Is the Semi-Permanent "Gunpowder Empire" Historical Scenario Plausible? Perhaps Not...

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Riffing off of yesterday's: : "'Gunpowder Empire': Should We Generalize Mark Elvin's High-Level Equilibrium Trap?"...

A generation ago Michael Kremer wrote a superb paper: Michael Kremer (1993): "Population Growth and Technological Change: One Million B.C. to 1990", Quarterly Journal of Economics 108:3 (August), pp. 681-716 http://tinyurl.com/dl20160727a.

Kremer saw human populations as growing at an increasing rate over time. Population reached approximately 4 million by 10000 BC, 50 million by 1000 BC, and 170 million by the year 1. Population then reached 265 million by the year 1000, 425 million by 1500, and 720 million by 1750 before the subsequent explosion of the British Industrial Revolution and the subsequent spread of Modern Economic Growth.

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The Supreme Court's RomneyCare Decision and the Future of Health Care Reform: Hoisted from Four Years Ago

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J. Bradford DeLong: The Supreme Court's RomneyCare Decision and the Future of Health Care Reform: 07/02/2012: As delivered at the U.C. Berkeley SCOTUS ACA Forum, July 2, 2012:

With respect to last Thursday: One piece of background is all-important in assessing the decision: ObamaCare is RomneyCare.

The health-care reform plan that Mitt Romney proposed when he was Governor of Massachusetts is the health-care reform plan that Barack Obama proposed. RomneyCare made it through the Massachusetts legislature with only two dissenting votes. No office-holding Republican complained that RomneyCare was bad policy, or would destroy the economy, or would be unconstitutional, or whatnot--for it was the signature policy initiative of a Republican governor. The mandate that was at its core? That was the conservative Personal Responsibility principle. And remember the centerpiece of the Bush administration's Social Security privatization proposals: it was an individual mandate to regulate 'inactivity': to require that people who had not established their own private individual retirement accounts do so.

Had the issue of 'inactivity' reached the justices in the form of a challenge to a Republican mandate to purchase retirement accounts rather than a Democratic mandate to purchase health insurance, the Republican justices would have voted the other way.

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Manu Saadia on Trekonomics at Books Inc. in Berkeley :: June 15, 2016

Star trek sarek live long and prosper Google Search

Manu Saadia: Trekonomics: The Economics of Star Trek http://amzn.to/28ZnBiD

Live from the Gamma Quadrant: Books Inc.: Trekonomics: The Economics of Star Trek: "Manu Saadia discusses Trekonomics: The Economics of Star Trek...

...What would the world look like if everybody had everything they wanted or needed? Delving deep into the details and intricacies of 24th century society, Trekonomics explores post-scarcity and whether we, as humans, are equipped for it. What are the prospects of automation and artificial intelligence? Is there really no money in Star Trek? Is Trekonomics at all possible? Manu will be in conversation with UC Berkeley economics professor Brad DeLong.


Rough Semi-Transcript:

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Tim Duy's Five Questions for Janet Yellen: The Honest Broker

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A very nice piece here from the very-sharp Tim Duy:

Tim Duy: Five Questions for Janet Yellen

Next week's meeting of the Federal Open Market Committee (FOMC) includes a press conference with Chair Janet Yellen. These are five questions I would ask if I had the opportunity to do so in light of recent events.

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Does One Improve Intellectual Diversity by Hiring or Reading "Conservative" Idiots?

As the very sharp Jacob Levy wrote back in 2008:

There's no modern work to teach alongside Theory of Justice and Anarchy, State, and Utopia that really gets at what's interesting about Burkean or social conservatism.... Any book plucked from the past that was concerned with yelling "stop!" tends to date badly to any modern reader who does not think he's already living in hell-in-a-handbasket... talks about how everything will go to hell if the [Jim Crow] South isn't allowed to remain the South.... Oakeshott['s]... "Rationalism in Politics" end[s] up feeling faintly ridiculous by the time he's talking about women's suffrage.... I might say Schumpeter, Capitalism, Socialism, and Democracy, and Kristol, Two Cheers for Capitalism, but the former isn't really distinctively conservative enough and I'm not sure the latter is a classic.

In my view, you go with Polanyi's The Great Transformation--which gets the rational kernel inside the mystical conservative shell--or you go home.

And this is apropos today because Nick Kristof is writing more bilgewater for the New York Times:

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Trying to Empiricize the Philosophy of Probability: Readings, Plus a Non-Platonic Dialogue

Black swan Google Search

Updated from: Live from Over the Rocky Mountains: I see that the War on Nate Silver has broken out again, with another article less appetizing than bilgewater in The New York Times, written by Jim Rutenberg:

Still more recently--as in Tuesday--the data journalist Nate Silver... gave Hillary Clinton a 90 percent chance of beating Bernie Sanders in Indiana. Mr. Sanders won by a comfortable margin of about five percentage points.... The lesson [from Eric Cantor's defeat] in Virginia, as the Washington Post reporter Paul Farhi wrote at the time, was that nothing exceeds the value of shoe-leather reporting, given that politics is an essentially human endeavor and therefore can defy prediction and reason...

Nate has his comment: Nate Silver Being Smart and Bringing the Snark: "Do You Know What 'Polling' Is? It's Talking to Voters in a Structured Way to Reduce Bias"

And Justin Wolfers says:


But I do not feel today like talking about the anti-empirical reporters--horse-race journamalists who try to avoid learning about horses, tracks, or jockeys--with their alternative methodology of source-flattering. I'm bored with their false and repeatedly disproven claims to magical expertise via choosing and flattering particular sources.

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One Last April-Fools Note on Niall Ferguson: Why Did Keynes Write "In the Long Run We Are All Dead"?

May 09, 2013: Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging: NewImage

Niall Ferguson: An Open Letter to the Harvard Community: "Last week I said something stupid about John Maynard Keynes...

...Asked to comment on Keynes’ famous observation “In the long run we are all dead,” I suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay. This was doubly stupid. First, it is obvious that people who do not have children also care about future generations. Second, I had forgotten that Keynes’ wife Lydia miscarried.

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Hoisted from 1999: Review of Paul Krugman, The Return of Depression Economics.

Just in case I get swelled-headed and think I am right more often than I am...

Brad DeLong (1999): Review of Paul Krugman, The Return of Depression Economics: Paul Krugman (1999), The Return of Depression Economics (New York: W.W. Norton: 039304839X).

This is a book that anyone interested in international economic policy and the possible destinies of the world economy needs to read. Paul Krugman is, as I have said before, the best claimant to the mantle of John Maynard Keynes: an extremely knowledgeable professional economist, an excellent writer, and an incisive critic of what international economic policymakers are doing wrong.

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Future Economists Will Probably Call This Decade the 'Longest Depression'

Over at Huffington World Post: Future Economists Will Probably Call This Decade the 'Longest Depression': Posted: 01/08/2016 9:28 am EST Updated: 49 minutes ago: Economist Joe Stiglitz warned back in 2010 that the world risked sliding into a 'Great Malaise.' This week, he followed up on that grim prediction, saying, 'We didn't do what was needed, and we have ended up precisely where I feared we would.'

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The Melting-Away of North Atlantic Social Democracy

This has been available in full exclusively at the magnificent and well worth subscribing-to Talking Points Memo.

SEND TPM MONEY!!!!

But now let me let it out into the wild here--and promise to imminently (well, maybe in a month...) write about the whole symposium of which it is a part:

The Melting Away of North Atlantic Social Democracy: Hotshot French economist Thomas Piketty, of the Paris School of Economics, looked at the major democracies with North Atlantic coastlines over the past couple of centuries. He saw five striking facts:

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Comment at the URPE-AEA Session: Causes of the Great Recession and the Prospects for Recovery: The Honest Broker for January 18, 2016

Notes for My Comment at the URPE-AEA Session: Causes of the Great Recession and the Prospects for Recovery

  • Presiding: Fred Moseley
  • David M. Kotz and Deepankar Basu: Stagnation and Institutional Structures
  • Robert McKee [Michael Roberts]: Recessions, Depressions, and the Rate of Profit
  • Mario Seccareccia and Marc Lavoie: Understanding the Great Recession: Keynesian and Post-Keynesian Insights
  • Discussants: Robert J. Gordon, Brad DeLong, David Colander

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What Have We Unlearned from Our Great Recession? (January 2011): The Honest Broker for the Week of January 11, 2016

Jan 07, 2011 10:15 am, Sheraton, Governor's Square 15 American Economic Association: What's Wrong (and Right) with Economics? Implications of the Financial Crisis (A1) (Panel Discussion): Panel Moderator: JOHN QUIGGIN (University of Queensland, Australia)

  • BRAD DELONG (University of California-Berkeley) Lessons for Keynesians
  • TYLER COWEN (George Mason University) Lessons for Libertarians
  • SCOTT SUMNER (Bentley University) A defense of the Efficient Markets Hypothesis
  • JAMES K. GALBRAITH (University of Texas-Austin) Mainstream economics after the crisis:

My name is Brad DeLong.

I am a Rubinite, a Greenspanist, a neoliberal, a neoclassical economist.

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The Grand Strategy of Rising Superpower Management: The Honest Broker for the Week of January 4, 2016

Xi jinping Google Search

Munk School Trans-Pacific Partnership Conference: Geopolitics Panel

Revised and Extended: I could now talk about the risks of the Trans-Pacific Partnership. You have already heard a lot about the risks in the previous session here. You have heard about dispute resolution and about intellectual property. You have heard about instituting largely-untested dispute resolution procedures in such a way that they will be very difficult indeed to amend or suspend or replace or adjust in the future.

We all know very well the eurozone’s ongoing experience. We remember that the euro single currency is in its origins a geopolitical project. We remember the origins of the eurozone at Maastricht—the decision of the great and good of Europe that something needed to be done to bind Europe more closely together in the wake of the absorption into the Bundesrepublik of the German East and the collapse of the Soviet Empire. The creation of a single currency was clearly something.

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Interview: Brad DeLong and Jan Hatzius: The Honest Broker for the Week of December 28, 2015

An interview with Jan Hatzius I did last fall:

Brad DeLong is a professor of economics at UC Berkeley, where his research focuses on financial crises and 20th century macroeconomics, as well as the political economy of monetary and fiscal policy. He has taught at Harvard University and served as Deputy Assistant Secretary of the Treasury for Economic Policy under the Clinton Administration. Below, he and Goldman Sachs Chief Economist Jan Hatzius discuss risks around liftoff and the structural downshift in rates.

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MOAR Musings on the Current Episteme of the Federal Reserve...: The Honest Broker for December 21, 2015

Paul Krugman's Respectable Radicalism politely points out (at least) one dimension along which I am a moron.

Let me back up: Here in the United States, the current framework for macroeconomic policy holds that the economy is nearly normalized, that further extraordinary expansionary and fiscal policy moves carry "risks", and that as a result the right policy is stay-the-course. I was arguing that the Economist Left Opposition demand--for substantially more expansionary monetary and fiscal policies right now until we see the whites of the eyes of rising inflatio--was soundly-based in orthodox lowbrow Hicks-Patinkin-Tobin macro theory. That is the macro theory that economists like Ben Bernanke, Janet Yellen, and Stan Fischer taught their entire academic careers.

Paul Krugman points out—politely—that I am wrong.

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The Melting Away of North Atlantic Social Democracy: The Honest Broker for the Week of December 14, 2015

Over at Talking Points Memo: The Melting Away of North Atlantic Social Democracy: Hotshot French economist Thomas Piketty, of the Paris School of Economics, looked at the major democracies with North Atlantic coastlines over the past couple of centuries. He saw five striking facts:

  • First, ownership of private wealth—with its power to command resources, dictate where and how people would work, and shape politics—was always highly concentrated.
  • Second, 150 years—six generations—ago, the ratio of a country’s total private wealth to its total annual income was about six.
  • Third, 50 years—two generations—ago, that capital-income ratio was about three.
  • Fourth, over the past two generations that capital-income ratio has been rising rapidly.
  • Fifth, the flow of income to the owner of the dollar capital did not rise when capital was relatively scarce, but plodded along at a typical net rate of profit of about 5% per year generation after generation.

He wondered what these facts predicted for the shape of the major North Atlantic economies in the 21st century. And so he wrote a big book, Capital in the Twenty-First Century **READ MOAR at Talking Points Memo

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Are We Approaching Peak Human?: The Honest Broker for the Week of November 9, 2015

Are We Approaching Peak Human?

Uncharted: The Berkeley Ideas Festival :: Freight and Salvage Coffeehouse :: October 16, 2015

Brad DeLong and Peter Leyden

https://www.youtube.com/watch?v=7hAHsGr76tY :: Reinvent.net

Transcript edited for clarity and coherence

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On the Proper Size of the Public Sector, and the Proper Level of Public Debt, in the Twenty-First Century: The Honest Broker for the Week of October 26, 2015

Progress and Confusion cover2 pdf 1 page

Rethinking Macro Policy III

Jack Morton Auditorium, George Washington University :: April 15-16, 2015

It has now been seven years since the onset of the global financial crisis. A central question is how the crisis has changed our view on macroeconomic policy. The IMF originally tackled this issue at a 2011 conference and again at a 2013 conference. Both conferences proved very successful, spawning books titled In the Wake of the Crisis and What Have We Learned? published by the MIT Press.

The time seemed right for another assessment. Research has continued, policies have been tried, and the debate has been intense. How much progress has been made? Are we closer to a new framework? To address these questions the IMF organized a follow up conference on "Rethinking Macro Policy III: Progress or Confusion?", which took place at the Jack Morton Auditorium in George Washington University, Washington DC, on April 15–16, 2015.

The conference was co-organized by IMF Economic Counselor Olivier Blanchard, RBI Governor Raghu Rajan, and Harvard Professors Ken Rogoff and Larry Summers. It brought together leading academics and policymakers from around the globe, as well as representatives from civil society, the private sector, and the media. Attendance was by invitation only.

Wrap Up Video:


Session IV: Fiscal Policy in the Future Video:

Vitor Gaspar, Marco Buti, Martin Feldstein, Brad DeLong


J. Bradford DeLong

On the Proper Size of the Public Sector, and the Proper Level of Public Debt, in the Twenty-First Century

(Edited and revised version of: http://www.bradford-delong.com/2015/07/needed-more-government-more-government-debt-less-worry-the-honest-broker-for-the-week-of-july-12-2015.html)

Introduction

Olivier Blanchard, when he parachuted me into the panel, asked me to “be provocative.”

So let me provoke:

My assigned focus on “fiscal policy in the medium term” has implications. It requires me to assume that things are or will be true that are not now or may not be true in the future, at least not for the rest of this decade and into the next. It makes sense to distinguish the medium from the short term only if the North Atlantic economies will relatively soon enter a regime in which the economy is not at the zero lower bound on safe nominal interest rates. The medium term is at a horizon at which monetary policy can adequately handle all of the demand-stabilization role.

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Some Perhaps Cogent Thoughts on the Structure of the Fed, on Productivity Trends, and on Macroeconomic Policy: The Honest Broker for September 14, 2015

The highly-estimable Tim Duy is doing what he does best once again: worrying about the Federal Reserve's conduct of monetary policy:

Tim Duy: Some Thoughts On Productivity And The Fed: "Yellen is leaning in the direction of taking the productivity numbers at face value...

...and seeing low wage growth as consistent with the view that the productivity slowdown is real.... The unobserved component approach suggests that productivity growth decelerated to an annualized pace of just 0.82 percent by the second quarter of this year... [in line with] Fed staff estimates of potential GDP growth range from roughly 1.6 to 1.8 percent through 2020.... Yellen might think back to the 1990’s, when a surprise rise in productivity growth temporarily lowered the natural rate of unemployment... [and] reverse that logic now and think that the arguments for tighter policy are stronger....

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Musings on Thomas Malthus, the Hellenistic Age, the Loyal-Spirit Great Kings of Iran 550-330 BCE, and Other Topics: The Honest Broker for the Week of August 17, 2015

Today's Economic History: Paul Krugman muses:

Paul Krugman: SPQR And All That: "Adrian Goldsworthy’s The Fall of Carthage...

...All pre-industrial societies, I thought, were Malthusian... at the edge of subsistence... [and] a small elite, 5 or 10 percent... liv[ing] on resources extorted.... This model still seems to me to be pretty good for the Roman Empire. But at least as Goldsworthy describes it, the Roman Republic at the time of the Punic Wars was something very different... social solidarity... loyal allies... strong commitment from a large fraction of the population... military manpower... durability.... Are there any other examples in history like this? And how did they do it?

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Needed: More Government, More Government Debt, Less Worry: The Honest Broker for the Week of July 19, 2015

Over at Equitable Growth: Introduction

Olivier Blanchard, when he parachuted me into this panel, asked me to “be provocative”.

So let me provoke:

My assigned focus on “fiscal policy in the medium term” has implications. It requires me to assume that things are or will be true that are not now or may not be true in the future, at least not for the rest of this and into the next decade. It makes sense to distinguish the medium from the short term only if the North Atlantic economies will relatively soon enter a régime in which the economy is not at the zero lower bound on safe nominal interest rates. The medium term is at a horizon at which monetary policy can adequately handle all of the demand-stabilization role. READ MOAR

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Why Did the Supreme Court Decide Yet Another ObamaCare Case Today?: The Honest Broker for the Week of June 28, 2015

This morning, Republican-appointed Supreme Court Chief Justice John Roberts wrote and five of his colleagues -- Democrat-appointed Breyer, Ginsburg, Sotomayor, and Kagan, and Republican-appointed Kennedy -- agreed that:

Section 18031 [of the Affordable Care Act--i.e., the ObamaCare Law--] provides that “[e]ach State shall . . . establish an American Health Benefit Exchange..." [But] if [a] State chooses not to do so, Section 18041 provides that the Secretary [of Health and Human Services] “shall . . . establish and operate such Exchange..." (emphasis added [by Roberts]).... The phrase “such Exchange”... instructs the Secretary to establish and operate the same Exchange that the State was directed to establish.... Black’s Law Dictionary 1661... (defining “such” as “That or those; having just been mentioned”).... State Exchanges and Federal Exchanges are equivalent—they must meet the same requirements, perform the same functions, and serve the same purposes...
A simple matter of black-letter law, no? The plain meaning of the phrase "such Exchange" means that anything legal that is true of a health-insurance exchange established by, say, the state of New York is also true of a health-insurance exchange established by the federal government for, say, the state of Florida if the state of Florida fails to establish its exchange, no?

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Discussion of Matthew Rognlie: "Deciphering the Fall and Rise in the Net Capital Share": The Honest Broker for the Week of June 14, 2015

Discussion of Matthew Rognlie: "Deciphering the Fall and Rise in the Net Capital Share"

http://www.brookings.edu/~/media/projects/bpea/spring-2015/2015a_rognlie.pdf

J. Bradford DeLong :: University of California at Berkeley

At FOLD: https://readfold.com/read/delong/discussion-of-matthew-rognlie-e43Cyu5q


Let me begin by thanking Matt Rognlie for doing some very serious and thoughtful digging into this set of factor-payments data. That digging leaves me in an ideal position for a discussant: There are interesting and important numbers. These numbers have not been put together in this way before. The author is wise enough not to believe he has nailed what the numbers mean to the floor. Thus I am in an excellent position to, if not add intellectual value, at least to claim a lavish intellectual-rent share of Matt Rognlie's product.

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New Economic Thinking, Hicks-Hansen-Wicksell Macro, and Blocking the Back Propagation Induction-Unraveling from the Long Run Omega Point: The Honest Broker for the Week of May 31, 2015

Over at Equitable Growth: In the long run... when the storm is long past, the ocean is flat again.

At that time--or, rather, in that logical state to which the economy will converge if values of future shocks are set to zero--expected inflation will be constant at about the 2% per year that the Federal Reserve has announced as its target. At that time the short-term safe nominal rate of interest will be equal to that 2% per year of expected inflation, plus the real profits on marginal investments, minus a rate-of-return discount because short-term government bonds are safe and liquid. At that time the money multiplier will be a reasonable and a reasonably stable value. At that time the velocity of money will be a reasonable and a reasonably stable value. Why? Because of the powerful incentive to economize on cash holdings provided by the the sacrifice of several percent per year incurred by keeping cash in your wallet rather than in bonds. And at that time the price level will be proportional to the monetary base. READ MOAR

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Internet Media and the Fall of GigaOm: The Honest Broker for the Week of March 15, 2015

Sokrates: Internet Media and the Fall of GigaOm

Adeimantos: What? Are you now intellectually flirting with both Hinduism and techno-transhumanism?

Sokrates: No. GigaOm. Om Malik's weblog grown huge and turned into a business. A rather large business. That failed.

Felix Salmon: I told you so. If I may quote myself:

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The Future of Weblogging in the Medium Run: The Honest Broker for the Week of March 8, 2015

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Glaukon: So: Blogging...

Sokrates: Indeed...

Hypatia: I would like to start by offering the floor to the Great and Good Felix Salmon:

Felix Salmon: To All the Young Journalists Asking for Advice...: I’m also very flattered by the lovely things you said... about how you’d love to have a career in journalism... do[ing] the kind of thing... I do. You won’t.... By the time you’re my age... you’ll... be doing something... nobody today... foresee[s]....The obstacles facing you are much greater than anything I managed to overcome.... The exact same forces which are good for journalism and good for owners are the forces which are bad for journalists....

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The Puzzlement of "Cognitive Capture"

I want to label something that I see "cognitive capture", and think about it.

The vir illustris Ron Rosenbaum, however, disagrees. Rosenbaum is writing about David Corn's story that Bill O'Reilly was not in fact in a "war zone" in 1982, and about how O'Reilly is responding by saying: "you can tell that I am a truth-teller because the liberals attack me so much". And he thinks that "cognitive capture" is not a useful concept. We should pretend it does not exist. We should instead just tell the truth day by day as if we were having a reasoned discussion. And we should hope that eventually, with enough truth-telling, the chips will fall where they should:

Jay Rosen on Twitter: "1/ To clarify what I meant in saying I share this http://t.co/SZWiX9pFZn view. The @MotherJones story on O'Reilly was still worth doing...":

@jayrosen: 1/ To clarify what I meant in saying I share this http://nymag.com/daily/intelligencer/2015/02/fox-news-should-thank-mojo-for-oreilly-story.html view. The @MotherJones story on O'Reilly was still worth doing. It's important to nail down what actually happened, compare that to O'Reilly's statements, and criticize him for misrepresentation. But. Since we're trying to be factual, it is a fact that Fox News is not only built to absorb these blows but to strengthen itself by them. Things are way beyond whether Fox News 'has' or does not 'have' credibility, journalistically. That discourse is surreal at this point. We have to face up to a kind of rupture in the news system. 'Making shit up' is a devastating blow over here, and no big deal over there.. So what I object to is any assumption of 'continuity in credibility.' We need metaphors of discontinuity if we're to understand Fox News.

@RonRosenbaum1: @jayrosen_nyu A bit condescending to say 'those people''s eyes can't be opened a bit by somethng as egregious as this.

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The Rise in Inequality: A Young Lady or Gentleman's Illustrated Primer: The Honest Broker for the Week of February 15, 2015

- Income and Wealth Inequality in the United States: Evidence, Causes and Solutions | Rice University's Baker Institute:

The policy debate on the sources, causes and potential solutions to rising income and wealth inequality has intensified in the past few years. Recently, French economist Thomas Piketty’s popular book 'Capital in the Twenty-First Century' garnered much attention and ignited further debate about these issues. Piketty argues that wealth will inevitably become more concentrated under capitalism because the returns to wealth are larger than economic growth rates. The solution he proposes is a coordinated global tax on wealth. The Baker Institute's Tax and Expenditure Policy Program will host two renowned economists to discuss the underlying causes and consequences of inequality, evaluate the empirical evidence of rising inequality, and examine potential solutions for dealing with these problems in the United States.

  • WELCOME AND INTRODUCTION: John W. Diamond, Ph.D., Edward A. and Hermena Hancock Kelly Fellow in Public Finance, Baker Institute
  • PANELISTS
    • R. Glenn Hubbard, Ph.D.: Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School
    • J. Bradford DeLong, Ph.D.: Professor of Economics, University of California, Berkeley
  • MODERATOR: George R. Zodrow, Ph.D., Allyn R. and Gladys M. Cline Chair of Economics; and Baker Institute Rice Faculty Scholar.

As prepared for delivery:

The Rise in Income and Wealth Inequality: Evidence, Causes, and Solutions

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J. Bradford DeLong :: U.C. Berkeley, NBER, WCEG, INET :: February 3, 2015 :: http://tinyurl.com/dl20150202a

I am very happy to be here, especially as Texas is a state I get to relatively rarely. I have unusually few relatives in it, you see. When the DeLongs got to Wichita they decided to turn north rather than south and wound up in DeKalb County, Illinois. And those who did end up here decamped to North Carolina, leaving me with none until last year when my cousin Annie and her husband moved to Dallas. The last time my wife and I spent any extended time in Texas was on our honeymoon, when we were washed out of our campsite in a swamp near the Louisiana border by a midnight mid-June thunderstorm, so we bypassed Galveston and Houston and then spent a week and a half going Austin-San Antonio-Permian Basin-El Paso.

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Today's Greek Crisis: A Non-Platonic Dialogue: The Honest Broker for the Week of February 8, 2015

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Readings:

Sokrates Son of Sophroniskos: You are out of your century, and out of your country...

Titus Pomponius Atticus: I claim this to be my country, and here by the docks of the Piraeus to be my place. I am not called "Atticus" for nothing, you know...

Axiothea: Why are you called "Atticus"? It doesn't sound like a very Roman name...

Atticus: I made it up. My father had only two names--good old Titus Pomponius, no claims to triple-barreled noble senatorial-class names he, just an equestrian.

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The Future of the European Project, and the Future of the Eurozone: A Talk from 2013: The Honest Broker for the Week of January 25, 2015

The Future of the European Project, and the Future of the Eurozone

J. Bradford DeLong :: U.C. Berkeley and NBER :: April 16, 2013 http://eurofuture2013.wordpress.com/1

Framed picture John Harris Valda The Battle of Aquae Sextiae 102 B C 80 x 54 Wood Corum S Gold Amazon co uk Kitchen Home

My problem this morning is that I have four starting points. Or maybe my problem is that I have five starting points:

 

I. A Little Dutch History

My first starting point is the history of the Netherlands.

I would have to be more rash indeed than the fifteenth century's Charles de Valois-Burgogne,2 the last sovereign Duke of Burgundy, to dare to opine about classical Dutch history with Jan de Vries in the room. But my read of it tells me that "political union" is a very vague and sketchy concept indeed. Consider the "political union" of what was surely the strongest power in seventeenth-century Western Europe: the seven United Provinces of the Netherlands that dominated the economy and were the political-military lynchpin of the coalition to contain the aggressive King Louis XIV Bourbon of France. READ MOAR

Continue reading "The Future of the European Project, and the Future of the Eurozone: A Talk from 2013: The Honest Broker for the Week of January 25, 2015" »


William Gale Responds to Me on the Fiscal Sitch...: The Honest Broker

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William Gale wrote: http://www.cato.org/publications/cato-online-forum/get-fiscal-house-order

And I wrote: http://equitablegrowth.org/2014/12/02/question-william-gale-fiscal-outlook/

And now he responds:

William Gale:

Recently, I wrote an article on the role of fiscal policy on economic growth. I argued that, if we want to raise living standards of future generations, a major priority should be reducing the long-term ratio of public debt to GDP. (I also suggested that, since the benefits of higher economic growth disproportionately accrue to high-income households, those households should bear the brunt of the costs of fiscal consolidation.)

In response, Berkeley Economics Professor Brad Delong asked, “Why would anyone seek today to relatively downweight virtually any other economic policy priority in order to focus on the deficit?” At the risk of oversimplifying, Delong offers two classes of reasons for asking his question:

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Prolegomenon to a Reading Course on Karl Marx: The Honest Broker for the Week of December 12, 2014

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Over at Equitable Growth: These days, when people come to me and ask if I will run a reading course for them on Karl Marx, this is what I tend to say:

The world is divided into those who take Karl Marx's work seriously and those who do not.

On the one hand, those who do not take Karl Marx's lifetime work-project seriously are further divided into three groups:

  1. Those who ignore Marx completely.

  2. Those who use selected snippets from his work as Holy Texts, and

  3. Those modern "western Marxists" who find inspiration in the works that Karl Marx wrote exclusively before he was thirty. READ MOAR

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Hoisted from the Archives from June 2013: Michael Kinsley Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging

In Which I Finally Make Time to Shape-Shift Back into My Direwolf Form and Think About Michael Kinsley: Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging (Brad DeLong's Grasping Reality...):

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So I finally made a chunk of time to read and think about Michael Kinsley's response to Paul Krugman's rebuttal of Kinsley's claim that Krugman was engaged in a "misguided moral crusade against" rather than a technocratic critique of "austerity".

First and most essential, I need to set some rules here: If I'm going to be called a canine of any form, standards must be maintained.

I insist that it be not "attack dog" but either:

  • the Maoist "running dog", or
  • Jon Snow's direwolf: Ghost.

Those are the approved options. Pick one. Use it. Stick to it. It's really not hard at all to do.

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The Cato Institute's Brink Lindsey Is Running an Economic Growth Conference This Week: The Honest Broker for the Week of November 21, 2014

Over at Equitable Growth: RE: The Future of U.S. Economic Growth & Reviving Economic Growth: A Cato Online Forum

Some questions for the authors of the contributions that struck me as the most interesting...

Two Questions for Scott Sumner: First Question: Why has nominal GDP targeting not already swept the economics community? It really ought to have. Second Question: I believe in nominal GDP targeting--especially if coupled with some version of "social credit" at or near the zero lower bound. But a look back at the history of ideas about a proper "neutral" monetary policy--Newton’s fixed price of gold, Hayek’s fixed nominal GDP level, Fisher’s fixed price-level commodity basket, Friedman’s stable M2 growth rate, the NAIRU targeting of the 1970s, Bernanke’s inflation-targeting—leads immediately to the conclusion that anybody who claims to have uncovered the Philosopher’s Stone here is a madman. How can you reassure me that I (and you) are not mad?

Scott Sumner: More Bang for the Buck: A Surprisingly Cost-Effective Way to Boost Growth: "I would certainly not claim that monetary policy is the most important determinant...

...of the long-run growth rate in the economy.... But it does offer one of the cheapest ways of boosting growth. Unlike fiscal programs such as infrastructure, there is virtually no cost to improving monetary policy.... Elsewhere (2014) I’ve argued that a policy of nominal GDP targeting would smooth out the business cycle and undercut many of the arguments for counterproductive policies.... We need to convince other economists that nominal GDP targeting is the way to go. Once we do so, the Fed will follow the consensus. READ MOAR

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A Dialogue on Secular Stagnation: The Honest Broker for the Week of November 7, 2014

###Secular Stagnation###

Princeps Cogitationis: If I am going to hold down my consulting and speech-making jobs, I need to understand what Larry Summers is talking about here:

Larry Summers: What to do about secular stagnation?

But it is too long! 3000 words! Help! What can I do?

Oeconomicarus: But I thought you read 300 books a year?

Princeps Cogitationis: I read the last chapter of 300 books a year. Then I read three short reviews of each. And then I opine fearlessly. Working through a difficult 3000-word argument and assessing it is not a good use of my time. READ MOAR

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Unclear and Inadequate Thoughts on Financial Stability and Monetary Policy Once Again: The Honest Broker for the Week of October 24, 2014

**Over at Equitable Growth:As I continue to try to worry--without great success--the question of just where the increases in financial instability produced by the prolonged period of past and expected future extremely low interest rates and by quantitative easing comes from...

Two sources of risk:

  1. Sudden downward revisions in the expected future cash flows of underlying real assets that back financial assets.
  2. Sudden upward revisions in the rate at which expected future cash flows are discounted.

To recap my thinking before now:

Continue reading "Unclear and Inadequate Thoughts on Financial Stability and Monetary Policy Once Again: The Honest Broker for the Week of October 24, 2014" »


PIMCO: How to Lose (Lots of) Money and Still Influence People: The Honest Broker for the Week of October 10, 2014

Joshua Brown: “Do we need to fire PIMCO?”: "In February of 2011, [Bill] Gross loudly proclaimed...

[that] Pimco Total Return had taken its allocation to US Treasury bonds down to zero. As recently as the previous December, Pimco Total Return had been carrying as much as 22 percent of its AUM in Treasurys.... Gross compounded the move by being extremely vocal about his rationale--he went so far as to call Treasury bonds a 'robbery' of investors given their ultra-low interest rates and the potential for inflation. He talked about the need for investors to 'exorcise' US bonds from their portfolios, as though the asset class itself was demonic. He called investors in Treasury bonds 'frogs being cooked alive in a pot'. The rhetoric was every bit as bold as the fund’s positioning. It’s really hard to pound the table like this and then be flexible in the aftermath...

Continue reading "PIMCO: How to Lose (Lots of) Money and Still Influence People: The Honest Broker for the Week of October 10, 2014" »


Monday Smackdown: Yet More Chapter 11 of David Graeber's "Debt" in Chapter 7: (Definitely Not) the Honest Broker for the Week of October 3, 2014

NewImageDuring the past two weeks the drought of high-quality DeLong smackdowns on the internet has resumed. So it is time to turn back to the promise I made myself on April Fools Day 2013, and see whether the rest of the chapters of David Graeber's Debt: The First Five Thousand Mistakes are of as low quality as the utterly bolixed up chapter 12.

As you will recall, David Graeber is infamous for:

Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages...

and for having, concurrently and subsequently, offered three different explanations of how this howler came to be written and published:

  1. He has claimed that it it all perfectly true, just not of Apple but of other companies (none of which he has ever named).

  2. He has claimed that he had been misled by Richard Wolff, who taught him about Silicon Valley's communal garage laptop circles of the 1980s.

  3. He has claimed that what he had written was coherent and accurate, but that (for some unexplained reason) his editor and publisher had bolixed it all up.

This passage is, in the words of the very sharp LizardBreath:[1]

The Thirteenth Chime... that make[s] me wonder whether any fact in the book I don't know for certain to be true can be trusted...

And things have gone downhill from there...

Continue reading "Monday Smackdown: Yet More Chapter 11 of David Graeber's "Debt" in Chapter 7: (Definitely Not) the Honest Broker for the Week of October 3, 2014" »


Potential Output and Total Factor Productivity since 2000: Marking My Beliefs to Market: The Honest Broker for the Week of September 26, 2014

Over at Equitable Growth: I am still thinking about the best assessment of potential output and productivity growth that we have--that of the extremely-sharp John Fernald's "Productivity and Potential Output Before, During, and After the Great Recession". And I am--slowly, hesitantly, and unwillingly--coming to the conclusion that I have to mark my beliefs about the process of economic technological change to market, and revise them significantly.

Let's start with what I wrote last July: READ MOAR

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Department of "Huh?!" John J. Mearsheimer Thinks the West Caused the Ukraine Crisis?: The Honest Broker for the Week of September 19, 2014

NewImageOver at Equitable Growth: John Mearsheimer is only one of a surprising number claiming that the current crisis in Ukraine is predominantly the U.S.'s, and NATO's, and the Ukraine's fault:

John Mearsheimer: How the West Caused the Ukraine Crisis: Why the Ukraine Crisis Is the West’s Fault: "The United States and its European allies share most of the responsibility...

...The taproot of the trouble is NATO enlargement.... For Putin, the illegal overthrow of Ukraine’s democratically elected and pro-Russian president--which he rightly labeled a “coup”--was the final straw.... Realpolitik remains relevant--and states that ignore it do so at their own peril. U.S. and European leaders blundered in attempting to turn Ukraine into a Western stronghold on Russia’s border....

Soviet leaders... and their Russian successors did not want NATO to grow any larger and assumed that Western diplomats understood their concerns. The Clinton administration evidently thought otherwise.... The first round of enlargement... 1999... the Czech Republic, Hungary, and Poland. The second... 2004... Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Moscow complained bitterly.... The alliance considered admitting Georgia and Ukraine.... Putin maintained that admitting those two countries to NATO would represent a “direct threat” to Russia.... READ MOAR

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"Trapped in the 'Dark Corners'"?: Thoughts on Olivier Blanchard's "Where Danger Lurks": The Honest Broker for the Week of September 12, 2014

Over at Equitable Growth: "Trapped in the 'Dark Corners'"?: Thoughts on Olivier Blanchard's "Where Danger Lurks"

Olivier Blanchard, inveighing against "ergodicity" and "linearity" as assumptions, sounds like some post-Keynesian from the 1980s. They were right then. He is right now:

Olivier Blanchard: Where Danger Lurks: "One has to go back to the so-called rational expectations revolution...

...What was new was the development of techniques to solve models under the assumption that people and firms did the best they could in assessing the future. (A glimpse into why this was technically hard: current decisions by people and firms depend on their whole expected future. But their whole expected future itself depends in part on current decisions.) These techniques... made sense only... [if] economic fluctuations were regular enough so that, by looking at the past, people and firms (and the econometricians)... could understand their nature and form expectations... and simple enough so that small shocks had small effects.... Thinking about macroeconomics was largely shaped by those assumptions....

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A Note on the Core PCE Inflation Phillips Curve: Over at Equitable Growth: The Honest Broker for the Week of August 30, 2014

A Note on the Core PCE Inflation Phillips Curve

The Honest Broker for the Week of August 30, 2014

Over at Equitable Growth:

David Beckworth notes that in the Bernanke-Yellen era the FOMC gets uncomfortable and decides that it has to loosen policy and steps up its interventions when PCE inflation falls below 1.5%/year and gets uneasy and decides that it has to tighten policy when PCE inflation rises above 2%/year:

[This] reduced-form relationship... is highly suggestive and consistent with my claim... that... there is a 2% ceiling to an inflation target corridor...

Macro and Other Market Musings About the Fed Not Trying Hard Enough To Hit Its Inflation Target

Macro and Other Market Musings About the Fed Not Trying Hard Enough To Hit Its Inflation Target READ MOAR

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The Taper, Nick Rowe, Quantitative Easing, and Intellectual Coordination Failures: Over at Equitable Growth: Wednesday Focus for August 27, 2014

NewImageOver at Equitable Growth: Nick Rowe begs for North Atlantic central banks to do what he (and I) regard as their proper job, and whimpers:

Nick Rowe: Money, Prices, and Coordination Failures "The more interesting cases are...

...where a non-monetary coordination failure has spillover effects, and causes a monetary coordination failure. A worsening of asymmetric information problems in financial markets, which is a coordination problem in its own right, also causes an increased demand for money and a monetary coordination problem. Should we say that the problem in financial markets is the "root cause" of the recession, and one that should be addressed directly, if possible, by something other than monetary policy? No. Monetary policy should take the world as it is, warts and all, and do what it can do. And what it can do is eliminate that excess demand for money, even if it cannot eliminate that original problem that initially caused the excess demand for money. It does not matter, for the monetary authority, whether that increased demand for money was caused by some natural event like the weather, which nobody can change, or whether it was caused by some other problem, which the fiscal authority can and should fix. READ MOAR

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Robert Skidelsky's Superb Biography of John Maynard Keynes: From the Archives from a Decade Ago

NewImageRobert Skidelsky's Biography of John Maynard Keynes: Archive Entry From Brad DeLong's Webjournal: August 06, 2004:

Sitting next to Lord Skidelsky in the Sala Maggioranza of the Italian Treasury (after they turned off the air conditioning, I took off my tie when he took off his jacket) impelled me to reread his Keynes biography.

And, after rereading, I find that I cannot improve on what I wrote about them three years ago: my thoughts then were totally enthusiastic and totally adulatory. And my thoughts are the same now. (I haven't yet reread volume three). In his first two volumes, Skidelsky gives us John Maynard Keynes's life, entire. And he does so with wit, charm, control, scope, and enthusiasm. You read these books and you know Keynes--who he was, what he did, and why it was so important.

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Reviewing Lawrence Summers's et al.'s VoxEU Ebook on "Secular Stagnation": The Honest Broker for the Week of August 23, 2014

Over at Equitable Growth: The Setup:

Let's start with Paul Krugman, who made me aware of this ebook by writing:

Paul Krugman: All About Zero: "Way back in 2008 I (and many others) argued...

...that the financial crisis had pushed us into a liquidity trap... in which the Fed and its counterparts elsewhere couldn’t restore full employment even by reducing short-term interest rates all the way to zero.... In practice the zero lower bound has huge adverse effects on policy effectiveness... [and] drastically changes the rules... [as] virtue becomes vice and prudence is folly. We want less saving, higher expected inflation, and more.... Liquidity-trap analysis has been overwhelmingly successful in its predictions: massive deficits didn’t drive up interest rates, enormous increases in the monetary base didn’t cause inflation, and fiscal austerity was associated with large declines in output and employment.... READ MOAR

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Under What Circumstances Should You Worry That the Stock Market Is "too High"?: The Honest Broker for the Week of August 16, 2014

UPDATE: As Noah Smith politely points out, I did a no-no in being so lazy as to take averages of monthly returns to be "close enough" to cumulative compounded returns. Fixing that requires some edits, which I have made:


Over at Equitable Growth: Robert Shiller: The Mystery of Lofty Stock Market Elevations: "The CAPE ratio, a stock-price measure I helped develop...

...is hovering at a worrisome level.... Above 25, a level that has been surpassed... in only... the years clustered around 1929, 1999 and 2007. Major market drops followed those peaks.... We should recognize that we are in an unusual period, and that it’s time to ask some serious questions about it...

The first question I think we should ask is: how damaging in the long run to investor portfolios were the major market drops that followed the 1929, 1999, and 2007 CAPE peaks? The CAPE is the current price of the S&P index divided by a ten-year trailing moving average of its earnings: the CAPE looks back ten years to try to get an estimate of what normal earnings are and how stock prices deviate from them. Let's look ahead and calculate ten-year forward earnings to get a sense of what signals the CAPE sends for those of us interested in stocks for the long run. When we do that, we find that we cannot calculate a ten-year return for the 2007 CAPE peak of 27.54--we still have three years to go. But over the past seven years the S&P has produced an average annual real return of 5.2%/year: not too shabby. The ten-year average real return from the 1929 peak of 32.56 was 3.3%/year: you were in a real world of hurt if you panicked and sold or had to sell in 1931-1934, but not if you hung on. Only the 1999 peak was followed by long-run return disaster: a ten-year average real return of -2.1%/year because you would have been selling at the bottom in 2009--but even then if you had hung on until today your average 14.5 year real return would be +2.7%/year.

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Making Sense of Friedrich A. von Hayek: Live from La Farine CCXXXV: August 7, 2014: Virtual Office Hours/The Honest Broker for the Week of August 9, 2014

NewImageOver at Equitable Growth: One way to conceptualize it all is to think of it as the shape of a river:

The first current is the Adam Smith current, which makes the classical liberal bid: Smith claims that the system of natural liberty; with government restricted to the rule of law, infrastructure, defense, and education; is the best of all social arrangements.

This first current is then joined by the Karl Polanyi current: Polanyi says that, empirically, at least in the Industrial Age, the system of natural liberty fails to produce a good-enough society. The system of natural liberty turns land, labor, and finance into commodities. The market then moves them about the board in its typically disruptive fashion: "all that is solid melts into air", or perhaps "established and inherited social orders are steamed away". But land, finance, and labor--these three are not real commodities. They are, rather, "fictitious commodities", for nobody wants their ability to earn a living, or to live where they grew up, or to start a business to be subject to the disruptive wheel of market fortuna. READ MOAR:

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Elementary Philosophy of Probability and the War on Nate Silver: The (Not Very) Honest Broker for the Week of August 2, 2014

The 2012 Election A Big Win for Big Data Big Think Think TankOf all the weird things that have happened in the American public sphere in my life, the most weird was the War on Nate Silver--launched in the fall of 2012 by David Brooks, Joe Scarborough, Dylan Byers, and a remarkably large company.

The underlying argument appeared to be that Nate Silver was doing something wrong and unfair by using... evidence. By... counting things. By... using statistics. By... estimating probabilities...

A few of the "best" examples:

David Brooks on the PBS NewsHour:

What I hate are the forecasts, when they say so and so has a 66 percent chance of winning or a 32 percent chance of winning.... If you tell me you think you can quantify an event that is about to happen that you don’t expect, like the 47 percent comment or a debate performance, I think you think you are a wizard. That’s not possible...

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Monetarist, Keynesian, and Minskyite Depressions Once Again: Yes, Lloyd Metzler Was the Greatest Chicago Macroeconomist Ever: The Honest Broker for the Week of July 19, 2014

I have said this before. But I seem to need to say it again...

The very intelligent and thoughtful David Beckworth, Simon Wren-Lewis, and Nick Rowe are agreeing on New Keynesian-Market Monetarist monetary-fiscal convergence. Underpinning all of their analyses there seems to me to be the assumption that all aggregate demand shortfalls spring from the same deep market failures. And I think that that is wrong.

Simon Wren-Lewis writes:

I really like David Beckworth’s Insurance proposal against ‘incompetent’ monetary policy. Here it is: 1) Target the level of nominal GDP (NGDP). 2) "The Fed and Treasury... agree... should a liquidity trap emerge anyhow... quickly work together to implement a helicopter drop...." Market Monetarists and New Keynesians [do not] suddenly agree about everything... for David this is an insurance against incompetence by the central bank, whereas Keynesians... view hitting the ZLB as unavoidable if the shock is big enough. However this difference is not critical...

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Is It Possible to Understand the BIS View as an Analytical Position Rather than a Rhetorical Attitude?: The Honest Broker for the Week of June 28, 2014

Paul Krugman admonishes me for thinking I should try to work out what model underlies the Bank for International Settlements' 84th Annual Report. It is, he says, not so much a macroeconomic model or an analytical framework. Rather, he says, it is a mood: the rhetorical stance of austerity a outrance:

Paul Krugman: Liquidationism in the 21st Century: "The BIS position... [is] that of 1930s liquidationists like Schumpeter...

...who warned against any 'artificial stimulus' that might leave the 'work of depressions undone'. And in 2010-2011 it had an intellectually coherent--actually wrong, but coherent--story... that mass unemployment was the result of structural mismatch... [and] easy money would lead to a rapid rise in inflation.... it didn’t happen. So... it... look[ed] for new justifications for the same [policy] prescriptions... playing up the supposed damage low rates do to financial stability.... That over-indebtedness on the part of part of the private sector is exerting a persistent drag on the economy... is a reasonable story.... But the BIS... doesn’t understand that model... as if they were equivalent to... real structural problems... [which] makes a compelling case for... fiscal deficits to support demand while the private sector gets its balance sheets in order, for monetary policy to support the fiscal policy, for a rise in inflation targets both to encourage whoever isn’t debt-constrained to spend more and to erode the real value of the debt. The BIS, however, wants governments as well as households to retrench... and--in a clear sign that it isn’t being coherent--it includes a box declaring that deflation isn’t so bad, after all. Irving Fisher wept....

Are the BIS’s methods unsound? I don’t see any method at all. Instead, I see an attitude, looking for justification...

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