Morning Must-Read: Paul Krugman: Structural Deformity
Afternoon Must-Read: Walt Mossberg and Kara Swisher: Re/code Removes Comments

Noted for Your Lunchtime Procrastination for November 21, 2014

Screenshot 10 3 14 6 17 PMOver at Equitable Growth--The Equitablog


Must- and Shall-Reads:

And Over Here:

  1. Paul Krugman: Structural Deformity: "Shinzo Abe is doing the right thing... trying to accomplish something very difficult, and it’s by no means clear whether the instruments he’s deploying are sufficient. Still, there’s one type of criticism that I really, really hate... especially because it’s one of those things that is so completely accepted by Very Serious People that they don’t even realize that they’re spouting a dubious hypothesis.... I refer to the claim that Japan doesn’t need a demand boost, it needs structural reformTM.... Traditionally, structural reform was offered as an answer to the problem of stagflation... accelerating inflation, despite quite high unemployment.... This argument makes a fair bit of sense... at least this was... coherent argument. But Japan isn’t suffering from stagflation; neither is Europe. They are, instead, suffering from low inflation or deflation, and persistent shortfalls in demand despite zero interest rates. Why, exactly, is structural reform supposed to help cure this problem?... There’s a definite snake-oil feel to calls for structural reform, which is touted as a universal elixir--it cures inflation, but it cures deflation too! Also back pain and bad breath.... The blanket call for ‘structural reform’ as the answer is intellectually lazy, and destructive.... What Japan needs right now, more than anything else, is to escape from deflation any way it can."

  2. William Cohan: A First-Person History Lesson From Robert Rubin: "Asked why he was a Democrat... Rubin explained that his grandfather ran ‘the most powerful political club’ in Brooklyn, was a delegate to the 1936 Democratic Convention, and then added, ‘I’m in more of an eclectic position than most folks. I could have been a moderate Republican or a moderate Democrat, a centrist in either one, except if I look at where I am and then look at the people who are left on the spectrum, I relate to their values and the things that concern them. There are a number of areas where I don’t agree with them... [but] their concern for the poor and their concern for having a society that works for everybody instead of just for a few, the notion that you can’t put people out on their own to pull themselves up by their own bootstraps, and you have a society that helps people when they need it.’

  3. David Altig: "Monetary Policy Is an Exercise in Risk Management. Here is the probability of being wrong: 100 percent. The question is what is the worst way to be wrong. In our view, the worst way to be wrong is to pull the trigger too quickly than to pull the trigger a little bit late."

  4. Paul Krugman: The Unwisdom of Crowding Out: "I am, to my own surprise, not too happy... with the defense of Keynes by Peter Temin and David Vines.... Temin-Vines... seems to conflate several different bad arguments under the heading of ‘Ricardian equivalence’, and in so doing understates the badness. The anti-Keynesian proposition is that government spending to boost a depressed economy will fail.... I actually see five arguments out there--two (including the actual Ricardian equivalence argument) completely and embarrassingly wrong on logical grounds, three more that aren’t logical nonsense but fly in the face of the evidence. First, there’s the Say’s Law argument.... ‘This is just accounting,’ declared John Cochrane. No, it isn’t--and it was the remarkable fact that prominent economists were saying things like this, as if none of the debates of the 1930s had happened, that led me to proclaim a Dark Age of macroeconomics. Second, there’s the misuse of Ricardian Equivalence.... Even if it were (it isn’t), what the anti-Keynesians were saying was wrong, as I tried to explain a number of times.... Third, there’s the standard textbook crowding-out story... [which] doesn’t work when we’re at the zero lower bound.... Fourth, there’s the claim that we’re at full employment, or maybe always at full employment.... Finally, there’s the confidence fairy.... You do a disservice to the debate by calling all of these things Ricardian equivalence; and the nature of that disservice is that you end up making the really, really bad arguments sound more respectable than they are..."

  5. Ta-Nehisi Coates: The Rape Accusations Against Bill Cosby Must Not Be Ignored: "I published a reported essay in 2008.... In that essay, there is a brief and limp mention of the accusations against Cosby... [with] no opinion offered on the rape accusations. This is not because I did not have an opinion.... Believing Bill Cosby does not require you to take one person's word over another, it requires you take one person's word over 15 others. At the time I wrote the piece, it was 13 peoples’ word--and I believed them. Put differently, I believed that Bill Cosby was a rapist.... A defender of Bill Cosby must, effectively, conjure a vast conspiracy, created to bring down one man, seemingly just out of spite. And people will do this work of conjuration, because it is hard to accept that people we love in one arena can commit great evil in another. It is hard to believe that Bill Cosby is a serial rapist because the belief doesn't just indict Cosby, it indicts us. It damns us for drawing intimate conclusions about people based on pudding-pop commercials and popular TV shows. It destroys our ability to lean on icons for our morality.... And one cannot escape this chaos by hiding behind the lack of a court conviction.... I regret not saying what I thought of the accusations, and then pursuing those thoughts.... I would not dismiss all journalist who've declined to mention these allegations as cowards. It's worth considering what it feels like to, say, have been among those convicting Richard Jewell in the press. And should I have decided to state what I believed about Cosby, I would have had to write a much different piece.... The Bill Cosby piece was my first shot writing for a big national magazine. I had been writing for 12 financially insecure years. By 2007, when I finished my first draft, I had lost three jobs in seven years.... I don't have many writing regrets. But this is one of them. I regret not saying what I thought of the accusations, and then pursuing those thoughts. I regret it because the lack of pursuit puts me in league with people who either looked away, or did not look hard enough. I take it as a personal admonition to always go there, to never flinch, to never look away."

  6. Pedro S. Amaral and Jessica Ice: Reassessing the Effects of Extending Unemployment Insurance Benefits: "To deal with the high level of unemployment during the Great Recession, lawmakers extended the availability of unemployment benefits—all the way to 99 weeks in the states where unemployment was highest. A recent study [by Hagedorn et al. (2013)] has found that the extensions served to increase unemployment significantly by putting upward pressure on wages, leading to less jobs creation by firms. We replicate the methodology of this study with an updated and longer sample and find a much smaller impact. We estimate that the impact of extending benefits on unemployment through wages and job creation can, at its highest, account for only one-fourth of the increase in the unemployment rate; an impact that is much lower than other estimates in the literature."

  7. Lee Jong-Wha: China’s New World Order: "China – already the world’s largest exporter, manufacturer, and international-reserve-asset holder – is poised to overtake the United States as the world’s largest economy (measured according to purchasing power parity) this year. Now, it is using its growing clout to reshape global economic governance.... This shift should not be surprising, given the widespread debate over the inherent weaknesses of existing international institutions and governance structures--in particular, China’s disproportionately small role in them.... Frustrated, China finally decided to push for the establishment of the AIIB, in which it will be the largest shareholder, with a stake of up to 50%. China will also provide the AIIB’s first president, and the bank’s headquarters will be in Beijing..."

Should Be Aware of:


  1. Josh Marshall: What Would That Look Like?: "Sen. Tom Coburn (R) of Oklahoma is half warning, half threatening that the President's impending immigration executive order could lead to 'instances of anarchy [or] violence'... [and] also spoke about acts of 'civil disobedience.'.... Not to be too jocular, but I guess anti-immigrant activists could lay down on the sidewalk in the way of undocumented immigrants trying to walk to school and challenge the authorities to arrest them or lay down in the streets in the path of undocumented workers driving to work? It's a bit like anti-gay marriage activists who wonder who will step forward to become the anti-gay marriage Rosa Parks.... In a basic nuts-and-bolts structural sense, it is hard to pull off the trappings of the righteous demand for your own rights when your own rights aren't in any question and what you're demanding is that someone else not get those rights.... With immigration and gay marriage there's nothing going on other than not deporting people or allowing people to marry each other. Even if you think those things are terrible it's very hard to find a victim. And it's even harder to explain why that victim is you.... If you have any ideas about what anti-Obama immigration executive order civil disobedience would look like, please drop me a line and let me know."

  2. Robert Waldmann: Whence the Right-Wing Confidence Back a Year Ago in ObamaCare's Failure?: "Not the main topic but 'the possession-of-knowledge syndrome fact that your subjective probability distributions tend to be much too tight when you know something about a subject.' is very important and not usually mentioned when people invoke Kahneman and Tversky and all that. I think this is a problem for liberalism (I mean liberalism itself not mild leftism let alone free market fanaticism which I, being in Italy, call liberismo (it is odd for English speakers to pretend to be superior because they use an English word with the meaning perceived by non English speakers)). The core dogma of liberalism is that discussion and debate are useful. I think they are (I am closed minded enough to not consider abandoning the dogma that free discussion which rejects all (other) dogmas is best). But discussion does create the problem that people think they are right because they can present a fact which undermines every argument made by those with whom the disagree. It isn't true that if one answers yes and another no and the other knows a lot more facts, then the correct answer must be no. Knowing more than someone else isn't knowing everything, and knowing everything that ever happened wouldn't imply knowing what will happen..."

  3. Glenn Hunter: Million-dollar Lawsuit Rips Winstead Advice in [John Goodman] NCPA Sex Scandal: "‘Putting aside the staggering monetary loses and bad PR, the deepest cut of all came from Baggett,’ the suit concludes. ‘He had been a supporter of [the NCPA] for many years. Yet with no remorse, Baggett actively covered up the ugly events of 2012, looked the other way, and when his conduct was exposed, he repeated the mantra of too many lawyers throughout the land: deny, deny, deny. Baggett pushed the moral compass of the organization to its polar extreme.’"

  4. William Cohan: A First-Person History Lesson From Robert Rubin: "Mr. Rubin said that during the heady days after the 1992 election, Mr. Clinton asked him what he thought about the idea of Hillary Clinton leading the effort to reform health care. He told Mr. Clinton he thought it would be ‘terrific’ and added, ‘I didn’t know Hillary very well at the time, but she struck me as being smart. The little bit I’d seen of her I liked her. She was very sensible, but I didn’t know her that well. I thought it was a terrific idea. In retrospect, it obviously wasn’t, but I didn’t know enough to know. Two years later I would have given, I think, very different advice.’

  5. William Cohan: A First-Person History Lesson From Robert Rubin: Mr. Rubin said that he was unlikely to return to Washington anytime soon. He joked that it was more likely he would end up in Guantánamo, and if he did, he wanted ‘a water view.’ Still, he seemed to relish his time serving Mr. Clinton. ‘It’s an amazing experience to have, not only because you can do things that you care about, which I did and it was good, but you also see the world in such a different way,’ he said. ‘You see how our society functions from the intersection point of policy and politics and message and media, all those things together. A lot of it is policy, communication, message, media. I said to Steve Friedman... before he went down there, "Steve, if you do this, you’ll never read a newspaper article again about an administration or read a book and see it the same way. You’ll see it through a different prism." It is a remarkable experience to have, but I wouldn’t do it again. Nobody’s asked me to do it, so it’s academic, but I’m just saying.’"