Jim Johnson's List: Economics

• Consider Spain's woes. What is the real economic problem? Basically, Spain is suffering the hangover from a huge housing bubble, which caused both an economic boom and a period of inflation that left Spanish industry uncompetitive with the rest of Europe.
• Unless Spain leaves the euro -- a step nobody wants to take -- it is condemned to years of high unemployment.
• Spain didn't get into trouble because its government was profligate. On the contrary, on the eve of the crisis, Spain actually had a budget surplus and low debt. Large deficits emerged when the economy tanked, taking revenues with it, but, even so, Spain doesn't appear to have all that high a debt burden.
• Spain doesn't need more austerity.

• Why, then, are there demands for ever more pain?

  Part of the explanation is that in Europe, as in America, far too many Very Serious People have been taken in by the cult of austerity, by the belief that budget deficits, not mass unemployment, are the clear and present danger, and that deficit reduction will somehow solve a problem brought on by private sector excess.

  Beyond that, a significant part of public opinion in Europe's core -- above all, in Germany -- is deeply committed to a false view of the situation.
• Talk to German officials and they will portray the euro crisis as a morality play, a tale of countries that lived high and now face the inevitable reckoning. Never mind the fact that this isn't at all what happened -- and the equally inconvenient fact that German banks played a large role in inflating Spain's housing bubble. Sin and its consequences is their story, and they're sticking to it.

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• Which is the more redistributionist of our two parties? In recent decades, as , the evidence suggests the answer is the GOP.

  The most obvious way that Republicans have robbed from the middle to give to the rich has been the changes they have wrought in the tax code -- reducing income taxes for the wealthy in the Ronald Reagan and George W. Bush tax cuts, and cutting the tax rate on capital gains to less than half the rate on the top income of upper-middle-class employees.
• The conservative counter to such liberal cavils is to assert that the market increases wealth, which will eventually descend on everyone as gentle rains from heaven.
• Believing and asserting that requires either ignorance or willful denial of economic history.
• The problem is not just that everyone but the wealthy is claiming a smaller share of the nation's income; the absolute amount of income they're getting is declining as well.
• Indeed, the United States has experienced an upward redistribution so profound that it affects far more than incomes. Whole sectors of the economy and regions of the country have been decimated by these economic changes.
• decline in marriage rates and family stability within the white working class
• decline includes longevity as well
• The market is not just redistributing income in the United States, then. It is redistributing life.
• A pro-life party? More like its opposite.

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• older people are not the main offenders when it comes to mental oblivion, general amnesia and chronic forgetfulness. Anybody holding strong political opinions -- Republican or Democrat -- also tends to suffer episodes of selective memory.
• As I write this, the Republicans are holding their convention in Tampa, Fla.
• The most amazing lapse of memory concerns the president whom Mr. Obama succeeded -- you know, what's his name, the Texas-drawling fellah from Maine. Republicans have wiped all mention of him from their collective memory banks, which is strange seeing how much they liked him at the time. We have gone from having a vice president at an undisclosed location to an ex-president with an undisclosed persona.

• Republicans are blessed because they can't remember the deficit when what's-his-face was in the White House, suggesting to them that it probably didn't happen. Nor can they remember Rep. Paul Ryan's part in supporting the huge spending by whoever was doing it.

  It would be a daring and welcome move if the Republicans would mention their last president at their convention, or else have him be a surprise visitor, leading the party faithful to give him a rapturous welcome even as they say to each other, "He looks familiar, but I can't quite place him."

  Or they might say, "Everything was just hunky-dory when he was president, which I vaguely remember he was, and dang those Democrats for causing the total economic collapse."

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• Bill Clinton's speech at the Democratic National Convention was a remarkable combination of pretty serious wonkishness
• and memorable zingers. Perhaps the best of those zingers was his sarcastic summary of the Republican case for denying President Barack Obama re-election: "We left him a total mess. He hasn't cleaned it up fast enough. So fire him and put us back in."

• Great line. But is the mess really getting cleaned up?

  The answer, I would argue, is yes.

• And here's the good news: The forces that have been holding the economy back seem likely to fade away in the years ahead. Housing starts have been at extremely low levels for years, so the overhang of excess construction from the bubble years is long past -- and it looks as if a housing recovery has begun. Household debt is still high by historical standards, but the ratio of debt to GDP is way down from its peak, setting the stage for stronger consumer demand.

  And what about business investment? It has actually been recovering rapidly since late 2009, and there's every reason to expect it to keep rising as businesses see rising demand for their products.

  So, as I said, the odds are that barring major mistakes, the next four years will be much better than the past four years.

  Does this mean that U.S. economic policy has done a good job? Not at all.

• But, that said, Mr. Obama did push through policies -- the auto bailout and the Recovery Act -- that made the slump a lot less awful than it might have been. And despite Mitt Romney's attempt to rewrite history on the bailout, the fact is that Republicans bitterly opposed both measures, as well as everything else the president has proposed.

  So Bill Clinton basically had it right: For all the pain America has suffered on his watch, Barack Obama can fairly claim to have helped the country get through a very bad patch, from which it is starting to emerge.

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• Why does American medicine cost so much?
• A film coming up on PBS next Tuesday night, the 25th, takes that question on directly. It's produced and directed by Roger Weisberg. Roger, welcome to the online New
• A film coming up on PBS next Tuesday night, the 25th, takes that question on directly.
• there are a lot of drivers. There's the aging of our population. There's technologic innovation and explosion. 
• But I think the biggest single driver is our fee-for-service system that rewards volume instead of value and quantity of medical services instead of quality
• . And as a result, we end up doing a lot of things that cause more harm than benefit for patients.
• we know from research that when patients are really given a true, fair choice, that is they're given all the information about the costs, benefits, risks, tradeoffs, of elective procedures, they tend to choose about 30 to 40 percent less treatment and their rate of consumption drops to about to the level that doctors choose when they're confronted with those same medical problems.

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• Being short on cash may make you a bit slower in the brain, a new study suggests.

  People worrying about having enough money to pay bills tend to lose temporarily the equivalent of 13 IQ points, scientists found when they gave intelligence tests to shoppers at a New Jersey mall and farmers in India.

  The idea is that financial stress monopolizes thinking, making other calculations slower and more difficult, like the effects of going without sleep for a night.
• The study's authors and others say the results contradict long-standing conservative economic social and political theory that say it is individuals -- not circumstances -- that are the primary problem with poverty.

• This society claims to reward the best and brightest regardless of family background. In practice, however, the children of the wealthy benefit from opportunities and connections unavailable to children of the middle and working classes.
• What's driving these huge income gains at the top? There's intense debate on that point
• I guess I'd note that a large proportion of those super-high incomes come from the financial industry, which is, as you may remember, the industry that taxpayers had to bail out after its looming collapse threatened to take down the whole economy.
• In any case, whatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America.

• that doesn't mean we should give up on smaller steps, initiatives that do at least a bit to level the playing field.

  Take, for example, the proposal by Bill de Blasio, who finished in first place in Tuesday's Democratic primary and is the probable next mayor of New York, to provide universal prekindergarten education, paid for with a small tax surcharge on those with incomes over $500,000.

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• The retirement of the "Who can look up your Timeline by name?" privacy setting was announced by the company on Thursday. It means anyone can find the profile of someone else through the search bar.
• As Facebook is a for-profit ad-backed company whose revenue growth depends on its users sharing as much data as possible with one another, the company's main motivation is to eradicate user privacy over time. The removal of this search setting goes hand-in-hand with the global roll out of Graph Search, which makes it more complicated than ever before for a user to keep their interactions on the network hidden from the Eye-of-Sauron-gaze of Zuckerberg & Co.

• HealthCare.gov was meant to create a simple, easy way for millions of Americans to shop for subsidized health care.

  Instead, in a little two more than weeks, it has become the poster child for the federal government's technical ineptitude.

  A dysfunctional contracting system clearly bears some of the blame. But entrepreneurs in Silicon Valley likely would have approached the project differently from the start.
• "They build one feature at a time, and take a step back, look at how the feature is be used, before they go on to the next feature."
• o get a software project funded in the public sector, typically you have say exactly what it is going to do, spell how much it will cost and when you will finish.
• It's a culture that is risk-adverse and terrified of public failure. You can't learn from little failures or adjust course midstream. And instead of taking big jobs, breaking them down into small tasks and testing for success at each step, a project like HealthCare.gov becomes a giant all-or-nothing gamble.
• oo often it's a gamble taxpayers loose

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• The budget office has now increased its estimate of the size of these effects. It believes that health reform will reduce the number of hours worked in the economy by between 1.5 percent and 2 percent, which it unhelpfully noted “represents a decline in the number of full-time-equivalent workers of about 2.0 million.”

    

  Why was this unhelpful? Because politicians and, I’m sorry to say, all too many news organizations immediately seized on the 2 million number and utterly misrepresented its meaning. For example, Rep. Eric Cantor, the House majority leader, quickly posted this on his Twitter account: “Under Obamacare, millions of hardworking Americans will lose their jobs and those who keep them will see their hours and wages reduced.”

    

  Not a word of this claim was true. The budget office report didn’t say that people will lose their jobs. It declared explicitly that the predicted fall in hours worked will come “almost entirely because workers will choose to supply less labor.” And as we’ve already seen, Mr. Elmendorf did his best the next day to explain that voluntary reductions in work hours are nothing like involuntary job loss. Oh, and because labor supply will be reduced, wages will go up, not down.

    

  We should add that the budget office believes that health reform will actually reduce unemployment over the next few years.

• n the early 20th century, many leading Americans warned about the dangers of extreme wealth concentration and urged that tax policy be used to limit the growth of great fortunes.
• an undemocratic distribution of wealth
• the economist Thomas Piketty points out that America, which introduced an income tax in 1913 and an inheritance tax in 1916, led the way in the rise of progressive taxation, that it was “far out in front” of Europe. Piketty goes so far as to say that “confiscatory taxation of excessive incomes” — that is, taxation whose goal was to reduce income and wealth disparities, rather than to raise money — was an “American invention.”
• America was in danger of turning into a society dominated by hereditary wealth — that the New World was at risk of turning into Old Europe.
• the share of wealth held at the very top — the richest 0.1 percent of the population — has doubled since the 1980s and is now as high as it was when Teddy Roosevelt and Irving Fisher issued their warnings.
• We don’t know how much of that wealth is inherited. But it’s interesting to look at the Forbes list of the wealthiest Americans. By my rough count, about a third of the top 50 inherited large fortunes. Another third are 65 or older, so they will probably be leaving large fortunes to their heirs. We aren’t yet a society with a hereditary aristocracy of wealth, but, if nothing changes, we’ll become that kind of society over the next couple of decades
• In short, the demonization of anyone who talks about the dangers of concentrated wealth is based on a misreading of both the past and the present. Such talk isn’t un-American; it’s very much in the American tradition.

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• New research explores gender disparities in business school enrollment by the different ways men and women appear to process ethical compromise.
• at the Haas School of Business at the University of California, Berkeley, David, and she's noticed over the years that there are always more men than women in her classes
• men tend to have more lenient ethical standards than women, and secondly, that negotiators are more likely to tell a blatant lie to a female counterpart than a male counterpart.
• men tend to apply ethical principles egocentrically. And what that means is that when an ethical decision affects them negatively, they're likely to perceive the situation as being unethical. But when the situation benefits them, they're likely to say: Well, it's a gray area - it's not such a big deal.
• at in every step of the process, right from business school on to the actual corporate world, women are confronting a triple hurdle. The first hurdle is that men are more willing to accept jobs that involve ethical compromise. Men seem to be less plagued by ethical doubt. And women are not only plagued by ethical doubt, they're actually targeted for deception.
• It's her hope that if women actually understand the way they're thinking about business, that they actually understand that process, they will find a way to stay in the game and also stay ethical.

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• The thing you sign your name on when the UPS guy gives you a package used to be a piece of paper. Now it's a computer that tells Earle everything he needs to know.

  The computer doesn't just give advice. It gathers data all day long. Earle's truck is also full of sensors that record to the second when he opens or closes the door behind him, buckles his seat belt and when he starts the truck.

  Technology means that no matter what kind of job you have — even if you're alone in a truck on an empty road — your company can now measure everything you do.

  In Earle's case, those measurements go into a little black box in the back of his truck. At the end of the day, the data get sent to Paramus, N.J., where computers crunch through the data from UPS trucks across the country.
• Earle says a typical day for him used to be around 90 deliveries — now it's about 120.
• In the long run, as workers have gotten more productive, their pay has gone up.
• But Earle says there is another side of driving around a truck full of sensors: "You know, it does feel like big brother."

• Still, issues over the data the company collects have become part of the bargaining process between the drivers' union and the company. Under the drivers' contract, the company cannot discipline drivers based solely on data, and can't collect data without telling them.

  This kind of back and forth — about what kind of data companies can collect, and what they can do with it — isn't limited to UPS. It's going to start popping up for more and more workers and more and more companies.

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• Capital in the Twenty-First Century,” the new book by French economist Thomas Piketty, is a bona fide phenomenon. Other books on economics have been best-sellers, but Mr. Piketty’s contribution is serious, discourse-changing scholarship in a way most best-sellers aren’t.
• What’s really new about “Capital” is the way it demolishes that most cherished of conservative myths — the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.
• it has been amazing to watch conservatives, one after another, denounce Mr. Piketty as a Marxist
• And The Wall Street Journal’s review, predictably, goes the whole distance, segueing from Mr. Piketty’s call for progressive taxation as a way to limit the concentration of wealth — a remedy as American as apple pie, once advocated by leading economists and mainstream politicians, including Teddy Roosevelt
• The Piketty panic shows that the right has run out of ideas.

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• we wondered what exactly could the NSA still see about us, assuming for a second that they still care to look? To find out, NPR technology correspondent Steve Henn teamed up with Sean Gallagher, a reporter at Ars Technica and Dave Porcello, a computer security expert at a company called Pwnie Express. Together, they tapped Steve's smart phone and laptop.
• Like anyone doing research on anything, I'd hit Google. Sean Gallagher and Dave Porcello had seen that. Like the NSA monitoring traffic, they were monitoring me. A few weeks earlier, we had installed something called a Pwn Plug in my office. It's this little wireless router that basically catches and copies all the traffic into and out of any device that connects to it - in my case, my computer and mobile phone.
• bulk collection - this kind of mass collection of Internet data - this is what happens to people who are not targets, who are not suspected terrorists but just regular people whose traffic is sucked up into this mesh. Our goal was to try and figure out exactly what this kind of passive surveillance can discover.
• the software that was automatically analyzing my web traffic got down to business. It scoured the sites I visited, looking for e-mail addresses and telephone numbers. Sean gave me a list of people he thought I was reaching out to.
• But the web wasn't the only thing that tripped me up. Almost every business or computer has some old software inside. Think about how you do your expenses at work or when you last updated your audio player. Old programs leak data too and pretty much everyone has them.
• It was sent using an old, insecure system that's now been patched. But actually the biggest surprise for me, the thing that kind of blew me away, came right at the beginning of this, when I first connected my phone to that little router monitoring my traffic. Dave was across the country on a speakerphone watching as my iPhone pinged servers all over the world.
• There's just thousands and thousands of pages of stuff.
• people are walking around every day with these, you know, mobile computers in their pockets and they have no idea what they're sending to the world.

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• At the end of the day, the business model that got us funded was advertising.
• The model that got us acquired was analyzing users’ personal homepages so we could better target ads to them. Along the way, we ended up creating one of the most hated tools in the advertiser’s toolkit: the pop-up ad.
• most online ads aren’t worth very much.
• As a rule, the ads that are worth the most money are those that appear when you’re ready to make a purchase
• most online advertising doesn’t follow your interest; it competes for your attention. It’s a barrier you have to overcome (minimizing windows, clicking it out of the way, ignoring it) to get to the article or interaction you want.
• Once we’ve assumed that advertising is the default model to support the Internet, the next step is obvious: We need more data so we can make our targeted ads appear to be more effective.
• I have come to believe that advertising is the original sin of the web.
• It’s unlikely that our willingness to accept online surveillance reflects our trust in the American government, which is at historic lows. More likely, we’ve been taught that this is simply how the Internet works: If we open ourselves to ever-increasing surveillance—whether from corporations or governments—the tools and content we want will remain free of cost.
• An ad supported web grows quickly and is open to those who can’t or won’t pay. But it has at least four downsides as a default business model.
• it’s hard to imagine online advertising without surveillance
• Second, not only does advertising lead to surveillance through the “investor storytime” mechanism, it creates incentives to produce and share content that generates pageviews and mouse clicks, but little thoughtful engagement
• Third, the advertising model tends to centralize the web
• Companies like Facebook want get as much of that money as possible
• decisions these platforms take to ban speech are as powerful as decisions made by governments
• Finally, even attempts to mitigate advertising’s downsides have consequences. To compensate us for our experience of continual surveillance, many websites promise personalization of content to match our interests and tastes.
• Research suggests that these personalized sites may lead us into echo chambers, filter bubbles, or other forms of ideological isolation that divide us into rival camps that cannot agree on anything, including a set of common facts on which we could build a debate.

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• Bill Gates, whom Forbes’ magazine ranks as the second wealthiest man in the world, doesn’t agree with the ideas of French economist Thomas Piketty.
• Bill Gates, whom Forbes’ magazine ranks as the second wealthiest man in the world, doesn’t agree with the ideas of French economist Thomas Piketty.
• It’s Piketty, after all, who made a big splash this year with his book Capital in the 21^st Century, which argued that it is a fundamental law of capitalism that wealth will grow more concentrated absent destabilizing events like global wars. Piketty’s solution? A global tax on capital that could help governments better understand how wealth is distributed and stem the tide of inevitably increasing inequality, which Piketty believes is socially destabilizing.
• Gates shares Piketty’s goal of spreading wealth, yet he doesn’t want to discourage the uber wealthy (like Gates) who are taking risks, investing in value-creating businesses, and helping the world through philanthropy. Gates’ solution? Shift the American tax code from one that taxes labor to one that taxes consumption.
• one of the strategies behind this tax regime is to reduce the incentive to consume. With less conspicuous consumption, the poor would suffer from the negative effects of having less than those around them.
• Such a regime could appeal to both the right and left sides of the political spectrum.

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