Brad DeLong

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.

Streaming live video by Ustream

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

Economic Policy: Saturday Twentieth Century Economic History Weblogging

Note well: the economy will not manage itself, at least not in a good way.

As John Maynard Keynes shrilly stated back in 1926:

Let us clear… the ground…. It is not true that individuals possess a prescriptive 'natural liberty' in their economic activities. There is no 'compact' conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened… individuals… promot[ing] their own ends are too ignorant or too weak to attain even these. Experience does not show that… social unit[s] are always less clear-sighted than [individuals] act[ing] separately. We [must] therefore settle… on its merits… "determin[ing] what the State ought to take upon itself to direct by the public wisdom, and what it ought to leave, with as little interference as possible, to individual exertion".

The management of economies by governments in the twentieth century was at best inept. And, as we have seen since 2007, little if anything has been durably learned about how to regulate the un-self-regulating market in order to maintain prosperity, or ensure opportunity, or produce substantial equality.

Ryan Avent: "Economics: The Ivory Fortress": Kauffman Foundation 2013 Economic Webloggers' Forum

Ryan Avent:

Economics: The ivory fortress: ONE of the more interesting responses to this week's Reinhart-Rogoff debate was this, from the economics blog Cheap Talk. "I Move That The AEA Stop Publishing Papers and Proceedings", the post title reads. Then: 

Non-peer reviewed, inaccessible data, and punditry that can’t tell the difference between P&P and a regular AER article can’t be good for the reputation of the journal, the AEA, or the profession.

Europe Fails to Learn the Lessons of History: Notes on Political Union for Barry Eichengreen's "Future of the Euro" Conference, as Delivered

What is the best place to start?

The problem is I really have four starting points, or perhaps I have five starting points--fear, surprise, ruthless efficiency, etc….

First, I would have to be even more rash than Charles le Temeraire, last duke of sovereign Burgundy, to opine about classical Dutch history with Jan de Vries in the room, but let me do so to point out that this session's topic, "political union", is a vague and sketchy concept. The political union of the strongest power in 17th century Europe, the seven United Provinces of the Netherlands, was made up of the components. First, there was a talk shop in the Hague--which had rather less power than is currently assembled in Brussels and Strasbourg. Second, the same guy, the Prince of Orange, was nearly always the stadthouder, the chief executive, of all seven provinces. Third, one of the provinces, Holland, was 60% of the total, and so if consensus was not reached could threaten to go it alone and do what was necessary--but when it did so take down names and have a long memory of who had played ball and who had not.

"Austerity" in the Context of the Global Economic Downturn: Wednesday Hoisted from Archives from Two Years Ago Weblogging

Brad DeLong: Friday February 18, 2011: Let me speak as a card-carrying neoliberal, as a bipartisan technocrat, as a mainstream neoclassical macroeconomist--a student of Larry Summers and Peter Temin and Charlie Kindleberger and Barry Eichengreen and Olivier Blanchard and many others.

We put to one side issues of long-run economic growth and of income and wealth distribution, and narrow our focus to the business cycle--to these grand mal seizures of high unemployment that industrial market economies have been suffering from since at least 1825. Such episodes are bad for everybody--bad for workers who lose their jobs, bad for entrepreneurs and equity holders who lose their profits, bad for governments that lose their tax revenue, and bad for bondholders who see debts owed them go unpaid as a result of bankruptcy. Such episodes are best avoided.

From my perspective, the technocratic economists by 1829 had figured out why these semi-periodic grand mal seizures happened. In 1829 Jean-Baptiste Say published his Cours Complet d'Economie Politique… in which he implicitly admitted that Thomas Robert Malthus had been at least partly right in his assertions that an economy could suffer from at least a temporary and disequliibrium "general glut" of commodities. In 1829 John Stuart Mill wrote that one of what was to appear as his Essays on Unsettled Questions in Political Economy in which he put his finger on the mechanism of depression.

The Future of the Euro: Lessons from History: U.C. Berkeley: Men's Faculty Club: Heyns Room: April 16, 2013

http://eurofuture2013.wordpress.com

Download 20130416 Brad DeLong "Future of the Euro" Eichengreen Conference Talk

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DRAFT: The 1919-1939 interwar period taught us four lessons:

1. In order for the world economy to be prosperous, adjustment to macroeconomic disequilibrium needs to be undertaken by both "surplus" and "deficit" economies--not by "deficit" economies alone.

2. If the world economy is to have any chance of avoiding or limiting crises, an integrated banking system requires an integrated bank regulator and supervisor.

3. In order for crises to be successfully managed, the lender of last resort must truly be a lender of last resort: it must create whatever asset the market thinks is the safest in the economy, and must be able to do so in whatever quantity the market demands.

4. In order for any monetary union or fixed exchange rate system larger than an optimum currency area to survive, it must be willing to undertake large-scale fiscal transfers to compensate for the exchange rate movements to rapidly shift inter-regional terms of trade that it prohibits.

I, at least, thought that everybody--or everybody who mattered in governing the world economy--had learned these four lessons that 1919-1939 had so cruelly taught us. Now it turns out that the dukes and duchesses of Eurovia had, in fact, learned none of them. History taught the lesson. But while history was teaching the lesson, the princes and princesses of Eurovia and their advisors were looking out the window and gossiping on Facebook.

Weblogging, Policy Analysis, and Policy Advocacy: Kauffman Foundation 2013 Economic Webloggers' Forum

Panel discussion – Economic and Financial Weblogging, Thinktanks and Policy Advocacy, and the Public Sphere (Panel: Stan Collender; Brink Lindsey; Sarah Kliff; Moderator: Corey Dillon)

Paul Krugman: Europhilia, Euromania, Eurocrisis

Paul Krugman:

Tim Duy asks, when can we all admit that the euro is a failure? The answer, of course, is never. Too much history, too many declarations, too much ego is invested…. Even if the project ends in total disaster, they will insist that the euro didn’t fail Europe, Europe failed the euro.

But it it occurs to me that it might be a good idea for me to recapitulate my view of what really ails Europe, and what could yet be done.

Macroeconomic Overview Talk for UMKC MBA Students (April 1, 2013)

20130401 Macro Outlook.pdf | 20130401 Macro Outlook.ppt | 8500 words

This year I am on sabbatical--which means I do not teach. And I do miss it. Thus, from my perspective at least, this next hour is going to be an hour of pure fun.

I hope it will be an hour of pure fun for you all as well.

As Bob Strom said, right now in this MBA class you are transitioning from studying micro to studying macroeconomics. You are moving away from studying that part of economics where you talk about how the market system works well: how supply balances demand to make the maximum possible amount and value of win-win deals, and how people respond to the incentives they’re given to change their behavior. To the extent that things go wrong in microeconomics--to the extent that when you step back and look at the situation you say "Geewillickers! I really wish this had not happened!"--it is because you wish that you or the market system had not given people the incentives that it in fact did.

It's the Seventieth Anniversary of Abba Lerner's "Functional Finance"…

I (or somebody) should run a history of economic thought conference to celebrate the seventieth anniversary of Abba Lerner's "Functional Finance" in the fall…

Milton Friedman on Abba Lerner:

Milton Friedman and Rose Friedman, Two Lucky People: We were affected very differently by the Keynesian revolution—Lerner becoming an enthusiastic convert and one of the most effective expositors and interpreters of Keynes, I remaining largely unaffected and if anything somewhat hostile….

Lerner was trained at the London School of Economics, where the dominant view was that the depression was an inevitable result of the prior boom, that it was deepened by the attempts to prevent prices and wages from falling and firms from going bankrupt, that the monetary authorities had brought on the depression by inflationary policies before the crash and had prolonged it by “easy money” policies thereafter; that the only sound policy was to let the depression run its course, bring down money costs, and eliminate weak and unsound firms.

Evan Soltas: The Anecdote Gap: Kauffman Foundation 2013 Economic Webloggers' Forum

Evan Soltas:

The Anecdote Gap: U.S. Senator Jerry Moran opened the Kauffman Foundation's Annual Economic Bloggers Forum with a short video address. And how he did so captured a critical gap between politics and policymaking.

Moran told the story of Asaf Darash, an Israeli entrepreneur who wanted to found a tech startup in the United States. When the entrepreneur did not receive a visa, Moran said, he was forced to relocate his business and his jobs to Israel. The story of this entrepreneur makes the case for high-skilled immigration reform, he said.

Productivity: Saturday Twentieth Century Economic History Weblogging

The twentieth century saw the material wealth of humankind explode beyond all previous imagining: we—at least those of us who belong to the upper middle class and live in the industrial core of the world economy—are now far richer than the writers of previous centuries’ utopias could imagine. The eighteenth and nineteenth centuries saw, for the first time, productive capability outran population growth and natural resource scarcity. By the last quarter of the nineteenth century, the average inhabitant of a leading economies—a Briton, a Belgian, a Dutchman, an American, a Canadian, or an Australian—had perhaps twice the material wealth and standard of living of the typical inhabitant of a pre-industrial economy. The standards of living of the bulk of the population underwent a substantial, sustained, and unreversed rise in the eighteenth and nineteenth centuries for perhaps the first time in a thousand, if not in seven thousand years.

Seven Themes: Saturday Twentieth Century Economic History Weblogging

Survey history courses in 2500—if they even have universities—will have at most one single week to spend on the twentieth century. In that one single week, teachers will focus on economic, and technological, and secondarily political and social history as they try to hastily and cursorily make seven points:

(1) Twentieth-centiury history was overwhelmingly economic history: the economy was the dominant arena of events and change, and economic changes were the driving force behind other changes in a way rarely—if ever—seen before.

The Beacon: Jobs Now!: Friday April 12, 2013: 8:00 PM CDT

Bill Black, Brad DeLong, Stephanie Kelton, Mike Konczal, Karl Smith, Steve Randy Waldmann:

The Beacon, The Monk's Loft: 5031 Main St., Kansas City, MO, Phone: 816-960-4646, Email: thebeacontavern@gmail.com

Bill Janeway: The Two Innovation Economies

Followers and leaders, known knowns and unknown unknowns:

The Two Innovation Economies by William Janeway: For 250 years, technological innovation has driven economic development. But the economics of innovation are very different for those at the frontier versus those who are followers striving to catch up. At the frontier, the innovation economy begins with discovery and culminates in speculation… progress has been achieved through trial and error. The strategic technologies that have repeatedly transformed the market economy – from railroads to the Internet – required the construction of networks whose value in use could not be known when they were first deployed.

?-Rated Economists Thursday Weblogging: Did James Buchanan Live in the Twentieth Century at All?

An economist deeply focused on public policy and politics. A Virginian living in the twentieth century. And yet as I scan through his collected works…

There are two references to "Lyndon Johnson"--one to his refusal to follow his economic advisors' advice to shrink aggregate demand in 1967-8, and a second to "the redistributionist zeal of Lyndon Johnson's 'Great Society'…"

There is one reference to "voting rights" advocating the removal of the franchise from public employees:

There are two references to "African", both of them citations to G.F. Thirby in the South African Journal of Economics:

And there are 29 references to "black"--28 of them references to Duncan Black, author of The Theory of Committees and Elections, and one a reference to black ink on white paper:

My mind is officially blown...

The Hoover Administration Was "Liquidationist"; Hoover Himself Was Merely Anti-Keynesian

It is very important to note that Herbert Hoover in his Memoirs is an unreliable narrator, magnifying his differences with those upon whom he seeks to cast blame--not only their fair share of blame but his share as well--for the disaster of the Great Depression.

LK:

Social Democracy for the 21st Century: A Post Keynesian Perspective: Herbert Hoover Rejected Keynesianism: And he tells us explicitly that he did so in a speech in October 1936, when describing his time as president, recently cited by Daniel Kuehn in a really excellent post here. I cite the full quotation below:

During my four years powerful groups thundered at the White House with these same ideas [i.e., the ideas of Roosevelt’s New Deal – LK]. Some were honest, some promising votes, most of them threatening reprisals, and all of them yelling ‘reactionary’ at us.

The Use and Abuse of Monetary History

Barry Eichengreen at Project Syndicate:

The Use and Abuse of Monetary History: Imagine two central banks. One is hyperactive, responding aggressively to events. While it certainly cannot be accused of ignoring current developments, its policies are widely criticized as storing up problems for the future. The other central bank is unflappable. It remains calm in the face of events, seeking at all cost to avoid doing anything that might be construed as encouraging excessive risk-taking or creating even a whiff of inflation…. It is, in fact, a capsule depiction of the United States Federal Reserve and the European Central Bank.

Would Tom Slee Be a Good Counterbalance to *Free to Choose* When Next I Teach "Principles of Economics"?: Monday Question Weblogging

• Tom Slee: No One Makes You Shop at Wal-Mart: The Surprising Deceptions of Individual Choice

Yes, George Orwell Is a Good "Plutarch's Lives" Partner for Tony Judt...

…not least because Eric Blair's various authorial personas and Eric Blair himself was a much more devious operator than was Orwell's self-presentation and the presentation of him his fans today make. Totally successful. Astonishingly right. But not quite the bluff, honest English truth-teller…

Geoffrey Wheatcroft has a very nice piece:

Buce on the Terrifying Map of Increasing Female Mortality in Red America

Underbelly: Red Counties: More on How the Poor Live:

[T]he Wichita Bureau updates on life in the trackless void that is Western Kansas:

KS counties in red are mostly what you’d expect – the odd part is NW Ks – where the main industry is I-70 (hotels, fleecing hunters and the only Starbucks in that corner of KS; we stayed in a motel out there on the way back from a trip to Denver – and each room has a sign warning against cleaning pheasants in the bathroom sink – they point out that there is a special area behind the motel for THAT). There are three little towns out there that are holding their own – but apparently not in healthcare. The two red counties in SE KS are quite familiar: Greenwood where we had a second home for years and Elk, the poorest county in the state, supposedly. Both are dominated by big land owners – ranchers and oil guys. the Koch family owns at least 5000 acres of prime grass land. I suspect they own the commission. Greenwood has a small county hospital (that mainly packages people up for the helicopter ride to Wichita) with a decent number of doctors – mostly DO’s and foreigners. There is absolutely no industry – and damn few restaurants. About the only significant employers are the county, school system and a cluster of nursing homes supported by Medicaire/Kancare…

Tyrannies: Saturday Twentieth Century Economic History Weblogging

The twentieth century’s tyrannies were more brutal and more barbaric than those of any previous age. And—astonishingly—they had their origins in economic discontents and economic ideologies. People killed each other in large numbers over questions of how the economy should be organized, which had not been a major source of massacre in previous centuries.

Twentieth-Century governments and their soldiers have killed perhaps forty million people in war: either soldiers (most of them unlucky enough to have been drafted into the mass armies of the twentieth century) or civilians killed in the course of what could be called military operations.

Why People Think I Am So Smart: Medicaid Expansion Edition

People think I am smart and know a lot about health care reform because I can ask Ann Marie Marciarille questions about health care finance, regulation, quality, and liability 24/7. I can.

Here she is last June explaining what has been happening for the last nine months with Medicaid...

The Future of the Euro: Lessons from History

Program | Future of the Euro: Lessons from History: A Conference at UC Berkeley | April 15-16, 2013:

April 15, 2013: 5 p.m. Keynote and Reception

• Welcome: Anton Fink, Partner and Managing Director, Dale Investment Advisors and Trustee, Marshall Plan Memorial Foundation

• How to Correct the Design Failures of the Euro Area: Helene Schuberth, Senior Advisor, Austrian National Bank

April 16, 2013: 8:30 a.m. Welcome

• Introduction: Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Professor of Political Science, UC Berkeley

9:00 a.m. Political Union

• Chair: Dieter Stiefel, Professor Emeritus for Social and Economic History, University of Vienna

• Benjamin Jerry Cohen, Louis G. Lancaster Professor of International Political Economy, UC Santa Barbara

• Harold James, Professor of History and International Affairs, Princeton University, and Professor of History, European University Institute Florence

• J. Bradford DeLong, Professor of Economics and Chair of the Political Economy of Industrial Societies major, UC Berkeley

10:45 a.m. Coffee and Refreshments