Growthology

John Cochrane, a newbie blogger but well-known UofChicago economist asked a question about the optimal form of the Eurozone in the latest Economics Bloggers Survey...

I'm a little bit surprised -- a majority think the Euro should be abandoned?  Although this chart doesn't stack qwll (my fault), opinions are strongest in favor of the two extreme positions -- complete union or complete disunion, and I expected the middle "weak union" to be most favored.  This is the U.S. model, a currency union among states which allows state and municipal default.  

Thanks John!

Craig Newmark from Newmark's Door provided us with two questions in the latest Economics Bloggers Survey. One is fairly simple, asking about inflation.  The other is a really rich question about education reform.  Both are fascinating:

Note, these values do not add up to 100% because we did not chart neutral responses.  Think about it this way: there were more responses in favor of "Flexibility for principals" (81%) than ALL responses for most other questions!  Supreme Court, are you listening?  

HAIKU from the latest Economics Bloggers Survey...

By now we know to
Expect the unexpected
To ruin your day.
~ Ryan Avent

Can’t bail forever
This year we might discover
The can does kick back.
~ Arnold Kling

Common currency
Is not the source of problems
Debt is the culprit.
~ Pedro Albuquerque

Euro troubles prove
Federalism is key
To secure freedom.
~ Will Franklin

Euro, Kroner, Franc,
Makes no difference to me
Long as gold glistens.
~ Robert Cringely

Europe’s Recessing
The ECB has no clue
Austerity Bites.
~ Daniel Gross

Euro-zone crumbling now
Silently, in the background
Surface is a veil.
~ David Tufte

Greece will soon default
The Eurozone will crumble
Let’s all go shopping!
~ Felix Salmon

Haughty Albion
Because she made the right choice
She must be punished.
~ Scott Sumner

NGDP it
Nominal incomes restored
Safe assets return.
~ David Beckworth

On this Continent
All European Unions
Always end in blood.
~ Andrew Samwick

Poor little Euro
a useful means of exchange
with no fiscal role.
~ David Zetland

Run the Euro press
Beg America for help
Beg China for help.
~ Michael Rizzo

Saint Germanicus
Gave no gifts to young Euro
Christmas without snow.
~ Tim Kane

Surprise everyone
Reintroduce the Deutschmark
Inflate the Euro.
~ Eli Dourado

The most painful part
Of the Euro’s coming end?
Krugman being right.
~ Joshua Barro

Twelve years later
Returned to the beginning
Germany loses again.
~ Kenneth Houghton

Euro resembles badly made movie
Its producers keep claiming movie a hit
Time they accept it flopped.
~ Amol Agrawal

Welfare states’ debt due
Ratings downgrades, states default
Euro muddles through.
~ Arthur Diamond

When the task is great,
take but one step at a time
Compromise builds strength.
~ Jeff Miller

You may disappear
or appear in great numbers
debt must come undone.
~ Steve Waldman

Thanks to Cardiff Garcia for recruiting his co-bloggers at FT Alphaville to submit three (!) questions to the latest Economics Bloggers Survey.  We tried snubbing them for nearly two years, but you can deny greatness for only so long ...

Bloggers offered tepid support for any of the solutions laid out by FTAlphaville. In fact, one-third of bloggers dispute the premise that there is aglobal shortage of safe assets. The full text of solutions is:

More country assets: The treasuriesof every remaining AAA sovereignshould start pumping out safeassets immediately (in the form ofgovernment debt).

Wider guarantees: Governments orcentral banks should guarantee a widerrange of debt (feel free to assume accompanying stricter regulation).

Broaden collateral: Central banksshould continue to diversify the rangeof acceptable collateral for temporary liquidity ops until they’re approving everything but Silvio Berlusconi’s black book.

Earth bonds!: Earth bonds!

All bad ideas: The world needs moresafe assets, but none of these ideas is any good.

Wow.  NGDP targeting not so near the fringe.  

So if the majority is right, who else loses their top rating?  America?  Oh, wait ...

You may have already seen that Kauffman published the latest quarterly bloggers survey earlier this week. Here are some of the individual charts ...

As Donald Marron noted on his blog, the word cloud is showing some positive signs.  One of the quirks of a word cloud is that it can miss the "nots."  For example, we noticed early on that some responses to this question included things like "not growing" and "not stable" which are read by the idiot algorithm as two distinct concepts NOT and GROWING.  We try to clean that stuff up, so Donald is right, the positive words are a nice change.  As such, it seemed appropriate to shift from the monochrome to a multi-colored map.  Hopefully it will be monochrome -- but all positive chrome -- a year from now. 

What I love about this question is its nuance!  Our sample of economists is mostly non-partisan, and the few partisans are evently split between D and R.  But the clearest constant has been the strong majority that thinks the federal government is too involved in the economy.  

Jim Hamilton has written some tremendous blog posts at Econbrowser.com on Keystone.  I was happy to see such strong support for his position here.  The biggest surprise was the response to a pet issue of my own: allowing states to set their own minimum wage.  I wonder if you could combine that with this idea of inflation adjusting the federal minimum -- would that pass Congress?

Unfortunately, scanning the old reports, this chart shows the same pessimism as 2010 ... 2 years ago. Bloggers generally think the real economy is worse off than the measured economy.  We have our work cut out for us.

Thanks to the 58 bloggers who participated in the survey!

?This is a terrific and interesting visualization by Nicolas Rapp, done for Fortune's article on the 100 Best Companies to Work For:

For those of us who try to figure out what new and young companies contribute to the economy in terms of job creation, this is another useful reminder that large companies matter, too. These 100 companies, representing one-ten-thousandth of all companies in the US, employ 1.1 percent of the American workforce. I cannot tell if this really only counts US employees, because we know Microsoft, among others, has many employees overseas. 

In any case, it is an interesting chart for seeing existing employment and where people have applied for jobs: 7.6 million job applications at Starbucks last year!

The intersection between tight labor markets, housing costs, and the opportunity cost of entrepreneurship: Free Exchange. The work by Fairlie and Chatterji that Ryan cites here is terrifically important and has not gotten nearly enough attention.

Why is carried interest taxed as it is? Observational Epidemiology. 

What the studies say about private equity. Dealbook (via Marginal Revolution). Tyler sums it up: "'Some positives, lots of uncertainty' would be a good description of the available evidence."

Brad Feld on the intra-metropolitan geography of entrepreneurship. We probably need some new mapping tools. Feld Thoughts.

As an aside, I completely agree with Brad that "entrepreneurial density" is a good measure of a region's culture of entrepreneurship, but I don't know if we can yet measure it precisely. For one thing, we need to agree on a common definition of entrepreneurship. Then we need to figure out how to count it--government data are not entirely helpful here. Then we need to figure out what it means. One of our research assistants has been looking over Business Dynamics Statistics data on employment in young firms as a share of total employment in each state over the past three decades. We will post some charts and findings soon, but as the data relate, so far, to existing literature, I am reminded of The Princess Bride:

Vizzini: "He didn't fall? INCONCEIVABLE!"

Inigo Montoya: "You keep using that word. I do not think it means what you think it means."

(h/t to PK for the reminder of this pricelessly fungible line the other day)

In case you missed it, here is President Obama in the State of the Union speech last night, underscoring the important role of entrepreneurs:

It means we should support everyone who’s willing to work, and every risk-taker and entrepreneur who aspires to become the next Steve Jobs. After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.

This may have been a reference to the Startup Act, versions of which have been introduced in both the House and Senate. Even so, any mention by the president of the vital role that new companies play in economic growth is noteworthy, especially because, as many claim, public celebration of entrepreneurs is an important cultural attribute.