Grasping Reality on TypePad, by Brad DeLong

Battle of Medenine - Wikipedia:

The Battle of Medenine, also known as Operation Capri, was a German counter-attack at Medenine, Tunisia, intended to disrupt and delay the 8th Army's attack on the Mareth Line. The German attack started on 6 March 1943, failed to make much impression and was abandoned at dusk on the same day. Over the next day or two, German forces withdrew northward….

At about 06:00 on 6 March, under cover of fog, Rommel attacked Medenine with three Panzer divisions. Montgomery had, however, been forewarned of the German attack by Enigma decrypts and had established strong defensive positions. The 8th Army had massive force superiority, including large, concealed batteries of anti-tank guns. These guns included a few of the new 17-pounder guns. The British were also able to concentrate their artillery in divisional or corps strength.

What good is an internet that does not have an Ascian lexicon anywhere to be found? Well, what good is it?

The only five I recall are:

• Behind our efforts, let there be found our efforts!

• In times past, loyalty to the cause of the populace was to be found everywhere. The will of the Group of Seventeen was the will of everyone.

• The people meeting in counsel may judge, but no one is to receive more than a hundred blows.

• How are the hands nourished? By the blood. How does the blood reach the hands? By the veins. If the veins are closed, the hands will rot away.

• Where the Group of Seventeen sit, there final justice is done.

What are the others?

• Carmen M. Reinhart, Vincent R. Reinhart, and Kenneth S. Rogoff: Debt Overhangs: Past and Present: "We identify the major public debt overhang episodes in the advanced economies since the early 1800s, characterized by public debt to GDP levels exceeding 90% for at least five years. Consistent with Reinhart and Rogoff (2010) and other more recent research, we find that public debt overhang episodes are associated with growth over one percent lower than during other periods. Perhaps the most striking new finding here is the duration of the average debt overhang episode. Among the 26 episodes we identify, 20 lasted more than a decade. Five of the six shorter episodes were immediately after World Wars I and II. Across all 26 cases, the average duration in years is about 23 years. The long duration belies the view that the correlation is caused mainly by debt buildups during business cycle recessions. The long duration also implies that cumulative shortfall in output from debt overhang is potentially massive. We find that growth effects are significant even in the many episodes where debtor countries were able to secure continual access to capital markets at relatively low real interest rates. That is, growth-reducing effects of high public debt are apparently not transmitted exclusively through high real interest rates."

• Tim Duy (April 2012): On the Difference Between Bernanke-1999 and Bernanke-2012: "Note - and I think this is important - when Bernanke's Fed took the opportunity to shift down the path of inflation by sanctifying the 2 percent target, they were comfortable with the subsequent shift in the distribution of outcomes.  And consider that shift. At a time when households were overwhelmed with excessive debt, the Fed deliberately chose to increase the real burden of the debt by changing the inflation trajectory. Why one would use a balance sheet recession to shift downward the path of prices is certainly something of a mystery.  But it does imply that the Fed wanted to induce a new distribution of outcomes, even knowing that the beneficiaries would not be households…. The Fed must also know that the by reducing the path of inflation they have knowing altered the distribution of outcomes in a way that is likely to slow the pace of recovery."

• Tyler Cowen: The more things change…: "'Malthus argued that redemption of the public debt wold be unwise given England’s economic circumstances, which were characterized by an excess of capital relative to aggregate demand and, consequently, a low rate of profit.' That is from Nancy Churchman…. Lord Lauderdale, circa 1803… 'constantly links the welfare of the country with the continuance of a high rate of yield to holders of the public debt'. How about J.B. Say?  From Wikipedia: 'Say himself advocated public works to remedy unemployment, and criticized Ricardo for neglecting the possibility of hoarding if there was a lack of investment opportunities'…. Ho hum, ho hum.  Go back and read the classics, and hang your heads in despair. As I’ve mentioned, it sometimes feels like we are living in the early 19th century."

Jeb Bush: I am really upset because Obama has not made some Americans into second-class citizens!

Benjy Sarlin on Jeb Bush (and Clinton Bolick):

Obamacare Is Bad Because Citizens Whose Parents Are Illegal Get Benefits: Here’s a surprise. Seemingly out of nowhere, Bush condemns the Affordable Care Act’s Medicaid expansion, recently accepted by Gov. Rick Scott (R-FL), for doling out “welfare” to the children of illegal immigrants.

This is why the Obama administration’s attempt to coerce states to adopt a major Medicaid expansion as part of its national health-care program had the effect of inflaming anti-immigration sentiment. Although the administration assured the states that illegal immigrants would not be eligible for Medicaid benefits, their children who are born in the United States are eligible because they are citizens…. Fortunately the US Supreme Court struck down the Medicaid expansion by a 7-2 vote as unduly coercive and therefore contrary to constitutional principles of federalism. The proposal should not be resurrected….

Bush isn’t even complaining about illegal immigrants getting Medicaid benefits, he’s complaining about American citizens who were born in the country…. [It] has nothing to do with Obamacare: the president didn’t invent Medicaid, and those kids were already free to apply, just as their citizenship lets them apply to myriad social programs.

It is true, as Bush notes, that more of these children will be eligible for Medicaid benefits in states like Florida now. That’s because more Floridians in general will be eligible for Medicaid under the Obamacare expansion….

The whole thing sounds an awful lot like something a Republican candidate for president might say in a primary debate.

Britan Leiter is a law and philosophy professor, yet he also claims to know how to "think like a lawyer". That raises a natural question: how does he know what it is to think like a typical lawyer?

His answer:

Brian Leiter:

We Get Mail: Thomas R. Grover, Esq. Edition: For criticizing Mr. Campos last week, I received the following insolent e-mail:

You’re a “Law and __” Professor, not a lawyer. How would you know how to ‘think like a lawyer’?

Thomas R. Grover, Esq.
Goodsell & Olsen, LLP

Mr. Grover is a law graduate of the University of Nebraska, one of those law schools that students should still be considering, even in the current market, and notwithstanding Mr. Grover. But it is odd that he thinks that being a lawyer and a philosopher involves a contraction, rather than an expansion, of knowledge and competence. In any case, I replied to Mr. Grover as follows:

Glen Whitman:

Agoraphilia: Marginal Terror Avoidance: I didn’t watch the State of the Union address, so Thursday’s press conference was the first time I’d actually seen Bush speaking since – wow, maybe not since 9/11. And I noticed something interesting: he’s learned to speak like a real president. No, seriously. The accent is milder now (I grew up in Texas, and even I couldn’t stand the accent as it was before), he speaks carefully and earnestly, and the lurking smirk is gone. He actually exhibited, dare I say it, gravitas.

And that’s too bad, really, because much of what he had to say doesn’t bear much scrutiny. Will Wilkinson has some choice commentary on the evasiveness of Bush’s answer to a question about the cost of making war on Iraq. The basic gist: in response to a question about costs, the president talked about benefits instead.

Sonoko Iwata to Shigezo Iwata:

There is a bowl of fresh wild flowers in our room to-day. Children and I went across the little stream to the empty field for a walk and found these yellow daisy-like flowers growing in a strip near the water. Their leaves are dainty – like cosmos leaves.

You know, I was thinking today that time marches on and if I’m to keep up, we should bury the past and always look toward what’s coming.

• Ian Buruma: Send in the Clowns: "Rage against the political establishment has become a global phenomenon. Chinese bloggers, American Tea Party activists, British Europhobes, Egyptian Islamists, Dutch populists, Greek ultra-rightists, and Thai 'red shirts' all have one thing in common: hatred of the status quo and contempt for their countries’ elites. We are living in an age of populism. The authority of conventional politicians and traditional media is slipping away fast…. In a globalized world managed by bankers and technocrats, many people feel that they have no say in public affairs; they feel abandoned. Our national politicians, increasingly powerless to cope with serious crises, are suspected, often with good reason, of simply looking after their own interests. All we can do is vote the rascals out, sometimes by voting for candidates whom we would not take seriously in more normal times."

• Mark Thoma sends us to Neil Irwin on Bernanke and Yellen versus Stein: "Jeremy Stein, a Fed governor since last May ... argued in a Feb. 7 speech that there are already signs of overheating in the markets for certain kinds of securities, including junk bonds and real estate investment trusts…. If the last 15 years have taught us anything, it is that financial bubbles can wreak huge damage to the economy, so it’s worth it to try to nip them in the bud. The two most powerful Fed officials have offered, in speeches Friday night and Monday morning, what amounts to a riposte to these arguments. 'Long-term interest rates in the major industrial countries are low for good reason', Chairman Ben Bernanke said Friday evening…. Vice-chair Janet Yellen chimed in Monday morning... "there are some signs that investors are reaching for yield, but I do not now see pervasive evidence of trends such as rapid credit growth, a marked buildup in leverage, or significant asset bubbles that would clearly threaten financial stability." So the Bernanke-Yellen response to the Stein-George argument boils down to a polite version of this: Are you crazy? Unemployment is really high! Inflation does not appear to be much of a threat! Why should we cripple the prospects of economic recovery just because investors may be paying too much for certain types of corporate bonds and end up losing money?"

• Noah Millman: What’s Natural About Natural Law?: "Why do I say I don’t 'get' natural law arguments? Because I don’t understand what’s 'natural' about them…. Human beings have to some degree immutable natures, natures we can comprehend with reason, and these natures determine, to a considerable degree, what social arrangements will 'work' and what arrangements won’t – in the sense of contributing to human flourishing…. I don’t have any objection to the foregoing…. But… how do we know what our essential natures are?… [H]ow do we know that your theory is true? What is its evidentiary basis? And I don’t know what the answer would be from the natural law side – indeed, I’ve never heard a proper answer…. [A]dvocates of a natural law approach cannot explain adequately how they know what they claim to know about our natures…. And the suspicion grows, over time, that this question isn’t opened not because it cannot be opened but because it must not be opened, because it is really the conclusions that are 'known' absolutely, and not the premises."

• Laurence Ball, Douglas W. Elmendorf, and N. Gregory Mankiw: The Deficit Gamble: "The historical behavior of interest rates and growth rates in U.S. data suggests that the government can, with a high probability, run temporary budget deficits and then roll over the resulting government debt forever. The purpose of this paper is to document this finding and to examine its implications. Using a standard overlapping-generations model of capital accumulation, we show that whenever a perpetual rollover of debt succeeds, policy can make every generation better off. This conclusion does not imply that deficits are good policy, for an attempt to roll over debt forever might fail. But the adverse effects of deficits, rather than being inevitable, occur with only a small probability."

Eric:

Louis Menand and New Deal Denialism in The New Yorker: In the current New Yorker, Louis Menand says there is a puzzle about how Franklin Roosevelt got reëlected:

When Roosevelt ran for reëlection in 1936, the unemployment rate was 16.9 per cent, almost twice what it had been in 1930. Yet he won five hundred and twenty-three electoral votes, and his opponent Alf Landon, eight. When Roosevelt ran for the unprecedented third term, unemployment was 14.6 per cent. He carried thirty-eight states; Wendell Willkie carried ten.

When Menand says unemployment was 16.9 and 14.6 percent when FDR ran for reëlection, he is counting federal relief workers as unemployed. According to the economist who constructed the series Menand is using, people working for the WPA were morally the same as concentration camp workers in Germany in the 1930s. If Menand realized that, the puzzle would go away: FDR and his New Deal were popular because they gave people jobs and sparked a rapid recovery.

Nobody has any business working for these Republicans. Nobody.

Jonathan Chait:

Sessions Not Happy Being Called Wonk McCarthyite: Last week, I wrote an item that made what can only be called a highly unflattering assessment of Alabama Senator Jeff Sessions. Sessions touted a study from the General Accounting Office that, he claimed, proved that Obamacare’s fiscal assumptions were lies and that the law would increase the deficit…. [T]he report showed no such thing…. I called Sessions a “Wonk McCarthyite,” and illustrated his fallacious reasoning with a tongue-in-cheek analogy to my asking the GAO to assume that Sessions were to acquire a nuclear weapon and detonate it in Manhattan, and then touting this report as finding that Sessions was going to murder 4 million people….

I have further explored the matter at length and determined that, in my haste, I treated Senator Sessions’s claims far too generously. Senator Sessions’s combination of ignorance and gross lack of intellectual standards turns out to be even more horrifying than I managed to initially communicate. Calling Sessions a "wonk McCarthyite" implies a level of policy understanding on his part that is wholly unsupported by the facts.

I would first like to concede one point of neglect. The Republican Senate staff objects that my item failed to include a hyperlink to a post by Aaron Carroll…. I apologize for the oversight. Sessions’s office further contends that Carroll, whom it correctly if incompletely characterizes as “a pediatrician,” is not a reliable source on matters of health-care finance. I replied that I consider Carroll, who is also director of the Center for Health Policy and Professionalism Research at Indiana University, and a co-author of the respected health economics blog the Incidental Economist, a reliable source on these matters. We agreed to disagree on this point.

In my haste I… failed to adequately capture the staggering dishonesty in Sessions’s public claims…. The GAO study does not find that the tax increases in Obamacare fail to cover its spending. The study, in fact, does not measure the tax increases at all…. The report assumed… that all the higher tax in the law disappeared after 2020. You may be wondering why the report did such an incredibly odd thing…. The Government Accounting Office is a kind of in-house think-tank for Congress… members of Congress can order up reports in order to advance their chosen agenda…. Congress can set the parameters of that analysis….

GAO agreed, in response [to Sessions], to publish a study that would measure the costs of Obamacare but not its net effect on the deficit…. Sessions falsely claimed the study concluded something completely at odds with its actual findings.

In sum, I apologize to my readers, the citizens of Alabama, budget fans, and other concerned citizens for failing in my original post to adequately convey the full paucity of the intellectual standards of the junior senator from Alabama.

I hope I have rectified my failure here.

In my email inbox:

Will Rogers (from his Daily Telegrams November 1929) on "market confidence":

America already holds the record for freak movements. Now we have a new one. It's called "Restoring Confidence." Rich men who never had a mission in life outside of watching a stock ticker are working day and night "restoring confidence." Writers are working night shifts, speakers' tables are littered up, ministers are preaching statistics, all on "restoring confidence."

Now I am not unpatriotic, and I want to do my bit, so I hereby offer my services to my President, my country and my friends to do anything, outside of serving on a commission, that I can in this great movement. But you will have to give me some idea of where "confidence" is. And just who you want it restored to.

I have been trying my best to help (the President) and Wall Street "Restore Confidence." Confidence, is one of the hardest things in the World to get restored once it gets out of bounds. I have helped restore a lot of things in my time, such as cattle back to the home range. Helped to revive interest in National Political Conventions. Even assisted the Democrats in every forlorn pilgrimage, and a host of other worthy charities. But I tell you this "Restoring Confidence" is the toughest drive I ever assisted in. When I took up the work two or three weeks ago, confidence was at a mighty low ebb. Wall Street had gone into one tail spin after another…

I am telling (folks) that the Country as a whole is "Sound," and that all those who's heads are solid are bound to get back into the market again. I tell 'em that this Country is bigger than Wall Street, and if they don't believe it, I show 'em the map…

In my email inbox:

The latest from Rehn… Hat-tip to Ambrose of the Torygraf: Ambrose:

While the tone is changing, there is no sign yet of a retreat from fiscal belt-tightening:

Given that average debt exceeds 90pc of GDP in the EU, I don’t think there’s any room for manoeuvre to leave the path of budgetary consolidation

said EU economics chief Olli Rehn.

“We won’t solve our growth problems by piling new debt on top of our old debt,” he said. Defying his critics, Mr Rehn said John Maynard Keynes himself would not be a Keynesian today’s circumstances.

Economists believe that the market will tell you when things are expensive. It is expensive to issue government debt when nobody wants to hold it--when the expected real interest rate on government debt is high. Right now the expected deal interest rate on the government debt of credit worthy sovereigns like Japan, Britain, Germany, and the U.S. is extraordinarily low.

If you want to argue that the current interest rates on 10-year and 30-year bonds are fake--that they do not reflect marginal social values--then make that argument.

DO NOT PRETEND THAT MARKET SIGNALS ARE FLASHING "RED" ON ADDITIONAL GOVERNMENT DEBT ISSUE OVER AND ABOVE WHAT IS FORECAST IN THE BASELINE! THEY ARE NOT!!!!

Brad DeLong : American Conservatism’s Crisis of Ideas: Project Syndicate Monarchy, Patriarchy, Orthodoxy Weblogging:

Will said... Oh dear. I fear Brad has turned on Nassau Senior! While the pro-relief conservatives mentioned are both Frenchmen, and thus obviously suspect, the transition in England's from the traditional policy of Tory paternalism to Whig/Radical haughty stinge in the conservative English mind, is embodied in one man, Thomas Malthus. It was Malthus's essay on population that ultimately served to undermine the Poor Laws, and to lead to the perverse spectacle of "charitable" institutions denouncing aid to the poor. However, this same Malthus wrote perhaps the last texts in the Tory paternalist tradition, with his defense of the Corn Laws as stabilizing Effective Demand and thus employment.

It all seems to boil down to me to a very simple question: do those afflicted with misfortune and want need help to stand up, or do they need punishment to change their ways? It's an empirical question, too, though it is only ever treated as a moral one.

Luis Enrique said... wow, what a quote from Nassau! I googled it, and wiki tells me he might have meant something rather different: http://en.wikipedia.org/wiki/Nassau_William_Senior

The Battle of the Bismarck Sea:

The U.S. Fifth Air Force and the Royal Australian Air Force (RAAF) attacked a Japanese convoy that was carrying troops to Lae, New Guinea. Most of the task force was destroyed, and Japanese troop losses were heavy…. On 28 February 1943, the convoy – comprising eight destroyers and eight troop transports with an escort of approximately 100 fighters – set out from Simpson Harbour in Rabaul…. All eight transports and four of the escorting destroyers were sunk. Out of 6,900 troops who were badly needed in New Guinea, only about 1,200 made it to Lae. Another 2,700 were rescued by destroyers and submarines and returned to Rabaul. The Japanese made no further attempts to reinforce Lae by ship….

• Paging Charlie "Curious Yellow" Stross: Silent email filtering makes iCloud an unreliable option: "Last November, our friends at Infoworld reported that Apple’s iCloud email system silently blocks emails containing certain phrases…. Granted, the phrases in question may not be the kind that you’re likely to exchange with your correspondents…. [W]e’ve managed to confirm that emails containing the phrase 'barely legal teen' are simply never delivered to iCloud inboxes. In fact, we found that even emails with the offending phrase contained in an attached PDF—even a zipped PDF—were blocked. Even if you, like us, would almost never receive a legitimate email with such a phrase…"

• Joan Walsh: Trashing Sheryl Sandberg: "The Facebook exec’s [pseudo-]feminist critics seem to say that if you can’t solve everyone’s problems, don’t solve anyone’s"

• Paul Krugman: Austerity, Italian-Style: "Consider how things were supposed to be working at this point. When Europe began its infatuation with austerity, top officials dismissed concerns that slashing spending and raising taxes in depressed economies might deepen their depressions. On the contrary, they insisted, such policies would actually boost economies by inspiring confidence. But the confidence fairy was a no-show… austerity hasn’t even achieved the minimal goal of reducing debt burdens… countries pursuing harsh austerity have seen the ratio of debt to G.D.P. rise, because the shrinkage in their economies has outpaced any reduction in the rate of borrowing… the European economy as a whole — which never had much of a recovery from the slump of 2008-9 — is back in recession…. [O]ne might have expected some reconsideration and soul-searching…. Instead, however, top officials have become even more insistent that austerity is the one true path. Thus in January 2011 Olli Rehn… praised the austerity programs of Greece, Spain and Portugal and predicted that the Greek program in particular would yield 'lasting returns'… in December 2012'Mr. Rehn published an op-ed article with the headline “Europe must stay the austerity course.' Oh, and Mr. Rehn’s response to studies showing that the adverse effects of austerity are much bigger than expected was to send a letter to finance minsters and the I.M.F. declaring that such studies were harmful, because they were threatening to erode confidence."

Ezra Klein:

This is why Obama can’t make a deal with Republicans: File this under “Jonathan Chait is right.”… [A] background briefing I attended with a respected Republican legislator who thought it would be a gamechanger for President Obama to say he’d be open to chained CPI — a policy that cuts Social Security benefits — as part of a budget deal. The only problem? Obama has said he’s open to chained CPI as part of a budget deal. And this isn’t one of those times where the admission was in private, and we’re going off of news reports. It’s right there on his Web site. It’s literally in bold type. But key GOP legislators have no idea Obama’s made that concession. The question my column left open was whether improving the lines of communication would actually change anything. Chait’s view is no, it wouldn’t. He begins by quoting Upton Sinclair’s famous line: “It is impossible to make a man understand something if his livelihood depends on not understanding it.” Chait continues:

If Obama could get hold of Klein’s mystery legislator and inform him of his budget offer, it almost certainly wouldn’t make a difference. He would come up with something – the cuts aren’t real, or the taxes are awful, or they can’t trust Obama to carry them out, or something.

What happened next on Twitter proved Chait’s point in every particular. Mike Murphy… has been a top strategist for Mitt Romney, John McCain, Jeb Bush, Arnold Schwarzenegger and many other Republicans. He’s also, as his client list would suggest, from the party’s more pragmatic, even moderate, wing…. On Feb. 13, Murphy wrote in Time that “six magic words can unlock the door to the votes inside the Republican fortress: Some beneficiaries pay more and chained CPI, budgetary code for slightly lowering benefit increases over time.” The only problem? Obama has said all these words, as John Harwood of the New York Times quickly pointed….

Murphy responded by suggesting that sure, Obama has called for more means-testing in Medicare, but he’s not put chained CPI — CCPI, if you’re hamstrung by Twitter’s 140-character limit — on the board…. [But he] endorsed it as part of a cliff deal, and he’s kept endorsing it, as his sequestration plan clearly says, since the cliff deal fell apart. This was quickly pointed out to Murphy on Twitter, at which point, he promptly proved Chait’s thesis correct….

So let’s back up. Murphy’s initial view was that to unlock GOP votes for a budget deal, Obama just needed to endorse chained CPI and more means-testing in Medicare. Then it was pointed out that Obama has endorsed means-testing in Medicare, so Murphy wondered why he didn’t endorse chained CPI as part of a deal. Then it was pointed out that Obama did endorse chained CPI, at which point Murphy called chained CPI “a gimmick,” and said Obama had to endorse raising the Medicare age, drop his demands for more revenue as part of a deal and earn back the GOP’s trust.

Recall what Chait said would happen if the Republican legislator in my column was forced to react to the fact that Obama has endorsed chained CPI: “He would come up with something – the cuts aren’t real, or the taxes are awful, or they can’t trust Obama to carry them out, or something.” Check, check, and check. Which is all to say that there’s no deal here….

The bottom line on American budgetary politics right now is that… there’s no deal to be had…. It’s what Hill Republicans have told me, it’s what the White House has told me, it what Hill Democrats have told me. The various camps disagree on whether Republicans are right to refuse a deal that includes further tax increases, but they all agree that that’s the key fact….

But it’s unpopular for Republicans to simply say they won’t agree to any compromise and there’s no deal to be had — particularly since taxing the wealthy is more popular than cutting entitlements, and so their position is less popular than Obama’s. That’s made it important for Republicans to prove that it’s the president who is somehow holding up a deal. This had led to a lot of Republicans fanning out to explain what the president should be offering if he was serious about making a deal. Then, when it turns out that the president did offer those items, there’s more furious hand-waving….

The interesting question is whether the possibility of a government shutdown, a debt-ceiling breach or simply the pressure of the sequester’s cuts will, in the coming months, break one side or the other. But as long as the GOP’s position is they won’t compromise, there’s not going to be a compromise.

Twitter / emmetmatheson:

@HeerJeet Ludwig von Mises called detective fiction part of "the artistic superstructure of the epoch of labor unionism and socialization"

The Bethnal Green Disaster 3rd March 1943:

My name is Alfred Morris, I lived at 106 Old Ford Road, Bethnal Green E2. I am now 75 years old. At the time of the Tube Disaster, I was 13 years of age. My parents had been taking me to the Bethnal Green Tube since 1941. It was the only shelter in Bethnal Green where you could get a night’s sleep.

At this period, the shelter was not organised. We, as children, had to line up outside the entrance from about 4:30pm until it opened at approximately 6:30pm. Then we would go down the escalators which were not working to the eastbound platform and put a blanket on the place were we were going to sleep that night. This was before the Tube Disaster. At this time, the tube took a direct hit. The bomb fell in the middle of the road in Green Street (i.e. Roman Road now) at the junction of Victoria Park Square. It was heard in the tube. I was standing on the eastbound platform with a jug of tea in my hand. The lights, which were hanging down all swung and people started screaming but Mr Hastings and another man tried to calm every one down.

• Chris Hanes: Monetary Policy Alternatives at the Zero Bound: Lessons from the 1930s: "In recent years economists have debated two unconventional policy options for situations when overnight rates are at the zero bound: boosting expected inflation through announced changes in policy objectives such as adoption of price-level or nominal GDP targets; and large-scale asset purchases to lower long-term rates by pushing down term or risk premiums - 'portfolio-balance' effects. American policies in the 1930s, when American overnight rates were at the zero bound, created experiments that tested the effectiveness of the expected-inflation option, and the existence of portfolio-balance effects. In data from the 1930s, I find strong evidence of portfolio- balance effects but no clear evidence of the expected-inflation channel."

• James Fallows: As We Near the 10th Anniversary of the Iraq War: "As I think about it this war and others the U.S. has contemplated or entered during my conscious life, I realize how strong is the recurrent pattern of threat inflation. Exactly once in the post-WW II era has the real threat been more ominous than officially portrayed. That was during the Cuban Missile Crisis in 1962, when the world really came within moments of nuclear destruction. Otherwise: the "missile gap." The Gulf of Tonkin. The overall scale of the Soviet menace. Iraq. In each case, the public soberly received official warnings about the imminent threat. In cold retrospect, those warnings were wrong — or contrived, or overblown, or misperceived. Official claims about the evils of these systems were many times justified. Claims about imminent threats were most of the times hyped."

• Via Tyler Cowen:Thomas J. Craughwell: Thomas Jefferson's Creme Brulee: How a Founding Father and His Slave James Hemings Introduced French Cuisine to America: "This culinary biography recounts the 1784 deal that Thomas Jefferson struck with his slaves, James Hemings. The founding father was traveling to Paris and wanted to bring James along “for a particular purpose”— to master the art of French cooking. In exchange for James’s cooperation, Jefferson would grant his freedom. Thus began one of the strangest partnerships in United States history. As Hemings apprenticed under master French chefs, Jefferson studied the cultivation of French crops (especially grapes for winemaking) so the might be replicated in American agriculture. The two men returned home with such marvels as pasta, French fries, Champagne, macaroni and cheese, crème brûlée, and a host of other treats. This narrative history tells the story of their remarkable adventure—and even includes a few of their favorite recipes!"

• Harold Pollack: Watching Death of a Salesman with my daughter: "The worksheets’ main purpose was to verify that the kids actually read it…. No worksheet could capture whether that play conveyed actual human meaning to these young people. “I told you that I hate that class,” my daughter told me. Who can blame her? I’ll bet similar mediocre experiences ar being replicated across thousands of classrooms across America. We’re living through tough economic times here in the southland of Chicago. Foreclosures and layoffs have brought financial disappointment, thwarted upward mobility, and everyday struggles for economic dignity that bear unmistakable resemblances to Willy Loman’s plight. Death of a Salesman might have provided an opportunity to communicate through literature what all too many of the families represented in that classroom are now going through. This was an opportunity squandered. Attention should have been paid."

Paul Krugman:

Disastrous Predictions and Predictable Disasters: Joe Weisenthal is wrong. He writes that the unfolding economic disaster in Europe is what everyone predicted. Not so. It’s what he predicted, it’s what I predicted, but it’s not at all what many people were predicting. And the people who got it completely wrong happen to be the people still running European economic policy. As Jonathan Portes points out, it is now more than two years since Olli Rehn declared that

Europe’s recovery in the real economy has taken hold and is becoming self-sustaining.

Rehn is still in place at the European Commission, and is still telling us that austerity will work any day now. And he’s not alone. The economics team at the OECD that told us in May 2010 not just that Europe needed fiscal austerity, but that the Fed needed to raise rates 350 basis points by the end of the year to head off inflation is still issuing reports. And then there’s Cameron/Osborne.

Readers sometimes complain about my frequent references to the things my friends and I got right, and others got wrong. But look, it’s not ego (or anyway it’s not just ego). Predictions are how you judge between models. If the world delivers results that are very much at odds with what your framework says should have happened, you’re supposed to reconsider your framework — as I did, for example, after I was wrong about interest rates in 2003.

And the fact is that a more or less Keynesian framework — a framework that says that austerity in a depressed economy is a terrible idea — has yielded pretty good predictions through the crisis, while the anti-Keynesian stories that became the conventional wisdom in Brussels and Frankfurt have delivered an awesome record of predictive failure.

Yet European leaders seem determined to learn nothing, which makes this more than a tragedy; it’s an outrage.

Ben Bernanke on Japan in 1999:

It is true that current monetary conditions in Japan limit the effectiveness of standard open-market operations. However… liquidity trap or no, monetary policy retains considerable power…. Money, unlike other forms of government debt, pays zero interest and has infinite maturity. The monetary authorities can issue as much money as they like. Hence, if the price level were truly independent of money issuance, then the monetary authorities could use the money they create to acquire indefinite quantities of goods and assets. This is manifestly impossible in equilibrium. Therefore money issuance must ultimately raise the price level, even if nominal interest rates are bounded at zero. This is an elementary argument… quite corrosive of claims of monetary impotence….

[A] policy of aggressive depreciation of the yen would by itself probably suffice to get the Japanese economy moving again….

Josh Marshall:

Scalia, Top Democratic Plant?: Speaking for myself, it’s hard for me to read the sort of stuff Justice Scalia says these days without seeing red. As he’s aged, he’s tossed aside any pretense or desire to hide the fact that he sees himself as what originalists and advocates of judicial restraint are supposed to be against: namely, an appointed super legislator…. Hearing him rail about “racial entitlement” sounds more like you’re listening to some sort of talk radio blowhard than a Supreme Court Justice.

But who is he (and his fellow conservatives on the Court) helping at this point?… [T]he Republican drive to disenfranchise minority voters in 2012 backfired spectacularly… you piss off and activate more people than you gain by playing to racial animus, hostility to immigrants and attacks on voting rights. Yet the Supreme Court is still stuck in the 80s and 90s era of the judicial politics of racial grievance…. The Court now seems dead set on overturning Section 5 of the Voting Rights Act. After that we’ll have cases on marriage equality, voter ID, affirmative action. The judicial calendar is stuck in a feedback loop.

I don’t want to underestimate the real world damage that will be done by bad outcomes of these cases. It’s real. But the political valence of all these cases, the politics they generate, seems certain to keep the public mind focused on the politics of exclusion they embody and the political coalition that put them on the bench. And that’s real too.

Paul Krugman is sad:

Gene Sperling Doesn't Respect Me: So, after reading the Bob Woodward saga of the alleged “threat” from Gene Sperling, the White House supereconwonk, I went through my own correspondence with Gene, and couldn’t find anything threatening — although I guess you could read his injunction, at one point, to “take care” in an ominous tone of voice. Hey, don’t I rate some proper intimidation?

Josef Goebbels' Diary:

We are now definitely pushing the Jews out of Berlin. They were suddenly rounded up last Saturday, and are to be carted off to the East as quickly as possible. Unfortunately our better circles, especially the intellectuals, once again have failed to understand our policy about the Jews and in some cases have even taken their part. As a result our plans were tipped off prematurely, so that a lot of Jews slipped through our hands. But we will catch them yet. I certainly won't rest until the capital of the Reich, at least, has become free of Jews…. Goering realizes perfectly what is in store for all of us if we show any weakness in this war. He has no illusions about that. On the Jewish question, especially, we have taken a position from which there is no escape. That is a good thing. Experience teaches that a movement and a people who have burned their bridges fight with much greater determination than those who are still able to retreat.

• Dan Liu and Christopher M. Meissner: Market Potential and the Rise of US Productivity Leadership: "The US advantage in per capita output, apparent from the late 19th century, is frequently attributed to its relatively large domestic market. We construct market potential measures for the US and 26 other countries between 1880 and 1913 based on a general equilibrium model of production and trade. When compared to other leading economies in 1900, the year around which the US overtakes Britain in productivity leadership, the US does not have the overwhelming lead in market potential that it has in GDP per capita. Still, market potential is positively related to the cross-country distribution of income per capita, but the impact of market potential is likely to be very heterogeneous. We illustrate this in a quantitative calculation of the welfare gains from removing international borders in 1900 within a parsimonious general equilibrium trade model. While there are gains from trade for all nations, the largest European countries do not close their per capita income gaps with the US after this hypothetical rise in market potential. On the other hand, many small countries could have done so."

• Mark Thoma: Economist's View: So Much for 'Economic Uncertainty': "It's hard to count all of the really bad predictions Republicans have made about interest rates, inflation, uncertainty, and so on in their attempt to use the recession to make ideological and political gains. But people still seem to listen. It's not the uncertainty about what might happen as much as it's policy, what actually has happened -- austerity during a recession -- that's problematic. Now we are about to get more austerity that is ill-timed -- as Ben Bernanke said this week it's far too front-loaded -- and very poorly designed. It was constructed after all to motivate parties to action, so it is intentionally loathsome. The Fed can be frustrating. Congress, the modern Republican contingent in particular, is ridiculous. It's hurting our ability to recover from the recession and provide jobs for millions of unemployed workers struggling to make ends meet each month."

• Mark Mazower: Italy exposes wider crisis of democracy: "Those preaching austerity are contributing to a political meltdown"

It isn't.

Republicans just don't want to hand Obama anything the press will perceive as a victory. Since anything other than complete surrender to the Republicans will be scored as a victory for bipartisan deal-making Obama, whatever concessions Obama offers will not be enough.

Failing to understand the White House negotiating position is not a bug, but a feature for them.

Ezra Klein:

What we have here is a failure to communicate: [S]ome of the gridlock in Washington is simply the result of poor information. Would it matter, one reporter asked the veteran [Republican] legislator, if the president were to put chained-CPI — a policy that reconfigures the way the government measures inflation and thus slows the growth of Social Security benefits — on the table? “Absolutely,” the legislator said. “That’s serious.” Another reporter jumped in. “But it is on the table! They tell us three times a day that they want to do chained-CPI.”

“Who wants to do it?” said the legislator.

“The president,” replied the reporter.

“I’d love to see it,” laughed the legislator.

You can see it. If you go to WhiteHouse.gov, the first thing you’ll see is an invitation to read the president’s plan to replace the sequester. That plan is only a page. “Savings from Superlative CPI” — another way of saying chained-CPI (consumer price index) — is one of the items in bold type. It saves $130 billion over the next decade, mostly by cutting Social Security benefits. And yet there are key Republican legislators — the very Republicans who say they want to strike a deal, and who the White House will need if it’s going to get a deal — who don’t know the president is even willing to consider it.

Now, one possibility is the legislator was simply lying. But I doubt it. Politicians don’t like to make themselves look uninformed in rooms full of reporters, and such cynical messaging would be out of character for this particular member of Congress. What we have here, rather, is a failure to communicate.

Chained-CPI isn’t the only policy concession the White House has made that seems to have escaped the notice of its negotiating partners…. McConnell… calls for “serious means-testing for high-income people” on Medicare…. Graham… meant "rraising the Medicare eligibility age, means-testing entitlements, etc."… But on page 34 of the White House’s most recent budget, President Obama proposes to do exactly that. Medicare, it’s important to note, is already a partially means-tested program, with richer seniors — about 5 percent of them — paying income-related premiums for their hospital and drug insurance. Obama would increase those premiums by 15 percent, and he’d freeze the threshold such that, over the next decade or two, 25 percent of seniors were paying part of the cost of their coverage….

That’s not to say that the White House necessarily goes as far as all Republicans would like…. But what shouldn’t be holding an agreement up is that top Republicans simply don’t know the compromises the White House is willing to make on Medicare and Social Security.

Michelle Golberg:

The Absurd Backlash Against Sheryl Sandberg’s ‘Lean In’: Columnists are mercilessly attacking Facebook COO Sheryl Sandberg’s new book, Lean In. Michelle Goldberg says they might be surprised to find that her ideas are reasonable, thoughtful—and necessary….

“My hope is that my message will be judged on its merits,” she writes. She may have been hoping for too much…. [A] strange, sour backlash has already begun, aimed… at who Sandberg is. Joanne Bamberger, who either didn’t read Lean In or didn’t comprehend it, lumps Sandberg in with Yahoo CEO Marissa Mayer, accusing both of launching “the latest salvo in the war on moms.”… [S]upercilious Maureen Dowd evince[s] a sudden concern for feminist authenticity…. Melissa Gira Grant, writing in The Washington Post, carps that “this is simply the elite leading the slightly-less-elite, for the sake of Sandberg’s bottom line,” which makes sense if you believe that a woman worth hundreds of millions of dollars would go into feminist publishing for the money. (Skirting feminist self-parody, Grant proceeds to complain that Sandberg fails to grapple with the struggles of domestic workers, the unemployed, people whose caretaking duties extend beyond children to aging parents as well as “close friends and extended families,” women who can’t have children, and those who are lesbian, bisexual, or transgender.)… Deanna Zandt admits that she didn’t bother trying to get a review copy of Lean In, but nonetheless claims that Sandberg’s message is “buck up, little campers. It’s a tough world, and you’ve got to be tough.”… [Thus] there’s already a lot of public misunderstanding of her book’s message. One would think she was peddling a multilevel marketing scheme, not the most overtly feminist mainstream business book ever written….

Life Magazine: Madame Chiang Calls Upon the US to Join China--in War and Peace:

One can hope that the founding fathers of the Republic were present last week in some ghostly fashion, when Madame Chiang Kai-shek stepped onto the rostrum of the House of Representatives and began her extraordinary speech (see photo). The Fathers would, perhaps, have been somewhat dazzled to see this beautiful woman, clad in black and ornamented with flawless jade, enter that rugged arena where Americans have wrangled over their domestic affairs for 154 years. But, for that matter, so was everybody else. When the slim and graceful "Missimo" appeared a gasp went around the galleries and people leaned forward to have a better look.

Yet the Fathers, if present, quickly discovered that this was no glamor-queen come to charm the Congress away from its legislative duties. On the contrary. Here was a voice from Asia, speaking a cultiral English (with a slight trace of Georgia accent she acquired in her girlhood) and propounding the very principles that the Fathers had been at such pains to develop. For instance, there was not the least doubt in the Missimo's mind whom she was addressing. She was not talking to a radio audience, large though her audience was. She was not talking merely to a legislative body, august though that body certainly is. And, while she had plenty to say to the Administration, she knew that the Executive is not the sovereign of this land. As she herself put it, "In speaking to Congress I am literally speaking to the American people."

L'Esprit de l'Escalier:

• Well, as William Rehnquist said, "strict construction" and "originalism" are masks for hostility to criminal defendants and civil-rights plaintiffs...

• When Joe Stiglitz first mooted the first version of "CPI reform" back in 1994 as an idea, the interesting thing about it was that it was plausibly (a) correcting an error because indexation wasn't supposed to increase values over time but simply adjust them for changes in the cost of living, while (b) affecting the budget half by raising taxes relative to baseline and half by cutting spending. That's still true. The problem is that it absolutely kills 90+ widows…

• I must say: rarely have such a large proportion of the people who have actually read a book like Lean In said: "These reviewers aren't reviewing the book I read: they are trash-talking Sheryl Sandberg, not reviewing the book". It's weird…

• I would not say that fighting to the last Russian (and the last Briton) was a "strategy": Roosevelt certainly wanted to be in there pitching a lot earlier…

• I have never understood the game that Amity [Shlaes] is playing. There are solid arguments for the point of view she wants to boost that she could make to build her reputation and network of trust. But she doesn't make them. And so she undermines herself and her long-run career to a remarkable degree. This transparently-wrong misreading of what Galbraith said about Coolidge and of what Coolidge said about the 1920s bubble is just one case…