Grasping Reality by Brad DeLong

Must-Read: Does Britain's Tory government listen to no advice from technocratic economists at all?

Martin Sandbu: Free Lunch: Iron Rule from No 11?: "George Osborne announced... not satisfied with outlawing higher tax rates...

Must-Read: The very sharp Matt Bruenig really dislikes the data underlying Acemoglu, Robinson, and Verthier:

Matt Bruenig: Nordic Zombie Arguments: "There are two amazing things about watching the American Right struggle mightily...

Must-Read: Paul Krugman attempts to score himself. I detect no minimization of errors, and no ex post moving of goalposts in a convenient direction:

Paul Krugman: The Decade Behind: "Almost 10 years.... It began with the diagnosis of a housing bubble, whose bursting I knew would be bad but had no idea would be this bad...

Atomic Bomb: Decision: The Franck Report, June 11, 1945:

SECRET

This document consists of 16 pages and 0 figures. No. 2 of 6 copies, Series A

This document contains information affecting the national defense of the United States within the meaning of the Espionage Act, U.S.C. 50; 31 and 32. Its transmission or the revelation of its contents in any manner to an unauthorized person is prohibited by law.

SECRET

Political and Social Problems

I. Preamble
II. Prospectives of Armament Race
III. Prospectives of Agreement
IV. Methods of Control
V. Summary

Hoisted from the Archives from Spring 2009: This Is Getting Damned Annoying: Will I Ever Be Allowed to Disagree with Paul Krugman Again About Anything? (Niall Ferguson Edition):

There have been two annoying things about the past decade. The first is that I feel like I have been living in a Ken Macleod novel--and one of the more dystopic ones too, at least up until January 21, 2009 (I am glad he has stopped: Ken: please don't get cranky again).

The second is that the best way to understand the world is through these two rules:

1. Paul Krugman's analysis is correct.
2. If you think that Paul Krugman's analysis is incorrect, see rule number 1. Most recently, I thought that Paul Krugman must be being too harsh on Niall Ferguson.

Over at Equitable Growth: Niall Ferguson: "In the vanguard of the Keynesian attack: was Paul Krugman of The New York Times...

...In August 2011 he denounced the ‘delusions’ of the chancellor whose ‘experiment in austerity’ was ‘going really, really badly’.... Mr Osborne was worrying needlessly about business confidence. ‘The confidence fairy’ was the term Mr Krugman coined to ridicule anyone who argued for fiscal restraint. Unfortunately for Mr Krugman, the more he talked about the confidence fairy, the more business confidence recovered in the UK. In fact, at no point after May 2010 did business confidence sink back to where it had been throughout the past two years of Gordon Brown’s premiership.... UK unemployment is now 5.6%, roughly half the rates in Italy and France.... Weekly earnings are up by more than 8%; in the private sector, the figure is above 10%. Inflation is below 2% and falling...

The graph that Ferguson is looking at: READ MOAR

Over at Medium Letters: Ah. So Medium http://medium.com is getting into the Tinyletter http://tinyletter.com business, as well as or in addition to or as part of its core mission, whatever its core mission is going to turn out to be.

I like this. I like the fact that very good programmers and designers are focusing on ease-of-writing, reader-experience, and the social dynamics of aggregation. I like the fact that they are trying to turn the Medium platform--is it a platform?--into a thing, or some thing, or something. READ MOAR

Must-Read: Speaking of people who were wrong in and before 2010 and get appear do made little effort to market their beliefs to market, Francesco Giavazzi. Karl Whelan reads him and gets shrill:

Karl Whelan: The FT Lets Itself Down Again: Francesco Giavazzi on Greece: "With regular opinion pieces from the likes of Hans-Werner Sinn and Niall Ferguson...

Jamil Hasanli: Stalin and the Turkish Crisis of the Cold War:

Must-Read: Ben Bernanke tries to clean up misinformation from Benn Steil.

No, I don't know why Benn Steil writes what he writes. I never have.

Ben Bernanke: The FOMC, the Board of Governors, and Fed Interest Rate Policy: "Benn Steil argues that, for the purpose of predicting changes in the stance of monetary policy...

Over at Equitable Growth: I found myself debating Tom Davis--a very smart and well-trained professional--on Bloomberg TV last Friday, on the occasion of the monthly employment report. I did better than I had expected, probably because we are both on the same side of the technocratic "we badly need to do more for infrastructure" issue: READ MOAR

What about the 2009 stimulus package, anyway?

Ah. The 2009 Recovery Act. Christie Romer's original calculations suggested we needed a fiscal stimulus program of $1.8 trillion over three years, even with all of the banking-support and monetary policy moves the Treasury and the Federal Reserve were making. Her forecasts--like almost every forecast in December and January 2009--were optimistic. We needed not $1.8 trillion over three years, but rather more like $4 trillion over 5 years (which could be pruned back or offset by tighter monetary policy if recovery came rapidly.

What Do We Learn from the Latest Monthly Employment Report?: DeLong FAQ:

• This month's employment report--in fact, the last few months' employment reports--should not lead us to change our minds about anything. What did you think three months ago? You should think the same thing now. Information about the changing destiny of the economy drips out only slowly. And so your view should change only slowly

• What should you have thought three months ago? Eight things:

Over on the Twitter Device the very sharp Tim Noah trolls me by writing 33 tweets about how "things went sour" for The Old New Republic when Richard Just got fired:

1.) This @VanityFair profile of Chris Hughes compels me to correct the record. http://t.co/CMckyAx3ht

— Timothy Noah (@TimothyNoah1) June 8, 2015

And following up with:

@delong @tnr the most part a good magazine, one that I'll wager you paid more attention to then than now.

— Timothy Noah (@TimothyNoah1) June 8, 2015

@delong @tnr It was a good magazine committed to hearing out the debate among liberals. It had its ups and downs and sometimes it defined

— Timothy Noah (@TimothyNoah1) June 8, 2015

Robert Waldmann: The Long Run Is My Shepherd: "DeLong Praises The Long Run...[, saying:]

...these beliefs hinged and hinge on a firm and faithful expectation that this long run is at hand, or is near, or will soon draw near (translations from the original koine texts differ)' those who believe will not taste death before, but will live to see exit from the liquidity trap'

I commented:

Must- and Should-Reads:

• David Byrne: Domestic Electronics Manufacturing: Medical, Military, and Aerospace Equipment and What we Don't Know about High-Tech Productivity
• Must-Read: Timothy Garton Ash: Xi Jinping’s China: The Greatest Political Experiment
• Must-Read: Gavyn Davies: China: Serious About Reflation
• Must-Read: Henry Farber et al.: The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out
• Must-Read: John Schmitt: OECD: Income Inequality Hampers Growth

Over at Equitable Growth--The Equitablog

• Nick Bunker: Understanding changes in movement on the U.S. job ladder - Washington Center for Equitable Growth

Plus:

• Things to Read on the Afternoon of June 9, 2015

And Over Here:

https://www.youtube.com/watch?v=g_WBsEGsUIM

Acquilla Cleaveland: Mount Independence, June 8, 1777:

I heartily embrace the opportunity to write to you, hoping that these will find you and yours in good health as I am now. I have been vary hearty since I left home. I herd last week that you were all well. Mr. Church said Sarah had been sick but had got well again. I would have your write to me if you can. I want to hear how you make out.

Live from La Farine: Matthew Yglesias nails it with the great wrongness that is at the core of George R.R. Martin's Game of Thrones:

Matthew Yglesias: Game of Thrones: "The overall [Game of Throne's] story's great weakness...

...is that... it... [is] just a giant series of MacGuffins until Jon, Dany, and a bunch of dragons face off against the undead horde...

Indeed.

Must-Read: Henry Farber et al.: The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out: "We estimate the effect of extended benefits on unemployment exits...

...separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014....

Must-Read: John Schmitt: OECD: Income Inequality Hampers Growth: "'Econometric analysis suggests that income inequality has...

Must-Read: Gavyn Davies: China: Serious About Reflation: "Amid further signs of a weakening economy...

Live from La Farine: Sam Thielman and Valerie Lapinski**: Darpa: These Robots Will Save Your Life (Once They Learn to Walk): "Tech reporter Sam Thielman visited the Darpa Robotics Challenge in Pomona, California...

Hoisted from the Archives: I understand that the Old New Republic was at times (save for firing him) very good to the very sharp Timothy Noah. But he says some things he shouldn't in and ancillary to a very nice tweetstorm:

2.) Things didn't go sour for @tnr when @FranklinFoer got fired. To whatever extent there was an abrupt break from past glories ...

— Timothy Noah (@TimothyNoah1) June 8, 2015

For example:

@delong @tnr the most part a good magazine, one that I'll wager you paid more attention to then than now.

— Timothy Noah (@TimothyNoah1) June 8, 2015

It was not a good magazine.

Must-Read: Timothy Garton Ash: Xi Jinping’s China: The Greatest Political Experiment: "Xi is... trying to steer a complex economy and society... by top-down changes...

Must- and Should-Reads:

• Barry Ritholtz: "Richard Fuld, the former chief executive officer of Lehman Brothers, is the Shaggy of finance. On the cause of the financial crisis and the collapse of Lehman Brothers, his claim is, 'It wasn’t me.'... He made the bizarre claim that ‘Regardless of what you heard about Lehman Brothers’ risk management, I had 27,000 risk managers because they all owned a piece of the firm.’ As if an employee e-mail to Fuld would have changed the firm’s direction: Imagine ‘Hi Dick, I own 10,000 shares of Lehman. Please divest all of our risky derivatives and securitized subprime mortgages because I think we're going to take losses on them.’ For the man known as ‘The Gorilla’ to make such an assertion is beyond absurd...
• Izabella Kaminska: Stranded Assets and Climate Stimulus
• Martin Sandbu: Free Lunch: Lessons learnt from the crisis
• Frank Hahn (1970): Some Adjustment Problems
• Must-Read: Larry Mishel: New Research Does Not Provide Any Reason to Doubt that CEO Pay Fueled Top 1% Income Growth
• Must-Read: Jared Bernstein: Wall St, Injured Dogs, and the Election
• Must-Read: Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen: Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis

Over at Equitable Growth--The Equitablog

• Nick Bunker: A partial defense of gross domestic product

Plus:

• Things to Read at Lunchtime on June 9, 2015

And Over Here:

To Watch:

• Brad DeLong: New Economic Thinking, Hicks-Hansen-Wicksell Macro, and Blocking the Back Propagation Induction-Unraveling from the Long Run Omega Point
• Paul Krugman: Backward Induction and Brad DeLong
• Brad DeLong: Paul Krugman Was Right. I, Ken Rogoff, Marty Feldstein, and Many, Many Others Were Wrong
• John Hicks (1975): The Crisis in Keynesian Economics
• Brad DeLong: Live from Evans Hall: When I arrived...
• Nick Rowe: Back propagation induction does not work under inflation targeting
• Brad DeLong: Convergence to the Long-Run Macroeconomic Omega Point and Inflation Targeting: Nick Rowe's View
• Mark Thoma: Krugman vs. DeLong
• David Glasner: Repeat after Me: Inflation’s the Cure not the Disease

Links:

• Frank Hahn (1970): Some Adjustment Problems
• Knit Me a Pony: Things I Learned From Sir Terry Pratchett...
• Must-Read: Larry Mishel: New Research Does Not Provide Any Reason to Doubt that CEO Pay Fueled Top 1% Income Growth
• Must-Read: Jared Bernstein: Wall St, Injured Dogs, and the Election
• Must-Read: Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen: Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis

Tweets:

• @HMittelmark: Password too weak. Life too hard for password. Password cannot go on. Password sorry for disappointing family, friends. Forgive password.
• @jbouie: My latest is in the LA Times: Markets and deregulation are a progressive's friends in tackling affordable housing. http://www.latimes.com/opinion/op-ed/la-oe-0607-bouie-sanfrancisco-housing-20150607-story.html
• @TimMcKayUM: Thoughtful @MazzucatoM piece on finding the right balance between public & private in the innovation ecosystem http://www.economist.com/blogs/schumpeter/2014/02/invitation-mariana-mazzucato
• @yeselson: David Brooks-"thoughtful" pundit obsessed w/moral integrity-on @pbsnewshour says fighting GOP voter suppression is "cynical"! #selma The notion there is a moral neutrality--"just politics"--between those restricting and those expanding the franchise degrades public ethics.
• @YaelTAbouhalkah: In 2012, Sen. Morris said tax bill was "not good policy" Brownback: "We're going to make it work" Good times! http://www.wsj.com/articles/SB10001424052702304791704577418641784902500
• @PaulNVandeWater: All other #TPP countries oppose 12-year exclusivity period for drugs. Obama budget proposes 7 years. @brettnorman http://www.politico.com/story/2015/06/big-pharma-trade-deal-118664.html

Must-Read: A paper that somehow seems to me to miss many of the important aspects of the situation. Where are home borrowers supposed to get their "rational expectations" of future house prices? Given that they are highly likely to be uninformed, should we really have a system in which households are betting large multiples of net worth in a market where they have no chance of being the smart money? That lots of other money wasn't smart either does not absolve mortgage regulators from blame. Not at all:

Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen: Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis: "This paper presents 12 facts about the mortgage market...

Must-Read: Jared Bernstein: Wall St, Injured Dogs, and the Election: "Those of us in the first Obama administration were driving along...

Must-Read: I must say, I gotta score this for Larry Mishel and company. There's a lot of overclaiming in "Firming Up Inequality":

Larry Mishel: New Research Does Not Provide Any Reason to Doubt that CEO Pay Fueled Top 1% Income Growth: "'Firming up Inequality' by [Jae Song, David J. Price, Fatih Guvenen, and Nicholas Bloom]...

The Avalon Project: Justice Jackson's Report to the President on Atrocities and War Crimes; June 7, 1945

MY DEAR MR. PRESIDENT:

I have the honor to report accomplishments during the month since you named me as Chief of Counsel for the United States in prosecuting the principal Axis War Criminals. In brief, I have selected staffs from the several services, departments and agencies concerned; worked out a plan for preparation, briefing, and trial of the cases; allocated the work among the several agencies; instructed those engaged in collecting or processing evidence; visited the European Theater to expedite the examination of captured documents, and the interrogation of witnesses and prisoners; coordinated our preparation of the main case with preparation by Judge Advocates of many cases not included in my responsibilities; and arranged cooperation and mutual assistance with the United Nations War Crimes Commission and with Counsel appointed to represent the United Kingdom in the joint prosecution.

https://www.youtube.com/watch?v=DmHoFcB_x1Q

Live from La Farine: America's Republican Party: worse than you can imagine, even though you know and take into account in your thinking the fact that it is worse than you can imagine.

Letter from Harry S. Truman to Bess W. Truman:

June 6, 1945

Dear Bess:

Well I'm getting better organized now. My office force soon will be shaken down and so will my Cabinet when I've gotten State straightened out. War and Navy I shall let alone until the Japanese are out of the picture.

Daniel P. Tompkins: What the Ancient Greeks Can Teach Us About Human Capital: "Unsupervised, cooperative Athenians developed an economy powerful enough to escape the Malthus trap...

The Rise and Fall of Classical Greece by Josiah Ober, Princeton University Press, 464pp. "Must it not then be acknowledged by an attentive examiner of the histories of mankind, that in every age and in every State in which man has existed, or does now exist, That the increase of population is necessarily limited by the means of subsistence? That population does invariably increase when the means of subsistence increase? And, That the superior power of population it repressed, and the actual population kept equal to the means of subsistence, by misery and vice?"

The very, very sharp Ben Thompson smacks down the not-sharp-at-all Michael Massing:

Nothing captures disdain for digital media quite like not even bothering to name a mere blog! http://t.co/28cPWlN3rq pic.twitter.com/k2I31BUf2m

— Ben Thompson (@benthompson) June 6, 2015

We see what Michael Massing did there...

The reason for Michael Massing to fail to write "Ben Thompson" and "Stratechery" and provide the link: https://stratechery.com/2015/buzzfeed-important-news-organization-world/? That Michael Massing is, and wants to be perceived as, an asshole. Failure-to-properly-cite syndrome is an old disease, an old move in pseudo-intellectual discourse.

And it is a weak one.

I wonder why nobody at the New York Review of Books bothered to edit him, or even to tell Massing that this was not the way to introduce himself to readers searching for trusted information intermediaries?

Ben Thompson's point was:

The world needs great journalism, but great journalism needs a great business model. That’s exactly what BuzzFeed seems to have, and it’s for that reason the company is the most important news organization in the world...

Does Massing engage that point--acknowledge its existence, argue against it, or provide support for it--anywhere in his piece? No.

Jon Schwarz: Legendary Journalist in Private: "It Is All Fraudulent, All of It, Everywhere": "Politico recently ran a fantastic historical profile...

...of journalist Theodore H. White by the writer Scott Porch. White invented the genre of modern presidential campaign books with The Making of the President, 1960 (and then 1964, 1968 and 1972). The 1960 version, which won a Pulitzer Prize and sold four million copies, describes John F. Kennedy as a ‘forlorn and lonesome young man … lithe as an athlete … handsome and tired, with just a fleck of gray now in his glossy brown hair’ who ‘baffled’ the ‘old-line politicians of Tammany.’ Then after Kennedy was assassinated, White helped Jackie Kennedy create the ‘Camelot’ myth of his presidency.

Must- and Should-Reads:

• Must-Read: Sahil Kapur: A Republican Supreme Court Victory on Obamacare Could Backfire in 2016 Swing States
• Eduardo Porter: Economic Statistics Miss the Benefits of Technology
• Must-Read: Mark Thoma: Krugman vs. DeLong
• Must-Read: Cullen Roche: Does a “Liquidity Trap” Ever End?
• Must-Read: Paul Krugman: Multipliers and Reality
• Thomas Piketty: A Practical Vision of a More Equal Society
• Must-Read: IMF Warns Fed to Hold Its Fire on Rate Rise
• Must-Read: Ben Thompson: The Funnel Framework
• Must-Read: Roger E.A. Farmer (2013): Animal Spirits, Financial Crises, and Persistent Unemployment
• Must-Read: David Glasner: Repeat after Me: Inflation’s the Cure not the Disease

Over at Equitable Growth--The Equitablog

• David Glasner on Monetary Régime Change
• Employment Report Talking Points for Bloomberg TV
• Is This "Fold" Possibly Going to Be a Useful Thing?
• Watching a Discussion: The Omega Point
• Convergence to the Long-Run Macroeconomic Omega Point and Inflation Targeting: Nick Rowe's View
• Nick Bunker: Waiting for healthy U.S. wage growth
• Nick Bunker: Weekend reading
• John Schmitt: OECD report says income inequality hampers economic growth

Plus:

• Things to Read on the Afternoon of June 5, 2015

And Over Here:

Over at Equitable Growth:

David Glasner enters the lists in the Omega Point discussion, making two big and important points:

1. There is an equilibrium in which the long-run comes quickly, and an equilibrium in which it comes so slowly that other things inevitably intervene. We do not know very much about what determines which the economy settles in, but we do strongly suspect from the Great Depression that sufficiently aggressive monetary régime change can eliminate the permanent-depression equilibrium

2. 1931 was the once-in-a-century time for a monetary régime change in the twentieth century (and, if we are allowed one every half-century, 1978 was the time for the second). And it looks to him very much like 2009 was the time for a monetary régime change in the first half of the twenty-first century. That the Federal Reserve did not realize this in late 2009--that it expected a rapid recovery from the economy's self-equilibrating forces even without additional fiscal and monetary stimulus--is our sorrow today.

I agree with (2). I am less certain about (1).

I would say probably, and note that sufficiently aggressive in this case is a weasel phrase, and admit that I am surprised that Abenomics in Japan has not been more successful. But more on that anon. READ MOAR

Must-Read: 1931 was the once-in-a-century time for a monetary régime change in the twentieth century (and, if we are allowed one every half-century, 1978 was the time for the second). And it looks to me very much like 2009 was the time for a monetary régime change in the first half of the twenty-first century:

David Glasner: Repeat after Me: Inflation’s the Cure not the Disease: "The question... depends not on an abstract argument about the shape of the LM curve...

U.S. Employers Add 280,000 Workers in May: "Is Jobs Data Truly Good News About U.S. Economy?

39:21 - UC Berkeley Professor of Economics Brad Delong and former republican Congressman Tom Davis examine the state of the U.S. economy following the May jobs report and discuss what the U.S. government needs to do to spark growth. They speak on ‘Bloomberg Markets.’ (Source: Bloomberg)

http://www.bloomberg.com/news/videos/2015-06-05/is-jobs-data-truly-good-news-about-u-s-economy-

• The past three months' job market reports do not lead us to change our minds about anything. What did you think three months ago? You should think the same thing now.

• What should you have thought three months ago? Four things:

• First, for the past 50 years the unemployment rate and other indicators of the health of the labor market--ease of getting a job, business willingness to build more to fill vacancies, employment the population adjusted for demographics and sociology--have all pointed in the same direction.

  • Not anymore.
  • Today the unemployment rate suggest that we have had a full recovery, while other labor market indicators suggest a very partial and very incomplete recovery.
  • The Federal Reserve is still mostly looking at the unemployment rate.
  • They are smart, and they know all the arguments, but when I look at all the evidence I cannot agree

• Thus, second, it looks to me like we are still far short of anything that might be called a normal or neutral business-cycle level of employment.

  • So it is not time to start cooling off the economy.

• Third, it will not be time to start cooling off the economy until either we get different signals:

  • Either from the employment share numbers.
  • Or from the wage growth numbers.

• Fourth we never recovered to the pre-2007 trend.

  • It was not that the pre-2007 trend was unsustainable.
  • In 2007 we were buying the wrong things: too many imports and too much housing.
  • But the economy as a whole was not overheated.
  • Why haven't we had a full recovery to the pre-2007 trend? Two reasons:
    • First, Republican economists have failed to properly brief Republican members of Congress that what is needed now are the policies that Milton Friedman's teachers, people like Jacob Viner, recommended for the 1930s--not austerity and not shrinking the Federal Reserve balance sheet shrinkage, but rather coordinated monetary and fiscal policy expansion.
    • Second, because in late 2009 Ben Bernanke overestimated the economy's self-generated recuperative powers, and so failed to understand the seriousness of the situation.
    • Third, to be fair, because Tim Geithner thought the same as Bernanke--that the economy was going to recover on its own--and Obama believed him.

• Fifth, it is still not too late to turn the macroeconomic policy ship around:

  • Global investors are willing to lend the US government money at unbelievably low terms.
  • Every reasonable calculation I have seen tell us the benefits of borrowing up to $1 trillion a year more and spending it on infrastructure and education are huge.
  • It is definitely worth doing, unless and until interest rates return to normal levels.

• Sixth, there are also important structural issues:

  • Growing inequality.
  • The rise of the robots.
  • Globalization, etc.
  • But these are roughly in the same state today that they were in 2007 or indeed 2000.
  • Changes since then or overwhelmingly due to short-run macroeconomic events and problems:
    • The housing bubble.
    • The Wall Street crash.
    • The deep depression.
    • The anemic half-recovery.

• Seventh, Obama... Taking a broad view, under Obama the American economy has done worse than it has done under any Democratic president since the Civil War

  • Save perhaps Carter.
  • Of course, that also means the economy has done better than under any Republican president since Coolidge
    • Save Eisenhower.
    • But these days the Democrats are claiming Eisenhower as his. Certainly today's Republicans don't want that RINO.
    • In fact, these days Democrats are also posthumously baptizing Lincoln as a Democrat, kind of like the Mormons do, when you think about it...

• Eighth, things could have been much better:

  • We would have had to switch out of housing and into exports and investment between 2006 and 2009.
  • We were well on the way--about halfway--through making that switch at full employment.
  • But then Wall Street mashed up and caused the crash.
  • We did not need a depression.
    • Especially not a depression this long.
  • What we needed--and could have had--was an expenditure switch. We still could have one--to education, to business investment, to infrastructure, to exports.

The Conversation

The conversation:

Matt Miller: Tom, let me start with you. Weren't you impressed with this month's job report? We added 280,000 jobs. That is much higher than the average of the past twelve months. We boosted hourly pay.

Tom Davis: Yes. It was a good report.

Matt Miller: And, Brad, do you find it to be a good report as well?

Brad DeLong: Yes. It was a good report. But combine it with the past two reports. We are about where we were three months ago. Whatever you thought about the state of the economy three months ago, you should think it now. The last quarter has not been one in which there has been a great deal of news to lead anyone to change their mind.

Matt Miller: Tom, are you more positive about this report than Brad? He's got a lot more "buts" and "ifs" in there.

Tom Davis: Well, there are a lot of "buts" and "ifs". I think lower gas prices have given a tax cut to everybody. I think they have created a lot of optimism. But there is still a lot of uncertainty. And there are still a number of international factors that come into this that nobody can control. I think some times we give the government too much credit for what goes well and too much blame for what goes badly.

Matt Miller: So what should we do, Tom, to make things better here? What is your prescription? Or what is the Republican prescription, I should say?

Tom Davis: Look: Our prescription has always been that higher taxes and needless regulations--and there are a lot hanging around. You need to be looking at them so that businesses can operate more efficiently. One of the biggest problems right now is that we have a political system that is not operating very efficiently on issues from the Export-Import Bank; to getting a long-term transportation bill which has been on life-support for six months--for six years; to just getting the Appropriations bills out on time. We just have a political system that is not functioning very efficiently. And that has, I think, a drag on the economy. We're not getting out of the government what we ought to be.

Matt Miller: Brad, Democrats and even President Obama would agree with that. They would like to see lower taxes and fewer regulations, but also more spending. Right?

Brad DeLong: Well, I don't think it is just Democrats who would like to see more spending. Back in the 1970s Milton Friedman looked back at the Great Depression. He talked about what his teachers had recommended as policies and what he would have advocated in the Great Depression. He called for, in situations like that, and, I think, in situations like this, for coordinated monetary and fiscal expansion. With interest rates at their extraordinarily low levels, now, as in the 1930s, is a once-in-a-century opportunity to pull all the infrastructure spending we will be doing over the next generation forward in time and do it over the next five years, when the government can finance it at such extraordinarily good terms.

Matt Miller: We have a national infrastructure crisis, right? Roads and bridges, ports and airports are at levels that are critical and certainly not worthy of a first-world country. Tom, don't you agree we need to fix that up quickly?

Tom Davis: I agree with that. Look, I think that with the stimulus package that was passed in 2009 they blew an opportunity to do more for infrastructure. We should have had something to show at the end of that. With the money, maybe we got a short-term stimulus, but we should have gotten something long-term.

Brad DeLong: They had to get it through with only Democratic votes. Why weren't there any Republicans willing to deal? We could have gotten a larger and much better-crafted program.

Matt Miller: There was a lot of money there. There was a lot of money there, Brad.

Brad: Yep.

Tom Davis: Let me interject. I know something about politics. I think the President's inclination was to deal with Republicans, but Democrat leaders said: "No: We are in charge. You have to go through us." And I think that hampered his ability. It wasn't just Republicans. You offer us a bad deal, don't expect us to take it.

Matt Miller: That doesn't change the fact that we still have crumbling infrastructure in this country.

Tom Davis: No, I agree.

Matt Miller: It needs to be, somehow, brought up to snuff. How would you do that?

Tom Davis: You need a massive transportation bill at this point. And you need continuity. Right now this thing is on life support. So long-term projects are not moving through. States are taking some initiative in some cases. But this is the time to do it.

Matt Miller: Brad, it sounds like...

Brad DeLong: When Larry Summers was in the White House, he spent two years trying to assemble a centrist bipartisan coalition for a large-scale long-lasting infrastructure bank, and got no Republican bites at all.

Tom Davis: Well, the Democrats controlled both houses. They could have done it. That is all I am saying. We have to look ahead at this point. But I think they blew the opportunity with that bill when they controlled everything. I think bipartisan government right now has just crumbled. We have turned almost into a parliamentary system in our behavior, and unfortunately with our system of government that just does not work very well.

Matt Miller: It sounds like we are all in agreement that something needs to be done. Hopefully that can happen. Maybe the two of you can get together after this program.

Live from La Farine: if I did not already know that we have 17 months during which the flow and intensity of the bullshit from the Washington Village media political press corps will only increase, I would have thought we were at peak bullshit now.

Do people really pay $1000 a year to read things like this beat-sweetener from Tim Alberta in the National Journal about how:

South Carolina is Marco Rubio's State to Lose.... Rubio is putting a stranglehold on South Carolina.... Rubio has become an adopted prince of South Carolina's political royalty... snatching up the state's top talent... achieved... an organizational lock... 'put together a first-class team'... courtship... goes beyond his roster of official allies... that's only a fraction of the South Carolina talent Rubio has on payroll... Whit Ayres, Rubio's highly respected pollster, launched his career in South Carolina... crucial hire... Katie Baham Gainey, a veteran of First Tuesday Strategies and Romney's 2008 campaign... "He has an all-star team"... courtship of South Carolina goes beyond his roster of official allies... been at the task of building alliances here for six years...

?

This beat-sweetener that in paragraph 26--twenty-six--TWENTY-SIX--XXVI--finally says:

The most recent poll was conducted by Winthrop before Rubio's April 13 launch and showed him taking only 4 percent, lagging behind Walker, Bush, and five other candidates...

That's eighth place.

The one piece of real information in the article, delayed until paragraph 26.

Must-Read: Roger E.A. Farmer (2013): Animal Spirits, Financial Crises, and Persistent Unemployment: "This article uses a rational expectations model with multiple equilibrium unemployment rates...

Must-Read: If you are going to read only one tech newsletter... I believe this is the one you should read:

Ben Thompson: The Funnel Framework: "The post-Internet Microsoft was the proverbial emperor with no clothes...

Must-Read: The obvious thing. The technocratic thing. The reasonable thing. So why does the Federal Reserve think otherwise?

IMF Warns Fed to Hold Its Fire on Rate Rise: "The International Monetary Fund has urged the Federal Reserve...

Comment of the Day: Robert Waldmann: My Usual Comment on Simon Wren-Lewis: "Simon Wren-Lewis very frankly discusses his faith in multipliers...

DECLARATION REGARDING THE DEFEAT OF GERMANY AND THE ASSUMPTION OF SUPREME AUTHORITY WITH RESPECT TO GERMANY BY THE GOVERNMENTS OF THE UNITED STATES OF AMERICA, THE UNION OF SOVIET SOCIALIST REPUBLICS, THE UNITED KINGDOM AND THE PROVISIONAL GOVERNMENT OF THE FRENCH REPUBLIC.

The German armed forces on land, at sea and in the air have been completely defeated and have surrendered unconditionally and Germany, which bears responsibility for the war, is no longer capable of resisting the will of the victorious Powers. The unconditional surrender of Germany has thereby been effected, and Germany has become subject to such requirements as may now or hereafter be imposed upon her.

Live from the U. of I.: Deirdre Mccluskey**: When I went from Donald to Deirdre: "In 1995... 'U of I Professor Becomes Woman'...

Must-Read: Paul Krugman: Multipliers and Reality: "When Bernstein and Romer assumed that [the fiscal multiplier] was 1.5, Robert Lucas accused them of ‘shlock economics‘...

Across the Wide Missouri: Duncan Black: Every Clown Car Member Gets The Love From The NYT: "Paragraph 8:

While supporters in Iowa noted that she had doubled her standing in state polls, it was a statistically insignificant change from 1 percent to 2 percent, according to a Quinnipiac University Poll released May 6. (That may seem piddling, but the same poll had Mr. Santorum, who won the Iowa caucuses in 2012, also at 2 percent, while 5 percent supported Mr. Bush)