Live from Cyberspace: Welcome praise for J. Bradford DeLong (2015): The Scary Debate Over Secular Stagnation - Milken Institute Review: Hiccup ... or Endgame? Let me put a copy of the whole thing below the fold...
Live from Cyberspace: Welcome praise for J. Bradford DeLong (2015): The Scary Debate Over Secular Stagnation - Milken Institute Review: Hiccup ... or Endgame? Let me put a copy of the whole thing below the fold...
DeLong Garcia Alphachatterbox Transcript: Brad DeLong on Hamiltonian economics
[Cardiff Garcia] Hey everyone, welcome to Alphachatterbox, the long form business economics and tech podcast of the Financial Times.
I'm Cardiff Garcia, and our guest today is Brad DeLong, an economist and economic historian at the University of California Berkeley. He also writes a popular blog, and he’s the co-author, along with Steven Cohen, of a new book called Concrete Economics: The Hamilton Approach to Economic Growth and Policy, and that is the topic of this edition of Alphachatterbox. Brad DeLong, welcome back.
[Brad DeLong] Yes, yes. Thank you very much. Very glad to be "here", wherever "here" is, in some metaphysical kind of sense.
Perhaps starting a broader conversation...
In Defense of Funny Diagrams: "Brad DeLong asks a question about which of the various funny diagrams economists love...:
...should be taught in Econ 101. I say production possibilities yes, Edgeworth box no--which, strange to say, is how we deal with this issue in Krugman/Wells. But students who go on to major in economics should be exposed to the box--and those who go on to grad school really, really need to have seen it, and in general need more simple general-equilibrium analysis than, as far as I can tell, many of them get these days. There was, clearly, a time when economics had too many pictures. But now, I suspect, it doesn’t have enough....
(1998): Robber Barons:
First draft October 13, 1997; second draft January 1, 1998.
'Robber Barons': that was what U.S. political and economic commentator Matthew Josephson (1934) called the economic princes of his own day. Today we call them 'billionaires.' Our capitalist economy--any capitalist economy--throws up such enormous concentrations of wealth: those lucky enough to be in the right place at the right time, driven and smart enough to see particular economic opportunities and seize them, foresighted enough to have gathered a large share of the equity of a highly-profitable enterprise into their hands, and well-connected enough to fend off political attempts to curb their wealth (or well-connected enough to make political favors the foundation of their wealth).
I have been playing with FOLD, and having fun. Here I take the transcript of the New York Comic Con "Trekonomics" panel created by the extremely-productive-on-long-airplane-flights Izabella Kaminska, add to it, and annotate it...
Hey! Why hasn't the Financial Times paid for her to step back from Alphaville and turn her Beyond Scarcity series of weblog posts into a book?
Over at Equitable Growth: The very sharp and energetic Peter Passell, who runs the Milken Institute Review these days, commissioned me to write a reader's guide to the secular stagnation debate. I set it up as a four-corner cage match--Bernanke, Rogoff, Krugman, and Summers--and I am proud of it. (But I have to offer apologies to those--Koo, Blanchard, Feldstein come most immediately to mind, but there are others--who have their own serious positions that are not completely and satisfactorily understood as linear combinations of the four I chose to be my basis vectors.) It is out:
The Scary Debate Over Secular Stagnation, Milken Institute Review 2015:IV (October) pp. 34-51:(2015):
Bernanke... says we have entered an age of a “global savings glut.”... Rogoff... points to the emergence of global “debt supercycles.”... Krugman warns of the return of “Depression economics.” And... Summers calls for broad structural shifts in government policy to deal with “secular stagnation.” READ MOAR
Multiple Comments of the Day: What I, at least, regard as an interesting discussion in the comments to my A Very Brief Sokratic Dialogue on Website Redesign: From that post:
Platon: Five requirements?
Sokrates: Yes.... The stream... so... who want to either read what is new or to treat the site as a weblog--that is, have a sustained engagement and conversation with the website considered as a Turing-class hivemind--can do so.... The front-end... to give each piece of content a visually-engaging and subhead-teaser informative welcome mat.... The syndication... to propagate the front-end cards out to Twitter and Facebook.... The stock... a pathway... by which people can pull things written in the past... relevant... to their concerns today.... The grammar: The visually-interesting and subhead-teaser front-end... needs to lead the people who would want to and enjoy engaging with the content to actually do so.... [But,] as William Goldman says, nobody knows anything.
Platon: Is there anybody whose degree of not-knowingness is even slightly less than the degree of not-knowingness of the rest of us?...
Sokrates: My guess... http://www.vox.com--Ezra Klein and Melissa Bell and company--are most likely to be slightly less not-knowing than the rest of us....
It is time for me to reedit and revise this before I give it again. How should it change? What does it say that no longer needs to be said? What does it not say that now needs to be said?
Zimbabwe!: Here is a piece of currency, a dollar bill. It is from Zimbabwe. It is for $100,000,000,000,000 Zimbabwean dollars.
One of the things that was supposed to get done in January but didn't was a revision of this piece--it is now three years out-of-date, after all, and while it is still useful it is less useful than it was, or would be were I to properly review and update it. But it did not get done in January. It is not going to get done in February. So I am putting it up both as a useful (albeit somewhat out of date) resource, but primarily as a reproach to myself to get cracking on the revision in my copious spare time...
FEBRUARY 2012 VERSION: Budgeting and Macroeconomic Policy: A Primer
by J. Bradford DeLong
Budgeting and Macroeconomic Policy: A Primer
Budgeting and Macro Policy
J. Bradford DeLong
U.C. Berkeley: Spring 2012: February 23, 2012: 11,103 words
Noncommercial distribution for educational purposes allowed
© 2012 J. Bradford DeLong
J. Bradford DeLong :: U.C. Berkeley
OëNB Conference on European Economic Integration :: Vienna :: November 24-25, 2014
There is an important purpose of an opening keynote talk like this one. Its task is to start from first principles and then give a large-scale bird's-eye overview to what is to come. We have panels to come on monetary policy, balance-sheet adjustment and growth, inequality and its role in generating internal macroeconomic imbalances, external macroeconomic rebalancing, and banking sector regulation. They all presuppose that Europe, and within it the regions of Central, Eastern, and Southeastern Europe that we focus on here, need not just higher aggregate demand in the short-term but more. They need large-scale sectoral rebalancing. And that sectoral rebalancing needs to be rapid. Why? Because these economies will not grow smoothly without deep structural reforms--in these reforms need to be not just at the bottom but at the top, reforms of institutions, governance structures, an regulatory practices and mandates need to be carried out as well.
Septima: My good friend Omar, whom I love so dearly! You just ran into that tree!
Axiothea: And why are you walking about muttering to yourself with your eyes glued not to the beautiful mountain afternoon but to your smartphone?
Omar Khayyam: THAR SHE BLOWS! THREE POINTS OFF THE LARBOARD BOW!! IT'S THE BERNE WHALE!!!
Sokrates: If you wanted a focus group for the core target audience of the Old New Republic, you would look for intellectually-curious left-of-center engaged intellectuals not themselves subject-matter experts in policy and politics. And on the internet the single most concentrated slice of such people are found in the commentariat at the website http://unfogged.com. Their Ringmaster assembles such a focus group. It isn't pretty, but I do think it is an accurate picture of what has been wrought by all those liberal writers and editors who were...
Artaphernes: ...were for three decades and more willing to go the extra mile to suck up to the various and manifold bigotries of Martin Peretz and company. Isn't that what you were going to say, Sok?
Sokrates: Anyway, here are selections from the thread:
Teach Me: I've read so much blather about The New Republic's shake-up that I'm just going to skip the links and ask a simple question: in the last thirty years, what are its five best pieces of political writing?:
The other contributions to Brink Lindsey's Cato Institute Online Economic Growth Forum have all been things I can engage--things that make me think, that are individual economists' honest and good-faith attempts to say where the fruit is to be picked in terms of boosting America's economic growth.
Then comes Douglas Holtz-Eakin.
And, I must say, it seems to me that it really is time for some sort of disciplinary police action/intervention here...
Holtz-Eakin's piece seems to me to be, in the context of the other--remarkably good--pieces that Brink Lindsey has commissioned, a very strange intrusion from some alternative non-technocratic discursive universe--a veritable Colour out of Space:
That same nameless intrusion which Ammi had come to recognise and dread... the shaft of phosphorescence from the well was getting brighter and brighter, bringing to the minds of the huddled men a sense of doom and abnormality which far outraced any image their conscious minds could form...
Over at Equitable Growth: I have been waiting to post this until now when there are only twelve months before the end date of my bet with Noah Smith on whether inflation would break 5% over any twelve-month period without a high-pressure labor market. I took the "no". He took the "yes" and did so, from my perspective, irrationally--he only took 50-1, while he should have demanded odds an order of magnitude greater. That the final twelve-month window of our bet is now running means it is time to set out my thoughts on the trahison des clercs of so much of the academic economics profession over the past seven years. READ MOAR
Over at Equitable Growth: I confess that I do not understand the recent BIS Annual Report. I have tried--I have tried very hard--to wrap my mind around just what the BIS position is. But I have failed.
So let me try to lay out how I see it--where I think we are, and what I think the three live macroeconomic-policy positions are:
First, where we are:
We had in the late-1990s a high-pressure full-employment low-inflation tight-fiscal equilibrium. It was, however, unsustainable: based on exaggerated beliefs not about the utility but the profitability of companies based on the high-tech computer and communications technologies of the 1990s. When expectations adjusted to the reality of profitability, the high investment part of the 1990s boom went away, and the economy fell into the minor recession of the early 2000s. READ MOAR:
J. Bradford DeLong
The reference of course, is to Hicks (1937): “Mr Keynes and the ‘Classics’: A Suggested Interpretation”. An important, sprawling book of economic analysis. A complex and nonobvious relationship to a previous economics literature. Large political economy and policy stakes at hazard. Is this John Maynard Keynes's General Theory of Employment, Interest, and Money? Or is this Thomas Piketty’s Capital in the Twenty-First Century?
I confess that I had forgotten about the existence of Roger Pielke, Jr.--the last trace I can find of him in my Augmented Memory Packs dates to February, 2010 when Google sent me off to:
and I read:
Nate Silver goes from hero to goat, convicted by the Left of apostasy: Pity Nate Silver. Hero of the Left for his successful take-down of GOP’s election forecasts, shooting down their delusions about Romney’s chances of victory. Good Leftists like Brad DeLong and Paul Krugman heaped praises on Silver, catapulting him into a sweet gig at ESPN. The poor guy thought the applause was for his use of numbers in pursuit in truth, when it was purely tribal. Their applause were just tribal grunts — we good, they bad — in effect chanting: “Two legs good. Four legs bad.” Right out of the box at his new venture, ESPN’s FiveThirtyEight, Silver committed apostasy, and the Left reacted with the fury true believers mete out to their betrayers. He posted “Disasters Cost More Than Ever — But Not Because of Climate Change” by Roger Pielke, Jr....
Since, as I said, I had forgotten about the existence of Roger Pielke, Jr., I was somewhat annoyed at being told that my applause for Silver had just been a "tribal grunt". So I asked:
No paper, just notes--a not-very-successful attempt to deliver on my promise to Larry Summers to think about "secular stagnation" issues. What I think economists need to be thinking about if we are semi-permanently in a world in which demand for safe assets is very high, trust in the private-sector ability to create and guarantee such assets is very low, and inflation remains low...
The first part of our lesson for today consists of a piece based on his AEA presentation by the terrifyingly brilliant Lawrence Summers: Strategies for sustainable growth: "Last month I argued that the U.S. and global economies may be in a period... in which sluggish growth and output, and employment levels well below potential... coincide... with problematically low real interest rates....
Attention Conservation Notice: tl;dr. 9000 words trying to work my way through and in the process provide a reader's guide to the techno-growth stagnation arguments of Robert Gordon, Tyler Cowen, and Brink Lindsey. The arguments are powerful. The authors are very serious economists. I wind up skeptical, and optimistic--partly because I am a techno-optimist by nature, partly because I am a politico-optimist and I think the literature confuses the past generation's failures in distribution and demand-management due to political dysfunction with failures in accumulation and innovation, and partly because I have a different more micro-incremental conception of the process of economic growth than does Robert Gordon.
I. Once and Future Ages of Diminished Expectations
Back in 1990 Paul Krugman wrote a little book--a very nice little book--called The Age of Diminished Expectations. The central point was that the long era of more than a century during which Americans could expect 2%/year growth on average in their real per capita incomes and standards of living was over. This era stretched back to the immediate aftermath of the Civil War. This era saw each generation attain a level of material wealth and well-being twice that of its predecessors: 2%/year growth for 35 years is a doubling. And, Krugman wrote, the slow growth from 1973-1990--during which real GDP per worker had been a mere 1%/year--was a harbinger of a new, more pessimistic future: an age in which Americans' formerly-great expectations of the future would have to be diminished.
"Is morale low today?" my wife asks.
Morale is low.
Morale has been low since September 15, 2008, as I have watched the governors of the North Atlantic economy throw away 10% of our potential wealth--and do so apparently permanently. No--morale has been low since November 7, 2000. No--morale has been low since June 11, 1993, when this bizarre combination of Oil-Patch Democratic Senators seeking future campaign contributions from the American Petroleum Institute and Northeast and Midwest Republican Senators seeking to make Clinton look weak left us with no option but to strip the BTU tax out of the Reconciliation Bill and thus start us down the road that it looks like will lead us to a 5F global warming 21st century rather than the 2F century we had hoped to obtain…
Ever since then, my dominant image of myself has been as an involuntary sanitation engineer--one of those people in orange jumpsuits picking up garbage by the side of the road, only intellectual garbage, in the hope not so much of advancing knowledge but reducing misinformation.
If any… bid you to a feast… whatsoever is set before you, eat, asking no question for conscience' sake…
Yes, it is time: Niall Ferguson's last-week's Wall Street Journal op-ed, once again, at greater length:
J. Bradford DeLong
U.C. Berkeley and NBER
September 2013 :: University of Missouri--Columbia
John Ball (1381):
When Adam delved and Eve span/Who was then the gentleman?
From the beginning all men by nature were created alike, and our bondage or servitude came in by the unjust oppression of naughty men. For if God would have had any bondmen from the beginning, he would have appointed who should be bond, and who free. And therefore I exhort you to consider that now the time is come, appointed to us by God, in which ye may (if ye will) cast off the yoke of bondage, and recover liberty…
You need to understand three things to grasp the state of the world economy outside the North Atlantic in 1870:
that the drive to make love is one of the very strongest of all human drives,
that living standards were what we would regard as very low for the bulk of humanity in the long trek between the invention of agriculture in 1870, and
that the rate of global and even leading-nation technological progress up to 1870—even in the heat of the Industrial Revolution itself—was, by our standards, glacial.
A shorter version was published in the July/August 2013 issue of Foreign Affairs at: http://www.foreignaffairs.com/articles/139464/j-bradford-delong/the-second-great-depression
A Review of Alan Blinder's After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead (New York: Penguin Press)
J. BRADFORD DELONG is Professor of Economics at the University of California at Berkeley, a Research Associate of the National Bureau of Economic Research, and a Visiting Fellow at the Kauffman Foundation
Alan Blinder is the latest economist out of the gate with an analytical account of the recent economic downturn. His 2013 After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead (New York: Penguin) is, I think, the best of accounts--at least the best for those without the substantial background and experience in finance needed to successfully crack the works of Gary Gorton. It is the best for four reasons:
OPERATOR: Excuse me, ladies and gentlemen, we now have the speakers in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of the presentation, we will open the floor for questions. At that time, instructions will be given if you would like to ask a question.
It is now my pleasure to turn the conference over to Gideon Rose.
Little more than quotes from Skidelsky's three-volume Keynes biography strung together, with a little commentary and occasional quibbling…
J. Bradford DeLong Professor of Economics, U.C. Berkeley
Econ 115 Lecture
September 29, 2009
5562 words: September 29, 2009
In the beginning was Karl Marx, with his vision of how the Industrial Revolution would transform everything and be followed by a Great Communist Social Revolution—greater than the political French Revolution—that would wash us up on the shores of Utopia.
The mature Marx saw the economy as the key to history: every forecast and historical interpretation must be based on the economy's logic of development. This project as carried forward by others ran dry. Sometimes--as in, say, Eric Hobsbawm's books on the history of the nineteenth century--this works relatively well. But sometimes it led nowhere. The writing of western European history as the rise, fall, and succession of ancient, feudal, and bourgeois modes of production is a fascinating project. But the only person to try it seriously soon throws the Marxist apparatus over the side, where it splashes and sinks to the bottom of the sea. Perry Anderson's Passages from Antiquity to Feudalism and Lineages of the Absolutist State are great and fascinating books, but they are not "Marxist". They are Weberian. The key processes in Anderson's books concern not “modes of production” but rather “modes of domination.”
And when Marx and Engels's writings became sacred texts for the world religion called Communism, things passed beyond the absurd into tragedy and beyond tragedy into horror: the belief that the logic of development of the economy was the most important thing about society became entangled in the belief that Joe Stalin or Mao Zedong or Pol Pot or Kim Il Sung or Fidel Castro was our benevolent master and ever-wise guide.
But let us go back to a time before Marxism lost its innocence. Let us go back and look at the thinker, Karl Marx, and what he actually wrote and thought…
Right now I am in the middle of a long project with Larry Summers on fiscal policy in a depressed economy. It has a lot of moving parts. Right now, however I am finding it difficult to make progress because it is not clear to me who the audience for this--who we should be trying to convince of what.
So let me, right now, try to spend tonight telling you what I think but rather what I think others think.
This year I am on sabbatical--which means I do not teach. And I do miss it. Thus, from my perspective at least, this next hour is going to be an hour of pure fun.
I hope it will be an hour of pure fun for you all as well.
As Bob Strom said, right now in this MBA class you are transitioning from studying micro to studying macroeconomics. You are moving away from studying that part of economics where you talk about how the market system works well: how supply balances demand to make the maximum possible amount and value of win-win deals, and how people respond to the incentives they’re given to change their behavior. To the extent that things go wrong in microeconomics--to the extent that when you step back and look at the situation you say "Geewillickers! I really wish this had not happened!"--it is because you wish that you or the market system had not given people the incentives that it in fact did.
David Graeber wrote, about his book Debt:
[S]cholars of Greece, Mesopotamia, and Islam, Medievalists, Africanists, historians of Buddhism, and a wide variety of economists... none have noticed any glaring errors... it’s remarkable that someone who is not an area specialist actually more or less gets it right (remember, these are scholars often loathe to admit even their own colleagues in the field get it more or less right.)... meticulously researched and has stood up to scholarly review...
I protested that David Graeber's chapter 12, at least, got quite a large number of things wrong.
Non-economic reasoning? Economic non-reasoning? Non-economic non-reasoning. I'm not sure what to call rejecting Bayes's Rule…
Suppose that for some reason--never mind why--you were back in 2009 confident--70% sure--that Bernanke's policies were inappropriate and disastrous, because if they were adopted they were near-certain--90%--to bring 10%/year if not 20%/year inflation soon--by 2012.
Then 2012 rolls around. No inflation. What, then, come 2013 is your subjective probability that Bernanke's policies are inappropriate and disastrous?
Panel Moderator: J. BRADFORD DELONG (University of California-Berkeley)
DELONG: Between 1985 and 2007--the period of the "Great Moderation"--the Federal Reserve and the rest of the U.S. government on the west edge and the central banks and institutions of the European Union on the east edge of the Atlantic Ocean provided a broadly stable macroeconomic environment within which private-sector businesses, workers and investors could make their economic plans. In the U.S., on an annual basis: the rate of nominal GDP growth dropped below 4% for only 3 of those years and rose above 7% for only 2 of those 22 years; the rate of consumer price inflation rose above 5% for only 3 and fell below 2% percent for only 2 of those 22 years; and the civilian adult employment-to-population ratio remained between 60% and 64% for that entire period. And Western Europe experienced a similar "Great Moderation" with low inflation, relatively smooth growth, and diminishing unemployment.
Two criticisms of Nate Silver that may be valid:
Silver introduces noise into his estimates by placing weight on a not very well-founded model of fundamentals-- witness his failure to get the North Dakota Senate race right.
Silver's model on election eve did not say that Obama had a 90% chance, it said Obama has a 99% chance. But Silver introduced a fudge factor: a
completely arbitrary 20% chance based on the scanty history of state-level polling that the state-level polls were all substantially wrong in the same direction, and hence a 10% chance of a Romney victory. He would have been better advised to say: "My model says Obama has it nailed, but my model might be wrong--pulling a number out of the air, if you think there's a 20% chance that I have my head completely up my #%$, you can assign Romney a 10% chance. That would have aided communication.
And, below the fold, a bunch of criticisms of Silver and hunch-based forecasts that are not valid:
Harley Shaiken: Hello. I’d like to welcome everyone on behalf of the Center for Latin American Studies at UC Berkeley, and on behalf of the University of Chile's School of Economics and Business. This is part of a series that the University of Chile and Berkeley are doing: "Inequality: A Dialogue Across the Americas".
The issue of inequality in the United States is a central one at this moment, with an election upcoming with broad concerns about the economy. It is clearly also a central concern in Chile, and throughout the Americas. This is the second of a series that we are doing. The first was in early September, with former president Ricardo Lagos, of Chile and Robert Reich from here at Berkeley.
Today, I am going to introduce both our speakers, one in Berkeley, one in Chile, and then after brief opening presentations we will ask a question of a speaker in another country--in fact, on another continent.Then we will open for questions here at Berkeley, at the University of Chile, and several questions that we’ve received on the internet.
Hobsbawm's 19th century "Age" trilogy is great. His 20th century Age of Extremes is less good--profitable as a work of history, but also, alas, profitable as an index of the impact decades of doublethink can leave on a good mind…
Hoisted from the Archives from back in 1995, in that decade between the Fall of the Berlin Wall and the Fall of the Towers:
Corrections from anybody listening to the panel most welcome...
John Ellwood: Welcome everybody, welcome to our session on the Supreme Court ruling on the Affordable Care Act, or if you don’t like that "ObamaCare"…
Brad DeLong: RomneyCare!
John Ellwood: We are fair and balanced here at Berkeley.
Last and first, this session is sponsored by the Goldman School of Public Policy, which is footing the bill, and I thank my gracious dean; by the Robert Wood Johnson Post-Doctoral Program in Healthcare; and by the Berkeley Law School at Boalt Hall, which has kindly given us this room.
Last Thursday, obviously, the Supreme Court released its opinion on the Affordable Care Act. In my view, the decision represents another step in the what I would call the 100-year struggle between those I see on the left to provide as close to universal access to healthcare as possible, to control the costs of healthcare, and to improve the quality of healthcare. The purpose of today’s event is to begin a conversation about the case, and to continue the conversation on these issues: access, cost, and quality.
Eric Schickler: Welcome everybody to the Institute of Governmental Studies. I will say, as my first point, that a couple of weeks ago when we were scheduling this for several days after graduation, some people commented:
Do you think a lot of people will come? You know it might be a little problem.
Well, this is clearly the biggest crowd I have ever seen at IGS. We have had some great events in the past, but this one promises to be really special. I want to note there are some extra seats in the side room where you will be able to hear, for Tom and Norman will have microphones. You should be able to hear them in there. You might be more comfortable in there than standing in the back.