March 2015
Marriage: How Good an Idea at the Margin?: Focus
Over at Equitable Growth: A fine rant from the very sharp and newly-parental Matthew Yglesias:
...As Betsey Stevenson and Justin Wolfers put it, we have gone from shared production to shared consumption and formed more egalitarian partnerships based on common preferences rather than a swap of housework for rent money. This new model of partnerships has thus far not taken root as strongly in working-class relationships. That's unfortunate. But it's a mistake to believe women are making themselves worse off than their next actually available alternative. As women have become more empowered, they have gotten pickier. That means more single women, and a higher quality of relationship for the non-single. READ MOAR
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Today's Economic History: Erik Loomis on the Triangle Shirtwaist Factory Fire
On March 25, 1911, 146 workers at the Triangle Shirtwaist Factory in New York City died when the building in which they worked caught on fire. One of the most important events in American labor history, the Triangle Fire brought attention to the terrible sweatshop conditions of American labor, helped spawn important labor reforms, and became a touchstone for justice advocates over the next century.
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On the Stupidity of Anti-Monetarist Economics: David K. Levine vs. Chris Sims as Refereed by Paul Krugman, with Additional Thoughts
Paul Krugman is the picador:
...Whenever someone steps up to declare that "Keynesian" economics is logically and empirically flawed... you know what comes next: a series of logical and empirical howlers — crude errors of reasoning, assertions of fact that can be checked and rejected in a minute or two. Levine doesn’t disappoint. Right at the beginning... he says:
Now suppose that the phone guy suddenly decides he doesn’t like tattoos enough to be bothered building a phone.
OK, stop right there. That’s an adverse supply shock, and no Keynesian claims that demand-side policies can cure the economy from the effects of such shocks.
April Fools' Festival Day XVI: No, Steve Keen Doesn't Know What He Is Talking About. Why Do You Ask?
From the Archives: Paul Krugman:
Minunderstanding IS-LM: Some readers have asked me to reply to this Steve Keen piece claiming that I don’t understand the IS-LM model. Sigh. I really don’t want to spend time fighting against people with whom I don’t really have a current policy disagreement — and this is so silly, besides. But to satisfy those who are for some reason nervous, here’s a brief explanation of why somebody doesn’t understand IS-LM.
Comment of the Day: : Liveblogging World War I: March 24, 1927: John Maynard Keynes in 1927 Looking Back at Winston Churchill on "The Great War": "War is about either compelling the other party to admit defeat (difficult; that happens in the mind)...
Liveblogging World War II: March 25, 1945: Albert Einstein to Franklin Delano Roosevelt
Albert Einstein to Franklin Delano Roosevelt: March 25, 1945:
Today's Must-Must-Read: David Wessel: Why Are Unions so Focused on Fighting Trade Deals?
Today's Must-Must-Read: Robert Skidelsky: Messed-Up Macro
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The Assumptions Behind the Federal Reserve’s Choice of 2% per Year Were Erroneous: Focus
Over at Equitable Growth: A question I will never ask any Federal Reserve policymakers— not in public, not in private. They do not need their elbows jiggled in this way: The decision by the Federal Reserve in the mid-1990s to settle on a 2% per year target inflation rate depended on three facts — or, rather, on three things that were presumed to be facts back in the mid-1990s: READ MOAR
A Rant Against the Use of the Word “Bubble” in the Context of the Bond Market
Over at Equitable Growth: I was reading Duncan Weldon’s very interesting “A Policy Driven Bond Bubble” (see also “Is There a Bubble in Fear” plus “A Monetary Policy Which Is Cheap But Not Easy”), and I found myself thinking:
We should careful when we call things “bubbles”. READ MOAR
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Noted for Your Morning Procrastination for March 24, 2015
Must- and Should-Reads:
- Morning Must-Read: : How Secular Stagnation Came to Smurf Village
- : Mortgaging the Future?
- Nighttime Must-Read: : Dirty Energy Taxes and Clean Energy Innovation
- Afternoon Must-Read: : Free Speech on Campus Is Not Simple
- Nighttime Must-Read: : Default Panic and Other Tall Stories
- Nighttime Must-Read: : "Claims that climate science is a hoax, that human action is not a factor
Over at Equitable Growth--The Equitablog
- Fixed: "A Significant Step Toward the Entrenchment of Abnormal Dynamics": Focus
- Over at Grasping Reality: I Note Dean Baker's Smackdown of Me and the "Debt School"'s Theory of the Lesser Depression
- Regional Economics and Living Standards: Portland OR vs. Kansas City MO/KS
- The Old Is New Again in the Analysis of Modern Authoritarian Regimes...
- Over at Grasping Reality: Simon Wren-Lewis on Faith-Based Macroeconomics
- : Looking inside the data-making factory
Plus:
And Over Here:
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Fixed: "A Significant Step Toward the Entrenchment of Abnormal Dynamics": Focus
Over at Equitable Growth: Fixed: "Beginning the normalization of policy will be a significant step toward the restoration entrenchment of... normal abnormal dynamics
...However it is widely expected that the rate will lift off before the end of this year, as the normalization of monetary policy gets underway. The approach of liftoff reflects the significant progress we have made toward our objectives of maximum employment and price stability. The extraordinary monetary policy accommodation that the Federal Reserve has undertaken in response to the crisis has contributed importantly to the economic recovery, though the recovery has taken longer than we expected. The unemployment rate, at 5.5 percent in February, is nearing estimates of its natural rate, and we expect that inflation will gradually rise toward the Fed's target of 2 percent. Beginning the normalization of policy will be a significant step toward the restoration of the economy's normal dynamics, allowing monetary policy to respond to shocks without recourse to unconventional tools... READ MOAR
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Hoisted from the Archives from Ten Years Ago: Eugene Volokh Getting *Really* Medieval
Getting Really Medieval: "Getting Really Medieval April Fools' Festival Day XV: Another person siding with the Ayatollah Khomeini instead of with James Madison!
Here we have James Madison, George Washington, and company:
Amendments to the Constitution VIII: Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.
Here we have Eugene Volokh:
I am especially pleased that the killing... was a slow throttling, and was preceded by a flogging.
Comment of the Day: : Monday DeLong Smackdown: Dean Baker: Question for Brad DeLong and the Debt School...: "[Dean] Baker is very smart and reality based...
In Lieu of a Newsletter: A Baker's Dozen for March 23, 2015
A long time ago, I read George Dangerfield's truly excellent Era of Good Feelings. Ever since then, claims that James Madison was a die-hard hard-money libertarian--that were he alive today he would have been strongly opposed to the existence of the Federal Reserve, and to government management of the economy more generally--have bewildered me. James Madison enthusiastically promoted and signed the bill chartering the Second Bank of the United States, after all. His opposition to the First Bank was something he rethought and abandoned when he actually had to try to guide the destinies of the United States in the mercantile, commercial, and increasingly industrializing world of the nineteenth century. It is a fact that Madison's (and Jefferson's) view of federal power hinged on whether he thought (as he did in the early 1790s) that Hamilton and Adams would exercise it or that people like him would exercise it. And the other argument against a loose construction of the Constitution was John Taylor of Caroline's: "If Congress could incorporate a bank, it might emancipate a slave..."
I stalled out on my overview of what "equitable growth" as a set of issue areas is. So as a down-payment on that, I produced a list of topics for the Equitable Growth Conference in a Box. Suggestions for readings to attach to the post are very welcome indeed...
Weblogging in this Age of Social Media has been taking up a lot of my time. The only thing readable to emerge so, far, however, has been a Socratic Dialogue: The Future of Weblogging in the Medium Run...
We have finally passed the milestone at which our cyclical unemployment problem ceases to be greater than our structural unemployment problem...
David Frum triggered me to undertake a side-expedition into super-duper-grand-strategy, with: Thoughts on David Frum's Excellent Review of Adam Tooze's Superb "The Deluge" and "The Wages of Destruction"...
And Mark Halperin grades Scott Walker thus: style A-, substance C+, overall A--thus demonstrating that he does not know the meaning of the concepts "overall" and "grade", or perhaps only that he presumes the audience of eyeballs he seeks to attract does not know or care about the meaning of those concepts. Then to add insult to injury he goes to see Scott Walker again. This time he thinks Walker is more impressive: the style grade stays the same, the substance grade rises from C+ to B... and the overall grade falls from A to A-. Ya think? Why journamalists like this, empty of substantive knowledge and emitting what can only be called "word salad", have jobs let alone high-paying jobs is completely beyond me...
I signed up to write for Medium's Bull Market: https://medium.com/bull-market. Why: http://www.bradford-delong.com/2015/03/looking-for-the-shovel-why-stephen-moore-is-making-me-write-for-medium.html
Sheryl Sandberg continues to get undeserved bullshit as someone who cares only about rich white women: http://www.bradford-delong.com/2015/03/evening-must-read-sheryl-sandberg-2011-barnard-college-commencementhttpequitablegrowthorgp9661-women-all.html
The start of my three-week April Fools' Festival: http://www.bradford-delong.com/2015/03/sleeping-beauty-again-thirders-correct-double-halfers-confused-halfers-wrong-festival-of-fools-blogging.html
An extraordinarily good quote from Richard Thaler: “An Infinite Regress. Of Dumb”: More Reflections on “Market Efficiency”
Question of the Day: Should Quad Lattes Be a Thing?
My Discussion of Matthew Rognlie's paper, "Deciphering the Fall and Rise in the Net Capital Share", which is kinda-sorta about Thomas Piketty...
One of my very favorite pieces: John Maynard Keynes's review of Winston Churchill's personal history of World War I: "The World Crisis" http://www.bradford-delong.com/2015/03/liveblogging-world-war-i-march-23-1927-john-maynard-keynes-in-1927-looking-back-at-winston-churchill-on-the-war.html
Liveblogging World War I: March 24, 1927: John Maynard Keynes in 1927 Looking Back at Winston Churchill on "The Great War"
John Maynard Keynes: Mr. Churchill on the War: The World Crisis, 1916-1918. By Winston Churchill (New York: Charles Scribner's Sons. Two vols. 625 pages. $10): "This brilliant book is not a history....
...It is a series of episodes, a succession of bird’s-eye views, designed to illuminate certain facets of the great contest and to confirm the author’s thesis about the conduct, in its broadest strategic aspects, of modern warfare. There are great advantages in this procedure. Mr. Churchill tells us many details of extraordinary interest, which most of us did not know before, but he does not lose himself in detail. He deals in the big with the essential problems of the higher thought of the conduct of the War.
How to be a Hack, Fred Hiatt of the Washington Post Edition
April Fools' Festival Day XIV: As James Fallows said just... last week... in another context: Jeff Bezos: Behold your newspaper!
: How to be a Hack, Fred Hiatt Edition - Lawyers, Guns & Money : Lawyers, Guns & Money: "This is also great:
There is, as we wrote earlier this week, a reasonable way for the two sides to compromise on the trafficking bill, but both sides need to be reasonable. Sadly, that was not the case for Senate Democrats this week.
There is a compromise out there that would work. Republicans aren’t actually offering this compromise, but nonetheless Democrats should agree to the bill anyway or they’re the obstructionists. I can’t explain High Broderism any better than that, ladies and gentlemen...
Monday DeLong Smackdown: Dean Baker: Question for Brad DeLong and the Debt School...
As I have said (often), I am on Mian and Sufi's side of this argument. But Dean Baker is not without points on his side: "What would our saving rate be if we didn't have [a] debt [overhang]?"
: Question for Brad DeLong and the Debt School of the Downturn: What Would Our Saving Rate Be If We Didn't Have Debt?: "Brad DeLong tells us that he is moving away from the cult of the financial crisis...
Regional Economics and Living Standards: Portland OR vs. Kansas City MO/KS: Focus
Over at Equitable Growth: Each time I go directly from Kansas City, Missouri-Kansas to Portland, Oregon--or from Portland to Kansas City--I am struck by cognitive dissonance.
There is a very large gulf between what I see around me and what, say, the charts people put up on the screen for relative levels of real cost-of-living adjusted income in Kansas City and Portland. The numbers seem to say that the Kansas City MO/KS metropolitan area is about 10% richer than the Portland OR metropolitan area. But my eyes tell me that Portland is about 20% richer than Kansas City.
There are a number of possible resolutions: READ MOAR
Robert Waldmann: Multipliers, Reverse Causation, and the Heroic Assumption That E(εη) = 0: Monday DeLong SmackDown Watch
...@foosion That is a very good question. There are two reasons. First even when looking at a scatter it is best to worry about reverse causation (as Brad does at length in the post). Government revenues are very strongly affected by GDP growth. To consider the effect of tax increases and cuts, one has to look at changes in the tax code not the automatic effect of GDP growth on tax revenues. To do that for all the countries would require a major effort not a blog post.
Second PK is attracted to New Keynesian models (NK) in which deficits don't matter (the standard NK models have Ricardian equivalence). In those models, the varaible which matters is government purchases (G). By the way, G doesn't included transfers such as social security pensions or unemployment insurance. In any case, he used the variable which he should use given the models he likes best.
Even given the old Keynesian IS-LM model, an increase in G financed by an equal increase in taxes should stimulate. I certainly agree with you about the different effects of taxes on the best off and the rest, but that implies that taxes increases on both will have a smaller effect on aggregate demand than an equally large spending increase (this is what the IS-LM model says and this fitst the data).
@Brad It seems to me that the multiplier is too large. Your quick calculations definitely add value to PK's valuable post. But I have to guess that there is something else going on too. The red flag is the heroic assumption that epsilon and eta are independent. I think the question is whether there are shocks wich affect both G and GDP directly (not just through GDP and G respectively). Trying to describe them I go to pick your country casual empiricism and to the PIIGS. To try to be brief I think the causes of austerity includes financial crises. I guess the simplest example is Ireland which spent 30% of a year's GDP rescuing banks. This put pressure on G. I guess the other common cause could be high price levels (the over-valued Greek, Italian, Spanish, Portoguese and Irish Euro). I think trade deficits lead to austerity as governments don't like them and (correctly for once) believe stimulus causes higher trade deficits.
Anyway just arithmetically, something which directly affects G a little and GDP a lot can cause a spuriously high multiplier.
I would say: touché. I said it was a heroic assumption.
But do notice that the G is real government purchases, and hence excludes bailout transfers (I believe--it's supposed to exclude them, and I hope EuroStat did)...
Liveblogging World War II: March 23, 1945: Operation Plunder
Beginning on the night of 23 March 1945, Operation Plunder was the crossing of the River Rhine at Rees, Wesel, and south of the Lippe River by the British 2nd Army... and the U.S. Ninth Army.... XVIII U.S. Airborne Corps, consisting of the British 6th Airborne Division and the U.S. 17th Airborne Division, conducted Operation Varsity, parachute landings on the east bank in support of the operation....
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Live from PDX: Ted Cruz for President:
The Old Is New Again in the Analysis of Modern Authoritarian Regimes...
Over at Equitable Growth: : ["From the Peru of Alberto Fujimori to the Hungary of Viktor Orban, illiberal regimes have managed to consolidate power without fencing off their countries or resorting to mass murder.... READ MOAR
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Noted for Your Morning Procrastination for March 22, 2015
Must- and Should-Reads:
- Morning Must-Read: : What happens When US Rates Rise?
- Nighttime Must-Read: : The New Mercantilist Challenge
- Evening Must-Read: Binyamin Applebaum: Richard Fisher, Often Wrong but Seldom Boring, Leaves the Fed
- : "Rent... is... a payment for a resource in excess of its opportunity cost.... There has been... a 'big idea'... that these rents are growing.... [We must] test the rent hypothesis systematically..."
- : "If Obamacare were pushing people into part-time work, we would expect an increase in involuntary part-time work.... The opposite has occurred.... The serious problem in US economic debates where those with non-credible arguments hold far too much sway..."
- : "From the Peru of Alberto Fujimori to the Hungary of Viktor Orban, illiberal regimes have managed to consolidate power without fencing off their countries or resorting to mass murder.... New forms of dictatorship based on manipulating information rather than on mass violence... can survive... in the face of moderate economic underperformance... [via] an increase in censorship and propaganda..."
Over at Equitable Growth--The Equitablog
- What Are the Arguments Against ObamaCare These Days, Exactly?: Focus
- : Weekend reading
- : The importance of shopping around in the U.S. health insurance market
Plus:
And Over Here:
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Weekend Reading: Zandar: Life Comes At You Fast, Scott Walker
...happened in about 72 hours, and involved tweeting. It goes something like this:
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Live from Downtown Portland: Starbucks is now also a wine bar, serving hipster staples like truffle mac & cheese and artichoke-goat cheese flatbread?! I must live in a cave…
It does make sense: having disrupted the coffee shop in the morning and afternoon, why not use the fixed and network assets to disrupt the evening wine bar business next?
I wonder if live music and slam poetry is next?
Liveblogging World War II: March 22, 1945: Ulithi Anchorage
April Fool's Day Comes Early This Year and Lasts a Long Time: Economics Edition
Scott Sumner.... 'Simon Wren-Lewis also gets the GDP growth data wrong, in a way that makes austerity look worse'.... Sumner is not using ‘wrong’ and ‘claim’ in their ordinary sense.... What he means is that by choosing to use the (correct) annual data, I’m (accidentally, deliberately?) hiding something important. He then quotes two figures that supposedly prove his case. No analysis, no graphs....
Continue reading "April Fool's Day Comes Early This Year and Lasts a Long Time: Economics Edition" »
Weekend Reading: Antonia Quirke on Richard Burton's Raincoat
...The first thing you see of Richard Burton in Martin Ritt’s The Spy Who Came in from the Cold, the 1965 adaptation of the novel by John le Carré, is his overcoat. He’s filmed from behind, in black and white, looking out of a window of a checkpoint into the Berlin night, and all you see is the coat, and all you hear is the voice as he gives weary commands.
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Weekend Reading: Corey Robin: When Conservatives Didn’t Get Tough on Crime: National Review on the Eichmann Trial
...though, about the initial reaction to Israel’s decision to try Adolf Eichmann. The response to that decision, as historians like Peter Novick and Deborah Lipstadt have shown, was rife with anti-Semitism. The Wall Street Journal warned darkly of ‘an atmosphere of Old Testament retribution.’ A Unitarian minister, according to Novick, claimed ‘he could see little ethical difference between ‘the Jew-pursuing Nazi and the Nazi-pursuing Jew.’ Those unitarian universalists.
The worst offender, though, was National Review. Combining all the elements of anticommunism, Christian homiletics, and ancient Jew-hatred, William F. Buckley’s magazine castigated the Israelis--really, the Jews, those Shylocks of vengeance and memory--for their inability to let bygones be bygones. In one editorial, the magazine wrote:
Liveblogging the American Revolution: March 21, 1777: John Adams
Philadelphia March 21. 1777
Dear sir
It is not easy to penetrate the Designs of the Enemy. What Object they have in View, cannot certainly be determined. Philadelphia, most probably and Albany. They have near Ten thousand Men in the Jersies, at Brunswick, Amboy, Bonamtown, and Piscataqua: the two last Posts, are very near their main Body.
I think, but may be mistaken, that they will not hazard, an Attempt upon this City, or Albany, before they receive a Reinforcement. If they do, they must evacuate New Jersy, entirely, because they have not Men enough to leave sufficient Garrisons in Brunswick and Amboy, and march to Philadelphia, or to Albany with the Remainder.
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What Are the Arguments Against ObamaCare These Days, Exactly?: Focus
Over at Equitable Growth: Picking up on In Lieu of a Focus Post: March 2, 2015 (Brad DeLong's Grasping Reality...): Janet Currie points out that the damage from a ruling adverse to the government in the King v. Burwell ObamaCare subsidies case is likely to carry a very heavy cost in terms of societal well-being along private health, public health, and economic growth dimensions. READ MOAR
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For the Weekend!
April Fools' Festival Day XI: Laurence Tribe in the Center Ring
I confess I am gobsmacked: I really thought this April Fools' Festival thing would be a trawl through my archives.
But no! Things going on today beat anything I can ressurrect:
Continue reading "April Fools' Festival Day XI: Laurence Tribe in the Center Ring" »
Live from the Pork and Pickle: By far the most extraordinary and astonishing thing about ex-Dallas Federal Reserve Bank President Richard Fisher: in spite of being wrong ex post for eight straight years in a row on pretty much everything to do with the appropriate direction of and the risks to Federal Reserve policy, he not only never changed his mind, he never lost his dead-certain iron confidence that he was right:
Evening Must-Read: Binyamin Applebaum: Richard Fisher, Often Wrong but Seldom Boring, Leaves the Fed: “[Richard Fisher] was also among the last to understand the depth of the resulting financial crisis…
Live from Outside the Dupont Circle Starbucks: it does not snow in Washington DC on March 20. That is all.
April Fools' Festival Day X: James Fallows Watches the Clown Show That Is the Washington Post
...When I published my 'Tragedy of the American Military' article last month, some people said:
No, it's an exaggeration to claim that war is an easy abstraction that people throw around without thinking through the consequences.'
Maybe. But I give you [Josh Muravchik] on the [Fred Hiatt-run] Op-Ed page of our capital city's main newspaper [The Washington Post]....
DeLong's Grasping Reality © J. Bradford DeLong 1995-2019
