Fairly Recently: Must- and Should-Reads, and Writings… (March 30, 2019)

6a00e551f080038834022ad3b05124200d

  • Professional Republicans, Not Professional Economists: How Low can They Go?: Among the professional Republicans, Ross Douthat joins Greg Mankiw in opposition to Steve Moore. So far, they are the only two I have seen—and Greg Mankiw is the only economist…. So far, not a peep I have seen out of anybody else: not Marty Feldstein, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, John. B. Taylor, James C. Miller III, Douglas Holtz-Eakin, Barry W. Poulson, Charles W. Calomiris, Donald Luskin, or Glenn Hubbard…

  • Yes, Of Course Larry Kudlow Is For QE Now and Was Against It When Obama Was President. Why Would You Think Otherwise?

  • Comment of the Day: Grizzled: “How Asia Works by Joe Studwell… the accounts he gives of successful asian development don’t seem to emphasize absolute property rights…

  • HA HA HA HA HA! Larry Lindsey and John Taylor: “PLEASE APPOINT US TO SOMETHING!! WE ARE LOYAL!!!! WE ARE NPOSTLTE PEOPLE!!!!!! PLEASE!!!!!!!!”: At some level, this is hilarious…. Greg Mankiw has said the obvious: that Stephen Moore is not qualified to be a Fed Governor…. Kevin Hassett—Kevin Hassett!—appears to are frantically trying to organize internal opposition…. And so John Taylor and Larry Lindsey decide that now is the time for them to demonstrate that they are NO PLATE OF SHIT TOO LARGE TO EAT people, as far as a Republican White House is concerned…

  • Weekend Reading: Salisbury the Late-Nineteenth Century Grand Strategist, as Explicated by Roberts, According to Gaddis: John Lewis Gaddis’s On Grand Strategy is not a book I would recommend highly…. However, there are two passages in the book that struck me very positively…

  • For the Weekend: Florence + The Machine: Tiny Dancer

  • Comment of the Day: Howard: “We need to remember that every other country in the world is now making plans on the expectation that having elected a trump once, America could easily do it again…

  • Note to Self: “Job Guarantee” vs. “Functional Finance”: Job Guarantee: “Our policy is for the government to run a deficit to offer low-quality make-work low-pay jobs that suck”. Functional Finance: “Our policy is for the government to run a deficit so that the labor market is in balance with employers getting the most value for their money possible and workers getting the most money for their time and energy possible with unemployment reduced to a ‘frictional’ level”. Job Guarantee is really stupid on many levels. Functional Finance is really smart. Put me down for Functional Finance…

  • Modern Dan Drezner Is Much Better…: “The Worst Piece Of Conventional Wisdom You Will Read This Year…. Stagflation in the 1970s…. Fiscal policy was an innocent bystander to this whole shebang. So I honestly don’t know what the hell Kinsley is talking about…

  • So, Professor Drezner, We Meet Again. And THIS TIME THE ADVANTAGE IS MINE!: Dan Drezner appears to mourn for the days when I was his nemesis…. I read Drezner’s piece in 2005 as an exercise in politics according to Karl Schmitt: that Drezner is following Schmitt’s advice that one’s first move when engaging in politics is to focus on identifying your enemies…. Here the point of Drezner’s piece is to assure (reassure?) his audience that his enemies are “Jackson and Sharpton… that thing they do”, which is to confront white politicians who are then “required to mau-mau kowtow to Jackson and Sharpton for something they say…” And he defines them as his enemies even though “they have a pretty valid point”. I am glad Drezner no longer does this…

  • I Said “Pass the Baton” to Those Further Left than I, Not “Bend the Knee”: Last night at dinner at Iyesare, Noah Smith admonished me for not making it clear that I said “pass the baton” to those further left, not “bend the knee”. So here I make that clear…. I said: pass the baton, right? I said: pass the baton. And yet as the thing spreads out into the Internet, it gets turned into “surrender”, “abandon my beliefs”, “bend at the knee”, all kinds of other things…

  • No Longer Fresh at Project Syndicate: Why Isn’t the Federal Reserve Buying Recession Insurance?


  1. Gene Sperling: Economic Dignity: “We must not lose sight of what economic policy is all about: allowing people to lead dignified lives…

  2. Steven Levitsky and Daniel Ziblatt: How Democracies Die https://books.google.com/books?isbn=1524762938

  3. Jamie Powell: The Cloud Software Kings Are Nuts, When’s the Crash?: “Within the cloud software space there are clearly excellent businesses. Adobe, for instance, in 2018 posted free cash flow margins of 41.7 per cent, while increasing revenues 23.7 per cent. Similarly Dell subsidiary VMware, worth just under of 77bn, last year had ebitda margins of 30.9 per cent, and grew its free cash flow 15.9 per cent. So when the model really works. It really works. The question is, with valuations gazing out to an ever-receding horizon, will it work out for investors?…

  4. Iyesare

  5. Stephen Spratt, Edward Bolingbroke , and Liz McCormick: Here’s Why U.S. Bond Yields Plunged So Much Over the Past Week: “Mortgage investors were forced to hedge, intensifying move. Traders who’d bet volatility would stay low were also burned: The Federal Reserve’s surprise policy shift last week shook markets, but, even still, the intensity of the ensuing drop in U.S. bond yields has puzzled many observers. A massive wave of hedging in the swaps market helps explain the scale of the eye-catching move…

  6. Still no professional Republican economists save Greg Mankiw opposed to Moore: Alexandra Petri: “Appointing My Horse Incitatus to the Federal Reserve Board to Own The Libs… sibusisodan: That’s a bit self-defeating, because it will never vote Aye…

  7. Lemin Wu et al.: Entertaining Malthus: Bread, Circuses, and Economic Growth

  8. Peking University: Lemin Wu

  9. I cannot stress this enough: there are no reasonable Republicans to make policy nice-nice with. For one example, look at the Trump-McConnell-Ryan tax cut. Republican economists could have drawn a red line and said they would oppose any plan that merely increased inequality without promising significantly faster investment and growth. They did not: they signed on to a plan that produces a pointless increase in income inequaity, and they lied about what it was likely to do: Paul Rosenberg: After the Mueller Gaslighting, We Know the Adults Won’t Save Us. But the Kids Might | Salon.com: “Jerry Taylor writes, ‘overcoming Republican intransigence is the only way that ambitious climate policy is ever going to come to fruition’, This is, quite frankly, absurd. As self-described Clinton-era neoliberal economist Brad DeLong recently explained in a Vox interview, there are no reasonable Republicans to make policy nice-nice with…

  10. Lucrezia Reichlin: The Eurozone’s Real Weakness: “The eurozone’s real weakness is not the lack of exchange-rate flexibility, or its common monetary policy. Rather, it is the breakdown in risk sharing when the economy is hit by large shocks, combined with the absence of a common fiscal policy. That is the main lesson of the past 20 years…

  11. Hinoki & the Bird

  12. Grand Central Market

  13. Tacos Tumbras a Tomas

  14. Tom Braithwaite: Apple and Goldman’s painful reinvention is hard to credit | Financial Times: “Jumping into consumer finance shows both companies are grasping for growth…

  15. Omni Los Angeles Hotel at California Plaza

  16. Wikipedia: Toffoli Gate

  17. Mrs Fish: March Omakase Special

  18. Wikipedia: Bless the Harts

  19. Nobu Matsuhisa: Miso Marinated Black Cod

  20. Wikipedia: Vladimir Tatlin: “one of the two most important figures in the Soviet avant-garde art movement of the 1920s, and he later became an important artist in the Constructivist movement…. In 1948 he was heavily criticized for his allegedly anti-communist stance and lost his job, but was not repressed. Tatlin died in 1953 in Moscow and was buried at the Novodevichy Cemetery…


  1. Let the record show that the Spartans did not show up for Marathon, save for the 300 hid in the Peloponnese until others had borne the brunt of the battle at Salamis, surrendered at sphakteria, allied with the Mede to try to destroy the freedom of the Greeks, and then hid in the Peloponnese from Philip, Alexander, and their successors: Paul Rahe: Was There a Spartan Mirage?: “the predilections and preferences fostered by bourgeois society and a reflection of our propensity to make of the past a morality tale supportive of our own way of life. If Lacedaemon is worthy of study today, it is as the opposite. For its example serves nicely as a corrective to our propensity for supposing ourselves the pinnacle of humanity. How well, we should ask, would we measure up if the Mede were to return? Would we fight? Or would we collaborate?…

  2. James Montier will soon have an answer to his question why people hate MMT. MMT is about to hate James Montier too: James Montier: Why Does Everyone Hate MMT?: “Many of the negative articles I’ve read about MMT use the tried and tested method of setting up a straw man purely for the purposes of knocking him down. So, to avoid confusion, I will lay out a simple and straightforward description of what MMT is…. (4) Functional finance, not sound finance. Fiscal policy is much more potent than monetary policy. Fiscal policy should be aimed at generating full employment while maintaining low inflation…

  3. Still only Greg Mankiw out of professional Republican economists publicly opposed to Steve Moore to the Fed. Still only Ross Douthat among professional Republican non-economists publicly opposed to the Fed: Catherine Rampell: Stephen Moore Says He’s No Trump Sycophant. But He Sure Sounds Like One: “He says that Trump has a rockin’ bod and deserves a Nobel Prize: Stephen Moore… ‘I don’t think anybody can reasonably say I am a sycophant for Trump, because I’m not’. Come. On. Moore has spent the past three years serving as surrogate, spin doctor and sycophant…. Moore has… abandoned many of the other issues in his ‘economic philosophy’…. Once a warrior for free trade, Moore now regularly defends Trump’s tariffs. Until recently a champion of undocumented immigrants, he now rails against them…. Previously an inflation truther who warned that official government statistics were hiding the dangerous hyperinflation just around the corner, he is suddenly a deflation truther…. Consider the personal flattery…. The president is ‘very charismatic’, ‘clever’, ‘gutsy’ and ‘the greatest marketer of modern times’…. ‘What a showman! What a gifted orator’… ‘looks like a football player, in incredible, great shape’… ‘in all seriousness… Donald Trump deserves the 2018 Nobel Prize in Economics’…

  4. Adam Tooze: Is This the End of The American Century?: America Pivots: “It is a gross exaggeration to talk of an end to the American world order. The two pillars of its global power–military and financial–are still firmly in place. What has ended is any claim on the part of American democracy to provide a political model. This is certainly a historic break…. Trump has forever personified the sleaziness, cynicism and sheer stupidity that dominates much of American political life. What we are facing is a radical disjunction between the continuity of basic structures of power and their political legitimation. If America’s president mounted on a golf buggy is a suitably ludicrous emblem of our current moment, the danger is that it suggests far too pastoral a scenario: American power trundling to retirement across manicured lawns. That is not our reality. Imagine instead the president and his buggy careening around the five-acre flight deck of a $13 billion, Ford-class, nuclear-powered aircraft carrier engaged in ‘dynamic force deployment’ to the South China Sea. That better captures the surreal revival of great-power politics that hangs over the present. Whether this turns out to be a violent and futile rearguard action, or a new chapter in the age of American world power, remains to be seen…

  5. Ian Dunt: Indicative Votes: A People’s Vote Just Became Much More Likely: “This was a very good night for the People’s Vote campaign…. Oliver Letwin… made it clear that it would be a multi-stage process… [with] a further day… which would move from finding the options with substantial support and see if any of them could secure a majority…. The government whipped against it, in a last-gasp attempt to kill off the process, and they failed…. There were surprisingly clear answers about what kinds of propositions might be able to secure support…. The hardline Brexit options fell hard…. Soft Brexit did surprisingly badly. Labour’s alternate plan, which does not specify a model, fell by 237-307…. Two propositions stood out…. Ken Clarke’s proposal for the UK to stay in the customs union fell by just 264 votes to 272…. Margaret Beckett’s motion calling for a confirmatory public vote on whatever deal was passed fell by 268 votes to 295… a far tighter margin than expected and also the single largest positive vote for any Brexit option so far…. The question now becomes which options are brought back to be decided on on Monday. Logically, it should be customs union membership and a second referendum, but Letwin may want to include one or two more. There is also a question about the voting system…. It’s only been 48 hours since the Letwin amendment was passed. And already the Brexit debate is changing beyond all recognition…

  6. Many Democrats have been saying “at its core, ObamaCare is a Republican idea from the Heritage Foundation!” and Scott Lemieux has been saying “Republicans have always hated the idea of making health care affordable to those who cannot pay through the nose in a broken adversely-selected market!” The many Democrats have said that by ignoring its Heritage Foundation roots Scott is making ObamaCare appear to be a more extreme-lefty plan than it is. Scott has been saying that by pushing the “ObamaCare = HeritageCare and RomneyCare” line the many Democrats have been feeding the myth that Reepublicans are actually in favor of getting more people health care. Can’t we agree that ObamaCare does have Heritage roots but that the Heritage Plan was never intended to be a serious policy proposal? Can’t we agree that the fact that the core of ObamaCare was a compromise that Mitt Romney felt he could accept is a sign that it is not a lefty plan? Can’t we all just get along?: Scott Lemieux: You Ever Think They’re Not Acting?: “As long as John Roberts remains the median vote of the Court—not a trivial condition!—this suit has virtually no chance of actually destroying the ACA, but is handing Democrats a nice political gift. The ‘we support healthcare reform, just not this healthcare reform’ con Republicans have been running for decades—with lots of inexplicable help from liberals–is finally over…

  7. The Financial Times—which in the circles I travel is widely-regarded as the only real newspaper, as the only one where when it publishes new things they are likely to be true while also publishing more than its quota of true things that are new, rather than taking its core mission to be pleasing its well-connected sources first and its advertisers second—should not have published this. Ian Buruma’s transgression was that he took his authority and the authority fo the New York Review of Books and used it give a man—Jian Ghomeshi—who had assaulted more than 20 women space to lie, uncorrected. And the FT should correct this story, and add to the article a headnote noting that Ian Buruma does not even now understand how he was unprofessional as an editor: Ian Buruma: Editing in an Age of Outrage: “Ian Buruma lost his job at the NYRB after publishing a controversial article. Here he reflects on what went wrong… ‘[My] transgression was not that any particular view was defended, but that a person accused of sexual abuses should be heard at all…

  8. Joan R. Rosés and Nikolaus Wolf: Regional Economic Development In Europe, 1900-2010: A Description Of The Patterns: “Regional employment structures and regional GDP and GDP per capita in 1990 international dollars, stretching over more than 100 years…. Variation in the density of population and economic activity, the spread of industry and services and the declining role of agriculture… changes in the levels of GDP and GDP per capita… patterns of convergence and divergence over time and their explanations… a secular decrease in spatial coherence… a U-shaped development in geographic concentration and regional income inequality, similar to the finding of a U-shaped pattern of personal income inequality…


#noted #weblogs

Ian Buruma: An Apology Would Be the Wrong Response

Can someone parse this for me? On the one hand “I should have… I could also have… voices… ought to have been considered…” and yet “an apology would be the wrong response”. Is the claim “I made bad mistakes, but I am proud that I made them, and anyone who wants me to try to fix things should get stuffed?” Isn’t that what “I refuse to apologize”! means?: Ian Buruma: An Apology Would Be the Wrong Response: “I should have insisted that the accusations against him were spelt out in more detail. He omitted the fact that he had caused injury, with reports of one woman suffering a cracked rib, and he didn’t mention the large number of women who had accused him. I could also have made it clear that our intention had not been to exonerate him, let alone to excuse violence against women…. The voices of his accusers ought to have been considered, as a response to his evasions…

So Ian Burumu’s NYRB did not spell out the accusations against Ghomeshi, did not mention that more than 20 women accused him, did not “ma[k]e it clear that our intention had not been to exonerate him, let alone to excuse violence against women”, did not consider the voices of his accusers. And Buruma knew that the piece would be “provocative” and “expected to be criticised”.

And yet for Buruma:

Ian Buruma: An Apology Would Be the Wrong Response: “The ferocity of the reaction surprised me… accused of promoting a rapist. My own journalistic writings… scrutinised for proof that I was a misogynist. Online petitions… to get me fired…. University presses threatened to pull their ads…. Interview… in which I said of Ghomeshi: ‘The exact nature of his behaviour—how much consent was involved—I have no idea, nor is it really my concern’. By this, I meant that I was mainly concerned with what happened later, but it was read as though I had no concern for what had happened to the women…. The magazine’s owner decided I had to go…

…In my view, an editor should not be afraid of publishing contentious subject-matter; the job is to make people think. There is much talk on American campuses of the need to avoid opinions, or even literary works that might make students feel uncomfortable. But a certain degree of discomfort can help people consider unfamiliar or unorthodox points of view, which is usually salutary…. The NYRB… had published writers who behaved violently before…. I would not claim that Ghomeshi is a master stylist. But the quality of a person’s prose should not determine how we judge the writer’s moral character. And moral character, in turn, shouldn’t be the sole determinant in whether the person should or should not be published…. I decided that an apology would be the wrong response…. The intensity of the reaction has been alarming and is detrimental to the freedom of expression. Editors should be able to take risks. Denunciation, instead of debate, will result in a kind of fearful conformity. Too much anxiety about defying the zeitgeist will have a stultifying effect on public discourse…

It was not “read as though I had no concern for what had happened to the women…” He literally said “how much consent… is… [not] really my concern…”


#noted #journamalism 

Salisbury the Late-Nineteenth Century Grand Strategist, as Explicated by Roberts, According to Gaddis: Weekend Reading

January 1943 FDR Day by Day

Weekend Reading: John Lewis Gaddis’s On Grand Strategy is not a book I would recommend highly. The “practitioners” he thinks he has learned from are “David Brooks, Walter Russell Mead, John Negroponte, Peggy Noonan, Victoria Nuland, Paul Solman, Jake Sullivan, and Evan Wolfson”: a Republican hack-journalist with some regrets, an ex-Yale professor now Hudson Institute fellow who is a little too enamored of the “clash of civilizations”, a George W. Bush Iraq ambassador and DNI, another Republican hack-journalist but this one without regrets, a former assistant secretary of state for European and Eurasian affairs who appears to have made a personal enemy of German Chancellor Merkel, a very sharp business-and-economics correspondent for PBS, and one of the chief negotiators for the Iran nuclear deal, and a co-counsel in the Hawai’i “freedom to marry” case. With the exception of Sullivan, these are not people I would take as positive role model practitioners of “Grand Strategy” at all: but there they are.

However, there is one passage in the book that struck me very positively. It was about British late-nineteenth-century prime minister Robert Talbot Gascoyne-Cecil (1830-1903), eventually 3rd Marquess of Salisbury from 1868, and Britain’s grand strategy. Starting in the 1840s with the Oregon affair, Britain pursued a grand strategy of appeasing the United States—a strategy that Robert Talbot Gascoyne-Cecil unwillingly embraced—that managed to make the United States Britain’s wired aces in the seven-card stud poker game that was world geopolitics from 1914 to 2000:

John Lewis Gaddis On Grand Strategy https://books.google.com/books?isbn=0143132512: “One night during the [American] Civil War, Georgina Cecil awoke to find her husband standing, asleep but agitated, before an open second-floor window. He seemed to be expecting invaders, ‘presumably Federal soldiers or revolutionary mob’. Strangely, though, this happened in England, and the sleepwalker was Lord Robert Talbot Gascoyne-Cecil, a descendant of Queen Elizabeth’s trusted counselor Lord Burghley. As the 3rd Marquess of Salisbury, this Cecil would go on to serve his own queen, Victoria, three times as prime minister. Never though, his wife recalled, did he suffer ‘such extremes of depression and nervous misery as at that time’. For the United States terrified Salisbury…

…his biographer Andrew Roberts has explained. He’d never been there and disapproved of slavery, but he despised democracy—so deeply that he sympathized with secession, favored the Confederacy, and regarded Lincoln’s assassination as a legitimate last act of resistance.

Most of all, Salisbury worried that the Union’s pursuit of ideological ends through vast military means would revive Napoleonic ambitions in Europe. Salisbury died in 1903, not before nightmares, however, anticipating the trenches, tanks, killing fields, and even aerial bombardments of the 1914–18 Great War. “If we had interfered,” he’d written of the Civil War in the last year of his life, it might have been possible “to reduce the power of the United States to manageable proportions. But two such chances are not given to a nation in the course of its career.”

Americans through most of Salisbury’s life, however, had been anything but Napoleonic. Eager to heal their wounds of war—even if that meant weakening emancipations for which the Union had fought—they’d returned to the states most of the power Lincoln centralized, dismantled their world-class military, and concentrated on populating, developing, and exploiting a continental republic, swollen after 1867 by Seward’s purchase, from the Russians, of what became Alaska.

National security receded as a concern: the United States, historian Robert Kagan writes, was now “too large, too rich, and too heavily populated to be an inviting target for invasion even by the world’s strongest powers.” That in itself alarmed Salisbury the sleepwalker, for where did it leave the British Dominion of Canada, with its long, indefensible southern border? He could hardly rely indefinitely on American self-restraint.

Salisbury the strategist, however, distinguished between predation—what strong countries do to weak ones—and baiting—what adolescents do to parents. Putting up with the second might forestall the first. “Our best chance of ordinary civility,” he concluded while foreign minister in 1888, “is to have a thoroughly anti-British Administration in Washington.”

But even Salisbury, as prime minister, thought it excessive when, in 1895, Grover Cleveland’s secretary of state, Richard Olney, turned an old Venezuelan boundary dispute with British Guiana into a brash reassertion of the Monroe Doctrine. “Europe as a whole is monarchical,” he superfluously announced. “America, on the other hand, is devoted to the exactly opposite principle—to the idea that every people has an inalienable right of self-government…. Today the United States is practically sovereign on this continent.” Despite its erratic targeting—Confederate rights? Venezuela’s geography?—Olney’s “twenty-inch gun” (Cleveland’s gloat) caught Salisbury at a bad time.

Baited… on two fronts, Salisbury yielded on one. “There is no such thing as a fixed policy,” he observed, “because policy like all organic entities is always in the making.” And so he and his successors began methodically and unilaterally eliminating all sources of friction with the United States. They not only gave in on Venezuela (where the Americans promptly lost interest and accepted arbitration), but subsequently and more significantly on the Spanish-American War (Britain stayed neutral), on the Philippines (Salisbury supported American, not German, annexation), on a future Panama Canal (Britain relinquished long-held rights in the region), and on Alaska’s boundary (Canada sacrificed for the greater good). It may not have been appeasement, but it was lubrication: like Mikhail Gorbachev almost a century later, Salisbury set out to deprive an enemy of its enemy.

Self-congratulation wasn’t Salisbury’s style, but he could more credibly own the accomplishment. Which he tactfully did in 1897 by congratulating his queen—his ancestor Burghley would have approved—as she celebrated her sixtieth year on the throne:

The impulse of democracy, which began in another country in other lands, has made itself felt in our time, and vast changes in the centre of power and incidence of responsibility have been made almost imperceptibly without any disturbance or hindrance in the progress of the prosperous development of the nation.

The sleepwalker still regretted the Confederacy’s defeat, and the consequent loss of a balance of power in North America. The strategist, however, never forgot that “we are fish,” and “alone can do nothing to remedy an inland tyranny.” So Great Britain learned to live with a democracy dominating a continent. For that, with whatever ambivalence, Salisbury had Lincoln to thank…


#weekendreading #strategy #history 

Modern Dan Drezner Is Much Better…

Consumer Price Index for All Urban Consumers All Items Less Food and Energy FRED St Louis Fed

Dan Drezner: The Worst Piece Of Conventional Wisdom You Will Read This Year: “OK, so, a few things…. Stagflation in the 1970s was caused primarily by an inward shift of the aggregate supply curve due to a surge in commodity prices, particularly energy. Some central banks responded with accommodating monetary policies that accelerated inflation even further. Fiscal policy was an innocent bystander to this whole shebang. So I honestly don’t know what the hell Kinsley is talking about…

…More importantly, the current macroeconomic climate is really, really different from the 1970s. Inflation was a Big Bad Problem during that decade. It is not a problem right now. If inflation were spiking, then a genuine debate could be had on macroeconomic policy options. But that’s not the case.

In his final paragraphs, Kinsley has managed to epitomize the exact critique that Krugman has served up.

The irony of this whole thing is that the Congressional Budget Office’s recent figures put the lie to Kinsey’s hidden assumption that the federal budget deficit is getting bigger and bigger. Right now it’s shrinking at the fastest rate in postwar economic history…. Kinsley et al. are acting as if the current fiscal climate demands immediate budgetary actions. And it doesn’t—it really, really doesn’t.

Look, I think Paul Krugman has a few policy blind spots. His method of argumentation alienates as many people as it attracts. But he’s not wrong when he’s talking about austerity. In his response, Michael Kinsley has managed to embody the conventional wisdom in Washington—and in doing so, embody every policy caricature of Paul Krugman’s worldview.

Am I missing anything?…


#monetarypolicy #publicsphere #journamalism #orangehairedbaboons 

Fairly Recently: Must- and Should-Reads, and Writings… (March 26, 2019)

6a00e551f080038834022ad3b05124200d


  1. Shelly Hagan and Wei Lu: San Francisco’s `Super Rich’ Lead a Widening U.S. Wealth Divide: “The Income Gap Is Getting Worse in American Cities. U.S. income gap between top 5% and middle 20% grew by 118,000. Boise City, Idaho, and Knoxville, Tennessee, have robust gaps: The tech hub’s ‘super-rich versus middle-class’ gap swelled by $118,000 to $529,500 over the past five years, as the top 5 percent of households earned $632,310 in 2017, compared with $102,785 for the middle class, according to the Bloomberg analysis of U.S. Census data…

  2. Richard Samans: Better Labor Standards Must Underpin the Future of Work: “As technology and deregulation continue to shape the labor market, maintaining strong worker protections is as important as ever…

  3. Hess Chung and Eric Engen (20134): Identifying the Sources of the Unexpectedly Weak Economic Recovery Using the FRB/US Model

  4. Abhijit V. Banerjee and Esther Duflo: The Economic Lives of the Poor

  5. Daniel Alpert: What the Federal Reserve Got Totally Wrong about Inflation and Interest Rate Policy: Getting Real About Rents

  6. Jared Bernstein: On the Economy

  7. Katrin Gödker, Peiran Jiao, and Paul Smeets: Investor Memory: “Self-serving memory bias… distorts beliefs and drives investment choices. Subjects who previously invested in a risky stock are more likely to remember positive investment outcomes and less likely to remember negative outcomes. In contrast, subjects who did not invest but merely observed the investment outcomes do not have this memory bias. Importantly, subjects do not adjust their behavior to account for the fallibility of their memory…

  8. Wired: How Animators Created the Spider-Verse

  9. Mark Thoma: Links (3/24/19)

  10. Ben Thompson: Apple’s Services Event: “The problem, though, is that there will never be a product like the iPhone again; Apple may have found its product future (good for developers and customers), but its financial future is less certain (not so good for Wall Street)…

  11. Data For Progress: A Green New Deal. New Consensus: Green New Deal

  12. Menzie Chinn: “Stop Stephen Moore from being appointed to the Fed. Here is a non-exhaustive recounting of Moore’s reign of error…

  13. Marina Hyde: Get Set for Brexit: Indicative Day–The One Where the Grand Wizards Turn on Each Other: “On Sunday it was all looking so good for the Brexit ultras. Then came Monday, and that parliamentary vote…. Like all initiatives handled by Oliver Letwin since the 1980s, it promises to go spectacularly wrong in ways we haven’t even thought of yet, but let’s pretend otherwise before the shitstorm gets properly under way on Wednesday…

  14. Catherine Rampell: The Op-Ed that Got Stephen Moore His Fed Nomination Is Based on Two Major Falsehoods: “Trump has nominated to the world’s most powerful central bank a guy who has trouble telling whether prices are going up or down, and struggles to remember how the most famous Fed chair in history successfully stamped out inflation. But hey, Republican senators still seem keen on him because ‘the establishment’ keeps pointing out how inept he is…

  15. Nick Timiraos: @NickTimiraos: “Ben Sasse supports Moore: ‘Steve’s nomination has thrown the card-carrying members of the Beltway establishment into a tizzy, and that says little about Steve and his belief in American ingenuity, but a lot about central planners’ devotion to groupthink’…

  16. Catherine Rampell: Stephen Moore Could Inflict More Long-Term Damage than Any of Trump’s Other Nominations: “President Trump has made a lot of ill-advised nominations. But perhaps no single choice could inflict more long-term damage than the one he announced Friday: Stephen Moore, Trump’s pick to join the Federal Reserve Board…

  17. Jo Walton (2010): The Suck Fairy

  18. Martin Cahill: A Stunning Debut: Arkady Martine’s “A Memory Called Empire”

  19. UCL Institute for Innovation and Public Purpose: @IIPPUCL_: “Watch as @bankofengland Chief Economist Andy Haldane explores 10 monetary myths that will help present and future generations to rethink and reframe the way we organise our economies, our financial systems and our societies https://www.youtube.com/watch?time_continue=1&v=Ul0pTVl8l98


  1. Paul Krugman: Trump’s Kakistocracy Is Also a Hackistocracy: “Trump said he planned to nominate Stephen Moore for the Fed’s Board of Governors. Moore is manifestly, flamboyantly unqualified for the position. But there’s a story here that goes deeper than Moore, or even Trump; it’s about the whole GOP’s preference for hucksters over experts, even partisan experts…

  2. Cathy Young: Who’s Afraid of The Bulwark?: “The conservative media wars heat up—but miss the point…. I don’t know what The Bulwark’s endgame is, but right now, it’s among a deplorably small number of outlets that get high marks for intellectual diversity and integrity. That should be good enough…

  3. Lukasz Rachel and Larry Summers: Responding to some of the Critiques of Our Paper on Secular Stagnation and Fiscal Policy: “Prefer more reliance on reasonably managed fiscal policies as a response to secular stagnation: government borrowing at negative real rates and investing seems very attractive in a world where there are many projects with high social returns…

  4. The very sharp Mohamed A. El-Erian misses one important thing here: almost always, recessions are much deeper than any naive computation of the size of the initial shock minus the sum of monetary and fiscal offset would predict. Why? Because businesses and investors are forward-looking, and take recession signals seriously. As Tim Duy says: everyone’s “recession indicator… probability models… [are] raising red flags”. It’s a multiple-equiibrium thing. So while a recession in the next year is not certain and may not be probable it is not unlikely: Mohamed A. El-Erian: Inverted Yield Curve Doesn’t Necessarily Mean Recession Is Nigh: “This rather benign economic outlook conflicts with the traditional signal of an inverted curve for four main reasons…. [1] Europe… puts downward pressure on U.S. yields…. [2] The Fed… a remarkable and rapid U-turn…. Other segments of the bond market are not signaling a major economic slowdown…. The erosion in inflationary expectations may… [be a] realization that many of the underlying drivers are structural…. This curve inversion is unlikely to be the traditional signal of a U.S. recession…

  5. Brad Setser: Why China’s Incomplete Macroeconomic Adjustment Makes China 2025 a Bigger Risk: “China… wants to ‘localize’ the production of the bulk of the high tech goods that its economy needs… Made in China 2025… a mix of subsidies (some disguised, as they flow through state-backed investment funds and the financial sectors) and ‘Buy China’ preferences…. Losses… China is good at both hiding them—and, well, absorbing what at the time seems like large losses as an inevitable cost of its rapid growth. The usual argument against such a mix of industrial policy and protectionism is that it just won’t work. A country that subsidizes its industries ends up with inefficient industries…. But China, is, to use Philip Pan’s phrase, the state that failed to fail…

  6. Robert Hutton: Indicative Votes: How Parliament Will Try to Change Brexit: “Members of Parliament will have put forward proposals they think should be voted on and it’s up to Bercow to choose which go forward…. At 7 p.m., Bercow will draw proceedings to a close and announce the vote. This won’t be like the usual House of Commons votes, where MPs walk through different lobbies to express their views. Instead, they’ll be given a piece of paper listing the options, and asked to vote Aye or No on each one. They’ll have half an hour…. Counting the indicative votes will probably take around an hour, and it will be up to Bercow whether he interrupts the government debate to announce the result, or waits until later. So some time before 10 p.m. The results will show how many MPs voted for and against each motion, and what happens next depends on that. Under Letwin’s proposals, Parliament will next have control of its own agenda on Monday April 1. That could be used to narrow options further, or to order the government to pursue a particular course of action…

  7. Charles Pierce: Khalid Shaikh Mohammad Tapes Went Unreviewed in Lead-Up to 9/11 in Latest Bush Administration Blunder: “‘Terry McDermott, co-author of “The Hunt for KSM,” said his research found that United States satellites “randomly scooped up” calls between Mr. Mohammed and an alleged deputy, Ramzi bin al-Shibh. “The N.S.A. intercepted calls but didn’t listen to them or translate them until after 9/11,” he said. “Afterward, they went through this stuff and found out what it was.”’ It is here where we remind everyone that one of the first things John Ashcroft did after being named attorney general by President C-Plus Augustus was to reorient the Justice Department’s priorities toward porn and busting Tommy Chong for weed… how clustered was the fck that was the intelligence community… in the summer of 2001… how desperate were the efforts to cover up all of the above, and more, in the wake of the attacks themselves…

The Fed Board Unmoored: Live at Project Syndicate

Prob6mo 2j5oc8g 1080x600

Live at Project Syndicate: The Fed Board Unmoored: “In December 2015, the right-wing commentator Stephen Moore, US President Donald Trump’s pick to fill a vacancy on the US Federal Reserve Board of Governors, savagely attacked then-Fed Chair Janet Yellen and her predecessor, Ben Bernanke, for maintaining loose monetary policies in the years following the ‘Great Recession’…. On December 26, 2018, he savagely attacked Yellen’s successor, Jerome Powell, for raising interest rates to unwind the very approach that he had condemned three years earlier. ‘If you cut engine power too far on a jetliner’, he warned, ‘it will stall and drop out of the sky’. Moore complained that after having ‘risen by 382 points on hopes that the Fed would listen to Trump and stop cutting power’, the Dow Jones Industrial Average had “plunged by 895 points” on the news of another interest-rate hike. This, he concluded, was evidence that ‘the Fed’s monetary policy has come unhinged’…


#projectsyndicate #highlighted #orangehairedbaboons #monetarypolicy 

David Glasner: James Buchanan Calling the Kettle Black: Weekend Reading

San Francisco from Abovee Berkeley

IIR, back in 1986 I was one of two two people at the MIT economics Wednesday faculty lunch willing to say that I thought the award of the Nobel Prize to James Buchanan was not a travesty and a mistake. I would now like to withdraw that opinion.

Buchanan was a hedgehog. Hedgehogs are wise in one big thing and very stupid otherwise. They may be intellectually useful for a community, or they may be tremendously destructive—it depends. But they are not wise. And they should not be given prizes that lead outsiders to think that they are wise:

David Glasner: James Buchanan Calling the Kettle Black: “In the wake of the tragic death of Alan Krueger, attention has been drawn to an implicitly defamatory statement by James Buchanan about those who, like Krueger, dared question the orthodox position taken by most economists that minimum-wage laws increase unemployment among low-wage, low-skilled workers whose productivity, at the margin, is less than the minimum wage that employers are required to pay employees. Here is Buchanan’s statement…

…The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the presupposition that human choice behavior is sufficiently relational to allow predictions to be made. Just as no physicist would claim that “water runs uphill,” no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teachings of two centuries; we have not yet become a bevy of camp-following whores.

Wholly apart from its odious metaphorical characterization of those he was criticizing, Buchanan’s assertion was substantively problematic….

Buchanan was obviously wrong not to acknowledge… obvious circumstances in which a minimum-wage law could simultaneously raise wages and reduce unemployment without contradicting the inverse relationship between quantity demanded and price. Such circumstances obtain whenever employers exercise monopsony power in the market for unskilled labor….

The second problem with Buchanan’s position is less straightforward and less well-known, but more important, than the first. The inverse relationship by which Buchanan set such great store is valid only if qualified by a ceteris paribus condition…. Labor markets, except at a granular level, when the focus is on an isolated region or a specialized occupation, cannot be modeled usefully with the standard partial-equilibrium techniques of price theory, because income effects and interactions between related markets cannot appropriately be excluded from the partial-equilibrium analysis of supply and demand in a broadly defined market for labor…. Moreover, the idea that the equilibration of any labor market can be understood within a partial-equiilbrium framework in which the wage responds to excess demands for, or excess supplies of, labor just as the price of a standardized commodity adjusts to excess demands for, or excess supplies of, that commodity, reflects a gross misunderstanding of the incentives of employers and workers in reaching wage bargains for the differentiated services provided by individual workers….

The truth is we don’t have a good understanding of how wages adjust, and so we don’t have a good understanding of the effects of minimum wages. But in arrogantly and insultingly dismissing Krueger’s empirical research on the effects of minimum wage laws, Buchanan was unwittingly exposing not Krueger’s ideological advocacy but his own.


#weekendreading 

A Firebell in the Morning…

Lesson one of central banking: yield curve inversion should only be allowed when the central bank wants to push inflation down. So what does the Fed think it’s doing? Is it that confident that the bond market does not know what it is doing? Show me any optimal control exercise that says that right now is a good time to allow yield curve inversion: Vildana Hajric and Sarah Ponczek: Stock Market Today: Dow, S&P Live Updates for March 22, 2019: “U.S. equities fell and Treasuries rose after miserable data from the German manufacturing sector…. The yield on 10-year Treasuries, already at a more-than-one-year low, extended its decline. The three-year/10-year yield curve inverted for the first time since 2007…


#noted 

Raising the Curtain: Trade and Empire

Yet Another Outtake from “Slouching Towards Utopia?: An Economic History of the Long Twentieth Century, 1870-2016”


Il Quarto Stato

Raising the Curtain: The Long Twentieth Century—Trade and Empire

The extent to which the navies and trading fleets of the great European sea-borne empires of the sixteenth, seventeenth, and eighteenth centuries shaped the industrial development of western Europe has always been one of the most fiercely-debated and unsettled topics in economic history. That European expansion in the sixteenth, seventeenth, and eighteenth centuries were catastrophes for the regions of west Africa that were the sources of the slave trade; for the Amerindians of the Caribbean; for the Aztecs, Incas, the mound-builders of the Mississippi valley; and for the princes of Bengal and others who found themselves competing with the British East India Company in the succession wars over the spoils of India’s Moghul Empire—that is not in dispute.

But how much did pre-industrial trade and plunder affect European development? That is not so clear.

It is clear is that even at the end of the eighteenth and the first half of the nineteenth century trade not in luxuries but in staples had begun to profoundly shape history. For the first time transoceanic trade mattered not just for a ruling elite but for an economy as a whole. The export of cotton from the American South and had mattered. Without the appetite of British and New England factories for cotton and the power to ship ginned cotton to them cheaply, the slaves of the American South in 1860 would have been what they were for George Washington in the 1790s: a quarter of your wealth that you were willing to free, at least upon your death, because it was the right thing to do. By contrast, for Jefferson Davis it wasn’t his land but rather his slaves that were three-quarters of his wealth—and so the U.S. Civil War of 1861-5 came.

Early-nineteenth century cotton showed what late-eighteenth century sugar had prefigured. The export of sugar from the Caribbean islands and Latin America (and also tobacco, tea, coffee, chocolate, and so forth) meant that European agriculture did not have to grow nearly as much flax or raise as much wool or produce as many calories. It provided an extra edge to the British economy: as if there was perhaps one additional ghost worker who did not have to be fed or paid alongside every ten.

That, from the perspective of 1870, was what the expanded intercontinental division of labor and the higher productivity that resulted from it had done up to that point.


#slouchingtowardsutopia #outtakes #economichistory