And GOD! DO I NEED A SHOWER!!
Trish Regan playing hide-the-ball and gulling her viewers: The Intelligence Report
And GOD! DO I NEED A SHOWER!!
Trish Regan playing hide-the-ball and gulling her viewers: The Intelligence Report
My colleague and neighbor Michael O'Hare is fed up with and denounces Berkeley NIMBYist privilege. I have two reactions:
Thinking About "Premature Deindustrialization": An Intellectual Toolkit I
OK. Popping the distraction stack again. The very sharp Matthew Yglesias writes about:
Matthew Yglesias: Premature Deindustrialization: The New Threat to Global Economic Development:
In the popular imagination, the old industrial landscape has moved abroad to Mexico or to China, perhaps due to bad trade policies or simply the vicissitudes of changing circumstance... [and] the migration of factory work to much poorer countries has been a boon to those countries' economic development.... [But] 'premature deindustrialization,' in which countries start to lose their manufacturing jobs without getting rich first....
W. Arthur Lewis (1977): The Evolution of the International Economic Order
We must therefore turn to economic explanations. The most important... is the dependence of an industrial revolution on a prior or simultaneous agricultural revolution... already familiar to eighteenth-century economists, including Sir James Steuart and Adam Smith. In a closed economy, the size of the industrial sector is a function of agricultural productivity. Agriculture has to be capable of producing the surplus food and raw materials consumed in the industrial sector, and it is the affluent state of the farmers that enables them to be a market for industrial products.
Riffing off of yesterday's: : "'Gunpowder Empire': Should We Generalize Mark Elvin's High-Level Equilibrium Trap?"...
A generation ago Michael Kremer wrote a superb paper: Michael Kremer (1993): "Population Growth and Technological Change: One Million B.C. to 1990", Quarterly Journal of Economics 108:3 (August), pp. 681-716 http://tinyurl.com/dl20160727a.
Kremer saw human populations as growing at an increasing rate over time. Population reached approximately 4 million by 10000 BC, 50 million by 1000 BC, and 170 million by the year 1. Population then reached 265 million by the year 1000, 425 million by 1500, and 720 million by 1750 before the subsequent explosion of the British Industrial Revolution and the subsequent spread of Modern Economic Growth.
Over at Project Syndicate: A Brief History of (In)equality: BERKELEY – The Berkeley economist Barry Eichengreen recently gave a talk in Lisbon about inequality that demonstrated one of the virtues of being a scholar of economic history. Eichengreen, like me, glories in the complexities of every situation, avoiding oversimplification in the pursuit of conceptual clarity. This disposition stays the impulse to try to explain more about the world than we can possibly know with one simple model. For his part, with respect to inequality, Eichengreen has identified six first-order processes at work over the past 250 years.
READ MOAR of A Brief History of (In)equality at Project Syndicate
OK. Popping the distraction stack again. A chance remark by the extremely sharp Cosma Shalizi when he came through Berkeley has caused me to spend a lot of time meditating upon a passage written by Bob Allen:
Robert Allen (2006): The British Industrial Revolution in Global Perspective:
The different trajectories of the wage-rental ratio created different incentives to mechanize production.... It was not Newtonian science that inclined British inventors and entrepreneurs to seek machines that raised labour productivity but the rising cost of labour... due to... Britain’s success in the global economy... in part the result of state policy... Britain['s] vast and readily worked coal deposits....
Tuesday Morning Distraction: Well, I was supposed to be sitting three tables down from Aaron Edlin at the Claremont Peets this morning doing research. But I got myself distracted--convinced myself that I ought to right something about the sharp Matthew Yglesias's (and why, Harvard Economics Department, was he not an economics major?) piece on premature deindustrialization. And then I got myself redistracted...
Let's start with one of the standard graphs: the American share of (nonfarm) employment that is in manufacturing:
Live from Cyberspace: Welcome praise for J. Bradford DeLong (2015): The Scary Debate Over Secular Stagnation - Milken Institute Review: Hiccup ... or Endgame? Let me put a copy of the whole thing below the fold...
July 23, 2016 at 05:24 PM in Economics: Finance, Economics: Growth, Economics: History, Economics: Inequality, Economics: Macro, Long Form, Streams: (BiWeekly) Honest Broker, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
Live from Cyberspace: Welcome praise for J. Bradford DeLong (2015): The Scary Debate Over Secular Stagnation - Milken Institute Review: Hiccup ... or Endgame? Much appreciated. Thanks...
Good review by Brad DeLong. There are still real policy issues out there! The Scary Debate Over Secular Stagnation https://t.co/f5ancyOEHT— Paul Krugman (@paulkrugman) July 23, 2016
I am trying to hold myself to one Monday Smackdown a week.
James Pethokoukis can and should do much better work than this.
Kevin Drum: Which Party Platform Is Better For Economic Growth?: "James Pethokoukis is unhappy with the Democratic Party platform:
As always, when the extremely sharp Dani Rodrick stuffs a book-length argument into an 800-word op-ed column, phrases acti as gestures toward what are properly chapter-long arguments. So there is lots to talk about.
Must-Read: Dani Rodrik: The Abdication of the Left: "This backlash was predictable...
...Hyper-globalization in trade and finance, intended to create seamlessly integrated world markets, tore domestic societies apart. The bigger surprise is the decidedly right-wing tilt the political reaction has taken. In Europe, it is predominantly nationalists and nativist populists that have risen to prominence, with the left advancing only in a few places such as Greece and Spain.... As an emerging new establishment consensus grudgingly concedes, globalization accentuates class divisions between those who have the skills and resources to take advantage of global markets and those who don’t. Income and class cleavages, in contrast to identity cleavages based on race, ethnicity, or religion, have traditionally strengthened the political left. So why has the left been unable to mount a significant political challenge to globalization?
I think that this paragraph above is largely wrong.
July 11, 2016 at 02:20 PM in Economics: Growth, Economics: History, Economics: Inequality, Economics: Macro, History, Long Form, Moral Responsibility, Obama Administration, Philosophy: Moral, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (2)
For a long time I have listened to Thomas Byrne Edsall with great attention. But this seems to me to be very bad and very wrong indeed:
Thomas Byrne Edsall: The Anti-P.C. Vote: "The refusal of Democrats and the American left to hear...
...or to grant some legitimacy to--the grievances of white America as it loses power and stature to ascendant minorities and to waves of immigrants from across the globe undergirds the Trump movement. In the zero sum world of immigration politics, it has proved impossible so far to convincingly affirm the validity of the claims of both sides...
But "white America" is not losing "power and stature" to "waves of immigrants".
But "white America" is not losing "power and stature" to "ascendant minorities".
Live from the Right-Wing's Self-Made Gehenna: WTF!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?!?
Martin Feldstein**: How EU Overreach Pushed Britain Out: "Although many officials and experts predict that Brexit will have dire economic consequences...
...this certainly is not inevitable. Much now depends on the terms of the future relationship between the EU and Britain. The UK is also now in a better position to negotiate a more favorable trade and investment treaty with the US.... The US would be negotiating with one country, not 28--many of which do not share Britain’s pro-market policies. The question of Britain’s EU membership has been decided. Now its economic future depends on what it does with its new independence.
Must-Read: If you have not been reading Dietrich Vollrath's weblog on economic growth, you should. He has been teaching the world a masterclass in understanding the patterns and determinants of economies' long-run growth trajectories:
Dietrich Vollrath: The Persistence of "Technology": "Diego Comin, Bill Easterly, and Erick Gong... 'Was the Wealth of Nations Determined in 1000BC?...
(1) Recession Chances?: The chances of recession are smmall, but not very small. Robert Solow likes to quote Damon Runyon that nothing between humans is more than 3 to 1. We have a very hard time imagining how fat the tails are--and so even when things look clear there are always dangers surprisingly close
That said, expansions do not die of natural causes. It is true that the unwinding of malinvestment balances is a fraught moment. But we climbed down from the dot-com bubble successfully. And we almost climbed down from the housing bubble successfully—I confess that even in July 2008 I thought we were going to make it. And so I think, today, that we are going to make it without a recession in our near future. (Britain and Texas, on the other hand...)
Live from the Gamma Quadrant: Books Inc.: Trekonomics: The Economics of Star Trek: "Manu Saadia discusses Trekonomics: The Economics of Star Trek...
...What would the world look like if everybody had everything they wanted or needed? Delving deep into the details and intricacies of 24th century society, Trekonomics explores post-scarcity and whether we, as humans, are equipped for it. What are the prospects of automation and artificial intelligence? Is there really no money in Star Trek? Is Trekonomics at all possible? Manu will be in conversation with UC Berkeley economics professor Brad DeLong.
June 25, 2016 at 12:06 PM in Berkeley, Books, Economics: Growth, Economics: History, Economics: Inequality, Long Form, Philosophy: Moral, Political Economy, Politics, Science Fiction, Streams: (BiWeekly) Honest Broker, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (3)
Jacob Hacker and Paul Pierson: Remembering Andy Grove—and Government's Role in Modern Technology: "The side of [Andy] Grove’s success that has received scant notice...
...is the huge debt that he and the industry he led owed to U.S. public policy.
History of Economics Society :: June 17, 2016 :: Geneen Auditorium, Fuqua School of Business, Duke University, Durham, NC:
https://www.icloud.com/keynote/00033GAKBnIHC53Sv0UDhbqEw#2016-06-17_HES_Confidence_Fairy_in_Historical_Perspective | http://delong.typepad.com/2016-06-17-hes-confidence-fairy-in-historical-perspective.pdf
June 17, 2016 at 12:08 PM in Economics: Finance, Economics: Growth, Economics: History, Economics: Macro, History, Long Form, Obama Administration, Philosophy: Moral, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (6)
Live from the Gamma Quadrant: Books Inc.: Trekonomics: The Economics of Star Trek: "Manu Saadia discusses Trekonomics: The Economics of Star Trek...
The conventional--pioneer--wisdom in American history is, still, that independent, entrepreneurial people settled the continent in small farms and established this civilization, pulling themselves up by their own bootstraps and building things through their own energy and enterprise, aided by democracy and the legal infrastructure of the free market.
This, of course, misses three big and immediate things:
First, the Amerindians who had been 12000 years in residence rightly objected--both to the plagues the European settlers brought that decimated their populations and then to the form the civilization being built took. Behind small-farm settlement stood conquest--and conquest requires governments and armies, not free-market association and catallaxy.
Second, a great deal of the surplus generated by the American economy--and used to finance its development--up to and beyond 1865 came from slavery--once again, not a free-market institution by any means.
Consider Jared Diamond's 1987 paean to hunter gatherers. While I find his article provocative and insightful, I also find it annoying. It seems to me that it mostly misses the most important parts of the story.
For one thing, it misses the importance of the dominant Malthusian mechanisms. The invention of agriculture and the domestication of animals provide an enormous technological boost to humanity both in terms of the number of calories that can be harvested by an hour of work and in terms of the ability of a society to make durable investments of all kinds that further boost its productivity. It is an absolute living-standard bonanza for the generations that discover it, and the generations that come after.
June 06, 2016 at 05:23 AM in Economics: Growth, Economics: History, Economics: Inequality, History, Philosophy: Moral, Political Economy, Politics, Science: Climate, Streams: (Wednesday) Economic History, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (38)
Must-Read: Carles Boix and Frances Rosenbluth: Bones of Contention: The Political Economy of Height Inequalty: "Human osteological data provide a rich, unmined source of information...
Must-Read: Noah Smith: Finding Better Ideas to Rebuild America: "‘Concrete Economics,’ by University of California-Berkeley professors Brad DeLong and Stephen S. Cohen, needs an expanded sequel...
...900 pages long, with charts, data, theory and an exhaustive list of historical case studies. That book would become the Bible of the New Industrialist movement that is just beginning to grope its way out of the ashes of the neoliberal free-market consensus. Perhaps that tome will get written. But DeLong and Cohen couldn’t wait to write it, because we need new ideas now, and they decided they had to put a sketch of those new ideas into people’s heads very quickly. And I agree with their decision. If you're at all concerned about economic policy, this is a book you need to read. It will take you only a couple of hours, and the time will be well-spent....
Hoisted from the Archives from Two Years Ago: At least, slavery and serfdom are good things when done by Communists like Uncle Joe Stalin, according to Genovese:
Eugene Genovese: On Eric Hobsbawm (1995): "But still Hobsbawm raises hackles...
...especially with his argument that the collectivization of agriculture saddled the Soviet Union with economic inefficiencies from which it never recovered. Here he betrays a small dose of the Bukharinite romanticism that would have had the Soviet Union choose a slower, steadier economic course. His evidence, and the soberest parts of his generally lucid analysis, suggest what he finally and virtually concedes, which is that Stalin knew what he was about, while Bukharin was whistling Dixie.
June 04, 2016 at 06:29 AM in Economics: Growth, Economics: History, Economics: Inequality, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Strategy, Streams: (Wednesday) Economic History, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (16)
Live from the Gamma Quadrant: Manu Saadia: The Big Idea – Whatever: "You’ve got books on the physics of Star Trek...
'Live long and prosper.'
'The needs of the many outweigh the needs of the few, or the one.'
'Make it so.'
‘Logic is the beginning of wisdom, not the end.’
'I'm a doctor, not a bricklayer.'
'You can stop it!' 'Stop it? I'm counting on it!'
Over the past century Star Trek has woven itself into our socio-cultural DNA. It provides a set of cultural reference points to powerful ideas, striking ideas, beneficial ideas that help us here in our civilization think better--even those of us who are economists.
Live from High Above the Former Iron Curtain: The very sharp Dani Rodrik:
Dani Rodrik: The Politics of Anger: "Perhaps the only surprising thing about the populist backlash that has overwhelmed the politics of many advanced democracies...
...is that it has taken so long.... Politicians’ unwillingness to offer remedies for the insecurities and inequalities of our hyper-globalized age... create[s] political space for demagogues with easy solutions... Ross Perot... Patrick Buchanan... Donald Trump, Marine Le Pen, and sundry others.... [In] the first era of globalization... mainstream political actors had to downplay social reform and national identity because they gave priority to international economic ties. The response... [was] fatal.... Socialists and communists chose social reform, while fascists chose national assertion. Both paths led away from globalization to economic closure (and far worse). Today’s backlash most likely will not go quite so far....
Still, the conflicts between a hyper-globalized economy and social cohesion are real, and mainstream political elites ignore them at their peril.... The internationalization of markets for goods, services, and capital drives a wedge between the cosmopolitan, professional, skilled groups that are able to take advantage of it and the rest of society... an identity cleavage, revolving around nationhood, ethnicity, or religion, and an income cleavage, revolving around social class. Populists derive their appeal from one or the other.... You can barely make ends meet? It is the Chinese who have been stealing your jobs. Upset by crime? It is the Mexicans.... Terrorism? Why, Muslims.... Political corruption? What do you expect... [from] big banks?... Establishment politicians are compromised... by their central narrative... [of] helplessness... [which] puts the blame... on technological forces... and globalization... as inexorable.... Mainstream politicians... [must] offer serious solutions.... The New Deal, the welfare state, and controlled globalization (under the Bretton Woods regime)... gave market-oriented societies a new lease on life... not tinkering and minor modification of existing policies that produced these achievements, but radical institutional engineering...
I find it alarming that here we are, more than one a half decades into the twenty-first century, and the wisdom and true knowledge that is state-of-the-art as far as political economy is concerned is still to be found in the writings of John Maynard Keynes and Karl Polanyi...
May 28, 2016 at 02:29 PM in Economics: Growth, Economics: History, Economics: Inequality, Economics: Macro, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (15)
Prakash Loungani: Rebel with a Cause:
The triumph of markets over the state appeared almost complete in the early 1990s. The collapse of the Soviet Union and the fall of the Berlin Wall had discredited the role of the state in commanding the economic and political life of citizens. The political scientist Frank Fukuyama proclaimed in 1992 that the spread of democracy and capitalism around the globe would henceforth make history somewhat ‘boring.’ Among economists, markets—already held in fairly high regard—gained further esteem. Prominent left-leaning economists like Larry Summers admitted to a ‘grudging admiration’ for such champions of the global spread of free markets as Milton Friedman.
The extremely-sharp Branko Milanovic asks a very good question that I had never considered before:
Branko Minanovic: Economic Reflections on the Fall of Constantinople: This Sunday, May 29 marks the anniversary of the Fall of Constantinople in 1453...
...Thinking of... what is called (somewhat inaccurately) the Eastern Roman Empire, led me to two, I hope interesting, observations. First, why did the Industrial Revolution not happen in the Eastern Roman Empire?... There are many answers... from... ‘barbarians at the gate’... inability to incorporate lower classes... ‘dead hand’ of a rising military bureaucracy... slavery: cheap labor that provided no incentive for the use of labor-saving machines... [to] those who... thought, like Moses Finley and Karl Polanyi, that Roman institutions did not contain at all the seeds that could have led to capitalist development.... Constantinople become the capital in 330 AD... and that lasted for another 800 to 900 years with no interruption. (That is, if we want to date the end of the Roman Empire in 1204 when Byzantium was conquered by the Crusaders). Wasn’t there enough time to find out if ancient institutions could become capitalistic? Eight or nine centuries seems plenty.
Must-Read: Dietrich Vollrath: Can We Get Rich by "Doing Business" Better?: "Below I’m going to get to the gory details of why the Doing Business (DB) indicators generally suck...
Paul Krugman (2015): Annoying Euro Apologetics: "Are there good arguments against the proposition that the creation of the euro was an epic mistake?...
Greg Mankiw's Abstract Is Misleading...: Greg Mankiw writes:
Greg Mankiw's Blog: Dynamic Scoring: In today's Washington Post, columnist Sebastian Mallaby gives my recent work with Matthew Weinzierl on dynamic scoring some free publicity, while using it to beat up my former boss [i.e., George W. Bush]...
Hoisted from 2010: James Scott, "Legibility," Flavius Apion, Anoup, the Emperor Justinian, Robin of Locksley, Rebecca Daughter of Mordecai, King Richard, and Others..: Cato Unbound: James Scott: The Trouble with the View from Above.: A comment:
In 542 AD the late Roman (early Byzantine?) Emperor Justinian I wrote to his Praetorian Prefect concerning the army--trained and equipped and paid for by the Roman State to control the barbarians and to 'increase the state.' Justinian was, Peter Sarris reports in his Economy and Society in the Age of Justinian, upset that:
certain individuals had been daring to draw away soldiers and foederati from their duties, occupying such troops entirely with their own private business.... The emperor... prohibit[ed] such individuals from drawing to themselves or diverting troops... having them in their household... on their property or estates.... [A]ny individual who, after thirty days, continues to employ soldiers to meet his private needs and does not return them to their units will face conﬁscation of property... 'and those soldiers and ﬁoderati who remain in paramonar attendance upon them... will not only be deprived of their rank, but also undergo punishments up to and including capital punishment.
May 15, 2016 at 03:17 PM in Economics: Growth, Economics: History, Economics: Inequality, History, Philosophy: Moral, Political Economy, Politics, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
Andrew McAfee: What will future jobs look like?: "The writer George Eliot cautioned us that, among all forms of mistake...
...prophesy is the most gratuitous. The person that we would all acknowledge as her 20th-century counterpart, Yogi Berra, agreed. He said, 'It's tough to make predictions, especially about the future.'
I'm going to ignore their cautions and make one very specific forecast. In the world that we are creating very quickly, we're going to see more and more things that look like science fiction, and fewer and fewer things that look like jobs. Our cars are very quickly going to start driving themselves, which means we're going to need fewer truck drivers. We're going to hook Siri up to Watson and use that to automate a lot of the work that's currently done by customer service reps and troubleshooters and diagnosers, and we're already taking R2D2, painting him orange, and putting him to work carrying shelves around warehouses, which means we need a lot fewer people to be walking up and down those aisles.
Live from the RSF Fieldhouse: I had thought this question was an 80% question--that 80% of Econ 1 students would get it right. Instead, it seems that it is a 60% question.
What makes it so hard for so many?
(IV) Political Economy/Long-Run Growth/International (20 pts./36 min.):
Remember the Rule of 72: the time it takes a quantity to double is roughly equal to 72 divided by the quantity’s growth rate in percent per year....
(7) (4 pts.: answer this with four numbers in the spaces provided) Real GDP per capita in the United States has been growing at 2%/year for the past 150 years. Annual real GDP per capita in the world today averages $10,000.
(a) If the world economy as a whole grows as fast in real GDP per capita in the future as the U.S. has grown over the past 150 years, how long will it take average real GDP per capita in the world as a whole to double? Answer: Since 72/2 = 36, average world GDP per capita will double in 36 years
(b) If worldwide economic growth continues at such a pace, what will average world GDP per capita be in 2124, roughly? Answer: at that pace, average world GDP per capita will double in 36 years, and then start doubling again. 2124 is 108 years from now. 108/36 = 3. Between now and 2124 there is enough time for three doublings. Three doublings = 8. $10,000 x 8 = $80,000
(c) If worldwide economic growth continues at such a pace, what will average world GDP per capita be in 2232, roughly? Answer: another 108 years, another three doublings. Three doublings = 8. $80,000 x 8 = $640,000
(d) If worldwide economic growth continues at such a pace, what will average world GDP per capita be in 2340, roughly? Answer: another 108 years, another three doublings. Three doublings = 8. $640,000 x 8 = $5,120,000
This was not a question that I expected to divide the class roughly in two...
Comment of the Day Robert Waldmann: DeLong on Hayek, Smith, and Smith: "I will be contrarian...
...(1) On The Road to Serfdom. Science progresses as people develop testable hypotheses, test them and reject them. Like _Leviathan, The Road to Serfdom presented a plausible (if pessimistic) hypothesis which turned out not to correspond to reality.
The utility of any object... pleases the master by perpetually suggesting to him the pleasure or conveniency which it is fitted to promote.... The spectator enters by sympathy into the sentiments of the master, and necessarily views the object under the same agreeable aspect. When we visit the palaces of the great, we cannot help conceiving the satisfaction we should enjoy if we ourselves were the masters, and were possessed of so much artful and ingeniously contrived accommodation....
Cardiff Garcia: Welcome to AlphaChat, the business and economics podcast of the Financial Times. I'm Cardiff Garcia....
First up on the show is Brad DeLong, an economist and economic historian at the University of California at Berkeley. He is also the coauthor of the New Book: Concrete Economics: The Hamilton Approach to Economic Growth and Policy. We are going to be discussing this book in a forthcoming episode of Alphachat-Terbox, our long-form sister podcast segment. But for this I have asked Brad to choose three under appreciated moments in economic history, and to give us the lessons we should learn from those events. I do not know what Brad's chosen. I will be learning along with you.
Brad: Thanks for common on AlphaChat.
Brad DeLong: Thank you very much.
May 10, 2016 at 08:49 AM in Economics: Finance, Economics: Growth, Economics: History, Economics: Macro, History, Long Form, Philosophy: Moral, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (2)
DeLong Garcia Alphachatterbox Transcript: Brad DeLong on Hamiltonian economics
[Cardiff Garcia] Hey everyone, welcome to Alphachatterbox, the long form business economics and tech podcast of the Financial Times.
I'm Cardiff Garcia, and our guest today is Brad DeLong, an economist and economic historian at the University of California Berkeley. He also writes a popular blog, and he’s the co-author, along with Steven Cohen, of a new book called Concrete Economics: The Hamilton Approach to Economic Growth and Policy, and that is the topic of this edition of Alphachatterbox. Brad DeLong, welcome back.
[Brad DeLong] Yes, yes. Thank you very much. Very glad to be "here", wherever "here" is, in some metaphysical kind of sense.
May 10, 2016 at 05:28 AM in Economics: Growth, Economics: History, Economics: Inequality, History, Long Form, Philosophy: Moral, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (3)
Let me pick up on some threads we’ve already heard this afternoon.
Let me provide a complementary, but I think supportive, perspective on what was going on with Morgenthau versus Marshall in Washington DC in the three or four years after World War II. Possibly my story will have some lessons for the present and the future. But possibly it will not.
Perhaps the most fruitful way to look at the debate between Morgenthau and Marshall that was carried on--largely below the surface, largely without explicit confrontation--at the end of WWII is that it was an attempt to figure out how to resolve call it two historical problems: the problem of European military culture, and the problem of modern industrial war.
May 09, 2016 at 04:36 PM in Economics: Growth, Economics: History, Economics: Macro, History, Long Form, Philosophy: Moral, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
In the early 1990s, that the rapid growth of the Japanese economy would continue...
In the early 1990s, that the rapid privatization of Russian industry was more likely than not to set up a favorable political dynamic that would lead to very rapid economic and political recovery in Russia...
In the early 1990s, that centrist bipartisan coalitions were possible...
In the early 1990s, that NAFTA's encouragement of FDI in Mexico would outweigh portfolio diversification and cause the peso to strengthen...
In the mid-1990s, that the U.S. unemployment rate would not be able to drop below six percent without generating rising inflation...
At the end of the 1990s, that Clinton-era deficit elimination efforts would endure...
In the mid-2000s, that central banks had the tools, the skill, and the political will to stabilize economies at high levels of employment and low levels of inflation, and thus that fiscal policy and financial institutions policy no longer had any compelling stabilization policy role to play...
In the mid-2000s, that large, leveraged financial institutions had sufficient caution and sufficient control over their derivatives books that their derivative positions did not pose major systemic risk...
In the mid-2000s, that one significant threat to the world economy would come from the fact that in a crisis the shaky long-term finances of the U.S. social insurance state might provoke a collapse of confidence in the long-term value of the dollar...
In the mid-2000s, that there were significant equilibrium-restoring forces in the labor market...
In the late-2000s, that academic macroeconomics was not in that bad shape...
At the end of the 2000s, that there were expectational limits to old-line expansionary Keynesian policies that would manifest themselves relatively soon...
I think that is all the big ones...
May 08, 2016 at 04:38 AM in Economics: Finance, Economics: Growth, Economics: History, Economics: Macro, Obama Administration, Philosophy: Moral, Political Economy, Politics, Streams: (Monday) Smackdown Watch, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (18)
Comment of the Day: Maynard Handley: The Wall Street Journal, the University of Chicago's Booth School of Business, and Stanford University's Hoover Institution Have Major, Major Quality_Control Problems: "And this, kids, is why it seems that you need to force economists to take a philosophy course...
...before they can be allowed to practice.
What is Cochrane's mental model here? That social reality is forced (by god?) to match a particular function, which happens to be an exponential plus a whole lotta noise?
In physics, where we have some understanding of underlying reality, it is often (not always) legitimate to extrapolate a curve beyond measurements because we have good reasons to believe certain properties about the extrapolating function.
May 06, 2016 at 11:33 AM in Economics: Finance, Economics: Growth, Economics: History, Economics: Macro, History, Political Economy, Presentations, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
Comment of the Day: Sans Souci: The University of Chicago and the Wall Street Journal Have Mammoth Quality Control Problems: "Some claim that extraordinary claims do not require extraordinary evidence...
John Cochrane.... 'Brad Delong posted a response to my oped on growth in the Wall Street Journal. He took issue with my graph...'
What are the odds that:
I put the odds as about 50-50 myself...
UPDATE: There is demand for slides: http://tinyurl.com/del20160506c | http://www.bradford-delong.com/2016-05-06-cochrane-slides.html
Over in my Twitter feed, Matthew Yglesias reminds me that whatever sins committed against the Gods of Reality-Based Analysis by BernieBros pale in comparison to the total idiocy of the Wall Street Journal and modern Chicago-school economics...
Here is the scatter, for 2014, of GDP per capita levels across the world and the World Bank's "Doing Business" rating:
The U.S. economy is best-of-breed in GDP per capita--even with Hong Kong and a hair below Switzerland--excepting, of course oil economies (UAE, Norway, Qatar, etc.) and money-laundering economies (Luxembourg). The U.S. business climate is very good at an 82--albeit the World Bank says that it is not as great as New Zealand's and Singapore's in the low 90s.
What do you think would happen if the U.S. were to undertake to push its "business climate" not just to Singapore's 93 but to be what the World Bank regards as entrepreneurial best-practice worldwide in all of its components?
What curve would you draw through these points and extend out to an x-axis value of 100?
And how much would you regard that curve as cause-and-effect, with "Doing Business" rating the cause and GDP per capita level the effect, and how much as effect-and-cause or both being results of other factors?
Debunking America’s Populist Narrative: BERKELEY – Listen to the dog-whistles—or, rather, dog-screams—of American politics this just-begun election season and this is what you hear: of Chinese and Mexicans together with Wall Street and lousy trade deals who outsourced factories and robbed you of your rightful good job, of Mexicans who come here willing to work for less and force you to listen to words in a Spanish you cannot understand, and of Muslims of whom you live in fear that their bombs will blow you to bits. These dog-scream undercurrents are scary, and scarier than usual. They are scary for foreigners who, by virtue of living in this world, find themselves not just in the room but in bed with the psychologically-unstable hyperpower elephant that is the United States. They are scary for Americans who thought or hoped or perhaps only wished that they lived in the Republic of George Washington, Abraham Lincoln, and Teddy and Franklin Roosevelt. READ MOAR
Live from La Farine: Duncan Black is anxious:
Duncan Black**: Hard to Kick the Habit: "Hope to be wrong, but suspect that team Clinton (very broadly defined)...
...will still be talking about BernieBros in September. I'm quite happy for Hillary Clinton to be the nominee, as I always thought she would be. I'm not happy with the months of 'we would have won it easy if not for these meddling kids who won't vote in November' rhetoric. Better figure out how to appeal to them. Stop calling them immature and stupid. The goal is to win, not to make early excuses for why you're going to lose.
Nah. After yesterday the word--and the obvious thing--is to stand down.
Mind you: The day will come when it will be time to gleefully and comprehensively trash people to be named later for Guevarista fantasies about what their policies are likely to do. The day will come when it will be time to gleefully and comprehensively trash people to be named later for advocating Comintern-scale lying to voters about what our policies are like to do. And it will be important to do so then--because overpromising leads to bad policy decisions, and overpromising is bad long-run politics as well.
But that day is not now. That day will be mid-November.
April 27, 2016 at 10:06 AM in Economics: Growth, Economics: Inequality, Economics: Macro, Moral Responsibility, Obama Administration, Philosophy: Moral, Political Economy, Politics, Streams: (Monday) Smackdown Watch, Streams: Across the Wide Missouri, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (27)
Over at Equitable Growth: Typically smart thoughts by Paul Krugman on carbon pricing:
Paul Krugman: 101 Boosteris: "I see that @drvox is writing a big piece on carbon pricing...
...I don’t want to step on his forthcoming message, but what he’s said so far helped crystallize something I’ve meant to write about... ‘101 boosterism’... a takeoff on Noah Smith’s clever writing about ‘101ism’, in which economics writers present Econ 101 stuff about supply, demand, and how great markets are as gospel, ignoring the many ways in which economists have learned to qualify those conclusions in the face of market imperfections. His point is that while Econ 101 can be a very useful guide, it is sometimes (often) misleading.... My point is... even when Econ 101 is right, that doesn’t always mean that it’s... the most important thing.... Economists... delight in talking about issues where 101 refutes naïve intuition, but that doesn’t... mean... these are the crucial policy issues.... Read MOAR
"I now know it is a rising, not a setting, sun" --Benjamin Franklin, 1787