Afternoon Must-Read: William Barnett, ed.: Rational Expectations: A Panel Discussion
Afternoon Must-Read: Paul Krugman: "I find myself in meetings...

Noted for Your Afternoon Procrastination for December 31, 2014

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


Must- and Shall-Reads:

And Over Here:

  1. William Barnett, ed.:: Rational expectations: A Panel Discussion: "Kevin Hoover: 'Kevin Hoover: Bob, did you want to comment on that? You’re looking unhappy, I thought.' Robert Lucas: 'No. I mean, you can’t read Muth’s paper as some recipe for cranking out true theories about everything under the sun.... My paper on expectations and the neutrality of money was an attempt to get a positive theory about what observations we call a Phillips curve. Basically it didn’t work.... I thought my model was going to explain price stickiness, and it didn’t. So we’re still working on it.... I don’t think we have a satisfactory solution... but I don’t think that’s a cloud over Muth’s work. If Jack [Muth] thinks it is, I don’t agree with him. Mike [Lovell] cites some data that Jack [Muth] couldn’t make sense out of using rational expectations.... There’re a lot of bad models out there. I authored my share, and I don’t see how that affects a lot of things we’ve been talking about earlier on about the value of Muth’s contribution.... You know, people had no trouble having financial meltdowns in their economies before all this stuff we’ve been talking about came on board. We didn’t help, though; there’s no question about that. We may have focused attention on the wrong things; I don’t know...'"

  2. Duncan Black: Does Anybody Remember MOOCs?: "They were all anybody who wrote about education would talk about for awhile. Where did that all go? Apparently administrators finally figured out that a 'course in a box' actually costs a lot of money, that it doesn't scale nearly as well as they hoped, that they are a substitute for 'learning from a book' not 'learning from a person,' and you can't charge $50,000 per year tuition simply because your prestigious name will be on the online course degree. I knew all of this because I saw people experimenting with online courses... 15 years ago. The technology, except maybe easy use of video (you could use video, it was just a bit more of a pain), was all there then..."

  3. Paul Krugman: Keynesians and the Volcker Disinflation: "Right-wing economists like Stephen Moore and John Cochrane--it’s becoming ever harder to tell the difference--have some curious beliefs.... One... is that the experience of disinflation in the 1980s was a huge shock to Keynesians, refuting everything they believed. What makes this belief curious is that it’s the exact opposite of the truth. Keynesians came into the Volcker disinflation... with a standard... model.... And events matched.... Cutting inflation would require a temporary surge in unemployment. Eventually, however, unemployment could come back down to more or less its original level; this temporary surge in unemployment would deliver a permanent reduction in the inflation rate, because it would change expectations.... [That's] what the Volcker disinflation actually looked like.... It was the other side of the macro divide that was left scrambling for answers. The models Chicago was promoting in the 1970s, based on the work of Robert Lucas and company, said that unemployment should have come down quickly.... Those models were unsustainable in the face of the data. But... most of those guys went into real business cycle theory--basically, denying that the Fed had anything to do with recessions. And from there they just kept digging ever deeper into the rabbit hole...

  4. Laura Tyson and Lenny Mendonca: Obamacare and Effective Government: "When historians look back on the United States’ Patient Protection and Affordable Care Act... they will not devote much attention to its regulations, its troubled insurance exchanges, or its website’s flawed launch... [but] on how ‘Obamacare’ encouraged a wave of innovation that gradually tamed the spiraling costs of a dysfunctional system, even as millions of previously excluded Americans gained access to health insurance..."

  5. Duncan Black: Eschaton: Um Because Even Proponents Never Had Any Explanation For How It Would Work?: "1) Destroy demand in the middle of a depression. 2) ??. 3) Cure depression!!! Nowhere have austerity policies been more aggressively tried — and generally failed to live up to results promised by advocates — than in Greece. After more than four years of belt tightening, patience is wearing thin, and tentative signs of improvement have not yet trickled down into the lives of average Greeks. At least US 'trickle down' isn't completely implausible. Give money to rich people and maybe they'll buy some stuff from the rest of us! I'm not sure how belt tightening is supposed to trickle down. Perhaps we should ask the Wookies on Endor."

Should Be Aware of:


  1. Kaleberg: Liveblogging World War II: December 27, 1944: FDR Seizes Montgomery Ward: "I live in a former lumber town and the locals are angry that the timber business isn't what it used to be. At one time, everyone worked cutting down trees and making wood products and was paid enough to buy a house and raise a family. Being a lumber man wasn't always like that. In the late 19th century lumberjacks were poorly paid and the town was full of bars and whore houses. During WWI, the government seized the lumber business and imposed a labor contract to provide wood and wood products for the war effort. Employers rarely raise wages just because productivity is rising or business is good. It requires united labor action or government intervention, and usually both. P.S. The business is still here, but it is ever more automated. A logging truck with a loader turns two men into a whole crew. It's also still dangerous. We lose one or two men, usually tree fellers, every year according to the local paper. The pay is still good, but you can't run a whole town on it anymore."

  2. Charles Murray (1979): Juvenile Corrections and the Chronic Delinquent: "The data do point unequivocally, we believe, to this: the grounds for debate about juvenile corrections must be shifted. The rhetoric that has guided national legislation and the policies of the Office of Juvenile Justice and Delinquency Prevention is based on the premise that corrections "only makes kids worse." That premise mayor may not be true on some dimensions. No one really knows. But in terms of delinquent behavior, corrections does not make kids worse. It makes them better. Much better, from the point of view of the community that must live with them."


  • Erik Lund: "[Webb:] 'When you bear in mind that hardly any emigrants left "Scotch-Ireland" in the Eighteenth Century--and that they show up on the frontier rather than in the port cities, I think there's actually a pretty strong case that the Scotch-Irish are the real Americans.' One just needs a slightly different understanding of why that's the case. (To lower the tone of the snark, I believe the mtDNA evidence bears out the hypothesis that the increasing Scotch-Irish population of the frontier represents an ethnogenesis of Metis as Americans through the vehicle of baptismal-certificate-less Presbyterian churches.)"

  • Gary P.: "As a software designer, I know that software tends to either: 1) Handle most of the work automatically, leaving a need for the top end workers to handle the tough cases that weren't worth automating; or 2) Simplify the job so much that most of the work can be done by people with much lower levels of skill (in extreme cases, the customers themselves!). So it tends to eliminate middle skill jobs in either case, and sometimes low skill ones. (in the longer term, it introduces the challenge of how you train the folks to work on the tough cases if there are no easy cases for them to learn from, which can lead to those "I can't find anyone to do the work" situations even when you've laid off 80% of the workers over the previous 10 years)."

  • Bloix: "Baum had one life-long political commitment, and that was to equal rights for women. You see this theme through the series, in which women and girls are the primary movers (good and bad), and the male characters are feckless or passive or at best helpful sidekicks. The second Oz book even introduces a transsexual character - a teenaged orphan boy called Tip who is revealed to be a girl bewitched in infancy. She is returned to her true nature and becomes Princess Ozma, heir to the throne of Oz, and serves as a wise and benevolent ruler for the rest of the series. As for populism, Baum worked as a newspaper owner and editor in South Dakota for a couple of years (1890-91) and he was no populist. As editor he had to have political views, and he wrote as a firm Republican. He viewed the "Independents" (who became the Populists) as momentarily disaffected Republicans. They were "our friends and brothers, honorable and good men who are just now in a fit of the sulks." The paper went broke during the drought of the early '90's. Baum moved to Chicago and made ends meet in a number of jobs, none of which were remotely political. By the time he wrote the Wonderful Wizard of Oz at the end of the decade, he had had no occasion to express any active political views for several years. IMHO, the references to populism - more accurately, to bimetallism and Bryan - were intentional send-ups. It's not credible that the Yellow Brick Road, the silver slippers, and Oz (ounce) are coincidental. And once you have those three, the temptation to look for others is irresistible. But there's is no coherent allegory that anyone has yet agreed on. There's a precedent that helps explain Baum's method. In 1890, a competing newspaper in South Dakota printed a sort of Edward Bellamy "Looking Backward" article called "The Wonderful Updyke Farm," which imagined a future utopia in which the dry valley was transformed by electric-powered irrigation and all the hard chores were performed by electricity. Baum wrote a parody in his paper about the "Downditch Farm" in which "'lectricity" powered all sorts of other fantastical things, including the farmer himself. Baum wasn't arguing against electrification, he was just expressing skepticism in this idyllic future, and he did it by fantastical exaggeration. Again IMHO, Baum was using fantasy to the same effect in WWoO, which is more a tweaking of the bimetallists' noses than a careful allegory."