Noted for January 5, 2013
Zachary Goldfarb: How the fiscal cliff deal will affect the economy and deficits, in six charts
Philip Stephens: The new prisoners of ideology: "Ideology used to belong to parties of the left. The right concerned itself with the exercise of power. On either side of the Atlantic politics has been turned on its head. The conservatives are now the utopian zealots forsaking centrist broad appeal for ideological absolutism. Liberals and social democrats are the new realists."
Jordi Gali: Notes for a New Guide to Keynes (I): Wages, Aggregate Demand, and Employment: "I revisit the General Theory's discussion of the role of wages in employment determination through the lens of the New Keynesian model. The analysis points to the key role played by the monetary policy rule in shaping the link between wages and employment, and in determining the welfare impact of enhanced wage flexibility. I show that the latter is not always welfare improving."
LizardBreath: Unfogged: "The platinum coin option is ridiculous and isn't going to happen, much as I wish it would. But if it were attempted, I don't think a court would stop it, and I'm sure that a court that did stop it would be acting unusually and for politically motivated reasons. Courts are expected to do what legislatures say, not what they mean: 'legislative intent' can only be considered where there's an ambiguity in the law. Even if what the legislature said is obviously not what they meant, courts are still expected to follow the letter of the statute. And the platinum coin statute isn't ambiguous."
Aaron Carroll: Better, if not cheaper: "Ezekiel Emanuel has a great piece over at the NYT about end-of-life care. He starts off by correcting a few myths…. [T]hese numbers obviously aren’t driving the massive over-spending we do on health care. Plus, what can we do about it? It’s easy to identify the year before people die when we look back at data. It’s impossible to do so looking forward. We spend money on people when they get sick. Sometimes we save them, and sometimes we don’t. We can’t tell ahead of time which group is which in order to save spending by not bothering."
Frances Coppola: Slaying the inflation monster
David Laidler: Two Crises, Two Ideas and One Question
Robert J. Gordon:Is Modern Macro or 1978‐era Macro More Relevant to the Understanding of the Current Economic Crisis?
Christina Romer: Macroeconomic Policy in the 1960s: Causes and Consequences of a Mistaken Revolution
Dan Froomkin: Ten questions for Harold Koh about torture and U.S. compliance with its legal commitments
Gordon's Notes: How did the American South feel about losing the Civil War?: "The second son asked me: 'How did the American South feel about losing the Civil War?'. My first thought was that the South was deeply unhappy, but I immediately realized that wasn't true…. [T]he correct answer is that most Mississippian's were relatively pleased, if not joyful, that the South lost the war…. White southern abolitionists, aka "Scalawags", would also have had mixed feelings. I couldn't locate percentages, but based on studies of human response to external evils, I'd expect about 10% of Southern Civil War whites would be at least somewhat pleased that their society was coming to an end. If I add those numbers to black Southerners then the answer would be "mostly unhappy, but many pleased, especially in Mississippi and South Carolina."
Thoreau: Come on baby, don’t fear the MOOC: "The libraries had physics and math books that you could read on your own long before Khan Academy came along to give you lectures that you could watch on your own. There’s a reason why people enrolled in colleges… it isn’t solely because of credentials… engineering firms never said 'Hey, we’ll replace our HR department with ETS, and just administer tests on the stuff found in the science books'…. I don’t fear MOOCs. I don’t believe that they will replace what we offer for most students. Some auto-didacts will, of course, benefit tremendously, and for them I say 'Godspeed' All we were doing was slowing them down. For the rest (including some very good students!), what we offer remains special and valuable."
Robert Farley: Messaging: "The United States may have inadvertently green-lit the 1982 Falklands War by sending overly positive signals to the Argentine junta. These signals (based on U.S. appreciation for Argentine anti-communist efforts) may have led the Argentines to believe that the U.S. would support its invasion, or at least not lend significant assistance to the United Kingdom…. This incident immediately brought to mind the 1990 conversation between Iraqi President Saddam Hussein and U.S. ambassador April Glaspie. In an ambiguous and confusing conversation, Glaspie suggested that 'we have no opinion on the Arab-Arab conflicts, like your border disagreement with Kuwait,' a statement which some have argued Hussein interpreted as a green light for invasion. In both cases the leadership wanted an invasion, and in both cases it wanted to believe that the United States would stand aside. By simply making neutral comments about the state of affairs, U.S. policymakers may have inadvertently helped convince the leaders of Argentina and Iraq to pursue war."
Ezra Klein: The December jobs report proves the fiscal cliff deal a farce: "The fiscal cliff ended with more worst-of-both-worlds legislating… the final deal is contractionary… cut[s] GDP growth by 0.6 percent in 2013…. Moreover, the final fiscal cliff deal does little to reduce deficits. It doesn’t come anywhere near stabilizing debt-to-GDP over the next decade. Which is to say that the fiscal cliff deal fails all three… doesn’t solve the unemployment problem… doesn’t solve the deficit problem, or even do much to improve that. And it doesn’t take advantage of the insanely cheap money the United States has access to right now… just one more failure from a congress that specialized in disappointing us. It was better than falling off a cliff, but then, Washington shouldn’t have been playing on the edge, anyway."
Pierre-Olivier Gourinchas and Olivier Jeanne: Global safe assets
David Romer and Christina Romer: The Most Dangerous Idea in Federal Reserve History: Monetary Policy Doesn’t Matter
