BRIEFLY NOTED: For 2021-05-05 We

Things that went whizzing by that I want to remember... <https://braddelong.substack.com/p/briefly-noted-for-2021-05-05-we>

 

 

First:

Ian Leslie: Biden's Bet: ‘Biden... is... hinting at... “I think they’re going to write about this point in history… about whether or not democracy can function in the 21st century. Not a joke. Whether autocracy is the answe—these were my debates I’d have in the many times I met with Xi.”... Biden believes that technology and science are moving so fast that they pose an existential challenge to democracy itself. The consensus used to be that if China wanted to catch with the West it would have to democratise—become more free, and more diverse, with power less centralised. But Xi has doubled down on autocracy and centralisation, partly by deploying new technologies. China is still growing. For Biden, it’s up to America to show the rest of the world that democracy is still the best platform… 

LINK: <https://ianleslie.substack.com/p/bidens-bet>

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Paul McLeary (2007): Is Perry Bacon Serious?: ‘Perry Bacon Jr. wrote what may be the single worst campaign ‘08 piece to appear in any American newspaper so far this election cycle. In the front-page piece, Bacon muses over how the chances of Barack Obama getting elected president might be affected by the fact that he’s not Muslim. Seriously. To build his case, Bacon stumbles artlessly through all manner of rumor, innuendo, and xenophobic smear—never bothering to refute any of it, even though there is plenty of well-documented evidence to knock down much of this stuff. Bacon kicks the whole sorry mess off with the unsubstantiated statement that: “In his speeches and often on the Internet, the part of Sen. Barack Obama’s biography that gets the most attention is not his race but his connections to the Muslim world.” Who, exactly, gives this the most attention?… This habit of reporters—perpetuating untruths by writing stories about the “phenomenon” of those untruths—drives us nuts. Was LexisNexis broken in the scant few minutes it must have taken him to write this story? If so, Bacon must have taken to Internet message boards to troll for xenophobic posts…. Bacon then wraps up by tossing in a quote from an Obama adviser telling us that all’s fine, there’s nothing to worry about. Oh, well, with that tidbit at the end Bacon achieved the all-important Balance, so all’s well in newspaper-land.

LINK: <https://archives.cjr.org/campaign_desk/post_75.php>


Iskander RehmanMetus Hostilis: Sallust, American Grand Strategy, & the Disciplining Effects of Peer Competition with China=: ‘Sallust’s theory remains starkly unforgiving, almost uncomfortably so, for a modern reader. As political scientist Daniel Kapust notes, this creates a dilemma whereby “the coherence of a community may become linked to the existence of a dangerous foreign enemy.” Healthy democracies should be able to guarantee the conditions of their own success without fear of a great-power competitor, and no sensible individual would argue in favor of cultivating foreign enmity for its own sake. And yet, Sallust’s grim insights, however unsettling, may hold some truth…. An unwelcome new strategic dispensation… may paradoxically provide a clarifying and restorative sense of purpose to a deeply fractious American democracy…. Intense domestic polarization has rendered U.S. foreign policy more volatile, unpredictable and—in the eyes of international observers—unreliable…

LINK: <https://warontherocks.com/2021/05/metus-hostilis-sallust-american-grand-strategy-and-the-disciplining-effects-of-peer-competition-with-china/>


Adam OzimekFuture Workforce: ‘Companies continue to be remote: Nine months into the pandemic, 41.8 percent of the American workforce remains fully remote. Companies say remote work is getting easier, not harder, as time goes on: 68 percent of hiring managers say remote work is going more smoothly now than when their company first made the shift to at the start of the pandemic. Remote work will continue through 2021: Managers believe that 26.7 percent of the workforce will be fully remote in one year suggesting that individuals will gradually continue to return to the office, but a significant share will remain remote in the near future.  The number of remote workers in the next five years is expected to be nearly double what it was before COVID–19: By 2025, 36.2 million Americans will be remote, an increase of 16.8 million people from pre-pandemic rates. Increased productivity and flexibility continue to be key benefits of remote work: Hiring managers cite reduction of non-essential meetings, increased schedule flexibility, and no commute as aspects of remote work that have worked better than expected…

LINK: <https://www.upwork.com/press/releases/economist-report-future-workforce>


Nancy QianThe Two Sides of Chinese GDP: ‘In 2019… China’s per capita GDP in 2019 was $8,242, placing the country between Montenegro ($8,591) and Botswana ($8,093). Its per capita GDP in purchasing power parity (PPP) terms—with income adjusted to take account of the cost of living—was $16,804… between Suriname ($17,256) and Bosnia and Herzegovina ($16,289)…. GDP per capita in PPP terms in the US and the European Union is $65,298 and $47,828, respectively…. China’s current level of income inequality… is similar to that found in the US and India…. 600 million people have… an annual income of $1,860…. The Chinese government… will be preoccupied for at least another generation by the need to increase domestic incomes. But… governments can also bolster their popular support in ways that do not foster economic growth… defending… against… earthquakes or the COVID–19 pandemic… territorial disputes in the South China Sea and along the Chinese-Indian border…. The backlash effect…. Many Chinese think the West is seeking to reassert political dominance and feel painful reminders of colonialism and World War II…. Behind the world’s second-highest GDP are hundreds of millions of people who just want to stop being poor…

LINK: <https://www.project-syndicate.org/commentary/china-poverty-aggregate-per-capita-gdp-by-nancy-qian-1-2021-04>


Jeet HeerCan We Bring Back Blogging?: ‘The golden age of blogging was… a digital party, where bouncing around through hyperlinks was always bringing in new writers and new perspectives… fresh voices and also of changing minds…. The blogosphere opened up debate, especially in the 21st century revival of feminist, anti-racist, and socialist politics…. There were a lot of factors that led to the decline of blogging… ads… Google and Facebook ate up that revenue. Social media like Twitter and Facebook also provided a new way to micro-blog…. I’m still finding my sea legs as a Substacker. I want to know what works and what doesn’t…

LINK: <https://jeetheer.substack.com/p/can-we-bring-back-blogging>


PROJECT SYNDICATE: Is þe US Economy Recovering or Overheating?

The fact that core inflation is rising on the back of substantial GDP growth and declining unemployment should not come as a surprise. Those who are wringing their hands about economic "overheating" should remember that an absence of price increases would reflect an economy that is still struggling. <https://www.project-syndicate.org/commentary/us-inflation-shows-economy-is-reshuffling-and-recovering-by-j-bradford-delong-2021-05>

 

BERKELEY – The financial and economic news in the United States lately has been dominated by concerns about inflation. “Runaway inflation is the biggest risk facing investors, Leuthold’s Jim Paulsen warns,” according to the cable news channel CNBC. As a potential hedge against inflation, “Bitcoin’s time to shine is fast approaching,” reportsFortune’s Robert Hackett. According to US News and World Report, “There is a lot of talk about inflation in 2021 as fears of high government spending creep in and the recent rebound in prices from pandemic-related levels has some investors worried that the trend will continue for some time.”

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PODCAST: Hexapodia XIII: "Mandated Interoperability": We Can't Make It Work, or Can We?

With Cory Doctorow; Noah Smith & Brad DeLong's 30:00 < Weekly Podcast < 60:00 <https://braddelong.substack.com/p/podcast-hexapodia-xiii-mandated-interoperability>

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Key Insights:

  • Cory Doctorow is AWESOME!

  • It is depressing. We once, with the creation of the market economy, got interoperability right. But now the political economy blocks us from there being any obvious path to an equivalent lucky historical accident in our future.

  • The problems in our society are not diametrically opposed: Addressing the problems of one thing doesn't necessarily create equal and opposite problems on the other side—but it does change the trade-offs, and so things become very complex and very difficult to solve.

  • Always keep a trash bag in your car.

  • Hexapodia!

 

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References:

Books:

Cory Doctorow: How to Destroy Surveillance Capitalism <https://www.google.com/books/edition/How_to_Destroy_Surveillance_Capitalism/W20NzgEACAAJ>

Cory Doctorow: Attack Surface <https://www.google.com/books/edition/Attack_Surface/rFfEDwAAQBAJ>

Cory Doctorow: Walkaway <https://www.google.com/books/edition/Walkaway/MKMsDAAAQBAJ>

Cory Doctorow: Down & Out in the Magic Kingdom <https://www.google.com/books/edition/Down_and_Out_in_the_Magic_Kingdom/h8DvDwAAQBA>

Cory Doctorow: Little Brother <https://www.google.com/books/edition/Little_Brother/r1zne2mZDW8C>

William Flesch:Comeuppance: Costly Signaling, Altruistic Punishment, and Other Biological Components of Fiction<https://www.google.com/books/edition/Comeuppance/JSRWPYp1nNUC>

Daniel L. Rubinfeld: A Retrospective on U.S. v. Microsoft: Why Does It Resonate Today? <https://journals.sagepub.com/doi/abs/10.1177/0003603X20950227>

Louis Galambos & Peter Temin: The Fall of the Bell System: A Study in Prices & Politics <https://www.google.com/books/edition/The_Fall_of_the_Bell_System/CXNPVjdxfAEC>

Websites:

Electronic Frontier Foundation: <http://www.eff.org>

Cory Doctorow: Craphound <http://craphound.net>

Cory Doctorow: Pluralistic <https://pluralistic.net>

&, of course:

Vernor VingeA Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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BRIEFLY NOTED: For 2021-05-02 Su

Things that went whizzing by that I want to remember...

First:

Zeynep TufekciSunday Open Thread for Subscribers: ‘The one big part of the tragedy here is that we had most of the science we needed really early on…. There was more to learn, for sure, but the basics were there. There have been very few scientific surprises… outside of how vaccinable this (luckily!) turned out to be (we didn’t know partly because we didn’t really try for the others exactly because we didn’t care). But sociologically, I am shaken. I knew about all of this, because I teach and study it. The group-think, the institutional resistance and inertia, the cognitive biases, the social dynamics… I know about them all! But I’ve been truly surprised most is how much stronger than I thought these dynamics were, even in a crisis. Perhaps because of the crisis. I’ve learned a lot about viruses last year, but I did not really need that much beyond an introductory textbook to write the policy oriented pieces I’ve published. I think we need to update our social science textbooks and assumptions, though. The dynamics that have dominated our world aren’t novel in the sense that we were new to them, but they are clearly so much stronger than we usually acknowledge…

LINK: <https://www.theinsight.org/p/sunday-open-thread-for-subscribers-d93>

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HOISTED FROM THE ARCHIVES: Five Books on the Classical Economists (2020-09-29)

This, I thought, was an interview that turned out very well...

 

The Best Books on the Classical Economists

recommended by Brad DeLong

They were an eclectic bunch, including, among others, a stock market speculator, a moral philosopher, a cleric, a lawyer and a journalist. From the late-18th to the mid-19th century, they provided the first systematic explanations of how economies work, where they fail and how they might be made to work better. Here, Brad DeLong, a professor of economics at UC Berkeley, introduces the classical economists, and suggests books to read to learn more about them and what they were trying to achieve.

Interview by Benedict King


The Passions and the Interests by Albert Hirschman

The Worldly Philosophers by Robert L Heilbroner

The Classical Economists Revisited by D. P. O'Brien

Economic Sentiments: Adam Smith, Condorcet and the Enlightenment by Emma Rothschild

Karl Marx: A Nineteenth-Century Life by Jonathan Sperber

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HOISTED FROM THE ARCHIVES: Lessons from the New Deal (2009-03-31)

My testimony before Sen. Sherrod Brown's subcommittee...

 

Earlier today Eric Rauchway @rauchway wrote that people should take a look at my 2009-03-31 testimony that Sen Sherrod Brown (D-OH) invited me to give:

Twitter avatar for @rauchwayEric Rauchway @rauchway
or see @delong 's Congressional testimony of 2009 Lessons from the New Dealbooks.google.com

He is right: my 2009-03-31 testimony is damned good!

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BRIEFLY NOTED: For 2021-04-30 Fr

Things that went whizzing by that I want to remember...

 

First:

Free speech advocates who care about the functioning of their community have never thought it appropriate for the free-speech principle to empower chaos monkeys who seek to destroy their society and replace it with something with speech that would be less free:

John MiltonAreopagitica: ‘Yet if all cannot be of one mind—as who looks they should be?—this doubtless is more wholesome, more prudent, and more Christian, that many be tolerated, rather than all compelled. I mean not tolerated popery, and open superstition, which, as it extirpates all religions and civil supremacies, so itself should be extirpate, provided first that all charitable and compassionate means be used to win and regain the weak and the misled: that also which is impious or evil absolutely either against faith or manners no law can possibly permit, that intends not to unlaw itself: but those neighbouring differences, or rather indifferences, are what I speak of, whether in some point of doctrine or of discipline, which, though they may be many, yet need not interrupt THE UNITY OF SPIRIT, if we could but find among us THE BOND OF PEACE…

LINK: <http://www.gutenberg.org/files/608/608-h/608-h.htm>

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John AuthersMarkets Give Powell a Break on Inflation. It May Be Transitory: ‘The latest Federal Open Market Committee meeting still left us with a few more clues on how the Fed intends to navigate through an exceptionally dangerous environment…. Virtually every data release for the last month has suggested a very strong recovery. The Fed wants great improvement in unemployment, which is still running at a 6% rate, compared to 3.5% before the pandemic…. So there are two questions. Do we see any signs of rising prices caused by anything more than a transitory bottleneck? And, are inflation expectations showing signs of settling “materially above 2%”? If there is any clear sign of a possible bottleneck, it is in… industrial metals…. Markets give us nice and precise measures of inflation expectations, via the breakevens between inflation-protected bonds, or TIPS, and conventional fixed-income Treasuries. The prediction this generates for average inflation over the next five years is just under 2.5%…. Ten-year expectations are slightly lower…. The best measure to justify continued lenience is the so-called 5-year, 5-year breakeven…

LINK: <https://www.bloomberg.com/opinion/articles/2021-04-29/markets-give-powell-a-break-on-inflation-it-may-be-transitory>


Patrick WymanAncient South Asia: ‘If we were to touch down in South Asia at the end of the Younger Dryas and the beginning of the Holocene around 12,000 years ago, however, we wouldn’t have seen many people. Archaeological traces of a human presence are few and far between at the end of the Pleistocene. Much of the region wasn’t particularly welcoming to people at that time; the Deccan Plateau, which makes up much of South Asia, would have been exceptionally arid. That is largely because the monsoon, which brings torrential but life-giving rain every summer, was either much weaker or altogether absent. The rain-fed seasonal rivers that make much of South Asia welcoming to people wouldn’t have flowed, leaving only the river valleys of the Indus and Ganges as particularly viable spots for people to live. As the Pleistocene gave way to the Holocene, the monsoon began to take on something more like its current form. As was the case elsewhere in the world at that time, the number of people living in South Asia dramatically expanded with improving climatic conditions. Many of these new residents were the descendants of long-established hunter-gatherers. Some of them kept foraging; others experimented with new ways of life. But others were new arrivals who set themselves up on the edges of the Indus Valley, bringing with them an agricultural package first developed far to the west in the Fertile Crescent…

LINK: <https://patrickwyman.substack.com/p/ancient-south-asia>


Joseph A. Francis: King Cotton, the Munificent Slavery & (Under)development in the United States, 1789–1865: ‘Slaves were necessary for the country’s cotton boom because cotton was not sufficiently remunerative to attract yeoman farmers. Cotton exports then balanced the imports that the Federal Government taxed to obtain most of its revenues. Those revenues were used to fund westward expansion, both directly through the acquisition and conquest of new territory, and indirectly through the policy of retiring the national debt, which pumped liquidity into the country’s nascent capital markets and bolstered the reputation of American bonds among foreign investors. State government could then borrow to finance the transportation infrastructure that connected the new lands to markets, allowing them to be serrled. Westward expansion tended to weaken slaveholders’ position in Congress because they were excluded from the rapidly growing Midwest. They therefore seceded. The North would not let the South leave the Union, however, because secession threatened to take away the Federal Government’s main source of revenues. As a result, the Civil War began, leading to emancipation. Slavery had thus financed the development of the settler society that would eventually abolish it, while the slaves themselves became an underdeveloped nation within a nation… 

LINK: <https://joefrancis.info/pdfs/FrancisUS_slavery.pdf>


Aswath DamodaranEquity Risk Premiums (ERP): Determinants, Estimation, and Implications–The 2021 Edition: ‘The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets like the United States, which have long periods of historical data available, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in non-equity markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generate expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis…

LINK: <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3825823>


Gary GortonRecent Changes & the Future of the US Financial System: ‘The financial crisis has not been solved because financial crises are inherent in market economics. A financial crisis is always about runs on short-term debt, e.g. in the repo market. The general trend in the past couple decades has been a decline in deposits replaced with other short-term debt instruments like repo contracts…. Stablecoin is essentially unregulated free banking that issues deposits. However, free banking never worked in the past, even in cases whether the government required backing. There needs to be credible backing for Stablecoin as they are now runnable without any entity overseeing them…. The fundamental theorem of bank regulation stipulates that bank regulators can only decide the location of the banking system. Without carrots—or incentives—to keep a bank, they can move, as evidenced by the rise of mortgage and loan origination outside of the banking system given the high costs of staying a bank…

LINK: <https://bcf.princeton.edu/events/gary-gorton-on-recent-changes-and-the-future-of-the-us-financial-system/>


Anton Troianovski‘We Know How to Defend Our Interests’: Putin’s Emerging Hard Line: ‘KYIV, Ukraine — The world according to President Vladimir V. Putin looks like this: Russia is on the rise while the West is in chaos. The West, spurred on by a new American president who is more anti-Russian than his predecessor, seeks Russia’s—and Mr. Putin’s—destruction. And it is time for Russia, imbued with a moral authority and a thinning supply of patience, to hit back. “They may think that we are like them, but we are different, with a different genetic, cultural and moral code,” Mr. Putin said last month, excoriating the United States. “We know how to defend our interests”…

LINK: <https://www.nytimes.com/2021/04/20/world/europe/putin-biden-ukraine-navalny.html?searchResultPosition=3>


James H. Stock & Mark W. WatsonIdentification & Estimation of Dynamic Causal Effects in Macroeconomics Using External Instruments: ‘The increasing use of external sources of as-if randomness to identify the dynamic causal effects of macroeconomic shocks… the time series counterpart of the highly successful strategy in microeconometrics of using external as-if randomness to provide instruments…. This lecture exposits this approach and provides conditions on instruments and control variables under which external instrument methods produce valid inference on dynamic causal effects…. We consider two methods, a one-step instrumental variables regression and a two-step method that entails estimation of a vector autoregression…

LINK: <https://www.princeton.edu/~mwatson/papers/Sargan_Lecture_Stock_Watson_20180104.pdf>


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BRIEFLY NOTED: For 2021-04-29 Th

Things that went whizzing by that I want to remember...

John Scalzi’I’m a dude with the usual amount of bullshit on his karma; I try to imagine the better version of me, and then cosplay that in public until hopefully it sticks. Or to quote Vonnegut: “We are what we pretend to be, so we must be careful about what we pretend to be”…


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Twitter avatar for @EyePatchWolfEyepatch Wolf @EyePatchWolf
Buying a PC with Dell: My Journey Into Hell

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John QuigginRepublicans & the End of Hard Neoliberalism: ‘After four years of the Trump Administration, and a few months of post-election madness, the Republican Party has completed a transition that has been going on for decades. In the 1980s and 1990s, the Republicans were a hard neoliberal party…. Now the situation is reversed. The Republicans are a white grievance party… [that] still attempt to attract support from corporations by advocating tax cuts….

Think of the Eisenhower-era Republican party as a complicated mixture of many dissolved ingredients, in which the dominant element was the business establishment, and the Trump era party as a crystalised mass of plutocratic economics, racism and all-round craziness. The development over the 60 years between the two has consisted of keeping the mixture simmering, while adding more and more appeals to racial animus and magical thinking (supply-side economics, climate denial, the Iraq war and so on). In this process various elements of the original mix have boiled off or precipitated out and discarded as dregs.

Boiling off is the process by which various groups (Blacks and Northeastern liberal Republicans in C20, liberaltarians more recently) have left the Republican coalition in response to its racism and know-nothingism. The dregs that have precipitated out are ideas that were supposed to be important to Republicans (free trade, scientific truth, classical liberalism, moral character and so on) that turned out not to matter at all. Trump’s arrival is the catalyst seed crystal that produces the phase change. The final product of the reaction emerges in its crystallised form.

LINK: <https://crookedtimber.org/2021/04/26/republicans-and-the-end-of-hard-neoliberalism/>


Matthew ZeitlinPersonnel Isn’t Policy, Policy Is Personnel: ‘Janet Yellen is a fiscal and monetary hawk. Or at least she was. Sorta. But no longer…. The Biden administration, as might be expected, has many of the same figures from the Obama years and even the Clinton years…. Yellen herself was Obama’s choice to run the Federal Reserve and the chair of Bill Clinton’s Council of Economic Advisors after some time on the Fed Board. While on the Fed and in the Clinton White House, she supported policies that would be anathema to the current administration, she was affiliated with deficit hawk groups that, for now, have no particular hold over current Democratic Party thinking. And yet I have no doubt that Yellen will be an effective advocate and architect of exactly what the Biden administration and Democratic congress wants to do right: spend money on families, Covid relief, the environment, and not get too stressed about the deficit….

It wasn’t Larry Summers who allegedly told Romer that monetary policy had “shot its wad,” or tried to explain high unemployment with reference to bank tellers and ATMs.  It was Barack Obama…. We are attuned to a model where advisors influence and shape the thinking of their “principal,” but it seems just as likely that the principal shapes the advisors, or essentially farms out different “modules” of thinking to different people (a deficit hawk here, a stimulus advocate there, a health care reformer over there) and then shifts the degree to which she takes their input in accordance with what she already wants to do. Inasmuch as the advisors differ, they differ within a fairly narrow band set by the principal…. [Summers] is as on board for more spending as anyone in Greater Bidenberg—but will remain at least somewhat estranged, even if the winds of change blow from the same direction both within and without it…

LINK: <https://zeitlin.substack.com/p/personnel-isnt-policy-policy-is-personnel>


Antonio GramsciPrison Notebooks III: ’That facet of today’s crisis which is lamented as a “wave of materialism” is related to the so-called “crisis of authority”. The ruling class has lost its coordination—is not leading but merely dominant solely by force. The overwhelming majority no longer believe what they used to believe, and so have become unmoored from the ideologies of tradition. This, precisely, is the crisis: The old order is dying. The new order cannot be born. There is an interregnum. It is a time of monsters….

Can a gap between the popular majority and the ideologies of the rulers as serious as that since World War I ended be bridged by simple force, which attempts to stop the ideologies of the future from coming to organize society. Will the current interregnum end not in the normal-history process, which naked force blocks, but rather in a restoration? The shape of the ideologies is such that that can be ruled out in any practical if not absolute sense. he character of the ideologies, that can be ruled out-yet not in an absolute sense. In the meantime depression will lead eventually to wide scepticism, and a new accommodation—catholicism will even more become simply Jesuitism, and so forth.

These are highly favorable conditions for an unprecedented expansion of Marxism’s influence. Marxism’s oversimplicity and inadequacy when it takes its popular form will help it spread. Dead old ideologies turn into skepticism with respect to all theories and frameworks, to a focus on economic fact and money, and to politics that is either fantastical or cynical…. But this reduction to economic money and to political power means exactly the disappearance of established frameworks of ideas as anything other than rationalizations. That opens up the possibility—and creates the necessity—of creating the new culture…


Hoisted From the Archives:

From 2011: LECTURE: Seven Sects of Macroeconomic Error: Wrong Models of the Great Recession

<https://www.icloud.com/pages/0zwSkfmRDPILOSmiq0_91g5nw><https://github.com/braddelong/public-files/blob/master/seven-sects-of-macroeconomic-error-2011-03-14.pdf> <https://www.bradford-delong.com/2021/04/seven.html> 2011-03-14

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PODCAST: Hexapodia XII: Þe Cambridge Capital Controversy

By Noah Smith & Brad DeLong: Joan Robinson to Bob Solow: "I would not be unkind if you would not be pig-headed..."

Key Insights:

  1. Getting the rate of profit—the sums that are charged businesses for renting machines and renting space, and for access to the generalized social power to deploy resources that is finance—right is a very, very important thing to do. Why? Because the market economy is a complicated institutional calculating machine for determining how to promote societal wellbeing. It cannot do its job if it cannot see the the constraints imposed on us by nature and current technology. And having the market get the profit rate right is a very important part of that. To say “it’s all ideology” or “it’s all power” or “it’s all distribution” and go the full Sraffa production-of-commodities-by-means-of-commodities is to miss a truly powerful, relevant, and important insight. That’s the strongest statement of what the Cambridge, Massachusetts-MIT side was really getting at—or ought to have been getting at, although they phrased it badly and inaccurately.

  2. If we attempt to use toy mathematical models applied to macro aggregates to say anything quantitative about whether business owners are getting paid “too much” or “too little”, we will fail embarrassingly. Therefore we should never use toy models to do that.

  3. To say that the market-equilibrium profit rate is the optimal one from the perspective of societal well-being is to commit the pseudo-pharisaical mistake of reversing the order of importance. Rather, recognize: the market was made for man, not man for the market. 

  4. The particular language in which the economists of the 1960s carried out this debate was extremely poorly suited to shed light. They cared deeply, they wrote angrily, and most of what they wrote was drivel. So: whenever you are having a discussion, if you want to learn or teach anything, first do this: try hard to figure out what issues really are, and then try hard to figure out what is the right language to talk about these issues.

  5. As always, the key insight is: “Hexapodia”.

 

<https://braddelong.substack.com/p/podcast-hexapodia-xii-the-cambridge>


BRIEFLY NOTED: For 2021-04-27 Tu

FIRST:

Robert P BairdThe Invention of Whiteness: The Long History of a Dangerous Idea: ‘By the time The Bell Curve appeared, Du Bois’s assertion that racial categories were not biologically grounded was widely accepted. In the years since, the scientific evidence for that understanding has only become more overwhelming. A 2017 study examined the DNA of nearly 6,000 people from around the world and found that while that while some genetic differences among humans can be traced to various ancestral lineages—for example, eastern African, southern European or circumpolar—none of those lineages correspond to traditional ideas about race…. During the second half of the 20th century a number of historians demonstrated that… Du Bois… was correct that it was only in the modern period that people started to think of themselves as belonging to something called the white race.…

LINK: <https://www.theguardian.com/news/2021/apr/20/the-invention-of-whiteness-long-history-dangerous-idea?CMP=Share_iOSApp_Other>

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Dietz VollrathWho Are You Calling Malthusian?: ‘I recently had a student ask me if I was a “Malthusian”…. It’s always asked in a way that implies it is a belief system, similar to “Christian”, “Muslim”, or “Packer Fan”…. I’m not a Malthusian “believer”, because that isn’t a thing. But I do think that several of Malthus’ assumptions about how economies function, in particular prior to the onset of sustained growth during the 1800’s, are well founded. And those assumptions have implications that help make sense of the world…

LINK: <https://growthecon.com/blog/Malthus/>


W.E.B. Du BoisThe Souls of White Folk: ‘The Middle Age regarded skin color with mild curiosity; and even up into the eighteenth century we were hammering our national manikins into one, great, Universal Man, with fine frenzy which ignored color and race even more than birth. Today we have changed all that, and the world in a sudden, emotional conversion has discovered that it is white and by that token, wonderful! This assumption that of all the hues of God whiteness alone is inherently and obviously better than brownness or tan leads to curious acts; even the sweeter souls of the dominant world as they discourse with me on weather, weal, and woe are continually playing above their actual words an obligato of tune and tone, saying “My poor, un-white thing! Weep not nor rage. I know, too well, that the curse of God lies heavy on you. Why? That is not for me to say, but be brave! Do your work in your lowly sphere, praying the good Lord that into heaven above, where all is love, you may, one day, be born-white!” I do not laugh. I am quite straight-faced as I ask soberly: “But what on earth is whiteness that one should so desire it?” Then always, somehow, some way, silently but clearly, I am given to understand that whiteness is the ownership of the earth forever and ever, Amen! Now what is the effect on a man or a nation when it comes passionately to believe such an extraordinary dictum as this?…

LINK: <https://loa-shared.s3.amazonaws.com/static/pdf/Du_Bois_White_Folk.pdf>


EconomistThe Kremlin Has Isolated Russia’s Economy: ‘Since 2014, when Russia annexed Crimea and invaded eastern Ukraine, the Kremlin has commanded the economy like a fortress under siege, building up reserves, decoupling from the world economy, and preparing for the potential impact of Western sanctions or fluctuations in oil prices…. Russia’s economy remains highly dependent on hydrocarbons. Despite years of promises, no meaningful diversification has taken place. Hydrocarbons still account for more than 60% of exports…. Russia’s covid–19-related stimulus measures amounted to just 4% of gdp, according to the World Bank. The pandemic, in Mr Putin’s eyes, is not the proverbial rainy day the nwf was intended for…

LINK: <https://www.economist.com/briefing/2021/04/24/the-kremlin-has-isolated-russias-economy>


M.G. SieglerIn(tel) Command: ‘Might Gelsinger pull it off…. I finally got around to watching the “Intel Unleashed” presentation from March. While I’m far from an expert on Intel, like a lot of folks in tech, I’m fascinated…. The good news seems to be that new CEO Pat Gelsinger clearly gets this. And perhaps just as importantly, he clearly cares about this, as someone who worked at Intel for 30 years and has now returned to right the ship. And most important still, he seems to have a plan. And to be in command of the situation…. Gelsinger’s… is an actual presentation and not a Q&A. Still, the same thing is conveyed: just how in command he is. And perhaps even more so than Jobs, just how enthusiastic he is about the opportunity…

LINK: <https://5ish.org/p/intel-command>


Cosma ShaliziIn Soviet Union, Optimization Problem Solves You: ‘There is a passage in Red Plenty which is central to describing both the nightmare from which we are trying to awake, and vision we are trying to awake into. Henry [Farrell] has quoted it already, but it bears repeating:

Marx had drawn a nightmare picture of what happened to human life under capitalism, when everything was produced only in order to be exchanged; when true qualities and uses dropped away, and the human power of making and doing itself became only an object to be traded…. The motion of society turned into a kind of zombie dance, a grim cavorting whirl in which objects and people blurred together till the objects were half alive and the people were half dead. Stock-market prices acted back upon the world as if they were independent powers, requiring factories to be opened or closed, real human beings to work or rest, hurry or dawdle; and they, having given the transfusion that made the stock prices come alive, felt their flesh go cold and impersonal on them, mere mechanisms for chunking out the man-hours. Living money and dying humans, metal as tender as skin and skin as hard as metal, taking hands, and dancing round, and round, and round, with no way ever of stopping; the quickened and the deadened, whirling on.…

And what would be the alternative? The consciously arranged alternative? A dance of another nature, Emil presumed. A dance to the music of use, where every step fulfilled some real need, did some tangible good, and no matter how fast the dancers spun, they moved easily, because they moved to a human measure, intelligible to all, chosen by all…

There is a fundamental level at which Marx’s nightmare vision is right: capitalism, the market system, whatever you want to call it, is a product of humanity, but each and every one of us confronts it as an autonomous and deeply alien force. Its ends, to the limited and debatable extent that it can even be understood as having them, are simply inhuman. The ideology of the market tell us that we face not something inhuman but superhuman, tells us to embrace our inner zombie cyborg and loose ourselves in the dance. One doesn’t know whether to laugh or cry or running screaming.

But, and this is I think something Marx did not sufficiently appreciate, human beings confront all the structures which emerge from our massed interactions in this way. A bureaucracy, or even a thoroughly democratic polity of which one is a citizen, can feel, can be, just as much of a cold monster as the market. We have no choice but to live among these alien powers which we create, and to try to direct them to human ends. It is beyond us, it is even beyond all of us, to find “a human measure, intelligible to all, chosen by all”, which says how everyone should go. What we can do is try to find the specific ways in which these powers we have conjured up are hurting us, and use them to check each other, or deflect them into better paths.

Sometimes this will mean more use of market mechanisms, sometimes it will mean removing some goods and services from market allocation, either through public provision or through other institutional arrangements. Sometimes it will mean expanding the scope of democratic decision-making (for instance, into the insides of firms), and sometimes it will mean narrowing its scope (for instance, not allowing the demos to censor speech it finds objectionable). Sometimes it will mean leaving some tasks to experts, deferring to the internal norms of their professions, and sometimes it will mean recognizing claims of expertise to be mere assertions of authority, to be resisted or countered.

These are all going to be complex problems, full of messy compromises. Attaining even second best solutions is going to demand “bold, persistent experimentation”, coupled with a frank recognition that many experiments will just fail, and that even long-settled compromises can, with the passage of time, become confining obstacles. We will not be able to turn everything over to the wise academicians, or even to their computers, but we may, if we are lucky and smart, be able, bit by bit, make a world fit for human beings to live in…

LINK: <https://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/>


From the Archives:

Brad DeLong (1999): An Appalling Article on Graduate Student Unionization by Yale Historian Paul Kennedy: I don’t know what I find more appalling: The open snobbery with which Paul Kennedy ridicules the idea that lower-class union leaders and members might have something to teach about or some concern over conditions of employment of graduate students…. The casual mendacity in his implication that the typical humanities graduate student at a private university gets his or her tuition paid and $12,000 a year with no strings attached…. The sneer at humanities graduate student section leaders at his own university—paid I believe, about $10 an hour… with little prospects for ever getting a tenured professorship like Paul Kennedy’s—for “imagin[ing themselves] as an aggrieved member of an exploited academic proletariat.”… The claim that the UAW’s paying its lead organizer at Yale (a more than full-time job) some $10 an hour is an extraordinarily generous subsidy that will lead to a “new career track for Ph.D.s who find all this campaigning much more exciting than their work on Milton or Freud”…

LINK: <https://delong.typepad.com/delong_long_form/1999/04/paul-kennedy-on-graduate-student-unionization.html>

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