Over at Project Syndicate: Try Everything: When it became clear in late 2008 that the orgy of deregulation coupled with global imbalances was confronting the global economy with a shock at least as dangerous as the Great Crash that had initiated the Great Depression, I was alarmed but hopeful. We had, after all, seen this before. And we had models from the Great Depression for how to mitigate the damage--basically, try everything that might work to boost demand and production and reduce jobless workers, and reinforce success. READ MOAR
I am once again out of DeLong Smackdowns of sufficiently high quality...
That means that it is time to (shudder) read the next page in chapter 11 of David Graeber's Debt: My First 5000 Mistakes.
But I cannot face it.
However, a correspondent sends me a piece from an extremely sharp observer--Ann Leckie, author of the devastatingly-good Ancillary Justice.
She worries that the rot in the book begins much earlier than chapter 11:
From Perry Anderson (1976): Considerations on Western Marxism: "The consequence of this impasse...
...was to be the studied silence of Western Marxism in those areas most central to the classical traditions of historical materialism: scrutiny of the economic laws of motion of capitalism as a mode of production, analysis of the political machinery of the bourgeois state, strategy of the class struggle necessary to overthrow it. Gramsci is the single exception to this rule--and it is the token of his greatness, which sets him apart from all other figures in this tradition....
The raw ingredients out of which J.R.R. Tolkien fashioned The Lord of the Rings are equal parts Norse-Anglo-Saxon-Germanic myth, chivalric romance, and Christian apocalyptics (evil personified and mighty, but also powerful guardian spirits, and over all a God who arranges things so that the highest prizes fall to those who suffer). The mix is extraordinarily powerful.
Over at Democracy Journal:
In 1980, the year Ronald Reagan won his first landslide presidential victory, pollsters at National Opinion Research Corporation asked Americans whether they thought, as Reagan did, that ‘too much’ was being spent on welfare, health, education, environmental, and urban programs. Only 21 percent did—the same percentage as had answered that way in 1976. The number that favored ‘keeping taxes and services about where they are’ was a healthy plurality, 45 percent—the exact same result as in 1975. READ MOAR
Rather far, I must say, from "to secure these rights governments are instituted..."
Oliver Wendell Holmes:
We have seen more than once that the public welfare may call upon the best citizens [i.e., young healthy men] for their lives [in war via the draft]. It would be strange if it could not call upon those who already sap the strength of the State for these lesser sacrifices, often not felt to be such by those concerned, in order to prevent our being swamped with incompetence...
Paul Lombardo (2008): Three Generations, No Imbeciles: Eugenics, the Supreme Court, and Buck v. Bell http://www.amazon.com/gp/product/0801898242/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0801898242&linkCode=as2&tag=brde-20&linkId=TJ3XP7ZYQDBJTDLH
From Perry Anderson (1976): Considerations on Western Marxism: "The consequence of this impasse...
...was to be the studied silence of Western Marxism in those areas most central to the classical traditions of historical materialism.... Gramsci is the single exception to this rule--and it is the token of his greatness, which sets him apart from all other figures in this tradition.... For over twenty years after the Second World War, the intellectual record of Western Marxism in original economic or political theory proper--in production of major works in either field--was virtually blank....
Over at Equitable Growth: These days, when people come to me and ask if I will run a reading course for them on Karl Marx, this is what I tend to say:
The world is divided into those who take Karl Marx's work seriously and those who do not.
On the one hand, those who do not take Karl Marx's lifetime work-project seriously are further divided into three groups:
Those who ignore Marx completely.
Those who use selected snippets from his work as Holy Texts, and
Those modern "western Marxists" who find inspiration in the works that Karl Marx wrote exclusively before he was thirty. READ MOAR
J. Bradford DeLong on December 15, 2014 at 07:06 AM in Books, Economics: History, History, Long Form, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Streams: The Honest Broker | Permalink | Comments (26)
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Christian Lorentzen: Dad & Jr: Bushes Jr & Sr: " It’s been five years and ten months....
...I confess to a bit of nostalgia for the nihilism that came with being governed by George W. Bush. For all the continuities, Obama arouses more earnest responses: apologetics, disappointment, head-shaking, Occupy, Edward Snowden. Bush’s arrogance has turned out to be that of a man destined to spend his golden years painting portraits of Putin, Merkel and Berlusconi like a dime-store Warhol working on commission for a UN theme bar. Retirement has now yielded a second book under his name.
Reviewers have welcomed 41: A Portrait of My Father like they miss father and son. Or maybe it’s ‘the soft bigotry of low expectations’:
The continued absence of high-quality DeLong smackdowns on the internet distresses me.
It distresses me because it means that today, once again, for our Monday Smackdown Watch, we must continue our death-march read (see the [backstory][c]) of chapter 11 of David Graeber's Debt: The First 5000 Mistakes.
By now I am desperately hoping that I will come across even a single kindle screen that does not have egregious errors of fact or analysis on it--one single screen in which what Graeber says is at least arguably right. We are talking Alexander the Great's army in the Gederosian Desert here.
But this is not that day.
Today I read only one kindle screen before collapsing into a fit of some sort:
Situate it in its context: relative to the Anglo American economy, the Iberian economies, the pre-conquest era, and--recently--the Pacific Rim as an example of an economy that works well...
Before 1850, it was Latin America that was the prize: Mexico, Peru, the Silver Mountain, the Sugar Islands
It was Europe's most prosperous, civilized, and technologically progressive peoples that grasped that opportunity--Portuguese mariners, Aragonese merchants, backed by Castilian crusader steel.
Parliamentary liberties and freedom of speech considerably more advanced in the Castile of Isabella Trastamera and the Aragon of Ferdinand Trastamera than in the England of Henry Tudor.
Indeed, the Empire of Liberty had a better advocate in Simon Bolivar than in George Washington and his successors.
Simon Bolivar freed not just his slaves, but all the slaves of Venezuela.
George Washington freed his slaves--but only after his death. Thomas Jefferson freed his--if they were his descendants. James Madison and James Monroe did not free theirs. John Adams and John Quincy Adams had none, and the latter fought all his life for the petitions for freedom of the slaves in the United States to be heard in Congress. But Andrew Jackson spent his life trying to buy more slaves. Martin Van Buren's slave Tom ran away--and then, when he was found, Van Buren sold him for $50 to the slave-catcher. William Henry Harrison tried to turn Indian into slave territory when he was governor. John Tyler, James K. Polk, and Zachary Taylor--not until we get to Millard Filmore do we get another American President even close to as free-soil as the Adams's were: "God knows that I detest slavery, but it is an existing evil, for which we are not responsible, and we must endure it, and give it such protection as is guaranteed by the Constitution, till we can get rid of it without destroying the last hope of free government in the world..."
Indeed, look at U.S. politics in the first 20 years after the Constitutional Convention. Washington thought his own Secretary of State--Jefferson--was on the point of betraying the U.S, to France, and would gladly sacrifice liberty in America to advance the cause of the French Revolution. Jefferson was certain that John Adams was plotting to restore the British monarchy--and Adams would have, if the alternative was the coming to power of some American Robespierre--and that Alexander Hamilton was ready to become a military dictator. Hamilton was shot dead by Jefferson's running mate and vice president, Aaron Burr, whom Jefferson then tried for treason. Burr was not convicted solely because the Chief Justice, John Marshall, thought that if he set Burr free he might be able to cause Jefferson yet more trouble. A banana republic--the ideal type of a banana republic, in fact--save that they grew no bananas...
Living standards, natural resources, population densities, and rates of demographic expansion give Latin America an edge over Anglo America through the first quarter of the nineteenth century, at least.
The coming of the steam engine and then, a generation later, the telegraph ought to have brought the world together in terms of ironing out economic divergences.
The technologies of the Industrial Revolution? The first generation of industrial technologies circa 1780 were potentially profitable only in Britain, with its uniquely high real wages and uniquely low price of coal at the factory gate. But by 1850 steam engines, spinning jennies, power looms, and railroads were potentially profitable everywhere.
Yet the story of economic development is of a steadily-widening relative-income gap: a widening gap between Anglo America and the Southern Cone on the one hand and the rest of Latin America up until 1918 or so; then a widening gap between Anglo America and all of Latin America save Venezuela up to 1950 or so; and then relative stasis--average growth in Latin America at about the same pace as Anglo America, with on average neither widening nor closing of the relative gap (save Venezuela and, after 1958, the peculiar case of Cuba).
By 1950, down to perhaps a quarter of Anglo American levels...
No worse than rest of exNorth Atlantic world, but no better..:
Since 1950, relative parity is normal...
Theories of economic relative retardation and growth inevitably fall into two broad categories: "the rich are so good, and the poor are so bad" theories; and "the rich are so bad, and the poor are so good" theories.
International trade and the international economy in general as engines of extraction theories: comparative-advantage traps, debt traps, vulnerability to cyclical fluctuations traps. Escape from the trap via neo-mercantilist protection, inward focus on resource accumulation, and import-substitution industrialization--turn the global economy into your servant rather than your master through clever technocratic policies of one sort or another. Raul Prebisch. (Early) Fernando Henrique Cardoso. Immanuel Wallerstein.
Unorthodox Marxist class-structure-a-fetter-on-development theories: latifundia and neo-feudalism, but not just rural neofeudalism: the heyday of the PRI in Mexico as a "new class" bureaucracy variant of robber baronage and clientage, focused on extracting rents for political powerbroker and their clients from the most productive pressure points of the economy--natural resources, high-productivity export manufacturing, tourism. Hernando de Soto, The Other Path. Andrei Shleifer et al., "Legal Origins". Acemoglu, Johnson, and Robinson, "Comparative Origins". What makes these people unorthodox Marxists is that Karl Marx believed in progress, and so a "bourgeois revolution" as inevitable: superstructure could not indefinitely contain the pressures being generated by the economic changes of the base. In the end, all of the feudal and neo-feudal and aristocratic and caste and estate-based blockages to market capitalism--and thus prosperity--would be "steamed away". "All that is solid melts into air..." really does not do the German justice...
One-unfortunate-accident-after-another theories: The long nineteenth century required either fluency in English or an exceptionally-favorable geographic environment--which the Southern Code had--in order to successfully adapt and adopt the technologies of the Industrial Revolution. In the twentieth century bets on globalization crapped out with the coming of the Great Depression, Imperial Preference, and the Smooth-Hawley Tariff. Bets on import-substitution then missed the biggest expansion of world trade ever in the Thirty Glorious Years. The switch to "neoliberal" policies then got squashed by the oil shocks, the coming of monetarism, and more recently the rise of China. Plus collateral damage from the Cold War--the Cold War in Asia gave Japan and the rest of the Pacific Rim preferential access to Anglo-America's markets, the Cold War in Europe was fought on terrain where the propertied right that had bet on Naziism kept its head down, but the Cold War in Latin America was different...
But do we really have to choose? (17) can be evaded via clever technocrats pursuing state-led development--but, in Lant Pritchett's words, what can be worse than state-led development policies pursued by an anti-developmental state? The anti-developmental state that trapped Latin America in (17) and was the product of unfortunate early wealth concentration and frontier absence in history via (18) could have been surmounted except for the unfortunate accidents of (19)--which pre-dated the Cold War: it was FDR who said that while Somoza may be an SOB he is our SOB. And unfortunate accidents would not have had as large deleterious effects had the global economy of (17) been more genuinely open and stable.
From this perspective, Latin American relative retardation--even in the Southern Cone--from 1850-1950 looks overdetermined: it would have been a miracle had it not taken place.
Still, literacy, life expectancy, prosperity, etc. vastly better than in 1825--and, relatively, better than Africa, South Asia, non-coastal East Asia (for the moment?), and (perhaps?) Muscovy and its dependencies. Relative retardation is relative to the North Atlantic plus the Asian Pacific Rim only.
Nobody intelligent would say that they know the relative weight to be assigned to these different overdetermining factors. Only a strong desire to obtain tenure and to do so by publishing articles that establish or refute particular narrow theories could induce anybody sane to claim to do so.
Looking forward: But do the burdens of the past still lie on the future?
Chance of making the global economy your servant rather than your master? Here the news is bad: over the past two decades neither the North Atlantic nor the Pacific Rim has been able to master the global economy. Instead, episodes of policy disorder and macroeconomic stress that those of us who focused on the North Atlantic used to see as confined to Latin America are now global.
Class structure a fetter on development? As income inequality in the United States surpasses that of Brazil, and as rent-seeking in everything from Berkeley NIMBYism to the ability of a very narrow fossil fuel-complex interest group to block urgent action on global warming to the ability of the princes of Wall Street to extract their fortunes, it is not that Latin America has promise of attaining the kind of institutional successes seen in the post-WWII North Atlantic. Rather, the North Atlantic--plus Japan--appear to be copying institutional failure, or at least underperformance.
Could we pray for good luck? It is hard to see what else we can do.
God knows the North Atlantic broadly construed--extending to Tokyo and Moscow--has not been immune to history. But it was a history of grasping technological possibilities perhaps too well, and reactions to them. Now, perhaps, North Atlantic history is becoming more "normal"...
From the tumblr of Marvel Comics editor Tom Breevort comes this edition of the classic column Stan's Soapbox, in which Stan Lee lets loose on the evils of bigotry. At this time when efforts at inclusion from the major publishers often face vocal pushback from those with less forward-thinking viewpoints, it's important to remember that Marvel is based on a foundation of progressivism, whether it's the X-Men's underlying metaphor for society's animosity towards The Other or Captain America's FDR-inspired brand of New Deal liberalism.
Understanding the career of William the Marshal, Comes Pembrokensis jure uxoris Isobel de Clare:
...Saez and... Zucman... uses a richer variety of sources.... The share of wealth held by the bottom 90% is an effective measure of 'middle class' wealth.... In the late 1920s the bottom 90% held just 16% of America’s wealth—-considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929.... By the early 1980s the share of household wealth held by the middle class rose to 36%—roughly four times the share controlled by the top 0.1%.... From the early 1980s... these trends have reversed.... The 16,000 families making up the richest 0.01%, with an average net worth of $371m, now control 11.2% of total wealth—-back to the 1916 share, which is the highest on record.... The top 0.1%... hold 22% of America’s wealth.... The outsize fortunes of the few would not be too worrying were they largely the product of entrepreneurial activity.... The club of young rich includes not only Mark Zuckerbergs... but also Paris Hiltons.... The share of labour income earned by the top 0.1% appears to have peaked... held in the form of shares... levelled off... held in bonds has risen... hint[ing] that America’s biggest fortunes may be starting to have less to do with building businesses...
Most wealth will be deployed, at least at the relevant margin, not in productive entrepreneurial or labor-complementary activities but in at best parasitic rent-seeking activities.
Democratic politics will not save us--that only exceptional circumstances in the twentieth century allowed for a democratic politics of progressive social insurance to level society and so promote social welfare in the face of the Gramscian hegemony of the bourgeoisie.
Both of these seem to me to be quite plausible, and perhaps true. But I think Piketty would have been very well-advised to have spent a lot more time backing them up in his book than he in fact did...
Franklin D. Roosevelt: Final Campaign Speech: Fenway Park, Boston, Massachusetts:
This is not my first visit to Boston. I shall not review all my previous visits. I should have to go on talking for several days to do that—and radio time costs a lot of money.
But I want to recall one visit, back in October, 1928, when I came here to urge you to vote for a great American named Al Smith.
And you did vote for that eternally 'Happy Warrior.'
The Commonwealth of Massachusetts—and your good neighbor, Rhode Island- both went Democratic in 1928—four years before the rest of the Nation did.
This year—and I am making no predictions, I just have a little hope—this year we would like to welcome into the family Maine and Vermont.
[I]t is naive to suppose that the [Supreme] Court's present difficulties could be cured by appointing Justices determined to give the Constitution its true meaning,' to work at 'finding the law' instead of reforming society. The possibility implied by these comforting phrases does not exist.... History can be of considerable help, but it tells us much too little about the specific intentions of the men who framed, adopted and ratified the great clauses. The record is incomplete, the men involved often had vague or even conflicting intentions, and no one foresaw, or could have foreseen, the disputes that changing social conditions and outlooks would bring before the Court. Robert Bork, Fortune December 1968 p.140-1....
As I went further back into Mr. Bork's intellectual history, I discovered that the arguments in his most recent book followed a formula developed in his earlier writings... a lapsarian pattern.... A state of corruption and decay is identified in some institution or area of law. The rot is traced to a particular departure from the proper state of affairs, a willful violation of an authoritatively decreed scheme of things. A method is prescribed by Mr. Bork which will allow us to escape our current fallen state and return to a condition of righteousness. Mr. Bork speaks strongly in favour of his method, pronouncing it 'inescapable' or 'unavoidable.'... Eventually, he falls silent for a while, only to emerge in two or three years with some new, and newly ineluctable, redemptive method. The process then repeats itself... in the past he has been, successively, a libertarian, a process theorist, a devotee of judicial restraint, a believer in neutral principles, a 'law and economist' and an advocate of two distinct forms of originalism. At the time, each of these theories was offered as being the only possible remedy to the subjectivity and arbitrariness of value judgements in a constitutional democracy and the other theories he had held, or was about to hold, were rejected out of hand...
...eighty miles south of Rome... founded in 529 by St. Benedict of Nursia.... Generations of scribes labored in the abbey’s library to copy texts and preserve artifacts.... From November, 1943, to May, 1944, the hill on which the abbey stood was at the center of one of the largest and bloodiest battles of the Second World War. Monte Cassino was a crucial part of the Gustav Line... ‘fortress strength.’... The Allied command, believing that the Germans were using the abbey as a garrison and ammunition dump, made the controversial decision to bomb Monte Cassino. On February 15, 1944, American B-17s, B-25s, and B-26s dropped more than four hundred tons of explosives on the monastery....
Could we please have better New York Times columnists?
...the stakes are not debatable at all. The Catholic Church was willing to lose the kingdom of England, and by extension the entire English-speaking world, over the principle that when a first marriage is valid a second is adulterous, a position rooted in the specific words of Jesus of Nazareth. To change on that issue, no matter how it was couched, would not be development; it would be contradiction and reversal...
Dear Mr. President:
I have received your letter of October 25.(1) From your letter, I got the feeling that you have some understanding of the situation which has developed and a sense of responsibility. I value this.
Now we have already publicly exchanged our evaluations of the events around Cuba and each of us has set forth his explanation and his understanding of these events. Consequently, I would think that, apparently, a continuation of an exchange of opinions at such a distance, even in the form of secret letters, will hardly add anything to that which one side has already said to the other.
9 million people living in the Confederacy: 5 million white, 4 million Black.
1.2 million adult white males in the Confederacy. 900,000 served. 75,000 died in battle. 75,000 died of wounds and infections. 150,000 died of disease in camp. 200,000 maimed. 200,000 deserted. 200,000 still with the Stars and Bars at the end.
21 million people living in states that remained loyal to the Union. 2.3 million served--1.9 million white, 400,000 Black (including Blacks from the Confederate states). 90,000 died in battle. 90,000 died of wounds and infections. 180,000 died of disease in camp. 200,000 maimed.
Mobilizing for a total industrial war is a b*tch when (a) your rich have been investing by buying slaves rather than building factories, and (b) nearly half of your population is more likely than not to turn any guns they get against you...
Missouri sent about 140,000 men to the Union, and about 60,000 to the Confederacy...
Amid great fanfare, the statue of Andrew Jackson was dedicated in Lafayette Park on January 8, 1853, the thirty-eighth anniversary of the battle of New Orleans. An elaborate parade preceded the dedication. A distinguished group including General Winfield Scott, Senator Stephen A. Douglas of Illinois, and the mayor and city council of Washington marched to the entrance of the White House, where they were greeted by President Millard Fillmore and his cabinet. Through a crowd of more than twenty thousand, they marched ￼across he street to Lafayette Park for the dedication. Senator Douglas gave an address on the military accomplishments of General Andrew Jackson and then introduced Clark Mills. Mills was so overcome with emotion that he could not speak and only pointed to the statue, which was then unveiled amid cheers and the salute of General Scott’s artillery.
The inscription on the west side of the marble pedestal reads “Jackson” and “Our Federal Union: It Must Be Preserved,” Jackson’s toast at a banquet celebrating Thomas Jefferson’s birthday on April 13, 1830. The phrase related to the nullification crisis...
Yes, I am happy that I am able to postpone reading further in chapter 11 of David Graeber's Debt: My First 5000 Mistakes for another week...
Amity Shlaes: What triggered Krugman’s pulling some kind of imagined rank on Asness was that Asness, along with me and others, signed a letter a few years ago suggesting that Fed policy might be off, and that inflation might result. Well, inflation hasn’t come on a big scale, apparently. Or not yet. Still, a lot of us remain comfortable with that letter, since we figure someone in the world ought always to warn about the possibility of inflation. Even if what the Fed is doing is not inflationary, the arbitrary fashion in which our central bank responds to markets betrays a lack of concern about inflation. And that behavior by monetary authorities is enough to make markets expect inflation in future...
I will react by asking, to the air, one and only one four-part question:
Consider whether one should line up with Amity Shlaes--along with William Kristol, Niall Ferguson, James Grant, David Malpass, Dan Señor, and the rest of that motley company--against Ben Bernanke. Suppose that one has no special expertise on the issue. Suppose that Ben Bernanke has studied that issue for his entire adult life.
Wouldn't anybody with a functioning neural network greater than that of a moderately-intelligent cephalopod recognize that such a lining-up was an intellectual strategy with a large negative prospective α?
Wouldn't--after the intellectual strategy's large negative-α returns have been realized--anybody with a functioning neural network equal to that of a moderately-intelligent cephalopod recognize that it was time to perform a Bayesian updating on one's beliefs, rather than doubling down and claiming that: it's not over--the inflationary pressures are building minute-by-minute?
Wouldn't--when thinking about how to double-down on one's negative-α intellectual strategy, and placing even more of one's mental and reputational chips on the claim that expanding and keeping the Federal Reserve's balance sheet beyond $1.5T generates excessive and dangerous risks of inflation, and that any such expansion ought to be stopped and reversed--anybody with a functioning neural network even less than that of a moderately-intelligent cephalopod recognize that phrasing one's doubling-down in the voice of John Belushi on a very bad day would be unwise, would be likely to call forth mockery and scorn on the same rhetorical level that one had chosen, and would make one a figure of fun and merriment?
And, when the readily-predictable tit-for-tat responses at the rhetorical level one chose do in predictable and due course manage to arrive, that to respond by whinging and sniveling and feeling offense would be unwarranted--would demonstrate only that whatever functioning neural network one does have was not fully connected to reality?
Responding to Krugman is as productive as smacking a skunk with a tennis racket.... Let's not be fooled by chicanery (silly Paul, you are no Rabbit).... An honest Paul Krugman (we will use this term again below but this is something called a "counter-factual").... Also remember, much like when the Germans bombed Pearl Harbor, nothing is over yet. The Fed has not undone its extraordinary loose monetary policy and is just now stopping its direct QE purchases.... Paul, and others, should by now know the folly of declaring victory too early....
This isn't a screed where I claim to have invented my own consumption basket showing inflation is rising at 25% per annum - though some of those screeds are interesting.... We have indeed observed tremendous inflation in asset prices.... If one counts asset inflation it seems we've indeed had tremendous inflation.... Where effects did show up, it actually caused rather a lot of inflation....
Mostly Paul is wrong, and twisting the facts, and doing so as rudely and crassly as possible, yet again. The rest of the JV team of Keynesians who have also jumped on board are doing the same thing, just with more class and less entertainment value than the master.... Paul will continue to be mostly wrong, mostly dishonest about it, incredibly rude, and in a crass class by himself (admittedly I attempt these heights sometimes but sadly fall far short). That is a prediction I'm willing to make over any horizon, offering considerable odds, and with no sneaky forecasts of merely 'heightened risks'. Any takers?
....For sixty years, he was one of my closest friends. My debt to him, both personal and professional, is beyond measure. Despite deep sadness at his death, I cannot recall him without a smile rising to my lips. He was as quick of wit as of mind. His wit always had a point, and was never mean or nasty — though some of the objects of his wit no doubt felt its sting. His occasional humorous articles — such as “The History of Truth in Teaching” — have become classics and demonstrate that had he chosen to become a professional humorist rather than a professional economist, he would have achieved no less fame in the one field than he did in the other. His death has left the world a far less joyful place for Rose and me, as for so many others.
Daniel Davies: The World Is Squared--Episode 3: The Greek Calends--A Disquisition on the Nature of Debt: "What is debt?...
...It’s a promise to pay back a specific amount of money at a specific time. Why is it so popular--why do people always seem to end up getting into it? Why, for example, don’t people make more equity investments, buying a share of someone else’s profits and sharing their risks in the way in which Islamic banking is meant to operate?
The University of California Press has put out a new edition of Charles Kindleberger's World in Depression early next year.
J Bradford DeLong and Barry J. Eichengreen: New preface to Charles Kindleberger,* The World in Depression 1929-1939*:
The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. We see unemployment, youth unemployment especially, soaring to unprecedented heights. Financial instability and distress are widespread. There is growing political support for extremist parties of the far left and right.
Over at Project Syndicate: The extremely sharp but differently-thinking Peter Thiel:
Peter Thiel: Robots Are Our Saviours, Not the Enemy: "Americans today dream less often of feats that computers will help us to accomplish...
...[and] more and more we have nightmares about computers taking away our jobs.... Fear of replacement is not new.... But... unlike fellow humans of different nationalities, computers are not substitutes for American labour. Men and machines are good at different things. People form plans and make decisions.... Computers... excel at efficient data processing but struggle to make basic judgments that would be simple for any human.... [At] PayPal... we were losing upwards of $10m a month to credit card fraud.... We tried to solve the problem by writing software.... But... after an hour or two, the thieves would catch on and change their tactics to fool our algorithms. Human analysts, however, were not easily fooled.... So we rewrote the software... the computer would flag the most suspicious transactions, and human operators would make the final judgment. This kind of man-machine symbiosis enabled PayPal to stay in business.... Computers do not eat.... The alternative to working with computers... is [a world] in which wages decline and prices rise as the whole world competes both to work and to spend. We are our own greatest enemies. Our most important allies are the machines that enable us to do new things...
During the past two weeks the drought of high-quality DeLong smackdowns on the internet has resumed. So it is time to turn back to the promise I made myself on April Fools Day 2013, and see whether the rest of the chapters of David Graeber's Debt: The First Five Thousand Mistakes are of as low quality as the utterly bolixed up chapter 12.
As you will recall, David Graeber is infamous for:
Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages...
and for having, concurrently and subsequently, offered three different explanations of how this howler came to be written and published:
He has claimed that it it all perfectly true, just not of Apple but of other companies (none of which he has ever named).
He has claimed that he had been misled by Richard Wolff, who taught him about Silicon Valley's communal garage laptop circles of the 1980s.
He has claimed that what he had written was coherent and accurate, but that (for some unexplained reason) his editor and publisher had bolixed it all up.
This passage is, in the words of the very sharp LizardBreath:
The Thirteenth Chime... that make[s] me wonder whether any fact in the book I don't know for certain to be true can be trusted...
And things have gone downhill from there...
Paul Krugman: Those Lazy Jobless - NYTimes.com Last week John Boehner, the speaker of the House, explained...
...People, he said, have “this idea” that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.” Holy 47 percent, Batman! It’s hardly the first time a prominent conservative has said something along these lines.... But it’s still amazing — and revealing — to hear this line being repeated now. For the blame-the-victim crowd has gotten everything it wanted: Benefits, especially for the long-term unemployed, have been slashed or eliminated. So now we have rants against the bums on welfare when they aren’t bums — they never were — and there’s no welfare. Why? First things first: I don’t know how many people realize just how successful the campaign against any kind of relief for those who can’t find jobs has been. But it’s a striking picture.... The total value of unemployment benefits is less than 0.25 percent of G.D.P., half what it was in 2003, when the unemployment rate was roughly the same as it is now.... Strange to say, this outbreak of anti-compassionate conservatism hasn’t produced a job surge.... Why is there so much animus against the unemployed, such a strong conviction that they’re getting away with something, at a time when they’re actually being treated with unprecedented harshness?...
Matthew Dessem: Field Of Lost Shoes: "Here’s John Sergeant Wise...
...in the opening voiceover of Sean McNamara’s new Civil War drama Field Of Lost Shoes, describing how his father took him to a slave auction in 1858 to teach him a lesson about the evils of slavery:
My father’s heart had long since changed on the topic, and one night, he took me to a place that would forever change my own.
Here’s the actual John Sergeant Wise describing the same incident, in his 1899 memoir The End Of An Era:
Among my Northern kinsfolk was a young uncle, a handsome, witty fellow, much younger than my mother… He asked if I had ever seen a slave sale.
That uncle, erased from the film to make John Sergeant Wise’s father look more enlightened than he was, died fighting for the Union.
Here’s John’s father Henry in his own words, in an 1838 letter recounted in The Life Of Henry A. Wise Of Virginia, 1806–1876, a biography written by his grandson:
I have often been struck with the thought which justifies slavery itself in the abstract, and which has made me wonder and adore a gracious special Providence… I as firmly believe that slavery on this continent is the gift of Heaven to Africa...
Here he is again in February of 1861:
I am confident there are a number who would vote for abject submission and abolition of slavery tomorrow.... I now see that the fate of slavery is doomed in Virginia and we have no hope but in actual Revolution...
Here’s a line from Field Of Lost Shoes, spoken by a fellow Virginia Military Institute cadet before a shoving match that ends when John Sergeant Wise punches him in the face:
Wasn’t it your father, the governor, who opposed secession? The old fool.
Here is a record of the Virginia Convention, showing that Henry A. Wise voted for secession each time he was given the opportunity, on April 4 and April 17, 1861. And here is an account of his announcement to the Convention that he secretly, illegally sent troops to seize the Federal armory at Harper’s Ferry, in an attempt to force the issue:
armed forces are now moving upon Harper’s Ferry to capture the arms there in the arsenal for the public defence, and there will be a fight or a foot-race between volunteers of Virginia and Federal troops before the sun sets this day!...
As governor, Wise presided over John Brown’s execution for doing the same thing, albeit for very different reasons. But his heart did finally change on the topic of slavery, just as the film alleges. Here he is in an 1867 speech, explaining why he has come to the conclusion that the end of the plantation system was good for the South:
It was... to give the land its greatest pride, a solid Caucasian yeomanry, instead of being filled by ignorant, lazy slaves of a degraded race!
And yet in Field Of Lost Shoes, he’s practically William Lloyd Garrison. There are as many examples of this sort of bullshit in the film as the screenplay has words. Its subject is the Battle Of New Market, in which Confederate general John C. Breckinridge fed a battalion of Virginia Military Institute cadets—children, really—into the thresher, killing 10 of them and wounding 45 more. Just like kindly old abolitionist Henry A. Wise, the film’s cadets were a remarkably progressive bunch for the children of elite Virginians of the 1860s. For example, there’s a sequence in which they save VMI’s slave cook “Old Judge” (Keith David) from hanging by volunteering to be hung in his place. There’s also a scene in which they stop their march to save an African-American trapped under a wagon, so she can flee the approaching Union forces for some reason. And the racial harmony goes both ways; at the end, Old Judge weeps on the battlefield over the corpses of men who died to keep him in chains. The film is adequately directed, well-photographed, and competently acted. But it’s rotten at its core...
Q: How much of regional variation in real health-care (Medicare) costs is due to the fact that some regions have sicker populations than others?
A1 (micro): If we examine how much sicker people in different regions are, and multiply the difference in average sickness by how much extra treatment sicker people get on average, we get an incremental regional R2 ~ 0.1: an extra 10%-points of the regional real cost variation can be accounted for because some regions are sicker than others.
A2 (macro): If we just regress regional real costs on some plausible indicator of regional average sickness, we get an incremental regional R2 ~ 0.5: an extra 50%-points of the regional real cost variation can be accounted for because some regions are sicker than others. READ MOAR
Every day I get down on my knees and thank The One Who Is that I did not, back in 1982, and thereabouts sign up for the Republican team--as a liberal, technocratic Republican. I could easily have done it: Democrats back were as likely as not to be philosophically opposed to market-based mechanisms. Those of us of a neoliberal bent who back then thought that often market-based mechanisms were the best means of achieving social-democratic ends were not as unwelcome in the Democratic Party as it stood at the end of the 1970s as reality-based technocrats are in today's Republican Party. But it was clear in the early 1980s that the Democratic Party's activist base were not about to start slaughtering the fatted calf for us--let alone the ring, sandals, merriment, and best robe part. Besides, back then the Democratic Party's deformations back then seemed to be something that smart economists could help fix. The Republican Party's deformations back then, not so much.
Daniel Kuehn administers the smackdown:
Daniel Kuehn: Facts & Other Stubborn Things: Kuehn Smackdown Watch: Bastiat Edition" "Brad DeLong thinks that Bastiat would be a modern liberal...
...(I had said the other day that he likely would be a libertarian but that Smith, Jefferson, Locke, Paine, etc. were classical liberals that would very plausibly be left-liberals today). I think he makes a good case. I've discussed many of the passages he presents to make the claim here, and I think they are important for libertarian fans of Bastiat especially to be aware of. And anyone that's followed the blog for a few years know that I think most modern invocations of the broken window are God-awful and that Bastiat's understanding of general equilibrium is far more sophisticated and closer to people like me or Krugman who make important distinctions between stocks and flows (wealth and income) in arbitrating the effects of, for example, a disaster.
I would only say this in my defense (because I still think he would be more of a libertarian, simply due to the center of gravity of his commentary): he would certainly be more of a libertarian in the vein of Hayek of the Constitution of Liberty or Law, Legislation, and Liberty than a libertarian like Bob Murphy (for example).
Keith Humphreys: Weekend Film Recommendation: The Spy Who Came in From the Cold:
What the hell do you think spies are? Moral philosophers measuring everything they do against the word of God or Karl Marx? They’re not! They’re just a bunch of seedy, squalid bastards like me: little men, drunkards, queers, hen-pecked husbands, civil servants playing cowboys and Indians to brighten their rotten little lives.
So says disillusioned British secret agent Alec Leamas (Richard Burton) in perhaps the best effort to adapt a John le Carré novel to the big screen: 1965′s The Spy Who Came in From the Cold. The serpentine plot concerns a burnt-out espionage agent who enters a downward spiral of booze, self-hatred and lost faith after a disastrous mission in Berlin. But then it turns out that Leamas’ decline and despair is a ruse (?) play-acted at the behest of his superiors. As planned, he is recruited by the other side and ends up trying to discredit East German intelligence head Hans-Dieter Mundt (A cold, effective Peter van Eyck). Leamas undermines the ex-Nazi by feeding false (??) information to Mundt’s ambitious, Jewish deputy (Oskar Werner, very strong here). It’s a difficult, high-risk mission, but Leamas knows that his boss back home is 100% behind him (???).
Over at Equitable Growth: John Mearsheimer is only one of a surprising number claiming that the current crisis in Ukraine is predominantly the U.S.'s, and NATO's, and the Ukraine's fault:
John Mearsheimer: How the West Caused the Ukraine Crisis: Why the Ukraine Crisis Is the West’s Fault: "The United States and its European allies share most of the responsibility...
...The taproot of the trouble is NATO enlargement.... For Putin, the illegal overthrow of Ukraine’s democratically elected and pro-Russian president--which he rightly labeled a “coup”--was the final straw.... Realpolitik remains relevant--and states that ignore it do so at their own peril. U.S. and European leaders blundered in attempting to turn Ukraine into a Western stronghold on Russia’s border....
Soviet leaders... and their Russian successors did not want NATO to grow any larger and assumed that Western diplomats understood their concerns. The Clinton administration evidently thought otherwise.... The first round of enlargement... 1999... the Czech Republic, Hungary, and Poland. The second... 2004... Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Moscow complained bitterly.... The alliance considered admitting Georgia and Ukraine.... Putin maintained that admitting those two countries to NATO would represent a “direct threat” to Russia.... READ MOAR
J. Bradford DeLong
Professor of Economics, U.C. Berkeley
Research Associate, NBER
September 30, 2009
A Little Background
About a year and a half ago—in the days after the forced merger of Bear Stearns into J.P. MorganChase, say—there was a near consensus of economists that an additional dose of expansionary fiscal policy was unlikely to be necessary. The Congress had passed a first round of tax cut-based stimulus, the impact of which in the summer of 2008 is clearly visible in disposable personal income and perhaps visible in the tracks of estimated monthly real GDP. The near-consensus belief back then, however, was that that was the only expansionary discretionary fiscal policy move that was appropriate. READ MOAR
Over at Equitable Growth: My four biggest intellectual mistakes over the past decade--and all four are huge--are:
My belief from 2003-2007 that the serious threat to the American financial system came from universal banks that had used their derivatives books to sell lots of unhedged puts against the dollar rather than universal banks accepting lots of house-value puts without doing any due diligence about the quality of the underlying assets.
My fear from 2008-2010 that although nominal wages were downward-sticky they were not that downward-sticky and we were on the point of tipping over into absolute deflation.
My confidence in 2009-2010 that the major policymakers--Bernanke, Obama, and what turned out to be Geithner--both understood how to use the ample monetary, fiscal, banking, and housing finance tools at their disposal to effectively target nominal GDP and understood the urgency of doing whatever it took to return nominal GDP to its pre-2008 growth path.
My failure to even conceive that "Washington" starting in 2010 could possibly be sufficiently happy with the pace of recovery that serious measures to further boost demand would vanish from the agenda.
(1) and (2) and (3) I have written about elsewhere. Today we have a piece of (4) to deal with--why do so many people prioritize low-pressure economy policies that they regard as the only safeguard of hard money over economic recovery? Paul Krugman constitutes himself the συμποσιαρχ, decides that we will be drinking κρασί ακρατος, and poses the question: READ MOAR
OK. It's time to try to pull everything together on the Red States, the Republican Party, ObamaCare, "repeal and replace", and starting at the top of the evil tree and hitting every branch all the way down...
Let's start with a catch from Austin Frakt last January:
Austin Frakt: These two tweets tell you all you need to know about the politics of health reform: January 29, 2014 at 12:30 pm: Two of Avik Roy’s tweets yesterday...
...pertaining to the recently released Senate GOP health reform plan (the Patient CARE Act [of Burr (R-NC) Coburn (R-OK), and Hatch [R-UT) and discussion thereof, are very revealing.
@matthewherper: @Avik it still seems to me that this is going to hit a lot of voters harder. Even if it makes economic sense.
@Avik: .@matthewherper By repealing and replacing Ocare, the plan is more disruptive than it needs to be. But repeal needed for Right viability.
And, of course, it had no right-wing viability at all even so.
J. Bradford DeLong on September 02, 2014 at 07:46 AM in Economics: Health, Economics: History, History, Moral Responsibility, Obama Administration, Philosophy: Moral, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Cycle, Streams: Economics | Permalink | Comments (10)
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...But not only was Hamilton more progressive for his time, he has lessons for our response to climate change. Two hundred years ago, Alexander Hamilton was mortally wounded by then Vice President Aaron Burr in a duel at Weehawken, New Jersey. Their conflict, stemming from essays Hamilton had penned against Burr, was an episode in a larger clash between two political ideologies: that of Thomas Jefferson and the anti-Federalists, who argued for an agrarian economy and a weak central government, versus that of Hamilton and the Federalists, who championed a strong central state and an industrial economy.
George Orwell: Confessions of a Book Reviewer: "In a cold but stuffy bed-sitting room...
...littered with cigarette ends and half-empty cups of tea, a man in a moth-eaten dressing-gown sits at a rickety table, trying to find room for his typewriter among the piles of dusty papers that surround it. He cannot throw the papers away because the wastepaper basket is already overflowing, and besides, somewhere among the unanswered letters and unpaid bills it is possible that there is a cheque for two guineas which he is nearly certain he forgot to pay into the bank. There are also letters with addresses which ought to be entered in his address book. He has lost his address book, and the thought of looking for it, or indeed of looking for anything, afflicts him with acute suicidal impulses.
My Great^6 Grandfather James DeLong left his bones in Wichita, but only after carrying out the first-ever extraordinary rendition on the past of the U.S. government and then getting fired by Abraham Lincoln for being too aggressive in waging the Civil War on all possible fronts...
Morocco–United States Relations--Wikipedia: "During the American Civil War...
...Morocco reaffirmed its diplomatic alliance with the United States. Morocco also became the scene of a colorful foreign relations and political warfare episode involving the Kingdom of Morocco, the United States of America, the Confederate States of America, France, and Great Britain. In 1862 Confederate diplomats Henry Myers and Tom Tate Tunstall were arrested outside the American Consulate in Tangier after making disparaging remarks about the United States and its flag. American consul, James De Long overheard their jeers and asked Moroccan police to seize the men. When word reached Confederate Admiral Raphael Semmes who was acting as the Confederate diplomat in the area, he sent out dispatches to as many neutral diplomats as he had contact with, including the British Consul to Morocco, John Drummond Hay. Semmes asked Hay to get involved and encourage Morocco to release the prisoners, to which Hay responded that he could only convey the message but not offer any recommendation for actions, as offering a recommendation would violate Britain's terms of neutrality. Semmes tried a similar tactic with the French consul, but without success.
Your freedom, you see, to exclude people of a race you do not like from a public accommodation--a hotel, a restaurant, a bus service, a retail store--is more freedom than their freedom to spend their money to participate in our societal division of labor just like most people. In fact, their claim that that is a freedom is false--it is not really a freedom at all...
The hard part--and this is the hard part about believing in freedom--is that if you believe in the first amendment, for example, you have to, for example, most believers in the first amendment will believe in abhorrent groups standing up and saying awful things. We're here at the bastion of newspaperdom. I'm sure you believe in the first amendment. You understand that people can say bad things. It's the same way with other behaviors. In a free society we will tolerate boorish people who have abhorrent behavior, but if we are civilized people we publicly criticize that and don't belong to those groups or don't associate with those people...
John Maynard Keynes (1926): The End of Laissez-Faire } "Panarchy - Panarchie - Panarchia - Panarquia - Παναρχία - 泛无政府主义: I The disposition towards public affairs...
...which we conveniently sum up as individualism and laissez-faire, drew its sustenance from many different rivulets of thought and springs of feeling. For more than a hundred years our philosophers ruled us because, by a miracle, they nearly all agreed or seem to agree on this one thing. We do not dance even yet to a new tune. But a change is in the air. We hear but indistinctly what were once the clearest and most distinguishable voices which have ever instructed political mankind. The orchestra of diverse instruments, the chorus of articulate sound, is receding at last into the distance.
H.G. Wells: “It seems to me that I am more to the Left than you, Mr Stalin”: "In 1934, Wells arrived in Moscow...
...to meet a group of Soviet writers. While there Stalin granted him an interview.... His deferential conversation was criticised by J M Keynes and George Bernard Shaw, among others, in the New Statesman.
Wells: I am very much obliged to you, Mr Stalin, for agreeing to see me. I was in the United States recently. I had a long conversation with President Roosevelt and tried to ascertain what his leading ideas were. Now I have come to ask you what you are doing to change the world...
Sitting next to Lord Skidelsky in the Sala Maggioranza of the Italian Treasury (after they turned off the air conditioning, I took off my tie when he took off his jacket) impelled me to reread his Keynes biography.
And, after rereading, I find that I cannot improve on what I wrote about them three years ago: my thoughts then were totally enthusiastic and totally adulatory. And my thoughts are the same now. (I haven't yet reread volume three). In his first two volumes, Skidelsky gives us John Maynard Keynes's life, entire. And he does so with wit, charm, control, scope, and enthusiasm. You read these books and you know Keynes--who he was, what he did, and why it was so important. READ MOAR
Alexander Hamilton, Federal Convention "Mr. Hamilton had been hitherto silent...
...on the business before the Convention, partly from respect to others whose superior abilities age, and experience rendered him unwilling to bring forward ideas, dissimilar to theirs; and partly from his delicate situation with respect to his own state, to whose sentiments as expressed by his colleagues he could by no means accede. The crisis, however, which now marked our affairs was too serious to permit any scruples whatever to prevail over the duty imposed on every man to contribute his efforts for the public safety and happiness. He was obliged therefore to declare himself unfriendly to both plans.