Worthwhile Reads – October 10th

On Tuesday, Speaker of the House John Boehner tweeted his jobs plan:

Though probably a mistake by one of his staffers, it is a telling of his actual plan which is nearly as empty as the tweet above. After some digging Wonkblog has found the details of Speaker Boehner’s five point plan: 

“You have to Google around for the full details, in a policy speech Boehner delivered at the American Enterprise Institute in September. But that even that speech was short on detailed policy proposals — particularly striking when Rep. Paul Ryan (R-Wisc.) and others are moving forward with comprehensive plans. The challenges the country faces, like stagnant middle class wages, are truly thorny. They don’t lend themselves to simple solutions.” 

More on Last Friday’s Jobs Report 

FiveThrityEight looks at job openings and new hiring:

“The trouble is that companies are posting new jobs a lot faster than they’re filling them. Employers hired nearly 300,000 fewer workers in August than in July. This has been a persistent problem in the recovery: Job openings have more than doubled since the recession ended, but hiring is up by just 27 percent… 

It isn’t just companies that are being cautious. Workers are, too. The number of workers who voluntarily quit their jobs fell slightly in August and has been essentially flat all year. That’s a sign employees aren’t yet confident enough in the economy to take a risk.” 

Mohamed A. El-Erian, the chairman of President Obama’s Global Development Council, believes three elements are needed before “economic liftoff.” Stating, 

“Whether one month’s report is higher or lower than the previous one matters far less than the larger picture. It’s better to assess whether the U.S. saw robust monthly job creation, healthy wage growth and an improvement in the structure of the labor market. Only when this trio of numbers materializes will the significant fall in the unemployment rate feel like, and constitute, genuine improvement for the majority of the country.” 

Where is Our Fiscal Policy? 

Wonkblog looks at the fiscal multiplier and how stimulus can help accelerate the recovery. They find that in a normal recession the fiscal multiplier can be 2.3 and in a downturn like the Great Recession it can be 3.1. “Indeed, even the oh-so-orthodox International Monetary Fund estimates that the fiscal multiplier might be as high as 1.7 right now.” 

The editors at BloombergView write that central banks have taken too much of the burden to fix the ailing economies around the globe. Stating, 

“But central banks can’t do it all by themselves. Debt burdens, long-term unemployment and poor infrastructure are holding back growth in many developed countries. In countries that can afford to borrow, such as the U.S. and Germany, careful investment in transportation and communication systems could pay for itself — boosting growth by enough to reduce public debt burdens.” 

Monetary Policy 

Reading for President Obama on his biggest economic policy mistake—neglecting the Federal Reserve:  “Obama has failed to make a point of tapping proponents of monetary stimulus for these positions. Even worse, he’s left two of the slots entirely vacant — not vacant because of GOP obstruction, but vacant because he hasn’t nominated anyone to fill them.” 

In a supplement to our comparison of ECB and Fed policies: Brad DeLong considers the disastrous policies coming from across the pond and makes a provisional call for the dissolution of the Euro: “If, as indeed seems the case, Germany will not step up and exercise the responsibilities of mini-hegemon aggregate demand a balance wheel for the European Union, it is time for a constitutional change… the eurozone needs to be dismantled so that Frankfurt can no longer dictate improper exchange-rate policies to Madrid and Rome.”

Finally, Josh Barro and Noah Smith both point out that inflation hawks are, as Noah Smith eloquently states, guilty of derp. Derp meaning “to describe ‘the constant, repetitive reiteration of strong priors.’ In other words, when your mind is made up and will never change, and you feel the need to keep broadcasting that fact over and over, you are guilty of ‘derp.’”

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