Grasping Reality on TypePad, by Brad DeLong

Barry Eichengreen (2011): Economic History and Economic Policy http://eml.berkeley.edu//~eichengr/EHA_Pres_Add_9-9-11.pdf

As you read, formulate your answers to the following questions:

1. What does Eichengreen think are the uses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?

2. What does Eichengreen think are the abuses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?

3. What rules and approaches does Eichengreen arrive it for future people trying to use history better?

4. Do you agree with his rules and approaches?

Trevon Logan (2015): A Time (Not) Apart: A Lesson in Economic History from Cotton Picking Books

1. I--that is, Brad DeLong, the lecturer--am an economist. Trevon Logan is an economist too. We focus on numbers: prices and quantities, incomes and expenditures, productivity and preferences. In our view, the economy is overwhelmingly what you get out of it for what you give up, and what the alternative options are. Here in his presidential address Trevon Logan argues that that economists' approach misses a good part--half? more than half?--of what is really going on and what is really important. Do you think he is right?

2. Think about this during the course. Would you feel comfortable answering a question on the final exam about how taking Trevon Logan seriously ought to have led me to teach a different course? There may well be such a question...

3. Trevon ends his article with: "It is relatively easy to count up the pounds of cotton picked per person per day, but much harder to face the reality of what that calculation means to those whose hands picked that cotton. Economic history requires that we face that reality.... There are lived experiences beneath the data, after all, and there are lessons beyond what is recorded in quantitative sources which may be far more valuable to our empirical knowledge. If we are to tell the lessons of economic history we have to be certain that we are telling all of it." Numbers are required to understand whether anecdotes are typical or exceptional. Anecdotes are required to learn what numbers mean. I assigned this paper primarily because I want you to take it to heart. I want you, throughout this course, to remember it and be constantly asking yourselves "what do these numbers mean?"

With each passing day Donald Trump looks more and more like Silvio Berlusconi: bunga-bunga governance, with a number of unlikely and unforeseen disasters and a major drag on the country--except in states where his policies are neutralized.

Nevertheless, remember: WE ARE WITH HER!

Should-Read: Robert Allen (2004): Progress and Poverty in Early Modern Europe: "At the end of the middle ages, the urban, manufacturing core of Europe was on the Mediterranean with an important offshoot in Flanders...

Q: Has protectionism ever worked? Are there examples of countries throughout history that have embraced protectionist policies, and did that yield positive results? And what do these examples, if there are any, tell us about the economic plans of Mr. Trump?

A: If I were you, I would go grab Robert Allen's Global Economic History: A Very Short Introduction <http://amzn.to/2kgt8pj>, and immediately read chapters 8 and 9.

Richard Feynman: Math and Science: "I’m going to describe to you how Nature is—and if you don’t like it, that’s going to get in the way of your understanding it...

...It’s a problem that physicists have learned to deal with: They’ve learned to realize that whether they like a theory or they don’t like a theory is not the essential question. Rather, it is whether or not the theory gives predictions that agree with experiment. It is not a question of whether a theory is philosophically delightful, or easy to understand, or perfectly reasonable from the point of view of common sense. The theory of quantum electrodynamics describes Nature as absurd from the point of view of common sense. And it agrees fully with experiment. So I hope you can accept Nature as She is—absurd.

Should-Read: We are narrative-loving animals. It's how we think. We are jumped-up East African Plains Apes, only 3000 generations removed from those who first developed language, trying to understand the world as monkeys with, as Winnie-the-Pooh would say, “very little brain”. We are lousy at remembering lists—that is why we need to write them down. We are not much good at retaining sets of information—unless we can, somehow, turn them into a journey or a memory palace. We are excellent, however, at remembering landscapes. And we are fabulous at stories: human characters with believable motivations; beginnings, middles, and endings; hubris and nemesis; cause and effect; villains and heroes. To place ideas and lessons in the context of a story is a mighty aid to our thinking:

Charles Stross: Why Scifi Matters More When the Future Looks So Dangerous: "Near-future scifi is not a predictive medium: it doesn’t directly reflect reality so much as it presents us with a funhouse mirror view of the world around us...

Should-Read: Xavier Jaravel: The Unequal Gains from Product Innovations: Evidence from the US Retail Sector: "From 2004 to 2013 higher-income households systematically experienced a larger increase in product variety and a lower inflation rate for continuing products...

Should-Read: Larry Summers: Disillusioned in Davos: "I am disturbed by (i) the spectacle of financiers who three months ago were telling anyone who would listen that they would never do business with a Trump company...

John Scalzi: The New Year and the Bend of the Arc: "As we begin 2017...

...there is something I’ve been thinking about, that I’d like for you to consider for the new year. It starts with a famous quote, the best-known version of which is from Martin Luther King, but which goes back to the transcendentalist Theodore Parker. The quote is:

The arc of the moral universe is long, but it bends toward justice.

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

• Duncan Black: Conservative Health Care Plan: "Liberal Trump fanfic scenarios aside...
• Kevin Drum: Why Do Republicans Hate Obamacare?: "Why the continued rabid opposition to Obamacare?...
• Nick Rowe: AD/AS: A Suggested Interpretation: "Many macroeconomists don't like the Aggregate Demand/Aggregate Supply framework.... So I am going to explain it...
• N. Gregory Mankiw and Lawrence H. Summers (1984): Are Tax Cuts Really Expansionary?: "If consumer spending generates more money demand than other components of GNP...
• [Money Demand a Function of Private Consumption Spending, Not Income | Equitable Growth][]
• Bridget Ansel: [Weekend Reading: “Stop, children, what’s that sound?” edition | Equitable Growth][]

Should-Read: N. Gregory Mankiw and Lawrence H. Summers (1984): Are Tax Cuts Really Expansionary?: "If consumer spending generates more money demand than other components of GNP...

Note to Self: I always find it interesting that Friedman and the monetarists formulated money demand as a function of income rather than of private spending, or even of private consumption spending. You don't need or want money when your income is high, unless you want to spend it.

Should-Read: A (mostly) smart piece by Nick Rowe. But it is not wrong to start with Knut Wicksell, as long as you get to Irving Fisher. And C+I+G+(X-M)=Y is a way of starting with Wicksell--that's why John Hicks called it the "IS Curve". Many might find it clearer to start with Fisher (I certainly do), but experience has taught me that that is really a matter of taste.

The rest of this, however, is excellent:

Nick Rowe: AD/AS: A Suggested Interpretation: "Many macroeconomists don't like the Aggregate Demand/Aggregate Supply framework.... So I am going to explain it...

Must-Read: Looking forward at the Trump administration, it now seems very clear that under the Trump administration policy will be:

• random
• unmotivated by technocratic effectiveness
• very interested in cutting taxes for the rich
• very interested in entrenching the economic position of the rich who have Trump's ear
• likely to produce a number of disasters--think Bush 43, only more so.

Therefore, it seems important that as much as possible should be done to encourage:

• the neutralization of Trumpism at the state level.
• the promising of future reimbursement of states that undertake said neutralization.
• the highlighting--as a yardstick against which to measure policy--of what the plans were had the woman who won the majority of votes become president.

Nicholas Bagley has the ObamaCare front on this:

Nicholas Bagley: Patching Obamacare at the State Level: "If Congress zeroes out the individual mandate—and my hunch is that it will—it’s game over for the exchanges...

Better Living through Chemistry: My first caffeinated coffee drink in two weeks--and only my third in a month and a half. WHEE!!!!

Live from the Land of Deferred Maintenance: Here at Berkeley, Evans Hall needs eight elevators. It has five elevators. But now, due to deferred maintenance and to "renovations", it has only three...

As a result, even though it is the third day of classes, the fifth and sixth floors of Evans where the Economics Department's are very quiet indeed...

Should-Read: Duncan Black: Conservative Health Care Plan: "Liberal Trump fanfic scenarios aside...

Anger is more useful than despair:

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

• JEC: The Next New Macro: "The seeds of disaster... lay...
• João Amador and Sónia Cabral: Networks of Value-Added Trade: "Global Value Chains have become the paradigm...
• Equitable Growth: Third Annual Class of Grantees
• Bridget Ansel: Across developed countries, family policies help women | Equitable Growth
• Bridget Ansel: Failing to invest in young kids is damaging the U.S. economy | Equitable Growth
• Nick Bunker: Outsourcing and rising wage inequality in the United States and Germany | Equitable Growth

Should-Read: Kevin Drum: Why Do Republicans Hate Obamacare?: "Why the continued rabid opposition to Obamacare?...

Live from Massively Dysfunctional California Hall: I can think of nothing worse for alumni relations, development, and fund-raising in the long run than this kind of disruptive nickel-and-diming of students.

Live from the Cage of the Orange-Haired Baboon: Phil Mattingly: On Twitter: "Asked Senate HELP Chair Lamar Alexander if he'd spoken to Trump or his team about the president-elect's healthcare plan: 'I have not.'"

Live from Planet Gutenberg: The day's book haul. These both look very good. Unfortunately, the first day of classes is absolutely the last day you want your book showing up in my mailbox in the form of a review copy...

James Kwak (2016): Economism: Bad Economics and the Rise of Inequality (New York: Pantheon: 1101871199) http://amzn.to/2k1yt3y

Daniel Wolff: Grown-Up Anger: The Connected Mysteries of Bob Dylan, Woody Guthrie, and the Calumet Massacre of 1913 (New York: Harper: 0062451693)http://amzn.to/2ixYJSP

Live from the Orange Haired-Baboon Cage: Ken Miller: Understanding Our New President’s Priorities through Twitter: "Trump’s favorite individual topic... communications that disparage the media in some way (particularly the NY Times and CNN), and posts related to his “Thank You” rallies...

Should-Read: Equitable Growth: Third Annual Class of Grantees: "Research on how economic inequality affects macroeconomic growth and stability...

Should-Read: João Amador and Sónia Cabral: Networks of Value-Added Trade: "Global Value Chains have become the paradigm...

Should-Read: JEC: The Next New Macro: "The seeds of disaster... lay...

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

• Kenneth Arrow et al.: (2004): Are We Consuming Too Much?: "We consider two criteria for the possible excessiveness (or insufficiency) of current consumption...
• Christoph Lakner and Branko Milanovic (2013): Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession
• Ken Rogoff: Big Danger at the Lower Bound: "Given that the Fed may struggle just to get its base interest rate up to 2% over the coming year, there will be very little room to cut if a recession hits...
• Jared Bernstein: More from the 2017 ERP: "Emily Horton... and Emma Sifre.... I asked them to choose a figure from the new 2017 ERP....
• Guido Alfani: Europe’s Rich since 1300: "Throughout this time, the only significant declines in inequality were the result of the Black Death and the World Wars...

Live from the Orange-Haired Baboon Cage:

If you voted for Trump, you are dead to me...

Karl Marx and Friedrich Engels (1848): The Communist Manifesto http://tinyurl.com/dl20161210h: This piece by Marx and Engels stands at the head of two traditions:

1. the political tradition of world communism that was the second-greatest political catastrophe to ever afflict the human race...
2. the intellectual tradition of the analysis of history as driven by modern capitalism--a historical-economic process...

You cannot separate these two. You should not try.

Read with an eye toward what is going to flourish in later intellectual and political history.

Live from America's Real Majority: Scott Lemieux: Donald Trump is Highly Unpopular: "There’s a lot of defeatism about opposing Trump...

Hoisted from the Archives: My Very Short Take on World War II...: From “September 1, 1939,” by W.H. Auden...

...I sit in one of the dives/On Fifty-second Street
Uncertain and afraid/As the clever hopes expire
Of a low dishonest decade:/Waves of anger and of fear
Circulate over the bright/And darkened lands of the earth,
Obsessing our private lives;/The unmentionable odor of death
Offends the September night.

Accurate scholarship can/Unearth the whole offence
From Luther until now/That has driven a culture mad,
Find what occurred at Linz,/What huge imago made
A psychopathic god:/and the public know
What all schoolchildren learn,/Those to whom evil is done
Do evil in return...

https://www.icloud.com/pages/0sDN_MGi_vAdd79qSmQ3lIE_Q#2011-01-05--My_Very_Short_Take_on_World_War_II

Live from Evans Hall: I'm taking over Barry Eichengreen's "The Current Research Frontier: Great Recent Books in Non-American Economic History" course--Econ 210b--this semester...

I would ask those planning to show up on Tuesday please drop me a line--and also a book they want to read, if they have one.

Joachim Voth from Zurich visiting Haas will be joining us, and the book list still has a few spaces available...

Must-Read: Guido Alfani: Europe’s Rich since 1300: "Throughout this time, the only significant declines in inequality were the result of the Black Death and the World Wars...

A lot of intellectual energy in the early 2000s was a reaction to the installation by a five-to-four vote of a manifestly unqualified president--and the huge wave of justificatory bullshit that the Noise Machine generated around that in the form of clouds of misinformation to hide reality. People with platforms began calling it out, hoping to find other people to talk to to check whether they were being gaslighted or not.

The finest example of this I have ever seen was Belle Waring's Best Weblog Post EVAR from 2004. It's a thing to remember. If aspect of the Reagan presidency were real tragedy, and the entire Bush 43 presidency was tragic farce, what is this about to be?

Belle Waring (2004): If Wishes Were Horses, Beggars Would Ride--A Pony!: "I think Matthew Yglesias' response to Josh Chafetz' exercise in wishful thinking was about right...

...even if Brad DeLong's is more nuanced.

I'd like to note, though, that Chafetz is selling himself short. You see, wishes are totally free. It's like when you can't decide whether to daydream about being a famous Hollywood star or having amazing magical powers. Why not--be a famous Hollywood star with amazing magical powers! Along these lines, John has developed an infallible way to improve any public policy wishes. You just wish for the thing, plus, wish that everyone would have their own pony!

Must-Read: Kenneth Arrow et al.: (2004): Are We Consuming Too Much?: "We consider two criteria for the possible excessiveness (or insufficiency) of current consumption...

Should-Read: Jared Bernstein: More from the 2017 ERP: "Emily Horton... and Emma Sifre.... I asked them to choose a figure from the new 2017 ERP....

Should-Read: Christoph Lakner and Branko Milanovic (2013): Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession: "The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008...

Should-Read: This first from Ken Rogoff is very sensible. But IMHO it fits awkwardly with the "debt supercycle" view. We are now, after all, a decade into repair of the debt supercycle after the crash. Why then is this still a big problem? It seems to me an implicit admission that there is something much more going on than a standard debt supercycle:

Ken Rogoff: Big Danger at the Lower Bound: "Given that the Fed may struggle just to get its base interest rate up to 2% over the coming year, there will be very little room to cut if a recession hits...

Jonathan Bernstein: Artists' Choices and Repeal, Replace, Delay: "Brad DeLong on what kind of president Trump will be...

...A lot here I agree with, but I think DeLong undervalues Ronald Reagan's appreciation of his audience -- his real audience, not just the one in his mind. Reagan (and not just the mythical Reagan, but, as DeLong says, the real one) was willing to back off on plans going wrong. For all of his considerable ability to believe stories that were not true, he was willing to accept that things he did could go wrong. I'm not confident Trump has that ability, and (unlike Reagan) unfortunately everything in Trump's brief political career has given him excuses for rejecting cautions from anyone. 

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

• Matthew Yglesias: Obama to Working Class Trump Voters: You Played Yourselves: "'If every economic issue is framed as a struggle between a hardworking white middle class and undeserving minorities'...
• Manu Saadia: Why Peter Thiel Fears “Star Trek”: "Asked... whether he was a bigger fan of 'Star Wars' or 'Star Trek'...
• Matthew Yglesias: Democrats Should Write Their Own “Terrific” Obamacare Replacement: "Protecting Medicare and Medicaid means you can’t... scrap the Medicaid expansion, and you can’t scrap the payment reforms to Medicare...
• Sharun W. Mukand and Dani Rodrik: _Ideas versus Interests: A Unified Political Economy Framework: "[We] distinguish between two kinds of ideational politics...
• Charles Wilson (1967): Trade, Society, and the State: "The two areas which in 1500 represented the richest and most advanced concentrations...
• Luigi Zingales: Donald Trump’s Economic Policies: Pro-Business, Not Pro-Market: "Trump is eliminating lobbyists by putting them in charge of all departments...
• Gillian Tett: Obama and the Audacity of Hindsight: "It is tempting to point out all the things that Obama could or should have done better...
• Paul Krugman: Infrastructure Delusions: "There will be no significant public investment program...
• I Have a Weblog!: Productivity! and Polanyi! - Equitable Growth
• Weekend Reading: George Orwell (1946): In Front of Your Nose - Equitable Growth
• Nick Bunker: Weekend reading: “Thawing out from #ASSA2017” edition - Equitable Growth

Must-Reads:

• Allegra Kirkland: Rand Paul: Trump Backs Plan To Repeal, Replace Obamacare Simultaneously: "Rand Paul: 'I just spoke to @realDonaldTrump...
• Antonio Fatás and Lawrence H. Summers: The Permanent Effects of Fiscal Consolidations: "The global financial crisis has permanently lowered the path of GDP in all advanced economies...
• Christopher Boone et al.: Unemployment Insurance and Employment: "The Unemployment Insurance programme in the US was significantly expanded during between 2008 and 2014... 
• Paul Krugman: @paulkrugman on Twitter: "The whole Streep-Trump thing reminds me of a theme that has been running through my thoughts a lot lately -- namely, the death of honor...
• Mark Thoma: Why Trump Needs to Take the Economy More Seriously: Trump’s habit of claiming more credit than he deserves stands in sharp contrast to President Obama’s inability to communicate all of the good things that have happened during his presidency...
• Greg Sargent: Memo to the Media: Stop Giving Trump the Headlines He Wants: "If the headline does not convey the fact that Trump’s claim is in question or open to doubt, based on the known facts, then it is insufficiently informative...
• Larry Summers: Best bets for public investment
• Jared Bernstein: More on the non-mystery of non-work: "Employment rates of prime-age workers...
• Sharun W. Mukand and Dani Rodrik: _Ideas versus Interests: A Unified Political Economy Framework: "[We] distinguish between two kinds of ideational politics...

Most-Recent Should-Reads:

• Matthew Yglesias: Obama to Working Class Trump Voters: You Played Yourselves: "'If every economic issue is framed as a struggle between a hardworking white middle class and undeserving minorities'...
• Manu Saadia: Why Peter Thiel Fears “Star Trek”: "Asked... whether he was a bigger fan of 'Star Wars' or 'Star Trek'...
• Matthew Yglesias: Democrats Should Write Their Own “Terrific” Obamacare Replacement: "Protecting Medicare and Medicaid means you can’t... scrap the Medicaid expansion, and you can’t scrap the payment reforms to Medicare...
• Charles Wilson (1967): Trade, Society, and the State: "The two areas which in 1500 represented the richest and most advanced concentrations...

Most-Recent Links:

• Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki: Trump’s Tax Plan and the Dollar: "A border-adjustment tax... has nothing to offer.... Currency appreciation offsets the fiscal devaluation. But... an appreciating dollar would erode America’s net foreign-asset position..."
• Adam Silverman: Today in Presidential Farewell Addresses: President Eisenhower
• Fred Block and Matthew R. Keller (2011): Where do Innovations Come From?: Transformations in the U.S. Economy, 1970-2006
• It seems that Pethokoukis's "compromise" is simply "ObamaCare". If he and his peers would just say that, things would be less messed up: James Pethokoukis: An ObamaCare compromise that Republicans and Democrats can both love
• Mark Thoma: Here's what really caused the housing crisis
• Thomas Piketty: WID.world: new data series on inequality and the collapse of bottom incomes
• George Orwell (1946): In Front of Your Nose
• Kevin Drum: No, Tech Firms Are Not Huge Job Creators

Live from Cyberspace: A Proposed Twitter-Interaction Strategy: Draining Your Part of Its Cesspoo:

I have swung around to a view of Twitter (and Facebook, but I haven't gotten around to managing Facebook).

Editing a piece for http://vox.com. And sections that I loooooove are getting--rightly getting, I hasten to say: my editors are gods in human form whose judgment is superb--cut and dropped onto the floor.

But I have a weblog!

• Productivity
• Polanyi

Bob Hoskins as Nikita Khrushchev:

Adam Tooze: USA: Goodbye to the American Century: "The rise and fall of US hegemony. Or Donald Trump and the sunset of American hegemony...

...The American Century is over. We can tell, not only because the Americans have elected a ludicrous President, but because, for all his nationalist braggadocio, Trump’s ambitions are so modest. He aspires, after all, only to make America great again.

Growth: Exponential, Convergent, Logistic: How much of this will my students this semester know? How much of this will I have to remind them? And how much of this will I have to teach them for the first time?

Must-Read: I believe Paul Krugman is right here. It looks as though Donald Trump's preferences are having very little effect on the policies of his own administration:

Paul Krugman: Infrastructure Delusions: "There will be no significant public investment program...

George Orwell (1946): In Front of Your Nose: "Many recent statements in the press have declared...

...that it is almost, if not quite, impossible for us to mine as much coal as we need for home and export purposes, because of the impossibility of inducing a sufficient number of miners to remain in the pits. One set of figures which I saw last week estimated the annual ‘wastage’ of mine workers at 60,000 and the annual intake of new workers at 10,000. Simultaneously with this—and sometimes in the same column of the same paper—there have been statements that it would be undesirable to make use of Poles or Germans because this might lead to unemployment in the coal industry. The two utterances do not always come from the same sources, but there must certainly be many people who are capable of holding these totally contradictory ideas in their heads at a single moment.