Pawel Morski: Exhuming Lehman (and looking for Signs in the Entrails) | David H. Autor | Martin Wolf:* Why the world faces climate chaos | Japan economy records fastest growth in a year
Ryan Avent: Government borrowing: Fiscal consolidation, American style: "THE Congressional Budget Office released an updated budget outlook today. Here's the big news: 'If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, the Congressional Budget Office (CBO) estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.' The 4% of GDP deficit forecast for 2013 is even more remarkable when one notes that the figure for 2012 was 7%. That's a breathtaking pace of fiscal consolidation. CBO reckons that the deficit will continue to fall and will drop to 2.1% of GDP in 2015. Public debt as a share of the economy is also forecast to begin falling from next year…. One has to conclude that pundits and politicians alike dramatically overstated the challenge of bringing down American borrowing and stabilising American public debt. One wonders how this news will be received in London. Since 2010 (when the coalition government took charge) Britain's growth performance has diverged sharply from America's. There was supposed to be a point to that pain; for its trouble, Britain was supposed to take the fast road back to fiscal rectitude. Instead Britain is badly lagging behind America on that score as well. There has been virtually no change in public borrowing as a share of GDP in Britain from 2011; it remains at about 7.5% of GDP. A very interesting contrast."
*Congressional Budget Office: Updated Budget Projections: Fiscal Years 2013 to 2023: "If the current laws… do not change, the budget deficit will shrink this year to $642 billion… 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP… deficits in CBO’s baseline projections continue to shrink, falling to 2.1 percent of GDP by 2015…. For the 2014–2023 period, deficits in CBO’s baseline projections total $6.3 trillion… the debt is projected to decline from about 76 percent of GDP in 2014 to slightly below 71 percent in 2018."
Jonathan Chait: Give Back that Pulitzer, Journal Editorial Page: "We don’t need to lower ourselves to the Journal’s hackish standard. Coincidences happen. The future is hard to predict. The Journal’s "Markets Good, Government Bad" worldview may give it the confidence to make clairvoyant predictions, which it of course proceeds to forget ever happened, but the correct response is a certain humility and willingness to learn from the data. Still, the fact that the right is being forced to fall back from predicting a staggering rise in health-care costs to explaining away the staggering decline in health-care costs represents real progress."
Henry Farrell: Nietszche and the Marginalists, Hayek, and Schumpeter: "The methodological problem is that of making an inherently rather static framework – equilibrium-centered economics – something that is better able to take account of dynamic effects, and in particular of the ways in which individuals may innovate…. The political priors have to do with a vision of the world that is most aptly expressed by Nietzsche and perhaps others, which emphasizes how the individual self-development of those few with the capacity for heroism is being stifled by an increasingly routinized and banausic world of bureaucracy and restraint. Weber most obviously expresses this in Nietzschian terms (and makes clear his debt to Nietzsche). But something similar spurs both Schumpeter and Hayek’s pessimism about the likely consequences of social democracy. What we see (if this guess is right) in the varying Austrian approaches to economics are the consequences of a perceived coincidence of the methodological and the political problems – a set of arguments which are intended both to provide a counterweight to more standardly marginalist accounts of the economy, and a possible antidote to the political disenchantment of the world. Again, what I really like about Corey’s take is that it highlights the specifically aristocratic implications of Schumpeter’s and Hayek’s answers – one could have come up with different possible solutions, and the solution that they did come up with reflects a specific set of political values, and either an elective affinity with, or indirect influence from, the ideas of Nietzsche."