Grasping Reality by Brad DeLong

Over at Equitable Growth--The Equitablog:

• Diane Coyle (2013): Learning Economic Lessons from Asia
• Cardiff Garcia: China and Traditional Industrialisation-Led Development: The World Was Not Enough
• Olivier Blanchard, Eugenio Cerutti, and Lawrence Summers: Inflation and Activity--Two Explorations and their Monetary Policy Implications
• Nick Bunker: Weekend reading: Quitting, low wages, racial inequality, and more
• Nick Bunker: The corporate savings glut and the economic possibilities of the future

Latest Must-Reads:

• Diane Coyle (2013): Learning Economic Lessons from Asia
• Cardiff Garcia: China and Traditional Industrialisation-Led Development: The World Was Not Enough
• Olivier Blanchard, Eugenio Cerutti, and Lawrence Summers: Inflation and Activity--Two Explorations and their Monetary Policy Implications

Latest Links:

• Michael Pettis: The four stages of Chinese growth
• Michael Pettis: China is like Japan and not in a good way
• Noah Smith: "These are survey papers, showing very small effect [of immigration on wages] is a robust finding. It's not just 'Card vs. Borjas'."

Let the record show that the Oregon pro-gun control coalition finally pushed their background checks bill across the legislative finish line last year:

• Ceasefire Oregon Fundraiser: Push Universal Background Checks Across the Line in Oregon

Harry S. Truman: The President's News Conference:

THE PRESIDENT. I want to read a couple of things to you, and then I will stand for questions as usual. [1.] 'Judge Samuel I. Rosenman is leaving the White House officially on February 1st, to return to private life in New York City. I make this announcement with deep regret.' You will receive copies of this. It is mimeographed, so you don't have to take it down now.

Must-Read: Diane Coyle (2013): Learning Economic Lessons from Asia: "Studwell... conclude[s]... successful economic development... follow[s]...

Must-Read: Cardiff Garcia: China and Traditional Industrialisation-Led Development: The World Was Not Enough: "[My] reaction was to be startled by [Justin Yifu Lin's] comparison of China’s current position...

Charles Gaba: Ted Cruz and the Case of the Vanishing Health Plan: "GOP Senator Ted Cruz, the guy who hates Obamacare so much he shut the entire federal government...

...down just to prevent it from being implemented... told his campaign supporters that he and his family:

1. had lost their Blue Cross Blue Shield of Texas PPO insurance policy at the end of December;
2. that the ACA was the ‘cause’ of their policy being cancelled;
3. that he and his family are therefore no longer currently insured; and
4. that the new policy which he’s (belatedly) decided to replace it with is going to cost 50 percent more than the old one[:]...

Must-Read: Olivier Blanchard, Eugenio Cerutti, and Lawrence Summers: Inflation and Activity--Two Explorations and their Monetary Policy Implications: "Since the mid-1970s, short-run inflation expectations have become more stable...

Over at Equitable Growth--The Equitablog:

• Weekend Reading: Robert Skidelsky: The Optimism Error
• Weekend Reading: David Warsh on Shapiro and Varian's "Information Rules"
• Nick Bunker: Weekend reading: Quitting, low wages, racial inequality, and more=
• Kevin Drum: Global Warming Went On a Rampage in 2015
• Narayana Kocherlakota: It’s Time to Make a Hard U-Turn.
• Tony Yates: Mind Changes

Wikipedia: Browning, Montana:

From January 23, 1916, to January 24, 1916, the temperature fell 100 °F (56 °C) from 44 °F (7 °C) to -56 °F (-49 °C). This is the United States' and also the world record for the greatest temperature drop in 24 hours...

David Warsh (1998): Whose `Rules?': "For the last year, hardly a week has passed without...

...some bright new book fetching up on my desk promising to explain some aspect of the business dynamics of the new age of information.... In all this stack of books on managing knowledge, intellectual capital, the ecology of information and the like, the single volume most worth reading -- and, for many persons having, for it bears consulting again and again -- is 'Information Rules.'...

Ian Millhiser: "The pic on the right... was taken in 2011 during a flight in Australia. This is called lying":

Sufficient reason never to pay any money to the Atlantic Media Group that pays Fournier's salary, yes?

Robert Skidelsky: The Optimism Error: "When a slump threatened... a government could stimulate spending...

...by cutting interest rates and by incurring budget deficits. This was the main point of the Keynesian revolution.... In the 1980s... unemployment prevention became confined to interest-rate policy... by the central bank, not the government. By keeping... inflation constant, the monetary authority could keep unemployment at its ‘natural rate’. This worked quite well for a time, but... the world economy collapsed in 2008. In a panic, the politicians, from Barack Obama to Gordon Brown, took Keynes out of the cupboard, dusted him down, and ‘stimulated’ the economy like mad. When this produced some useful recovery they got cold feet....

From One Year Ago:

• Morning Must-Read: Paul de Grauwe: Quantitative Easing and the Euro Zone: The Sad Consequences of the Fear of QE
• Over at the London Economist: May Zanny Minton Beddoes Do as Well Relative to John Micklethwait as Barack Obama Has Done Relative to George W. Bush
• An Inadequate Note on Nick Bunker on Bank Leverage...
• A Note on Carter Price's: What Have We Learned About the ACA Over the Past Year?

President Franklin D Roosevelt Inaugural Address:

Must-Read: Let the record show that there was never any honest and honorable statistical or smoothing model-based way of extracting global-warming trends that would even hint that there was some kind of "pause" in global warming starting at the very end of the twentieth century:

And let the record show that those I ran across who were claiming that there was such a "pause"--the Tobin Harshaws and the Clifford Assesses and the Tom Campbells and the Steve Levitts and the Steve Dubners and the Russ Robertses the Richard Mullers and the George Wills--ought to be profoundly ashamed of themselves, and would be if they were capable of shame:

Kevin Drum: Global Warming Went On a Rampage in 2015: "Remember that old chestnut, the climate chart that starts in 1998...

Must-Read: Narayana Kocherlakota: It’s Time to Make a Hard U-Turn.: "Market-based measures of long-term inflation compensation have fallen...

Live from the Roasterie: Bad Blood Between Frankenstein and His Monster! National Review Edition Blogging:

Comment of the Day: Kansas Jack: Palin-Trump: "Of course she gave the, 'I was told the media were going to beat me up for this' saw...

...What I found interesting is if you look at Google News and Buzzfeed where what is trending gets the headlines, what you saw was the following. 1. Sarah endorsed. 2 Media reported. 3. Readers ignored.'Sarah Endorsement: THE MOVIE,' in other words, went straight to video.

Harry S Truman: Letter of January 22, 1946:

Eleanor Roosevelt: My Day:

LONDON—In spite of the fact that he speaks English very well, Soviet representative Andrei A. Gromyko delivered his address on Friday in Russian. He probably felt that in this way he would be sure of giving the right emphasis to what he wished to say. But when a speech has to be translated into both French and English, by the end of the second translation I am always sorry we don't have earphones, which give it to you at the time the speech is being made! Someday, perhaps, when materials are plentiful again, all international gatherings will have these installed.

The Arabian Sun:

Hawaii Today: Welcome to Kauai:

On this date in Hawaiian history (236 years ago) Captain Cook landed at Waimea on the island of Kauai and named the island group the Sandwich Islands, in honor of John Montague, who was the Earl of Sandwich and one his patrons.

Over at Equitable Growth--The Equitablog:

• Dietz Vollrath: Beating a Dead Robotic Horse
• Andrew Gelman: Middle-Aged White Death Trends: All About Women in the South
• Duncan Black: Time To Increase Interest Rates!
• Simon Wren-Lewis: The Dead Hand of Austerity; Left and Right

Live from the Roasterie Failure to Take Personal Responsibility Blogging: For Sarah Palin, it's always Obama's or Pelosi's or Reid's or the libruls' fault.

Josh Marshall: A Master: "Even though Sarah Palin passed over Ted Cruz... this has not stopped Cruz from trying to hitch a ride on...

...the Palin Grievance Wagon.... Cruz slammed the 'dirty ... unprincipled ... [and] wrong' decision of many media outlets to report Palin's son Track's arrest....

Must-Read: Dietz Vollrath: Beating a Dead Robotic Horse: "People are not horses, they are apes...

Must-Read: Andrew Gelman: Middle-Aged White Death Trends: All About Women in the South: "Remember that increasing death rate among middle-aged non-Hispanic whites?...

Comment of the Day: Peter Dorman: May I Say That I Have a Bad Feeling About This?: "In the case of my institution...

...the move to Canvas (from Moodle) was motivated by the perceived need to up the capabilities for social media. Canvas is apparently strong in this, and the consultants are saying that to reach today's students you have to provide an environment that looks like what they're used to in their own digital universe.

Must-Read: And Duncan Black comes up with a very good phrase to describe what we think the Federal Reserve is doing based on what we think is its misspecified and erroneous view of the inflation process: "taking away the punchbowl before the DJ even shows up to the party":

Duncan Black: Time To Increase Interest Rates!: "As I've said, I don't think small upticks in interest rates by the Fed...

Must-Read: Olivier Blanchard says that he and Paul Krugman differ not at all on the analytics but, rather, substantially on "tone". When I read Olivier, I find his tone so measured and reasonable that casual and even more-attentive-than-casual readers are likely to completely miss the point.

When Olivier believes the Federal Reserve did right to raise interest rates in December. But when he says "each of the last three conclusions presents challenges for the conduct of monetary policy", what he means what I conclude is: The Federal Reserve has made and is making three mistakes in its assessment of the relationship between inflation and unemployment:

1. It believes that the relationship is tight, so that you can make policy by simply looking at the forecast without looking at asymmetric consequences in the tails of the distribution of future outcomes. But the relationship is not tight, but loose. It has always been loose.

2. It believes that the gearing between unemployment and inflation is strong, so that minor falls of unemployment below the natural rate produce substantial increases in inflation even in the short run. But that gearing has not been strong since the early 1980s. It is weak.

3. It believes that increases in inflation substantially and rapidly affect expectations of future inflation, so that we are never far from a wage-price spiral. But that gearing has not been strong since the late 1980s, if then. Inflation expectations are anchored.

Why the Federal Reserve is working today as if the Phillips-Curve relationship is still what it was in the years around 1980 is a great mystery. But it is, I think--and I think Olivier thinks, though with his reasonable tone it is hard to tell--leading the Federal Reserve to place some bad monetary-policy bets right now:

Olivier Blanchard: The US Phillips Curve: Back to the 60s?: "The US Phillips curve is alive...

Must-Read: There is an alternative branch of the quantum-mechanical wave-function multiverse in which we reality-based economists got behind the "safe asset shortage" view of our current malaise back in 2009. Savers, you see, love to hold safe assets. And in 2007-9 the private-sector financial intermediaries permanently broke saver trust in their ability to create and credibility to identify such safe assets. If, then, we seek to escape secular stagnation, the government must take of the task of providing safe assets for people to hold and then using the financing for useful and productive purposes. That could have been an effective counter-narrative to demands for austerity--not least because it appears to be a correct analysis...

Simon Wren-Lewis: The Dead Hand of Austerity; Left and Right: "Those who care to see know the real damage that austerity has had on people’s lives...

Live from La Farine: NAIL ‘EM UP!!!! Methinks it is time to go reread Robert Penn Warren's All the King's Men again...

Molly Ball: http://www.theatlantic.com/politics/archive/2016/01/how-sarah-palin-created-donald-trump/424911: "Think what the [Republican] establishment was already, at that point...

...doing to Palin. The GOP elites had plucked her from relative obscurity, largely for her superficial characteristics, then mocked her for all the things she didn’t know. They took her to Neiman Marcus for an image makeover on the party credit card, then leaked word of it to the press to make her look like a greedy, starstruck hick. They expected her to be a docile pawn—but she went rogue.

Over at Equitable Growth--The Equitablog:

• Nick Bunker: The Federal Reserve and awareness of racial inequalityh
• Nick Bunker: Why employers might like paid leave programs
• Heather Boushey: Always-low wages aren't always competitive
• Today's economic history: William McChesney Martin's "Punchbowl Speech"
• Nick Bunker and Kavya Vaghu: Demographics don’t explain the decline in quitting* Nick Rowe: Neo-Fisherian Equilibrium with Upper and Lower bounds
• Barry Eichengreen: Reforming or Deforming the Fed?
• Dani Rodrik: The Return of Public Investment

Live from Iowa: Kyle Blaine: So, Uh, Here's The Full Text Of Sarah Palin's Bizarre Trump Speech: "Thank you so much...

...It’s so great to be here in Iowa. We’re here just thawing out. Todd and I and a couple of our friends here from Alaska, lending our support for the next president of our great United States of America, Donald J. Trump.

Mr. Trump, you’re right, look back there in the press box. Heads are spinning, media heads are spinning. This is going to be so much fun.

FIRST SECTION MEETINGS WILL BE WEDNESDAY 1/20 AND THURSDAY 1/21: There are no Monday or Tuesday sections the week of January 18

YOU MUST ATTEND YOUR FIRST SECTION MEETING: If you fail to attend, you will be sent back to the waitlist.

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The University of California at Berkeley has ditched its old course management system, bSpace (and is not automatically migrating content on bSpace elsewhere). It has replaced it with a new Canvas-based CMS, bCourses.

May I say that a CMS that refuses to admit in its header menus that I have a 2016 version of Econ 210a is one that is really not ready for prime time?

Sending me to the 2014 version of the class, and then telling me that there has been "no activity" in it, is not professional.

Fortunately for me, I have figured out that the URL https://bcourses.berkeley.edu/courses/1413612 gives me direct access to the 2016 version--in spite of the header menu's insistence that it does not exist...

Must-Read: Marc Dordal i Carreras: U.S. Banking Panics and the Credit Channel: Evidence from 1870-1904: "The empirical study of the effect of banking panics on the economy...

...has traditionally been difficult due to the lack of adequate data on output during the major part of the 19th and early 20th centuries. This paper proposes an alternative approach by looking at the business activity of the banking sector. Using a newly digitized dataset on National Banks resources and liabilities, I argue that distortions to the normal activity of the banking sector are a good proxy for the impact of panics on the economy. Additionally, I propose a novel Instrumental Variables approach for identifying the effects of banking panics through the exogenous drops in deposits induced by bank runs. The results show a temporary but large effect of panics on lending activity of approximately 10 p.p. (on impact) and an average duration of one year.

Live from La Farine: David Brooks wants Republicans to go back in time to 1993 and support Bill Clinton's ideas for "a government that will help the little guy... [not] incompetent [or] corrupt... [one] which would actually provide concrete policy ideas to help the working class... offer[ing] people a secure financial base and a steady hand up so they can welcome global capitalism with hope and a sense of opportunity..."

In one sense, that ship has sailed.

In another, nothing is stopping them from signing on with Hillary Rodham Clinton's campaign--same philosophy of what government should do, same technocratic commitment to policies that actually work. Admittedly, HRC comes with the dreaded "liberal social values". But once you've abandoned the Goldwater-Nixon-Reagan strategy of "intentionally alienating every person of color", you are already more than halfway there...

David Brooks: Time for a Republican Conspiracy!: "Members of the Republican governing class are like cowering freshmen at halftime...

Must-Read: At least this has produced some useful work in how to teach the ignorant today things about convergence to equilibrium that Frank Fisher, Tom Sargent, and many others knew very well back at the end of the 1970s:

Nick Rowe: Neo-Fisherian Equilibrium with Upper and Lower bounds: "Naryana [Kocherlakota]... [thinks] models should have relatively robust predictions....

Must-Read: Barry Eichengreen: Reforming or Deforming the Fed?: "Some... proposals by Bernie Sanders... deserve to be taken seriously...

Must-Read: Dani Rodrik: The Return of Public Investment: "If one looks at the countries that, despite strengthening global economic headwinds, are still growing very rapidly...

Live from the Peninsula: Gerald Seib says: "Opinions of shape of earth differ!":

Democratic presidential candidate Senator Bernie Sanders, left, and Republican presidential candidate Donald Trump are offering voters in their parties’ primary simple solutions to some of the big issues of the day...

You were once better than this, Gerald. Working for Murdoch and company has rotted your brain. Get out, now, if you still can!

William McChesney Martin (1955): Punchbowl Speech (October 19, 1955): "In framing the Federal Reserve Act great care was taken to safeguard...

Picks of the Litter:

1. Clay Chandler and What Is Wrong with the Culture of the Washington Post (Why Oh Why Can't We Have a Better Press Corps?)
2. Back to Disagreeing with Scott Sumner...
3. Assessing Structural Unemployment
4. Ahem!: I Believe the London Economist Needs to Step Up Its Game...

William James Garrow: Letters From the Trenches

Notes for My Comment at the URPE-AEA Session: Causes of the Great Recession and the Prospects for Recovery

• Presiding: Fred Moseley
• David M. Kotz and Deepankar Basu: Stagnation and Institutional Structures
• Robert McKee [Michael Roberts]: Recessions, Depressions, and the Rate of Profit
• Mario Seccareccia and Marc Lavoie: Understanding the Great Recession: Keynesian and Post-Keynesian Insights
• Discussants: Robert J. Gordon, Brad DeLong, David Colander

Over at Equitable Growth--The Equitablog:

• Roger Farmer: Please: Lets Agree to Speak the Same Language
• Olivier Blanchard: The Price of Oil, China, and Stock Market Herding
• Gavyn Davies: China devaluation – a necessary evil?
• McKay Coppins: The Gospel According to Trump

Must-Read: I want to plump for "self-fulfilling prophecies" or "multiple near-rational equilibria" myself:

Roger Farmer: Please: Lets Agree to Speak the Same Language: "Animal spirits, confidence, sunspots, self-fulfilling prophecies and sentiments...

Picks of the Litter:

DeLong Smackdown Watch: How Do Projected Long-Run Deficits Matter?

An Ongoing Pick-Up Internet Symposium on the 1%