John Q

(Overdue again!) Another open thread, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

Note: Unfortunately there appears to be no way to turn moderation off selectively, so the discussion here will be a bit slow. Still looking into options.

As I’ve mentioned previously, when I started work on Economic Consequences of the Pandemic, I assumed I’d be writing a polemic against austerity, as I did in Zombie Economics. Based on the last crisis, it seemed likely that any stimulus measures would be wound back rapidly, leading to a sluggish and limited recovery. That’s pretty much what is happening in Australia, where I live, but not in the US, where the book will be published. On the contrary, Biden’s policies are pretty much what I would have advocated (certainly if you take into account the razor-thin majorities he is working with). And, with luck, the main elements will be in place by mid-year, long before my book can appear.

So I’m refocusing on the issue of debt and how it can be managed. This was the central issue after the Treaty of Versailles, and also in the return to the gold standard, which prompted The Economic Consequences of Mr Churchill. io o

My central conclusion is a simple one. Rather than aiming for a fixed ratio of public debt to GDP, governments should aim to control the long-term rate of interest on inflation-protected bonds, and set it at a rate of around 1 per cent, about equal to the long-term rate of productivity growth. Since rates are well below that now, there is plenty of room for more public investment.

More over the fold

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Thanks to everyone who has made useful comments on my recent posts. I need to move on to present concerns, so I’m finishing my writing on the post-War Golden Age (or whatever you would like to call this period). Here are some thoughts I still need to organize

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The claim that the mid-20th century represented an economic Golden Age of near-full employment and economic equality, compared to both earlier and later periods, commonly meets two kinds of critical responses. Over the fold, I respond.
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(Long overdue!) Another open thread, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

In most societies, there is a myth of a ‘golden age’, a time when men and women lived simply and happily, free from the cares and troubles that afflcit them today. This myth usually includes an account of how, through foolishness or malice, the golden age was lost. In Western versions, the blame has been placed upon women – Pandora opening the box and Eve taking the apple.

In the economic history of the developed world, there is one historical episode which might reasonably be regarded as a golden age. Between 1945 and 1973, developed countries in Western Europe, North America and Oceania experienced strong economic growth, combined with minimal levels of employment and a sharp decline in inequality. In policy terms. the dominant features of this period were the use of Keynesian macroeconomics to stabilize the economy and the development of a fairly comprehensive welfare state, protecting citizens from falling into poverty due to old age, incapacity or unemployment.

Those are the opening paragraphs for Chapter 2 of The Economic Consequences of the Pandemic. Comments and criticism much appreciated.

When I agreed to write The Economic Consequences of the Pandemic for Yale UP, with a target date of May 2021 the idea was that it would be a polemic against austerity along the lines of Keynes’ The Economic Consequences of Mr Churchill, and the The Economic Consequences of the Peace [1] . In view of the rapid resurgence of austerity politics after the Global Financial Crisis, about which Henry and I wrote here, it seemed like a safe bet that this would be a hot topic in 2021. Even when Joe Biden won the election, and then the voters of Georgia gave the Dems a wafer-thin Senate majority, it still seemed likely, that we would see, at best, a half-baked “compromise” along the lines of the Republican counter-proposal to the American Recovery Program.

But here we are, a couple of months later. Not only has the ARP passed with the only significant cutback being the exclusion of the $15 minimum wage rise, but the Administration is already talking about an additional $3 trillion in infrastructure expenditure. If that happens, it will be after I’m due to finish my manuscript, but well before the book comes out.

All of this is great news, but it means I need to produce a different book to the one I had planned and have already written a fair bit of.

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One of the striking features of the Dr Seuss fuss is that most commentators seem to be treating this as something new. No one I’ve read in US commentary on the topic seems to be aware that “Dr Seuss, cancelled” is a shot-for-shot remake of a British drama.

It reminded me immediately of the arguments about golliwogs in Enid Blyton’s Noddy books, which started just about the time (a long, long time ago) I grew out of those books, and moved on to reading such gems as the Famous Five . After a long series of adjustments, turning golliwogs into goblins and so on, the issue was resolved by the reissue, in 2009, of a new canonical series, with no golliwogs. (There’s still controversy about golliwogs in general, but not wrt Noddy).

As is always the case, once you know what to look for, you can always find someone who’s made the same point before. In my case, very close to home. Here’s Kate Cantrell and Sharon Bickle from the University of Southern Queensland making exactly this point, with many more examples.

A draft of the first chapter of my book, The Economic Consequences of the Pandemic. Comments, criticism and congratulations all welcome.

Here’s the draft introduction for The Economic Consequences of the Pandemic. Comments, criticism and congratulations all appreciated.

In the NY Times, Paul Krugman makes the case that too much choice (particularly about retirement investment) can be bad

Ani Guerdjikova and I demonstrate this with lots of algebra

Another open thread, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

Some thoughts on the failure of the Texas electricity market to deal with unexpected cold weather, published at Inside Story. Focus on implications for Australia, but much of it should be of interest to US readers also.

Another open thread, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!