Over at Equitable Growth: Kenneth Rogoff: Inequality, Immigration, and Hypocrisy: "Europe’s migration crisis exposes a fundamental flaw, if not towering hypocrisy, in the ongoing debate about economic inequality...
And Kenneth Rogoff fakes right:
Wouldn’t a true progressive support equal opportunity for all people on the planet, rather than just for those of us lucky enough to have been born and raised in rich countries? READ MOAR
J. Bradford DeLong on May 20, 2015 at 03:00 PM in Economics: Growth, Economics: Inequality, Economics: Macro, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Twentieth Century Economic History | Permalink | Comments (16)
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Wisdom: Robert Shiller:
The inference from the unpredictability to the rationality of stock prices is the most remarkable error in the history of economic thought...
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
Must-Read: The real problem that Barack Obama has with the Trans-Pacific Partnership is that the intellectual property interests--Hollywood, Silicon Valley, and Pharma--are for it only to the extent that it strengthens their property rights, that the Democratic caucus is against it unless it contains meaningful steps to reduce inequality and increase positive-sum regulatory oversight, and that the Republican caucus is against it if it contains meaningful steps to reduce inequality and increase positive-sum regulatory oversight. Thus from a perspective that is technocrat-utilitarian, legislative-process, and coalition-assembly oriented, the obvious path is to appoint a senior free-trade Republican--a Romney figure--to negotiate TPP, and then to withhold presidential approval of its implementing legislation unless inequality-reducing Democratic legislative priorities are attached to the bill. Yet, once again, this kind of Legislative Process 101 move--to make the situation not "I'm in here with you" but "you're in here with me"--was not undertaken by the Obama White House...
Matthew Yglesias: Obama's Real Problem on Trade Is Way Bigger than Elizabeth Warren: "The coalition against TPP is very broad...
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.
Over at Equitable Growth: I see that over on the Twitter machine Noah Smith is engaging Paul Romer, in an attempt to get Paul to elucidate his "Mathiness" paper. I think Noah Smith misunderstands Paul Romer.
As I see it, Paul Romer believes that George Stigler laid down the methodological principal that one should always assume perfect competition in one's microfoundations, and in so doing Stigler was acting as an ideologue rather than a technocrat, and that this is harmful.
It seems to me that Paul is more right than wrong.
A POLICY AGENDA FOR THE KNOWLEDGE ECONOMY
- Policy debate dominated by discussions of ‘reform’
- Policy agenda set in 1980s >* Irrelevant or counterproductive today
- We need a 21st century policy agenda
- Previous reform era provides a way to think about this.
Mario Draghi: ECB: The ECB’s Recent Monetary Policy Measures: Effectiveness and Challenges: "Over the past year the ECB has taken a series of major monetary policy measures...
...culminating in our decision in January this year to expand our asset purchases towards public sector securities. While the aim of these measures is the same as it has always been – maintaining price stability over the medium-term – their form is unprecedented for our central bank. And as such our policy decisions have become more complex in two key ways.
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
Live from The Roasterie: Do Americans no longer buy non-Apple laptops? Or is it just that Americans whose jobs allow them to sit in cafes that sell $4 espresso drinks in the morning no longer buy non-Apple laptops?
Over at Equitable Growth: Paul Krugman digs in in defense of old economic thinking: behavioral finance to explain bubbles, money illusion plus anchoring to explain wage and price inertia, and then the three-commodity--outside money, bonds, and currently-produced goods and services--temporary-equilibrium model of Hicks and Metzler to provide the backbone of a useful macroeconomics:
...here when he says:
There are still a number of self-professed Keynesian bloggers out there who see the world through the lens of 1950s theory...
And it’s true!... Farmer wants us to think in terms of models with: READ MOAR*
Matthew Yglesias: "Brookings did a symposium on the 40th anniversary of Arthur Okun's famous book...
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.
Over at Equitable Growth: The trouble that is the King v. Burwell case arises because of one sub-sub-section of the law which says "established by the state" rather than "established in the state" or "established for the state". The purpose of "established by the state" in its context:
...the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311... READ MOAR
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.
Over at Equitable Growth: Suppose, for a moment, you were teaching your college students social theory—but that you were back in 1750.
Who would you want your students to have at hand to read?
We will not do the boring think of confining you to assigning solely authors who had written before 1750. Assume that the appropriate time machine is available. But, equally, we will not do the boring thing of allowing you to assign historical accounts of what in 1750 was then the future. This is an intellectual exercise: we are interested in analytical perspectives on societies and how they work. READ MOAR
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
Across the Wide Missouri: Lo: a year and a half ago my Net.Friend Katha Pollitt tweeted the very true:
Twitter is a poisonous well of bad faith and viciousness.— Katha Pollitt (@KathaPollitt) December 22, 2013
And that was when I first heard of Sarah Kendzior.
Over at Equitable Growth: Mark Thoma directs us to Paul Romer. And Paul Romer gets remarkably exercised about George Stigler's long and successful war against the use of the theory of monopolistic competition in economics, with its consequence that even today we have "scientifically unacceptable" people who say:
We will never, as a matter of principle, consider a model in which there are ever any monopolies. We will dogmatically stick only to models of price-taking competition...
From my perspective it is not the contemporary implications of this train of thought for growth theory that are important--for as best I can tell there are people who write growth models where every market has price-taking competition but there is nobody outside who reads them--but rather the historical implications of this train of thought for industrial organization, antitrust, and the rise of the rent seeking sector in the American economy.
I eagerly want to read and hope to see more work in this area. READ MOAR
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.
Over at Equitable Growth: I find myself perseverating over the awful macroeconomic policy record of the Conservative-Liberal Democrat government of the past five years in Britain, and the unconvincing excuses of those who claim that the austerity policies it implemented were not a disaster--and that the austerity policies it ran on would not have come close to or actually broken the back of the economy.
Leaving to one side the fact that it is ludicrous that a depression that originates in overbuilding in the desert between Los Angeles and Albuquerque and overleverage in New York has a larger impact shock on the UK than on the US: READ MOAR
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.
In the Shadow of the Grand Tetons:
...[Alan] Greenspan will address a counter-conference organized by a group called the American Principles Project. The group combines social conservatism — it’s anti-gay-marriage, anti-abortion rights, and pro-‘religious liberty’ — with goldbug economic doctrine. The second half of this agenda may be appealing to Greenspan, a former Ayn Rand intimate — as Paul Samuelson remarked, ‘You can take the boy out of the cult but you can’t take the cult out of the boy.’ But the anti-gay stuff? And helping these people attack his former colleagues? Awesome.
Over at Equitable Growth Much of the dysfunction of the American press corps is driven by the ideological commitments of its bosses, the cultural flaws of its journalists' communities, or the desperate need to scare its readers and viewers and thus keep them reading and viewing so that their eyeballs can be sold to advertisers.
Some of the dysfunction is not. Some of the dysfunction is unmotivated and completely pointless, even on its own terms.
Here we have Eugene Stern warning readers that reading Nick Kristof of The New York Times will not make you better informed: READ MOAR
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: From last week:
The "free trade because Adam Smith comparative advantage BAM" stuff has got to stop! http://t.co/c5q1Oxkvf7— Noah Smith (@Noahpinion) April 25, 2015
Alma Mater Blogging: Greg Mankiw's desire to move Harvard to someplace better adapted to human life than Massachusetts was triggered by:
Greg Mankiw's Blog: Time for Harvard to Move?: The Wall Street Journal reports one of the most pernicious ideas I have heard of late:
Massachusetts legislators, demonstrating a growing resentment against the wealth of elite universities in tight economic times, are studying a plan to levy a 2.5% annual tax on the portion of college endowments that exceed $1 billion. The effort takes aim at one of the primary economic engines of the state...
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: Economics, Streams: Equitable Growth, Streams: Highlighted, Streams: The Honest Broker, Streams: Today's Economic History, 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...
An excellent piece by the very sharp and thoughtful Jonathan Chait.
The remarkable thing is that Republican ideologues could, right now, be taking a huge victory lap with the apparent success of ObamaCare. All they had to say was: "this is really RomneyCare." But they didn't.
How much of what he says these days does Michael Tanner believe? My feeling is: relatively little.
...The trouble is that anti-Obamacare dogma sits so deeply at the GOP’s core that any discussion of health care must pay fealty to their belief that the law has failed utterly. The Republican Party in the Obamacare era is a doomsday cult after the world failed to end. Its entire analysis of the issue is built upon a foundation of falsehoods.
Over at Equitable Growth: I have never gotten it straight whether Vladimir Lenin actually did say: "The worse, the better." But Eduardo Porter does!:
The bloated incarceration rates and rock-bottom life expectancy, the unraveling families and the stagnant college graduation rates amount to an existential threat to the nation’s future. That is, perhaps, the best reason for hope. The silver lining in these dismal, if abstract, statistics, is that they portend such a dysfunctional future that our broken political system might finally be forced to come together to prevent it.
Talk about grasping at straws... READ MOAR
Live From the Laura Ingalls Wilder Farm: Rocky Ridge: Discussion with Senator Blunt. Subject: King v. Burwell.
Me: "A great many people here in Missouri might be unable to afford their health insurance in three months."
Ann Marie: "You need to be on the right side". Sen. Blunt: "That's really up to the judges."
Me: "But you in Congress could fix it in a sentence".
Sen. Blunt: "You are right."
Of course, "You are right" means not "we will do the one sentence fix if necessary" but "I came to Rocky Ridge on a Saturday afternoon to be avuncular, not to justify my rhetorical pose of root-and-branch opposition to something that is at bottom 'RomneyCare'".
...on Japan's ongoing "Great Recession," although I have to keep pinching myself to ask if its main thesis can really be true. Is the equilibrium (full-employment) medium-term real interest rate for Japan actually negative, so that unless the Bank of Japan (BOJ) resigns itself to sustained inflation, the zero bound on nominal interest rates will present serious problems? Has the BOJ so thoroughly convinced the public of its anti-inflation credibility that it has lost the power to rekindle inflation now that Japan needs it?
Sokrates: Internet Media and the Fall of GigaOm
Adeimantos: What? Are you now intellectually flirting with both Hinduism and techno-transhumanism?
Felix Salmon: I told you so. If I may quote myself:
Live from Crow’s Coffee: 435 Magazine. I was reading 435 Magazine (offices at 11775 W. 112th Street, Suite 200, Overland Park, KS 66210, ten miles away from here) on the airplane on my way back from California to Kansas City. I found myself getting scared.
The scary thing is that Los Angeles is not that very much larger than Kansas City. And yet it has about nine times the population.
...Look it up. Altruistic punishment is a ‘puzzle’ to the sort of economist who thinks of homo economicus maximizing her utility, and a no-brainer to the [evolutionary] game theorist who understands humans could never have survived if we actually were the kind of creature who succumbed to every prisoners’ dilemma. Altruistic punishment is behavior that imposes costs on third parties with no benefit to the punisher, often even at great cost to the punisher. To the idiot economist, it is a lose/lose situation, such a puzzle. For the record, I’m a fan of the phenomenon. Does that mean I’m a fan of these riots, that I condone the burning of my own hometown? Fuck you and your tendentious entrapment games and Manichean choices, your my-team ‘ridiculing’ of people you can claim support destruction. Altruistic punishment is essential to human affairs but it is hard. It is mixed, it is complicated, it is shades of gray...