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September 2017

Should-Read: (1) Don't be a dick. (2) Cast as broad a net as you can. (3) Encourage the young to ask "why is that so?" and to challenge the old—there is great value in a "Talmudic" culture. (4) Make sure the Olds start from the premise that the Youngs are smarter than they are—better trained, with more energy, selected from more people in a harsher selection environment—and thus to be listened to rather than squelched. (5) Make sure the Olds know that they retain more status by gracefully yielding than by enforcing their mistaken intellectual orthodoxies.

I find myself struck by the differential reactions of George Borjas when challenged on sexism in economics by a woman, Janet Currie, and by a man, Justin Wolfers. George to Janet:

Currie takes an even easier approach to dismiss EJMR: sexism. I personally find the forum refreshing. There’s still hope for mankind when many of the posts written by a bunch of over-educated young social scientists illustrate a throwing off of the shackles of political correctness and reflect mundane concerns that more normal human beings share: prestige, sex, money, landing a job, sex, professional misconduct, gossip, sex, and putting down “reg monkeys,” a subspecies of economists that cares little about conceptual issues and lives simply to run regressions)...

George says: what Janet claims is "sexism" is actually "a throwing off of the shackles of political correctness" and "reflect[s] mundane concerns that more normal human beings share".

George to Justin:

"While there is some value in that forum, there is also a great deal that is offensive and disturbing. The problem is I’m not sure exactly where to draw [the] line." This precisely summarizes my feelings about EJMR, in particular, and social media, in general. There’s an amazing amount of bullying, of offensive language, of demeaning people, of making fun of how people look, and on and on. It often makes a high school cafeteria look like the Magic Kingdom, the friendliest place on earth. At the same time, amidst all that offensive material, one can find posts that are very useful. In the EJMR context, the posts on professional misconduct in economics are extremely valuable. It is likely that much of that information would have been hidden away in the darkest room by the guilty parties had they not been uncovered by the forum. There is indeed a tradeoff. Unlike most people who seem so certain of what the world should look like, however, I just don’t know what the solution is...

Mostly it's (1): Don't be a dick. And don't be a meta-dick by making excuses for those who want to be dicks, or wringing your hands and claiming that figuring out how to provide strong incentives for people not to be dicks is too hard a problem.

Matthew Kahn: Does Culture Matter? The Case of Academic Economics: "I stumbled across this very interesting (and depressing) post by Claudia Sahm...

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Should-Read: This was remarkably off-base at the time. It reads even worse now. I don't know which is worse: the endorsement of do-nothing climate policies, the refusal to face the fact that high-income tax cuts have not generated faster growth, or the "nation of takers" bs with respect to "paying no taxes"...

Why do Republican economists burn their reputations this way?

Michael Boskin (March 6, 2009): Obama's Radicalism Is Killing the Dow: "our new president's policies are designed to radically re-engineer the market-based U.S. economy...

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Should-Read: Piketty's elasticity of substitution between capital and labor is, in his model, produced by the constancy of the rate of profit near 5%/year in spite of wide swings in the capital-output ratio. You can't say that substitution parameter is wrong without providing an alternative explanation for the constancy of the rate of profit. Yet very few of Piketty's critics even attempt that:

Diane Coyle: Inequality, revisited: "Recently I’ve been dipping into The Contradictions of Capital in the 21st Century: The Piketty Opportunity, edited by Pat Hudson and Keith Tribe...

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September 11, 2001: Sixteen Years After...

September 11 2001 Google Search

The Onion: Hijackers Surprised To Find Selves In Hell: "JAHANNEM, OUTER DARKNESS—The hijackers who carried out the Sept. 11 attacks on the World Trade Center and Pentagon expressed confusion and surprise...

...Monday to find themselves in the lowest plane of Na'ar, Islam's Hell.

"I was promised I would spend eternity in Paradise, being fed honeyed cakes by 67 virgins in a tree-lined garden, if only I would fly the airplane into one of the Twin Towers," said Mohammed Atta, one of the hijackers of American Airlines Flight 11, between attempts to vomit up the wasps, hornets, and live coals infesting his stomach. "But instead, I am fed the boiling feces of traitors by malicious, laughing Ifrit. Is this to be my reward for destroying the enemies of my faith?"

The rest of Atta's words turned to raw-throated shrieks, as a tusked, asp-tongued demon burst his eyeballs and drank the fluid that ran down his face.

According to Hell sources, the 19 eternally damned terrorists have struggled to understand why they have been subjected to soul-withering, infernal torture ever since their Sept. 11 arrival.

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Must-Read: Every year since 2007 the Fed has been too optimistic and forecast that its interest rates will be higher than has turned out to be the case. Every single year. 2-11 = 1/2048:

Pedro Nicolaci da Costa: Fed may pause rate hikes if inflation weakness persists: "The Federal Reserve is embarking on an annual summer ritual: Downgrading its overly optimistic forecasts for economic growth...

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Should-Read: The price level is the (inverse) price of symbols of purchasing power in terms of an index of useful commodities. The nominal interest rate is the price of liquidity services. The real interest rate is the slope of the intertemporal price system for useful commodities.

Is that clear?

David Glasner: Milton Friedman Says that the Rate of Interest Is NOT the Price of Money: Don’t Listen to Him!: "Friedman’s repeated claims that the rate of interest is not the price of money...

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Links and Such for the Week of September 10, 2017


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One Year and One Month Ago at Grasping Reality: August 10, 2016

Two Things Worth Highlighting:

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Should-Read: What Noah Smith does not say is: this is a horrible research program.

Taking your residual, putting it on the right hand side, and calling it a "productivity" shock may allow you to fit some things, but it doesn't allow you to explain or _understand. And there is no theory and no interest in developing any theory of where these "productivity shocks" come from.

Compare this to medieval Ptolemaic astronomy—well, Judah al-Barceloni had a theory that it was Sammael, the Angel of Mars, who guided the planet around its epicycles.

Ljungqvist and Sargent haven't even reached that level of Popperian potential falsification: their productivity shocks do not emerge from any economic process whereby businesses learn and forget production technologies, but they simply crystallize out of the air:

Noah Smith: Realism in macroeconomic modeling: "Ljungqvist and Sargent are trying to solve the Shimer Puzzle...

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Weekend Reading: Winston S. Churchill: Their Finest Hour

Edward Wood Lord Halifax

Winston S. Churchill: Their Finest Hour "AFTER THE COLLAPSE of France the question which arose in the minds of all our friends and foes was, 'Would Britain surrender too?'...

...So far as public statements count in the teeth of events, I had in the name of His Majesty’s Government repeatedly declared our resolve to fight on alone. After Dunkirk on June 4 I had used the expression, “if necessary for years, if necessary alone.” This was not inserted without design, and the French Ambassador in London had been instructed the next day to inquire what I actually meant. He was told “exactly what was said.”

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Procrastination on September 8, 2017

We re All Public Intellectuals Now The National Interest

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

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Weekend Reading: Stanley Fischer (1973): Chicago Undergraduate Macro

Weekend Reading: Stanley Fischer (1973): Chicago Undergraduate Macro: "ECONOMICS 202 Reading List...


  • Branson: Macroeconomic Theory and Policy, Harper and Row, 1972.
  • Friedman: An Economist’s Protest, Thomas Horton, 1972.

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Weekend Reading: Dean Acheson: A Lawyer's Brief for the Mid-Twentieth Century Democratic Party: A Historical Document:

Photograph of Dean Acheson taking the oath of office as Secretary of State in the Oval Office with Chief Justice NARA 200076 Dean Acheson Wikipedia

Weekend Reading: Dean Acheson: A Historical Document: A Lawyer's Brief for the Mid-Twentieth Century Democratic Party: From Dean Acheson (1955), A Democrat Looks at His Party:

p. 23 ff: From the very beginning the Democratic Party has been broadly based... the party of the many... the urban worker; the backwoods merchant and banker; the small farmer... the large landowners of the South, who saw themselves as being milked by the commercial and financial magnates gathered under Hamilton's banner; the newly arrived immigrants... the party of the underdog.... The many have an important and most relevant characteristic. They have many interests, many points of view, many purposes to accomplish, and a party which represents them will have their many interests, many points of view, and many purposes also. It is this multiplicity of interests which, I submit, is the principal clue in understanding the vitality and endurance of the Democratic Party....

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Must-Read: Austin Clemens: New report on evidenced-based policymaking boasts recommendations that Congress must take seriously: "The Commission’s report does not address funding levels for existing statistical agencies, but funding for these agencies is not a luxury...

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Weekend Reading: Lael Brainard: Understanding the Disconnect between Employment and Inflation with a Low Neutral Rate

In advance of Yellen speech Brainard urges caution on rates Daily Mail Online

Weekend Reading: Lael Brainard: Understanding the Disconnect between Employment and Inflation with a Low Neutral Rate: "Overall, the U.S. economy remains on solid footing, against the backdrop of the first synchronized global economic growth we have seen in many years and accommodative financial conditions...

...This benign outlook is clouded somewhat by uncertainty about government funding and the fiscal outlook, and geostrategic risk has risen. While the heartbreaking human toll exacted by Hurricane Harvey is already all too clear, it will take some time to assess the macroeconomic impact.

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Should-Read: I am not as confident as Paul is that Paul's numbers here are the right numbers to look at: I do not know how much wealth accumulation escapes the income stream measurement, but I suspect it is a lot more than escaped back in the 1970s:

Paul Krugman: The Political Failure of Trickle-Down Economics: "We tend to think of the period since Reagan’s election as a conservative era...

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For the Weekend: Stephen Vincent Benet: The Devil and Daniel Webster III

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For the Weekend: Stephen Vincent Benet: The Devil and Daniel Webster III "There was a man named Jabez Stone, lived at Cross Corners, New Hampshire...

...He wasn't a bad man to start with, but he was an unlucky man. If he planted corn, he got borers; if he planted potatoes, he got blight. He had good enough land, but it didn't prosper him; he had a decent wife and children, but the more children he had, the less there was to feed them. If stones cropped up in his neighbours' field, boulders boiled up in his; if he had a horse with the spavins, he'd trade it for one with the staggers and give something extra. There's some folks bound to be like that, apparently. But one day Jabez Stone got sick of the whole business.

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Should-Read: The opposing argument, of course, is that a president who misuses his pardon power should be sanctioned by impeachment. Of course, that would mean that a president who can maintain the confidence of half the House or one third of the Senate could become a dictator. Thus I think Zunger's side has the best of this argument:

Yonatan Zunger: What can be Pardoned?: "This [Arpaio] pardon is now being challenged in court as being unconstitutional...

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Ten Years and One Month Ago at Grasping Reality: August 4-7 2007

Worth Highlighting:

  • Woytinsky! Frivolous academic purchase of the month: W.S. and E.S. Woytinsky (1953), World Population and Production: Trends and Outlook and World Commerce and Government: Trends and Outlook_.... Maury Obsteld next door says: "Ah! Woytinsky!"... One thing that is very sad. The very last page of World Commerce and Government shows that this was a library copy: it was stamped due back into the library by Jan 13, 1956; Jan 19, 1956; Jun 11, 1956; Oct 1, 1959; Jun 11, 1973; Jul 29, 1983; Jun 01, 1992; Sep 1, 1992; Sep 1, 1995. Which library? Harvard's Littauer Library of Public Administration. This is the copy of World Commerce and Government that I checked out the summer after my first year of graduate school, and returned at the end of July 1983. Littauer Library has gotten rid of it, and I now have it. I hope it wasn't their only copy, but I don't remember seeing two...

  • Fear of Finance

  • Ezra Klein on Giuliani, the Press, and the Laffer Curve "Fed up with Rudy Giuliani's Laffer-baiting and with the 'uncritical stenography' of his journalistic enablers: Chris Cilizza, Michael Shear, Steven Braun, and Mike Glover..."

  • Hoover in China: Yet Another Note "The reality was expressed at the time of the swindle by Britain's charge d'affaires in Beijing, Arthur Townley. With the help of a Yankee [Hoover], he said, an Anglo-Belgian gang had 'fleeced' the Chinese, and Moreing and associates had 'made pretty pile at their expense'..."

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Must-Read: If another significant contractionary macroeconomic shock were to hit in the next two years, we would be totally s----ed. The Fed doesn't have enough maneuvering room, and only an idiot would think that this President and this Congress would step up and do the job. It is vitally important that the Red now be taking steps so that we would not be totally s---ed if significant contractionary macroeconomic shock were to hit in years three to five. But for that to be the case her colleagues would have to listen to Lael. And there is no sign that they are willing to do so:

Cardiff Garcia: Brainard’s framing challenge: "Tim Duy has the right response to Lael Brainard’s speech today...

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Must-Read: I could wish for a little more attention to the on-the-ground dynamics of local political economy. In California, it was the right-wing anti-property tax revolt (yes, I'm looking at you, Proposition 13, Jarvis, and Gann) that shifted local governments from being broadly pro-development to regarding developments as burdens that required more in services than they would pay in property taxes In New York (and, to a much lesser extent, Boston), it is an unwillingness to invest sufficiently in transportation infrastructure(yes, I'm looking at you, Chris Christie).

When I do Nimbyism in America: A Back-of-the-Envelope Finger-Exercise Calculation quick-and-dirty for introductory economics students, I start with this slide:

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Thus there seem to me to be two problems: a NIMBY problem that afflicts Washington, Boston, and—overwhelmingly—San Francisco, and an infrastructure problem that afflicts New York, Boston, Washington, Chicago, and Philadelphia.

I should rerun the fit line excluding New York, shouldn't I...

Chang-Tai Hsieh and Enrico Moretti: How Local Housing Regulations Smother the U.S. Economy: "For most of the 20th century, workers moved to areas where new industries and opportunities were emerging...

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Procrastination on September 7, 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: Anne Laurie: Wednesday Morning Open Thread: Angry Incompetents: "@Rschooley: 'Don't think of it as being ruled by angry, cruel, racist people. Think of it as being ruled by incompetent, angry, cruel, racist people.'...

@Bakari_Sellers: "There is a direct correlation between Charlottesville, Arpaio, ending DACA and 'Trumps Base'. It cannot be [over]stated.

Franco Ordoñez and Anita Kumar: How Jeff Sessions got Trump to stop protecting Dreamers "It was last Thursday, and Sessions... tried to get into the Oval Office...

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Hoisted from 2013: Yet MOAR Bad-Faith Intellectual History: Keynes's "In the Long Run We Are All Dead" Is Not a "Carpe Diem" Argument...

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Hoisted from 2013: Apropos of David Glasner and John Maynard Keynes's:

Now "in the long run" this is probably true.... But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again...

2013: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging "Niall Ferguson:

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Supply-Side Amnesia: Live at Project Syndicate

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Project Syndicate: Supply-Side Amnesia: While in the White House, Feldstein waged a persuasive but lonely bureaucratic campaign against the Reagan administration’s 1981 income-tax cuts, arguing that they had been too big, and would prove economically painful if not corrected.... If Feldstein’s warning had been heeded in 1982-84, America would be stronger and happier today. I was thus dismayed at his recent expression of optimism that under today’s Republican-led Congress, “a tax reform serving to increase capital formation and growth will be enacted,” while arguing that “any resulting increase in the budget deficit will be only temporary”... Read MOAR at Project Syndicate