The Agenda

Stray Links for 1 August 2013

Josh Barro dismantles the notion that firms ought to pay employees above-market wages, yet he argues that “the lack of a moral obligation for employers to pay more actually strengthens the argument for policy interventions to enrich low-wage workers.” Megan McArdle describes the potential fallout of a sharp Chinese economic slowdown. Karl Rove warns congressional Republicans against overreaching. Julian Barnes reports on deep cuts in military expenditures, including planned reductions in the size of ground forces. David Wessel describes a number of Stanford computer scientist Balaji Prabhakar’s ingenious strategies to reduce congestion and promote walking, which have met with success in field tests in India, Singapore, and California. As Evan Soltas explains, the CBO’s deficit forecasts rest on the assumption that the U.S. economy will close the output gap in the medium-term future — an assumption that seems increasingly untenable. Robert VerBruggen discusses the economics of “swipe fees.” And finally, Matt Yglesias says that rather than contrast inflation hawks and doves, we ought to be thinking in terms of turkeys, who doubt that the Federal Reserve can generate inflation at the zero bound and high unemployment, and hummingbirds, who believe that the Federal Reserve has tremendous scope to increase inflation expectations. Virtually all of the relevant players in U.S. monetary policy debates, including Janet Yellen and Lawrence Summers, are turkeys.