Grasping Reality on TypePad, by Brad DeLong

This year, 2018, will be the 11th year after the 2007 business cycle peak that preceded what is generally called the “Great Recession“. This year American national income per capita will be about 7.5% above its 2007 level. If we are lucky we will hit 10% above 2007 in 2020. That is growth of 0.4% per year—compared to the yardstick of 2.0% per year that we were reasonably expecting back in 2007.

Abraham Lincoln (1855): Letter to Joshua Speed: "Dear Speed: You know what a poor correspondent I am...

...Ever since I received your very agreeable letter of the 22nd of May I have been intending to write you in answer to it.

Comment of the Day: Graydon: Kevin Williamson Stays Mute on What the Punishment for Abortion Should Be: "Back in the early-to-mid eighties, the first wave of women who had formally studied the ancient Near East, linguists and anthropologists and archaeologists and sociologists, started to publish...

Some very interesting thoughts from Ken Rogoff. But he does not seem to recognize that Shenzhen is now at least as much a global hub of hardware and manufacturing process innovation in small-scale high-tech devices as anywhere else in the world. World class communities of engineering practice are hard to build. But China looks to be building one. I would dearly love somebody to take a deep close look at Shenzhen and tell me to what extent it is already more than just "the great assembler": Ken Rogoff: Will China Really Supplant US Economic Hegemony?: "Over the next 100 years, who takes over, Chinese workers or the robots?...

If the U.S. wants to avoid a very damaging outcome to all this, the less immoderate Republicans and the Democrats need to be thinking hard about how to take power away from Donald Trump on trade matters—and national security matters—come January 5, 2019: Martin Wolf: Donald Trump declares trade war on China: "The Trump administration has presented China with an ultimatum on trade...

Noah Smith: Remember Karl Marx for the many things he got wrong: "Marx didn’t make it to 200, but the ideas he injected into the global conversation and the ideologies that bear his name far outlasted the German economist and philosopher...

So I woke up this morning bright and early ready to work... and I promptly let myself get distracted and procrastinated for an hour tracing links from Noah Smith's denunciation of Karl Marx:

Noah Smith: Remember Karl Marx for the many things he got wrong: "Marx didn’t make it to 200, but the ideas he injected into the global conversation and the ideologies that bear his name far outlasted the German economist and philosopher...

I, of course, agree with Noah—he does cite me favorably, after all. And then I realized that I had never put my "Understanding Karl Marx" lecture slides up anywhere...

This is what I want when I call for a better class of DeLong Smackdowns! How do we think this looks not just nine years after my optimism in 2009 back at the end of the American century but five years after Matt wrote?:

Hoisted from the Archives: Matthew Yglesias (2013): May Day Marxism: Capitalism is looking pretty shabby: "DeLong reposted a very interesting 2009 talk... "Understanding Karl Marx"... that I would have enthusiastically endorsed in 2009 but which look weaker four years later...

Time to relaunch the Equitable Growth http://equitablegrowth.org website!

That makes this a good time to look back at what Equitable Growth does and has been doing over this past half decade. As I grow older, I become more and more and organizational realist: The Purpose of an organization is what it does, rather than what its mission statement says it is going to do or what it’s funders believe that their money is going to pay for. What the worker bees do determines what the organization does. What the planners and vision architects say does not determine what the organization does.

Thus I look for exemplars: What are the things on the current Equitable Growth website that exemplify what it does, or perhaps what it should do?

Let's ask Mr. Google:

Terminator, if the Terminator were incredibly shy, were addicted to watching soap operas, and were genuinely driven to protect and serve. Martha Wells is making very interesting comments on artificial intelligence, human connection, and narrative and cognition here: Martha Wells All Systems Red: "I COULD HAVE BECOME a mass murderer after I hacked my governor module, but then I realized I could access the combined feed of entertainment channels carried on the company satellites...

...It had been well over 35,000 hours or so since then, with still not much murdering, but probably, I don’t know, a little under 35,000 hours of movies, serials, books, plays, and music consumed. As a heartless killing machine, I was a terrible failure. I was also still doing my job, on a new contract, and hoping Dr. Volescu and Dr. Bharadwaj finished their survey soon so we could get back to the habitat and I could watch episode 397 of Rise and Fall of Sanctuary Moon...

What I describe as the Rubin questions, because these are questions that I first heard when Bob Rubin would ask them when he led the NEC for Clinton in the 1990s: What might we wish two years from now we had done today? What might we wish ten years now that we had done today? Yes, that decision turned out right, but was it the best decision we could have made then given what we could have known then? Yes, that decision turned out wrong, but was there a better decision we could have made then given what we could have known then, and how could we have made it?: Cory Doctorow: Thinking in Bets: a poker-master's Jedi mind-trick for being less wrong: "Annie Duke... Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts...

John Taylor is not just wrong, but wrong in a way that it is impossible to be if you are attempting to argue in good faith from any coherent set of economic principles and models: Miles Kimball: Contra John Taylor: "[Taylor] is just wrong...

...The Fed is promising to shift the demand curve for assets in the future and thereby get to a particular equilibrium interest rate. This is not at all like rent control. The right analogy is... getting rents to come down by reducing making it easier to get a building permit, or by subsidizing the building of new apartments.... There is a world of difference between a market intervention in which the government contributes to supply and demand and a price floor or ceiling. By buying assets, and promising to buy them in the future, the Fed is lowering an equilibrium interest rate. The details of the pattern of buying assets and promising to buy them in the future tends to keep the equilibrium interest rate at a certain level. The fact that the Fed acts by changing the equilibrium interest rate matters, because John’s claim that lowering the interest rate will reduce the quantity of investment would hold only if what the Fed is doing really did act like an interest rate ceiling that makes asset demand lower than asset supply...

#shouldread

Why would it ever occur to John Taylor to claim that open market operations are like price controls? I cannot imagine the circumstances under which anyone would be tempted to do this: Paul Krugman: More Artificial Unintelligence: "David Beckworth pleads with fellow free-marketeers to stop claiming that low interest rates are 'artificial' and comparing them to price controls...

Alex Bell et al.: Who becomes an inventor in America? The importance of exposure to innovation: "Using deidentified data on 1.2 million inventors from patent records linked to tax records...

Noah Smith: Supply and Demand Does a Poor Job of Explaining Depressed Wages: "The standard framework that economists traditionally used to understand job markets is just supply and demand...

National Taxpayers Union: More Than 1,100 Economists Join NTU to Voice Opposition to Tariffs, Protectionism: "The lowering of trade barriers between nations has been one of the great achievements of the global economic system in the postwar era...

Josh Bernoff: How we really should teach writing: "Here’s a radical idea.... Teach... students to write stuff that they’ll actually need to write in life or in an office: emails, blog posts, social media posts, marketing copy, research reports, and presentations...

The White House press corps: working for their sources first, their bosses second, and themselves third. Do they view themselves as working for their readers at all?: Katha Pollitt: A Press Corps Full of Aunt Lydias: "The real reason... would call into question the underlying presumption of the dinner, which is that there is no price for 'access'...

History, biography, and fiction are the queens of the humanities because we think via narrative. I give a lecture on this stuff occasionally, and I am anxious to improve it and keep it up to date...

• Narrative https://www.icloud.com/keynote/0vo61T4rToRXKzWceow8gi0-g
• A Story of American Economic History
  • http://www.bradford-delong.com/2017/01/the-story-of-american-economic-history.html
  • https://www.icloud.com/pages/0d5I-zcl-0Y3NC6EKy9VkAWAg
• html http://www.bradford-delong.com/2018/05/narrative.html

Ashley Feinberg: Leak: The Atlantic Had A Meeting About Kevin Williamson. It Was A Liberal Self-Reckoning: "In a staff meeting, Jeffrey Goldberg and Ta-Nehisi Coates discussed the hiring and firing of a conservative writer. But it wound up being about a lot more than that...

Am I wrong to be appalled at how there are too many economists whose knowledge of models carries with it negative knowledge about the economy? I always thought that technique was to be in the service of understanding, not a substitute for it. Yet whenever I look at a David Andolfatto claiming that there is no relationship between unemployment and inflation or a Robert Lucas claiming that private decisions fueled by increasing money balances to spend affect production and prices but public decisions do not... or Eugene Fama and John Cochrane trying to resurrect Say's Law 190 years after it had been abandoned by Jean-Baptiste Say... I am, to say the least, not impressed at all: Paul Krugman: Immaculate Inflation Strikes Again: "We’re currently well above historical estimates of full employment, and inflation remains subdued. Could unemployment fall to 3.5% without accelerating inflation? Honestly, we don’t know...

The question of whether the U.S. national debt is too high—and of what it should be—is a very knotty one. Interest rates are telling us that the debt is too low: that there are too few safe assets in the world, and that more U.S. Treasury debt would be very valuable in this world in which nobody trusts private sector organizations to create AAA assets, for which the demand is high. But asset quantities relative to historical norms and policy projections are telling another story. Is this one of those times when we should listen to financial markets' judgments? Or is this one of those times when we should disregard them? Alan J. Auerbach, William G. Gale, and Aaron Krupkin: THE FEDERAL BUDGET OUTLOOK: EVEN CRAZIER AFTER ALL THESE YEARS: "New Congressional Budget Office (CBO) projections... prospect of routine trillion-dollar deficits... underlying problem is even more serious...

History, biography, and fiction are the queens of the humanities because we think via narrative: David Robson: Culture-Our fiction addiction: Why humans need stories: "The perfect summer blockbuster. A handsome king... superhuman strength... insufferable arroganc... wreak[s] havoc...

Bloomberg: Prof. DeLong Says Better If U.S. in TPP Negotiating With China: "University of California at Berkeley Professor Brad DeLong weighs in on U.S and China trade talks, and talks about the makeup of the U.S. negotiating team. DeLong speaks on "Bloomberg Daybreak: Australia..."

https://www.bloomberg.com/news/videos/2018-05-03/prof-delong-says-tax-cut-for-rich-growing-trade-deficit-video

My talking points on the China-U.S. trade "negotiations":

The extremely sharp Joe Romm: Trump voters hurt most by Trump policies, new study finds: "Failure to stop business-as-usual global warming will deliver a severe economic blow to Southern states, a recent paper by the Federal Reserve Bank of Richmond finds..." and he sends us to: Riccardo Colacito, Bridget Hoffman and Toan Phan: Temperature and Growth: A Panel Analysis of the United States: "Seasonal temperatures have significant and systematic effects on the U.S. economy...

It's time to normalize Karl Marx: "For elite American economists, Marx has long been viewed as absolutely anathema, if not some kind of demon...

The well-worth reading Ryan Cooper trolls me: Ryan Cooper: It's time to normalize Karl Marx: "For elite American economists, Marx has long been viewed as absolutely anathema, if not some kind of demon...

The highly-estimable Steve Randy Waldmann hoists the banner of "employment for societal usefulness, not for profit". Smart guy: Steve Randy Waldman: Smile: "Pairing a UBI with a job guarantee would mitigate the risk that we neglect the broader project of integrating one another into a vibrant society...

Against North and Weingast: it was not 1688 that was important so much as 1485, 1534, 1543, and 1642, all powerful steps away from quod principi placuit legis habet vigorem: Avner Greif and Jared Rubin: Political Legitimacy and the Institutional Foundations of Constitutional Government: "This paper opens the ‘black box’ of endogenous political legitimacy and asks what role...

J. Bradford DeLong
Economics and Blum Center of U.C. Berkeley, WCEG, and NBER
Revised 2018-05-01

https://www.icloud.com/keynote/0xoGroPwN3sF-FHQgSM9K3xPw

http://nbviewer.jupyter.org/github/braddelong/LSS18E101b/blob/master/2018-05-01%20%23MRE%20Review%20Intermediate%20Macroeonomics.ipynb

Yes, this is as bad a violation of academic standards as it looks: Henry Farrell: The public choice of public choice: "Now this... 'financial ties to the Charles Koch Foundation... [but] George Mason University has cited its academic independence...