From the Good Germany--the one that has more to offer the world than austerity and general depression. Bonus: the most expensive special effects for a music video ever:
Comment of the Day: Runup to Hiroshima: "The [Potsdam Ultimatum] document makes a reference to the 'self-willed militaristic advisors'...:
...and in the same sentence refers to Japan as an 'Empire.' Later on the demand is made for the elimination of the authority of 'those who have misled and deceived the people of Japan.' It's clearly directed at the people in power at that time, which could include the Emperor, but there's nothing here that demands the complete dismantling of the imperial institution. 'Unconditional surrender' is specifically directed to apply to the Japanese armed forces. Also, the term 'utter devastation' is a strong indication of what might be coming.
Must-Read: Growth Fantasy of Tax Cuts and Small Government: "Jeb Bush says that if he's elected president he wants to get us to sustained gross domestic product growth of 4 percent a year...:
Must-Read: Fire Phasers: "Jeb Bush doesn’t just want Americans to work more hours; he also wants to ‘phase out’ Medicare....:
Live from Bullwinkle Plaza: On Paul Krugman's theory of hipsters: "Krugman suggests that hipsters are signaling a rejection of the workaday bourgeois world by flouting conventional dress codes...:
Must-Read: Richard Fisher became President of the Federal Reserve Bank of Dallas in April 2005. He spent ten years as a regional bank President. I cannot think of a single case in which he was pulling the Federal Reserve Open Market Committee toward a more correct assessment of the current economic situation and of the major risks to it. And I cannot think of an episode in which, after events had proved his views of major risks erroneous, he ever marked his beliefs to market in any substantive ways.
Surely that is worth mentioning at least once in an article about the Dallas Fed? Can anybody make a case to me that Wall Street Journal reporter Michael Derby's failure to even whisper this in his article is any way professional?
Dallas Fed Struggles to Fill Fisher’s Big Shoes: "The Federal Reserve Bank of Dallas is taking its time picking a new president....:
Must-Read: The process of creating a market--especially as delicate and complicated a market as a market for debt and equity investments in relatively large-scale enterprises--is not a straightforward process. Here Venture and Voth argue that the spillovers from the creation of the "technology" of a debt marketplace were enormous, as only after the government had dug the channels through which debt would flow for its own war-fighting purposes could first canal companies, then manufacturing companies, and then railroad companies take advantage of them.
Debt miracle: Why the country that borrowed the most industrialised first: "Is debt really that bad?...:
Pierre Laval, the puppet leader of Nazi-occupied Vichy France, surrenders to American authorities in Austria, who extradite him to France to stand trial.
Must-Watch: Really, really bad news for the American economy. Alan Krueger concludes that we are now near "full employment" in a monetary policy-Federal Reserve-inflation sense. The implications? The implications are:
- that the failure of the government and the Federal Reserve to more aggressively boost recovery has turned what was excess cyclical non-employment into structural non-employment,
- that essentially none of the drop in production relative to the pre-2008 trend can or will be recouped without noticeably higher inflation.
Labor Force Participation: <(https://vimeo.com/134932856)>::
Via Mark Thoma.
Live from Bullwinkle Plaza: I misheard. Philz Coffee does not in fact serve a drink called "Silicon Splendor"...
Must-Read: Jeb Bush 'Should Be Embarrassed' by His Overtime Pay Claims: "Jeb Bush... said Barack Obama’s proposal to expand overtime pay...:
Live from Bullwinkle Plaza: Where oh where are Nate Silver and Sam Wang on this?:
The only four things truly on-point are:
Worth Attending If in Town: Conference on the Greek Debt Crisis: Rm 902 Hart Senate Office Building. 2:30 PM, Thursday July 30th...:
Live from Bullwinkle Plaza: "The congressional debate on the Iran deal... will be high-volume Kabuki theater...:
Senator Harry Reid on Twitter: "Been carrying this in my wallet a long time. It shows you how long Republicans have been wrong about health care. http://t.co/ZoiqsoVwdk"
Live from Bullwinkle PlazaOn Twitter: "Been carrying this in my wallet a long time..." http://t.co/ZoiqsoVwdk:
Been carrying this in my wallet a long time. It shows you how long Republicans have been wrong about health care. pic.twitter.com/ZoiqsoVwdk— Senator Harry Reid (@SenatorReid) July 30, 2015
Must-Read: The Euroskeptic Vindication: "Conventional Hicks/Keynes macroeconomics--whether or not you dress it up in New Keynesian algebra--has performed very well...:
Must-Read: I had always thought that we had a mixed economy and the social safety net in large part to counter and correct the market's judgment as to who deserved to have resources used for their benefit. And I had always thought that this was an obvious and well-understood part of benefit-cost analysis. Have I in fact been wrong? Is this not well-understood? Do the younger economists--the kids these days!--Really think that the rights function for assessing societal well-being roughly multiplies each person's utility by their individual income?
Valuing Medicaid: "Finkelstein and her colleagues placed a very low value...:
Alfred Marshall and Mary Marshall (1885), Economics of Industry, Book III: Market Value: Chapter 1: Changes in the Purchasing Power of Money http://tinyurl.com/dl20110818j:
(4) After every crisis, in every period of commercial depression, it is said that supply is in excess of demand. Of course there may easily be an excessive supply of some particular commodities.... But something more than this is meant.... The warehouses are overstocked... in almost every important trade; scarcely any trade can continue undiminished production so as to afford a good rate of proﬁts....
In Flanders, Belgium, on July 30, 1915, the Germans put their new weapon, the flammenwerfer, or flamethrower, to devastating use against the Allies at the Battle of Hooge.
Must-Read: Supply-Side Policies in the Depression: Evidence from France: "The effects of supply-side policies in depressed economies... evidence from France in the 1930s...:
Must- and Should-Reads:
- The U.S. Underestimates Growth :
- State income tax cuts: Still a bad idea :
- "Thanks to a push by President Barack Obama's administration, more and more student-loan borrowers are signing up for income-driven repayment programs, allowing them to pay a fraction of what they would otherwise owe..." :
- Must-Read: Moving on From the Euro :
- Must-Read: The Politics of Economics and ‘Very Serious People’ :
- The F story about the Great Inflation :
- Must-Read: Greek Debt and German Banks :
- Must-Read: The Verjus Manifesto :
- Must-Read: 12 Good and Bad Parts of Online Education :
- Must-Read: The Amazing Persistence of Reagan Derp :
- Annoying Euro Apologetics :
- Beware of simple U.S. tax reform plans :
- Why Zingales is so “soft” on Greece :
- The euro: It can’t happen, It’s a bad idea, It won’t last. US economists on the EMU, 1989-2002 :
- Is technological change key in the decline of U.S. labor share of income? - Washington Center for Equitable Growth :
- Why Factory Jobs Are Shrinking Everywhere :
- Visualizing Economics: Created by Catherine Mulbrandon at http://VisualizingEconomics.com
- The state of tax progressivity across the United States :
- A U.S. financial transaction tax and the allocation of capital :
- Why Americans Are Nostalgic About Manufacturing
- Worm Wars!
- In Which Ben Bernanke Asks and Answers a Rhetorical Question About the Eurozone
- Today's Economic History: Alfred and Mary Marshall on The Confidence Fairy
- Hoisted from Arin Dube's Archives from Four Years Ago: Where are My Liberal-Neo-Liberal Technocrats?
- Monday DeLong Smackdown Watch: How Important Is the Euro's Effect on Exchange Rates on the German Economy, Anyway?
And Over Here:
Over at Equitable Growth: Last month the sharp and hard-working Jeff Spross wrote:
Why Americans Are so nostalgic About the Manufacturing Industry: "The U.S. still manufactures a lot of stuff, but most of it isn't stuff average American consumers buy...:
...These days, we mostly make heavy industrial equipment, circuitry, aircraft, and other big and expensive goods and high-end products.... A lot of manufacturing went overseas... so we get imports for a lower cost, which improves our standard of living. People in other, less developed nations get new jobs, which... improves theirs. A win-win, theoretically speaking. Same goes for rising automation.... But the 1950s economy was also a delicately balanced ecosystem... where wages were good, health and pension benefits... plentiful... job security was high....
Globalization gave certain interests and centers of power in our society the wedge and hammer.... Unions became far weaker, business owners and management got much freer hands, and worker bargaining power collapsed. The economic benefits... weren't broadly shared.... Other Western countries also endured globalization, but managed to keep their levels of inequality lower.... If we'd found some sort of alternative economic strategy for producing those same results, it's unlikely voters or politicians would be nostalgically lamenting any [manufacturing] decline. READ MOAR
Live from Evans Hall (Must-Read If You Could): Jeremie Cohen-Setton**: How Binding Is the Trilemma in a Currency Union?: Evidence from the Fed: The semi-autonomy of the regional reserve banks and...
After major repairs and an overhaul, Indianapolis received orders to proceed to Tinian island, carrying parts and the enriched uranium (about half of the world's supply of Uranium-235 at the time) for the atomic bomb Little Boy, which would later be dropped on Hiroshima. Indianapolis departed San Francisco on 16 July 1945, within hours of the Trinity test. Arriving at Pearl Harbor on 19 July, she raced on unaccompanied, delivering the atomic weapon components to Tinian on 26 July.
Must-Read: The very sharp Kevin O'Rourke concludes that it is time to throw in the towel on the eurozone. I think it is worth one more throw of the dice: perhaps European macroeconomic stabilization regulation can be moved out of the hands of the Eurocracy in Brussels and Frankfurt and into a more general North Atlantic macroeconomic stabilization regulatory apparatus in Washington. A utopian project? Yes, but worth attempting. If that does not work--or if that is not attempted--I cannot find any holes in Kevin's logic:
Moving on From the Euro: "European Monetary Union was never a good idea...:
Must-Read: Why is it always the people who work hard to mark their beliefs to market--like Mark Thoma--who are hesitant and worry that their political priors are contaminating their assessment of what policies actually work? Why is it that it is those whose policy views have no contact with reality are those who never think of marking their beliefs their market?
The Politics of Economics and ‘Very Serious People’: "There is one government intervention that Democrats often promote that has always been harder for me to justify based upon economics...:
Must-Read: A very nice income inequality visualization from Catherine Mulbrandon. I want another set, however. I want to set that has the top 10% undifferentiated on the left, and then the next 20%, the next 30%, and the next 40% on the right:
Today's Economic History: The Transformation of Hunger Revisited: Reply: "The higher [early industrial] calorie levels reported in Gazeley, Newell, Bezabith (2015)...:
...are a function of a conversion of food quantities to calories that is weighted towards contemporary, calorie-rich foods. Their conversion uses the full distribution of contemporary foods and should not be applied to historical populations. Since Gazeley, Newell, Bezabith assume that industrial workers in the past had access to contemporary foods, the revised calorie levels reflect contemporary diets rather than historical diets.
Live from Bullwinkle Plaza: Ted Miguel is 1... 2... 3... 4... 5... 6... 7... 8... 9... 10... 11... 12... 13... offices down the hall. So be warned!
My take on this is the same as the very sharp and very hard working Chris Blattman's: http://chrisblattman.com/2015/07/23/dear-journalists-and-policymakers-what-you-need-to-know-about-the-worm-wars/ http://chrisblattman.com/2015/07/24/the-10-things-i-learned-in-the-trenches-of-the-worm-wars/
[Over at Equitable Growth]: The current and the greater onrushing disaster that is macroeconomic policy in the eurozone is, in my opinion, the result of two things:
Setting up a Single currency in the region much broader than any optimum currency area.
Abysmal macroeconomic management by would-be economic hegemons that do not understand that system management needs to keep him employment high and thus make adjustment easy.
Even if dismantling the eurozone is not possible, transferring authority for North Atlantic macroeconomic management as a whole out of Europe is possible.
Greece and Europe: Is Europe holding up its end of the bargain? No: "Is the euro zone’s leadership delivering the broad-based economic recovery that is needed to give stressed countries like Greece…:
…a reasonable chance to meet their growth, employment, and fiscal objectives?…. Unfortunately, the answers… are… obvious… (1) the weak performance of the euro zone as a whole; and (2) the highly asymmetric outcomes among countries within the euro zone…. In late 2009 and early 2010 unemployment rates in Europe and the United States were roughly equal, at about 10 percent of the labor force. Today... the unemployment rate in the euro zone is more than 11 percent... a very large share of... younger workers; the inability of these workers to gain skills and work experience will adversely affect Europe’s longer-term growth potential…. [READ MOAR]
Live from La Farine: Google Deep Dream http://psychic-vr-lab.com/deepdream/pics/402479.html
Must-Read: Robert Hall says somewhere that the MIT guys ret-conned the name of the first computer he programmed--CADET--to "can't add: doesn't even try" because decimal arithmetic was beyond it. And the age of Reagan--the seven fat years 1982-1989 of Robert Bartley--were a glorious time for America's upper class. But the arithmetic needed to recognize that that was not true for the country as a whole is very elementary indeed...
The Amazing Persistence of Reagan Derp: "The most telling part... is when [John] Cochrane veers off topic...:
Must-Read: The very thoughtful and sharp Mark Thoma has swung around to thinking that, with the right student body, online education can do 60% of the job of the residential university campus for... 10%? 5%? of the non-student-time-and-effort cost. Of course, the principal cost is still student time and effort...
12 Good and Bad Parts of Online Education: "I was initially very skeptical about the claims being made about online education...:
Must-Read: Daniel Davies muses this morning on the problems of audience and intellectual reach: who are you writing for, and which potential audience will lead to what you right doing the most good? In the end he comes down at what is, I think, the right place: write the way you have the most fun, because that is the kind of writing you will be best at...
The Verjus Manifesto: "You get fewer readers this way, but more of them email you...:
Must-Read: I become more and more convinced as time passes that there is a deep design flaw in the human brain. We are much much too eager to turn expectations about how people will behave in normal times into obligations that they are morally bound to fulfill, and then much much too eager doing gauge and altruistic punishment of those who we decide have not fulfilled them...
Greek Debt and German Banks: "Are you fascinated by the ‘debt as moral weight’ arguments you see being tossed around and viciously debated over in Germany and Greece nowadays?...:
Hoisted from Arin Dube's Archives from Four Years Ago: Where are My Liberal-Neo-Liberal Technocrats?
Where are My Liberal-Neo-Liberal Technocrats?: "Brad DeLong's recent post on 'Left Neoliberals Like Me' brings a response from Arin Dube:(2011):
Arin Dube: Dude, Where are my Liberal-Neo-Liberal technocrats? …or… Where Paul R. Krugman from 1996 argues against J. Bradford DeLong in 2011 regarding the political economy of policy-making:
Alfred Marshall and Mary Marshall (1885), Economics of Industry, Book III: Market Value: Chapter 1: Changes in the Purchasing Power of Money http://tinyurl.com/dl20110818j: "If all trades which make goods for direct consumption...
...agreed to work on and to buy each other's goods as in ordinary times, they would supply one another with the means of earning a moderate rate of proﬁts and of wages. The trades which make fixed capital might have to wait a little longer, but they too would get employment when conﬁdence had revived so far that those who had capital to invest had made up their minds how to invest it.
Comment of the Day: The "Structural Problems" Ideology is not Superstructure.: "Brad DeLong notes that Friedman has few disciples and that Hayek has many...:
In 1919, following the close of World War I, President Woodrow Wilson implored the U.S. Senate to approve the charter for the League of Nations. Postwar isolationism and partisan politics killed U.S. participation in the League, however. In July 1945, with World War II coming to a close, the U.S. Senate indicated the sea change in American attitudes toward U.S. involvement in world affairs by approving the charter for the United Nations by a vote of 89 to 2.
Noted for Your Evening Procrastination for July 27, 2015##
Must- and Should-Reads:
- Must-Read: The Essential Obstfeld :
- Press Release: Appoints Maurice Obstfeld as Economic Counsellor and Director of the IMF’s Research Department :
- Models of currency crises with self-fulfilling features :
- Exchange Rate Dynamics Redux :
- Must-Read: "It will be normal... :
- Must-Read: A Brief Theory of Very Serious People :
- Laid Low: The IMF, the eurozone, and the First Rescue of Greece :
- Must-Read: The Fed Is Closer to Hitting Its Inflation Target Than People Think :
- Must-Read: Does wealth inequality matter for growth? The effect of billionaire wealth, income distribution, and poverty :
- Must-Read: "Suppose the Bank of Canada targets 2% inflation... :
- Must-Read: Low-Hanging Fruit Guarded by Dragons: Reforming Regressive Regulation to Boost U.S. Economic Growth :
- Robots Aren't Taking Your Jobs--and That's the Problem :
- Why the Fed’s policy on interest rates is key to fighting poverty :
- Must-Read: Compensation Inequality and Productivity Growth :
And Over Here:
Must-Read: The "but compensation growth has been faster than wage growth since 1975!" literature has always seemed to me to a bit of a game of Three-Card-Monte in the inequality debate: I see every reason to think that the increases in benefits that are the wedge between compensation and income growth went overwhelmingly to those near the top of the income distribution...
Compensation Inequality and Productivity Growth: "Growth in total compensation for lower-paid workers was slower...:
Must-Read: Let me register a complaint: http://vox.com seems to me to be getting a little #Slatepitchy these days--and that is a problem. Bait-and-switch between what the headline and the teaser promise and what the article delivers is already the reason I do not click on links to Slate...
The right teaser would be: "Don't worry that robots are taking your jobs--they are not (at least, not yet). Do worry that robots are not amplifying your productivity."
Robots Aren't Taking Your Jobs--and That's the Problem: "The good news is that these concerns are wrong...:
Must-Read: The very sharp Brink Lindsey continues to try to find common bipartisan technocratic policy ground...
Low-Hanging Fruit Guarded by Dragons: Reforming Regressive Regulation to Boost U.S. Economic Growth: "The U.S. economy is slowing down...:
Must-Read: More intellectual garbage pickup by Nick Rowe on the stability of expectational equilibria in monetary economics. It's a dirty job, and I'm glad he's doing it rather than me. Me? I think this "literature" should never have started, because it requires ignoring that central banks issue not just forward guidance as to interest rates but an entire macroeconomic forecast including money-supply and monetary-base measures. So asking the question of what happens in a model in which the interest rate path is the only piece of information ever revealed by the central bank is rather... stupid...
"Suppose the Bank of Canada targets 2% inflation, using a nominal interest rate instrument...:
Must-Read: Unless I misread it, the authors should also include an additional sentence in their abstract: "We failed to find a statistically significant difference between the effect on growth of politically-connected wealth inequality and the effect on growth of politically-unconnected wealth inequality." That would be a more accurate description of what the data say, I think, and would lead to some differences in interpretation...
Does wealth inequality matter for growth? The effect of billionaire wealth, income distribution, and poverty: "When we control for the fact that some billionaires...:
Live from La Farine: Just what does John Kasich imagine that he is doing reentering national politics at the presidential-candidate level, anyway? John Kerry could run against Howard Dean as Mr. Electable Centrist, and Bill Clinton could run against Jerry Brown/Paul Tsongas in the same way. But that is a Democratic Party shtick that works. When has it ever worked for a (non-incumbent) Republican?
Must-Read: The Fed Is Closer to Hitting Its Inflation Target Than People Think: "I sense there is a growing confidence among policymakers that wage growth will soon accelerate...:
Comment of the Day: Notes on "Trekonomics"...: "In Star Trek, as in the Culture series, work still occurs...:
...But the idea is that work is geared toward improving oneself and making the world better. It's service. I doubt this is the likeliest outcome, as there is a thread in human nature that manifests itself in exploitation of others for reasons that go beyond the economic...
What would the German export sector look like?: "German Economic Thought and the European Crisis...:
...What would the German export sector look like?
Just consider what the state of Germany’s export sector would be right now if Germany were not part of the euro, and had the real exchange rate of Switzerland.’
I’ve considered it, and I think the answer is actually ‘more or less the same’.