Economist's View

The conclusion of a post by Harold Feld at ProMarket:

Will Repeal of Net Neutrality Accelerate the Trend in Media Consolidation? The History of Cable Suggests “Yes,” by Harold Feld, ProMarket: ...Based on the history of both the cable industry and the broadband industry (which is, after all, almost entirely derived from the cable industry), we should expect repeal of the net neutrality to rules to accelerate the trend toward vertical and horizontal consolidation. This is particularly true in light of the public statements of chairman Pai and other Republican commissioners indicating they believe that consolidation can offer benefits to consumers and that the dangers of anticompetitive behavior are exaggerated. This is not only true about net neutrality, but generally. Although chairman for less than a year, Pai has already announced that the FCC will simply defer to the Department of Justice on antitrust and to the Federal Trade Commission on consumer protection, and has either repealed or begun the process of repealing the FCC’s longstanding limits on vertical and horizontal media ownership.

Additionally, although Pai and the other Republican commissioners repeatedly refer to state consumer protection laws as providing an additional layer of protection, the draft order repealing net neutrality also contains sweeping language preempting the states from any laws “inconsistent” with the “deregulatory policy” the FCC will adopt on December 14. Charter Communication (which now owns Time Warner Cable) has already rushed to use this language to file a motion to dismiss a lawsuit by the New York state attorney general relating to Time Warner Cable’s 2014 conduct denying New York subscribers access to Netflix. Whether or not this particular motion to dismiss succeeds, we can expect broadband provider to use the broad preemption language in the net neutrality repeal order to block precisely the kind of state consumer protection statutes chairman Pai claims will make FCC oversight unnecessary.

In short, the net neutrality repeal order does for broadband exactly what the 1984 Cable Act did for cable—create an environment with virtually no effective restraint on the ability of providers to favor their own content and discriminate against rivals. We should therefore expect the same result: rapid horizontal and vertical consolidation. While chairman Pai and other supporters of the repeal order dismiss these concerns, they offer no plausible explanation for why this round of deregulation should produce different results beyond an airy wave that all that consolidation is ancient history and how could that possibly happen again?

As we all know, those who refuse to learn from history are doomed to repeat it.

"offsetting those deficits will require going after the true big-ticket programs, namely Medicare and Social Security":

Republicans Are Coming for Your Benefits, by Paul Krugman, NY Times: ...During the Senate debate over the Tax Cuts and Jobs Act, Senator Orrin Hatch was challenged over support for the Children’s Health Insurance Program, which covers nine million U.S. children — but whose funding lapsed two months ago... Hatch ... insisted that “the reason CHIP’s having trouble is because we don’t have money anymore” — just before voting for a trillion-and-a-half-dollar tax cut that will deliver the bulk of its benefits to the richest few percent....

He then went on to say, “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.”

So who, exactly, was he talking about...?

Was he talking about food stamps, most of whose beneficiaries are children, elderly or disabled? ... Was he talking about the earned-income tax credit, which rewards only those who work? Was he talking about Medicaid, which again mainly benefits children, the elderly and the disabled, plus people who work hard but whose jobs don’t provide health benefits?

We can go on down the list. The simple fact is that big spending on people who “won’t lift a finger” doesn’t actually happen in America — only in Hatch’s meanspirited imagination.

Now, to be fair..., some people ... get lots of money they didn’t lift a finger to earn — namely, inheritors of large estates. ...Republican legislation would give these people ... billions and billions of dollars... How can this be justified if it’s supposedly hard to find money for children’s health care?

Well, Senator Chuck Grassley explained it all last week: “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” ...

The important thing to realize, however, is that the hypocrisy and contempt for the public we’ve seen ... is just the beginning..., budget deficits are going to soar... And offsetting those deficits will require going after the true big-ticket programs, namely Medicare and Social Security.

Oh, they’ll find euphemisms to describe what they’re doing, talking solemnly about the need for “entitlement reform” as an act of fiscal responsibility — while their huge budget-busting tax cut for the rich gets shoved down the memory hole. But whatever words they use to cloak the reality of the situation, Republicans have given their donors what they wanted — and now they’re coming for your benefits.

Tim Duy:

Will Growth Slow In 2018? And Why?, by Tim Duy: Thinking about the path of policy next year, this quote from Chicago Federal Reserve President Charles Evans (via the New York Times), seems like an important issue:

I think the economy is doing very well. I think it continues to show strength. The second half is looking like very good growth: 2.5 to 3 percent growth. And this is to be measured against our assessment that sustainable growth is more like 1.75 percent. So 2.5 to 3 percent is very strong growth, which should continue to lead to improved labor market activity.

Unless something structural improves to increase trend growth, we’re going to be decelerating to something under 2 percent — and that will still be a pretty good economic picture.

On the surface, this is a fairly straightforward analysis. The supply side of the economy currently grows at roughly 1.75 percent. The demand side is growing at 2.5-3 percent. So it must be true that activity slows to something under 2 percent. ...Continued here...

• The L-Shaped Phillips Curve (NBER) - Narayana Kocherlakota
• The Phillips Curve, Again - The Everyday Economist
• Aggregate productivity and the rise of mark-ups - VoxEU
• The Problem With Bayesian Model Averaging... - No Hesitations
• Workers Get Nothing When They Produce More? Wrong - Noah Smith
• Optimal quantitative easing - Bank Underground
• The changing of the guard at the Fed - Gavyn Davies
• Finding the Octopus - Economic Principals
• 11 California Republicans Vote to Make Their Constituents Poorer - Brad DeLong
• Managing risk and complexity: Legal entity identifier - VoxEU
• Is Unemployment Too Low? - Roger E. A. Farmer
• Bitcoin and Fundamentals - Cecchetti & Schoenholtz
• Is Bitcoin A Speculative Bubble? - EconoSpeak
• Economic consequences of revolutions - VoxEU

I'm a bit late posting this one:

Republicans’ Tax Lies Show the Rot Spreads Wide and Runs Deep, by Paul Krugman, NY Times: ...Steven Mnuchin, the Treasury secretary, has been lying ... about Republican tax plans. Mnuchin has repeatedly claimed the existence of a Treasury report that — unlike every independent, nonpartisan assessment — found that these plans would pay for themselves... But there is no such report...

Also on Thursday, John McCain — who has delivered sanctimonious lectures on the importance of “regular order”... — declared his support for the G.O.P. tax bill. Remember, Senate leaders rushed this bill to the floor without holding any hearings or soliciting expert testimony..., at the time McCain declared his support, some key provisions were still secret, so they could be presented for a vote with no time for debate.

McCain declared that he had made his decision after “careful consideration.” Careful consideration of what?...

Later that day the joint committee delivered its predictable verdict: Like all other reasonable studies, its review found that the Senate bill would do little for U.S. economic growth, while directly hurting tens of millions of middle-class Americans, blowing up the deficit, lavishing benefits on the wealthy and opening up new frontiers for tax avoidance. ...

But aren’t politicians always cynical? Not to this degree..., there’s no precedent for this frantic rush to pass major legislation... And there’s a world of difference between normal political spin ... and the outright lies that have marked every aspect of the selling of this thing.

Mnuchin said his department had a study showing great effects on growth; that was a lie. Donald Trump says the bill is “not good for me”; that’s a lie. Senator John Cornyn said, “This is not a bill that is designed primarily to benefit the wealthy and the large businesses”; that was a lie. Senator Bob Corker said he wouldn’t support a plan “adding one penny to the deficit”; that was a lie. ...

There are ... further things worth pointing out about this moral rot.

I’m not just talking about Republican politicians... It was remarkable, for example, to see a group of Republican-leaning economists with serious professional credentials put out an open letter clearly intended to lend aid and comfort to Mnuchinesque promises of miraculous growth. ...

And weasel-wording aside, it turns out that the letter misrepresented the research on which it was supposedly based. ...

So what will it take to clean out the rot? The answer, basically, is overwhelming electoral defeat. Until or unless that happens, there’s no telling how low the G.O.P. will sink.

See also: La Trahison des Clercs, Economics Edition.

• How the Great Recession Continues to Shape America - Annie Lowrey
• Is Job Disruption Historically Low in the US Economy? - Tim Taylor
• Why Trying New Things Is So Hard to Do - By Sendhil Mullainathan
• Adam Smith: is democracy always better for the poor? - globalinequality
• A Tax Bill that could Increase the Deficit and Lead to Recession - Richard Green
• The debate over US tax reform - Furman and Summers
• Market Expectations for FOMC Rate Hikes from Different Angles - Liberty Street
• Reducing Homelessness with Long-Term Rent Subsidies - Tim Taylor
• Mediamacro is alive and well, unfortunately - mainly macro
• Economics as a Professional Vocation - Brad DeLong
• Have Inflation Dynamics Changed? - FRB Cleveland
• Hypothermia, Inflation, and the Fed's Epistemological Jam - David Beckworth
• Getting the Facts Straight on Deficits - Center on Budget and Policy Priorities
• Trump’s version of capitalism endangers our democracy - Larry Summers
• Too Much Power in the Hands of Big Tech Could Distort Democracy - ProMarket
• What's Next for Mass Transit? - Tim Taylor
• The cash comeback: Evidence and possible explanations - VoxEU
• Why poor countries invest too little in R&D - VoxEU
• Did Investor Sentiment Affect Credit Risk around the Election? - Liberty Street
• An Economist's Take on Bitcoin and Cryptocurrencies - Douglas L. Campbell
• From RCT to Policy - American Economic Association
• Incidence and Welfare Effects of Corporate Tax Cuts - Paul Krugman
• Corruption and institutional design - Understanding Society
• A short comment on a discrete choice experiment in the AER - John Whitehead
• Choice and the Insurance Mandate - Paul Krugman

Jason Furman and Larry Summers:

Dear colleagues, please explain your letter to Steven Mnuchin: Dear Colleagues:

You recently wrote an open letter to Treasury Secretary Steven  Mnuchin quantifying the economic impact of tax reform. We are interested in and surprised by your analysis.  We share your commitment to the idea that well-designed tax reform can make the economy stronger and that careful economic analysis is essential. And we know that you all share our belief that such careful analysis is well served by discussion and debate of these issues that is at least as frank and vigorous as what we are all accustomed to in the average economics seminar. To that end, we think it would be useful to lay out some of the questions we have about your analysis...

• House prices and the UK economy - VoxEU
• Asset Prices and the Real Economy - Tim Taylor
• The Four Big Tax Deceptions - The New York Times
• On Trade, Trump Puts Corporate America First - Dani Rodrik
• Should we Get rid of the Natural Rate Hypothesis? (NBER) - Olivier Blanchard
• The New York Fed DSGE Model Forecast–November 2017 - Liberty Street
• The politics of debt fetishism - Stumbling and Mumbling
• Disentangling the UK productivity problem - mainly macro
• What’s Down with Inflation? - FRBSF
• Abenomics Update - David Beckworth
• Interpreting the yield curve - MacroMania
• ‘Metrics Monday: 2SLS–Chronicle of a Death Foretold?- Marc Bellemare
• What Makes a Safe Asset Safe? - Liberty Street Economics
• GDP at Risk - Cecchetti & Schoenholtz
• The Economics Data Revolution Has Growing Pains - Noah Smith
• Wealth taxes (and how to evade them) - American Economic Association
• Banks as buyers of last resort for government bonds - VoxEU
• Towards the Next Generation - Economic Principals
• Voodoo Too: The GOP Addiction to Financial Deregulation - Paul Krugman

"will they manage to pull off this giant con job?":

The Biggest Tax Scam in History, by Paul Krugman, NY Times: ...The bill Republican leaders are trying to ram through this week ... is the biggest tax scam in history. It’s such a big scam that it’s not even clear who’s being scammed — middle-class taxpayers, people who care about budget deficits, or both.

One thing is clear, however: One way or another, the bill would hurt most Americans. The only big winners would be the wealthy — especially those who mainly collect income from their assets rather than working for a living...

The core of the bill is a huge redistribution of income from lower- and middle-income families to corporations and business owners. ...

Meanwhile, the bill would partially repeal Obamacare, in a way that would sharply reduce aid to lower-income families and raise the cost of insurance for many in the middle class.

You might wonder how such a thing could possibly pass the Senate. But that’s where the scamming comes in.

While the underlying structure of the bill involves raising taxes on the middle class, the bill also includes a number of temporary tax breaks..., in the first few years most middle-class families would see modest tax cuts.

But the operative word here is “temporary.” All of these tax breaks either dwindle over time or are scheduled to expire at some point; by 2027 the bill is ... a tax increase on the middle class used to pay for tax cuts that mainly benefit the wealthy. ...

So it’s a giant scam. And while the exact nature of the scam may be unclear, ordinary American families would end up being the victims either way.

For suppose those temporary tax breaks did end up becoming permanent, so that the budget deficit soared on a long-term basis. Then what? You know the answer: Republicans would suddenly revert to the pretense that they’re deficit hawks, and demand “entitlement reform” — that is, cuts in Medicare, Medicaid and Social Security... In fact, they’re already talking about those cuts...

So will they manage to pull off this giant con job? The reason they’re rushing this to the Senate floor without a single hearing, without a full assessment from Congress’s own official scorekeepers, is their hope that they can pass the thing before people figure out what they’re up to.

And the question is whether there are enough Republican senators with principles, who believe that policies should not be sold with lies, to stop this bum’s rush.

Tim Duy:

Fed Frets About Inflation While Preparing Another Rate Hike, by Tim Duy: The minutes of the Oct. 31-Nov. 1, 2018 FOMC meeting made a bit of a splash with their mixed message. The minutes revealed widespread concern with the weak inflation numbers of the past year. Yet the minutes also showed that committee members were committed to a December rate hike. Damn the torpedoes, full speed ahead! Why the mixed message? Two words: “gradual” and “lags.” ...Continued here (blog and newsletter)...

• Schroedinger's Tax Hike - Paul Krugman
• Socialism and Capitalism Work Together - Noah Smith
• Do rich countries lend to poor countries? - Bank Underground
• Macroeconomic nowcasting and forecasting with big data - Fed in Print
• Fed Remains on Track to Raise Interest Rates Next Month - NYTimes
• The impact of big research facilities on local scientific output - VoxEU
• Medicaid and the rise of common chronic childhood conditions - VoxEU
• New eBook: Ordoliberalism: A German oddity? - VoxEU
• Economic implications of a protectionist US trade policy - VoxEU
• Populism and time inconsistency - VoxEU
• The effects of employer payroll tax cuts - VoxEU
• Information inequality - VoxEU
• Insider Privileges – Digitopoly