Asymptosis

A lot of people out there seem to have the notion that Greece’s troubles are the result of laziness.

That really doesn’t seem to be true. OECD:

Average annual hours actually worked per worker 2000-2010

Germany	1473	1458	1445	1439	1442	1434	1430	1430	1426	1390	1419
Greece	2121	2121	2109	2103	2082	2086	2148	2115	2116	2119	2109

And no, labor force participation is not wildly different: 55% in Greece, 60% in Germany.

To quote my friend Katherine: “It’s those goddam hyper-efficient Germans with their ‘work smart not hard’ screwing things up for the rest of us.”

Tongue in cheek there, of course, but it does seem to be German productivity in a single-currency regime that makes it impossible for Greek banks to stay solvent.

And it’s not that Greek bankers, politicians, or workers are lazy. No matter how hard they work, the financial system doesn’t seem to make it possible for them to live a lifestyle in which they crush their grapes with their childrens’ feet. No matter how much they want the “liberty” to live that lifestyle.

Cross-posted at Angry Bear.

Or: Chris Mooney Should Really Learn to Use Graphics More

He’s got a great piece (“Reality Bites Republicans“) up over at The Nation on the rise of fact checkers, the perception that they’re bend-over-backward (or forward…) “even handed” in the face of blatant falsehood asymmetry, and long-term analysis of results from PolitiFact.

But he also gives use some Brand New Data analyzing the Washington Post Fact Checker column, pulled together with his research assistant Aviva Meyer.

Here’s how he presents it:

Republicans got nearly three times as many “four Pinocchio” ratings as Democrats (thirty-three versus twelve), according to our analysis. They were also overrepresented in the “three Pinocchio” category (forty-two versus thirty-one) and the “two Pinocchio” category (seventy-six versus fifty-five), the most frequent category used.

But, interestingly, this trend did not hold up in the “one Pinocchio” category, in which Democrats predominated (forty versus twenty-six).

Here’s how I present it (click for larger):

Everybody fudges. And all politicians lie, including Democrats. But matters of degree do matter, no?

The Washington Post is just a bunch of east-coast liberal media elitists, of course (facts nothwithstanding), so we can ignore this.

Cross-posted at Angry Bear.

Mike Konczal floats a very interesting idea emailed to him by Richard Clayton, the Research Director of Change To Win (my bold for quick scanning).

under Section 14 b 1 the Fed has the authority to purchase any obligation of a state or local government of 6 months maturity or less. This provision seems clearly to permit a mass refinancing of state and local government debt at the current 6 month interest rate (very close to 0), which would save state and local gov’ts approximately $75 billion a year (going by the flow of funds #s for state and local interest payments). Moreover, since state and local govts do the bulk of infrastructure investing, the fed could create a program to fully fund such investment through purchases of newly issued 6 month bonds

I really love this idea (the alternative being the very iffy notion of the Fed buying REITs, ETFs, etc.), but I do wonder if it’s practical. Munis would have to issue new bonds, and they’d be in the position of having to roll them over six months hence. Could they do that? Would the Fed still be there in six or twelve months? Could the whole distributed machinery really be built quickly? Would muni managers get on board? Would the political pressure on the Fed resisting what looks like a very fiscal move make it difficult to implement? Is there a large and liquidly trading existing stock of short-term munis out there that the Fed could just buy (pushing down short-term muni rates)? Those are just a few of many questions that come mind. Thoughts?

Cross-posted at Angry Bear.

Lots of excellent pushback against Jonathan Haidt’s crazy assertion that Republicans have become the party of working people. A great takedown by Larry Bartells, you can follow the rest from there.

Haidt uses an awful lot of words, numbers, pictures, and general hand-waving to point out obscure the fact that white southern Democrats have gone Republican since the 60s. The “Southern Strategy” has worked.

As my teenage daughter would say, “no duh.”

Johnson predicted this when he passed civil rights legislation — the South has been lost to the Democrats “for a generation.” But Johnson may have underestimated the duration. These are the people, after all, who still haven’t accepted the fact that they lost the Civil War 147 years ago. Haidt’s apparently chosen role as an apologist for this group is…less than admirable.

Cross-posted at Angry Bear.

Andrew Oh-Willeke points us to this, on the job market for lawyers:

Slightly more than half of the class of 2011 — 55 percent — found full-time, long-term jobs that require bar passage nine months after they graduated, according to employment figures released on June 18 by the American Bar Association.

I couldn’t find a comparable figure for medical graduates on a quick search, but I’m guessing the number’s in the low single digits.

The lawyer glut has been going on for a while, and at least in Canada (the only place I’ve found data) it’s been having predictable effects on legal fees — down 40% in nine years ’01–’10:

I doubt that doctors’ fees are the prime driver behind our crisis of rising health-care costs (what providers charge). But at least one analysis says it’s an important part (Todd Hixon, Forbes):

U.S. spending annual on physicians per capita is about five times higher than peer countries: $1,600 versus $310 in a sample of peer countries, a difference of $1,290 per capita or $390 billion nationally, 37% of the health care spending gap. These conclusions come from an analysis co-authored by Miriam Laugesen of the Columbia University School of Public Health and Sherry Gleid, an Assistant Secretary in the U.S. Department of Health and Human Services (source)**.

This suggests that relieving the supply shortage — especially for primary care doctors — could have a big impact. Not a new insight, but I thought this data point would be of interest.

Update: In response to WH10’s good comments, perhaps some better thinking:

Maybe the answer’s to relieve the shortage of specialists, driving down their compensation and making primary care (relatively) a more attractive career option.

Cross-posted at Angry Bear.

HT to Reagan staffer Bruce Bartlett on Facebook, pointing to this from conservative icon Gary Wills in the NYRB:

To vote for a Republican means, now, is to vote for a plutocracy that depends for its support on anti-government forces like the tea party, Southern racists, religious fanatics, and war investors in the military-industrial complex.

Hey, he said it, not me.

Or at least: In all the reading I’ve done, from Gibbon to Diamond to Acemoglu and Robinson and far beyond, I’ve never come across one.

It’s not hard to find examples where you can at least reasonably attribute decline and fall to lazy, self-indulgent rich people.

Of course, maybe this time is different.

Coming at this question from my typical perspective: a business owner facing a national economy.

You run a mid-sized business selling high-quality furniture. You’ve developed a new chair that’s better than the other chairs on the market. (Think: the Herman Miller Aeron Chair.) Say you’re planning to sell it for $700. (You can’t sell it for much less, no matter the volume, without losing money.)

Would you rather be selling into an economy with wide disparities of income and wealth, or one that’s more equal?

Let’s build one of each.

Imagine a million-dollar economy with ten people in it.

Economy 1: Each person has an income of $100,000.

Economy 2: Two people earn $300K each, and the other eight earn $50K each.

In which economy can you expect to sell more chairs?

In which economy would you expect to see more innovators and entrepreneurs thriving?

This is not quantum physics.

Cross-posted at Angry Bear.

The Fed’s credibility is obviously important. If people believe that they can and will do what they say they’re going to do — and that it will have the desired effect — they can affect the the real economy (at least short-term) by just making promises — Open Mouth Operations. (Though they must actually do things to their balance sheet, sometimes — rather than just promising to make future promises — to avoid the Turtles All The Way Down problem.)

Also obvious: the Fed has great inflation-fighting cred. They’ve fetishized inflation and that credibility for thirty years. People feel damned confident that they can and will successfully stomp on price spikes — especially wages. That’s what they do. That fixation has continued even through four years in which runaway inflation has manifestly not been a credible threat.

Meanwhile, their unemployment-fighting cred is in the tank. If they announced today that they’re going to do whatever is necessary to bring unemployment down to X%, people would seriously question their ability to do so, even their future commitment to doing so.

Tyler Cowen agrees:

The Fed, at least right now, is not able to make a credible commitment toward a significantly more expansionary policy for very long. … The market expectation has become “the Fed can/will only do so much.”

Why? Because in their frantic obsession with inflation (explanation here), they missed their chance to demonstrate their unemployment-fighting moxie. The time to do that was 2008 and 2009, when 1. unemployment was spiking and 2. monetary policy had a lot more traction on unemployment. They could have not sabotaged the fiscal efforts.

Again, Tyler agrees:

The Fed already has failed to act, for whatever reasons.  That makes it all the harder to achieve the credible commitment now.

Now people may be confused, thinking that because the Fed didn’t do what was needed to fight unemployment, it couldn’t have. This could result in them believing that it can’t, now. This is obviously faulty reasoning, but the conclusion could still be correct.

I don’t know for sure. Two questions, using a fairly extreme scenario to make the conundrum clear:

1. If the Fed had bought a trillion dollars of S&P 500 stocks in 2008, would it have prevented (or greatly reduced) the unemployment carnage?

2. If the Fed bought a trillion dollars of S&P 500 stocks today, would it bring unemployment down significantly?

On #2, Tyler thinks not — that action today would have a fifth or a tenth of the effect that ’08 action would have had — for several reasons, mainly having to do with reduced potential. (Arguably caused by the Fed’s inaction.)

But one thing seems clear: that inaction (or sabotage, if you prefer) seriously damaged the Fed’s growth-enhancing, unemployment-fighting credibility. By sabotaging fiscal, it has sabotaged its own ability to reduce unemployment (or increase NGDP) by simply making promises.

Cross-posted at Angry Bear.

Or: Yes, The Rich Really Are Different

You’ve all probably seen the depressing reports from the newly issued 2010 edition of the Fed’s triennial Survey of Consumer Finance, in particular the 39% drop in median household net worth, ’07-’10.

Here’s a picture (click for larger):

The well-off have done fine. In the greatest economic downturn in eighty years, their median net worth went up.

This doesn’t even touch on the top 1%, .1%, or .01%, of course. It’s very hard to calculate net worth for those folks as a group. But judging by their incomes, they’re doing just fine too:

I can’t comprehend how anyone can play word games about “incentives” to suggest that this situation, created quite intentionally over the past three decades, is or could be conducive to widespread national prosperity.

I can only assume that those who do so don’t actually care about widespread national prosperity.

Cross-posted at Angry Bear.