Grasping Reality on TypePad, by Brad DeLong

Sharon Reier: From Vienna to Harvard, A Life of Ups and Downs: "Schumpeter... establishment of the Austrian Republic... appointed finance minister.... A tangle with Austria's foreign minister deprived him of support for taming... inflation.... His battle over the nationalization of a prominent company was the pretext for an enemy faction to force him out of office in 1919. Schumpeter's next move, in 1921, was to help found and run the Biedermann Bank.... The bank collapsed in 1924 as Austrian inflation destroyed the value of the currency and therefore the value of the bank's loans and investments.... It took many years to pay off his creditors. If his political and business life were turbulent, so were his private affairs. In 1912, Schumpeter fell in love with Annie Riesinger, the 12-year-old daughter of a building porter. He offered to pay for her education until she was old enough to marry him, and his proposition was accepted. In 1926, a year after she had become the second of his three wives, Annie died in childbirth at the age of 26, along with the couple's infant son. In "The Life and Work of Joseph Schumpeter," Schumpeter's biographer, Robert Loring Allen, suggested that this personal tragedy triggered manic-depressive episodes. In 1937, he was married for the third time, to Elizabeth Boody, a fellow Harvard economist...

Bay Area Book Festival: Festival Keynote: Enough Is Enough: Fighting Economic Injustice: "Anand Giridharadas, Robert Reich, and Kat Taylor...

SEDAC: Population Estimation Tools:
 

Jonathan Gruber and Simon Johnson: Jump-Starting America:
 

The extremely sharp Josh Bevins correctly calls out as "remarkably stupid, even relative to my expectations baseline" a piece by former Trump Federal Reserve nominee Herman Cain. The 1980s and 1990s simply did not see a "stable dollar" in any sense those words might ever possibly mean:

https://delong.typepad.com/.a/6a00e551f0800388340240a4a39f6a200b-pi: Herman Cain: The Fed and the Professor Standard: "The 1980s and 1990s brought prosperity across the board. This success was driven by a voting bloc of Fed governors, such as Wayne Angell and Manley Johnson, who favored a stable dollar and were able to swing the consensus. The dollar is a unit of measure—like the foot or the ounce—and keeping units of measure stable is critical to the functioning of a complex economy. The result of their stable-dollar policy was prosperity...

It is very common to attribute the collapse of Roman Republican institutions and the rise of Imperial dictatorship to a loss of moral virtue on behalf of the Roman electorate—who are supposed to have fallen prey to demagogues and voted for bread-and-circuses as the underlying foundations of liberty collapsed underneath them. That story is not true. Here Sean Elling sends us to Edward Watts on the real story—recently enriched plutocracy breaking political norm after political norm in an attempt to disrupt what had been the normal grievance-redressing operation of the system:

Sean Illing: Mortal Republic: Edward Watts on what America can learn from Rome’s collapse - Vox: "The Roman republic destroyed itself. Are we on a similar path?... Edward Watts, a historian at the University of California San Diego, has just published a new book titled Mortal Republic that carefully lays out what went wrong in ancient Rome — and how the lessons of its decline might help save fledgling republics like the United States today...

It is difficult to understand Uber's prospectus as anything other than "if we release information, we will scare off more potential buyers than we will attract". That makes us wonder what such information would reveal. And it leads to a class-action of Uber's IPO as a—in all likelihood very successful—attempt at affinity fraud: Rett Wallace: Uber’s Enormous, Vague IPO Prospectus Is an Outrage: "The 431-page updated prospectus was filled with lawyerly phrases and volumes of information on potential risks, but it left many serious professional investors wondering why a company that loses $3bn annually would be worth that much. The information that financial analysts would need simply wasn’t in there. A solicitation for so much money with so little information is an outrage, and a sign that something of central importance has gone wrong in US public markets in recent years...

An event coming on May 16: Preparing for the next recession is perhaps the most productive and urgent policy-analysis task op[en today: Equitable Growth: Preparing for the Next Recession: Policies to Reduce the Impact on the U.S. Economy - : "A Hamilton Project and Washington Center for Equitable Growth Policy Forum.... Historically, the U.S. has responded to recent recessions with a mix of monetary policy action and discretionary fiscal stimulus. However, since monetary policy options may be limited during the next recession, policymakers should consider adopting a range of fiscal policy measures now to help stabilize the economy when a future downturn inevitably occurs. This can be achieved with a range of fiscal policy responses aimed at expediting the next recovery through strengthening job creation and restoring confidence to businesses and households...

From Carole Cadwalladr as she uses TED to try to hold Silicon Valley to account—to get the social media companies to thin of themselves as informaiton utilities rather than misinformation utilities: Carole Cadwalladr: My TED Talk: How I Took on the Tech Titans in Their Lair: "Facebook had been 'warned' beforehand. And within minutes of stepping off stage, I was told that its press team had already lodged an official complaint... raised a serious challenge to the talk to claim 'factual inaccuracies'.... What factual inaccuracies, we both wondered. 'Let’s see what they come back with in the morning', she said. Spoiler: they never did. That night, though, there was what was described to me as 'an emergency dinner' between Anderson and a cadre of senior Facebook executives. They were very angry, my spies told me. But Anderson, one of the most thoughtful people in tech, seemed unruffled. 'There’s always been a strict church and state separation between sponsors and editorial', he said. 'And these are important conversations we need to have. There’s a lot of people here who are very upset about what has happened to the internet. They want to take it back and we have to start figuring out how'. At the end of my talk, he invited Zuckerberg or anyone else at Facebook to come and respond. Spoiler: they never did...

This is... not right. Prospectively, Barro was modeling a permanent supply-side boost to the level of GDP driven by higher investment to the tune of an extra 800 billion dollars annually. Barro's prospective model conclusion was not of a temporary demand-side boost. His shift to the demand side in his paper with Jason was a six-month-later climb-down. I know this. He knows this. I know he knows this. He knows I know he knows this. Why bother saying this? I think the point is to fuzz the issue: Barro made three assessments—one that the TCJA would boost output by 4% and it might achieve its full effect in 10 years, one that the TCJA would boost output by 7% with an 0.4% first-year effect, and a third with Jason Furman hat was not so much a model-based forecast of the impact but a reduced-form claim that if pst correlations held. It is this last that he now focuses on: Robert Barro: My Best Growth Forecast Ever: "America’s real GDP growth rate of 3.2% for the first quarter of this year is impressive, as was the 3% average growth in 2018 (measured from the fourth quarter of 2017 to the fourth quarter of 2018). Since the end of the Great Recession–from 2011 to 2017–the US economy grew by only 2.1% per year, on average. What accounts for the recent acceleration?...

Note to Self: Confirmed dead: Melisandre, Jorah, Dolorous Edd, Theon, Lyanna, Beric, Rhaegal, Visserion, Night King...

• The Knot of War: An Intake from "Slouching Towards Utopia?: An Economic History of the Long Twentieth Century, 1870-1914"

• Weekend Reading: Edmund Wilson (1940): Trotsky, History, and Providence

• Weekend Reading: Sean Jones: Brexiters, Elites and the Death of the Irish Joke

• Writing Bulls--- for the WSJ Op-Ed Page as a Career Strategy: The Nine Unprofessional Republican Economists

1. Adam Schiff: The Barr S---show: "Russians were engaged in a systemic effort to interfere in our election; the Trump campaign welcomed it, embraced it, built it into their plan, made full use of it, lied about it, covered it up, and then obstructed the investigation into it...

2. Alan Rappeport: Stung by Trump’s Trade Wars, Wisconsin’s Milk Farmers Face Extinction: "The Voelker dairy farm in Wisconsin sold off most of its cows this year as economic and technological forces, including President Trump’s trade war, take a toll on the dairy industry.... The flagship industry in a pivotal swing state faces an economic crisis.

3. Paul Krugman: The Great Republican Abdication: "The modern G.O.P. is perfectly willing to sell out America if that’s what it takes to get tax cuts for the wealthy...

4. Abigail Disney: "Let me very clear. I like Bob Iger. I do NOT speak for my family but only for myself. Other than owning shares (not that many) I have no more say in what happens there than anyone else. But by any objective measure a pay ratio over a thousand is insane...

5. Emma Newburger: Steve Schwarzman: Raise Minimum Wage, Eliminate Taxes for Teachers: "Blackstone CEO and Chairman Steve Schwarzman outlines a 'Marshall Plan' for the middle class to address increasing income inequality in America. The billionaire private equity titan and supporter of President Donald Trump pointed to three main pillars of the plan: a higher minimum wage, more resources for technical training programs in schools and the elimination of taxes for teachers. 'What we have is less an issue of income inequality than income insufficiency for the bottom 50% of the society', he says...

6. Ray Dalio: Why and How Capitalism Needs to Be Reformed)

7. Bloomberg: Quadriga’s Downfall Began When Founder Abruptly Fired All The Exchange’s ‘Law And Order’ Folks, Former Lawyer Says: "Christine Duhaime says Gerald Cotten decided one day in 2016 he no longer wanted the crypto exchange to be a listed company...

8. Dan Margolies and Celia Llopis-Jepsen: Kansas Supreme Court Rules State Constitution Protects Right To Abortion

9. Wikipedia: More Cowbell

10. Walter Laquer: On Thomas Mann's "Reflections on a Non-Political Man: "The war was totally justified, a genuine popular cause... Germany had been driven into the war by its envious adversaries. But it was also a necessity ('fate'), for the prewar world had been deeply corrupt, not worth preserving. War was a tremendous creative event, it brought about national unity and moral elevation. These basic ideas (of the early war years) were coupled with violent attacks against the decadent West: against France which had a democratic civilization but no culture; against the British who wanted to re-educate Germany using Gurkhas and Hottentots...

11. Gwern: Spaced Repetition

12. Branko Milanovic: Shadows and Lights of Globalization: "Today’s globalization and its effects, positive and negative, as in many ways a mirror-replay  of the first globalization that took place from the mid-19th century to the First World War...

13. Michael Nielsen: Augmenting Long-Term Memory

14. Wikipedia: Ian Richardson

How and why did they corrupt Wharton's Jeremy Siegel?: Cardiff Garcia: "'But his presence would serve to remind Fed governors that there are many ways to interpret economic data'. Gotta say "let's start putting incompetent people on important committees to remind other committee members that some people are incompetent" is multiverse-level thinking... 'Sujeet Indap: "This is embarrassing, Jeremy Siegel: 'Jeremy Siegel: A Professor for Stephen Moore: "I am not a fan of a gold or even a strict commodity standard, but analyzing sensitive commodity markets’ price signals should be an important input.... As for Mr. Moore’s earlier warnings that former Fed Chairman Ben Bernanke’s quantitative easing would lead to rapid inflation, recall that some well-respected monetary economists echoed them...

It is not 95 theses nailed to a church door, but it is five these that make a good deal of sense: Jason Furman and Lawrence H. Summers: Further Thinking on the Costs and Benefits of Deficits: "1. IS THE POLITICAL SYSTEM SO BIASED TOWARDS DEFICIT INCREASES THAT ECONOMISTS HAVE A RESPONSIBILITY TO OVEREMPHASIZE THE COSTS OF DEFICITS?... The political system can be biased towards greater deficits. But the opposite is often the case as well.... The fiscal stimulus was too small in the wake of the Great Recession.... Deficit reduction in the late 1990s was probably excessive, especially in light of the license it gave for unproductive tax cuts. Germany is one of many countries that has also shown that politicians can generate excessive fiscal prudence. Japan has done the same at many points.... With interest rates so low that they could limit central banks’ ability to respond in a downturn everywhere in the industrial world, the dangers posed by anti-deficit dogma in the next recession could be enormous.... The role of economists is to analyze the economy and not to lean one way or the other to counteract some presumed bias of politicians.... 2. DO THE CHANGING ECONOMICS OF DEFICITS MEAN THAT ANYTHING GOES AND WE DO NOT NEED TO PAY ANY ATTENTION TO FISCAL CONSTRAINTS?... No. The costs and benefits of deficits have changed, but we still need a limiting principle in order to conduct fiscal policy.... YOU ADVOCATE DOING NO HARM, BUT IS THAT ENOUGH TO STABILIZE THE DEBT AT A REASONABLE LEVEL? Yes, it likely is enough, if we also do what is widely agreed, which is to eventually close the shortfalls in both Social Security and Medicare hospital insurance and not use the savings to pay for other priorities.... 4. ISN’T ACTION ON THE DEFICIT URGENT IN ORDER TO REDUCE THE RISK OF A FISCAL CRISIS? No.... 5. DO YOU THINK ANYTHING ABOUT FISCAL POLICY IS URGENT? Yes. We should be making contingency plans for the next recession...

Rosa Luxemburg: Library: "Freedom only for the supporters of the government, only for the members of one party – however numerous they may be – is no freedom at all. Freedom is always and exclusively freedom for the one who thinks differently. Not because of any fanatical concept of ‘justice’ but because all that is instructive, wholesome and purifying in political freedom depends on this essential characteristic, and its effectiveness vanishes when ‘freedom’ becomes a special privilege...

Alan Rappeport: Stung by Trump’s Trade Wars, Wisconsin’s Milk Farmers Face Extinction: "The Voelker dairy farm in Wisconsin sold off most of its cows this year as economic and technological forces, including President Trump’s trade war, take a toll on the dairy industry.... The flagship industry in a pivotal swing state faces an economic crisis...

Adam Schiff: The Barr S---show: "Russians were engaged in a systemic effort to interfere in our election; the Trump campaign welcomed it, embraced it, built it into their plan, made full use of it, lied about it, covered it up, and then obstructed the investigation into it...

Weekend Reading: Edmund Wilson (1940): Trotsky, History, and Providence (from "To the Finland Station"): History, then, with its dialectical Trinity, had chosen Prince Svyatopolk-Mirsky to disillusion the middle class, had propounded revolutionary conclusions which it had compelled Father Gapon to bless, and will cruelly discredit and destroy certain Pharisees and Sadducees of Marxism before it summons the boiling lava of the Judgment.

These statements make no sense whatever unless one substitutes for the words history and dialectic of history the words Providence and God. And this Providential power of history is present in all the writings of Trotsky. John Jay Chapman said of Browning that God did duty in his work as noon, verb, adjective, adverb, interjection and prepositions; and the same is true of History with Trotsky...

Sean Jones: Brexiters, Elites and the Death of the Irish Joke: "One of the oddest aspects of the Brexit Kulturkrieg has been very rich white men depicting themselves as an oppressed minority standing up, heroically, to 'the Elite'... the defence of the Rees-Moggs and the Johnsons suggesting that it is outrageous to 'blame' them for going to Eton.... WTF, says half of Twitter, WTAF? I think I get it, but to explain it I need to take you back.... When I recall the laughter now about the Irish; about 'women’s libbers' and immigrants, I can hear a fear in it that I was deaf to at the time. To use words that would have horrified my father, it was a defence of sorts; a defence against the challenge to privilege. The cartoonist in the Sunday Express was Cummings. Here is cartoon of his from the mid-80s. It’s astonishing to look at, but its message is clear. It’s an image that is wringing wet with fear. British society was under threat from malign forces that believed in things like 'anti-racism' and not discriminating on grounds of sexual orientation. Here’s the thing though—it was. Although I do not pretend we are an equal society, the argument that we should try to be prevailed. We won.... The clearest sign was that the Irish joke had vanished...

This is chapter 7 of Slouching Towards Utopia?. I am of several minds with respect to it. I think it says what really needs to be said. I think it says it all in a remarkably short space—or it says it all to me. But it seems, to me, very different in tone from both the rest of the book I have written and from how this stuff is usually presented...

So tell me what you think of it:

VII. The Knot of War, 1914-1920

Nikita Sergeyevitch Khrushchev to John F. Kennedy (1962):

We and you ought not now to pull on the ends of the rope in which you have tied the knot of war, because the more the two of us pull, the tighter that knot will be tied. And a moment may come when that knot will be tied so tight that even he who tied it will not have the strength to untie it, and then it will be necessary to cut that knot, and what that would mean is not for me to explain to you, because you yourself understand perfectly of what terrible forces our countries dispose…

Two chapters ago we shifted our focus from economics to political economy: we needed to look not just at technology, production, organization, and exchange, but also at how people governing themselves and others tried to regulate the economy to preserve or produce a good society, or a society good for them. One chapter ago we shifted our focus to imperial politics: we needed to look not just at how peoples and their elites governed themselves, but how they governed others. Each of these two shifts brought us away from processes and factors that seem almost inevitable—in which the actions of individuals mostly cancel out, and if an opportunity was not seized by one person at one date it would have been seized by another soon after. Each of these two moved us closer to that part of history where individual actions matter: where individuals and their luck can divert history for good, either because of their place in the society or because of the waves of belief and expectations that they set in motion. And so the history became less a flowering of long-planted seeds and more choice and chance.

This chapter takes a further step in that direction: into politico-military affairs, where choice and chance is dominant. This fits awkwardly into an economic history. But it is necessary. For we cannot understand what the world was like in 1918 without looking at World War I. The world in 1914 had been a growing, substantially peaceful, prosperous—with problems, but prosperous—world, in which it was not irrational to be optimistic about human civilization. The world, especially Europe, in the ashes after World War I was different.

Jonathan Portes: Scruton Is Part of an Intellectual Culture Giving Respectability to Racism: "Scruton's essay... is a defence, of sorts, of Enoch Powell's Rivers of Blood speech. The direct political peg for Powell's speech was his opposition to the 1968 Race Relations Act, which outlawed direct discrimination in housing or employment, as exemplified by signs saying 'No blacks, no dogs, no Irish'.... Scruton's... final point... more extreme.... Immigrant integration... is logically impossible, even for the British-born children of immigrants. 'Like the White Queen in Through the Looking Glass, they [liberal politicians] practiced the art of believing six impossible propositions before breakfast, including the proposition that pious Muslims from the hinterlands of Asia would produce children loyal to a secular European state.'... Scruton's writings from the 2000s could have come straight from the BNP manifesto of the time, and legitimised those who made such claims...

Cryptocurrency! It would appear that TETHER is now being looted to prop up BITFINEX, which has been defrauded, as routinely happens in this space. Anybody seen the principals of Quadriga SX recently?:

Izabella Kaminska: We All Become Mf Global Eventually, Tether Edition: "The New York attorney-general's office... obtained a court order directing Bitfinex's parent company to suspend making transactions from Tether accounts into Bitfinex accounts for the purpose of masking a loss somewhere in the order of a 850m due to a suspected fraud by a partner processor. The documentation... contains... stuff... from a Bitfinex employee—codename Merlin—on August 15th last year, to... a Panama-based entity called Crypto Capital... which also... just happened to provide payment processing for Quadriga XS, the Canadian exchange whose founder 'died' with the keys to about 140m of customer money): 'Please understand this could be extremely dangerous for everybody, the entire crypto community. BTC could tank to below $1k if we don't act quickly.'... Opacity offers huge temptation with respect to wrongly taking advantage of customer flow information for prop trading purposes or for dipping into customer deposits for proprietary purposes without customer approval. Or just losing funds in other careless ways.... The key points are as follows...

The extra quarter's worth of data from the new BEA NIPA release raises this, once again, to the top of the pile: Note the contrast between the path of investment, on the one hand, implicit in the growth forecast of the effects of the Trump-Ryan-McConnell tax cut that Robert J. Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz and John. B. Taylor, and, on the other hand, reality:

If you are even 10% in the explain-the-world business—if you are even 1% in the explain-the-world business—such a sharp disjunction between what you had predicted and the outcome calls forth curiosity, interest, and explanations of why you think you went wrong and what your future research projects will be to figure it out.

Only if you are 100% in the I-am-engaging-in-vice-signalling-by-writing-bulls----to-please-my-political-masters business are you left doing <crickets> in response to such a very sharp disjunction between your predictions and reality.

Yet as I listen to each and very one of the Nine Unprofessional Republican Economists, all that I hear is: <crickets>...

• Economics as a Professional Vocation: Bulls--- Detection as a Student Learning Goal
• The Nine Unprofessional Republican Economists Have Become Even More Unprofessional

Come to think of it, none of the nine has dared to see that Steve Moore is unqualified to serve on the Federal Reserve, either—and two of the nine, Taylor and Lindsey, are, I am assured, in his corner...

• April 26, 2019: Weekly Forecasting Update: The right response to almost all economic data releases is: Nothing has changed—your view of the economic forecast today is different from what it was last week, last month, or three months ago in only minor ways. Specifically, it is still the case that...

• For the Weekend: Jessie J: Domino

1. I would note that when Twitter blocks a Republican politician for being a Nazi, it is not making a mistake: the point of the tweet it blocks is to tiptoe up to the edge of Nazihood while still maintaining a smidgeon of implausible deniability. But algorithms are not good at detecting those speech markers meant to preserve implausible deniability: Joseph Cox and Jason Koebler: [Why Won’t Twitter Treat White Supremacy Like ISIS? Because It Would Mean Banning Some Republican Politicians Too(https://motherboard.vice.com/enus/article/a3xgq5/why-wont-twitter-treat-white-supremacy-like-isis-because-it-would-mean-banning-some-republican-politicians-too)_: "A Twitter employee who works on machine learning believes that a proactive, algorithmic solution to white supremacy would also catch Republican politicians...

2. Vox Staff: 5 Years Of Vox, Explained by Our Staff

3. Lauren Williams: Vox Turns 5: "Since its launch in 2014, Vox has gone through countless changes. One thing has stayed the same... a pristine clarity of purpose that’s translated across beats, platforms, and mediums. We explain. We give the context. We go deep. We put our audience first. On Vox’s fifth anniversary, this clarity of purpose is the throughline of our best work...

4. Ariel Kalil, Catherine E. Born, James Kunz, and Pamela J. Caudill: Life Stressors, Social Support, and Depressive Symptoms Among First-Time Welfare Recipients

5. Ashley Jardina: White Identity Politics Is About More than Racism: "We can’t mask the fact that we’re also talking about the protection and preservation of whites in the United States at the expense of racial and ethnic minorities.... I make this really crisp distinction between white identity and white racial prejudice.... There are a lot of white people who do have this sense of solidarity but who wouldn’t score particularly high on any social science measure of racial prejudice. For these whites, it’s about protecting their in-group and showing some sense of favoritism.... Most... would absolutely reject any association with white supremacist organizations, and yet in some instances, they do hold a lot of the same beliefs as some of these groups...

6. Dao Nguyen: Cultural Cartography: "The people doing the something, reading or watching—what are they thinking?... What if, instead of tagging what articles or videos are about, what if we asked: How is it helping our users do a real job in their lives? Last year, we started a project to formally categorize our content in this way. We called it, 'cultural cartography'. It formalized an informal practice that we’ve had for a really long time: don’t just think about the subject matter; think also about, and in fact, primarily about, the job that your content is doing for the reader or the viewer...

Today: U.S. Bureau of Economic Analysis: Gross Domestic Product Release: "Real gross domestic product (GDP) increased 3.2 percent in the first quarter of 2019, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2018, real GDP increased 2.2 percent...

Key Points:

The right response to almost all economic data releases is: Nothing has changed—your view of the economic forecast today is different from what it was last week, last month, or three months ago in only minor ways. Specifically, it is still the case that:

• The Trump-McConnell-Ryan tax cut, to the extent that it was supposed to boost the American economy by boosting the supply side through increased investment in America, has been a complete failure.
• The Trump-McConnell-Ryan tax cut, to the extent that it was supposed to make America more unequal, has succeeded.
• The Trump-McConnell-Ryan tax cut delivered a substantial short-erm demand-side fiscal stimulus to growth that has now ebbed.
  • (A 3.2%/year rate of growth of final sales to domestic purchasers over the seven quarters starting in January 2017, pushing the level of Gross National Income up by 2.1% from this demand-side stimulus.)
• U.S. potential economic growth continues to be around 2%/year.
• There are still no signs the U.S. has entered that phase of the recovery in which inflation is accelerating.
• There are still no signs of interest rate normalization: secular stagnation continues to reign.
• There are still no signs the the U.S. is at "overfull employment" in any meaningful sense.

• A change from 3 months ago: The Federal Reserve is now supporting the recovery rather than focusing on policies that are likely to keep PCE chain inflation at 2%/year or lower.
• A change from 1 month ago: The Federal Reserve's abandonment of its focus on policies that are likely to keep PCE chain inflation at 2%/year or lower does not mean that it is preparing to do anything to avoid or moderate the next recession.
• A change from 1 week ago: The U.S. grew at 3.2%/year in the first quarter of 2019—1.6%-points higher than had been nowcast.
  • But the growth number you want to put in your head in assessing the strength of the economy is the 1.6%/year number that had been nowcast.
  • The U.S. grew faster than had been nowcast by borrowing 1%-point of growth from the future via what is likely to turn out to be noise in net exports—thus a borrowing highly likely to be reversed.
  • The U.S. grew faster than had been nowcast by investing heavily in inventories, which contributed 0.6%-point of growth.
    • This inventory investment may or may not be reversed: it may be a reaction to the economic and political-economic uncertainty created by Trump-as-chaos-monkey, and a resulting unwillingness of companies to run their value chains as lean as they used to.
    • If so, then while this inventory investment raises measured growth, it actually reflects a subtraction from American economic welfare.

If this Grassley clip were to be put forward in a cartoon of villainy, I would condemn it as an improbable fiction: Charles Gaba: GOP Senator Openly Admits Millions of Americans Are Only Alive Thanks to Democrats, and that Republicans Are Still Trying to Kill Them: "I've included the transcript below, but words can't accurately describe the tone of voice or the body language of Grassley in the actual video, so I'll just urge everyone to watch it.... This is... absolutely stunning. In the space of less than two minutes, Republican U.S. Senator Chuck Grassley (1) Admits that the ACA may be repealed due to a lawsuit brought by fellow Republicans, (2) Admits that he personally voted to repeal the ACA seven times, (3) Declares that it's not going to be repealed now even though he just admitted that it could be, (4) Yells at, berates and mocks a woman for wanting to know why he keeps trying to kill her, (5) Openly admits that the only reason she's alive today is because every Democratic Senator (plus 3 Republicans, one of whom is now dead) voted against repeal the last time around, (6) Openly admits that the only thing keeping her alive today is the fact that Democrats retook the House of Representatives, (7) Shrugs her off when she points out that he and his fellow Congressional Republicans are still trying to kill her. I'm not sure what else to say about this, except elections have consequences...

Jessie J: Domino:

Murray Waas: Mueller Prosecutors: Trump Did Obstruct Justice: "Prosecutors working for Special Counsel Robert Mueller concluded... that they had sufficient evidence to seek criminal charges against President Donald Trump for obstruction of justice.... The two prosecutors disclosed this information in then-confidential conversations with two other federal law enforcement officials, who subsequently recounted what they were told to me.... Without consulting with Mueller, Attorney General William Barr declared that in the absence of a final judgment by Mueller as to whether or not the president broke the law, he, the attorney general, had taken it upon himself to make that determination.... Many... have questioned the propriety and legitimacy of Barr’s making such a decision...

Adam Parkhomenko: @AdamParkhomenko: "Is this a joke? We paid North Korea to torture an American to death? Trump paid them to torture an American to death and then 'fell in love' with the monster who sent the bill: Abby D. Phillip: @abbydphillip: 'The US reportedly agreed to pay a $2 million "bill" for the care of Otto Warmbier, who was returned to the US in a coma and later died...

Robert Armstrong, Oliver Ralph and Eric Platt: Warren Buffett: ‘I’m Having More Fun Than Any 88-Year-Old in the World’: "Warren Buffett. Over the past 54 years, shares in his company, Berkshire Hathaway, have outpaced the S&P 500—a broad index of American stocks—by almost 2.5 million percentage points. The degree to which Buffett has outwitted successive generations of Wall Street rivals almost defies comprehension. It is striking, then, that over the past decade Buffett has fallen behind. A dollar invested in Berkshire 10 years ago is worth about 2.40; the same dollar in an S&P 500 tracker fund is worth 3.20. More striking still is what Buffett says about this.... 'I think this: if you want to join something that may have a tiny expectation of better [performance] than the S&P, I think we may be about the safest'.... Every working day, $100m rolls into Berkshire—cash from its subsidiaries, dividends from its shares, interest from its treasuries. Something must be done with it all. The porridge is starting to overrun the house.... If the problem is too much money, a natural response would be to get rid of some. Companies do this all the time: they pay dividends or sell off business units. Why not get smaller, so that Berkshire can get back to producing outsized returns?... The only way Buffett will countenance reducing the company’s massive pile of shareholder equity is to buy back shares when they are selling at a price he thinks is lower than their true value.... But what happens when Berkshire’s shares are trading at a fair price, and companies and stocks look expensive too? 'That’s my nightmare', Buffett says...

"Yes" for 2000, Alex: Andrew Napolitano: Did President Trump Obstruct Justice?: " Mueller laid out at least a half-dozen crimes of obstruction committed by Trump—from asking former Deputy National Security Adviser K.T. McFarland to write an untruthful letter about the reason for Flynn's chat with Kislyak, to asking Corey Lewandowski and then-former White House Counse lDon McGahn to fire Mueller and McGahn to lie about it, to firing Comey to impede the FBI's investigations, to dangling a pardon in front of Michael Cohen to stay silent, to ordering his aides to hide and delete records...

Barry Ritholtz: Is 3 & 30 the new 2 & 20?: "The hedge fund industry... are the latest group to succumb to 'Winner Take All' ethos.... In 2018 'the industry saw its biggest annual loss since 2011, declining 4.1 percent on an a fund-weighted basis'.... For all but the most elite... poor performance has led to pressure from clients. Look no further than the changing nature of those fees.... With a few notable exceptions, 2 & 20 is no more. About those exceptions: the winner takes all ethos applies as much to hedge fund managers as it does to the rest of us.... Bridgewater,... Pure Alpha vehicle generate[d] 14.6 percent in gains in 2018.... D.E. Shaw... is... moving back to a fee structure of 3 percent of assets and 30 percent of profits it used throughout the aughts. Its 14 billion Composite fund, gained 11.2 percent in 2018...

I have not yet seen anything that convinces me at what density of which types of activities "pedestrianization" becomes a great boon. I wish somebody would present the argument in a convincing way. Clearly not everywhere should be "pedestrianized": David Roberts: Barcelona, Spain, Urban Planning: A City’s Vision to Dig Out from Cars: "a four-square-block area, roughly 5,000 square meters, has been pedestrianized, reclaimed from cars and given over to people for a mix of uses. Only residents’ vehicles and delivery vehicles enter, and when they do, they are on the same level of pavement as pedestrians and must match their speed...

Nice to see that the very sharp Jared Bernstein of CBPP is recovering from his health misadventure, and is already saying very smart things again: Jared Bernstein: Ch-ch-ch-changes!: "GS fiscal analyst Alec Phillips... worth a close look.... One of the more important policy-driven determinants of near-term US growth is under debate right now: setting discretionary spending levels for 2020/21.... Even were Congress to agree to keep the levels of discretionary spending stable over the next few years, the impact will be a fading of fiscal stimulus on real GDP growth... When it comes to fiscal impulse, it’s not the level that matters. It’s the change. The last deal–the one that determined spending in 2018/19–went both well above the caps but, more important from an impulse perspective, went well above prior agreements.... That’s one reason to expect 2020 growth to be closer to 2 percent than 3 percent...

Noah Smith's plan for reviving rural and small-city America is to spend a fortune establishing research universities that will attract graduate students from abroad. A good many of them will then settle where they went to school. And they will then figure out how to use local factors of production to generates value in the world economy, and so revive the area. But that would require boosterish elites in the south, in the prairie, and in the midwest. And part of the social pathology of those regions is that they do not have boosterish elites:

Paul Krugman: Getting Real About Rural America: "Nobody knows how to reverse the heartland’s decline.... Rural lives matter—we’re all Americans, and deserve to share in the nation’s wealth.... But it’s also important to get real. There are powerful forces behind the relative and in some cases absolute economic decline of rural America—and the truth is that nobody knows how to reverse those forces. Put it this way: Many of the problems facing America have easy technical solutions; all we lack is the political will. Every other advanced country provides universal health care. Affordable child care is within easy reach. Rebuilding our fraying infrastructure would be expensive, but we can afford it—and it might well pay for itself. But reviving declining regions is really hard. Many countries have tried, but it’s difficult to find any convincing success stories... Southern Italy... the former East Germany.... Maybe we could do better, but history is not on our side...

Too little. And too late for 2010-2016. Hopefully not too late for the next business cycle. I confess I still do not understand why we are only here now. It has been known since the late 1990s by those who cared to think about it—and the Federal Reserve certainly ought to have cared to do so—that it was worth substantial compromises with respect to other goals in order to make sure that your policy excursions to the zero lower bound were rare and short. THIS SHOLD HAVE BEEN HAPPENING TWO DECADES AGO. INDEED, I THOUGHT THIS WAS HAPPENING TWO DECADES AGO: Joseph E. Gagnon and Christopher G. Collins: Changes Are Coming to the Fed's Monetary Policy Strategy | PIIE: "The most likely outcome of the review is that the Fed will commit itself to intentionally overshooting its inflation target after episodes at the zero bound in which it has undershot the target...

This may well be the most insightful thing I have read last year, at least as far as its definition of conservatism is concerned: Frank Wilhoit: The Travesty of Liberalism: "There is no such thing as liberalism—or progressivism, etc. There is only conservatism. No other political philosophy actually exists; by the political analogue of Gresham’s Law, conservatism has driven every other idea out of circulation. There might be, and should be, anti-conservatism; but it does not yet exist. What would it be? In order to answer that question, it is necessary and sufficient to characterize conservatism. Fortunately, this can be done very concisely. Conservatism consists of exactly one proposition, to wit: "There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect"...

• Note to Self: Now down to 187 snoozed emails! Progress!! Excelsior!!!...

• Comment of the Day: _"It's not just wrong, it's a fetish passing for scholarship.... The scenario Our Host describes was first laid out by Aristotle in the Politics. This ain't exactly cutting edge revisionism, folks...

1. Brandi Neal: Illustrator Tyler Feder's ‘Work-From-Home Fashions’ Cartoon Is Relatable AF: "I work from home and it's been about a month since I've done any laundry that's included pants with zippers. It's a relief to know I'm not the only one. Illustrator Tyler Feder gets it, and she created these work-from-home looks that are way too relatable...

2. David Anderson: Oklahoma Medicaid Expansion Is on the Ballot: "Oklahoma activists are going the same route as Utah, Idaho and Nebraska activists successfully used in the 2018 election cycle: They are trying to get enough signatures to get Medicaid expansion on the ballot...

3. Ron White (2010): You Can't Fix Stupid

4. Pavithra Mohan: Who is actually middle class?: "It might not feel that way, but you might actually be upper middle class...

5. Keith Whittington: Reckoning with the Mueller Report, Volume One: "That only one of Trump’s campaign managers found himself imprisoned in the aftermath of the election or that Donald Trump’s son-in-law thought it was a 'waste of time' when a meeting failed to deliver the promised incriminating Russian government files is no cause for celebration...

6. Ben Thompson: Uber Questions Follow-up, Luminary Launches, Luminary’s Broken Rung: "I do feel bad that yesterday’s Weekly Article, Uber Questions, was so late; in this case, the article itself got at why: I spent hours upon hours trying to craft a narrative around the numbers I could pull from Uber’s S-1, before finally realizing I was wasting my time. There was going to be no water from that stone. So that ended up being my point: there simply wasn’t anything in the S-1...

7. Wikipedia: 5 Nanometer: "In early 2018, TSMC announced production of a 5 nm node by 2020 on its new Fab 18. In October 2018, TSMC disclosed plans to start risk production of 5 nm devices by April 2019...

8. Wikipedia: Mississippi State Penitentiary: "Mississippi State Penitentiary (MSP), also known as Parchman Farm, is a prison farm, the oldest prison, and the only maximum security prison for men in the state of Mississippi...

9. Oliver Miller: 50 Quotes From The Movie Aliens, Ranked In Order Of Awesomeness

Henry Farrell and Bruce Schneier: Information Attacks on Democracies: "Democracies, in contrast, are vulnerable to information attacks that turn common political knowledge into contested political knowledge. If people disagree on the results of an election, or whether a census process is accurate, then democracy suffers. Similarly, if people lose any sense of what the other perspectives in society are, who is real and who is not real, then the debate and argument that democracy thrives on will be degraded. This is what seems to be Russia’s aims in their information campaigns against the U.S.: to weaken our collective trust in the institutions and systems that hold our country together. This is also the situation that writers like Adrien Chen and Peter Pomerantsev describe in today’s Russia, where no one knows which parties or voices are genuine, and which are puppets of the regime, creating general paranoia and despair...

Well worth your time chasing the links from this review of work Equitable Growth has published over the past several years on women's roles. At the root, I think, is that a great many of our economic and societal practices reflect gender reality as it stood 50, 100, or 150 years ago—and both biological and even more societal reality as it stood then was hardly conducive to the empowerment of women. Recall that two centuries ago an overwhelming proportion of women became mothers, that the typical mother stood a one-in-seven chance of dying in childbed, and that the typical mother (if she survived) would spend twenty years eating for two—pregnant or nursing—in a world in which childcare-by-non-relatives was a thing for only the upper class. Legacy institutions from that time are unlikely to serve today's women—or men—well: Equitable Growth: Equitable Growth’s History of Focusing on Women’s Role in the Economy: A Review: "How women are reshaping the American economy.... Gender wage inequality.... Paid family and medical leave.... Women... [and] family economic security.... The gender gap in economics.... The link between bodily autonomy and economic opportunity.... The wages of care.... Motherhood penalties...

Note to Self: Now down to 187 snoozed emails! Progress!! Excelsior!!!

This is absolutely brilliantly done, and striking in the size of the effect found!: Forced exile and migration producing a durable human-capital culture among ethnic Poles: Sascha O. Becker, Irena Grosfeld, Pauline Grosjean, Nico Voigtländer, Ekaterina Zhuravskaya: Forced Migration and Human Capital: Evidence from Post-WWII Population Transfers: "World War II, the Polish borders were redrawn... migration... from the Kresy territories in the East (taken over by the USSR) and were resettled mostly to the newly acquired Western Territories, from which Germans were expelled.... Poles with a family history of forced migration are significantly more educated today. Descendants of forced migrants have on average one extra year of schooling, driven by a higher propensity to finish secondary or higher education.... Since Kresy migrants were of the same ethnicity and religion as other Poles, we bypass confounding factors of other cases of forced migration.... Survey evidence suggests that forced migration led to a shift in preferences, away from material possessions and towards investment in a mobile asset–human capital. The effects persist over three generations...

It is interesting to note that Adam Smith's one explicit use of the phrase "Invisible Hand" in his Wealth of Nations is not a situation in which the competitive market equilibrium is Pareto-optimal. It is of a situation with two market failures—a home bias psychological failure among the merchants of Amsterdam, and agglomeration economies for mercantile activity in Amsterdam. And the two offset each other: if merchants were rational, the free-market equilibrium would ternate an inefficient sacrifice the agglomeration economies. If the agglomeration economies were absent, psychological home bias would lead to an inefficient concentration of activity:

Glory Liu: How the Chicago School Changed the Meaning of Adam Smith’s ‘Invisible Hand’: "For Friedman and Stigler, economics’ scientific power came from its ability to predict outcomes based on two central insights... in The Wealth of Nations... self-interest... [and,] of course, the invisible hand.... Few economists were as successful as Friedman in spreading this interpretation of Smith’s ideas to the public... populariz[ing] this interpretation of Smith’s invisible hand for an overtly conservative political agenda.... What makes the Smith of Milton Friedman and George Stigler so... problematic... is that they 'economized' Smith in a way that obscured if not precluded the relevance of his moral philosophy and political theory.... Whether his political value stems from the idea that he is an economist or moral philosopher or something else, however, is something that we—Smith’s readers—get to decide...

Sally Albright: @SallyAlbright: "I called it. Bernie ran the exact same scam that lost Jim Wright his Speakership and cost Newt Gingrich $400k in fines, but from campaign donations, not from lobbyists. And sadly, it's legal. Unethical af, but legal: 'Bernie spent $444k of campaign dollars on his own books in 2015...

Carole Cadwalladr: @carolecadwalla: "Oh wow. This is what happened after my talk at #TED2019. This bit is not in the video. @TEDchris invited @facebook to respond. ‘We will make time for you,’ he said. Instead, they made an official complaint about what I said. And then: silence...

Comment of the Day: Eric Lund: "It's not just wrong, it's a fetish passing for scholarship, and there's far too much of it out there. While I am by no means a classicist, it seems to me that a casual eye on the new books carousel at your university library would rescue from any temptation to indulge this kind of nonsense. Nino Luraghi's Ancient Messenians: Constructions of Ethnicity and Memory (2008) will lead to Hodkinson and Powell, eds. Sparta: New Perspectives, which, even if you are as lazy as a certain blog commentator and content yourself with the Bryn Mawr review up on JSTOR, you would be quickly led to a pdf posted by H. W. Singor https://delong.typepad.com/files/5_041_036.pdf... and to the chastening realisation that the scenario Our Host describes was first laid out by Aristotle in the Politics. This ain't exactly cutting edge revisionism, folks...

Michael Nielsen: Six Rules for Rewriting: "Write freely, and then... rewrite.... Six rules that help me recognize the bad bits in my own writing.... Every sentence should grab the reader and propel them forward.... Every paragraph should contain a striking idea.... The most significant ideas should be distilled into the most potent sentences possible.... Use the strongest appropriate verb.... Beware of nominalization: A common way we weaken verbs is by turning them into nouns, and then combining them with weaker verbs.... None of the above rules should be consciously applied while drafting.... Only once you are done should you... rewrite...

Randall Munroe: Physicists:

As I understand it, the big difference between Auten and Splinter's inequality estimates and those of other researchers are that Auten and Splinter (a) have not harmonized their estimates with the components of the System of National Accounts, (b) assume low-income business owners evade a greater share of the taxes they owe than do high-income business owners, (c) do not assign undistributed pension earnings to their ultimate owners, (d) assume that the corporate tax is largely borne by low-income current retirees, and (e) define the top 1% by summing the incomes of all earners in the family but calculate their earning by dividing income by the number of adults in the family (see PSZ: "Distributional National Accounts: Methods and Estimates for the United States Data Appendix").

I do not, given the random audit studies, understand why they do (b). And I think that (e) is simply wrong. (e) has a big effect on inequality trends because of increasing female paid employment and decreasing marriage rates among the non-rich. Thus at the moment at least I find myself strongly on the side of Piketty, Saez, and Zucman in this disagreement—and not just because two of those three work down the hall from me.

But I do strongly share Auten and Splinter's dissatisfaction with the concept being measured here by the standard estimates. I want to see inequality defined as the lifetime distribution fo economic and social power, and I would very much want to see Piketty, Saez, and Zucman—and others—try to lay out how they think of getting from the income estimates they report to an assessment of the inequality concept we really want to see: Austen Clemens: Progress Toward Consensus on Measuring U.S. Income Inequality: "The Organisation for Economic Co-operation and Development... the team from the U.S. Bureau of Economic Analysis... Gerald Auten... and David Splinter at the congressional Joint Committee on Taxation... Thomas Piketty... Emmanuel Saez and Gabriel Zucman.... All... attempt to quantify changes in income inequality after taxes and transfers...

Mohamed A. El-Erian: Economy: The Missing Elements for a Market 'Melt Up': "Stronger global fundamentals need to underpin elevated asset prices, and the Fed must maintain a tricky policy balance as the U.S. continues to outperform advanced countries.... The argument for a melt up (involving a pile on by investors who don't want to be left on the sidelines during a market rise regardless of any change in market fundamentals) essentially extrapolates forward the impact of central bank liquidity support in the context of the notion of investment portfolio underexposure to stocks and the continued proliferation of index products. This is also known as the FOMO, or fear-of-missing-out, effect...