Afternoon Must-Read: Greg Sargent: Senate documents and interviews undercut ‘bombshell’ lawsuit against Obamacare
Evening Must-Read: Paul Krugman: Circles of Influence

Noted for Your Afternoon Procrastination for July 29, 2014

Over at Equitable Growth--The Equitablog


On Twitter:

  • @MichaelSLinden: Alberto Alesina, the go-to guy for austerity backers, is the only economist on the IGM panel to disagree that ARRA reduced unemployment.

  • .@MichaelSLinden (1/3) Curiously, back in 2012 Alesina said the ARRA did reduce unemployment.

  • .@MichaelSLinden (2/3) Alesina is thus the only economist I am aware of to have become less confident in the power of
  • .@MichaelSLinden (3/3) fiscal policy at the ZLB since 2012. A remarkable example of swimming against the empirical current cc:
  • .@MichaelSLinden (4/3) other shifts in the panel: Hoxby: no —> no answer. Judd: uncertain —> yes. Lazear: no —> off the panel
  • .@arindube do you understand what shifted Alesina from ARRA-effective in 2012 to ARRA-ineffective today?


  1. David Beckworth: The Other Important Legacy of World War One: "An important point I... could not find.... WWI shattered the classical gold standard of 1870-1914, which had worked relatively well, and replaced it with an incredibly flawed one to which many attribute... the severity and global reach of the Great Depression in the 1930s. And the Great Depression... brought the Nazis to power.... Barry Eichengreen and Peter Temin.... 'At some level... the Nazis were the party of the Depression. They were a fringe group in the 1920s and grew to electoral prominence only in 1930 when economic conditions deteriorated. They gained even more seats in the Reichstag in the first election of 1932, but lost seats in the second election later that year as economic conditions appeared to improve.... Almost any model would say that better economic conditions would have decreased political support for the Nazis and therefore the probability that Hindenburg would have asked Hitler to be chancellor.' So far all the problems WWI created, the flawed interwar gold standard was probably one of the the more important ones. It led to the Great Depression which, in turn, guaranteed the rise of the Nazis and another world war. The big lesson, then, is getting the international monetary system right matters a lot."

  2. Walter Shapiro: Hillary for Liberals: "Hillary has been through two disastrous disorganized White Houses under Bill Clinton and Obama.... She would come into the White House with a greater understanding of White House dysfunction than anyone in Democratic Party history... steel you against creating a White House where people believe they’ve invented the wheel, that they’re geniuses.... At this point, NSA spying and drone attacks are just not voting issues for liberals. Getting tough with Wall Street--like single-payer health insurance--was something much more likely to trigger an adrenaline rush for the left in 2009 than in 2016..."

  3. Jonathan Chait: I Have Mocked Ross Douthat One Time too Many: "for his fatal flaw of detecting signs of ideological moderation in a succession of Republican figures like Sarah Palin, Eric Cantor, Tim Pawlenty, and others. Now he has finally snapped.... My piece notes that Douthat praises Ryan for his moderation, while dismissing the 2012 GOP ticket as hopelessly plutocratic, yet he defended Romney and Ryan against exactly this charge at the time. Douthat points out that he also devoted numerous items to complaining about Romney’s upper-class tilt. And yeah, he certainly did.... I argued... with Douthat--me insisting Romney’s plan cut taxes for the rich; he insisting it did not.... [And] the situations are fairly analogous. Ryan now, like Romney-Ryan then, is making a series of irreconcilable promises. Douthat is treating the more mainstream version of those premises as binding, and the more extreme promises as null and void.... What he calls 'cherry-picking', I call 'condensing'. But a less patient person would have lashed out years ago..."

  4. Kevin Kelly: You Are Not Late: "Can you imagine how awesome it would have been to be an entrepreneur in 1985 when almost any dot com name you wanted was available? All words; short ones, cool ones. All you had to do was ask. It didn’t even cost anything to claim.... Thirty years later the internet feels saturated, bloated, overstuffed.... Even if you could manage to squeeze in another tiny innovation, who would notice it?.... But, but... here is the thing. In terms of the internet, nothing has happened yet.... Most of the greatest products running the lives of citizens in 2044 were not invented until after 2014.... Here is the other thing the greybeards in 2044 will tell you: Can you imagine how awesome it would have been to be an entrepreneur in 2014? It was a wide-open frontier! You could pick almost any category X and add some AI to it, put it on the cloud. Few devices had more than one or two sensors in them, unlike the hundreds now. Expectations and barriers were low. It was easy to be the first. And then they would sigh, 'Oh, if only we realized how possible everything was back then!' So, the truth: Right now, today, in 2014 is the best time to start something on the internet.... Today truly is a wide open frontier. It is the best time EVER in human history to begin. You are not late."

  5. Paul Krugman: How Prophets Get Lonely: "At Bloomberg View, Leonid Bershinksy weeps over the cruel world that for some reason isn’t listening to Jaime Caruana of the BIS, who warns that we must raise interest rates now now now. Why is this prophet so lonely? Well, it might have something to do with the fact that three years ago Caruana and the BIS warned that interest rates must rise to avert a surge of inflation. That didn’t happen.... Now, everyone gets things wrong sometimes. But when that happens, you’re supposed to think about why you were wrong, and reconsider your policy views. If the BIS did any soul-searching, nobody else noticed.... Why, exactly, should anyone take its views seriously?... But being a hard-money guy seems to mean never having to reconsider..."


And Over Here:

Should Be Aware of:

  1. Philippa Skett: Ebola outbreak: What you need to know about its spread: "The recent Ebola epidemic in West Africa has so far claimed more than 670 lives.... Now it has reached Lagos in Nigeria.... Ebola... causes extensive internal bleeding, and can lead to those infected dying from shock. Initially, those infected experience a sudden onset of fever, muscle pain, weakness, headaches, a sore throat and vomiting and diarrhoea.... Ebola is highly contagious and can be transmitted even after those infected have died, because the virus is transmitted via bodily fluids. It has a 90% fatality rate.... Bausch thinks it is unlikely that the outbreak will spread through Europe or the US if someone infected gets on an international plane.... Currently there is no cure..."

  2. Lars Syll: What to do to make economics a relevant and realist science: "What shall neoclassical economists do when the modeling assumptions made are shown to be harmful and not even remotely matching reality?... (1) Stop pretending that we have exact and rigorous answers.... (2) Stop the childish and exaggerated belief in mathematics.... (3) Stop pretending that there are laws.... (4) Stop treating other social sciences as poor relations.... (5) Stop building models and making forecasts of the future based on totally unreal microfounded macromodels with intertemporally optimizing robot-like representative actors equipped with rational expectations. This is pure nonsense. We have to build our models on assumptions that are not so blatantly in contradiction to reality. Assuming that people are green and come from Mars is not a good--not even as a 'successive approximation'--modeling strategy."

Already-Noted Must-Reads:

  1. Tim Pawlenty (2011): US headed for double-dip: "I think we're headed for a double-dip. That's my personal view.... It may look like there is temporary improvement because they have artificially infused the economy with government money, but the consequences of that will, as sure as we're sitting here, will rear its head..."

  2. Emily Badger: How big cities that restrict new housing harm the economy: "For the last couple of years San Francisco has been erupting with periodic protests aimed, rather imprecisely, at a nexus of grievances related to gentrification, affordable housing, transportation, the tech industry, newcomers to the city, its changing skyline and Silicon Valley to the south. The city is screaming, although at what its protestors seem a little confused. 'In my view, the whole debate here misses the point', says Enrico Moretti.... 'People are marching against Google buses when they should be marching for more housing permits.' At the root of San Francisco's tension is a mismatch of supply and demand: Affluent workers have been flocking to the area for its tech jobs, but as the number of jobs in the region has grown, the number of housing units to accommodate people taking them hasn't remotely kept pace. As a result, rents are going up. Low-income residents are pushed out. Landlords who see more lucrative opportunity in condo conversions have ramped up evictions. 'Once I started seeing what was going on in the San Francisco public debate, I got appalled by the lack of understanding of basic economics among the general public, the protesters', Moretti says. 'And it’s even more problematic among policymakers.' The culprit here isn't really the tech industry. It's much-harder-to-protest land-use policy. And from Moretti's point of view, the rest of us should care... because the economic repercussions of such local decisions stretch nationwide..."

  3. Paul Gigot (2009): The Bond Vigilantes: "The disciplinarians of U.S. policy makers return. They're back.... The vigilantes... appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession. Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%.... Investors are now calculating the risks of renewed dollar inflation. They have cause to be worried, given Washington's astonishing bet on fiscal and monetary reflation.... Chinese and other dollar asset holders are nervous. They wonder--as do we--whether the unspoken Beltway strategy is to pay off this debt by inflating away its value.... The Fed is desperate to keep mortgage rates low to reflate the housing market, and last week it promised to inject hundreds of billions of dollars.... This week the bond vigilantes are showing what they think of that offer, bidding up yields even higher. It's not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets. When in doubt, bet on the markets."

  4. Greg Sargent: Senate documents and interviews undercut ‘bombshell’ lawsuit against Obamacare: "Documents from the Senate committees that worked on versions of the bill in 2009--combined with a close look at the history of the phrase itself, and interviews with staffers directly involved in the drafting of the statutes--strongly undercut the argument that the law did not intend or provide subsidies to those on the federal exchange..."