Some Fairly-Recent Must- and Should-Reads...
The Wrong Financial Crisis: Hoisted from the Archives (October 2008) #hoistedfromthearchives #highlighted #greatrecession #finance #behavioral #monetaryeconomics
Dean Acheson's Lawyer's Brief for the Mid-Twentieth Century Democratic Party: A Historical Document: Weekend Reading #weekendreading #history
Monday Smackdown: What Tobin Harshaw of the New York Times Wants to Be Remembered For: "I Am Not Authorized to Explain Why I Am Not Authorized..." #journamalism #hoistedfromthearchives #globalwarming #orangehairedbaboons #mondaysmackdown
Self-Fulfilling Financial Crises: No Longer Fresh at Project Syndicate #projectsyndicate #economicsgoneright #monetaryeconomics #behavioral #finance
Tweed Jackets and Natural Disasters: No Longer Fresh at Project Syndicate #projectsyndicate #globalwarming #highlighted
Hoisted from the Archives: “Unknown Unknowns”: High Public Debt Levels and Other Sources of Risk in Today’s Macroeconomic Environment #hoistedfromthearchives #finance #behavioral #monetarypolicy #monetaryeconomics #fiscalpolicy #highlighted
Monday DeLong Smackdown: Alan Kirman on Self-Fulfilling Financial Crises #commentoftheday #behavioral #finance #mondaysmackdown
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Lily Batchelder: The “Silver Spoon” Tax: How to Strengthen Wealth Transfer Taxation: "30 percent of the correlation between parent and child incomes—and more than 50 percent of the correlation between the wealth of parents and the wealth of their children—is attributable to financial inheritances. This is more than the impact of IQ, personality, and schooling combined... #equitablegrowth #inequality #plutocracy
Sarita Gupta, Stephen Lerner, and Joseph A. McCartin: It’s Not the 'Future of Work,' It’s the Future of Workers That’s in Doubt: "Nearly every discussion of labor’s future in mainstream media quickly becomes mired in a group of elite-defined concerns called 'The Future of Work'.... Rarely has a phrase been so ubiquitous in discussions of the economy or social policy.... [But] it is the concentration of wealth and power in this new economy, not computerization or artificial intelligence, that represents the gravest threat to our future... #riseoftherobots #labormarket #equitablegrowth
I am keenly aware that since, say, 1997 one disagrees with Paul Krugman at one's grave intellectual peril. But I am not as confident as Paul Krugman is that "the past decade has been a huge validation for textbook macroeconomics". A large component of what Krugman calls "good old-fashioned macro" was that expectations were, if not rational, adaptive. Keynes's "speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done..." had no place in "old-fashioned macro". And it is not as though this was a flaw and could be quickly, coherently, and satisfactorily patched. The integration of behavioral finance and macro is still not done—which is why I am such a booster of Nicola Gennaioli and Andrei Shleifer (2018): A Crisis of Beliefs: Investor Psychology and Financial Fragility https://books.google.com/books?isbn=0691184925. (That, and Andrei is my friend.) They are at least looking in the right direction: Paul Krugman: What Do We Actually Know About the Economy?: "Among macroeconomists, the self-criticism seems to me to be mainly too narrow: people berate themselves for, say, not giving financial markets a bigger role in their models, but few have done what they should, which is to question the whole direction macroeconomics has gone these past four decades or so... #economicsgonewrong #monetaryeconomics #finance #economicsgoneright
THE MUST-READ OF MUST-READS on the links between behavioral finance and macro: John Maynard Keynes (1936): The State of Long-Term Expectation: The General Theory of Employment, Interest and Money: Chapter 12: "If I may be allowed to appropriate the term _speculation for the activity of forecasting the psychology of the market, and the term enterprise for the activity of forecasting the prospective yield of assets over their whole life, it is by no means always the case that speculation predominates over enterprise. As the organisation of investment markets improves, the risk of the predominance of speculation does, however, increase... #johnmaynardkeynes #books #behavioral #finance #monetaryeconomics
But, says Mohammed bin Sultan, Thomas Friedman of the New York Times told me I had carte blanche that I was the real Arab Spring. And Jared Kushner assured me that America was eager for me to do hat was necessary. So why, suddenly, are they claiming that Khashoggi was not one of the torturable class?: Graham Greene: Our Man in Havana https://books.google.com/books?isbn=1504052536: ".‘How are you so certain that Cifuentes is not my agent?’ ‘By the way you play checkers, Mr Wormold, and because I interrogated Cifuentes.’ ‘Did you torture him?’ Captain Segura laughed. ‘No. He doesn’t belong to the torturable class.’ ‘I didn’t know there were class-distinctions in torture.’ ‘Dear Mr Wormold, surely you realize there are people who expect to be tortured and others who would be outraged by the idea. One never tortures except by a kind of mutual agreement’... #books #torture #security #orangehairedbaboons
I don't know why Paul Krugman is tweeting about Marvin Goodfriend's stalled Federal Reserve nomination again, but his main point is worth highlighting: Rand Paul's opposition to Goodfriend is not a bad thing for the country in itself But it is a very bad thing as a sign of the craziness of the Republicans because of the reasons that Rand Paul objects: Paul Krugman: Characteristic: "[Marvin] Goodfriend['s Federal Reserve nomination] is in trouble, not for constantly predicting inflation that never materialized, but because of what he got right: acknowledging that the zero lower bound on interest rates can be a problem... #monetarypolicy
Dictionary of National Biography: Fitzurse, Reginald: "The eldest son of Richard Fitzurse, on whose death about 1168 he inherited the manor of Williton, Somersetshire (Collinson, iii. 487); he also held the manor of Barham,Kent (Hasted, iii. 536), and lands in Northamptonshire (Liber Niger, p. 216). He is sometimes called a baron, for he held of the king in chief. He was one of the four knights who were stirred up by the hasty words of Henry II to plot the archbishop's death... #orangehairedbaboons #history
Depressing news: hints that we are not still far from "full employment" and thus have little room to grow rapidly: Rob Valletta and Nathaniel Barlow: The Prime-Age Workforce and Labor Market Polarization: "U.S. labor force participation by people in their prime working years fell substantially... and it remains depressed... #monetarypolicy #labormarket
Elisabeth Jacobs and Liz Hipple: Are Today’s Inequalities Limiting Tomorrow’s Opportunities?: "An individual’s place on the economic distribution is supposed to reflect individual effort and talent, not parental resources and privilege. Yet this perspective ignores the mounting evidence of the myriad ways that poverty and economic inequality foreclose equality of opportunity... Elisabeth Jacobs and Liz Hipple: Are Today’s Inequalities Limiting Tomorrow’s Opportunities?: "An individual’s place on the economic distribution is supposed to reflect individual effort and talent, not parental resources and privilege. Yet this perspective ignores the mounting evidence of the myriad ways that poverty and economic inequality foreclose equality of opportunity... #equitablegrowth
EPI: Interactive: The Unequal States of America: "Income trends have varied from state to state, and within states. But a pattern is apparent: the growth of top 1% incomes. Explore inequality in this interactive feature.... Adapted from Estelle Sommeiller and Mark Price, The New Gilded Age: Income Inequality in the U.S. by State, Metropolitan Area, and County... #regionaleconomics
John Bell: Speakable and Unspeakable in Quantum Mechanics: "Einstein declares the notions ‘really resting’ and ‘really moving’ as meaningless. For him only the relative motion of two or more uniformly moving objects is real. Lorentz, on the other hand, preferred the view that there is indeed a state of real rest, defined by the ‘aether’, even though the laws of physics conspire to prevent us identifying it experimentally. The facts of physics do not oblige us to accept one philosophy rather than the other. And we need not accept Lorentz’s philosophy to accept a Lorentzian pedagogy... #science #relativity
Neo-fascism in Brazil: "a crusade of second-class citizens against non-citizens, orchestrated by those who rights and privileges are never in doubt": Matthew Richmond: Understanding “Bolsonarismo Popular”: "People who work long hours for low pay, struggle to continue their studies, despair about the healthcare of their parents and schooling of their children. Their lives are hard and they believe they are doing the right thing. Then they look around themselves and see those they believe are undeserving... #orangehairedbaboons #neofascism
Will McGrew sends us to Allegretto, Godoey, Nadler, and Reich taking a narrow look at food services and drinking places and the minimum wage. Back when David Card and Alan Krueger wrote their Myth and Measurement about how the costs of rising minimum wages had been vastly overstated, many—I might even say most—American economists believed that their claim that the evidence showed that recent minimum wage increases had raised rather than lowered business demand for employees was overstated. Now I believe that is no longer the case: the majority view is that employers have market power, so a minimum wage is much more like good rate regulation of a monopoly utility rather than an anti-competitive "interference" in a well-working competitive market: Will McGrew: The latest research on the efficacy of raising the minimum wage above $10 in six U.S. cities: "Sylvia Allegretto, Anna Godoey, Carl Nadler, and Michael Reich... local labor markets... particularly affected by... local legislative changes... food services and drinking places... six cities... substantial earnings growth and inconsistent employment effects... #labormarket
A Baker's Dozen of Fairly-Recent Links
"Listen to the yell of Leopold's ghost/Burning in Hell for his hand-maimed host./Hear how the demons chuckle and yell/Cutting his hands off, down in Hell..." Sara Lowes
Galileo Galilei: And Yet It Moves
Wikipedia: Myth of Er
2017: Reading Notes for Robert Skidelsky: "Keynes: A Very Short Introduction"...: John Maynard Keynes was brought up a classical liberal and a classical economist. He believed in free trade, economic progress, cultural uplift, and political reason. He then found himself working for the British Treasury during World War I, unable to stop what he thought were disastrous post-World War I political decisions. He then found himself watching as the classical economic mechanisms he had been taught to admire all fell apart. He then picked himself up. After World War I Keynes used what power he had to—don't laugh—try to restore civilization. He had, all things considered, amazing success and an amazing impact...
Andrew Kent: Faithful Execution of the Office and Laws: New Research on the Original Meaning of Article II: "Since President Trump’s inauguration, we have seen him time and again prove correct the most pessimistic predictions about his character and the manner in which he would use the office. New research on the original meaning of the Constitution suggests that actions taken in bad faith—as many of President Trump’s actions appear to be—are not authorized by, and hence violate, Article II...
Allison C. Morgan, Dimitrios J. Economou, Samuel F. Way, and Aaron Clauset: Prestige Drives Epistemic Inequality In The Diffusion Of Scientific Ideas: "We consider comprehensive data on the hiring events of 5032 faculty at all 205 Ph.D.-granting departments of computer science in the U.S. and Canada, and on the timing and titles of 200,476 associated publications.... Research from prestigious institutions spreads more quickly and completely than work of similar quality originating from less prestigious institutions...
Don Kuehn: A few more thoughts on monopsony and the minimum wage: "Monopsony is definitely not the only and not even really the best theoretical argument for why we see no disemployment effects.... We have work that suggests there is monopsony power in low wage labor markets, and we know that under certain conditions (but not all conditions) dynamic monopsony can explain the no disemployment effect result, so it seems reasonable to me to keep it on the table...
John Stuart Mill (1829): Of the Influence of Consumption on Production: "Those who have, at periods such as we have described, affirmed that there was an excess of all commodities, never pretended that money was one of these commodities; they held that there was not an excess, but a deficiency of the circulating medium. What they called a general superabundance, was not a superabundance of commodities relatively to commodities, but a superabundance of all commodities relatively to money. What it amounted to was, that persons in general, at that particular time, from a general expectation of being called upon to meet sudden demands, liked better to possess money than any other commodity. Money, consequently, was in request, and all other commodities were in comparative disrepute...
Òscar Jordà, Moritz HP. Schularick, and Alan M. Taylor (2014): Betting the House: "Is there a link between loose monetary conditions, credit growth, house price booms, and financial instability? This paper analyzes the role of interest rates and credit in driving house price booms and busts with data spanning 140 years of modern economic history in the advanced economies. We exploit the implications of the macroeconomic policy trilemma to identify exogenous variation in monetary conditions: countries with fixed exchange regimes often see fluctuations in short-term interest rates unrelated to home economic conditions. We use novel instrumental variable local projection methods to demonstrate that loose monetary conditions lead to booms in real estate lending and house prices bubbles; these, in turn, materially heighten the risk of financial crises. Both effects have become stronger in the postwar era...
Pia Ceres: 3 Smart Things About Animal-Inspired Robotics: "When turkeys strut, their leg muscles work as shock absorbers to boost energy efficiency.... Though it has a brain, the lamprey—an eel-like beast—doesn’t need it to wiggle about.... Cockroaches can react in 1⁄50 of a second and skitter 25 body lengths per second...
Karl Polanyi: Aristotle Discovers the Economy https://www.bradford-delong.com/2017/06/notes-polanyi-aristotle-discovers-the-economy-hoisted-from-the-archives.html http://delong.typepad.com/polanyi-aristotle.pdf https://www.icloud.com/keynote/0GwzWFlWB8EGxTiETO8L6-OkA
Notes: Polanyi: Aristotle Discovers the Economy: Hoisted from the Archives
Dylan Matthews: Human Extinction: How To Help People Millions Of Years From Now: "A few brief thoughts on the very, very distant future...
Wall of Shame:
Morgan Gstalter: McConnell: Midterms could be 'a Category 3, 4 or 5' storm for GOP: "'We know the wind is going to be in our face. We don’t know whether it’s going to be a Category 3, 4 or 5'...
Matthew Yglesias: "The highbrow intellectual leaders of the modern conservative movement explicitly conceptualized it as a white nationalist undertaking. Trump is true to this legacy and his intra-movement critics are the innovators...
Eight years of Governor Sam Brownback has seen Kansas lose 8% of its jobs relative to the national average. Now Kansas is Ground Zero for Trump's trade war. Joshua Green: Chinese Sorghum Tariffs Will Hit Hard in Trump-friendly Kansas: "Trump’s Trade War Hits Another Red State: What’s the matter with Kansas? It’ll be hardest hit by new Chinese tariffs...
Will Wilkinson: The DACA and immigration debates are about whether Latinos are “real Americans”: "Challenging the idea that Latino Americans can be truly American undercuts the very idea of America...
Just when you think the mainstream media could not sink any lower into misogyny and stupidity, it's the Atlantic Monthly!: Scott Lemieux: Are you provoked yet?: "Both James Bennet and Fred Hiatt have been asked to hold David Bradley’s beer...
Ezra Klein: @ezraklein on Twitter: "I don’t know what the [New York] Times should’ve done with Thrush. But I watched the efforts to plant oppo and smear @lkmcgann in the aftermath of her reporting. Anyone who thinks coming forward with these experiences is easy, even now, is wrong. I am beyond proud to be her colleague..."
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.
The Brexiters never had a plan for what they would do if they won the referendum. And they still do not have a plan. I do not see a road other than "transitional" arrangements that keep things as they are without the UK having any voice in Brussels—"transitional" arrangements that will keep getting indefinitely extended: Robert Hutton: Stuck In the Middle: These Are Theresa May's Four Brexit Options: "Her inner Brexit Cabinet has rejected her proposed customs relationship with the European Union...
Gabrielle Coppola: Trump’s TPP Pullout May Have Cost Missouri Its Harley Factory: "Harley-Davidson Inc.’s chief executive officer said he may have kept a plant open in Missouri if the U.S. had stayed in the Trans-Pacific Partnership, the free-trade agreement that President Donald Trump withdrew from last year...
WTF happened to Brendan Nyhan? The braineater has eaten his brain: Josh Marshall: "There are several problems with this logic.: The first is that you are applying jury trial standards to what are political questions. You are also applying statutory standards where they do not exist. As a factual matter the obstruction question is not in doubt...
Shame on the Editors of Vanity Fair!: Highlighted/Hoisted from Two Years Ago
