Josh Bivens: (Final?) Notes on the Reinhart/Rogoff Saga
Global Inequality: Saturday Twentieth Century Economic History Weblogging

Noted for April 27, 2013

  • 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 |

  • Henry Farrell: The Reinhart-Rogoff Two-Step: "Paul Krugman on the latest Reinhart-Rogoff self-defense: 'OK, Reinhart and Rogoff have said their piece. I’d say that they’re still trying to have it both ways, on two fronts. They deny asserting that the debt-growth relationship is causal, but keep making statements that insinuate that it is. And they deny having been strong austerity advocates – but they were happy to bask in the celebrity that came with their adoption as austerian mascots, and never to my knowledge spoke out to condemn all the “eek! 90 percent!” rhetoric that was used to justify sharp austerity right now.' Maybe worth noting that this is a variant of John Holbo’s Two-Step of Terrific Triviality: 'To put it another way, [Jonah] Goldberg is making a standard rhetorical move which has no accepted name, but which really needs one. I call it "the two-step of terrific triviality". Say something that is ambiguous between something so strong it is absurd and so weak that it would be absurd even to mention it. When attacked, hop from foot to foot as necessary, keeping a serious expression on your face. With luck, you will be able to generate the mistaken impression that you haven’t been knocked flat, by rights. As a result, the thing that you said which was absurdly strong will appear to have some obscure grain of truth in it. Even though you have provided no reason to think so.'"

  • Betty Cracker vs. Keith Hennessy: Balloon Juice » Too soon? Yep. Too soon.: "As the push to rehabilitate the worst president in living memory proceeds apace, former Bushies are crawling out the woodwork…. In a post entitled 'George W. Bush is smarter than you', someone named Keith Hennessey, the former director of the George W. Bush National Economics Council (which is like being the Emeritus Chair of the Sarah Palin Center for Teen Pregnancy Prevention — discuss!) invites citizens to 'test your own assumptions and thinking about our former President'…. Kind of surprising that the George W. Bush National Economics Council would appoint an eighth-grader fresh from an introduction to logic class as director. Oh wait… 'Might it be possible that an intelligent, thoughtful conservative with different values and priorities than your own might have reached a different conclusion than you? Do you really think your policy views derive only from your intellect?' Uh-oh — Iooks like someone didn’t comprehend the straw man logical fallacy lesson! But let’s play along: The thing is that the aforementioned world-historical clusterf#@&s were predictable — and were in fact predicted in real time by many people. It doesn’t matter if Bush’s policy views were derived from his 'intellect', Cheney’s colon or a Magic Eight Ball; they were not only wrong, they were disastrously and measurably so on virtually every important front – domestic, international, financial and social. So a hearty “f#$% off” to you, Mr. Hennessey…. It’s too soon for a rehab tour. With a bit of luck, you might be able to sell this stinking load of horseshit to my great-great-grandchildren. But I wouldn’t bet the farm on it."