Grasping Reality on TypePad, by Brad DeLong

Paul Krugman: Why Is Obamacare Complicated?:

Obamacare isn’t complicated because government social insurance programs have to be complicated: neither Social Security nor Medicare are complex in structure. It’s complicated because political constraints made a straightforward single-payer system unachievable. It’s been clear all along that the Affordable Care Act sets up a sort of Rube Goldberg device, a complicated system that in the end is supposed to more or less simulate the results of single-payer, but keeping private insurance companies in the mix and holding down the headline amount of government outlays through means-testing. This doesn’t make it unworkable: state exchanges are working, and healthcare.gov will probably get fixed before the whole thing kicks in. But it did make a botched rollout much more likely.

So [Mike] Konczal is right to say that the implementation problems aren’t revealing problems with the idea of social insurance; they’re revealing the price we pay for insisting on keeping insurance companies in the mix, when they serve little useful purpose. So does this mean that liberals should have insisted on single-payer or nothing? No.... Yes, Obamacare is a somewhat awkward kludge, but if that’s what it took to cover the uninsured, so be it.... The odds remain high that this will work, and make America a much better place.

Christina Romer: Monetary Policy in the Post-Crisis World:

It [will] be helpful to step back from all of the discussion about who should be Fed chair, and talk instead about monetary policy more broadly. The last five years have been very difficult ones.... The Federal Reserve and other central banks had to take unprecedented actions to try to contain the panic. And they have continued to struggle to come up with innovative ways to spur lending and encourage growth. With the benefit of a little distance, I thought it would be useful to talk about what we have learned about monetary policy from the experience of the financial crisis, and the subsequent recession and slow recovery...

Duncan Black: Eschaton: Geniuses, They Are:

5 years later and our famed macroeconomists have begun to remember a bit of macroeconomics.

WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.

Off the Treasury Islands in the South Pacific:

Stanley Baranowski on the USS Cony:

Oct. 27, 1943 We got up at 3:30AM and at 5:00AM we went into GQ. We were laying off from island “Treasury” because we were fighting director for our planes. Nothing happened all morning. Everything was going good, then at 3:00PM got contact with a lot of planes--enemy. Then at 3:15PM, they came at us. So many of them. We started to fire everything we had. Bombs dropping all around us. 17 of them missed us. Then at 3:25PM we got 2 direct hits on port and starboard. Shrapnel flew everywhere. Lots of men were hit. 3-4-5 guns went out. Fire broke out on engines, they went out of order. We started to leave Treasury at 4:00PM. Worked on fires. Was up all night taking care of wounded.

Pro-Growth Liberal: EconoSpeak: A Fuzzchart on Federal Spending Courtesy of John Taylor:

Mark Thoma used to crack me up when he would refer to those Jerry Bowyer National Review graphs as Fuzz Charts, since Bowyer usually tried to deceive his readers. Now if you miss those good old days--John Taylor has kindly decided to take over....

A starting point is to lay out in simple big picture terms what the House and Senate budget resolutions passed earlier this year look like.... The chart shows the recent history of federal outlays along with the path of outlays as a percentage of GDP under the Senate proposal and under the House proposal. There is a big difference in these two paths. Spending gradually comes down to pre-crisis levels as a share of GDP under the House plan and remains high under the Senate plan. I have been arguing since 2009 that undoing the recent spending binge is a reasonable goal, and prefer the House version on that count.

My problem with his chart is its historical starting point is 2000 when Federal spending as a share of GDP was only 18.5%.... A naïve reader might think the historical norm was the 18.5% observed in 2000, but my graph takes us back to 1961. And it turns out that Federal spending as a share of GDP was not always as low it was at the end of the Clinton years. The peace dividend years are over and future health care spending isn’t going to what it was in 2000--but John Taylor wants us to think there is something magical and normal about the Ryan budget.

Indeed:

Stolen from FT Alphaville, in turn stolen from John McDermott, in turn stolen from Branco Milanovic:

Note that these are not the changes in income of individuals in the world economy. Rather, they are the changes in the incomes associated with particular percentile slots in the world economy. Your average citizen of China is in a much higher percentile of the income distribution today than twenty years ago.

Also note that Milanovic's numbers on the prosperity of the pre-1991 Communist Bloc have always looked to me to be considerably higher than reality--they have never seemed to me to make adequate allowances for quality, variety, and the hassle factor involved in obtaining goods and services in a centrally-planned really existing-socialist economy.

Plus I am a techno-optimist: I see the coming of internet access as contributing an enormous amount to human well-being via consumer surplus that is simply not captured by standard GDP accounts.

Neverthless, the (relative) failure of development for the 75-90 percentile of the world income distribution over 1988-2008 is a fact, a fascinating one, and a somewhat terrifying one.

• Now Up: AnnaLee Newitz of IO9 on Mass Extinction
• Contraception Extremism and the Right-Wing Bubble
• UnCharted: Morning Session I: Robots, Architecture
• Uncharted: Afternoon Session I: Wine, Politics, Race
• Kris Kobacs's Two-Tier Vote Suppression Regime in Kansas: The View from the Roasterie XIX: October 25, 2013
• Uncharted: Josh Barro and Markos Moulitsas Zuniga on the 2014 Election
• Steven Pearlstein: Marty Sullivan figured out how the world’s biggest companies avoided billions in taxes. Here’s how he wants to stop them

And:

1. "Once you have involuntary unemployment, [market optimality] fails. Keynes’ famous thought experiment of burying pound notes in coal mines made the point that an intervention that would be totally absurd in terms of standard microeconomic reasoning might nonetheless help to alleviate a recession and therefore make society better off.... None of the standard conclusions of... microeconomics can be assumed to be valid under conditions of sustained high unemployment. Keynes specifically presented his macroeconomic ideas as making the world safe for neoclassical micro. If governments could stabilise the aggregate economy with fiscal policy, there was no need for comprehensive economic planning of the kind being practised, with apparent success, in the Soviet Union, or for ad hoc interventions like the price-fixing elements of the New Deal.... The failure of macroeconomists and finance economists to provide either a warning of the Global Financial Crisis or any consistent advice on how to deal with the ensuing Great Recession it isn’t just a problem for them. It undermines the whole economics profession. The sooner we realise that the entire discipline is in a state of scientific crisis the sooner we might start to do something about it": John Quiggin: The macro foundations of micro
2. "Notice [Rick Perry's] obvious physical threat [to Ben Bernanke]: 'do to him'. Not 'say to him', but 'do to him'. Not 'I'd do' something to him, but 'we' would. And when someone says 'we'd' like to 'do' something 'pretty ugly' to a public official – with a reference to Texas lore, where lynching was once commonplace, I'm sorry but this was a threat of violence, especially in the context of [accusing Bernanke of] a capital offense": Andrew Sullivan: Dissent Of The Day
3. "Former Republican congressional staffer Mike Lofgren first alerted me to this phenomenon two years ago... he discussed the tactic of filibustering all legislation in the Senate and all nominations to administration positions, regardless of merit.... 'A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress's generic favorability rating among the American people. By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.' A deeply cynical tactic, to be sure, but a psychologically insightful one that plays on the weaknesses both of the voting public and the news media'... An ABC News/Washington Post poll out this week confirms that the strategy is working. I recalled Lofgren’s statement on Wednesday when I saw that House Ways and Means Committee Chairman Dave Camp (R-MI) blasted the Internal Revenue Service for delaying the 2014 filing season by two weeks. Said Camp, “There is no reason the IRS should not be able to do its job on time.” The IRS explanation for the delay, however, is both understandable and believable—it is because of the 2-week government shutdown that Camp’s party petulantly undertook a quixotic effort to repeal the Affordable Care Act": Bruce Bartlett: Republicans and the “Lofgren Corollary”
4. "Let’s suppose that after allowing nominal GDP to fall 9% below trend between mid-2008 in mid-2009, the Fed had started a new and lower trend line with 5% growth. That would’ve been an unconscionably contractionary monetary policy by any reasonable standard. That would’ve meant no trend reversion at all. And yet I believe that if they had done this unconscionably contractionary monetary policy beginning in mid-2009 the recession would now be over and the unemployment rate would have fallen to below 6%.... Think about the fact that monetary policy has been much more contractionary than the unconscionably contractionary policy I just sketched out, and it’s getting increasingly contractionary as NGDP growth continues to slow. So when will I stop asking for “MOAR”? When it’s no longer needed. But so far people like me and Lars Svensson have been consistently right and my critics, even inflation hawks that say the Fed should ignore unemployment and focus like a laser on 2% inflation, have been consistently wrong. Officials within the Fed and Riksbank and ECB have also been consistently wrong.  I see no reason to change my views as long as events continue confirming the validity of the market monetarist approach to policy": Scott: Sumner: TheMoneyIllusion » MOAR!

Plus: Long:

Justin Fox: What We’ve Learned from the Financial Crisis | Zadie Smith: Love in the Gardens | Kenneth Rogoff: "Eine Hexenjagd" |

Steven Pearlstein: Marty Sullivan figured out how the world’s biggest companies avoided billions in taxes. Here’s how he wants to stop them:

For two decades, from the same home office, Sullivan has been exposing the tax-dodging schemes of multinational corporations in the columns of Tax Notes... an early light on how companies had finagled 'transfer prices'... called out the big drug and tech companies for transferring ownership of their patents and trademarks... to subsidiaries in Ireland and other low-tax jurisdictions.... in 2010 pieced together from public filings that Apple had understated its reported profits to hide the fact that it was paying a tax rate of less than 2 percent on its overseas profits, shining the spotlight on Apple’s tax avoidance schemes. “We’ve been banging the drum on this stuff for years,” Sullivan said with just the slightest hint of satisfaction as the morning sun filtered into the garage he shares with bicycles, garden tools, an American flag and an old coffee maker. 'But it’s finally gone prime time'

http://www.berkeleyideas.com/event/afternoon-session-i/

John Milburn: The Latest Voter Suppression Fad: Two Tiers:

Officials in Arizona and Kansas are making preparations for elections with two categories of voters. There will be those who provided proof of citizenship when they registered to vote, and will therefore be able to vote in all local, state, and federal elections. And then there will be those who did not provide proof of citizenship when they registered. Those people will only be able to vote in federal contests--if at all.

Afternoon session I: Wine, politics, race | Uncharted:

Why wine matters: Randall Grahm in conversation with Felix Salmon.
The crystal ball: What will happen in the 2014 midterms Markos Moulitsas in conversation with Josh Barro.
Are we born racist? Rodolfo Mendoza-Denton in conversation with Phil Bronstein.

Details:

Start: October 25, 2013 1:40 pm
End: October 25, 2013 2:50 pm
Event Category: Conversation

Morning Session I: Robots, Architecture | Uncharted:

Morning session I: Robots, architecture
October 25 @ 11:40 am - 12:40 pm

I, for one, welcome our new robot overlords. Brad DeLong in conversation with Joshua Bloom

What will increasing automation mean for our economy and our society? Will it exacerbate unemployment, or will it spur new industries? Are there some aspects of automation that we’re unlikely to accept?

The bridge to somewhere. Donald MacDonald in conversation with Felix Salmon

The architect of the new East Span of the Bay Bridge discusses the importance of bridges and what they can bring to an urban environment.

Details:

Start: October 25, 2013 11:40 am
End: October 25, 2013 12:40 pm
Event Category: Conversation

Amanda Marcotte: Contraception Extremism and the Right-Wing Bubble:

When you aim for “mighty rulers of America” and instead land on “squalling baby” as your public image, you screwed up, big time. So what went so terribly wrong for Republicans? If you really want to understand what’s the matter with the modern Republican Party, look no further than the issue of contraception, which played an important role during the shutdown talks. The way that the modern Republican Party approaches what used to be the non-issue of contraception tells you everything you need to know about how the Republicans’ dramatic right-wing shift happened, and why they can’t seem to see that the political moves they think are genius are actually scaring and alienating ordinary voters....

http://hbr.org/2013/11/what-weve-learned-from-the-financial-crisis/ar/1

http://io9.com

• Tim Duy Quotes Enrico Moretti: Where the Good Jobs Are—and Why
• Donald Kuehn: None of them along the line know what any of it's worth
• Corey Robin: Edmund Burke, Pioneer of Wingnut Welfare: Notes
• Tom Matzzie wins Twitter by Spying on Ex-NSA Director Michael Hayden on the Acela
• The Utilitarian Math Says: The Top 1% Should Pay an 80% Marginal Rate: Emmanuel Saez and Thomas Piketty
• Sahil Kapur: New Budget Numbers May Kill A Medicare Age Hike
• And Dan Davies Falls into the David Graeber Zone!!
• Duncan Black: Good Luck With That

And:

1. "Hirschman’s goal was not simply to probe the anatomy of conservatism but to illuminate the 'rhetorics of intransigence'.... He believed, for example, that the 'conservative futility thesis', which is based on faith in deep structures or immutable laws of motion within society, is mirrored precisely in Marxism.... For conservatives, the thesis holds that all human action to change social conditions invariably results in making them worse. For the left, the thesis implies that, precisely if one has nothing to lose, one should engage in social action in any event, even to the point of a nihilistic politics of the apocalypse. He concluded the book on a coy note, worrying that his diagnosis of the weaknesses of progressive thought would lose him many friends who are 'long on moral indignation and short on irony'": Seyla Benhabib: Oracle’s Odyssey: Albert Hirschman
2. "Joss Whedon’s Much Ado about Nothing is a tender, sexy, and very funny film production of Shakespeare’s comedy, but what made it most satisfying was its creepy presentation of Hero’s public shaming and its concluding on a melancholy note rather than with victorious fanfare.... The unimaginative Claudio and his friends simply assume that Hero is guilty, “an approved wanton” and no maid, a mere “sign and semblance of her honour.”  Before a crowd of guests and the priest who expects to hear the couple’s vows, Claudo shoves Hero back to her father, intent not be be married to her. Eventually Hero’s innocence and modesty come to light, but much grief could have been saved had Claudo given his beloved the respect due a person.... Hero’s accusers are mistaken, but they’re acting in line with social expectations and norms.... Setting the film as Whedon did really helped get these social expectations across. The structural sexism is more apparent alongside the occasionally seen smart phone, within the film noir stylization, and with 'Sigh No More' sung with a hint of sadness.  We in the audience expect that these classic characters would know better than to treat Hero as goods damaged before the date of sale.  The fact that they don’t know any better helps bring the social context in which they act to the foreground": Kyle Cupp: Much Ado about a Public Shaming
3. "Criticisms of the industry as a whole, be it managed futures or hedge funds, tend to be answered with the characteristics of individual funds: 'Don’t blame me if other funds are useless and investors are stupid. We do things properly and our interests are aligned--we only make money when our investors do'... But when past performance is the only signpost for manager quality, it naturally encourages cash to flood in on the back of good results. The industry is full of examples of rockstar funds that grow huge and then suffer big losses, wiping out in dollar terms most or all of their previous dollar gains for investors: Tiger Management, Aramanth, Harbinger, Paulson & Co, for instance. Time-weighted returns, what the fund made each year in simple percentage terms, fail to capture that effect": Dan McCrum: A managed futures smackback to the Bloomberg takedown
4. "Assuming conjectural variations of one is almost but not quite the same as simply assuming that firms collude.... This is just a clumsy way of solving the Econ 101 monopolist’s problem. Steve Keen’s arguments are simply wrong. They cannot be rescued by any appeal to realism or empirical evidence, because he is arguing about math, not empirical implications, and he simply has the math wrong.... Steve Keen is offering just plain wrong arguments about very basic versions of very basic models taught to second-year undergraduates. I hope that people who take these arguments seriously attempt to reproduce Keen’s results, so they can demonstrate for themselves that Keen is wrong. If you can’t do basic calculus, consider this: it is either the case that Keen has made basic errors in basic math, or it is the case that hundreds of thousands of economists and mathematicians over many generations have all made basic errors in basic math. Which seems more likely?": Chris Auld: Steve Keen still butchering basic microeconomics

Plus: Long:

Stan Greenberg et al.: Inside the GOP: Report on focus groups with Evangelical, Tea Party, and Moderate Republicans |

Yes, this is so weird: but so is my travel schedule this fall:

• Fr Aug 16: 5-7 PM PDT: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Aug 23: 5-7 PM PDT: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Aug 30: 12-2 PM CDT: The Roastery, Brookside & 62nd, Kansas City, MO[1]
• Fr Sep 6: 5-7 PM PDT: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Sep 13: 12-2 PM CDT: The Roastery, Brookside & 62nd, Kansas City, MO
• Fr Sep 20: 5-7 PM EDT: Caribou Coffee, 15th & Pennsylvania, NW, Washington DC
• Fr Sep 27: 5-7 PM PDT: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Oct 4: 5-7 PM PDT: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Oct 11: 12-2 PM CDT: The Roastery, Brookside & 62nd, Kansas City, MO
• Fr Oct 18: 12-2 PM CDT: The Roastery, Brookside & 62nd, Kansas City, MO
• Fr Oct 25: 5-7 PM PDT: Espresso Roma, Ashby & College, Berkeley, CA 7:30-9:30 AM PDT: Starbucks, Oxford and Center, Berkeley, CA
• Fr Nov 1: 12-2 PM CST: The Roastery, Brookside & 62nd, Kansas City, MO Mo Oct 28: 12-2 PM CST: The Roastery, Brookside & 62nd, Kansas City, MO
• Fr Nov 8: 12-2 PM CST: The Roastery, Brookside & 62nd, Kansas City, MO
• Fr Nov 15: 5-7 PM EST: Caribou Coffee, 15th & Pennsylvania, NW, Washington DC
• Fr Nov 22: 5-7 PM PST: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Nov 29: 5-7 PM PST: Espresso Roma, Ashby & College, Berkeley, CA
• Fr Dec 6: 12-2 PM CST: The Roastery, Brookside & 62nd, Kansas City, MO
• Fr Dec 13: 12-2 PM CST: The Roastery, Brookside & 62nd, Kansas City, MO

Or by appointment. Email [email protected] SUBJ:Office Hours to set up another time. In fact, email anyway: things get crowded, and it's much better if people are slotted in…

[1] Sorry, I would like to do Minsky's Pizza just for the resonance, but they would have to step up their game first…

Duncan Black: Eschaton: Good Luck With That:

As I regularly point out, it's illegal to build the urban hellhole even in the urban hellhole. While most older housing stock has no off-street parking, developers are usually forced by a combination of zoning boards and neighborhood group pressure to add it to new development.... The position of people who demand parking is basically "I get my free on street parking spot but newer residents don't."

Dan Davies (dsquareddigest) on Twitter:

@davidgraeber it is not like your other "my article must have been valid because it was widely forwarded on the internet" line was better.

@davidgraeber alternatively, could I go to a party and ask people "anthropologists don't really use cocktail chat as data do they?"

I mean "what's that Dave, oh yes, totally agree, all these jobs are just bullshit, I think my wife wants me to go over there now, see you!"

@BlandDexter @davidgraeber in the name of pity, please tell me this isn't a normal data gathering standard, even in jest, in anthropology

Four things create value:

1. Gross manipulation of matter and energy.
2. Fine manipulation of matter and energy.
3. Interacting with humans.
4. Thinking of new things to do, and thinking of better ways to do things.

And let me know that, as far back as we can tell, your status and standard of living depends on (a) the value you directly add and (b) what you are able to grab (and persuade others that you are right to grab) from our joint-product common store.

It is this:

Take the expectational Phillips Curve:

π = E(π) + β(u* - u)

where π is the inflation rate, E(π) is the market's expectation of inflation, u* is the natural rate of unemployment, and u is the unemployment rate.

This equation tells us that if expected inflation rises and the central bank does not want actual inflation to rise, it must take steps to drive the unemployment rate to:

u = u* + (E(π) - π)/β

Sahil Kapur: New Budget Numbers May Kill A Medicare Age Hike:

Raising the Medicare eligibility age to 67 saves far less than previously projected... cuts the deficit by just $19 billion over a decade, according to a report released Thursday by the nonpartisan Congressional Budget Office. Last year, the same policy... was found by the CBO to save $113 billion.... The idea has been floated since 2011, when President Barack Obama and Speaker John Boehner nearly agreed to a broad debt deal that adopted it....

Emmanuel Saez and Thomas Piketty: Why the 1% should pay tax at 80%:

In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled, from less than 10% in the 1970s to over 20% today (pdf). A similar pattern is true of other English-speaking countries.... Other OECD countries... have seen far less concentration of income among the mega rich. At the same time, top income tax rates on upper income earners have declined significantly since the 1970s in many OECD countries--gain, particularly in English-speaking ones.... At a time when most OECD countries face large deficits and debt burdens, a crucial public policy question is whether governments should tax high earners more. The potential tax revenue at stake is now very large....

Tom Matzzie wins Twitter (with image, tweets) · JuddLegum · Storify:

1:20 PM: Former NSA spy boss Michael Hayden on Acela behind me blabbing "on background as a former senior admin official" Sounds defensive.

1:21 PM: Hayden talking about a famous blackberry now.

1:23 PM: Hayden was bragging about rendition and black sites a minute ago.

1:26 PM: Michael Hayden on Acela giving reporters disparaging quotes about admin. "Remember, just refer as former senior admin" #exNSAneedsadayjob

1:27 PM: On Acela: Michael Hayden was talking to Massimo Calabresi at TIME I am pretty sure. Does he tweet?

1:29 PM: On Acela: former NSA spy boss Michael Hayden just ended last of handful of interviews bashing admin

1:34 PM: On Acela listening to former NSA spy boss Michael Hayden give "off record" interviews. I feel like I'm in the NSA. Except I'm in public.

1:35 PM: On Acela: phone ringing. I think the jig is up. Maybe somebody is telling him I'm here. Do I hide?

1:40 PM: New call. I am totally busted I think.

1:42 PM: I think I'm safe. Just passed Philly. No rendition yet. Do I have the balls to ask him for a photo? #haydenacela

1:46 PM: There is a faint smell of sulfur on the train. #Haydenacela

1:51 PM: New call just came in.

1:53 PM: On Acela: Hayden's comments to press were clearly about NSA spying on foreign allies. #haydenacela

1:57 PM: Win

Corey Robin: Burke in Debt:

Some day someone should write an essay on the struggles of Edmund Burke in his final years to overcome his considerable debts—some £30,000—by securing a peerage and a pension from the Crown.... So terrified was he of dying in a debtor’s prison that he struggled in his retirement to learn Italian. His hope, claimed one of the many visitors at his estate, was to flee England and “end his days with tollerable Ease in Italy.” (He also floated, apparently, the possibility of fleeing to Portugal or America.) “I cannot quite reconcile my mind to a prison,” he  told a friend. Thanks to the interventions of his well connected friends, Burke secured from Pitt in August 1795 two annuities that would wipe out his debts and a pension that, along with an additional pension and the income from his estate, would enable him and his wife to live in comfort into their old age.

Three months later, when Burke took up his pen against a proposal for the government to subsidize the wages of farm laborers during bad harvest years (so that they could sustain themselves and their families), he wrote, “To provide for us in our necessities is not in the power of government.”

Daniel Kuehn: Facts & other stubborn things: None of them along the line know what any of it's worth:

The greatest hesitation I have about the market economy is the wedge between demand and the willingness to pay that is the ability to pay. This is, after all, why full employment is so important. This is why opportunity and equality are so important.... This wedge... presents] insurmountable problems... [to]any kind of welfare claims about the market economy.... We can't say anything about the quality of the system as a whole that isn't contingent on implausible assumption about the quality of the distribution of the ability to pay. The trouble is the ability to pay is tied up with productivity, and this doesn't seem to be a justifiable basis for distributing well-being. At the same time allocating productivity efficiently is the only chance of getting a surplus in the first place to distribute.

If we have robots, robot socialism is probably an answer. Until then I just don't know.

The structure of credit always rests on three legs:

1. The power and willingness of financial intermediaries to create the securities that savers and speculators seek to hold.
2. The possession by counterparties of the income streams to make good the cash flows the securities promise.
3. The underlying real values to make good pledges even should the income streams of counterparties vanish.

There are thus three kinds of raid on financial markets:

James Baker: To win again, the Republicans must be a party of hope:

That is not to say that the Grand Old Party did not administer self-inflicted wounds in its recent effort to defund the Affordable Care Act. My party has been hurt by this tilting at political windmills. But while President Barack Obama and the Democrats may have scored a political victory, its impact in the long term is unclear and they were also hurt by the fallout…

I mean, whiskey-tango-foxtrot-bang-query-bang-query. The Democrats didn't threaten to and then begin to break the economy and the international financial system and the government unless the Republicans knuckled under to their policy priorities.

How does that hurt them?

How does James Baker think that hurt them?

The answer is simple: he doesn't. But he doesn't, even now, have the guts to speak truth to the wingnuts. And if nobody in the Republican Party has the guts to speak truth to the wingnuts, the wingnuts will never have their view of the world challenged.

Earl Ziemke:

On 21 October, as the Russians pushed toward Krivoi Rog, von Mackensen had to give up his plan to counterattack with the divisions from Eighth Army--the 11th Panzer and SS Totenkopf--and had to put them in the line separately to do what they could toward braking the Russian momentum. He informed Manstein that the Russians, if they wanted to, could also turn east into the Dneipr Bend and strike in the rear of the army's line on the river. He proposed giving up the eastern half of the river bend and drawing back to a line anchored on the river and the left flank of Army Group A near Nikopol. Manstein agreed, but, after relaying the proposal to the OKH, called at midnight and said that Hitler insisted on keeping the Dneipr front where it was.

Enrico Moretti: Where the Good Jobs Are—and Why:

It is a tipping-point.... Once a city spawns some innovative companies, its ecosystem changes in ways that make it even more attractive to others.... Salesforce, Twitter and Yelp in downtown San Francisco increases the city's appeal to other high-tech entrepreneurs.... Scientists and software engineers are not the only ones who thrive as a result... for each new innovation-job in a city, five additional jobs are created... professional occupations (lawyers, teachers, nurses) but also nonprofessional occupations (waiters, hairdressers, carpenters). For each new software designer hired at Twitter in San Francisco, there are five new job openings for baristas, personal trainers, therapists and taxi drivers. The most important effect of high-tech companies on the local economy is outside high-tech.

This matters for wages, too. In 1980, salaries for workers with a high-school diploma in Austin and Raleigh were significantly lower than the national average. Then those cities became important hubs for IT and life science, respectively. Salaries are 45% higher, and the gap keeps expanding. High-school graduates in Austin and Raleigh don't work harder or have higher IQs. The ecosystem around them is different. Most industries have a multiplier effect. But none has a bigger one than the innovation sector: about three times as large as that of extractive industries or traditional manufacturing. Clearly, the best way for a city or state to generate jobs for everyone is to attract innovative companies that hire highly educated workers.

• Jim Stock: An 0.25% Point Reduction in Fourth Quarter Growth and Minus 120000 Private-Sector Jobs
• Angus Deaton: Inequalities in Income, Health, and Wellbeing
• Dean Baker: Unemployment Edges Down as People Continue to Leave the Workforce in September
• Simon Wren-Lewis: Is a currency crisis bad for you at the ZLB?
• Brian Buetler: The amazing politics of ObamaCare
• Paul Krugman: Maybe Economics Is A Science, But Many Economists Are Not Scientists
• Cardiff Garcia: The downsides of quantitative easing, Cardiff Garcia smackdown watch

And:

1. "If all the problems are driven by means-testing, state-level decisions and privatization of social insurance, the fact that the core conservative plan for social insurance is focused like a laser beam on means-testing, block-granting and privatization is a rather large [issue].... The Medicaid expansion is working well where it is being implemented, and the ACA is perhaps even bending the cost curve of Medicare, the two paths forward that conservatives don’t want to take.... The choice between Category A and B above will characterize much of the political debate in the next decade. It’s important we get more sophisticated analysis of what has gone wrong with the ACA rollout to better appreciate how utilizing 'the market' can be far more cumbersome and inefficient than the government just doing things itself": Mike Konczal: What Kind of Problem is the ACA Rollout for Liberalism?
2. "'The Industrial Revolution didn't put everyone out of work, and neither did 80s-era technology like ATMs and accounting software. Therefore, 2030s-era technology won't either.' This is, literally, the worst possible case you can make for the continued relevance of the middle class. To say that 'intelligent machines per se are not new', as Bessen does, wildly misrepresents both intelligence and machines.... Those machines won't need help from ordinary humans. In fact... they won't need much help from really smart humans either.... If you wave this away, you're missing the whole debate. You're pretending to argue without actually addressing the main point of the techno-optimists": Kevin Drum: Yes, Technology Is Going to Destroy the Middle Class
3. "The very existence of the bucket list is a problem. It doesn’t prove that QE should be discarded, but it does show that QE is a policy whose comprehensive effects are widely and badly misunderstood--because they are easy to badly misunderstand. This makes the signalling mechanism, which is so important, difficult to process correctly. QE unavoidably asks the markets to do much of its heavy lifting. That the signals it sends them are so vulnerable to being mangled is therefore another downside": Cardiff Garcia: The downsides of quantitative easing, Cardiff Garcia smackdown watch
4. "There is little evidence for Rogoff’s implicit assumption that investors’ decisions today are driven by the government’s handling of its debt in the past.... A country’s past failures do not influence investors if its current institutions and economic policies are sound. That was clearly the case when Osborne and his colleagues opted for austerity": Robert Skidelsky: Misconceiving austerity

Plus: Long:

Paul Krugman: Gambling with Civilization: William Nordhaus's The Climate Casino |

The physiocrats saw France as having four kinds of jobs:

• Farmers
• Skilled artisans
• Flunkies
• Landowning aristocrats

Farmers, they thought, produced the net value in the economy--the net product. Their labor combined with water, soil, and sun grew the food they and others ate. Artisans, the physiocrats thought, were best seen not as creators but as transformers of wealth--transformers of wealth in the form of food into wealth in the form of manufactures. Aristocrats collected this net product--agricultural production in excess of farmers' subsistence needs--and spent it buying manufactured goods and, when they got sated with manufactured goods, employing flunkies.

Cardiff Garcia: The downsides of quantitative easing, Cardiff Garcia smackdown watch:

Back in July 2012, before open-ended QE was announced, Bernanke said that the Fed’s unconventional measures have “various costs and risks associated with it with respect to market functioning, with respect to financial stability, with respect to the exit process”. He wasn’t specific, and he hasn’t been more specific since.... So here is an attempt to sketch out some of the non-trivial downsides to QE, along with a discussion of countervailing arguments that explain why the downsides haven’t convinced me that QE should stop or be slowed:

Paul Krugman: Maybe Economics Is A Science, But Many Economists Are Not Scientists:

Raj Chetty stands up valiantly for the honor of his and my profession.... And in many ways I agree: there is a lot of good research in economics.... But while there are clearly scientific elements in economics, a lot of economists aren’t behaving like scientists. Look at Chetty’s examples....

Brian Buetler: The amazing politics of Healthcare.gov failure:

In states as diverse as Arizona, Ohio and New Jersey, where Republican governors--once conservative standard bearers, now fallen RINOs--transgressed against their bases and agreed to implement the ACA’s Medicaid expansion. The most important ACA news of the week... Ohio’s Republican Gov. John Kasich circumvented the state Legislature to expand Medicaid, opening the program to about 300,000 new low-income beneficiaries.

Per Jim Henley's request:

Alan Greenspan: The Map and the Territory: Risk, Human Nature, and the Future of Forecasting:

India, a long-time bastion of Fabian socialism, instituted significant reform in 1991...

Capitalism and socialism are specific about the conditions they deem necessary for the creation of wealth and rising standards of living. Populism is not. It is a shout of pain...

Fortunately, modern societies have finally abandoned as unworkable the various economic models of socialism that were so popular a century or more ago. But we need to recognize that welfare states, unless contained, have proven similarly trouble prone. Even the long-vaunted welfare model of Sweden has felt the need for a significant overhaul...

Simon Wren-Lewis: Is a currency crisis bad for you at the ZLB?:

The discussion centred on the UK, but it is more general than that: a similar thought experiment is if China sells its US government debt.... The track I want to pursue starts from my argument that Quantitative Easing (QE) will ensure that the UK government never runs out of money with which to pay the bills. The obvious response... is that a market reaction against UK government debt might be accompanied by a reaction against the UK’s currency, leading to a ‘sterling crisis’.... Suppose Labour had not lost the election, and austerity had been delayed (by more than Ken Rogoff would have thought wise, bearing in mind that he agrees that government ‘investment’ in its widest sense was in fact cut too aggressively)... markets had decided that... it was no longer wise to buy UK debt. QE fills the gap, but the flight from UK debt is also a flight from sterling, which depreciates....

Dean Baker: Unemployment Edges Down as People Continue to Leave the Workforce in September:

In spite of the September drop in unemployment, the employment-to-population rate (EPOP) remained unchanged at 58.6 percent. This continues the pattern that we have seen throughout the recovery as the unemployment rate falls mainly because workers leave the labor market. The unemployment rate is now down by 2.8 percentage points from its 10.0 percent peak in October of 2009. However, the EPOP is up just 0.4 percentage points from its low point in June of 2011. Over the last year the EPOP actually edged down by 0.1 percentage point, while the unemployment rate dropped by 0.6 percentage points. This drop in labor force participation is now occurring at an equal pace among men and women, with the participation of both dropping 0.5 percentage points in the last year.

Angus Deaton: Inequalities in Income, Health, and Wellbeing | The Incidental Economist:

Economists--my own tribe--hink that people are better off if they have more money--which is fine as far as it goes. So if a few people get a lot more money and most people get little or nothing, but do not lose out, economists will usually argue that the world is a better place. And indeed there is enormous appeal to the idea that, as long as no one gets hurt, better off is better; it is called the Pareto criterion. Yet this idea is completely undermined if wellbeing is defined too narrowly; people have to be better off, or no worse off, in wellbeing, not just in material living standards. If those who get rich get favorable political treatment, or undermine the public health or education systems, so that those who do less well lose out in politics, health, or education, then those who have done less well may have gained money but they are not better off. One cannot assess society, or justice, using living standards alone. Yet economists routinely and incorrectly apply the Pareto argument to income, ignoring other aspects of wellbeing...

Jim Stock:

The government shutdown and debt limit brinksmanship have had a substantial negative impact on the economy. A new report released today by the Council of Economic Advisers (CEA) attempts to estimate the actual impact of the shutdown and default brinksmanship on economic activity as measured by eight different daily or weekly economic indicators. Overall it finds that a range of eight economic indicators in what we call a “Weekly Economic Index” are consistent with a 0.25 percentage point reduction in the annualized GDP growth rate in the fourth quarter and a reduction of about 120,000 private sector jobs in the first two weeks of October (estimates use indicators available through October 12th). These estimates very likely understate the full economic effects of the episode because of its effects that continued, and will continue, past October 12th.

• Donald Marron: CEA’s New Weekly Economic Index Says Shutdown Destroyed 120,000 Jobs
• Andrew Gelman: Ivy Jew Update
• Matthew Yglesias: Alan Greenspan Bank Capital: A Fraud

And:

1. "There is no problem if all we are is an enjoyable discussion club that is isolated from the rest of the world and is free to make its own rules. But we aren’t isolated...": Paul Pfleiderer: Chameleon Models
2. "The debate... is not about the debt. It is about whether Americans will pay the taxes needed to fund the government they have legislated. The US has created major social programmes. But it seems unable to agree on the taxes needed to pay for them.... This struggle is disguised behind the rhetoric on unsustainable debt and disincentive effects of modest rises in taxation. If the US does create a huge fiscal problem for itself, it will be because agreement on the balance between what government does and how it is financed is impossible. But, first, the factitious crises of recent weeks simply have to stop": Martin Wolf: The reality of America’s fiscal future
3. "Especially in the light of yesterday’s weak jobs report, I keep coming back to the disturbing fact that as soon as the shutdown/debt ceiling debacle was at least temporarily behind us, the political system, without dropping a beat, went right back to deficit reduction mode. The President['s]... framing/messaging becomes a mash-up that’s more confusing than elucidating: 'The issue is not growth versus fiscal responsibility.... We need a budget that deals with the issues that most Americans are focused on: creating more good jobs that pay better wages.  And remember, the deficit is getting smaller, not bigger'.... OK–stop right there.... As the austerity evidence in Europe has clearly shown, when you reduce your budget deficit in the midst of output gaps, those gaps stop closing and even reopen.  The deficit decline that the President is touting here is not part of the near-term solution, it’s a big part of the near-term problem.  It’s a key factor in the slog in which we’re demonstrably stuck": Jared Bernstein: An Odd Juxtaposition on Deficit Reduction and Growth
4. "Ethnocentric whites are more likely to push for cuts in food stamps, to favor reductions in spending on welfare, to oppose increasing benefits to women on welfare if they have additional children, and to favor strict time limits on public assistance. Partisanship, egalitarianism, and limited government also contribute.... [But[ ethnocentrism helps to build support for social insurance programs among white Americans—wherever we looked, and we looked in quite a few places. [...] When it comes to providing pensions and health care to the retired and elderly, ethnocentrism appears to be a force for liberalism, for a more generous welfare state": Donald Kinder and Cindy Cam: Us Against Them

Plus: Long:

Cardiff Garcia: The downsides of quantitative easing, Cardiff Garcia smackdown watch | Council of Economic Advisors: Economic Activity During the Government Shutdown and Debt Limit Brinksmanship Episode |

Alan Greenspan bank capital: A fraud

I'm a little surprised to find myself saying this, but I think David Dayen's managed to be too soft on Alan Greenspan.... It's on the "thin regulation" front where Greenspan's new media push is driving me nuts. He's out essentially preaching the Gospel According to John Cochrane in which the actually existing Dodd-Frank financial regulation overhaul is a pointless increase in the regulatory burden, and really the entire crisis could and should have been avoided by imposing stiffer capital requirements (i.e., less borrowing) on the financial sector. This rather conveniently ignores the period in history—a period that began in 1987 and didn't end until 2006—when Alan Greenspan was the most important bank regulator in America.

Who was letting banks lever up so much? Greenspan! Who was happy to see the growth of a "shadow banking" sector outside the ambit of traditional regulation? Greenspan! It's as if Richard Nixon wrote a book about how tougher security at the Watergate Hotel could have avoided a lot of problems for America.... His latest work is entirely focused on the worst aspects of his record. That's starting with this shocking hypocrisy on bank capital and continues with his ludicrous musings on Social Security and the national savings rate which are written as if he wasn't... arguing in 2001 that we needed large tax cuts in order to avoid the budget deficit becoming too low.

Saturday, October 23, 1943:

On the Eastern Front... Melitopol falls to Soviet forces after 10 days of battle. Konev's drive on Krivoy Rog continues to progress against stiffening resistance. Soviet forces within 20 miles of the town and have cut the rail line to Dnepropetrovsk...

Andrew Gelman: Ivy Jew update:

Nurit Baytch posted a document, A Critique of Ron Unz’s Article “The Myth of American Meritocracy”, that is relevant to an ongoing discussion we had on this blog. Baytch’s article....

I shall demonstrate that Unz’s conclusion that Jews are over-admitted to Harvard... relied on faulty assumptions and spurious data: Unz substantially overestimated the percentage of Jews at Harvard while grossly underestimating the percentage of Jews among high academic achievers, when, in fact, there is no discrepancy.... Unz’s analysis of Jewish academic achievement is predicated on his ability to identify Jews on the basis of their names, which proved spectacularly wrong for the one data set on which there exists confirmed, peer-reviewed data....

Dialing for Dollars: The Politics of Getting Money for California Schools

"Hello. My name is Brad DeLong. I'm the parent of two kids at Burton Valley. I'm volunteering tonight to call people to ask for their support for Measure E, the parcel tax measure for local Lafayette schools."

Note the words parent, volunteer, local. I'm not Washington calling: I'm your neighbor. This isn't big government: this is volunteerism. This isn't for some federal construction boondoggle: this is for the school in your neighborhood.

Oregon Economic Forum: After the Recession: Opportunities and Challenges

The 10th Annual Oregon Economic Forum
Thursday, October 24, 2013
Portland Art Museum
0745am-1130am
Doors open at 0700am. Breakfast Served.

Come join us for our 10th Anniversary.

This summer will mark the fourth year of the recovery.  Four years of slow economic growth that defied early-expectations of a rapid rebound.  But while fiscal contraction is dragging down overall growth, momentum in the private sector is building.  The long-awaited return to a more normal recovery may finally be at hand.

Just print out these four thousand words from Cardiff Garcia of the Financial Times, use them as your speech and you will be better prepared to make the one-hour case for Novtaper and Aprunwind by the Federal Reserve than anyone else!

Now if only Cardiff would freely distribute a powerpoint deck for this as well...