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JW Mason Profile picture
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1 Jun, 4 tweets, 3 min read
Interesting figure from @dhneilson showing inventory changes over the past year. Makes clear that the initial economic impact of the pandemic was a fall in demand, no supply -- something that for some reason was controversial at the time. neilson.substack.com/p/two-price Image
Back in spring 2020, I insisted that the economic crisis was a fall in spending, not in potential output. In retrospect, I was right on that, tho - thanks to the extraordinary stimulus - I was wrong that the pandemic would lead to a conventional downturn. rooseveltinstitute.org/2020/03/19/how… Image
Also from spring 2020, this still seems very relevant. jwmason.org/slackwire/post… Image
Of course Dean is also correct here. Even if depressed activity in spring 2020 reflected lower demand, it doesn't follow that we should have been trying to raise demand.

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More from @JWMason1

JW Mason Profile picture
3 Jun
Here's a new post from @rortybomb and me, on how to think about tomorrow's jobs numbers. rooseveltinstitute.org/2021/06/03/don…
There are three big things to keep in mind about tomorrow's jobs numbers. First, this stuff is noisy. Wherever the numbers come in, you should not draw strong conclusions from them; whatever the picture is now, it may look very different when the revised numbers come in.
While the revisions this spring weren't that big, they changed the picture in an important way: the initial numbers suggested accelerating growth over December-March, while the revised ones are closer to linear. This is important for interpreting the relatively low April number. Image
Read 14 tweets
JW Mason Profile picture
28 May
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.
Read 7 tweets
JW Mason Profile picture
27 May
Here's a beautiful application of Minsky's two-price model.

barrons.com/articles/house…
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.
Read 5 tweets
JW Mason Profile picture
22 May
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.
Read 12 tweets
JW Mason Profile picture
21 May
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.
Read 7 tweets
JW Mason Profile picture
20 May
This discussion was better than I was expecting.
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.
Read 6 tweets

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