Fairly Recently: Must- and Should-Reads, and Writings… (November 26, 2018)


  1. Monday Smackdown: Hoisted: Cliff Asness Department: Cliff Asness spent 82 minutes talking to Tyler Cowen. The phrase “Federal Reserve” does not appear in the transcript. The phrase “quantitative easing” does not appear in the transcript. The word “monetary” does not appear in the transcript. The word “debasement” does not appear. Tyler Cowen does not ask questions using any of those words. Cliff Asness does not use any of those words in answering questions. Seems to me Cliff Asness owes Ben Bernanke a big apology for this. And perhaps he could give us some clues as to whether he has learned anything from looking back at his wrong claim that Bernanke did not understand what the Federal Reserve should be doing?…

  2. Weekend Reading: Hilzoy: Liberating Iraq (from 2007)

  1. Elizabeth Bear: Shoggoths in Bloom

  2. Samantha Henderson: Maybe the Stars

  3. Wikipedia: United States Floating Battery Demologos

  4. Roger Farmer: How New Keynesian Economics Betrays Keynes: “Self-fulfilling beliefs could explain business cycle fluctuations at least as well as the real- business- cycle paradigm that came to dominate graduate programs for the next thirty- five years. But, the sun spot agenda did not have a single strong leader and the figures who wrote the first two papers in the area, Azariadis, and Cass and Shell, were dismissive of the practical and empirical relevance of their ideas…

  5. Philosopher Alex Rosenberg’s actions are incomprehensible until you realize that he believes and desperately desires to convince us that there are no such thing as human beliefs or desires. Also: That Henry Kissinger is a bad man. You see the problem? The neurology level is useless if you want a better theory than the folk theory of mind. The behavioral economics level may be becoming useful. But for the life of me I do not see what Rosenberg has to add here. His book begins with a big song-and-dance about how narrative military history is useless because the Germans’ opponents were flummoxed all four times the Germans attacked at Sedan between 1870 and 1940, thus—he claims—proving that it is impossible to learn lessons from narrative military history. It’s clear why one might think the French (and their allies) failed to learn anything useful from narrative military history. It is much less clear why Rosenberg is so sur his example shows that the Germans- failed to learn from narrative military history: Alex Rosenberg: _How History Gets Things Wrong: “The Kaiser wasn’t thinking about anything at all when he gave the ‘blank-check’ to the Austrians. He didn’t have any desires about how matters should turn out, or any beliefs about how to organize things to make them turn out that way. He didn’t because no one has such thoughts… #cognitive

  6. Alan L. Olmstead and Paul W. Rhode: Cotton, Slavery, and the New History of Capitalism

  7. Isaiah Andrews and Maximilian Kasy: Identification of and Correction for Publication Bias: “Some empirical results are more likely to be published than others. Selective publication leads to biased estimates and distorted inference. We propose two approaches for identifying the conditional probability of publication as a function of a study’s results… #minimumwage #equitablegrowth #cognitive #statistics

  8. Overlord

  9. Bad Times at the El Royale

  10. Rory Appleton: Cox Now 447 Votes Behind Valadao

  11. Max Boot: Trump Goes to France and Dishonors U.S. War Dead

  12. This seems to me to pretty much get it wrong. The right way to talk about what is to be called “rational“ is to imbed the problem of thinking in its proper context. I think thought should proceed thus: (1) Do we have time and resources to gather more information before we have to make a decision? If the answer to this question is “yes”, we then face a second question: (2) would gathering more information increase our knowledge enough to make it worthwhile to do so before making our decision? Answering that question requires very un-Bayesian modes of thought. But that question must be answered. And, having answered it, we either go and gather more information or we proceed to question: (3) Are we playing some kind of game against nature, or are we playing against another mind? If the answer is “we are playing against nature”, then it is appropriate to go full Bayesian. If the answer is “we are playing against another month“, then there is yet another question: (four) what is the other morning that we are playing against thinking that makes it willing to enter into this strategic interaction with us? The answer will probably be: “at least one of the two of us is wrong in our understanding of the situation“—as Warren Buffett says: “if you do not know who is the fool in the market, you are the fool in the market”. Attempting to understand the implications of this question also leaves us down very un-Bayesian roads of thought. But understanding the implications of this question is essential to making a rational assessment of the situation. My problem with Gilboa et al. is that their criticisms of Bayesian Savagery do not provide any gruel at all to nourish us and thus help us in our task of figuring out what to do when Bayesian Savagery breaks down, either for information-gathering or for other-mind reasons: Itzhak Gilboa, Andrew Postlewaite, and David Schmeidler (2009): Is It Always Rational to Satisfy Savage’s Axioms?: “To explain our notion of rational choice, consider the following scenario. You are a public health official who must make a decision about immunization of newborn babies. Specifically, you have a choice of including another vaccine in the standard immunization package. This vaccine will prevent deaths from virus A. But it can cause deaths with some probability. The exact probabilities of death with and without the vaccine are not known. Given the large numbers of babies involved, you are quite confident that some fatalities are to be expected whatever your decision is…

  13. I cannot help but thinking that this line of thought misses the elephant in the room. To reset the stories that have been told to us and seek for better stories ought to begin with more thought about why these stories we have inherited are the stories that have been told to us: Amal El-Mohtar (2017): WisCon Guest of Honour Speech: “I am their fury, I am their patience, I am a conversation…

#shouldread #weblogging 

Monday Smackdown: Hoisted: Cliff Asness Department

**Hoisted from the Archives: 7 days before the fifth anniversary of his appearing as lead signatory of the right-wing Republican “Open Letter to Ben Bernanke—Cliff Asness spent 82 minutes talking to Tyler Cowen. The phrase “Federal Reserve” does not appear in the transcript. The phrase “quantitative easing” does not appear in the transcript. The word “monetary” does not appear in the transcript. The word “debasement” does not appear. Tyler Cowen does not ask questions using any of those words. Cliff Asness does not use any of those words in answering questions.

Seems to me Cliff Asness owes Ben Bernanke a big apology for this. And perhaps he could give us some clues as to whether he has learned anything from looking back at his wrong claim that Bernanke did not understand what the Federal Reserve should be doing?

Cliff Asness et al. (2010): Open Letter to Ben Bernanke (2010): “We believe the Federal Reserve’s large-scale asset purchase plan (so-called ‘quantitative easing’)…

…should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that ‘the Federal Reserve cannot solve all the economy’s problems on its own.’  In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

Cliff Asness * Michael J. Boskin * Richard X. Bove * Charles W. Calomiris * Jim Chanos * John F. Cogan * Niall Ferguson * Nicole Gelinas * James Grant * Kevin A. Hassett * Roger Hertog * Gregory Hess * Douglas Holtz-Eakin * Seth Klarman * William Kristol * David Malpass * Ronald I. McKinnon * Dan Senor * Amity Shlaes * Paul E. Singer * John B. Taylor * Peter J. Wallison * Geoffrey Wood

Weekend Reading: Hilzoy: Liberating Iraq (from 2007)

Hilzoy: Obsidian Wings: Liberating Iraq: “Peter Beinart has a piece in TNR about why he supported the war: ‘For myself, perhaps the most honest reply is this: because Kanan Makiya did. When I first saw Makiya–the Iraqi exile who has devoted his life to chronicling Saddam Hussein’s crimes–I recognized the type: gentle, disheveled, distracted, obsessed. He reminded me of the South African exiles who occasionally wandered through my house as a kid. Once, many years ago, I asked one of them how the United States could aid the anti-apartheid struggle. Congress could impose sanctions, he responded. Sure, sure, I said impatiently. But what else? Well, he replied with a chuckle, if the United States were a different country, it would help the African National Congress liberate South Africa by force.’ He also writes about why he got it wrong…

…I was willing to gamble, too–partly, I suppose, because, in the era of the all-volunteer military, I wasn’t gambling with my own life. And partly because I didn’t think I was gambling many of my countrymen’s. I had come of age in that surreal period between Panama and Afghanistan, when the United States won wars easily and those wars benefited the people on whose soil they were fought. It’s a truism that American intellectuals have long been seduced by revolution. In the 1930s, some grew intoxicated with the revolutionary potential of the Soviet Union. In the 1960s, some felt the same way about Cuba. In the 1990s, I grew intoxicated with the revolutionary potential of the United States. 

Some non-Americans did, too. “All the Iraqi democratic voices that still exist, all the leaders and potential leaders who still survive,” wrote Salman Rushdie in November 2002, “are asking, even pleading for the proposed regime change. Will the American and European left make the mistake of being so eager to oppose Bush that they end up seeming to back Saddam Hussein?” 

I couldn’t answer that then. It seemed irrefutable. But there was an answer, and it was the one I heard from that South African many years ago. It begins with a painful realization about the United States: We can’t be the country those Iraqis wanted us to be. We lack the wisdom and the virtue to remake the world through preventive war. That’s why a liberal international order, like a liberal domestic one, restrains the use of force–because it assumes that no nation is governed by angels, including our own. And it’s why liberals must be anti-utopian, because the United States cannot be a benign power and a messianic one at the same time. That’s not to say the United States can never intervene to stop aggression or genocide. It’s not even to say that we can’t, in favorable circumstances and with enormous effort, help build democracy once we’re there. But it does mean that, when our fellow democracies largely oppose a war–as they did in Vietnam and Iraq–because they think we’re deluding ourselves about either our capacities or our motives, they’re probably right. Being a liberal, as opposed to a neoconservative, means recognizing that the United States has no monopoly on insight or righteousness. Some Iraqis might have been desperate enough to trust the United States with unconstrained power. But we shouldn’t have trusted ourselves.

I admire Peter Beinart’s willingness to think about what he got wrong, and why. But while I think that he’s right to say that we can’t be the country the Iraqis and South Africans wanted us to be — a country wise enough to liberate other countries by force — there’s another mistake lurking in the train of thought he describes. Namely:

It’s not just that we aren’t the country Beinart wanted to think we were; it’s that war is not the instrument he thought it was.

You can see this pretty clearly when he refers to the “surreal period” when “the United States won wars easily and those wars benefited the people on whose soil they were fought.” That we won all those wars easily was due to a number of different factors. As I understand it, the Gulf War went as well as it did because of superb work by the armed forces, and because we had broad international support and limited objectives. Kosovo went well, at least for us, for the same reasons, and of course because we fought from the air and really paid attention to the follow-up. Ronald Reagan’s wars — the overt ones, at any rate — were all against tiny countries who could not possibly have put up any resistance to our army. (E.g.: Grenada; Panama.) That was deliberate: the country was traumatized after Vietnam, and while I wished that we could get over it without having to rack up cheap victories against insignificant opponents, Ronald Reagan felt differently.

Even then, though, it would have been worthwhile for Beinart to pay more attention than he seems to have paid to the wars we sponsored in Central America, which were neither easy nor beneficial to the people who lived in the countries where our proxies fought. Thinking about the plight of a farmer who is forced at gunpoint to serve as a guide by one side and then shot as a collaborator by another when all he ever wanted was to work his fields in peace, or of villages burned to the ground after their inhabitants had been massacred, would have been a useful corrective to the idea that wars are easy and painless.

Noting that war is, in fact, hell, and that when it seems easy, that’s generally due to some combination of very hard work, massive military superiority, and sheer blind luck, is an easy lesson to draw — and, frankly, the fact that Beinart had to learn it the hard way, after an error of this magnitude, is as good an example as any I can think of of why I think there’s something badly wrong with the writers of editorials and columns in the mainstream media. But there’s another, deeper problem, which I will approach in a somewhat roundabout way.

Back in 1983, I sat in on a conference on women and social change. There were fascinating people from all over the world, women who had been doing extraordinary things in their own countries, and who had gathered together to talk it through; and I got to be a fly on the wall.

During this conference, there was a recurring disagreement about the role of violence in fighting deeply unjust regimes. On one side were the women from India, who argued against the use of violence, generally on Gandhian grounds. On the other were many of the women who lived under deeply unjust regimes; I recall, in particular, the South Africans arguing that however laudable nonviolence might be, their situation was sufficiently desperate that they could not afford the luxury of waiting for nonviolence to work.

It seemed to me that at the heart of this disagreement was this one fact: that the women from India were from a country that had already achieved independence, and were living with the problems that came afterwards, whereas the women from South Africa were trying to achieve that self-government in the first place. The South Africans seemed to think that the women from India had forgotten what it was like to be subjugated:

We need to win our freedom as quickly as possible, they seemed to say. We realize that it would be preferable to win that freedom in the best possible way. If we could win it just as quickly through non-violent means, we would surely do so. But you would not ask us to wait if you really understood what it is like to live in slavery.

By contrast, many of the arguments made by the Indians turned on the effects that achieving self-government through violence had on one’s own people:

Don’t do this, they seemed to be saying: once you win your freedom, you will find that you and your people have grown accustomed to settling disputes by force and to demonizing your opponents. Think now about how to use the struggle you are waging to teach yourselves how to become citizens and to practice self-government. Do not wait until you win your independence to discover that self-government requires not just political power, but political responsibility.

What made this argument so fascinating and painful to watch was that it was so easy to see both points of view. Who could possibly deny the justice of either side? And yet I thought the Indian women were right. I did not think that they had forgotten what it was like to be oppressed. I thought they were warning the others off a mistake that they knew would be tragic, however comprehensible it might be. And I had just returned from Israel, where I had spent a lot of time thinking about the many, many ways in which completely comprehensible failures can echo down through the generations.

While I was in Israel, I had also wondered what would happen to all those Palestinian kids who had grown up in refugee camps in Lebanon, who had, as best I could tell, been taught a lot about RPGs and nothing whatsoever about how to function in a world in which conflicts are not settled by violence. I found it unforgivable that the Palestinian leadership that ran the camps seemed to have given no thought to the question: how can we bring these children up to be responsible citizens of any future state?

And besides these thoughts, when the Indian women spoke I thought I could see the partition of India, and the attendant massacres in which hundreds of thousands of people died, sitting on the Indian women’s shoulders like a constant silent familiar, casting its shadow over every word.

So one thing I thought that the Indian women saw was this:

Violence is not a way of getting where you want to go, only more quickly. Its existence changes your destination. If you use it, you had better be prepared to find yourself in the kind of place it takes you to.

And another was this:

liberation is not just a matter of removing an oppressive government. It can seem that way when you live under tyranny. Nothing is more comprehensible than people living in apartheid South Africa, or under Saddam, thinking: if only that government were removed from power, things would be better. They would have to be. After all, how could they possibly be worse?

Unfortunately, there are almost always ways in which things could be worse.

Thomas Hobbes, who actually lived through a civil war, believed that to escape from “the war of all against all”, it was necessary to grant a monarch unlimited sovereignty, and that living under such a monarch was preferable to living in a state of war and anarchy. I am not a Hobbesian, in part because I do not believe that those are our only two choices. But I’ve never been sure that if we had to face that choice, his answer wasn’t the right one.

The absolute monarch, according to Hobbes, does more than protect us from all our other enemies. He provides us with a clear answer to the question: whose word is law? Whose will governs? Hobbes thinks that that answer has to be as clear as possible, since if there is any ambiguity about it, even people who agree on the need to live together under the rule of law will end up fighting about its interpretation.

Suppose, for instance, that everyone in some country agreed about the desirability of living under a democracy, and that an election were held. Does it follow that everyone would accept the winner of that election as legitimate? Only if there are no questions about its fairness: about who really won. But there are always questions about the fairness of elections: reasons to wonder whether a ballot box here and there wasn’t stuffed, or voting machines tampered with, or candidates silenced, or voters intimidated.

Hobbes wasn’t considering democracy, of course. But he did think that there would always be similar questions about laws and political structures, and that in any situation like this, people would recognize how much turned on who got political power, and they would be willing to fight to make their interpretation prevail. And the only thing that could prevent them from doing so was a clear and acknowledged sovereign whose word would settle such disputes.

As I said, I think Hobbes was wrong, and that we have more choices than anarchy or tyranny. But to be willing to accept and abide by established procedures for the resolution of conflicts, even when your side loses in ways that you think are unfair, presupposes a lot. In particular, it presupposes both allegiance to those procedures, and the confidence that the price of losing will not be more than you can bear.

Both of these conditions exist in the US, which is why the Democrats did not go to war over the 2000 election. But they are not universal. They are an extraordinary human creation which we too easily take for granted. But we should never forget how astonishing it is that people vying for power are willing to concede even when they believe that the rules have been broken, out of respect for the rule of law and for courts they believe to be profoundly in error.

In many countries, there are no established procedures for resolving conflicts, and certainly none that command the kind of allegiance that would lead people to yield even when they believe that they deserve to have won. In those countries it will always be tempting to think: well, this election was stolen from us, and this year-old Constitution is unfair; why not fight for a better one? Wouldn’t our opponents do the same?

This is especially likely in a country in which the price of losing a political struggle has always been not just being in the minority party in Congress, but death or subjugation. And it takes a long time to learn to trust that losing power will not cost you your life or your freedom, when all your experience to date has taught you the opposite.

When you use force to liberate a country, like Kuwait, that has only been occupied for a short time, you can hope that its people will accept their previous government, and that whatever made that government function in the past will have survived. But when you liberate a country like Iraq, a country whose people have been brutalized, you risk loosing Hobbes’ “war of all against all” on its people. You remove the sovereign who has kept that war in check, without thereby creating any of the political virtues that allow alternate forms of government, like democracy, to function.

This is why, when I read Beinart’s piece, I thought: the South African he quotes — the one who said that “if the United States were a different country, it would help the African National Congress liberate South Africa by force” — was wrong. Force is not just an alternate way of getting to liberation; it changes everything. And liberation is not just a matter of removing an oppressive regime; it is a matter of creating a country populated by citizens who are, by and large, willing to set aside the idea of resolving conflicts by force and to respect the laws, even when they are imperfectly applied.

For this reason, the problem with that South African’s vision is not just that “we lack the wisdom and the virtue to remake the world through preventive war.” That’s true, but it doesn’t get to the heart of the problem, namely: that preventive war is not a way of remaking the world in the ways the South African and Beinart imagine.

Saying that the problem is that we lack the wisdom and virtue to do this is like saying that the problem with the USSR in the 30s was that Stalin was not sufficiently wise and virtuous to really make totalitarianism work for the people of Russia. That Stalin was neither good nor wise is beyond question. But to focus on his personal failings is to miss a broader point: that totalitarianism itself is bound to fail to do right by those who live under it.

(There are other reasons why I think that invading a country in order to create a democracy is bound to fail. I explained some of them here. But these are the two that Beinart’s piece brought to mind.)

#shouldread #weekendreading #strategy #moralreponsibility 

Fairly Recently: Must- and Should-Reads, and Writings… (November 20, 2018)

stacks and stacks of books

  1. Comment of the Day: The Fall of Rome: Am I too Much of a Malthusian-Ricardian to Understand It Properly?

  2. Journamalism: The most both-sidesee bothsidism ever is in—where else?—the New York Times!… And it is Ross Douthat!…

  3. _[Review of “Capitalism in America: A History” by Alan Greenspan and Adrian Wooldridge](https://www.bradford-delong.com/2018/

  4. Perhaps Facebook’s Top Management Should Give Their Shares in the Company to the Open Society Foundationt?

  5. Hoisted from 2012: Why Next to No Political Reaction to the Second Gilded Age?

  1. Applause from Noah Smith for Equitable Growth’s attempt to focus on the broader implications of rising monopoly: Noah Smith: Economists Gear Up to Challenge the Monopolies: “The antitrust movement is making a comeback…. Think tanks like the Washington Center for Equitable Growth are starting to zero in on the issue as well”: Jacob Robbins: How the rise of market power in the United States may explain some macroeconomic puzzles: “Gauti Eggertsson, Ella Getz Wold, and I at Brown University argue that these diverse trends are closely connected, and that the driving force behind them is an increase in monopoly power together with a decline in interest rates…

  2. The most important thing for you to read: the deadline for Equitable Growth’s next set of grant proposals over at Equitable Growth is January 31, 2019: WCEG: Request for Proposals: “The Washington Center for Equitable Growth seeks to deepen our understanding of whether and how inequality affects economic growth and stability. Our academic grants program is building a portfolio of cutting-edge scholarly research investigating the various channels through which economic inequality may or may not impact economic growth and stability, both directly and indirectly…

  3. My read of the evidence is somewhat different here: my view is that forward guidance did something, but quantitative easing did very, very little. And the idea that quantitative easing made forward guidance more credible? I do not see that. Yes, quantitative easing was a big deal for the financial professionals Who otherwise would have held the treasury bonds that the Federal Reserve bought. But I do not see any channels through which their attempt to compensate add large affects and the real economy of productions and demand: Ken Kuttner: Outside the Box: Unconventional Monetary Policy in the Great Recession and Beyond: “A preponderance of evidence nonetheless suggests that forward guidance and quantitative easing succeeded in lowering long-term interest rates. Studies using micro data have documented tangible effects of quantitative easing on firms and financial intermediaries. Macro models suggest that the interest rate reductions are likely to have had a meaningful impact. The adverse side effects appear to have been mild, and are dwarfed by the costs of the more protracted recession in the United States that likely would have occurred in the absence of the unconventional policies. The benefits of unconventional policy therefore probably outweighed the costs… #monetaryeconomics #monetarypolicy

  4. For whom was the decline and fall of the western Roman Empire that commenced with the Antonine Plague a decline and fall? It was a decline and fall for: 1. Those at the top of the state apparatus who saw their resources collapse, and their ability to avoid barbarian power projection into the empire decline. 2. Those who were rich. 3. Those who were urban, dependent on the flow of resources from the countryside to the city. 4. Those in the countryside who had been prosperous and free, and who were now enserfed. 5. Those who benefited from large-scale efficient production and distribution of conveniences. 6. Those for whom the maintenance of the pax Romana was really important. The question is: what happened to those on the bottom in the countryside? They now are much more productive. Yet they face increased pressures from above to exploit them more in order to compensate for the reduced rent flow from depopulation, and they suffer from increased dissipative violence—both from their superiors and from barbarian invasions. Yet on the other hand their increased value might have given them increased leverage: that was the case for western European serfs in the aftermath of the Black Death. My view: slave —> serf a definite improvement. For everyone else, a decline: loss of conveniences with the end of large-scale efficient production, loss of resource flow to city-dwellers, loss of resources that had underpinned the pax Romana. What is uncertain is the relative numbers of the winners and losers—and whether even the winners in terms of consumption were better off facing the barbarian rather than the slavemaster. In any event, very interesting: Willem Jongman (2006): Gibbon Was Right: The Decline and Fall of The Roman Economy: “For the naive historian, it would seem that we now have all we need: we have a range of examples of catastrophic decline, and some potential causes. What we do not yet have, however, are the mechanisms by which this shock propagated through the economic and social system. Imagine a pre-industrial and largely agricultural economy in a fairly stable equilibrium. Next that equilibrium is disturbed by mortality…. The biggest economic and social change, however, was to the land-labour ratio…

  5. FiveThirtyEight: Yes, It Was A Blue Wav | FiveThirtyEight: “natesilver (Nate Silver, editor in chief): The arguments that it ISN’T a blue wave are dumb. Can we end the chat now and get lunch?…. sarahf: Haha, no. We’re here to tell readers why it’s dumb—although Nathaniel did do a pretty good job of convincing me. nrakich: People seem to be defining “blue wave” as, “Did Democrats outperform expectations?” They’re forgetting that expectations were already for a blue wave. natesilver: What is the argument that it isn’t a blue wave? That Democrats didn’t win the Senate?…

  6. Perhaps Facebook’s top management should give their shares in the company to the Open Society Foundationt?: Patrick Gaspard: Letter to Sandberg

  7. Rafael Behr: The Brexit wreckers Are Slinking Away from the Rancid Mess They’ve Made: “Dominic Raab and Esther McVey have resigned because they know Brexit is intrinsically dysfunctional…. There is now no Brexit true believer prepared to take an author’s credit on the deal that is about to come before parliament…. These resignations confirm a fundamental structural problem with the whole leave prospectus: it was a fantasy, and as such incompatible with the mundane fulfilment of ministerial responsibility. Raab has come to the same conclusion that David Davis and Boris Johnson reached earlier in the year: it is easier to be on the team that accuses the prime minister of failing to deliver majestic herds of unicorns than it is to be stuck with a portfolio that requires expertise in unicorn-breeding…

  8. Adam Gopnik: Wine, War, Donald Trump, and Emmanuel Macron: “Macron made a speech… as clearly directed at and against Trump as any he could have made… distinguished between nationalism (bad) and patriotism (good)… in eloquent terms… #orangehairedbaboons #moralresponsibility #history

  9. Jason Kottke: The Odyssey of Reading “The Odyssey”: “In this clip from the TV show Articulate (which airs on PBS), host Jim Cotter talks with Emily Wilson and Daniel Mendelsohn about The Odyssey, different versions of the self, translations, and more…

  10. The chances for equitable growth in America over the next three years may or may not be crippled by the trade war that Donald Trump is now trying to launch. What should you be reading and watching to try to figure out what is going on? I believe that the Peterson Institute of International Economics is the place to go for up-to-date analysis on the trade war that Donald Trump is trying to launch, over the—not dead bodies, but—active opposition and passive resistance of pretty much everybody in his administration save Peter Navarro and Robert Lighthizer. This is not being driven by any interest groups outside the administration. It is being driven by three people inside the administration: Navarro, Lighthizer, and Trump: Navarro… On the few occasions that I have interacted with Navarro he has seemed to me to be… not quite all there. The kindest thing I have heard said about him comes from Paul Krugman: “Peter Navarro predicted that nobody would retaliate…. Trump’s tariffs are badly designed even from the point of view of someone who shares his crude mercantilist view…. Unlike Trump, the Chinese and other targets of his trade wrath seem to have a clear idea of what they’re trying to accomplish. The key point is that the Navarro/Trump view, aside from its fixation on trade balances… seems to imagine that the world still looks the way it did in the 1960s, when trade was overwhelmingly in final goods like wheat and cars…” Lighthizer… I do not understand at all. The policies that he is pushing forward are pretty much 180 degrees reversed from those he worked for in his previous stints in government. He is now too old—70—to be anything other than a rainmaker at his old law firm of Skadden Arps after he departs from government. And businesses with international trade legal needs will think that the guy who launched a trade war is not a rain but a drought maker. His actions do not compute on any rational-actor decision theory… Trump… There is little to understand. Somehow he has become convinced that running a bilateral trade deficit with a country means that we are “losing” to them, and that this should stop. Why he believes this we do not know, and he cannot explain it. We do know that none of those working for him—not Priebus, not Mnuchin, not Kudlow, not Ross, nor any of the others—have been able to change his knee-jerk instincts. Currently the best place to go to figure out what, concretely, has actually happened is to the PIIE’s trade-war timelines: Chad P. Bown and Melina Kolb: Is Trump in a Trade War? An Up-to-Date Guide: “The timelines below track the development of the most pressing trade conflicts with links to the latest available data and PIIE analysis… #orangehairedbaboons #globalization #tradewar

11.You should go see this, if you are in DC tomorrow: Equitable Growth: Building a New Consensus on Antitrust Reform Tickets, Wed, Nov 14, 2018 at 12:00 PM: “Please join the Washington Center for Equitable Growth on Wednesday, November 14, at noon for a conversation on reforming federal antitrust law…. Sen. Amy Klobuchar (D-MN), Ranking Member of the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, will deliver keynote remarks…. RSVP is required by Friday, November 9… #monopoly

  1. New computer and communications technologies were supposed to democratize information—route around corrupt media and data-centrer oligarchies, and allow a flourishing of the public sphere. Yes… and no…: Joi Ito: The Next Great (Digital) Extinction | WIRED: “SOMEWHERE BETWEEN 2 and 3 billion years ago, what scientists call the Great Oxidation Event, or GOE, took place, causing the mass extinction of … the dominant life form at the time…. Cyanobacteria… had the photosynthetic ability to produce glucose and oxygen out of carbon dioxide and water using the power of the sun. Oxygen was toxic to many anaerobic cousins… #riseoftherobots

  2. Pascal Michaillat and Emmanuel Saez: A New Keynesian Model with Wealth in the Utility Function: “Wealth… [in] the utility function. The extension modifies the Euler equation: in steady state the real interest rate is negatively related to consumption instead of being constant… Thus, when the marginal utility of wealth is large enough, the dynamical system representing the equilibrium is a source not only in normal times but also at the zero lower bound. This property eliminates the zero-lower-bound anomalies of the New Keynesian model, such as explosive output and inflation, and forward-guidance puzzle… #monetaryeconomics

The Fall of Rome: Am I too Much of a Malthusian-Ricardian to Understand It Properly?

American Minute The Fall of Rome Tyranny News

Comment of the Day: in response to Brad DeLong: On Twitter: For whom was the decline and fall of the western Roman Empire that commenced with the Antonine Plague a decline https://t.co/FdZeNjvtCr: Carlos Noreña: @carlosfnorena: “Yes, bad for all of those sectors, and devastating in systemic terms for this large-scale political economy. I also agree with Jongman that what he calls the “resilience” of the Roman central state was remarkable…” I respond: Perhaps my problem is that I am too much a Malthusian-Ricardian to see history straight, but…

…Population decline because climate change whomps agricultural productivity I understand: Everyone loses, and complex, civilized society may not survive because such societal systems have a hard time scaling down. Somebody still wants to have the same resources they had in the conflicts that produces go very negative sum very quickly.

But population decline while agricultural productivity stays constant—due to the Antonine and Justinian Plagues, or due to a temporary volcano winter, for example? Those have to raise agricultural productivity per farmer. And, yes, the upper class men will try to extract more from farmers. But if they could extract more from farmers, they would have done so back when they were riding high: they have and never had much charity. So from my perspective it is an uphill climb to clean that present material standards of living would decline.

Now peasant life expectancy and security could decline: the pax Romana was a real thing, and so was the Viking blood eagle. Now landlords could fail to recognize the new situation, and dissipate huge amounts of resources in “wars of attrition trying to extract more than could sustainably be extracted, thus leaving everybody worse off. And as cities take it in the neck the loss of economies of scale and Smithian division of labor could transform the city countryside relationship from one of extraction plus trade-for-conveniences to one of simple extraction.

But I still cannot help but think that it was better to be a serf of Pemmo son of Billo Duke of Friuli in the 8th century than of Marcus Tullius Cicero in the -1st (unless you were Tiro) or (shudder) Marcus Porcius Cato in the -2nd.

#shouldread #commentoftheday 

Review of “Capitalism in America: A History” by Alan Greenspan and Adrian Wooldridge

Pittsburgh in 1900 Google Search

Review of Capitalism in America: A History by Alan Greenspan and Adrian Wooldridge: The world as a whole is much richer than it was three centuries ago. And the United States of America is the richest land of all. For nearly two centuries its unique dynamic of economic growth has made America, as Leon Trotsky put it after his brief residence in New York, “the furnace where the future is being forged.” Alan Greenspan and Adrian Wooldridge’s “Capitalism in America: A History” argues that it is the American love and embrace of capitalism, the resulting entrepreneurial business culture, and the creative destruction inherent in the capitalist-market system that have given America its special, unique edge in economic wealth. In America, successful entrepreneurs, innovators, organizers and promoters have become not just well-off but heroes…. While it is no surprise that Greenspan and Wooldridge have produced this book, they are, I think, broadly correct in their argument… Read MOAR at the Washington Post

#shouldread #books #economicgrowth #highlighted #entrepreneurship 

Perhaps Facebook’s Top Management Should Give Their Shares in the Company to the Open Society Foundationt?

Perhaps Facebook’s top management should give their shares in the company to the Open Society Foundationt?: Patrick Gaspard: Letter to Sandberg:


Sheryl Sandberg
Chief Operating Officer
1 Hacker Way
Menlo Park, CA 94025

Dear Ms. Sandberg:

I was shocked to learn from the New York Times that you and your colleagues at Facebook hired a Republican opposition research firm to stir up animus toward George Soros.

As you know, there is a concerted right-wing effort the world over to demonize Mr. Soros and his foundations, which I lead—an effort which has contributed to death threats and the delivery of a pipe bomb to Mr. Soros’s home. You are no doubt also aware that much of this hateful and blatantly false and anti-Semitic information is spread via Facebook.

The notion that your company, at your direction, actively engaged in the same behavior to try to discredit people exercising their First Amendment rights to protest Facebook’s role in disseminating vile propaganda is frankly astonishing to me.

It’s been disappointing to see how you have failed to monitor hate and misinformation on Facebook’s platform. To now learn that you are active in promoting these distortions is beyond the pale.

These efforts appear to have been part of a deliberate strategy to distract from the very real accountability problems your company continues to grapple with. This is reprehensible, and an offense to the core values Open Society seeks to advance. But at bottom, this is not about George Soros or the foundations. Your methods threaten the very values underpinning our democracy.

I would appreciate the opportunity to discuss this matter with you in person, and to hear what steps you might take to help remediate the damage done by this deeply misguided—and dangerous—effort carried out at Facebook’s behest.


Patrick Gaspard
Open Society Foundations


Why Next to No Political Reaction to the Second Gilded Age?: Hoisted from 2012

Il Quarto Stato

Hoisted from 2012: Brad DeLong: Why Next to No Political Reaction to the Second Gilded Age?: Oh dear, that’s a really tough question. So let me make it tougher by sharpening it and give it historical context. During the Gilded Age of the 1890s and 1900s you had strong political movements saying “something is going remarkably wrong with this, this isn’t the country we thought we were going to live in”. The way that the historian—I’m blanking—Ray Ginger? Harley Shaiken: Yes, Ray Ginger. Brad DeLong: Ray Ginger put it in two absolutely brilliant books—Altgeld’s America and The Age of Excess—even the Republicans thought that they wanted to live in Abe Lincoln’s America, where when you are young you split wood into fence rails and go to law school at night and when you are middle-aged you become a lawyer and get rich and when you are old you enter politics and save the Union and free the slaves. They wanted to live in that kind of world, of upward mobility, in which opportunity is wide open even to the son of a penniless and not very successful rural farmer. But by 1890 they discovered that they weren’t living in Abe Lincoln’s America at all…

…As a result in the First Gilded Age you had two political movements. The Democratic, left, farmer, labor, semi-socialist, Populist Movement on the one hand. The mixed bipartisan Democratic and Republican, urban, Progressive Movement on the other. Both of them were desperately eager to change America, to repair the flaws of the Gilded Age, to reduce inequality, to make the economy work for everybody—or at least for every white guy—and even to grant women the vote.

They wanted this so much so that someone like Republican President Theodore Roosevelt—as aggressively a partisan an animal as you would ever see—would place his loyalty to the Republican cause second to his loyalty to his progressive principles for American reform. He was happy denouncing Democrats as communist anarchists, but equally happy denouncing rich republicans as “malefactors of great wealth” who desperately needed to be controlled.

Theodore Roosevelt wove his political career out of being head of the Republican party and head of the Progressive Movement. And at the end non-Progressive Republican President Taft simply offended him one time too many, and Roosevelt decided to blow up the Republican Party and hand the presidency to Woodrow Wilson from 1912-1920.

That was the history of America from 1880-1920 or so. After 1920 you do get a Republican Gilded Age resurgence under Harding, Coolidge, Hoover—very corrupt, especially under Harding. But by the late 1920s Progressivism is rising again—even Hoover is running as a Progressive. Then when the Great Depression comes Franklin Roosevelt comes in and he takes the entire progressive agenda off the shelf and promptly begins to implement it.

We haven’t had anything like that over the past thirty years.

And here I’m simply going to throw up my hands and say that I don’t know why.

It’s in a great mystery to me. As an economic historian I like to look at political economic patterns from the past and to say we should learn from these and generalize them and take them as providing some insight into the present and the future. In general, we economic historians are extraordinarily successful. There are lots of lessons to be drawn from the first age of globalization for the second. There are lots of lessons to be drawn from the high school-ization of America for the college-ization of America and for education elsewhere in the world. There are lots and lots of lessons to be drawn from the Great Depression for today.

But the political economy of Gilded Ages? Why the first Gilded age produces a Populist and a Progressive reaction and the second, so far, does not? There I throw up my hands and say that my economic historian training betrays me. I have no clue as to what is going on here….


#shouldread #history #gildedage #secondgildedage

Fairly Recently: Must- and Should-Reads, and Writings… (November 12, 2018)

stacks and stacks of books

  1. Economists’ Models: Analysis Pumps or Filing Systems? And Do Countries with Reserve Currencies Need to Fear Solvency Crises?

  2. Note to Self: Why isn’t the first rule of Federal Reserve policy “thou shalt not come even close to inverting the yield curve!”?

  3. Weekend Reading: The Riot Act of 1714

  4. Weekend Reading: John Maynard Keynes on the Baneful Consequences of Ricardo’s Rhetorical Victory Over Malthus

  5. Hoisted from the Archives: Robert Skidelsky vs. Niall Ferguson: John Maynard Keynes Is Not Kesha (Also, the U.S. Is Not Greece, and 2013 Is Not 1923)

  6. Hoisted from the Archives: Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write “In the Long Run We Are All Dead”? Weblogging

  7. “In the Long Run We Are All Dead” in Context…

  8. Note to Self: I had thought that the question of where the sun will be in the sky so you know where to erect the sunshades was a solved problem—a problem solved in 3000 BC by the Babylonians. Apparently not…

  9. Hoisted From the Archives: The Grand Strategy of the United States of America: From 2003

  1. What is the counterfactual here? The demand factors they are talking about here are all microeconomic and not macroeconomic factors. Thus it seems to me that—unless they are assuming that the Federal Reserve is a potted plants—they affect the distribution of employment but not its overall magnitude. Remember! The economy is a general equilibrium system!: Katharine G. Abraham and Melissa Kearney: The Secular Decline in Us Employment over the Past Two Decades: “This column reviews the evidence on the main causes of the secular decline in employment since the turn of the century. Labour demand factors–notably import competition from China and the rise of industrial robots–emerge as the key drivers. Some labour supply and institutional factors also have contributed to the decline, but to a lesser extent… #labormarket

  2. Friedrich Engels (1843): Outlines of a Critique of Political Economy: “According to the economists, the production costs of a commodity consist of… rent… capital with its profit, and the wages for the labour…. A third factor which the economist does not think about–I mean the mental element of invention, of thought…

  3. Nick Rowe: Bicycle Disequilibrium Theory: “Suppose you need a bicycle to get to work. Suppose bicycles are a common property resource, because bike locks don’t work. Every night the workers deposit their bicycles in the bike bank, and in the morning it’s first come first served. And suppose that sometimes there aren’t enough bicycles to go around. So sometimes the level of employment is determined by the number of bicycles, and not by all the usual stuff. Any individual can always get a bicycle in the morning, simply by getting up early enough. But in aggregate they can’t. Fallacy of composition. A theory of when workers wake up might be interesting, and useful for microeconomists wanting to understand the distribution of employment, but it won’t help us understand what determines the aggregate level of employment… #monetaryeconomics

  4. Joseph Schumpeter on the Ricardian and Keynesian vices. The echo of bdsm practices—le vice anglais—that you hear is intentional on Schumpeter’s part, as is his feminization of Keynesians, and the misogyny. Schumpeter was a very smart but very interesting man: Joseph Schumpeter (1953): History of Economic Analysis https://books.google.com/books?isbn=1134838700: “Ricardo’s… interest was in the clear-cut result of direct, practical significance. In order to get this he… piled one simplifying assumption upon another until… the desire results emerged almost as tautologies… It is an excellent theory that can never be refuted and lacks nothing save sense. The habit of applying results of this character to the solution of practical problems we shall call the Ricardian Vice… #books #schumpeter #keynes #economicsgoneright #economicsgonewrong #historyofeconomicthought

  5. The New York Times is a sad, sad thing: Kevin Drum: Hey David: It Wasn’t “We” Who Screwed the Working Class: “I get so tired sometimes. Here is David Brooks today…

  6. Ian Buruma (2001): Class Acts: “According to Cannadine, race was not everything in the British Raj. It was not even the main point. Class was the main point. Class, status, and rank were more important than skin color, the shape of one’s eyes, or the dimensions of one’s skull. A Sultan, a Nizam, or a Pasha was equal to British royalty…

  7. Shane White (2015): The Story of Wall Street’s First Black Millionaire: “Jeremiah Hamilton made white clients do his bidding. He bought insurance policies on ships he purposely destroyed. And in 1875, he died the richest black American…

  8. Joseph Schumpeter (1953): History of Economic Analysis https://books.google.com/books?isbn=1134838700

  9. Angus Deaton: The U.S. Can No Longer Hide From Its Deep Poverty Problem: “According to the World Bank, 769 million people lived on less than $1.90 a day in 2013; they are the world’s very poorest. Of these, 3.2 million live in the United States, and 3.3 million in other high-income countries (most in Italy, Japan and Spain)… #poverty #equitablegrowth

  10. Back at the end of the nineteenth century the quest for better economic statistics was a bipartisan, bi-ideology, bi-analytic approach effort. Liberals and conservatives, reactionaries and social democrats, socialists and centrists in America all thought that good statistics would reveal that America matched their images of it and would show that their policies were good ones. We need to recover that: Austin Clemens: In an age of inequality, aggregate and mean economic statistics don’t tell us enough: “I have argued that we should disaggregate the reporting of GDP growth so we can understand who prospers when the economy grows. But we don’t need to stop there. As income inequality increases and we increasingly see two Americas—one for rich and one for everyone else—it is more important than ever to see more granular breakdowns…

  11. Anybody looking back at economic history cannot help but note that female physical autonomy and its absence has played an absolutely huge role. Kate Bahn and company are pulling together the evidence that this is not just history—that it still matters a lot in America today: Kate Bahn: Understanding the link between bodily autonomy and economic opportunity across the United States: “All of these connective threads are examined in a forthcoming paper of mine… #gender

12.Marshall Berman: All That’s Solid Melts into Air http://delong.typepad.com/files/berman_marshall_all_that_is_solid_melts_into_air_the_experience_of_modernity.pdf

  1. Simon Jäger, Benjamin Schoefer, Samuel G. Young, Josef Zweimüller: Wages and the Value of Nonemployment: “Nonemployment is often posited as a worker’s outside option in wage setting models such as bargaining and wage posting. The value of this state is therefore a fundamental determinant of wages… #labormarket

Economists’ Models: Analysis Pumps or Filing Systems? And Do Countries with Reserve Currencies Need to Fear Solvency Crises?

School of Athens

I believe that there are four issues in this Summers-Krugman-Rogoff-Blanchard et al.-DeLong internet discussion of three years ago:

  1. As far as we economists are concerned, are our models analysis pumps, or are they merely filing systems to remind us of experiential wisdom? In other words: Are our models to be taken seriously when they lead us to a conclusion that the great and good believe is unserious?

  2. Do economies with exorbitant privilege in which the key leveraged financial institutions have little foreign-currency debt need to fear banking and government solvency crises?

  3. Can economies with exorbitant privilege in which the key leveraged financial institutions have little foreign-currency debt rely on their abilty to print their way to liquidity in an emergency and on market participants’ recognition of that ability?

  4. Can economists build models and conduct analyses assuming that business expectations are reasonable things, and will not push the economy to a position that is not close to a self-consistent near rational expectations equilibrium?

As near as I can see:

  1. Larry Summers says: filing systems, yes, no, no.
  2. Paul Krugman says: analysis pumps, no, yes, yes.
  3. I say” both, no, yes, no.

I think I should, sometime over the past three years, have written a really good piece about these questions based on the ten items below. But I regret that I have not:

  • Lawrence Summers (2015): My Views and the Fed’s Views on Secular Stagnation: “Why is the Fed making these mistakes if indeed they are mistakes? It is not because its leaders are not thoughtful or open minded or concerned with growth and employment.  Rather I suspect it is because of an excessive commitment to existing models and modes of thought.  Usually it takes disaster to shatter orthodoxy.  We can all hope that either my worries prove misplaced or the Fed shows itself to be less in the thrall of orthodoxy than it has been of late…

  • Brad DeLong (2015): Musings on the Current Episteme of the Federal Reserve…: “The… errors that the Federal Reserve is currently making… are the result of an excessive commitment to some current modes of thought-…. But… are models properly idea-generating machines… or merely filing systems?… If you give even minor weight to the first… the line of work into the economics of the liquidity trap that I see as well-represented by Krugman’s (1999) “Thinking About the Liquidity Trap” tells us, very strongly, that the Federal Reserve is on the wrong track intellectually right now…

  • Paul Krugman (2015): Respectable Radicalism: “Brad DeLong… argues… Larry has it wrong, that the Fed’s problem is not an ‘excessive commitment to existing models’…. The case that the risks of hiking too soon and too late are deeply asymmetric comes right out of IS-LM with a zero lower bound…. I think I understand how being an official, surrounded by men (and some but not many women) who seem knowledgeable in the ways of the world, can create a conviction that you and your colleagues know more than is in the textbooks…. But in a world of zero-lower-bound macroeconomics… theory and history are much more important than market savvy…

Lawrence Summers (2016): Thoughts on Delong and Krugman Blogs: “Delong and… Krugman… disagree with my assertion that it reflects an excessive attachment to existing models and modes of thought…. On the supply side… if I believed strongly in the vertical long run Phillips curve with a NAIRU around five percent and in inflation expectations responsiveness to a heated up labor market, I would see a reasonable case for the monetary tightening that has taken place…. The disagreement does, it seems to me , come down to the Fed’s attachment to the standard Phillips curve mode of thought…

Lawrence Summers (2016): Thoughts on Delong and Krugman Blogs: “A desire to be “sound” also influences policy.  I am not nearly as hostile to this as Paul. I think… market thought is I think right and simple model based thought is I think dangerously wrong is Paul’s own Mundell-Fleming lecture on confidence crises in countries that have their own currencies. Paul asserts that a damaging confidence crisis in a liquidity trap country without large foreign debts is impossible because if one developed the currency would depreciate generating an export surge…

  • Brad DeLong (2016): MOAR Musings on Whether We Consciously Know More or Less than What Is in Our Models…: “Summers presents as an example of his contention that we know more than is in our models—that our models are more a filing system, and more a way of efficiently conveying part of what we know, than they are an idea-generating mechanism—Paul Krugman’s… contention that floating exchange-rate countries that can borrow in their own currency should not fear capital flight in a liquidity trap. Summers points to Olivier Blanchard et al.’s empirical finding that capital outflows do indeed appear to be not expansionary but contractionary…

  • Paul Krugman (2013): Currency Régimes, Capital Flows, and Crises: “Several commentators… have suggested that a sudden stop of capital inflows provoked by concerns over sovereign debt would inevitably lead to a banking crisis…. If correct, this would certainly undermine the optimism I have expressed about how such a scenario would play out. The question we need to ask here is why, exactly, we should believe that a sudden stop leads to a banking crisis. The argument seems to be that banks would take large losses on their holdings of government bonds. But why, exactly? A country that borrows in its own currency can’t be forced into default, and we’ve just seen that it can’t even be forced to raise interest rates. So there is no reason the domestic-currency value of the country’s bonds should plunge. The foreign-currency value of those bonds may indeed fall sharply thanks to currency depreciation, but this is only a problem for the banks if they have large liabilities denominated in foreign currency…. The historical example that comes nearest to the kind of crisis so widely envisaged–France in the 1920s–involved a very steep currency depreciation, but did not involve a banking crisis…

  • Ken Rogoff (2013): Britain Should Not Take Its Credit Status for Granted: “Debt panglossians are far too confident that the UK’s credit status is bulletproof, and too dismissive of the risks… about pension liabilities or existential threats to the banking system that could require massive injections of cash to fix…. Last but not least, what about the UK’s serial dependence on International Monetary Fund bailouts from the mid-1950s until the mid-1970s? This is hardly a country with an indestructible credit status…

  • Olivier Blanchard, Jonathan D. Ostry, Atish R. Ghosh, and Marcos Chamon (2015): Macro Effects of Capital Inflows: Capital Type Matters: “Some scholars view capital inflows as contractionary, but many policymakers view them as expansionary. Evidence supports the policymakers. This column introduces an analytic framework that knits together the two views. For a given policy rate, bond inflows lead to currency appreciation and are contractionary, while non-bond inflows lead to an appreciation but also to a decrease in the cost of borrowing, and thus may be expansionary…

  • *John Maynard Keynes * (1936): The General Theory of Employment, Interest and Money: Chapter 12. The State of Long-Term Expectation: “Enterprise…. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come. Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die…. This means… that economic prosperity is excessively dependent on a political and social atmosphere which is congenial to the average business man. If the fear of a Labour Government or a New Deal depresses enterprise, this need not be the result either of a reasonable calculation or of a plot with political intent;—it is the mere consequence of upsetting the delicate balance of spontaneous optimism. In estimating the prospects of investment, we must have regard, therefore, to the nerves and hysteria and even the digestions and reactions to the weather of those upon whose spontaneous activity it largely depends…

#highlighted #finance #macroeconomics #krugman #rogoff #blanchard #cognitive #economicsgoneright #economicsgonewrong