Live from Nineteenth-Century London: John Stuart Mill (1848, 1871): Principles of Political Economy: "Hitherto it is questionable if all the mechanical inventions yet made have lightened the day's toil of any human being...
Live from Nineteenth-Century London: John Stuart Mill (1848, 1871): Principles of Political Economy: "Hitherto it is questionable if all the mechanical inventions yet made have lightened the day's toil of any human being...
Q: Have BREXIT and Trump increased the probability of a breakup of the eurozone?
That Britain voted for BREXIT, even under the false pretense of an extra 350 million pounds a week for the health service, is a strong indication that the tide of globalization and integration is not irresistible. That Americans... well, Americans did not vote for Trump--they voted for Clinton. That the quirks of the electoral college have made Trump president-elect is a strong indication that the tide of globalization and integration is not irresistible.
Note to Self: If we want to have a better world, we either need to change the politics to restore the stabilization policy mission to fiscal authorities--and somehow provide them with the technocratic competence to carry out that mission--or give additional powers to central banks, powers that we classify or used to classify as being to a degree "fiscal".
I must take exception to something said earlier today by the very sharp Neville Morley:
Neville Morley: When It Changed: "Unless you do assume that one strand of historical development...
...changes in productivity, or technology, or ideology--is determinative of all the others, then there’s no particular reason to assume that everything will change according to the same chronological pattern...
I think he has gone wrong here. In the past--even in the first half of the nineteenth century--the assumption that there was one principal engine driving the belts and powering the orreries of history was just that: an assumption, and a simplifying and probably badly chosen assumption.
But for the past hundred and fifty years things have been different.
In the "long" twentieth century the pace of economic transformation has been so great as to force nearly every other aspect of history to respond according to the same chronological pattern.
Betty Cracker: Update on Faces vs. Leopards: "This is one of my favorite tweets from the post-election period:
...Via TPM, we now have a (metaphorically eaten) face and name to attach to that sentiment:
The unwillingness of David Brooks of the New York Times) and his ilk to tell their readers that Barack Obama was the centrist president they were looking for is one of the reasons we are in this mess--and one reason why, I think, David Brooks's career is now over:
Jonathan Chait: David Brooks and the Intellectual Collapse of the Center: "Of all the failures that have led to the historical disaster of the Trump presidency, perhaps the least-remarked-upon is the abdication of responsibility of the American center.
Ah. I see that you have found the first draft of my opening lecture for Econ 115 next semester... https://twitter.com/BrankoMilan/status/804205835543019520 https://t.co/lK82RVQudb
I think whether it is more useful to do the tell of 20th century economic history as the "short" 1914-1989 (as Hobsbswm does) or the "long" 1870-2012 (as I want to) rests on two analytical judgments:
Project Syndicate: Missing the Economic Big Picture: BERKELEY – I recently heard former World Trade Organization Director-General Pascal Lamy paraphrasing a classic Buddhist proverb, wherein China’s Sixth Buddhist Patriarch Huineng tells the nun Wu Jincang: “When the philosopher points at the moon, the fool looks at the finger.” Lamy added that, “Market capitalism is the moon. Globalization is the finger.” With anti-globalization sentiment now on the rise throughout the West, this has been quite a year for finger-watching... Read MOAR at Project Syndicate
Democracy Must Be Irresponsible: So Responsible Governance Must Be Undemocratic
When is responsible democratic governance possible? Our classical predecessors would have given a simple answer: never.
Thoukydides: The Mytilene Debate (427 B.C.): "The Athenians... in the fury of the moment determined to put to death not only the [Mytilenean] prisoners at Athens, but the whole adult male population of Mitylene, and to make slaves of the women and children...
Good Riddance to Fidel Castro!: Fidel Castro has retired. Good riddance!!
That the Lenin-Trotsky-Stalin Authoritarian Project of which Fidel Castro was the next-to-last exemplar was not an advance toward but a retreat from a better world was obvious long, long ago. Quite early--Kronstadt?--it was clear to all save the dead-enders that the project was a mistake.
As Rosa Luxemburg wrote in "The Russian Revolution":
November 26, 2016 at 06:32 AM in Economics: Growth, Economics: History, Economics: Inequality, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (6)
Ana Navarro: @ananavarro: "Why Miami celebrating? Ppl like my friend, Claudia Puig. Her dad killed by a Castro firing squad. Her uncle was a political prisoner 25 yrs."
Sean Carroll: @seanmcarroll: “'Universal health care' and 'other countries were worse' don’t make Castro worth celebrating. Repressive dictatorships are bad."
Adrian Monck: @amonck: "Channelling Public Enemy on Elvis:"
Stefan Leifert: @StefanLeifert: "Jean-Claude Juncker: 'With the death of Fidel Castro, the world has lost a man who was a hero for many'."
For all of our stooges searching for a Stalin, half-wits hailing a Hitler, morons marching for a Mussolini, and clowns craving a Castro this morning. A suitable epitaph for Fidel Castro, from Gabriel Garcia Marquez:
A vast bureaucratic incompetence affecting almost every realm of daily life, especially domestic happiness... has forced Fidel Castro himself, almost thirty years after victory, to involve himself personally in such extraordinary matters as how bread is made and the distribution of beer...
Jacobo Timmerman (1990): A Summer in the Revolution: 1987: "When I read one of Gabriel Carcia Marquez's essays on the Commandante [Fidel Castro], I was remind of paeans to Stalin...
November 26, 2016 at 06:02 AM in Economics: Growth, Economics: History, Economics: Inequality, Funny, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (1)
For all of our stooges searching for a Stalin, half-wits hailing a Hitler, morons marching for a Mussolini, and clowns craving a Castro this morning:
Jaybird: Vladimir, Joseph, and Zedong:
Has anybody here seen my old friend Vladimir?
Can you tell me where he’s gone?
He freed a lot of people,
But it seems the good they die young.
You know, I just looked around and he’s gone.
AP: Fidel Castro Dead at 90: "HAVANA (AP) — Cuban President Raul Castro has announced the death of his brother Fidel Castro on Cuban state media. Fidel Castro was 90 years old..."
Some teabaggers like Augusto Pinochet. Some herbal teabagger liked Fidel Castro. Peas in a pod:
Alexander Hamilton: The Federalist Papers: No. 9: "To the People of the State of New York:
A FIRM Union will be of the utmost moment to the peace and liberty of the States, as a barrier against domestic faction and insurrection. It is impossible to read the history of the petty republics of Greece and Italy without feeling sensations of horror and disgust at the distractions with which they were continually agitated, and at the rapid succession of revolutions by which they were kept in a state of perpetual vibration between the extremes of tyranny and anarchy.
Note to Self: Was it Mary Beard who said that, much as she loved to read Tacitus and Suetonius, it was implausible that all the good emperors were those who died in their beds and were followed by their chosen successors no matter how many senators they had killed or poets they had exiled, while all the bad emperors were those who had been assassinated? Were no good emperors ever assassinated? Did no bad emperors ever die in their beds? Thus she tends toward structural rather than accident- or personality-based history...
Q: How hard will it be for Trump to produce jobs for the people he promised he would?
A: Fiscal expansion might rescue Trump by creating a high-pressure economy, if we are still far from full employment. Otherwise...
Bad trade deals are not the reason for the decline in American manufacturing employment and the stagnation of earnings outside the 10%.
Hoisted from the Archives: 470 years ago, in 1543, King Henry VIII Tudor of England married his sixth and last wife, Katherine Parr. He also:
A busy king, for one so sick and mad.
There are, broadly speaking, three kinds of American patriotism. There is Kentucky, which is the standard ethno-linguistic nationalism of soil and blood (think: age of Andrew Jackson). There is Virginia, which is a peculiar form of libertarianism-of-adoption: "we" have come here so that nobody else can boss "us" or those we adopt to become "us" around (think: Thomas Jefferson). And there is New England, which is the utopian nationalism of election: those who elect to come here and help "us" to build utopia are "us", and are very welcome as long as they commit to building the City Upon a Hill.
To no one's surprise, I like the third kind. And here is its root, in John Winthrop's Arabella Sermon:
John Winthrop: From "A Model of Christian Charity": "We are entered into covenant with Him for this work...
The best thing I have seen on the mess that America has now gotten itself into:
Luigi Zingales: The Right Way to Resist Trump: Five years ago, I warned about the risk of a Donald J. Trump presidency. Most people laughed...
They thought it inconceivable. I was not particularly prescient; I come from Italy, and I had already seen this movie, starring Silvio Berlusconi, who led the Italian government as prime minister for a total of nine years between 1994 and 2011. I knew how it could unfold.
Note to Self: Regulatory Uncertainty and Housing Finance: The U.S. Treasury seized Fannie and Freddie in 2008, and said that housing finance would be differently organized in the future.
When I was working in the Treasury in 1993-5, I was struck by how much it was the case that President Bill Clinton was still the ex-Governor of Arkansas. Thus arguments that would have been powerful and important when directed at a Governor of Arkansas still resonated in his mind. Moreover, it seemed to me that they resonated much more strongly than they perhaps should have, given that he was now not Governor of Arkansas but President of the United States, if they were evaluated purely on technocratic grounds.
Diane Coyle: The Trade-Investment-Service-Intellectual Property Nexus: "I’ve managed to resist reviewing Richard Baldwin’s new book The Great Convergence: information technology, trade and the new globalization until now...
J. Bradford DeLong :: U.C. Berkeley, NBER, and WCEG :: November 17, 2016 :: PIIE
We are highly unlikely to have any—not for the next two years, and probably not for the next four years. Thus the talk I had prepared and the powerpoint I had drawn up two weeks ago are now totally irrelevant.
Neville Morley: Vicarious Virtue: "The seminar text for my Roman History course over the last fortnight has been the opening of the third book of Varro’s Rerum Rusticarum...
Let me distinguish between:
Supervulgar Trumpism: Donald Trump will return manufacturing employment to 24% of the nonfarm labor force.
Vulgar Trumpism: Donald Trump will renegotiate NAFTA and China's accession to the WTO. We will not get all or even most of the manufacturing jobs back, but the industries and the communities will be healthy.
Semi-intelligent Trumpism: The U.S. ought to be a high savings capital and manufactures exporting country, like Germany and Japan. Bad macro and trade policies--the Reagan and Bush 43 deficits, keeping the strong dollar policy long past its sell-by date, prioritizing finance over manufacturing--accelerated the decline of manufacturing employment well beyond its proper technology driven pace and eroded our valuable communities of engineering practice.
Note to Self: Why Donald Trump's attempt to make trade policy his arena for rescuing America's white want-to-be-blue-collar workers will fail:
Brad DeLong started by alluding to Indian philosophy. I will start with Chinese: The philosopher says: 'When the wise man points at the moon, the fool looks at the finger'. Market capitalism is the moon. Globalization is the finger...
Whether you think the problem with market capitalism is income stagnation coupled with in adequate social insurance on the one hand, or a Polanyian disruption of expected life paths and chances on the other, Pascal Lamy is right in saying that it is a problem with market capitalism, not with trade and globalization.
Weekend Reading: The problem with this from the extremely smart and thoughtful Izabella Kaminska's argument here is that people pay for the New York Times--and they got Judy Miller, Whitewater!, and Emails!. People pay for the Washinton Post, and get Fred Hiatt--plus get told that Stanley Kaplan University is wonderful, and that Clarice Starling and Eliot Ness established the high reputation of the FBI. In pay-for journalism you may be the customer rather than the product, but that does not get you far enough:
Izabella Kaminska: Facebook and the manufacture of consent: "As to... what’s really wrong with the media, the simple adage that you get what you pay for and that if it’s free you are the product is... insightful...
...If you pay peanuts, you will get poorly balanced, poorly verified, poorly sourced and poorly scrutinised news. And if you condone the mass distribution of free news and normalise it by calling it a “business model” or an “eco-system” you will fan the propaganda war rather than abate it. Don’t make Facebook and Google filter fake news. If you value truly balanced and verified news; if you value comment which scrutinises vested interests, business models or government policy; or if you value being confronted by views which are different from your own but still well argued, pay for the news, don’t just get it from Facebook....
Benedict Anderson's (1983) Imagined Communities is a great book--but great at posing the problem of why political action and agency went to the ethno-linguistic nation and not to the class, not great at finding a solution to the problem...
**Ernest Gellner's also 1983 Nations and Nationalism is a much better place to start...
Should we expect 2017 to be different than 2016 as far as global economic growth is concerned?
As Gian-Maria Milesi-Ferreti said yesterday, it surely ought to be better because it will be unlikely to be as bad as 2016 was for Russia, Nigeria, South Africa, and Brazil. The anti-productivity shock of BREXIT will not have hit the world economy yet, and Mark Carney and company have managed to drop the pound enough that Britain looks likely to see expenditure-switching rather than expenditure-dropping as people readjust their plans as they wonder what the end of the BREXIT imbroglio will be.
Whether Thomas Jefferson's vision of the future of America was coherent was unclear then and remains unclear now.
Jefferson, like most of his founding-father contemporaries, was steeped in one version of classical history: Roman history as a morality play. Jefferson and many, many of his revolutionary peers assumed that yeoman farmers--Cincinnati--were the only possible social class that could maintain a free republic. They all believed that Rome was a great, free Republic because of its fiercely-independent farmers who nevertheless loved their city and would--like Cincinnatus--drop their ploughs and instantly take up their swords to defend (and conquer), and then return to their ploughs after the war was over.
November 14, 2016 at 11:34 PM in Economics: Growth, Economics: History, History, Moral Responsibility, Philosophy: Moral, Political Economy, Politics, Streams: (Wednesday) Economic History, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (31)
Fiscal expansion now is really a no-brainer:
What's the downside?
Must-Read: I would add Mongkut and Chulalongkorn in Thailand, and Mohammed Ali in Egypt, to Pseudoerasmus's list here...
In a good world, this would be not a blogpost but a symposium. This would be a conference. Admittedly, since Pseudoerasmus is and probably must remain anonymous, he/she would have to teleconference in her/his disguised-voice avatar:
Pseudoerasmus: State Capacity & the Sino-Japanese Divergence: "Why China did not industrialise before Western Europe may be a tantalising and irresistible subject, but frankly it’s a parlour game...
...What remains underexplored, however, is the more tractable issue of why Japan managed, but China failed, to initiate an early transition to modern growth and convergence with the West. A recent paper argues that the gap in state capacity between Qing China and Tokugawa Japan was responsible for the divergence.
Please note, this blogpost disputes that argument:
Joachim Voth: Differences and Similarities: Trump and Hitler: "Here is my attempt to think through the troubling parallels with 1933...
...Trump is no Hitler, and history doesn't repeat itself.... [But] this is my small checklist of things that look, broadly speaking, similar - and those that do not:
Must-Read: The divide between Democrats and Republicans in the United States in 2016 is best conceptualized as a divide between those who think that an America in which black, brown, yellow, red, etc. people vote is great and in which they have a great deal to gain and those who think that an America in which black, brown, yellow, red, etc. people vote is no longer great and in which they have something--maybe not a great deal, but something--to lose:
Francis Wilkinson: [Race, Not Class, Dictates Republican Future]: "The class compositions of the Republican and Democratic parties keep evolving...
Stephen Cohen and J. Bradford DeLong (2016): Concrete Economics: The Hamilton Approach to Economic Policy (Cambridge: Harvard University Press) http://amzn.to/2fJnSEe | Keynote
Must-Read: Philip Stephens: America Can Survive Trump. Not so the West: "History can veer off course... in 1914... the first age of globalisation was consumed in the flames of the Great War... [in] the 1930s when economic hardship, protectionism and nationalism nurtured the rise of fascism...
Must-Read: As I said yesterday, President-elect Trump is probably a Schwarzenegger--in which case the next four years will see for the most part a loss of opportunity to make America greater, which is a disappointment but not a total disaster. Trump is perhaps a Berlusconi--which would be a disaster: think of the damage Berlusconi's bunga-bunga rent-seeking rule did to Italy. And Trump is highly unlikely to be a Mussolini.
But there are Mussolinis out there, and worse. And, as Ezra Klein notes, the rise of Trump reveals that our political system is frighteningly vulnerable to them:
Ezra Klein: Donald Trump’s Success Reveals a Frightening Weakness in American Democracy: "The belief that Trump is a predictable reaction to acute economic duress crumbled before the finding that his primary voters had a median household income of $72,000 — well above both the national average and that of Clinton supporters...
Must-Read: This by Josh Barro was, I think, the best take on what the 2016 presidential election was really about: telling it like it is. I do, however, have several caveats:
Josh Barro's analysis is correct only for high-information Trump voters. For low-information Trump voters, the calculus is: "Gee, there's more of an uproar in the media about this election! Maybe it's because of social changes produced by the internet? Whatever, I'm a Republican, and the Republican convention nominated Trump, and the Republican establishment says to vote for Trump. So I will vote for Trump." Things aren't as dire about all--or most--of those of our fellow citizens who pull the lever for Trump as Barro believes. There is a weak duty not to be a low-information voter, but not a strong duty not to be one.
A great many high-information voters who usually vote Republican are not voting for Trump. That is, I think, a good sign.
Where the news is much worse than Barro says is with respect to the Republican establishment that has fallen in line behind Trump. That is a very worrisome problem for the future, whatever the next four years bring us.
Josh Barro: Final Thoughts on 2016: "The core question of the 2016 election is stupidly simple...
Must-Read: If "fascist" means anything, it means somebody who claims to be a strong leader who will (a) solve problems, (b) eliminate the cretinism of parliaments, and (c) identify the enemies of the people--internal and external--and deal with them harshly. If you want to say that "fascism" proper is a disease of the twentieth century, and that the twenty-first century has "neo-fascism", I will not complain:
Gideon Rachman: Is Donald Trump a Fascist?: "Labeling a politician a fascist is not usually helpful...
Well, that was a very interesting election night...
Our failure in 2000 to introduce into the running code (as opposed to the specification document) of our constitution that electors switch votes so that the national popular vote winner wins the electoral college cost us dear in 2000, and may cost us even more today...
You may ask: How is one to judge what to do in such times? The answer is clear: As one has ever judged. Good and evil have not changed since yesteryear, nor are they one thing among Elves and another among Men. It is a human's part to discern them, as much in the Golden Wood as in his own house. What would have been good policy yesterday would still be good policy today. What would have been bad policy yesterday would still be bad policy today. So we play our position.
I therefore set forth seven principles that should govern good technocratic fiscal policies that promise to enhance America's societal well-being :
Must-Read: Why I reacted badly to journalists who asked me to analyze Trump's economic plans. The first, last, and only correct thing to say was that there never was any coherent plan. To say anything else was to try to normalize the unnormalizable. Everyone who wrote as if there was a plan should be deeply ashamed of themselves.
Here Alan Cole gets it... less wrong than most. He is still trying to normalize the unnormalizable. But he is honest about how difficult it was for him to attempt the task:
Alan Cole: _On Twitter: "This is my 407th (and, I expect, final) day covering Donald Trump's tax proposals for @taxfoundation...
...Here's what we've learned:
I endorse this:
[Scholars' letter of support for Ricardo Hausmann]:
We the undersigned write to express our dismay at Venezuelan president Nicolás Maduro’s repeated targeting of our colleague Ricardo Hausmann and to express our support for Professor Hausmann.
I'm going to call this debate--from six and four years ago--for me. I do think I was right then. But even were I to concede that I was not right then about what "economics" was in its essence, I believe I can convincingly make the case that I am correct now:
November 07, 2016 at 01:11 PM in Economics: History, History, Long Form, Philosophy: Moral, Political Economy, Politics, Streams: (BiWeekly) Honest Broker, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (3)
Here I believe Noah Smith is incomplete when he claims:
Everyone is born with an endowment of Asskickery. The state monopoly on the use of force is simply a government redistribution of Asskickery. Libertarians, of course, should realize this.
The state monopoly on the use of force is not just a redistribution of the endowment of Asskickery. It is also a revelation of who has how much of it. When the amount of Asskickery with which individuals are endowed is hidden, the requirements of the Coase Theorem are not met, and so bargaining costs keep the economy from attaining a Pareto optimum.
For example, in twelfth-century Ireland, the distribution of Asskickery among Richard "Strongbow" de Clare, Diarmait Mac Murchada, and Ruaidrí Ua Conchobair was uncertain. Richard and Diarmait could reduce their bargaining costs to zero by aligning their interests via the marriage of Diarmait's daughter Aoife to Richard (shown below). But there remained the bargaining costs between Richard and Diarmait on the one hand and Ruaidrí on the other (also shown below), which were very large and very dissipative indeed. Not a Pareto-optimal outcome in the least:
Curiously enough, if you websurf to the National Gallery of Ireland, its website focus on only a small portion of "The Marriage of Strongbow and Aoife":
Must-Read: Noah Smith: Cosma Shalizi Argues That Adam Smith Is Not a Real Economist Edition: "Everyone is born with an endowment of Asskickery...
...The state monopoly on the use of force is simply a government redistribution of Asskickery. Libertarians, of course, should realize this.
Simon Wren-Lewis: Ann Pettifor on mainstream economics: "Ann has a article that talks about the underlying factor behind the Brexit vote...
...Her thesis, that it represents the discontent of those left behind by globalisation, has been put forward by others. Unlike Brad DeLong, I have few problems with seeing this as a contributing factor to Brexit, because it is backed up by evidence, but like Brad DeLong I doubt it generalises to other countries...
"I now know it is a rising, not a setting, sun" --Benjamin Franklin, 1787