Grasping Reality on TypePad, by Brad DeLong

20110201_ias 107 upload.pdf

Screencast: http://delong.typepad.com/files/20110201-ias-107.mp4

Best answers so far:

(15) Dropbox: Why is Dropbox more popular than other tools with similar functionality?

Michael Wolfe:

Well, let's take a step back and think about the sync problem and what the ideal solution for it would do:

1. There would be a folder.
2. You'd put your stuff in it.
3. It would sync.

They built that.

Why didn't anyone else build that?  I have no idea.

"But," you may ask, "so much more you could do!  What about task management, calendaring, customized dashboards, virtual white boarding.  More than just folders and files!"

No, shut up.  People don't use that crap.  They just want a folder.  A folder that syncs.

"But," you may say, "this is valuable data...certainly users will feel more comfortable tying their data to Windows Live, Apple Mobile Me, or a name they already know."

No, shut up.  Not a single person on Earth wakes up in the morning worried about deriving more value from their Windows Live login.  People already trust folders.  And Dropbox looks just like a folder.  One that syncs.

"But," you may say, "folders are so 1995.  why not leverage the full power of the web?  With HTML 5 you can drag and drop files, you can build intergalactic dashboards of stats showing how much storage you are using, you can publish your files as RSS feeds and tweets, and you can add your company logo!"

No, shut up.  Most of the world doesn't sit in front of their browser all day.   If they do, it is IE 6 at work that they are not allowed to upgrade.  Browsers suck for these kinds of things.  Their stuff is already in folders.  They just want a folder.  That syncs.

That is what it does.

Isaac Hall:

As a co-founder of Syncplicity, a service that competes with Dropbox, this question has been on my mind for years. We launched within a few weeks of Dropbox, we had multi-folder synchronization & read-only sync, and we were a few years older than the Dropbox kids. I'm very proud of the service we put together and am happy to see the service shift towards businesses, yet Dropbox kicked butt. Here's why:

Before launching their service, Dropbox created a video that had tons of geeky references. It showed off a product that wasn't finished and had a few flaws. It showed a binary diff sync of an image... binary diff is great, but it only works if the file isn't compressed. So, it only works on bitmaps and who the heck is sync'ing bitmaps? The video spread quickly and got their name out before anyone heard of our company. Instead of making our own video, we were upset that binary diff wouldn't do anything for JPEGs or other compressed formats that consumers tended to use. Who the heck is sync'ing images saved from Microsoft Paint?

Next, we had issues getting the press excited at launch. We built a fantastic Windows client. 3 years ago, everyone was running Windows. (Actually, I had a Mac and wrote all my code in a Parallels VM on my Mac. It always made me a little sad that we didn't have a native Mac client for a long time. Thankfully, the company has a Mac client today.) We were so excited to show the press, yet they all had Macs. Walt Mossberg wouldn't write about our product because it was PC only. Months after we hired our PR agency, we found out that they had never even used our product... because they too only had Macs. It's pretty hard to pitch a service when you haven't used it.

For a while, we couldn't believe Dropbox was so viral while we weren't. We opened our beta so anyone could sign up while people had to beg for a Dropbox invite. The closed beta worked incredibly well for Dropbox. We opened up our beta at the insistence of our PR agency -- "No way the New York Times will write about you if you have a closed beta". (It turned out that the NYT also doesn't write about you if you're PC only.) If your service is really popular, having a closed beta helps you create pent up demand and control the number of users joining on a regular basis so you can scale the backend appropriately.

In the end, it really came down to one incredibly genius idea: Dropbox limited its feature set on purpose. It had one folder and that folder always synced without any issues -- it was magic. Syncplicity could sync every folder on your computer until you hit our quota. (Unfortunately, that feature was used to synchronize C:\Windows\ for dozens of users -- doh!) Our company had too many features and this created confusion amongst our customer base. This in turn led to enough customer support issues that we couldn't innovate on the product, we were too busy fixing things.

After I left Syncplicity, I ran into the CEO of Dropbox and asked him my burning question: "Why don't you support multi-folder synchronization?" His answer was classic Dropbox. They built multi-folder support early on and did limited beta testing with it, but they couldn't get the UI right. It confused people and created too many questions. It was too hard for the average consumer to setup. So it got shelved.

If you're starting a new company, the best thing you can do is keep your feature set small and focused. Do one thing as best as you possibly can. Your users will beg and beg for more functionality. They will tell you their problems and ask you to fix it. My philosophy is that they're right if their feature request is right only if it works for 80% of your customers. Until you have a lot of resources, stay focused on your core competency.

The best part about having a simple product is that it's easy to sell & easy to support. If your product is too complicated, you'll spend all day on customer support & bug fixing. I've been there -- it's no fun.

In closing, I want to give props to my previous Syncplicity co-workers. They worked their butts off competing against Dropbox. They're crazy smart and we built a great service together. They're still working on it and they've got a great business solution. As for Dropbox... Drew, Arash and the rest of the team are absolutely brilliant. Their success is no accident. File synchronization is incredibly difficult. Building a product that millions of consumers can easily understand without RTFM is even more challenging. They're my inspiration for my current company.

If you want to understand more, read everything you can about the lean startup movement. And have at least one seriously amazing product person on your staff if that's not you.

Michael Froomkin writes:

Dennis Kucinich Appears to Have Lost His Mind: Yes, this is a silly suit for a politician to bring because he will be ridiculed by bloggers.

But on the merits I think you have missed two things. First, it is plausible to say that restaurants have duty to serve sandwiches without dangerous hard things in them. It is not reasonable to put the burden on the consumer because that would require that the consumer have a duty to take the sandwich apart to examine its safety. That makes a mess and destroys the sandwich. The least cost avoider here may well be the maker of sandwich, who can look over the material as they put it together, or even do it en mass before doling it out in servings. This sort of suit may actually preserve incentives leading to an efficient result.

Second, since we lack a decent health system, the tort system is in effect how we socialize certain medical costs. It undoubtedly is a hideously inefficient way of spreading losses, but it's how we do it. In that context, this suit is much less unreasonable than you suggest.

Biting an olive pit rarely leads to breaking a tooth. Breaking a tooth rarely leads to a fortune in dental bills--especially if when you bit an olive pit and suffer excruciating pain, you then go to the dentist and don't "shake it off and go right back to work."

Dennis Kucinich:

This injury required nearly two years, three dental surgeries, and a substantial amount of money to rectify. The legal action you have heard about was filed due to the severity, expense and duration of the dental injury, the complications which followed and which still persist.... When I bit into the olive pit, (unbeknown to me at the time), upon impact the tooth split in half, vertically through the crown and the tooth, below the level of the bone.... The internal structure of the tooth was rendered nonrestorable. Although the pain was excruciating, I shook it off and I went right back to work. This tooth is a key tooth which anchored my upper bridgework. The injured tooth and the bone above it became infected. I took a course of antibiotics for the infection, had an adverse reaction to the antibiotics which caused me to have an intestinal obstruction and emergency medical intervention. Later, my dentist referred me to a specialist who informed me that the damaged tooth had to be removed. A third dentist removed the tooth and I was fitted for a temporary partial. I waited for the bone to heal. An implant was placed, but it failed. Many months later still a second implant succeeded. My bridgework had to be completely reconfigured, a new partial was designed, so this injury did not affect only one tooth, but rather involved six (6) replacement teeth as well. A new crown with a new precision attachment was engineered and put in place. To clarify, no dental expenses were covered by any health plan, nor did I have dental insurance that covered the injury, which, until it was resolved, affected my ability to chew food properly...

Seems to me that the least-cost risk avoider here is Dennis Kucinich: when you suffer excruciating pain in a tooth, you should go to the dentist. The second lowest-cost risk avoider is the dentist who prescribed the wrong antibiotic. The third lowest-cost risk avoider is the dental surgeon who did the failed implant.

None of these are the sandwich maker. Strict liability for sandwich makers really does not seem the way to go here.

dsquared writes:

Alex Tabarrok Asks a Question...: Brad, not being funny here, but have you read Marx? Alex Tabarrok has an excuse for not knowing the first thing about him, but you teach History of Political Economy!

Marx would not have been hypocritical to have bought vegetables in a market and surplus-value has nothing to do with it. Marx's view of commodity markets did not differ materially from Adam Smith. Marx might have been considered hypocritical if he had employed large amounts of labour ... but ...

Engels actually did! It is not exactly an obscure point about Engels that he was a factory owner. Marx and Engels wrote voluminously about the specific point at issue, and they specifically and repeatedly said that they thought the rules were suboptimal (to say the least), but that at the point in history where they found themselves, there was no point in trying other than to act within them, and to work to create another possible society. Historical materialism is also not an obscure point about Marxism!

Furthermore, the conflict between and need to reconcile and synthesis differing and contradictory principles, under the name of "dialectic" is also not exactly an obscure part of Marx's philosophy.

I am unconvinced. The problem is that Marx is trying to have his surplus-value cake and eat it too. He wants, on the one hand, to claim to simply be a positive social scientist projecting out the laws of historical development in a value-neutral manner--describing, not condemning. He wants, on the other hand, for his descriptions to carry labels like "exploitation." I don't think it works. But Marx needs both elements. If, after all, the current system is not unjust, why work so hard to change it? Why not let peaceful historical evolution take its course?

Barmen & Engels is a whole additional can of worms all on its own...

AT:

Libertarians of Weak Principles: Regarding Rand, so it was hypocritical for Karl Marx to buy vegetables at the market?

Yes, it was. On Marx's principles, he had a moral duty to find those whose surplus value was extracted and who were thus underpaid for their labor on the commodities he consumed, and compensate them.

You can sleep easy if you play by the rules even if you think the rules are non-optimal, as long as you point that out. That's Milton Friedman.

You cannot sleep easy if you play by the rules if you think the rules give you a license to steal. That's Robert Nozick, Robert Bork, and Ayn Rand.

That's the difference between utilitarian and deontological theories. Deontology is a bitch.

Econbrowser: UK: No Expansionary Fiscal Contraction Yet

It will be interesting to see if expansionary monetary policy a l'outrance can keep Britain afloat, or if it is simply pushing on a string. The export channel should help. But I certainly would not do this were I in Mervyn King's shoes.

Chris Giles and George Parker:

King defends UK economic policy: The Bank of England has robustly defended the UK government’s economic strategy, urging it to stick to tough public spending cuts in spite of shock figures showing the inflation-prone economy shrunk at the end of last year. Mervyn King, the bank governor, said the economy’s 0.5 per cent contraction in the fourth quarter proved the recovery would be “choppy”. But he used the economic weakness to defend the central bank’s ultra-loose monetary policy in the face of high inflation....

George Osborne, the chancellor, and the governor are united in their belief that Britain’s structural deficit should be eliminated within four years, but they now face a tough adversary in the abrasive Ed Balls, the new shadow chancellor, who argues that the priority should be growth. The economic debate at Westminster has been transformed in a matter of days....

“My advice to George Osborne is don’t blame the weather: change your mind, get a Plan B, get a policy for jobs and growth and do it quickly,” Mr Balls said, claiming that the economy was too fragile to withstand cuts.

But the chancellor insisted he would not be “blown off course”, pointing out that the Office for National Statistics had said that December snow had lopped 0.5 per cent off growth in its preliminary figures, which would otherwise have been flat...

MWQ:

Why China hates loving the dollar: In criticising US fiscal and monetary policies and, in particular, the Federal Reserve’s policy of “quantitative easing”, Mr Hu was following a well-trodden path. In the 1960s, Valéry Giscard d’Estaing, then French finance minister, complained about the dollar’s “exorbitant privilege”. John Connally, US Treasury secretary under Richard Nixon, answered when he described the dollar as “our currency, but your problem”. The French and now the Chinese desire exchange rate stability but detest the inevitable result: an open-ended commitment to buying as many dollars as the US creates. Both want to discipline US policies. Both have failed. Are things likely to be different this time? No.

The Chinese and other heavy interveners have a peculiar way of showing their distrust of the dollar. Between January 1999, just after the Asian financial crisis, and October 2010, the global stock of foreign currency reserves increased by the staggering total of $7,450bn. China alone added $2,616bn. During the recent financial crisis, global reserves did provide a cushion to holders, falling by just $473bn from July 2008 to February 2009 (6 per cent of the initial stock). But then purchases restarted: between February 2009 and October 2010, reserves rose by another $2,004bn....

Why have relatively poor countries made these huge investments in the low-yielding liabilities of the world’s richest countries and, above all, of the US? Why has China, in particular, purchased vast quantities of debt from a country whose policies it distrusts – more than $2,000 for every Chinese and some 50 per cent of gross domestic product? The answer is that this is the by-product of efforts to keep the currency down and exports competitive....

Is there a plausible reform of the international monetary system that would solve the Chinese dilemma?... What about turning the renminbi itself into a global reserve currency? In the very long run, this must happen. But any swift move in that direction would raise two difficulties for China. First, it would only make sense if the currency were to be unpegged from the dollar, in which case the mercantilist strategy would collapse. Second, for a currency to become global it must be freely convertible and traded in deep and liquid financial markets. China would have to abandon exchange controls and liberalise its financial system. It would become impossible to force Chinese people to hold vast quantities of low-yielding bank deposits. Above all, the authorities would lose their most important source of economic control: the banking system. This is surely close to inconceivable in the near term....

China cannot pursue its mercantilist strategy and also avoid accumulating dollar liabilities of doubtful long-term value. This is the “Triffin dilemma”.... The solution for China is to... allow the renminbi to rise faster. That would surely create adjustment problems. But those adjustments are in China’s own interests.... [E]vidence suggests that China is still willing to move only very slowly. That is a mistake. My advice to Mr Hu is simple: if China wants to escape from the tyranny of that dreadful dollar, stop buying. Please.

John Quiggin:

One size fits nobody?: Much recent discussion of the future of the euro... has started from the idea that Europe is not an optimal currency area, and that a ‘one-size fits all’ monetary policy is therefore bound to lead to the kinds of problems we are now observing.... I want to argue that this is not an accurate description of the current state of the eurozone. It’s true that Germany is doing a lot better than the eurozone as a whole, and the peripheral countries a lot worse. So, the optimal policy for Germany alone would be tighter than for the rest of the eurozone.... But when you look at the actual policies of the ECB, including Trichet’s recent threat to raise interest rates, it’s hard to see that this policy is optimal for any EU country, even Germany.... Germany’s recovery has not been that strong, and an expansion based on exports could easily be derailed by the kind of currency appreciation that would follow an interest rate rise, or even a really credible commitment to hold inflation down. And given the difficulties of handing out explicit haircuts, a modest amount of inflation seems likely to be a low-risk way of easing debt burdens without endangering the (largely German and French, and also UK) banks that hold a lot of the debt.

As has been pointed out here on previous occasions, to say that the problem is the ECB rather than the euro is, for some purposes, a distinction without a difference. But in other respects it is critical. If the optimal currency area analysis is correct then a breakup of the euro is probably inevitable and the big question is how to manage it. On the other hand, on the analysis offered here, the ECB must, in the end, be bluffing. Faced with the end of the currency it has been set up to manage, the ECB must eventually back down on everything else, including its inflation targets. The problem on this analysis is how to broker the politics of pushing the ECB towards large-scale quantitative easing and a higher inflation target...

Jack Stuef writes:

Dennis Kucinich Suing House Cafeteria Over ‘Dangerous’ Sandwich: Congressman Dennis Kucinich is suing three companies that operate the Longworth House Office Building cafeteria because it served him a sandwich that “contained dangerous substances, namely an olive pit” three years ago...

I don't care that he did break a tooth. Occasional olive pits are a background hazard. They do not, in a good world, give you a cause of action against the cafeteria--no matter how botched up the subsequent dentistry becomes.

In general there are two types of critics of the social insurance state. One type--Milton Friedman, say--claims that the social insurance state is bad policy because its benefits misalign incentives and the reduction in the size of the pie outweighs whatever distributional benefits are attained. A second type--the Robert Nozicks, the Ayn Rands, the Robert Borks--say that the social insurance state is immoral because its benefits are theft by parasites and loafers.

That is why it is noteworthy when Robert Bork files a tort lawsuit of a type he has denounced against the Yale Club of New York, why it is noteworthy when Robert Nozick uses the Cambridge Rent Control Board to extort money from Eric Segal, and when Ayn Rand accepts Medicare because otherwise her lung cancer surgeries would bankrupt her.

Joshua Holland

Ayn Rand Railed Against Government Benefits, But Grabbed Social Security and Medicare When She Needed Them: Ayn Rand was not only a schlock novelist, she was also the progenitor of a sweeping “moral philosophy” that justifies the privilege of the wealthy and demonizes not only the slothful, undeserving poor but the lackluster middle-classes as well. Her books provided wide-ranging parables of "parasites," "looters" and "moochers" using the levers of government to steal the fruits of her heroes' labor. In the real world, however, Rand herself received Social Security payments and Medicare benefits under the name of Ann O'Connor (her husband was Frank O'Connor).... Her ideas about government intervention in some idealized pristine marketplace serve as the basis for so much of the conservative rhetoric we see today. “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand,” said Paul Ryan, the GOP's young budget star at a D.C. event honoring the author. On another occasion, he proclaimed, “Rand makes the best case for the morality of democratic capitalism.” “Morally and economically,” wrote Rand in a 1972 newsletter, “the welfare state creates an ever accelerating downward pull.”...

Rand... believed that the scientific consensus on the dangers of tobacco was a hoax. By 1974, the two-pack-a-day smoker, then 69, required surgery for lung cancer. And it was at that moment of vulnerability that she succumbed to the lure of collectivism. Evva Joan Pryor... interviewed in 1998 by Scott McConnell, who was then the director of communications for the Ayn Rand Institute.... “She was coming to a point in her life where she was going to receive the very thing she didn’t like, which was Medicare and Social Security,” Pryor told McConnell. “I remember telling her that this was going to be difficult. For me to do my job she had to recognize that there were exceptions to her theory. So that started our political discussions. From there on – with gusto – we argued all the time. The initial argument was on greed,” Pryor continued. “She had to see that there was such a thing as greed in this world. Doctors could cost an awful lot more money than books earn, and she could be totally wiped out by medical bills if she didn’t watch it. Since she had worked her entire life, and had paid into Social Security, she had a right to it. She didn’t feel that an individual should take help.”...

[A]t least she put up a fight before succumbing to the imperatives of the real world – one in which people get sick, and old, and many who are perfectly decent and hardworking don't end up being independently wealthy....

A central rule of the U.S. political economy is that people are attracted to the idea of “limited government” in the abstract—and certainly don’t want the government intruding in their homes—but they really, really like living in a society with adequately funded public services.

That's just as true for an icon of modern conservatism as it is for a poor mother getting public health care for her kids.

Menzie Chinn:

Econbrowser: Three Years after the Great Recession's Start: GDP seem to continue growing, although at a slower rate than one might expect from such a deep recession (but probably in line with a recession coincident with a financial crisis). Of course, it would have been much worse without the stimulus package passed in February 2009.... One mystery, alluded to in Leonhardt's recent NYT article, is why GDP has grown at a pace so much faster than employment. Those who cite this as a puzzle of the recent recovery are somewhat off the mark. A substantial divergence between employment and output growth has been the hallmark of the last three recovery (1990's, 2000's, and the current episode).... The fact that this pattern shows up in previous US recoveries suggests that the phenomenon is not specific to policies adopted by the Obama Administration. The fact that the GDP-employment growth is not as pronounced in other countries with, arguably, greater unionization or labor power, further suggests that the ability of labor to wrest high wages is not the source of the divergence. So the puzzle remains...

Paul Krugman writes:

The Demand-Side Temptation: Nick Rowe makes a good point: most of the time, in market economies, sellers feel constrained while buyers don’t... because perfect competition is actually rare.... [T]hat... is how most New Keynesian models set things up: the classic NK model is one in which a number of little monopolists sell differentiated products, at prices they set and revise only occasionally.... [I]n these models more demand actually is good for everyone: if you could keep the economy running a bit hot all the time, that would be a positive thing. The problem is that you can’t: a monetary policy that tries to keep unemployment below the “natural” rate may initially be welfare-enhancing, but only at the cost of ever-accelerating inflation.

Rowe goes on to suggest that demand-side logic is dangerous, because it appeals to our sense that more demand is always better, and could lead to irresponsible policies. Well, there have been times and place where that was true: Latin America used to have outbreaks of macroeconomic populism, Britain had its “go for growth” debacle in the early 70s, and so on. But what I think Nick misses is the power of the contrary narrative, of the notion of the government as being like a family that must tighten its belt when the rest of us do, of the evils of printing money (hey, I can’t do that, why can Bernanke?).

As so often, Keynes was there first:

The completeness of the Ricardian victory is something of a curiosity and a mystery. It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.

Add to this the Kalecki notion that captains of industry want governments to believe that it’s all about being nice to business, which makes them hostile to any active policy, and I think you have a rough explanation of the fact that right now hostility to demand-side policies, rather than demands for more, rule our discourse.

From Paul Krugman:

Just saying.

Compound -$2.5 billion at 7%/year and you get -$35 billion...

Jay Yarow and Kamelia Angelova:

CHART OF THE DAY: Microsoft Incinerates ANOTHER $543 Million Online: Every quarter Microsoft reports earnings, and every quarter it reports a massive loss in its online operations. Today it reported a $543 million loss for its December quarter. This gives Microsoft a trailing-four-quarter loss of $2.5 billion. That's simply astounding. We've asked it before, and we'll ask it again: Has any company lost as much money online as Microsoft?

John Boehner:

That would be a financial disaster, not only for us, but for the worldwide economy. I don't think it's a question that's even on the table.

First draft of plans for Operation Barbarossa completed.

Paul Krugman:

Eurozone Inflation: Wolfgang Munchau agonizes over European inflation targets; he worries that rising German inflation may lead the ECB to raise rates, which would be disastrous for troubled peripheral economies.... Trying to keep German inflation low means imposing harsh deflation on the European periphery, as it tries to get costs and prices back in line.... [G]iven what we know about price adjustment during persistent large output gaps (PLOGs), the reality is that keeping overall eurozone inflation at 2 percent would probably mean at best very slow deflation in the periphery — because prices really don’t want to fall — but a prolonged period of very high unemployment.

The point, as Munchau says, is that a monetary union of imperfectly integrated economies really needed a higher inflation target than the United States; having what amounts to a low-inflation target, and a central bank that’s always looking for reasons to worry about inflation, is really destructive.

Alan Blinder:

Alan S. Blinder: The Carbon Tax Miracle Cure: President Obama called for a major technological push for cleaner energy: "the Apollo projects of our time." But when the details emerge, it is predictable that his political foes will object to the new government spending and decry the "heavy hand" of government in telling business what to do. Fortunately, there is a marvelous way to square the circle... [leave] decision-making... in private hands... not cost taxpayers a dime... reduce the federal budget deficit... [also]like reducing our trade deficit, making our economy more efficient, ameliorating global warming.... What is this miraculous policy? It's called a carbon tax—really, a carbon dioxide tax—but one that starts at zero and ramps up gradually over time.

The timing is critical. With the recovery just starting—we hope—to gather steam, this is a terrible time to hit it with some big new tax. Hence, while the CO2 tax should be enacted now, it should be set at zero for 2011 and 2012. After that, it would ramp up gradually. Adapting some calculations from a recent paper by Prof. William Nordhaus of Yale, the tax might start at something like $8 per ton of CO2 in 2013 (that's roughly eight cents per gallon of gasoline), reach $25 a ton by 2015 (still just 26 cents per gallon), $40 by 2020, and keep on rising. I'd like to see it top out at more than $200 a ton in, say, 2040—which is higher than in Mr. Nordhaus's example.... What's critical is that we lock in higher future costs of carbon today. The key thing, as the president said, is that "businesses know there will be a market for what they're selling." Think about what would happen. Once America's entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies....

No one likes to pay higher taxes. But every realistic observer knows that closing our humongous federal budget deficit will require a mix of higher taxes and lower spending as shares of GDP. Forget about value-added taxes and other new levies you may have heard about. A CO2 tax trumps them all....

I know this sounds like a pipe dream now. America has elected a Republican House of Representatives that, among its first acts, decided that tax increases don't really add revenue and that tax cuts don't really lose revenue—at least not any revenue they are willing to count. These folks are not about to vote for a CO2 tax, even one starting at zero.

But let's remember Winston Churchill's marvelous aphorism: "You can always count on Americans to do the right thing—after they've tried everything else." First, we'll try everything else. But eventually we'll succumb to the inexorable logic of a phased-in CO2 tax. Just watch—if you're young enough to live that long.

Paul Krugman:

The Demands for Higher Interest Rates: Last Saturday, reported The Financial Times, some of the world’s most powerful financial executives were going to hold a private meeting with finance ministers in Davos, the site of the World Economic Forum. The principal demand of the executives, the newspaper suggested, would be that governments “stop banker-bashing.” Apparently bailing bankers out after they precipitated the worst slump since the Great Depression isn’t enough — politicians have to stop hurting their feelings, too.

But the bankers also had a more substantive demand: they want higher interest rates, despite the persistence of very high unemployment in the United States and Europe, because they say that low rates are feeding inflation. And what worries me is the possibility that policy makers might actually take their advice....

[W]e’re in the midst of what the International Monetary Fund calls a “two speed” recovery, in which some countries are speeding ahead, but others — including the United States — have yet to get out of first gear.... What about inflation? High unemployment has kept a lid on the measures of inflation that usually guide policy. The Federal Reserve’s preferred measure, which excludes volatile energy and food prices, is now running below half a percent at an annual rate, far below the informal target of 2 percent.

But food and energy prices — and commodity prices in general — have, of course, been rising lately.... What’s that about? The answer, mainly, is growth in emerging markets. While recovery in advanced nations has been sluggish, developing countries — China in particular — have come roaring back from the 2008 slump. This has created inflation pressures within many of these countries; it has also led to sharply rising global demand for raw materials. Bad weather — especially an unprecedented heat wave in the former Soviet Union, which led to a sharp fall in world wheat production — has also played a role in driving up food prices.

The question is, what bearing should all of this have on policy at the Federal Reserve and the European Central Bank?...

The Fed normally focuses on “core” inflation, which excludes food and energy, rather than “headline” inflation, because experience shows that while some prices fluctuate widely from month to month, others have a lot of inertia — and it’s the ones with inertia you want to worry about.... And this focus has served the Fed well in the past. In particular, the Fed was right not to raise rates in 2007-8, when commodity prices soared — briefly pushing headline inflation above 5 percent — only to plunge right back to earth. It’s hard to see why the Fed should behave differently this time, with inflation nowhere near as high as it was during the last commodity boom....

Ben Bernanke clearly understands that raising rates now would be a huge mistake. But Jean-Claude Trichet, his European counterpart, is making hawkish noises — and both the Fed and the European Central Bank are under a lot of external pressure to do the wrong thing.

They need to resist this pressure. Yes, commodity prices are up — but that’s no reason to perpetuate mass unemployment. To paraphrase William Jennings Bryan, we must not crucify our economies upon a cross of rubber.

James Condliffe:

One Per Cent: Kindle is mightier than the book, for Amazon at least: Forget the dog-eared holiday paperback: you'll be reading an ebook on the beach this summer, if Amazon's latest sales figures are anything to go by. For the first time, Amazon's Kindle book sales have overtaken those of their paperbacks, making ebooks the company's most popular format in the US. In a statement published on their website, Amazon announced:

Amazon.com is now selling more Kindle books than paperback books. Since the beginning of the year, for every 100 paperback books Amazon has sold, the Company has sold 115 Kindle books. Additionally, during this same time period the company has sold three times as many Kindle books as hardcover books.

Kindle sales first overtook hardbacks back in July of 2010. But this latest announcement marks a much more significant step forward. The company's aggressive marketing of digital books seems to have helped it achieve its first ever $10 billion quarter at the end of last year, and ebook sales look set to keep breaking records. Last December, the Kindle device replaced J.K. Rowling's "Harry Potter and the Deathly Hallows" as Amazon's biggest-selling single product ever, and the Kindle store itself now boasts over 810,000 titles.

Amazon has very cleverly separated hardback and paperback sales in these newly-released figures - and remained tight-lipped about the raw sales numbers for the time period they quote in their release. The Guardian points out that this differentiation actually "suggests that the online retailer still sells 120 print books for every 100 ebooks sold". So in absolute terms, the hard-copy book still outsells its digital counterpart.

Nevertheless, the news suggests that the Kindle's success is sealed as the champion of e-readers - and maybe even reading, full stop.

Slacktivist fears being Justified, and sends us to Tony Jones, who asks:

Is is palatable to worship a God who allows Judas (and Hitler) to enjoy eternal life in God’s presence?

Put me down among those who think that a God that could not even Justify finite beings like Judas Iscariot and Charles Whitman would be a pretty wimpy God indeed.

And, of course, there is: Kenny Loggins wouldn't beat the baby Jesus...

SP:

Steven Pearlstein: On public investment, Republicans again show they aren't serious: When talking about the federal government and its budget deficit, Republican politicians love to score points by noting that "you'd never run your household or your business that way." Then again, you'd never run your household or your business by ignoring investment. Yet now that President Obama has proposed stepped-up public investment in infrastructure, energy, education and basic research, Republicans have suddenly decided their favorite analogy no longer applies.... Republicans, it turns out, have no public investment strategy, just as they have no health-care strategy and no agreed-upon blueprint for reducing federal spending. What they have are poll-tested talking points, economic delusions and an overwhelming partisan instinct to say "no" to anything Barack Obama proposes....

[A]s the president should have learned from health-care reform, the danger in tailoring his strategy to the partisan back and forth on Capitol Hill is that he risks losing the more important battle for broad popular support. By endorsing the markers laid down by his own commission, Obama could have taken the the deficit issue away from Republicans and gained the political credibility he needs to push through his investment agenda. To use the president's phrase, that would have been doing "big things."

Matt Cutts:

Algorithm change launched: I just wanted to give a quick update on one thing I mentioned in my search engine spam post. My post mentioned that “we’re evaluating multiple changes that should help drive spam levels even lower, including one change that primarily affects sites that copy others’ content and sites with low levels of original content.” That change was approved at our weekly quality launch meeting last Thursday and launched earlier this week. This was a pretty targeted launch: slightly over 2% of queries change in some way, but less than half a percent of search results change enough that someone might really notice. The net effect is that searchers are more likely to see the sites that wrote the original content rather than a site that scraped or copied the original site’s content.

Thanks to Jeff Atwood and the team at Stack Overflow for providing feedback to Google about this issue. I mentioned the update over on Hacker News too, because folks on that site had been discussing specific queries too.

Anybody read Rachel Polonsky's Molotov's Magic Lantern: Travels in Russian History?

The Kindle version costs $14.99, which is four figures, so I won't simply buy it on spec...

TEH STUPID!! IT BURNS!!!!

Outsourced to Jonathan Chait:

Who Wants To Be Paul Ryan's Press Secretary?: News stories about Paul Ryan have increasingly come to resemble an open competition for the job of Paul Ryan's press secretary. The latest audition, from ABC News, actually compares him to Kevin Kline's character in "Dave," an earnest wonk combing through the federal budget for examples of waste.... Hilariously, the result of Ryan's Dave-like search through the budget -- and the only example of a putative budget savings mentioned anywhere in the piece -- is his claim to have discovered a savings in the student loan program. In fact, this example is exactly the opposite of what Ryan (and the story) proclaim.

The old federal student loan program guaranteed loans made from private banks to students. This gave the banks incentive to shovel money out the door, knowing Uncle Sam would back them up in case of failure, which of course happened constantly. President Clinton cut, and then President Obama eliminated,the subsidy to the banks, saving taxpayers tens of billions of dollars. Here is the Congressional Budget Office's description:

Despite the many similarities between the FDLP [Federal Direct Loan Program] and the FFEL [Federal Family Education Loan, aka guaranteed lending] program, the latter is significantly more costly for the federal budget. For example, CBO recently estimated that the President’s proposal to eliminate the FFEL program and replace it with additional direct lending would save the government a total of $62 billion between 2010 and 2020. Although the federal cost per dollar of student loans originated varies from year to year and among different types of loans, a loan made in the FFEL program consistently shows a much higher budgetary cost than if it had been made in the direct loan program…

The higher costs in the guaranteed loan program (on both a FCRA and a fair-value basis) result mainly from the way in which the government compensates FFEL lenders. Payments to those lenders are fixed in legislation rather than set through a mechanism—such as a competitive bidding process—that ties reimbursement to actual costs incurred. In general, those statutory payments appear to exceed lenders’ basic administrative costs and their funding costs under normal market conditions (although during the financial crisis, the payments proved too low to cover the surge in lenders’ borrowing costs). Because FFEL lenders must compete to attract borrowers, any difference between the statutory payments they receive and their basic costs is mostly absorbed by increasing marketing efforts, enhancing the administrative services they provide, or offering other benefits to schools and students. Thus, competition between lenders benefits schools and borrowers rather than lowering costs to the government. In addition, FFEL lenders fund their loans in the capital markets, which introduces additional costs and risks to the program that do not arise when loans are funded through the Treasury.

Ryan is a fervent ally of the college lending industry. In 2007, he was one of only 71 Republicans to vote against the College Student Relief Act, which would have cut the interest rate on many student loans, including the FFEL program, in half. Inside Higher Ed notedthat the bill would cut “deeply and directly into lenders' profits.” The bill passed the House 356-71, but stalled in the Senate.

So, that's the one idea this fresh-faced reformer comes up with the balance the budget: shovel billions of dollars in extra subsidies to an inefficient and wildly corrupt industry whose water he has faithfully carried. And this isn't an exception --Ryan's record is one of wild fiscal profligacy. I realize he's cute and energetic and exudes an aw-shucks Midwestern earnestness, but the reality bears absolutely no relation to the image.

Sean Bonner:

Egypt turns off internet, Lieberman wants same option for US - Boing Boing: On Thursday Jan 27th at 22:34 UTC the Egyptian Government effectively removed Egypt from the internet. Nearly all inbound and outbound connections to the web were shut down. The internet intelligence authority Renesys explains it here and confirms that "virtually all of Egypt's Internet addresses are now unreachable, worldwide." This has never happened before in the entire history of the internet, with a nation of this size. A block of this scale is completely unheard of, and Senator Joe Lieberman wants to be able to do the same thing in the US.

This isn't a new move, last year Senators Lieberman and Collins introduced a fairly far-reaching bill that would allow the US Government to shut down civilian access to the internet should a "Cybersecurity Emergency" arise, and keep it offline indefinitely. That version of the bill received some criticism though Lieberman continued to insist it was important. The bill, now referred to as the 'Protecting Cyberspace as a National Asset Act' (PCNAA) has been revised a bit and most notably now removes all judicial oversight. This bill is still currently circulating and will be voted on later this year. Lieberman has said it should be a top priority.

That, the late Rudi Dornbusch might have but did not say, appears to be the current state of Marxian crisis theory.

Matthew Yglesias directs us to Benjamin Kunkel and notes his allegiance to the Boehner-McConnell-Hayek-Hoover-Mellon-Marx axis on economic policy:

Karl Marx, Real Business Cycle Theorist: Kudos to Benjamin Kunkel for trying to present an accessible Marxist account of the current financial crisis. I was struck reading the piece, though, by how similar the Kunkel/Harvery/Marx account of the crisis is to linguistically and ideologically quite different accounts from the right.... [T]he Marxist and the real business cycle theorist are united in the view that these things happen and mass unemployment and prolonged periods of immiseration are just what happens in a market economy. The RBC stops there while the Marxist looks forward to the construction of an entirely new system.... The range of views associated with John Maynard Keynes and... Milton Friedman... says... no. A transient period of somewhat elevated unemployment could reflect a change in tastes.... But a prolonged period of widespread mass unemployment paired with a collapse in overall spending reflects something else. People haven’t decided they want fewer apples and more pears, they’ve decided they want fewer goods and services and more safe liquid financial instruments. What has to happen in response is that governments need to create more safe liquid financial instruments—more dollars, more euros, more Swiss & British sovereign debt—until people decide they’ve had enough and want to increase their demand for goods and services.

Here is Benjamin Kunkel:

How Much Is Too Much?: The deepest economic crisis in eighty years prompted a shallow revival of Marxism.... [T]he elements of a Marxian crisis theory, one never fully articulated by Marx himself, lie... scattered throughout Theories of Surplus Value, the Grundrisse and above all the posthumous second and third volumes of Capital.... To date, a revived Keynesianism has formed a left boundary of economic debate.... Not until now, with David Harvey’s Enigma of Capital, have we had a book-length example of Marxian crisis theory addressed to the current situation....

Harvey adds new features to a simple model of the ‘overaccumulation of capital’.... [O]veraccumulation remains... the fount of all crisis. The term may seem paradoxical: what could it mean for capital to overaccumulate, when the entire spirit of the system is, as Marx wrote, ‘accumulation for accumulation’s sake’? How could capitalism acquire too much of what it regards as the sole good thing?

Overaccumulated capital can be defined as capital unable to realise the expected rate of profit.... Imagine an economy consisting of a single firm which has bought means of production and labour power for a total of $100, in order to produce a mass of commodities it intends to sell for $110.... As Harvey explains in The Limits to Capital, effective demand ‘is at any one point equal to C+V, whereas the value of the total output is C+V+S. Under conditions of equilibrium, this still leaves us with the problem of where the demand for S, the surplus value produced but not yet realised through exchange, comes from’... ‘the creation of what Marx calls “fictitious capital” – money that is thrown into circulation as capital without any material basis in commodities or productive activity’... an anticipation of future value without which the creation of present value stalls.... Inevitably, the risk is that a given territory... comes to prosper thanks to a stream of finance that one day flows elsewhere. A devaluation of the abandoned land along with its ‘overaccumulated’ workers, industries and infrastructure will ensue. This harsh sequel to the spatial fix Harvey calls a ‘switching crisis’....

The more the forces of geographical inertia prevail, the deeper will the aggregate crises of capitalism become and the more savage will switching crises have to be.... Local alliances will have to be dramatically reorganised (the rise of Fascism being the most horrible example), technological mixes suddenly altered (incurring massive devaluation of old plant), physical and social infrastructures totally reconstituted (often through a crisis in state expenditures) and the space economy of capitalist production, distribution and consumption totally transformed. The cost of devaluation to both individual capitalists and labourers becomes substantial. Capitalism reaps the savage harvest of its own internal contradictions....

[I]t is the broader and more systematic Marxist perspective that ultimately and properly contains Keynesianism within it, and a crude Marxist catechism may be in order. Where does an excess of savings come from? From unpaid labour – for example, that of Chinese or German workers. And why would such funds inflate asset bubbles rather than create useful investment? Because capital pursues not ‘high social returns’, but high private returns.... Not only Americans and Britons but the Irish, Spanish and Emiratis live today among the ruins of a broken spatial fix....

Harvey doesn’t spell out why growth must have a stop, and the outlines of an ecologically stable and politically democratic future socialism remain as blurry in his later work as they do almost everywhere else. At the moment Marxism seems better prepared to interpret the world than to change it. But the first achievement is at least due wider recognition, which with the next crisis, or subsequent spasm of the present one, it may begin to receive.

The original errors are that the divorces between exchange value and use value and the wedges between private profits and social returns have absolutely nothing to do with overaccumulation crises--Hayek and company, after all, manage to construct a perfectly coherent and functional model of overaccumulation crises without them at all.

Ezra Klein:

Too young not to work, too old to get a job, Part II: From the inbox:

Some of my work is as a primary doctor at a VA primary care clinic in Southeast Michigan. We are totally overwhelmed right now with people who lost their insurance from auto-related layoffs and are using VA eligibility for the first time. It is totally awful. Think about the job prospects for a high-school educated 50-year-old with 32 years experience with one employer welding a single auto part near Detroit. These are good people who lived and taught their kids with a perspective on life -- work hard and stay out of trouble to earn a middle class life -- that is now totally wrong. They're essentially unemployable here but sure aren't going to leave friends and family for a job at a Panera in Arizona. I suppose that's the nature of technology and change, but it's pretty brutal in this neighborhood.

Matthew Yglesias:

Yglesias: This is the central problem with dynamic, growth-oriented market economies. It’s really not just something that is “now totally wrong,” though the recession is making it a particularly intense problem in Michigan. My mother went to college, worked for years as a graphic designer, and attained middle age in possession of a valuable set of skills related to a period in which “cut and paste” was not a metaphor. Then, quite suddenly, the economic value of those skills was wiped out and her labor market possibilities took a huge negative hit through no fault of her own notwithstanding the fact that she “did everything right.”

It’s clear if you look at the past 300 years of human history that allowing this process of change to move forward leads to huge increases in average living standards. But the notion that it makes everyone better off or that market outcomes are “fair” is a lie. Hence the need for redistribution in general and, ideally, some kind of active labor market policy for people like these former auto workers.

Outsourced to Marc Lynch:

Obama's handling Egypt pretty well: After President Obama spoke last night about the situation in Egypt, my Twitter feed and inbox filled up with angry denunciations.... Once I actually read the transcript of his remarks, though, I felt much better. I think the instant analysis badly misread his comments and the thrust of the administration's policy. His speech was actually pretty good.... The administration, it seems to me, is trying hard to protect the protestors from an escalation of violent repression, giving Mubarak just enough rope to hang himself, while carefully preparing to ensure that a transition will go in the direction of a more democratic successor.

It's crucial to understand that the United States is not the key driver....

What [the protesters] do need, if they think about it, is for Obama to help broker an endgame... to ease Mubarak out of power, and to try to ensure that whatever replaces Mubarak commits to a rapid and smooth transition to civilian, democratic rule. And that's what the administration is doing....

I completely understand why activists and those who desperately want the protestors to succeed would be frustrated --- anything short of Obama gripping the podium and shouting "Down With Mubarak!" probably would have disappointed them. But that wasn't going to happen, and shouldn't have....

The key to the administration's emerging strategy is the public and private signal that this is Mubarak's last chance, that the administration does not expect him to seize it, and that the U.S. has clear expectations of those who might succeed him. The key line in his remarks here is this:

When President Mubarak addressed the Egyptian people tonight, he pledged a better democracy and greater economic opportunity. I just spoke to him after his speech and I told him he has a responsibility to give meaning to those words, to take concrete steps and actions that deliver on that promise.

This is not the language of capitulation to Mubarak's empty promises of reform. It's a pretty sharp challenge to him to demonstrate serious change immediately.... This blunt conditionality has to be understood in tandem with White House Spokseman Robert Gibbs' carefully chosen words that U.S. economic and military aid to Egypt would now be reviewed -- a direct, almost unprecedented form of pressure on Egypt for which many democracy activists have clamored for years to no avail.

It's also crucial that the U.S. is signaling directly and clearly to the Egyptian military that the administration will not accept a massive, bloody escalation....

What happens next? I really don't think that Mubarak's gambit of dismissing the government is going to work. The protestors want to be rid of him, not of a faceless government of technocrats. His speech last night had an air of desperation, disconnect and delusion which will only feed the protests. Al-Jazeera has been filling up with prominent Egyptian figures disparaging Mubarak, and there's a palpable sense of people positioning themselves for a new era. It isn't over yet --- Mubarak is likely calculating that if he can survive only a few more days, the protest fever will break and he can go back to the old status quo. It's not like he had much legitimacy or popular support before these protests, and his regime has long been comfortable ruling without it. But the rush of events has a feel of finality to it. It's hard to believe, and it's far from certain even now, but as an accelerated Ben Ali script plays out it really is possible that Mubarak could be gone by tonight.

And then will come the hard part. This part of the speech, which went largely unremarked, may prove to be the key to the future: "When I was in Cairo, shortly after I was elected President, I said that all governments must maintain power through consent, not coercion. That is the single standard by which the people of Egypt will achieve the future they deserve." If the U.S. can help the Egyptian people achieve those aspirations, then it will be a major diplomatic success which resonates far beyond Egypt's borders.

To fail to understand your own leverage and so push the world economy into a deep recession is something that would normally lead to some criticism. But "bankers" think they should be immune.

Paul Krugman watches the train wreck:

MHLAMF in Davos: From the FT:

Governments around the world must stop banker-bashing and create the right environment for lenders to support economic growth, some of the world’s most powerful bankers will tell finance ministers on Saturday.

So “Ma! He’s looking at me funny!” is now at the core of the financial sector’s complaints. And the world’s top bankers feel that after bringing on a gigantic crisis that has left millions unemployed, being bailed out, and receiving huge paychecks all the while, they now have the right to demand that people stop saying critical things about them.

Oh, and substantively, they want interest rates to rise despite the persistence of high unemployment.

Outsourced to Mark Kleiman:

Redefining rape: Should a twelve-year-old girl impregnated by her mother’s boyfriend be forced to carry the child to term? Yes she should, according to 173 House Republicans, including the Speaker.... James Joyner is right to point out that the “rape exception” to anti-abortion laws makes either no sense or the wrong kind of sense. If bans on abortion reflect the inalienable human rights of the fertilized egg, then surely those rights can’t be diminished by the conditions of conception. The “except for rape” rule would be justified only if the point of the law is to punish women for having sex. (That is the point, of course, which is why the “pro-life” lobby is strongly anti-contraception and anti-sex education. But it wouldn’t do to say so.)

Still, the gross (in both senses of the term) injustice of forcing a woman to bear her rapist’s child means that absolute bans on abortion have very little support among the voters. And the right-to-lifers have generally been satisfied with something that, according to the logic of their own position, shouldn’t satisfy them at all.

But the vicious lunacy of the new Republican majority in the house seemingly knows no bounds. H.R. 3, “The No Taxpayer Funding For Abortion Act,” – identified as a high priority by Speaker John Boehner – reiterates current law banning the use of federal funds for abortion, but changes the rape exemption to provide that funding shall be available “if the pregnancy occurred because the pregnant female was the subject of an act of forcible rape or, if a minor, an act of incest.” The key word is “forcible.” Date-rape, rape by drugs, and statutory rape are all excluded....

If the Republicans were trying to eliminate the rape exception entirely, they could at least lay claim to a sort of foolish consistency. But... the decision to proclaim that a large class of rape victims is not innocent can only be called stupid and heartless.

I have an email from Pamela Paul of the New York Times:

I am very eager to get in touch to talk to you about my story about academic bloggers. Basically, I am profiling 7 of the most prominent and influential blogs written by professors and yours is one. I have interviewed every other professor for the story (Becker/Posner, Glenn Reynolds, Juan Cole, Greg Mankiew, Eugene Volokh, Ann Althouse) and I really want to speak with you as well. I will profile your blog no matter what, but it is so much more interesting to readers and informative if I can include your quotes in the piece. If you get a chance, please do let me know when we could talk and I promise I won't take more than 5 minutes of your time.

I'm thinking of offering her one single quote to be used on an all-or-nothing basis: use it all or use nothing. Perhaps:

The best of us webloggers try to shift America's public sphere from celebrity gossiip toward policy substance. Back in 2004 Greg Mankiw was caught in an absurd media firestorm as "reporters... [who] universally acknowledged in private that [Mankiw's remarks were] correct and unremarkable" [felt] "as journalists... obligated to cover the political reaction" without foregrounding the policy substance. Why? Because foregrounding the substance would have made both Dennis Hastert and John Kerry look like idiots--which few reporters and no editors dared do. It would be a better world if we could stomp that kind of thing out, and we are trying.

What do people think?

UPDATE: So I did offer Pamela Paul the quote. Here is my email back to her:

The consensus around here is that at least four weblogs by academics that are more influential than any of these seven are missing: Paul Krugman's Conscience of a Liberal has to rank number one as the most influential weblog by an academic, Crooked Timber (Chris Bertram, Kieran Healy, John Holbo, John Quiggin, and company) has to rank number two as the most influential academic weblog, Alex Tabarrok's and Tyler Cowen's Marginal Revolution in our view ranks number three, and Andrew Gelman and company's The Monkey Cage ranks number four.

And the consensus around here is that two of your seven probably do not belong on the list at all: Glenn Reynolds in the first half of the 2000s would have been a fine choice but right now he is much closer to being an RSS feed than a weblog; and Becker/Posner are much more trading off of their established reputations than engaging in a new form of communication.

If you want a quote, I will offer you the following on an all-or-nothing basis:

The best of us webloggers try to shift America's public sphere from celebrity gossiip toward policy substance. Back in 2004 Greg Mankiw was caught in an absurd media firestorm as "reporters... [who] universally acknowledged in private that [Mankiw's remarks were] correct and unremarkable" [felt] "as journalists... obligated to cover the political reaction" without foregrounding the policy substance. Why? Because foregrounding the substance would have made both Dennis Hastert and John Kerry look like idiots--which few reporters and no editors dared do. It would be a better world if we could stomp that kind of thing out, and we are trying.

FYI, I remember Pamela Paul writing:

Raise the Price of Toys: [M]any of us lament the fact that elementary, high school and even college students today seem creatively bankrupt, bereft of problem-solving skills, and completely lacking resourcefulness. Is it any surprise when we cater to them from infancy with a barrage of cheap toys. That they treat their playthings carelessly, fail to value material goods, and become indifferent to waste? And that they then complain of boredom as they get older? Kids would be a lot better off getting five new toys a year and playing with them 50 different ways. The best toys, after all, are the ones that look most "boring" from the outside. A good rule of thumb is that toys should be 10% toy, 90% child. It's what a child puts into a toy that counts. Take plain wooden blocks. At two months, a baby chews on the block and learns what wood tastes and feels like. At six months, he learns to throw the block and at ten months, he bangs them together. By age four, he is building castles and bridges. Toys are so cheap that it's hard to rationalize not buying them. But perhaps we need to raise the price of toys so that parents and children learn to value them again...

April 16, 1953:

Dwight D. Eisenhower: The Chance for Peace: What can the world, or any nation in it, hope for if no turning is found on this dread road? The worst to be feared and the best to be expected can be simply stated. The worst is atomic war. The best would be this: a life of perpetual fear and tension; a burden of arms draining the wealth and the labor of all peoples; a wasting of strength that defies the American system or the Soviet system or any system to achieve true abundance and happiness for the peoples of this earth.

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.

The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.

This is, I repeat, the best way of life to be found on the road the world has been taking.

This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. These plain and cruel truths define the peril and point the hope that come with this spring of 1953.

This is one of those times in the affairs of nations when the gravest choices must be made, if there is to be a turning toward a just and lasting peace. It is a moment that calls upon the governments of the world to speak their intentions with simplicity and with honesty. It calls upon them to answer the question that stirs the hearts of all sane men: is there no other way the world may live? The world knows that an era ended with the death of Joseph Stalin. The extraordinary 30-year span of his rule saw the Soviet Empire expand to reach from the Baltic Sea to the Sea of Japan, finally to dominate 800 million souls.

The Soviet system shaped by Stalin and his predecessors was born of one World War. It survived with stubborn and often amazing courage a second World War. It has lived to threaten a third. Now a new leadership has assumed power in the Soviet Union. Its links to the past, however strong, cannot bind it completely. Its future is, in great part, its own to make.

This new leadership confronts a free world aroused, as rarely in its history, by the will to stay free. The free world knows, out of the bitter wisdom of experience, that vigilance and sacrifice are the price of liberty. It knows that the peace and defense of Western Europe imperatively demands the unity of purpose and action made possible by the North Atlantic Treaty Organization, embracing a European Defense Community. It knows that Western Germany deserves to be a free and equal partner in this community and that this, for Germany, is the only safe way to full, final unity. It knows that aggression in Korea and in southeast Asia are threats to the whole free community to be met only through united action.

This is the kind of free world which the new Soviet leadership confronts. It is a world that demands and expects the fullest respect of its rights and interests. It is a world that will always accord the same respect to all others. So the new Soviet leadership now has a precious opportunity to awaken, with the rest of the world, to the point of peril reached and to help turn the tide of history.

Will it do this?

We do not yet know. Recent statements and gestures of Soviet leaders give some evidence that they may recognize this critical moment...

James Cowie:

Egypt Leaves the Internet - Renesys Blog: James Cowie on January 27, 2011 7:56 PM: Confirming what a few have reported this evening: in an action unprecedented in Internet history, the Egyptian government appears to have ordered service providers to shut down all international connections to the Internet. Critical European-Asian fiber-optic routes through Egypt appear to be unaffected for now. But every Egyptian provider, every business, bank, Internet cafe, website, school, embassy, and government office that relied on the big four Egyptian ISPs for their Internet connectivity is now cut off from the rest of the world. Link Egypt, Vodafone/Raya, Telecom Egypt, Etisalat Misr, and all their customers and partners are, for the moment, off the air.

At 22:34 UTC (00:34am local time), Renesys observed the virtually simultaneous withdrawal of all routes to Egyptian networks in the Internet's global routing table. Approximately 3,500 individual BGP routes were withdrawn, leaving no valid paths by which the rest of the world could continue to exchange Internet traffic with Egypt's service providers.... This is a completely different situation from the modest Internet manipulation that took place in Tunisia, where specific routes were blocked, or Iran, where the Internet stayed up in a rate-limited form designed to make Internet connectivity painfully slow....

What happens when you disconnect a modern economy and 80,000,000 people from the Internet? What will happen tomorrow, on the streets and in the credit markets? This has never happened before, and the unknowns are piling up. We will continue to dig into the event, and will update this story as we learn more. As Friday dawns in Cairo under this unprecedented communications blackout, keep the Egyptian people in your thoughts.

Update (3:06 UTC Friday): One of the very few exceptions to this block has been Noor Group (AS20928), which still has 83 out of 83 live routes to its Egyptian customers, with inbound transit from Telecom Italia as usual. Why was Noor Group apparently unaffected by the countrywide takedown order? Unknown at this point, but we observe that the Egyptian Stock Exchange (www.egyptse.com) is still alive at a Noor address. Its DNS A records indicate that it's normally reachable at 4 different IP addresses, only one of which belongs to Noor. Internet transit path diversity is a sign of good planning by the Stock Exchange IT staff, and it appears to have paid off in this case. Did the Egyptian government leave Noor standing so that the markets could open next week?

Update (17:30 UTC Friday): The Internet routing situation for Egypt continues to be bleak, with an estimated 93% of Egyptian networks currently unreachable. Renesys saw no significant improvements or changes in Egyptian international Internet routing overnight. We have examined the takedown event more closely.... [T]his was not an instantaneous event on the front end; each service provider approached the task of shutting down its part of the Egyptian Internet separately.... [T]his sequencing looks like people getting phone calls, one at a time, telling them to take themselves off the air. Not an automated system that takes all providers down at once; instead, the incumbent leads and other providers follow meekly one by one until Egypt is silenced.

The man must simply not sleep. Mike:

FCIC Report, 1: The False Politicalization of the Final Report. « Rortybomb: [T]he Financial Crisis Inquiry Commission Final Report... is an excellent guide through the financial markets and how they’ve changed over the past 30 years, as well as the lead-up to the financial crisis. The Republicans and conservatives did a great job trying to hatch-job and politicize the reception of this volume by breaking away and writing a dissenting opinion, since the FCIC’s opinion has virtually all the honest conservative thoughts expressed in there.

Two items in particular jumped out at me in the first skim.  First, the role of regulator’s 2001 Recourse Rule has been blamed... for increasing the demand for securitization... [by] strong libertarians, maybe even a kind of anarchist in some cases – they are to the right of most of the discussion on the financial sector. Here’s the FCIC report which features the same argument:

In October 2001, they introduced the “Recourse Rule” governing how much capital a bank needed to hold against securitized assets. If a bank retained an interest in a residual tranche of a mortgage security, as Keystone, Superior, and others had done, it would have to keep a dollar in capital for every dollar of residual interest. That seemed to make sense, since the bank, in this instance, would be the first to take losses on the loans in the pool.... The Recourse Rule also imposed a new framework for asset-backed securities. The capital requirement would be directly linked to the rating agencies’ assessment of the tranches. Holding securities rated AAA or AA required far less capital than holding lower-rated investments.... The new requirements put the rating agencies in the driver’s seat....

And they spend a lot of the report blasting the ratings agencies too:

We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.

There’s a debate about when the concept of Too Big To Fail enters the financial elite's minds.... Nicole Gelinas [made] the case that the failure of Continental Illinois was the introduction of Too Big To Fail mentality.... [T]he FCIC report [agrees]. FCIC:

In 1984, federal regulators rescued Continental Illinois, the nation’s 7th-largest bank…These banks had relied heavily on uninsured short-term inancing to aggressively expand into high-risk lending, leaving them vulnerable to abrupt withdrawals once conidence in their solvency evaporated. Deposits covered by the FDIC were protected from loss, but regulators felt obliged to protect the uninsured depositors—those whose balances exceeded the statutorily protected limits—to prevent potential runs on even larger banks that reportedly may have lacked sufficient assets to satisfy their obligations, such as First Chicago, Bank of America, and Manufacturers Hanover.... This was a new regulatory principle, and within moments it had a catchy name. Representative Stewart McKinney of Connecticut responded, “We have a new kind of bank. It is called ‘too big to fail’—TBTF—and it is a wonderful bank.”

The report spends a lot of time analyzing how the GSEs failed, and what the CRA’s role in the crisis was, and handles the topics in a fair, critical and investigative manner.... [T]he full... by the three Republican members... look[s] like an aesthetic critique at best... the Republicans don’t actually call out Wall Street in any serious manner. I think David Dayen gets it right here:

My sense is that somebody told the Republicans on the commission that they’d better not assent to the final report, or else there would be some kind of consensus for action.

The Wallison dissent is almost Sid Vicious punk rock; the other GOPers kick him out of the band, and he just goes ahead and does it his way. For the Wallison solo dissent, I predicted:

I can’t respond to this argument because there are no numbers or citations. It is likely that Wallison is using Edward Pinto’s idiosyncratic definition of what constitutes a subprime mortgage, renaming prime loans with FICO < 660 as subprime, and not industry standard, as James Kwak has taken apart elsewhere.

I should have also noted that it was almost 100% likely that Wallison’s report was going to be exactly what he and a handful of other true-believers at the conservative think tank AEI believed before the FCIC panel. Sure enough.... This report is exactly what he believed in 2009.  Think about this. We paid this guy at a level IV of the Executive Schedule, which is a juicy six-figure salary, for the days he worked. He had a staff, subpenoa power, researchers, documents, access, interviewers. And he ultimately had a responsibility to be an investigator.  And his final product is a handful of AEI white papers from 2009 stapled together...

Ezra Klein:

Ezra Klein - Too young not to work, too old to get a job: The interplay between age and unemployment really worries me. On some level, we have a rosy view of "structural unemployment": It's a guy in Reno, Nev., who has skills better suited to the job market in Boulder, Colo. That's not an easy problem to fix -- our Reno resident doesn't scan Boulder's "help wanted" ads -- but it at least points toward a way the problem can be fixed. But a lot of older workers have found that employers just don't want to hire them. They are, in the words of one job-seeker in Warren County, N.J., "too young not to work, but too old to work." Or, more to the point, too old to get a job. When they apply for jobs much below their previous position, they're rejected as overqualified. When they try to hold the line, employers default to younger workers. And in both cases, there's a quiet assumption that young workers will be better at learning new skills than older workers will be.

Eventually, the unemployment rate in this country will come down. But it's very likely that there'll still be a core of a couple of million hardcore unemployed -- people who're a bit older, who're underwater on their houses in an area with a weak labor market, and who are becoming less employable as both their age and their time out of work come to seem more and more glaring on their resumes. What are we going to do for them?

HH:

Five Things To Understand About The Egyptian Riots: Here are five points that American observers should keep in mind....

Revolutions often erupt with little warning.... [N]o one saw Tunisia coming, and few believed that unrest would spread to Egypt—except the Egyptian activists, apparently young and secular at the core, who have been out on the streets every day since. This morning, I had the chance to ask a member of the House Intelligence Committee whether they had ever been briefed that such a thing was possible. Answer: No. So when the Beltway “experts” tell you what’s going to happen next, take it with a grain of salt....

*Watch the military:.... Years of repression and neglect mean that there’s no obvious civilian—much less secular—force that can immediately step in to govern Egypt. But there are institutions: the military; the security services; blocs of elites around business, academic, and religious institutions; and the political parties and movements. The choices they make now will be central to what happens and how. Right now, it appears that the police have withdrawn from the street rather than escalate to live fire, and that the army is in the street and being welcomed by the protestors—the military has not been deployed in Cairo since 1986 and has never fired on Egyptian civilians, though confused reports of its actions in Cairo today are still emerging.

America can’t stop this revolt. Commentators across the political spectrum can’t seem to keep themselves from implying that Barack Obama and Hillary Clinton, by their choice of adjectives, can “save” President Mubarak.... We can, however, exert some control over whether we are perceived by the citizenry in Egypt and elsewhere as part of the solution. Our diplomats and spokespeople are now at pains to prove, in real time, that when we talk about stability, we mean it in a way that favors the governed, and not just the governors.... [W]ith talk of a negotiated departure for Mubarak shooting around Twitter, there may come a time when the United States has to become even more involved.

After Mubarak, what? The Egyptian government has done an excellent job of preventing the emergence of rival power centers—and not just those who could pose a threat to Mubarak, but anyone who could serve as a potential successor....

The ‘Islamist Menace’ is overblown. Some American commentators have argued that Al Jazeera is somehow fanning Islamism and anti-Americanism with its coverage. But as Marc Lynch has pointed out, Egyptian citizens... are so—justifiably—angry at their governments that it’s hard to imagine what new provocations the station could come up with. Similarly, concern about the relative strength of the Muslim Brotherhood, which espouses a fundamentalist strain of Islam and has championed and employed violence in the past, should be balanced against three other facts: (1) The Brotherhood has renounced violence and it has been active in Egyptian politics, transformed by an internal debate about whether and how to participate, for some time now; (2) Thus far, observers on the ground report that it is young, secular Egyptians who are leading this revolt; (3) The Islamist Muslim Brotherhood, the largest opposition organization in Egypt, is a first-rank enemy of Al Qaeda, and has been for decades.... Meanwhile, it is reasonable to be concerned about the future role of radical extremists... but this kind of scaremongering is actually quite ignorant; it’s also disheartening and potentially damaging to the true democrats—some of whom organize around Islam, and some of whom don’t—that are doing the struggling and dying right now...

EK:

Ezra Klein - Can we win the future if we lose the present?: Mike Konczal says that "in a non-crisis time, [Obama's State of the Union] would have been a great vision of the role of government in the economy." But this isn't a non-crisis time. Unemployment is stuck above 9 percent.... We just had an election in which both parties proclaimed jobs the central issue, but the State of the Union had few answers for those who're out of work.

I sat in on a briefing yesterday where various "senior administration officials" explained the theory behind the State of the Union. When they were asked about shifting their focus to the future when the economy was so bad in the present, they explained that they got pretty much everything they thought they could get -- and, in fact, more than they thought they could get -- in the tax-cut deal, and it was time to let that work. Left unsaid is that they can't get anything more out of a Republican House, and so there's little point in begging.

This is, essentially, a bet: The economy isn't currently growing fast enough to bring down the unemployment rate. But the administration expects that it will be growing that fast very soon. The early numbers are looking good, the forecasts are optimistic, and Americans are more confident than they've been at any time in the past three years. But if that doesn't happen, it's not at all clear that they have a workable policy or political theory for what to do about it. And so far as the future goes, it doesn't matter how many tax credits you offer for college students: If 8 percent unemployment becomes the new normal, we've lost.

Matthew Yglesias:

Yglesias » And You Will Know Us By The Trail of Patent Trolls: One line from last night’s speech that really left me cold was this: “No country has more successful companies, or grants more patents to inventors and entrepreneurs.”... [T]he quantity of patents the government hands out to inventors and entrepreneurs is measuring two different things simultaneously. One is how many new ideas do inventors and entrepreneurs send in patent applications for. The other is how loosey goosey does the patent office get about what it deems patentable.... [By] 21st century standards Isaac Newton should have patented calculus (“A Method For Using Fluxions To Determine Instantaneous Rate of Change”) and then waited patiently until Leibniz published his superior method and then sued the pants off anyone who tried to take a derivative without coughing up a hefty license fee. But would that world have been a better place? The issue isn’t really so much the rents that Newton would have thereby extracted (I’m not going to begrudge one of human history’s greatest geniuses a fortune) but the barriers to entry that would have been created as a secondary consequence. A world in which smart people have access to the stock of existing human knowledge and are free to apply it in new ways is a world of competition and innovation. A world where you need to consult with an army of lawyers first isn’t. If you ask the people who care most about promoting entrepreneurship in America about this they kind of shrug, concede that the patent system is hopelessly broken, and then confess to despair that it can or will be fixed...

HP:

Dog bites man: 270+ health, public finance, and labor economists oppose repeal of health reform: Several of us drafted the economists’ letter. It opposes the repeal of health reform. It also rebuts the “job-killing” charge Republicans are making about the Affordable Care Act. We got more than 270 signatures, and counting. With a tiny number of exceptions, we confined the letter to health, labor, and public finance economists. Had we included other public health and health policy experts and clinicians, we could have easily gotten huge numbers.

It makes an interesting contrast to a similar Republican effort here. I hope that readers look at both letters.

Consider the tone and the quality of the arguments. To take an obvious example, The Republican letter criticizes ACA as “A crushing debt burden,” and writes the weasel words “could potentially [ialics mine] raise the federal deficit by more than $500 billion during the first ten years and by nearly $1.5 trillion in the following decade.” They do not acknowledge that the Congressional Budget Office scores the repeal legislation as raising the deficit by $230 billion.

Less obviously, look at who signed. Andrew Sabl has knocked the Republican letter already for its lack of luminaries. That’s not my point. Their list includes some very accomplished people.

Their list does not include many people at the core of health policy analysis and research. With the exception of Douglas Holtz-Eakin, Joseph Antos, June O’Neill and a very small number of others, their list does not even include many of the standard Republican policy experts I would expect to see. Then look through our 270 names. It includes people like Hank Aaron, Alice Rivlin, Kenneth Arrow, David Cutler, Alan Krueger, Jon Gruber, Uwe Reinhardt, Hal Luft, Charles Schultze, and many more. These are not ideologues. They are not only at the top of the profession. These are pioneers in the fields of public finance and health services research who in many ways provided the intellectual groundwork and the empirical research on which current health policy debate is based.

Partisan noise aside, the overwhelming majority of serious health policy and public finance researchers support the Affordable Care Act and want it to work. Indeed, I believe that most Republican policy wonks who would repeal the provisions that cover the uninsured still support the delivery reforms embodied in the new law. The dirty secret of Washington politics is that policy wonks on both sides have much more in common with each other– say on the new Independent payment Advisory Board, or on overpayments to Medicare Advantage plans–than either side has in common with, say, Congressional committee chairs who want to meddle in Medicare reimbursements for surgeries and medical devices.

I hope, as we move forward, that a responsible, incremental Republican opposition emerges that makes possible improvement and genuine negotiation in the implementation of this new law.

Antos, Holtz-Eakin, and O'Neill ought to know better. Hell, they do know better.

Did the Washington Post really spend its subscribers' money to send a team of six people to Davos?

A 3.2% GDP number

Problem Sets and Screencasts:

Screencasts:

Some huge honking files here:

• Lecture 1 January 18: http://delong.typepad.com/files/lecture-1-ias-107-spring-2011.m4a
• Lecture 2 January 20: http://delong.typepad.com/files/lecture-2-ias-107-spring-2011.mp4
• Lecture 3 January 25: http://delong.typepad.com/files/lecture-3-ias-107-spring-2011.mp4
• Lecture 4 January 27: http://delong.typepad.com/files/lecture-4-ias-107-spring-2011.mp4

Problem Sets:

• Problem Set 1 with answers: http://delong.typepad.com/20110118-ias-107-pset1-with-answers.pdf
• Problem Set 2: http://delong.typepad.com/20110126-ias-107-pset2.pdf

Econ 210a: Memo Question for February 2, 2011:

Adam Smith confidently predicted that slavery was on its way out for economic reasons. In commercial society, manumission would be the rule because the carrot of working for yourself is much more efficient than the stick of being whipped by others. Was Smith right? If you conclude he was wrong, why was he wrong?

Intelligent Economic Design by J. Bradford DeLong - Project Syndicate: BERKELEY – As Stephen Cohen, with whom I wrote The End of Influence: What Happens When Other Countries Have the Money, likes to say, economies do not evolve; they are, rather, intelligently designed. He also likes to say that, though there is an intelligence behind their design, this does not mean that the design is in any sense wise.

The first claim is, I think, incontrovertible. Since long before Croesus, King of Lydia, came up with the game-changing idea of standardized “coinage,” what governments have done and not done to structure, nudge, and put their thumbs on the scales has been decisively important for economic development.

Just look around you. Notice the hundred-fold divergence across political jurisdictions in relative levels of economic productivity and prosperity? I dare anyone to claim that the overwhelming bulk of that disparity springs from causes other than history and the current state of governance.

The second claim is also, I think, true. To say that economies are the products of intelligent design means only that some human intelligence or intelligences lies behind the design. It does not mean that the design is smart or optimal.

For one thing, the process by which the design decisions are made resembles committee work: most people want a horse, but the push and pull and tug of negotiation produces a camel. Moreover, the government officials, lobbyists, and interest groups doing the designing may not have the public interest in mind – or even know what the public interest happens to be.

Most of the time in America, the process of intelligent design of the economy has gone well: that is why Americans are so relatively and absolutely rich today. After all, the Founding Fathers were keen on redesigning the infant American economy. Alexander Hamilton was clear on the primacy of commerce and industry.

In particular, Hamilton was convinced of the importance of a sophisticated banking system to support the growing economy. And he and his Federalist colleagues, including John Adams, believed strongly in providing infant industries with room to grow – even using money from the Department of War to fund experiments in high-tech industry.

When the Democratic-Republicans, led by Thomas Jefferson and James Madison, replaced the Federalists, they quickly decided that their small-government principles were an out-of-power luxury. Wars of conquest, territorial acquisition, continental surveying, and canal and then railroad subsidies were good for voters, immigrants, and pretty much everyone else except the outnumbered and outgunned Native Americans who got in the way.

Indeed, any government that builds infrastructure and allocates land titles on the scale of the nineteenth-century US government is “Big Government” incarnate. Add steep tariffs on imported manufactured goods – rammed through over the angry protests of farmers and southern planters – and you have the policies that intelligently designed much of nineteenth- and early twentieth-century America.

After World War II, it was again government that led the redesign of the US economy. The decisions to build an interstate highway system (and to spend most of that money on suburban commuter roads) and to jump-start the long-term mortgage market – reflecting the widespread belief that General Motors’ interests were identical with America’s – literally reconfigured the landscape. Combine that with the large-scale development of the world’s leading research universities, which then educated tens of millions of people, and with the tradition of using defense money to finance high-tech research and development, and, voilà, you have the post-war US economy.

Whenever push has come to economic shove, America’s government has even deliberately devalued the dollar in the interest of economic prosperity. Franklin Roosevelt did it during the Great Depression, and Richard Nixon and Ronald Reagan did it, too.

This history is worth reviewing because America is poised for another debate over whether its economy evolves or is designed, with President Barack Obama’s opponents claiming that whatever is good in America’s economy has always evolved with no guidance, and that whatever is bad has been designed by government.

This claim is, of course, ludicrous. American governments will continue to plan and design the development of the economy, as they always have in the past. The question is how, and whether the design will be in any sense wise.

But there are two dangers in America’s forthcoming debate. The first concerns the term likely to be used to frame the debate: competitiveness. “Productivity” would be much better. "Competitiveness" carries the implication of a zero-sum game, in which America can win only if its trading partners lose.

That is a misleading, and dangerous, implication. Instead, all else being equal, richer trading partners benefit America: they make more good stuff for Americans to buy and sell more cheaply, and their stronger demand means that they are willing to pay more for the stuff that America has to sell. Win-win.

The second danger is that “competitiveness” implies that what is good for companies located in America – good, that is, for their investors, executives, and financiers – is good for America as a whole. Back when President Dwight D. Eisenhower’s cabinet nominee Charlie Wilson claimed that what was “good for America was good for General Motors – and vice versa,” GM included not just shareholders, executives, and financiers, but also suppliers and members of the United Auto Workers union. By contrast, General Electric CEO Jeffrey Immelt, recently appointed by Obama to lead the President’s Council on Jobs and Competitiveness, runs a company that has long since narrowed to executives, investors, and financiers.

Let us hope that the looming debate goes well. A more prosperous and rapidly growing America – a scenario in which the rest of the world has a vital interest – hangs in the balance.

Outsourced to Barry Ritholtz:

More Snow : It appears we got hit with another 10-12 inches of snow overnight. Schools are cancelled, and my trains are not running into the city yet.

I need to go blow the snow off the driveway, then figure out what I am gong to do today. I was hoping to read the FCIC report, but it does not look like I will get to the store today.

And speaking of Snow Jobs, the dissenters in the FCIC continue their embarrassing foolishness.

The NYT devotes two paragraphs to Peter Wallison — they mention he was “chief lawyer for the Treasury Department and then the White House during the Reagan administration” and that he is “now at the conservative American Enterprise Institute.”

But nowhere do they mention that he was co-director of the AEI’s Financial Deregulation Project.  This is a serious omission by a major publication.

The New York Times should be much better than this . .