bradford-delong.com: Grasping Reality with Both Hands

Gaudete! Dies Natalis Solis Invicti!

Links for the Week of December 25, 2016

Most-Recent Must-Reads:

• Paul Krugman: Will Fiscal Policy Really Be Expansionary?: "It’s now generally accepted that Trumpism will finally involve the kind of fiscal stimulus progressive economists have been pleading for... (M)
• Tim Duy: Fed Turns Hawkish: "The FOMC raised the... federal funds rate by 25bp today, as expected... (Tu)
• Ben Thompson: Reconsidering Uber: "Part 2 is far better, and in many respects redeems the series... (Tu)
• Simon Wren-Lewis: Understanding Free Trade: "There you have, in one calm and measured paragraph, the contradiction at the heart of the argument... (Tu)
• Martin Wolf: Democrats, Demagogues and Despots: "Fear and rage must not be used as an excuse to destroy America’s core institutions... (W)
• Dietz Vollrath: Can You Do Historical Counter-Factuals?: "Studying slavery and capitalism, for example, we do not have thousands of different societies or cultures to page through... (Th)
• Robert Skidelsky: Economists versus the Economy: "Why did [economists] miss the storm?... Queen Elizabeth... asked a group of economists... (F)

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Most-Recent Should-Reads:

• Peter Lindert: Purchasing Power Disparity before 1914: "The issue has become “when did countries’ contemporaneous purchasing powers diverge?”, not “when did countries’ productivity grow at different rates?”... (F)
• Kevin Drum: Business Community Shocked Trump Might Impose Tariffs: "CNN reports that the business community is shocked... (Th)
• Daniel Johnson: Have Public Intellectuals Ever Gotten Anything Right?: "What [is] it... that gives gravitas to a public intellectual[?]... (Th)

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Most-Recent Links:

• Daniel Drezner: So you want to preserve the liberal international order
• Maciej Ceglowski: Superintelligence: The Idea That Eats Smart People: "The emus responded by adopting basic guerrilla tactics: they avoided pitched battles, dispersed, and melted into the landscape, humiliating and demoralizing the enemy..."
• Squid314: Epistemic learned helplessness

Must-Read: Paul Krugman likes to say that macroeconomics has done fine since 2007. And Jim Tobin's macroeconomics has. John Maynard Keynes's macroeconomics has. Walter Bagehot, Hyman Minsky, and Charlie Kindleberger's macroeconomics has done fine.

But Bagehot and Minsky influenced the then top-five American economics departments--Chicago, MIT, Harvard, Princeton, Yale--only through Kindlberger. Charlie went emeritus from MIT in 1976 and died in 1991, and MIT made a decision--a long series of repeated decisions, in fact--that there was no space on its faculty for anybody like Charlie.

When Robert Skidelsky says "macroeconomics", he means the macroeconomics of RBC and DSGE and ratex and the Great Moderation. And he is right: Alesina and Ardagna and Reinhart and Rogoff each had more influence on what policymakers and journalists thought about the effects of fiscal policy than did Paul Krugman and company, (including me). While the Federal Reserve went full-tilt into quantitative easing (but not stamped money or helicopter money), it did so in the face of considerable know-nothing opposition. And the ECB lagged far behind in terms of even understanding its mission. Why? Because Taylor, Boskin, Calomiris, Lucas, Fama, and company had almost as much impact as did Paul Krugman and company.

"Basic macro" did fine. But basic macro was not the really-existing macro that mattered:

Paul Krugman: Don't Blame Macroeconomics (Wonkish And Petty): "Robert Skidelsky... argues, quite correctly in my view, that economists have become far too inward-looking...

Towards a Reinvigorated Public (and Academic-Intellectual) Sphere...

What should I be doing that I am not doing?

• Notebook: The Public Sphere
• Discussions...
• Notebook: Discussion of: The Economist as...?: The Public Square and Economists
  • The Economist as...?: The Public Square and Economists
    • The Economist as...? (pdf)
• The Invisible College:
• What Is the Excellence of an Economist?

Must-Read: Nick Bunker: The 10 most popular Value Added posts of 2016: "Does the one percent deserve what it gets?...

Must-Read: John Lyons: Bring Back Jobs From China? In Shenzhen, They Aren’t That Worried: "As Donald Trump presses companies on U.S. manufacturing, city that became poster child for globalization has learned to adapt to economic shifts...

Should-Read: Peter Lindert: Purchasing Power Disparity before 1914: "The issue has become “when did countries’ contemporaneous purchasing powers diverge?”, not “when did countries’ productivity grow at different rates?”...

Comment of the Day: David Cloutier: The Economist as...?: The Public Square and Economists: "This is a wonderful piece...

Comment of the Day: Altoid: Falklands: "I have to think it was televised coverage of the British task force setting off...

Should-Read: Daniel Johnson: Have Public Intellectuals Ever Gotten Anything Right?: "What [is] it... that gives gravitas to a public intellectual[?]...

Schoolmen, and Others, as Public Intellectuals...

In retrospect, I like my "The Economist as...?: The Public Square and Economists" paper for the Notre Dame "public intellectualism" conference (and the newly-published conference volume) very much indeed.

It would be very nice if more people read it, and talked about it...

A discussion page...

Plus my note on an unfavorable review of the book in the Wall Street Journal, and some recent musings on failures of economists as public intellectuals.

Michael C. Desch, ed.: Public Intellectuals in the Global Arena: Professors or Pundits? (South Bend, IN: University of Notre Dame Press: 0268100241) http://amzn.to/2ifc7qn

Must-Read: On the defects of a disciplinary--as opposed to a liberal--education for anybody hoping to be a good disciplinarian, let alone anything more significant: Robert Skidelsky, Daniel Johnson, and Brad DeLong on Bagehot and on Machivelli

Robert Skidelsky: Economists versus the Economy: "Why did [economists] miss the storm?... Queen Elizabeth... asked a group of economists...

The Value of the History of Economic Thought: Hoisted from the Archives from 2003

2003: On Machiavelli's "Letter to Vettori," or, The Value of the History of Economic Thought: A surprisingly-large number of people have recently asked me why I am interested in the history of economic thought. They make various points. First, we don't learn physics from Galileo's Discourse on Two New Sciences. There are other, better, more complete, more accurate ways of presenting the material. In any real body of knowledge, the more up-to-date has to be preferred to the less because we know more than they did.

Procrastinating on December 23, 2016

Over at Equitable Growth: Must- and Should-Reads:

• Edward L. Glaeser (2004): Reinventing Boston: 1630–2003: "The three largest cities in colonial America remain at the core of three of America’s largest metropolitan areas today...
• Dietz Vollrath: Dumb Luck in Historical Development: "Philip Hoffman’s Why Did Europe Conquer the World?... on its face is another...
• Sue Helper and Jennifer Kuan: How engineers innovate in the automotive supply chain: "In practice... critical innovation occurs daily at many points throughout a supply chain...
• Dietz Vollrath: Can You Do Historical Counter-Factuals?: "Studying slavery and capitalism, for example, we do not have thousands of different societies or cultures to page through...
• Kevin Drum: Business Community Shocked Trump Might Impose Tariffs: "CNN reports that the business community is shocked...
• Nick Bunker: The 10 most popular Value Added posts of 2016 - Equitable Growth

Should-Read: Kevin Drum: Business Community Shocked Trump Might Impose Tariffs: "CNN reports that the business community is shocked...

Comment of the Day: Charles Steindel: Monday Smackdown: No, Larry Kudlow Is Not an Economist: "About 10 years ago (maybe a year or two prior to this panel) I tried to reconcile...

Missing the Economic Big Picture: No Longer so Fresh at Project Syndicate

Missing the Economic Big Picture: As former WTO Director-General Pascal Lamy said earlier this month in my hearing, quoting from a conversation between Wu Jincang and Chinese Sixth Buddhist Patriarch Huineng:

"When the philosopher points at the moon, the fool looks at the finger". Market capitalism is the moon. Globalization is the finger.

Between the Little Englanders' BREXIT vote and those currently installing Donald Trump in the American presidency in the belief that he will make America great again by negotiating very different "trade deals", there has been a lot of finger-watching this year.

Must-Read: Do historians do counter-factuals? Yes. Can you do historical counter-factuals? Yes. Could you do without historical counter-factuals? No. A world in which historians do not engage in and with counterfactuals would e a world in which human actions have no meaning, because you would never be able to say "this mattered"--you would only be able to say "this happened, and then that happened, and that is what was". And why would anyone with any volition at all wish to create or live in such a world?

Dietz Vollrath: Can You Do Historical Counter-Factuals?: "Studying slavery and capitalism, for example, we do not have thousands of different societies or cultures to page through...

Should-Read: Matthew Yglesias: Donald Trump’s Trade Team Has Based Their Analysis on a Remarkably Silly Mistake: "Because political life is full of dreary reductive binaries...

Should-Read: Dietz Vollrath: Dumb Luck in Historical Development: "Philip Hoffman’s Why Did Europe Conquer the World?... on its face is another...

Should-Read: Edward L. Glaeser (2004): Reinventing Boston: 1630–2003: "The three largest cities in colonial America remain at the core of three of America’s largest metropolitan areas today...

Public Intellectualism: Wednesday Economic History

A correspondent tells me that the Wall Street Journal has reviewed the book from our Notre Dame public intellectuals conference of three years ago and that, while the book is trashed, my piece is called "entertaining and enlightening" by the reviewer Daniel Johnson. This greatly pleases me--enlightenment is all one can hope for, and if one is entertaining as well one may be read even by those who do not get paid to do so. That makes my--personal--day, and I gratefully thank him.

Unfortunately, he also writes:

Comment of the Day: Charles Steindel: John Muellbauer: Why Central Bank Models Failed. How to Repair Them: "As somebody who spent years mucking around consumer spending and saving issues, it has long been frustrating to see that Euler equation in those models...

Should-Read: George Orwell: On Book Reviewers: "These books deal with subjects of which he is so ignorant...

Should-Read: Communities of engineering practice:

Sue Helper and Jennifer Kuan: How engineers innovate in the automotive supply chain: "In practice... critical innovation occurs daily at many points throughout a supply chain...

Procrastinating on December 21, 2016

Over at Equitable Growth: Must- and Should-Reads:

• Ben Thompson: Reconsidering Uber: "Part 2 is far better, and in many respects redeems the series...
• Simon Wren-Lewis: Understanding Free Trade: "There you have, in one calm and measured paragraph, the contradiction at the heart of the argument...
• Laurel Lucia and Ken Jacobs: California’s Projected Economic Losses under ACA Repeal: "[With] repeal [of] the Affordable Care Act (ACA), 3.7 million Californians enrolled in the Medi-Cal expansion would lose that coverage...
• John Muellbauer: Why Central Bank Models Failed. How to Repair Them: "At the core of representative agent DSGE models is the Euler equation for consumption...
• Martin Wolf: Democrats, Demagogues and Despots: "Fear and rage must not be used as an excuse to destroy America’s core institutions...
• Gideon Lewis-Kraus: The Great A.I. Awakening: "Google Translate, the company’s popular machine-translation service, had suddenly and almost immeasurably improved... (M)
• John Schmitt and Nisha Chikhale: The U.S. Recession and Recovery Have Been Tough on Everyone - Equitable Growth:

Should-Read: Gideon Lewis-Kraus: The Great A.I. Awakening: "Google Translate, the company’s popular machine-translation service, had suddenly and almost immeasurably improved...

Must-Read: Martin Wolf: Democrats, Demagogues and Despots: "Fear and rage must not be used as an excuse to destroy America’s core institutions...

Should-Read: John Muellbauer: Why Central Bank Models Failed. How to Repair Them: "At the core of representative agent DSGE models is the Euler equation for consumption...

Live from the Electoral College: KStreet607: Final Popular Vote Total Shows Hillary Clinton Won Almost 3 Million More Ballots Than Donald Trump: " Hillary Clinton won a total of 65,844,610 votes--48.2 percent--compared with Trump’s 62,979,636 votes--46.1 percent--according to David Wasserman of the nonpartisan Cook Political Report...

Jeffrey Toobin on Robert Bork: Hoisted from the Internet from Four Years Ago

Hoisted from Others' Archives:

Jeffrey Toobin: Robert Bork, 1927-2012: "Robert Bork, who died Wednesday...

...was an unrepentant reactionary who was on the wrong side of every major legal controversy of the twentieth century. The fifty-eight senators who voted against Bork for confirmation to the Supreme Court in 1987 honored themselves, and the Constitution. In the subsequent quarter-century, Bork devoted himself to proving that his critics were right about him all along.

Should-Read: Laurel Lucia and Ken Jacobs: California’s Projected Economic Losses under ACA Repeal: "[With] repeal [of] the Affordable Care Act (ACA), 3.7 million Californians enrolled in the Medi-Cal expansion would lose that coverage...

Must-Read: Simon Wren-Lewis: Understanding Free Trade: "There you have, in one calm and measured paragraph, the contradiction at the heart of the argument...

Must-Read: There is a serious debate about "Uber, floor wax or desert topping?"--excuse me: "Uber: grift or technological and organizational breakthrough?": Izabella Kaminska: Mythbusting Uber’s valuation | Why Uber’s capital costs will creep ever higher. Eric Newcomer: Uber Loses at Least $1.2 Billion in First Half of 2016. Hubert Horan: Can Uber Ever Deliver?: Part 1 | Part 2 | Part 3 | Part 4 | Part 5

Ben Thompson: Reconsidering Uber: "Part 2 is far better, and in many respects redeems the series...

Procrastinating on December 19, 2016

Over at Equitable Growth: Must- and Should-Reads:

• Paul Krugman: Will Fiscal Policy Really Be Expansionary?: "It’s now generally accepted that Trumpism will finally involve the kind of fiscal stimulus progressive economists have been pleading for...
• Andrew Sprung: xpostfactoid on Twitter: .@jamesykwak @delong: Odo of Urras (LeGuin)
• Tim Duy: Fed Turns Hawkish: "The FOMC raised the... federal funds rate by 25bp today, as expected...
• Jonathan Chait: Trump Turns to Always-Wrong Pseudo-Economist Lawrence Kudlow: "The emerging cast... suggests... his party’s domestic platform... continued and even intensified...
• No, Larry Kudlow Is Not an Economist... - Equitable Growth
• Bridget Ansel: Millions of Americans are stuck in part-time jobs - Equitable Growth

Should-Read: Jonathan Chait: Trump Turns to Always-Wrong Pseudo-Economist Lawrence Kudlow: "The emerging cast... suggests... his party’s domestic platform... continued and even intensified...

Monday Smackdown: No, Larry Kudlow Is Not an Economist III

Stupidest Man Alive Nomination: Larry Kudlow: Hoisted from the Archives from 2008: One would think that National Review would want to maintain a smidgeon of a reputation, and hence at least edit Larry Kudlow for his biggest howlers. But no. Eschaton reader js informs Atrios of the stupidity:

Monday Smackdown: No, Larry Kudlow Is Not an Economist II

John Holbo (2008): Shameless: "I know logically that Larry Kudlow has no shame, because...Larry Kudlow!...

Monday Smackdown: No, Larry Kudlow Is Not an Economist

I have only been on the same stage as Larry Kudlow twice in my life. In neither case did he provide any intellectual substance at all. This was the second time:

Hoisted from the Archives from 2007: I was sitting on the right end of an nine-person panel at the New School Friday morning http://www.cepa.newschool.edu/events/events_schwartz-lecture.htm#webcast. Bob Solow was sitting on the left end--Solow, Shapiro, Schwartz, Rohatyn, Kudlow, Kerrey, Kosterlitz, Hormats, DeLong. Bob Solow expressed concern and worry over the declines in the U.S. savings rate over the past generation. Larry Kudlow, in the middle of the panel, aggressively launched into an unbalanced and nearly fact-free rant...

Comment of the Day: Quite Likely: Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns: "'Instead, the government is supposed to, somehow, via clever predistribution, rearrange the pattern of market power in the economy...

Must-Read: I do not get this: it was 21 years ago that I learned--from an early draft of Staiger, Stock, and Watson (1997)--that nobody had any business thinking or acting on any belief that they had the correct estimate of the natural rate. The natural rate shifts. And because the natural rate shifts there is no way to estimate it precisely, even in retrospect, let along in prospect:

Tim Duy: Fed Turns Hawkish: "The FOMC raised the... federal funds rate by 25bp today, as expected...

Should-Read: Andrew Sprung: xpostfactoid on Twitter: .@jamesykwak @delong: Odo of Urras (LeGuin)

Must Read: In fact, it is looking less and less likely that the Trump deficits will be the kind of fiscal stimulus reality-based economists interested in economic recovery have been pleading for ever since the financial crisis:

Paul Krugman: Will Fiscal Policy Really Be Expansionary?: "It’s now generally accepted that Trumpism will finally involve the kind of fiscal stimulus progressive economists have been pleading for...

Links for the Week of December 18, 2016

Most-Recent Must-Reads:

• Tony Judt (1994): The New Old Nationalism: "Québecois today have few of the grievances expressed thirty years ago, when the region was economically depressed and its language and culture in decline... (M)
• Pseudoerasmus and Friends: The Cultural Turn Among "Historians of Capitalism" Considered Harmful (M)
• Martin Wolf: Too Big, Too Leninist: A China Crisis Is a Matter of Time: As Minxin Pei notes in a brilliant book, China’s Crony Capitalism... (Tu)
• Matt Bruenig (2012): The Never-Ending Libertarian Quest to Appear Clever: "I have been following an amusing back-and-forth between Bryan Caplan (I, II, III) and Matt Yglesias... (W)
• Paul Krugman: Notes on the Macroeconomic Situation: "So the Fed has raised rates... a mistake, although not as severe... as it would have been a year ago... (Th)
• Must-Read: Matthew Yglesias: We Should Have Taken Trump Literally as Well as Seriously: "The national press’s Trump coverage did to an extent err by not taking him seriously enough... (Th)

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Most-Recent Should-Reads:

• Robbie Whelan and Esther Fung: China’s Factories Count on Robots as Workforce Shrinks: "Suzhou Victory Precision Manufacture Co.’s chairman, Yugen Gao, said the days when the company drew its strength from China’s cheap and hardworking employees are gone... (Tu)
• David Drake: What Distant Deeps: "Empires have generally used proxies to fight wars on their borders... (Tu)
• Douglas O. Staiger, James H. Stock, and Mark W. Watson (1997): How Precise Are Estimates of the Natural Rate of Unemployment?: "Uncertainty arising from not knowing the parameters of the model at hand... (W)

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Most-Recent Links:

• The Niskanen Center is doing great work: Jacob Levy: The Multiculturalism of Fear | The Defense of Liberty Can’t Do Without Identity Politics | Authoritarianism and Post-Truth Politics
• Kevin Drum: Now Even Conservatives Are Calling Them "Tax Cuts For the Rich": "National Review editor Rich Lowry.... When was the last time you heard a conservative, let alone the editor of NR, refer to tax reform as a 'traditional Republican' 'tax cut for the rich'? That's the way liberals jeer at supply-side voodoo.... But now they are. What does this mean?"
• Katie Martin and Leo Lewis: Japanese banks warn of leaving London without Brexit clarity: Financial groups suggest relocating functions within 6 months to mainland Europe
• Matthew Klein: Who wins and loses from America’s transfer union?
• Simon Wren-Lewis: How the media misled us over Brexit and Donald Trump: Partisan newspapers and TV channels let "politicised truths" pass unchallenged...
• Simon Wren-Lewis: What Brexit and austerity tell us about economics, policy and the media
• Chye-Ching Huang and Paul N. van de Water: Millionaires the Big Winners From Repealing the Affordable Care Act
• Amanda Bayer and Cecilia Elena Rouse: Diversity in the Economics Profession: A New Attack on an Old Problem
• The History of Economics Society

Procrastinating on December 18, 2016

Over at Equitable Growth: Must- and Should-Reads:

• Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns - Equitable Growth
• Has Academic Thinking About Countercyclical Fiscal Policy Changed? - Equitable Growth
• (Early) Monday DeLong Smackdown Watch: Has Macroeconomics Gone Right? - Equitable Growth
• Nick Bunker: Weekend reading: “Disaggregating data” edition - Equitable Growth
• Philip Stephens: How Brexit May Not Mean Brexit: "Referendums... become a device for demagogues and dictators: the people have spoken so now they must be silent ever more...
• Greg Sargent: @ThePlumLineGS: "A new CBS poll finds support for [ObamaCare] repeal has dropped 10 points since January, all the way down to 25%: https://t.co/5NnlgJbWhK https://t.co/kAmAAAIn3S"
• Matthew Yglesias: Trump is going to be mad when he hears what his appointees think about the TPP: "His top economic and foreign policy advisers love it (as do his other advisers)...
• Robbie Whelan and Esther Fung: China’s Factories Count on Robots as Workforce Shrinks: "Suzhou Victory Precision Manufacture Co.’s chairman, Yugen Gao, said the days when the company drew its strength from China’s cheap and hardworking employees are gone...
• David Drake: What Distant Deeps: "Empires have generally used proxies to fight wars on their borders...
• Storify: Pre-Distribution vs. Social Insurance in Regional and Equality Policy:

Should-Read: Storify: Pre-Distribution vs. Social Insurance in Regional and Equality Policy:

(Early) Monday DeLong Smackdown Watch: Has Macroeconomics Gone Right?

Has macroeconomics gone right? After three years, how is this working out?...

Paul Krugman (2013): The Neopaleo-Keynesian Counter-counter-Counterrevolution: "OK, I can’t resist this one — and I think it’s actually important...

...Brad DeLong reacts to Binyamin Appelbaum’s piece on Young Frankenstein Stan Fischer by quoting from his own 2000 piece on New Keynesian ideas in macroeconomics, a piece in which he argued that New Keynesian thought was, in important respects, a descendant of old-fashioned monetarism. There’s a lot to that view.

Should-Read: The answer is: not precise at all. Nobody should imagine that they know what the NAIRU is right now, or make policy that does not take account of the fact that there is great uncertainty about what the NAIRU is right now:

Douglas O. Staiger, James H. Stock, and Mark W. Watson (1997): How Precise Are Estimates of the Natural Rate of Unemployment?: "Uncertainty arising from not knowing the parameters of the model at hand...

Comment of the Day: Tim McDermott: Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns: "Years and years ago I heard an interview with a Carnegie Mellon computer science professor who taught the founders of Lycos...

Should-Read: One loose end left in traditional histories of the Reagan administration is why Argentina moved in and occupied the Falkland Islands in 1982. Why didn't the fear a U.K. response supported by the U.S.'s logistical tail? Here David Drake provides an answer: the Argentine generals thought that they had been of so much assistance to the U.S. in its attacks on Nicaragua that the U.S. would stand aside--and it seems likely that policymakers like Jeane Kirkpatrick, Alexander Haig, William Casey and perhaps Zbigniew Brzezinski (if Drake has not written "1979" where he should have written "1981") had led them to believe that it would be so:

David Drake: What Distant Deeps: "Empires have generally used proxies to fight wars on their borders...

Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns

Pascal Lamy: "When the wise man points at the moon, the fool looks at the finger..."

Perhaps in the end the problem is that people want to pretend that they are filling a valuable role in the societal division of labor, and are receiving no more than they earn--than they contribute.

But that is not the case. The value--the societal dividend--is in the accumulated knowledge of humanity and in the painfully constructed networks that make up our value chains.