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October 2017

Should-Read: This from the very sharp Dani Rodrik seems to me to be largely wrong. The 1990s did not see dislocated workers fall into poverty: the 1990s saw, for the most part, workers pulled into higher-paying jobs and occupations by the then high-pressure economy. It was the Reagan deficits of the 1980s that started the midwest on its decline—but the idea was to blame the Japanese rather than St. Ronnie and his feckless policymakers. The China shock of the 2000s was a big deal. But the crash of 2007-2009 and the slow recovery since an even bigger one. And the long, slow decline of manufacturing and other traditionally male blue-collar jobs—a decline overwhelmingly independent of globalization—that was the biggest deal of all. I write about this. But here is Dani:

Dani Rodrik: The Trouble With Globalization: "The United States, too, could have moved aggressively to compensate dislocated workers in the 1990s, when it opened its economy to imports from Mexico, China...

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Hoisted from the Archives: "95"

Out of love for the truth and from desire to elucidate it, the Reverend Father Martin Luther, Master of Arts and Sacred Theology, and ordinary lecturer therein at Wittenberg, intends to defend the following statements and to dispute on them in that place. Therefore he asks that those who cannot be present and dispute with him orally shall do so in their absence by letter. In the name of our Lord Jesus Christ, Amen:

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When Globalization is Public Enemy Number One: At the Milken Review

At the Milken Review: When Globalization is Public Enemy Number One: The first 30 years after World War II saw the recovery and reintegration of the world economy (the “Thirty Glorious Years,” in the words of French economist Jean Fourastié). Yet after a troubled decade—one in which oil shocks, inflation, near-depression and asset bubbles temporarily left us demoralized—the subsequent 33 years (1984-2007) of perky growth and stable prices were even more impressive... Read MOAR at Milken Review

Should-Read: The extremely sharp David Glasner is very sick and tired of John Taylor's incoherences and evasions. In my experience, Glasner's net view of Taylor is about average of the private views of monetary economists worth respecting and listening to:

David Glasner: Larry Summers v. John Taylor: No Contest: "'If a Fed Funds rate higher than the rate set for the past three years would have led, as the Taylor rule implies, to lower inflation...

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Must-Read: Practically everything that the Democrats have been saying about the insanity of the Republicans (and that much of the media has been ignoring), said here by Republican ex-Speaker John Boehner:

Tim Alberta: John Boehner Unchained: "After railing against the defund strategy, however, Boehner surveyed his conference and realized...

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Procrastination/Links and Such for October 30, 2017


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Small American Magazines in the Public Sphere, the Personal, and the Political: A Note

It was pretty clear to me back in the late 1980s that, if you went to work for Marty Peretz at Old The New Republic, you either got yourself fired in relatively short order, or you demonstrated that you had a badly defective moral compass.

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Live from the MCP Bunker: Still looking for some kind of acknowledgement from any of Hendrik Hertzberg, Michael Kinsley, Andrew Sullivan—or, indeed, Marty Peretz—just how big of an asshole Leon Wieseltier they let rampage around their magazine, delighting in making women feel like pieces of meat...

Silence seems to be an acknowledgement that is is one of those: "my behavior was worse than you imagine, even though you know it was worse than you imagine..." moments...

Must-Read: I wish that the extremely sharp Alan Auerbach would turn his concern knob up a bit more—in fact, I wish he would turn it up to 11. He says: "change in the guise of [tax] reform has the capacity to make things worse, and the secretive, often chaotic nature of the current process provides ample opportunity to do so..." I wish he would say: "the secretive and constantly chaotic nature of the current tax reform process makes it inevitable that it will end up making things worse..." Nobody should have any illusions that Republican congressional leaders know what they are doing here—any more than they knew what they were doing with their health care fiasco:

Alan Auerbach: Five Questions for Congress on Tax Reform: "Congressional leaders say they’re working on a corporate tax reform...

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Weekend Reading: Context for Matthew Klein Talking to Stephen Kotkin about Stalin

Matthew Klein: Some context for our chat with Stephen Kotkin about Stalin: "We recently had the chance to chat with Princeton historian Stephen Kotkin about the second volume of his biography of Joseph Stalin: Waiting for Hitler...

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

Daniel Webster

For the Weekend: Stephen Vincent Benet: The Devil and Daniel Webster IX "And with that the fire burned blue and the door blew open and twelve men entered, one by one...

...If Jabez Stone had been sick with terror before, he was blind with terror now. For there was Walter Butler, the loyalist, who spread fire and horror through the Mohawk Valley in the times of the Revolution; and there was Simon Girty, the renegade, who saw white men burned at the stake and whooped with the Indians to see them burn. His eyes were green, like a catamount's, and the stains on his hunting shirt did not come from the blood of the deer. King Philip was there, wild and proud as he had been in life, with the great gash in his head that gave him his death wound, and cruel Governor Dale, who broke men on the wheel.

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Should-Read: Kim Clausing gets one wrong. Greg Mankiw—I leave Casey Mulligan to one side, for I will not call him an "economist"—does not say that "it is possible for a 1 dollar reduction in corporate taxes to result in a more than 1 dollar increase in wages". He says, instead: in a model in which the U.S. is a small open economy, in which all corporate profits are a return to capital investment (rather than some of them being rents, returns to bearing risk, or market power), in which the revenue lost is made up by other taxes that do not cause economic distortions, then at least the "static" assessment is that a one dollar reduction in corporate taxes generates a 1/(1-t) dollar increase in wages.

Now since the U.S. is not a small open economy, since a substantial share of corporate profits are not returns to corporate investment, since steps to rebalance the public fisc will induce other economic distortions, and since misinterprets what a "static" assessment is (or—more likely, I think—made an algebraic error), he in fact does not say that it is conceptually possible that "cutting [U.S.] corporate taxes [would] raise workers' incomes". Nevertheless, he leaves himself open to Clausing's thumbnail as a summary:

Kim Clausing: Would Cutting [U.S.] Corporate Taxes Raise Workers' Incomes?: "Overall, it is difficult to document a relationship between lower corporate taxes and higher wages...

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Another Question I Didn't Have Time to Ask Ask Alice Rivlin: Possibilities for Technocracy

Alice Rivlin

You said that technocracy was still possible because there was still substantial agreement on models—and as an example you pointed out that there used to be strong disagreements about monetary policy and whether policy should be made by a "rule", and now there isn't much of anybody who thinks so.

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(Early) Monday Smackdown: Male Ex-Old New Republic Editors Are Simply Not Credible Here...


I agree with Matthew Yglesias here: This from Franklin Foer simply does not pass the most-basic "plausibility" test. "I was totally oblivious to what was going on in the office I ran" = "I took and kept a job at which I was totally incompetent". I don't think anybody has ever called Franklin Foer incompetent. And what we are hearing is not about the various editors-in-chief's ignorance. What we are hearing is about the various editors-in-chief's complicity.


Matthew Yglesias: @mattyglesias on Twitter: "I’m a little confused as to what story we’re being told about male OTNR editors’ knowledge of the situation...

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Live from CBO: There is one very important thing to recognize about the year of Repeal and Replace is that the CBO's power and influence was at a maximum even though its bureaucratic influence was zero. The bureaucratic influence of CBO comes from the fact that the midpoint of its ranges determine whether pieces of legislation do not or do fit within the parameters of the Reconciliation process and the Budget Enforcement Act, and thus are or are not subject to a 60-vote point-of-order in the Senate. But those questions have never been at issue this year. And yet the CBO has wielded enormous influence, just by saying what it thinks the effects of proposed pieces of legislation are.

That is an amazing accomplishment.

A Question I Will Not Have Time to Ask Alice Rivlin This Afternoon...


Alice Rivlin is speaking this afternoon at Berkeley's GSPP in honor of John Ellwood's retirement on EVIDENCE AND POLICY ANALYSIS IN THE AGE OF FAKE NEWS. A question I will not have time to ask:

Alice, I listen to you, and I think of Irving Kristol, who explained his “rather cavalier attitude” to technocratic questions of what economic policies would actually do thus:

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Live from the Gehenna That Was The Old New Republic: Shame on Franklin Foer and Andrew Sullivan for refusing to comment. Kudos to Charles Lane for talking on the record—but "no complaints from female staffers ever came to him... [because while] the editor was nominally the supervisor of Leon Wieseltier... that was not reality... Leon had total autonomy as literary editor and a very close, almost brother-like relationship with the owner at the time, Marty Peretz..." evades the important fact that no complaints came to him because nobody thought he would be any help. And he should examine his conscience. But he is a mensch here.

And for the rest who talk but not on the record? Kinsley, Hertzberg, Beinart, Just? Feh...

Jason Cherkis: 'I Was Blind And Complicit And Just, Like, Did Nothing': New Republic Staffers Speak Out: "'I accept I was blind and complicit and just, like, did nothing', one former top New Republic editor, who asked to remain anonymous to speak candidly, told HuffPost...

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Basic Econ 1-Level Tax Incidence Primer: Owen Zidar Requests MOAR Tax Incidence Model Blogging


Over on the Twitter machine, the learned and incredibly sharp Owen Zidar writes, about the picky model-based incidence analysis points:

@omzidar: On Twitter: The number of tweets needed to describe this issue suggest more clarification/ a detailed step by step post would be useful...

My view is that in the end all this—Krugman (2017b) and (2017a); DeLong (2017d), (2017c), (2017b), and (2017a); Bernstein (2017); Furman (2017); and Mankiw (2017)—when unpacked, boils down to Econ 1-level tax incidence, and an algebraic mistake in calculating overelaborated and overcomplicated versions thereof.

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Live from Sexual Harassment Central: Could Wieseltier please change his statement? Could he not say the false: "I am ashamed to know that I made any of [the women with whom I worked] feel demeaned and disrespected"? Could he say, instead, the true: "I am ashamed that now the public knows that I gleefully and joyfully made women with whom I worked feel demeaned and disrespected—and violated"?

Hiring assholes is almost always a bad idea, Brookings Institution. Sir Isaiah would not be pleased:

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Q & A: Should We Focus Our Attention on a Revitalized Public Sector and Social Insurance System?: INET Edinburgh

Edinburgh castle Google Search

Is a sufficiently revitalized social insurance state and public infrastructure and other public goods provision system what we really need? That is a very difficult and a very hard question.

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What Is a "Static" Revenue Analysis?

I seem to have a disagreement with Jason Furman here:

@paulkrugman: Brad is right here: Mankiw et al have clearly made a math error

@jasonfurman: Not seeing the math error. Mankiw said static. His soln is right for static (defined as unchanged base)... And dynamic version is higher.

I was taught the definition of "static" by the Jedi Masters at OTA in the early 1990s...

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