Dealing with Global Warming Needs a Carbon Tax Starting Now

Global warming Google Search

It would have been smart to do it 26 years ago, when Al Gore was first pushing it—and we got it through the House and fell short by two votes in the Senate: George Akerlof et al.: Economists’ Statement on Carbon Dividends: Bipartisan agreement on how to combat climate change: Global climate change is a serious problem calling for immediate national action. Guided by sound economic principles, we are united in the following policy recommendations…

  1. …A carbon tax offers the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary. By correcting a well-known market failure, a carbon tax will send a powerful price signal that harnesses the invisible hand of the marketplace to steer economic actors towards a low-carbon future.

  2. A carbon tax should increase every year until emissions reductions goals are met and be revenue neutral to avoid debates over the size of government. A consistently rising carbon price will encourage technological innovation and large-scale infrastructure development. It will also accelerate the diffusion of carbon-efficient goods and services.

  3. A sufficiently robust and gradually rising carbon tax will replace the need for various carbon regulations that are less efficient. Substituting a price signal for cumbersome regulations will promote economic growth and provide the regulatory certainty companies need for long- term investment in clean-energy alternatives.

  4. To prevent carbon leakage and to protect U.S. competitiveness, a border carbon adjustment system should be established. This system would enhance the competitiveness of American firms that are more energy-efficient than their global competitors. It would also create an incentive for other nations to adopt similar carbon pricing.

  5. To maximize the fairness and political viability of a rising carbon tax, all the revenue should be returned directly to U.S. citizens through equal lump-sum rebates. The majority of American families, including the most vulnerable, will benefit financially by receiving more in “carbon dividends” than they pay in increased energy prices…

List of signatories here: https://www.clcouncil.org/

George Akerlof, Robert Aumann, Angus Deaton, Peter Diamond, Robert Engle, Eugene Fama, Lars Peter Hansen, Oliver Hart, Bengt Holmström, Daniel Kahneman, Finn Kydland, Robert Lucas, Eric Maskin, Daniel McFadden, Robert Merton, Roger Myerson, Edmund Phelps, Alvin Roth, Thomas Sargent, Myron Scholes, Amartya Sen, William Sharpe, Robert Shiller, Christopher Sims, Robert Solow, Michael Spence and Richard Thaler are recipients of the Nobel Memorial Prize in Economic Sciences. Paul Volcker is a former Federal Reserve chairman. Martin Baily, Michael Boskin, Martin Feldstein, Jason Furman, Austan Goolsbee, Glenn Hubbard, Alan Krueger, Edward Lazear, N. Gregory Mankiw, Christina Romer, Harvey Rosen and Laura Tyson are former chairmen of the president’s Council of Economic Advisers. Ben Bernanke, Alan Greenspan and Janet Yellen have chaired both the Fed and the Council of Economic Advisers. George Shultz and Lawrence Summers are former Treasury secretaries.


#globalwarming #highlighted 

Fairly Recently: Must- and Should-Reads, and Writings… (January 15, 2019)

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  1. Global North research university problem: Speaker: “My major concern is: How can I be interested in fewer things?…

  2. Welcome to the 21st-century, in which my coffee machine says that it is “booting”…

  3. For the Weekend: 2018 In Weather

  4. Costs and Benefits of International Capital Mobility: Reply to Bhagwati: Hoisted from 20 Years Ago: Needless to say, time has left me a lot wiser: We need to design economies so that they can operate without disaster even when deregulatory clowns like those of the George W. Bush or the Donald J. Trump administrations are in control of the levers of policy at key moments…

  5. Comment of the Day: Charles Steindel: “British produce comes in before the Swiss spaghetti harvest?…

  6. Supply and Demand Shocks, and Seasonal Adjustment: Think that there are no such things as aggregate fluctuations generated by shifts in tastes and technologies? Think again. Look at the pattern of monthly payroll employment changes…


  1. A million dollars? As a tort settlement? What was going on?: Michelle Boorstein: C. John McCloskey: Opus Dei paid $977,000 to settle sexual misconduct claim against prominent Catholic pries

  2. That conservative parties’ policies redistribute wealth and power upward while distracting their mass base by focusing them on internal or external enemies has long been the point of Toryism—since before try Gordon Riots, in fact. And now Tucker Carlson is surprised that there is gambling going on, and is just asking questions? Does he want us to take him seriously?: Eric Levitz: Why Tucker Carlson Plays a Critic of Capitalism On TV: “Melinda Cooper… explains: ‘Writing at the end of the 1970s, the Chicago school neoliberal Gary Becker remarked that the “family in the Western world has been radically altered—some claim almost destroyed—by events of the last three decades.”… Becker believed that such dramatic changes in the structure of the family had more to do with the expansion of the welfare state in the post-war era than with feminism per se… a consequence rather than an instigator of these dynamics…. Becker’s abiding concern with the destructive effects of public spending on the family represents a key element of his microeconomics… that is consistently overlooked’…

  3. Farmers, miners, merchants, assembly-line workers—four key categories of workers that at various times in the past had to be supported and nurtured in order to create the wealth of a nation. Now none of those categories seem likely to embrace any substantial proportion of any future workforce. So how, then, we inquire, are we to understand the nature and causes of the wealth of nations in our future?: David desJardins: “It’s too Late for Industrialization and Manufacturing to be a Path to Increasing Returns for Developing Countries.: “he information economy… is where the real increasing returns are today…. The key question for developing economies today is whether they can take advantage of the information economy…. China has moved pretty darn quickly up the ladder. Basically created a significant number of rather productive information workers in a single generation… #globalization #economicgrowth #riseodftherobots

  4. David Cho: The Labor Market Effects of Demand Shocks: Firm-Level Evidence from the Recovery Act: “How do firms respond to demand shocks?… Leveraging two firm-level datasets… linked employer-employee administrative records for a subset of U.S. firms from ADP, LLC with a comprehensive database of transactions from the American Recovery and Reinvestment Act (ARRA)… I compare firms that received ARRA funds to a counterfactual sample of employers that were not directly connected to the Recovery Act…. The magnitudes of these changes suggest that the labor supply to an individual firm is relatively inelastic, even in a deep recession, and provide evidence of monopsonistic wage-setting in U.S. labor markets… #fiscalpolicy

  5. Noah Smith: Unions Did Great Things for the American Working Class: “Politically and economically, unions are sort of an odd duck. They aren’t part of the apparatus of the state, yet they depend crucially on state protections in order to wield their power. They’re stakeholders in corporations, but often have adversarial relationships with management. Historically, unions are a big reason that the working class won many of the protections and rights it now enjoys… #equitablegrowth #labormarket #politicaleconomy

  6. Paul Krugman (1998): America the Boastful

  7. Jagdish Bhagwati (1998): The Capital Myth

  8. Sendhil Mullainathan: Using Machine Learning to Understand Health Care Systems: “Machine learning… can also be used to improve our understanding of the health system itself… contribute to empirical science and better grounded policy. I describe results from two projects where the predictive approach proves particularly illuminating, both on ‘wasted’ spending: one on over-testing and the other on the high concentration of spending at the end of life. I will also describe methodological issues that arise that are relatively neglected in the machine learning literature, such as measurement error and the impact of unobserved variables…

  9. Lyz Lenz: You Should Care That Richard Spencer’s Wife Says He Abused Her: “Despite the so-called alt-right’s attempt to be respectable, violence seems to follow it everywhere—even, allegedly, into Spencer’s own home…

  10. Seems to me @biscuit_ersed and everybody else needs their first game-theory lecture to be (1) defect-defect as dominant-strategy Nash equilibrium in prisoner’s dilemma, (2) the unraveling equilibrium in finite related prisoner’s dilemma, and (3) this first prisoner’s dilemma ever played: http://www.j-bradford-delong.net/economists/prisoners_dilemma.html https://twitter.com/biscuit_ersed/status/1084812993509105671… #economics

  11. UCLA Gymnastics: “A 🔟 isn’t enough for this floor routine by @katelyn_ohashi…

  12. Marie Le Conte: “One of my favourite things about being alive in 2019 is vaguely remembering that someone once sent you something you now need and having to look through the conversation archives of four different social media platforms to find it…

  13. Flood and Dresher devised a simple game where Nash equilibrium wasn’t such a good outcome…

  14. Welcome to the 21st-century, in which my coffee machine says that it is “booting”…

  15. The very sharp Jeet Heer traces David Brooks’s intgellecutal panic back to the John Birch Society; Jeet Heer: A Few Thoughts on “Cultural Marxism,” Marcuse, John Wayne, the John Birch Society, and Anti-Semitism: “Goobers in the Trump administration are worried about ‘Cultural Marxism’ in the ‘Deep State’ opposing Trump…. ‘Cultural Marxism’ is a big boogeyman on the alt-right: it’s the people who are supposedly responsible for creating PC, feminism, etc. The actual historical ‘cultural Marxists’ (or ‘Western Marxists’) were the Frankfurt School: Adorno, Benjamin, Marcuse etc… sought to supplant and update Marx’s economic system with recognition of cultural forces…

  16. Todd C. Neumann, Price V. Fishback, and Shawn Kantor: The Dynamics of Relief Spending and the Private Urban Labor Market During the New Deal: “Positive shocks to relief during the First New Deal were followed by increased private employment and earnings, consistent with demand stimulus in that period…

  17. Delany Crampton: Veterans in the U.S. Labor Market Face Barriers to Success That Can and Should Be Addressed – Equitable Growth: “Anna Zogas of the University of Washington observes in her 2017 research that the U.S. military does an extremely effective job of training veterans to operate within the military and an extremely poor job of preparing them, especially young servicemembers, for post-military job…

  18. According to my Grandmother Florence Richardson Usher Lord, my Great-Great Uncle Abbott Payson Usher back in The Day used to teach—very boringly, she said—(1) Middle Ages, (2) Commercial Revolution, (3) Industrial Revolution, (4) Age of Modern Science, with growth accelerations in each of the four: Dietz Vollrath: Sustained growth and the increase in work hours: “Jane Humphries and Jacob Weisdorf… labor contract terms in England over several centuries… annual labor contracts starting seeing sustained growth in their value around 1650 or so, far sooner than the day wages indicated…

  19. Xavir Jaravel (2017): Product innovations and inflation in the U.S. retail sector have magnified inequality: “shifts in income distribution in the United States lead to product innovations that target high-income households, which increases purchasing-power inequality…

  20. Stephanie Victoria: “I’m a say this lil story then I’m gon’ let’chall get back to tweeting…: Recently, I discovered a grocery story even bougie-er than Whole Foods in my new ‘hood. My addition to the list of ‘approved negroes after 6PM’ recently went through so my neighbors have stopped staring at me & the resident coons only give disapproving looks on trash day instead of their usual ‘don’t start no trouble’ slave talks in the hallway…

  21. David Rezza Baqaee and Emmanuel Farhi: The Microeconomic Foundations of Aggregate Production Functions: “We provide a general methodology for analyzing…aggregate production functions by deriving their first- and second-order properties… provide non-parametric characterizations of the macro elasticities of substitution between factors and of the macro bias of technical change in terms of micro sufficient statistics. They allow us to generalize existing aggregation theorems and to derive new ones. We relate our results to the famous Cambridge- Cambridge controversy…

  22. Equitable Growth Steering Committee member Karen Dynan and company point out a big problem. Should we be trying to pay down our debt now in order to create “fiscal space”? Our should we take secular stagnation seriously, and not fear the possibilty of a sudden downward valuation of government debt that would take fiscal space away?: Karen Dynan, Jay Shambaugh, and Eduardo Porter: What Tools Does the U.S. Have to Combat the Next Recession?: “Today’s lower equilibrium interest rates make it more likely that monetary policy would need to make use of unconventional tools to spur the economy. On the fiscal front, we have a much larger level of government debt relative to GDP than we did prior to the financial crisis. However, viewing this level of debt to GDP as a reason to restrain stimulus spending in case of a crisis could make the problem worse. Whether the government uses fiscal policy to stimulate the economy will depend more on political willingness, than on the actual limits on fiscal policy…

  23. This book is fun!: Jeff Erickson: Algorithms: “‘Algorithm’ does not derive… from the Greek roots arithmos (αριθοσ), meaning “number”, and algos (αλγοσ), meaning ‘pain’. Rather, it is a corruption of the name of the 9th century Persianm athematician Muhammad ibn Musa al-Khwarizmi. Al-Khwarizmi is perhaps best known as the writer of the treatise Al-Kitab al-mukhtasar fihisab al-gabr wal-muqabala, from which the modern word algebra derives. In a different treatise, al-Khwarizmi described the modern decimal system for writing and manipulating numbers—in particular, the use of a small circle or sifr to represent a missing quantity—which had been developed in India several centuries earlier. The methods described in Al-Kitab, using either written figures or counting stones, became known in English as algorism or augrym, and its figures became known in English as ciphers

  24. Abbott Payson Usher (1921): European Economic History: European Industry and Commerce in the Nineteenth Century. Half-course (second half-year). Tu., Th., Sat., at 9. Dr. Usher

  25. Irwin Collier presents my Great-Great-Uncle Abbott’s 1922 exam: Abbott Payson Usher: Final Exam Questions for: European Industry and Commerce in the Nineteenth Century, 1922

  26. Nicholas Lardy: Xi Jinping’s Turn Away from the Market Puts Chinese Growth at Risk: “Credit is flowing to state-owned companies, not more productive private ones…

Costs and Benefits of International Capital Mobility: Reply to Bhagwati: Hoisted from 20 Years Ago

Needless to say, time has left me a lot wiser: We need to design economies so that they can operate without disaster even when deregulatory clowns like those of the George W. Bush or the Donald J. Trump administrations are in control of the levers of policy at key moments. How to do that is not so clear. What is clear is that only a fool today would think that our political economy would support a clever technocracy so that we might have our cake and eat it too. Indeed, the most likely scenario seems to be that we will be unable to eat our cake, and then the kleptocrats will steal it out from under our noses so that we will not have it either. In short: I should have listened harder to Jagdish 20 years ago…

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Hoisted from the Archives: Reply to Bhagwati: “I open my May/June [1998] issue of Foreign Affairs to discover myself pilloried in an article by Jagdish Bhagwati between Paul Krugman and Roger C. Altman (excellent company to be in, by the way: much better than I am used to) as a banner-waving proponent of international capital mobility, guilty of “assum[ing] that free capital mobility is enormously beneficial while simultaneously failing to evaluate its crisis-prone downside.”

I rub my eyes in surprise. I had not thought of myself as a banner-waving proponent of international capital mobility.

I wish that Jagdish Bhagwati’s research assistants had shown him the sentence from my January 28 Los Angeles Times op-ed after the two he quotes (it reads: “But the free flow of financial capital is also giving us one major international financial crisis every two years”); or shown him my evaluation of the causes of the crisis a paragraph but one above where he quotes (it reads: “the sudden change in [market] opinion [toward East Asia] reflects not a cool judgment of changing fundamentals [of East Asian growth] but instead a sudden psychological victory of fear over greed”).

If I am the the point man waving the banner, all I can say is that the ranks of the army of international capital mobility must be thin indeed.

But since I have apparently been elected, let me pick up the banner and wave it around a few times, for on this issue I am what Jagdish Bhagwati calls a “[neo-]liberal”—someone who believes that we should neither encourage governments to choke off international flows of saving and investment (as Bhagwati thinks), nor look with schadenfreude on and discourse on the long-run salutary effects of the great depressions caused by international financial panics, but instead try to have our cake and eat it too: to reap the benefits of international capital mobility, and to minimize the human costs of recurrent crises through appropriate and well-funded international central banking institutions and practices.

We should try to have our cake because the benefits of international capital mobility truly are mammoth. Between 1994 and 1996 some $200 billion of international capital flowed into Malaysia, the Philippines, South Korea, and Thailand. In all of these countries the private return on investment is high—higher than in the industrial core. In all of these countries the social return on investment is higher still: if the economic history of the past two centuries teaches us anything, it teaches us that investments in modern machine technologies are a very good if not the best way to upgrade the skills of the labor force and gain the organizational expertise necessary for high total factor productivity.

This inflow of capital to these four countries was worth at least $15 billion a year and perhaps as much as $40 billion a year in higher GDP to the receiving countries even after taking account of the interest, dividends, and capital gains owed to investors from abroad. Just as the flow of finance from the British core to the periphery in the late nineteenth century played an important role in producing the Australian and North American economies that have had the world’s highest standard of living in the twentieth century, so the flow of finance from today’s industrial core to the NIC periphery has every prospect of cutting a generation or so off of the time needed for East Asian workers and consumers to achieve industrial core levels of productivity and economic welfare.

Calculations of the effect of international capital mobility on economic welfare are considerably more complicated and uncertain than calculations of the effect on growth, but they carry the same message: the ability to attract international capital to boost development or cushion the costs of macroeconomic policy mistakes can be very, very valuable.

We should try to eat our cake too because the costs of unmanaged international financial crises are horrific. Because of the Latin American debt crisis of 1982 the decade of the 1980s was lost to Latin American development—leaving the typical Latin American country between five and ten percent poorer at the beginning of the 1990s than it would have been in a counterfactual world in which borrowing from abroad had not financed oil imports and elite consumption in the late 1970s. The financial crisis of 1873 saw the share of the U.S. non-agricultural labor force employed in building railroads fall from perhaps eight to perhaps two percent. And international financial crises turned the global recession of 1929-1931 into the Great Depression, generating not only a decade of relative poverty but the rise of the Nazi regime and the fifty million dead from World War II in Europe.

If there were no reasonable prospect of successfully managing international financial crises, then I would agree with Professor Bhagwati: the risks of an 1873 or a 1982 or—worst of all—a 1933 would then significantly outweigh the benefits of capital mobility. But there is every reasonable prospect of successfully managing international financial crises. The much-larger-than-anyone-anticipated Mexican crisis of 1994-1995—successfully handled—saw Mexican economic growth resume after a single year of recession. The East Asian crisis of 1997 may not even generate an absolute recession: as of this writing it looks as though East Asian GDPs will not decline, but instead that growth will pause in 1998 and resume in 1999.

But successful handling of international financial crises requires political and economic skill. It requires rejecting the arguments of the Wall Street Journal’s editorial page that East Asia “needs” a deep, prolonged recession with mass unemployment to punish entrepreneurs and banks in NICs who overborrowed. It requires rejecting the arguments of Ralph Nader that East Asia “needs” a deep, prolonged recession with mass unemployment to punish New York financiers who overlent. And it requires rejecting the arguments of Jagdish Bhagwati that international capital mobility—good enough to finance the industrialization of the NICs of Australia, Canada, and the U.S. a century ago—is too risky for the NICs of today…



#noted #globalization #macro #finance #hoistedfromthearchives #monetaryeconomics #monetarypolicy #highlighted 
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Supply and Demand Shocks, and Seasonal Adjustment

Think that there are no such things as aggregate fluctuations generated by shifts in tastes and technologies? Think again. Look at the pattern of monthly payroll employment changes:

All Employees Total Nonfarm Payrolls FRED St Louis Fed

We are more used to looking at the seasonally-adjusted pattern, which looks very, very different indeed:

All Employees Total Nonfarm Payrolls FRED St Louis Fed


As big a deal as the Great Recession does not stand out that strongly when we look at the raw seasonally-unadjusted monthly changes:

All Employees Total Nonfarm Payrolls FRED St Louis Fed

It only becomes the biggest deal in generations when we seasonally adjust the changes series:

All Employees Total Nonfarm Payrolls FRED St Louis Fed

And here is the seasonal adjustment filter as the BLS has applied it:

All Employees Total Nonfarm Payrolls FRED St Louis Fed

A lot of serially-correlated month-by-month shortfalls of employment growth relative to the standard very short-run month-to-month patterns and relative to long-run trend growth cumulate and integrate to something truly important and distressing.

Note that, important as shifts in tastes and technologies are in being effectively the sole driver of the seasonal cycle, there is no credible theory that shifts in tastes and technologies are in any part responsible for anything even vaguely like the Great Recession. What is it supposed to be: a great vacation, a great forgetting of productive technology, a great rusting-out of capital, a great increase in the speed with which the marginal utility of wealth diminishes, a great loss of ability to monitor firms and investment projects?

To those who claim that one of these is the cause, at this stage the right thing to do is to recognize that ars longa, vita brevis, and remember the words of Robert M. Solow:

Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous–that is, by laughing at it–so as not to fall into the trap of taking it seriously and passing on to matters of technique.

There is the demand side—fluctuations in real spending relative to what a first-best non-monetary economy would produce (although, as Arin Dube points out, it would be better to call it the “cpordination successes and failures side” and there is the supply side—the technologies and resources and tastes for work goods, and leisure side. That the supply side is not the important thing for business cycles does not mean that it is not there. And the supply side is the most important thing for the seasonal cycle, and for the long-run trend.

Talk cavalry tactics at the Battle of Austerlitz all you want—it’s fun! Or at least I find it fun. But it is much better to confine your talking about cavalry tactics at the Battle of Austerlitz when your interlocutor is in fact Napoleon, and when Austerlitz is relevant to the problem at hand…


#macro #supplyshocks #labormarket #highlighted #teachingeconomics #teachingmacro 
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Fairly Recently: Must- and Should-Reads, and Writings… (January 10, 2019)

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  1. Note to Self: No, Apple! No Potty Mouth, Please!: Today I am disturbed that Apple voice recognition keeps hearing “slut“ when I say “slack“…

  2. Comment of the Day: BruceJ: “Honestly, when you look back at Brooks’ history, where he ‘just happens’ to reference ideas out of the ‘dark, dank silos of the far right’ I see less laziness, than an ongoing subtle injection of those very ideas into so-called ‘respectable’ conservative commentary. If it IS all happenstance and laziness, Brooks is the luckiest damned blind squirrel in the universe…

  3. Why Economic History?: Good theory is in the end nothing but distilled and crystallized economic history. It could, after all, be nothing else. And piling more and more computer power on to the analysis of nonhistorical data could only be an intellectual optimum if the world was created ex nihilo the instant of the first date of your panel. So this is why we are here. Welcome to economic history…

  4. Comment of the Day: Private-sector entities cannot migrate labor and capital into the business of creating money, for money is liquid trust and can only be created by institutions that are trusted to be, well, good for the money. So the solution is not to move resources out of creating currently-produced goods and services but to move demand into buying currently-produced goods and services. And—as long as it is good for the money—the government’s borrowing-and-spending or printing-and-dropping works just fine: JEC: Keynesian Economics vs. Regular Economics: “The funny thing here is that Barro imagines this to be a killer rhetorical question, when it is in fact a crucial and open research question…

  5. What Will Cause the Next US Recession?: Live at Project Syndicate: Needless to say, the particular nature and form of the next financial shock will be unanticipated. Investors, speculators, and financial institutions are generally hedged against the foreseeable shocks…. The death blow to the global economy in 2008-2009 came not from global imbalances or from the collapse of the mid-2000s housing bubble, but from the concentration of ownership of mortgage-backed securities…

  6. Comment of the Day: Cervantes: “I didn’t know that British produce comes into season at the end of March, actually. You learn something every day…

  7. Betting That Nobody Will Check the References as an Intellectual Style: Monday Smackdown: Never mind that Himmelfarb cuts off her quote from Keynes just before Keynes writes that he approves of this Puritan fallacy—that he is not, as Himmelfarb claims, ridiculing it, but rather praising it…


  1. Paul Campos: Tucker Carlson Utters More Than Fourteen Words Evincing Skepticism About Finance Capitalism: Conservative Pundits Blanch In Pure Horror: “white ethno-nationalism, which is what both Carlson and Trump actually market to their respective, heavily overlapping audiences, is likely to become even more successful if it manages to morph into a kind of welfare=state herrenvolk democracy, in which ‘real Americans’ receive genuine protection from the depredations of capitalism, while a permanently disenfranchised underclass of guest workers and the like gets to live in the libertarian utopia envisioned by the Koch brothers…

  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… #orangehairedbaboons #publicsphere

  3. Alexander Zubatov: “I think YOU’RE misusing Blackford…. Remember, the whole point of my Tablet article was to respond to Sam Moyn’s utterly misleading NYT article claiming cultural Marxism simply doesn’t exist and is no more than anti-Semitic right-wing phantasmagoria…

  4. Ben Alper: Fun With Primary Sources: The Free Congress Foundation’s “History of Political Correctness”: “The notion that the Frankfurt School was responsible for creating ‘Political Correctness’, ‘Cultural Marxism’, and a related plot against Western civilization itself emerged from the circle around Lyndon LaRouche from the 1970s (when LaRouche’s attacks on the Frankfurt Institute apparently began) through the early 1990s…

  5. Dave Niewertr: Norway Terrorist Breivik Was An Ardent Subscriber To Theories Of ‘Cultural Marxism’: “The picture that’s emerging is of an ordinary right-wing man stoked into anger by theories about “Cultural Marxism” that originated on the anti-Semitic far right but have in recent years been spreading into more mainstream venues, promoted by the likes of Andrew Breitbart, among others…

  6. Ben Alpers: The Frankfurt School, Right-Wing Conspiracy Theories, and American Conservatism: “There are obviously a lot of threads that one might pull in this story, regarding, among other things, the relationship between mainstream conservatism and the violent radical right, the strong base of antisemitism that (often silently) underwrites a lot right-wing rhetoric, the deep anti-intellectual and anti-academic tendencies in these modes of thought, and the peculiar role that Lyndon LaRouche and his minions have played in encouraging conspiracy theories of all sorts (they are also an important source for left-wing conspiracy theories about Leo Strauss and the Straussians)…

  7. Samuel Moyn: The Alt-Right’s Favorite Meme Is 100 Years Old: “‘Cultural Marxism’ might sound postmodern but it’s got a long, toxic history…

  8. Russell Blackford: Cultural Marxism and our current culture wars: Part 1: “In everyday contexts, those of us who do not accept the narrative of a grand, semi-conspiratorial movement aimed at producing moral degeneracy should probably avoid using the term ‘cultural Marxism’. Unfortunate cultural tendencies, including those that manifest a left-wing style of authoritarianism, can usually be labelled in less confusing, more effective, more precise ways. By all means, let’s develop useful terminology to express whatever concerns we have about tendencies on the Left, but ‘cultural Marxism’ carries too much baggage…

  9. Jana Winter and Elias Groll: Here’s the Memo That Blew Up the NSC: “Fired White House staffer [Rich Higgins] argued ‘deep state’ attacked Trump administration because the president represents a threat to cultural Marxist memes, globalists, and bankers…

  10. Jeet Heer: Let’s Talk about Anti-Semitic Ideology: “Bowers… belonged to the far right faction that sees Trump as… claim[ing] to stand for white America but actually works for ‘the Jews’…. The idea that George Soros (symbol for many on right of Jewish conspiracy) is behind Caravan isn’t confined to Nazis…. Congressman Matt Gaetz… popular Trumpist cartoonist Ben Garrison… House GOP Leader Kevin McCarthy…. The Soros stuff is just one of many manifestations of the the grand anti-Semitic trope…. The Soros of right-wing mythology (globalist intent on destroy cohesive nations) fit the long history of blaming internal discord on outside agitators as well as the Dolchstoßlegende. The nationalist needs a cosmopolitan nemesis…

  11. Zack Beauchamp: A Trump Voter Hurt by the Shutdown’s Incredibly Revealing Quote: “Think about that line for a second. Roll it over in your head. In essence, Minton is declaring that one aim of the Trump administration is to hurt people—the right people. Making America great again, in her mind, involves inflicting pain. This is not an accident. Trump’s political victory and continuing appeal depend on a brand of politics that marginalizes and targets groups disliked by his supporters. Trump supporters don’t so much love the Republican party as they hate Democrats…

  12. Jeet Heer: Let’s Talk about Anti-Semitic Ideology: “The idea that George Soros (symbol for many on right of Jewish conspiracy) is behind Caravan isn’t confined to Nazis. Here’s Congressman Matt Gaetz. Here is popular Trumpist cartoonist Ben Garrison—again, someone with an audience outside the Nazi right but circulating idea that Soros is working to destroy America. House GOP Leader Kevin McCarthy…

  13. Tamara Strauss: Blum Center News Digest, Jan. 7: “A selection of articles and reports pulled from the last two/three weeks…

  14. Raj Kumar: Facing Harsh Realities, the Global Development Community Confronts Another Fraught Year: “The outlines of an established global politics on aid are beginning to come into focus, and it’s a fraught landscape. Aid is now openly and directly discussed as a tool to stem migration, achieve foreign policy objectives, and derive domestic economic benefits, particularly for major donors including the U.S., China, Germany, and the U.K…

  15. Paul Krugman: The Economics of Soaking the Rich: “Diminishing marginal utility is the common-sense notion that an extra dollar is worth a lot less in satisfaction to people with very high incomes than to those with low incomes. Give a family with an annual income of $20,000 an extra $1,000 and it will make a big difference to their lives. Give a guy who makes $1 million an extra thousand and he’ll barely notice it. What this implies for economic policy is that we shouldn’t care what a policy does to the incomes of the very rich. A policy that makes the rich a bit poorer will affect only a handful of people, and will barely affect their life satisfaction, since they will still be able to buy whatever they want… #equitablegrowth #fiscalpolicy

  16. Steve Richards: Theresa May’s Survival Has Become Dependent on Denying Political Reality: “After the long cabinet meeting on the Brexit deal, the prime minister declared outside Number 10 that ministers had backed her plans. The next day the Brexit secretary, Dominic Raab, resigned. Mrs May appointed a successor as if the words she had uttered the night before had never been spoken…. She has, in the intervening weeks, insisted that there is space for a significant negotiation with the EU before the approaching Commons’ vote on her deal, expected within the next fortnight. The EU has made clear there is no room for such revision. The disconnect between the prime minister’s public words and what is happening around her is stark. Other prime ministers sought words to make sense of chaotic situations. Alternatively, they tried to change the situation. But Mrs May does neither. She presses on. But her indifference to words and persuasion, these essential arts of leadership, is a fatal flaw…

  17. Patrick Kline, Neviana Petkova, Heidi Williams, and Owen Zidar: Who Profits from Patents? Rent-Sharing at Innovative Firms: “An initial allowance of an ex-ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex-ante value patents yield no detectable effects on firm outcomes…. On average, workers capture roughly 30 cents of every dollar of patent-induced surplus in higher earnings… concentrated among men and workers in the top half of the earnings distribution, and are paired with corresponding improvements in worker retention among these groups. We interpret these earnings responses as reflecting the capture of economic rents by senior workers, who are most costly for innovative firms to replace…

  18. David Weil (2014): The Fissured Workplace: “Large corporations have shed their role as direct employers of the people responsible for their products, in favor of outsourcing work to small companies that compete fiercely with one another…

  19. Jag Bhalla: Judea Pearl’s ‘The Book of Why’ Shakes Up Correlation vs. Causality

  20. Uncle Judea, Melanin, Genetics, and Educational Attainment…: Am I profoundly stupid, or is Uncle Judea’s framework of causal confounders—colliders—mediators a huge advance, perhaps not in helping those of you who think carefully do non-stupid statistics, but in helping those of us who do not think carefully do non-stupid statistics, and in providing a royal road to teaching people how to do not-stupid statistics…

  21. This point is absolutely cognitive science-statistics-philosophy of probability gold!: Judea Pearl, Madelyn Glymour, and Nicholas P. Jewell (2016): Causal Inference in Statistics: A Primer (New York: John Wiley & Sons: 978119186847): “Inquisitive students may wonder why it is that dependencies associated with conditioning on a collider are so surprising to most people—as in, for example, the Monty Hall example. The reason is that humans tend to associate dependence with causation…

  22. Lisa R. Goldberg: Review of The Book of Why: The New Science of Cause and Effect: “The graphical approach to causal inference that Pearl favors has been influential, but it is not the only approach…. The Neyman (or Neyman–Rubin) potential outcomes model… James Heckman, whose concept of ‘fixing’ resembles, superficially at least, the do operator that Pearl uses. Those who enjoy scholarly disputes may look to Andrew Gelman’s blog… or to the tributes written by Pearl and Heckman to the reclusive Nobel Laureate, Trygve Haavelmo, who pioneered causal inference in economics in 1940…

  23. Ride | Austin: Frequently Asked Question: “The previous rideshare companies spent millions of dollars then chose to abandon the ‘factory’ (drivers & riders) they built. We believed with the backing of the community-RideAustin could quickly harness this infrastructure-build the right solution and fill the void and provide a great, safe service…. The tech community contributed technology to power the app that costs millions to develop-but it also took over $7 million in cash donations and significant in-kind services donations to make RideAustin what it is today…

  24. Counterfactuals! There is currently a mishegas at Andrew Gelman’s place about Pearl and Mackenzie’s Book of Why, which has a reference to this and has led me to the conclusion that I really need to find time to work my way through this entire book: Cosma Shalizi: Advanced Data Analysis from an Elementary Point of View: “The distributions we observe in the world are the outcome of complicated stochastic processes. The mechanisms which set the value of one variable inter-lock with those which set other variables. When we make a probabilistic prediction by conditioning—whether we predict􏰁 E[Y|X=x] or Pr (Y|X=x) or something more complicated—we are just filtering the output of those mechanisms, picking out the cases where they happen to have set X to the value x, and looking at what goes along with that. When we make a causal prediction, we want to know what would happen if the usual mechanisms controlling X were suspended and it was set to x. How would this change propagate to the other variables? What distribution would result for Y? This is often, perhaps even usually, what people really want to know from a data analysis, and they settle for statistical prediction either because they think it is causal prediction, or for lack of a better alternative… #reasoning

  25. Yes, lots of conservative males feel unmanned because women can now get jobs and contraceptives and so are not (a) desperate to find a man to support them while (b) terrified of getting pregnant. The best answer would be teaching young males that while their grandfathers and male their fathers could be real dicks without it ruining their lives, that is no longer tru: Josh Barro: “I think a big problem with the ‘economic and social change undermined marriage and family for the working class’ frame is that a main way it did this is by making women less dependent on men…

  26. Jane Coaston: Tucker Carlson Has Sparked The Most Interesting Debate In Conservative Politics: “Carlson… greed that his monologue was reminiscent of Warren, referencing her 2003 book The Two-Income Trap: Why Middle-Class Parents Are Growing Broke…. Carlson wanted to be clear: He’s just asking questions…. In this telling, white working-class Americans who once relied on a manufacturing economy that doesn’t look the way it did in 1955 are the unwilling pawns of elites. It’s not their fault that, in Carlson’s view, marriage is inaccessible to them…. Someone, or something, did this to them…. Carlson is advancing a form of victim-politics populism that takes a series of tectonic cultural changes—civil rights, women’s rights, a technological revolution as significant as the industrial revolution, the mass-scale loss of religious faith, the sexual revolution, etc.—and turns the negative or challenging aspects of those changes into an angry tale of what they are doing to you. And that was my biggest question about Carlson’s monologue, and the flurry of responses to it, and support for it: When other groups (say, black Americans) have pointed to systemic inequities within the economic system that have resulted in poverty and family dysfunction, the response from many on the right has been, shall we say, less than enthusiastic. Yet white working-class poverty receives, from Carlson and others, far more sympathy…

Why Economic History?

Economic history Google Search

We economists have gotten too good at making theories. In fact, the set of plausible and admissible economic theories is now dense in the space of possible conclusions: For every desired conclusion X, for every ε, there is a degree of theoretical complexity nδ and a chain of theories of increasing complexity T such that:

for all n > nδ -> | T(n) – X | < ε

We have also gotten not too good at but too proficient at econometrics: RCT, regression discontinuity, diff-in-diff, IV, aggressively and preemptively seizing the high ground of the null hypothesis, unconscious and conscious, deliberate and accidental specification searches, plus file-drawer problems. My first econometrics teacher Zvi Griliches said that the CLT was the second most important thing he had to teach. The most important?:

If someone tortures the data enough, they will confess…

Is a theoretical result an interesting constraint on reality or a demonstration of the ingenuity of the researcher? Is an econometric-empirical result a robust finding about the world out there or a demonstration that research assistants desperate to please jet-setting tenured bosses can do amazing things?

This is not to say that things were not worse in the old days. The pasts of many sub-literatures in economics are better understood as careerists on the make taking the line of theoretical least resistance rather than trying to understand the world. The lack of computer power that made it next to impossible to robustly summarize the data meant that arresting anecdotes could not be checked for representativeness and typicality.

But good theory is in the end nothing but distilled and crystallized economic history. It could, after all, be nothing else. And piling more and more computer power on to the analysis of nonhistorical data could only be an intellectual optimum if the world was created ex nihilo the instant of the first date of your panel.

So this is why we are here. Welcome to economic history.


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What Will Cause the Next US Recession?: Live at Project Syndicate

The Digital Research Library of Illinois History Journal™ The Panic of 1893 in Illinois and Chicago

Live at Project Syndicate: U.S. Recession No Longer Improbable: The next recession most likely will not be due to a sudden shift by the Fed from a growth-nurturing to an inflation-fighting policy. Given that visible inflationary pressures probably will not build up by much over the next half-decade, it is more likely that something else will trigger the next downturn…. The culprit will probably be a sudden, sharp “flight to safety” following the revelation of a fundamental weakness in financial markets. That… is the pattern that has been generating downturns since at least 1825, when England’s canal-stock boom collapsed.

Needless to say, the particular nature and form of the next financial shock will be unanticipated. Investors, speculators, and financial institutions are generally hedged against the foreseeable shocks…. The death blow to the global economy in 2008-2009 came not from global imbalances or from the collapse of the mid-2000s housing bubble, but from the concentration of ownership of mortgage-backed securities… Read MOAR at Project Syndicat


#projectsyndicate #monetarypolicy #recessionwarning #macro #highlighted 

Betting That Nobody Will Check the References as an Intellectual Style: Monday Smackdown

Juggalos Google Search

Monday Smackdown: Apropos of David Brooks’s ill-sourced imaginings that “cultural Marxism… is now the lingua franca in the elite academy…” and his use of Alexander Zubatov and Russell Blackford to back him up…

I am not sure whether Brooks is simply confident that people will not check Zubatov’s references or did not check them himself—he does have to write a full 1200 words a week in his job. But I have long thought that betting nobody will check the references is an intellectual style much more common on the right than on the center or the left. For example:

On Niall Ferguson: Why Did Keynes Write “In the Long Run We Are All Dead”?: In [Keynes’s] extended discussion of how to use the quantity theory of money, the sentence ‘In the long run we are all dead’ performs an important rhetorical role. It wakes up the reader. It gets him or her to reset an attention that may well be flagging.

But it has nothing to do with attitudes toward the future, or with rates of time discount, or with a heedless pursuit of present pleasure.

So why do people think it does? Note that we are speaking not just of Ferguson here, but of Mankiw and Hayek and Schumpeter and Himmelfarb and Peter Drucker and McCraw and even Heilbroner—along with many others.

I blame it on Hayek and Schumpeter. They appear to be the wellsprings.

Hayek is simply a bad actor—knowingly dishonest. In what Nicholas Wapshott delicately calls “misappropriation”, Hayek does not just quote “In the long run we are all dead” out of context but gives it a false context he makes up:

Are we not even told that, since ‘in the long run we are all dead’, policy should be guided entirely by short run considerations? I fear that these believers in the principle of apres nous le déluge may get what they have bargained for sooner than they wish.

And Hayek’s bad-faith writing yielded a lot of fruit: cf. Himmelfarb:

Something of the “soul” of Bloomsbury penetrated even into Keynes’s economic theories. There is a discernible affinity between the Bloomsbury ethos, which put a premium on immediate and present satisfactions, and Keynesian economics, which is based entirely on the short run and precludes any long-term judgments. (Keynes’s famous remark. “In the long run we are all dead,” also has an obvious connection with his homosexuality-what Schumpeter delicately referred to as his “childless vision.”) The same ethos is reflected in the Keynesian doctrine that consumption rather than saving is the source of economic growth-indeed, that thrift is economically and socially harmful. In The Economic Consequences of the Peace, written long before The General Theory, Keynes ridiculed the “virtue” of saving. The capitalists, he said, deluded the working classes into thinking that their interests were best served by saving rather than consuming. This delusion was part of the age-old Puritan fallacy:

The duty of “saving” became nine-tenths of virtue and the growth of the cake the object of true religion. There grew round the non-consumption of the cake all those instincts of puritanism which in other ages has withdrawn itself from the world and has neglected the arts of production as well as those of enjoyment. And so the cake increased; but to what end was not clearly contemplated. Individuals would be exhorted not so much to abstain as to defer, and to cultivate the pleasures of security and anticipation. Saving was for old age or for your children; but this was only in theory – the virtue of the cake was that it was never to be consumed, neither by you nor by your children after you.

Never mind that Himmelfarb cuts off her quote from Keynes just before Keynes writes that he approves of this Puritan fallacy—that he is not, as Himmelfarb claims, ridiculing it, but rather praising it:

In the unconscious recesses of its being Society knew what it was about. The cake was really very small in proportion to the appetites of consumption, and no one, if it were shared all round, would be much the better off by the cutting of it. Society was working not for the small pleasures of today but for the future security and improvement of the race,—in fact for “progress.” If only the cake were not cut but was allowed to grow in the geometrical proportion predicted by Malthus of population, but not less true of compound interest, perhaps a day might come when there would at last be enough to go round, and when posterity could enter into the enjoyment of our labors…

——

#noted #economicsgonewrong #moralresponsibility #publicsphere #smackdown #highlighted