What’s that? You don’t know what PGEPs are? Get with it, dude!

December 1st, 2014 at 8:10 pm

They’re pro-growth, equalizing policies and they’re the subject of a paper I’m discussing tomorrow in NYC at a conference hosted by the great Joe Stiglitz and the Roosevelt Institute. But OTE’ers get the first look at a draft!

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3 comments in reply to "What’s that? You don’t know what PGEPs are? Get with it, dude!"

  1. Robert Salzberg says:

    Great post. Was a bit surprised you didn’t include large scale infrastructure investment.

    The American Society of Civil Engineers estimated that if we continue our current spending path, our infrastructure will cost the average American family $28,000 between 2013 and 2020 or an average of $4,000 a year.

    So both pro-growth and pro-equality, yes?

    http://www.infrastructurereportcard.org/a/#e/how-we-use-infrastructure


    • Jared Bernstein says:

      I mention it in passing at the end but it should be there explicitly under fiscal policy. I’m a huge fan of the idea!


  2. Smith says:

    Not to be a total jerk, I liked the graphs, the part about financial regulation and the deficit.
    However…

    I believe there are corrections needed for the below quoted passages from the report:
    “Without delving too deep into the extensive research on this question, the dominant finding
    is that those domestic workers at risk from new immigrant competition are those who are
    substitutes to new immigrants as opposed to their complements.”

    As explained numerous times, all of the “extensive research” is wrong and underestimates the wage effects of immigration. The standard formula everyone uses determines imperfect substitution (how closely an immigrant worker replaces a non-immigrant) by looking at wages. This totally ignores downward nominal wage rigidities (as well as common sense).

    “Thus, when it comes to low-skill immigrants, research finds that minority high school dropouts, for example, may suffer from immigrant competition, thus worsening inequality.”
    I think “may” could be omitted, and I fail to see why this problem is not a major obstacle to increasing immigration.

    Nowhere in the paper’s discussion of immigration is there any notion of granting immigrants full labor rights. The major thrust of the proposed bill is to vastly increase the immigrant labor pool that has no labor rights while at the same time cutting sharply immigrants who are free (family ties cut back, and diversity lottery 50,000/year eliminated) It’s accept whatever comes from the employer or be deported. No right to strike, no free mobility, no ability to organize, or bargain collectively or individually. Reform and true PGEP would eliminate the current two labor market instead of expanding the un-free portion.

    “At the other end of the pay scale, however, increasing immigration among high-skilled
    workers, like lawyers and doctors, could put downward pressure on their pay and thus
    reduce wage differentials between high and lower wage workers.
    In that regard, a PGEP targeted at reducing occupational protectionism that prevents high-skill workers from immigrating here would be useful.”

    This is sounds somewhat removed from reality. High-skilled immigration is a code word for cheap tech workers, everyone knows that. There is of course no shortage of tech workers, some modest wage growth recently experienced is welcome. The other non-tech high skilled are usually STEM, (no premium on language skills) also lower paid, non profit colleges and universities exempt from hiring restrictions make ample use of the system. The doctor situation is weird because there is no shortage of qualified U.S. wanna-be doctors, only med school openings which the AMA etc previously suppressed (but now scrambling to expand). There is also a glut of lawyers in the U.S. already, the problem is the cost of law school and other factors (see also ABA) that drive up fees needed to pay for services.

    Immigration is good and healthy for the U.S. but one has to question the reason for supporting anything like the current proposal worked out by pro-business Democrats and Republicans. It’s not good for U.S. workers, and it’s grossly unfair to new and current immigrants. For sure it would exacerbate inequality and hollowing of the middle class.

    A quick note on education, college should be free or offered for a nominal fee, just like many large prosperous developed nations. College is the new high school.

    Tax policy should be reformed along the lines of Piketty in regard to income with Eisenhower era rates. Any attempt to restore lost equality is doomed to failure otherwise.


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