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October 2019

Clayton Yuetter (March 24, 1992): When 'Fairness' Isn't Fair https://www.nytimes.com/1992/03/24/opinion/when-fairness-isn-t-fair.html?searchResultPosition=1: "Class warfare, discredited throughout the former Communist world, seems to have found new life in American political circles. A front-page article in the March 5 New York Times described one example: an allegation that the recovery of the 1980's—and hence the conservative philosophy of the Bush Administration—helped the rich and hurt the poor. This analysis, a reprise of the so-called fairness argument, rests on a Congressional Budget Office study and an analysis by a Massachusetts Institute of Technology economist, Paul Krugman. The C.B.O. and Mr. Krugman have played prominent roles in shaping the liberal version of the fairness debate, and their allegations have become a staple in the speeches of Democratic politicians. But the analysis suffers from grievous flaws. I will cite just a few. First, the claim that the top 1 percent of taxpayers raked in 60 percent of the benefits of the Reagan-Bush boom rests on a statistical sleight of hand. The C.B.O.-Krugman analysis masks the progress of the Reagan-Bush expansion by throwing in data from the Carter era, when the poor got poorer and the rich got poorer. During the Reagan-Bush boom, by contrast, the rich paid more in taxes and the poor made more in income. Minorities enjoyed a greater leap in wealth, employment and mobility than whites. The middle class shrank because more people became 'rich'. That's the Reagan-Bush record...

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CBO (March 1992): Measuring The Distribution of Income Gains https://delong.typepad.com/cbo-income-gains.pdf: "For several years, the Congressional Budget Office (CBO) has developed estimates of the distribution of income and federal taxes in response to requests from Committees of the Congress. CBO published the original estimates, and various publications of the Committee on Ways and Means have included more recent estimates along with explanations of the methodology used to calculate them and the staffs descriptions of the patterns they reveal. Policy analysts, commentators, and the media frequently reconfigure, interpret, analyze, and criticize the estimates. In the process, the interpretations and conclusions of these secondary appraisals are sometimes-and incorrectly-attributed to CBO. A case in point: recent media stories have used CBO statistics on incomes to buttress a contention about the increasing inequality of after-tax incomes among families. For example, The New York Times reported on March 5 that 'The richest 1% of families received 60% of the after-tax income gain' between 1977 and 1989. That figure, which was attributed to both CBO and Professor Paul Krugman of the Massachusetts Institute of Technology, was actually Professor Krugman's reconfiguration of CBO data contained in a December 1991 report issued by the House Committee on Ways and Means. Many of the commentaries that resulted criticized CBO's estimates and methodology or ascribed the conclusions in the original article to CBO. This memorandum seeks to clarify some of the confusion...

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Weekend Reading: Paul Krugman: The Rich, the Right, and the Facts: Deconstructing the Inequality Debate

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Paul Krugman (Fall 1992): The Rich, the Right, and the Facts: Deconstructing the Inequality Debate https://prospect.org/economy/rich-right-facts-deconstructing-inequality-debate/: "During the mid-1980s, economists became aware that something unexpected was happening to the distribution of income in the United States. After three decades during which the income distribution had remained relatively stable, wages and incomes rapidly became more unequal.... During 1992 this genteel academic discussion gave way to a public debate, carried out in the pages of the New York Times, the Wall Street Journal, and assorted popular magazines. This public debate was remarkable in two ways.... The conservative side displayed great ferocity.... Conservatives chose to take an odd, and ultimately indefensible, position. They could legitimately have challenged,,, on the grounds that nothing can, or at any rate should, be done about it. But with only a few exceptions they chose instead to make their stand on the facts to deny that the massive increase in inequality had happened... [in] an extraordinary series of attempts at statistical distortion. The whole episode... is a sort of textbook demonstration of the uses and abuses of statistics.... The combination of mendacity and sheer incompetence displayed by the Wall Street Journal, the U.S. Treasury Department, and a number of supposed economic experts demonstrates something else: the extent of the moral and intellectual decline of American conservatism.... Fortune has long carried out annual surveys of executive compensation; and since the mid-1970s compensation of top executives has risen far faster than average or typical wages.... Surveys carried out by the University of Michigan have also shed useful light on income distribution.... There is also anecdotal evidence: Tom Wolfe... soaring demand for apartments in Manhattan's 'Good Buildings'... his Bonfire of the Vanities arguably tells you all you need to know about the subject...

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Sylvia Nasar (December 12, 1992): Tapping the Rich May Prove Tricky https://www.nytimes.com/1992/12/12/business/tapping-the-rich-may-prove-tricky.html?searchResultPosition=257: "Getting the really rich—the people who reaped an outsize share of the economic gains of the 1980's—to pay more was a major plank of the Democratic campaign.... The problem is that while higher tax rates on high incomes are likely to provide a good deal of new money, they are not likely, barring an unexpectedly buoyant economy, to generate the 92 billion over four years that the Clinton camp has claimed.... 'If there's a significant change in rates, say from 31 percent to 41 percent, people will change their behavior to take advantage of ways to defer income', Professor Poterba said. 'It would set into motion a return to pre-1986 tax shelters'.... Mr. Clinton's strategists must find roughly 100 billion a year through permanent tax increases or spending cuts to fulfill his deficit-shrinking pledge...

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Sylvia Nasar (August 16, 1992): THE NATION: The Rich Get Richer, But Never the Same Way Twice https://www.nytimes.com/1992/08/16/weekinreview/the-nation-the-rich-get-richer-but-never-the-same-way-twice.html?searchResultPosition=274: "IN the late 1970's, during the Carter Presidency, the super-rich commanded a smaller slice of America's wealth than at any time since the 1830's, when Alexis de Tocqueville was struck by 'the general equality of condition among the people' in the fledgling democracy. By the end of the 1980's, soon after Ronald Reagan left the White House, wealth in this country had become more concentrated than at any time since the Roaring Twenties. The share of net worth—assets minus debts—held by the top 1 percent of households jumped from below 20 percent in 1979 to more than 36 percent in 1989, according to a new historical data series compiled by the economic historians Claudia Goldin and Bradford De Long at Harvard University and the economist Edward Wolff at New York University.... If the pattern suggested by the data is accurate, the wealthy's share of the total wealth expanded as much during the Reagan boom as it did in the 100 years—roughly 1830 to 1929—in which America transformed itself from an egalitarian land of small farmers into the world's reigning industrial power...

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Sylvia Nasar (July 20, 1992): The Rich Get Richer, but the Question Is by How Much https://www.nytimes.com/1992/07/20/business/the-rich-get-richer-but-the-question-is-by-how-much.html?searchResultPosition=239: "Trying to challenge the widespread impression that the rich got a wildly disproportionate share of the gains from the Reagan economic boom, the Treasury has been quietly circulating a 'primer' on income distribution to journalists and economists. The 24-page document, prepared by R. Glenn Hubbard, Deputy Assistant Secretary for Tax Analysis, asserts that the richest 1 percent of American taxpayers reaped only 11.3 percent of the income gains in the 1980's.... But experts in the field who reviewed the Treasury's calculation were highly critical, saying that the Treasury economist had fallen into a well-known statistical trap that all but guaranteed that the gains for the top group of income earners would appear modest. 'It's not a meaningful calculation', said Lawrence F. Katz, an economist at Harvard University.... Its calculation contrasts sharply with one by an economist at the Massachusetts Institute of Technology, Paul R. Krugman, that the richest 1 percent of American families reaped 70 percent of the growth in average family incomes from 1977 to 1988. Professor Krugman's data are now enshrined in Gov. Bill Clinton's economic program as the Democratic Presidential candidate and dismissed by the Treasury as a 'meaningless statistical artifact'...

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Sylvia Nasar (June 17, 1992): One Study's Riches, Another's Rags https://www.nytimes.com/1992/06/17/business/one-study-s-riches-another-s-rags.html?searchResultPosition=233: "Two teams of researchers asking the same politically sensitive question—both tracking individual households over the decade—have reached quite different conclusions. A Treasury study released earlier this month said it was relatively routine for someone who started out poor to end up affluent. But a study by the middle-of-the-road Urban Institute concludes that such Horatio Alger stories were, in fact, rare..... Both also confirm one of the best-known facts of modern economics: for rich and poor alike, earnings rise from the time individuals enter the work force through middle age—roughly doubling, on average—and fall after retirement.... Leading labor and tax economists said that the Treasury study did not shed much light on the matter of how much social mobility there is in America.... 'This isn't your classic income mobility', said Kevin Murphy, a labor economist at the University of Chicago. 'This is the guy who works in the college bookstore and has a real job by his early 30's'. The conflicting studies have appeared in the midst of a bareknuckled election-year debate over who won—and who lost—from Reaganomics. In a period of slow economic growth, income distribution has elbowed its way into the political arena...

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Sylvia Nasar (May 18, 1992): Rich and Poor Likely to Remain So https://www.nytimes.com/1992/05/18/business/rich-and-poor-likely-to-remain-so.html?searchResultPosition=305: "In the continuing debate over the distribution of wealth and income—the richest 1 percent of American families control more wealth than the bottom 90 percent—one school of thought says findings like this, however extreme, do not present a true picture.... Even if the raw numbers are accurate, these economists say, the portrait fails to capture the amazing fluidity and flux of American society, the hardscrabble beginnings of many a millionaire, from Bobby Bonilla to Ross Perot. And the richest person in America these days is not a Rockefeller or a du Pont but William Gates, founder of the Microsoft Corporation, the leading software company. But... rags-to-riches remains the economic exception, not the rule.... If anything, economists say, the climb out of poverty has become harder in the last decade or two...

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Sylvia Nasar (May 11, 1992): The Richest Getting Richer: Now It's a Top Political Issues https://www.nytimes.com/1992/05/11/business/the-richest-getting-richer-now-it-s-a-top-political-issue.html: "When Bill Clinton wants to galvanize his audience, he thunders from the podium that the top 1 percent of families got 60 percent of the gains from economic growth during the 1980's and owns more wealth than the bottom 90 percent. Governor Clinton, the likely Democratic Presidential nominee, had been searching for months for facts to illustrate his claim that America's middle class benefited little from 12 years of Republican rule. The explosion of riches at the top struck him as a perfect vehicle. Not only did the widening gap between the rich and the rest of Americans conflict with traditional notions of democracy, but it also went right to the pocketbook sources of middle-class discontent...

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Sylvia Nasar (March 5, 1992): The 1980's: A Very Good Time for the Very Rich https://www.nytimes.com/1992/03/05/business/the-1980-s-a-very-good-time-for-the-very-rich.html: "An outsized 60 percent of the growth in the average after-tax income of all American families between 1977 and 1989—and an even heftier three-fourths of the gain in average pretax income—went to the wealthiest 660,000 families, each of which had an annual income of at least 310,000 a year, for a household of four... giving them 13 percent of all family income, up from 9 percent. The average pretax income of families in the top percent swelled to 560,000 from 315,000, for a 77 percent gain in a dozen years, again in constant dollars. At the same time, the... American family... smack... at the median... saw its income edge up only 4 percent, to 36,000.... 'We know that productivity has increased since 1977 and that more people are working', said Paul Krugman, an economist at the Massachusetts Institute of Technology and the author of The Age of Diminished Expectations.... 'Where did all that extra income go? The answer is that it all went to the very top'.... The broad pattern disclosed by the latest data is not in dispute, but the reasons for the shift are...

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Sylvia Nasar (February 14, 1992): Economic Scene; Puzzling Poverty Of the 80's Boom https://www.nytimes.com/1992/02/14/business/economic-scene-puzzling-poverty-of-the-80-s-boom.html: "In at least one vital dimension, the 80's were totally unlike the 60's. The official poverty rate, which counts the number of people whose income falls short of some minimum level, did not come down as the economy rose. While poverty shrank by a quarter in those golden Kennedy-Johnson years, it was actually higher at the end of the Reagan boom than in 1979.... How come trickle-down economics did not work last time around, especially given that the unemployment rate fell by half, or more than five full percentage points, from 1983 to 1989? Some bright young labor economists—two at Harvard, one at Princeton—have taken a look at a variety of explanations and offered some intriguing ones of their own.... David Cutler and Lawrence Katz point out in 'Macroeconomic Performance and the Disadvantaged'... the fact that... benefits are excluded is irrelevant to the 80's because such benefits did not grow much in that decade.... Perhaps poor people were living high and hiding more of their off-the-books income?... Mr. Katz and Mr. Cutler discover... 10 percent based on consumption as compared with 13 percent based on reported income in 1988.... But, even on this measure, poverty did not decline in the 80's.... Labor's share of the economic pie, about two-thirds, did not shrink an iota in the union-busting 80's.... A widening disparity between low-wage and high-wage workers is to blame.... Not only did jobs in manufacturing, where unskilled workers used to be able to earn premium pay, shrink as a share of total jobs, but within virtually every industry, demand for unskilled workers either slipped or grew more slowly than for workers with more to offer...

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Note to Self: The continued strength of landed military service aristocrats in government left Europe on the eve of World War I potentially vulnerable to currents of thought that were anti-liberal, pro-hierarchy, and authoritarian...

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Very Briefly Noted 2019-10-07:

  1. clearkimura: How to Convert Document from Google Docs to Text File https://askubuntu.com/questions/998384/how-to-convert-document-from-google-docs-to-text-file: "No need to pipe to other program to convert the file. You can download from Google Docs in any supported format, by using the existing parameters in the URL address: https://docs.google.com/document/d/FILE_ID/export?format=FORMAT; where: FILE_ID is string ID of target file and; FORMAT is file format of choice i.e. txt.... Then, downloading the document from Google Docs as text file is straightforward by using wget or a web browser. Both methods will download the document as text file as expected.... In terms of documentation, the only relevant guide I found was this dated blog post circa 2014. There is this page of developer guide for Google Drive but not useful as it is. That is all...

  2. Gustave Dore: Inferno Illustrations http://www.templarinfernobookreview.com/inferno_illustrations_dore.htm

  3. Nasir Tyabji: Review by "MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-75" by Chalmers Johnson https://podcasts.apple.com/us/podcast/robert-shiller-discusses-narrative-economics/id730188152?i=1000452370005...

  4. Scott Lemieux: BREAKING! Access to Health Care Improves Health Outcomes http://www.lawyersgunsmoneyblog.com/2019/10/breaking-access-to-health-care-improves-health-outcomes: "This may seem like 'studies report that water is wet', except for the cadre of know-nothing libertarian hacks determined to deny the obvious, and whose mission to take health coverage away from as many people as possible may yet succeed...

  5. Scott Lemieux: The Infuriating Bad Faith of Arguments That Health Insurance Doesn't Improve Health Outcomes http://www.lawyersgunsmoneyblog.com/2017/06/infuriating-bad-faith-arguments-health-insurance-doesnt-improve-health-outcomes: "It’s like, how much more McArdle could this be?: 'Republicans want to kill you. Worse than that, they want to kill you so that they can give your money to rich people who don’t need it'. Why, yes. This is entirely accurate. Well, actually, 'you' should be replaced with 'poor people'—the typical McArdle reader isn’t very likely to have their access to healthcare being put at risk...

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Wikipedia: Ötzi the Iceman https://en.wikipedia.org/wiki/%C3%96tzi: "Born near the present village of Feldthurns (Velturno), north of Bolzano, Italy. Died c. 3300 BCE (aged about 45) Ötztal Alps, near Hauslabjoch on the border between Austria and Italy.... Currently, it is believed that Ötzi bled to death after the arrow shattered the scapula and damaged nerves and blood vessels before lodging near the lung..... Ötzi was 160 centimetres (5 ft 3 in) tall, weighed about 50 kilograms (110 lb), and was about 45 years of age.... Analysis of pollen, dust grains and the isotopic composition of his tooth enamel indicates that he spent his childhood near the present village of Feldthurns, north of Bolzano, but later went to live in valleys about 50 kilometres farther north...

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Giovanni Federico and Antonio Tena-Junguito: The World Trade Historical Database https://voxeu.org/article/world-trade-historical-database: "Global trade data for periods prior to WWII are notoriously incomplete and unreliable. This column describes a new dataset of historical world trade that addresses many of these flaws. The World Trade Historical Database comprises imports and exports for polities beginning in 1800, and also includes international prices for 190 products, freight rates, and exchange rates, where available. Though focused on aggregate trade, the data include information on the composition of trade from numerous sources...

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Richard Grabowski (2002): East Asia, Land Reform and Economic Development https://delong.typepad.com/land-reform.pdf: "In trying to explain the economic success of East Asia (Japan, South Korea, and Taiwan) reference is often made to the fact that all three of these countries had extensive land reforms. These land reforms are thought to haue significantly contributed to the rapid growth of the region by eliminating the landlord class and providing the basis for an equitable distribution of the benefits of growth...

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Gary Forsythe: A Critical History of Early Rome: "Perhaps the single most intriguing site of the late and final Bronze Age in Italy (c. thirteenth to eleventh centuries B.C.) is that of Frattesina located in the eastern part of the Po Valley. By prehistoric standards it was quite large, 700 by 190 yards, an area of 27.5 acres, and its remains show that it was an industrial community that refined metal, fashioned deer antler into tools, and produced colored glass beads, making it the earliest known site in Italy to manufacture glass. Ivory, amber, and fragments of ostrich eggs have been uncovered there as well.... The progressive and innovative character of Bronze-Age northern Italy is further demonstrated by the fact that during the thirteenth century B.C. the spring safety pin was invented, probably in the area between Lake Garda and the Austrian Alps. Termed a 'fibula' by modern archaeologists from its Latin name, the pin was henceforth used throughout antiquity to fasten at the shoulder or chest a garment wrapped about the body. Fibulae are therefore often found in graves, and the changing decorative style of their catch-plates provides archaeologists with valuable information for dating and concerning possible artistic influence...

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Jeremy Bulow: How Stress Tests Fail https://voxeu.org/article/how-stress-tests-fail: "Bank stress tests in the US were an important tool for bailing out banks in the Great Recession. As this column points out, however, because the tests use regulatory rather than market measures of asset values and risk they have almost nothing to do with whether a bank will be economically solvent under test conditions. This column argues that the thousands of pages of post-crisis bank regulation have largely ignored perhaps the two most needed reforms: measuring asset values and risks in an economically realistic way. Reforming the stress tests is necessary for clearly and credibly placing responsibility for future banking losses in the private sector and for improving incentives for both managing old risks and for investing in new ones...

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Carl O'Donnell (2014): What Does It Take To Make The Forbes 400?: Increasingly More And More: "Every year, the Forbes 400 sets the bar higher. Just making it to the very bottom of this year’s list requires 1.55 billion–250 million more than in 2013. And that’s only a single year. To truly appreciate how quickly the hurdle is rising, Forbes took a look at how much the minimum cutoff increased every year since 1982, when the first Rich List was created. In so doing, Forbes also revisited the millionaires and billionaires who have had the honor of ranking last on the Forbes 400. The poorest person on the list in 1982 was Armas Clifford 'Mike' Markkula Jr., who was then the CEO of a hot tech startup called Apple Computer. He joined the firm in 1977, when Steve Jobs and Steve Wozniak approached him for funding. Markkula’s net worth in 1982: $91 million. Not bad, but only about one 17th of what he would need to ascend to the Forbes 400 today. Granted, the dollar had more purchasing power in 1982. So how much would 91 million be worth in today’s dollars? About 225 million, still less than a sixth of today’s cutoff....

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The Shadow: An Outtake from "Slouching Toward Utopia?: An Economic History of the Long Twentieth Century"

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15.5: The Shadow: Populist Nationalism and Social Darwinism

15.5.1: Max Weber as German Chauvinist

The coming of social and political equality—or at least pressures toward that end—in the North Atlantic had a consequence. People were no longer primarily identifying themselves as (western) Christians or Calvinists or nobles or farriers but as Englishmen, Frenchmen, Dutchmen, or Germans. This meant that they were definitely not Poles or Italians or Catalans(well, maybe they were still identifying themselves as Catalans), or even Auvernais. The drawing tight of the bonds of national identity meant the exclusion of those not identified with the ethno-nation from the ekumene—or worse: the rise of German nationality meant that Polish-speaking citizens of the traditional Hohenzollern lands, people whose ancestors had paid taxes and built roads for and died in the armies of the ruling dynasty of Prussia since the days of the Great Elector in the 1600s were now viewed as an alien excrescence in the body politic, human pus to be somehow treated to make the ethno-nation healthy...

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My Job as the Economist Here Is to Do the Numbers...

https://www.icloud.com/keynote/0aOjZYHb_NKIojtbIPFDbptTg

Council on Foreign Relations: The Future of Democracy Symposium: Session Two: Economics, Identity, and the Democratic Recession: My job as the economist here is to do the numbers.

Over the past forty, fifty years we’ve seen some alleviation of—call them gender hierarchies. Women, even women who are high school dropouts are making more money adjusted for inflation now than women were back in 1981. And that progress spreads up the distribution, so that the group that’s done at least as well as anyone else are women with advanced degrees in America. For them, America is fulfilling the promise that people thought or expect to have of it...

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Will Wilkinson: Why an Assault Weapons Ban Hits Such a Nerve With Many Conservatives https://www.nytimes.com/2019/09/18/opinion/assault-rifle-ban.html: "They’ll tell you their foreboding 'predictions' of lethal resistance are really about preserving the means to protect the republic against an overweening, rights-stomping state. Don’t believe that, either. It’s really about the imagined peril of a multicultural majority running the show. Many countries that do more to protect their citizens against gun violence are more, not less, free than we are. According to the libertarian Cato Institute, 16 countries enjoy a higher level of overall freedom than the United States, and most of them ban or severely restrict ownership of assault weapons. The freedom to have your head blown off in an Applebee’s, to flee in terror from the bang of a backfiring engine, might not be freedom at all...

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Cristobal Kay (2002): Why East Asia Overtook Latin America: Agrarian Reform, Industrialisation, and Development https://delong.typepad.com/asia-latin.pdf: "Scholars and policy makers have long debated the causes of the spectacular economic success achieved by the East Asian newly industrialising countries (NICs) as well as the lessons that other developing countries can learn from this development experience...

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The unmeasured societal well-being benefits of new technologies: 0.02%, 0.1%, 0.5%, 2.5% per year, or more? I tend to be on the side something between 0.5% and 2.5%—the fact that people with a poverty-line income of 25000 per family of 4 seem to me to live better than people with the same nominal income in any past generation is, for me, dispositive. Public and private health, entertainment, and information technologies are "seismic", and seem to me to have overwhelmed the rest. But her we have smart people disagreeing. Plus—an issue that they do not raise—is Facebook actually a net plus? You can make the case that it has not been:

Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox: GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy: "The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US...

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From two years ago, Liz Hipple saying very smart things about what is it stake in the debate over antitrust policy:

Liz Hipple: Understanding the Importance of Antitrust Policy for U.S. Economic Competitiveness and Consumer Choice: "Changes in antitrust policy’s presumptions about the competitive consequences of increases in concentration. Over the past 50 years, those presumptions shifted from a viewpoint that held that even modest increases in concentration would result in above-competitive prices and profits to one in which it was believed that tougher merger standards sacrificed cost efficiencies, which presumably would be passed along to consumers. While antitrust policy has moderated somewhat from that so-called Chicago school view, the FTC enforcement data from 1996 through 2011 nonetheless demonstrate that there has continued to be a shift away from merger enforcement actions in all but the most concentrated markets. Furthermore, while the latest merger guidelines, published in 2010, emphasize the multiplicity of relevant factors beyond just cost efficiencies in evaluating the likelihood of possible harms from a merger, they also further relax the thresholds for the levels and changes in concentration at which a merger might be presumed to lessen competition...

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Weekend Reading: Annie Wood Besant (1878): The Law of Population: Its Consequences and Its Bearing Upon Human Conduct and Morals

Weekend Reading: Annie Wood Besant (1878): The Law of Population: Its Consequences and Its Bearing Upon Human Conduct and Morals: "The preventive check which is so generally practised in France that Dr. Drysdale—with a rarely wide French experience—stated that among the peasantry it was 'used universally', and was 'practised by almost every male in Paris, and all over the country', is one which depends entirely on the self-control of the man. It consists simply in the withdrawal of the husband previous to the emission of the semen, and is, of course, absolutely certain as a preventive...

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William Roberts Clark and Vincent Arel-Bundock: Independent but Not Indifferent: Partisan Bias in Monetary Policy at the Fed: "Independent central banks are thought to be effective inflation hawks because they are run by technocrats with conservative monetary policy preferences. But central bankers can only protect their independence by compromising with the elected officials who grant them their independence. Policy, therefore, is likely to be a weighted average of the preferences of the central bank and the government. Consequently, central bankers may be eager to help right-wing governments stay in power and oppose the election of left-wing governments. We show evidence from the United States that interest rates (a) decline as elections approach when Republicans control the White House, but rise when Democrats do; and (b) are sensitive to the inflation rate (output gap) when Democrats (Republicans) are in the White House. Thus, the Federal Reserve is a conditional inflation hawk. Since the Fed became operationally independent in 1951, the Republicans have exhibited a decided electoral advantage in presidential politics...

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Echoes of George Kennan's "Sources of Soviet Conduct" article. Back then in 1947 George Kennan wisely said that the way to deal with the Soviet Union was not to fight. It was for he western alliance to (a) contain, (c) become its best self, and (c) east for recognition that we did, after all, have the better system. But in the age of Trump, Johnson, and Orban on the one hand and Chinese prosperity still doubling every two decades, whether we have a better system is more up for grabs than it was:

Joschka Fischer: Two Systems, One World: "The issue of freedom has returned to the fore in Moscow and Hong Kong.... The modern era was built on freedom, and on the recognition that all people are born equal. This radical Enlightenment idea, when it took hold, constituted a break from all previous history. But times have changed. In the twenty-first century, we are confronted with a fundamental question: Could a modernized form of authoritarianism represent an alternative to liberal democracy and the rule of law? In 1989, the obvious answer to that question would have been no, not just in the West but around the world. Since then, however, we have witnessed the revival of nationalism in Europe, the failure of the Arab Spring, the election of US President Donald Trump, Russia’s relapse into revanchism, and the emergence of a global China. Now, all bets on liberal democracy are off. China’s emergence as a second military, economic, and technological superpower suggests that there is now an alternative development model. In modern China, the rule of law and democracy are regarded as a threat to one-party rule. Hence, the ongoing protests for freedom and democratic accountability in Hong Kong expose a division not just between two normative frameworks, but between two systems of political power.... The competition with China, however, will be precisely about the question of which system delivers more in terms of technological and material progress. China’s ascent from a poverty-stricken developing country to an economic powerhouse is one of the greatest achievements of the modern era.... For the West, the 'Chinese Challenge', then, is to show that its model of democracy is still better suited than Eastern-style authoritarianism for the majority of humankind.... China’s ascent cannot be prevented. The country is simply too large and too strong to be boycotted or contained.... The Chinese people’s desire to share in global prosperity is entirely legitimate. The West has little choice but to maintain good relations with the new superpower, while at the same time defending its values...

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Todd Gitlin: Donald Trump’s biggest sin https://www.nydailynews.com/opinion/ny-oped-donald-trumps-biggest-sin-20191001-bfs5bsk5xbaihh46azhogx3woy-story.html: "We can see why Trump thinks he can carry the country with him. Much of his support in 2016 came from Americans who hate the United States government. They view it as an alien power—an apparatus for infesting the country with immigrants, hamstringing businesses, banning prayer, permitting abortion, curbing churches and rejecting dark-skinned refugees. His voters invested their hopes and fantasies in Trump as a presumably untainted outsider who would cleanse the swamp in their behalf. What they did not understand—did not want to understand—is that his abiding purpose was, and is, personal.... He successfully allied with evangelical leaders who equated their power with God’s will. Believing that private and church interests are the only interests that count, Republicans made a bargain. Their wealthiest were rewarded with tax cuts; their most churchly, with a pliable Supreme Court. But in the end, they have accorded Trump the privilege of having his way. A Republican Party consecrated to self-aggrandizement since the presidency of Ronald Reagan has seen in Donald Trump, however vulgar, however vicious, an incarnation of their deepest values. Now we shall see how well his uncovered entitlement plays....

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Listening to Arsonists

No Longer Fresh at Project Syndicate: Listening to Arsonists: Barack Obama made a significant mistake in naming the Republican ex-senator Alan Simpson to co-chair the president’s deficit-reduction commission. Simpson was a noted budget arsonist when he was in the Senate, and he has recently expressed views that make no sense whatsoever: Simpson was a noted budget arsonist when he was in the Senate. Indeed, he never met a budget-busting, deficit-increasing initiative from a Republican president that he would not lead the charge to pass. Nor did he ever meet a sober deficit-reducing initiative from a Democratic president that he did not oppose with every fiber of his being...

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How Damaging Is Plutocracy for Economic Policy?

Is Plutocracy Really the Problem by J Bradford DeLong Project Syndicate

No Longer Fresh at Project Syndicate: Is Plutocracy Really the Problem?: After the 2008 financial crisis, economic policymakers in the United States did enough to avert another Great Depression, but fell far short of what was needed to ensure a strong recovery. Attributing that failure to the malign influence of the plutocracy is tempting, but it misses the root of the problem.... In fact, big money does not always find a way, nor does its influence necessarily increase as the top 0.01% captures a larger share of total income.... The larger issue...is an absence of alternative voices. If the 2010s had been anything like the 1930s, the National Association of Manufacturers and the Conference Board would have been aggressively calling for more investment in America, and these arguments would have commanded the attention of the press. Labor unions would have had a prominent voice as advocates for a high-pressure economy. Both would have had very powerful voices inside the political process through their support of candidates. Did the top 0.01% put something in the water to make the media freeze out such voices after 2008?... Read MOAR at Project Syndicate

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Doug Jones: The Patriarchal Age https://logarithmichistory.wordpress.com/2019/09/27/the-patriarchal-age-5/: "The left panel shows effective population sizes based on Y chromosome DNA, transmitted down the male line. The right panel shows effective population sizes based mitochondrial DNA, transmitted down the female line. The dramatic dip on the left panel, where effective population sizes go way down in the last ten thousand years, means that there was a period, from the initial spread of major language families to near the dawn of history, where just a few men were leaving lots of descendants in the male line. This must reflect a time when polygyny – some men taking multiple wives, others not reproducing at all – was common. But this pattern probably reflects more than just polygyny. It probably also reflects a continuing advantage, carried over many generations, for some male lines of descent. In other words, back in the day, not just did Lord Y (or whoever) have many wives and many sons, but his sons, his sons’ sons. his son’s son’s sons, and so on, had many offspring. This probably implies some kind of long-term social memory, such that that the “Sons of Y” or the “House of Y” had a privileged position for many generations.... Eurasian history is often told as the story the rise of states and empires. But it’s also the story of the rise of patrilineal descent groups (and the heavy policing of female sexuality to make sure of paternity in the male line)...

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I was remiss a couple of years ago in not highlighting this by four very good friends of Equitable Growth. During the Great Recession, unemployment-benefit extensions had essentially no effect discouraging employment at all: nobody took advantage of the unemployment-benefit extension to take an extra vacation on Uncle Sam's dime:

Christopher Boone, Arindrajit Dube, Lucas Goodman, and Ethan Kaplan (2017): Unemployment Insurance and Employment during the Great Recession: "We compare 1,161 county pairs that straddle the border between two states, such as Allegany County, Maryland, and Bedford County, Pennsylvania. Within each pair, counties share a similar geography and economic environment, but may have... different lengths of benefits, largely due to the economic situations in the rest of the state.... Extending benefits by 73 weeks increased the employment-to-population (EPOP) ratio by 0.2%, a negligible amount that is not statistically significant. While our employment estimates are not statistically distinguishable from zero, they do rule out moderate-sized negative employment effects of the UI extensions on EPOP of 0.5% or more...

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Weekend Reading: Martin Luther King, Jr. (1963): The Promissory Note and the Bank of Justice

Martin Luther King, Jr (1963): The Promissory Note and the Bank of Justice https://avalon.law.yale.edu/20th_century/mlk01.asp: "In a sense we have come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men would be guaranteed the inalienable rights of life, liberty, and the pursuit of happiness...

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Weekend Reading: Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome

Weekend Reading: Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome: "When Rome ran out of ferocious competitors in the interstate system, frequent large-scale war-making by Rome ceased, replaced by the pax Romana, the Roman peace. It is important to understand that in many regions of the Mediterranean the pax Romana came into existence not late but rather at a quite early point, and that most Roman high officials became administrators rather than generals at a quite early point. This is true in Sicily after 210 b.c.; in all of peninsular Italy by 200 (and in most areas of Italy long before that); in the Po Valley after 190; in most of Spain after 133; in North Africa after 100; and for ever-longer stretches of time in the Greek East. Similarly, Roman aristocratic culture after about 160 b.c. was gradually becoming more and more civilian in character and focus. Yet these twin crucial developments were both occurring well within the period when, according to most scholars, powerful internal cultural, political, and economic pressures were supposedly pushing Rome the war-machine and its militarized aristocracy implacably, in Schumpeteresque fashion, along its specially brutal and bellicose Sonderweg...

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The answer to the question "is Trumpenomics a failure?" is "yes": There is no large investment boom. There is no manufacturing recovery. There is no reduced trade deficit. There is increased inequality and corruption: Michael Rainey: Is Trumponomics a Failure? : "Paul Krugman... Trump’s two main economic policies–tax cuts and tariffs, both intended to boost manufacturing–have flopped. The tax cuts failed to produce a surge in business investment... the tariffs... are now dragging on the economy.... No one is arguing that the economy is in ruins due to Trump’s policies.... But Trump and Republicans promised that their economic plans would result in lasting, structural improvements, and those don’t appear to have materialized. Krugman says... 'Imagine how much better shape we’d be in if the hundreds of billions squandered on tax cuts... had been used to rebuild our crumbling infrastructure...

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Wikipedia: Socii: "The 75-year period between 338 BC and the outbreak of the First Punic War in 264 saw an explosion of Roman expansion and the subjugation of the entire peninsula to Roman political hegemony, achieved by virtually incessant warfare. Roman territory (ager Romanus) grew enormously in size, from c. 5,500 to 27,000 km², c. 20% of peninsular Italy. The Roman citizen population nearly tripled, from c. 350,000 to c. 900,000, c. 30% of the peninsular population.[16] Latin colonies probably comprised a further 10% of the peninsula (about 12,500 km²). The remaining 60% of the peninsula remained in the hands of other Italian socii who were, however, forced to accept Roman supremacy...

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Weekend Reading: Nikita Sergeyevitch Khrushchev (1956): Speech to 20th Congress of the C.P.S.U.

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Nikita Sergeyevitch Khrushchev (1956): Speech to 20th Congress of the C.P.S.U. https://www.marxists.org/archive/khrushchev/1956/02/24.htm: "Comrades! In the Party Central Committee’s report at the 20th Congress and in a number of speeches by delegates to the Congress, as also formerly during Plenary CC/CPSU [Central Committee of the Communist Party of the Soviet Union] sessions, quite a lot has been said about the cult of the individual and about its harmful consequences...

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Given how little of foreign aid is directed at the alleviation of extreme poverty, we should not be surprised that foreign aid does not do much to alleviate extreme poverty. The question of whether a very different foreign aid program could rains of viable global importance:

Nancy Qian: Making Progress on Foreign Aid: "The primary purpose of aid is often not to alleviate poverty... only 1.69–5.25% is given to the poorest 20% of countries.... Polarized arguments of the necessity of aid versus the detrimental effects of aid are premature, and the discussion of total foreign aid and the lack of economic improvement for the poorest countries in the world is somewhat misleading.... What is the impact of existing aid?... Can foreign aid ever improve economic performance and well-being? What is the best way of delivering aid to maximize its effectiveness?...

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Very Briefly Noted 2019-10-05:

  1. David Epstein: Range: Why Generalists Triumph in a Specialized Worlds https://books.google.com/books?id=ma1sDwAAQBA...

  2. Binyamin Appelbaum: The Economists' Hour: False Prophets, Free Markets, and the Fracture of Society https://books.google.com/books?id=8sWCDwAAQBAJ...

  3. Electric Sheep Comix: Apocamon: The Book of Revelation in Manga Format, as God Intended https://www.electricsheepcomix.com/apocamon/...

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Weekend Reading: Monica Potts: In the Land of Self-Defeat

Opinion In the Land of Self Defeat The New York Times

Weekend Reading: I saw this in Kansas City, of all places—where, IIRC, one firm dropped out of funding the Chamber of Commerce because it was going on roadshows outside trying to attract jobs to the region. It thought more mployers might force it to pay higher wages: Monica Potts: In the Land of Self-Defeat https://www.nytimes.com/2019/10/04/opinion/sunday/trump-arkansas.html: "What a fight over the local library in my hometown in rural Arkansas taught me about my neighbors’ go-it-alone mythology—and Donald Trump’s unbeatable appeal.... I returned to Van Buren County at the end of 2017 after 20 years.... I’ve realized that it is true that people here think life here has taken a turn for the worse. What’s also true, though, is that many here seem determined to get rid of the last institutions trying to help them, to keep people with educations out, and to retreat from community life and concentrate on taking care of themselves and their own families. It’s an attitude that is against taxes, immigrants and government, but also against helping your neighbor.... I realized this after a fight over, of all things, our local library.... The library board wanted to increase the pay it could offer a new head librarian, who would be combining her new job with an older one, to 25 an hour.... The library has historically provided a variety of services for this community. It has offered summer reading camps for children and services like high-speed internet, sewing classes and academic help. I grew up going to the library and visited it often when I returned. It was always busy. I thought people would be supportive. Instead, they started a fight.... The first comment came from Amie Hamilton, who reiterated her point when I interviewed her several months later. 'If you want to make 25 an hour, please go to a city that can afford it', she wrote. 'We the people are not here to pay your excessive salaries through taxation or in any other way'. There was general agreement among the Facebook commenters that no one in the area was paid that much... and the people who do actually earn incomes that are similar—teachers and many county officials—largely remained quiet.... When a few of us, including me, pointed out that the candidate for the library job had a master’s degree, more people commented on the uselessness of education. 'Call me narrow-minded but I’ve never understood why a librarian needs a four-year degree', someone wrote. 'We were taught Dewey decimal system in grade school. Never sounded like anything too tough'.... The library fight was, itself, a fight over the future of rural America, what it meant to choose to live in a county like mine, what my neighbors were willing to do for one another, what they were willing to sacrifice to foster a sense of community here. The answer was, for the most part, not very much...

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Fairly Recently: Must- and Should-Reads, and Writings... (October 4 , 2019)

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Musts of the Musts:

  1. Podcast: Trump's Impact on the Economy https://www.bradford-delong.com/2019/09/cottogottfried-_what-happens-to-americas-economy-if-trump-is-reelected-brad-delong-explains_-donald-trump-if-he.html: Cotto/Gottfried: What Happens to America's Economy If Trump Is Reelected? Brad DeLong Explains: "Donald Trump... if he manages to secure a second term, what would four more years of his presidency mean for America's economy? Former Deputy Assistant Secretary of the US Treasury Brad DeLong, who now is an economics professor at UC Berkeley, addresses this hugely important question¸—and much more—on 'Cotto/Gottfried.'... See more episodes here: https://wtcgcottogottfried.blogspot.com/. San Francisco Review of Books main page: http://www.sanfranciscoreviewofbooks.com...

  2. Steve M.: We Might Have Impeachment Now Because They Found a Way to Make It Centrist https://nomoremister.blogspot.com/2019/09/we-might-have-impeachment-now-because.html: "A couple of days ago I predicted that the Ukraine whistleblower story wouldn't amount to anything, because of Nancy Pelosi's fear of a left-centrist voter backlash against impeachment and because rank-and-file voters aren't likely to understand what the fuss is about. And yet now we're being told that impeachment seems 'almost inevitabl'. What changed? There's no polling evidence I know of.... There's no reason to believe that even a single Republican in Congress will support impeachment or vote to convict in the Senate. (Mitt Romney's words are characteristically mealy-mouthed: "If the President asked or pressured Ukraine's president to investigate his political rival, either directly or through his personal attorney, it would be troubling in the extreme." And I swear I can hear Susan Collins quietly wringing her hands somewhere off in the distance.) Yet impeachment is on the table now. Why? Nancy Pelosi is still the same person she was a week ago, when impeachment was being slow-walked at her insistence. Pelosi still fears Republicans and Reagan Democrat, Obama/Trump voters in Michigan diners. But she's accepting this because now she can sell the pursuit as centrist. It's about global stability and international alliances. If you want to use the term, Trump is being accused of high crimes and misdemeanors in a neoliberal way...

  3. Berkeley Social Science: Authors Meet Critics: The Populist Temptation _ http://matrix.berkeley.edu/event/authors-meet-critics-populist-temptation: "Please join us on October 3, 2019 at 4pm for a book talk featuring: Barry Eichengreen, Professor of Economics & Political Science, UC Berkeley; Paul Pierson, Professor of Political Science, UC Berkeley; Brad DeLong, Professor of Economics, UC Berkeley. Barry Eichengreen’s book, _The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era, places the global resurgence of populism in a deep historical context. It argues that populists tend to thrive in the wake of economic downturns, when it is easy to convince the masses of elite malfeasance. While bankers, financiers, and ‘bought’ politicians are partly responsible, populists’ own solutions tend to be simplistic and economically counterproductive. By arguing that ordinary people are at the mercy of extra-national forces beyond their control, populists often degenerate into demagoguery and xenophobia. Eichengreen posits that interventions must begin with shoring up and improving the welfare state so that it is better able to act as a buffer for those who suffer most during economic slumps. In discussing his book, Eichengreen will be engaging two eminent colleagues: Paul Pierson, a renowned specialist in populism, social theory, and political economy, and Brad DeLong, a distinguished economist who served as Deputy Assistant Secretary of the Treasury for Economic Policy during the Clinton Administration and is currently a research associate of the National Bureau of Economic Research. This talk is presented as part of Social Science Matrix's new "Authors Meet Critics" book series, which features lively discussions about recently published books by social scientists at UC Berkeley...

  4. Kevin Drum: Remember What Ukrainegate Is About https://www.motherjones.com/kevin-drum/2019/09/remember-what-ukrainegate-is-about/: "Ukrainegate is about Donald Trump holding military assistance hostage unless a foreign leader agreed to help him win an election. To the best of anyone’s knowledge, this has never happened before.... Nothing that was said—or yelled or tweeted—over the weekend has changed this...

  5. Duncan Black: Just Like Any Other President https://www.eschatonblog.com/2019/09/just-like-any-other-president.html: "I can imagine the conversations in newsrooms when Trump became president. They aren't all that stupid. "How are we supposed to cover this freak show of a man?" And the answer they came to is "we cover it like we cover any other presidency." But that's not what they've done, even if they think it is. They aren't covering Trump as they would've covered Obama or even George W. Bush. Pretending everything is normal is not normal coverage. Normally "tan suits" are enough to cause a freakout....

  6. And so the cruelty of U.S. immigration policy has now touched me personally. Maria Isabel Bueso is the sister of one of my daughter's friends from high school. It appears to have taken the personal intervention of at least on U.S. senator to get INS to at least reconsider whether it really wants to be pointlessly cruel. And, after watching this story unfold, I can no longer push back against those who claim that, as far as current U.S. immmigration policy is concerned, the cruelty is the point. I had been pushing back, but no more: Farida Jhabvala Romero: Feds to Reconsider Case of Bay Area Woman Getting Lifesaving Treatment Who Faces Deportation https://www.bradford-delong.com/2019/09/feds-to-reconsider-case-of-bay-area-woman-getting-lifesaving-treatment-who-faces-deportation-the-california-report-kqed-n.html: "Maria Isabel Bueso has overcome many challenges as a result of the debilitating genetic disease she was born with that eventually left her confined to a wheelchair, breathing through a device and reliant upon weekly treatments to survive. She trained to become a dance teacher and now is an instructor, and she graduated summa cum laude from California State University, East Bay—where she set up a scholarship fund for students with disabilities. She also advocates for people with her disease and other rare illnesses, traveling to Washington, D.C., to lobby for medical research. Now, Bueso is fighting for her life once more. Immigration authorities previously told her and her family to leave the U.S. by mid-September—or face deportation to her home country of Guatemala...

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Maciej Ceglowski: Superintelligence: The Idea That Eats Smart People: "I was delighted some years later to come across an essay by Scott Alexander about what he calls epistemic learned helplessness. Epistemology is one of those big words, but all it means is 'how do you know what you know is true?'. Alexander noticed that when he was a young man, he would be taken in by 'alternative' histories he read by various crackpots. He would read the history and be utterly convinced, then read the rebuttal and be convinced by that, and so on. At some point he noticed was these alternative histories were mutually contradictory, so they could not possibly all be true. And from that he reasoned that he was simply somebody who could not trust his judgement. He was too easily persuaded. People who believe in superintelligence present an interesting case, because many of them are freakishly smart. They can argue you into the ground. But are their arguments right, or is there just something about very smart minds that leaves them vulnerable to religious conversion about AI risk, and makes them particularly persuasive? Is the idea of 'superintelligence' just a memetic hazard?...

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Doug Jones: The World at 1000 BCE https://logarithmichistory.wordpress.com/2019/10/01/the-world-at-1000-bce-5/: "The world population is about 50 million. The Bantu expansion is just beginning, from a homeland on the present Nigeria/Cameroon border. It will eventually cover most of Africa south of the equator.... Seafarers with roots in the Lapita culture have already reached Western Polynesian.... The Olmec are flourishing in Meso-America.... In China, the Mandate of Heaven has passed from the Shang Dynasty to the Zhou. In the Near East and Eastern Mediterranean, the Late Bronze Age collapse has opened up space for smaller states. Tyre and other Phoenician city-states are sailing the Mediterranean. Phoenicians are using an alphabet that Greeks will eventually adapt.... Further south, Philistines and Israelites have been duking it out, with Israelites gaining the upper hand under David* (king from 1010 to 970 BCE). The Iron Age conventionally begins now.... On the steppe, horses have long been domesticated, but people are now learning to make effective use of cavalry–fighting in formation and firing volleys from horseback. This is the beginning of 2500 years in which the division between Steppe and Sown will be central to Eurasian history...

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We still do not really know why the factor-terms distribution of income has shifted against labor so much in the past generation: Mark Thoma sends us to: Tim Taylor: Why Did the US Labor Share of Income Fall So Quickly?: "The McKinsey Global Institute... James Manyika, Jan Mischke, Jacques Bughin, Jonathan Woetzel, Mekala Krishnan, and Samuel Cudre (May 2019)..... From 1947-2000, the labor share of income fell from 65.4% to 62.3%. There already seemed to be a pattern of decline in the 1980s and 1990s in particular, which was then reversed for a short time at the tail end of the dot-com boom. But since 2000, the labor share has sunk to 56.7% in 2016.... 'We find that that the main drivers for the decline in the labor share of income since 1999 are as follows, starting with the most important: supercycles and boom-bust (33 percent), rising depreciation and shift to IPP capital (26 percent), superstar effects and consolidation (18 percent), capital substitution and technology (12 percent), and globalization and labor bargaining power (11 percent).... One possible interpretation is that sharp drop in labor income from 1999-2016 was a little deceptive, because in part it was based on cyclical factors, but a number of the factors underlying a longer-term decline in labor share continue to operate...

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Weekend Reading: 2005 Comments on and Discussion of Raghu Rajan: "Has Financial Development Made the World Riskier?"

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Raghu's paper itself is at: https://www.kansascityfed.org/publicat/sympos/2005/PDF/Rajan2005.pdf: Federal Reserve Bank of Kansas City (2005): Discussion of: Raghu Rajan: "Has Financial Development Made the World Riskier?" https://www.kansascityfed.org/publicat/sympos/2005/pdf/Kohn2005.pdf https://www.kansascityfed.org/Publicat/sympos/2005/PDF/Shin2005.pdf https://www.kansascityfed.org/publicat/sympos/2005/PDF/GD5_2005.pdf: Donald Kohn: "My perspective on this interesting paper by Raghu Rajan has been very much influenced by observing Alan Greenspan’s approach to the development of financial systems and their regulation over the past 18 years. I believe that the Greenspan doctrine, if I may call it that, has reflected the chairman’s analysis and deeply held belief that private interest and technological change, interacting in a stable macroeconomic environment, will advance the general economic welfare...

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