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October 2018

A Baker's Dozen of Fairly-Recent Links

stacks and stacks of books

  1. Michael Bröning: Germany’s Socialism of Fools: "By adopting a program based on "identity and solidarity," Germany's far-right AfD is harking back to classic National Socialism. It is likely to be a winning formula in this month's state elections in Bavaria and Hesse...
  2. Anjana Ahuja: Climate catastrophe warnings were greeted with global silence: "hortsighted folly of ignoring the IPCC will lead to drastic future policies...
  3. Brad W. Setser: Russia, China, and (the Absence of) Global Funding of the U.S. Fiscal Deficit…
  4. Robert Wilde: The Chevauchée: Organised Medieval Murder 5, N.S. Gill: Rome 1st Century B.C. Chronology
  5. Wikipedia: Legio X Equestris
  6. Nicola Gennaioli and Andrei Shleifer: A Crisis of Beliefs: Investor Psychology and Financial Fragility
  7. Timur Kuran and Dani Rodrik: The Economic Costs of Erdoğan : "For more than a decade, financial markets gave Recep Tayyip Erdoğan the benefit of the doubt and supplied the Turkish economy with easy credit. Such debt-fueled growth almost always ends badly, and now it has...
  8. Wikipedia: Peace of Westphalia
  9. William Shakespeare: The Second part of King Henry the Fourth
  10. Daniel W. Drezner (20070: The New New World Order
  11. (2004): Eric Alterman Told Us So
  12. Matthew Buckley: @physicsmatt: "Are we going to do anything about our allies murding a journalist? No, because a) Prince Jared still needs a loan, and b) murdering journalists is a GOP party plank now. All the US will do is ask the Saudis for how-to tips...

"You don’t get to claim that you’re not attacking the university when your first few sentences read like that. It suggests a lack of clarity in the argument—a sentence I would have written if I had been asked to peer-review this essay". Dan Drezner mocks the anti-humanities industry, and, boy, is it mockable: Daniel Drezner: A Paper That Would Never Have Gotten Past Peer Review Criticizes the Academy. Film at 11: "Last year scholars James A. Lindsay and Peter Boghossian proudly declared that they had hoodwinked a peer-reviewed journal into publishing nonsense.... That... was riddled with problems, not the least of which was that the journal they had hacked was a pay-for-play scam...

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Development and Security

Battle of crecy froissart 58bf04d43df78c353c2c2e0f jpg 768×650 pixels

Not what I said at the Blum Center Development Lunch today: more what I wish I had said—albeit it is still incoherent and disorganized:

Let me begin with three direct responses to points Michael Nacht made. Let me then try to—briefly—propose a framework, perhaps a framework for analysis, perhaps merely a framework for convincing people in the national security community that they should take issues of economic development seriously, and so give large grants so that the Berkeley development community can do more things—things closely related to what we would be doing anyway.

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Note to Self: Books for Econ 210a: Introduction to Economic History (Spring 2019)

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Nathaniel Rakich: A Big Blue Wave Could Overwhelm The GOP’s Advantage In The House: "A switch is thrown at D+8 that causes actual Democratic seat gain to go from behind their popular-vote gain pace to well ahead of it. So what happens at D+8? Republicans’ structural advantage in how districts are drawn (gerrymandering, as well as the phenomenon of self-sorting, whereby Democrats tend to cluster in cities, which are already heavily Democratic) begins to erode. That advantage normally allows Republicans to keep control of the House while still losing the popular vote by a modest margin. But if Republicans lose the popular vote by too much, their firewall might break all at once, and Democratic gains could multiply...

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Oh, f---! It was only a bunch of bottles of wine, and some undesired asset liquidations. It was a pretty big deal in terms of social power, but not of human well-being, or lives. It was ultimately a very funny story—until now; Laura Noonan: Assistant Accused of Stealing Wine from Goldman Sachs CEO Jumps to Death: "Nicolas de Meyer was due to plead guilty to 1.2m fine wine theft from David Solomon.... The personal assistant accused of stealing... from Goldman Sachs’ chief executive David Solomon has jumped to his death from a 33rd floor Manhattan hotel instead of appearing in court to plead guilty to the charges...

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Noah Smith baits earnest ideologues on Twitter: Ryan Hauntedhouse: @ryandhous_: "Dismantling capitalism =! becoming the USSR."

...Noah Smith: @Noahpinion: Maybe not, but what the heck DOES it mean??

Ryan Hauntedhouse 🎃👻💀 on Twitter Dismantling capitalism becoming the USSR

Ryan Hauntedhouse: @ryandhous_: It means that an economy based on creating value for shareholders based primarily on profit as a metric will not be able to solve the oncoming catastrophe of climate change.

...Noah Smith: @Noahpinion: No, you just said what it doesn't mean. What does it mean?...

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Newly-arrived at Equitable Growth, Will McGrew retweets Matthew Yglesias quoting Ryan Cooper: Will McGrew: Matthew Yglesias: "Ryan Cooper: 'There was no skills gap, nor an innovation shortage, nor an explosion of stay-at-home dads. There was a collapse in aggregate demand that was left to rot, while a lot of people who should have known better made things worse...'

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Homeowner bankruptcy and foreclosure are liquidity events, not solvency events: Peter Ganong and Pascal Noel: Liquidity vs. wealth in household debt obligations: Evidence from housing policy in the Great Recession: "We use variation in mortgage modifications to disentangle the impact of reducing long-term obligations with no change in short-term payments ('wealth'), and reducing short-term payments with approximately no change in long-term obligations ('liquidity')...

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A Baker's Dozen of Fairly-Recent Links

stacks and stacks of books

  1. Marshall Berman: All That's Solid Melts into Air http://delong.typepad.com/files/berman_marshall_all_that_is_solid_melts_into_air_the_experience_of_modernity.pdf
  2. Karen S. Freeman: How to View Web Pages on Apple Watch in Watchos 5: "Yes, you can access web pages on your Apple Watch now...
  3. Wikipedia: Darien scheme
  4. Caroline M. Yoachim: Carnival Nine: #sciencefiction
  5. James Nicoll: The Company of Strangers: "The Ginger Star—Leigh Brackett, Skaith, book 1... #sciencefiction
  6. Steven Pulvirent: A Week On The Wrist: Apple Watch Series 4: "The future of the Apple Watch is coming into focus–and I like what I'm starting to see...
  7. William Poundstone: Prisoner's Dilemma https://books.google.com/books?isbn=0307763781 #books
  8. Merrill M. Flood: Experimental Games
  9. Paul Romer (1989): Endogenous Technological Change: "Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good...
  10. Paul Romer (2015): Economic Growth: "Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas...
  11. William D. Nordhaus (1996): Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not: "During periods of major technological change, the construction of accurate price indexes that capture the impact of new technologies on living standards is beyond the practical capability of official statistical agencies. The essential difficulty arises for the obvious but usually overlooked reason that most of the goods we consume today were not produced a century ago...
  12. William D. Nordhaus (2007): A Review of the Stern Review on the Economics of Climate Change: "How much and how fast should we react to the threat of global warming? The Stern Review argues that the damages from climate change are large, and that nations should undertake sharp and immediate reductions in greenhouse gas emissions...
  13. Nick Stern et al.: The Stern Review: The Economics of Climate Change

#shouldread

Note to Self: Optional Readings by This Year's Note Prize Winners:

  1. Paul Romer (1989): Endogenous Technological Change: "Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good...

  2. Paul Romer (2015): Economic Growth: "Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas...

  3. William D. Nordhaus (1996): Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not: "During periods of major technological change, the construction of accurate price indexes that capture the impact of new technologies on living standards is beyond the practical capability of official statistical agencies. The essential difficulty arises for the obvious but usually overlooked reason that most of the goods we consume today were not produced a century ago...

  4. William D. Nordhaus (2007): A Review of the Stern Review on the Economics of Climate Change: "How much and how fast should we react to the threat of global warming? The Stern Review argues that the damages from climate change are large, and that nations should undertake sharp and immediate reductions in greenhouse gas emissions...

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Just in time for midterm exams: M. Aurelius Antoninus: :M. Cornelius Fronto: "To my teacher: I received two letters from you at the same time. In one of them, you were criticizing me and you were showing that I wrote a sentence rashly; in the second, however, you were trying to approve my work with praise. Still, I swear by my mother and by my health that I got more joy from the first letter...

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Blum Hall B100: Plaza Level: 2 PM: Bill Janeway: The Digital Revolution and the State: The Great Reversal

http://delong.typepad.com/the-digital-revolution-and-the-state--book-talk.pdf

Bill Janeway: Doing Capitalism in the Innovation Economy 2.0 https://books.google.com/books?isbn=1108471277: "The innovation economy begins with discovery and culminates in speculation. Over some 250 years, economic growth has been driven by successive processes of trial and error: upstream exercises in research and invention and downstream experiments in exploiting the new economic space opened by innovation...

...Drawing on his professional experiences, William H. Janeway provides an accessible pathway for readers to appreciate the dynamics of the innovation economy. He combines personal reflections from a career spanning forty years in venture capital, with the development of an original theory of the role of asset bubbles in financing technological innovation and of the role of the state in playing an enabling role in the innovation process. Today, with the state frozen as an economic actor and access to the public equity markets only open to a minority, the innovation economy is stalled; learning the lessons from this book will contribute to its renewal...

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Note to Self: Prisoners' Dilemma Tweets...

https://twitter.com/delong/status/1048597577229373440
https://twitter.com/XLProfessor/status/1048599003821047809
https://twitter.com/delong/status/1048609562217996288
https://twitter.com/JonWalkerDC/status/1048610059926700032
https://twitter.com/delong/status/1048610236418772993
https://twitter.com/akcayerol/status/1048609883036299264
https://twitter.com/delong/status/1048610846014763008
https://twitter.com/laseptiemewilay/status/1048610348583010305
https://twitter.com/delong/status/1048610963497209856
https://twitter.com/delong/status/1048611584552009728
https://twitter.com/delong/status/1048612380895105024
https://twitter.com/thorgamma/status/1048614023552552966
https://twitter.com/delong/status/1048614093270081536
https://twitter.com/oliverbeige/status/1048613269487980545
https://twitter.com/delong/status/1048614520242020352
https://twitter.com/delong/status/1048614537962770432
https://twitter.com/MarkARKleiman/status/1048614352067149825
https://twitter.com/MarkARKleiman/status/1048614353640022017
https://twitter.com/delong/status/1048615646743785472
https://twitter.com/delong/status/1048616583784873984
https://twitter.com/delong/status/1048624515289436162
https://twitter.com/MarkARKleiman/status/1048615957189611520
https://twitter.com/dannyschwab/status/1048629320393084929
https://twitter.com/MarkARKleiman/status/1048630608476426241
https://twitter.com/dannyschwab/status/1048632117171838976

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The first write-up of the Prisoner's (or is it Prisoners'?) Dilemma: Merrill Flood (1958): Some Experimental Games: "Summary: Two players non-cooperatively choose rows and columns of their payoff matrices in a series of 100 plays of a non-constant sum game. The purpose of this experimental game is to determine which of several theories best describes their behavior. The players, being familiar with zero-sum game theory, happen to choose a poor solution for their non-constant-sum game...

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For the Weekend: John Donne

Bridge depicted in Hemingway s For Whom the Bell Tolls Picture of La Ciudad Ronda

John Donne: For Whom the Bell Tolls:

...No man is an island,
Entire of itself.
Each is a piece of the continent,
A part of the main.

If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thine own
Or of thine friend's were.

Each man's death diminishes me,
For I am involved in mankind.
Therefore, send not to know
For whom the bell tolls,
It tolls for thee...

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Prisoner's Dilemma, or Prisoners' Dilemma?: Hoisted from the Archives

Game Theory

Hoisted from the Archives: Prisoner's Dilemma: An extended passage from William Poundstone's (1992) marvelous book Prisoner's Dilemma (New York: Doubleday: 038541580X) https://books.google.com/books?isbn=0307763781. Economists will find it hilarious and thought-provoking. Others will probably find it bizarre and weird. It comes from pp.106-118.

Flood and Dresher devised a simple game where [the Nash equilibrium wasn't such a good outcome for the players].... The researchers wondered if real people playing the game--especially, people who had never heard of Nash or equilibrium points--would be drawn mysteriously to the equilibrium strategy. Flood and Dresher doubted it.

The two researchers ran an experiment that very afternoon. They recruited two friends as guinea pigs, Armen Alchian of UCLA ("AA" below), and RAND's John D. Williams ("JW"). The game was presented purely as a payoff table. The payoffs were:

(AA's payoff, JW's payoff) JW's Strategy 1 [Defect] JW's Strategy 2 [Cooperate]
AA's Strategy 1 [Cooperate] (-1, 2) (1/2, 1)
AA's Strategy 2 [Defect] (0, 1/2) (1, -1)

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A Baker's Dozen of Fairly Recent Links

stacks and stacks of books

  1. Wolfenoot: "Eat roast meat (because wolves eat meat) and cake decorated like a full moon. A holiday to the spirit of wolves that celebrates people who are kind to dogs? I can 100% get behind this. So we will be celebrating Wolfenoot. It’s on the 23rd November.... If you’re posting publicly about it, use #wolfenoot...
  2. Emma Christensen: Recipe: Chili-Rubbed Ribeye Steak with Maple-Bourbon Butter | Kitchn: "For the steaks: 1 tablespoon cacao nibs 1 tablespoon chili powder 2 teaspoons brown sugar 1 teaspoon salt 1/2 teaspoon smoked paprika (optional) Black pepper 2 (1-pound) boneless ribeye steaks. For the maple-bourbon butter: 1 tablespoon bourbon 1 teaspoon maple syrup 1/2 stick (4 tablespoons) butter, very soft...
  3. John Bell: +Against Measurement_
  4. Daniel Swain: Substantial early-season rainfall in California to dampen explosive wildfire conditions: "Significant rainfall now appears likely from about the SF Bay Area south to Los Angeles County, with at least some precipitation pretty much statewide...
  5. John Williams: 'Normal' Monetary Policy in Words and Deeds: "We could return to a system... in which the supply of reserves... was kept relatively scarce, and the interest rate was set by... open market operations.  Alternatively, we could continue with the system that we’ve been using since the crisis, in which bank reserves are abundant and the federal funds rate target is achieved through adjustments to administered rates...
  6. Doug Jones: Logarithmic History: "The history of the universe—from the Big Bang to the end of the year—day by day...
  7. Great China Restaurant
  8. Zach Weinersmith: Saturday Morning Breakfast Cereal: "The Program...
  9. Wikipedia: Hexapodia Is the Key Insight!
  10. Noah Smith: Why Millennials Are Sour on the Economy: "Lack of mobility, stagnant incomes and thwarted expectations is a painful mix...
  11. Noah Smith: How to Fill the Gaps in the U.S. Economy: "Many of these advances have come through a single agency—the Defense Advanced Research Projects Agency, or DARPA (also known as ARPA at some points in its history)...
  12. Jason Snell: Why Are Apple Watch Faces Such a Mess?: "a lot of Apple Watch users have been surprised that they can’t add older complications to those faces. Apps need to be updated to explicitly support the new complication style, which was only introduced to developers on the day the Apple Watch Series 4 was announced...
  13. Moses Abramovitz (1986): Catching Up, Forging Ahead, and Falling Behind

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The Appalachian and Other Trails

https://www.icloud.com/keynote/0HORQ6Ql3Ejvf5PSeGJkEXOyQ

Let's consider the United States in the time of major westward expansion and "Amerindian removal": the century 1760 to 1860 before the Civil War. We have U.S. output-per-worker growth then at about 1.0% per year, in contrast to British output-per-worker growth at about 0.5% per year. We have the U.S. population and labor force growing at 2.5% per year, from 2.5 to 30 million. Our conclusion:

An America penned behind the Appalachians would probably have seen its living standards and productivity levels not growing at 1% per year from 1760 to 1860 but shrinking. For the $ \gamma = 3.0 $ benchmark case, living standards and productivity levels would have shrunk at a pace of -0.325% per year had population growth been the historical 3% per year.

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The search for "robust determinants" has always seemed to me to be wrong-headed. We should be searching for effective policies. And which determinants are "robust" will depend on what other determinants are in the mix. And an effective policy is likely to shift the values of more than one "determinant": Dani Rodrik: "Is 'export sophistication' (as in Hausmann, Hwang, and Rodrik 2007) the only robust determinant of economic growth? Robust, that is, to correcting for endogenity and OVB as best as possible? This new paper from the IMF says yes https://t.co/C3DkRzqr8d...

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Comment of the Day: Ronald Brakels: Strong AI: "Just so you know, once we get something that can accurately transcribe podcasts that will be strong AI. It'll be some mightily powerful strong I. I'm not saying podcast transcribers are going to take over the world, but I am saying that we fix this one little annoying thing and we change the world beyond recognition...

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Over on EconSpark, I think this is wrong: Ben Bernanke: How Important Was The Financial Panic As A Cause Of The Great Recession?: "The collapse of the housing bubble was certainly a primary cause of the Great Recession.  The unwinding of the bubble (1) depressed aggregate demand through its adverse effects on consumer wealth and residential construction, and (2) triggered a financial panic...

The unwinding of the bubble set the table for the financial panic, but it did not trigger it. The bubble had already been unwound before the panic. The triggers of the panic lay elsewhere: in the events in financial markets that produced a sudden, discontinuous boost in the demand for safe assets. One picture I have always found very illuminating is this one:

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Lars Svensson: Can Monetary Policy Still Deliver? A Natural Experiment: "Riksbank policy-rate hikes 2010-2011, from 0.25% to 2%. What happens to inflation and unemployment when the central bank (for no good reason) raise the policy rate by 175 bp?... Monetary policy works like clockwork in Sweden. Neo-Fisherian view rejected. What contributes to powerful monetary policy in Sweden? 1. Strong exchange-rate channel 2. Strong household cash-flow channel...

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Our Kate Bahn Reminds us: Kate Bahn: "This needs to be screamed from the rooftops.... We cannot have a substantive conversation about how tight the labor market is without examining demographic disparities..." ands sends us to Equitable Growth alumnus John Schmitt quoting Janelle Jones at: Laura Maggi: Despite Drop in Black Unemployment, Significant Disparities Remain: "The African-American unemployment rate... low—compared to historic numbers. In July, it was 6.6 percent...

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Joseph E. Gagnon and Brian Sack: QE: A User's Guide: "Central banks should characterize QE in terms of the stock of long-term asset holdings and should announce purchases of assets in discrete increments that are designed to deliver macroeconomic stimulus equivalent to the policy rate cut that they would otherwise desire to implement...

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Scarce: Sharice Davids (D) and Kevin Yoder (R) in KS-03: "It's a bit surprising that the Republicans are pulling out this early in a nominally red district (R+4), but early polling had Davids already up by 8. Yoder, who had been endorsed by Trump, committed the grievous crime earlier this summer of supporting asylum for migrants who were victims of domestic violence. Unforgivable for the cultists...

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Very clever by Sedláček et al.. And this certainly looks right: 2% of GDP as the (ongoing) cost of the Boris Johnson BREXIT clown show: Benjamin Born, Gernot Müller, Moritz Schularick, and Petr Sedláček: £350 Million a Week: The Output Cost of the Brexit Vote: "The current cost of Brexit... counterfactual... a matching algorithm... combination of comparison economies best resembles the pre-referendum growth path of the UK economy.... The negative drag from the Brexit vote now appears to be roughly £350 million a week...

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