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.
I do not think that "supply side" is helpful for this complex of issues. The phrase arose as a false contrast with a supposed belief that growth could be promoted by stimulating the "demand side." Something like "growth promoting" or "wealth creating" seems like a much better moniker.
> the social returns on connecting poor neighborhoods and rural areas to fast internet will be large, even if the private sector ROI is too low to make it worth corporate America’s while
I think this is somewhat misguided. It's true that cumcast or whoever can't profitably provide to these areas. But currently, there are a lot of big tech companies with lots of market power and spare cash with products that good internet access is a complement to. Via the logic of Commoditizing the Complement, we should expect these companies to invest lots in driving down the prices for us, yielding a solution that's ultimately much more efficient than just the government paying through the nose to connect them via current means.
And indeed, this is the case! Look at Google Fiber, Google Loon, Starlink, whatever the Amazon version of Starlink is, etc.
This is a case where I really think the best approach is just sit back and let the market sort it out. Unless you're like, Bernie Sanders's ultimate form, and you're also going to break up the big tech companies, then go nuts I guess
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!
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
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.]
“and both the infrastructure bill and the climate legislation create a lot of good jobs and a lot of investment that’s going to be broadly distributed across the country.”
Maybe. But those "good jobs" are going to pay a good deal less in real terms if we didn't have to suffer from the inflation of Bidenomics.
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.
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.
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.
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!
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.
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 can't find it right now, but I saw a tweet from Robin Brooks, former chief economist from Goldman Sachs, showing that the US' economic performance has exceeded every single developed country in that same time frame. Fun fact, the EU as a whole was actually larger than the US economy in the 2000s, but not now (and yes I'm including the EU plus Britain in 'now')
But wasn't the target higher and the higher than necessary not a recession? Sort of the exception that proves the rule? Or am I just totally off base about Australia?
Not really sure what this means. Australia had negative excess deaths in 2020 and 2021 (fewer deaths than usual). It also (unlike the US) has employment to population ratio and participation rate above Feb 2020 levels, and has seen strong output growth even this year as other advanced economies have faltered.
I definitely thought it was weird to prove “best in the world” by showing “better than a few European countries”. I was mainly thinking that there are reasons why higher growth in India and China wouldn’t count against this thesis, but figured there might be more issues too.
It’s such a classic American move, to compare yourself to like 3 other countries, see that you’re on top and declare yourself the Best In The World. This from the people who name a domestic sporting final the “World Series”
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.
I do not think that "supply side" is helpful for this complex of issues. The phrase arose as a false contrast with a supposed belief that growth could be promoted by stimulating the "demand side." Something like "growth promoting" or "wealth creating" seems like a much better moniker.
> the social returns on connecting poor neighborhoods and rural areas to fast internet will be large, even if the private sector ROI is too low to make it worth corporate America’s while
I think this is somewhat misguided. It's true that cumcast or whoever can't profitably provide to these areas. But currently, there are a lot of big tech companies with lots of market power and spare cash with products that good internet access is a complement to. Via the logic of Commoditizing the Complement, we should expect these companies to invest lots in driving down the prices for us, yielding a solution that's ultimately much more efficient than just the government paying through the nose to connect them via current means.
And indeed, this is the case! Look at Google Fiber, Google Loon, Starlink, whatever the Amazon version of Starlink is, etc.
This is a case where I really think the best approach is just sit back and let the market sort it out. Unless you're like, Bernie Sanders's ultimate form, and you're also going to break up the big tech companies, then go nuts I guess
Can Matt or someone explain why the shifts between different types of jobs in the CRFB chart are "change for the better"?
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!
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
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.]
“and both the infrastructure bill and the climate legislation create a lot of good jobs and a lot of investment that’s going to be broadly distributed across the country.”
Maybe. But those "good jobs" are going to pay a good deal less in real terms if we didn't have to suffer from the inflation of Bidenomics.
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.
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!
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.
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!
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.
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.
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."
"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!!!!! :)
This is awesome lol
Except that the process expands/enlarges language and makes is better/betters it at communication/to communicate. :)
.
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.
"America has had the best economic performance in the world"
America's performance has not been better than Australia's
US economic performance has exceed Australia's since 2000
https://www.macrotrends.net/countries/USA/united-states/gdp-growth-rate
https://www.macrotrends.net/countries/AUS/australia/gdp-growth-rate
I can't find it right now, but I saw a tweet from Robin Brooks, former chief economist from Goldman Sachs, showing that the US' economic performance has exceeded every single developed country in that same time frame. Fun fact, the EU as a whole was actually larger than the US economy in the 2000s, but not now (and yes I'm including the EU plus Britain in 'now')
I'm not saying you are wrong, but I could not find the comparison I would want to see: average GDP or GDI 2000-2021 for the two countries.
I've read a bit (in The Economist) about Australia not having a recession for ~30 years before Covid — what's their secret trick?
Basically a never having deflation/super low inflation like Bernanke/Yellen forced on the US.
no, Australia also undershot its inflation target in the 5 years pre-COVID and had higher-than-necessary unemployment.
But wasn't the target higher and the higher than necessary not a recession? Sort of the exception that proves the rule? Or am I just totally off base about Australia?
1) have an endowment of natural resources
2) be next door to, and tightly integrated with, the rising economies of east and south east Asia
3) allow lots of migration (Much, much more than the US as a % of population)
4) have good macro policy, including a flexible average inflation target
5) a parliamentary system that allows govt to move quicker to pass fiscal stimulus when downturns look likely
Even taking account of their more restrictive COVID policies?
Not really sure what this means. Australia had negative excess deaths in 2020 and 2021 (fewer deaths than usual). It also (unlike the US) has employment to population ratio and participation rate above Feb 2020 levels, and has seen strong output growth even this year as other advanced economies have faltered.
That's what I'm asking for for various countries. Thanks
I definitely thought it was weird to prove “best in the world” by showing “better than a few European countries”. I was mainly thinking that there are reasons why higher growth in India and China wouldn’t count against this thesis, but figured there might be more issues too.
It’s such a classic American move, to compare yourself to like 3 other countries, see that you’re on top and declare yourself the Best In The World. This from the people who name a domestic sporting final the “World Series”
Enjoyed this article