Previous month:
October 2014
Next month:
December 2014

November 2014

Lunchtime Must-Read: Matthew Yglesias: The GOP's Counterproductive Policy Strategy

Matthew Yglesias: The GOP's political strategy against Obama keeps leading to policies conservatives hate: "Republicans' strategy has been savvy politics, but it's forced them...

...repeatedly — to accept worse policy outcomes than they otherwise could have obtained. Alleged presidential overreach is largely a mirror-image of systematic congressional underreach... deliberately choos[ing] to leave obtainable policy concessions on the cutting room floor.... The clearest example of obstructionism leading to policy costs is probably the Affordable Care Act. Democrats had the votes to get this done, but the party was plainly desperate for bipartisan cover. In exchange for votes, Republican members of congress could have gotten tort reform or other policy priorities. But they preferred to keep their fingerprints off the bill, even if that meant a policy outcome they liked less. On climate change, Republican behavior was even more counterproductive.... A similar preference for worse policy outcomes has manifested itself through inaction.... Obama, in other words, was offering a real policy concession (entitlement cuts) in exchange for political cover for tax hikes that were going to happen anyway. But Republicans preferred to keep their fingerprints off any kind of action, even if that meant a policy outcome they liked less. These triple-breakdowns of bipartisanship have made Obama a much less popular and successful-looking president.... But... fFor a party driven by a core commitment to low taxes and welfare state rollback, it's a bit odd.... [The Republican] Congress is, itself, violating a basic norm of American politics — the norm that says given a choice between a better policy outcome and a worse one, a legislator should choose the better outcome.... If Republicans wanted more conservative-friendly policy outcomes, they could be getting them. But they prefer more Republican-friendly political outcomes...

I think Matt is definitely on to something. Republicans are, right now, temporarily (those of us interested in good policies have to hope), the majority legislative party. Yet they are acting like a fringe party in a proportional-representation system in which their seats depend on satisfying the ideological preferences of a small political minorities rather than the substantive, pragmatic policy preferences of a majority.

Perhaps the most puzzling thing is how few of the policy intellectuals and the technocrats whose substantive policy ideas would be thought likely to have the most traction on the Republican side of the aisle are worried about this or spend any time working on this. The end result of Obama's presidency Will be national health, spending and taxing, climate, and immigration policies that are much worse from the viewpoint of the substantive policy preferences of most Republicans than could easily have been the case. And the Republicans have traded away this low-hanging fruit for what? Have they raised their long-run chances of partisan political domination? Have they raised the chance of a Republican president come 2017? Have they made Ron Fornier, Chuck Lane, and Clive Crook dislike Barack Obama?

Morning Must-Read: Richard Milne: Central banks: Stockholm Syndrome

Richard Milne: Central banks: Stockholm Syndrome: "When the global financial crisis broke in 2008...

...Sweden’s central bank seemed to be one of the best-equipped to fight it. The Riksbank was led by Stefan Ingves, a former senior official at the International Monetary Fund whose expertise lay in financial crises and how to avoid them. One of its deputy governors was Lars Svensson, an expert on Japan’s long battle against deflation and a top thinker on monetary policy. With these credentials, the two men seemed ideally suited to guide the Riksbank’s policy through the turmoil.... At first, they found common ground as the Riksbank cut interest rates in 2009 to 0.25 per cent, their lowest level since its founding in 1668. But for the next two years, the duo clashed bitterly.... The Riksbank’s decision in 2010 to start raising rates--an idea Mr Svensson firmly opposed – has transformed the Swedish central bank from a small but respected institution to a cautionary tale for central banks worldwide. 'Sweden has done an experiment the whole world is interested in', Mr Odendahl says. 'What should we do when monetary policy should be accommodative but there are financial risks? The Swedish lesson is that tightening policy prematurely isn’t the answer'...

Both at the time and in retrospect, it seems completely unclear just why Ingves thought it was time to tighten interest rates back in 2010. The arguments just seem to make no sense whatever. They still do not.

Noted for Your Morning Procrastination for November 22, 2014

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


Must- and Shall-Reads:

And Over Here:

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

Morning Must-Read: Alice Rivlin: People Who Wanted Market-Driven Health Care Now Have it in the Affordable Care Act

Alice Rivlin: People Who Wanted Market-Driven Health Care Now Have it in the Affordable Care Act: "That all sounds complicated, inconvenient and unfair...

...What have these 'socialist Democrats' done to us? But wait a minute: Isn't that how markets are supposed to work? The United States never adopted a simple national health plan to cover everyone.... In general, Republicans argued that relying on market forces would give people what they wanted while also putting pressure on the health system to offer more effective care for less money.... In general, Democrats argued that government should set benefits and the prices it would pay, as in a 'Medicare for all' program.... They pointed out that markets didn't work well in health care because consumers didn't know enough to choose what was best for them.... The compromise was to combine markets with regulation, sometimes called 'managed competition,' now called 'the Affordable Care Act.'... Should believers in market forces try to gut the Affordable Care Act? Heavens, no. They should seize this huge opportunity to prove their case by helping to make the law's markets work effectively...

Morning Must-Read: Steve Teles: Restrain Regressive Rent-Seeking

Steven Teles: Restrain Regressive Rent-Seeking: "The great paradox of the last third of a century is that we have actually had... explosion of regulation in this ‘supposedly deregulatory’ era... regulation that has the effect of redistributing, sometimes dramatically, upward.... Intellectual property protections, especially patents and copyright, have been expanded dramatically.... There is an argument that this expansion has actually reduced innovation, there is no doubt that it has allowed existing firms to use the force of law (rather than the market) to enrich themselves.... The same period has seen a transformation of occupational licensing, from a marginal force in our economic organization to one that is increasingly ubiquitous.... Finally, the incredible growth of the financial sector... also finds its source in government-derived rents... ‘too big to fail.’... By allowing a huge securitized housing finance market.. pushing more and more of American retirement savings into actively managed 401ks and IRAs... the government created the greatest pool of rents in the history of mankind...

Morning Must-Read: Danny Vinik: Peter Schiff: My Inflation Prediction Was Correct. The Stats Are Lying

Danny Vinik: Peter Schiff: My Inflation Prediction Was Correct. The Stats Are Lying: "Peter Schiff... might... be the person most wrong...

...about America's economic struggles. In 2009, Schiff not only warned of impending inflation but said it was already upon us.... In the newest issue of Reason, the libertarian magazine, he ‘responds’ to his critics....'It's hard to ignore the victory chants coming from the White House press room, the minutes of the Federal Reserve's Open Markets Committee, the talking heads on financial television, and the editorial pages of The New York Times.... Their claims of victory are premature and inaccurate. Inflation is easy to see in our current economy, if you make a genuine attempt to measure it.' Schiff goes on to cite the Big Mac index... argues that the ‘sandwich, which reflects the average person's direct experience, may be a more accurate yardstick of inflation.’ This is wrong in so many ways.... If Schiff wants a metric that takes into account prices of everyday items—lettuce, tomato, bread, ground beef, etc.—he should look no further than the consumer price index.... The Massachusetts Institute of Technology has created a separate inflation measure: The Billion Prices Project tracks prices online through massive retailers that have significant market share. The project only further confirms the accuracy of the CPI. It’s hard to think of any theory that has been more clearly disproven over the past six years than the right wing’s inflation paranoia. But the fanatics are not giving up. Is there any evidence at all that would convince Schiff—and his many followers—he’s wrong?

Liveblogging the American Revolution: November 22, 176: Washington orders General Lee to New Jersey

Charles Lee Esq r Americanischer general major Charles Lee general Wikipedia the free encyclopediaWashington orders General Lee to New Jersey —

In what proved a fateful decision on this day in 1776, Continental Commander in Chief General George Washington writes to General Charles Lee in Westchester County, New York, to report the loss of Fort Lee, New Jersey, and to order Lee to bring his forces to New Jersey.

Lee wanted to stay in New York, so he dawdled in departing and crossing the small state of New Jersey to the Delaware River, where Washington impatiently awaited the arrival of his reinforcements. Lee, who took a commission in the British army upon finishing military school at age 12 and served in North America during the Seven Years' War, felt slighted that the less experienced Washington had been given command of the Continental Army and showed no inclination to rush.

Continue reading "Liveblogging the American Revolution: November 22, 176: Washington orders General Lee to New Jersey" »

Liveblogging World War II: November 21, 1944: The Sinking of the Battleship Kongo

World War II Today Follow the War as it happened

Commander Eli Reich: [World War II Today: Off Taiwan):

0020: Radar contact at 44,000 yards, on our starboard quarter, (Ship contact #3) three pips, very clear and distinct. Came to normal approach, went ahead flank on four engines, and commenced tracking. Overcast sky, no soon, visibility about 1500 yards, calm sea.

0043: Two large pips and two smaller pips now outlined on radar screen at a range of 35,000 yards. These are the greatest ranges we have ever obtained on our radar. Pips so large, at so great a range, we first suspected land. It was possible to lobe switch on the larger targets at 32,000 yards – we now realized we probably had two targets of battleship proportions and two of larger cruiser size as our targets. They were in a column with a cruiser ahead followed by two battleships, and a cruiser astern, course 060 T, speed 16 knots. not zigging.

Continue reading "Liveblogging World War II: November 21, 1944: The Sinking of the Battleship Kongo" »

Afternoon Must-Read: Walt Mossberg and Kara Swisher: Re/code Removes Comments

Walt Mossberg and Kara Swisher: A Note to Re/code Readers: "The biggest change for some of you...

...however, will be that we have decided to remove the commenting function from the site. We thought about this decision long and hard, since we do value reader opinion. But we concluded that, as social media has continued its robust growth, the bulk of discussion of our stories is increasingly taking place there, making onsite comments less and less used and less and less useful.... We believe that social media is the new arena for commenting, replacing the old onsite approach that dates back many years...

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:

Continue reading "Noted for Your Lunchtime Procrastination for November 21, 2014" »

Morning Must-Read: Paul Krugman: Structural Deformity

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.

Over at Equitable Growth: Night Thoughts on Martin Wolf's Shocking Shifts: Daily Focus

Cthulhu Google SearchOver at Equitable Growth: Martin Wolf's column this week contains a very nice precis of the main argument of his recent The Shifts and the Shocks:

Martin Wolf: The Curse of Weak Global Demand: "This feeble performance--even the 6 per cent rise in real demand in the US...

...over more than six years is pathetic by historical standards--occurred despite the most aggressive monetary policies in history.... Yet this has not been nearly enough.... How do we explain such weak demand?... Three sets.... The first... stresses the post-crisis overhang of private debt and the damage to confidence caused by the sudden disintegration of the financial system.... The second... argues that the pre-crisis demand was unsustainable because it relied on huge accumulations of private and public debt.... The implication of this is that economies suffer not just from a post-crisis balance-sheet recession, but from an inability to generate credit-driven demand on the pre-crisis scale. Behind the unsustainability of pre-crisis demand lie global imbalances, shifts in income distribution and structurally weak investment.... The third set... points to a slowdown in potential growth, due to some combination of demographic changes, slowing rises in productivity and weak investment... feeds directly into the second.... The reason that extreme policy has been so ineffective is that the economies suffer from such deep-seated ailments. It is not just about weak supply. But it is also not just about weak demand. Nor is it just about the debt overhang or financial shocks. Each economy also has a different combination of ailments...

The deep-seated ailments that Wolf identifies are, I think, sixfold: READ MOAR

Continue reading "Over at Equitable Growth: Night Thoughts on Martin Wolf's Shocking Shifts: Daily Focus" »

Morning Must-Read: Robert Rubin: A First-Person History Lesson

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.

Liveblogging the Revoutionary War: November 20, 1776: The "Battle" of Fort Lee

NewImageThe Battle of Fort Lee:

Gen. William Howe ordered Gen. Lord Charles Cornwallis to capture Fort Lee. The plan was to trap the American army between the Hackensack River and the Hudson River. With a force of 4,000-6,000 British soldiers, Cornwallis crossed the Hudson River in a rainstorm and landed about 6 miles north of the fort and marched south.

Continue reading "Liveblogging the Revoutionary War: November 20, 1776: The "Battle" of Fort Lee" »

Liveblogging the American Revolution: November 19, 1776: Washington to Congress

NewImageThe writings of George Washington:

Hackensack, November 19, 1776

To the President of Congress:

Sir: I have not been yet able, to obtain a particular account of the unhappy affair of the 16th, nor of the Terms on which the Garrison surrendered. The Intelligence that has come to hand, is not so full and accurate as I could wish. One of the Artillery, and whose information is most direct, who escaped on Sunday night says the Enemy's loss was very considerable, especially in the attack made above the Fort by the Division of Hessians that Marched from Kingsbridge, and where Lieut. Colo Rawlings of the late Colo. Stevenson's Regiment was posted.

Continue reading "Liveblogging the American Revolution: November 19, 1776: Washington to Congress" »

Morning Must-Read: Paul Krugman: The Unwisdom of Crowding Out

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...

Morning Must-Read: Ta-Nehisi Coates: The Rape Accusations Against Bill Cosby Must Not Be Ignored

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.

Hoisted from the Internet from One Year Ago: Whence the Right-Wing Confidence Back a Year Ago in ObamaCare's Failure?


Please read:

and tell me what is going on here. Anyone have any plausible answers for me?

The lack of any public or even private willingness to mark one's beliefs to market is amazing. As is the inexorable and irresistible desire to call the pitch a strike before the pitcher has even walked to the mound.

It's not as though either Cochrane or Epstein has the confidence that would have been created by a lifetime of calling the balls and strikes more accurately than anyone else that might have motivated such hubris.

Nor do either of them have any standing other than that that comes from a perception of being smart. One would think one would guard that by trying really hard not to say things that are really stupid. And one would think that they would have matched outcomes to their ex ante subjective distributions enough in their lives to correct for the possession-of-knowledge syndrome fact that your subjective probability distributions tend to be much too tight when you know something about a subject.

Or perhaps I have gotten it wrong?

Perhaps both Cochrane and Epstein believe that their real standing comes from being not smart but both (a) really clever and (b) really ideological--that their standing comes from their auditors' confidence that their arguments and positions (c) won't necessarily be correct but (d) will conform to their expected ideology and (e) will not be prima facie, ludicrously, and easily and immediately seen to be wrong.

The problem is that the (e) part no longer seems to hold...

And I get that for Epstein the root animus is the status insult at being put into the same category as females--that community rating is a mighty infringement on his liberty because it forces him to buy gynecological care as part of his essential benefits package. But the root emotional animus has to be translated into arguments and thoughts somehow, doesn't it?

Continue reading "Hoisted from the Internet from One Year Ago: Whence the Right-Wing Confidence Back a Year Ago in ObamaCare's Failure?" »

Noted for Your Morning Procrastination for November 19, 2014

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


Must- and Shall-Reads:

And Over Here:

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

Afternoon Must-Read: Charles Pierce: Here's Some Stupid For Lunch

What are the odds that future generations will not dismiss the stories of Fred Hiatt's shop at The Washington Post as improbable fictions? When Paul Krugman denounced "opinions of shape of earth differ" journalism, he was making a joke!

Charles Pierce: Here's Some Stupid For Lunch: "The editorial board of The Washington Post [serves up] the absolutely perfect Beltway word-souffle:

[Obama] has tried compromise, and the Republicans spurned him. We will not relitigate that last contention except to note that behind the legislative disappointments of the past six years lies fault on both sides.


Afternoon Must-Read: Mark Thoma: When Piketty Argued for Income Redistribution, He Changed Economics

Mark Thoma: When Piketty Argued for Income Redistribution, He Changed Economics: "Thomas Piketty’s Capital in the Twenty-First Century...

...has it changed anything within economics?... Piketty has... revive[d] the study of the distribution of wealth without violating the positive and normative distinction that economists hold so dear.... Whether or not Piketty is correct about the fundamental determinants of these distributions remains to be seen, but he deserves much credit.... Another thing Piketty deserves credit for is the revival of the historical, narrative methodology.... In his 1919 presidential address to the American Economic Association, Irving Fisher said, ‘The real scientific study of the distribution of wealth has, we must confess, scarcely begun as yet.’ Nearly a hundred years later that, along with a revival of historical methods and perspective, may finally be changing.

Over at Equitable Growth: Continuing on the "What Are Conservative Policy Ideas for Replacing ObamaCare?" Beat: (Early) Wednesday Focus

Over at Equitable Growth: I read Reihan Salam over at Slate.

My first, minor, thought is that the Slate editors seriously fell down on their job in failing to demand even a modicum of intellectual consistency here. Let me endorse Brian Buetler:

Brian Buetler: Reihan Salam Obamacare Article Shows Why the Debate Will Never End: " Salam laments that Democrats tailored their health care legislation... obscure and delay transfers so that budget analysts wouldn’t treat the law as they might a single-payer program where... everything coming in is a tax, and everything going out is an expenditure.... The right’s memory has grown conveniently spotty.... In 2011, in a different context, Salam mocked the kind of scolding he’s now directing at Obama. ‘Ah, he made the program marginally less politically poisonous, which will make it harder for us to demonize him. Now let’s attack him for hypocrisy!’ he wrote, paraphrasing critics. The policy architect in that instance was Paul Ryan, who proposed phasing out the existing Medicare program, but only after 10 years, and only for future retirees. At the time, Salam didn’t believe his opponents’ rhetorical strategy had much merit. ‘I mean, I get it,’ he added. ‘But also: let’s move on'...

My second, big, thought is that there are no live policy ideas--that the Republicans are now the captives of the nihilists they have turned their activist base into, and that their only strategy now is to hope that somehow, some way, ObamaCare can be made to collapse. READ MOAR

Continue reading "Over at Equitable Growth: Continuing on the "What Are Conservative Policy Ideas for Replacing ObamaCare?" Beat: (Early) Wednesday Focus" »

More Wingnut Scat: Pop-Unders Left After Visiting the Websites of National Review and The American Spectator...: Live from the Roasterie

NewImageConservataria is a terrifying place--largely because a great many people have decided that they are going to make money by terrifying conservatarians, or by selling the eyeballs of their readers to people who are going to make money by terrifying conservatarians. And, yes, I am looking at you, National Review and American Spectator. You know better. And you do it anyway..

In today's pop-unders left after visiting National Review and the American Spectator:

Dear Reader,

THIS JUST IN: An insider near Washington D.C. has just blown the lid off the 7 Deadly Drugs the U.S. Government can't wait for you to swallow.

I wish I could say this was just a conspiracy theory, but this whistleblower has concrete evidence "the powers that be" are shoving pure poison down your throat... and laughing all the way to the bank, while you're carted off to the graveyard.

Who knows how long this list will be up before "Big Brother" catches on... so don't wait a moment longer. Click here now for the full list.

To knowing the truth,

Paul Amos
Associate Director, HSI

P.S. You won't believe what innocent little pill rounds out the list at #1. If you're taking it regularly, you're 530% more likely to die TONIGHT. Make sure it's not in your medicine cabinet. Click here for the full list.

Continue reading "More Wingnut Scat: Pop-Unders Left After Visiting the Websites of National Review and The American Spectator...: Live from the Roasterie" »

Lunchtime Must-Read: Robert F. Martin et al.: Potential Output and Recessions: Are We Fooling Ourselves?

Robert F. Martin et al.: Potential Output and Recessions: Are We Fooling Ourselves?: "The economic collapse in the wake of the global financial crises (GFC)...

...and the weaker-than-expected recovery in many countries have led to questions about the impact of severe downturns on economic potential. Indeed, for several major economies, the level of output is nowhere near returning to pre-crisis trend (figure 1). Such developments have resulted in repeated downward revisions to estimates of potential output by private- and public-sector forecasters. In addition, this disappointment in post-recession growth has contributed to concerns that the U.S. economy, among others, is entering an era of secular stagnation. However, the historical experience of advanced economies around recessions indicates that the current experience is less unusual than one might think. First, output typically does not return to pre-crisis trend following recessions, especially deep ones. Second, in response, forecasters repeatedly revise down measures of trend...

FRB Potential Output and Recessions Are We Fooling Ourselves

Morning Must-Read: James Pethokoukis: The GOP Needs to Rethink Its Approach to Tax Cuts

James Pethokoukis: The GOP needs to rethink its approach to tax cuts: "Steve Moore... doesn’t like the conservative idea...

...of cutting the tax burden and increasing take-home pay of American parents by expanding the child tax credit.... So the Republican Party — tagged as the 'party of the rich'--should head into 2016 with a plan to cut taxes on the rich and raise them on working class Americans? Hmm. (And by the way, there doesn’t seem to be any evidence that turning people into non-income taxpayers nudges them into greater support for expanding government.) Anyway, what should the GOP pitch to the middle-class be, according to Moore? This: cutting the top income tax rate would boost GDP growth, which in turn would broadly boost middle-class incomes.... When incomes for the top 1% have risen by 200% over the past three decades vs. for 40% for the middle class, it’s not surprising that Americans wonder about the wisdom of cutting top tax rates...

Morning Must-Read: Ed O'Keefe: Supreme Court Justice Samuel Alito Fails to Quote Straight

Ed O'Keefe: Samuel Alito Fails to Quote Straight: "'Some of the columns that are written... know, are another story,' Alito said, in a rare public lecture on Constitutional history and law presented by the New York Historical Society on Saturday. 'Some of them are written by people who are not very knowledgeable.... I was reading one, actually, reading one this morning that was complaining about the current membership of the Court, because unlike in past days, according to this columnist, we don't have a representation of drunks, philanderers, and a few, you know, a few other n'er do wells.'... [Dahlia Lithwick's] column.... 'Compared with the political operators, philanderers, and alcoholics of bygone eras, they are almost completely devoid of bad habits or scandalous secrets. This is, of course, not a bad thing.' American legal scholar and Yale University professor Akhil Reed Amar, who moderated the discussion and referred to Alito by his first name throughout the event, politely described the column as 'interesting', and quickly moved on to other topics...

Noted for Your Morning Procrastination for November 18, 2014

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


Must- and Shall-Reads:

And Over Here:

Continue reading "Noted for Your Morning Procrastination for November 18, 2014" »

Over at Equitable Growth: RomneyCare Has Always Been at War with Eastasia!: Tuesday Focus


Over at Equitable Growth: Various wingnuts have started emailing me Jon Gruber videos. In them, Jon Gruber says what Gruber has always said about ObamaCare:

  • That the Cadillac Tax was an unnecessarily complex and inverted long-run Rube Goldberg way of accomplishing McCain's 2008 goal of eliminating the tax preference for employer sponsored coverage.

  • That CBO's distinction between mandates and taxes was unhelpful in either building a well-working system or understanding how it would work.

  • That the gamble that cost-control measures would be effective in the long-run was a gamble.

And the very sharp Jon Cohn agrees with me: READ MOAR

Continue reading "Over at Equitable Growth: RomneyCare Has Always Been at War with Eastasia!: Tuesday Focus" »

Liveblogging World War I: November 18, 1914: The Newcastle Herald Complains

NewImageWWI in the Herald: November 18, 1914:

It is apparent, from the unaffected and easy-going character of many of the young members of the defence forces now in encampment in the Newcastle district; that military supervision upon their movements, when away from camp, is not as strict as it should be.

Continue reading "Liveblogging World War I: November 18, 1914: The Newcastle Herald Complains" »

Hoisted from Other People's Archives: The First Inaugural Address of Franklin D. Roosevelt Could Be About the Masters of Europe Today...


Franklin D. Roosevelt: First Inaugural Address: "Values have shrunken to fantastic levels...

...taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Continue reading "Hoisted from Other People's Archives: The First Inaugural Address of Franklin D. Roosevelt Could Be About the Masters of Europe Today..." »

In Which I Confess, Once Again, That I Do Not Understand the Argument for the Taper as Long as Inflation is Below Its Target...: Monday Focus

Graph Personal Consumption Expenditures Excluding Food and Energy Chain Type Price Index FRED St Louis FedOver at Equitable Growth:

Continue reading "In Which I Confess, Once Again, That I Do Not Understand the Argument for the Taper as Long as Inflation is Below Its Target...: Monday Focus" »

Over at Equitable Growth: Am I Imagining a Golden Age That Never Was?: (Late) Friday Focus

Cthulhu Google SearchOver at Equitable Growth: Not to pick on Mr. David Rennie especially--simply this piece of his struck me as very characteristic of a great deal of what I read in the Economist these days (outside its But:

Economist: The Nostalgia Trap: Politicians need to stop pretending to angry voters that globalisation can be wished away: "THE public is losing faith in the American Dream...

...Mitch McConnell declared.... Now begins a more important contest, Mr McConnell told Kentucky Republicans: the race to save the centuries-old ‘compact’ that every American generation leaves the next one better off. Mr McConnell declared that promise imperilled by ‘distant planners in federal agencies’, whether they are killing jobs in coal mines or--in their zeal to impose Obamacare--cancelling families’ health insurance plans.... Republicans such as Mr McConnell are right to criticise government when it overreaches. But it is a stretch to suggest that reining in environmental rules on coal, or even repealing Obamacare, can revive the American Dream.... Coal mines, steel mills and factories have closed throughout the rich world, in countries with very different governments, labour laws and environmental rules.... READ MOAR

Continue reading "Over at Equitable Growth: Am I Imagining a Golden Age That Never Was?: (Late) Friday Focus" »

David Graeber Smackdown Watch: The Gedrosian Desert of Essentialist Anti-Europeanism Edition

NewImageThe continued absence of high-quality DeLong smackdowns on the internet distresses me.

It distresses me because it means that today, once again, for our Monday Smackdown Watch, we must continue our death-march read (see the [backstory][c]) of chapter 11 of David Graeber's Debt: The First 5000 Mistakes.

By now I am desperately hoping that I will come across even a single kindle screen that does not have egregious errors of fact or analysis on it--one single screen in which what Graeber says is at least arguably right. We are talking Alexander the Great's army in the Gederosian Desert here.

But this is not that day.

Today I read only one kindle screen before collapsing into a fit of some sort:

Continue reading "David Graeber Smackdown Watch: The Gedrosian Desert of Essentialist Anti-Europeanism Edition" »

Afternoon Must-Read: Rob Dent et al.: Measuring Labor Market Slack: Are the Long-Term Unemployed Different?

Rob Dent et al.: Measuring Labor Market Slack: Are the Long-Term Unemployed Different?: "There has been some debate...

...Krueger, Cramer, and Cho (2014) and Gordon (2013) about whether the short-term unemployment rate is a better measure of slack than the overall unemployment rate.... The two measures are sending different signals.... One can argue that the unemployment rate is exaggerating the extent of underutilization in the labor market, based on the premise that the long-term unemployed are, in practice, out of the labor force and likely to exert little pressure on earnings. If this is indeed the case, inflationary pressures might start building up sooner than suggested by the overall unemployment rate. In a three-part series, we study the available evidence on the long-term unemployed and argue against this premise. The long-term unemployed should not be excluded from measures of labor market slack...

Afternoon Must-Read: Adair Turner: Printing Money to Fund Deficit Is the Fastest Way to Raise Rates

Adair Turner: Printing money to fund deficit is the fastest way to raise rates - "What is the right course for monetary policy?...

...The International Monetary Fund seems to answer with forked tongue. Its latest World Economic Outlook urges that monetary policy should stay loose to stimulate growth. Yet its Global Financial Stability Review warns that loose monetary policy risks creating financial instability.... In fact the best policy is to print money and raise interest rates. That sounds contradictory, but it is not.... Most countries have opted to combine fiscal tightening with ultra-loose monetary policy, setting short-term interest rates close to zero and using quantitative easing to reduce long-term rates and boost asset prices. But... sustained low interest rates create incentives for highly leveraged financial engineering.... The Bank for International Settlements therefore argues that monetary policy should be tightened as well as fiscal, but that would depress demand yet further.

We should indeed seek a swift return to higher interest rates, to remove the dangerous subsidy to high leverage.... The best way to do that, particularly in Japan and the eurozone, would be to deploy a variant of Friedman’s idea of dropping money from a helicopter. Government deficits should temporarily increase, and they should be financed with new money created by the central bank and added permanently to the money supply. Money-financed deficits would increase demand without creating debts that have to be serviced. This would lift either real output or inflation and allow interest rates to return to normal more quickly...

Afternoon Must-Read: Larry Mishel: Washington Post “Wage Freeze” Brain Freeze

Larry Mishel: Washington Post “Wage Freeze” Brain Freeze: "Mostly the Washington Post issues a smug assessment...

...that ‘[n]othing in the last four decades refutes the basic case for flexible, innovative, American-style capitalism’ but then immediately negates this conclusion by saying ‘if the system doesn’t work for the middle class, it really isn’t working at all.’ If, in fact, the economy is not working for most everybody then perhaps it is worth challenging the way the economy operates, including many of the ways the Post advocates it should operate!

Afternoon Must-Read: Paul Krugman: Contractionary Policies Are Contractionary

Paul Krugman: Contractionary Policies Are Contractionary - "Terrible numbers from Japan....

...The ill-considered sales tax hike of the spring is still doing major damage.... So contractionary policy is contractionary. I could have told you that, and in fact have told you that again and again. But some people still don’t get the message. In Germany, the Bundesbank president opposes expansionary monetary policy because it might reduce the pressure for fiscal austerity: ‘Such purchases might create new incentives to run up debt, besides adding to the reform fatigue in a number of countries’....

That’s actually quite an awesome concern to express at this moment. European recovery has stalled, largely thanks to fiscal contraction; inflation is far below target, and outright deflation looms; and the political basis for the European project is coming apart at the seams. And Weidmann worries that monetary expansion might make life too easy for debtors. But as Wolfgang Munchau says in a terrific column today, 'German economists roughly fall into two groups: those that have not read Keynes, and those that have not understood Keynes'....

How does this end? We have to keep pounding on the issues, and I’m reasonably sure that Draghi and co get it. But with the largest player on the European scene living in a fantasy world, the best guess has to be that nothing much is done until there is complete political crisis, with anti-European nationalists taking over one or more major nations.

Afternoon Must-Read: Ron Fournier of the National Journal Writes the Worst Two Paragraphs You'll Read Today

Matthew Yglesias: The worst two paragraphs about American politics you'll read today: "Ron Fournier, like many of us... frustrated with the state of American politics.... He explains that the big problem with Obama's approach was failing to take a page from the Massachusetts universal health care program that is in fact the model for Obamacare:

On health care, we needed a market-driven plan.... Just such a plan sprang out of conservative think tanks and was tested by a GOP governor in Massachusetts, Mitt Romney. Instead of a bipartisan agreement to bring that plan to scale, we got more partisan warfare. The GOP resisted, Obama surrendered his mantle of bipartisanship, and Democrats muscled through a one-sided law that has never been popular with a majority of the public.

It is true that we did not get a bipartisan agreement. It is true that the GOP resisted. It is true that the law is unpopular. But Obama didn't surrender his mantle of bipartisanship. The GOP took it away from him. They took it away from his as part of a deliberate strategy. They knew, as Fournier says right in this very column, that a big bipartisan health reform would be more popular than a big partisan health reform. So since Republicans didn't want Obama to be popular, they had every incentive to refuse to reach a bipartisan agreement. And thus no agreement was reached.

But... Obama and congressional Democrats delivered exactly the kind of reform Fournier says America needed. Shouldn't they be congratulated?... In substance, you still have a program... on the Massachusetts model.... It's also not something Obama bungled. It's a consequence of mismatched incentives in Washington.... The opposition party would like the president to not be associated with bipartisan initiatives.... If you don't understand that, you'll never understand today's politics. Worse, you'll be consistently making bipartisanship less likely. It's precisely because of columns like this one that it made narrow political sense for the GOP to abjure compromise. Why bargain if any failure to reach agreement will be blamed on the president?

Kansas Announces Big Budget Gap, but True Gap May Be Even Larger: Live from the Roasterie

Thanks to the Republican election victory in Kansas this cycle--and thanks to the inability of moderate Republicans (we are looking at you, Bob Dole and Nancy Kassebaum) to get their act together to defend the civilization on the prairie that my ancestors started to build before theirs ever got here--the voters of Kansas continue their attempt to transform it into a Texas--but with little oil, hostile to Hispanics, and with days in November when it is fifteen degrees.

The extremely-sharp yet still Republican Josh Barro reports:

Continue reading "Kansas Announces Big Budget Gap, but True Gap May Be Even Larger: Live from the Roasterie" »

Noted for Your Evening Procrastination for November 16, 2014

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


Must- and Shall-Reads:)

And Over Here:

Continue reading "Noted for Your Evening Procrastination for November 16, 2014" »

Liveblogging the American Revolution: November 16, 1776: Fort Washington Is Captured


: This Day in History:

Hessian Lieutenant General Wilhelm von Knyphausen and a force of 3,000 Hessian mercenaries and 5,000 Redcoats lay siege to Fort Washington at the northern end and highest point of Manhattan Island. Throughout the morning, Knyphausen met stiff resistance from the Patriot riflemen inside the fort, but by afternoon, the Patriots were overwhelmed, and the garrison commander, Colonel Robert Magaw, surrendered. Nearly 3,000 Patriots were taken prisoner, and valuable ammunition and supplies were lost to the Hessians. The prisoners faced a particularly grim fate: Many later died from deprivation and disease aboard British prison ships anchored in New York Harbor.

Continue reading "Liveblogging the American Revolution: November 16, 1776: Fort Washington Is Captured" »

Weekend Reading: Jason Zweig from Fifteen Years Ago on the Internet Bubble

Screenshot 10 3 14 6 17 PM

Jason Zweig: Don't believe the hype about Internet stocks and funds:

For the next few months, perhaps even for a year or two, this may seem like one of the stupidest investing columns ever written. That's because I've been asked to answer the question "Can you get rich by buying an Internet stock fund?" and my answer is no.

Continue reading "Weekend Reading: Jason Zweig from Fifteen Years Ago on the Internet Bubble" »

Evening Must-Read: Mike Konczal: The UNC Coup and the Second Limit of Economic Liberalism

Mike Konczal: The UNC Coup and the Second Limit of Economic Liberalism: "There was a quiet revolution in the University of North Carolina...

...higher education system in August, one that shows an important limit of current liberal thought.... The UNC System Board of Governors voted unanimously to cap the amount of tuition that may be used for financial aid for need-based students at no more than 15 percent.... As a board member told the local press, the burden of providing need-based aid ‘has become unfairly apportioned to working North Carolinians,’ and this new policy helps prevent that.... The problem for liberals isn’t just that there’s no way for them to win this argument with middle-class wages stagnating.... The far bigger issue for liberals is that this is a false choice, a real class antagonism that has been created entirely by the process of state disinvestment, privatization, cost-shifting of tuitions away from general revenues to individual, and the subsequent explosion in student debt. As long as liberals continue to play this game, they’ll be undermining their chances...

Evening Must-Read: Wolfgang Munchau: The Wacky Economics of Germany’s Parallel Universe

Wolfgang Munchau: The wacky economics of Germany’s parallel universe: "German economists roughly fall into two groups: those that have not read Keynes...

...and those that have not understood Keynes. To describe the economic mainstream in Germany as conservative misses the point.... As compelling as a comparison between the German mainstream and the Tea Party may appear, it does not survive scrutiny.... A good example of orthodox dogma was last week’s annual report of the Council of Economic Experts.... They did not criticise a lack of investment, excessive current account surpluses or overzealous fiscal rectitude. Instead they criticised the minimum wage and some minor relaxation to the retirement age. In other words: they want the government of Angela Merkel, chancellor, to be even tougher.... Macroeconomics in Germany and elsewhere are tantamount to parallel universes. In practice, German macroeconomic exceptionalism did not really matter all that much--until recently, when it started to matter a lot. When you have your own currency and engage with the rest of the world mainly through trade, a wacky ideology is your problem. That changes when you enter a monetary union, which is when policy makers have to work together..."

Morning Must-Read: Kevin Drum: People Who Use Obamacare Sure Do Like It

Kevin Drum: People Who Use Obamacare Sure Do Like It: "Jonathan Cohn points us today to a Gallup poll...

...with yet more good news for Obamacare.... The people who are actually using Obamacare... 74 percent said the quality of health care they received was good or excellent, and 71 percent said the overall coverage was good or excellent. What's remarkable is that these numbers are nearly the same as those for everyone else with health insurance, which includes those with either employer coverage or Medicare. Here's the bottom line from Cohn:

You hear a lot about what’s wrong with the coverage available through the marketplaces and some of these criticisms are legitimate. The narrow networks of providers are confusing, for example, and lack of sufficient regulations leaves some patients unfairly on the hook for ridiculously high bills. But overall the plans turn out to be as popular as other forms of private and public insurance. It’s one more sign that, if you can just block out the negative headlines and political attacks, you’ll discover a program that is working.

Republicans can huff and puff all they want, but the evidence is clear: despite its rollout problems, Obamacare is a success...

Liveblogging World War II: November 15, 1944: Marshall to Draper

NewImageGeorge Marshall to Colonel William H. Draper, Jr., November 15, 1944: "To Colonel William H. Draper, Jr.1

Dear Draper:

I just learnt yesterday that your boy had been lost in France and I want you to know that you have my deep sympathy. This war has reached a stage where it is sparing few families in this country and I fear that worse is still to come before we reach a victorious conclusion.

I have had you in mind for a long time, feeling that you had suffered very hard luck in being deprived of troop opportunity. However, General Somervell tells me the services you are now rendering are of such great importance that he does not feel that he can release you at the present time. Should an opportunity arise you may be sure that I will try to further your chances for overseas service.

Again with my sympathy,

Faithfully yours,