Mike Konczal

Roosevelt Institute Fellow

Recent Posts by Mike Konczal

  • Reed, Obama and FDR

    Mar 20, 2014Mike Konczal

    I had a piece at The New Republic last week I haven't share here yet. It's a response to Adolph Reed’s long Harper’s piece about liberalism at this moment. You should check it out.

    I wanted to clarify one thing because several historically-minded people asked me about it. I have a general rule that after I write something I should immediately delete the most “clever” thing I included, or at least go back and carefully edit it. In this piece I didn’t do that or make my point clear, and the glib results caused some confusion.

    I opened the piece with a New Republic essay from 1940 criticizing Franklin Roosevelt from the left for leaving the economic problem unresolved. I had just read the essay in the (excellent, recommended) collection of New Deal Thought by Howard Zinn from the 1960s, and really thought it would be clever to include it in a current New Republic piece. What I ideally wanted the piece to reference was (i) pointing out that Reed's golden period of the late 1930s, where he has things working out well for the left, was more problematic at the time than he lets on, and in ways similar to where we are now.

    But also (ii) point out that historical shifts often happen even when Presidents are floundering, as the “second New Deal” was formalizing an order that would reign for 40 years even though Franklin Roosevelt was making a mess of the late 1930s with his disastrous turn to austerity. As a result we can’t answer the most important question about President Obama - is he the beginning of a longer-term shift, or someone that forecloses the potential of that longer-term shift - by pointing to individual actions by him, which is the core of Reed’s argument. Also (iii) to reference the 1940 piece at the end of mine, with their smart observation about self-enforcing reform and the open question over whether Obamacare, etc. will ever have those dynamics.

    [And as a personal fun point, I also like (iv) pointing out that the New Republic was pretty lefty back when within its own online pages.]

    However I botched the intro, cutting for space, and wrote it in a glib manner that referenced it to dismiss valid criticism now and then. Some thought I was excusing the screwups of 1937, others comparing President Obama to FDR. And since it introduced the piece, it hung over the rest (which I’m pretty happy with). I’ll try better next time.

    Richard Eskow had a nice response to the piece; I believe Reed will be on the next Belabored podcast as well, a great podcast you should be checking out.

    I had a piece at The New Republic last week I haven't share here yet. It's a response to Adolph Reed’s long Harper’s piece about liberalism at this moment. You should check it out.

    I wanted to clarify one thing because several historically-minded people asked me about it. I have a general rule that after I write something I should immediately delete the most “clever” thing I included, or at least go back and carefully edit it. In this piece I didn’t do that or make my point clear, and the glib results caused some confusion.

    I opened the piece with a New Republic essay from 1940 criticizing Franklin Roosevelt from the left for leaving the economic problem unresolved. I had just read the essay in the (excellent, recommended) collection of New Deal Thought by Howard Zinn from the 1960s, and really thought it would be clever to include it in a current New Republic piece. What I ideally wanted the piece to reference was (i) pointing out that Reed's golden period of the late 1930s, where he has things working out well for the left, was more problematic at the time than he lets on, and in ways similar to where we are now.

    But also (ii) point out that historical shifts often happen even when Presidents are floundering, as the “second New Deal” was formalizing an order that would reign for 40 years even though Franklin Roosevelt was making a mess of the late 1930s with his disastrous turn to austerity. As a result we can’t answer the most important question about President Obama - is he the beginning of a longer-term shift, or someone that forecloses the potential of that longer-term shift - by pointing to individual actions by him, which is the core of Reed’s argument. Also (iii) to reference the 1940 piece at the end of mine, with their smart observation about self-enforcing reform and the open question over whether Obamacare, etc. will ever have those dynamics.

    [And as a personal fun point, I also like (iv) pointing out that the New Republic was pretty lefty back when within its own online pages.]

    However I botched the intro, cutting for space, and wrote it in a glib manner that referenced it to dismiss valid criticism now and then. Some thought I was excusing the screwups of 1937, others comparing President Obama to FDR. And since it introduced the piece, it hung over the rest (which I’m pretty happy with). I’ll try better next time.

    Richard Eskow had a nice response to the piece; I believe Reed will be on the next Belabored podcast as well, a great podcast you should be checking out.

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  • The Voluntarism Fantasy, Live at Democracy Journal

    Mar 18, 2014Mike Konczal
    The newest Democracy Journal is now online. In addition to pieces from Monica Potts on poverty, Richard Kahlenberg on community colleges, and Jason Furman on the tax code, I have a a big piece on the way conservatives deploy "civil society" and the voluntary state to justify massive cuts to social insurance. The name of the piece is the The Voluntarism Fantasy (fancy pdf here).
     
    I've seen the idea that if we simply end the federal state, private civil society will step in and take over come up more and more. It's in random tweets by people like Tim Carney, implicit in arguments about sweeping away social insurance, and also involved in the way people like Paul Ryan deploy the term "subsidiarity." I wanted to take apart the history of this idea and why it failed, and would fail again. I also wanted to argue how the welfare state, spotty as it is, met the challenge of the Great Recession in a way that doesn't get enough credit. Finally, I wanted to push liberals to consider that the public will have to take a greater, rather than lesser, role in providing economic security in the future.
     
    I'm very excited about this piece, and I hope you read, debate and share it. Check it out here.
     
    Bonus: I only got to include a sentence from this amazing February, 1931 speech by President Hoover. Do you notice how some conservative think we can try and provide relief and spending in our current difficult economic times, but only if its done by private, voluntary, charitable organizations or local, as opposed to federal, government? Here is Hoover saying the same exact thing in 1931:
    This is not an issue as to whether people shall go hungry or cold in the United States. It is solely a question of the best method by which hunger and cold shall be prevented. It is a question as to whether the American people on one hand will maintain the spirit of charity and mutual self-help through voluntary giving and the responsibility of local government as distinguished on the other hand from appropriations out of the Federal Treasury for such purposes. My own conviction is strongly that if we break down this sense of responsibility of individual generosity to individual and mutual self-help in the country in times of national difficulty and if we start appropriations of this character we have not only impaired something infinitely valuable in the life of the American people but have struck at the roots of self-government. Once this has happened it is not the cost of a few score millions, but we are faced with the abyss of reliance in future upon Government charity in some form or other. The money involved is indeed the least of the costs to American ideals and American institutions.

    1931. This is when food riots were breaking out in American cities. Unemployment would be over 15 percent that year, climbing to 25 percent the next. In 1932 you'd also see Douglas MacArthur, Dwight Eisenhower and George Patton leading an army to destroy the encampments of thousands of people occupying Washington DC demanding relief.

    The world was falling apart, liberal democracy was facing its worst challenge in decades, and Hoover wouldn't budget on the idea that there was any role for the public or the federal state in meeting the challenges of mass economic insecurity. This is what many conservatives still believe, and it's important to dissect why it fails and what we can do about it.

    Follow or contact the Rortybomb blog:

      
    The newest Democracy Journal is now online. In addition to pieces from Monica Potts on poverty, Richard Kahlenberg on community colleges, and Jason Furman on the tax code, I have a a big piece on the way conservatives deploy "civil society" and the voluntary state to justify massive cuts to social insurance. The name of the piece is the The Voluntarism Fantasy (fancy pdf here).
     
    I've seen the idea that if we simply end the federal state, private civil society will step in and take over come up more and more. It's in random tweets by people like Tim Carney, implicit in arguments about sweeping away social insurance, and also involved in the way people like Paul Ryan deploy the term "subsidiarity." I wanted to take apart the history of this idea and why it failed, and would fail again. I also wanted to argue how the welfare state, spotty as it is, met the challenge of the Great Recession in a way that doesn't get enough credit. Finally, I wanted to push liberals to consider that the public will have to take a greater, rather than lesser, role in providing economic security in the future.
     
    I'm very excited about this piece, and I hope you read, debate and share it. Check it out here.
     
    Bonus: I only got to include a sentence from this amazing February, 1931 speech by President Hoover. Do you notice how some conservative think we can try and provide relief and spending in our current difficult economic times, but only if its done by private, voluntary, charitable organizations or local, as opposed to federal, government? Here is Hoover saying the same exact thing in 1931:
    This is not an issue as to whether people shall go hungry or cold in the United States. It is solely a question of the best method by which hunger and cold shall be prevented. It is a question as to whether the American people on one hand will maintain the spirit of charity and mutual self-help through voluntary giving and the responsibility of local government as distinguished on the other hand from appropriations out of the Federal Treasury for such purposes. My own conviction is strongly that if we break down this sense of responsibility of individual generosity to individual and mutual self-help in the country in times of national difficulty and if we start appropriations of this character we have not only impaired something infinitely valuable in the life of the American people but have struck at the roots of self-government. Once this has happened it is not the cost of a few score millions, but we are faced with the abyss of reliance in future upon Government charity in some form or other. The money involved is indeed the least of the costs to American ideals and American institutions.

    1931. This is when food riots were breaking out in American cities. Unemployment would be over 15 percent that year, climbing to 25 percent the next. In 1932 you'd also see Douglas MacArthur, Dwight Eisenhower and George Patton leading an army to destroy the encampments of thousands of people occupying Washington DC demanding relief.

    The world was falling apart, liberal democracy was facing its worst challenge in decades, and Hoover wouldn't budget on the idea that there was any role for the public or the federal state in meeting the challenges of mass economic insecurity. This is what many conservatives still believe, and it's important to dissect why it fails and what we can do about it.

    Follow or contact the Rortybomb blog:

      

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  • Quits Won't Tell Us Anything About the True Unemployment Rate (Vacancy Chains 1/2)

    Mar 12, 2014Mike Konczal

    (Wonkish. Part One of Two. This part covers theory, part two some data.)

    Can the number of people quitting their jobs tell us anything useful about slack in the labor market? No. At most, it tells us to focus even more on the stuff we already knew to be watching.

    Evan Soltas has argued that the rate at which people quit their job tells us all we need to know about the unemployment rate, in particular how likely it is that the long-term unemployed and people who have left the labor force could be brought back into the labor force. There were several responses from Dean Baker, Jared Bernstein, and Cardiff Garcia.

    As a reminder, there are currently 2.5 million Americans who want a job but aren’t looking, and as such are counted as “marginally attached to the labor force” instead of unemployed. There’s a major debate about how much of the collapse in the labor force participation rate is due to de facto unemployment, or people who will come back into the labor force if it gets better (with much of the research pointing to about half).

    We should distinguish between what quit rates can tell us about the employed and what they can tell us about the status of the unemployed. What’s the theory of quits in which they tell us what the “true” unemployment rate is? Soltas: “Think about the decision to quit. It's a function of your confidence that you'll find a better job quickly -- which embodies some unobserved but holistic measure of labor-market tightness.” If quits go up, then the long-term unemployed, in this view, “no longer [have] the power to restrain wage growth or discourage the employed from quitting and switching jobs.”

    If I understand this correctly, this assumes that quits are a measure of people first becoming unemployed and then looking for a new job (trying to “find a better job quickly”).[i] But I don’t think this is right. A very large percentage, perhaps half, of quits are people moving job-to-job rather than becoming unemployed.[ii]

    Under Soltas' view, quits make it more difficult for the existing unemployed to find jobs by increasing unemployment. But doesn’t a quit create a job opening? As such, doesn’t it create an opportunity for an unemployed person, rather than a limitation? Also, even if the employed became unemployed, would that mean that the long-term unemployed couldn’t find work, or just that they are at the end of a very long line?

    Vacancy Chains

    Let’s try to develop a more firmly grounded theory of quits. What can quits tell us about unemployment as a matter of economic logic? Well, first off, every person who quits his or her job creates a job opening. Someone has to do the work that person was doing. So we should think of “vacancy chains” -- a term made famous by George Akerlof, Andrew Rose, and Janet Yellen (!) back in 1988 -- and their characteristics.

    Suppose Amy works at Acorp, and she leaves her job to take a new one. Acorp now has a job opening. They hire Bill away from Bcorp. Now Bcorp has a job opening. So they hire Charlotte from Ccorp. Now Ccorp has a job opening. They hire Dan from Dcorp. Now Dcorp has a job opening.

    Note: Amy, Bill, Charlotte and Dan are all counted as “quits,” though they wouldn’t count as having been unemployed.

    So Dcorp hangs a sign that says “help wanted.” They can do one of three mutually exclusive things. They can (1) hire an employed person, which will create another quit, which will create another vacancy, which Erin from Ecorp will fill. Thus the vacancy chain is extended one more step. They’ll likely have to pay the employed person a higher wage than that person currently makes to change jobs (or at least in aggregate this will happen). Or they can (2) hire an unemployed person, which will not create another job opening, but instead just close the vacancy chain.[iii] Or, if they can’t fill the job with an employed person or an unemployed person, they (3) leave the job opening unfilled.

    So let’s rephrase that. The only thing interesting about the quits rate in this context is what it is implying about the length and conclusion of vacancy chains. If the length of the vacancy chain is infinitely increasing, then wage growth must be skyrocketing. And if the unemployed aren’t capable of taking jobs and closing the vacancy chain, then the number of job openings must rise relative to the unemployment rate.

    Which means the interesting things the quits rate tells us about unemployment are entirely captured in wage growth or the number of job openings relative to unemployment (i.e. the Beveridge Curve).

    So where are we? Wage growth is still weak, and nowhere near what it was in the late 1990s. Meanwhile, the Beveridge Curve shifted at the height of the crash, but has been remarkably consistent since. The shifting of the Beveridge Curve has been thoroughly debated, with the complicating issues of circularity and endogenous firm search at the forefront. What stands out for me is that the Beveridge Curve hasn’t deteriorated in the past several years, which implies that the increasing duration and prominence of the long-term unemployed in the labor market isn’t showing up in increased job openings.

    The quits rate is important. It hints at the lived experience of working throughout the Great Recession and points to the stagnating wages workers face. But from the point of view of the status of the unemployed, it doesn’t tell us the “true” unemployment rate. Rather, it is important because it flags the things we should be watching -- things that are slowly improving, as long as the Fed doesn’t put a stop to it.

    [i] Soltas also has a statistical relationship between the two based over the past two business cycles, but if we can’t think of a good theory of what quits tell us about unemployment I’m not sure what weight we should put on this relationship.

    [ii] The Census will start releasing job-to-job transition data in late 2014. Hurry Census! We need this data to be publicly digestible.

    [iii] This is why Akerlof, Rose, and Yellen believe quits to be counter-cyclical to unemployment, as opposed to the pro-cyclicality predicted by search models. There are more unemployed hanging around to close chains earlier in a recession, reducing the number of quits necessary to close a vacancy chain.

    Follow or contact the Rortybomb blog:

      

    (Wonkish. Part One of Two. This part covers theory, part two some data.)

    Can the number of people quitting their jobs tell us anything useful about slack in the labor market? No. At most, it tells us to focus even more on the stuff we already knew to be watching.

    Evan Soltas has argued that the rate at which people quit their job tells us all we need to know about the unemployment rate, in particular how likely it is that the long-term unemployed and people who have left the labor force could be brought back into the labor force. There were several responses from Dean Baker, Jared Bernstein, and Cardiff Garcia.

    As a reminder, there are currently 2.5 million Americans who want a job but aren’t looking, and as such are counted as “marginally attached to the labor force” instead of unemployed. There’s a major debate about how much of the collapse in the labor force participation rate is due to de facto unemployment, or people who will come back into the labor force if it gets better (with much of the research pointing to about half).

    We should distinguish between what quit rates can tell us about the employed and what they can tell us about the status of the unemployed. What’s the theory of quits in which they tell us what the “true” unemployment rate is? Soltas: “Think about the decision to quit. It's a function of your confidence that you'll find a better job quickly -- which embodies some unobserved but holistic measure of labor-market tightness.” If quits go up, then the long-term unemployed, in this view, “no longer [have] the power to restrain wage growth or discourage the employed from quitting and switching jobs.”

    If I understand this correctly, this assumes that quits are a measure of people first becoming unemployed and then looking for a new job (trying to “find a better job quickly”).[i] But I don’t think this is right. A very large percentage, perhaps half, of quits are people moving job-to-job rather than becoming unemployed.[ii]

    Under Soltas' view, quits make it more difficult for the existing unemployed to find jobs by increasing unemployment. But doesn’t a quit create a job opening? As such, doesn’t it create an opportunity for an unemployed person, rather than a limitation? Also, even if the employed became unemployed, would that mean that the long-term unemployed couldn’t find work, or just that they are at the end of a very long line?

    Vacancy Chains

    Let’s try to develop a more firmly grounded theory of quits. What can quits tell us about unemployment as a matter of economic logic? Well, first off, every person who quits his or her job creates a job opening. Someone has to do the work that person was doing. So we should think of “vacancy chains” -- a term made famous by George Akerlof, Andrew Rose, and Janet Yellen (!) back in 1988 -- and their characteristics.

    Suppose Amy works at Acorp, and she leaves her job to take a new one. Acorp now has a job opening. They hire Bill away from Bcorp. Now Bcorp has a job opening. So they hire Charlotte from Ccorp. Now Ccorp has a job opening. They hire Dan from Dcorp. Now Dcorp has a job opening.

    Note: Amy, Bill, Charlotte and Dan are all counted as “quits,” though they wouldn’t count as having been unemployed.

    So Dcorp hangs a sign that says “help wanted.” They can do one of three mutually exclusive things. They can (1) hire an employed person, which will create another quit, which will create another vacancy, which Erin from Ecorp will fill. Thus the vacancy chain is extended one more step. They’ll likely have to pay the employed person a higher wage than that person currently makes to change jobs (or at least in aggregate this will happen). Or they can (2) hire an unemployed person, which will not create another job opening, but instead just close the vacancy chain.[iii] Or, if they can’t fill the job with an employed person or an unemployed person, they (3) leave the job opening unfilled.

    So let’s rephrase that. The only thing interesting about the quits rate in this context is what it is implying about the length and conclusion of vacancy chains. If the length of the vacancy chain is infinitely increasing, then wage growth must be skyrocketing. And if the unemployed aren’t capable of taking jobs and closing the vacancy chain, then the number of job openings must rise relative to the unemployment rate.

    Which means the interesting things the quits rate tells us about unemployment are entirely captured in wage growth or the number of job openings relative to unemployment (i.e. the Beveridge Curve).

    So where are we? Wage growth is still weak, and nowhere near what it was in the late 1990s. Meanwhile, the Beveridge Curve shifted at the height of the crash, but has been remarkably consistent since. The shifting of the Beveridge Curve has been thoroughly debated, with the complicating issues of circularity and endogenous firm search at the forefront. What stands out for me is that the Beveridge Curve hasn’t deteriorated in the past several years, which implies that the increasing duration and prominence of the long-term unemployed in the labor market isn’t showing up in increased job openings.

    The quits rate is important. It hints at the lived experience of working throughout the Great Recession and points to the stagnating wages workers face. But from the point of view of the status of the unemployed, it doesn’t tell us the “true” unemployment rate. Rather, it is important because it flags the things we should be watching -- things that are slowly improving, as long as the Fed doesn’t put a stop to it.

    [i] Soltas also has a statistical relationship between the two based over the past two business cycles, but if we can’t think of a good theory of what quits tell us about unemployment I’m not sure what weight we should put on this relationship.

    [ii] The Census will start releasing job-to-job transition data in late 2014. Hurry Census! We need this data to be publicly digestible.

    [iii] This is why Akerlof, Rose, and Yellen believe quits to be counter-cyclical to unemployment, as opposed to the pro-cyclicality predicted by search models. There are more unemployed hanging around to close chains earlier in a recession, reducing the number of quits necessary to close a vacancy chain.

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  • The Diversity of Arguments for a Higher Minimum Wage

    Mar 3, 2014Mike Konczal

    I have a piece in the new Boston Review on seven ways of looking at a higher minimum wage increase. I wanted to step back from the denser statistical arguments (though those are included) and get a sense of why the minimum wage is popular and an important feature of our economy. The diversity of reasons is remarkable. The seven ways I focus on are inequality, poverty, policy, feminism, conservatism, republicanism, and Catholicism's living wage. I hope you check it out.

    I have a piece in the new Boston Review on seven ways of looking at a higher minimum wage increase. I wanted to step back from the denser statistical arguments (though those are included) and get a sense of why the minimum wage is popular and an important feature of our economy. The diversity of reasons is remarkable. The seven ways I focus on are inequality, poverty, policy, feminism, conservatism, republicanism, and Catholicism's living wage. I hope you check it out.

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  • Recent Writings, February 2014 Edition

    Feb 19, 2014Mike Konczal

    Recent Rortybomb enterprise updates:

    - My last weekly column at Wonkblog went up a week ago. It's a review of Melissa Gira Grant's book Playing the Whore.

    - I wrote about the minimum wage twice at the New Republic. The first time was on the Silicon Valley wage fixing scandal, and what it says about how labor markets work. (it's a nontechnical introduction to "dynamic monopsony" theory, if you are familiar with that.)

    If you haven't read about the Silicon Valley scandal I highly recommend it. (I had assumed, falsely, that more people knew about it when I wrote my piece.) Mark Ames had the most comprehensive version when it broke; Josh Harkinson just did another piece on it. It's worth it just for the quotes you'll see from the digital Masters of the Universe.

    - I also wrote about the CBO report that just came out on the minimum wage at the New Republic too.

    - I also wrote a piece at Al-Jazeera America about what is at stake when liberals, including President Obama, replace a focus on inequality with a focus on opportunity.

    Follow or contact the Rortybomb blog:

      

    Recent Rortybomb enterprise updates:

    - My last weekly column at Wonkblog went up a week ago. It's a review of Melissa Gira Grant's book Playing the Whore.

    - I wrote about the minimum wage twice at the New Republic. The first time was on the Silicon Valley wage fixing scandal, and what it says about how labor markets work. (it's a nontechnical introduction to "dynamic monopsony" theory, if you are familiar with that.)

    If you haven't read about the Silicon Valley scandal I highly recommend it. (I had assumed, falsely, that more people knew about it when I wrote my piece.) Mark Ames had the most comprehensive version when it broke; Josh Harkinson just did another piece on it. It's worth it just for the quotes you'll see from the digital Masters of the Universe.

    - I also wrote about the CBO report that just came out on the minimum wage at the New Republic too.

    - I also wrote a piece at Al-Jazeera America about what is at stake when liberals, including President Obama, replace a focus on inequality with a focus on opportunity.

    Follow or contact the Rortybomb blog:

      

    Share This

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