December 2014
Over at Equitable Growth: What Should the Fed Think of the Economy's Clearly Gaining Momentum?: Daily Focus
...with a monthly nfp gain of 321k and 44k of upward revisions to previous months. Job gains were spread throughout the major sectors of the economy. The 2014 acceleration in job growth is clearly evident. The employment report in the context of indicators previously identified by Federal Reserve Chair Janet Yellen as important to watch. READ MOAR
The First Good Monthly Payroll Report of the Recovery, If I Am Not Mistaken...
and the unemployment rate was unchanged at 5.8 percent, the U.S. Bureau of Labor Statistics reported today.... The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.8 million in November. These individuals accounted for 30.7 percent of the unemployed.... The civilian labor force participation rate held at 62.8 percent in November and has been essentially unchanged since April. The employment-population ratio, at 59.2 percent, was unchanged in November...
10 Years After His Firing by Martin Peretz and Franklin Foer, "Spencer Ackerman Has a Pulitzer and The New Republic Is Basically Dead"
Noah Schachtman wins the internet today:
And Julian Sanchez agrees:
@normative on Twitter: : "Also basically my first thought... RT : 10 years later, @attackerman has a Pulitzer and @TNR is basically dead. Wow."
:
Hoisted from the Archives: The Best of Spencer Ackerman Weekly
I continue to get great value from my $60 two-year subscription to Spencer Ackerman weekly (http://toohotfortnr.blogspot.com/).
Here are this week's highlights:
- Never fire your best polemicist [as Martin Peretz and Franklin Foer of The New Republic did].
- On the Iraq Study Group.
- On the Armed Party of Ali in Iraq.
- On why Heidi Klum would have been a better chair for the ISG than James Baker.
- And, finally, becoming completely unhinged through reading Left Behind.
(1) Never fire your best polemicist:
Continue reading "Hoisted from the Archives: The Best of Spencer Ackerman Weekly" »
Noted for Your Morning Procrastination for December 5, 2014
Over at Equitable Growth--The Equitablog
- Cato Institute Economic Growth Conference: Panel I: The Pace of Recent Economic Growth - Washington Center for Equitable Growth
- Blog You Should Read: Daniel Little: Understanding Society: Daily Focus - Washington Center for Equitable Growth
- Cato Institute Conference: The Future of U.S. Economic Growth: Panel II - Washington Center for Equitable Growth
- Afternoon Must-Read: Mark Thoma on Salim Furth's 'What’s Causing the Increase in Long-Term Unemployment?' - Washington Center for Equitable Growth
- Morning Must-Read: David Beckworth: Are We Mismeasuring Productivity Growth? - Washington Center for Equitable Growth
- Morning Must-Read: Jonathan Chait: 4 New Studies: Obamacare Working Incredibly Well - Washington Center for Equitable Growth
- Morning Must-Read: Ezra Klein (2007): No Exit Revisited - Washington Center for Equitable Growth
- Morning Must-Read: Duncan Black: So Long, and Thanks For All The S- Washington Center for Equitable Growth
- Morning-Must-Read: Ezra Klein: Even the Liberal New Republic Needs to Change - Washington Center for Equitable Growth
- The rise and fall of financial deleveraging - Washington Center for Equitable Growth :
Plus:
Must- and Shall-Reads:
- The Liquidity Trap, the Great Depression, and Unconventional Policy: Reading Keynes at the Zero Lower Bound :
- Fiscal Policy and Full Employment :
- Productivity and Potential Output Before, During, and After the Great Recession :
- A 1920-21 Recovery Myth :
- Economist's View: 'What’s Causing the Increase in Long-Term Unemployment?' :
- 4 New Studies: Obamacare Working Incredibly Well :
- Are We Mismeasuring Productivity Growth? :
- Economist's View: 'Entrepreneurship, Down-Side Risks, and Social Insurance' :
- No Exit Revisited (2007):
- So Long, And Thanks For All The Shit :
- Even the liberal New Republic needs to change :
And Over Here:
Continue reading "Noted for Your Morning Procrastination for December 5, 2014" »
Morning-Must-Read: Ezra Klein: Even the Liberal New Republic Needs to Change
Even the liberal New Republic needs to change: "The eulogy that needs to be written isn't for The New Republic...
:...It's for the role once played by Washington's small fleet of ambitious policy magazines. The internet is now thick with outlets that pride themselves on covering... policymaking apparatus. Vox... The New Republic... Wonkblog, the Upshot, Mother Jones, Storyline, FiveThirtyEight, and Politico, to name just a few. And that doesn't even include the individual bloggers who are must-reads... Kevin Drum, and Tyler Cowen, and Brad DeLong, and Paul Krugman, and Ross Douthat, and Ramesh Ponnuru, and Jonathan Chait, and Scott Sumner, and Megan McArdle, and Jonathan Bernstein, and, again, the list goes on. This sprawling conversation over Washington policymaking used to be centered in a handful of elite-focused policy magazines, of which The New Republic was perhaps the best known and most ambitious....
The policy magazines had two dimensions. The first was what they covered--which was, for the most part, politics through the lens of policy.... The second was the angle and tone.... The New Republic oscillated from editor to editor, but tended towards a hawkish, contrarian neoliberalism (hence the 'Even the liberal New Republic' meme).... To the wonk in the 1970s, '80s, and '90s, these magazines were the thrumming center of the policy conversation in Washington.... But they're no longer the center....
A deeper tension in digital journalism: the pressure for convergence is strong. We feel it at Vox, and sometimes give into it. It's easy to see which stories are resonating with readers. It's obvious that John Oliver videos do big numbers. And that's fine. Right now, almost all successful digital publications are partially built on internet best practices and partially built on that publication's particular obsessions, ideas, and attitude. Digital publications need to be smart about their mix....
But what made the New Republic and its peer policy magazines so great was how restlessly, relentlessly idiosyncratic they were--that's how they drove new ideologies and new ideas to the fore. They were worse at covering policy than their digital successors, but probably better at thinking.... I'm less pessimistic about TNR's future than many... and, as someone who really loathed a number of TNR's previous eras (see the Bell Curve, or No Exit, or A Fighting Faith, for examples)... a bit less nostalgic for its past. But something is being lost in the transition from policy magazines to policy web sites...
The Martin Peretz-Michael Kinsley New Republic was world-class at snarking, but thinking--I think of Mickey Kaus, Jacob Weisber, Charles Krauthammer, Fred Barnes, Morton Kondracke and a magazine known best for the phrase "even the liberal New Republic", and I say "no". Hertzberg, IIRC, dialed down the snark and dialed up the policy substance, but still... And I don't see how anybody would claim that the post-Hertzberg TNR was good at "thinking"...
Morning Must-Read: Ezra Klein (2007): No Exit Revisited
No Exit Revisited: "Andrew Sullivan tries to answer my post from yesterday...
(2007):...on No Exit, the [Betsy McCaughey] article he published attacking the Clinton health plan. He says that 'I don't think it's fair to expose the internal editing of a piece but there was a struggle and it's fair to say I didn't win every skirmish,' which is interesting, and he says that 'I was aware of the piece's flaws but nonetheless was comfortable running it as a provocation to debate.' What he doesn't say is that he believes the piece accurately described the Clinton health care plan. Which is what's at issue. There were reasons to criticize the delivery structure the Clintons sought to implement, but No Exit simply lied...
Liveblogging World War II: December 5, 1944: NBC
December 5, 1944 - A Day In The Life Of Wars:
:The news on this day in December in 1944 was all about Allied Advances. On the Western Front, General Patton's 3rd Army established a bridgehead at The Saar River. The 1st Army was advancing on the German frontier. The British 8th Army was busy advancing in Italy and capturing several towns along the way. Estimates the Germans had over 1/2 million troops poised for a counter-attack somewhere, but as of yet not known where. In the Pacific, the Philippines Invasion was plodding along. This morning's news report from the Pacific talked about mail delivery to the troops and the difficulties that entailed - but the mail was still getting through.
In Greece, rioting continued with a Civil War threatening. The British Army was trying to keep peace by keeping the warring parties away from each other, but that was looking easier said than done. And there was a shakeup and shuffling of positions and desks at the State Department.
All in all, a world deeply engrossed in the process of war, as reported on the NBC World News Roundup for the morning of December 5, 1944.
The Cato Institute Should Be Seriously Embarrassed by What It Has in the Lobby...
By my count, they ought to be embarrassed by all five of these now.
And the probability is 99% that whoever is running the Cato Institute in a decade will then be embarrassed by all of them (save possibly the weird constitutional law poster, where dead-enders will still be dead-ending).
- We did need to jump-start the economy back in 2009--even more than we did.
- ObamaCare is turning out to do a remarkably large amount to improve the competitive functioning of the private health-insurance and health care-delivery markets.
- The global warming poster is simply embarrassing.
- And the looming debt crisis? How does it loom?
Wingnuts gotta nut, I know. But some recognition that their past policy judgments were simply wrong--is that too much to expect?
Morning Must-Read: Jonathan Chait: 4 New Studies: Obamacare Working Incredibly Well
...all of which have further demonstrated the law’s success. 1. Increasing access to the uninsured.... Conservatives widely denied that the law would even succeed at its basic goal of increasing access to health insurance. Obamacare ‘created more uninsured people than it gave insurance to. And it promises to create even more,’ argued National Review’s Jonah Goldberg. Fox News panelist Charles Krauthammer proclaimed the law would result in ‘essentially the same number of uninsured.’... 2. Reducing overall health-care costs.... 3. Hospital errors.... 4. Insurance competition. Obamacare is based on an old Republican plan, developed by the Heritage Foundation and first tried by Mitt Romney, whose central feature was market competition.... Liberals did not place much faith in this dynamic.... But the dynamic has turned out to work much better than expected...
Over at Equitable Growth: Cato Institute Economic Growth Conference: Panel I
Over at Equitable Growth: : The Future of U.S. Economic Growth: Panel 1: Forecasting the Long-Term Growth Outlook
- Dale Jorgenson, Harvard University
- John Fernald, Federal Reserve Bank of San Francisco
- Martin Baily, Brookings Institution
If David Beckworth is here, I want him to ask his question--itself triggered by an observation from Noah Smith at Stonybrook. If he isn't here, or is shy...
...can be decomposed into TFP in investment production and TFP in consumption production. TFP in investment looks better than the overall.... TFP in consumption... has basically flatlined since the early 1970s and is what is driving the Great Stagnation.... The Great Flattening does not seem reasonable. Has productivity growth in consumption really been flat since the early 1970s?... This suggests there are big measurement problems in consumption production. And I suspect they can be traced to the service sector..." READ MOAR
Continue reading "Over at Equitable Growth: Cato Institute Economic Growth Conference: Panel I" »
Morning Must-Read: David Beckworth: Are We Mismeasuring Productivity Growth?
...can be decomposed into TFP in investment production and TFP in consumption production. TFP in investment looks better than the overall.... TFP in consumption... has basically flatlined since the early 1970s and is what is driving the Great Stagnation.... The Great Flattening does not seem reasonable. Has productivity growth in consumption really been flat since the early 1970s?... This suggests there are big measurement problems in consumption production. And I suspect they can be traced to the service sector..."
Continue reading "Morning Must-Read: David Beckworth: Are We Mismeasuring Productivity Growth?" »
Cato Economic Growth Conference: Live from the F.A. von Hayek Auditorium
Sitting next to Bo Cutter (Roosevelt) and Bob Strom (Kauffman) in the Friedrich A. von Hayek Auditorium at the Cato Institute at 1000 Massachusetts Ave., NW, Washington DC.
No Hayek quotes written on the walls...
Wireless Password: GiveMeLiberty: That makes me want to google, and I find that Patrick Henry is supposed to have purchased 78 slaves over the course of his lifetime...
I find myself sitting in the Emery E. Allain seat: Emery Allain (1922-2006):
Trades By Insiders - Morning Call: November 24, 1986: Great Northern Nekoosa Corp. - Emery E. Allain, vice president, exercised an option for 3,919 shares between $39.94 and $35.31 per share from Oct. 28 to Oct. 29. Allain now holds directly 4,119 shares.
J & J Mid-South Corp.(merged 12/31/87) in Atlanta, GA - Bizapedia Profile: J & J Mid-South Corp.(merged 12/31/87) is a Georgia Domestic Profit Corporation filed on June 21, 1968. The company's filing status is listed as Merged and its File Number is J215572.... Filing Date: June 21, 1968. Company Age: 46 Years, 6 Months.... EMERY E ALLAIN, Chief Executive Officer, 75 Prospect St Box 9309, Stamford, CT 06904
Manhattanville College: THE ALLAIN COLLECTION: For over twenty five years Mr. Emery E. Allain was a frequent visitor to the Manhattanville College Library. A collector of books Mr. Allain contributed over thirty thousand books to the Library’s biography collection. On September 16th the Library held a reception in honor of Mr. Allain and his generous contributions to the Library. An exhibit featuring a few of the presidential biographies, family pictures, and memorabilia was on display. In attendance were Mrs, Patricia Allain, Mr. Allain’s widow, John Allain, his son, family, friends, and the Library staff. Stories were shared about Mr. Allain’s generosity, business acumen, and life-long interest in books.
Over at Equitable Growth: Weblog You Should Read: Daniel Little: Understanding Society: Daily Focus
Over at Equitable Growth:
...That's 954 posts, almost a million words, and about a hundred posts in the past twelve months. The blog continues to serve as an enormously important part of my own intellectual life, permitting me to spend a few hours several times a week on topics of continuing interest to me, without needing to find the time within my administrative life to try to move a more orderly book manuscript forward. And truthfully, I don't feel that it is faut de mieux or second-best. I like the notion that it's a kind of 'open source philosophy'.... READ MOAR
Cato Institute Conference: The Future of U.S. Economic Growth: Panel II
Panel 2: The Future of Innovation: Stagnation, Singularity, or Something in Between?:
- Erik Brynjolfsson, Massachusetts Institute of Technology
- Robert Gordon, Northwestern University
- Stephen Oliner, American Enterprise Institute
A Question: For us economists, intensive economic growth is the rate in percent per year at which the real cost of obtaining the currently-produced bundle of marketed goods and services decline. what I am hearing from Erik is that, in his view, that is missing much if not most of the action: that what we really ought to be doing is measuring the rate at which the real cost of staying on the same utility surface is declining. And that these two are very different right now.
Continue reading "Cato Institute Conference: The Future of U.S. Economic Growth: Panel II" »
Liveblogging World War II: December 4, 1944: Mosquito Nightmare 30,000 Feet Above Aachen
Mosquito Nightmare 30,000 Feet Above Aachen :: World War II Today:
:The 4th of December 1944 — 1900 hours — target: Karlsruhe. On the left, slightly higher than my head and facing forward, the pilot peers into the black night. I flick the switch on the nozzle of my oxygen mask, and he turns his head in my direction. A nasal, humid sound: ‘Alter course to one-six-four degrees. We’ll be over Aachen in two minutes.’ The intercom crackles back: ‘OK.’
[…]
Suddenly there is a jolt, and I glance sharply to the left. Out of the window beyond Johnny’s head I see, for an instant, the grotesque black belly of an aircraft sliding by. Nothing happens for a moment, the drone persists — the course holds. Then with a sickening lurch, the plane cartwheels through the sky.
Afternoon Must-Read: Mark Thoma on Salim Furth's 'What’s Causing the Increase in Long-Term Unemployment?'
Economist's View: 'What’s Causing the Increase in Long-Term Unemployment?': "Salim Furth, who 'is senior policy analyst...
:...in macroeconomics at the Heritage Foundation’s Center for Data Analysis':
What’s Causing the Increase in Long-Term Unemployment?: Some economic indicators, including the short-term unemployment rate, have recovered to levels associated with ‘normal times.’ But long-term unemployment remains high.... Many economists, myself included, expected that the expiration of long-term unemployment benefits at the end of 2013 would sharply lower the long-term unemployment rate. Instead, the rate has continued its slow, steady decline.... Economists have not yet found convincing explanations.... The problem is worth studying.
They will have to find another social insurance program to blame... instead of, say, lack of demand (a policy failure) combined with the stigma attached to the long-term unemployed."
Noted for Your Afternoon Procrastination for December 3, 2014
Over at Equitable Growth--The Equitablog
- Is the Fed "Pretending"?(Not) The Honest Broker for the Week of November 28, 2014
- A Question for William Gale: The Fiscal Outlook
- Nicholas Bagley: Am I Unreasonable?
- Bob Litan: Two Relatively Painless Ways to Boost Growth
- Gillian Tett: In Parched Bond Markets, Sparks Are Dangerous
- Alan S. Blinder: What’s the Matter with Economics?
- Joe Romm: 2014 Headed Toward Hottest Year On Record-Here's Why That's Remarkable
- The behavioral barriers to paying off debt :
- Pulling up the “job ladder” :
Plus:
Must- and Shall-Reads:
- "@katie_martin_FX 'the key risk is that all these spreadsheets were put together by a summer intern and I haven't checked them'" :
- The 2015 Economic Outlook and the Implications for Monetary Policy :
- The Economic Consequences of the Peace, Chapter 3 | Library of Economics and Liberty :
- Why the Next Recession Will Be Different :
- Six Ways Health Reform Helps the Middle Class :
- 2014 Headed Toward Hottest Year On Record--Here's Why That's Remarkable | ThinkProgress :
- What’s the Matter with Economics? :
- In Parched Bond Markets, Sparks Are Dangerous :
- Two Relatively Painless Ways to Boost Growth : Am I unreasonable? :
- A critique of Powell, Woods, and Murphy on the 1920–1921 depression :
- Structural Destruction : A Phillips Curve with Anchored Expectations and Short-Term Unemployment :
And Over Here:
Continue reading "Noted for Your Afternoon Procrastination for December 3, 2014" »
Afternoon Must-Read: Joe Romm: 2014 Headed Toward Hottest Year On Record--Here's Why That's Remarkable
...2005 and then 2010 and likely 2014. Humans are, after all, emitting record amounts of heat-trapping carbon pollution into the air, and carbon dioxide levels in the air are at levels not seen for millions of years... 'Fourteen of the fifteen warmest years on record have all occurred in the 21st century.... There is no standstill in global warming.’... What is remarkable... is that we’re headed toward record high global temps ‘in the absence of a full El Niño’.... It’s usually the combination of the long-term manmade warming trend and the regional El Niño warming pattern that leads to new global temperature records. But not this year.
Virtual Office Hours: Asset Prices, Monetary Policy, Secular Stagnation, Inequality, and Pikettyism
Virtual Office Hours:
Question: "Given how low global interest rates are, it seems hard to believe that returns on investment over the next 8 to 10 years can be good. So, isn’t some of the recent increase in wealth effectively ‘stealing from the future’ as capitalization values responded to the low rates of return available from sovereign bonds?"
Yes.
This is, I think, the crucial flaw in the current “Fed raises inequality!” literature...
It is also at the root of the most powerful critique of Piketty, which is, I think, Matt Rognlie’s:
- Piketty describes a world in which the ratio of wealth-held-by-the-rich to total annual national income rises.
- But most of our wealth today—our capital—is in the form of productive investments that boost productivity and complement labor.
- So as the wealth-held-by-the-rich to total annual national income ratio W/Y rises, the rate of profit r falls.
- And r falls by more proportionally than W/Y rises.
- So not only does Piketty-world see a higher level of production per worker, it sees a smaller share of that production paid to owners of capital.
- This is what Keynes saw as a possibility: the “euthanasia of the rentier”—even though the wealthy are fabulously rich relative to the middle class, their incomes are smaller relative to the middle class than we have seen in the past.
- All this hinges on wealth being held in the form of productive investments that must then be deployed by producers, rather than in the form of rent-seeking property that gives the rich the power to extract from the producers
264 words
Over at Equitable Growth: Is the Fed "Pretending"?: Daily Focus
Over at Equitable Growth: Ted Rivelle is clearly saying things that make sense to him. But I don't think what he says makes sense to the world, and it certainly does not make sense to me:
...obtain loans and then bid resources away from those who might employ them more productively. Along the way leverage accumulates, increasing financial risk and market volatility.... The Fed’s reluctance to pull the plug on zero interest rates is understandable. Since low rates have enabled activities that would not survive a rate rise, a renormalisation will be painful.... So why do it? Because 'kicking the can' means the inevitable deleveraging will be more painful. Sustainable growth comes from improvements to work process and product. Merely adding leverage to a business does not improve its efficiency; higher home prices do not increase the wages of those in the home.... The game of pretend ultimately has to end. For investors, the question that matters is when and how. When the end game comes, leverage will be forced out of the system and asset prices will fall. If the Fed is willing to recognise that ultimately its policies cannot dictate economic realities, rate rises should begin soon, presumably in 2015... READ MOAR
Continue reading "Over at Equitable Growth: Is the Fed "Pretending"?: Daily Focus" »
Liveblogging the American Revolution: December 3, 1776: Washington Arrives at the Delaware
Washington arrives at the banks of the Delaware: This Day in History:
In a letter dated December 3, 1776, General George Washington writes to Congress from his headquarters in Trenton, New Jersey, to report that he had transported much of the Continental Army's stores and baggage across the Delaware River to Pennsylvania. In his letter Washington wrote:
Immediately on my arrival here, I ordered the removal of all the military and other stores and baggage over the Delaware, a great quantity are already got over, and as soon as the boats come up from Philadelphia, we shall load them, by which means I hope to have every thing secured this night and tomorrow if we are not disturbed.
Evening Must-Read: Alan S. Blinder: What’s the Matter with Economics?
...and mainstream doctors are not held responsible for homeopathy.... John Cochrane, also of the University of Chicago... saying in 2009 that Keynesian economics is ‘not part of what anybody has taught graduate students since the 1960s. [Keynesian ideas] are fairy tales that have been proved false.’ The first statement is demonstrably false; the second is absurd.... Madrick’s second bad idea, Say’s Law... really is bad.... Madrick also tabs ‘low inflation is all that matters’ as a bad idea, which it is. But again, who believes it?... Perhaps you can imagine my surprise when I read that ‘economists in general are Friedman’s handmaidens.’... Eugene Fama.... As Madrick correctly states, the... strong form of the EMH... proved pernicious.... Madrick’s wonderful chapter on efficient markets should be required reading for everyone in the financial world...
Afternoon Must-Read: Gillian Tett: In Parched Bond Markets, Sparks Are Dangerous
...it now takes seven times as long for investors to liquidate bond portfolios as in 2008. The reason? Eight years ago investment banks and brokers held such large inventories of bonds and other assets that they were happy to act as market makers.... The ‘exits’ for trades, to use banking jargon, are crowded. And that means that while the markets might seem placid today, particularly given the easing announced by the Japanese and European central banks, this calm could come to a halt if investors try to sell en masse. ‘Fundamentally, liquidity has become more scarce,’ Mr Carney says....
The big question is what will happen when the US Federal Reserve starts raising rates. If investors rush to sell US government bonds, that will create one seriously crowded exit.... Is there a solution? Behind the scenes, there is plenty of brainstorming. For now regulators seem opposed to the step bankers most want: a relaxation of reforms such as the international Basel III regulations or America’s Dodd-Frank act....
Ever since the days of Walter Bagehot, the 19th century British economist, central banks have accepted that one of their roles is to lend freely to solvent institutions in a crisis. But they have generally shied away from acting as market makers or from rescuing non-banks. ‘Backstopping market liquidity directly risks structurally distorting economic incentives,’ the BIS paper notes. But the 2008 crisis and its aftermath have forced central banks to break many taboos. If a bond crisis erupts, this one may crumble too, forcing central banks to jump in. As Mr Carney observed in Singapore: ‘Bagehot will need to be updated for the 21st century.’ Watch this policy space, and that sevenfold statistic.
Central banks "have generally shied away from acting as market makers or from rescuing non-banks"? If you are holding duration risk or entrepreneurial risk during the financial crisis, You are a bank. That is what banks do: they undertake liquidity, entrepreneurial, and duration transformations. You can call yourself a rubber duck if you want to and an attempt to engage in regulatory arbitrage. But you are a bank. And in the event of a financial crisis your life or death is the central bank's business. For central banks to pretend that there are "non-banks" that perform liquidity, entrepreneurial, and duration transformations is for them to adopt the ostrich nature.
And "shied away from acting as market makers"? Bagehot's Rule: in a financial crisis, lend freely at a penalty rate on collateral that would be good in normal times. If that isn't being a market maker, then I am Marie of Roumania. It is being a market maker in exceptional times when nobody else is willing to be--when everyone else thinks that the likelihood that current traders know something is more of a risk to market makers than the close and intimate connection with order flow they get by being market makers is a gain. But it is being a market maker.
And "the big question is what will happen when the US Federal Reserve starts raising rates. If investors rush to sell US government bonds, that will create one seriously crowded exit..." Only if the Federal Reserve wishes it so. The Federal Reserve can pick any point on the yield curve it wishes, and absolutely nail that point. Whether it can nail other points depends on the credibility and implementation of its communications strategy. But it can nail one point. And if it is seriously worried about the risk that the long Treasury bond will collapse in value when it starts raising short-term safe interest rates, it can direct the New York Fed's trading desk to target not the Federal Funds rate but the Ten-Year Treasury bond rate. And it can always back that up with interest on reserves.
Very few people in high finance seem to understand how powerful a central bank that prints an ultimate reserve asset for the world economy--that possesses exorbitant privilege--is. Only if it lets itself get backed into a corner in which it has pledged itself to defend against depreciation a currency value that the market does not believe in can it get into serious trouble, and the only reason the Federal Reserve would do that is if it feared as a shepherd that its major sheep had been very naughty and had done too much currency transformation as well.
Afternoon Must-Read: Bob Litan: Two Relatively Painless Ways to Boost Growth
...(citizenship would be a plus) for high-skilled immigrants.... The second idea stems from the landmark decision by a California state court in June 2014, Vergara v. State of California, which held that the teacher unions’ tenure system violated the equal protection clause of the state’s constitution.... Students who are penalized by an educational system stacked against them virtually from the time they enter school until they graduate (or drop out, as all too many will), represent a huge waste of human capital...
Department of "WTF?!?!": Douglas Holtz-Eakin Edition: (Not) The Honest Broker for the Week of November 28, 2014
The other contributions to Brink Lindsey's Cato Institute Online Economic Growth Forum have all been things I can engage--things that make me think, that are individual economists' honest and good-faith attempts to say where the fruit is to be picked in terms of boosting America's economic growth.
Then comes Douglas Holtz-Eakin.
And, I must say, it seems to me that it really is time for some sort of disciplinary boundary-patrol police action/intervention here...
Holtz-Eakin's piece seems to me to be, in the context of the other--remarkably good--pieces that Brink Lindsey has commissioned, a very strange intrusion from some alternative non-technocratic discursive universe--a veritable Colour out of Space:
That same nameless intrusion which Ammi had come to recognise and dread... the shaft of phosphorescence from the well was getting brighter and brighter, bringing to the minds of the huddled men a sense of doom and abnormality which far outraced any image their conscious minds could form...
Ahem:
A Question for William Gale: The Fiscal Outlook
- Debt held by the public is at 72.1% of a year's GDP.
- Debt held by the non-Federal Reserve public is at 59.2% of a year's GDP.
- The nominal net interest bill is at 1.3% of a year's GDP.
- The real net interest bill is at -0.14% of a year's GDP--yes, right now holders of government bonds are paying the government to keep their money safe.
- A large carbon tax to deal with global warming is coming--maybe in this decade, maybe next decade.
- A huge shift in health-care financing that will move an enormous chunk of business payroll costs into the income and the social-insurance tax base is coming with the implementation of the Cadillac Tax of the ACA.
- The ACA has also embarked us on a large number of experiments in the reasonable hope that some of them will prove effective at improving the efficiency of our health-care financing system and so reducing public health-care costs.
- According to CBO's extended-baseline, our long-term fiscal gap over 2015-2039 is 1.2% of GDP.
And yet in this situation William Gale thinks that "a major priority should be to get our long-term fiscal house in order..." READ MOAR
Continue reading "A Question for William Gale: The Fiscal Outlook" »
For Kevin Drum to Be "Expecting a Reasoned Critique of John Cochrane’s Claim Is Like Expecting a Reasoned Critique of the Claim that 2+2=5": Hoisted from Robert Waldmann's Archives from a Year Ago
...I know something about. He notes a post by John Cochrane and said he was licking his lips waiting for the Delong/Krugman demolition which, however disappointed him.
I was a little disappointed in their responses. They have plenty of detailed issues with Cochrane, many of which strike me as well taken. But I didn’t feel like they ever addressed Cochrane’s core argument. He isn’t insisting that stimulus doesn’t work. Instead, he’s taking aim at the stories economists use to explain why they think stimulus works.
He hands the mike to Cochrane:
Morning Must-Read: Nicholas Bagley: Am I Unreasonable?
Am I unreasonable?: "To prevail, it’s not enough for the King challengers...
:...to show that it’s possible to read the ACA to eliminate tax credits from states that refused to set up their own exchanges. They must also demonstrate that the ACA does so unambiguously—and that the IRS’s contrary interpretation is therefore unreasonable. Under Chevron, if the ACA could be read in a couple of different ways, the courts owe deference to the IRS’s authoritative decision about how best to read it.
Noted for Your Morning Procrastination for December 2, 2014
Over at Equitable Growth--The Equitablog
- Thinking About Austerity in Britain
- The Cato Institute's Brink Lindsey Is Running an Economic Growth Conference This WeekZeynep Tufkeci: How TED (Really) Works
- Juan Carlos Suárez Serrato and Owen Zidar: Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms
- Chris Rock: It's Not Black People Who Have Progressed. It's White People
- Hiroshi Nakaso: The Potential Impact of Large-Scale Monetary Accommodation
- Paul Krugman: Dean Baker on Robert Samuelson's Famous Fake Prediction Failures
- Nick Bunker: Thanksgiving Weekend Reading
Plus:
Must- and Shall-Reads:
- Amazon Reveals the Robots at the Heart of Its Epic Cyber Monday Operation :
- Real World Contradicts Right-Wing Tax Theories :
- Anton's Econ History Reading List :
- Dornbusch's Overshooting Model After 25 Years0. :
- Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms :
- It's Not Black People Who Have Progressed. It's White People :
- The Potential Impact of Large-Scale Monetary Accommodation :
- Famous Fake Prediction Failures :
- Thanksgiving weekend reading :
- Yes, I Am Optimistic :
- How TED (Really) Works: How One Hairdresser Behind the Scenes, and Émile Durkheim, Says More About TED than All the Viral Videos :
And Over Here:
Continue reading "Noted for Your Morning Procrastination for December 2, 2014" »
Tuesday Book Review Blogging: Christian Lorentzen on George W. Bush's Latest
Dad & Jr: Bushes Jr & Sr: " It’s been five years and ten months....
:...I confess to a bit of nostalgia for the nihilism that came with being governed by George W. Bush. For all the continuities, Obama arouses more earnest responses: apologetics, disappointment, head-shaking, Occupy, Edward Snowden. Bush’s arrogance has turned out to be that of a man destined to spend his golden years painting portraits of Putin, Merkel and Berlusconi like a dime-store Warhol working on commission for a UN theme bar. Retirement has now yielded a second book under his name.
Reviewers have welcomed 41: A Portrait of My Father like they miss father and son. Or maybe it’s ‘the soft bigotry of low expectations’:
Continue reading "Tuesday Book Review Blogging: Christian Lorentzen on George W. Bush's Latest" »
Liveblogging World War I: December 2, 1914: Karl Liebknecht
:
AT the second War Session of the Reichstag, Dec. 2, 1914, Karl Liebknecht not only voted against the War Budget – the only member of the Reichstag so to vote – but also handed in an explanation of his vote, which the President of the Reichstag refused to allow to be read, nor was it printed in the Parliamentary report. The President banned it on the pretext that it would entail calls to order. The document was sent to the German Press, but not one paper published it.
The full text of the protest was received by way of Switzerland. It runs as follows:
Continue reading "Liveblogging World War I: December 2, 1914: Karl Liebknecht" »
Over at Equitable Growth: Thinking About Austerity in Britain: Daily Focus
Over at Equitable Growth: : Destroying the State is No Accident: "Why do I think [that Osborne's] sharp reduction in the size of the state in the UK is no accident?...
There is no sound macroeconomic case for a rapid reduction in the share of debt to GDP at a time when interest rates are still at or near their lower bound and there are risks to the recovery. So, if the macroeconomic argument for deficit reduction is unsound, there has to be another motive.... [And] why on earth has Ed Balls come to accept the austerity case?... Just think if Clement Attlee’s government at the end of the second world war had decided that the first priority was to reduce the debts built up during the war.... READ MOAR
Continue reading "Over at Equitable Growth: Thinking About Austerity in Britain: Daily Focus" »
The Cato Institute's Brink Lindsey Is Running an Economic Growth Conference This Week: The Honest Broker for the Week of November 21, 2014
Over at Equitable Growth: RE: The Future of U.S. Economic Growth & Reviving Economic Growth: A Cato Online Forum
Some questions for the authors of the contributions that struck me as the most interesting...
Two Questions for Scott Sumner: First Question: Why has nominal GDP targeting not already swept the economics community? It really ought to have. Second Question: I believe in nominal GDP targeting--especially if coupled with some version of "social credit" at or near the zero lower bound. But a look back at the history of ideas about a proper "neutral" monetary policy--Newton’s fixed price of gold, Hayek’s fixed nominal GDP level, Fisher’s fixed price-level commodity basket, Friedman’s stable M2 growth rate, the NAIRU targeting of the 1970s, Bernanke’s inflation-targeting—leads immediately to the conclusion that anybody who claims to have uncovered the Philosopher’s Stone here is a madman. How can you reassure me that I (and you) are not mad?
...of the long-run growth rate in the economy.... But it does offer one of the cheapest ways of boosting growth. Unlike fiscal programs such as infrastructure, there is virtually no cost to improving monetary policy.... Elsewhere (2014) I’ve argued that a policy of nominal GDP targeting would smooth out the business cycle and undercut many of the arguments for counterproductive policies.... We need to convince other economists that nominal GDP targeting is the way to go. Once we do so, the Fed will follow the consensus. READ MOAR
Long Past Time to Mirror http://www.j-bradford-delong.net Over Here at TypePad...
20th-Century http://www.typepad.com/account/files?path=%2F-jbd%2F20th_Century
2007_audio http://www.typepad.com/account/files?path=%2F-jbd%2F2007_audio
- http://delong.typepad.com/-jbd/2007_audio/8_10_07_L%26S.mp3
- http://delong.typepad.com/-jbd/2007_audio/9_24_07_113.mp3
- http://delong.typepad.com/-jbd/2007_audio/9_26_07_113.mp3
- http://delong.typepad.com/-jbd/2007_audio/101_9_4_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/101_9_11_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/101_9_13_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/101_9_18_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/101_9_20_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/101_10_02_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/101_10_4_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/101_10_9_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/101_10_16_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/113_.m4a (2007-09-12)
- http://delong.typepad.com/-jbd/2007_audio/113_8_10_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/113_8_27_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_8_28_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_8_29_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_9_5_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_9_10_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_9_12_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_9_19_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/113_10_03_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/113_10_10_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/113_10_22_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/20070911_101.m4a
- http://delong.typepad.com/-jbd/2007_audio/20071024_AEH.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071025_101.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071029_113_women.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071030_101_Fallows.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071031_113.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071101_111154.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071106_121406.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071108_121455.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071114_163517.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071115_112044.mp3
- http://delong.typepad.com/-jbd/2007_audio/20071126_162759.mp3
- http://delong.typepad.com/-jbd/2007_audio/Bloomberg_Keene_9_14_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/Clark-Cowen-DeLong_10_18_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/EHA_9_8_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/EHR_10_10_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/Global_Imbalances_9_12_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/Greenspanism_9_12_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/KCBS_8_17_07.m4a
- http://delong.typepad.com/-jbd/2007_audio/KQED_9_19_07.mp3
- http://delong.typepad.com/-jbd/2007_audio/PE_Peer_9_21_07.m4a
2007_images http://www.typepad.com/account/files?path=/-jbd/2007_images
Robert Waldmann on the Engines of Growth: Live from Crows Coffee
It is just not credible for me to highlight a comment that starts "this is an unusually excellent post" as a DeLong Smackdown, is it? Alas, because it is one, a good one...
...Also the question is a very good question (and your concern about the power of the wand a good concern).
@Ezra Abrams the question was specifically about increasing "growth".... There is evidence that higher taxes on the top 0.1% would cause higher GDP growth https://ideas.repec.org/p/rtv/ceisrp/281.html but it isn't very strong....
I find it interesting that the word "equipment" doesn't appear on your list. I wonder why.
Continue reading "Robert Waldmann on the Engines of Growth: Live from Crows Coffee" »
On Paul Krugman and His "Notes on the Floating Crap Game": Live from Crows Coffee
Paul Krugman appears to be suffering a crisis of confidence with respect to the value of the economics Academic "meritocracy" he surveys from his position at its peak:
Notes on the Floating Crap Game (Economics Inside Baseball): "Reading Fourcade et al....
:...may explain one of the things that has puzzled me in the disputes over macro policy--namely, the seemingly unquenchable certainty among some of the freshwater guys that Keynesians are stupid. Again and again...freshwater macroeconomists declare that New [and old] Keynesians... don’t get some basic point... accounting identities [among others: Fama, Cochrane]... Ricardian equivalence [among others: Lucas, Cochrane, Lin, Prescott, Zingales, Boldrin]... the Euler condition [this seems to be Cochrane alone] (plus)... the Fisher equation [among others: Kocherlakota (but years ago), Williamson, Cochrane, Schmidt-Grohe, Uribe, Cowen, Andolfatto].
Afternoon Must-Read: Zeynep Tufkeci: How TED (Really) Works
...who will write about education policy on the high-traffic site: no need to be an expert in the topic, just an interest in the beat, and the ability to write really fast (part-time, of course while you juggle other, likely unrelated, jobs).... There are, of course, advantages to acquiring breadth as well as depth, as one should, but it still remains true: to do something well, you need to specialize, over time, and most organizations run on the fuel that is people dedicated to taking care of their corner. These people are rarely the ones on stage, or highlighted as interesting people, or celebrated as glamorous. It’s the nurse who really understands preemie babies, the electrician who takes care of the aging air-conditioning in the building that nobody else knows how to fix, and the programmer that makes the creaky legacy scheduling database work....
It’s why you can walk onto a big stage without having looked at a mirror, because you know you can trust the person whose job it is to take care of this. And the opposite is the anxiety we feel in situations where institutions don’t function as well, and where one keeps having to acquire competencies just to take care of basic functions: most places on the planet. The inability to trust this division of labor is among the most tiring aspects of living in less developed countries.... And my talk? Oh, it was about whether digital technology is helping social movements scale up without building deep organizations, and hence hitting the big time without the capacity to weather the challenges. So, yeah. Sometimes, the real magic is in the details, the specialization, and a division of labor you can rely on.
But yes: plugging your market interface into a finely-graded division of labor populated by true experts and building your own expert division of labor where you cannot plug into the market's is the key to turning even the best entrepreneurial idea into something of enduring value. As far as the interfaces are concerned, it is both locating in the right place and ensuring you have the right conductivity. As far as the internals are concerned, it is sweating the small stuff--and being willing to pay for quality.
Lunchtime Must-Read: Juan Carlos Suárez Serrato and Owen Zidar: Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms
...on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40% of the incidence, while workers and landowners bear 30-35% and 25-30%, respectively
Lunchtime Must-Read: Chris Rock: It's Not Black People Who Have Progressed. It's White People
It's Not Black People Who Have Progressed. It's White People: "When we talk about race relations...
:...it's all nonsense. There are no race relations. White people were crazy. Now they're not as crazy. To say that black people have made progress would be to say they deserve what happened to them before.... To say Obama is progress is saying that he's the first black person that is qualified to be president. That's not black progress. That's white progress. There've been black people qualified to be president for hundreds of years. If you saw Tina Turner and Ike having a lovely breakfast over there, would you say their relationship's improved?... A smart person would go, 'Oh, he stopped punching her in the face.'... Ike and Tina Turner’s relationship has nothing to do with Tina Turner. Nothing. It just doesn't.
The question is, you know, my kids are smart, educated, beautiful, polite children. There have been smart, educated, beautiful, polite black children for hundreds of years. The advantage that my children have is that my children are encountering the nicest white people that America has ever produced. Let's hope America keeps producing nicer white people...
Lunchtime Must-Read: Hiroshi Nakaso: The Potential Impact of Large-Scale Monetary Accommodation
The Potential Impact of Large-Scale Monetary Accommodation: "The Bank of Japan introduced the QQE...
:...to achieve the price stability target of 2 percent at the earliest possible time, with a time horizon of about two years... to dispel a view that... prices would not rise... to raise inflation expectations through a strong and clear commitment to achieve the price stability target of 2 percent, and at the same time to exert downward pressure across the entire yield curve through massive purchases of government bonds.
As a result, real interest rates will decline, thereby stimulating such private demand components as business fixed investment, private consumption, and housing investment. The upward pressure on prices will grow stronger as demand increases and the output gap narrows accordingly. Rises in actual inflation rates will be translated into higher expected rates of inflation and thus lower real interest rates. This will reinforce the virtuous cycle as the economy is provided with additional stimulus. Since its inception, the QQE has been producing the intended effects....
In recent months, however... the decline in demand following the consumption tax hike has been somewhat protracted... crude oil prices have declined substantially... slowing the CPI inflation rates... down to 1.0 percent in September.... The temporary weakness in demand associated with the consumption tax hike has already started to wane. Meanwhile, the decline in crude oil prices will have positive effects on economic activity and push up prices over the longer-run. Nevertheless... we decided to take preemptive actions to expand the QQE at the Monetary Policy Meeting held on October 31....
I would like to address a frequently cited remark that unconventional monetary stimulus could destabilize financial markets and the economy at large by encouraging 'search for yield' activities.... A rise in asset prices and a decline in volatility are intended effects of the QQE.... [But] we should be mindful of the risk that 'search for yield' activities enter into a self-fulfilling cycle.... If a rise in asset prices creates overly bullish expectations among non-financial entities such as the corporate and household sectors, it could trigger excessive risk-taking behavior in these sectors as well. Thus far, we have not observed signs of self-fulfilling, overheated price movements...
Lunchtime Must-Read: Paul Krugman: Dean Baker on Robert Samuelson's Famous Fake Prediction Failures
Famous Fake Prediction Failures: "Dean Baker is annoyed, and rightly so, at claims like this from Robert Samuelson...
:...that Keynesians failed to predict the slow recovery. Dean and I were both tearing our hair out in early 2009, warning that the Obama stimulus was too small and too short-lived.... Samuelson is taking the fact that this business cycle didn’t look like previous cycles as evidence that we don’t understand macroeconomics, so we shouldn’t even try to help the economy. But I was predicting a protracted jobless recovery long before the recession was official, and explained carefully why.
But then I also fairly often get comments along the lines of ‘If you’re so smart, how come you didn’t see the housing bubble’, when I not only did see it (although Dean saw it much earlier), but got a lot of flak for daring to raise questions about the Bush Boom. Well, I guess you can’t expect people to be aware of what I was saying, seeing as how I only write for an obscure publication nobody has heard of.
Morning Must-Read: Nick Bunker: Thanksgiving Weekend Reading
Thanksgiving weekend reading - Washington Center for Equitable Growth: "Secular stagnation: Greg Ip argues that the growing tide of elderly...
:...in wealthy countries explains a lot of secular stagnation [the economist]. The Economist also created a series of accompanying graphics [the economist]. Shane Ferro looks at the troubling demographic situation in Japan [business insider]. Hidden wealth of nations: Matthew Klein looks at London School of Economics professor Gabriel Zucman’s research on the offshoring of wealth and profits [ft alphaville part 1, part 2]. The roots of upward mobility: Richard Reeves looks at research that finds a link between inequality of non-cognitive skills and intergenerational mobility [brookings]. Derek Thompson poses a dilemma for Millennials: move to a city with affordable housing or a city with a good track record of upward mobility [the atlantic]. More work and less play than expected: Dylan Matthews tries to figure out why we don’t have 3-hours workdays as Keynes predicted [vox]. Timothy Taylor considers two approaches to encouraging work: tax incentives and social support [conversable economist]"
Free exchange: No country for young people | The Economist | "Secular stagnation" in graphics: Doom and gloom | The Economist | How a Limo Ride With Paul Krugman Changed the Course of Abenomics - Bloomberg | The costs of offshore tax avoidance, part 1 | FT Alphaville | The costs of offshore tax avoidance, part 2 | FT Alphaville | The “Great Gatsby Curve” for Character Skills and Mobility | Brookings Institution | Why It's So Hard for Millennials to Find a Place to Live and Work - The Atlantic | Why 3-hour workdays haven't happened yet - Vox | CONVERSABLE ECONOMIST: Encouraging Work: Tax Incentives or Social Support?
Noted for Your Morning Procrastination for December 1, 2014
Over at Equitable Growth--The Equitablog
- Over at the Cato Institute: Waving a Magic Wand for Economic Growth
- Lawrence Summers on ‘House of Debt’
- Paul Krugman: The German Inflation Undershoot: The European Outlier
- Peter Hart: NYT Columnist Andrew Ross Sorkin's Faulty Attack on Elizabeth Warren's 'Rage'
- Nicholas Bagley: Three Words and the Future of the Affordable Care Act
- Ed Luce: Hillary Clinton’s rickety bridge to the White House
Plus:
Must- and Shall-Reads:
- When G.M. Was Google :
- Hillary Clinton’s rickety bridge to the White House :
- Three Words and the Future of the Affordable Care Act :
- The German Inflation Undershoot: The European Outlier :
- NYT Columnist Andrew Ross Sorkin's Faulty Attack on Elizabeth Warren's 'Rage' :
And Over Here:
Continue reading "Noted for Your Morning Procrastination for December 1, 2014" »