Recommended reading

Why nation-states are good by Dani Rodrik at Aeon.

"A truly global economy, in which economic activity is unmoored from its national base, would necessitate transnational rule-making institutions that match the global scale and scope of markets."

A surprise ending that you should have seen coming

Timothy Taylor, Some Notes on Corporations and Social Values:

There is a long-standing debate over the goals of corporations. Should they focus mostly or exclusively on earning profits? Should they be willing to take on broader social missions? Should they be required to do so?...

At least among economists, the usual starting point for these discussions is an essay written by Milton Friedman in the New York Times on September 13, 1970, called "A Friedman doctrine -- The Social Responsibility of Business is to Raise its Profits." As with many things written by Friedman, it is a starting point both for those who agree and who disagree, because of the clarity and pungency with which his views are expressed...

A point Friedman does not state explicitly in this essay, but is implicit to many economists, is that the "social value" of a corporation lies partly in the way that it uses know-how and work to organize and combine various resources--workers, physical capital, and knowledge that can range from breakfast recipes to pharmaceutical formulas. By acting in this way, a corporation provides a service that customers believe is worth their money and jobs that workers believe are worth accepting, as well as buying inputs and supplies from other businesses and thus supporting them as well. If a company consistently makes losses and does not earn profits, these benefits will be lost. On the other side, a company that earns profits then has access to finance that could be used to expand in a way that satisfies more customer and hires more workers.

It seems to me that many discussions of the "social responsibility" of firms do not pay sufficient attention to these gains from pleasing customers and paying workers and suppliers. Such gains should not be taken for granted.

It seems to me that many, many discussions of "finance that could be used to expand in a way that satisfies more customer and hires more workers" do not pay any attention to the increase in financial costs that goes hand in hand with the rise of finance.

Such costs should not be taken for granted.

Setting the bar

2.2% is "pretty modest" GDP growth.

John Cassidy:

The fact is that economic growth was pretty modest during the first year of the Trump Administration: inflation-adjusted Gross Domestic Product, the broadest measure of the economy’s output, rose by 2.2 per cent.

So Jiggy, No Jiggy

Annualized Growth Rates, Real and Nominal GDP

Just checking

Spur of the moment, I'm wondering how far down the page I have to go at Economist's View to find the word "debt":

Economist's View

Thursday, September 20, 2018

Links (9/20/18)

• A Smorgasbord Recession? (Wonkish) - Paul Krugman
• Political Pressure on Central Banks - Carola Binder
• Three Sudden Stops and a Surge - Brad Setser
• Japan’s Successful Economic Model - Adair Turner
• The economic cost of repellent leadership - VoxEU
• Foreign expansion, competition, and bank risk - VoxEU
• Tax cuts have not led to bonuses, wage or compensation growth - EPI
• Reflections by Bernanke, Geithner and Paulson (Video) - Brookings
• Saving the Planet Doesn’t Mean Killing Economic Growth - Bloomberg
• Controlling My Heating Bill Using Bayesian Model Averaging - Dave Giles
• Communicating Academic Economics Ideas to the General Public - Mathew Kahn
• Growth, well-being: policy should not be based on GDP alone - Micro Insights
• How the sterling money markets dried up - Bank Underground
• Update on US Health Insurance Coverage - Tim Taylor
• The increasing faith in macroprudential policies - VoxEU
• Kavanaugh and the Politics of Bad Faith - Paul Krugman

Posted by Mark Thoma on Thursday, September 20, 2018 at 10:53 AM in Economics, Links | Permalink  Comments (259) 

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Monday, September 17, 2018

Links (9/17/18)

• The Credit Crunch and the Great Recession (Wonkish) - Paul Krugman
• Comments on monetary policy at the effective lower bound - Janet Yellen
• Why central banks should not be inflation nutters - VoxEU
• Can Trade Agreements Be a Friend to Labor? - Dani Rodrik
• What Do We Actually Know About the Economy? (Wonkish) - Paul Krugman
• Central Banks Strike Back Against Political Interference - Bloomberg
• Economics Gets It Wrong Because Research Is Hard to Replicate - Bloomberg
• Ten Years Ago - Economic Principals
• Output Gaps and Robust Monetary Policy Rules - Roberto Billi
• Charting the Financial Crisis - Brookings
• Can codetermination help fix America’s wage problem? - Lane Kenworthy
• The Most Addictive Theorem in Applied Mathematics - Scientific American
• The Economist as Public Intellectual - Federal Reserve Bank of Richmond
• Interview with Chad Syverson - Federal Reserve Bank of Richmond
• Ten Year House Price Volatility - Richard Green
• Another lesson of the GFC unlearnt - mainly macro
• We’re Measuring the Economy All Wrong - The New York Times
• Crisis firefighters still uninterested in fire prevention - FT
• The Fed's Floor System: Sayonara? - Macro Musings
• Tax Cuts Are Costing the U.S. Treasury Money - Bloomberg
• Economic Security Programs Cut Poverty Nearly in Half Over Last 50 Years - CBPP
• What We Should Have Learned From the 2008 Financial Crisis - Reinhart and Reinhart
• Could A Coalition of the “Friends of Turkey” Ride to Turkey’s Financial Rescue? - Brad Setser

Posted by Mark Thoma on Monday, September 17, 2018 at 10:39 AM in Economics, Links | Permalink  Comments (374) 

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Thursday, September 13, 2018

Links (9/13/18)

• Botching the Great Recession - Paul Krugman
• Fed Interest-Rate Debate Misses the Bigger Picture - Tim Duy
• The financial crisis and the foundations for macroeconomics - Larry Summers
• The Makings of a 2020 Recession and Financial Crisis - Roubini & Rosa
• An overdue look at the effects of monopoly distortion - Financial Times
• What Do We Mean by Neutral in Monetary Policy? - Lael Brainard
• How the brain decides what to do in the face of danger - EurekAlert
• Radical Markets: a review - Stumbling and Mumbling
• Rebelling Against the Clean Plate Club - Tim Taylor
• Financial panic and credit disruptions in the 2007-09 crisis - Ben Bernanke
• What’s Going On with the Economy? It’s the Stimulus, Stupid - John Cassidy
• Interview with Philip Jefferson - The Region
• SWF+UBD - interfluidity

Posted by Mark Thoma on Thursday, September 13, 2018 at 11:41 AM in Economics, Links | Permalink  Comments (302) 

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Tuesday, September 11, 2018

Links (9/11/18)

• Trade, Inflation Targeting, and Central Bank Independence - PIIE
• The Stable-Coin Myth - Barry Eichengreen
• On the Debt Non-Spiral - Paul Krugman

Not in the first three posts. It is in the fourth one.

I grabbed the data on 23 September. I find the word "debt" in Mark Thoma's links posted in 11 September, a dozen days back. It would seem debt is no longer a hot topic, these days.

The word "debt" occurs in the 55th link from the top of the page. At least 54 things are more important than debt.


If debt was the cause of our problems ten years back, then it remains the cause of our problems today. No matter ten years have passed.

Predicting the 1990s

Robert Eisner in 1993:

The Office of Management and Budget, in its final document released by President [George H.W.] Bush, offered “baseline” deficit estimates grounded on the relatively pessimistic economic outlook of 51 private “blue chip” forecasters. They foresaw real GDP growth of only 3% in 1993, 2.9% in 1994, and then down to 2.5% from 1995 to 1998; unemployment was still projected at 5.7% for 1998.

Sounds like the same sort of unimaginative estimates we've seen over the last few years, estimates that cannot foresee real GDP growth above 2%. Meanwhile, we're seeing 4%.

//

See also mine of March 2016, predicting vigor due to low (but rising) financial cost.

"most articles are not actually meant to be read"

From What Should an Economics Research Article Look Like? by Timothy Taylor:

... is a research article actually meant to be read, word-for-word, beginning to end? It seems plausible that if articles have become three times as long, then students and researchers living in a world with just 24 hours in a day can read only about one-third as many articles. My guess is that most articles are not actually meant to be read, but only to be skimmed.

The problems of economics apparently go deeper than we realize.