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June 2013

What Is "Grigua's Prayer"?

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Brad DeLong: John Maynard Keynes's Life, 1918-1936: At the Versailles peace conference the new democratic German government was treated as a foe rather than a potential ally. The object became to extract as much in plunder and reparations from Germany as possible. South African Prime Minister Jan Christian Smuts wrote about how he and Keynes sat up night after night and:

rail[ed] against the world and the coming flood. And I tell him that this is the time for Grigua’s Prayer (the Lord to come himself and not to send his Son, as this is not a time for children). And then we laugh, and behind the laughter is [Herbert] Hoover’s horrible picture of thirty million people who must die unless there is some great intervention. But then again we think that things are never really as bad as that; and something will turn up, and the worst will never be. And somehow all these phases of feeling are true and right in some sense… (Robert Skidelsky, Hopes Betrayed, page 373, quoting J.C. Smuts).

Why is this "Grigua's Prayer"?

Continue reading "What Is "Grigua's Prayer"?" »

L'Espret de l'Escalier: June 30, 2013

Esprit de l'Escalier: June 30, 2013

  • But, @Prozakonomi, David Graeber claims I want to be him. But I don’t want to be a person who thinks the Fed loans to banks at Prime Rate! I don't want to be a person who thinks that deposits are assets to a bank!! I really do not want to be such a person!!! #GraeberErrors

  • A correspondent asks: "Is it possible that we are no longer as tolerant about right-wing b/s from faux wannabe technocrats desperate to strike a bipartisan balance or find excuses for Republicans as we were 15 years ago? Perhaps it is that the financial crisis and the ensuing Great Recession focused our minds, and it did not focus theirs, and the weakness of their thinking and their models became glaringly obvious to us." That may be part of it. Rather more of it, from my perspective at least, is their reaction to Obama. For somebody like Clive Crook, Obama ought to be the Second Coming: rhetorically impressive, a living demonstration that he quality of opportunity is very real, And so damned bipartisan centrist in his policies it makes my teeth hurt--George H.W. Bush's security policy, Jeb Bush's immigration policy, Bill Clinton's tax policy, John McCain's climate policy, Mitt Romney's health-care policy, and no tolerance for mortgage cramdown or bank nationalization or great government spending missions. In the 1990s, their reaction to Bill Clinton was: "Is a lying lecherous hick from Arkansas, and I can't trust him and don't support him." And they had a point. But the same "I can't trust him and don't support him"--attitude toward Obama? This "he has governed as a divider by proposing John McCain's climate policy, Bill Clinton's tax policy, and Mitt Romney's health-care policy"? And fewer excuses were made for Gingrich than have consistently been made and are currently being made for McConnell and Boehner.

Continue reading "L'Espret de l'Escalier: June 30, 2013" »

On the Perpetual Decline of Things, and Niall Ferguson: Answering Ashok Rao's Request Weblogging

Ashok Rao calls for help via the Twitterphone:

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Needless to say, Ashok needs no help. If he wished, he could certainly say, in the immortal words of Darth Vader:

I've been waiting for you, Niall Ferguson. We meet again, at last. The circle is now complete. When I left you, I was but the learner; now I am the master…

Nevertheless, I will answer the Twitterphone…

Continue reading "On the Perpetual Decline of Things, and Niall Ferguson: Answering Ashok Rao's Request Weblogging" »

Noted for June 30, 2013

  • Izabella Kaminska: Advantage Abe: "The first bits of post-Abenomics data are finally trickling in. And so far, it has to be said, it’s looking good for Shinzo Abe. Lombard Street Research’s Michael Taylor takes us through the initial findings…. 'A recovery in industrial production and consumer spending points to above-trend growth in Q2. Consumer price inflation may soon make a brief appearance above zero on the back of higher energy and import prices. But deflation isn’t beaten yet. The splurge of Japanese data overnight confirms the overall positive trend in the economy. Notably, industrial production increased by 2% in the month of May, the fourth consecutive monthly increase. Output in May was boosted by electronic components and machinery in particular. Both industrial production and exports are now on an upward trend (see chart below). To a large extent this recovery is due to the weaker yen. Although the yen is above its recent lows against the US dollar, it is still 19% lower than last November…. The fall in the yen has coincided with an equity market rally. This, plus an increase in inflation expectations triggered by aggressive monetary ease from the Bank of Japan, is also helping to boost consumer spending. For May household spending data show a 0.1% monthly gain, while retail trade data were up by 1.5%. Both are on an upward trend and will support another quarter of fairly robust GDP growth in Q2. Meanwhile headline CPI inflation was -0.3% in May, up from -0.7% in April.'"

Continue reading "Noted for June 30, 2013" »

Felix Salmon Firmly Believes Not in the Inflation-Expectations Imp, But in the Tightening Tommyknockers...

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Felix Salmon:

Chart of the day, Fed-tightening edition: QE turns out to be a surprisingly effective way of signalling to the market that rates are going to stay at zero for a very long time. And when you say that QE isn’t likely to stay in place much longer, the market takes that as tantamount to saying that rates are not going to stay at zero for nearly as long as they had thought…. The markets… want to see the Fed putting its money where its mouth is. As a result, when the Fed starts saying that it’s going to taper, the market sees rates rising again. Fed officials are desperately making a concerted attempt to tell the markets that they’re wrong, but history tells us that when policymakers rail against the markets, the markets smell blood and often end up turning out to be right. The markets don’t care about “forward guidance”; they consider the Fed’s deeds to be more important than its words. As a result, so long as the Fed says that tapering is on the horizon, we’re never going to return to the interest rates we were seeing just a month or two ago.

Today We Eat Broccoli Tempura for Dinner

Justice Ginsburg, a year ago:

Consider the chain of inferences the Court would have to accept to conclude that a vegetable-purchase mandate was likely to have a substantial effect on the health-care costs borne by lithe Americans. The Court would have to believe that individuals forced to buy vegetables would then eat them (instead of throwing or giving them away), would prepare the vegetables in a healthy way (steamed or raw, not deep-fried), would cut back on unhealthy foods, and would not allow other factors (such as lack of exercise or little sleep) to trump the improved diet...

Liveblogging World War II: June 29, 1943

Franklin D. Roosevelt to J. Robert Oppenheimer:

June 29, 1943


My dear Dr. Oppenheimer:

I have recently reviewed with Dr. [Vannevar] Bush the highly important and secret program of research, development and manufacture with which you are familiar. I was very glad to hear of the excellent work which is being done in a number of places in this country under the immediate supervision of General L.R. Groves and the general direction of the Committee of which Dr. Bush is Chairman. The successful solution of the problem is of the utmost importance to the national safety, and I am confident that the work will be completed in as short a time as possible as the result of the wholehearted cooperation of all concerned.

Continue reading "Liveblogging World War II: June 29, 1943" »

Noted for June 29, 2013

  • Elizabeth Anderson uses a Friedrich von Hayek to dismember a Greg Mankiw argument (2005): "I deserve my pretax income": Today's post is a tribute to F. A. Hayek.  I was going to commend Hayek earlier, for nailing the economic case against comprehensive planning…. I've been clearing the ground by explaining why certain sorts of arguments… don't work…. In this post, I'll explain why the claim 'I deserve my property' doesn't do so…. In two of his important works of political economy, The Constitution of Liberty (see esp. ch. 6), and Law, Legislation, and Liberty (vol. 2), Hayek explained why free market prices cannot, and should not, track claims of individual moral desert…. The basic function of free market prices is informational… signals to producers as to where their products are most in demand (and to consumers as to the opportunity costs of their options).  They reflect the sum total of the inherently dispersed information…. It's a short step from this core insight about prices to their failure to track any coherent notion of moral desert. Claims of desert are essentially backward-looking. They aim to reward people for virtuous conduct…. Free market prices are essentially forward-looking…. This is one of capitalism's great virtues…. Consequently, capitalism is constantly pulling the rug out from underneath even the most thoughtful, foresightful, and prudent production plans of individual agents. However virtuous they were, by whatever standard of virtue one can name, individuals cannot count on their virtue being rewarded in the free market…. Sheer dumb luck is also, ineradicably, a prominent factor determining free market returns.  And nobody deserves what comes to them by sheer luck."

  • John Holbo: Unintended Consequences of Shelby?: "I’m not a big believer in ‘heighten the contradictions’. Too Lenin-meets-slatepitch. But I wonder to what extent the Shelby decision will prove disadvantageous for Republicans because the party will now pursue measures that are inconsistent with making any credible attempt to not be a regional, ethnocentric party…. Maybe it will backfire, as voter discouragement measures seem to have backfired in 2012. Or maybe it will work, at least in the near term. Minorities will vote in smaller numbers. That will help Republicans. But it seems like doom for Republican moderates, hence death for tender green shoots of Republican moderation (were one to believe such a delicate blossom could ever compete with that hardiest of conservative perennials – the extremist spasm.) No Republican is allowed to call a fellow Republican a racist, obviously… no moderate Republican will be able to talk, critically, about what their fellow Republicans are going to be up to, thanks to Shelby…. The overall optics are going to be terrible… the talk is going to get ugly. But no one on the right is allowed to notice it getting ugly…. Lewis is a Rubio fan, and I can see him worrying: in 12 years, is it going to be possible to have a figure like Rubio…. Rubio-types will look to white Republicans like a liability waiting to happen. When is he finally going to call us racists, which will have the Times all over us in a New York minute, costing us more than all the good he ever did for us, in terms of minority outreach…. It’s too clever by half to argue that vote suppression measures will surely backfire, having the opposite of the intended effect. So let’s just ask: to what extent will Shelby discourage the Republican Party from mending its ways (by liberal lights, of course)?"

Continue reading "Noted for June 29, 2013" »

It's Broccoli Day! Our Annual Day on Which We Give Thanks to Justice Ginsburg, the Dissent-That-Became-an-Opinion, and the Affordable Care Act

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  • 1 whole-wheat (9 inch) pie crust
  • 3 tablespoons olive oil
  • 2 cloves minced garlic
  • 1 minced onion
  • 1 1/2 cups chopped fresh broccoli
  • 1 1/2 cups shredded swiss cheese
  • 4 eggs, well beaten
  • 1 1/2 cups lowfat milk
  • 1/1 teaspoon salt
  • 1 teaspoon black pepper
  • 1 1/2 more cups chopped fresh broccoli

Odds That Erick Erickson a False-Flag Troll Now at 90%...

Paul Krugman:

The Truthiness Is Out There: OK, this is awesome. Dylan Byers at Politico gets Erick son of Erick to respond to my observation that, although he rants about the rising prices of milk and bread — which somehow has something to do with pundits riding the Acela — the truth is that milk and bread prices have been flat for about five years, and in particular have gone nowhere despite all that money the Fed has printed. And Erickson’s response is, hey, it isn’t true, but people feel that it’s true:

Not everything is academic or chartable and sometimes the accuracy of the chart isn’t as real to people as the perception they have that their grocery store bills are getting more expensive though their shopping habits haven’t changed.… Seriously, Paul’s point is correct, but it is an issue of perception of people versus the reality of his chart. He can certainly go tell people milk prices haven’t gone up, but good luck getting them to believe him.

Notice, by the way, the implication that I don’t appreciate the problems real people (who don’t eat quiche or ride the Acela) are facing; actually, I do, but those problems are lack of jobs and stagnant wages, not rising prices. And if you want to solve problems, getting the nature of those problems right matters.

But then, only elitists want to solve problems; true men of the people just vent, and what matters is perception, not truth.

From the Opening of George MacDonald Fraser's "The Candlemass Road"...

Apropos of themes raised by George Orwell's "Wells, Hitler, and the World State":

The Candlemass Road: A FELLOW OF CLARE HALL, being in that state where another hour’s tippling should render him swine drunk, asked me, if I had a choice of all mankind that ever lived, which would I choose to sit by me as a guest at the next college feast. I made excuse that I was not of his learned society, but he said all was one for that, and I must choose or be fined in stoupes for the company. Still I would have put him off, for I longed to be quiet in my corner by the fire, away from the babble and ass-laughter of him and his companions, and have no part in their silly conceits designed to show off their wit and learning (and little they had of either) in their cups….

Continue reading "From the Opening of George MacDonald Fraser's "The Candlemass Road"..." »

George Orwell: Wells, Hitler and the World State

Paul Krugman sends us to George Orwell writing in the summer of 1941:

Wells, Hitler and the World State: All sensible men for decades past have been substantially in agreement with what Mr. Wells says; but the sensible men have no power and, in too many cases, no disposition to sacrifice themselves. Hitler is a criminal lunatic, and Hitler has an army of millions of men, aeroplanes in thousands, tanks in tens of thousands. For his sake a great nation has been willing to overwork itself for six years and then to fight for two years more, whereas for the common-sense, essentially hedonistic world-view which Mr. Wells puts forward, hardly a human creature is willing to shed a pint of blood.

Continue reading "George Orwell: Wells, Hitler and the World State" »

Claire McCaskill Blasts "Rape Culture", Warns Against "Placing Blame In All The Wrong Places"

Claire McCaskill:

Missouri Senator Blasts Rape Culture, Warns Against 'Placing Blame In All The Wrong Places': McCaskill responded this Thursday… explained that, since many people who still don’t think rape culture is a real thing, arguments like Taranto’s are repeated beyond the pages of the WSJ:

Mr. Taranto says that I’m involved in a crusade to “criminalize male sexuality.” For decades, from my time as a courtroom prosecutor and throughout my career in public service, I have indeed done my best to criminalize violence. And I have never subscribed to Mr. Taranto’s bizarre and deeply out of touch understanding of sexual assault as somehow being a two-way street between a victim and an assailant. Mr. Taranto’s arguments contribute to an environment that purposely places blame in all the wrong places, and has made the current culture and status quo an obstruction to sorely needed change.

What to Do with the Hypertrophied Financial Sector?

We are live at Project Syndicate

Back in 2011, I wrote:

In 1950, finance and insurance in the United States accounted for 2.8% of GDP…. Today, it is 8.4% of GDP…. If the US were getting good value from the extra 5.6% of GDP that it is now spending on finance and insurance--the extra $750 billion diverted annually from paying people who make directly useful goods and provide directly useful services--it would be obvious in the statistics… diverting that large a share of resources away from goods and services directly useful this year is a good bargain only if it collectively has a substantial amount of what financiers call "alpha", only if it boosts overall annual economic growth by 0.3%--or 6% per 25-year generation….

Why has the devotion of a great deal of skill and enterprise to finance and insurance sector not paid obvious economic dividends? There are two sustainable ways to make money in finance: find people with risks that need to be carried and match them with people with unused risk-bearing capacity, or find people with such risks and match them with people who are clueless but who have money…

Continue reading "What to Do with the Hypertrophied Financial Sector?" »

Hoisted from Archives from One Year Ago: Very Rough Transcript: UC Berkeley July 2, 2012 SCOTUS ACA Decision Panel

Corrections from anybody listening to the panel most welcome...

John Ellwood: Welcome everybody, welcome to our session on the Supreme Court ruling on the Affordable Care Act, or if you don’t like that "ObamaCare"…

Brad DeLong: RomneyCare!

John Ellwood: We are fair and balanced here at Berkeley.

Last and first, this session is sponsored by the Goldman School of Public Policy, which is footing the bill, and I thank my gracious dean; by the Robert Wood Johnson Post-Doctoral Program in Healthcare; and by the Berkeley Law School at Boalt Hall, which has kindly given us this room.

Last Thursday, obviously, the Supreme Court released its opinion on the Affordable Care Act. In my view, the decision represents another step in the what I would call the 100-year struggle between those I see on the left to provide as close to universal access to healthcare as possible, to control the costs of healthcare, and to improve the quality of healthcare. The purpose of today’s event is to begin a conversation about the case, and to continue the conversation on these issues: access, cost, and quality.

Continue reading "Hoisted from Archives from One Year Ago: Very Rough Transcript: UC Berkeley July 2, 2012 SCOTUS ACA Decision Panel" »

A Gallon of Milk, a Loaf of Bread, Homosexuals and Mexicans Who Know Their Place--and an End to the Acela--and Wilderness Is Paradise Enow!: I Am Now More than Half-Convinced That Erick Erickson Is a False-Flag Troll Weblogging

This more than half convinces me, personally, that Erick Erickson is a false-flag troll:

Why America Hates Washington: First class… Acela Express…. Thomas Freidman…. The overworked steward hadn’t taken Friedman’s tray. Friedman yelled angrily about this being why the nation was collapsing…. The New York-Washington bubble remains largely disconnected from the rest of the country…. Washington, DC… cool with the NSA spying on ordinary Americans… immigration reform that will give immigrants preferential hiring status… is the most important thing ever… shutting down coal power plants is the most important thing ever… IRS… out of control… Congress would rather bribe each other to pass immigration plans…. Gun control, global warming, gay marriage, and immigration are the greatest issues of the day to those in Washington who hang around the green rooms…. The sage of creased pants bipartisanship, David Brooks, reports on Jesus’s letter to the Corinthians. Thomas Friedman… yells at train stewards… the Washington to New York crowd laps them all up…. The rest of America is nervous about where their next meal and paycheck are coming from, how they are going to afford to bail their kids out of crumbling schools, and the price of a gallon of milk and loaf of bread that keep going up though Ben Bernanke tells them there is no inflation…

Continue reading "A Gallon of Milk, a Loaf of Bread, Homosexuals and Mexicans Who Know Their Place--and an End to the Acela--and Wilderness Is Paradise Enow!: I Am Now More than Half-Convinced That Erick Erickson Is a False-Flag Troll Weblogging" »

Noted for June 28, 2013

  • Mike Konczal: Can the Taper Matter? Revisiting a Wonkish 2012 Debate: "An objective bystander would say that if the taper is being read as tightening even though future expectations language is the same, it means that we should be throwing everything we have at the problem…. As Woodford writes, '[t]he most obvious source of a boost to current aggregate demand that would not depend solely on expectational channels is fiscal stimulus.' We should be expanding, rather than contracting, the portfolio channel, while also avoiding the sequester and extending the payroll tax cut. Arguments, like Woodford's, about the supremacy of any one approach tend to get knocked down by all the other concerns."

Continue reading "Noted for June 28, 2013" »

Noah Smith Eats Greg Mankiw's Just Desserts

Noah Smith:

Noahpinion: "I get what you get in ten years, in two days." - Chris Brown

Plenty of folks have turned out to attack Greg Mankiw's essay… focused on Mankiw's numbers and factual assertions. I thought I'd take a different approach… values…. The usual economist case for income redistribution is based on utilitarianism; the idea is that $1000 matters more to a poor person than to a rich person. Mankiw wants to ditch this idea in favor of a value system based on "just desserts"… "people should receive compensation congruent with their contributions"….

I think it's worthwhile to think through the implications of Mankiw's "just desserts" value system.

Continue reading "Noah Smith Eats Greg Mankiw's Just Desserts" »

Immigration Reform Passes Senate 68-32


14 GOP AYEs: Alexander, Ayotte, Chiesa, Collins, Corker, Flake, Graham, Hatch, Heller, Hoeven, Kirk, McCain, Murkowski, Rubio.

So what happened to McConnell's whip this time--to the "you can pretend to negotiate as much as you want, as long as you always delay and return home for the final cloture vote"?

Something Wrong with the Framing of CEO Pay in Steven Kaplan's Feldstein Lecture? Larry Mishel Makes a Good Case That It Is

I have lots of respect for both Steve and Larry, but it seems to me that Larry wins the first set, 6-3:

Steven Kaplan:

I compare the average estimated pay of S&P 500 CEOs to the average adjusted gross income (AGI) of taxpayers in the top 0.1 percent of the income distribution. Figure 2 shows that average estimated pay for S&P 500 CEOs, relative to the average income of the top 0.1 percent, is about the same in 2010 as it was in 1994…. Over the last twenty years, then, public company CEO pay relative to the top 0.1 percent has remained relatively constant or declined. These patterns are consistent with a competitive market for talent. They are less consistent with managerial power. Other top income groups, not subject to managerial power forces, have seen similar growth in pay.

Continue reading "Something Wrong with the Framing of CEO Pay in Steven Kaplan's Feldstein Lecture? Larry Mishel Makes a Good Case That It Is" »

Ann Marie Marciarille: Talking Back to David Rivkin and Elizabeth Foley on IPAB

David Rivkin and Elizabeth Foley have a vivid Op-Ed in the June 19, 2013 Wall Street Journal. Titled: "An ObamaCare Board Answerable to No One" the piece begins by singling out the Independent Payment Advisory Board (IPAB) as the ACA's "new beast, with god-like powers."  They then offer "a vivid illustration of the extent to which life-and-death medical decisons have already been usurped by governmennt bureaucrats" -- the Sarah Murnaghan transplant case.

But, IPAB hasn't been formed yet. IPAB, even once formed, will have no individual utilization review decision power -- the ACA leaves this power where it has vested for some time now, in the hands of commercial insurance company utilization review schemes. No such review exists for government funded insurance. What, then, could Rivkin and Foley be talking about when discussing Secretary Sebelius's decision to maintain two separate lung-transplant lists: one for children and one for adults? Will IPAB be in charge of the difficult decisions that must be made about organ transplant availability?

Organ transplant availability is a sorry mess in the United States, a morass of  easily-gamed conflicting lists, rules, and programs. You can learn more about the gaming of an overwhelmingly de-centralized system here:  Interestingly, it is not the government that has made it so chaotic.

Now, maybe you didn't know these things.  And maybe some of the readers of the Wall Street Journal didn't know these things.  But I am going to guess that David Rivkin and Elizabeth Foley could have found these things out with some research.  Maybe the Wall Street Journal's fact checkers could have helped them out.

But then the Op-Ed would have to have taken on IPAB's defects on its own terms.


Ann Marie Marciarille: DOMA and the ACA

Wonkblog's Sarah Kliff and others have begun to consider whether it is necessarily in a gay couple's best financial interest, under the ACA, to be married. She posts that individuals who may qualify for premium supports and subsidies through the exchanges or even expanded Medicaid eligibility may combine their incomes into a household where neither spouse is entitled to such subsidies or expanded Medicaid eligibility.  Without ever acknowledging that these same marital disincentives may also exist for heterosexual couples -- the way the federal tax code systematically punishes two relatively high wage earner marital households springs to mind -- she talks about assessing the "financial interest" of a gay couple.

I do think that same sex couples contemplating marriage will have some serious financial and estate planning considerations to address,  but they should extend far beyond the immediate concern of health care premium supports under the ACA and extend all the way to Medicare eligibility.  The financial implications of marriage -- in theory (and for significant demographic cohorts -- in reality)  a lifetime commitment  -- actually merit both a short term analysis and a long term analysis.

A short term analysis might look at eligibility for family based coverage under a spouse's employer sponsored health insurance plan.  This is a good time to remember that employers are not required to offer family coverage under the ACA.  A private employer may meet its play or pay obligation, in short, by offering individual coverage under an employer sponsored commercial plan.  A spouse of any gender would then be pushed to the exchanges, Medicaid, or their own employer's insurance plan. If the spouse's employer also offers only individual coverage, then any children of the household will be pushed to Medicaid, Medicaid extension programs, or the exchanges themselves.

Mind bogglingly complex to contemplate each member of a single household enrolled in a different insurance plan? Yes. A concern peculiar to same sex couples contemplating marriage? No.

A longer term analysis might look at social security eligibility and its handmaiden, Medicare eligibility. Depending upon how a family organizes its wage income production, a spouse may qualify for a more generous benefit under the breadwinner's work record than under their own, particularly if labor force attachment has been attenuated by family or other responsibilities.  But you don't get to claim social security retirement under the employment record of a spouse of an extremely brief marriage.

Remaining unmarried to qualify for ACA premium support while planning to marry in the future for spousal social security benefits and Medicare eligibility, in short, may be inconsistent approaches. At the very least, questions of timing must be considered.

Yes, affordable health insurance coverage matters here and now beyond words. Medicare coverage during your peak health care consuming years matters too, for most Americans.

Each couple will need to do the math for themselves with so many individually relevant variables in the mix: work record, ages at marriage, anticipated retirement ages, likely income trajectories. But it won't be as simple, for many, as determining how best to attain premium supports under the ACA or to attain expanded Medicaid eligibility -- as pressing as those needs are for many.


Does Allan H. Meltzer Look at Numbers?: Thursday Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging

Allan H. Meltzer writes:

Quantitative Quicksand: The US economy has not responded to the Fed’s monetary expansion, because America’s biggest problems are not liquidity problems…. One major problem [is] insufficient investment…

And indeed it is: investment in equipment and software has recovered quite nicely from its recession-trough lows--and in fact is very high given the amount of slack capacity in the American economy today:

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Continue reading "Does Allan H. Meltzer Look at Numbers?: Thursday Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging" »

Blogs Beat Cable: "Wildly Differing Assessments": Talking Heads in Studios Who Don't Know What They Are Talking About vs. Live-Blog Screen Crawl by Those Who Do

Anybody who was anybody was watching SCOTUSblog on the morning of June 28, 2012:

10:07 Amy Howe: We have health care opinion.
10:08 Amy Howe: Parsing it asap.
10:08 Amy Howe: The individual mandate survives as a tax.
10:09 Amy Howe: It's very complicated, so we're still figuring it out.
10:10 Kali: We are still here. Don't worry.
10:10 Tom: So the mandate is constitutional. Chief Justice Roberts joins the left of the Court.
10:11 Amy Howe: The Medicaid provision is limited but not invalidated.

Continue reading "Blogs Beat Cable: "Wildly Differing Assessments": Talking Heads in Studios Who Don't Know What They Are Talking About vs. Live-Blog Screen Crawl by Those Who Do" »

Noted for June 27, 2013

  • John Holbo: It was crime at the time, but the laws, we changed them: "Kevin Drum’s nickel summary works for me, comparing and contrasting the new decision, in Shelby County v. Holder with Crawford v. Marion County Election Board (PDF). 'So here’s your nickel summary. If a law is passed on a party-line vote, has no justification in the historical record, and is highly likely to harm black voting, that’s OK as long as the legislature in question can whomp up some kind of neutral-sounding justification. Judicial restraint is the order of the day. But if a law is passed by unanimous vote, is based on a power given to Congress with no strings attached, and is likely to protect black voting, that’s prohibited unless the Supreme Court can be persuaded that Congress’s approach is one they approve of. Judicial restraint is out the window. Welcome to the 21st century.'"

Continue reading "Noted for June 27, 2013" »

Rod Dreher vs. Aristophanes on Gay Marriage and the Moral Order: Methinks Aristophanes Wins, 6-0, 6-0, 6-0

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Who is more civilized?

Rod Dreher, 2013:

Sex After Christianity: Now we’re entering the endgame of the struggle over gay rights and the meaning of homosexuality…. The magnitude of the defeat suffered by moral traditionalists will become ever clearer…. The struggle for the rights of “a small and despised sexual minority” would not have succeeded if the old Christian cosmology had held….

Continue reading "Rod Dreher vs. Aristophanes on Gay Marriage and the Moral Order: Methinks Aristophanes Wins, 6-0, 6-0, 6-0" »

Department of "Huh?!": A Rise in the Dollar Produced by a Rise in Real Interest and a Fall in Expected Inflation Rates Is Not a Sign of a Strong Economy Weblogging



Reuters Next — Dollar strength sign of a good looking horse: Fed's Fisher: The current strengthening of the dollar shows that financial markets are increasingly confident about U.S. economic prospects, Federal Reserve policymaker Richard Fisher said on Monday. "It (dollar strength) shows that we are the best looking horse in the glue factory," Fisher, the President of the Dallas Fed said at an event organized by OMFIF, adding that the U.S. was perhaps "a thoroughbred waiting to be released."

David Weigel: Nino Scalia's Frantic Cry for Help


David Weigel:

DOMA struck down: The Supreme Court and the end of gay marriage ban.: By general agreement, the strangest read in the United States v. Windsor decision—the one that neuters the Defense of Marriage Act—comes at the start of Antonin Scalia's dissent.

We have no power to decide this case. And even if we did, we have no power under the Constitution to invalidate this democratically adopted legislation. The Court’s errors on both points spring forth from the same diseased root: an exalted conception of the role of this institution in America.

This comes literally 24 hours after the court really did invalidate legislation, nixing Section 4 of the Voting Rights Act. That law had been passed again in 2006; DOMA had been passed in 1996. No one who'd voted for the VRA had come to renounce his/her vote, but scores of representatives had apologized for DOMA. Scalia's not making sense, unless you read this as a cry for help from someone watching his colleagues validate social mores he deeply disagrees with.

The Hard-Working Lawrence Mishel vs. the… Confused… Greg Mankiw

It's been a decade since I heard anybody well-informed claim in a seminar that the top 1% premium and the college premium were driven by similar factors…

Larry Mishel:

Greg Mankiw Forgets to Offer Data for his Biggest Claim: Greg Mankiw’s paper in the Journal of Economic Perspectives’ symposium on the top one percent… claims… the doubling of the income share of the top one percent reflects the increased economic contributions, or productivity, of those in the top one percent…. Mankiw’s evidence for this is pretty thin…. First, he rests on the work of Claudia Goldin and Lawrence Katz (2008) book, The Race between Education and Technology, that skill biased technological change continually increases the demand for skilled labor” and concludes that “the story of rising inequality, therefore, is not primarily about politics and rent-seeking but rather about supply and demand.” Mankiw acknowledges, however, that “Goldin and Katz focus their work on the broad changes in inequality, not on the incomes of the top 1 percent in particular. But it is natural to suspect that similar forces are at work.” Mankiw then argues that the growth of top one percent income shares and the premium earned by skilled relative to unskilled workers that Goldin and Katz study “follow a similar U-shaped pattern.”

That’s not much evidence and, in any case, it’s not even true: the growth of top one percent incomes has not followed the same pattern as the wage premium of ‘skilled’ workers (meaning the wage premium earned by college graduates).

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The Thoughtful Jonathan Chait vs. Greg Mankiw, Who Appears… Confused... About How One Assesses Determinants of Economic Success

Jonathan Chait:

Greg Mankiw Loves One Percent, Doesn’t Know Why: Yesterday I published a piece calling Harvard economist and Republican adviser Greg Mankiw’s paper “Defending the One Percent” an “embarrassing piece of ignorant tripe.”… I now see that I treated Mankiw’s argument far too generously. Matt Steinglass, Josh Barro and Zack Beauchamp, among many others, not only identify a wide range of massive, crippling errors of fact and logic in Mankiw’s essay, they identify completely different errors of fact and logic than the ones I noticed. Now I am filled with regret--I could have done more. I could have done so much more!

Fortunately, Mankiw is giving me that chance.

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Richard Posner Calls Chief Justice John Roberts "Disreputable"...

Richard Posner:

The Supreme Court and the Voting Rights Act: Striking down the law is all about conservatives’ imagination: Shelby County v. Holder, decided Tuesday, struck down a key part of the Voting Rights Act (the part requiring certain states with a history of racial discrimination in voting to obtain federal permission in advance to change their voting procedures—called “preclearance”) as violating the “fundamental principle of equal sovereignty” of the states. This is a principle of constitutional law of which I had never heard… there is no such principle…. Justice Ruth Bader Ginsburg’s very impressive opinion (in part because of its even tone), at a length (37 pages) that, remarkably, one would not like to see shortened—marshals convincing evidence that the reasons Congress has for treating some states differently for purposes of the Voting Rights Act are not arbitrary, though they are less needful than they were in 1965, when the law was first enacted. That evidence—the record before Congress—should have been the end of this case. For apart from the spurious principle of equal sovereignty, all that the majority had on which to base its decision was tenderness for “states’ rights.”

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Liveblogging World War II: June 26, 1943


Bishop Konrad von Preysing sends word to the other bishops by messenger that the divorce decree has again been postponed. He asks the other bishops to each write letters to all government ministries inquiring in strong language about the whereabouts of the deportees, demanding pastoral care for the "non-Aryan" Christians and threatening a public protest. "Beyond this," he says, "one should speak clearly about the outrages inflicted upon the Jews in general."

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Michael Kinsley and Jacob Weisberg Really Need to Make Their Apologies to the Very Patient and Mild-Mannered Daniel Kuehn...

…for giving Stephen Landsburg a megaphone.

But Landsburg was Edgy. Contrarian. Provocative. Exactly what Kinsley and Weisburg wanted for Slate

Daniel take his turn as the Sanitation Department:

Facts & other stubborn things: As misleading as…: "Now, though I cannot seem to find a reference, I have a vague memory that it was Murray Rothbard who observed [<<< DPK: Well we're clearly off to a bad start] that the really neat thing about this [Keynesian] argument is that you can do exactly the same thing with any accounting identity. Let’s start with this one: Y = L + E; Here Y is economy-wide income, L is Landsburg’s income, and E is everyone else’s income. No disputing that one. Next we observe that everyone else’s share of the income tends to be about 99.999999% of the total. In symbols, we have: E = .99999999 Y. Combine these two equations, do your algebra, and voila: Y = 100,000,000 L. That 100,000,000 there is the soon-to-be-famous “Landsburg multiplier”. Our equation proves that if you send Landsburg a dollar, you’ll generate $100,000,000 worth of income for everyone else."

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The Intelligent Simon Wren-Lewis and the Thoughtful Antonio Fatas vs. the Hacks of Sol III

Simon Wren-Lewis: The intellectual bankruptcy of the austerians:

It is both amusing and tragic to watch the advocates of fiscal austerity try and deal with the fact that the thin intellectual foundations for their approach have crumbled away, while at the same time the empirical evidence of their folly accumulates… economic textbooks tell us that this policy was foolish… austerians were always arguing something like ‘forget the accumulated wisdom of the past century, on the basis of two or three papers we know better’.

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Liquidity Preference, Loanable Funds, and Interest Rate Spreads: Wednesday Hoisted from the Archives from Two Years Ago Weblogging

UPDATE: This was written two years ago, just before the summer surge in demand for U.S. long-term Treasuries that drove ten-year real rates negative. Now it looks as though debt is going to stabilize at twice its share of GDP expected as of 2007--and yet at that level of debt both expected inflation and real Treasury rates will be lower than any of us thought likely six years ago.

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Brad DeLong: Liquidity Preference, Loanable Funds, and Interest Rate Spreads:

The Hicksian liquidity-trap model that Paul [Krugman] is working in (and that I find myself working in these days, almost in spite of myself) is about the simplest possible general equilibrium model with three… commodities--currently-produced goods and services, safe short-term nominal bonds, and liquid cash money. Two equilibrium conditions--that the amount of money some people wish to trade for bonds must be equal to the amount of bonds other people wish to trade for money, and that the amount of financial assets people want to hold is equal to the amount of financial assets in existence. Two adjustment processes--that the interest rate adjusts instantaneously to clear the money-bond market and that spending adjusts over a longer period to clear the financial assets-currently-produced goods and services market. And from this the conclusion follows: as long as the central bank is keeping the money stock M high enough to keep you at the zero-lower bound where the interest elasticity of money demand is well-approximated by +∞, fiscal expansion--having the government print more bonds B and spend the proceeds on currently-produced goods and services--raises Y and has no effect on i.

Note that it is not just the ignorant, the uncurious, and the slow-of-thought among economic Ph.D.s who do not buy this argument: who cannot believe the argument that more expansionary fiscal policy is what the world needs right now. Why, just yesterday it was IMF chief economist Olivier Blanchard, smarter than whom on these issues there is nobody alive--who taught me this stuff--who wrote:

Policy inertia is not an option. This is especially true in the advanced economies.... Fiscal repair is also essential. A key priority for advanced economies is to continue the process of fiscal adjustment that most of them initiated.... [T]he US and Japan... have not yet started along this path. They should put in place as soon as possible credible consolidation plans that are specific in terms of not only goals, but also the tools to achieve them. The pace of fiscal consolidation should be set with a keen eye on growth and employment. Too slow will kill credibility, but too fast will kill growth...

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Noted for June 26, 2013

  • Carola Conces Binder: The Sword of Greenspan: "Let's look back at the Federal Reserve transcripts from 1994, when Alan Greenspan himself alluded to the sword of Damocles on multiple occasions. At the first meeting of the year, on February 3-4, the federal funds rate was at 3%, after having been lowered repeatedly since 1989. Discussions centered around how much to raise the rate. Mostly it was a question of raising by 25 or 50 basis points…. 'Chairman Greenspan: I thought about 50 basis points, or I thought about it in the sense of trying to move the rate to where we want to put it and then sticking with it. But I think it may be very helpful to have anticipations in the market now that we are going to move rates higher because it will subdue speculation in the stock market; at this particular stage having expectations hanging in the market that we may move again, and move reasonably soon, could have a very useful effect. If it is in any way contemplated that we have moved and are going to stop, that could create the type of erosion in the economy that I've watched over the past decades, which is precisely what we don't want. If we have the capability of having a Sword of Damocles over the market we can prevent it from running away…. If we're going to move, I would not mind moving again at the next meeting or the meeting after that, for example. That depends on the evolution of events, frankly.' Greenspan got his way…. The February 14, 1994 New York Times reported that 'in the two weeks since the rate action, it appears that rather than reassuring traders and investors, the Federal Reserve has managed to leave them with a worse case of the jitters. The financial markets seem to have increased their focus on inflation amid a general consensus that the Federal Reserve will have to raise short-term interest rates again soon. Both factors have led to a sharp selloff in the bond market and a jump in both long- and short-term interest rates'."

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Corey Robin vs. Friedrich von Hayek in Syrakusa, Augusto Pinochet, and the Lykourgan Moment

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Corey Robin:

The Hayek-Pinochet Connection: A Second Reply to My Critics: In this post I respond to… [critics] regarding the connection between Friedrich von Hayek and Chilean dictator Augusto Pinochet. Though my comments on that connection took up a mere three sentences in my article, they’ve consumed an extraordinary amount of bandwidth among my libertarian critics. At Bleeding Hearts Libertarians, Kevin Vallier repeatedly accuses me of “smearing” Hayek with the Pinochet connection:

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Andrew Gelman: Is Nate Silver Paying Off Politico?


Andrew Gelman: My theory: Nate Silver is paying those Politico guys to say these silly things:

The question is, how could these guys at Politico say such foolish things (see John’s discussion here of some examples)? The usual explanation for smart people acting stupid is love, religion, or political ideology. But in this case I don’t see John Harris and Jim VandeHei being motivated by love or religion, and it seems to be part of their shtick that they don’t have much of an ideology. So here’s my theory… to stay on top, Nate needs to be continually contrasted with easy-to-hate enemies. But this isn’t so easy. There are no more polls to unskew, and at this point even the fools know to be careful not to tangle with Nate. So what does Nate do? He has to create some enemies…. He pays off the staff at Politico to pick a fight with him. And this reminds us of what we all love about 538. Nate cares about the truth, not about sound bites…. And what do the dudes at Politico get out of this? Beyond whatever Nate is paying them under the table, they get some short-term attention…. Win-win-win.

John Sides:

The Harris-VandeHei Interview Sells Even Politico Short: Apropos of a question about the contretemps between Nate Silver and some Politico reporters (mainly Dylan Byers) in the fall of 2012, John Harris avers that he didn’t read 538 during the election.  Silver quickly noted that Harris had listed 538 as one of his favorite blogs as of November 2010…. Former Politico reporter Ben Smith suggested that he may actually have written that list for Harris…

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Tim Taylor Sends Us to William McChesney Martin's Punchbowl Speech (October 19, 1955)

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For Release at 7:30 p. m. , Eastern Daylight Time, Wednesday, October 19, 1955.

Address of Wm. McC. .Martin, Jr., Chairman, Board of Governors of the Federal Reserve System, before the New York Group of the Investment Bankers Association of America

Waldorf Astoria Hotel New York City October 19, 1955, 7:30 p.m., Eastern Daylight Time

There's an apocryphal story about a professor of economics that sums up in a way the theme of what I would like to talk about this evening. In final examinations the professor always posed the same questions. When he was asked how his students could possibly fail the test, he replied simply, "Well, it's true that the questions don't change, but the answers do." Here the questions are in large measure hardy perennials: How do we attain and retain prosperity? How do we achieve normal healthy growth? How do we preserve the purchasing power of our money? The answers to these interrelated questions in the 1950's far differ in important respects from those of earlier decades.

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John Maynard Keynes: The General Theory of Employment, Interest and Money, from Chapter 24: Tuesday Hoisted from the Non-Internet of 57 Years Ago Weblogging

The General Theory of Employment, Interest and Money:

The central controls [my theory claims are] necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government. Furthermore, the modern classical theory has itself called attention to various conditions in which the free play of economic forces may need to be curbed or guided. But here will still remain a wide field for the exercise of private initiative and responsibility. Within this field the traditional advantages of individualism will still hold good.

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David Cay Johnston: Real Wages Fall

David Cay Johnston: The National Memo » Wages Fall At Record Pace:

My former employer, The New York Times, not only failed to report this awful news affecting the vast majority of Americans who work, but gave a misleading account in both a news report and a blog post:

Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department.

That is true, by the way. Misleading and incomplete, but true. It is also in line with that paper’s tradition of focusing readers on any silver lining in an economic storm…. It is not like this new wage news can be dismissed as an anomaly, either. It is evidence of a troubling trend – falling incomes for the 99 percent…. From 2007 to 2011 the average pretax income of the bottom 90 percent fell from $35,173 to $30,437. That is a drop of more than $4,500. It is also a decline of nearly 13 percent. The 2012 data are likely to show that drop has worsened….

During the same period, the threshold to enter the top 10 percent fell by 6.5 percent, a drop of $7,665 to $110,651, analysis of the latest IRS data by economists Emmanuel Saez and Thomas Piketty shows…

Noted for June 25, 2013

  • Barbara Bergmann (2007): Hail the new empiricism: "How do economists know what they know? In a call for a new empiricism, Barbara Bergmann asserts that economists mainly make it up…. 'The most intensive interaction with business people so far seems to have been carried out as a solo venture by Truman Bewley who interviewed about 300 business managers, asking why they don’t lower wages in a depression. The failure to do so, which may (or may not) be an important reason for the failure of unemployment to dissipate rapidly, has long been a subject of speculation among economists. Bewley’s book lists no less than 25 published theories that economists had invented to explain the phenomenon, 24 of which were wrong. Bewley was the first who dared to go out and ask those making the decisions what they did and why. They told him that to lower wages would create severe morale problems, and so would interfere with the operations of their firm.' This study was indeed daring. As if business people could know better than economists why they behave. The presumption! (For more details see Bewley's book, Why Wages Don't Fall During a Recession, and discussion papers). Bergmann concludes: 'While observation-less theorizing is still the most common way economists think to advance the science, the new interest being shown to behavioral and experimental methods at places like Princeton and Harvard is an encouraging sign. But actual observation of business behavior has barely started. Whether it will flourish depends on whether an ever increasing corps of economists willing and able to do the work of observation gets trained and then finds jobs. A few years ago I had occasion to ask Truman Bewley whether he was training students at Yale to carry on research like that he did on wages. His answer, I am sorry to report, was, “No, that would ruin their careers.”'"

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Norm Ornstein Is Tired of Trying to Reason with Republicans Like Mitch McConnell

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Norm Ornstein:

Mitch McConnell Is Either Very Bad at Math or Horribly Disingenuous: The Senate minority leader took me to task on Friday. Unfortunately, he had his facts wrong on virtually every count. Last Friday morning, I attended a ballyhooed speech given by Senate Minority Leader Mitch McConnell at AEI, where I am a resident scholar, titled "Washington's Ongoing Assault on Free Speech." After he finished, McConnell took questions, and I immediately raised my hand. It took a while, but he finally recognized me, and when I got up, before I had asked anything -- well, let's go to the transcript:

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