Noah Smith: China's Economic Growth at Risk From Reversing Reforms - Bloomberg: "There already are some signs that the country is making mistakes that will hobble economic growth.... By many measures, China is the world’s largest economy. This means a number of benefits will now flow—and indeed are already flowing—to China that used to go to the U.S. and Europe. Chief among these is agglomeration.... But... it might easily make mistakes that would prevent the country from leveraging that size for maximum economic benefit. Chief among these self-inflicted wounds would be closing the country to foreign investment, extending state control of the economy and adopting an adversarial relationship with neighboring nations. Ominously, the country seems to doing all of these now, to one extent on another...

I now think the right dates for the "long" 20th Century are: May 10, 1869-November 8, 2016: Frederick Studemann: The New Year Could Mark the Beginning of a New(ish) Century: "There are those, such as the economic historian Brad DeLong, who wonder whether Hobsbawn may have short-changed the 20th century. Can a case can be made, they ask, for the 20th century to run from 1870, when the wider impact of the industrial revolution became clear, political economics became central and liberal democracy took hold, to just after the global financial crisis?...

## Fairly Recently: Must- and Should-Reads, and Writings... (January 2, 2019)

1. Hoisted from 2008: Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: This argument of an inconsistency between free trade and the well-being of the majority of potential voters rests substantially on the two-factor example of the Stolper-Samuelson result. It does not fare too well when we generalize to a situation in which there are a number of different factors—even if the ownership of the abundant factors of production is very concentrated indeed... #economics, #equitablegrowth, #globalization, #highlighted, #hoistedfromthearchives

1. William Morris said: "If you want a golden rule that will fit everything, this is it: Have nothing in your houses that you do not know to be useful or believe to be beautiful". What is the equivalent for our mental houses?: Barry Ritholtz: More Signal, Less Noise: "ere are some things you need to understand if you want to decrease the noise...

2. Quoctrung Bui: Map: The Most Common Job In Every State: "We used data from the Census Bureau, which has two catch-all categories: "managers not elsewhere classified" and "salespersons not elsewhere classified." Because those categories are broad and vague to the point of meaninglessness, we excluded them from our map...

3. Danny Blanchflower: "Hey Stephen Mooreyou need to withdraw this lie NOW: ‘Pay gains in real terms this year are now estimated at 3 percent—one of the biggest increases in two decades’. Real hrly earnings rose 0.8% real weekly 0.5%...

4. David Weigel: "Warren's 2020 launch video is genuinely interesting because it offers Dems something they have not nominated in ages: A nominee who identifies specific sources of trouble and will fight them, instead of suggesting that a good politician can get everyone to work together...

5. Tren Griffin: A Dozen Things I’ve Learned from Charlie Munger (Distilled to less than 500 Words) – 25iq: "The intent with this post is to distill Charlie Munger’s approach to making decisions to less than 500 words.  If you don’t have the patience to read 500 words, I can’t help you...

6. Miguel Hernan: Causal Inference Book: "Jamie Robins and I are working on a book that provides a cohesive presentation of concepts of, and methods for, causal inference. Much of this material is currently scattered across journals in several disciplines or confined to technical articles. We expect that the book will be of interest to anyone interested in causal inference, e.g., epidemiologists, statisticians, psychologists, economists, sociologists, political scientists, computer scientists… The book is divided in 3 parts of increasing difficulty: causal inference without models, causal inference with models, and causal inference from complex longitudinal data...

7. Erik Berglöf: Learning from China: "Despite 40 years of unprecedented economic growth, Chinese leaders' efforts to promote their development model have run up against political suspicion. But it makes little sense for countries to reject outright the lessons of China’s economic miracle, and deepening hostility between China and the West is in nobody’s interest...

8. John Geanakoplos: Leverage and Cycles

9. Peter Wade: Kelly Confirms He Was Lying All Along: The White House Is in Chaos: "In an exit interview, the outgoing chief of staff tries to protect his legacy...

10. Paul Krugman: The Trump Tax Cut: Even Worse Than You’ve Heard: "The 2017 tax cut has received pretty bad press, and rightly so. Its proponents made big promises about soaring investment and wages, and also assured everyone that it would pay for itself; none of that has happened. Yet coverage actually hasn’t been negative enough.... The reality: No money has... been brought home... the tax cut has... reduced national income... at least 90 percent of Americans will end up poorer...

11. Martin Wolf: The Future Might Not Belong to China: "China has had a hugely impressive four decades. After their triumph in the cold war, both the west and the cause of liberal democracy have stumbled. Should we conclude that an autocratic China is sure to become the world’s dominant power in the next few decades? My answer is: no. That is a possible future, not a certain one...

12. Paul Krugman is tired to trying to reason with you people...

13. Dani Rodrik: China’s Boldest Experiment: "China... offered a master class.... Dual-track pricing provided market incentives at the margin without undermining the fiscal revenues. TVEs spurred private entrepreneurship, despite weak frameworks for property rights and contract enforcement. SEZs spurred exports and foreign investment without undermining employment among protected state enterprises. Industrial policies allowed infant industries to internalize learning spillovers. In short, China represents the triumph of practical economics–in which second-best strategies, market failures, general equilibrium, and political economy prevail – over the simplistic reasoning of Econ 101...

Martin Wolf: The Future Might Not Belong to China: "China has had a hugely impressive four decades. After their triumph in the cold war, both the west and the cause of liberal democracy have stumbled. Should we conclude that an autocratic China is sure to become the world’s dominant power in the next few decades? My answer is: no. That is a possible future, not a certain one...

Paul Krugman: The Trump Tax Cut: Even Worse Than You’ve Heard: "The 2017 tax cut has received pretty bad press, and rightly so. Its proponents made big promises about soaring investment and wages, and also assured everyone that it would pay for itself; none of that has happened. Yet coverage actually hasn’t been negative enough.... The reality: No money has... been brought home... the tax cut has... reduced national income... at least 90 percent of Americans will end up poorer...

## Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: Hoisted from 2008

Hoisted from 2008: Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: This argument of an inconsistency between free trade and the well-being of the majority of potential voters rests substantially on the two-factor example of the Stolper-Samuelson result. It does not fare too well when we generalize to a situation in which there are a number of different factors—even if the ownership of the abundant factors of production is very concentrated indeed... https://delong.typepad.com/stolper-samuelson_finger_exercise-1.pdf

Continue reading "Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: Hoisted from 2008" »

William Morris said: "If you want a golden rule that will fit everything, this is it: Have nothing in your houses that you do not know to be useful or believe to be beautiful". What is the equivalent for our mental houses?: Barry Ritholtz: More Signal, Less Noise: "ere are some things you need to understand if you want to decrease the noise...

## Fairly Recently: Must- and Should-Reads, and Writings... (January 1, 2019)

1. A Lazy New Year's Eve Morn on Twitter...: I had thought that my brilliant-but-at-times-highly-annoying coauthor @Econ_Marshall was making a more sophisticated point—that here in America "libertarianism" is a Frankenstein's monster that got its lightning-bolt juice from massive resistance to the Civil Rights Movement. Dismantling the New Deal and rolling back the social insurance state were not ideas that had much potential political-economy juice back in the 1950s and 1960s. But if the economic libertarian cause of dismantling the New Deal could be harnessed to the cause of white supremacy—if one of the key liberties that libertarians were fighting to defend was the liberty to discriminate against and oppress the Negroes... #publicsphere #economicsgonewrong #moralphilosophy #ontwitter

2. Note to Self: WTF?!?!: At a ten-percent pre-tax social return to investment, that would require a 1 trillion—a 5%-point of national income—permanent upward jump in the annual flow of investment into America. Given that it looks like Trump is raising the annual deficit by 400 billion, that would require a 1.4 trillion—a 75-point of national income—permanent upward jump in the sum of annual private savings plus the annual trade deficit. On what planet and on what definition of "reasonable" is it "reasonable" to argue that Trump's tax cuts are going produce such a thing?... #fiscalpolicy #economicsgonewrong #orangehairedbaboons #notetoself #wtf

3. Not Only No Wage But Minimal Investment Boosts from Trump-McConnell-Ryan...: Admittedly, making an argument that complex is far beyond the attention span of your standard NYT insider-access journalist. But do we really have any alternative other than to play our position and make the accurate and correct argument? Just saying "no wage growth" is met with parry "it will come in the long run" and being able to say "we told you so" a decade hence is of limited use in today's policy debate, no?... #publicfinance #equitablegrowth #orangehairedbaboons #economicsgonewrong #playingourposition #ontwitter

4. Would Small Minimum Wage Increases Raise or Have No Effect on Employment?: It is only a small minority of economists who follow David Neumark on this—who are confident that a higher minimum wage now would have a noticeable negative effect on employment. Thus Steve gets it wrong... #publicsphere #equitablegrowth #labormarket

1. J. Bradford De Long: America's Only Peacetime Inflation: The 1970s: "The 1970s were America's only peacetime inflation, as uncertainty about prices made every business decision a speculation on monetary policy. In magnitude, the total rise in the price level from the spurt in inflation to the five-to-ten percent per year range in the 1970s was as large as the jumps in prices from the major wars of this century. The truest cause of the 1970s inflation was the shadow of the Great Depression. The memory left by the Depression predisposed the left and center to think that any unemployment was too much, and eliminated any mandate the Federal Reserve might have had for controlling inflation by risking unemployment. The Federal Reserve gained, or regained, its mandate to control inflation at the risk of unemployment during the 1970s as discontent built over that decade's inflation. It is hard to see how the Federal Reserve could have acquired such a mandate without an unpleasant lesson like the inflation of the 1970s. Thus the memory of the Great Depression meant that the U.S. was highly likely to suffer an inflation like the 1970s in the post-World War II period þ maybe not as long, and maybe not in that particular decade, but nevertheless an inflation of recognizably the same genus... #monetarypolicy #macro #highlighted

2. Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Seattle: "An initial study said the increase to \$15 would cost workers jobs and hours. That didn’t happen.... The increase was an 'economic death wish' that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks. The warnings were as unambiguous as they were specific... #minimumwage #labormarket #seattle #equitablegrowth

3. Matthew Yglesias: Trump may be correct on Fed interest rate increases - Vox: "Premature interest rate increases hurt workers and the economy... #monetarypolicy

4. Dev Patel, Justin Sandefur and Arvind Subramanian: Everything You Know about Cross-Country Convergence Is (Now) Wrong: "A quarter-century after the empirical growth literature set out to explain why poor countries aren’t catching up with rich ones, cross-country regressions have mercifully gone out of fashion. But in the interim, the core facts have changed... #economicgrowth #convergence #divergence

5. Richard Thaler: The Power of Nudges, for Good and Bad: "All nudging should be transparent and never misleading.... It should be as easy as possible to opt out.... There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.... Government teams in Britain and the United States that have focused on nudging have followed these guidelines scrupulously. But the private sector is another matter. In this domain, I see much more troubling behavior... #behavioral #economics

6. Benjamin Page and William Gale: CBO estimates imply that TCJA will boost incomes for foreign investors but not for Americans: "CBO estimates that TCJA will increase U.S. GDP by 0.5 percent in 2028.... Most of that additional capital will be financed by foreigners... net payments of profits, dividends, and interest to foreigners also will rise... boost GNP by just 0.1 percent in 2028.... To maintain that larger capital stock a larger share of output must be devoted to offsetting depreciation.... Thus, long-run incomes for Americans as measured by NNP will be more or less unchanged by the TCJA... #publicfinance #orangehariedbaboons

7. Howard Shelanski and Michael Kades: Judge Kavanaugh-Would He Increase the Divide Between the Public and Judicial Debate Over Antitrust Enforcement?: "Over the past decade, the Supreme Court has, with one exception that we discuss below, followed a path of reduced enforcement, reflected in decisions weakening prohibitions against vertical restraints... #monopoly #equitablegrowth

8. Everybody in any way associated with National Review knows that ObamaCare must be repealed and replaced. Not a single person is qualified to say how; National Review: Obamacare Court Ruling—Republicans Can’t Rely on the Courts on Health Care: "Republican politicians have repeatedly counted on the courts to deliver them from Obamacare without their having to take any heat for abolishing its popular elements, to come up with workable alternatives, or to accommodate the interests of people who rely on the law while pleasing those who oppose it. O’Connor’s decision is giving them a new dodge: As it winds its way through the courts, they can continue telling the opponents of the law that victory is at hand, continue telling those who benefit from the law that they will protect them whatever happens, and—continue not working on health care. But the courts will almost certainly not, as they should not, deliver Republicans from their duties... #ObamaCare #orangehairedbaboons

9. Barbara Kiviat: The Art of Deciding with Data: Evidence From How Employers Translate Credit Reports into Hiring Decisions: "Half of US employers consider personal credit history when hiring.... They... reach beyond credit reports, both by inferring events that led to delinquent debt and by testing to see if candidates can offer morally redeeming accounts... #equitblegrowth

10. Jonathan Baker: Market Power or Just Scale Economies?: "Growing market power provides a better explanation for higher price-cost margins and rising concentration in many industries, declining economic dynamism, and other contemporary US trends, than the most plausible benign alternative: increased scale economies and temporary returns to the first firms to adopt new information technologies (IT) in competitive markets. The benign alternative has an initial plausibility.... Yet six of the nine reasons I gave for thinking market power is substantial and widening in the US in my testimony cannot be reconciled with the benign alternative.... None of the reasons is individually decisive: there are ways to question or push back against each. But their weaknesses are different, so, taken collectively, they paint a compelling picture of substantial and widening market power over the late 20th century and early 21st century... #monopoly

11. Paul Krugman (2013): Eco 348, The Great Recession #macro #teachingeconomics #greatrecession

12. If you missed Anne Case and Angus Deaton on "deaths of despair" when it came out at the start of this year, you need to go back and read it: Iris Marechal: The Opioid Crisis: A Consequence of U.S. Economic Decline?: "Anne Case and Angus Deaton at Princeton University attribute the sharp increase in drug overdoses between 1999 and 2015 to 'deaths of despair' rather than to the increased ease of obtaining opioids: That is, their research suggests that higher drug suicides are attributable to social and economic factors such as a prolonged economic decline in many parts of the United States. They show that white Americans are more affected by the opioid epidemic, yet less affected by economic downturns than other racial and ethnic groups in the country... #equitablegrowth

Continue reading "Fairly Recently: Must- and Should-Reads, and Writings... (January 1, 2019)" »

Benjamin Page and William Gale: CBO estimates imply that TCJA will boost incomes for foreign investors but not for Americans: "CBO estimates that TCJA will increase U.S. GDP by 0.5 percent in 2028.... Most of that additional capital will be financed by foreigners... net payments of profits, dividends, and interest to foreigners also will rise... boost GNP by just 0.1 percent in 2028.... To maintain that larger capital stock a larger share of output must be devoted to offsetting depreciation.... Thus, long-run incomes for Americans as measured by NNP will be more or less unchanged by the TCJA...

Richard Thaler: The Power of Nudges, for Good and Bad: "All nudging should be transparent and never misleading.... It should be as easy as possible to opt out.... There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.... Government teams in Britain and the United States that have focused on nudging have followed these guidelines scrupulously. But the private sector is another matter. In this domain, I see much more troubling behavior...

## A Lazy New Year's Eve Morn on Twitter...

Suresh Naidu: Sorry that came out wrong, deleted. Straightforward: a substantial amount of economic power and inefficiency is not eliminated by deconcentration/free entry. Not clear, lots of problems are made worse by free entry/competition. Low margins mean harder to unionize. Innovation is done by big firms. On simple efficiency grounds things can get worse in market with advantageous selection (eg loans) or with any negative ext. It depends!

Mike Konczal: If we are worried about margins being too low, boy do I have exciting news for you:

Sure, but between that, Tobin's Q, "profit share", consistent rate of return under declining real rates, and the break of investment and profitability, something is broken. One can contest any of the individual methods, but together they paint a clear picture.

Suresh Naidu: The " always more competition" fix implies we want to expand output but it is not clear we do in every market (eg airline monopoly might be 10th best emissions regulation).

(((E. Glen Weyl))): 10th best reasoning is fine for policy technocrats, but I think a pretty poor basis for thinking about imaginaries for broad social change and democratic movement building. Imaginaries that move us beyond monopolistic corporate forms, but using market mechanisms, seem promising. I am talking about building coalitions and democratic discourse rather than just being technocratic experts.

Note to Self: WTF?!?! At a ten-percent pre-tax social return to investment, that would require a 1 trillion—a 5%-point of national income—permanent upward jump in the annual flow of investment into America. Given that it looks like Trump is raising the annual deficit by 400 billion, that would require a 1.4 trillion—a 75-point of national income—permanent upward jump in the sum of annual private savings plus the annual trade deficit. On what planet and on what definition of "reasonable" is it "reasonable" to argue that Trump's tax cuts are going produce such a thing? Greg Mankiw: The Bad Economics Behind Trump's Policies: "One might reasonably argue that Trump’s tax cuts will increase growth over the next decade by as much as half a percentage point per year...

## Not Only No Wage But Minimal Investment Boosts from Trump-McConnell-Ryan...

The so brilliant as to be goddess-like Chye-Ching Huang gets this one, I think, wrong: In response to: Jared Bernstein: "For the [Trump-McConnell-Ryan tax] cuts to have more than near-term growth impacts, they’d have to boost biz investment a lot more than we’ve seen so far, though these are early days. Both WSJ and Slate show “muted” investment results..." She writes: Chye-Ching Huang: "My concern is the frame that "growth' is what we should be focused on. If what we care about is how workers are doing—and GOP lawmakers claimed the 2017 tax law would help workers—we should focus on the metric that directly shows how they're doing! If the claimed point of tax cuts for corporations was to raise wages, we should first and foremost look at real wage rates to assess the results...

But those economists shilling for Trump-McConnell-Ryan committed not just to wage increases, but to a particular mechanism for wage increases: (1) U.S. a small open economy -> (2) tax cuts produce a huge jump in investment -> (3) faster growth -> (4) factor shares revert -> (5) higher wages.

To see whether this argument makes sense we can—and should—look at this causal mechanism at every one of its five steps.

Continue reading "Not Only No Wage But Minimal Investment Boosts from Trump-McConnell-Ryan..." »

## Would Small Minimum Wage Increases Raise or Have No Effect on Employment?

That is the current question—would (small) minimum wage increases have no effect on employment because labor-supply curves are steep, or would they boost employment by curbing employers with monopsony power from pushing both wages and employment below their competitive equilibirum values? Yet you would not know it from the very sharp and good-hearted ex-New York Times labor beat reporter Steven Greenhouse. What is he doing? He is, I think, reflexively saying "both sides!": Steven Greenhouse: "Some argue that it's foolish to support a higher minimum because it could reduce employment. But there's a huge debate among economists on this. One school—see David Neumark—finds that a higher minimum reduces employment. The other—see Arin Dube—finds little effect on employment...

Now this is simply wrong. The majority of economists believe that raising the minimum wage from its current level would significantly boost the incomes of the working poor and have little adverse effect on employment. A large minority of economists believe that raising the minimum wage would actually increase employment—that employers currently use their monopsony power to push wages and employment below their competitive equilibrium values, and that a higher minimum wage would reduce their ability to do this and so boost both. The majority and the large minority all, however, agree that there is uncertainty here. It is only a small minority of economists who follow David Neumark on this—who are confident that a higher minimum wage now would have a noticeable negative effect on employment. Thus Steve gets it wrong.

Continue reading "Would Small Minimum Wage Increases Raise or Have No Effect on Employment?" »

## Fairly Recently: Must- and Should-Reads, and Writings... (December 29, 2018)

1. Comment of the Day: Graydon: Insecurity Management: "I think you're missing the central thing about Drake's writing. It is not so much that, yeah, these are not the best circumstances and our feels are in abeyance; that happens, that's depicted. But among that depiction you get what I think of as the essential Drake thing, which is a vehicle crew. They may not like each other much; they may not, in some senses of the word, trust one another. But they are entirely predictable to one another, and reliable...

1. Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life: "Honorable Mention. Self-Flattering Quote by Anonymous Weekly Standard Minion [David Brooks], 2018: This isn’t an article, but deserves to be included here due to its timeless, crystalline beauty: According to a nameless Weekly Standard staffer, the magazine’s original masthead constituted 'one of the greatest collections of writerly talent ever put together outside the New Yorker. What makes this so perfect is that it shows the Weekly Standard training its keen power of observation upon itself.... Tucker Carlson, John Podhoretz and Charles Krauthammer somehow become James Thurber, Dorothy Parker and E.B. White. No matter the subject, the Weekly Standard assessed it with the exact same hubris, blindness, and lunatic hyperbole...

2. PS editors: PS Commentators’ Best Reads in 2018: "Project Syndicate contributors once again share some of the books that resonated with them the most over the past year. From sweeping histories to ambitious new works of fiction, readers of all tastes and persuasions should find something to pique their interest in this year’s selection...

3. Barry Ritholtz: How to Use Behavioral Finance in Asset Management, Part I: "Annual Mea Culpas: I learned this from Ray Dalio about a decade ago: every year I make a list of what I got wrong and what I learned from the experience.... Acknowledging your mistakes...

4. Cosma Shalizi (2007): g, a Statistical Myth: "Factor analysis is handy for summarizing data, but can't tell us where the correlations came from; it always says that there is a general factor whenever there are only positive correlations. The appearance of g is a trivial reflection of that correlation structure. A clear example, known since 1916, shows that factor analysis can give the appearance of a general factor when there are actually many thousands of completely independent and equally strong causes at work...

5. Sean Illing: What Is Fascism? Yale Philosopher Jason Stanley Explains How It Works: "This is probably a good time to pivot to the glittering elephant in the room: Donald Trump. Is he a fascist?" Jason Stanley: "I make the case in my book that he practices fascist politics. Now, that doesn’t mean his government is a fascist government. For one thing, I think it’s very difficult to say what a fascist government is...

6. Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu (2017): Do Americans Want to Tax Capital?: Evidence from Online Surveys: "A vast theoretical literature in public finance has studied the question of the desirability of capital taxation. Distinct from questions of the optimality of taxing wealth is whether it is politically feasible. We provide, to our knowledge, the first investigation of individuals’ preferences over jointly taxing income and wealth, via a survey on Amazon’s Mechanical Turk...

7. Wikipedia: Tzoah Rotachat

8. Carlos Lozada: Anti-Trump Conservatives Want to Reverse the GOP’s Destruction. But They Helped Light the Fuse: "What kind of conservatism can survive, let alone thrive, in American politics today? The question hangs over the Never Trump volumes.... Flake... keeps the faith. 'With hard work... and maybe a little luck, we will right this ship'... #orangehairedbaboons #moralresponsibility

9. Megan Burbank: A "neat" thing I have learned from writing food reviews: "There is nothing more upsetting to some people than a woman saying she ate a lot without caging it in guilt or apology. It was truly weird to discover people will actually chastise you for saying you ate a lot IN A FOOD REVIEW, where eating is, you know, essential. The absurdity mounts: the first time this happened to me it was on a story where I said I biked 7 miles before eating (and after). Look, no one should be food-shamed, I have so little time for it, and fitness is not a virtue, but I biked 14 miles. I gotta refuel! The second was on a story where I said I ate three pastries and was pretty gleeful about the whole thing. but if somebody enjoying what they eat is personally upsetting...

10. Mariana Zerpa: Short and Medium Run Impacts of Preschool Education: Evidence from State Pre-K Programs: "I also provide a discussion of two local average treatment effects under different counterfactual child care arrangements. I find implied effects that are very large, although not very different from the estimates found in the literature on Head Start. This finding highlights the relevance of estimating intention- to-treat effects on the full affected cohorts.... The relevance of externalities and peer effects in early childhood experience is an open question that is part of a promising research agenda...

11. Benjamin F. Jones and Benjamin A. Olken: Do Leaders Matter?: National Leadership and Growth Since World War II: "We use deaths of leaders while in office as a source of exogenous variation in leadership, and ask whether these plausibly exogenous leadership transitions are associated with shifts in country growth rates. We find robust evidence that leaders matter... strongest in autocratic settings where there are fewer constraints on a leader’s power...

12. Matthew Yglesias, Ezra Klein, and Dylan Matthews: 2020 Democratic Nomination Predictions: Who’s Overrated and Underrated: "Nobody outside Amy Klobuchar’s state knows who the senior senator from Minnesota is, except for hardcore political junkies. But here’s the thing that hardcore political junkies know about her: She’s probably the most popular politician in America.... Even though Klobuchar isn’t well-known, she clearly has some political skills.... To the extent that Democrats want to put their various factional disputes aside and just try to win the damn election, Klobuchar smells a lot like the electability candidate...

Matthew Yglesias, Ezra Klein, and Dylan Matthews: 2020 Democratic Nomination Predictions: Who’s Overrated and Underrated: "Nobody outside Amy Klobuchar’s state knows who the senior senator from Minnesota is, except for hardcore political junkies. But here’s the thing that hardcore political junkies know about her: She’s probably the most popular politician in America.... Even though Klobuchar isn’t well-known, she clearly has some political skills.... To the extent that Democrats want to put their various factional disputes aside and just try to win the damn election, Klobuchar smells a lot like the electability candidate...

#shouldread


Comment of the Day: Graydon: Insecurity Management: "I think you're missing the central thing about Drake's writing. It is not so much that, yeah, these are not the best circumstances and our feels are in abeyance; that happens, that's depicted. But among that depiction you get what I think of as the essential Drake thing, which is a vehicle crew. They may not like each other much; they may not, in some senses of the word, trust one another. But they are entirely predictable to one another, and reliable. And it's that obligation of reliability that lets people get their head out of hell, whether as imperfectly as Danny Pritchard does it or as entirely as the protagonist of Redliners does. (You can see much the same flavour of reliable between Gunnar and Brennu-Njáll.)...

Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu (2017): Do Americans Want to Tax Capital?: Evidence from Online Surveys: "A vast theoretical literature in public finance has studied the question of the desirability of capital taxation. Distinct from questions of the optimality of taxing wealth is whether it is politically feasible. We provide, to our knowledge, the first investigation of individuals’ preferences over jointly taxing income and wealth, via a survey on Amazon’s Mechanical Turk...

Sean Illing: What Is Fascism? Yale Philosopher Jason Stanley Explains How It Works: "This is probably a good time to pivot to the glittering elephant in the room: Donald Trump. Is he a fascist?" Jason Stanley: "I make the case in my book that he practices fascist politics. Now, that doesn’t mean his government is a fascist government. For one thing, I think it’s very difficult to say what a fascist government is...

Cosma Shalizi (2007): g, a Statistical Myth: "Factor analysis is handy for summarizing data, but can't tell us where the correlations came from; it always says that there is a general factor whenever there are only positive correlations. The appearance of g is a trivial reflection of that correlation structure. A clear example, known since 1916, shows that factor analysis can give the appearance of a general factor when there are actually many thousands of completely independent and equally strong causes at work...

## Fairly Recently: Must- and Should-Reads, and Writings... (December 28b, 2018)

1. Comment of the Day: Cervantes: There's No Process: "Individual-1 told Mnuchin to do something to talk up the stock market and Mnuchin thinks this will have that effect. So he's an idiot. That's basically all there is to it. Possibly Individual 1 suggested these specific steps, possibly they're Mnuchin's idea. Doesn't matter since they're both idiots anyway...

1. Vastly superior to Tom Holland—and vastly, vastly superior to the likes of Niall Ferguson—on the decline and fall of the Roman Republic: Edward J. Watts: Mortal Republic: How Rome Fell into Tyranny https://books.google.com/books?isbn=0465093825: "If the early and middle centuries of Rome’s republic show how effective this system could be, the last century of the Roman Republic reveals the tremendous dangers that result when political leaders cynically misuse these consensus-building mechanisms to obstruct a republic’s functions. Like politicians in modern republics, Romans could use vetoes to block votes on laws, they could claim the presence of unfavorable religious conditions to annul votes they disliked, and they could deploy other parliamentary tools to slow down or shut down the political process if it seemed to be moving too quickly toward an outcome they disliked... #books #history

2. Hyman Minsky: [Stabilizing an Unstable Economy](https://delong.typepad.com/hyman-minsky-stabilizing-an-unstable-economy-2008.pdf" title="hyman-minsky-stabilizing-an-unstable-economy-2008.pdf) #books #finance #macro

3. Aline Bütikofer, Sissel Jensen, and Kjell G. Salvanes: The Role of Parenthood on the Gender Gap Among Top Earners: "A recent literature argues that a ‘motherhood penalty’ is a main contributor to the persistent gender wage gap in the upper part of the earnings distribution. Using Norwegian registry data, this column studies the effect of parenthood on the careers of high-achieving women relative to high-achieving men in a set of high-earning professions. It finds that the child earnings penalty is substantially larger for mothers with an MBA or law degree than for mothers with a STEM or medical degree... #gender #equitablegrowth

4. The Committee for a Responsible Federal Budget is only one of many organizations that bought the snakeoil from Paul Ryan. We have a significantly less responsible federal budget as a consequence: Michael Grunwalde: Paul Ryan's Legacy of Red Ink: "The speaker of the House’s reputation as a budget hawk has somehow survived his actual record... #orangehairedbaboons

5. Trump Is a Bully, But He Is Your Bully—He is going to bully corporations into giving you good jobs...

6. Paul Krugman: "Disputes over trade can seem gentlemanly because economists, at least, mostly talk sense. Disputes over macroeconomic policy can't, because they don't. Sad!

7. Menzie Chin: On Recession: Hassett, Prediction Markets, and Markets: "Council of Economic Advisers Kevin Hassett said he is willing to bet, based on the economy and indicators, that there will not be a recession any time soon.... My first observation is  that Hassett’s statement regarding current growth rates surprising. Atlanta Fed GDPNow does indicate 2.9% growth SAAR in 2018Q4 (12/18), but as of 12/14 the New York Fed’s nowcast indicates 2.42% growth, while the St. Louis Fed nowcast is 2.65%. Macroeconomic Advisers today nowcasts 2.6%, latest Goldman Sachs is 2.7% (12/17). I don’t know of any nowcasts for over 3% for 2018Q4 Q/Q SAAR.... The second observation is that the prediction market’s odds on a recession over the next year is not as low as suggested by Hassett’s comments.... The current probability of recession using the term spread is in the 15% range, a bit less than the 30% or so from the prediction markets...

8. Pseudoerasmus: Labour repression & the Indo-Japanese divergence: "I illustrate the relevance of labour relations to economic development through the contrasting fortunes of India’s and Japan’s cotton textile industries in the interwar period, with some glimpses of Lancashire, the USA, interwar Shanghai, etc....

9. John Maynard Keynes: Essays in Persuasion

10. John Maynard Keynes: Essays in Biography

11. John Steinbeck: The 1930s: A Primer: "Except for the field organizers of strikes, who were pretty tough monkeys and devoted, most of the so-called Communists I met were middle-class, middle-aged people playing a game of dreams. I remember a woman in easy circumstances saying to another even more affluent: “After the revolution even we will have more, won’t we, dear?” Then there was another lover of proletarians who used to raise hell with Sunday picnickers on her property. I guess the trouble was that we didn’t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist. Maybe the Communists so closely questioned by investigation committees were a danger to America, but the ones I knew--at least they claimed to be Communists--couldn’t have disrupted a Sunday-school picnic. Besides they were too busy fighting among themselves...

12. Robert Feenstra, Hong Ma, Akira Sasahara, Yuan Xu: Reconsidering the ‘China Shock’ in Trade: "While previous studies focus on the job-reducing effect of the surging imports from China or other low-wage countries on the US employment, the job-creating effect of exports has receive much less attention. This column employs two approaches—an instrumental variable regression analysis and a global input-output approach—to argue that the negative effects of import competition on US employment are largely balanced out once the country’s job-creating export expansion is taken into account....

13. This by the very sharp Henry Farrell seems to me to be largely wrong. Farrell thinks that parties, plural, became "unwilling to compete for voters across tricky political issues". I see it as right-wing party, singular, taking the neo-fascist turn to which the system was always vulnerable—winning mass support for policies of plutocracy and kleptocracy by mobilizing fear and hatred of a distinct and sinister internal and external other. Four times in the past hundred yeras have we seen this in the United States. Teddy Rooevelt vs. the Malefactors of Great Wealth, Ike Eisenhower vs. the McCarthyites, and Richard Nixon's Flaws vs. Richard Nixon and Pat Buchanan were three earlier episodes. We won through because of conservative elitss that valued liberty and an open society. We may win through again: Henry Farrell: The Hollowing Out of Democracy: "There are strong similarities between what is happening in the United States, Hungary, the United Kingdom, and France... where democracy is backpedaling rapidly, such as the Philippines. This is the product both of common shocks... and of cross-national reinforcement... the family resemblances are undeniable. What Davies arguably gets wrong though is the significance of these changes...

Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life: "Honorable Mention. Self-Flattering Quote by Anonymous Weekly Standard Minion [David Brooks], 2018: This isn’t an article, but deserves to be included here due to its timeless, crystalline beauty: According to a nameless Weekly Standard staffer, the magazine’s original masthead constituted 'one of the greatest collections of writerly talent ever put together outside the New Yorker. What makes this so perfect is that it shows the Weekly Standard training its keen power of observation upon itself.... Tucker Carlson, John Podhoretz and Charles Krauthammer somehow become James Thurber, Dorothy Parker and E.B. White. No matter the subject, the Weekly Standard assessed it with the exact same hubris, blindness, and lunatic hyperbole...

This by the very sharp Henry Farrell seems to me to be largely wrong.

Farrell thinks that parties, plural, became "unwilling to compete for voters across tricky political issues". I see it as right-wing party, singular, taking the neo-fascist turn to which the system was always vulnerable—winning mass support for policies of plutocracy and kleptocracy by mobilizing fear and hatred of a distinct and sinister internal and external other.

Four times in the past hundred yeras have we seen this in the United States. Teddy Rooevelt vs. the Malefactors of Great Wealth, Ike Eisenhower vs. the McCarthyites, and Richard Nixon's Flaws vs. Richard Nixon and Pat Buchanan were three earlier episodes. We won through because of conservative elitss that valued liberty and an open society. We may win through again: Henry Farrell: The Hollowing Out of Democracy: "There are strong similarities between what is happening in the United States, Hungary, the United Kingdom, and France... where democracy is backpedaling rapidly, such as the Philippines. This is the product both of common shocks... and of cross-national reinforcement... the family resemblances are undeniable. What Davies arguably gets wrong though is the significance of these changes...

John Steinbeck: The 1930s: A Primer: "Except for the field organizers of strikes, who were pretty tough monkeys and devoted, most of the so-called Communists I met were middle-class, middle-aged people playing a game of dreams. I remember a woman in easy circumstances saying to another even more affluent: “After the revolution even we will have more, won’t we, dear?” Then there was another lover of proletarians who used to raise hell with Sunday picnickers on her property. I guess the trouble was that we didn’t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist. Maybe the Communists so closely questioned by investigation committees were a danger to America, but the ones I knew--at least they claimed to be Communists--couldn’t have disrupted a Sunday-school picnic. Besides they were too busy fighting among themselves...

Jacob Levy: Populism's Dangerous Companions: "It’s an interesting and illuminating exercise to single out a shift from debates about cultural moralism to those about nationalism as the important destabilizing influence.... Jerry Falwell Jr.’s sycophancy toward a serial adulterer, multiple divorcé, and seeker of sexual favors from nude models and porn actresses is a nice synecdoche for the apparent surrender of the old religious right, even in the United States, on everything except abortion...

Comment of the Day: Cervantes: There's No Proccess...: "Individual-1 told Mnuchin to do something to talk up the stock market and Mnuchin thinks this will have that effect. So he's an idiot. That's basically all there is to it. Possibly Individual 1 suggested these specific steps, possibly they're Mnuchin's idea. Doesn't matter since they're both idiots anyway....

#commentoftheday


Aline Bütikofer, Sissel Jensen, and Kjell G. Salvanes: The Role of Parenthood on the Gender Gap Among Top Earners: "A recent literature argues that a ‘motherhood penalty’ is a main contributor to the persistent gender wage gap in the upper part of the earnings distribution. Using Norwegian registry data, this column studies the effect of parenthood on the careers of high-achieving women relative to high-achieving men in a set of high-earning professions. It finds that the child earnings penalty is substantially larger for mothers with an MBA or law degree than for mothers with a STEM or medical degree...

Vastly superior to Tom Holland—and vastly, vastly superior to the likes of Niall Ferguson—on the decline and fall of the Roman Republic: Edward J. Watts: Mortal Republic: How Rome Fell into Tyranny https://books.google.com/books?isbn=0465093825: "If the early and middle centuries of Rome’s republic show how effective this system could be, the last century of the Roman Republic reveals the tremendous dangers that result when political leaders cynically misuse these consensus-building mechanisms to obstruct a republic’s functions. Like politicians in modern republics, Romans could use vetoes to block votes on laws, they could claim the presence of unfavorable religious conditions to annul votes they disliked, and they could deploy other parliamentary tools to slow down or shut down the political process if it seemed to be moving too quickly toward an outcome they disliked...

## Fairly Recently: Must- and Should-Reads, and Writings... (December 28, 2018)

1. Reading: Homer, Odysseus, Emily Wilson, David Drake: Hoisted from the Archives: I am distressed to find myself somewhat more sympathetic than I want to be with Plato's recommendation that only "hymns to the gods and praise of famous men" be allowed in the Just City—because allowing more would lead to sensation and melodrama and would excite the baser instincts of men. And I have now opened up the following can of worms: How do we educate people to read—listen—watch—properly, so that they become their better rather than their worse selves?...

1. Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life VIII: "'The Worst Thing About Gay Marriage', by Sam Schulman, 2009: Here Sam Schulman first expresses amazement at the rapidity with 'which gays have attained the right to hold jobs — even as teachers and members of the clergy', and explains 'all these rights … have made gays not just ‘free’ but our neighbors'. (In the past all LGBT Americans were apparently sequestered away in underground caverns.) Also, the only reason for marriage is 'protecting and controlling the sexuality of the child-bearing sex'. Then Schulman frets that gay marriage will obviously lead to brothers marrying brothers and fathers marrying sons.... The upshot is that after the initial excitement of gay incest marriage, all the gay Americans will realize marriage is pointless and will stop getting married; this will cause marriage of all genres to collapse (?); and human society will evaporate... #journamalism #orangehairedbaboons #moralresponsibility

2. Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life IX: "'He Was Honest, Eventually' by the Scrapbook, 2018: On its surface this is simply a banal unsigned post on a Weekly Standard blog about Barack Obama and Medicare for All. But it deserves recognition because it was published just as it was revealed that Facebook had chosen the Weekly Standard as one of five U.S. publications to which it would outsource factchecking. Hence the magazine showed real moxie here by managing to make three glaring factual errors in two sentences. First, Medicare would not entail 'the full-on nationalization of the health-care industry'. Rather, it would entail nationalization of much of the healthcare insurance industry. Anyone who doesn’t understand the difference doesn’t understand this issue at all. Second, Medicare is not 'America’s most expensive and worst-run health-care program' #journamalism #orangehairedbaboons #moralresponsibility

3. Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life X: "'Going Soft on Iran' by Reuel Marc Gerecht, 2004.... And as we know, there’s nothing neoconservatives care about more than democracy. In this article, former CIA case officer Reuel Marc Gerecht writes of his yearning for Iranians to experience it. If you want to read more about how much the Weekly Standard supports democracy in Iran, well, there’s a lot there for you... #journamalism #orangehairedbaboons #moralresponsibility

4. Harald Dale-Olsen: Wages, Creative Destruction, and Union Networks: "Do unions promote creative destruction?...

5. Andreas Ferrara: World War II and African American Socioeconomic Progress: "This paper argues that the unprecedented socioeconomic rise of African Americans at mid-century is causally related to the labor shortages induced by WWII...

6. Equitable Growth: Workers Re-entering : "Workers previously out of the labor force are re-entering at higher rates, continuing the long-term upward trend...

7. Very much worth reading: Henry Farrell and Bruce Schneier: Common-Knowledge Attacks on Democracy: "Democracies draw upon the disagreements within their population to solve problems.... In a well-functioning democracy, each such group vies for political influence by persuading voters that its way of understanding problems and associated solutions is the best one. This is to the democracy’s benefit. It provides a mechanism through which a polity can harness the diversity of perspectives within it, the better to solve complex problems. This requires contestation over who the rulers should be, and what broad social goals they will seek to implement. Political parties and other collective actors hope that they (or their allies) will be in control for a given period, and each vies against others to win public support to that end.... Autocracies adopt a very different approach to common and contested knowledge...

8. David Spiegel: 38% of Rich Republicans Would Not Re-Elect Trump: "Just 34 percent of America’s millionaires... say they would vote to re-elect President Trump if the election were held today...

9. WTF!? Geoffrey Kabaservice? For one thing, the Democratic Party became the more fiscally-conservative party back in 1991 when the Republican Party was hijacked by Newt Gingrich. Do you really not know this? Why put it 45 years later, in 2036? Now I do realize that this is supposed, at some level, to be a joke: our geophysicists are not predicting catastrophic city-threatening sea-level rises by the 1930s; nor does value-added in infrastructure construction come from the "white working class of the heartland". But why tell this particular joke? What is gained, and for whom, by telling it?: Geoffrey Kabaservice: What Will History Books Say About 2018?: "By 2036, the Democratic Party—whose middle- and upper-class constituents were deeply disturbed by the impending threat of national bankruptcy—had become the fiscally conservative party. The Republicans, meanwhile, had become the party more supportive of government spending... on universal social benefits like Social Security and Medicare, as well as the spending programs that were the sole economic lifeline for the 30 percent of the population that still lived in the semi-inhabited small towns and environmentally ravaged rural areas of the American heartland. The peculiar arithmetic of the Electoral College meant that Republicans still commanded supermajorities in the Senate.... But the Grand Bargain of the 2030s rallied the whole country around the slogan, 'Build the Walls!'—the massive seawalls, constructed mostly by the white working class of the heartland, that saved the coastal cities from inundation by rising oceans...

10. Jonah Goldberg appears to finally—finally!—wake up to the fact that America's conservatives have for sixty-three years identified themselves as the bad guys—as those entitled to not play fair and to break all the rules, in William F. Buckley's words back in 1955, "to take such measures as are necessary to prevail, politically and culturally, in areas in which it does not predominate numerically"—to abandon any idea of "consulting a catalog of the rights of American citizens" or of "bow[ing] to the demands of the numerical majority": Jonah Goldberg: Why the Trump Presidency Will End Poorly: "When I say President Trump is not a man of good character, I... preface it with a trigger warning for... my fellow conservatives. Most... do not wish to be reminded.... Others... have convinced themselves that Trump is a man of good character... rushes to rebut the claim... are redefining good character in Trump’s image, and they end up modeling it...

11. Tony Yates is unhappy with Mervyn King: Tony Yates: Why Mervyn King’s Defence of Brexit “Isn’t Worthy of a Bank of England Governor”: "Mervyn King, Mark Carney’s predecessor as the governor of the Bank of England, has burnished his Brexit credentials in an opinion piece for Bloomberg. King has made his pro-Brexit views known already. The trigger for reprising them was the publication of the Bank of England’s assessment of different trajectories either through or without Brexit...

12. Howard Gleckman: The TaxVox Lump of Coal Award For The Worst Tax Idea of 2018: "Trump’s promise to cut middle-class taxes by 10 percent.... The credulous response to Trump’s promised middle-class tax cut. Journalists and policy analysts just can’t help themselves. The president makes an off-the-cuff campaign promise and, like mice on a wheel, they chase after it as if it is a... real thing. They opine on what his phantom tax cut might look like. They prognosticate over the odds of Congress passing the non-existent plan. They even debate who exactly is the middle class.... he 2018 lump of coal (not a real thing) goes to the president who made an absurd, impossible-to-keep promise, and all those self-described experts who took him seriously. Congratulations, or something...

Tony Yates is unhappy with Mervyn King: Tony Yates: Why Mervyn King’s Defence of Brexit “Isn’t Worthy of a Bank of England Governor”: "Mervyn King, Mark Carney’s predecessor as the governor of the Bank of England, has burnished his Brexit credentials in an opinion piece for Bloomberg. King has made his pro-Brexit views known already. The trigger for reprising them was the publication of the Bank of England’s assessment of different trajectories either through or without Brexit...

Jonah Goldberg appears to finally—finally!—wake up to the fact that America's conservatives have for sixty-three years identified themselves as the bad guys—as those entitled to not play fair and to break all the rules, in William F. Buckley's words back in 1955, "to take such measures as are necessary to prevail, politically and culturally, in areas in which it does not predominate numerically"—to abandon any idea of "consulting a catalog of the rights of American citizens" or of "bow[ing] to the demands of the numerical majority": Jonah Goldberg: Why the Trump Presidency Will End Poorly: "When I say President Trump is not a man of good character, I... preface it with a trigger warning for... my fellow conservatives. Most... do not wish to be reminded.... Others... have convinced themselves that Trump is a man of good character... rushes to rebut the claim... are redefining good character in Trump’s image, and they end up modeling it...

WTF!? Geoffrey Kabaservice? For one thing, the Democratic Party became the more fiscally-conservative party back in 1991 when the Republican Party was hijacked by Newt Gingrich. Do you really not know this? Why put it 45 years later, in 2036? Now I do realize that this is supposed, at some level, to be a joke: our geophysicists are not predicting catastrophic city-threatening sea-level rises by the 1930s; nor does value-added in infrastructure construction come from the "white working class of the heartland". But why tell this particular joke? What is gained, and for whom, by telling it?: Geoffrey Kabaservice: What Will History Books Say About 2018?: "By 2036, the Democratic Party—whose middle- and upper-class constituents were deeply disturbed by the impending threat of national bankruptcy—had become the fiscally conservative party...

Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life X: "'Going Soft on Iran' by Reuel Marc Gerecht, 2004.... And as we know, there’s nothing neoconservatives care about more than democracy. In this article, former CIA case officer Reuel Marc Gerecht writes of his yearning for Iranians to experience it. If you want to read more about how much the Weekly Standard supports democracy in Iran, well, there’s a lot there for you...

Very much worth reading: Henry Farrell and Bruce Schneier: Common-Knowledge Attacks on Democracy: "Democracies draw upon the disagreements within their population to solve problems.... In a well-functioning democracy, each such group vies for political influence by persuading voters that its way of understanding problems and associated solutions is the best one. This is to the democracy’s benefit. It provides a mechanism through which a polity can harness the diversity of perspectives within it, the better to solve complex problems. This requires contestation over who the rulers should be, and what broad social goals they will seek to implement. Political parties and other collective actors hope that they (or their allies) will be in control for a given period, and each vies against others to win public support to that end.... Autocracies adopt a very different approach to common and contested knowledge...

Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life IX: "'He Was Honest, Eventually' by the Scrapbook, 2018: On its surface this is simply a banal unsigned post on a Weekly Standard blog about Barack Obama and Medicare for All. But it deserves recognition because it was published just as it was revealed that Facebook had chosen the Weekly Standard as one of five U.S. publications to which it would outsource factchecking. Hence the magazine showed real moxie here by managing to make three glaring factual errors in two sentences. First, Medicare would not entail 'the full-on nationalization of the health-care industry'. Rather, it would entail nationalization of much of the healthcare insurance industry. Anyone who doesn’t understand the difference doesn’t understand this issue at all. Second, Medicare is not 'America’s most expensive and worst-run health-care program'...

Jon Schwarz: The 10 Most Awful Articles in the Weekly Standard’s Short Life VIII: "'The Worst Thing About Gay Marriage', by Sam Schulman, 2009: Here Sam Schulman first expresses amazement at the rapidity with 'which gays have attained the right to hold jobs — even as teachers and members of the clergy', and explains 'all these rights … have made gays not just ‘free’ but our neighbors'. (In the past all LGBT Americans were apparently sequestered away in underground caverns.) Also, the only reason for marriage is 'protecting and controlling the sexuality of the child-bearing sex'. Then Schulman frets that gay marriage will obviously lead to brothers marrying brothers and fathers marrying sons.... The upshot is that after the initial excitement of gay incest marriage, all the gay Americans will realize marriage is pointless and will stop getting married; this will cause marriage of all genres to collapse (?); and human society will evaporate...