Grasping Reality on TypePad, by Brad DeLong

Must-Read: Paul Krugman: Labour’s Dead Center: "One crucial piece of background to the Corbyn surge...

Manu Saadia, the author of the forthcoming book, Trekonomics, discusses the economic theories behind the creation of the Star Trek with J. Bradford DeLong, professor of Economics at UC Berkeley and former Deputy Assistant Secretary at the US Treasury. Inkshares' Adam Gomolin is the moderator:

The U.S.S. Asimov...:

• https://www.inkshares.com/projects/trekonomics
• https://readfold.com/read/delong/unfinished-notes-on-trekonomics-tKdx6Njn

One of many, many reasons why Gabriel Snyder and The New New Republic have a nearly inexhaustible wellspring of credit to draw on...

Why Oh Why Can't We Have a Better Press Corps?: Kevin Drum's jaw drops as he contemplates The Old New Republic's Michael Crowley.

Michael Crowley doesn't like public policy. It makes one wonder why he doesn't go and write about things that do interest him. Bill Clinton, you see, likes public policy and likes to talk about it. This makes Michael Crowley mad.

Crowley is, I think, one example of a larger trend:

Must-Read: Bluntly, your model--whatever it is--needs to mimic a Simsian VAR in-sample. If it does not, it has no claim on our attention: it is imposing assumptions that are neither the true structure nor even useful epicycle-like forecasting hypotheses. And if it cannot fit the data we have, it has no ability to claim to provide useful policy multipliers.

The Lucas critique remains true: a model can mimic a VAR and still not be useful for the purpose of providing policy multipliers. But the anti-Lucas critique--that a model that does not mimic a VAR has no claim to our attention for any purpose whatsoever--is much truer:

Ray Fair (2010): Convergence in Macroeconomics: Hoisted from Ray Fair's Archives: "There have been a number of recent papers arguing...

Live from Strada: Susan Carter: Confined to Chinatowns?: A New Look at Chinese American Geographic Redistribution in the Exclusion Era, 1882-1943:

Seminar 211, Economic History: September 14 | 2-4 p.m. | 597 Evans Hall

Live from Strada: Berkeley Center for Latin American Studies: Fall Reception September 16, 4-6 PM: " CLAS Fall Reception"

Must-Read: There are a lot of instructive comparisons that can be made around the European periphery--Finland, Latvia, Greece, Spain, Portugal, Ireland, Iceland. They pretty much all lead to the conclusion that given the Austere way the euro has been implemented, it has been a huge mistake for everybody except Germany and Holland--for whom the lower currency value and thus greater export competitiveness produced by the eurozone has been an enormous benefit--a benefit that should make them very eager to pay the fiscal union transfers needed in the eurozone's current situation.

Paul Krugman: Poland Versus Greece: "Yannis Ioannides and Christopher Pissarides... talk about the ways lack of structural reform...

Over at Equitable Growth: Commercial bankers, you see, are not rentiers. Rather, they are intermediaries. And they are intermediaries who find an economy in which interest rates are likely to kiss the zero lower bound a very difficult environment in which to operate.

Thus if I were a commercial banker working for or advising the Federal Reserve, I would think like this: READ MOAR

Must- and Should-Reads:

• Must-Read: David Roberts: Jon Chait Wrote an Optimistic Take on Climate Change. Is it justified?
• Must-Read: Jared Bernstein: The Press Calls Him on It!
• Must-Read: Harriet Torry and Jon Hilsenrath: Lesson for Fed: Higher Interest Rates Haven’t Been Sticking
• Austan Goolsbee: "I mean, who looks at the economy and says: 'You know what went wrong in the 2000s? We didn't cut high income people's taxes enough'"
• Dave Weigel: "Christie says the official low unemployment # is bunk: 'There's someone in the Perkins building who just throws darts at a dartboard.'"
• Bill Black: Now the DOJ Admits They Got it Wrong
• Diane Coyle (1997): The Weightless World: Strategies for Managing the Digital Economy

Over at Equitable Growth--The Equitablog

• What Does the Failure of the Situation to Develop Necessarily to Abenomics' Advantage Mean for Macroeconomics?
• Night Thoughts on Dynamic Scoring
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Gaming the Student Loan System

Plus:

Truman Library: Memo, Dean Acheson to Harry S. Truman with Attachment, September 14, 1945. Official File, Truman Papers:

Over at Equitable Growth: As I said, my reading of the Great Depression era--FDR's New Deal, Neville Chamberlain's announcement that it was the policy of HMG to reverse the deflation that had occurred since 1929, Takahashi Korekiyo's policies in Japan before his very untimely murder by militarist-fascist captains and majors--had convinced me that expectational effects were a thing. Thus I anticipated that Abenomics was likely to be a substantial huge success. 1979-1984 had taught us the limits of the expectations channel: that at the worker- and the manager-level expectations of inflation and deflation were likely to be adaptive and backward-looking. But Roosevelt, Chamberlain, and Takahashi in the 1930s gave me confidence in the expectations channel as far as money demand and investment were concerned. Thus I believed that the announcement effect of Abenomics stood a very good chance of working very well indeed. READ MOAR

Must-Read: I guess I must be more optimistic than David Roberts--I still think the odds are favorable that we will learn how to manage our climate before we have had 100,000,000 unnecessary and avoidable premature deaths from global warming:

David Roberts: Jon Chait Wrote an Optimistic Take on Climate Change. Is it justified?: "my favorite part is Chait's straight talk...

...about the Republican Party:

The entire world is, in essence, tiptoeing gingerly around the unhinged second-largest political party in the world’s second-largest greenhouse-gas emitter, in hopes of saving the world behind its back.

Comment of the Day: Tracy Libecap: : "I second the above, especially gb...

...It is vital to have a plan to scaffold the students into basic routines in R. And I do mean basic; I change my exercises in my methods class every year for just this reason. Some caveats, however.

Must-Read: Jared Bernstein: The Press Calls Him on It!: "The media, often pilloried for just reporting what the candidates tell them...

Must-Read: Harriet Torry and Jon Hilsenrath: Lesson for Fed: Higher Interest Rates Haven’t Been Sticking: "In the seven years since the world’s central banks responded to the financial crisis...

Scott Lemieux: F-----' Women, How Do They Work?: "If further shots were going to be fired into the corpse of parody...

it makes sense that Bobby Jindal’s minions are involved:

The task seems straightforward:

Live from DuPont Circle: Last Thursday two of the smartest participants at last Friday's Brookings Panel on Economic Activity conference--Martin Feldstein and Glenn Hubbard--claimed marvelous things from the enactment of JEB!'s proposed tax cuts and his regulatory reform program.

Links:

• Austan Goolsbee: "I mean, who looks at the economy and says: 'You know what went wrong in the 2000s? We didn't cut high income people's taxes enough'"
• Dave Weigel: "Christie says the official low unemployment # is bunk: 'There's someone in the Perkins building who just throws darts at a dartboard.'"
• Bill Black: Now the DOJ Admits They Got it Wrong
• Bryan Lowry: Brownback’s Office Attacks ‘Ever-Litigating’ [Kansas] School Districts
• J-F. Dubeau: Why Inkshares Matters to Readers and Writers of Fantasy and Science Fiction

John Burgoyne (1780): The State of the Expedition from Canada: September 13, 1777:

Robert Waldmann: Paul Romer has 3 Questions: "General Relativity explained an anomaly...

...the precession of the perihelion of Mercury... predict[ed]... how much gravity caused light to curve... has yielded a huge number of predictions which fit the data exactly... was easily modified to correspond to an expanding universe.... Physicists are quite sure general relativity is not the truth (because it is inconsistent with quantum mechanics and therefore a lot of data). But it is a very empirically successful theory.

Andrew Sullivan (2009): Anecdote Of The Day: "'I remember back in the late 1990s, when Ira Katznelson, an eminent political scientist at Columbia...

...came to deliver a guest lecture. Prof. Katznelson described a lunch he had with Irving Kristol during the first Bush administration.

The talk turned to William Kristol, then Dan Quayle's chief of staff, and how he got his start in politics.

Josh Bivens and Lawrence Mishel: The Divergence Between Productivity and a Typical Worker's Pay: Why It Matters and Why It’s Real: "Our work has been widely cited...

Live from DuPont Cirle: Who am I reading on the internet these days? Below is an unorganized list of my past 100 must-, should-, and ought to-read authors.

I really do not know what to make of the patterns, if any, to be found of this list. If you want to think of me as some sort of neuron in a giant distributed anthology-intelligence brain, these are the other neurons for which in the past two weeks my connections with them have been strong enough in the signal they have been sending have been strong enough to trigger me to send a pulse down my axon. But that metaphor may be hopelessly bad. What neurons send down their axons are simply voltage-spike pulses. What I do is somewhat more complex...

The list:

The Writings of George Washington

Nancy Sinatra: These Boots Are Made for Walkin' (1966):

Over at Equitable Growth: Fall 2015 BPEA 11:45 AM Fr: With respect to Looney and Constantine Yannelis...

If I recall correctly, back in the 1950s, the then-president of the University of California, Clark Kerr, took a look at the situation and foresaw that come 2000 ten times as many students would be qualified to benefit from a University of California undergraduate education as in his day--50,000 a year rather than 5,000 or so. READ MOAR

Must- and Should-Reads:

• djw: "Americans’... fall into three groups of roughly equal size: Those who have a moderate to strong preference for auto-centric suburban living, those who have a moderate to strong preference for... walkable urbanis[m]... and those who have weak or no preferences.."
• Must-Read: Lawrence Summers: Why the Fed Must Stand Still on Rates
• Must-Read: Dani Rodrik: Economists vs. Economics
• Must-Read: Josh Bivens and Lawrence Mishel: The Divergence Between Productivity and a Typical Worker's Pay: Why It Matters and Why It’s Real
• Nicholas Bagley: Oh Boy. Here We Go Again
• Bruce Bartlett: Jeb's Tax Plan Makes George W. Bush’s Policies Look Good
• Izabella Kaminska: So Where Did That Chinese Dollar Liquidity End Up?
• Bruce Bartlett: Jeb's Tax Plan Makes George W. Bush’s Policies Look Good
• Must-Read: Larry Summers: "If there’s one thing that characterizes our politics now,
• Must-Read: Rob Kunzig: Labor Economics Are Having a Moment--and so Is Larry Mishel
• Must-Read: Andy Menke et al.: Prevalence of and Trends in Diabetes Among Adults in the United States, 1988-2012

Over at Equitable Growth--The Equitablog

• Nick Bunker: The pace of productivity growth and misallocation in the United States
• Oya Aktas: The intellectual history of the minimum wage and overtime Fall 2015 Brookings Panel on Economic Activity Weblogging: Abenomics
• Fall 2015 Bro okings Panel on Economic Activity Weblogging: The German Ministry of Finance Says Portugal Is a Major Success...
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Greece: Doug Elmendorf on Dynamic Scoring
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Inflation Expectations in New Zealand
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Weather
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Greece: Schumacher and Weder di Mauro
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Greece: Reinhart and Trebesch
• Fall 2015 Brookings Panel on Economic Activity Weblogging: Greece: Ioannides and Pissarides
• Fall 2015 Brookings Panel on Economic Activity Weblogging: House and Tesar on Greece

Plus:

Over at Equitable Growth: Fall 2015 BPEA 10:45 AM Fr: Hausman and Wieland once again depress me:

Our analysis of Abenomics, and monetary policy in particular, suggests that its real effects so far have been small despite intermediate indicators, such as the real interest rate and the real exchange rate, moving in an expansionary direction... READ MOAR

Over at Equitable Growth: Fall 2015 BPEA 10:00 AM Fr: Thinking about Ricardo Reis's paper...

As we all know, in the absence of the Maastricht Treaty a financial crisis like that of Portugal 2010 would have been dealt with by depreciation and an IMF program--both to provide funding to cushion the effect of the sudden stop on capital inflows and to take the blame for the policy changes inevitable to create external balance at whatever capital account conformed to the post-crisis tolerance of both foreigners and Portuguese for Portugal risk. READ MOAR

Must-Read: Andy Menke et al.: Prevalence of and Trends in Diabetes Among Adults in the United States, 1988-2012: "Diabetes... [is] a previous diagnosis of diabetes or...

Over at Equitable Growth: Fall 2015 BPEA 8:30 AM Fr: Twenty-two years and one month ago, after an OEOB meeting I spent carrying spears for David Cutler in one of his hopeless attempts to warn certain Assistant to the President for Health Policy precisely what reception his policy proposals would get from a CBO where Doug Elmendorf piloted the health-care desk, I returned to my office at the Treasury, and one of our career economists lectured me thus about dynamic scoring:

"Brad, you people come in with your exaggerated belief in the productivity benefits of public investment. And so you command us to score your policies as having a very favorable impact on the deficit. They come in with their exaggerated belief in the benefits of tax cuts. They command us to score their policies as having a very favorable impact. We cannot say we disagree with our bosses' analytic judgments. But by holding the line and stating that we do not consider any macroeconomic effects of policies, we can at least prevent being whipsawed by this partisan rosy-scenario ratchet." Over at Equitable Growth

Must-Read: This is, of course, false: Labor economics is "having its moment" only in a first-derivative sentence--in that it is no longer totally ignored but only mostly ignored by the ugly-celebrity-worship-and-champagne-drinking chattering glasses of Washington DC who fail to understand that America's capital is not supposed to be a decadent court.

But the article is nice to see, even so.

Rob Kunzig: Labor Economics Are Having a Moment--and so Is Larry Mishel: "Americans are finally paying attention to wealth inequality...

On the Economics of Star Trek--San Francisco Basement Tapes Discussion

Comment of the Day: Robert Waldmann: Inflation Expectations in New Zealand: "Well it depends on whose inflation expectations you have in mind...

...One of the most damaging aspects of allegedly micro founded macro is that it (almost always) relies on a representative consumer, so the inflation expectations of bond traders, economic experts and potential home buyers must be the same.

The Writings of George Washington:

: The Writings of George Washington

History of the Battle of the Brandywine:

Philadelphia, the capital of the newly formed nation, was the goal of British General Howe during the campaign of 1777. The British approached Philadelphia from the Chesapeake, landing at Head of Elk, Maryland (present day Elkton). As the British began their march toward the city, Washington and the people of Philadelphia were confident that the British could be stopped. Washington chose the high ground in the area of Chadds Ford to defend against the British advance. Chadds Ford allowed safe passage across the Brandywine River on the road from Baltimore to Philadelphia.

Over at Equitable Growth: Fall 2015 BPEA Th 4:30 PM: Kumar et al.: Am I right in reading this paper as saying not only that inflation expectations are not forward-looking, but that--at least when inflation is less than 5%/year--they are not especially backward-looking either? That inflation expectations, at least below some threshold are just not a thing that can be usefully modeled as affected by other macroeconomic variables?

Over at Equitable Growth: Fall 2015 BPEA Th 3:00 PM: Boldin and Wright: I still find myself confused as to the extent to which weather-induced adverse supply shocks are permanent losses, are super-losses in that they disrupt something called "momentum", or are merely shifts as activity that would have been carried out during a snowstorm is shifted to later in the year. I clearly need more guidance as to how to think about this...

Must-Read: Larry Summers: "If there’s one thing that characterizes our politics now, it is a sense amongst almost everyone in the middle class...

Over at Equitable Growth: Fall 2015 BPEA Th 4:30 PM: Ioannides and Pissarides seem to me to provide yet one more argument that the right policy in 2010 was Grexit so that external balance could be achieved via depreciation--that given structural impediments to productivity growth and the predictable consequences of austerity and internal deflation, nothing else had a chance of working.

So what was the plan and expectation back in 2010?

Over at Equitable Growth: Fall 2015 BPEA Th 1:00 PM: Reinhart and Trebesch: I note the statement that:

external creditors fared rather benignly in Greece, despite the many years of default. The real ex-post returns on the defaulted bonds were in the range of +1% to +5%, despite the losses due to haircuts and arrears... partly the result of the high yields... but also because partial debt service continued even in severe crisis years...

That seems to explain why people lend to Greece--that when the crisis comes, they have enough control to squeeze the lemon hard, whatever the excess burden of the taxes imposed and its cost for the Greeks. READ MOAR

Over at Equitable Growth: Fall 2015 BPEA 1:00 PM Th: I read House and Tesar. They say that attempting a 4%-point increase in government revenue as a share of GDP in Greece may well push you over the top of the Laffer curve:

We consider spending reductions or tax increases sufficient to generate an average flow increase in the primary balance of one percent of 2014 GDP... a quarter of the repayment required to fully meet the stream of debt payments.... We do not push the model to generate the full 4 percent increase in the primary balance as a share of 2014 GDP.... Policy shifts that satisfy (or attempt to satisfy) the full 4 percent increase could push capital and labor taxes into the downward sloping portions of the Laffer curve...

Does it not follow immediately that the excess burdens of a 1%-point increase are overwhelmingly large? READ MOAR

Over at Equitable Growth: Fall 2015 BPEA Th 1:00 PM: Schumacher and Weder di Mauro's paper, "Diagnosing Greek Debt Sustainability: Why Is It so Hard?", confuses me. It is not at all clear to me what "sustainable" or "less than 20% chance of debt-distress" really mean--as, indeed, it has become a term a political art rather than one of economic analysis. READ MOAR

Live from DuPont Circle: The Curse of Teddy White: Once again we suffer from the fact that our press corps focuses on the rituals of republican government as if they were sports events, with politicians and their media aides as celebrity-athletes. The press could focus on voters, after all--voters are the real actors in elections, for it is voters who make the choice. Obama does not "win" a race. America's voters choose Obama...

Paul Krugman: Tea and Trumpism: "Memo to pollsters: while I’m having as much fun as everyone else watching the unsinkable Donald...

Must-Read: Josh Bivens and Lawrence Mishel: The Divergence Between Productivity and a Typical Worker's Pay: Why It Matters and Why It’s Real: "Our work has been widely cited...

Comment of the Day: Downpuppy: Who Would Be Worse than Elizabeth Bumiller as Head of the New York Times Washington Bureau?: "She's really lain low...

...it's nearly 11 years since her Wimblehack victory: http://www.alternet.org/story/20532/wimblehack:_the_winner:

Must-Read: As I see it, John Maynard Keynes was right when he wrote that "good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel!" The problem is that a good economist needs to be able to:

1. Be willing to do their homework in learning about both the economic literature and the world.
2. Assess and understand the classes of models that are good candidates to use in understanding a particular situation.
3. Reach a judgment on which of those models is the one that best applies.
4. Understand how the model works.
5. Communicate (1), (2), and (3) to the world.

Dani Rodrik: Economists vs. Economics: "Navigating among economic models--choosing which one will work better...

Must-Read: What is the technocratic economic--not the "the unemployment rate is normalizing so the interest rate should be normalized too" argument? For a person to be lying in a bed 24/7 is not normal. But if they have a broken leg you don't make them normal by making them get up and walk around.

Lawrence Summers: Why the Fed Must Stand Still on Rates: "The case against a rate increase has become somewhat more compelling even...

Must-Read: Nate Silver calls out David Brooks and George Packer and Jonah Goldberg. May I say that the New York Times made a major mistake when it decided to let Nate Silver but not David Brooks go? And that the New Yorker would be well-advised to give Nate Silver George Packer's inches?

Nate Silver: Stop Comparing Donald Trump And Bernie Sanders: "A lot [David Brooks] of people [Jonah Goldberg] are linking [George Packer] the candidacies of Bernie Sanders and Donald Trump...