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Legislature may write own pot proposal - Bend Bulletin

Oregon Political Headlines - Fri, 09/13/2013 - 3:11am

Legislature may write own pot proposal
Bend Bulletin
The Washington and Colorado elections and the Obama administration's decision not to thwart them have persuaded leading Oregon legislators that, even if they oppose the idea of legal pot, the Legislature should put a proposal in front of voters next ...

and more »

Oregon lawmakers may write legal pot bill themselves - The Columbian

Oregon Political Headlines - Thu, 09/12/2013 - 11:41pm

KOMO News

Oregon lawmakers may write legal pot bill themselves
The Columbian
The Washington and Colorado elections and the Obama administration's decision not to thwart them have persuaded leading Oregon legislators that, even if they oppose the idea of legal pot, the Legislature should put a proposal in front of voters next ...
Oregon House leaders consider writing pot lawStatesman Journal

all 3 news articles »

Paul Krugman: Rich Man’s Recovery

Economist's View - Thu, 09/12/2013 - 11:24pm

Inequality is harmful:

Rich Man’s Recovery, by Paul Krugman, Commentary, NY Times: A few days ago, The Times published a report on a society that is being undermined by extreme inequality. This society claims to reward the best and brightest... In practice, however, the children of the wealthy benefit from opportunities and connections unavailable to children of the middle and working classes. And ... the gap between the society’s meritocratic ideology and its increasingly oligarchic reality is having a deeply demoralizing effect. The report illustrated in a nutshell why extreme inequality is destructive, why claims ring hollow that inequality of outcomes doesn’t matter as long as there is equality of opportunity. If the rich ... live in a different social and material universe, that fact in itself makes nonsense of any notion of equal opportunity. By the way, which society are we talking about? The answer is: the Harvard Business School — an elite institution, but one that is now characterized by a sharp internal division between ordinary students and a sub-elite of students from wealthy families. The point, of course, is that as the business school goes, so goes America, only even more so — a point driven home by the latest data on taxpayer incomes..., 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. ... Basically, while the great majority of Americans are still living in a depressed economy, the rich have recovered just about all their losses and are powering ahead. ... What’s driving these huge income gains at the top? There’s intense debate on that point,..., however, whatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America. Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy. So what can be done? For the moment, the kind of transformation that took place under the New Deal — a transformation that created a middle-class society, not just through government programs, but by greatly increasing workers’ bargaining power — seems politically out of reach. But that doesn’t mean we should give up on smaller steps, initiatives that do at least a bit to level the playing field..., for example,... universal prekindergarten education, paid for with a small tax surcharge on those with incomes over $500,000. ... For extreme inequality is still on the rise — and it’s poisoning our society.

Memo details Oregon-led CRC - The Columbian

Oregon Political Headlines - Thu, 09/12/2013 - 5:21pm

Memo details Oregon-led CRC
The Columbian
Project leaders are now pursuing an Oregon-only plan — still including tolls and light rail to Vancouver — after the Washington Legislature authorized no funding for the CRC earlier this year. The ODOT memo expresses confidence in the plan, but ...

Tomei seeks record eighth term in Legislature - Portland Tribune

Oregon Political Headlines - Thu, 09/12/2013 - 3:59pm

Tomei seeks record eighth term in Legislature
Portland Tribune
Carolyn Tomei (D-Milwaukie), who represents Milwaukie, Oak Grove and parts of Southeast Portland in the Oregon Legislature, filed for re-election on Thursday. by: FILE PHOTO - Carolyn Tomei After redistricting of House District 41 to include portions ...

State legislators consider writing pot law - The Register-Guard

Oregon Political Headlines - Thu, 09/12/2013 - 11:45am

KOMO News

State legislators consider writing pot law
The Register-Guard
Oregon's House leadership is talking about referring its own marijuana legalization measure to voters rather than waiting on someone else to write a ballot measure for 2014. House minority leader Rep. Mike McLane, R-Powell Butte, said Wednesday that ...
Oregon lawmakers may write legal pot bill themselvesThe Columbian
Oregon House leaders consider writing pot lawStatesman Journal

all 3 news articles »

'Remembering Ronald Coase’s Contributions'

Economist's View - Thu, 09/12/2013 - 11:15am

In his post Remembering Ronald Coase’s Contributions, Robert Stavins notes a big surprise, the Wall Street Journal's editorial page being less than forthright (he is summarizing a statement in "an effective essay" by Severin Borenstein on "the effect that Coase’s thinking had decades ago on his own intellectual development"):

the Wall Street Journal in its ... tribute to Coase ... twisted the implications of his work to fit the Journal’s view of the world

Stavins goes on to discuss "The Coase Theorem and the Independence Property":

... In our article, “The Effect of Allowance Allocations on Cap-and-Trade System Performance,” Hahn and I took as our starting point a well-known result from Coase’s work, namely, that bilateral negotiation between the generator and the recipient of an externality will lead to the same efficient outcome regardless of the initial assignment of property rights, in the absence of transaction costs, income effects, and third party impacts. This result, or a variation of it, has come to be known as the Coase Theorem. We focused on an idea that is closely related to the Coase theorem, namely, that the market equilibrium in a cap-and-trade system will be cost-effective and independent of the initial allocation of tradable rights (typically referred to as permits or allowances). That is, the overall cost of achieving a given emission reduction will be minimized, and the final allocation of permits will be independent of the initial allocation, under certain conditions (conditional upon the permits being allocated freely, i.e., not auctioned). We called this the independence property. It is closely related to a core principle of general equilibrium theory (Arrow and Debreu 1954), namely, that when markets are complete, outcomes remain efficient even after lump-sum transfers among agents. The Practical Political Importance of the Independence Property ...The reason why this property is of such great relevance to ... public policy is that it allows equity and efficiency concerns to be separated. In particular, a government can set an overall cap of pollutant emissions (a pollution reduction goal) and leave it up to a legislature to construct a constituency in support of the program by allocating shares of the allowances to various interests, such as sectors and geographic regions, without affecting either the environmental performance of the system or its aggregate social costs. Indeed, this property is a key reason why cap-and-trade systems have been employed and have evolved as the preferred instrument in a variety of environmental policy settings. ...Does the Property Always Hold? ...Hahn and I ... carried out an empirical assessment of the independence property in past and current cap-and-trade systems... I hope some of may find time to read our article, but a quick summary of our assessment is that we found modest support for the independence property in the seven cases we examined (but also recognized that it would surely be useful to have more empirical research in this realm). Political Judgments That the independence property appears to be broadly validated provides support for the efficacy of past political judgments regarding constituency building through legislatures’ allowance allocations in cap-and-trade systems. Governments have repeatedly set the overall emissions cap and then left it up to the political process to allocate the available number of allowances among sources to build support for an initiative without reducing the system’s environmental performance or driving up its cost. This success with environmental cap-and-trade systems should be contrasted with many other public policy proposals for which the normal course of events is that the political bargaining that is necessary to develop support reduces the effectiveness of the policy or drives up its overall cost. So, the independence property of well-designed and implemented cap-and-trade systems is hardly something to be taken for granted. It is of real political importance and remarkable social value. It is just one of many lasting contributions of Ronald Coase.

New Research in Economics: Rational Bubbles

Economist's View - Thu, 09/12/2013 - 9:37am

New research on rational bubbles from George Waters:

Dear Mark,

I’d like to take you up on your offer to publicize research. I’ve spent a good chunk of my time (along with Bill Parke) over the last decade developing an asset price model with heterogeneous expectations, where agents are allowed to adopt a forecast based on a rational bubble.

The idea of a rational bubble has been around for quite a while, but there has been little effort to explain how investors would coordinate on such a forecast when there is a perfectly good alternative forecast based on fundamentals. In our model agents are not assumed to use either forecast but are allowed to switch between forecasting strategies based on past performance, according to an evolutionary game theory dynamic.

The primary theoretical point is to provide conditions where agents coordinate on the fundamental forecast in accordance with the strong version of the efficient markets hypothesis. However, it is quite possible that agents do not always coordinate on the fundamental forecast, and there are periods of time when a significant fraction of agents adopt a bubble forecast. There are obvious implications about assuming a unique rational expectation.

A more practical goal is to model the endogenous formation and collapse of bubbles. Bubbles form when there is a fortuitous correlation between some extraneous information and the fundamentals, and agents are sufficiently aggressive about switching to better performing strategies. Bubbles always collapse due to the presence of a small fraction of agents who do not abandon fundamentals, and the presence of a reflective forecast, a weighted average of the other two forecasts, that is the rational forecast in the presence of heterogeneity.

There are strong empirical implications. The asset price is not forecastable, so the weak version of the efficient markets hypothesis is satisfied. Simulated data from the model shows excess persistence and variance in the asset price and ARCH effects and long memory in the returns.

There is much more work to be done to connect the approach to the literature on the empirical detection of bubbles, and to develop models with dynamic switching between heterogeneous strategies in more sophisticated macro models.

A theoretical examination of the model is forthcoming in Macroeconomic Dynamics.

A more user friendly exposition of the model and the empirical implications is here.

An older published paper (Journal of Economic Dynamics and Control 31(7)) focuses on ARCH effects and long memory.

Dr. George Waters
Associate Professor of Economics
Illinois State University
http://www.econ.ilstu.edu/gawater/

Herrera Beutler says revived CRC plan doesn't qualify for federal money - The Columbian

Oregon Political Headlines - Thu, 09/12/2013 - 9:26am

Herrera Beutler says revived CRC plan doesn't qualify for federal money
The Columbian
The $3.4 billion project was declared dead after Washington lawmakers declined to commit the state's $450 million share; Oregon legislators had said they would only commit their share if Washington did. Since then, a new version of the CRC has emerged ...
Bridge faces long oddsThe Register-Guard

all 3 news articles »

Oregon House leaders consider writing pot law - Statesman Journal

Oregon Political Headlines - Thu, 09/12/2013 - 4:48am

Oregon House leaders consider writing pot law
Statesman Journal
The Oregon Legislature will consider a bill to allow medical marijuana for PTSD. AP This Jan. 26, 2013 photo taken at a grow house in Denver shows a marijuana plants ready to be harvested. Last fall, voters made Washington and Colorado the first states ...

and more »

The Rising Yuan

Economist's View - Wed, 09/11/2013 - 11:24pm

The yuan has made "rapid progress" as an invoicing currency:

CNY on the Rise, by Menzie Chinn: The preliminary results from the BIS triennial survey for 2013 are out. There are a lot of interesting results, but one I want to flag is that the Chinese yuan is increasingly used in forex transactions. ... The Chinese government has been quite aggressive in increasing the use of the Chinese currency, as noted in this post. The yuan is far from becoming a reserve currency [1] [2], but there are other dimensions of an international currency that the CNY could fulfill. One of these is use as an invoicing currency, and here, the CNY has made rapid progress. In a study conducted by myself and Hiro Ito (revision soon to be put online), we document the rise in CNY invoicing for Chinese exports and imports, and compare against JPY invoicing for Japanese exports and imports. ... In the study, we employ a panel time series analysis to predict invoicing, and conclude that 2010 levels of CNY invoicing of exports are below model-predicted levels, suggesting further increases in home currency invoicing are plausible.

[There are graphs showing the change over time in the original post.]

Consider The Equilibrium: Salt Shakers At Restaurant Tables

Economist's View - Wed, 09/11/2013 - 11:15pm

Why do salt shakers at restaurants "benefit diners who like less salt"?

Answer here.

Bridge faces long odds - The Register-Guard

Oregon Political Headlines - Wed, 09/11/2013 - 11:12pm

Bridge faces long odds
The Register-Guard
The Oregon Legislature must meet in special session before Sept. 30 to authorize funding for the project. Earlier this year, state lawmakers approved spending $450 million for the project that is contingent on a similar contribution from Washington ...
Herrera Beutler says revived CRC plan doesn't qualify for federal moneyThe Columbian

all 3 news articles »

'What Defunding Means'

Economist's View - Wed, 09/11/2013 - 11:11am

Paul Krugman:

What Defunding Means: ...Republican leaders are actually saying ... they intend to go full-on blackmail, holding America’s full faith and credit hostage to the sacred goal of crippling Obamacare before it gets going. Assumptions that they will in fact blink are entirely faith-based. And this article about the plight of the near-old — those close to, but not yet at, the Medicare age — shows what it is the GOP is willing to fight for, indeed to endanger the stability of world financial markets: THE sweeping federal health care law making its major public debut next month was meant for people like Juanita Stonebraker, 63, from Oakland, Md., who retired from her job in a hospital billing office a year and a half ago. She was able to continue her health insurance coverage from the hospital for a time, but when she tried to find an individual policy on her own, none of the insurers she contacted would cover her because she was diabetic. Yes: Republicans are willing to push the economy and the financial system to the edge of disaster in order to deny people like Ms. Stonebraker coverage. Awesome, isn’t it?

Here's more:

House Speaker John Boehner's complicated scheme to pass a budget that defunds Obamacare without really defunding Obamacare has hit a major snag: the far right isn't buying it. They want the real confrontation: defund Obamcare or shut down government. Boehner had hoped to vote on the measure Thursday, but has been forced to postpone the vote by the opposition in his own party. Once again, he just doesn't have the votes for it. ...

[T]he Club for Growth, Heritage Action and other groups [are all] lining up in vocal opposition to Boehner's plan. None are buying Majority Leader Eric Cantor's consolation prize—demanding an Obamacare delay in exchange for lifting the debt ceiling.

Boehner doesn't want a government shutdown on his head, no more than he wants responsibility for the inevitable financial crisis resulting from not raising the debt ceiling. If he can't rein in the teabaggers in his caucus, he's going to have to abandon them, and come up with a budget that he can get Democratic support for. That's just about the only option left to him, unless he decides to follow in Newt Gingrich's footsteps.

Back to Krugman:

As some of us have been saying, financial markets are way too complacent about the debt ceiling...

'Broken Job Ladders and the Great Recession: Fast Food Edition'

Economist's View - Wed, 09/11/2013 - 2:21am

Arin Dube at his blog:

Broken Job Ladders and the Great Recession: Fast Food Edition: One of the features of the current labor market is that the usual mechanisms by which people find better quality jobs have broken down, as net job creation in manufacturing sector, larger establishments and more established firms—all of which tend to pay better—have fallen relatively more. A key avenue for mobility, transitions between jobs, took a dive with the onset of the Great Recession, and has not recovered. In a recent paper, Giuseppe Moscarini and Fabien Postel-Vinay call this the failure of the job ladder.

One of the consequences of a broken job ladder is that workers take—and stick around in—less than ideal jobs like fast food. But the failure of the job ladder does not impact all workers equally. Higher-credentialed workers have more opportunities to get some job—any job—than their lower-credentialed counterparts. A college graduate can get a job at McDonald’s if she wants to, but a high school grad will have a hard time getting a job in finance. So as the labor market is stuck in a low gear, an increasing share of fast food vacancies are filled with people who may not have taken such jobs in a healthy labor market, or may have climbed up the job ladder to better opportunities. This is a form of skills-mismatch, but one that is induced by demand conditions. ... [evidence] ...

Overall, the evidence suggests that we have a stock of misallocated workers in jobs due to weak demand. When hiring kicks into a higher gear, it won’t just be the new job creation for low-credentialed workers that will help reduce their unemployment rate. When the job ladder starts working again, it will also pull out over-qualified workers from fast food checkout counters which will help their lesser-credentialed counterparts. A final observation: if we want to understand what moves the low-wage service job share of employment for non-college-educated workers, it’s not just technology and polarization that matter; pulls and pushes due to labor market slack matter as well. While I am looking at somewhat different questions, Dean Baker recently made a similar argument as well.

Oregon's new medical mediation law helps bad doctors, national group says - OregonLive.com

Oregon Political Headlines - Tue, 09/10/2013 - 4:24pm

Oregon's new medical mediation law helps bad doctors, national group says
OregonLive.com
In March, the Oregon Legislature approved it overwhelmingly, hailed as significant tort reform. On Tuesday Public Citizen, a consumer advocacy group founded by Ralph Nader, said the new law hurts public safety by making it easier for bad doctors to ...

'The Rich Get Richer Through the Recovery'

Economist's View - Tue, 09/10/2013 - 1:53pm

In case you missed this news today:

The Rich Get Richer Through the Recovery, by Annie Lowrey, NY Times: An updated study by the prominent economists Emmanuel Saez and Thomas Piketty shows that the top 1 percent of earners took more than one-fifth of the country’s total income in 2012, one of the highest levels recorded in the century that the government has collected the relevant data. The top 10 percent of earners took more than half of all income. That is the highest recorded level ever. The figures underscore that even after the recession the country remains in a kind of new Gilded Age, with income as concentrated as it was in the years that preceded the Great Depression, if not more so. ...