Grasping Reality on TypePad, by Brad DeLong

George Washington: To Marquis de Lafayette:

Head Quarters, December 31, 1777.

My Dear Marquis:

Your favour of Yesterday conveyed to me fresh proof of that friendship and attachment which I have happily experienced since the first of our acquaintance, and for which I entertain sentiments of the purest affection. It will ever constitute part of my happiness to know that I stand well in your opinion, because I am satisfied that you can have no views to answer by throwing out false colours, and that you possess a Mind too exalted to condescend to dirty Arts and low intrigues to acquire a reputation.

Picks of the litter:

1. Musings on 25-54 Employment-to-Population Rates and the Macroeconomy: Why is the Fed so confident that hysteresis is permanent?
2. Grifters Gotta Grift: Democratic Politician Edition: Live from La Farine: Jim Webb as grifter
3. Nighttime Must-Read: Paul Krugman: The Volcker Disinflation: Krugmans gotta krug
4. Try Everything

Paul Krugman's Respectable Radicalism politely points out (at least) one dimension along which I am a moron.

Let me back up: Here in the United States, the current framework for macroeconomic policy holds that the economy is nearly normalized, that further extraordinary expansionary and fiscal policy moves carry "risks", and that as a result the right policy is stay-the-course. I was arguing that the Economist Left Opposition demand--for substantially more expansionary monetary and fiscal policies right now until we see the whites of the eyes of rising inflatio--was soundly-based in orthodox lowbrow Hicks-Patinkin-Tobin macro theory. That is the macro theory that economists like Ben Bernanke, Janet Yellen, and Stan Fischer taught their entire academic careers.

Paul Krugman points out—politely—that I am wrong.

Live from the North PoleMaddie Stone: Temperatures Rose Above Freezing at the North Pole Today: "It isn’t just the US that’s getting walloped with bizarre weather....

Hillary Clinton, whose chances of becoming the 45th president have risen from ~35% to ~55%, has probably had the best year in Washington.

— Nate Silver (@NateSilver538) December 24, 2015

Word salad from: Chris Cilizza: I Said Hillary Clinton had the ‘Worst Year in Washington.’ Here’s Why: "It's possible, of course, that I am biased, dumb or maybe a little bit of both...

...I picked Clinton... I stand by it.... I had no intent making some sort of statement about her chances of winning.... Her past few months have been quite good.... Strong performance... [in the] first... debate... 11-hour star turn in... Benghazi... turned the narrative of her campaign around. But all of that... in... the 10th month of the year.... Private email... Bernie Sanders... Clinton righted the ship in October and has effectively kept that momentum up heading into 2016. But that doesn't mean that 2015 was a great or even good year.... Yes, of course... Sanders had nowhere to go but up.... And, yes, Clinton had nowhere to go but down.... Regardless of whether Clinton is in strong shape to be the Democratic nominee (she is) or the next president (she's got a slightly better than 50-50 shot)... lasting story of 2015 was how Clinton--or at least her candidacy--was less than we all thought it would be.... Look at Clinton's numbers on the question of whether the words "honest" or "trustworthy" apply to her.... An examination of the entirety of 2015--not just the last two months of the year--suggests that she damaged herself enough to turn a coronation into a contest for the Democratic nomination and to hand Republicans a cudgel...

The only way to make coherent sense of this is if:

• Cilizza thought that HRC's chances a year ago of winning the presidency were significantly more than today's 55%,
• Cilizza thus that Nate Silver was way off when he assessed them back then as 35%, but
• Cilizza does not dare write anything disagreeing with Nate Silver.

However, I don't think we should bend over backwards to try to make coherent sense out of this word-salad.

I don't think it is intended at any level to be any sort of coherent or logical argument.

Cilizza wanted not to inform his readers but to write an "evenhanded" column criticizing Democrats and Republicans easily, with bonus points for trashing Clintons.

He's at the Washington Post.

That's what they do there.

Must-Read: George Evans and Bruce McGough: The Neo-Fisherian View and the Macro Learning Approach: "[A] REE... needs an explanation for how economic agents come to coordinate on it...

Today's Economic History: Mary Beard: There is no such thing as the fall of the Roman Empire: "The Romans don’t sit down and have a grand plan to conquer the world...

Must-Read: David Deming: The Growing Importance of Social Skills in the Labor Market: "While computers perform cognitive tasks of rapidly increasing complexity...

Over at Equitable Growth--The Equitablog:

• Nick Bunker: The 10 most popular Value Added posts of 2015d
• Today's Economic History: Did the Classical Liberals Believe in Constructive Statecraft?
• Today's Economic History: Writing Is (and Other Things Are) Not "Naturally" Human - Equitable Growth
• Mark Thoma: On Summers: My Views and the Fed’s Views on Secular Stagnation: "The Fed's job would have been, and will be a lot easier if fiscal policy makers would help. I disagree with Charles Plosser's view on monetary policy, but I have some sympathy for the view that many people have come to expect too much from monetary policy..."
• Noah Smith: Don't Blame "Uncertainty" for the Slow Recovery
• William Nordhaus (2004): Schumpeterian Profits in the American Economy: Theory and Measurement
• Roger E.A. Farmer: Global Sunspots and Asset Prices in a Monetary Economy
• Roger Fouquet and Stephen Broadberry: Seven Centuries of European Economic Growth and Decline: "Rather than being stagnant, pre-nineteenth century European economies experienced a great deal of change..." :: How rapidly would one anticipate that the Malthusian scissors would work, anyway?

Must-Read: I would say that if monetary policy makers wish to place limits on what can be expected from monetary policy, they need to also be making loud and constructive arguments about what will do the stabilization policy job if monetary policy is not going to push the envelope. I don't think Plosser ever made loud and constructive arguments directing other policy makers to do a constructive job...

Mark Thoma: On Summers: My Views and the Fed’s Views on Secular Stagnation: "The Fed's job would have been, and will be a lot easier if fiscal policy makers would help...

Most worth remembering:

• David Bell Praises "The Old New Republic" as "Not Predictably Reaganite"

But there are two other things well worth remembering in addition:

• Harry Jaffa, Willmoore Kendall, the Crisis of the House Divided, and the Party of Abraham Lincoln
• Casey Mulligan Nominates Himself for This Year's Stupidest Man Alive Prize (Yes, New York TImes, Why Oh Why Can't We Have a Better Press Corps? Edition)

Andy Ferguson's love of Wilmoore Kendall is very powerful evidence that he should be shunned by all of polite society. And the fact that The New York Times hired and paid the astonishingly ignorant Casey Mulligan... I'm still waiting for anyone at the New York Times to make a profound apology to their entire readership.

Over at Project Syndicate: Piketty vs. Piketty: BERKELEY – In Capital in the Twenty-First Century, the French economist Thomas Piketty highlights the striking contrasts in North America and Europe between the Gilded Age that preceded World War I and the decades following World War II. In the first period, economic growth was sluggish, wealth was predominantly inherited, the rich dominated politics, and economic (as well as race and gender) inequality was extreme... READ MOAR over at Project Syndicate

Larry Summers attributes the Federal Reserve's decision to tighten policy, in what appears to him and to me to be a weakly-growing and high-slack economy, to four mistakes, which are themselves driven by a fifth, overarching mistake. The four mistakes are:

Live from the Westin Portland Harborside: "Give to me so that I don't disappoint my Dad George H.W. Bush 41 again with my campaign..." is a... rather unique fundraising pitch. Could this possibly be real?:

Today's Economic History: Abbott Payson Usher (1934): A Liberal Theory of Constructive Statecraft: Presidential address delivered at the Forty-sixth Annual Meeting of the American Economic Association, Philadelphia, Pennsylvania, December 27, 1933:

Classical and neo-classical economic theory is commonly associated with a form of liberalism that was more largely directed toward the repeal of old laws and regulations than to the constructive development of institutions to meet new social problems. In the past the chief emphasis has been laid upon these destructive accomplishments of economic liberalism. It has therefore been easy to overlook the actual constructive accomplishments of the early nineteenth century, and many are disposed to believe that these positive achievements were inconsistent with the primary postulates of classical and neo-classical theory.

Live from the Westin Harborside Portland: Jim Henley's Ire Is Roused by Politico...:

Must-Read: Noah Smith: Don't Blame "Uncertainty" for the Slow Recovery: "Since Baker, Bloom and Davis came out with their uncertainty hypothesis...

: 1066 Granada massacre - Wikipedia, the free encyclopedia:

The 1066 Granada massacre took place on 30 December 1066 (9 Tevet 4827; 10 Safar 459 AH)

A Muslim mob stormed the royal palace in Granada, which was at that time in Muslim-ruled al-Andalus, assassinated the Jewish vizier Joseph ibn Naghrela, and massacred many of the Jewish population of the city.

Must-Read: William Nordhaus (2004): Schumpeterian Profits in the American Economy: Theory and Measurement: "Schumpeterian profits... arise when firms...

Live from La Farine: We haven't heard of "Obama's Katrina" in quite a while, have we? But we can nevertheless watch myths being made in real time--thus setting time bombs to do major, major damage in the future...

Five recent things worth reading, or what Paul Krugman said:

Paul Krugman: Obama the Job-Killer: "Given the GOP field’s collective decision to go for Bushonomics squared...

Today's Economic History: For Homer and his audience, writing is unnatural and un-human: "many deadly signs on a folded tablet...".

What is natural to humans--what we were back in the environment of evolutionary adaptation when we were in biological equilibrium--is grunting bands of 50 or so making their way across the Horn of Africa with their stone tools. Since then, the language Singularity, the agriculture Singularity, the writing Singularity, and perhaps now a fourth have changed human life in many ways beyond all recognition. "What is natural to humans" almost invariably means "what I expect to happen", which is roughly the same as "what I learned about how things were, were done, and 'ought' to be done back when I was a child".

Homer: Iliad: "Proetus’ wife, the fair Anteia...

Must-Read: How rapidly would one anticipate that the Malthusian scissors would work, anyway?

Roger Fouquet and Stephen Broadberry: Seven Centuries of European Economic Growth and Decline, Journal of Economic Perspectives 29:4 (Fall), pp. 227-44: "New annual GDP per capita data for six European countries over the last seven hundred years...

Must-Read: Contra Dean Baker, I suspect that Thomas Piketty would say that the ability of the rich to manipulate property rights and market power in order to keep the rate of profit high even as the economy becomes more capital-intensive is a feature that is "intrinsic to capitalism." Thus I think Piketty would say that Baker is wrong here at the end:

Dean Baker: The Upward Redistribution of Income: Are Rents the Story?: "The top one percent of households have seen their income share roughly double...

As I read back through my archives, I find myself wondering, once again, just how much of our current political disfunction is a result of the Washington media's unwillingness to simply call things by their right names.

For example, we have the once-smart-but-no-longer Clive Crook writing that

Frederic Cortland Penfield: To the Secretary of State:

The Ambassador in Austria-Hungary (Penfield) [Telegram] Vienna, December 29, 1915,7 p. m. [Received December 30, 3.50 p. m.] 1064. The following reply to my note of the 21st instant, communicating textually the contents of the Department’s telegram No. 1039 of December 19, 1 p. m.,2 was received this afternoon:

Wikipedia: War Brides Act:

The War Brides Act (Public Law 271) was enacted on December 28, 1945, to allow alien spouses, natural children, and adopted children of members of the United States Armed Forces, 'if admissible,' to enter the U.S. as non-quota immigrants after World War II.

Shakezulu: 3 Words that Rhyme: Sleight of Word from HLS: "I see Prof. Pull up Your Pants [Randall Kennedy] is at it again...

...and I hope people who enjoy a good goalpost shifting caught this one, buried (and rightfully so) in paragraph nine of 13....

Over at Equitable Growth--The Equitablog:

• Nick Bunker: A non-exclusive list of interesting graphs from 2015
• The Federal Reserve's 2 percent inflation target was a mistake - Equitable Growth* Jefferson Cowie and Nick Salvatore: The Long Exception: Rethinking the Place of the New Deal in American History: "While liberals of the 70s and 80s waited for a return to... the New Deal order, they were actually living in the final days of... the 'interregnum between Gilded Ages'..." :: From "The Defining Moment" to "The Long Exception"...
• Bloomberg View: Congress Should Care About the IMF
• Matthew Yglesias: Seattle Shows San Francisco and New York How to Fix the Housing Crisis: "A high level of construction ensures that the homeland of Microsoft and Amazon remains substantially cheaper than the Bay Area homeland of Apple and Google."

{For the New York Times Room for Debate:](http://www.nytimes.com/roomfordebate/2015/12/29/what-science-fiction-movie-or-novel-is-most-prescient-today/use-of-weapons-by-iain-banks) Let me put in a plug for the late, alas!, Iain M. Banks (1954-2013) and his truly-astonishing novel [Use of Weapons][1].

The best science fiction is always about us in the here-and-now rather than about them in the there-and-then. It is a distancing that makes us see ourselves more clearly.

Live from Portland, ME: Anne Laurie: Even Politico Is Beginning to Worry…: "…because the Repubs are sailing On Beyond Crazy...

Not the Comment of the Day: Chris G: Chris Bertram Wages War on Eyeglasses, Surrenders to Cyborgs: "Skepticism of cyborgs does not imply a negative outlook towards eyeglasses, canes, literacy, etc...

Must-Read: Roger E.A. Farmer: Global Sunspots and Asset Prices in a Monetary Economy: "A simple model in which asset price fluctuations are caused by sunspots...

Most-Recent Must-Reads:

• Jefferson Cowie and Nick Salvatore: The Long Exception: Rethinking the Place of the New Deal in American History: "While liberals of the 70s and 80s waited for a return to... the New Deal order, they were actually living in the final days of... the 'interregnum between Gilded Ages'..." :: From "The Defining Moment" to "The Long Exception"...
• Bloomberg View: Congress Should Care About the IMF
• Matthew Yglesias: Seattle Shows San Francisco and New York How to Fix the Housing Crisis: "A high level of construction ensures that the homeland of Microsoft and Amazon remains substantially cheaper than the Bay Area homeland of Apple and Google."

Most-Recent Links:

• Barry Ritholtz: Bah humbug to ridiculous year-end financial advice
• Richard Mayhew: The morality of waiting for a pony
• Arctic Sun

Over at Project Syndicate: Of all the strange and novel economic doctrines propounded since 2007, Stanford's John Taylor has a good claim to [propounding the strangest][1]: In his view, the low interest-rate, quantitative-easing, and forward-guidance policies of North Atlantic and Japanese central banks are like:

imposing an interest-rate ceiling on the longer-term market... much like the effect of a price ceiling in a [housing] rental market.... [This] decline in credit availability, reduces aggregate demand, which tends to increase unemployment, a classic unintended consequence..."

When you think about it, this analogy makes no sense at all.

Must-Read: "My mental power is with me here, and my machines and my minions are not far off!" It is sobering to recognize that I am right now at Peak Wisdom. In the future more of my energy needs to be devoted reminding myself of things I know that are true than in the past and to forgetting things I learn are false than in the past. In the future less of my energy can be devoted to learning new things than in the past

Mattan Griffel: How to Never Forget Anything Ever Again: "In a paper on gradual-interval recall published by Paul Pimsleur in 1967...

...he hypothesizes the following intervals: 5 seconds, 25 seconds, 2 minutes, 10 minutes, 1 hour, 5 hours, 1 day, 5 days, 25 days, 4 months, and 2 years.... One of the cool side-effects of this is that you can take a large set of facts (e.g. the 1000 most commonly used words in the French language) and introduce them in batches slowly (e.g. 10 per day). That way you only have to review each word every few months in order to remember them all indefinitely. (The flip-side of this is: it doesn’t matter how awesome your teachers or your school was, if you don’t review each fact you learned at least every few years, you will forget them)...

Communique: Interim Meeting of Foreign Ministers, Moscow:

(a) Soviet-Anglo-American Communique, December 27,1945

The Foreign Ministers of the Union of Soviet Socialist Republics, the United Kingdom, and the United States of America met in Moscow from December 16 to December 26, 1945, in accordance with the decision of the Crimea Conference, confirmed at the Berlin Conference, that there should be periodic consultation between-them. At the meeting of the three Foreign Ministers, discussions took place on an informal and exploratory basis and agreement was reached on the following questions:

JAMES F. BYRNES
ERNEST BEVIN
V. MOLOTOV
Dec. 27/45

Chris Bertram, three years ago:

Noah Smith had me going for a minute there: I just love econobloggers, with their capacity for Swiftian satire...

...Dry as dust, yet clearly having a laugh, they aim to reel in the poor saps who are take them seriously... making as if they really mean it.... Noah Smith surpasses them all with a new blog on The Rise of the Cyborgs... does a really excellent job of pretending to be keen on the robot-human future he imagines.... [H]e feigns enthusiasm most successfully about the prospects for the economy....

Comment of the Day: Charles Steindel: Current Links: "One excellent point in the fine Blanchard-Krugman discussion...

Daniel Davies: The D-Squared Digest One Minute MBA: Avoiding Projects Pursued By Morons 101: "Literally people have been asking me...

...'How is it that you were so amazingly prescient about Iraq? Why is it that you were right about everything at precisely the same moment when we were wrong?' No honestly, they have. I'd love to show you the emails I've received, there were dozens of them, honest. Honest.

The picks of the litter are:

1. Why It Is Likely to Be Really Bad for Bloomberg as a Journalistic Enterprise to Have John Micklethwait at Its Head: John Holbo's take down of the really and truly ludicrously mendacious The Right Nation, by John Micklethwait and Adrian Wooldridge
2. Department of "Huh?!": Done-Something Congress Edition: My smackdown of the similarly really and truly ludicrously mendacious up-is-down partisan Republican piece by UCLA's Stephen Bainbridge.

The picks of the litter are:

1. Is the Fed in a Trap?:
2. A Better World Was Possible...

Benjamin Rush: To George Washington:

Princetown [N.J.] December 26, 1777.

Sir,

I have delayed troubling your Excellency with the State of our hospitals, in hopes you would hear it from the Director General whose business it is to correspond with your Excellency upon this Subject. I beg leave therefore at last to look up to you, and through you to the congress as the only powers that can redress our greivances, or do us justice.

The Anglo-Saxon Chronicle:

This battle [at Hastings] was fought on the day of Pope Calixtus: and Earl William returned to Hastings, and waited there to know whether the people would submit to him. But when he found that they would not come to him, he went up with all his force that was left and that came since to him from over sea, and ravaged all the country that he overran, until he came to Berkhampstead; where Archbishop Aldred came to meet him, with child Edgar, and Earls Edwin and Morkar, and all the best men from London; who submitted then for need, when the most harm was done.

Eleanor Roosevelt: My Day:

NEW YORK, Sunday—I have received a great number of Christmas cards and messages and I should like to thank the many kind people who have remembered me this Christmas. I know that they have done so feeling that this would be a sad and lonely time for me, and I am grateful for their thought. It would be impossible to thank each person with an individual note, as I should like to do, but I hope that many of them read this column and will take these few lines as a personal acknowledgement of what I think shows the great heart of the people of this country. Christmas is a joyous time and a busy one, particularly where there are children, and that so many should have taken time out to send me a word of greeting makes me deeply appreciate the loyalty of people to my husband's memory and their kindly feeling toward me.

History.com: Vera Brittain loses fiance at Western Front:

Roland Leighton, the fiance of Vera Brittain, a nurse in the British Red Cross who will become a famous author and feminist after the war, dies of wounds sustained in battle at the Western Front in France.

Julia Child: Buche De Noel:

Live from La Farine: Jonathan Chait: Rove: Obama Should React to Terrorism Like Bush: "A Karl Rove column weaves together... delusional optimism about Republican prospects... with hilariously amnesiac attacks on President Obama...

Must-Read: From "The Defining Moment" to "The Long Exception"...

Jefferson Cowie and Nick Salvatore (2008): The Long Exception: Rethinking the Place of the New Deal in American History: "The period from Franklin Roosevelt to the end of the twentieth century... [shows] that the New Deal...

Recommended Star Wars Viewing Order:

1. The Force Awakens
2. A New Hope
3. The Empire Strikes Back

And that is it. Everything else would simply be a letdown, and leave viewers disappointed...

Plus:

Essence of Decision: Understanding the Real History of the Imperial and Succession Wars

The fall of the Empire, and the failure of its successor states to re-establish order in the galaxy, is usually mistold in the history books. Popular, semi-academic, and even academic authors write it as a combination of tabloid soap opera and personal heroics: villains, Jedi Knights, stunning double crosses, the Palpatine succession, and--of course--the bizarre and incomprehensible repeated cross-generational psychodramas of the Skywalker family.

The Federal Reserve's 2%/Year Inflation Target Was a Mistake...: Storify: