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March 2017

Weekend Reading: Jacob S. Hacker and Paul Pierson: How Republicans’ obsession with tax cuts for the rich drove their health care plan over a cliff

Il Quarto Stato

Weekend Reading: Jacob S. Hacker and Paul Pierson: Republicans’ Obsession with Tax Cuts for the Rich Drove Their Health Care Plan Over a Cliff: "Somehow, Republicans managed to craft a policy that simultaneously...

...raised premiums and out-of-pocket costs, lowered the quality of insurance plans, increased the chances of insurance market death spirals, put new pressure on state budgets, and massively increased the ranks of the uninsured.

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Weekend Reading: Harold Meyerson: How California Hopes to Undo Trump

San Francisco Bay

Weekend Reading: Harold Meyerson: How California Hopes to Undo Trump: "America’s mega-state is now clearly its leftmost, too...

...and on social insurance, climate change, and immigrant rights, it has more capacity and desire to defeat Republican reaction than any other institution.

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Sluggish Future: No Longer Fresh Over at Finance and Development

Secular Stagnation

Over at Finance and Development: Sluggish Future: You are reading this because of the long, steady decline in nominal and real interest rates on all kinds of safe investments, such as US Treasury securities. The decline has created a world in which, as economist Alvin Hansen put it when he saw a similar situation in 1938, we see “sick recoveries… die in their infancy and depressions… feed on themselves and leave a hard and seemingly immovable core of unemployment…” In other words, a world of secular stagnation. Harvard Professor Kenneth Rogoff thinks this is a passing phase—that nobody will talk about secular stagnation in nine years. Perhaps. But the balance of probabilities is the other way. Financial markets do not expect this problem to go away for at least a generation... Read MOAR at Finance and Development

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Essence of Decision: Understanding the Real History of the Imperial and Succession Wars: Hoisted from The Archives

6a00e551f08003883401b8d188490e970c pi 549×306

Hoisted from The Archives: Essence of Decision: Understanding the Real History of the Imperial and Succession Wars: The fall of the Empire, and the failure of its successor states to re-establish order in the galaxy, is usually mistold in the history books.

Popular, semi-academic, and even academic authors write it as a combination of tabloid soap opera and personal heroics: villains, Jedi Knights, stunning double crosses, the Palpatine succession, and--of course--the bizarre and incomprehensible repeated cross-generational psychodramas of the Skywalker family.

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Procrastinating on March 29, 2017

We re All Public Intellectuals Now The National Interest

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

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Live from the Republicans' Self-Made Gehenna: Let the record show that Paul Ryan has as little contact with reality as Donald Trump:

Jordan Weissman: Let us now appreciate Paul Ryan’s utter failure as a political leader: "The AHCA... somehow achieved the distinction of being panned by policy experts from the left, right, and center...

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Must-Read: Back in 1992 Larry Summers and I warned that, *even with business cycles of the size seen in the "Great Moderation" era, trying to reduce inflation much below 5%/year was a risky and dangerous endeavor. Since they we have learned that the world can give us—from causes that seem trivial as a share of world asset stocks—shocks much larger than was thought reasonable in the "Great Moderation" era, plus we have had a very sharp and apparently permanent fall in real interest rates. That has changed the 2%/year inflation target from being risky and dangerous to being... simply not sane...

Michael T. Kiley and John M. Roberts: Monetary policy in a Low Interest Rate World: "Nominal interest rates may remain substantially below the averages of the last half-century...

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Must-Read: It's not robots or technology or trade: it's policy that has caused U.S. income stagnation over the past one and a half generations. Making America much less egalitarian in the economic sphere is what Reagan and his coalition said they wanted to do. And, lo, they have done it. It did not have to be this way:

Economic growth in the US A tale of two countries VOX CEPR s Policy Portal

Thomas Piketty, Emmanuel Saez, and Gabriel Zucman: Economic growth in the US: A Tale of Two Countries: "Given the generation-long stagnation of the pre-tax incomes among the bottom 50% of wage earners in the US...

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Must-Read: Ummmm... No. The Federal Reserve's inflation policy has been not an achievement but a mistake. Driving expectations of inflation so low that the economy spends half its time in a liquidity trap—as has been the case so far this millennium—is a substantial policy error, not an achievement.

As John Maynard Keynes wrote back in 1923:

Inflation is unjust and Deflation is inexpedient. Of the two perhaps Deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier. But it is not necessary that we should weigh one evil against the other. It is easier to agree that both are evils to be shunned...

"Achievement" is balance. "Achievement" is not falling out of balance to one side or the other:

Stephen Cecchetti and Kim Schoenholtz: The Fed’s Price Stability Achievement: "US monetary policy has been the target of substantial criticism over the years...

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Must-Read; It has long been clear to me that the last thing Fred Hiatt and his crew at the Washington Post are interested in is being trustworthy information intermediaries—that what they write is of interest, as Izzy Stone used to say, not for what it tells us about the world but for what it tells us about the cons they are attempting to run.

The latest version is Fred Hiatt's claim that he was one of the marks last fall--that he trusted Trump, and Trump conned him:

Steve M.: I Know This Sounds Wacky, but I Think Trump and Bannon Are Actually Conservatives: "The Donald Trump administration didn't come into office holding out an olive branch to Chuck Schumer... and The Washington Post's Fred Hiatt finds that baffling...

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Procrastinating on March 27, 2017

We re All Public Intellectuals Now The National Interest

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

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Should-Read: [I apologize: I was wrong. I got my SW VA newspapers confused...]

Grifters gotta grift...

The Roanoke Times cannot say "we told you so" because they were enthusiastic Trump supporters. And, for some reason, The Roanoke Times does not yet dare tell its readers: we—and you—got grifted; we are sorry; we and you need to apologize to the rest of the country; we need to apologize to you, our readers, because if we had done our job you would have known that Trump was a grifter when you went into the voting booth:

The Roanoke Times: Editorial: Trump Breaks a Promise to Coal Country: "Donald Trump... invariably talked up his support for coal... investing in the “clean coal” technology...

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A Historical Document: "In the Long Run It Is the Majority Who Will Determine What the Constitutional Rights of the Minority Are": Hoisted from 2003

Rehnquist Court

Hoisted from the Archives from 2003: A Historical Document: "In the Long Run It Is the Majority Who Will Determine What the Constitutional Rights of the Minority Are": The judicial philosophy of Chief Justice Rehnquist, taken from Rehnquist (1952), "A Random Thought on the Segregation Cases"[1]. This memo expressing Rehnquist's position[2] on a number of issues is usually cited for the flat declaration at the end that Plessy v. Ferguson (establishing the legality of the "separate and unequal" principle of segregation in governmental treatment of Blacks and whites) "was right and should be re-affirmed" even though Rehnquist is aware that it is an "unpopular and unhumanitarian position" for which he has been "excoriated by 'liberal' colleagues."

More interesting, from my perspective at least, are Rehnquist's beliefs that:

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Links for the Week of March 26, 2017

Must-Reads:

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Procrastinating on March 26, 2017

We re All Public Intellectuals Now The National Interest

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

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Should-Read: Sen. Pat Roberts (R-KS) leaves us in a fog—it is not clear whether he believes the government should define what constitutes a "comprehensive health insurance policy", if it should define it which level of government should define it, or what, in fact, the right level of benefits for something to qualify as a "comprehensive health insurance policy" should be. Given that his first reaction when the question is raised is that it is unfair for males to be charged some of the premiums to cover medical care for the breasts at which they nursed, I do not think that Sen. Pat Roberts (R-KS) will be clarifying this any time soon:

Alice Ollstein: @AliceOllstein on Twitter: "I asked Sen. [Pat] Roberts if he supports scrapping Essential Health Benefits. 'I wouldn't want to lose my mammograms', he snarked. #AHCA"

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Should-Read: I cannot see Trump-Ryan-McConnell coming up with anything that would get 60 votes in the Senate, and perhaps even 218 in the House, by themselves. And I do not see them willing to give what they would need to give in the way of Democratic priorities in order to get both Pelosi and Schumer on board in the sense of being willing to stand aside when Trump-Ryan-McConnell go hunting for Democratic legislative votes. So what is this tax reform that is going to pass? Anyone? Anyone? Bueller?

Pedro Nicolaci da Costa: Trump Tax-Cut Agenda Faces Challenges: "It, it would seem like tax cuts would be fairly simple for a Republican president backed by a Republican majority in Congress...

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The Need for a Reformation of Authority and Hierarchy Among Economists in the Public Sphere

School of Athens

I find that I have much more to say (or, rather, largely, republish) relevant to the current debate between Simon Wren-Lewis and Unlearning Economics.

Let me start by saying that I think Unlearning Economics is almost entirely wrong in his proposed solutions.

Indeed, he does not seem especially knowledgeable about his cases. For example:

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Must-Read: Carmen Reinhart and Ken Rogoff are mainstream economists. The fact is that they had much more influence on economic policy in 2009-2013 than did Simon Wren-Lewis and me. Simon needs to face that fact squarely, rather than to dodge it. The fact is that the "mainstream economists, and most mainstream economists" who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side. (IMHO, Simon Wren-Lewis half admits this with his denunciations of "City economists".) For this reason, I think Simon's response here to Unlearning Economics is ineffective, and unhelpful:

Simon Wren-Lewis: On Criticising the Existence of Mainstream Economics: "I’m very grateful to Unlearning Economics (UE) for writing in a clear and forceful way a defence of the idea that attacking mainstream economics is a progressive endeavor...

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What About Trade Deficits, Anyway?: DeLong FAQ

San Francisco from Abovee Berkeley

Q: Libertarian economic theorists tend to believe that trade deficits are of minimal importance. Do these deficits really have a great impact on America's economy?

A: If the president and congress are not doing their job through fiscal policy--regulating government spending and taxing--and the Federal Reserve is not doing its job through monetary policy--regulating the supply and price of liquid purchasing power--in order to maintain full employment, then, yes, a trade deficit can make matters much worse.

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Weekend Reading: Josh Barro: Healthcare: Republicans Lied. They Deserve Punishment

Clowns (ICP)

Weekend Reading: Josh Barro: Healthcare: Republicans Lied. They Deserve Punishment: "It's hard to decide which would be the more politically damaging outcome for Republican politicians...

...passing the American Health Care Act, and therefore owning the premium increases and coverage losses it would cause; or not passing the bill, and therefore failing to... "repeal... Obamacare." Each option is a political nightmare... an admission that Republicans cannot deliver what they have promised....

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Measuring Productivity Growth: No Longer So Live at Project Syndicate

Economics delong Google Search

Measuring Productivity Growth: The world's population today is about 20 times richer than it was back during the long Agrarian Age from 7000 BC to 1500, during which limited resources, slow technological advance, and Malthusian pressures kept the overwhelming proportion of human populations at near-"subsistence"--incomes of less than $1.50 per person per day. Today only 1/15 of the world's population is that poor. And today if we were to take the total money value of what we produce and use it to buy what people receiving less than $1.50/day buy, at current prices the value of global output would be $30/day per person. That is our roughly $80 trillion of annual global income today.

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Weekend Reading: Tom Levenson: Why I Hate The NY Times, Part [n]

Preview of Weekend Reading Tom Levenson Why I Hate The NY Times Part n

Weekend Reading: Tom Levenson: Why I Hate The NY Times, Part n: "This paragraph [by Margot Sanger-Katz]...

...There is most likely a middle way. Republican lawmakers might be comfortable with a system that shifts more of the costs of care onto people who are sick, if it makes the average insurance plan less costly for the healthy. But making those choices would mean engaging in very real trade-offs, less simple than their talking point.

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Weekend Reading: David Frum: Obamacare: The Republican Waterloo

Clowns (ICP)

We all remember how seven years ago American Enterprise Institute head Arthur Brooks fired David Frum for saying that Republican root-and-branch opposition to ObamaCare was a mistake.

Therefore I take some things in Frum's very good piece today with huge blocks of salt. These include the last paragraph. And I must say that a thinktank does not exist to advocate. A thinktank exists to analyze. Someone who is paid to advocate is either a public-relations specialist, a lobbyist, or a prostitute.

David Frum:

Weekend Reading: David Frum: Obamacare: The Republican Waterloo: Conservatives once warned that Obamacare would produce the Democratic Waterloo. Their inability to accept the principle of universal coverage has, instead, led to their own defeat...

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Must-Read: I think Ezra has this wrong: Donald Trump may have "promised" lots of things, but why on earth would anyone think that he ever meant to keep any of those promises? Trump doesn't know enough about policy to have policy goals—it's reality TV, not reality.

Trump did not get played.

Trump's voters and supporters on the other hand...

Ezra Klein: How Paul Ryan Played Donald Trump: "Donald Trump promised to be a... populist...

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Procrastinating on March 24, 2017

We re All Public Intellectuals Now The National Interest

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

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