Asset Pricing Mooc, Resurrected

The online class "Asset Pricing" is resurrected, at least half-way.

The videos, readings, slides/whiteboards and notes are all now here on my webpage.  If you just want the lecture videos, they are all on Youtube, Part 1 here and Part 2 here.

These materials are also hosted in a somewhat prettier manner on the University of Chicago's Canvas platform. You may or may not have  access to that. It may become open to the public at some point.

I'm working on the quizzes, problems, and exams, and also on finding a new host so you can have problems graded and get a certificate. For now, however, I hope these materials are useful as self-study, and as assignments for in-person classes. I found that sending students to watch the videos and then having a more discussion oriented class worked well.

What happened? Coursera moved to a new platform. The new platform is not backward-compatible, did not support several features I used from the old platform, and some of the new platform features don't work as advertised either. Neither the excellent team at U of C, nor Coursera's staff, could move the class to the new platform. And Coursera would not keep the old platform open. So, months of work are consigned to the dustbin of software "upgrades," at least for now.

Obviously, if you are thinking of doing an online course, I do not recommend that you work with Coursera. And make sure to write strong language about keeping your course working in the contract.

What an amazing marketing tool!

Have you stopped using Dentrix mobile? If so, may I ask what you are using as a login tool instead? If there is something easier and more tightly integrated with your Dentrix software other than Dentrix Mobile, I would like to know about it. 

Maybe it’s just that you don’t know what Dentrix Mobile is or you haven’t been taught how to use it.  Over the past few years, I have seen a decline in awareness and use of Dentrix Mobile so I felt it was time to re-post about this useful tool and remind you that it is part of your customer service agreement. 

One of the greatest marketing tasks you can do at your practice is follow up with patients after a surgical or challenging appointment. You can easily log into Dentrix Mobile and see your appointment book and look up patient information to make those important calls. 

I just finished two of the best books on the market right now for the dental practice, Everything is Marketing and Becoming Remarkableby Fred Joyal. One thing that he recommends in his books is for the doctor to call new patients, welcome them to the practice and ask if there is anything he or she should know before their visit tomorrow. What an amazing marketing tool! This can easily be done using your Dentrix Mobile service because you can make the calls from anywhere and see your appointment book at a glance.

If you would like to read my blog from 2013 (which is still very pertinent today) about Dentrix Mobile, CLICK HERE to be directed.

Don't settle on the defaults

Okay, I get it. You are not quite ready to dive into electronic forms, load them up on your website for patients to fill out online or link them up to an iPad. If you are wanting to go paperless, then using the document center in Dentrix is going to be how you will manage all your paper forms. What I am finding with so many offices is that they think they have to settle with the default settings that came with the Dentrix installation.

Since the document center will be your best friend when it comes to paper storage, here are some tips to make it work as best as it can for you.

When you think of the document center, think of it like a big file cabinet with hanging file folders and then you put the pieces of paper into it. I want you to customize the names of the hanging file folders just like you would in a real file cabinet.

Here are some examples . . .

• Referring Doctor Letters
• Lab Slips
• Original Forms from Paper Chart
• New Patient Forms
• Health History Update (of course if you read my blog you know that I love the Questionnaire module for HHX)
• Consent Forms
• Pre-Op Forms

So how do you edit the category types? Open the document center > setup > document types, then you can edit the existing names and/or create new ones. Create verbiage that your team will understand and will make it easier to find information.

NOTE: If you are using the feature that sends a virtual copy of the patient billing statement to the document center, make sure you keep the Billing Statements line item at the top of the list.

Micro vs. Macro

The cause of sclerotic growth is the major economic policy question of our time. The three big explanations are 1) We ran out of ideas (Gordon); 2) Deficient "demand," remediable by more fiscal stimulus (Summers, say) 3); Death by a thousand cuts of cronyist regulation and legal economic interference.

On the latter, we mostly have stories and some estimates for individual markets, not easy-to-use  government-provided statistics. But there are lots of stories.

Here is one day's Wall Street Journal reading while waiting for a plane last Saturday:

1) Holman Jenkins,

... unbridled rent seeking.  That’s the term economists use for exercising government power to create private gains for political purposes. 

Channelling Jefferson,

Mr. Obama’s bank policy dramatically consolidated the banking industry, which the government routinely sues for billions of dollars, with the proceeds partly distributed to Democratic activist groups. 

His consumer-finance agency manufactured fake evidence of racism against wholesale auto lenders in order to facilitate a billion-dollar shakedown.

 His airline policy, urged by labor unions, led to a major-carrier oligopoly, with rising fares and profits. 

His FDA is seeking to extinguish small e-cigarette makers for the benefit of Big Tobacco and Big Pharma (whose smoking-cessation franchise is threatened by cheap and relatively safe electronic cigarettes). 

His National Labor Relations Board, by undermining the power of independent franchisees, is working to cartelize the fast-food industry for the benefit of organized labor.

Summing up,

We could go on. Mr. Obama’s own Council of Economic Advisers complains about the increasing cartelization of the U.S. economy—as if this were not a natural output of regulation. In a much-noted Harvard Business Review piece this spring, James Bessen, an economist, lawyer and software entrepreneur, cites increased “political rent seeking” to explain the puzzle of rising corporate profits in the absence of job creation and economic growth.

The truth is, government playing neutral arbiter over the private economy doesn’t produce rents. A stable and predictable regulatory system produces only mingy or non-existent rents.

2) Uber class action buffet

Federal judge Edward Chen on Thursday rejected a $100 million settlement in a class action alleging that Uber misclassified drivers as independent contractors. That’s a big pot of cash, but the judge says the ride-hailing company can be raided for billions more....Judge Chen complained, however, that the settlement required class members to drop all employment-related claims (e.g., minimum wage, rest and meal breaks and workers’ compensation) ...he settlement would have pre-empted at least 15 lawsuits for employment-related claims as well as cases “before various administrative bodies such as the NLRB.”...the settlement would have scotched lawsuits brought under California’s Private Attorneys General Act—known among businesses as the “bounty hunter law”—that lets private attorneys litigate labor, safety and health code violations on behalf of the state. California pays the lawyers’ fees and keeps 75% of the bounty. The state’s Labor & Workforce Development Agency carped that the statutory penalties against Uber could exceed $1 billion.  

Uber brings flexible employment to thousands, and dramatically better and cheaper rides to consumers and businesses. Whatever you think of contractors vs. employees, nothing in this improves productivity and economic growth, or encourages the needed massive investment towards self-driving ubers.

3) You don't need a dentist to fill a cavity Whether (cheaper, less licensed) dental therapists will be allowed to provide basic services especially in poor areas where there are no dentists.

4) How Obama’s FDA Keeps Generic Drugs Off the Market

 One of the biggest factors fueling the angst over drug prices in the U.S. is that some older medicines that should be sold cheaply as generics are still priced very high, often owing to a dwindling number of generic competitors ..in recent years the Food and Drug Administration has imposed on generic firms many of the same costly requirements that the agency applies to branded-drug makers.  

In 2003...we estimated that it cost less than $1 million for a firm to file a generic-drug application. ...Today, filing a generic application requires an average of about $5 million and can cost as much as $15 million.... 

For generics filed in 2009, the median review time exceeds three years. Yet generics launched in 2015 took about four years for the FDA to approve, since less than 2% of applications were approved on their first submission.    

A new FDA draft regulation...would force the generics to clutter their drug labels with defensive advisories to avoid “failure to warn” lawsuits. Legal fees stemming from the regulation would add over $5 billion to annual health-care costs, rising to $8.6 billion by 2024, ...

And this is just one morning's reading of one paper's opinion section while sipping coffee at the airport. Even the New York Times is waking up to the apres-Obama regulatory deluge.

As these stories make clear, the problem is not benevolent but ham-handed interventionism. The problem, much tougher, is best described as "cronyism." A veneer of public purpose stifles markets, to drive profits to connected parties in return for political support.

Can we really screw up every single market but make it all up with "demand?" The "ideas" and "stimulus" approaches presume everything else in the economy is working just fine. Is investment really slow only because there are, fundamentally, just no good ideas to invest in any more?

The deeper economic issue is whether "macro" and "growth" outcomes really can be separated from "micro" distortions in each market.

The new voodoo

Scott Sumner sums up contemporary stimulus proposals well

...Old hydraulic Keynesianism from the 1960s was already a pretty implausible model. But what's happened since 2009 involves not just one, but at least five new types of voodoo: 

1. The claim that artificial attempts to force wages higher will boost employment, by boosting AD.

2. The claim that extended unemployment benefits---paying people not to work---will lead to more employment, by boosting AD.

3. The claim that more government spending can actually reduce the budget deficit, by boosting AD and growth. Note that in the simple Keynesian model, even with no crowding out, monetary offset, etc., this is impossible.

4. More aggregate demand will lead to higher productivity. In the old Keynesian model, more AD boosted growth by increasing employment, not productivity.

5. Fiscal stimulus can boost AD when not at the zero bound, because . . . ?

In all five cases there is almost no theoretical or empirical support for the new voodoo claims, and lots of evidence against. There were 5 attempts to push wages higher in the 1930s, and all 5 failed to spur recovery. Job creation sped up when the extended UI benefits ended at the beginning of 2014, contrary to the prediction of Keynesians. The austerity of 2013 failed to slow growth, contrary to the predictions of Keynesians. Britain had perhaps the biggest budget deficits of any major economy during the Great Recession, job growth has been robust, and yet productivity is now actually lower than in the 4th quarter of 2007.

Interview, talk, and slides

I did an interview with Cloud Yip at Econreporter, Part I and Part II, on various things macro, money, and fiscal theory of the price level. It's part of an interesting series on macroeconomics. Being a transcript of an interview, it's not as clean as a written essay, but not as incoherent as I usually am when talking.

On the same topics, I will be giving a talk at the European Financial Association, on Friday, titled  "Michelson-Morley, Occam and Fisher: The radical implications of stable inflation at the zero bound," slides here. (Yes, it's an evolution of earlier talks, and hopefully it will be a paper in the fall.)

And, also on the same topic, you might find useful a set of slides for a 1.5 hour MBA class covering all of monetary economics from Friedman to Sargent-Wallace to Taylor to Woodford to FTPL.  That too should get written down at some point.

The talk incorporates something I just figured out last week, namely how Sims' "stepping on a rake" model produces a temporary decline in inflation after an interest rate rise. Details here. The key is simple fiscal theory of the price level, long-term debt, and a Treasury that stubbornly keeps real surpluses in place even when the Fed devalues long-term debt via inflation.

Here is really simple example.


Contrast a perpetuity with one period debt, and a frictionless model. Frictionless means constant real rates and inflation moves one for one with interest rates
$$ \frac{1}{1+i_t} = \beta E_t \frac{P_t}{P_{t+1}} $$
The fiscal theory equation, real value of government debt = present value of surpluses,  says
$$\frac{Q_t B_{t-1}}{P_t} = E_t \sum \beta^j s_{t+j}$$
where Q is the bond price, B is the number of bonds outstanding, and s are real primary surpluses. For one period debt Q=1 always. (If you don't see equations above or picture below, come back to the original here.)

Now, suppose the Fed raises interest rates, unexpectedly,  from \(i\) to \(i^\ast\), and (really important) there is no change to fiscal policy \(s\). Inflation \(P_{t+1}/P_t\) must jump immediately up following the Fisher relation. But the price level \(P_t\)might jump too.

With one period debt, that can't happen -- B is predetermined, the right side doesn't change, so \(P_t\) can't change. We just ramp up to more inflation.

But with long-term debt, any change in the bond price Q must be reflected in a jump in the price level P. In the example, the price of the perpetuity falls to
$$ Q_t = \sum_{j=1}^\infty \frac{1}{(1+i^\ast)^j} = \frac{1+i\ast}{i^\ast}$$
so if we were expecting P under the original interest rate i, we now have
$$\frac{P_t}{P} = \frac{1+i^\ast}{1+i} \frac{i}{i^\ast}$$
If the interest rate rises permanently from 5% to 6%, a 20% rise, the price level jumps down 20%. The sticky price version smooths this out and gives us a temporary disinflation, but then a long run Fisher rise in inflation.

Do we believe it? It relies crucially on the Treasury pigheadedly raising unchanged surpluses when the Fed inflates away coupons the Treasury must pay on its debt, so all the Fed can do is rearrange the price level over time.

But it tells us this is the important question -- the dynamics of inflation following an interest rate rise depend crucially on how we think fiscal policy adjusts. That's a vastly different focus than most of monetary economics. That we're looking under the wrong couch is big news by itself.

Even if the short-run sign is negative, that is not necessarily an invitation to activist monetary policy which exploits the negative correlation. Sims model, and this one, is Fisherian in the long run -- higher interest rates eventually mean higher inflation. Like Friedman's example of adjusting the temperature in the shower, rather than fiddle with the knobs it might be better to just set it where you want it and wait.

Clinton Plan

The WSJ asked me to review the Hillary Clinton economic plan, motivated by her August 11 speech introducing it.  The Op-Ed is here.

I read a good deal of the "plan" on hillaryclinton.com. What I discovered is that there is so much plan that there really isn't any plan at all.



For example, follow me down to the  Fact sheet at the bottom of the website to figure out just what the "infrastructure" plan is about.  Some snippets:

Clinton will make smart, targeted, and coordinated investments to increase capacity, improve road quality, and reduce congestion 

Clinton will prioritize and increase investments in public transit to connect Americans to jobs, spur economic growth, and improve quality of life in our communities. And she will encourage local governments to work with low-income communities to ensure that these investments are creating transit options that connect the unemployed and underemployed to the jobs they need. She will also support bicycle and pedestrian infrastructure 

Clinton will make smart, coordinated investments that upgrade our aging rail tunnels and bridges, expand congested highway corridors, eliminate dangerous at-grade railway crossings, and build deeper port channels to accommodate the newest and largest cargo ships. Clinton will also focus on vital “intermodal” transfer points between trucks, rail, and ships—including the “last-mile connectors” between different modes, like the local roads that connect highways to ports. She is committed to initiating upgrades of at least the 25 most costly freight bottlenecks by the end of her first term. (bold italics in the original) 

The Federal Aviation Administration is currently pursuing a “NextGen” upgrade program... But these efforts have fallen chronically behind schedule and well short of expectations. Clinton will get this crucial program back on track and ensure that it is managed effectively and with accountability. 

Clinton will also invest in building world-class American airports...with reliable and efficient connections to mass transit. ... 

committing that by 2020, 100 percent of households in America will have access to affordable broadband that delivers world-class speeds sufficient to meet families’ needs.

A wide-ranging system of advanced energy fueling stations for the 21st century fleet. A network of roadway sensors capable of alerting drivers to a dangerous icy patch a mile ahead. 

Clinton will invest in creating a world-leading passenger rail system to meet rapidly growing demand and build a more mobile America. 

...Clinton’s plan will modernize our pipeline system, increase rail safety, and enhance grid security. It will also build new infrastructure to power our economic future and capture America’s clean energy potential. ... 

We need a bold agenda to revitalize our aging water infrastructure and make it more sustainable and energy efficient. Clinton will work to harness both public and private resources to support these efforts. 

Modernizing our dams and levees ...our efforts to maintain these critical structures are haphazard and under-resourced ...We need to substantially increase funding to inspect these structures, bring them into good repair, and remove them where appropriate. ... 

Clinton will support efforts to increase dams’ capacity to deliver affordable and reliable electricity while reducing carbon pollution.

And it goes on like this.

The positive view of all this is  that someone running the vast American bureacracy should have a detailed plan for what they want that bureuacracy to do.  Well, there is plenty of detail here, and it's a good bet that Donald Trump has never thought about traffic jams at intermodal transfer facilities.

So how can I say there is no "plan?"

The other job of an Administration is to set priorities, which means something has to come second. This is what Clinton will propose in her first 100 days, and what she will accomplish in 5 years, with $50 billion a year? You must be kidding. Turning Amtrak alone into a "world-leading passenger rail system" would swallow her $275 billion

There are no numbers here anywhere. The $275 billion is clearly just a made up number that sounds sortof big but not so big as to attract tax-and-spend criticism. Because that is the last number in the whole document. In my rough calculation, she blew $275 billion by the first paragraph. As a consequence,  analysts who calculate how many "jobs" the "Clinton plan" will create are just making it up too.

There is no timeline or process The President of the US is not a King or dictator who waves her hands and upgrades at intermodal transfer facilities just happen. The president appoints cabinet secretaries, who oversee a bureaucracy, which must, by law conducts proper cost benefit analysis, follow the Administrative Procedures Act,  submit plans for EPA review, and so on.

The job of an Administration is also to understand and figure out how to surmount the institutional barriers that have stopped all of these fine and very old ideas from happening before. If Governor Brown and President Obama have not been able to lay a foot of high-speed track in 8 years, how is she going to do so much better?

As I mentioned in the oped, it fails to ask, why are these things problems in the first place? Apparently, traffic jams where trucks unload trains happen when the President is not, herself, there to run things. It's an implicitly damning condemnation of her predecessor -- he was either not studious enough to do his homework to this detail, or insufficiently "committed to initiating upgrades""at  costly freight bottlenecks"

In my world, things go wrong when markets go wrong, or the structures of government fail. In this world, things happen only on the will and attention of the President, including traffic jams. The people in charge now are either idiots, Republicans blocking progress, or just insufficiently guided by the great leader on top.  One need do not analysis of why things are going wrong, just "fight" to fix them. 

This "plan" implies a stinging rebuke of her predecessor, when you think about it. If all it takes is the force of Hllary's will to accomplish all this in 5 years for $275 billion, just why did he fail in 8 years with about $10 trillion? Maybe, just maybe, President Obama was trying darn hard, using the same methods, and came up short for a reason?


There is, literally, no plan. I looked hard through the website, and this "fact sheet" is the bottom level for infrastructure. Yet it keeps referring to what "the plan" will do, with no citations or links. That's all over the website. Thousands of pages talk about the plan, but no pages are, grammatically the plan itself.

Lost in details   And this is just one fact sheet, 6 levels deep in the website.  You get here from (click on bold) 

1) Hllaryclinton.com

2) About / Act / Issues / Shop / More / Español / Donate

3) All Issues / Economy and jobs / Education / Environment / Health / Justice and equality / National security

4) A fair tax system / Jobs and Wages /  Paid family and medical leave .../ Fixing America's infrastructure / ... (17 boxes in all)

5) As president, Hillary will:

• Repair and expand our roads and bridges....
• Lower transportation costs and unlock economic opportunity by expanding public transit options. ...
• Connect all Americans to the internet.... 
• Invest in building world-class American airports and modernize our national airspace system. ..
• Build energy infrastructure for the 21st century. ..

(Looking over all 17 tabs of the "Economy and Jobs" tab, I lost count at 139 such bullet points.)

And finally this  Fact sheet. Transport is actually one of the best thought out of all the tabs.

The point, if each such fact sheet promises that Mrs. Clinton is "committed" to details as fine as solving intermodal freight bottlenecks (the bold italics really got to me), across all 17 tabs of economic policy x 7 tabs of policy areas, she and her administration will get nothing done.

In sum, I think the picture I painted is unavoidable. Clinton and her team are well meaning, but this document (the website) displays an unbelievable naivete about how American government works. Every possible "policy solution" to every perceived problem in America got thrown in, with no thought of where the problems came from, no acknowledgement that good people have been trying hard for years, and that American government has an important set of checks and balances and a policy process. No, she will wave her hand and all will be well. 

Perhaps she and her team are wiser, and this is just a campaign document designed to please media analysts and voters. But if that is the case, it displays an unbelievable disdain for the intelligence of the media and voters she wishes to attract. 

Red Tape 

The thousands of pages of the website do address how Mrs. Clinton will succeed where President Obama failed: She will "break through washington gridlock" and get rid of "red tape." Period. 

This had me guffawing. Really? That's all it takes? Too bad President Obama never had that idea! (He did, and had an office devoted to the project. With little success.) 

Her speech made some progress on just how she will break through "gridlock": 

What we need is serious, steady leadership that can find common ground and build on it based on hard but respectful bargaining. 

Leadership that rises above personal attacks and name calling, not revels in it.... 

ogether, we'll make full use of the White House's power to convene. We'll get everyone at the table – not just Republicans and Democrats, but business and labor leaders...academics and experts... and, most importantly, all of you. I want working people to have a real say in your government again.

That means we have to get unaccountable money out of our politics, overturn Citizens United, and expand voting rights, not restrict them. 

Starting even before the election, we will bring together leaders from across our economy and our communities for meetings on jobs, American competitiveness, and working families. 

I omitted the, well, "personal attacks" on Donald Trump, so we can think about just how plausible this is once he's off the stage. And then it's just roll-your-eyes funny. The major proposal is... more Town Hall meetings and "listening" tours?  I would think, given current scandals, she'd be a little circumspect about "money in politics," and if you want to show your "listening" abilities, perhaps those who think Citizens United was a good idea might be a place to start.

If Mrs. Clinton wants to listen, and reach out to Republicans, she doesn't need to "convene" everyone at the table. And least of all, she doesn't need more policy-wonks stuffing her campaign website with every little idea that public policy schools and liberal think tanks dream up. Paul Ryan's "a better way" plan is right there on the internet. She should get a good glass of wine, sit down with that plan, pick 5 things she can live with, and go with them or see how to meet them half way.

This should be taken as constructive and nonpartisan criticism. Do not mistakenly imply anything about Mr. Trump in here.  Mrs. Clinton is daily more likely to be our next president. I hope dearly that she could make some progress in coming to compromise on some of the simple and obvious steps that our country needs to take, steps pretty much every bipartisan commission agrees on -- tax and immigration reform, yes, infrastructure, reform of much regulatory process, and so on. She doesn't have to agree on policy, but an approach much more like the famous Shultz memo to Reagan -- written in November! -- is much more likely to succeed.

Sadly, though, this seems like a road to four more years of gridlock.

Zoning common sense

Kate Kershaw Downing has posted a worthy letter of resignation from the Palo Alto Housing commission, that seems to be going viral.

Palo Alto is absurdly expensive. People who want to come here for jobs can't afford to live anywhere nearby.  What to do about it?

 I have repeatedly made recommendations to the Council to expand the housing supply in Palo Alto so that together with our neighboring cities who are already adding housing, we can start to make a dent in the jobs-housing imbalance that causes housing prices throughout the Bay Area to spiral out of control. Small steps like allowing 2 floors of housing instead of 1 in mixed use developments, enforcing minimum density requirements so that developers build apartments instead of penthouses, legalizing duplexes, easing restrictions on granny units, leveraging the residential parking permit program to experiment with housing for people who don’t want or need two cars, and allowing single-use areas like the Stanford shopping center to add housing on top of shops (or offices), would go a long way in adding desperately needed housing units while maintaining the character of our neighborhoods and preserving historic structures throughout.

She also warns

 If things keep going as they are, yes, Palo Alto’s streets will look just as they did decades ago, but its inhabitants, spirit, and sense of community will be unrecognizable. A once thriving city will turn into a hollowed out museum.  

I found Ms. Downing's letter noteworthy in that it did not include the usual Bay Area nostrums -- the government must build "affordable housing," freeze rents, ban new construction (yes, this is proposed) or otherwise take counterproductive actions. Those steps can preserve some existing low-income people at high cost -- creating a different kind of museum, really -- but make matters even worse for people who want to move here to work. Few local voices appreciate that expanding supply can do a lot to lower prices, and enhance age and economic diversity.

As the post notes, the coverage and comments in the local newspaper are worth reading as well.  These are local issues, handled by local governments, responsive to the wishes of their local residents. A lot of residents like things just as they are and as they are going, or have quite different views of cause and effect of housing policies.

I'm sorry Ms. Downing is leaving. Good local government depends on hard work by people like her, not crabby bloggers. We all spend too much time focused on Washington and Presidents rather than these kinds of important issues.

Update: Alex Tabarrok at Marginal Revolution on the same letter. Alex points out just how much we have all lost property rights.

Regional price data

Some big news, to me at least: The Bureau of Economic Analysis is now producing "regional price parities" data that allow you to compare the cost of living in one place in the US to another. The BEA news release release is here; coverage from the tax foundation here (HT the always interesting Marginal Revolution). In the past, you could see regional inflation -- changes over time -- but you couldn't compare the level of prices in different places.

The states differ widely. It is in fact as if we live in different countries with different currencies. Hawaii (116.8) vs. Mississippi (86.7) is bigger than paying in dollars vs Euros (118) Yen (times 100, 1.01) and almost as big as pounds (1.30)

The variation across city/country and across cities is even higher:

In 2014, the metropolitan area with the highest RPP was Urban Honolulu, HI (123.5). Metropolitan areas with RPPs above 120.0 also included San Jose-Sunnyvale-Santa Clara, CA (122.9), New York-Newark-Jersey City, NY-NJ-PA (122.3), Santa Cruz-Watsonville, CA (121.8), San Francisco-Oakland-Hayward, CA (121.3), and Bridgeport-Stamford-Norwalk, CT (120.4). The metropolitan area with the lowest RPP was Beckley, WV (79.7), followed by Rome, GA (80.7), Danville, IL (81.1), Morristown, TN (81.9), and Jonesboro, AR (82.0).

No surprise, much of the variation is due to housing. Breaking it out, (look up your town here!)

San Francisco-Oakland-Hayward, CA
All items 121.3
Goods 108.4
Services: Rents 183.9
Services: Other 109.6

San Jose-Sunnyvale-Santa Clara, CA
All items 122.9
Goods 108.2
Services: Rents 200.7
Services: Other 109.3

Beckley, WV
All items 79.7
Goods 92
Services: Rents 52.8
Services: Other 92.5

There is still a 20% difference in the cost of goods and other services, but the variation in rents is really big. When you consider that the cost of real estate drives up other costs, its effect may be even larger: If the barbershop pays higher rent, and the barber pays higher rent, you're going to pay more for haircuts. And this is just rents. Since houses have thin rental markets, the true difference may be larger still. Also, rents are often controlled or poorly measured. I don't know how BLS deals with that.

You can see many uses for even more granular data. But since house price and rent are easy to get, you might get a good approximation by adding granular housing cost data to regional price data.

There are a lot of interesting issues here.

One question it raises is the true picture of inequality. Poor people, especially those who don't work, tend to live in low-rent areas. Relative to local prices, inequality may not be as bad as it seems. (I presume the BLS does something to adjust rents for quality of housing.)

One can also imagine that congresspeople from high price areas will soon ask for higher cost of living adjustments for benefits to their constituents.

This data ought to focus more attention on housing supply restrictions -- the main reason that rents vary so much.

It raises some puzzles too. I notice that the market for academics gives surprisingly little weight to cost of living variations. If you compare offers from a European and US university, nobody expects you to compare "100,000" in each place without converting currency. But nominal academic salaries are quite similar across chasms of cost of living. To some extent universities make it up with absurdly complex and inefficient housing subsidies, but that doesn't make much sense either.  I'm curious to what extent this phenomenon occurs in other markets.

And... who knows? New data always leads to interesting new research. Kudos to the BEA for making this available.

Comments from people who know how this data is constructed, with good parts and pitfalls, are especially welcome.

Update

A colleague who knows a lot about these issues sent some useful information:

...it’s my understanding from conversations with a few people and brief reading on methodology (https://www.bea.gov/regional/pdf/RPP2015.pdf) that they are actually pretty poor measures of local prices. Essentially all of the variation comes from relatively poorly measured housing prices, almost by construction.

That’s because the only local retail price data going into the BEA indices comes from the BLS CPI data, which covers less than 30 cities (and not even on identical products across locations). They’re extrapolating from this small number of cities to all cities in the US by just taking the nearest city with CPI data and re-weighting it with local expenditures shares. So for example, there is no retail pricing data collected for Columbus, but they show up in the BEA metro area price parities. So where are they getting price data from? They just take the prices collected in Cleveland (where BLS collects data) and assume that are the same in Columbus with potentially slightly different weights in the consumption basket. So even if there is wide heterogeneity across cities in prices... this is for the most part not going to get picked up in their local price measures, since they’re imputing prices in most cities using pricing data from other cities. Since most states have either 0 or 1 BLS price collection cities, this means that close to 100% of the within-state variation in their price levels is coming from housing. So to close to a first approximation, these purchasing power indices are really just house price indices since they basically aren’t using data on local prices for anything except housing.

But the housing price data is coming from ACS with various hedonic adjustment. That is notoriously challenging, especially across locations. It’s much easier but still hard to compute house price changes across time using repeat sales indices like core logic, but the housing stock is fundamentally heterogeneous across space which puts huge standard errors on trying to construct the price for an equivalent unit of housing across space, so I take the exact numbers there with a big grain of salt.

So overall I think these indices basically just tell you that housing is more expensive in san francisco and NYC than in oklahoma, but I think their quantitative usefulness is pretty limited. I think to really measure price level differences across locations, scanner data is much more useful since we can measure identical products as well as product availability and varieties. (A weakness is that this can’t capture differences in service prices across space, but it’s hard to adjust for quality there just like for housing, even if we had a census of all service providers prices everywhere in the country). Jessie Handbury and David Weinstein’s 2014 restud paper is the best study I know of trying to take seriously measuring retail price levels across locations using that kind of data. I have no idea how it lines up with the BEA numbers.

From which I take: 1) This is very important 2) The BLS took a useful stab at it with the numbers they have but 3) understand the large limitations of the BLS numbers before you use them 4) get to work, big-data economists, on using scanner data, twitter feeds, amazon purchases, zillow, and everything else you can get your hands on, to produce 21st century granular price indices!

Update 2:

Enrico Moretti has already written a very nice paper, Real wage inequality (Also here)  adjusting inequality measures for local cost of living.

At least 22% of the documented increase in college premium is accounted for by spatial differences in the cost of living.

He creates local price indices. He also takes on the question whether higher prices in hot cities represent more housing -- better amenities -- or just higher prices which you have to pay in order to work high -productivity jobs.

It's the little things . . .

It’s the little things that matter.  I hear that statement all the time being out in the

dental industry working with dental practices from all over the country. I love it when I show clients something and their eyes light up because they now know something that is so simple but makes such a huge impact on their day.

Dentrix is by far the most comprehensive and feature-rich practice management software in the industry and this is why it is the leading software for dentists.  However, when a keystroke or menu maneuver helps you do something better, faster and easier, it is HUGE.

Here are some of the top “Ah-Ha” moments I have seen over my career as a certified Dentrix trainer.

• Printing the full day of Route Slips or sorting them.  When I walk into an office and I see in the Batch Processor 30-60 single Route Slips being printed, I know this office does not know how to print out the whole day at one time.  There are two ways to accomplish this . . .
• Office manager > Reports > Lists > Daily Appointment List > check mark Patient Route Slips and send to the Batch.  From this menu, you can also sort by provider or operatory.
• You can also print the Route Slips within the Daily Huddle Report.
• Filter the Office Journal.  If you have been reading my blog, you know how much I love the office journal and I recommend all teams use it for admin communication with patients.  However, I find that a lot of offices refuse to use it because it takes so long to load.  Good news! You can filter your office journal so it will load less information and speed it up.  Open the office journal and click on View and then Filters.  Here you can select only the information you want to list in your view and you can select a starting date so it doesn’t look back to the beginning of time.
• Lock your computer with a CTRL + ALT + DEL and select LOCK COMPUTER when you leave your workstation. This way, you do not have to close down all your Dentrix windows to secure your computer.

Let me know what some of your “Ah-Ha” moments are.  I would love to hear your stories and quick tips to share.  You can comment  on this post or email me directly.

Summers on growth and stimulus

Larry Summers has an important, and 95% excellent, Financial Times column. Larry is especially worth listening to. I can't imagine that if not a main Hilary Clinton adviser he will surely be an eminence grise on its economic policies. He's saying loud and clear what they are, so far, not: Focus on growth.


The title "the progressive case" for growth, is interesting enough. Perhaps Larry now uses the word "progressive" to describe himself. More importantly, Larry's audience here is the Clinton campaign and the Democratic party. He's saying loud and clear: you're not paying enough attention to growth, and growth ought to be at the center of the party, and the new Administration's, economic plans.

...many people, in their eagerness to focus on fairness, neglect the single most important determinant of almost every aspect of economic performance: the rate of growth of total income,

Hooray. Not only is this vitally important and factually correct, a growth oriented policy, if sold without the usual demonization, could well attract bipartisan support. That sentence could come from Paul Ryan's a better way

Alas, Larry blows that spirit right off the bat with a sentence that take a gold medal for convoluted calumny and bombastic bulverism:

Because those who champion strategies that centre on business tax-cutting and deregulation and favour the wealthy have placed the most emphasis on growth over the past 35 years, the objective of increasing growth has been discredited in the minds of too many progressives.

Translated into something approximating English: because people whose only and base motive was "favoring the wealthy" happened to advocate growth to sell their (as later described) useless tax-cutting and deregulation strategies, the goal of growth has become tarnished in the minds of good progressives.

This is below Larry -- in person I have always known him to recognize that conservatives and free-marketers have exactly the same dispassionate goal, advocate growth primarily to help the less well off, and tax-cutting and deregulation as time-proven policies that improve growth.  But, again, his audience is to the left, so perhaps one can excuse some I-hear-you agreeing with common demonizations.

But then he gets to well written and praiseworthy work, so good I must quote it in entirety:  

It can hardly be an accident that the decades of maximum growth, the 1960s and 1990s, also saw the most rapid job growth and most rapid increase in middle-class living standards.

Growth provides the wherewithal for increased federal revenue and so encourages the protection of vital social insurance programmes such as Social Security and Medicare.... 

Tight labour markets are the best social programme, as they force employers to hire and mentor inexperienced people in order to be adequately staffed. Some years ago, I estimated that for each 1 per cent point increase in adult male employment, the employment of young black men rose 7 per cent. More recent research confirms economic growth has an outsized benefit for younger people and minorities.

Rising growth has other benefits, as well. It strengthens the power of the American example in the world. It obviates the need for desperation monetary policies that risk future financial stability. Greater growth also has historically operated to reduce crime, encourage environmental protection and contributes to public optimism about the country that our children will inherit.

The reality is that if American growth continues to have a 2 per cent ceiling, it is doubtful that we will achieve any of our major national objectives.

If, on the other hand, we can boost growth to 3 per cent, interest rates will normalise, middle-class wages will rise faster than inflation, debt burdens will tend to melt away and the power of the American example will be greatly enhanced.

...the vast majority of job creation and income growth comes from the private sector. If the next president is lucky enough to oversee the creation of 10m jobs from 2017-20, more than 8m of them will surely come from businesses hiring in response to profit opportunities. 

All true, excellent, well-stated, and bipartisan (at least for the pre-Trump era). Jeb Bush's 4%, Paul Ryan's opportunity society agree totally. Heck, even Gary Johnson might find little to quibble with here. If growth could be the mantra for the Hilary Clinton administration, and if Larry can persuade his fellow "progressives," great things could follow.

And now to the remaining 5%:

There is no case for reducing already low corporate taxes or removing regulations unless it can be shown that these have costs in excess of benefits.

What is needed is more demand for the product of business. This is the core of the case for policy approaches to raising public investment, increasing workers’ purchasing power and promoting competitiveness.

No case? Really? The higher taxes, steadily more convoluted tax code, vast expansion of regulation (Dodd-Frank, Obamacare are just the start) that coincided with our epic slow growth, have nothing at all to do with that sorry experience?   There is absolutely nothing wrong with the microeconomics of the American economy and its vast administrative, judicial and regulatory state, we just need a bit more "demand?"

Leave aside the last 30 years of growth theory, which is silent on "demand," we can do nothing better than move around 1970s era IS and LM curves, and revive ideas from the 1930s?

Read the second paragraph carefully. "More demand" is the ""core of the case for policy approaches to raising public investment, increasing workers’ purchasing power and promoting competitiveness."

That "more demand" is the "core of the case" for (The Federal Government to borrow a lot of money and spend it on things labeled as) "public investment" admits up front that the actual value of such investment is at best secondary. Public investment in a great Ice Wall of Westeros on the southern border, or for high-speed trains from Tonopah to Winemucca, do just as well in boosting "demand."

What is needed is a serious negotiation: Fund needed infrastructure investment, but put in serious cost-benefit analysis,  buy it at reasonable prices, and so forth. That negotiation should start by abandoning the whole idea that we're doing it to provide "jobs" and "demand." If you're not wiling to do that, at least be honest and state that Mr. Trump's wall provides the same "demand."

Then explain to us how Japan has been at this for 20 years, producing no great shakes of growth.

"policy-approaches to... increasing worker's purchasing power" is another classic hidden-subject clause. I presume it means [The Federal Government, by legislation, regulation, or threat, will force companies to pay workers more, and then control employment to make sure those companies don't just fire workers or select better ones in order to ] increase [some] worker's purchasing power." Gary Johson's program also increases worker's purchasing power, and I don't think that's what Larry has in mind. I'm also curious where in modern economics forced transfers increase employment and long-run growth.

But in context, this is a small complaint. If Larry can persuade Mrs. Clinton and the "progressives" in the Democratic Party to focus on growth, to state goals for growth, and to hold themselves accountable for growth, then we can have an honest and very productive conversation about what's stopping growth and what steps can further it.

A world without cash

Max Raskin and David Yermack have a nice WSJ OpEd last week, "Preparing for a world without cash." The oped summarizes their related paper.

What would a government-backed digital currency look like? A country’s central bank would need to become a deposit-taking institution and hold accounts on behalf of citizens and businesses. All of their debits would be tracked on the central bank’s blockchain, a digital ledger resistant to tampering. The central bank would pay interest electronically by adjusting the balances of depositor accounts.

I'm a big fan of the idea of abundant interest-bearing electronic money, and that the Fed or Treasury should provide abundant amounts of it. (Some links below.) Two big reasons: First, we then get to live Milton Friedman's optimal quantity of money. If money pays interest, you can hold as much as you'd like. It's like running a car with all the oil it needs. Second, it is a key to financial stability. If all "money" is backed by the Treasury or Fed, financial crises and runs end. As Max and David say,

Depositors would no longer have to rely on commercial banks to hold their checking accounts, and the government could get out of the risky deposit-insurance business. Commercial banks that wished to keep making loans would raise long-term capital in the debt and equity markets, ending the mismatch between demand deposits and long-term loans that can cause liquidity problems.

However, there are different ways to accomplish this larger goal. Do we all need to have accounts directly at the Fed, and is a blockchain the best way for the Fed to handle transfers?


The point of the blockchain, as I understand it, is to demonstrate the validity of each "dollar" by keeping a complete encrypted record of its creation and each person who held it along the way.

Its archival blockchain links together all previous transfers of a given unit of currency as a method of authentication. The blockchain is known as a “shared ledger” or “distributed ledger,” because it is available to all members of the network, any one of whom can see all previous transactions into or out of other digital wallets

That, and a limited supply to control its value, was the basic idea of bitcoin. But when we are clearing transactions by transferring rights to accounts at the Fed, the validity of the "dollar" is not in question. It's at the Fed. And, the big advantage relative to bitcoin as I see it, the value of the dollar comes from monetary policy and ultimately the government's demand for "dollars" to be paid in taxes, not from a fixed supply as was the case with gold.

The blockchain also appears to clear transactions more quickly and offer some security advantages. The latter are very attractive -- in my personal life I've recently had the questionable pleasure of spending days enjoying 19th century finance of multi-day clearing times, obtaining notarized signatures and medallion guarantees, and sending pieces of paper around. But not yet ironclad -- The same week of the WSJ has a string of articles on the security of  Bitcoin following a recent hack.

The biggest stumbling block in my mind is "all members of the network, any one of whom can see all previous transactions into or out of other digital wallets." Per Max and David, this has pluses and minuses:

Tax collection would become much simpler, and tax evasion and money laundering could become prohibitively difficult.

Yet the centralization of banking under this system would also create a Leviathan with the power to monitor and control the personal finances of every citizen in the country. This is one of the chief reasons why many are loath to give up on hard currency. With digital money, the government could view any financial transaction and obtain a flow of information about personal spending that could be used against an individual in a whole host of scenarios. 

This really is a big change in how "money" works. Traditional cash has a lovely property, that it has no memory. Its physical properties determine its value in a way independent of its history. It is incredibly efficient, in a Hayek information sense. The economy does not need the memory of every transaction. Blockchains turn this around.

The anonymity of cash makes it enduringly popular -- cash holdings are up, not down in the digital age. The same week of WSJ reading had articles delving into the continuing popularity of cash, and the mechanics of handling it, the ongoing fury over the planeload of cash delivered by the Obama administration to Iran. It's not hard to figure out why both Iranians and Administration needed to send old-fahshioned bills on an unmarked plane, not a wire transfer.

Indeed creating this Leviathan is a danger, to the economy, and to our political freedom. Our government likes to pass aspirational laws that we don't really mean to enforce. Get rid of cash, and allow the government to see every transaction and enforce every law regarding payment of anything, and 11 million immigrants suddenly can't work at all and become penniless. Rigorous enforcement of all transactions would not only stop your kids lemonade stand and babysitting business, it would wipe out most of the employment opportunities for lower-income America. Many businesses would come to a halt.

The natural response is, well, maybe we shouldn't pass laws we don't really mean to enforce. Good luck with that.

More deeply,  "flow of information about personal spending that could be used against an individual in a whole host of scenarios" is truly frightening. I don't think there is a political candidate in the whole country who could not be embarrassed with one purchase at some point in their lives. Consider the brouhaha now over "disclosure" of political contributions -- there is a real fear that disclosure is a way of setting up hit lists for the administration to go after its political enemies. Multiply that by a thousand. Dissenters could easily be silenced if the government can monitor or block every transaction.

The ability to transact with anonymity and privacy has been a central freedom for hundreds of years. It's largely gone already. Losing it entirely and giving the government huge power to enforce any law it passes is not necessarily a good thing.

Mike and David opine

creating and respecting privacy firewalls and rethinking legal-tender laws could mitigate the dangers of monopoly and stifled competition in currency markets.

[Subject-free sentences (creating?) are always a sign of trouble!] The dangers are not of monopoly and competition, the dangers are in the vast loss of privacy that the government, and its leakers and hackers knowing all our transactions implies.

(Here I'm out on a limb on my blockchain knowledge, but I gather that one does have to wipe the slate clean occasionally. Otherwise, the blockchain gets ridiculously long. Imagine each dollar, a hundred years from now, attached to a list of everyone who has ever held it! That wiping out process could do a lot for privacy.)

So, back to basics. It is not at all clear to me in their analysis why the Fed has to manage all the accounts. The Fed, Treasury, and the government in general are very good at defining the units of a currency, and providing an easy standard of value -- cash, coins, liquid government debt, reserves.  That is their natural monopoly. I don't see that the government has a similar natural advantage in providing low-cost transactions services, especially on monitoring fraud in the use of those services. The Fed got hacked by employees of the central bank of Bangladesh.

So I leave with two big questions -- and these are questions, and this is an invitation to more thought.

Is a blockchain really better than accounts at the Fed, and instructions to flip a switch to send money from my account to your account? What is the best way to get low transactions costs and fraud prevention, given that we don't need authentication of the dollar itself and a supply limitation?

Is it really better for the Fed to handle all transactions directly, rather than for the Fed to provide clearing accounts, and "banks" (narrow!) to provide transactions services between people, using reserves as now for netting and clearing? The latter setup allows competition and innovation in transactions services, and a better hope for an information firewall retaining some privacy and anonymity in transactions.

(Note for readers new to the blog: I've written about some of these issues in  A new structure for US Federal Debt, Toward a run-free financial system, A blueprint for effective financial reform and previous blog posts, such as here.)

A Look in the Mirror

Tyler Cowen and Alex Tabarrok have written a splendid article, "A Skeptical View of the National Science Foundation’s Role in Economic Research" in the summer Journal of Economic Perspectives. Many of their points apply to research support in general.

The article starts with classic Chicago-style microeconomics: What are the opportunity costs -- money may be helpful here, but what else could you do with it? What are the unexpected offsetting forces -- if the government subsidizes more, who subsidizes less? What is the whole picture -- how much public and private subsidy is there to economics research without the NSF? Too many good economists just say "economic research is a public good, the government should subsidize it."

They go on to ask deeper questions, "Are NSF Grants the Best Method of Government Support for Economic Science?" The NSF largely supports mainstream research by established economists at high-prestige universities. Are there better "public goods," undersupported by other means, for it to support?


Yes. Among others, replication and data. There are few current rewards for replication, and much economics research is not replicable. We live in the age of big data, but it's expensive and hard to access. The NSF has done commendable work here -- and other government agencies including the Census, Bureau of Labor Statistics, Federal Reserve, etc. provide huge public goods by collecting and disseminating good data. Without data we would not exist.  That strikes me as the single most underfunded public good in the economics sphere.

I'm less a fan of their proposal to support "far out" research, naming "post-Keynesians, econo-physicists, or the Austrians." While they cite popular authors  and a "gadfly'" sensational claims for the end of macroeconomics in 2009, in fact Macroeconomics is not all that much changed since the crisis and recession, and none of these claims -- nor the wackier approaches -- have in fact borne any fruit.  Yes, it's easy to support mediocre incremental research, but government agency that must appear impartial can too quickly end up subsidizing crank research, of which there is plenty in economics (see my inbox!)

They ask a great question. If the government wants to subsidize economic research, why hand out grants, rather than hire people directly?

I think there are good answers here. Another big subsidy to economics research which they do not mention are the legions of government employees already doing it. The Federal Reserve, Treasury, OFR, CEA, SEC, CFTC, HHS, EPA and hundreds of other agencies employ thousands of PhD economists who spend considerable if not full time on "research," and are expected to write academic journal articles. Make up your own mind about the value of this effort. The success of the research university I think points to an important externality between doing research, teaching it, and evaluating it through service to the profession. Also, research coming out of government agencies always seems to find just how wonderful those agencies' policies are. However, replication and data production, or other more easily guided research seems a good fit.

Also not mentioned is the danger that government subsidized research ends up being politicized, or at least ends up calling for more government.

One of the main methods of NSF support is "summer support." Universities pay academics on a 9 month basis. If you get an NSF grant it pays for 2 months of "summer support."  This is, of course, a fiction. In fact, most universities chop up the "9 month" salary into 12 pieces anyway. And most academics are not about to go work elsewhere in the summer -- it's the only time to really focus on research, and as Alex and Tyler point out the rewards to publishing are huge.  By and large the NSF does not (or did not when I last looked in to it) buy off teaching or other duties, the one thing that might free up some marginal research time. Alex and Tyler mention low labor supply elasticities as a reason to be cautious about the effectiveness of support. They don't mention this system, practically guaranteed to be a pure transfer rather than induce more research.

On the other hand, NSF grants are typically awarded based on a working paper. They already are a "prize" as Tyler and Alex recommend. So perhaps the lump-sum nature of the reward is not such a bad idea, and ends up subsidizing good research rather than more effort.

I stopped applying for NSF grants some time ago. Sometime in the mid-1990s, I was driving through Indiana, and I saw a guy hooking a shiny new boat up to his pickup truck. It occurred to me, my NSF check for that summer was worth about 5 boats. I didn't think I could get out of the car and say with a straight face that he and four neighbors should forego their boats so I could work on unit roots for the summer. I'm not pure either; I still benefit from many government subsidies, not least of which the tax-deductibility of charitable contributions.

Federalization of Labor

We are getting a good hint that a centerpiece of economic policy in the Hillary Clinton administration will be an increase in Federal control over labor markets.

The news here is that serious economists are advocating these policies, not just to transfer income from one to another, reduce inequality, help specific groups, or enhance some sense of social justice, at the expense of dynamism and growth, but that more Federal control of the labor market will increase wages, productivity and economic growth for everyone!

Alan Blinder's cogent Aug 2 Wall Street Journal opinion piece gives a good sense of the language and logic,

... Hillary Clinton has presented an extensive list of policies that would raise wages, starting with a higher minimum wage. ...

Mrs. Clinton also advocates widespread profit-sharing as a way to put more money into workers’ pockets. She would promote that goal both by using the presidential bully pulpit and by providing tax incentives for businesses that share profits. Since the scholarly evidence suggests that profit-sharing raises productivity, such tax breaks will partly pay for themselves.

Increased vocational training and apprenticeships for the non-college-bound are also major Clinton policies....The U.S. can increase its productivity and reduce inequality by ensuring that the right people get vocational training and apprenticeships.

And then there is what may be the surest way to raise wages over the long run: providing pre-K education for all American children....

Labor market intervention is getting wrapped up in "stimulus," as reported in an excellent Bloomberg column by Brendan Greeley here,

 "It’s really simple," she said at a rally in June in Ohio. "Higher wages leads to more demand, which leads to more jobs, which leads to higher wages." ...

When Clinton uses the word "demand" on the stump, she’s blowing a dog whistle. (Economists have them, too.) Increase demand, she’s saying, and you get growth.... 

Bob Gordon signs on reluctantly,  

"I think it’s a very marginal way of promoting economic growth," says Robert Gordon, economist at Northwestern University who specializes in the subject. Like Summers, he prefers a massive investment in infrastructure. But he does agree that a shift in business income away from profits and toward salaries would create growth. Workers are more likely to buy things from their paychecks than businesses are to invest out of their profits.

Alan Krueger ["former chairman of the Council of Economic Advisers and an informal adviser to the Clinton campaign," and candidate for vice-president of the American Economic Association] agrees wholeheartedly:

... "I think the time could be right for a more virtuous growth model," he said, "which is driven by stronger wage growth...more consumption, more demand, creating more jobs." 

Novel rationalizations for decades-old policies are always suspect. And the usual passive or verb-less sentences hiding the heavy hand of Federal government always invites skepticism.

But let's take it seriously. How much sense do these analyses make?

Without rehashing the whole minimum-wage fight, it is worth asking, if the Federal Government forces businesses to raise some people's wages, but others become unemployed as a result, whether that really count as raising wages overall?

The words "presidential bully pulipit" has poor overtones in the current age. The bully pulpit means the DOJ, EEOC, IRS, NLRB, EPA and who knows even the fish and wildlife service may come calling if you don't do what the president wants. Schoolyard bully, not Teddy Roosevelt's jolly-good pulpit.

"The scholarly evidence indicates that profit-sharing raises productivity.." That's a new twist on the abominable "studies show" argument by reference to vague authority.  But even "scholarly evidence" has to make some sense.

It does make sense that firms which study the question and choose profit-sharing plans can thereby raise productivity, either by giving their employees better incentives or by attracting different and more productive employees. They would not do it otherwise.

But this classic subject-free sentence is about Federal Regulations to force profit-sharing that "puts money into workers' pockets" on all firms. It does not follow that such a mandate will have the same effect. This is the classic, "rich guys drive BMWs, so if we force BMW to give cars away we'll all get rich."

To belabor the obvious, that some firms choose it because they see it will work does not mean that the Federal Government forcing it on all firms will work.  That profit sharing which increases workers' incentives can work does not mean that reducing profits and paying lump sums to workers will work. That profit sharing accompanied by greater selection of productive workers works does not mean that forced profit sharing will work for everyone -- someone employs the less productive, I hope.

If it's about incentives, then there should be a widespread Federal initiative to promote piece-work, commissions rather than salaries, independent contractors rather than employees... Hmm, we're headed the other way.

As economists, we are supposed to start with a problem. What is the market failure that stops companies form putting in productivity enhancing profit sharing programs? Or are they just too dumb and need the benevolent hand of the "bully pulpit" to educate them?

"Increased vocational training and apprenticeships for the non-college-bound," are more Orwellian subject-less sentences. Who is going to do this increasing and how? What is the market failure? Do we need to have triple digit numbers of Federal Job-training programs?

"Providing pre-k education" is another subject-free sentence. I presume he does not mean reducing regulations and union requirements so more pre-k schools can start up! That might actually be effective. But perhaps it is technically correct: a large Federal subsidy for pre-k education, funneled through the public school systems and teacher's unions will raise someone's wages. The "scholarly evidence" is not that it will be the kids.

The idea that forcing companies to pay out greater wages is the key to "stimulus," and that demand-side "stimulus" is the key to long-run growth is...er... even more novel economics.

In classic Keynesian stimulus, there is something about the government borrowing money and spending it, or giving it to consumers to spend, that causes people to forget that the borrowed money must be paid back someday. Not here -- this is directly the claim that taking from Peter and giving to Paul is the key to prosperity. And not just temporary stimulus, but long run growth.

One of many fallacies at work here is the notion that companies face a choice between "paper" investment and "real" investment; that by piling up cash reserves they are somehow diverting resources that could be "real demand" into "paper investments." But every paper asset is a paper liability, so this possible truth about an individual company makes no sense for an economy as a whole.

And let's follow the logic.  If this works for stimulus and growth, force companies to give away cash to consumers. Consumers are, well, people who like to consume. Force them to give cash away to thieves. They consume quickly.  If this is a bad idea.. well then maybe the whole "stimulus" thin is a bit of bunk as well.

Gordon at least has the decency to belittle the idea. And on "a shift in business income [another subjectless sentence -- this shift is forced by the Federal Government!] away from profits and toward salaries would create growth"  because "Workers are more likely to buy things from their paychecks than businesses are to invest out of their profits," one can hope that a statement which violates basic accounting is a misquotation.

 Krueger has less defense: "a more virtuous growth model,...which is driven by stronger wage growth...more consumption, more demand, creating more jobs" is a direct quote. It may be "virtuous" to feel this way, but the classic criticism of Democratic economic policy is doing things that make you feel good but don't work.

Well maybe, maybe not. Economics is a work in progress. But it is certainly brand-new, made-up-on-the spot economics, designed to buttress policies decided on for other reasons.

A last grumpy comment. The WSJ titled Blinder's oped, "Only one candidate can make wages grow again."  Actually I agree with the sentence   Like most media they forgot there are more than two candidates!

Give your scanner a break . . . two ways to eliminate scanning

Does your front office have a basket over flowing with papers with a sign on it that reads “TO BE SCANNED?” No one in the office wants to touch it because it is one of those tedious tasks that no one wants to do … so it just grows and grows. I know how you feel and many practices I work with say that scanning is one of the biggest pain points they deal with every day.

Let’s look at how we could cut that pile of paper in half … but first let’s look at what’s in that pile and how we can deal with it in the electronic world. Some examples of what ends up in that pile of “TO BE SCANNED” paper are . . .

• Letters from specialists
• Treatment plan estimates
• Insurance EOBs and pre-estimates
• New patient forms
• Health history updates
• Consent forms
•  Letters to/from patients

We can’t really do much with the paper that comes in through the mail because it is already in a paper form. There is not much we can do other than scan it. What I would recommend is reaching out to the people who are sending you paper and see if you can receive electronic correspondence or (even better) see if they can send the letter as an attachment to an email. NOTE:Make sure you are using a HIPAA-compliant email service when you are sending protected patient information.

There are two in-house ways you can eliminate the scanning without adding any additional cost or third-party service.

1. “Send to the Dentrix Document Center” is the easiest, most efficient way to get a document into the Document Center without scanning. This can be used for anything you receive in an email, off a website (insurance breakdowns, EOBs, etc.) or as an attachment. You can also send all your treatment plan estimates to the Document Center using this feature and then have the patient sign in the Document Center using an electronic signature device. If your referring doctors are still sending their follow up letter in the mail, you can implement a way for them to send it to you via email and now you can send it to the Document Center without scanning. CLICK HERE for instructions on how this works.
2. Start using the Dentrix Questionnaire module for all in-house forms, including health history updates, all treatment consent forms, financial arrangement forms and updates to your HIPAA acknowledgement. You can use the Questionnaire Module without adding any expense for electronic services … all you will need is a signature pad. You can print out your consent forms and have them laminated so the patient can read them in a paper form. After that, have the patient sign in the Questionnaire or just pull the form up on your monitor for him or her to read. It is so easy. CLICK HERE to learn how to create a new form.

Give your team a break . . . give your scanner a break and save time. Use this time to do more productive things like fill your schedule and improve your collections.