Grasping Reality on TypePad, by Brad DeLong

Time for a Weblogger Ethics Panel!

Aaron Carroll:

Creditmongering or legitimate gripe?: Kevin Drum has a nice post up about “creditmongering”, or going overboard about concern for being the first to publish a fact…. I don’t think that if you get up first and post that it’s sunny out, then anyone who then comments on the weather is obligated to cite you for the rest of the day…. But, and this is a big “but”, if it’s not a study that you would have found on your own without me, then I think you should throw me a link. As an academic blogger, this is not my real “job”. So when you take my sweat equity, and don’t link to it, you tick me off. Period. When I write about a game-changing study in the NEJM or JAMA that I expect every health policy writer in the world has received a press release on, I accept that you don’t need me at all. When I write a post on a study from the Journal of Minutae and Obscurity, though, and later in the day you happen to post on it? I’m suspicious. We need those links. They’re how we build readership and grow. Moreover, when I spend a fair amount of time making a reasoned argument in the morning that is deep in the weeds of theory nuanced by my particular set of skills, and then someone without those skills somehow manages to restate all of it in shorthand later in the afternoon using the same sources I did – then I’m closer to angry.

We in the academic world are very protective of ideas. They are our currency. So I’m a little disappointed that Kevin said this:

Ideas don’t belong to anyone, and readers don’t much care where the inspiration for a story came from. Once it’s out there, it’s out there.

Readers may not care where the inspiration came from, but ideas and arguments do belong to people, at least initially. They should be cited. If I come up with a theory of why something is the way it is, and I explain it clearly and carefully, then someone else taking my work and presenting it as their own thinking and reasoning is plagiarism. We should be able to recognize that and be unhappy about it.

Austin Frakt:

Creditmongering: [Kevin Drum:]

I’d make the distinction between ideas and IDEAS. The former is inspiration: if I read something that makes me want to dig into the plight of the long-term unemployed, I’m not likely to credit anyone. It’s just a topic. Lots of people have addressed it, and the fact that I happened to get my inspiration from one person rather than another probably doesn’t matter much. But an IDEA is different: this is a very specific theory or model or explanation for something. Or maybe an original insight. If you mention an IDEA, or riff on it to produce one of your own, you should credit the originator. [...]

I guess maybe the overriding rule for credit is this: it doesn’t cost anything and it can’t hurt. If in doubt, give credit.

Having discussed this topic with other journalists, I can add that Drum’s conventions are not universal. Not everyone thinks it’s important to provide credit to someone for shedding light on a story (or source or paper) they’d not have seen on their own. Not everyone thinks it’s important to give credit to an IDEA….

I point out that that property — that you might have come up on your own with an IDEA you saw elsewhere — is unobservable to the reader. I can’t know if you came up with the IDEA on your own or if you copied it from the post on another blog that appeared yesterday. What I would stress to journalists and bloggers is that you should not even want such a suspicion to creep into the mind of your reader. If you read it elsewhere and you repeat it, even if it isn’t the deepest IDEA in the world, and you might have thought of it on your own, you should credit the originator. Otherwise, it could look like you’re trying to get away with something. That doesn’t look good. Moreover, a link doesn’t cost you anything. If you’re worried it’ll make it look like you have fewer original ideas then you’ve already admitted you’re doing something wrong.

Under These Circumstances, a Larger National Debt Is Indeed a National Blessing

Project Syndicate: A Teaser for what might possibly be in J. Bradford DeLong and Lawrence H. Summers (2012, forthcoming), "Fiscal Policy in a Depressed Economy", Brookings Papers on Economic Activity 2012:1 (Spring), pp. ???-???:

As recovery from the recession of 2008-9 continues to be sluggish and halting, all over the North Atlantic world what was readily-curable cyclical unemployment is turning into structural unemployment, and what was a brief hiccup in the process of capital accumulation has turned into a prolonged investment shortfall that means a lower capital stock and a lower level of real GDP not just today while the recovery is incomplete but for perhaps decades into the future.

The experience of the 1980s in Western Europe gives us the following rule of thumb: lower labor-force attachment and the reduced capital stock from reduced investment together mean that every year production is depressed $100 billion below normal carries with it a future productive potential at full employment some $10 billion below what would otherwise have been forecast.

The conclusions that then follow for what government fiscal policy should be are striking.

Suppose that the United States or the Western European core economies boost their government purchases for next year by $100 billion, and suppose that while their central banks are unwilling to extend themselves further in unconventional monetary policy they are also unwilling to step on the toes of elected governments’ policies by offsetting them. Then our simple constant-monetary-conditions multiplier tells us that we can expect roughly $150 billion of extra GDP from that fiscal boost. And alongside that $150 billion of extra GDP comes $50 billion of extra tax revenue, so that the net addition to the national debt is only $50 billion.

What is the real interest rate that the United States or that Western European core economies will have to pay on that extra $50 billion of debt? Is it 1%? 3%? 5%? If it is 1%, boosting demand and production by $150 billion next year means that $500 million of taxes must be raised each year in the future to keep the real debt from growing. If it is 3%, that means $1.5 billion a year. If it is 5%, that means $2.5 billion a year.

At a 10% shadow cast on future potential output levels by continued subnormal output, that extra $150 billion of production means that in the future when the economy is recovered there will be an extra $15 billion of output—and an extra $5 billion of tax revenue.

That $5 billion of tax revenue will more than cover the $500 million or $1.5 billion or $2.5 billion interest cost of financing the added debt.

Governments will not have to raise taxes to finance extra debt taken on to fund fiscal boosts: instead, the supply-side boost to potential output over the long run from an expansionary fiscal boost program looks highly likely to pay for not just the added debt needed to finance the fiscal boost but to allow for additional future tax cuts while still balancing the government’s budget.

Now this is, to say the least, a highly unusual situation. In a usual situation the multipliers applied to expansions in government purchases are much less than 1.5, for in a usual situation the central bank does not maintain constant monetary conditions as government purchases expand but rather acts to keep the economy on track to meet the central bank’s inflation target, and a more usual multiplier is the monetary-policy offset multiplier of 0.5 or 0. And in a usual situation governments—even the U.S. and Western European governments—are not able to run up their debt and yet pay a real interest rate of 1% or 3%. In a usual situation the math of increasing government purchases tells us that a small or dubious boost to production today brings with it a heavier burden of financing government in the future that makes debt-financed fiscal expansion a bad idea.

But the situation today is not usual. Today the global economy is, as Ricardo Cabellero of MIT stresses, still desperately short of safe assets. Investors worldwide are willing to pay extraordinarily high prices for and accept extraordinarily low interest rates on core-economy debt, for they value having a safe asset that they can use a collateral as an extraordinary benefit.

Right now, given this preference for safety on the part of investors that makes financing additional government debt so cheap, and given the long-run shadows cast by prolonged subnormal production and employment that make our current sluggish recovery so very costly not just in the short run of idle resources but in the long run of reduced productive potential, a larger national debt would indeed be, as the first U.S. Treasury Secretary, Alexander Hamilton, said, a national blessing.

Econ 1: Spring 2012: U.C. Berkeley: Re-Revised Syllabus

http://delong.typepad.com/20120228-econ-1-spring-2012-syllabus-revised-revised.pdf

You Can't Make This Stuff Up...

Max Abelson:

Bonus Withdrawal Puts Bankers in “Malaise”: Andrew Schiff was sitting in a traffic jam in California this month after giving a speech at an investment conference about gold. He turned off the satellite radio, got out of the car and screamed a profanity.

“I’m not Zen at all, and when I’m freaking out about the situation, where I’m stuck like a rat in a trap on a highway with no way to get out, it’s very hard,” Schiff, director of marketing for broker-dealer Euro Pacific Capital Inc., said in an interview.

Schiff, 46, is facing another kind of jam this year: Paid a lower bonus, he said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a Kent, Connecticut, summer rental and the upgrade they would like from their 1,200-square-foot Brooklyn duplex.

“I feel stuck,” Schiff said. “The New York that I wanted to have is still just beyond my reach.”

The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to interviews with bankers and their accountants, therapists, advisers and headhunters.

“People who don’t have money don’t understand the stress,” said Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy. “Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”…

Mike Konczal Watches Alan Meltzer Play for Team Republican: Contrasting Alan Meltzer on Japan and the United States

I must say I don't think that Alan Meltzer is even trying to be consistent any more.

Mike Konczal:

Contrasting Alan Meltzer on Japan and the United States: I, for one, really like the new emphasis conservatives are putting on so-called “social issues” over economic issues. When Rick Santorum says that he is worried about Satan attacking America, I believe that he believes that.  His worry that Satan infested my brain with devils while I was at college uses reasons I can accept as legible under the ideal of public reason.  However, I have no idea what conservatives economists like Alan Meltzer really think about the economic recovery – do they think their arguments are the best policy or are they trying to go after unrelated objectives?…

[T]his 1999 speech, "A Policy for Japanese Recovery", from Meltzer (h/t Market Monetarist) on what to do for the weak economy in Japan (stuck in a similar situation to the United States today), as it addresses all that directly….

Repeatedly, the message has been to reduce tax rates permanently and maintain the exchange rate for the yen in its recent range…. The problem… is that few would, and none should, believe that Japan can reduce tax rates permanently…. What is the alternative? Deregulation is desirable, but it will do its work slowly….

Monetary expansion and devaluation is a much better solution. An announcement by the Bank of Japan and the government that the aim of policy is to prevent deflation and restore growth by providing enough money to raise asset prices would change beliefs and anticipations…. The volume of “bad loans” at Japanese banks is not a fixed sum. Rising asset prices would change some loans from bad to good, thereby improving the position of the banking system…. Let money growth increase until asset prices start to rise.

I like targeting NGDP better than asset prices, but other than that pretty good, right?  And I’m sure these recommendations have continued forward to the United States today, right?

I think you see where this is going.

What’s his take on current US policy?… WSJ, August 2011, "The Folly of Economic Short-Termism"….

Advocates of more short-term stimulus make several fundamental mistakes…. What we need most is confidence in our future…. Reducing corporate tax rates permanently…. Agreeing on long-term reductions in entitlement spending…. A five-year moratorium on new regulations…. An explicit inflation target between zero and 2% to force the Fed to pay more attention to the medium term and to increase public confidence that we will not experience runaway inflation.

It’s scary how well they match up as exact opposites…. That the quality of banking assets is related to overall economy and growth is something Christina Romer gets, and Meltzer got in 1999 as well.  Perhaps Satan had gotten to him back then…

Justice for Seamus!

Dogs Against Romney

As Santorum and Romney Battle for the Loony Right, the Rest of Us Should Not Gloat

Robert Reich:

As Santorum and Romney Battle for the Loony Right, the Rest of Us Should Not Gloat: [T]he rest of us have reason to worry. A party of birthers, creationists, theocrats, climate-change deniers, nativists, gay-bashers, anti-abortionists, media paranoids, anti-intellectuals, and out-of-touch country clubbers cannot govern America. Yet even if they lose the presidency on Election Day they’re still likely to be in charge of at least one house of Congress as well as several state legislators and governorships. That’s a problem….

The GOP’s drift toward loopyness started in 1993 when Bill Clinton became the first Democrat in the White House in a dozen years – and promptly allowed gays in the military, pushed through the Brady handgun act, had the audacity to staff his administration with strong women and African-Americans…. This was enough to stir right-wing evangelicals in the South, social conservatives in the Midwest and on the Great Plains, and stop-at-nothing extremists in Washington and the media who hounded Bill Clinton for eight years, then stole the 2000 election from Al Gore, and Swift-boated John Kerry in 2004.

They were not pleased to have a Democrat back in the White House in 2008, let alone a black one. They rose up in the 2010 election cycle as “tea partiers” and have by now pushed the GOP further right than it has been in more than eighty years….

At this rate the GOP will end up on the dust heap of history. Young Americans are more tolerant, cosmopolitan, better educated, and more socially liberal than their parents. And relative to the typical middle-aged America, they are also more Hispanic and more shades of brown. Today’s Republican Party is as relevant to what America is becoming as an ice pick in New Orleans.

In the meantime, though, we are in trouble….

[A] loony fringe can take over an entire party — and that party will inevitably take over some part of our federal, state, and local governments.

As such, the loony right is a clear and present danger.

Menzie Chinn vs. Casey Mulligan

I understand that there is no accountability at the New York Times: that it is bureaucratically incapable of saying "we must have a right-wing economist on our panel, but we really need one who is not an ignorant and uncurious ass". But surely there must be some tendency for Casey Mulligan to mark his beliefs to market? Or at least to conclude that he should be quiet until he has done so?

Alas, no…

Menzie Chinn reviews the record:

Econbrowser: Famous Conditional Forecasts from the Real Business Cycle Side: As I was reviewing material to use in teaching how new classical models relate to the popular aggregate demand/aggregate supply models [0] used in policy analysis, I ran into this forecast in the real business cycle vein from October 26, 2008.

Barring a nuclear war or other violent national disaster, employment will not drop below 134,000,000 and real GDP will not drop below $11 trillion.

All this is to illustrate that in the fog of business cycles, one's got to be careful about making forecasts (the rest of the article is a must-read, as is this rousing defense by Professor Mulligan in October 2009)…. [N]onfarm payroll employment…. At first glance, Professor Mulligan's forecast of GDP does better…. Of course, while Professor Mulligan did condition on no-nuclear war, he didn't condition on ARRA…. [I]n the absence of the ARRA, the economy would have breached the $11 trillion…. [I]t's unclear whether Professor Mulligan conditions on the Fed's extraordinary measures to support the credit markets; I think he believed they were not necessary, given this October 2008 post supporting the Minneapolis Fed working paper debunking the existence of a banking crisis (my discussion of Chari et al. (2008), aka wp 666 here).

I think all this is useful to recall the next time we hear a criticism of forecasts generated by models of the aggregate demand/aggregate supply mode, and forecasted responses to the ARRA, without any reference to conditioning statements. (Incidentally, the CBO has just released its latest assessment of the ARRA's impact. There's an excellent discussion of the range of models used in the CBO's analysis in the Appendix.)

If Olympia Snowe Wasn't Frightened of a Right-Wing Primary Challenge Because She Was Going to Run for Another Senate Term, Why Didn't She Work to Make the Affordable Care Act Better Policy?

Where Were You in 1993, David Brooks?

The Possum Republicans - NYTimes.com: Politicians do what they must to get re-elected. So it’s not unexpected that Republican senators like Richard Lugar and Orrin Hatch would swing sharply to the right to fend off primary challengers…. [I]t is worth pointing out that this behavior is not entirely honorable. It’s not honorable to adjust your true nature in order to win re-election. It’s not honorable to kowtow to the extremes so you can preserve your political career. But, of course, this is exactly what has been happening in the Republican Party for the past half century. Over these decades, one pattern has been constant: Wingers fight to take over the party, mainstream Republicans bob and weave to keep their seats.

Republicans on the extreme ferociously attack their fellow party members. Those in the middle backpedal to avoid conflict….

In the 1960s and ’70s, the fight was between conservatives and moderates. Conservatives trounced the moderates and have driven them from the party. These days the fight is between the protesters and the professionals…. [T]he protesters don’t believe in governance. They have zero tolerance for the compromises needed to get legislation passed. They don’t believe in trimming and coalition building…. Of course, the professional politicians don’t want to get in the way of this torrent of passion and resentment. In private, they bemoan where the party is headed; in public they do nothing.

All across the nation, there are mainstream Republicans lamenting how the party has grown more and more insular, more and more rigid. This year, they have an excellent chance to defeat President Obama, yet the wingers have trashed the party’s reputation….

As I have written in the past: You know, I went to Washington in 1993 to work for what we called Lloyd Bentsen's Treasury as part of the sane technocratic bipartisan center. And it took me only two months--two months!--to conclude that America's best hope for sane technocratic governance required the elimination of the Republican Party from our political system as rapidly as possible. Dole and Gingrich's "We really don't care that these policies are good for the country--are a lot like policies we would enthusiastically support if proposed by a Republican president--but we are going to try to block them because that will weaken Clinton" wad a real eye-opener. Nothing since has led me to question or change that belief--only to strengthen it. We really need a very different opposition party to the Democrats: a less dishonorable one.

Now David Brooks--who has spent the last nineteen years carrying water and making excuses for today's Republican Party--finally says what I have been saying since 1993. Where have you been, David?

But where have these party leaders been over the past five years, when all the forces that distort the G.O.P. were metastasizing? Where were they during the rise of Sarah Palin and Glenn Beck? Where were they when Arizona passed its beyond-the-fringe immigration law? Where were they in the summer of 2011 when the House Republicans rejected even the possibility of budget compromise? They were lying low, hoping the unpleasantness would pass….

We’ve had a primary campaign that isn’t really an argument about issues. It’s a series of heresy trials in which each of the candidates accuse the others of tribal impurity. Two kinds of candidates emerge from this process: first, those who are forceful but outside the mainstream; second, those who started out mainstream but look weak and unprincipled because they have spent so much time genuflecting before those who despise them.

Neither is likely to win in the fall. Before the G.O.P. meshugana campaign, independents were leaning toward the G.O.P. But, in the latest Politico/George Washington University Battleground Poll, Obama leads Mitt Romney among independents by 49 percent to 27 percent….

First they went after the Rockefeller Republicans, but I was not a Rockefeller Republican. Then they went after the compassionate conservatives, but I was not a compassionate conservative. Then they went after the mainstream conservatives, and there was no one left to speak for me.

Econ 1: Spring 2012: U.C. Berkeley: Consumers and Firms: February 29, 2012 Lecture Files

Econ 1: Spring 2012: U.C. Berkeley: Consumers and Firms: February 29, 2012 Lecture Files:

• Lecture Slides
• Lecture Audio

Richard H. Serlin on Envy and Spite

Richard Serlin:

Richard H. Serlin: To: John Cochrane, Re: Positional Externalites: Years ago, when your excellent book, Asset Pricing, first came out, I was a finance PhD student. I found some errors and sent you an email with them, and some feedback and suggestions I had. You replied, and were very gracious. So I'm hoping you might reply to this.

In your current blog post, you write:

Frank's article is hilarious in another way. Higher taxes are fine, he says, because more money won't make you feel better when everyone around you is wealthier too. Too much low-hanging fruit there, just go read it and have a laugh. Or shake your head in amazement. No, he's not joking.

With regard to Frank's contention that position/rank/prestige/context is a substantial part of how much utility the average person gets from goods, please give us the evidence why this is wrong. Please don't just say, ha ha, it's hilarious, it's too obvious. Because Frank's contention was published in one of economics' top journals, the American Economic Review, "Positional Externalities Cause Large and Preventable Welfare Losses." (2005). And other authors have based top journal papers on the same contention…. Now, surely the wrongness of this idea can't be so laughably obvious if the editors of some of economics' top journals repeatedly published articles based on it. And, not to beat a dead horse, Nobel Prize winning economist Gary Becker wrote a paper based on this idea:

"Evolutionary Efficiency and Happiness", Journal of Political Economy, April, 2007 (with Louis Rayo). Quoting Becker and Rayo:

For a long time, utility was assumed to depend only on the absolute level of an individual’s economic conditions. However, a large body of research now shows that the relative level of these conditions also plays a central role: an individual’s utility, whether defined in terms of decision making or hedonic experience, tends to be sharply influenced by his personal history and social environment. Examples include Markowitz (1952), Stigler and Becker (1977), Frank (1985), Constantinides (1990), Easterlin (1995), Clark and Oswald (1996), and Frederick and Loewenstein (1999).

So please John, don't treat Frank's general idea as laughably, obviously wrong. Becker's not an idiot. None of the very successful economists noted above are idiots….

For me personally, I'd be stunned if position/rank/context/prestige were insignificant or insubstantial factors in how much utility people get from clothes, cars, homes, etc…. But I'm very open to your evidence, and very curious to hear it.

Sincerely,

Richard Serlin

If the Committee for a Reponsible Federal Budget Were in Fact a Committee for a Responsible Budget, at the Top of Their Website Would Be the Declaration: President Barack Obama's Proposals Are the Most Fiscally Responsible

That is not what is at the top of their website.

Enough said.

Paul Krugman:

Four Fiscal Phonies: The Committee for a Responsible Federal Budget – not my favorite people, but they can do their arithmetic – has put together evaluations of the four remaining GOP candidates’ tax and spending plans. Annoyingly, however, they compare these plans to a so-called “realistic baseline” that assumes, among other things, that all the Bush tax cuts are made permanent. So for all the talk of the urgency of deficit control, the need to cut basic social insurance programs, the CRFB is in effect willing to accept as a fait accompli the biggest, most gratuitous budget-busting action of the past couple of decades.

How to fix this? One way would be a current-law comparison, which would involve allowing all the Bush tax cuts to expire. But it also seems to me useful to compare the Republican plans with the Obama administration’s plan, which would at least allow the high-end tax cuts to expire. How does debt under this plan compare with the four Republicans?….

Yep: as Republicans yell about Obama’s deficits and cry that we’re turning into Greece, Greece I tell you, all of them, all of them, propose making the deficit bigger.

And for what? For reverse Robin-Hoodism, taking from the poor and the middle class to lavish huge tax cuts on the rich.

And I believe that all of them know this, too. It’s pure hypocrisy – and it’s all in the service of class warfare waged on behalf of the top 0.1 or 0.01 percent of the income distribution.

Rick Santorum may not know it. And it's not clear to me that "knowledge" is a category that is usefully applied to Ron Paul. But Gingrich and Romney--and all their advisors--know damned well what they are doing.

Greg Sargent Says That President Obama Has Eaten His Wheaties This Morning...

Greg Sargent:

Obama hits Romney with withering mockery as he makes case for reelectiont: In a speech to the United Auto Workers just now, Obama defended his decision to bail out the auto industry, lacing into Mitt Romney with withering derision. But this speech was about more than the auto-bailout. It was Obama’s case for reelection…. [T]oday’s speech… revealed that the alternate reality Romney has been functioning in throughout the GOP primary is soon going to give way to another reality entirely, a general election reality — and Romney, presuming he will be the nominee, will soon collide with it.

In recent days, that alternate reality has meant that Romney has been speaking to audiences who nod along when he tells them that he got the auto-bailout right, even though he predicted that it would lead to the auto industry’s demise….

Things will soon change rather abruptly.

In his speech, Obama… went out of his way to ridicule [Romney's] justifications for opposing the auto-bailout and his current dissembling….

I keep on hearing these same folks talk about values all the time. You want to talk about values? Hard work: That’s a value. Looking out for one another: That’s a value. The idea that we’re all in it together and I’m my brother’s and sister’s keeper: That’s a value.

Obama used the auto-bailout argument as a jumping off point for his larger case: That Democrats and Republicans have fundamental ideological differences over government’s role in stepping in and protecting working people and ordinary Americans against the depredations and excesses of unfettered free market capitalism, and that this all flows from a difference over moral values and priorities….

[W]hat you’ve just seen is a preview of how aggressive a bid Obama will make to ensure that the general-election debate over the auto-bailout plays out his way.

The Taxation of Capital Income

The Economist of lLondon:

Economics: How should governments tax capital?: Tax reform is again on the political agenda in America and elsewhere. Of particular interest is the way in which capital ought to be taxed. If we assume that income taxes are not going away, what is the best or most appropriate way to tax capital gains and capital and corporate income? What should be taxed, at what level and at what rate (relative to rates on wage income)?

My take:

Economics: Tax luck, not thrift—and do it progressively: WE WANT to tax luck--heavily.

We don't want to tax enterprise and ingenuity.

We do not want to create armies of accountants gaming our system.

In a world that is as a whole still relatively poor we do not want to tax thrift.

And we want to use our tax system to provide a substantial amount of social insurance: if you could ask us all as neonates whether we wanted a lump-sum, a flat, or a progressive tax, we would (if we could think and talk) nearly all call for a strongly progressive tax—and if you could ask us even earlier, before we had drunk from the Lethe when we all still faced the risk that we might not choose the right parents, that conclusion would be squared.

These considerations push in very different directions. The closest to a point of equipoise is a strong progressive tax on consumption, on net cash flow, on income minus savings—with then no distinction between whether the income comes from wages or dividends or capital gains: if the income is saved, it escapes tax, and if it is spent on consumption goods and services it is all taxed at the same rate.

---

Other takes:

The proper tax rate on capital income is zero: Scott Sumner wrote on Feb 24th 2012, 13:58 GMT: ONE of the most basic principles in economics is that the taxation of capital income is inefficient. Taxes on interest, dividends, and capital gains represent a sort of “double taxation”, of wage income. For some reason many people have difficulty grasping this concept, and one often sees even Nobel Prize-winning economists talking about “income inequality” using data that includes both wage and capital income. This makes about as much sense as adding up blueberries and watermelons and calling it the “number of units of fruit”...

Make corporate tax rates as low as possible given arbitrage constraints: Hal Varian wrote on Feb 24th 2012, 14:04 GMT: I FAVOUR a consumption tax. Though this seems radical to some, it turns out that most Americans already face a consumption tax due to the many tax-deferred savings plans available. Such plans allow you to defer taxes on money saved in IRAs, 401(k)s, Keough plans and the like until the money is withdrawn and spent...

The benefits of tax reform to deficit reduction are overstated: Tom Gallagher wrote on Feb 27th 2012, 14:33 GMT: I'D LIKE to see the tax system move in the direction of a progressive consumption tax. I don’t have a detailed plan in mind, and I recognise the many difficulties in devising such a plan. This would require lighter taxes on capital income and higher rates on the remaining tax base, all in the context of unsustainable future deficits. Thus, this approach flies against prevailing political winds. But if I could I’d take the answer in a different direction. In many ways it’s unfortunate that tax reform is rising to be a first-tier issue. By the time tax reform ripens politically, possibly by 2014, the US may be far enough along in the deleveraging process that Washington should turn to addressing longer-term deficits, and I worry that tax reform could distract from or complicate that effort...

Taxing capital income provides automatic progressivity: David Li wrote on Feb 27th 2012, 15:16 GMT: I THINK, in today's world, there should be two objectives in redesigning taxes on capital.  The first should be to encourage corporate investment and therefore stimulate growth and employment.  And the second should be to enhance a sense of fairness among the general public.

Don't penalise future consumption relative to current consumption: Gilles Saint-Paul wrote on Feb 28th 2012, 16:52 GMT: THE economics of capital taxation are poorly understood by the general public, because they are in fact subtle. A common tendency is to advocate capital taxation on the grounds of some distate for capital, perhaps because capitalists are supposedly rich (and therefore disliked), or because they do not derive their income from their labour, which means they do not suffer for it, which is supposedly immoral. In fact, capitalists are not necessarily rich, they may for example be pensioners who have invested their savings in corporate bonds or equity in order to provide for their old age. If one wants to tax the rich, say for redistributive purposes, so be it, but then one should tax wealth or income irrespective of their source...

A Nice Review from Angry Bear: The Promise and Peril of IPAB

Angry Bear:

Health Care Thoughts: Recommending Brad Delong: When he is not snarking up a storm on his blog or educating Berkeley's young skulls full of mush Brad does some solid academic work. In concert with Prof. Ann Marie Marciarille (Mrs. Delong if I remember correctly) Delong has posted an interesting piece to SSRN, entitled "Bending the Health Cost Curve: The Promise and the Peril of the IPAB'.  the article explores the promise and perils of the Independent Payment Advisory Board (IPAB), a major feature of PPACA.

This is a balanced piece with a lot of good background information.

Having been involved in the policy and details of Medicare and Medicaid reimbursement since the late 70s I am more skeptical of technocrats and bureaucrats, but I do see potential, and do see the need. (I also intend to write something about the technical aspects of Medicare reimbursement, but several editors are whipping me now so pleasure work will have to wait).     If you have any interest in health care policy and operations, read the Delong piece, well worth the time.

Much appreciated. It seemed to us that we knew things that people did not seem to know that were absolutely crucial to understanding whether and how the cost-control and efficiency-enhancing pieces of the Affordable Care Act will work (if they are allowed to work), and that we should write it down.

Emily Rapp on Why the American Public Sphere Really Does Not Need Rick Santorum, or This Republican Party, at All

Emily Rapp:

Rick Santorum and prenatal testing: This week my son turned blue, and for 30 terrifying seconds, stopped breathing. Called an "apnea seizure," this is one stage in the progression of Tay-Sachs, the genetic disease Ronan was born with and will die of, but not before he suffers from these and other kinds of seizures and is finally plunged into a completely vegetative state.

Nearly two years old, he is already blind, paralyzed, and increasingly nonresponsive. I expect his death to happen this year, and this week's seizure only highlighted the fact that it could happen at any moment—while I'm at work, at the hair salon, at the grocery store. I love my son more than any person in the world and his life is of utmost value to me. I don't regret a single minute of this parenting journey, even though I wake up every morning with my heart breaking, feeling the impending dread of his imminent death. This is one set of absolute truths.

Here's another: If I had known Ronan had Tay-Sachs (I met with two genetic counselors and had every standard prenatal test available to me, including the one for Tay-Sachs, which did not detect my rare mutation, and therefore I waived the test at my CVS procedure), I would have found out what the disease meant for my then unborn child; I would have talked to parents who are raising (and burying) children with this disease, and then I would have had an abortion. Without question and without regret, although this would have been a different kind of loss to mourn and would by no means have been a cavalier or uncomplicated, heartless decision. I'm so grateful that Ronan is my child. I also wish he'd never been born; no person should suffer in this way—daily seizures, blindness, lack of movement, inability to swallow, a devastated brain—with no hope for a cure. Both of these statements are categorically true; neither one is mutually exclusive.

That it is possible to hold this paradox as part of my daily reality points to the reductive and narrow-minded nature of Rick Santorum's assertions that prenatal testing increases the number of abortions (a this equals that equation), and for this reason, the moral viability or inherent value of these tests should be questioned. Prenatal testing provides information, a value-less act. I maintain that it is a woman’s right to choose what to do with the information that attaches value and meaning, and that this choice is—and must be—directly related to that individual’s experiences. What’s at stake here is not the issue of testing, but the issue of choice. I love Ronan, and I believe it would have been an act of love to abort him, knowing that his life would be primarily one of intense suffering, knowing that his neurologically devastated brain made true quality of life—relationships, thoughts, pleasant physical experiences—impossible.

Here's another set of truths for the moral and ethical mix: I was born with a physical deformity in the age before the evolution of advanced ultrasound technology that may have detected it. My mom did not have a choice about terminating her pregnancy, although when I was born and she was told that I might be retarded, that I might never walk, and that given these possibilities she might want to consider institutionalizing me, she probably wished she'd had the choice. Regardless of what she may or may not have decided had she been possessed of all the information prior to my birth, regardless of the fact that none of the doctor’s warnings had any truth to them, it would have been her choice to make.

In 1974, we did not have the prenatal testing available to us now, and the restrictions on abortion were much different. Santorum's ideas advocate a return to that oppressive historical situation where women were punished for having sex, for making any kind of reproductive choice whatsoever, for being women, for being human beings, for making decisions about the course and shape of their lives. Do I think people with disabilities are of value in the world? Obviously, as I am one of them, and I love my life. Do I wish my child wouldn't suffer, that it would have been better for him to have never been born than to watch him struggle to breathe? To know that he will never speak, walk, chew solid food, toddle, or move? Yes. One statement doesn’t cancel out the other.

Rick Santorum, I would like you to meet my child. You should see how beautiful he is; you should see how he suffers, how his parents suffer. And I'd like you to meet me, as well, with my artificial leg and strong body and big, beautiful, complicated life full of friends and books and meaningful work and sex and all kinds of texture and heaps of subtlety and contradiction; in short, a full life. My mother made a choice without knowing she had one. I made a choice without having all the information. Neither choice is bad or good; neither is this one thing or the other.

The tenor of the current debate frightens me, as it heralds a return to another age when women were not the trustees of decisions made about their own bodies. What I hope for other women is that they have the power to make their own decisions with as much information as it is possible to have, with respect to the specificity and complexity of their own circumstances, according to their own minds and hearts and not the dictates of another person’s worldview.

Santorum believes that all life is inherently valuable, no matter how compromised or of what limited quality; that is one view. I believe that we need a more nuanced discussion about what quality of life is, and that it should be a woman's right to choose to terminate a pregnancy when the path of her child’s life is as compromised—and as terrible—as my son’s.

Econ 1: Spring 2012: U.C. Berkeley: Problem Set 4

http://delong.typepad.com/20120227-econ-1-problem-set-4.pdf

Republican Rick Santorum Drives Harold Pollack Shrill...

…and the New York Times does not print this: it's web-only:

Do Liberals Disdain the Disabled?: Earlier this month, I was hanging out with my brother-in-law Vincent. He lives with developmental disabilities caused by an unwanted genetic sequence that deprives his brain of a critical protein. We were sitting in our family room when Rick Santorum — whose 3-year-old daughter has a different chromosomal disorder — appeared on the television.

“One of the things that you don’t know about ObamaCare,” Mr. Santorum said, is that it requires “free prenatal testing ... Why? Because free prenatal testing ends up in more abortions and, therefore, less care that has to be done, because we cull the ranks of the disabled in our society.” Mr. Santorum’s comment echoed Sarah Palin’s famous [death panel] charge during the health care reform debate…. There is no basis whatsoever for Mr. Santorum or Ms. Palin’s comments. Disability advocates across the political spectrum strongly supported the 2010 health care reform. They had obvious reasons to do so. The new law provides protections for people with preexisting conditions, regulations to make sure insurers properly cover care for chronic illnesses and expanded coverage for young adults and low-income families.

But more is at stake here than factual inaccuracies. Mr. Santorum and Ms. Palin are spreading a poisonous meme: that liberals disdain the disabled…. They seek to insert the hateful rhetoric of the culture war into one of the few areas of American life that had remained relatively free of such rancor. Care for people with disabilities has quietly been one of the few causes in this country on which social liberals and conservatives could put aside their differences…. I fear this may be changing….

Since at least the 1970s, when the prospect of mass prenatal screening for genetic abnormalities first emerged, many people have worried that such technologies would coarsen public attitudes toward disabled citizens and erode support for essential services. Disability advocates were (and remain) divided…. Many fears regarding screening turned out to be unwarranted…. The first Special Olympics were held in 1968, in large part thanks to the efforts of Eunice Kennedy Shriver, an anti-abortion liberal Catholic, and Medicare and Medicaid, the two most important programs for financing the treatment and care of disabled Americans, were enacted in 1965 by Great Society liberals. Richard M. Nixon worked with Congress to enact Supplemental Security Income, which established income security for millions of people with disabilities. Not long after, President Gerald R. Ford signed what is now the Individuals with Disabilities Education Act, guaranteeing access to special education and other services. Senators Edward M. Kennedy and Robert Dole collaborated to pass the Americans With Disabilities Act…. Today, social conservatives in the Knights of Columbus sell Tootsie Rolls on street corners supporting group homes and workshops, while liberal activists fight to ensure that disabled Medicaid recipients have access to proper dental care and other services.

As a result of this hard work, things have gotten better…. [E]very day, our family experiences countless acts of kindness and acceptance: harried business travelers patiently wait as we move ever so slowly through the airport security check; tough South Side Chicago kids wave back when Vincent waves at them; students at our daughters’ school react kindly to their classmates’ unusual-looking uncle.

Liberals and conservatives deserve credit for working together to promote genuine progress in these areas. It isn’t easy, because we have genuine differences…. But Mr. Santorum wants to exploit these differences. Mr. Santorum faces an uphill political climb. But whatever happens with his candidacy, he can still tear this particularly delicate piece of our social fabric before he’s through. We can’t let him do that.

Christina Romer: We Need A Regime Change at the Fed

Christina Romer:

Macro and Other Market Musings: Christina Romer: We Need A Regime Change at the Fed: What we learned from the Temin and Wigmore paper is that one way out of a recession at the zero lower bound is by changing expectations. To do that, often what is needed is a very strong change in policy – something economists call a “regime shift”. The most effective way to shake an economy out of a terrible downturn when we’re at the zero lower bound is an aggressive change in policy that makes people wake up, say “this is a new day” and change their expectations. What the Fed has done since early 2009 is much more of an incremental change….

[…]

I think that what the Fed needs instead is a regime shift… adopt a new framework for monetary policy, like targeting a path for nominal GDP…. Pledging to get back to the pre-crisis path for nominal GDP would commit the Fed to much more aggressive [short run] policy – perhaps more quantitative easing and deliberate actions to talk down the dollar. Such a strong change in the policy framework could have a dramatic effect on expectations, and hence on the behavior of consumers and businesses [without endangering confidence in the economy's long-run nominal anchors]…. This is just the medicine the U.S. economy needs right now.  

Fiscal Policy in a Depressed Economy

Friday March 23, 2012: 11:30 AM: J. Bradford DeLong and Lawrence H. Summers, "Fiscal Policy in a Depressed Economy"

• Discussants: Martin Feldstein, Valerie Ramey

Rich Yeselson on Noam Scheiber's "Escape Artists"

Rich Yeselson:

Obama's Squandered Recovery: Scheiber’s strategy is to show the reader that, as they used to say in the Reagan years, “personnel are policy.”… [K]ey people do what their history and temperament have prepared them to do. Thus, Tim Geithner’s long history of working with banks as a regulator guides critical decisions during his tenure as Secretary of the Treasury…. Obama naturally wanted experienced people handling the economy. When the time came to make appointments, he plucked… important players from the tree of Robert Rubin…. Scheiber astutely identifies different strains in the Rubin genealogy. Geithner… the “restorationist”…. Summers… a “reformist” Rubinite, unwedded to obsessing over the deficit during a massive recession. Orszag, the team’s primary deficit hawk…. “Orszag’s power," Scheiber writes, “came from the harmony between his worldview and the president’s. Both men were fierce anti-partisans; both shunned ideology.” Orszag thought there were practical limitations to how much the government could spend, and that much of the stimulus would inevitably be rolled into the long-term deficit….

Cristina Romer… was the pure academic…. Only she kept the recession at the top of her agenda…. Summers is an inside angler but an inept one… squanders his greatest comparative advantage over everyone else, that on these issues, his voice was the one the president trusted most….

Scheiber’s narrative is lucid enough so that the reader can begin to question, along with the author, why several mistakes are made more than once. The White House trusts Iowa Republican Senator Chuck Grassley time and again…. The deficit fetish culminates in the ghastly 2011 effort by Obama’s new Chief of Staff, Bill Daley, and David Plouffe… to increase the president’s credibility with independent voters by positioning him as a budget cutter… dependent on the fantasy, even after the Tea Party ascendancy, that a deal can be cut with the Republicans. But there are strange omissions in the book. Scheiber fails to discuss the successful auto bailout…. He doesn’t point to the Republican’s unprecedented use of the filibuster…. Obama reappointed moderate Republican, Ben Bernanke, as Fed chair, instead of endorsing a more aggressive alternative…. Scheiber… does not pause to give his readers an understanding of Obama and his team’s thinking about monetary policy.  

I happen to think that if the health care system is rationally integrated and costs are controlled in 20 years, then the Affordable Care Act will ratify Obama’s place as one of America’s most important domestic policy presidents. But Scheiber is right that if Obama and his team accomplished a great thing in fending off depression, they did not relentlessly seek out every possibility to increase GDP and job growth. Economically, things could have gotten even worse than they did…. But… sthey should have had a better instinct for the unique crisis they faced…

I see it differently: a better instinct in late 2008-early 2009 would have been good, but hoarding rather than giving away your power to act in 2010 and 2011 should things go south would have been much better.

This Is Horrible!

It is too cold to sit outside in the morning Berkeley sun to prepare for lecture! I have to go sit in the windowless Wheeler Green Room instead!

John Cassidy on the Total Incoherence That Is Mitt Romney...

John Cassidy:

Rational Irrationality: Romney’s New Tax Plan: Big, Bold, and Desperate: This is the first rule of Republican politics: If you are in trouble, promise to cut taxes. The second rule is similar: If you are in trouble and you have already promised to cut taxes, say you will cut them even more. Speaking to what may have been the smallest crowd in the history of Ford Field… Mitt Romney today followed the second rule…. [T]he Mittster promised to slash income-tax rates by a fifth. Under his new proposal, the top rate of thirty-five per cent would be lowered to twenty-eight per cent; the second top rate of thirty-three percent would be cut to twenty-six percent; and so on down to the bottom rate of ten per cent, which would be reduced to eight per cent…. Romney didn’t completely junk his old plan…. All [of its] costly giveaways hold over to his new plan, where they have been supplemented with an across-the-board proposal to slash income taxes.

If you recall some of your grade-school arithmetic classes, where adding two negative numbers together gave you a larger negative number, you might suspect that cutting taxes for workers, businesses, investors, and dead people would produce a bigger gap between revenues and spending…. “These changes will not add to the deficits,” he said with an impressively straight face. “Stronger economic growth, spending cuts, and base broadening will offset the reductions.”…

Romney’s economic team, which includes Columbia’s Glenn Hubbard and Harvard’s Greg Mankiw, knows [budget arithmetic] perfectly well…. At this stage in a Presidential campaign, however, politics trumps economics…. Taken overall, though, his new plan goes well beyond tactical positioning. In promising yet another big round of tax cuts while simultaneously trying to depict the President as a feckless fiscal degenerate, someone who couldn’t balance his own checkbook, let alone the federal budget, Romney doesn’t merely come across as irresponsible. He looks desperate.

Nobody has any business working for this [CENSORED], or contributing to this [CENSORED], or voting for this [CENSORED]. No business at all.

Sins of the Internet...

I don't link enough.

I see something interesting on somebody's website--but I don't want to get distracted from the task at hand--so I open it up in a new, hidden window. By the time I get back to it I have forgotten who I got it from, and there is no live "back" button to help, so when I write about it I do not drop a link to the person who did the work of finding the truffle and making me aware of its existence.

This seems to me to be a bad thing: I ought to credit the people who do the work, and whom I rely on.

Plus I spend too much time relying on the Old Reliables of my weblogging generation to bring things to my attention rather than seeking things out--in the lazy belief that if I ought to read it then Marginal Revolution or Economist's View or Free Exchange or Baseline Scenario or Beat the Press or Think Progress or the FT Home Page or Eschaton or Free Exchange or Daring Fireball or Econbrowser or VoxEU or Talking Points Memo or the Reality-Based Community or Counterparties or Macro Advisors or Capitol Gains and Games or Rortybomb or Naked Capitalism or BondDad or Left Business Observer will bring it to my attention.

So I need to reform--without adding to the time I spend procrastinating on the internet.

So how should I change my practices to link more? And which of my Old Reliables should I swap out, and what should I replace them with?

Felix Salmon has some related thoughts:

Why journalists need to link: Jonathan Stray has a great essay up at Nieman Lab entitled “Why link out? Four journalistic purposes of the noble hyperlink”…. [L]inks are wonderful things, and the more of them… especially… external… the better….

In recent days, a debate has emerged online on what I consider to be two very different subjects, which are getting unhelpfully elided. The first question, raised by MG Siegler, is whether outlets like the WSJ have an obligation to say who first broke a piece of news, when they report that news. The second question, which is often mistaken for the first, is whether outlets like the WSJ should link to outside sources of information.

To the second question, my answer is simple: yes. But look at the story by Jessica Vascellaro about Apple acquiring Chomp…. What Siegler wants is for extra text to be added in to Vascellaro’s story, saying that he first broke the news…. If it was Siegler’s article which caused Vascellaro to call Apple, then Siegler certainly counts as an online resource used in writing the WSJ story, and should therefore, by Stray’s formulation, be fully linked and credited….

The difference between linking and citing is the difference between showing and telling. I’m not a big fan of citing, mainly because it gets in the way: we might learn a lot about where the Haas School of Business might be, but at the same time we’ll learn nothing useful about the increase in the number of rental households. On the other hand, if Rich had simply said that “about six million more households are renting”, complete with hyperlink, that would have been shorter, more useful, and more accurate, even if there were no explicit citation.

Similarly, there’s a case to be made that Vascellaro could and should simply have put out a one-line story under the exact same headline (“Apple Acquires App-Search Engine Chomp”), saying “I’ve talked to Apple and they confirm this story is true.” Vascellaro had exactly one new piece of information: Apple’s confirmation of the news. In a world where TechCrunch is only a click away, why write out a lazy rehash of what Siegler had already written, rather than just linking to his story and moving on to breaking and writing something more interesting?

One reason is that the WSJ still has a hugely successful print product, and that therefore WSJ journalists’ pieces need to work in print as well as online….

My feeling is that commodity news is a commodity: facts are in the public domain, and don’t belong to anybody. If you’re mentioning a fact which you sourced in a certain place, then it’s a great idea to link to that place. And if you’re matching a story which some other news organization got first, it’s friendly and polite to mention that fact…. But it’s always your reader who should be top of mind — and the fact is that readers almost never care who got the scoop.

There’s one big exception to that rule, however. Often, a reporter spends a long time getting a big and important scoop, which comes in the form of a long and deeply-reported story. When other news organizations cover that news, they really do have to link to the original story…. A prime example came last August, with Matt Taibbi’s 5,000-word exposé of the SEC’s document-shredding. Anybody covering that story without linking to Taibbi was doing their readers a disservice….

[I]t’s good to link to as many different people and sources as possible, because the more links you have, the richer your story is…. As for crediting the news organization which broke some piece of news, that’s more of a journalistic convention than a necessary service to readers. It’s important enough within the journalism world, at least in the US, that it’s probably a good idea to do it when you can. But most of the time it’s pretty inside-baseball stuff. And in the pantheon of journalistic sins, failing to do it is not a particularly big deal…

Quote of the Day: February 27, 2012

"After [George Romney] had won the 1962 governor's race in Michigan, I still assumed that he was just another liberal Republican with a salesman's spiel. Saul Alinsky, that cantankerous "professional radical" told me off. He said that he knew Romney well, and found in him a unique political insight. From Saul, the slum organizer, this was liberal praise indeed. In the ten years since I had first run into Alinsky's unusual work, I had never heard him call a businessman or a politician, let alone a Republican, anything but a fink. It was an article of faith for him, and Romney was the rare exception…"

--T. George Harris, Romney's Way: A Man and an Idea for a Better America

You Can't Have a Modern Industrial Economy If You Have to Stage a Wife-Swapping Party Everytime You Want to Buy a Blanket...

Mark Thoma Sends Us to Daniel Davies:

Too Big To Fail: The First 5000 Years — Crooked Timber: It’s also notable that actually over the years, debt (by which I mean, the commercial and mercantile kind of debt) has worked noticeably better than most of the alternatives. The dzamalag ceremonies described in the book… certainly have some attractive qualities, but although Graeber wins the battle against the “Myth of Barter” here I think he loses the war – really, although the discussion of socially embedded exchange is incredibly interesting and illuminating, I think anyone who reads the passage above is going to end up sympathising with the people in the economics department who say that you really can’t organise a modern industrial society on the basis of organising a wife-swapping party every time you want to buy a blanket. Perhaps the fact from the book that will end up resisting the longest against the onslaughts of late nights and Scotch whisky on my ability to recall, is that more or less every urban society in the world has ended up inventing an equivalent phrase to “Please”, and “Thank you”, terms which have the social function of asserting between parties to a commercial transaction that the transaction itself does not embed them in any deeper social relation….

[T]the debt contract is basically a tool of industrial organisation that escaped from the laboratory and ran wild. But I think [Graeber] understimates the extent to which there have always been domesticating influences on the concept, and the extent to which the debt relation has always been, correctly, the subject of revision and reappraisal, with the basic underlying question being that of economics rather than anthropology – “How do we best organise the decision making process with regard to production, consumption, and exchange?”…

I Would Be a Happier, Wiser, and Better-Read Man If I Spent More Time Reading and Following Links from Underbelly...

http://underbelly-buce.blogspot.com

That is all.

The Scary Thing Is That My Contacts at UCLA Law School Say They Cannot Tell If This Is a Joke: They Say It's 50-50 Either Way…

Clarence Thomas last asked a question of any of the attorneys pleading before him on February 14, 2007.

UCLA Law School Professor of Law Adam Winkler appears to think that Clarence Thomas is the person we should elect to assume the office of President of the United States on January 21, 2013:

Clarence Thomas Is a Long Shot for President, But His Candidacy Makes a Lot of Sense: [T]he Republicans should consider a more inspired and game-changing pick: Supreme Court Justice Clarence Thomas…. Unlike the flip-flopping Mitt Romney, Thomas is a true conservative who could appeal to all of the segments of the Republican coalition…. Thomas is also very smart…. Today, it seems as if [Nino] Scalia is more likely to follow [Clarence] Thomas [than the reverse].

Although known for his silence on the bench—he hasn’t asked a question during oral argument in several years…. About his refusal to ask questions, he’s drawn laughs by joking that his “colleagues should shut up!”…. He’s worked at the highest levels of government for over two decades, far longer than the single-term junior senator from Illinois who currently occupies the White House. With considerably less experience than Thomas, Justice Charles Evans Hughes came just a handful of electoral votes away from being elected president in 1916. Despite Thomas’s long service on the Supreme Court, he could also reasonably cast himself as an outsider to Washington  politics unsullied by the partisan taint….

The media would surely bring up Anita Hill’s allegations of sexual harassment. Voters… might be... inclined to forgive Thomas for an indiscretion that occurred 30 years ago. It’s also hard to imagine the Democrats, who still embrace Bill Clinton, gaining much traction with Hill’s old accusations.

Democrats will find plenty of potentially controversial things in Thomas’s judicial opinions, but even here Thomas has a trump card. Those were not statements of his personal political positions, he can say, but merely interpretations of the law…. As president, he can more freely pursue his own policy agenda….

If drafted at the convention at the end of August, Thomas would still have to resign. Nevertheless, Republicans in the Senate could plausibly justify a filibuster of any Obama nominee on the ground that the seat should be filled by whoever wins the White House in November, two months later. And then they’d keep their fingers crossed that Thomas would be that person.

Yes, it is hard to believe that Clarence Thomas would ever be the Republican nominee. Then again, most people thought an inexperienced African-American often mistaken for a Muslim could never defeat presumptive nominee Hillary Clinton, much less be elected president.

Is the quality of thought on the legal academic right what it once was?

Econ 1: Spring 2012: U.C. Berkeley: Correcting and Overriding Markets: February 27, 2012

Econ 1: Spring 2012: U.C. Berkeley: Correcting and Overriding Markets: February 27, 2012:

• Lecture Slides
• Lecture Audio
• Lecture pdf
• Lecture epub

Sara Robinson on Contraception in Historical Perspective

Sara Robinson

Why Patriarchal Men Are Utterly Petrified of Birth Control -- And Why We'll Still Be Fighting About it 100 Years From Now: [D]idn't we all honestly think that by 2012, contraception would be a non-issue, and Congress wouldn't make the mistake of leaving women out of conversations like this one?

Yes, we did. And the fact that we were wrong about that points to a deeper trend at work…. When people look back on the 20th century from the vantage point of 500 years on, they will remember the 1900s for three big things. One was the integrated circuit…. The second was the moon landing…. But the third… is the mass availability of nearly 100% effective contraception…. [Before] anatomy really was destiny — and all of the world’s societies were organized around that central fact. Women were born to bear children… tied to home, dependent on men, and subject to all kinds of religious and cultural restrictions designed to guarantee that they bore the right kids to the right man at the right time — even if that meant effectively jailing them at home. Our biology reduced us to a kind of chattel, subject to strictures that owed more to property law than the more rights-based laws that applied to men…. Thousands of generations of men and women have lived under some variant of this order — some variations more benevolent, some more brutal, but all similar enough in form and intention — in all times and places, going back to where our memory of time ends….

[W]ithin the span of just a few short decades in the middle of the 20th century, all of that suddenly ended. For the first time in human history, new technologies made fertility a conscious choice for an ever-growing number of the planet’s females. And that, in turn, changed everything else. With that one essential choice came the possibility, for the first time, to make a vast range of other choices for ourselves that were simply never within reach before…. Contraception was the single necessary key that opened the door to the whole new universe of activities that had always been zealously monopolized by the men — education, the trades, the arts, government, travel, spiritual and cultural leadership, and even (eventually) war making. That one fact, that one technological shift, is now rocking the foundations of every culture on the planet — and will keep rocking it for a very long time to come….

[W]hile some men have embraced this new order… a global majority is increasingly confused, enraged, and terrified by it. They never wanted to be at this table in the first place, and they’re furious to even find themselves being forced to have this conversation at all. It was never meant to happen. It never should have happened. And they’re doing their damnedest to put a stop to it all, right now, and make it go away.

It’s this rage that’s driving the Catholic bishops into a frenzied donnybrook fight against contraception — despite the very real possibility that this fight could, in the end, damage their church even more fatally than the molestation scandal did…. That same frantic panic… also lies that the core of the worldwide rash of fundamentalist religions…. [T]hey've turned women's bodies into the symbolic battlefield on which their anxieties over this play out. Drill down to the very deepest center of any of these movements, and you'll find men who are experiencing this change as a kind of personal annihilation….

They are, above everything else, desperate to get their women back under firm control. And in their minds, things will not be right again until they’re assured that the girls are locked up even more tightly….

If you’re a woman of childbearing age in the US, you’ve had access to effective contraception your entire fertile life…. From our individual personal perspectives, it feels like we’ve had this right, and this technology, forever. We take it so completely for granted that we simply cannot imagine that it could ever go away. It leads to a sweet complacency: birth control is something that’s always been there for us, and we’re rather stunned that anybody could possibly find it controversial enough to pick a fight over.

But if we’re wise, we’ll keep our eyes on the long game, because you can bet that those angry men are, too….

Male privilege has been with us for — how long? Ten thousand years? A hundred thousand? Contraception, in the mere blink of an eye in historical terms, toppled the core rationale that justified that entire system. And now, every aspect of human society is frantically racing to catch up with that stunning fact. Everything will have to change in response to this — families, business, religion, politics, economics…everything.

We're in this catch-up process for the long haul. In the meantime, we shouldn’t be surprised to be confronted by large groups of well-organized men (and their female flunkies, who are legion) marshaling their vast resources to get every last one of Pandora’s frolicking contraception-fueled demons back into the box….

What we’ve learned these past few weeks is: the fight for contraception is not only not over — it hasn’t even really started yet.

Dutch Health Policy Edition: Republicans Lie All the Time, About Everything

Robert Mackey:

Dutch Puzzled by Santorum's False Claim of Forced Euthanasia: The Dutch Embassy in Washington declined to comment on Wednesday on recent remarks by Rick Santorum, the Republican presidential candidate, in which he claimed, falsely, that forced euthanasia accounts for 5 percent of all deaths in the Netherlands. An embassy spokeswoman, Carla Bundy, explained that the Dutch government preferred not to intervene in an American political campaign. But Ms. Bundy did provide The Lede with documents and official statistics showing that there are no provisions of Dutch law that permit forced euthanasia. Voluntary euthanasia, which has been legal since 2002, accounted for about 2 percent of deaths in the Netherlands in 2010.

As Jonathan Turley, a legal blogger, explained on Monday, the Dutch law permitting euthanasia is unambiguous about the requirement that it be voluntary, and lawmakers mandated that each case be carefully reviewed by an expert panel…. As the Web site Buzzfeed reported, Mr. Santorum’s erroneous comments, made at a public forum hosted by the conservative leader James Dobson on Feb. 3, failed to attract much notice until they were fact-checked, and mocked, in the Dutch press last weekend…. [A] video showed Mr. Santorum claiming that elderly Dutch people wear a bracelet reading “Do not euthanize me.” Over audible gasps from the audience, he continued:

Because they have voluntary euthanasia in the Netherlands, but half the people who are euthanized every year — and it’s 10 percent of all deaths for the Netherlands — half of those people are euthanized involuntarily, at hospitals, because they are older and sick. And so elderly people in the Netherlands don’t go to the hospital, they go to another country, because they’re afraid because of budget purposes that they will not come out of that hospital if they go into it with sickness.

As Buzzfeed noted, Dutch journalists found it easy to refute Mr. Santorum’s statistics, and made fun of his “fact-free” claim that euthanasia was forced on anyone, but they had no idea where he got the idea that the nation’s elderly wear “Do not euthanize me” bracelets…. Mr. Santorum’s campaign did not respond to a request to explain who or what the candidate’s sources were…. At the end of his post, Mr. Turley, the legal blogger, concluded:

Putting aside these tiny factual disagreements, it is good to finally see a politician willing to take on our greatest threat: the Dutch. Dutch propagandists like Rembrandt, Vermeer and Van Gogh have already infiltrated our schools and museums. Our leaders (except Santorum) are deaf to the growing sound of their wooden-shoe stomping, marzipan-eating hordes.

J. Bradford DeLong: Budgeting and Macroeconomic Policy: A Primer

A lecture about the short-run, medium-run, and long-run impact of government budget deficits on the economy, with sundry observations on political economy, delivered to John Ellwood's GSPP 269 class on February 2, 2012. Edited. 11,103 words:

• Ellwood Lecture: iBooks version for iPad

• Ellwood Lecture: epub version

• Ellwood Lecture: pdf version

• Ellwood lecture: kindle version

Quote of the Day: February 25, 2012

"I do like living in this future. So much nicer than the scrambling in the radioactive ruins fighting the mutants for the canned goods that we pictured in my youth."

--Lois McMaster Bujold

Republicans Lie, All the Time, About Everything: Newt Gingrich Ediition

Josh Marshall:

WTF, Newt? | Talking Points Memo: When I was watching the debate last night I did a double-take when I heard Newt say that ‘reforming’ the federal Civil Service system could save “a minimum of $500 billion a year.”… [T]he federal government’s entire payroll, even including the military, came to just $432.6 billion in fiscal 2011. In other words, if you fired everyone who works for the federal government you couldn’t save $500 billion.

Our requests for comment from the Newt campaign have yet to be returned.

There Is No Shortage of Shovel-Ready Human Capital Investment Projects

Paul Krugman:

Reversing Local Austerity: One question that arises when we talk about the possibility of reversing the disastrous push for austerity runs something like this: “OK, you say you want more government spending, but what should it spend money on?” The truth is that I think the perceived lack of shovel-ready projects was overstated even in 2009, but it was a real concern…. [W]e could get a fairly big fiscal bang just by resuming aid to state and local governments, allowing them to reverse the big cuts they have recently made…. [E]mployment by state and local governments, which has fallen around half a million, with the majority of the cuts coming from education. Moreover, the baseline should not be zero; it should be normal growth…. [W]e could put well over a million people to work directly, and probably around 3 million once you take other effects into account, without any need to come up with new projects; just transfer enough money to state and local governments to let them return to doing the essential business of government, like educating our children.

This isn’t the whole of what we should be doing, by a long shot. But anyone who thinks we don’t have good ways to stimulate demand can be refuted with this observation alone.

Marginal Products and Earnings in Historical Perspective...

In 1183 A.D., Reynaud de Chatillon--Prince of Antioch, Castellan of Kerak in Moab, Lord of Oultrejourdain, one of the leading nobles of the Latin Kingdom of Jerusalem, tall, strong, handsome, wielding his two-handed sword In Nomine Domine, and suffering from severe impulse-control problems--had much, much higher earnings than I would have had had I been back in the Latin Kingdom of Jerusalem in 1183.

Today, by contrast, I sit here outdoors in the warm Berkeley winter sun with a Treasury-Department Family Economic Income concept eight times the U.S. median, and were Reynaud de Chatillon to be here now he would be working the loading dock at Target at near-minimum wage and on Thorazine, for the skills that were his comparative advantage are to typically highly rewarded today--if he were not in Folsom Prison.

And perhaps in future centuries the wheel will turn again:

Ryan Avent:

Technology: Cognitive inequality: LAST week, I participated in a panel discussion on open questions in economics with professor and economics blogger extraordinaire Karl Smith. We got to talking about inequality, and I ran through a few of the bog standard interpretations of rising income gaps: mismatches between the supply of and demand for skills, superstar effects at the very top, and improved rent-seeking in the financial sector. Mr Smith offered something dramatically different, some of which he gets at in this post:

I want to make the point that this consistent with my long thesis that we are returning to an environment where productivity gains do not accrue to unskilled labor because they are imbedded in the brains of the innovators. A factory is really big and hard to keep secret. Computer code less so. When you simply write down the process you want or draw the object you want and the computer translates it for you the seep down [keeping the relative income distribution from blowing apart] will grind to [a] complete halt….

I want to stop there and use this thought to begin to tie a few threads together. Politicians, and many economists, are increasingly focused on the importance of global supply chains…. [W]hat most people seem to gloss over is the fact that the most important parts of modern supply chains are embedded in the heads of innovators and… in the space… in which discussions about innovation take place…. [T]he most important parts of the Apple supply chain are Steve Jobs' brain and the community of engineers tasked with turning Jobs' musings into actual, revolutionary products.

This has significant implications…. Someone with an outstanding analytical framework and a talent for manipulating information has probably (or at least potentially) enjoyed huge productivity and consumption gains from the internet and related technologies. Others have gotten some benefits from the internet, but it's far from clear that those benefits are outweighed by, say, the impact of increased outsourcing on the wage they can command….

[I]s this an iron rule of innovation in information technology—that the cheaper information becomes and the easier it becomes to manipulate it the greater will be the gap, productive and otherwise, between the informationally capable and the rest?

That's certainly possible….

I'm not sure we should be confident that continued innovation won't ultimately augment cognition generally, and perhaps in relatively surprising ways. Maybe as the internal aspect of cognition shrinks relative to the external, technological aspect, the differences in internal characteristics across the population will cease to matter very much. The more I rely on the same cloud brain that's available to anyone else, the less the strengths or weaknesses of my meat brain may matter…

But it probably will not turn again back in the direction of Raynaud de Chatillon.

Trade and Dealing with Income Distribution

Mark Thoma:

Economist's View: Autor, Dorn, and Hanson: When (and Where) Work Disappears: The loss of manufacturing jobs to overseas producers has large negative impacts on workers and their communities. I'm with David Autor, one of the authors of the study described below, when he says "policymakers need new responses to the loss of manufacturing jobs: 'I’m not anti-trade, but it is important to realize that there are reasons why people worry about this issue.'... Trade may raise GDP, but it does make some people worse off. Almost all of us share in the gains. We could readily assist the minority of citizens who bear a disproportionate share of the costs and still be better off in the aggregate"….

A new study co-authored by MIT economist David Autor shows that the rapid rise in low-wage manufacturing industries overseas has ... had a significant impact on the United States. The disappearance of U.S. manufacturing jobs frequently leaves former manufacturing workers unemployed for years, if not permanently, while creating a drag on local economies and raising the amount of taxpayer-borne social insurance necessary to keep workers and their families afloat. Geographically, the research shows, foreign competition has hurt many U.S. metropolitan areas — not necessarily the ones built around heavy manufacturing in the industrial Midwest, but many areas in the South, the West and the Northeast, which once had abundant manual-labor manufacturing jobs, often involving the production of clothing, footwear, luggage, furniture and other household consumer items. Many of these jobs were held by workers without college degrees, who have since found it hard to gain new employment.

“The effects are very concentrated and very visible locally,” says Autor... “People drop out of the labor force, and the data strongly suggest that it takes some people a long time to get back on their feet, if they do at all.” Moreover, Autor notes, when a large manufacturer closes its doors, “it does not simply affect an industry, but affects a whole locality.”…

“Trade may raise GDP,” Autor says, “but it does make some people worse off. Almost all of us share in the gains. We could readily assist the minority of citizens who bear a disproportionate share of the costs and still be better off in the aggregate.”

The Eurocrisis: The Republican Story, the German Story, and the Truth

Paul Krugman:

European Crisis Realities: There are basically three stories about the euro crisis in wide circulation: the Republican story, the German story, and the truth. The Republican story is that it’s all about excessive welfare states. How does that hold up? Well, let’s look at public social expenditures as a share of GDP in 2007…. Hmm, only Italy is in the top five — and Germany’s welfare state was bigger. OK, the German story is that it’s about fiscal profligacy, running excessive deficits…. Greece is there, and Italy (although its deficits were not very big, and the ratio of debt to GDP fell over the period). But Portugal doesn’t stand out, and Spain and Ireland were models of virtue.

Finally, let’s look at the balance of payments — the current account deficit, which is the flip side of capital inflows (also from the IMF):

We’re doing a lot better here — especially when you bear in mind that Estonia, a recent entrant to the euro, had an 18 percent decline in real GDP between 2007 and 2009. (See Edward Hugh on why you shouldn’t make too much of the bounceback.)

What we’re basically looking at, then, is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe…. [That's] the main way you should think about where we are.

And the key point is that the two false diagnoses lead to policies that don’t address the real problem. You can slash the welfare state… but this has very little to do with export competitiveness. You can pursue crippling fiscal austerity, but this improves the external balance only by driving down the economy and hence import demand….

Now, if you’re running a peripheral nation, and the troika demands austerity, you have no choice except the nuclear option of leaving the euro, coming soon to a Balkan nation near you. But non-GIPSI European leaders should realize that what the GIPSIs really need is a general European reflation. So let’s hope that they get this, and also give each of us a pony.

Mark Kleiman Calls Out Tyler Cowen for Playing for Team Republican

MK:

The Virginia ultrasound bill: Driving to Charlottesville yesterday for a talk at U. Va., I got to listen to a local radio show focused on the ultrasound bill. Turns out that Jon Stewart wasn’t exaggerating… ultrasound… transvaginal… the one opponents keep comparing to rape. Apparently the comparison isn’t out of line: someone who had had one described it as extremely uncomfortable, invasive, and humiliating. Apparently the dimwit Republican legislator who sponsored the bill – a woman, as it turns out – has said that she didn’t understand what her bill would require of women seeking abortions. The dimwit Governor, hoping for a spot on the Republican national ticket, says that he, too, supported the bill without knowing what it was about….

[T]he right-wing, including some who call themselves libertarian, leaped to its defense anyway, because it was a Red Team effort. Tyler Cowen, for example…. [H]is comment was the sort of astoundlingly heartless and tasteless remark that even otherwise decent people can find themselves making in the heat of partisan fury…. [T]he Virigina bill has absolutely nothing in common with a law requiring that banks disclose the interest rates on credit cards or used-car dealers disclose the defects in the cars they sell….

[G]ross, idiotic, cruel stuff like this is what today’s Republican party is about, that anyone who votes, donates, writes, blogs, or tweets for the Red Team is, will he nill he, contributing to it…

The Roman Catholic Hierarchy Comes Clean on Anthony Bevilacqua, a Month After His Death

John P. Martin:

Court filing: Bevilacqua ordered shredding of memo identifying suspected abusers: Cardinal Anthony J. Bevilacqua ordered aides to shred a 1994 memo that identified 35 Archdiocese of Philadelphia priests suspected of sexually abusing children, according to a new court filing. The order, outlined in a handwritten note locked away for years at the archdiocese's Center City offices, was disclosed Friday by lawyers for Msgr. William J. Lynn, the former church administrator facing trial next month. They say the shredding directive proves what Lynn has long claimed: that a church conspiracy to conceal clergy sex abuse was orchestrated at levels far above him….

Prosecutors say that Lynn, as the secretary for clergy, recommended priests for assignments despite knowing or suspecting that they would sexually abuse children…. Lynn's lawyers argue that the new documents show he was one of the few church officials trying to confront the issue of abuse…. The result was his February 1994 memo that identified 35 priests suspected of abuse or pedophilia. Lynn allegedly gave it to his superior, Msgr. James Molloy, the assistant vicar for administration…. Bevilacqua discussed the memo in a March 15, 1994, meeting with Molloy and Bishop Edward P. Cullen, then the cardinal's top aide, the filing says. After the meeting, Bevilacqua allegedly ordered Molloy to shred the memo. One week later, Molloy allegedly destroyed four copies, with the Rev. Joseph Cistone as a witness. "This action was taken on the basis of a directive I received from Cardinal Bevilacqua," say Molloy's handwritten notes.

But Molloy apparently had second thoughts. Without telling anyone, he took a copy of the memo, and his notes, and placed them in a portable, locked safe.

According to the motion, that safe remained untouched and unnoticed until 2006, when archdiocesan officials found it and hired a locksmith to open it. It's unclear why the records inside were only recently turned over to Lynn's lawyers and prosecutors….

During 10 appearances before a grand jury in 2003 and 2004, Bevilacqua denied knowing details or playing a significant role in the handling of sex-abuse complaints, saying he delegated those duties to Lynn. "I saw no evidence at any time that we did any cover-up," he testified….

Lynn's lawyers also contend that Cistone, now the bishop of Saginaw, Mich., and Cullen, the retired bishop of Allentown, misled the grand jury by not acknowledging the memo or the cardinal's order to shred it…

Ezra Klein on "Flip-Floppers"

Ezra Klein:

What ‘left’ and ‘right’ really mean: Perhaps my biggest frustration with the U.S. news media (and yes, I am a card-carrying member) is that we permit the two parties to decide what is “left” and what is “right.” The way it works, roughly, is that anything Democrats support becomes “left,” and everything Republicans support becomes “right.” But that makes “left” and “right” descriptions of where the two parties stand at any given moment rather than descriptions of the philosophies, ideologies or ideas that animate, or should animate, political debates…. [T]hat leaves ordinary voters in a bit of a tough spot.

The reality is that most Americans aren’t policy wonks. They don’t sit down with think-tank papers or economic studies and puzzle over whether it’s better to address the free-rider problem in health care through automatic enrollment or the individual mandate. Instead, they outsource those questions to the political actors — both elected and unelected — they trust.

Unfortunately, those political actors aren’t worthy of their trust. They’re trying to win elections, not points for intellectual consistency. So the voters who trust them get taken for a ride.

Consider the partywide flips and flops of just the past few years:

• Supporting a temporary, deficit-financed payroll-tax cut as a stimulus measure in 2009, as Republican Sen. John McCain and every one of his colleagues did, put you on the right. Supporting a temporary, deficit-financed payroll tax-cut in late 2011 put you on the left. Supporting it in early 2012 could have put you on either side.

• Supporting an individual mandate as a way to solve the health-care system’s free-rider problem between 1991 and 2007 put you on the right. Doing so after 2010 put you on the left.

• Supporting a system in which total carbon emissions would be capped and permits traded as a way of moving toward clean energy using the power of market pricing could have put you on either the left or right between 2000 and 2008. After 2009, it put you squarely on the left.

• Caring about short-term deficits between 2001 and 2008 put you on the left. Caring about them between 2008 and 2012 put you on the right….

• Supporting large cuts to Medicare in the context of universal health-care reform puts you on the left, as every Democrat who voted for the Affordable Care Act found out during the 2010 election. Supporting large cuts to Medicare in the context of deficit reduction puts you on the right, as Republicans found out in the 1990s, and then again after voting for Representative Paul Ryan’s proposed budget in 2011….

So we have four substantive policy flip-flops by the Republicans, and two by the Democrats. Except that the lost substantive policy flip-flop for each--Medicare--isn't a policy flip-flop at all: Democrats have always been in favor of universal coverage and always thought (when they dared) that it made little sense for the social insurance system to give much more generous benefits to the old than to the rest; Republicans have always been in favor of tax cuts for the rich and always thought (when they dared) that it made little sense to tax the rich in order for the government to pay for health care for the old. So we are down to three to one. And then, lower down, we get this:

I don’t particularly mind flip-flops. Consistency is an overrated virtue. But honesty isn’t. In many of these cases, the parties changed policy when it was politically convenient to do so, not when conditions changed and new information came to light. There are exceptions, of course. It’s reasonable to worry about short-term deficits during an economic expansion and consider them necessary during a recession. That’s Economics 101.

OK. So Ezra Klein has three substantive policy flip-flop by Republicans, and zero by Democrats. And these examples support Ezra's language that "the parties"--not the Republican Party, "the parties"--"changed policy when it was politically convenient to do so, not when conditions changed and new information came to light."

But the Democratic Party changed policy when conditions changed, and new information came to light.

Now if Ezra were focusing on political and legislative strategy:

• Favoring an expansive view of executive authority between 2001 and 2008 put you on the right. Doing so since 2009 has, in most cases, put you on the left….

• Decrying the filibuster and considering drastic changes to the Senate rulebook to curb it between 2001 and 2008 put you on the right, particularly if you were exercised over judicial nominations. Since 2009, decrying the filibuster and considering reforms to curb it has put you on the left.

I would have no beef with his piece (save that there are some virtuous actors who have been consistently for less senatorial gridlock and consistently against quod principi placuit legis habit vigorem, and it would have been nice to recognize them).

But there are differences in honesty and intellectual consistency as far as their commitment to substantive policies are between the two parties.

And by not stressing those differences, in my view Ezra contributes to a problem.

After all, the reality is that most Americans aren’t policy wonks. They don’t sit down with think-tank papers or economic studies or follow the twists and turns of political and policy debate. Instead, they outsource those questions to the journalistic actors they trust. Are those journalistic actors worthy of their trust?

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

Andrew Sabl Tries to Make Sense of the Romney Train Wreck

Andrew Sabl:

The real news about Romney’s stadium speech: I’ve long joked, openly, that being a political theorist at a policy school is a little like holding a chair in astrology in an astronomy department. I violate all the assumptions about how policy analysts are supposed to think. I care deeply about rhetoric…. [W]hile I believe in the value of cost-benefit and cost-effectiveness analyses… I don’t do any of those valuable things myself. That’s why it’s nice when Ezra Klein does them for me…. While all the reporters as well as we blogger-pundits were, understandably, chortling at the sight of a man who can’t lure more than 1,200 supporters to an empty football stadium, Ezra looked at the substance of what Mitt Romney said and found out how he proposes to pay for his tax cuts and hikes in defense spending:

He’ll “send Medicaid back to the states and cap that program’s rate of growth,” and then “do the same for other programs, like food stamps, housing subsidies and job training.”

Sending the programs back to the states is a red herring. The key bit for deficit reduction is capping their rates of growth. Which is to say, cutting their rates of growth. Which is to say, cutting them.

What Romney is essentially proposing to do is finance a massive tax cut by cutting Medicaid, food stamps, housing subsidies and job training. In other words, the neediest Americans — and, to a lesser degree, federal workers — will be financing a massive tax cut.

I don’t know whether independent analysts will say the numbers add up to make the rest of Romney’s plan deficit neutral. My guess is they won’t. But even if they did, Romney’s priorities are clear: In order to cut taxes and raise defense spending, he’ll cut the programs that support the poorest Americans.

In 2000, George W. Bush ran for president saying “I don’t think they ought to be balancing their budget on the backs of the poor.” In 2012, amidst a much worse economy, Romney is running for president saying exactly the opposite.

Perhaps that’s why the stadium is empty.

Daniel Gross Is Shrill...

A Note on Fed Communications Policy

One of the things we try to teach our freshman is the distinction between a change in the economy's equilibrium resulting from a shift of a curve and one resulting from a movement along a curve.

For example, if future interest rates were going to be lower because the Federal Reserve had changed its monetary rule and thus shifted its monetary policy response curve in an expansionary direction, that would make spenders today more optimistic and boost real GDP today.

By contrast, a future interest rates we're going to be lower because the economy in the future was going to be even worse than expected and the Federal Reserve would respond by keeping interest rates low according to its standard monetary policy rule, that would be contractionary.

The first would be a promise by the Fed that it would be cheaper to borrow and more profitable to invest in businesses had previously expected. The second would be a warning by the Fed and it would be less profitable to invest in businesses had previously expected because demand was likely to be lower than the forecast. The Federal Reserve's declarations of future policy have all taken the second form, rather than the first,

If the Fed communication strategy is in fact intended to boost the economy today, I think the Fed is simply doing it wrong...

The Duration of Unemployment is Historically Unprecedented

Kenneth Thomas:

Middle Class Political Economist: Basics: Length of Unemployment is Historically Unprecedented: As everyone knows, long-term unemployment has been a big problem in the current crisis. But "knowing" isn't the same as having perspective. For that, we need a comparison. It turns out that the average duration of unemployment over the last few months is almost exactly twice as high as the previous peak in 1983 in the aftermath of the Reagan recession. The current average of over 40 weeks is completely unprecedented historically…. Unemployment duration has increased steadily even since the end of the official recession, and may finally have topped out at 40.9 weeks in November 2011. Let's hope we're finally seeing a reduction.

I Can't Stand This. I Can't Stand This...

Dealing with the Zero Nominal Interest Rate Lower Bound in Practice

http://emlab.berkeley.edu/users/webfac/cromer/e134_sp12/Lecture%2012%20Slides.pdf

Federal Reserve communications policy:

Twitterstorm delong: February 24, 2012

• RT @delong BBC News - Mild drought caused Maya collapse in Mexico, Guatemala || Eco-tipping points Rnt where you think!

• Official statistics: Don’t lie to me, Argentina | The Economist http://economist.com/node/21548242

• Is the Administration Joining Team Balance-Sheet Recession? | Rortybomb rortybomb.wordpress.com/2012/02/24/is-…

• MT @delong James Kvaal: Romney & Santorum Tax & Budget Plans Increase Deficit by $Trillions http://bit.ly/yfV1PN || Hey, its what Reps do!

• Mark Schmitt Reviews Geoffrey Kabaservice's "Rule And Ruin" | The New Republic tnr.com/book/review/mo…

• Now We See the Violence Inherent in the System!: Steven Pinker Is Being Repressed! Department http://tinyurl.com/7p425nx

• Unlearning Economics ‏ @UnlearningEcon Wondering if people like Krugman and Delong are actually more dangerous than the more RW economists, by appearing reasonable.

• Alchemic Architect ‏ @alchetect If the central bank succeeds in raising inflation expectations, it'll move the PR closer to the real interest rate http://bit.ly/w6hCB2

• Ryan Avent Is Sick of Arnold Kling: Invisible Wage-Push Inflation Vigilantes Watch http://tinyurl.com/7arj3ma

• Stephanie Kelton ‏ @deficitowl I'm more comfortable w/notion of a L/Trap than an IS curve! Keynesians use IS/LM @pilkingtonphil: @delong IS there even a 'liquidity trap'?

• Bob Fishell ‏ @BobFishell @deficitowl @delong QE is admittedly over my head, but it seems to me the money just piles up in banks and doesn't stimulate anything.

• Stephanie Kelton ‏ @deficitowl Reply Retweet Favorite · Open @delong QE is probably DE-flationary. Large deficits can be safe even outside L/Traps Fondly, Kemosabe delong.typepad.com/sdj/2012/02/de…

• Austin Frakt ‏ @afrakt @delong I defer. I'm not willing to infer conversion motivation. I convert when I don't want changes. At the WH, will scrub my name first.

• moe tkacik ‏ @moetkacik All I know of these guys is they're both on my "libertrollz" list. Fight! @delong: Ryan Avent Is Sick of Arnold Kling http://bit.ly/wFxNY4

• @felixsalmon People did not use to be: "Habemus enim huiusce modi senatus consultum, verum inclusum in tabulis tamquam in vagina reconditum"

• @delong "when its elites are protected from their mistakes, societies fail." ~ jared diamond

• Yes, we can! ‏ @supertascha Republican Presidential Candidates Lie All the Time, About Everything, Fiscal Balance Edition delong.typepad.com/sdj/2012/02/de…

• Frozen Dead Guy Days | To Freeze… or not to Freeze http://frozendeadguydays.org

• Robert Silvey ‏ @rsilvey @delong Incomprehensible! A barren life, devoid of irony or semiotics!

• Christina Romer: We Need A Regime Change at the Fed: Christina Romer: Macro and Other Market… http://goo.gl/fb/E83qY

• @mattyglesias Time to sing the hymn: "He Is Trampling the Ungodly with His Hooves of Red-Hot Iron"!!

• Dutch Health Policy Edition: Republicans Lie All the Time, About Everything http://bit.ly/yTSaF8

• Mark Thoma: Broadening the Base and Lowering the Rates Is Good Policy, But Not a Short-Run Employm... http://ow.ly/1hAZyN

• Romney Tax Plan: Gimmicky Proposal That Blows Huge Hole in the Budget: The bar is much lower for... http://dlvr.it/1F0M2x

• I Think Jared Bernstein Gets It Right: JB: The Wrong Narrative on La... http://bit.ly/xaxbjM

• @TheStalwart @modeledbehavior Are you saying I am being PWND by Modeled Behavior?

• Gabriel Rossman ‏ @GabrielRossman Reply Retweet Favorite · Open @delong @plutocracyfiles Absolutely, you me, and @henryfarrell all agree on the tribute thing

• @GabrielRossman @plutocracyfiles me to be as completely out of touch with reality as the Apple Computer passage made fun of by SIfu&co (3/3)

• @GabrielRossman @plutocracyfiles lending it money or that the U.S. is paying imperial tribute to China by paying it interest seems to (2/3)

• @delong @plutocracyfiles Agreed. Concretely you can see that w monetization of feudal obligations then the effect of credit markets on war

• @GabrielRossman @plutocracyfiles But I am scared of chapter 12--the idea that either China is paying imperial tribute to the U.S. by (1/3)

• @GabrielRossman @plutocracyfiles And then financial markets make thin-ties debt which is not a "thick ties" power-submission thing (4/4)

• @GabrielRossman @plutocracyfiles phenomenon. Money enables arms-length thin-ties exchange and greatly enlarges your economic network (3/4)

• @GabrielRossman @plutocracyfiles inherently a "thick ties" phenomenon. Balanced non-monetary gift-exchange is also a "thick ties" (2/4)

• @GabrielRossman @plutocracyfiles Perhaps a triple movement? Unbalanced gift exchange create debt, obligation, and power and is (1/4)

• @delong @plutocracyfiles In any case very glad to get an economic historian's perspective. Hope you blog a review when you finish reading

• @delong @plutocracyfiles I don't recall though how early he makes this point

• @delong @plutocracyfiles Actually I see monetization facilitating arms-length exchange as a central part of his argument.

• @GabrielRossman @PlutocracyFiles you can exchange with people you barely know and may never see again. That's huge. Graeber misses it (5/5)

• @GabrielRossman @PlutocracyFiles your exchange network can now become a thin-ties network rather than a thick-ties network: with money (4/5)

• @GabrielRossman @PlutocracyFiles double coincidence of wants barter problem and makes exchange possible. It's that money means that (3/5)

• @GabrielRossman @PlutocracyFiles Lydia/the Aegean around 600 BC with they invention of coinage. It's not that coinage--money--solves (2/5)

• @GabrielRossman @PlutocracyFiles I'm reading. The anthropology is good--although I think Graeber misses completely what happened in (1/5)

• @PlutocracyFiles @delong It's on p 96. The more sustained problem of "tribute" is all of chapter 12. Still, read the book, it's good overall

• Clark Kerr on Dorothea Lange and Paul Taylor: About Dorothea Lange: Lange's Berkeley Connections: Professor emer... http://bit.ly/z5Gbjm

• Oh wow RT @UnaMullally: How to discredit your entire book with one sentence: http://bit.ly/xrbkgj (via @OrrCollins and @TimHarford)

Can't Anybody Play This Game?/You Can't Make This S--- Up Political Blogging

Steve Rattner vs. Mitt Romney:

Delusions About the Detroit Bailout: WHEN Mitt Romney takes the podium at Ford Field in Detroit today, he’s likely to include yet another sharp denunciation of the government’s rescue of General Motors and Chrysler. That Mr. Romney would traverse Michigan trashing a program that saved tens of thousands of jobs at the Detroit-based automakers doesn’t necessarily mean he’s politically tone-deaf…. Mr. Romney may have the primary politics right — though with a majority of Michigan voters supporting the rescue, he may want to pivot deftly before the general election in November. But on the substance he’s dead wrong…. Mr. Romney evidently hasn’t felt a need to be consistent or specific…. [His]gist is that the government should have stayed on the sidelines and allowed the companies to go through what he calls “managed bankruptcies,” financed by private capital. That sounds like a wonderfully sensible approach — except that it’s utter fantasy…

Benjy Sarlin: Media Fixates On Near-Empty Stadium Rather Than Romney’s Speech:

Mitt Romney’s big speech in Michigan Friday was delivered before a crowd that organizers pegged at roughly 1,200. Apparently the seats had sold out so fast that the campaign had been obliged to shift from its initial venue to a larger space. The site they found was the enormous Ford Field Stadium. The problem: it seats 65,000 people. So early-on the campaign was faced with the issue of how to make it look like he wasn’t addressing a near-empty arena. Their solution was to set up the seats in the middle of the field. However, despite those efforts, a live feed of the event clearly showed tens of thousands of unfilled seats and Romney’s speech had an audible echo as his voice bounced around the cavernous space…

Benjy Sarlin: Romney Camp Can’t Hold Back From Editing Endorsements:

The latest blow up is over a pair of newspaper endorsements that Romney received this week, both of which were generally positive but tempered with some criticisms of his position on various issues where they disagreed. The latest came on Friday, as the Romney campaign sent out another newspaper endorsement, this one from the Arizona Republic, that left out sections criticizing Romney’s position on immigration policy as well as his skills as a campaigner. It did also leave out some more positive passages as well on his foreign policy views. As reported by TPM this week, Romney’s campaign recently e-mailed out an endorsement from the Detroit News that left out a paragraph criticizing his handling of the auto bailout…

Travis Waldron: Romney Slams Santorum's Support For Education Law He Also Supports | ThinkProgress

Pat Garofolo: Romney's New Tax Plan Gives the Richest 0.1 Percent a $264,000 Tax Cut:

Previously, Romney had said that he’s not concerned about the very rich and is “proposing no tax cuts for the rich.” But during this week’s GOP primary debate, he reneged on that position, saying, “number one, I said that we’re going to cut taxes on everyone across the country by 20 percent, including the top 1 percent.”… [N]early half the benefit of such a cut would go to the richest 5 percent of Americans, with more than 25 percent of the benefit going to the richest 1 percent, compared with current policy.

Steve Benen: The Maddow Blog - Michigan: where the trees are 'the right height':

The clip has been making the rounds…. Josh Marshall argues the video "has been scientifically proven to be the best Mitt video in history."… [H]ere's Mitt Romney, speaking in Michigan, trying to explain why he loves the state:

A little history -- I was born and raised here. I love the state. It seems right here. Trees are the right height.

I like -- I like seeing the lakes. I love the lakes. Something very special here. The Great Lakes but also all the little inland lakes that dot the parts of Michigan.

I love cars. I don't know -- I mean, I grew up totally in love with cars.... I love cars. I love American cars."

There was apparently some glitch in Romney's programming during that appearance, but I've been assured the campaign tech team has given the candidate a full diagnostic. As for why Michigan trees "are the right height" -- unlike those other rascally states, where the trees are either too tall or too short -- I'm yet to see someone explain what on earth Romney was talking about.

Romney: My Wife Drives 'A Couple Of Cadillacs':

First, he repeated his bizarre and widely-mocked line about liking Michigan because “the trees are the right height.” Then, he played into the out-of-touch patrician narrative he’s trying to shed when he said his wife drives not one, but “a couple of Cadillacs.”… Campaign aides told reporters after the event that Ann Romney has two Cadillac SRX SUVs, one in California and one in Massachusetts.