Call For Submissions: Got Questions? I’ve Got Answers (Maybe)

May 17th, 2013 at 3:47 pm

We haven’t done a YAIA (“you ask, I answer”) around here for awhile.  So, let’s do one!

Got questions about any of the stuff we talk about here–unemployment, automation, jobs, full employment, income inequality, budgets, trade, taxes, state policies, minimum wages, growth economics, health care, Europe, financial markets, romance, great music?

Submit your questions in the comments section, and I’ll post a video responding to a bunch of them in the next few weeks.  Usual charges apply (i.e., none).

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31 comments in reply to "Call For Submissions: Got Questions? I’ve Got Answers (Maybe)"

  1. Red says:

    I’m not a religious or spiritual person but some aspects of Buddhism interest me. How strictly do you follow the tenets, how did you first get involved and what are the top couple of benefits you’ve found since becoming a Buddhist?


    • Jared Bernstein says:

      Great one! I’ll be sure to speak to it in the video, and to make some important linkages to economic policy.


  2. James says:

    I don’t remember seeing an update about a new laptop. What did you get and are you happy with it?

    More on topic:

    During all of the North Korean bluster, I never really saw a discussion of the economic consequences of war between the North and South. Samsung is/was the manufacturer of the iPhone processors (TSMC is the new mfg) as well as it’s own. They make a lot of the memory used by cell phones/tablet/computers (SSD/flash).

    Do you have any comments or pointers to open source material? I realize that this is somewhat sensitive stuff considering that it relates to defense.


    • Jared Bernstein says:

      I should have reported back: I got an Acer which was really competitively priced and very much rocks and is light with awesome battery life. The only downside: with Windows 8 I’m CONSTANTLY making unintended stuff happen–screens popping out all over the place.


  3. Scott Supak says:

    The American Society of Civil Engineer’s Infrastructure Report Card recommends spending $3.6 T by 2020 on improvements to our crumbling infrastructure. If we borrowed that money and did as they suggest, what would be an estimate of the result in terms of added GDP and employment?

    My bandwidth makes it hard to watch videos, so a short written response would be nice, if you have the time. Thank you.


  4. Roger Chittum says:

    What have been the quantitative effects over the last three decades or so of US foreign trade in goods and services on domestic (1) employment, (2) wages, and (3) consumer prices? I think there is general agreement that imports tend to hold down all three factors, but there is much disagreement (and as far as I know not much data) about whether the aggregate reduction in consumer prices is greater than or less than the aggregate reduction in personal income, and by how much. If you are able to address this, how much was the outcome affected by our trade deficit every year since 1981?


  5. Tom in MN says:

    I’ve mentioned this in the comments before, but could you discuss the Fed’s choice of 2 percent as their target rate? To me this seems to be almost the background rate of inflation without any wage growth, which also means to keep inflation that low the economy needs to be operated below full employment.

    I’m glad to hear you like the Acer laptop, as that was my suggestion when you asked. I hope the upgrade to Windows 8.1, which will be free, will make it even better for you. I’m glad to have gotten mine with 7.


  6. Jerry Khachoyan says:

    Blogger Noah Smith brought up a good point about “Austerins” recently. He argues that the reason why people support Austerity is because they see it as thru only time structural reform is possible. And this is why they hate measures that save the economy like bailouts and stimulus.
    Now as someone who has not only a great economic understanding, but also experience with working in “politics”, do you think this is true?
    For example, I am someone who strongly supports campaign finance refor almost to a point where I would support “dumb” economic measures in the short term if it meant longer term reform.
    So do you think structural reform (let’s assume positive and honest reforms) is not possible without austerity? IE- No pain no gain.
    Here is Smith’s post: http://noahpinionblog.blogspot.com/2013/05/why-do-people-support-austerity.html

    Thanks, @TheArmoTrader


  7. Luemas Rellok says:

    https://docs.google.com/spreadsheet/ccc?key=0AqCXnQ176E7ydGh1aU0wMnJST1pzR1Q5dGU4OElibHc&usp=sharing

    I trust the above spreadsheet will show itself, at least to Prof Bernstien.

    Question 1) Sheet 1 shows wages falling sharply as a share of GDP at precisely the same time as labor-force to population sharply increases. It is a fairly basic premise of economics that when supply increases price falls. Why should we not believe that this decrease in wages largely accounts for both income inequality and the slowdown of the US economy (real GDP growth has slowed), and that wages are now significantly below their optimal equilibrium? Other then alot of older economists not wanting to admit they missed something that huge?

    Question 2) Sheet 2 shows the historical LF/population (from total population) since 1900. As you can see, only since 1970 hss LF increased over 40% of population. Supply/Demand theory seems to indicate that every price of a function of one (or two) quantities. Is there good reason not to believe that there is an optimal equilibrium LF participation rate? Is there any reason not to conclude that the LF is trying to correct back to this equalibrium?

    Question 3) Sheet 3 shows Wages as a share of GDP and technology + Equipment spending also as a share of GDP (from BEA table 5.3.5). If robots where replacing workers, we should (I would think) expect to see equipment spending and wages moving inversely (as more robots are purchased, less wages are paid). However, wages and equipment seem to be moving together, with equipment slightly leading wages. In conjunction with the fact that LF has not fallen anywhere near its pre 1970 levels, what does this say about the theory that robots are displacing workers?

    Question 4) Is there a generic term of the deliberate distortion of price signals in the market in order to profit in one way or another. This would include both the deliberate creation of information asymmetry and transfer effects from pollution (and any other transfer mechanism’s). http://www.guardian.co.uk/world/2012/may/16/us-dolphin-safe-tuna-labels It would seem these companies are trying to sell dolphin unsafe tuna at dolphin safe tuna prices, profiting by denying consumer the knowledge of which tuna is or is not dolphin safe. Is there currently a term for this, or am i free to invent one (I am considering “Disallocation of Capital” as capital is being deliberately miss-allocated.)


    • Perplexed says:

      -”It would seem these companies are trying to sell dolphin unsafe tuna at dolphin safe tuna prices, profiting by denying consumer the knowledge of which tuna is or is not dolphin safe. Is there currently a term for this…”

      Sorry, you’re too late. Its called “counterfeit fraud.” The same thing that was done with mortgages. Selling mortgages that don’t compare at all to properly underwritten mortgages is simply a form of counterfeit fraud. It happens in lots of industries. While it used to be illegal for everyone, its only legal now if you’re a bank.


  8. Perplexed says:

    In light of your on-going series on labor productivity, some discussion/clarification of what we’re actually measuring when we measure “productivity” in dollar terms might be helpful.

    On the face of it, it seems like a very troublesome measure (how does it compare with labor productivity in terms of units?) that is heavily biased toward “productivity improvements” that don’t result large price declines. For example, at a very basic level, if price=marginal cost=marginal revenue, (& absent patent monopolies), large declines in labor hours resulting from very low marginal cost “technologies” should lead to large marginal (& average) unit cost reductions. The resulting “productivity” in “unit” terms would be huge, but in dollar terms it could be very small (or even negative?). Dollar “productivity” where the marginal cost reductions were captured by monopoly rents in the form of patents, instead of price reductions, would show very high productivity gains by this measure. How are these tendencies corrected for in our measures of “productivity” or is it really just a measure of productivity gains that didn’t result in price declines that might benefit everyone?


    • Jared Bernstein says:

      Jeez, if I knew you were gonna ask such hard questions…! Kidding…good one, I’ll be sure to tackle it.


      • Perplexed says:

        Thnx – I look forward to it. & thanks for all of the hard work you do in getting the word out and bringing some clarity to the wide range of issues (and music) you address. Its very much appreciated!


  9. Tyler Healey says:

    Is there any evidence that Quantitative Easing has stimulated the economy?

    How can it be that Japan has had low interest rates for decades, yet no high inflation?

    Is there any evidence that low interest rates are inflationary?

    Thanks!


  10. Neildsmith says:

    Paul Krugman wrote today on his blog that “the economy functions far below potential, millions of people who want to work can’t find jobs, and many people see all their hopes for the future slipping away.”

    I’m really curious if you actually know any of these people. I’m a middle class guy from a large Midwestern family. No one in my extended family can be described this way and while I’m a loyal liberal democrat I have a hard time convincing the people I know that there is suffering out there requiring extraordinary effort. It’s just not in their (or my) experience to see this as anything other then the “normal” level of poor people without jobs. I know we all accept the data as being an accurate description of what is actually happening in the country, but without personal experience as a guide, it is difficult to make the case to conservatives or those open-minded independents that action is required.

    How can we make this more real to those who came through the recession unscathed? Or are we seeing things in the data that are leading us to think things are worse than they really are?


  11. Kevin Rica says:

    Jared,

    I know that I’ve asked about this before, but I would still like to see an analysis of the budget implications of abolishing the Social Security and Medicare systems taken separately and together. Right now most of the calls for “Social Security” have wanted to cut benefits so SS revenues can build aircraft carriers.

    My understanding is that the great deficits of the Bush years and most of the Obama years were done with these accounts in surplus. So the real problem is the “on-budget” deficit.

    So let’s ask, “What would happen to the deficit if we cut both benefits and contributions to zero?”

    I have some other questions about Social Security. How much does one have to contribute for the system to break even? If everyone paid more into the system then they got out, it would be mathematically impossible for the system to run a deficit ever.

    But we have both inter-generational and intra-generational cross subsidization. So on an actuarial basis, what is the break-even point for how much one has to earn (and contribute) for the high-35 to pay for the expected benefits.

    How has the more uneven distribution between high- and low- wage earners, labor’s declining share of total income between 1970 and today affected SS’s long-term finances?

    And last, how do different assumptions about the effects of legalizing 11-million illegals affect those finances? What are the SSA’s assumptions about the effects of immigration? Do they distinguish between high and low-wage workers? Do they account for effects on wages or displacement out of the labor market of existing workers? Or do they just use a naive model that show contributions and benefits as a function the size of the working and retired populations?


    • wkj says:

      Regarding the question about breaking even on Social Security, here is a link to the SS Actuary’s real rate of return analysis for various hypothetical workers.

      http://www.ssa.gov/OACT/NOTES/ran5/index.html


      • Kevin Rica says:

        Thanks wkj,

        I hadn’t seen that before. It’s very interesting.

        It almost answers my question. We still need to know what the rate of return the SSA gets on its funds. If we (falsely) assume that rate is zero, then the SSA loses on everybody (even excluding the cost of administering the system).

        But assuming that the return is positive, I believe (I am not a finance major) that the SSA loses on everyone who receives a higher IRR than the SSA’s return on the funds. But I’ll stand corrected if anyone knows more about how to do those calculations properly.


  12. Tom Cantlon says:

    As described in a WSJ piece…
    “Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt ”
    online.wsj.com/article/SB10001424127887323353204578127374039087636.html

    “The U.S. Treasury ‘balance sheet’ …does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations.”

    “The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion.

    I realize they are just counting in a different way, and in a way that doesn’t connect with the real world or both the government budget and the economy would have totally collapsed already, but could you please clarify the details of how this is the wrong way to calculate the debt?


  13. Kristian Monsen says:

    As I understand it keynesian economics wants the government to spend in a downturn and save in good times. Isn’t this a bit like timing the stock market, or any market? How can we know that this will get worse or improve?

    I guess part of the answer is in the fact the the central bank can print money, but even this is not enough always as Japan shows, and for the Euro countries they can’t rely on the central bank helping them out.

    So how do we know that this extra spending is only temporary? And how good are politicians in general in cutting back when the government doesn’t have to spend?


  14. Jay says:

    How will the end of QE be significantly different from the Fed raising short term rates? I can’t understand how ending QE will somehow be catastrophic and cause a spike in rates when the short term rate will still be zero.


  15. Jim says:

    How does the rate of rejection for tea party 501(c)4 groups compare to the overall rate?


  16. Joe Banano Jr says:

    Jared,
    my question is, Do you feel it would be smart for economy to end the cap on payroll taxes maybe for 3 years. when payroll tax was put into effect 90% of people paid on 100% of salary now only 71% pay on 100%.

    Thanx Joe Banano Jr multiple business owner


  17. Greg says:

    It was reported last week that CO2 emissions are at their highest ever. What are the economic and security implication for the US? What are the economic costs for remedial action across different strategies? What are possible economic benefits from innovation? How can this be made a populist (vs Big Government…) priority?


  18. Loretta says:

    What happened to the $3.5Trillion Bush gave to GOPs job creators in 2003 b/c by 2008 we had Millions of 99ers?

    How many times did GOP raise the Debt Limit w/Bush b/c GOP put Bush entire 2Terms on Taxpayers Tab.. $11.5Trillion?

    Why do GOP act like they had nothing to do w/ the Debt.. Where is GOP taking responsiBility like they tell everyone else to?


  19. JaredC says:

    Could a state, like California or New York, implement it’s own version of the Glass-Steagall Act and effectively limit the ability of the speculative banks to bet with consumer/retail bank money? Would such a state law be more feasible than a reinstatement of Glass-Steagall on a federal level?


  20. Carol Ball says:

    Are your working on another book?


  21. Luemas Rellok says:

    what ever happened to the video for this? Did all the responses scare away the good professor?


    • Jared Bernstein says:

      Good question–and some of those questions were pretty hard! But we made the video a few weeks ago and it’s really long, so we’ve been editing it. Try to post it soonish.


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