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July 2017

Comment of the Day: JEC: HOW WOULD HEALTH-CARE REFORM AFFECT PATIENT HEALTH?: "I'd also point out that Marty is performing the 'null hypothesis bait-and-switch', which relies on nobody noticing that you've swapped the maintained and null hypotheses... http://www.bradford-delong.com/2017/07/must-read-naughty-naughty-marty-you-know-better-you-say-patients-in-the-oregon-medicaid-study-show-no-signif.html?cid=6a00e551f08003883401b8d299d84a970c#comment-6a00e551f08003883401b8d299d84a970c

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Comment of the Day: Charles Steindel: Monday Smackdown: Republican Economists Burn Yet More of Their Reputations Department...: "John F. Cogan, Glenn Hubbard, John B. Taylor, and Kevin Warsh... a very odd comment in their report... http://www.bradford-delong.com/2017/07/monday-smackdown-republican-economists-burn-yet-more-of-their-reputations-department.html?cid=6a00e551f08003883401b8d299a01b970c#comment-6a00e551f08003883401b8d299a01b970c

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Must-Read: Naughty, naughty, Marty...

You know better.

You say: "Patients in the Oregon Medicaid study show no significant improvement in clinical physical health outcomes". You know as well as I do that you should say: "Patients in the Oregon Medicaid study showed the expected and clinically significant improvement in physical health outcomes, but the study had low statistical power, and so the researchers could not dismiss, at conventional levels of statistical significance, the possibility that the improvement was due to chance."

Back in the early 1980s you used to try very hard to teach your students not to confuse statistical significance with economic significance.

What has happened?

Martin Feldstein: How Would Health-Care Reform Affect Patient Health?: "People who qualify for Medicaid do receive substantially more care than those without formal insurance... https://www.project-syndicate.org/commentary/us-health-care-reform-medicaid-cuts-by-martin-feldstein-2017-07

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Live from Cyberspace: Metaphors for Programming Department: Python νB Gandalf the Grey confronting unexpected behavior from a pandas.DataFrame:

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Should-Read: This is not even sausage-making: this is taking an intestinal casing, putting nothing in it, and saying that you are going to add the meat by-products later:

Leigh Ann Caldwell and Vaughn Hillard: Senate Considers 'Skinny' Repeal of Obamacare in Tuesday's Voting: "The plan... is for senators to... a 'skinny' repeal... eliminat[ing] Obamacare's individual mandate penalty, the employer mandate penalty, and the tax on medical devices.... The Senate would then go to conference.... Conferees would work out a final bill. Both chambers would then have to vote..." http://www.nbcnews.com/politics/congress/senate-sets-sights-skinny-repeal-obamacare-tuesday-s-voting-n786296


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Live from the Misty Mountains: When one wishes that one had some fellow wizards to talk shop-issues through to help you think and understand, rather than a bunch of Hobbits and such.

I've been there. I see you, Gandalf:

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Monday Smackdown: David Glasner on Friedrich von Hayek

Pinochet occasional links commentary

When I read this by David Glasner, I wonder whether the shift in Hayek's beliefs between the 1930s and the 1980s was an improvement. In the 1930s, he believed in big depressions—"secondary deflation"—as a way of breaking "nominal rigidities", which I understand as the power of labor to resist being forced to accept declines in real wage rates. By the 1980s, he seemed to believe in shooting people like me in soccer stadiums, and throwing them out of helicopters into the South Atlantic. See: Pinochet, Augusto

David Glasner: Hayek, Deflation and Nihilism: "Hayek argued that... neutral money was... constant total spending (MV)... https://uneasymoney.com/2017/07/23/hayek-deflation-and-nihilism/

...Once the downturn started to accelerate, causing aggregate spending to decline by 50% between 1929 and 1933, Hayek, totally disregarding his own neutral-money criterion, uttered not a single word in protest of a monetary policy that was in flagrant violation of his own neutral money criterion. On the contrary, Hayek wrote an impassioned defense of the insane gold accumulation policy of the Bank of France, which along with the US Federal Reserve was chiefly responsible for the decline in aggregate spending.... Hayek’s policy advice was... relentlessly pro-deflation. Why did Hayek offer policy advice so blatantly contradicted by his own neutral-money criterion?...

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Monday Smackdown: Republican Economists Burn Yet More of Their Reputations Department...

Must-Read: The quick and careful Justin Fox is unhappy with—and makes me aware of this.

All I can say is: unprofessional

I would not have thought that it was an argument that could be maintained by any economist of reputation—even though, as John Stuart Mill once said, "what was affirmed by Cicero... [of] philosophy...may be asserted without scruple of the subject of political economy—that there is no opinion so absurd as not to have been maintained by some person of reputation". I don't think that this is an opinion. And the cost to your reputation—I'm looking at you, John Taylor, and you, Glenn Hubbard, and you Kevin Warsh—may well exceed whatever your current positive balance is plus your available credit limit:

John F. Cogan, Glenn Hubbard, John B. Taylor, and Kevin Warsh: On the Prospects for Higher Economic Growth: "Productivity growth declined in the 1970s, rose markedly through the 1980s and 1990s, and fell again sharply in recent years. The data are not supportive of the popular contention that the United States is in the midst of a long-term decline in productivity growth..." http://www.hoover.org/sites/default/files/research/docs/on_the_prospects_for_higher_economic_growth_0.pdf

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Links for the Week of July 24, 2017

Must-Reads:

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Should-Read: Wall Street Journal editorial writer Joe Rago found dead in his apartment. I am very sorry for him and his family.

Note, first, that none of his predictions about the effects of ObamaCare have so far shown any signs of coming true. None. But a lot of people have gotten addiction treatment through ObamaCare. Note, second, that when a healthy 34-year-old is found dead when, after missing one day of work, his boss sends the police to his apartment, you gotta think: fentanyl and heroin. And so I am even sorrier for him and his family:

Joe Rago (2010): The ObamaCare Crossroads: "Once the health-care markets are put through Mr. Obama's de facto nationalization, costs will further explode... https://www.wsj.com/articles/SB10001424052748704207504575130321235660474

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What Should We Be Ready to Do After the Next Nuclear Fire?...

I was never able to get anybody interested in publishing this when I wrote it and shopped it around ten years ago. I do wonder why: it is, I think, rather important...

Gettyimages 470309868 jpg 1 800×1 299 pixels

After the Next Nuclear Fire... http://www.bradford-delong.com/2007/07/after-the-next-.html: In the early 1980s the U.S. NSA--or perhaps it was the Defense Department--loved to play games with Russian air defense. They would send probe planes in from the Pacific to fly over Siberia. And they would watch and listen: Where were the gaps in Russian sensor coverage? How far could U.S. planes penetrate before being spotted? What were Russian command-and-control procedures to intercept intruders?

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Procrastination on July 22, 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 Orange-Haired Baboon Cage: Bradd Jaffy https://twitter.com/BraddJaffy/status/888440965895262210 sends us to White House Communications Director Anthony Scaramucci's opinion of Donald Trump:

[Donald Trump] is just another hack politician. That's another hack politician. He's just a hack politician. [Donald Trump] is probably going to make Elizabeth Warren his Vice Presidential nominee, with comments like that. It's anti-American [for him to criticize hedge funds]. It's very divisive.

I can tell you what he's going to be president of—you can tell Donald I said this—the Queens County Bowling Association. You have to cut it out now. Stop all this crazy rhetoric.

I don't like the way he talks about women. I don't like the way he talks about our friend Megan Kelly. You know what? The politicians don't want to go at Donald Trump because he has a big mouth, and they are afraid he is going to light them up on Fox News.

But I'm not a politician.

You are an inherited money dude from Queens County! Bring it, Donald! Bring it! An inherited money dude from Queens County!

Q: Do you think Walker will do attack ads against [Donald Trump]?

I don't. I think that Walker is a smart guy and he knows [Donald Trump] is going to implode without attack ads. I don't think [PACs] are going to spend their money on him. Anybody that has been in the high 20s this early in the race has faded. It's Herman Cain. [Trump] says he's different: it's not different.

I'll tell you what I think he's doing. It's right out of Elizabeth Warren's playbook. [Donald,] are you a Democratic plant? Stand here and prove otherwise!


Live from the Orange-Haired Baboon Cage: WTFF!?!?!?!?

Xeni Jardin: Spicey go bye-bye: "Sean Spicer has resigned as President Donald Trump's communications director, and he doesn't like his replacement. From The New York Times... http://boingboing.net/2017/07/21/spicer-quits.html

...Sean Spicer, the White House press secretary, resigned on Friday morning, telling President Trump he vehemently disagreed with the appointment of New York financier Anthony Scaramucci as communications director. Mr. Trump offered Mr. Scaramucci the job at 10 a.m. The president requested that Mr. Spicer stay on, but Mr. Spicer told Mr. Trump that he believed the appointment was a major mistake, according to person with direct knowledge of the exchange.

We'll always have Melissa McCarthy.


A Teaching Note on Barro's (2005) "Rare Events and the Equity Premium" and Rietz's (1988) "The Equity Premium: A Solution"

Graph Maker Plotly Online

J. Bradford DeLong (2007): A Teaching Note on Barro's (2005) "Rare Events and the Equity Premium" and Rietz's (1988) "The Equity Premium: A Solution" http://www.bradford-delong.com/2007/02/preliminary_mar.html: Robert Barro should have called his 2005 "Rare Events and the Equity Premium" paper http://papers.nber.org/papers/w11310.pdf something like "Rare Events and the Low Riskfree Rate" instead...

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Ten Years Ago on Grasping Reality: July 19-21, 2007

Worth Highlighting:

The puzzle about just how and why the brain eater ate Clive Crook's brain—how it was that, starting about a decade ago, one of the most interesting (and intelligent) of the Tories simply lost his grip on reality—remains, to me at least, a mystery. Here is my reaction to one of the first signs of the brain-eating:

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Hoisted from 2007: Clive Crook vs. "Populist" Democrats: The Brain-Eater Surfaces

I WAS A TEENAGE BRAIN EATER Compilation BRAIN EATERS

The puzzle about just how and why the brain eater ate Clive Crook's brain—how it was that, starting about a decade ago, one of the most interesting (and intelligent) of the Tories simply lost his grip on reality—remains, to me at least, a mystery.

Here I am hoisting from one of the first full-blown signs of it in 2007.

A little background: By 2008 the brain-eating was overwhelming. For example we had Clive Crook on the "huge success" of the nomination of Sarah Palin—meaning, that is, that she was highly qualified to be Vice President and would attract lots of new votes to the McCain-Palin ticket:

Clive Crook (2008): Democrats must learn some respect: "The problem in my view is less Mr Obama and more the attitudes of the claque of official and unofficial supporters that surrounds him... https://www.theatlantic.com/business/archive/2008/09/democrats-must-learn-some-respect/8803/

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Reading Notes for Robert Skidelsky: "Keynes: A Very Short Introduction"...

File WhiteandKeynes jpg Wikipedia

John Maynard Keynes: John Maynard Keynes was brought up a classical liberal and a classical economist. He believed in free trade, economic progress, cultural uplift, and political reason. He then found himself working for the British Treasury during World War I, unable to stop what he thought were disastrous post-World War I political decisions. He then found himself watching as the classical economic mechanisms he had been taught to admire all fell apart.

He then picked himself up.

After World War I Keynes used what power he had to—don't laugh—try to restore civilization.

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World War II at the Operational Level: The Fall of France 1940 (Prompted by the Forthcoming Release of "Dunkirk")

Will the "Dunkirk" movie be any good? I cannot say that I am optimistic. But if you want to understand the bigger picture, here is my take on it:


From: My Very Short Take on World War II... http://www.bradford-delong.com/2017/01/my-very-short-take-on-world-war-ii-hoisted-from-the-archives.html: How are we to understand World War II? One way is to take a look at the first three major campaigns—the Polish campaign of September 1939, the French campaign of May-June 1940, and the first six months of the Russian campaign from June 22 to the end of 1941.

In the 1939 Polish campaign, the Nazis lost 40,000 soldiers killed and wounded. The Poles lost 200,000 killed and wounded. The Poles also lost about 1,000,000 taken prisoner.

In the 1940 French campaign, the Nazis lost 160,000 soldiers killed and wounded. The allies lost 360,000 soldiers killed and wounded. And the allies also lost 2,000,000 soldiers taken prisoner.

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Should-Read: Nick Bunker: Is declining competition causing slow U.S. business investment growth?: "Germán Gutiérrez and Thomas Philippon... the divergence between investment and profits... employ a so-called natural experiment where the entrance of competition from China changed investment decisions... http://equitablegrowth.org/equitablog/value-added/is-declining-competition-causing-slow-u-s-business-investment-growth/

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Must-Read: A propos of Nancy MacLean's Democracy in Chains http://amzn.to/2tGUUeN: My view is that Brown v. Board of Education was not the major cause of James Buchanan's decision to try too build and U VA President Colgate Darden's decision to fund the "Virginia School of Political Economy"—Public Choice as a discipline that had only one wing, a right one, and that would, as the late Mancur Olson liked to say, "never be healthy until its left wing was as strong as its right, and it was no longer an ideological movement masquerading as an academic sub discipline". But it was certainly a trigger, and support was always very welcome from those whose concerns about appropriate governmental decentralization, limited powers, and checks and balances started and ended with preserving white supremacy.

Noah Smith was on the case back in 2011:

Noah Smith (2011): Noahpinion: The liberty of local bullies: "I have not been surprised by any of the quotes that have recently come to light from Ron Paul's racist newsletters. I grew up in Texas, remember... http://noahpinionblog.blogspot.jp/2011/12/liberty-of-local-bullies.html

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Clueless DeLong Was Clueless: Hoisted from the Archives from 2007: The Domestic Macroeconomic Outlook: February 28, 2007

Clueless DeLong Was Clueless: Hoisted from February 2007: The Domestic Macroeconomic Outlook: February 28, 2007 http://www.bradford-delong.com/2007/02/the_domestic_ma.html: It looks like I'm not going to get to give my short talk on the domestic macroeconomic outlook up at Lake Tahoe this weekend:

That's too bad, because such talks quickly grow stale.

One of the major points of my schtick is that the macroeconomic outlook rarely changes suddenly, so that 90% of the time it is perfectly OK to say, "things are like they were, only three months ago." Nevertheless such talks have a very short half life: people like to know how the most recent news affects things, even if the usual answer is "not much"--except, of course, for those turning points where things do change a great deal, and which we usually see clearly only in retrospect.

I was going to hit three big points:

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Clueless DeLong Still Clueless, But Slightly Less So: Hoisted from Ten Years Ago: High-Grade Structured Credit, and Time for the Fed to Start Cutting Interest Rates

Clueless DeLong Still Clueless—Albeit Slightly Less So: High-Grade Structured Credit, and Time for the Fed to Start Cutting Interest Rates: Hoisted from Ten Years Ago http://www.bradford-delong.com/2007/07/high-grade-stru.html: BondDad writes:

Daily Kos: $10 Billion Hedge Fund Now WORTHLESS: $10 Billion Hedge Fund Now WORTHLESS: From CBS Marketwatch:

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Ten Years Ago in Grasping Reality: July 16-18, 2007

Worth Highlighting:

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The Most Mendacious Graph the Wall Street Journal Ever Published: Paul Gigot and Kevin Hassett Smackdown/Hoisted from 2007:

...Thanks, Paul Gigot! Thanks, Kevin Hassett!

Hoisted from 2007: Most Dishonest Wall Street Journal Editorial Ever http://delong.typepad.com/sdj/2007/07/most-dishonest-.html: Yes, it's the Wall Street Journal editorial page reporting more American Enterprise Institute-quality research from Kevin Hassett. This is the most mendacious ever. Mark Thoma is on the case.

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Europe's Post-World War I Crisis Through the Lens of the Life of John Maynard Keynes: Hoisted from Ten Years Ago

File WhiteandKeynes jpg Wikipedia

Hoisted from Ten Years Ago: Europe's Post-World War I Crisis Through the Lens of the Life of John Maynard Keynes http://delong.typepad.com/sdj/2007/09/lecture-notes-f.html?asset_id=6a00e551f08003883400e552211a228833: World War I makes it impossible to be a liberal believer in progress, peace, rationality, equilibrium, the benevolence of the market, the triumph of reasoned discussion, et cetera.

So what do you do?

The answer is "managerialism." Muddling through. Trying desperately to somehow cobble together something like pre-WWI liberalism—to make it true in practice even though it isn't true in theory, and to do so somehow.

Hence Keynes.

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Should-Read: The problem with the current crop of Republican politicians is that I cannot decode their map between what they say, what they would vote for, and what they could be induced to vote for relatively cheaply. That makes decoding what this—or, indeed, anything they do or say—really means for the future every difficult:

Jonathan Cohn, Paige Lavender, and Chris D’Angelo: Senate Republicans Just Killed Their Health Care Bill Again: "But it could come back in another form. Like a zombie...

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Should-Read: Nancy Folbre: Why current definitions of family income are misleading, and why this matters for measures of inequality: "Researchers studying income distribution in the United States seem reluctant to acknowledge the family as an important unit of production and distribution... http://equitablegrowth.org/research-analysis/why-current-definitions-of-family-income-are-misleading-and-why-this-matters-for-measures-of-inequality/

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