Brad DeLong

Liveblogging World War II: May 12, 1943

12th May 1943:

General Alexander to Prime Minister

The end is very near. Von Arnim has been captured, and prisoners will most likely be over 150,000. All organised resistance has collapsed, and only pockets of enemy are still holding out. It appears that we have taken over 1,000 guns, of which 180 are 88-mm, 250 tanks, and many thousands of motor vehicles, many of which are serviceable. German prisoners driving their own vehicles formed a dense column on the road from Grombalia to Medjez el Bab all day to-day.

My next telegram, denoting the formal end of the campaign, will follow, I hope, in a few hours.

Noted for May 12, 2013

• Ryan Avent: Bubbles: Stability through instability: "THIS spring, the economics commentariat is discussing the relationship between monetary policy and financial stability…. Jeremy Stein, a new addition to the Federal Reserve Board of Governors, has been making speeches that provide an intellectual skeleton to which the more gut-driven critics of excess can cling…. Easy monetary policy, and especially unconventional policy that lowers rates all along the yield curve, generates a sort of unnatural pressure for financial risk-taking. Regulatory tools may be able to rein in some of that excess, but the only way to make sure you've gotten all the bubbles that might be hiding in the cracks is to raise interest rates. Tighter monetary policy might have a cost, but if it prevents financial excess it may avoid even greater costs…. First, within the argument to tighten policy in order to prevent big economic losses there are several logical links that look pretty weak…. You would first wish to establish that there is a financial bubble…. Next, it should be established that anything needs to be done about the bubble. Third, and this is a big one, it should be established that regulatory policy is unable to bring credit indicators back to desired levels…. Ny second comment follows from the first. A bubble is a surge in prices that comes to an end. But we must, must remember that a good way to bring a bubble to an end is to disemploy people and cause their incomes to grow more slowly than they had anticipated…. I see… a central bank that worries about financial excess but is uncomfortable using regulatory tools to address it…. And I see, second, a central bank tendancy to: 1) reduce nominal output growth to rein in asset-price increases, 2) fail to return nominal output back to trend out, for reasons of inflation-aversion or something else, and 3) use the financial mess that results from tight policy as proof that there was a bubble that needed popping."

• Jonathan Chait: The Facts Are In and Paul Ryan Is Wrong: "Two such developments have come together recently…. The first is the collapse of intellectual support for the notion that immediate austerity can boost economic growth. The second is a growing consensus that health-care-cost inflation is slowing for deep structural reasons, rather than having undergone a mere temporary dip from the recession…. They blow to smithereens the intellectual foundations of the Obama-era Republican policy agenda…. It is of course unfair to judge the merits of an analysis solely by the rhetoric of its politicians…. The deeper expression of the Ryan worldview comes from Yuval Levin…. This conflation of short- and medium-term problems — of annual deficits with retirement liabilities, of sluggish growth with the burden of debt, of the Obama agenda with the broader social-democratic project — is in one sense an error, of course…. [But] this became the basis for the Republican view that deficit reduction could not be delayed and must be undertaken immediately, and that radical new tactics, like threatening financial chaos through defaulting on the debt, were a justified response to an emergency that did not lay over the horizon but was already upon us…. At first, the sharp slowdown in health-care costs was assumed to have happened because the recession is making people cut back on their medical care. Levin has clung stubbornly to this interpretation. But as the trend has persisted, and undergone deeper study, a consensus is emerging that this is not the case at all."

CDX IG 9 | London in 1927 |

Nick Crafts: George Osborne Badly Needs to Study the Macroeconomic Leadership Secrets of Neville Chamberlain…

Nick Crafts:

Escaping liquidity traps: Lessons from the UK’s 1930s escape: The UK escaped a liquidity trap in the 1930s and enjoyed a strong economic recovery. This column argues that what drove this recovery was ‘unconventional’ monetary policy implemented not by the Bank of England but by the Treasury. Thus, Neville Chamberlain was an early proponent of ‘Abenomics’. This raises the question: is inflation targeting by an independent central bank appropriate at a time of very low nominal-interest rates?

Bernanke-Haters at the Sohn Conference

Stanley Druckenmiller:

Druckenmiller noted everyone is saying, "love the market long term, looking for a correction." He believes the opposite, loves market short-term, but hates it long term. Strongly disagrees with quantitative easing by Bernanke now. Only agreed with the first QE. "His bond buying is controlling the most important price in the US economy." Says it will end badly, despite money-printing being beneficial to financial assets currently. When Fed slightly tightens, that will hurt things he says. Bernanke completely ignored strong economic data in January and February, but with slightly soft data later, he printed even more money. Expects a "melt-up" in the short-term, due to Fed's current policy…. Bernanke is “running the most inappropriate monetary policy in history.”

The Only Comment Possible on the Tsarnaev Burial

Sophokles:

Creon: You alone, of all the people in Thebes, see things that way.

Antigone: They see it just that way but defer to you and keep their tongues in leash.

Creon: And aren’t you ashamed to differ so from them? So disloyal!

Antigone: Not ashamed for a moment, not to honor my brother, my own flesh and blood.

Creon: Wasn’t Eteocles a brother too—cut down, facing him?

Antigone: Brother, yes, by the same mother, the same father.

Creon: Then how can you render his enemy such honors, such impieties in his eyes?

Antigone: He will never testify to that, Eteocles dead and buried.

Creon: He will—if you honor the traitor just as much as him.

Antigone: But it was his brother, not some slave that died—

Creon: Ravaging our country!—but Eteocles died fighting in our behalf.

Antigone: No matter—Death longs for the same rites for all.

Creon: Never the same for the patriot and the traitor.

Antigone: Who, Creon, who on earth can say the ones below don’t find this pure and uncorrupt?

Creon: Never. Once an enemy, never a friend, not even after death.

Antigone:  I was born to join in love, not hate—that is my nature.

Creon: Go down below and love, if love you must—love the dead! While I’m alive, no woman is going to lord it over me.

Liveblogging World War II: May 11, 1943

The British delegation arrives in America for the TRIDENT Conference: Alan Brooke writes:

Noted for May 11, 2013

• Tim Duy: Rising Structural Unemployment?: "Circles don't get more vicious than this. The people who need work the most can't even get an interview, let alone a job. It's a cycle that could end with the long-term unemployed becoming unemployable. It's what economists call hysteresis, the idea being that a slump, left untreated, can make us permanently poorer by reducing our future ability to do and make things…. One would think that a low hires/openings ratio suggests that wage growth would be accelerating (as employers appear to face a relative shortage of workers), but that is not the case…. How does this fit with the long-term unemployed story above? Perhaps that although firms have a bias against the long-term unemployed, those potential workers still place downward pressure on wages. The newly employed don't require higher wages despite demand for their skills because they know there is a large pool of people available with similar skills…. This also explains the low quits rate.  The consequences of becoming long-term unemployed are particularly severe, raising the expected cost of voluntarily leaving a job."

• Matthew Zeitlin: Does the Sohn Conference Make Hedge-Fund Geniuses Stupid?: "Yesterday, big-name investors, their fans and journalists (the latter two categories are not mutually exclusive) gathered at the Ira Sohn Conference in New York to hear some of the best ideas of the hedge-fund illuminati…. Bass yesterday gave yet another version of his 'Japan is doomed' thesis. He said the 'the beginning of the end has begun' and that inflation and skyrocketing debt costs will drive Japan into something like insolvency sometime in the next three years, causing the value of Japanese government bonds to plummet. He’s been making this pitch since late 2011, and since then yields on Japanese bonds have gone down -- 25 basis points on 10-year debt in the last 12 months -- despite a debt-to-gross-domestic-product ratio around 230 percent. There’s a reason going short Japanese debt is called the 'widow-maker'."

Do Nominal Wage Cuts really stabilize Demand-driven Recessions? | The Progressive Alternative | Steve Conover: Money Printing Isn’t Always Inflationary: "Republicans are wrongly giving fear of money printing a higher priority than the growth debate. Robust growth is as close as we can get to a panacea for our monetary and fiscal problems" | Chapin White: "My hope is that the dynamic cost-shifting theory is hereby put to rest…. In the two-stage least squares analysis, the estimated elasticity was 0.773, meaning that a 10 percent reduction in the Medicare payment rate was associated with a 7.73 percent reduction in the private rate" | Alex Tabarrok: Sodomy and Usury | Antigone: Irene Papas, Manos Katrakis, Maro Kodou, Nikos Kazis, Ilia Livykou, Giannis Argyris, Byron Pallis, Tzavalas Karousos, Thodoros Moridis, Giorgos Vlahopoulos, Yorgos Karetas, Thanasis Kefalopoulos, Dinos Katsouridis, Yorgos Javellas, Giorgos Tsaoulis, James Paris, Sperie Perakos, Sophocles | GeoGuessr - Let's explore the world! | Google Earth Engine | Jordan Rau: A patient’s view on the Oregon Medicaid experiment | David Donaldson: Railroads of the Raj: Estimating the Impact of Transportation Infrastructure |

Moby Ben, or, The Washington Super-Whale: Hedge Fundies, the Federal Reserve, and Bernanke-Hatred

In February 2012, a number of hedge fund traders noted one particular index--CDX IG 9--that seemed to be underpriced. It seemed to be cheaper to buy credit default protection on the 125 companies that made the index by buying the index than by buying protection on the 125 companies one by one. This was an obvious short-term moneymaking opportunity: Buy the index, sell its component short, in short order either the index will rise or the components will fall in value, and then you will be able to quickly close out your position with a large profit.

Mary Carson and Jordan Rau: A Patient’s View on the Oregon Medicaid Experiment

A patient’s view on the Oregon Medicaid experiment:

Jordan Rau, KHN:

A study of Oregonians who won Medicaid benefits in a 2008 state lottery has sparked an intense debate about the value of expanding health care to the poor — and the value of health benefits in general. Mary Carson is, in a way, at the center of that debate. The 55-year-old Oregon woman was accepted into the Oregon Health Plan, the state Medicaid program, in 2011. She and her partner live with her three children. They earn about $1,000 a month by making and selling replicas of historic battle knives used in the Civil War and the two World Wars, doing odd jobs and providing respite care for people with cancer.

Friday Night Music: "After the Music Stopped" Edition

Does Anybody Understand Why Clive Crook Thinks Krugman Believes in MMT and Is Lying When He Says He Worries About the Long-Run Deficit?

Clive Crook:

Krugman, DeLong and Radical Centrism - Bloomberg: Krugman proposed raising taxes on all Americans while the recovery was still very weak. He recognized this as a fiscal tightening that would put people out of work. He advocated it because the alternative of retaining the Bush tax cuts would have handed the Republicans a victory, and because -- get this -- he was worried about the long-term deficit implications. There you have it: Krugman the apolitical Keynesian.

I mean, this is damned weird.

Ryan Cooper Tries to Guide Clive Crook Back to Reality

Why oh why can't we have a better press corps?

Ryan Cooper:

Clive Crook Doesn’t Understand Paul Krugman or Liberals Generally: Crook… made the quite specific claim that Krugman was using the 2009 stimulus for partisan ends….

Krugman and his admirers were at the forefront in casting discussion of the stimulus in left vs. right terms. For many Democrats, the top priority in the fiscal-policy discussion was not, in fact, to make the stimulus bigger but to reverse the Bush high-income tax cuts and to make sure that the composition of the stimulus, whatever its size, as far as possible favored higher spending over lower taxes.

Today, Crook is back… moving the goalposts. He conveniently forgets the stimulus debate, around which all his previous claims were centered, and digs up a Krugman column from December 2010, almost two years later…. What is unquestionably clear is that Crook’s earlier claim that “Krugman and his admirers were at the forefront in casting discussion of the stimulus in left vs. right terms” is completely bogus, and he clearly knows it….

David Glasner vs. Martin Feldstein on Appropriate Federal Reserve Policy

David Glasner:

Martin Feldstein writes:

Quantitative easing… is supposed to stimulate the economy by increasing share prices, leading to higher household wealth and therefore to increased consumer spending. Fed Chairman Ben Bernanke has described this as the “portfolio-balance” effect of the Fed’s purchase of long-term government securities instead of the traditional open-market operations that were restricted to buying and selling short-term government obligations. Here’s how it is supposed to work. When the Fed buys long-term government bonds and mortgage-backed securities, private investors are no longer able to buy those long-term assets. Investors who want long-term securities therefore have to buy equities. That drives up the price of equities, leading to more consumer spending….

Dana Golstein: ATTENTION JASON RICHWINE!!: You're Not the First Guy to (Wrongly) Believe Immigrants are Dumb

Dana Goldstein:

Att. Jason Richwine: You're Not the First Guy to (Wrongly) Believe Immigrants are Dumb: The human brain remains, in many crucial aspects, a mystery to science. So what is IQ? It is a measure of the capacity to learn in the linear fashion prized by Western culture, and we know that it is partially determined by genetics. Yet in the life of the average, individual human, those "innate" genes are vastly, vastly overpowered by the effects of environment: decent nutrition; an emotionally stable, vocabulary-rich home life; physically and emotionally attentive parents; good schools and teachers. All those factors are in shorter supply among high-poverty populations. Claiming that such populations are genetically inferior ignores about a century of research and writing on the malleability of IQ and the proper uses of intelligence assessments.

Fed’s Evans: Low Inflation to Persist for Years

Fed’s Evans: Low Inflation to Persist for Years - Real Time Economics

Liveblogging World War II: May 10, 1943

Heinz Guderian: "How many people do you think even know where Kursk is? It is a matter of profound indifference to the world whether we hold Kursk or not. I repeat my question. Why do we want to attack in the East at all this year?"

Adolf Hitler: "You’re quite right. Whenever I think of this attack my stomach turns over."

Heinz Guderian: "In that case your reaction to the problem is the correct one. Leave it alone!"

Noted for May 10, 2013

• Matthew Yglesias (2005): The Lies, The Lies, Andrew Sullivan's Lies: "As we know, and as this letter writer to his site reminds us, Andrew Sullivan has been a pretty consistent proponent of the view that Paul Krugman is some sort of liar. At issue, are Krugman's repeated insistences that George W. Bush's economic policy is founded on a tissue of lies. Krugman is, of course, entirely correct about this. The unnoted irony here is that in his May 14, 2001 column 'Downsize', Sullivan conceded Krugman's point."

• Mark Thoma sends us to Fernando Duarte and Carlo Rosa: Are Stocks Cheap? A Review of the Evidence: "[M]odels predict that we will enjoy historically high excess returns for the S&P 500 for the next five years…. [W]e analyze twenty-nine of the most popular and widely used models to compute the equity risk premium over the last fifty years. They include surveys, dividend-discount models, cross-sectional regressions, and time-series regressions, which together use more than thirty different variables as predictors, ranging from price-dividend ratios to inflation. Our calculations rely on real-time information to avoid any look-ahead bias…. The value of 5.4 percent for December 2012 is about as high as it’s ever been. The previous two peaks correspond to November 1974 and January 2009. Those were dicey times. By the end of 1974, we had just experienced the collapse of the Bretton Woods system and had a terrible case of stagflation. January 2009 is fresher in our memory. Following the collapse of Lehman Brothers and the upheaval in financial markets, the economy had just shed almost 600,000 jobs in one month and was in its deepest recession since the 1930s. It is difficult to argue that we’re living in rosy times, but we are surely in better shape now than then."

Ashok Rao: Radical Centrism and the Return of Ricardo | Pawel Morski: Mario Draghi: Your Call Is Important To Us | It's Not That Simple | Karl Smith: Childless Keynesians And The Future They Made | Jackie Calmes and Jonathan Weisman: "The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists" | Mark Thoma: About Those Inflation Fears: Via Cardiff Garcia at FT Alphaville, Inflation is falling everywhere | Dani Rodrik: What is wrong (and right) in economics? | Jeff Weintraub: 154 one-line rebuttals to climate-change denialists | James Heckman: Lessons from the Bell Curve | Jason Richwine: IQ and Immigration Policy |

Josh Barro: Boehner Accidentally Explains Why His Deficit Position Is Phony

Josh Barro:

Boehner Accidentally Explains Why His Deficit Position Is Phony: Yesterday, in an interview with Bloomberg Television, House Speaker John Boehner warned that the U.S. government must balance its budget. After all, he said:

We have spent more than what we have brought into this government for 55 of the last 60 years. There’s no business in America that could survive like this. No household in America that could do this. And this government can’t do this.

L'Esprit de l'Escalier: May 10, 2013

L'Esprit de l'Escalier: May 10, 2013

• I think what I would say is that if there were no safe-asset shortage the current low level of economic activity would not be self-sustaining--that if there were no safe-asset shortage, at current interest rates people would be dumping safe assets and funding risky investments and buying currently-produced goods and services and we would be heading for a boom. And I would point to the enormous spread between real Treasury yields on the one hand and equity earnings yields on the other. Perhaps you would be happier if I said that, once you are in a depressed economy like this one, depression will continue until and unless you have a surplus of safe assets to kick the economy out of its low-level equilibrium?

• Alas! I do not know enough about the genealogy of Niall Ferguson's--repeatedly expressed over the past several decades--idea that Keynes's theories sprang not from an analysis of the economy but from the psychological imperatives of being a gay childless deviant pervert comes from. There was an oral tradition at Harvard that Schumpeter hated Keynes for many reasons, of which his bisexuality was one, and people did used to shake their heads at the low-class Schumpeter showed in the obituary… And there was a great deal of fuss about how it was unfair for neocons to be attacking Keynes while praising Allan Bloom to the skies as a low blow--that even if you bought the neocon "Victorian morals and religion are good things for gentlemen and hoi polloi to have", Keynes was certainly a philosopher…. But I don't know any more, other than that since the Schumpeter Keynes obit "Keynes was a perv and his theory is perverted and decadent and his followers are pervs too" coupled with a strikingly false misconstrual of the "in the long run we are all dead" quote has been a thing to say on the right for 67 years now: Hayek, Himmelfarb, . Ferguson and others have made it a thing to tiptoe up to this line for decades. He is now trying to cope with the fact that the world has changed--much in the same way that William F. Buckley had to cope with his discovery that apologizing for domestic terrorism--saying southern whites could defend segregation "by any means they found appropriate"--was not the wisest thing, given the circles in which he wished to move.

Department of "Huh!?": George Borjas Says Richard Zeckhauser Chaired Jason Richwine's Thesis Committee?

Jennifer Rubin:

What the anti-immigrant movement really believes: I received the following e-mail attack from Borjas, who, keep in mind, is a Harvard professor:

Someone copied me on an email that contained your column trashing Jason Richwine’s dissertation work, and along the way you decided to trash me as well. Just for your info, the dissertation committee was formed of Richard Zeckhauser (who, by the way, was the chair of the committee), Christopher (Sandy) Jencks, a very influential sociologist whose lifetime work on inequality you may perhaps be familiar with, and myself. Perhaps next time around before you decide to trash anyone who disagrees with your ideological musings you may want to do some background reporting. I know that this request will fall on deaf ears, since it is not part of the modus operandi of people like yourself, but I would hope you correct the record in print. (I actually know you won’t since once the membership of the committee of faculty who advised Jason on his dissertation is well known you can no longer employ the by-association method of character assassination).

LOLCat Sez: When Ur Inflation Below and Ur Unemployment Consistently Above Target, Ur Doin It Wrong

In this case, "you" is the Federal Reserve, and "it" is monetary policy.

Liveblogging World War II: May 9, 1943

Molly Panter Downes writing in the New Yorker:

The African victory came so suddenly that astonished Londoners had hardly enough breath left to cheer with. The news of the all-out offensive had already put everyone in a mood of confident expectation, but the fall of Tunis and Bizerte was so far in advance of schedule that the first jubilation was just faintly dazed.

Noted for May 9, 2013

• Mike Konczal: What Would the "Financial Instability" Argument Look Like For Any Other Industry?: "It’s becoming a surprisingly influential argument given that it hasn’t been well presented or argued, much less vetted and challenged. What is it? The argument that we should raise interest rates or otherwise contract monetary policy in order to preserve 'financial stability'…. Let’s be clear on the terms: should we risk another immediate recession ('lower employment and prices') to preserve a thing called 'financial stability'?… Now if I told you we should keep the economy in a permanent recession because senior managers at insurance companies aren’t good at their basic job of monitoring mid-level portfolio managers you’d probably think I was crazy. And I would be…. If we need to make the financial system less complex and prone to abusive practices, requiring parties of a derivatives contract to hold a stake in the underlying asset would do a lot. Are we worried about contagion? In that case, force banks to hold more capital as well as convertible instruments. About bad debts holding back the economy? Then reform the bankruptcy code, dropping the 2005 'reforms'. Some people are demanding more jail sentences, not only for the benefit of the public but for boards and shareholders who can’t keep their workers in line…. It’s hard not to read the financial stability arguments as saying 'look, we can’t trust the financial sector to accomplish its most basic goals'. If true, that’s a very significant problem that should cause everyone a lot of concern. It should make us ask why we even have a financial system if we can’t expect it to function, or function only by putting the entire economy at risk."

• Matthew C. Klein: In the Long Run, Niall Ferguson, Keynes Was Right: "It's intellectually immature to critique an idea by going after the person who came up with it, rather than the logic of the idea itself. That didn't stop Niall Ferguson, a distinguished Harvard historian, from implying that Keynesian economics could be explained by Keynes's homosexuality and lack of children…. Regrettably, Ferguson isn't the only person to suggest that Keynes's analysis should be discounted because of his personal qualities. In 2008, N. Gregory Mankiw, the chairman of the Harvard economics department (and a senior adviser to President George W. Bush and Mitt Romney), wrote that 'passing a larger national debt to the next generation may look attractive to those without children' before going on to note that 'Keynes himself was childless'. First off, it's important to note that both Mankiw and Ferguson misrepresent what Keynes actually meant when he said that 'in the long run we are all dead'…"

John Sides: Why the “Permission Structure” Makes Obama Smart (and Too Many Pundits Dumb) | Austin Frakt: Limitations: The Achilles Heel of Single Study Relevance | Tim Duy: Rising Structural Unemployment? | John Maynard Keynes: A treatise on money, v.1 1930 A treatise on money, v.2 1930 |

Has Clive Crook Recovered His Orientation? Perhaps...

My comment on: http://www.bloomberg.com/news/2013-05-09/krugman-delong-and-radical-centrism.html

Now that is infinitely better!

But do note you are no longer claiming that Paul Krugman trying to radicalize the Obama administration's position on "the stimulus" in the winter of 2008-2009. You are, instead, making a different argument: an argument that Krugman's position at the end of 2010, after the largely-Republican politicization of everything, was not centrist enough.

And do note that the rest of Krugman's column--the part you do not quote--undermines your new argument pretty completely.

Robert Skidelsky vs. Niall Ferguson: John Maynard Keynes Is Not Ke$ha (Also, the U.S. Is Not Greece, and 2013 Is Not 1923)

Ke$ha:

And Robert Skidelsky explains what John Maynard "We'll Keep Dancing 'Till We Die" Keynes really meant by "In the long run we are all dead":

I Say We Start a Kickstarter to "Persuade" David Glasner to Write 38 Posts--One for Each Chapter--on Keynes's "Treatise on Money"

Selections from Samuel Pepys Diary for April 1663: Thursday History Weblogging

Samuel Pepys:

5th (Lord's day). Up and spent the morning, till the Barber came, in reading in my chamber part of Osborne's Advice to his Son (which I shall not never enough admire for sense and language), and being by and by trimmed, to Church, myself, wife, Ashwell, &c. Home to dinner, it raining, while that was prepared to my office to read over my vows with great affection and to very good purpose. So to dinner, and very well pleased with it. Then to church again, where a simple bawling young Scot preached. So home to my office alone till dark, reading some papers of my old navy precedents, and so home to supper, and, after some pleasant talk, my wife, Ashwell, and I to bed.

Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging

Niall Ferguson:

An Open Letter to the Harvard Community: Last week I said something stupid about John Maynard Keynes.  Asked to comment on Keynes’ famous observation “In the long run we are all dead,” I suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay. This was doubly stupid. First, it is obvious that people who do not have children also care about future generations. Second, I had forgotten that Keynes’ wife Lydia miscarried.

Niall is wrong. His suggestion was not doubly stupid. There is more.

Niall speaks of Keynes's "In the long run we are all dead" as if it is a carpe diem argument--a "seize the day" argument, analogous to Marvell's "To His Coy Mistress" or Herrick's "To the Virgins"--and Ferguson sees his task as that of explaining why Keynes adopted this be-a-grasshopper-not-an-ant "party like we're gonna die young!" form of economics, or perhaps form of morality.

But that is not it at all.

Eric Rauchway: Adam Smithian "Sympathy" and the Sources of Keynes’s Critique of the 1919 Treaty of Versailles: Niall Ferguson Carl-Melchior-Was-Really-Hot Smackdown Watch

Eric Rauchway:

Apropos nothing at all I thought I might address the suggestion, sometimes raised, that John Maynard Keynes’s “love” for Carl Melchior, German representative at Versailles, might substantively have influenced Keynes’s position on what reparations the Germans ought to pay. Keynes made early calculations for what Germany should pay in reparations in October, 1918. In “Notes on an Indemnity,” he presented two sets of figures – one “without crushing Germany” and one “with crushing Germany”.

My John Maynard Keynes Lecture

Little more than quotes from Skidelsky's three-volume Keynes biography strung together, with a little commentary and occasional quibbling…

---

John Maynard Keynes

J. Bradford DeLong Professor of Economics, U.C. Berkeley

Econ 115 Lecture

September 29, 2009

http://delong.typepad.com/files/20090929-115-lecture-9.pdf

5,562 words: September 29, 2009

Who Are the Right-Wing Republicans Whom Clive Crook Thinks Are "Thoughtful [and] Public-Spirited… [with] Vews… Worthy of Respect"?: Tuesday Crickets Weblogging

Paul Krugman observes:

Not Everything Is Political: Clive Crook demands that I engage respectfully with reasonable people on the other side, but somehow fails to offer even one example of such a person. Not long ago Crook was offering Paul Ryan as an exemplar of serious, honest conservatism, while I was shrilly declaring Ryan a con man. But I suspect that even Crook now admits, at least to himself, that Ryan is indeed a con man…

Good to Know That David Gergen Isn't Pretending That Blame for Partisan Bickering Is Equally Shared...

Jacob Jensen: Political Polarization and the Dynamics of Political Language: Evidence from 130 Years of Partisan Speech:

Asked by Gerald Cohen whether he agreed with DeLong’s assertion that Republicans today are more partisan and less compromising, David Gergen replied in the affirmative.

Noted for May 8, 2013

• Gertrude Himmelfarb (1960): On John Buchan: "The familiar racist sentiments of Buchan, Kipling, even Conrad, were a reflection of a common attitude. They were descriptive, not prescriptive; not an incitement to novel political action, but an attempt to express differences of culture and colour in terms that had been unquestioned for generations. To-day, when differences of race have attained the status of problems--and tragic problems--writers with the best of motives and finest of sensibilities must often take refuge in evasion and subterfuge. Neutral, scientific words replace the old charged ones, and then, because even the neutral ones--"Negro" in place of "nigger"--give offense, in testifying to differences that mn of goodwill would prefer forgotten, disingenuous euphemisms are invented--"non-white" in place of "Negro". It is at this stage that one may find a virtue of sorts in Buchan: the virtue of candor, which has both an aesthetic and an ethical appeal." <--What a loathsome troll! "To-day [i.e., 1960], when differences of race have attained the status of problems--and tragic problems" indeed!

• Matthew O'Brien: This Is the Biggest Mistake Conservatives Make About Keynes: "Here's some completely irrelevant information. John Maynard Keynes was bisexual and never had any children. His wife Lydia suffered a miscarriage in 1927…. Speaking at an investing conference for individuals with at least $2 million in liquid assets, Harvard historian Niall Ferguson said Keynes was wrong because he was too short-termist, and he was short-termist because he was gay and childless. You read that right…. To his discredit, this is far from the first time he has imputed Keynes' policy views to Keynes' sexuality. For one, Cambridge professor Michael Kitson recalls hearing Ferguson make the same argument in a seminar 20 years ago. For another, Ferguson suggested in his book The Pity of War that Keynes may have opposed the Versailles Treaty, not because it was a short-sighted disaster, as Keynes argued, but rather because he had a crush on the German negotiator (a claim Ferguson made in even stronger terms before). But, of course, as Jonah Goldberg of National Review points out in a majestically thick-headed piece, this conservative obsession with Keynes' bedroom partners is hardly new: It's an attack that's been around since Joseph Schumpeter first made it in the 1940s. And it's as illiterate as it is bigoted."

William K. Black: Niall Ferguson’s Latest Gay Bashing is the Least of His Problems | Mayonnaise | Krizman's House of Sausage | Polski Day | Brookside Art Fair | Peter May's House of Kielbasa | Kevin Drum: What We Know—And What We Don't—About the Oregon Medicaid Study | Bruce Bartlett: Keynes’s Biggest Mistake | Kathy Geier (March 22, 2013): The Siren Song Of War: Why Pundits Beat The Drums For Iraq | Matthew C. Klein: In the Long Run, Niall Ferguson, Keynes Was Right | Jeet Heer: Sex, Economics, and Austerity | John Maynard Keynes - Wikiquote | Karl Case et al.: What Have They Been Thinking? Homebuyer Behavior in Hot and Cold Markets | CBO Economic and Budget Outlook, FY 2013-2023 | J.K. Trotter: Niall Ferguson Doubles Down on His Big Gay Theory About John Maynard Keynes | The Magically Vanishing Slice of Pie: Shockingly Bad Methods behind the Heritage Foundation’s Estimates of the Fiscal Costs of Unauthorized Immigration |

Liveblogging World War II: May 8, 1943

Joseph Goebbels Liveblogs World War II:

The War and the Jews

The naivete, not to mention ignorance, with which certain European circles see the Jewish Question in the fourth year of this gigantic struggle is astonishing. They cannot or will not see that this war is a war of the Jewish race and its subject people against Western culture and civilization. Everything that we Germans and Europeans, defenders of the principle of a moral world order, hold dear is at risk. The above-mentioned circles are too inclined to see the Jewish Question as a humanitarian issue. They make their judgments on the feelings of the moment rather than on the knowledge and insight resulting from clear and calm reason.

It is clear that if during this war we show the least weakening of our determination to resolve the Jewish Question, the result will be the gravest danger to our people and Reich and all of Europe.

Brad DeLong (1997): The Corporation as a Command Economy: Wednesday Hoisted from The Archives from 17 Years Ago Weblogging

Introduction:

Most of us spend more than one-third of our waking lives working for large, modern corporations: organizations where we do not know personally either those at the top or the bulk of those at the bottom of the organization's administrative hierarchy. This is a striking change from two centuries ago, when a productive organization of more than thirty was unusual, and one of more than three hundred an extreme oddity.

Why do so many of us work for large modern corporations? And what impact does working for large modern corporations have on our lives? The second is much too broad a question, and is moreover a question that I--a narrow-minded professional economist--feel unqualified to address. So I am going to focus on the economic side of the modern corporation. I am not going discuss the political or sociological or ethical implications of large modern corporations. I am not going to discuss their historical development, or the contrasts between different countries' styles of corporate life.

Niall Ferguson "Quos Deus Vult Perdere, Prius Dementat" Weblogging...

Niall Ferguson (April 22, 1995):

It is not too much to infer from these emotive phrases some kind of sexual attraction [for Carl Melchior]…. [T]here is no question that the attraction Keynes felt for him strongly influenced his judgment…. [T]hose familiar with Bloomsbury will appreciate why Keynes fell so hard for the representative of an enemy power. Only those--like Robert Skidelsky--who seek to rescue his reputation as a monetary theorist may find Keynes's conduct less easy to account for.

Niall Ferguson (1999):

Though his work at the Treasury gratified his sense of self-importance, the war itself made Keynes deeply unhappy. Even his sex life went into a decline, perhaps because the boys he liked to pick up in London all joined up…

Niall Ferguson (May 7, 2013):

Last week I said something stupid about John Maynard Keynes…. I was duly attacked for my remarks and offered an immediate and unqualified apology. But this did not suffice for some critics, who insisted that I was guilty not just of stupidity but also of homophobia…. To be accused of prejudice is one of the occupational hazards of public life nowadays. There are a remarkable number of people who appear to make a living from pouncing on any utterance that can be construed as evidence of bigotry….

Keynes’ sexual orientation did have historical significance. The strong attraction he felt for the German banker Carl Melchior undoubtedly played a part in shaping Keynes’ views on the Treaty of Versailles and its aftermath….

I have labored long and hard to expose precisely what was wrong about the theories that condemned homosexuals, Jews and others to discrimination and death. I have also tried to explain what made those theories so lethally appealing…. I doubt very much that any of my vituperative online critics have made a comparable effort to understand the nature and dire consequences of prejudice. For the self-appointed inquisitors of internet, it is always easier to accuse than seriously to inquire. In the long run we are all indeed dead, at least as individuals. Perhaps Keynes was lucky to pre-decease the bloggers because, for all his brilliance, was also prone to moments of what we would now call political incorrectness….

What the self-appointed speech police of the blogosphere forget is that to err occasionally is an integral part of the learning process. And one of the things I learnt from my stupidity last week is that those who seek to demonize error, rather than forgive it, are among the most insidious enemies of academic freedom.

"This Is a Nightmare"

John Maynard Keynes:

The Great Slump of 1930: This is a nightmare, which will pass away with the morning. For the resources of nature and men's devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life… and will soon learn to afford a standard higher still. We were not previously deceived.

But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time…

John Maynard Keynes (1923), "A Tract on Monetary Reform", pp. 80-82

Keynes (1923):

[T]he [Quantity] Theory [of Money] has often been expounded on the further assumption that a mere change in the quantity of the currency cannot affect k, r, and k',--that is to say, in mathematical parlance, that n is an independent variable in relation to these quantities. It would follow from this that an arbitrary doubling of n, since this in itself is assumed not to affect k, r, and k', must have the effect of raising p to double what it would have been otherwise. The Quantity Theory is often stated in this, or a similar, form.

Now "in the long run" this is probably true. If, after the American Civil War, that American dollar had been stabilized and defined by law at 10 per cent below its present value, it would be safe to assume that n and p would now be just 10 per cent greater than they actually are and that the present values of k, r, and k' would be entirely unaffected. But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean will be flat again.

Austin Frakt: Power Calculations for Diabetes in the NEJM Oregon Medicaid Study

Austin Frakt:

Power calculations for the Oregon Medicaid study: Kevin Drum:

Let’s do the math. In the Oregon study, 5.1 percent of the people in the control group had elevated GH [glycated hemoglobin, aka A1C, or colloquially, blood sugar] levels. Now let’s take a look at the treatment group. It started out with about 6,000 people who were offered Medicaid. Of that, 1,500 actually signed up. If you figure that 5.1 percent of them started out with elevated GH levels, that’s about 80 people. A 20 percent reduction would be 16 people.

Somebody Has to Be the Pontifex Who Decides What "Keynesian Economics" Is: And I Elect Mark Thoma to Be That Bridge-Builder

Mark Thoma:

Seven Myths about Keynesian Economics: The claim that Keynesians are indifferent to the long-run is one of many myths about Keynesian economics…. This has it backwards. Conservatives who oppose Keynesian economics are not concerned enough about short-run economic problems, particularly unemployment, and failing to address our short-run problems can bring long-run harm…. Keynesians care very much about the long run, but they do not go along with the idea that neglecting short-run issues is the best way to solve our long-run problems.

Tim Duy on Abenomics

Mark Thoma sends us to Tim Duy:

14,000 - Tim Duy's Fed Watch: Seems like just yesterday Japanese policymakers were looking to push the Nikkie to 13,000.  It even seemed like a overreaching at the time…. Today the Nikkei pushed past 14,000. Note too that the 10-year Japanese government bond holds well below 1 percent - fears that aggressive policy would cause rates to skyrocket are once again proved unfounded.

So far, so good for Abenomics.  Now the question is will policymakers back off soon after seeing such positive results?  We have seen such stop-go policy in Japan in the past when attention turns back toward the size of the deficit.  Are Japanese policymakers in it for the long-haul?  

Keynesian Economics: The Gay Science?

Niall Ferguson certainly thought so in 1995. Donald Markwell, author of Donald Markwell (2006), "John Maynard Keynes and International Relations: Economic Paths to War and Peace", emails me a copy of Niall Ferguson's 1995 Spectator article, with its claim that Keynes's belief in "the ideas contained in The Economic Consequences of the Peace" "owed as much to his homosexuality as to his Germanophilia…" for "there is no question that the attraction Keynes felt for [Carl Melchior] strongly influenced his judgment…"

But that is not what he says today:

My disagreements with Keynes’s economic philosophy have never had anything to do with his sexual orientation. It is simply false to suggest, as I did, that his approach to economic policy was inspired by any aspect of his personal life.

Liveblogging World War II: May 7, 1943

A young woman writes:

7th May 1943: The ‘end of the world’ approaches in the Warsaw Ghetto: Five difficult and tragic days have passed. In this short time, we have had many experiences. Our living conditions were difficult from the moment we entered our hideaway and they became worse since we have taken in 45 people. Most of them had no food. At midnight on Monday, the electricity was cut off. We are now faced with a serious problem: how will we cook? We do not have stoves connected to a chimney. The bunker leaders deliberated this problem for three days and, in the meantime, arguments broke out. Brother fought with sister, friend fought with friend and they all fought among themselves. Hunger skipped no one.

Noted for May 7, 2013

• Bloix: "Modern fertilizer is not guano. It's synthesized from natural gas, using the Haber-Bosch method of nitrogen fixation discovered by Fritz Haber in 1909 and developed into an industrial-scale process by Carl Bosch of BASF in 1913.The Haber-Bosch process and the internal combustion engine (the first commercially viable tractors were built in 1902) are the two developments that ended the iron grip of Malthus. IMHO, BTW, the Haber-Bosch process is the most important scientific development of the twentieth century - more important than flight, the splitting of the atom, radio/TV, or computing. Without Haber-Bosch, long wars like WWI and WWII would have been impossible - the same nitrogen fixation that makes fertilizer also makes TNT. And without it, the fate of most children in the world would still be, as it had been from time immemorial, death from disease brought on by malnutrition."

• Owen Zidar: Labs of Democracy & Today’s Fiscal Policy Debates: "Economists have increasingly been using regions within the United States as labs of democracy.... UNCERTAINTY: In a study published this month, Atif Mian of Princeton and Amir Sufi of the University of Chicago pointed out that if uncertainty about prospective government regulation and taxes is the primary reason for the sluggish recovery, then states where policy uncertainty is high should tend to have lower job growth. Using state-level data from National Federation of Independent Businesses, however, they found almost no relationship between job growth and the share of small businesses that cite regulation and taxes as their top concern.... FISCAL RELIEF: Gabe Chodorow-Reich of the University of California, Berkeley, and three colleagues used similar methods to investigate whether fiscal relief during the Great Recession increased employment... focused fiscal relief during hard times can effectively stimulate employment.... SPENDING CUTS VS. TAX INCREASES: Many Republicans say that spending cuts from the sequester would have a less damaging effect on the economy than increasing taxes on upper-income earners. But some of my own recent research uses regional variation to show that this belief is at odds with the evidence. I find that modestly sized tax increases on upper-income taxpayers have a negligible to small impact on job creation. These magnitudes are much smaller than those of cutting government spending in hard times, which suggests that using modest upper-income tax increases to offset some required spending cuts would help cushion the impact of the sequester on the labor market."

Paul Krugman: Exchange Rates and Austerity | Mark Blyth: The Austerity Delusion: Why a Bad Idea Won Over the West |

I Confess Clive Crook Is Getting to Me: Bloomberg Has Some House-Cleaning to Do Weblogging

Why oh why can't we have a better press corps?

Clive Crook is back again, writing:

Krugman… concede[s] (somewhat to my surprise)… stunningly disingenuous of Krugman…. Krugman… at the forefront in casting discussion of the stimulus in left vs. right terms… not to make the stimulus bigger but to reverse the Bush high-income tax cuts… higher spending over lower taxes… [placed] divisive value judgements about the size and scope of government at the center… the stimulus debate was as political as it gets… thanks to Krugman.

It's the absence of quotation marks in his columns that is doing it to me.

There are, I am starting to think, three kinds of columnists: those who quote people in order to show that they have properly construed the arguments they are praising or criticizing, those who quote people out of context in order to misconstrue their arguments, and those who don't quote anybody at all.

So here's the comment I left on Crook's column:

Did John Roberts and Nino Scalia Kill the Republican Party with Citizens United?

My view is: perhaps they did. The argument is that the Koch Brothers and others of their ilk now think that they bought and paid for the Republican Party--and in the primaries they are largely right. But money is much less influential in presidential elections, and so the minus effect on candidate quality in the primaries outweighs the positive effects of more money in the general election.

Ezra Klein:

We got way too excited over money in the 2012 elections: This time last year, I was working with three political scientists — John Sides, Lynn Vavreck, and Seth Hill — to build a really, really simple model for predicting the election…. The model kept telling us that President Obama was likely to win… under circumstances where I didn’t think he was likely to win. That model offended my gut. And so I spent a lot of time coming up with things the model might be missing.

Laura D'Andrea Tyson: Lessons on Fiscal Policy Since the Recession

Laura D'Andrea Tyson:

Lessons on Fiscal Policy Since the Recession: In late 2008, the United States economy was caught in the midst of what proved to be its longest and deepest recession since the end of World War II. Frightened by steep and self-reinforcing declines in output and employment, both the Federal Reserve and the federal government responded quickly and boldly. The Federal Reserve dropped the federal funds rate to near zero, where it remains today, and began its controversial “quantitative easing” purchases of long-term government securities to contain long-term interest rates. Fueled by the 2009 federal stimulus package, discretionary fiscal policy was also expansionary in 2009-10, adding to growth during the first year of the recovery at roughly the same pace that fiscal policy had achieved during previous recoveries. Then, in a sharp break with history, fiscal policy became a drag on growth in the second year of recovery, and since then the drag has intensified.

Alan Reynolds Has Submitted a Comment to My Weblog...

So I am writing him a letter:

I see you submitted a comment… It contains three things that are wrong.

You mischaracterize the liquidity trap argument by claiming "Krugman's 'lliquidity trap' means the Fed is completely useless. It can't stimulate demand and it can't raise inflation either." A liquidity trap means that if monetary policy works, it works not through the safe-and-sure channel of reducing short-term safe nominal interest rates but by changing borrowers' assessments of the future by either raising expected inflation or reducing risk spreads by taking risk off of the private sector. That's strike one.

Guenter Grass DeLong Smackdown Watch: Monday Hoisted from Comments Weblogging

Brad DeLong : Thursday Dozen Hoisted from the Archives: Keepers from May 2005: Grebmörts said...

I see that you rethought part of your criticism of Guenter Grass shortly after posting it. The events that have happened since 2005 should make you rethink the rest. He complained that the "growing gap between rich and poor" had brought about "the impotence of politics", a political system that responds only to the interests of the elites. Democracy is being destroyed.

That sounds a lot like the situation in the US today. Washington is unable to end this depression because gridlock serves the interests of the overclass.

Grass was right. You owe him an apology.

Paul Krugman: Naive Fiscal Cynicism: It's Not That We Can't Manage Our Debt, It's That Right-Wing Republicans Seek to Break the Economy and the Government

Paul Krugman:

Naive Fiscal Cynicism: Expansionary austerity has been refuted… even the IMF says that short-run multipliers are big… 90 percent red line… was… fuzzy math… bond vigilantes remain invisible… the confidence fairy refuses to make an appearance… austerian economics has imploded…. Yet there remains immense reluctance to draw the obvious policy conclusion, which is not simply that we have too much austerity, but that right now we shouldn’t be having austerity at all.