Grasping Reality on TypePad, by Brad DeLong

Should-Read: The centrist neoliberal project--use market means to achieve both social democratic ends and the rapid expansion of wealth--has crashed and burned. Now comes Ruy Texeira to lead the left that was kept off the plane and the center that has survived out of the mountains to a practical utopia...

Ruy Texeira tells leftists and centrists, cosmopolitans and communitarians, organizers and activists which is the way to a pragmatic utopianism based on the energy and accomplishments of humanity...

Ruy Teixeira: The Optimistic Leftist: "A new utopian vision for the left’s emerging coalition will... include...

Should-Read: Kevin Drum: Charts of the Day: If Only Every State Could Be As "Out of Control" As California: "I feel like someone ought to defend the honor of California against our president, so why not me? Here you go...

Should-Read: James Kwak: Health Care and John D. Rockefeller’s Dog: "Few people actually want to live in a world where health care is distributed by a free market...

Should-Read: Robert Waldmann: Buchanan, Smith, and Krugman: "There is no reason why macroeconomists can't work on empirical microeconomics while also using old Keynesian models for forecasting and policy advice...

Should-Read: For a long time, there have been Texas journalists claiming that former Texas Governor and Trump's choice for Secretary of Energy Rick Perry is a competent, industrious, and good-intentioned man. Why, I have no idea:

Caitlin Macneal: Perry Didn't Fully Understand Role Of Energy Secretary At First: "Former Texas Gov. Rick Perry did not realize exactly what the position of energy secretary entails...

Hindenburg Explosion:

Live from the Mass Media: Bloomberg: DeLong Says Trump’s Tax Cuts Will Raise Demand for U.S. Dollars: "Berkeley professor Brad DeLong says Donald Trump’s big tax cuts will raise demand for U.S. dollars worldwide..."

E. M. Halliday (2001): Understanding Thomas Jefferson (New York: Harper Perennial: 0060957611) <http://amzn.to/2lWn7f3>

This is only one-third of a biography of Thomas Jefferson: it is about Jefferson the human being, rather than Jefferson the moral philosopher or Jefferson the politician. And I do not think it is the best biography even of Jefferson the human being--it is too short. But it is, I think, the best very short biography of Jefferson the human being...

Five Questions:

1. What does Halliday say that Jefferson-the-human was, if not a "sphinx" whom we are incapable of understanding?
2. Sally Hemings: WTF?!
3. What did Jefferson do that he thought was most worth remembering? Why did he think those things were most worth remembering?
4. What does Halliday think of historians and biographers of Jefferson (with the exception of Fawn Brodie)?
5. What does Halliday understand to be the status of his biography--the likelihood that it is all true, or true enough, or grasps the essence of Jefferson-the-human?

Must-Read: Note that in its rosy scenario Trump is not exceptional--for a Republican. Similar claims were made by Hassett, Hubbard, Mankiw, and Taylor on behalf of Mitt Romney back in 2012. Rosy scenario, and subsequently having to explain--in 1988, in 1992, in 2008, and 2020--why their projections back during the campaign and in the transition were such b.s.

And, yes, Hassett, Hubbard, Mankiw, and Taylor would have been making excuses last year had Romney won in 2012:

Nick Timiraos: Trump Team’s Growth Forecasts Far Rosier Than Those of CBO, Private Economists: "While there are often disparities between the White House and independent agencies on growth projections, they are rarely this large...

Must-Read: Colin Camerer: On "Rational Expectations" and John Muth: "Rational expectations pioneer John Muth in 1984...

Should-Read: Wing Thye Woo: China’s Growth Odyssey: "Former World Bank Chief Economist Justin Yifu Lin is sanguine...

Should-Read: Robert Waldmann: Marking My Beliefs To Market: UK Violent Crime: "The lead causes crime hypothesis...

Outsourced to: Robert Waldmann: Podhoretz: "John Podhoretz who wrote...

What if the tactical mistake we made in Iraq was that we didn't kill enough Sunnis in the early going to intimidate them and make them so afraid of us they would go along with anything? Wasn't the survival of Sunni men between the ages of 15 and 35 the reason there was an insurgency and the basic cause of the sectarian violence now? [John Podhoretz (July 25, 2006). "Too Nice to Win? Israel's Dilemma". New York Post. Retrieved April 7, 2007 <http://nypost.com/2006/07/25/too-nice-to-win-israels-dilemma/>]

Live from the Orange-Haired Baboon Cage: Josh Marshall: About 'The Press Conference': "This is that rare time when I think the cliched phrase is appropriate: That press conference speaks for itself...

Should-Read: Charles Wyplosz: When the IMF Evaluates the IMF: "Two critical mistakes are not mentioned...

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

• Heather Boushey: Americans’ feelings about the U.S. economy make sense | Equitable Growth
• Nisha Chikhale: Are shocks to U.S. firm performance transmitted to their workers? | Equitable Growth
• Elizabeth Jacobs: Can women’s “sagging middle” explain fall in labor force participation? | Equitable Growth
• Martin Sandbu: Donald Trump’s Love of Manufacturing Is Misguided: "Donald Trump and his economic team love manufacturing...
• Nick Bunker: What’s Behind the Decline in U.S. Interest Rates?: "Eggertsson, Mehrotra, and Robbins decompose the roughly 4 percent decline in the natural rate of interest since 1970...
• Richard Baldwin: Trump’s Anachronistic Trade Strategy: "Trump has aggressively lashed out against globalization...
• Tirthankar Roy: Were Indian Famines ‘Natural’ Or ‘Manmade’?: "I review the theories of Indian famines and suggest that a mainly geographical account...
• David Anderson: A BFD that Passed amongst the Chaos: "Repeal and Replace or Repeal and Delay and Pray is dead...
• Charles Wyplosz: When the IMF Evaluates the IMF: "Two critical mistakes are not mentioned...
• Ben Thompson: DistroKid, The “Publisher’s Right”, Shopify’s Results: "As I’ve noted... the old value chain had three parts: supply — distribution — demand...
• David Anderson: Governing Is Hard: "The Republican Party has an ACA problem.  The ACA is deficit reducing...

Must-Read: The right moment for Republicans interested in health policy to intervene in the politics was back in 2010, when the "repeal and replace" meme was first decided on. They should have said: "Hell, no!--You really do not want to say that."

My suspicion is that they thought the battle was not worth fighting because the dog would never catch the car. The least they could do is apologize to the rest of us now...

David Anderson: Governing Is Hard: "The Republican Party has an ACA problem.  The ACA is deficit reducing...

Should-Read: Ben Thompson: DistroKid, The “Publisher’s Right”, Shopify’s Results: "As I’ve noted... the old value chain had three parts: supply — distribution — demand...

Live from the Orange-Haired Baboon Cage: Duncan Black: Does No One Tell Him?: "Constant lying... about his massive electoral college victory...

Should-Read: David Anderson: A BFD that Passed amongst the Chaos: "Repeal and Replace or Repeal and Delay and Pray is dead...

Why can't "fiscal conservatives" ever man up and take responsibility for their actions and their lives?

When you try to starve the government, sometimes you succeed--and then things that need to be done don't get done. Shame on the LA Time for publishing this.

Outsourced to Kevin Drum:

Kevin Drum: Blame Oroville on "Fiscal Conservatives": "Victor Davis Hanson is a native Californian who hates California because it's become too brown and too liberal...

Monday Smackdown: This may be the stupidest thing I have read this year! Shame on the FT for publishing it!

I get 4480 results on google for "Garland Tucker". I get no results before this morning for "'Garland Tucker' +Calhoun". The fact that Yale's Calhoun College has been named for John C. Calhoun all of Garland Tucker's life has never led him to say anything about how bad a person John C. Calhoun was. Garland Tucker has had his chance all his life before now to use the honor Yale has done Calhoun to, as he quotes Cicero, "not be a child". He whiffed it.

For, you see, Tucker doesn't think Calhoun is bad: his position as the most powerful pro-slavery politician and leading intellectual advocate for the expansion of slavery in the first half of the nineteenth century is, in Garland Tucker's eyes, vastly less important than Calhoun's being a "free trader and" and opponent of "expanding federal government... bloated bureaucracy, patronage abuses... and ever-higher tariffs..."

But John C. Calhoun's role in history is not "complex"--it is evil, starting at the top of the evil tree and hitting every branch all the way down:

Garland Tucker: Expunging slave-owners’ names erases our complex history: "Calhoun will no longer be Calhoun.... Yale... after eight decades it will rename one of its residential colleges...

Lisa Blades and Eric Chaney (2013): The Feudal Revolution and Europe’s Rise: Political Divergence of the Christian West and the Muslim World before 1500 CE <http://scholar.harvard.edu/files/chaney/files/feudalrevolutionfinal.pdf>: "We document a divergence in the duration of rule for monarchs...

...in Western Europe and the Islamic world beginning in the medieval period. While leadership tenures in the two regions were similar in the 8th century, Christian kings became increasingly long lived compared to Muslim sultans.

When Something Is Valuable:

• You can either:
  • Work hard to make stuff and trade stuff
  • Steal it—by fraud, or force, or threat of force
  • When property rights are "endogenous", who endogenizes them, and how?
• As with so much else, these historical arguments start with the 14th Century Bubonic Plague
  • The Brenner thesis, and the Brenner debate
  • Is “freedom” really free? Naidu and Yuchtman
  • What did the slave trade do to Africa in the very long run? Nunn
  • What did maintaining a slavery/debt peonage system do to Latin America (and the U.S. South) in the very long run? Engerman and Sokoloff

Robert Brenner (1979): Agrarian Class Structure and Economic Development in Pre-Industrial Europe, Past & Present 70 (Feb.), pp. 30-75 <http://www.jstor.org/stable/650345>

MOAR Readings:

• T. H. Aston (Editor) and C. H. E. Philpin, eds. (1987): The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-industrial Europe (New York: Cambridge University Press: 0521349338) <http://amzn.to/2ljFIo5>
• Dietrich Vollrath (2017): Who Are You Calling “Malthusian”? <https://growthecon.com/blog/Malthus/>
• Quamrul Ashraf and Oded Galor (2011): Dynamics and Stagnation in the Malthusian Epoch <https://www.aeaweb.org/articles?id=10.1257/aer.101.5.2003>
• Daniel Little (2010): The Brenner Debate Revisited <http://understandingsociety.blogspot.com/2010/01/brenner-debate-revisited.html>
• Jonathan Conning (2007): On ‘The Causes of Slavery or Serfdom’ and the Roads to Agrarian Capitalism: Domar’s Hypothesis Revisited <http://economics.yale.edu/sites/default/files/files/Workshops-Seminars/Development/conning-041101.pdf>

Suresh Naidu and Noam Yuchtman (2013): Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain, American Economic Review 103 (February): 107–144 <https://www.aeaweb.org/articles.php?doi=10.1257/aer.103.1.107>

Degrees of "Freedom"

• Is “freedom” really free? Naidu and Yuchtman
• The law of “master and servant”
• Criminal penalties for what we see as a civil breach of contract
• Who decides when the contract has been breached?
• How frequent are these prosecutions?
• How much informal bargaining is conducted under legal threat, implicit or explicit?
• How much unfreedom is generated by this set of legal institutions?
• How do they come to an end?

Live from Inside the Nazi War Machine: Among the most interesting documents from the Third Reich:

Franz Halder: _Diary: | 1939-08-14 to 1939-09-10 | 1939-09-11 to 1939-12-06 | 1939-12-07 to 1940-05-09 | 1940-05-10 to 1940-10-30 | 1940-10-31 to 1941-02-20 | 1941-02-21 to 1941-07-31 | 1941-08-01 to 1942-09-24

Should-Read: Tirthankar Roy: Were Indian Famines ‘Natural’ Or ‘Manmade’?: "I review the theories of Indian famines and suggest that a mainly geographical account...

What Is to Be Explained?: Three Things

1. Origin of Modern Economic Growth (MEG)
2. Pace of Modern Economic Growth (MEG)
3. Duration of Modern Economic Growth (MEG)

Origins of Modern Economic Growth

• We have market economies throughout Eurasia, at least—i.e., places where becoming a merchant drawing on sophisticated artisanal producers is a road to wealth
• We have governments smart enough—or constrained enough—not to kill the goose that lays the golden eggs, at least not quickly
• We have what looks like worldwide growth at a faster pace after 1500—one that calls forth a demographic response
• Post-1800 in the North Atlantic we have growth that outruns any possible demographic response, and triggers the demographic transition.
• Why? And how?

Dave Donaldson (2016): Railroads of the Raj: Estimating the Impact of Transportation Infrastructure American Economic Review <http://www.nber.org/papers/w16487.pdf>

How large are the benefits of transportation infrastructure projects, and what explains these benefits? This paper uses archival data from colonial India to investigate the impact of India’s vast railroad network. Guided by four results from a general equilibrium trade model, I find that railroads: (1) decreased trade costs and interregional price gaps; (2) increased interregional and international trade; (3) increased real in- come levels; and (4), that a sufficient statistic for the effect of railroads on welfare in the model accounts for virtually all of the observed reduced-form impact of railroads on real income in the data.

Must-Read: Richard Baldwin: Trump’s Anachronistic Trade Strategy: "Trump has aggressively lashed out against globalization...

Must-Read: Nick Bunker explains Eggertsson, Mehrotra, and Robbins to us:

Nick Bunker: What’s Behind the Decline in U.S. Interest Rates?: "Eggertsson, Mehrotra, and Robbins decompose the roughly 4 percent decline in the natural rate of interest since 1970...

Should-Read: Martin Sandbu: Donald Trump’s Love of Manufacturing Is Misguided: "Donald Trump and his economic team love manufacturing...

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

• Tim Duy: Fed's Bullard Knows His Treasury Yield Curve: "Having tipped their toes in the water with two interest-rate hikes...
• Morgan Kelly and Cormac Ó Gráda (2016): Adam Smith, Watch Prices, and the Industrial Revolution: "Watches were the first mass-produced consumer durable...
• Anton Cheremukhin et al. (2013): Was Stalin Necessary for Russia’s Economic Development?: "We construct a large dataset that covers Soviet Russia during 1928-1940 and Tsarist Russia during 1885-1913...
• Peter Orszag: Here's How Trump Will Change Obamacare: "I expect to see Republicans stage a dramatic early vote to repeal...
• Nick Bunker: [Modeling the decline in U.S. interest rates | Equitable Growth][]
• Nancy Folbre and Kristin Smith: [The wages of care: Bargaining power, earnings and inequality | Equitable Growth][]
• Bridget Ansel: U.S. millennials, the racial wealth divide, and asking parents for rent | Equitable Growth

Should-Read: Peter Orszag: Here's How Trump Will Change Obamacare: "I expect to see Republicans stage a dramatic early vote to repeal...

Should-Read: Joachim Voth and I both focused on how Tsarist industrialization was hindered by monopoly power in manufacturing, and on the absence of a special bonus for the Stalinist construction of a heavy industrial sector in Magnitogorsk and elsewhere very far in the interior. The destruction of monopoly power via planning--along with the destruction of the peasant-collective barriers to mobility--was a big plus that largely offset the inefficiencies of central planning. The creation of a heavy industrial complex in Magnitogorsk was a priceless asset for the world come World War II.

Anton Cheremukhin et al. (2013): Was Stalin Necessary for Russia’s Economic Development?: "We construct a large dataset that covers Soviet Russia during 1928-1940 and Tsarist Russia during 1885-1913...

Live from the Trade War: What Trump Gets Wrong About Nafta: Everything!

Live from the Trade War: Full Show: What'd You Miss? (02/13): In which I defend NAFTA...

Live from the Orange-Haired Baboon Cage: Moral fault attaches to anybody who pays money to the New York Times for any purpose as long as it publishes things like this:

Kate Kelly: Trump’s Economic Cabinet Is Mostly Bare. This Man Fills the Void: "Gary Cohn... briefed Mr. Trump... argued that the bold infrastructure projects that Mr. Trump envisioned...

...would need private-industry partners, those people said, in order to avoid weighing down the government with costs. That got Mr. Trump’s attention. The president-elect turned to the other people in the room—his son-in-law, Jared Kushner; his chief strategist, Stephen K. Bannon; his chief of staff, Reince Priebus; and Steven T. Mnuchin, his campaign’s chief fund-raiser and Mr. Trump’s nominee to be Treasury secretary—surprised that his infrastructure ideas had such a potential downside. “Is this true?” Mr. Trump asked the group, according to those people. Heads nodded. “Why did I have to wait to have this guy tell me?” he demanded.

This is what my late coauthor Susan Rasky called a "beat sweetener".

Live from the Orange-Haired Baboon Cage: OK:

• Did Flynn resign because Bannon decided that he did not want to wage his jihad against Muslims worldwide attached to the ball and chain of a Russian agent of influence?

• Did Flynn resign because Pence threatened to invoke Amendment 25 if he did not?

Trump is not only not picking "the best people"; he has no clue what picking the best people would possibly mean...

Robert C. Allen (2003): Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution (Princeton: Princeton University Press: 0691144311) <http://amzn.to/2kpLZd2>

The Big Question:

Was the Soviet Union an Asian economy, (like) a Latin American economy, a (central or western) European economy, or a settler-frontier economy?

1. If it was an Asian economy, than it did well on economic growth--even though horribly (save in comparison to Maoist China, the Khmer Rouge, and the Korean Hereditary Dictatorship of the God-Kings Kim) in terms of societal well being.

2. If it was a Latin American economy, it did OK in terms of economic growth--Allen says "good", but I think he overstates his case: "OK".

3. If it was a (central or western) European economy, it did very badly--badly enough to prompt its bloodless overthrow.

4. If it was a settler-frontier economy, its badness attains world-historical levels.

I reject Allen's conclusions, largely because of the regression-discontinuity study I did in the middle of the 1990s:

The discontinuity between the countries on the left and the countries on the right is simply where Stalin's (or Mao's, or Giap's) armies stopped. The communist countries were, as of the moment that the Iron Curtain collapsed, missing 88% of their prosperity as measured by what seems and seemed to be the most natural yardstick.

Most-Recent Must-Reads:

• Dietrich Vollrath: Who are you calling Malthusian?: "Living standards are negatively related to the size of population...
• Ed Luce: Donald Trump, the Bully in America’s Pulpit: "Nobody can say they were not warned...
• Matthew Yglesias: Beyond wild allegations, what’s clearly true about Trump and Russia is disturbing: "The Russian blackmail theory is composed of two sub-elements...
• Facundo Alvaredo et al.: Global Inequality Dynamics: New Findings from WID.WORLD: "Global inequality dynamics involve strong and contradictory forces...

Most-Recent Should-Reads:

• Scott Lemieux: There Will Never Be A Republican Replacement for the ACA, Cont'd: "There’s no alternative to the ACA that 1) could get a non-trivial amount of Republican support and...
• Mary Amiti and David Weinstein: Why shocks to large banks cause big GDP swings: "Banks are large relative to the economies they serve...

Most-Recent Links:

• Paul Krugman: Springtime for Scammers: "People keep saying that Donald Trump is a populist. I do not think that word means what they think it means..."
• Giovanni Federico and Antonio Tena-Junguito: World trade, 1800-1938: a new data-set
• Zachary Tracer et al.: U.S. Health Insurance Mergers Killed as Companies Plot Next Move
• Doug Staiger and James Stock (1997): Instrumental Variables Regression with Weak Instruments
• (2001): Kaiping Mines: Memorandum of Agreement Between Chang Yen-Mao and Herbert Hoover
• Peter Lee (2006): China Matters: Herbert Hoover: Made in China
• Peter Lee (2006): China Matters: Last of the Muckrakers: An Appreciation of Walter Liggett
• Peter Lee (2006): China Matters: The Coolie Quagmire: Flogging, Sodomy, and Imperial Overreach on the Rand

Doug Staiger and James Stock (1997): Instrumental Variables Regression with Weak Instruments

Five Questions:

1. What is the "weak instruments" problem?
2. How many studies with weird instruments--latitude, military spending--are affected by the weak instruments problem?
3. How does the weak instruments problem interact with the desk-drawer problem?
4. They say that your first stage F statistic needs to be greater than 10 for you not to worry. On what considerations do they base this rule of thumb?
5. They say their paper is valid for "10 to 20" (or more) "observations per instrument". What, in this context, is an "observation", really?

Cf: <http://econ.lse.ac.uk/staff/spischke/ec533/Weak%20IV.pdf> <http://econweb.ucsd.edu/~elib/250A/Instrumental%20Variables2.pdf>

Should-Read: I agree with Tim Duy here: Bullard is looking at the right things, and that is a very good sign...

Tim Duy: Fed's Bullard Knows His Treasury Yield Curve: "Having tipped their toes in the water with two interest-rate hikes...

Morgan Kelly and Cormac Ó Gráda (2016): Adam Smith, Watch Prices, and the Industrial Revolution

Six Questions:

1. What do Kelly and Ó Gráda mean by a "middle class consumer durable"?
2. How large a cumulative real price decline is 1.3%/year on average over 160 years?
3. How do we understand the combination of falling watch prices in terms of labor time with stable prices in terms of labor time of necessities in Britain between 1650 and 1810?
4. Was there equivalents of the watch in terms of technological improvement over 1490-1650? Or 1330-1490? Or 1170-1330? What were they, and why were they what they were?
5. If it is indeed the case that making an equivalent-quality watch from metal ore and energy took only 1/8 as much time and trouble in 1810 as it had taken in 1650, where should we look to understand the details of this extraordinary improvement?
6. When and why did British artisans cease being the world's watchmakers?

Should-Read: Morgan Kelly and Cormac Ó Gráda (2016): Adam Smith, Watch Prices, and the Industrial Revolution: "Watches were the first mass-produced consumer durable...

Robert Solow (1974): The Economics of Resources or the Resources of Economics: The American Economic Review, Vol. 64, No. 2, Papers and Proceedings of the Eighty-sixth Annual Meeting of the American Economic Association. (May, 1974), pp. 1-14:

Five Questions:

1. Is this a "what markets do" paper or a "what planners should do" paper?
2. Solow says that hitherto prices for exhaustible resources have been falling "presumably" (a) because "extraction costs are falling through time", as opposed to alternative explanations based on (b) investor myopia, (c) insecurity of property rights, and (d) a failure of the market to properly mobilize society's risk bearing capacity. Why does Solow jump immediately for (a)--the market is doing it right--rather than for (b), (c), and (d)?
3. Does the path of the price of, say, oil since 1950 conform to Solow's model and expectations? Why or why not?
4. What does Solow have to say about "pure" time preference?
5. Why does Solow think it most important to focus on the zero-technological-progress case?

Harold Hotelling (1931): The Economics of Exhaustible Resources Journal of Political Economy

Back in 2009, Greg Mankiw was opposed to any [carbon-tax/cap-and-trade] proposal that did not use "most" of the [revenue raised by the tax/money earned by auctioning the permits] to cut marginal tax rates.

Today Greg Mankiw is in favor of a carbon tax proposal that does not use any of the revenue raised to cut marginal tax rates.

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

• Scott Lemieux: There Will Never Be A Republican Replacement for the ACA, Cont'd: "There’s no alternative to the ACA that 1) could get a non-trivial amount of Republican support and...
• Mary Amiti and David Weinstein: Why shocks to large banks cause big GDP swings: "Banks are large relative to the economies they serve...
• Facundo Alvaredo et al.: Global Inequality Dynamics: New Findings from WID.WORLD: "Global inequality dynamics involve strong and contradictory forces...
• Nick Bunker: Weekend reading: “low probability event” edition | Equitable Growth