Fairly Recently: Must- and Should-Reads, and Writings (October 20, 2019)...

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Must of the Musts:

  • Why am I hearing "very fine people on both sides!"? here: Robert Knight: Letters · LRB: Globalists: "Alexander Zevin writes that Friedrich Hayek opposed the use of sanctions against apartheid, and ‘confided to his secretary that he liked blacks no better than Jews’ (LRB, 15 August). The antisemitic antecedents of National Socialism are conspicuous by their absence in The Road to Serfdom; if we assume the manuscript was completed in 1943, it almost completely ignores a decade of antisemitic persecution and four years of Nazi war crimes and atrocities. In the Spectator in January 1947 Hayek attacked the ‘blunders’ of denazification in Austria, including the suspension of violinists from the Vienna Philharmonic Orchestra because they had been Nazi party members. It was, he wrote, ‘scarcely easier to justify the prevention of a person from fiddling because he was a Nazi than the prevention because he is a Jew’...

  • BREXIT!!!!!: Hugh Mannerings: "I'm not saying there wasn't a Democratic mandate for Brexit at the time. I'm just saying if I narrowly decided to order fish at a restaurant that was known for chicken, but said it was happy to offer fish, and so far I've been waiting three hours, and two chefs who promised to cook the fish had quit, and the third one is promising to deliver the fish in the next five minutes whether it's cooked or not, or indeed still alive, and all the waiting staff have spent the last few hours arguing amongst themselves about whether I wanted battered cod, grilled salmon, jellied deals, or dolphin kebabs, and if large parts of the restaurant appeared to be on fire, but no one was paying attention to it because they were all arguing about fish, I would like, just once, to be asked if I definitely still wanted the fish...

  • Once again, we have a piece by an impressively credentialed academic Republican economists that seems to me to have... no contact with reality. There is no economist I know of save for Robert Barro who has ever said or implied that the "neutral" real interest rate today is the same 2.4% that the average real interest rate was from 1986-2008. To the contrary, there has been a very long and active discussion—led over the past two decades by current New York Fed President John Williams—about how far the "neutral" rate has fallen, and how persistent that fall will be. And one conclusion of that debate has been that the current real federal funds rate of "only 0.7%" does indeed look "high" by some important metrics. So why would anyone write as thought this literature does not exist?: Robert J. Barro: Is Politics Getting to the Fed?: "One could infer the normal rate from the average federal funds rate over time. Between January 1986 and August 2008, it was 4.9%, and the average inflation rate was 2.5%...

  • My friend Jason Furman keeps telling me that the Obama Administration sincerely sought throughout its tenure in office to boost employment in America via expansionary fiscal policy. I agree that Jason did. But the administration? No. When Jason and company could win internal fights, yes. But otherwise the Obama Administration seemed to me to be focused on winning the day's media narrative, and if dingbat kabuki moves that were destructive of employment growth could attain that daily goal, they were gleefully and joyfully embraced—even if they were pointlessly cruel to those4 on whom the success of the Obama Administration rested. For example: Jack Lew (November 29, 2010): Tightening Our Belts https://obamawhitehouse.archives.gov/blog/2010/11/29/tightening-our-belts: "The freeze will apply to all civilian federal employees.... This pay freeze is not a reflection on their fine work. It is a reflection of the fiscal reality that we face: just as families and businesses across the nation have tightened their belts, so must the federal government...

  • There have been many disruptions of the functioning of the discursive public sphere by new communications technologies. The most recent significant one was the early-twentieth century disruption by radio. The very sharp and witty Maciej Ceglowski provides us with a brief introduction: Maciej Ceglowski: Legends of the Ancient Web: "It doesn't take long for politically talented people to discover how to use radio for their own ends. One of these early pioneers in the United States is Charles Coughlin, a Catholic priest and early religious broadcaster who notices that his angry rants on political topics net him a much bigger audience than his discourses on religion. By the middle of the 1930's, Coughlin has an active audience of ten million tuning in to hear him rail against against bankers and international conspiracies, in a way that sounds uncomfortably familiar in 2017. Here's Father Coughlin at the top of his game, yelling about banks...

  • Project Syndicate: No, We Don’t “Need” a Recession https://www.bradford-delong.com/2019/10/no-we-dont-need-a-recession-by-j-bradford-delong-project-syndicate.html: "It was not uncommon for commentators to argue for a “needed” recession before the big one hit in 2008-2010. But I, for one, assumed that this claim was a decade dead. Who in 2019 could say with a straight face that a recession and high unemployment under conditions of low inflation would be a good thing? Apparently, I was wrong. The argument turns out to be an example of what Nobel laureate economist Paul Krugman calls a “zombie idea … that should have died long ago in the face of evidence or logic, but just keeps shambling forward, eating peoples’ brains.” Clearly, those who claim to welcome recessions have never looked at the data. If they did, they would understand that beneficial structural changes to the economy occur during booms, not during busts...

  • Hoisted from the Archives from 2010: Perhaps. And Sometimes https://www.bradford-delong.com/2019/10/perhaps-and-sometimes-cato-unbound.html: That Sherwood Forest is illegible to the Sheriff of Nottingham allows Robin of Locksley and Maid Marian to survive. But that is just a stopgap. In the final reel of Ivanhoe the fair Rebecca must be rescued from the unworthy rogue Templar Sir Brian de Bois-Guilbert (and packed offstage to marry some young banker or rabbi), the Sheriff of Nottingham and Sir Guy of Gisborne must receive their comeuppance, the proper property order of Nottinghamshire must be restored, and Wilfred must marry the fair Rowena–and all this is accomplished by making Sherwood Forest and Nottinghamshire legible to the true king, Richard I “Lionheart” Plantagenet, and then through his justice and good lordship...

  • Comment of the Day: Harold Carmel on March of the Peacocks https://www.bradford-delong.com/2019/10/comment-of-the-day-_harold-carmel_-in-paul-krugman-march-of-the-peacocks-as-prof-delong-has-often-pointed-out-obam.html: "Obama's turn toward austerity in that SOTU was a very dumb policy idea.... Obama presented himself as post-partisan and thought the Republicans would reciprocate. How did that work out?...

  • Comment of the Day: Phil Koop on Quantum Supremacy https://www.bradford-delong.com/2019/10/comment-of-the-day-_phil-koop_-on-quantum-supremacy-in-reply-to-kaleberg-your-objection-is-mistaken-as-scott-aaronso.html: "Scott Aaronson explains: 'You don’t get to arbitrarily redefine whatever random chemical you find in the wild to be a “computer for simulating itself.” Under any sane definition, the superconducting devices that Google, IBM, and others are now building are indeed “computers”...

  • Comment of the Day: _Ebenezer Scrooge on Stanford Week: _ https://www.bradford-delong.com/2019/10/comment-of-the-day-_ebenezer-scrooge_-in-stanford-week-the-formula-for-succeeding-as-an-undergrad-at-an-enormous-stat.html: "The formula for succeeding as an undergrad at an enormous state university is to pretend you're a grad student, and dive into a department full time. You're likely to get a decent mentor and adequate support, so you can ignore the bureaucratic madness...


  1. Always worth reading as a window into sane thinking about national security and related international non-economic plus political-economy thinking and circumstances: Daniel W. Drezner: Your Interesting Late-Summer Foreign Policy Reads: "Normally when I do this, I recommend books. For a change of pace, however, this time I thought I would recommend some recent articles.... Kurt Campbell and Jake Sullivan, “Competition Without Catastrophe: How America Can Both Challenge and Coexist With China”.... Henry Farrell and Abraham L. Newman, “Weaponized Interdependence: How Global Economic Networks Shape State Coercion”.... Mary Sarotte, “How to Enlarge NATO: The Debate inside the Clinton Administration, 1993—95”.... Isaac Chotiner, “A Penn Law Professor Wants to Make America White Again”.... Penn law professor Amy Wax, ostensibly one of the intellectual leaders of 'national conservatism', beclowned herself repeatedly in her conversation with Chotiner. This claim was particularly ludicrous...

  2. Very good advice for California now—and for future congressional majority leaders and speakers and presidents who might represent the large majorities of American voters who want these problems addressed sensibly and substantially: Heather Boushey: Equitable Growth CEO's Written Testimony at California Future of Work Commission: "The monopoly power problem... exacerbates inequality, contributes to wage stagnation, limits entrepreneurship, increases the cost of living, and stifles innovation.... Industry concentration and declining economic dynamism reduces wages by limiting workers’ employment options and opportunities for advancement, and allows firms to use their increasing power to squeeze worker compensation in favor of greater profits. Workplace fissuring, through the rise of independent contractors, franchisors, and contingent hiring, prevents workers from accessing career ladders, matching into the jobs they are best suited for, and gaining sufficient bargaining power to unlock wage increases. Persistent historical disparities such as wage discrimination and social norms reinforce occupational segregation into jobs that don’t pay well enough and offer little room for advancement. Yet policymaking over the past several decades has been moving in the wrong direction. Specifically: Antitrust law now allows firms to accrue and abuse monopoly power, not just over consumers but also in many cases over workers. Successive rounds of tax cuts, including the Tax Cuts and Jobs Act of 2017 and several tax cuts under the George W. Bush administration, have lowered the progressivity of the tax code and greatly decreased taxes on wealth, capital, inheritances, and corporate profits. Outdated labor law provides insufficient protection of workers and has facilitated the long decline of unions, traditionally the most vocal and ardent advocates for the middle class. We have an opportunity right now to take a step back to look at the scale and scope of the problems and develop real solutions...

  3. We have had financial crises for nearly 200 years now. Yet our handling of those of the mid-nineteenth century was certainly no worse, and arguably better, than our handling of 2007-2010. All parts of "lend freely at a penalty rate on collateral that is good in normal times" were understood. Why weren't they understood in 2008?: Karl Marx: Neue Rheinische Zeitung Revue: "The years 1843-5 were years of industrial and commercial prosperity, a necessary sequel to the almost uninterrupted industrial depression of 1837-42. As is always the case, prosperity very rapidly encouraged speculation. Speculation regularly occurs in periods when overproduction is already in full swing. It provides overproduction with temporary market outlets, while for this very reason precipitating the outbreak of the crisis and increasing its force. The crisis itself first breaks out in the area of speculation; only later does it hit production. What appears to the superficial observer to be the cause of the crisis is not overproduction but excess speculation, but this is itself only a symptom of overproduction. The subsequent disruption of production does not appear as [what it really is,] a consequence of its own previous exuberance, but merely as a setback caused by the collapse of speculation...

  4. Federal Reserve Bank of New York: Nowcasting Report https://www.newyorkfed.org/research/policy/nowcast: "Oct 11, 2019.... The New York Fed Staff Nowcast stands at 2.0% for 2019:Q3 and 1.3% for 2019:Q4. News from the JOLTS, PPI, CPI, and export and import prices releases were small, leaving the nowcast for both quarters broadly unchanged...

  5. This is not a paper where I have ever understood what features of the data are interacting with the model to produce the conclusions. It would be nice if I could crack this: Marjorie A. Flavin: The Joint Consumption/Asset Demand Decision: A Case Study in Robust Estimation: "The Michigan Survey of Consumer Finances... whether... consumption tracks current income more closely than is consistent with the permanent income hypothesis can be attributed solely or partially to borrowing constraints.... The paper uses a robust instrumental variables estimator, and argues that achieving robustness with respect to leverage points is actually simpler, both conceptually and computationally, in an instrumental variables context than in the OLS context.... Households do use asset stocks to smooth their consumption.... There is no evidence that the excess sensitivity of consumption to current income is caused by borrowing constraints.... Robust instrumental variables estimates are more stable across different subsamples, more consistent with the theoretical specification of the model, and indicate that some of the most striking findings in the conventional results were attributable to a single, highly unusual observation...

  6. For the past decade Robert Gordon has written about The Rise and Fall of American Growth, praising the first in our past that was and lamenting the second in our present that is. Now comes Dietz Vollrath with a lively, accurate, and essential corrective to Gordon's pessimism: growth is slow today, he demonstrates, not because our economy is failing but because our economy has succeeded: Dietz Vollrath: Optimal Stagnation: Why Slower Economic Growth Is a Sign of Success: "In 1940 you might have spent your money installing plumbing for running water, or a toilet.... The same went for air conditioning, a TV, or a computer at other points in time during the 20th century. But once we had those goods, then what did we spend our money on?... Goods became cheaper and we filled up our houses with them.... Spending turned towards services... longer and better vacations... classes... medical specialists... physical therapy... data... Netflix and Hulu.... The flow of workers out of producing goods didn’t signal some kind of failure.... In the 21st century... these shifts became a drag on economic growth...[for] most service industries have relatively low productivity growth.... As we shifted our spending from goods to services, this pulled down aggregate productivity growth, which is just a weighted average of productivity growth across different industries.... Baumol.... Labor is necessary to produce goods, but it is not part of the product itself. The person who assembled your fuel injector doesn’t have to be there for you to drive your car. On the other hand, for services labor is part of the product... you need to interact with a doctor, or lawyer, or waiter, or personal trainer, or financial advisor, or teacher.... It isn’t some kind of failure that service productivity growth is low, it is rather an inherent feature of those kinds of activities.... Choices born of success had the unintended consequence of putting a drag on the growth rate in the 21st century...

  7. Ever since I stopped being a wee'un, I have heard that one should not use expansionary fiscal policy to rebalance the economy because of the dangers of public debt accumulation. Somehow, there was never an analogous focus on how rebalancing the economy through monetary policy might produce greater dangers of private debt accumulation. Until now: Martin Wolf: How Our Low Inflation World Was Made: "If we are to make sense of where the world economy is today and might be tomorrow, we need a story about how we got here. By 'here', I mean today’s world of ultra-low real and nominal interest rates, populist politics and hostility to the global market economy. The best story is one about the interaction between real demand and the ups and then downs of global credit. Crucially, this story is not over...

  8. 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, from the left. I can’t think of a book that emerged from economics for a mass audience with as much reception since then. And what good news this is for economics! For 50 years Milton Friedman was the public face of partisan economics, and stamped it with a conservative public face that persisted. Maybe now Piketty’s book will give my discipline another public face...

  9. One quibble with the sharp Hunter Blair here: the argument that the supply of savings to fund private investment was highly elastic with respect to the after-tax interest rate has never been economically-respectable for anything other than a small open economy with a fixed exchange rate system. It was not respectable back in 2017 when it was made. The solid preponderance of evidence then was that the supply of savings was inelastic. And so it has proved: Hunter Blair: It’s Not Trickling Down: New Data Provides No Evidence that the TCJA Is Working as Its Proponents Claimed It Would: "The strongest economically-respectable argument from proponents of the Trump administration’s Tax Cuts and Jobs Act (TCJA) was that... higher dividends incentivize households to save more, or attract more savings from abroad. The increased savings push down interest rates, so that it’s easier for corporations to borrow money to invest in new plants and equipment. And this new capital stock gives workers more and better tools to work with, boosting their productivity, and eventually that increased productivity should boost wages.... We now have 18 months of data on investment since the passage of the TCJA, plenty of time for its increased incentives for private investment to have taken hold. But the data doesn’t come close to supporting the story told by TCJA proponents...

  10. Diane Coyle: The Puzzle of Economic Progress: "Do we know how economies develop? Obviously not, it seems, or otherwise every country would be doing better than it currently is in these low-growth times.... Yet when Patrick Collison of software infrastructure company Stripe and Tyler Cowen of George Mason University recently wrote an article in The Atlantic calling for a bold new interdisciplinary 'science of progress', they stirred up a flurry of righteous indignation among academics. Many pointed to the vast amount of academic and applied research that already addresses what Collison and Cowen propose to include in a new discipline.... Gina Neff... remarked... [that] the Industrial Revolution even gave birth to sociology, or what she called 'Progress Studies 1.0'. This is all true, and yet Collison and Cowen are on to something. Academic researchers clearly find it hard to work together across disciplinary boundaries, despite repeated calls for them to do so more often. This is largely the result of incentives that encourage academics to specialize...

  11. Aristotle: The Necessity of Slavery: "Let us first speak of master and slave, looking to the needs of practical life.... [Some] affirm that the rule of a master over slaves is contrary to nature.... Property is a part of the household... no man can live well, or indeed live at all, unless he be provided with necessaries.... [T]he workers must have their own proper instruments... of various sorts; some are living, others lifeless; in the rudder, the pilot of a ship has a lifeless, in the look-out man, a living instrument.... [I]f every instrument could accomplish its own work, obeying or anticipating the will of others, like the statues of Daedalus, or the tripods of Hephaestus... the shuttle would weave and the plectrum touch the lyre without a hand to guide them, chief workmen would not want servants, nor masters slaves.... But is there any one thus intended by nature to be a slave, and for whom such a condition is expedient and right?... There is no difficulty in answering this question... that some should rule and others be ruled is a thing not only necessary, but expedient; from the hour of their birth, some are marked out for subjection, others for rule...

  12. In addition to today's American conservatives regarding politics not as the enactment of policies but rather the identification of enemies, there is also this strange current which seems aimed at convincing people that high ideals are only for fools. Once again, our politics does not know how to deal with this. One again, our role is to play our position. But that does not make this less disturbing: Jacob Levy: The Weight of the Words: "The power of elite speech in a democracy is only partly that of giving partisan cues to one’s supporters. It’s also the power to channel and direct the dangerous but real desire for collective national direction and aspiration. Humans are tribal animals, and our tribal psychology is a political resource.... Whether... presidents are named 'Reagan and George W. Bush' or 'JFK and Barack Obama'... all... put forward a public rhetorical face that was better than their worst acts.... They kept the public aspirations of American political culture pointed toward Reagan’s 'shining city on a hill'... a free and fair liberal democratic order, the protection of civil liberties, openness toward the world, rejection of racism at home, and defiance against tyranny abroad. And their words were part of the process of persuading each generation of Americans that those were constitutively American ideals. Trump’s apologists are now reduced to saying that his speech has been worse than his actions so far, the reverse of this usual pattern. The effect is the reverse, too.... The norm against publicly legitimizing Klan-type explicit racism was built up over a long time, calling on white Americans to be better than they were, partly by convincing them that they were better. The norm is still strong enough that Trump grudgingly kind of walked back his comments after the Charlottesville protests last year. But a norm that was built up through speech, persuasion, and belief can be undermined the same way. Trump’s own racism, his embrace of white nationalist discourse, and his encouragement of the alt-right over the past two years have, through words, made a start on that transformation...

  13. From 2011: Matthew Yglesias is trying to understand how there can be an ethnicism that calls itself "Christian". In the4 United States you can trace it to the emergence of the Peculiar Institution. In Britain—and among Britons and ex-Britons—I confess I am at a loss: Matthew Yglesias (2011): John Derbyshire of National Review Wants To ‘Let Britain Burn’: "It’s one thing if you want to call 'deracinated moral universalism' a 'sick' principle. But it’s very strange to combine this with table-pounding about Christianity. I’m no Christian, personally, but deracinated moral universalism is one of Christianity’s best and most worthy contributions to human thought. I, for example, am not British nor am I descended from British people. But despite the lack of ties of blood, it seems to me that it’s sad if British people get hurt or killed or have their property damaged in rioting. You can see that as being because we’re all God’s children and equal in His eyes, or as a non-theological statement of human equality. In either case, I think it would be very sad for the country to burn...

  14. Ruth Schuster: Oldest Shipwreck in World May Have Been Carrying Copper to Minoans: "The hull of the merchant vessel found off Antalya by Hakan Oniz and team is long gone, but the shape of the copper ingots is unmistakably the same as found in Minoan palaces, and depicted in ancient Egyptian tombs...

  15. Interstate 80 is the wrong way to go from San Francisco to Chicago. Vastly superior, scenery wise, is 580-205-120-6-305-93-319-50-70-55: Kevin Drum: Friday Cat Blogging https://www.motherjones.com/kevin-drum/2019/10/friday-cat-blogging-11-october-2019/: "I’m on the road today... helping Dr. Marc drive his cats to Chicago..... Interstate 80 Isn’t Very Interesting https://www.motherjones.com/kevin-drum/2019/10/interstate-80-isnt-very-interesting/: "Our mission to get Professor M’s cats to Chicago proceeds apace. We’re basically covering one state per day, and today we drove across Wyoming...

  16. This, from the smart Nick Rowe, is just misleading from any sensible point of view. The burden of a debt on a generation in any sensible social welfare function is proportional to the proportional reduction in that generation's consumption needed to finance the debt, and all generations are on an equal footing. When r < g, you can boost the relative well-being of a current generation at a very low cost in terms of the reduced well-being of a far-future generation. So even though debt is not a free lunch when r < g, it is a very, very cheap lunch indeed: Nick Rowe: Hilbert's Hotel and the National Debt when r < g https://worthwhile.typepad.com/worthwhile_canadian_initi/2019/10/hilberts-hotel-and-the-national-debt-when-rg.html: "Hilbert's Hotel has infinitely many rooms. Even if every room is full, you can still make room for one more guest in room 1, by moving the guest currently in room 1 to room 2, moving the guest currently in room 2 to room 3, and so on forever. When the rate of interest r is less than the growth rate of GDP g ("r < g"), the national debt in an infinitely-lived economy is a bit like Hilbert's Hotel. The government prints some bonds, which it gives (as a freebie) to generation 1 (this is like giving generation 1 a deficit-financed transfer payment, or tax cut). When they get old, generation 1 sells those bonds to the young in generation 2, in exchange for apples. So generation 1 eats more apples when old, and generation 2 eats fewer apples when young.... If r < g, the government never needs to raise taxes to service the debt.... A national debt makes all generations better off.... But it won't work if the economy has a finite life.... The last generation is stuck with bonds it can't sell, and no compensation for consuming fewer apples when old. So they wouldn't buy the bonds... unless the government raises taxes to retire the debt before the economy ends, but then those taxes would make the generations that pay them worse off...

  17. Miles Kimball: Adding a Variable Measured with Error to a Regression Only Partially Controls for that Variable https://blog.supplysideliberal.com/post/2019/10/10/adding-a-variable-measured-with-error-to-a-regression-only-partially-controls-for-that-variable: "Compare the coefficient estimates in a large-sample, ordinary-least-squares, multiple regression with (a) an accurately measured statistical control variable, (b) instead only that statistical control variable measured with error and (c) without the statistical control variable at all. Then all coefficient estimates with the statistical control variable measured with error (b) will be a weighted average of (a) the coefficient estimates with that statistical control variable measured accurately and (c) that statistical control variable excluded. The weight showing how far inclusion of the error-ridden statistical control variable moves the results toward what they would be with an accurate measure of that variable is equal to the fraction of signal in (signal + noise), where “signal” is the variance of the accurately measured control variable that is not explained by variables that were already in the regression, and “noise” is the variance of the measurement error...

  18. Very few of those who read this weblog would be attracted to this, or, indeed, find it anything other than a very hard slog. But those who do tackle it will, I think, be very well rewarded. Adam Kotsko is a smart, honorable, very insightful person who thinks very differently from us—and that is the kind of person we can potentially learn the most from: Adam Kotsko: Neoliberalism's Demons: On the Political Theology of Late Capital https://books.google.com/books?isbn=1503607135: "Neoliberalism makes demons of us all, confronting us with forced choices that serve to redirect the blame for social problems onto the ostensible poor decision-making of individuals...

  19. Jennifer Ouellette: New research on Tunguska finds such events happen less often than we thought: "Eyewitness: 'Suddenly the sky appeared like it was split in two, high above the forest.'... scientists deduced that the Chelyabinsk object was most likely a stony asteroid the size of a five-story building that broke apart 15 miles (24km) above the ground. The resulting shock wave was as powerful as a 550 kiloton nuclear explosion—and the Tunguska object was probably much larger. Based on the Chelyabinsk models—augmented with survey records from the Tunguska region shortly after the event—the scientists concluded the Tunguska object was probably stony (rather than icy), and measured between 164 and 262 feet in diameter (about 50 to 80 meters). It whipped through the atmosphere at 34,000 miles per hour (about 54,700km/h), and produced an amount of energy equivalent to the 1980 eruption of Mount Saint Helens. Those models, plus current data on the asteroid population, also enabled researchers to calculate how frequently such impact events are likely to occur. The good news is that this research suggests mid-size rocky bodies like the one that likely caused the damage at Tunguska occur less frequently than previously thought—on the order of millennia, rather than centuries...

  20. Why am I hearing "very fine people on both sides!"? here: Robert Knight: Letters · LRB: Globalists: "Alexander Zevin writes that Friedrich Hayek opposed the use of sanctions against apartheid, and ‘confided to his secretary that he liked blacks no better than Jews’ (LRB, 15 August). The antisemitic antecedents of National Socialism are conspicuous by their absence in The Road to Serfdom; if we assume the manuscript was completed in 1943, it almost completely ignores a decade of antisemitic persecution and four years of Nazi war crimes and atrocities. In the Spectator in January 1947 Hayek attacked the ‘blunders’ of denazification in Austria, including the suspension of violinists from the Vienna Philharmonic Orchestra because they had been Nazi party members. It was, he wrote, ‘scarcely easier to justify the prevention of a person from fiddling because he was a Nazi than the prevention because he is a Jew’...

  21. What return does John Tamny get for shilling for Elizabeth Holmes, and why is he so eager to do so?: John Tamny: Elizabeth Holmes Is a Visionary, and We Need More Like Her https://www.realclearmarkets.com/articles/2019/10/14/elizabeth_holmes_is_a_visionary_and_we_need_more_like_her_103946.html: "The analysis that you’re about to read, it's mine.... No interviews were conducted.... I live in the same apartment building as Holmes’s parents, and consider them friends. I've also briefly spoken with Elizabeth Holmes a few times.... I venerate the risk takers whose intrepid ways vastly improve our living standards.... The Wright brothers owned a bike shop as opposed to college degrees from some well-regarded school of engineering, Thomas Edison had no formal education beyond the 8th grade, and then Steve Jobs was a Reed College dropout. But the arguably more important truth is that most advances are hatched by people outside the industry about to be transformed.... Holmes’s hiring of the best she could find was an explicit admission by the entrepreneur that there were limits to her knowledge that she would strive to make up for through brilliant recruitment.... A popular narrative that’s taken hold about a 'fraudulent' Theranos having made false claims about its technology. Not so fast.... She was willing to fail publicly.... Rome wasn't built in a day, and neither were cars, airplanes or internet-capable computers. Theranos, like any other corporation aiming to do something truly different, was going to have to fail a lot to get to success..... While Holmes was plainly and understandably not eager to shout the initial shortcomings of Theranos technology to all who would listen, it’s not as though she was going out of her way to bury mistakes without addressing them. Quite the opposite. Some will point to Theranos’s utilization of third party equipment, along with actual needles on occasion in order to complete blood tests, but this too was yet further evidence that accuracy of testing mattered; that Theranos would make up for the initial shortcomings of the Edison and miniLab analyzers until they could stand on their own.... So much of Bad Blood struck this reader as innuendo.... That the technology 'didn’t always work' means it sometimes did.... It’s quite simply not news that Thernanos technology was buggy.... Which brings us to Theranos not making it. Carreyrou comes to the not-terribly-novel conclusion that 'Holmes and her company had overpromised and then cut corners when they couldn’t deliver'.... Stressing average doesn’t work when raising funds for a technology company.... Some will respond that the responsible thing for Holmes et al to have done would have been to tap the brakes as it were, to moderate expectations in consideration of the company’s audacious vision, to underpromise. Much easier said than done.... One senses that some of Holmes’s biggest critics have never run a start-up, let alone a business.... Which brings us to Elizabeth Holmes.... Seemingly forgotten by the eternally smug is that per serial business founder and investor Carl Schramm, capitalistic progress is 'messy', and it’s the stuff of individuals willing to energetically pursue that which is roundly rejected by the existing order. Crucial is that these people are very necessary.... It’s time to end the witch hunts meant to quiet the minds and actions of those who want to force the change without which there is no progress...

  22. Wikipedia: Lester C. Hunt https://en.wikipedia.org/wiki/Lester_C._Hunt: "Lester Callaway Hunt, Sr. (July 8, 1892 – June 19, 1954), was a Democratic politician and dentist from the state of Wyoming. Hunt was the first to be elected to two consecutive terms as Wyoming's governor, serving as its 19th Governor from January 4, 1943, to January 3, 1949. In 1948, he was elected by an overwhelming margin to the U.S. Senate, and began his term on January 3, 1949. Hunt supported a number of federal social programs and advocated for federal support of low-cost health and dental insurance policies. He also supported a variety of programs proposed by the Eisenhower administration following the Republican landslide in the 1952 elections, including the abolition of racial segregation in the District of Columbia, and the expansion of Social Security. An outspoken opponent of Senator Joseph McCarthy's anti-Communist campaign, Hunt challenged McCarthy and his senatorial allies by championing a proposed law restricting Congressional immunity and allowing individuals to sue members of Congress for slanderous statements. In June 1953, Hunt's son was arrested in Washington, D.C., on charges of soliciting sex with an undercover male police officer. (Homosexual acts were prohibited by law at the time.) Several Republican senators, including McCarthy, threatened Hunt with prosecution of his son and wide publication of the event unless he abandoned plans to run for re-election and resigned immediately, which Hunt refused to do. His son was convicted and fined on October 6, 1953. On April 15, 1954, Hunt announced his intention to run for re-election. He changed his mind, however, after McCarthy renewed the threat to use his son's arrest against him. On June 19, 1954, Hunt committed suicide in his Senate office; the suicide dealt a serious blow to McCarthy's image...

  23. Genetic counsellor Claude Mordan, an early Heinlein character, waxes enthusiastic about the real point of an armed society—ot improve the breed by killing off the unalert, the weak, the stupid, those who are not quick with their hands, and those who are not quick with their wits, and so improve the breed. Note that early Heinlein's authorial stand-in Hamilton Felix does not think much of this argument: Robert A. Heinlein (1948): Beyond This Horizon https://books.google.com/books?isbn=1625793146: "'An armed society is a polite society. Manners are good when one may have to back up his acts with his life. For me, politeness is a sine qua non of civilization. That’s a personal evaluation only. But gun-fighting has a strong biological use. We do not have enough things that kill off the weak and the stupid these days. But to stay alive as an armed citizen a man has to be either quick with his wits or with his hands, preferably both. It’s a good thing." “Maybe so,” Felix answered slowly, “but it does seem like there ought to be a better way to do it. This way is pretty sloppy. Sometimes the bystanders get burned.” “The alert ones don’t,” Mordan pointed out...

  24. Nathan Lane: Manufacturing Revolutions: Industrial Policy and Networks in South Korea https://delong.typepad.com/lane-korea.pdf: "This paper uses a historic big push intervention and newly digitized data from South Korea to study the effects of industrial policy on (short- and long-run) industrial development. In 1973 South Korea transitioned to a military dictatorship and drastically changed their development strategy. I find industries targeted by the regime’s big push grew significantly more than non-targeted industries along several key dimensions of industrial development. These developmental effects persisted after industrial policies were retrenched, following the 1979 assassination of the president. Furthermore, I estimate the spillovers of the industrial policies using exogenous variation in the exposure to the policy across the input-output network. I find evidence of persistent pecuniary externalities like those posited by big push development theorists, such as Albert Hirschman. In other words, I find that South Korea’s controversial industrial policy was successful in producing industrial development, the benefits of which persisted through time and in industries not directly targeted by the policies...

  25. BREXIT!!!!!: Hugh Mannerings: "I'm not saying there wasn't a Democratic mandate for Brexit at the time. I'm just saying if I narrowly decided to order fish at a restaurant that was known for chicken, but said it was happy to offer fish, and so far I've been waiting three hours, and two chefs who promised to cook the fish had quit, and the third one is promising to deliver the fish in the next five minutes whether it's cooked or not, or indeed still alive, and all the waiting staff have spent the last few hours arguing amongst themselves about whether I wanted battered cod, grilled salmon, jellied deals, or dolphin kebabs, and if large parts of the restaurant appeared to be on fire, but no one was paying attention to it because they were all arguing about fish, I would like, just once, to be asked if I definitely still wanted the fish...

  26. Sandy Li: ‘Golden Week’ Property Sales Plunge in Major Chinese Cities Amid Slowing Economy, Tight Mortgage Conditions https://www.scmp.com/business/article/3032030/golden-week-property-sales-plunge-major-chinese-cities-amid-slowing: "Sales of new homes in Beijing dropped to their lowest level since 2014 during the week following the National Day holiday. The seven-day holiday is traditionally a peak period for home sales.... Sales of new homes in Beijing dropped to their lowest level since 2014 during the week following the National Day holiday, according to data from the property information portal Zhuge.com.... Traditionally a peak period for sales, the seven-day holiday drew little interest from buyers who were unwilling to pursue big investments at a time when the national economy faces a slowdown caused by the trade war with the United States. Buyers’ appetite was further depleted by banks tightening mortgage loans and Beijing’s tougher measures to curb home prices.... Just 190 transactions were recorded in the primary residential market in Beijing during the golden week, down 19 per cent from 2018. In the secondary market, 41 used homes had changed hands, the second poorest golden week sales performance in the capital in the past five years...

  27. 260,000 people in Buncombe County, NC—Asheville. That is 60,000 households, low which perhaps 40 are in the nationwide top 0.1% with an income of 1.6 million a year or more. That is, I am told, the range in which one should perhaps start thinking about whether one wants an 8,000 square-foot house as one of one's items of conspicuous consumption. And such things sell slowly. So the thing that amazes me is not that the inventory of houses priced at more than two million in Asheville is twice annual turnover, but that 16 houses sold in that price range in grater Asheville last year. It's an index of plutocracy: Candace Taylor: A Growing Problem in Real Estate: Too Many Too Big Houses: "Baby boomers and retirees built large, elaborate dream homes across the Sunbelt—only to find that few people want to buy them.... Elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom. Many baby boomers poured millions into these spacious homes, planning to live out their golden years in houses with all the bells and whistles. Now, many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them.... The problem is especially acute in areas with large clusters of retirees. In North Carolina’s Buncombe County, which draws retirees with its mild climate and Blue Ridge Mountain scenery, there are 34 homes priced over $2 million on the market, but only 16 sold in that price range in the past year, said Marilyn Wright, an agent at Premier Sotheby’s International Realty in Asheville

  28. Darrick Hamilton: Racial and Gender Wage Gaps. From Equitable Growth: Racial and Gender Wage Gaps: Overcoming Structural Barriers to Shared Growth: "July 9, 2019 1:00PM - 2:15PM. Rayburn House Office Building, 2261, 45 Independence Ave SW, Washington, DC 20515, USA...

  29. Wikipedia: Danelaw https://en.wikipedia.org/wiki/Danelaw#Establishment_of_Danish_self-rule: "as recorded in the Anglo-Saxon Chronicle, is a historical name given to the part of England in which the laws of the Danes held sway[2] and dominated those of the Anglo-Saxons. Danelaw contrasts with West Saxon law and Mercian law. The term is first recorded in the early 11th century as Dena lage. Modern historians have extended the term to a geographical designation. The areas that constituted the Danelaw lie in northern and eastern England. The Danelaw originated from the Viking expansion of the 9th century, although the term was not used to describe a geographic area until the 11th century. With the increase in population and productivity in Scandinavia, Viking warriors, having sought treasure and glory in the nearby British Isles, 'proceeded to plough and support themselves', in the words of the Anglo-Saxon Chronicle for the year 876. Danelaw can describe the set of legal terms and definitions created in the treaties between the King of Wessex, Alfred the Great, and the Danish warlord, Guthrum, written following Guthrum's defeat at the Battle of Edington in 878...

  30. Wikipedia: Ragnar Lodbrok https://en.wikipedia.org/wiki/Ragnar_Lodbrok: "According to traditional sources, Ragnar (possibly as a literary composite) was: (a) married three times, to the shieldmaiden Lagertha, the noblewoman Thóra Borgarhjǫrtr and Aslaug (also known as Kráka, Kraba), a Norse queen; (b) the father of historical Viking figures including Ivar the Boneless, Björn Ironside, Halfdan Ragnarsson, Hvitserk, Sigurd Snake-in-the-Eye, and Ubba; (c) captured by King Ælla of Northumbria and died after Ælla had him thrown into a pit of snakes; and (d) avenged by the Great Heathen Army that invaded and occupied Northumbria and adjoining Anglo-Saxon kingdoms...

  31. Alan Levin and Ryan Beene: Boeing Pilot Expressed Worries About 737 Max Safety in 2016 https://www.bloomberg.com/news/articles/2019-10-18/faa-says-boeing-was-tardy-in-turning-over-737-max-evidence?srnd=premium: "FAA chief, in letter, demands explanation from planemaker. Pilots were alarmed by performance of MCAS feature on jet: The November 2016 instant messages, which were reviewed by Bloomberg News, were exchanges between Mark Forkner, then Boeing’s chief technical pilot for the 737, and another 737 technical pilot, Patrik Gustavsson. In the messages, Forkner described his alarm at simulator tests in which he encountered troubling behavior of the automated flight control system implicated in the two fatal crashes. Boeing had earlier assured the aviation regulator that the feature known as Maneuvering Characteristics Augmentation System was benign and didn’t need to be included in the plane’s flight manuals, according to a person familiar with the issue. Forkner told Gustavsson that MCAS was 'running rampant in the sim on me', referring to simulator tests of the aircraft. Forkner expressed concern that he may have unknowingly misled the FAA. 'So I basically lied to the regulators (unknowingly)', he wrote.... 'I’m levelling [sic] off at like 4000 ft, 230 knots and the plane is trimming itself like craxy [sic]', Forkner said. 'I’m like, WHAT?'... After Forkner said he was concerned about misleading regulators, Gustavsson replied that 'it wasn’t a lie, no one told us that was the case'. 'I don’t know, the test pilots have kept us out of the loop', Gustavsson said. Forkner replied, 'they’re all so damn busy, and getting pressure from the program'...

  32. Increasingly, sober people not prone to overstatement are going there—making the analogies between today's right wing in the North Atlantic and interwar fascism. I think that they are right to do so, but then I was always "shrill and unbalanced", too interested in rallying the troops and not focused enough on persuading moderate, reasonable people like... Martin Wolf. Well, those among them who have not surrendered are now out-shrilling me: Martin Wolf: Brexit: A Journey without End for Britain https://www.ft.com/content/fa53836e-e8d7-11e9-a240-3b065ef5fc55_: "In 1933, Joseph Goebbels stated that, 'The modern structure of the German State is a higher form of democracy in which, by virtue of the people’s mandate, the government is exercised authoritatively while there is no possibility for parliamentary interference, to obliterate and render ineffective the execution of the nation’s will'. It is a measure of how far the UK has fallen that Boris Johnson, the prime minister, often sounds rather like this. Mr Johnson sought to prevent 'parliamentary interference' in Brexit negotiations, by proroguing... it.... He dissented from the Supreme Court’s unanimous decision that this was unlawful. He has suggested he could ignore the Benn Act requiring him to seek an extension to the Article 50 deadline, should he not achieve a deal.... Worst of all, he plans to frame the next election as a battle of “people versus parliament”. How did the UK reach a position in which its prime minister regards parliament as an obstacle to be ignored? The simple answer is that it decided to insert a particularly ill-considered referendum on an exceptionally contentious subject into a parliamentary system. This created conflicting sources of legitimacy. Worse, the meaning of the option that won a small majority in that referendum was ill-defined. 'Brexit means Brexit' is perhaps the silliest sentence ever uttered by a British prime minister. But it was also all that could be said. Contrary to what Brexiters insist, parliamentary involvement is not an unwarranted intrusion. Any referendum requires legislation. This one also required negotiation and agreement. Alas, no majority exists for any option for a deal with the EU. Brexiters are as much to blame for this as Remainers.... The Leave campaign said essentially nothing about a no-deal exit. There is no mandate for what every informed observer, including the civil service, knows would be a disruptive and costly result. It would also be just the beginning of negotiations, not their end. But those talks would occur in worse circumstances. There would be pervasive economic uncertainty. This would be a mad choice. Governments exist to help their countries, not harm them deliberately...

  33. Once again, we have a piece by an impressively credentialed academic Republican economists that seems to me to have... no contact with reality. There is no economist I know of save for Robert Barro who has ever said or implied that the "neutral" real interest rate today is the same 2.4% that the average real interest rate was from 1986-2008. To the contrary, there has been a very long and active discussion—led over the past two decades by current New York Fed President John Williams—about how far the "neutral" rate has fallen, and how persistent that fall will be. And one conclusion of that debate has been that the current real federal funds rate of "only 0.7%" does indeed look "high" by some important metrics. So why would anyone write as thought this literature does not exist?: Robert J. Barro: Is Politics Getting to the Fed?: "From the early 1980s until the start of the financial crisis in September 2008, the US Federal Reserve seemed to have a coherent process for adjusting its main short-term interest rate, the federal funds rate. Its policy had three key components: the nominal interest rate would rise by more than the rate of inflation; it would increase in response to a strengthening of the real economy; and it would tend toward a long-term normal value. Accordingly, one could infer the normal rate from the average federal funds rate over time. Between January 1986 and August 2008, it was 4.9%, and the average inflation rate was 2.5%.... The Fed’s prolonged low-interest-rate policy, which was supplemented by quantitative easing (QE), seems misguided, considering that the economy had long since recovered, at least in terms of the unemployment rate. The nominal federal funds rate was not placed on an upward trajectory until the end of 2016.... It is hard to view today’s nominal federal funds rate of 2.4% as high. With an inflation rate of 1.7%, the real federal funds rate is only 0.7%. And yet the Fed’s “high”-interest-rate policy was fiercely attacked by Wall Street.... That view is not crazy if you are focused solely on boosting the stock market. On average, interest-rate cuts do tend to stimulate the stock market by making real returns on bonds less competitive. But that does not mean it is good economic policy always to be cutting rates...

  34. My friend Jason Furman keeps telling me that the Obama Administration sincerely sought throughout its tenure in office to boost employment in America via expansionary fiscal policy. I agree that Jason did. But the administration? No. When Jason and company could win internal fights, yes. But otherwise the Obama Administration seemed to me to be focused on winning the day's media narrative, and if dingbat kabuki moves that were destructive of employment growth could attain that daily goal, they were gleefully and joyfully embraced—even if they were pointlessly cruel to those4 on whom the success of the Obama Administration rested. For example: Jack Lew (November 29, 2010): Tightening Our Belts https://obamawhitehouse.archives.gov/blog/2010/11/29/tightening-our-belts: "To lay the foundation for long-term economic growth and to make our nation competitive for years to come, we must put the United States back on a sustainable fiscal course. And that’s going to require some tough choices. Today, the President made one of those: proposing a two-year pay freeze for all civilian federal workers. This will save  2 billion over the remainder of this fiscal year, 28 billion in cumulative savings over the next five years, and more than 60 billion over the next 10 years. The freeze will apply to all civilian federal employees, including those in various alternative pay plans and those working at the Department of Defense – but not military personnel.... Make no mistake: this decision was not made lightly. Like everyone honored to serve in the White House or the Cabinet, we work with extraordinarily talented public servants every day.... Indeed, anyone who has flown safely, enjoyed our national parks, received a Pell grant to go to college, or relied on a Social Security check to retire in dignity has benefited from the service of federal workers. This pay freeze is not a reflection on their fine work. It is a reflection of the fiscal reality that we face: just as families and businesses across the nation have tightened their belts, so must the federal government...

  35. Perhaps the most interesting thing to happen in political economy over the summer was the American Business Roundtable's declaration that it no longer believed in "shareholder primacy". "Shareholder primacy" is the doctrine that a corporation's managers have a twofold and only twofold duty: (1) obey the law, and (2) maximize the stock market value possessed by its shareholders. All other considerations are, according to "shareholder primacy" not the proper business of the corporation: rather, they are the business of the government officials who make the laws and write the regulations to enforce them, the politicians who compete to boss the government officials, and the voters who elect them. The alternative view was always that shareholders were just one of the groups of stakeholders, albeit one of the most important groups by virtue of their status as residual claimants and their powers to choose corporate officers, whose interests were to be advanced and balanced. Here my old teacher Mike Spence has smart things to say about the possible advantageous consequences that opening the door to the possibility of moving away from "shareholder primacy" might produce: Michael Spence: The End of Shareholder Primacy? https://www.project-syndicate.org/commentary/shareholder-vs-multi-stakeholder-model-by-michael-spence-2019-08: "An even more exciting feature of the shift toward socially conscious corporate governance is that it opens the door for new, more creative business models.... Alibaba [was founded with the goal of expanding market access for small and medium-size companies... [and] remain[s] committed.... Mukesh Ambani... identified Reliance’s stakeholders as the 'Indian economy, Indian people, our customers, employees, and shareowners'.... Digital technologies tend to come with high fixed costs, but low to negligible variable costs. Once established, a firm like Alibaba or Jio can thus provide a platform for countless other business models built around social objectives. And this effect is especially powerful in potentially large markets like China, India, Indonesia, Brazil, and the United States. The Business Roundtable’s recent declaration represents a major step forward for the multi-stakeholder model. The example set by industry leaders matters. And it is no accident that some of today’s most successful global companies were explicitly conceived and built on the basis of multi-stakeholder values...

  36. This catches the wise David Adler's attention. Indeed, Wolfgang Streeck's socialism is a very particular and grinchy and, indeed, nationalsocialism. I first saw this back in 1993-1994 in the NAFTA wars, when too many on the left seemed to think they could mobilize white supremacy and fear of hispanics to the service of social-democratic equitable-growth goals. Back then I thought "it really does not work that way". Indeed it does not. But people keep trying: David Adler: But Jesus Christ Wolfgang Streeck Really Hates Migrants: Wolfgang Streeck: Progressive Regression: "As governed by 'European' or international law, immigration may also function in essence as social policy. The arrival of unskilled workers may undermine collective bargaining in low-wage sectors, to the extent that it still exists; it may also increase income inequality. In the process, it may furthermore weaken public perceptions of poverty and inequality as a problem—and, indeed, allow opponents of social protection to declare acceptance of domestic inequality a commandment of global solidarity with the 'really poor'. Immigration may also exert pressure on social-assistance budgets while weakening the willingness of citizens to be taxed for them, as a growing share of the expenditure may be going to newly arriving non-citizens. There is some evidence from Sweden that immigration can give rise to local educational segregation, as middle- and upper-class parents extract their offspring from schools that educate the children of immigrants and send them to more selective institutions...

  37. There have been many disruptions of the functioning of the discursive public sphere by new communications technologies. The most recent significant one was the early-twentieth century disruption by radio. The very sharp and witty Maciej Ceglowski provides us with a brief introduction: Maciej Ceglowski: Legends of the Ancient Web: "It doesn't take long for politically talented people to discover how to use radio for their own ends. One of these early pioneers in the United States is Charles Coughlin, a Catholic priest and early religious broadcaster who notices that his angry rants on political topics net him a much bigger audience than his discourses on religion. By the middle of the 1930's, Coughlin has an active audience of ten million tuning in to hear him rail against against bankers and international conspiracies, in a way that sounds uncomfortably familiar in 2017. Here's Father Coughlin at the top of his game, yelling about banks...

  38. It is a very curious thing that pre-industrial societies were, by and large, about as unequal in terms of relative income as we are today. It does suggest that something like Vilfredo Pareto's Iron Law is operating, although how it could operate is beyond me. And it does suggest that Piketty was correct in his fear that the post-WWII trentes glorieuses age of social democracy was a fragile anomaly. This, however, fits less well with Piketty's current argument that our current second gilded age was generated by the descent of the center-right into neofascism and the descent of the center-left into cultural liberalism as it took its eye off the important ball that is the distribution of wealth and hence of social power. It is also worthy noting that pre-industrial inequality was much more vicious than modern inequality: push pre-industrial inequality up by an additional fifth or more, and large numbers of people start dying from malnutrition: Branko Milanovic, Peter H. Lindert and Jeffrey G. Williamson: Pre-Industrial Inequality https://delong.typepad.com/pre-industrial-inequality.pdf: "Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes as unequal as they are today? This article infers inequality across individuals within each of the 28 pre-industrial societies, for which data were available, using what are known as social tables. It applies two new concepts: the inequality possibility frontier and the inequality extraction ratio. They compare the observed income inequality to the maximum feasible inequality that, at a given level of income, might have been 'extracted' by those in power. The results give new insights into the connection between inequality and economic development in the very long run...

  39. Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome: "Thus Rome went to war for a city that no longer existed, and Carthage went to war for a political figure whom many Punic aristocrats distrusted. But beneath this apparently irrational conduct on both sides lay deep issues of pride, honor, and security. The Romans wanted their will obeyed, as had happened in 238/237—and the Carthaginians were adamant in refusing to obey another state’s will, in good part because of previous incidents with Rome, probably mixed now with new confidence from their Spanish conquests and resources (Polyb. 3.14.9–10: explicit). We must, of course, leave room for badly judged, vacillating, and even incoherent human decision making in the course of the crisis of 220–218. The purpose of the new Punic empire in Spain was to enhance the military and financial capability of Carthage and thus change the balance of power—but this need not have led to war with Rome. If Hannibal had agreed to leave Saguntum alone—and it was a small place—the Punic conquest of Spain might have continued unimpeded in other directions for years, with the balance of power continuing to shift, and Rome ever less able to impose her will. That was Polybius’s impression...

  40. I would have thought that wealth taxation would be the default conventional neoliberal public finance position. You want to broaden the base and lower the rates. And what base is broader than wealth? Administrative, behavioral-response, and information-revelation considerations can move you away from a wealth tax to narrower bases. But is has always seemed to me that a wealth tax is where you start. But that does not seem to be how the public finance intellectual community is reacting. We at Equitable Growth, however, are providing pushback: Fatih Guvenen, Gueorgui Kambourov, Burhan Kuruscu, Sergio Ocampo, and Daphne Chen: Use It or Lose It: Efficiency Gains from Wealth Taxation https://equitablegrowth.org/working-papers/use-it-or-lose-it-efficiency-gains-from-wealth-taxation/_: "How does wealth taxation differ from capital income taxation? When the return on investment is equal across individuals, a well-known result is that the two tax systems are equivalent. Motivated by recent empirical evidence documenting persistent heterogeneity in rates of return across individuals, we revisit this question. With such heterogeneity, the two tax systems have opposite implications for both efficiency and inequality. Under capital income taxation, entrepreneurs who are more productive, and therefore generate more income, pay higher taxes. Under wealth taxation, entrepreneurs who have similar wealth levels pay similar taxes regardless of their productivity, which expands the tax base, shifts the tax burden toward unproductive entrepreneurs, and raises the savings rate of productive ones. This reallocation increases aggregate productivity and output. In the simulated model parameterized to match the US data, replacing the capital income tax with a wealth tax in a revenue-neutral fashion delivers a significantly higher average lifetime utility to a newborn (about 7.5% in consumption-equivalent terms). Turning to optimal taxation, the optimal wealth tax (OWT) in a stationary equilibrium is positive and yields even larger welfare gains. In contrast, the optimal capital income tax (OCIT) is negative—a subsidy—and large, and it delivers lower welfare gains than the wealth tax. Furthermore, the subsidy policy increases consumption inequality, whereas the wealth tax reduces it slightly. We also consider an extension that models the transition path and find that individuals who are alive at the time of the policy change, on average, would incur large welfare losses if the new policy is OCIT but would experience large welfare gains if the new policy is an OWT. We conclude that wealth taxation has the potential to raise productivity while simultaneously reducing consumption inequality...



#noted #weblogs #2019-10-20

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