You've heard of an international market for superstar soccer players. We need an international market for superstar central bankers.
[ Reuters ]
Great Britain gets a lot of things wrong, like food and spelling. But here's something they get right: They're willing to poach the best central bankers from around the world for the top spots at the Bank of England.
The UK is hardly alone on this. They're just particularly aggressive about it. Their latest target is Mark Carney, the current chief of the Bank of Canada. Before that, though, they snatched up American economist Adam Posen -- an expert on Japan's lost decade -- to serve on their monetary policy committee. You've heard of an international market for superstar soccer players and Olympic coaches. This is an international market for superstar central bankers.
It got me thinking: How much is a good central banker worth? Consider this chart. The blue line shows where our economy could, and should, be if it had kept growing at its long-term trend since 2008. The red line shows where we actually are. The difference between the two is the so-called output gap. (Note: These dollar figures are not adjusted for inflation).
We're in about a trillion-dollar hole. And that's a trillion dollars every year. Even if we get "Morning in America: The Sequel" and the economy rapidly reverts to its long-term trend, we'll forever be $4 trillion poorer than we would have otherwise been.
Let's try a thought experiment. Say that Lars Svensson -- one of the world's top monetary economists and the current deputy governor of Sweden's central bank, the Riksbank -- could get our economy back to trend in half the time Ben Bernanke could. It's actually plausible-ish. Like Bernanke, Svensson spent his academic career championing unconventional monetary policy as a "foolproof" way to escape a liquidity trap. (Coincidentally, they were colleagues at Princeton). But unlike Bernanke, Svensson's Riksbank has been much more willing than Bernanke's Fed to experiment with these kind of heterodox policies. Perhaps unsurprisingly, Sweden's recovery has been the envy of the developed world. So I ask again: How much is a good central banker worth? Put simply, how much cash should we throw at Svensson to steal him away from Sweden?
That's another way of asking how long it will take the economy to return to trend. Here's where things get really depressing. According to Fed Vice Chair Janet Yellen, we won't get back to full employment until after 2018. If we assume the output gap will steadily shrink until then, that leaves us with roughly another $4 trillion in lost income. Maybe more. If Svensson really could double our recovery speed, he'd be worth $2 trillion to us. Even if that's being wildly optimistic, something on the order of hundreds of billions of dollars probably isn't. Tell me that wouldn't be worth paying Svensson a billion dollars a year. Maybe more.
The above suggestion is obviously a bit tongue-in-cheek ... but not completely. Right now, central bankers are paid almost entirely in prestige. Ben Bernanke is making just $199,700 this year. That's not to say that we need to pay central bankers more to attract the best ones. We don't. Economists really care about prestige.
This doesn't necessarily lead to the most efficient allocation of monetary economists. As Matt Yglesias pointed out, we'd ideally have economists prove their central banking chops in smaller countries before moving up to the big leagues of the Fed or the ECB or the Bank of England. Put a bit less diplomatically: Sweden is important, but it's a relative waste of Svensson's talents not to have him running a bigger central bank. (Not that I have anything against Sweden). Here comes the "to be sure" sentence: It wouldn't be enough just to import Svensson. As L.A. Galaxy fans can tell you, bringing in one (albeit, overrated) superstar like David Beckham doesn't help much if his teammates are only mediocre. We'd need to create a Federal Reserve board equivalent of the Super Friends for Svensson to make the biggest difference. We might even find out that we already have a superstar in Bernanke in that scenario.
Central banking should be a superstar profession. The difference between a top central banker and an average one can be astronomical, particularly when conventional policy is impotent. An efficient market would pay them accordingly. If the United States spent $10 billion assembling a central banking fantasy lineup of Lars Svensson, Stanley Fischer, Adam Posen, and Christina Romer, it would probably be a phenomenal investment. It'd pay for itself many, many times over. The biggest challenge is changing the norms around central banking. We shouldn't just consider the top American economists for the top spots.
We're a nation of immigrants. The Federal Reserve should reflect that.
Donald Trump flaunted his elastic conception of truth in an interview with Time—but he may yet learn that facts are stubborn things.
How can anyone convince the most powerful man in the world of something he does not wish to believe?
It’s not an idle question. In a remarkable interview with Time’s Michael Scherer, President Trump flaunted his elastic relationship with truth. Instead of weighing evidence, he explained, he prefers to trust his gut. “I’m a very instinctual person,” he said, “but my instinct turns out to be right.”
Trump unrepentantly rehearsed his litany of false or unsubstantiated claims with Scherer. Was Ted Cruz’s father linked to Lee Harvey Oswald? “Why do you say that I have to apologize? I’m just quoting the newspaper.” (The newspaper in question is the National Enquirer.) Had the president tapped his phones? “A lot of information has just been learned, and a lot of information may be learned over the next coming period of time. We will see what happens.” Were there 3 million fraudulent votes cast in 2016? “Well I think I will be proved right about that too.”
The commander in chief embraces a peculiar worldview in which bogus claims are retroactively justified and evidence simply conjured into existence.
President Trump remains peculiarly fixated on the cover of Time magazine. He has claimed in the past that he holds the record for most covers, but in an interview with Michael Scherer for this week’s magazine, the president asked if he was the all-time leader. Scherer had to break the bad news to him: Richard M. Nixon still held the lead—though he added, “He was in office for longer, so give yourself time.” “Ok, good. I’m sure I’ll win,” Trump replied.
The exchange is full of intrigue. Neither man noted that though Nixon was elected to two terms, his presidency was foreshortened by paranoia and lawbreaking. Nor did they note the increasingly frequent comparisons between Nixon’s terminal scandal and Trump’s own difficulties. But in the course of an interview about Trump’s extremely distant relationship with the truth—from obvious lies to head-scratching speculation—the president offered Nixonian maxim of his own.
Party leaders postponed a House vote Thursday after President Trump and Speaker Paul Ryan failed to win enough support.
Updated on March 23 at 4:28 p.m. ET
Lacking the majority needed to pass their bill to replace the Affordable Care Act, House Republican leaders have postponed a planned Thursday vote, imperiling President Trump’s first major legislative priority.
The move was an indication that a series of meetings Trump and Speaker Paul Ryan had with reluctant members in the party’s conservative and centrist wings had failed to achieve a consensus. Members of the House Freedom Caucus left a meeting with the president early in the afternoon saying there was “no deal” as they pushed Ryan to move the bill further to the right. And for Trump and Ryan, the delay dashed their hope of voting to dismantle the law on the seventh anniversary of its signing by former President Barack Obama.
Press Secretary Sean Spicer pushed back against CNN’s claim that the FBI has information suggesting Trump associates and Russia may have worked together to undermine Hillary Clinton’s campaign.
White House Press Secretary Sean Spicer on Thursday dismissed a recent CNN report claiming the FBI has information to suggest Trump associates may have worked with Russian operatives in an attempt to undermine Hillary Clinton’s campaign.
Spicer argued that the report was flimsy and, by its own admission, offered no definitive proof of coordination. “Let’s actually look at what CNN reported: They reported that anonymous U.S. officials have told them that information indicates that [associates] of the campaign and suspected operatives coordinated, which they admit is not conclusive of anything bordering on collusion.” He added: “There is probably more evidence that CNN colluded with the Clinton campaign to give her debate questions than the Trump campaign gave any kind of collusion.”
Two Princeton economists elaborate on their work exploring rising mortality rates among certain demographics.
Two years ago, the Princeton economists Anne Case and Angus Deaton published an alarming revelation: Middle-aged white Americans without a college degree were dying in greater numbers, even as people in other developed countries were living longer. The husband-and-wife team argued, in a study in the Proceedings of the National Academy of Sciences, that these white Americans are facing“deaths of despair”—suicide, overdoses from alcohol and drug, and alcohol-related liver disease.
The paper caused a stir in academic circles and in the media, and has remained in the public discourse following Donald Trump’s win partly on the strength of his support from these same middle-aged white Americans (the alive ones, to be clear). The paper, however, couldn’t answer the question everyone had: Why was this demographic in particular struggling? It couldn’t be purely the economic pain they faced in the wake of globalization; after all, European countries are also affected by globalization, and their residents are getting healthier and living longer. And non-whites in the U.S. are living longer than they used to as well, and they are subject to the same economic forces as middle-age whites and are struggling, at least in economic terms, even more.
Trump promised to revitalize the blighted heartland. His policies will punish them.
President Donald Trump might be consumed by half-truths and conspiracy theories, but during the campaign he brought attention to a very real phenomenon: regional inequality. He promised not only a proper swamp-draining in Washington, D.C., but also a renaissance for the Rust Belt, Appalachia, and America’s blighted heartland.
Even when his prognoses were fantasies—neither trade wars nor border walls will ever bring back 1950s-level manufacturing employment—the underlying diagnosis was pretty much right. For much of the 20th century, productivity in America’s poorest regions actually grew faster than in rich metros. But decades of convergence have come to a screeching halt in the 2000s. Rich coastal cities have left the rest of the country behind. In 1980, the typical New York City worker earned 80 percent more than the national average. By 2013, he earned 172 percent more.
New research on the creatures’ family tree could “shake dinosaur paleontology to its core.”
When I first read Matthew Baron’s new dinosaur study, I actually gasped.
For most of my life, I’ve believed that the dinosaurs fell into two major groups: the lizard-hipped saurischians, which included the meat-eating theropods like Tyrannosaurus and long-necked sauropodomorphs like BrontosaurusYes, Brontosaurus. It’s a thing again. ; and the bird-hipped ornithischians, which included horned species like Triceratops and armored ones like Stegosaurus. That’s how dinosaurs have been divided since 1887. It’s what I learned as a kid. It’s what all the textbooks and museums have always said. And according to Baron, a Ph.D. student at the University of Cambridge, it’s wrong.
By thoroughly comparing 74 early dinosaurs and their relatives, Baron has radically redrawn the two major branches of the dinosaur family tree. Defying 130 years of accepted dogma, he splits the saurischians apart, leaving the sauropods in one branch, and placing the theropods with the ornthischians on the other. Put it this way: This is like someone telling you that neither cats nor dogs are what you thought they were, and some of the animals you call “cats” are actually dogs.
A small community of fundamentalist Mormons, about 15 polygamist and monogamist families, have established a unique home for themselves, living in modern homes literally carved into the side of a massive sandstone rock in the desert south of Moab, Utah. Rockland Ranch, informally called "The Rock," was founded about 35 years ago by Robert Dean Foster, who set out to create a safe, remote space for a Christian community that embraced plural marriage. Large houses were built by using dynamite to blast caves into the sandstone cliff, then finished into relatively modern homes complete with running water, electricity, internet access, and more. Reuters photographer Jimmy Urquhart was recently invited to visit and photograph The Rock, and returned with these images, a rare glimpse into a unique Utah community.
Tech companies are spending hundreds of millions of dollars to improve conditions for female employees. Here’s why not much has changed—and what might actually work.
One weekday morning in 2007, Bethanye Blount came into work early to interview a job applicant. A veteran software engineer then in her 30s, Blount held a senior position at the company that runs Second Life, the online virtual world. Good-natured and self-confident, she typically wore the kind of outfit—jeans, hoodie, sneakers—that signals coding gravitas. That day, she might even have been wearing what’s known as the “full-in start-up twin set”: a Second Life T-shirt paired with a Second Life hoodie.
In short, everything about her indicated that she was a serious technical person. So she was taken aback when the job applicant barely gave her the time of day. He knew her job title. He knew she would play a key role in deciding whether he got hired. Yet every time Blount asked him a question about his skills or tried to steer the conversation to the scope of the job, he blew her off with a flippant comment. Afterward, Blount spoke to another top woman—a vice president—who said he’d treated her the same way.
The new Republican provision to allow states to deny health assistance for lacking employment will only make the program worse.
What are work requirements good for?
Stretching back to the establishment of welfare in the United States, politicians have debated both the practical and moral utility of requiring people to work in order to receive government benefits. Since welfare reform in the 1990s gave states wide latitude to create work requirements in the Temporary Assistance for Needy Families cash-assistance program, Republicans have hankered for a chance to extend those requirements to other safety-net programs, as part of their push to “require everyone who can to work.”
The purpose of work requirements in welfare, according to the Congressional Research Service, is “to offset work disincentives in social assistance programs, promote a culture of work over dependency, and prioritize governmental resources,” in addition to helping lift people out of poverty.