## Liveblogging World War II: January 23, 1942

The Red Army encircles its first (small) group of Nazi soldiers in the Kholm pocket:

Kholm Pocket - Wikipedia, the free encyclopedia: The Kholm Pocket (German: Kessel von Cholm; Russian: Холмский котёл) was the name given for the encirclement of German troops by the Red Army around Kholm south of Leningrad, during World War II on the Eastern Front. The pocket existed from 23 January 1942 until 5 May 1942. A much larger pocket was simultaneously surrounded in Demyansk, about 100 km (62 mi) to the northeast. These were the results of German retreat following their defeat during the Battle of Moscow. At the small Kholm pocket, 5,500 German soldiers held out for 105 days. The pocket was supplied by air but too small for planes to land and supplies had therefore to be dropped in and recovered by the German defenders…. Hauptmann Albert Biecker was awarded the Knight's Cross of the Iron Cross on 20 March 1942 for his command of the defence…. in Cholm, four days before the pocket was relieved by German forces….

Members of the Reserve-Polizei-Bataillon 65, a police unit from Gelsenkirchen, were questioned after the war by the state prosecuter in Dortmund for their involvement in ethnic cleansing in Eastern Europe. The unit was found to have taken part in a minimum of 5,000 executions and a large number of deportations to concentration camps. Among them was also the hanging of a young girl in Kholm during the siege.

## Quote of the Day: January 23, 2012

"Nixonland: it is the America where two separate and irreconcilable sets of apocalyptic fears coexist in the minds of two separate and irreconcilable groups of Americans."

--Rick Perlstein, Nixonland: The Rise of a President and the Fracturing of America

## The Repubicans Are Now a Big Problem for All of Us...

BooMan:

Booman Tribune ~ A Progressive Community: This is Not Excellent News for Romney: People and pundits on the right tell themselves so many lies that it is often difficult to know if they are deceiving themselves or simply trying to deceive the rest of us. Now, I am willing to concede one thing from Hugh Hewitt's analysis…. If Mitt Romney is the eventual Republican nominee, he will get some benefits out of having to fight for it. Barack Obama had something like 19 debates with Hillary Clinton. He got better as he went along…. The same could be true for Romney. But I think there are downsides that outweigh the upsides for Romney…. Mitt Romney is not the anti-Establishment choice. He is playing the role of Hillary Clinton. He's playing it badly, and without the fervent base of support she enjoyed, but he's the candidate that most elected Republicans and big donors want on the top of the ballot. In this cycle, Obamacare is what Iraq was in the last cycle. Romney was for it before he was against it, putting him in a position similar to Kerry and Clinton.

The problem is that Romney is distorting himself in order to compensate for his past sins and in an effort to win the trust of conservatives. The more he has to distort himself and the longer he has to go on distorting himself, the less credibility he has and the harder it is for him to pivot back to the middle.

Obama didn't need to do any of that…. When Obama emerged as the nominee of the party, he didn't have to move dramatically from the way he had been campaigning all along. That's why the prolonged campaign ultimately did him more good than harm.

Romney… has already abandoned almost every moderate or sane position he ever held, and he's gained a reputation as a flip-flopper as a result. This makes it much harder for him the flip back to the middle without exacerbating his reputation for lacking any principles. But the more time he has to do it, the most subtle and gradual he can be about it. At a minimum, losing South Carolina has lost him valuable time.

But I think his problem is more severe than that. If he continues to campaign as he has been, he's going to lose the nomination…. [I]t's not clear that Romney can change his campaign in a way that will be successful, but if he does, he will drive up his unfavorables to Newt-like levels with the general electorate.

So, all in all, I believe Gingrich's win in South Carolina is very bad news for Mitt Romney and for the Republican Party. You can try to make some lemonade out of it, and there could be some benefits, but the net result is unlikely to be anything less than disastrous.

Let me say that the damage likely to be done by a President Gingrich means that Gingrich's win in South Carolina is very bad news for the country as well.

## Econ 1: U.C. Berkeley: Spring 2012: Lecture Files for January 23, 2012

Econ 1 Files for January 23, 2012:

## If You Don't Learn How to Mark Your Beliefs to Market, You Risk Turning into Coot Yelling at Clouds…

Kevin Drum watches Michael Kinsley, who deals with a contradiction between his firmly-held beliefs and reality by... doubling down on his unshakeable previous beliefs:

Michael Kinsley's Inflation Demons Are Still Haunting Him: Two years ago Michael Kinsley wrote a piece in the Atlantic explaining that he was worried about inflation:

For this, I was widely ridiculed, and I’d like to take this opportunity to claim vindication. That is, I’d like to —  but I can’t. Inflation (CPI) has been creeping up the past couple of years —  from less than 2 percent to more than 3 percent  —  but that’s still pretty low. Nevertheless, I double down: Barring a miracle, there will be a fierce storm of inflation sometime in the next few years and it will wipe out a big chunk of the national debt, along with the debts of individual citizens, and the savings of others.

One reason I say this is that the arguments on the other side have shifted. It used to be, “It’s not gonna happen — so don’t worry about it.” Now it’s, “You know, a moderate dose of inflation would be no bad thing. So don’t worry about it.”

The last time around I sort of semi-defended Kinsley. This time around I'm just perplexed. His original piece appeared in March 2010. Here is Paul Krugman a month earlier praising a suggestion from IMF chief economist Olivier Blanchard that the world could use a bit of additional inflation:

I’m not that surprised that Olivier should think that; I am, however, somewhat surprised that the IMF is letting him say that under its auspices. In any case, I very much agree.

I would add, however, that there’s another case for a higher inflation rate....[blah blah blah].... So yes, let’s have modestly higher inflation. Alas, Ben Bernanke — at least when speaking publicly — doesn’t agree. And I can only imagine what Trichet would say.

And here is Ryan Avent at the same time, not only agreeing but pointing out that Kenneth Rogoff, Greg Mankiw, Scott Sumner, and Brad DeLong all agree too. So this time I can't even semi-defend Kinsley. Plenty of economists were making the case for higher inflation well before he wrote his original article. The arguments haven't shifted, he just never noticed them before.

Why oh why can't we have a better press corps?

## Econ 1: Spring 2012: UC Berkeley: Announcements for Monday January 23, 2012

• First Essay “Intro to GSI” due at start of next section...
• One more week to do problem set 1...
• iClicker points will start for real next Monday...
• Econ 1 §106 REASSIGNED TO 156 DWINELLE...

## Twitterstorm delong: January 22, 2012

• MarkThoma Mark Thoma @ @ModeledBehavior I have never resolved how important national borders should be in social welfare functions. Let me put that another way ... 54 minutes ago Retweeted by delong

• MarkThoma Mark Thoma @ @ModeledBehavior Remember this? http://bit.ly/xwKzUL An iPod Has Global Value. Ask the (Many) Countries That Make It. (by Varian) 1 hour ago Retweeted by delong

• davidfrum davidfrum Better point: nobody who has ever worked with Gingrich thinks he should be president. Let's hear from them .... 1 hour ago Retweeted by delong

• AmandaMarcotte Amanda Marcotte http://bit.ly/wvB2WV The anti-Girl Scouts nonsense is as much about GS's religious tolerance as its openness on gender. 1 hour ago Retweeted by delong

• delong J. Bradford DeLong @ @adamkotsko Full employment, so people don't riot in the streets and then put the heads of the members of the State Council on pikes 4 hours ago

• fivethirtyeight Nate Silver In Florida GOP primary in 2008, Romney actually won the white vote. But lost state because Latinos went 54-14 for McCain. 5 hours ago Retweeted by delong

• BorowitzReport Andy Borowitz I'd think I'd rather have a President who gives people food stamps than one who runs up a $500,000 tab at Tiffany. 5 hours ago Retweeted by delong • Sherman_Alexie Sherman Alexie Voting for Newt proves that Republicans are the Official Party of Moral Relativism. 5 hours ago Retweeted by delong • jayrosen_nyu Jay Rosen Wonder why @howardkurtz decided on a one-sided conversation with @thepubliceditor, giving platform to none of those who said: WTF? Strange. 8 hours ago Retweeted by delong • ezraklein Ezra Klein Pretty sure Alinsky's 'Rules for Radicals' didn't include "become president and focus on negotiating with Congress and major industries." 7 hours ago Retweeted by delong • fivethirtyeight Nate Silver Also surging at Intrade: the Obama re-elect contract. Now trading at 56%, a 5-month high. http://bit.ly/e5QnYA 6 hours ago Retweeted by delong • AriBerman Ari Berman Food stamp program "has so far grown by 444,574 fewer recipients during Obama's time in office than during Bush's" usat.ly/AAo5S1 9 hours ago Retweeted by delong • delong J. Bradford DeLong @ @ModeledBehavior Will you weigh in? In a righteous world Ta-Nehisi Coates would have a lot more wingmen than he does, but I have a day job. 9 hours ago • delong J. Bradford DeLong Kieran Healy: What Is the Best Virtual Reality Tool Ever? http://bit.ly/yRtS9D 9 hours ago • delong J. Bradford DeLong Chicago Macro: Yet Another Soft Bigotry of Low Expectations Post http://bit.ly/y8yCeQ 9 hours ago • davidfrum davidfrum In fairness, Newt did change Washington. Lobbyists' fees much higher now 21 hours ago Retweeted by delong • BetseyStevenson Betsey Stevenson Just when I thought that Newt couldn't get worse RT @jimtankersley: Pretty sure Newt just embraced the gold standard, by extension 21 hours ago Retweeted by delong • markos Markos Moulitsas RT @pourmecoffee: Newt: I will fight for America for better or for worse, richer or poorer, in sickness and health, LET ME REPHRASE THAT. 22 hours ago Retweeted by delong • BorowitzReport Andy Borowitz A sign of Gingrich's new confidence: he just changed his Facebook status to "in an open relationship." #SCPrimary 22 hours ago Retweeted by delong • T1theinfamous T1theinfamous @ @AngryBlackLady States should have freedoms and rights to tell Negroes and whores that they have no freedom or rights - Ron Paul 23 hours ago Retweeted by delong • joshtpm Josh Marshall Paul saying how he's agst system that's had America going downhill 4 "70 or 80 years" hard 2 get people 2 buy been all downhill since 1932. 23 hours ago Retweeted by delong • blakehounshell Blake Hounshell Newt onstage with a state senator who called Obama and SC governor Nikki Haley "rag heads" 23 hours ago Retweeted by delong • drgrist David Roberts Citing coal as an example of gov't OVER-regulation is surely the reductio ad absurdum of the GOP agenda. 23 hours ago Retweeted by delong • AriMelber Ari Melber What are your favorite #WeaponsOfTheLeft ? Minimum wage. Child labor laws. MLK Day. 23 hours ago Retweeted by delong • AriMelber Ari Melber The G.I. Bill. The Voting Rights Act. Social Security. #WeaponsOfTheLeft @markos @mharrisperry @toure @jamilsmith @anamariecox @AntDeRosa 23 hours ago Retweeted by delong • tanehisi Ta-Nehisi Coates Lincoln predicts Paul's Civil War stance--"Stand and deliver, or I shall kill you, and then you will be a murderer!" bit.ly/wOQYol 23 hours ago Retweeted by delong • AngryBlackLady Imani ABL THIS. RT @tanehisi: Compensation slave-owners=nonviolent resolution. Compensating slaves=damned reparations. #privilege // #p2 #TFY 23 hours ago Retweeted by delong • markos Markos Moulitsas 28% of South Carolina is black. 99% of GOP primary votes were white. http://fxn.ws/zdCqyI 23 hours ago Retweeted by delong • RBReich Robert Reich Now is the time for Republican leaders -- if there are any left -- to do the responsible thing and tell the truth about Newt Gingrich. 23 hours ago Retweeted by delong • BorowitzReport Andy Borowitz Gingrich: "Tonight's great victory means I'm staying in this race for another three wives." #SCPrimary 23 hours ago Retweeted by delong • CitizenCohn Jonathan Cohn Don't usually bother w/Paul, but I'm pretty sure gov't spending on health care has, in fact, expanded access #Medicare #Medicaid #SCHIP 23 hours ago Retweeted by delong • RBReich Robert Reich White House loves idea of Grinch heading R ticket. Increases O's odds by 20%. But also increases odds that next US prez will be insane. 21 Jan Retweeted by delong • ezraklein Ezra Klein HUGE win for Obama in South Carolina tonight. And I don't mean in the Democratic primary. 21 Jan Retweeted by delong • BorowitzReport Andy Borowitz BREAKING: Stung By Defeat, Romney Considers Adultery: http://bit.ly/vbnJ4j #SCPrimary 21 Jan Retweeted by delong • joshtpm Josh Marshall Open marriage getting a second look among So. Evangelicals 21 Jan Retweeted by delong • Atrios Atrios will work for newt for$200,000K tiffany's gift card 21 Jan Retweeted by delong

• AndyHarless Andy Harless Based on past experience it's not clear to me why people think being a lunatic would be to Newt's disadvantage in the general election. 21 Jan Retweeted by delong

• matttbastard Matthew Elliot RT @HuffPostMedia: Fox News' Chris Wallace: SC exit polls say Romney's big problems are 'he's a moderate & he's a Mormon.' #scprimary 21 Jan Retweeted by delong

• RP_Newsletter Ron Paul Newsletter People say government should do more to stem AIDS. Actually, it should do less and thereby help more. 21 Jan Retweeted by delong

• neilbarofsky Neil Barofsky @ @ddayen Yes, but also think about what could've been done for housing if Admin had used just part of the 250bn of unused TARP it let expire 21 Jan Retweeted by delong

• JoeNBC Joe Scarborough CNBC reports that early polling has Newt beating Romney by 14%. 21 Jan Retweeted by delong

• DougHenwood Doug Henwood @ @delong RP said that liberty was lost as a result of the Civil War. End of slavery meant nothing apparently - property rights took a hit. 21 Jan Retweeted by delong

• delong J. Bradford DeLong @adamkotsko USSR didn't create new forms of economic management: copied Fordism x Taylorism x Ludendorff-Rathenau war economy. Triedbut found them sustainable only with permanent ideological mobilization plus terror. Decline into bureaucratic corruption 21 Jan

• JohnQuiggin JohnQuiggin @CoreyRobin @delong The Character of Mr. Burke http://bit.ly/wHYSp5 20 Jan Retweeted by delong

• David Graeber: The Political Metaphysics of Stupidity http://commoner.org.uk/10graeber.pdf 21 Jan

• justinwolfers Justin Wolfers Romney's economics: Smart advisers, good advice, but policies that sellout or are so-so. Smart piece by @jimtankersley: http://nationaljournal.com/magazine/the-a… 21 Jan Retweeted by delong

• tanehisi Ta-Nehisi Coates Ron Paul preaching the Lost Cause with the the Confederate flag in the background...But he is against the drug war. http://ow.ly/8BsUA If an unreconstructed neo-Confederate is the best your best soldier against the Drug War, you have already lost. 21 Jan Retweeted by delong

• siracusa John Siracusa By now, we all hate proprietary file formats for data, but single-vendor app platforms are commonplace and far less demonized. 20 Jan Retweeted by delong »

• AndyHarless Andy Harless IMO @delong should think twice before favorably citing David Glasner on the topic of the Savings-Investment identity. delong.typepad.com/sdj/2012/01/be… 6 hours ago Favorite Retweet Reply

• bjandcircleit Brian J @ @AriBerman @delong But those are facts that imply Gingrich is lying or an idiot...or both. DO YOU REALIZE WHAT YOU ARE SAYING? 8 hours ago

• JosephFCrater Joseph Force Crater @ @JohnQuiggin @CoreyRobin @delong Cobbett was a total enemy of Paine, and then he switched sides and carried Paine's bones back to UK. 9 hours ago

• MaddogM13 MaddogM13 “@delong “@RBReich Gingrich almost destroyed the GOP in 1996. Now he's been given a second chance.”” 23 hours ago

• MaddogM13 MaddogM13 “@delong “@DanRiehl Statement by Karl Rove: There's not always an illegitimate black child around when you need one”” 21 Jan

• MaddogM13 MaddogM13 “@delong “@tanehisi It's interesting how Ron Paul argues for slave-owners being compensated, (cont) HTTP://tl.gd/ffdhph 21 Jan

• CoreyRobin corey robin @ @JohnQuiggin @delong One of Hazlitt's classic essays. Not exactly right on the facts, but almost as brilliant as his essay on hating. 21 Jan

• bjandcircleit Brian J @delong EPI: Top 10 pct have 64 pct of economy wide income gains, bottom 60 pct received only 11 pct of income gains. http://bit.ly/w7HURH 21 Jan

• bjandcircleit Brian J @delong Even Hubbard once said long-term deficit/debt deal should include tax increase on well off. http://rollingstone.com/politics/news/… 21 Jan

## Earl Cook's Estimates of Energy Capture...

"Early agriculturalists" means Fertile Crescent ca. 5000 BC; "advanced agriculturalists" means northwest Europe ca. 1400; "industrial" means northwest Europe ca. 1860; "technological" means North Atlantic ca. 1970.

## Behavioral Relationships, Equilibrium Conditions, Accounting Identities...

it turns out in economics to be remarkably hard for lots of people to distinguish between:

• behavioral relationships--things that tell you how people will change their behavior to respond to changes in the economic environment and economic policy;

• equilibrium conditions--things that tell you what configurations of the economic environment are consistent and are not rapidly-changing out-of-equilibrium phenomena seen for an eyeblink of time, if that long; and

• accounting identities--things true by the metaphysical necessity of the definitions that are devoid of interesting substantive implications.

Mark Thoma tells us to look at Noah Smith on this, and related intellectual no-nos. And Paul Krugman chimes in:

Mistaken Identities: Via Mark Thoma, Noah Smith* has a terrific piece on how to argue with economists. All the points are good, but I’d like to focus on Principle 4, “Argument by accounting identity almost never works.”

What he’s referring to… is arguments like “since savings equals investment, fiscal stimulus can’t affect overall spending”, or “since the current account balance is equal to the difference between domestic saving and domestic investment, exchange rates can’t affect trade”. The first argument is, more or less, Say’s Law and/or the Treasury view. The second argument is what John Williamson called the doctrine of immaculate transfer.

Why are such arguments so misleading?… [L]et me put in a further word…. [E]conomic explanations… have to involve micromotives and macrobehavior… describing how the actions of individuals, driven by individual motives… add up to interesting behavior at the aggregate level.

And the key point is that individuals in general neither know nor care about aggregate accounting identities…. [I]f you want to claim that a rise in savings translates directly into a fall in the trade deficit, without any depreciation of the currency, you have to tell me how that rise in savings induces domestic consumers to buy fewer foreign goods, or foreign consumers to buy more domestic goods. Don’t tell me about how the identity must hold, tell me about the mechanism that induces the individual decisions that make it hold…. [O]nce you do that, you realize that something else has to be happening — a slump in the economy, a depreciation of the real exchange rate, it depends on the circumstances, but it can’t be immaculate, with nothing moving to enforce the identity.

When it comes to confusions about the macro implications of S=I, again the question is how the identity gets reflected in individual motives — is it via the interest rate, via changes in GDP, or what?

Accounting identities… inform your stories about how people behave, [they do] not act as a substitute for behavioral analysis.

Indeed.

You use the behavioral relationships to understand how people will act in the economic environment.

You then check the equilibrium conditions to see, given economic policy and the economic environment, which configurations of the economy are self-consistent equilibria.

You use accounting identities as part of the paperwork to keep track of what the behavioral relationships and equilibrium conditions are.

You don't base explanations on them. You don't say, as Eugene Fama does, that "when new savings are used to buy government bonds, the people who sold the bonds must do something with the proceeds. In the end, the new savings have to work their way through to new private investment…" and think that you have made an argument. You don't say, as John Cochrane does, that "if the government borrows a dollar from you, that is a dollar that you do not spend, or that you do not lend to a company to spend on new investment. Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both. This form of “crowding out” is just accounting, and doesn't rest on any perceptions or behavioral assumptions…" and think that you have made an argument. At least, you don't if you know what you are talking about.

UPDATE: The thoughtful David Glasner points out that it's not (or not all) Cochrane's and Fama's fault:

Why Am I Arguing with Scott Sumner? « Uneasy Money: When Scott says he can derive a substantive result about the magnitude of the balanced-budget multiplier from an accounting identity between savings and investment, he is making a theoretically ungrammatical statement. My problem is not with whatever value he wants to assign to the balanced-budget multiplier. My problem is that he thinks that he can draw any empirically meaningful conclusion — about anything — from an accounting identity. Scott defends himself by citing Mankiw and Krugman and others…. I don’t have a copy of any of Krugman’s textbooks…. I was able to find the statement in Mankiw’s text. And yes, he does say it, and he was speaking incoherently when he said it. Now, it is one thing to make a nonsense statement, which Mankiw obviously did, and it is another to use it as a step – in fact a critical step — in a logical proof, which is what Scott did.

The unfortunate fact is that the vast majority of economics textbooks starting with Samuelson’s classic text (though not until the fourth edition) have been infected by this identity virus… introduced into economics by none other than Keynes himself in his General Theory. He was properly chastised for doing so by Robertson, Hawtrey, Haberler, and Lutz among others. Perhaps because the identity between savings and investment in the national income accounts reinforced the misunderstanding and misconception that the Keynesian model is somehow based on an accounting identity between investment and savings, the virus withstood apparently conclusive refutation and has clearly become highly entrenched….

It is legitimate to refer to the equality of savings and investment in equilibrium, but you can’t extrapolate from a change in one or the other to determine how the equilibrium changes as a result of the specified change in savings or investment, which is what Scott tried to do. So, yes, the mistaken identification of savings and investment is distressingly widespread, but unfortunately Scott has compounded the confusion…. Let me again cite as the key source identifying and tracking down all the confusions and misconceptions associated with treating savings and investment (or expenditure and income) as identically equal the classic paper by Richard Lipsey, “The Foundations of the Theory of National Income,” originally published in 1972 in Essays in Honour of Lord Robbins and reprinted in Lipsey, Macroeconomic Theory and Policy: The Selected Essays of Richard G. Lipsey, vol. 2…

## Kieran Healy: What Is the Best Virtual Reality Tool Ever?

The book, he says--or, rather, the column of print.

Kieran Healy:

Apple for the Teacher: Instapaper and the Persistence of the Textbook: In his presentation, Apple’s Phil Schiller heavily criticized the static, text-heavy format of the traditional texbook. Far better to present information dynamically with graphics, supporting illustrations, movies, interactive components and all the rest of it.

Sure, why not? But—-consider how many of the most sophisticated computer users consume "content" online, perhaps especially the ones who use iPads. Do they seek out material that looks like this? Do they want multi-modal, multimedia formats? Do they love jazzy Infographics? No. They use Instapaper or some equivalent tool to create reading lists for themselves, and to read those articles in a format that deliberately strips out a lot of the original presentation and replaces it with simple, clean, easy-to-read, blocks of text that look a lot like a well-designed piece of outmoded 1950s technology.

Why do people like Instapaper so much? It’s because they’ve chosen to read what they save, and the app lets them keep it and read it in a straightforward, uncluttered way. Finding the good stuff is the hard part, along with the ability, motivation, and opportunity to read things: once you’re there, you don’t need the dynamic illustrations or zooming or supporting illustrations. You’ll read it because you’re already interested in it, and you’ll even seek out and pay for a way to make the reading and learning experience static and simple, because you don’t want to be distracted.

A similar point applies in education. Technology by itself—-let alone Keynote transitions, animations, or what have you—-will not by themselves engage students. The promise of "technology in the classroom" has always been that it will magically "engage" students in what they have to learn. But it never does: you still need a good teacher, the opportunity to learn, and some motivation of your own. More dynamic textbooks aren’t the solution to the problem of education—-they’re not even the solution to the problem of textbooks.

It’s strange to see Apple going down this well-worn road. When the iPad was launched, a stock criticism of it was that it was a device made for consuming rather than making or doing things. Very quickly, people found ways to use it that showed it was capable of a lot more than that. Apps like GarageBand or Star Walk or Leafsnap—-there are loads more—-take advantage of the iPad’s computing power and portability in ways that put it in a different class of activity from reading textbooks or sitting working at a computer. It’s these sort of use-cases where a device like the iPad really shines. So it’s a pity that Apple has chosen to re-enter the education market with a pitch about Reinventing the Textbook that, frankly, sounds pretty old hat. The reason, I suppose, is that there’s potentially a lot of money to be made selling the things to schools as replacements for the books.

Where Kieran may be wrong--not is wrong, but may be wrong--is that he may miss the fact that humanity is divided into two groups: we for whom the column of print is the best virtual reality tool ever, and the rest of the human race for whom it is not.

We need Instapaper, a quiet room, and the Lynx browser. The rest of the human race may need the productions of iBooks Author.

## Chicago Macro: Yet Another Soft Bigotry of Low Expectations Post

I really, really wish Karl Smith would not do this…

Karl Smith writes:

Cochrane, Krugman, Lucas, Wren-Lewis and Sumner: A Very Short Interpretation « Modeled Behavior: I think the response to Cochrane and Lucas should go like this: "When the government raises taxes to fund additional spending then in theory the effect on aggregate demand depends crucially on what the money is spent on…."

When Cochrane explicitly and Lucas implicitly thinks in terms of transferring purchasing power from one randomly chosen citizen to another there is no reason to expect that this will have any effect on either the marginal utility of consumption or the marginal product of capital.

Indeed, though Lucas trips himself up in the phrasing when he describes the government using money to purchase a bridge he is almost certainly describing a situation that will have an effect on the marginal utility of consumption and perhaps also the marginal product of capital….

My hope is that this closes the intuition around why reasoning from random cash transfers or reasoning from a fully employed economy gives such different results from reasoning about a bridge purchase during a recession.

But Lucas is not "implicitly think[ing] in terms of transferring purchasing power from one randomly chosen citizen to another". Lucas is explicity thinking of the government using money to purchase a bridge.

You can say Lucas is confused. You can say Lucas is incoherent. You can say Lucas does not know his models. You can say Lucas has not done his homework. You can say Lucas is not thinking at all.

But to say that Lucas "Lucas implicitly thinks in terms of transferring purchasing power from one randomly chosen citizen to another" but "trips himself up in the phrasing"...

You do nobody any favors when you claim that somebody who grounds out to first really hit a home run...

## Quote of the Day: January 22, 2012

"The gorilla study illustrates, perhaps more dramatically than any other, the powerful and pervasive influence of the illusion of attention: We experience far less of our visual world than we think we do…"

--Christopher Chabris and Daniel Simons, The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us

## Liveblogging World War II: January 22, 1942

German 9th Army is in danger of encirclement in the Rzhev salient as Soviets converge on Vyazma (29th and 39th Armies from the North and General Pavel Belov’s 2nd Cavalry Corps from the South). At 10 AM, 9th Army’s General Model attempts to break up the encirclement by attacking out of Rzhev with tanks and Stuka dive-bomber support into the extended flank of Soviet 29th Army.

## Harold Pollack Gazes into the Face of Ross Douthat...

…and what he sees there strikes him, well…

Let me second Harold. The American liberals I know--and the American liberals I see on TV--are, if asked for advice by somebody carrying a child where there is strong reason to expect a problem in development, going to say: "This is your choice and your burden, but we all will be there to help you carry it--not least with publicly-funded health care and disability accommodation..."

The conservatives I know--the conservatives I see on TV--are much more likely to be: "you should do what I say, and if you don't you are a bad person, and the law should force you to do what I say..."

Evidence that this is not just my limited piece of the world but is much more general is provided by Ross Douthat. He looks at us liberals and sees… himself in the mirror: he sees a bunch of people whose primary impulse is: "do what I say!"

Harold Pollck:

Ross Douthat on the personal and the political « The Reality-Based Community: I just encountered today’s column by Ross Douthat:

Today, we are less divided over race, but more divided over sex and reproduction. In a country that cannot agree whether fetuses are human beings, even questions like how to mourn and bury a miscarried child are inevitably freighted with ideological significance. Likewise, in a country where the majority of Down syndrome fetuses are aborted, the mere act of carrying a child with a genetic disorder to term — as both the Palins and the Santorums, whose daughter Bella has Trisomy 18, have done — feels like a political statement…

[T]here’s an underlying assumption in Douthat’s passage that bears scrutiny. Some social conservatives assert that liberals look down on or disapprove of parents who choose to carry a fetus to term after receiving unfavorable prenatal genetic test results. Others assert that a pro-choice perspective brings an accompanying callous attitude towards the disabled. This was, for example, an undertone in the discussion of Governor Palin’s pregnancy during the 2008 campaign. I know of no evidence for either assertion. I was very involved with the Obama campaign in 2008. All of us were pretty or very partisan Democrats. Many of us came to deeply oppose Governor Palin as the campaign progressed. None of us had any interest in attacking Governor Palin over her family issues or her pregnancy. That just wasn’t what the campaign was about. A surprising number of us were caregivers for relatives and friends living with genetic disorders or other disabilities. Core to the pro-choice position is—and certainly should be—profound respect for parents who choose to continue a pregnancy knowing that this choice may bring particularly challenging implications and responsibilities.

My reading of the polling data is that people’s attitudes regarding abortion are not correlated with people’s willingness to provide practical help to people living with disabilities, or with people’s attitudes towards families such as the Palins or the Santorums who have faced adversity or tragedy connected with genetic disorders. The poisonous terms of the culture wars have been mercifully absent in the world of disabilities.

Many of us on the left also believe that our preferred policy choices—universal health coverage, expanded educational services, expanded services and legal protections for the disabled, for example—are especially important to protect and nurture children who are born with conditions that prevent their bodies or their minds from properly working as they are supposed to do.

I have no problem with conservative politicians such as Santorum showing moving pictures of their own children. There’s a responsibility that comes with that. These same politicians should consider what’s happening around the country today as states—especially red ones—curb optional Medicaid and intellectual disability services in response to both a deep recession and congressionally-mandated budget cuts.

Douthat at times writes beautifully about these issues…. Yet many of the moralizing politicians he admires are failing to step up.

Why oh why can't we have a better press corps?

## Yes, Virginia, at Some Deep Level Ron Paul Does Not Think Black People Are Real People

byomtov said...: "The consent of the governed???"

There's a lot of idiocy here, but this really takes the cake.

Ron Paul is defending secession and talking abou the consent of the governed? Is he truly so stupid as to be unaware that "the governed" included the slaves? Does he imagine that the slaves, who were a majority in SC and MS, and around 45% in several other states, consented to the laws governing them?

## Why We Need the Republican Party as We Know It to Vanish as Fast as Possible...

It is fracking 2011, people. Ron Paul:

The Irony Of American History - Personal - The Atlantic: I'd like to think that the Confederate Flag in the back was photo-shopped. At any rate, what's amazing is the frame here--It's not the firing on federal property that inaugurated the War, it's Bull Run, or some such. It's as if I punch you in the face and then accuse you of bullying me after I get the crap kicked out of me. Except worse.

At least he's against the drug war...

## Quote of the Day: January 21, 2012

"The history of Athenian popular government shows that making good use of dispersed knowledge is the original source of democracy's strength."

--Josiah Ober, Democracy and Knowledge: Innovation and Learning in Classical Athens

## Liveblogging World War II: January 21, 1942

In North Africa... Rommel's second offensive begins. Cautious probing reveals that the British are ill situated and the German attacks meet with quick success. The Germans employ 100 tanks in their drive advancing to El Agheila on the inland flank while German and Italian infantry advance along the coast. The British forward defenses are manned by a Guard Brigade and part of 1st Armored Division. The attack when it comes, comes as a surprise.

## William Hazlitt's Political Essays: The Character of Mr. Burke

It is not without reluctance that we speak of the vices and infirmities of such a mind as Burke's: but the poison of high example has by far the widest range of destruction: and, for the sake of public honour and individual integrity, we think it right to say, that however it may be defended upon other grounds, the political career of that eminent individual has no title to the praise of consistency. Mr Burke, the opponent of the American war, and Mr Burke, the opponent of the French Revolution, are not the same person, but opposite persons -- not opposite persons only, but deadly enemies.

In the latter period, he abandoned not only all his practical conclusions, but all the principles on which they were founded. He proscribed all his former sentiments, denounced all his former friends, rejected and reviled all the maxims to which he had formerly appealed as incontestable. In the American war, he constantly spoke of the right of the people as inherent, and inalienable: after the French Revolution, he began by treating them with the chicanery of a sophist, and ended by raving at them with the fury of a maniac. In the former case, he held out the duty of resistance to oppression, as the palladium and only ultimate resource of natural liberty; in the latter, he scouted, prejudged, vilified and nicknamed, all resistance in the abstract, as a foul and unnatural union of rebellion and sacrilege. In the one case, to answer the purposes of faction he made it out, that the people are always in the right; in the other, to answer different ends, he made it out that they are always in the wrong -- lunatics in the hands of the royal keepers, patients in the sick-wards of a hospital, or felons in the condemned cells of a prison.

In the one, he considered that there was a constant tendency on the part of the prerogative to encroach on the rights of the people, which ought always to be the object of the most watchful jealousy, and of resistance, when necessary: in the other, he pretended to regard it as the sole occupation and ruling passion of those in power, to watch over the liberties and happiness of their subjects. The burthen of all his speeches on the American war, was conciliation, concession, timely reform, as the only practicable or desirable alternative of rebellion: the object of all his writings on the French Revolution was, to deprecate and explode all concession and all reform, as encouraging rebellion, and as in irretrievable step to revolution and anarchy.

In the one, he insulted kings personally, as among the lowest and worst of mankind; in the other, he held them up to the imagination of his readers, as scared abstractions. In the one case, he was a partisan of the people, to court popularity; in the other, to gain the favour of the Court, he became the apologist of all courtly abuses. In the one case, he took part with those who were actually rebels against his Sovereign: in the other, he denounced as rebels and traitors, all those of his own countrymen who did not yield sympathetic allegiance to a foreign Sovereign, whom we had always been in the habit of treating as an arbitrary tyrant.

Nobody will accuse the principles of his present Majesty, or the general measures of his reign, of inconsistency. If they had no other merit, they have, at least, that of having been all along actuated by one uniform and constant spirit: yet Mr Burke at one time vehemently opposed, and afterwards most intemperately extolled them: and it was for his recanting his opposition, not for his persevering in it, that he received his pension. He does not himself mention his flaming speeches in the American war, as among the public services which had entitled him to this remuneration.

The truth is, that Burke was a man of fine fancy subtle reflection; but not of sound and practical judgment, nor of high or rigid principles. -- As to his understanding, he certainly was not a great philosopher; for his works of mere abstract reasoning are shallow and inefficient: -- nor was he a man of sense and business; for, both in counsel and in conduct, he alarmed his friends as much at least as his opponents: -- but he was an acute and accomplished man of letters -- an ingenious political essayist. He applied the habit of reflection, which he had borrowed from his metaphysical studies, but which was not competent to the discovery of any elementary truth in that department, with great facility and success, to the mixed mass of human affairs.

He knew more of the political machine than a recluse philosopher; and he speculated more profoundly on its principles and general results than a mere politician. He saw a number of fine distinctions and changeable aspects of things, the good mixed with the ill, and the ill mixed with the good; and with a sceptical indifference, in which the exercise of his own ingenuity was obviously the governing principle, suggested various topics to qualify or assist the judgment of others.

But for this very reason, he was little calculated to become a leader or a partizan in any important practical measure. For the habit of his mind would lead him to find out a reason for or against any thing: and it is not on speculative refinements, (which belong to every side of a question), but on a just estimate of the aggregate mass and extended combinations of objections and advantages, that we ought to decide or act. Burke had the power of throwing true or false weights into the scales of political casuistry, but not firmness of mind (or, shall we say, honesty enough) to hold the balance. When he took a side, his vanity or his spleen more frequently gave the casting vote than his judgment; and the fieriness of his zeal was in exact proportion to the levity of his understanding, and the want of conscious sincerity.

He was fitted by nature and habit for the studies and labours of the closet; and was generally mischievous when he came out; because the very subtlety of his reasoning, which, left to itself, would have counteracted its own activity, or found its level in the common sense of mankind, became a dangerous engine in the hands of power, which is always eager to make use of the most plausible pretext to cover the most fatal designs. That which, if applied as a general observation on human affairs, is a valuable truth suggested to the mind, may, when forced into the interested defence of a particular measure or system, become the grosses and basest sophistry.

Facts or consequences never stood in the way of this speculative politician. He fitted them to his preconceived theories, instead of conforming his theories to them. They were the playthings of his style, the sport of his fancy. They were the straws of which his imagination made a blaze, and were consumed, like straws, in the blaze they had served to kindle. The fine things he said about Liberty and Humanity, his speech on the Begum's affairs, told equally well, whether Warren Hastings was a a tyrant or not: nor did he care one jot who caused the famine he described, so that he described it in a way that no one else could. On the same principle, he represented the French priests and nobles under the old regime as excellent moral people, very charitable, and very religious, in the teeth of notorious facts, -- to answer to the handsome things he had to say in favour of priesthood and nobility in general; and with similar views he falsifies the record of our English Revolution, and puts an interpretation of the word abdication, of which a schoolboy would be ashamed.

He constructed his whole theory of government, in short, not on rational, but on picturesque and fanciful principles; as if the king's crowns were a painted gewgaw, to be looked at on gala-days; titles an empty sound to please the ear; and the whole order of society a theatrical procession.

His lamentations over the age of chivalry, and his projected crusade to restore it, are about as wise as if any one from reading the Beggar's Opera, should take to picking of pockets: or, from admiring the landscapes of Salvator Rosa, should wish to convert the abodes of civilized life into the haunts of wild beasts and banditti. On this principle of false refinement, there is not abuse, nor system of abuses, that does not admit of an easy and triumphant defence; for there is something which a merely speculative enquirer may always find out, good as well as bad, in every possible system, the best or the worst; and if we can once get rid of the restraints of common sense and honesty, we may easily prove, by plausible words, that liberty and slavery, peace and war, plenty and famine, are matters of perfect indifference. This is the school of politics, of which Mr Burke was at the head; and it is perhaps to his example, in this respect, that we owe the prevailing tone of many of those newspaper paragraphs, which Mr Coleridge thinks so invaluable an accession to our political philosophy.

Burke's literary talents were, after all, his chief excellence. His style has all the familiarity of conversation, and all the research of the most elaborate composition. He says what he wants to say, by any means, nearer to more remote, within his reach. He makes use of the most common or scientific terms, or the longest or shortest sentences, of the plainest and most downright, or of the most figurative modes of speech. He gives for the most part loose reins to his imagination, and follows it as far as the language will carry him. As long as the one or the other has any resources in store to make the reader feel and see the thing as he has conceived it, in its nicest shades of difference, in its utmost degree of force and splendour, he never disdains, and never fails to employ them.

Yet, in the extremes of his mixed style, there is not much affectation, and but little either of pedantry or coarseness. He everywhere gives the image he wishes to give, in its true and appropriate colouring: and it is the very crowd and variety of these images that have given to his language its peculiar tone of animation, and even of passion. It is his impatience to transfer his conceptions entire, living, in all their rapidity, strength, and glancing variety, to the minds of others, that constantly pushes him to the verge of extravagance, and yet supports him there in dignified security --

Never so sure our rapture to create,
As when he treads the brink of all we hate.

He is the most poetical of our prose writers, and at the same time his prose never degenerates into the mere effeminacy of poetry; for he always aims at over powering rather than at pleasing; and consequently sacrifices beauty and delicacy to force and vividness. He has invariable a task to perform, a positive purpose to execute, an effect to produce. His only object is therefore to strike hard, and in the right place; if he misses his mark, he repeats his blow; and does not care how ungraceful the action, or how clumsy the instrument, provided it brings down his antagonist.

## Twitterstorm delong; January 20, 2012

• fivethirtyeight Nate Silver Intrade now gives Romney only a 20% chance of winning SC tomorrow. (We still have him at 36%.) http://bit.ly/dIcTro 1 hour ago Retweeted by delong

• AKaczynski1 Andrew Kaczynski Watch Ron Pul explain the Civil War to you while standing in front of a giant Confederate flag. http://bit.ly/wCaezY 1 hour ago Retweeted by delong

• B_Eichengreen Barry Eichengreen Here the Motley Fool takes up an argument from "Exorbitant Privilege" about the euro's likely survival: http://tinyurl.com/7y9khbj 26 minutes ago Retweeted by delong

• AKaczynski1 Andrew Kaczynski 2006 Boston Globe article mentions Mitt Romney got the idea for the individual mandate from Newt Gingrich. http://bo.st/xS6ADR 19 minutes ago Retweeted by delong

• drgrist David Roberts @ @ModeledBehavior Polls say otherwise. Majorities in favor of addressing CO2 & encouraging clean energy. 17 minutes ago Retweeted by delong

delong J. Bradford DeLong Gingrich Says 'Work' Is A 'Strange, Distant Concept' To Juan Williams | ThinkProgress thinkprogress.org/justice/2012/0… 2 hours ago

• Justin Wolfers: Yes, Higher Income Inequality Is Associated with Lower Intergenerational Mobility? http://bit.ly/xrPjpH 4 hours ago

• Free exchange: The hangover | The Economist http://economist.com/node/21543139 8 hours ago

• The Impact of Fiscal Policy and Consumption Smoothing http://bit.ly/xcUont 23 hours ago

• ezraklein Ezra Klein Gingrich might win SC because he slammed the media for asking about an ultimatum he gave his exwife demanding an open marriage. Huh. 19 Jan Retweeted by delong

• drgrist David Roberts So Newt, after cheating on his wife for 6 years, retroactively asked for an open marriage. That is some genuinely slimy sh*t. 19 Jan Retweeted by delong

• AriBerman Ari Berman Note to future presidential candidates: starting your campaign by calling Social Security a "ponzi scheme" probably isn't right way to go 19 Jan Retweeted by delong

• delong J. Bradford DeLong Could Somebody Please Create Some High-Paying Sinecures to Get Scalia and Thomas Off the Bench Immediately? http://bit.ly/xvvILG 18 Jan

• R_Thaler Richard H Thaler Biggest economic diffs if Romney is elected? 1. MUCH bigger deficits. Tax cuts + DoD surge=red ink 2. Even greater inequality. Disputable? 18 Jan Retweeted by delong

• NicholasGruen Nicholas Gruen RT @Skulled: Under SOPA, you cd get 5 years for uploading a Michael Jackson song. 1 year more than the doctor who killed him 18 Jan Retweeted by delong

• delong J. Bradford DeLong Nervos Lecturae, Caffeinam Infinitam http://bit.ly/wLNhWd 18 Jan

• thinkprogress ThinkProgress New GOP candidate for U.S. Senate claims birth defects are God's punishment for women who previously had an abortion http://thkpr.gs/ymKVSG 17 Jan Retweeted by delong

• delong J. Bradford DeLong Hoisted from the Archives: Columbia Journalism School 701: Highly Advanced Journamalism: Mark Mitchell Utter and Com... http://bit.ly/ydQ2y4

• stegermeister Benjamin Steger @mattyglesias @delong Newt blamed his infidelity on working too hard, but he wants minorities to work harder...Thus he's against marriage? 1 hour ago

• altmandaniel Daniel Altman Fact (and perhaps axiom): No Republican presidential candidate proposes a tax reform that raises his own taxes @delong 3 hours ago

• bjandcircleit Brian J @delong Here's Justin Wolfers on Winship http://bit.ly/yM6T3A 10 hours ago

• bjandcircleit Brian J @delong Meanwhile, Jared Bernstein has experience w/ Sen. Pat Toomey and probably wishes GOP would wither away soon. http://bit.ly/wP4Ozq 10 hours ago

• ericuman Eric Umansky MT @delong: Romney’s tax plan would cut his own taxes by nearly half http://wapo.st/xHWOLH 19 Jan

• NewDeal20 New Deal 2.0 RT @delong: Capitalism and Freedom http://slate.me/xY6AFx 17 Jan

• StephenBove Stephen Bové RT @delong: We Still Need To See Romney's Tax Returns http://nyti.ms/yCAYtr [He ain't showing 'em till he HAS to.] 17 Jan

• *

## Post-WWII 24-Month Changes in the Employment/Population Ratio and in the Labor Force Parrticipation Rate

for the first two years of our current Lesser Depression, the labor force tracked almost exactly what we would have expected from the previous post-WWII experience of the correlation between changes in employment and the labor force, even though the post-January 2008 change in the employment-to-population ratio was far outside the previous post-WWII range of variation. By the start of 2010, the employment-to-population ratio had fallen 4.4% points below its start-of-2008 value, and that fall in employment had carried the labor force participation rate down by 1.4% points.

In the two years starting in January 2010, however, the previous relationship between employment and labor force participation broke down. Today the employment-to-population ratio is 0.3% points above its value of two years ago. But the labor force participation rate is not 0.2% points higher but rather 0.6% points lower than it was two years ago.

The natural fear is that this shows transitory cyclical non-employment turning into permanent structural non-employment as a result of persistent depression. The labor-force participation ratio is 0.8% points below where we would four years ago have expected it to be had we known then what the employment-to-population ratio would be today. Under the ancillary assumption that the gap between the employment-to-population and the labor-force participation ratios--the unemployment rate--is a sufficient statistic for the gap between the current state of the economy and the economy's sustainable potential employment level, the high and persistent employment of the past two years have robbed America of roughly 0.8%/65% = 0.012 one-eightieth of potential employment, and 0.8% of its potential output.

If this is indeed a permanent cost to the economy's long-run growth path from our current Lesser Depression, the shadow it casts on our future is wide, long, and deep indeed.

## Slate Has Just Turned into the Onion

No. I am not going to link to it. And I am not going to link to Scott Lemieux who links to it.

Why oh why can't we have a better press corps?

## Paul Krugman: Fannie and Freddie Are Not Good Things, But They Did Not Cause the Financial Crisis

Paul Krugman

Fannie Freddie Follies: Joe Nocera gets it right.

It’s worth noting, as Joe does, that when you hear the AEI guys asserting that Fannie and Freddie bought lots of “subprime and other high-risk” mortgages — which often gets truncated to assertions that they bought lots of subprime — you are being conned. There’s not much actual subprime in there, and the “other high-risk” turns out to be not all that high risk, and nothing at all like subprime.

But why did Fannie and Freddie have to be bailed out? Basically because they had virtually no capital, so that even though their losses as a percentage of assets were smaller than private institutions, the losses were still enough to put them underwater.

None of this is meant to defend what F&F did or how they behaved. But there’s no contradiction between the assertion that F&F were bad institutions run by bad people, and the assertion that they played no important role in creating the financial crisis. The widespread belief that they did play such a role is the result of an effective right-wing disinformation campaign, not serious analysis.

## Matthew Yglesias Turns the Snark Up to 11 on John Cochrane

Matthew Yglesias:

Capitalism and Freedom: As long as economists like Brad DeLong and John Cochrane are going to use their blogs to debate introduction to political philosophy issues, Moneybox may as well chime in…. Cochrane, like a lot of people with right-of-center views, thinks that he espouses a "negative freedom" view in which "rights, of individuals against interference by their government" trump things like a "freedom from want."… [M]y strong suspicion is that, like most people who say this is what they believe, he actually hasn't scrutinized it in detail….

[I]f we really wanted to maximize everyone's freedom from government interference we would get rid of all these pesky traffic laws…. [M]y most frequent encounters wth the long arm of the state are the constant walk/don't walk injunctions…. Those who commute by automobile will have noticed the traffic signals and the stop signs…. [Y]ou can't really posit these as prohibitions that are necessary to preserve the natural rights of other people…. Nevertheless, it's much better for everyone if you follow the rules as posted rather than simply asserting your inalienable right to drive around as you please. The freedom we care about when it comes to traffic laws is not minimizing government coercion, but maximizing our practical ability to get from place to place.

As a second example, air pollution. If John Cochrane drives around town and the particulate emissions from his automobile impair my ability to grow basil on my porch and exacerbate my allergy-induced respiratory problems, and in response I assault his person or his car the authorities will look askance at my claim to be acting to uphold my natural right…. The police will instead act to uphold his right to engage in a limited-but-meaningful level of harm-inducing pollution and will arrogate to the political process the authority to decide how much harm Cochrane will be allowed to impose….

As a third example, intellectual property. Cochrane's wife is an author. If I buy a copy of one of her books, retype it, and start selling copies at a discount rate over the internet I'll get arrested.

And all of that is to the good…. I don't think we should do without traffic regulation, halt all harm-inflicting air pollution, or have no intellectual property laws. It turns out that for a modern capitalist economy to function, you need to constrain individual liberty a fair amount relative to what a strict natural rights reading would entail…. [T]he original set of liberal thinkers who propounded natural rights theory were writing before digital reproduction or automobiles… [or] air pollution was really understood…. [T]hey didn't deal with these issues not-yet-arisen issues…. Which is fine. But I think most of the people around today who praise those thinkers… don't actually think we should throw the whole idea of a modern technologically advanced society overboard in the name of adherence to a strict Lockean doctrine…

## Justin Wolfers: Yes, Higher Income Inequality Is Associated with Lower Intergenerational Mobility

Freakonomics » Is Higher Income Inequality Associated with Lower Intergenerational Mobility?: A lot of our political debate boils down to questions about equality of outcomes versus equality of opportunity…. The United States… [has] high inequality, which I bet that doesn’t surprise you…. A score of zero means that we have equality of opportunity — the kids of rich people earn as much as the kids of the poor. A high number means that the rich parents have rich kids and poor parents have poor kids. The U.S. has a score of 0.4 which means that, on average, you pass on 40% of your economic advantage to your kids: if I earn $100,000 more than you, then on average, my kids will earn$40,000 more than your kids. So I think of this as a measure of inequality of opportunity. You’ll notice that the U.S. also scores high on this measure. Americans are often surprised to learn that in the land of opportunity, your life outcomes are largely determined by your parents.

It’s striking just how closely related inequality and mobility are. And it’s political dynamite.  Why? If income inequality in one generation can be linked to unequal opportunity in the next, then income inequality can’t just be dismissed as the politics of envy. My bet is that this chart that will launch a thousand papers, as economists try to sort out just what these linkages are. Whatever the answer, it will transform our thinking about inequality.

But in the political arena, the first instinct is to deny. And so not surprisingly, this chart has led to a wonk-fight.  If you want the dirty details, here’s Scott Winship’s critique, Miles Corak’s reply, Winship’s counter, and Corak’s response. I score this fight for Corak. It’s not even close: he’s the leading figure in international comparisons of mobility, and he’s put together the best data around. Other authors and other datasets yield the same conclusions.

There’s a broader lesson…. Winship has a bunch of complaints about how the data are constructed — and many are valid…. It’s a standard play from the wonk-fight playbook: throw lots of mud at the data, and hope that this leads people to mistrust the conclusions that follow.

Here’s the thing: his criticisms actually strengthen the original finding.

Think about it. Imagine how strong the “true” relationship must be if it shows up even when using only rough proxies for the “true” levels of inequality and immobility. In light of Winship’s criticisms, the high correlation in this chart is all the more remarkable.  If his gripes are correct, then graph understates the correlation between inequality and mobility….

Predictably enough, I spent yesterday reading lefty blogs trumpeting Corak’s analysis, and right-leaning blogs who didn’t want to believe the inequality-mobility link, endorsing Winship.

But both missed the bigger picture implications.

Either you’re convinced by Corak that the data can be trusted, and that they show there’s a strong link between actual inequality and actual mobility.  Or you believe Winship that the data are a pretty poor proxy for what’s really happening, and so there’s actually a very strong link that’s being disguised by imperfect data.

## Liveblogging World War II: January 20, 1942

The Wannsee Conference:

Reynhard Heydrich (Kenneth Branagh) "convinces" Wilhelm Stuckart (Colin Firth) not to push for his "humane" solution to the "Jewish Question"--mass sterilization rather than immediate mass murder.

http://www.historyguide.org/europe/wannsee.html

## Quote of the Day: January 20, 2012

"Parents of other friends were Revisionists, so named by Ze’ev Jabotinsky in the 1920s, when he invented his own brand of right-wing Zionism. The Revisionists’ slogan, which I heard often, was “A Jewish state with a Jewish majority on both sides of the Jordan,” a view that seemed pointless and funny to me in the 1950s and early 1960s, but became much less so after the Six Day War of 1967. The Revisionists were affiliated with the right-wing Herut (Freedom) Party in Israel, led by Menachem Begin, who, before Israeli independence, had led Jewish terrorists against the British colonizers of Palestine. According to my mother, Begin had dated her sister, one of my Israeli aunts, back in Poland when they were both young."

Yves Smith sends us to Michael C. who sends us to Carrick Mollenkamp, Lauren Tara LaCapra and Matthew Goldstein of Reuters:

INSIGHT - In MF Global, JPMorgan again at center of a financial failures: In late October, as MF Global Holdings Ltd teetered toward bankruptcy, Jon Corzine phoned his close-knit circle of Wall Street friends for help…. Global executives came to believe that JPMorgan Chase & Co. (JPM.N), one of MF Global's primary bankers and a middleman moving that cash, was dragging its feet in forwarding the funds…. By adhering to procedure and not cutting MF Global any slack, these people say, JPMorgan was able to slow the delivery of funds… hundreds of millions of dollars of MF Global money may be still stuck in accounts at JPMorgan….

To meet the sudden outflow, MF Global during the week of October 24 tapped the $1.3 billion loan commitment from a syndicate of banks led by JPMorgan. MF Global also decided to sell$1.3 billion of… commercial paper…. MF Global had used customer funds to invest in the short-term debt and now badly needed to liquidate the IOUs and move cash into the customer accounts to meet their demands…. Corzine turned to his old employer, Goldman Sachs… ask[ed it]… to buy the IOUs, offering a slight discount…. Cohn agreed…. Goldman traders made the purchases…. MF Global sought to settle the deal that day…. JPMorgan, in its role as middleman, was able to control the speed with which MF Global's asset sales were processed…. While MF Global waited for the funds from JPMorgan, it frenetically tried to avoid a second cash demand generated by the second Moody's downgrade…. To meet those demands, MF Global on October 28 undertook yet another set of asset sales totaling $4.5 billion. It sold the securities to JPMorgan, yet the bank was slow to settle this trade as well…. JPMorgan declined to confirm whether it bought the securities…. MF Global, during the weekend before it filed bankruptcy proceedings, made one final push to sell more assets. In London, it tried to sell off short-term European bonds, according to one trader at a London bank…. What remains unclear is whether JPMorgan held on to the funds, and where the funds are now. People familiar with the situation suggest that the funds are still at JPMorgan… ## Yes, Virginia, If Scott Winship Is Published in National Review Attacking Alan Krueger It Is Highly Likely that Winship Is Wrong and Krueger Is Right Noah Smith does the dirty work and takes out the intellectual garbage: Noahpinion: Scott Winship fails to show that Alan Krueger is a liar: Ever since Council of Economic Advisors chair Alan Krueger gave a speech on inequality, conservative media have been hard at work trying to debunk his claims. Increasingly, the go-to numbers guy on the right is Scott Winship of the Brookings Institute, who has written a series of articles at the National Review. Several of these articles have recently been linked and praised by Tyler Cowen. Cowen's most effusive accolades were reserved for this piece, about which Cowen says "The post is excellent throughout and it contains many more points of interest." So I thought I'd take a look…. What I found, disappointingly, was a mix of insults, value judgments masquerading as refutations, dubious logic and concern trolling. So I thought I'd do my usual thing...go through the piece point by point, so readers can see why I reached the conclusions I reached... Warning: This gets long. Winship writes: [T]he more Obama can make the election about big-picture economic issues like inequality and mobility, the less flack he will take…. I have a fair amount of sympathy for much of President Obama’s agenda... But I am exasperated by the Administration’s casual claim that opportunity in the U.S. for the typical American is on the decline…. As you can see, the concern-trolling has already begun: "I support Obama and care about inequality...I'm just pissed about his lack of empirical rigor! Oh, and also he's just trying to scare Americans and distract them from our real problems for his selfish political gain. But no really, I'm just a dispassionately concerned data guy!" But then the real kicker comes in this line: The latest attempts to justify this claim [of reduced opportunity], in Krueger’s speech, have crossed the line from ill-supported to deceitful. Oh, so Krueger is a liar, is he??? I say that if you are going to call a respected economist a liar, you had better have some pretty damn good evidence to back that up. Let's see if Winship has the goods…. Winship paints a picture of an America that is becoming more unequal only because a rising tide is lifting some boats faster than others. That may have been an accurate picture in the 80s, but it has not been accurate for over a decade. Next, Winship takes on the much-talked about "Great Gatsby curve," which shows a cross-country correlation between income inequality and intergenerational mobility. The first thing he does is to cast doubt on the cross-country data, citing several ways in which these might be mismeasured. These complaints are certainly valid, but do they refute Krueger's point... or reinforce it? I hereby outsource my argument to Justin Wolfers…. Basically, Winship has a bunch of complaints about how the data are constructed — and many are valid...It’s a standard play from the wonk-fight playbook: throw lots of mud at the data, and hope that this leads people to mistrust the conclusions that follow. Here’s the thing: his criticisms actually strengthen the original finding. Think about it. Imagine how strong the “true” relationship must be if it shows up even when using only rough proxies for the “true” levels of inequality and immobility. In light of Winship’s criticisms, the high correlation in this chart is all the more remarkable. If his gripes are correct, then graph understates the correlation between inequality and mobility... [If] the data are a pretty poor proxy for what’s really happening... there’s actually a very strong link that’s being disguised by imperfect data. So if the relationship between inequality and immobility holds across multiple data specifications, then Winship's "critique" is just proving Krueger's point. But maybe the Obama administration just cherry-picked the one data specification that seemed to show a relationship? Ah, but no. In his next paragraph, Winship writes: Admittedly, all of the charts like this that researchers have created show a relationship between inequality and immobility. So Winship's argument is: "Any way you slice it, the data seem to support Krueger. But those data are noisy! Therefore Krueger is a liar!" Refutation FAIL…. Winship concludes his article with some more concern-trolling: [The Obama administration is] needlessly scaring the middle class into doubting their own security... So the president’s strategy is likely to hinder recovery from the Great Recession. In fact, there is reason to believe that Americans are more generous when they feel they are doing well than when they feel they are at risk, in which case the Administration’s strategy is doubly counterproductive if it wants to help the bottom. Yeah, yeah. "Obama is slaughtering the economy with his socialist rhetoric, but really I'm only complaining because I care so much about helping the poor and disadvantaged." Gotcha. But OK, let's back up. Winship called Alan Krueger "deceitful"! And nowhere in this article do I see anything even remotely resembling convincing evidence that this is true; instead I see a mix of value judgments and fallacious arguments…. If I were Tyler Cowen, I would not have lavished such unqualified, effusive praise on this article. ## The Impact of Fiscal Policy and Consumption Smoothing I think that the extremely thoughtful David Glasner may have gotten one wrong. David Glasner wrote: I Figured Out What Scott Sumner Is Talking About « Uneasy Money: Paul Krugman and Simon Wren-Lewis pounced on this assertion, arguing that Ricardian equivalence actually reinforces the stimulative effect of government spending financed by taxes, because consumption smoothing implies that a temporary increase in taxation would cause current consumption to fall by less than would a permanent increase in taxation…. Now this response by Krugman and Wren-Lewis was just a bit opportunistic and disingenuous, the standard explanation for a balanced-budget multiplier equal to one having nothing to do with the deferred effect of temporary taxation. Rather, it seems to me that Krugman and Wren-Lewis were trying to show that they could turn Ricardian equivalence to their own advantage… This was not what I understood Krugman and Wren-Lewis to be doing. What I thought that they were doing was this: suppose that there is no consumption smoothing and no balanced-budget multiplier: that households have a target level of savings independent of their income and wealth, so that raising their taxes by$1 leads them to cut back the present value of consumption spending not by $(1-s) but by the full$1.

Now add consumption smoothing. This period's government purchases go up by $1. This period's private consumption spending goes down by$r. There is a short-term stimulative effect of fiscal policy, even without a balanced-budget multiplier.

The thing from Robert Lucas that made them howl--that made me howl back in April 2009--was Robert Lucas's invocation of a permanent-income consumption-smoothing argument to claim that $1 of government purchases now would be offset by$1 of reduced private consumption spending now, something that is not true in any model I know of with consumption smoothing.

## Why Oh Why Can't We Have a Better Press Corps?

You know, it is really remarkable that--even with the extraordinarily talented Dahlia Lithwick, Dave Weigel, and Matt Yglesias on staff--Slate is what Jeff Sachs calls a value-subtracting firm: an organization that would make us all richer, happier, and smarter if it simply went away...

Take it away, Belle Waring:

Hey Look, Some Sexist Bullshit at Slate. No Wai!

## Quotation of the Day: January 19, 2012: The Bad Conscience of Robert Nozick Department

"Our normative task in these two chapters is now complete, but perhaps something should be said about the actual operation of redistributive programs. It has often been noticed, both by proponents of laissez-faire capitalism and by radicals, that the poor in the United States are not net beneficiaries of the total of government programs and interventions in the economy…"

--Robert Nozick, Anarchy, State, and Utopia

## Could Somebody Please Create Some High-Paying Sinecures to Get Scalia and Thomas Off the Bench Immediately?

Jack Danforth: you have got a lot of explaining to do…

## Liveblogging World War II: January 18, 1942

In Gibraltar harbor, a bomb planted by Spanish saboteurs or Italian manned torpedoes sinks British anti-submarine trawler HMS Erin and minesweeping trawler HMS Honjo (8 killed) and badly damages another anti-submarine trawler HMS Imperialist.

## Quotation of the Day: January 18, 2012

"Magicians understand at a deeply intuitive level that you alone create your experience of reality, and, like Johnny, they exploit the fact that your brain does a staggering amount of outright confabulation in order to construct the mental simulation of reality known as 'consciousness'.”

--Stephen L. Macknik, Susana Martinez-Conde, and Sandra Blakeslee, Sleights of Mind: What the Neuroscience of Magic Reveals about Our Consciousness

## Six Question Intelligence Test

What are the antonyms of:

1. Always
2. Coming
3. From
4. Take
5. Me
6. Down

## Lowering the Medicare Age to Zero: Duncan Black Snarks

Duncan Black:

Eschaton: And lowering the Medicare eligibility age to, say, 0, would save money.

Seriouly, some Democratic Senator should seriously ask CBO to score this:

A BILL…

…to reduce the Medicare Eligibility Age to zero, and for other purposes.

I. SHORT TITLE: This bill may be cited as the "Universal Medicare Act of 2012"

II. ELIGIBILITY: All residents of the U.S. are eligible for the health-finance benefits provided under the Social Security Amendments of 1965, as subsequently amended.

III. INTERNATIONAL: The Secretary of Health and Human Services is authorized and encouraged to declare citizens of other nations eligible for the same benefits provided he or she is satisfied that reciprocal treatment will be accorded U.S. citizens abroad.

IV. TAXATION: All wages and salaries are hereby subject to the FICA and Medicare payroll taxes.

Scored on a fully-phased-in-in-2020 basis, my guess is that there is a 50-50 chance it comes out positive...

## Econ 210a: Spring 2012: Memo Question for January 25: Commercial Revolution

Subject: Memo Question for January 25

"The treasure captured outside Europe by undisguised looting, enslavement and murder, floated back to the mother-country and were there turned into capital." -- Marx, Capital, Vol. 1 Ch. 32.

Do the assigned readings provide any basis for assessing the general truth of this passage from Marx? In what sense did colonial trade in the 1497-1800 period contribute to capital formation in Europe?

## Nervos Lecturae, Caffeinam Infinitam

The sinews of lecturing are unlimited caffeine…

Especially if you still have (no longer contagious) pneumonia, and will have to lie down for a nap immediately after you finish...

## What They Dislike: Roy Edroso: "A Bunch of Minorities Have Coalesced to Get Something They Think Belongs by Right to Them..."

Roy Edroso:

YOUR LIBERTARIAN IDEAS ARE INTRIGUING TO ME AND I WOULD LIKE TO SUBSCRIBE TO YOUR RACIST NEWSLETTER: [S]ince their crackpot [deregulation] ideas collapsed the economy… they still can't get too deep into the libertarian social agenda, due to all those senior citizens whose prejudices are all that bind them to the party. And forget the other libertarian tropes. No one would believe them talking gold bug nonsense; Herman Cain, the conservative black hope till he imploded, was a Federal Reserve Bank chairman.  And without their support for endless wars, what would be left to make them look butch?

Then there's Ron Paul. Not only does he go the whole nine yards on free minds-free markets -- he also denounces our foreign adventures economic and martial. He hates the Fed. He'll let you have raw milk. Freedom! And he has a kinda-sorta gay rights record that both bigots and Dan Savage can be comfortable with -- he'd leave it to the states, just like abortion and racial integration. This is where his libertarianism really comes in handy -- you can believe that he personally endorsed at the vile things published under his name in those newsletters, and still believe, if motivated to do so, that his hatred of the State (but not the states) is so strong that it would actually protect gays, blacks, women, and everyone else even from his own ill will.

This is easier to believe if you forget that Paul is a Republican, operating comfortably within that party's framework… [and] that libertarians are comfortable in that party for a reason.

The right-wing fringe groups that attached to the GOP after World War II had their disagreements -- as with the National Review people and Ayn Rand -- but they also found plenty of common ground. It is almost charming to read Walter Olson on R.J. Rushdoony and his Reconstructionist loons, and how they -- unaccountably, to Olson -- "gained prominence in libertarian causes, ranging from hard-money economics to the defense of home schooling."… [T]he relationship of libertarians, Christian fundamentalists, Birchers, and other radicals was less contentious than synthetic…. These guys can always work together, because they all came out of the same Big Bang of hatred for the New Deal and its legacy: Big Government and the coalition that sustains it -- blacks, gays, unionized workers, women, et alia. Each conservative tribe has its own relationship to that legacy -- some of them (the more intelligent ones, generally) are deeply cynical, and some are as sincere as any schizophrenic street preacher. But all of them deeply hate that a bunch of minorities have coalesced to get something that they think belongs by right to them and people like them, and many of them have learned that it would be more effective (and, these days, more popular) to strike at the state that enables that coalition than at the minorities themselves.

What mania, particularly, animated Paul's newsletter stories of criminal-natured blacks and AIDS-drama-queen gays doesn't matter to me. I know that he's a Republican Libertarian and, having been born earlier than yesterday, that is enough for me.

## Econ 1: U.C. Berkeley: Spring 2012: Lecture Files for January 18, 2012

Econ 1 Files for January 18, 2012:

## Marc Weisbrot Is Very Unhappy About Economists

Mark Weisbrot:

The economic illiteracy of economists: Alan Auerbach, who put up a graph of the United States' rising debt-to-GDP ratio, and warned of dire consequences if Congress didn't do something about it. Yawn….

Alan Blinder… describ[ed] the public discussion of the US national debt as generally ranging from "ludicrous to horrific"…. [I]s there any urgency (to reduce the deficit or debt)? No…. [W]e need more fiscal stimulus, preferably spending that focuses on actually creating jobs. Amen…. [S]hould we focus on the next decade? No, he said, and noted that the Congressional Budget Office's (CBO's) budget deficit projections over the next decade are about 3.6% of GDP, which is not much to get agitated about…. [I]s government spending the problem? No, he said, it's healthcare costs…. [I]s the public really up in arms about the deficit? No… they care more about… jobs. As they should. Blinder concluded that since this is an election year, we can forget about having any fact-based discussion of these issues in 2012. Happy New Year, he said….

But a rapid descent into hell was imminent. Former CBO director Douglas Holtz-Eakin was next…. The United States has all the characteristics of countries that run into trouble, he said. Then he warned that the US is going to end up like Greece. This is one of the dumbest things that anyone with an economics degree can say….

At this point, it was clear that this panel, other than Blinder, was living in a dystopian fantasy world. Next up was Rudy Penner…. He complained about the polarisation of the political process, which prevents the two major parties from reaching an agreement. It's not partisanship, he said: House speaker Tip O'Neill and President Ronald Reagan knew how to be partisan, but they were able to reach agreement on the 1983 social security package and the 1986 tax reforms. And yada yada….

The last panelist was Alice Rivlin of the Brookings Institution… agreed with Blinder that we need more stimulus. But we can only get this if we agree to long-run spending cuts – including social security…. This is a political strategy that is sure to end in disaster, given the prevailing state of misinformation and disinformation….

I called attention to Blinder's presentation of the long-term budget problem as almost completely a problem of the rising price of healthcare…. [A]re Americans so inherently different from other nationalities that we can't have similar healthcare costs? And if not, then why are we talking about long-term budget problems – instead of how to fix our healthcare system? None of the panelists offered a serious answer…. The United States pays about twice as much per person for healthcare as other high-income countries – and still leaves 50 million people uninsured…

I understand that Douglas Holtz-Eakin is now playing for Team Republican. I understand that he gave good internal advice to his bosses in the George W. Bush administration in the 2000s. But he should not be destroying his and his political masters' potential 2013 policy running room in this way: come 2013 he may well want to forget as quickly as possible his current claims that the U.S. is "like Greece". For him to repeat the talking point right now is long-term stupid politically and both short-term and long-term stupid technocratically.

## Hoisted from the Archives: Columbia Journalism School 701: Highly Advanced Journamalism: Mark Mitchell Utter and Complete #FAIL Edition

Why oh why can't we have a better press corps?

UPDATE January 17, 2012: Bree Nordenson emails that the email sent me signed by her was actually written by Mark Mitchell:

[F]ive years or so ago I wrote an article about Paul Krugman and David Brooks for what was then CJRDaily. Anyway, it was not a pretty incident. I had just graduated and taken a position at CJR the magazine and I occasionally wrote for the Daily. I wrote a piece about how Krugman and Brooks used statistics and it was significantly re-written with inflammatory language ("partisan slipperiness" etc) and posted by then assistant editor of CJR Daily Mark Mitchell (he left/was let go a few months afterwards, along with the editor). Anyway, I just googled myself for the first time in ages (I am no longer in journalism, probably for many of the reasons you do not like the press) and saw that you posted a letter that is attributed to me but that was actually written and sent to you by Mark Mitchell. I would never have written anything like that– smug, self-righeous etc (very similar to how Mark changed the original piece). If possible, it would be great if your website could reflect that Mark Mitchell wrote that letter: http://delong.typepad.com/sdj/2006/09/columbia_journa.html

I sincerely never meant any harm by writing that article. Please also know that the original article I wrote was not the one that was posted. I was dismayed by the edited-in language. I am very sorry about the whole thing and that it was handled so poorly.

Wow. The quality-control problems at Columbia Journalism Review are bigger than I had imagined.

It turns out that Bree Nordenson's Mark Mitchell' true beef with Paul Krugman is that Paul "fails to reveal [in his column] that during... [2000-2005] incomes dropped for [the median] household."

The idea that somebody could accuse Paul Krugman of being "partisan" for failing to reveal to his readers that median household incomes have fallen during the Bush administration... well, words really do fail me. That really doesn't pass the laugh test.

Funniest thing I have heard all month.

Here's what Bree Nordenson Well, it turns out not to be Bree Nordenson, but rather her then-boss Mark Mitchell pretending to be Bree Nordenson. No, I don't understand it either. What Mark Mitchell has to say, on the record. Not believing that she he really wanted to call Krugman "partisan" and "slippery" for "fail[ing] to reveal" that median household incomes have fallen during the Bush dministration, I gave her him a chance to amend it. She he declined:

Dear Mr. DeLong:

Here is my response to be posted in its entirety (or not at all) on your blog (not simply the comments section):

Leaving aside the question of whether "typical" households can be characterized as "median" (rather than, say, "average" or "neighbors of Paul Krugman"), we stand by our conclusion that Mr. Krugman's statistic was cherry-picked and utterly unsupportive of his argument.

We wonder whether Professor DeLong's economics students would be permitted to look at the median personal income of college graduates in two separate years, chosen at random, and then present a paper suggesting that this data alone sheds light on the question of education's effect on income inequality. Mr. Krugman notes that the (median) real income of college graduates was lower in 2005, compared to 2000, and offers this as evidence that education does not improve income disparities. But he fails to reveal that during the same time frame, incomes dropped for all households, regardless of their level of education (see http://www.census.gov/prod/2006pubs/p60-231.pdf, p. 31). To determine whether a gap between the incomes of two groups has narrowed, one must know the incomes of both groups.

And unless the objective is merely to win the argument, rather than identify the truth, it is also necessary to test one's hypothesis against a range of years and other information. Krugman compares college graduates' incomes in 2000 and 2005, because that suits his ends. An entirely different picture emerges, however, if we compare the median incomes of college graduate in, say, 2004 to those in 2005. During that time frame, the number increases (after adjusting for inflation, of course).

Ideology passed off as science is the essence of demagoguery. An economist of Professor DeLong's stature should know this.

Sincerely,

Bree Nordenson Mark Mitchell
Assistant Editor, Columbia Journalism Review

Her boss Mark Mitchell, assistant managing editor of the Columbia Journalism Review, backs her up at the price of damage to his own reputation, and says that Paul Krugman is indeed culpable for suppressing knowledge that median incomes have fallen during the Bush administration (I think this is a fair summary quote from our conversation):

If you are talking about income inequality, you cannot just take the statistic of one group's income dropping over a period of time and not compare it to the other group's income. I am surprised that the Berkeley economics department cannot figure this out...

And--of course--never any attempt by Bree Nordenson Mark Mitchell (or anybody else) to talk to Paul Krugman or any labor economist about where the numbers were coming from, and whether they were reasonable.

Can there be any reaction other than "Wow. Look at the circular firing squad of flying journamalistic attack monkeys?"

Let's recap.

In previous episodes, David Brooks had written:

The Populist Myths on Income Inequality - New York Times: [T]he market isn't broken; the meritocracy is working almost too well. It's rewarding people based on individual talents. Higher education pays off because it provides technical knowledge and because it screens out people who are not organized, self-motivated and socially adept. But even among people with identical education levels, inequality is widening as the economy favors certain abilities. In short, government policy is not driving inequality and wage stagnation...

In response, Larry Katz--a source Brooks relies on--said that changes in government policy do play an important role:

Brad DeLong's Semi-Daily Journal: Larry Katz Weighs in on What Should Be Done About Inequality: There are clear market forces that have to do with the demand for talented individuals, but the current period is not that different from the past for that type of thing. In the past, however, we've done a very good job expanding access to education to keep up with growth, providing bargaining power to those left behind, and using government policy to help them. What's changed in the last twenty years is that we've eroded those ameliorating institutions....

In response, Paul Krugman wrote that there are powerful other causes of rising income inequality besides skill-biased technological change:

Whining Over Discontent - New York Times: [N]otice the desperate effort to find some number, any number, to support claims that increasing inequality is just a matter of a rising payoff to education and skill. Conservative commentators tell us about wage gains for one-eyed bearded men with 2.5 years of college, or whatever -- and conveniently forget to adjust for inflation. In fact, the data refute any suggestion that education is a guarantee of income gains: once you adjust for inflation, you find that the income of a typical household headed by a college graduate was lower in 2005 than in 2000...

I, at least, think the number Krugman cites is completely on point: Brooks said that inequality is widening because the market is providing increasing rewards to education and skills. Krugman responds that there is a lot more going on than just skill- and education-biased technological change: even the relatively well-educated have seen their household incomes fall over the current business cycle.

Yet Bree Nordenson, in CJR Daily, then wrote to accuse Paul Krugman of being "slippery" and "partisan"

The left-wing Krugman, while not as flagrant as Brooks, coats his column with a similar sort of partisan slipperiness.... chooses somewhat specific data... a decrease between 2000 and 2005 of incomes for a "typical household headed by a college graduate." This is not a widely published statistic, and Krugman doesn't tell us where he got it. He also fails to reveal the meaning of "typical," so we are left to guess who exactly these desperate college graduates might be.

That's the end of the recap.

## Belle Waring Smackdown Watch

Walt:

Hey Look, Some Sexist Bullshit at Slate. No Wai! — Crooked Timber: I hate to blame the victim here, Belle, but this is entirely your own fault. You went over to Slate to read Yglesias or Lithwick or something. You could have stopped there. But instead, you clicked on a link that was clearly labeled “I am contrarian bullshit that will annoy you, because this is Slate.” I saw that link, and I almost clicked on it. But I didn’t, because society drummed into my head that Slate is 90% contrarian bullshit, and society is right.

Why oh why can't we have a better press corps?

## Representative Leland Ford (R-CA) Liveblogs World War II: January 17, 1942

Digital History: Representative Leland Ford, Republican of California:

“To prevent any fifth column activity…all Japanese, whether citizens or not, be placed in inland concentration camps. As justification for this, I submit that if an American born Japanese, who is a citizen, is really patriotic and wishes to make his contribution to the safety and welfare of this country, right here is the opportunity to do so, namely, that by permitting himself to be placed in a concentration camp, he would be making his sacrifice, and he should be willing to do it if he is patriotic and working for us. As against his sacrifice, millions of other native born citizens are willing to lay down their lives, which is a far greater sacrifice, of course, than being placed in a concentration camp. Therefore any loyal Japanese should not hesitate to do that which is absolutely the best for the country, and to operate in such a manner that his particular activity would be for the greatest benefit."

## Quote of the Day: January 17, 2011

"Ironworks clustered around their main market, the million-strong city of Kaifeng, where (among other uses) iron was cast into the countless weapons the army required. Chosen as a capital because it lay conveniently near the Grand Canal, Kaifeng was the city that worked. It lacked the history, tree-lined boulevards, and gracious palaces of earlier capitals and it inspired no great poetry, but in the eleventh century it grew into a crowded, chaotic, and vibrant metropolis. Its raucous bars served wine until dawn,88 fifty theaters each drew audiences of thousands, and shops even encroached on the city’s one great processional avenue. And beyond the walls, foundries burned day and night, dark satanic mills belching fire and smoke, sucking in tens of thousands of trees to smelt ores into iron—so many trees, in fact, that ironmasters bought up and clear-cut entire mountains, driving the price of charcoal beyond the reach of ordinary homeowners. Hundreds of freezing Kaifengers were trampled in fuel riots in 1013…"

--Ian Morris, Why the West Rules--for Now