Musica Sacra: February 16, 2013
Liveblogging World War II: February 17, 1943

Noted for February 17, 2013

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  • Mark Thoma sends us to Ned Phelps on Rational Expectations: "The 'scientists' from Chicago and MIT came along to say… let's be scientific… suppose price and wage setters form their expectations with every bit as much understanding of markets as the expert economist seeking to model…. Craziness…. You’re not supposed to ask what to do if one economist has one model of the market and another economist a different model…. Roman Frydman has made his career uncovering the impossibility of rational expectations in several contexts…. When I was getting into economics in the 1950s, we understood there could be times when a craze would drive stock prices very high. Or the reverse…. But now that way of thinking is regarded by the rational expectations advocates as unscientific. By the early 2000s, Chicago and MIT were saying we've licked inflation and put an end to unhealthy fluctuations –- only the healthy 'vibrations' in rational expectations models remained…. I had to listen to Ben Bernanke and Oliver Blanchard… crowing that they had conquered the business cycle of old by introducing predictability in monetary policy making, which made it possible for the public to stop generating baseless swings in their expectations and adopt rational expectations."

  • Daniel Kuehn: Facts & other stubborn things: Yes, a lot of people have a very odd view of the 1970s: "Whenever I read from [Buchanan's] Democracy in Deficit I always have the same reaction that I do reading Hayek on 'scientism'. I think 'how could someone who was otherwise so brilliant go so terribly wrong?'. It happens I suppose. Notice the strange conflation of everything liberal he doesn't like with Keynesianism. Notice the bizarre characterization of fiscal irresponsibility as the origin of the problems of the 1970s (this was written in 1977). I especially like the line about Camelot in ruins and Vietnam. For international readers that may not know, 'Camelot' is a reference to Kennedy. The ironic thing here is that despite the tepid semi-embrace of Keynesian ideas by Roosevelt, Kennedy is usually the president most associated with a deliberate application of Keynesian principles due to his Keynesian advisors, not Johnson - who had other priorities. But apparently the loss of Camelot to the Great Society is some kind of Keynesian problem? The other guy that applied Keynesian principles pretty decently (aside from 2009 Obama) was Bill Clinton, consolidating our fiscal position in the growth years of the 1990s. Of course, Kennedy, Clinton, and Obama don't fit as nicely into Buchanan's narratives about Keynesians abandoning prudent fiscal policy. To get Buchanan's answer you have to fabricate what went on in the 1970s (like Holtz-Eakin), redefine Keynesianism, and somehow make the argument that politicians who were not Keynesian at all were somehow enabled to do what they did because Keynes was just so awful and killed any sense of fiscal responsibility (as if politicians need an economic theorist to give them license to behave badly, and as if it even makes sense to talk about Keynes as a potential source of such license)."

  • Paul Krugman: An Orthodoxy of One: Mark Thoma sends us to a piece by Douglas Holtz-Eakin that is both sad and funny. The sad part is seeing Holtz-Eakin come to this…. parroting the party line… not even… making much of an effort. I mean, still peddling expansionary austerity at this point? The funny part is his description of the anti-austerity position as the 'pundit orthodoxy'. Wow. Just the other day the various Joes – Joe Scarborough, Joe Kernen, etc. – were saying that I’m all alone, a 'unicorn', one of maybe 3 or 4 people in the whole world who don’t think that the deficit is the biggest problem we face…. Now I’m part of an orthodoxy?…Look at all the pundits on major op-ed pages or TV shows calling for an end to austerity and more stimulus. There’s me, and there’s… well, maybe Martin Wolf. But I guess I’m such a big guy that I’m an orthodoxy all by myself." I would say that while Paul and Martin (and Olivier!) aren't an "orthodoxy" all by themselves, they are certainly the maior et sanior pars of the chattering class

  • Matthew Yglesias (2007): Kids These Days: "I went with Young Ezra Klein to the Wizards’ unfortunate finale versus Orlando last night. All-too-typically for the rising generation of political bloggers, he’s sadly unfamiliar with the NBA. Thus, at one point he queries about the constant jawboning with the officials — wondering if this ever works, does an official ever say “hey, you’re right, I’ll change the call?” Obviously, it never happens. But how to explain it? Then it hits me. “You know,” I ask him, “how they say conservative media critics are trying to ‘work the refs?’” And then he gets it. Which goes to show that I don’t think we have enough basketball metaphors in our political discourse, which is so totally dominanted by football and bseball metaphors that people don’t even recognize a hoops reference when it’s sitting right there in front of them."

  • Duncan Black: Eschaton: Fortunately There's A Policy For That: More human sacrifices should do the trick: "The European Union statistics agency Eurostat said the economy across the 17-nation shared-currency bloc shrank 0.6% in the fourth quarter of 2012, coming in below analysts’ expectations of a 0.4% decline."

  • Francesco Saraceno: Surprise! Demand Spillovers Exist!

  • Mike Konczal: Interview with Dube; EITC and Minimum Wage as Complements

  • Kevin Drum: Has the Mainstream Media Finally Had Enough?: "I'm curious. It seems to me that something has happened… [the] media has finally started to internalize the idea that the modern Republican Party has gone off the rails…. They have no serious ideas…. They're serially obsessed with a few hobby horses — Fast & Furious! Obamacare! Benghazi! — that no one else cares about. Their fundraising is controlled by scam artists…. Obviously these are all things that we partisan hacks in the blogosphere have been yapping about forever. But the mainstream press, despite endless conservative kvetching to the contrary, has mostly stuck with standard shape-of-the-world-differs reporting. Recently, though, my sense is that this has shifted a bit… veteran reporters just can't bring themselves to pretend one more time that climate change is a hoax, Benghazi is a scandal, and federal spending is spiraling out of control. It's getting harder and harder to pretend that the same old shrieking over the same old issues is really newsworthy. Question: Am I just imagining this? Or has there really been a small but noticeable shift in the tone of recent reporting?"

  • Cosma Shalizi: Dissent Is the Health of the Democratic State: "This… book… is written so… diffusely that it will will have next to no impact, which is a shame. Let me try to lay out the main path…. We live in big, complex societies… thoroughly interdependent on each other…. This means that politics we shall always have with us…. [W]e can basically never know in advance what the best institution for a given problem is. (That markets should always and everywhere be the default institution is a claim Knight and Johnson carefully examine before rejecting, whereas I would simply mock.)… This is where democracy comes in. It has priority, not as a first-order institution for getting everything done, but as a second-order institution for checking on and revising other institutions. No other organizational form is as well-suited to checking whether an institution is actively working; some (e.g., markets and courts) are positively pessimized for monitoring their own performance. Democracy has… two crucial parts: voting… and debate…. Democratic voting is a way of making choices. Democratic debate is a tool for cognition.… This sort of competition is going to work better as we expand the pool of people who can contribute to it…. We can and should move towards… mak[ing] democracy more of a reality and less of a mere promise. This, then, is the main path of thought in The Priority of Democracy; I find it extremely attractive."

On February 16, 2013:

  • Noted for February 16, 2013
  • Proposed Panel 6: 2013 Kauffman Foundation Economic Webloggers' Conference: Friday April 12, 2013 4:15 PM: Economic and Financial Weblogging and Standard Ivy-Covered Academia (Speaker: Mark Thoma: weblogger and Department Chair, U. Oregon, with discussant Stephanie Kelton)
  • Christina Romer Is My Choice for the Next Fed Chair
  • Musica Sacra: February 16, 2013
  • WHAT PLANET DOES EC VICE PRESIDENT OLLI REHN LIVE ON? You can't make this stuff up. "Of course everyone agreed back in 2009-10 that fiscal multipliers were not negative but were large when interest rates were low and the economy was overleveraged", says Olli Rehn