Grasping Reality on TypePad, by Brad DeLong

Should-Read: Katia Porzecanski: Ray Dalio Is Changing His Mind About Donald Trump: "'When faced with the choices between what’s good for the whole and what’s good for the part, and between harmony and conflict, he has a strong tendency to choose the part and conflict... https://www.bloomberg.com/news/articles/2017-06-05/dalio-concerned-by-consequences-of-trump-s-pursuit-of-conflict

Live from the Orange-Haired Baboon Cage: Betty Cracker: _Reichstag in search of a fire?: "Trump himself has settled into a pattern of undermining his own team... confirming that he’s an incompetent boob.... Today was no exception... https://www.balloon-juice.com/2017/06/05/reichstag-in-search-of-a-fire/

It is interesting that when Charles Dickens's character Ebenezer Scrooge says of the poor that "If they would rather die, they had better do it, and decrease the surplus population”, he is well to the left of John Cochrane.

The position Scrooge takes is that the Victorian workhouse system is a sufficiently well-functioning entitlement that the poor have—not that the poor have "no such law, right, or entitlement" to enough food to keep from starving to death.

What a maroon!:

Noah Smith: Americans Sure Seem to Like Universal Health Care: "In a recent blog post, Hoover Institute senior fellow John Cochrane likens single-payer health care to single-payer food... https://www.bloomberg.com/view/articles/2017-06-01/americans-sure-seem-to-like-universal-health-care

Should-Read: Nick Bunker: Monetary policy via income redistribution: "Combining these three redistribution channels... http://equitablegrowth.org/equitablog/value-added/monetary-policy-via-income-redistribution/

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

• Simon Wren-Lewis: GE2017 and the Stages of Leaver Grief: "The EU knows that No Deal would be a disaster for the UK... https://mainlymacro.blogspot.com/2017/06/the-stages-of-leaver-grief.html
• Reuters: Fed's Harker Still Sees Two More Interest Rate Hikes in 2017: "Philadelphia Federal Reserve Bank President Patrick Harker said on Friday that the U.S. central bank remains on track... https://www.nytimes.com/reuters/2017/06/02/business/02reuters-usa-fed-harker.html
• Luciano Floridi: A fallacy that will hinder advances in artificial intelligence: "The best definition of AI was written in 1955 by US computer scientist John McCarthy and colleagues... https://www.ft.com/content/ee996846-4626-11e7-8d27-59b4dd6296b8

Should-Read: Simon Wren-Lewis: GE2017 and the Stages of Leaver Grief: "The EU knows that No Deal would be a disaster for the UK... https://mainlymacro.blogspot.com/2017/06/the-stages-of-leaver-grief.html

Must-Reads:

• Luciano Floridi: A fallacy that will hinder advances in artificial intelligence: "The best definition of AI was written in 1955 by US computer scientist John McCarthy and colleagues... https://www.ft.com/content/ee996846-4626-11e7-8d27-59b4dd6296b8
• Dean Baker: Job Growth Slows Sharply: "the overall employment-to-population ratio (EPOP) dropp[ed] from 60.2 percent in April to 60.0 percent in May... http://cepr.net/data-bytes/jobs-bytes/jobs-2017-06
• Lael Brainard: Navigating the Different Signals from Inflation and Unemployment: "The labor market has continued to strengthen... https://www.federalreserve.gov/newsevents/speech/brainard20170530a.htm
• Samuel Osborne: Angela Merkel says Germany can no longer rely on Donald Trump's America: "'We Europeans must really take our destiny into our own hands'... http://www.independent.co.uk/news/world/europe/angela-merkel-donald-trump-germany-us-no-longer-rely-european-union-climate-change-g7-a7760486.html
• Gavyn Davies: The Fed’s Lowflation Dilemma: "The [last] two months together have left core CPI inflation 0.4 percentage points lower than expected... https://www.ft.com/content/b165f756-e4bf-3a70-880f-74474f6538fa

Live from the Orange-Haired Baboon Cage: Duncan Black: Trump's Worldview: "If I am confronted with one more piece of serious "journalism" about what Trump Thinks About Things... He's a senile racist old man who watches Fox news and gets pissed off and otherwise doesn't know anything about anything who thinks he is super smart and thinks all deals are zero sum the end." http://www.eschatonblog.com/2017/06/trumps-worldview.html

Nine from Fritz Stern's Memoirs http://delong.typepad.com/sdj/2007/03/nine_from_fritz.html: Fritz Stern (2006), Five Germanys I Have Known (New York: FSG: 0374155402) http://amzn.to/2s6AuiG:

p. 101: Captain Hardinac von Hatten in 1933 on Fritz Stern's father, Rudolf Stern: "For [Rudolf Stern's] exemplary courage at the Somme and his commitment to duty, he was promoted to lieutenant of the reserve, and after the battle of Arras in the spring of 1917, I successfully recommended him for an Iron Cross, First Class. If every soldier of the German army had fulfilled his duty to the fatherland as loyally and courageously in the foremost position as Lieut. Stern did under my command in 1916-1917, we would have been spared the shame of the last fourteen years..."

An amazing con game Guenter Grass played for virtually his entire life: denouncing the western alliance for failing to grapple properly with Germany's unmasterable past, while at the same time doing all he could to hide and refuse to face his own membership in the criminal origination that was the Waffen-SS:

Hoisted from June 4, 2017: Guenter Grass Surfaces in the Pages of the New Yorker http://www.bradford-delong.com/2007/06/guenter_grass_s.html: Ah. Guenter Grass in the New Yorker this week:

Guenter Grass: What is less certain is when I exchanged my [Waffen SS 10th Division "Frundsberg"] uniform jacket for one less onerous...

Hoisted from June 4, 2007: Neil Henry vs. Jay Rosen Future-of-Journalism Smackdown! http://www.bradford-delong.com/2007/06/neil_henry_vs_j_1.html: "Excuse me, I need to worship my idol a bit more... There... That's better...

Three pieces worth highlighting:

• My monthly contribution to Project Syndicate: What Can China Do with Its Foreign Exchange Reserves? http://www.bradford-delong.com/2007/06/what_can_china_.html
• Back when I was much more optimistic about internet technologies and the public sphere: Neil Henry vs. Jay Rosen Future-of-Journalism Smackdown! http://www.bradford-delong.com/2007/06/neil_henry_vs_j_1.html
• Guenter Grass's con game: trying to hide his membership in the criminal organization that was the Waffen-SS while denouncing the western alliance for refusing to face the unmasterable past: Guenter Grass Surfaces in the Pages of the New Yorker http://www.bradford-delong.com/2007/06/guenter_grass_s.html

Dead from Behind the Iron Curtain: Albert Glotzer: Stalin’s Place in History (1953): "Assessing the Social Role of the Great Assassin... https://www.marxists.org/history/etol/writers/glotzer/1953/05/stalin.htm

Leon Trotsky's Not-Entirely-Reliable-Narrator View of Lenin's New Economic Policy of the 1920s http://www.bradford-delong.com/2015/02/daily-economic-history-leon-trotskys-not-entirely-reliable-narrator-view-of-lenins-new-economic-policy-of-the-1920s.html: "With the bourgeois economists we no longer anything to quarrel over...

...Socialism has demonstrated its right to victory, not on the pages of Das Kapital, but in an industrial arena comprising a sixth part of the earths surface--not in the language of dialectics, but in the language of steel, cement and electricity. Even if the Soviet Union, as a result of internal difficulties, external blows and the mistakes of leadership, were to collapse--which we firmly hope will not happen--there would remain an earnest of the future this indestructible fact, that thanks solely to a proletarian revolution a backward country has achieved in less than 10 years successes unexampled in history.

Weekend Reading: Corey Robin: Second Edition of The Reactionary Mind now available for order: "Sorry for the radio silence... http://coreyrobin.com/2017/06/03/second-edition-of-the-reactionary-mind-now-available-for-order/

...I’ve been hard at work on the manuscript for the second edition of The Reactionary Mind, which I’ve now completed!

Comment of the Day: Robert Waldmann: Why Is the FOMC So Certain the U.S. Is "Essentially at Full Employment"?: "Two things. One small and one very dubious... http://www.bradford-delong.com/2017/05/why-is-the-fomc-so-certain-the-us-is-essentially-at-full-employment.html?cid=6a00e551f08003883401b7c8fec793970b#comment-6a00e551f08003883401b7c8fec793970b

Should-Read: This is one of the iron laws of bureaucracy: Whenever an incumbent in an office appoints a chair of the search committee who then winds up getting the job, something has gone badly wrong—the process has been rigged to flatter the outgoing occupant, rather than to choose an appropriate successor.

In the first four months of 2017 the monthly changes in the core PCE chain inflation index have added up to 0.52%-points: an average of 0.13%-point per month.

If all twelve months of 2017 are to add up to the 2%/year core PCE chain inflation that is the Federal Reserve's target, the remaining eight months of 2017 need to average 0.19%-points.

That's average over the next eight months—not kiss once or twice.

The economic world is a surprising place: it could happen. But I see nothing in the data or in any underlying economic relationships—no chain of logical reasoning—that would lead anybody to truthfully say that they anticipate that 0.19%-point will be the average monthly PCE core chain inflation rate reported over the next eight monthly releases.

Yet that is what Philadelphia Fed President Patrick Parker is currently claiming:

Reuters: Fed's Harker Still Sees Two More Interest Rate Hikes in 2017: "Philadelphia Federal Reserve Bank President Patrick Harker said on Friday that the U.S. central bank remains on track... https://www.nytimes.com/reuters/2017/06/02/business/02reuters-usa-fed-harker.html

Must-Read: There are many inconsistent and wildly different definitions of "artificial intelligence". Here are two useful ones:

• Building systems that humans can easily and successful interact with by acting as if they are a human-level intelligence (within their domain).
• Building systems that behave in ways "that would be called 'intelligent' if a human were so behaving."

Luciano Floridi says smart things about the second:

Luciano Floridi: A fallacy that will hinder advances in artificial intelligence: "The best definition of AI was written in 1955 by US computer scientist John McCarthy and colleagues... https://www.ft.com/content/ee996846-4626-11e7-8d27-59b4dd6296b8

From June 3, 2007I Like Barack Obama's Health Care Plan http://delong.typepad.com/sdj/2007/06/i_like_barack_o.html: FT.com / Comment & analysis: It is an iron law of American politics that Democratic party politicians who propose relatively detailed healthcare reform plans–as Barack Obama did last Tuesday–get trashed.

Six files:

• Links for 2007-06-04 http://www.bradford-delong.com/2007/06/links_for_20070_2.html: "Fareed Zakaria on restoring America's place, Hugh Williamson on G8 riots in Germany, Mark Danner on words in a time of war, and Jonathan Schwarz on the relative sizes of different national economies
• Tyler Cowen says smart things: The Value of a Diversified Intellectual Portfolio http://www.bradford-delong.com/2007/06/the_value_of_a_.html
• Larry Ball is right: Q: Has Globalization Changed Inflation? A: No. http://www.bradford-delong.com/2007/06/larry_ball_q_ha.html
• It was never clear to me why Fareed Zakaria was saying either of these things: The Next Generation of Republicans Is Worse than Bush http://www.bradford-delong.com/2007/06/fareed_zakaria__1.html | It Is Time to Stop Bashing Bush http://www.bradford-delong.com/2007/06/fareed_zakaria_.html
• A very good meditation on issues discussed at TPM Cafe, through a family-history lens: James K. Galbraith's John Kenneth Galbraith Lecture http://www.bradford-delong.com/2007/06/james_k_galbrai.html
• At the FT, I write: Barack Obama's mid-2007 health plan was very good http://www.bradford-delong.com/2007/06/i_like_barack_o.html

The sixth is worth noting and remembering..

Walt Whitman (1865): When Lilacs Last in the Dooryard Bloom’d... https://www.poetryfoundation.org/poems-and-poets/poems/detail/45480:

1: When lilacs last in the dooryard bloom’d,
And the great star early droop’d in the western sky in the night,
I mourn’d, and yet shall mourn with ever-returning spring.

Ever-returning spring, trinity sure to me you bring,
Lilac blooming perennial and drooping star in the west,
And thought of him I love.

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

• Nick Bunker: Weekend reading: “Unstable incomes, uncertain world” edition: "'Conversations about inequality often miss something essential... http://equitablegrowth.org/equitablog/weekend-reading-unstable-incomes-uncertain-world-edition/
• Equitable Growth: Equitable Growth’s Jobs Day Graphs: May 2017 Report Edition | Equitable Growth: "The unemployment rate for African Americans is back to pre-recession levels... http://equitablegrowth.org/equitablog/equitable-growths-jobs-day-graphs-may-2017-report-edition/
• Ben Thompson: Blue Apron Files for IPO, Network Effects and Customer Acquisition Costs, Uber Concerns: "I did find this bit in The Information article interesting... https://stratechery.com/2017/blue-apron-files-for-ipo-network-effects-and-customer-acquisition-costs-uber-concerns/
• Pseudoreasmus: The Cold War Triumph of Liberal Capitalism—in Hindsight https://medium.com/@pseudoerasmus/if-we-ask-the-retrospective-question-why-did-western-liberal-capitalism-actually-triumph-then-e025706801e0: "The tête-à-tête Soviet-American global struggle over the Third World...
• Dean Baker: Job Growth Slows Sharply: "the overall employment-to-population ratio (EPOP) dropp[ed] from 60.2 percent in April to 60.0 percent in May... http://cepr.net/data-bytes/jobs-bytes/jobs-2017-06
• Larry Summers: What History Tells Us about Trump’s Budget Fantasy: "The Trump economic team has not engaged in serious analysis or been in dialogue... http://larrysummers.com/2017/05/30/what-history-tells-us-about-trumps-budget-fantasy/

Should-Read: Equitable Growth: Equitable Growth’s Jobs Day Graphs: May 2017 Report Edition | Equitable Growth: "The unemployment rate for African Americans is back to pre-recession levels... http://equitablegrowth.org/equitablog/equitable-growths-jobs-day-graphs-may-2017-report-edition/

Should-Read: Nick Bunker: Weekend reading: “Unstable incomes, uncertain world” edition: "'Conversations about inequality often miss something essential... http://equitablegrowth.org/equitablog/weekend-reading-unstable-incomes-uncertain-world-edition/

Should-Read: Ben Thompson: Blue Apron Files for IPO, Network Effects and Customer Acquisition Costs, Uber Concerns: "I did find this bit in The Information article interesting... https://stratechery.com/2017/blue-apron-files-for-ipo-network-effects-and-customer-acquisition-costs-uber-concerns/

Should-Read: Not just in hindsight! The point of my citing to George Kennan’s 1946 “Long Telegram”—published in 1947 in Foreign Affairs as “The Sources of Soviet Conduct”—was to stress that what you, Pseudoerasmus, whoever you are, call the retrospective assessment was Kennan’s prospective hope as well.

Kennan wanted containment, not rollback. Kennan wanted to move the conflict to the political economic-ideological level: which system better delivered on Enlightenment values of prosperity, security, freedom? He was confident that, if moving the conflict to that level could be accomplished, the U.S., the western alliance, liberal democratic capitalism would win if it deserved to win. And he was confident it deserved to win.

Curiously, N.S. Khrushchev—at least in his saner moments—wanted the same thing: he, too, sought to move the conflict to the political economic-ideological level: which system better delivered on Enlightenment values of prosperity, security, freedom? He was confident that, if moving the conflict to that level could be accomplished, Soviet communism would win if it deserved to win. And he was confident it deserved to win. “We will have to be the ones making your funeral arrangements…”

Khrushchev was wrong. But he was a believer…

Pseudoerasmus: The Cold War Triumph of Liberal Capitalism—in Hindsight https://medium.com/@pseudoerasmus/if-we-ask-the-retrospective-question-why-did-western-liberal-capitalism-actually-triumph-then-e025706801e0: "The tête-à-tête Soviet-American global struggle over the Third World...

Must-Read: I am trying to think of rational state-dependent monetary policy algorithms—even semi-rational state-dependent monetary policy algorithms. I can think of none that would take the last three months' worth of data, and say that it is appropriate to reverse the surprise 25 basis point March Federal Funds rate increase. I can certainly think of none that would say that it is appropriate to double down by another 25 basis point rise this month.

And yet the FOMC looks highly likely to raise interest rates this month. Go figure:

Dean Baker: Job Growth Slows Sharply: "the overall employment-to-population ratio (EPOP) dropp[ed] from 60.2 percent in April to 60.0 percent in May... http://cepr.net/data-bytes/jobs-bytes/jobs-2017-06

Live from the Orange-Haired Baboon Cage: Yair Mintzker: Donald Trump’s Ancien Régime: "Trump is preoccupied with appearances and regal roleplaying... https://www.project-syndicate.org/commentary/trump-ancien-regime-court-society-by-yair-mintzker-2017-06

Live at Project Syndicate: The Truth Behind Today’s US Inflation Numbers https://www.project-syndicate.org/commentary/fed-low-inflation-more-stimulus-by-j--bradford-delong-2017-06: BERKELEY – In December 2015, the US Federal Reserve embarked on a monetary-tightening cycle, by raising the target range for the short-term nominal federal funds rate by 25 basis points (one-quarter of a percentage point). At the time, the Federal Open Market Committee (FOMC)–the Fed body that sets monetary policy–issued a median forecast predicting three things... Read MOAR at Project Syndicate

Hoisted from June 2, 2007: On Keynesian Economicses and the Economicses of Keynes http://www.bradford-delong.com/2007/06/keynesian_econo.html: With respect to http://bookclub.tpmcafe.com/blog/bookclub/2007/jun/01/rebutted_but_not_refuted...

I think that there are two ways to understand the divergence of perspectives here...

• Two links for 2007-06-03 http://www.bradford-delong.com/2007/06/links_for_20070_1.html: "Scott Horton: Did... Rumsfeld... Wolfowitz, Feith, Cambone and DiRita–with backing from John Bolton... actually attempt to provoke a war with China?..." And: "Anatole France: La majestueuse égalité des lois interdit..."
• Shopping on Saturday Afternoon, with Cellphones http://www.bradford-delong.com/2007/06/shopping_on_sat.html: "I'm going to have to reconsider my attitude toward Costco now that I know you can get a cubic foot of pre-washed organic spring mix for under $4..."
• Two ways to understand Keynesian heresy wars: as East Anglian vs. MIT Keynesianism; and as root-and-branch opposition to versus peaceful coexistence with right-wing Friedmanite and Hayekian perspectives: On Keynesian Economicses and the Economicses of Keynes http://www.bradford-delong.com/2007/06/keynesian_econo.html. Worth hoisting and highlighting...

Globalization and Inequality

J. Bradford DeLong :: U.C. Berkeley, WCEG, and NBER http://bradford-delong.com [email protected] @delong

.pages: https://www.icloud.com/pages/0_H9kCtNY6cZglaYpa4IRw2pQ | .key: https://www.icloud.com/keynote/0a1YIQGu-i9__uHwnHA0thhTg | .html: http://www.bradford-delong.com/2017/06/economic-policy-challenges-in-the-us-and-japan-panel.html

Globalization and Inequality

• Moderator: Naoyuki Haraoka
• Brad DeLong
• Francis Fukuyama
• Yoriko Kawaguchi
• Hideichi Okada

Should-Read: Larry Summers is not happy with Steve Mnuchin or Gary Cohn. I suspect that he has not registered the transformation of Goldman Sachs that took place with its shift away from relationship banking to trading plus adoption of the corporate form. High standards of integrity are an asset only if you are both playing a much-repeated game and have the mental discipline to be not short-term but long-term greedy. That last, especially, is very hard.

Larry Summers: What History Tells Us about Trump’s Budget Fantasy: "The Trump economic team has not engaged in serious analysis or been in dialogue... http://larrysummers.com/2017/05/30/what-history-tells-us-about-trumps-budget-fantasy/

Comment of the Day: Charles Steindel: Lael Brainard: Navigating the Different Signals from Inflation and Unemployment: "I was at the speech. The Q&A was dominated by people asking about reinvestment plans... http://www.bradford-delong.com/2017/05/must-read-once-again-over-the-past-30-years-we-have-had-three-business-cycle-peaks1990-2000-and-2007and-thre.html?cid=6a00e551f08003883401b8d2884e39970c#comment-6a00e551f08003883401b8d2884e39970c

Comment of the Day: Sans Souci said in reply to Elf M. Sternberg: (Early) Weekend Reading: The End of Francis Spufford's "Red Plenty": "Here's a perceptive Bolshevik critic of Stalinist central planning, which became the template of really-existing socialism... http://www.bradford-delong.com/2017/05/early-weekend-reading-the-end-of-francis-spuffords-red-plenty.html?cid=6a00e551f08003883401bb09a13bc2970d#comment-6a00e551f08003883401bb09a13bc2970d

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

• Perhaps Today We See Not a New Crisis of Liberal Democratic Capitalism, But an Old Condition Recurring http://equitablegrowth.org/equitablog/perhaps-today-we-see-not-a-new-crisis-of-liberal-democratic-capitalism-but-an-old-condition-recurring-like-herpes-if-you-will/
• Bridget Ansel: Venture capital’s gender gap is costly for firms and the economy: "The absence of women in VC firms, of course, trickles down into the success of female entrepreneurs... http://equitablegrowth.org/equitablog/value-added/venture-capitals-gender-gap-is-costly-for-firms-and-the-economy/
• Lael Brainard: Navigating the Different Signals from Inflation and Unemployment: "The labor market has continued to strengthen... https://www.federalreserve.gov/newsevents/speech/brainard20170530a.htm
• Anatole Kaletsky: The Divergence of US and British Populism: "Trump’s key economic officials... plus a galaxy of Congressional officials and business leaders, made clear that Trump... is only a temporary aberration... https://www.project-syndicate.org/commentary/trump-resistance-brexit-acceptance-by-anatole-kaletsky-2017-05
• Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman**: Tax Evasion and Inequality: "We combine stratified random audits... with new micro-data leaked from two large offshore financial institutions, HSBC Switzerland (“Swiss leaks”) and Mossack Fonseca (“Panama Papers”)... http://gabriel-zucman.eu/files/AJZ2017.pdf
• Nick Bunker: What unconventional policies are likely to stay in central bankers’ toolkits?: "Blinder... Ehrmann... de Haan... and... Jansen... academic economists... and central bankers... http://equitablegrowth.org/equitablog/value-added/what-unconventional-policies-are-likely-to-stay-in-central-bankers-toolkits/

Should-Read: Bridget Ansel: Venture capital’s gender gap is costly for firms and the economy: "The absence of women in VC firms, of course, trickles down into the success of female entrepreneurs... http://equitablegrowth.org/equitablog/value-added/venture-capitals-gender-gap-is-costly-for-firms-and-the-economy/

Six posts: Peggy Noonan on June 1, 2007 saying that she had long been an internal exile from the Bush administration whose victory she gloated over back at the end of 2004; a close encounter with a Tom Turkey; three pieces noodling over what "orthodox", "heterodox", and "Keynesian" economics are; and two links worth reading.

None seem to me especially worth highlighting and hoisting today...