Grasping Reality on TypePad, by Brad DeLong

Being a long time historical materialist of some flavor or another, I am by orientation hostile to arguments like Mokyr's that it was ideas and culture that ultimately mattered. I find myself very suspicious of arguments that give a unique value to cultures, especially when they are my own. I tend to appeal instead to principles of representativeness—that I should not assume that I or anything of mine is special without very good reason—of non-cherrypicking—do not accentuate the positive while neglecting the negative—and of visibility—that of requiring concrete causal mechanisms, rather than waving one's hands, saying "it was in the air" and "there are lots of other ways it matters besides those that have been mentioned here".

That does not mean that I am right.

Should-Read: Graydon Saunders appears to be writing more books. Given that his first book was a tract on feasible socialism disguised as a grimdark military fantasy novel, his second was a disquisition on the consequence of nanotechnology for materials science disguised as a wizard-school bildungsroman, and his third was a meditation on how very different humans can nevertheless find human connection in all kinds of ways on all kinds of levels disguised as a political-factions fantasy quasi-thriller, I do wonder what the next two will be: Graydon Saunders: Dubious Prospects: "Under One Banner will be off to first-pass copy edit in the first week of 2018...

Should-Read: The Prussian army, the Hohenzollern monarchy, German society, and the European abattoir. Georg Freiherr von Derfflinger at Fehrbellin; Johann David Ludwig Graf Yorck von Wartenburg at Tauroggen; and Friedrich William Adalbert von Bredow at Mars-la-Tours. Kant and von Clausewitz. Those are obvious. "Prussia is not a state with an army but an army with a state"—and who said that anyway? All those are obvious. But what else will Adam Tooze focus on here?: Adam Tooze: War in Germany 1618-2018: "For much of modern history Germany was Europe’s battlefield...

Should-Read: Adam Smith (1776): Publicly Funded Education: "In the progress of the division of labour, the employment of the far greater part of those who live by labour...

Should-Read: Bernanke and Yellen's failure to push the envelope further to attain an inflation rate higher than 2% has created enormous risks, given our dysfunctional government's right-wing ideologically-driven inability to get its fiscal act together. I note that a little opposition to tax cuts that consumed our fiscal space without credible prospects of boosting growth would have been welcome and constructive from Marty Feldstein. But that ship has sailed. And here he is talking sense: Martin Feldstein: The Heightened Risks of a US Downturn: "The Fed traditionally responds to a downturn by sharply reducing the short-term federal funds rate...

Should-Read: As Alfred says: "Some men just want to watch the world burn". It is not as though any conservative technocratic ideas about how to make health financing fairer and more efficient are being deployed—that is not the object of this political game being played by the Republicans in Washington: Zac Auter: U.S. Uninsured Rate Rises to 12.3% in Third Quarter:

Should-Read: 0.5%/year increase in ocean transport speeds in the late-eighteenth and early-nineteenth centuries. A bunch of this is capital deepening—figure it is better thought of as a measure of the growth rate of the efficiency of labor E than of total factor productivity A: Morgan Kelly and Cormac Ó Gráda: Speed under sail during the early Industrial Revolution: "The consensus among economic (but not maritime) historians that maritime technology was more or less stagnant for 300 years...

Should-Read: Definitely an ongoing debate to follow: Brink Lindsey and Steven M. Teles: The Regulatory Subsidy for Extreme Leverage: A Reply to Mike Konczal: "We do not argue—although Konczal suggests we do—that the problem with financial regulation is a dearth of 'economic liberty'...

Should-Read: A remarkable fact—especially since a number of companies end their listing periods on CRSP when they are acquired. That you are more likely to not to have better performance over the lifetime of a company by simply putting your money in Treasury bills is striking evidence of skewness—and the extraordinary benefits to diversification. It also means that, in a world with lots of undiversified portfolios, successful wealth is unlikely to be significant evidence of portfolio-choosing skill: those who were lucky enough to get in on the ground floor of Xerox or Apple will turn out to have outperformed and to be richer than those who knew what they were doing: Hendrik Bessembinder: Do Stocks Outperform Treasury Bills?: "Most common stocks do not outperform Treasury Bills...

Should-Read: Actually, I do not believe that the work of wizards like Norman Borlaug "encouraged [the] complacency about environmental problems that threaten us today". That is a fake rap, Bill—the complacency has other, much more self-interested and selfish roots than the writings or deeds of those working to raise productivity: William Easterly: Review: Going Beyond the Limits of the Earth With ‘The Wizard and the Prophet’: "Even though the explosion of population and living standards that Vogt feared did occur, the famines he expected never did...

Should-Read: Speech and language make us all into an anthology intelligence. Writing makes us into an (unfortunately only one way) time-traveling intelligence. Geniuses add the other way: Walter Jon Williams: Ursula K. LeGuin: 1929-2018: "I occasionally found myself in the same room with her, but she was always surrounded by a swarm of admirers, and I never felt right about barging through her adherents just to introduce myself...

Must-Read: Marvin Goodfriend could have given any one of three answers to account for his rather strident opposition to Ben Bernanke's monetary policy at the start of the 2010s: (a) that he was right, and that Ben Bernanke was lucky things turned out well and did not go south; (b) that he was wrong, and has rethought his views in such and such a way; or (c) that he was giving his political patrons what they wanted to hear. Any one of the three would have been better than filibustering: Binyamin Appelbaum: Senate Confirms Jerome H. Powell as Fed Chairman: "Brown and other Democrats questioned the qualifications of Marvin Goodfriend... [who] repeatedly predicted after the 2008 financial crisis that the Fed’s actions were about to unleash higher inflation...

Should-Read: Marvin Goodfriend must have been much less impressive in his confirmation hearing than I would have imagined possible. I need to try to figure out why: Paul Krugman: The Durability of Inflation Derp: "What’s striking about the economists who predicted runaway inflation in 2009-2011 is that as far as I can tell none of them has even gotten to step (a), acknowledging their mistake...

Should-Read: Donald Trump really is not doing the job of president. It is not clear who is: Matthew Yglesias:Trump’s CNBC interview from the Davos World Economic Forum: "President Donald Trump’s first non-Fox television interview in a long time, conducted with CNBC’s Joe Kernen from Davos, Switzerland, is in many respects weirdly devoid of substance...

Should-Read: It looks as though Marvin Goodfriend is a very bad choice for Fed governor—that he will behave like one of those Bush-era regional bank presidents who was a stopped clock, impervious to the news and to argument: Matt O'Brien: Why can’t conservatives just admit they were wrong about inflation?: "Marvin Goodfriend, one of President Trump's picks for the Federal Reserve, would have been terrible at the job over the past 10 years...

Berkeley Faculty Club :: 5 PM :: Fri Jan 26, 2018

Slides: https://www.icloud.com/keynote/0HwNuP_CB7pXLH_ZpjXHDbGQQ

Must-Read: Ursula K. LeGuin (1928-2018) against utilitarian moral philosophy: Ursula K. LeGuin (1973): the ones who walk away from omelas: "With a clamor of bells that set the swallows soaring, the Festival of Summer came to the city of Omelas, bright towered by the sea...

Reading Question/Note Files for Bob Allen: Global Economic History: A Very Short Introduction:

Robert Allen: Global Economic History: A Very Short Introduction (0199596654):

Should-Read: A very interesting paper by very sharp people. The problem is that I do to know what it means. The post-2000 period has one huge, huge, huge shock in it: 2008-2009. How is the fact that the post-2000 sample has a Great Recession in it and the pre-2000 does not affect their conclusions? I don't know. And I don't think they know: Ryan A. Decker, John C. Haltiwanger, Ron S. Jarmin, and Javier Miranda: Changing Business Dynamism and Productivity: Shocks vs. Responsiveness: "The pace of job reallocation has declined in all U.S. sectors since 2000...

Hansard: Winston Churchill (January 27, 1942): WAR SITUATION: "We prepared to set upon Rommel and try to make a good job of him...

Should-Read: Josh Marshall: Trump, Wolff and The Secret of the Russia Story: "The onslaught of negative press allowed Wolff to pose as the only reporter who got the true nature of Trump’s greatness...

Hoisted from the Archives: Yes, People at the Ludwig von Mises Institute Think Churchill Was a War Criminal for Not Making Peace with Hitler in May 1940. Why Do You Ask?: David Gordon:

Ludwig von Mises Institute: Given this sorry record, it is hardly surprising that the renewed outbreak of world war in September 1939, which returned Churchill to the British cabinet as First Lord of the Admiralty, brought a new hunger blockade of Germany.... Franklin Roosevelt rivaled his British counterpart in his disregard for the rules of civilized warfare....

Hoisted from the Archives: Dictatorships and Double Standards: Jeet Heer Has a Ludwig Von Mises Quote...: An example of classical liberalism's elective affinity with authoritarian politics? Ludwig:

It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error...

So now I have to add Ludwig Von Mises, Liberalism to the pile...

Should-Read: Tom Nichols: Trump’s first year: A damage assessment: "PJ Media’s Roger Simon has declared that Never Trumpers (like me) should apologize for their apostasy...

Should-Read: The public intellectuals' public intellectual lays down his list of five underappreciated public intellectuals: Dan Drezner: @dandrezner on Twitter: "@Noahpinion: 'Open question for Twitter folks: Who would you list as the 5 most important intellectuals in America today?...

Should-Read: In praise of the truly excellent Tim Jost: Ann Marie Marciarille: Say It Isn't So, Tim: "Sarah Kliff once noted that Tim Jost was 'scary fast/good' with his health law and policy analysis. I could not agree more...

Should-Read: Why hasn't globalization reduced inequality in emerging markets over the past generation? Jeffrey Frankel wants to say that it is because the HO-SS theory is misleading and unhelpful for inequality issues. I think that is not right. HO-SS says economic integration will reduce inequality if it raises the relative demand for factors of production controlled by the poor. But the most important shift in relative factor abundance has been the ability to plug yourself into the world economy: that is controlled by the rich in emerging markets, and that has become much much scarcer relative to demand: Jeffrey Frankel: Does Trade Fuel Inequality?: "Trade has been among the most powerful drivers of... the convergence between the developed and developing worlds...

Should-Read: Ronald Reagan was not up to the job. And he had lots of bad policy ideas and bad policy advisors. But Ronald Reagan was an American: Ronald Reagan: Remarks to Members of the National Association of Minority Contractors: "We're trying to provide the broadest possible range of opportunities to all Americans without regard to race, creed, color, or sex. And sometimes it makes your day when you hear from people that understand this and agree..."

Live from the Cryptocurrency Bulls' Self-Made Gehenna: Who is holding 1.6B dollars of TetherCoin—and an additional 100M dollars each day of the past week—and why?:

Amici Curiae in Janus v. AFSCME: No. 16-1466 :: In the Supreme Court of the United States :: MARK JANUS, Petitioner, v. AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES, COUNCIL 31, ET AL., Respondents. On Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit:

Henry J. Aaron, Katharine G. Abraham, Daron Acemoglu, David Autor, Ian Ayres, Alan S. Blinder, David Card, Kenneth G. Dau-Schmidt, Angus Stewart Deaton, Bradford DeLong, John J. Donohue III, Ronald G. Ehrenberg, Henry S. Farber, Robert H. Frank, Richard B. Freeman, Claudia Goldin, Robert J. Gordon, Oliver Hart, David A. Hoffman, Lawrence F. Katz, Thomas A. Kochan, Alan Krueger, David Lewin, Ray Marshall, Alexandre Mas, Eric S. Maskin, Alison D. Morantz, J.J. Prescott, Jesse Rothstein, Cecilia Elena Rouse, Jeffrey D. Sachs, Stewart J. Schwab, J.H. Verkerke, Paula B. Voos, David Weil: BRIEF OF AMICI CURIAE ECONOMISTS AND PROFESSORS OF LAW AND ECONOMICS IN SUPPORT OF RESPONDENTS:

Limits to Confidentiality: As UC employees, all course instructors and tutors are Responsible Employees and that we are required to report incidents of sexual violence, sexual harassment or other conduct prohibited by university policy to the Title IX officer. We cannot keep reports of sexual harassment or sexual violence confidential from the Title IX officer, but the Title IX officer will consider requests for confidentiality. There are confidential resources available to you, including the CARE Advocate Office (http://sa.berkeley.edu/dean/confidential-care-advocate), which serves survivors of sexual violence and sexual harassment. Here at U.C. Berkeley the Title IX officer currently is: Denise Oldham 510-643-7985 dwoldham@berkeley.edu

Should-Read: Robynn Cox, Seva Rodnyansky, Benjamin Henwood, and Suzanne Wenzel: Measuring population estimates of housing insecurity in the United States: A comprehensive approach: "A seven dimension definition of housing security set forth by Cox et al. (2017)...

Should-Read: Elizabeth U. Cascio: Does Universal Preschool Hit the Target?: Program Access and Preschool Impacts: "This paper takes advantage of age-eligibility rules to construct an instrument for prekindergarten (pre-K) attendance...

Should-Read: I think Skidelsky gets it closer to right here than Krugman did in the piece Skidelsky is critiquing: Robert Skidelsky: How Economics Survived the Economic Crisis: "Unlike the Great Depression of the 1930s, which produced Keynesian economics, and the stagflation of the 1970s, which gave rise to Milton Friedman's monetarism...

Should-Read: What an enormous, unbelievable mess. The IRS ought to draw this tightly—goods producers, licensed architects, and degreed engineers qualify; everybody in the service sector is selling their "reputation or skill" and hence does not qualify. But I do not think that they will: Ruth Simon: The Tax Break That Doctors and Plumbers Both Will Miss: "Architecture and engineering groups...

Should-Read: I have to think about this. Yes, distributions have lower tails. but it still seems to me that the absence of clearly visible life out there is powerful evidence that there is a "Great Filter": that one of the parameters (or more than one of the parameters) in the Drake Equation is near zero. Sandberg et al. seem to me to be arguing not so much that the absence of visible life out there is likely even if none of the parameters are near zero, but that our uncertainty is so great that it is not surprising that the universe we live in has one or more parameters near zero even though the average value of each parameter across all universes we might live in is larger: Anders Sandberg, Eric Drexler and Toby Ord: Dissolving the Fermi Paradox: "The Fermi question is not a paradox...

Must-Read: In Charlie Stross's view, the discourse and worries about Artificial Intelligence "Singularity" are of primary interest to sociologists, psychologists, and theologists; and not to economists or technologists. Stross says that economists and technologists should, instead, think of AI as purposeful cognitively informed nonhuman behavior toward goals—and view the development of, growth of, and consequences of those slow AI entities called "business corporations" as our template for thinking about the coming of nonhuman near-Turing class cognition to our world: Charlie Stross: Dude, you broke the future!: "If it walks like a duck and quacks like a duck, it's probably a duck. And if it looks like a religion it's probably a religion...

Should-Read: The very sharp Peter Hall engages in what I think is some fuzzy thinking here, caused by his paying too much attention to economists' tautological claim that people maximize their utility, or, as Peter puts it, "pursue their interests". People's actions are determined by their interests when they pursue the material well-being and freedom of themselves, their families, and those of particular concern by acting on well-founded beliefs about how the world works. When people act on beliefs that are not well-founded; or pursue goals that are not the material well-being and freedom of themselves, their families, and those of particular concern; are pursue the material well-being of people who do not have particular concern for them—well, then, they are acting against their interest, and according to ideas. To say that ideas shape interest is, in my view, unhelpful. Ideas create true or false consciousness, and then afterwards people act out of concern for their interest or because they are driven by ideas: Peter Hall: Ideas and Interests: "Interests are always interpreted (by ideas), i.e. they do not arise unambiguously from the material world...

Must-Read: But who is this "we", Kemosabe? Paul Krugman believes that "saltwater" economists have little to learn, theoretically, from the financial crisis. I think that is wrong. I think what "saltwater" economists have to learn is that it was a huge mistake to engage with rather than ignore—"freshwater" economists. People interested in understanding the world and guiding policy should always have been focused on the world outside, rather than on RE and DSGE and RBC and other pointless alphabet soup: Paul Krugman: Good enough for government work? Macroeconomics since the crisis: "hen the financial crisis came policy-makers relied on some version of the Hicksian sticky-price IS-LM as their default model; these models were ‘good enough for government work’...

Should-Read: As near as I can see it, the clever Simon Wren-Lewis thinks that what Brexit will mean in practice is that Britain loses its votes in Brussels and Strasbourg, but otherwise things go on as they have been: few in England really want a hard Irish border; or the departure of large chunks of London finance for Frankfort, Paris, and Dublin; or restrictions on Britain's abilities to visit and move to continental Europe. That's called "staying in the EU—but without any control over what the EU does because you have Brexited". And Simon is right to say that this is stupid and idiotic and unsustainable, and would it short order be rationally followed by Brexreentrance. But I think he has it wrong: he presumes that the Tory and Labour politicians in Westminster in the medium-term future will not be cynical posturing morons. And he has no warrant for believing that: Simon Wren-Lewis: Does Brexit end not with a bang but a whimper?: "Most media commentary on Brexit makes a huge mistake... focuses on what the UK government may wish to do or should do...

Comment of the Day: Ethan: Live from Global Warming Gehenna: "We used to call it 'Global Warming'. Later we called it 'Climate Change'. I have long preferred to call it 'Excess Solar Energy Trapped in the Bio-sphere'. That seems to me to explain it better. More energy = more movement. Storms, wind, melting ice, tides, whatever—the energy is going to go somewhere..."

Live from... Europe's Twentieth Century Gehenna: Reading Dennis Showalter (2005): Patton and Rommel: Men of War in the Twentieth Century http://amzn.to/2D7QNOq https://www.amazon.com/dp/0425206637/. And I find myself wondering: Why didn't Hermann Hoth request Rommel for his team in Russia for Operation Barbarossa?

• 2018 on bCourses: https://bcourses.berkeley.edu/courses/1469149
• Brad DeLong's Office Hours: Th 10-12 Blum Hall 200G, and by appointment: send email to: delong@econ.berkeley.edu

Course Meeting: Tuesday @ 4 PM in Evans Hall 639

Topics (Preliminary):

Live from Global Warming Gehenna: An interesting—and unusual—weather pattern. With more energy the climate can occupy more states, and transfer of cold air straight down the prairie from the arctic to the gulf coast is definitely a state of the system:

Live from the Orange-Haired Baboon Cage: David Brooks picked a bad moment to go all anti-anti-Trump contrarian. But there will never be a good one, will there? Why is tenure for New York Times columnists thought to be a good idea? Why does the Washington Post have the op-ed columnists it does? And am I wrong, or wasn't Brooks's "affable, if repetitive" the party line for the late second term Alzheimers-afflicted Reagan?: Steve M.: No More Mister Nice Blog: MARC THIESSEN'S DEFENSE OF TRUMP IS EVEN MORE EMBARRASSING THAN THE ONE BY DAVID BROOKS: "Jonathan Chait... "David Brooks Picked a Bad Week to Say Trump ‘Runs a Normal, Good Meeting'...

Must-Reads:

• Michael J. Boskin: Another Look at Tax Reform and Economic Growth: "Barro and I have clearly come to a different conclusion than Summers and Furman have about the bill...
• Ezra Klein: Michael Wolff’s “Fire and Fury” is a damning portrait of an unfit president: "It would be easy enough for Trump to run a presidency that left him better-liked...
• Paul Krugman Notes on Farrell and Quiggin: "I’m not sure how many readers will realize the extent to which anti-Keynesian economic arguments, as opposed to those that Keynesians made, were invented on the fly...
• Matthew Yglesias: Trump’s North Korea tweet was based on a cable news segment: "Matt Gertz... undertaking the valuable investigative work of figuring out which Fox News segment had set Trump off...
• Jonathan Kirshner (January 15, 2017): America, America: "Consider what it took in Germany to bring about a Hitler...
• Paul Krugman: The Gambler’s Ruin of Small Cities: "Once... towns and small cities... served as central places serving a mainly rural population engaged in agriculture and other natural resource-based activities...

Must-Read: A strange piece form Michael Boskin. The JCT's dynamic score assesses the Republican tax "reform" bill as boosting real GDP by 0.2% over the long run. The Tax Foundation—which by excluding any deficit drag greatly highballs the growth effects of tax cuts—sees it as boosting real GDP by 1.3% over the long run. Robert Barro and Michael Boskin, devoting less than 1/20 as much analytical time to the question and with little familiarity with the details and phase-out provisions, say 7%. And they are sticking to it. We are, they say, "not about to cede... professional judgment to others, in or out of government..." That's all they write. I am, I must confess, somewhat flummoxed. I think the real Boskin position comes in the next sentence I quote: "current reform may well have deviated further from the ideal had we not offered our analysis and advice", with the nudge-nudge-wink-wink claim that their analysis and advice was only taken because they were willing to say whatever their political masters wanted and endorse the final product. I see it very differently. I see their willingness to say whatever their political masters required at the end as not gaining them a seat but losing them their seat at the policy table. In being willing to make the demanded claims and provide the demanded endorsement, they throw away their ability to influence policy: since they will endorse whatever the sausage-making process produces, others elbow them out of the way and feed the sausage machine. So, then, they should be asking themselves: What's the point of our being here?: Michael J. Boskin: Another Look at Tax Reform and Economic Growth: "Barro and I have clearly come to a different conclusion than Summers and Furman have about the bill...

Should-Read: Note that a good many economists who have, or at least had, substantial academic reputations are on board claiming that the revenue costs of last month's tax "reform" bill are likely to be trivial—much smaller than the "static" calculation: Barro, Boskin, Holtz-Eakin, Lindsey, Calomiris, Hubbard, and others. In being willing to make such claims, they throw away their ability to influence policy: since they will endorse whatever the sausage-making process produces, others elbow them out of the way and feed the sausage machine. So, then, they should be asking themselves: What's the point of my being here?: Jeffrey Frankel: Reagan’s Tax Reforms Revisited: "today’s Republicans do not admit that their plan isn’t revenue-neutral...

...Like their counterparts in 1981, not to mention during the Bush era, they claim that the cuts will stimulate the economy so much that overall tax receipts will stay the same or even rise.... Reagan and Bush... implemented their cuts... and, as economists had warned, budget deficits increased sharply. The tax cuts that the Trump Republicans are attempting to pass today would be even more damaging. There is good reason to fear much more serious long-term consequences of the rise in the budget deficit, owing to two key issues of timing.... With a 4.1% unemployment rate, the US economy does not need more stimulus.... Moreover, the baby boom generation is now retiring...

Should-Read: Long-time San Diego-Orange-Riverside County Congressman Darrell Issa reads the tea leaves and decides it is time to become a lobbyist. Interesting that the accomplishments he wants to be known for... have very little to do with the core of the agenda that he voted for in his eighteen years in Congress. That so much what he spent his time on goes unmentioned—as something not to be highlighted—is perhaps the best short precis of the 1995-2007 and 2011-present congressional majority I can think of: Darrell Issa: A Statement: "The first successful recall of a sitting Governor in California history...