What if the DOGE were run by Arnold Kling?
Scott Lincicome explains “what Biden and Harris got wrong on inflation.” Two slices:
Plenty of other data points and anecdotes all come to the same conclusion: Even though inflation has moderated a lot in recent months, and even though the U.S. economy was (is) generally humming along, the dramatic, generational price increases we all experienced in 2021-23 left a deep scar on most voters’ minds.
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Probably the biggest mistake was the Biden administration’s and congressional Democrats’ repeated decision to “go big” on government spending, starting with the $1.9 trillion American Rescue Plan and then continuing with several massive “industrial policy” laws—the Infrastructure Investment and Jobs Act, CHIPS Act, and Inflation Reduction Act—potentially spending trillions more.
Specifics of the ARP aside, it was broadly ill-conceived in two big ways. First, its timing was off. As we discussed way back in February 2021, the ARP’s general outline was first crafted when the U.S. economy was in a much more perilous position—before vaccines began to proliferate widely and economies began to reopen—than it was when the bill finally became law in March of that same year. By that time, it was abundantly clear that the ARP would be adding rocket fuel to an economy that had already started taking off—thanks in part to previous rounds of government stimulus.
Second, the ARP erroneously assumed that the pandemic recession was much like the Great Recession, which supposedly taught us that fiscal stimulus should always “Go Big” to avoid a prolonged labor market funk.
The world is watching to see how new Mexican President Claudia Sheinbaum will govern—as a pragmatist who wants investment, or a leftist who tries to solidify one-party rule. Two early moves suggest the latter, which may be why the peso keeps falling against the dollar.
First she suggested she would defy the Supreme Court if it declared parts of a constitutional amendment on judicial reform to violate the basic tenets of the constitution. The amendment was passed by her predecessor and her Morena party, and it makes all judges run for election. The high court backed down after her threat, failing to garner the eight votes necessary to roll back the reform. The court was the last barrier to Morena’s rewrite of the constitution to solidify its power.
Innovation and automation continue both to substitute for and complement human labor in welfare-enhancing ways, as documented in a new paper by Yong Suk Lee, Toshiaki Iizukak, and Karen Eggleston. Here’s the abstract:
How do employment, tasks, and productivity change with robot adoption? Unlike manufacturing, little is known about these issues in the service sector, where robot adoption is expanding. As a first step towards filling this gap, we study Japanese nursing homes using original facility-level panel data that includes the different robots used and the tasks performed. We find that robot adoption is accompanied by an increase in employment and retention and the relationship is strongest for non-regular care workers and monitoring robots. The share of specific tasks performed by robots increases with the adoption of the respective type of robot, leading to reallocation of care worker effort to “human touch” tasks that support quality care. Robots are associated with improved quality (reduction in restraint use and pressure ulcers) and productivity.
Covid masks, vaccine mandates, lockdowns and school closures were pseudo-science, just like leeches, lobotomy and eugenics.
