Previous month:
August 2014
Next month:
October 2014

September 2014

Liveblogging World War II: September 24, 1944: Oosterbreek

NewImageBrigadier John Hackett in Oosterbeek:

The blow came before the sound of the burst. I dropped on my knees, sick, bewildered and unhappy. It had not been a tree-burst like so many of them, detonating in the branches over-head. This violent thing had happened there on the ground, a few yards in front of me. Was it a mortar bomb or a shell? Had there been a whine before it? Had there been one of them, or two?

Anyway, whatever it had been there were probably more on the way. I crawled on my hands and knees to a shallow slit trench a few feet from me. I had taken refuge in this before and now tumbled into it once again, flattening myself against its side and thrusting a grateful face into cool sandy earth. The ground rang and shook as the rest of the concentration came down, spasmodic bursts in quick untidy groups. Then it was over.

Continue reading "Liveblogging World War II: September 24, 1944: Oosterbreek" »


Afternoon Must-Read: David G. Blanchflower and Adam S. Posen: Wages and Labor Market Slack: Making the Dual Mandate Operational

David G. Blanchflower and Adam S. Posen: Wages and Labor Market Slack: Making the Dual Mandate Operational: "We examine the impact of rises in inactivity...

...on wages in the US economy and find evidence of a statistically significant negative effect. These nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself. This pattern holds across recent decades in the US data, and the relationship strengthens in recent years when variation in participation increases. We also examine the impact of long-term unemployment on wages and find it has no different effect from that of short-term unemployment. Our analysis provides strong empirical support, we argue, for the assessment that continuing labor market slack is a key reason for the persistent shortfall in inflation relative to the Federal Open Market Committee’s (FOMC) 2 percent inflation goal. Further, we suggest our results point towards using wage inflation as an additional intermediate target for monetary policy by the FOMC.


Afternoon Must-Read: Ezra Klein: In Conservative Media, Obamacare Is a Disaster. In the Real World, It’s Working

Ezra Klein: In conservative media, Obamacare is a disaster. In the real world, it’s working: "Before Obamacare launched...

...conservative outlets warned that the law would collapse as insurers shunned the overpriced, overregulated insurance exchanges.... I remember, a month or two after HealthCare.Gov opened (and crashed), being on a panel with a conservative writer who said that Obamacare might well enter a death spiral as insurers pull out of the marketplaces. On Tuesday, the idea that insurers would flee Obamacare joined the long procession of Obamacare disasters that simply didn't happen.... This news is not, as I write this on Tuesday evening, being carried on the home pages of Fox Business, HotAir.com, or the Heritage Foundation. (In case you're wondering, the most recent Obamacare article on FoxBusiness.com is "Obamacare website still not secure?"; on Hot Air.com, it's "How many people are poised to lose 2014 Obamacare coverage?"; at Heritage, it's "Why you can't keep your plan under Obamacare, explained in 3 minutes".)... My hunch is that relatively few conservatives realize that premiums are lower-than-expected, and that the law's costs are lower-than-expected ($104 billion lower, as of April 2014)....

Republicans have, for a long time, been putting forward health-care plans that would devolve single-payer insurance programs like Medicare to private insurers that would hold down costs by narrowing networks and managing care. Then, they figure, Americans can shop around, and the market will reward the plans that hold down costs and punish the plans that don't. These ideas were present in the health reforms Mitt Romney passed in Massachusetts, and Obamacare borrowed heavily from them. Rep. Paul Ryan has also been a key sponsor of these ideas. But now that they're happening in Obamacare, he's selling it to conservatives like some kind of catastrophe.... Except that very dynamic is exactly the way Ryan's own fabled Medicare plan is designed to work.... On the whole... costs are lower than expected, enrollment is higher than expected, the number of insurers participating in the exchanges is increasing, and more states are joining the Medicaid expansion. Millions of people have insurance who didn't have it before. The law is working. But a lot of the people who are convinced Obamacare is a disaster will never know that, because the voices they trust will never tell them.


Afternoon Must-Read: Jason Fried: Some Advice from Jeff Bezos

Jason Fried (2012): Some advice from Jeff Bezos: "Jeff Bezos... shared an enlightened observation...

...about people who are 'right a lot'. He said people who were right a lot of the time were people who often changed their minds.... The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking.... What trait signified someone who was wrong a lot of the time? Someone obsessed with details that only support one point of view...


Gabby Giffords's 'Nasty' Ad Causes GOP Candidate To Embrace Gun Safety Law: Live from the Roasterie

Igor Volsky: Gabby Giffords's 'Nasty' Ad Causes GOP Candidate To Embrace Gun Safety Law: "A political campaign ad that led some media outlets to describe Gabby Giffords...

...as a “mean” and “ruthless attack dog” convinced a Republican congressional nominee on Tuesday to support reforms that prohibit convicted stalkers from owning guns.... Republican Martha McSally, who is running for the Congressional seat Giffords held before she was shot in the head in 2011, confirmed to the Huffington Post that McSally now supports legislation that would prohibit all people convicted of misdemeanor stalking “from obtaining guns in other states where stalking can also be a misdemeanor.”


Godwin's Law Violation in Kansas! Vulnerable Kansas Senator Pat Roberts: We Are Heading Toward 'National Socialism': Live from the Roasterie

Wow! Kansas Senator Pat Roberts is getting really desperate. Haven't heard a Senator call Obama a Nazi before...

Dylan Scott: Vulnerable Kansas Senator: We Are Heading Toward 'National Socialism': "Incumbent Sen. Pat Roberts (R-KS)...

...facing an unexpectedly fierce challenge for re-election, warned Monday at a campaign stop that the United States is heading for "national socialism."... American Bridge, the liberal opposition research group that tracks Republican candidates, posted the video of Roberts's remarks at a Dodge City event.

There's a palpable fear among Kansans all across this state that the America that we love and cherish and honor will not be the same America for our kids and grandkids, and that's wrong. That's very wrong.... We have to change course because our country is heading for national socialism. That's not right. It's changing our culture. It's changing what we're all about...


Lunchtime Must-Read: Young Rand Paul (1984): Stealing to Help the Needy

Young Rand Paul (1984): Stealing to Help the Needy: "To the editors...

...After reading Mr. Wilzrkarth's editorial (Feb. 2) condemning President Reagan's plan for a "New Federalism," every national person should contemplate the essence of the system that has created such a controversy.

The main thrust of the article lies in the assertion that neither state governments nor private charity can absorb the immensity of the welfare system.

We have been taught as Christian people that it is wrong to steal. But underlying the whole welfare concept is the principle of theft. Money in the form of taxes is confiscated from the producers in society and redistributed to those who can't or won't produce. The immoral act of stealing, thus, has become moral in the eyes of society.

Immediately, I sense the horror stricken faces of those persons finishing the previous paragraph. Why, he would let the needy starve! My reply would be: How many realistic people believe there are 22 million Americans who need food stamps to survive? How many open-minded people believe 11 million Americans actually need sustenance? Let us assume a highly unlikely percentage, such as half, truly need some support. If individuals were not burdened by taxes incurred by this wealth transfer system, the truly needy would surely be supported.

Randall H. Paul
Biology, '85


The Kansas Wingnuts May Have Done So Much Damage to Their State as to Undermine Their Political Dominance...: Live from The Roasterie

This is not good news--it is, in a sense, "mission accomplished" for the wingnuts to have managed to do so much damage so quickly that it reverses their natural partisan political advantage in Kansas. But it is remarkable that the consequences of their policies have been so negative as to make Kansas competitive at all levels...

We see that Pat Roberts has given up arguing that he would be a good senator:

Thomas Beaumont: Sen. Roberts Takes Partisan Tone Campaigning In Crucial East Kansas: "Sen. Pat Roberts of Kansas took his conservative re-election message into the state's swing-voting east...

...Saturday in his latest effort chip away any advantage from independent candidate Greg Orman in a U.S. Senate race that has unexpectedly become one of the most hotly contested in the nation.... Roberts stuck to his argument that the election is a referendum on President Barack Obama and the Democratic-controlled Senate.

That really is the issue: whether (Senate Majority Leader) Harry Reid continues to be a one-man rules committee in the Senate.... Orman is a liberal Democrat and a vote for Harry Reid. That really is the issue....

Orman ran for Senate in 2008 as a Democrat but dropped out of the primary. He has also made financial contributions to President Obama and others. He had also been a registered Republican and made contributions to GOP candidates.

Senator Roberts' increasingly desperate campaign is turning to the only playbook his new handlers from Washington, DC know: throw out a lot of baseless negative attacks, and continue to try to divide people along partisan lines. Kansans of all parties are fed up with the broken system in Washington. They want an independent voice in the Senate, and that's why every day more and more Republicans, Democrats and Independents are supporting Greg Orman for Senate...

Continue reading "The Kansas Wingnuts May Have Done So Much Damage to Their State as to Undermine Their Political Dominance...: Live from The Roasterie" »


Liveblogging World War II: September 23, 1944: FDR: "Fala"

NewImageFDR - The "Fala" Speech:

Well, here we are together again - after four years - and what years they have been! You know, I am actually four years older, which is a fact that seems to annoy some people. In fact, in the mathematical field there are millions of Americans who are more than eleven years older than when we started in to clear up the mess that was dumped in our laps in 1933.

Continue reading "Liveblogging World War II: September 23, 1944: FDR: "Fala"" »


Noted for Your Morning Procrastination for September 23, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:

 

  1. David M. Byrne, Stephen D. Oliner, and Daniel E. Sichel: Is the Information Technology Revolution Over?: "Given the slowdown in labor productivity growth in the mid-2000s, some have argued that the boost to labor productivity from IT may have run its course. This paper contributes three types of evidence to this debate. First, we show that since 2004, IT has continued to make a significant contribution to labor productivity growth in the United States, though it is no longer providing the boost it did during the productivity resurgence from 1995 to 2004. Second, we present evidence that semiconductor technology, a key ingredient of the IT revolution, has continued to advance at a rapid pace and that the BLS price index for microprocesssors may have substantially understated the rate of decline in prices in recent years. Finally, we develop projections of growth in trend labor productivity in the nonfarm business sector. The baseline projection of about 13⁄4 percent a year is better than recent history but is still below the long-run average of 21⁄4 percent. However, we see a reasonable prospect — particularly given the ongoing advance in semiconductors — that the pace of labor productivity growth could rise back up to or exceed the long-run average. While the evidence is far from conclusive, we judge that 'No, the IT revolution is not over'."

  2. Paul Krugman: The Temporary-Equilibrium Method: "David Glasner has some thoughts... that I mostly agree with, but not entirely. So, a bit more. Glasner is right to say that the Hicksian IS-LM analysis comes most directly not out of Keynes but out of Hicks’s own Value and Capital, which introduced the concept of 'temporary equilibrium'... using quasi-static methods to analyze a dynamic economy... simply as a tool.... So is IS-LM really Keynesian? I think yes--there is a lot of temporary equilibrium in The General Theory, even if there’s other stuff too. As I wrote in the last post, one key thing that distinguished TGT from earlier business cycle theorizing was precisely that it stopped trying to tell a dynamic story.... The real question is whether the method of temporary equilibrium is useful. What are the alternatives? One... is to do intertemporal equilibrium all the way... DSGE--and I think Glasner and I agree that this hasn’t worked out too well.... Economists who never learned temporary-equiibrium-style modeling have had a strong tendency to reinvent pre-Keynesian fallacies (cough-Say’s Law-cough), because they don’t know how to think out of the forever-equilibrium straitjacket.... Disequilibrium dynamics all the way?... I have never seen anyone pull this off.... Hicks... often seems to hit a sweet spot between rigorous irrelevance and would-be realism that ends up being just confused.... Glasner says that temporary equilibrium must involve disappointed expectations, and fails to take account of the dynamics that must result as expectations are revised.... I’m not sure that this is always true. Hicks did indeed assume static expectations... but in Keynes’s vision of an economy stuck in sustained depression, such static expectations will be more or less right. It’s true that you need some wage stickiness to explain what you see... but that isn’t necessarily about false expectations.... In the end, I wouldn’t say that temporary equilibrium is either right or wrong; what it is, is useful..."

  3. Lemin Wu et al.: Entertaining Malthus: Bread, Circuses and Economic Growth: "We augment a simple Malthusian model by allowing agents to consume something besides food. Whereas food (in our case: bread) is both enjoyable and necessary for survival, the other good, circuses, is pure entertainment: it has absolutely no impact on survival, but does enhance the quality of life. With this very simple modification, we show that, whereas food supply may remain at subsistence, technological change will have a great impact on the consumption of everything else. Most strikingly, though the population remains bound by a Malthusian constraint, sustained improvements to living standards can no longer be ruled out. We also argue that our model better fits the known historical facts–the widely-held belief that growth prior to the Industrial Revolution was flat is based largely on historical measures of food production. Although food supply throughout history may have been (and for most individuals still is) at or near subsistence levels technological advancements have brought greater convenience and comfort to wealthy and poor alike, a possibility that Malthus himself conceded in his later (and often ignored) work. Therefore, our model not only describes historical growth patterns and demographic transitions better than traditional 'Malthusian' models, but is also more in line with Malthus’ later thinking."

  4. Daniel Davies: Every single IT guy, every single manager…: "In the general debate on email spying and... NSA/Snowden... people who want to dismiss the whole thing as 'no big deal' are... totally underestimating the... blind trust... required of them.... Even opponents of ubiquitous surveillance... assume that the institution which has access to your information is the institution which collected it. But that’s not necessarily the case at all. The Leveson Inquiry... demonstrated that the Police National Computer could be accessed by more or less any tabloid journalist with a phone and an account with a crooked detective agency.... Manning and Snowden... have made it clear that mid-level employees can get access to huge amounts of top secret data as long as they’ve got the wit to smuggle it out on a thumb drive. So the question is not so much 'do you trust the CIA/NSA/MI6/etc?'. It’s “Do you trust every single sysadmin... analyst... middle manager?”. The CIA might not be interested at all in my dull mobile phone conversation metadata, but someone else might--the Leveson inquiry was told how the UK’s PNC was used by one copper to check out his daughter’s new boyfriend.... The policies which might prevent [our data] from being accessed by blackmailers, tabloid journalists, nosey neighbours and basically anyone else, are themselves top secret and not subject to any sort of legal oversight. This isn’t a conspiracy theory.... It’s based on the fact that big and complicated systems are set up to malfunction, particularly if they are able to declare themselves above any regulation.... And the way in which this particular system is set up to malfunction is easily predictable and potentially very damaging to innocent people. I am personally not at the stage where I trust every single person who might be hired for a low level IT job in a security agency, and I’m not sure that I trust an entirely opaque set of safeguards with no accountability either."

  5. Nick Bunker: How Rising Income Inequality Affects State Tax Revenue: "S&P’s job is to assess the risk of bonds or other fixed-income investments and the creditworthiness of the governments.... According to the new report, rising income inequality is a factor that affects the creditworthiness of state governments, and thus their cost of borrowing and the tax revenue required to pay off their bonds. Over the past several decades, incomes have shifted upward while the tax code hasn’t responded. The result: states are collecting less tax revenue.... [State] spending cutbacks don’t just affect growth and stability. They also have implications for economic inequality. A paper by economists Laurence Ball, of Johns Hopkins University, and Davide Furceri, Daniel Leigh, and Prakash Loungani—all at the International Monetary Fund—finds that fiscal consolidation, or attempts to reduce budget deficits, ends up raising inequality. Particularly noteworthy is their conclusion that focusing primarily on cutting government spending results in larger increases in economic inequality."

  6. Dylan Scott: This Classic GOP Anti-Obamacare Meme Has Officially Imploded: "Last week... [was] the end of one of the GOP's favorite anti-Obamacare memes.... It was just a few months ago that Republicans were... theorizing that a third or more of Obamacare sign-ups weren't paying their bills.... 'I don't know how many have actually paid for it', House Speaker John Boehner (R-OH) said... he believed that fewer people were now covered than before the law. 'I actually do believe that to be the case'.... Boehner wasn't alone.... 'We don’t know how many have paid'... spokesman for Senate Minority Leader Mitch McConnell.... '20 percent to 33 percent are signing up and then not paying', Rep. Darrell Issa (R-CA) said.... 'Im told a low %--perhaps as low as 15%--of people who "enrolled" in #Obamacare actually paid first premium. Will be A LOT of attrition' — Scott Gottlieb, MD (@ScottGottliebMD) December 6, 2013.... 'Report: 1/3 of #ObamaCare "enrollees" haven't paid premiums. How does not paying the premium constitute enrollment? http://t.co/OkkUhsJGyt' — Reince Priebus (@Reince).... Last week's news, however, was effectively met with crickets..."

  7. Eric Wemple: Alessandra Stanley’s Contempt for New York Times Readers: "The piece launched a thousand tweets with a single-sentence lede: 'When Shonda Rhimes writes her autobiography, it should be called "How to Get Away With Being an Angry Black Woman"'.... New York Times Public Editor Margaret Sullivan... [wrote] that the piece was 'astonishingly tone-deaf and out of touch'. No critique, however, was so damning as the one delivered by … Alessandra Stanley.... 'I didn’t think Times readers would take the opening sentence literally because I so often write arch, provocative ledes that are then undercut or mitigated by the paragraphs that follow'. Only a gifted critic can pack so much sin into a single sentence. Sin No. 1: Over-healthy self-regard: What Stanley appears to be saying here is that Times readers read her stuff with such care and joy that they know her as the woman who writes self-mitigated ledes. Ahhh, yes, that’s her trademark! Sin No. 2: Deliberate obfuscation: Just what is the purpose of mitigating your own lede? That must be an art form that Stanley and her culture-critic pals delight in executing. From this point onward, the Erik Wemple Blog will start reading Stanley’s work from the third or fourth paragraph. Sin No. 3: Why write a lede at all if your goal in the body of the piece is to undercut it?..."

  8. Kevin Bryan: “Aggregation in Production Functions: What Applied Economists Should Know,” J. Felipe & F. Fisher (2003): "What conditions are required to construct an aggregated production function Y=F(K,L), or more broadly to aggregate across firms an economy-wide production function Y=F(K,L)? Note that the question is not about the definition of capital per se, since defining 'labor' is equally problematic when man-hours are clearly heterogeneous, and this question is also not about the more general capital controversy worries, like reswitching.... The conditions under which factors can be aggregated are ridiculously stringent... that the marginal rate of substitution between different types of factors in one aggregation, e.g. capital, does not depend on the level of factors not in that aggregation, e.g. labor. Surely this is a condition that rarely holds: how much I want to use... different types of trucks will depend on how much labor I have at hand.... Why, then, do empirical exercises using, say, aggregate Cobb-Douglas seem to give such reasonable parameters, even though the above theoretical results suggest that parameters like 'aggregate elasticity of substitution between labor and capital' don’t even exist?.... Since ex-post production Y must equal the wage bill plus the capital payments plus profits, Felipe notes that this identity can be algebraically manipulated to Y=AF(K,L) where the form of F depends on the nature of the factor shares. That is, the good fit of Cobb-Douglas or CES can simply reflect an accounting identity.... It doesn’t strike me that aggregate production functions are measuring arbitrary things. However, if we are using parameters from these functions to do counterfactual analysis, we really ought know better exactly what approximations or assumptions are being baked into the cake..."

  9. Alan Blinder: Behind the Fed's Dovish Turn on Rates: "The battle at the Federal Open Market Committee is now on. Score the previous meeting in late July for the inflation hawks, but last week's meeting went for the doves.... The committee's hawks would like the phrase 'significant underutilization of labor' removed from the statement.... They want the FOMC to stop declaring that interest rates will remain at their current superlow levels 'for a considerable time'.... The hawks want the Fed to stop saying that it expects to keep interest rates low 'for some time'.... Plosser dissented again... this time Fisher joined him.... Yet another indicator of rampant disagreement appeared.... Opinions on where the [Federal Funeds] rate should be... for the end of 2016 [range] from 0.25-0.50% to 4%. This is a remarkable degree of disagreement..."

And Over Here:

Continue reading "Noted for Your Morning Procrastination for September 23, 2014" »


Morning Must-Read: Alan S. Blinder: Behind the Fed's Dovish Turn on Rates

Alan Blinder: Behind the Fed's Dovish Turn on Rates: "The battle at the Federal Open Market Committee...

...is now on. Score the previous meeting in late July for the inflation hawks, but last week's meeting went for the doves.... The committee's hawks would like the phrase 'significant underutilization of labor' removed from the statement.... They want the FOMC to stop declaring that interest rates will remain at their current superlow levels 'for a considerable time'.... The hawks want the Fed to stop saying that it expects to keep interest rates low 'for some time'.... Plosser dissented again... this time Fisher joined him.... Yet another indicator of rampant disagreement appeared.... Opinions on where the [Federal Funeds] rate should be... for the end of 2016 [range] from 0.25-0.50% to 4%. This is a remarkable degree of disagreement...


Over at Equitable Growth: It Really Seems as Though Dallas Fed President Richard Fisher Doesn't Want Real Wages to Increase, or Doesn't Believe Real Wages Can Increase, or Something: Tuesday Focus for September 23, 2014

FISHER092214

Over at Equitable Growth: Tim Duy: Fisher on Wages: "Richard Fisher said Friday the US economy was threatened...

...by higher wages. Via Reuters:

Fisher said on Friday he worries that further declines in unemployment nationally could lead to broader wage inflation. To head that off, and also to address what he called rising excesses in financial markets, Fisher said he prefers to raise rates by springtime, sooner than many investors currently anticipate....

I wondered if he was not misquoted or misinterpreted. But he definitely warns that wage growth is set to accelerate in his Fox News interview.... READ MOAR

Continue reading "Over at Equitable Growth: It Really Seems as Though Dallas Fed President Richard Fisher Doesn't Want Real Wages to Increase, or Doesn't Believe Real Wages Can Increase, or Something: Tuesday Focus for September 23, 2014" »


Morning Must-Read: Kevin Bryan: “Aggregation in Production Functions: What Applied Economists Should Know,” J. Felipe & F. Fisher (2003)

Kevin Bryan: “Aggregation in Production Functions: What Applied Economists Should Know,” J. Felipe & F. Fisher (2003): "What conditions are required to construct an aggregated production function Y=F(K,L)...

...or more broadly to aggregate across firms an economy-wide production function Y=F(K,L)? Note that the question is not about the definition of capital per se, since defining 'labor' is equally problematic when man-hours are clearly heterogeneous, and this question is also not about the more general capital controversy worries, like reswitching.... The conditions under which factors can be aggregated are ridiculously stringent... that the marginal rate of substitution between different types of factors in one aggregation, e.g. capital, does not depend on the level of factors not in that aggregation, e.g. labor. Surely this is a condition that rarely holds: how much I want to use... different types of trucks will depend on how much labor I have at hand.... Why, then, do empirical exercises using, say, aggregate Cobb-Douglas seem to give such reasonable parameters, even though the above theoretical results suggest that parameters like 'aggregate elasticity of substitution between labor and capital' don’t even exist?.... Since ex-post production Y must equal the wage bill plus the capital payments plus profits, Felipe notes that this identity can be algebraically manipulated to Y=AF(K,L) where the form of F depends on the nature of the factor shares. That is, the good fit of Cobb-Douglas or CES can simply reflect an accounting identity.... It doesn’t strike me that aggregate production functions are measuring arbitrary things. However, if we are using parameters from these functions to do counterfactual analysis, we really ought know better exactly what approximations or assumptions are being baked into the cake...


Morning Must-Read: Daniel Davies: Every Single IT guy, Every Single Manager…

Daniel Davies: Every single IT guy, every single manager…: "In the general debate on email spying and... NSA/Snowden...

...people who want to dismiss the whole thing as 'no big deal' are... totally underestimating the... blind trust... required of them.... Even opponents of ubiquitous surveillance... assume that the institution which has access to your information is the institution which collected it. But that’s not necessarily the case at all. The Leveson Inquiry... demonstrated that the Police National Computer could be accessed by more or less any tabloid journalist with a phone and an account with a crooked detective agency.... Manning and Snowden... have made it clear that mid-level employees can get access to huge amounts of top secret data as long as they’ve got the wit to smuggle it out on a thumb drive. So the question is not so much 'do you trust the CIA/NSA/MI6/etc?'. It’s “Do you trust every single sysadmin... analyst... middle manager?”. The CIA might not be interested at all in my dull mobile phone conversation metadata, but someone else might--the Leveson inquiry was told how the UK’s PNC was used by one copper to check out his daughter’s new boyfriend.... The policies which might prevent [our data] from being accessed by blackmailers, tabloid journalists, nosey neighbours and basically anyone else, are themselves top secret and not subject to any sort of legal oversight. This isn’t a conspiracy theory.... It’s based on the fact that big and complicated systems are set up to malfunction, particularly if they are able to declare themselves above any regulation.... And the way in which this particular system is set up to malfunction is easily predictable and potentially very damaging to innocent people. I am personally not at the stage where I trust every single person who might be hired for a low level IT job in a security agency, and I’m not sure that I trust an entirely opaque set of safeguards with no accountability either.


Morning Must-Read: Lemin Wu et al.: Entertaining Malthus: Bread, Circuses and Economic Growth

Lemin Wu et al.: Entertaining Malthus: Bread, Circuses and Economic Growth: "We augment a simple Malthusian model...

...by allowing agents to consume something besides food. Whereas food (in our case: bread) is both enjoyable and necessary for survival, the other good, circuses, is pure entertainment: it has absolutely no impact on survival, but does enhance the quality of life. With this very simple modification, we show that, whereas food supply may remain at subsistence, technological change will have a great impact on the consumption of everything else. Most strikingly, though the population remains bound by a Malthusian constraint, sustained improvements to living standards can no longer be ruled out. We also argue that our model better fits the known historical facts–the widely-held belief that growth prior to the Industrial Revolution was flat is based largely on historical measures of food production. Although food supply throughout history may have been (and for most individuals still is) at or near subsistence levels technological advancements have brought greater convenience and comfort to wealthy and poor alike, a possibility that Malthus himself conceded in his later (and often ignored) work. Therefore, our model not only describes historical growth patterns and demographic transitions better than traditional 'Malthusian' models, but is also more in line with Malthus’ later thinking.


Liveblogging the American Revolution: September 22, 1776: Execution of Nathan Hale

NewImageExecution of Nathan Hale: Diary Entry, September 22, 1776:

After the Battle of Harlem Heights, a Connecticut officer, a former schoolmaster named Nathan Hale, volunteered to conduct espionage behind the British lines to secure intelligence concerning troop movements. He was captured on Long Island, identified as a spy (some sources say that he was fingered by his own cousin, Samuel Hale—but it is also true that he carried incriminating documents on his person), and summarily hanged on September 22, 1776. There is considerable difference of opinion as to the site of his execution, which may have been at the present intersection of 66th Street and Third Avenue in Manhattan; at City Hall Park in Lower Manhattan, or at the present location of the Yale Club at 44th Street and Vanderbilt Avenue, across from Grand Central Terminal. Frederick Mackenzie, a British captain, recorded the execution in his diary on the day of the event.

Sept. 22. A person named Nathaniel Hales [sic], a lieutenant in the Rebel army and a native of Connecticut, was apprehended as a spy last night upon Long Island; and having this day made a full and free confession to the Commander in Chief of his being employed by Mr Washington in that capacity, he was hanged at 11 o'clock in front of the park of artillery. He was about 24 years of age, and had been educated at the College of Newhaven [Yale College] in Connecticut. He behaved with great composure and resolution, saying he thought it the duty of every good officer to obey any orders given him by his Commander in Chief; and desired the spectators to be at all times prepared to meet death in whatever shape it might appear.


This Is Not the First Time We Have Seen Alessandra Stanley, Is It?

Perhaps Margaret Sullivan could read her predecessor?

Margaret Sullivan: An Article on Shonda Rhimes Rightly Causes a Furor: "Alessandra Stanley['s]... first paragraph--with a reference to Ms. Rhimes as an 'Angry Black Woman'...

...struck many readers as completely off-base. Many called it offensive. Some went further, saying it was racist. Another reference to the actress Viola Davis as 'less classically beautiful' than lighter-skinned African American actresses immediately inspired a mocking hashtag.... I have asked Ms. Stanley for further comment (she has said that her intentions were misunderstood, and seemed to blame the Twitter culture for that.... Culture editor, Danielle Mattoon.... 'There was never any intent to offend anyone and I deeply regret that it did', Ms. Mattoon said. 'Alessandra used a rhetorical device to begin her essay, and because the piece was so largely positive, we as editors weren’t sensitive enough to the language being used'. Ms. Mattoon called the article 'a serious piece of criticism', adding, 'I do think there were interesting and important ideas raised that are being swamped' by the protests. She told me that multiple editors--at least three--read the article in advance but that none of them raised any objections...

The Nytpicker (August 2009): How Does Alessandra Stanley Get To Keep Her Job As TV Critic? That's One Question Clark Hoyt Neglects To Ask. "Under the headline 'How Did This Happen?' Public Editor Clark Hoyt...

...today purports to address Alessandra Stanley's famously-flawed appraisal of Walter Cronkite on July 18, and to explain how the TV critic could end up with a whopping 8-error correction. But while Hoyt names several editors who failed to catch the mistakes in Stanley's piece, he ignores the deeper question on readers' minds. How does a television critic who has had 91 corrections of her work in just six years get to keep her job? Nowhere in Hoyt's 1,228-word essay today does the Public Editor address the question of what consequences Stanley has faced as a result of her epic fail on July 18. By focusing on the mechanics of the screw-up--which includes naming editors who read the piece and who didn't fact-check it--Hoyt bypasses the issue of a systemic breakdown at the NYT that led to the error-riddled essay.


Lunchtime Must-Read: Paul Krugman: The Temporary-Equilibrium Method

Paul Krugman: The Temporary-Equilibrium Method: "David Glasner has some thoughts... that I mostly agree with, but not entirely. So, a bit more...

Glasner is right to say that the Hicksian IS-LM analysis comes most directly not out of Keynes but out of Hicks’s own Value and Capital, which introduced the concept of 'temporary equilibrium'... using quasi-static methods to analyze a dynamic economy... simply as a tool.... So is IS-LM really Keynesian? I think yes--there is a lot of temporary equilibrium in The General Theory, even if there’s other stuff too. As I wrote in the last post, one key thing that distinguished TGT from earlier business cycle theorizing was precisely that it stopped trying to tell a dynamic story.... The real question is whether the method of temporary equilibrium is useful. What are the alternatives? One... is to do intertemporal equilibrium all the way... DSGE--and I think Glasner and I agree that this hasn’t worked out too well.... Economists who never learned temporary-equiibrium-style modeling have had a strong tendency to reinvent pre-Keynesian fallacies (cough-Say’s Law-cough), because they don’t know how to think out of the forever-equilibrium straitjacket.... Disequilibrium dynamics all the way?... I have never seen anyone pull this off.... Hicks... often seems to hit a sweet spot between rigorous irrelevance and would-be realism that ends up being just confused.... Glasner says that temporary equilibrium must involve disappointed expectations, and fails to take account of the dynamics that must result as expectations are revised.... I’m not sure that this is always true. Hicks did indeed assume static expectations... but in Keynes’s vision of an economy stuck in sustained depression, such static expectations will be more or less right. It’s true that you need some wage stickiness to explain what you see... but that isn’t necessarily about false expectations.... In the end, I wouldn’t say that temporary equilibrium is either right or wrong; what it is, is useful...


Lunchtime Must-Read: David M. Byrne, Stephen D. Oliner, and Daniel E. Sichel: Is the Information Technology Revolution Over?

David M. Byrne, Stephen D. Oliner, and Daniel E. Sichel: Is the Information Technology Revolution Over?: "Given the slowdown in labor productivity growth in the mid-2000s...

some have argued that the boost to labor productivity from IT may have run its course. This paper contributes three types of evidence to this debate. First, we show that since 2004, IT has continued to make a significant contribution to labor productivity growth in the United States, though it is no longer providing the boost it did during the productivity resurgence from 1995 to 2004. Second, we present evidence that semiconductor technology, a key ingredient of the IT revolution, has continued to advance at a rapid pace and that the BLS price index for microprocesssors may have substantially understated the rate of decline in prices in recent years. Finally, we develop projections of growth in trend labor productivity in the nonfarm business sector. The baseline projection of about 13⁄4 percent a year is better than recent history but is still below the long-run average of 21⁄4 percent. However, we see a reasonable prospect — particularly given the ongoing advance in semiconductors — that the pace of labor productivity growth could rise back up to or exceed the long-run average. While the evidence is far from conclusive, we judge that 'No, the IT revolution is not over'.


Over at Equitable Growth: Potential Output and Total Factor Productivity since 2000: Marking My Beliefs to Market: The Honest Broker for the Week of September 26, 2014

Over at Equitable Growth: I am still thinking about the best assessment of potential output and productivity growth that we have--that of the extremely-sharp John Fernald's "Productivity and Potential Output Before, During, and After the Great Recession". And I am--slowly, hesitantly, and unwillingly--coming to the conclusion that I have to mark my beliefs about the process of economic technological change to market, and revise them significantly.

Let's start with what I wrote last July: READ MOAR

Continue reading "Over at Equitable Growth: Potential Output and Total Factor Productivity since 2000: Marking My Beliefs to Market: The Honest Broker for the Week of September 26, 2014" »


Morning Must-Read: Robert Skidelsky: Vanguard Scotland?

Robert Skidelsky: Vanguard Scotland?: "Many are now convinced that the current way of organizing our affairs does not deserve such unquestioning allegiance; that the political system has closed down serious debate on economic and social alternatives; that banks and oligarchs rule; and that democracy is a sham. Nationalism promises an escape from the discipline of 'sensible' alternatives that turn out to offer no alternative. Nationalists can be divided into... those who genuinely believe that independence provides an exit from a blocked political system, and those who use the threat of it to force concessions from the political establishment. Either way, nationalist politicians enjoy the huge advantage of not requiring a practical program: all good things will flow from sovereignty.... Practically all of Europe’s existing nation-states contain geographically concentrated ethnic, religious, or linguistic minorities. Moreover, these states’ incorporation into the European Union--a kind of voluntary empire--challenges their citizens’ allegiance....

People are more willing to discount nationalism’s costs, because they have come to doubt the benefits of its liberal capitalist rival. Ordinary Russians, for example, refuse to face the costs of their government’s Ukraine policy, not just because they underestimate them, but because they somehow seem unimportant relative to the huge psychological boost the policy brings. Nationalism today is not nearly as virulent as it was in the 1930s, because economic distress is much less pronounced. But its revival is a portent of what happens when a form of politics claims to satisfy every human need except the coziness of communal belonging – and then lets the people down.


Morning Must-Read: Any Jalil: A New History of Banking Panics in the United States, 1825–1929: Construction and Implications

Andy Jalil: A New History of Banking Panics in the United States, 1825–1929: Construction and Implications: "There are two major problems in identifying the output effects...

...of banking panics of the pre-Great Depression era. First, it is not clear when panics occurred because prior panic series differ in their identification of panic episodes. Second, establishing the direction of causality is tricky. This paper addresses these two problems (1) by deriving a new panic series for the 1825-1929 period and (2) by studying the output effects of major banking panics via vector autoregression (VAR) and narrative-based methods. The new series has important implications for the history of financial panics in the United States.


Noted for Your Morning Procrastination for September 22, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:

And Over Here:

Continue reading "Noted for Your Morning Procrastination for September 22, 2014" »


Morning Must-Read: Rob Stavins: Climate Realities

Rob Stavins: Climate Realities: "In theory, we can avoid the worst consequences of climate change...

...with an intensive global effort over the next several decades. But given real-world economic and, in particular, political realities, that seems unlikely.... The world is now on track to more than double current greenhouse gas concentrations in the atmosphere by the end of the century. This would push up average global temperatures by three to eight degrees Celsius and could mean the disappearance of glaciers, droughts in the mid-to-low latitudes, decreased crop productivity, increased sea levels and flooding, vanishing islands and coastal wetlands, greater storm frequency and intensity, the risk of species extinction and a significant spread of infectious disease.... Two points are important to understand if we’re going to be serious about attacking this problem. One, it will be costly.... And two, things become more challenging when we move from the economics to the politics.... If the new technologies we hope will be available aren’t, like one that would enable the capture and storage of carbon emissions from power plants, the cost estimates more than double. Then there are the politics, which are driven by two fundamental facts. First, greenhouse gases mix globally.... Second, some of these heat-trapping gases--in particular, carbon dioxide--remain in the atmosphere for centuries.... Reducing greenhouse gas pollution will require the unalloyed cooperation of at least the 15 countries and one region (the European Union) that together account for about 80 percent of global carbon dioxide emissions.... Making matters more difficult, climate change is essentially unobservable by the public. On a daily basis, we observe the weather, not the climate. This makes it less likely that public opinion will force action the way it did 50 years ago when black smoke rose from industrial smokestacks...


Morning Must-Read: Jeffrey Frankel: Piketty’s Fence

Jeffrey Frankel: Piketty’s Fence: "one could just easily find other a priori grounds for reasoning...

...that countervailing forces might kick in if things get bad enough. Democracy is one such force. Progressive taxation arose in the 20th century, following the excesses of the Belle Époque. A political trend of that sort could recur in this century if the gap between rich and poor continues to grow. A few years ago, American voters and politicians were persuaded to reduce federal taxes on capital income and estates. They phased out the estate tax completely (effective in 2010), even though this would benefit only the upper 1 per cent. This is standardly viewed as an example of the rich manipulating the political economy for their own benefit. Indeed, we know that campaign contributions buy some very effective advertising. But imagine that in the future we lived in a Piketty world, a return to the golden age of Austen and Balzac, where inheritance and unearned income were the sources of stratospheric income inequality. Would a majority of the 99 % still be persuaded to vote against their self-interest?


Across the Wide Mediterranean: Zalmay Khalilzad, Ex-Top US Diplomat, in Laundering Probe

I really hope that there is nothing here. Zalmay Khalilzad was the only member of the Bush Administration who struck me as likable, competent, realistic, and not-evil...

Associated Press: Khalilzad, ex-top US diplomat, in laundering probe: "Zalmay Khalilzad, who served as U.S. ambassador to Afghanistan, Iraq and the United Nations...

...under President George W. Bush, is being investigated by American authorities for suspected money laundering, Austrian officials said Monday. State prosecutor Thomas Vecsey confirmed a report in the Austrian weekly Profil about the investigation of Khalilzad, who played a key role in the political transition in Afghanistan after the 2001 U.S.-led invasion and the fall of the Taliban.

Continue reading "Across the Wide Mediterranean: Zalmay Khalilzad, Ex-Top US Diplomat, in Laundering Probe" »


Morning Must-Read: Max Sawicky: Economic Security and “The Great Disturbing Factors of Life”

Max Sawicky: Economic security and “the great disturbing factors of life”: "Steve Randy Waldman of the interfluidity blog pulls me back into Universal Basic Income (UBI) land...

...I share his foreboding of a political future without a labor movement. It’s unpleasant to imagine how bad things could get, even aside from that whole destruction of the planet thing. In troubled times, there is a natural conflict between trying to preserve old, embattled forms of social protection and casting about for new, more viable ones. In general I have no problem with providing unconditional cash money to the poor rather than in-kind benefits. The problem of course is that we have in-kind benefits for food and housing because of the historic, political weakness of free-standing cash assistance. So we need a political environment that would be conducive to some kind of conversion. The Supplemental Nutrition Assistance Program (SNAP), formerly known as “Food Stamps,” got its political boost from agri-business interests, support which is waning.... I believe SRW’s characterization of the libertarian impulse is wrong. At its root I would say is not some desire for minimal bureaucracy and free choice, but a drive to drown a whittled-down welfare state in the bathtub. If you don’t like bureaucracy, try not to spend much time dealing with private health insurance companies. The Koch-fueled libertarians use UBI to trash existing programs and advocate a wholesale trade. Big government for all its flaws provides some measure of protection from predators that abound in the private sector.... Steve claims the UBI is a bridge from the U.S. to welfare states that are more effective in addressing poverty. By this criterion the U.S. certainly ranks comparatively low. The question is where such a bridge would lead. Existing, more effective welfare states are built on big social insurance, not UBIs...


Monday Smackdown: The Stupidest Paragraph in Perhaps the Stupidest Article Ever Published

We are interrupting our DeLong Smackdown Watches (and other things to bring you news that International Economy is now in the running for the Washington Post for the title of publication that exercises the very least quality control--that takes the least care to make sure that the articles it publishes inform rather than mislead their readers.

Let's turn the mike over to Menzie Chinn:

Menzie Chinn: The Stupidest Paragraph in Perhaps the Stupidest Article Ever Published: Bruce Bartlett brought my attention to this article...

...which Mark Thoma mused was “The Stupidest Article Ever Published”. From "The Inflation Debt Scam", by Paul Craig Roberts, Dave Kranzler and John Williams[, in International Economy]:

Continue reading "Monday Smackdown: The Stupidest Paragraph in Perhaps the Stupidest Article Ever Published" »


Lunchtime Must-Read: Heidi Moore et al.: Why is Thomas Piketty's 700-Page Book a Bestseller?

**Heidi Moore et al. Why is Thomas Piketty's 700-page book a bestseller?: "There’s been a bizarre phenomenon this year... it’s a bestseller.... Why this book? The themes that Piketty brings up have been enshrined in discussion about progressive economists for decades.... Now, over to the experts...

Stephanie Kelton: What explains the Piketty phenomenon?... The title,... doesn’t exactly carry the titillating allure of a bestseller like, say, Fifty Shades of Grey.... The Occupy movement laid the groundwork for a great debate. What was happening to America? Were we witnessing the rise of a plutocracy or the emergence of a meritocracy? Chris Hayes and Joe Stiglitz made the case on the left, while Tyler Cowen and David Brooks provided a counter-narrative for the right... but it was Piketty whose meticulous examination of the evidence, seemed to provide the impartial proof audiences were craving. The left was right....

Tyler Cowen: Thomas Piketty’s Capital in the Twenty-First Century has been a hit for several reasons, most notably the quality of the work. But I’d like to focus on a neglected reason why the book has found so much support, namely it appears to strengthen the case for redistribution.... As these issues get processed by the public there is a common attitude--whether justified or not--that many of the lower earners are partially or fully responsible for their own plight. The egalitarians don’t tend to win these policy debates.... If you are an activist who favors lots of redistribution, the Piketty story is a lot easier to tell yourself and to tell your audiences--and that is yet another reason for its popularity....

Emanuel Derman: Economists are the new nuclear physicists, turned to by governments for advice as though they are heirs to the power of the scientists who created Hiroshima.... Though I should, I can’t bring myself to read Thomas Piketty. I wish I could.... I am just spiritually weary of the ubiquitous cockiness of economists, though Piketty sounds as though he’s less guilty of this than most of the pundits in the daily papers.... My gripe with economists is not that their models don’t work well--they don’t, look at the role of central banks in the financial crisis--but that they seem so reluctant to acknowledge the riskiness of their advice. And yet, beware their fearsome unelected power...


Noted for Your Morning Procrastination for September 21, 2014

Over at Equitable Growth--The Equitablog

Plus:

  • http://equitablegrowth.org/2014/09/21/things-read-morning-september-21-2014/

Must- and Shall-Reads:

 

  1. NewImageSam Wang: Senate Conditions Are Back to September 3: "As of today, conditions in the battle for Senate control are just about back to where they were on the day after the shake-up in the Kansas Senate race. Using polls alone in a 2-3 week window (see right sidebar), current medians show the following key margins: Alaska D+5%, Colorado D+2%, Iowa D+0.5%, North Carolina D+4%, and Kansas I+5.5%. In an election based on today’s polled sample, the most likely outcome is 51 votes for Democrats and Independents. [Update: see comments. At the moment, significant drivers of the difference between PEC and other sites appear to be (1) we're using all polls, including partisan ones, which changes Alaska; and (2) we're using Kansas two-candidate matchups and don't have fundamentals to drag those polls in the GOP direction.]"

  2. Barry Ritholtz: After 30,000 posts, Big Picture blogger has figured a few things out: "After more than a decade of getting up before the crack of dawn to write a daily journal about all things financial, here is what I’ve learned: (1) Writing is a good way to figure out what you think.... (2) Writing is a good way to become a better writer.... (3) Mainstream media ignored blogs, occasionally stole from, then adopted the format wholesale.... (4) Content: creativity, criticism and curation. Content is king. When you are asking people to read you several times a day, you better have some fine content. Mixing original content, intelligent criticism and curation (a.k.a. reading linkfests) has been a successful formula for me.... I would describe it [as]... 'First, here is something I CREATED which I think is worthwhile; second, THAT OVER THERE is wrong and not especially compelling and here’s why; and third, you should see ALL OF THESE. They are excellent.' I am oversimplifying, but that’s the basic three-part content structure of a good blog.... Reader comments have become useless.... This is a shame. At one time, commenters had tremendous value within given communities.... (5) Advertising is a terrible business model (unless you are Google).... (6) Authors vs. publishers. People read publications less than they do authors.... There is a caveat.... Any powerful platform will potentially expose a writer to a wider audience. That has been my experience here at The Washington Post as well as on Bloomberg View. (7) People lie to themselves.... For a data guy like me, this is both utterly fascinating and somewhat disturbing.... Whenever I encounter someone who refuses to accept reality, all I can do is shrug and remind myself that someone has to be on the losing side of the trade. It might as well be him. (8) It can be difficult for readers to distinguish between good information and distracting nonsense. Despite a tremendous amount of information online, readers are still mired in lots of bad thinking and disproven memes."

  3. Steven J. Davis and John Haltiwanger: Labor Market Fluidity and Economic Performance: "U.S. labor markets became much less fluid in recent decades. Job reallocation rates fell more than a quarter after 1990, and worker reallocation rates fell more than a quarter after 2000. The declines cut across states, industries and demographic groups defined by age, gender and education. Younger and less educated workers had especially large declines, as did the retail sector. A shift to older businesses, an aging workforce, and policy developments that suppress reallocation all contributed to fluidity declines. Drawing on previous work, we argue that reduced fluidity has harmful consequences for productivity, real wages and employment. To quantify the effects of reallocation intensity on employment, we estimate regression models that exploit low frequency variation over time within states, using state-level changes in population composition and other variables as instruments. We find large positive effects of worker reallocation rates on employment, especially for men, young workers, and the less educated. Similar estimates obtain when dropping data from the Great Recession and its aftermath. These results suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity."

  4. Paul Krugman: Conservative Canadian Cockroach "Oh, my. Josh Barro tells us that conservatives are once again touting Canada as a role model, in particular using its experience in the 90s to claim that austerity is expansionary after all. I think this qualifies as a cockroach idea (zombies just keep shambling along, whereas sometimes you think you’ve gotten rid of cockroaches, but they keep coming back.) I thought we had disposed of all this four years ago. But nooooo. Barro hits the main points. Canadian austerity in the 1990s was offset by a huge positive movement in the trade balance, due to a falling Canadian dollar and raw material exports.... Also, the whole debate about austerity versus stimulus was driven by the problem that interest rates were at the zero lower bound, so that there wasn’t any easy way to offset the effects of austerity. Canada in the 1990s? Not so much.... However, Josh misses a trick. When dealing with right-wing claims about economic data, you should never forget Moore’s Law: not only shouldn’t you accept their assertions, you should assume that what they say is probably wrong.... So conservatives have fallen in love with an imaginary Canada, whose history and current reality is nothing like the real place. Are you surprised?"

  5. Jason Millman: Millions have joined Medicaid under Obamacare. Here’s what they think of it: "All the study participants said they feel better off with free or low-cost Medicaid coverage... worry less about being able to afford bills or see a doctor.... The majority said they've already used their coverage and feel healthier.... Most said they didn't even know they were eligible for Medicaid.... There's some confusion about what the program actually covers, and researchers found some feared receiving low-quality or limited care. The enrollees' biggest problem has been finding a primary care doctor.... Some new enrollees in the focus groups said they had to call at least six practices to find a doctor.... Others said they weren't used to the process of finding a primary care physician, and others didn't try because they didn't see an urgent need to find one..."

And Over Here:

Continue reading "Noted for Your Morning Procrastination for September 21, 2014" »


Why is Thomas Piketty's 700-Page Book a Bestseller?: (Early) Monday Focus for September 22, 2014

Over at the Grauniad Guardian: Why is Thomas Piketty's 700-page book a bestseller? I like Thomas Piketty’s Capital in the Twenty-First Century a lot. It follows Larry Summers’s advice – which I have always thought wise--that the further ahead in time we want to forecast, the further back in time we should look. It deals with very big and important questions. It takes a broad moral-philosophical view, rather than a narrow technical-economist view. It combines history, quantitative estimation, social science theory, and a deep concern with societal welfare in a way that is too rare these days.

Continue reading "Why is Thomas Piketty's 700-Page Book a Bestseller?: (Early) Monday Focus for September 22, 2014" »


Weekend Reading: Dean Baker: Influencing the Debate from Outside the Mainstream: Keep it Simple

Dean Baker: Influencing the Debate from Outside the Mainstream: Keep it Simple: "If people working outside of the mainstream of the profession are going to have any impact...

...on economic policy debates in the United States it is essential that they understand the forum in which the debate is taking place. This is not a contest of ideas where the best arguments and evidence win out. If we are talking about a debate within the economics profession, think of debating the morality of abortion with the pope in front of the College of Cardinals. That is pretty much what it is like to try to challenge any of the main precepts of economics within the economics profession.

Continue reading "Weekend Reading: Dean Baker: Influencing the Debate from Outside the Mainstream: Keep it Simple" »


Liveblogging the American Revolution: September 21, 1776: The Great Fire of New York

Great Fire of New York (1776) - Wikipedia:

The Great Fire of New York was a devastating fire that burned through the night of September 21, 1776, on the west side of what then constituted New York City at the southern end of the island of Manhattan. It broke out in the early days of the military occupation of the city by British forces during the American Revolutionary War. The fire destroyed 10 to 25 percent of the city and some unburned parts of the city were plundered. Many people believed or assumed that one or more people deliberately started the fire, for a variety of different reasons. British leaders accused revolutionaries acting within the city, and many residents assumed that one side or the other had started it. The fire had long-term effects on the British occupation of the city, which did not end until 1783....

Continue reading "Liveblogging the American Revolution: September 21, 1776: The Great Fire of New York" »


Morning Must-Read: Steven J. Davis and John Haltiwanger: Labor Market Fluidity and Economic Performance

Steven J. Davis and John Haltiwanger: Labor Market Fluidity and Economic Performance: "U.S. labor markets became much less fluid in recent decades...

...Job reallocation rates fell more than a quarter after 1990, and worker reallocation rates fell more than a quarter after 2000. The declines cut across states, industries and demographic groups defined by age, gender and education. Younger and less educated workers had especially large declines, as did the retail sector. A shift to older businesses, an aging workforce, and policy developments that suppress reallocation all contributed to fluidity declines. Drawing on previous work, we argue that reduced fluidity has harmful consequences for productivity, real wages and employment. To quantify the effects of reallocation intensity on employment, we estimate regression models that exploit low frequency variation over time within states, using state-level changes in population composition and other variables as instruments. We find large positive effects of worker reallocation rates on employment, especially for men, young workers, and the less educated. Similar estimates obtain when dropping data from the Great Recession and its aftermath. These results suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity.


Morning Must-Read: Barry Ritholtz: After 30,000 Posts...

Barry Ritholtz: After 30,000 posts, Big Picture blogger has figured a few things out: "After more than a decade of getting up before the crack of dawn...

...to write a daily journal about all things financial, here is what I’ve learned: (1) Writing is a good way to figure out what you think.... (2) Writing is a good way to become a better writer.... (3) Mainstream media ignored blogs, occasionally stole from, then adopted the format wholesale.... (4) Content: creativity, criticism and curation. Content is king. When you are asking people to read you several times a day, you better have some fine content. Mixing original content, intelligent criticism and curation (a.k.a. reading linkfests) has been a successful formula for me.... I would describe it [as]... 'First, here is something I CREATED which I think is worthwhile; second, THAT OVER THERE is wrong and not especially compelling and here’s why; and third, you should see ALL OF THESE. They are excellent.' I am oversimplifying, but that’s the basic three-part content structure of a good blog.... Reader comments have become useless.... This is a shame. At one time, commenters had tremendous value within given communities....

(5) Advertising is a terrible business model (unless you are Google).... (6) Authors vs. publishers. People read publications less than they do authors.... There is a caveat.... Any powerful platform will potentially expose a writer to a wider audience. That has been my experience here at The Washington Post as well as on Bloomberg View. (7) People lie to themselves.... For a data guy like me, this is both utterly fascinating and somewhat disturbing.... Whenever I encounter someone who refuses to accept reality, all I can do is shrug and remind myself that someone has to be on the losing side of the trade. It might as well be him. (8) It can be difficult for readers to distinguish between good information and distracting nonsense. Despite a tremendous amount of information online, readers are still mired in lots of bad thinking and disproven memes.


Morning Must-Read: Sam Wang: Senate Conditions Are Back To September 3

NewImage

Sam Wang: Senate Conditions Are Back to September 3: "As of today, conditions in the battle for Senate control...

...are just about back to where they were on the day after the shake-up in the Kansas Senate race. Using polls alone in a 2-3 week window (see right sidebar), current medians show the following key margins: Alaska D+5%, Colorado D+2%, Iowa D+0.5%, North Carolina D+4%, and Kansas I+5.5%. In an election based on today’s polled sample, the most likely outcome is 51 votes for Democrats and Independents. [Update: see comments. At the moment, significant drivers of the difference between PEC and other sites appear to be (1) we're using all polls, including partisan ones, which changes Alaska; and (2) we're using Kansas two-candidate matchups and don't have fundamentals to drag those polls in the GOP direction.]


Over at Equitable Growth: Econometrics: One Thing That I Have Never, Ever Understood. Never. And Probably Never Will...: Very Late Thursday Focus for September 18, 2014

Over at Equitable Growth: The smart David Giles writes things that thousands of time-series econometricians out of the San Diego tradition have written, and continue to write:

David Giles: The (Non-) Standard Asymptotics of Dickey-Fuller Tests: "One of the most widely used tests in econometrics...

...is the (augmented) Dickey-Fuller (DF) test. We use it in the context of time series data to test the null hypothesis that a series has a unit root (i.e., it is I(1)), against the alternative hypothesis that the series is I(0), and hence stationary...

A stationary time series is one in which (once a deterministic non-stochastic trend is removed) you are willing to bet at very heavy odds that if you look far into the future the variable will still be close to what you calculate as its past sample average. A non-stationary time series is one that is not. This is kinda important: whether (and how much) radical uncertainty there is about the long run is a thing. This is a big issue if a piece of what enters your model is not what the time series has been over the course of your sample but rather what the agents in your model anticipate that the time series will be in the distant future. Things that look very well-behaved from today's perspective and in the past may well have underlying generating processes that are not so well-behaved in the future.

But consider for the white-noise innovation ε the time series: READ MOAR

Continue reading "Over at Equitable Growth: Econometrics: One Thing That I Have Never, Ever Understood. Never. And Probably Never Will...: Very Late Thursday Focus for September 18, 2014" »


Noted for Your Morning Procrastination for September 19, 2014

Over at Equitable Growth--The Equitablog

Plus:

Must- and Shall-Reads:

And Over Here:

Continue reading "Noted for Your Morning Procrastination for September 19, 2014" »


Liveblogging World War II: September 19, 1944: Arnhem

James Sims: 19 September 1944: Arnhem becomes a desperate battle for survival:

After the failure of the ‘Grand Prix’ attack the Germans withdrew a short distance and began to mortar and shell our positions systematically for the first time. The very air seemed to wail and sigh with the number of projectiles passing through it. The enemy had also brought up some self-propelled artillery, heavy stuff, and against this we were virtually helpless. One by one the houses held by the paratroopers were set alight. There was nothing to fight the fires with, even if we had been able to.

Continue reading "Liveblogging World War II: September 19, 1944: Arnhem" »


Lunchtime Must-Read: Peterson Institute: Labor Market Slack: Assessing and Addressing in Real Time

Peterson Institute: Event: Labor Market Slack: Assessing and Addressing in Real Time: "Live Webcast September 24, 2014...

...Demographics versus demand as determinants of US labor force participation. Erica Groshen... Betsey Stevenson... David Blanchflower... Julie Hotchkiss... Michael Kiley... Justin Wolfers, University of Michigan and PIIE.... Hhow estimates of labor market slack are constructed... David Stockton... Wendy Edelberg... William Wascher... Andrew Levin... Michael Horrigan.... Charles Evans.... Angel Ubide... implications of current labor slack for monetary policymaking... Laurence Ball... William Dickens... Jan Hatzius... Stephen Oliner... Adam S. Posen.... Implications of current labor lack assessments for structural reform... Karen Dynan... Jared Bernstein... Jennifer Hunt... Jacob Kirkegaard... Michael Strain...


Lunchtime Must Read: Joe Romm: NOAA: Hottest August On Record

NewImage

Joe Romm: NOAA: Hottest August On Record: Last month was the warmest August since records began being kept in 1880...

...the National Oceanic and Atmospheric Administration (NOAA) reported Thursday.... The oceans were particularly warm. In fact, ocean warming blew more than one record out of the water: 'The August global sea surface temperature was 0.65°C (1.17°F) above the 20th century average of 16.4°C (61.4°F). This record high departure from average not only beats the previous August record set in 2005 by 0.08°C (0.14°F), but also beats the previous all-time record set just two months ago in June 2014 by 0.03°C (0.05°F).'"


Lunchtime Must-Read: Reuters: U.S. House Speaker Boehner Bemoans Notion 'I Don't Have to Work'

Reuters: U.S. House Speaker Boehner bemoans notion 'I don't have to work': "Boehner's remarks were in response to a question following a speech...

...he delivered to the conservative-leaning American Enterprise Institute.... Boehner... lamented 'this idea that has been born, maybe out of the economy over the last couple years, that you know, I really don't have to work. I don't really want to do this. I think I'd rather just sit around. This is a very sick idea for our country.'.... Boehner talked about his large family of 11 brothers and sisters, saying that as a youngster... 'If you wanted something you worked for it'... adding, 'Trust me, I did it all'.... [Paul] Ryan... spoke of a 'tailspin of culture in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value of work'. Ryan later said his remarks were 'inarticulate'...


Lunchtime Must Read: Paul Krugman: Could Fighting Global Warming Be Cheap and Free?

Paul Krugman: Could Fighting Global Warming Be Cheap and Free? "Where is the new optimism about climate change and growth coming from?...

...It has long been clear that a well-thought-out strategy of emissions control, in particular one that puts a price on carbon via either an emissions tax or a cap-and-trade scheme, would cost much less than the usual suspects want you to think. But the economics of climate protection look even better now than they did a few years ago. On one side, there has been dramatic progress in renewable energy technology.... On the other side, it turns out that putting a price on carbon would have large 'co-benefits'--positive effects over and above the reduction in climate risks--and that these benefits would come fairly quickly. The most important of these co-benefits, according to the I.M.F. paper, would involve public health: burning coal causes many respiratory ailments, which drive up medical costs and reduce productivity..."


Morning Must-Read: James Pethokoukis: Is it time to retire the most important chart in the world?

James Pethokoukis: Is it time to retire the most important chart in the world?: 'The gap between actual GDP and potential GDP...

...represents trillions in missing economic growth caused by a failure of the US economy to return to its previous trend growth path. The cost of the Two Percent Economy is staggering, and it’s a big reason — along with quiescent inflation — that “market monetarists” have been in no hurry to see the Federal Reserve do less. In fact, many would prefer the central bank do more — or, actually, do different. But at this point, economist David Beckworth thinks it’s time to look forward and forget about returning to the pre-crisis trend level.... That is reality talking. The Fed is winding down QE and will begin nudging up rates next year (hopefully avoiding a repeat of the Fed’s 1936-37 mistake). From this point on, I suppose, better to focus on crisis avoidance through smarter, rule-based, market-based monetary policy. That, and faster potential GDP growth through supply-side reforms in areas such as taxation, regulation, and education.


Over at Equitable Growth: The Contractionary[?] Federal Reserve Policies of 2013-2014: Friday Focus for September 19, 2014

Over at Equitable Growth: Let's look at the five-year and ten-year U.S. break-even inflation rates--the inflation rates at which an investment in U.S. Treasury bonds held to maturity produces exactly the same return as an investment in U.S. Treasury inflation-protected securities of the same maturity:

Graph 10 Year Breakeven Inflation Rate FRED St Louis FedREAD MOAR

Continue reading "Over at Equitable Growth: The Contractionary[?] Federal Reserve Policies of 2013-2014: Friday Focus for September 19, 2014" »