Grasping Reality on TypePad, by Brad DeLong

Live from the Electoral College: KStreet607: Final Popular Vote Total Shows Hillary Clinton Won Almost 3 Million More Ballots Than Donald Trump: " Hillary Clinton won a total of 65,844,610 votes--48.2 percent--compared with Trump’s 62,979,636 votes--46.1 percent--according to David Wasserman of the nonpartisan Cook Political Report...

Hoisted from Others' Archives:

Should-Read: Laurel Lucia and Ken Jacobs: California’s Projected Economic Losses under ACA Repeal: "[With] repeal [of] the Affordable Care Act (ACA), 3.7 million Californians enrolled in the Medi-Cal expansion would lose that coverage...

Must-Read: Simon Wren-Lewis: Understanding Free Trade: "There you have, in one calm and measured paragraph, the contradiction at the heart of the argument...

Must-Read: There is a serious debate about "Uber, floor wax or desert topping?"--excuse me: "Uber: grift or technological and organizational breakthrough?": Izabella Kaminska: Mythbusting Uber’s valuation | Why Uber’s capital costs will creep ever higher. Eric Newcomer: Uber Loses at Least $1.2 Billion in First Half of 2016. Hubert Horan: Can Uber Ever Deliver?: Part 1 | Part 2 | Part 3 | Part 4 | Part 5

Ben Thompson: Reconsidering Uber: "Part 2 is far better, and in many respects redeems the series...

Over at Equitable Growth: Must- and Should-Reads:

• Paul Krugman: Will Fiscal Policy Really Be Expansionary?: "It’s now generally accepted that Trumpism will finally involve the kind of fiscal stimulus progressive economists have been pleading for...
• Andrew Sprung: xpostfactoid on Twitter: .@jamesykwak @delong: Odo of Urras (LeGuin)
• Tim Duy: Fed Turns Hawkish: "The FOMC raised the... federal funds rate by 25bp today, as expected...
• Jonathan Chait: Trump Turns to Always-Wrong Pseudo-Economist Lawrence Kudlow: "The emerging cast... suggests... his party’s domestic platform... continued and even intensified...
• No, Larry Kudlow Is Not an Economist... - Equitable Growth
• Bridget Ansel: Millions of Americans are stuck in part-time jobs - Equitable Growth

Should-Read: Jonathan Chait: Trump Turns to Always-Wrong Pseudo-Economist Lawrence Kudlow: "The emerging cast... suggests... his party’s domestic platform... continued and even intensified...

Stupidest Man Alive Nomination: Larry Kudlow: Hoisted from the Archives from 2008: One would think that National Review would want to maintain a smidgeon of a reputation, and hence at least edit Larry Kudlow for his biggest howlers. But no. Eschaton reader js informs Atrios of the stupidity:

John Holbo (2008): Shameless: "I know logically that Larry Kudlow has no shame, because...Larry Kudlow!...

I have only been on the same stage as Larry Kudlow twice in my life. In neither case did he provide any intellectual substance at all. This was the second time:

Hoisted from the Archives from 2007: I was sitting on the right end of an nine-person panel at the New School Friday morning http://www.cepa.newschool.edu/events/events_schwartz-lecture.htm#webcast. Bob Solow was sitting on the left end--Solow, Shapiro, Schwartz, Rohatyn, Kudlow, Kerrey, Kosterlitz, Hormats, DeLong. Bob Solow expressed concern and worry over the declines in the U.S. savings rate over the past generation. Larry Kudlow, in the middle of the panel, aggressively launched into an unbalanced and nearly fact-free rant...

Comment of the Day: Quite Likely: Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns: "'Instead, the government is supposed to, somehow, via clever predistribution, rearrange the pattern of market power in the economy...

Must-Read: I do not get this: it was 21 years ago that I learned--from an early draft of Staiger, Stock, and Watson (1997)--that nobody had any business thinking or acting on any belief that they had the correct estimate of the natural rate. The natural rate shifts. And because the natural rate shifts there is no way to estimate it precisely, even in retrospect, let along in prospect:

Tim Duy: Fed Turns Hawkish: "The FOMC raised the... federal funds rate by 25bp today, as expected...

Should-Read: Andrew Sprung: xpostfactoid on Twitter: .@jamesykwak @delong: Odo of Urras (LeGuin)

Must Read: In fact, it is looking less and less likely that the Trump deficits will be the kind of fiscal stimulus reality-based economists interested in economic recovery have been pleading for ever since the financial crisis:

Paul Krugman: Will Fiscal Policy Really Be Expansionary?: "It’s now generally accepted that Trumpism will finally involve the kind of fiscal stimulus progressive economists have been pleading for...

Most-Recent Must-Reads:

• Tony Judt (1994): The New Old Nationalism: "Québecois today have few of the grievances expressed thirty years ago, when the region was economically depressed and its language and culture in decline... (M)
• Pseudoerasmus and Friends: The Cultural Turn Among "Historians of Capitalism" Considered Harmful (M)
• Martin Wolf: Too Big, Too Leninist: A China Crisis Is a Matter of Time: As Minxin Pei notes in a brilliant book, China’s Crony Capitalism... (Tu)
• Matt Bruenig (2012): The Never-Ending Libertarian Quest to Appear Clever: "I have been following an amusing back-and-forth between Bryan Caplan (I, II, III) and Matt Yglesias... (W)
• Paul Krugman: Notes on the Macroeconomic Situation: "So the Fed has raised rates... a mistake, although not as severe... as it would have been a year ago... (Th)
• Must-Read: Matthew Yglesias: We Should Have Taken Trump Literally as Well as Seriously: "The national press’s Trump coverage did to an extent err by not taking him seriously enough... (Th)

Most-Recent Should-Reads:

• Robbie Whelan and Esther Fung: China’s Factories Count on Robots as Workforce Shrinks: "Suzhou Victory Precision Manufacture Co.’s chairman, Yugen Gao, said the days when the company drew its strength from China’s cheap and hardworking employees are gone... (Tu)
• David Drake: What Distant Deeps: "Empires have generally used proxies to fight wars on their borders... (Tu)
• Douglas O. Staiger, James H. Stock, and Mark W. Watson (1997): How Precise Are Estimates of the Natural Rate of Unemployment?: "Uncertainty arising from not knowing the parameters of the model at hand... (W)

Most-Recent Links:

• The Niskanen Center is doing great work: Jacob Levy: The Multiculturalism of Fear | The Defense of Liberty Can’t Do Without Identity Politics | Authoritarianism and Post-Truth Politics
• Kevin Drum: Now Even Conservatives Are Calling Them "Tax Cuts For the Rich": "National Review editor Rich Lowry.... When was the last time you heard a conservative, let alone the editor of NR, refer to tax reform as a 'traditional Republican' 'tax cut for the rich'? That's the way liberals jeer at supply-side voodoo.... But now they are. What does this mean?"
• Katie Martin and Leo Lewis: Japanese banks warn of leaving London without Brexit clarity: Financial groups suggest relocating functions within 6 months to mainland Europe
• Matthew Klein: Who wins and loses from America’s transfer union?
• Simon Wren-Lewis: How the media misled us over Brexit and Donald Trump: Partisan newspapers and TV channels let "politicised truths" pass unchallenged...
• Simon Wren-Lewis: What Brexit and austerity tell us about economics, policy and the media
• Chye-Ching Huang and Paul N. van de Water: Millionaires the Big Winners From Repealing the Affordable Care Act
• Amanda Bayer and Cecilia Elena Rouse: Diversity in the Economics Profession: A New Attack on an Old Problem
• The History of Economics Society

Over at Equitable Growth: Must- and Should-Reads:

• Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns - Equitable Growth
• Has Academic Thinking About Countercyclical Fiscal Policy Changed? - Equitable Growth
• (Early) Monday DeLong Smackdown Watch: Has Macroeconomics Gone Right? - Equitable Growth
• Nick Bunker: Weekend reading: “Disaggregating data” edition - Equitable Growth
• Philip Stephens: How Brexit May Not Mean Brexit: "Referendums... become a device for demagogues and dictators: the people have spoken so now they must be silent ever more...
• Greg Sargent: @ThePlumLineGS: "A new CBS poll finds support for [ObamaCare] repeal has dropped 10 points since January, all the way down to 25%: https://t.co/5NnlgJbWhK https://t.co/kAmAAAIn3S"
• Matthew Yglesias: Trump is going to be mad when he hears what his appointees think about the TPP: "His top economic and foreign policy advisers love it (as do his other advisers)...
• Robbie Whelan and Esther Fung: China’s Factories Count on Robots as Workforce Shrinks: "Suzhou Victory Precision Manufacture Co.’s chairman, Yugen Gao, said the days when the company drew its strength from China’s cheap and hardworking employees are gone...
• David Drake: What Distant Deeps: "Empires have generally used proxies to fight wars on their borders...
• Storify: Pre-Distribution vs. Social Insurance in Regional and Equality Policy:

Should-Read: Storify: Pre-Distribution vs. Social Insurance in Regional and Equality Policy:

Has macroeconomics gone right? After three years, how is this working out?...

Paul Krugman (2013): The Neopaleo-Keynesian Counter-counter-Counterrevolution: "OK, I can’t resist this one — and I think it’s actually important...

...Brad DeLong reacts to Binyamin Appelbaum’s piece on Young Frankenstein Stan Fischer by quoting from his own 2000 piece on New Keynesian ideas in macroeconomics, a piece in which he argued that New Keynesian thought was, in important respects, a descendant of old-fashioned monetarism. There’s a lot to that view.

Should-Read: The answer is: not precise at all. Nobody should imagine that they know what the NAIRU is right now, or make policy that does not take account of the fact that there is great uncertainty about what the NAIRU is right now:

Douglas O. Staiger, James H. Stock, and Mark W. Watson (1997): How Precise Are Estimates of the Natural Rate of Unemployment?: "Uncertainty arising from not knowing the parameters of the model at hand...

Comment of the Day: Tim McDermott: Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns: "Years and years ago I heard an interview with a Carnegie Mellon computer science professor who taught the founders of Lycos...

Should-Read: One loose end left in traditional histories of the Reagan administration is why Argentina moved in and occupied the Falkland Islands in 1982. Why didn't the fear a U.K. response supported by the U.S.'s logistical tail? Here David Drake provides an answer: the Argentine generals thought that they had been of so much assistance to the U.S. in its attacks on Nicaragua that the U.S. would stand aside--and it seems likely that policymakers like Jeane Kirkpatrick, Alexander Haig, William Casey and perhaps Zbigniew Brzezinski (if Drake has not written "1979" where he should have written "1981") had led them to believe that it would be so:

David Drake: What Distant Deeps: "Empires have generally used proxies to fight wars on their borders...

Pascal Lamy: "When the wise man points at the moon, the fool looks at the finger..."

Perhaps in the end the problem is that people want to pretend that they are filling a valuable role in the societal division of labor, and are receiving no more than they earn--than they contribute.

But that is not the case. The value--the societal dividend--is in the accumulated knowledge of humanity and in the painfully constructed networks that make up our value chains.

Has academic thinking about countercyclical fiscal policy changed recently? I would not say that thinking has changed. I would say that there is a good chance that thinking is changing--that academia is swinging back to a recognition that monetary policy cannot do the stabilization policy by itself, at least not under current circumstances. But it may not be.

Philip Craig Chapman-Bell: Incipit Gestis Rudolphi Rangifer Tarandus: "Hwæt, Hrodulf readnosa hrandeor...

Weekend Reading: John Steinbeck: The 1930s: A Primer: "Except for the field organizers of strikes, who were pretty tough monkeys and devoted...

Weekend Reading: Chinese Cauldron: Huineng Points at the Moon ~ 惠能指月: "One evening, the Buddhist nun, Wu Jincang (無盡藏)...

...consulted Huineng, the Sixth Patriarch of Chan (Zen) Buddhism (六祖惠能), for guidance. She said:

I have studied the Mahaparinirvana Sutra (涅槃經) for many years, yet there are many places where the meaning still eludes me. Please would you enlighten me.

Why there will be a lot of policy disasters under our forthcoming unpopular minority government: today's Republicans, fundamentally, do not care whether policies work or not:

Weekend Reading: David Atkins: Republicans Don’t Care What Works: "What little attention the right wing media machine isn’t devoting to the sordid mudslinging between Ted Cruz and Donald Trump...

...is focused on a statement President Obama made about practicalities and ideologies:

Should-Read: Matthew Yglesias: Trump is going to be mad when he hears what his appointees think about the TPP: "His top economic and foreign policy advisers love it (as do his other advisers)...

Should Read: Greg Sargent: @ThePlumLineGS: "A new CBS poll finds support for [ObamaCare] repeal has dropped 10 points since January, all the way down to 25%: https://t.co/5NnlgJbWhK https://t.co/kAmAAAIn3S"

Should-Read: The more this goes on, the more this looks like Brexiters and Trumpists share an essence: they are all seeking to grab whatever they can while the getting is good, while trying to figure out a way to avoid responsibility and blame for whatever disasters Brexit and Trumpism bring--and there will be disasters. But there will be more disasters if nobody is actually at the tiller. And nobody appears to be--either in Westminster or in Washington:

Philip Stephens: How Brexit May Not Mean Brexit: "Referendums... become a device for demagogues and dictators: the people have spoken so now they must be silent ever more...

Over at Equitable Growth: Must- and Should-Reads:

• More Expansionary Fiscal Policy Is Needed: The Only Question Is Whether for a Short-Term Full Employment Attainment or a Medium-Term Full-Employment Maintenance Purpose - Equitable Growth
• Nick Bunker: Is U.S. investment capital flowing to the best possible destinations? - Equitable Growth
• Betsey Stevenson: Manly Men Need to Do More Girly Jobs: "Donald Trump wants America to make things... bring iPhone assembly to the U.S...
• Karl Marx and Friedrich Engels (1848): The Communist Manifesto: "The bourgeoisie... has played a most revolutionary role...
• Paul Krugman: Notes on the Macroeconomic Situation: "So the Fed has raised rates... a mistake, although not as severe... as it would have been a year ago....
• Matthew Yglesias: We Should Have Taken Trump Literally as Well as Seriously: "The national press’s Trump coverage did to an extent err by not taking him seriously enough...
• Jason Furman et al.: The 2017 Economic Report of the President: "President Obama was faced with the daunting task of helping to rescue the U.S. economy from its worst crisis since the Great Depression...

Science and Technology as Institutions

• What does it mean for knowledge to be "non-rival"?
• Given that knowledge is "non-rival", what justification could there possibly be for charging people for access to knowledge and its uses?
• If people weren't allowed to charge others for access to knowledge and its uses, would there be any reason to think that society would be putting a properly-large share of our resources into creating and disseminating knowledge?
• Why can contests and the rule of priority be good ways to spur the creation and dissemination of knowledge?
• How well do contests and the rule of priority fit with a private-property market economy?

Partha Dasgupta (2007): Economics: A Very Short Introduction

Sustainable Development

• Why are we destroying our fisheries?
• Why are we rapidly using up our atmosphere's capacity to absorb carbon dioxide without substantial increases in temperature?
• Why is such a large chunk of our population potentially short of fresh water?
• Why have we been able to successfully capture and use 40% of the photosynthesis on earth without already severely disrupting our planet?
• How have we managed to become so much more numerous and rich since 1800 without rapidly-rising prices of pretty much all natural resources?

Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/2gR2jH3

Macroeconomic History

• In the long sweep of human history, is Becky very lucky, lucky, unlucky, or very unlucky?
• In the long sweep of human history, is Desta very lucky, lucky, unlucky, or very unlucky?
• How much richer is the world today than it was in the long centuries from 5000 BC to 1800?
• How much richer are the world's rich today than the world's poor today?
• What would count as an explanation of this divergence across space and time--that is, what kinds of things would count as "causes" and make you happy that you understood what was going on?
• How many useful "hierarchies of causation" can you imagine here?

Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/2gR2jH3

Societal Well-Being and Democratic Government

• What are T.H. Marshall's "three revolutions"?
• Why is each of them important?
• How does a government based on T.H. Marshall's "three revolutions" tend to promote a prosperous market economy?
• Does a prosperous market economy tend to promote T.H. Marshall's "Three Revolutions"--and if it does, does it promote them all?

Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/2gR2jH3

What I (try to) make my principals students read before class begins; Partha Dasgupta (2007): Economics: A Very Short Introduction http://amzn.to/2gR2jH3. Question: should I try to make my students in my other classes read it too?

Econ 2: Spring 2014: Why We Read Partha Dasgupta:

Me: Note: This is a game theorist's short introduction to economics. Its focus is on:

Should-Read: Jason Furman et al.: The 2017 Economic Report of the President: "President Obama was faced with the daunting task of helping to rescue the U.S. economy from its worst crisis since the Great Depression...

Must-Read: Matthew Yglesias: We Should Have Taken Trump Literally as Well as Seriously: "The national press’s Trump coverage did to an extent err by not taking him seriously enough...

Should-Read: The last three of these paragraphs I quote were, I must say, totally wrong. But there is still a lot to be gotten out of the first two:

Karl Marx and Friedrich Engels (1848): The Communist Manifesto: "The bourgeoisie... has played a most revolutionary role...

Live from Independence Hall: Mark Harris: On Twitter: "The entire Senate--2012, 2014, 2016--is likely to be 52R, 48D. Yet over the last three Senate elections, Ds got 13 million more votes."

Live from Independence Hall: Dave Wasserman: On Twitter: "Hillary Clinton's national popular vote lead just surpassed 2.5 million (1.9%)"

Must-Read: Let me disagree a bit with Paul: although evidence does suggest that we are near full employment, we are not at full employment--and the suggestion that we are near full employment is a very weak one. The unemployment rate is 4.6%--and six years ago I would have said that 5% unemployment is full employment. The prime-age employment-to-population ratio is 78.1%--and six years ago I would have said that an 80% prime-age employment-to-population ratio is full employment. It is possible to reconcile the two by saying that hysteresis has permanently knocked 2% of the prime-age population out of the labor force. But that claim is, itself, uncertain.

Paul rests his case for continued monetary policy at the zero lower bound and for fiscal expansion on the "precautionary motive". That case is there, and is very strong. But IMHO there is still a very strong case for continued monetary policy at the zero lower bound and fiscal expansion resulting from recognition of our uncertainty about the current state of the economy.

The downsides of further expansionary policy to see if full employment is an 80% prime-age employment-to-population ratio are small. The upsides are large. We should follow Rikki-Tikki-Tavi, and run and find out.

Paul Krugman: Notes on the Macroeconomic Situation: "So the Fed has raised rates... a mistake, although not as severe... as it would have been a year ago....

Should-Read: Robbie Whelan and Esther Fung: China’s Factories Count on Robots as Workforce Shrinks: "Suzhou Victory Precision Manufacture Co.’s chairman, Yugen Gao, said the days when the company drew its strength from China’s cheap and hardworking employees are gone...

Should-Read: Betsey Stevenson: Manly Men Need to Do More Girly Jobs: "Donald Trump wants America to make things... bring iPhone assembly to the U.S...

J. Bradford DeLong: On Twitter:

This strikes me as a bad mistake: fiscal needed to create space to normalize interest rates and give Fed room to fight next recession https://t.co/49djGBQRdS

— J. Bradford DeLong (@delong) December 14, 2016

Yellen: Fiscal policy is not needed to provide stimulus to get us back to full employment

— David Wessel (@davidmwessel) December 14, 2016

Over at Equitable Growth: Must- and Should-Reads:

• What Is the Excellence of an Economist? - Equitable Growth:
• The Phrase "Structural Reform" Considered Harmful - Equitable Growth
• Question to Self: Germany - Equitable Growth
• Musings: Donald Trump Ought Not to Be a Hard-Money Gold-Standard Austerian Pain-Caucus President - Equitable Growth:
• Bridget Ansel: Many of the fastest growing jobs in the United States are missing men - Equitable Growth
• Kavya Vaghul and Christian Edlagan: How data disaggregation matters for Asian Americans and Pacific Islanders - Equitable Growth
• Brad DeLong (2013): Who Are the Foes of Expansionary Fiscal Policy? And Why?: "I am finding it difficult to make progress because it is not clear to me who the audience... who we should be trying to convince of what...
• Nick Bunker: What Could Boost U.S. Business Investment?: "German Gutierrez and Thomas Philippon... why business investment... has been so lackluster since the turn of the 21st century...
• Should-Read: Chris Isidore: Carrier to Ultimately Cut: "Union boss on Trump feud: I called him out...
• Simon Wren-Lewis: Ann Pettifor on Mainstream Economics: "Unfortunately her piece is spoilt by a final section that is a tirade against mainstream economists which goes way over the top...   
• Tierney Sneed: Key House GOPer Introduces Bill With Major Cuts To Social Security: "A key House Republican on the issue of Social Security introduced a bill... the Social Security Reform Act of 2016...
• Matt Bruenig (2012): The Never-Ending Libertarian Quest to Appear Clever: "I have been following an amusing back-and-forth between Bryan Caplan (I, II, III) and Matt Yglesias...
• Barry Ritholtz: "Popularism" as Farce: "A grift of the uneducated, low information voter, coopted to vote in many ways against their own interests...
• Ryan Avent: The Hole at the Heart of Economics: "For many of the most important questions within economics...

I have been thinking about John Maynard Keynes's observations on the mysterious difficulty of being a first-class economist that I quoted a while ago:

John Maynard Keynes (1924): Alfred Marshall: "The study of economics does not seem to require...

Should-Read: Ryan Avent: The Hole at the Heart of Economics: "For many of the most important questions within economics...

Should-Read: Barry Ritholtz: "Popularism" as Farce: "A grift of the uneducated, low information voter, coopted to vote in many ways against their own interests...