Grasping Reality on TypePad, by Brad DeLong

Rosie Taylor:

Photographer Ron Miller creates incredible pictures of what it would look like if planets were closer: The universe as you’ve never seen it before: Photographer creates incredible pictures of what it would look like if planets were closer. Ron Miller, a former art director for NASA, used digital trickery to superimpose scale drawings of Mercury, Venus, Mars, Jupiter, Saturn, Uranus and Neptune over the same landscape, highlighting the sheer size of the planets. The incredible drawings imagine each planet to be 233,812 miles from Earth - the same distance at which the moon orbits. Enormous planet Jupiter, around 11 times the size of Earth, would dominate the skies while Mars would appear to be around twice the size of the moon.

Michael Peppard:

NYT's ironic fact-check error: David Brooks's column today is vintage Brooks… embed[ding] my own nostalgia for the time and place in which I grew up within a framework of someone else's compelling (if simplistic) narrative, and then offer[ing] sweeping, general prescriptions for our societial ills. The upshot of this particular instance of the genre is that "religion" (impossibly generalized) used to play a more "dominant role in public culture," and that such a role supported a "moral status system" that provided a check on the "worldly status system." Back in those days, when there were "competing status hierarchies," the "culture was probably more dynamic" and -- it goes without saying -- better. It's a pristine specimen of Brooks…. But then there's this doozy of a blunder:

In Corinthians, Jesus tells the crowds, “Not many of you were wise by worldly standards; not many were influential; not many were of noble birth…"

Where to begin analyzing this unbelievable error?! Until proven otherwise, I'm going to go ahead and pronounce it the most ironic fact-checking oversight in the history of the esteemed New York Times.

This is the thing that happens when you go trolling for quotes through books you haven't read or have long forgotten.

Just saying.

Why oh why can't we have a better press corps?

Long-term real interest rates were not supposed to rise by half a percentage point as a result of last week's FOMC meeting:

They did. This seems to me--and others--to be a bad error of monetary policy. And the BIS wants the Federal Reserve to do worse…

I have now populated DeLong: Long Form from the present back through the start of 2012--for those who are looking for long, meaty analyses bigger than a breadbox, or rather bigger than an op-ed…

• Hemant Mehta: Joe Klein's Time Cover Story Wrongly Attacks Atheists for Not Helping Out Victims of Oklahoma Tornadoes: "Klein… wrote…. 'There was an occupying army of relief workers, led by local first responders, exhausted but still humping it a week after the storm, church groups from all over the country — funny how you don’t see organized groups of secular humanists giving out hot meals….' Wow. My jaw dropped while reading that because it’s absolutely not true…. He made the same mistake that Minister David Brassfield did (though at least Brassfield eventually offered a semi-apology). Klein is simply lying out of his ass. A simple Google search would’ve turned up a number of ways atheists helped in the wake of the Oklahoma tornadoes. But since Klein was too lazy to do it, I’ll do it for him: More than 4,300 people donated more than $120,000 for the family of Rebecca Vitsmun (she promised to donate to charity whatever money she doesn’t need). Foundation Beyond Belief raised over $45,000 for Operation USA and the Regional Food Bank of Oklahoma. Atheists Giving Aid raised over $18,000 that will be given to local relief groups in Moore, Oklahoma and directly to families that need help. Members of the FreeOK atheist group helped families who needed wreckage removed from their property…. Local atheist groups such as the Oklahoma Atheists, Atheist Community of Tulsa, the Lawton Area Secular Society, Norman Naturalism Group, and the Oklahoma State Secular Organization have organized volunteers, resources, and blood drives…. Is that enough proof that atheists, too, were (and still are) helping out in the aftermath of the tornadoes?… To suggest that we were not there and not doing anything useful for the victims isn’t just factually wrong--it’s slander…. If Klein had mentioned any other group of people--'funny how you don’t see organized groups of Jews giving out hot meals'--you know there would be hell to pay."

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...

If you are looking for a metaphor of what has happened to the intellectual case for austerity, Napoleon's retreat from Moscow comes to mind.

We have been treated to spectacles like Michael Kinsley, floundering in the Beresina, saying that even though he doesn't have any technocratic economic argument for austerity, he lived through the 1970s, and isn't that relevant, and didn't Paul Volcker eliminate the large budget deficits that preceded the inauguration of Ronald Reagan, or something; spectacles like Bloomberg Editorial abandoning the troops to take a fast sleigh back to Paris, claiming that nobody ever said that a 90% debt-to-annual-GDP ratio was any sort of "important marker"; and the most welcome spectacle of IMF Managing Director Christine Lagarde, cast by history as an analogue of Prussian Field Marshall Johann David Ludwig Graf Yorck von Wartenberg, ably assisted by David Lipton, Olivier Blanchard, and many others as analogues of Carl Philipp Gottfried von Clausewitz, declaring that she was going to do what was right rather than what those who appointed her wished, and turn her corps d'armee around to point in the other, pro-stimulus, direction.

Ryan Avent: Central banks: The twilight of the central banker:

The misjudgments common to central bankers are occasionally distilled in BIS analysis into a somewhat curious view of the global economy: one in which heroic, blameless central banks have done their utmost to keep the world economy afloat, in the face of ceaseless governmental incompetence and despite a constant bombardment of baseless outsider criticism. The ability of central bankers to bandage over the harm inflicted by bumbling politicians is limited, warns the BIS in its latest annual report. Unless the world embraces the sober leadership of the wise central banker disaster looms.

The annual report is a remarkable document, one which might well come to serve as the epitaph for an era of central banking spanning the Volcker disinflation and the Great Recession—the epoch of the central banker as oracle, guru, maestro…. The report captures what may be the most critical error of the modern central banker: eschewing a focus on his proper domain—demand stabilisation—in favour of an arena in which he has no business sticking his nose—the economy's supply side.

The standard argument for traditional journalistic forms and against weblogging always had three parts: that journalists had fact-checkers who kept them from publishing wrong things, line editors who kept them from publishing incoherent things, and senior editors who kept them from publishing really stupid things--while, by contrast, webloggers posted things that were wrong, incoherent, and stupid several times a day.

We now have Exhibit A:

Kieran Healy:

Monsters University: the Aftermath: Monsters University, the prequel to Monsters, Inc, opened this weekend. I brought the kids to see it. As a faculty member at what is generally thought of as America’s most monstrous university, I was naturally interested in seeing how higher education worked in Monstropolis. What sort of pedagogical techniques are in vogue there? Is the flipped classroom all the rage? What’s the structure of the curriculum? These are natural questions to ask of a children’s movie about imaginary creatures. Do I have to say there will be spoilers? Of course there will be spoilers. (But really, if you are the sort of person who would be genuinely upset by having someone reveal a few plot points in Monsters University, I am not sure I have any sympathy for you at all.) As it turned out, while my initial reactions focused on aspects of everyday campus life at MU, my considered reaction is that, as an institution, Monsters University is doomed.

Eleanor Roosevelt:

HYDE PARK, Tuesday—As I came out of our gate on Sunday, I was interested to see quite a group of young people on bicycles. That is reminiscent of Europe. It may be that the shortage of gasoline will start our young people really travelling by bicycle. I know of few better ways of seeing the country if you do not try to cover too much territory.

Why oh why can't we have a better press corps?

No More Mister Nice Blog:

Nothing to See Here--Just a Few Bad Apples: For years the Beltway has been in denial about the extremism of the Republican Party, and here's yet more evidence, from Politico, that that state of denial will never, ever change:

They've waxed philosophic about "legitimate rape," reflected on the economic role of "wetbacks" and denounced the actions of "brazen, self-described illegal aliens." They've lamented that "mom got in the workplace" and called out the United States attorney general for casting "aspersions on my asparagus." Call them the clueless caucus of the Republican Party.

I'd call them "the Republican Party," but hey, that's just me.

• Evan Soltas: Ben Bernanke Flunks Communications 101: "If on days that rates are rising, the stock index also rises, then we can assume that both are driven by changes in the economic outlook. If on days that rates are rising, the stock index is falling, then the 'economic outlook' story doesn't hold up -- and a 'monetary policy' story fits. I calculated the 90-day correlation coefficient of their daily percentage changes. I find that it has been plummeting since May, which is when interest rates began to jump. See how it's falling off a cliff at the right end of the chart? That means the first story ('happy days are here again') is wrong, and the second story ('the Fed is tightening') is right…. Here's my editorial comment: If the Fed doesn't intend for all of its talk since the start of May to be perceived as pushing forward the schedule for monetary tightening, independent of the economic recovery, it needs to start clarifying its intentions. Now."

• Martin Wolf: The toxic legacy of the Greek crisis: "Greece suffered a calamity – and others’ fear of following it justified the shift to austerity. The result has been a feeble recovery from the post-crisis recession, notably in the eurozone and the UK. Greece, alas, had the wrong crisis, at the wrong time…. [Greece's experience] tells us depressing things about the politicisation of the IMF and the inability of the eurozone to act in the best interests of its weaker members. But the Greek crisis, alas, also had two global results. First, inside the eurozone, the fact that Greece was the first country to fall into trouble gave weight to the view of northern Europeans that the crisis was fiscal. For Greece was, indeed, a case of remarkable fiscal profligacy…. But elsewhere the position was quite different: private borrowing was the root cause of the crisis in Ireland and Spain and, to a lesser extent, in Portugal…. By deciding that the crisis was largely fiscal, policy makers could ignore the truth that the underlying cause of the disarray was irresponsible cross-border lending…. Second, the Greek crisis frightened policy makers everywhere. Instead of focusing efforts on remedying the collapse of the financial sector and reducing the overhang of private debt, which were the causes of the crisis, they focused on fiscal deficits. But these were largely a symptom of the crisis, though also, in part, an appropriate policy response to it…. What looked, until mid-2010, to be a burgeoning recovery from the nightmare of the 'Great Recession' was aborted, notably so in the UK and eurozone. The greater success of the US in surviving austerity was probably due to its more aggressive clean-up of the financial sector, greater acceptance of deleveraging by households and its more aggressive monetary policy…. What makes this story depressing is that it was unnecessary…. In brief, the Greek crisis proved a triple calamity: a calamity for the Greeks themselves; a calamity for the popular view of the crisis inside the eurozone; and a calamity for fiscal policy everywhere. The result has been stagnation, or worse, particularly in Europe. Today, we have to recognise that the huge falls in output relative to pre-crisis trends may well never be recouped. Yet the reaction of policy makers has not been to admit the mistakes, but to redefine acceptable performance at a new, lower level. It is a sad story."

If you believe--as I do--that the overwhelming proportion of the effects of non-standard monetary policy at the zero nominal lower bound come from reducing short-term safe real interest rates by raising expectations of inflation, the failure of Bernanke's monetary policy to ever raise the average of 5, 10, and 30-year TIPS inflation break-evens above 2.5%--and its recent fall to 2.0%--demonstrates that Bernanke's policies have failed.

Return to Jekyl Island

Barry Eichengreen's contribution:

At an IMF conference last April, Martin Wolf said from the podium that if Ph.D. economists were indeed looking for analytical guidance on the current situation from a journalist, that said Ph.D. economists were in sad shape. I do not regard myself as in sad shape, but I do look to Martin Wolf for guidance:

Martin Wolf: How Austerity Has Failed: Austerity has failed. It turned a nascent recovery into stagnation. That imposes huge and unnecessary costs, not just in the short run, but also in the long term: the costs of investments unmade, of businesses not started, of skills atrophied, and of hopes destroyed. What is being done here in the UK and also in much of the eurozone is worse than a crime, it is a blunder. If policymakers listened to the arguments put forward by our opponents, the picture, already dark, would become still darker.

Wh'd have thunk it: fiscal consolidation raises inequality + LT unemployment, decreases labor share. http://t.co/h7dQh86v7i @BruceBartlett

— Yves Smith (@yvessmith) June 21, 2013

@AshokRao95 Luckily, Kyle Bass issued a falsifiable prediction — Japanese debt blowup in next eighteen months to two years.

— John Aziz (@azizonomics) June 20, 2013

• Rich Lowry: Who Mitt Romney Is:: "Romney… is… someone who overhead some conservative cocktail chatter and maybe read a conservative blog or two, and is thoughtlessly repeating back what he heard and read."

Reading Paul Krugman this morning reminded me that several years ago Larry Summers was musing about a (more complicated) setup drawing off of Paul Samuelson's 2004 JEP paper: Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization, that was in some ways analogous to the model Paul Krugman says he is now trying to build.

In Larry's setup, IIRC, there was an (a) low-skilled competitive sector with constant returns to scale and undifferentiated products, and (b) a sector with monopolistic competition and increasing returns to scale, half of which (b1) could employ unskilled labor (finance, marketing, brands, etc.) and in which the owners of the intellectual property reaped the surplus, and half of which (b2) needed to employ skilled, unionized labor, which reaped the surplus. The coming of globalization then eliminated the market power of (b2) and shifted that sector of the economy into (a), leaving us with our more unequal, globalized economy of today…

Why oh why can't we have a better press corps?

Antonio Fatas is The Department of Sanitation:

The power of statistics (Ferguson and the WSJ): Dean Baker complains about the high number of inconsistencies and mistakes that Niall Ferguson manages to put together…. There seems to be a pattern here given the article that Niall Ferguson had written just a few days earlier (June 7) also in the Wall Street Journal. The way I found that second article is interesting and it shows the negative influence of these articles -- even if the mistakes are obvious. I found that second article by Ferguson because as I was teaching some of my students here at INSEAD about the connections between institutions and growth, one of them mentioned an article in the Wall Street Journal that was showing data that contradicted some of my statements. The article, by Niall Ferguson claimed that according to the Doing Business report from the World Bank, the US is now the sixth-worst country in the world when it comes to how easy it is to do business -- I was, of course, showing data that the US remains one of the countries on top of that list.

Bullard doesn't seem to like this. And Mark Thoma sends us to Tim Duy who doesn't like this, and explains why:

Economist's View: Fed Watch: It's About The Calendar: St. Louis Federal Reserve President James Bullard explained his FOMC dissent in a press release this morning, and it was an eye-opener. I don't see how you can read Bullard's statement and not conclude that the primary consideration for scaling back asset purchases is the calendar. I think that the date, not the data, is more important than Fed officials like to claim.

John Cole:

The Best Part About the Farm Bill Fail: The absolute best part of the farm bill failing is that an actual House leader who can actually count the votes in her caucus told Boehner yesterday that this would happen:

Ta-Nehisi Coates:

No, Lincoln Could Not Have 'Bought The Slaves': I saw the graph above for the first time yesterday, and it made me shiver. It's taken from historian  Roger L. Ransom's article "The Economics Of The Civil War." 

Andre Malraux:

21st June 1943: French resistance leader Jean Moulin captured: The Resistance was gaining in strength; fugitives from the forced labour draft would soon be taking to the maquis. The Gestapo was growing stronger too, and the Milice were everywhere. It was a time when, out in the countryside, we listened tensely to the barking of dogs in the depths of the night; a time when multi-coloured parachutes, laden with weapons and cigarettes, fell from the sky by the light of flares burning in forest clearings or on windswept plateaus; a time of cellars, and the desperate cries of the torture victims, their voices like those of children… The great battle in the darkness had begun.

L'Esprit de l'Escalier: June 21, 2013

• John Harwood: "Mr. Obama has not given North Dakota his time. It is one of six states he has not visited…. Mr. Obama has time to elevate the unifying themes that propelled his initial emergence. Mr. Clinton, who valued presidential travel as a symbol of outreach, did not touch every state until he visited Nebraska six weeks before leaving office." How many states did George W. Bush visit in his first term (he visited 49, all except Vermont in two terms)? Bill Clinton (he visited all 50 in two terms)? George H.W. Bush, I know, visited 49--all except Vermont. How many did Ronald Reagan visit in his first term (I know he visited 46 in both terms)? Jimmy Carter?

• No More Mister Nice Blog: YOU KNOW WHO ELSE STOOD IN THE RAIN AND PLEADED FOR FAIR TREATMENT, DON'T YOU?: "Okay, immigrant-bashing Kansas secretary of state Kris Kobach hasn't compared the protesters who gathered outside his front door on Saturday to Hitler -- but he's come close. Yesterday he imagined shooting them, as he told Fox News: 'The secretary of state is a staunch supporter of the Second Amendment -- and he said the incident at his home is an example of why Americans should bear arms. "If we had been in the home and not been armed, I would have felt very afraid -- because it took the police 15 minutes to show up," he said. "It's important we recognize there's a reason we have the Second Amendment. There are situations like this where you have a mob and you do need to be able to protect yourself." He said had they been home and the mob had gotten out of hand, his family would have been in "grave jeopardy." "The Second Amendment is the private property owner's last resort," he said.' Subsequently, he was interviewed by Glenn Beck, and he and Beck agreed that the protesters were comparable to the Klan: 'Beck show[ed] a video of the protest and ask[ed], "What’s the difference between that and the Klan coming to Martin Luther King’s house? This is not just domestic terrorism, this is civil rights stuff," he added. "This isn't America. This is old-style South kind of tactics."… Beck finally got on the phone with Kobach, who agreed with him about the demonstrators: "They're just not wearing white cloaks, but this is exactly KKK type of intimidation."' Want to see what was so intimidating? This is what was so intimidating…"

Jillian C. York (jilliancyork) on Twitter:

Exiting the Friedman Forum pre-drinks. Couldn't take another moment.

3m @mornews @daveweigel Took the day off to do this :-)

17m He said "veto-ocracy" again. DRINK.

17m The Davos namedropping on this stage today is intense. WE GET IT, YOU WENT TO DAVOS

2m Malaysia has a design thinking institute: Evidence for Friedman and Comstock that it's progressive. #sigh

2m BIGGEST DISAPPOINTMENT TODAY: No taxi driver mentions to speak of.

John Harwood: Dissent Festers in States That Obama Seems to Have Forgotten:

Mr. Obama has not given North Dakota his time. It is one of six states he has not visited as president, along with South Dakota, Arkansas, Idaho, South Carolina and Utah. He has gone just once to Kansas, Kentucky, Mississippi, Montana, Nebraska, Tennessee and Wyoming. Mr. Obama’s near-complete absence from more than 25 percent of the states, from which he is politically estranged, is no surprise, reflecting routine cost-benefit calculations of the modern presidency. But in a country splintered by partisanship and race, it may have consequences…. Mr. Obama burst onto the national stage as a bridge-builder whose biracial ancestry spanned the white Kansas heartland and emerging minority communities. His 2004 Democratic convention speech gained moral force by scorning the fact that “pundits like to slice and dice our country into red states and blue states.”… As Mr. Obama’s travel shows, his White House has sliced and diced as finely as any….

Mr. Bush’s campaign strategist Matthew Dowd… met with the candidate Barack Obama and told him, Mr. Dowd said, “I hope you’re going to be the president of the country, not just leader of your party.” Mr. Dowd says Mr. Obama’s engagement with adversaries in and out of Washington has been too narrowly focused, “about a transaction and not about a relationship.” He chided Mr. Obama as giving short shrift to bridge-building when the president summoned him for advice after Democrats’ midterm election defeat in 2010. “Why haven’t you used the social power of the presidency to do that?” Mr. Dowd recalled asking Mr. Obama. “He didn’t push back all that strongly, because he acknowledged he could have done a better job.”…

The sense of disappointment some feel extends beyond inattention to staunch opponents. Mr. Obama has not, for instance, traveled as president to the overwhelmingly poor, black Mississippi Delta, either…. Just months into his second term, Mr. Obama has time to elevate the unifying themes that propelled his initial emergence. Mr. Clinton, who valued presidential travel as a symbol of outreach, did not touch every state until he visited Nebraska six weeks before leaving office.

Brad DeLong: How many states did George W. Bush visit in his first term (he visited 49, all except Vermont in two terms)? Bill Clinton (he visited all 50 in two terms)? George H.W. Bush, I know, visited 49--all except Vermont. How many did Ronald Reagan visit in his first term (I know he visited 46 in both terms)? Jimmy Carter?

On Wed, Jun 19, 2013 at 1:19 PM, John Harwood johnjharwood@gmail.com wrote:

I don't know where predecessors stood on state visits at this point in their presidencies. But i tried to make clear, by saying his travel was unsurprising and reflected "routine cost-benefits calculations of the modern presidency," that my point wasn't to compare President Obama to earlier presidents. Rather i was measuring those routine decisions against the aspirations he had expressed for himself.

Brad DeLong: Clinton, as you say, made travel-for-outreach a high priority. Clinton, as you know at least as we as I do, was at least as much a public believer in not Red States or Blue States but the United States as Obama is--Clinton promised to take good ideas from whatever party they originated and implement them, not just health-care reform and short-term stimulus and tax cuts for the middle class and not the rich from the Democrats, but NAFTA and welfare reform and a government that lived within its means from the Republicans, and he did so.

If indeed it is the case that right now that Bipartisan Healer Obama--who does not make travel a priority for outreach--is running neck-and-neck with his travels with New Democrat Clinton, that is a very powerful indictment of your thesis.

And the fact that you do not know whether or not that is true is, I think, something that we readers of the New York Times should note, and think hard about.

Ezra Klein: Who Killed Equality?:

The fatalist case rests on technology: As we replace human toil with networked computers and tireless robots, those who own the technology or learn to master it benefit, and those whose jobs are displaced by technology suffer…. The winner-take-all economy is a boon to people who can market themselves or their product globally and a bust for those who can’t. Of course, this creates a less equal world, the fatalists say….

Eliot Asquith watches Conor, among other things, stridently denounce the media for taking Rand Paul's non-racist opposition to the Civil Rights Act to be the same thing as his father Ron Paul's racist opposition to the Civil Rights Act:

Rand Paul: Not Aristotle: There’s something about being a willfully marginal player in the political sphere that induces whininess. Or at least that’s the conclusion I can’t help but come to after reading the libertarian-ish Conor Friedersdorf’s epic lament over the media’s treatment of Rand Paul.

Detroit Race Riot (1943) - Wikipedia:

In the summer of 1943, in the midst of World War II, tensions between blacks and whites in Detroit were escalating. Detroit's population had grown by 350,000 people since the war began. The booming defense industries brought in large numbers of people with high wages and very little available housing… 50,000 blacks and 300,000 whites had arrived, mostly from rural Appalachia and the American South…. A historian of Detroit's Poles found that they were scared into seeing African-Americans as "threatening their jobs, homes, communities, and churches."

The argument that normal-time policy-relevant fiscal multipliers should be presumed to be very small can be made more general. Optimizing central banks will be expected to offset shifts in discretionary fiscal policy—and thus lead to multi-plier estimates near zero—under relatively unrestrictive conditions. Consider a government with an objective function u defined on a set of economic outcomes Π, and economic laws Γ:M → Π leading from a monetary policy m in M to an economic outcome ϕ in Π. Then if ϕ' is the optimal outcome, a central bank will choose an element m' such that Γ(m') = ϕ'. The adoption of a different fiscal policy g will change the relationship from monetary policies to economic outcomes to a different Γ_g. However, assume that the domain M and the range Π of Γ is the same as the domain and range of Γ_g. Then an optimizing central bank will choose a monetary policy m'' so that Γ_g(m'') = ϕ'. It will engage in full fiscal offset.

Thus there are two key requirements for this fiscal offset to hold:

1. The optimal outcome ϕ' must be in the set Π_g of outcomes attainable by monetary policy under the counterfactual fiscal as well as in the set of outcomes Π.
2. No superior economic outcome ϕ"' such that u(ϕ"') > u(ϕ') that is not attainable under the baseline set of possible outcomes Π can be in the counterfactual set of attainable outcomes Π_g.

Steve Horwitz works for a pro-freedom libertarianism and against a Herrenvolk libertarianism:

How Did We Get Here? Or, Why Do 20 Year Old Newsletters Matter So Damn Much?: [T]he attempt to court the right through appeals to the most unsavory sorts of arguments was a conscious part of the “paleolibertarian” strategy that Lew Rockwell and Murray Rothbard cooked up in the late 1980s….

Ron Paul supporters of all people should understand that when you poke at sleeping dogs, you should not be surprised when they turn around and attack you, even if it takes a couple of decades…. From the Old Right of the 1940s through the Reagan era, libertarianism’s opposition to socialism, especially interferences in the market, led us to ally with the forces of reaction. But even with the demise of really-existing socialism, we have been unable to completely break free of that connection to the right, though things are better than they used to be….

• Maurice Obstfeld: On Keeping Your Powder Dry: Fiscal Foundations of Financial and Price Stability: "Banking systems have rapidly grown to a point where for many countries bank assets amount to multiples of GDP. As a consequence, government’s capacity to provide stability-enhancing fiscal guarantees against systemic crises can no longer be taken for granted. As regulation of dynamic financial markets will inevitably be imperfect, prudent governments need to adjust other facets of macroeconomic policy in order to mitigate financial instability. A precautionary approach to fiscal policy, leading to moderate levels of public debt relative to GDP over the medium term, is essential for the credibility of government promises to support the financial system, as well as the broader economy."

• Catherine Almirall Hausman
• Joshua Kautsky Hausman

We confidently expect very good things from them…

Of course, if they get tenure votes in 2020, that means that their outside tenure letters will be written in 2019, and based on discussions outside faculty members will have had in 2018, which will depend on papers read in 2017, which depend on papers published in 2016, which depend on papers submitted to journals in 2015.

Which means that they have two years to do the work to get themselves tenure in Ann Arbor…

Paul Krugman: How Are These Times Different?:

Ah, Paris! You walk for miles and miles — it’s still, after all these years, a spectacularly beautiful city. Then you have as traditional a meal as possible at an old-fashioned bistro, washed down with lots of wine. And you feel like hell the next morning….

[W]hen it comes to macro issues I am pretty much a curmudgeon, someone who thinks that the similarities between our time and the 90s in Japan or the 30s everywhere are a lot more important than the differences…

Yes, definitely. That is the principal lesson right now!

Why oh why can't we have a better press corps?

Sam Wilkinson: James Taranto, Louis C.K., and The Brand New "War On Men":

James Taranto is angry. Lt. General Susan Helms has had her promotion held up by Missouri’s recently re-elected Senator Claire McCaskill. Taranto doesn’t like this; he views it as a salvo in what he’s describing as a “War On Men.”…

J. Bradford DeLong: The Second Great Depression: Why the Economic Crisis Is Worse Than You Think:

Alan Blinder is only the most recent in a series of prominent economists who have produced analytic accounts of the U.S. economic downturn. His crisp narrative lays out the policy options that were available at each stage of the crisis, and his analysis is infused with a deep understanding of macroeconomics. Overall, it is the best general volume on the subject that has been published to date.Despite its many virtues, however, the book paints an overly optimistic portrait of the state of the U.S. economy. “More than four years after Lehman Brothers went under,” Blinder writes, “policy makers are still nursing a frail economy back to health.” But the U.S. economy is worse than “frail,” and there are few signs that it is being nursed “back to health.” Most economists claim at least one silver lining in the economic downturn: that it was not as bad as the Great Depression. Up until recently, I agreed; I even took to calling the episode “the Lesser Depression.” I now suspect that I was wrong. Compare the ongoing crisis to the Great Depression, and there is hardly anything “lesser” about it. The European economy today stands in a worse position compared to 2007 than it did in 1935 compared to 1929, when the Great Depression began. And it looks as if the U.S. economy, when all is said and done, will have faced certainly one lost decade, and perhaps even two.

Reading Paul Krugman calls to mind that I never reacted to John Cochrane's July 2012 failure to mark his beliefs to market and, instead, doubling down on his claim that the biggest risk the U.S. economy faces is that of becoming "Argentina" "quickly".

I must say that if I had been opining stridently about issues of public policy without doing my homework five years ago, and if between then and now events had developed in directions strongly contrary to my expectations, I would not double down on what I had thought then--I would rather try hard to do my homework and to mark my beliefs to market.

And if I were going to criticize people for not citing my work, I would not claim that a sentence they wrote which comes immediately after a four-paragraph quote from me as an example, and I would have read their explanation of why they think expansionary fiscal policy right now does not raise the risks of "fiscal dominance" rather than remain in ignorance of it.

But to each his own.

Cochrane:

The Grumpy Economist: Krugman, Delong and Inflation: Yes, I've been worried for some time that our current debt could lead to inflation. And yes, that inflation has so far not happened…. Well, they made fun of Friedman when he said in 1968 that inflation was coming. They made fun of Greenspan when he said in 1996 that stocks seemed awfully high, and stocks went up for a few more years.

I gotta interrupt: Friedman in the late 1960s was right. He--correctly--saw inflation rising because he had theory and evidence on supply and demand in the labor market. But Greenspan in 1996 was wrong: since late 1996 the S&P 500 has produced a real return of 5.6%/year.

Does Cochrane know this?

Has he looked at the numbers?

Back in 1996 I agreed with Greenspan. I worried too that the market was overvalued. We thought this for a bunch of reasons. We were wrong.

Why does the fact that our worries were wrong then make Cochrane's worries right now?

World War II Today:

On the 19th June 1943 the Governor of what remained of Poland, Hans Frank, met with Hitler to discuss the situation in the country. He brought with him a briefing document which was to prove important at the post war War Crimes trials. There was ample evidence of the suffering that the Nazis had brought to the whole of the Polish population. Quite apart from the murderous actions directed against the Jewish population, non Jewish Poles had suffered from an extraordinarily repressive regime. Frank himself had openly acknowledged as much in a 1940 interview:

UPDATE (June 2013): We now have two years to run. If Noah wants to back out of his position, I will buy it back from him at 99.9 cents on the dollar. At this point I think that core inflation above 5% with unemployment above 6% starting in a year really is a 1000-1 shot, even with fat tails.

A 5%/year inflation rate is not "Argentina", but we want to bend over backward to give the John Cochrane side a chance…

The bet, made in July 2012:

If, at any time between 7/28/2012 and 7/28/2015, core consumer prices, as recorded in the FRED database series CPILFESL, are up more than 5% in the preceding 12 months, and if over the same 1-year period monthly U3 unemployment (as recorded in FRED database series UNRATE) has not averaged below 6%, then Brad DeLong agrees to buy Noah Smith one dinner at Zachary's Pizza at 1853 Solano Ave. in Berkeley CA, and to pay Noah 49 times the cost--including tax but excluding tip--of Noah's meal at Zachary's in Federal Reserve notes, or in alternative means of payment accepted by Zachary's should Zachary's Pizza no longer be accepting Federal Reserve notes at the date of the dinner. This cost will be assessed as the total cost of the dinner to all, divided by the number of people present, regardless of how much pizza is consumed by or how much alcohol is drunk by specific individuals.

From a year ago, on July 2, 2012, starting at 67:33 into the video, UMKC Health Law Professor provides a spot-on forecast of nearly everything that has happened across the country in Medicaid expansion decisions over the past year:

• Jesse Rothstein: Unemployment Insurance and Disability Insurance in the Great Recession: "Disability insurance applications and awards are countercyclical. One possible explanation is that unemployed individuals who exhaust their Unemployment Insurance benefits use DI as a form of extended benefits. I exploit the haphazard pattern of Unemployment Insurance (UI) extensions in the Great Recession to identify the effect of UI exhaustion on DI application, using both aggregate data at the state-month level and microdata on unemployed individuals in the Current Population Survey. I find no indication that expiration of UI benefits causes DI applications. Estimates are sufficiently precise to rule out effects of meaningful magnitude."

CBS News:

McCaskill: "Military Doesn't Even Know How Many Rapes and Sodomies" Occur: WASHINGTON, D.C. -- Sen. Claire McCaskill (D-Mo.), argued the problem underlying military sexual assault crimes is not the role of the chain of command, as many have argued, but the broad definition of "sexual contact." She is among Democrats and activists upset with Defense Secretary Chuck Hagel's and Senate Armed Services chairman Sen. Carl Levin's support to soften the legislation aimed at addressing the problem…. Sen. McCaskill said at the Senate Armed Services Committee markup Wednesday:

Our main problem is the military doesn't even know how many rapes and sodomies they have…. What a better place to be a roving predator than the military that moves you all the time. Don't think this is over once this… becomes law because we have just begun…"

Nate Silver: Politico Co-Founders Lack 'Curiosity For The World Outside Of The Bubble':

I thought it was a good interview. It's striking how preoccupied Harris and VandeHei are with the perception that Politico is too "insidery". My personal critique of their work cuts a little deeper than that, however. It's not that they are too "insidery" per se, but that the perceptions of Beltway insiders, which Politico echoes and embraces, are not always very insightful or accurate. In other words, the conventional wisdom is often wrong, especially in Washington.

Petr Mikhin on the Eastern Front:

We had completely given up on the appearance of the German cooks, when suddenly above us we heard the clink of empty jerrycans. What a joy — they were coming! Then worry: how would everything turn out? We had planned to capture them at dawn, when everyone was still asleep, but here we were now in the afternoon and all the Germans were up and about, while our guys on the opposite bank likely weren’t waiting for us, expecting that we had postponed the operation until nightfall.