Reinvent: Determining Bargaining Power in the Platform Economy: Our political system has been hacked by time, circumstance, chaos, and disaster...
Reinvent: Determining Bargaining Power in the Platform Economy: Our political system has been hacked by time, circumstance, chaos, and disaster...
Ken Murphy asked me for three books for 2017. Mine are: Amy Goldstein: Janesville: An American Story, Jean Tirole: Economics for the Common Good, and James Kwak: Economism: Bad Economics and the Rise of Inequality:
Alan Cole: @AlanMCole on Twitter: "Don't think this one's gonna pay for itself, guys:"
Susan Collins on Meet the Press, December 4, 2017:
SUSAN COLLINS: Apply [that] to [the] four-tenths of one percent increase in the GDP generates revenues of a trillion dollars, a trillion dollars.... I’ve talked four economists, including the Dean of the Columbia School of Business and former chairs of the councils of economic advisors and they believe that it will have this impact. So I think if we can stimulate the economy, create more jobs, that does generate more revenue...
J. Bradford Delong: Notes on Gerald Friedman: Since 2010 fiscal policy austerity has been a disaster for both Europe and the United States. But how much better could things be? How much good could be done by a restoration of a sensible fiscal policy?
I take a sensible fiscal policy to be one that, in the words of Abba Lerner, recognizes the first principle of functional finance...
Should-Read: I say it is time to promote this guy to Admiral: AdmiralPAYGO!: Ed Lorenzen: @CaptainPAYGO on Twitter: "The Treasury Department dynamic 'analysis' of tax reform makes a mockery of dynamic analysis and does a disservice to those who advocate for serious dynamic estimates https://t.co/PudiRrQzu1..."
Brad DeLong: @de1ong on Twitter: This is a surprise? Static analysis was always about making a bias-variance tradeoff: A static analysis would be biased, but have lower mean-squared error because the "dynamic" terms would inevitably be overwhelmingly large-magnitude political-partisan-lobbyist-ideologue noise:
Hoisted from the Archives from 2015: Night Thoughts on Dynamic Scoring: Live from DuPont Circle: Last Thursday two of the smartest participants at the Brookings Panel on Economic Activity conference—Martin Feldstein and Glenn Hubbard—claimed marvelous things from the enactment of JEB!'s proposed tax cuts and his regulatory reform program. They claimed:
December 11, 2017 at 01:04 PM in Economics: Finance, Economics: Growth, Economics: Inequality, Moral Responsibility, Political Economy, Politics, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
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Greg Mankiw: Paul Krugman... Sigh: "Paul says I have never admitted to making a math error. Well, I would if I thought I made such an error. I make them all the time. But in this case I am not convinced. Neither is University of Chicago professor Casey Mulligan, who thinks Paul made a math error. I spoke with several other economists (some of whom share Paul's politics) and they don't see Paul's point either..."
It's probably no use, given my lack of success here with:
Losing friends on Twitter: What can I do here? What should I have done differently?
It is a matter of basic empirical historical fact that to a typical upper class white Virginian in the 1950s, "individual liberty" included, as principal and basic parts, the liberties:
Empirical fact. Historical fact. A seamless web of "individual liberty". These were among its principal components.
To deny that these were (a large) part of what "individual liberty" meant to a typical upper class white Virginian in the 1950s—to claim that you need "textual evidence" proving that this was how any particular one thought, for the "belief" that this was the case is a "slender reed"—that is a truly remarkable hill to choose to die on:
Joseph Britt: @zathras3 on Twitter:Thread by @de1ong in response to an observation I made about @SenBobCorker & the Senate #TaxBill-it understates resources available to a senior Senator, but is dead accurate on damage to the Senate done by McConnell trashing Regular Order.
Another day passes without any of the Unprofessional Republican Economists—not the nine, not the three, not the hundred-odd—with the exception of Jagdish Bhagwati—even emitting a peep about how the tax "reform" bill will not, in fact, pay for itself, and will raise the national debt above the appropriate counterfactual baseline...
It is worth reiterating just how unprofessional this has been. The authors take the following logical steps in constructing their argument:
And the video from October is up:
INET Edinburgh Panel: Gains from Trade: Is Comparative Advantage the Ideology of the Comparatively Advantaged?:
My notes and slides:
Live from Souvenir on Claremont: (Early) Monday Smackdown: Tax Reform Intellectual Garbage Cleanup Edition:
1) I am informed—by "persons who say they are familiar with the matter"—that Barro, Boskin, Cogan, Holtz-Eakin, Hubbard, Lindsey, Rosen, Shultz, and Taylor are not lying when they say on Wednesday "we did not offer claims about the speed of adjustment to a long-run result...." even though the previous Saturday they had written about a raise in "the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year..."
Why aren't they lying on Wednesday?
Because the "if" does not mean: "it could be the case that..."
Instead, the "if" means: "for illustrative purposes, if you have trouble converting from changes in levels to growth rates, as an illustrative example, suppose that in a counterfactual world (which is definitely not this world)..."
Should-Read: The very sharp Binyamin Applebaum had an interesting rant yesterday: Binyamin Applebaum: @BCAppelbaum on Twitter: "I am not sure there is a defensible case for the discipline of macroeconomics if they can’t at least agree on the ground rules for evaluating tax policy...
November 30, 2017 at 06:15 AM in Berkeley, Economics: Growth, Economics: Inequality, Economics: Macro, Information: Better Press Corps/Journamalism, Information: Internet, Moral Responsibility, Political Economy, Politics, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (26)
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Project Syndicate: Keeping US Policymaking Honest: Last month here at Berkeley I heard great optimism from the illustrious Alice Rivlin. What “technocracy” in the good sense the United States has—what respect is paid to sound analysis and empirical evidence in the making of policy—is due more to Alice Rivlin than to any other living human.
No, this is not about Martin Peretz...
2006: Madmen in the Attic...: Here Mark Thoma watches Tony Giddens in the Guardian discourse on conditions for a 'revival of sociology.' I listen for a while, and then I want to sidle quietly away before I am noticed:
Economist's View: Did Economics Crowd Out Sociology?: A call to arms, by Anthony Giddens, Commentary, The Guardian:
All you sociologists out there! All you ex-students of sociology! All of you (if there are such people) who are simply interested in sociology and its future! I'd like to hear from you. We live in a world of extraordinary change, in everyday life, family relationships, politics, communications and in global society. We are witnessing, among other things, a return of the gods, as religion re-emerges as a major force in our societies, locally and on a worldwide level.... [W]hy isn't sociology again right at the forefront of intellectual life and public debate?...
First of all, note that nine and only nine would sign on to this letter.
That is not a large number.
Second, note that they do not analyze the deficit-increasing tax bill on display, but rather something else:
Robert J. Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, and John. B. Taylor: How Tax Reform Will Lift the Economy: "In the foregoing analysis, we assumed a revenue-neutral corporate tax change...
...or, especially, after-tax real median growth. Or even 2%-ile income growth. Let alone well-being after cuts in public services.
You just can't. It doesn't add up at any level. As a matter of arithmetic...
Just too much of existing capital income flows to foreigners. Too much of extra production generated by a capital inflow would be credited to foreigners. And domestic savings supply is relatively inelastic. Even if you put both hands on the scale and lean hard, it just doesn't work, even without noting how much of payments to capital are monopoly rents and payments to other forms of capital that are not interest sensitive...
And Paul Krugman has been on fire this fall:
(Plus the salmon (on my machine) rectangle, minus the... what color is that? (on my machine) brownish-gold rectangle—that's the long-run change in U.S. national income from a budget neutral tax "reform" like that Trumpublicans are proposing. The effects of a deficit-increasing one are... less favorable.)
Information from the very sharp Eric Toder: The House Ways and Means Tax Bill Would Raise the National Debt to 123 percent of GDP by 2037: "The Tax Policy Center estimates that the House Ways and Means Committee’s version of the Tax Cut and Jobs Act (TCJA)...
...over the first decade... increases the deficit by 1.7 trillion dollars.... Between 2028 and 2037, the TCJA would reduce net receipts by 1.6 trillion dollars and add 920 billion dollars in additional interest costs. Over the entire 20-year period, the combination of reduced revenues and higher interest payments would raise the federal debt held by the public by 4.2 trillion dollars...
Note to Self: Malthusian Growth Epoch Differential Equations—Analytic:
Principal Reference: Mark Koyama: Could Rome Have Had an Industrial Revolution?
Should-Read: Publius Aelius Aristides Theodorus (155): From The Roman Oration: "This city... covers mountain peaks... covers the land intervening, and... goes down to the sea...
Mark Koyama: Could Rome Have Had an Industrial Revolution?/span>
The agrarian age Malthusian epoch in human economic-demographic history had three principal driving characteristics:
Technological and organizational advance was slow and stable relative to movements in population.
Standards of living wer near "subsistence", in that increases in living standards produced increases in population growth, and decreases in living standards declines.
Resources were important, inasmuch as average productivity declined with increasing population, adjusting for the state of technology and organization.
Politics in the Way of Progress: The seventeen—seventeen!—sustainable development goals are: No Poverty, Zero Hunger, Good Health and Well-being, Quality Education, Gender Equality, Clean Water and Sanitation, Affordable and Clean Energy, Decent Work and Economic Growth, Industry, Innovation and Infrastructure, Reduced Inequalities, Sustainable Cities and Communities, Responsible Consumption and Production, Climate Action, Life Below Water, Life on Land, Peace, Justice and Strong Institutions, and "Partnerships for the Goals https://en.wikipedia.org/wiki/Sustainable_Development_Goals.
At the Milken Review: When Globalization is Public Enemy Number One: The first 30 years after World War II saw the recovery and reintegration of the world economy (the “Thirty Glorious Years,” in the words of French economist Jean Fourastié). Yet after a troubled decade—one in which oil shocks, inflation, near-depression and asset bubbles temporarily left us demoralized—the subsequent 33 years (1984-2007) of perky growth and stable prices were even more impressive... Read MOAR at Milken Review
You said that technocracy was still possible because there was still substantial agreement on models—and as an example you pointed out that there used to be strong disagreements about monetary policy and whether policy should be made by a "rule", and now there isn't much of anybody who thinks so.
Alice Rivlin is speaking this afternoon at Berkeley's GSPP in honor of John Ellwood's retirement on EVIDENCE AND POLICY ANALYSIS IN THE AGE OF FAKE NEWS. A question I will not have time to ask:
Alice, I listen to you, and I think of Irving Kristol, who explained his “rather cavalier attitude” to technocratic questions of what economic policies would actually do thus:
Over on the Twitter machine, the learned and incredibly sharp Owen Zidar writes, about the picky model-based incidence analysis points:
@omzidar: On Twitter: The number of tweets needed to describe this issue suggest more clarification/ a detailed step by step post would be useful...
My view is that in the end all this—Krugman (2017b) and (2017a); DeLong (2017d), (2017c), (2017b), and (2017a); Bernstein (2017); Furman (2017); and Mankiw (2017)—when unpacked, boils down to Econ 1-level tax incidence, and an algebraic mistake in calculating overelaborated and overcomplicated versions thereof.
I seem to have a disagreement with Jason Furman here:
@jasonfurman: Not seeing the math error. Mankiw said static. His soln is right for static (defined as unchanged base)... And dynamic version is higher.
I was taught the definition of "static" by the Jedi Masters at OTA in the early 1990s...
Note to Self: Greg Mankiw Providing Backup for Kevin Hassett Department: Larry Summers One last time on who benefits from corporate tax cuts: "Mankiw’s blog is a fine bit of economic pedagogy...
Ricardo believes in labor value prices because capital flows to put people to work wherever those things can be made with the fewest workers. This poses a problem for Ricardo: The LTV tells him that capitalist production should take place according to absolute advantage, with those living in countries with no absolute advantage left in subsistence agriculture.
I have just spent four hours on a plane to Edinburgh—four hours when I should have been sleeping—chasing my own analytic tail in a counterproductive way.
It was me demonstrating that I am indeed a Bear of Very Little Brain in ways too numerous to enumerate...
It started when I ran across an excellent twitter thread from Jason Furman:
Some talk lately of Ramsey models and their implications for wage increases under the Unified Framework (warning: irrelevant nerdy thread)...
In the middle of saying a number of smart things, Jason said something that confused me—that a calculation comparing Ramsey model steady—states suggested that a 200b corp tax cut [would bring a] 300b wage increase", at least in "Greg Mankiw’s toy example", which Jason wanted to "stipulate... is right..."
I did not understand where such a conclusion could come from.
Should-Watch: Vivienne Ming: Applied Neuroscience and Ramping Up Human Potential https://www.youtube.com/watch?v=MUHXoPS0fm8:
Live at Project Syndicate: Politics in the Way of Progress https://www.project-syndicate.org/commentary/populist-politics-block-development-goals-by-j--bradford-delong-2017-10: BERKELEY – There are 17 United Nations Sustainable Development Goals (SDGs), which aim to tackle problems including poverty, hunger, disease, inequality, climate change, ecological degradation, and many others in between. Clearly, 17 is too many. As Frederick the Great supposedly said, “He who defends everything defends nothing.” Similarly, those who emphasize everything emphasize nothing.
This points to the problem of forging goals through consensus: they can end up being a wish list for everything short of heaven on Earth. But, to be effective, goals should operate like turnpikes, which allow you to make progress toward a specific destination much faster than if you had taken the scenic route. The purpose of consensus building, then, should be to get us to the on-ramp, after which it becomes harder to make a wrong turn or reverse course... Read MOAR at Project Syndicate
Let me put a spotlight on the very sharp Brink Lindsey here...
Brink Lindsey believes utopia is in our grasp. Our problems today are, he thinks, at their root problems about the creation of truly human identities that people can embrace.
This is a remarkable shift.
Previous human societies have had very different problems:
Should-Read: Anton Howes: Why study Economic History?: "What is Economic History? It is about asking some of the biggest and most interesting questions imaginable... https://medium.com/@antonhowes/why-study-economic-history-ef747767be25
Pat Garofolo: FLASHBACK: In 1993, GOP Warned That Clinton’s Tax Plan Would ‘Kill Jobs,’ ‘Kill The Current Recovery’: "Republicans... have been apoplectic about Obama’s plan, claiming that it will kill jobs and cripple small businesses... https://thinkprogress.org/flashback-in-1993-gop-warned-that-clintons-tax-plan-would-kill-jobs-kill-the-current-recovery-96adb3663484/
September 27, 2017 at 05:33 PM in Economics: Finance, Economics: Growth, Economics: History, History, Moral Responsibility, Political Economy, Politics, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (6)
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Supply-Side Amnesia https://www.project-syndicate.org/commentary/republican-tax-cuts-budget-deficit-by-j--bradford-delong-2017-09: In the spring of 1980, Martin Feldstein co-taught (with Olivier Blanchard) the second-best macroeconomics class I ever took. (The best was a class I took from Olivier alone three years later.) From 1982-1984 Martin Feldstein served in Ronald Reagan's cabinet as Chair of the President's Council of Economic Advisers. There he waged an effective if lonely bureaucratic war for the proposition that the size of the Reagan tax cut of 1981 had been a big policy mistake, and that America would suffer if that mistake was not repaired. That position was unpopular inside the Reagan White House: chief-of-staff James Baker tried to get everybody on to the page of delay, in the hope that something would turn up, and avoid the administration having to admit that its signature tax-cutting initiative was, at least in part, a mistake.
Apropos of Janet Napolitano's : The future of NAFTA and the state of U.S.-Mexico relations: "A forum hosted by the University of California and Tecnológico de Monterrey..." https://www.universityofcalifornia.edu/initiative/uc-mexico-initiative/nafta-conference...
My present thoughts about NAFTA:
Nearly a quarter century ago, early in the Clinton administration, I was one of the leads on the team responsible for constructing estimate of the economic impact of NAFTA. And I definitely have some explaining to do.
Consider the 256 GB memory iPhone X: Implemented in vacuum tubes in 1957, the transistors in an iPhoneX alone would have:
Live from Federal Reserve Economic Data: Brad DeLong's FRED Economic Statistics Dashboard https://research.stlouisfed.org/useraccount/dashboard/215: What I want my Econ 101b students to see and think about before they come to class next January:
Just look at this:
Kansas is—in some strong sense—unbelievably loony.
No sooner does Sam Brownback manage to plant his behind in the Governor's chair in Topeka, KS than does Kansas's share of American nonfarm jobs and people start to drop like a stone.
About a month and a half ago I decided that there was really no place in any of my classes for my "what you really ought to know about doing economics" lecture http://www.bradford-delong.com/2017/07/how-to-think-like-an-economist-if-that-is-you-wish-to.html: it would be either incomprehensible (because students would not understand it) or unnecessary (because students would already know it).
Hoisted from 2010: What Do Econ 1 Students Need to Remember Most from the Course? http://delong.typepad.com/sdj/2010/12/what-do-econ-1-students-need-to-remember-most-from-the-course.html: Economics deals with those things that we want but that are "scarce".
Gavin Wright: Review of "Slavery’s Capitalism: A New History of American Economic Development": https://eh.net/book_reviews/slaverys-capitalism-a-new-history-of-american-economic-development/
Stephanie McCurry: Slavery and economics http://www.the-tls.co.uk/articles/private/slavery-economics/
The Trump administration (I won't say "Donald Trump", because I am not convinced that Donald Trump knows what the Congressional Budget Office is) wants people to take on the CBO's projections that real GDP growth is likely to average a hair less than 2 percent per year.
And professional Republicans John Cogan of Stanford, Glenn Hubbard of Columbia, John Taylor of Stanford, and Kevin Warsh of Stanford deliver.
Michael Strain provides them with a warning—which they do not and will not heed:
https://www.project-syndicate.org/commentary/universities-in-the-age-of-trump-by-j--bradford-delong-2017-07: Let me take a break in this column from our usual economics to worry about our institutions: What have we to say—to hope and fear—about the role and the future of the independent—ideologically and intellectually—university?
Hoisted from Ten Years Ago: More on the Kaiping Mines: Jonathan Spence's Asides, and Albert Feuerwerker's Review of Ellsworth Carlson http://www.bradford-delong.com/2007/07/more-on-the-kai.html: China specialists see and can almost touch an alternative history in which late-nineteenth century China managed to match the political and economic achievements of Meiji Japan, and in which China stood up economically, politically, and organizationally at the same pace of the Japan that won its short victorious war against Russia in 1905, negotiated as an equal with Britain and the U.S. over warship construction in 1921, and was perhaps the eighth industrial power in the world by 1929.
Brad DeLong: （経済教室）グローバル化を巡る攻防(下)偏りない成長で不安払拭 市場経済の経験を生かせ Ｂ・デロング カリフォルニア大学バークレー校教授 ：日本経済新聞 http://www.nikkei.com/article/DGKKZO19272800W7A720C1KE8000/
(Battle over globalization (down) Uneasy with unbiased growth Leverage the experience of market economy)
The puzzle about just how and why the brain eater ate Clive Crook's brain—how it was that, starting about a decade ago, one of the most interesting (and intelligent) of the Tories simply lost his grip on reality—remains, to me at least, a mystery.
Here I am hoisting from one of the first full-blown signs of it in 2007.
A little background: By 2008 the brain-eating was overwhelming. For example we had Clive Crook on the "huge success" of the nomination of Sarah Palin—meaning, that is, that she was highly qualified to be Vice President and would attract lots of new votes to the McCain-Palin ticket:
Clive Crook (2008): Democrats must learn some respect: "The problem in my view is less Mr Obama and more the attitudes of the claque of official and unofficial supporters that surrounds him... https://www.theatlantic.com/business/archive/2008/09/democrats-must-learn-some-respect/8803/
July 21, 2017 at 07:38 AM in Economics: Growth, Economics: History, Economics: Inequality, History, Moral Responsibility, Obama Administration, Philosophy: Moral, Political Economy, Politics, Science: Cognitive, Streams: (Tuesday) Hoisted from Archives, Streams: Cycle, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted | Permalink | Comments (1)
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Clueless DeLong Was Clueless: Hoisted from February 2007: The Domestic Macroeconomic Outlook: February 28, 2007 http://www.bradford-delong.com/2007/02/the_domestic_ma.html: It looks like I'm not going to get to give my short talk on the domestic macroeconomic outlook up at Lake Tahoe this weekend:
That's too bad, because such talks quickly grow stale.
One of the major points of my schtick is that the macroeconomic outlook rarely changes suddenly, so that 90% of the time it is perfectly OK to say, "things are like they were, only three months ago." Nevertheless such talks have a very short half life: people like to know how the most recent news affects things, even if the usual answer is "not much"--except, of course, for those turning points where things do change a great deal, and which we usually see clearly only in retrospect.
I was going to hit three big points:
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!
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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"I now know it is a rising, not a setting, sun" --Benjamin Franklin, 1787
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