Hallows' Eve Must-Read: A Night in the Lonesome October::
David Graeber Surfaces!: Ignorant and uncurious about the Federal Reserve, the Ming Dynasty, and many other topics--yet somehow eager to claim omniscient authority when he writes about them, and profoundly... resistant to any form of debate or correction...
Elizabeth Barre: What is the Point of a Teacher?: "What is it that makes a teacher valuable in a way that books are not?
Paul Krugman: Springtime for Grifters: "At one point during Wednesday’s Republican debate...
Diane Coyle (2012): Do Economic Crises Reflect Crises in Economics?: "The problems with economics: (1) Theory...
A Twitter Dialogue: The 18th Brumaire of Ben Bernanke: Macroeconomic policy and memories of the past pressing down like an Alp on the brain...
A Twitter Dialogue: IS-LM and the Neoclassical Synthesis in the Short-Run and the Medium-Run: Andy Harless asks a question, and I try to explain what I think Paul Krugman is thinking...
Must- and Should-Reads:
It has now been seven years since the onset of the global financial crisis. A central question is how the crisis has changed our view on macroeconomic policy. The IMF originally tackled this issue at a 2011 conference and again at a 2013 conference. Both conferences proved very successful, spawning books titled In the Wake of the Crisis and What Have We Learned? published by the MIT Press.
The time seemed right for another assessment. Research has continued, policies have been tried, and the debate has been intense. How much progress has been made? Are we closer to a new framework? To address these questions the IMF organized a follow up conference on "Rethinking Macro Policy III: Progress or Confusion?", which took place at the Jack Morton Auditorium in George Washington University, Washington DC, on April 15–16, 2015.
The conference was co-organized by IMF Economic Counselor Olivier Blanchard, RBI Governor Raghu Rajan, and Harvard Professors Ken Rogoff and Larry Summers. It brought together leading academics and policymakers from around the globe, as well as representatives from civil society, the private sector, and the media. Attendance was by invitation only.
Wrap Up Video:
Session IV: Fiscal Policy in the Future Video:
Vitor Gaspar, Marco Buti, Martin Feldstein, Brad DeLong
J. Bradford DeLong
Olivier Blanchard, when he parachuted me into the panel, asked me to “be provocative.”
So let me provoke:
My assigned focus on “fiscal policy in the medium term” has implications. It requires me to assume that things are or will be true that are not now or may not be true in the future, at least not for the rest of this decade and into the next. It makes sense to distinguish the medium from the short term only if the North Atlantic economies will relatively soon enter a regime in which the economy is not at the zero lower bound on safe nominal interest rates. The medium term is at a horizon at which monetary policy can adequately handle all of the demand-stabilization role.
George Washington: To Horatio Gates, October 30, 1777: "George Washington to Horatio Gates, October 30, 1777
Near White Marsh,
15 Miles from Philadelphia,
October 30, 1777
Sir: By this Opportunity, I do myself the pleasure to congratulate you on the signal success of the Army under your command, in compelling Genl. Burgoyne and his whole force, to surrender themselves prisoners of War. An Event that does the highest honor to the American Arms, and which, I hope, will be attended with the most extensive and happy consequences.
Must-Read: If our estimates of the real natural rate of interest are that it is less than zero, and if inflation is below target, what is the argument for even talking about raising interest rates? Isn't the argument that ought to be made that one should raise the inflation target? One does want to have a late-expansion nominal federal funds rate of at least 6%/year, does one not?
Thomas Laubach and John C. Williams: Measuring the Natural Rate of Interest Redux: "Persistently low real interest rates have prompted the question...
The effects of either a rise of liquidity preference or (with a minus sign) of expansionary open-market operations like quantitative easing:
John Maynard Keynes (1937): The General Theory of Employment: "The quantity of money and the amount of it required in the active circulation for the transaction of current business...
...(mainly depending on the level of money-income) determine how much is available for inactive balances, i.e. for hoards. The rate of interest is the factor which adjusts at the margin the demand for hoards to the supply of hoards.... The owner of wealth, who has been induced not to hold his wealth in the shape of hoarded money, still... can lend his money at the current rate of money-interest, or... purchase some kind of capital-asset.... In equilibrium these two alternatives must offer an equal advantage.... The prices of capital-assets move until, having regard to their prospective yields and account being taken of all those elements of doubt and uncertainty, interested and disinterested advice, fashion, convention and what else you will which affect the mind of the investor, they offer an equal apparent advantage to the marginal investor who is wavering between one kind of investment and another.
Unleash Chiang Kai-Shek: I'm sorry, but this is just too weird:
Gainesville.com | The Gainesville Sun | Gainesville, Fla.: After more than an hour of solemn ceremony naming Rep. Marco Rubio, R-West Miami, as the 2007-08 House speaker, Gov. Jeb Bush stepped to the podium in the House chamber last week and told a short story about 'unleashing Chang,' his 'mystical warrior' friend. Here are Bush's words, spoken before hundreds of lawmakers and politicians:
Live from Crow's Coffee:
But is it the case that the JEB! Bush campaign's soul fled long ago? And that it is now being kept alive at huge expense only because of ideology-crazed wingnuts who refuse to recognize the reality of the situation?
Must- and Should-Reads:
J. Bradford DeLong: The Tragedy of Ben Bernanke: Project Syndicate:
Ben Bernanke has published his memoir, The Courage to Act.
I am finding it hard to read. And I am finding it hard to read as anything other than a tragedy. It is the story of a man who may have been the best-prepared person in the world for the job he was given, but who soon found himself outmatched by its challenges, quickly falling behind the curve and never quite managing to catch up.
It is to Bernanke’s great credit that the shock of 2007-2008 did not trigger another Great Depression. But the aftermath was unexpectedly disappointing... READ MOAR AT PROJECT SYNDICATE
Live from Lawrence, KS: Kansas Economic Policy Conference:
My Presentation: Inequality, Prosperity, Growth, and Well-Being in America
Kansas Economic Policy Conference: Lunch: Video: https://youtu.be/nsT6gQmesdQ (1:13:53 total; Kane starts at 8:25, DeLong at 21:32, conversation with Kane and DeLong at 34:14, and closing remarks by Ginther at 1:06:25):
Must-Read: Ann Leckie: David Graeber's Debt: "‘Prostitution is on the list of mes’ isn’t really a very good argument...
...for the ancient Sumerians holding a positive view of prostitution.... But... this is his evidence for the attitude he says they had. And so the question for me is, did he not actually look at the list of mes? There are plenty of Sumerian texts that are mentioned or summarized in books but hard to find in translation, but this one, as I mention above, is easily available. So if he didn’t read the actual list of mes, he did sloppy research and I’m bound to wonder where else he skipped research he ought to have done...
As best as I can see, the answer to the question "where else did David Graeber skip research he ought to have done?" is "everywhere"...
Must-Read: Dean Baker: Growth Falls Off Sharply in Third Quarter: "The economy grew at a 1.5 percent annual rate in the third quarter...
...a sharp slowing from the 3.9 percent rate reported for the second quarter.... For the first three quarters of the year GDP has risen at a 2.0 percent annual rate.... There continues to be no evidence of inflationary pressures in any sector...
A 2.0%/year growth rate over the past three quarters, a 2.1%/year growth rate over the past four quarters, a 2.9%/year growth rate the year before (2013:III-2014:III), and a 1.6%/year growth rate the year before that (2012:III-2013:III).
The case for tightening monetary policy is not obvious, to say the least...
Gregory VIII: Audita Tremendi: The Call for the Third Crusade
Live from State Line Road: I must say: this amazes me. The old argument was that large Kansas-Missouri differences in AFDC payments back before 1995 did not lead single mothers to move across State Line Road into Kansas, so why should we expect even sharp state tax differentials to pull people across? The answer to that is: It was very, very clear that African-Americans in Kansas City were suppose to stay east of Troost. And non-African American AFDC recipients were much more geographically dispersed, hence it was not a short move.
Thus I thought business would be different.
Thus I really did think that Brownback's tax cuts would pull enough income across State Line Road to allow him to declare him non-defeat, and indeed to avoid utter defeat, when the rubber of his ideology met the road of reality and he had to make a Kansas state budget. Yet it is not so:
Yael T. Abouhalkah: Paging Gov. Sam Brownback’s Sycophants: "Kansas tax cuts still aren’t killing Missouri jobs in KC area...
Must-Read: Charles I. Jones and Paul M. Romer: The New Kaldor Economic Growth Facts: Ideas, Institutions, Population, and Human Capital: "Here is a summary of our new list of stylized facts...
...to be discussed in more detail:
Must-Read: Also Larry Summers.
The important thing here, I think, is to have Bernanke's back. Bernanke is right: QE was worth trying ex ante, and ex post it looks as though it was worth doing--and I would say it was worth doing more of it than he did. If there are arguments that Bernanke's QE policy is wrong, they need to be arguments--not mere expressive word-salad.
Spence and Warsh are attacking Bernanke's monetary policy. Why? It's not clear--they claim that business investment is low because Bernanke's QE policies have retarded it. But they do not present anything that I would count as an argument or evidence to that effect. As I see it, they are supplying a demand coming from Republican political masters, who decided that since Obama renominated Bernanke the fact that Bernanke was a Republican following sensible Republican policies was neither here nor there: that they had to oppose him--DEBAUCHING THE CURRENCY!!
And Warsh and Spence are meeting that demand, and meeting it when a more sensible Republican Party--and more sensible Republican economists--would be taking victory laps on how the George W. Bush-appointed Republican Fed Chair Ben Bernanke produced the best recovery in the North Atlantic.
I don't know why Warsh is in this business, lining up with the Randites against Bernanke, other than hoping for future high federal office. And I am with Krugman on Spence: I have no idea why Spence is lining up with Warsh here--he is very sharp, even if he did give me one of my two B+s ever. What's the model?
Joseph E. Gagnon: Is QE Bad for Business Investment? No Way!: "There is no logical or factual basis for their claim...
Must-Read: Michelle Bachelet was a minister in the Chilean government--first Health, then Defense--from 2001-2005, and President of Chile over 2006-2010. So why this from Martin Feldstein?
Martin Feldstein: Chile’s Uncertain Future: "Chile’s excellent economic performance has been the result of the free-market policies introduced during the military dictatorship of General Augusto Pinochet...
...but confirmed and strengthened by democratically elected governments over the 25 years since he left office. So, given the success and popularity of these policies, it is surprising that Chile’s voters have elected a president [i.e., Michelle Bachelet] and a parliament [i.e., led by her party] that many Chileans now fear could put this approach at risk...
Live from Boulder, CO: You do worry--very seriously--that these Republican presidential candidates are so ill-suited to life that they are likely to kill themselves via some accidental mishap with a household appliance:
Steve Hamlin: Lindsey Graham:
"Do you think Putin would be in the Ukraine if Reagan was president?" HAHAHAHAHAHAHAHAHAHAHA--Steve Hamlin (@stevehamlin19) October 28, 2015
The bench is really, really weak here...
Must- and Should-Reads:
Live from the Library of Ashurbanipal: Emily Saul: Billionaire Hobby Lobby Owners Probed in Looting: "The billionaire owners of craft giant Hobby Lobby are under federal investigation...
...for allegedly looting hundreds of ancient artifacts from the Middle East for use in their nonprofit Museum of the Bible, according to a report. The Green family has been under investigation since 2011... when US Customs agents in Memphis seized nearly 300 clay tablets the family was attempting to send to the store’s headquarters.... ‘Is it possible we have some [illicit] artifacts? That’s possible,’ CEO Steven Green told reporters. The Greens... tried to sneak the artifacts into the country by misstating the contents of FedEx packages as ‘hand-crafted tiles’ worth $300...
Must-Read: Bloomberg News: China Steel Head Says Demand Slumping at Unprecedented Speed: "Crude steel output in the country fell 2.1 percent to 608.9 million tons...
Katherine Fite: To Mr. and Mrs. Emerson Fite:
Dearest Mother and Father,
Alea iacta est.
As my detail expires Nov. 13, I went to see the Justice himself Friday and said I would like to stay on. He said I should and asked me to draft a cable for his signature suggesting the extension of the detail for the duration of the trial or until further instructions. So I suppose it's gone by now. And we have only to see what the reply will be. I rather think it will be yes, O.K. which means Christmas here certainly. Mr. Hackworth said when he was being so difficult--now, remember, you're coming home at the end of four months, even if they ask you to stay. So I'm taking a bit of a gamble.
Must-Read: James J. Heckman: Quality Early Childhood Education: Enduring Benefits: "The recent debate around the new Vanderbilt study...
John Maynard Keynes (1937): The General Theory of Employment: "There are passages which suggest that Professor Viner is thinking too much...
Live from the Roasterie: Brownback won reelection in 2014. Just saying. And in spite of his current unpopularity, he continues to rule Topeka and block attempts to undue what he and his fellow con artists set in motion in 2011: the transformation of Kansas, as far as the state government is concerned. He says: "less like California, more like Texas." But Texas has a hell of a lot of oil, real mountains and a real seacoast, a culture very welcoming to Hispanics, a still-boosterish upper class, and no winters. Kansas lacks all of these. It is actually: "less like Minnesota, more like Mississippi."
Steve Kraske: Gov. Sam Brownback in deep hole with Kansans: "Lots of numbers in a new statewide survey of Kansas from Fort Hays State University...
Live from the Roasterie: Brian Buetler: Marco Rubio isn't the Obama of the GOP. He's the John Edwards: "To accept the Rubio-as-Obama line, you must ignore the vastly different strategic niches the two men occupy...
Must-Read: Uncertainty about what the correct model of the economy is and a strongly asymmetric loss function do not simply apply to the question of whether the Federal Reserve should start a tightening cycle now or delay for a year and reevaluate then. It also applies to the question of whether fiscal policy--with its substance-free love of austerity--is fundamentally, tragically, and potentially catastrophically misguided:
Lawrence Summers: Global Economy: The Case for Expansion: "The inability of the industrial world to grow at satisfactory rates even with very loose monetary policies...
Must- and Should-Reads:
The purpose of this weblog is to be the best possible portal into what I am thinking, what I am reading, what I think about what I am reading, and what other smart people think about what I am reading...
"Bring expertise, bring a willingness to learn, bring good humor, bring a desire to improve the world—and also bring a low tolerance for lies and bullshit..." — Brad DeLong
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"With the arrival of Web logging... my invisible college is paradise squared, for an academic at least. Plus, web logging is an excellent procrastination tool.... Plus, every legitimate economist who has worked in government has left swearing to do everything possible to raise the level of debate and to communicate with a mass audience.... Web logging is a promising way to do that..." — Brad DeLong
"Blogs are an outlet for unexpurgated, unreviewed, and occasionally unprofessional musings.... At Chicago, I found that some of my colleagues overestimated the time and effort I put into my blog—which led them to overestimate lost opportunities for scholarship. Other colleagues maintained that they never read blogs—and yet, without fail, they come into my office once every two weeks to talk about a post of mine..." — Daniel Drezner
Looking Forward to Four Years During Which Most if Not All of America's Potential for Human Progress Is Likely to Be Wasted
With each passing day Donald Trump looks more and more like Silvio Berlusconi: bunga-bunga governance, with a number of unlikely and unforeseen disasters and a major drag on the country--except in states where his policies are neutralized.
Nevertheless, remember: WE ARE WITH HER!
"I now know it is a rising, not a setting, sun" --Benjamin Franklin, 1787
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