I was in DC today at an event for legislative staffers organized by the Congressional Progressive Caucus, on fiscal policy and government debt. For anyone interested, the slides I used for my presentation are below.
fiscal policy slides for 11-5-19
Tag: potential output
Can We Afford a Green New Deal?
[I was at an event the other night bringing together people from the economic-policy and climate activism worlds. I was asked to talk about the macroeconomic case for a Green New Deal, and the question of “how do we pay for it?” Here is a somewhat extended and edited version of my remarks.]
Most of the Democratic candidates now have plans for major public investment programs to deal with the challenge of climate change. These involve spending on the order of 2 percent of GDP on average, ranging from half a percent for Beto O’Rourke up to 4 percent for Bernie Sanders.
A question that will get asked about any of these plans is, how do we pay for it? Can we afford it?
We might simply reject the question, on the grounds that what we cannot afford is to continue dumping carbon into the atmosphere. Any plan to substantially reduce carbon emissions will pass any reasonable cost-benefit test.
But I think we should answer the “pay for it” question. It has a good answer!
The question is really two questions:
– How can federal government finance it? – what new money coming in will match the new money going out?
– Are the real resources available, or will we have to sacrifice production in other areas?
On first question, given that low interest rates now seem to be a permanent feature of our world, it is very hard to make a an argument that additional borrowing on the scale of 2, 3 or even 4 percent of GDP would be economically costly. When interest rates are below GDP growth rates, the debt-to-GDP ratio stabilzies on its own, even if you run deficits forever. Unlike in the 1980s and 1990s, when interest rates were higher, today it is impossible for public debt to snowball out of control.
If it has no effect on growth, additional debt-financed spending of 2 percent of GDP would bring the debt-GDP ratio to about 105 percent in 2030. Debt-financed spending of 4 percent of GDP would bring the ratio to 125 percent. Looking around the world, or at history, there is just no evidence that debt at that level has any economic costs. The US ended World War II with a debt ratio of about 120 percent of GDP, the UK over 200 percent. Japan today has a debt ratio of 250 percent of GDP, while France and Belgium have debt ratios around 100 percent. None of these countries have seen any of the negative consequences – spiking interest rates, rising inflation, a collapsing exchange rate — that are supposed to follow from excessive government debt. Quite the opposite, in fact.
And if there is any boost to growth from additional spending – any role for what economists call called hysteresis — then the debt ratio would be even smaller. If we take a standard estimate of the multiplier — the boost to GDP from an additional dollar of public spending — of 1.5, and assume half of that effect is permanent, then debt-financed public spending can actually leave the debt ratio lower than it would be otherwise. In which case the new spending would fully pay for itself, even without any new revenue. Of course there is a lot of uncertainty around these questions – I wouldn’t promise an effect on growth that large. But it doesn’t seem crazy to think that a program public investment could substantially raise the economy’s productive potential.
If we do want to raise revenue, there is also plenty of space for taxes on very high incomes and wealth, or a carbon tax, or other taxes that are socially desirable for their own sake, to finance some substantial portion of a decarbonization program. A recent very thorough study of the space for high-end income and wealth taxes by a couple of professors at NYU identified taxes that could raise over 2 percent of GDP on a very targeted base of the highest incomes. A wealth tax, again targeted at the very richest households, could raise another 2 percent or so. These are taxes we would like to raise anyway, because great concentrations of income and wealth are bad for our democracy and for our society. (There’s even evidence they are bad for our health.) So if we can finance decarbonization this way, we shouldn’t see it as a cost.
We often hear that it’s a fantasy to say that decarbonization will be economically costless, that it isn’t realistic to talk about spending on this scale without broad-based tax increases, without sacrifices by the middle class households. But this is crackpot realism. Of course there will be costs in particular carbon-intensive sectors of the economy. But the notion that investing in decarbonization necessarily requires sacrifices by working people in general, or painful choices about the federal budget, is just not borne out by the numbers.
On the real resources side, the critical point is that by any measure, the US economy has operated below potential for the large majority of the time in recent decades. Taking official statistics at face value, since 1980 there have been 192 months when the unemployment rate was more than one point above the NAIRU – the unemployment rate targeted by the Fed. There have been only 18 months when it was more than one point below. It took a full seven years after the last downturn for output to return to official estimate of potential. The total shortfall equaled 25 percent of GDP.
Even the most ambitious climate plan would have been barely enough spending to fill that gap.
And there are lots of reasons to think that these official measure understates economic potential. GDP today is more than 10 percent below what was forecast a decade ago. Labor force participation still significantly down from a decade, even among those 25-54 – prime working-age adults. Inflation is still below target. Wage growth is still slow. Almost any alternative measure you can think of suggests that the economy is running well below potential even today, and that there is enough slack for a substantial program of public investment without the need to reduce production of anything else.
Even if we think the economy is operating at normal capacity today, there are major social benefits to letting demand push up against capacity – to running the economy hot. There is strong evidence that the only way you get a rise in the wage share and especially a rise in wages at the lower end, is with sustained very low unemployment – what people call a high-pressure economy. Consistent with that, we’ve begun to see some recovery in wages at the bottom of the distribution in the past couple years. This is welcome, but it’s nowhere enough to make up for losses in previous years. For that, we still need more spending, stronger demand.
And that’s today. In a few years, we are likely to want more spending much more.
Today many people are talking about the possibility of recession within next year or so. Nobody except for a few cranks is talking about a sudden surge of inflation, or sudden takeoff of wages.
If there is a recession, the ability of the Fed and other central banks to offset a fall in demand is gong to be even more limited this time than it was in the last recession. In past recessions, the Fed has typically reduced rates by 5 points, and this has still not been enough to stabilize demand. Now we will be starting from a federal funds rate of only 2 percent, giving room for only 2 points of cuts. And there is good reason to think that the economy is less sensitive to changes in the policy rate than we used to believe. Central bankers themselves are quite clear that we will need more public spending in a recession. When Fed chair Jay Powell testified before Congress earlier this summer, Alexandria Ocasio-Cortez asked him what he would do in the event of another deep recession. He said monetary policy would not be enough, that the Fed would need help from fiscal policy – from the federal government spending more. Christine Lagarde, in her first public comments after being appointed head of the European Central Bank, said the same thing, that governments in the eurozone needed to spend more to boost demand. The central bank can’t be “the only game in town,” she said.
One of the big lessons of the stimulus debates in the last recession is that it is very hard to ramp up public spending in a hurry. There are not a lot of “shovel ready” projects out there waiting for someone to just start writing checks. So if we think we are going to need a big boost to public spending in the near future, we had better begin ramping it up now.
Many discussions of the cost of responding to climate change start from the idea that we are fully using our resources. If this were true, we’d have to ask how much consumption is worth giving up today in order to maintain a habitable planet in the future. Obviously the answer should be: A lot! But we don’t have to ask the question, because it isn’t true. We are living in a world where we are not using all our real resources, because of a lack of demand. Some people call this secular stagnation. We are living in a world where the central macroeconomic problem is that there is too little spending to fully utilize the economy’s productive potential – not just occasionally in recessions, but all the time, or at least on average.
Some people will say to this: Ok, we agree that the economy is running below capacity. We agree there is space to add more federal debt, and to raise taxes on the rich. Still, you could use that space for anything. It’s not a case for Green New Deal specifically.
This sounds superficially reasonable, but I don’t think it’s right. Because the evidence of recent history suggests that we won’t use that space.
Almost everyone today agrees that stimulus in last recession was too small — and that even if it might have been big enough in the abstract, it was offset by massive anti-stimulus at the state-local level. The situation in Europe is even worse, with deep austerity almost everywhere, with the result that countries like Italy have lower GDP than a decade ago. Even when mainstream economists say there is actually a case for deficit spending and not to worry about balanced budgets, it turns out to be very hard to get the political system to listen.
If we don’t use our productive capacity and our financial capacity for a Green New Deal, it’s very likely we won’t use it for anything.
The discussion of public budgets, among economists and much of the media and policy world, has not caught up to reality. We still talk about governments being subject to deficit bias – that’s a term of art in the macroeconomics literature, used to justify all kinds of rules to restrict government spending. We have this idea that without some sort of hard external constraint, elected officials are going to declare it’s Christmas every day and shovel money out the door on anything popular. We assume that you need some sort of disciplining device to force policymakers to make hard choices, or else they will just try to spend without limit. But governments today don’t suffer from deficit bias. On the contrary: The problem is austerity bias. For whatever reason governments refuse to spend even when the economic case for it is overwhelming.
This isn’t just a wasted opportunity for all sorts of valuable public spending. It imposes real costs in slower growth, fewer jobs, lower wages. And slow growth and low employment and wages have political costs too, as we know.
In this environment, it’s wrong to think about tradeoffs and making hard choices. This may sound strange coming from an economists, but it’s wrong to think about opportunity costs. The question is not, why should we do this rather than that? The question is, how do we break through the logjam that stops us from doing anything at all?
One of the unique things about climate change is that it may be a crisis urgent enough to overcome the entrenched austerity bias of governments, and to push public spending up toward the level needed to get true full employment. It may be the only thing urgent enough other than a major war — which we certainly do not want.
So when we look at the cost of the climate proposals out there against today’s macroeconomic background, the question should not be, are they too expensive? The question should be: Are they expensive enough?
A Baker’s Dozen of Reasons Not to Worry about Government Debt
(EDIT: It’s not sufficiently clear in the original post, but I wrote this as a sort of compendium of arguments one might use in response to claims that the federal debt is a binding constraint on new spending. I’m not saying these are the best or only reasons to reject the idea that federal government cannot borrow more. I’m saying that these are arguments that seem to have some traction in the mainstream policy world, such that you could use them in a newspaper op-ed or conversation with a congress member’s staff. Also, a premise here is that there are urgent needs we want the public sector to spend more on. Apart from the last couple, these are not arguments for more public dbet as an end in itself.)
Why might larger budget deficits be ok?
There are a number of reasons why economists, policymakers and advocates believe that increased public borrowing is not something to be afraid of. As I’ll discuss below, the fundamental factor linking most of these reasons is the idea that the US economy is generally operating below capacity.
When we think about the fiscal balance – the difference between government spending and government revenue – we always have to keep in mind that it has two sides: the real side and the financial side. Whenever the government increases spending, it has two kinds of effects. First, all else equal, it increases the amount of government debt in circulation. And second, it increases demand for goods and services, both directly when the government buys them and indirectly as government spending creates incomes for private businesses and households.
To put it another way, for government to successfully raise spending without raising taxes, two things have to be true. First, someone – banks, wealthy families, foreign countries – has to be willing to hold the additional debt that the government issues. And second, someone has to be prepared to sell whatever it is that the government is trying to buy. If we are asking what kinds of limits there might be to deficit spending, we have to think about both sides. A government’s spending may face financial constraints, if people are unwilling to hold more of its debt; or real constraints, if the economy cannot produce the additional goods and services it is trying to buy.
Some people who think higher deficits are not a problem – particularly those associated with Modern Monetary Theory – believe that the US federal government never faces financial constraints, so only the real constraints matter. Others believe that the federal government might in principle face financial constraints, but there are good reasons to think that they are not an issue today. For policy purposes, the difference between these positions may not be very important.
On the real constraint side, the essential question is how close the economy is to potential output, or full employment. (The two terms are used interchanegably.) In an economy operating at potential, government can only increase its spending f the private sector reduces its spending. This “crowding out” is the real cost of increased public spending. In an economy below potential, on the other hand, the goods and services purchased by increased public spending come from mobilizing unused productive capacity, so there is no crowding out. In. fact, if the fiscal multiplier is big enough (greater than one) then increased purchases of goods and services by the public sector will result in more goods and services being purchased by the private sector as well.
Below, I lay out a baker’s dozen of related arguments for why, from a macroeconomic perspective, we should welcome increased debt-financed public spending. Some people who believe in greater public borrowing would accept all of these arguments; some only some of them.
Real-economy arguments for more public borrowing
1. The economy generally operates below potential. Over the past 30 years, there have been three recessions, each followed by a long period of weak growth and high unemployment. By official measures, in 10 of the past 30 years GDP has been at least two points below potential; there have been only six months when it was more than two points above potential. And there has been no periods of high inflation. This suggests that in general, the economy is not running at full capacity; there is additional productive potential that could be mobilized by higher public spending, without crowding out private spending. In that sense, there is no real cost to higher public spending, and no need top offset it with higher taxes. Even better, higher public spending will help close the output gap and raise private spending as well.
2. There are long run forces pushing down demand. Larry Summers famously reintroduced into the economic conversation the idea of secular stagnation – that there is a long-run tendency for private spending to fall short of the economy’s productive potential. There are many reasons we might expect private spending to be lower, relative to national income, in the future than in the past. Among these: increased monopoly power; the shift toward information-based rather than resource-intensive production; increased shareholder power; a more unequal distribution of income; slower population growth; and the satiation of demand for market consumption, in favor of leisure and nonmarket activities. (The first three of these factors tend to reduce investment spending, the last three consumption spending.) If this idea is correct, the demand shortfalls of the past thirty years are not an anomaly, and we should expect them to grow larger in the future.
3. Potential output is mismeasured; we are still well below it. Even by the conventional measures of unemployment and potential output, the US economy has spent far more time in recent decades below target than above it. But if the target is mismeasured, the problem may be even worse. There are good reasons to think that both productivity and laborforce growth over the past decade have been depressed by weak demand. If this is the case, the US economy even at the height of a supposed boom, may in fact be operating well below potential today. The fact that even with measured unemployment below 4 percent wage growth has accelerated only modestly, and inflation has not accelerated at all, is important evidence for this view.
4. Recessions and jobless recoveries have occurred repeatedly in past, will occur again in the future. Whether or not the US economy is at potential today, the current expansion will not continue forever. Recessions have occurred in the past and will occur in the future. Many forecasts believe there is a high risk of recession is likely in the relatively near future; the fact that the Fed is moving toward cutting rates suggests that they share this view. When thinking about what fiscal balance is appropriate, we need to consider not just where the economy is today but where it is likely to be in coming years.
5. Monetary policy is not effective at maintaining full employment. In the past, weak demand and recessions weren’t considered an argument for more public spending because it was assumed that a central bank following the correct policy rule could quickly return the economy to full employment. But it is increasingly clear that central banks do not have the tools (and perhaps the willingness) to precent extended periods of weak demand. It is increasingly recognized that fiscal policy is also required to stabilize demand. In his July testimony before Congress, Fed chair Jerome Powell said explicitly that in the event of another deep recession, the Fed would need help from fiscal policy. One important reason for this is the problem of the zero lower bound – since the policy interest rate cannot be set below zero, there is a limit to how far the Fed can lower it in a recession.
6. It’s hard to ramp up public spending quickly in recession. Orthodox opinion has long been that fiscal policy is not as effective as monetary policy in a recession because it takes much longer to ramp up public spending than to cut interest rates. While the experience of the Great Recession undermined conventional wisdom on many points, it supported it on this one. The ARRA stimulus bill was supposed to direct spending to “shovel-ready” projects, but in fact the majority of the infrastructure spending funded by the bill came several years after it passed. There are many institutional obstacles to increasing public spending rapidly. This means that if we need higher public spending in a recession, the best thing is to have higher spending all the time. If that leads to an overheating economy in the boom, that is an easier problem for the Fed to solve then a deep recession.
7. The costs of getting demand wrong are not symmetrical. Traditionally policymakers have defined their goal as keeping output as close to potential as possible. But it is increasingly clear that the costs of demand falling short are greater than the costs of demand overshooting potential. One reason for this is the previous point – that conventional policy has an easier time reining in excessive demand than stimulating weak demand. (As the old saying has it, “you can’t push on a string.”) A second reason is that demand has effects that go beyond the level of output. In particular, strong demand and low unemployment redistribute income toward workers from owners, and toward lower-wage workers in particular. Periods of weak demand, conversely, reduce the share of income going to workers. If we think the upward redistribution of income over the past generation is a problem, we should prefer to let demand overshoot potential than fall short of it.
8. Weak demand may have permanent effects on potential output. Traditionally, economists saw the economy’s long-term growth as being completely independent of demand conditions. People spending more money might raise production and employment today, but the long-term growth of potential output depended on structural factors – demographics, technological change, and so on. More recently, however, there has been renewed interest in the idea that weak demand can reduce potential output, an effect known as hysteresis. high unemployment may lead more people to drop out of the laborforce, while low unemployment may lead more people to enter the laborforce (or immigrate from abroad.) Strong demand may also lead to faster productivity growth. If hysteresis is real, then demand shortfalls don’t reduce output and employment this year, but potentially many years in the future as well. This is another reason to be more worried about demand falling short than overshooting, hence another reason to prefer a more expansionary fiscal stance, which normally implies more public borrowing.
Financial arguments for more public borrowing
9. With low interest rates, debt does not snowball. Traditionally, concerns about the financing of government spending have focused on whether debt is “sustainable” – whether debt levels will stabilize as a fraction of GDP, or rise without limit. When interest rates are greater than GDP growth rates, this implies a hard limit to government borrowing – to keep the debt-GDP ratio on a stable path, a deficit in one year must be made up for by a larger surplus in a future year. Otherwise, the interest on the existing debt will imply more and more borrowing, with the debt-GDP ratio rising without limit. But when interest rates on government debt are below growth rates, as they have been for the past 25 years, the debt ratio will stabilize on its own – deficits do not have to be offset with surpluses. This makes much of the earlier concern with debt sustainability obsolete.
10. There is good reason to think interest rates will remain low. There are a number of reasons to think that interest rates on public debt are likely to remain low, even if debt ratios rise considerably higher. First, low interest rates reflect the conditions of chronic weak demand discussed above, for two reasons. First, low investment means less demand for borrowed funds. And second, weak demand means that the interest rate set by the central bank is likely to be low. A second reason to expect low interest rates to continue is that the past ten years have repeatedly falsified predictions of bond vigilantes driving up the rates on government debt. Prior to the financial crisis of 2007-2008, many observers expected a catastrophic flight by investors away from US government debt and the dollar, but in fact, the crisis saw a steep fall interest rates on government debt and a rise in the dollar, as investors all over the world rushed to the safety of Treasury debt. Similarly, in Europe, even in the worst crisis-hit countries like Greece, interest rates are at their lowest point in history. Similarly Japan, with one of the highest debt0-GDP ratios ever recorded (about triple that of the US) continues to borrow at very low rats. Third, the experience of the past ten years have made it clear that even if investors were to demand higher interest rates on government debt, modern central banks can easily overcome this. The most dramatic illustration of this came in the summer of 2012, when a public statement by European Central bank chief Mario Draghi “we will do whatever it takes, and believe me, it will be enough”) reversed the spike in interest rates in countries like Italy, Spain and Portugal practically overnight. Finally, the prices of bonds — with hardly any premium for 30 year bonds over 5 and 10 year maturities — show that private investors do not expect a rise in interest rates any time in the foreseeable future.
11. With hysteresis, higher public borrowing can pay for itself. Even if we are concerned about lowering the debt-GDP ratio, the existence of hysteresis (point 8 above) means that cutting public borrowing is necessarily the right way to get there. In a world where the long-term path of GDP depends on aggregate demand, austerity can be self-defeating even in its own narrow financial terms. If lower public spending reduces demand, then it can lead to lower GDP, potentially raising the debt to GDP ratio even if it succeeds in reducing debt. Greece offers a clear example of this – the fiscal surpluses between 2010 and 2015 succeeded in reducing government debt by 5 percent, but the deep austerity contributed to a fall in GDP of 25 percent. So the debt-GDP ratio actually rose. Similarly, if debt-financed public spending leads to faster growth, the debt-GDP ratio may end up lower than otherwise.
12. Federal debt is an important asset for financial markets. The points up to now have been arguments for why higher public debt is acceptable. But there is also an argument that increased public debt would be a positive good. Financial markets depend on Treasury debt as a safe, liquid asset. Federal government debt offers an absolutely safe asset that can always be sold quickly and at a predictable price – something that is extremely valuable for banks and other financial institutions. There is a strong argument that the growth of the mortgage-backed security market in the 2000s was fundamentally driven by a scarcity of government debt – many financial institutions wanted (or were compelled by regulation) to hold a substantial amount of ultrasafe, liquid debt, and there was not enough government debt in circulation to meet this demand. So financial markets came up with mortgage-backed securities as a supposed alternative – with disastrous results. Similarly, after the recession, one argument for why the recovery was so slow was a “safe asset shortage” – financial institutions were unwilling to make risky loans without holdings of ultrasafe assets to balance them. While these concerns have receded today, there is still good reason to expect a “flight to safety” toward Treasury debt in the event of a new crisis, and government debt remains important for settling many financial contracts and pricing other assets. So strange as it may sound, there is a serious argument – made by, among others, Nobel prize winner Jean Tirole in his book on financial liquidity — that increased government borrowing would make the financial system more stable and increase access to credit for other borrowers.
13. Federal debt is an important asset for the rest of the world. Federal debt is an important asset not just for the US financial system, but for the rest of the world. In today’s dollar-based international system, the great majority of international trade and investment is denominated in dollars, and most foreign-exchange transactions involve dollars. As a result, central banks (and private financial institutions) all over the world hold foreign-exchange reserves primarily in the form of dollars. These dollar reserves are mainly held in the form of Treasury debt. Close to half of federal debt is now held abroad, mainly as reserves by foreign governments. These holdings are essential for the stability of the international financial system – without adequate reserves, countries are vulnerable to sudden flows of “hot money” out of their countries. As Barry Eichengreen – perhaps the leading economic historian of the international financial system, — has noted, a deep market for government is an essential requirement for a currency to serve as the global reserve currency. If the US is going to be a responsible partner for the rest of the world — and continue reaping the benefits of being at the center of the global economy — it needs to provide an adequate supply of safe government debt for the rest of the world to hold as reserves.
(I wrote this document for internal use at the Roosevelt Institute. Figured I might as well put it up here as well. Obviously it would benefit from links to supporting material, which I may add at some point.)
Good News on the Economy, Bad News on Economic Policy
(Cross-posted from the Roosevelt Institute blog. I am hoping to start doing these kinds of posts on new economic data somewhat regularly.)
On Friday, the the Bureau of Labor Statistics released the unemployment figures for May. As expected, the reported unemployment rate was very low—3.6 percent, the same as last month. Combined with the steady growth in employment over the past few years, this level of unemployment—not seen since the 1960s—suggests an exceptionally strong labor market by historical standards. On one level this really is good news for the economy. But at the same time it is very bad news for economic policy: The fact that employment this low is possible, shows that we have fallen even farther short of full employment in earlier years than we thought.
Some skeptics, of course, will cast doubts on how meaningful the BLS numbers are. The headline unemployment rate, they will argue, understates true slack in the labor market; many of the jobs being created are low-wage and insecure; workers’ overall position is still weak and precarious by historical standards.
This is all true. But it is also true that the unemployment numbers are not an isolated outlier. Virtually every other measure also suggests a labor market that is relatively favorable to workers, at least by the standards of the past 20 years.
The broader unemployment measures published by the BLS, while higher than the headline rate, have come down more or less in lockstep with it. (The new release shows that the BLS’s broadest measure of unemployment, U-6, continued to decline in May, thanks to a steep fall in the number of people working part-time because they can’t find full-time work.) The labor force participation rate, after declining for a number of years, has now started to trend back upward, suggesting that people who might have given up on finding a job a few years ago are once again finding it worthwhile to look for one. The fraction of workers voluntarily quitting their jobs, at 2.3 percent, is now higher than it ever got during the previous business cycle. The quit rate is a good measure of labor market tightness—one of former Fed chair Janet Yellen’s preferred measures—because it shows you how people evaluate their own job prospects; people are much more likely to quit their current job if they expect to get a better one. Reported job openings, a longstanding measure of labor market conditions, are at their highest level on record, with employers reporting that nearly 5 percent of positions are unfilled. Wage growth, which was nowhere to be seen well into the official recovery, has finally begun to pick up, with wage growth noticeably faster since 2016 than in the first six years of the expansion. In the nonfinancial business sector—where the shares of labor and capital are most easily measured—the share of value added going to labor has finally begun to tick up, from a steady 57 percent from 2011 to 2014 up to 59 percent by 2017. Though still far short of the 65 percent of value added claimed by labor at the height of the late-1990s boom, the recent increase does suggest an environment in which bargaining power has at last begun to shift in favor of workers.
For progressives, it can be a challenge to talk about the strengthening labor market. Our first instinct is often to call attention to the ways in which workers’ position is still worse than it was a generation ago, and to all the ways that the labor market is still rigged in favor of employers. This instinct is not wrong, but it is only one side of the picture. At the same time, we need to call attention to the real gains to working people from a high-pressure economy—one where aggregate demand is running ahead of available labor.
A high-pressure economy is especially important for those at the back of the hiring queue. People sometimes say that full employment is fine, but that it doesn’t help people of color, younger people, or those without college degrees. This thinking, however, is backwards. It is educated white men with plenty of experience whose job prospects depend least on overall labor market conditions; their employment prospects are good whether overall unemployment rates are high or low. It is those at the back of the hiring queue—Black Americans, those who have received less education, people with criminal records, and others discriminated against by potential employers—who depend much more on a strong labor market. The Atlanta Fed’s useful wage tracker shows this clearly: Wage growth for lower-wage, non-white, and less-educated workers lagged behind that of college-educated white workers during the high-unemployment years following the recession. Since 2016, however, that pattern has reversed, with the biggest wage gains for nonwhite workers and those at the bottom of the wage distribution. This pattern has been documented in careful empirical work by Josh Bivens and Ben Zipperer of the Economic Policy Institute, who show that, historically, tight labor markets have disproportionately benefited Black workers and raised wages most at the bottom.
Does this mean we should be satisfied with the state of macroeconomic policy—if not in every detail, at least with its broad direction?
No, it means just the opposite. Labor markets do seem to be doing well today. But that only shows that macroeconomic performance over the past decade was even worse than we thought.
This is true in a precise sense. Macroeconomic policy always aims at keeping the economy near some target. Whether we define the target as potential output or full employment, the goal of policy is to keep the actual level of activity as close to it as possible. But we can’t see the target directly. We know how high gross domestic product (GDP) growth is or how low unemployment is, but we don’t know how high or how low they could be. Everyone agrees that the US fell short of full employment for much of the past decade, but we don’t know how far short. Every month that the US records an unemployment rate below 4 percent suggests that these low unemployment rates are indeed sustainable. Which means that they should be the benchmark for full employment. Which also means that the economy fell that much further short of full employment in the years after the 2008-2009 recession—and, indeed, in the years before it.
For example: In 2014, the headline unemployment rate averaged 6.2 percent. At that time, the benchmark for full employment (technically, the non-accelerating inflation rate of unemployment, or NAIRU) used by the federal government was 4.8 percent, suggesting a 1.4 point shortfall, equivalent to 2.2 million excess people out of work. But let’s suppose that today’s unemployment rate of 3.6 percent is sustainable—which it certainly seems to be, given that it is, in fact, being sustained. Then the unemployment rate in 2014 wasn’t 1.4 points too high but 2.6 points too high, which is nearly twice as big of a gap as policymakers thought at the time. Again, this implies that the failure of demand management after the Great Recession was even worse than we thought.
And not just after it. For most of the previous expansion, unemployment was above 5 percent, and the labor share was falling. At the time, this was considered full employment – indeed, the self-congratulation over the so-called Great Moderation and “amazing success” of economic policy reached a crescendo in this period. But if a perofrmance like today’s was possible then — and why shouldn’t it have been? — then what policymakers were actually presiding over was an extended stagnation. As Minnesota Fed chair Narayan Kocherlakota – one of the the few people at the economic-policy high table who seems to have learned something from the past decade – points out, the US “output gap has been negative for almost the entirety of the current millenium.”
These mistakes have consequences. For years now, we have been repeatedly told that the US is at or above full employment—claims that have been repeatedly proved wrong as the labor market continues to strengthen. Only three years ago, respectable opinion dismissed the idea that, with sufficient stimulus, the unemployment could fall below 4 percent as absurd. As a result, we spent years talking about how to rein in demand and bring down the deficit, when in retrospect it is clear that we should have been talking about big new public spending programs to boost demand.
This, then, is a lesson we can draw from today’s strong unemployment numbers. Strong economic growth does improve the bargaining position of workers relative to employers, just as it has in the past. The fact that the genuine gains for working people over the past couple years have only begun to roll back the losses of the past 20 doesn’t mean that strong demand is not an important goal for policy. It means that we need much more of it, sustained for much longer. More fundamentally, strong labor markets today are no grounds for complacency about the state of macroeconomic policy. Again, the fact that today’s labor market outcomes are better than people thought possible a few years ago shows that the earlier outcomes were even worse than we thought. The lesson we should take is not that today’s good numbers are somehow fake; they are real, or at least they reflect a real shift from the position of a few years ago. Rather, the lesson we should take is that we need to set our sights higher. If today’s strong labor markets are sustainable—and there’s no reason to think that they are not—then we should not accept a macroeconomic policy consensus that has been willing to settle for so much less for so long.
Video: Monetary Policy since the Crisis
On May 30, I did a “webinar” with INET’s Young Scholar’s Intiative. The subject was central banking since the financial crisis of a decade ago, and how it forces us to rethink some long-held ideas about money and the real economy — the dstinction between a demand-determined short run and a supply-determined long run; the neutrality of money in the long run; the absence of tradeoffs between unemployment, inflation and other macroeconomic goals; the reduction of monetary policy choices to setting a single overnight interest rate based on a fixed rule.My argument is that the crisis — or more precisely, central banks’ response to it — creates deep problems for all these ideas.
The full video (about an hour and 15 minus, including Q&A) is on YouTube, and embedded below. It’s part of an ongoing series of YSI webinars on endogenous money, including ones by Daniela Gabor, Jo Mitchella nd Sheila Dow. I encourage you, if you’re interested, to sign up with YSI — anyone can join — and check them out.
I didn’t use slides, but you can read my notes for the talk, if you want to.
The Economic Case for the Green New Deal
(Co-authored with Sue Holmberg and Mark Paul, and cross-posted from Forbes. This is a teaser for a project the three of us are working on at the Roosevelt Institute on the economics of the Green New Deal.)
Almost overnight, the idea of a Green New Deal has won over environmental activists and many lawmakers. An all-out national mobilization to decarbonize the economy has a natural appeal to those who see climate change as an immediate, existential threat. But others have doubts. Why can’t markets guide the transition from carbon? Do we really need an expansion of the public sector on the scale of the New Deal or World War II? Can we afford it?
As economists, we think the answer is Yes.
To many economists, the obvious alternative to a Green New Deal is a carbon tax. Make the tax high enough, and businesses and consumers will figure the best ways to reduce emissions. A group of eminent economists from both parties, including Nobel Laureates and former Federal Reserve chairman, recently endorsed this approach to climate change. They argue that markets, rather than regulation or public spending, are best at spurring investments in clean energy.
Carbon pricing definitely has a role to play, but market approaches have limits. Markets are effective at allocating resources when the required adjustments are small and the outcomes clear and immediate. Yet, there’s a reason that during World War II, the government built aircraft factories and allocated scarce materials like steel and rubber through the War Production Board. Closer to home, there’s a reason that large businesses have professional managers to plan their operations, and don’t rely on internal markets.
The limits of leaving large-scale planning to markets should be even clearer today, especially after the experience of the housing bubble and crash, which demonstrated a colossal failure of financial markets to direct investment to productive uses. We shouldn’t count on the same financial system that so mismanaged the housing market to guide the shift away from fossil fuels on its own.
Instead, the government needs to mobilize our collective productive capacities through a mix of tools: directly through public investments and credit policy; through regulations that enforce key climate goals, in the same way that harmful chemicals are banned and not just taxed; and through taxes and subsidies that ensure that what consumers and businesses pay for goods and services reflects their true social cost.
What about the fact that the Green New Deal bill includes seemingly unrelated issues, like health coverage and a jobs guarantee? Is there a danger of weighing down a climate program with perhaps worthy but unrelated social goals? If we were talking about small-bore regulatory changes, this criticism might have merit. But we may be looking at five or ten percent of GDP, sustained over many years. Action on this scale is going to have major effects on labor markets and income distribution, one way or another. The question is only whether these impacts come haphazardly, or openly and deliberately.
A Green New Deal that didn’t address social justice would risk reinforcing existing inequities of education, geography, race and gender, as certain workers and regions found their labor in much greater demand and others much less. The fact that the authors of the bill have addressed these impacts directly does not mean they are getting distracted or being disingenuous. It means they are taking the project seriously. As recent events in France demonstrate, environmental policy that ignores existing inequities invites a ferocious backlash.
Perhaps the most common question about the Green New Deal approach is “How do we pay for it?” That is, where will the money come from for new public spending? And where will the real resources come from, for both public and private investment in decarbonization?
Supporters of the Green New Deal, like most Americans, also favor higher taxes on very high incomes and wealth. But these will not cover all the increased public spending. So, yes, the government will borrow more, but this shouldn’t worry us.
In recent years, there has been a remarkable shift among economists on the dangers of high public debt. The big runup in U.S. debt over the past decade has not been accompanied by any of the disasters that we used to fear—runaway inflation, sky-high interest rates. Neither has rising debt in Japan, which has now reached 250 percent of GDP with no obvious ill effects.
In a world of low interest rates, which seem to be here for the foreseeable future, there is no danger of a runaway debt spiral. The idea that low interest rates make deficits less worrisome has been forcefully argued by people like former IMF chief economist Olivier Blanchard and former Treasury Secretary Lawrence Summers and Council of Economic Advisors Chair Jason Furman. Even if the government runs deficits year after year, the debt will eventually stabilize.
On the productivity side, there is good reason to think that our economy is still operating well below full capacity. Real GDP today is more than 10 percent below the level predicted a decade ago, and at least some of this gap reflects lingering weak demand following the Great Recession. Despite the low headline unemployment rate, the fraction of working-age adults in the labor market is substantially lower than it was a decade ago — let alone than in the late 1990s, or in many other rich countries. Meanwhile, flat productivity suggests that many of the Americans who have jobs are underemployed. A truly strong labor market would bring discouraged workers back into the labor force, shift currently employed workers into more high-yielding work, and boost wage growth – something that still hasn’t happened despite today’s supposedly tight labor markets.
We won’t know for sure how much space there is exactly until we reach the limits, but there’s every reason to push them – if a deficit-funded Green New Deal causes the economy to run hot for a while, that’s a benefit, not a cost. Faster wage growth will help workers regain the ground they have lost in the last 50 years. And if the Fed has to raise rates to step on the brakes, that gives them more room to cut them again in the next recession.
There is no silver bullet to address climate change, but history shows us that market approaches alone are not enough – public investment and other, more direct government action are necessary to provide an effective, robust response. The costs of a Green New Deal are affordable, but the costs of inaction are literally beyond calculation.
As economists, we see a Green New Deal as eminently reasonable. As human beings, we see it as a necessity.
Could Trump Have a Point about Rate Hikes?
(Cross-posted from The Next New Deal at The Roosevelt Institute.)
At its December meeting, the Federal Reserve raised its benchmark interest rate a quarter point. The move, while widely expected, represented a clear rebuke to President Trump, who has repeatedly urged the Fed to keep rates low. He took to Twitter after the move to attack Fed head Jerome Powell as a golfer who has no touch (“he can’t putt”)—strong words in the president’s social circle.
Trump’s critics on the left may be tempted to cheer the Fed’s decision as a welcome triumph of the separation of powers. But opposing him on the grounds that the labor market is already great may end up weakening the case for a progressive agenda. We need to consider the possibility that, in this one case, the president is right.
By raising rates, the Fed is signaling that it thinks that the economy is now operating at potential, or full employment. Conventional economic theory says that when the economy is below potential, more spending will bring unemployed and underemployed people to work, and more fully utilize structures and equipment, but once potential is reached, additional spending will just lead to higher prices. So when output is below potential, anything that raises spending—whether it is tax cuts, increased federal spending, a more favorable trade balance, or lower interest rates—is macroeconomically useful. But once the economy is at potential, and there are no more unemployed people or underused buildings and machines, the same policies will lead only to more inflation.
By this standard, the case for the most recent rate increase was plausible, though not a slam dunk. By the official measures produced by the Bureau of Economic Analysis (BEA), 2018 was the first year since 2007 that GDP reached potential, and at 3.7 percent, the headline unemployment rate is quite low by historical standards. So textbook logic suggests that if demand growth does not slow, inflation is likely to rise.
The past decade, however, has given us reason to doubt the textbook models. As I argued in the Roosevelt report What Recovery?, it is far from clear that the BEA’s measure does a good job capturing the productive potential of the economy. Similarly, the headline unemployment rate may no longer be a good measure of the economically relevant category of people available for work; many people move directly between being out of the laborforce and being employed. The behavior of inflation has defied any mechanical linkage with GDP growth, wages, or unemployment. And even if one accepts that output is nearing potential, a higher interest rate may not be necessary to slow it. (This is related to the idea of r*, the “neutral” rate of interest, which neither raises nor lowers demand—something that many people, including Powell himself, have suggested we don’t actually know.) Given these uncertainties, many people—across the political spectrum—have argued that it’s foolish for the central bank to try to make policy based on guesses of where inflation is heading. Instead, they should wait to raise rates until it is clear that inflation is above target.
More broadly, the question of whether the economy is at full employment implies a judgement on whether this is the best we can do, economically. Are the millions of people who have dropped out of the laborforce over the past decade really unable or unwilling to engage in paid work? Is the decline of American manufacturing the inevitable result of a lack of competitiveness? Are the millions of people working at low-wage, dead-end jobs incapable of doing anything more rewarding? The decision to raise rates implicitly assumes that the answers are yes. People who think that the economy could work better for ordinary people should hesitate to agree.
We live in a country filled with energetic, talented, creative people, many of whom are forced to spend their days doing tedious busywork. Personally, I find it offensive to claim that a job at McDonald’s or in a nail salon or Amazon warehouse is the fullest use of anyone’s potential. When John Maynard Keynes said “we will build our New Jerusalem out of the labour which in our former vain folly we were keeping unused and unhappy in enforced idleness,” he didn’t only mean literal idleness, but wasted labor more broadly. In a society in which aggregate expenditure was constantly pushing against supply constraints, millions of people today who spend their working hours in menial, unproductive activities would instead be developing their capacities as engineers, artists, electricians, doctors, and scientists.
Progressives concerned about the distribution of income should also pause before cheering an interest rate hike. The textbook model assumes that wage changes are passed more or less one for one to prices (that’s why the Fed pays so much attention to unemployment). But we know that this is not true. Slow wage growth may simply mean a lower share of income going to workers, rather than lower inflation, and high wages may lead to an increase in labor share rather than to higher inflation. Indeed, as a matter of math, the labor share of income cannot rise unless wages rise faster than the sum of productivity growth and inflation. For most of the past decade—and much of the decade before—wages have risen more slowly than this. As a result, labor compensation has fallen to 58 percent of value added in the corporate sector (where it is most reliably measured), down from 60 percent a decade ago and 66 percent in 2000. The only way that this shift from labor to capital can be reversed is if we see an extended period of “excessive” wage growth. This recent hike suggests that the Fed will not tolerate that.
The alternative is to deliberately foster what is sometimes called a “high-pressure” economy. Allowing the unemployment rate to remain low enough for sustained rapid wage growth won’t just help restore the ground that workers have lost over the past decade. It could also boost laborforce participation, as discouraged workers return to the labor market. And it could boost productivity, as scarce workers and strong demand encourage businesses to undertake labor-saving investment. An increasing number of economists think that these kinds of effects, called hysteresis, mean that weak demand conditions can reduce the economy’s productive potential—and strong demand can increase it.
We are already seeing some signs of this. The fall in the laborforce participation over the past decade was, according to most studies, was much larger than can be explained by aging and other demographic factors. Now, as the labor market gets stronger, people who dropped out of the laborforce are reentering it. Some businesses in low-unemployment areas are now paying for English lessons so they can hire non-English speaking immigrants, who are normally among the last to be employed. After years of stagnation, wages are beginning to rise fast enough to produce a modest rise in the hare of output going to workers—the predictable result of a strong labor market. A recent study by the Federal Reserve Bank of Atlanta confirmed that a high-pressure economy, with unemployment well below normal levels, can boost earnings and strengthen attachment to the laborforce. The effects are long-lasting and strongest for those at the back of the hiring queue, such as Black Americans and those with less-formal education. Labor productivity has yet to pick up, but business investment is now quite strong, so it is likely that productivity may soon start rising as well. None of these gains will be realized if the Fed acts too quickly to rein in a boom.
Critics of the president who argue that the economy is already at full employment risk replaying the 2016 election, where the Democrats were perceived—fairly or not—as defenders of the status quo, while Trump spoke to and for those left behind by the recovery. And they risk throwing away one of the best arguments for a progressive program in 2021 and beyond. The next Democratic president will enter office with an ambitious agenda. Whether the top priority is Medicare for All, a Green New Deal, universal childcare, or free higher education, realizing this agenda will require a substantial increase in government spending. Making the case for this will be much easier if there is broad agreement that the economy still suffers from a demand shortfall that public spending can fill.
EDIT: The one thing I did not mention here and should have is that the principle of central bank indpedence is also not something that anyone on the left should be defending. Like the various countermajoritarian features of the US political system, it will be wielded more aggressively against any kind of progressive program. And as Mike Konczal and I have argued, both financial crises and extended periods of weak demand have forced central banks to broaden their mandate, making it much harder to mark off “monetary policy” proper from economic policy in general.
Macroeconomic Lessons from the Past Decade
Below the fold is a draft of a chapter I’m contributing to an edited volume on aggregate demand and employment. My chapter is supposed to cover macroeconomic policy and employment in the US, with other chapters covering other countries and regions.
The chapter is mostly based on material I’ve pulished elsewhere, mainly my Roosevelt papers “What Recovery?” and “A New Direction for the Federal Reserve.” My goal was something that summarized the arguments there for an audience of (presumably) heterodox macroeconomists, and that could also be used in the classroom.
There is still time to revise this, so comments/criticisms are very welcome.
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Guns and Ice Cream
I’ve gotten some pushback on the line from my decarbonization piece that “wartime mobilization did not crowd out civilian production.” More than one person has told me they agree with the broader argument but don’t find that claim believable. Will Boisvert writes in comments:
Huh? The American war economy was an *austerity* economy. There was no civilian auto production or housing construction for the duration. There were severe housing shortages, and riots over housing shortages. Strikes were virtually banned. Millions of soldiers lived in barracks, tents or foxholes, on rations. So yeah, there were drastic trade-offs between guns and butter (which was rationed for civilians).
It’s true that there were no new cars produced during the war, and very little new housing.1 But this doesn’t tell us what happened to civilian output in general. For most of the war, wartime planning involved centralized allocation of a handful of key resources — steel, aluminum, rubber — that were the most important constraints on military production. This obviously ruled out making cars, but most civilian production wasn’t directly affected by wartime controls. 2 If we want to look at what happened to civilian production overall, we have to look at aggregate measures.
The most comprehensive discussions of this I’ve seen are in various pieces by Hugh Rockoff.3 Here’s the BEA data on real (inflation-adjusted) civilian and military production, as he presents it:
As you can see, civilian and military production rose together in 1941, but civilian production fell in 1942, once the US was officially at war. So there does seem to be some crowding out. But looking at the big picture, I think my claim is defensible. From 1939 to its peak in 1944, annual military production increased by 80 percent of prewar GDP. The fall in real civilian production over this period was less than 4 percent of prewar GDP. So essentially none of the increase in military output came at the expense of civilian output; it was all additional to it. And civilian production began rising again before the end of the war; by 1945 it was well above 1939 levels.
Production is not the same as living standards. As it happens, civilian investment fell steeply during the war — in 1943-44, it was only about one third its prewar level. If we look at civilian consumption rather than output, we see a steady rise during the war. By the official numbers, real per-capita civilian consumption was 5 percent higher in 1944 – the peak of war production — than it had been in 1940. Rockoff believes that, although the BLS did try to correct for the distortions created by rationing and price controls, the official numbers still understate the inflation facing civilians. But even his preferred estimate shows a modest increase in per-capita civilian consumption over this period.
We can avoid the problems of aggregation if we look at physical quantities of particular goods. For example, shoes were rationed, but civilians nonetheless bought about 5 percent more shoes annually in 1942-1944 than they had in 1941. Civilian meat consumption increased by about 10 percent, from 142 pounds of meat per person in 1940 to 154 pounds per person in 1944. As it happens, butter seems to be one of the few categories of food where consumption declined during the war. Here’s Rockoff’s discussion:
Consumption of edible fats, particularly butter, was down somewhat during the war. Thus in a strict sense the United States did not have guns and butter. The reasons are not clear, but the long-term decline in butter consumption probably played a role. Ice cream consumption, which had been rising for a long time, continued to rise. Thus, the United States did have guns and ice cream. The decline in edible fat consumption was a major concern, and the meat rationing system was designed to provide each family with an adequate fat ration. The concern about fats aside, [civilian] food production held up well.
As this passage suggests, rationing in itself should not be seen as a sign of increased scarcity. It is, rather, an alternative to the price mechanism for the allocation of scarce goods. In the wartime setting, it was introduced where demand would exceed supply at current prices, and where higher prices were considered undesirable. In this sense, rationing is the flipside of price controls. Rationing can also be used to deliver a more equitable distribution than prices would — especially important where we are talking about a necessity like food or shoes.
The fundamental reason why rationing was necessary in the wartime US was not that civilian production had fallen, but because civilian incomes were rising so rapidly. Civilian consumption might have been 5 percent higher in 1944 than in 1940; but aggregate civilian wages and salaries were 170 percent higher. Prices rose somewhat during the war years; but without price controls and rationing inflation would undoubtedly have been much higher. Rockoff’s comment on meat probably applies to a wide range of civilian goods: “Wartime shortages … were the result of large increases in demand combined with price controls, rather than decreases in supply.”
Another issue, which Rockoff touches on only in passing, is the great compression of incomes during the war. Per Piketty and co., the income share of the top 10 percent dropped from 45 percent in 1940 to 33 percent in 1945. If civilian consumption rose modestly in the aggregate, it must have risen by more for the non-wealthy majority. So I think it’s pretty clear that in the US, civilian living standards generally rose during the war, despite the vast expansion of military production.
You might argue that even if civilian consumption rose, it’s still wrong to say there was no crowding out, since it could have risen even more without the war. Of course one can’t know what would have happened; even speculation depends on what the counterfactual scenario is. But certainly it didn’t look this way at the time. Real per capita income in the US increased by less than 2 percent in total over the decade 1929-1939. So the growth of civilian consumption during the war was actually faster than in the previous decade. There was a reason for the popular perception that “we’ve never had it so good.”
It is true that there was already some pickup in growth in 1940, before the US entered the war (but rearmament was already under way). But there was no reason to think that faster growth was fated to happen regardless of military production. If you read stuff written at the time, it’s clear that most people believed the 1930s represented, at least to some degree, a new normal; and no one believed that the huge increase in production of the war years would have happened on its own.
Will also writes:
War production itself was profoundly irrational. Expensive capital goods were produced, thousands of tanks and warplanes and warships, whose service lives spanned just a few hours. Factories and production lines were built knowing that in a year or two there would be no market at all for their products.
I agree that military production itself is profoundly irrational. Abolishing the military is a program I fully support. But I don’t think the last sentence follows. Much wartime capital investment could be, and was, rapidly turned to civilian purposes afterwards. One obvious piece of evidence for this is the huge increase in civilian output in 1946; there’s no way that production could increase by one third in a single year except by redirecting plant and equipment built for the military.
And of course much wartime investment was in basic industries for which reconversion wasn’t even necessary. The last chapter of Mark Wilson’s Destructive Creation makes a strong case that postwar privatization of factories built during the war was very valuable for postwar businesses, and that acquiring them was a top priority for business leaders in the reconversion period. 4 By one estimate, in the late 1940s around a quarter of private manufacturing capital consisted of plant and equipment built by the government during the war and subsequently transferred to private business. In 1947, for example, about half the nation’s aluminum came from plants built by the government during the war for aircraft production. All synthetic rubber — about half total rubber production — came from plants built for the military. And so on. While not all wartime investment was useful after the war, it’s clear that a great deal was.
I think people are attracted to the idea of wartime austerity because we’ve all been steeped in the idea of scarcity – that economic problems consist of the allocation of scarce means among alternative ends, in Lionel Robbins’ famous phrase. Aggregate demand is, in that sense, a profoundly subversive idea – it suggests that’s what’s really scarce isn’t our means but our wants. Most people are doing far less than they could be, given the basic constraints of the material world, to meet real human needs. And markets are a weak and unreliable tool for redirecting our energies to something better. World War II is the biggest experiment to date on the limits of boosting output through a combination of increased market demand and central planning. And it suggests that, altho supply constraints are real — wartime controls on rubber and steel were there for a reason – in general we are much, much farther from those constraints than we normally think.
Some Interviews
One new one, and two older ones I should have posted here a while ago.
The new one is with Seth Ackerman at Jacobin. Its starting point is a new article (co-authored with Arjun Jayadev and Enno Schroeder) I have coming out in Development and Change. But it’s also a continuation of the argument I made in my earlier Jacobin piece on the socialization of finance [*], and in my talk at this year’s Left Forum. (I still hope to get a transcript of that one at some point.)
The older two are both in response to my “What Recovery?” report for the Roosevelt Institute. This one, with David Beckworth at the Mercatus Institute, was a wide-ranging conversation that touched on a lot of topics beside the immediate question of whether we should regard the US economy as having reached full employment or potential output. This one, with Joe Weisenthal and his colleagues at “What Did You Miss” on Bloomberg, was much briefer but still managed to cover a lot of ground.
Supposedly there’s also an interview with me coming out in Der Standard, an Austrian newspaper, but I’m not sure when it will appear.
If you’re reading this blog, you’ll probably find these interviews interesting.
[*] Incidentally, my preferred title was that: The Socialization of Finance. I understand why the editors changed it to the catchier imperative form, but what I liked about my original was that it could refer both to something done to finance, and something done by finance.