!
I know when my sister worked for a daycare in Chicago, they paid for her community college classes to get an associates degree in early childhood education and gave her a pay bump after she got it. While she earned it, she worked there full time. As community college is usually quite affordable, this seems to be a sensible middle way to transition a child care system from glorified babysitters to higher quality preschools.
If someone’s productive capacity were wasted on childcare, they’d be able to afford childcare. If you struggle to afford childcare, whatever else you are doing is objectively not all that valuable compared to childcare.
This is only true in a world in which workers are paid their marginal product. If they’re paid less, the social returns to work may be higher than the private returns.
Okay, but a primary reason you’d be paid much less than your marginal product is tons of other workers can easily replace you. Also we’re talking about a massive social cost to be borne by taxpayers to keep you in the labor market. If the “social” return to your labor is, like, your firm’s profit margin then that seems like a raw deal.
I get that childcare is seen as demeaning and consigning parents to the home to do it themselves can feel barbarically cruel. I just don’t think childcare discourse takes seriously enough the fact that it is actually one of the most expensive things money can buy. Its status should be a lot higher!
I am also all for giving people more agency and autonomy over their lives. But giving people at great public expense, specifically the ability to hold down jobs that aren’t even that good, seems like a monkey’s paw form of that.
The best case for having strangers look after your kids is probably the Case Against Education one that adult success is so dominated by genetic talents that a lot of the childhood environment just comes out in the wash, so you might as well take a higher-paying job and pay someone else the imputed[1] value of the childcare you would otherwise have performed without sacrificing anything other than a few hedons of good times (for a kid who won't remember much of any of it anyway) with minimal impact on long-term prospects.
[1] actually less than the imputed value of parent-performed childcare, see my above comment to JCW
Is it just financial success that is heavily dependent on genetics? Because if so, beyond the hedons you mention, parents may want their children to be successful in something other than money, such as values or morals, in which case it is a very large risk to trust the development of your child's values to someone who may not share yours.
If you see the economy as constrained by labor force participation, because you straight up have too few workers relative to available jobs, raising women’s participation really would be an end in itself.
Another way to think about it would be to say that you have an artifact of culture here, which is that stay at home moms actually ARE participating in the labor force, even though we don’t call it that. Seen that way, you would say that many moms are stuck in very low productivity jobs, which is bad for them AND bad for the economy.
Obviously, if women want to accept lower wages for ancillary benefits of being a mom, that’s fine in the same way that I have accepted lower pay in order to do work that I value more in other ways (going back to nursing school at age 42: a suboptimal earnings choice). But right now it’s not a choice for lots of women. We just have a system that systematically underpays people involved in childcare in part by taking advantage of cultural pressures on women to provide the labor for free at very low levels of efficiency, thus making everyone worse off.
I’m not necessarily pro or anti-subsidy; I’m kind of agnostic on the policy. But the reason the discussion is weird is that it’s trying to slot an economics discussion into a cultural artifact.
The alternative to to change regulations to promote meaningful flexible and part-time employment so that a parent doesn't have to make a binary choice between a career and their family.
Throwing tons of money at child-care so that Moms and Dads can spent as little time as possible with their newborns before being forced back to the workplace is bad policy IMO. The bigger issue is that our labor models have not substantially changed for most of a century and they no longer meet the needs of parents and families in our modern society.
I would basically agree with this, but I would root it in a deeper problem which is that I think our whole society just systematically devalues women's labor for a basket of reasons that are cultural but also have to do with childcare, and that distortion just screws everything else up, top to bottom, creating all kinds of inefficiency and frustration.
I'm not sure if it necessarily makes moms or kids worse off relative to daycare for a child -- particularly one pre-kindergarten age--to be raised by one of the people with the most direct interest in the child's wellbeing and education and who presumably likes spending time with the kid.
Parenting and childcare is a ton of work and kids can be exhausting, and people (including mothers) definitely can have heterogeneous preferences, but also there's a certain degree to which childcare is inherently a low-productivity job because short of putting (mobile) children in a padded cell, there aren't a lot of ways we know of beyond close supervision with a very low adult-to-child-ratio to deal with the fact that curious children spend hours every day finding new and creative ways to potentially injure themselves.
To first order you're right that we would want that supervision provided by people with the lowest opportunity cost as far as doing other things, but in practice that requires overcoming both coordination costs and -- more importantly -- stipulating that all childcare is fungible, even though agency costs are probably going to be lowest by far for parents looking after their own children.
We've used daycare for our own young kids so I'm not trying to go after anyone here and I don't have an axe to grind, the point is just that these are tangible considerations that make the imputed value of childcare *by parents* (both in emotional returns to carer and quality of care / lack of agency costs for the child) potentially higher-value than the explicit value of childcare by strangers as a more commodified service, so it's a little over-simplified to say that it's "bad for moms" for be doing childcare in that respect.
I basically agree with your priors, but there's a couple of points I would make here:
1) If you agree--and I do!--that quality childcare requires low child-to-adult ratios, and you note that a large percentage of parents only have one child of that age in the house, then you are still wasting a ton of labor. Like, even if you set the ratio at 2:1 children to adults for good care, then a mom with one child is half as productive as theoretically possible. That's a crazy-high level of inefficiency.
As you say, the equation is actually much, much more complicated than that. I totally agree that it is easy to overstate the gains. But I'm trying to suggest that it is also easy to underrate just how big of efficiency gains are out there, so my intuition is that there are gains to be made when you cost it all out in some theoretical alternative policy structure, which is why you might say, as Yellen did, that labor force participation is itself a goal of the policy.
2) When I say "bad for moms," what I'm really saying is that it is bad for them to do childcare because we make policy choices based on a cultural artifact that devalues their labor. If a mom has two choices that provide equal "benefit" to her (since that can be money, but it can also be emotional satisfaction, etc.), and the choices are 1) enter the formal labor force doing labor that makes more efficient use of her talents or 2) stay home doing childcare labor that makes less efficient use of her talents, it is fine for her to make either choice but "bad" for the rest of us, in a theoretical sense, if she picks #2. But if the mom WANTS to do #1, but we have systematically undervalued her labor to the point that #1 is an equal (or lesser) choice, that's straight-up bad for her AND bad for the rest of us.
So, just to pick an example from the news, right now there is a teacher shortage in parts of the United States. There are some number of stay-at-home moms that could theoretically fill those jobs but for whom the calculation doesn't make sense, because they are squeezed in both directions. "Teacher," like most jobs culturally coded as "female," pays lower wages than you would expect (based on things like credentialing requirements and theoretical importance). So that down-weights working. Childcare is also expensive, which up-weights being a stay-at-home parent. And juggling the two creates frictions and hassles, as you know. So there are some number of stay-at-home parents who in an ideal world would be labor force participants but are not, and everyone is worse off: the community that needs more teachers AND the moms who would kind of prefer to be teachers but for whom it just doesn't quite make sense at the margins.
This is especially, especially true for younger moms, for whom the thing that would long-term bring the most benefit to everyone would be additional training. We need more primary healthcare providers (GPs and nurse practitioners) in the United States, but if you have a baby one year out of college, it just doesn't make any kind of sense to pay for childcare so you can take out huge loans to not make money for another eight years and go to medical school. A few people do it, because a few people can do just about anything, but the calculus is way off. So we're just wasting a ton of working talent in the U.S.--moms who would themselves be happier and all of us better off if we didn't systematically underprice women's labor through the mechanism of culturally pricing their childcare labor at "free."
The thing I'm skeptical of here is whether the monetary undervaluing of childcare is all that closely connected to it being traditionally women's work. It seems to me that most things people will do voluntary for their own satisfaction tends to be underpaid. Musicians, for example, tend to not be paid very will and most careers in performing music tend to pretty low paid unless you develop an exceptional reputation.
I prefer doing some percentage of raising my kids, even if childcare was free, because there's many aspect of it that I believe I can do better, by virtue of them being mine. I'm sure many other parents feel the same way and I tend to think Yellen and many other professional Dems underestimate how common that sentiment it.
I feel like this is one of those areas where priors matter a lot, because it gets into how you think about "value" and what you believe about a basket of other stuff, such as "is women's labor undervalued?" (my claim) and why or why not. I could offer some evidence for my own view on the matter, but it's the usual stuff, so I presume you already know it.
I would be curious as to how much care you decided to forego as a stay-at-home parent. No daycare at all until your children started school? Summers during school years? I mean, all of us do some percentage of raising our own kids, in the form of nights and weekends.
I actually taught night school for a year so that I could stay-at-home parent when my child was a toddler, but to be perfectly honest I think he got more out of daycare because of the socialization aspect once I went back to a daytime job. Certainly his language development (which had been lagging) took an immediate big step forward (God bless you, Ms. Kelsie). So what's your story? How many years did you take off for it, or did you just rearrange your work-life like I did?
All that said, though, I think that the stay-at-home thing is, at the end of the day, just like lots of other things that people would theoretically like to do: it's good for us as a society to enable people to have the lives they want. But I think forcing people into difficult, poorly compensated work that they don't want to do is bad, and a lot of childcare, including a lot of parenting, falls under this heading, but we kind of sweep it under the rug by saying that people should love being with their kids and it's really great or whatever because we all love you and you do an important job and the work is its own compensation or something. We do the same thing to teachers and soldiers, for similar reasons.
Hey - sorry this reply comes so slowly but I figured better late than never. With respect to priors, I know exactly what you mean because I was thinking about it in those same terms and I think I even considered writing something similar in one of these threads.
But yeah, it feels like the crux of this issue is not a simple one, because the crux is something like "how much should we value children as a society?" and I have no idea how to answer that. "A lot" is a good answer, but that doesn't tell me if we should be having more or less children.
Then next is an almost as difficult question, which is what kinds of childcare are best for children in the pre-K to K years? That, at least, probably has some evidence we could look to. I remember reading that experts felt children were best off with parents until age 3 or so. That feels about right based on my own experience, but I'm sure it varies by child and parent and if the expert consensus changed to 2 or 4 at some point in my lifetime I wouldn't be surprised.
But coming full circle - if we decide as a society that we want more children or early childcare is beneficial for children then it would make sense to subsidize it directly. But my feeling is we have no consensus on that. So given that, it's better to Yglesias style "just give cash" (or prosperity in general) and let the people decide if they want to be stay-at-home parents or spend it on daycare. I'm sure plenty of people would choose both, but my prior is more would pick "stay at home, spend the money on something else".
As for me I'm still in the middle of it. My kid started a little bit of preschool when she was 2, and then 2 mornings a week 2 afternoons a week when she was 3. Then when she was 3 and a half she started enjoying daycare/preschool more and so it went up to 3.5 days a week.
Overall it's felt just about right - the teachers at Goddard school are alright but it just feels like we could give her way more personalized attention that benefited her a lot when she was littler, but now that she's a bit older she'd definitely benefitting from more socializing with other kids and learning how to deal with other adults.
Interestingly, language has always been the thing she's always been most advanced with, and our hypothesis was it was because she was at home talking to us all day. But I have no idea if that's true. I'm glad she's at daycare more now b/c at first she was struggling to make friends and that's where she felt behind.
I've been working from home with my wife since 2018 and we work for ourselves (although our clients certainly feel like our bosses some times) so it's hard to say how much time I've taken off... it probably cut in 30-40% of my working time when she was at home all the time. Now it's still like 10%.
"The main question here is whether well-designed pre-K programs can reliably improve children's life outcomes." Is it though? If both parents want to work, shouldn't they be able to? As it is now, child care is insanely expensive even though the workers are paid a pittance. That sure sounds like a market failure to me.
Child care subsidies and cash benefits aren't the only two options. We could also just lower the age of public school eligibility to 3.
True. However my point is that different states have hugely differing qualifications for teaching Pre-School. In MA the expensive Day Care Centers have to have teachers educated and qualified for each age grouping such as Infant-10mos., 10mos-3yrars, as examples. This takes 6 months of study plus 6 months as a practice teacher plus passing Certification. In the cities, women who have been caring for children without the Certification charge far less per hour, but don’t get State funds. In other states, a childcare people do not have to be certified and earn half of one in MA who is certified. Neither person earns a living wage for their locale although for most women who desire to work feel all child care is too expensive. So my question is do we want to pay (in Govt or Corporate or Private) funds enough money to provide high quality Pre-School, pay teachers as Professionals, and subsidize the many families who can’t afford the fees?? Doing all that requires far more than a block grant from the Govt. Space with rooms, refrigerator for meds, and Educational toys, books and supplies would be a first step. Teacher training needs to be widely available. Would these Pre-Schools be organized State by State or would they be regulated by the Federal Government? If large yearly funds are given out each year, would we need a Pre-School Exec in the HHS?
I am an advocate for top-notch 3-4 School!! I just don’t think that the “Progressive” Democrats have really focused enough on the hurdles for building them.
There's a fairly strong argument for investing in America's children and future adults, if indeed out-of-home childcare is in the interests of the child.
There's a less strong argument for indulging what amounts to a lifestyle preference to be engaged in out-of-home, non-childcare work - when doing so means paying almost 1:1 for a different middle class worker to do the childcare.
Obviously. Expanding professional childcare could be combined with efforts to recruit more men into the field. Currently though, 92% of childcare workers are women. Fathers stay at home about 30% as often as women do (7% vs 24%) so moving kids to day care, by itself, probably results in more care by women. Perhaps there is more agency in choosing childcare as a career vs. having kids, but economics can be coercive too.
Women are increasingly more educated than men, and even out-earn their husbands 30% of the time. Stay at home dads ought to be more common than they are.
I was an Educator at every level. To answer your last question re Early Childhood class vs. Cash to parent: When children are 3-4yrs old, they show great benefits from being read to, seeing numbers, playing in groups with blocks etc. that form the basis for early literacy. A busy mother often doesn’t have the time or the knowledge to present the best activities at the best time for their child. If we eventually go to a national offering of Pre-Kindergarten, I would recommend we agree on Standards of Education/Training and license Teachers as we do at Kindergarten. It came as a surprise to me living near Boston to learn Alabama had put together an excellent trial program,matching State & Corporate funds, demonstrating that under-privileged children learned reading faster and took those skills with them into Elementary and higher.
Their results were demonstrably better than for children left at home.
Most people’s labor is less valuable than 1/5th of a childcare worker’s attention. I’m no free market fundamentalist, sometimes human values demand we do things that prices would recommend against, but is giving more people the subjective experience of working mediocre jobs really a good use of public subsidy? If we are going to redistribute vast amounts of income for the sake of uneconomical experiences, shouldn’t they be pleasant and fun experiences?
The talk about permitting reform reminds me of Jimmy Carter.
In a good way; a very good way.
Way more than Reagan, Carter was the champion of (smart) deregulation: civil aviation, trucking, natural gas and I'm sure many more that I can't recall. These -- along with the factors Matt discusses -- set the stage for a productive economy more than Reagan's actions did.
It's highly unlikely that the Democrats could pass anything similar in the next two years, but maybe this could actually be a target of bipartisan, even "Secret Congress" efforts?
Without a repeat of the 1980 election though, one hopes.
The large discrepancy between GDP and GDI is quite interesting from a technical perspective and it has significant implications for our understanding of the economy. There are numerous hypotheses for the cause of this discrepancy and each has different implications for the current state of the US economy.
2. Census Manufacturing Data is Underestimating Output and Investment
3. Profits are Overestimated
4. Aggregate Wages are Overestimated
5. Trade is Miscounted
The investment underestimation cause (#1) would imply that not only is our economy growing faster than shown in current GDP estimates but also that businesses are confident to invest in expanding supply. That would come as great relief, showing economic robustness and investments in addressing supply shortages that exasperate our current high inflation. Matt Klein has a great (paywalled) article covering this mechanism, https://theovershoot.co/p/is-the-2022h1-gdp-declinefake
In contrast, hypothesis #4, overestimation of aggregate wages, would imply a weaker labor market and that GDI is being overestimated. Politano summarizes a previous article of his that covers the technical mechanism of that discrepancy as, https://www.apricitas.io/p/labor-market-mystery-hour
> Last week we discussed the rising gap between America’s two labor market surveys—the establishment survey (which surveys businesses) and the household survey (which surveys individuals). The establishment survey shows robust job growth through both quarters while the household survey shows a slowdown in employment growth at the end of Q1.
Will be quite interesting to see how these GDP and GDI discrepancies are resolved in future revisions and which of these hypotheses turn out to be the cause. Could be a combination of multiple mechanisms and possibly causes that haven’t yet been proposed.
Maybe I'm reading him wrong, but his point on #4 is about employment levels, not wages specifically, which is what actually counts toward GDI/GDP. Wouldn't it be pretty simple to get a rough estimate of aggregate wages by tracking payroll tax revenue? If we know the vast majority of earned income is taxed at 14% right off the top, it seems to be just basic math to get the other 86% and estimate aggregate earned income (unless I am missing something?).
The history of the intellectual development of this idea is a subject I would love to see more of. I am *very* obsessive about following politics so I have read e.g. Miles Kimball's blog, which has been called "Confessions of a Supply Side Liberal" for like a decade. So the term isn't totally new, but the way that there has been this rapid movement toward a new liberal consensus around a combination of deregulation, industrial policy, and science/innovation investment that seems to have swept up basically every liberal who has the administration's ear feels like it came out of nowhere.
I'd like to see "industrial policy" guided by data-driven arguments over market distortion that justify promotion of one kind of economic activity over another, not just a warm feeling that factory jobs are nice things to promote.
Yes we need to make child care more affordable, but with a child tax credit, though, not subsidizing a specific kind of child care.
But I don't think that ALL that needs to be done to increase LFPR. We need to make work more remunerative with a more generous, more wage subsidy like EITC and even better with a shift from a wage tax to a VAT for retirement benefits and health insurance.
So much of this is frustrating because I think you and Yellen have framed things far too narrowly into a binary choice between "old" supply-side and federal spending as a "new" supply side.
It's frustrating because you understand very well that the problems with housing, for instance, are not supply side problems in the sense that the housing construction industry needs tax breaks or government subsidies. The problems with housing require substantial reforms in other areas and no amount of federal "investment" will fix that.
Well, the same thing is true in other areas. The notion that it's always "investment" when the federal government throws money at things (or lowers corporate taxes) is wrong unless you consider the whole picture, including the structure of the industry and the existing incentives. The reason these policies often fail is not because there is something inherently wrong with low corporate taxes or government "investment" - it's due to other factors.
Child care is a good example of this huge blind spot where we are only supposed to consider a binary-choice. Either a parent stays home and sacrifices earning and career growth to support a family, or the federal government subsidizes child care so the parent can work full time and off-load most of the child rearing to subsidized third parties.
But this misses what a lot of parents actually want, which is more work flexibility to allow people to work and maintain and grow careers while still being highly active in their child's growth and development. The biggest obstacle to that isn't the lack of federal dollars, it's federal labor regulation and a work culture the promotes standard "full time" employment as the the only viable option. The system is designed to consider anything but "full time" work as substandard.
If you want to give Mom's and Dads what they really want, then give them workplace flexibility, and the potential for meaningful part-time and flex-time work in their chosen career so they aren't faced with a binary choice of family vs career. A parent that can switch to flex or part-time work during a child's critical development, would be much more useful to most parents than the alternatives. That also happens to be very pro-natalist policy!
Conceptually, I suspect it's just a lot easier to increase childcare supply (maybe we'd need to greenlight more immigration, though) than to heavily micro-regulate and mandate working hours. It's not that I don't think *some* regulation along these lines wouldn't be helpful to families. It's just that we probably would need a fairly comprehensive reworking of the relationship between employers and employees to get the kind of far-reaching changes we'd need to make this a decent substitute for, you know, quality affordable childcare on demand.
Sometimes throwing resources at problems is the best solution.
(We already have a huge infrastructure in place: why not just have K-6th grade be opened from 7:30 am to 6:30pm, or what have you? I think France does something like this).
I'm not advocating for micro-regulation - rather, removing or altering existing regulations that force employment labor into two exclusive categories - full time and part time. And I think there's a reason the independent contracts have become much more popular because both employees and employers see the need for alternatives to the full-time vs part-time binary. This binary model is really a holdover from when we had an industrial economy that is less relevant for a lot of people.
That said, I'm not against I'm not against increasing child-care supply. But fundamentally we need policy that responds to the needs of parents and a lot of parents want more than six weeks of maternity/paternity time before sending their baby off to third parties so the parents don't damage their careers.
"Sometimes throwing resources at problems is the best solution."
I don't think it is the best solution, but I can see that it's attractive for technocrats who prefer to think in terms of where money goes in aggregate terms.
>>removing or altering existing regulations that force employment labor into two exclusive categories - full time and part time.<<
Nothing's forcing employers and employees from making their own, maximally flexible arrangements under the status quo. If 17 hours a week is mutually amenable, you can do it. Or 23 hours a week. Or 32.5 hours a week. Or some weeks at 50 hours followed by a week off followed by 20 hours. Or split your job with another person like you who doesn't want to work full-time. We don't need to change the law ("removing or altering existing regulations") for that.* Such things already occur.
We would have to change the law, though, to >require< employers to grant such bespoke scheduling when it doesn't suit them. And maybe we should! I just think it would be complicated, hence my suspicion that plowing more resources into childcare is a more straightforward way to go.
*One other thing we can do is have a really strong economy featuring a high demand for workers. AFAIK more employers are indeed finding that it's in their interest in terms of recruitment and retention to maintain family-friendly policies. And a big part of that is surely driven by competition for talent.
We shouldn't mandate benefits (including health insurance) but if we think there is a reason employers and employees cannot find a mutually beneficial wage/hours point, we can subsidize the benefit, say eliminate the wage tax on employers/employees for days of sick leave or family leave or parental leave. [Health insurance is different. Employers don't need to be involved at all and the subsidy should go straight to the employee as with ACA.]
I suspect the issue is that if companies offered 30 or 20 hour weeks to mothers, they'd legally have to offer them to other workers as well. Lots of them relatively highly paid professionals would probably take them up on it- I'm sure many people with upper middle class incomes would be happy to take a pay cut (and still make decent money) in exchange for a 20 or 30 hour week. Companies have no incentive to suddenly get less work out of their valuable employees- now they have to hire more to replace the lost output, and hiring for skilled jobs is already challenging, etc. Basically, they don't want to lose the current system where 40 hours is a socially accepted minimum
What was missing in the critique of corporate tax reduction was that those requestions were not made up (and more than made up) with increases in personal taxes. They increased the structural deficit which reduces national savings and investment. The corporate tax is so riddled with special incentives for this and that any shift in revenue collection from corporate to personal taxation will make investment more efficient and increase growth. It was absolutely infuriating that the "Tax Cuts for the Rich and Deficits Act of 2017" were not criticized more vigorously as being anti growth as well as regressive!
Yellen's leadership and sound decision-making has consistently made me more confident in the Biden's entire admin. Dumb signaling tweets from the Dems are very annoying to me and make me wonder what their priorities are for the nation... Yellen makes me forget about it all.
US economic performance vis a vis other high income countries: I have not seen any analysis of aggregate economic effects of COVID + COVID response across countries.
Great article explaining in very simple economics that US is moving from a market centered economy to a welfare state to the extent it is not only focusing on entrepreneurs and especially capital markets or financial sector, but Bidenomics is talking about a comprehensive approach towards not only the ownership for capital but the workers in general who should benefit from Biden's tax plan. But it's not that private enterprise won't benefit. Bidenomics is trying to shift the focus from financial sector to industrial sector whereby US is all set to create an industrial base with help of government support through acts like the Chip Act, whereas corporations would create real economic output and not only a financial accounting service through white color jobs. US is already a pioneer in renewables and thanks to entreprenuers like Elon Musk and the rapid need to address the challenges of climate change. Even financial sector is all geared up to invest in renewable technologies starting with the hardware like electronic chips, batteries and semi conductors. With investments in production of mineral, as Elon Musk has put it it would be ready cash for all the related industries as demand for EV has not reached its maximum potential and the threshold is going to be met when Ford is going to manufacture its EV trucks to compete with Cyber Truck with its usual design ingenuity. Most of the auto manufacturers in 2022 have introduced trucks and SUVs with a face lift that is the standard design of a Ford Truck. AMerican universities are already doing research on the physical and chemical properties of exotic crystals like graphite and in coming years with appropriate nano technologies, lithium batteries and semi-conductors are bound to get far more efficient. And I agree with Madam Yellen that the generous American Rescue Plan has avoided major economic depression as an out of COVID Pandemic and the country is stabilized within less than a year to mark highest GNI.
I just want to say that former Weeds co-host Jane Coasten's brilliant joke - "Between Biden, Blinken, and Yellen, I fear the US may soon descend into gerundocracy" has burned itself into my skull and now immediately springs to mind whenever Blinken/Yelllen are mentioned.
Not to mention herself…
Jane is the greatest but I believe this was the actual origin of the gerundocracy joke: https://twitter.com/ajbauer/status/1330968713747705856?t=4wyPGCGDE0STMrUMNsj_4w&s=19
Gerunds end in "ing" Or are we supposed to hear these as Biden', Blinken' and Yellin'? :)
Yeah, that's the idea. Although gerunds don't need to end in -ing, it's just any verb that is used as a noun. (eg: "What a great jump!")
I think that a gerund does have to end in "ing." "Living is easy" contains a gerund; "To live is easy," does not. Still it is fun to think of Joe "Bidin' his time." or "Janet Yellin' at the Fed."
Agreed. I’m reminded of this:
Calvin: I like to verb words.
Hobbes: What?
Calvin: I take nouns and adjectives and use them as verbs. Remember when “access“ was a thing? Now it’s something you do. It got verbed.
Calvin: Verbing weirds language.
Hobbes: Maybe we can eventually make language a complete impediment to understanding.
This is awesome lol
Except that the process expands/enlarges language and makes is better/betters it at communication/to communicate. :)
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I know, I just remembered the strip and laughed to myself, so I figured I’d share.
"To live" is a verb in it's infinitive form, not a verb being used as a noun. -Ing verbs are by far the most common way you see a gerund and so it's sort of used as a short hand when people are explaining it, but it isn't necessary.
"To live" is used as a noun, the subject of the sentence, "To live is easy," but is is not a gerund.
Heaven help us! Another dimension of polarization!!!!! :)
As a companion piece to this article, I strongly recommend Ezra Klein’s recent discussion of Supply-Side Liberalism on the Odd Lots podcast, https://www.bloomberg.com/news/articles/2022-09-08/odd-lots-podcast-ezra-klein-on-supply-side-liberalism
I found this an excellent overview of his current thinking on how liberals/progressives should embrace a focus on expanding supply abundance. Also goes through the large and novel challenges on addressing supply issues relative to traditional supply-side economics (e.g., tax cuts and blanket deregulation) or traditional demand side interventions (e.g., stimulus checks and cash benefits).
And in general, I highly recommend the Odd Lots podcast. It’s an exceptionally entertaining and educational survey of numerous current economic themes.
I recently started listening, I think because of a rec here that probably came from you. So thanks!
Is there a market failure that justifies government subsidies for child care?
Yellen seems to imply that raising women's labor force participation is an end in itself, but as an economist she must know that isn't true. Mothers also want to spend time with their children, so there's an opportunity cost to working.
The main question here is whether well-designed pre-K programs can reliably improve children's life outcomes (a positive externality). There seems to be some debate about the empirical evidence, with Freddie de Boer being predictably skeptical.
If he's right, wouldn't a cash child benefit be better than spending the same amount of money as tied funding for group care?
The market failure would be under provision of children, but I agree that might be better addressed with a cash grant.
Yea, the theory that childcare spending somehow fuels more growth seems pretty half baked. Like I guess the theory is that women with high productive capacity are wasted on childcare? But then the same plans all seem to want daycare employees to have a BA, so you're not actually creating useful employment for less credentialed people. So then you're left with the theory that childcare providers can be trained to be so much more effective at raising a child than their parents that you gain efficiency that way? But that seems really poorly supported to me, also just kind of a technocratic dystopia run amuck situation. It all seems like like a cup and ball game intended to to shift unpaid parenting labor into measurable GDP to make politicians look better with very little practical effect.
Yes. We have that insanity in prospect in DC where they want to raise the costs of providing child care by requiring a degree in Early Childhood education. Early Childhood Education is good and if parents could afford it, child care centers would probably be willing to pay more to people with that education. But restriking the supply instead of subsidizing demand is basakwards!
I know when my sister worked for a daycare in Chicago, they paid for her community college classes to get an associates degree in early childhood education and gave her a pay bump after she got it. While she earned it, she worked there full time. As community college is usually quite affordable, this seems to be a sensible middle way to transition a child care system from glorified babysitters to higher quality preschools.
If someone’s productive capacity were wasted on childcare, they’d be able to afford childcare. If you struggle to afford childcare, whatever else you are doing is objectively not all that valuable compared to childcare.
This is only true in a world in which workers are paid their marginal product. If they’re paid less, the social returns to work may be higher than the private returns.
Okay, but a primary reason you’d be paid much less than your marginal product is tons of other workers can easily replace you. Also we’re talking about a massive social cost to be borne by taxpayers to keep you in the labor market. If the “social” return to your labor is, like, your firm’s profit margin then that seems like a raw deal.
I get that childcare is seen as demeaning and consigning parents to the home to do it themselves can feel barbarically cruel. I just don’t think childcare discourse takes seriously enough the fact that it is actually one of the most expensive things money can buy. Its status should be a lot higher!
I am also all for giving people more agency and autonomy over their lives. But giving people at great public expense, specifically the ability to hold down jobs that aren’t even that good, seems like a monkey’s paw form of that.
The best case for having strangers look after your kids is probably the Case Against Education one that adult success is so dominated by genetic talents that a lot of the childhood environment just comes out in the wash, so you might as well take a higher-paying job and pay someone else the imputed[1] value of the childcare you would otherwise have performed without sacrificing anything other than a few hedons of good times (for a kid who won't remember much of any of it anyway) with minimal impact on long-term prospects.
[1] actually less than the imputed value of parent-performed childcare, see my above comment to JCW
Is it just financial success that is heavily dependent on genetics? Because if so, beyond the hedons you mention, parents may want their children to be successful in something other than money, such as values or morals, in which case it is a very large risk to trust the development of your child's values to someone who may not share yours.
If you see the economy as constrained by labor force participation, because you straight up have too few workers relative to available jobs, raising women’s participation really would be an end in itself.
Another way to think about it would be to say that you have an artifact of culture here, which is that stay at home moms actually ARE participating in the labor force, even though we don’t call it that. Seen that way, you would say that many moms are stuck in very low productivity jobs, which is bad for them AND bad for the economy.
Obviously, if women want to accept lower wages for ancillary benefits of being a mom, that’s fine in the same way that I have accepted lower pay in order to do work that I value more in other ways (going back to nursing school at age 42: a suboptimal earnings choice). But right now it’s not a choice for lots of women. We just have a system that systematically underpays people involved in childcare in part by taking advantage of cultural pressures on women to provide the labor for free at very low levels of efficiency, thus making everyone worse off.
I’m not necessarily pro or anti-subsidy; I’m kind of agnostic on the policy. But the reason the discussion is weird is that it’s trying to slot an economics discussion into a cultural artifact.
The alternative to to change regulations to promote meaningful flexible and part-time employment so that a parent doesn't have to make a binary choice between a career and their family.
Throwing tons of money at child-care so that Moms and Dads can spent as little time as possible with their newborns before being forced back to the workplace is bad policy IMO. The bigger issue is that our labor models have not substantially changed for most of a century and they no longer meet the needs of parents and families in our modern society.
I would basically agree with this, but I would root it in a deeper problem which is that I think our whole society just systematically devalues women's labor for a basket of reasons that are cultural but also have to do with childcare, and that distortion just screws everything else up, top to bottom, creating all kinds of inefficiency and frustration.
I'm not sure if it necessarily makes moms or kids worse off relative to daycare for a child -- particularly one pre-kindergarten age--to be raised by one of the people with the most direct interest in the child's wellbeing and education and who presumably likes spending time with the kid.
Parenting and childcare is a ton of work and kids can be exhausting, and people (including mothers) definitely can have heterogeneous preferences, but also there's a certain degree to which childcare is inherently a low-productivity job because short of putting (mobile) children in a padded cell, there aren't a lot of ways we know of beyond close supervision with a very low adult-to-child-ratio to deal with the fact that curious children spend hours every day finding new and creative ways to potentially injure themselves.
To first order you're right that we would want that supervision provided by people with the lowest opportunity cost as far as doing other things, but in practice that requires overcoming both coordination costs and -- more importantly -- stipulating that all childcare is fungible, even though agency costs are probably going to be lowest by far for parents looking after their own children.
We've used daycare for our own young kids so I'm not trying to go after anyone here and I don't have an axe to grind, the point is just that these are tangible considerations that make the imputed value of childcare *by parents* (both in emotional returns to carer and quality of care / lack of agency costs for the child) potentially higher-value than the explicit value of childcare by strangers as a more commodified service, so it's a little over-simplified to say that it's "bad for moms" for be doing childcare in that respect.
I basically agree with your priors, but there's a couple of points I would make here:
1) If you agree--and I do!--that quality childcare requires low child-to-adult ratios, and you note that a large percentage of parents only have one child of that age in the house, then you are still wasting a ton of labor. Like, even if you set the ratio at 2:1 children to adults for good care, then a mom with one child is half as productive as theoretically possible. That's a crazy-high level of inefficiency.
As you say, the equation is actually much, much more complicated than that. I totally agree that it is easy to overstate the gains. But I'm trying to suggest that it is also easy to underrate just how big of efficiency gains are out there, so my intuition is that there are gains to be made when you cost it all out in some theoretical alternative policy structure, which is why you might say, as Yellen did, that labor force participation is itself a goal of the policy.
2) When I say "bad for moms," what I'm really saying is that it is bad for them to do childcare because we make policy choices based on a cultural artifact that devalues their labor. If a mom has two choices that provide equal "benefit" to her (since that can be money, but it can also be emotional satisfaction, etc.), and the choices are 1) enter the formal labor force doing labor that makes more efficient use of her talents or 2) stay home doing childcare labor that makes less efficient use of her talents, it is fine for her to make either choice but "bad" for the rest of us, in a theoretical sense, if she picks #2. But if the mom WANTS to do #1, but we have systematically undervalued her labor to the point that #1 is an equal (or lesser) choice, that's straight-up bad for her AND bad for the rest of us.
So, just to pick an example from the news, right now there is a teacher shortage in parts of the United States. There are some number of stay-at-home moms that could theoretically fill those jobs but for whom the calculation doesn't make sense, because they are squeezed in both directions. "Teacher," like most jobs culturally coded as "female," pays lower wages than you would expect (based on things like credentialing requirements and theoretical importance). So that down-weights working. Childcare is also expensive, which up-weights being a stay-at-home parent. And juggling the two creates frictions and hassles, as you know. So there are some number of stay-at-home parents who in an ideal world would be labor force participants but are not, and everyone is worse off: the community that needs more teachers AND the moms who would kind of prefer to be teachers but for whom it just doesn't quite make sense at the margins.
This is especially, especially true for younger moms, for whom the thing that would long-term bring the most benefit to everyone would be additional training. We need more primary healthcare providers (GPs and nurse practitioners) in the United States, but if you have a baby one year out of college, it just doesn't make any kind of sense to pay for childcare so you can take out huge loans to not make money for another eight years and go to medical school. A few people do it, because a few people can do just about anything, but the calculus is way off. So we're just wasting a ton of working talent in the U.S.--moms who would themselves be happier and all of us better off if we didn't systematically underprice women's labor through the mechanism of culturally pricing their childcare labor at "free."
The thing I'm skeptical of here is whether the monetary undervaluing of childcare is all that closely connected to it being traditionally women's work. It seems to me that most things people will do voluntary for their own satisfaction tends to be underpaid. Musicians, for example, tend to not be paid very will and most careers in performing music tend to pretty low paid unless you develop an exceptional reputation.
I prefer doing some percentage of raising my kids, even if childcare was free, because there's many aspect of it that I believe I can do better, by virtue of them being mine. I'm sure many other parents feel the same way and I tend to think Yellen and many other professional Dems underestimate how common that sentiment it.
I feel like this is one of those areas where priors matter a lot, because it gets into how you think about "value" and what you believe about a basket of other stuff, such as "is women's labor undervalued?" (my claim) and why or why not. I could offer some evidence for my own view on the matter, but it's the usual stuff, so I presume you already know it.
I would be curious as to how much care you decided to forego as a stay-at-home parent. No daycare at all until your children started school? Summers during school years? I mean, all of us do some percentage of raising our own kids, in the form of nights and weekends.
I actually taught night school for a year so that I could stay-at-home parent when my child was a toddler, but to be perfectly honest I think he got more out of daycare because of the socialization aspect once I went back to a daytime job. Certainly his language development (which had been lagging) took an immediate big step forward (God bless you, Ms. Kelsie). So what's your story? How many years did you take off for it, or did you just rearrange your work-life like I did?
All that said, though, I think that the stay-at-home thing is, at the end of the day, just like lots of other things that people would theoretically like to do: it's good for us as a society to enable people to have the lives they want. But I think forcing people into difficult, poorly compensated work that they don't want to do is bad, and a lot of childcare, including a lot of parenting, falls under this heading, but we kind of sweep it under the rug by saying that people should love being with their kids and it's really great or whatever because we all love you and you do an important job and the work is its own compensation or something. We do the same thing to teachers and soldiers, for similar reasons.
Hey - sorry this reply comes so slowly but I figured better late than never. With respect to priors, I know exactly what you mean because I was thinking about it in those same terms and I think I even considered writing something similar in one of these threads.
But yeah, it feels like the crux of this issue is not a simple one, because the crux is something like "how much should we value children as a society?" and I have no idea how to answer that. "A lot" is a good answer, but that doesn't tell me if we should be having more or less children.
Then next is an almost as difficult question, which is what kinds of childcare are best for children in the pre-K to K years? That, at least, probably has some evidence we could look to. I remember reading that experts felt children were best off with parents until age 3 or so. That feels about right based on my own experience, but I'm sure it varies by child and parent and if the expert consensus changed to 2 or 4 at some point in my lifetime I wouldn't be surprised.
But coming full circle - if we decide as a society that we want more children or early childcare is beneficial for children then it would make sense to subsidize it directly. But my feeling is we have no consensus on that. So given that, it's better to Yglesias style "just give cash" (or prosperity in general) and let the people decide if they want to be stay-at-home parents or spend it on daycare. I'm sure plenty of people would choose both, but my prior is more would pick "stay at home, spend the money on something else".
As for me I'm still in the middle of it. My kid started a little bit of preschool when she was 2, and then 2 mornings a week 2 afternoons a week when she was 3. Then when she was 3 and a half she started enjoying daycare/preschool more and so it went up to 3.5 days a week.
Overall it's felt just about right - the teachers at Goddard school are alright but it just feels like we could give her way more personalized attention that benefited her a lot when she was littler, but now that she's a bit older she'd definitely benefitting from more socializing with other kids and learning how to deal with other adults.
Interestingly, language has always been the thing she's always been most advanced with, and our hypothesis was it was because she was at home talking to us all day. But I have no idea if that's true. I'm glad she's at daycare more now b/c at first she was struggling to make friends and that's where she felt behind.
I've been working from home with my wife since 2018 and we work for ourselves (although our clients certainly feel like our bosses some times) so it's hard to say how much time I've taken off... it probably cut in 30-40% of my working time when she was at home all the time. Now it's still like 10%.
"The main question here is whether well-designed pre-K programs can reliably improve children's life outcomes." Is it though? If both parents want to work, shouldn't they be able to? As it is now, child care is insanely expensive even though the workers are paid a pittance. That sure sounds like a market failure to me.
Child care subsidies and cash benefits aren't the only two options. We could also just lower the age of public school eligibility to 3.
True. However my point is that different states have hugely differing qualifications for teaching Pre-School. In MA the expensive Day Care Centers have to have teachers educated and qualified for each age grouping such as Infant-10mos., 10mos-3yrars, as examples. This takes 6 months of study plus 6 months as a practice teacher plus passing Certification. In the cities, women who have been caring for children without the Certification charge far less per hour, but don’t get State funds. In other states, a childcare people do not have to be certified and earn half of one in MA who is certified. Neither person earns a living wage for their locale although for most women who desire to work feel all child care is too expensive. So my question is do we want to pay (in Govt or Corporate or Private) funds enough money to provide high quality Pre-School, pay teachers as Professionals, and subsidize the many families who can’t afford the fees?? Doing all that requires far more than a block grant from the Govt. Space with rooms, refrigerator for meds, and Educational toys, books and supplies would be a first step. Teacher training needs to be widely available. Would these Pre-Schools be organized State by State or would they be regulated by the Federal Government? If large yearly funds are given out each year, would we need a Pre-School Exec in the HHS?
I am an advocate for top-notch 3-4 School!! I just don’t think that the “Progressive” Democrats have really focused enough on the hurdles for building them.
SallyJones
There's a fairly strong argument for investing in America's children and future adults, if indeed out-of-home childcare is in the interests of the child.
There's a less strong argument for indulging what amounts to a lifestyle preference to be engaged in out-of-home, non-childcare work - when doing so means paying almost 1:1 for a different middle class worker to do the childcare.
No one ever calls it a "lifestyle preference" when men want to be engaged in out-of-home non-childcare work.
The number of women with full-time childcare duties wouldn't change, you'd just have fewer stay-at-home parents and more childcare center employees.
Dear readers who are not unreliabletags: Child care is not solely women's responsibility.
Obviously. Expanding professional childcare could be combined with efforts to recruit more men into the field. Currently though, 92% of childcare workers are women. Fathers stay at home about 30% as often as women do (7% vs 24%) so moving kids to day care, by itself, probably results in more care by women. Perhaps there is more agency in choosing childcare as a career vs. having kids, but economics can be coercive too.
Women are increasingly more educated than men, and even out-earn their husbands 30% of the time. Stay at home dads ought to be more common than they are.
https://www.pewresearch.org/fact-tank/2018/09/24/stay-at-home-moms-and-dads-account-for-about-one-in-five-u-s-parents/
https://datausa.io/profile/soc/childcare-workers#demographics
https://www.americanprogress.org/article/breadwinning-mothers-continue-u-s-norm/
I was an Educator at every level. To answer your last question re Early Childhood class vs. Cash to parent: When children are 3-4yrs old, they show great benefits from being read to, seeing numbers, playing in groups with blocks etc. that form the basis for early literacy. A busy mother often doesn’t have the time or the knowledge to present the best activities at the best time for their child. If we eventually go to a national offering of Pre-Kindergarten, I would recommend we agree on Standards of Education/Training and license Teachers as we do at Kindergarten. It came as a surprise to me living near Boston to learn Alabama had put together an excellent trial program,matching State & Corporate funds, demonstrating that under-privileged children learned reading faster and took those skills with them into Elementary and higher.
Their results were demonstrably better than for children left at home.
Most people’s labor is less valuable than 1/5th of a childcare worker’s attention. I’m no free market fundamentalist, sometimes human values demand we do things that prices would recommend against, but is giving more people the subjective experience of working mediocre jobs really a good use of public subsidy? If we are going to redistribute vast amounts of income for the sake of uneconomical experiences, shouldn’t they be pleasant and fun experiences?
Nice bonus piece, finally making this subscription worth the investment! (j/k)
We try to deliver!
The talk about permitting reform reminds me of Jimmy Carter.
In a good way; a very good way.
Way more than Reagan, Carter was the champion of (smart) deregulation: civil aviation, trucking, natural gas and I'm sure many more that I can't recall. These -- along with the factors Matt discusses -- set the stage for a productive economy more than Reagan's actions did.
It's highly unlikely that the Democrats could pass anything similar in the next two years, but maybe this could actually be a target of bipartisan, even "Secret Congress" efforts?
Without a repeat of the 1980 election though, one hopes.
Carter also deregulated the breweries!
The large discrepancy between GDP and GDI is quite interesting from a technical perspective and it has significant implications for our understanding of the economy. There are numerous hypotheses for the cause of this discrepancy and each has different implications for the current state of the US economy.
Joey Politano has a great recent article that presents some of these hypothesis in “The Trillion Dollar Question”, https://www.apricitas.io/p/the-trillion-dollar-question
1. Investment is Underestimated
2. Census Manufacturing Data is Underestimating Output and Investment
3. Profits are Overestimated
4. Aggregate Wages are Overestimated
5. Trade is Miscounted
The investment underestimation cause (#1) would imply that not only is our economy growing faster than shown in current GDP estimates but also that businesses are confident to invest in expanding supply. That would come as great relief, showing economic robustness and investments in addressing supply shortages that exasperate our current high inflation. Matt Klein has a great (paywalled) article covering this mechanism, https://theovershoot.co/p/is-the-2022h1-gdp-declinefake
In contrast, hypothesis #4, overestimation of aggregate wages, would imply a weaker labor market and that GDI is being overestimated. Politano summarizes a previous article of his that covers the technical mechanism of that discrepancy as, https://www.apricitas.io/p/labor-market-mystery-hour
> Last week we discussed the rising gap between America’s two labor market surveys—the establishment survey (which surveys businesses) and the household survey (which surveys individuals). The establishment survey shows robust job growth through both quarters while the household survey shows a slowdown in employment growth at the end of Q1.
Will be quite interesting to see how these GDP and GDI discrepancies are resolved in future revisions and which of these hypotheses turn out to be the cause. Could be a combination of multiple mechanisms and possibly causes that haven’t yet been proposed.
Maybe I'm reading him wrong, but his point on #4 is about employment levels, not wages specifically, which is what actually counts toward GDI/GDP. Wouldn't it be pretty simple to get a rough estimate of aggregate wages by tracking payroll tax revenue? If we know the vast majority of earned income is taxed at 14% right off the top, it seems to be just basic math to get the other 86% and estimate aggregate earned income (unless I am missing something?).
The history of the intellectual development of this idea is a subject I would love to see more of. I am *very* obsessive about following politics so I have read e.g. Miles Kimball's blog, which has been called "Confessions of a Supply Side Liberal" for like a decade. So the term isn't totally new, but the way that there has been this rapid movement toward a new liberal consensus around a combination of deregulation, industrial policy, and science/innovation investment that seems to have swept up basically every liberal who has the administration's ear feels like it came out of nowhere.
I'd like to see "industrial policy" guided by data-driven arguments over market distortion that justify promotion of one kind of economic activity over another, not just a warm feeling that factory jobs are nice things to promote.
Yes we need to make child care more affordable, but with a child tax credit, though, not subsidizing a specific kind of child care.
But I don't think that ALL that needs to be done to increase LFPR. We need to make work more remunerative with a more generous, more wage subsidy like EITC and even better with a shift from a wage tax to a VAT for retirement benefits and health insurance.
Yay on the housing shout out, Ms Yellen. Hi from Cambridge, Milan
Hello from New Haven :)
So much of this is frustrating because I think you and Yellen have framed things far too narrowly into a binary choice between "old" supply-side and federal spending as a "new" supply side.
It's frustrating because you understand very well that the problems with housing, for instance, are not supply side problems in the sense that the housing construction industry needs tax breaks or government subsidies. The problems with housing require substantial reforms in other areas and no amount of federal "investment" will fix that.
Well, the same thing is true in other areas. The notion that it's always "investment" when the federal government throws money at things (or lowers corporate taxes) is wrong unless you consider the whole picture, including the structure of the industry and the existing incentives. The reason these policies often fail is not because there is something inherently wrong with low corporate taxes or government "investment" - it's due to other factors.
Child care is a good example of this huge blind spot where we are only supposed to consider a binary-choice. Either a parent stays home and sacrifices earning and career growth to support a family, or the federal government subsidizes child care so the parent can work full time and off-load most of the child rearing to subsidized third parties.
But this misses what a lot of parents actually want, which is more work flexibility to allow people to work and maintain and grow careers while still being highly active in their child's growth and development. The biggest obstacle to that isn't the lack of federal dollars, it's federal labor regulation and a work culture the promotes standard "full time" employment as the the only viable option. The system is designed to consider anything but "full time" work as substandard.
If you want to give Mom's and Dads what they really want, then give them workplace flexibility, and the potential for meaningful part-time and flex-time work in their chosen career so they aren't faced with a binary choice of family vs career. A parent that can switch to flex or part-time work during a child's critical development, would be much more useful to most parents than the alternatives. That also happens to be very pro-natalist policy!
Conceptually, I suspect it's just a lot easier to increase childcare supply (maybe we'd need to greenlight more immigration, though) than to heavily micro-regulate and mandate working hours. It's not that I don't think *some* regulation along these lines wouldn't be helpful to families. It's just that we probably would need a fairly comprehensive reworking of the relationship between employers and employees to get the kind of far-reaching changes we'd need to make this a decent substitute for, you know, quality affordable childcare on demand.
Sometimes throwing resources at problems is the best solution.
(We already have a huge infrastructure in place: why not just have K-6th grade be opened from 7:30 am to 6:30pm, or what have you? I think France does something like this).
I'm not advocating for micro-regulation - rather, removing or altering existing regulations that force employment labor into two exclusive categories - full time and part time. And I think there's a reason the independent contracts have become much more popular because both employees and employers see the need for alternatives to the full-time vs part-time binary. This binary model is really a holdover from when we had an industrial economy that is less relevant for a lot of people.
That said, I'm not against I'm not against increasing child-care supply. But fundamentally we need policy that responds to the needs of parents and a lot of parents want more than six weeks of maternity/paternity time before sending their baby off to third parties so the parents don't damage their careers.
"Sometimes throwing resources at problems is the best solution."
I don't think it is the best solution, but I can see that it's attractive for technocrats who prefer to think in terms of where money goes in aggregate terms.
>>removing or altering existing regulations that force employment labor into two exclusive categories - full time and part time.<<
Nothing's forcing employers and employees from making their own, maximally flexible arrangements under the status quo. If 17 hours a week is mutually amenable, you can do it. Or 23 hours a week. Or 32.5 hours a week. Or some weeks at 50 hours followed by a week off followed by 20 hours. Or split your job with another person like you who doesn't want to work full-time. We don't need to change the law ("removing or altering existing regulations") for that.* Such things already occur.
We would have to change the law, though, to >require< employers to grant such bespoke scheduling when it doesn't suit them. And maybe we should! I just think it would be complicated, hence my suspicion that plowing more resources into childcare is a more straightforward way to go.
*One other thing we can do is have a really strong economy featuring a high demand for workers. AFAIK more employers are indeed finding that it's in their interest in terms of recruitment and retention to maintain family-friendly policies. And a big part of that is surely driven by competition for talent.
We shouldn't mandate benefits (including health insurance) but if we think there is a reason employers and employees cannot find a mutually beneficial wage/hours point, we can subsidize the benefit, say eliminate the wage tax on employers/employees for days of sick leave or family leave or parental leave. [Health insurance is different. Employers don't need to be involved at all and the subsidy should go straight to the employee as with ACA.]
I suspect the issue is that if companies offered 30 or 20 hour weeks to mothers, they'd legally have to offer them to other workers as well. Lots of them relatively highly paid professionals would probably take them up on it- I'm sure many people with upper middle class incomes would be happy to take a pay cut (and still make decent money) in exchange for a 20 or 30 hour week. Companies have no incentive to suddenly get less work out of their valuable employees- now they have to hire more to replace the lost output, and hiring for skilled jobs is already challenging, etc. Basically, they don't want to lose the current system where 40 hours is a socially accepted minimum
What was missing in the critique of corporate tax reduction was that those requestions were not made up (and more than made up) with increases in personal taxes. They increased the structural deficit which reduces national savings and investment. The corporate tax is so riddled with special incentives for this and that any shift in revenue collection from corporate to personal taxation will make investment more efficient and increase growth. It was absolutely infuriating that the "Tax Cuts for the Rich and Deficits Act of 2017" were not criticized more vigorously as being anti growth as well as regressive!
Yellen's leadership and sound decision-making has consistently made me more confident in the Biden's entire admin. Dumb signaling tweets from the Dems are very annoying to me and make me wonder what their priorities are for the nation... Yellen makes me forget about it all.
US economic performance vis a vis other high income countries: I have not seen any analysis of aggregate economic effects of COVID + COVID response across countries.
Would love to read the full Q&A!
Wonder if the mined or extracted in USA and is therefore comparatively environmentally "friendly" or lower impact will catch on.
Great article explaining in very simple economics that US is moving from a market centered economy to a welfare state to the extent it is not only focusing on entrepreneurs and especially capital markets or financial sector, but Bidenomics is talking about a comprehensive approach towards not only the ownership for capital but the workers in general who should benefit from Biden's tax plan. But it's not that private enterprise won't benefit. Bidenomics is trying to shift the focus from financial sector to industrial sector whereby US is all set to create an industrial base with help of government support through acts like the Chip Act, whereas corporations would create real economic output and not only a financial accounting service through white color jobs. US is already a pioneer in renewables and thanks to entreprenuers like Elon Musk and the rapid need to address the challenges of climate change. Even financial sector is all geared up to invest in renewable technologies starting with the hardware like electronic chips, batteries and semi conductors. With investments in production of mineral, as Elon Musk has put it it would be ready cash for all the related industries as demand for EV has not reached its maximum potential and the threshold is going to be met when Ford is going to manufacture its EV trucks to compete with Cyber Truck with its usual design ingenuity. Most of the auto manufacturers in 2022 have introduced trucks and SUVs with a face lift that is the standard design of a Ford Truck. AMerican universities are already doing research on the physical and chemical properties of exotic crystals like graphite and in coming years with appropriate nano technologies, lithium batteries and semi-conductors are bound to get far more efficient. And I agree with Madam Yellen that the generous American Rescue Plan has avoided major economic depression as an out of COVID Pandemic and the country is stabilized within less than a year to mark highest GNI.