Introducing Partha Dasgupta: Economics: A Very Short Introduction

479 Social Capital and Natural Resources Sir Partha Dasgupta YouTube

Introducing Partha Dasgupta: Economics: A Very Short Introduction

http://amzn.to/2gR2jH3

Back in 1800, nearly the entire world lived in dire poverty—what we today see as the dire poverty line of $1.90 a day, a level at which you are spending more than half your income on bare calories and essential nutrients, the minimum of heat and shelter, and the minimum of clothing. Below that line, certainly your health and perhaps your life is impacted: women become too skinny to reliably ovulate, and children become too malnourished to have healthy and effective immune systems. Back in 1800, there were only a few economies where the median household had a standard of living of more than $3 a day: Germany, France, Austria, Denmark, Belgium, Holland, Switzerland, the U.K., the U.S., and that was it.

Today the median household’s standard of living in the United States, Switzerland, or Singapore is 55 times that dire poverty line of $1.90 a day. That is all due to advances since 1800: advances in science and technology that give us powers to manipulate nature beyond those attributed to gods in earlier centuries; advances in business, property, and market organization that allow us to organize production and distribution much more efficiently; and advances in government provision of educational, physical, and institutional infrastructure that underpin the advances in science, technology, and organization.

Yet 9% of humanity today lives at a standard of living of less than $1.90 a day. Half the world’s population lives at less than $7 a day. 20% of humanity lives at less than $3 a day—including more than half of the people in each of Ethiopia, Uganda, Haiti, Burkina Faso, Gambia, Comoros, Timor Leste, North Korea, Madagascar, Togo, Guinea-Bissau, Sierra Leone, Eritrea, Guinea, Mozambique, Malawi, Niger, Liberia, the DRC, Burundi, the CAR, and—currently the poorest of the poor—Somalia.

At most 8% of the world’s population has a standard of living more than half of today’s U.S. median.

Rejoice: the world today is so much fabulously richer than it was in 1800. That is a miracle. Recoil: our knowledge—of how to run governments; of how to organize markets, firms, and property; and of how to apply science and technology—is so sketchily and unevenly distributed around the world, leaving only a small part of it as what we would see as rich and huge chunks of it as what we do see as desperately poor, is a scandal, and a crime against humanity.

But what is to be done about this crime against humanity?

One place to start is with economics, which is, as its revered ancestral founder wrote, “an inquiry into the nature and causes of the wealth of nations”. One wishes one’s own national economy to be wealthy and prosperous—one wants all national economies to be wealthy and prosperous—but how is this to be accomplished.

One road into economics a a discipline begins with Partha Dasgupta: Economics: A Very Short Introduction http://amzn.to/2gR2jH3 https://delong.typepad.com/dasgupta.pdf. This book is a game theorist’s short—very short—introduction to economics. It focus on: individual goals, individual opportunities and constraints, individual incentives, strategies, exchange, trust, and equilibrium outcomes. You won’t find lots of practice at using quantitative models to figure out how price and quantity change in response to demand shocks, or calculating macroeconomic multipliers to use in macroeconomic stabilization policy exercises.. What you will find is the logic and rationale for why figuring out how price and quantity change in response to demand shocks or calculating multipliers is a worthwhile thing to do.

Most introductory economics books begin with the highly stylized world of rational individuals and profit-seeking firms trading goods and labor in abstract markets. Instead, Dasgupta starts with two families—one in the upper middle class in the American Midwest, the other in a rural village in Ethiopia—describing how the members of each family live their lives and support themselves. The central concern of economics, he writes, is “to uncover the processes that influence how people’s lives come to be what they are.” Economists use models to answer that question, but the models only come later—after understanding the material conditions that people face and the choices they make under those conditions.

There is one single key thread in Dasgupta’s Very Short Introduction: trust. Trust in others is essential to inducing people to make the investments—in making capital improvements, in developing skills and knowledges, in developing production and exchange networks—necessary to take advantage of the possibilities of technology, organization, and the division of labor in order to have full wealth and prosperity. Most of prosperity, in Dasgupta’s view, rests on creating social institutions to enable large-scale networks of trust:

  • The coffee farmer on the volcanic hillsides of Nicaragua five years ago could plant coffee trusting that the planting would be socially useful because today I or somebody like me would drink a drink made from their plant’s beans, and would be, in exchange for the drink, willing and able to reward all those in the value chain back to the coffee farmer.
    • Back in 456 B.C., the archons of Athens, Greece could commission the sculptor Pheidias to assemble a team to make a 30-foot-tall bronze statue of their patron goddess Athena-Fighting-in-Front trusting that 1500 miles away (as the owl flies) there were Keltic miners in Cornwall who would dig out of the earth the 7 tons of tin needed to turn the copper into bronze and send it by ship and wagon to Athens.

Normally, however, one has deep trust in only a few people: one trusts one’s close kin, one’s immediate neighbors, and one’s closest friends to have your back. Outside of your core group, if you do somebody a favor and provide them with something of use and value, they may or may not reciprocate, depending. The size of the group of people you can normally trust to respect your stuff, or to reciprocate the favors you do in gift-exchange relationships, is about 50. That is not enough on which to build even a minimally efficient division of labor and scale of organization.

Economics is thus, according to Dasgupta, the study of the institutions, norms, and patterns that allow for the generalization of deep trust needed to transform bands of 50 or so East African Plains Apes quarreling with their neighbors into our current 7.5 billion-strong global division of productive labor and system of technological development and advance. How does these underpinnings function and how does our global market economy work—and, in may places and for many purposes, fail to work well? These are the questions Dasgupta asks and tries to answer. And he has a lot to say.

For a taste, let me turn the mic over to Partha http://www.voxeu.org/index.php?q=node/4307:

The earliest class of explanations… [in the] 1950s… [were] that a worker in the United States, for example, would be producing a lot more per hour than a worker in Ethiopia… [because] he has many, many instruments to work with…. The last 20 years… [have seen] explanation[s] … founded on institutions…. I’ve found that to be unsatisfactory as well, because you could establish the same institution in various parts of the world, and in some places will work, and in others it won’t…. It’s a rather banal observation… institutions per se don’t deliver. What’s at the heart of well functioning institutions is the creation of trust among people… buying and selling, borrowing and lending, investing, and so forth…. Economic life involves exchanges, transactions…. And for them to be fruitful requires a strong element of trust….

Exchange takes place everywhere. Economic life is all pervasive, whether it’s in the highlands of Ethiopia or whether in Midwestern United States. No matter where you go, people are making deals, exchanging…. If the trust is maintained within small groups only, then you’re not going to be able to propel yourself far, because your transactions are going to be limited…. What you need is to be able to trust the mechanisms, the institutions, in such a way that you can indirectly transact with people in the event we’ll never meet…. “How do you build trust?”… is a big thing…. Rumors can cause a society to flip from a state of cooperation to a state where everybody is looting every store on site. We’ve seen that happen, and we’ve seen that happening within hours in a day…. Getting locked into a non-trust state… you can even say a society is trapped….

[In] every country there’s a great deal of trust within small groups. Villages everywhere, they trust one another, they exchange, they swap insurance, they borrow from each other. Without that, they would of course be dead…. [But] the reach of that trust is so limited…


Notes:


#economics #economicgrowth #globalization #highlighted #moralphilosophy #politicaleconomy 

https://delong.typepad.com/dasgupta.pdf
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Moral Philosophy: https://www.bradford-delong.com/moral-philosophy-in-america.html
Economics Gone Right: https://www.bradford-delong.com/economics-right.html
Globalization, Trade, and Distribution: https://www.bradford-delong.com/globalization-trade-and-distribution.html

Liveblogging: The Anglo-Saxon Chronicle: Death of Penda

Journey To Normandy Scene 1

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Death of Penda: “A.D. 655. This year Penda was slain at Wingfield, and thirty royal personages with him, some of whom were kings. One of them was Ethelhere, brother of Anna, king of the East-Angles. The Mercians after this became Christians…

…From the beginning of the world had now elapsed five thousand eight hundred and fifty winters, when Peada, the son of Penda, assumed the government of the Mercians. In his time came together himself and Oswy, brother of King Oswald, and said, that they would rear a minster to the glory of Christ, and the honour of St. Peter. And they did so, and gave it the name of Medhamsted; because there is a well there, called Meadswell. And they began the groundwall, and wrought thereon; after which they committed the work to a monk, whose name was Saxulf. He was very much the friend of God, and him also loved all people. He was nobly born in the world, and rich: he is now much richer with Christ.

But King Peada reigned no while; for he was betrayed by his own queen, in Easter-tide. This year Ithamar, Bishop of Rochester, consecrated Deus-dedit to Canterbury, on the twenty-sixth day of March…


#liveblogging #history #anglosaxonchronicle 

Ancient Economies: A Malthusian Model: Markdown Notebook

DRAFT: Ancient Economies: A Malthusian Model : The math for complicating the standard Solow Growth Model with (a) a rate of population growth that depends positively on the excess of spending on necessities above “subsistence” and (b) a level of the efficiency-of-labor that depends inversely on population, as a higher population induces resource scarcity that makes labor less productive. For understanding both the long-term apparent stagnation of living standards between the Neolithic and the Industrial Revolutions, and for understanding the rise and fall of ancient civilizations. Question: How should we add on to the Python class for the Solow Growth Model to turn this into a tool for doing problem sets for Econ 101b (and perhaps 135):

https://nbviewer.jupyter.org/github/braddelong/LS2019/blob/master/2019-08-17-Ancient_Economies.ipynb


#berkeley #economicgrowth #economichistory #highlighted #jupyter #notebook #python #teaching #teachinghistory 

Worthy Reads at Equitable Growth and Elsewhere… August 16, 2018

Worthy Reads at Equitable Growth…

  1. An excellent piece from Marinescu, Dinan, and Hovenkamp: one of our working papers laying out how the analysis of how antitrust policy should be done given that compensated firms face their counter parties not just in the product but in labor markets. I think this is the most important thing I have seen out of our shop here at Equitable Growth this week*Ioana Marinescu, James G. Dinan, and Herbert Hovenkamp*: Anticompetitive mergers in labor markets: “Increased market concentration in labor markets threatens to facilitate coordinated interaction among employers that could lead to lower output and wage suppression in employment markets…

  2. As Michael Kades writes, “the stakes are much higher than an ideological battle or technical adjustments to a legal regime” here. We need to understand how anti-trust practice affects the degree of monopoly in the United States and Hal monopoly effects equitable growth and societal well being. We do not. I think that attempting to understand these two issues is the most important analytic issue for policy relevant economic research in the United States today: Michael Kades: Why market competition matters to equitable growth: “At first glance, competition in the U.S. economy may seem far afield of the topic of equitable growth…. What could antitrust enforcement have to do with maintaining a healthy economy?…

  3. The analysis of rising inequality and its effects in the United States and elsewhere over the past generation has suffered from a relative downplaying of the role of the family and how income gets earned and then transformed Into well-being. Central to this is the rapidly changing economic role of women in the workforce, but that is not all of it. We need more and better analyses of her public policy needs to shift in the context of changing family structure and rising inequality. Elizabeth Jacobs presents some of our thinking about how Equitable Growth is and will be trying to support this effort: Elizabeth Jacobs: Rethinking 20th century policies to support 21st century families: “…As a raft of research illustrates, economic growth is increasingly concentrating at the top…

  4. Our Kate Bahn Reminds us: Kate Bahn: “This needs to be screamed from the rooftops…. We cannot have a substantive conversation about how tight the labor market is without examining demographic disparities…” ands sends us to Equitable Growth alumnus John Schmitt quoting Janelle Jones at: Laura Maggi: Despite Drop in Black Unemployment, Significant Disparities Remain: “The African-American unemployment rate… low—compared to historic numbers. In July, it was 6.6 percent…

  5. Not to put the pressure on or anything, but I expect very good things from our Equitable Growth grant to: Matthew Staiger: Parental Resources And The Career Choices of Young Workers: “With a specific focus on the impact of parental resources on entrepreneurship and job mobility…


Worthy Reads Elsewhere…

  1. Dan Drezner: The invisible heroism of Paul Ryan: “Back in March, I wrote…. ‘Why, exactly, is Paul D. Ryan being so quiet? What does he hope to accomplish at this point? I don’t know. I would love to hear from someone who does’…

  2. The utility of history for rational self-government: David Walsh: “That Twitter is the major forum for this says a lot about the pitiful state of our institutional capacity…

  3. Erica Groshen and Robert Groves: Better Data for a Better Economy: “Mov[ing] the Bureau of Labor Statistics—the source of statistics on jobs, wages, working conditions, productivity and prices—from the Labor Department to the Commerce Department…

  4. Nancy L. Yu, Preston Atteberry, Peter B. Bach: Spending On Prescription Drugs In The US: Where Does All The Money Go?: “The US pharmaceutical industry is characterized by a complex and often opaque system of distribution and reimbursement…

  5. No surprise: throwing people off Medicaid has substantial costs and no benefits at all: Thomas DeLeire: The Effect of Disenrollment from Medicaid on Employment, Insurance Coverage, Health and Health Care Utilization: “From July through September 2005, TennCare, the Tennessee Medicaid program, disenrolled approximately 170,000 adults following a change in eligibility rules…

  6. A very good point here: there is good reason not to take a markup-free model as our benchmark from which we begin our analysis of Trump: Ben Golub: Krugman Thinks Efficiency Loss of a Trade War Is Small: “Krugman thinks efficiency loss of a trade war is small (Harberger triangle size) even though trade is now in intermediates along supply chains…

  7. Smart proposal to unify U.S. statistical agencies in the Department of Commerce: Erica L. Groshen and Robert M. Groves: Op-Ed: “We depend largely on three professional government agencies: the Bureau of Labor Statistics, the Bureau of Economic Analysis and the Census Bureau…

  8. Cathy O’Neal: Mark Zuckerberg Is Totally Out of His Depth: “I might be the only person on Earth feeling sorry for the big boys of technology. Jack Dorsey from Twitter, Mark Zuckerberg from Facebook, all those Google nerds: They’re monumentally screwed, because they have no idea how to tame the monsters they have created…

  9. Kate Aronoff: What the ‘New York Times’ Climate Blockbuster Missed: “Nathaniel Rich’s article illustrates American failures, not global ones…

  10. Alexandra Erin: Fear, and Fear of Witches: “There’s fear, and then there’s fear of witches…

  11. Michael Tomasky: Hail to the Chief: “It’s worth stepping back here to review quickly the steps by which the Republican Party became this stewpot of sycophants, courtesans, and obscurantists…

  12. Paul Krugman: Supply Chains and Trade War: “There are three possible stories about how supply chains might increase the costs of trade war, and while two of them are right, I suspect that many economists are buying into the third, which isn’t…

  13. Mattheew Fay: The U.S. Military is a Tool, but the President Thinks it’s a Trophy: “The president routinely complains that the United States can’t afford to maintain its alliance commitments… suggests military exercises on the Korean Peninsula are so costly that they can be traded for vague promises of North Korean denuclearization…. The president will preside over a military parade in Washington, D.C., later this year that will cost nearly as much as the exercises. What explains this apparent contradiction?…

  14. Michael Tomasky: What Are Capitalists Thinking?: “Every once in a while in history, cause and effect smack us in the face…. The kind of capitalism that has been practiced in this country over the last few decades has made socialism look far more appealing…. If you’re 28 like Alexandria Ocasio-Cortez… what have you seen during your sentient life?…

  15. Why are Fox News’s victims so easily-grifted with respect to making them scared of liberal universities?: Jacob T. Levy: “I’ve made a lot of arguments in my life to people who didn’t want to hear them. I argued about sodomy laws and Bowers vs Hardwick with my grandmother when I was 15…

  16. Doug Irwin: Trump’s trade policy is an exercise in futility: “Yet for all the Sturm und Drang of his trade policy, the president is likely to end up being terribly disappointed by the results of his efforts…


#hoistedfromthearchives #noted 

Looking Backwards from This Week at 24, 16, 8, 4, 2, 1, 1/2, and 1/4 Years Ago (August 7-August 13, 2019)

stacks and stacks of books

MUST OF THE MUSTS: J. Bradford De Long and Lawrence H. Summers: Equipment Investment and Economic Growth: “We use disaggregated data from the United Nations International Comparison Project and the Penn World Table to examine the association between different components of investment and economic growth over 1960–85. We find that producers’ machinery and equipment has a very strong association with growth: in our cross section of nations each percent of GDP invested in equipment raises GDP growth rate by 1/3 of a percentage point per year. This is a much stronger association than can be found between any of the other components. We interpret this association as revealing that the marginal product of equipment is about 30 percent per year. The cross nation pattern of equipment prices, quantities, and growth is consistent with the belief that countries with rapid growth have favorable supply conditions for machinery and equipment. The pattern is not consistent with the belief that some third factor both pushes up the rate of growth and increases the demand for machinery and equipment…

 

Three Months Ago (May 7-13, 2019):

  • Where Frank Fukuyama Went Wrong; or, Zombie Fascism!!: Francis Fukuyama wrote an excellent article about how really-existing-socialism—public ownership of the means of production, hopefully leading someday to the free society of associated producers—had crashed and burned, and that the only big idea left about how to organize society was that of liberal market democracy. But Fukuyama made a key mistake: there had been a third option. That is the basically-Roman idea thateach of us is individually a stick, very weak, but if we can unite ourselves in a big bundle of sticks and if we can tie ourselves together in leather thongs, we then become a powerful force that, in the hands of our strong leaders, could bruise our enemies.
     
    Francis Fukuyama thought that this political movement had been dead and buried by 1945. It looks like he was wrong. Very wrong.
     
    If you look at Hungary—as we saw before—if you look at India today—where the government seems to be trying National Hinduism, casting the Muslims of India in the role traditionally ascribed to the Jews—if you look at an awful lot of place, the idea of taking people’s attention on the right believe they aren’t getting their fair share from the system and pointing it at internal or external enemies that you can despise or blame: this seems to be a remarkably powerful movement today.
     
    It appears wherever the rapid economic growth needed to guarantee that pretty much everything thinks “well, I’m living significantly better than my parents” fails. We’ve seen this before. We have come out of this before. But that doesn’t mean we should say this is no big deal. It’s always been a big deal. So far, at least, the United States and Britain, at least, have been very lucky whenever such political movements have arisen. But will we always be lucky? Are we being lucky now?…

  • Yes, Societal Well-Being Depends on a Very Strong Distributional Bias Along the Lines of “To Each According to Their Need”. Why Do You Ask?: At least half of our wealth comes from the ideas and investments of those who are now dead. And as we grow richer, that proportion grows as well. None of the living have any just exclusive claim on any portion of this cornucopian storehouse of technologies. The dead have no just claim on it either: respect for their legacy does not entail honoring their wishes as to its use, if that honoring upsets the principle of equal opportunity. Thus the most bedrock moral-philosophical principal is that more than half of our wealth is held in common for the human community to distribute as it decides is good…

  • PREVIEW: Economic Growth in Historical Perspective: U.C. Berkeley: Spring 2020: After hearing Ellora Derenoncourt rave about being a TA for Melissa Dell and her Econ 142: The History of Economic Growth, I have decided to go full parasite and stand up my own version of the course for the spring of 2020 here at U.C. Berkeley. Tell me what you think! Here are my notes so far: Course to be at: Teaching Economics: https://delong.typepad.com/teaching_economics/econ-135.html Econ 135: Economic Growth in Historical Perspective

  • Note to Self: : If, after the EMP data wipeout and the collapse, future raccoon historians of fascism dig up this statue, they are going to be very confused…

  • I disagree here: our soft power has been blown up by George W. Bush’s and Donald Trump’s liking to come off as cartoon villains on the international stage. A large stock of social capital built up by Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Ford, Carter, Reagan, GHWB, Clinton, and Obama has been trashed. Now we are just another normal nation. We need to figure out how to deal with this. Nye hopes that our attractive civil society will win through. But in the age of Trump our civil society is no longer attractive…

  • For quite a long time now a conservative mode of American politics has been to find a despised other who can be despised to draw attention away from issues of economic well-being. Yet there is a peculiar resistance to naming this. John Holbo deals here with one particular dodge: John Holbo: The Steelwool Scrub–A Fallacy: “It IS unfair to strawman a position by conflating it with its least thoughtful, most irrational, animus-afflicted exponents. Yet descriptively–sociologically–it’s absurd to steelman a socio-cultural order-or-group by conflating its practices and norms with unrepresentative, intellectual outliers…

From 2000: America’s Historical Experience with Low Inflation: The inflation of the 1970’s was a marked deviation from America’s typical peacetime historical pattern as a hard-money country. We should expect America to continue to be a hard-money–low inflation–country in the future, at least in peacetime. The low rate of future inflation that we thus forecast changes the balance of macroeconomic risks and opportunities. The risk of debt-deflation-mediated recessions is somewhat higher because a low trend rate of goods-and-services price index inflation somewhat increases the chances of deflation. But it does not raise such risks as much as one might think… J. Bradford DeLong (2000): America’s Historical Experience with Low Inflation, Journal of Money, Credit and Banking 32:4, Part 2: (November), pp. 979-993 http://www.jstor.org/stable/2601154…

 


Six Months Ago (February 7-13, 2019):

  • Jill Abramson, Formerly of the New York Times, Has Both a Depraved Heart and a Social Intelligence Deficit

  • Cosma Shalizi (2007): Those Voices Again…: Hoisted from the Archives: “Q: Do you ever get tired of beating that dead horse? A: It’s not dead yet; that horse will keep kicking until the last person who thinks there’s something to The Bell Curve is hanged in the entrails of the last Durkheimian. Q: I really did not need that image, thank you very much. So you’re perfectly happy to agree that there is genetic variation in the human population which affects the facility with which various cognitive skills are learned, and so mental ability?… Q: Could there be traits under selection in the present? A: I am pretty sure that genes contributing to resistance to malaria, cholera, schistosomiasis and malnutrition continue to be positively selected. Q: Any more interesting suspects? A: The prospects for influenza resistance look bright. Q: You know what I meant. A: You’re asking me to pull speculations out of the air…. People are going to think I’m advancing a genetic explanation for the Flynn Effect, when it’s much too strong for it to be due to any remotely plausible degree of selection…

  • Weekend Reading: Trust and the Benefit of the Doubt: “Dietz Vollrath sends us to a classic story from the late Douglas Adams: Douglas Adams: Trust and the Benefit of the Doubt: “This actually did happen to a real person, and the real person was me. I had gone to catch a train. This was April 1976, in Cambridge, U.K….

 


One Year Ago (August 7-13, 2018):

  • Ten Years Ago: A Federal Reserve Not Understanding the Situation at All: Occurrences in August 5, 2008, FOMC Meeting Transcript:
     
    322: Inflation
    029: Liquidity
    029: Spreads
    028: Unemployment
    011: Crisis
    001: Solvency
    000: Minsky
    000: Lehman
    000: Bear-Stearns…

  • An Outtake from “Slouching Towards Utopia: An Economic History of the Long Twentieth Century”: Mass Politics and “Populism”

  • Nikita Sergeyevitch Khrushchev: to John Fitzgerald Kennedy (1963): “We and you ought not now to pull on the ends of the rope in which you have tied the knot of war, because the more the two of us pull, the tighter that knot will be tied. And a moment may come when that knot will be tied so tight that even he who tied it will not have the strength to untie it, and then it will be necessary to cut that knot, and what that would mean is not for me to explain to you, because you yourself understand perfectly of what terrible forces our countries dispose…”

 


Two Years Ago (August 7-13, 2017):

  • Hoisted from 2010: What Do Econ 1 Students Need to Remember Most from the Course?: Economics deals with those things that we want but that are “scarce.”… Where things are not scarce (the air, for example), that is not economics. Where we do not care, that is not economics either…. At this point I need to pause and note two facts about the world. Most scarce things that we care about are “rival.”… Because commodities are “rival,” somebody’s use of a particular good imposes an opportunity cost on the rest of society. Because I am using this iPad, there is one fewer iPad for the rest of you to use. My use restricts your opportunities. A good economic system would make me take account in my decision-making of any reduction in your opportunities and resources that might be caused by my actions. This is where the market economy comes in…

 


Four Years Ago (August 7-13, 2015):

 


Eight Years Ago (August 7-13, 2011):

  • Noah Smith: Greg Mankiw Thinks Obama’s Stimulus Worked: A good catch from Noah Smith: “Greg Mankiw thinks Obama’s stimulus worked: Greg Mankiw’s August 8 appearance on Larry Kudlow. At 3:27, Mankiw says: ‘Fiscal policy is going to be a drag going forward as the stimulus wears out…’ So what Mankiw seems to be saying is that the Obama stimulus increased economic growth. Note that Mankiw has stated numerous times that he is a ‘stimulus skeptic’. In general, he has been coy… said that he doesn’t think Obama’s stimulus was very effective… linked uncritically to a paper that purported to show that the stimulus destroyed jobs overall”…

  • Treasury Real Interest Rates Now Negative Out to Ten Years…

  • How Should Obama Answer the Stock Market’s Wake-Up Call? We-Need-Different-Cossacks Department: Three years ago I would have said—I did say—that Ben Bernanke was among the best available candidates for Fed chair and that Tim Geithner was among the best available candidates for Assistant to the President for Economic Policy. Today I think they both suffer from the sunk-costs problem…. They need to… look at the situation with fresh eyes. I don’t think they have done that. i don’t think they can do that. And yet theirs seem to be the only strong policy voices from people with deep substance-matter expertise that Obama hears. If you were to ask me what thing—aside from the complete and immediate collapse of the Republican Party and the resignation of all of its legislators from both houses of the Congress: if the previous fifteen years had not taught me that Republican politicians have nothing useful to contribute to national governance the last three years would certainly have done so—would most give me confidence that America would surmount this current economic crisis, it would be personnel changes to put qualified people who saw the world as it was in the summer of 2009 into the key economic jobs…

  • At the Economist’s Economics by Invitation: We Need Different Cossacks Round II: “ow Romer, Summers, and Orszag are gone. Their successors—Goolsbee, Sperling, and Lew—are extraordinary capable civil servants, but are not nearly as loud policy voices and lack the substantive issue knowledge of their predecessors. The two who are left, Geithner and Bernanke, are the two who did not see the world as it was in mid-2009. And they do not seem to have recalibrated their beliefs about how the world works—they still think that they were right in mid-2009, or should have been right, or something. I fear that they still do not see the situation as it really is. And I do not see anyone in the American government serving as a counterbalance…

  • Policy Proposals to Boost Employment in Obama’s 2010 State of the Union Address: I must say I don’t know what quadrant Andrew Sabl is in these days…. The two new policy proposals of Obama’s 2010 State of the Union: the Simpson-Bowles Commission, and a federal spending freeze. Yes, there were 24 mentions of “jobs” and only 14 mentions of “deficit”, but the only (small beer) thing Obama asked for that might have actually reduced the unemployment rate was his plea for the Senate to pass the House employment bill…

  • Ta-Nehisi Coates Goes to Gettysburg: The Unmasterable Burden of the Past Department: Grant at Appomattox Courthouse: ‘My own feelings… were sad and depressed. I felt like anything rather than rejoicing at the downfall of a foe who had fought so long and valiantly, and had suffered so much for a cause, though that cause was, I believe, one of the worst for which a people ever fought, and one for which there was the least excuse…” I think that is the answer to the questions Ta-Nehisi Coates is asking at Gettysburg…. The crux of the issue, I think, is that even in a democracy—especially in a democracy perhaps, for democracies tend to be naive about power—people trust their leaders, and loyalty and trust are virtues along with courage and a willingness to be the sharp end of the spear when the needs of the many require it. The fact that the leaders were evil men and the culture in which the boys—and even the officers—were raised was an evil culture does not completely erase the fact that on June 3, 1863 five thousand young Virginian men risked and lost everything in the sincere belief that the future of Virginia required that they do deeds of violence that day…. As President von Weizsacker of Germany said: “We need and we have the strength to look truth straight in the eye–without embellishment and without distortion…. The greater honesty we show in commemorating this day, the freer we are to face the consequences with due responsibility…. The vast majority of today’s [German] population… cannot profess a guilt of their own for crimes that they did not commit…. But their forefathers have left them a grave legacy. All of us, whether guilty or not, whether old or young, must accept the past. We are all affected by its consequences and liable for it”…

 


Twelve Years Ago (August 7-August 13, 2007):

  • Slouching Towards Utopia: The Economic World of the Twentieth Century: Pre-WWI China: I have a problem. Any history of the world economy in the twentieth century needs a section on China at the start of the century to balance the section on China at the end. Yet I am not well-qualified to write such a section. And I don’t think the section I have is particularly good. Any suggestions?…

  • Tobin Harshaw of the New York Times: “I Am Not Authorized to Explain Why I Am Not Authorized…”: As you may recall, last Friday there was a lot of discussion about revisions to the GISS global warming series of estimated average temperatures in the United States—a revision that changed the hottest year to date from 1998 (which in the old data was 1/100 of a degree hotter than 1934) to 1934 (which in the new data is 2/100 of a degree hotter than 1998) http://delong.typepad.com/sdj/2007/08/why-oh-why-ca-1.html. One surprising thing was that the New York Times’s Opinionator weblog http://opinionator.blogs.nytimes.com/,.. went way overboard…. “Among global warming Cassandras, the fact that 1998 was the ‘hottest year on record’ has always been an article of faith…. James Hansen, the climate scientist who has long accused the Bush administration of trying to “silence” him…. [A] Y2K bug played havoc with some of the numbers…. Michael Ashe… explains…. “The changes are truly astounding. The warmest year on record is now 1934. 1998 (long trumpeted by the media as recordbreaking) moves to second place…. [T]he effect on the U.S. global warming propaganda machine could be huge…” This surprised me: “effect… huge,” “havoc,” the scare quotes around “silence,” “data meltdown,” et cetera seemed very out of place for a three-one-hundredths of a degree shift—either complete mendacity or total innumeracy, or both…

  • The Subprime Meltdown Hits Quant Hedge Funds: If you had asked me where the subprime meltdown was going to hit first, I would never have guessed “heavy-quant hedge funds.” Yet so it has…

  • Reporters Should Be Subject-Matter Experts and Honest Brokers: The pressure point is “most reporters aren’t subject-matter experts.” Why not? Replace non-subject-matter expert reporters with expert subject-matter reporters who have reputations as honest brokers. You need both: subject-matter expertise, and a willingness to be an honest broker interested in informing readers rather than a propagandist or a stenographer. The Washington Post should throw Nell Henderson out the window and buy its Federal Reserve coverage from the Wall Street Journal and Jackie Calmes. The New York Times should throw Michael Gordon out the window and buy its Iraq coverage from Steve Negus of the Financial Times and Nancy Youssef and Leila Fadel of McClatchy…

  • Today Is a Great Day in Finance! That is, it is a great intellectual day for those of us who are friends of and committed to the intellectual project of Shleifer and Vishny, for today one of their theories is made flesh, and stomps about Wall Street like Godzilla: Andrei Shleifer and Robert W. Vishny (1997), “The Limits of Arbitrage,” Journal of Finance, 52:1, pp. 35-55. “Abstract: Textbook arbitrage in financial markets requires no capital and entails no risk. In reality, almost all arbitrage requires capital, and is typically risky. Moreover, professional arbitrage is conducted by a relatively small number of highly specialized investors using other people’s capital. Such professional arbitrage has a number of interesting implications for security pricing, including the possibility that arbitrage becomes ineffective in extreme circumstances, when prices diverge far from fundamental values. The model also suggests where anomalies in financial markets are likely to appear, and why arbitrage fails to eliminate them…

  • David Rees: Shorter Michael Ignatieff: “‘It was right for me to support the Iraq war when I was an academic, because academics live in outer space on Planet Zinfandel, and play with ideas all day. But now, as a politician in a country that opposed the war, I’ll admit I screwed up, because politicians must deign to harness the wild mares of whimsy to the ox-cart of cold, calculated reality.’ There is more. It is, Ezra Klein says, the greatest essay ever published on anything. There is more. A lot more…

  • Assimilation: George Borja…. Whenever I read things like this, I cannot help but think that they are completely turned around. All over the world ministers of culture are frightened because their citizens who have not moved to the United States are “assimilating” to American culture and values—and they are. People who are in America assimilate even faster—albeit not as rapidly as we would, ideally, wish…

  • The Woosung-Shanghai Railway of 1876: D.C. Boulger, China, Chapter XXIII, The Reign of Kwangsu…. David Pong (1973), “Confucian Patriotism and the Destruction of the Woosung Railway,” Modern Asian Studies 7:4 http://links.jstor.org/sici?sici=0026-749X%281973%297%3A4%3C647%3ACPATDO%3E2.0.CO%3B2-W

 


Sixteen Years Ago (August 7-13, 2003):

  • Human Mental Augmentation: Archive Entry From Brad DeLong’s Webjournal: But, Henry, it’s too late. Our selves have already been infinitely extended. What has happened to the Third Chimpanzee over the past million years has already created gulfs between us and our chimpanzee and bonobo evolutionary siblings that dwarf any future Singularity. Think of trying to explain your own life to one of your African Plains Ape ancestors of the past—even those that already had upright posture, opposable thumbs, serious stone toolmaking, and language.
     
    And if serious toolmaking and language didn’t do it, agricu  lture did. And if agriculture didn’t do it, writing did. And if writing didn’t do it, large-scale social organization did. And if large-scale social organization didn’t do it, metallurgy did. And if metallurgy didn’t do it, large-scale environmental manipulation (i.e., building cities) did. And if LSEM didn’t do it, printing did. And if printing didn’t do it, steam-power did. And if steam-power didn’t do it, the second industrial revolution did. And if the SIR didn’t do it, modern information technologies did.
     
    One thing is clear along this journey: after each stage, very few people want to go back. Henry Farrell’s life would be impoverished were he to find himself switched with some eighth-century monk in a scriptorium, spending his days preparing vellum and ink and copying out Matthew, Mark, Luke, John, Paul, Augustine—and little else.
     
    So isn’t the way to bet that our descendants will marvel at how limited our capabilities were?…

  • The Invention of Tradition: Listening to a tape about the life of Stephen Foster, 1826-1864. A Pittsburgh boy, a ninth child, born, schooled, and lived in Pittsburgh pretty much his entire life. Yet this guy from Pittsburgh created an amazing amount of what we now think of as southern and western folk music: “The Old Folks at Home”, “My Old Kentucky Home”, “Old Black Joe”, “Massa’s in the Cold, Cold Ground”, “Oh, Susannah!”, “Camptown Races”, and others. What’s a guy from Pittsburgh doing writing songs about the Swanee River? About Kentucky plantation mansions? About mining camps? And–most interesting–his songs seem to have been very popular not just in the relatively urbanized east, but in the south and west as well. The people they were written about seem to have grabbed them up with both hands as (idealized) depictions of how things were. And the (relatively) urbanized and urbane easterners grabbed onto them too–as authentic windows into the raw, alien, but exciting and fascinating cultures of the Slave South and the Wild West…

  • On the Pacific Crest Trail: The marching song of the Pacific Crest Trail: “Everywhere we go/People want to know/Who we are/So we tell them:/We are the unacclimated/The feeble feeble unacclimated/Unacclimated to the high country/With too few red cells in our blood…

  • I’m Not as Smart as I Thought I Was: Ah. I thought—from GDP and aggregate hours data—that we would have a 4% per year productivity growth quarter in the spring of 2003. I was wrong: we had a 5.7% per year productivity growth quarter. It is amazing that nonfarm business hours worked can fall—and fall at a 2.2% annual rate—in a quarter in which nonfarm business output can rise at a rate of 3.4% per year. If only we had demand rising fast enough to employ more rather than fewer people, the performance of the American economy would be truly amazing…

  • Productivity Growth Trends: This business cycle has been different. There was no sustained decline in productivity growth during the recession–there was little if any labor hoarding, and thus little slack of employed-but-underutilized labor to fuel rapid productivity growth numbers as the recovery begins. But it is very hard to look at the figure and think that we are still in the long productivity-growth slowdown period that began in the mid-1970s…

  • Alan Murray Wonders Why We Are Ruled by These Liars: The Wall Street Journal’s Alan Murray bangs his head against the wall at the Bush Administration which has “willfully deceived the public and Congress about the costs of the Iraqi war and its aftermath… [and] continue[s] to do so…”

  • Only in California…: “With more than 100 different candidates on the ballot for the California governor recall election (thus making it conceivable that the winner will be somebody with a plurality of 20%—now that’s a mandate for the exercise of legitimate political authority you), my fair state of California has recaptured the proud title of Doofus State that Florida had snatched away with its impressive performance in the 2000 presidential election…

  • False Advertising: Archive Entry From Brad DeLong’s Webjournal: Ebbetts Pass is not a pass. It should be called “Ebbetts Saddle that is marginally lower than the highest Sierra Nevada peaks, but that should not be driven by the faint of heart and acrophobic, especially not in a poorly-made Ford Taurus with 130,000 miles on it and a twice-rebuilt transmission”…

  • The Tip of the Whip That Is the Business Cycle: Archive Entry From Brad DeLong’s Webjournal: The most cyclically-sensitive sectors of all—the tip of the whip that is the business cycle—makes the equipment needed to make the capital goods that firms purchase in order to produce durable goods. One firm in particular—Applied Materials—is the preeminent manufacturer of the equipment needed to make high-tech capital goods. And so today investing in Applied Materials is, as the Financial Times writes, a clean and highly leveraged bet on the strength of America’s current anemic business-cycle recovery—a bet only for those with “iron nerves”…

  • “Grant, Oh Gods…”: I’ve been reading Dan Simmons (2003), Ilium (New York: HarperCollins: 0380978938):”Hector stretched his arms towards his son, but the boy cried and grabbed for his nurse, scared at the fierce sight of his father’s armor, and especially at the nodding horse-hair plume on Hector’s helmet. Hector and Andromache laughed. And Hector took the gleaming helmet from his head and put it aside on the ground. Then he took his dear child, kissed him, and bounced him in his arms, all the while praying to Zeus and all the gods: ‘Grant, oh gods, that this boy, my son, with whom I am well pleased, may be like me—first in glory among the Trojans! Strong and brave like me, Hector, his father! And grant, oh gods, that Scamandrius, son of Hector, may one day rule all Ilium in power and glory. And grant that all men shall say, “He is a better man than his father!” This, oh gods, is my prayer, and I ask no other boon from thee”…

  • I Deeply Resent the Way This Administration…_: It was Teresa Nielsen Hayden who said: “I deeply resent the way this administration makes me feel like a nutbar conspiracy theorist.” Here Jeffrey Sachs succumbs to the belief that the real reason for the invasion of Iraq was to get enough military ground power in place to give the U.S. the capability to conquer and occupy Saudi Arabia in 72 hours…

  • Bush-League Implementation: Last February Daniel Davies asked if there was any reason to think that the Bush adventure in Iraq would not be a SNAFU…. Now comes Daniel Drezner to say that the Bush Administration has created and is unlikely to be able to fix the SNAFU that is the reconstruction of Iraq…

  • “Sustainable Growth”: IMHO, the Fed should still be worrying about the economy’s inability to show “sustainable growth”. The economy’s “sustainable growth rate” looks to be something north of 3.5% per year: it’s not clear to me whether or not the unemployment rate would fall if real GDP growth were a steady 3.5% per year. And it’s not clear to me that we are on track for growth faster than 3.5% per year over the next couple of years…

  • Google Calculator: Google calculates that the speed of light is 1.8026175 × 10^12 furlongs per fortnight… The scary thing is that (tonight at least) it is faster than launching a calculator from the dock…

  • A Worrisome Trend…: You may say that anybody who puts “hot stuff” or “tabloid” in the subject line of an email message deserves what he gets (even if he is my father)–or that it is Eudora’s fault for not having a “whitelist” of senders–and that spam-control technology will stay ahead of spamsters’ ingenuity. But I find this worrisome. I don’t need to add “check my spam mailbox for non-spam messages” to my list of daily tasks…

  • Yes! Telecom Price Wars!: To us economists, prices ought to be signals of social scarcity. We overbuilt fiber-optic networks, we have ample wireless bandwidth, and so telecom capacity is definitely not scarce. So it should fall through the floor—and it is…

  • The Information Age Means Fiercer Competition_: The Information age means increasing returns to scale—write-once, run-everywhere. But it also means that it is easier to get… information. Which means that all of the hassle and ignorance factors that produced local monopoly power are bypassed. Which means fiercer competition and better deals for consumers…

  • It Is 10 PM. Do You Know Where Your Laundry Is?: When things communicate—or at least, broadcast their identity and their location: “News: RFID chips sent to the dry cleaners: Chipmaker Texas Instruments on Monday announced a wireless identity chip for clothing which can survive the dry cleaning process…

  • What Is Wrong with Thomas Sowell?: Thomas Sowell rants about how migration data covering the 1995-2000 period show that the California state government is killing California’s economy: “The real voting: The latest census data show—for the first time—that more Californians have been moving to other states than people in other states have been moving to California. Between 1995 and 2000, California had a net loss of more than 600,000 people to other states. People are voting with their feet. California’s total population has not gone down, however. Immigrants have replaced Americans. Apparently California is still considered to be preferable to Mexico or Central America…. One reason is that California’s politicians are following a strategy which has worked well politically in New York City—milking the productive people in order to support the unproductive, whose votes count just as much and are easier to get. This may be killing the goose that lays the golden egg, but that is all right politically, so long as the goose doesn’t die before the next election…” But the 1995-2000 period Sowell references–the one during which Americans “voted with their feet” against California—saw employment grow by 14% in California (as opposed to 12% in the rest of the country). The 1995-2000 period saw real gross state product in California grow by 27% (as opposed to by 21% in the rest of the country). To call the California economy between 1995 and 2000 a failure doesn’t pass the laugh test…

  • Give Credit Where Credit Is Due: Greg Ransom raves against what he sees as a Federal Reserve devoted to “reducing the value of money”: “The Fed moves to continue its ongoing devaluation of the currency, voting to keep interest rates artificially low…. Behind all this is the Krugman/ “Keynes” theory of “deflation”…. The Fed—and the economics profession generally—is overrun by witch doctors and astrologists, not scientists or even competent dentists…” Leave to one side the fact this is not a Federal Reserve devoted to reducing the value of money: the inflation rate under Greenspan has been less than under any Fed Chair since the days of Herbert Hoover. Focus, instead, on the fact that it is definitely not the “Krugman/’Keynes’ theory of deflation.” The theory is Irving Fisher’s… Milton Friedman and Anna Schwartz’s… and Ben Bernanke and Mark Gertler’s (analyzing the effect of a falling price level on interest rate spreads). Bernanke and Gertler may well get Nobel Prize’s someday for their work on deflation and the “credit channel.” Paul Krugman won’t…. Why slight Bernanke and Gertler—and Fisher, and Anna J. Schwartz, and Milton Friedman? Is it because Ransom doesn’t want to explicitly call Ben Bernanke and Milton Friedman “witch doctors”? Is it because his core audience knows little economics and less about the history of economic thought, but breaks into hives at the mention of “Paul Krugman”? Whatever the reason, a bad move…

  • Signs of a Weak Labor Market: I think the NBER made a mistake in going for an “output” rather than an “employment” definition of the business cycle…

  • One Hundred Interesting Mathematical Calculations, Puzzles, and Amusements: Number 18: Sunscreen: Suppose that 1/100 of the genes controlling our ancestors’ skin color 1000 generations ago had been a gene for low melanin, and suppose —for those of us of northern European descent—today 99/100 of our genes are genes for low melanin. What does that tell us about the strength of selection pressure and the differential survival rates of low- and high-melanin genes in the icy boreal forests of northern Europe over the past 1000 generations?…

  • The Economist Is Unhappy at the U.S.-E.U. Trade “Deal”l: Better than nothing, but not much better than nothing, is what the Economist says. I find this infuriating. The AFL-CIO provides a large share of funding for the Democratic Party. The AFL-CIO was scarred for life when the Reagan deficits of the 1980s pushed up the value of the dollar and devastated many union-heavy manufacturing industries. The AFL-CIO now fears free trade greatly—and this makes making progress on free trade very, very difficult when a Democrat is president. Nevertheless, Bill Clinton worked hard and made a lot of progress toward a better world. By contrast, building momentum for freer trade in a Republican administration should be as easy as falling off a log. But the Bush Administration can’t even fall off a log reliably…

  • Laurence H. Meyer: “Ah. If I were a rich trader of fixed-income securities rather than a poor academic, this is a service I would buy: “Laurence H. Meyer’s Monetary Policy Insights”. Larry Meyer is very smart, very thoughtful, and very good at making what he has to say sound fascinating: I’ve never seen anyone fall asleep at an LHM seminar…

 


Twenty Years Ago (August 7-13, 1999):

 


Twenty-Four Years Ago (August 7-13, 1995):

  • J. Bradford De Long and Lawrence H. Summers: Equipment Investment and Economic Growth: “We use disaggregated data from the United Nations International Comparison Project and the Penn World Table to examine the association between different components of investment and economic growth over 1960–85. We find that producers’ machinery and equipment has a very strong association with growth: in our cross section of nations each percent of GDP invested in equipment raises GDP growth rate by 1/3 of a percentage point per year. This is a much stronger association than can be found between any of the other components. We interpret this association as revealing that the marginal product of equipment is about 30 percent per year. The cross nation pattern of equipment prices, quantities, and growth is consistent with the belief that countries with rapid growth have favorable supply conditions for machinery and equipment. The pattern is not consistent with the belief that some third factor both pushes up the rate of growth and increases the demand for machinery and equipment…

 


#highlighted #weblogs #hoistedfromthearchives

Talking points for [Squawk Box: Business, Politics, Investors and Traders: 7:45 AM EDT 2019-08-24

FRED Graph FRED St Louis Fed

Note to Self: Talking points for Squawk Box: Business, Politics, Investors and Traders, 7:45 AM EDT 2019-08-24:

  • Deficits matter. How they matter depends on:

    • Is unemployment high or low?
    • Are interest rates low or high?
    • Is the debt sold to finance the deficit a solid asset or a shaky one?
    • Are you worried because the debt service is large, the deficit is large, or the debt is large?
  • At the moment the unemployment rate is low, so there is no reason to run a deficit:

    • A competent government would be running a surplus, to increase the fiscal space available to run a deficit when one becomes desirable.
      • But we have not had an even half-competent government since January 21, 2017
      • I would argue Mitch McConnell, John Boehner, and Paul Ryan’s political strategies have kept us from having a more than half-competent one since January 21, 2011.
  • At the moment interest rates are very low, and the debt we sell is regarded by everyone as a very safe asset:

    • Thus running a deficit—even a very large deficit—is not an immediate problem.
    • Remember: economists look at quantities and prices:
      • We have an immediate problem when the quantity of the deficit to be financed is high and the price at which the bonds to finance it are sold is low,.
      • That is not us, now.
  • At the moment, debt service is low:

    • If we were a private borrower, standard financial planners and advisors would say that we were in quite good shape.
    • They would recommend that we carry a greater proportion of our debt long-term to lock in the extremely advantageous interest rates at which we can borrow.
    • But they would not advise us to strain muscles to reduce our debt load.
      • There are subtleties with respect to a national debt that make things more complicated than a private household’s accounts.
      • But the main message is: other problems are much more serious, and scarce energy should be spent dealing with more urgent problems.

#finance #fiscalpolicy #macro #notetoself #talkingpoints #2019-08-14 

America’s Superpower Panic: Project Syndicate

America s Superpower Panic by J Bradford DeLong Project Syndicate and America s Superpower Panic Project Syndicate

Project Syndicate: America’s Superpower Panic: History suggests that a global superpower in relative decline should aim for a soft landing, so that it still has a comfortable place in the world once its dominance fades. By contrast, US President Donald Trump’s incoherent, confrontational approach toward China could seriously damage America’s long-term interests.

BERKELEY–Global superpowers have always found it painful to acknowledge their relative decline and deal with fast-rising challengers. Today, the United States finds itself in this situation with regard to China. A century and a half ago, imperial Britain faced a similar competitive threat from America. And in the seventeenth century, the Dutch Republic was the superpower and England the challenger.

History suggests that the global superpower should aim for a soft landing, including by engaging with its likely successor, so that it still has a comfortable place in the world once its dominance fades. Sadly, US President Donald Trump is no historian. And his incoherent, confrontational approach to China could seriously damage America’s long-term interests.

Like Britain and the Dutch Republic before it, America is the world’s dominant military power, and its reach is global. It has some of the world’s most productive industries, and dominates global trade and finance.

But, also like its predecessors, America now faces a rising power–a confident, ambitious country that has a larger population, is hungry for wealth and global preeminence, and believes it has a manifest destiny to supplant the current hegemon. And, unless something goes badly wrong, the challenger’s continued rise is all but assured.

Inevitably, conflicts will arise. The up-and-coming superpower wants more access to markets and to intellectual property than the incumbent wishes to provide. And what the incumbent does not willingly give, its challenger will seek to take. Moreover, the rising superpower wants a degree of influence in international bodies commensurate to what its fundamental power will be a generation from now, and not to what it is today.

These are all legitimate disagreements, and the two powers need to manage them by advancing and defending their respective interests. But these tensions do not outweigh the two countries’ common interest in peace and prosperity.

What, then, should the incumbent hegemon do?

In the Anglo-Dutch case, a series of trade skirmishes and naval wars in the 1600s led to a remarkably large number of derogatory expressions entering the English language, such as Dutch book, Dutch concert, Dutch courage, Dutch leave, Dutch metal, Dutch nightingale, and Dutch reckoning. In the long run, though, Britain’s fundamental strengths proved decisive, and the country became a global power. Yet the Dutch created a world in which they were largely comfortable long after their predominance ended.

The Dutch shift from opposing Britain to engaging with it was a crucial factor in this transition. On October 24, 1688, a change in wind direction allowed the Dutch fleet to leave harbor in support of the aristocratic Whig faction in England, thereby ending the would-be absolutist Stuart dynasty. Thereafter, the two powers’ joint interests in limited government, mercantile prosperity, and anti-Catholicism formed the basis of a durable alliance in which the Dutch were the junior partner. Or, as a viral slogan of the 1700s more bluntly put it, there would be “no popery or wooden shoes!” – the latter being a contemporary symbol of French poverty. And with British backing, the Dutch remained independent, rather than falling involuntarily under French control.

More than a century later, imperial Britain eventually adopted a similar strategy of engagement and cooperation with America. This culminated, as Harold Macmillan unwisely (because too publicly) put it when he was seconded to General Eisenhower’s staff in North Africa during World War II, in Britain playing Greece to America’s Rome. As a result, the US became Britain’s staunchest geopolitical ally of the twentieth century.

Today, US policymakers could learn much by studying the actions of the Dutch Republic and Britain when they were global hyperpowers pursuing soft landings. In addition, they should read “The Sources of Soviet Conduct,” the 1947 article by US diplomat George F. Kennan that advocated a US policy of containment toward the Soviet Union.

Three of Kennan’s points stand out. First, he wrote, US policymakers should not panic, but recognize what the long game is and play it. Second, America should not try to contain the Soviet Union unilaterally, but rather assemble broad alliances to confront, resist, and sanction it. Third, America should become its best self, because as long as the struggle between the US and Soviet systems remained peaceful, liberty and prosperity would ultimately be decisive.

But since taking office in January 2017, Trump has steadfastly ignored such advice. Instead of forming alliances to contain China, Trump withdrew the US from the proposed Trans-Pacific Partnership trade deal. And he continues to make random, incoherent demands–such as immediately eliminating the bilateral US-China trade deficit.

Rather than carefully playing the long game with regard to China, Trump seems to be panicking. And, increasingly, China and the world know it.


#aspen #globalization #highlighted #orangehairedbaboons #projectsyndicate #strategy 

The Flight to Safety in Asset Markets Has Now Become a Thing in Itself…

Note to Self: The market has now delivered 100 basis points of easing in the ten-year Treasury window since the end of last October. On the 30-year bond, you would have made a 20% profit if you both i9t last October and sold it today, compared to a 3.5% profit on the S&P Composite over the same period. That is a major, major sentiment shift. That means that a number of people short debt with riskier operations than the S&P Composite are about to face margin calls and rollover difficulties. We will shortly see how solvent the market judges them.

No, it is not yet August 2007. But it is much closer to August 2007 than I expected to see for another generation:

Daily Treasury Yield Curve Rates

Daily Treasury Real Yield Curve Rates

30 Year Treasury Constant Maturity Rate DGS30 FRED St Louis Fed

FRED Graph FRED St Louis Fed

S P 500 SP500 FRED St Louis Fed


#forecasting #macro #notetoself #recessionwatch 

Fairly Recently: Must- and Should-Reads, and Writings… (August 11, 2019)

6a00e551f080038834022ad3b05124200d

  • Reflections 11 Years After the Crash: As long as people were confident that the 500 billion of bad mortgage debt would ultimately land on somebody who could absorb it, the only thing that would make a bad recession was if people anticipated a bad recession. And with no Lehman panic—if Bernanke, Paulson, and Geithner had not caused everybody to say quote what the fuck is going on” by allowing Lehman’s bankruptcy uncontrolled and then justifying their actions by claiming that they were forbidden by law to support a too-big-to-fail institution that was insolvent and not just illiquid… Without that, no reason to fear even as bad as the S&L crisis…

  • Weekly Forecasting Update: August 9, 2019: There was essentially no news about real GDP last week: The Federal Reserve Bank of New York nowcast continues to stand at 1.6% for 2019:Q3. We did see another fifteen basis points of market easing at the long end of the yield. Curve: the 10-Year TIPS yield is now 0.09%. And that, of course, makes equity stock market investments a deal. Patrick Chovanec is worth reading…

  • Hoisted from the Archives: A Now-Extended Non-Sokratic Dialogue on Website Design

  • DeLong Smackdown: Why I Was Wrong Over 2006-2010…: Let me say what things I was “expecting,” in the sense of anticipating that it was they were both likely enough and serious enough that public policymakers should be paying significant attention to guarding the risks that it would create…

  • Note to Self: We know that big data can find correlations. We thus fear people will then use those correlations to hack our brains for their profit or advantage—and for our loss…. On the other hand… Big Ad Data is not smart enough to figure out: “although this internet identity is associated with this credit card number, the person surfing the web right now is not the person who buys the bras”…

  • Note to Self: et me say that I am 100% behind Roxane Gay here. When Jonathan Weisman was covering economics and monetary policy, he was a “Paul Krugman and Donald Luskin disagree about the shape of the earth: who can tell who is right?” guy. Those of us who talked to him took the incompetence for granted—and more than that: a willful desire to not understand the issues because then he might be unable to properly suck up to the sources he wished to suck up to…

  • Note to Self: Why was Jonathan Weisman’s economic policy reporting for the Washington Post so execrable back in the mid-2000s? A person who was, as they say, very, very, very, very, very familiar with the matter: “Jonathan’s big problem is that he’s not that deep into the issues, and he has no backup. There’s nobody that he can go to in that building to tell him ‘this was how X was trying to mislead you’ or ‘this is Y’s history’ or ‘be very careful here: if you get this detail Z wrong, they’ll come down on you extremely hard'”…

  • Note to Self: For programming and Python Jupyter Notebook νBs, who are wondering what they are getting themselves into: Programming Dos and Don’ts: A Running List…

  • Looking Backward: From This Week at 24, 20, 16, 12, 8, 4, 2, 1, 1/2, and 1/4 Years Ago (July 31-August 6, 2019): MUST OF THE MUSTS: James M. Buchanan: The “Social” Efficiency of Education: You have to be able to hold in your mind two things at once in order to understand economist James M. Buchanan: (1) He was a total loon: a strong believer in the de Maistrean trinity of Patriarchy, Orthodoxy, Autocracy as necessary for society—essential Noble Lies; a man who in 1970 wanted to shut down America’s universities as teachers of evil, and regretted the failure of nerve that made that impossible; a man who saw Martin Luther King Jr. as a teacher of evil—whose response to the Civil Rights movement and its peaceful civil disobedience campaign was not Edmund Burke’s “to make us love our country, our country must be lovely”, but rather: how dare MLK claim that an African American should be “openly encouraged to use his own conscience”—rather than shutting up and accepting his subservient Jim Crow position in society! (2) A man who saw things that other economists did not and would not have without him…

  • A Year Ago on Equitable Growth: Fifteen Worthy Reads On and Off Equitable Growth for August 9, 2018:

  • Comment of the Day: Graydon: “You get what you reward, and the present mechanism of reward is advertising, fundamentally aligned with increasing people’s insecurity so as to increase their likelihood of making a purchase to address that insecurity…

  • Comment of the Day: Cosma Shalizi: “:I have used Google as pretty much my only search engine since it became available…. Google should thus have a very complete idea of what I’m interested in…. I can, with charity, understand ‘homemaking and interior decor’ (because I’d been researching new window blinds), and ‘pet food and supplies’ (though my cat had died more than a year before). Everything else was just flat wrong, and often mystifyingly so…

  • Comment of the Day: Doctor Jay: “I’m very much not getting what I want out of social media. I very much AM getting what I want out of internet search…

  • For the Weekend: J.R.R. Tolkien (1925): Light as Leaf on Linden Tree:

  • Liveblogging: The Anglo-Saxon Chronicle: Cynegils: “A.D. 635. This year King Cynegils was baptized by Bishop Birinus at Dorchester; and Oswald, king of the Northumbrians, was his sponsor. A.D. 636. This year King Cwichelm was baptized at Dorchester, and died the same year. Bishop Felix also preached to the East-Angles the belief of Christ…

  • Liveblogging: The Anglo-Saxon Chronicle: Erkenbert: “”A.D. 639. This year Birinus baptized King Cuthred at Dorchester, and received him as his son…


  1. Brian Chappatta: Trump Risks Losing the Fed as a Recession Scapegoat: “The Federal Reserve cut interest rates to account for a ‘simmering’ trade war. Then the president turned up the heat and put a downturn in play himself. The market signal for a recession is blinking fast and Trump has only himself to blame. The markets have spoken. If they are to be believed, the potential for a U.S. recession has never been greater in the post-crisis era than it is right now. That’s a problem for President Donald Trump because after the events of the past few days, it should be clear that he has effectively forfeited the ability to use the Federal Reserve as a scapegoat for any economic slowdown, an angle he was clearly prepared to play…

  2. Jeremy R. Hammond: The Lies that Led to the Iraq War and the Myth of ‘Intelligence Failure’

  3. Jonathan Stein and Tim Dickinson: Lie by Lie: A Timeline of How We Got Into Iraq: “Mushroom clouds, duct tape, Judy Miller, Curveball. Recalling how Americans were sold a bogus case for invasion…

  4. Hubert Horan: Uber’s Path of Destruction: “Uber has disrupted… the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency…. Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else…

  5. Yereth Rosen: Record-Low Sea Ice in July Sets Up Conditions For an Ultra-Low Minimum Extent This Fall: “Sea ice extent in September of 2019 is likely to be among the five lowest minimums recorded…

  6. Patrick Chovanec: U.S. Market and Economic Review—August 2019

  7. Kieran Healy: Frank Oz Muppets and the Big Five Personality Traits


  1. After hanging out with Madeleine Albright last week, I’m going to start calling all of this what it is: neo-fascism: Annalee Newitz (2008): Larry Niven Tells DHS to Spread Organ Harvesting Rumors: “There’s a small group of science fiction authors who call themselves SIGMA and offer the U.S. government advice on futuristic scenarios…. One of them—Larry “Ringworld” Niven — offered the Department of Homeland Security some of the creepiest advice we’ve ever heard about how to handle problems with overcrowding in hospitals… a good way to help hospitals stem financial losses is to spread rumors in Spanish within the Latino community that emergency rooms are killing patients in order to harvest their organs for transplants. ‘The problem [of hospitals going broke] is hugely exaggerated by illegal aliens who aren’t going to pay for anything anyway’, Niven said. ‘Do you know how politically incorrect you are?’ Pournelle asked. ‘I know it may not be possible to use this solution, but it does work’, Niven replied…. Other authors in SIGMA include Greg Bear (Darwin’s Radio, Eon), Sage Walker (Wild Cards), and Eric Kotani (Between the Stars)…

  2. Future generations are going to have a very difficult time understanding the early twenty-first century Republican Party in America and its relationship to gun and ammunition manufacturers: Frank Wilkinson: El Paso Shooter’s Bullets and Gun Culture: “What the El Paso shooter’s hyper-deadly ammunition tells us about gun culture. The hyper-lethality of the bullets is the point…. The ‘manifesto’ purportedly posted by the shooter accused of last weekend’s mass murder in El Paso, Texas… included a section called ‘Gear’…. Along with his AK-47-style semi-automatic rifle, he cites an 8m3 bullet, which appears to have something of a cult following owing to its capacity to expand and fragment inside bodies, causing ‘catastrophic wounds’…. It’s a sick soliloquy. But you can find others much like it. An anonymous review at SGammo.com states that the customer’s Russian-made 8m3 ‘works in all of my ak’s and is devastating in soft tissue’. Bullet talk is as revealing a window on American gun culture as gun talk–maybe more so. Consider this 2011 ammo review at Shooting Illustrated, the ‘official journal’ of the National Rifle Association…. Americans buy guns designed and marketed as hyper-lethal. They fill their magazines with bullets specifically manufactured to rip human bodies to shreds and make human lives unsavable. In 1993, Senator Daniel Patrick Moynihan of New York proposed a huge tax increase on the most vicious brands of ammunition, pointing out that, unlike guns, ammunition doesn’t last forever. ‘Guns don’t kill people’, Moynihan said, ‘bullets do’…

  3. Normally, when there is a small chance that a form of behavior assisted by particular commodities will produce very destructive results, we impose strict liability, and let those who promote that behavior and sell those commodities sort out the tradeoffs—or we heavily regulate for safety. Firearms is the only car in which we do neither: Paul Campos: Where Do Lone Wolf Mentally Ill Mass Murders Get Their Ideas About a “Hispanic Invasion”?: “From their Republican President Donald Trump: ‘When Mexico sends its people, they’re not sending their best. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.’… From their Republican U.S senator John Cornyn: ‘Texas gained almost nine Hispanic residents for every additional white resident last year.’… From Fox News’s Laura Ingraham: ‘As the so-called US-bound “caravan” traveling through Mexico continues to swell, some questions arise that the media will not ask. Who is funding these efforts? How has it grown so quickly and what did the Democrats have to offer besides a bunch of cliches and bromides, and of course grandstanding? If you have been watching other networks, you have been treated to sympathetic, overwrought coverage of this invading horde’…

  4. Nir Kaissar: Don’t Count Out Value Investing Despite Growth’s Spurt: “A decade or more of lagging doesn’t mean the landscape has changed permanently…. A third theory—and the most generous to value—is that the measure of value is broken… While it’s true that P/B ratio has been the worst-performing measure of value over the last 12 years, it’s premature to call it obsolete. No one measure has performed consistently better than others in decades past, so it’s just as likely that P/B ratio’s recent struggles are purely coincidental…. Also, P/B ratio has a long history of strong performance relative to growth stocks following bouts of weak performance, and vice versa, which strongly suggests that its recent underperformance will prove to be cyclical rather than permanent…. Of course, investors can sidestep the value versus growth debate by simply buying the market…

  5. David Rees: Cormac Ignatieff’s “The Road”: “Hello everyone! Personal message to all the New Yorkers out there: Did you read Michael Ignatieff’s essay in the the NY Times Magazine? If so, contact me ASAP to let me know you’re OK. I put your flyer up at Grand Central Station, but have heard no response. Myself, I’m just making my way out of the debilitating Level-Five Mind Fog that came from reading the thing…. Ignatieff’s 2005 NY Times Magazine essay justifying the Iraq war… said the reason the American public wanted to invade Iraq was to spread ‘The Ultimate Task of Thomas Jefferson’s Dream’. (I am not making a joke. This is for real.) And, he implied, anyone who opposed the invasion of Iraq did so because they hated Thomas Jefferson— and they didn’t believe in the Ultimate Tasks of Dreams!… I was excited when I first saw this new essay: At last, Ignatieff was going to come clean about his super-duper-double-dipper errors. I expected a no-holds barred, personal excoriation. In fact, I assumed the first, last, and only sentence of the essay would be: ‘Please, for the love of God, don’t ever listen to me again’. HOWEVER… The first nine-tenths of Ignatieff’s essay… is a collection of vague aphorisms and bong-poster koans. It hums with the comforting murmur of lobotomy…. Below, a smorgasbord of Ignatieff’s musings, with commentary: ‘An intellectual’s responsibility for his ideas is to follow their consequences wherever they may lead. A politician’s responsibility is to master those consequences and prevent them from doing harm…’ Right off the bat, he’s saying: ‘It was right for me to support the Iraq war when I was an academic, because academics live in outer space on Planet Zinfandel, and play with ideas all day. But now, as a politician in a country that opposed the war, I’ll admit I screwed up, because politicians must deign to harness the wild mares of whimsy to the ox-cart of cold, calculated reality’. So, although his judgments were objectively wrong, they were contextually appropriate. Sweet! You’ve been totally 0wn3d by Michael Ignatieff! And so have all those dead Iraqis…

  6. Ben Thompson: A Framework for Moderation: “Section 230 doesn’t shield platforms from the responsibility to moderate; it in fact makes moderation possible in the first place. Nor does Section 230 require neutrality: the entire reason it exists was because true neutrality — that is, zero moderation beyond what is illegal — was undesirable by Congress. Keep in mind that Congress is extremely limited in what it can make illegal because of the First Amendment…. This is how we have arrived at the uneasy space that Cloudflare and others occupy: it is the will of the democratically elected Congress that companies moderate content above-and-beyond what is illegal, but Congress can not tell them exactly what content should be moderated…

  7. Clair Jones: Former Fed chairs gang up on Trump : “Every living former US Federal Reserve chair has ganged up on US President Donald Trump in an op-ed with the Wall Street Journal…. ‘When the current chair’s four-year term ends, the president will have the opportunity to reappoint him or choose someone new. That nomination will have to be ratified by the Senate. We hope that when that decision is made, the choice will be based on the prospective nominee’s competence and integrity, not on political allegiance or activism. It is critical to preserve the Federal Reserve’s ability to make decisions based on the best interests of the nation, not the interests of a small group of politicians….’ The Journal article is diplomatic, eloquent and reflective. Everything that Trump isn’t, then. The trouble is, in an era of short attention spans and pick-A-side politics where the Fed chair finds himself regularly called out on Twitter, relying on things like evidence, or a coherent argument, might not cut it…. Earlier this year, when addressing Trump’s threat to replace Powell, former Fed vice-chair Stan Fischer put it bluntly. If the US President used his re-election in 2020 to choose a Fed chair with views close to his own, there was a chance of the US becoming ‘a Third World country’. Stark and not exactly politically correct. If they are to retain their independence, though, the world’s central bankers might need a bit more of Fischer’s zing…

  8. Moral fault attaches to all those who in any way support or excuse the New York Times: Scott Lemieux: Today is the Day Donald Trump Most Assuredly Became President: “Nate Silver: ‘Not sure “TRUMP URGES UNITY VS. RACISM” is how I would have framed the story.’ In fairness, you can’t deny that Trump has his finger on the pulse of the Rust Belt in a way no coastal liberal could ever understand: Reuters: ‘”May God bless the memories of those who perished in Toledo”, Trump said, mistakenly saying “Toledo” not Dayton, Ohio, where 10 people, including the gunman, died over the weekend’…

  9. Market forces are voting, strongly, for green energy: Alwyn Scott: General Electric to Scrap California Power Plant 20 Years Early: “General Electric Co said on Friday it plans to demolish a large power plant it owns in California this year after only one-third of its useful life because the plant is no longer economically viable in a state where wind and solar supply a growing share of inexpensive electricity. The 750-megawatt natural-gas-fired plant, known as the Inland Empire Energy Center, uses two of GE’s H-Class turbines, developed only in the last decade, before the company’s successor gas turbine, the flagship HA model, which uses different technology. The closure illustrates stiff competition in the deregulated energy market as cheap wind and solar supply more electricity, squeezing out fossil fuels…

  10. Gauti Eggertsson, Jacob A. Robbins, and Ella Getz Wold: Kaldor and Piketty’s facts: The rise of monopoly power in the United States: “The macroeconomic data of the last thirty years has overturned at least two of Kaldor’s famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin’s Q, and a divergence between the marginal and the average return on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy, i.e., the emergence of a non-zero-rent economy, along with forces that have led to a persistent long term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new stylized macroeconomic facts…

  11. Geoffrey Skelley: Why So Many House Republicans Are Retiring, And Why More Could Be On The Way: “Four Republicans who have criticized Trump or… opposed him…. Texas Rep. Will Hurd…. Indiana Rep. Susan Brooks…. Michigan Rep. Paul Mitchell didn’t vote to condemn the president over his tweets, [but] he was openly critical of them…. Alabama Rep. Martha Roby hasn’t been critical of Trump recently, and has a very pro-Trump voting record]27] overall, she did say she wouldn’t vote for him in 2016 after the release of an Access Hollywood video…. She faced opposition from a write-in candidate in 2016 and had to survive a primary runoff in 2018…. Tough reelection bids… Hurd…. Georgia Rep. Rob Woodall… only held onto his seat after a recount]35]…. Reps. Kenny Marchant and Pete Olson… won reelection in 2018 by fewer than 5 points…. Republican conference rules… do not allow members to lead committees for more than three consecutive terms, unless they get a special waiver (which is rare)…. Texas Rep. Mike Conaway and Utah Rep. Rob Bishop, as each was in his third term…. These early retirements don’t necessarily signal a wave of future exits. But… don’t be shocked if more Republicans decide to exit stage right…

  12. Maciej Ceglowski: Our Comrade The Electron: “I want to close with my favorite Termen anecdote, from the end of his life. Termen spent years trying to join the Communist party, and they kept making excuses to turn him away. When he was ninety years old, he applied again, but they told him that to join he had to take a five-year advanced course in Marxism-Leninism. So he did it. He went to night school and did it. In 1991, literally weeks before the fall of the Soviet Union, Termen got his party badge. The 95-year-old Bolshevik was briefly the youngest Communist in the country. Naturally people asked him, ‘Lev Sergeyevich, why on Earth would you join the Communist Party now, when everyone else is leaving?’ He gave them the most badass answer imaginable: ‘I promised Lenin’…

  13. The China shock was not the only shock American manufacturing has experienced. yet New England politics did not turn nativist in the 1960s. What was the difference? No Fox News?: John F. Kennedy: New England Industry and the South: “The southward migration of industry from New England has too frequently taken place for causes other than normal competition and natural advantages…

  14. Overly cynical, IMHO: Modernization theory is correct in that the “advanced” shows the “backward” more about the “backward”‘s own future than the “backward”‘s own past and present show. Picking the most attractive “advanced” society and trying to replicate what it does well is always a smart development strategy, if you can go about it smartly—in an Alexander Hamiltonian vein, say: Nils Gilman: Modernization Theory Never Dies: “Modernization theory was among the most influential historical and policy paradigms to emerge in the United States during the 1950s, but fell into steep academic disrepute from the 1970s forward. Despite this loss of intellectual credibility, however, it has for fifty years continued to exercise a major influence on the developmental imaginary both in the United States and in many other countries. This article examines how modernization theory’s leading progenitor, Walt Whitman Rostow, developed his narrative of modernization to provide a metahistorical theory of development and asserts that the enduring appeal of modernization theory, despite its intellectual flaws, rests on the optimistic historical narrative it proposes and the flattering role it provides in that narrative for policy and intellectual elites…

  15. Wikipedia: Talent (Measurement): “The talent as a unit of weight was introduced in Mesopotamia at the end of the 4th millennium BC, and was normalized at the end of the 3rd millennium during the Akkadian-Sumer phase…

  16. Gary Forsythe: A Critical History of Early Rome: “Historians have traditionally labeled the period c. 1100–800 B.C. the Greek dark age, characterized by village societies headed by local chieftains, from which the city-state eventually arose. The unsettled conditions of the late second millennium B.C. might have extended as far west as eastern Sicily. Coastal sites exposed to sea raids were abandoned, and the inhabitants occupied defensible positions of the interior, such as Pantalica near Syracuse (Holloway 1981, 107–14). It is also noteworthy that at the close of the Bronze Age the major site in the Lipari Islands met with violent destruction and was reoccupied by people from the Apennine Culture of Italy…

  17. Back, eight short years ago, when Conor Friedersdorf embraced the racism as part of what he saw as an attractive package deal: Conor Friedersdorf (2011): Grappling With Ron Paul’s Racist Newsletters: “Were it 1964, I’d never vote for Paul…. But it is not 1964. Other injustices better define our times…. I wouldn’t begrudge someone who… decided… the racist newsletters are reason enough to refrain from supporting Paul. In some ways, it would be easiest for me to reach that conclusion…. Among the candidates who could win, Paul is… least likely to deprive innocent foreigners of their God given rights to life, liberty and the pursuit of happiness… most committed to civil liberties and drug legalization at home…. Bygone complicity in racist newsletters doesn’t… tell us whose policies, which candidate, would do the most to square American government with the highest ideals of our polity. Support for Paul is grounded for many in the judgment that he is that candidate…. I remain sympathetic to that argument…

  18. This was what Conor Friedersdorf back in 2012 was endorsing as part of an attractive package deal: Ron Paul (1992): Fundraising Letter: “I have unmasked the plot for world government, world money, and world central banking… high officials who are wholly owned subsidiaries of the Trilateral Commission and the Council on Foreign Relations…. I’ve been told not to talk, but these stooges don’t scare me. Threats or no threats, I’ve laid bare the coming race war in big cities. The federal-homosexual cover-up on AIDS…. The Israeli lobby, which plays Congress like a cheap harmonica…. The Soviet-style ‘smartcard’ the Justice Department has in mind for you…. Welfare riots in the big cities. Massive unemployment. The destruction of wealth. The erosion of personal liberties. Vicious economic controls. The exaltation of envy. The suppression of privacy. Authoritarian clamp-downs. Bank and S&L closings on a massive scale. A world dollar crisis as the greenback (or ‘pinkback’) is rejected for almost any non-paper alternative…

  19. Jean-Claude Juncker: “If it comes to a hard Brexit, that is in no one’s interest, but the British would be the big losers. They are acting as though that were not the case but it is. We are fully prepared even though some in Britain say we are not well set up for a ‘no deal’. But I am not taking part in these little summer games…. We have made clear that we are not prepared to hold new negotiations on the withdrawal agreement but only to make certain clarifications in the framework of the political declarations that regulate future relations between the United Kingdom and European Union. We are well prepared (for no deal) and I hope the British are too…

  20. Izabella Kaminska: Uber Becomes Modern Art: “Back in September 2016, we cited a BCA report which questioned Uber’s 62.5bn valuation, arguing its model was neither innovative or viable. Unfortunately, the report didn’t really register with the great and the good who have money to burn. Ahead of Uber’s IPO… as much as 120bn was being thrown about by some enthusiastic bankers. Fast forward to August 8, and Uber has truly beaten even the most extravagant of money-burning expectations. Here’s the Q2 results table, possibly in need of framing…. The thing that really hit market sentiment was the slowdown in revenue growth at 14 per cent to $3.2bn. Analysts had been expecting a 20 per cent rate which would have taken the top line to $3.4bn. This is important because Uber’s investment case is based on the thesis that the continuous net losses don’t matter because it’s still a growth company, and its pathway to profitability is through market domination and, of course, revenue growth…

  21. I confess I do not understand what is to be done here. These internet platforms are not utilities—the technology is not stable and investments are not large enough—so rate regulation would seem inappropriate. The economies of scale on the production side and the economies of scope on the consumption side are very large, and so it would seem inappropriate to sacrifice them to generate competition at the core services of each platform. Consumer surplus appears to be very large, so reducing the profits to successful innovators seems a very bad idea. And there is the question of whether these firms are giving their customers what they need instead of what they think they want—but do recall that in early generations one socialist critique of the market was that the market economy was making people unfree by failing to force them to wear identical blue overalls, drive identical utilitarian black cards, and listen to properly uplifting music: Ben Thompson: Tech and Antitrust: “That is not to say that tech deserves no regulation: question of privacy, for example, are something else entirely. Nor, for that matter, is antitrust irrelevant in the United States generally: concentration has increased dramatically throughout the economy. What is driving that concentration matters, though: at the end of the day tech companies are powerful because consumers like them, not because they are the only option. Consumer welfare still matters, both in a court of law and in the court of public opinion…

  22. Jane Waldfogel and Emma Liebman: Paid Family Care Leave: “The unmet need for leave to care for a family member with a serious illness is actually more widespread and more frequent than it is for the other types of family leave. This is why its relative neglect in research and its uneven treatment by policymakers is all the more striking. For these reasons, this paper focuses on reviewing what we know and do not know about family care leave. In particular, this paper contributes to an understanding of the need for paid leave to care for a seriously ill family member and the current state of policy and research. In doing so, we draw on the best available research on family care leave where available, but because such research is often lacking, we also draw on evidence about family and medical leave more generally when necessary…

  23. There are many obstacles to the successful reintegration of ex-convicts. This—access to credit resources—now looks like a surprisingly important one: Carlos Fernando Avenancio-León: Without Access to Credit, Ex-Cons May Return to Lives of Crime: “Within the former inmate population, those experiencing sharper drops in credit availability are more likely to engage in future criminal activity: For each thousand dollars of available credit card limit lost, recidivism increases by 1.4 percentage points. Accordingly, a history of incarceration and lack of access to credit creates credit-driven crime cycles for this population.  Yet, after accounting for credit history and income, former inmates are less likely to default on loans than individuals who have never been incarcerated. Because former inmates present lower credit risks, lenders extend former inmates slightly more loans, albeit not nearly enough to overcome a lending contraction driven by low credit scores…

  24. Hannah Critchlow: The Science of Fate: Why Your Future is More Predictable Than You Think: “Once you have built up a perception of the world, you will ignore any information to the contrary. Your brain is already taking up about 20% of your energy, so changing the way that you think is going to be quite cognitively costly. And it might be quite socially costly too…

  25. I am not sure whether what is needed is for economics to “go digital” as for economics to finally recognize what John Maynard Keynes called “the end of laissez-faire”. But since he wrote about the end of laissez-faire 94 years ago, I am not holding my breath for a better economics: Diane Coyle: Why Economics Must Go Digital: “Drug discovery is an information industry, and information is a non-rival public good which the private sector, not surprisingly, is under-supplying…. Yet the idea of nationalizing part of the pharmaceutical industry is outlandish from the perspective of the prevailing economic-policy paradigm…. Should data collection by digital firms be further regulated?…. The standard economic framework of individual choices made independently of one another, with no externalities, and monetary exchange for the transfer of private property, offers no help…

  26. Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome: “Tarentine ambitions and strategies… were unrealistic: their resources, large though they were for a city-state, were inadequate for dominion over southern Italy… failure to create a stable hegemonic structure. Tarentum was not powerful enough to impose a hierarchical alliance system upon the Italiotes in the manner of Athens in fifth-century Greece, yet it also failed to create a cooperative and integrative league, such as the Achaeans and Aetolians did in Hellenistic Greece. Nothing in that direction was really attempted…. Thus Tarentum differed from Rome in organizational vision and ability—but it was as militaristic and diplomatically aggressive as Rome…. The citizen army remained strong; the government adapted to the increasing pressure from the Italic highlanders with a reasonable policy of hiring mercenaries… and bringing in famous generals… [and] the last half of the fourth century witnessed the erection of the great statues of Nike and Zeus the Thunderer in the city center. The wide claims of Tarentum show that Rome was not alone in Italy in making such claims—just alone in the capacity to enforce them…

  27. Our Fearless Leader at Equitable Growth on the very sad, very depressing story of Arthur Laffer. “Charlatans and cranks” was what George W. Bush’s chief economist Greg Mankiw called him and his ilk. And Laffer’s early promoter Irving Kristol, later half-apologized for his “rather cavalier attitude” toward whether Laffer actually knew what he was talking aboug: “The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority-so political effectiveness was the priority, not the accounting deficiencies of government”: Heather Boushey: “A few thoughts on Arthur Laffer’s legacy:: “Laffer promoted a set of ideas to policymakers that promised to deliver a more fulsome American Dream, even though they were not grounded in empirical evidence. Time and again, we’ve seen that Laffer’s hypothesis that tax cuts will lead to an amount of growth that would make up for lost revenue and improve economic well-being broadly is false…. Research undermines the contention since the 1970s that lower rates stimulate the economy. What they seem to do instead is increase inequality. Millions of families have felt the effects of stalled incomes and cutbacks in much-needed government services, including education…. Former Kansas Gov. Sam Brownback, a proponent of Laffer’s ideas, admitted that putting his supply-side tax cut plan in place would be ‘a real live experiment’, one that failed so spectacularly his Republican legislature overrode his veto…

  28. One very peculiar thing about America is majorities that believe that government doesn’t have our back and indeed, shouldn’t have our back. This is a very puzzling attitude to see in a democracy: Gillian Tett: Why Japan Isn’t Afraid of Robots: “The social safety net…. 63 per cent of people in Japan think that it is up to the government… to help the population adapt to automation…. In the US, however, only about 30 per cent of the public expect the government to help…. A recipe for anxiety: some of America’s current problems can be traced to the sense of abandonment felt by many workers in deindustrialised regions…

  29. Geoffrey Skelley: Why So Many House Republicans Are Retiring, And Why More Could Be On The Way: “Four Republicans who have criticized Trump or… opposed him…. Texas Rep. Will Hurd…. Indiana Rep. Susan Brooks…. Michigan Rep. Paul Mitchell didn’t vote to condemn the president over his tweets, [but] he was openly critical of them…. Alabama Rep. Martha Roby hasn’t been critical of Trump recently, and has a very pro-Trump voting record overall, she did say she wouldn’t vote for him in 2016 after the release of an Access Hollywood video…. She faced [opposition from a write-in candidate][30] in 2016 and had to survive a primary runoff in 2018…. Tough reelection bids… Hurd…. Georgia Rep. Rob Woodall… only held onto his seat after a recount…. Reps. Kenny Marchant and Pete Olson… won reelection in 2018 by fewer than 5 points…. Republican conference rules… do not allow members to lead committees for more than three consecutive terms, unless they get a special waiver (which is rare)…. Texas Rep. Mike Conaway and Utah Rep. Rob Bishop, as each was in his third term…. These early retirements don’t necessarily signal a wave of future exits. But… don’t be shocked if more Republicans decide to exit stage right…

  30. I agree with Larry Glickman here: Talking your book is never good, Tyler. And monopsony is not freedom—not even if the monopsonist works for you: Lawrence Glickman: “I have questions about this piece by @tylercowen: https://t.co/UllO6J28my: Why must very wealthy universities ‘choose between boosting their academic quality through better training, or paying them higher stipends and teaching wages to ease their immediate financial concerns’? Why is it an inherently zero sum situation? Why can’t they do both? You write, ‘I would merely note that many of my graduate students come from relatively well-to-do backgrounds and face favorable prospects after they graduate’. First, anecdotes about your grad students is not the best basis for policy making. Second, presumably you do not want to live in a world in which grad school is only feasible for the ‘well-to-do’. Third, your students may face ‘favorable’ job prospects, but there is a huge jobs crisis in the humanities that you may have read about. Grad students may not be ’employees in the traditional sense’, but the category of “employees in in the traditional sense” is shrinking. There are many more Whole Foods employees than coal miners. Unions work just as well for the former as the latter…

  31. Olivier Blanchard and Lawrence H. Summers: Evolution or Revolution: An Afterword: “Since… we wrote… neutral… have likely declined even as the crisis has receded. The notion that low rates largely reflected the after-effects of the financial crisis and would slowly fade away has simply proven wrong…. Fiscal policy has continued to be expansionary in Japan and has turned strongly expansionary in the US and mildly expansionary in Europe…. Inflation has barely reached the Fed’s inflation target…. In the euro area and in Japan, inflation remains below target…. Output is still below potential, at least in the euro area and in Japan…. These facts lead to the inevitable conclusion that fiscal policy will have to play a much bigger role in the future than it has in the past…. For a long time, economists looking at Japan pointed to mistakes in policy and excessive reliance on deficits; it is now clear that the Japanese macroeconomic response was, on net, the right one…. We noted… that both the Depression and the Great Inflation of the 1970s led to dramatic changes in macroeconomic thinking–much more dramatic than have yet occurred in response to the events of the last decade. We think it is increasingly likely that this gap will close in the next few years…

  32. Pascal Michaillat and Emmanuel Saez: How to design a stimulus package | VOX, CEPR Policy Portal: “the size of the stimulus does not follow the bang-for-the-buck logic…. Stimulus spending should be similarly small when multipliers are small and large. The stimulus should only be large for medium multipliers. Relatedly, the threshold value of one for the multiplier plays no role at all…. A well-designed stimulus package should also depend on the usefulness of public expenditure…. When the elasticity of substitution is higher, extra public goods are more valuable, so stimulus spending is more desirable…. We find that the output multiplier is not a robust statistic to use in stimulus discussion. Instead, we should use the ‘unemployment multiplier’…

  33. Kara Swisher: Can anyone tame the next internet?: “which jobs will be impacted? It’s not just factory workers, burger flippers, and long-haul truckers. Highly paid lawyers, skilled doctors (don’t let your daughter be a radiologist), and, yes, even lowly journalists will need to find new lines of work. And those tectonic workplace realignments will only become more profound as the AI becomes inevitably—and exponentially—better. To thrive in this environment will require being in a profession that is creative, where analog interactions are critical—one that cannot be easily made digital. Think art, think the caring professions, think anything in which being human trumps cyborg. And since AI becomes ever smarter, it will make sense to allow it to do more and more as we become ever less so…. We’ll also soon see the effects of radical advances in robotics and automation…. The way we wage war is changing dramatically, but it’s not the killer robots we think of…


  1. Kent Holsinger: Lecture Notes in Population Genetics

  2. TechWiser: 7 Best Clipboard Managers for Mac (Free and Paid)

  3. Github: Hello World: Guide

  4. Kinks: Lola

  5. Ellora Derenoncourt: Can You Move to Opportunity?: Evidence from the Great Migration: “The northern United States long served as a land of opportunity for black Americans, but today the region’s racial gap in intergenerational mobility rivals that of the South…. Racial composition changes during the peak of the Great Migration… reduced upward mobility… with the largest effects on black men…. The Migration’s negative effects on children’s adult outcomes appear driven by neighborhood factors, not changes in the characteristics of the average child… greater white enrollment in private schools, increased spending on policing, and higher crime and incarceration rates…. The overall change in childhood environment induced by the Great Migration explains 43% of the upward mobility gap between black and white men in the region today…

  6. Achadinha Cheese Company

  7. The Kinks: Waterloo Sunset


#noted #weblogs 

Uber becomes modern art | FT Alphaville

Izabella Kaminska: Uber Becomes Modern Art: “Back in September 2016, we cited a BCA report which questioned Uber’s 62.5bn valuation, arguing its model was neither innovative or viable. Unfortunately, the report didn’t really register with the great and the good who have money to burn. Ahead of Uber’s IPO… as much as 120bn was being thrown about by some enthusiastic bankers. Fast forward to August 8, and Uber has truly beaten even the most extravagant of money-burning expectations. Here’s the Q2 results table, possibly in need of framing…. The thing that really hit market sentiment was the slowdown in revenue growth at 14 per cent to $3.2bn. Analysts had been expecting a 20 per cent rate which would have taken the top line to $3.4bn. This is important because Uber’s investment case is based on the thesis that the continuous net losses don’t matter because it’s still a growth company, and its pathway to profitability is through market domination and, of course, revenue growth…

Uber becomes modern art FT Alphaville


#noted