Wednesday, June 24, 2020

Shoddy Executive Order Bears Fingerprints of Navarro and Krugman

An immigration Executive Order was issued two days ago.  I read it yesterday and gathered my thoughts and relevant memories over the subsequent 24 hours.

The EO contains immigration regulations and purported economic justifications for the regulations.

The EO’s economic justification is essentially that it is good to suppress labor supply during a recession.  I disagreed with such a conclusion when it was offered years ago by Krugman, Eggertson, and others.  The conclusion is just as wrong when it comes from President Donald Trump.

The empirical fact, which is not a surprise from a theoretical point of view, is that labor supply and demand matter just as much at the margin during a recession as they do during an expansion.  See Chapter 8 “Recession-era Effects of Factor Supply and Demand” of my 2012 book (a more recent JPE paper confirmed these results but I cannot find the link right now).  A recession is not an economic excuse for suppressing labor supply.

The faulty economic analysis I see in the EO sounds to me like Peter Navarro talking.  Hearing his voice now catches me a bit by surprise because, although he is a part of the populist story, his “rudeness, ignorance, and dishonesty” are well known from the President on down.  [I believe that Hassett, Mnuchin, Mulvaney, and Kudlow shot down such Navarro initiatives in the past, although I was not present at those meetings or even much involved with the prep.]

Suppressing labor supply is also poor public relations.  The employment and productivity numbers will come in lower than they would with a more market-oriented recovery.  (Only a couple of the Navarro stories were included in my 2020 book because they were a small fraction of my experience, and the President is a lot more interesting.  But a hilarious one – in the reader-spits-out-coffee category – is about another time that Navarro flunked marketing.)

The justification for the EO’s regulations, if there is any, would have to be that it somehow begins a path to fixing the broken status quo system that was in place before Monday.  That system was full of special-interest favors, which the President should be removing as he has removed them in many other regulatory areas.  I am pessimistic (i.e., optimistic for the entrenched special interests) that there is any such path in the immigration area, though.

Gary Becker’s immigration plan should be given serious consideration.  President Trump agrees with that on purely economic grounds (Chapter 6 of my book), although he sees that as a political nonstarter (“radical” as Becker put it).  Perhaps the immigration plan Trump proposed in May 2019 (essentially the Canadian and Australian systems) is a more politically correct approximation to the Becker plan.

Part of this EO pertains to foreign-born scholars working in the U.S., which saddens me personally.  My closest friends are squarely in that category.  The value they add is so great that policy will likely change so that they continue to work in the U.S. 

A little known fact is that President Trump is a very good listener (my book is filled with examples; that’s how he became a populist president).  So speak up!  He may decide in your favor.  After listening, he may articulate your position better you do.  In that case, I’m sorry because that is a strong indication that he is deciding against you (e.g., here) and wants you to at least know that you were heard.

Friday, June 19, 2020

Dueling Memoirs: Mulligan vs. Bolton

What do readers have to say?

A New York Times Review says that Bolton's memoir "has been written with so little discernible attention to style and narrative form...."

One reader (who asked to remain anonymous because he/she fears retribution at work) finds You're Hired! to be an "extremely well-written book." Brian Blase found it to be "enjoyable and easy to read."

Back to the review of Bolton, "Underneath it all courses a festering obsession with his enemies ...the book is bloated with self-importance."

Pages xii and xviii of You're Hired! explain how I was "the Apprentice" and that readers should be "prepared to be as amazed and humbled as I was."

By Joe Grogan's reading, You're Hired! is an "an insightful, honest, book ...  free from score settling and self promotion."

You're Hired! shows that Bolton has distorted the truth, omitted important context, and contradicts critical facts in plain sight.  Excepts related to this matter were published on-line as Bolton is Wrong; I was There.

Sunday, June 7, 2020

Coronavirus and What it is Like to Speak with Trump

One viewer says "You play it very straight which at this point is unheard of in Washington."

Saturday, June 6, 2020

The Higher Ed Market after Floyd

@GlennLoury objects to what university administrators are doing. They are economic actors too, who will not benefit from a repeat of 1968, so it is predictable that their reactions might risk some scholarship, reason, and learning.
But there is also competition in the industry and thereby an opportunity for an (aspiring?) administrator who expresses the interests of the many individuals who have not yet reached the fashionable conclusions. Something like the famous Zimmer letter.
This competition might play out slowly given that (barring regulatory favors) universities will now compete in another important dimension: whether 2020-21 students are allowed to purchase a college education that does more than Zoom (which would have made 1968 impossible).

Moreover the Zimmer letter was not written on a blank tablet. A Uchicago committee led by @stone_geoffrey had already worked on it 2 years before. If this capital does not yet exist for the current situation, it will take time to build it up.

Thursday, June 4, 2020

Labor Market Recovery Begins when States Begin to Open

The first chart below is an estimate of weekly US employment per adult.  It suggests that the bottom was the week ending May 7, and that a recovery may have begun.

The estimated recovery may not look large on the scale of the current depression, but it is about 7.5 million employees above May 7 and 3 million employees above late April.  Note that the entire recovery from the 2008-9 recession was "only" 7 million employees above population growth and took ten years rather than a week or two.

At about the same time, states began ending their stay-at-home orders.  E.g., Texas May 1 and California May 8.  I expect another increase in early June as more reopening occurs.  A big increase will occur when UI bonuses expire, which may be as early as August.

The imputation is based on the scatterplot below.