Grasping Reality on TypePad, by Brad DeLong

1. Will McGrew sends us to new EPI employee and friend of Equitable Growth Pedro Nicolaci da Costa: The U.S. Job Market Doesn’t Feel so Hot Despite the Low Unemployment Rate: "Workers need the economy to stay hot so they can begin to see the dividends of high growth.... There are several reasons a purportedly booming U.S. economy doesn’t feel like much of a boon to millions of American workers, chief among them the startling lack of wage growth many have experienced over the past four decades.... A business- and bank-friendly mindset at the Federal Reserve, whose top officials spend a lot more time with their high-flying Wall Street and industry contacts than with workers and community leaders, deepens this imbalance.... Because of the Fed’s proximity to its business contacts, it tends to think of workers as labor costs (not investments in human capital) and wages as inflation (not improvements in standards of living). This colors the Fed’s definition of 'full employment', making policy makers easily swayed by dubious claims from business executives about chronic labor shortages—made without any contention about why wages are not rising on a sustained basis...

2. I would not have called MMT "nonsense economics". Thus I think Jonathan Portes needs to put a choke collar on Prospect's headline writers. It is very much the case that MMT done right focuses attention on the inflation constraint rather than the financiers-are-scared-the-debt-is-too-high constraint, and that would seem to me to be a healthy thing. However, I do worry about multiple equilibria—and jumps between equilibria: Jonathan Portes: Nonsense Economics: The Rise of Modern Monetary Theory: "Under MMT, fiscal policy is the main tool. This may well make sense when interest rates are at or close to zero. But that... was explicitly recognised by government policy during and immediately after the 2008 financial crisis.... It’s an integral part of Labour’s fiscal rule.... It also means that MMT—at least the credible version—does not mean there is no limit to deficits, just a different one, dictated by the potential impact on inflation.... So in the end I... find... MMT... frustrating... [as] a mixture of the tautological, the obvious and the tendentious.... The claim that that MMT means that a future government can dodge hard choices about how to pay for decent public services is just plain nonsense...

3. The very sharp Gavyn Davies summarizes four views of the macro outlook: Powell/Bernanke/Summers/DeLong. Not sure I belong in this company... As he sees it, the Fed is now confident that there will neither be inflation which will require it to raise interest rates and trigger a recession nor private-sector weakness which ought to have led the Fed to have already returned the Federal Funds rate to zero. The first seems correct. But I am not sure why the Fed believes in tiger second—and I have no idea what the Fed thinks it can do if the second comes to pass: Gavyn Davies: Recessions and Bear Markets—The Terrible Twins: "Many global markets... are now pricing a probability of recession of at least 50 per cent within 12 months. This recession risk seems far too high.... Inter-relationships between recessions and bear markets are complex and not very well understood. It is clear that they tend broadly to coincide in their timing.... Economists often assume that recessions are basically caused by economic fundamentals, with the financial markets reacting when these fundamentals deteriorate. Sometimes investors may be able to discern rising recession risks before they actually appear in hard economic data...

4. Jemima Kelly: Stuff Elon Says, (Inevitable) Bitcoin Edition: "Tesla CEO Elon Musk appeared on ARK Invest’s “For Your Innovation” podcast on Tuesday, to be fawned over interviewed by Ark CEO Cathie Wood and analyst Tasha Keeney.... A strange choice of podcast for him to appear on given that nobody has heard of it, perhaps? Not really. ARK Invest... is very bullish on Tesla.... Wood has said at various times that Tesla is the next Amazon, the next Apple, and that Musk is 'a one in a billion type of person'. (Implying six other Elons might be on the loose around the planet?)... Wood is also very bullish on blockchain and crypto. Very bullish.... Musk, in response to Wood, said (emphasis ours): 'Yeah. It bypasses currency controls. Yeah. **Paper money is going away, and crypto is a far better way to transfer value than pieces of paper, that’s for sure.' It was already a close correlation, but the Tesla-bro-to-crypto-bro Venn diagram is officially a perfect circle...

5. How could we tell if someone is interested in maintaining their own place at the top of a pyramid of status, authority, and wealth or in aiding the growth of knowledge?: Stuart Ritchie: @StuartJRitchie: "He’s quietly deleted it now, but here’s the attitude of a senior scholar to people trying to improve the quality of scientific research: Cass Sunstein: 'It is right and important to ask whether social science findings can be replicated—but in another life, the replication police would be Stasi'...

6. Yannay Spitzer: UC Berkeley Event: Pale in Comparison: The Economic Ecology of the Jews as a Rural Service Minority: "Econ 211, Economic History | February 25 | 2-3:30 p.m. | 639 Evans Hall... https://yannayspitzer.files.wordpress.com/2014/11/spitzer-pale-in-comparison-150426.pdf

7. Margaret Talbot: Revisiting the American Nazi Supporters of “A Night at the Garden”: "Even more unnerving than the strangeness of the spectacle is the creeping sense of familiarity it evokes. Kuhn’s snarky excoriation of the 'Jewish-controlled' press, his demand 'that our government shall be returned to the American people who founded it', and even the idolatry of the Founding Fathers all have their echoes in far-right politics today. No moment in the film seems more redolent of our current demagogue’s maga rallies than the one in which a protester scrambles onto the stage—he was Isadore Greenbaum, a twenty-six-year-old plumber’s helper from Brooklyn—and is promptly tackled and pummelled by Kuhn supporters, amid appreciative laughter and hooting from the crowd. One advantage to living through Trumpism is that it has compelled a reckoning with aspects of our country’s past that, for a long time, many Americans preferred not to acknowledge...

8. Marcy Wheeler: How Amy Berman Jackson Got Roger Stone to Step in It and Then Step in It Again: "Here’s what she did.... Impose a gag that a Twitter account bearing Stone’s name may have violated within an hour. Get Rogow and Stone on the record explaining why the terms of her gag won’t impact Stone’s ability to make a living, undercutting a significant part of the First Amendment claim they’ve been making. Provide a basis for the gag that Rogow did not anticipate, which may be far harder—and politically more difficult—to challenge. Provide an opportunity for both the prosecution and herself to catch Stone in multiple sworn lies (which, again, I’m sure the FBI is busy at work proving now), which if charged as perjury would lead to Stone’s immediate jailing...

9. I am told that somewhere on the internet there was once an exchange where Scott Winship told Matthew Yglesias that Winship's strategy was to become famous and influential by concern-trolling progressive researchers and analysts. Anybody know where it is? Don't give him oxygen. And no, I have never here anybody ever say "Scott Winship values integrity above nearly all else": Scott Winship: "I recently accused researchers at the Center for American Progress of an 'amateur-hour' mistake.... I had been accused of double-counting in the debate that drove me off Twitter.... I never suggested the CAP researchers were trying to mislead anyone. People who know me—even those who regularly disagree with me and who don't like me, I think—know that I value integrity above nearly all else.... For reasons that end up being technical... I was wrong in my specific charge of double-counting against the CAP researchers.... I do believe that other statements in the report I criticized and a comment by CAP president Neera Tanden in the Vox.com piece that highlighted the report do in fact double-count in the way I (incorrectly) said that a specific chart did. And I have other criticisms...

10. Jerry Wang: Decrypting Crypto: The Evolutionary Biology Behind Blockchain-Backed Currencies

11. There has never been such a clown show. Lighthizer, desperate, tries to lecture his boss, and then renames his "Memorandum of Understanding" a "Trade Agreement". Why? Because Trump thinks the agreement is binding if it is called "Trade Agreement" and not binding if it is called "Memorandum of Understanding": Jennifer Jacobs and Justin Sink: Trump's Trade Chief Lectures His Boss and Gets Earful in Return: "Negotiators have been drafting MOUs.... Trump told gathered reporters that the memorandums would 'be very short term. I don’t like MOUs because they don’t mean anything. To me, they don’t mean anything'.... Lighthizer then jumped in to defend the strategy, with Trump looking on. 'An MOU is a binding agreement... detailed.... It’s a legal term. It’s a contract'.... But the president, unswayed, fired back at Lighthizer. 'By the way I disagree', Trump said. The top Chinese negotiator, Vice Premier Liu He, laughed out loud...

12. Perhaps the strangest thing seen in the clash between Ilhan Omar and Elliot Abrams on whether he has any business working representing the U.S. abroad (he does not have any such business) was the reaction of CAP Foreign-Policy Vice President Kelly Magsamen: "Elliott Abrams... is a fierce advocate for human rights and democracy. Yes, he made serious professional mistakes and was held accountable.... we share goals..." I am flummoxed and flabbergasted: Charles R. Pierce: Ilhan Omar Questions Elliot Abrams Over El Mozote Massacre, Activities in El Salvador, Guatemala, Central America: "Ilhan Omar's Cross-Examination of Elliot Abrams Honored Thousands of Central American Dead: Someone in Congress finally asked a world-historical ghoul to answer for what he did...

13. John Holbo: @jholbo1: "Write an article entitled "Gaslighting Political Liberalism". I thought of this reading Zizek ages ago but today I read Vermeule. The argument alleges a paradoxical, debilitating blindspot. Political liberalism is supposed to be broadminded, self-critical and yet-and yet!-it cannot see this hole at the heart of ... (bum-bum-BUM!) ITSELF! But the existence of the hole is un-demonstrated, merely asserted (this is the gaslight part of the production)...

14. The very smart Simon Johnson believes that something like codetermination is essential if modern capitalism is going to work: Simon Johnson: Saving Capitalism from Economics 101: "Warren is proposing a much broader rethink. Large corporations can still do well, but they need to be held accountable in a much more transparent way. Incentives for executives would be adjusted, and running these companies would no longer be so much about lining their own pockets.... The legitimacy of capitalism–private ownership and reliance on market mechanisms–would be greatly strengthened under the Accountable Capitalism Act. So, yes, like it or not, this will be on the final exam...

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