Grasping Reality on TypePad, by Brad DeLong

Addams Family Values:

Should-Read: I'm really not surprised that the only economist out of 42 willing to believe this is from Robber-Baron Crony-Capitalism Stanford University. But I am embarrassed for my profession that there is even one: Justin Wolfers: @justinwolfers on Twitter: "The University of Chicago surveyed 42 leading economists and found exactly one who believes the Republican claim that their tax bill will grow the economy. http://www.igmchicago.org/surveys/tax-reform-2"

Should-Read: Dave Drake: Statues of the Boys in Grey: "In Durham last month, a peaceful mob pulled down a Confederate monument on the grounds of the old courthouse. It wasn’t a statue of Lee or Jackson; it was dedicated To the Boys in Gray...

Should-Read: Stan Collender: GOP Tax Bill Is The End Of All Economic Sanity In Washington: "The GOP tax bill will increase the federal deficit by 2 trillion dollars or more over the next decade (the official estimates of 1.5 trillion hide the real amount with a witches' brew of gimmicks and outright lies)...

Should-Read: It is now almost forty years since Tennessee Senator Howard Baker characterized Republican fiscal policy as a "riverboat gamble"—where if you lose, you don't pay up but instead abandon ship, jump overboard, and swim to shore. It is more than 35 years ago since Reagan OMB Director David Stockman said, of the Republican members of congress's understanding of fiscal policy: "nobody understands these numbers". I say it reminds me of fratboys who haven't done the reading winging it in a budget simulation course. And I do find myself resenting former Bush CEA Chairs Eddie Lazear's and Glenn Hubbard's endorsements of this "unworkable mess", in the words of their colleague Greg Mankiw. They owe the country better: Paul Krugman: Tax Cuts, Growth, and Leprechauns: "The Tax Policy Center released its macroeconomic analysis of the House tax cut bill...

Must-Read: I remember when Martin Wolf was the very smart, very reality based, but very sincere and committed Tory. (He would probably say that he still is such.) Yet now his shrillness is up to 11 on the 10-point Krugman scale... And the owl was once the baker's daughter: Martin Wolf: A Republican tax plan built for plutocrats: "How does a political party dedicated to the material interests of the top 0.1 per cent of the income distribution win and hold power in a universal suffrage democracy?...

...or, especially, after-tax real median growth. Or even 2%-ile income growth. Let alone well-being after cuts in public services.

You just can't. It doesn't add up at any level. As a matter of arithmetic...

Just too much of existing capital income flows to foreigners. Too much of extra production generated by a capital inflow would be credited to foreigners. And domestic savings supply is relatively inelastic. Even if you put both hands on the scale and lean hard, it just doesn't work, even without noting how much of payments to capital are monopoly rents and payments to other forms of capital that are not interest sensitive...

And Paul Krugman has been on fire this fall:

(Plus the salmon (on my machine) rectangle, minus the... what color is that? (on my machine) brownish-gold rectangle—that's the long-run change in U.S. national income from a budget neutral tax "reform" like that Trumpublicans are proposing. The effects of a deficit-increasing one are... less favorable.)

Must-Read: Martin Sandbu: Who should govern the euro?: "I have long argued against further centralisation of fiscal and structural policies, and proposed that some autonomy should instead be returned to the national level...

How did we get here?

First, where are we?

Matthew Yglesias: If the GOP tax plan is so good, why do they lie so much about it?: "Democratic programs may or may not be... good idea[s], [but] the bills they write that they say will expand the provision of social services in the United States really do expand the provision of social services...

...Not so... with the Republican plan....

Must-Read: Matthew Yglesias: If the GOP tax plan is so good, why do they lie so much about it?: "Democratic programs may or may not be... good idea[s], [but] the bills they write that they say will expand the provision of social services in the United States really do expand the provision of social services...

Comment of the Day: Joe B: Six Faces of Right-Wing Chain-Forging Economist James Buchanan...: "It seems to me that you need to provide some concrete examples of being "struck by the contrast". Where in the text, exactly, do Farrell and Teles bend over backward to be fair to Buchanan and unfair to MacLean?..."

Fair question...

Let's look at: Henry Farrell and Steven Teles: When Politics Drives Scholarship...

Should-Read: Peter Lindert: The rise and future of progressive redistribution: "There has been a blossoming of research into fiscal incidence by income class...

Should-Read: Jo Mitchell: Dilettantes Shouldn’t Get Excited: "The Freshwater version of the model concluded that all government policy has no effect and that any changes are driven by an unexplained residual...

Attracting him a very great move by http://equitablegrowth.org, I must say...

Greg Leiserson has been killing it on tax policy this late summer and fall, most notably with The Tax Foundation’s score of the Tax Cuts and Jobs Act. But there is lots more good stuff as well:

Must-Read: I think Greg is right here: on their own terms the Tax Foundation's calculations look to be twice as big as they ought to be—and, as you know, everybody else involved has very large doubts about whether one should take the Tax Foundation's calculations as proper professional estimates: Greg Leiserson: The Tax Foundation’s score of the Tax Cuts and Jobs Act: "First, the Tax Foundation appears to incorrectly model the interaction between federal and state corporate income taxes...

Must-Read: Brink Lindsey: Further thoughts on libertarian anti-democracy: "Further thoughts by Will on libertarian anti-democracy’s effect on the GOP...

Information from the very sharp Eric Toder: The House Ways and Means Tax Bill Would Raise the National Debt to 123 percent of GDP by 2037: "The Tax Policy Center estimates that the House Ways and Means Committee’s version of the Tax Cut and Jobs Act (TCJA)...

...over the first decade... increases the deficit by 1.7 trillion dollars.... Between 2028 and 2037, the TCJA would reduce net receipts by 1.6 trillion dollars and add 920 billion dollars in additional interest costs. Over the entire 20-year period, the combination of reduced revenues and higher interest payments would raise the federal debt held by the public by 4.2 trillion dollars...

Neuroskeptic (2010): The 9 Circles of Scientific Hell: "Dante’s Inferno: a classic of world literature, the definitive statement of the mediaeval Christian world-view, the first major work in the Italian language, and the basis for a violent videogame...

...The poem offers a tour through the nine increasingly horrible levels of Hell, in which sinners are tormented forever.

But Dante lived before the era of modern science. I thought I’d update his scheme to explain what happens to those guilty of various scientific sins, ranging from the commonplace to the shocking.

Bear in mind that Dante’s Hell had a place for everyone, and it was only Christ’s intervention that saved anyone from it; even “good” people went to Hell because everyone sins. But they are still sins. Likewise, very few scientists (and I’m certainly not one of them) would be able to avoid being condemned to some level of this Inferno… but, that’s no excuse.

Comment of the Day: Howard: : "There are a handful of conservatives...

Should-Read: Jason Fruman: On Twitter: "Hahahahahahahahahahahahahahahahahaha...": "It is hard to know where to start on Treasury's comments on their analysis of dynamic scoring...

Must-Read: Paul Krugman: Leprechaun Economics, With Numbers: "8% is a reasonable number for after-tax required return...

Should-Read: Paul Krugman: Everybody Hates the Trump Tax Plan: "Gary Cohn, Donald Trump’s chief economic adviser, met with a group of top executives... asked to raise their hands if lower taxes would lead them to raise capital expenditures...

Should-Read: Paul Krugman: Days of Greed and Desperation: "The House tax bill is wildly regressive; the Senate bill actually raises taxes on most families, while including a special tax break for private planes...

Must-Read: As one would expect, Paul Krugman is right here: If the Tax Foundation's model is a good projection of the effects of the Trumpublican tax cut for the rich, it would indeed reduce manufacturing employment by around 2.5 million". Now it is highly unlikely that it would do that—a tenth of that number would be more on the mark. IMHO, take the Tax Foundation's claims about the bill and divide the benefits by 10—and recognize that the Tax Foundation does not assess the costs of the bill at all: Paul Krugman: Tax Cuts and The Trade Deficit: "TF provides very little detail on their model, which is itself a flashing red light: transparency is essential...

For the Weekend: Stephen Vincent Benet: The Devil and Daniel Webster XII http://gutenberg.net.au/ebooks06/0602901h.html: "Walter Butler rose in his place and his face had a dark, gay pride on it...

..."The jury has considered its verdict," he said, and looked the stranger full in the eye. "We find for the defendant, Jabez Stone."

Comment of the Day: I have evoked some rants from Robert Waldmann...: Robert Waldmann: Monday Smackdown: Oh Dear!: "It isn't exactly Robert Waldmann's critique...

...In 1982 someone told me that he thought macroeconomics had taken a wrong turn and commenced a sterile research program which would last decades and be fruitless. That's a lot more impressive than saying such a thing now.

Who was that guy? Oh yeah, his name was Brad DeLong.

Should-Read: Martin Wolf: A bruising Brexit could shipwreck the British economy: "The UK economy remains the most regionally divided in Europe...

Should-Read: Matthew Yglesias: Watch CEOs admit they won’t actually invest more if tax reform passes: "A telling and important moment...

Comment of the Day: Six Faces of Right-Wing Chain-Forging Economist James Buchanan...: It's by, well, me:

What seems to me a very strange comment on Twitter from Henry Farrell https://twitter.com/henryfarrell/status/931227926779047937, who appears to deny that he (and Steve Teles) bend over backwards to be "fair" to Buchanan, while providing no such charity to McLean:

Must-Read: @dashching seems like an unhappy camper today—unhappy with the Tax Foundation setting forth a model that (a) they know is inaccurate even on their own methodologies, and (b) based on a methodology—that the medium-run drag on growth from a larger deficit does not exist—that I do not believe can be defended in a professional manner: Chye-Ching Huang: @dashching on Twitter: "A Tax Foundation dynamic score that no-one should pay any attention to an indication of what this bill would do for growth...

Should-Read: Douglas L. Campbell: Ancestry and Development: the Power Pose of Economics?: "George Mason... asked me to present my work joint with Ju Hyun Pyun, taking down the "genetic distance to the US predicts development"...

Should-Read: The point, though, of being a party of cultural grievance-mongers catering to symbolic and social recognition ethno-sectarian demands is that one can also, on the side as it were, enrich plutocrats. As Lyndon Johnson said in Bill Moyers's hearing: "If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you..." This has been going on since the 1890s... hell, the 1870s... hell, the 1810s. It used to be the business model of the Royalist wing of the Southern Democratic Party. Now it is the business model of the Republican Party. The interesting thing is that they do not seem able to execute it very well: Matthew Yglesias: Republicans should admit to themselves they mostly don’t want big change: "It’s a cranky old person party, not a policy visionary party...

Comment of the Day: Erik Lund: The Robert Heinlein Wars, Part MDCCLXIV: Hoisted from 2006: "It's pointless to read Heinlein through a political lens. He was a narcissist; it's all about him...

Should-Read: Nick Bunker: The forces behind the highly unequal U.S. wealth distribution: "Two papers... give us some guidance on the forces that have led to such an unequal wealth distribution in the United States...

Comment of the Day: "Praise then darkness and creation unfinished"; "praise the fire and the impulse of making"; isn't there another large, very densely-written book by now?

Graydon: : ""Good" is a value judgement, subject to context and hindsight, and it's subject to hindsight forever...

Must-Read: Noah Smith gets this 100% right, IMHO

Noah Smith: On Twitter @noahpinion: "Nasty tweets are like nasty blog comments...

Six Faces of Right-Wing Chain-Forging Economist James Buchanan...

Steven Teles inquired why I liked Will Wilkinson's essay How Libertarian Democracy Skepticism Infected the American Right much more than I liked Henry Farrell and Steven Teles's essays When Politics Drives Scholarship and Even the intellectual left is drawn to conspiracy theories about the right. Resist them as takes on Nancy McLean's Democracy in Chains http://amzn.to/2zKJygv...

Should-Read: Krystal Ball and Ro Khanna: Lessons for Democrats after Virginia election and how tech can help: "Given modern communications technology, there’s no reason why good jobs in the new economy should be sequestered in a few hubs...

Should-Read: Noah Smith: The "cackling cartoon villain" defense of DSGE: "The new defense of DSGE by Christiano, Eichenbaum, and Trabandt is pretty cringe-inducing...

Live from the U.S. Mint: I would pay to watch whatever movie these pictures are publicity stills for!:

Note to Self: Malthusian Growth Epoch Differential Equations—Analytic:

Principal Reference: Mark Koyama: Could Rome Have Had an Industrial Revolution?

Quantifying "Two Heads Are Better than One"

Note to Self: Spent the Berkeley Econ faculty lunch talking to Yuriy Gorodnichenko, Pierre-Olivier Gourinchas, St. Matthew the Greater, Dmitriy Sergeyev, and a couple of others about a very wide range of topics, ending with r-star (which Yuriy has to discuss Saturday at the Clausen Center Conference). I left the conversation desperate to figure out how Shiller's stock-market CAPE index which currently suggests substantial stock market valuation even with a low fundamental safe real interest rate r-star is affected by the low earnings of the crisis years 2008-2011...

Yes, it makes a significant difference:

Should-Read: Jasjeet S. Sekhon: Causal Inference in the Age of Big Data: "The rise of massive datasets that provide fine-grained information about human beings and their behavior offers unprecedented opportunities...

Should-Read: Lant Pritchett: The Perils of Partial Attribution: Let’s All Play for Team Development: "There was a growth acceleration in 1993 that created 1.1 trillion in additional GDP...

Should-Read: Equitable Growth: Jobs Day Graphs: October 2017 Report Edition: "After an increase in September, the prime employment rate fell slightly to 78.8 percent in October...

Should-Read: Matteo Maggiori, Brent Neiman, and Jesse Schreger: International Currencies and Capital Allocation: "The external wealth of countries has increased dramatically over the last forty years...

The Robot Uprising Is Near: Berkeley's Blum Center Building wants me to pay with Apple Pay in order for me to enter itself...

Comment of the Day: JEC argues, I think correctly, that Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt: On DSGE Models is significantly less serious and more bad than I had argued. I think he is correct: JEC: Monday Smackdown: Oh Dear!: "To understand the state of academic macroeconomics, it's worth reading the first two sentences of the paper under discussion. They go like this...

Must-Read: The lead makes me think: "Peter Beinart was a real idiot, and he is very very late to the party." For somebody to be such a moron as not to realize that people that Marty Peretz, Leon Wieseltier, Andrew Sullivan, and others were scorning as under qualified affirmative action hires had harder rows to hoe than he did—that almost beggars belief.

Nevertheless, in the words of Viktor Laszlo: "Welcome to the fight!":

Peter Beinart: Reflections of an Affirmative-Action Baby: "In 1991... Stephen Carter wrote... Reflections of an Affirmative Action Baby.... Little did I realize that the book’s title applied to me...

Comment of the Day: Sir Kraab: "A Sikh, an athetist, and a trans woman walk into a bar. They all have a drink together to celebrate their electoral victories."