- Afternoon Must-Read: Paul Krugman: The Fall of Macroeconomics | Washington Center for Equitable Growth
- Afternoon Must-Read: Brink Lindsey: Why Living on the Dole is Bad for You | Washington Center for Equitable Growth
- Liveblogging World War II: June 29, 1944: Eleanor Roosevelt (Brad DeLong's Grasping Reality...)
- Adam Smith on How to Make the Working Class Happier and More Productive: Pay Them More (Brad DeLong's Grasping Reality...)
- Alfred Marshall on Nineteenth-Century English Economics and Economists (Brad DeLong's Grasping Reality...)
- Liveblogging World War I: June 28, 1914: The Assassination of Archduke Franz Ferdinand of Austria-Hungary (Brad DeLong's Grasping Reality...)
- For the Weekend...: British Accents (Brad DeLong's Grasping Reality...)
- The Four Big Valid Issues People Have with Thomas Piketty's Grand Argument: Over at Equitable Growth: Friday Focus for June 27, 2014 (Brad DeLong's Grasping Reality...)
Garry Kasparov: The Chess Master and the Computer: "The AI crowd, too, was pleased with the result and the attention, but dismayed by the fact that Deep Blue was hardly what their predecessors had imagined decades earlier when they dreamed of creating a machine to defeat the world chess champion. Instead of a computer that thought and played chess like a human, with human creativity and intuition, they got one that played like a machine, systematically evaluating 200 million possible moves on the chess board per second and winning with brute number-crunching force. As Igor Aleksander, a British AI and neural networks pioneer, explained in his 2000 book, How to Build a Mind: 'By the mid-1990s the number of people with some experience of using computers was many orders of magnitude greater than in the 1960s. In the Kasparov defeat they recognized that here was a great triumph for programmers, but not one that may compete with the human intelligence that helps us to lead our lives.' It was an impressive achievement, of course, and a human achievement by the members of the IBM team, but Deep Blue was only intelligent the way your programmable alarm clock is intelligent. Not that losing to a $10 million alarm clock made me feel any better..."
Judd Legum: Arizona Professor Body Slammed By Police During Jaywalking Stop, Now Charged With Assaulting Officer: "A new video shows Dr. Ersula Ore, a professor at Arizona State University, body slammed by a police officer after being stopped for jaywalking near campus. But it’s Ore who is facing charges for resisting arrest, assaulting a police officer, and other crimes..."
Nick Bunker: Productivity lost?: "Fernald’s findings... imply that our growth problem is secular... a supply-side problem that has reduced the rate the economy can sustainably grow at. This would mean the Fed should raise interest rates soon, but keep rates low in the long run.... What’s frightening is that Fernald’s work doesn’t include the potential damage to long-run economic growth done by the Great Recession and the weak policy response. Total factor productivity growth could be even lower as the effects of the recession casts a shadow forward into our economic future as laid-off workers and idle equipment become less productive and unable to contribute to economic growth. Of course, productivity growth could leap back up again..."
Nick Bunker: The curious case of the first quarter GDP numbers | Washington Center for Equitable Growth: "Yet the most confusing aspect of the data is that while the economy contracted during the first quarter of this year, employment increased by 569,000 jobs.... Some economic commentators questioned the validity of Okun’s Law early in this expansion, which began in June 2009, but from a different angle. Back then, the concern was that GDP growth wasn’t bringing unemployment down fast enough.... But after the GDP figures were later revised, the validity of the 'law' was upheld... one quarter does not an economic law break..."
Nick Bunker: Weekend reading: "Macroeconomics: Reacting to Brad DeLong’s Comparative Economic Theology, Simon Wren-Lewis provides a short intellectual history of macroeconomics.... Finance:... The Economist: Is the increasing size of finance just rent seeking?; Claudia Sahm on Household Deleveraging. Labor: Jared Bernstein... on state and local minimum wages. Federal Reserve: Cardiff Garcia... [on] Janet Yellen. Long-Term Growth: Larry Summers... [on] secular stagnation. Tech: Noah Smith on... Drone Valley."
Should Be Aware of:
- John C. Williams: "The very real and sizable costs of using monetary policy to deal with risks to financial stability along with the uncertain benefits of doing so—argues for finding alternative tools with more favorable tradeoffs..."
- Bridget Ansel: Reform summer vacation to boost U.S. economic competitiveness
- **Jim Tankersley and Jeff Guo:(( Congrats, America. You have less economic opportunity than you did in 1970
- Ben Casselman: No, the Long-Term Jobless Aren’t ‘Catching a Break’
Michael Hiltzik: Healthcare debate lacks factual arguments against Obamacare: "All for suggesting that a government program is actually succeeding in improving access to healthcare for millions of Americans who didn't have it before. Plainly, something is at work here other than the wholesome give-and-take of political debate.... What accounts for the pungent rancor? Here's a rundown: 1. The Fox News effect.... 2. The novelty of health insurance.... 3. Nature abhors a vacuum. The yawning vacuum in analysis of the Affordable Care Act has been hard information.... 4. Us vs. them. As Jonathan Chait of New York Magazine observes, the conservative critique of the ACA has been shifting 'from the practical to the philosophical'. The old talking points have gone down in flames.... So now their objection is that the ACA mainly benefits the poor..."
Bruce Bartlett Sends Us to Scott Sumner: The American system is rigged to favor the rich: "All across America... millions... live in the underground economy, fearful of the government. Thousands of them are people who are unable to pay legal bills, and face jail time if caught: 'More than a third of all states now allow borrowers who don’t pay their bills to be jailed, even when debtor’s prisons have been explicitly banned by state constitutions....' In contrast, when wealthy people like Donald Trump go bankrupt, they are allowed to keep many of their assets and obviously don’t go to jail. Here are some other ways that the system in America is rigged to favor the rich: 1. The poor are often jailed for drug crimes, while people like Rush Limbaugh get off scot-free. Or go into 'rehab'. 2. The government allows big banks to borrow money (via deposits) at T-bond interest rates...,3. The government shovels vast sums of money into healthcare... they don’t regulate costs.... 4. In addition to the medical subsidies, they severely restrict entry in medicine.... 5. They also restrict entry in law, and as if that isn’t enough, they set up tort laws in such a way that lawyers can skim massive profits.... 6. In my field (higher education) they heavily subsidize spending.... 7. They have patent laws that give monopolies to the inventor... not just major new products with social externalities like the internet, or semi-major ideas like social media, but slight tweaking.... This allows vast profits to be earned in knowledge-oriented industries that are winner-take-all and near-zero marginal cost of production.... 8. People who own auto dealerships are protected from competition.... The question of whether the policies are justified has no bearing on whether the system is rigged to favor the rich..... Many on the left favor superficial palliatives like higher minimum wages and taxes on capital, which would do little to solve the problem and indeed would do more harm than good..."
Paul Krugman: Stagflation and the Fall of Macroeconomics: "Anti-Keynesian views, indeed real business cycle theory asserting that inadequate demand can never be a problem, retains a firm grip on much of the profession.... More broadly, the fundamental shift in intellectual criteria that Simon [Wren-Lewis] has written about several times--from 'does the model fit the facts?' to 'does it have rigorous foundations in [intertemporal] maximization?'--remains very much in force. You might have expected both the 2008 crisis and the years of poor performance that followed--years in which new classical types made massively wrong predictions, while people who remembered IS-LM did much better--would have changed this a lot. But remember that new classical macro fundamentally elevated microfoundations above empirical success; so orthodoxy largely brushed aside empirical failure.... In the long run, new classical macro may erode in the face of its uselessness. But in the long run — well, you know..."
Brink Lindsey: Why Living on the Dole is Bad for You: "I worry that a U[niversal ]B[asic ]I[ncome] would further encourage mass idleness, a serious and worsening social blight among the less educated and less skilled, I favor instead social policies that promote engagement in the work force... through wage subsidies for low-skill work. Flanigan says this makes me a paternalist.... I don’t think the paternalism charge really gets us anywhere.... The purpose of both a UBI and wage subsidies is to help people.... In one sense, then, both policies are paternalistic.... Viewed from another angle, though, neither policy is properly considered paternalistic. Paternalism, after all, is about reducing people’s choices for their own good. But either a UBI or wage subsidies would expand the choices.... The great virtue of a UBI is its directness and simplicity... more helpful to the disadvantaged than the patchwork of frequently intrusive, infantilizing, bureaucratic, and wasteful means-tested programs.... If I could wave a magic wand and replace the policy status quo with a UBI, I would do so. That said, my reading of the available evidence convinces me that a social policy that channels benefits through work and thereby encourages paid employment has important advantages..."