Noted for January 8, 2013
John Emerson: Les Érudits Maudits « Haquelebac: "Historically culture-producers were monks, gentlemen of leisure, military aristocrats, lackeys and retainers of the aristocracy and the church, and déclassé riffraff. Only in the nineteenth century did scholarship come to be defined as a job at a university, and even during that century most professors were ill-paid and dependent on family money. During the twentieth century professors gradually came to earn a middle-class income for the work they did and to take their place in the middle class…. What match is there between the universities’ goals and their funding? Very little. Many years ago a friend of mine, after spending some time researching “the purpose of education”, decided that education is an institution, like marriage, and that one way you know that something is an institution is that you don’t have to give reasons for it. Getting a college degree, like getting married (cf. “Repo Man”), is what people do."
Felix Salmon: Why we won’t mint a platinum coin: "Let’s be clear about this: no one’s going to mint a trillion-dollar platinum coin. Nor is anybody going to mint a million million-dollar platinum coins. But it would probably be stupid for anybody in the government to say that they’re not going to do it…. [T]he real problem with the main argument for minting a coin, which is that “yes, it’s a stupid gimmick, but so is the debt ceiling, and the debt ceiling is a lot more harmful than a coin would be”. That’s true, but it’s important to recognize just how damaging the platinum-coin move would be, all the same. It would effectively mark the demise of the three-branch system of government, by allowing the executive branch to simply steamroller the rights and privileges of the legislative branch." That seems to me to be simply wrong: the legislature has commanded the executive not to borrow; the legislature has commanded the executive how much to spend; the legislature has commanded the executive how much to tax. Those commands are inconsistent. Only by minting the coin can the executive avoid breaking the law.
Josh Barro: Why Platinum Coin Opponents Are All Wrong
Wolfgang Münchau: US joins misguided pursuit of austerity
Paul Seabright reviews ‘Seeing Like a State’ by James C. Scott · LRB 27 May 1999
Laurence M. Ball, Daniel Leigh, Prakash Loungani : Okun's Law: Fit at Fifty? "This paper asks how well Okun’s Law fits short-run unemployment movements in the United States since 1948 and in twenty advanced economies since 1980. We find that Okun’s Law is a strong and stable relationship in most countries, one that did not change substantially during the Great Recession. Accounts of breakdowns in the Law, such as the emergence of “jobless recoveries,” are flawed. We also find that the coefficient in the relationship—the effect of a one percent change in output on the unemployment rate—varies substantially across countries. This variation is partly explained by idiosyncratic features of national labor markets, but it is not related to differences in employment protection legislation."
Cosma Shalizi: Liberty! What Fallacies Are Committed in Thy Name!
Nate Cohn: A GOP Civil War Looks Possible: "The Republicans could nominate a unifying candidate in the 2016 primaries--you never know--but a contested primary would probably break along geographic lines. In retrospect, the 2012 primary might have been a sneak preview. Even though Romney possessed vastly superior resources and acceded to every substantive demand of the right, the GOP primary electorate divided neatly between north and south. Southerners concerned with nominating an authentic conservative never embraced Romney: Despite the help of a divided field, Romney only broke 31 percent of the vote in one southern state, Florida. Geographic polarization ensured that the 2012 Republican presidential primary lasted until April. The fiscal cliff vote shows that such polarization is becoming the rule rather than the exception."
Herbert A. Simon: The Architecture of Complexity* M.C.K.: Government debt: How much is too much?: "THE popularity of austerity policies has waned over the past several years thanks to evidence that it may have been counterproductive. But many are still worried by the fact that, relative to national income, government debt is now larger in many countries than at any point since WWII…. The sovereign bond markets in America, Japan, Britain, and the euro area’s “core” do not seem to think [debt is too high]. These governments can borrow cheaply for decades at a time. While it is certainly possible that the markets are wrong, policymakers should probably pay more attention to investors and less to the fear-mongers, especially since economists do not know how much government debt is too much. In fact, there is good reason to think that many countries with their own currencies could become far more indebted without risking trouble. One reason is that many private investors do not own enough sovereign bonds…. Why would private investors want to buy more sovereign debt? A previous post on the shortage of safe financial assets mentioned how pension plans in many countries need to buy more government bonds to avoid mismatches between their assets and liabilities…. How much public debt is too much? There is no straightforward answer. However, it seems that many countries may be able to afford to have significantly higher ratios of government debt to national income. Of course, the way in which we calculate these debt/income ratios may also be misleading, which is why a subsequent post will examine some ways to modernise public accounting practices."
Matthew Yglesias: Fiscal stimulus debate: Endless frustration: "The final session of the American Economics Association conference I attended was a very popular throwdown between Paul Krugman and UCSD's Valerie Ramey on the subject of fiscal stimulus. It was, I thought, a frustrating affair…. Krugman advanced basically two key arguments on behalf of stimulus…. The recession was associated with a huge move toward private sector de-leveraging, indicating a clear need for public sector leveraging to avoid the creation of a gigantic output gap…. The second is the empirical evidence from Europe… a specific argument about a specific kind of situation in which there's a large output gap and no monetary policy offset. Ramey in response has time-series data from throughout the twentieth century which points to low multipliers for government spending—multipliers below one. But this is overwhelmingly drawn from periods when Krugman would concede that fiscal policy multipliers ought to be low…. If you listen carefully to Krugman, he's saying that fiscal stimulus will almost never be a good idea. And if you listen carefully to Ramey, she's saying that when economic slack exists fiscal policy can reduce it. In off-topic remarks, Krugman said he thinks there's a lot of slack in the economy right now and Ramey said she thinks there's very little slack in the economy right now. Ramey also ended her presentation with a strong call for free market health care reforms, while we know from Krugman's columns that he's a strong advocate of the Affordable Care Act and other efforts to bring the United States into closer alignment with Canadian health care practice. So there's a lot of disagreement here about economic policy but relatively little actual disagreement about macroeconomics."
