DeLong: Long Form

Stalingrad at 70

Perhaps we should turn our historical-memory attention here a little bit away from the Cuban Missile Crisis at 50...

Our Debt to Stalingrad by J. Bradford DeLong - Project Syndicate:

Brad DeLong: Three Dimensions of Inequality: Global, Educational/Technological, and Plutocratic

CENTER FOR LATIN AMERICAN STUDIES, UC BERKELEY: INEQUALITY: DIALOGUES FOR THE AMERICAS, FALL 2012: OCTOBER 15, 2012 http://www.clas.berkeley.edu/Events/series/inequalityfall2012/index.html

• Full cleaned-up transcript
• Video

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There are, broadly speaking, three dimensions of Inequality.

A Platonic Dialogue About Quantitative Easing, or, Summoning the Inflation Expectations Imp

Glaukon: Let us talk about the Inflation Expectations Imp.

Daedalos: The Inflation Expectations Imp?

Glaukon: That is what Robert Waldmann calls him. He is a cousin of the Confidence Fairy.

Daedalos: And?

Glaukon: As you know, if the fiscal authority finally gets its house in order, adopts a sustainable long-term fiscal plan, and demonstrates its commitment to that plan by immediately undertaking politically and economically painful austerity measures, the Austerity Confidence Fairy appears and touches business investment committees with her magic wand, and they begin to spend, and the economy recovers!

A Platonic Dialogue: Arguments Against Loose Money When Fiscal Policy Is too Tight

Glaukon: Suppose fiscal policy is too tight, and as a consequence the economy will be depressed under normal monetary policy. A natural response would be to loosen monetary policy to return aggregate demand to full employment. Are there any costs to doing this?

Hypatia: I am not sure what the question is…

Glaukon: Is there any reason to worry if fiscal policy is too tight and monetary policy is too loose, provided that they balance each other out, aggregate demand is equal to potential output, and inflation remains on its desired path?

Reflections on Paul Ryan's Transactions in Individual Bank Stocks in 2008

Paul Ryan's transactions in individual bank stocks in 2008:

January:

• Sold his Wells Fargo position ($1K-$15K) on January 14, 2008

• Sold part of his Wachovia position ($1K-$15K) on January 22, 2008

• Sold part of his JPMorganChase position ($1K-$15K) on January 22, 2008
• Sold part of his Citigroup position ($1K-$15K) on January 22, 2008
• Bought Goldman Sachs ($1K-$15K) on January 22, 2008

February:

• Sold part of his Goldman Sachs position ($1K-$15K) on February 22, 2008
• Bought Citigroup ($1K-$15K) on February 22, 2008

I See I Have Made Gene Callahan Terribly Unhappy: Dred Scott v. Sanford Blogging

Callahan writes:

Brad DeLong: How Low Can He Go?: DeLong decides to smear Daniel McCarthy as being pro-Dred-Scott simply because he favors the Constitution over the Declaration. Gee, Brad, why not throw in a comment about how Dan must be a sociopath as well?

I've kept DeLong on my sidebar because, despite his frequent ugly displays of character assassination, he often says very interesting things. But I've had it: I can't with good conscience promote this verminous human being any longer.

Oh, dear, dear, dear...

In 1857 Dred Scott was not a close decision.

Jonathan Chait writes a column that would be a lifetime best for almost anybody else around, but for him is simply Jonathan Chait on a good day

Jonathan Chait writes a column that would be a lifetime best for almost anybody else around, but for him is simply Jonathan Chait on a good day:

Why Washington Accepts Mass Unemployment: Good news! The economy added 163,000 jobs last month, just a bit over the level required to keep up with population growth. A return to a free fall now seems less likely. On the other hand, there is the small footnote that the return to full employment is nowhere in sight. The recovery looks safe for those of us who are not already screwed. That, sadly, has come to be the primary focus of our economic policy.

In the years since the collapse of 2008, the existence of mass unemployment has stopped being something the economic powers that be even pretend to regard as a crisis. To those directly impacted, the economic crisis is an emergency, a life-altering disaster the damage from which will endure for years. But most of those in a position to address it simply have not seen it in such terms. History will record that the economic elite has viewed the economic crisis from a perspective of detached complacency.

Two events from the last week have underscored this disturbing reality.

The Obama administration has tried to prevail upon Edward DeMarco… to offer lower mortgage rates to underwater home owners through Fannie Mae and Freddie Mac, which he controls. What interests me is not the proposal itself, nor even DeMarco’s obstinate refusal, but an editorial in the Washington Post applauding DeMarco for refusing to implement the program…. The Obama administration had argued to DeMarco that the mortgage relief was a pure win-win…. DeMarco replied that he believed the taxpayers would end up spending money on the deal: not much, but some. The Post’s thumbs-up editorial of DeMarco endorsed the reasoning that only a relief program that could be assured to cost the taxpayers nothing was worthwhile. It concluded, “with signs multiplying that the housing market may be finally bottoming out without this additional stimulus, perpetuating this particular battle does not strike us as the best use of the secretary’s time.”

There are signs we’ve hit bottom. Nothing to worry about here. Why risk the possibility of a small outlay merely to provide relief to hundreds of thousands of desperate people? This is such a perfect statement of the way the American elite has approached the economic crisis. They concede that it is a problem. But there are other problems, you know….

For millions and millions of Americans, the economic crisis is the worst event of their lives. They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth. But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.

No, Mitt Romney Does Not Believe in This "Arithmetic". Why Do You Ask? Kevin Hassett-and-Scraping-the-Bottom-of-the-Barrel Edition

One of my phone calls yesterday--one that I did not answer at the time--was asking me what I thought of the quote below from the not-so-famous Kevin Hassett, made on a Romney campaign conference call yesterday.

A little background first: Samuel Brown, William Gale, and Adam Looney crunched the numbers on what we know of Romney's tax plan: in the long run, after we have recovered from our current slump, average tax cuts of $175,000/year for taxpayers reporting over $1,000,000 in income; average tax cuts of $1,800/year for taxpayers reporting incomes of around $100,000/year; average tax increases of $130/year for taxpayers making less than $30,000/year; in the long run a total of $360 billion/year of revenue losses, of which $250 billion/year flow to those reporting incomes of more than $200,000/year, $80 billion/year flow to those reporting incomes of between $100,000/year - $200,000/year, and $30 billion/year flow to those reporting incomes of less than $100,000/year.

Things I Forgot to Post Months Ago: Does Stephen Williamson Understand the Monetary Economics He Teaches Edition?

Sorry. This should have gone up… months ago…

I see Stephen Williamson is [was] ranting about how he teaches people monetary theory while I teach them John Stuart Mill, Wicksell, Fisher, Friedman, and Hicks…

From my perspective, the problem is that Stephen Williamson does not understand the monetary theory he purports to teach--and does not understand it because he does not know Mill, Wicksell, Fisher, Friedman, and Hicks.

What Is to Be Done Now?: Jeff Sachs Appears to Miss the Point by a Substantial Margin...

Jeff Sachs:

Move America’s economic debate out of its time warp: In Krugman’s simplified Keynesian worldview, there are no structural challenges, only shortfalls in aggregate demand. There is no public debt problem. There is no global competitiveness challenge, since “competitiveness” is a myth when applied to national economies. Fiscal multipliers are predictable, timeless, persistent, and large. All growth reversals can be solved through larger deficits. Politicians can be trusted to design short-term stimulus spending programmes of hundreds of billions of dollars. Tax cuts are about as good as increases in government spending, and short-term boosts in spending are about as good as long-term public investments.  Not one of these conclusions stands scrutiny. 

Let Us Have a Constitutional Moment Here, Nino...

Maybe I am simply being stupid, but it seems to me that there were three nearly-indistinguishable ways to structure the "mandate" part of the Affordable Care Act:

1. A command to purchase health insurance--under pain of losing (part of) your tax refund.

2. A command to have purchased health insurance continuously since the effective date of the ACA when you show up at the emergency room--under pain of having to pay the back premiums plus a fine.

3. Simple "play or pay"--purchase health insurance or else pay an extra tax to cover the costs of treating you when you show up, uninsured, at the emergency room.

The Supreme Court's RomneyCare Decision and the Future of Health Care Reform

As delivered at the U.C. Berkeley SCOTUS ACA Forum, July 2, 2012:

With respect to last Thursday: One piece of background is all-important in assessing the decision: ObamaCare is RomneyCare.

The health-care reform plan that Mitt Romney proposed when he was Governor of Massachusetts is the health-care reform plan that Barack Obama proposed. RomneyCare made it through the Massachusetts legislature with only two dissenting votes. No office-holding Republican complained that RomneyCare was bad policy, or would destroy the economy, or would be unconstitutional, or whatnot--for it was the signature policy initiative of a Republican governor. The mandate that was at its core? That was the conservative Personal Responsibility principle. And remember the centerpiece of the Bush administration's Social Security privatization proposals: it was an individual mandate to regulate "inactivity": to require that people who had not established their own private individual retirement accounts do so.

Brad DeLong: Yes, the Multiplier Is Likely to Be Very Small Away from the Zero Lower Bound

YES, THE MULTIPLIER IS LIKELY TO BE VERY SMALL AWAY FROM THE ZERO NOMINAL LOWER BOUND ON INTEREST RATES. WHY DO YOU ASK?

In trotting around the country giving versions of DeLong and Summers, “Fiscal Policy in a Depressed Economy”, I have found that a point that seemed completely obvious to us is not obvious at all to many.

Here is the point: an optimizing central bank that cares about inflation and unemployment but not about the level of interest rates will, as long as it does not find itself at the zero nominal lower bound, engage in full fiscal offset: will take care to make sure that the net-of-monetary-policy-reaction fiscal multiplier is very close to zero by making the monetary policy reaction function in (r, Y) space nearly vertical.

Here is the argument