Bold and important paper from @JWMason1 and @rortybomb, a must-read even if you don't agree with all of it.…
@JWMason1 @rortybomb You do not have to think that strong demand can achieve all of this by itself to think that strong demand is an important ingredient for achieving this, as the authors argue.
@JWMason1 @rortybomb A lot of people might dismiss this as heterodox liberal economics, but I can't emphasize enough how consistent with conservative thought this is. Yes, there is much to debate about supply-side policies. But optimism about the potential for demand side should be bipartisan.
@JWMason1 @rortybomb More people want to work and we should want them to work is very much a conservative principal.
@JWMason1 @rortybomb This is not about abandoning other conservative economic ideas. Indeed, the same argument they make about liberal supply side policies holds: strong demand helps absorb supply-side increases in the labor force. That applies to all sorts of supply-side policies.
@JWMason1 @rortybomb This does not mean the Fed should simply assume that this is the target labor force, that would be a mistake. But it does mean we should think of the preservation of strong demand conditions as potentially having a lot of of upside beyond getting us simply back to Jan 2020.

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More from @ModeledBehavior

13 Jun
Why is there so much disagreement about the inflation outlook? Let me do a little thread here to try to explain why things are so uncertain…
I think that a lot of economists (not all) agree output will be above potential over the next 12-18 months, but we disagree about the implications.
I think a lot of economists (not all) agree that there will be significant labor market slack over the next 12 months, but disagree about the implications.
Read 16 tweets
9 Jun
To extent recession recovery speed limits bind, I don't think its best described as "there are lots & lots of job openings, more than normal, but people can't match to them fast enough". It's more like it takes time for firms to expand and invest and grow and demand to reallocate
Like post Great Recession, it was not the case that there were a ton of businesses who knew demand was rocketing back and they wanted to get payrolls up to where they were but matching slowed them down.
We are not facing a reallocation challenge anywhere near what we do in a normal recovery. Even the part of this that requires new and expanding firms, the vast vast majority will be back in the sectors that just temporarily shrunk.
Read 4 tweets
9 Jun
Critics of the UI theory of labor supply argue: why is leisure and hospitality growing fast if UI constraint matters given the low wage jobs there? The simple answer is "thats where job cuts are biggest", but I think there is a longer answer to that which is useful...
Hold demand constant, and assume you have three industries: manufacturing, restaurants, and warehouses. Manuf has avg wage of $15, warehouses $12, and restaurants $10...
Now imagine you randomly separate workers from firms, with 1% in manufacturing, 5% in warehouses, and 40% in restaurants. Demand is unchanged. Then you reduce labor supply by paying people a fixed $ amount to not work.
Read 7 tweets
14 May
I want to do a quick tweet storm about an interesting new paper out on WFH at an IT services company that found productivity declined.…
Before I dig in, I want to emphasize something really important about some kinds of technological change like remote work and how it will impact productivity in the long-run: it works through selection.
During the pandemic, everyone who could worked remotely. According to Gallup, over half of workers were remote full-time early in the pandemic. But that’s not how all long-run technology adoption works.
Read 14 tweets
2 May
Crypto people might think that winning is determined by technical factors, things that make it work as a currency and store of value. But the success of doge and NFTs show that fun is really what matters. If you want to invent a crypto and get rich, make it fun/shocking/absurd.
It’s not a serious financial revolution. The whole thing is more like collectibles. I suspect (but maybe I’m wrong), those working in this space can’t see admit the somewhat embarrassing truth that entertainer is the core value prop. So take advantage of that.
Anyway, point is, id like to announce my forthcoming cryptocurrency CageBucks, where the quantity is tied to Nic Cage box office grosses. Image
Read 5 tweets
27 Apr
I think some people think excessive caution about masking is going to gone down in history as being as important of a story about this period as the virus. They’re super excited they get to be on the right side of a mistake, and have lost all perspective
People are so thirsty to be able to both-sides again you can almost see the drool on their tweets
People who have been operating under the delusion that masks are such a costly inconvenience are not going to be viewed by history as making a symmetric error as the excessively cautious, I promise.
Read 4 tweets

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