Business Cycle Indicators, January 4th

With the release of the IHS Markit (nee Macroeconomic Advisers) monthly GDP, key indicators tracked by NBER Business Cycle Dating Committee (BCDC) continue to show mixed behavior. Monthly GDP declined in November (joining personal income ex.-transfers in decline):

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for employment as of 1/4/2021 (light blue square), industrial production (red),  personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (1/4/2021 release), NBER, Bloomberg, and author’s calculations.

The Bloomberg consensus for nonfarm payroll employment for December is for an increase of only 100,000 (that was true when I last checked as well – 12/23).

IHS Markit notes:

Monthly GDP declined 0.8% in November following a 0.6% increase in October that was revised lower by 0.1 percentage point. The decline in November was the first so far in the recovery and reflected declines in personal consumption expenditures, nonresidential fixed investment, net exports, and nonfarm inventory investment. There were partially offsetting increases in residential investment and the portion of monthly GDP not covered by the monthly source data.

NY Fed nowcast as of 12/31 is for 2.1% in Q4, and Atlanta Fed GDPNow as of 1/4 is for 8.6%. The IHS Markit forecast as of today is 3.0%, implying a further 0.4% (nonannualized) decline in December.

So, some of the worries I mentioned in this December 3rd post seem to come to pass.

52 thoughts on “Business Cycle Indicators, January 4th

  1. Moses Herzog

    Interesting. Not sure what to make out of it at the moment. Maybe I’ll stick my neck out and predict a number if I get some kind of feeling on it. Right now seems too many variables. Just watching the film “You Were Never Really Here” for the second time thinking how lazy I am for not reading the novella by now. I’m wondering when my state is going to make the Oxford/Astrazeneka vaccine available because I’m still leaning towards that one.

      1. Moses Herzog

        AS
        https://www.yardeni.com/pub/emplindnew_bb.pdf

        I may, just for fun toss out an ADP employment number tonight, I will try to toss out a number before 9 p.m. eastern time. But two things. Really me giving it this late is kind of “cheating”, it doesn’t make much point to give a number this late because the whole point in forecasts is both envisioning the future and having a timing advantage in investments. I will say your ability at stats is way above mine, and if you can crunch these numbers kind of “averaging out CES and ADP, if it might help in future forecasts??
        https://www.federalreserve.gov/econres/notes/feds-notes/tracking-the-labor-market-with-big-data-20190920.htm
        Although really again, in a virus situation it makes a lot of it a crap shoot. If there some other measures for virus effects on employment 1-3 variables correlating with virus effects on employment that you could “adjust” numbers with, and you can “calibrate” that with the numbers, I’m wondering if you couldn’t get a number pretty damned close.

      2. Moses Herzog

        @ AS
        The are actually different “consensus” numbers out there. And one of the “consensus” numbers I am looking at, actually goes below Econoday’s forecast range. Kind of strange how “you” have different “consensus” numbers, I guess it depends on the parties included in the consensus. Maybe Professor Chinn would like to “throw us a bone” here in the comments section on the “most respected” consensus forecast on ADP employment. I looked on the Philadelphia Fed website for ADP employment forecasts, and was very surprised not to find one, because the Philly Fed site is one of the better ones to hunt out forecasts on (if someone out there in blogland knows a link to get the ADP forecast on the Philly Fed site, I’d be grateful if you’d enlighten “AS” and me).

        Here is my number. Don’t feel bad if mine gets closer than yours, If I had attempted this a month ago, my number almost certainly would have been higher, and so I am kind of “cheating” here tossing out a number at the last minute.

        I’m gonna go with a decrease, or “negative” 18k for the December ADP employment report.

        1. macroduck

          Bad retail hiring in November creates the possibility of a sizable, largely meaningless rise in December.

  2. rjs

    i don’t figure that any of those GDP forecasts noted above included today’s November construction spending report, which had nominal spending up 0.9% after October’s spending was revised 0.6% higher…because there are multiple prices indexes for different types of construction listed in the National Income and Product Accounts Handbook, i use the producer price index for final demand construction as an inexact adjustment to estimate the change in real construction…comparing two months of the 4th quarter to 3 of the 3rd quarter adjusted with that price index, i find that real construction for the first two months of the 4th quarter has increased at an annual rate of 11.5%, or at a pace that would add about 1.30 percentage points to 4th quarter GDP across the 3 GDP components it feeds into, should real December construction continue at the same pace as the average of that of October and November… 

    Source: Census Bureau, BLS, BEA,, and author’s calculations.

      1. Moses Herzog

        Since I still consume a decent amount of “hardcopy” data (Yeah….. I am that guy, the old man, on good days you’ll catch me with peachfuzz whiskers near to my neck). I’m guessing Menzie already knows this (the numbers I mean). IHS reported their PMI number for December at 57.1 which is a rise from the November number of 56.7. IHS said this was the biggest improvement since Sept, 2014. It’s not every guy who will take an intermission from slobbering on himself watching Winona Ryder in “The Plot Against America” to dutifully report these numbers. What do you say guys, do I get “humanitarian of the year”???

    1. JohnH

      The notion that the fate of Democratic agenda is at stake in Georgia is ludicrous on so many levels. First are the totally unrealistic expectations that this message is creating. Second, it’s doubtful that Democrats have any coherent agenda. And third, as we learned in 2009 when Obama had a filibuster-proof majority, they are totally incapable of getting much done ever, in large part because of the large number of Democrats, often selected by the DSCC and DCCC, who happily serve as a fifth column for Republicans.

      If Democrats actually win both seats in Georgia after raising unrealistic expectations about their ability to deliver with a bare majority, they will find themselves in a real pickle immediately after the votes are all counted. I mean, if they couldn’t deliver in 2009, how will they be able to deliver now?

      Plus ça change, plus c’est la même chose.

      1. Moses Herzog

        @ JohnH
        I agree with you in a general way on your point on expectations. But any way you want to slice it, the two Senate seats are monstrously important, if for no other reason than to “play defense”. It also takes away a lot of power from Mitch McConnell, which can’t be anything other than good. The power to block legislation from even getting on the Senate floor for a vote is HUGE.

        Perry Bacon Jr. at “538” blog says it much better than I can:
        “Mitch McConnell has been perhaps the most important person in the U.S. government since 2014, particularly with Trump often so disengaged from policy issues. So if he is no longer the Senate majority leader, as seems likely right now, that is of course a huge, huge shift. He stops bills that a majority of senators support from going to the floor. He singlehandedly blocks Democratic priorities. He really controls the agenda in the chamber. A Senate where Joe Manchin is the 51st Democratic vote is not a liberal Senate, but it’s well to the left of one where McConnell decides what gets voted on in the first place. Loeffler and Perdue have been fairly unremarkable senators. But their votes to make McConnell the majority leader were hugely important.”

          1. macroduck

            McConnell – prosecutable on corruption charges now that the DOJ will no longer be on a leash held by Trump’s dog walker.

            Nice ring to that, as well.

        1. JohnH

          My point is that there is still the filibuster, which Republicans seem to use all the time, but Democrats don’t, dubbing themselves too “reasonable.”

          On the few votes not subject to filibuster, enough Democrats from the fifth column can always be magically found to torpedo most anything popular. The problem in NY is illustrative. First there were Republicans blocking popular legislation, so voters got rid of them. So Cuomo organized the Independent Democratic Conference to replace Republicans and block popular legislation. Voters got rid of them, so more popular legislation started being passed after 2018.
          https://theintercept.com/2019/07/11/new-york-state-progressive-democrat-primaries/

          Given the size of the problem in Washington,, it will be a long, long time before the “no, we can’t” Democrats get shunted aside, if ever. But we will certainly start seeing a lot of DC donkeys braying that it’s all Republicans’ fault, deflecting the blame that they share but wish to hide.

          As for the Supreme Court, it’s not likely that Biden will have an opportunity, because vacancies are unlikely.

          1. pgl

            You actually think there is zero chance that Alito or Thomas might pass away or resign? I presume you are their medical doctor.

            Now that McConnell has lost his iron grip on what is brought to the Senate floor, there are moderate Republicans that will work with Senate Democrats. Of course my way or the highway types like you will bitch about almost anything passed if it does not echo your usual mindless slogans.

          2. pgl

            “The problem in NY is illustrative. First there were Republicans blocking popular legislation, so voters got rid of them. So Cuomo organized the Independent Democratic Conference to replace Republicans and block popular legislation. Voters got rid of them, so more popular legislation started being passed after 2018.”

            Seriously? Look – I’m not that big of a fan of Cuomo but the progressive legislation this article touts were things Andy believed and pushed for. If you think Cynthia Nixon was the driving force – you are dumber than I ever gave you credit for.

            BTW – Biden is far more progressive than is Andy Cuomo.

      2. Barkley Rosser

        JohnH,

        You are probably right on policy. Nothing too dramatic is likely to get passed. Where it makes a difference is on getting approvals for cabinet and judicial appointments.

        1. pgl

          Biden at least gets to set the agenda. My understanding is that the top two proposals are: (1) crush this virus; and (2) a BIG infrastructure push.

          Given the gutless decision by the DA in Kenosha yesterday, item (3) should be a real police accountability law. Black Lives Matter.

      3. pgl

        Bitch, bitch, bitch! Guess what? Both Democrats won in Georgia. Oh my apologies – return to your bitching.

        1. macroduck

          The problem with the “little will change” claim regarding Democratic control of the Senate is that it ignoresres the monumental harm Moscow Mitch has done. A Senate that functions normally, however cautious, is a night-and-day contrast to Mitch’s “party over county” rule.

          1. pgl

            I agree but remember any health care reform no matter how good it is will be seen by JohnH as a corporate sellout unless it is spelled Medicare for All. Look – the man is like a trained parrot incapable of actual though preferring to have pre-approvate slogans.

          2. noneconomist

            If any M4A bill was passed JohnH wouldn’t support it because,well, it wasn’t his version of what it should be. And the corporatists had a hand in it, and the brain dead Democrats didn’t do enough and, blah, blah,…..Amd guaranteed more blah.
            Good news though. Florida’s new voter passed minimum wage bill will rise now to $8.65. That ll be only $5.35 less than the law passed by brain dead California Democrats four years ago. JohnH knows his heroes when he sees them.

  3. ltr

    January 4, 2021

    Coronavirus

    US

    Cases   ( 21,353,051)
    Deaths   ( 362,123)

    India

    Cases   ( 10,357,569)
    Deaths   ( 149,886)

    France

    Cases   ( 2,659,750)
    Deaths   ( 65,415)

    UK

    Cases   ( 2,713,563)
    Deaths   ( 75,431)

    Germany

    Cases   ( 1,796,216)
    Deaths   ( 35,632)

    Mexico

    Cases   ( 1,448,755)
    Deaths   ( 127,213)

    Canada

    Cases   ( 611,419)
    Deaths   ( 16,074)

    China

    Cases   ( 87,150)
    Deaths   ( 4,634)

    1. ltr

      Correcting order by number of cases:

      January 4, 2021

      Coronavirus

      UK

      Cases ( 2,713,563)
      Deaths ( 75,431)

      France

      Cases ( 2,659,750)
      Deaths ( 65,415)

  4. ltr

    January 4, 2021

    Coronavirus   (Deaths per million)

    UK   ( 1,108)
    US   ( 1,091)
    France   ( 1,001)
    Mexico   ( 981)

    Germany   ( 425)
    Canada   ( 420)
    India   ( 108)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 8.8%, 2.8% and 2.5% for Mexico, the United Kingdom and France respectively.

  5. ltr

    https://news.cgtn.com/news/2021-01-05/Chinese-mainland-reports-33-new-COVID-19-cases-WNmdQod0CQ/index.html

    January 5, 2021

    Chinese mainland reports 33 new COVID-19 cases

    The Chinese mainland on Monday reported 33 new COVID-19 cases – 17 cases of local transmission and 16 from overseas, the National Health Commission said on Tuesday.

    The locally transmitted cases were reported in north and northeast China: 14 in Hebei Province, 2 in Liaoning Province and 1 in Beijing.

    Moreover, 37 new asymptomatic COVID-19 cases were also recorded, while 318 asymptomatic patients remained under medical observation. No death related to COVID-19 was registered on Monday, while 12 patients were discharged from hospitals.

    The total number of confirmed COVID-19 cases in China has reached 87,183, and the death toll stands at 4,634.

    Chinese mainland new imported cases

    https://news.cgtn.com/news/2021-01-05/Chinese-mainland-reports-33-new-COVID-19-cases-WNmdQod0CQ/img/51eebcd702f94c528ef3525170d1b8db/51eebcd702f94c528ef3525170d1b8db.jpeg

    Chinese mainland new asymptomatic cases

    https://news.cgtn.com/news/2021-01-05/Chinese-mainland-reports-33-new-COVID-19-cases-WNmdQod0CQ/img/8bb7556411cb41718ac42c538bf9c0a3/8bb7556411cb41718ac42c538bf9c0a3.jpeg

    [ There are now 432 active coronavirus cases in all on the Chinese mainland, 13 of which cases are classed as serious or critical.

    There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been only limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 432 active coronavirus cases in all on the Chinese mainland, 13 of which cases are classed as serious or critical. ]

  6. ltr

    https://mainlymacro.blogspot.com/2021/01/why-uks-covid-crisis-should-be-personal.html

    January 4, 2021

    Why the UK’s COVID crisis should be personal for so many Tory voters

    There are around 16 million over 60s living in the UK, nearly a quarter of the UK population. They are the most at risk from COVID: catching the virus could be a matter of life or death. To them the government’s handling, or rather mishandling, of the pandemic should be a matter of acute personal concern. It certainly is for me. Around 60% of over 60s voted Conservative in the last election.

    The National Health Service is currently at breaking point. Tired and demoralised after almost a year of COVID, doctors and nurses find their hospitals are full and we haven’t yet seen the impact of Christmas and New Year. Whereas Boris Johnson acted in March to save the NHS, this winter he decided to save Christmas instead, until he was forced to backtrack at the last minute. You can blame people for not following the rules, but the government should plan for how people actually behave, not how they should behave.

    There are so many errors that led us to this dreadful crisis. Let me list the main mistakes, ordered by time….

    — Simon Wren-Lewis

  7. Dr. Dysmalist

    So while it looks like we won’t have a disastrous winter and spring overall, neither will the coming months be very pleasant because the virus will still be in charge. I have great worries on behalf of those who have, or will, lose a job, catch the virus, or (heaven forfend) both. I hope the Biden Admin can work out the problems with vaccine distribution and accelerate the pace of it so that we can start to recover physically, psychologically, and economically.

  8. ltr

    January 5, 2021

    Coronavirus

    Israel

    Cases   ( 455,144)
    Deaths   ( 3,489)

    Deaths per million   ( 379)

    ————————————-

    July 4, 2020

    Coronavirus

    Israel

    Cases   ( 29,170)
    Deaths   ( 330)

    Deaths per million   ( 36)

    [ Having apparently approached a containment of the coronavirus in June, the Israeli government incautiously opened schools and businesses, and the result has been a persistent community infection spread contributing to what are now 455,144 cases in the small country as compared to 87,183 in all through all of mainland China.  Israel unfortunately has more than 5 times the number of coronavirus cases in mainland China.  Paul Krugman noticed the Israeli “disaster” on September 14 when there were 160,000 coronavirus cases. ]

  9. 2slugbaits

    The graphs in Menzie’s chart all reflect data that captures information after the November election but for the most part before the post-Thanksgiving to Xmas to New Year’s spike in COVID cases. In other words, it’s likely to be overly optimistic. The information set available at the time also assumed 20 million vaccines would be in arms by the end of December. So instead of a late spring economic recovery, we’re looking at late summer/early fall at best. The logistics side of Operation Warp Speed has been a disaster. This is not the GEN Perna that I knew and worked for.

    1. pgl

      The Trump disaster will plague us for much of 2021. NYC is still saying my group (1c it is called) may be able to get vaccines by March or April. I hope so. In the meantime, wear your mask!

      1. macroduck

        Rumor has it that Tennessee is instituting a registry from which names will be called to use up expiring vaccine. I say rumor, because I cannot find the registry on the state Covid website.

        I mention this because it seems like a good enough idea that it could not have come from Tennessee. Other states may be doing the same. Worth checking into.

  10. ltr

    Latin American countries have recorded 4 of the 13 highest and 6 of the 24 highest number of coronavirus cases among all countries.  Brazil, Argentina, Colombia, Mexico, Peru and Chile.

    Mexico, with more than 1.45 million cases recorded, has the 4th highest number of cases among Latin American countries and the 13th highest number of cases among all countries.  Peru, with more than 1 million cases, has the 5th highest number of cases among Latin American countries and the 18th highest number among all countries.  Mexico was the 4th among all countries to have recorded more than 100,000 and 125,000 coronavirus deaths.

    January 4, 2021

    Coronavirus   (Deaths per million)

    US   ( 1,091) *

    Brazil   ( 921)
    Argentina   ( 961)
    Colombia   ( 864)

    Mexico   ( 981)
    Peru   ( 1,139)
    Chile   ( 873)

    Ecuador   ( 791)
    Bolivia   ( 783)

    * Descending number of cases

  11. ltr

    January 4, 2021

    Coronavirus

    Massachusetts

    Cases   ( 3927,568)
    Deaths   ( 12,651)

    Deaths per million   ( 1,835)

    ————————————–

    January 4, 2021

    Coronavirus

    New York

    Cases   ( 1,069,073)
    Deaths   ( 38,561)

    Deaths per million   ( 1,982)

    [ Where are the public health failings? We need to ask the question and look to system and details. ]

    1. ltr

      Correcting:

      January 4, 2021

      Coronavirus

      Massachusetts

      Cases ( 392,568)
      Deaths ( 12,651)

      Deaths per million ( 1,835)

      [ I can only understand the data as pointing to important state as well as national public health failings. ]

  12. Moses Herzog

    For our much vaunted and revered native Washington stater blog host, who seems to indicate an appreciation for history (American and World) from time to time…….

    Nathaniel Rakich over at “538” drops this information nugget:
    “Raphael Warnock would be only the second popularly elected Black senator from the former Confederacy.”

    1. Moses Herzog

      I tend to be cynical and pessimistic about human beings (A sentiment I try to conceal as much as I can but tends to leak out when I’m drinking). Therefor, on a personal level, I don’t buy into this quote. Yet still, if Raphael Warnock wins his election tonight, one is reminded of the ray of sunshine proffered by MLK and “re-illuminated” by President Obama:
      “the arc of the moral universe is long, but it bends toward justice.”

      1. Barkley Rosser

        The originator of this famous line was an abolitionist Unitarian minister, Theodore Parker, who first said it in 1850.

  13. Moses Herzog

    Wow, Wasserman getting the donald j trump treatment from Twitter:
    https://twitter.com/Redistrict/status/1346647684900417536

    https://twitter.com/Redistrict/status/1346681326934650880

    If you look at the large Counties remaining to be counted and do the math with some assumed percentages, it’s slightly hard to argue with Wasserman’s assertions. That’s not to say that Twitter did the wrong thing, Twitter in fact did the CORRECT thing, just kind of interesting. Kind of like watching a teacher in grade school hold back a classmate from beating up a kid you don’t like. Yeah, the teacher did the right thing, but if your classmate had gotten another punch in, you really wouldn’t have minded it that much.

  14. ltr

    January 5, 2021

    Coronavirus

    US

    Cases   ( 21,578,606)
    Deaths   ( 365,620)

    India

    Cases   ( 10,375,478)
    Deaths   ( 150,151)

    UK

    Cases   ( 2,774,479)
    Deaths   ( 76,305)

    France

    Cases   ( 2,680,239)
    Deaths   ( 66,282)

    Germany

    Cases   ( 1,814,565)
    Deaths   ( 36,510)

    Mexico

    Cases   ( 1,455,219)
    Deaths   ( 127,757)

    Canada

    Cases   ( 618,646)
    Deaths   ( 16,233)

    China

    Cases   ( 87,183)
    Deaths   ( 4,634)

  15. ltr

    January 5, 2021

    Coronavirus   (Deaths per million)

    UK   ( 1,121)
    US   ( 1,101)
    France   ( 1,014)
    Mexico   ( 986)

    Germany   ( 435)
    Canada   ( 428)
    India   ( 108)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 8.8%, 2.8% and 2.5% for Mexico, the United Kingdom and France respectively.

  16. ltr

    https://news.cgtn.com/news/2021-01-06/Chinese-mainland-reports-32-new-COVID-19-cases-WP1Jqe80EM/index.html

    January 6, 2021

    Chinese mainland reports 32 new COVID-19 cases

    The Chinese mainland on Tuesday reported 32 new COVID-19 cases – 23 cases of local transmission and 9 from overseas, the National Health Commission said on Wednesday.

    The locally transmitted cases were reported in north and northeast China: 20 in Hebei Province, 1 in Liaoning Province, 1 in Heilongjiang Province and 1 in Beijing.

    Moreover, 64 new asymptomatic COVID-19 cases were also recorded, while 360 asymptomatic patients remain under medical observation. No death related to COVID-19 was registered on Tuesday, while 21 patients were discharged from hospitals.

    The total number of confirmed COVID-19 cases in China has reached 87,215, and the death toll stands at 4,634.

    Chinese mainland new imported cases

    https://news.cgtn.com/news/2021-01-06/Chinese-mainland-reports-32-new-COVID-19-cases-WP1Jqe80EM/img/059ff5050878428da241cdaef7ad7e01/059ff5050878428da241cdaef7ad7e01.jpeg

    Chinese mainland new asymptomatic cases

    https://news.cgtn.com/news/2021-01-06/Chinese-mainland-reports-32-new-COVID-19-cases-WP1Jqe80EM/img/4e6e115893944e98a351fe032175f991/4e6e115893944e98a351fe032175f991.jpeg

    [ There has been no coronavirus death on the Chinese mainland since the beginning of last May.  Since the beginning of last June there have been only limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 443 active coronavirus cases in all on the Chinese mainland, 14 of which cases are classed as serious or critical. ]

    1. macroduck

      It’s an age thing. At 82, Breyer is likely to outlive Biden’s presidency, but less likely to outlive the next one. The time for Breyer to resign is mid-2022, while the Senate is still held by Democrats.

      Asking Alito or Thomas to retire is a non-starter. They don’t have the country’s best interest at heart.

      1. pgl

        Thanks for pointing out his age. Do not give up hope that the Democrats can actually gain seats in the Senate in 2022. Assuming Trump’s terrorists do not destroy our Republic. They have disrupted Congress today in what appears to be Trump’s call for a coup.

  17. pgl

    Merrick Garland nominated to be our next Attorney General. Let’s see McConnell try to stop him on this appointment!

  18. ltr

    https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2021/01/whats-given-whats-not.html

    January 4, 2021

    What’s given, what’s not?

    There is much talk of how Covid is putting pressure on the National Health Service. Such talk, however, often misses an important fact – that although NHS capacity is more or less fixed in the short-term, it is certainly not in the long-run. And past political choices have limited this capacity. For example, the UK has 2.8 doctors for every 1000 people compared to an average of three in Organisation for Economic Co-operation and Development countries generally and more than four in Germany, Italy or Switzerland. We have only 2.46 hospital beds per 1000 people, compared to 8.0 in Germany or 5.9 in France. And we have fewer intensive care spaces than the average developed economy.

    The NHS is under pressure because of past political decisions to limit its capacity. Failing to point this out exonerates what should not be exonerated – namely, a decade of fiscal austerity.

    What’s happening here is, in fact, a widespread error – of regarding something as exogenous or given when it is in fact a creation of people, either deliberately via policy or inadvertently via emergent processes.

    Another example of this mistake lies in the debate over how far Labour should accommodate itself to social conservatism. What some of this misses is that whilst there have always been social conservatives, they have not always been so salient or an insuperable obstacle to progress. Instead, the strength of social conservatism today is a product of economic conditions. As Ben Friedman has shown, stagnation breeds illiberalism. And Kenan Malik adds that, among working class voters, it is also “the product of decades of neglect.”

    The strength of social conservatism is partly endogenous. One trivial fact tells us this. It’s that before 2016 hardly any of us were “leavers” or “remainers”; these are identities that were created by political debate.

    There’s more to politics than merely giving punters what they say they want. As Kenan says, it is also “about standing on a set of principles and trying to win people over” – or, I would add, shifting the agenda from the culture wars to economics.

    Social conservatism, though, isn’t the only example of public opinion being (partly) endogenous. Kris-Stella Trump has shown that the same is true of our attitudes to fairness. When inequality is high we regard that as fair, and when it is low we also see that as fair. Our perceptions of fairness are anchored by (what we perceive to be) the actual distribution of income.

    Even the most intelligent social observers can sometimes fail to distinguish between the exogenous and endogenous. I’m thinking here of two otherwise excellent recent books, Case and Deaton’s Deaths of Despair and Thomas Phillipon’s The Great Reversal. Both show how capitalists have captured the state in order to extend their monopoly power. But their response to this is to advocate better policy, as if doing so were only a matter of intellect and goodwill.

    Which it is not….

    — Chris Dillow

    1. pgl

      “For example, the UK has 2.8 doctors for every 1000 people compared to an average of three in Organisation for Economic Co-operation and Development countries generally and more than four in Germany, Italy or Switzerland.”

      Dean Baker and Greg Mankiw in one of their rare areas of agreement noted that the US had only 2.4 doctors per 1000 people which is why doctor salaries in the US were so damn high even before COVID19. Obamacare raised the demand for doctors so people fretted that we would have a shortage of doctors. The Baker-Mankiw solution was to allow more foreign doctors to move here.

      That was preCOVID. Now that the world demand for doctors is higher, we need to train more people to become doctors. Hopefully the admiration for Dr. Fauci will increase people going to medical school

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