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February 2016

Weekend Reading: Girl Crush: bell hooks and Emma Watson: In Conversation: Feminism, Confidence and the Importance of Reading

Girl Crush: bell hooks and Emma Watson: In Conversation: Feminism, Confidence and the Importance of Reading:

When we look back at this moment as a period in time when women started talking about feminism and identifying as feminists with a passion not seen for many years, some of the high watermarks in this fourth-wave resurgence will be Beyoncé's 2014 VMAs performance, Malala Yousafzai's Nobel Peace Prize acceptance and, of course, Emma Watson's stirring speech at the United Nations. Emma's moving words and her work promoting gender equality through the UN's HeForShe movement provided the first real introduction to the concept for many young women (and men). For her part, the actress says she's identified as a feminist since she was a kid, but she also credits writer, artist, intellectual, and feminist icon bell hooks, author of Feminism is for Everybody among many other key texts, with inspiring her and helping shape her understanding and beliefs through her essays, books, and videos. And as for bell she says she is equally as inspired by Emma.

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Must-Read: [And no sooner do I write:]

There are three possible positions for us to take now:

  1. In a liquidity trap, monetary policy is not or will rarely be sufficient to have any substantial effect—active fiscal expansionary support on a large scale is essential for good macroeconomic policy.
  2. In a liquidity trap, monetary policy can have substantial effects, but only if the central bank and government are willing to talk the talk by aggressive and consistent promises of inflation—backed up, if necessary, by régime change.
  3. We are barking up the wrong tree: there is something we have missed, and the models that we think are good first-order approximations to reality are not, in fact, so.

I still favor a mixture of (2) and (1), with (2) still having the heavier weight in it. Larry Summers is, I think, all the way at (1) now...

But Paul Krugman goes full (1) as well:

Paul Krugman: Living with Monetary Impotence: "Check our low, low rates...

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Quantitative Easing: Walking the Walk without Talking the Talk?

The extremely-sharp Joe Gagnon is approaching the edge of shrillness: he seeks to praise the Bank of Japan for what it has done, and yet stress and stress again that what it has done is far too little than it should and needs to do:

Joe Gagnon: The Bank of Japan Is Moving Too Slowly in the Right Direction: "Bank of Japan Governor Haruhiko Kuroda's bold program...

...has made enormous progress, but it has fallen well short of its goal of 2 percent inflation within two years. Now is the time for a final big push... The government of Prime Minister Shinzo Abe could help by raising the salaries of public workers and taking other measures to increase wages.... But the BOJ should not make inaction by the government an excuse for its own passivity....

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Must-Read: Joe Gagnon: The Bank of Japan Is Moving Too Slowly in the Right Direction: "Bank of Japan Governor Haruhiko Kuroda's bold program...

...has made enormous progress, but it has fallen well short of its goal of 2 percent inflation within two years. Now is the time for a final big push.... On January 29, the Bank of Japan (BOJ) announced a complicated program to pay different rates of interest on tranches of deposits that banks hold with the BOJ.... Financial markets quickly reacted positively: Real bond yields fell, the yen fell, and stock prices rose. But much of these gains were erased in subsequent days, probably because markets came to believe the effects of the new policy would be small.... Ten-year inflation compensation is now only 0.5 percent, a clear message that markets expect the BOJ to fail to deliver 2 percent inflation....

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Live from the Panopticon: I must say that the Obama Administration and the FBI seem to me to be being profoundly stupid here.

The game is whether other governments can go to Apple and say: You helped one Westphalian sovereignty with its internal-security problems, you have to help us. If the U.S. takes a strong stance for privacy here, the likely shape of the world a century hence is better:

Maria Farrell: That Apple FBI Back_Door Thing: "Apple has quite rightly made the point that not only does this break company security and therefore customer privacy...

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Must-Read: The extremely-sharp Rob Johnson is in the camp of those who think that China's principal short-run problems of problems of macroeconomic management--that investors are not confident that their investments in China will remain profitable--rather than the more-fundamental problems of political economy: the fear by investors that their investments in China are insecure. There's a return-problems camp. There's a risk-problems camp. Rob Johnson is in the first:

Rob Johnson: The China Delusion: "China’s transition from an export-led growth strategy to one propelled by domestic consumption... proceeding far less smoothly than hoped. For some people, visions of the wonders of capitalism with Chinese characteristics remain undiminished.... The optimists’ unreality is rivalled by that of supply-siders, who would apply shock therapy to China’s slumping state sector and immediately integrate the country’s underdeveloped capital markets into today’s turbulent global financial system. That is a profoundly dangerous prescription. The power of the market to transform China will not be unleashed in a stagnant economy, where such measures would aggravate deflationary forces and produce a calamity.

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Live from the Gehenna the Republicans Have Made for Themselves: Paul Campos: Cass Sunstein has just offered the opinion that Scalia ‘was not only one of the most important justices in the nation’s history...

...he was also among the greatest.’  Scalia’s greatness, Sunstein claims, ‘lies in his abiding commitment to one ideal above any other: the rule of law.’ Sunstein’s assessment strikes me as not merely wrong, but as the precise opposite of the truth. Scalia['s] badness consisted precisely in his contempt for the rule of law, if by ‘the rule of law’ one means the consistent application of legal principles, without regard to the political consequences of applying those principles in a consistent way.... Scalia had no real fidelity to the legal principles he claimed were synonymous with a faithful interpretation of the law.  Over and over during Scalia’s three decades on the Supreme Court, if one of his cherished interpretive principles got in the way of his political preferences, that principle got thrown overboard in a New York minute....

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Weekend Reading: Charles Pierce: Lee Atwater's Legacy in South Carolina and Republican Politics

Charles Pierce: Lee Atwater's Legacy in South Carolina and Republican Politics: "COLUMBIA, SOUTH CAROLINA—Bold and fiercely territorial, the geese in the small pond shatter the peace...

...of the Greenlawn Memorial Park on a bright winter's afternoon. They squawk and honk, disrespecting the dead resting there and unnerving the living who come to pray and to contemplate the lives now gone.

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Procrastinating on February 18, 2016


Over at Equitable Growth--The Equitablog:

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We Need to Hold the Line on Analytical Standards Here: Bernie Sanders Blogging

I have learned an immense amount for Gerald Friedman, and I will always be extremely grateful to him for being one of the two people who thought so highly of my undergraduate thesis to think it deserved a summa.


Arguing that Bernie Sanders's policies are likely to produce a 5.3%/year real GDP growth rate is not just wrong--not just likely to read to false conclusions about the likely impacts of the policies--but further opens the gates of hell for the likes of Arthur Laffer and John Cochrane to dance around and get their garbage into the press.

We had held the line, with no economists of note and reputation except Hubbard, Mankiw, Cogan, Feldstein, and Cochrane daring to endorse JEB!!'s 4%/year growth forecast--and with the press overwhelmingly treating it as the joke that it is. This kind of thing puts that limited but real victory in danger.

So line me up with Paul--and with Laura, Austen, Christina and Alan here:

Paul Krugman: Worried Wonks: "I’ve tweeted this out, but want to point out that this is a pretty big deal...

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"Live Long and Prosper" Blogging...

Spock live long and prosper sarek Google Search

Manu Saadia: Trekonomics (San Francisco: Piper Text: 941758754)

Forward by J. Bradford DeLong:

"Live long and prosper."

"The needs of the many outweigh the needs of the few, or the one."


"Make it so."

“Logic is the beginning of wisdom, not the end.”

"I'm a doctor, not a bricklayer."

“Highly illogical.”

"You can stop it!" "Stop it? I'm counting on it!"

Over the past century Star Trek has woven itself into our socio-cultural DNA. It provides a set of cultural reference points to powerful ideas, striking ideas, beneficial ideas that help us here in our civilization think better--even those of us who are economists.

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As You Can Tell, I at Least Am Trying to Sail as Close to the "Hamilton" Musical Boom as I Can...

...without becoming an intellectual property-appropriation test case:

I must say, the idiom of Lin-Manuel Miranda and his company is absolutely perfect: these weren't Men of Marble, these were highly-energetic highly-flawed highly-ambitious young men seriously on the make...

Stephen S. Cohen and J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy: (Allston, MA: Harvard Business Review Press: 1422189813)

The "In Praise of Alexander Hamilton" Section from Our "Concrete Economics". In Fortune Online

"The lesson is that ideologies—no matter what they are—are bad masters. Hamilton’s genius was in focusing on not what was decreed according to ideological first principles laid down by some academic scribbler, but rather focusing on what was in a pragmatic sense likely to generate prosperity at that moment in that situation. Hamilton broadly got it right..."


Stephen S. Cohen and J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy: (Allston, MA: Harvard Business Review Press: 1422189813)

Over at Fortune Online:

Stephen S. Cohen and J. Bradford DeLong: Why Hamilton—Not Jefferson—Is the Father of America's Economy: We honor him on the $10 bill, but Alexander Hamilton deserves more... READ MOAR @ Fortune Online

Continue reading "The "In Praise of Alexander Hamilton" Section from Our "Concrete Economics". In Fortune Online" »

Concrete Economics: The Hamilton Approach to Economic Growth and Policy

Concrete Economics The Hamilton Approach to Economic Growth and Policy Stephen S Cohen J Bradford DeLong 9781422189818 Amazon com Books

Stephen S. Cohen and J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy: (Allston, MA: Harvard Business Review Press: 1422189813)

Steve Cohen and I have a new book coming out from Harvard Business Review Press on March 1, 2016. A very short book. Easy and quick to read. Easy and quick to read because it tries to make one big and very important point, and avoid being distracted from it:

America’s debate about economic policy goes way wrong whenever it is ruled by ideology.

It doesn’t matter much which ideology—a rigid and ideologized Hamiltonianism would have been (almost) as bad as rigid-Jeffersonianism, an excessive attachment to outmoded industries or to ways of delivering social-insurance that were merely emergency expedients when adopted in the 1930s would be (almost) as bad as the market-worshipping sects of neoliberalism. Thus we say:

America’s debate about economic policy goes largely right whenever it is ruled by pragmatism.

Successes come whenever the question asked and answered is: What concrete steps can we take, here and now, to make America more prosperous and to share the fruits of growth equitably? Failures come whenever the question asked and answered is: Do these policy proposals conform to the ideas of Adam Smith or Edmund Burke or William Beveridge or even John Maynard Keynes?—let alone those of the Karl Marxes, the Friedrich von Hayeks, and the Ayn Rands.

So I now have a problem. HBR Press would be extremely annoyed if I were to simply dump the book (or large parts of the book) online. But I really do want to do so. I am excited about the big idea. And I want this big idea to get out into the world undistorted.

So how should Steve and I tease this book of ours?

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Procrastinating on February 16, 2016


Over at Equitable Growth--The Equitablog:

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Live from Evans Hall: Is this the point at which we say that the sensible Republicans who thought they could use the crazies to gain power have been punished enough?


Live from Cesar Chavez: Venturing out of Evans Hall for Tuesday morning office hours report:

Number of discussions, and which course related to:

  • Econ 1: 3 <--the one I teach...
  • Econ 2: 4
  • History 160b: 1
  • Econ 100a: 2

  • David and Christina Romer's True-False-Uncertain problems puzzle people who do not remember their formal logic. The question is: "Is P-->Q true, false, or uncertain?" Since Q is uncertain, the students want to say "uncertain". But "P-->Q" is false...

  • David and Christina Romer's "airlines" problem is, I think, much harder than they think it is. "Load factor" does not appear to be a phrase these students know, or if they know it they cannot then reason from it to the local slope of the supply curve...

Must-Read: As I understand it, all precedent suggests that ISDS provisions are not a problem for the United States. ISDS panels make their determinations, and as a result other countries gain or fail to gain the right to impose countervailing duties on U.S. exports--and then the negotiations begin, with the first move being the U.S. negotiators say: "Do you really think this company of yours now waving around an ISDS panel ruling has a strong enough case that you want to seriously risk pissing us off?" It is much easier all around for everyone if the ISDS panel rules for the United States--and the pattern of rulings in the ten years we have watched this instrumentality at work strongly suggest that that is how it works.

Of course: things could change. And ISDS panels do rule against other countries' governments--that is, after all, why the U.S. has put ISDS into this agreement: to give its companies protection.

But the disturbing thing is that I do not understand these institutions very well--neither how they are formally supposed to work, how they work in practice, and why they work the way that they appear to do:

NPC Newsmaker: Feb. 11 Newsmaker Panel Asserts that the Proposed Trans-Pacific Partnership's ISDS Provision Will Undermine U.S. Courts and Legislative Bodies: "What are the ramifications of the Trans-Pacific Partnership...

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ObamaCare: How Is It Doing?


There have been three very surprising things with respect to Obamacare implementation so far.

The first is the surge in enrollment in employer-sponsored insurance. The fear was that people and employers would find the coverage offered on the exchanges irresistible, and that there would be a great deal of disruptive churn as the exchanges started up. The penalty for large employers who did not offer health insurance was constructed to guard against this. Yet it seems to have been needless. The appearance of the exchange option appears to have led to more rather than fewer employers offering insurance.

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Monday Smackdown: Intellectual garbage collection by the extremely-sharp Kristi Culpepper: Reason magazine edition

Kristi Culpepper: Sad and Depressing:

Procrastinating on February 15, 2016


Over at Equitable Growth--The Equitablog:

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Must-Read: Ordinarily, buyers and sellers in a marketplace have a partial harmony of interests. All want to make a win-win deal. But all also want to, conditional on the deal being made, reduce the amount of surplus received by their counterparty by as much as they can. The interest vectors have a positive dot product. But they are not aligned.

However, when what is being sold is not the service to the user but rather the user's eyeballs to an advertiser who may want to inform the user and may want to distort the user's cognition and worsen his or her judgment, even the partial harmony of interest goes up for grabs. And now Henry Farrell is annoyed at Alex Tabarrok's transfer of what was originally a valid intuition outside of its proper sphere:

Henry Farrell: Facebook’s Algorithms Are Not Your Friend: "Alex’s more fundamental claim--like very many of Alex’s claims...

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The Archives: From Two Years Ago: February 1-15, 2014

Picks of the Litter:

  1. What Market Failures Underlie Our Fears of "Secular Stagnation"?
  2. Marvelling at Chris Cilizza of the Washington Post Weblogging
  3. Chris House: All Opinions of Shape of Earth Are Nutty: Does This Qualify as Thursday Idiocy?: Yes, I Conclude That It Does...
  4. Crazies Gotta Craze: UCLA Law School Professor Stephen Bainbridge and Others: Thursday Idiocy
  5. Hoisted from the Internet from 3.5 Years Ago: "Recovery Summer" with Groundbreakings and Events Across the Country

Most worth noting is one good but, I think, ultimately inadequate wrestle with secular stagnation.

And also worth noting are my attempts to chronicle a real considerable outbreak of the crazy:

  • Remembering Obama's "Recovery Summer" of 2010...
  • UCLA law professor Stephen Bainbridge's: "How dare a Black man act like a white president and travel the country protected by the Secret Service!"...
  • Michigan's Chris House and his ludicrous claims that the likes of Peter Diamond, Paul Krugman, and George Akerlof are all just as nutty as Ed Prescott...
  • Chris Cilizza of the Washington Post and his claim that his job "is to assess not the rightness of each argument, but to deal in the real world of campaign politics in which perception often (if not always) trumps reality…" Note that the world in which people go to the doctor and get medical treatment is the fake world, and the "campaign politics" world of spinmasters and political PR is the real world...

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Jeb Bush: Hoisted from Scott Lemieux's Archives from Five Months Ago

Scott Lemieux: Jeb Bush and the Republican Party's bizarre 9/11 blind spot: "Donald Trump is more of a reality show contestant engaged in the simulacrum of a presidential candidacy...

...than an actual candidate for president. But this comes with an advantage: He can tell the truths that are inconvenient to Republican dogma. This was evident many times during the Republican debate earlier this week. Showing both a talent for getting under the skin of Jeb Bush and a firmer grasp of the fundamentals crucial to winning elections, Trump observed in an exchange with Bush that his brother's presidency had been such a 'disaster' that Abraham Lincoln couldn't have won on the Republican ticket in 2008.

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Comment of the Day/Live from the Gehenna the Republicans Have Made for Themselves: Jim Harper: "Nino Scalia was in the majority in a little known pre-DNA case of Arizona v. Youngblood...

...Youngblood was convicted, but the rape kit wasn't refrigerated which could have provided exoneration. Ultraconservative Arizona Court of Appeals reversed. Supremes reversed saying that the destruction of the evidence did not substantially disrupt the fact finding process, blah, blah blah. Youngblood was subsequently exonerated through DNA. Bad enough, but the weird thing is the Supremes keep on citing it like nothing happened. Demonstrably screwing up makes no difference, because their logic is pure because it is inductive...

Must-Reads: Perhaps the most frustrating thing about monetary policy making since the taper tantrum has been that we outsiders find that (a) asymmetric risks plus (b) uncertainty about the true state of the labor market and (c) uncertainty about the position and slope of the Phillips Curve are dispositive. They make the case for keeping the monetary-expansion pedal to the metal overwhelming. Yet the Federal Reserve has not felt compelled to engage with outsiders making these arguments in any sustained and deep technocratic way. And those doing oversight at congress have been incapable of doing the job--what we have seen has been either blathering or, worse, ravings about the gold standard.

The extremely-sharp Don Kohn and David Wessel have good suggestions for procedural reform:

Donald Kohn and David Wessel: Eight Ways to Improve the Fed's Accountability: "1. The Fed should... have monetary policy hearings quarterly...

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Must-Read: Either Lehman was a reasonable organization caught in a perfect storm--in which case its creditors should have been bailed out as part of its resolution--or Lehman should have been shut down and resolved while there was still enough notional equity value left in the portfolio to cover the inevitable surprises and the likely negative shock to risk tolerance. As I have come to read it, Paulson, Bernanke, and Geithner were afraid to do their job in spring and summer of 2008, and also afraid to take responsibility to do what their forbearance with Lehman in the spring and summer had made prudent in the fall.

Perhaps Paulson, Bernanke, and Geithner thought that although the way they handled Lehman was a small technocratic policy mistake, it was a political economy necessity. Perhaps they thought an uncontrolled Lehman bankruptcy that would deliver a painful shock to asset markets and economies would generate strong political benefits: constituents would feel that shock and then complain to congress, which would then give the Fed and the Treasury a free hand to keep it from happening again. Perhaps such considerations made it the right political-economy thing to do. Perhaps not.

But we have never had the debate over that. Paulson, Bernanke, and Geithner have instead claimed that they did not have legal authority to resolve Lehman in the fall. Combining with their failure to resolve it in the summer to generate the conclusion that they did not understand what their jobs were:

John Plender: ‘Lehman Brothers: A Crisis of Value’ by Oonagh McDonald: "The collapse of Lehman Brothers in 2008 was... a spectacular curtain raiser...

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Live from the Private Gehenna Nino Scalia Made for Himself: Particularly funny in a sick ironic way--Nino Scalia's wish that the U.S. government to bury Jews under the sign of the cross:

JUSTICE SCALIA: The cross doesn't honor non-Christians who fought in the war?... Where does it say that?... It's erected as a war memorial. I assume it is erected in honor of all of the war dead.... The cross is the most common symbol of the resting place of the dead.... What would you have them erect?... Some conglomerate of a cross, a Star of David, and you know, a Moslem half moon and star?

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Live from the Gehenna the Republicans Have Made for Themselves: Let me echo Igor Volsky here: WOW!!

Igor Volsky: "Cruz: if Hillary or Bernie win, veterans memorials will be 'torn down' & 'crosses and Stars of David' will b sandblasted off tombstones. WOW"

Boob bait for the bubbas--but it is squarely in the Gingrich-Goldwater tradition. Nixon and Reagan's dog whistles were more subtle and their lies less blatant.

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Must-Read: James Fallows will be upset as I buy into the myth of the boiling frog. The Federal Reserve's decision to raise interest rates last December was, it thought, a marginal move that was running a small risk. But as evidence has piled in suggesting that the risks on the downside are larger and larger, the Federal Reserve has done... nothing...

Paul Krugman orders and inspects the arguments:

Paul Krugman sends us to Gavyn Davies, Lael Briainard from last October, and himself from a year ago:

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Links for the Week of February 14, 2016

Most-Recent Must-Reads:

Most-Recent Links

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