Must-Read: The Political Economy of Liberal Democracy: "We distinguish between... property rights, political rights, and civil rights...:
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: The slaveholders who forced through Virginia's joining the Confederacy in 1861 and the Social Darwinist libertarians of the 19th century did not pretend.
They did not go to war honorably and reluctantly because they needed to make a point of constitutional law.
They did not seek to eliminate regulation of wages an hours because the "Big Children" and "Big Slovak Immigrant" lobbies had captured the government and were imposing high rent-seeking costs on society.
In this, they were more honorable than their latter-day epigones and defenders:
Richard Mayhew @bjdickmayhew 4h4 hours ago @xpostfactoid1 http://www.balloon-juice.com/2015/07/06/cash-flow-of-rejecting-free-money/ … Medicaid Rejection has lower net GDP component than @Delong argued in 10/14 due to APTC and CSR $$$
Richard Mayhew @bjdickmayhew 4h4 hours ago @xpostfactoid1 @delong so for Florida, net cash missed is Medicaid Expansion for 100k... Rounding error
Richard Mayhew @bjdickmayhew 4h4 hours ago @xpostfactoid1 @delong what % 100-138℅ are of 0 to 138℅ expansion eligible... Need an intern for this
xpostfactoid @xpostfactoid1 2h2 hours ago Alabama update: perhaps 22% of those who should have been Medicaid-eligible now in QHPs. @bjdickmayhew http://bit.ly/1TaGCei
Richard Mayhew @bjdickmayhew 2h2 hours ago @xpostfactoid1 OK, that is still a big multiplier cost
xpostfactoid @xpostfactoid1 2h2 hours ago @bjdickmayhew Can be calculated state-by-state. I'll work up for FL & MS too shortly.
xpostfactoid @xpostfactoid1 2h2 hours ago @charles_gaba @bjdickmayhew I had 1.9m originally - figuring now 1.6m, w/ attrition, v. 4m in Medicaid gap, per Kaiser. That's 28.5%.
Richard Mayhew @bjdickmayhew @xpostfactoid1 @charles_gaba so net loss of about .5% GDP, not @delong initial .7% rejection state GDP...
Over at Equitable Growth: Angel Ubide writes:
"Pre-Syriza growth" would return Greek GDP to its 1975-1999 trend... never.
"Pre-Syriza growth" was at a pace that would not return Greek real GDP to the 2007 level of the 1975-1999 trend (if you think that was Greece's "real" potential output in 2007) until... 2023. READ MOAR
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.
Steve Randy Waldman: Greece: "I’ll end this ramble with...
...a discussion of a fashionable view that in fact, the Greece crisis is not about the money at all, it is merely about creditors wresting political control from the concededly fucked up Greek state in order to make reforms in the long term interest of the Greek public. Anyone familiar with corporate finance ought to be immediately skeptical of this claim. A state cannot be liquidated. In bankruptcy terms, it must be reorganized. Corporate bankruptcy laws wisely limit the control rights of unconverted creditors during reorganizations, because creditors have no interest in maximizing the value of firm assets. Their claim to any upside is capped, their downside is large, they seek the fastest possible exit that makes them mostly whole. The incentives of impaired creditors are simply not well aligned with maximizing the long-term value of an enterprise.
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:
Nothing: I see no reason to edit my: What Do We Learn from the Latest Monthly Employment Report?: DeLong FAQ — Brad's Buffalo Blog
Keynes says that they must be "inexperienced persons".
John Maynard Keynes (1936): The General Theory of Employment, Interest and Money: Chapter 19: Changes in Money-Wages: "The method of increasing the quantity of money...
...in terms of wage-units by decreasing the wage-unit increases proportionately the burden of debt; whereas the method of producing the same result by increasing the quantity of money whilst leaving the wage unit unchanged has the opposite effect. Having regard to the excessive burden of many types of debt, it can only be an inexperienced person who would prefer the former...
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...
Comment of the Day/Early Monday DeLong Smackdown: Robert Waldmann: Comment on "More Musings on "Monetary Economics": "Also:
it is not the case that curing the excess demand for safe and liquid assets always requires painful 'liquidation' and austerity...
is true but doesn't go very far.
Over at Equitable Growth: There is, I think, a profound reason why those who have been able to understand the business cycle over the past two centuries have been those who have defined themselves as doing "monetary economics", and those who have not been able to understand the business cycle have not...
Let us remember the days when the Old New Republic, under the ownership of Marty Peretz and the editorship of Franklin Foer put forward people who are, shall we say, not very quantitative to make "the case against Keynes... [and] Krugman", and for austerity.
William Galston (June 2010): The Case Against Keynes (With Some Questions for Krugman, Too): "As President Obama’s bipartisan fiscal commission gets set to convene...
J. Bradford DeLong on July 01, 2015 at 05:52 AM in Economics: Macro, Information: Better Press Corps/Journamalism, Moral Responsibility, Streams: (Monthly) Old New Republic, Streams: (Tuesday) Hoisted from Archives, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (3)
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: 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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Comment of the Day: Charles Steindel: Monday Austrian-Economists Smackdown: The "Hangover Theory" of the 2008-2009 Crash Fails Because of Timing: "Yes, the housing slump started well before the actual recession...
Comment of the Day: Charles Steindel: State-Level Fiscal Policy: "Well, yes, taxes aren't the largest factor in location decisions...
...but of that list, which can state governments fairly readily control?
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...
Over at Equitable Growth: By coincidence, two people this past weekend have soberly informed me of what they call a "hard truth": that nationwide employment simply had to go down in 2008 and 2009.
You see, they said, we had to move people out of me industry of building houses and the occupations connected to that industry, and it was impossible to do that without lowering employment. READ MOAR
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.
Must-Read: And my loyal readers inform me that the only even half-economist half-clown they have seen carrying water for Jeb Bush's 4%/Year Growth Plan is... John Cochrane.
I do not know why back in 2008 John Cochrane decided to start turning himself into a clown. But he did. And now he is three-quarters of the way there.
Matthew Yglesias: Jeb Bush's 4% Growth Promise Is 104% Nonsense: "Asked by Reuters to describe his thought process...
Must-Read: Erik Loomis: A Glimpse Into the Black, Shriveled Hearts of the Class Warriors: "When you think that maybe the hearts... aren’t actually that closed to compassion...
How long does it take to go from the short run to the long run? As I say repeatedly, I used to teach my students that the "short run" was the next couple of years, that the long run was from seven years from now on out, and that in between were interesting and confused medium-run transition dynamics--plus there is always the possibility that forward-looking expectations can lead the long run to come like a thief in the night, suddenly, immediately, long before you expect it to.
Across the Wide Missouri: Scott Lemieux: Friday Links: The Repulsion of the Moopish Invasion: "Nice to see the conspiracy theories already heating up already...
...The reviews of Scalia’s dissent continue to come in. (Tushnet has been on this beat for a while, and his analysis looks more prescient than ever.) Lead plaintiff David King, earlier this month:
Mr. King said that he was not really worried about the outcome of the case, King v. Burwell, because as a Vietnam veteran, he has access to medical care through the Department of Veterans Affairs.
Yeah, really sorry you lost this one, buddy. Smart analysis from Brianne Gorod, Nicholas Bagley, Ian Millhiser, and Jon Cohn. Cue Nelson Muntz.
The thoughtful Matthew Klein, over at FT Alphaville:
Matthew Klein: The changing nature of Americans’ income: "Consider what this has meant for consumption...
This morning, Republican-appointed Supreme Court Chief Justice John Roberts wrote and five of his colleagues -- Democrat-appointed Breyer, Ginsburg, Sotomayor, and Kagan, and Republican-appointed Kennedy -- agreed that:
Section 18031 [of the Affordable Care Act--i.e., the ObamaCare Law--] provides that “[e]ach State shall . . . establish an American Health Benefit Exchange..." [But] if [a] State chooses not to do so, Section 18041 provides that the Secretary [of Health and Human Services] “shall . . . establish and operate such Exchange..." (emphasis added [by Roberts]).... The phrase “such Exchange”... instructs the Secretary to establish and operate the same Exchange that the State was directed to establish.... Black’s Law Dictionary 1661... (defining “such” as “That or those; having just been mentioned”).... State Exchanges and Federal Exchanges are equivalent—they must meet the same requirements, perform the same functions, and serve the same purposes...A simple matter of black-letter law, no? The plain meaning of the phrase "such Exchange" means that anything legal that is true of a health-insurance exchange established by, say, the state of New York is also true of a health-insurance exchange established by the federal government for, say, the state of Florida if the state of Florida fails to establish its exchange, no?
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.
Think are intellectual property protections are insufficiently strong?
Five years ago I put a tickler in to see what would happen to this. Glad to see that sanity reigned after all:
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.
Live from Sandbridge Beach: Invictus: Red State, Blue State: Kansas & Washington: "We have interesting experiments going on in the state of Kansas and the city of Seattle...
Must-Read: Antonio Fatas: Interest Rates: Natural or Artificial?: "Ben Bernanke... central banks are simply reacting to economic conditions rather than driving the interest rate...
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:
Comment of the Day: Charles Steindel: State-Level Fiscal Policy: "While I agree with what you literally say...
Over at Equitable Growth: Ezra Klein has a very nice explainer on the likely consequences of the possible announcement next week of a 5-4 partisan Supreme Court vote to disrupt ObamaCare via the case King v. Burwell:
Ezra Klein: King v. Burwell Won’t Destroy Obamacare: "A ruling for the plaintiffs in King won't change anything about Obamacare...
...in California, or New York, or Massachusetts, or even Kentucky. And it won't be a long-term problem for the states using a federal exchange out of convenience rather than ideology; they'll just set up their own exchanges.... Pennsylvania, Arkansas, Delaware, and Maine are already working on backup plans. So King can't destroy Obamacare. What it can do is let Republican elected officials destroy Obamacare in states where they have a majority. That's a very different thing, and it will lead to very different political dynamics.... Resistant red states will be left with a wrecked insurance market — and a hefty tax bill.... READ MOAR
Must-Read: David Smith: Why has R, despite quirks, been so successful?: "Bow Cowgill said, 'The best thing about R is that it was written by statisticians...
The worst thing about R is that it was written by statisticians.
R is undeniably quirky... and yet it has attracted a huge following for a domain-specific language, with more than two million users wordwide. So why has R become so successful, despite being outside the mainstream of programming languages? John Cook adeptly tackles that question in a 2013 lecture, 'The R Language: The Good The Bad And The Ugly'.... To understand a domain-specific language, you have to understand the domain, and statistical data analysis is a very different domain than systems programming.
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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Òscar Jorda, Moritz Schularick, and Alan M. Taylor: Leveraged Bubbles: "The critical assumption was that central banks would be in a position to manage the macroeconomic fall-out...
They could clean-up after the mess. While the aftermath of the dotcom bubble seemed to offer support for this rosy view of central bank capabilities, the 2008 global financial crisis dealt a severe blow to the assumption that the fall-out of asset price bubbles was always and everywhere a manageable phenomenon. This observation meshes well with the key finding of this paper: not all bubbles are created equal.... When credit growth fuels asset price bubbles, the dangers for the financial sector and the real economy are much more substantial. The damage done to the economy by the bursting of credit-boom bubbles is significant and long-lasting. These findings can inform ongoing efforts to devise better guides to macro-financial policies at a time when policymakers are searching for new approaches in the aftermath of the Great Recession.
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, Philosophy: Moral, Political Economy, Politics, 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...
M.S.: Inequality: The 1 percent needs better defenders: "Perhaps [it was] John Kenneth Galbraith... [who] said that the way to debate...
What about today's Republican Party?
Let me give a stream-of-consciousness-personal-psychodrama-confessional-oversharing answer to that question:
I am not a political scientist. I am not an especially deep student of politics.
My government experience came from working in 1993-1995 in Lloyd Bentsen's Treasury Department, when he had just gone from being senator from Texas and chairman of the Senate Finance Committee Treasury Secretary. He and his staff, broadly, believed that what you did in order to govern--with a kinder and gentler, technocratic, equitable-growth approach to policy--was to start with a centrist block, Bentsen and his friends and allies, people from Jack Danforth on the right to Daniel Patrick Moynihan on the left. You would then call for bids from the left and right. You would ally with whichever was willing to give you better deal to build a majority. And you would then vote your bill out of the Senate Finance Committee 12-5 and roll it through initial passage, conference, and presidential signature.
Over at Equitable Growth: The Past Two Decades: The Coming of the Information Economy Looks to Have Doubled Our True Rate of Economic Growth
Over at Bloomberg View, smart young whippersnapper Noah Smith weighs in on the relationship between measured GDP at factor cost and societal well-being--including consumer surplus--in the information age:
Must-Must-Read: Steve Benen: The importance of setting Sessions straight: "The Senate Judiciary Committee held a... hearing...
...which became notable for one very specific reason. As much of the political world wait for the Supreme Court to issue its ruling in the King v. Burwell case, Republicans at least pretend to believe that the Affordable Care Act was written in such a way as to deny subsidies – on purpose – to consumers who enrolled through healthcare.gov. To that end, Sen. Jeff Sessions (R-Ala.) thought he was making an important point yesterday, addressing the Constitutional Accountability Center’s Elizabeth Wydra:
Over at Equitable Growth: The sharp Tyler Cowen writes:
Tyler Cowen: Has fiscal conservatism met an impasse at the state level?: "The latest from Louisiana is that taxes are going up...
...but in a strange way that won’t be called a tax increase.... It is even weirder than that sounds. Combine that with the recent fiasco in Kansas.... Fiscal conservatism has been stymied at the state level... for many other states, especially those governed by Republicans.... Trying to cut taxes at the state level doesn’t seem like a useful or productive way forward. If you have a better revisionist take on Louisiana and Kansas, please do put it in the comments, I would gladly read it, and if you have something really good I will pass it along. But I see myself as stating what has to be the default hypothesis for the time being--should we not all come out and admit this? READ MOAR