WunderEconomistScottSumnerSchafft

Has been looking at data on Deutschland from 2006-2012 and asking 'compared to what';

So employment rose by 7.1% over a period of nearly 7 years, and hours per worker fell by 3.1%.  That means hours rose by 4%.  Productivity rose by 4.7% and RGDP rose by 8.8% (roughly half from more hours worked, and half from improved hourly productivity.)

Many commenters pointed to various job sharing programs, or subsidies to keep workers employed during the recession.  Libetaer used the metaphor of putting 2 workers in one chair.  The one chair reflects relatively meager growth in NGDP, and the two workers represent job sharing.

It would be a mistake to assume that the German miracle was an illusion due to all this job sharing and slow productivity growth (caused by keeping excess workers around.)  The welfare loss to a society from a 5% RGDP shock is much greater if 5% of workers lose their jobs, as compared to all workers staying employed, but working 5% less hard.  Yes, the miracle seems marginally less impressive, but I’d still prefer Germany’s labor market to France’s.

Or Portugal's, Spain's, Italy's, Greece's....

James Buchanan laughs best

Or would, if the co-founder of Public Choice Economics were still alive, at this from Stuart A. Gabriel, Matthew E. Kahn and Ryan K Vaughn.

... our findings suggest a consistent pattern of Congressional Representative political geography in subprime lending. [The now defunct sub-prime lender] New Century may have viewed direction of campaign contributions to particular Representatives as well as enhancement of subprime-credit access in those or other Congressional Districts as consistent with profit maximisation, to the extent it helped to buy Congressional support for widespread proliferation of this controversial lending instrument among less qualified borrowers.

At the same time, local direction of mortgage capital may have served to elevate Representative political capital among constituents, given provision of mortgage finance to constituent households previously excluded from home ownership attainment. As boom turned to bust, Congressional proponents of the mortgage-credit boom likely rushed to support legislation aimed at foreclosure relief for those same constituents. Political factors, including direction of campaign contributions and Representative-specific allocation of mortgage finance, provide important new insights as regards the political geography of subprime lending.

 Findings suggest that Congressional leaders as well as recipients of New Century campaign contributions may have benefited from gains to trade in the direction, pricing, and sizing of subprime mortgage loans.

[Thanks to N.C. State's Craig Newmark]

A Marxist walks into a haymaker

In this case Herb Gintis. Normally the most reasonable of radicals, but in reviewing Thomas Sowell's Intellectuals and Society back in December of last year, he let loose his ideological priors;

 Sowell is a Biased, Opinionated, Klutzy Intellectual 

Sowell.... has no heart for the plight of the poor....he is a thorough-going right-wing ideologue....blind to...problems with conservative ideas....

...petty, vituperative, Manichean, and unilluminating. ....

... preachs to a right-wing choir, a wordy version of the radio talk-show hucksters....smothered in invective.

When it was pointed out, by someone trying to be of public service, that Sowell himself was born into poverty in pre-WWII South Carolina--through a laborious and painful striving, he went from high school dropout to Phd in Economics--and thus might be actually better qualified to claim some 'heart for the plight of the poor' than many, Gintis was having nothing of it;

Sowell does not know what it takes to overcome it. He knows what it took him and talented people like him to overcome it. 

Nor did he like the follow up;

It seems to me that Sowell has a lot more respect for 'the poor' than most. He treats them like human beings, recognizing that they respond to incentives put in front of them just as everyone else does. Not too surprising in that he grew up in dire poverty himself.

Which is why I'm so suprised at Herb Gintis's intemperate review, not of Sowell's book, but of Sowell himself. 

Gintis returned to his own defense;

I stand by my statement. Having "respect for the poor" does not mean assuming that they respond to incentives "just like anybody else." It means recognizing (a) there are dysfunctional individuals; and (b) there are dysfunctional cultures of poverty. Neither can be treated by assuming that the structure of incentives available to the non-poor will operate effectively to eliminate poverty.

I am not of course claiming that getting the incentives right is not important. It clearly is. For instance, limiting welfare support for teenage school dropouts has be key in reducing the teen pregnancy rate. I am saying that ignoring dysfunctionality and cultures of poverty is sufficient to render an anti-povery policy ineffective.

How Sowell is guilty of 'render[ing] anti-poverty policy ineffective' is left unexplained.  Nor has this been responded to by Gintis (yet);

So, you think that the author of Race and Culture, Conquests and Cultures, Migration and Cultures, and Black Rednecks and White Liberals is inattentive to 'dysfunctional cultures of poverty'? Seems unlikely to me. 

Shaking the dead hand of the past

But, not heartily.  Though a recognition that's it's not 1938 anymore might be a start to making wages more flexible, and thus more responsive to changes in the supply and demand for labor.  Which is what is necessary to resolve surplus and shortage in that market (i.e., reduce the unemployment rate).  No surprise that it's Republicans taking the initiative, and Democrats, beholden to their big-union-boss clients, trying to portray the reform as pro-business, anti-worker;

It seems like a simple proposition: give employees who work more than 40 hours a week the option of taking paid time off instead of overtime pay.

The choice already exists in the public sector. Federal and state workers can save earned time off and use it weeks or even months later to attend a parent-teacher conference, care for an elderly parent or deal with home repairs.

Republicans in Congress are pushing legislation that would extend that option to the private sector.

Notice that word 'option'.  It would expand possibilities that might be mutually beneficial to both employer and employee.  Naturally, Democrats aren't having any of it--they have the moral high ground now; they're the protectors of labor...even if individual laborers were harmed in the making of this New Deal policy.

...the idea Republicans promote as "pro-worker" is vigorously opposed by worker advocacy groups, labor unions and most Democrats. These opponents claim it's really a backdoor way for businesses to skimp on overtime pay.

Judith Lichtman, senior adviser to the National Partnership for Women and Families, contends the measure would open the door for employers to pressure workers into taking compensatory time off instead of overtime pay.

The program was created in the public sector in 1985 to save federal, state and local governments money....

What Milton said

Inflation is always and everywhere a monetary phenomenon, and by implication, so is recession and recovery.  David Beckworth provides clear evidence for that;

Mike Konczal and Paul Krugman claimed earlier this week that the contraction of U.S. fiscal policy in 2013 [the so called 'sequester'] was trumping the Fed's QE3 program and, in so doing, undermining the views of Market Monetarists like Scott Sumner and me. The [latest] employment report and its revisions to the previous months throw some cold water on their claim. But this should not surprise anyone, since fiscal austerity has been happening from 2010 and it has yet to stop the steady progression of nominal GDP (NGDP) growth. 

Steady, but not spectacular, growth of GDP.  I.e., not what is needed for a return to normalcy. Beckworth provides some spiffy graphs to illustrate his argument;

...the cyclically adjusted (i.e. structural) budget balance as a percent of potential GDP has been shrinking since 2010. This is the budget balance due to policy changes, not from changes to the economy.

....This broader 3-year experiment of fiscal policy versus money policy is the one Konczal and Krugman should be examining. Instead, they focus on the first quarter of 2013 and miss the forest for the trees. 

 Not that this excuses the incredibly stupid policies that have raised marginal tax rates on some of the nation's low income earners to over 100%.  Such as increasing unemployment compensation benefits to over 99 weeks (paying people to remain idle).  Neither did raising minimum wages (especially at the state level, in many cases) help, nor the monster Dr. Obamacare being let loose from the laboratory, which increased the costs of employing people.

He who crows last

Would be named Scott Sumner, because he can use the latest jobs report to say, I told you so.

Well you guys [Keynesians, anti-Austerians] had a nice little run, but it’s all over now.  Monetary offset stands triumphant.

PS.  I should clarify that the big story is the revisions.  We are adding 196,000 jobs per month this year, which is actually more than last year, despite the austerity.

Which Scott attributes to 'monetary offset' (expansionary monetary policy by the Fed) of 'austerity';

So far it looks like I was right and the Fed was wrong.  Admittedly things could change, but Fed officials are already in full CYA-mode, blaming fiscal austerity for the slowdown, despite the fact that they anticipated fiscal austerity when they made their forecasts in late 2012.  You don’t hear them say; “Sumner was right, we never should have forecast such robust RGDP growth in the first place.”

... Meanwhile the anti-austerians predicted a 1.5% hit to RGDP, some even mentioned 2%, and yet those predictions also look off base so far, as 2013 will look much like 2012.  Yet the press has an overwhelming Keynesian bias, so any facts are assumed to support the Keynesian model, no matter how much at variance. For instance, the US is doing more fiscal austerity that Europe, and yet David Beckworth showed that it’s Europe that has the big slowdown, not the US. 

Which also makes Paul Krugman's latest jihad against the Devil's Disciples look pretty silly too. 

These aren’t good times for austerian economics; and, to be honest, they aren’t too good for economics in general. Even if some economists have come out of the Reinhart/Rogoff/Alesina/Ardagna business looking pretty good, the reputation of the intellectual enterprise as a whole has clearly suffered.

Well, someone's reputation has certainly suffered.

Typing A Personality

A few hours spent with August Dvorak's (and co-authors') Typewriting Behavior; Psychology Applied to Teaching and Learning Typewriting (1936), go a long way...in explaining the curious hold that QWERTYnomics has had on some these past three decades.

According to Dvorak, the key to improved typing is an improved personality:

In this first typewriting crisis, what personality will you assume?.... Will you take the successful way of the superior typing student? Or is it to be the troubled path of the inferior typing student, who must comprise his failure with alibis or day dreams, or the casting of blame, or 'sour grapes'.

and,

...a bulk of [typing] errors is a personal matter.  It results from underlying personal troubles.... Sometimes the errors may be part of a young typist's queer attempts to overcome personal trouble.

and,

Learning to type successfully is intelligent behavior in more ways than many mediocre typists appear yet to realize. 

Somewhat ironic, that above casting of blame, or 'sour grapes', in light of the subsequent tilting at keyboards by Dvorak.  That ended in complete frustration for the former University of Washington time and motion expert.  As Jared Diamond put it in The Curse of QWERTY; August Dvorak died in 1975, a bitter man: I’m tired of trying to do something worthwhile for the human race, he complained. They simply don’t want to change!

They didn't change, because there was no reason to change, contrary to the fevered rantings of Dvorak and his acolytes.  Psychology, yeah, yeah, that's the ticket.