Monday Smackdown: Revisiting the Trump-McConnell-Ryan Tax Cut Debate

Gross Private Domestic Investment Nominal Potential Gross Domestic Product FRED St Louis Fed

A year ago, during the Trump-McConnell-Ryan corporate tax cut debate, Greg Mankiw wrote that “a relevant exercise for my readers… [is assuming] the capital stock adjusts so that the after-tax marginal product of capital equals the exogenously given world interest rate r…” That was unprofessional. That is not a relevant model for a large country with a floating exchange rate. If you want an investment boom, cut the deficit—like Clinton-Mitchell-Gephardt did over 1993-1996.

Paul Krugman explains why: Paul Krugman: Why Was Trump’s Tax Cut a Fizzle?: “The blue wave means that Donald Trump will go into the 2020 election with only one major legislative achievement: a big tax cut for corporations and the wealthy. Still, that tax cut was supposed to accomplish big things. Republicans thought it would give them a big electoral boost, and they predicted dramatic economic gains. What they got instead, however, was a big fizzle…

…The political payoff, of course, never arrived. And the economic results have been disappointing…. There’s no sign of the vast investment boom the law’s backers promised. Corporations have used the tax cut’s proceeds largely to buy back their own stock rather than to add jobs and expand capacity. But why have the tax cut’s impacts been so minimal? Leave aside the glitch-filled changes in individual taxes, which will keep accountants busy for years; the core of the bill was a huge cut in corporate taxes. Why hasn’t this done more to increase investment? The answer, I’d argue, is that business decisions are a lot less sensitive to financial incentives — including tax rates—than conservatives claim. And appreciating that reality doesn’t just undermine the case for the Trump tax cut. It undermines Republican economic doctrine as a whole….

Changes in interest rates affect the economy mainly through their effect on the housing market and the international value of the dollar (which in turn affects the competitiveness of U.S. goods on world markets). Any direct effect on business investment is so small that it’s hard even to see it in the data. What drives such investment is, instead, perceptions about market demand…. Business investments have relatively short working lives…. There aren’t many potential business investments that will be worth doing with a 21 percent profits tax, the current rate, but weren’t worth doing at 35 percent, the rate before the Trump tax cut….

Proponents of the tax cut, including Trump’s own economists, made a big deal about how we now have a global capital market, in which money flows to wherever it gets the highest after-tax return…. The key word here is, however, “appear.” Corporations do have a strong incentive to cook their books… The vast sums corporations have supposedly invested in Ireland have yielded remarkably few jobs and remarkably little income for the Irish themselves….

That doctrine is all about the supposed need to give the already privileged incentives to do nice things for the rest of us. We must, the right says, cut taxes on the wealthy to induce them to work hard, and cut taxes on corporations to induce them to invest in America. But this doctrine keeps failing in practice. President George W. Bush’s tax cuts didn’t produce a boom; President Barack Obama’s tax hike didn’t cause a depression. Tax cuts in Kansas didn’t jump-start the state’s economy; tax hikes in California didn’t slow growth. And with the Trump tax cut, the doctrine has failed again…

#shouldread #economicsgonewrong #smackdown #fiscalpolicy #globalization 

Fairly Recently: Must- and Should-Reads, and Writings… (December 6, 2018)


  1. The Business-Cycle History of the Past Thirty Years Through the Lens of Aggregate Demand: Four Components of Multiplier-Driving Spending

  2. Hoisted from the Archives: Margaret Thatcher Against Friedrich von Hayek’s Pleas for a Lykourgan Dictatorship in Britain

  3. Hoisted from the Archives (December 20, 2010): : Can’t Anybody in Obama’s Inner Circle Play This Game?

  4. Hoisted from the Archives: How Powell May Approach Regulation: Bloomberg Daybreak Asia 2017-12-01:

  1. Unfogged continues to be an oasis of sanity: Heebie-Jeebie: Post-WASP Sad Feels: “I feel like I ought to post on that dumb-dumb Douthat op-ed where he’s teary about WASPS of yore and misses that time they ruled the country, but it’s so dull that I can’t get through it… #orangehairedbaboons #journamalism

  2. Anna Snider: Just Released: Interactive R-star Charts: “With the arrival of Bank President John Williams… we’re now running—and sharing the output of—models he helped develop to obtain estimates of the natural rate of interest, or r-star, for the United States and other advanced economies… the real interest rate that allows an economy to expand in line with its underlying potential while keeping inflation stable…. We’re providing quarterly estimates of r-star and related variables on our public website in downloadable Excel files plus the replication code and documentation for both the Laubach-Williams (‘LW’) and Holston-Laubach-Williams (‘HLW/) models… #monetarypolicy #monetaryeconomics

  3. Barry Ritholtz: How to Use Behavioral Finance in Asset Management, Part III: “The ugly truth: there is an enormous contingency of players who do not have your best interests at heart… expert at pushing the hot buttons hard-wired into you that is part of your evolutionary inheritance…. This is why we try to teach how to think… [to] see through the bullshit machinery…. Beta vs Alpha: Beta is cheap and easy, Alpha is expensive and hard…. People who create alpha are exceedingly rare; people who can identify them in advance are rarer still. Why should any of us assume we are in either camp? Understanding this gives investors the greatest probability of succeeding… #finance #cognitive

  4. A first-class rant this morning! Yes, the New York Times is a sinkhole of sloth and depravity. What else is new?: Yastreblyansky: It’s the Stupid, Economy!: “Hi, it’s Stupid to say that it’s still the economy, whatever David Brooks may think: Shorter David Brooks, ‘It’s Not the Economy, Stupid’…. ‘The US economy is the best ever, so if you’re not happy there must be something wrong with you, like not going to church or getting married often enough. This explains why life expectancy has declined three years in a row for the first time since 1915-18. It’s your fault’. Looks like he thinks the Republicans might lose the election two weeks ago, but only time will tell… #journamalism #equitablegrowth

  5. Charlie Warzel and Ryan Ma: Facebook’s Internal Tensions Are Spilling Beyond The Company’s Walls: “‘It’s the bunker mentality. These people have been under siege for 600 days now. They’re getting tired, getting cranky—the only survival strategy is to quit or fully buy in.’… Internally, the conflict seems to have divided Facebook into three camps: those loyal to Zuckerberg and chief operating officer Sheryl Sandberg; those who see the current scandals as proof of a larger corporate meltdown; and a group who see the entire narrative—including the portrayal of the company’s hiring of communications consulting firm Definers Public Affairs—as examples of biased media attacks…

  6. Paul Krugman: “The funny part Kevin Hassett touted that slight blip upward in the first quarter as proof of tax-cut success.: “We’ve seen a plunge in foreign direct investment—that is, investment that involves control, rather than just being part of a portfolio. Also a plunge in US investment abroad, although that was an accounting reshuffle with little real meaning…. Kevin Hassett touted that slight blip upward in the first quarter as proof of tax-cut success; also failed to understand what the repatriation of earnings was about Gotta say that Mr. Dow 36K doesn’t disappoint. All of us are wrong sometimes, but he manages to be wrong every single time, about everything. Trump’s kind of guy…

  7. Olivier Blanchard: The French “Yellow Vest” Movement and the (Current) Failure of Representative Democracy: “Go back to the end of communism and the failure of central planning as an alternative to the market economy…. With the end of communism, it became clear that there was no alternative, only a muddle between market intervention and free markets. So long as growth was strong, and all boats were indeed lifted, the problem was manageable. Then growth slowed down, and inequality and insecurity became more salient…

  8. Niskanen Center (December 11, 2018): Starting Over: The Center-Right After Trump: “Donald Trump has had a hurricane-like effect on the Republican Party. The 2018 midterm elections have forced center-right Americans to reconsider their relationship to the Trump-driven conservative populism that has come to dominate the GOP. The Niskanen Center will present an important public analysis of this new political reality… #politics

  9. Tom Nichols: “Counter-Intuitive Though It May Seem, Trump winning was a political disaster for the white working class, especially older whites. They were once pandered to in elections; now it’s no longer possible to indulge the pretense that their concerns are economic-or fixable. That’s because there’s no ground for a policy fix or a compromise with people whose basic position is that they want America to be white, sorta Christian, and frozen in 1963-except with 2018’s drugs, sexual liberty, government transfer payments, ESPN channels, and internet porn… #orangehairedbaboons

  10. Highly amusing. My complaint is that Brexit is hardly “Estalblishment”—it is, rather, counter-establishment, or ex-establishment. Maybe the connection is that Classics at Oxbridge is also ex-establishment. I think of PPE as establishment: Neville Morley: We Need To Talk About Classics: “The overall breakdown among MPs was 25% Leave, 75% Remain…. Those with degrees in… Classics… 6 out of 8 did (plus one who hasn’t disclosed how he voted)… #brexit #orangehairedbaboons

  11. Barry Ritholtz: Understanding Why You Think QE Didn’t Work: “The right question isn’t always what happened, but what might have happened in the absence of action…

  12. Julie Segal: Not One Ivy League Endowment Beat a Simple U.S. 60-40 Portfolio Over Ten Years: “A new report shows that the complex and expensive endowment model hasn’t proved its worth since the financial crisis: The performance of Ivy League endowments has trailed a passive portfolio of 60 percent U.S. stocks and 40 percent bonds over the past ten years—and has been more volatile to boot, according to a new report from research and analytics provider Markov Processes International…

  13. John Judis: The Key to Understanding America’s Red-Blue Split Isn’t Ideology or Culture. It’s Economics: “Those blue dots: Increasingly… large cities and the suburbs that surround them…. For two years, the main analytical lens for explaining the unshakable red-blue division in American politics has been culture and ideology…. Another lens, one that often gets short shrift… jobs. Red and blue America aren’t separated just by their cultural politics; they are separated by sharp differences in how their economies have developed over the past half-century. And those economic differences can, in turn, explain many of the cultural differences that so bedevil our political system…

How Powell May Approach Regulation: Bloomberg Daybreak Asia 2017-12-01: Hoisted from the Archives

From a year ago. Not a transcript but much more what I wish I had said—that is, heavily edited and revised to increase clarity, decrease stupidity, and file a little bit of the ragged stream-of-consciousness rough edges off.

Nevertheless, holds up very nicely, no?

Needless to say, the backdrop here is not the view from the Berkeley Northgate TV studio:

How Powell May Approach Regulation If Named Fed Chair Bloomberg

but this is the view from the conference room in which I am holding pre-exam-week office hours:

View from Blum Center

Unfortunately, the view of the Golden Gate to the left of the frame is blocked by three tall pine trees that have no reason to live, and the peak of Mount Tamalpais is hidden by the salmon-and-white apartment building on the right.

People over the nexzt three months trying to decide between jobs at Berkeley and at universities with larger endowments take norte..

How Powell May Approach Regulation If Named Fed Chair: From 2017-11-01: Anchor: Do you think that’s concerning or do you think it’s refreshing that Powell comes from the private sector?

DeLong: I think it’s neither concerning nor refreshing. I think it’s fairly normal.

The things that you learn when you get an economics PhD are not essential to being a good Fed Chair. By now Powell has the equivalent of much more than one PhD in financial markets and monetary policy.

Anchor: Given all the time he spent around Wall Street and government since he left school, do you see him—given that he came from private equity—as having a cozy working relationship with Wall Street?

DeLong Private equity people tend to be very much focused on capital adequacy. They tend to look at how much money banks have put into risky situations, and become very worried. People who come out of banking tend to be much more “well, that’s what banks do”, and so are more willing to let banks do what banks do. Private equity people are more concerned thanks not wind up gambling with the governments money. Because deposits are guaranteed and insured by the government, they think the government ought to have a big voice in determining the riskiness of bank portfolios. Thus it’s not at all clear that he will be more deregulatory than Yellen was.

Powell should be an excellent choice. He was an extremely effective undersecretary of the treasury back in the George H.W. Bush administration. He has been a very responsible and positive contributor to the Federal Reserve Board’s discussions and debates over the past years. He is a very good administrator. He is going to be polite and effective manager. Whatever the consensus of the Federal Reserve Open Market Committee is, he is going to guide them to recognize that. He is not going to be a strong advocate on any particular side. And that is, I think, the appropriate role for him to take. The question is whether the Federal Reserve Open Market Committee has the right model of the economy. If it does, he will be a very successful Fed chair.

#highlighted #monetarypolicy 

Hoisted from the Archives (December 20, 2010): Can’t Anybody in Obama’s Inner Circle Play This Game?

Clowns (ICP)

Hoisted from the Archives: Can’t Anybody in Obama’s Inner Circle Play This Game?: When people in the White House ask me whether I think Obama’s SOTU address should be about tax reform or Social Security reform (i.e., 2/3 Social Security benefit cuts, 1/3 tax increases offered by the administration–and God alone knows what happens after that), I want to say: Why not make the SOTU address about jobs and economic recovery?…


Margaret Thatcher Against Friedrich von Hayek’s Pleas for a Lykourgan Dictatorship in Britain: Hoisted from the Archives

Hoisted: Margaret Thatcher Against Friedrich von Hayek’s Pleas for a Lykourgan Dictatorship: “My dear Professor Hayek, Thank you for your letter of 5 February. I was very glad that you were able to attend the dinner so thoughtfully organised by Walter Salomon. It was not only a great pleasure for me, it was, as always, instructive and rewarding to hear your views on the great issues of our time…

…I was aware of the remarkable success of the Chilean economy in reducing the share of Government expenditure substantially over the decade of the 70s. The progression from Allende’s Socialism to the free enterprise capitalist economy of the 1980s is a striking example of economic reform from which we can learn many lessons. However, I am sure you will agree that, in Britain with our democratic institutions and the need for a high degree of consent, some of the measures adopted in Chile are quite unacceptable. Our reform must be in line with our traditions and our Constitution. At times the process may seem painfully slow. But I am certain we shall achieve our reforms in our own way and in our own time. Then they will endure.

Best wishes.

Yours sincerely,

Margaret Thatcher.


Fairly Recently: Must- and Should-Reads, and Writings… (December 2, 2018)


  1. Monday Smackdown/Hoistred: John Cochrane’s Claim in Late 2008 That a Recession Would Be a Good Thing Deserves Some Kind of Award…

  2. Monday Smackdown/Hoisted: The “Hastert’ and “Hastertland” Paragraphs from Wooldridge and Micklethwaite’s “The Right Nation”

  3. Monday Smackdown Watch: The New York Times and Bret Stephens Continue to Beclown Themselves Bigtime

  4. Weekend Reading: The Royal Proclamation of 1763

  5. From Berkeley’s Blum Center: Whither 21st Century Development; and Other Topics?: A Q&A with Brad DeLon

  6. Contra Tim Duy, The Lack of Federal Reserve Maneuvering Room Is Very Worrisome…

  1. Von Hayek, to put it bluntly, loved Pincohet’s shooting people in soccer stadiums: the “Lykourgan Moment” in which unconstitutional and illiberal actions create the space for future stable libertarian capitalism was a recurrent fantasy of his. Friedman saw his trips to Chile to be an opportunity to preach to the gentiles—to primarily preach free markets and small government, but also respect for individuals, for their liberty, and for democracy. And he had no tolerance for those who said it was evil to try to make the Chilean people more prosperous because that might reinforce the dictatorship. Buchanan… where was Buchanan on this spectrum, anyway? It’s complicated: Andrew Farrant and Vlad Tarko: James M. Buchanan’s 1981 Visit to Chile: Knightian Democrat or Defender of the ‘Devil’s Fix’?: “Buchanan has repeatedly argued that the ‘political economist should not act as if he or she were providing advice to a benevolent despot’ (Boettke Constitutional Political Economy, 25, 110–124, 2014: 112), but an increasingly influential body of scholarship argues that Buchanan provided a wealth of early 1980s policy advice to Augusto Pinochet’s military dictatorship in Chile (e.g., Fischer 2009; Maclean 2017). In particular, Buchanan reportedly provided an analytical defense of military rule to a predominantly Chilean audience when he visited the country in late 1981… #buchanan #publicchoice

  2. Jo Johnson: The Inside Story of Brexit and Where It All Went Wrong: “My oldest brother Boris, one of the leaders of the Leave campaign, recently observed that the proposed arrangements were ‘substantially worse than staying in the EU’. Iain Dale, a leading Conservative commentator, wrote in despair this week that the deal was ‘so damaging to our country both in the short and long term that if I had to make a choice between voting for this deal or remaining in the European Union, I’d do the latter’. They are both influential thinkers in the party and they are both unquestionably right… #orangehairedbaboons

  3. Brink Lindsey: “Another election, another round of libertarians’ dumping on the right to vote. I used to just find this inane and self-defeating, but now I think it’s bad citizenship and affirmatively harmful…

  4. Steve M.: Hey, There’s No Reason TO Get Worked Up—It’s Only the Death of Democracy: “Leonhardt… is arguing that the electoral problems Democrats have complained about are much worse than what Republicans have cited (Republicans, in fact, are citing nonexistent acts of cheating)—but… that we should be quieter than the Republicans when they complain about nothing…. Yes, Kemp stole the election. But don’t say so, because you might upset people…

  5. David Warsh: Situations Wanted: “The mood at Duke has been gloomy since its economics department failed to make a place last year for Steven Medema, of the University of Colorado at Denver, in a quarrel over resources.  Both sides became the loser. Medema, an expert on the law and economics movement and a stalwart of the discipline, was expected to join professors Bruce Caldwell and Kevin Hoover in the core faculty of the Center for the History of Political Economy…#historyofeconomicthought

  6. This may well be the most interesting working paper the WCEG released last month: Daniel Schneider and Kristen Harknett: Consequences of Routine Work Schedule Instability for Worker Health and Wellbeing: “Research… has overwhelmingly focused on the economic dimension of precarity, epitomized by low and stagnant wages. But the rise in precarious work has also involved a major shift in the temporal dimension of work such that many workers now experience routine instability in their work schedules… #equitablegrowth

  7. Paul Krugman: The Trump Tax Cut and the Balance of Payments=: “It seems likely that the Tax Cuts and Jobs Act will turn out to have been the only major piece of legislation enacted under Donald Trump…. The TCJA played almost no role in the midterms: Republicans dropped it as a selling point, focusing on fear of brown people instead, while Democrats hammered health care. But now… seems like a good idea to revisit the bill and its effects. What I want to focus on in this piece is the effects on the balance of payments. Why?… Because the theory of the case… depended crucially on claims about what tax cuts would do to international movements of capital… [via] the balance of payments… #fiscalpolicy #globalization #orangehairedbaboons

  8. Margaret Sullivan: The Media’s Eagerness to Discount the ‘Blue Wave’ Feeds a Dangerous Problem: “Democratic strategist James Carville… was among the first to make the proclamation… ‘When you look at what’s going on here tonight, this is not a blue wave.’… On a stage Friday night in Manhattan, forecasting that Democrats would ultimately gain 37 House seats (not 29, as some early results had it), the data-oriented journalist Nate Silver said what happened certainly looked like a wave to him. Silver has been in a dust-up with New York Times columnist Bret Stephens, who wrote a column last week titled ‘The Midterm Results Are a Warning to the Democrats’. Silver said he was ‘enjoying thinking about Bret Stephens knowing deep down how dumb his hot take was and cringing a little bit every time Dems win an additional House seat’… #journamalism

  9. Is there any chance for a revival of the California Republican Party? Not as long as the national party is Trumpist—or rather, Pete Wilsonesque. This is what Pete Wilson wrought, after all: Carla Marinucci: RIP, California GOP: Republicans Lash Out After Midterm Election Debacle: “‘There is no message. There is no messenger. There is no money. And there is no infrastructure,’ says one top Republican…. even longtime conservative stronghold Orange County bereft of a single Republican in the House of Representatives, a growing chorus of GOP loyalists here say there’s only one hope for reviving the flatlining party: Blow it up and start again from scratch…

  10. Listening to Gabe Zucman last week on this reminded me that Heather Boushey said wise things about distributional national accounts before the U.S. Congress’s Joint Economic Committee: Heather Boushey: Testimony Before the Joint Economic Committee: “The U.S. Bureau of Economic Analysis releases a new estimate of quarterly or annual GDP growth every month. Distributional national accounts would add to this release an estimate that disaggregates the topline number and tells us what growth was experienced by low-, middle-, and high-income Americans. Academics have already constructed such a measure. The so-called DINA dataset constructed by economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman… #equitablegrowth

  11. 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 “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

  12. Jing Dong, Harold Pollack, and Rita Tamara Konetzka: Effects of Long‐Term Care Setting on Spousal Health Outcomes: “A large expansion in noninstitutional long-term care (LTC) use… shifting away from nursing homes toward home- and community- based services (HCBS)…. The rationale… (a) LTC users generally prefer HCBS to institutional care, and (b) for nursing home residents with less intensive care needs, HCBS may be cheaper…

  13. Thiemo Fetzer: Did Austerity Cause Brexit?: “The rise of popular support for… UKIP… strongly and causally associated with an individual’s or an area’s exposure to austerity since 2010…

  14. Once again, the Trump administration does not have to be competent for its chaos-monkey nature to wind up doing enormous damage: Gabe Gutierrez and Annie Rose Ramos: Harley-Davidson workers stunned by plant closure after tax cut: “Tim Primeaux has worked at the Harley-Davidson plant in Kansas City, Missouri, for 17 years. He was sure he was going to retire from the company. That all changed when Harley-Davidson told its 800 employees in January that the plant will be closing next year. Operations will be shifted to the motorcycle manufacturer’s facility in York, Pennsylvania…

The Royal Proclamation of 1763: Weekend Reading

The French and Indian War National Geographic Society

George III Hanover (1763): The Royal Proclamation of 1763: “BY THE KlNG. A PROCLAMATION: >Whereas We have taken into Our Royal Consideration the extensive and valuable acquisitions in America, secured to our Crown by the late definitive Treaty of Peace, concluded at Paris the 10th day of February last; and being desirous that all Our loving Subjects, as well of our Kingdom as of our Colonies in America, may avail themselves with all convenient Speed, of the great Benefits and Advantages which must accrue therefrom to their Commerce, Manufactures, and Navigation, We have thought fit, with the Advice of our Privy Council, to issue this our Royal Proclamation…

…hereby to publish and declare to all our loving Subjects, that we have, with the Advice of our Said Privy Council, granted our Letters Patent, under our Great Seal of Great Britain, to erect, within the Countries and Islands ceded and confirmed to Us by the said Treaty, Four distinct and separate Governments, styled and called by the names of Quebec, East Florida, West Florida and Grenada, and limited and bounded as follows, viz.

First—The Government of Quebec bounded on the Labrador Coast by the River St. John, and from thence by a Line drawn from the Head of that River through the Lake St. John, to the South end of the Lake Nipissim; from whence the said Line, crossing the River St. Lawrence, and the Lake Champlain, in 45. Degrees of North Latitude, passes along the High Lands which divide the Rivers that empty themselves into the said River St. Lawrence from those which fall into the Sea; and also along the North Coast of the Baye des Châleurs, and the Coast of the Gulph of St. Lawrence to Cape Rosières, and from thence crossing the Mouth of the River St. Lawrence by the West End of the Island of Anticosti, terminates at the aforesaid River of St. John.

Secondly—The Government of East Florida. bounded to the Westward by the Gulph of Mexico and the Apalachicola River; to the Northward by a Line drawn from that part of the said River where the Chatahouchee and Flint Rivers meet, to the source of St. Mary’s River, and by the course of the said River to the Atlantic Ocean; and to the Eastward and Southward by the Atlantic Ocean and the Gulph of Florida, including all Islands within Six Leagues of the Sea Coast.

Thirdly—The Government of West Florida. bounded to the Southward by the Gulph of Mexico. including all Islands within Six Leagues of the Coast, from the River Apalachicola to Lake Pontchartrain; to the Westward by the said Lake, the Lake Maurepas, and the River Mississippi; to the Northward by a Line drawn due East from that part of the River Mississippi which lies in 31 Degrees North Latitude, to the River Apalachicola or Chatahouchee; and to the Eastward by the said River.

Fourthly—The Government of Grenada, comprehending the Island of that name, together with the Grenadines, and the Islands of Dominico, St. Vincent’s and Tobago. And to the end that the open and free Fishery of our Subjects may be extended to and carried on upon the Coast of Labrador, and the adjacent Islands.

We have thought fit, with the advice of our said Privy Council to put all that Coast, from the River St. John’s to Hudson’s Streights, together with the Islands of Anticosti and Madelaine, and all other smaller Islands Iying upon the said Coast, under the care and Inspection of our Governor of Newfoundland.

We have also, with the advice of our Privy Council. thought fit to annex the Islands of St. John’s and Cape Breton, or Isle Royale, with the lesser Islands adjacent thereto, to our Government of Nova Scotia.

We have also, with the advice of our Privy Council aforesaid, annexed to our Province of Georgia all the Lands Iying between the Rivers Alatamaha and St. Mary’s.

And whereas it will greatly contribute to the speedy settling of our said new Governments, that our loving Subjects should be informed of our Paternal care, for the security of the Liberties and Properties of those who are and shall become Inhabitants thereof, We have thought fit to publish and declare, by this Our Proclamation, that We have, in the Letters Patent under our Great Seal of Great Britain, by which the said Governments are constituted. given express Power and Direction to our Governors of our Said Colonies respectively, that so soon as the state and circumstances of the said Colonies will admit thereof, they shall, with the Advice and Consent of the Members of our Council, summon and call General Assemblies within the said Governments respectively, in such Manner and Form as is used and directed in those Colonies and Provinces in America which are under our immediate Government: And We have also given Power to the said Governors, with the consent of our Said Councils, and the Representatives of the People so to be summoned as aforesaid, to make, constitute, and ordain Laws. Statutes, and Ordinances for the Public Peace, Welfare, and good Government of our said Colonies, and of the People and Inhabitants thereof, as near as may be agreeable to the Laws of England, and under such Regulations and Restrictions as are used in other Colonies; and in the mean Time, and until such Assemblies can be called as aforesaid, all Persons Inhabiting in or resorting to our Said Colonies may confide in our Royal Protection for the Enjoyment of the Benefit of the Laws of our Realm of England; for which Purpose We have given Power under our Great Seal to the Governors of our said Colonies respectively to erect and constitute, with the Advice of our said Councils respectively, Courts of Judicature and public Justice within our Said Colonies for hearing and determining all Causes, as well Criminal as Civil, according to Law and Equity, and as near as may be agreeable to the Laws of England, with Liberty to all Persons who may think themselves aggrieved by the Sentences of such Courts, in all Civil Cases, to appeal, under the usual Limitations and Restrictions, to Us in our Privy Council.

We have also thought fit, with the advice of our Privy Council as aforesaid, to give unto the Governors and Councils of our said Three new Colonies, upon the Continent, full Power and Authority to settle and agree with the Inhabitants of our said new Colonies or with any other Persons who shall resort thereto, for such Lands. Tenements and Hereditaments, as are now or hereafter shall be in our Power to dispose of; and them to grant to any such Person or Persons upon such Terms, and under such moderate Quit-Rents, Services and Acknowledgments, as have been appointed and settled in our other Colonies, and under such other Conditions as shall appear to us to be necessary and expedient for the Advantage of the Grantees, and the Improvement and settlement of our said Colonies.

And Whereas, We are desirous, upon all occasions, to testify our Royal Sense and Approbation of the Conduct and bravery of the Officers and Soldiers of our Armies, and to reward the same, We do hereby command and impower our Governors of our said Three new Colonies, and all other our Governors of our several Provinces on the Continent of North America, to grant without Fee or Reward, to such reduced Officers as have served in North America during the late War, and to such Private Soldiers as have been or shall be disbanded in America, and are actually residing there, and shall personally apply for the same, the following Quantities of Lands, subject, at the Expiration of Ten Years, to the same Quit-Rents as other Lands are subject to in the Province within which they are granted, as also subject to the same Conditions of Cultivation and Improvement; viz.

  • To every Person having the Rank of a Field Officer—5,000 Acres.
  • To every Captain—3,000 Acres.
  • To every Subaltern or Staff Officer,—2,000 Acres.
  • To every Non-Commission Officer,—200 Acres.
  • To every Private Man—50 Acres.

We do likewise authorize and require the Governors and Commanders in Chief of all our said Colonies upon the Continent of North America to grant the like Quantities of Land, and upon the same conditions, to such reduced Officers of our Navy of like Rank as served on board our Ships of War in North America at the times of the Reduction of Louisbourg and Quebec in the late War, and who shall personally apply to our respective Governors for such Grants.

And whereas it is just and reasonable, and essential to our Interest, and the Security of our Colonies, that the several Nations or Tribes of Indians with whom We are connected, and who live under our Protection, should not be molested or disturbed in the Possession of such Parts of Our Dominions and Territories as, not having been ceded to or purchased by Us, are reserved to them. or any of them, as their Hunting Grounds.—We do therefore, with the Advice of our Privy Council, declare it to be our Royal Will and Pleasure. that no Governor or Commander in Chief in any of our Colonies of Quebec, East Florida. or West Florida, do presume, upon any Pretence whatever, to grant Warrants of Survey, or pass any Patents for Lands beyond the Bounds of their respective Governments as described in their Commissions: as also that no Governor or Commander in Chief in any of our other Colonies or Plantations in America do presume for the present, and until our further Pleasure be known, to grant Warrants of Survey, or pass Patents for any Lands beyond the Heads or Sources of any of the Rivers which fall into the Atlantic Ocean from the West and North West, or upon any Lands whatever, which, not having been ceded to or purchased by Us as aforesaid, are reserved to the said Indians, or any of them.

And We do further declare it to be Our Royal Will and Pleasure, for the present as aforesaid, to reserve under our Sovereignty, Protection, and Dominion, for the use of the said Indians, all the Lands and Territories not included within the Limits of Our said Three new Governments, or within the Limits of the Territory granted to the Hudson’s Bay Company, as also all the Lands and Territories lying to the Westward of the Sources of the Rivers which fall into the Sea from the West and North West as aforesaid.

And We do hereby strictly forbid, on Pain of our Displeasure, all our loving Subjects from making any Purchases or Settlements whatever, or taking Possession of any of the Lands above reserved. without our especial leave and Licence for that Purpose first obtained.

And We do further strictly enjoin and require all Persons whatever who have either wilfully or inadvertently seated themselves upon any Lands within the Countries above described or upon any other Lands which, not having been ceded to or purchased by Us, are still reserved to the said Indians as aforesaid, forthwith to remove themselves from such Settlements.

And whereas great Frauds and Abuses have been committed in purchasing Lands of the Indians, to the great Prejudice of our Interests and to the great Dissatisfaction of the said Indians: In order, therefore, to prevent such Irregularities for the future, and to the end that the Indians may be convinced of our Justice and determined Resolution to remove all reasonable Cause of Discontent, We do, with the Advice of our Privy Council strictly enjoin and require that no private Person do presume to make any purchase from the said Indians of any Lands reserved to the said Indians, within those parts of our Colonies where, We have thought proper to allow Settlement: but that, if at any Time any of the Said Indians should be inclined to dispose of the said Lands, the same shall be Purchased only for Us, in our Name, at some public Meeting or Assembly of the said Indians, to be held for that Purpose by the Governor or Commander in Chief of our Colony respectively within which they shall lie: and in case they shall lie within the limits of any Proprietary Government, they shall be purchased only for the Use and in the name of such Proprietaries, conformable to such Directions and Instructions as We or they shall think proper to give for that Purpose: And we do, by the Advice of our Privy Council, declare and enjoin, that the Trade with the said Indians shall be free and open to all our Subjects whatever, provided that every Person who may incline to Trade with the said Indians do take out a Licence for carrying on such Trade from the Governor or Commander in Chief of any of our Colonies respectively where such Person shall reside, and also give Security to observe such Regulations as We shall at any Time think fit, by ourselves or by our Commissaries to be appointed for this Purpose, to direct and appoint for the Benefit of the said Trade:

And we do hereby authorize, enjoin, and require the Governors and Commanders in Chief of all our Colonies respectively, as well those under Our immediate Government as those under the Government and Direction of Proprietaries, to grant such Licences without Fee or Reward, taking especial Care to insert therein a Condition, that such Licence shall be void, and the Security forfeited in case the Person to whom the same is granted shall refuse or neglect to observe such Regulations as We shall think proper to prescribe as aforesaid.

And we do further expressly conjoin and require all Officers whatever, as well Military as those Employed in the Management and Direction of Indian Affairs, within the Territories reserved as aforesaid for the use of the said Indians, to seize and apprehend all Persons whatever, who standing charged with Treason. Misprisions of Treason, Murders, or other Felonies or Misdemeanors, shall fly from Justice and take Refuge in the said Territory. and to send them under a proper guard to the Colony where the Crime was committed of which they, stand accused, in order to take their Trial for the same.

Given at our Court at St. James’s the 7th Day of October 1763, in the Third Year of our Reign.


– Royal Proclamation, October 7, 1763.


Fairly Recently: Must- and Should-Reads, and Writings… (December 1, 2018)


  1. A short version of my review of Adam Tooze’s excellent Crashed: How a Decade of Financial Crises Changed the World: No Longer Fresh at Project Syndicate: Blame the Economists?: Ever since the 2008 financial crash and subsequent Great Recession, economists have been pilloried for failing to foresee the crisis, and for not convincing policymakers of what needed to be done to address it. But the upheavals of the past decade were more a product of historical contingency than technocratic failure… #tooze #greatrecession #financialcrisis #highlighted

  1. One interesting thing here is that Jonathan Swift was one of the biggest political liars of his generation—the anti-Whig Breitbart of his day, in some respects: Jonathan Swift (2010): Political Lying: “A political liar… ought to have but a short memory…. The superiority of his genius consists in nothing else but an inexhaustible fund of political lies, which he plentifully distributes every minute he speaks, and by an unparalleled generosity forgets, and consequently contradicts, the next half hour. He never yet considered whether any proposition were true or false, but whether it were convenient for the present minute or company…. You… will find yourself equally deceived whether you believe or not: the only remedy is to suppose, that you have heard some inarticulate sounds, without any meaning at all… #orangehairedbaboons #publicsphere

  2. Ben Alpers: A Far-Right Anti-Semitic Conspiracy Theory Becomes a Mainstream Irritable Gesture: “At the heart of this largely rote piece of Brooksian pablum is a claim that deserves a closer look.  ‘The younger militants’, writes Brooks, ‘tend to have been influenced by the cultural Marxism that is now the lingua franca in the elite academy’. This is interesting both for what Brooks appears to be trying to say and, more immediately, how he has decided to say it…. Norwegian far-right terrorist Anders Behring Breivik… murdered sixty-nine people… William Lind… associated with both the Free Congress Foundation and Lyndon LaRouche… Lind’s conception of Cultural Marxism was explicitly anti-Semitic…. Over the course of these years, the idea of Cultural Marxism spread across the American far right… [with] a big boost from Andrew Breitbart…. Why would a columnist like David Brooks, who is himself Jewish in background (if, perhaps, no longer in faith) and who has tried to build his brand identity by peddling in respectability and civility, adopt the term?…

  3. Ken Rogoff: Why Human Chess Survives: “At one time, it seemed that computers would sound the death knell for chess, not to mention all human mind games. Yet for followers of the game, the just-concluded world championship in London, won by the 27-year-old Norwegian Magnus Carlsen, was as exciting as any great soccer match…

  4. Heather Caygel: Pelosi Creates Leadership Position for Barbara Lee: “Rep. Barbara Lee will be joining the House Democratic leadership team…. Lee is expected to fill a new position being created by Minority Leader Nancy Pelosi to oversee the Steering and Policy Committee, the panel that determines committee assignments for Democrats. Pelosi’s decision expands leadership of the panel from two co-chairs to three…

  5. Nathaniel Rakich: What The Heck Is Happening In That North Carolina House Race?: “Affidavits… in which voters said that people came to their doors to collect their unsealed absentee ballots. One voter alleged that her ballot was incomplete at the time and that the collector said ‘she would finish it herself’. Another claimed to have received an absentee ballot that she did not request…. Something unusual happened in absentee-by-mail voting in Bladen County…. In six of the district’s eight counties, fewer than 3 percent of total votes were absentee-by-mail ballots. But in Bladen County, that number was 7.3…. Absentee-by-mail ballots tended to be much better for McCready than other ballots—except in Bladen County… [where] absentee-by-mail ballots were more Republican-leaning than the rest of Bladen’s votes by 8 percentage points. But if we look at the whole district, absentee-by-mail ballots were 24 points more Democratic-leaning… #orangehairedbaboons #politics #voterfraud

  6. Berkeley Center on the Economics and Demography of Aging: Inequality in Life and Death: Policy and Prospect: “Featured Speaker:  Peter Orszag…. Speakers:  Yuriy Gorodnichenko… Hilary Hoynes… Ronald Lee… Gabriel Zucman…. Moderator:  Alan Auerbach…. Inequality has become a central focus of policy discussions, but inequality has multiple dimensions and correspondingly many potential policy interventions. This mini-conference will consider inequality from this broad perspective…

  7. Samuel Moyn: The Alt-Right’s Favorite Meme Is 100 Years Old: “What is ‘cultural Marxism’? And why does Mr. Lind fantasize about its slaughter? Nothing of the kind actually exists. But it is increasingly popular to indict cultural Marxism’s baleful effects on society—and to dream of its violent extermination… #orangehairedbaboons #neofascim #fascism

  8. Hold on, every day, to the fact that this is not normal: Matthew Yglesias: Trump Wall Street Journal Interview: Transcript Shows Trade Ignorance: “He confuses tariffs and interest rates, and invents phantom new steel plants…. One of Trump’s earliest trade moves was to impose broad new taxes on imported steel and aluminum, which has allowed him to hand out exemptions as political favors…. It’s been bad for American companies that manufacture things made out of metal. Trump’s view, however, is that this policy has been a stunning success that’s made America’s steel industry ‘vibrant’…. ‘You know, they’re building plants all over the country because I put steel—because I put tariffs, 25 percent tariffs, on dumping steel’… #oranagehairedbaboons #tariffs #globalization

  9. I really wish that they had included something like my full quote—that: “It is Trump’s policies that have created a situation in which a Federal Reserve headed by Jay Powell cannot do otherwise than raise interest rates, and so raise the value of the dollar and increase the trade deficit. So what is he complaining about, really?” Philip Rucker et al.: Trump Says He’s Not Happy with Chairman of Fed: “Trump says he’s not happy with chairman of Fed: ‘I’m doing deals, and I’m not being accommodated by the Fed’, Trump said. ‘They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me’… #orangehairedbaboons #macropolicy

  10. Paul Krugman: The Bank of England’s Dire Estimates of Brexit: “Another trade discussion where I would like to believe the worst but not convinced: Brexit. The Bank of England just released some very dire scenarios…

  11. Tim Fetter: Research

  12. Tyler Feder: Time for a New Installment of Work-From-Home L👀ks…

  13. Marcy Wheeler: Mueller Just Guaranteed He Can Issue a Public Report: “Mueller’s team appears to have no doubt that Manafort was lying to them…. Giving Manafort the impression that he was pulling a fast one over the prosecutors… while reporting… to Trump … increases the likelihood that Trump just submitted sworn answers… full of lies…. That ‘detailed sentencing submission’… Mueller mentions?… There’s your Mueller report, which will be provided in a form that Matt Whitaker won’t be able to suppress… #orangehairedbaboons