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


  1. 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...

  2. *Stephen G. Cecchetti and Kermit L. Schoenholtz *: The Brave New World of Monetary Policy Operations — Money, Banking and Financial Markets: "An analysis by Fed economists in early 2017 assumed that by 2022, reserve demand would stabilize at roughly $100 billion. However, just two years later, in March 2019, a Fed survey concluded that banks were likely to want well over $1 trillion in reserves. What accounts for this gap?...

  3. 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...

  4. 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...

  5. "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 Adventure: "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...

  6. 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...

  7. Scott Manley: Asteroids In Resonance With Jupiter: "This video highlights 2 groups of asteroids that have orbits in resonance with Jupiter.... The first group highlighted is in the 3:2 resonance.... The second group consists of those which have orbital periods identical to Jupiter... in 2 clusters around the Jovian Lagrange points...

  8. 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...

  9. 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...

  10. 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'...

  11. xThis 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...

  12. This was the highlight of this year's Bay Area Book Fair: Robert Reich, Anand Giridharyas, and Kay Taylor: Fighting Economic Injustice...

  13. 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 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...

  14. 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...

  15. 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 technological 'innovation' via subsidies for favored low-carbon industries and increases in federal energy R&D has thus far been their policy response of choice.... But the Republican innovation agenda alone is not, in and of itself, a serious policy proposal. It is, perhaps, the prelude to a serious policy proposal.... If Republican rebels are prepared to accept the consensus within the climate science community, they 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...

  16. Thomas Piketty and Emmanuel Saez (2002-2018): Income Inequality in the United States https://eml.berkeley.edu/~saez/TabFig2017.xls | https://www.icloud.com/numbers/0tS0nx15rshjRCoZI_Q8B9CRw...

  17. 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...

  18. 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...

  19. 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...

  20. 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...

  21. 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...


  1. Patricia Crone and Michael Cook: Hagarism #books

  2. Patricia Crone (1980): Slaves on Horses #books

  3. Wikipedia: Julie d'Aubigny

  4. 2017: NAFTA and Other Trade Deals Have Not Gutted American Manufacturing—Period

  5. 2018: When Globalization is Public Enemy Number One

  6. David Clingingsmith: "Trained in both anthropology and economics, I'm struck by the related issues of quant scholars missing the complexity of the social processes in which their data is embedded and qual scholars overgeneralizing from the settings with which they are intimately familiar... Carlos Norena: "Historians struggle with this, too. It's one reason I've become ever more interested in comparative history: it helps to mitigate both problems...

  7. Wikipedia: Hannah Arendt


#noted #weblogs

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