Previous month:
November 2014
Next month:
January 2015

December 2014

Weekend Reading: Rick Perlstein in Democracy Journal on Why Jacob Weisberg's Reviewing License Should Be Withdrawn

Over at Democracy Journal:

Rick Perlstein: The Reason for Reagan, Democracy Journal: Understanding Ronald Reagan requires looking beyond clichés to the cultural climate of the time. A response to Jacob Weisberg:

In 1980, the year Ronald Reagan won his first landslide presidential victory, pollsters at National Opinion Research Corporation asked Americans whether they thought, as Reagan did, that ‘too much’ was being spent on welfare, health, education, environmental, and urban programs. Only 21 percent did—the same percentage as had answered that way in 1976. The number that favored ‘keeping taxes and services about where they are’ was a healthy plurality, 45 percent—the exact same result as in 1975. READ MOAR

Continue reading "Weekend Reading: Rick Perlstein in Democracy Journal on Why Jacob Weisberg's Reviewing License Should Be Withdrawn" »

Noted for Your Nighttime Procrastination for December 21, 2014

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


On Twitter:

Must- and Shall-Reads:

And Over Here:

Continue reading "Noted for Your Nighttime Procrastination for December 21, 2014" »

Evening Must-Read: William H. Davidow and Michael S. Malone: What Happens to Society When Robots Replace Workers?

William H. Davidow and Michael S. Malone: What Happens to Society When Robots Replace Workers?: "Henry Adams... estimated that power output...

between 1840 and 1900 [had] a compounded rate of progress of about 7% per year.... 1848... speed... 60 miles per hour. A century later... 600... a rate of progress of only about 2% per year. By contrast, progress today comes rapidly... semiconductor technology has been progressing at a 40% rate for more than 50 years. These rates of progress are embedded in the creation of intelligent machines, from robots to automobiles to drones, that will soon dominate the global economy.... We will soon be looking at hordes of citizens of zero economic value. Figuring out how to deal with the impacts of this development will be the greatest challenge facing free market economies in this century...

Evening Must-Read: Nauro Campos: The Riddle of Argentina

Nauro Campos: The Riddle of Argentina: "Argentina is the only country in the world that was...

...'developed’ in 1900 and ‘developing’ in 2000.... Financial development and institutional change are [probably] two main factors behind the unusual growth trajectory of Argentina over the last century.... Some argue that the decline started with the Great Depression (e.g. Diaz-Alejandro 1985)... Taylor (1992) argues for 1913.... Yet by 1947 Argentina was still ranked 10th in the world in terms of per capita income and della Paolera and Taylor (2003) estimate that the ratio of Argentina’s to the OECD’s income declined to 84% in 1950, to 65% in 1973, and then to 43% in 1987. It rebounded in the 1990s but with the run-up to the 2001 crisis again reverted....

The PGARCH multivariate analysis reveals a robust positive effect of the development of domestic financial institutions (private and savings bank deposits to GDP) as well as a negative growth effect from the instability of informal institutions (chiefly general strikes and guerilla warfare). As for the indirect effects on economic growth (through growth volatility), the results support negative roles for formal political instability (constitutional changes) and trade openness....

The main lesson... is one that economic historians already knew... institutions do matter but among them, political institutions and financial institutions seem fulcral...

(Early) Monday DeLong Smackdown Watch: Paul Krugman: The Simple Analytics of Monetary Impotence

Cthulhu Google Search

Paul Krugman: The Simple Analytics of Monetary Impotence: "Monetary policy at the zero lower bound....

...Many... economists... don’t know about an analytical approach that, it seems to me, lets you cut through most of the confusion.... An infinite-horizon model... all the action takes place in period 1.... P* is the period 2 price level, C* the period 2 consumption level... un-asterisked symbols refer to period 1... no investment, just consumption....

What determines period 1 consumption?... If we have rational expectations and frictionless capital markets--which we don’t, but let’s see what would happen if we did--the... ratio of marginal utilit[ies]... equal[s] the relative price of consumption in the two periods, where the relative price is the real discount rate.... Assume logarithmic utility, so that marginal utility is 1/C. Then... C = C*(P*/P)/(1+r).... [This] Euler equation... lets us read off current consumption from future consumption, current and future price levels, and the interest rate....

Continue reading "(Early) Monday DeLong Smackdown Watch: Paul Krugman: The Simple Analytics of Monetary Impotence" »

Liveblogging World War II: December 21, 1944: Siege of Bastogne


Wikipedia: Siege of Bastogne :

The 101st Airborne formed an all-round perimeter using the 502nd PIR on the northwest shoulder to block the 26th Volksgrenadier, the 506th PIR to block entry from Noville, the 501st PIR defending the eastern approach, and the 327th GIR scattered from Marvie in the southeast to Champs in the west along the southern perimeter, augmented by engineer and artillery units plugging gaps in the line. The division service area to the west of Bastogne had been raided the first night, causing the loss of almost its entire medical company, and numerous service troops were used as infantry to reinforce the thin lines. CCB of the 10th Armored Division, severely weakened by losses to its Team Desobry (Maj. William R. Desobry), Team Cherry (Lt. Col. Henry T. Cherry), and Team O'Hara (Lt. Col. James O'Hara) in delaying the Germans, formed a mobile 'fire brigade' of 40 light and medium tanks (including survivors of CCR 9th Armored Division and eight replacement tanks found unassigned in Bastogne).

Continue reading "Liveblogging World War II: December 21, 1944: Siege of Bastogne" »

Guy Vidra's Open Letter to "New Republic" Readers

Guy Vidra: Open Letter to New Republic Readers: "I started my career in journalism...

...My first job out of college was as a junior editor for a small publication in Dublin, Ireland. When I moved back to the United States, I worked as a copy editor for a company many do not remember today called Bridge News. At the time, Bridge was one of the largest financial news providers in the world but was quickly displaced by a faster moving competitor, Bloomberg. It was the first of many times in my career when I witnessed a traditional media outlet upended by a new competitor on the landscape.

Continue reading "Guy Vidra's Open Letter to "New Republic" Readers" »

Weekend Reading: Karl Whelan: Thoughts on “Teaching Economics After the Crash”

NewImage Karl Whelan: Thoughts on “Teaching Economics After the Crash”: "This is a long post on the state of economics...

...and how it is taught to undergraduates. The world is not crying out for another such discussion, so blame Tony Yates, via whom I ended up listening to Aditya Chakrabortty’s documentary ‘Teaching Economics After the Crash’ for BBC Radio 4.

Like Tony, I viewed the programme as a hopelessly one-sided critique of the economics profession. Still, it was useful in the sense that it packed all the regular criticisms about economics into one short piece. I agree with most of what Tony wrote but I want to take a different approach because I think it’s worth engaging a bit more positively with the criticisms raised.

Continue reading "Weekend Reading: Karl Whelan: Thoughts on “Teaching Economics After the Crash”" »

Morning Must-Read: Heather Boushey: You Can’t Help Today’s Middle Class with 1930s-Era Policies

Heather Boushey: You can’t help today’s middle class with 1930s-era policies: "America’s families look very different today...

...than a generation or two ago. Too many families fear they are falling out of the middle class or will never get there due to a combination of stagnating wages, rising and high levels of income and wealth inequality, and an increase in jobs with unpredictable schedules and too few benefits. Yet, our workplaces are matched to a very different time. The foundation for labor standards in the United States are grounded in a set of policies implemented in the 1930s. They include the minimum wage, overtime provisions and unemployment insurance. This basket of social insurance programs presumes a specific kind of work and family structure that was prevalent then, but is not the norm now...

Morning Must-Read: Nick Bunker: Weekend Reading

Nick Bunker: Weekend reading: "Cardiff Garcia asks whether household formation...

...will pick up.... Matt O’Brien argues that the bad news [for the Russian economy] won’t end any time soon.... Paul Krugman points to the large private-sector debts that Russia ran up.... Neil Irwin... countries with large social insurance states have the highest employment rates. Danielle Kurtzleben... the stark gender divide in low-wage work.... Dietz Vollrath... [on] the difficulty of calculating productivity growth in the service sector...

Noted for Your Nighttime Procrastination for December 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 Nighttime Procrastination for December 19, 2014" »

Lunchtime Must-Read: Paul Krugman: Switzerland and the Inflation Hawks

Paul Krugman: Switzerland and the Inflation Hawks: "A lot of people have been predicting soaring inflation...

...since 2009 if not earlier, and have refused to change their views.... Inflation truthers insist that the government is hiding the real numbers.... Normally sensible conservative economists... see the non-inflationary story as somehow the result of very special circumstances.... Martin Feldstein and others have claimed that it’s all about the 0.25 percent... interest rate the Fed has been paying on excess reserves. Without that... quantitative easing would indeed have produced... big inflation....

So, can we talk about Switzerland?... Never paid interest on reserves... [now] charging banks 0.25 percent.... So has the Swiss National Bank’s huge increase in the monetary base, which dwarfs what the Fed has done, produced inflation?... Monetary base up by a factor of eight. Money supply up by much less, because banks didn’t lend the funds out. And consumer prices flat, indeed flirting with deflation. This is all exactly what a basic liquidity trap model--the one I laid out in 1998--predicted...


Hoisted from Other People's Archives from 2010: David Blanchflower: Welcome Back to 1930s Britain


David Blanchflower: Welcome Back to 1930s Britain: "I am writing this from beautiful Hong Kong...

...having arrived here late at night on a flight from Beijing. It was a pleasant shock to wake this morning to see double-decker buses driving on the left-hand side of the road so far from home.

I came to Beijing for the launch of Bloomberg's Chinese-language service and to sit on a panel to discuss China's role in the new world order. The throng of Chinese tourists at the Forbidden City somehow made it more real to us that China is a country of 1.3 billion people. The highlight of the trip so far was a visit to the Great Wall - something I have always wanted to do. The most comprehensive archaeological survey has recently concluded that the entire Great Wall, with all of its branches, stretches for 5,500 miles. We didn't walk all of it.

Continue reading "Hoisted from Other People's Archives from 2010: David Blanchflower: Welcome Back to 1930s Britain" »

Morning Must-Read: David Jolly: Swiss National Bank to Adopt a Negative Interest Rate

David Jolly: Swiss National Bank to Adopt a Negative Interest Rate: "Switzerland is introducing a negative interest rate...

...on deposits held by lenders at its central bank, moving to hold down the value of the Swiss franc amid turmoil in global currency markets and expectations that deflation is at hand. The Swiss National Bank said in a statement from Zurich on Thursday that it would begin charging banks 0.25 percent interest on bank deposits exceeding a certain threshold, effective Jan. 22...

Liveblogging World War II: December 19, 1944: Siege of Bastogne

NewImageWikipedia: Siege of Bastogne:

The 101st [Airborne Division] left Camp Mourmelon on the afternoon of 18 December, with the order of march the division artillery, division trains, 501st Parachute Infantry Regiment (PIR), 506th PIR, 502nd PIR, and 327th Glider Infantry. Much of the convoy was conducted at night in drizzle and sleet, using headlights despite threat of air attack to speed the movement, and at one point the combined column stretched from Bouillon, Belgium, back to Reims.

The 101st Airborne was originally supposed to go to Werbomont on the northern shoulder but was rerouted to Bastogne, located 107 mi (172 km) away on a 1,463 ft (446 m) high plateau, while the 82nd Airborne, because it was able to leave sooner, went to Werbomont to block the critical advance of Kampfgruppe Peiper. The 705th Tank Destroyer Battalion—in reserve 60 mi (97 km) to the north—was ordered to Bastogne to provide anti-tank support to the armor-less 101st Airborne on the 18th and arrived late the next evening. The first elements of the 501st PIR entered the division assembly area 4 mi (6.4 km) west of Bastogne shortly after midnight of 19 December, and by 09:00 the entire division had arrived.

Continue reading "Liveblogging World War II: December 19, 1944: Siege of Bastogne" »

Afternoon Must-Read: Alan Blinder: ‘What’s the Matter with Economics?’


As I see it, the real point at issue here is that Alan Blinder on the one hand and Jeff Madrick and Arnold Packer on the other have very different ideas of what the "mainstream" of modern American economics is.

Alan Blinder believes that the "mainstream" is his brand of economics--MIT-Princeton-Berkeley. That economics is, in my view, very sensible about both market failure and government failure, and somewhat sensible (we here at Berkeley being most so) about long-run intellectual strategy. We also have--as the past ten years have taught us--remarkably little influence on policy, either macroprudential or macroeconomic, considering how smart and right we are.

Continue reading "Afternoon Must-Read: Alan Blinder: ‘What’s the Matter with Economics?’" »

Afternoon Must-Read: Ed Luce: Too Big to Resist: Wall Street’s Comeback

Edward Luce: Too big to resist: Wall Street’s comeback - "It was right to let Citigroup stay in business in 2009...

...even though it was effectively bankrupt. But should it be so much larger than it was six years ago? Is it healthy that Citi lobbyists wrote the clause, almost word for word, that was tucked into last week’s spending bill?

The question answers itself. It also points to two glaring deficiencies that will come back to haunt Washington when the next crisis strikes.... There has been no improvement in Wall Street’s culture--or in Washington’s revolving door habits. Bankers dismiss Elizabeth Warren, the Democratic senator from Massachusetts, as a populist. Perhaps they should listen to Bill Dudley, president of the New York Federal Reserve and a former Goldman Sachs partner....

At some point there will be another Wall Street crisis. It could be a decade away, or maybe next year. Markets run in psychological cycles in which fear gives way to greed and then hangover. Greed is once more in the ascendant. No law can stop the next bomb from detonating. No regulator can foresee it. But they could do much more to be ready for it when it comes. Here Mr Geithner’s moral fundamentalists have a point...

Noted for Your Afternoon Procrastination for December 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 Afternoon Procrastination for December 18, 2014" »

Afternoon Must-Read: Tim Duy: Quick FOMC Recap

Tim Duy: Quick FOMC Recap: "In normal times the Federal Reserve moves slowly and methodically...

...Policymakers were apparently concerned that removal of 'considerable time' by itself would prove to be disruptive. Instead, they opted to both remove it and retain it: 'Based on its current assessment, the Committee judges that it can be patient.... The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October....'

If you thought they would drop 'considerable time,' they did. If you thought they would retain 'considerable time,' they did. Everyone's a winner.... The April meeting is still on the table [for a rate increase], although I still suspect that is too early.

Yellen... dismissed falling market-based inflation expectations as reflecting inflation 'compensation' rather than expectations... dismissed the disinflationary impulse from oil... indicated that inflation did not need to return to target prior to raising rates, only that the Fed needed to be confident it would continue to trend toward target... unconcerned about the risk of contagion either via Russia or high yield energy debt.... The Federal Reserve... have their eyes set firmly on June... see the accelerating economy and combine that with, as Yellen mentioned, the long lags of monetary policy....

Believe it or not, the Fed is seriously looking at mid-2015 to begin the normalization process. And there is no guarantee that it will be a predictable series of modest rate hikes. As much as you think of the possibility that the hike is delayed, think also of the possibility of 1994.

Buck v. Bell: Live from The Roasterie

Three Generations No Imbeciles Eugenics the Supreme Court and I Buck v Bell I 9780801898242 Medicine Health Science Books Amazon comRather far, I must say, from "to secure these rights governments are instituted..."

Oliver Wendell Holmes:

We have seen more than once that the public welfare may call upon the best citizens [i.e., young healthy men] for their lives [in war via the draft]. It would be strange if it could not call upon those who already sap the strength of the State for these lesser sacrifices, often not felt to be such by those concerned, in order to prevent our being swamped with incompetence...

Paul Lombardo (2008): Three Generations, No Imbeciles: Eugenics, the Supreme Court, and Buck v. Bell

Continue reading "Buck v. Bell: Live from The Roasterie" »

Lunchtime Must-Read: Brett Norman: ACA Employer Mandate: Not as Bitter in Better Economy

Brett Norman: ACA Employer Mandate: Not as Bitter in Better Economy: "Contrary to the once dire predictions...

...of health law critics and the business community, employers are not dropping coverage en masse and steering workers into the federally subsidized plans on the new Obamacare exchanges. In advance of the mandate finally kicking in, many are already increasing the number of employees offered coverage to ensure compliance. ‘The economic reality has changed,’ said Paul Fronstin, a senior associate at the Employee Benefit Resource Institute. Unemployment’s below 6 percent, down from the double-digit days in which the mandate was first debated. ‘Employers are remembering why they offered benefits in the first place--to compete for workers.’

The mandate is the Affordable Care Act’s last big piece of coverage expansion to be put into place. The Obama administration twice delayed it in the face of furious lobbying by the business community and repeated votes by the House to kill it.... ‘As we’ve gone along, I think there are other factors that have come into play – employee morale, retention of managers,’ said Michelle Neblett, director of labor and workforce policy for the National Restaurant Association. ‘I don’t hear people talking about dropping coverage, I hear about people figuring out how to afford to offer coverage.’...

Liveblogging World War II: December 18, 1944: St. Vith


St. Vith lay approximately twelve miles behind the front lines on 16 December. This was an average Belgian town, with a population of a little over 2,000 and sufficient billets to house a division headquarters. It was important, however, as the knot which tied the roads running around the Schnee Eifel barrier to the net which fanned out toward the north, south, and west. Six paved or macadam roads entered St. Vith. None of these were considered by the German planners to be major military trunk lines, although in the late summer of 1944 work had been started to recondition the road running east from St. Vith to Stadtkyll as a branch of the main military system, because normally the Schnee Eifel range served as a breakwater diverting heavy highway traffic so that it passed to the north or south of St. Vith. (See Map III.)

Continue reading "Liveblogging World War II: December 18, 1944: St. Vith" »

Nighttime Must Read: Itzhak Gilboa et al.: Economic Models as Analogies

Itzhak Gilboa et al.: Economic Models as Analogies: "Why [do] economists analyze models...

...whose assumptions are known to be false[?]... Economists feel that they learn a great deal from such exercises.... Economists often analyze models that are 'theoretical cases', which help understand economic problems by drawing analogies between the model and the problem.... Models... data, experimental results, and other sources of knowledge... all provide cases to which a given problem can be compared. We offer complexity arguments that explain why case-based reasoning may sometimes be the method of choice and why economists prefer simple cases...

Hoisted from Other People's Archives: Perry Anderson's (1976) Hanging Judgment on "Western Marxism"

B7e jpg 460×333 pixelsFrom Perry Anderson (1976): Considerations on Western Marxism: "The consequence of this impasse...

...was to be the studied silence of Western Marxism in those areas most central to the classical traditions of historical materialism.... Gramsci is the single exception to this rule--and it is the token of his greatness, which sets him apart from all other figures in this tradition.... For over twenty years after the Second World War, the intellectual record of Western Marxism in original economic or political theory proper--in production of major works in either field--was virtually blank....

Continue reading "Hoisted from Other People's Archives: Perry Anderson's (1976) Hanging Judgment on "Western Marxism"" »

Hoisted from the Archives from 2012: This Time, It Is Not Different: The Persistent Concerns of Financial Macroeconomics

Cthulhu Google Search

Over at Equitable Growth: This Time, It Is Not Different: The Persistent Concerns of Financial Macroeconomics:

When the Financial Times's Martin Wolf asked former U.S. Treasury Secretary Lawrence Summers what in economics had proved useful in understanding the financial crisis and the recession, Summers answered:

There is a lot about the recent financial crisis in Bagehot...

“Bagehot” here is Walter Bagehot’s 1873 book, Lombard Street. How is it that a book written 150 years ago is still state-of-the- art in economists’ analysis of episodes like the one that we hope is just about to end?

There are three reasons:

The first is that modern academic economics has long possessed drives toward analyzing empirical issues that can be successfully treated statistically and theoretical issues that can be successfully modeled on the foundation of individual rationality. But those drives are disabilities in analyzing episodes like major financial crises that come too rarely for statistical tools to have much bite, and for which a major ex post question asked of wealth holders and their portfolios is: “just what were they thinking?”.

The second is that even though the causes of financial collapses like the one we saw in 2007-9 are diverse, the transmission mechanism in the form of the flight to liquidity and/or safety in asset holdings and the consequences for the real economy in the freezing-up of the spending flow and its implications have always been very similar since at least the first proper industrial business cycle in 1825.

Thus a nineteenth-century author like Walter Bagehot is in no wise at a disadvantage in analyzing the downward financial spiral.

The third is that the proposed cures for current financial crises still bear a remarkable family resemblance to those proposed by Walter Bagehot. And so he is remarkably close to the best we can do, even today.

Over at Equitable Growth: I Hate Those Blurred Lines! Monetary Policy and Fiscal Policy: Daily Focus

Blurred Lines Unrated Version Robin Thicke Over at Equitable Growth:

Paul Krugman: The Limits of Purely Monetary Policies: "I understand where Evans-Pritchard is coming from...

...because I’ve been there.... I had my road-to-Damascus moment... in 1998.... Back in 1998 I... believed that the Bank of Japan could surely end deflation if it really tried. IS-LM said not, but I was sure that if you really worked it through carefully you could show... doubling the monetary base will always raise prices even if you’re at the zero lower bound.... (By the way, I screwed up the aside on fiscal policy. In that model, the multiplier is one.) READ MOAR

Continue reading "Over at Equitable Growth: I Hate Those Blurred Lines! Monetary Policy and Fiscal Policy: Daily Focus" »

Morning Must-Read: Paul Krugman: The Limits of Purely Monetary Policies

Paul Krugman: The Limits of Purely Monetary Policies: "I understand where Evans-Pritchard is coming from...

...because I’ve been there.... I had my road-to-Damascus moment... in 1998.... Back in 1998 I... believed that the Bank of Japan could surely end deflation if it really tried. IS-LM said not, but I was sure that if you really worked it through carefully you could show... doubling the monetary base will always raise prices even if you’re at the zero lower bound.... (By the way, I screwed up the aside on fiscal policy. In that model, the multiplier is one.)

To my own surprise, what the model actually said was that when you’re at the zero lower bound, the size of the current money supply does not matter at all.... Doubling the current money supply and all future money supplies will double prices. If the short-term interest rate is currently zero, changing the current money supply without changing future [money] supplies... matters not at all....

As a result, monetary traction is far from obvious. Central banks can change the monetary base now, but can they commit not to undo the expansion in the future, when inflation rises? Not obviously.... But, asks Evans-Pritchard, what if the central bank simply gives households money? Well, that is, as he notes, really fiscal policy.... I’m pretty sure that neither the Fed nor the Bank of England has the legal right to just give money away as opposed to lending it out; if I’m wrong about this, put me down for $10 million, OK?...

Noted for Your Morning Procrastination for December 17, 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 December 17, 2014" »

Liveblogging World War II: December 17, 1944: Elsenborn Ridge

NewImage Wikipedia: Elsenborn Ridge:

The Elsenborn Ridge is a ridge line... the blocking line on the northern shoulder of the Battle of the Bulge... the main line of advance for Hitler's prized 12th SS Panzer Division Hitlerjugend. However, units of V Corps of the First U.S. 1st Army held the ridge.... This was the only sector of the American front line during the Battle of the Bulge where the Germans failed to advance.... During the first three days, the battle was for the twin villages of Rocherath-Krinkelt, during which American G.I.s were at times isolated in individual buildings surrounded by German armor. Attacking Eisenborn Ridge itself, the Germans, although superior in numbers, were stopped by the Americans' well-prepared and deeply dug-in defensive positions. The German attack plans were not well coordinated and frustrated by the rugged terrain, built-up areas around the twin villages, and massed American artillery firepower.... Although the Germans possessed superior armor, they were held in check by the innovative American tactics including better communication, coordinated time on target artillery strikes, new proximity fuses for artillery shells, and superior air power. The Sixth Panzer Army was unable to break through.... Because of the success of the 395th and the 99th, the Americans maintained effective freedom to maneuver across the north flank of the German's line of advance and continually limited the success of the German offensive....

Continue reading "Liveblogging World War II: December 17, 1944: Elsenborn Ridge" »

Morning Must-Read: Gregor Aisch et al.: Where Men Aren’t Working

Gregor Aisch et al.: Where Men Aren’t Working: "There are still places in the United States where nearly all men in their prime working years have a job. In the affluent sections of Manhattan; in the energy belt that extends down from the Dakotas; in the highly educated suburbs of San Francisco, Denver, Minneapolis, Boston and elsewhere, more than 90 percent of men between the ages of 25 and 54 are working in many neighborhoods. The male employment rates in those areas resemble the nationwide male employment rates in the 1950s and 1960s.... On the whole, however, it’s vastly more common today than it was decades ago for prime-age men not to be working"

Where Men Aren t Working NYTimes com

Morning Must-Read: Dirk Schoenmaker: Macroprudentialism

Dirk Schoenmaker: Macroprudentialism: "As the macroprudential toolbox is slowly being filled...

...with new instruments, central banks need to learn how to use them. This will not be easy since the exact effect depends on the specifics of a country’s financial system and there may be unintended consequences.... Macroprudential policy, just like monetary policy, is more art than science.... The high costs of financial crises suggest that it may be better to err on the side of a pro-active macroprudential policy stance....

Macroprudential policy requires complete independence from short-term political pressures to deal with the inherent conflict between the short and the long term. This is why independent agencies, such as the central bank or the financial supervisory authority, are made responsible for macroprudential policy. This requires adequate arrangements for democratic accountability, as macroprudential decisions, such as lowering the loan-to-value ratio, can have a major impact on citizens.

Morning Must-Read: Noah Smith: Cultural Liberalism Is About Personal Responsibility

Noah Smith: Cultural Liberalism Is About Personal Responsibility: "Under a social censure model...

...punishment is communally imposed to get people to avoid unhealthy behaviors, such as drugs and broken families. Under a personal responsibility model, people are educated about the risks and dangers, and told that it is incumbent upon them to avoid doing the bad stuff.... Of course, this is a huge generalization, but I think you see this dynamic at work in the case of marriage and the case of drugs. The 'secret traditionalism' of upper-class liberals is no secret. It is simply the outcome of the repeated quiet exercise of personal responsibility....

Social conservatives, in my experience, often tend to argue that the lower classes of society are not smart enough to handle personal responsibility.... I am not a big fan of that idea.... But I suspect you'll find at least hints and threads of this idea throughout the arguments of many social conservatives. So that leaves the question: If personal responsibility works better than social censure, why?...

At the aggregate level we now have a bit of circumstantial evidence favoring the liberal, health-and-responsibility-based approach over the conservative, punishment-and-censure-based approach on both marriage and drug use.

Noted for Your Nighttime Procrastination for December 15, 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 Nighttime Procrastination for December 15, 2014" »

Liveblogging World War II: December 16, 1944: The Battle of the Bulge

NewImageWikipedia: Battle of the Bulge:

The Wehrmacht '​s code name for the offensive was Unternehmen Wacht am Rhein ('Operation Watch on the Rhine'), after the German patriotic hymn Die Wacht am Rhein, a name that deceptively implied the Germans would be adopting a defensive posture along the Western Front. The Germans also referred to it as Ardennenoffensive (Ardennes Offensive) and Rundstedtoffensive (Von Rundstedt Offensive).... The phrase 'Battle of the Bulge' was coined by contemporary press to describe the way the Allied front line bulged inward on wartime news maps.... The most popular description remains simply the Battle of the Bulge."...

Continue reading "Liveblogging World War II: December 16, 1944: The Battle of the Bulge" »

Over at Equitable Growth: "Convergence": Daily Focus

NewImageOver at Equitable Growth: When I read this piece, it struck me that the stakes were unusually large--that what Lant Pritchett and Larry Summers were really trying to do was to reopen questions of how to think about long-run economic growth that had been largely settled back in the 1950s and 1960s, with the intellectual victory of Robert Solow and company over incremental-institutionalists like Walt Rostow...

Lant Pritchett and Lawrence Summers: Growth Slowdowns: Middle-Income Trap vs. Regression to the Mean: No question is more important for the living standards of billions of people or for the evolution of the global system than the question of how rapidly differently economies will grow over the next generation. We believe that conventional wisdom makes two important errors.... READ MOAR

Continue reading "Over at Equitable Growth: "Convergence": Daily Focus" »

Prolegomenon to a Reading Course on Karl Marx: The Honest Broker for the Week of December 12, 2014


Over at Equitable Growth: These days, when people come to me and ask if I will run a reading course for them on Karl Marx, this is what I tend to say:

The world is divided into those who take Karl Marx's work seriously and those who do not.

On the one hand, those who do not take Karl Marx's lifetime work-project seriously are further divided into three groups:

  1. Those who ignore Marx completely.

  2. Those who use selected snippets from his work as Holy Texts, and

  3. Those modern "western Marxists" who find inspiration in the works that Karl Marx wrote exclusively before he was thirty. READ MOAR

Continue reading "Prolegomenon to a Reading Course on Karl Marx: The Honest Broker for the Week of December 12, 2014" »

Memo to Self: Shrill Tag Lines: Live from La Farine Monday Weblogging

Cthulhu gif 663×720 pixelsLa mayyitan ma qadirun yatabaqqa sarmadi
Fa idha yaji' al-shudhdhadh fa-l-maut qad yantahi.

That is not dead which can eternal lie
And with strange aeons even death may die.

Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn!

In His House at R'lyeh Dead Cthulhu waits dreaming!

Zi Dingir Ana Kanpa
Zi Dingir Kia Kanpa.

Spirits of the earth remember
spirits of the sky remember.

Liveblogging World War I: December 15, 1914: New York Stock Exchange Shut Down, 1914

NewImageNew York Stock Exchange Shut Down:

On July 31, 1914, the New York Stock Exchange closed its doors for the longest period in exchange history. It stayed closed until Nov. 28, 1914, when bonds began trading again. Stock trading re-opened Dec. 15, 1914, but shares were not allowed to trade below closing prices of July 30, 1914. By April 1, 1915, all trading was re-established without price limits. Most would dismiss the closing as a natural response to the beginning of World War I. But no war before or after (including the Civil War), or even the devastating attack on the World Trade Center less than one-half mile from the NYSE in 2001, has shuttered the exchange for more than 10 days in its 222-year history.

Continue reading "Liveblogging World War I: December 15, 1914: New York Stock Exchange Shut Down, 1914" »

Morning Must-Read: Tim Duy: Six Questions for Janet Yellen

Tim Duy: More Questions for Yellen:

  1. A journalist needs to push Yellen on the secular stagnation issue.... Does she or the committee agree with Fischer?  And does she see any inconsistency with the SEP implied equilibrium Federal Funds rates and the current level of long bonds?....

  2. The 5-year, 5-year forward breakeven measure of inflation expectations. Does she see this measure as important or too noisy to be used as a policy metric?  What is her preferred metric?...

  3. Considering that recent updates of your optimal control framework now suggest that the normalization process should already be underway, how useful do you believe such a framework is for the conduct of monetary policy? What specific framework are you now using to dismiss the results of your previously preferred framework?...

  4. St. Louis Federal Reserve President James Bullard has defined a specific metric to assess the Fed's current distance from its goals. What is your specific metric and by that metric how far is the Fed from it's goals?  What does this metric tell you about the likely timing of the first rate hike of this cycle?...

  5. Why is the Fed setting the stage for raising interest rates next year while inflation measures remain below target? What is the risk, exactly, of explicitly committing to a zero interest rate policy until inflation reaches at least your target?...

  6. High yield debt markets are currently under pressure from the decline in oil prices. Are you confident that macroprudential tools are sufficient to contain the damage to energy-related debt? If the damage cannot be contained and contagion to other markets spreads, what does this tell you about the ability to use low interest rate policy without engendering dangerous financial instabilities?

Morning Must-Read: Severin Borenstein: Gas Prices Are Going Up, But It's a Small Price to Pay

Severin Borenstein: Gas prices are going up, but it's a small price to pay at the pump to address climate change: "Under California's cap-and-trade program...

...wholesale gasoline distributors... will have to buy... one emissions allowance for every metric ton of greenhouse gases you emit when you burn the gasoline.... At the current price of allowances... that works out to about 10 cents per gallon of gas.... Unfortunately, as the date for expanding cap-and-trade to transportation fuels approaches, both the program's opponents and supporters have been exaggerating how much or little impact it will have....

The oil lobby... is claiming that the change will raise gas prices 16 to 76 cents... based on two analyses that were done many years ago.... The oil industry knows what allowances actually sell for today.... But they are choosing to stick with the outdated--and scarier--estimates.... Some proponents... are saying that Big Oil is not required by law to raise its prices, so it will be its own choice if it does, not the fault of the cap-and-trade program. This is just as disingenuous....

By establishing a price for emissions, California sends a signal to the rest of the country and the world that we recognize the risk of climate change and are willing to take actions to address it.... No one thinks California's climate change program alone will solve this global problem, but if advanced economies like ours aren't willing to step up, there will be no solution at all.

The 21-Year-Old Says: Link to Ta-Nehisi Coates More Edition: Monday DeLong Smackdown

NewImageThe 21-Year Old: Yes. That Piece by Ta-Nehisi Coates was really good. But I notice that you didn't link to it on your weblog. Why not?

Me: Well, I'm busy. I link to a lot of stuff. I link to a lot of his stuff. I think he is really good, but... Perhaps I fear that I think he is better than he is because of residual white liberal guilt? Perhaps I fear to be patronizing? Perhaps people will think: "He's good, but not that good, so why is DeLong..."

The 21-Year-Old: You are wrong. He is that good. Link to him more.

So here we are:

Ta-Nehisi Coates: The New Republic: An Appreciation: It is impossible to avoid the conclusion that black lives didn't matter much at all to the magazine. Last week, Franklin Foer resigned his editorship of The New Republic. A deep, if not broad, mourning immediately commenced as a number of influential writers lamented what occurred to them as the passing of a great American institution. The mourners have something of a case. TNR had a hand in the careers of an outsized number of prominent narrative and opinion journalists. I have never quite been able to judge the effect of literature or journalism on policy, but

Continue reading "The 21-Year-Old Says: Link to Ta-Nehisi Coates More Edition: Monday DeLong Smackdown" »

Morning Must-Read: Tyler Cowen: Differential Inflation by Class and Income Inequality

Tyler Cowen: Comparing Living Standards Over Time: "I say I prefer $100k[/year] today to $100k[year] in 1964...

...that being a nominal rather than a real comparison.  If you are not convinced, try comparing $1 million or $1 billion (nominal) today to 1964. For some income level, we have seen net deflation. But here’s the catch: would you rather have net nominal 20k[/year] today or in 1964? I would opt for 1964, where you would be quite prosperous and could track the career of Miles Davis and hear the Horowitz comeback concert at Carnegie Hall. (To push along the scale a bit, $5 nominal in 1964 is clearly worth much more than $5 today nominal. Back then you might eat the world’s best piece of fish for that much.) So for people in the 20k a year income range, there has been net inflation.

Think about it: significant net deflation for the millionaires, but significant net inflation for those earning 20k a year.  In real terms income inequality has gone up much more than most of our numbers indicate.

Noted for Your Morning Procrastination for December 14, 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 December 14, 2014" »

Morning Must-Read: Marcy Wheeler: Dick Cheney Lied Us into War

Marcy Wheeler: As Last Piece of Business, Carl Levin Reiterates that Dick Cheney Lied Us into War: "Carl Levin... released a letter he received from John Brennan...

...demonstrating what a liar Dick Cheney is.... Levin has been trying to get the CIA to declassify a March 13, 2003 cable.... Brennan still refuses to declassify the cable, but his letter does explain some of CIA’s assessment of that source:

On 13 March 2003, CIA headquarters received a communication from the field responding to a request that the field look into a single-source intelligence report indicating that Mohammed Atta met with former Iraqi intelligence officer al-Ani in Praque in April 2001. In that communication, the field expressed significant concern regarding the possibility of an official public statement by the United States Government indicating that such a meeting took place. The communication noted that information received after the single-source report raised serious doubts about that report’s accuracy....

Brennan’s letter goes on to quote on line from the report:

The field added that, to its knowledge, ‘there is not one USG [counterterrorism] or FBI expert that... has said they have evidence of ‘know’ that [Atta] was indeed [in Prague]. In fact, the analysis has been quite the opposite. [brackets original]

Four days after this report, Cheney fought mightily to make the Atta claim once more....

I raise all this when I should instead be talking about the torture report because it gets to the point.... This all was about exploitation, not intelligence. And for over a year, Dick Cheney’s goal for exploitation was to create a fraudulent case for the Iraq war, whether via torture or dubious single source claims in Prague. As Cheney complains that the torture report (which reported on the anal rape done in the guise of rectal rehydration done on his order) is ‘full of crap,’ we should never forget that one end result of this was the disastrous Iraq war...

Morning Must-Read: Cory Doctorow: Reviewing Steven Johnson's "How We Got to Now: Six Innovations That Made the Modern World"

Cory Doctorow: Reviewing "How We Got to Now: Six Innovations That Made the Modern World": "In How We Got to Now...

...[Steven] Johnson picks six profound technologies and follows their path from earliest prehistory to the modern age... glass (from Venetian glassblowers to telescopes and microscopes); cold (from icehouses to modern refrigeration, and the way our food infrastructure, medical science, and geography have been transformed by the ability to manipulate heat); sound (from early chanted ritual to phonographs, to music, urban noise, and radar); hygiene (the key innovations that let cities grow without being destroyed by disease, the germ theory of medicine, and clean rooms in microprocessor factories); time (early astronomy, the age of navigation and the Longitude Prize, the industrial revolution and the timeclock, and microsecond timing in modern computers); and, finally, light (from candles to whaling; the changes to human sleep cycles thanks to artificial light, lasers and electron microscopy).

Each of these six lively stories is a tapestry worn of fascinating technical tid-bits and engrossing stories of personal sacrifice, genius, error, foolishness and difficulty from the cluster of inventors who are responsible for each one...

Liveblogging Japanese History: December 14, 1702: The Forty-Seven Ronin

Screenshot 12 14 14 6 24 AM

Wikipedia: Forty-seven Ronin:

The revenge of the forty-seven Ronin (四十七士 Shi-jū-shichi-shi?, forty-seven samurai) took place in Japan at the start of the 18th century. One noted Japanese scholar described the tale, the best known example of the samurai code of honor, bushidō, as the country's 'national legend.'

Continue reading "Liveblogging Japanese History: December 14, 1702: The Forty-Seven Ronin" »

Nighttime Must-Read: Stanley Fischer: Discusses Big-Bank Political Influence

Stanley Fischer: Discusses Big-Bank Political Influence: "Mr. Fischer suggested rules set...

...directly by legislatures can be imperfect, lamenting the role of Wall Street banks in shaping the 2010 Dodd-Frank financial overhaul law. ‘I thought that when Dodd-Frank started, that the banks would not succeed in influencing it, having lost all the prestige they lost,’ he told a crowd of several dozen at the Washington, D.C., think tank. ‘Boy, was I wrong.’ His remarks came less than a day after the House passed a spending bill that included a provision, long sought by banks, to scale back a Dodd-Frank requirement.

Mr. Fischer also recalled how... leading the Bank of Israel.... When his central bank colleagues asserted that the institution acted independently of the elected government, his reply was, ‘Yes. And we are two bad decisions away from not being an independent central bank.’

Mr. Fischer said he believes the Financial Stability Board, an organization of regulators set up to coordinate the global response to the financial crisis, has been ‘a great success,’ in part because it has been more inclusive than other international bodies...

Evening Must-Read: Roger Farmer: Real Business Cycle Theory and the High School Olympics

Roger Farmer: Real business cycle theory and the high school Olympics: "I have lost count of the number of times...

...I have heard students and faculty repeat the idea in seminars, that ‘all models are wrong’. This aphorism, attributed to George Box, is the battle cry  of the Minnesota calibrator, a breed of macroeconomist, inspired by Ed Prescott.... The cry has been used for three decades to poke fun at attempts to use serious econometric methods to analyze time series data. Time series methods were inconvenient to the nascent Real Business Cycle Program that Ed pioneered because the models that he favored were, and still are, overwhelmingly rejected by the facts. That is inconvenient.

Ed’s response was pure genius. If the model and the data are in conflict, the data must be wrong.... In a puff of calibrator’s smoke, the history of time series econometrics was relegated to the dustbin of history to take its place alongside alchemy, the ether, and the theory of phlogiston. How did Ed achieve this remarkable feat of prestidigitation? First, he argued that we should focus on a small subset of the properties of the data....

Ed argued that the trends in time series are a nuisance if we are interested in understanding business cycles and he proposed to remove them with a filter... remov[ing] a different trend from each series and the trends are discarded when evaluating the success of the theory.... He proposed that we should evaluate our economic theories of business cycles by how well they explain co-movements among the wiggles.

When his theory failed to clear the 8ft hurdle of the Olympic high jump, he lowered the bar to 5ft and persuaded us all that leaping over this high school bar was a success. Keynesians protested. But they did not protest loudly enough and ultimately it became common, even among serious econometricians, to filter their data with the eponymous Hodrick-Prescott filter....

We don't have to play by Ed's rules.... Once we allow aggregate demand to influence permanently the unemployment rate, the data do not look kindly on either real business cycle models or on the new-Keynesian approach. It's time to get serious about macroeconomic science and put back the Olympic bar.