Grasping Reality on TypePad, by Brad DeLong

Over at Equitable Growth:

1. Lives lost from Ebola to date are tiny, even in West Africa, compared to HIV, TB, and malaria. Ebola still not (yet) the biggest public health problem in West Africa.

2. Yes, the epidemic will spread to more countries.

3. Ebola will not become the biggest public health problem in West Africa unless deaths reach the high seven figures--which they may: it is highly likely that deaths in the six figures are now baked in the cake.

4. Unless the virus changes dramatically, we are almost surely safe. If you want to worry, worry that influenza or something already airborne will become more deadly, not that Ebola will become airborne.

5. Those at risk from the Ebola virus are overwhelmingly (a) those who love them and (b) those medical professionals who treat them--you get it from direct fluid contact with symptomatic patients. Thus risks here in the United States are very low. It is scary, but unlikely to be a serious problem here.

6. Why, then, are risks high in West Africa? The major problem with control is that there is no functioning health system in most of sub-Saharan Africa. Not only are resources poor, but they are uncoordinated. What we really need is a helicopter drop of trained people.

7. The health system was especially poor in Liberia. You have issues like no supply of gloves to hospitals. Few doctors even to begin. Had the epidemic started in Ethiopia or even Uganda, the probability of it getting out-of-control epidemic would have been much less--Uganda, for example, has excellent hospitals, good supply, competent public health, and even a decent medical school. Just how bad Liberia’s system was should not be underestimated.

8. Secondary problems in West Africa are that: (1) Ebola can be difficult to diagnose; (2) Ebola is easily transmitted in cultures where people are expected to die at home in non-sterile and non-antiseptic environments; and (3) Ebola is easily transmitted in cultures where people--still infectious--are prepared for burial at home.

9. The economic cost of Ebola to the countries most affected is and will be immense, in addition to the loss of life.

10. In general, we are not well-equipped for some types of global pandemics. The advance from years of nothing on AIDS to stopping SARS in its tracks was immense. But it relies on functional organizations--and we did and do not have any such in the affected West African areas.

11. Nevertheless, it is surprising how unprepared the WHO and international community was for for this kind of emergency. The WHO is a UN organization, and it is a mistake to expect much bureaucratic competence of UN organizations. Nevertheless, the international response should have been swifter and more effective.

12. The Ebola crisis is eating up resources in West Africa that are desperately needed in other areas of health and society. It's not so much money as people--doctors pulled in from caring for pregnant women to manage Ebola patients, NGOs working on violence reduction in Sierra Leone now counting the dead. Really sad. We are likely to lose most of the health-care professionals in the most severely affected sub-Saharan African countries.

13. The importance of investing in strong public health infrastructure--which is both massively underfunded and very cost-effective compared with acute care.

Courtesy of Chris Blattman, David Cutler, Ann Marie Marciarille, and others...

I was supposed to go on Bloomberg News this afternoon to talk about robots, wages, and is very smart but differently-thinking Peter Thiel. But 10 minutes before I was supposed to go on the air the CDC announced that a case of Ebola had been diagnosed in Dallas. So I had to play public health economist for five minutes...

• Very smart but differently-thinking Peter Thiel is a techno-optimist--he sees the extraordinary increases in human productivity that robots and computers make possible, and seems that is driving an enormous increase in typical wages in the future.

• I think he has fallen into the diamonds and water paradox--the average human will be highly productive in the robot world of the future but that does not mean that the typical human will be well-paid; just as the average gallon of water we consume is valuable, but the price of water is (usually) low.

• we should not talk about whether computerization and robotization raises or lowers wages. We should distinguish among the wages for doing six different things

  1. Using our backs to move heavy things--the coming of the steam engine greatly reduced relative demand for this, and computerization and robotization will eliminate it.
  2. Using our fingers that manipulate things via skilled craftwork--Mass production greatly reduced relative demand for this, and computerization and robotization will eliminate it save for that fringe market where hand-made is of the essence.
  3. Using our brains as underemployed routine cybernetic control loops to make sure that material and accounting processes stay on track--the steam engine and mass production greatly increased relative demand for this, but computerization and robotization will greatly reduce it: human brains will remain the only supercomputers that fit in a shoebox and run on 50W, but most blue-collar machine-control and white-collar transactions-processing Jobs do not require a supercomputer.
  4. Using our mouths (and touch-typing fingers) that inform--and steam engines and mass productions supplied the size of the economy we also multiplied demand for such services, but computerization and robotization will transform this set of activities from one-to-one to one-to-many and so into an amplifier of global inequality.
  5. Using our smiles to make each other feel happy and valued, and keep us all pulling roughly in the same direction--personal services and human interaction and motivation will remain human unless the Singularity comes.
  6. Using our minds to have have genuinely original and useful thoughts--this might remain human unless the Singularity comes.

• When I look at this, I see three ways that humans can make money in the computerized and robotized world of the future:

  1. Owning the computers and the robots.
  2. Having genuinely original and useful thoughts.
  3. Figuring out personal service-like things we can do that the people who do own the robots and thus have money to spend will be I willing to pay for--things that make them directly happy.

Paul Krugman: The Pimco Perplex: "Why was Gross betting so heavily against Treasuries?...

...Brad DeLong tries to rationalize Gross’s behavior in terms of a coherent story about an impending U.S. recovery.... But Gross wasn’t saying anything like that. Instead, he... warned that the impending spike in rates when QE2 ended would derail recovery. So why did he believe all that?... Since 2008 the basic logic of the economic situation has been that the private sector is trying to run a huge surplus, and the public sector isn’t willing to run a corresponding deficit.... A lot of people... have just refused to accept this account.... You might think the failure of higher rates to materialize... would cause them to reassess.... The big excuse was that rates would have gone higher if only the Fed weren’t buying up the stuff.... You can see why I found Gillian Tett’s apologia for Gross--that he was blindsided by central bank intervention--frustrating. For one thing, that’s accepting a model that has failed with flying colors; but beyond that, Gross’s really bad call was almost exactly the opposite, his claim that rates would soar when the Fed’s intervention ended.... Finance people seem weirdly determined to believe in a macro canon whose hold on their perceptions appears to be completely unbreakable, no matter how much money it causes them to lose.

Over at Equitable Growth--The Equitablog

• Afternoon Must-Read: Dan Davies What’s Really Wrong With Bank Supervision - Washington Center for Equitable Growth
• Afternoon Must-Read: Ryan Avent: Crises: They Let It Happen - Washington Center for Equitable Growth
• Afternoon Must-Read: Joe Stiglitz: Reconstructing Macroeconomic Theory to Manage Economic Policy - Washington Center for Equitable Growth
• Afternoon Must-Read: Daron Acemoglu et al.: Offshoring and Skill-Biased Technical Change - Washington Center for Equitable Growth
• Afternon Must-Read: Martin Wolf: Why Inequality Is Such a Drag on Economies - Washington Center for Equitable Growth
• Why Was Bill Gross so Certain Interest Rates Were on the Rise Back in February 2011?: Tuesday Focus for September 30, 2014 - Washington Center for Equitable Growth
• Evening Must-Read: Ryan Avent: Monetary Policy: Why Is the Fed Planning to Fail? - Washington Center for Equitable Growth
• Over at Project Syndicate: Need We Fear the Robot Uprising?: Monday Focus for September 29, 2014 - Washington Center for Equitable Growth
• Nick Bunker: The upside to bankruptcy protection - Washington Center for Equitable Growth
• Robert Lynch: U.S. Census highlights rising economic inequality - Washington Center for Equitable Growth
• Nick Bunker: Are the advantages of a college degree declining? - Washington Center for Equitable Growth

Plus:

• Things to Read on the Afternoon of September 30, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Charles Goodhart: It is time to shake up housing finance
• Helene Jorgensen and Dean Baker: The Affordable Care Act: A Family-Friendly Policy
• Martin Wolf: Even Beijing balks at price to pay for renminbi to become a reserve currency
• Joe Nocera: The Hole in Holder’s Legacy
• Michael Bauer: Options-Based Expectations of Future Policy Rates
• Erica Schoenberger: Los Angeles: Planning to Sprawl
• Robin Greenwood, Samuel G. Hanson, Joshua S. Rudolph and Lawrence H. Summers: Government Debt Management at the Zero Lower Bound
• Siri Srinivas: Why it takes 13.75 hours of minimum-wage work to earn a Metrocard in New York
• Mark Thoma: Why Have Policymakers Abandoned the Working Class?

And Over Here:

Dan Davies: What’s really wrong with bank supervision: "The banks treat supervisors like punks, and the supervisors let them....

...The supervisor was, originally in the privacy of his office and talking to his own team, outraged. But then when he went to meet with the bank, all the vim and vinegar went out of him.... The problem, as everyone who is familiar with bank supervision knows, is that there is a cultural disinclination to challenge banks on their behaviour.... The biggest problem is that senior management of bank supervisors don’t have the supervisors’ backs.... Regulated institutions generally have better contacts and relationships with the top central bankers than their supervisors do. And for whatever reason, top central bankers never developed the necessary knee-jerk aggressive response to any attempts to make use of these relationships to affect the behaviour of supervisors. If you’re a bank CEO, then calling Tim Geithner for a chat--that ought to be OK. Calling Tim Geithner to complain about how your supervisor is treating you--that ought to be a third-rail, relationship-destroying, potential career ender of a call. And it isn’t...

Ryan Avent: Crises: They let it happen: "THE argument that American officials lacked the capability...

...or authority to save Lehman Brothers—and, potentially, to spare the world the most wrenching financial crisis since the 1930s—never really withstood close scrutiny.... This morning the New York Times publishes a remarkable piece of reporting drawing on accounts from insiders at the Federal Reserve Bank of New York, who were there during the crisis of 2008. The Fed officials say that they were tasked to conduct analyses of Lehman's books in preparation for some sort of rescue, and came back with figures that could easily have justified a bail-out. But their results scarcely received a hearing...

Joe Stiglitz: Reconstructing Macroeconomic Theory to Manage Economic Policy: Any theory of deep downturns has to answer these questions...

What is the source of the disturbances? Why do seemingly small shocks have such large effects? Why do deep downturns last so long? Why is there such persistence, when we have the same human, physical, and natural resources today as we had before the crisis?... The apparent liquidity trap today is markedly different from that envisioned by Keynes in the Great Depression, and why the Zero Lower Bound is not the central impediment to the effectiveness of monetary policy in restoring the economy to full employment.

Daron Acemoglu et al.: Offshoring and Skill-Biased Technical Change: "When labour is sufficiently cheap abroad...

...firms have incentives to offshore low-skill tasks and invest in skill-biased technologies at home.... The production structure of Apple’s iPod illustrates some of the potential effects.... Though most production jobs are offshored, a significant number of high-skill engineering jobs and low-skill retail jobs are created in the US, and more than 50% of the value added of the iPod is captured by domestic companies. With more limited offshoring, some of the production jobs may have stayed within the US borders, increasing the demand for the services of low-skill production workers. But this would have also increased the cost and price of iPods, reducing employment not only in engineering and design occupations but also in retail and other related tasks.... The reason for this switch in the direction of technological progress is that more offshoring increases the demand for labour abroad and thus wages in the East. In turn, the closing of the wage gap between countries mutes the price effect that was fuelling skill-biased innovation.... Offshoring first increases wage inequality in the West. However, as offshoring continues, technical change eventually changes direction and may even lower the skill premium...

Martin Wolf: Why Inequality Is Such a Drag on Economies: "A report written by the chief US economist of Standard & Poor’s...

...and another from Morgan Stanley, agree that inequality is not only rising but having damaging effects on the US economy... two economic consequences... weak demand and lagging progress in raising educational levels.... The costs to society of rising inequality go further--the greatest costs are the erosion of the republican ideal of shared citizenship.... As the US Supreme Court seeks to bend the constitution to the will of plutocrats, the peril is to the politically egalitarian premises of the republic. Enormous divergences in wealth and power have hollowed out republics before now. They could well do so in our age. Yet even for those who do not share such concerns, the economic costs should matter...

Over at Equitable Growth: Joshua Brown: “Do we need to fire Pimco?”: "In February of 2011, [Bill] Gross loudly proclaimed...

[that] PIMCO Total Return had taken its allocation to US Treasury bonds down to zero. As recently as the previous December, PIMCO Total Return had been carrying as much as 22 percent of its AUM in Treasurys.... Gross compounded the move by being extremely vocal about his rationale--he went so far as to call Treasury bonds a 'robbery' of investors given their ultra-low interest rates and the potential for inflation. He talked about the need for investors to 'exorcise' US bonds from their portfolios, as though the asset class itself was demonic. He called investors in Treasury bonds 'frogs being cooked alive in a pot'. The rhetoric was every bit as bold as the fund’s positioning. It’s really hard to pound the table like this and then be flexible in the aftermath...

Yes, Bill Gross's judgment in February 2011 that U.S. Treasuries were overbought has been an absolute disaster for PIMCO's Total Return Fund vis-a-vis the market portfolio: READ MOAR

Timothy Noah (2007): Has Jonah Goldberg gone soft on Hillary?: "Her name's been removed from his forthcoming book's subtitle...

Three months ago, I speculated that Jonah Goldberg's forthcoming book, then titled Liberal Fascism: The Totalitarian Temptation From Mussolini to Hillary Clinton, was the victim of a swift and violent paradigm shift. The 2006 elections and the right's critical drubbing of Dinesh D'Souza's The Enemy at Home: The Cultural Left and Its Responsibility for 9/11--which proposed a strategic alliance between Muslim theocrats and the American right against the degenerate American left—had rendered conservatism's lunatic fringe suddenly unfashionable. This couldn't, I thought, be good news for a book that portrayed Hillary Clinton as a goose-stepping brownshirt.

...is that it is somehow rude to hold politicians--especially right-of-center politicians--to the standard of behaving with honor or serving the public interest, and even ruder to point out that the Washington press corps village should call them on it. Ron Fournier of the National Journal, for example, calls it "name calling".

On Twitter:

• @ThePlumLineGS: RT @AdamSerwer: Tom Cotton's new ad points out welfare for farmers is ok, but not for poor people http://www.washingtonpost.com/blogs/plum-line/wp/2014/09/29/socialism-for-me-but-not-for-thee/

• @ron_fournier: @ThePlumLineGS @AdamSerwer He's running in Arkansas

• @ryanlcooper: @ron_fournier @ThePlumLineGS @AdamSerwer good point, I forgot how Arkansas has zero poors

• @AdamSerwer: @ryanlcooper @ron_fournier @ThePlumLineGS I bet "give money to farmers instead of grubby kids and old people" wouldn't do that well in AR

• @ThePlumLineGS: @AdamSerwer @ryanlcooper @ron_fournier It is impossible to get a national reporter or commentator to acknowledge this fact, though

• @ryanlcooper: @ThePlumLineGS @AdamSerwer @ron_fournier Tom who? Arka-what? Medi-huh? My question is, why won't #Oblammer lead

• @ThePlumLineGS: @ryanlcooper @AdamSerwer @ron_fournier Oblammer?

• @ron_fournier: @ThePlumLineGS @ryanlcooper @AdamSerwer Not here. Knock off the name calling please or go elsewhere.

From George Washington to Lund Washington, 30 September 1776:

Col. Morris’s, on the Heights of Harlem,

30 September, 1776.Dear Lund,

Your letter of the 18th, which is the only one received and unanswered, now lies before me. The amazement which you seem to be in at the unaccountable measures which have been adopted by —— would be a good deal increased if I had time to unfold the whole system of their management since this time twelve months. I do not know how to account for the unfortunate steps which have been taken but from that fatal idea of conciliation which prevailed so long--fatal, I call it, because from my soul I wish it may prove so, though my fears lead me to think there is too much danger of it.

Ryan Avent: Monetary Policy: Why Is the Fed Planning to Fail?: "THE members of the Federal Open Market Committee...

...are not overly fond of being stuck at the zero lower bound (ZLB) [as they have been] since December of 2008.... Policy-making since then has been a monetary mess.... I'll put things more plainly. Central bankers should hate the ZLB. Whether or not policy at the ZLB tends to raise financial instability, the central bank simply can't do its job when its main interest rate is at zero. Since December of 2008 the Fed has failed miserably on both of its primary objectives: maximum employment and stable prices.... In a ZLB world the Fed does not do its job. That is a serious problem for the American economy and the Fed. It is quite possibly the most serious problem the Fed could conceivably have.

So why is the Fed so determined to find itself right back at the ZLB in future, assuming it ever leaves it in the first place?... The fed funds rate rose to 5.25% prior to the Great Recession and nonetheless tumbled to the ZLB. The 2001 recession was far milder, yet in battling it the Fed reduced interest rates from a high of 6.5% down to 1%.... There is plenty of uncertainty regarding precisely how much cushion one needs between the federal funds rate and the ZLB, yet we can be pretty safe in concluding that roughly four percentage points counts as 'not nearly enough'.... Let's be clear about this. The central bank can choose the inflation rate it wants... so there is absolutely no reason why the Fed ought to find itself stuck with too low a full-employment interest rate.... One would think the Fed would want to be damn sure to get well away from the ZLB....

The Fed is going to intentionally undershoot its inflation target on average over the next three years, thereby ensuring that it returns to the ZLB during the next downturn, thereby ensuring that it continues to undershoot its inflation target while also missing its maximum employment target. And one can't be completely sure, but I think the reason they intend to do this is because they fear that setting and hitting a higher inflation target would call into question their credibility...

From earlier this month: the incomparable Doktor Zoom:

Doktor Zoom: Mitch McConnell’s Campaign Manager Quits To Spend More Time With His (Alleged) Bribe Money: "Looks like Senate Minority Leader and Supreme Chelonian Overlord Mitch McConnell...

...is going to have to find himself a new campaign manager after the sudden resignation of Jesse Benton, who will now have more time to hold his nose and wait for Rand Paul to snap him up for 2016.

It might be a long wait, what with the guilty plea last week by Ken Sorenson, a former Iowa state senator who admitted taking bribes to switch his endorsement from Michele Bachmann to Ron Paul shortly before the Iowa caucuses in 2012. What the what? How is bribery in the Iowa caucuses two years ago connected to Yertle’s Senate hopes? Let us connect ye olde dots for you!...

Over at Equitable Growth--The Equitablog

• Joe Stiglitz vs. the Austerity Zombies: (Late) Friday Focus for September 26, 2014 - Washington Center for Equitable Growth
• Morning Must-Read: Paul Krugman: The New Classical Clique and the Insulation of International Macro - Washington Center for Equitable Growth
• Morning Must-Read: Felix Salmon on Martin Wolf's "The Shifts and the Shocks" - Washington Center for Equitable Growth
• Evening Must-Read: Gillian Tett: After a Life of Trend Spotting, Bill Gross Missed the Big Shift - Washington Center for Equitable Growth
• Evening Must-Read: Gavyn Davies: Labour Under-Utilisation in America - Washington Center for Equitable Growth
• Morning Must-Read: Stephen Golub et al.: The Federal Reserve in the Run-Up to the Global Crisis - Washington Center for Equitable Growth

Plus:

• Things to Read on the Morning of September 29, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Rex Nutting: The Fed would be crazy to worry about runaway wages
• Nicholas Bagley: Medicine as a Public Calling
• Economist: Free exchange: Goldilocks Nationalism

And Over Here:

Letter from Harry S. Truman to Bess Wallace, September 29, 1914:

Dear Bess:

I am going to try and send you a letter anyway this week. Sunday was Papa's worse day. He very nearly got so weak he could hardly talk. Today he is better but he hasn't eaten anything since Saturday morning except a little eggnog. I am very much afraid he isn't going to last so very much longer. I tried to talk to you over the phone today but you were not at home. Our phone here isn't working so very well today. Brownie tried to talk to his sister at Independence tonight but could not get a connection. I couldn't talk very much to you anyway because Papa insists on having the door from his room into the hall open so he can hear what is said. So I didn't try to call you from here this evening, although I told George I would.

I have been very busy today trying to be in several places at once. I have been to Belton and Kansas City and have bought 100 bushels of wheat in one place and 150 at Dodson, and a new drill down in the west bottom, besides getting a tire fixed and purchasing a quart of whiskey! You know, I ran over a piece of glass with my brand-new hind tire and cut a hole an inch long right through to the tube. It was sure a piece of very bad luck. The tire had only been about fifty miles. It is as good as ever now though.

Stephen Golub et al: The Federal Reserve in the run-up to the Global Crisis: "Both Greenspan and Bernanke subscribed to Bernanke and Gertler’s (2001) view...

...that identifying bubbles is very difficult, pre-emptive bursting may be harmful, and that central banks could limit the fallout from systemic financial disturbances through ex post interventions. The successful response to the 2001 dot-com bubble boosted the Fed’s confidence in this strategy. On this basis, Blinder and Reis (2005: 73) conclude '[Greenspan’s] legacy … is the strategy of mopping up after bubbles rather than trying to pop them'. The 2001 crisis, however, did not feature leverage and securitisation, unlike in 2008.... Several of the Fed’s institutional routines likely reinforced its complacency. One such feature is the scripted nature of FOMC meetings.... Moreover, the priority on reaching consensus on interest-rate policy limits scope for sustained consideration of broader economic concerns. Further, FOMC staff briefings and FOMC discussions centre on the staff’s ‘Greenbook’ economic analyses and projections, which reinforces the tendency for consensus. Former Governor Meyer jokingly refers to the Greenbook as 'the thirteenth member of the FOMC'...

Over at Project Syndicate: The extremely sharp but differently-thinking Peter Thiel:

Peter Thiel: Robots Are Our Saviours, Not the Enemy: "Americans today dream less often of feats that computers will help us to accomplish...

...[and] more and more we have nightmares about computers taking away our jobs.... Fear of replacement is not new.... But... unlike fellow humans of different nationalities, computers are not substitutes for American labour. Men and machines are good at different things. People form plans and make decisions.... Computers... excel at efficient data processing but struggle to make basic judgments that would be simple for any human.... [At] PayPal... we were losing upwards of $10m a month to credit card fraud.... We tried to solve the problem by writing software.... But... after an hour or two, the thieves would catch on and change their tactics to fool our algorithms. Human analysts, however, were not easily fooled.... So we rewrote the software... the computer would flag the most suspicious trans­actions, and human operators would make the final judgment. This kind of man-machine symbiosis enabled PayPal to stay in business.... Computers do not eat.... The alternative to working with computers... is [a world] in which wages decline and prices rise as the whole world competes both to work and to spend. We are our own greatest enemies. Our most important allies are the machines that enable us to do new things...

During the past two weeks the drought of high-quality DeLong smackdowns on the internet has resumed. So it is time to turn back to the promise I made myself on April Fools Day 2013, and see whether the rest of the chapters of David Graeber's Debt: The First Five Thousand Mistakes are of as low quality as the utterly bolixed up chapter 12.

As you will recall, David Graeber is infamous for:

Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages...

and for having, concurrently and subsequently, offered three different explanations of how this howler came to be written and published:

1. He has claimed that it it all perfectly true, just not of Apple but of other companies (none of which he has ever named).

2. He has claimed that he had been misled by Richard Wolff, who taught him about Silicon Valley's communal garage laptop circles of the 1980s.

3. He has claimed that what he had written was coherent and accurate, but that (for some unexplained reason) his editor and publisher had bolixed it all up.

This passage is, in the words of the very sharp LizardBreath:[1]

The Thirteenth Chime... that make[s] me wonder whether any fact in the book I don't know for certain to be true can be trusted...

And things have gone downhill from there...

It would be worth pointing out that the Fed hawks--Fisher, Plosser, and company--have been consistently wrong since at least 2007, and have never shown any signs of rethinking their positions as the world has surprised them...

Gavyn Davies: Labour under-utilisation in America: "If there is still a large margin of slack in the labour market...

...despite tumbling unemployment figures, the Fed is unlikely to tighten monetary conditions very much in the next couple of years. Slack will also keep the wages share in national income low, thus boosting the profits share further. The utilisation of labour resources in America is thus critical not only for monetary policy, but also for the outlook for US equities. The academic discipline of labour economics, which has not really been centre stage since the wage-push inflation of the 1970s, is therefore very much back in vogue.... Despite the fact that the official unemployment rate has fallen close to the Fed’s estimates of its 'natural' or equilibrium rate, few empirical labour economists seem to believe, at least with any certainty, that labour resources are near full utilisation at present.... The hawkish case is still represented by some regional presidents on the FOMC... Fisher.... Almost all economists in policy circles acknowledge that there is great uncertainty here...

I would note that interest rates are arguably below their interest-rate rule levels--it's not central banks that are big footing the bond market, it is the depressed economy. And it is not as though there were not models: Keynes and Hicks saw what we see back in the 1930s, and Japan has provided an example since the start of the 1990s...

Gillian Tett: After a Life of Trend Spotting, Bill Gross Missed the Big Shift: "The power balance between governments and the bond market has shifted...

...These days it is governments that are intimidating--or, at least, wrongfooting--the bond gurus... unorthodox monetary policy... is shaping bond prices now. And that is making it difficult for bond titans such as Mr Gross to recreate their old magic.... During most of his career, Mr Gross wielded brilliant trend-spotting skills.... Recently his performance has crumbled. This year his flagship fund is in the bottom 20 per cent of industry tables, measured by returns. This partly reflects the fact that low interest rates have cut returns across the board.... But Mr Gross also has been wrongfooted by government. In January 2010 he declared that the British bond market was 'sitting on a bed of nitroglycerine', suggesting UK sovereign bond yields would rise. It seemed a rational bet, given that the UK had a 7 per cent structural budget deficit.... Similarly, there was sound logic to Mr Gross’s declarations in 2010 and 2013 that the bull market in bonds was over. But instead of rising, yields fell to new lows in the US and Europe. That is partly because markets are 'under the spell' of unconventional monetary policy, as the Bank for International Settlements says..."

In the Trenches: Pierre Minault's First World War Diary:

Hardly was I in bed and beginning to feel its warmth and go to sleep, than I believe I hear a voice, a peremptory order coming from outside in the street, and as if getting an electric shock, I jump out of bed: “Everybody outside, in battle dress,” says the voice. In two  minutes I am outside, equipped with my knapsack on.  My squad bumps into each other in the narrow stable where we were encamped; the men feel for their packs and their guns.  The shadows are counted, the captain swears and grumbles.  Finally we are ready.  In silence the column starts out.  We renew our advance toward the cannon thunder.

Over at Equitable Growth: That U.S. policy since 2008 has been so much more successful than Eurozone policy even though the center of the financial crash was in the U.S., in the desert between Los Angeles and Albuquerque, should have caused the Eurozone to revise its economic policies and move them closer to the more-stimulative policies of the U.S. And it should have caused the U.S. to revise its policies and moved them further away from the hyper-austere policies of the Eurozone. But no.

Joe Stiglitz is, unsurprisingly, in despair:

Joe Stiglitz: [Europe’s Austerity Zombies:a “Austerity has failed. But its defenders are willing to claim victory on the basis of the weakest possible evidence: [that] the economy is no longer collapsing.... To say that the medicine is working because the unemployment rate has decreased by a couple of percentage points, or because one can see a glimmer of meager growth, is akin to a medieval barber saying that a bloodletting is working, because the patient has not died yet.... The long recession is lowering Europe’s potential growth. Young people who should be accumulating skills are not.... Meanwhile, Germany is forcing other countries to follow policies that are weakening their economies--and their democracies.... Privatization of pensions, for example, has proved costly in those countries that have tried the experiment. America’s mostly private health-care system is the least efficient in the world.... Selling state-owned assets at low prices is not a good way to improve long-run financial strength. All of the suffering in Europe... is even more tragic for being unnecessary. Though the evidence that austerity is not working continues to mount, Germany and the other hawks have doubled down on it, betting Europe’s future on a long-discredited theory. Why provide economists with more facts to prove the point? READ MOAR

Nieman Storyboard: "In what might be the only performance of Texas stand-up comedy about narrative writing...

...Vanity Fair writer Bryan Burrough recently offered practical tips for long-form storytelling to a Mayborn Conference audience. Prior to his magazine career, Burrough spent several years reporting for The Wall Street Journal; he has also written five books, including Public Enemies and Barbarians at the Gate. In these excerpts from his talk, Burrough addresses the best transition word ever, presents his strategy for avoiding writer’s block, and reminds you that “your words are not nearly as great as you think they are.”

Paul Krugman: The New Classical Clique: "As I said, international macro went in a different direction...

...The overwhelming international evidence against a new classical view, although that view persisted on the domestic side despite compelling evidence after 1980.... For domestic macro types, the big event of the 70s was stagflation; in international macro it was the collapse of Bretton Woods and the shocking volatility... that followed. The very tight correlation between nominal and real rates meant that international macroeconomists kept sticky prices in their models. The famous Dornbusch 'overshooting' analysis paired sticky goods prices with volatile, forward-looking asset prices, and seemed to have very interesting things to say--so international macro had a program other than the demolition of all things Keynes.... International macro has all along had stronger ties to real-world policymakers, especially at central banks, maybe because there are a lot of currencies and US-based economists therefore have a lot more opportunities to weigh in on actual policy decisions.

Felix Salmon: A Radical Response: "Martin Wolf paints a picture of a global economy being wrecked both by freedom of capital...

...and by the imprisonment of 18 European countries in a fixed currency system.... It’s a worldview in which central bankers, rather than their commercial brethren, are the people who really determine whether the world crashes and burns: The Jamie Dimons simply end up acting in accordance with the incentives that the Alan Greenspans put in place.... Wolf... has withering scorn for what central bankers have wrought... persuasively argues that central banks should target a much higher rate of inflation, noting that, in the eurozone, “inflation of 3 to 4 percent a year would not be a disaster” and would actually be very helpful.... Wolf... says the French economist Thomas Piketty’s recommendation of a global wealth tax “is unquestionably too ambitious.” Yet Wolf’s own recommendations are more ambitious... attempts to prevent corporations from accumulating cash; an end to the tax-deductibility of interest payments; a scaling back of international banks... a mass refinancing of European sovereign debt into eurobonds... a radical change in debt contracts to make them much more equitylike; and, of course, that idea about abolishing ­fractional-reserve banking.... Despite Wolf’s attempts to don the garb of a revolutionary, this book is actually something more familiar, and more depressing: a wonkish eschatology of how the global economy, and Europe’s in particular, is doomed.... THE SHIFTS AND THE SHOCKS: What We’ve Learned — and Have Still to Learn — From the Financial Crisis. By Martin Wolf.

Over at Equitable Growth--The Equitablog

• Afternoon Must-Read: Justin Fox: The Federal Reserve: Regulatory Capture Observed in the Wild - Washington Center for Equitable Growth
• Afternoon Must-Read: Paul Krugman: GOP: Those Lazy Jobless; with Bonus Heather Cox Richardson - Washington Center for Equitable Growth
• Afternoon Must-Read: Nick Bunker: Labor Market Slack - Washington Center for Equitable Growth
• Afternoon Must-Read: Sahil Kapur: The Halbig Truthers - Washington Center for Equitable Growth

Plus:

• Things to Read on the Morning of September 27, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Claudia Sahm: Mortgage Finance: Inertia and Inattention
• Howard Pollack: Scholar Zeke Emanuel says he wants to die at 75. Here’s why this author hopes to live
• Steve Randy Waldmann: iLinks: UBI and Hard Money
• Macro Advisors: The Emperor has no Clothes: MA on the State of "modern" Macro
• Gretchen Gavett: CEOs Get Paid Too Much, According to Pretty Much Everyone in the World
• Simon Wren-Lewis: Where Macroeconomics Went wrong
• Josh Bivens: Now It’s Explicit: Fighting Inflation Is a War to Ensure That Real Wages for the Vast Majority Never Grow
• Dietrich Vollrath: Productivity Pessimism from Productivity Optimists
• Cassandra Does Tokyo: The Rule of Law is Vastly Under-Priced

On Twitter:

• .@scalzi new Richard K. Morgan? A book or an ARC?
• .@joshtpm I still don’t know who Ed Champion is. Should I take a sledgehammer to the Google Fiber box to keep from finding out?
• Being advisd (1) I will B happier if I don’t find out who Ed Champion is, & (2) should buy books by @PKhakpour @ayeletw @EmilyGould @Mrs.D’s
• @A_L: For the first time in modern history, the eastern basin of the South Aral Sea has completely dried. http://earthobservatory.nasa.gov/IOTD/view.php?id=84437
• @froomkin: Anatomy of a Non-Denial Denial http://interc.pt/1uNcfNU my latest, about John Brennan and the Senate
• @zeynep: Hah. Slate's higher-ed columnist says of course she exaggrates, skips on research, simplifies to bring on vitriol. https://www.insidehighered.com/views/2014/09/25/essay-which-rebecca-schuman-responds-recent-column-criticizing-her-take-higher-ed
• @zeynep: .@delong @sivavaid Okay--but is the corollary that the content must be so shoddy? Can't there be solid, complex contrarianism? #slatepitch
• .@zeynep @sivavaid if 3/4 of conventional wisdom is right, solid complex contrarianism 4x harder to do than just solid & complex vox/538
• .@zeynep @sivavaid #slatepitch is what Kinsley, Weisberg, Plotz decided they wanted to be. The vox/538 pitch was made. The niche was open.
• .@zeynep @whtshellreads (1/2) #slatepitch is a unique brand. Individuals who write for Slate have + reputations; organization not so much
• .@zeynep @whtshellreads (2/2) #slatepitch is a unique brand. “it’s in Slate so it’s probably pretty good” said nobody ever…
• Dear @economist: when Ur paywall keeps me out & after 10 min still won’t let me in, that is a major lose for U
• @daveweigel: Rand threading needle on abortion bans: "Don't tell me that five and six pound babies have no rights simply because they're not born."
• .@daveweigel Rand Paul wants to move abortion regulation to the third-trimester only?
• @stevebenen: Era of post-truth politics: Tom Cotton, caught in a brazen lie, says he doesn't care & will keep repeating it http://on.msnbc.com/1wNk0Fl #arsen
• @gary4205: @delong Orman's a hard core left wing democrat party radical pretending to be "independent" to fool lowinfo voters @PhilipRucker @daveweigel
• .@gary4205: “@delong Orman's a hard core left wing democrat party radical” who contributed to and voted for Mitt Romney in 2012 @daveweigel
• .@gary4205 Is Mitt Romney, in Ur view, also a “hard-core left-wing democratic-party radical” and just pretending? @PhilipRucker @daveweigel
• .@DougWilliams85 @sarahkendzior has done something stupid?
• @RexNutting: Bill Black for attorney general. http://law.umkc.edu/faculty-staff/people/black-william.asp
• .@RexNutting No fair! I wanted Bill Black for a Governor of the Federal Reserve!

And Over Here:

World War II Today: Yom Kipper, 1944:

On September 26 1944, Yom Kippur began at sunset--and this was the excuse for another ‘selection’. Joseph Zalman Kleinman described the process that followed during the trial of Adolf Eichman. He was fourteen years old in 1944, he and his brother had been separated from their father, mother and younger sister when they arrived at Auschwitz – they never saw them again:

What happened on Yom Kippur?

A. There were about two thousand youths left. We thought that perhaps that would be the end of the matter. Then, the day before Yom Kippur – I remember – in the morning the news spread around that they were going to distribute an additional ration of bread. Usually they would hand out a quarter or a fifth of a loaf of bread; that day they brought to our hut a ration of a quarter, a third of a loaf of bread, together with additions of cheese and other items. There had never been anything like that in Auschwitz. We were very glad that we would be able to fast the next day.

Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy: "I would like to thank the Peterson Institute and Adam Posen...

...for organizing this conference focusing on labor market issues. The functioning of the labor market is always of great interest to both academics and policymakers. But today, with the collapse of labor demand during the Great Recession and ongoing structural changes, judging the health and future of labor markets is both especially challenging and important. The work presented at this conference and others like it offers an opportunity to integrate the most recent research with the thinking of policymakers. In keeping with this theme, I will first offer my views on the labor market and how the issues raised here influence my thinking on monetary policy, and I will then discuss my more general strategy for considering when and how we should begin to normalize monetary policy.

Paul Krugman: 'Seven Bad Ideas,' by Jeff Madrick: "The economics profession has not, to say the least...

...covered itself in glory these past six years. Hardly any economists predicted the 2008 crisis — and the handful who did tended to be people who also predicted crises that didn’t happen. More significant, many and arguably most economists were claiming, right up to the moment of collapse, that nothing like this could even happen.

Furthermore, once crisis struck economists seemed unable to agree on a response. They’d had 75 years since the Great Depression to figure out what to do if something similar happened again, but the profession was utterly divided when the moment of truth arrived.

Justin Fox: Why the Fed Is So Wimpy: "Regulatory capture...

...is a phenomenon that economists, political scientists, and legal scholars have been writing about for decades.... Actually witnessing capture in the wild is different, though, and the new This American Life episode with secret recordings of bank examiners at the Federal Reserve Bank of New York going about their jobs is going to focus a lot more attention on the phenomenon. It’s really well done, and you should listen to it, read the transcript, and/or read the story by ProPublica reporter Jake Bernstein.... Segarra pushed for a tough Fed line on Goldman’s lack of a substantive conflict of interest policy, and was rebuffed by her boss. This is a big deal, and for much more than the legal/compliance reasons discussed in the piece. That’s because, for the past two decades or so, not having a substantive conflict of interest policy has been Goldman’s business model.... All this is meant not to excuse the extreme timidity apparent in the Fed tapes, but to explain why it’s been so hard for the New York Fed to adopt the more aggressive, questioning approach... Maybe if banking laws and regulations were simpler and more straightforward, the bank examiners at the Fed and elsewhere wouldn’t so often be in the position of making judgment calls that favor the banks they oversee. Then again, the people who write banking laws and regulations are not exactly immune from capture themselves. This won’t be an easy thing to fix.

Paul Krugman: Those Lazy Jobless - NYTimes.com Last week John Boehner, the speaker of the House, explained...

...People, he said, have “this idea” that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.” Holy 47 percent, Batman! It’s hardly the first time a prominent conservative has said something along these lines.... But it’s still amazing — and revealing — to hear this line being repeated now. For the blame-the-victim crowd has gotten everything it wanted: Benefits, especially for the long-term unemployed, have been slashed or eliminated. So now we have rants against the bums on welfare when they aren’t bums — they never were — and there’s no welfare. Why? First things first: I don’t know how many people realize just how successful the campaign against any kind of relief for those who can’t find jobs has been. But it’s a striking picture.... The total value of unemployment benefits is less than 0.25 percent of G.D.P., half what it was in 2003, when the unemployment rate was roughly the same as it is now.... Strange to say, this outbreak of anti-compassionate conservatism hasn’t produced a job surge.... Why is there so much animus against the unemployed, such a strong conviction that they’re getting away with something, at a time when they’re actually being treated with unprecedented harshness?...

About half of the decline in labor force participation since 2007 is due to well-identified demographic trends plus extrapolated age and gender specific trends. About one-sixth of the decrease comes from the well-established fact that when the unemployment rate is elevated labor force participation declines. But how much comes from the fact that the downturn and jobless recovery were not only deep but long? We do not know, because we have never seen anything nearly as deep and long before. The cyclicalists say that there is a strong presumption that a deep and long employment downturn casts a strong shadow on participation, and are agnostic about whether and how rapidly participation would pick up in a high-pressure economy. The structuralists say that the decline would not be reversed in a high-pressure economy, but do not claim to have any insight into why the excess decline in participation occurred.

Nick Bunker: Labor Market Slack: "There are two major reasons behind the decline in participation...

...the Great Recession... the aging of the Baby Boomer generation.... Obama’s Council of Economic Advisers... found that aging accounts for about half of the decrease since the last quarter of 2007... one-sixth of the decline... from [normal] cyclical factors... one-third of the decline comes from 'other factors'.... Janet Yellen is keening aware of the lack of stark divide between cyclical and structural labor market factors.... Policymakers, while not sailing blind, are still in a considerable amount of fog.

It is very interesting: to overturn Chevron vs. NRDC would instantly require the substantial rewriting of every single administrative law textbook in the United States, and reopen a substantial proportion of administrative law cases adjudicated since 1984, plus all administrative determinations made under the shadow of the Chevron Doctrine. Five justices could do a Bush v. Gore--claim that this decision is sui generis and not a precedent for anything. But that is embarrassing enough that it is hard to imagine that Roberts, Scalia, Alito, Thomas, and Kennedy would do that for anything less than the presidency. But it is also hard to believe that Roberts, Scalia, Alito, Thomas, and Kennedy would make a hash of administrative law doctrine. And it is equally hard to believe that any of the Five Horsemen would want to alienate their patrons in the Republican Party further.

The only way out, I think, is for the Five Horsemen to take refuge in delay and demand that the plaintiffs bring them a split among the circuits before they take the case. But the very smart Robert Litan has long thought that Halbig has legs, and wrote something at http://bloomberg.gov a while ago predicting it would go 5-4 at the Supreme Court--and that the health exchanges in the red states would then go into adverse-selection meltdown...

Sahil Kapur: Why This Conservative Lawyer Thinks He Can Still Cripple Obamacare: "The top lawyer arguing a case to overturn Obamacare subsidies...

...believes he can succeed at crippling the law even if it's upheld in every district and appellate court.... Michael Carvin... expects the justices to view an expected D.C. Circuit ruling in favor of the law as corrupted by politics and agree to review it. 'I don't know that four justices, who are needed to [take the case] here, are going to give much of a damn about what a bunch of Obama appointees on the D.C. Circuit think.... This is a hugely important case.... I'm not going to lose any Republican-appointed judges' votes on the en banc — then I think the calculus would be, well let's take it now and get it resolved.' And if the case reaches the Supreme Court, Carvin expects all five Republican-appointed justices to rule that the federal exchange subsidies are invalid. Asked if he believes he'd lose the votes of any of the five conservative justices, he smiled and said, 'Oh, I don't think so'."

Over at Equitable Growth--The Equitablog

• Nick Bunker: Labor market slack attack - Washington Center for Equitable Growth
• Robert Lynch: U.S. Census highlights rising economic inequality - Washington Center for Equitable Growth
• What Should Monetary Policy Be?: Thursday Focus for September 25, 2014 - Washington Center for Equitable Growth
• Morning Must-Read: Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy - Washington Center for Equitable Growth
• Morning Must-Read: Michael Lewis: Occupational Hazards of Working on Wall Street - Washington Center for Equitable Growth
• Morning Must Read: David Weigel: The CBOghazi of Chris Cilizza (and Others): Journalists have no idea "what will matter" in an election. - Washington Center for Equitable Growth
• Morning Must-Read: Peter Thiel: Robots Are Our Saviours, Not the Enemy - Washington Center for Equitable Growth
• Morning Must-Read: David Card and Laura Giuliano: Gifted Education - Washington Center for Equitable Growth

Plus:

• Things to Read at Lunchtime on September 26, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Rhys R. Mendes: The Neutral Rate of Interest in Canada
• Bull Market
• Zeynep Tufecki: "Hah. Slate's higher-ed columnist says of course she exaggrates, skips on research, simplifies to bring on vitriol" https://t.co/PARzQ6mmEp
• Philippe Legrain: Germany’s Economic Mirage
• George Magnus: Xi Jinping’s Pure Party Joseph E. Stiglitz: Europe’s Austerity Zombies
• Laura Tyson: Paying for Productivity

And Over Here:

David Card and Laura Giuliano: Study by UC Berkeley professor, colleague questions effects of gifted education: "Students with high standardized test scores...

...but relatively lower IQs than their “gifted” counterparts experience the most improvement in their test scores--particularly those from disadvantaged backgrounds who are commonly excluded from gifted and talented programs.... David Card and... Laura Giuliano... one of the only two studies evaluating the effects of gifted education. “Unfortunately, there’s not enough scientific knowledge on how any of these programs work,” Card said... a large, urban district in Florida. Students within the district are admitted to gifted programs, determined by a high IQ score. To fill out empty seats in the gifted class, the district would admit students who scored at the top of their third-grade class in standardized tests. Researchers found that these students improved more in their standardized test scores as a result of enrolling in the gifted class...

Weekend Reading: Michael Berube (1996): Review of Dinesh D'Souza, "The End of Racism", Transition http://www.jstor.org/stable/2935241?

Strolling through the Detroit International Airport on my way to my parents' home in Virginia Beach, I came upon a newsstand-bookstore that was devoting eight or ten shelves of space-roughly one-quarter, I believe, of its "new bestsellers" wall-to Dinesh D'Souza's The End of Racism. I had heard a great deal about the book before it was published, and had just recently been asked (twice, actually) by the Chicago Tribune to re- view the thing. I declined, partly on the grounds that I've already read more D'Souza than any human should, having perused both Illiberal Education (1991) and his rarely mentioned first (and best) effort, Falwell: Before the Millennium (1984). That's the book where D'Souza writes:

listening to Falwell speak, one gets a sense that something is right about America, after all.

The extremely sharp but differently-thinking Peter Thiel:

Peter Thiel: Robots Are Our Saviours, Not the Enemy: "Americans today dream less often of feats that computers will help us to accomplish...

...[and] more and more we have nightmares about computers taking away our jobs.... Fear of replacement is not new.... But... unlike fellow humans of different nationalities, computers are not substitutes for American labour. Men and machines are good at different things. People form plans and make decisions.... Computers... excel at efficient data processing but struggle to make basic judgments that would be simple for any human.... [At] PayPal... we were losing upwards of $10m a month to credit card fraud.... We tried to solve the problem by writing software.... But... after an hour or two, the thieves would catch on and change their tactics to fool our algorithms. Human analysts, however, were not easily fooled.... So we rewrote the software... the computer would flag the most suspicious trans­actions, and human operators would make the final judgment. This kind of man-machine symbiosis enabled PayPal to stay in business.... Computers do not eat.... The alternative to working with computers... is [a world] in which wages decline and prices rise as the whole world competes both to work and to spend. We are our own greatest enemies. Our most important allies are the machines that enable us to do new things...

World War II Today: Polish Home Army trapped in the Warsaw sewers:

The battle in Warsaw had now been grinding on for almost two months. Gradually the German forces were were reducing the areas held by the Polish Home Army to isolated pockets. There was no way to get around the city except by going underground – into the sewers. Soon the Germans were aware of this and began trying to block the sewers or force people out with gas.

For one anonymous fighter the sewers that were the only possible means of escape soon turned into a deadly trap. He was trying to evacuate a badly wounded female fighter along with two companions, it was a desperate business and it soon became more desperate:

Every time I think that the east and west coasts are too over-bureaucratized I visit the Missouri-Mississippi-Ohio valley and find something like this--and I haven't even gone to the real south, or to Texas.

Remind me again why the Federal Reserve hasn't Incorporated every single American as a bank holding company? It makes payday loans for banks, so why doesn't it make payday loans for individuals? Remind me again please why you don't have a post office small banking and payday loan business?

David Hudnall, in Kansas City:

David Hudnall: A closer look at the Feds' crackdown on two KC-based predatory lenders: "On Wednesday, September 10...

...U.S. Marshals, local law enforcement and a temporary receiver appointed by a federal judge arrived at the headquarters of CWB Services LLC, at 6700 Squibb, in Mission.

Larry Cook, the temporary receiver, ordered all employees present to step away from their desks. Photos and video were taken of the premises. Employees submitted to in-depth interviews and filled out questionnaires about their roles in the company. All items in the office that could contain information about the business — desktop computers, laptops, filing cabinets, phones — were seized.

Over at Equitable Growth: Chicago Federal Reserve Bank President Charles Evans's position seems to me to be the position that ought to be the center of gravity of the Federal Open Market Committee's thoughts right now, with wings on all sides of it taking different views as part of a diversified intellectual portfolio. Charles Evans:

Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy: "At the end of the second quarter of 2014...

...the labor force participation rate was between 1/2 and 1-1/4 percentage points below trend... as much as 3/4 of a percentage point below predictions based on its historical relationship with the unemployment rate.... Virtually all the gap during this cycle has been due to withdrawal from the labor market of workers without a college degree.... If skills mismatch were an ongoing problem, we’d expect to see wages rising for those with the skills in demand.... Pools of potential workers other than the short-term unemployed, notably the medium-term unemployed and the involuntary part-time work force, substantially influence wage growth at the state or metropolitan statistical area level.... Current circumstances and a weighing of alternative risks mean that a balanced policy approach calls for being patient in reducing accommodation.... The biggest risk we face today is prematurely engineering restrictive monetary conditions.... If we were to... reduce monetary accommodation too soon, we could find ourselves in the very uncomfortable position of falling back into the ZLB environment.... There are great risks to premature liftoff.... And the costs of being mired in the zero lower bound are simply very large...

Yet Evans is out there on his own--with perhaps Narayana Kocherlakota beside him.[[1]][3] READ MOAR

[3]: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20140917.pdf (Percent Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, September 2014: Advance release of table 1 of the Summary of Economic Projections to be released with the FOMC minutes)

World War II Today:

After over a week of intense fighting it was finally decided to withdraw the remaining men of the 1st Airborne Division from their isolated position on the outskirts of Arnhem. They were pulled out in small groups from the defence line in Oosterbeek so that the Germans would not guess what was happening. Of the 10,000 who had arrived by parachute and glider, about 2,500 got away across the Rhine during the night of the 25th/26th. Many of those left behind could not be extricated because they were wounded. Glider Pilot Louis Hagen had narrowly avoided becoming a casualty and describes the final stages of their escape:

Matthew Dessem: Field Of Lost Shoes: "Here’s John Sergeant Wise...

...in the opening voiceover of Sean McNamara’s new Civil War drama Field Of Lost Shoes, describing how his father took him to a slave auction in 1858 to teach him a lesson about the evils of slavery:

My father’s heart had long since changed on the topic, and one night, he took me to a place that would forever change my own.

Here’s the actual John Sergeant Wise describing the same incident, in his 1899 memoir The End Of An Era:

Among my Northern kinsfolk was a young uncle, a handsome, witty fellow, much younger than my mother… He asked if I had ever seen a slave sale.

That uncle, erased from the film to make John Sergeant Wise’s father look more enlightened than he was, died fighting for the Union.

Here’s John’s father Henry in his own words, in an 1838 letter recounted in The Life Of Henry A. Wise Of Virginia, 1806–1876, a biography written by his grandson:

I have often been struck with the thought which justifies slavery itself in the abstract, and which has made me wonder and adore a gracious special Providence… I as firmly believe that slavery on this continent is the gift of Heaven to Africa...

Here he is again in February of 1861:

I am confident there are a number who would vote for abject submission and abolition of slavery tomorrow.... I now see that the fate of slavery is doomed in Virginia and we have no hope but in actual Revolution...

Here’s a line from Field Of Lost Shoes, spoken by a fellow Virginia Military Institute cadet before a shoving match that ends when John Sergeant Wise punches him in the face:

Wasn’t it your father, the governor, who opposed secession? The old fool.

Here is a record of the Virginia Convention, showing that Henry A. Wise voted for secession each time he was given the opportunity, on April 4 and April 17, 1861. And here is an account of his announcement to the Convention that he secretly, illegally sent troops to seize the Federal armory at Harper’s Ferry, in an attempt to force the issue:

armed forces are now moving upon Harper’s Ferry to capture the arms there in the arsenal for the public defence, and there will be a fight or a foot-race between volunteers of Virginia and Federal troops before the sun sets this day!...

As governor, Wise presided over John Brown’s execution for doing the same thing, albeit for very different reasons. But his heart did finally change on the topic of slavery, just as the film alleges. Here he is in an 1867 speech, explaining why he has come to the conclusion that the end of the plantation system was good for the South:

It was... to give the land its greatest pride, a solid Caucasian yeomanry, instead of being filled by ignorant, lazy slaves of a degraded race!

And yet in Field Of Lost Shoes, he’s practically William Lloyd Garrison. There are as many examples of this sort of bullshit in the film as the screenplay has words. Its subject is the Battle Of New Market, in which Confederate general John C. Breckinridge fed a battalion of Virginia Military Institute cadets—children, really—into the thresher, killing 10 of them and wounding 45 more. Just like kindly old abolitionist Henry A. Wise, the film’s cadets were a remarkably progressive bunch for the children of elite Virginians of the 1860s. For example, there’s a sequence in which they save VMI’s slave cook “Old Judge” (Keith David) from hanging by volunteering to be hung in his place. There’s also a scene in which they stop their march to save an African-American trapped under a wagon, so she can flee the approaching Union forces for some reason. And the racial harmony goes both ways; at the end, Old Judge weeps on the battlefield over the corpses of men who died to keep him in chains. The film is adequately directed, well-photographed, and competently acted. But it’s rotten at its core...

Kevin Drum: Bill Clinton Is Right: Storyline Reporting Has Poisoned the Political Press | Mother Jones: "The Washington Post's Chris Cillizza....

Put simply: Neither Hillary nor Bill Clinton likes the media or, increasingly, sees any positive use for them:

If a policymaker is a political leader and is covered primarily by the political press, there is a craving that borders on addictive to have a storyline

Bill Clinton said in a speech at Georgetown University back in April:

And then once people settle on the storyline, there is a craving that borders on blindness to shoehorn every fact, every development, every thing that happens into the story line, even if it’s not the story....

That's an interesting comment from Bill Clinton. Is it true? Well, check this out from the start of Cillizza's column:

Charles Evans: Patience Is a Virtue When Normalizing Monetary Policy: "At the end of the second quarter of 2014...

...the labor force participation rate was between 1/2 and 1-1/4 percentage points below trend... as much as 3/4 of a percentage point below predictions based on its historical relationship with the unemployment rate.... Virtually all the gap during this cycle has been due to withdrawal from the labor market of workers without a college degree.... If skills mismatch were an ongoing problem, we’d expect to see wages rising for those with the skills in demand.... Pools of potential workers other than the short-term unemployed, notably the medium-term unemployed and the involuntary part-time work force, substantially influence wage growth at the state or metropolitan statistical area level.... Current circumstances and a weighing of alternative risks mean that a balanced policy approach calls for being patient in reducing accommodation.... The biggest risk we face today is prematurely engineering restrictive monetary conditions.... If we were to... reduce monetary accommodation too soon, we could find ourselves in the very uncomfortable position of falling back into the ZLB environment.... There are great risks to premature liftoff.... And the costs of being mired in the zero lower bound are simply very large...

Michael Lewis: Occupational Hazards of Working on Wall Street: "Technology entrepreneurship will never have the power to displace big Wall Street banks...

...in the central nervous system of America’s youth, in part because tech entrepreneurship requires the practitioner to have an original idea, or at least to know something about computers, but also because entrepreneurship doesn’t offer the sort of people who wind up at elite universities what a lot of them obviously crave: status certainty.... The question I’ve always had about this army of young people with seemingly endless career options who wind up in finance is: What happens next to them? People like to think they have a 'character', and that this character of theirs will endure.... It’s not really so.... The best a person can do... is to choose carefully the environment that will go to work on their characters. One moment this herd of graduates of the nation’s best universities are young people.... The next they are essentially old people... gaming ratings companies... designing securities to fail... [to] make a killing off the... dupe[s]... rigging various markets at the expense of... society... encouraging... people to do stuff with their capital... they never should do....

All occupations have hazards. An occupational hazard of the Internet columnist... is that he becomes the sort of person who says whatever he thinks will get him the most attention rather than what he thinks is true, so often that he forgets the difference. The occupational hazards of Wall Street are... the pressure to pretend to know more than he does... hard to form deep attachments to anything much greater than himself... enormous pressure to not challenge or question existing arrangements.... So watch yourself, because no one else will.

Our Bad Media:

The only change Fareed Zakaria made was to (a) delete David Leonhardt's explanation of who had actually done the work to calculate the numbers, while (b) failing to put David Leonhardt's words in quotation marks, and (c) failing to provide a pointer to David Leonhardt's column.

Over at Equitable Growth--The Equitablog

• Heidi Moore, Tyler Cowen, Bob Solow, Russ Roberts, Brad DeLong: Piketty: Wednesday Focus for September 24, 2014 - Washington Center for Equitable Growth
• Lunchtime Must-Read: Young Rand Paul (1984): Stealing to Help the Needy - Washington Center for Equitable Growth
• Five Year Inflation Breakeven Now Only 1.6%/Year/a>
• Afternoon Must-Read: Jason Fried: Some Advice from Jeff Bezos - Washington Center for Equitable Growth
• Afternoon Must-Read: Ezra Klein: In Conservative Media, Obamacare Is a Disaster. In the Real World, It’s Working - Washington Center for Equitable Growth
• Afternoon Must-Read: David G. Blanchflower and Adam S. Posen: Wages and Labor Market Slack: Making the Dual Mandate Operational - Washington Center for Equitable Growth
• Nick Bunker: The rise of the commercial banking sector and household debt - Washington Center for Equitable Growth
• Nick Bunker: The future of marriage and income inequality - Washington Center for Equitable Growth

Plus:

• Things to Read on the Afternoon of September 24, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

• Ta-Nehisi Coates: The Case for Reparations
• John Bogle on the Rise of Index Funds
• Michael McKenzie: Treasury market cuts US inflation outlook
• Tim Harford: Selten's Chain-Store Paradox

And Over Here: