Grasping Reality on TypePad, by Brad DeLong

Felix Salmon: Is Marissa Mayer the right CEO for Yahoo?: Noted for August 27. 2013

Felix Salmon: Is Marissa Mayer the right CEO for Yahoo?:

Nicholas Carlson, Joe Weisenthal, and Henry Blodget deserve many congratulations on Carlson’s monster 22,500-word profile of Marissa Mayer. It features the kind of deep reporting one normally only finds in books, and it sheds a lot of light on what is going on at Yahoo — both at the senior executive level and at board level. What’s more, Carlson was fortunate enough to get just the right amount of access to Mayer — enough to be able to fill in the necessary details, get lovely bits of color, and ask her the questions he needed to ask, but not so much that he became captured. (In general, with very few exceptions, the more time that a journalist spends with his subject, the more favorable the resulting profile will be.)

More Stanley Fischer Weblogging...

A correspondent emails:

I think [Neil] Irwin [has] the year Stan became a US citizen wrong. I'm pretty sure it was 1975, since it was such a memorable event. Basically, it was the only time he ever showed up late for a class. He comes in wearing a coat and tie (also highly unusual), starts his talk, takes off his coat, starts scribbling on the board, takes off his tie, and rolls up his sleeves. Another student, whose name I shall not reveal other than he subsequently served a hitch as XX XXX XXXXXXXX XXXXXXXX, called out "Take it all off." Naturally, we learned what the occasion had been…

Noted for August 26, 2013

Cotijas Mexican Restaurant | Nikola Tesla's Machines Live! | The Missouri Budget Project | Kathleen Geier: The March on Washington was a march for “Jobs and Freedom” | Maersk Triple-E | David Autor and David Dorn: How Technology Wrecks the Middle Class | Ben Thompson: If Steve Ballmer Ran Apple | Anat Admati: We’re All Still Hostages to the Big Banks | Tom Kludt: Ginsburg Calls Out Roberts: 'One Of The Most Activist Courts In History' | Colin Powell Calls George Zimmerman Verdict 'Questionable' | Brad DeLong: Does Allan H. Meltzer Look at Numbers?: Thursday Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging | Brad DeLong: How Long Can an Economist Fail to Mark His Theories to Market? | Tom Levenson: The FSM Moves In Mysterious Ways | The Shape of Rome « Ex Urbe |

Long:

The Gospel of Nicodemus | Robert Hall: The Routes into and out of the Zero Lower Bound | John Maynard Keynes: The General Theory of Employment, Interest and Money, chapter 2 | Maury Obstfeld (1997): Europe's Gamble: The Euro | J. Bradford DeLong and Lawrence H. Summers (1992): Macroeconomic Policy and Long-Run Growth |

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• Y R There No SW-Quadrisphere Hurricanes?
• Jonathan Chait: David Fahrenthold's Washington Post Article Designed to Increase Misunderstanding of Federal Budget
• Jon Schwartz: "Without Fear or Favor. NOT!"
• Philip Elmer-DeWitt: Ben Thompson: What if Steve Ballmer ran Apple?

Y R There No SW-Quadrisphere Hurricanes?: Noted for August 26, 2013

John Metcalfe: All the Hurricanes of the Past 170 Years, Mapped:

Yosemite Rim Fire Burns Toward Hetch Hetchy Reservoir...

We drove that stretch of CA-120 just 13 days ago…

Yes, Stan Fischer Would Be an Excellent Fed Chair...

Neil Irwin beats the drum. My favorite quote from Stan addressing the great and good of finance, from 2000's Federal Reserve Bank of Kansas City's Jackson Hole Conference:

There is nothing in the ILO's [labor standards] principles that we cannot and very little that we should not be eager to endorse, all of us.

The only point against Stan is that he is turning 70 this year, and it is not fair to give him another 70-hour a week job unless he really wants it…

Paul Krugman: Real-Time DeLong Smackdown Watch

Ooops…

Paul Krugman:

News Flash: The CBO Isn't Stupid: It’s actually much worse than even Brad seems to realize. The potential output series he’s using comes from the Congressional Budget Office, which describes its method….

CBO’s estimate of potential output is based on the framework of a textbook model of long-term economic growth, the Solow growth model. The model attributes the growth of real GDP to the growth of labor (hours worked), capital (an index of capital services emanating from the stock of productive assets), and technological progress (total factor productivity). CBO estimates trends —that is, removes the cyclical changes—in the labor and productivity components by using a variant of a relationship known as Okun’s law. (In principle, other “detrending” methods could be used to extract the trends in those inputs.)

So the CBO already takes into account the effect of a smaller capital stock on potential output. That’s part of the reason CBO’s projections of future potential have in fact been marked down since the crisis began.

ME STUPID TODAY. NEED COFFEE!!

Jonathan Chait: David Fahrenthold's Washington Post Article Designed to Increase Misunderstanding of Federal Budget: Noted for August 26, 2013

Jonathan Chait: Tea Party Now Covering News for Washington Post:

The Washington Post’s lead Sunday news story is one of the weirdest, and most weirdly biased, news articles I’ve ever read in my life…. There are actually two points to the story. One is that government is not shrinking…. This point is clearly false. The author employs crude, badly deployed statistics…. The second point of the story is not a factual one but an opinion: Government is just really, really big. The article bolsters this opinion by describing the size of government with a series of adjectives (“big,” “whopping,” “the government still spends a vast amount of money,” etc.)…. Is the federal government big, vast, whopping, and so on? Well, by the standards of the national government of an advanced country, the answer is no. The United States federal government is comparatively small.

I suppose you could argue that, in some objective sense, the federal government is big in that all governments are big. It’s much, much bigger than a bread box. The Post story tries to bolster its case that the federal government is big by comparing it to a series of small things….

As a point of view, it’s perfectly legitimate to believe that the federal government is too big and that the governments of all advanced countries are too big. But the Post’s particular article seems almost designed to decrease the audience’s understanding of the federal budget.

Wanted: Headphones and Power Chargers That Can Survive Multiple Trips Through the Washing Machine

Any Explanation for This Other Than That Robert Murphy Simply Doesn't Do His Homework?

Why oh why can't we have a better internet? A correspondent who must wish me ill asks me to respond to Robert Murphy. It's a mistake for me to oblige. But I will…

I looked at a graph of the components of investment spending:

And I thought: "Gee. Housing investment is depressed because the Obama Administration gave fixing housing finance a priority urgency of zero and it has not fixed itself, so low housing investment is no mystery. But equipment investment is doing quite well, especially since demand is so low--there are no signs that businesses have run out of their ability or desire to adopt machinery that incorporates new and more productive technologies."

And so I wrote a five-word clause to that effect in my post Brad DeLong: And I Do Not Understand the Federal Reserve's Current Thinking at All... in the sentence: "There are no signs in the pace of technological progress, in the level of investment, in the pace at which the American labor force educates itself, in measures of capacity utilization, in signs of upward wage pressure due to labor quality bottlenecks, or in surging commodity prices due to supply bottlenecks to suggest that the path of growth of U.S. sustainable potential GDP is materially lower today than was believed back in 2007."

Now comes Robert Murphy, who proceeds to multiply my five-word clause by a factor of 120 and write a 600-word irrelevant rant:

Balazs Egert: The 90% Public Debt Threshold: The Rise & Fall of a Stylised Fact

Balazs Egert: The 90% Public Debt Threshold: The Rise & Fall of a Stylised Fact:

This paper analyses the original Reinhart-Rogoff dataset, made public by Herndon et al. (2013), on the basis of descriptive statistics and formal econometric testing. First, based on the public debt thresholds (30%, 60% and 90%) proposed by Reinhart and Rogoff (2010), descriptive statistics reveal that real GDP growth slows considerably as the central government debt-to-GDP ratio goes beyond the 30% threshold and that no further slowdown can be observed in the data as the debt-to-GDP ratio rises above 60% and 90% during the periods 1790-2009 and 1946-2009. For the United States (1946-2009), the negative nonlinear finding completely disappears for any level of public debt, once reverse causality and influential outliers are accounted for.

Jon Schwartz: "Without Fear or Favor. NOT!": Noted for August 26, 2013

Jon Schwartz (2011): A Tiny Revolution: "Without Fear or Favor. NOT!":

I'd never heard of [this] until right now. And considering how much media criticism I've plowed through in my life, that suggests almost no one else has heard of it either. It really goes to show how all the most important history just evaporates…. As you know if you're the right class in the U.S., the glorious reign of the New York Times began in 1896 when Adolph Ochs bought it and published a manifesto about the standards the Times would henceforth uphold: they would now:

give the news impartially, without fear or favor, regardless of party, sect, or interests involved.

Here's the whole paragraph:

It will be my earnest aim that The New-York Times give the news, all the news, in concise and attractive form, in language that is parliamentary in good society, and give it as early, if not earlier, than it can be learned through any other reliable medium; to give the news impartially, without fear or favor, regardless of party, sect, or interests involved; to make of the columns of The New-York Times a forum for the consideration of all questions of public importance, and to that end to invite intelligent discussion from all shades of opinion.

Impressive!

Here's the next paragraph:

There will be no radical changes in the personnel of the present efficient staff. Mr. Charles R. Miller, who has so ably for many years presided over the editorial pages, will continue to be the editor; nor will there be a departure from the general tone and character and policies pursued with relation to public questions that have distinguished The New-York Times as a non-partisan newspaper — unless it be, if possible, to intensify its devotion to the cause of sound money and tariff reform, opposition to wastefulness and peculation in administering public affairs, and in its advocacy of the lowest tax consistent with good government, and no more government than is absolutely necessary to protect society, maintain individual and vested rights, and assure the free exercise of a sound conscience.

So… Ochs stated… bluntly that "We will be completely impartial, except for our intense devotion to this long list of issues"… all right-wing economic obsessions—-in 1896 and today.

Philip Elmer-DeWitt: Ben Thompson: What if Steve Ballmer ran Apple?: Noted for August 26, 2013

Philip Elmer-DeWitt: Ben Thompson: What if Steve Ballmer ran Apple?:

Skip Kara Swisher's gossipy piece about how it happened faster than Microsoft let on and go straight to Ben Thompson's If Steve Ballmer ran Apple on his stratechery blog…. Thompson--a former Microsoft Windows product manager--imagines what Apple's new CEO would do over the next five years, starting with the rollout of the iPhone 5C…. Thompson's punchline--which gets to the heart of the difference between Microsoft and Apple (AAPL)--is that if Ballmer ran Apple, the company would never again ship a disruptive new product.

Robert Hall Maths Up Chapter 2 of Keynes's (1936) General Theory...

Larry Summers (1983):

The first way to find a topic is to open Keynes's General Theory at random, read what's on that page, and math it up…

John Maynard Keynes (1936):

The General Theory of Employment, Interest and Money: Clearly we do not mean by ‘involuntary’ unemployment the mere existence of an unexhausted capacity to work. An eight-hour day does not constitute unemployment because it is not beyond human capacity to work ten hours. Nor should we regard as ‘involuntary’ unemployment the withdrawal of their labour by a body of workers because they do not choose to work for less than a certain real reward. Furthermore, it will be convenient to exclude ‘frictional’ unemployment from our definition of ‘involuntary’ unemployment. My definition is, therefore, as follows: Men are involuntarily unemployed if, in the event of a small rise in the price of wage-goods relatively to the money-wage, both the aggregate supply of labour willing to work for the current money-wage and the aggregate demand for it at that wage would be greater than the existing volume of employment.

Robert Hall(2013): The Routes into and out of the Zero Lower Bound:

To the extent that high unemployment is an equilibrium, the stability of inflation in the presence of persistent high unemployment is less of a mystery. The tradition of regarding high unemployment as a disequilibrium that gradually rectifies itself by price-wage adjustment may rest on a misunderstanding of the mechanism of high unemployment….

Not, mind you, that I am complaining about the very-smart but never-conventional Hall: the paper worries about the right things, says a lot of things that are true, says a lot of things that might be true and that provoke insight, and says nothing that is known to be false.

But it is striking that useful and important frontier work in economics can still be done in 2013 by mathing-up pieces of the General Theory…

The Mystery to Me Is That Robert Hall Finds a Mystery Here…

The extremely smart but never conventional Robert Hall thinks that we are now in a high-unemployment equilibrium: something has greatly degraded the quality of the labor-market job-matching process by making firms unwilling to invest in finding the right hire for the job:

Robert Hall: The Routes into and Out of the Zero Lower Bound:

To the extent that high unemployment is an equilibrium, the stability of inflation in the presence of persistent high unemployment is less of a mystery. The tradition of regarding high unemployment as a disequilibrium that gradually rectifies itself by price-wage adjustment may rest on a misunderstanding of the mechanism of high unemployment.

Could that something be… slack aggregate demand? Hall dismisses that possibility, but I don't see why. After all, slack aggregate demand plays the major role in firms' current relative unwillingness to invest, doesn't it? Why can't it play the major role in firms' current relative unwillingness to hire?

DeLong Smackdown Watch: James Kwak: The Lame “Uncertainty” Defense

James Kwak:

The Lame “Uncertainty” Defense: Brad DeLong has devoted his energies to singlehandedly protecting Larry Summers from the Internet (although, he makes pains to say, he likes Janet Yellen almost as much). Although I’m letting most of the Fed chair sideline debate pass me by, DeLong and others have raised one issue that played an important symbolic role in 13 Bankers and, more generally, the historical background to the financial crisis: Brooksley Born’s proposal to think about regulating OTC derivatives in 1998….

Liveblogging World War II: August 26, 2013

John Baxter on Life as a Japanese POW:

The Japanese punished even minor infringements severely, including trying to buy or barter food from the natives. One prisoner, caught exchanging a leather wallet for some bananas with a native, was beaten up by two guards and thrown into solitary confinement.

Noted for August 25, 2013

Short:

Anil Dash (2011): If your website's full of assholes, it's your fault | Joshua Zumbrun and Aki Ito: Yellen’s Ties From London to Shanghai Bypass White House | Philip Elmer-DeWitt: Steve Ballmer's Microsoft years: What the critics are saying: | Prairie Weather: NSA admits it deliberately broke the law |

Long:

Citing a proposal by the respected economist Barry Eichengreen, [Héléne] Rey says a small group of systemically significant central banks should meet regularly at the Bank for International Settlements (BIS), discuss the implications of their policies and issue a short report that may “encourage central bankers to internalize some of the external spillovers of the policies.” |

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• Jonathan Chait Watches the Right Wing Object to Barack Obama's Presidenting While Black
• Adam Posen: Why has the Fed given up on America’s unemployed?
• Belle Waring: A Woman Rice Planter
• Robert Farley: David Ignatius, Parochialism, and the USAF: Noted for August 25, 2013 Why Oh Why Can't We Have a Better Press Corps?:
• Paul Krugman: The Macroeconomics of Sisyphus
• Paul Krugman: The (Lack of) Utility of Close Reading
• Josh Barro: Don't Believe the Cato Institute: Welfare Does Not Really Pay Better Than Work

Jonathan Chait Watches the Right Wing Object to Barack Obama's Presidenting While Black: Noted for August 25, 2013

Jonathan Chait: Barack Hussein Milhous Nixon Impeachment Update: The Weekly Standard has an essay by Noemie Emery on the scandalousness of Barack Hussein Obama, which provides an interesting window into the current state of conservative thought…. Impeachment is merited… his guilt [is] assumed; the puzzle merely how they could go about nailing him…. The facts don’t interest Emery; she assumes his criminality and undertakes to show that he absorbed it environmentally via his career in Chicago:

A biracial man who posed as a healer, he attended the church of the Reverend Jeremiah Wright, who preached racial antipathy; a proponent of peace, he befriended Bernardine Dohrn and Bill Ayers, who had trafficked in violence; a high-minded reformer, he became a cog in Chicago’s notorious Democratic machine, known for corruption and strong-arm behavior.

Emery argues that corruption is the essence of Obama’s identity…. the particulars… don’t… [matter.]

Adam Posen: Why has the Fed given up on America’s unemployed?: Noted for August 25, 2013

Adam Posen: Why has the Fed given up on America’s unemployed?:

What a reversal from just a year ago. Last summer the US Federal Reserve’s Jackson Hole conference ended with a paper by Edward Lazear, a prominent Stanford economist, who argued that almost all US unemployment was cyclical and thus reparable through stimulus. That conclusion was then welcomed by Ben Bernanke, the central bank’s chairman. It was consistent with the Fed’s insistence that the level of employment that can be sustained by the US economy without stoking inflation--the “Nairu”, the non-accelerating inflation rate of unemployment--had not risen. Policy makers had not yet accepted high unemployment as a fact of life…. Yet for the past three months, despite little improvement, most members of the FOMC have spoken about a desire to “taper” off stimulatory policy by September. They reaffirmed that desire even after the market interest rates rose almost 100 basis points as a result of their statements. This credit market tightening, combined with the ham-fisted fiscal sequestration--the across-the-board cuts in federal spending that took effect in March--have dragged on US growth…. The costs of pushing a bit too far are small and reversible. But the costs of letting unemployment persist are vast. Even reforms to reduce structural unemployment, which worked in Germany a decade ago or in the US a decade before that, only take effect in an expanding economy. There is no good reason for the Fed to give up on the labour market – and thus no good argument for allowing the de facto tightening of monetary conditions to stand.

We Economic Historians All Mourn That David Landes Has Died

And yet his work remains. Jeff Weintraub asks a question:

Let's imagine that one wants to give students (or any other set of non-expert readers) a sweeping and illuminating introductory overview on the industrial revolution--what it was about, how & why it marked a major break in human history, why it was a socio-economic and socio-political transformation as well as a purely technological one, along with some consideration of the major controversies about its nature & causes & consequences--that is brief & compact, but also intellectually substantial & theoretically sophisticated, not to mention well written. As far as I can tell, the best available single piece of this sort is still David Landes's 39-page ["Introduction"] to The Unbound Prometheus. At least, I'm not aware of a superior substitute that meets all those criteria…

I am not aware of a superior substitute either. Is anybody?

Here is a taste: the first section of David's introductory chapter:

Belle Waring: A Woman Rice Planter: Noted for August 25, 2013

Belle Waring: A Woman Rice Planter — Crooked Timber:

After my grandmother died and before my dad sold the house (with much gnashing of teeth and wailing on my part) I nabbed some excellent books, in particular A Woman Rice Planter, by Patience Pennington, published in 1903. An unmarried woman living just to the north of my family home, she relates her trials as she attempts to keep her family plantation running after the end of the Civil War. This is just a taste of how much her former slaves, who now either work for her or are sharecroppers, hate her, and how much she completely doesn’t understand that they do, or why:

Robert Farley: David Ignatius, Parochialism, and the USAF: Noted for August 25, 2013 Why Oh Why Can't We Have a Better Press Corps?

Robert Farley: David Ignatius, Parochialism, and the USAF:

This is some pretty gruesome stuff: "Governors united across party lines to protest the potential loss of their pet C-130s and other planes. Members of Congress lined up behind the potent lobbying pressure of the Guard and the reserves. The result: The Air Force was ordered not to make the cuts it thought were best for the nation’s defense, and it instead had to retain scores of planes it wanted to retire…." Ignatius seems completely unaware of several problems: There is a long-running dispute between the Air Force, the Army, and Congress over the utility of the A-10, based in profoundly different understandings of the utility of close air support and battlefield interdiction. People have even written books about it. The Air Force has tried to kill the A-10 several times since the early 1970s, with Army protests and Congressional action preventing the mothballing of the Warthog. Of the transport aircraft that Ignatius identifies… the C-130 has been in continuous production since 1957, and is regarded as one of the most useful military transport aircraft in history…. Anyone familiar with the history of the USAF understands that it has long been accused of having an institutional predisposition against transport (which it regards as fundamentally a support function), and that the commentary of USAF officers and PR flacks regarding the utility of transport aircraft should be understood against this background. “Pet” uses of the C-130 Hercules include firefighting, hurricane relief, search and rescue, and humanitarian assistance…. The national interest isn’t “lost” in a debate over the relative utility of F-35s, C-27s, and C-130s, because the answers in that debate aren’t self-evident…. THIS IS THE DEBATE THAT’S HAPPENING RIGHT NOW. Ignatius just can’t manage to see it.

Paul Krugman: The Macroeconomics of Sisyphus: Noted for August 25, 2013

Paul Krugman: The Macroeconomics of Sisyphus:

Do[ing] policy-relevant macroeconomics these past 5 years has felt like the curse of Sisyphus: you labor mightily to get some simple but essential point across, you think that maybe, finally, you’re getting through. Then along comes some famous economist or report from an influential agency that rolls the level of the discussion right back down to the bottom. The central fact of macro policy in these times is… [that] in normal times, the central bank can offset fiscal contraction by cutting interest rates. Since late 2008, however, the interest rates the Fed can control have been limited by the zero lower bound. This means that there is no offset to the negative effects of fiscal consolidation--which means that this is not the time to be doing such consolidation…. This isn’t complicated, and it isn’t new--it’s what we’ve been saying for almost 5 years. There are arguments one can make on the other side, although the two main ones--expansionary austerity and the supposed existence of a red line on debt at 90 percent of GDP--have imploded.

The Washington Post's Dana Milbank Has a Dark Night of the Soul…

Dana Milbank has a dark night of the soul:

I envy [my father] that connection to a cause that stirred so many Americans and defined a generation. My generation, Generation X, has no equivalent…. We lacked a cause greater than self…. Without any concept of actual combat or crisis, a new crop of leaders--Ted Cruz, Rand Paul, Paul Ryan, Sarah Palin… substitute[s] factional causes…. The generational drift is nonpartisan. President Obama has extraordinary talents but shows no ability to unify the nation.

Cruz, Obama, Palin, Paul, Ryan: is one of these things not like the other ones? Is it really Obama's fault that Cruz, Palin, Paul, and Ryan exist? Is it really Obama's fault that he cannot do what Roosevelt, Truman, Eisenhower, Kennedy, and Johnson could not do? The only President who unified the nation was Nixon--against himself.

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

Paul Krugman: The (Lack of) Utility of Close Reading: Noted for August 25, 2013

Paul Krugman: The (Lack of) Utility of Close Reading: :

In general, what people thought Keynes or Friedman meant ends up being more important than what they turn out, on close reading, to (maybe, possibly) actually have meant. For what it’s worth, I think Glasner makes a good case that Friedman was indeed more or less a Keynesian, or maybe Hicksian--certainly that was the message everyone took from his Monetary Framework, which was disappointingly conventional. And Friedman’s attempts to claim that Keynes added little that wasn’t already in a Chicago oral tradition don’t hold up well either.

Josh Barro: Don't Believe the Cato Institute: Welfare Does Not Really Pay Better Than Work: Noted for August 25, 2013

Josh Barro: Does Welfare Really Pay Better Than Work?:

The Cato Institute is out with an update to their 1995 study which purports to show that, in most states, welfare pays better than work. They add up benefits available through eight programs to a low-income woman with two children, and find total benefit values well in excess of full-time minimum wage work, or even, in some states, middle-skill work. The study is called "The Welfare-Versus-Work Tradeoff," and it's meant to show why people don't get off welfare. And it's B.S., for three reasons.

1. Very few people actually qualify for all eight of the programs Cato looks at.
2. Welfare benefits for single adults are much less generous than those for women with children.
3. Not all benefits are lost when a welfare recipient starts working. SNAP benefits phase out…. People who go back to work don't necessarily lose health benefits….

That said, poverty traps are real. This is the phenomenon of people losing benefits as they earn more income of their own. It's a problem that welfare programs need to be designed around, and there are two ways of mitigating it. One is to make benefits more generous by extending their phaseout ranges, so people don't lose as many benefits as they earn more income. That costs money. The other is to reduce benefits. That reduces the standard of living for the most vulnerable people in America. It's easier to make an argument for the latter approach when you have an economy that creates broad prosperity and makes it easy for people to find living-wage jobs if they are willing to work. We don't have that economy. This is the problem that conservatives and libertarians refuse to grapple with: If you're unwilling to support policies that promote macroeconomic stability, such as counter-cyclical fiscal and monetary policies, you're only making a more generous welfare state more morally necessary. Meanwhile, Democrats have implemented a reform that actually does help to address the poverty trap issue, the Affordable Care Act.

Liveblogging World War II: August 25, 1943

Franklin Delano Roosevelt addresses the Canadian parliament:

Your Excellency, Members of the Parliament, my good friends and neighbors of the Dominion of Canada: It was exactly five years ago last Wednesday that I came to Canada to receive the high honor of a degree at Queen's University. On that occasion one year before the invasion of Poland, three years before Pearl Harbor-I said:

We in the Americas are no longer a far-away continent, to which the eddies of controversies beyond the seas could bring no interest or no harm. Instead, we in the Americas have become a consideration to every propaganda office and to every general staff beyond the seas. The vast amount of our resources, the vigor of our commerce, and the strength of our men have made us vital factors in world peace whether we choose it or not.

Noted for August 24, 2013

Short:

A two-fer for chef Celina Tio on Grand Boulevard | Chef Celina Tio | Peter Eavis: Unreliable Guesswork in Valuing Murky Trades | Pachamamas 800 New Hampshire St Lawrence, KS 66044 Phone number (785) 841-0990 | Huckleberry | The Duck: Sturbridge MA | Anil Dash: What Medium Is — The Web We Make | Kevin Drum: Steve Ballmer Is the -$18 Billion Man | Jan Groen and Menno Middeldorp : Creating a History of U.S. Inflation Expectations | Nicole Belle: KY Gov [Beshear] Praise of Obamacare Leaves McConnell, Rand Dumbfounded |

Long:

Hans Noel: The Coalition Merchants: Testing the Power of Ideas with the Civil Rights Realignment |

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• David Autor, David Dorn, and Gordon Hanson: Untangling Trade and Technology: Evidence from Local Labor Markets
• Simon Wren Lewis: Missing the Point at the IMF
• Paul Krugman: Communicating
• Daniel Davies: Humanities! Science is not your enemy, it’s a friend who owes you money
• Paul Krugman: Singapore Is The New Chile
• Pedro da Costa: Why have top U.S. Fed officials, even dovish ones, become increasingly queasy about asset purchases despite falling inflation?
• Scott Lemieux: That Sweet, Sweet Wingnut Welfare

Scott Lemieux: That Sweet, Sweet Wingnut Welfare: Noted for August 24, 2013

Scott Lemieux: That Sweet, Sweet Wingnut Welfare:

The winger plagiarism battle Rob linked to below is entertaining in its own terms, but I wanted to highlight this remarkable fact:

Boot, who was in Thailand at the time, was hesitant at first and asked for time to think it over. But Rosen was encouraging, offering $4,000, for 2,000 words, more than a week to write, and editorial guidance from Sam Walker, the Journal’s Sports editor.

The context of somebody already having submitted pretty much the same hacktacular argument already makes the $2 a word offer even more amazing. Nor did Boot have the slightest expertise on the specific subject; he needed not only the help of Sam Walker, the Journal‘s Sports editor, but of his RA at the CFR. Yup, Max Boot has an RA to help him write unoriginal op-ed pieces for which he gets paid $2 a word.

Wall Street Journal and Max Boot Behaving Badly Weblogging

Dylan Byers and Hadas Gold: Daniel Flynn Accuses the Wall Street Journal of Paying $2 a Word to Commission a 2000 Word Plagiarized Article from Max Boot:

Daniel Flynn… submitted an essay to the Wall Street Journal… “The War on Football.”… Two days later, Flynn was informed that his piece had been turned down. Two-and-a-half weeks later, on Aug. 17, Flynn went to the Journal’s website and found that the paper had published a column by another author, titled “In Defense of Football,” which included much of the same data presented in the same order and language similar to that presented in his own work… Flynn [is now] publicly accusing the Journal and author Max Boot--a senior fellow at the Council on Foreign Relations and contributing editor to the Weekly Standard and the Los Angeles Times--of plagiarism…. Both Boot and his research assistant say they had no knowledge of Flynn or his work until they received inquiries…. Boot threatened to take legal action against POLITICO if it printed Flynn’s “scurrilous and unsubstantiated allegations.”…

If I were on the jury on this, I would find for Flynn. My advice is that the WSJ and Boot should settle this quickly…

David Autor, David Dorn, and Gordon Hanson: Untangling Trade and Technology: Evidence from Local Labor Markets

David Autor, David Dorn, and Gordon Hanson: Untangling Trade and Technology: Evidence from Local Labor Markets:

Labor markets whose initial industry composition exposes them to rising Chinese import competition experience significant falls in employment…. Labor markets susceptible to computerization due to specialization in routine task-intensive activities experience significant occupational polarization… but no net employment decline. Trade impacts rise in the 2000s as imports accelerate, while the effect of technology appears to shift from automation of production activities in manufacturing towards computerization of information-processing tasks in nonmanufacturing…. Local labor markets with greater exposure to trade competition experience differential declines in manufacturing employment, with corresponding growth in unemployment and non-employment. The employment decline is not limited to production jobs but instead affects all major occupation groups. Employment losses are particularly large among workers without college education…. The effect of trade competition on the manufacturing sector has become stronger over time, while the effect of technological change on employment composition in the manufacturing sector has subsided. Conversely, the impact of technology on the non-manufacturing sector is growing as technological change seems to be shifting from automation of production in manufacturing to computerization of information processing in knowledge-intensive industries.

Simon Wren Lewis: Missing the Point at the IMF: Noted for August 24, 2013

Simon Wren Lewis: Missing the point at the IMF:

[Ran Bi, Haonan Qu, and James Roaf of] the IMF have just published a working paper entitled: ‘Assessing the Impact and Phasing of Multi-year Fiscal Adjustment: A General Framework’. Or to put it more simply: should austerity be front loaded or delayed?… Honestly, if you… write this:

our framework does not explicitly model the monetary policy response, which could have an important impact on output…

then you have no business using the word ‘Framework’, let alone ‘General’

Paul Krugman: Communicating: Noted for August 24, 2013

Paul Krugman: Communicating Economics:

The truth… I haven’t read… [Roger Farmer's] stuff. I’ve… found it very hard to penetrate and gave up…. I’m not saying that there’s nothing there… maybe it’s even profound. But… [I need] a motivating example, a simple and effective summary, something to indicate that the effort will be worthwhile…. What every economist, and for that matter every writer… needs to realize is that unless you are a powerful person and people are looking for clues about what you’ll do next, nobody has to read what you write…. You have to provide the hook, the pitch, whatever you want to call it, that pulls them in. It’s part of the job.

Daniel Davies: Humanities! Science is not your enemy, it’s a friend who owes you money: Noted for August 24, 2013

Daniel Davies: Humanities! Science is not your enemy, it’s a friend who owes you money:

While in an unusually masochistic mood, I read all of Steven Pinker’s astonishingly wordy essay on science science science science did I tell you how much I love science? Just as there are few clearer signs that one cannot program a computer than to publicly call yourself a “hacktivist” and few clearer signs that you didn’t do statistics at university than to boast that you’re a “data geek”, Pinker, who made a perfectly decent academic career as a computational linguist, and then an absolutely stellar one by making up a load of rubbish about social sciences, really sounds like he’s overcompensating for something. Everyone’s happy about the moon landings and curing smallpox and all that, but it really is a bit unseemly to imply that if you object to Pinker and his mates constantly gobbing off about things they don’t want to bother learning about, you’re in favour of unanaesthetised dentistry.

Paul Krugman: Singapore Is The New Chile: Noted for August 24, 2013

Paul Krugman: Singapore Is The New Chile:

Remember the 2005 Social Security debate?… Conservatives repeatedly pointed to the example of Chile, with its privatized retirement scheme…. And then a funny thing happened: it turned out that the Chileans didn’t like their system either; it was massively reformed…. In the health reform debate, Singapore has played much the same role for conservatives that Chile played on Social Security--once again it was a small, far away country of which we know nothing, which supposedly had a wonderful health system based on free market principles. As Aaron Carroll has been pointing out, Singapore’s actual system is much less free-market, and involves much more government intervention, than legend has it. In any case, however, guess what: it turns out that Singapore isn’t happy with the system, and has just reformed it in a way that makes it much more like… Obamacare.

Pedro da Costa: Why have top U.S. Fed officials, even dovish ones, become increasingly queasy about asset purchases despite falling inflation?: Noted for August 24, 2013

Pedro da Costa: Why have top U.S. Fed officials, even dovish ones, become increasingly queasy about asset purchases despite falling inflation?:

The U.S. economy, while outpacing its even more anemic rich-nation counterparts, is hardly besieged by runaway growth of the sort that would normally lead central banks to tighten monetary policy. And by even talking about reducing bond buys, the Fed has helped push interest rates up more than a full percentage point, to a two year high, in just a few months. There are a number of possible explanations…. One, sadly, is politics…. Policymakers were clearly caught off guard by the blowback… to unconventional monetary policy…. A second… is the prospect that their asset purchases could adversely affect financial markets… if the prolonged period of low rates stokes asset bubbles. This concern has prompted Kansas City Fed President Esther George to dissent against the Fed’s decisions…. A number of U.S. central bankers including Bernanke have expressed relief about the possibility that the recent back-up in interest rates reflects a healthy removal of froth for a market that had grown complacent about risks. Never mind that the whole point of quantitative easing was to prompt businesses to take risks in the first place. Then there is the issue of efficacy. Is the bond buying having a beneficial economic impact? Here, the Fed itself appears to be changing its mind.

Noted for August 23, 2013

Short:

Matthew Yglesias: How Obamacare is Slowing the Growth of Health Care Spending | Kevin Drum: Maureen Dowd Twists Yet Another Quote Just Because She Feels Like It | Alex Pareene: Please fire Maureen Dowd… or get her a fact-checker: The Times columnist hijacks the NYC mayor race, makes another screw-up that would get a less famous reporter axed | Joshua Bloom: Is there an Uncanny Valley of Machine Intelligence? | Berkeleyside | Berkeley, CA's independent news site | Sean Carroll: Mind and Cosmos | The Brunch Consult: CA Mulls Health Exchange Backup Plan, Utah Has 99 Plans in Health Exchanges | Sally Kohn: GOP is infuriating its rich elites |

Long

Lawrence Mishel and Heidi Shierholz: A Decade of Flat Wages: The Key Barrier to Shared Prosperity and a Rising Middle Class | 2013 Economic Policy Symposium | Federal Reserve Bank of Kansas City: Robert E. Hall, "The Natural Rate of Interest, Financial Crises, and the Zero Lower Bound"; Arvind Krishnamurthy, "The Transmission of Unconventional Monetary Policy; Augustín Carstens, David Daokui Li, Frank R. Smets, "Monetary Policy Options and Tools"; Christine Lagarde; Jean-Pierre Landau, "Liquidity"; Hélène Rey, "Cross-Border Capital Flows"; Charles R. Bean, Haruhiko Kuroda, Alexandre Antonio Tombini, "Overview" |

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• Roger Farmer: The Natural Rate of Unemployment Is a Rotten Idea
• Robert Hall: The Routes into and Out of the Zero Lower Bound
• Josh Bivens: Slow Wage Growth Just One More Sign of How Big a Problem the Profit-Biased Recovery Is

For the Weekend

Roger Farmer: The Natural Rate of Unemployment Is a Rotten Idea: Noted for August 23, 2013

Roger Farmer: The Natural Rate of Unemployment Is a Rotten Idea:

Central banks throughout the world predict inflation with new-Keynesian models where, after a shock, the unemployment rate returns to its so called “natural rate’. That assumption is called the Natural Rate Hypothesis (NRH). This paper reviews a body of work, published over the last decade, which is critical of the NRH. I argue that the NRH does not hold in the data and I provide an alternative paradigm that explains why it does not hold. I replace the NRH with the assumption that the animal spirits of investors are a fundamental of the economy and I show how to operationalize that idea by constructing an empirical model that outperforms the new-Keynesian Phillips curve. I model animal spirits with a new fundamental that I call the belief function.

Preliminary Notes: Robert Hall at Jackson Hole Wisely Embraces the Cutting-Edge Macroeconomics of 1898

Robert Hall http://www.kansascityfed.org/publicat/sympos/2013/2013Hall.pdf http://www.kansascityfed.org/publicat/sympos/2013/2013.Hall.handout.pdf says that the cutting-edge macroeconomics we need today is that of Knut Wicksell's Knut Wicksell's Geldzins und Guterpreis, originally published in 1898:

The United States and most other advanced countries are closing on five years of flat-out expansionary monetary policy that has failed in all cases to restore normal conditions of employment and output. These countries have been in liquidity traps, where monetary policies that normally expand the economy by enlarging the monetary base are ineffectual…. The U.S. economy entered this state… [as] real-estate claims came close to collapse…. Rising risk premiums discouraged investments in plant, equipment, and new hiring… declining collateral values… forced… deleveraging. The combination of low investment and low consumption resulted in an extraordinary decline in output demand, which called for a markedly negative real interest rate, one unattainable because the zero lower bound on the nominal interest rate coupled with low inflation…. As output demand recovers, the lower bound will cease to be an impediment and normal conditions will prevail again.

Can Anybody Help Me Understand the Horizontal Axis Scale on Figure 1 in Hall (2013)?

http://www.kansascityfed.org/publicat/sympos/2013/2013Hall.pdf

Robert Hall: The Routes into and Out of the Zero Lower Bound: Noted for August 23, 2013

Robert Hall: The Routes into and Out of the Zero Lower Bound:

The United States and most other advanced countries are closing on five years of flat-out expansionary monetary policy that has failed in all cases to restore normal conditions of employment and output. These countries have been in liquidity traps, where monetary policies that normally expand the economy by enlarging the monetary base are ineffectual. Reserves have become near-perfect substitutes for government debt, so open-market policies of funding purchases of debt with reserves have essentially no effect. The U.S. economy entered this state because a financial crisis originating in a financial system built largely on real-estate claims came close to collapse when the underlying assets lost value. Rising risk premiums discouraged investments in plant, equipment, and new hiring. Weakened banks and declining collateral values depressed lending to households and forced their deleveraging. The combination of low investment and low consumption resulted in an extraordinary decline in output demand, which called for a markedly negative real interest rate, one unattainable because the zero lower bound on the nominal interest rate coupled with low inflation put a lower bound on the real rate at only a slightly negative level. As output demand recovers, the lower bound will cease to be an impediment and normal conditions will prevail again.

Handout

Josh Bivens: Slow Wage Growth Just One More Sign of How Big a Problem the Profit-Biased Recovery Is: Noted for August 23, 2013

Josh Bivens: Slow Wage Growth Just One More Sign of How Big a Problem the Profit-Biased Recovery Is:

A last, possibly peevish sidenote--while we’re often accused (correctly!) of being pretty gloomy on the economic picture for most American families, we’re also often accused (incorrectly!) of feeding a sense of fatalism by not providing potential solutions or highlighting what could be changed. We’ve got some solutions here, and, we should note that there is a glimmer of good news in Larry and Heidi’s analysis: we are a rich country that gets richer just about every year. Look at the productivity trends (check out Table 1) in their piece--in 2012 productivity was nearly 8 percent higher than it was at the start of the Great Recession! The problem is insuring that these potential income gains actually are broadly shared—and this is mostly a political problem. Political problems are bad (trust us, we know), but they’re better than genuine economic problems. To put it another way, it’s better to be arguing over how to fairly split up a big pile of money than to have no big pile of money to split up.

Event Wednesday, September 4, 2013: Jolie Justus and Tom Kruckemeyer: Race to the Bottom: How the New Kansas-Missouri Border War Is Killing Jobs, Social Services, and Public Education

Race to the Bottom: How the New Kansas-Missouri Border War Is Killing Jobs, Social Services, and Public Education:

Wednesday September 4, 2013: 7 PM, Stack Auditorium; 800 E. 52 St., Kansas City, MO.

Time to See If I Can Use Google Groups to Conduct the 21st Century Equivalent of Virtual Office Hours…

The Sandbox of Brad DeLong: [email protected]

Ask to join by emailing your email to me at [email protected]…

Noted for August 22, 2013

Short:

R.M.: The Economist in prison: About that missing issue | Previously.TV: Television Show Commentary and Assorted Nonsense | Rebecca Leber: More Louisiana Republicans Blame President Obama For Hurricane Katrina Response Than Bush | Austin Frakt: Len Nichols’ seven health care challenges | Elspeth Reeve: Some Newly Uncovered Nixon Comments on the Subjects of Jews and Black People | Celina Tio: Collection 1532 Grand Blvd. Kansas City, MO 64108 816-471-7111 |

Long:

John Quiggin (2006): Cities, Connections, and Cronyism | Dexter Whitfield: Unmasking Austerity - Lessons for Australia |

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• Aaron Carroll: Snark About Singapore's Health Care System
• Menzie Chinn: Asymmetries in Aggregate Supply in Two Frameworks
• Ryan Avent: Labour markets: On "bullshit jobs"
• Ryan Avent: The global economy: The emerging-market squeeze, short version
• Tim Noah: The Heritage Foundation disowns its baby
• Mark Zandi: Hiring is up, a sign health law fears fading

Aaron Carroll: Snark About Singapore's Health Care System: Noted for August 22, 2013

Aaron Carroll: About Singapore…:

Man, this has been a week. Just a few days ago, I wrote about how Singapore has been a go-to for many of my move conservative colleagues, who think it’s a much more market friendly alternative to the ACA. I think that many of them underestimate how much “government” there is in the system. Today, all that is a bit irrelevant, because Singapore announced that however much government is involved, it’s not nearly enough….

Singapore’s Prime Minister Lee Hsien Loong announced a number of policy adjustments on Sunday evening in areas such as medical insurance and education, outlining a strategic shift in his approach to nation building. Individuals must still do their best, but the community and government must do more to reduce the pressures on individuals, he said at the annual National Day Rally….

Hoo-boy. What kind of changes can we expect? You don’t think they’ll look anything like Obamacare, do you? Let’s get out our scorecards…. A “Medicaid expansion”! Check…. Guaranteed issue! Check…. Less cost-sharing! Check…. A stronger mandate! Check…. Rate shocks! Increased subsidies! Check and check…. A new entitlement program! Check. It’s almost as if Singapore doesn’t realize that it’s supposed to eschew all of these things so wonks can point to some system somewhere that hews to a more market-based health system. Don’t they understand what they’re supposed to do?

Dylan Byers Says: We Journalists Can't Bring Our Usual Sloppy C-Game to the Clintons!

Yep. That is what Dyan Byers says:

Clinton-world vs. the N.Y. Times: It's early days in the 2016 race, but let this be a lesson to media outlets everywhere--especially The New York Times: If you're going to go up against the Clinton machine, you've got to anticipate every vulnerability in your argument and get rid of it.

As opposed to, say, Dylan Byers's coverage of Nate Silver, leaving sloppy vulnerabilities open at every turn?

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

Menzie Chinn: Asymmetries in Aggregate Supply in Two Frameworks: Noted for August 22, 2013

Menzie Chinn: Econbrowser: Asymmetries in Aggregate Supply in Two Frameworks:

[In] the textbook neoclassical synthesis… output then can go above or below potential (unemployment below or above the NAIRU) with symmetric response of price level or inflation. This worldview is not the only one; Paul Krugman has just noted one reason…. Others have also noted related asymmetries, with resulting policy implications--including, Larry Summers and Janet Yellen. In Summers and Delong (1988), the authors provide an interpretation of potential as a level of output that can’t be exceeded… reminiscent of the Friedman “plucking model”…. As of 2012, the output gap using the DeLong-Summers (1988) procedure is quite similar to the implied CBO gap -- 3.6% vs. 4.3% (log terms)…. Yellen and Akerlof (2006)… a decrease in unemployment above NAIRU has a different size impact (in absolute value) than an increase in unemployment below NAIRU… at low inflation rates, the accelerationist hypothesis does not hold…. This means in low-output, low-inflation environments, one should not expect marked increases in inflation for given increases in policy stimulus…. In both cases, conceptions of how aggregate supply works imply activist macroeconomic policy is called for in current conditions, more so than in the case using a conventional, textbook AD-AS framework, even with large negative output gap, although the specific reasons differ.