Live from the Roasterie: Perhaps the strangest thing about hanging out on the Missouri-Kansas border is the moderate Republicans who come up to one: "Isn't the failure to expand Medicaid insane?" they say
Over at Equitable Growth: Trying to get the issues straight in my mind here...
>email@example.com: Dear Mr. Delong: I hope this note finds you well. In light of recent activity in Congress related to the Trade Promotion Authority legislation, I write to invite you to join an off-the-record conference call with XXXXXX senior staff for an update on the current state of play. The call is scheduled for today, Tuesday, April 21 at 3:45 p.m. ET
Dear Mr. White:
Thank you very much for your invitation. I will try. I will have to move a couple of things--and I am not the most important person involved in them...
But if you want to know where my concerns are, let me start by quoting something that I wrote before http://www.bradford-delong.com/2015/03/the-debate-over-the-trans-pacific-partnership.html: READ MOAR
...Rosa Luxemburg, Emma Goldman and Eleanor Marx. The first two survived these debilitating attachments, the third did not. At the age of 43, upon learning that her common law husband of 14 years had secretly married a 22-year-old actress, Eleanor took poison and died. Had her father, Karl Marx, been alive he would have been not only distressed by her death but, I think, dismayed that a daughter of his could not surmount this level of betrayal, for the sake of international socialism if nothing else.
On Robert A. Heinlein (1964):
So the banker is the son of a bitch in the deal--Or is he, now? Bankers never handle their own money to any important extent; they are custodians of other people’s money. If the banker thinks that it is a bad deal in the long run [because of discrimination], is it not his solemn duty to his stockholders and his depositors to refuse it? No matter how it offends the “human rights” of purple people eaters? Is he morally justified in hypothecating other people’s money in a deal which he considers risky--whether the risk be on that one piece of paper, or long-term risk for his whole crazy structure of loans and futures and so forth? I say he is not; he is a steward and must behave as one--not as a social reformer. Are you and I entitled to a backseat veto over his judgment? No, it ain’t our money. So far, I think, no argument--You, the banker, and the subdivider are each morally entitled to turn down the purple people eater...
And me on Twitter via Storify:
Over at Equitable Growth: In the Oil Patch, probably yes--lost demand from the failure to expand Medicaid is likely to push them over the edge and into recession. Elsewhere it will be close, but probably not:
...is leaving red states poorer and sicker.... King v. Burwell.... If the Supreme Court rules for the plaintiffs, those states, including Arizona, will lose their subsidies. That would be a disaster for those states. As Sarah Kliff writes: READ MOAR
Thank you for a wonderful talk. A comment, and a question:
The comment: I have long had a bone to pick with Amy Finkelstein and company and their Oregon Medicaid study. They use “significant” in two different ways in their paper. Improvements in blood pressure and in blood sugar levels in their study were not statistically significant. Not a lot of people in the sample had high blood pressure or high blood sugar, and so the drops seen were not big enough to be confident in a statistical sense that they were not just the luck fo the draw. But the drops in blood pressure and in blood sugar levels were in line with what we expect to follow from prescribing first line lisinopril and metphormin to those who need them, and those drops are clinically significant. I’ve been trying to get them to say that the improvements in the physical health indicators they found were clinically but not statistically significant — but without conspicuous success. READ MOAR
Can, in a political-economy sense, central banks be trusted with the full-employment-and-price-stability stabilization-policy mission? Are they not captured, to too great an extent, by the commercial-banking sector that, myopically, favors higher nominal interest rates to directly improve bank cash flows and indirectly dampen inflation and so redistribute wealth to nominal creditors--like banks?
No, they cannot be trusted. Yes, they are captured to too great an extent by the commercial-banking sector. Yes, the commercial banking sector is very myopic in its conventional wisdom.
...to understanding economic and financial processes. The Global Financial Crisis of 2008 and the Great Recession that followed challenged much conventional wisdom and academic orthodoxy with respect both to theory and policy. New economic thinking was needed and that need has been extended and amplified through the succeeding years. But: what constitutes 'new economic thinking?'
...Lean over backwards so you do not fool yourself, and teach your students the discipline correctly from the start, rather than teaching them things at the start you will have to unteach them later.
If you haven't read Bruce Bartlett's complete history of the Laffer Curve, you should. The upshot is that you do not need special circumstances for high tax rates to be capable of inflicting significant damage on the underlying economy. But you do need exceptional circumstances to actually get a free lunch out of the Laffer Curve...
It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.
Over at INET: As I wrote in my introductory "Tap... Tap... Tap..." http://beta.ineteconomics.org/ideas-papers/blog/tap-tap-tap-is-this-thing-on-website-relaunch post last week, there are four gaps--between what economists should and do say, say among themselves and are heard to say, are heard to say and what the public sphere concludes, and what the public sphere concludes and actual policies. It is INET's business to focus primarily on the first and second of these gaps. And it is this weblog's place to provide a space for discussion and debate--for new economy thinking--about how to close these gaps.
After one week, how are we doing?
Over at INET: Welcome to our website, and thus weblog, relaunch.
Almost everybody looking around today agrees that there are four gaps in economic thought:
...by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force....
Over at Equitable Growth We all know this.
But it is highlighted by the work of the very sharp Carter Price and David Evans, who have the infographic of the month:
...access to expanded Medicaid... and how a ruling by the Supreme Court in... King vs. Burwell... would affect ACA coverage...
From the perspective of any individual state, both the Medicaid expansion funds and the health-exchange subsidy funs are free money: READ MOAR
For the past decade Stanford's John Taylor has been loudly crying:
And we all have said: This makes no sense! If the original derivation of the Taylor rule is accurate, minor deviations from it have small consequences. If minor deviations from optimal policy rules have major consequences, than the original Taylor rule simply cannot be the optimal policy rule.
And we have never gotten a coherent answer.
April Fools' Festival, Day XVII: Note that the Insane Clown Posse picture at the top right is not a happy clown. This is an insane clown. And this is a somewhat dangerous clown...
Shorter Thomas Friedman: Because my cell phone company drops calls when I take the Acela, it is very important that Michael Bloomberg run for President in 2012. He should run on the platform of Obama's policies. Thus he should split the vote for those policies between two candidates, and so raise the chances for Mitt Romney--who is running against those policies--to squeak in.
Over at Equitable Growth: A fine rant from the very sharp and newly-parental Matthew Yglesias:
...As Betsey Stevenson and Justin Wolfers put it, we have gone from shared production to shared consumption and formed more egalitarian partnerships based on common preferences rather than a swap of housework for rent money. This new model of partnerships has thus far not taken root as strongly in working-class relationships. That's unfortunate. But it's a mistake to believe women are making themselves worse off than their next actually available alternative. As women have become more empowered, they have gotten pickier. That means more single women, and a higher quality of relationship for the non-single. READ MOAR
Over at Equitable Growth: Picking up on In Lieu of a Focus Post: March 2, 2015 (Brad DeLong's Grasping Reality...): Janet Currie points out that the damage from a ruling adverse to the government in the King v. Burwell ObamaCare subsidies case is likely to carry a very heavy cost in terms of societal well-being along private health, public health, and economic growth dimensions. READ MOAR
James Kwak: Who’s a Freeloader?: "Daniel Rodgers’s review [of Williamson et l.]... is titled “‘Moocher Class’ Warfare”...
...Tea Party members like Medicare and Social Security, which they think they have earned through their work, but don’t like perceived freeloaders who live off of other peoples’ work. From the [Williamson et al.] paper (p. 33):
But Steve Blough trolls me this morning over on the Twitter Machine about the truly remarkable ignorance of economics professor David K. Levine:
And so I rise to the bait: READ MOAR
I steal my title from my esteemed ex-roommate and coauthor Robert Waldmann, who writes:
I wonder why wealthy investors vote for Republicans against their self-interest.
Brad DeLong wonders why they favor tight money and austerity against their self-interest....
Live from La Farine: class="author">Scott Lemieux**: Lawyers, Guns & Money: "It’s hard to be sure, given how badly bungled it was by the Clintons...
...but my guess is that as far as comprehensive health care reform in 1993 they were drawing dead anyway. On health care, the Republican conference was already where it would be on pretty much everything in 2009; he was not getting more than token Republican support.
...TPP... will almost certainly have nothing on currency... It will not make it any easier, and could well make it more difficult, for the United States to address the trade deficit that results from having an over-valued dollar....
J. Bradford DeLong on March 12, 2015 at 09:23 AM in Economics: Growth, Economics: Inequality, Economics: Information, Economics: Macro, Obama Administration, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (27)
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The kha-khan Cosma Shalizi smacks me down for seeing the Federal Reserve as afflicted by intellectual errors, rather than as a prisoner of Gramscian top 0.1% hegemony and the revolving door.
He has a point, a definite point.
In a good world the Janet Yellens and the Charles Evanses would be the vital center of the Federal Reserve, not its left wing. And they would be acting as its left wing, pointing out the manifold benefits of labor-force upgrading in a high-pressure economy, the extraordinary quiescence of core inflation, and the continued overoptimism of the Fed model. READ MOAR
Ah. Crossing my desk today, two intersecting streams. The first is unpacking a stray box and finding in it a copy of NBER Working Paper 12398...
Back in 2004, you see, George W. Bush's Council of Economic Advisers, headed by Greg Mankiw, released its 2004 Economic Report of the President--and immediately found the reporters of Washington enthusiastically throwing a low-tech necktie party, with the Bush CEA as the center of attention. In 2006 Greg and Phil Swagel wrote a good retrospective:
over offshore outsourcing connected with the release of the Economic Report of the President (ERP) in February 2004, examines the differing ways in which economists and non-economists talk about offshore outsourcing, and assesses the empirical evidence on the importance of offshore outsourcing in accounting for the weak labor market from 2001 to 2004...
In their 2004 Economic Report of the President, Greg and company made three points with respect to outsourcing, of which I count two and a half as likely correct:
J. Bradford DeLong on March 10, 2015 at 08:27 AM in Economics: Growth, Economics: Inequality, Information: Better Press Corps/Journamalism, Information: Internet, Moral Responsibility, Obama Administration, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Weblogs | Permalink | Comments (8)
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Live from The Roasterie: We see what Paul Gigot, Rupert Murdoch, and the rest of the Wall Street Journal are doing here:
They are saying to Anthony Kennedy and John Roberts: "You aren't going to let yourself be persuaded by some women, are you?"
Femina illustris Dahlia Remler:
The problem with the @WashingtonPost (and the @NYTimes) is that it sells itself as a trusted intermediary interested in informing you while it is actually focused on seizing your eyeballs so that it can sell them to advertisers...
It’s true that both papers have had financial problems and need eyeballs to sell to advertisers. But Brad is being a bit unfair.
Over at Equitable Growth: Last week I noted my wife Ann Marie's:
...a poster child for the clear articulation and active supervision standards required to determine whether an anticompetitive policy is indeed the policy of a given state, and entitled to immunity…. North Carolina’s Dental Board functioned more as a trade association with super powers granted to it by the state–apparently with an open-ended portfolio of responsibilities relating to dentistry in the state…. The dissent argues the delegation was valid.... READ MOAR
In their essay last fall on the state of economics, Seth Ackerman and Mike Beggs charged that today’s mainstream is irredeemably captured by conservative ideology. The good news is they’re wrong — Piketty’s work testiﬁes to that.
Josh Barro: Why Does Josh Barro Hate the Merely Affluent?: "I called out the ‘merely affluent’...
...people with family incomes of, say, $175,000--for pleading poverty and putting themselves off limits for tax increases. Comments on the article drew a lot of poverty pleas from merely affluent readers. Liz from Utah... Robert from New York... A reader from Queens....
Over at Equitable Growth: Excellent work from David Frum--reviewing even more excellent work from Adam Tooze.
Let's give David the floor:
Glaukon: So: Blogging...
Hypatia: I would like to start by offering the floor to the Great and Good Felix Salmon:
Felix Salmon: To All the Young Journalists Asking for Advice...: I’m also very flattered by the lovely things you said... about how you’d love to have a career in journalism... do[ing] the kind of thing... I do. You won’t.... By the time you’re my age... you’ll... be doing something... nobody today... foresee[s]....The obstacles facing you are much greater than anything I managed to overcome.... The exact same forces which are good for journalism and good for owners are the forces which are bad for journalists....
J. Bradford DeLong on March 04, 2015 at 12:52 PM in Economics: Information, Information: Internet, Long Form, Philosophy: Moral, Political Economy, Politics, Science: Cognitive, Streams: Economics, Streams: Highlighted, Streams: The Honest Broker, Web/Tech, Weblogs | Permalink | Comments (5)
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Over at Equitable Growth: Ezra Klein, one of the viri illustres making us hope that the press corps over the next generation will actually be a net plus to the nation (cough, Judy Miller of the New York Times; cough, Fred Hiatt of the Washington Post) has a good post that, I think, misses one important point:
Daily Economic History: From George Dangerfield: The Era of Good Feelings:
Indeed, when one attempts to restore [Chief Justice John Marshall] to the context of his times, it becomes exceedingly—difficult to separate the business—minded judge from the nationalist statesman.... In his decision on the case of Gibbons v. Ogden, Marshall struck down a steamboat monopoly, and did as much as any single man could do to make the steamboat free upon the western rivers; and the steamboat was not merely an essential factor in the development of the internal market, it was also the very symbol of democracy.... He gained much popularity from his decision, and he might have established the “dormant” power of the commerce clause—that is to say, its implicit veto upon state legislation—without too much disagreement from the rest of the Court. Instead, he merely suggested—and in terms that may have been deliberately confused—the existence of the dormant power.... “We must never forget,” he once said, “that it is a constitution we are expounding...” something organic, capable of growth, susceptible to change....
It is time for me to reedit and revise this before I give it again. How should it change? What does it say that no longer needs to be said? What does it not say that now needs to be said?
Zimbabwe!: Here is a piece of currency, a dollar bill. It is from Zimbabwe. It is for $100,000,000,000,000 Zimbabwean dollars.
J. Bradford DeLong on March 02, 2015 at 09:57 AM in Economics: Health, Economics: History, Economics: Macro, History, Long Form, Obama Administration, Political Economy, Politics, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Streams: The Honest Broker | Permalink | Comments (6)
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...but averting the prospect of unemployment getting too low, and encouraging the election of Republican presidents--see http://utip.gov.utexas.edu/papers/utip_42.pdf. (It would be good to update that paper with another ten years of data.) The phrase "executive committee of the bourgeoisie" comes to mind. To say it another way--this post, and those of our host's like it, seem far to close to saying: "If only the Little Fathers knew knew what was going on were more careful about their decision theory, they would set things right". And yet, as a wise man used to say often, the cossacks work for the Czar.
I do think it is more complicated than that...
...between income inequality and r − g and argue that r − g does not seem to have much impact on inequality. However, I do not find these regressions very convincing, for two main reasons.
Over at Equitable Growth: For the first time, we have a clue as to what Republican plans are for what to do with respect to health policy in the event of an anti-government Supreme Court decision in King v. Burwell. And the Republican plan of Nebraska Senator Ben Sasse is the same as the Democratic plan--override the Supreme Court. The difference is that the Democratic override would be permanent, while Sass is only proposing a temporary override. For now. READ MOAR
One of the things that was supposed to get done in January but didn't was a revision of this piece--it is now three years out-of-date, after all, and while it is still useful it is less useful than it was, or would be were I to properly review and update it. But it did not get done in January. It is not going to get done in February. So I am putting it up both as a useful (albeit somewhat out of date) resource, but primarily as a reproach to myself to get cracking on the revision in my copious spare time...
FEBRUARY 2012 VERSION: Budgeting and Macroeconomic Policy: A Primer
by J. Bradford DeLong
Budgeting and Macroeconomic Policy: A Primer
Socialism has demonstrated its right to victory, not on the pages of Das Kapital, but in an industrial arena comprising a sixth part of the earths surface--not in the language of dialectics, but in the language of steel, cement and electricity. Even if the Soviet Union, as a result of internal difficulties, external blows and the mistakes of leadership, were to collapse--which we firmly hope will not happen--there would remain an earnest of the future this indestructible fact, that thanks solely to a proletarian revolution a backward country has achieved in less than 10 years successes unexampled in history.
Right now, the financial markets are telling us that for the next 20 years at least they expect not a surplus but rather a shortage of federal debt.
The interest rates at which investors are willing to hold federal debt now and expect to hold federal debt in the future tell us that it is an extraordinary valuable asset
Those interest rates tell us that investors at least think the world economy would be better off with more federal debt than with less. READ MOAR
Over at Equitable Growth: I see that the femina spectabilis Diane Lim is a very unhappy camper:
...‘Critical investments’ and ‘shared prosperity’ are ‘in.’ Deficits are down to an economically sustainable range.... Our policymakers are no doubt relieved to take a break from having to talk about the hard stuff (spending cuts and tax increases) and getting to focus on the nice-sounding stuff (spending increases and tax cuts).... Dismissing fiscal responsibility as a socially irresponsible idea is irresponsible.... READ MOAR
I would still dearly love to see what this is a reply to.
But I don't think I ever will.
Which is, in itself, very very interesting: it suggests that whatever I imagine Hayek wrote to Thatcher, the reality is worse...
February 17, 1982
Thank you for your letter of 5 February. I was very glad that you able to attend the dinner so thoughtfully organized by Walter Salomon. It was not only a great pleasure for me, it was, as always, instructive and rewarding to hear your views on the great issues of our times.
I was aware of the remarkable success of the Chilean economy in reducing the share of Government expenditure substantially over the decade of the 70s. The progression from Allende's Socialism to the free enterprise capitalist economy of the 1980s is a striking example of economic reform from which we can learn many lessons.
However, I am sure you will agree that, in Britain with our democratic institutions and the need for a high degree of consent, some of the measures adopted in Chile are quite unacceptable. Our reform must be in line with our traditions and our Constitution. At times the process may seem painfully slow. But I am certain we shall achieve our reforms in our own way and in our own time. Then they will endure.
Over at Equitable Growth: I had always thought that dynamic scoring was a bad idea because it leads to a ratchet--Democrats when they are in power claim deficit reduction from a stronger economy if their policies are enacted , and then Republicans when they are in power claim deficit reduction from a stronger economy if they undo what the Democrats did. You have no chance of getting policy-effect forecasts that are unbiased on average if you allow the party in power to shape CBO's estimates of macroeconomic impacts.
The vir clarissimus Robert Lynch has a good look at all the other issues in this can of worms: READ MOAR