When the president says the goal is labor markets so tight that employers are competing for workers, and wages rise at the expense of profits - if you've followed macroeconomic debates over the past however many years, that's a big deal. whitehouse.gov/briefing-room/…
It's also important that he presents labor market tightness as important for power in the workplace. And employment and wage gaps between white and non-white workers as symptoms of less than full employment.
Poor Larry Summers must be tearing his hair out.
More seriously, I think people who don't see what a big deal this is, probably haven't been paying attention to the large part of the macroeconomic conversation - including many prominent Dems - who have been freaking out about "labor supply" and wages rising too fast.
What Biden is saying here is that labor supply constraints aren't a problem, they are the solution - they're how we get rising wages. This isn't just an anodyne campaign promise anyone would make, it's a direct rejection of core Clinton-Obama views on the economy.
The consensus since the 1990s has been that the only way raise wages is to raise people's capacity and/or willingness to work - education/training on the one side, welfare reform on the other. Wage increases from tight labor markets, in this view, just get passed on to inflation.
The distribution of income between labor and capital, meanwhile, w as supposed to be due to deep structural forces, basically technology, which changes for reasons of its own. Labor market conditions had nothing to do with it.
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Minsky's big argument (which unfortunately gets overshadowed by the less interesting financial instability hypothesis) is that prices of long lived capital goods are fundamentally determined by financial/liquidity conditions in a way that prices of current output aren't.
This is one reason why money is never neutral, not even in the long run - more abundant money/credit doesn't just lead to higher spending, but spending on different things - specifically, more long-lived and illiquid ones.
Currently reading Michael Heinrich's Karl Marx and the Birth of Modern Society, the first of a multi-volume intellectual biography of Marx. I'm really liking it.
One thing I like about it is that it is not just about Marx, it is - in the early sections - a social history of early 19th century Germany. Post-Napoleonic Trier was a very distinctive place.
Trier had been occupied by France, and effectively incorporated into it, for most of the 30 years before Marx was born. This had fundamentally reshaped society there in all sorts of ways, which were not necessarily reversed once the Congress of Vienna gave it to Prussia.
Back in 2016, when he was CEA chair, @jasonfurman argued that if the unemployment rate was unexpectedly high, that should automatically trigger *more* generous unemployment benefits. I thought, and still think, he was right about that. obamawhitehouse.archives.gov/sites/default/…
Last year, he was arguing that UI should be very generous when labor markets are weak, employment is growing slowly or falling, and the unemployment rate is high. It should be scaled back when labor markets are strong and the unemployment rate is low. piie.com/system/files/d…
It seems to me that if we follow this line of reasoning, the most recent weak jobs numbers must be an argument for keeping generous UI benefits in place for longer.
The key takeaway for me is that National Investment Authority-type proposals combine two logically distinct elements. They are supposed to be *lenders* that will direct public finance to private projects. And they are *borrowers* that will create new assets for financial markets.
In my mind the first function makes sense and worth pursuing. The second is fundamentally misguided. The financing problem for the public sector has already been solved, we don't need to create a new form of public liabilities to finance decarbonization.
What's most striking to me is how she draws a straight line from spending focused on recovery from the pandemic to spending on longer term problems. The goal is not just to get back to January 2020.
When you go back to the first year of the Obama administration, the mantra was "timely, targeted and temporary." It was an explicit goal and selling point that increased federal spending would last no longer than the recession. What Yellen is saying now is the opposite of that.
Those lumber prices, huh? $1,600 per 1000 board-feet, up from $400 a year ago. Why? This story mentions a mills closing prior to the pandemic, reducing supply; not a lot of inventory on hand; a skilled labor shortage; and of course construction picking up. bloomberg.com/news/articles/…
What do we do about it? Some people might note that we live in a market economy, where prices carry information. High lumber prices tell mills to boost capacity and train up more skilled labor, and builders to look for methods that use less wood. Isn't that what prices are for?
Others might say that market adjustment isn't so quick or smooth, so it might be wise to speed the process along. We could, I don't know, offer cheap credit to lumber companies looking to expand capacity? or look for regulations that would favor less wood-intensive construction?