Martin Wolf: China Battles the US in the Artificial Intelligence Arms Race: "What counts is implementation not innovation, and here the Chinese have big advantages.... Kai-Fu Lee.... China has scale... more internet users than the US and Europe combined... a supportive government... [with] ambitious goals... build complementary infrastructure.... Lee distinguishes four aspects of AI: 'internet AI'—the AI that tracks what you do on the internet; 'business AI'—the AI that allows businesses to exploit their data better; 'perception AI'—the AI that sees the world around it; and 'autonomous AI'—the AI that interacts with us in the real world. At present, he thinks China is equal to the US in the first, vastly behind in the second, a little ahead in the third, and, again, far behind in the fourth. But five years from now, he thinks, China might be a little ahead in the first, less far behind in the second, well ahead in the third and equal in the last...

Kevin Drum: Liberals Need to Be Lincolnesque In Our Latest Race War: "The entire Republican Party is now all-in on this strategy. They mostly stay quiet themselves and let Trump himself do the dirty work, but that’s enough. Nobody talks anymore about reaching out to the black community with a spirit of caring or any other spirit. Nor is there anything the rest of us can do about this. Republicans believe that wrecking the fabric of the country is their only hope of staying in power, and they’re right. If working-class whites abandon them even a little bit, they’re toast. So all we can do is try to crush them. What other options are there?... Liberals need to be as Lincolnesque as possible in this endeavor—we don’t have to win the votes of unrepentent bigots, just the fretful fence-sitters—but we also need to be Lincolnesque in our commitment to winning America’s latest race war...

Sean Gallagher: The Fourth Industrial Revolution Emerges from AI and the Internet of Things: "IoT has arrived on the factory floor with the force of Kool-Aid Man exploding through walls.... Smart, cheap, sensor-laden devices paired with powerful analytics and algorithms have been changing the industrial world.... Companies are seeing more precise, higher quality manufacturing with lowered operational costs; less downtime because of predictive maintenance and intelligence in the supply chain; and fewer injuries on factory floors because of more adaptable equipment. And outside of the factory, other industries could benefit from having a nervous system of sensors, analytics to process 'lakes' of data, and just-in-time responses to emergent issues—aviation, energy, logistics, and many other businesses that rely on reliable, predictable things could also get a boost. But the new way comes with significant challenges, not the least of which are the security and resilience of the networked nervous systems stitching all this new magic together.... And then there's always that whole 'robots are stealing our jobs' thing. (The truth is much more complicated—and we'll touch on it later this week)...

This paper seems to rest on a distinction between "removing inefficiencies" and "transformational growth" that they do not theorize, yet should. That very few of those countries that have grown faster than the North Atlantic economies over the past two decades are on anything like Korea's trajectory is surely true. But why not? Why doesn't the removal of one inefficiency lead to a chain-reaction removal of others?:

Paul Johnson and Chris Papageorgiou: It’s too Soon for Optimism about Convergence : "The recent wave of growth in several developing economies has led to many analysts to claim that poorer countries are catching up with advanced economies. This column argues that, with the exception of a few countries in Asia which exhibited transformational growth, most of the economic achievements in developing economies have been the result of removing inefficiencies which are merely one-off level effects. While these effects are not unimportant and are necessary in the process of development, they do not imply ongoing economic growth...

Robert Bork and his ilk managed to set antitrust on a destructive path, and we badly need to recover somehow: Jonathan B. Baker: The Antitrust Paradigm: "At a time when tech giants have amassed vast market power, Jonathan Baker shows how laws and regulations can be updated to ensure more competition. The sooner courts and antitrust enforcement agencies stop listening to the Chicago school and start paying attention to modern economics, the sooner Americans will reap the benefits of competition...

Note that even if gentrification were to raise housing demand by as much as housing supply—which is not the case—note that the general-equilibrium effects are enormously beneficial: much less pressure on non-gentrifying neighborhoods, and much larger increase in the tax base to support urban services:

Brian James Asquith, Evan Mast, and Davin Reed: Does Luxury Housing Construction Increase Nearby Rents?: "There are many plausible mechanisms by which an increased concentration of wealthy households could make a neighborhood more attractive.... We study induced demand near new apartment complexes in gentrifying areas using listing-level data on rental prices from Zillow and exact household migration data from Infutor... difference-in-differences.... In neighborhoods where new apartment complexes were completed between 2014-2016, rents in existing units near the new apartments declined relative to neighborhoods that did not see new construction until 2018. Changes in in-migration appear to drive this result. Although the total number of migrants from high-income neighborhoods to the new construction neighborhoods increases after the new units are completed, the number of high-income arrivals to previously existing units actually decreases, as the new units absorb a substantial portion of these households. On the whole, our results suggest that—on average and in the short-run—new construction lowers rents in gentrifying neighborhoods...

## Liveblogging: The Anglo-Saxon Chronicle: Laurentius and St. Peter

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Laurentius and St. Peter: "A.D. 616. This year died Ethelbert, king of Kent, the first of English kings that received baptism: he was the son of Ermenric. He reigned fifty-six winters, and was succeeded by his son Eadbald. And in this same year had elapsed from the beginning of the world five thousand six hundred and eighteen winters. This Eadbald renounced his baptism, and lived in a heathen manner; so that he took to wife the relict of his father...

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Scott Lemieux: The Real Victims: "I’m not sure it’s scientifically possible to build a violin small enough to accompany this story: 'Jacqueline Sackler was fed up. HBO’s John Oliver would soon use his TV show to pillory her family, the clan that owns Purdue Pharma, the maker of OxyContin. In a nearly 15-minute Sunday-night segment, he joined a long line of people who blamed the Sacklers in part for the nation’s opioid crisis. Before the show aired, Ms. Sackler, who is married to a son of a company co-founder, emailed her in-laws, lawyers and advisers. “This situation is destroying our work, our friendships, our reputation and our ability to function in society,” she wrote. “And worse, it dooms my children. How is my son supposed to apply to high school in September?”'...

Gideon Rachman: Boris Johnson, ‘Cakeism’ and the Blitz Spirit : "If Boris Johnson’s name is ever linked to a political idea, it is likely to be “cakeism” — the notion that it is possible to govern without making hard choices. Mr Johnson’s famous remark that, when it comes to cake, he is 'pro having it and pro eating it too' has defined his approach to Brexit.... It feels, at times, as if Britain is preparing psychologically for adversity. Certainly, in casual conversations I have heard older Leavers suggest that self-indulgent millennials could benefit from the shock of learning to live without avocados and just-in-time deliveries.... If the cake hits the fan after a Johnson government had forced through a bitterly contested no-deal Brexit, the new prime minister will not be leading a united nation.... He would risk ending up as a British version of Marie Antoinette — a French queen, infamous for an ill-advised remark about cake, who met a sticky end...

## Jo Walton: The Spearpoint Theory: The Dyer of Lorbanery: Weekend Reading

Jo Walton: The Dyer of Lorbanery (Spearpoint Theory): "There comes a point in writing, and it’s a spear-point, it’s very small and sharp but because it’s backed by the length and weight of a whole spear and a whole strong person pushing it, it’s a point that goes in a long way. Spearpoints need all that behind them, or they don’t pack their punch in the same way. Examples are difficult to give because spear-points by their nature require their context, and spoilers. They tend to be moments of poignancy and realization. When Duncan picks the branches when passing through trees, he’s just getting a disguise, but we the audience suddenly understand how Birnam Wood shall come to Dunsinane...

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I am swinging around to the position that private pharmaceutical companies have no role in a well-functioning health-care system. The efficiency losses from private property in what is a public good plus a few cents' worth of ingredients are enormous. And the efficiency loss from behavioral grifts on patients by drug companies appear to me to be likely to be even greater. So I am on the point of condemning Michael Kades's aggressive pharmaceutical competition agenda as an inadequate halfway house:

Michael Kades: To Combat Rising U.S. Prescription Drug Prices, Let’s Try Competition: "Let’s look at the variety of problems with anti-competitive practices engaged in by U.S. pharmaceutical companies. Take ViroPharma Inc. When faced with the possibility that the U.S. Food and Drug Administration would approve generic versions of its Vancocin product (a drug to treat a potentially life-threatening gastrointestinal infection), the company filed 43 petitions to delay or prevent generic approval. Although none were successful on the merits, it took years before the FDA approved any generic competitors. The Federal Trade Commission alleged the strategy increased costs by hundreds of millions of dollars...

If you missed Alyssa Fisher here on automatic stabilizers last May, go back and reread it: Alyssa Fisher: Planning for the Next Recession by Reforming U.S. Macroeconomic Policy Automatic Stabilizers: "Six big idea... to be triggered when the economy shows clear, proven signs of heading into a recession...... Gabriel Chodorow-Reich... and... John Coglianese... propose to expand eligibility for Unemployment Insurance and encourage take-up.... Jason Furman and Wilson Powell III... aim to reduce state budget shortfalls during recessions... by increasing the federal matching rate for Medicaid and the Children’s Health Insurance Program.... Hilary Hoynes... and... Diane Whitmore Schanzenbach... propose to limit or eliminate work requirements for supplemental nutrition assistance during recessions.... Indivar Dutta-Gupta... proposes a countercyclical stabilization program through... Temporary Assistance for Needy Families.... Andrew Haughwout... proposes an automatic infrastructure investment program.... Claudia Sahm... proposes to boost consumer spending during recessions by creating a system of direct stimulus payments to individuals...

Paul Krugman: After Draghi: "Europe’s overall performance since the 2008 crisis has been better than I believe most U.S. observers realize. The big problem now, I’d say, is the extreme fragility of Europe with respect to any future shocks. In the years since Draghi came in, the euro area has done surprisingly well in restoring growth and regaining employment losses. But this success rests on extremely low interest rates and an undervalued euro. What this means is that Europe has essentially no “monetary space”–there is nothing more it can do if something goes wrong. If there’s a Chinese recession, or Trump slaps tariffs on German cars, or whatever, what can Europe do? The ECB can’t significantly ease monetary policy. Fiscal expansion could help, but it would have to be led by Germany, which seems implausible...

From one and a half years ago, a primer on what tax distribution tables are good for from Equitable Growth's newly-anointed chief economist: Greg Leiserson: If U.S. Tax Reform Delivers Equitable Growth, a Distribution Table Will Show It: "Distribution tables—estimates of who wins and who loses from changes in tax law—are central to any debate about tax reform. Such analyses frequently show the plans put forward by Republican politicians to be severely regressive, delivering large income gains for high-income families and little for the overwhelming majority of families. The blueprint for tax reform released by House Republicans in 2016, for example, would increase after-tax incomes for the top 1 percent of families by 13 percent in the first year after enactment but would increase incomes for the bottom 95 percent of families by less than half of 1 percent...

Disruption in Dingolfing. The network of knowledge and machinery that has developed and built the world-class internal-combustion engines of BMW over the past three-quarters of a century has been a tremendously valuable economic asset. But its societal value will be zero in a very few short years, if it is not already zero:

Elisabeth Behrmann: Twilight of Combustion Engine Comes for Germany: "The completed combustion engine fitted into a BMW M5 is a 1,200-piece puzzle that weighs more than 181 kg (400 pounds). There are about 150 moving parts whose interlocking precision can catapult a six-figure sports car to 97 kph (60 mph) in 3.3 seconds. The engine... has come together from a web of hundreds of suppliers and many, many hands. The electric-vehicle motor... is... light enough for a single person to lift... just two dozen parts... lacking an exhaust, transmission, or fuel tank. The battery cells themselves are mostly an industrial commodity.... No one brags about the unique power of BMW's electric drivetrain. Yet, this slight battery-driven motor can outgun the combustion engine in BMW's fastest performance car from a standstill at a traffic light. The fact that both combustion engines and electric motors find themselves inside the same 18,000-person complex in Dingolfing, BMW's largest in Europe, makes it a microcosm of a shift overtaking automakers the world over...

## Titus Livius: The Latin War: The History of Rome: Weekend Reading

Weekend Reading: Titus Livius: The Latin War: The History of Rome: "The consuls now were Caius Plautius a second time, and Lucius Æmilius Mamercinus; when the people of Setia and Norba came to Rome to announce the revolt of the Privernians, with complaints of the damages received by them. News were brought that the army of the Volscians, under the guidance of the people of Antium, had taken post at Satricum...

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I confess that the normal thing to do would be to give the 737MAX a de novo safety review, which it would flunk, and then shut down the value chain. Let Airbus have the business. But there is a large margin of safety in commercial aviation. And with the value chain setup, more planes can now be made cheap. Plus there are those planes already made now on the ground.

I do not know what I would do if I were king of the world:

David Fickling: Boeing's 737 Max Defense Is Poor Crisis Management: "We can expect Boeing Co.’s treatment of its two 737 Max crashes to join the syllabus–as an example of what not to do. Engineers at the planemaker discovered problems with the aircraft’s angle-of-attack sensors within months of the model’s first delivery, but didn’t share its findings with airlines, regulators or even senior management until much later, the company said Sunday. That we’re still getting incomplete details of the situation–almost two years after the problems were first found, and six months after the Lion Air crash last October that brought it to wider attention–is an almost perfect inversion of the Tylenol lesson...

A charitable reading of Heidegger here might be: "You ask how I could have supported Hitler—seen him as the better road of those open. I ask how you can—as your are—still support Stalin as the better road of those open". But I see no reason to read Heidegger charitably: he is best classified as one of the most awesome examples of puerile and destructive whataboutism anywhere or anywhen:

Robert Kaufman: Poetry's Ethics? Theodor W. Adorno and Robert Duncan on Aesthetic Illusion and Sociopolitical Delusion: "On August 28, 1947, Marcuse writes Heidegger to say that he is sending a care package to his former teacher in war-ravaged Germany, although 'my friends have recommended strongly against it and have accused me of helping a man who identified with a regime that sent millions of my co-religionists to the gas chambers.... I excuse myself in the eyes of my own conscience, by saying I am sending a package to a man from whom I learned philosophy from 1928 to 1932.' Marcuse's letter at several points renews earlier requests that Heidegger dissociate himself more clearly from (if well after the fact of his involvement with) the Nazi regime, and that Heidegger "expres[s his] current attitude about the events that have occurred...

Paul Krugman: Goldbugs for Trump: "Stephen Moore and now Judy Shelton have long records of supporting the gold standard or something like it. This should put them at odds with his efforts to politicize the Fed.... With gold prices rising lately, gold standard advocates should be calling for the Fed to raise rates, not lower them. But of course both Moore and Shelton have endorsed Trump’s demand for rate cuts. This creates a dual puzzle: Why does Trump want these people, and why are they so willing to cater to his wishes?... I think there’s a simple answer.... Becom[ing] goldbugs... usually has less to do with conviction than with cynical careerism. And this in turn means that goldbugs are, in general, the kind of people who can be counted on to do Trump’s bidding, never mind what they may have said in the past...

Ben Thompson: Shopify and the Power of Platforms: "More and more attention is being paid to the power wielded by Aggregators like Google and Facebook, but to my mind the language is all wrong.... Facebook and Google want to do things for you; Microsoft and Apple were about helping you do things better.... The more that network effects were internalized the more suppliers were commoditized, and the more that network effects were externalized the more suppliers were differentiated.... The difference between Aggregators and Platforms[:]... platforms... facilitate a relationship between 3rd-party suppliers and end users; Aggregators, on the other hand, intermediate and control it. It follows, then, that debates around companies like Google that use the word 'platform' and, unsurprisingly, draw comparisons to Microsoft twenty years ago, misunderstand what is happening.... There is, though, another reason to understand the difference between platforms and Aggregators: platforms are Aggregators’ most effective competition...

We here in the US still have one largely-sane political party. Britain has zero: Martin Wolf: Brexit Means Goodbye to Britain as We Know It: "What is happening now is not worthy of a serious country.... The UK the world thought it knew—stable, pragmatic and respected — is gone, probably forever. Lost reputations are not readily regained.... Political leadership[:] Boris Johnson, a serial fantasist at best, is very likely to become prime minister. The leader of the opposition is Jeremy Corbyn, a man whose lifetime passion has been leftwing, anti-American politics. The country’s dominant force is Nigel Farage—a talented demagogue consumed by dislike of the EU. This is not a cast of leading characters for a country with a stable and mature democracy. Then there is the risk of a no-deal Brexit.... There are also constitutional threats.... Brexit—quite probably a no-deal Brexit—is now inevitable. An additional reason for this is the horror many Europeans now feel.... Mr Johnson described the French as 'turds'.... Brexit party members of the European Parliament turned their backs when Beethoven’s Ode to Joy was played. Why would Europeans tolerate such people if they have the choice?... What might be the future of England on its own, at open loggerheads with the EU?... Can a country dithering between Ayn Rand and Leon Trotsky truly count in the world? What justification can there be for its staying on as a permanent member of the UN Security Council? What is happening is not worthy of a serious country. The conclusion is that the UK is no longer such a country...

## July 12, 2019: Weekly Forecasting Update

The right response to almost all economic data releases is: Next to nothing has changed. We are where we were a year ago: Stable growth at 2% per year with no signs of rising inflation or a rising labor share.

The only significant difference that the Fed has recognized that its hope of normalizing the Fed Funds rate in the foreseeable future is vain, and has now recognized that its confidence over the past six years that we were close to full employment was simply wrong:

Federal Reserve Bank of New York: Nowcasting Report: Junly 5, 2019: "The... Nowcast stands at 1.5% for 2019:Q2 and 1.8% for 2019:Q3. News from the JOLTS, CPI, and PPI releases were small, leaving the nowcast for both quarters broadly unchanged...

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Victory in the Latin War of 340-338 as the big sign that things had changed, and that Rome was now a very special and unusual power and social formation?: Gary Forsythe: A Critical History of Early Rome   : "The smaller Latin states, such as Lanuvium, Aricia, Pedum, and Nomentum, were directly incorporated into the Roman state, as had happened with Tusculum in 381 B.C.... retain[ing] their traditional political institutions and... govern[ing] their own local affairs. The two largest Latin states, Tibur and Praeneste, which in the past had rivaled Rome in Latium... were left nominally independent as Latin allies... bound to Rome by bilateral treaties.... Sutrium, Nepet, Ardea, Circeii, Signia, and Setia retained their status as Latin colonies on the confines of the Ager Romanus. But Roman territory was further increased by annexing Antium and Velitrae. A small Roman maritime colony was established at Antium to guard the coast.... The censors... created two new tribes, the Maecia and the Scaptia...

Charles II Stuart: Wikiquote: "Mrs. Lane and I took our journey towards Bristol, resolving to lie at a place called Long Marson, in the vale of Esham. But we had not gone two hours on our way but the mare I rode on cast a shoe; so we were forced to ride to get another shoe at a scattering village, whose name begins with something like Long—. And as I was holding my horse's foot, I asked the smith what news? He told me that there was no news that he knew of, since the good news of the beating of the rogues the Scots. I asked him whether there was none of the English taken that joined with the Scots? He answered, that he did not hear that that rogue Charles Stewart was taken; but some of the others, he said, were taken, but not Charles Stewart. I told him, that if that rogue were taken he deserved to be hanged, more than all the rest, for bringing in the Scots. Upon which he said, that I spoke like an honest man, and so we parted...

## Liveblogging: The Anglo-Saxon Chronicle: The Prophecy of Augustine

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): "A.D. 604. This year Augustine consecrated two bishops, Mellitus and Justus. Mellitus he sent to preach baptism to the East-Saxons. Their king was called Seabert, the son of Ricola, Ethelbert's sister, whom Ethelbert placed there as king. Ethelbert also gave Mellitus the bishopric of London; and to Justus he gave the bishopric of Rochester, which is twenty-four miles from Canterbury...

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Mak-'amham: Nonwentemak—blog: "The seasons are changing yet again! We are leaving the time of huuyi tiwši warép, the time of blossoming on us, and entering herwe makiš, the time it’s warm on us—the Chochenyo [Ohlone] way of saying it’s summertime.... Prepare for the foods served at Café Ohlone to represent the seasonality and warmth.... We will be serving iced Indian teas, manzanita cider, and hazelnut milk horchata, as well as native blackberry and wild strawberry fruit salads with fresh coyote mint. The warm months and longer days allow us to spend more time smoking traditional meats of salmon, quail and venison—all of which will be on our menu for summertime. We are experimenting with icy sorbets from gathered bay laurel and minty yerba buena and we are adding late mushrooms like porcini and morels to our plates as well.... We are grateful for the continued outpouring of support and well wishes we are receiving from both our community and the public for the work we are doing at Café Ohlone. We were recently featured in a piece written by John Birdsall in the Los Angeles Times, and just this morning, we were listed as one of the top 100 Bay Area restaurants by the SF Chronicle...

## Thomas Wyatt the Younger: Weekend Reading:

Weekend Reading: Great12-grandfather: Wikipedia: Thomas Wyatt the Younger - Wikipedia: "Sir Thomas Wyatt the Younger (1521 – 11 April 1554) was an English politician and rebel leader during the reign of Queen Mary I; his rising is traditionally called 'Wyatt's rebellion'. He was also the son of the English poet and ambassador Sir Thomas Wyatt...

## A Year Ago on Equitable Growth: Fifteen Worthy Reads from the Past Week or so: July 12, 2018

TOP MUST REMEMBER: Cory Doctorow: I Was Naive: "I've been thinking of all those 'progressive' Senators who said that... Jeff Sessions was a gentleman, honorable, decent—just someone whose ideas they disagreed with. They approved Sessions for AG on that basis, and he architected this kids-in-cages moment...

Continue reading "A Year Ago on Equitable Growth: Fifteen Worthy Reads from the Past Week or so: July 12, 2018" »

## Fairly Recently: Must- and Should-Reads, and Writings... (July 10, 2019)

• Fresh at Project Syndicate: Is Plutocracy Really the Problem?: The larger issue...is an absence of alternative voices. If the 2010s had been anything like the 1930s, the National Association of Manufacturers and the Conference Board would have been aggressively calling for more investment in America, and these arguments would have commanded the attention of the press. Labor unions would have had a prominent voice as advocates for a high-pressure economy. Both would have had very powerful voices inside the political process through their support of candidates. Did the top 0.01% put something in the water to make the media freeze out such voices after 2008?...

• Smackdown: Failing to Do Robustness Checks Is Not a Virtue: This, from this past April of all times, greatly puzzles me: WHAT IN THE HOLY NAME OF THE ONE WHO IS IS GOING ON HERE?! Let us remember what really happened back in 2011 when the unemployment rate was 9%: "Reinhart... explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous.... Reinhart and Rogoff... 'current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP'..." Yet there never was any "90 percent debt-to-GDP tipping point". Reinhart and Rogoff thought there was because they did not do any robustness checks of their data-analysis binning procedures. Perhaps an apology to the misled world should be a high priority? Perhaps it should be a higher priority than rants claiming that their critics like me—who were right—engaged in "years of mounting polemics against austerity policies, Keynesian dogma has become something close to a secular religion"?...

• Hoisted from the Archives: Risks of Debt: The Real Flaw in Reinhart-Rogoff: A country that spends and spends and spends and spends and does not tax sufficiently will eventually run into debt-generated trouble.... But can this happen as long as interest rates remain low? As long as stock prices remain buoyant? As long as inflation remains subdued. My faction of economists—including Larry Summers, Laura Tyson, Paul Krugman, and many many others—believe that it will not...

• Hoisted from July 3, 2008: Optimal Control: "Was the Federal Reserve too volatile and hair-trigger? Or was the ECB too sluggish?...

• Note to Self: The establishment-survey payroll-employment numbers (red line) contain within them a guess as to how many newly-formed forms there are that have not yet caught up to and entered the payroll system. When a recession starts, that guess at the fudge factor can be way high. On the other hand, the household-survey employment numbers (blue line) has a lot more statistical noise in it...

• Comment of the Day: Ronald Brakels: "If you record a bitch's new born puppy and then play that sound on a tape deck or other audio device the bitch will pick up that device and treat it like a pup. Dogs have about 2 billion plus neurons but this shows they are still very stupid. But no one seems to have a problem with this epic level of idiocy in our closest animal companions...

• Comment of the Day: Charles Steindel: "Nothing at all wrong with Weller, really. The truly odd point appears to be how he got nominated. It seems that Trump was pleased that Jim Bullard, the president of the St. Louis Fed, voted to cut the funds rate at the last meeting, and offered Jim the slot. Bullard turned it down (no regional president would ever be included to accept a Board post other than Chair or Vice Chair; no more real power, combined with less pay and no staff) and suggested Weller. That's not the usual way these things get done...

• Weekend Reading: Daniel Davies: One-Minute MBA: "The secret to every analysis I've ever done... has been, more or less, my expensive business school education.... Good ideas do not need lots of lies told about them in order to gain public acceptance. I was first made aware of this during an accounting class.... Fibbers' Forecasts Are Worthless. Case after miserable case after bloody case we went through, I tell you.... Not only that people who want a project will tend to make inaccurate projections about the possible outcomes of that project, but about the futility of attempts to "shade" downward a fundamentally dishonest set of predictions.... It's been shown time and again and again; companies which do not audit completed projects in order to see how accurate the original projections were, tend to get exactly the forecasts and projects that they deserve.... Next week, perhaps, a few reflections on why it is that people don't support the neoconservative project to bring democracy to the Middle East (a trailer for those who can't wait; the title is going to be something like 'If You Tell Lies A Lot, You Tend To Get A Reputation As A Liar'). Mind how you go...

• A Year Ago on Equitable Growth: : Fifteen Worthy Reads from the Past Week or so: July 12, 2018: TOP MUST REMEMBER: Cory Doctorow: I Was Naive: "I've been thinking of all those 'progressive' Senators who said that... Jeff Sessions was a gentleman, honorable, decent—just someone whose ideas they disagreed with. They approved Sessions for AG on that basis, and he architected this kids-in-cages moment...

• Liveblogging: The Anglo-Saxon Chronicle: Gregory, Augustine, and Ceolwulf: "A.D. 596. This year Pope Gregory sent Augustine to Britain with very many monks, to preach the word of God to the English people...

• Liveblogging: The Anglo-Saxon Chronicle: Ceawlin and Friends: "A.D. 568. This year Ceawlin, and Cutha the brother of Ceawlin, fought with Ethelbert, and pursued him into Kent. And they slew two aldermen at Wimbledon, Oslake and Cnebba...

• Liveblogging: The Anglo-Saxon Chronicle: The Holy Pope Gregory, and Columba: "A.D. 560. This year Ceawlin undertook the government of the West-Saxons; and Ella, on the death of Ida, that of the Northumbrians; each of whom reigned thirty winters...

1. Duncan Black: In The Old Times: "I'm not one to defend the Bush administration, but they did at least attempt to color inside the lines, if in garish bloody colors. I'm sure Yoo's torture memo was quite a marvel of legal reasoning that only someone who went to the best law school could come up with (our best laws schools are churning out sociopaths, but still). At this point, the Trump administration is just saying 'we are going to continue doing crimes and you can't stop us and hahaha you aren't even trying'...

2. Sam Dangremond: Ken Griffin's 238 Million NYC Penthouse Is Most Expensive Home in America: "The penthouse at 220 Central Park South... $238 million.... At 953 feet, the 79-story tower stands out along the Central Park South skyline. Griffin's penthouse—a combination of two units—encompasses approximately 24,000 square feet, according to the Wall Street Journal. The$238-million price tag dwarfs the previous record of \$137 million, which hedge-fund manager Barry Rosenstein reportedly paid for a home in East Hampton...

4. Jared Bernstein: More Evidence–This Time from CBO... Higher (Even Much Higher) Minimum Wages Largely Do What They’re Supposed To Do: "Raising the federal minimum wage to 15 per hour by 2025 would lift the pay of 27.3 million workers—17 percent of the workforce—according to a new report from the Congressional Budget Office. It would raise the incomes of poor families by 5 percent and thus reduce the number of people in poverty by 1.3 million. Since these low-end gains would be partially financed out of profits, the increase in the wage floor would reduce inequality. CBO also estimates that '1.3 million workers who would otherwise be employed would be jobless in an average week in 2025'.... The report warns that some will be hurt by the increase, but the best research suggests their job-loss estimate may be too high. Moreover, even if they’re right, the ratio of helped-to-hurt is 21 (27.3m/1.3m)...

5. Tomaz Cajner, Leland D. Crane, Ryan A. Decker, Adrian Hamins-Puertolas, and Christopher Kurz: Improving the Accuracy of Economic Measurement with Multiple Data Sources: The Case of Payroll Employment Data: "The optimal predictor... puts approximately equal weight on the CES and ADP-derived series. Moreover, the estimated state contains information about future readings of payroll employment...

6. David Byrne and Carol Corrado: Accounting for Innovations in Consumer Digital Services: IT Still mMatters: "Accounting for innovations in consumer content delivery matters: The innovations boost consumer surplus by nearly 1,800 (2017 dollars) per connected user per year for the full period of this study (1987 to 2017) and contribute more than 1/2 percentage point to US real GDP growth during the last ten...

7. Kim Darroch: How Foreign Allies Talk About Trump Behind Closed Doors: "We don’t really believe this Administration is going to become substantially more normal; less dysfunctional; less unpredictable; less faction riven; less diplomatically clumsy and inept...

8. Owen Zidar (2013): Debt to GDP & Future Economic Growth

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Let me endorse this: search and information costs and human psychology seem to me likely to be more powerful drivers of monopsony (and monopoly) power than concentration per se: Arindrajit Dube: "Concentration plays only a modest part in understanding [labor-market] monopsony power. Firms in totally unconcentrated markets still have a labor supply elasticity of 3.7. In other words, even if you totally got rid of labor concentration concentration, you would still have a substantial degree of monopsony, which is endemic. Paper: https://www.nber.org/papers/w25719...

Comment of the Day: Charles Steindel: "Nothing at all wrong with Weller, really. The truly odd point appears to be how he got nominated. It seems that Trump was pleased that Jim Bullard, the president of the St. Louis Fed, voted to cut the funds rate at the last meeting, and offered Jim the slot. Bullard turned it down (no regional president would ever be included to accept a Board post other than Chair or Vice Chair; no more real power, combined with less pay and no staff) and suggested Weller. That's not the usual way these things get done. The only 'hasty' Board nomination I can recall was Paul Volcker being named chair in the immediate wake of Bill Miller becoming Treasury Secretary. But in 1979 there was a clear need to have that slot filled as quickly as possible by a person of Volcker's (dare I say...) stature (groan). Update: Whoops—it slipped my mind that Martin replacing McCabe in 1951 was rushed. But the circumstances were also pretty extraordinary, even more so than 1979: the FOMC had pretty openly defied the President in the middle of a major shooting war. McCable (and Eccles) had to go as part of the Accord. Truman thought he got his guy in at the Fed, but learned otherwise...

Africa is the only region in which the number of people in dire poverty continues to increase. Can industrialization help? Maybe—but it may be too late for industrial firms to be a leading sector: Bright Simons: Africa’s Unsung “Industrial Revolution”: "There is an industrial revolution underway in sub-Saharan Africa’s most entrepreneurial economies—places such as Ghana, Uganda, Senegal, and Côte d’Ivoire... Alibaba industrialisation.... No one is entirely sure why protectionist and state-led industrial policies of the type described earlier seem to induce large-scale industrialisation in Vietnam, South Korea, and Taiwan but not in Nigeria, Laos, or Uzbekistan. Every theory adduced is racked with contradictions and does not survive granular examination.... Small and medium-sized Chinese suppliers provide major chunks of the industrial jigsaw and African hustlers and unconventional industrialists act as shuttle-brokers of the various factors of production between China and Africa.... Chinese SMEs are becoming sophisticated global opportunity hunters, ditching the somewhat passive role they played as cogs in the Western outsourcing wheel three decades ago.... tailoring solutions for individual African country terrains, complete with logistics, training, and support packages. The effects of the modular transformation of the African industrial sector, whilst subtle, are already fascinating: reassembled knockdown luxury cars in Ghana; cutting-edge clay brick kilns in Uganda; and milk-vending now a thing in Kenya...

The old "secular stagnation" of the 1930s and 1940s was a fear that the world was approaching satiation with respect to things that it would be profitable to build. The new "secular stagnation" is much more a fear of growing monopoly power and a growing desire for safety. It is thus a very different thing—or, rather, two different things happening alongside each other:

Emmanuel Farhi and Francois Gourio: Accounting for Macro-Finance Trends: "Most developed economies have experienced large declines in risk-free interest rates and lacklustre investment over the past 30 years, while the profitability of private capital has increased slightly. Using an extension of the neoclassical growth model, this column identifies what accounts for these developments. It finds that rising market power, rising unmeasured intangibles, and rising risk premia play a crucial role, over and above the traditional culprits of increasing savings supply and technological growth slowdown...

Very wise. There is no reason for the Senate to do anything but neglect the Fed, and the Fed will be stronger at the start of 2021 if it is neglected: Josh Barro: There’s No Need for the Senate to Confirm Anyone to the Fed: "Trump... says he will nominate Judy Shelton and Christopher Waller to... fill out the board.... Shelton... like Cain and Moore before her has traded in a long track record of hawkish gold-buggery for a new, dovish outlook that calls for the low interest rates President Trump wants. In 2015, she said low interest rates were 'making suckers out of savers'. Now, even though the economy has gotten stronger and the argument for low rates should have, if anything, gotten a little bit weaker, Shelton is suddenly an advocate of cutting interest rates to zero, in order to increase access to capital. Shelton’s flip-flop is, if anything, more egregious than Moore’s and Cain’s, because monetary policy is supposed to be an actual area of expertise for her...

## Is Plutocracy Really the Problem?: Fresh at Project Syndicate

Fresh at Project Syndicate: Is Plutocracy Really the Problem?: After the 2008 financial crisis, economic policymakers in the United States did enough to avert another Great Depression, but fell far short of what was needed to ensure a strong recovery. Attributing that failure to the malign influence of the plutocracy is tempting, but it misses the root of the problem.... In fact, big money does not always find a way, nor does its influence necessarily increase as the top 0.01% captures a larger share of total income.... The larger issue...is an absence of alternative voices. If the 2010s had been anything like the 1930s, the National Association of Manufacturers and the Conference Board would have been aggressively calling for more investment in America, and these arguments would have commanded the attention of the press. Labor unions would have had a prominent voice as advocates for a high-pressure economy. Both would have had very powerful voices inside the political process through their support of candidates. Did the top 0.01% put something in the water to make the media freeze out such voices after 2008?... Read MOAR at Project Syndicate

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Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome: "The history of the next fifty years [after 390 BC] in Latium appears to be a repeat of the fifth century, with Rome fighting the same rivals for power in the same geographical realm as before (Aequi, Volsci, Latin and Etruscan city-states, primarily in Latium and extreme southern Etruria)—and with the same equivocal success. In the 350s the Romans were still fighting wars with Latin Tibur and Praeneste, only thirty miles away. The evidence of the second Ro- man treaty with Carthage (ca. 348 b.c.) shows a Rome that has not advanced the geographical scope of its power much beyond the first treaty with Carthage, 150 years previously: Roman power is still limited to Latium, and does not control all states even there (see Polyb. 2.24.5). As Oakley says, no state can have benefited much from having its city destroyed...

Moving from correlation to causation is one of the most subtle and puzzling topics in social science. I think Judea Pearl is a genius, and this book is well worth reading. Andrew Gelman is right in that there is a lot to disagree with in Pearl's intellectual history—Pearl seems unable to give an even slightly charitable or generous reading of anybody else. But Andrew Gelman is also right that the meat of the book—the case studies and examples—"is great". And I at least think that Andrew Gelman is wrong in thinking that Pearl's writing on causal inference has little point. I believe Pearl's framework of confounders-colliders-mediators is of great help, at least to those of us whose thought is not as smart and subtle as Andrew Gelman's:

Andrew Gelman: "The Book of Why" by Pearl and Mackenzie: "Pearl and Mackenzie’s book is really three books... an exposition of Pearl’s approach to causal inference... an intellectual history... a series of examples.... I have difficulty understanding the point of Pearl’s writing on causal inference.... About the intellectual history... I disagree with a lot of what Pearl says.... The examples in the book. These are great.... The examples are interesting and they engage the reader—at least, they engage me—and I think they are a big part of what makes the book work...

Rachael Meager: Understanding the Average Effect of Microcredit: "The idea that giving small loans to poor households would help them escape poverty was once considered so compelling that it won Mohammed Yunus the Nobel Peace Prize. The global microloan portfolio is now worth over 102 billion and is growing yearly (Microfinance Barometer 2017). Yet microcredit now enjoys so little support among academics and policymakers that the Washington Post recently felt the need to assure us that 'microcredit isn’t dead'.... To estimate how much the effect of microcredit varies across studies, and how uncertain we should be about the effect of expanding access to microloans in new settings, I perform a Bayesian hierarchical analysis of the microcredit literature (Meager 2019).... I find that, in general, the effects on these outcomes are likely to be small and uncertain, around 7% of the average control group’s mean outcome.... Overall, there is little evidence that microcredit harms borrowers as was feared by some of its critics, but there is also little evidence of the transformative positive effects initially claimed by its advocates...

## Hoisted from the Archives: What Was the Point of Robert Woodward's "The Agenda"?

What the Washington Post's headline writers thought that Bob Woodward's The Agenda: Inside the Clinton White House was about back in 1994:

According to the Washington Post's headline writers (and according to pretty damn near everybody else who read The Agenda that I have talked to), Woodward's book tells the story of a president who (a) feels "blindsided" by their actions, (b) feels that the policies his administration is adopting means that he is losing his soul, (c) finds that the Republican Federal Reserve Chair's views are etching a deep impression on policy, (d) finds himself stuck with a "turkey" of an economic plan, (e) has advisors who fight fiercely in order to (f) control a wishy-washy president, and as a result (g) decision-making suffers and (h) clarity of vision is lost.

Now I was there.

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Note to Self: The establishment-survey payroll-employment number (red line) contain within them a guess as to how many newly-formed forms there are that have not yet caught up to and entered the payroll system. When a recession starts, that guess at the fudge factor can be way high.

On the other hand, the household-survey employment number (blue line) has a lot more statistical noise in it.

The bet right now is that late last year the household survey interviewers just happened by luck on a bunch of people enthusiastic about working, but nothing is guaranteed. It might be that the firm birth-death guess is leading the establishment survey (red line) astray:

Ok. But what drives these differential rates of return, anyway? And how much can this really approach the dream of taxing luck and inheritance rather than enterprise?:

Fatih Guvenen: Use It Or Lose It: Efficiency Gains from Wealth Taxation: "When individuals differ from each other in the rate of return they earn... capital income and wealth taxes have opposite implications for efficiency as well as for some key distributional outcomes. Under capital income taxation, entrepreneurs who are more productive... pay higher taxes. Under wealth taxation, on the other hand, entrepreneurs who have similar wealth levels pay similar taxes regardless of their productivity.... A revenue-neutral tax reform that replaces capital income tax with a wealth tax raises average welfare by about 8% in consumption-equivalent terms.... The optimal wealth tax is positive, yields larger welfare gains than the tax reform, and is preferable to optimal capital income taxes.... Wealth taxes can yield both efficiency and distributional gains...

The echoes of the 1930s appear to me to be getting stronger and stronger. Hannah Arendt—who did not show up in the United States until 1941—always thought we were better than we were, and are: more insulated from European nihilism:

Charles Sykes: Some Thoughts on David French’s Thoughts: "This seems a good time to remind you to go get a copy of Hannah Arendt’s Origins of Totalitarianism, in which she describes the rise of fashionable cruelty among the intellectual elites of the 1930s. Arendt writes about how 'it seems revolutionary to admit cruelty, disregard for human values, and general amorality, because this at least destroyed the duplicity upon which the existing society seemed to rest. What a temptation to flaunt extreme attitudes in the hypocritical twilight of double moral standards, to wear publicly the mask of cruelty if everybody was patently inconsiderate and pretended to be gentle'...