Thursday , November 23 2017
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Dan Crawford

Dan Crawford

aka Rdan owns, designs, moderates, and manages Angry Bear since 2007. Dan is the fourth ‘owner’.



Articles by Dan Crawford

Productivity and wages

2 days ago

Another article from Jared Bernstein Washington Post:
There’s an interesting sort of argument going on between Stansbury/Summers (SS) and Mishel/Bivens (MB). My name has been invoked as well, so I’ll weigh in. It’s a “sort-of” argument because there’s less disagreement than first appears.
It all revolves around this chart, which plots to the real compensation of mid-wage workers against the growth in productivity. For years they grew together, then they grow apart. The levels of both variables almost double, 1948-73, but since then, productivity has outpaced the real comp of blue-collar, non-managerial workers (mid-wage workers) by a factor of 6.
Figure 1

That wedge between productivity and middle-class wage growth has become one of the more important

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…California’s Republican delegation boycotted a request for disaster funding for their own state.”

2 days ago

Lifted from comments reader Denis Drew:
Donald Trump’s Response to Disaster Aid for California: Nothing
Kevin DrumNov. 20, 2017http://www.motherjones.com/kevin-drum/2017/11/donald-trumps-response-to-disaster-aid-for-california-nothing/
“A few weeks ago, California requested $7.4 billion in disaster aid following the massive series of wildfires in the northern part of the state that killed 43 people and destroyed nearly 9,000 structures. Actually, let’s back up. That’s not quite accurate. California’s Democratic governor, its two Democratic senators, and its 39 Democratic members of Congress asked for $7.4 billion. With only one exception, California’s Republican delegation boycotted a request for disaster funding for their own state.”
* * * * * *

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Trade deficits, offshoring jobs, Republican tax plan

2 days ago

Via Washington Post, Jared Bernstein writes:
The Republican tax cut plan has been justly criticized for worsening both income inequality and the national debt, but the plan has another big problem: It’s likely to lead to more outsourcing of U.S. jobs and a larger trade deficit. That’s obviously a negative for factory jobs and net exports, but it’s also precisely the opposite of what Trump continues to promise to many of his working-class supporters.
First, the tax plan moves to what’s called a territorial system of international taxation, which means the U.S. tax rate on the overseas earnings of U.S. foreign affiliates would become zero. While it’s true these firms can defer taxes on these earnings for as long as they like, they cannot “repatriate” them

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Venezuela and the Next Debt Crisis

3 days ago

By Joseph Joyce
Venezuela and the Next Debt Crisis
The markets for the bonds of emerging markets have been rattled by developments in Venezuela. On November 13,Standard & Poor’s declared Venezuela to be in default after that country missed interest payments of $200 million on two government bonds. Venezuelan President Nicolás Maduro had pledged to restructure and refinance his country’s $60 billion debt, but there were no concrete proposals offered at a meeting with bondholders. By the end of the week, however, support from Russia and China had allowed the country to make the late payments.
Whether or not Venezuela’s situation can be resolved, the outlook for the sovereign debt of emerging markets and developing economies is worrisome. The incentive to

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Do Android Phones Dream of Electoral Sheeple in 1984

3 days ago

(Dan here…Lifted from Robert’s StochasticThoughts)
Do Android Phones Dream of Electoral Sheeple in 1984

Signs of the times
A photo tweeted by the Russian Ministry of Defense Tuesday as “irrefutable” proof that the United States has allied with the Islamic State in Iraq and Syria turned out to be from a video game.
@umpire43 a bot who claimed to have joined the nave at age 5, then claimed to have served 22 years from 1970 to 1972 has deleted all its tweets. But, I have a screen capture

Dan Scavino retweeted him/her/and or it. Umpire43’s story is amazing. Roy Moore and his wife literally took an old letter of support by 53 pastors, and forged it to make it seem like he was still supported AFTER the allegations of sexual assault on minors came out.
So

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More on why so many parents lose under the TCJA

3 days ago

Ernie Tedeschi writes:
As a followup to my post earlier this morning, I’ve created a table below detailing how each policy in the TCJA affects the number of parental families in 2027 seeing a tax hike.
Using refined policy parameters that have been added to the OSPC model since yesterday, I find that under the TCJA as written, 22 million families with children would see a tax hike in 2027 versus current law. This includes the indirect effects of the corporate income tax cut, but assumes that the filer credits expire in 2023.
That 22 million figure is almost exactly half of the 44 million total families with kids projected for 2027.
I’ve stacked the policies left to right in roughly the same order as in JCT’s score of the TCJA. You can see all the way to

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Tax Cuts Pay for themselves nonsense

4 days ago

By Hale Stewart (originally published at Bonddad blog)
John Hinderaker Renews His “Tax Cuts Pay For Themselves With Growth” Nonsense

It’s been awhile since John “Everything I wrote about economics for an entire year was wrong” Hinderaker has written about economics.  The respite has been glorious.  But now that Republicans in the House have passed a tax bill, ol’ John has to tell us that they will lead to glorious growth.
I have one word for him: KANSAS.  Sam Brownback tried this over the last 5 years in his state and it failed.  Miserably.  For more on this, please see Menzie Chen’s writing over at Econbrowser.
But more to the point, the whole “tax cuts made the 80s the most amazing economic growth miracle since the beginning of time pure trope.  Let’s

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Many parents face higher taxes under TCJA, even if Congress makes its credits permanent

6 days ago

Ernie Tedeschi as linked by Paul Krugman points to an interesting author. The math is in follow up post.:
Many parents face higher taxes under TCJA, even if Congress makes its credits permanent

This quick post looks at the effects of the Tax Cut and Jobs Act (TCJA, the House GOP’s proposed tax plan introduced last week), but (selfishly) I focus on a specific segment of the population: families with children under 18.
It turns out that parents do far worse under the TCJA than the population as a whole, and making the expiring credits in the TCJA permanent only modestly changes this story. More than 40% of families with children face a hike under TCJA in 2027, even with the security of permanent filer credits and assumptions about the benefit of corporate

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This is Why Inflation Expectations Are So Important

14 days ago

By Hale Stewart (originally published at Bonddad blog)
This is Why Inflation Expectations Are So Important

Canadian Central Bank Head Poloz:

The underlying trend in inflation is driven by the laws of supply and demand, which are as applicable today as they ever were. Excess demand pushes inflation up; excess supply pushes inflation down. Central banks exploit this relationship, working to create excess demand or excess supply in the economy, to target the inflation rate.
 
A central role in this relationship between the economy and inflation is played by inflation expectations. The more anchored those expectations are, the more quickly the economy will find its way back to normal after an economic shock. This is known as the credibility dividend: a

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Fox’s Shep Smith on Tax Bill

14 days ago

I found this segment of interest from Fox News…while I differ on the generic federal deficit thinking, I notice while Obamacare repeal was ‘do or die’, Smith noticed the eight years of Republicans calling doom from the federal deficit gets hardly a peep.
[embedded content] Student loan deductions and credits disappear, among a list. as well…his affect is telling.

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Small businesses, tax cuts, and reporting

16 days ago

(Dan here…lifted from AB 2012)
Small businesses, tax cuts, and reporting
Dan Crawford | November 29, 2012

 I sometimes get the ‘eyes rolling’ reaction from people in my social sphere when I insist that at least linking to  original documents is important, and that someone needs to follow up on what an author says someone else says (as a way to gain traction and authority status for their own writing, such as saying the non-partisan Tax Policy Centers says).  I won’t go into the idea of spin, which involves figuring out intent.  Mine is a caution for readers:
The post is lifted from a note from Daniel Becker in response to a query I sent to him…Dan is a small businessman in the way most of us think of as small business.  (The IRS has a different criterion

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Economic Consequences of Populism

16 days ago

By Joseph Joyce
Economic Consequences of Populism
Who is the true populist: Bernie Sanders, who promises single-payer health care and college without tuition, or Donald Trump, who campaigned on a promise to “drain the swamp”?  Jeremy Corbyn of the UK’s Labour Party, who wants to nationalize public-sector firms, or Marine Le Pen of France’s National Front, who wants to take France out of the Eurozone? And what would be the consequences of their policies?
To answer these questions requires first an understanding of populism. One definition of populism, such as the one found here, refers to it as policies for the “common people.” Populism, therefore, divides the world into two groups: the good “common people” and the evil “them.” “They” deprive the “people”

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The Exchange Rate as a ‘Veil’

18 days ago

(Dan here…Biagio Bossone will be joining contributors to Angry Bear.  Here is his first post for AB concerning the impact of exchange rates)
by Biagio Bossone      (Biagio BOSSONE is an Italian national,  currently advises the World Bank Group/IMF on financial sector development issues and technical assistance programs in several countries in Africa, Asia and the Pacific, Latin America, and Northern Africa and the Middle East. He is a consultant to private-sector organizations He has taught at various universities in Italy.)
The Exchange Rate as a ‘Veil’
A few years back, Antonio Fatas challenged the conventional wisdom whereby sudden stops – or the abrupt reductions in net capital inflows caused by crisis confidence – are relevant only for countries with

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October jobs report: great utilization, decent growth, poor wages (reposted)

18 days ago

(Dan here….Corrected code to fit the format and reposted)

 by New Deal Democrat

HEADLINES:
+261,000 jobs added
U3 unemployment rate down -0.1% from 4.2% to 4.1%
U6 underemployment rate down -0.3 from 8.2% to7.9%
Here are the headlines on wages and the chronic heightened underemployment:

Wages and participation rates
Not in Labor Force, but Want a Job Now:  down -443,000 from 5.628 million
to 5.135 million
Part time for economic reasons: down -369,000 from 5.122 million to 4.753
million
Employment/population ratio ages 25-54: down -0.1% from 78.9% to 78.8%
Average Weekly Earnings for Production and Nonsupervisory Personnel: down -$.0.1
from $22.23  to $22.22, up +2.4% YoY.  (Note: you may be reading different information about
wages elsewhere. They

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2017 Globie: “Grave New World”

18 days ago

By Joseph Joyce
2017 Globie: “Grave New World”
Once a year I choose a book that deals with an aspect of globalization in an interesting and illuminating way, and bestow on it the “prize” of the Globalization Book of the Year (known as the “Globie”). The prize is strictly honorific—no check is attached! But I enjoy drawing attention to an author who has an insight on the process of globalization.  Previous winners are listed below.
This year’s Globie goes to Stephen D. King for Grave New World: The End of Globalization, The Return of History. King is senior economic adviser at HSBC Holdings, where he was chief economist from 1998 to 2015. He is the author of Losing Control: The Emerging Threats to Western Prosperity, which won the Globie in 2010, and

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The Long Run and International Economics

20 days ago

(/Dan here…lifted from Robert’s Stochastic Thoughts)
The Long Run and International Economics

I am still thinking about Krugman and the Gravelle GeardownDo click the link if you are interested in understanding what I am typing about. Very briefly the question is: what effect would cutting the tax on profits have on the _US capital stock ? The particular issue is what difference does it make that most of US production is production of non traded goods and services. Gravelle claims that this implies a lower long run effect of the tax cut on US capital stock than would occur if all goods and services were traded (or that’s what I think based on Krugman’s explanation).
Here the key words are “long run” and, I think, an important issue is long run mysticism.

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Lower taxes generate growth to replace lost revenue?

28 days ago

(Dan here..lifted from 2010 Angry Bear postings and still centrally relevant.  More to be posted)
A Proposed Bet for Professors Bryan Caplan and David R. Henderson  

by Mike Kimel
A Proposed Bet for Professors Bryan Caplan and David R. Henderson (and Anyone Else Who Believes Lower Taxes Generate Faster Economic Growth)
Cross posted at the Presimetrics blog.
Professors Caplan and Henderson,
Both of you have had recent posts that indicate you have some enthusiasm for betting on economic outcomes. (Your co-blogger at Econlog, Arnold Kling seems less enthusiastic about bets, and thus I have not addressed him by name here.) I have a few criticisms of your approach to betting. The first is that, frankly, y’all are betting on some rather peripheral issues. Why

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Labor Market Slack and Weak Wage Growth

October 21, 2017

By Hale Stewart (originally published at Bonddad blog)
Labor Market Slack and Weak Wage Growth

From the IMF’s latest World Economic Outlook: Sluggishness in core inflation in advanced economies—a surprise in view of stronger than expected activity—has coincided with slow transmission of declining unemployment rates into faster wage growth. Real wages in most large advanced economies have moved broadly with labor productivity in recent years, as indicated by flat labor income shares (Figure 1.4, panel 6). As shown in Chapter 2, muted growth in nominal wages in recent years partly reflects sluggishness in labor productivity.1 However, the analysis also reveals continued spare capacity in labor markets as a key drag: wage growth has been particularly soft

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Silicon Valley is not your friend

October 20, 2017

Vis New York Times

Growth becomes the overriding motivation — something treasured for its own sake, not for anything it brings to the world. Facebook and Google can point to a greater utility that comes from being the central repository of all people, all information, but such market dominance has obvious drawbacks, and not just the lack of competition. As we’ve seen, the extreme concentration of wealth and power is a threat to our democracy by making some people and companies unaccountable.

In addition to their power, tech companies have a tool that other powerful industries don’t: the generally benign feelings of the public. To oppose Silicon Valley can appear to be opposing progress, even if progress has been defined as online monopolies; propaganda

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Precursor to Ecological Armageddon.

October 19, 2017

(Dan here…Stormy sends a reminder that the world has a real side as well…lifted from an e-mail))
Calling out the precursor to an Ecological Armageddon.
Thought you might like to see this study—also written up in Guardian.  Economists are totally irrelevant.   Profit and money are their game….and that game is ending within our children’s lifetime.
More than 75 percent decline over 27 years in total flying insect biomass in protected areas
See also:
Warning of ‘Ecological Armageddon’ after dramatic plunge in insect numbers

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Is This Why Wages Are Low?

October 17, 2017

By Hale Stewart (originally published at Bonddad blog)
Is This Why Wages Are Low?

These are two graphs from a post over at the Center for Equitable Growth. 

The top chart shows that the relationship between unemployment and wage growth isn’t as strong as you’d think.  Recent research highlighted by Fed President Bullard made the same observation.  But the bottom chart — now that’s what a tight correlation looks like!

I ran a quick, down-and-dirty calculation from FRED data using simple correlation analysis, but I used the employment to population rate and the Y/Y percentage change in average hourly earnings of all employees.  Here’s the scatterplot:

The correlation was .68 — pretty high.

Here’s a chart of the prime age employment ratio:

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