when Trump claims to be “an innocent man” and his followers believe him, i don’t think the meaning of that is to deny that he did what he is accused of. instead the claim is that, by virtue of being Trump, by virtue of his nobility and the nobility of his intentions, his doing this does not constitute a crime where it might if others did the same. 1/

in the conservative imaginary, the protection offered by the state must be about persons rather than actions. it is futile, naive, to try to prevent or deter crime. we must catch and punish criminals. there are good guys and there are bad guys, and the edifice of law is a pretext by which we get the bad guys. going after the good guys, unless what they’ve done shocks the conscience in its harm to other good guys, is always a miscarriage of justice. /fin

@Alon @SteveRoth @jamisonnbishop @ryanlcooper I’m very sympathetic to “hysteresis” arguments that suggest the long-term effect of recessionary economies is sluggish demand, lower growth and productivity that might have emerged in a “run the economy hot” counterfactual, where people would spend more securely and full employment / rising wages create incentives for labor-augmenting innovation.

@Alon @SteveRoth @jamisonnbishop @ryanlcooper There’s just a very mechanical short-term effect. Business’ capacity to produce does not fall linearly with the marginal workers fired. So the immediate effect of a recession is a productivity increase, once demand comes back towards capacity. I don’t at all claim it’s a good thing overall.

@Alon @SteveRoth @jamisonnbishop @ryanlcooper since that early 1990s recession, the stylized fact is “jobless recoveries”. fast GDP growth not matched by employment growth. growth itself does not imply productivity. the question is what labor “produces” (it’s really just a ratio) that growth. 1/

@Alon @SteveRoth @jamisonnbishop @ryanlcooper at the end of a recession is when labor markets are loosest. you might argue then that this is exactly when you’d expect growth to be a function of recruiting labor. but that’s not what happens. “productivity” happens. growth picks uo much faster than labor. /fin

This comment on economists' and policy makers' betrayal of welfare economics by adopting "cost-benefit analysis" (or the potential-Pareto criterion) is fabulous. https://downloads.regulations.gov/OMB-2022-0014-0023/attachment_1.pdf via @SteveRoth

#economics

@SteveRoth (The pedant in me can't help but point out that even *with* compensation, we must impose as a normative matter interpersonal comparison of welfare in order to make claims of welfare improvement. Absent unanimous agreement to a policy — with which or without reasonable compensation, will rarely be forthcoming, as people have idiosyncratic attachments or play holdup games — even with compensation we can't "scientifically" know the compensation is adequate.)

@Alon @SteveRoth @jamisonnbishop @ryanlcooper In a world where employers perceive high costs to finding employees and so hold onto employees through the business cycle, measured productivity declines overall. during periods of lower demand, labor hours are expended for the nontransactional benefit of maintaining relationships, which does not appear in GDP, reducing apparent productivity. 1/

@Alon @SteveRoth @jamisonnbishop @ryanlcooper In a world where employers fire very freely, we see the morally counterintuitive result that productivity rises in recessions. Businesses fire employees whose hours contribute least to revenue generating transactions, raising the average of revenue per hour. Plus they can work those they retain harder, as "the sack" becomes a very credible threat. 2/

@Alon @SteveRoth @jamisonnbishop @ryanlcooper Treating productivity as we measure it as an unmitigated virtue is perilous. Yes, we want to maximize welfare generated per hour worked. But productivity doesn't measure welfare, it measures GDP, the macro analog of revenue. There are obvious wedges between welfare and revenue when firing someone doesn't much hit revenue but condemns a person to penury. /fin

@Alon @SteveRoth @jamisonnbishop @ryanlcooper (The better matching you describe in boom periods could counter to some degree my claim of lower measured productivity over the cycle, but to the degree there are matching gains to be had from job-switching, there might be tensions between the worker scarcity and so security “labor hoarding” yields, encouraging switching, and the relationship-building attached to that, discouraging it even in booms.)

@SteveRoth @Alon @jamisonnbishop @ryanlcooper i think this is maybe restating @Alon’s point, but one conjecture would we are experiencing a labor bargaining power hangover. “labor hoarding” is the phrase the US press uses, but what it means is that businesses perceive labor relations as precious, potentially hard to replace or scarce, rather than disposable and replaceable on demand. so they err on the side of retaining workers, rather than dismiss and rehire them. 1/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper this would be a pro-employment result of the US’ extraordinary fiscal support during the pandemic. over the last few years, workers experienced getting by without current work — it became thinkable — and they accumulated savings that, even for a while after supports ended, meant “take this job and shove it” remained on the table. 2/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper thanks to state support, workers were (qua @Alon / Meidner) perceived as having wings, rather than hiding desperately under shells praying for the beneficience of employers. 3/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper in the stupid Econ 101 imagination, there is only price and quantity, and labor supports can only shove the supply curve outward, reducing quantity employed. 4/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper but it is policy that determines the *character* of labor as an economic commodity. in a Dickensian world, labor is disorganized, disposable, a burden you take on only when needed and shed as quickly as possible. 5/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper in a civilized world, labor is people, employment is a relationship, employers who become available then unavailable, “sleep around” looking to replace you, are employers workers can and do avoid. 6/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper for the first time in 50 years, from 2021, US employers have got a taste of a civilized labor market. even as household employment declines (gig workers find it harder to hire themselves), employers retain the relationships they’ve established, are less likely to let go. 7/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper in a civilized world, what that leads to is a profits recession, not a labor recession at all, profit margins (i think still near double historical norms) normalize while workers remain employed and employable. 8/

@SteveRoth @Alon @jamisonnbishop @ryanlcooper it remains to be seen how civilized our country is willing to be. what if the stock market declines even while employment is tight and interest rates are steady? is that even thinkable? /fin