Grasping Reality on TypePad, by Brad DeLong

Project Syndicate: Across the North Atlantic region, central bankers and governments seem, for the most part, helpless in restoring full employment to their economies. Europe has slipped back into recession without ever really recovering from the financial/sovereign-debt crisis that began in 2008. The United States’ economy is currently growing at 1.5% per year (about a full percentage point less than potential), and growth may slow, owing to fiscal contraction this year.

Industrial market economies have been suffering from periodic financial crises, followed by high unemployment, at least since the Panic of 1825 nearly caused the Bank of England to collapse. Such episodes are bad for everybody – workers who lose their jobs, entrepreneurs and equity holders who lose their profits, governments that lose their tax revenue, and bondholders who suffer the consequences of bankruptcy – and we have had nearly two centuries to figure out how to deal with them. So why have governments and central banks failed?

General Field Marshal Paulus surrenders himself and the Sixth Army's southern pocket at Stalingrad.

This means, I think:

1. Reading the Udacity Blog regularly…

2. Signing up for Udacity Statistics https://www.udacity.com/course/st095 to see how they are trying to do it…

Lectures:

1. Regression: Predicting and Relating Quantitative Features
2. The Truth About Linear Regression
3. Model Evaluation: Error and Inference
4. Smoothing Methods in Regression
5. The Bootstrap
6. Heteroskedasticity, Weighted Least Squares, and Variance Estimation
7. Splines
8. Additive Models
9. Writing R Code
10. Testing Regression Specifications
11. Hypothesis Testing and Statistical Evidence
12. Logistic Regression
13. Generalized Linear Models and Generalized Additive Models
14. GLM and GAM Examples
15. Multivariate Distributions
16. Density Estimation
17. Simulation
18. Relative Distributions and Smooth Tests
19. Principal Components Analysis
20. Factor Analysis
21. Mixture Models
22. Graphical Models
23. Graphical Causal Models
24. Identifying Causal Effects from Observations
25. Estimating Causal Effects from Observations
26. Time Series I, without latent variables
27. Time Series II, with latent variables

Homework:

1. What's That Got to Do with the Price of Condos in California?
2. Advantages of Backwardness
3. How the Hyracotherium Got Its Mass
4. It's Not the Heat that Gets to You, It's the Sustained Conjunction of Heat with Elevated Levels of Atmospheric Pollutants
5. How the North American Mammalian Paleofauna Got a Crook in Its Curve
6. What Makes the Union Strong?
7. Fun with Density Estimation
8. Red Brain, Blue Brain
9. How the Recent Mammals Got Their Size Distribution
10. Separated at Birth
11. Brought to You by the Letters D, A, and G

The amusing thing is that when I first heard of David Graeber's Debt, I thought it might well be a useful corrective to some of the sillinesses of economists, and it went into my "to read" pile with a presumption that I would learn a considerable amount from it:

Back in September 2011, I wrote that Graeber was justifiably annoyed at having his summary of anthropological findings dismissed by Austrians as "nonsensical":

David Graeber: On the Invention of Money: [S]tandard economic accounts of the emergence of money from barter... wildly wrong.... [Robert M.] Murphy apparently felt honor-bound to respond…. Murphy didn’t even consult [my] book... but [relied on] an inaccurate summary of my position someone had made in another blog! We are not, in other words, dealing with a work of scholarship....

[W]hat anthropologists observe when neighbors do engage in something like exchange with each other, if you want your neighbor's cow, you'd say, "wow, nice cow" and he'd say "you like it? Take it!" — and now you owe him one.... [T]he real question is not how does barter generate some sort of medium of exchange that then becomes money, but rather, how does that broad sense of "I owe you one" turn into a precise system of measurement — that is: money as a unit of account? By the time the curtain goes up on the historical record in ancient Mesopotamia, around 3200 BC, it's already happened. There's an elaborate system of money of account and complex credit systems...

And I commented: Indeed. It really looks from the anthropologists that Adam Smith was wrong--that we are not animals that like to "truck, barter, and exchange" with strangers but rather gift-exchange pack animals--that we manufacture social solidarity by gift networks, and those who give the most valuable gifts acquire status hereby.

It seemed to me that there were, in fact, four important and interesting questions:

• How does an original thick-tie sense of reciprocal obligation and gift-exchange become a precise system of measurement using monetary values as units of account?
• How does this keeping-track-of-exchange get transformed, via debt, into a system which often creates a particular set of powerful ones called "the rich", who then via thick-tie relationships with "the poor" take what they can while the weak suffer what they must?
• How does money as a medium-of-exchange emerge, so that individuals are no longer limited to various debt thick-tie reciprocal obligation networks but can instead construct pick-up one-time thinnest-tie exchange relationships with pretty much anybody they please?
• How does the thick-tie category of "debt" transform itself into a thin-tie (or thinner-tie) relationship--and how can such thin-tie relationships go as catastrophically wrong on a systemic level as they did in 2007-2009?

It seemed likely that Graeber's Debt would provide a perspective I would find interesting and informative on these questions.

But then things went south rather quickly...

• Miles Kimball: Contra John Taylor: "Having tweeted that John Taylor’s op-ed this morning, “Fed Policy is a Drag on the Economy” was “extraordinarily bad analysis,” I need to back up my view. Let me go point by point…. [I]t is implausible for critics of Fed policy to say that (holding short-term rates fixed) changes in the holdings of long-term government bonds and mortgage-backed securities have no power to stimulate aggregate demand when the economy is in a slump, but going in the other direction, could have a dangerously powerful negative effect on aggregate demand once the economy is on the mend and asset positions are pulled back. The truth is that these effects were always likely to be modest…. As I wrote in “What to Do When the World Desperately Wants to Lend Us Money,” there are many ways that it is completely appropriate for the government to take low (real) interest rates into account in spending decisions…. [I]t is good that expansionary US monetary policy helps to inspire expansionary monetary policy by other countries…. Finally, let’s turn to John’s most remarkable claim—the one that inspired my statement that his op-ed had “extraordinarily bad analysis.”… This is just wrong. To the extent that forward guidance has bite, the Fed is promising to shift the demand curve for assets in the future and thereby get to a particular equilibrium interest rate. This is not at all like rent control. The right analogy is, say, New York City getting rents to come down by reducing making it easier to get a building permit, or by subsidizing the building of new apartments."

• Felix Salmon: Europe’s robust financial-transactions tax: "The tax is being implemented by 11 countries, including most importantly Germany and France, and it’s going to be levied at two levels: 0.1% on securities trades, and 0.01% on derivatives trades…. even the UK, which is implacably opposed to the European tax and which won’t ever join such a scheme, levies a surprisingly large 0.5% tax whenever anybody — anywhere in the world — trades a UK stock. And yet, somehow, London remains the first choice for international companies looking for a place to list their shares. The European tax, which is much smaller than UK stamp duty, will similarly have little effect on how and where financial markets operate. The “if you tax me, I’ll just move elsewhere” threat is a pretty empty one, in practice, especially if you have a carefully-drafted law which makes tax avoidance difficult, and if you’re talking about established financial institutions rather than individuals…. I think that the financial transactions tax will actually be very good at raising money…. On the other hand, I doubt that speculators will find this tax particularly off-putting. Europe doesn’t suffer from the high-frequency trading that has overtaken the U.S. stock market, and these taxes are low enough that any remotely sensible financial transaction will remain sensible on a post-tax basis. It’s possible that total trading volume might decline a little bit in some markets, and that would be fine."

Bulletin of International News:

If you have a depressed economy where the central bank wishes to but cannot lower short-term interest rates, then it is a fact that with a Keynesian spending multiplier of μ, a marginal tax-and-transfer share of τ, a hysteresis shadow of present depression cast upon future economic growth of η, and a long-term real government borrowing rate of r, increasing government spending now reduces the long-run burden of financing the debt if:

τμη/r > 1 - μτ

For consensus τ and μ or 0.33 and 1.5, and for a (lowballed) η of 0.1, this means that it is fiscally prudent to boost spending now as long as you do not expect the weighted-average real interest rate on government debt to be above 5%/year in the long-run--the nominal rate to be above 7%/year--in the future. For a lowballed multiplier μ of 1.0, you have to expect the weighted-average real interest rate on government debt to be above 3.75%/year in the long-run.

Even a moment's look back at history reveals that real interest rates above 3.75%/year--let alone above 5%/year are above the range in which the U.S. can expect to see interest rates remain for the long run.

When Richard Haass of the Council on Foreign Relations says, therefore, that Paul Krugman "is right until he is wrong"--i.e., until interest rates rise--he is forecasting that interest rates will not just normalize to historical norms but rise far beyond historical norms and stay outside the historical range on the upside indefinitely.

And, of course, Richard Haass does not know that that is what he is forecasting. He is a Very Serious Person.

A more honest Peterson Foundation would say: if the ACA does not succeed in keeping health-care costs from exploding, we will have a big problem, but if it does not so much--we will know in a decade and should be ready now to do whatever is needed then.

Suzy Khimm administers the smack down:

How’s the deficit doing? Depends on your timeframe: The White House and its allies believe we’ve already come a long way on deficit reduction…. The Peterson Foundation has released a new analysis showing that the debt-to-GDP ratio will reach 200 percent by 2040….

The Peterson camp believes limiting budget projections to 10 years presents a short-sighted and misleading portrait of our real long-term deficits, allowing legislators to shirk from their real responsibilities to rein in the budget…. However, critics believe it’s the Petersonian analysis that’s distorting the magnitude of our fiscal problems. The model that creates these scary long-term projections relies mostly on assumptions about health-care cost growth remaining fast (even though it’s slowed in recent years) and is quite uncertain. It’s “mostly scaremongering—way too dismissive of progress made so far and over-emphasizing the very long term,” says Jared Bernstein…

In general, if there are worries about the debt you see them in (a) interest rates right now or (b) expected debt escalation in the near term. If you do not dare talk about interest rates and have to look 30 years in the future to produce a scarce debt escalation number, you are a bullshit artist.

Matthew Yglesias writes:

Real interest rates are negative: Taxing is more costly than borrowing.: A remarkable Damon Linker article about the "worrying rise of reckless liberal pundits"… [is] the very worst kind of common sense political pundity…. I have previously suggested that with real interest rates negative it makes more sense to finance government activities with borrowing than with taxes. Linker finds this "fanciful" but can't quite say what's fanciful about it….

I say blast off and nuke the site from orbit. It's the only way to be sure…

M.C.K.:

Investing: Irrationality, trend-following, and cats: Robin Greenwood and Andrei Shleifer… [argue that] actual people basically do the opposite of what rational expectations models suggest they should do. Mr Greenwood and Mr Shleifer measure investor expectations for the stock market by looking at the results of six separate surveys, as well as the flows into and out of equity mutual funds. They find that all of the surveys are strongly correlated with each other. Unsurprisingly, they also find that there is a strong relationship between equity fund flows and investor optimism… when people expect to stock prices to go up a lot, they buy more shares.

But what determines these expectations? According to rational expectations theory, investors should become increasingly bullish as dividend yields rise (roughly). Yet it turns out that survey respondents are astonishingly bad investors who buy high and sell low:

[The] evidence is inconsistent with the view that expectations of stock market returns reflect the beliefs or requirements of a representative investor in a rational expectations model...Investor expectations tend to be extrapolative: they are positively correlated with past stock market returns, as well as with the level of the stock market (i.e., they are positively correlated with the price-dividend ratio).

Some financial economists dismiss the value of these survey results, even going so far as to say that respondents do not understand what they are being asked. The authors have little sympathy with this view:

Perhaps when investors report high expectations of market returns, they mean high expected growth of fundamentals, in which case their true expectations of market returns are low. This conjecture seems inconsistent with the obvious fact that respondents in the surveys we cover are active investors, and even CFOs, and they are asked directly about their expectations of stock market returns, not changes in fundamentals. The conjecture is also inconsistent with the high correlation between investors’ reported expectations and their actual behavior, as measured by the flows that retail investors direct into mutual funds.

What can we learn from this? As a first approximation, you should avoid trying to time the market… you are probably buying high and selling low, just like everyone else. You would be better off letting a cat manage your money…

• David Brooks appears to finally realize that he has spent his knife shilling for grifters and spivs: A Second G.O.P.: "On the surface, Republicans are already doing a good job of beginning to change…. But… Jindal spanked his party for its stale clichés but then repeated the same Republican themes that have earned his party its 33 percent approval ratings…. Republicans seem to have spent no time talking to people who didn’t already vote for them…. [T]he central Republican narrative has been what you might call the Encroachment Story: the core problem of American life is that voracious government has been steadily encroaching upon individuals and local communities…. While losing the popular vote in five of the last six presidential elections, the flaws of this mentality have become apparent…. Republicans like Mitt Romney can talk about improving the overall business climate with lower taxes and lighter regulation, but regular voters sense that that won’t necessarily help them because wages no longer keep pace with productivity gains…. It’s probably futile to try to change current Republicans. It’s smarter to build a new wing of the Republican Party, one that can compete in the Northeast, the mid-Atlantic states, in the upper Midwest and along the West Coast…"

• Matthew Yglesias: Amazon Q4 profits fall 45 percent.: "Amazon kept up its streak of being awesome this afternoon by announcing a 45 percent year-on-year decline in profits measuring Q4 2012 against Q4 2011. Not because sales went down, mind you. They're up…. The company's razor-thin profit margins just got even thinner, and in total the company lost $39 million in 2012…. Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers."

DRAFT… DRAFT… DARFT… Fifth Annual Kauffman Foundation Economics Webloggers Forum 2013

Invitation only, alas: our budget and our space is limited…

Is this conference about economic webloggers, about weblogging economists, or about the economics of weblogging? All three, I say…

TIME LIMITS FOR SPEAKERS, DISCUSSANTS, AND PANELISTS WILL BE RUTHLESSLY ENFORCED!!

Questions, comments, and interventions in general discussion periods must be relevant to what has been said on the panel!! (It is assumed and taken as said that all questions, comments, and interventions are preceded by: "You really should go and carefully and comprehensively study my weblog if you are to have a prayer of properly understanding any of this stuff".)

Anticipatory posting of draft remarks; anticipatory posting of possible questions, comments and interventions; live-tweeting during the sessions; live-weblogging during the sessions; and post-conference after-action weblogging of what one really should have said at the conference in accordance with l'esprit de l'escalier is not just permitted, but required…

THURSDAY, APRIL 11, 2013:

6:15 PM CT: Bus departs hotel for Kauffman Foundation

6:30 PM CT: Drinks and Dinner, Kauffman Foundation Dining Room

8:30 PM- CT: Webcrawling, Kauffman Labs (if demand); or pubcrawling, various locations (if demand)

FRIDAY APRIL 12, 2013:

7:45 AM CT: Bus departs hotel for Kauffman Foundation

8:00 AM CT: Breakfast, Kauffman Foundation Conference Center

8:30 AM CT: Introduction, J. Bradford DeLong

8:40-8:45 AM CT: Straggle-in and caffeination top-off (for sleepyheads)

8:45-9:35 AM CT: Visualizing the Future and Grappling with the Present, Opportunities and Challenges for Webloggers in

• Chair: J. Bradford DeLong, 8:45-8:47
• Speaker: Hal Varian, 8:47-9:02
• Discussant: Joshua Gans, 9:02-9:10
• General discussion, 9:10-9:35

9:35-9:50 Break

9:50-10:40 AM CT: The Potential Forthcoming Disruption of Higher Education, Opportunities and Challenges for Webloggers in

• Chair: ???, 9:50-9:52
• Speaker: Clay Shirky, 9:52-10:07
• Discussant: Ben Wildavsky, 10:07-10:15
• General discussion, 10:15-10:40

10:40-10:55 Break

10:55-11:45 AM CT: The Future Ecology of Financial Journalism, Opportunities and Challenges for Webloggers in

• Chair: ???, 10:55-10:56
• Panelist: Cardiff Garcia, 10:56-11:04
• Panelist: Joe Weisenthal, 11:04-11:12
• Panelist: Alison Schrager, 11:12-11:20
• General discussion, 11:20-11:45

11:45 AM-12:45 PM CT: LUNCH

12:45-1:35 PM CT: The Future Ecology of Mainstream Journalism, Opportunities and Challenges for Webloggers in

• Chair: ???, 12:45-12:46
• Panelist: Bruce Bartlett, 12:46-12:54
• Panelist: Megan McArdle, 12:54-1:02
• Panelist: Josh Barro, 1:02-1:10
• General discussion, 1:10-1:35

1:35-1:50 Break

1:50-2:40 PM CT: The Future Ecology of Thinktanks, Policy Advocacy, the Public Sphere, and Public Policy, Opportunities and Challenges for Webloggers in

• Chair: J. Bradford DeLong, 1:50-1:51
• Panelist: Stan Collender, 1:51-1:59
• Panelist: Robert Litan, 1:59-2:07
• Panelist: Sarah Kliff, 2:07-2:15
• General discussion, 2:15-2:40

2:40-2:55 Break

2:55-3:45 PM CT: The Future Ecology of Standard Ivy-Covered Academia, Opportunities and Challenges for Webloggers in

• Chair: ???, 2:55-2:57
• Speaker: Mark Thoma, 2:57-3:12
• Discussant: Stephanie Kelton, 3:12-3:20
• General discussion, 3:20-3:45

3:45 PM CT: Conclusion, J. Bradford DeLong

4:00 PM CT: Adjournment and (for some) sprint for airport…

6:00 PM CT: Cocktails, dinner, webcrawling, pubcrawling for those remaining…

Apropos of David Brooks:

A Second G.O.P.: Can current Republicans change their underlying mentality?... It’s probably futile to try.... It’s smarter to build a new wing of the Republican Party... that is different the way the Westin is different than the Sheraton...

First, Brian Buetler answers a question from Matthew Ygleias:

"I give up on the GOP, but am not yet ready to be a Dem." RT @mattyglesias I would've liked to read today’s Brooks column in 140 characters.

— Brian Beutler (@brianbeutler) January 29, 2013

Second, the one and only @thegarance asks:

Question of the morning: what is the difference btwn a Westin and a Sheraton?

— Garance Franke-Ruta (@thegarance) January 29, 2013

And I answer:

The Westin is where you take your trophy wife:

The Sheraton is where they put you up for your business meeting after flying economy class:

Is that clear?

Nobody even half-sane and half-moral supports these people. Nobody.

Jonathan Chait:

The Washington Free Beacon has a report… that Chris Hughes is purging Jews from The New Republic…. The sensationalism of the article is structured in hilariously descending fashion, with each successive addition to the story draining its plausibility until nothing remains…. But the Free Beacon’s report offers a helpful window into… [how] millions of conservatives are held in a constant state of bug-eyed rage because they’re being manipulated for financial and ideological profit by right-wing pseudo-journalists.

Over at Balkinizing, Jason Mazzone screams and leaps at Jeff Toobin:

Balkinization: The Two Toobins: Toobin's opinion columns about the Court for The New Yorker are routinely weak… advocacy dressed up as analysis… succeeding as neither… [a] howler from Toobin's column on the 40th anniversary of Roe v. Wade:

Some Justices like to assert, or pretend, that the Constitution has a single meaning, and that each case thus has only one correct resolution. This view is especially pronounced among conservatives, who, in recent years, have claimed that they can identify the original intent of the framers and use their eighteenth-century wisdom to resolve any modern controversy.

Perhaps some dumbing down is needed for readers of The New Yorker but surely it isn't hard to describe originalism accurately… [as] original public meaning not intent…. [What does his] authoring poor columns in a national magazine… this tell us about the reliability of old media (books!) versus new?

Google search for "original intent": 2,350,000 results

Google search for "original public meaning": 102,000 results

Noah Smith snarks at Robert Lucas:

The power and the terror of Irrational Expectations: In September 2011, in an interview with the Wall Street Journal, Robert Lucas gave the following justification for the use of Rational Expectations:

If you're going to write down a mathematical model, you have to address that issue. Where are you supposed to get these expectations? If you just make them up, then you can get any result you want.

So, are Rational Expectations not "just made up"? Does the evidence tell us that this is how people form expectations? I don't think so. It seems to me that Lucas is saying that we should pick Rational Expectations because they are appealing in some a priori way. I'm not sure what that is, though.

Note that Lucas does not say that one should impose rational expectations on one's model because that is in fact how people form their expectations. I think it tends to lead to the conclusions that he wants, and that is why he picks it--just as he abandoned econometric estimation for calibration because estimation was producing results he did not want.

Noah Smith then goes on to talk about reality:

Tom Watson reminds us of Ed Balls' “Bloomberg” speech:

I am very grateful to Bloomberg for giving me the opportunity to come here this morning to respond to the bullish speech given from this same platform by George Osborne 10 days ago. That speech is the clearest articulation of the Cameron-Clegg Coalition strategy for this parliament. In it, their Chancellor repeated his claim that fiscal retrenchment through immediate and deep public spending cuts to reduce the fiscal deficit would build financial market confidence in the UK economy, keep interest rates low and secure economic recovery by boosting private investment. And the Chancellor once again declared that his was the only possible credible course ahead – dismissing anyone who doubts that fiscal deflation on this scale and at this delicate stage in the economic cycle is necessary or wise.

Jared Bernstein:

Disability Rolls and the Makers/Takers/Fakers Nonsense: Jimmy Pethokoukis… went on a rant about all the fakers on the Social Security Disability rolls, prompting me to inject some facts from my CBPP colleague Kathy Ruffing….

[The] number on the DI rolls has doubled since 1995 while the working-aged population has only grown by about a fifth.  Sounds bad, right? Not necessarily. What if the population was aging, with a larger share in their high-disability years, while more women were working and thus eligible for the program?  In fact, about half of the increase since 1990 is due to those factors…. [T]he increase in the eligibility age for Social Security from 65 to 66 over this period has also played a role over these years, as once DI recipients hit the retirement eligibility age, they transfer onto the retirement program.

The History Place - Holocaust Timeline:

January 29, 1943 - Nazis order all Gypsies arrested and sent to extermination camps.

• Andrew Sullivan: Freezing As The Planet Overheats, Ctd.: "Bill McKibben Truly weird winter, record-breaking highs in the 70s across Kansas and Missouri http://t.co/w7uzwQG7" "Steve Bloom @billmckibben Yes, hard to explain. It's not as if the entire northern hemisphere atmospheric circulation has been destabilized. Oh wait…"

• Duncan Black: "Is Chris Cilizza really this big an idiot? Yes" weblogging: Eschaton: What Sarah Palin Meant For Our Opinion Of Village Journalism: "The laziest grifter grfited you all." Chris Cilizza: "What Sarah Palin meant to politics: Her journey shows how the process can chew up those who aren’t ready." "Doug Galt: "'I wanna spread the news that if it feels this good getting used…' Chewed up to the tune of a million dollars a year, 15 bucks a word. Plus all the money she made from her book and reality show. Don’t cry for me, Wasilla."

• John Scalzi: Killing My Voice Mail: "Well, I finally did what I should have done about four years ago, which is to change my cell phone voice mail message to this: 'Hi, this is John Scalzi. I will never ever ever ever listen to the voice mail you’re about to leave, because voice mail is a pain in the ass. So if you actually want to reach me, you can either send me a text at this number, or send me e-mail at “[email protected].” Feel free to leave a voice message if you want, but remember, I will never ever listen to it. Have a nice day!' Why? Because f@&% me, voice mail is annoying. Especially on cell phones, on which it seems designed by the furies to punish everyone, not just the people who mock the gods. And you know what? Life is too short to deal with a horrible user interface, especially when everyone under the age of 103 knows how to send a goddamned text. So that’s it, I’m done with voice mail, that hateful contrivance. And I feel good."

• Linda Greenhouse: Misconceptions About Roe v. Wade: "[T]he seven middle-aged to elderly men in the majority certainly didn’t think they were making a statement about women’s rights…. It’s a case about the rights of doctors – fellow professionals, after all – who faced criminal prosecution in states across the country for acting in what they considered to be the best interests of their patients…. Republican strategists throughout the 1970s and well into ’80s carefully cultivated the abortion issue in the service of party realignment, with the aim of peeling away urban ethnic Catholic voters from their traditional home in the Democratic Party. It was a Northern version of the successful 'Southern strategy'…"

• Cosma Shalizi (2007): Those Voices Again | In Different Voices… | Yet More on the Heritability and Malleability of IQ

• Teresa Nielsen Hayden (2004): Motivation and doubt

Tara Culp-Ressler:

If Oklahoma Governor Expands Medicaid, Her Aunt's Free Health Clinic Won't Be So Overcrowded: Oklahoma Gov. Marry Fallin (R) has refused to accept Obamacare’s optional expansion of the Medicaid program… the direct impact of the GOP governor’s decision is evident even within her own extended family. Fallin’s aunt, 85-year-old Dorthea Copeland, runs a free health clinic in Pottawatomie County, an area of Oklahoma that has an 18 percent poverty rate and a 28 percent uninsurance rate…. [T]he clinic is currently overloaded with low-income patients who don’t currently qualify for government assistance. As Tulsa World reports, Copeland’s volunteer staff — who served over 850 patients last year — are now struggling to keep up with the increasing demand for health services:

In 1829, John Stuart Mill made the key intellectual leap…. Mill saw that excess demand for some particular set of assets in financial markets was mirrored by excess supply of goods and services in product markets, which in turn generated excess supply of workers in labor markets…. If you relieved the excess demand for financial assets, you also cured the… shortfall of aggregate demand….

When the excess demand is for liquid assets used as means of payment – for “money” – the natural response is to have the central bank buy government bonds for cash….

When the excess demand is for longer-term assets – bonds to serve as vehicles for savings that move purchasing power from the present into the future – the natural response is… induce businesses to borrow more and build more capacity, and encourage the government to borrow and spend….

When excess demand is for high-quality assets – places where you can park your wealth and be assured that it will still be there when you come back – the natural response is to have credit-worthy governments guarantee some private assets and buy up others, swapping them out for their own liabilities and thus diminishing the supply of risky assets and increasing the supply of safe assets.

Neil McCallum on Bernard Law Montgomery:

We gathered in Tripoli in the Miramare Cinema. The auditorium was crowded and on the stage was a notice ‘No Smoking’. When Montgomery stepped on the stage the auditorium was in darkness and the stage was brilliantly lit from the sides and from above. In this setting he stood dapper and neat and alone. He stood away from the small reading-table and spoke without notes, lightly fingering the belt of his battle-dress. By some trick of illumination there were shadows cast on his face so that the eyes were in deep pools of darkness and the bony prominences were emphasised. It gave his face the appearance of a skull, and at times it seemed, from my seat at the back of the hall, that we were being addressed by a skeleton in uniform.

• Mark Thoma sends us to Gavyn Davies: Carney rejects King: "Mark Carney ‘s comments on monetary policy at Davos… opened a wide gap between his thinking and that of outgoing Governor Sir Mervyn King (see this earlier blog). The latter expressed doubts last week about the ability of monetary policy to boost the economy further…. Mark Carney showed very little sympathy for any of this, arguing that there is plenty of scope for monetary policy to boost the developed economies further… Mr Carney said that it might be acceptable for inflation to exceed the government’s 2% target for a fairly lengthy period, especially in the context of fiscal consolidation…. But it is not clear how this approach can be made compatible with the Bank of England’s current mandate, which has always been interpreted by the MPC as requiring a return to a 2% inflation target over roughly a two year horizon…. [I]n spirit his remarks are more in keeping with a nominal GDP target…"

• Scott Lemieux: >More on the Swartz Prosecution: "I certainly agree with [Orin] Kerr that the central problem is that '[f]elony liability under the statute is triggered much too easily'. A too-broad statute, to borrow Robert Jackson’s phrase, “lies about like a loaded weapon,” and if it wasn’t Ortiz and Swartz another prosecutor was going to bring excessively harsh charges eventually. The key to his defense of Ortiz, though — '[w]hat the prosecutors did here was what federal prosecutors often do' — is less convincing… comes too close to being a 'no justice for x until justice for y (and hence no justice for anyone)' argument."

• A Commonplace Book: Buying Power of 14th Century Money: "In the second half of the 14th century, a pound sterling would: (i) Support the lifestyle of a single peasant laborer for half a year, or that of a knight for a week. Or buy: (ii)( Three changes of clothing for a teenage page (underclothes not included) or (iii) Twelve pounds of sugar or (iv) A carthorse or (v) Two cows or (vi) An inexpensive bible or (vii) ten ordinary books or (viii) Rent a craftsman’s townhouse for a year or (ix) Hire a servant for six months…. It should be obvious from the above list that the conversion rate depends a great deal on what you buy…"

• Manchester Guardian: Osborne's depression: "The chancellor took a modest recovery bequeathed him by Alistair Darling and snuffed it out…. National income did not grow at all last year and astonishingly remains nearly 4% smaller than it was when Lehman Brothers collapsed. The US on the other hand has made back all the output it lost in the subprime crisis – and then some. Given that the Bank of England's Mervyn King has warned of yet another five years of pain, there must surely come a time when politicians and economists stop hiding behind euphemisms and neologisms and call this episode in Britain's economic history what it is: a depression… the price of sticking rigidly to an historic austerity plan. As George Osborne prepared his swingeing spending cuts, back in June 2010, this paper warned that he was 'putting his ideological shrink-the-stateism ahead of sound economic management'. Two and a half years on, that seems a serviceable assessment. This chancellor took a modest recovery bequeathed him by Alistair Darling (whose performance in No 11 grows all the more remarkable in retrospect) – and snuffed it out. And in doing so, he has learned the hard way the lesson that critics of austerity were urging on him at the outset: that without growth there can be no hope of bringing down the public debt…"

• The Two envelopes Problem | TheSleeping Beauty problem - Wikipedia, the free encyclopedia

Missouri State of Mind: Riddle: How Many Doctors Will It Take to Implement One Affordable Care Act?:

If you saw the recent Wall Street Journal article on the development of Smartphone apps to detect skin cancer, you may already be wondering about specialty physician over-supply…. [T]he fourth app… the one with the astonishingly accurate results that used a system that forwarded data and images to board-certified dermatologists for remote review at a cost of $5 per mole -- you could tell Christopher Weaver at the Wall Street Journal was intrigued. I am as well. Teledermatology is not particularly well developed in the United States but is fairly advanced in Australia…. [D]ermatological care for some Australians is provided, in part, remotely.

There are many other health care related apps out there but not as many as you might think…. (If you have one in mind, here's a forum for you to seek fame and fortune: http://rwjf.org/en/about-rwjf/newsroom/newsroom-content/2012/12/foundation-announces--200-000-developer-challenge.html?cid=Xtw_qualequal. No worries if you miss today's deadline, this is an ongoing series of competitions.)… [I]t is not difficult to imagine a trend line on dermatology: fewer dermatologists practicing remotely in ever larger specialized practice settings… we can already notice [this] in some parts of radiology… the specialization of the visual exam reader may also improve accuracy -- both in screening function and in elimination of expensive-in-every-way (financially, clinically, emotionally) false positives. I think of this as the paradox of learning to have clinical confidence in the doctor you never meet: the super specialized mammogram reader, for example, you hope you never meet.

http://www.independent.co.uk/news/uk/politics/ed-balls-pressure-grows-for-plan-b-as-triple-dip-threatens-8468379.html

As I have said many times, Nick Clegg needs to end this farce, and vote with the Labour Party that the House of Commons has no confidence in the Queen's current ministers.

Clegg's political career is completely over in any case. The question is whether he is going to do a little good or a lot of harm to Britain as he exits the stage with a whimper…

Cosma Shalizi: When Fen-Dwelling Bayesians Can't Handle the Truth:

Attention conservation notice: Self-promotion of an academic talk, based on a three-year-old paper, on the arcana of how Bayesian methods work from a frequentist perspective.

Because is snowing relentlessly and the occasional bout of merely freezing air is a blessed relief, I will be escaping to a balmier clime next week: Cambridgeshire.

"When Bayesians Can't Handle the Truth", statistics seminar, Cambridge University: Abstract: There are elegant results on the consistency of Bayesian updating for well-specified models facing IID or Markovian data, but both completely correct models and fully observed states are vanishingly rare. In this talk, I give conditions for posterior convergence that hold when the prior excludes the truth, which may have complex dependencies. The key dynamical assumption is the convergence of time-averaged log likelihoods (Shannon-McMillan-Breiman property). The main statistical assumption is a building into the prior a form of capacity control related to the method of sieves. With these, I derive posterior and predictive convergence, and a large deviations principle for the posterior, even in infinite-dimensional hypothesis spaces; and clarify role of the prior and of model averaging as regularization devices. (Paper)

Place and time: 1 February 2013, 4-5 pm in MR 12, CMS

And my views on all this hoisted from archives:

303rd BG(H) Combat Mission No. 12: 27 January 1943:

Target: Wilhelmshaven Naval Base, Germany

Crews Dispatched: 11

Length of Mission: 5 1/2 hours

Bomb Load: 4 x 1000 lbs H.E. Demolition bombs

Bombing Altitude: 23,000 ft

Ammo Fired: 14,142 rounds

Enemy Aircraft Claims: 1 Destroyed, 1 Damaged

• Nir Jaimovich and Henry Siu: The Trend is the Cycle: Job Polarization and Jobless Recoveries: "Polarization -- the loss of middle-skill jobs that concentrate on routine tasks -- happens in spurts and essentially only during recessions. Because these jobs don't return once recessions are over, the rebound in the labor market is slow, and the result is a sluggish or 'jobless' recovery…. 'The high- and low-skill occupations to which employment is polarizing either do not experience contractions, or if they do, rebound soon after the turning point in aggregate output.'… Fully 92 percent of the loss of these jobs occurs within 12 months of NBER-dated recessions…. This phenomenon is not accounted for simply by the cyclical behavior and secular decline of manufacturing in the United States. Similarly, it is not merely a result of the employment experience of workers with low educational attainment."

• Claudia Goldin and Lawrence Katz: The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family-Friendly Occupation: "The transformation of the pharmacy profession over the past half century, from one dominated by independent pharmacies to an industry overwhelmingly controlled by national pharmacy chains and hospitals, has made the occupation more family-friendly and female-friendly, with higher earnings and a lower gender earnings gap than other fields. In the mid-1960s, only 8 percent of licensed pharmacists were female, and the industry was dominated by self-employed male pharmacists. About 40 percent of all pharmacists were self-employed, owning and working at independent pharmacies, and 70 percent of all pharmacists worked at independent pharmacies…. To measure how much the pharmacy profession has changed over the years, the authors use data from a number of sources…. The overall self-employment rate for pharmacists declined from 40 percent in the mid-1960s to less than 5 percent in 2010. Meanwhile, the demand for pharmacists has increased and the percentage of pharmacists working part-time has soared."

Jeff Frankel:

Monetary Alchemy, Fiscal Science: The austerity-versus-stimulus debate has been thoroughly hashed out…. [T]he long-term consequences of permanently expansionary macroeconomic policy… are unsustainable deficits, debts, and inflation…. [I]n the aftermath of a recession, when unemployment is high and inflation low, the immediate consequences of contractionary macroeconomic policy are continued unemployment, slow growth, and debt/GDP ratios that go up rather than down….

Less thoroughly aired recently is… whether… monetary or fiscal expansion is the more effective instrument…. The answer to the question which form of policy is more effective: under the circumstances that held in the 1930s and that hold again now - which are conditions not just of high unemployment and low inflation, but also near-zero interest rates — stimulus in the specific form of fiscal expansion is much more likely to be effective in the short-term than stimulus in the form of monetary expansion…. The hoary — but still evocative — metaphor is “pushing on a string.” Meanwhile, fiscal expansion is rendered relatively more effective, in that it doesn’t push up those rock-bottom interest rates and thereby crowd out private-sector demand…. It is worth trying all sorts of things:  quantitative easing, forward guidance, nominal targets.  But the effects of each are highly uncertain. 

That monetary policy is less effective than fiscal policy under conditions of high unemployment and zero interest rates should not be a novel position. But many economists have forgotten much of what they knew and politicians may not have even heard the proposition…. A new wave of econometric research estimates fiscal multipliers using methods that allow them to be higher in some circumstances than others. Baum, Poplawski-Riberio and Weber (2012)… Batini, Callegari and Melina (2012)… Auerbach and Gorodnichenko (2012a, 2012b), Baum and Koester (2011), and Fazzari, Morley and Panovska (2012). Most of this research finds high multipliers under conditions of excess capacity and low interest rates. (Few of them have the courage to mention that this is what one would have expected from the elementary textbooks of 50 years ago, perhaps due to fear of sounding old-fashioned.)…

Needless to say, the effects of fiscal policy are subject to substantial uncertainty… the United States would be well-advised to lock in a long-term path toward debt sustainability, even while undertaking a little short-term stimulus…. Nevertheless, if the question is whether it is monetary policy or fiscal policy that can more reliably deliver demand expansion under current conditions, the answer is the latter.  One might even dramatize the contrast by speaking of “monetary alchemy and fiscal science.”

9:15 AM: Economic Weblogging and the Future: Speaker: Hal Varian. Discussant: Joshua Gans:

DRAFT PANEL INTRO: In the beginning things were simple. You became a weblogger. Whenever you read something interesting—on or off the internet—you noted it. If it was online, you dropped a link to it.

Then people responded to comments about things you had written about people’s critiques of others’ writings, and you went from a singular voice, crying in the wilderness, as you snacked on your locusts and wild honey, to part of a collective, communal conversation: “the generation’s finest minds meeting on comment threads, battling roving bands of trolls, and holding the great conversations of the age!”

And then there became simply too much to read. We found ourselves reduced from insightful commentators and analysts to frontline aggregators, and then we gave up on aggregating anything outside our own narrow circles.

We know that chunk of the world and of the now that we see, but that is becoming a smaller slice of the Cosmic All with each passing day. How do we perform our role now? And how will be perform our role in the future, and with what tools are available? How will we do our jobs in the future?

Google as a company lives ten to twenty years in our future anyway. And Google does so because it specializes in thinking about how to drink from the information firehose without getting self-waterboarded. So here to introduce our conference and give us a more informed view than we have on both the future and on what tools we should already be using in the present, we have Google’s Chief Economist Hal Varian—with discussion by the University of Toronto’s Josh Gans, one of the proprietors of http://digitopoly.org.

.#NRI Summit on Twitter:

Phil Goldstein ‏@pgold1230: #NRISummit @JoeNBC How does it feel to be the most reasonable person in the room? Lonely, I bet.

Virginia Dare ‏@vdare: Diana Furchtgott-Roth chimes in that more immigration will create more "growth." @Heritage study down the memory hole. #NRISummit #tcot

Greg Sargent ‏@ThePlumLineGS: Worked well for GOP in last election MT @daveweigel Scott Walker telling #NRIsummit liberals define success as how many people are on UI

Alec MacGillis ‏@AlecMacGillis: Barone: contraception controversy helped win Obama "the Lena Dunham generation, about which the less said the better." #NRISummit #outreach

Justin Green ‏@JGreenDC: I adore Michael Barone, but after this I'm not certain he's still in touch with America on demographics: http://washingtonexaminer.com/barone-going-out-on-a-limb-romney-wins-handily/article/2512470 #NRIsummit

James Wolcott ‏@JamesWolcott: Know whose name is conspicuous in its absence at #NRISummit? Sarah Palin's. Twasn't that long ago she was the Reagan warrior princess savior

James Wolcott ‏@JamesWolcott: Ted Cruz: another simplistic blowhard; his telling House R's to "stop reading NY Times" seems out of date--Agnew-esque. #NRISummit

Alec MacGillis ‏@AlecMacGillis: Right after Scott Walker tells R's to stop talking so much about "fiscal cliffs" and "debt ceilings," Ted Cruz dwells on them. #NRISummit

daveweigel ‏@daveweigel: First audience applause in a while at #NRISummit comes when @JoeNBC asks "why no Republican said 'break up the banks'"?

Alec MacGillis ‏@AlecMacGillis: On a panel with six guys and no gals. Good times. RT @JGreenDC: Here we go: @jpodhoretz talking Sandra Fluke #NRIsummit

Eric Boehlert ‏@EricBoehlert: perfect; RT @daveweigel: Fun @ByronYork's story: Republicans grumble Jindal used a teleprompter in Charlotte. (Ryan used one at #NRIsummit)

Ryan Riebe ‏@ryanriebe: We have "freedom to do things in the world of bits, but not enough freedom to do things in the world of stuff." - Peter Thiel #NRISummit

Justin Green ‏@JGreenDC Bizarre joke from Peter Thiel: "They promised us flying cars in the 60s, but all we've got are 140 characters on Twitter" #NRISummit

daveweigel ‏@daveweigel; Cleta Mitchell denouncing "the left" for passing early voting laws.

daveweigel ‏@daveweigel: Cruz says Kerry and Hagel are "less than ardent fans of the US military. Two of the people in that sentence are veterans. Guess which!

Alec MacGillis ‏@AlecMacGillis: Ted Cruz says social mobility is higher here than in Europe. Even Rick Santorum acknowledges that this is no longer true. #NRISummit Retweeted by daveweigel

daveweigel ‏@daveweigel: Cruz: "If you watched Fox News, you thought Romney was going to win with 70%." Earlier he told us not to read NYT. cc @fivethirtyeight

daveweigel ‏@daveweigel: Cognitive dissonance at #NRIsummit: Lots of pro-life writers, speakers, activists, but none of the R electeds are mentioning social issues

daveweigel ‏@daveweigel: Cruz says GOP should be for Social Security privatization again. Bigger actual fiscal idea than anything Jindal et al have said

Ken Thomas ‏@AP_Ken_Thomas: At #NRISummit, @TedCruz says US House members should "stop reading the New York Times." Retweeted by daveweigel

daveweigel ‏@daveweigel: Takes all of 40 seconds for Cruz to make an Obama TelePrompTer joke

daveweigel ‏@daveweigel: #realkeeping from Ross Douthat: "If you can't find health insurance, Mitt Romney had nothing to say to you."

daveweigel ‏@daveweigel: #waronwomen RT @timothypmurphy: First eight people in line to ask questions of all-dude panel are also dudes.

daveweigel ‏@daveweigel: Fun @ByronYork's story: Republicans grumble that Jindal used a teleprompter in Charlotte. (Ryan used one at #NRIsummit) http://bit.ly/WsTLk6

That is all...

Randall Munroe:

Gary Marcus and Ernest Davis:

Bayesian Statistics and what Nate Silver Gets Wrong: The Bayesian approach is much less helpful when there is no consensus about what the prior probabilities should be…. In actual practice, the method of evaluation most scientists use most of the time is a variant of a technique proposed by the statistician Ronald Fisher in the early 1900s. Roughly speaking, in this approach, a hypothesis is considered validated by data only if the data pass a test that would be failed ninety-five or ninety-nine per cent of the time if the data were generated randomly. The advantage of Fisher’s approach (which is by no means perfect) is that to some degree it sidesteps the problem of estimating priors where no sufficient advance information exists. In the vast majority of scientific papers, Fisher’s statistics (and more sophisticated statistics in that tradition) are used.

Why oh why can't we have a better press corps?

Those of us economists who grumble about Bayesian statistics don't want us to move backward to Frequentism but forward to (prior probabilities) x (value of being right) -- the decision-theory counterparts of the so-called risk-neutral valuation method in finance...

Those of us economists who do use frequentist statistics know something very important that Marcus and Davis show no sign at all of knowing: that if you fail to reject the null hypothesis at 0.05, you do not conclude (even provisionally) that the null hypothesis is true--instead, you go gather more data and test again until you can either reject the null against the alternative or reject (the interesting) alternative(s) against the null.

That's science!!

Swartz didn't face prison until feds took over case, report says | Politics and Law - CNET News

Bonus Quote of the Day:

We've got to stop being the stupid party. It's time for a new Republican Party that talks like adults. We had a number of Republicans damage the brand this year with offensive and bizarre comments. I'm here to say we've had enough of that.

Louisiana Gov. Bobby Jindal (R-LA)

Soviet soldiers meet as they chop the Nazi pocket in Stalingrad into pieces:

• Lawrence Mishel and Nicholas Finio: Earnings of the top 1.0 percent rebound strongly in the recovery

• Alan Blinder on the Lessons of the Financial Crisis: "Until very recently, one major factor behind the sluggish recovery was the failure of home building to rebound. And one major reason for that was the seemingly unending waves of foreclosures…. If the government had made more lending a condition of receiving aid, that would not have changed a D performance into an A. But it might have gotten us a C+ or a B-…. The “error” of holding interest rates too low for too long was only obvious after the fact, not before. In fact, the Fed had good reasons to hold interest rates very low in the early 2000s: The recovery was pathetic, and we faced a real risk of deflation. And those who place primary blame for the house-price bubble on the Federal Reserve are exaggerating so much that it smacks of a put-on. When home buyers believe that house prices will keep on rising at 10 to 15 percent a year, would, say, a half-percentage-point increase in the mortgage interest rate stop speculation?"

• Mark Thoma: Social Insurance: "Socialism is a low mean, low variance economic system…. Worker income, though low, is not subject to substantial variation over time. Other economic risks, such as access to housing and risks related to healthcare are also very low…. Under capitalism the average level of income is much higher, but economic risk is higher as well…. A worker who has shown up to work every day and worked hard to support a family can be suddenly unemployed for reasons unrelated to anything connected to his or her own behavior…. In an agrarian economy, economic security is provided by extended family relationships coupled with the largely self-sufficient nature of farms…. For a worker dependent solely upon wage income, the consequences of a recession are much more severe…. 1920 marks a benchmark year where, for the first time, more than half of the population lived in cities. When the Great Depression hit around a decade later, the social changes the U.S. was experiencing and the need for new ideas regarding the government’s responsibility for the economic security of its citizens became clear. The Great Depression made it evident that in a capitalist system, where the whimsies of the marketplace can wreak havoc on people’s lives, the government has an obligation to provide economic security. It was also evident that the private sector did not provide the needed level of insurance and that government intervention was required to overcome this problem (due to both moral hazard and asymmetric information problems in the private insurance market)."

• Jonathan Chait: Paul Ryan Breaks Down Under Wonkterrogation: "Ryan has pitched himself… as a thoughtful numbers guy. Literally every piece of evidence in Ryan’s career – from his formative infatuation with Ayn Rand to his indoctrination in the works of supply-siders to his mentorships under Jack Kemp and Sam Brownback to his entire voting record in public life say that Ryan is a hard core supply-sider whose overarching goal is to reduce tax rates on the rich…. Nevertheless, Ryan has managed to persuade legions of moderates and moderate conservatives – see James Stewart, Ruth Marcus, and Ross Douthat, to take a few examples -- that he is secretly willing to raise tax revenue…. Ryan usually manages to elide the contradiction between the irreconcilable hopes placed in him by evading questioning, using weasel words, or just filibustering long enough to exhaust the topic. That’s what makes his talk Wednesday with Ezra Klein… so interesting…. Klein wouldn’t let him until Ryan had made it perfectly clear he would not accept higher revenue at all, under any conditions…. Ryan simply hurls up nonsensical rationales one after another, and finally offers his actual reason when he has run out of gibberish…. [N]otice how fast Ryan has flipped his logic. First he asserts that there can’t be more revenue because we already increased some revenue. When reminded that we cut spending even more, he says it’s 'last session', and irrelevant. I did not attend this meeting, so I don’t know how many seconds passed between Ryan insisting that a budget agreement in the last Congress inherently rules out a similar action and Ryan insisting that agreements in the last Congress are totally irrelevant to what happens going forward. It couldn’t have been many."

• Doug Galt: Saw you in a mag kissing a man: "Nate Silver’s sexual orientation… when I found out, well, it explained a lot. Not about him but about how why there was so much otherwise-mystifying hostility aimed at him (from people like Charles Lane, Bobo, Scarborough, Michael Gerson, etc.). I had the same feeling when I learned that Susan Rice was black and earlier, when I learned that Desiree Rogers was black…. [M]ore and more I find that when someone is inexplicably hated by some establishment in-group, I later learn that there’s some racial/orientation/whatever reason (that isn’t evident from reading their name in print) for it. It’s been eye-opening."

Think Progress:

Chief Justice Roberts: Why Isn't Obama Making Recess Appointments To The NLRB?: NEAL KATYAL, DEPUTY SOLICITOR GENERAL: They were named in July of last year. They were voted out of committee in October. One of them had a hold and had to be renominated. That renomination took place. There was a failed quorum — a failed cloture vote in February. And so all three nominations are pending. And I think that underscores the general contentious nature of the appointment process with respect to this set of issues.

CHIEF JUSTICE ROBERTS: And the recess appointment power doesn’t work why?

Paul Blumenthal and Ryan Grim: CRFB Corporate Ties: Budget Watchdog Funded By Big Tobacco In 1990s Health Care Fight

Why oh why can't we have a better press corps?

Given this: Twitter / DylanByers: What Nate Silver Gets Wrong...

It's time to repost Byers's entire initial catastrophe--the one in which he could not find anybody who actually knew anything about forecasting elections to quote, but only Joe Scarborough and David Brooks:

Dylan Byers:

Nate Silver: One-term celebrity?: The New York Times's resident political predictor says President Barack Obama currently has a 74.6 percent chance of winning reelection. It's a prediction that liberals, whose heart rates continue to fluctuate with the release of every new poll, want to take solace in but somehow can't. Sure, this is the guy who correctly predicted the outcome of the 2008 election in 49 of 50 states, but this year's polls suggest a nailbiter.

"Romney, clearly, could still win," Silver told POLITICO today.

Prediction is the name of Silver's game, the basis for his celebrity. So should Mitt Romney win on Nov. 6, it's difficult to see how people can continue to put faith in the predictions of someone who has never given that candidate anything higher than a 41 percent chance of winning (way back on June 2) and — one week from the election — gives him a one-in-four chance, even as the polls have him almost neck-and-neck with the incumbent.

I would say:

1. We should start worrying about health-care costs now--i.e., actually staff up the IPAB, encourage private insurers to start cutting specialists' reimbursement rates, and aggressively assault scope-of-practice restrictions.

2. Right now we should worry that our current deficit this year and next year and even the year after is too small.

But, otherwise, Alan Blinder is 100% correct:

How to Worry About the Deficit: (1) Don't; (2) Wait a Few Years; (3) Then Worry About Healthcare Costs.

The Cult of Google's Self-Driving Car assimilates Paul Krugman and Felix Salmon.

How did your Davos party go, Felix?

Ezra Klein calls Paul Ryan a bullshit artist: "Ryan’s wrong on that…. [T]he evidence doesn’t support Ryan’s contention…. Ryan… didn’t actually provide a study or historical experience…. [If] Ryan’s argument… [were true] it’s hard to understand why Republicans are willing to risk so much to secure [spending cuts]…"

What happened when I asked Paul Ryan why he hates taxes:

Nobody has any business supporting this branch of Republicans. Nobody at all.

Jonathan Chait:

Paul Ryan Breaks Down Under Wonkterrogation: Ezra Klein then asks what evidence [Paul Ryan] has that taking “another $600 billion or $700 billion out of tax expenditures” would harm the economy. Tax expenditures means eliminating tax deductions for specific things, rather than raising rates. Here’s Ryan’s reply:

I think rates matter. I think the statutory rate matters at the end of the day.

Note that this is not the premise of the question at all. He was asked about reducing tax deductions, leaving rates in place, and stated he wouldn’t do it because he likes low rates.

Order of the Day, January 25, 1943:

J. V. Stalin: Order of the Day: January 25, 1943

To the Troops on the South-West, South, Don, North Caucasus, Voronezh, Kalinin, Volkhov and Leningrad Fronts

As a result of two months of offensive engagements, the Red Army has broken through the defences of the German-fascist troops on a wide front, routed 102 enemy divisions, captured over 200,000 prisoners, 13,000 guns and a large quantity of their war material, and advanced about 400 kilometres (250 miles). Our troops have won an important victory. The offensive of our troops continues.

The highly intelligent and thoughtful Ken Rogoff writes another column where I simply cannot grasp the force of his argument:

World is right to worry about US debt: The idea that one should just ignore all these problems and apply crude Keynesian stimulus is a dangerous one. It matters a great deal how the government taxes and spends, not just how much. The US debt level is a constraint. A growing number of empirical studies, including my own joint work with Carmen Reinhart, suggest that the US has already reached a debt level that has been associated with slower growth in advanced countries. The fact interest rates are low today does not necessarily mean the US is an exception to this rule – take one look at stagnant Japan’s rates. The dollar’s reserve currency status buys America more room, but how much and for how long? A high debt burden is a problem precisely because it reduces a country’s capacity to deal with future shocks…

Three points: