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September 2016

Comment of the Day: Ryan: bin Laden:

George W. Bush said:

I was concerned about him, when he had taken over a country. I was concerned about the fact that he was basically running Afghanistan and calling the shots for the Taliban.

Yeah, except, you know, how you weren't concerned actually.

Must-Read: The mysterious Pseudoerasmus says--I believe correctly--that Cuba's very real accomplishments in raising human development index values since 1959 are not nearly enough to offset the other major manifest flaws of the Castro brothers' regime in the scales of history.

I would add that had Cuba been a normal North Atlantic country since 1957, then starting from where it was then--as not a poor but a middle-income country--and following the standard North Atlantic historical trajectory would have delivered equivalent improvements in human development index, plus lots more in the way f material plenty, plus a free press, plus real elections, plus a whole host of other bourgeois virtues and comforts:

Pseudoerasmus: Ideology & Human Development:

My overall point can be summarised thus....

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Outline of: Joel Mokyr: A Culture of Growth: The Origins of the Modern Economy

A Culture of Growth: The Origins of the Modern Economy

The "Institutional" Puzzle

  • Following the work of North, Rodrik, Greif, Acemoglu and many others, a consensus has emerged that “institutions” are central in explaining economic performance:
    • Law and order,
    • good property rights,
    • effective third-party or private-order contract enforcement,
    • low rent-seeking,
    • openness and inclusiveness, and
    • efficient governance and provision of public goods.
  • [But] the European Industrial Revolution that started modern growth was above all about technological progress, not just better allocations and more efficient markets:
    • Growth before 1750 was primarily on “Smithian Growth”.
    • Growth after 1750 was increasingly based on innovation or “useful knowledge”.
    • Whence the different dynamic?
    • What kind of institution was instrumental in bringing about the rise in intellectual innovations that eventually led to the Industrial Revolution?

Continue reading "Outline of: Joel Mokyr: A Culture of Growth: The Origins of the Modern Economy" »

Must-Read: Paul Romer observes--I believe indisputably--that the now 40-year tool-building exercise creating Dynamic Stochastic General Equilibrium models based on representative agents and rational expectations has produced neither estimates nor insights. He further ventures the guess--which I believe is correct--that it never will.

As Paul Krugman observes, the fact that he was one of the last students to learn macroeconomics under the old Keynesian regime of Jim Tobin and then escaped the gravitational attraction of DSGE and RBC entirely by wandering off into international trade meant that, when the ---- started to hit the fan internationally in the later 1990s and did hit the fan for real in 2008, he was vastly better prepared to understand the world than virtually any of his colleagues who had felt, to any degree, the gravitational attraction of DSGE and RBC:

Paul Romer: The Trouble with Macroeconomics:

In the last three decades, the methods and conclusions of macroeconomics have deteriorated...

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Procrastinating on September 14, 2016


Over at Equitable Growth: Must-Reads:

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Live from the Republicans' Self-Made Gehenna: Rice: If Rumsfeld, Pentagon Had Done Their Job, Iraq Might Have Turned Out Different:

Condi Rice: First, we didn’t invade Iraq to bring democracy — but once we overthrew Saddam, we had a view of what should follow. If Don and the Pentagon had done their job (after claiming the rights to lead post-war rebuilding—things might have turned out differently). Don should just stop talking. He puts his foot in his mouth every time.

Colin Powell: Doug and Paul claims they had a plan (turn Iraq and our Army over to Chalibi) and leave. 43 knew what had to be done, specifically rejected the Chalibi crowd and as you say the boys in the band were brain dead.

Live from Trumpland: James Fallows: Trump Time Capsule #101: Pepe the Frog:

Way back in July, Donald Trump retweeted an item showing Hillary Clinton awash in a sea of cash, with the message “Most Corrupt Candidate Ever!” emblazoned on a six-sided star.... Trump took the rare-for-him step of actually deleting his tweet. But even then his campaign’s reaction was outraged innocence. Anti-Semitic? What are you talking about?? Why would you think it’s a Star of David? It’s so obviously a sheriff’s badge! The real racists are the ones who think anything else!

That’s what this weekend’s “Pepe” episode reminds me of.

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Live from the Journamalists' Self-Made Gehenna: It's not just that the national newspaper and TV political reporters are "objectively" pro-Trump: they know what they are doing, and what they are doing is putting their thumbs on the Trump side of the scale as strongly as they dare. Why? In order to try to make the race look closer than it is, and to punish Hillary for getting above herself. Why are they doing this? You tell me...

Paul Krugman: Why Are The Media Objectively Pro-Trump?:

Because they are, at this point. It’s not even false equivalence....

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Kephalos the Antiphilosopher: Whatever You Have Is Justly Yours as Long as You Have Not Cheated Anybody

Cf: Greg Mankiw (2015): Defending the 1%

Cephalus and socrates Google Search

The Opening of Plato's Republic Sokrates:

I went down yesterday to the Piraeus with Glaukon the son of Ariston, that I might offer up my prayers to the goddess; and also because I wanted to see in what manner they would celebrate the festival, which was a new thing. I was delighted with the procession of the inhabitants; but that of the Thrakians was equally, if not more, beautiful.

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The New York TImes and John F. Burns Suppressing the News That's Fit to Print: Hoisted from the Archives

The memory of man runneth not to the day that I could trust that with reasonable probability anything new in the New York Times would be true:

B7e jpg 460×333 pixels

Some of the News That's Fit to Print (Why Oh Why Can't We Have a Better Press Corps?) (January 29, 2006):

In Slate, Jack Shafer writes:

John Q. Blogger can't fly to Baghdad or Bosnia and do the work of a John F. Burns....

There's a question Shafer doesn't ask:

What quality of coverage does John F. Burns, chief foreign correspondent of the New York Times produce?

It's an important question.

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Liveblogging Postwar: September 13, 1946: Harry S. Truman to Bess W. Truman

Letter from Harry S Truman to Bess W Truman September 13 1946 Truman Papers Family Business and Personal Affairs Papers

Harry S. Truman: To Bess W. Truman:

The White House
September 13, 1946

Dear Bess:

I failed to answer your question about your car. It seems to me that if you can get a good price for it you may as well sell it and buy a bond, and then when we leave the great white jail a new car can be bought. The new cars won't have the bugs out of them for two or three years anyway. Be sure though that no regulations or price ceilings are in any way infringed, no matter how good you may think the friendship of the person you sell to may be. The temptation to take a crack at the first family for pay is almost irresistible and so far we've escaped any factual misdemeanor and I'd like to finish with that reputation. Save the number.

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Day Nine of the Fall Campaign: National Press Corps Strives Hard to Normalize Trump...

...and to denormalize HRC. Any national MSM political reporters besides @Farenthold, @theplumlineGS, and @JamesFallows doing their jobs to whitelist for ?

Must-Read: Note that the case for greater infrastructure investment is close to orthogonal to the case for bigger government deficits ending in a larger target national debt, and that both are together each close to orthogonal to the case for larger swings in the government's fiscal balance--bigger surpluses in times of boom to create the fiscal space so that you can run bigger and more stimulative deficits in times of recession. Larry is here making a case that I believe is intellectually irresistible for the first only. But the cases for the second and third are, I believe, intellectually irresistible as well:

Larry Summers: Building the Case for Greater Infrastructure Investment:

The issue now is not whether the US should invest more but what the policy framework should be...

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Live from Trumpland: It is now the eighth day after the real start of the presidential campaign at Labor Day. And for eight days the United States's media-industrial complex has been frantically and diligently engaged in the normalization of Donald Trump--a grifter, a bigot, a liar, a con man, and a clown.

Shame on them. Shame on them all. Of all those political-reporter employees of newspapers and TV channels whose words have crossed my screen this morning, only David Farenthold has done his job properly.

Simon Wren-Lewis: Trump, Brexit and Balance:

It is with a dreadful sense of inevitability that I’m watching what is happening in the US general election between Clinton and Trump....

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Must-Read: Diligently and industriously study the Thought of Nick Rowe to understand the qualitative microfoundations of recessions in a monetary economy!

There can be excess demand for all kinds of things--kumquats, Mona Lisas, experiences of the ineffable, savings vehicles, stocks of safe assets, cash--*but unless the excess demand spills over into an excess demand for cash there will not be a recession. The difference between an excess demand for Mona Lisas or kumquats on the one hand and an excess demand for savings vehicles and safe assets on the other is that cash can be--and in some recessions is--pressed into service as a savings vehicle or a safe asset, and thus the initial excess demand propagates itself into an excess demand for cash:

Nick Rowe: Money Stocks and Flows:

Those... differences between money and all other assets means that it is misleading to think of the demand for money, like the demand for other assets, in terms of portfolio choice....

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The Wayback Machine: From Ten Years Ago: August 31-September 13, 2006

Peabody and sherman original Google Search

  • 2006-09-13: Un-Atlantic Economic History: It is a fair criticism that we Berkeley Economics people think Economic History is Atlantic Economic History, and overwhelmingly North Atlantic Economic History. Well, now I have a new course's worth of readings to compile--and I know I will have read only an appallingly small portion of it: "Un-Atlantic Economic History: The Economies Bordering the Indian Ocean and the China Seas, 1000-1950" Where to start?.... Fernand Braudel, The Structure of Everyday Life.... Janet Abu-Lughod, Before European Hegemony: The World System A.D. 1250-1350.... K.N. Chaudhuri, Trade and Civilisation in the Indian Ocean: An Economic History from the Rise of Islam to 1750.... Tirthankar Roy, The Economic History of India 1857-1947... <--Alas! I never finished putting the course together, and still have never taught it...

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Procrastinating on September 12, 2016


Over at Equitable Growth: Must-Reads:

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Links for the Week of September 11, 2016

Most-Recent Must-Reads:

  • Dietrich Domanski et al.: Wealth Inequality and Monetary Policy: Explor[ing] the recent evolution of household wealth inequality in advanced economies by looking at valuation effects on household assets and liabilities....
  • William Grieder (1981): The Education of David Stockman: As budget director, [Stockman] intended to proceed against many of the programs...
  • Mark Thoma: Diverting Attention From the Real Issues: Immigration is not the problem.... Immigrants do not lower the employment prospects for natives...
  • Paul Krugman: Tobin Was Right: Tobin’s 1972 presidential address to the American Economic Association...

Most-Recent Links:

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Monday Smackdown: Sam Tanenhaus Department

Sam Tanenhaus--who has a substantial history of whitewashing wingnuts--calls for reporters to... not do their jobs. They should not cover what Donald Trump says and does. They should not cover what Trump said and did. Why not? Out of fear of some political payback or electoral backlash:

Glenn Fleishman says: WTF?!?!

I chime on, saying Tanenhaus has confirmed one of my judgments:

And Tanenhaus zings back:

Well, that showed me! :-)

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Liveblogging Postwar: September 12, 1946: Henry Wallace

Henry wallace september 12 1946 Google Search

enry A. Wallace: The Way To Peace:

First off, I want to give my own personal endorsement to the candidates chosen by the Democratic Party and the American Labor Party in New York. James Mead long has been one of the ablest public servants in Washington—a constant, faithful and intelligent proponent of the New Deal of Franklin Roosevelt. The Senate will miss him—but Albany needs him. He will make a great governor—worthy of the tradition of Smith and Roosevelt and Lehman.

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Weekend Reading: Paul Krugman (2011): Mr. Keynes and the Moderns

Paul Krugman (2011): Mr Keynes and the Moderns:

It’s a great honour to be asked to give this talk, especially because I’m arguably not qualified to do so.1 I am, after all, not a Keynes scholar, nor any kind of serious intellectual historian. Nor have I spent most of my career doing macroeconomics. Until the late 1990s my contributions to that field were limited to international issues; although I kept up with macro research, I avoided getting into the frontline theoretical and empirical disputes.

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Must-Read: An answer to a question from Robert Waldmann. Milton Friedman rejects rational expectations, seeing instead "quinquennia or decades" before "the public... [will have] adapted its attitudes or its institutions to a new monetary environment...":

Milton Friedman (1976): Inflation and Unemployment:

A major factor in some countries and a contributing factor in others may be that they are in a transitional period...

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Why an attack like 9 11 is much less likely today than it was in 2001 Vox

Live from George W. Bush's Self-Made Gehenna (March 2002): [President Bush Holds Press Conference][]:

THE PRESIDENT: Deep in my heart I know [Osama bin Laden] is on the run, if he's alive at all.  Who knows if he's hiding in some cave or not; we haven't heard from him in a long time.  And the idea of focusing on one person is--really indicates to me people don't understand the scope of the mission. Terror is bigger than one person.  And he's just--he's a person who's now been marginalized.  His network, his host government has been destroyed.  He's the ultimate parasite who found weakness, exploited it, and met his match. He is--as I mentioned in my speech, I do mention the fact that this is a fellow who is willing to commit youngsters to their death and he, himself, tries to hide--if, in fact, he's hiding at all.

So I don't know where he is.

You know, I just don't spend that much time on him, Kelly, to be honest with you.

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Comment of the Day: Maynard Handley: in reply to Tracy Lightcap...:

(a) How many jobs require "com[ing] up with useful solutions to new situations?"...

(b) The issue is not whether robots can do better than humans in ONE PARTICULAR situation. It's whether they can do better across the gamut of situations. Yes, robots might have failed the Canadian geese test. They may also have PASSED the PanAm 1736 test and the Saudia 763 test and, heck, most of the items on this list: (including, BTW, the top two...)

Must Read: Note the difference between wealth inequality and income inequality. Lowering interest rates raises wealth inequality (by boosting the value of old capital) and lowers income inequality (by reducing the rate of return earned on new capital). Cf: John Maynard Keynes, "euthanasia of the rentier*...

Dietrich Domanski et al.: Wealth Inequality and Monetary Policy:

Explor[ing] the recent evolution of household wealth inequality in advanced economies by looking at valuation effects on household assets and liabilities....

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Must-Read: My late friend Susan Rasky was, in general, annoyed at William Grieder.

You see, she was covering Stockman and the budget in the New York Times in 1981. She was trying to tell as it happened the same story about David Stockman and his budget that William Grieder was going to tell in the Atlantic Monthly piece he published at the very end of the year.

But, she told me once, she got substantial pushback from her New York Times editors, which hobbled her. Why? In part because the Washington Post reporters--being supervised by Grieder--were telling a very different story. And her editors said that if she were right the Post would be on board as well. Grieder, she thought, might not only have been keeping his own material from the reporters he supervised, but also may have been steering the reporters he supervised away from the real story--he certainly wasn't dropping them any hints, and wasn't doing them any favors as they tried to cover a complex situation--the real story that Grieder was saving for the Atlantic, and that Rasky was trying to tell as it was happening:

William Grieder (1981): The Education of David Stockman:

As budget director, [Stockman] intended to proceed against many of the programs...

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Weekend Reading: CIA Director John Brennan Was Against Waterboarding But Didn't Tell Anyone


CIA Director John Brennan:

Scott Pelley: Do you think of waterboarding as a dark time in the history of your agency?

John Brennan: Sure. Waterboarding was something that was authorized. It was something that I do not believe was appropriate. It is something that is not used now and as far as I'm concerned will not be used again.

Scott Pelley: You were in management here at the time. You didn't stop it.

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Asian Ideographic Vocabulary Lesson...

Noah Smith: on 義は山嶽より重く死は鴻毛より軽しと心得よ:

After binge-watching Firefly on Transcontinental airplane flights, I feel it's kinda sad that Asian ideographs aren't incorporated into my writing... A beginning:

  • Imperial Security Zone (i.e., "Forbidden City"--Zijincheng, ([Purple/Polaris/Celestial/Imperial]-Security-[city/city wall/enclosed area]) :: 紫禁城
  • Duty is heavier than a mountain; death is lighter than a feather :: 義は山嶽より重く死は鴻毛より軽しと心得よ
  • Mobile Force (Kidō Butai) :: 機動部隊
  • San Francisco :: 舊金山

Must-Read: In retrospect, Robert Lucas's solutions to the problems left over from Milton Friedman and James Tobin--closing the model via specifying expectations, accounting for apparent wage and price inertia, and specifying the big business-cycle impulses--were, as Milton Friedman did warn, all intellectual value-subtracting. The three intellectual bets of requiring rational expectations first and above all, requiring market clearing second, and putting the Solow TFP residual on the right-hand side as a primitive third all force you into models that fail to fit the data and lack any true and useful implications:

Paul Krugman: Tobin Was Right:

Tobin’s 1972 presidential address to the American Economic Association...

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Liveblogging Postwar: September 10, 1946: Eleanor Roosevelt


Eleanor Roosevelt: My Day:

HYDE PARK, Monday—At last I am going to tell you about a bill in which I have been interested for some time. It has been introduced in both the House and the Senate and has strong bipartisan backing. It would establish a Labor Extension Service within the Department of Labor. It would provide for a $10,000,000 to $15,000,000 grants-in-aid program to land-grant colleges and universities, and to other colleges, universities and educational institutions which are prepared to spend their resources and teaching facilities for the benefit of the 45,000,000 wage and salary earners.

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Liveblogging Postwar: September 9, 1946: Eleanor Roosevelt


Eleanor Roosevelt: My Day:

HYDE PARK, Sunday—It is serious and sad reading that we cannot reach peaceful decisions between employers and employees without strikes, even when so much is at stake as in the tie-up of our shipping. When you realize that this not only means losses to employers, shippers and wage-earners, but also may result in actual starvation in many countries throughout the world, you wonder why it is not possible for reasonable men to come to just arrangements.

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