Must-Read: History and the Sizes of Cities: "We contrast evidence of urban path dependence with efforts to analyze calibrated models of city sizes...:
Must-Read: Hoyt Bleakley and Jeffrey Lin: History and the Sizes of Cities: "We contrast evidence of urban path dependence with efforts to analyze calibrated models of city sizes...
Over at Equitable Growth: Paul Krugman succumbs once again to shrill unholy madness: Ph'nglui mglw'nafh Friedman R'lyeh wgah'nagl fhtagn!! This time it is over the observation that, as I put it:
Via John the Lutheran: Alex Butterworth: The World That Never Was: "Childhood, individual liberty, the rights of man...
nothing was respected. It was a mighty letting loose of every sort of clerical fury — a St Bartholomew to the sixth power,
Rochefort would later record of the Semaine Sanglante, recalling the terrible massacre of Huguenots by Catholics 300 years earlier.
J. Bradford DeLong :: U.C. Berkeley and NBER :: April 16, 2013 http://eurofuture2013.wordpress.com/
My problem this morning is that I have four starting points. Or maybe my problem is that I have five starting points:
Over at Equitable Growth: Dean Baker once again marvels at the Washington Post's inability to figure out that the calculus of debts and deficits is fundamentally different today than back in the early 1980s. When long-term interest rates on government debt are 2%/year below the growth rate of the economy, things are very different from what they are when they are 3%/year above the growth rate of the economy. READ MOAR
Must-Read: Sharun Mukand and Dani Rodrik: The Political Economy of Liberal Democracy: "We distinguish between... property rights, political rights, and civil rights...
Live from La Farine: Scott Lemieux: The Party of Lincoln Is Now the Party of Jackson, and Vice Versa: "It’s not exactly news that Sean Wilentz’s punditry during the 2008 primaries was an embarrassment...
...But, via Chait, I somehow missed this definitive example....
Arthur Goldhammer: The Old Continent Creaks: Austerity and the failures of the technocratic elite have created the current populist backlash. France’s experience is instructive—and, possibly, ominous:
What’s the matter with Europe? Wherever one looks these days, there are signs of deep trouble. Economic growth has stagnated. Deflation threatens. Unemployment is rampant in many member states of the European Union. Support for the former mainstream parties of the center-right and center-left is waning. Populist parties of the far right and far left are on the rise. Anti-Islamic movements such as PEGIDA in Germany have attracted worrisome support, while in France the xenophobic National Front has topped all other parties in recent polls. Terrorist attacks by native-born citizens in Paris and Copenhagen have raised fears that the social fabric has irreparably deteriorated—fears compounded by the flight of several thousand young Europeans to join the Islamic State in Syria. And to top it all off, Ukraine has been racked by civil war and threatened with disintegration since Russian-backed separatists rejected the rule of the government in Kiev.
The parallels with the antinomies of the thought of the Ludwig von Mises of today--John Taylor--are, I think, rather striking:
In looking up some sources for my previous post on the gold-exchange standard, I checked, as I like to do from time to time, my old copy of The Theory of Money and Credit by Ludwig von Mises. Mises published The Theory of Money and Credit in 1912 (in German of course) when he was about 31 years old, a significant achievement. In 1924 he published a second enlarged edition addressing many issues that became relevant in the aftermath the World War and the attempts then underway to restore the gold standard. So one finds in the 1934 English translation of the 1924 German edition a whole section of Part III, chapter 6 devoted to the Gold-Exchange Standard.
Must-Read: Virginia Postrel: The Venus de Milo’s Arms: "The re-creation provides a plausible answer to a question posed...
A question of special interest to me right now because the departmental powers-that-be have decided to ask me to go back onto the 700-person Econ 1 Wheeler teaching line next spring...
Chris Y.: A colleague (middle grade civil servant) has sent this request to Mrs Y:
John Maynard Keynes (1936): The General Theory of Employment, Interest and Money by John Maynard Keynes: "A moderate increase in the quantity of money...
...may exert an inadequate influence over the long-term rate of interest [to restore full employment], whilst an immoderate increase may offset its other advantages by its disturbing effect on confidence...
: 1750 BC Problems: "Tell Ea-nasir:
Nanni sends the following message:
When you came, you said to me as follows:
I will give Gimil-Sin (when he comes) fine quality copper ingots.
You left then but you did not do what you promised me. You put ingots which were not good before my messenger (Sit-Sin) and said:
If you want to take them, take them; if you do not want to take them, go away!
Samuel Brittan--who I believe is extremely perceptive and penetrating (although not at all unsympathetic)--on Friedrich Hayek. From 'Hayek, Freedom, and Interest Groups,' in The Role and Limits of Government (London: Maurice Temple Smith, 1983):
The first page of the first chapter of Hayek's own Constitution of Liberty starts with the sentence:
We are concerned in this book with that condition of men in which coercion of some by others is reduced as much as possible.
J. Bradford DeLong on June 30, 2015 at 10:45 AM in Economics: History, Economics: Information, Economics: Macro, History, Moral Responsibility, Political Economy, Politics, Streams: (Tuesday) Hoisted from Archives, Streams: (Wednesday) Economic History, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (0)
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David Glasner: "[Murray] Rothbard’s selective quotation from the memorandum summarizing Strong’s 1928 conversation...
with Sir Arthur Salter, which I will discuss below, gives a very inaccurate impression of Strong’s position on money management...
Three things strike me while rereading Schumpeter's 1934 "Depressions" (and also his 1927 Explanation of the Business Cycle):
How much smarter Schumpeter is than our modern liquidationists and austerians--he says a great many true things in and amongst the chaff, which is created by his fundamentally mistaken belief that structural adjustment must be triggered by a downturn and a wave of bankruptcies that releases resources into unemployment. How much more fun and useful it would be right now to be debating a Schumpeter right now than the ideologues calling for, say, more austerity for and more unemployment in Greece!
How very strange it is for Schumpeter to be laying out his depressions-cause-structural-change-and-growth theory of business cycles at the very same moment that he is also laying out his entrepreneurs-disrupt-the-circular-flow-and-cause-structural-change-and-growth-theory of enterprise. It is, of course, the second that is correct: Growth comes from entrepreneurs pulling resources into the sectors, enterprises, products, and production methods of the future. It does not come from depressions pushing resources into unemployment. Indeed, as Keynes noted, times of depression and fear of future depression are powerful brakes halting Schumpeterian entrepreneurship: "If effective demand is deficient... the individual enterpriser... is operating with the odds loaded against him. The game of hazard which he plays is furnished with many zeros.... Hitherto the increment of the world’s wealth has fallen short of the aggregate of positive individual savings; and the difference has been made up by the losses of those whose courage and initiative have not been supplemented by exceptional skill or unusual good fortune. But if effective demand is adequate, average skill and average good fortune will be enough..."
How Schumpeter genuinely seems to have no clue at all that the business cycle is a feature of a monetary economy--how very badly indeed he needed to learn, and how he never did learn, what Nick Rowe and company teach today about the effects of monetary stringency on economic coordination.
Joseph Schumpeter (1934): [Depressions: What Can We Learn from Past Experience?](https://books.google.com/books?id=WVMUGqMU5bAC&pg=PA115&dq=schumpeter+depressions+are+not+simply+evils,+which+we+might+attempt+to+suppress&hl=en&sa=X&ei=rQ2QVZTfHsnvoASqpYaAAw&ved=0CCwQuwUwAg#v=onepage&q=schumpeter depressions are not simply evils, which we might attempt to suppress&f=false)
The problems presented by periods of depression may be grouped as follows: First, removal of extra economic injuries to the economic mechanism: Mostly impossible on political grounds. Second, relief: Not only imperative on moral and social grounds, but also an important means to keep up the current of economic life and to steady demand, although no cure for fundamental cases.
Third, remedies: The chief difficulty of which lies in the fact that depressions are not simply evils, which we might attempt to suppress, but--perhaps undesirable--forms of something which has to be done, namely, adjustment to previous economic change.
Today's Economic History: James Narron and Don Morgan: Crisis Chronicles: Railway Mania, the Hungry Forties, and the Commercial Crisis of 1847: "Money was plentiful in the United Kingdom in 1842...
...and with low yields on government bonds and railway shares paying handsome dividends, the desire to speculate spread—as one observer put it, ‘the contagion passed to all, and from the clerk to the capitalist the fever reigned uncontrollable and uncontrolled’ (Francis’s History of the Bank of England). And so began railway mania.
Over at Project Syndicate: As bubbles go, it was not a very big one.
From 2002 to 2006, the share of the American economy devoted to residential construction rose by 1.2 percentage points of GDP above its previous trend value, before plunging as the United States entered the greatest economic crisis in nearly a century. According to my rough calculations, the excess investment in the housing sector during this period totaled some $500 billion – by any measure a tiny fraction of the world economy at the time of the crash.
Comment of the Day: James Wimberley: Premier Je Suis, Second Je Fus, Mouton Ne Change: "I can't resist quoting François Villon's puff...
...for Chateau Balestard la Tonnelle, on the other side:
Ray Ginger: On Clarence Darrow: "Ray Ginger on Clarence Darrow, from Ray Ginger (1975), The Age of Excess: The United States from 1877-1914 (Prospect Heights, IL: Waveland Press: 0192486013954), pp. 358-9:
Lawyer: Clarence Darrow: The name of Clarence Seward Darrow (1857-1938) conjures up the Monkey Trial and Leopold-Loeb. He is remembered as the foremost defense lawyer of his generation, spokeman for the accused in dozens of murder trials. This view is badly distorted. He was a courtroom advocate only in his waning years. The truth is far more complex.
J. Bradford DeLong on June 18, 2015 at 07:01 AM in Economics: History, Economics: Inequality, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: (Daily) Liveblogging History, Streams: (Wednesday) Economic History, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (1)
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bottlerocketscience: Startup Geometry Podcast EP 004: Brad DeLong:
J. Bradford DeLong on June 17, 2015 at 12:49 PM in Economics: Finance, Economics: Growth, Economics: History, Economics: Inequality, Economics: Information, Economics: Macro, Long Form, Philosophy: Moral, Political Economy, Politics, Science Fiction, Streams: (BiWeekly) Honest Broker, Streams: Cycle, Streams: DeLong FAQ, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
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Live from the Garonne Estuary: Château Mouton Rothschild
Suppose you were heading from Bordeaux to London in the twelfth century by sea.
Suppose wanted to stop someplace to pick up something to use as ballast.
Where would you stop?
Yep. You would stop at what is now Château Mouton Rothschild on the left bank of the Garonne. That is the ideal place to stop, pick up whatever blast you need for ship stability, and rebalance your cargo before you head out beyond Isle de Cordouan into the waves of the North Atlantic.
What do you think the chances are that the best place in the world to grow grapes for making claret--the place with the absolute-best, ahem, terroir--just happens to also be the ideal place to pick up ballast for the Bordeaux-London voyage?
And, in fact, what are the odds that the sea-run ballast pick-up point would just happen to be for Bordeaux-London? That the sea run would be that between the capital of the lands that Eleanor d'Acquitaine brought to the Angevin Empire and the London capital and court of Henri II de Plantagenet?
"But what about the Burgundies?" you ask. Had not the Dukes of Burgundy managed to acquire overlordship of the seventeen provinces at the mouths of the Meuse and the Rhine, Burgundy would be nowhere. And the great days of the Burgundian court came to an end with the death of Charles the Rash...
Via Arthur Goldhammer:
Alexis de Tocqueville: Democracy in America: 2.10: (Democracy in America I.2.10): "Nowadays the dispossession of the Indians...
...is often accomplished in a routine and—one might say—perfectly legal manner.
J. Bradford DeLong :: University of California at Berkeley
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.
J. Bradford DeLong on June 12, 2015 at 11:06 AM in Economics: Growth, Economics: History, Economics: Inequality, Economics: Macro, Long Form, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: (Wednesday) Economic History, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (10)
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Daniel P. Tompkins: What the Ancient Greeks Can Teach Us About Human Capital: "Unsupervised, cooperative Athenians developed an economy powerful enough to escape the Malthus trap...
The Rise and Fall of Classical Greece by Josiah Ober, Princeton University Press, 464pp. "Must it not then be acknowledged by an attentive examiner of the histories of mankind, that in every age and in every State in which man has existed, or does now exist, That the increase of population is necessarily limited by the means of subsistence? That population does invariably increase when the means of subsistence increase? And, That the superior power of population it repressed, and the actual population kept equal to the means of subsistence, by misery and vice?"
David Glasner enters the lists in the Omega Point discussion, making two big and important points:
There is an equilibrium in which the long-run comes quickly, and an equilibrium in which it comes so slowly that other things inevitably intervene. We do not know very much about what determines which the economy settles in, but we do strongly suspect from the Great Depression that sufficiently aggressive monetary régime change can eliminate the permanent-depression equilibrium
1931 was the once-in-a-century time for a monetary régime change in the twentieth century (and, if we are allowed one every half-century, 1978 was the time for the second). And it looks to him very much like 2009 was the time for a monetary régime change in the first half of the twenty-first century. That the Federal Reserve did not realize this in late 2009--that it expected a rapid recovery from the economy's self-equilibrating forces even without additional fiscal and monetary stimulus--is our sorrow today.
I agree with (2). I am less certain about (1).
I would say probably, and note that sufficiently aggressive in this case is a weasel phrase, and admit that I am surprised that Abenomics in Japan has not been more successful. But more on that anon. READ MOAR
Today's Economic History: Matthew Yglesias: Surplus content: "Keynes on bubbles...
...I think Chapter 22 of the General Theory is enduringly relevant:
It may, of course, be the case — indeed it is likely to be — that the illusions of the boom cause particular types of capital-assets to be produced in such excessive abundance that some part of the output is, on any criterion, a waste of resources; — which sometimes happens, we may add, even when there is no boom. It leads, that is to say, to misdirected investment. But over and above this it is an essential characteristic of the boom that investments which will in fact yield, say, 2 per cent. in conditions of full employment are made in the expectation of a yield of, say, 6 per cent., and are valued accordingly.
When the disillusion comes, this expectation is replaced by a contrary ‘error of pessimism’, with the result that the investments, which would in fact yield 2 per cent. in conditions of full employment, are expected to yield less than nothing; and the resulting collapse of new investment then leads to a state of unemployment in which the investments, which would have yielded 2 per cent. in conditions of full employment, in fact yield less than nothing.
We reach a condition where there is a shortage of houses, but where nevertheless no one can afford to live in the houses that there are. Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.
Think about Greece with its 'unsustainable' economy bolstered by government borrowing, or the US with its 'unsustainable' housing boom. Indeed, those particular arrangements could not be sustained forever. But why, when they unwound, were they replaced by a boom in unemployment? Surely it's not hard to come up with a higher-productivity sector for people to work in than the unemployment sector? To simply observe that the old arrangement suffered from some mis-valuation problems doesn't explain what's really mysterious and troubling about recessions.
Live from Evans Hall: When I arrived at 506 Evans Hall for this morning's workshop, this book was on the seminar table looking at me.
I think the ghost of John Hicks is weighing in on the inadequacy of Hicks (1937) as the thing you need to know to do policy-relevant macro with success...
Over at Equitable Growth: The question is: Why were we wrong? We had, after all, read, learned, and taught the same Hicks-Hansen-Wicksell-Metzler-Tobin macro that was Paul Krugman's foundation.
Yesterday I wrote: 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
And now I see Paul Krugman writing:
Paul Krugman: Backward Induction and Brad DeLong (Wonkish) - NYTimes.com: "One more thing: Brad says that we came into the crisis...
...expecting business cycles and possible liquidity-trap phases to be short. What do you mean we, white man?
Touché... READ MOAR
Étienne Mantoux says: Britain and America must allow France to impose a satisfactory peace upon Nazi Germany in 1945--one that places Germany under sufficient territorial, military, political, and economic burdens that it will thereafter lack the power to dominate Europe politically and militarily. If they do not, then perhaps, after 200 years of trying to control or contain Germany, France and the rest of Europe will ally with it. And that would fix those Britons and Americans:
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
Postponed to 2016-2017:
Over at Project Syndicate: Putting Economic Models in Their Place:
Among the voices calling these days for new--or at least substantially different--economic thinking http://ineteconomics.org is the very sharp Paul M. Romer http://paulromer.net/ of New York University, with his critique of what he calls "Mathiness" in modern economics http://paulromer.net/mathiness/. He seems, to me at least, to be very worried principally about two aspects of modern economic discourse. The first is to take what is true about one restricted class of theories and generalize it, claiming it is true of all theories and of the world as well.
Note to Self: Rereading Etienne Mantoux: La Paix Calomniée, ou les Conséquences Économiques de M. Keynes. "The Calumniated Peace" of Versailles. OK. So why is the title of the English translation The Carthaginian Peace? Who decided to replace "Caluminiated" with "Carthaginian", and why?
With his fascination Keynes combines another of the serpent's attributes--his disconcerting ability to molt at more or less frequent intervals, leaving his former conceptions behind him like so many old integuments from which the reader, somewhat disconcerted, must extract himself, having previously been at no little trouble to get in.... We are to witness a revolution. At least so one would gather from some of the more enthusiastic reviews, which go so far as to make Keynes (much to his disgust no doubt) the direct successor of Karl Marx. "My undertaking is one that has no equal, that none will ever equal. I would change the basis of society, shift the axis of civilization..." Is that facetious to place Proudhon's ironic boasts beside Keynes' ambitious sureness? Yet their two proposals are not so very unlike, for it is by decline of the rate of interest to zero that the latter would see our economic ills remedied. Curious that the most sharp-tongued economist of our time should come back, by this unexpected route, to the thought of the famous inventor of "credit gratuit"...
Note to self:
Perhaps I imposed too much of my own preconceptions on Skidelsky. But I had always seen Skidelsky as arguing that Keynes saw:
Cf: Stephen A. Schuker (2014): J.M. Keynes and the Personal Politics of Reparationshttp://www.tandfonline.com/loi/fdps20
John Maynard Keynes: The Economic Consequences of the Peace: "Very few of us realize with conviction the intensely unusual, unstable, complicated, unreliable, temporary nature
Over at Equitable Growth Paul Romer inquired why I did not endorse his following Krusell and Smith (2014) in characterizing Piketty and Piketty and Zucman as a canonical example of what Romer calls "mathiness". Indeed, I think that, instead, it is Krusell and Smith (2014) that suffers from "mathiness"--people not in control of their models deploying algebra untethered to the real world in a manner that approaches gibberish.
I wrote about this last summer, several times: READ MOAR
Via Ta-Nehisi Coates: John C. Calhoun: Slavery a Positive Good: "I do not belong... to the school which holds that aggression is to be met by concession...
...Mine is the opposite creed, which teaches that encroachments must be met at the beginning, and that those who act on the opposite principle are prepared to become slaves. In this case, in particular I hold concession or compromise to be fatal. If we concede an inch, concession would follow concession–compromise would follow compromise, until our ranks would be so broken that effectual resistance would be impossible. We must meet the enemy on the frontier, with a fixed determination of maintaining our position at every hazard. Consent to receive these insulting petitions [seeking from the senate a constitutional amendment abolishing slavery], and the next demand will be that they be referred to a committee in order that they may be deliberated and acted upon.
Live from La Farine: How does opposition to contraception and abortion and advocacy of discrimination against homosexuals get tied up with the gold standard and the elimination of the pro-poor redistributionist social ethic of Jesus Christ? It is a mystery.
First, what is the American Principles Project. Well, the American Principles Project's founder is Robert P. George. Enough said.
UPDATE: No, not enough said. Thanks to the Idler for finding this true gem in First Things:
Robert P. George: Killing Abortionists: A Symposium: "I am personally opposed to killing abortionists...
....However, inasmuch as my personal opposition to this practice is rooted in a sectarian (Catholic) religious belief in the sanctity of human life, I am unwilling to impose it on others who may, as a matter of conscience, take a different view. Of course, I am entirely in favor of policies aimed at removing the root causes of violence against abortionists. Indeed, I would go so far as to support mandatory one-week waiting periods, and even nonjudgmental counseling, for people who are contemplating the choice of killing an abortionist. I believe in policies that reduce the urgent need some people feel to kill abortionists while, at the same time, respecting the rights of conscience of my fellow citizens who believe that the killing of abortionists is sometimes a tragic necessity-not a good, but a lesser evil. In short, I am moderately pro-choice...
Over at Equitable Growth]1 Today's best piece I have read on the internet is by the extremely sharp John Quiggin:
John Quiggin: The Last Gasp of (US) [Left-]Neoliberalism: "US neoliberalism is... closer to Blair’s Third Way than to Thatcher....
...[US] neoliberalism maintained and even extended ‘social liberalism’, in the US sense of support for equal marriage, reproductive choice and so on. In economic terms, its central claim was that the goals of the New Deal... could best be pursued through market-friendly policies that would earn the support of the financial sector.... [The] signature issues for US neoliberals were free trade, cuts in ‘entitlement’ spending, and school reform... a ‘grand bargain’, in which Republicans would accept minimal increases in taxation in return for the abandonment of most of the Democratic program. The Clinton administration was explicitly neoliberal.... And, while Obama’s 2008 election campaign was masterfully ambiguous, his first Administration neoliberal through and through.... But developments since then, including the global financial crisis, the failure of school reform and increasing awareness of entrenched inequality have destroyed the appeal of neoliberalism...
I think that John Quiggin is largely correct--if you correct "abandonment" to "reconfiguration". READ MOAR
John Maynard Keynes (1924): Obituary for Alfred Marshall: "ALFRED MARSHALL was born at Clapham on July 26, 1842...
...the son of William Marshall, a cashier in the Bank of England, by his marriage with Rebecca Oliver. The Marshalls were a clerical family of the West, sprung from William Marshall, incumbent of Saltash, Cornwall, at the end of the seventeenth century. Alfred was the great-great-grandson of the Reverend William Marshall, the half-legendary herculean parson of Devonshire, who, by twisting horseshoes with his hands, frightened local blacksmiths into fearing that they blew their bellows for the devil. His great-grandfather was the Reverend John Marshall, Headmaster of Exeter Grammar School, who married Mary Hawtrey, daughter of the Reverend Charles Hawtrey, Sub-Dean and Canon of Exeter, and aunt of the Provost of Eton.
UPDATE: Oh, excellent! Here is the transcript.
Heather Boushey and Larry Summers posted their prepared thoughts for last week's Brookings-Okumn event. They are very good, and are well worth reading. The others--Wessel, Mankiw, Kearney, Wolfers--alas, did not. I am told that they were very good in the panel discussion. But where am I going to find the hour and a half to listen to it? And there appears to be no transcript. Serious bummer.
Arthur Burns (August 21, 1969): "The recently announced [Nixon administration] welfare reform [plan] was to do away with food stamps (in order to keep costs down)...
...but then it was discovered--the President didn't know this--that the recent welfare benefit plus promised food stamps would yield larger benefits to many than the new plan. This came as a shock to the administration (certainly to the President and to Ehrlichman; and to Moynihan who cares neither for truth nor for public money), and at once the cry went up that nobody would be worse off. The additional cost, on account of the food stamp fiasco, is still being calculated. It will probably be $1 billion [a year] or so...
Arthur Burns: Secret Diary (1969) (ed. Robert Ferrell): http://www.amazon.com/gp/product/0700617302/ref=as_li_tlie=UTF8&camp=1789&creative=390957&creativeASIN=0700617302&linkCode=as2&tag=brde-20&linkId=VPOV3DID2PHOFJ2W
John Maynard Keynes: Concluding Notes on the Social Philosophy Towards which the General Theory Might Lead: "THE outstanding faults of the economic society in which we live...
...are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes. The bearing of the foregoing theory on the first of these is obvious. But there are also two important respects in which it is relevant to the second.
Since the end of the nineteenth century significant progress towards the removal of very great disparities of wealth and income has been achieved through the instrument of direct taxation — income tax and surtax and death duties — especially in Great Britain. Many people would wish to see this process carried much further, but they are deterred by two considerations; partly by the fear of making skilful evasions too much worth while and also of diminishing unduly the motive towards risk-taking, but mainly, I think, by the belief that the growth of capital depends upon the strength of the motive towards individual saving and that for a large proportion of this growth we are dependent on the savings of the rich out of their superfluity.
Phillip Aldrick (2013): "Was Montagu Norman a Nazi sympathiser?" Torygraph http://www.telegraph.co.uk/finance/bank-of-england/10214541/Was-Montagu-Norman-a-Nazi-sympathiser.html: "Norman was Britain’s first modern central banker and Governor...
...for a remarkable 24 years until 1944, amassing powers at Threadneedle Street that turned what was a cosy City institution into an arm of the state. But he was also an economic dinosaur, whose determination to put Britain back on the gold standard in 1925 destroyed industry and condemned Britain to a more severe recession than necessary. Adam Posen, a former Bank’s rate-setter, has said that when he could not decide which way to vote he would look at the giant portrait of Norman hanging in the Monetary Policy Committee’s meeting room and ask himself ‘What would Montagu do?’. Then do the opposite.
Over at Equitable Growth: A good review by Jonathan Knee of the exteremely-sharp Richard Thaler's truly excellent new book, Misbehaving. The intellectual evolution of the Chicago School is very interesting indeed. Back in 1950 Milton Friedman would argue that economists should reason as if people were rational optimizers as long as such reasoning produce predictions about economic variables--prices and quantities--that fit the the data. He left to one side the consideration even if the prices and quantities were right the assessments of societal well-being would be wrong. READ MOAR
Over at Equitable Growth: Back in 1959 Arthur Burns, lifelong senior Republican policymaker, Chair of the Council of Economic Advisers under President Eisenhower, good friend of and White House Counselor to President Nixon, and Chair of the Federal Reserve from 1970 to 1978 gave the presidential address to the American Economic Association. In it, he concluded that the United States and a lot of choices to make as far as its future economic institutions and economic policies were concerned. And, he said:
These... choices will have to be made by the people of the United States; and economists--far more than any other group--will in the end help to make them...
That's you. "Economists", that is. And I am glad to be here, because I am glad that you are joining us. For we--all of us in America--need you. Arthur Burns was right: you are better-positioned than any other group to help us make the right choices, at the level of the world and of the country as a whole, but also at the level of the state, the city, the business, the school district, the NGO seeking to figure out how to spend its limited resources--whatever. READ MOAR
J. Bradford DeLong on May 04, 2015 at 04:46 PM in Economics: History, Economics: Macro, Political Economy, Streams: (BiWeekly) Honest Broker, Streams: (Wednesday) Economic History, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Twentieth Century Economic History | Permalink | Comments (2)
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Morgan partner Russell C. Leffingwell (1934): "Monty [Norman] says that Hitler and Schacht are the bulwarks of civilization in Germany and the only friends we have. They are fighting the war of our system of society against communism. If they fail, communism will follow in Germany, and anything may follow in Europe."
Ron Chernow (1990): The House of Morgan: "When [Morgan partner Thomas W.] Lamont learned that [Reichsbank President Hjalmar Horace Greeley] Schacht was contemplating selective repudiation in 1934...