Grasping Reality on TypePad, by Brad DeLong

1. Jonathan Chait: My Article Saying Trump Was Compromised by Russia Was Right: During the campaign, Trump was pursuing a building deal in Russia worth several hundred million dollars.... This deal created two forms of secret leverage for Vladimir Putin...

2. Can you tell us how to get to Sesame Street? Our immensely powerful mass and segmented media could be used for much good—if we could figure out how to keep them from hacking our brains to glue our eyeballs to the screen so they could sell ads from people who often do not wish us well: Melissa S. Kearney and Phillip B. Levine: Early Childhood Education by Television: Lessons from Sesame Street: "We investigate whether preschool-age children exposed to Sesame Street when it aired in 1969 experienced improved educational and labor market outcomes. We exploit geographic variation in broadcast reception derived from technological factors, namely UHF versus VHF transmission...

3. Alexander Clarkson: "They could call it 'Freedom of Mobility': Adam Bienkov: 'Jeremy Corbyn’s spokesman on whether retaining free movement will be one of his demands in talks with May: “Freedom of movement ends when we leave the EU and we will replace it with fair management of migration...”' The attempt to scrap the UK's involvement in the EU's 'Freedom of Movement' structure is already falling apart at a glacial pace. It is heading to the point Switzerland has landed where cosmetic tweaks to keep cultural conservatives happy are a facade behind which nothing changes...

4. According to the 2011 Census,, 140,000 people living in the United Kingdom had been born in France, with half of them—70,000—among the 8,000,000 people living in London. Of course, many more have French ancestry: The richest person under 30 in the world, Hugh Richard Louis Grosvenor, the Duke of Westminster, has prominent French ancestor—he is descended from Hugh the Fat Hunter, _gros veneur in France. And Elizabeth Windsor, the occupant of the most impressive house in London—a veritable palace—is herself descended from a French-Danish thug named Guillaume le Batard—"the bastard". But why is Tom Friedman such an idiot?: Tom Friedman: The United Kingdom Has Gone Mad: "The grievances of... of those who voted to leave... swamped by E.U. immigrants.... 300,000 French citizens living in London.... I had a drink with a member of Parliament in the bar in the House of Commons on Tuesday, and as we sat down he whispered to me that 'not a single person working in this whole building is British'...

5. Now we are up to four professional Republicans saying that Steve Moore is unqualified for the Fed: Greg Mankiw, Ross Douthat, Steve Moore himself, and now James Pethokoukis: James Pethokoukis: Don't let Trump blow up the Fed: "It is important that the Fed be independent both in practice and perception. We know what happens when it isn't.... While we don't know for sure why Burns decided to run a loose monetary policy in an already inflationary environment, his actions 'helped to trigger an extremely costly inflationary boom–bust cycle', concludes economist Burton Abrams in How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes...

6. Martin Wolf: A Long Brexit Extension Offers a Chance To Think Again: "The withdrawal agreement does not command the needed support in parliament or country.... The UK economy is already some 2.5 per cent smaller than it would have been if Britain had not decided on Brexit. The knock-on effect on the public finances is, it argues, £360m a week, almost exactly the sum that the fount of economic wisdom, Boris Johnson, promised would be available after Brexit.... Philip Hammond, chancellor of exchequer, used to say that the British people 'did not vote to be poorer'. But they did. Alas, it could get far worse.... The view that the British people are enslaved by the EU is laughable. But the analogy is better than Mr Johnson knew. The freed Israelites wandered in the wilderness for 40 years. That was not the promise of the Brexit campaign. But it is probably accurate. A no-deal Brexit is likely to deliver a large negative shock, followed by decades of weaker growth in an economy with reduced access to its natural markets and shorn of global confidence. The prime minister is absolutely right to reject this option, though that has come far too late...

7. Paul Krugman (2013): Milton Friedman, Unperson: "[It] is really interesting is the way Friedman has virtually vanished from policy discourse. Keynes is very much back.... Hayek is back in some sense.... But Friedman is pretty much absent. This is hardly what you would have expected not that long ago, when Friedman’s reputation bestrode the economic world like a colossus, when Greg Mankiw declared Friedman, not Keynes, the greatest economist of the 20th century...

8. Equitable Growth's Kate Bahn sends us to what she rightly describes as "a really heartbreaking and inspiring and important thread" treating to the death of Alan Krueger: Kate Bahn: @LipstickEcon: Liz Ananat: @LizAnanat: "I have some things to say about the death from depression of Alan Krueger.... Alan was unfailingly and unnecessarily kind to me. He also made many of the things I love about economics possible. But others e.g. @dynarski @arindube can speak better to these aspects of his life. What I can speak to is living with depression as an economist. Economics is not a gentle profession, and I think that many economists are afraid to say they experience depression because it might be seen as weakness. So we say things like 'Someone close to me' or 'Many struggle with'. But I now see how otherizing it is. It says economists can care about suffering and still be successful, but they can’t suffer THEMSELVES—that would make them too weak to be good at what they do. And part of why I wasn’t 'out' about my depression was I feared this was true. Here’s the thing: if your theory has been that experiencing depression makes you not a good economist, then your theory fails to account for the empirical reality of Alan Krueger...

9. Matt Bruenig: Various Job Guarantee Quotes: "Despite the long-standing JG promise of a program featuring shit jobs at s--- wages with the intent of undermining the regular welfare state and private sector workers, people have recently become very confused into thinking it is something else. Some of that confusion is just the result of clever messaging...

10. Louis Brandeis believed that bigness is bad per se—thus failing to see that since, well, at least 1870 value chains and the division of the labor had become sufficiently complicated that efficient production required a great deal of central planning on the level of the large firm. Toyota sells 250 billion dollars worth of cars each year—that is 0.2 percent of global GDP—and roughly 2/3 of that value flow is under the centrally-planned direction of the Toyota design and production management teams, not the result of arms-length market-price deals between truly independent producers. Bork believed that any bigness was good if could be colorably or uncolorably claimed to be the result of some clever economy of scale that a lawyer who was part of the judge's social circle could think up was never credible as anything other than an excuse for rent-seeking corruption. To find the true path, look, and Jonathan Baker says, to FDR antitrust guru Thurman Arnold: Jonathan Baker: Revitalizing U.S. Antitrust Enforcement Is Not Simply a Contest Between Brandeis and Bork—Look First to Thurman Arnold: "Growing market power in the United States today puts a spotlight on our nation’s antitrust laws—the critical policy tool for restoring competition where it is lacking—from airlines and brewing to hospitals and dominant online platforms. But how can these laws be made more effective in this environment? The best guide from the past is Thurman Arnold, President Franklin D. Roosevelt’s longest-serving antitrust enforcer. Arnold helped shape a political consensus for effective antitrust enforcement. Yet his singular contribution is often overlooked in the present-day debate over antitrust’s future. That achievement—the embrace of an antitrust enforcement playbook for supervising large firms that is competition-promoting and economic growth-enhancing—is endangered today...

11. Janet Yellen: Former Fed Chair Janet Yellen: Far from Retired, Nowhere Near Done: Ryssdal: Do you think the president has a grasp of macroeconomic policy? Yellen: No, I do not...

12. Ken Rogoff has picked up the goal posts and moved them five miles down the field! Recall his (and Carmen Reinhart's) austerity line from 2011: Too Much Debt Means the Economy Can’t Grow: "Current debt trajectories are a risk to long-term growth and stability.... [Debt] burdens above 90 percent are associated with 1 percent lower median growth..." But it turns out "austerity" does not mean "move heaven and earth to keep debt-to-annual GDP less than 90%, no matter how high current unemployment". Instead, all "austerity" means is: Kenneth Rogoff: The Austerity Chronicles: "Alesina, Favero, and Giavazzi find that their main conclusions are valid even at the zero bound.... Expenditure-based austerity programs tend to impose lower costs on output than do programs based on tax hikes... [A] politician who tries to adopt an austerity program will [not necessarily] be kicked out of office.... The nature of any pathbreaking scholarship is that it sets the agenda for further research. Alesina, Favero, and Giavazzi have written a fundamentally non-ideological book that raises the bar for future studies of fiscal retrenchment policies. No doubt it will continue to set the standard for such research for many years to come, however much left-leaning polemicists try to dismiss it as blasphemy...

13. Migration—temporary and permanent—is turning out to be one of the magic bullets for global economic growth: Ricardo Hausmann (2013): The Tacit-Knowledge Economy: "Know how resides in brains, and emerging and developing countries should focus on attracting them.... Tacit knowledge flows through amazingly slow and narrow channels. The productivity of Nuevo León, Mexico, is higher than in South Korea, but that of Guerrero, another Mexican state, resembles levels in Honduras. Moving knowledge across Mexican states has been difficult and slow. It is easier to move brains than it is to move tacit knowledge into brains.... Knowledge moves when people do...

14. George Magnus: China Leadership Monitor: "China’s TFP surged in the 1980s following the agricultural and ownership reforms, in the 1990s following the state enterprise reforms and the creation of a modern housing market, and in the 2000s as China prepared for and was then able to exploit WTO membership.... China’s one-party system deservedly has won plaudits when it has been most ambitious with regard to economic reforms and experimentation with market mechanisms. But this is not the case, for example, before the 1980s and again since 2012, when reforms were suppressed or stifled and inputs were boosted, but without any improvements...

15. This Federal Reserve interest-raising cycle: not just an ex-post but an ex-ante mistake: Adam Ozimek and Michael Ferlez: The Fed’s Mistake: "WWhen the Fed faces similar uncertainty in the future, looks back at the deci- sion to start raising rates in 2015, and judges that the path of monetary policy turned out to be optimal, such an assessment will offer support for raising rates. If instead the Fed looks back and sees that the path was sub-optimal, such an assessment will offer a cautionary tale.... The current Fed estimate of the long-run unemployment rate implies that in December 2015 the gap was 0.55 percentage point instead of 0.1.... The assumption that the LRU will continue to be revised downward is consistent with the pattern over the past few years, and is further supported by recent statements from Powell that indicate a strong possibility that LRU will continue to fall. As the best estimates of the long-run unemployment rate fall, the magnitude of the Fed’s ex ante error will continue to grow.... the Fed made a numerically significant error in underestimating the amount of labor market slack...

16. Pharmaceutical pricing appears to be one of the very few areas in which an equitable growth agenda can be advanced at the federal level over the next two years: CPPC: How Rebate Walls Block Access to Affordable Drugs: "The company that manufacturers the older drug can "bundle" its rebates for all those prescriptions and use it as a weapon. Some drug companies are using the large group of rebates, also known as a 'rebate wall', as a negotiating tactic-they demand that health plans not favor or exclude newer medicines from their formularies, even if the newer medicines lead to better outcomes. One example of this problem are when Johnson & Johnson used rebate walls to protect its drug Remicade and stifle competition from Pfizer's Inflectra, a lower cost biosimilar drug.... How can this be fixed? One possible solution: the Trump administration has announced a proposed rebate rule that eliminate the anti-kickback safe harbor that is currently applied to rebates. Another idea would be indication-based pricing, which is requiring prices and rebates to be negotiated for each drug and not bundled together. And as we mentioned earlier, the Federal Trade Commission could and should forbid drug manufacturers from erecting rebate walls...

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