What we need is more demand and that goes to short run cyclical policy, more generally to how we operate macroeconomic policy, and the enormous importance of having tighter labor markets, so that firms have an incentive to reach for worker, rather than workers having to reach for firms…
I think that the broad empowerment of labor in a world where an increasing part of the economy is generating income that has a kind of rent aspect to it, the question of who’s going to share in it becomes very large. One of the puzzles of our economy today is that on the one hand, we have record low real interest rates that are expected to be record low for 30 years if you look at the index bond market. And on the other hand, we have record high profits. And you tend to think record high profits would mean record high returns to capital, would also mean really high interest rates. And what we actually have is really low real interest rates. The way to think about that is there’s a lot of rents in what we’re calling profits that don’t really represent a return to investment, but represent a rent.
The question then is who’s going to get those rents? Which goes to the minimum wage, goes to the power of union, goes through the presence of profit sharing, goes to the length of patents and a variety of other government policies that confer rents and then when those are received, goes to the question of how progressive the tax and transfer system is. That has got to be a very, very large part of the picture…
If we had the income distribution in the United States that we did in 1979, the top 1% would have $1 trillion less today, and the bottom 80% would have $1 trillion more. That works out to about $700,000 a family for the top 1%, and about $11,000 a year for a family in the bottom 80%.
That’s a trillion dollars. I don’t know what the number is, but my guess is that the total cost of the Earned Income Tax Credit is $50 billion. Nobody’s got on the policy agenda doubling the Earned Income Tax Credit. The big, aggressive agendas are probably to increase it by a third or a half. So, I’m all for it, but we are talking about 2.5% of the redistribution that has taken place. So, you have to be looking for things and there’s no one thing that is going to do it. My reading of the evidence, it’s a fairly general evidence, is that while there may be some elasticity, the elasticity around the current level of the minimum wage is very low.[1]
—Larry Summers
The One Where Larry Summers Demolished the Robots and Skills Arguments
[1] What this means is that raising (or lowering) the minimum wage will have very little effect on the demand for labor. Thus, contrary to what all conservatives “know,” raising the minimum wage is not going to cost jobs, and lowering (or eliminating) it is not going to create jobs.
I was thinking back on the story, Three Little Pigs. Apparently, in the original story —
The always great Mike Konczal over at Next New Deal told us,
On this day in 1788, the great philosopher
In the early 1980s, I was in a band Otherwise Nice Guys with my current business partner Will. At the time, he introduced me to this 45 rpm single of this band, The Urge. The single had two songs: “Bit By Bit” and “Baby Talk.” I don’t really remember “Baby Talk,” but Will tells me it was really good. I immediately fell in love with “Bit By Bit” and I think we started using the song in our band. It couldn’t be simpler: A-D-E. It’s “Wild Thing” but a bit more modern. Very Modern Lovers if you know what I mean.
Many of you have been in the room when the president has delivered speeches where he’s talked about his love for this country, or how the United States is a force for good in the world — in fact it’s the greatest force for good that the world has ever seen — and we can cite those examples and many of you have been in the room when he’s delivered remarks like that — both in this country and around the world.
Rudy Giuliani thinks that Obama doesn’t love America. There are a lot of articles talking about it, and
I’m not especially interested in the controversy. It may be a tired cliche, but it is also a fact that at least half of the Republican popular support is based upon racism. So this kind of racism and more generally the implication that liberals are not “real” Americans is forever spilling over in conservative comments when they don’t think anyone is listening. What I’m more interested in here is how exactly it is that Obama is supposed to “love” this thing called “America.” I agree with what Rudy Giuliani said: I don’t think Obama loves America. I don’t think that Rudy Giuliani loves America. I know that I don’t love America because I don’t even know what it is I’m supposed to be loving.
Kevin D Williamson wrote a really pathetic apologia for Rudy Giuliani,
On this day in 1962, the great writer and thinker
“The Post Postmodern Comedy Hour” is a television series that I’ve created. I’ve written two episodes for it. The extent of my illusions regarding it is that if I ever finish six episodes, I may take it down to public access and see if some people would like to try to do it. Along with a couple of short stories I’ve written, it is the best work that I’ve ever done. But more important, it is the only work that I’ve ever written that is exactly the kind of art that I want to see.
What was once before you — an exciting, mysterious future — is now behind you. Lived; understood; disappointing. You realize you are not special. You have struggled into existence, and are now slipping silently out of it. This is everyone’s experience. Every single one. The specifics hardly matter. Everyone’s everyone. So you are Adele, Hazel, Claire, Olive. You are Ellen. All her meager sadnesses are yours; all her loneliness; the gray, straw-like hair; her red raw hands. It’s yours. It is time for you to understand this…
I was talking to my father the other day and he told that this “Walker fellow” seemed like he might be reasonable. It wasn’t my father talking; it was the