Relevant and even prescient commentary on news, politics and the economy.

“Saving” and Underconsumption

Some years ago Paul Krugman gave perhaps the best argument against the inequality-causes-underconsumption theory of secular stagnation: the idea that rich people spend less of their income/wealth, so if wealth/income is more concentrated there’s less spending and less GDP/prosperity. (It’s curious how liberal economists are the ones who most commonly shoot down this argument. That’s […]

Relax DeLong & Krugman… productivity advances will appear when there is demand-space

Brad DeLong wrote a praised piece about growth… The Honest Broker: Is Growth Getting Harder? If so, Why, and What Can We Do About It? Yes, it was an interesting piece, but I have a bit of a critique of one point concerning productivity. I see productivity as blocked by demand. But he doesn’t make […]

Does Lowering Corporate Tax Rates Create Jobs? Answer is a resounding "no"

by Linda Beale Does Lowering Corporate Tax Rates Create Jobs? Answer is a resounding “no” For years (decades, actually), the American pro-wealthy right has argued that lowering corporate tax rates will create jobs.  That is the presumed purpose behind the push by Dave Camp to enact a tax reform package with lower corporate rates, and […]

By faith, Mr. Krugman seeing the light… More evidence labor share critical to trade deficits…

I watch the transformation of Paul Krugman to understand the key importance of labor share. But first, let’s start with Till Van Treeck, who writes an article titled… U.S. Current Account Deficits and German Surpluses: The Role of Income Distribution in Global Imbalances. He presents evidence that labor share and inequality are creating a large part […]

Why is inflation low and steady?

While some debate whether QE is causing low inflation… there is a practical view of low inflation from an article written by Chun Wang at Advisor Perspectives. Here are some excerpts… “A key factor allowing the Fed to maintain QE is the lack of inflation. You would think after multiple rounds of synchronized global money […]

Elephant in the Room: Upward Redistribution, Concentrated Income and Wealth, and Secular Stagnation

Update: Brad DeLong has replied, and I have replied to him. Dean Baker quite rightly takes Robert Samuelson to task for his op-ed on the causes of secular stagnation. Samuelson: The problem might not be a dearth of investments so much as a surplus of risk aversion. For that, candidates abound: the traumatic impact of the Great Recession […]

A healthy natural real interest rate… Say “No” to secular stagnation

I put together a video on the natural real interest rate. There is not one single natural real rate. It is like what Steve Waldman said… “The word natural is always used to hide the constructed context in which an outcome occurs…” The natural real interest rate goes lower, as policy tries to push real […]

Dreadful Plumbing with Downward Nominal Rigidity

by Robert Waldmann Dreadful Plumbing with Downward Nominal Rigidity Dreadful plumbing with downward nominal rigidity This is a legible version (thanks Dan) of this post. This is the pointless math post which accompaniesthis and especially this post at angrybearblog. Here I am assuming that transition out of the liquidity trap is predictable. This means that […]

Insurers’ Latest Dodge to Not Cover You when You Need It: The Incredible Shrinking Network

Today’s must-read Seattle Times article by Carol M. Ostrom and Amy Snow Landa (interactive graphic here and comparison table here) prompts me to write about a huge problem with American health insurance that I’ve been banging against quite personally in recent months. Excerpts below give an idea what an important article this is. My thoughts: Insurers are actively eliminating must-have hospitals from their networks, […]