Brad DeLong

Ezra Klein: Medicaid in Oregon

Ezra Klein:

Is the future of American health care in Oregon?: Two weeks ago, the group reported… that Medicaid coverage increased the amount of health care people used, offered almost total protection against catastrophic health expenses and reduced depression by 30 percent, but it didn’t show a statistically significant effect on blood pressure, cholesterol or blood sugar…. The sample of sick people was too small to show statistically significant improvements in those measures…. It’s a critique that Katherine Baicker, a Harvard health economist who was one of the principle authors of the study, partially accepts:

Our power to detect changes in health was limited by the relatively small numbers of patients with these conditions. Indeed, the only condition in which we detected improvements was depression, which was by far the most prevalent of the four conditions examined.

She also noted that the diabetes results were consistent with the improvements one would expect from the clinical literature but the number of people with diabetes was too small to establish significance. However, she said the sample size was large enough to rule out large improvements in blood pressure and cholesterol, at least over the first two years.

Understanding the Roberts Court's Health-Care Decision: Monday DeLong Smackdown by Jonathan Adler

The extremely smart Jonathan Adler delivers the smackdown:

For some reason I just saw this now. The Eldred point is interesting, but it’s missing important context. Lessig abandoned the Lopez-style argument against the CTEA. A conservative group had filed an amicus brief in the D.C. Circuit making a Lopez-influenced textual argument, Lessig failed to adopt it as an alternative argument, and the D.C. Circuit held that the argument was waived (a point on which the judge for whom I was clerking at the time – David Sentelle – dissented). As a consequence, the textualist argument against Eldred was never really in play in the Supreme Court.

As for your hippie-punching theory, that does more to explain the voting pattern of Justice Kennedy – who joined the majority In Raich, and tends to vote against criminal defendants in close drug cases – than Scalia or Thomas. See, e,g., Kyllo v. U.S.

Economic Possibilities for Our Grandchildren

'"Well, is it art?" "I do not know," said Mordel. "It may be. Perhaps randomicity is the principle behind artistic technique. I cannot judge this work because I do not understand it. I must therefore go deeper, and inquire into what lies behind it, rather than merely considering the technique whereby it was produced. I know that human artists never set out to create art, as such," he said, "but rather to portray with their techniquest some features of objects and their functions which they deemed significant." "'Significant'? In what sense of the word?" "In the only sense of the word possible under the circumstances: significant in relation to the human condition, and worth of accentuation because of the manner in which they touched upon it." "In what manner?" "Obviously, it must be in a manner knowable only to one who has experience of the human condition." "There is a flaw somewhere in your logic, Mordel, and I shall find it." "I will wait." "If your major premise is correct," said Frost after awhile, "then I do not comprehend art."' -- Roger Zelazny, "For a Breath I Tarry"

Kevin Drum:

Why the Digital Revolution Won't be a Rerun of the Industrial Revolution: Whenever you talk about smart machines taking all our jobs, the usual pushback is that you're being a Luddite—an argument that's especially appropriate this year since it's the 200th anniversary of the end of the Luddite movement… all those skilled weavers in 1813 thought that power looms would put them out of jobs, but they were right only in the most limited way…. But the Digital Revolution won't be a rerun of the Industrial Revolution…. Karl Smith… [has a] take:

Creating things is a matter of rearranging atoms. Broadly speaking, you need two things to do this — a power system to overcome the gravitational and electromagnetic forces that tend to hold atoms in their relative positions and a control system to guarantee that atoms wind up in the right place. The industrial revolution was about one thing — more power! But, more power means the need for more control. Hence, the Industrial Revolution meant a rapid increase in the demand for human brains, not decrease. Smart machines provide both the power system and the control system in one convenient package. You can still argue that displaced humans will end up doing something else—we just don't know what yet—but it's a tough argument to win. If you agree that artificial intelligence will be real someday soon, then by definition smart machines will be able to do just about anything that humans can do. The answer to "Humans will do X," for any value of X, is "But robots can do that too." That wasn't true of the Industrial Revolution.

If you don't believe that AI is around the corner, then there's no argument to have here (aside from why you think AI is so far off). But if you do, then we have some serious questions to ponder about the future of work, the future of money, and the future of democracy. That's what my piece is mainly about.

More Economic Possibilities for Our Grandchildren…

Ashok Rao:

The Future and its Critics: This post is dedicated to the brilliant John Stuart Mill…. Every now and then, it seems, the blogosphere plunges into deep introspection of all that we think to be holy: technology, growth, and even utopian prosperity. Kevin Drum at Mother Jones has a piece about “Robot Overlords” and the more-optimistic Matt Yglesias can’t help but go long on beachfront property. A while back, I wrote about technology at the end of history, and I think I got one thing absolutely right:

Yet, when reading Fukuyama’s gripping essay years ago, I had one big qualification, a fleeting hope for the end of history. Ideological struggle is romantic for those of us who sit in comfort and liberty. For the scholars who write in the dimmed halls of Harvard. For the man of letters in Lamont Library; or better the Bodleian. For the precocious high schoolers who fawn on every dripping word from their history teacher. But for the many who are in the throes of historical struggle, there is nothing poetic. For the Russians who were slave to the Gulag, the romanticism of Wilson’s To the Finland Station, is but a Western concoction of reality, beautifully written for the scholar…. For the small actors in history, the girls murdered by Taliban and the dissidents silenced by Communists, the real victory would be a textbook of history blank after today….

The Oregon Medicaid Lottery New England Journal of Medicine Baicker et. al Study Power Calculations

Austin Frakt has done the heavy lifting, and presents the power calculations that, in an ideal world, should have been done and archived ex ante as part of the experimental design of Baicker et al.: The Oregon Experiment — Effects of Medicaid on Clinical Outcomes. Needless to say, he may have made an error: this is the moral equivalent of rocket science. But with enough eyes all bugs are shallow, hopefully…

Until somebody improve and refines his calculations, I believe that the right bottom line is his:

Updated power calculation: Thestudy was underpowered for the change in proportion with elevated glycated hemoglobin (GH) by a factor of 23. Yes, twenty-three…. Let me now state where we are. With respect to the statistically insignificant physical health measures in the study… the sample was too small even for much larger effects. This renders them… uninformative about whether or how much Medicaid improves physical health. Uninformative means just that. No new information. No resetting of priors is justified… We also know, from the authors’ discussion and from Aaron’s posts, that the results include [point estimate] changes in blood sugar and blood pressure that are not unreasonable to have expected clinically [if Medicaid were effective]…. Again, no resetting of priors is warranted.

Given this, for the physical health measures only, I don’t understand the rush I’ve noticed in people updating what they expected Medicaid could do…. I think it is time for people to take another look at what this study is saying…. What I think we’re seeing is a re-expression of everyone’s priors. This study is an opportunity to do that, but it doesn’t and shouldn’t change what [priors] are. The claims that people should be changing sides from pro- to/from anti-Medicaid expansion just make no sense based on the physical health measures in this study.

On the other hand, it is perfectly acceptable--in fact, I think it is morally and scientifically required--to update your priors and shift them in a pro-Medicaid direction from the findings on emotional health and financial stress.

Nick Clegg Is a Wizard! He Makes Economic Recovery Disappear!

Jeff Weintraub:

Nick Cohen (and Andrew Adonis) explains how Britain's Liberal Democrats sold their birthright and didn't even get a mess of pottage for it:

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.

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….

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.

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).

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":

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…

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.

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.

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.

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.

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.

Saying More than "When the Storm Is Long Past the Ocean Is Flat"

Paul Krugman:

Keynes, Keynesians, the Long Run, and Fiscal Policy: One dead giveaway that someone pretending to be an authority on economics is in fact faking it is misuse of the famous Keynes line about the long run. Here’s the actual quote:

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 is flat again.

Doug Holtz-Eakin Turns to the Dark Side

One correspondent asks if perhaps Douglas Holtz-Eakin isn't an honest Republican worth engaging with--those whom Clive Crook claims are so thick on the ground and that Paul Krugman is so remiss in not engaging, but he can't remember any of their names.

But another correspondent writes, and I agree:

He was an honest and effective CBO director. After he left CBO… he was invited to set up what he called a 'conservative think tank'. That that was the way he decided to go. And then he went downhill: occasionally now he says something informative and interesting, but most of the time he is saying what he calculates all please his right-wing political masters. It's quite sad…

Demography: Twentieth Century Economic History Weblogging

Tyrannies throughout the world—dictators, sane or insane—for whom prosperity was not a concern or was even seen as a threat, were the principal cause of rising relative inequality around the globe. But the second cause were the demographic burdens placed on poor countries by the population explosion. These burdens are now, fortunately, ebbing as the demographic transition to low fertility and extended lifespan finish their spread across the globe.

Matthew Yglesias vs. Alex Tabarrok

Hey! Clive Crook! Here is one more reason why Paul Krugman is tired of trying to reason with you people

Matthew Yglesias:

Keynesianism today: Start by stating the argument correctly: This Alex Tabarrok post on growth in the face of fiscal austerity annoyed me as did his co-blogger Tyler Cowen chiming in to say Tabarrok had "nailed it"... the line "In the 1990s growth was strong even while 'austerity' was increasing."

That kind of thing is a dead giveaway that the author isn't even stating the argument for expansionary fiscal policy correctly.

The Long-Run and Short-Run Budget Picture

Opening statement at K-State Debate with Alan Reynolds:

How big a government should we have?

Right now the U.S. has a relatively small government: in a normal year the U.S. government as a whole spends something like 32% of total production. The U.S. government spends about ten percentage points less of GDP than the average rich, industrialized country spends. The U.S. government spends about 15 percentage points less of GDP than a never-Communist country as rich as the U.S. is today would be expected to spend. We are thus, in comparative perspective, a small-government country.

Aaron Carroll: Additional Thoughts on the New Oregon Medicaid Results

Aaron Carroll: Additional thoughts on the new Oregon Medicaid results:

1) This was a HUGE study. How can you say otherwise?

According to the paper, 12,229 people responded to the surveys and were analyzed. So, yes, for outcomes that effected everyone (think financial hardship), it’s likely they were super-powered. But for many of the outcomes that were more murky, that’s not the case. Take A1C for instance. Only 5.1% of the control group had an A1C>=6.5. Let’s assume that the starting prevalence was the same in the intervention group. That means that only 624 people (312 in each group) actually had a high A1C in the study. That’s not anywhere near as big. Especially when you’re talking about an indirect intervention like insurance as opposed to actual health care.

MCarson on the Oregon Medicaid Expansion

Robert Waldmann hoists this from my comments: mcarson:

I am one of the winners in the Oregon lottery [winners could get Medicaid]. Going from no insurance to insurance is very confusing. When you have no money every health question starts with "would I rather live with this problem and have electricity, or treat this problem and keep my milk in a cooler for a month or so?" Stepping back into healthcare was like hopping on a merry-go-round. The doctor wanted to do test after test to come up with baselines for me, and I had a hard time showing up at the lab.

Josh Barro: What to Make of the Oregon Health Study

I would say that we already knew that the Medicaid model is not a terribly productive way to create chronic conditions like high blood pressure and diabetes, and that we need to find better condition-management models pronto. But I would also say that the depression and financial security findings are better news than I expected. About what I would have expected (but worse than I might have hoped) on some welfare indicators, better than expected (and as good as I might have hoped) on others--net-net, goods news for the efficacy of Medicaid expansion.

And people who say otherwise aren't reading the study…

Oregon Medicaid Lottery Says: "Medicaid Expansion Definitely Worth It": Hoisted from Incidental Economist Comments Weblogging

Matt:

Two thoughts:

1. On your point #1 on sample sizes, note that the study is effectively even smaller than you’re saying. Thinking of the high A1C sub-sample as containing 624 people is correct for the intent-to-treat analysis (i.e. for estimating the effect of offering insurance). But (net) take-up was only about 25 percent. Thus, for the IV analysis (which provide the estimates of the effect of insurance per se), the point estimates and variance are scaled up by a factor of 4=1/0.25. This means that the “RCT-equivalent” sample size is only 156=624/4. That’s really, really small, even before you get to the fact that insuring people does not automatically get them the appropriate care (your point about direct versus indirect interventions).

DeLong, Neyman, Pearson, and Many Others Smackdown Watch: Medicaid Expansion Hoisted from Comments Weblogging

Robert Waldmann:

Heh, indeed.

I actually haven't read the whole [Baicker et al. NEJM Oregon Medicaid Lottery] paper, but I have read the abstract and a key table cut-and-pasted by Kevin Drum. It shows a more than four-fold increase in diabetes diagnosis due to Medicaid availability. This does not correspond to statistically significant decrease in the fraction of people with high hemoglobin glycosylation. So the paper does not contain proof that current therapy for diabetes is better than nothing.

I Am More Confident This Morning That Medicaid Expansion Is a Good Idea

Having read Katherine Baicker et al. (2013), "The Oregon Experiment — Effects of Medicaid on Clinical Outcomes", New England Journal of Medicine, I conclude that the study was--as natural experiments are--significantly underpowered, that the jury is still out on most of the effects, but that the success of the Medicaid expansion in reducing depression and improving financial security are rock-solid and nailed benefits, by themselves worth more than the net cost of the expansion.

Therefore I wish to withdraw my tweet from last night:

@tylercowen @petersuderman the case for Medicaid expansion is *marginally* less strong than I had thought...

— J. Bradford DeLong (@delong) May 1, 2013

And substitute for it, instead, the correct:

.@tylercowen @petersuderman CORRECTION: I have read the paper and evaluated its power, the case for Medicaid is stronger than I had thought

— J. Bradford DeLong (@delong) May 2, 2013

Understanding Karl Marx: Hoisted from the Archives from Four Years Ago May Day Weblogging

In the beginning was Karl Marx, with his vision of how the Industrial Revolution would transform everything and be followed by a Great Communist Social Revolution—greater than the political French Revolution—that would wash us up on the shores of Utopia.

The mature Marx saw the economy as the key to history: every forecast and historical interpretation must be based on the economy's logic of development. This project as carried forward by others ran dry. Sometimes--as in, say, Eric Hobsbawm's books on the history of the nineteenth century--this works relatively well. But sometimes it led nowhere. The writing of western European history as the rise, fall, and succession of ancient, feudal, and bourgeois modes of production is a fascinating project. But the only person to try it seriously soon throws the Marxist apparatus over the side, where it splashes and sinks to the bottom of the sea. Perry Anderson's Passages from Antiquity to Feudalism and Lineages of the Absolutist State are great and fascinating books, but they are not "Marxist". They are Weberian. The key processes in Anderson's books concern not “modes of production” but rather “modes of domination.”

Stanford Talk: Understanding Karl Marx.pdf

What Have We Learned About Fiscal Policy as Stabilization Policy since 2007?

Laura Tyson and I gave a presentation to the IMF Fiscal Forum on Wednesday the 17th. A draft of our paper. I talked about changing perceptions of fiscal policy. Laura talked about changing perceptions of multipliers.

Here is my part of our talk:

---

For the past five years, each year I have begun talks by saying that I thought in the previous year that the crisis was at its peak, and that each year I turned out to be wrong, as the crisis revealed itself as even deeper and more of a crisis than it had been the year before.

We are now six years in. The natural thing to do, therefore, is to compare 1929-1935 with 2007-2013. 1929-1933 saw much larger output declines and unemployment increases than 2007-2011--between two and three times as large. But by 1935 the tide had turned nearly everywhere except France, which was still on the gold standard (but about to elect a Popular Front government and drop its link). There had been substantial gap closing between 1931 or 1933 and 1935. The Great Depression was clearly not over by 1935, but the global economy was clearly on the mend.

By contrast, today we have had a slower decline. But we have seen no signs of anything we could call gap-closing, no sign of any returns back to what we used to think of as normal levels of activity. Here at the IMF we speak of a "three speed recovery". In the North Atlantic plus Japan, at least, the speeds are "reverse" in Europe--the proportion of the population at work is dropping--and "neutral" in America--the proportion of the population is stable. Thus it is no longer clear that, when this is over, people will look back and classify it as a smaller worldwide event than 1929-1939. Another five years of the last two years' trends, and it will be 2007- rather than 1929-1939 that will seize the name of "The Great Depression".

Global Inequality: Saturday Twentieth Century Economic History Weblogging

Those economies relatively rich at the start of the twentieth century have by and large seen their material wealth and prosperity explode. Those nations and economies that were relatively poor have grown richer, but for the most part slowly. The relative gulf between rich and poor economies has grown steadily over the past century. Today it is larger than at any time in humanity’s previous experience, or at least larger than at any time since only some tribes knew how to use fire. The gulf across which the world’s rich and poor regarded each other exists in every dimension: how much people consume, whether they can read, what tools they use, and how they make their living.

Josh Bivens: (Final?) Notes on the Reinhart/Rogoff Saga

Josh Bivens:

(Final?) Notes on the Reinhart/Rogoff Saga: As pointed out elsewhere, the claim that the UMASS paper actually supports R&R’s alleged core finding of a significant relationship between high debt and slow growth is flat wrong.[1] Yes, the midpoint average growth rate of high-debt countries (over 90 percent of GDP) is lower than the average growth of lower-debt countries, but the differences are not statistically significant…. More importantly, the real argument all along has been two-way causality: data showing that there is lower growth at high debt levels does not show that high debt causes low growth…. Arin Dube demonstrated this very well in his note on Reinhart and Rogoff’s entire data-set, and for the U.S. John Irons and I did the same with Granger causality tests on the U.S. data in July 2010, nearly three years ago. Paul Krugman kindly referred to our results in his blog saying “John Irons and Josh Bivens have the best takedown yet of the Reinhart-Rogoff paper (pdf) claiming that debt over 90 percent of GDP leads to drastically slower growth.” So the causality problem has been well known for some time.

By the way, we compiled the data we used ourselves because emails to Reinhart and Rogoff requesting their data went unreturned. Perhaps if they had shared their data at that time their actual weighting procedure would have become clear much sooner and even their spreadsheet error could have been corrected. Kudos to the UMASS authors for being more persistent than us and for the work they did.

Lastly, Reinhart and Rogoff argue against the thesis that slow-growth causes debt rather than vice-versa based simply on the fact that high-debt episodes are often long-lived…. [T]he simple point is that “downturns in the business cycle” seems to be an intentionally narrow claim being put forward by Reinhart and Rogoff…. [O]ne could argue (if one was feeling tendentious) that budget deficits in 2010, 2011 and 2012 were not driven at all by the economy being in outright recession in those years (hence not driven by “downturns in the business cycle”), since the economy wasn’t in an official recession. Yet these deficits were certainly driven by a shortfall of aggregate demand. A clue that this is indeed what is going on in lots of the Reinhart and Rogoff data is their other persistent finding that the slower growth associated with (again, associated with, not caused by) high-debt in their data is not durably associated with high interest rates….

Finally, I’d just like to add that another problem with the larger R&R narrative that both their book and their paper have constructed. This narrative  presents  financial crises as consigning economies to slow growth through some iron law of nature—and their 90 percent debt threshold is clearly intended to imply that efforts to use fiscal stimulus to combat this slow growth in the wake of the U.S. housing bubble’s burst will be thwarted. But this narrative is wrong…. [P]olicy failure, not “debt” or “financial crisis” should be clearly identified as the stumbling block to full recovery.

[1] I say “alleged core finding” because the real core finding was the claim that a 90 percent debt/GDP ratio was a clear tipping point over which growth slowed. This is obviously the finding that stuck in the public debate, and the authors themselves just helped to push this impression.

Paul Krugman (2012): Economics in the Crisis

Paul Krugman (2012): Economics in the Crisis:

To say the obvious: we’re now in the fourth year of a truly nightmarish economic crisis. I like to think that I was more prepared than most for the possibility that such a thing might happen; developments in Asia in the late 1990s badly shook my faith in the widely accepted proposition that events like those of the 1930s could never happen again. But even pessimists like me, even those who realized that the age of bank runs and liquidity traps was not yet over, failed to realize how bad a crisis was waiting to happen – and how grossly inadequate the policy response would be when it did happen.

And the inadequacy of policy is something that should bother economists greatly – indeed, it should make them ashamed of their profession, which is certainly how I feel. For times of crisis are when economists are most needed. If they cannot get their advice accepted in the clinch – or, worse yet, if they have no useful advice to offer – the whole enterprise of economic scholarship has failed in its most essential duty.

Mike Konczal: Reinhart-Rogoff a Week Later: Why Does This Matter?

Mike Konczal:

Reinhart-Rogoff a Week Later: Why Does This Matter?: Well this is progress. We are seeing distancing by conservative writers on the Reinhart/Rogoff thesis. In Feburary, Douglas Holtz-Eakin wrote:

The debt hurts the economy already. The canonical work of Carmen Reinhart and Kenneth Rogoff and its successors carry a clear message: countries that have gross government debt in excess of 90% of Gross Domestic Product (GDP) are in the debt danger zone. Entering the zone means slower economic growth. Granted, the research is not yet robust enough to say exactly when and how a crisis will engulf the US, but there is no reason to believe that America is somehow immune. (h/t QZ.)

Review of Robert Skidelsky (2000), "John Maynard Keynes: Fighting for Britain": Hoisted from the Archives from Twelve Years Ago

Review of Robert Skidelsky (2000), "John Maynard Keynes: Fighting for Britain" (London: Macmillan: 0333604563), pp. xxiii, 580.

J. Bradford DeLong

July 2001

Each of the first two volumes of Robert Skidelsky's biography of John Maynard Keynes--Hopes Betrayed, and The Economist as Saviour--was an astonishing intellectual achievement. Now that it is complete, it is clear that as a whole the three-volume biography is the finest biography of an economist that I have ever read, or that I ever expect to read. However, this third volume--Fighting for Britain--does not quite measure up to its predecessors. Nevertheless, it is still a superb book. It falls short only because its predecessors have raised the bar so very high indeed.

Notre Dame Public Intellectualism Conference: Comment on Ahmad Moussalli: Islam and the Public Intellectual

Last year my former student Eric Chaney wrote a paper "Democratic Change in the Arab World: Past and Present". In it he saw a striking difference between not the Arab lands but rather the lands of the original first two centuries of Arab conquest on the one hand, and the lands of subsequent expansion on the other. In the 28 countries that are lands of the original Arab conquest, there is a substantial "democratic deficit". In the 15 countries that are lands of subsequent post-Ummayad expansion, democracy is doing about as well as one would expect.

From this pattern Chaney concludes that there is little special about Islam, little special about oil, little special about desert terrain, little special about Arab culture, but that there is something special about the long-run historical heritage--about the political modes of domination established after the Rashidun, under the Ummayad and especially the Abbasid ruling dynasties. They led to a millennium-long withdrawal of religious and other intermediary forms of social organization from the task of criticizing the doings of the state to following the doctrine that the state is to be supported.

Now I at least do not think that a theocracy controlled by those of the Party of Ali who claim to speak in the name of the Occulted One is a step forward. And similar currents of theocracy among those following Traditional Practices seem similarly unwise.

But is there a middle way, a creative tension, something like the medieval European intellectual contest between the Emperor's University of Naples and the Pope's University of Bologna both arguing for the rule of law and the curbing of arbitrary power, a way--without a theocratic turn--for the ulema to take on a more active and prophetic critical role vis-a-vis the governments? Not Jerusalem speaking to Athens, but Mecca speaking to Baghdad?

The Economist as...?: DRAFT Talk: Notre Dame Public Intellectualism Conference

Draft 0.7 :: PRELIMINARY AND INCOMPLETE

Whenever I begin thinking about the economist as public intellectual, five questions come to the fore:

1. Why should anybody care what we economists say?
2. What do we economists have to say?
3. Do we say it well?
4. Is there any way to change things so that we say it better?
5. Given what we economists have to say and how we say it, should the rest of you listen?

Why should anybody care what we economists say?

The Economist as…?: Slides for Notre Dame Public Intellectualism Conference

20130423 DeLong "The Economist as a…?" Notre Dame Slides.ppt

20130423 DeLong "The Economist as a…?" Notre Dame Slides.pdf

Notre Dame Public Intellectuals Conference: Comment on Enrique Krauze: Latin America: Intellectuals or Intelligentsia?

It seems to me that I have both more hopes and more fears for democracy and liberty and progress in Latin America.

The first is Brazil and Mexico. Should Brazil and Mexico become normal social-democratic growing-economies--and, the Mexican drug war aside, they have had now good 15 years--then they will be of sufficient weight to pull the rest of Latin America in their wake, and that would be a great accomplishment.

The fear is, largely, the consequences of the failure of the neoliberal promise. The hope was that by turning to market mechanisms to attain social democratic ends then, with skillful Keynesian or Friedmanite technocratic governance and with the assistance of publicly-provided pensions, education, infrastructure, etc., the world could rapidly become much more prosperous while becoming somewhat more equal.

The reality has been that the "much" in "much more prosperous" has fallen by the wayside, and in the past five years the "more" part has vanished as well. The reality is that if the world as a whole has become more equal over the past generation it is because the peasants of China and India are no longer so desperately poor. The rest see growing global wealth, and see that if they do not belong to the plutocracy at the top they are not getting a proper share of that growing global wealth.

And the people feel betrayed.

And the people are betrayed.

Copying the United States does not look attractive to anybody in Latin America, given our rapidly-growing inequality of wealth. Copying Russia never looked attractive. Copying Cuba does not look attractive. Copy Venezuela requires that you have a lot of oil per capita--much more oil than even Brazil and Mexico can muster.

We up here at least would like a Latin America taking a somewhat different road--if only because a diversified intellectual and institutional portfolio is a very important thing for the human race to have. But it is not clear to me what that road might be. And I was hoping that you would provide an answer...

Notre Dame Public Intellectualism Conference: Mark Lilla and My Instant Reaction

Mark Lilla: Caveat Lector:

I speak as a defender of liberal democracy. But I want to be a lucid one. I don't think it can be understood or defended without recognizing two things. First, that the finance-driven economy of today is no longer your mother's capitalism, and is threatening important democratic values around the world, including in the West, even the United States; and, second, that liberal democracy is not in the future in many countries of the world, and that to understand them we need to, well, understand them and not ourselves. During the Cold War I felt that the most important function the intellectual could serve was to expose and dismantle the radical ideologies of left and right that were spawned by the French Revolution, to hold other intellectuals responsible for the consequences of their ideas. That has been accomplished. The intellectual task before us today is different. It is to think the present, the way it actually is, and try to develop a coherent, historically grounded picture of it. As Alasdair Macintyre might have put it in an earlier stage of his career, "We are waiting not for a Godot, but for another--doubtless very different--Karl Marx.

My comment on his paper:

The puzzling thing from my perspective about Mark Lilla's talk was that he blames the current troubles in Europe on (a) a lack of coherent grand-narrative ideologies and (b) the power of international financial markets.

I would blame it on the weakness of international financial markets--the inability of banks and bankers to win the trust of people and so mobilize the risk-bearing capacity of the world to bear the risks of investing in a radically-uncertain future, and the unwillingness of governments to do what is necessary--either abandon the euro or move forward to the continent-wide banking regulatory union, fiscal transfer union, and political union necessary if the market is to be properly backstopped and regulated by the state. The problem is not that international financial markets are too strong. It is that they are too weak to bear the weight that the EU's institutions have placed on them.

And they are too weak precisely because of an ideology--the sound-finance ideology: gold and hard money are good, people should pay their debts, the bankers have sinned and because they sinned Greece and Spain must suffer.

So I would call for managerialism: for public intellectuals as people able to step back and bring what concerns ordinary people and should concern those who hold power and megaphones.

For this ideology that we have is, precisely, our great-grandmother's capitalism. It is the "austerity" of Baldwin and Churchill and Coolidge and Hayek and Hoover and Mellon and MacDonald and Norman. It came a-crash in 1929. Yet, somehow, it is back. And it is coming a-crash again. Then the cost was 1933, 1939, and 1945. Now--we hope--the cost will be less. But we must make it so.

Public Intellectualism in Comparative Context: Different Countries, Different Disciplines

Public Intellectualism in Comparative Context: Different Countries, Different Disciplines

Schedule

Participate in "Public Intellectualism" Conference Sessions Remotely // News // Advanced Study // University of Notre Dame:

If you are unable to attend the "Public Intellectualism" conference this Monday through Wednesday, April 22-24, you can still take part in the conference sessions and engage the discussants over the web. To participate remotely, for FREE, check out our conference blog at http://blogs.nd.edu/ndias/ -- on the blog's Event pages you can watch the conference sessions LIVE via Web Simulcast and ask questions to the conference presenters and commentators in the Comment field at the bottom of the pages. We encourage all of our virtual participants to ask questions early and often.

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This international conference, taking place April 22-24, 2013 in McKenna Hall's Notre Dame Conference Center at the University of Notre Dame, will focus on the roles played by public intellectuals—persons who exert a large influence in the contemporary society of their countries by virtue of their thought, writing, or speaking—in various countries around the world and in their different professional roles. Leading experts from multiple disciplines will come together to approach this elusive topic of public intellectualism from different perspectives.

The Best Case Against Fiscal Stimulus: Monday DeLong Smackdown Watch Weblogging

Matthew Yglesias:

Best case against fiscal stimulus: From a stimulus supporter: Amidst all this Reinhart and Rogoff mishegas, it's worth saying that I recently read Brad DeLong's [and Laura Tyson's] slideshow about what we've learned about fiscal stimulus since the crisis began and even though he doesn't read it this way I think it contains far and away the most persuasive argument that the "old" (1977-2007) consensus against discretionary fiscal stimulus is still roughly valid. It's right there in his first slide "What We Thought About Fiscal Policy in 2007", which I'll retype:

• Near-consensus support of John Taylor's (2000) argument that aggregate demand management was the near-exclusive province of central banks.

• Five reasons for near consensus:

  1. The problem of legislative confusion.
  2. The problem of legislative process
  3. The problem of implementation.
  4. The problem of rent-seeking.
  5. The problem of superfluity.

• Monetary policy was strong enough to do the job. Fiscal policy was simply not necessary.

Now looking back on this the crisis has done a lot to imperil (5), the notion that fiscal stimulus is superfluous. But it's reinforced 1-4.

Even if you assume perfect good faith on the part of each and every member of congress (which seems like a stretch) there's an inherent tension between the desire to do high-multiplier stimulus and the desire to do high social value expenditures. And not only is there empirical disagreement about multipliers, there's complicated and multi-layered disagreement about the social value of different expenditures. And operating in an environment of uncertainty, in which members know that their colleagues are seeking to advance what they believe to be socially valuable expenditures members are rational to worry about ratchet effects. What you get is gridlock and confusion. The old thinking was that a "let's do stimulus now" mentality would lead to overstimulus (and indeed multiple accounts have the Obama administration assuming congress would substantially exceed its ARRA requests) which is wrong, but the general concern about confusion/process/implementation/rents has been [validated].

So we're left with superfluity, and the revelation that whether or not "monetary policy" is in some sense "strong enough" the actual practice of Western central banks is not strong enough.

But the solution to this problem can't be to say "next time congress is going to be way better and less partisan and fiscal stimulus will work out great."

Conference: Notre Dame: Public Intellectualism in Comparative Context

Sunday, April 21: Welcome Dinner

Monday, April 22: ​8:00 a.m.​Continental Breakfast

• 8:30 a.m. Welcome, Robert Bernhard, Vice President for Research, University of Notre Dame
• 8:45 a.m. ​“Caveat Lector: Intellectuals and the Public” Mark Lilla, Commentary: Michael Zuckert
• 10:45 a.m. “The Public Intellectual in China” Willy Lam, Commentary: Lionel Jensen ​​* 2:00 p.m. “The Public Intellectual in Latin America” Enrique Krauze, Commentary: Paolo Carozza ​​* 4:00 p.m. “The Artist as Public Intellectual” Maxim Kantor, Commentary: Peter Holland
• 5:45 p.m. Dinner
• 7:15 p.m.: Evening Presentation "The Religious Leader as Public Intellectual” Sr. Joan Chittister, Commentary: Ann Astell