- Ryan Avent:** The euro crisis: Europe bleeds out: "IT IS a car crash of a data release…. The overall rate, at 12.1%? In the spring of 2010 unemployment rates in America and the euro zone were effectively the same at about 10%. There is now a gap of 4.5 percentage points. Total unemployment? In the first three years of the downturn America did far worse than the euro area, adding some 7.5m workers to the unemployment rolls to Europe's 4.7m. Since then total unemployment in the euro area has risen by another 3.2m while America reduced the ranks of the jobless by 3.5m. The euro area now has some 19.2m unemployed workers…. Greek joblessness topped 27% in January (the most recent month for which data there are available), while Spanish employment has risen to 26.7%…. And did you know that Dutch unemployment rose by 1.4 percentage points over the past year? German unemployment, of course, has held steady at 5.4% since last summer. It is the youth figures that are most remarkable, however: 59.1% of those under 25 are unemployed in Greece, 55.9% in Spain, 38.4% in Italy, 38.3% in Portugal, 26.5% in France—3.6m youths in all. There is blame to go around for this, but one has to reserve special criticism for the European Central Bank. The Federal Reserve's main policy rate has been effectively zero since late 2008; the ECB's has never fallen below the current 0.75% level. The Fed has undertaken major asset-purchase programmes in an effort to raise growth expectations, lower interest rates, and improve lending conditions; the ECB deployed a special lending programme to banks last year in order to prevent a systemic collapse, but its balance sheet has since been shrinking as those loans are repaid. The Fed has reacted to weakening inflation and inflation expectations and has linked policy changes to labour market indicators. The ECB has presided over a wrenching disinflation that has brought inflation well below target, and which is both a consequence of recession and itself an implement of macroeconomic pain. Europe's governments have behaved badly, but American fiscal policy has hardly been better…. [A]t the moment, the ECB is behaving as though the main economic failure in the 1930s was the world's pathetic inability to grit its teeth and endure the costs of tight money."
George Soros Comment On Hans-Werner Sinn: Hans-Werner Sinn has deliberately distorted and obfuscated my argument. I was arguing that the current state of integration within the eurozone is inadequate: the euro will work only if the bulk of the national debts are financed by Eurobonds and the banking system is regulated by institutions that create a level playing field within the eurozone.
Today in 1943, the British launched Operation Mincemeat, a disinformation plan that was possibly the most effective deception of the war. Because of one family’s sacrifice, thousands of lives were saved.
And, alas! still no sign he is marking his beliefs to market. And he really, really, really, really should never have written "the CPI is losing credibility [because it] is… as economist John Williams tirelessly points out…a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been “improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent."
That was totally wrong then. That is totally wrong now.
Gerald Silverberg: Meltdown Economics & Other Complex Catastrophes: Reinhart-Rogoff vs. New Zealand 1951 Topsy-Turvy (historical-statistical nitty-gritty and postmodernist nightmare): I've calculated New Zealand real GDP growth rates for the period 1946-1951 based on three data series available from Statistics New Zealand…. None of these series corresponds to the data employed by Reinhart and Rogoff, although the Maddison data comes closest. Moreover, the three series are wildly inconsistent…. If RR had used the Statistics NZ value of +15,60% for 1951 instead of the -7.6% one they did use, they would have obtained the exact opposite conclusion - that countries with debt ratios over 90% had significantly higher growth rates than lower indebted countries! That is the danger one runs by basing such a far-reaching conclusion on just one observation of the most minor country in the database. In any event, the gyrations in NZ's postwar growth experience had nothing whatsoever to do with its indebtedness but were rather driven by unprecedented industrial disputes and the Korean War wool export boom. Now some nitty-gritty on the 1951 NZ waterfront lockout/strike: (1) The waterfront dispute did not entirely close the ports. (2) After locking out the waterside union workers, the government declared a state of emergency and used military troops to reestablish some measure of port activity (as well as in the coal mines). (3) While it was the longest NZ industrial dispute, it was not the most violent one. That was the Great Strike of 1913. (4) Support strikes were staged by coal miners, railroad and hydroelectric workers, frozen meat processors and in other sectors amounting to some 22,000 workers during much of the 151 day dispute. The government ultimately achieved its primary goal in provoking the dispute - the destruction of the waterside union, which had separated from the main labor federation, by branding them communists and blacklisting their leadership and activists."
Aaron Carroll: The best ad for health services research in some time: "Ezra Klein has a longform piece out on a care model in Pennsylvania, not too far from where I grew up, that is using nurses to manage Medicare patients better. There’s no new science. There’s no new medicine. It’s health services work – reorganizing the way we care for patients – and it’s making a huge difference in terms of quality and costs. Medicare is about to shut it down. Here’s why: 'Brenner puts it more vividly. “There is a bias in medicine against talking to people and for cutting, scanning and chopping into them. If this was a pill or or a machine with these results it would be front-page news in the Wall Street Journal. If we could get these results for your grandmother, you’d say, ‘Of course I want that.’ But then you’d say, what are the risks? Does she need to have chemotherapy? Does she need to be put in a scanner? Is it a surgery? And you’d say, no, you just have to have a nurse come visit her every week.”' That’s the problem with health services research in a nutshell. When I tell people that we get results from talking to people, from getting the pieces of the system better coordinated, by advising physicians better, just by improving communication – then their eyes glaze over. They don’t see it as 'real' research, or 'real' care. It’s soft. But it works."
Lawrence H. Summers | Alison Galbraith: Financial burdens in the health exchanges | Gillian Tett: Markets Insight: US mortgage market depends on state support | Jon Ronson: Amber Waves of Green: The Surprising Truths About Income Inequality in America | Noah Smith: Noahpinion: Book Review: The Occupy Handbook | Mike Konczal: What Does the New Community Reinvestment Act (CRA) Paper Tell Us? | Barry Eichengreen and Douglas Irwin (2009): The protectionist temptation: Lessons from the Great Depression for today | Spies of Warsaw: Season 1, Episode 1 |
Rethinking Macroeconomic Policy: Rethinking and reforms are both taking place. But we still do not know the final destination, be it for the redefinition of monetary policy, or the contours of financial regulation, or the role of macroprudential tools. We have a general sense of direction, but we are largely navigating by sight. I shall take six examples….
Six months ago David Brooks, Joe Scarborough, and company thought: "Mitt Romney is behind and has an uphill climb. But if we pretend that Romney is actually ahead, maybe he will get momentum and win." And so they launched the War on Nate Silver, seeking themselves and asking others to help them discredit the most prominent aggregator of state polls, Nate Silver.
Now, six months late, Gregg Easterbrook, suffering from trench foot and beri-beri, wanders out of the forest waving his katana, and seeks to join the effort, accusing Nate Silver of "spurious precision."
Brad: R&R, Hamilton, and many other serious, bright, empirical economists that are not part of your "faction" frequently argue "interest rates may be low now, but they could rise quickly." (Similarly, stock prices may be high now, but they could fall, particularly if long-term interest rates rise.) And in the next breath, they argue that because debt levels are slower and more costly to adjust than asset prices, the prudent course is to slow the growth of debt now.
What say you to this? In your title, you speak of "Risk". Theirs is (I think) a risk-management argument. Surely it deserves acknowledgement.
Jared Bernstein: The War Against the Pointless Pain Austerity Caucus: Not the End, Not the Beginning of the End, But Perhaps the End of the Beginning?
What Debt Crisis, Indeed? Things that Make You Go Hmmmmm…: OK, I know that what’s happening in the debt debate is more complicated than a grad student found some mistakes in a spreadsheet and the spell that had bewitched the nation was broken. But that’s kinda what seems to be happening. This Politico piece tells of some Democrats coming around to the view that “[t]here’s no short-term deficit problem…and there isn’t even an urgent debt crisis that requires immediate attention.”… You gotta love the incredibly juicy irony of what’s going on. Nobel laureates [that's Krugman], former Treasury officials [that's me], think tankers [Josh Bivens and John Irons of EPI], yours truly, and zillions of others have been trying to break through on this for years. Some bespectacled twenty-something [Thomas Herndon] comes along, and for a term paper--a term paper!--tries to replicate Rogoff and Reinhart’s study, he perseveres, gets some solid guidance from his profs, who happen not to genuflect at either the alter of austerity or the academic hierarchy (I’m afraid other profs might have shut the young man down)--and BOOM! Somebody really needs to make a movie out of all of this someday.
Sandra Day O'Connor: "I'm Sorta Kinda Sorry I Prostituted My High Office to Weaken American Democracy and 'Elect' a Highly Unqualified President Who Then Led America to Disaster. But Only Sorta-Kinda"
Scott Lemieux is on the case:
A Day Late, Several Trillion Dollars Short: I dunno, somehow I prefer Scalia’s belligerent, protesting-too-much defenses of his bad faith in Bush v. Gore to O’Connor’s attempts to disassociate herself:
“Obviously the court did reach a decision and thought it had to reach a decision,” she said. “It turned out the election authorities in Florida hadn’t done a real good job there and kind of messed it up. And probably the Supreme Court added to the problem at the end of the day.“
And, again, it’s not just that justices notably unsympathetic to broad equal protection claims claimed to accept an innovative equal protection argument. Where Bush v. Gore immediately falls apart and becomes a historic disgrace is that the completely lawless remedy left an election count with all of the alleged equal protection defects of the court-ordered recount (and the “mess up” job of the Florida authorities) in place. Bush v. Gore will always be a massive embarrassment to the five judges that understandably refused to sign their names to it…. I can understand why O’Connor is uncomfortable with that, but she can’t escape it.
Laura Tyson and I gave a presentation to the IMF Fiscal Forum on Wednesday the 17th. A draft of our paper. I talked about changing perceptions of fiscal policy. Laura talked about changing perceptions of multipliers.
Here is my part of our talk:
For the past five years, each year I have begun talks by saying that I thought in the previous year that the crisis was at its peak, and that each year I turned out to be wrong, as the crisis revealed itself as even deeper and more of a crisis than it had been the year before.
We are now six years in. The natural thing to do, therefore, is to compare 1929-1935 with 2007-2013. 1929-1933 saw much larger output declines and unemployment increases than 2007-2011--between two and three times as large. But by 1935 the tide had turned nearly everywhere except France, which was still on the gold standard (but about to elect a Popular Front government and drop its link). There had been substantial gap closing between 1931 or 1933 and 1935. The Great Depression was clearly not over by 1935, but the global economy was clearly on the mend.
By contrast, today we have had a slower decline. But we have seen no signs of anything we could call gap-closing, no sign of any returns back to what we used to think of as normal levels of activity. Here at the IMF we speak of a "three speed recovery". In the North Atlantic plus Japan, at least, the speeds are "reverse" in Europe--the proportion of the population at work is dropping--and "neutral" in America--the proportion of the population is stable. Thus it is no longer clear that, when this is over, people will look back and classify it as a smaller worldwide event than 1929-1939. Another five years of the last two years' trends, and it will be 2007- rather than 1929-1939 that will seize the name of "The Great Depression".
A country that spends and spends and spends and does not tax sufficiently will eventually run into debt-generated trouble. Its nominal interest rates will rise as bondholders fear inflation. Its business leaders will hunker down and try to move their wealth out of the corporations they run for fear of high future taxes on business. Real interest rates will rise because of policy uncertainty, and make many investments that are truly socially productive unprofitable. When inflation takes hold, the web of the division of labor will shrink from a global web he'd together by thin monetary ties to a very small web solidified by social bonds of trust and obligation--and a small division of labor means low productivity. All of this is bound to happen. Eventually. If a government spends and spends and spends but does not tax sufficiently.
But can this happen as long as interest rates remain low? As long as stock prices remain buoyant? As long as inflation remains subdued. My faction of economists--including Larry Summers, Laura Tyson, Paul Krugman, and many many others--believe that it will not. As long as stock prices are buoyant, business leaders are not scared of future taxes or of policy uncertainty. As long as interest rates remain low, there is no downward pressure on public investment. And as long as inflation remains low, the extra debt that governments are issuing is highly-prized as a store of value, helps savers sleep more easily at night, and provides a boost to the economy as it assists deleveraging and raises the velocity of spending.
And we are live at Project Syndicate: http://www.project-syndicate.org/commentary/the-impact-of-public-debt-on-economic-growth.
- J. Bradford DeLong and Lawrence H. Summers (2012), Fiscal Policy in a Depressed Economy, Brookings Papers on Economic Activity.
- J. Bradford DeLong and Laura d'A. Tyson (2013): Discretionary Fiscal Policy as a Stabilization Policy Tool: What Do We Think Now That We Did Not Think in 2007? (Washington, DC: IMF).
A country that spends and spends and spends and does not tax sufficiently will eventually run into debt-generated trouble. Its nominal interest rates will rise as bondholders fear inflation. Its business leaders will hunker down and try to move their wealth out of the corporations they run for fear of high future taxes on business. Real interest rates will rise because of policy uncertainty, and make many investments that are truly socially productive unprofitable. When inflation takes hold, the web of the division of labor will shrink from a global web he'd together by thin monetary ties to a very small web solidified by social bonds of trust and obligation--and a small division of labor means low productivity.
All of this is bound to happen.
If a government spends and spends and spends but does not tax sufficiently.
But can this happen as long as interest rates remain low? As long as stock prices remain buoyant? As long as inflation remains subdued?
Tame Inflation to Keep Fed on Course - WSJ.com: Federal Reserve officials are likely to continue their easy-money policies at the central bank's policy meeting on Tuesday and Wednesday, in part because several recent inflation measures have fallen well below the Fed's 2% target.
With inflation now lower than the Fed wants, officials are likely to conclude their policies show no sign of overheating the economy. That allows them to maintain their $85 billion-a-month bond-buying program, which the central bank is employing to ease credit conditions and spur spending, investment and hiring.
Fed officials after their March policy meeting talked about tapering off the bond purchases later this year if the economy continued to gain strength. But inflation readings have since slipped, and employment numbers have been disappointing.
The Commerce Department reported Friday that its personal consumption expenditure price index—one of the Fed's favored measures of consumer price inflation—was up 1.2% in the first quarter from a year earlier, well below the central bank's target. It was the weakest annual reading since the third quarter of 2008, when the U.S. was consumed by the financial crisis.
When Nazi Germany attacked the Soviet Union in June 1941, Pokryshkin was stationed in the Soviet republic of Moldova. During the first days of World War II, Pokryshkin shot down a Bf-109 fighter. On July 3, he was downed by Nazi flak cannons behind German lines, but managed to return to his unit in four days, despite his injuries.
In 1941, in severe storms and without armor on his aircraft (pilots called it the “dance macabre”), he was able to locate German tank army Panzer Group Kleist. The Russian forces stopped them near the town of Shakhty, but then lost track of the tank army as it disappeared into the woods.
Two pilots had been killed by the severe weather conditions on their mission to locate the tanks. Nevertheless, Pokryshkin took a risk and safely located the unit by following the caterpillar tracks of the tanks. This event won him the highest honor of the Soviet Union: the Order of Lenin.
Pokryshkin’s regiment was called to the rear in the summer of 1942 under a new commanding officer, where the unit was re-equipped with American-manufactured P-39 Airacobra fighters. Pokryshkin was quite fond of the Airacobras’ ample firepower. Several times during the war, directives from Moscow requested his units to consider switching to Russian-built aircraft such as the La-5 or Yak fighters, but he turned down the requests each time.
In 1943, Pokryshkin was deployed to the Kuban region in southern Russia. There, he invented new fighter tactics against German Luftwaffe units. On April 29, 1943, eight P-39 Airacobra fighters, one of which he piloted, attacked three squadrons of Ju-87 Stuka dive bombers escorted by Bf-109 fighters. As many as 12 German aircraft were downed in this battle, with Pokryshkin shooting down 5 of them. He considered it his highest achievement that all of this was accomplished without the loss of a single one of his supporting aircraft.
In September 1943, Pokryshkin shot down three Ju-88 aircrafts in a single pass. This further spread his fame as an ace pilot, because the move was performed at low altitude. Later that year, he took a flight on his own initiative and shot four transport aircraft U-2 over the storming Black Sea…
Mervyn King (June 16, 2010): Monetary Policy Developments: "Monetary policy must be set in the light of the fiscal tightening over the coming years, the continuing fragility in financial markets and the state of the banking system. I know there are those who worry that too rapid a fiscal consolidation will endanger recovery. But the steady reduction in the very large structural deficit over a period of a parliament cannot credibly be postponed indefinitely. If prospects for growth were to weaken, the outlook for inflation would probably be lower and monetary policy could then respond. I do, therefore, Chancellor [Osborne], welcome your commitment to put the UK’s public finances on a sound footing. It is important that, in the medium term, national debt as a proportion of GDP returns to a declining path."
Mike Konczal: The great economic experiment of 2013: Ben Bernanke vs. austerity: "We rarely get to see a major, nationwide economic experiment at work, but so far 2013 has been one of those experiments — specifically, an experiment to try and do exactly what Beckworth and Ponnuru proposed. If you look at macroeconomic policy since last fall, there have been two big moves. The Federal Reserve has committed to much bolder action in adopting the Evans Rule and QE3. At the same time, the country has entered a period of fiscal austerity. Was the Fed action enough to offset the contraction? It’s still very early, and economists will probably debate this for a generation, but, especially after the stagnating GDP report yesterday, it looks as though fiscal policy is the winner…. [T]here is still more the Federal Reserve could do to try and balance out austerity in 2013, but those moves would require a big change from current policy. Minor tweaking is unlikely to help. Joseph Gagnon of the Peterson Institute for International Economics suggests that, instead of committing to mortgage purchases, the Fed could target the mortgage rate for a time. Other economists, such as Brad DeLong, suggest that an explicit higher inflation target would be important. Still others, ranging from Christina Romer to market monetarists, think the Fed should explicitly target a nominal GDP. Given that the Fed appears to be having trouble getting these new policies to move inflation expectations or interest rates, a dramatic change may be harder than originally thought."
The world wisely edges away from talk of a currency war: The diplomatic communiqués that follow international summits are rarely noteworthy. They have to be acceptable to everyone, so tend toward the lowest common denominator. But the Group of 20’s most recent communiqué, following its meeting on the sidelines of the spring meetings of the International Monetary Fund and World Bank, contains one sentence of consequence. “Monetary policy,” it reads, “should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks”.
The significance of this addition should not be overlooked. It means that the Bank of Japan is to be applauded, not criticised, for the aggressive asset-purchase programme it has adopted in the effort to hit its 2 per cent inflation target.
It also implies that the Federal Reserve’s heavy use of quantitative easing and forward guidance are entirely appropriate given its dual mandate to pursue low inflation and high employment – more so now that other instruments that could be used to achieve those goals, notably fiscal policy, are currently unavailable.
This is a significant advance from the “currency war” rhetoric that prevailed earlier this year. Back then, the BoJ's new policies were impugned as an effort to depreciate the yen and gain an export advantage. The BoJ and Fed were criticised for unleashing a torrent of capital flows into emerging markets. Now, in contrast, officials in other countries, while still less than fully comfortable about the consequences, realise that they would be even worse off had the Fed and the BoJ responded to them. Capital inflows and local currency appreciation may be uncomfortable for emerging markets but renewed recession in the US and Japan, which could be induced by premature abandonment of easing, would be worse.
Before writing a sermon in praise of scribes, we call for the help of Him who promised the clarity of eternal life as a reward to the sincere scribe. Indeed:
And they that be wise shall shine as the brightness of the firmament; and they that turn many to righteousness as the stars for ever and ever.
This is to be understood as referring not only to those who create new things with their talents, but also to those who transcribe the old, as we will show by God's grace in what follows.
However useful the tradition of the learned, without the attention of the scribe it would never come to the notice of posterity. However well we behave, however fruitfully we teach, all that would be lost to oblivion if the work of the scribe did not record them in letters. It is therefore scribes who lend strength to words, memory to things, vigor to time. If they were taken from the Church, faith would weaken, charity would freeze, hope would die, law would perish, Scripture fall into oblivion. Finally, if writing was lost, the people would disperse, religious devotion would be extinguished, and the peace of Catholic unity would be a roil of confusion. Without scribes, writing would not long persist safely, but would be shattered by chance and corrupted by age.
The printed book is a thing of paper and in a short time will decay entirely. But the scribe commending letters to parchment extends his own and the letters' lifespan for ages. And he enriches the Church, conserves the faith, destroys heresies, repels vice, teaches morals and helps grow virtue. The devoted scribe, whom we intend to describe, praises God, pleases the angels, strengthens the just, corrects the sinner, commends the humble, protects the good, defeats the proud, and condemns the stubborn. The scribe, distinguished by piety, is the herald of God, because he announces His will to present and future peoples, promising eternal life to the good, pardon to the penitent, penalty to the negligent, and damnation to the contemptible. What is healthier than this art, what is more commendable than this piety which delights God, which the angels praise, which is venerated by the citizens of heaven? It is this piety that creates the weapons of the faithful against the heretics, which casts out the proud, which saps the strength of demons and which sets the norms of Christian life. It is this that teaches the ignorant, supports the timid, helps the devout, and joins the peaceful in love…
Paul Krugman: The Medium Term Is Not The Message: Ezra Klein tries to broker peace: 'The more modest differences between the various participants in the broader austerity debate are covering up a real area of consensus: We could, and should, do more now, and we could, and should, couple that with policies that reduce deficits in the medium and, more to the point, long term…. There’s no serious economic model in which $400 billion in stimulus spending — plus some principal reduction — over the next two years would destabilize the bond markets if it was coupled with $4 trillion in deficit reduction over the next 12 years. Reinhart and Rogoff could have been doing much more to call out the inanity of this position, which has blocked both more short-term support for the economy and more long-term deficit reduction. That, for them, should be a lesson of this debacle: They got in bed with politicians whose policy agenda had little to do with their actual research, and so now they’re being blamed for that policy agenda.'… Look, we are not going to have a deal that trades short-term stimulus for medium-term deficit reduction. Na ga ha pen…. [S]aying that you would oppose austerity if politicians simultaneously did something they aren’t going to do is, de facto, support for austerity. The reality is that as an economist, you’re either trying to calm deficit hysteria or you’re helping to ratchet it up. And R-R were clearly helping to ratchet up the fear…. This is, I’d say, part of a broader point: the responsibility of public intellectuals in general goes beyond talking about the ideal… you need to make it clear where you stand on the actual decisions being made, as opposed to merely stating what we should do but won’t."
Simon Wren Lewis (2012): Real and Fake Microfoundations: "Is intertemporal optimisation at the heart of modern macro, as I wrote here, or is it a gadget like the Dixit-Stiglitz model of monopolistic competition, as Paul Krugman suggests here? Well, I think I was right to characterise modern macro this way, but I also agree with what I believe Professor Krugman was saying in his post…. Professor Krugman did not get a Nobel for clever use of the Dixit-Stiglitz model of monopolistic competition, but for investigating the role of increasing returns and imperfect competition on trade and economic geography. So why characterise, as I did, modern macro by a tool it uses (i.e. intertemporal optimisation), rather than by what it is trying to achieve with that tool?… [T]rying to understand… did not start with the New Classical economists. What did begin in a major way around then was the microfoundation of macroeconomics…. But I think Professor Krugman is pointing to a danger that results from this. He writes 'a gadget is only a gadget, and you should not let it define your field'. If we define something by the tool or methods we use, we may start taking those tools too seriously…. Going back to macro, I’ve sometimes heard it said by someone that they are not sure how important price rigidity is, because they do not find any of the models of price rigidity convincing. This is letting theory define reality. If that is Professor Krugman’s point, then I agree with it. It is very similar to the argument I have been making about the need to be pragmatic about microfoundations…. [Y]ou should (a) look for a better microfounded model that does allow price rigidity, but also (b) discount the microfounded models you currently have because they are clearly incomplete/wrong…. [J]ust when microeconomics is getting rather more relaxed about its axioms as a result of behavioural economics in particular, the hegemony of microfoundations in macro is at its height."
Jérémie Cohen-Setton Blogs review: Bold ideas for the eurozone from economic history | Matthew Yglesias: Some further thoughts on the Bangladesh factory disaster |
Why Oh Why Can't We Have a Better Press Corps? Yes, David Ignatius of the Washington Post, We Are Looking at You
You do Mervyn King a very bad service indeed, David, when you claim that he understood the economy he was dealing with as Governor of the Bank of England, and backed the Tory-Salad austerity coalition anyway.
David Ignatius on April 24, 2013:
Mervyn King’s hard lessons in Keynesian economics: King is… one of those mild-mannered Englishmen who can dominate a room the moment he begins to speak, with a wry humor that can amuse, charm and eviscerate at will…. King… said events have shown that “purely monetary stimulus will not be enough…. Monetary policy is pushing on a string. It has some effect but less than we might have thought.”… For King, the past decade reinforced the lessons Keynes drew from the 1930s… the psychological quirkiness of investors… monetary policy could not persuade frightened people to spend and invest…. King couldn’t fix the British economy, but he did understand it.
Happy fish: These Fish Are Happy (But How Do You Know That?): One day Zhuangzi and Huizi are strolling on Bridge Hao:
Zhuangzi: "Look how happy the fish are just swimming around in the river."
Huizi: "How do you know they are happy? You are not a fish."
Zhuangzi: "And you are not me. How do you know I don't know the fish are happy?"
Huizi: "Of course I'm not you, and I don't know what you think. But I do know that you're not a fish, and so you couldn't possibly know the fish are happy."
Zhuangzi: "Look, when you asked me how I knew the fish were happy, you already knew that I knew the fish were happy. I knew it from my feelings standing on this bridge."
tr. Brian Bruya
Those economies relatively rich at the start of the twentieth century have by and large seen their material wealth and prosperity explode. Those nations and economies that were relatively poor have grown richer, but for the most part slowly. The relative gulf between rich and poor economies has grown steadily over the past century. Today it is larger than at any time in humanity’s previous experience, or at least larger than at any time since only some tribes knew how to use fire. The gulf across which the world’s rich and poor regarded each other exists in every dimension: how much people consume, whether they can read, what tools they use, and how they make their living.
Jared Benstein: The US Gov’t as Venture Capitalist: Why Go There?: "Why should the USG provide venture capital? And if there’s a rationale, how much should they do, and on what terms? What is an acceptable failure rate? Is it zero, as Kudlow et al would argue? The question of should the government backstop investments in new areas of research is actually an odd one, because it’s been doing so since before we were even a nation (the provisional government subsidized machine tools for weaponry to fight the British—in fact, much of what followed grew out of defense spending). As I stressed on the Kudlow show, you simply cannot find an economically transformative innovation, from railroads to transistors to lasers to fracking to the internet, GPS, nanotech, and so on, that doesn’t have a government fingerprint on it somewhere."
Carmen M. Reinhart and Kenneth S. Rogoff (2011): Too Much Debt Means the Economy Can’t Grow: "As public debt in advanced countries reaches levels not seen since the end of World War II, there is considerable debate about the urgency of taming deficits with the aim of stabilizing and ultimately reducing debt as a percentage of gross domestic product…. [C]urrent debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP. Nevertheless, many prominent public intellectuals continue to argue that debt phobia is wildly overblown. Countries such as the U.S., Japan and the U.K. aren’t like Greece, nor does the market treat them as such…. Those who would point to low servicing costs should remember that market interest rates can change like the weather. Debt levels, by contrast, can’t be brought down quickly…. The biggest risk is that debt will accumulate until the overhang weighs on growth…. [B]urdens above 90 percent are associated with 1 percent lower median growth…. [H]istorical experience and early examination of new data suggest the need to be cautious about surrendering to “this-time-is-different” syndrome and decreeing that surging government debt isn’t as significant a problem in the present as it was in the past."
Interview with Justin Fox: The Myth Of The Rational Market | Karl Smith: In Which I Am Won Over By Paul Krugman | Ben McLannahan: BoJ maintains pace of monetary easing | explain xkcd | Steve Randy Waldman: The generalized resource curse | Adam Kotsko: From the generalized resource curse to communism | Buce: Underbelly: Where the Livin' Was Easy |
(Final?) Notes on the Reinhart/Rogoff Saga: As pointed out elsewhere, the claim that the UMASS paper actually supports R&R’s alleged core finding of a significant relationship between high debt and slow growth is flat wrong. Yes, the midpoint average growth rate of high-debt countries (over 90 percent of GDP) is lower than the average growth of lower-debt countries, but the differences are not statistically significant…. More importantly, the real argument all along has been two-way causality: data showing that there is lower growth at high debt levels does not show that high debt causes low growth…. Arin Dube demonstrated this very well in his note on Reinhart and Rogoff’s entire data-set, and for the U.S. John Irons and I did the same with Granger causality tests on the U.S. data in July 2010, nearly three years ago. Paul Krugman kindly referred to our results in his blog saying “John Irons and Josh Bivens have the best takedown yet of the Reinhart-Rogoff paper (pdf) claiming that debt over 90 percent of GDP leads to drastically slower growth.” So the causality problem has been well known for some time.
By the way, we compiled the data we used ourselves because emails to Reinhart and Rogoff requesting their data went unreturned. Perhaps if they had shared their data at that time their actual weighting procedure would have become clear much sooner and even their spreadsheet error could have been corrected. Kudos to the UMASS authors for being more persistent than us and for the work they did.
Lastly, Reinhart and Rogoff argue against the thesis that slow-growth causes debt rather than vice-versa based simply on the fact that high-debt episodes are often long-lived…. [T]he simple point is that “downturns in the business cycle” seems to be an intentionally narrow claim being put forward by Reinhart and Rogoff…. [O]ne could argue (if one was feeling tendentious) that budget deficits in 2010, 2011 and 2012 were not driven at all by the economy being in outright recession in those years (hence not driven by “downturns in the business cycle”), since the economy wasn’t in an official recession. Yet these deficits were certainly driven by a shortfall of aggregate demand. A clue that this is indeed what is going on in lots of the Reinhart and Rogoff data is their other persistent finding that the slower growth associated with (again, associated with, not caused by) high-debt in their data is not durably associated with high interest rates….
Finally, I’d just like to add that another problem with the larger R&R narrative that both their book and their paper have constructed. This narrative presents financial crises as consigning economies to slow growth through some iron law of nature—and their 90 percent debt threshold is clearly intended to imply that efforts to use fiscal stimulus to combat this slow growth in the wake of the U.S. housing bubble’s burst will be thwarted. But this narrative is wrong…. [P]olicy failure, not “debt” or “financial crisis” should be clearly identified as the stumbling block to full recovery.
 I say “alleged core finding” because the real core finding was the claim that a 90 percent debt/GDP ratio was a clear tipping point over which growth slowed. This is obviously the finding that stuck in the public debate, and the authors themselves just helped to push this impression.
Carmen Reinhart and Ken Rogoff:
Debt, Growth and the Austerity Debate - NYTimes.com: IN May 2010, we published an academic paper, “Growth in a Time of Debt.” Its main finding, drawing on data from 44 countries over 200 years, was that in both rich and developing countries, high levels of government debt — specifically, gross public debt equaling 90 percent or more of the nation’s annual economic output — was associated with notably lower rates of growth.
Given debates occurring across the industrialized world, from Washington to London to Brussels to Tokyo, about the best way to recover from the Great Recession, that paper, along with other research we have published, has frequently been cited — and, often, exaggerated or misrepresented — by politicians, commentators and activists across the political spectrum.
L'Esprit de l'Escalier: April 26, 2013
Why start with IS-LM? Because IS-LM is the simplest possible monetary model of the economy. The quantity theory is not a complete model--you need to know the interest rate i to calculate velocity V. And whatever you add to the quantity theory to determine i becomes your IS curve...
Consider Abba Lerner's (1943) "Functional Finance": It requires a healthy constant-monetary-and-financial-conditions multiplier (so that activist fiscal policy can move the IS curve left or right) that is relatively steeply sloped (so that what the interest rate is is not of first-order importance in determining the spending on currently-produced goods and services). It requires that debt issue and money-printing do little to shift the IS curve back via raising expected future taxes and little to raise spreads by increasing perceived financial risks. It requires that the mix of money and debt have little effect on inflation expectations. If all of these are true, then Abba Lerner's (1943) conclusions that fiscal policy should be used to close any deflationary or inflationary gap to maintain full employment and monetary policy should be used to ensure that interest rates are low enough that the debt is not a burden are cogent and correct. If not, not.
"Jeet Heer: The thing with [Michael] Kelly was not just that he was 'wrong about Iraq', but he was belligerently, willfully, wrathfully and stupidly wrong. The blinkered rage Kelly brought to the debate makes it harder to forgive him than someone who just made a simple & honest miscalculation."
I was watching @TheStalwart sitting next to and watching @ezraklein at the conference. Joe's jaw dropped--like Toshiro Mifune watching Takashi Shimura in "Shichinin no Samurai"
Game of Thrones: "@attackerman: Barristan Selmy: Return of the Jedi." 12 min of Dragons, 0 min of Ice Zombies, 48 min of Veal Calves not a good balance
"Top Conservative Cat: Ron Portman announces he opposes gay marriage again: 'Turns out my son was only pretending to be gay to break up with girlfriend.'"
"Christopher Mims: How robots are eating the last of the routine cognitive jobs http://qz.com/67323/how-the-internet-made-us-poor/ …" Including the job of internet troll!
Obama takes $700 billion that was going to be wasted on inefficient and ineffective parts of Medicare--waste and abuse, in short--and spends it on (i) pharmaceuticals for seniors and (ii) better coverage for everyone. Ryan took the same $700 billion and spent it on tax cuts for the rich. Now Ryan says--once again--he wants to give it back to the insurance companies.
@TheStalwart. Perhaps most characteristic of @davidgraeber is http://www.webcitation.org/65KpxkaVf, where he says those who want Occupy to be peaceful are actually the ones who are violent. War Is Peace! Freedom Is Slavery! Ignorance Is Strength! #GraeberErrors
"marcsobel @marcsobel: @delong claims he invented Sub-Turing Evocation, not knowing Free Republic's a news aggregator and 2^20 twitter bots http://bit.ly/1791KdU"
@PykeA @jbouie Are you saying that the Cilizza piece wreaks wrongness, or that it reeks of wrongness?
"Kevin T. Keith @KTKeith: @billmon1 @delong More importantly, we didn't openly endorse torture till Bush. Now we've made it our signature, not aberration."
Polish ambassador in Moscow, Tadeusz Romer's response to the Soviet Note of April 25, 1943, severing Soviet-Polish relations.
Moscow, April 26, 1943.
Mister People's Commissar,
Today at 0:15 in the morning upon your invitation you kindly received me for the purpose of reading to me a Note addressed to my name and with your signature, dated the 25th of this month, informing me of the Soviet Government's decision to sever relations with the Polish Government. Having heard the text of the Note I declared that I can do nothing, but take with regret cognizance of this decision of the Soviet Government, which shall bear full and sole responsibility for this step. However, at the same time I stipulate most emphatically against the motives and conclusions referred to in the Note read to me, which in an unacceptable manner impute to the Polish Government conduct and intentions utterly contradictory to the facts, therefore I render acceptance of this Note impossible. Furthermore, I have mentioned that contrary to the statement in the Note, the Polish Government for nearly two years have sought to obtain explanations on the matter of the missing Polish officers from the Soviet Government, and recently addressed this matter again in the note to Mr. Bogomolov from the 20th of this month.
Since, despite my refusal to accept the Note, I have received it later in my hotel in a sealed envelope of the People's Commissariat for Foreign Affairs, I have the honour to send it back herewith in accordance with my stated above position.
Please accept, Mister People's Commissar, my highest regards.
/-/ Tadeusz Romer
To: Mr. V.M. Molotov
People's Commissar for Foreign Affairs
Vyacheslav Mikhailovich Molotov… on March 5, 1940, as a member of the Politburo of the Central Committee of the A-UCP(b)… [had] voted for the NKVD's recommendation that those officers be murdered. Mass executions commenced on April 5, 1940.
Paul Krugman (2012): Economics in the Crisis:
To say the obvious: we’re now in the fourth year of a truly nightmarish economic crisis. I like to think that I was more prepared than most for the possibility that such a thing might happen; developments in Asia in the late 1990s badly shook my faith in the widely accepted proposition that events like those of the 1930s could never happen again. But even pessimists like me, even those who realized that the age of bank runs and liquidity traps was not yet over, failed to realize how bad a crisis was waiting to happen – and how grossly inadequate the policy response would be when it did happen.
And the inadequacy of policy is something that should bother economists greatly – indeed, it should make them ashamed of their profession, which is certainly how I feel. For times of crisis are when economists are most needed. If they cannot get their advice accepted in the clinch – or, worse yet, if they have no useful advice to offer – the whole enterprise of economic scholarship has failed in its most essential duty.
Matthew Yglesias Watches Keith Hennessy Give a Non-Denial Denial of George W. Bush's Non-Involvement in 2008
Keith Hennessy on Bush and the financial crisis: How Involved Was George W. Bush in the Fall of 2008?: As most of us recall, George W. Bush was president of the United States during the crucial year of 2008 when the economy slid into recession and a series of panics and runs gripped the shadow banking system. As we also recall, Bush did not play a significant public-facing role in the response. Presidential candidates Barack Obama and John McCain said a lot, Federal Reserve Chairman Ben Bernanke was visible, America got to know the previously obscure figure of New York Fed President Timothy Geithner, and Treasury Secretary Hank Paulson was frequently on television. But Bush was president, and one assumes he was doing something. But what, exactly?
- highly-persistent shocks to the long-run level of GDP/Pop
- highly-persistent shocks to the long-run growth rate of GDP/Pop
- short-run transitory shocks to the level of GDP/Pop driven by changes in labor and capacity utilization
Univariate ARIMA just does not cut it as a description…
Barbara Bush: On Jeb Bush in 2016: ‘We’ve had enough Bushes’: "He's by far the best qualified man, but no. I really don't [think Jeb Bush will make a White House bid.] I think it's a great country. There are a lot of great families, and it's not just four families or whatever. There are other people out there that are very qualified and we've had enough Bushes…. He’s the most qualified but I don't think he'll run. There are other families. He'll get all our enemies, half of our friends."
Henry Blodget: It's Official: Paul Krugman Is Right: "The Economic Argument Is Over — Paul Krugman Has Won: For the past five years, a fierce war of words and policies has been fought in America and other economically challenged countries around the world. On one side were economists and politicians who wanted to increase government spending to offset weakness in the private sector…. On the other side were economists and politicians who wanted to cut spending to reduce deficits and 'restore confidence'…. This debate has not just been academic. Those in favor of economic stimulus won a brief victory in the depths of the financial crisis, with countries like the U.S…. Over the course of this debate, evidence has gradually piled up that, however well-intentioned they might be, the 'Austerians' were wrong…. The argument is over. Paul Krugman has won. The only question now is whether the folks who have been arguing that we have no choice but to cut government spending while the economy is still weak will be big enough to admit that."
Greg Sargent: On guns, Dems hold the sensible middle ground: "Fox News poll: During a manhunt, 69 percent of voters want a gun This is generating a bit of excitement on Twitter. But here’s what this Fox News poll also finds: Would you be more likely or less likely to support a political candidate who voted IN FAVOR OF expanding background checks on gun buyers? More likely: 68. Less likely: 20. And: Would you be more likely or less likely to support a political candidate who voted AGAINST expanding background checks on gun buyers? More likely: 23. Less likely: 61…. Clearly, the liberal media conspiracy to manufacture false impressions of overwhelming public support for Obama’s gun-grabbing policies has spread to Fox News."
Sahil Kapur: GOP Conservatives Beg For Another Obamacare Repeal Vote: Feel Left Out of Failed Obamacare Repeal Rituals | Daniel Davies: Guest Post: Sympathy For the Dijsselbloem | It's Not That Simple | Mike Konczal: What's the Best Way to Help the Long-Term Unemployed? Full Employment. | Next New Deal | Henry Farrell: Post-Democracy in Italy and Europe | Yes. Steve Keen Is a 100% Bullshit Artist. Why Do You Ask? | When Nassim Taleb Attacks | Updates | Banksophilia | Paul Krugman: A Brief Note on Macroeconomics and Ethics | A plain blog about politics: Scott Walker's ACA Op-Ed and Lazy Mendacity |
Why oh why can't we have a better press corps? Because the Washington Post continues to pay hacks like Robert Samuelson.
Paul Krugman does the intellectual garbage collection:
Academic Non-Obscurity: Robert Samuelson tries to minimize the significance of the Reinhart-Rogoff affair; and that, I realized, offers an interesting window into why, in fact, the affair matters so much.
Samuelson starts by excusing R-R on the grounds that the economic crisis predates their blooper:
And we have an answer!:
Zaldrīzes buzdari iksos daor.
“A dragon is not a slave.”
Of note here: the word for dragon, zaldrīzes. Also, buzdari is stressed on the second syllable even though the a is not long because this isn’t actually a High Valyrian word: It’s an Astapori word that Dany is using on purpose. The High Valyrian word for slave is dohaeriros (whose root you may recognize), but the word they use in Astapor is buzdar, which has its roots in Ghiscari.
Follow Stuffed Jeremy Bentham (@StuffedJeremyB) on Twitter or Track #nytfriedmanforum for Important News About the New York Times Tom Friedman Forum!!
Why oh why can't we have a better press corps?
Highlighted for Today: Mark Thoma and Stephanie Kelton on Weblogging and Standard Ivy-Covered Academia: Kauffman Foundation 2013 Economic Webloggers' Forum (Highlighted for April 25, 2013)
Panel discussion – Economic and Financial Weblogging and Standard Ivy-Covered Academia (Speaker: Mark Thoma; Discussant Stephanie Kelton; Moderator: Bob Strom)
Abba Lerner (1943): "Functional Finance":
The first financial responsibility of the government (since nobody else can undertake that responsibility) is to keep the total rate of spending in the country on goods and services neither greater nor less than that rate which at the current prices would buy all the goods that it is possible to produce. If total spending is allowed to go above this there will be inflation, and if it is allowed to go below this there will be unemployment. The government can increase total spending by spending more itself or by reducing taxes so that taxpayers have more money left to spend. It can reduce total spending by spending less itself or by raising taxes….
Statement made by Josef Blösche following his arrest in 1969.
The Liquidation of the Warsaw Ghetto: I have looked at the given photocopy. Concerning the person in the SS uniform, standing in the foreground of a group of SS members and holding a sub-machine gun in firing position and wearing a steel helmet with motorcycle goggles, this is me.
The picture shows that I, as a member of the Gestapo office in the Warsaw Ghetto, together with a group of SS members, am driving a large number of Jewish citizens out from a house. The group of Jewish citizens is comprised predominantly of children, women and old people, driven out of a house through a gateway, with their arms raised.
The Jewish citizens were then led to the so-called Umschlagplatz, from which they were transported to the extermination camp Treblinka.
Reinhart-Rogoff a Week Later: Why Does This Matter?: Well this is progress. We are seeing distancing by conservative writers on the Reinhart/Rogoff thesis. In Feburary, Douglas Holtz-Eakin wrote:
The debt hurts the economy already. The canonical work of Carmen Reinhart and Kenneth Rogoff and its successors carry a clear message: countries that have gross government debt in excess of 90% of Gross Domestic Product (GDP) are in the debt danger zone. Entering the zone means slower economic growth. Granted, the research is not yet robust enough to say exactly when and how a crisis will engulf the US, but there is no reason to believe that America is somehow immune. (h/t QZ.)
I occasionally get the question of what the above phrase means. It was my tagline when I wrote at my own blog and it is on the rotating lines at the top of this blog. It is a quote from Herbert Hoover, a strong believer in eugenics along with everything else. The full quote is as follows:
In its broad aspects, the proper feeding of children revolves around a public recognition of the interdependence of the human animal upon his cattle. The white race cannot survive without dairy products.
In a sense, what Hoover is doing here is combining his very real concern for nutrition and food distribution with his racial sensibilities. The intertwining of racial ideology and social reform was all too common in the early 20th century and engaged in by figures ranging from Theodore Roosevelt to Margaret Sanger.
You can see this quote on Google Books in the very exciting journal The Dairy World (and what a wide world it is), 1922, Volume 1, p.18. Also, the equally thrilling publication The Milk Dealer, Volume 11, 1921, p. 86
…. Yglesias makes the connection between Hoover’s remarks and the soon skyrocketing milk prices (due to the Truman-era poison pill on milk without a farm bill). Obama’s plot to destroy white people is now clear for all to see!!!
The University of California Press is going to put out a new edition of Charles Kindleberger's World in Depression early next year.
J Bradford DeLong and Barry J. Eichengreen: New preface to Charles Kindleberger,* The World in Depression 1929-1939*:
The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. We see unemployment, youth unemployment especially, soaring to unprecedented heights. Financial instability and distress are widespread. There is growing political support for extremist parties of the far left and right.
Both the existence of these parallels and their tragic nature would not have escaped Charles Kindleberger, whose World in Depression, 1929-1939 was published exactly 40 years ago, in 1973. Where Kindleberger’s canvas was the world, his focus was Europe. While much of the earlier literature, often authored by Americans, focused on the Great Depression in the US, Kindleberger emphasised that the Depression had a prominent international and, in particular, European dimension. It was in Europe where many of the Depression’s worst effects, political as well as economic, played out. And it was in Europe where the absence of a public policy authority at the level of the continent and the inability of any individual national government or central bank to exercise adequate leadership had the most calamitous economic and financial effects.
Reinhart-Rogoff, Continued: About the slow growth/debt connection: I’ve done a quick and dirty mini-RR for the period 1950-2007 (starting 1950 because that’s where the Total Economy Database starts), focusing only on the G7. If you look at the scatterplot, there does seem to be an association between high debt and slow growth. But I’ve coded the points by country — and if you look at it, you see that most of the apparent relationship is coming from Italy and Japan; Britain didn’t seem to suffer much from its high debt in the 1950s. And it’s quite clear from the history that both Italy and (especially) Japan ran up high debts as a consequence of their growth slowdowns, not the other way around.
Juan Cole: Report: Highest US Officials Responsible for Use of Torture: "The political reality of the United States in the world is that of blowback…. The US spent the 1980s encouraging Muslim radicals to engage in ‘freedom fighting’ against the leftist government of Afghanistan, and that policy certainly is implicated in the creation of al-Qaeda. We have been suffering with lack of security ever since. And what would have happened if Washington had just left the Communist government in place? Wouldn’t it have gone the same way as the former Communist regime of Tajikistan or Kyrgyzstan? Which of you feels threatened by those former Soviet Socialist Republics?The policy of deliberate deployment of torture by US officials, in Guantanamo, Abu Ghraib (Iraq) and Bagram (Afghanistan), as well as black sites in Poland and elsewhere, during the past decade, has spawned a whole new wave of blowback. The US is not responsible for terrorism against it, and the terrorists are horrible human beings. But let’s just say that a more responsible US foreign policy would make less trouble for the rest of us."
Cosma Shalizi: Ken MacLeod, The Cassini Division: "Damn that's good. Ahem. That's not how I meant to begin this. I wanted to say that The Cassini Division is a marvelously intelligent, gripping and lightning-fast book, a witty wide-screen blitzkrieg of an anarcho-communist hard-science space opera with brains to spare. Which it is. And that there are some Deep Issues in politics and ethics here, like the Singularity ("the Rapture for nerds"), post-humanity, conflicts between intelligent species, and how to run a socialist utopia of thirty billion people…. And that I have no idea whether the protagonist is the savior of the human race, the biggest mass-murderer in history, or both. As Constant Readers know, I'm usually good for a few thousand words of agonizing (to read) reflections about that sort of thing. But to hell with that. The Cassini Division made me want to laugh, cheer, sing The Internationale, read everything else by MacLeod, and join the Cassini Division when I grow up. I haven't had this much fun with a book in ages."
Nancy Churchman: Public Debt Policy and Public Extravagance: The Ricardo-Malthus Debate | Lexicon Urthus: A Dictionary for the Urth Cycle | Lawrence Ball: The Case for 4% Inflation | "Casablanca" Script http://www.youtube.com/watch?v=tlP42BemRrk | Simon Kirby: Obsessing about triple dips misses the point. We havent had the recovery yet. | Chinese Restaurant Owner Says Robot Noodle Maker Doing “A Good Job!” | Josh Bivens: How far from full labor market recovery are we? Part I | Dylan Matthews: George W. Bush’s presidency, in 24 charts | Ugo Panizza and Andrea F Presbiteros: Public debt and economic growth, one more time |
Middle Class Political Economist: Reinhart/Rogoff Gets the Colbert Treatment: Via Paul Krugman, Steven Colbert takes on Reinhart and Rogoff. Also be sure to check out his interview with Thomas Herndon.
Andrew Bacevich trashing Dwight MacDonald, Reinhold Niebuhr, and Arthur Schlesinger, Jr. for their attacks on Henry Wallace…
I had always thought that Henry Wallace's major sin was trying to elect Thomas Dewey in 1948.
Jonathan Portes reminds me that his which (macro)-economists are worth listening to? piece is from last June--and that I noticed it at the time. Clearly I need to recognize that my internal memory is full, and need to Google everything in order to find out what I know…
Jonathan came up with a small (and gratifying to me) whitelist of economists whom one should presume are to be taken seriously--because they have a coherent framework for looking at the world, and have broadly been correct in their forecasts since the world changed in 2007. It consists of:
- Paul De Grauwe
- Brad DeLong
- Richard Koo
- Paul Krugman and http://krugman.blogs.nytimes.com/2009/05/02/liquidity-preference-loanable-funds-and-niall-ferguson-wonkish/
- Adam Posen
- Martin Wolf
- Simon Wren-Lewi
And he sets forth a very small greylist of people whose analytical framework is neither clear nor transparent:
And he presents a blacklist of institutions: "[those] writing editorials at the Financial Times, macroeconomic forecasters at the OECD, the European Department at the IMF (up until recently - their recent stuff on both UK and eurozone has been pretty good), the senior leadership at the Bank of England and the Treasury, and probably worst of all senior economic policymakers at the ECB and European Commission. Oh, and the credit ratings agencies."
But he does not present a blacklist of individuals--a list of economist-goats, of people using a badly-flawed framework who have been repeatedly proven wrong since 2007 and have failed to mark their beliefs to market, whether because they do not believe in marking their beliefs to market, because they are seeking high office, because they are playing to a base that they hope will reward them, or for some other reason.
He suggests that readers come up with such a list.
So here is my start: a few people who, when I see their byline at the head of a piece, I now tend to presume that they are likely to get something badly wrong. In the order in which they have crossed my desk recently: Niall Ferguson, Allan Meltzer, Peter Schiff, Tim Geithner, Wolfgang Schäuble, Robert Lucas, Anders Aslund, John Taylor, Michael Boskin, Alberto Alesina.
UPDATE: Commenters add: John Cochrane, Glenn Hubbard, Alan Greenspan, Casey Mulligan, Eugene Fama, Hans-Werner Sinn, James Bullard, David K Levine, Luigi Zingales, Robert Barro, Douglas Holtz-Eakin,
And there are some commenters add who I would deny are really economists at all: Ed Prescott, Steve Landsburg, Robert Murphy, Robert Samuelson,
And I would transfer from the commenter-added-blacklist to the greylist: James Hamilton, Raghuram Rajan, Gregory Mankiw,