Afternoon Must-Read: Lawrence H. Summers: Response to Marc Andreessen on Secular Stagnation
Liveblogging 301 BC, Fall: The Battle of Ipsus

Noted for Your Nighttime Procrastination for January 14, 2015

Screenshot 10 3 14 6 17 PMOver at Equitable Growth--The Equitablog


Must- and Shall-Reads:

And Over Here:

  1. Lawrence Summers: Response to Marc Andreessen on Secular Stagnation: "The essence of the secular stagnation issue is not whether technology has stopped advancing; but rather whether there is a mismatch between desired saving and investment opportunities that results in low equilibrium real interest rates, precipitates financial instability, and may inhibit economic growth.... For the roughly 30 years after World War II, the American economy generated consistent growth in living standards with business cycles of relatively low amplitude.  From the early 1980s until the late 1990s, the economy again preformed quite well.... We have plenty of experience with satisfactory economic performance to set as an aspiration.... Markets--in the form of 30-year indexed bonds--are now predicting that real rates well below 2 percent will prevail for more than a generation.... I think it is quite plausible and consistent with Marc’s picture that equilibrium real rates were roughly constant at around 2 percent until the mid-1990s and have trended downward since that time.... Marc and I agree that we are headed into a period of soft real interest rates, where there will be more money available than great deals.  This may, as he suggests, not be all bad; as it will make it easier for risky ideas to get funded. The danger... is that the zero lower bound on nominal rates will prevent the attainment of full employment as desired investment falls short of desired saving. A related danger is that the very low interest rates will encourage risk-taking and asset price inflation in ways that will ultimately give rise to financial instability.... The experience of the US economy in the 1930s demonstrates [that] even with rapid innovation it is possible for economic performance to be very poor when finances are not successfully managed..."

  2. Jean-Claude Trichet (June 2010): A Trip Down Euromemory Lane: "As regards the economy, the idea that austerity measures could trigger stagnation is incorrect … In fact, in these circumstances, everything that helps to increase the confidence of households, firms and investors in the sustainability of public finances is good for the consolidation of growth and job creation. I firmly believe that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today..."

  3. NewImage

    Kevin Drum: America's Real Criminal Element: Lead: "Washington, DC, didn't have either Giuliani or Bratton, but its violent crime rate has dropped 58 percent since its peak. Dallas' has fallen 70 percent. Newark: 74 percent. Los Angeles: 78 percent.... Howard Mielke... Sammy Zahran... lead and crime... six US cities that had both good crime data and good lead data going back to the '50s, and they found a good fit in every single one. In fact, Mielke has even studied lead concentrations at the neighborhood level in New Orleans and shared his maps with the local police. 'When they overlay them with crime maps,' he told me, 'they realize they match up.'... We now have studies at the international level, the national level, the state level, the city level, and even the individual level. Groups of children have been followed from the womb to adulthood, and higher childhood blood lead levels are consistently associated with higher adult arrest rates for violent crimes. All of these studies tell the same story: Gasoline lead is responsible for a good share of the rise and fall of violent crime over the past half century.... The gasoline lead hypothesis helps explain some things we might not have realized even needed explaining.... Murder rates have always been higher in big cities than in towns... big cities have lots of cars in a small area, they also had high densities of atmospheric lead during the postwar era. But as lead levels in gasoline decreased, the differences between big and small cities largely went away. And guess what? The difference in murder rates went away too..."

Should Be Aware of:


  1. Alan Taylor: Surprising New Findings Point to “Perfect Storm” Brewing in Your Financial Future: "This basic aggregate measure of gearing or leverage is telling us that today’s advanced economies' operating systems are more heavily dependent on private sector credit than anything we have ever seen before. Furthermore, this pattern is seen across all the advanced economies, and isn’t just a feature of some special subset (e.g. the Anglo-Saxons)."


  • Nathanael: Noted for Your Morning Procrastination for January 5, 2015: " It's not clear whether the Constitution allows the Senate can be abolished by amendment -- but it certainly allows all the powers of the Senate to be transferred to another body, leaving the Senate as a ceremonial body."

  • Nathanael: Noted for Your Morning Procrastination for January 5, 2015: " Marshall is 100% right in his criticism of Sargent. And you're wrong in your criticism of him! Removing the ability of the government to print money is actually extremely bad. It leads to deflation. Regime change occurs when the regime changes, that is to say when the people in charge change. Money-printing can be a power of the new government just as it was a power of the old government; the key is that the new government must be different people, so that people do not expect them to behave like the old government. The "tough, independent central banker" is of zero value -- or in fact, of negative value -- what he traditionally does is to distort policy in favor of the rich and against the general public. This is because the government has some interest in retaining support from the general public, while the central banker is only interested in retaining popularity among other bankers."

  • Maynard Handley: Noted for Your Nighttime Procrastination for January 8, 2015: " Interesting, in light of Samsung's feet of clay, is Xiaomi's meteoric rise as discussed here: and here We can all have our opinions about this, but to me the Xiaomi hype looks basically the same as what I was seeing about Samsung say four years ago, and the biggest cheerleaders look to me like people talking up their book, not dispassionate and rational observers. In particular, I see Xiaomi following the Samsung model which in turn followed the SONY model --- slap your brand on anything that moves and charges the rubes an extra 15% for the privilege. This works as long as those products ARE best of breed --- I'm happy to pay a little more to delegate to someone else the task of figuring out the optimal set of features in any product. But at some point SONY stopped bothering with even that minimal task, and from that point on it was all downhill. Back in the early 2000s a colleague of mine (I won't give his name, but let me just say that he's part of that same elite club as Stallman or Linus or Herb Sutter --- an alpha geek known by name to the other alpha geeks) worked with SONY on a project to unify their UIs across the vast range of devices they produce, to create a single "Sony Style", the way there is a recognizable Apple style across all their products. Technically the result was pretty awesome and, IMHO, was exactly was SONY needed --- an easy way for designers to create a uniform UI on top of the low level device specific code. Needless to say, SONY paid him for his work --- and then promptly ignored it. Samsung reprised the story of SONY, like the Bourbons forgetting nothing and learning nothing, and running at a speed about 3x as fast. Xiaomi are interesting, IMHO, because they now have not one but two failures as evidence of the consequences of a particular way of "growing the brand", along with trying to be a tech company without any real, seriously differentiating, tech of your own; and Xiaomi are interesting because their future and staying power are still not obvious --- Justin Fox may be reporting Samsung's situation to the masses today, but it was obvious to any unbiased observer at least a year ago."