Grasping Reality on TypePad, by Brad DeLong

Jonathan Chait: Howard Dean, Concerned American and Non-Shill:

If you are old enough to remember when Howard Dean was running for president in 2004, excoriating fellow Democrats like John Kerry as a "handmaiden of special interests," it may be a surprise to find him opining in The Wall Street Journal today in favor of a repeal of the Independent Payment Advisory Board…. He's Howard Dean, and he represents the Democratic wing of the Democratic Party! He also represents McKenna Long & Aldridge LLP, a Washington lobbying firm…. Dean has refused to disclose which firms he's representing on behalf of McKenna Long & Aldridge. It seems to be regular practice at the Journal editorial page to let retired Democrats lobbying for the health-care industry write op-eds calling for a repeal of parts of the law that reduce the industry's profit margin.

Dean's bio at his lobbying firm boasts, "With an extensive set of contacts nationally, Governor Dean is uniquely positioned to develop partnerships between industry stakeholders and local governments." No mention about fighting the handmaidens of special interests, alas.

Jon Hilsenrath and Kristina Peterson: Federal Reserve 'Doves' Beat 'Hawks' in Economic Prognosticating:

As the U.S. emerged from recession in the summer of 2009, Janet Yellen, then president of the Federal Reserve Bank of San Francisco, took a grim view of the economy's prospects. "I expect the pace of the recovery will be frustratingly slow," she said in a San Francisco speech. A month later, addressing fears that money flooding into the economy from the Federal Reserve would stoke inflation, Ms. Yellen said not to worry in a speech to Idaho bankers: High unemployment and the weak economy would tamp wages and prices.

Others at the Fed spoke forcefully in the other direction. Unless the central bank reversed the easy money course, Philadelphia Fed President Charles Plosser warned in December 2009, "the inflation rate is likely to rise to levels that most would consider unacceptable."

Ms. Yellen was proved right.

Paul Krugman: Fear of Froth:

Carola Binder parses President Obama’s big interview with the Times, and thinks it hints at a Summers, or anyway non-Yellen appointment. Maybe; in any case, can I say just how really stupid it is for the White House to have allowed this show even to get started? Here we have Obama trying to reboot his economic message, and much of the reporting is instead focused on palace intrigue….

Here we are with inflation at a long-term low, many economists arguing that we need higher inflation expectations, and unemployment the overwhelming problem we face. Yet Obama appears if anything to give more emphasis to inflation-fighting than to unemployment reduction, and throws in stuff about bubbles; basically, he has a definite tight-money lean. I don’t know who it’s coming from. And this has, by the way, been true all along.

The government already sets rates for Medicare, through the RVS and the RUC process.

The Independent Payment Advisory Board--IPAB--is an attempt to set rates in a less-stupid and more evidence-based way.

Thus Howard Dean claiming that "the ACA's rate-setting won't work", thereby telling his readers that the creation of IPAB introduces rate-setting into some equilibrium of free-market prices for Medicare, is Howard Dean being mendacious to try to protect the profits of the clients of McKenna, Long, & Aldridge. It is not Howard Dean weighing in on public policy trying to make America a better place.

Shame on Howard Dean. Disgraceful.

Leslie Groves:

From: Leslie R Groves, Brigadier General
To: J Robert Oppenheimer
Date: July 29, 1943

July 29, 1943

Dear Dr. Oppenheimer:

In view of the nature of the work on which you are engaged, the knowledge of it which is possessed by you and the dependence which rests upon you for its successful accomplishment, it seems necessary to ask you to take certain special precautions with respect to your personal safety.

Igor Volsky: Growing Number Of States Are Reporting Lower Than Expected Health Care Premiums | Harold Wilson conspiracy theories | Wonkette: Reading Maureen Dowd is like paying one of the Mean Girls to write columns for you forever and ever. At this point Dowd’s tone is pretty much only good for writing notes and passing them down the row in first period math: haha Huma her husband cheats on her prolly because she’s a furriner--also she pads her bra and has her period. Now remember that she probably got paid more to write this than you made this month and bathe the earth with your tears of rage |

• Alex Gelber and Matthew Weinzierl: Equalizing Outcomes and Equalizing Opportunities

• Paul Krugman: Abe Lincoln Would Have Recognized the Rhetoric of Marco Rubio as the Rhetoric of Jefferson Davis

Dan Balz:

From doubts to confidence to defeat: In December 2010… [the Romneys]… were in Hawaii…. When the family members took a vote, 10 of the 12 said no. Mitt Romney was one of the 10 who opposed another campaign [in 2012]. The only “yes” votes were from Ann Romney and Tagg Romney….

Paul Krugman: Greg Sargent finds Marco Rubio trying to redefine the nature of budget blackmail…

declaring that it’s not about Republicans threatening to shut down the government unless Obama defunds heath reform; it’s about Obama threatening to shut down the government unless he gets to implement the law. No, really. Rubio: "I think the real question is: Is Barack Obama willing to shut down the government over ObamaCare?"… Where have I heard that before?… Lincoln… talks of slave interests declaring that they will break up the Union if Northerners vote in a Republican, which will make secession the fault of… anti-slavery forces: "That is cool. A highwayman holds a pistol to my ear, and mutters through his teeth, 'Stand and deliver, or I shall kill you, and then you will be a murderer!”'" Old Abe would have recognized today’s Republicans.

Years late and terabucks short blogging…

Four years ago, Obama pivoted to the Axelrod-Geithner line that the decline had stopped, economic recovery was on the way and could handle itself, and that economic policy job #1 was stabilizing the long-term finances of the federal government.

Now, after four largely wasted years spent mostly talking about the deficit, he may be pivoting back:

"I want to make sure that all of us in Washington are investing as much time, as much energy, as much debate on how we grow the economy and grow the middle class as we’ve spent over the last two to three years arguing about how we reduce the deficits", Mr. Obama said. He called for a shift "away from what I think has been a damaging framework in Washington."

Alex Gelber and Matthew Weinzierl: Equalizing Outcomes and Equalizing Opportunities: Optimal Taxation when Children’s Abilities Depend on Parents’ Resources:

Empirical research suggests that parents’ economic resources affect their children’s future earnings abilities. Optimal tax policy therefore treats future ability distributions as endogenous to current taxes. We model this endogeneity, calibrate the model to match estimates of the intergenerational transmission of earnings ability in the United States, and use the model to simulate such an optimal policy numerically. The optimal policy in this context is more redistributive toward low-income parents than existing U.S. tax policy. It also increases the probability that low-income children move up the economic ladder, generating a present-value welfare gain of more than two and one half percent of consumption in our baseline case.

Franklin Delano Roosevelt: Fireside Chat 25: On the Fall of Mussolini:

Over a year and a half ago I said this to the Congress: "The militarists in Berlin, and Rome and Tokyo started this war, but the massed angered forces of common humanity will finish it."

Today that prophecy is in the process of being fulfilled. The massed, angered forces of common humanity are on the march. They are going forward -- on the Russian front, in the vast Pacific area, and into Europe -- converging upon their ultimate objectives: Berlin and Tokyo.

Laura Vozzella: Va. first lady McDonnell spent thousands from husband’s PAC on clothes, other items | Emily Bazelon: Myth that rape rarely causes pregnancy based on a Nazi experiment that never happened | Casa De Chocolates: 2629 Ashby Ave Berkeley, CA | Robert Farley: Kochtopus vs. EMP vs. Sharknado | Donald Taylor: Title VIII of Ryan’s Patients’ Choice Act: The IPABening | Liam Brunt and Edmund Cannon: Transport infrastructure and market integration: Lessons from the British industrial revolution | Kevin Drum: Obama Should Commit to a Trillion-Dollar Infrastructure Plan | ‘Ghost Chili’ burns away stomach ills | Sarah Kliff: Senator Coburn thinks defunding Obamacare is a horrible idea | **Barbara L. Salisbury: U.S. allowed Italian kidnap prosecution to shield higher-ups, ex-CIA officer says | Greg Sargent: Government shutdown threats won’t work. But maybe complete gibberish will! | Ryan Cooper: Why My Fellow Broke Young Men Will Sign Up for Obamacare by Ryan Cooper |

• William Black: Is it Legal Malpractice to Fail to Get Holder to Promise not to Torture Your Client?
• Paul Krugman: Living in the Sprawl
• Paul Krugman: Republican Health Care Panic
• Partha Dasgupta: Getting India Wrong

William Black: Is it Legal Malpractice to Fail to Get Holder to Promise not to Torture Your Client?

One of the things I never expected to read was a promise by any United States official that a potential defendant in a criminal prosecution by our federal courts “will not be tortured”: http://www.nytimes.com/2013/07/27/world/europe/edward-snowden.html The idea that the Attorney General of the United States of America would send such a letter to the representative of a foreign government, particularly Russia under the leadership of a former KGB official, was so preposterous that I thought the first news report I read about Attorney General Holder’s letter concerning Edward Snowden was satire. The joke, however, was on me.

Pau Krugman: Friday Night Music: Sprawl, Again:

Consider the following thought experiment: you are driving on a road — let’s arbitrarily call it Interstate 91 — and must choose a lane. Traffic is so heavy that you can’t really change lanes thereafter. But there are many bad patches along the road; half of the distance can be covered at 60 miles an hour, but the other half only at 15. You might imagine that your average speed is halfway between 15 and 60, but… your average speed is only 24 miles an hour… you spend four times as much time watching the other guys race past [as going 60]. And this creates intense frustration and anger, a sense that it’s grossly unfair that you are in the wrong lane…. But it’s a good thing I didn’t ride the train (which for complicated reasons wasn’t an option); after all, that would have diminished my individualism.

Paul Krugman: Republican Health Care Panic:

A system along exactly these lines [of ObamaCare] has been operating in Massachusetts since 2006, where it was introduced by a Republican governor. What was his name? Mitt Somethingorother? And no trains have been wrecked so far. The question is whether the Massachusetts success story can be replicated in other states… the answer, so far, is a clear “yes.” In California, insurers came in with bids running significantly below expectations; in New York, it appears that premiums will be cut roughly in half…. Over all, then, health reform will help millions of Americans who were previously either too sick or too poor to get the coverage they needed, and also offer a great deal of reassurance to millions more who currently have insurance but fear losing it….

And the prospect that such a plan might succeed is anathema to a party whose whole philosophy is built around doing just the opposite…. So will Republicans actually take us to the brink? If they do, it will be crucial to understand why they would do such a thing…. Republicans may be willing to risk economic and financial crisis solely in order to deny essential health care and financial security to millions of their fellow Americans. Let’s hear it for their noble cause!

Partha Dasgupta: Getting India wrong:

Uncertain Glory: India and Its Contradictions by Jean Drèze and Amartya Sen (Allen Lane, £20). Why Growth Matters: How Economic Growth in India Reduced Poverty by Jagdish Bhagwati and Arvind Panagariya (PublicAffairs, £19.99)

A central message of modern development economics is the importance of income growth…. In the early 1980s the government of India initiated a programme of economic liberalisation. It is now widely acknowledged that the resulting structural reforms led to the impressive economic growth…. The proportion of people whose incomes are below the country’s official poverty line declined from 45 per cent in the early 1980s to 28 per cent in 2005. The decline is impressive, but the latter figure tells us that the country still harbours widespread deprivation….

Hamburg after the firestorm: RAF operation 'Gomorrah', 27th July 1943. 40,000 dead:

In an attempt to render U boat workers homeless, Bomber Command launched a massive fire-bombing raid on July 27th 1943.

The raid by 739 heavy bombers was so destructive Hamburg was more or less destroyed by a new phenomenon termed 'firestorm'.

Eight square miles of the city were incinerated by flames of up to 800 degrees fanned by winds of 150mph.

Ayn Rand on Religion:

Faith, as such, is extremely detrimental to human life: it is the negation of reason. But you must remember that religion is an early form of philosophy, that the first attempts to explain the universe, to give a coherent frame of reference to man’s life and a code of moral values, were made by religion, before men graduated or developed enough to have philosophy. And, as philosophies, some religions have very valuable moral points. They may have a good influence or proper principles to inculcate, but in a very contradictory context and, on a very--how should I say it?--dangerous or malevolent base: on the ground of faith...

Scott Lemieux: Assuming the Distance Learning Can Opener:

While conceding that Johnathan Rees’s argument against MOOC’s focuses too much on the self-interest of faculty members and not enough on the massive problems of distance learning, Jon Chait’s touting of the promise of MOOCs… suffers… [from] the idea that MOOCs have any realistic possibility of meaningfully replacing college education…. There’s rather a lot of hand-waving going on…. Sure, if there’s a way of weeding out cheating without in-class exams or any contact with students and ensuring that most students can learn effectively solely from videotapes, without any meaningful supervision or direction, MOOCs may well be a good idea! And, similarly, if there was a magic pellet we could shoot into the air that would reduce carbon emissions to 1960 levels global warming would be much less of a problem…. As Reihan Salam notes, far more likely is that online education can be cheap, or it can be good, but almost certainly not both:

Robert Pozen: The Retirement Surprise In Detroit's Bankruptcy: The Expected $3 Billion in Pensions and $6.4 Billion in Other Post-Employment Benefits | The Trappist Provisions: 6309 College Ave, Oakland CA | Paragon: 41 Tunnel Rd., Berkeley CA | Blue Jeans: Video Conferencing and Content Sharing | Dylan Matthews: Republicans had a plan to replace Obamacare; it looked a lot like Obamacare | Barry Ritholtz: Vancouver: Romancing Alpha, Forsaking Beta | Brad DeLong (June 2013): Confusion: High Public Debt Levels and Other Sources of Risk in Today’s Macroeconomic Environment | Aviva Shen: With Voting Rights Act Gutted, Florida Set To Resume Voter Purge | Peter Dizikes: How anti-poverty programs go viral |

• Adrianna Macintyre: We Would Be Seeing It If ObamaCare Were a Job Killer
• Alison Lundergan Grimes for Senate (D-KY)
• Kevin Drum: The Cost of Austerity: 3 Million Jobs
• Paul Krugman: Stiglitz, Minsky, and Obama

Adrianna Macintyre: Friday News Dump: Wonkbites:

A late-Friday news roundup is still a Friday news roundup. Or so I tell myself.

1. If the ACA will force part-time hours, we should already be seeing it. We’re not. One of the arguments against Obamacare that gets trotted out frequently is that it’s a “jobs killer”—it will motivate employers to reduce hours below the 30/week threshold that constitutes full-time for the purposes of the employer mandate. In order to assess penalties for 2014, the feds were going to look at data for 2013 employee hours, meaning the move toward part time should already be happening, and we should be seeing more people just below that 30-hour threshold. If you look at the data, the number of workers reporting 26-29 hours a week has not grown significantly since 2012.

Kevin Drum: The Cost of Austerity: 3 Million Jobs:

Here is the Congressional Budget Office's latest estimate of the economic benefit of eliminating sequestration:

Those changes would increase the level of real (inflation-adjusted) gross domestic product (GDP) by 0.7 percent and increase the level of employment by 0.9 million in the third quarter of calendar year 2014 (the end of fiscal year 2014) relative to the levels projected under current law.

Spending cuts and tax increases since 2011 have cut the deficit by about $3.9 trillion over the next ten years. The sequester accounts for… a third… suggests that the total effect of our austerity binge has been a GDP reduction of 2 percent and an employment reduction of nearly 3 million. If the economy were running at full capacity, deficit slashing wouldn't have this effect. It would be perfectly appropriate policy. Unfortunately, Republicans don't believe in cutting spending during good times and increasing it during bad times. They believe in cutting it during Democratic presidencies and increasing it during Republican presidencies. That might not be so great for people who wish they had jobs right now, but then, that's never been the party's goal in the first place.

Ezra Klein and Evan Soltas:

Wonkbook: A dark horse for Fed chair?: Are the chances of a dark horse rising? There’s a chance that the increasingly acrimonious fight between supporters of Larry Summers and supporters of Janet Yellen will render both candidates too toxic to pick. Summers’s critics are manifold. The latest — and most significant — salvo comes in the form of a letter signed by about a third of Senate Democrats endorsing Janet Yellen for chair. The letter doesn’t mention Summers. But the idea that there are even a dozen Senate Democrats with strong, pro-Yellen opinions strains credulity. It’s an anti-Summers letter, and everyone knows it. But if Summers ends up sunk, there’s a chance that Yellen’s critics in the administration won’t want to pick her, either. They’ll have dug in too deeply during this process, and her supporters will have just dealt them a painful defeat. The ferocity of the backlash to Summers could end up helping an alternative candidate like Roger Ferguson.

July 26, 1943: L.A. Gets First Big Smog:

1943: In the middle of World War II, Los Angeles residents believe the Japanese are attacking them with chemical warfare. A thick fog that makes people’s eyes sting and their noses run has taken hold of the city. Visibility is cut down to three city blocks. As residents would later find out, the fog was not from an outside attacker, but from their own vehicles and factories. Massive wartime immigration to a city built for cars had made L.A. the largest car market the industry had ever seen. But the influx of cars and industry, combined with a geography that traps fumes like a big bowl, had caught up with Angelenos.

Paul Krugman: Stiglitz, Minsky, and Obama:

The president came down pretty much for what we might call a Stiglitzian view… debt was driven by rising inequality…. What’s the alternative? Minsky: debt exploded because the Great Depression was receding into the mists of forgetfulness… lenders and borrowers--enabled and encouraged by financial deregulation--forgot the dangers of leverage. Personally, I’m more of a Minskyite than a Stiglitzian… [but] Elizabeth Warren’s old work on bankruptcy pretty clearly shows that at least some families took on excess debt as a result of rising inequality. But I’m inherently suspicious of any story that makes economics a morality play in which all bad results come from things you consider bad for other reasons too….

There’s a danger in the Stiglitzian approach, namely that people might conclude that fixing the short-run shortfall in demand must wait until we fix the long-run problem of inequality, which is going to be very hard and a long time coming. We need stimulus, or at least an end to austerity, now, even if restoring a middle-class society isn’t going to happen any time soon.

I wouldn’t make too much of these differences; in practice Stiglitzians and Minskyites agree on what should be done,and it’s good to see the president finally talking about the right things. Still, it is interesting to see where he put his emphasis.

Pedro da Costa and Mark Felsenthal:

Opposition mounts to Summers as possible Fed chief: Supporters of Summers argue he should have an edge given his crisis-management experience. "When there is consensus, who the Fed chair is hardly matters, and the times when it matters are the times when you have to think outside the box, and then his strengths shine," said Brad DeLong, a professor at the University of California, Berkeley, who worked with Summers in the Clinton Treasury Department.

• Jared Bernstein: The President’s Economics Speech, First Impressions: "I thought the President gave a resonant and powerful speech…. There’s little in here the President didn’t touch on back in 2005…. What’s different is that in 2005 he was saying 'here’s what a president should do', in 2013 he’s saying 'here’s what I’d be doing if we had a functional political system'…. And he still doesn’t know what to do… a compelling economic vision… [and] a uniquely hostile Congress… beyond making his case to the people as he did today, taking executive actions, and exhorting private sector actors (CEOs, college presidents; he clearly has some executive orders loaded; I’m hoping one involves improving the job quality of workers on government contracts)…. The arrival of Barack Obama on the national stage… was a source of great hope for those like myself back in 2005…. But at least this progressive economist, one who worked for his administration in the early years, hears him with a very different, and sadder, set of ears today than back then." * James Feyrer, Dimitra Politi, and David N. Weil: The Cognitive Effects of Micronutrient Deficiency: Evidence from Salt Iodization in the United States: "Iodine deficiency is the leading cause of preventable mental retardation in the world today. The condition, which was common in the developed world until the introduction of iodized salt in the 1920s, is connected to low iodine levels in the soil and water. We examine the impact of salt iodization on cognitive outcomes in the US by taking advantage of this natural geographic variation. Salt was iodized over a very short period of time beginning in 1924. We use military data collected during WWI and WWII to compare outcomes of cohorts born before and after iodization, in localities that were naturally poor and rich in iodine. We find that for the one quarter of the population most deficient in iodine this intervention raised IQ by approximately one standard deviation. Our results can explain roughly one decade's worth of the upward trend in IQ in the US (the Flynn Effect). We also document a large increase in thyroid related deaths following the countrywide adoption of iodized salt, which affected mostly older individuals in localities with high prevalence of iodine deficiency."

The intelligent Jonathan Chait writes a "let's Obama and professors fight!" column:

Professors Are About to Get Really Mad at Obama: Probably the most important policy idea in President Obama’s economic speech yesterday was his commitment to control the rising cost of college tuition…. Obama’s college agenda started off as a classic Democratic agenda of increasing access by making student loans more generous. But he’s come to think of college tuition costs as… [a] problem….

Families and taxpayers can't just keep paying more and more and more into an undisciplined system where costs just keep on going up and up and up. We'll never have enough loan money, we'll never have enough grant money…. We've got to get more out of what we pay for. Now, some colleges are testing new approaches…. And some states are testing new ways to fund college based not just on how many students enroll but how many of them graduate, how well do they do…

http://delong.typepad.com/Imperialism.pdf

Mark Thoma sends us to Kevin O'Rourke:

Economist's View: 'Why Economics Needs Economic History': The current economic and financial crisis has given rise to a vigorous debate about the state of economics, and the training which graduate and undergraduates economics students are receiving. Importantly, among those arguing most strongly for a change in the way that young economists are trained are the ultimate employers of these students, in both the private and the public sector. Employers are increasingly complaining that young economists don’t understand how the financial system actually works, and are ill-prepared to think about appropriate policies at a time of crisis….

General Badoglio:

The King was quite calm and told me at once what had happened. What he said made so deep an impression on me that I can repeat it almost word for word.

Ezra Klein and Evan Soltas:

Wonkbook: The White House wants Summers for the Fed. But will they actually choose him?: 1) All else being equal, President Obama would like to choose Larry Summers; 2) Right now, the White House is trying to figure out how unequal all else is. On the merits, they think the preference many on the left have for Janet Yellen is a bit puzzling. Yellen and Summers are both strongly committed to reducing unemployment. They’re both committed to implementing Dodd-Frank--as much as the left mistrusts Summers on financial regulation for his actions in the 1990s, the White House believes that he, like many others, is strongly committed to regulating Wall Street now. They see a lot of the opposition to Summers is based on bad or outdated information. But they’re not unaware that Summers is a polarizing choice. So some of what’s happening right now, I think, is that they’re figuring out whether opposition to Summers is soft or hard…. The White House is getting to test the reaction to a Summers pick at a time when they can still choose Yellen, or even go back to the drawing board and look at Roger Ferguson or Donald Kohn or Alan Blinder or anyone else.

In my view, both Larry Summers and Janet Yellen are two of the four best people in the world to be Fed Chair. Don Kohn was behind the curve since 2007--one of the people whose forecasts of unemployment have been consistently low and whose forecasts of inflation and growth have been consistently high over the past six years, who has a faulty model of the economy, and who has not to my knowledge marked his beliefs to market. He would be a bad choice. We know next to nothing about Roger Ferguson's views on monetary policy--less, even, than we knew about Jeremy Stein's. Roger would be a wonderful Fed Chair in normal times. But not now: now he would be a bad choice.

Blinder would be a very good choice. Yellen would be a good choice. Summers would, I think, be a very very good choice. That is the key thing to focus on and keep focusing on.

I missed this from Jonathan Bernstein: A plain blog about politics: Catch of the Day:

[I]t's a good excuse to tell my favorite GOP-scandal-obsession story, which I've told here before, but unless my search skills are awful it appears I haven't told it for some time now. This was about the Clinton-era White House travel office story...I tried to explain the scandal last time, so you can click over if you want a bit of context, but you don't need it (although if you do click through, you'll get the Frank Grimes theory of anti-Clintonism). The basic idea was that it was a major fizzle of a scandal, but that didn't prevent it from looming large for at least some Republicans trapped in the mid-1990s early and primitive version of the conservative information feedback loop.

• Matthew Yglesias: Harry Hopkins explains why stimulus doesn't work: "Harry Hopkins explaining the basic dilemma of overseeing a government job creation program…. 'You can't care very much what people are going to say because when you're handling other people's money whatever you do is always wrong. If you try to hold down wages, you'll be accused of union-busting and grinding down the poor; if you pay a decent wage, you'll be competing with private industry and pampering a lot of no-accounts; if you scrimp on production costs, they'll say your shows are lousy and if you spend enough to get a good show on, they'll say you're wasting the taxpayers' money. Don't forget that whatever happens you'll be wrong.' This… is something that those of us who believe stimulative policy is appropriate during recessions need to think more seriously about…. The Federal Reserve's customary tool of short-term interest rates can run out of firepower. One possible solution to this problem is for Congress to enact a massive fiscal stimulus… but there are some really serious barriers to actually stimulating at the necessary scale. That doesn't mean we're doomed. But it means we need to adopt public policies in advance to help rescue the economy before the next zero bound episode. That means giving the Federal Reserve a powerful new tool to hand out money to people and working out an automatic mechanism for state governments to get injections of money in severe downturns."

Matthew C. Klein:

Larry Summers's Billion-Dollar Bad Bet at Harvard: There is a very good reason Summers shouldn't be in charge of monetary policy: He seems to have trouble with interest rates. During the financial crisis, Harvard lost nearly $1 billion because of some unusual and ill-judged interest rate swaps that Summers implemented in the early 2000s during his troubled tenure as the university's president…. Summers wanted to lock in interest rates for money that the university hadn't actually borrowed and wasn't planning on borrowing for a very long time. There aren't a lot of ways to interpret this exotic instrument except as a bet that the future level of interest rates would be higher…. That bet was wrong, and Harvard lost a billion dollars…. Not only was Summers wrong in 2004 about where interest rates would be -- he was willing to bet a lot of other people's money that he knew better than everyone else. The damage at Harvard was bad enough. Imagine what that sort of thing could do to the U.S. economy.

Paul Krugman:

Been There, Done That: Monetary and Fiscal Policy Edition: The remarkable thing is the desperation with which inflationistas keep conjuring up new explanations…. Instead of saying that a simple IS-LM framework… has worked very well--and that whatever other model they were using failed the test--they keep coming up with excuses. It’s Obamacare! It’s interest on reserves! It’s the decline of traditional marriage! OK, they haven’t used that last one yet, but give them time.

David Beckworth:

Macro and Other Market Musings: Abenomics Confusion: Lars Christensen nails it….

There has been a lot of focus on the fact that USD/JPY has now broken above 100 and that the slide in the yen is going to have a positive impact on Japanese exports. In fact it seems like most commentators and economists think that the easing of monetary policy we have seen in Japan is about the exchange rate and the impact on Japanese “competitiveness”. I think this focus is completely wrong…. I believe that we are likely to see is a boost to domestic demand and that will be the main driver of growth. Yes, we are likely to see an improvement in Japanese export growth, but it is not really the most important channel for how monetary easing works.

Jonathan Bernstein watches Josh Kraushaar graphically demonstrate that only suckers pay for the National Journal:

Oy, Kraushaar: Granted, I haven't watched the president's speech today. But that's OK; apparently, Josh Kraushaar hasn't watched anything else the president did from about March 2009 until today.

Seriously: I think this could be the single stupidest thing I've heard anyone try to peddle yet about Barack Obama's economic record:

Larry Summers: Lack of fear gives cause for concern:

The US is enjoying a rare combination of low inflation and 4.5 per cent unemployment… has not suffered a deep recession in a quarter of a century… markets… extrapolate from experience…. The great danger is that optimism can become a self-denying prophecy if it leads to excessive extension of credit, irrational capacity creation and unsustainable levels of spending.

Jim Macdonald (2008): The solution to the problem of comment trolls is strong moderation:

Here’s what moderators need to know:

1. Sure, there’s freedom of speech. Anyone who wants it can go start their own blog. On Yog’s board, Yog’s whim is law.
2. Yog is an ancient ghod of chaos and evil. And he doesn’t like people very much.
3. Moderation is a subjective art, and the moderator is always right.
4. The moderator may have minions. They need to have a private area where they keep the buckets of Thorazine and the cold-frosty bottles of cow snot.
5. The minions speak with the voice of Yog. Yog backs his minions up.
6. There is always someone awake, and in charge, when Yog isn’t around in person. The minions know who the Duty Yog is.
7. If someone starts off as a spammer, troll, or flamer, he is a spammer, troll, or flamer forever and is liable to instant deletion/banning with no recourse and no appeal.
8. If the moderator ever needs inspiration, he can re-read Jonathan Edwards’ Sinners in the Hands of an Angry God and recall that the posters are sinners and he is Ghod.
9. Rules? In a knife fight? Yog and his minions have standards, but they don’t need to tell the posters, lest some of them attempt to game the system. Attempting to game the system is, all on its own, a deletable offense.
10. ALL CAPS posts are deleted on sight, unread. Mostly ALL CAPS POSTS are ALL CAPS.
11. Anyone who doesn’t space after punctuation marks is insane, and can be deleted/banned on sight.
12. Personal attacks against Yog and his minions are ignored. Personal attacks against anyone else are deletable on sight.

J. V. Stalin:

Order of the Day

Addressed to Army-Generals Rokossovsky and Yatutin and Colonel-General Popov

July 24, 1943

YESTERDAY, on July 23, as the result of the successful operations of our troops, the complete liquidation of the German July offensive was accomplished in the areas south of Orel and north of Byelgorod in the direction of Kursk.

• Bruce Bartlett: Inflationphobia, Part III: "To be sure, some inflationphobes never believed their own rhetoric; they were just trying to score political cheap shots or con unsophisticated investors into buying gold – from which the inflationphobe reaped a commission. But many others were sincere in their belief that higher inflation was inevitable. Intellectually honest inflationphobes need to explain why they were wrong and stop crying wolf or else it will be reasonable to assume they are simply cranks and crackpots."

• Thomas Piketty and Gabriel Zucman: Capital is Back: Wealth-Income Ratios in Rich Countries 1700-2010: "How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970-2010 national balance sheets recently compiled in the top eight developed economies. For the U.S., U.K., Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise of wealth-income ratios in recent decades, from about 200-300% in 1970 to 400-600% in 2010. In e↵ect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600-700%). This can be explained by a long run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the = s/g Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long run wealth-income ratio is about 300% if g = 3% and 600% if g = 1.5%. Our results have important implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares."

Michael Heller: Paul Krugman, The Ungracious Ideologue (And Loser):

For most people -- arguably even for most economists -- all that mattered was the knowledge that countries with debt over 90 percent of GDP tend to have slower growth than countries with debt below 90 percent of GDP. Simple and clear. Everyone who received that message recognised it for what it was. In the cloudy consciousness of humble non-statisticians, it was a vital warning on debt issued by two cautious and meticulous researchers - Reinhart and Rogoff.

Ta-Nehisi Coates:

It's The Racism, Stupid: National Review's Victor Davis Hanson takes on the president's comments with predictable results. Here Hansen counters The Talk which African-Americans parents give their children about the police, with his own version of The Talk….

For every lecture of the sort that Holder is forced to give his son, millions of non-African-Americans are offering their own versions of ensuring safety to their progeny…. My father was a lifelong Democrat. He had helped to establish a local junior college aimed at providing vocational education for at-risk minorities…. In middle age, he and my mother once were parking their car on a visit to San Francisco when they were suddenly surrounded by several African-American teens. When confronted with their demands, he offered to give the thieves all his cash if they would leave him and my mother alone. Thankfully they took his cash and left.

Ezra Klein:

What… [did Nate Silver get] right during the election[?] The typical answer to this is, well, “the election.” But getting the election right was no great feat. The betting markets got the election right. The pollsters got the election right. The polling aggregators, like Real Clear Politics, got the election right. The modelers--which included Silver, but also included Sam Wang and Drew Linzer, among others--got the election right. Wonkblog’s election model called the election right… in June….

AHA Statement on Policies Regarding the Embargoing of Completed History PhD Dissertations:

The American Historical Association strongly encourages graduate programs and university libraries to… embargo… completed history PhD dissertations in digital form for… six years…. University presses are reluctant to offer a publishing contract to newly minted PhDs whose dissertations… [are] available… online sources…. Students who must post their dissertations online immediately after they receive their degree can find themselves at a serious disadvantage in their effort to get their first book published….

Izabella Kaminska:

Explaining the commodity warehouse trade with scripture: This is Joseph. He is a well known commodity forecaster…. This is Pharaoh…

George S. Patton:

On the afternoon of the twenty-first, we secured a position northeast of Castelvetrano from which to launch the 2nd Armored Division, which heretofore had been held back near the middle of the island so that the enemy could not tell which way it was going. The troops moved into position, beginning at 4 p.m., and were all set by dark. In the morning they started their relentless advance.