Saturday, January 26, 2013

A few more Mulligan things

- This is his blog. I'm following it now, and of course I'll post anything interesting. He also posts at the New York Times, and I've linked to those a lot in the past.

- This is the website for his book. You can get the chapter with the labor market figure I shared yesterday on this site. I haven't read the chapter yet, but looking through it only the "HA equilibrium" (without shifting labor demand the same way he shifted labor supply in response to the safety net expansions) is in the chapter - presumably the other equilibria he cited are somewhere else in the book, and might even be referenced in the chapter (I'm swamped right now but you've got the link). Taking everything into account to determine how much worse (or better!) the safety net made the recession is quite a task, but if you want to say something about the impact of the safety net on the labor market, I do think you need both supply and demand effects.

- Speaking of making claims about the impact on the recession, this Q&A answer from the same site is interesting:
Q2. Are you saying that the entire recession was caused by redistributive public policy? A2. No: expanded redistribution made the recession at least twice, and probably four times, as deep as it would have been with a constant set of rules for disbursing subsidies to the poor and unemployed. Nor do I say that redistribution was the root cause of the recession – Chapters 9 and 10 of the book explain how the mortgage mess and financial crisis made it politically feasible, if not necessary, to expand the amount of redistribution. [emphasis is added]
So it seems to me to make that bolded claim you really do need take labor supply and demand effects of the safety net into account (I've only seen his take on labor supply effects so far - I need to see the book to understand the rest), but also everything else that's going on. If the recession would have been three times as worse (just throwing numbers out there) without the interventions of Bernanke, Bush, and Obama in late 2008/early 2009, your "at least twice, and probably four times" assessments are obviously going to change!

This is a big job, don't get me wrong - I understand that. I just feel like I need to read Mulligan as analysis of the labor supply impact of recent safety net changes - not as a case for a "redistribution recession".

- Finally - data. Here and here. As you guys know I've done a lot of work on racial and gender disparities. Mulligan - because he's interested in macroeconomic questions here - is aggregating the eligibility and benefits indices. One thing I'm curious about is how these increased eligibility and benefits have differentially impacted UI receipt by race. It's always nice to use and cite someone else's constructed data for this sort of thing. It ensures consistency in the literature and guarantees that you use the best out there (assuming - and I think it's safe to assume - that Mulligan's work on this has been among the most meticulous).


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  2. Daniel,

    Get over this "labor stuff." You are a man with a hammer, per Munger.

    The current situation has nothing to do with choices or decisions made by average Americans.

    The reason that we have been unsuccessful in putting out the fire, even having the fiscal hose wide open for 5 years, is that it was China that needed to raise consumption, as per Keynes.

    M. Pettis, here:

    Rising unemployment increases the pressure for misguided trade policies

    Delong and Krugman were there in 2005-06, but have lost their way since.

    There is a very simple reason why nothing works---we still keep buying Iphones from China.

    If you say I am wrong, explain how we can ever employ all our un and under employed in a decent job. Exactly what work will they perform, in what industries.

    For someone who claims to be as bright and smart as you, this should be very easy. Just put up an excel spread sheet with the millions of jobs that we will create in the various industries, etc.

    You say you know all about his stuff. Put it up.

    The truth is that there will be no jobs. There are no industries that could hire the millions of people we have who need good paying jobs unless we stop imports.

  3. Your statement on "racial and gender disparities" has sparked a question from me to you, Mr. Kuehn.

    Have you written any economics articles on crime? Dr. Michael Emmett Brady has, in his non-Keynes-related work. I believe I have sent you this link before, but please see the following 1984 article in the Journal of Urban Economics. Perhaps you might find it useful in the future eventually.

  4. Daniel,

    Do you think you could send Mulligan to Zero Hedge.

    Those who have spent their careers in government or academia have little idea what it takes to hire more people. Number one is a business with strong demand for one's products or services. In a developed world with too much of everything except energy, that is no small challenge: the world is awash in over-capacity in every field except niche industries such as deepwater oil rigs.

    Second, you need a process that generates so much value (specifically surplus value) that you will generate immediate profits by hiring more people.

    If the value added by additional labor is low, then you have no reason to hire more employees, even if Ben Bernanke personally knocked on your door begging you to borrow a couple million dollars at low rates of interest.

    Guest Post: Why Employment Is Dead in the Water

    It is funny that people on Noah's list sometimes make the case better than Delong and Krugman.

    Strong demand for one's product or services.

    All day I have been waiting for your list of high demand areas---

  5. You mentioned Bryan Caplan being at Mulligan's GMU talk, he was surprisingly critical at EconLog. Of course I find his reliance on introspection infuriating, much more convincing is Krugman's graph with a big discontinuity at zero for nominal wage changes.

    1. I thought it was weird too.

      Workers aren't angry and sad when they're fired? And I'd think workers would be as likely to be bummed out as mad if they got a wage cut.

      I think Bryan just figured what reactions would support his thesis and asserted them. Very odd post.

  6. I agree with most of Daniels complaints about Mulligan.

    Really, what he's saying only makes sense as a long-term theory. During the boom France and Spain had unemployment of ~9%. Lots of other developed countries had 4% to 6%. That's the kind of thing that's explainable by Mulligans idea, though it's already been explained by plenty of others.

    I agree with Mulligan that the US should trim it's unemployment benefits and other benefits. But, that should be done to reduce long-term unemployment, to prevent ~7% unemployment from happening year after year. I expect that won't happen and 7% will become the new normality.


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