JW Mason Profile picture
Oct 7, 2021 8 tweets 3 min read Read on X
This piece on inflation by @BuddyYakov gets it exactly right: the problem we need to be addressing - in both the short term and long term - is not excessive growth in demand, but sluggish growth in supply. noemamag.com/how-to-put-the…
In retrospect it's strange that "supply side economics" has been associated with conservatives - in general, raising the economy's productive capacity is going to require a bigger public sector, not a smaller one.
The idea that there is a direct link between labor supply and employment needs full debunking elsewhere. But I'm just following textbook economics when I say: Demand determines employment, then labor supply conditions determine the wage at that employment level.
You can imagine a world where businesses post a wage, and then each day wait to see how many people show up to work at that wage. But that is not the world we live in.
To say "the Fed can deal with inflation," as people often do, is to say that the Fed can make us sufficiently poor to buy only what business is currently capable of producing, locking in the disruptions of the pandemic. Yes, it can; do we want it to?
When I say that investments in green energy are a natural way to deal with inflation, people look at me like I'm crazy. But given the central role of fossil fuel prices in almost all recent price accelerations (including this one), isn't it obvious? Jacob is on point here.
Shout out to @pigphilosophy!
The only thing in the piece I disagree with is the implied suggestion that those of us over 40 *don't* face a future full of floods, fires and storms.

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More from @JWMason1

May 22, 2023
Ezra Klein joins the just-give-up caucus. Image
The great thing about arbitrary authority is that after a while you don't even have to exercise it. People internalize that you are going to do whatever you want to do, and don't even try to challenge you. Image
Obviously, I don't know how the Supreme Court will rule in response to various measures to bypass the debt ceiling. But the only way find out where that constraint is, or the best path to overcoming it, is by pushing against it.
Read 6 tweets
Apr 3, 2023
Mainstream economic theory and conventional wisdom in the policy/media worlds both have serious problems, but mostly very different ones. One thing they both get wrong is that "real" interest rates are more stable or more fundamental than nominal rates. ft.com/content/07a1b2…
Bond markets do not consist, in any way, of people trading present consumption good for future ones. The only link between interest rates and inflation, expected or otherwise, is the one deliberately created by central banks.
You might say: "Ok, Josh, but why are you so sure?" I could say, "because that's what Keynes says." But that might not be very satisfactory. After all, other people say other things.
Read 14 tweets
Mar 24, 2023
Another point for the side saying that there was nothing unusual or particularly risky about SVB's assets, the problem was it's exceptionally flight-prone depositors. ft.com/content/33c0d6…
One way of looking at this is that the Federal Reserve is currently carrying out a program of rapidly reducing the value of the assets in the banking system, without any particular plan for what will happen as they fall below the level of banks' liabilities and then their deposit
It seems like many other banks would be objectively just as vulnerable to a run as SVB was, if their depositors were as socially connected and as given to chasing after the next shiny object as tech companies and their funders are.
Read 13 tweets
Mar 7, 2023
I was very pleased to join @rakeen_mabud and the team at @Groundwork for the release of new polling data on how people feel about the Fed's rate hikes. (They don't like them, it turns out.) commondreams.org/news/voters-fe…
We've seen plenty of polls showing that people dislike inflation, which is of course true. But when it's posed as a question of higher inflation vs higher unemployment, a large majority says that inflation is preferable.
Even without bringing in the unemployment tradeoff, most people do not see higher interest rates as an appropriate response to inflation.
Read 5 tweets
Feb 6, 2023
I recall seeing an article a few years ago on green investment in industry, which unfortunately I can’t find right now, which quoted one executive saying that they were *delighted* to install new equipment to reduce carbon use - as long as it fully paid for itself in one year.
Here's a piece making the same point about investments in more energy-efficient offices - if it doesn't fully pay for itself in a year or two, businesses are not interested. ft.com/content/fe44ba…
I am not sure if this is a point about energy specifically, or about the fact that the hurdle rate for private investment in general is much higher than people often think.
Read 8 tweets
Feb 3, 2023
Here's a talk on the Inflation Reduction Act and climate policy featuring @70sBachchan and @tedfertik. If you want an informed view of how much the IRA was a victory for the Green New Deal, they are the ones to listen to. Just started it, but looks great.
You can tell someone is an Adam Tooze student when they start out with a list of "megatrends".
Tim tells a very interesting story about how the IRA passed because it got a critical business interests on board. The opposition came from ideologues in Congress, not from their business constituents and their lobbyists.
Read 11 tweets

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