Must-Read: Jeb Bush and longer working hours: "Jeb Bush's stated goal of 4 percent annual GDP growth...:
Must-Read: Matthew Yglesias: Jeb Bush and longer working hours: "Jeb Bush's stated goal of 4 percent annual GDP growth...
Over at Equitable Growth: I truly do not understand this argument by the very sharp Daniel Davies:
Daniel Davies: Comment on Greece, Decision Theory, and the Sure-Thing Principle: "If Greece stays in the Euro it is likely to need constant transfers forever...
...If it leaves, but stays in the EU, then these can be reduced from a level in the tens of billions to something like what Romania or Bulgaria get....
The reason, of course, the transfers can then be reduced is that a Greece out of the euro re-denominates its debt in Greekeuros--drachmas--which go to a substantial discount vis-a-vis the euro, thus devalues, begins to have an export boom, and sees a strong economic recovery. What's the problem? READ MOAR
Across the Wide Missouri: New York Comic Con: October 8-11, 2015 | Javits Center:
Must-Read: Richard Kogan: CBO Contradicts Itself — Long-Term Budget Picture Improving, Not Worsening: "The Congressional Budget Office's (CBO) new report...
Hoisted from Other People's Archives from Five Years Ago: Paul Krugman** (2010): The Conventional Superstition: "Calculated Risk points us to a speech by Kevin Warsh...
that strikes me as almost the perfect illustration of the predicament we’re in, in which policy is paralyzed by fear of invisible bond vigilantes. Warsh isn’t an especially bad example — but that’s the point: this is what Serious People sound like these days. The bottom line of Warsh’s speech — although expressed indirectly — is that it’s time for fiscal austerity, even though the economy remains deeply depressed; and no, the Fed can’t offset the effects of fiscal contraction with more quantitative easing. In short, the responsible thing is just to accept 10 percent unemployment. And why is this the responsible thing? On fiscal policy:
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: 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: On Twitter:
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...