Published October 19, 2016.
So, here's a problem: what is your humble editor to do if there simply isn't room to fit everything worth reading between the covers of a 96-page quarterly issue? And here's an answer: publish the extra content on our website, MilkenReview.org.
This issue includes an excerpt from The Euro and the Battle for Ideas, a new book by Markus Brunnermeier, Harold James and Jean-Pierre Landau that explains the dysfunction of the Eurozone in terms of the diverging economic cultures of the member-states. Check that — this issue includes part of the excerpt. The rest can be found on our website, with a handy link that takes readers of the magazine to the place they left off.
Meanwhile, take a gander at what's waiting for you in this issue:
jason furman, the chair of Pres. Obama's Council of Economic Advisers, offers a rare glimpse into the difficulties of analyzing macroeconomic data and using it to predict growth, unemployment and inflation. "While we no longer must cope with the information void that policymakers faced in the 1930s, the mountain of data available creates its own problems," he writes. "Chief among them is that we can sometimes ask too much of the data while doing too little to put it in context."
robert litan of the Council on Foreign Relations offers two ideas for reducing job insecurity in an era of rapid globalization. One is universal wage insurance that would replace a portion of income lost when a displaced worker takes a lower-paying job. The other: loans for job retraining in which repayment is linked to gains in income.
"It is far too easy to slip off the economic ladder and never fully recover," Litan notes. "To manage the consequences of the sorts of economic displacement that seem inevitable, we need smarter government — not less of it."
robert looney, an economist at the Naval Postgraduate School in California, analyzes Brazil's latest adventure in flying too close to the sun. "Brazil is a land of immense economic promise and immense disappointment," he writes. "It is also becoming an icon of the reality that shortcuts to development, especially development subject to the middle-income trap, are deeply problematic."
ron haskins, the co-director of the Brookings Center on Children and Families, rebuts the conventional wisdom that partisan politics has blocked all cooperation between Congress and the Obama White House, and offers a menu for possible policy collaboration on social issues after the election. "It would be Pollyannaish to pretend that business as usual has not been unusual in Washington, or that the partisan divide hasn't taken a major toll on the quality of government," he acknowledges. But he focuses on a number of issues — with early childhood education highest on the list — where common ground could still be found.
charles castaldi, a former NPR correspondent, revisits Bolivia for an update on how the country is coping with its deep ethnic divisions – not to mention the rule of Evo Morales, the populist president who thumbs his nose at the former colonial powers. "The initial take in Washington was that Evo was cut from the same cloth as Hugo Chávez in Venezuela and was sure to drive the economy (further) into ruin," Castaldi writes. "In fact, this government's track record is the envy of its neighbors."
ed demarco, the former acting director of the Federal Housing Finance Agency, concedes that inertia and interest group politics make it very difficult to redirect Washington's focus on home ownership. But he argues that the vast public resources committed to subsidizing private housing could be spent on building equity rather than facilitating ever-riskier borrowing.
"It's pretty clear that we've been sidetracked into policies that make the mortgage market bigger and more volatile," he writes. "It's equally clear that we've strayed far from the broader public interest — and that the route back lies in building equity, not debt."
ed dolan, creator of an eponymous blog on economic literacy, takes an unconventional tack in asking what could be done to help American workers displaced by international trade. Rather than (or in addition to) helping them out with cash or retraining, he focuses on removing impediments to going where new jobs are plentiful.
Among the most significant: occupational licensing restrictions used to protect incumbents from competition, subsidies designed to steer Americans toward owner-occupied housing that is immensely costly to turn over, and forced disclosure of criminal records that make it very difficult to switch jobs.
Happy perusing. —Peter Passell
You've probably figured it out already: the caricature on the spine of the combined 2016 issues of the Review is Robert Solow, arguably the most influential living economist and certainly one of the nicest people you'll ever meet.
A child of the Depression, he and his sisters were the first in the family to attend college. But he picked a good one (Harvard) and the rest is history. Well, not quite. Solow made a detour between 1942 and 1945, fighting the Wehrmacht in the hellish campaign to capture Italy before returning to Cambridge for a BA and PhD. Then on to a job teaching economics at MIT, where he was key (along with Paul Samuelson and Franco Modigliani) to transforming the department into the best in the nation.
Yes, but what has he done? It's impossible to overestimate the importance of his model of economic growth, which focused much of the profession on the role of technological change in explaining how advanced economies prosper. Certainly, the profession hasn't; he's won both a John Bates Clark Medal (awarded every two years to an economist under 40) and, of course, the Nobel Prize in 1987.
Less tangibly (but probably as important), he was a leading force in demanding mathematical and statistical rigor from economists in training. Yet he never fell into the trap of treating economics as an elegant abstraction. Indeed, he's used his august position in the profession to promote smart, evidence-based policy analysis throughout his career.