An Article IV consultation for a reserve-currency sovereign that might actually matter:
Osborne braced for IMF verdict on UK economy: George Osborne is braced for the International Monetary Fund's verdict on Britain's economic prospects amid speculation it will urge him to change course. On Wednesday, the IMF presents its annual healthcheck on the UK and the international body is expected to suggest that deficit reduction should be slowed amid anaemic growth. The “Article IV” report is expected to recommend Mr Osborne change his plans and borrow more to invest in infrastructure or cut taxes. Previously, the IMF was among the strongest backers of the Chancellor's economic strategy, but has gradually changed its tone in response to dwindling growth forecasts.
Is the future of American health care in Oregon?: Two weeks ago, the group reported… that Medicaid coverage increased the amount of health care people used, offered almost total protection against catastrophic health expenses and reduced depression by 30 percent, but it didn’t show a statistically significant effect on blood pressure, cholesterol or blood sugar…. The sample of sick people was too small to show statistically significant improvements in those measures…. It’s a critique that Katherine Baicker, a Harvard health economist who was one of the principle authors of the study, partially accepts:
Our power to detect changes in health was limited by the relatively small numbers of patients with these conditions. Indeed, the only condition in which we detected improvements was depression, which was by far the most prevalent of the four conditions examined.
She also noted that the diabetes results were consistent with the improvements one would expect from the clinical literature but the number of people with diabetes was too small to establish significance. However, she said the sample size was large enough to rule out large improvements in blood pressure and cholesterol, at least over the first two years.
The extremely smart Jonathan Adler delivers the smackdown:
For some reason I just saw this now. The Eldred point is interesting, but it’s missing important context. Lessig abandoned the Lopez-style argument against the CTEA. A conservative group had filed an amicus brief in the D.C. Circuit making a Lopez-influenced textual argument, Lessig failed to adopt it as an alternative argument, and the D.C. Circuit held that the argument was waived (a point on which the judge for whom I was clerking at the time – David Sentelle – dissented). As a consequence, the textualist argument against Eldred was never really in play in the Supreme Court.
As for your hippie-punching theory, that does more to explain the voting pattern of Justice Kennedy – who joined the majority In Raich, and tends to vote against criminal defendants in close drug cases – than Scalia or Thomas. See, e,g., Kyllo v. U.S.
Nick Cohen reviews "5 Days in May: The Coalition and Beyond" by Andrew Adonis.
'"Well, is it art?" "I do not know," said Mordel. "It may be. Perhaps randomicity is the principle behind artistic technique. I cannot judge this work because I do not understand it. I must therefore go deeper, and inquire into what lies behind it, rather than merely considering the technique whereby it was produced. I know that human artists never set out to create art, as such," he said, "but rather to portray with their techniquest some features of objects and their functions which they deemed significant." "'Significant'? In what sense of the word?" "In the only sense of the word possible under the circumstances: significant in relation to the human condition, and worth of accentuation because of the manner in which they touched upon it." "In what manner?" "Obviously, it must be in a manner knowable only to one who has experience of the human condition." "There is a flaw somewhere in your logic, Mordel, and I shall find it." "I will wait." "If your major premise is correct," said Frost after awhile, "then I do not comprehend art."' -- Roger Zelazny, "For a Breath I Tarry"
Why the Digital Revolution Won't be a Rerun of the Industrial Revolution: Whenever you talk about smart machines taking all our jobs, the usual pushback is that you're being a Luddite—an argument that's especially appropriate this year since it's the 200th anniversary of the end of the Luddite movement… all those skilled weavers in 1813 thought that power looms would put them out of jobs, but they were right only in the most limited way…. But the Digital Revolution won't be a rerun of the Industrial Revolution…. Karl Smith… [has a] take:
Creating things is a matter of rearranging atoms. Broadly speaking, you need two things to do this — a power system to overcome the gravitational and electromagnetic forces that tend to hold atoms in their relative positions and a control system to guarantee that atoms wind up in the right place. The industrial revolution was about one thing — more power! But, more power means the need for more control. Hence, the Industrial Revolution meant a rapid increase in the demand for human brains, not decrease. Smart machines provide both the power system and the control system in one convenient package. You can still argue that displaced humans will end up doing something else—we just don't know what yet—but it's a tough argument to win. If you agree that artificial intelligence will be real someday soon, then by definition smart machines will be able to do just about anything that humans can do. The answer to "Humans will do X," for any value of X, is "But robots can do that too." That wasn't true of the Industrial Revolution.
If you don't believe that AI is around the corner, then there's no argument to have here (aside from why you think AI is so far off). But if you do, then we have some serious questions to ponder about the future of work, the future of money, and the future of democracy. That's what my piece is mainly about.
Heritage study co-author opposed letting in immigrants with low IQs: The Heritage Foundation made something of a splash with its study suggesting that immigration reform will cost the public trillions…. Jason Richwine’s doctoral dissertation… asserts that there are deep-set differentials in intelligence between races… partly due to genetics…. [H]e argues the most important thing is that the differences in group IQs are persistent…. “No one knows whether Hispanics will ever reach IQ parity with whites, but the prediction that new Hispanic immigrants will have low-IQ children and grandchildren is difficult to argue against.”… Rather than excluding what he judges to be low-IQ races, we can just test each individual’s IQ and exclude those with low scores. “I believe there is a strong case for IQ selection,” he writes, “since it is theoretically a win-win for the U.S. and potential immigrants.” He does caution against referring to it as IQ-based selection, saying that using the term “skill-based” would “blunt the negative reaction.”
That rhetorical strategy is reflected in Heritage’s current work on immigration. His and Rector’s report recommends greatly reducing “low-skilled” immigration and increasing “high-skilled” immigration…. Richwine also invoked skill considerations in arguing against the “diversity visa” program…
This, I think, poses a huge problem for everybody associated with the Heritage Foundation in the future. It is a reasonable inference to hear "superior race" when DeMint and Rector and company say "highly skilled".
Andrew Sullivan says, apropos of Jason Richwine, the cross-burning Charles Murray, and company, that the racists are the real victims here…
Twenty-eight hours before Sullivan posts--thus showing that Ta-Nehisi Coates's worldline is capable of following closed timeline paths--Ta Nehisi Coates delivers the smackdown. And in the process he says what Sandy Jencks, George Borjas, and Dick Zeckhauser really should have said to Jason Richwine when he first proposed his dissertation topic, and he lays out arguments that Richwine really should have been forced to acknowledge and grapple with before they signed off on his dissertation:
Ta-Nehisi Coates: The Dark Art of Racecraft:
Dave Weigel is one of my favorite reporters, but I think this piece on Jason Richwine, intelligence research, and "race" deserves a closer look:
Academics aren't so concerned with the politics. But they know all too well the risks that come with research connecting IQ and race. At the start of his dissertation, Richwine thanked his three advisers -- George Borjas, Christopher Jenks, and Richard Zeckhauser -- for being so helpful and so bold. Borjas "helped me navigate the minefield of early graduate school," he wrote. "Richard Zeckhauser, never someone to shy away from controversial ideas, immediately embraced my work…." Anyone who works in Washington and wants to explore the dark arts of race and IQ research is in the right place. The city's a bit like a college campus, where investigating "taboo" topics is rewarded, especially on the right. A liberal squeals "racism," and they hear the political-correctness cops (most often, the Southern Poverty Law Center) reporting a thought crime.
It is almost as though the "dark arts of race and IQ" were an untapped field of potential knowledge, not one of the most discredited fields of study in modern history. We should first be clear that there is nothing mysterious or forbidden about purporting to study race and intelligence. Indeed, despite an inability to define "race" or "intelligence," such studies are one of the dominant intellectual strains in Western history. We forget this because its convient to believe that history begins with the Watts riots. But it's important to remember the particular tradition that Charles Murray and Jason Richwine are working in. A brief reminder seems in order.
Austin Frakt has done the heavy lifting, and presents the power calculations that, in an ideal world, should have been done and archived ex ante as part of the experimental design of Baicker et al.: The Oregon Experiment — Effects of Medicaid on Clinical Outcomes. Needless to say, he may have made an error: this is the moral equivalent of rocket science. But with enough eyes all bugs are shallow, hopefully…
Until somebody improve and refines his calculations, I believe that the right bottom line is his:
Updated power calculation: Thestudy was underpowered for the change in proportion with elevated glycated hemoglobin (GH) by a factor of 23. Yes, twenty-three…. Let me now state where we are. With respect to the statistically insignificant physical health measures in the study… the sample was too small even for much larger effects. This renders them… uninformative about whether or how much Medicaid improves physical health. Uninformative means just that. No new information. No resetting of priors is justified… We also know, from the authors’ discussion and from Aaron’s posts, that the results include [point estimate] changes in blood sugar and blood pressure that are not unreasonable to have expected clinically [if Medicaid were effective]…. Again, no resetting of priors is warranted.
Given this, for the physical health measures only, I don’t understand the rush I’ve noticed in people updating what they expected Medicaid could do…. I think it is time for people to take another look at what this study is saying…. What I think we’re seeing is a re-expression of everyone’s priors. This study is an opportunity to do that, but it doesn’t and shouldn’t change what [priors] are. The claims that people should be changing sides from pro- to/from anti-Medicaid expansion just make no sense based on the physical health measures in this study.
On the other hand, it is perfectly acceptable--in fact, I think it is morally and scientifically required--to update your priors and shift them in a pro-Medicaid direction from the findings on emotional health and financial stress.
Iraq War 10-Year Anniversary: What It Was Like to Oppose It in 2003: There were, of course, people who opposed invading Iraq—Illinois State Senator Barack Obama among them—but within political Washington, it was difficult to find like-minded foes. When The New Republic’s editor-in-chief and editor proclaimed the need for a “muscular” foreign policy, I was usually the only vocal dissenter, and the only people who agreed with me were the women on staff: Michelle Cottle, Laura Obolensky and Sarah Wildman. Both of the major national dailies—The Washington Post and The New York Times (featuring Judith Miller’s reporting)—were beating the drums for war. Except for Jessica Mathews at the Carnegie Endowment for International Peace, Washington’s thinktank honchos were also lined up behind the war.
Druckenmiller noted everyone is saying, "love the market long term, looking for a correction." He believes the opposite, loves market short-term, but hates it long term. Strongly disagrees with quantitative easing by Bernanke now. Only agreed with the first QE. "His bond buying is controlling the most important price in the US economy." Says it will end badly, despite money-printing being beneficial to financial assets currently. When Fed slightly tightens, that will hurt things he says. Bernanke completely ignored strong economic data in January and February, but with slightly soft data later, he printed even more money. Expects a "melt-up" in the short-term, due to Fed's current policy…. Bernanke is “running the most inappropriate monetary policy in history.”
Jordan Rau, KHN:
A study of Oregonians who won Medicaid benefits in a 2008 state lottery has sparked an intense debate about the value of expanding health care to the poor — and the value of health benefits in general. Mary Carson is, in a way, at the center of that debate. The 55-year-old Oregon woman was accepted into the Oregon Health Plan, the state Medicaid program, in 2011. She and her partner live with her three children. They earn about $1,000 a month by making and selling replicas of historic battle knives used in the Civil War and the two World Wars, doing odd jobs and providing respite care for people with cancer.
Why oh why can't we have a better press corps?
Clive Crook Doesn’t Understand Paul Krugman or Liberals Generally: Crook… made the quite specific claim that Krugman was using the 2009 stimulus for partisan ends….
Krugman and his admirers were at the forefront in casting discussion of the stimulus in left vs. right terms. For many Democrats, the top priority in the fiscal-policy discussion was not, in fact, to make the stimulus bigger but to reverse the Bush high-income tax cuts and to make sure that the composition of the stimulus, whatever its size, as far as possible favored higher spending over lower taxes.
Today, Crook is back… moving the goalposts. He conveniently forgets the stimulus debate, around which all his previous claims were centered, and digs up a Krugman column from December 2010, almost two years later…. What is unquestionably clear is that Crook’s earlier claim that “Krugman and his admirers were at the forefront in casting discussion of the stimulus in left vs. right terms” is completely bogus, and he clearly knows it….
Att. Jason Richwine: You're Not the First Guy to (Wrongly) Believe Immigrants are Dumb: The human brain remains, in many crucial aspects, a mystery to science. So what is IQ? It is a measure of the capacity to learn in the linear fashion prized by Western culture, and we know that it is partially determined by genetics. Yet in the life of the average, individual human, those "innate" genes are vastly, vastly overpowered by the effects of environment: decent nutrition; an emotionally stable, vocabulary-rich home life; physically and emotionally attentive parents; good schools and teachers. All those factors are in shorter supply among high-poverty populations. Claiming that such populations are genetically inferior ignores about a century of research and writing on the malleability of IQ and the proper uses of intelligence assessments.
Boehner Accidentally Explains Why His Deficit Position Is Phony: Yesterday, in an interview with Bloomberg Television, House Speaker John Boehner warned that the U.S. government must balance its budget. After all, he said:
We have spent more than what we have brought into this government for 55 of the last 60 years. There’s no business in America that could survive like this. No household in America that could do this. And this government can’t do this.
What the anti-immigrant movement really believes: I received the following e-mail attack from Borjas, who, keep in mind, is a Harvard professor:
Someone copied me on an email that contained your column trashing Jason Richwine’s dissertation work, and along the way you decided to trash me as well. Just for your info, the dissertation committee was formed of Richard Zeckhauser (who, by the way, was the chair of the committee), Christopher (Sandy) Jencks, a very influential sociologist whose lifetime work on inequality you may perhaps be familiar with, and myself. Perhaps next time around before you decide to trash anyone who disagrees with your ideological musings you may want to do some background reporting. I know that this request will fall on deaf ears, since it is not part of the modus operandi of people like yourself, but I would hope you correct the record in print. (I actually know you won’t since once the membership of the committee of faculty who advised Jason on his dissertation is well known you can no longer employ the by-association method of character assassination).
Now that is infinitely better!
But do note you are no longer claiming that Paul Krugman trying to radicalize the Obama administration's position on "the stimulus" in the winter of 2008-2009. You are, instead, making a different argument: an argument that Krugman's position at the end of 2010, after the largely-Republican politicization of everything, was not centrist enough.
And do note that the rest of Krugman's column--the part you do not quote--undermines your new argument pretty completely.
And Robert Skidelsky explains what John Maynard "We'll Keep Dancing 'Till We Die" Keynes really meant by "In the long run we are all dead":
Apropos nothing at all I thought I might address the suggestion, sometimes raised, that John Maynard Keynes’s “love” for Carl Melchior, German representative at Versailles, might substantively have influenced Keynes’s position on what reparations the Germans ought to pay. Keynes made early calculations for what Germany should pay in reparations in October, 1918. In “Notes on an Indemnity,” he presented two sets of figures – one “without crushing Germany” and one “with crushing Germany”.
Little more than quotes from Skidelsky's three-volume Keynes biography strung together, with a little commentary and occasional quibbling…
J. Bradford DeLong Professor of Economics, U.C. Berkeley
Econ 115 Lecture
September 29, 2009
5,562 words: September 29, 2009
Paul Krugman observes:
Not Everything Is Political: Clive Crook demands that I engage respectfully with reasonable people on the other side, but somehow fails to offer even one example of such a person. Not long ago Crook was offering Paul Ryan as an exemplar of serious, honest conservatism, while I was shrilly declaring Ryan a con man. But I suspect that even Crook now admits, at least to himself, that Ryan is indeed a con man…
Asked by Gerald Cohen whether he agreed with DeLong’s assertion that Republicans today are more partisan and less compromising, David Gergen replied in the affirmative.
Seven Myths about Keynesian Economics: The claim that Keynesians are indifferent to the long-run is one of many myths about Keynesian economics…. This has it backwards. Conservatives who oppose Keynesian economics are not concerned enough about short-run economic problems, particularly unemployment, and failing to address our short-run problems can bring long-run harm…. Keynesians care very much about the long run, but they do not go along with the idea that neglecting short-run issues is the best way to solve our long-run problems.
Niall Ferguson certainly thought so in 1995. Donald Markwell, author of Donald Markwell (2006), "John Maynard Keynes and International Relations: Economic Paths to War and Peace", emails me a copy of Niall Ferguson's 1995 Spectator article, with its claim that Keynes's belief in "the ideas contained in The Economic Consequences of the Peace" "owed as much to his homosexuality as to his Germanophilia…" for "there is no question that the attraction Keynes felt for [Carl Melchior] strongly influenced his judgment…"
But that is not what he says today:
My disagreements with Keynes’s economic philosophy have never had anything to do with his sexual orientation. It is simply false to suggest, as I did, that his approach to economic policy was inspired by any aspect of his personal life.
Why oh why can't we have a better press corps?
Krugman… concede[s] (somewhat to my surprise)… stunningly disingenuous of Krugman…. Krugman… at the forefront in casting discussion of the stimulus in left vs. right terms… not to make the stimulus bigger but to reverse the Bush high-income tax cuts… higher spending over lower taxes… [placed] divisive value judgements about the size and scope of government at the center… the stimulus debate was as political as it gets… thanks to Krugman.
It's the absence of quotation marks in his columns that is doing it to me.
There are, I am starting to think, three kinds of columnists: those who quote people in order to show that they have properly construed the arguments they are praising or criticizing, those who quote people out of context in order to misconstrue their arguments, and those who don't quote anybody at all.
So here's the comment I left on Crook's column:
My view is: perhaps they did. The argument is that the Koch Brothers and others of their ilk now think that they bought and paid for the Republican Party--and in the primaries they are largely right. But money is much less influential in presidential elections, and so the minus effect on candidate quality in the primaries outweighs the positive effects of more money in the general election.
We got way too excited over money in the 2012 elections: This time last year, I was working with three political scientists — John Sides, Lynn Vavreck, and Seth Hill — to build a really, really simple model for predicting the election…. The model kept telling us that President Obama was likely to win… under circumstances where I didn’t think he was likely to win. That model offended my gut. And so I spent a lot of time coming up with things the model might be missing.
Laura D'Andrea Tyson:
Lessons on Fiscal Policy Since the Recession: In late 2008, the United States economy was caught in the midst of what proved to be its longest and deepest recession since the end of World War II. Frightened by steep and self-reinforcing declines in output and employment, both the Federal Reserve and the federal government responded quickly and boldly. The Federal Reserve dropped the federal funds rate to near zero, where it remains today, and began its controversial “quantitative easing” purchases of long-term government securities to contain long-term interest rates. Fueled by the 2009 federal stimulus package, discretionary fiscal policy was also expansionary in 2009-10, adding to growth during the first year of the recovery at roughly the same pace that fiscal policy had achieved during previous recoveries. Then, in a sharp break with history, fiscal policy became a drag on growth in the second year of recovery, and since then the drag has intensified.
I see that you rethought part of your criticism of Guenter Grass shortly after posting it. The events that have happened since 2005 should make you rethink the rest. He complained that the "growing gap between rich and poor" had brought about "the impotence of politics", a political system that responds only to the interests of the elites. Democracy is being destroyed.
That sounds a lot like the situation in the US today. Washington is unable to end this depression because gridlock serves the interests of the overclass.
Grass was right. You owe him an apology.
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.
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.
The Weekend Interview with Donald Kagan: 'Democracy May Have Had Its Day': Donald Kagan is engaging in one last argument. For his "farewell lecture" here at Yale on Thursday afternoon, the 80-year-old scholar of ancient Greece—whose four-volume history of the Peloponnesian War inspired comparisons to Edward Gibbon's Roman history…
What? Who is it who compared Donald Kagan's history of the Peloponnesian War to Gibbon's Decline and Fall of the Roman Empire? Kaminski doesn't say. The Google is of no help…
My view was that Kagan had a big problem with his History of the Peloponnesian War. He wanted to challenge Thoukydides's interpretation. The problem was that Thoukydides was there. Kagan wasn't. Thoukydides knew a lot more about the war and how it went down than he put in his book. And his book was essentially Kagan's only source.
So Kagan's "Aha! The evidence Thoukydides presents in his book doesn't prove his interpretation wrong beyond a reasonable doubt!" very soon got very tiresome, as I found myself thinking over and over again that it takes a very special man indeed to pick a fight with somebody who knows more about a subject than he does.
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…
Hey! Clive Crook! Here is one more reason why Paul Krugman is tired of trying to reason with you people
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.
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:
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.
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.
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…
- 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).
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.
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:
And substitute for it, instead, the correct:
According to the New York Times, key Senate Republicans threaten to sink the entire immigration reform initiative if it includes a provision allowing gay American citizens to bring their life partners into the country. “It’s a deal-breaker for most Republicans,” Senator Jeff Flake, R-Ariz., told the Times. In a radio interview (quoted by the Times), Sen. Marco Rubio of Florida, who is considered reform’s indispensable Republican, was blunt: “If that issue is injected into this bill, this bill will fail. It will not have the support. It will not have my support.”
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.”
Scott Lemieux is on the case:
A Day Late, Several Trillion Dollars Short: I dunno, somehow I prefer Scalia’s belligerent, protesting-too-much defenses of his bad faith in Bush v. Gore to O’Connor’s attempts to disassociate herself:
“Obviously the court did reach a decision and thought it had to reach a decision,” she said. “It turned out the election authorities in Florida hadn’t done a real good job there and kind of messed it up. And probably the Supreme Court added to the problem at the end of the day.“
And, again, it’s not just that justices notably unsympathetic to broad equal protection claims claimed to accept an innovative equal protection argument. Where Bush v. Gore immediately falls apart and becomes a historic disgrace is that the completely lawless remedy left an election count with all of the alleged equal protection defects of the court-ordered recount (and the “mess up” job of the Florida authorities) in place. Bush v. Gore will always be a massive embarrassment to the five judges that understandably refused to sign their names to it…. I can understand why O’Connor is uncomfortable with that, but she can’t escape it.
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".
(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. 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.
 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:
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.
Keith Hennessy on Bush and the financial crisis: How Involved Was George W. Bush in the Fall of 2008?: As most of us recall, George W. Bush was president of the United States during the crucial year of 2008 when the economy slid into recession and a series of panics and runs gripped the shadow banking system. As we also recall, Bush did not play a significant public-facing role in the response. Presidential candidates Barack Obama and John McCain said a lot, Federal Reserve Chairman Ben Bernanke was visible, America got to know the previously obscure figure of New York Fed President Timothy Geithner, and Treasury Secretary Hank Paulson was frequently on television. But Bush was president, and one assumes he was doing something. But what, exactly?