Grasping Reality on TypePad, by Brad DeLong

Over at Equitable Growth:

A Note on the Likelihood of Recession: With global inflation currently more than quiescent, there is no chance that global recovery will be—as Rudi Dornbusch used to say—assassinated by inflation-fighting central banks raising interest rates.

As for recovery being assassinated by financial chaos, we face a paradox here: Financial risks that policymakers and economists can see are those that bankers can see and hedge against as well. It is only the financial risks that policymakers and economists do not see that are truly dangerous. Many back in 2005 saw the global imbalance of China's export surplus and feared disaster from a fall in the dollar coupled with the discovery of money-center institutions having sold massive amounts of unhedged dollar puts. Very few, if any--even among those who believed US housing was a massive bubble likely to pop—feared that any problems created thereby would not be rapidly handled and neutralized by the Federal Reserve. READ MOAR

Must-Read: Matthew Klein: Private Equity’s Mark-to-Make-Believe Problem: "No asset is inherently worth anything...

Robert Solow (2015): The Future of Work: Why Wages Aren't Keeping Up: "One of the more puzzling and damaging features of the American labor market in the last few decades...

...has been the failure of real (i.e. inflation-adjusted) wages and benefits to keep up with the increase in productivity. In the years after the Second World War, real wages generally rose at the same rate as output per hour worked. This rough balance was made explicit in what came to be called the Treaty of Detroit: the agreement between the United Auto Workers and General Motors (followed by Ford and Chrysler) that the average annual rate of wage increase would be the percentage increase in productivity plus the percentage increase in consumer prices. This norm spread beyond the auto industry. It had the arithmetic consequence that the share of total value added in industry going to labor would stay roughly constant, with the rest going to the capital side.

Must-Read: Susan Dynarski: Why Talented Black and Hispanic Students Can Go Undiscovered: "Broward County.... More than half of its students are black or Hispanic...

Weekend Reading: Cardiff Garcia: Productivity and innovation stagnation, past and future: an epic compendium of recent views: "Maybe you’ve even read Robert Gordon’s new book...

...or just one of the many summaries and critical reviews — and you worry gravely about what this means for future living standards. And maybe you’re also at least somewhat aware of the endless arguments about whether productivity growth is measured appropriately, whether all the ‘low-hanging fruit has been picked’, whether anyone understands the relationship between total-factor productivity growth and investment, and (of course) whether automation will destroy or bolster the labour market of the future. But you have a social life.

Must-Read: Gene Smolensky says Bob Reich's latest book is truly excellent:

Robert B. Reich: Saving Capitalism: For the Many, Not the Few: "The New Property...

Live from Vatican City: Dana Houle: Department of "WTF?!": American Politics Bernie Sanders/Jeff Sachs Edition...

Must-Read: Barry Eichengreen: The Case for a Grand Bargain: "What would it take for all this to happen?...

Over at Equitable Growth: Must-Reads:

• A note on Niall Ferguson: Why did Keynes write "In the long run we are all dead"? - Equitable Growth
• Nick Bunker: Why it’s time to rethink non-compete agreements - Equitable Growth* Peter J. Walker: David Card
• Steve Cohen, Brad DeLong, and Laura Tyson: Book Talk: "Concrete Economics" | Institute of Governmental Studies
• Fareed Zakaria: Obama Pursued Transformation as Republicans Chose Self-Destruction
• Brian Feldman: A Bunch of Websites Migrate to Medium--Following: How We Live Online

Must-Read: One of the many, many reason to be very glad that I am here at Berkeley...

Peter J. Walker: David Card: "Peter J. Walker profiles David Card...

the economist who has questioned conventional wisdom on minimum wages, immigration, and education...

Must-Watch: Steve Cohen, Brad DeLong, and Laura Tyson: Book Talk: "Concrete Economics" | Institute of Governmental Studies: "Friday, April 8, 2016 :: 4:00pm to 6:00pm :: 109 Moses Hall, IGS Library...

Must-Read: Fareed Zakaria: Obama Pursued Transformation as Republicans Chose Self-Destruction: "From the first month of Obama’s presidency, the GOP decided that he was a socialist radical who had to be opposed, no matter what...

Live from the Greek Theatre: Ada Palmer: Plato vs. Metaphysics, or How Very Hard it Is to Un-Learn Freud: "It is true that the pre-modern world had a lot more unfreedom...

Eleanor Roosevelt: My Day, April 8, 1946:

HYDE PARK, Sunday—In talking with the Polish Minister of Labor and Welfare, the other afternoon, I received the same picture of Poland that one gets in talking to people who have been working for relief and rehabilitation in Greece, Yugoslavia and other European countries. Italy sounds almost as badly off. Some of the stories from France and Holland are equally pitiful.

Must-Read: Brian Feldman: A Bunch of Websites Migrate to Medium--Following: How We Live Online: "Medium has now placed its bets firmly on the 'platform' side of its bipolar business...

Comment of the Day: Dunhill: Live Riding with the Three Horseman of the Judicial Reacalypse: "The possibility that the upgraded LHC...

...operating at 13 teraelectronvolts may open a portal to an alternative parallel reality... through which a living Fourth Horseman Scalia could somehow communicate his retrograde jurisprudence to our timeline... cannot be completely ruled out by the laws of physics...

Live from Capitol Hill: Al Franken FTW

AL FRANKEN: The president has a four-year term. Scientists tell us that there are approximately ten months left in his term. But then I hear colleagues from the other side saying ‘well you know what, if the election goes the wrong way, I’d be happy to consider this nomination during the lame duck.’ How absurd is that? So it’s ‘let the people decide’ unless they decide on Hillary Clinton, in which case ‘let us decide.’ Do you guys talk to you each other? That’s what I want to know. I just hear such contradictory stuff coming out from your side.

May 09, 2013: Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging:

Niall Ferguson: An Open Letter to the Harvard Community: "Last week I said something stupid about John Maynard Keynes...

...Asked to comment on Keynes’ famous observation “In the long run we are all dead,” I suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay. This was doubly stupid. First, it is obvious that people who do not have children also care about future generations. Second, I had forgotten that Keynes’ wife Lydia miscarried.

Over at Equitable Growth: Must-Reads:

• Nick Bunker: JOLTS and another look at the health of the U.S. labor market - Equitable Growth
• Nick Bunker: Why it’s time to rethink non-compete agreements - Equitable Growth* Simon Wren-Lewis: The Financial Crisis, Austerity and the Shift from the Centre
• Yuka Hayashi and Anna Prior: U.S. Unveils Retirement-Savings Revamp, but With a Few Concessions to Industry
• Robert Gordon (2012): Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds

Must-Read: Simon Wren-Lewis: The Financial Crisis, Austerity and the Shift from the Centre: "Think of two separate one dimensional continuums...

Karl Liebknecht: The Future Belongs to the People (Reichstag Meeting, April 7, 1916):

On April 7, 1916, Liebknecht declared – in the Reichstag during the discussion of the military estimates – that he had documents showing an agreement between Herr Zimmerman, the Under Foreign Secretary, and Sir Roger Casement, by which British prisoners were to be drilled to fight against England. After some further remarks about Mohammedan prisoners of war being pressed into service for Germany, Liebknecht was prevented from speaking amid shouts of 'Traitor!' from all parts of the Chamber.

Live Riding with the Three Horseman of the Judicial Reacalypse: Scott Lemieux: The Futility of Determining the "Original Meaning" of the 14th Amendment: "Justice Alito said something rather interesting....

Live from the Laundry: Jon Letzing: CERN Is Seeking Secrets of the Universe, or Maybe Opening the Portals of Hell: "Operators of Large Hadron Collider gear up to battle conspiracy theories..."

Live from Market Street: As I wrote almost a year ago, I see Ev Williams on a crusade...

Brad DeLong (2015): Ah. So Medium Is Getting Into the Tinyletter Business...: My feeling is that what Medium is aiming at is to accomplish the vision of Vannevar Bush: hypertext done properly, in a way so that the community dynamics and the financial dynamics work, and reinforce the good parts of many-to-many hypertext rather than the bad parts, and avoiding the tearing-itself-apart in the many, many different ways we have seen over the past two decades...

And now both Medium and Ben Thompson are provoking me to circle back around to this set of issues, but I have no conclusions as of yet--either about the future of the public sphere as a whole, or about what individual people who want to contribute should do to max out the win:

Must-Read: IMHO, long, long overdue...

Yuka Hayashi and Anna Prior: U.S. Unveils Retirement-Savings Revamp, but With a Few Concessions to Industry: "The Obama administration Wednesday rolled out a long-anticipated new rule aimed at transforming the way the financial industry delivers retirement-savings advice...

Must-Read: Robert Gordon (2012): Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds: "Start by assuming that future innovation propels growth...

May 04, 2013: Psychohistorical Origins of Niall Ferguson's Bizarre Remarks About John Maynard Keynes:

Henry Blodget writes:

Harvard Professor Niall Ferguson Reportedly Just Blamed Keynes' Economic Philosophy On Him Being Homosexual And Childless

Ferguson's underlying source appears to be a rather remarkable screed by Gertrude Himmelfarb in a rather McCarthyite vein--a screed that manages to get a lot about Keynes's economics and his family life substantially wrong in a very short space. It appears, in turn, to be based on the views of Joseph Schumpeter:

Over at Equitable Growth: Must-Reads:

• Miles Kimball: Density is Destiny
• ProGrowthLiberal: Social Security Replacement Rates as Reported by the CBO
• Karen M. Tani: Introduction to States of Dependency: Welfare, Rights, and American Governance, 1935-1972
• Martin Wolf: [Why Fossil Fuel Power Plants Will Be Left Stranded](http://equitablegrowth.org/?p=24729 )

Must-Read: Miles Kimball: Density is Destiny: "Every time the population of a city doubles...

Must-Read: ProGrowthLiberal: Social Security Replacement Rates as Reported by the CBO: "Brian Faler warned us a year ago...

Must-Read: I gotta get this book. I gotta read this book...

Karen M. Tani: Introduction to States of Dependency: Welfare, Rights, and American Governance, 1935-1972: "States of Dependency provides a new account of welfare law and policy...

Live from Journalistic Cloud-Cuckooland: When did Bloomberg View give up even trying to be a trusted information intermediary?

Paragraph 1:

Albert Hunt: Cruz and Sanders Raise Stakes in Wisconsin: "Wisconsin gave a boost...

...to... Bernie Sanders... Tuesday, protracting the Democratic presidential race...

Paragraph 9:

Barring an unlikely cataclysm--for example, a criminal charge against Clinton resulting from her email controversy--it's almost impossible to envision her losing the nomination...

Why oh why can't we have a better press corps?

Must-Read: Martin Wolf: Why Fossil Fuel Power Plants Will Be Left Stranded: "Virtually all new fossil fuel-burning power-generation capacity will end up ‘stranded’...

Live from Riverside Drive: Paul Krugman: Cities for Everyone: "Remember when Ted Cruz tried to take Donald Trump down by accusing him of having ‘New York values’?...

Must-Read: Lorenzo Caliendo et al.: Trade and Labor Market Dynamics: "We develop a dynamic trade model...

...where production and consumption take place in spatially distinct labor markets with varying exposure to domestic and international trade. The model recognizes the role of labor mobility frictions, goods mobility frictions, geographic factors, and input-output linkages in determining equilibrium allocations. We show how to solve the equilibrium of the model without estimating productivities, migration frictions, or trade costs, which are usually di¢ cult to identify. We calibrate the model to 38 countries, 50 U.S. states, and 22 sectors and use the rise in Chinaís import competition to quantify the e§ects across more than a thousand U.S. labor markets. We find that China's trade shock resulted in a loss of 0.8 million U.S. manufacturing jobs, about 50 percent of the change in the manufacturing employment share unexplained by a secular trend. We find aggregate welfare gains but, due to trade and migration frictions, the welfare and employment e§ects vary across U.S. labor markets. Estimated transition costs to the new long-run equilibrium are also heterogeneous and reflect the importance of accounting for labor dynamics.

Josef Stalin: To Harry S. Truman:

Charles Kindleberger: To Benjamin Cohen, April 5, 1946. State Department File, Kindleberger Papers:

Over at Equitable Growth--The Equitablog:

• Historical Nonfarm Unemployment Statistics - Equitable Growth
• Our second set of Equitable Growth working papers - Equitable Growth
• David Autor: The China shock: Learning from labor market adjustment to large changes in trade - Equitable Growth
• Kimberly Clausing: The effect of profit shifting on the corporate tax base in the U.S. and beyond - Equitable Growth
• Jeff Larrimore et al.: Income and earnings mobility in U.S. tax data - Equitable Growth
• Stephanie Chapman: Student loans and the labor market: Evidence from merit aid programs - Equitable Growth
• Nick Bunker: Panama and the opacity of global capital - Equitable Growth
• The Economist: Chairman of Everything
• Wes McKinney: "United shows me better fares...
• Heather Boushey and Kavya Vaghul: Women have made the difference for family economic security

Must-Read: I do not understand China. But it now looks more likely than not to me that Xi Jinping's rule will lose China a decade, if not half a century...

The Economist: Chairman of Everything: "Two curious articles appeared in government-linked news media...

Must-Read: Wes McKinney: "United shows me better fares...:

United shows me better fares when I use Incognito mode or use a VPN. Sigh #2016

— Wes McKinney (@wesmckinn) April 3, 2016

Live from the Rumpublicans' Self-Made Gehenna: Kevin Drum: Americans Aren't Anxious About the Economy. So What Are They Anxious About?: "One possibility is angst over illegal immigration, but...

January 04, 2015: Hard Power, Soft Power, Muscovy, Strategy, and My Once-Again Failure to Understand Where Niall Ferguson Is Coming From: Live from Le Pain Quotidien:

In which I once again fail to understand where Niall Ferguson is coming from...

And I think: Of course hard power can be decisive--but one needs to have a lot of it, and be willing not just to threaten to use it but to actually use it, and not care that one's use of it may lead the abyss to look into you, and turn you into something you did not want to be, and so cause you to lose even as you "win".

Cosma Shalizi: In Soviet Union, Optimization Problem Solves You: "Both neo-classical and Austrian economists make a fetish (in several senses) of markets and market prices...

...That this is crazy is reflected in the fact that even under capitalism, immense areas of the economy are not coordinated through the market. There is a great passage from Herbert Simon in 1991 which is relevant here:

Suppose that [‘a mythical visitor from Mars’] approaches the Earth from space, equipped with a telescope that revels social structures. The firms reveal themselves, say, as solid green areas with faint interior contours marking out divisions and departments. Market transactions show as red lines connecting firms, forming a network in the spaces between them. Within firms (and perhaps even between them) the approaching visitor also sees pale blue lines, the lines of authority connecting bosses with various levels of workers. As our visitors looked more carefully at the scene beneath, it might see one of the green masses divide, as a firm divested itself of one of its divisions. Or it might see one green object gobble up another. At this distance, the departing golden parachutes would probably not be visible.

Must-Read: Heather Boushey and Kavya Vaghul: Women have made the difference for family economic security: "The steady movement of women into the U.S. workforce over the past half-century...

An updated graph that Claudia Goldin had me make two and a half decades ago. The nonfarm unemployment rate since 1890:

Then it was 1890-1990, now it is 1869-2015.

Live from the Gettysburg Battlefield: Clarence Thomas seems very unclear about who won the battle here...

Scott Lemieux: Equal Representation Won a Qualified Victory at the Supreme Court | New Republic: "Clarence Thomas... tackled the ‘one person, one vote’ principle head-on...

...‘The Constitution does not prescribe any one basis for apportionment within States,’ argued Thomas. ‘It instead leaves States significant leeway in apportioning their own districts to equalize total population, to equalize eligible voters, or to promote any other principle consistent with a republican form of government.’ According to Thomas, the ‘Court has never provided a sound basis for the one-person, one-vote principle.’

I think Paul Krugman gets this one right:

Paul Krugman: Aggregate Supply and Depression Economics: "Robert Waldmann follows up on the question of who got what wrong in the late 1990s analysis of Japan’s liquidity trap...

...As he says, the extremely stripped-down nature of the model I used may have led some readers — like, surprisingly, Brad DeLong — to suppose that I had forgotten about the supply side. Actually, though, I still don’t really understand the confusion — I explicitly began with a flexible-price model, then considered the effects of temporarily fixed prices, so how could that have been unclear [to people like Brad DeLong]?

Required Purchases:

• Robert Frank, Ben Bernanke, Kate Antonovics, and Ori Heffetz: Principles of Economics http://amzn.to/1Zpuoj5 (New York: McGraw-Hill: 9781259897580) be sure to order and buy ISBN 9781259897580 from the Berkeley bookstore
• Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/1ZpuFCQ (Oxford: Oxford University Press: 9780192853455)
• Milton Friedman and Rose Director Friedman (1970): Free to Choose: A Personal Statement http://amzn.to/1NbvEPU (New York: Mariner Books: 9780156334600)
• Tom Slee (2006): No One Makes You Shop at Wal-Mart: The Surprising Deceptions of Individual Choice http://amzn.to/234zCph (New York: Between the Lines: 9781897071069)
• i>Clicker+ Student Remote http://amzn.to/1ZpvkEe (New York: W.H. Freeman: 9781464120152)