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June 2019

Eric Levitz: Trump’s Jokes About Shooting Migrants Are No Laughing Matter: "He made a point of noting that other countries do use weapons in such circumstances, suggested that there might be no other way to 'stop these people', and declined to explicitly condemn the idea that somebody should shoot them. Meanwhile, long before... Trump had already given our nation’s most trigger-happy 'patriots' reason to interpret 'we can’t use weapons' as 'but perhaps you should'...

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Willem Jongman, Jan Jacobs, and Geertje Goldewijk: Health and Wealth in the Roman Empire: "Archaeological research of the last few decades has given us far better data... substantial increases in rural site numbers and site sizes... hand-in-hand with a substantial urban growth from existing and new towns. In Italy this rural and urban growth mostly occurred from the late fourth or early third century B.C., and in the provinces often following Roman conquest.... Numbers mostly peak in the first and early second century A.D., followed by often quite dramatic decline, mostly from the late second century A.D., after the so-called Antonine Plague...

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Doug Jones: Post Erectus: "Alan Roger... and Ryan Bohlender and Chad Huff['s]... model says that about 700,000 years ago. a small population split from the rest of humanity and then quickly split again to give rise to the ancestors of Neanderthals and Denisovans... an Out Of Africa event in the Middle Pleistocene.... The ancestors of Neanderthals and Denisovans then replaced Homo erectus in Eurasia.... John Hawks notes.... 'Humans stand out among our close primate relatives as effective biological invaders. Our recent history has included range expansions into remote and harsh geographic regions, and invasions by some populations into areas long occupied by others'. We’ll be seeing more instances of this in days to come on the blog...

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Martin Wolf: G20 Meets as Trade Rifts Heighten Risks to Global Economy: "Tit-for-tat tariffs between the US and China risk hitting an already precarious global recovery.... In today’s uncertain environment, policymakers need particularly to display caution, which is precisely the quality that populist politicians, with their contempt for rules, institutions and 'experts', lack most.... The G20... founded in an attempt to broaden the base for global co-operation, is a victim of the general disarray. The G20’s members are physicians who need to heal themselves. Will they? Not today, is surely the answer...

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June 28, 2019: Weekly Forecasting Update

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The right response to almost all economic data releases is: Next to nothing has changed with respect to the forecast. Worth noting is that the ten-year CPI inflation breakeven is now 1.6%. If investors were risk neutral with respect to bearing this particular inflation risk, this breakeven ought to be 2.5% if investors expected the Federal Reserve to meet its 2.0% PCE inflation target over the next decade:

Federal Reserve Bank of New York: Nowcasting Report: June 28, 2019: "The... Staff Nowcast stands at 1.3% for 2019:Q2 and 1.2% for 2019:Q3...

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It is macro: recession, weak recovery, catastrophe, and then superweak recovery...

I confess I do not get this from Paul Krugman.

Yes, the trade deficit crowds-out traditionally-male blue-collar import-substituting manufacturing jobs, but imports crowd-in traditionally-male blue-collar wholesale trade jobs, and finance traditionally-male blue-collar construction (and capital-goods manufacturing) jobs. If you look at all traditionally-male blue-collar—wholesale, construction, manufacturing, and mining)–what you get is not a story of the trade deficit, but rather a story of (a) macro shocks to aggregate demand, and (b) the long-run technology-and-preferences trend—some of which is automation.

NAFTA is nowhere.

The 2002-2007 bilateral-trade "China shock" is simply not a terribly big deal for the country as a whole: employment in traditionally-male blue-collar occupations was flat. A big deal for places that found their manufactures competing with new imports from China, yes. But not for blue-collar traditionally-male employment in the country as a whole.

For the country as a whole, it is aggregate demand—2001-3 recession, weak recovery, 2007-9 catastrophe, and then superweak recovery—with a supporting role for technology-and-preferences:

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Paul Krugman: "Yang asserts that automation destroyed lots of manufacturing in the midwest, [but] you don't have to be a protectionist to realize that the acceleration of job loss after 2000 was mainly about the surging trade deficit:

18 Paul Krugman on Twitter And while Yang asserts that automation destroyed lots of manufacturing in the midwest you don t have to be a protectionist to realize that the acceleration of job loss after 2000 was mainly about the surging

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I concur with Noah Smith's judgment here. Elizabeth Warren's policy shop is highly professional, and that she already has such a highly professional policy shop is a strong recon to think she would make a good president: Noah Smith: Elizabeth Warren Channels the Real New Deal: "Just since the start of this year, Warren has released no fewer than 19 detailed economic policy proposals. This outpouring of ideas has been so dramatic that it has spawned Twitter hashtags such as #shehasaplan. Warren's ideas are neither the cautious, technocratic tweaks that tend to emerge from centrist think tanks, nor the bold but vague promises often issued by the socialist left. Nor are they merely a laundry list.... Instead, they represent a coherent, unified program for transforming the U.S. economy.... Ultimately no set of big, transformational ideas will be perfect. The New Deal certainly wasn't. But by thinking big, combining intelligence with ambition, and being willing to engage both the public and private sectors, Warren has set herself up to be the closest thing modern American politics has to a successor to FDR...

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Fairly Recently: Must- and Should-Reads, and Writings... (June 26, 2019)

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  • Weekly Forecasting Update: June 21, 2019: : "About the only news in the past week or so is that the Federal Reserve has—behind the curve—become convinced that it raised interest rates too much in 2018. To the extent they attribute their change of view to news, the news is that President Trump is a chaos monkey with respect to international trade—but that was well known back in 2015. Worth noting is that the ten-year CPI inflation breakeven is now 1.6%. If investors were risk neutral with respect to bearing this particular inflation risk, this breakeven ought to be 2.5% if investors expected the Federal Reserve to meet its 2.0% PCE inflation target over the next decade...

  • Project Syndicate: Robo-Apocalypse? Not in Your Lifetime: "Historically, the tasks that humans have performed have fallen into ten broad categories. The first, and most basic, is using one’s body to move physical objects, which is followed by using one’s eyes and fingers to create discrete material goods. The third category involves feeding materials into machine-driven production processes...

  • Project Syndicate: U.S. as Doofus Country, China, and Grand Strategy: "note that—of course—all those necessary and needed pieces of action require that the U.S. look and act inwardly, not outwardly...

  • 15000 workers in the top 0.01% of income this year receive an average of 400,000 dollars a day How could one go about spending that? Suppose you decided this morning that you wanted to rent the 2000 square-foot Ritz-Carlton suite at the Ritz-Carlton San Francisco hotel for the week of next Memorial Day, and did so. That would set you back 6000 for seven nights. You would still have to spend 394,000 more today to avoid getting richer: to avoid getting richer you would have to spend 16,667 an hour, awake and asleep, day in and day out...

  • Comment of the Day: JEC: On Economist James Buchanan: "So... what Buchanan learned from serving in the Navy at a time when blacks were allowed to serve on ships exclusively as cooks was that snobbish Yankees were mean to him. Remind me again why we're spending time on this man's 'thought?...

  • For the Weekend: Where There's a Whip, There's a Way!

  • Weekend Reading: Discussion of J. Bradford DeLong and Lawrence H. Summers: "Fiscal Policy in a Depressed Economy

  • Weekend Reading: John Maynard Keynes (1937): How to Avoid a Slump: "So long as surplus resources were widely diffused between industries and localities it was no great matter at what point in the economic structure the impulse of an increased demand was applied. But the evidence grows that—for several reasons into which there is no space to enter here—the economic structure is unfortunately rigid, and that (for example) building activity in the home counties is less effective than one might have hoped in decreasing unemployment in the distressed areas. It follows that the later stages of recovery require a different technique...

  • Liveblogging: The Anglo-Saxon Chronicle: The Conquest of Southeast Britain: "A.D. 457. This year Hengest and Esc fought with the Britons on the spot that is called Crayford, and there slew four thousand men. The Britons then forsook the land of Kent, and in great consternation fled to London.... A.D. 473. This year Hengest and Esc fought with the Welsh, and took immense Booty. And the Welsh fled from the English like fire...

  • Liveblogging: The Anglo-Saxon Chronicle: The Arrival of the Saxons: "A.D. 449. This year Marcian and Valentinian assumed the empire, and reigned seven winters. In their days Hengest and Horsa, invited by Wurtgern, king of the Britons to his assistance, landed in Britain in a place that is called Ipwinesfleet; first of all to support the Britons, but they afterwards fought against them...

  • Liveblogging: The Anglo-Saxon Chronicle: The Fall of the Western Roman Empire: "A.D. 443. This year sent the Britons over sea to Rome, and begged assistance against the Picts; but they had none, for the Romans were at war with Attila, king of the Huns. Then sent they to the Angles, and requested the same from the nobles of that nation...

  • Liveblogging: The Anglo-Saxon Chronicle: To the End of Roman Rule in Britain: "A.D. 189. This year Severus came to the empire; and went with his army into Britain, and subdued in battle a great part of the island. Then wrought he a mound of turf, with a broad wall thereupon, from sea to sea, for the defence of the Britons...

  • A Year Ago on Equitable Growth: Fifteen Worthy Reads from around June 28, 2018


  1. Caleb Melby, Laura Marcinek and Danielle Burger (2014): Inflation Hawks Unrepentant and Zombified Watch!: ": Fed Critics Say ’10 Letter Warning Inflation Still Right.... John Taylor 'inflation, [un]employment... destroy[ed] financial markets, complicate[d]... normaliz[ation]... all have happened.'... Douglas Holtz-Eakin 'the clever thing... is never give a number and a date. They are going to generate an uptick in core inflation.... I don’t know when, but they will.' Niall Ferguson 'this bull market has been accompanied by significant financial market distortions, just as we foresaw. Note that word "risk". And note the absence of a date. There is in fact still a risk of currency debasement and inflation.'... David Malpass: 'The letter was correct'.... Amity Shlaes: 'inflation could come... the nation is not prepared'.... Cliff Asness... declined to comment. Michael Boskin... didn’t immediately respond.... Charles Calomiris... was traveling and unavailable.... Jim Chanos... didn’t return a phone call or an e-mail.... John Cogan... didn’t respond.... Nicole Gelinas... didn’t respond.... Phone calls... and an e-mail... to Kevin A. Hassett... weren’t returned. Roger Hertog... declined to comment.... Gregory Hess... didn’t immediately return.... Diana DeSocio... said Klarman stands by the position.... William Kristol... didn’t immediately return a call.... Ronald McKinnon... died yesterday prior to a Bloomberg call.... Dan Senor... didn’t respond.... Stephen Spruiell... declined to comment... https://blogs.wsj.com/economics/2010/11/15/open-letter-to-ben-bernanke/

  2. Win McCormack: The Green New Deal: A Capitalist Plot: "To save the planet, be more like Ike.... According Cohen and DeLong, economists at Berkeley who are among the key sources of the economic development strategy underlying the Green New Deal, the Eisenhower years were perhaps the most economically consequential in modern American history...

  3. Emily Blanchard: Trade Wars in the Global Value Chain Era: "Early evidence suggests that even in the very short run, the current trade war is taking a toll on US firms and consumers.6 The key question in the months and years to come is how, if these tariffs continue, they will begin to feed back through global value chains at the expense of firms and workers in the US, China, and around the world...

  4. John Maynard Keynes (1937): How to Avoid a Slump: "The boom, not the slump, is the right time for austerity at the Treasury...

  5. Patience Haggin and Kara Dapena: Google’s Ad Dominance Explained in Three Charts: "Tech giant is the leading supplier of services to carry out virtually every step of purchasing and selling ads...

  6. "Barry Eichengreen (2015): Hall of Mirrors: The Great Depression, The Great Recession, and the Uses—and Misuses—of History

  7. Paul Krugman: Notes on Excessive Wealth Disorder: "How not to repeat the mistakes of 2011...

  8. Antonio Gramsci (1926): Some Aspects of the Southern Question:

  9. Thomas R. Bates (1975): Gramsci and the Theory of Hegemony: "The intellectuals succeed in creating hegemony to the extent that they extend the world view of the rulers to the world, and thereby secure the 'free' consent of the masses to the law and order of the land. To the extent that the intellectuals fail to create hegemony, the ruling class falls back on the state's coercive apparatus...

  10. Weekend Reading: Discussion of J. Bradford DeLong and Lawrence H. Summers (2012): "Fiscal Policy in a Depressed Economy"

  11. Notebook: Economics Gone Wrong

  12. J. Bradford Delong and Lawrence H. Summers (2012): Fiscal Policy in a Depressed Economy

  13. Paul Krugman: Notes on Excessive Wealth Disorder: "How not to repeat the mistakes of 2011...

  14. It makes me sad that the sweet spot for this is 50 a year. How many such things do I feel I can afford to subscribe to at 50 a year? About 1/10 of those I would feel I could afford to subscribe to at 10 a year...: Daniel Mallory Ortberg: The Shatner Chatner

  15. Martin Wolf (2014): The Shifts and the Shocks: What We've Learned—and Have Still to Learn—from the Financial Crisis

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Noah Smith: Welcome to the Age of Surveillance Capitalism: "In 1998... David Brin published a remarkably prescient book... The Transparent Society: Will Technology Force Us To Choose Between Privacy And Freedom?... [But] however powerful crowds with cameras might be, big organizations like governments and corporations have at their disposal many more resources, better technology and more invasive, diabolical planning than the average person. And we’re just starting to discover what happens when those mighty forces put citizens and consumers into a panopticon.... Surveillance capitalism... could ultimately have the effect of creating a so-called social credit system like the one being piloted in China. Under that system, people who fail to recycle, park in the wrong place, or play loud music can be barred from riding trains, obtaining credit or otherwise participating in other parts of economic life. If that sounds like totalitarianism, it’s because it is...

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Excellent from the very sharp Elena Prager and Matt Schmitt down at UCLA and out by Lake Michigan. Hospital mergers appear to be as much about gaining market power with respect to health-care workers as about gaining market power with respect to patients and their insurers.There continues to be very little evidence that they are about efficiencies of any kind: Elena Prager and Matt Schmitt: Employer Consolidation and Wages: Evidence from Hospitals: "We find evidence of reduced wage growth in cases where both (i) the increase in concentration induced by the merger is large and (ii) workers’ skills are at least somewhat industry-specific. Following such mergers, annual wage growth is 1.1pp slower for skilled non-health professionals and 1.7pp slower for nursing and pharmacy workers than in markets without mergers.... Observed patterns are unlikely to be explained by merger-related changes aside from labor market power. Wage growth slowdowns appear to be attenuated in markets with strong labor unions, and we do not observe reduced wage growth after out-of-market mergers that leave employer concentration unchanged...

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Damon Jones came to Equitable Growth and gave a paper about Alaska's Oil Dividend Fund that made me significantly more optimistic about Universal Basic Income: Damon Jones: Labor Market Impacts of Universal and Permanent Cash Transfers: "UBI-like cash transfer in Alaska: unconditional, universal, long-run, captures macro effects. The macro effects of Alaska PDF on labor supply less negative than the macro effects of an unconditional cash transfer... a very small (0.001) and insignificant effect on employment to population...

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Liveblogging: The Anglo-Saxon Chronicle: The Conquest of Southeast Britain

Journey To Normandy Scene 1

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): The Conquest of Southeast Britain: "A.D. 455. This year Hengest and Horsa fought with Wurtgern the king on the spot that is called Aylesford. His brother Horsa being there slain, Hengest afterwards took to the kingdom with his son Esc...

...A.D. 457. This year Hengest and Esc fought with the Britons on the spot that is called Crayford, and there slew four thousand men. The Britons then forsook the land of Kent, and in great consternation fled to London.

A.D. 465. This year Hengest and Esc fought with the Welsh, nigh Wippedfleet; and there slew twelve leaders, all Welsh. On their side a thane was there slain, whose name was Wipped.

A.D. 473. This year Hengest and Esc fought with the Welsh, and took immense Booty. And the Welsh fled from the English like fire...

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A Year Ago on Equitable Growth: Fifteen Worthy Reads from around June 28, 2018

stacks and stacks of books

Worthy Reads on Equitable Growth:

  1. A very nice paper concluding, among other things, that geographic mobility is the friend and not the foe of increases in the minimum wage as an equitable growth policy—it is the individuals who are able to move across state lines to opportunity who appear to benefit the most: Kevin Rinz and John Voorheis: The distributional effects of minimum wages: Evidence from linked survey and administrative data: "States and localities are increasingly experimenting with higher minimum wage...

  2. Brad DeLong: The lack of Federal Reserve maneuvering room is very worrisome

  3. Karen Dynan joins Equitable Growth Steering Committee

  4. It is worth stressing that motherhood penalties—work-gap penalties more generally—appear present throughout and beyond the Global North. Our labor market institutions and expectations are still as if designed for a male-dominated paid workforce in which women exit the paid labor force upon marriage or pregnancy and do not return: Eunjung Jee, Joya Misra, and Marta Murray-Close: Motherhood penalties in the U.S., 1986-2014: "Mothers earn less than childless women...

  5. I have long thought it unwise that feminist economics is not a much larger and more prominent subfield. The past century and a half, after all, has seen the typical woman go from eating for two for twenty years to eating for two for onlyfour. That is a huge change, with mammoth and fascinating implications and consequences within and far beyond economics—yet remarkably few (male) economists seem to care: Kate Bahn: Reporting from the International Association for Feminist Economics Conference: "Great presentation on 'Bridging Theory and Action: Digital Platforms as an Opportunity for Feminist Economics' by @leezagavronsky and @Bilguis92.... We need to move beyond the online/offline binary, since it often leads activism out in the world. Economists don't need to dumb things down, but present things in a more inclusive manner, with less jargon that obfuscates what we are actually trying to say...

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Thomas Hale: This Is Nuts, When's the Maturity?: "Austria borrowed €3.5bn for 100 years... currently yielding 1.1 per cent.... One of the issues with long-dated bonds is the question of how long it would take to get your money back. The 8 per cent yield on Argentina's 100-year bond, for example, meant investors would, in the absence of a default, receive their money back in a reasonable time period-i.e., within the duration of their own lives. That's obviously not the case with the... Austrian bond(s).... This is nuts in the sense that structural factors on the buyside lead to ostensible absurdities, or in the sense that the interest rate environment in the eurozone is unprecedented, rather than nuts in the sense that this bond is objectively a bad asset to buy.... The German 10 year Bund... is back at a new lowest-level-of-all-time-level of -0.33 per cent.... You just lose less than you might elsewhere, which, conceivably, is a kind of gain, depending on what happens to everyone else...

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Making it real that we live in the "second gilded age"...

I am hearing from a number of people that columns like this one and its ilk by Paul Krugman and our other compadres are bloodless, and ineffective. They do not convey any sense of what is happening.

So let me make it more concrete:

The top 0.01% of American workers—now some 15000—this year have incomes, including capital gains, of about 500 times the average. Typical incomes in America today, including capital gains and benefits, are perhaps 300 a working day. The gulf between them and average income is large: average income is about 800. Thus 15000 workers in the top 0.01% of income this year receive an average of 400,000 dollars a day.

How could one go about spending that? Suppose you decided this morning that you wanted to rent the 2000 square-foot Ritz-Carlton suite at the Ritz-Carlton San Francisco hotel for the week of next Memorial Day, and did so. That would set you back 6000 for seven nights. You would still have to spend 394,000 more today to avoid getting richer: to avoid getting richer you would have to spend 16,667 an hour, awake and asleep, day in and day out.

One way to think about the spending of these 15000 superrich is that they are, collectively, through their spending employing 7,500,000 who are dedicated to making them happier and advancing their purposes, whatever they may be. And a large proportion of them are bosses, partially constrained by their obligation to advance the purposes of the organizations they work for, but free to shape and interpret those purposes as they wish. Guess average is effectively the unconstrained boss of only 3 more: that makes 20,000,000 of us who are paid to directly and indirectly and who are thus are focused on advancing the top 0.01%'s particular and idiosyncratic purposes. Is that likely to be a healthy society?

And then there are the rest of the top 0.1%—not 15,000 but 135,000 each on average one-ninth as well-off—who must spend and reinvest not 400,000 but 45,000 a day, but who are collectively of the same economic weight as the top 0.01%, and thus have another 20,000,000 of us working for them: paid to directly and indirectly and thus focused on advancing the top 0.1%'s particular and idiosyncratic purposes as well:

Paul Krugman: Notes on Excessive Wealth Disorder: "How not to repeat the mistakes of 2011.... What’s really at issue here is the role of the 0.1 percent, or maybe the 0.01 percent—the truly wealthy, not the '400,000 a year working Wall Street stiff' memorably ridiculed in the movie Wall Street. This is a really tiny group of people, but one that exerts huge influence over policy.... Raw corruption.... Soft corruption.... Campaign contributions.... Defining the agenda... [which] I want to focus on... a particular example that for me and others was a kind of radicalizing moment, a demonstration that extreme wealth really has degraded the ability of our political system to deal with real problems... the extraordinary shift in conventional wisdom and policy priorities that took place in 2010-2011, away from placing priority on reducing the huge suffering still taking place in the aftermath of the 2008 financial crisis, and toward action to avert the supposed risk of a debt crisis...

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All signs are that when the next recession comes the deficit hawks will reappear in full force. But the bust is not the time for austerity: Alan Taylor (2013): When Is the Time for Austerity?: "Recent austerity policies have been guided by ideology rather than research. This column discusses research that reconciles disparate estimates of fiscal multipliers in the literature. It finds that common identification assumptions are problematic. Matching methods based on propensity scores show how contractionary austerity really is, especially in economies operating below potential.... A saturated first-stage probit model to predict treatment probability... the policy propensity score. The second stage outcome regression then corrects for the allocation bias in situations where the outcome also depends on observables, but is in every other respect exactly the same specification used in the linear-projection specifications. The consistency of this estimator is 'doubly robust' (unlike inverse probability weight or regression adjustment alone) and guards against incorrect model specification in either the treatment regression or the outcome regression.... Austerity has a mostly negative effect, all years, in both bins. It has larger and more statistically significant negative effects in the slump. In booms, which one could view as the 'full employment' case, we find smaller (and mostly statistically insignificant) impacts of fiscal consolidation on output...

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Liveblogging: The Anglo-Saxon Chronicle: The Arrival of the Saxons

Journey To Normandy Scene 1

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): The Arrival of the Saxons: "A.D. 449. This year Marcian and Valentinian assumed the empire, and reigned seven winters. In their days Hengest and Horsa, invited by Wurtgern, king of the Britons to his assistance, landed in Britain in a place that is called Ipwinesfleet; first of all to support the Britons, but they afterwards fought against them...

...The king directed them to fight against the Picts; and they did so; and obtained the victory wheresoever they came. They then sent to the Angles, and desired them to send more assistance. They described the worthlessness of the Britons, and the richness of the land. They then sent them greater support.

Then came the men from three powers of Germany; the Old Saxons, the Angles, and the Jutes.

From the Jutes are descended the men of Kent, the Wightwarians (that is, the tribe that now dwelleth in the Isle of Wight), and that kindred in Wessex that men yet call the kindred of the Jutes.

From the Old Saxons came the people of Essex and Sussex and Wessex.

From Anglia, which has ever since remained waste between the Jutes and the Saxons, came the East Angles, the Middle Angles, the Mercians, and all of those north of the Humber.

Their leaders were two brothers, Hengest and Horsa; who were the sons of Wihtgils; Wihtgils was the son of Witta, Witta of Wecta, Wecta of Woden. From this Woden arose all our royal kindred, and that of the Southumbrians also...

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Weekend Reading: John Maynard Keynes (1937): How to Avoid a Slump

Il Quarto Stato

I. The Problem of the Steady Level

It is clear that by painful degrees we have climbed out of the slump. It is also clear that we are well advanced on the upward slopes of prosperity I will not say 'of the boom', for 'boom' is an opprobrious term, and what we are enjoying is desirable. But many are already preoccupied with what is to come. It is widely agreed that it is more important to avoid a descent into another slump than to stimulate (subject to an important qualification to be mentioned below) a still greater activity than we have. This means that all of us—politicians, bankers, industrialists, and economists—are faced with a scientific problem which we have never tried to solve before.

I emphasise that point. Not only have we never solved it; we have never tried to. Not once. The booms and slumps of the past have been neither courted nor contrived against. The action of central banks has been hitherto an almost automatic response to the unforeseen and undesigned impact of outside events. But this time it is different. We have entirely freed ourselves—this applies to every party and every quarter—from the philosop[hy of the laissez-faire state. We have new means at our disposal which we intend to use. Perhaps we know more. But chiefly it is a general conviction that the stability of our institutions absolutely requires a resolute attempt to apply what perhaps we know to preventing the recurrence of another steep descent. I should like to try, therefore, to reduce a complicated problem to its essential elements.

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Weekend Reading: Discussion of J. Bradford DeLong and Lawrence H. Summers: "Fiscal Policy in a Depressed Economy

Il Quarto Stato

Weekend Reading: Discussion of J. Bradford DeLong and Lawrence H. Summers (2012): "Fiscal Policy in a Depressed Economy:

Robert Hall observed that a better title for the paper would be “Eta,” since the paper’s surprising results all stem from the authors’ beliefs about the value of their hysteresis parameter η. The other parameter values the authors used for their simulations seemed mostly reasonable and uncontroversial to Hall. He noted that although Valerie Ramey had estimated a relatively low value for the multiplier on fiscal spending, the standard error on her estimate was large and did not rule out the possibility that the authors’ baseline value of 1.5 was correct. Hall also observed that some alternative ways of analyzing government spending data from World War II generated higher estimates of the multiplier. He found the authors’ value for the growth rate reasonable, and although he shared Ramey’s concern about the authors’ real interest rate assumptions, he thought their baseline value might be reasonable as well.

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It is tremendously disturbing that so many of today' Republican office holders and ideologues have no sense of when markets do and do not work, or how to structure markets so that they can work:

Jerry Taylor: One (and Only One) Cheer for the Republican “Innovation” Answer to Climate Change: "Restless Republicans are (rightly) uncomfortable about allowing the planet to burn while their party doggedly maintains that nothing is happening. Alas, they’re also uncomfortable about imposing discernible economic costs on anyone, so... subsidies for... low-carbon... and increases in federal energy R&D... not, in and of itself, a serious policy proposal.... Republican... need to... act even more aggressively... deploy zero-carbon energy technology right now.... Simon’s narrative about resource renewal only plays out when we’re dealing with tradable commodities in a free market economy where price signals are accurate and can do their job. And we don’t have those conditions when it comes to the atmosphere...

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From 2016. This paper did not get the attention I believe it deserved:

How higher labor standards affect how firms behave on the ground. This type of work is extremely valuable—indeed, essential to place statistical patterns in proper context—is difficult to do, and so needs to be highlighted more:

T. William Lester: Inside Monopsony: Employer Responses to Higher Labor Standards in the Full-Service Restaurant Industry: "Employer responses to higher labor standards through a qualitative case comparison of the full service restaurant industry.... San Francisco—where employers face the nation’s highest minimum wage, no tip credits, a pay-or-play health care mandate, and paid sick leave requirements—and... North Carolina’s Research Triangle region—where there are no locally-enacted labor standards.... Higher labor standards led to wage compression in San Francisco even while some employers continued to offer greater benefits to reduce turnover. Employers in San Francisco exhibit greater investment in finding better matches and tend to seek higher-skilled, more professional workers, rather than invest in formal in-house training. Finally, higher wage mandates in San Francisco have exacerbated the wage gap between front-of-house and back-of-house occupations—which correlate strongly with existing racial and ethnic divisions. Initial evidence shows that some employers have responded by radically restructuring industry compensation practices by adding service charges and in some cases eliminating tipping...

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The American electorate contains very few libertarians—very few who want a (largely) unregulated markets economy and also a (largely) tolerant society in which flying your personal freak-flag in public is encouraged. Americans are, rather, much more likely to be egalitarian with respect to the distribution of economic wealth and status and socially tolerant; or alternatively hierarchical—seeking a society in which everybody knows their place and toes the line both economically and socially.

And the people who don't fit into those two liberal and conservative baskets? They are, overwhelmingly, believers in a social order that also produces an egalitarian economy—but only for those who toe the social-order line.

This poses problems for those billionaires who would like to become president, but also wish to speak honestly to the electorate:

Paul Krugman: The Empty Quarters of U.S. Politics: "Socially liberal, economically conservative voters... the people Schultz thought he could appeal to; but basically they don’t exist, accounting for only around, yes, 4 percent of the electorate.... The absence of economically liberal, socially conservative politicians... There are plenty of voters who would like that mix, and Trump pretended to be their man; but he wasn’t, and neither is anyone else. Understanding these empty quarters is, I’d argue, the key to understanding U.S. politics. Once upon a time there were racist populists... segregationist Dixiecrats. But this was always unstable. In practice, advocating economic inclusion seems to spill over into advocacy of racial and social inclusion, too.... Meanwhile, the modern Republican Party is all about cutting taxes on the rich and benefits for the poor and the middle class. And Trump, despite his campaign posturing, has turned out to be no different. Hence the failure of our political system to serve socially conservative/racist voters who also want to tax the rich and preserve Social Security. Democrats won’t ratify their racism; Republicans, who have no such compunctions, will—remember, the party establishment solidly backed Roy Moore’s Senate bid—but won’t protect the programs they depend on...

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Liveblogging: The Anglo-Saxon Chronicle: The Fall of the Western Roman Empire

Journey To Normandy Scene 1

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): The Arrival of the Saxons: "A.D. 423. This year Theodosius the younger succeeded to the empire...

...A.D. 429. This year Bishop Palladius was sent from Pope Celestinus to the Scots, that he might establish their faith.

A.D. 430. This year Patricius was sent from Pope Celestinus to preach baptism to the Scots.

A.D. 435. This year the Goths sacked the city of Rome; and never since have the Romans reigned in Britain. This was about eleven hundred and ten winters after it was built. They reigned altogether in Britain four hundred and seventy winters since Gaius Julius first sought that land.

A.D. 443. This year sent the Britons over sea to Rome, and begged assistance against the Picts; but they had none, for the Romans were at war with Attila, king of the Huns. Then sent they to the Angles, and requested the same from the nobles of that nation.

A.D. 444. This year died St. Martin.

A.D. 448. This year John the Baptist showed his head to two monks, who came from the eastern country to Jerusalem for the sake of prayer, in the place that whilom was the palace of Herod...

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U.S. as Doofus Country, China, and Grand Strategy

Il Quarto Stato

No Longer Fresh at Project Syndicate: In the New York Review of Books, Adam Tooze recently wrote that: "across the American political spectrum, if there is agreement on anything, it is on the need for a firmer line against China". He is correct: On this, the bombs-and-bullets people, the geopolitics people, and the blame-somebody-else people are all agreed. The U.S. needs to do something to strengthen its relative position, and that means it needs to start doing something to China.

But that would be going about it the wrong way. Thinking that the right way to do something is to do something to China is a very bad way to think.

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Robo-Apocalypse? Not in Your Lifetime: No Longer Fresh at Project Syndicate

Robo Apocalypse Not in Your Lifetime by J Bradford DeLong Project Syndicate

No Longer Fresh at Project Syndicate: Robo-Apocalypse? Not in Your Lifetime: "Will the imminent “rise of the robots” threaten all future human employment? The most thoughtful discussion of that question can be found in MIT economist David H. Autor’s 2015 paper, “Why Are There Still so Many Jobs?”, which considers the problem in the context of Polanyi’s Paradox. Given that “we can know more than we can tell,” the twentieth-century philosopher Michael Polanyi observed, we shouldn’t assume that technology can replicate the function of human knowledge itself. Just because a computer can know everything there is to know about a car doesn’t mean it can drive it. This distinction between tacit knowledge and information bears directly on the question of what humans will be doing to produce economic value in the future... Read MOAR at Project Syndicate

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This is exactly one of the situations the 25th Amendment was designed to handle:

Donald J. Trump: "We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s Legislative body!." David Rothschild: "Take a step back: [the] US President is repeatedly, publicly [claiming] that he made a massive international deal with Mexico that everyone in both the Mexican government and our government says does not exist[;] that is (1) disturbing behavior [that is] (2) incredibly damaging [to] US security/economy." Nicole Wallace: Trump appears less capable of sustaining his own thoughts for longer than 4 to 6 seconds. It used to be he couldn’t follow anyone else’s conversation but now it seems he can’t follow his own train of thought...

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And, speaking of totalizing revealed ideologies, the Chinese Communist Party is finding little difficulty in proof-texting its current doctrines out of the scripture that is the collected writings of Marx and Engels. Their point that Donald Trump and Brexit suggest that unequal slow-growth political democracies do not have it right is powerful. And it is hopeful that Xi Jinping and company view gross inequality as a problem to be solved—"the result of an 'early stage of development'"—rather than a reality to be suffered:

Tom Hancock: China’s Selective Version of Marxist Theory Is a Puzzle: "A TV show, Marx Got it Right, and an illustrated edition of his masterpiece Das Kapital aimed at 8- to 14-year-olds.... The Communist party is stepping-up promotion of Marxist thought when it has largely abandoned its core tenet: public ownership of the means of production. About 80 per cent of urban workers are employed by private companies. Levels of wealth inequality are among the highest in the world, making egalitarianism potentially subversive. It is rendered more confusing by a recent crackdown on self-declared Marxist students at elite universities.... Beijing pushes a selective version of Marxism... likes the theory of historical change that helps portray Communist party rule as inevitable.... Marxism means one-party rule... means fixing inequality, the result of an 'early stage of development'... gives US president Donald Trump and Brexit as examples of 'serious problems of capitalist development'...

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Liveblogging: The Anglo-Saxon Chronicle: To the End of Roman Rule in Britain

Journey To Normandy Scene 1

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): To the End of Roman Rule in Britain: "A.D. 189. This year Severus came to the empire; and went with his army into Britain, and subdued in battle a great part of the island. Then wrought he a mound of turf, with a broad wall thereupon, from sea to sea, for the defence of the Britons. He reigned seventeen years; and then ended his days at York. His son Bassianus succeeded him in the empire. His other son, who perished, was called Geta...

...A.D. 199. In this year was found the holy rood.

A.D. 283. This year suffered Saint Alban the Martyr.

A.D. 343. This year died St. Nicolaus.

A.D. 379. This year Gratian succeeded to the empire.

A.D. 381. This year Maximus the Caesar came to the empire. He was born in the land of Britain, whence he passed over into Gaul. He there slew the Emperor Gratian; and drove his brother, whose name was Valentinian, from his country (Italy). The same Valentinian afterwards collected an army, and slew Maximus; whereby he gained the empire. About this time arose the error of Pelagius over the world.

A.D. 418. This year the Romans collected all the hoards of gold (14) that were in Britain; and some they hid in the earth, so that no man afterwards might find them, and some they carried away with them into Gaul...

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June 21, 2019: Weekly Forecasting Update

Outlook Slides: https://www.icloud.com/keynote/0iqGf9C1E8-9mHJVeQdy1U7YQ

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The right response to almost all economic data releases is: Next to nothing has changed with respect to the forecast—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.

About the only news in the past week or so is that the Federal Reserve has—behind the curve—become convinced that it raised interest rates too much in 2018. To the extent they attribute their change of view to news, the news is that President Trump is a chaos monkey with respect to international trade—but that was well known back in 2015.

Worth noting is that the ten-year CPI inflation breakeven is now 1.6%. If investors were risk neutral with respect to bearing this particular inflation risk, this breakeven ought to be 2.5% if investors expected the Federal Resrve to meet its 2.0% PCE inflation target over the next decade:

Federal Reserve Bank of New York: Nowcasting Report: June 21, 2019: "The New York Fed Staff Nowcast stands at 1.4% for 2019:Q2 and 1.3% for 2019:Q3. News from this week's data releases left the nowcast for 2019:Q2 largely unchanged and decreased the nowcast for 2019:Q3 by 0.4 percentage point. For 2019:Q3, negative surprises from regional survey data drove most of the decrease...

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Paul Miller: How to Fix the Internet: "What we'll see very clearly in hindsight is that when we published our content on other people's servers, it always went bad. Instagram's algo made us sad. YouTube's algo made us mad. Twitter's algo mad us sad AND mad. Google Photos algo, it turned out, made us easily tracked and controlled by totalitarian governments. Oops! Self-hosting will be the 'difficult' and 'cumbersome' option for a while, but by the year 2025 it will be easier than the centralized services are. Think about it: have you ever tried to upload a YouTube video? There are a ton of options, and the interface is kind of annoying, and it's a many-step process. This is because YouTube has to be designed to be a jack of all uploading trades, master of none. But when self-hosting is mature and common, you'll be able to pay for a highly specific app that streamlines the experience to match your exact needs. If you don't want to pay for a high-end app there will likely be a more general, harder-to-use, free and open source option as well...

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Patricia Crone Meccan Trade: "The conventional account of Meccan trade begs one simple question: what commodity or commodities enabled the inhabitants of so unpromising a site to engage in commerce on so large a scale? That the trading empire grew up in an unexpected place is clear, if not always clearly brought out. There have, of course, been commercial centres in Arabia that developed in areas of comparable barrenness, notably Aden. But Aden and other coastal cities of south Arabia all owed their existence to the sea, as Muqaddasi noted, whereas Mecca was an inland town...

Screenshot 6 20 19 5 16 PM

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The Fed now seems to be saying: "We misjudged the situation late last year. We are going to reverse our policy. But not quite yet." And I do not understand the frame of mind in which that is a coherent system of thought. I wish they would explain: Tim Duy: Rate Cut On The Way: "The Fed turned... dovish... basically announcing a July rate cut as clearly as they could without taking out an ad in the Wall Street Journal... increased 'uncertainties'... 'muted inflation pressures'.... The proximity to the lower bound coupled with low inflation was always going to lead the Fed to err on the side of a rate cut. It just took them some time to find their way there.... The dot plot was far more dovish than I anticipated.... Eight participants expecting lower rates.... Forecasts were dovish as well.... Market participants have priced in a 100% change of a rate hike in July. The 2 year treasury yield is also begging the Fed to cut rates.... It would take some spectacular data to call the July cut into question.... It would be exceedingly difficult to pull back on a rate cut now. Nor is there any reason to...

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"Unionization for me, but not for thee"—Jonah Peretti: Alexia Fernández Campbell: BuzzFeed News Walkout: "Managers at the popular news website, which employs more than 200 journalists in the US, have been fighting... about how many employees can join the bargaining unit, according to a statement BuzzFeed News Union shared with Vox.... BuzzFeed CEO Jonah Peretti said the union won’t accept a proposal to define which positions would be part of the bargaining unit before recognition, and won’t agree to honor individual contracts while they negotiate a collective bargaining contract.... The company’s offer would recognize 77 journalists in the bargaining unit—far fewer than the union wants...

Jonah Peretti (2001): My Nike Media Adventuren: "As a challenge to Nike, I ordered a pair of shoes customized with the word 'sweatshop' Nike rejected my request... correspondence.... None of Nike’s messages addressed the company’s legendary labor abuses, and their avoidance of the issue created an impression even worse than an admission of guilt. In mid-January I forwarded the whole e-mail correspondence to a dozen friends, and since that time it has raced around the Internet, reaching millions of people...

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Ajay Agrawal, Joshua S. Gans, and Avi Goldfarb: Artificial Intelligence: The Ambiguous Labor Market Impact of Automating Prediction: "Artificial intelligence does not fit easily into existing analyses of the effect of automation on labor markets. The reasons are threefold. First, prediction is always strictly complementary to other tasks—namely decision-related tasks. Those tasks can be existing or newly possible because of better prediction. Second, better prediction improves decisions—whether taken by labor or capital—by enabling more nuanced decisions through the reduction of uncertainty. Finally, it is not yet possible to say whether the net impact on decision tasks—whether existing or new— is likely to favor labor or capital. We have found important examples of both, and there is no obvious reason for a particular bias to emerge. Thus, we caution on drawing broad inferences from the research on factory automation (for example, Acemoglu and Restrepo 2017; Autor and Salomons 2018) in forecasting the net near-term consequences of artificial intelligence for labor markets...

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Kevin Hjortshøj O'Rourke, Ahmed Rahman, and Alan M. Taylor: Trade, Technology, and the Great Divergence: "Why did per capita income divergence occur so dramatically during the 19th Century, rather than at the outset of the Industrial Revolution? How were some countries able to reverse this trend during the globalization of the late 20th Century?... Endogenous biased technological change and intercontinental trade. An Industrial Revolution begins as a sequence of more unskilled-labor-intensive innovations in both regions. We show that the subsequent co-evolution of trade and directed technologies can create a delayed but inevitable divergence in demographics and living standards—the peripheral region increasingly specializes in production that worsens its terms of trade and spurs even greater fertility increases and educational declines. Allowing for technological diffusion between regions can mitigate and even reverse divergence, spurring a reversal of fortune for peripheral regions...

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Eric Rauchway: "This, by @EliotACohen on the problems with DARKEST HOUR, is right, but one could go much further. I should be the target audience for a movie like DARKEST HOUR. I teach WW2 and I believe that next to Soviet manpower and American machinery, British stubbornness was a key to Allied victory. But this movie presents Churchill as an insecure boor who is nevertheless right about the need to oppose Nazism, and for Britain to defeat Nazism it was necessary only for friends to indulge his boorishness, bolster him in his insecurity, and opponents to yield to his dazzling rhetoric. This is wrong...

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Fairly Recently: Must- and Should-Reads, and Writings... (June 19, 2019)

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  1. Fareed Zakaria: The Self-Destruction of American Power: "One is struck by the ways in which Washington—from an unprecedented position—mishandled its hegemony and abused its power, losing allies and emboldening enemies. And now, under the Trump administration, the United States seems to have lost interest, indeed lost faith, in the ideas and purpose that animated its international presence for three-quarters of a century...

  2. Christina Romer (1994): The End of Economic History?: "Perhaps more than any particular finding or direct implication, the fact that the debate about stabilization and the new data collection efforts are being carried out by a mixture of economic historians and macroeconomists is the most desirable development of all. As with all of the other recent developments in economic history that have been discussed here, the bringing together of researchers with different perspectives has not only stimulated exciting research, it has also meant that the lessons of history have been incorporated into other fields. In this way, the end of economic history has really been just the beginning of better and richer economics...

  3. AlphaChat: Jay Shambaugh on Tools to Fight the Next Recession: "The economist and Brookings Institution senior fellow talks to FT contributor Megan Greene about the fiscal policies that lawmakers could arrange now that would automatically kick in when some of the early signs of a slowdown start to appear...

  4. Ed Nawotka: Daunt Relishes Challenge of Leading B&N: "Daunt said his priority with B&N is not to cut costs, but to find a way to arrest the decline in sales and return the company to growth, much as he did at Waterstones. The key, he said, will be investment.... Above all, Daunt expressed calm about the transition, and advocated for patience...

  5. Charles Petzold (2008): The Annotated Turing: A Guided Tour through Alan Turing's Historic Paper on Computability and the Turing Machine (Indianapolis: John Wiley: 9780470229057) #books

  6. Joanna Ossinger: JPMorgan Shows Where Huge Risks From Fed, G-20 Are Underpriced: "Stocks may correct if Fed isn’t dovish enough: Panigirtzoglou. Cross-asset measures show little volatility risk premium...

  7. Barry Eichengreen, Asmaa El-Ganainy, Rui Esteves, and Kris James Mitchener: Public Debt Through the Ages: "Periods when debt-to-GDP ratios rose explosively as a result of wars, depressions and financial crises also have a long history. Many of these episodes resulted in debt-management problems resolved through debasements and restructurings. Less widely appreciated are successful debt consolidation episodes.... We analyze the economic and political circumstances that made these successful debt consolidation episodes possible...

  8. Josefin Meyer, Carmen M. Reinhart, and Christoph Trebesch: Sovereign Bonds since Waterloo: "220,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle of Waterloo) and 2016, covering 91 countries.... Returns on external sovereign bonds have been sufficiently high to compensate for risk. Real ex-post returns averaged 7% annually across two centuries, including default episodes, major wars, and global crises... an excess return of around 4% above US or UK government bonds... are hard to reconcile with canonical theoretical models and with the degree of credit risk.... Full repudiation is rare; the median haircut is below 50%...

  9. Olivier Blanchard and Takeshi Tashiro: Fiscal Policy Options for Japan

  10. DS100: Principles and Techniques of Data Science #book

  11. Barry Ritholtz: Buy Yourself a F--king Latte: "A Latte a Day Isn’t Going to Ruin Your Retirement. If spending $5 a day on fancy coffee puts your retirement at risk, you’ve got bigger problem...

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Hoisted from Six Years Ago: To Steal a Line from Leon Trotsky: "Every Man Has a Right to Be Stupid, but John Cochrane Abuses the Privilege..."

Consumer Price Index for All Urban Consumers All Items Less Food and Energy FRED St Louis Fed

Hoisted from the Archives: Stupidity Is a Willed Choice Files: John Cochrane: Reading Paul Krugman calls to mind that I never reacted to John Cochrane's July 2012 failure to mark his beliefs to market and, instead, doubling down on his claim that the biggest risk the U.S. economy faces is that of becoming "Argentina" "quickly".

I must say that if I had been opining stridently about issues of public policy without doing my homework five years ago, and if between then and now events had developed in directions strongly contrary to my expectations, I would not double down on what I had thought then--I would rather try hard to do my homework and to mark my beliefs to market.

And if I were going to criticize people for not citing my work, I would not claim that a sentence they wrote which comes immediately after a four-paragraph quote from me as an example, and I would have read their explanation of why they think expansionary fiscal policy right now does not raise the risks of "fiscal dominance" rather than remain in ignorance of it.

But to each his own!

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Liveblogging: The Anglo-Saxon Chronicle: The Slightly Later Church, and the Flavian and Antonine Empire

Journey To Normandy Scene 1

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): The Slightly Later Church, and the Flavian and Antonine Empire: "A.D. 81. This year Titus came to the empire, after Vespasian, who said that he considered the day lost in which he did no good...

...A.D. 83. This year Domitian, the brother of Titus, assumed the government.

A.D. 84. This year John the evangelist in the island Patmos wrote the book called "The Apocalypse".

A.D. 90. This year Simon, the apostle, a relation of Christ, was crucified: and John the evangelist rested at Ephesus.

A.D. 92. This year died Pope Clement.

A.D. 110. This year Bishop Ignatius suffered.

A.D. 116. This year Hadrian the Caesar began to reign.

A.D. 145. This year Marcus Antoninus and Aurelius his brother succeeded to the empire.

A.D. 167. This year Eleutherius succeeded to the popedom, and held it fifteen years; and in the same year Lucius, king of the Britons, sent and begged baptism of him. And he soon sent it him, and they continued in the true faith until the time of Diocletian...

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A Year Ago on Equitable Growth: Twenty Worthy Reads from Around June 21, 2018

stacks and stacks of books

Worthy Reads at Equitable Growth:

  1. Very nice to see: Equitable Growth: Janet Yellen Joins Equitable Growth Steering Committee: "'There are few economists with the depth of academic and policymaking experience that Janet Yellen possesses', said Heather Boushey, Equitable Growth’s executive director and chief economist. 'She has worked tirelessly, in her research and in her high government positions, to promote strong economic growth that benefits workers and to ensure that the American Dream is within reach for all...'"

  2. Suggestions for what kinds of information we will want to be capturing in twenty years are very welcome: Michael Strain: Equitable Growth in Conversation: "To the extent that you are figuring out ways to update this statistical system to account for the way that we live and work now would be important. But more importantly, to account for the ways that we might live and work 20 years from now, to really have a plan to have statistically valid surveys that capture the information that we want to capture is, I think, a very worthy research program..."

  3. Really surprised that there is no evidence of boom-bust asymmetry here. I am going to have to dig into what reasonable alternatives are and how much power the authors' techniques have against them: Adam M. Guren, Alisdair McKay, Emi Nakamura, and Jon Steinsson: Housing Wealth Effects: The long View: "1) Large housing wealth effects are not new... substantial effects back to the mid 1980s; 2) Housing wealth effects were not particularly large in the 2000s... 3) There is no evidence of a boom-bust asymmetry..."

  4. The "elasticity of substitution" is an emergent property. It has very little to do with "technology" if only because there is not one single technology in the economy. There are lots of different types of machines and lots of ways to use workers and machines to produce things. And "rigid organization" is not quite right either here: Suresh Naidu (2014): Notes from Capital in the 21st Century Panel: "Perhaps a useful analogy is that this is the "Free to Choose" or “Capitalism and Freedom” for our time.... I can’t think of a book that emerged from economics for a mass audience with as much reception since then.... The book doesn't quite take a stand on whether it is brute market forces and a production function with a high elasticity of substitution or instead relatively rigid organization of firms and financial institutions that lies behind the stability of r. I think the production approach is less plausible..."

  5. Sue and Tim worry that the organizational disaggregation produced by this Age of Supply Chains is harming the development of our communities of engineering practice. Annalee Saxenian's Regional Advantage: Culture and Competition in Silicon Valley and Route 128 is now 20 years old, and yet somehow I do not think we know as much about this as we should: Susan Helper and Timothy Krueger (2016): Supply Chains and Equitable Growth: "Deregulation, market failures, and corporate policies have led to the rise of supply chains comprised of small, weak firms that innovate less and pay less. These problems in supply chains threaten U.S. competitiveness by undermining innovation, and also contribute to the erosion of U.S. workers’ standard of living. A different kind of outsourcing is possible..."

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Berkeley Economics: Economics CIP Code Update and FAQs | Department of Economics: "(5) What are the practical effects of this change for domestic students? For international students? The reclassification of Economics as a STEM major may enhance research and funding opportunities, job market placement and diversity and growth in the field that can be associated with other STEM majors. For international students, the STEM classification increases accessibility to US job opportunities with an extension of work visas, etc. This was not an available option with our current general economics CIP code.... (6) As an international student, how will this impact my Optional Practical Training (OPT)? OPT is work authorization available to F-1 international students who have been full-time students for at least two consecutive semesters and who plan to seek employment in the United States in their fields of study. On March 11, 2016, the U.S. Department of Homeland Security (DHS) published a new STEM Final Rule, with effective date May 10, 2016. Eligible students may now apply for a 24 Month STEM Extension up to 90 days prior to the expiration of their OPT Employment Authorization Document (EAD). Our CIP code approval qualifies our degree programs as a STEM related field of study for the Optional Practical Training (OPT) extension for employment of 24 months. For further information about your OPT options, please consult with the Berkeley International Office (BIO)...

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Hoisted from the Archives: John Cochrane's Claim in Late 2008 That a Recession Would Be a Good Thing Deserves Some Kind of Award...

Hoisted from the Archives: The fact is that by the end of 2007 the construction sector had rebalanced: there was no excess of people pounding nails in Nevada—even if you did believe the false theory that recessions have recessions do the "necessary work of rebalancing", there was no rebalancing work to be done after 2007. Even a quarter-competent Schumpeterian who kept even half an eye on the data should have been able to recognize that...

More than Two Decades of Macroeconomic History Through the Lens of Four Key Components of Aggregate Demand


To: @johnmlippert: If I may beg a small slice of your attention...

I am tracking down John Cochrane's claims that (i) in your December 23, 2008 article you were "only... on a hunt for embarrassing quotes", (ii) he had "spent about 10 hours patiently trying to explain some basics" to you, and (iii) you took him out of proper context when you wrote: "'We should have a recession', Cochrane said in November, speaking to students and said in November, speaking to students and investors in a conference room.... 'People who spend their lives pounding nails in Nevada need something else to do'."

Do you by chance remember the larger context of Cochrane's "pounding nails" comment, and do you have any idea why he now claims that you took him out of context? Or what he thinks the proper context would have been?

I would be grateful for any light you can shed on this.

Yours,

Brad DeLong brad.delong@gmail.com


John M. Lippert: "Hi Professor DeLong.

Thanks for your note. Professor Cochrane’s complaint is something of which I became aware several months after we published our story in 2008.... The bottom line is that Bloomberg did not respond to Cochrane’s comments. He never sent them to us, despite my request that he do so.

When we became aware of his complaint, we saw no reason to make a correction. Cochrane made the ‘pounding nails’ comment at a Chicago Booth forum at the Gleacher Center in downtown Chicago in November 2008. It was part of an ongoing lecture series, as I recall. It was kind of a big event, with a couple hundred people. So they may have a recording that you can access.

Good luck with your inquiries.

Tks,

John Lippert

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