Grasping Reality with at Least Three Hands

Some Fairly-Recent Must- and Should-Reads...

1. Jerome H. Powell: Monetary Policy in a Changing Economy: "Analysts talk about... u* (pronounced "u star") is the natural rate of unemployment, r* ("r star") is the neutral real rate of interest, and π* ("pi star") is the inflation objective. According to the conventional thinking, policymakers should navigate by these stars...

2. Josh Marshall: Whelan Nutbar Twitter Thread Preserved for Posterity: "We still have more questions than answers about Ed Whelan’s bizarre twitter thread that accused another Kavanaugh classmate of attacking Prof. Blasey Ford and roiled the already embattled nomination. So for those who didn’t see or would like to read through it again for clues to what happened, here’s the whole thing...

3. Michael R. Strain: The Economics and Emotions Behind Slow Wage Growth: "why does wage growth continue to be so tepid? As unemployment falls and the number of open jobs increases, businesses should have to increase pay in order to attract increasingly scarce available workers as well as retain the employees they have...

4. GDP has its place in our national public-sphere conversation because a new number is released roughly once a month—each quarter of the year has its own GDP number, and the Commerce Department's Bureau of Economic Analysis releases "advance", "second", and "third" estimates for each quarter, and then there are benchmarking revisions. To attain an equal place in public-sphere consciousness, the distributional national accounts component would have to appear also once a month. And it is not clear to me how to do that: Equitable Growth: Measuring U.S. economic growth: "The measurement of GDP has fostered a national fixation on 'growing the pie' that ignores how growth is distributed...

5. Binyamin Applebaum: Economics as a Professional Vocation: "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...

6. Pedro Nicolaci da Costa: Wage Growth Should Be Much Stronger by Now Given Low Jobless Rates: "There's a simple way to tell the US job market is not as strong as it appears.... 'The definition of full employment is low- and moderate-wage workers actually get raises," said Josh Bivens, director of research at the Economic Policy Institute. 'We are not at full employment yet'...

7. Sara Boboltz and Emily Peck: Yale Students To Prof Who Denies Coaching Kavanaugh Clerks: You're Lying: "Yale Law School professor Amy Chua strongly denied that she told students that Brett Kavanaugh, now a nominee for the U.S. Supreme Court, liked his female law clerks to have a certain feminine appearance, in a statement emailed to the Yale Law community on Saturday...

8. Wigner has many friends, and they can disagree: Lidia del Rio: Journal club: Frauchiger-Renner no-go theorem for single-world interpretations of quantum theory: "In this talk I will go over the recent paper by Daniela Frauchiger and Renato Renner, "Single-world interpretations of quantum theory cannot be self-consistent" (arXiv:1604.07422)...

9. Rob Johnson and George Soros: A Better Bailout Was Possible: "A critical opportunity was missed when the burden of post-crisis adjustment was tilted heavily in favor of creditors relative to debtors.... When President Barack Obama’s administration arrived, one of us (Soros) repeatedly appealed to Summers... [for] equity injection into fragile financial institutions and... writ[ing] down mortgages to a realistic market value.... Summers objected that ... such a policy reeked of socialism and America is not a socialist country...

10. Duncan Black: Who Talks Like This: "I have some opinions about elite law-and The Law as a "scholarly" endeavor-which I might share sometime after a few lines of coke (joke), but something which drives me nuts is how they all talk about each other in terms of 'giant intellects' and 'intellectual prowess' and 'my friend, the jurist, has always impressed me with his deep intellect'...

11. Paul Krugman: The Careerism and De Facto Soft Corruption of the Center_: "given Kavanaugh's record (sexual assault aside) and the Whelan stunt it's now clear that the right-wing judicial establishment is full of charlatans and cranks.... What's different is how respectfully the judicial crazies have been treated by the non-right-wing legal establishment...

12. Women of Yale: Open Letter from Women of Yale in Support of Deborah Ramirez: "We stand behind Deborah Ramirez, Yale ’87, and with Dr. Christine Blasey Ford. These two women have come forward with grave allegations against Supreme Court nominee Brett Kavanaugh, a Yale graduate...

13. Statement from James Roche: "I was Brett Kavanaugh's roommate at Yale University in the Fall of 1983. We shared a two-bedroom unit in the basement of Lawrence Hall on the Old Campus. Despite conditions, Brett and I did not socialize beyond the first few days of freshman year. We talked at night as freshman roommates do and I would see him as he returned from nights out friends. It is from this experience that I concluded that although Brett was normally reserved, he was a notably heavy drinker, even by the standards of the time...

14. Brett Kavanaugh: A Multiple Train Wreck in Many Dimensions: Monday Smackdown

15. Monday Smackdown: Things from His Georgetown Prep Yearbook Brett Kavanaugh Should Be Asked About This Week...

16. Yale Students To Prof Who Denies Coaching Kavanaugh Clerks: You're Lying | HuffPost

17. Why Would Anybody Sane Ever, Ever Choose Brett Kavanaugh Over Amy Barrett?

Statement from James Roche: "I was Brett Kavanaugh's roommate at Yale University in the Fall of 1983. We shared a two-bedroom unit in the basement of Lawrence Hall on the Old Campus. Despite conditions, Brett and I did not socialize beyond the first few days of freshman year. We talked at night as freshman roommates do and I would see him as he returned from nights out friends. It is from this experience that I concluded that although Brett was normally reserved, he was a notably heavy drinker, even by the standards of the time...

Women of Yale: Open Letter from Women of Yale in Support of Deborah Ramirez: "We stand behind Deborah Ramirez, Yale ’87, and with Dr. Christine Blasey Ford. These two women have come forward with grave allegations against Supreme Court nominee Brett Kavanaugh, a Yale graduate...

Paul Krugman: The Careerism and De Facto Soft Corruption of the Center_: "given Kavanaugh's record (sexual assault aside) and the Whelan stunt it's now clear that the right-wing judicial establishment is full of charlatans and cranks.... What's different is how respectfully the judicial crazies have been treated by the non-right-wing legal establishment...

Duncan Black: Who Talks Like This: "I have some opinions about elite law-and The Law as a "scholarly" endeavor-which I might share sometime after a few lines of coke (joke), but something which drives me nuts is how they all talk about each other in terms of 'giant intellects' and 'intellectual prowess' and 'my friend, the jurist, has always impressed me with his deep intellect'...

Rob Johnson and George Soros: A Better Bailout Was Possible: "A critical opportunity was missed when the burden of post-crisis adjustment was tilted heavily in favor of creditors relative to debtors.... When President Barack Obama’s administration arrived, one of us (Soros) repeatedly appealed to Summers... [for] equity injection into fragile financial institutions and... writ[ing] down mortgages to a realistic market value.... Summers objected that ... such a policy reeked of socialism and America is not a socialist country...

Yale Students To Prof Who Denies Coaching Kavanaugh Clerks: You're Lying | HuffPost

Sara Boboltz and Emily Peck: Yale Students To Prof Who Denies Coaching Kavanaugh Clerks: You're Lying: "Yale Law School professor Amy Chua strongly denied that she told students that Brett Kavanaugh, now a nominee for the U.S. Supreme Court, liked his female law clerks to have a certain feminine appearance, in a statement emailed to the Yale Law community on Saturday...

Pedro Nicolaci da Costa: Wage Growth Should Be Much Stronger by Now Given Low Jobless Rates: "There's a simple way to tell the US job market is not as strong as it appears.... 'The definition of full employment is low- and moderate-wage workers actually get raises," said Josh Bivens, director of research at the Economic Policy Institute. 'We are not at full employment yet'...

Binyamin Applebaum: Economics as a Professional Vocation: "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...

GDP has its place in our national public-sphere conversation because a new number is released roughly once a month—each quarter of the year has its own GDP number, and the Commerce Department's Bureau of Economic Analysis releases "advance", "second", and "third" estimates for each quarter, and then there are benchmarking revisions. To attain an equal place in public-sphere consciousness, the distributional national accounts component would have to appear also once a month. And it is not clear to me how to do that: Equitable Growth: Measuring U.S. economic growth: "The measurement of GDP has fostered a national fixation on 'growing the pie' that ignores how growth is distributed...

Michael R. Strain: The Economics and Emotions Behind Slow Wage Growth: "why does wage growth continue to be so tepid? As unemployment falls and the number of open jobs increases, businesses should have to increase pay in order to attract increasingly scarce available workers as well as retain the employees they have...

Josh Marshall: Whelan Nutbar Twitter Thread Preserved for Posterity: "We still have more questions than answers about Ed Whelan’s bizarre twitter thread that accused another Kavanaugh classmate of attacking Prof. Blasey Ford and roiled the already embattled nomination. So for those who didn’t see or would like to read through it again for clues to what happened, here’s the whole thing:

Jerome H. Powell: Monetary Policy in a Changing Economy: "Analysts talk about... u* (pronounced "u star") is the natural rate of unemployment, r* ("r star") is the neutral real rate of interest, and π* ("pi star") is the inflation objective. According to the conventional thinking, policymakers should navigate by these stars...

A Baker's Dozen of Fairly-Recent Links...

1. Peter Norvig: A Concrete Introduction to Probability (using Python)
2. James Gorman: Parrots Think They’re So Smart. Now They’re Bartering Tokens for Food
3. Paul Moses: Tackling the Wrong Problem: "Pope Benedict XVI’s Removal of Bishop William Morris...
4. Weekend Reading: John Maynard Keynes on the "Euthanasia of the Rentier"
5. Rachel Feintzig: Tax Change Helps Executives Afford Pricier Planes: "The recent changes to the tax code are giving business executives a new perk: the opportunity to deduct the entirety of a corporate-jet purchase.... The price of a new or used airplane purchased by a company can be a 100% write-off against its earnings. That is a major change...
6. Robert Farley: The Queen Elizabeth Class Battleships Were Among the Best Ever Built. What If They Never Happened?
7. Erik Berglöf: The Evolution of Globalization: "Around the turn of the century, critics of trade and capital-market liberalization had good reason to worry that emerging and developing economies would fall further behind the developing world. But the opposite happened, and now the world must worry about the trajectory of advanced economies and the fraying of multilateral arrangements...
8. Adair Turner: Japan’s Successful Economic Model by Adair Turner: "Japan’s GDP growth lags most other developed economies, and will likely continue to do so as the population slowly declines. But what matters for human welfare is GDP per capita, and on this front, the country excels...
9. Very, very, very, very smart: Brad Setser: Three Sudden Stops and a Surge: "Fundamentally, the crisis was a crisis of confidence in the health of the balance sheets of the great financial houses of the United States and Europe.... The line between banks and shadow banks was thin, it turned out...
10. Martin Sandbu: Salzburg Changes Nothing: "[May] far from giving up on Chequers, will be prepared to make further concessions on the specifics to gain agreement from the EU27 on the plan’s basic principle.... Britain... will have to sign up to a permanent customs union with the EU in all but name, and accept the full force of European jurisdiction in everything to do with production and trade.... It would be a good deal for the EU for its regulatory authority to be accepted by such a big third country...
11. Tim Duy: Fed Interest-Rate Debate Misses the Bigger Picture: "It’s better to let economic conditions dictate when to pause the monetary tightening process...
12. Olla Cocina: "Downtown San Jose Mexican Restaurant in the historic San Pedro Square...
13. Benjamin Wittes: Brett Kavanaugh Bears the Burden of Proof: "The question isn’t whether he can win confirmation—it’s whether he can defend against the charge he faces in a manner that is both persuasive and honorable...

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#mightread

Paul Krugman: @paulkrugman: "The Kavanaugh mess has structural roots. Rs needed someone who was both ideologically reliable and at no risk of developing a conscience when it came to defending Trump against rule of law. So it had to be a bad person, which meant good odds of nasty stuff surfacing...

Why are they sticking with Kavanaugh? Because the pool of "Federalist Society approved judges who also think the president is essentially unaccountable... is rather thin". There are two agendas here—that of the Federalist Society and that of the Orange-Haired Baboon. If not, the Republicans would not have wedged themselves into this position—they would have said: "OK. Amy Barrett". Anyone sane would have long ago decided that Amy Barrett is the right swing vote to repeal Roe: Mike the Mad Biologist: Several Thoughts On Kavanaugh: "There’s a misunderstanding about the letter of support by the ‘Kavanaugh 65.’ It was meant to defang the charge that he was a drunken pig.... They didn’t think attempted sexual assault allegations were coming, though they probably should have...

Very, very, very, very smart: Brad Setser: Three Sudden Stops and a Surge: "Fundamentally, the crisis was a crisis of confidence in the health of the balance sheets of the great financial houses of the United States and Europe.... The line between banks and shadow banks was thin, it turned out...

I think that this is 100% right: Anatole Kaletsky: Why the US Would Lose A Trade War with China: "In handicapping the US-China conflict, Keynesian demand management is a better guide than comparative advantage.... China can avoid any damage at all from US tariffs simply by responding with a full-scale Keynesian stimulus...

Isabel Z. Martínez, Michael Siegenthaler, and Emmanuel Saez: The Myth of Intertemporal Labour Supply Substitution: "Macroeconomists tend to assume that people work more when their wages are temporarily higher...

A very interesting paper. My first reaction is that the effect of salt iodization is just too large—that iodine deficiency in utero is highly unlikely to rob you of 11% of your lifetime income. Thus I suspect that something has gone wrong with the identification. But I cannot figure out what. Great kudos to Nguyen and company for being willing to put this out there for us to look at: Achyuta Adhvaryu, Steven Bednar, Anant Nyshadham, Teresa Molina, Quynh Nguyen: When It Rains It Pours: The Long-run Economic Impacts of Salt Iodization in the United States: "In 1924, The Morton Salt Company began nationwide distribution of iodine-fortified salt...

Dmitry Lubensky and Doug Smith: Learning from Speculating and the No Trade Theorem: "To overcome the no-trade theorems of Aumann (1976) and others, models of speculative trade have relied on agents that do not maximize expected wealth (noise traders)...

Jeremy Nalewaik: Inflation Expectations and the Stabilization of Inflation: Alternative Hypotheses: "This paper examines two candidate hypotheses explaining the stabilization of U.S. inflation since the 1970s and 1980s...

I need to understand China. I do not understand China. How can I learn to understand China? Martin Wolf is also trying to understand China. Here he sets forth seven propositions that the Chinese elite make to him: Martin Wolf: How the Beijing elite sees the world: "How does the Chinese ruling elite view the world?...

Cosma Shalizi (2007): Foundational Dismal Science Blogging: "Who knew that Reinhard Selten was the author of a dialogue http://bactra.org/sloth/selten-dialogue.pdf on the foundations of economics?...

Even though this is written by another member of the Global J. Bradford Alliance, I am not sure that "when U.S. multinationals are able to import talent or export R&D work, this reinforces US technological leadership". That is not how I read Shenzhen, at least: Lee Branstetter, Britta Glennon, and J. Bradford Jensen: The IT revolution and the globalisation of R&D: "US firms have begun shifting R&D investment towards non-traditional destinations such as China, India, and Israel...

Pablo D. Fajgelbaum, Eduardo Morales, Juan Carlos Suárez Serrato, and Owen M. Zidar: State Taxes and Spatial Misallocation: "We study state taxes as a potential source of spatial misallocation in the United States...

John Scalzi: The Whatever Digest, 9/13/18: "I’m a fan of Lindsay Ellis.... Her most recent video is... about... people... making... 'authentic' as opposed to the conventional polish of television.... Along the way she talks, on her own and with vlogger/author Hank Green, about the emotional cost of keeping up that veneer of authenticity...

Anthills have minds. Anthills have minds that can fall victim to positive-feedback bubbles: Bob Holmes: The mind of an anthill: "The creatures’ hive-mind nature led Stephen Pratt, a behavioral biologist at Arizona State University in Tempe, to see if he could study the behavior of ant colonies the same way psychologists study human behavior, such as with experiments forcing the ants to make difficult decisions and trade-offs...

Ed Kilgore: Is the Anti-Abortion Movement Just About Suppressing Women?: "Even if many individual Republicans... thought of themselves as 'pro-woman and pro-life', it has been a long time since there was any party-wide commitment to the first half of that formula.... The anti-abortion movement['s]... its mass base is now found not among traditionalist Catholics, with their centuries-old teachings against abortion rooted in... medieval/early modern biology, but among conservative Evangelical Protestants, who were at most ambivalent about abortion until the late 1970s...

I still think it more likely than not that the Fed will be back at the zero lower bound in three years—and that the Fed then will wish that it had cut interest rates next week, rather than raised them, as it will: Narayana Kocherlakota: The Fed Should Prepare for the Unexpected: "Keeping the economy strong is the best defense against recession.... Let’s consider another risk — that the relationship between unemployment and inflation, expressed in what economists call the Phillips curve, will prove different than expected...

Will Wilkinson: “Socialism” vs. “capitalism”: what left and right get wrong about the debate: "We need go-go capitalism to afford a generous welfare state...

Gabriel P. Mathy: Hysteresis and Persistent Long-Term Unemployment: the American Beveridge Curve of the Great Depression and World War II: "The stigma of a long unemployment spell made reentering employment difficult even during the brisk economic recovery, which lead to unemployment hysteresis and persistently high joblessness...

Yet another nail in the coffin of the idea that watching the lecture in-person can be made optional and education improved: Martin R. Edwards and Michael E. Clinton: A study exploring the impact of lecture capture availability and lecture capture usage on student attendance and attainment: "Lecture capture is widely used within higher education as a means of recording lecture material for online student viewing...

Kimberly Adams: The disturbing parallels between modern accounting and the business of slavery: "The common narrative is that today's modern management techniques were developed in the factories in England and the industrialized North.... According to... Caitlin Rosenthal, that narrative is wrong...

"Perhaps smack of desperation, and pull us into a tighter relationship with other parts of government"—those were the arguments of Vince Reinhart in 2003 against the aggressive policies (like currency depreciation, money-financed tax cuts, discount-window lending, purchases of corporate debt and equity, and reductions in reserve requirements) that Ben Bernanke had previously argued that a central bank should follow at the zero lower bound. But if you maintain your independence by not doing the right thing, you were never independent in the first place. And desperation is the appropriate response to being at the zero lower bound on interest rates: it is a desperate situation. I think that somehow Bernanke (and Reinhart, and the Fed) came to believe that "encouraging investors to expect short rates to be lower in the future than they currently anticipate; shifting relative supplies to affect risk premiums; oversupplying reserves at the zero funds rate" had a good chance of being effective. It was not clear to me why they should have thought this. And it looks like they were wrong: Laurence Ball (2012): Ben Bernanke and The Zero Bound: "From 2000 to 2003, when Ben Bernanke was a professor and then a Fed Governor, he wrote extensively about monetary policy at the zero bound on interest rates...

Are fracking firms little more than a bubble? I cannot tell whether the Economist is on to something here or not: Schumpeter: America’s Shale Firms Don’t Give a Frack About Financial Returns: "Shale fracking... is booming once again... But... the business has burned up cash for 34 of the last 40 quarters.... With the exception of airlines, Chinese state enterprises and Silicon Valley unicorns—private firms valued at more than $1bn—shale firms are on an unparalleled money-losing streak. About $11bn was torched in the latest quarter...

Very good to see—Dan Froomkin's original WHW was Politico before there was Politico, and was, actually, unlike Politico, informative—because Dan worked for his readers, rather than for his sources. One suggestion, Dan—don't say "renewal": there is no "renewal", at least not yet: Dan Froomkin: Dan Froomkin's White House Watch: "Trump welcomes another authoritarian to the White House...

Sandra Newman: One More Thing on Kavanaugh: "One more thing on Kavanaugh before I go and do my laundry. I've written about false rape accusations before, and I know they do occur. I spent months researching this article, and I'm very familiar with the territory...

Claudia Sahm: Alice in Wonderland: "One year ago today, Alice Wu’s research about sexism at an online economics forum made the news...

This line of work has become popular, and is very interesting. But I always find myself having a hard time evaluating it, and am puzzled as to how to think about it: Yuriy Gorodnichenko, Debora Revoltella, Jan Svejnar, Christoph Weiss: Dispersion in productivity among European firms: "This column uses firm-level data from all EU countries to explore how the dispersion of resources affects macroeconomic performance...

Back in my day—which was a decade and a half a decade before Brett Kavanaugh's—the view from the co-ed prep schools of Sidwell Friends and Georgetown Day was that, while the boys from all the single-sex prep schools needed watching, those from Georgetown Prep who showed up to parties and drank were out-of-control in an... unusual way: Amanda Terkel and Arthur Delaney: Alumnae Of Christine Blasey Ford's High School Circulate Letter Of Support | HuffPost: "Ford’s allegations against Brett Kavanaugh are 'all too consistent with stories we heard and lived while attending Holton', they wrote...

Nicola Bianchi and Michela Giorcelli: Reconstruction Aid, Public Infrastructure, and Economic Development: "Plausibly exogenous differences between Italian provinces in the amount of grants disbursed through the Marshall Plan...

Gary R. Saxonhouse, Robert M. Stern, Gavin Wright, and Hugh Patrick: The Japanese Economy in Retrospect: "..."

William H. Janeway: American Political Economy, Disrupted: "Digitalization has also opened up a new front in the age-old confrontation with the state...

Mark Thoma sends us to: Summer 2018 Journal of Economic Perspectives: "Symposium: Macroeconomics a Decade after the Great Recession...

Perhaps the biggest hole in growth economics is its inability to properly wrestle with the problem of how to build and entertain the communities of engineering practice that have the externalities that fuel so much of economic growth. The 2% per year rate of growth of labor efficiency seen over the past century comes from somewhere, after all. If it comes from activities like R&D and science that together consume 2% of national income, that is a 60%/year net rate of return on such activities. We badly need to understand more about them: Pierre Azoulay, Erica Fuchs, Anna Goldstein, Michael Kearney: Funding Breakthrough Research: Promises and Challenges of the "ARPA Model": "The Advanced Research Projects Agency (ARPA) model for research funding has... spread...

Justin Wolfers: Money Really Does Lead to a More Satisfying Life: "Lottery winners said they were substantially more satisfied with their lives than lottery losers.... These effects are remarkably durable... still evident up to two decades after a big win...

This, somehow, does not seem like it lies within the scope of economists' comparative advantage. But do psychologists, sociologists, and political scientists do better?: Roland Bénabou, Armin Falk, Jean Tirole: Narratives, Imperatives, and Moral Reasoning: "By downplaying externalities, magnifying the cost of moral behavior, or suggesting not being pivotal, exculpatory narratives...

Justin Fox: Why German Corporate Boards Include Workers for Co-Determination: "One of the world’s most successful capitalist nations, Germany, currently requires 50 percent employee representation on the supervisory boards of large corporations, and that most countries in the European Union now also encourage or require some such form of employee 'co-determination'...

Ezra Klein: Ben Shapiro’s revealing explanation for Trump: it’s all Obama’s fault: "Obama and Shapiro differ sharply.... Obama blames Trump—and others in the Republican Party and conservative media—for demagogically preying on Americans’ fears and anxieties. Shapiro blames Obama for adopting a lecturing tone that alienated a critical mass of Americans...