🧵NEW PAPER.

My new @AspenEcon paper is well titled: "Protectionism is Failing and Wrongheaded."

Link:

🚨🚨🚨 economicstrategygroup.org/wp-content/upl… 2/ The Trump–Pence and Biden–Harris administrations enthusiastically embraced protectionism. Each administration explicitly argued for a break from the bipartisan consensus of recent decades that has been generally supportive of free trade and of allowing markets to shape US industrial and employment composition.

🧵The federal debt is projected to grow and grow and grow.

The annual budget deficit is the gap between spending and revenue, and the debt is the accumulation of annual budget deficits.

Is the debt primarily a spending problem or a revenue problem? 2/ In some sense, that question is not well defined. The deficit is the gap between spending and revenue. Lowering spending will reduce that gap, as will increasing revenue.

1/ @econjared46 is a terrific policymaker and the President is lucky to have him leading the @WhiteHouseCEA . 2/ Jared is passionately committed to full employment, and the first time I worked with him was a decade ago on that topic. I learned a lot from Jared about economic policy and about the labor market at that time, and have been learning from him ever since.

THREAD. Protectionism is running amok: The President of the United States is opposing investment by a staunch ally in a US manufacturing company.

My @FT column. ft.com/content/cdd09f… 2/ Nippon Steel and US Steel reached a deal in December for the Japanese steelmaker to acquire its iconic US competitor. The acquisition is a non-hostile, $14.1bn deal in which Nippon would pay a 40 per cent premium. Investors cheered the deal.

https://twitter.com/MichaelRStrain/status/1768624833372242213

THREAD. There is a surprising amount of champagne popping on this website. This morning inflation report is certainty welcome news. But let's not get carried away. 2/ Yes, this is good news. The monthly increase in underlying CPI inflation (here I'm using the "core CPI") printed very low.

THREAD. The tsunami of concern over AI is astonishingly pessimistic.

AI will be good for human welfare!

My latest @ProSyn column discusses. project-syndicate.org/commentary/ai-… 2/ Let’s start with the basic – but seemingly overlooked – fact that technological advances improve human welfare. The development of drugs and therapies, new ways of treating disease, and productivity and wage growth caused child mortality to plunge.

https://twitter.com/MichaelRStrain/status/1667999430438445058

THREAD.

The Fed should hike rates this month.

One-month change in core CPI:

May: 0.4%
April: 0.4%
March: 0.4%
February: 0.5%
January: 0.4%
December: 0.4% 2/ Over the last 12 months, the core CPI rose by 5.3%.

There is a clear decline from this summer/fall, but underlying inflation by this measure is still extremely high --- and has improved very little over the past six months.

1/ This is not surprising. If anything, I would have guessed it would be higher. Professionals spend an absurd amount of time emailing each other and in unproductive meetings.

wsj.com/articles/worke… 2/ Sometimes it feels to me like we are all 18th century aristocrats who just sit around and correspond all day. Some of that makes sense, of course. But all the time spent corresponding with people who work down the hall is confusing. wsj.com/articles/worke…

THREAD. The drivers of wage growth have become a subject of considerable interest and controversy. What is the relative importance of market forces, employer power, & institutions? @jeffreypclemens and I shed some light in our new paper.

Full text here: aei.org/wp-content/upl… 2/ FINDING 1. We find qualitatively similar likelihoods of wage growth among workers who live in states that increased their minimum wages and among those who do not.

1/ The first, second, and third paragraphs of this essay are embarrassingly inaccurate.

That's where I stopped reading.

nytimes.com/2023/03/09/mag… 2/ This is likely a good lesson in group think: The editors at the NYT are all progressive, and they give progressive arguments much less scrutiny than they give conservative arguments.

THREAD. President Biden was supposed to turn the page on populism, nationalism, and grievance-onomics.

But his reelection campaign didn't get the memo.

Biden seems to think that the 2024 election will unfold in a Trump-Sanders world.

My @ProSyn column. project-syndicate.org/commentary/bid… 2/ Biden's 2023 State of the Union address – which should be viewed as the roadmap for a potential re-election campaign – offered an ample serving of populism.

THREAD. The House is in chaos and the debt ceiling needs to be increased. The firebrand GOP members aren't bluffing. The risk of default is higher than in decades.

Congress needs to figure out a plan, asap.

My @ProSyn column. project-syndicate.org/commentary/deb… 2/ The rabble-rousing Republicans who prolonged the House leadership election have made clear that a “clean” debt-ceiling increase – in which lifting the borrowing limit is not coupled with other measures – should not even be on the table.

https://twitter.com/ReporterCioffi/status/1610737048926683169

THREAD.

* Incomes for typical households have not been stagnant for decades.

* Income inequality (holistically measured) has not been rising over the past decade.

The conventional wisdom has both these points backwards.

My latest @ProSyn column: project-syndicate.org/commentary/myt… 2/ Economists, journalists, and business leaders all argue that income stagnation and inequality are large and growing threats to broad-based prosperity in the United States.

President Obama called inequality the defining challenge of our time.

THREAD. Liz Truss was right to focus on economic growth. She was right to focus on supply side reforms. But she was wrong to focus on tax cuts.

Conservatives in the US and Britain should not overlearn the lessons from Truss’s fall.

My latest, in the @FT. ft.com/content/fceabc… 2/ For conservatives on both sides of the Atlantic, the wrong conclusion to draw from this episode would be to abandon supply-side economics. The correct lesson is that the supply-side agenda needs to be updated from the days of Reagan and Thatcher.
ft.com/content/fceabc…