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February 2020

OK. I have got to stop playing my position, because this is more important for America today: Jill Lepore: The Last Time Democracy Almost Died https://www.newyorker.com/magazine/2020/02/03/the-last-time-democracy-almost-died?: 'The endless train of academics were also called upon to contribute to the nation’s growing number of periodicals. In 1937, The New Republic, arguing that “at no time since the rise of political democracy have its tenets been so seriously challenged as they are today,” ran a series on “The Future of Democracy,” featuring pieces by the likes of Bertrand Russell and John Dewey. “Do you think that political democracy is now on the wane?” the editors asked each writer. The series’ lead contributor, the Italian philosopher Benedetto Croce, took issue with the question, as philosophers, thankfully, do. “I call this kind of question ‘meteorological,’ ” he grumbled. “It is like asking, ‘Do you think that it is going to rain today? Had I better take my umbrella?’ ” The trouble, Croce explained, is that political problems are not external forces beyond our control; they are forces within our control. “We need solely to make up our own minds and to act”...

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"Populism"—in today's climate, neo-fascism would be a better phrase because the original populists actually had policies that were popular and effective (in some cases at least) in boosting the well-being of the people—is only strengthened by a small amount via the economic insecurity channel. But other factors boosting "populism" have currently made it influential enough that that small boost can be politically decisive. Excellent work from Yotam Margalit: Yotam Margalit: Economic causes of populism: Important, marginally important, or important on the margin https://voxeu.org/article/economic-causes-populism: 'A common explanation for the rise of populism is economic insecurity driven by forces such as trade, immigration, or the financial crisis. This column, part of the Vox debate on populism, argues that such view overstates the role of economic insecurity as a driver. In particular, it conflates economic insecurity being important in explaining the overall populist vote and being important by affecting election outcomes on the margin. The empirical findings indicate that the share of populist support explained by economic insecurity is modest...

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This was absolutely great great great great news for us associated with Equitable Growth: Equitable Growth: Longtime Capitol Hill Staffer Named Policy Director at Equitable Growth https://equitablegrowth.org/press/longtime-capitol-hill-staffer-named-policy-director-at-equitable-growth/: 'WASHINGTON—The Washington Center for Equitable Growth today announced that longtime congressional staffer Amanda Fischer has joined the organization as its new policy director. “As our new policy director, Amanda will lead the development of our policy priorities and help position the organization as a go-to resource for understanding the impact of rising inequality in the U.S. economy and what policymakers can do about it,” said Equitable Growth President and CEO Heather Boushey. “Amanda brings a wealth of knowledge and experience that will help advance an evidence-backed policy agenda to promote economic growth that is strong, stable, and broadly shared.” Fischer most recently served as chief of staff for Rep. Katie Porter (D-CA)...

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This was, I am told, a very good sbow: Equitable Growth: Vision 2020 Book Release Breakfast https://equitablegrowth.org/event/vision-2020-book-release-breakfast/: 'The Washington Center for Equitable Growth is proud to announce that it will be releasing its new book, Vision 2020: Evidence for a Stronger Economy, at a breakfast event on February 18, 2020. Authored by leading scholars across the country, this compilation of 21 essays highlights a range of new ideas and the research behind them. We compiled Vision 2020 so the latest research informs critical election-year economic policy debates and to inspire decisionmakers to take action to address inequality’s subversive effect on broadly shared and sustainable economic growth. Building on many of the key themes and ideas from Equitable Growth’s Vision 2020 conference, this package of policy proposals tackles many of the ways that the increasing concentration of economic resources translates into political and social power. Panelists: Heather Boushey... Robynn Cox... Susan Lambert... Fiona Scott Morton...

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Comment of the Day: Dilbert Dogbert: I am old as dirt. https://www.bradford-delong.com/2020/02/deskilling-among-manufacturing-production-workers-vox-cepr-policy-portal.html#comment-6a00e551f0800388340240a509a3d8200b I remember how all the magazines of my youth were full of do it yourself articles. Now the mags I pickup from time to time are about buying stuff. I used to know the publisher of Sunset Magazine, Bill Lane. As a young married it was full of DIY articles. Now it is full of buy it stuff. What has happened is the DIY has shifted to the internet. I worked up close and personal with engineering either as a draftsman or as an engineer. A lot of the skills I learned as a draftsman are now done by a drafting program. Same with a lot of the skills i learned as an engineer. I have built 7 boats over my lifetime. Had to learn all those old shipbuilding skills from the days of wooden boats and sails. Today's mass employment has to be deadly dull. Maybe that is why loans for education became so onerous. Keep the slaves bound to the debt as they go quietly crazy...

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Equitable Growth founder John Podesta says very wise things as he lays out the roadmap for repairing American democracy: Author: John Podesta: What House Democrats should do now - The Washington Post https://www.washingtonpost.com/opinions/2020/02/05/country-needs-houses-oversight-now-more-than-ever/: 'The House is the only governmental body with the power and will to expose Trump’s corruption. Unfortunately, the other institutions that were supposed to hold a corrupt president accountable have protected him instead. The attorney general, America’s chief law enforcement officer, has run an interference campaign to protect Trump from accountability. Lawyers at the White House and Office of Management and Budget have rendered legal opinions enabling presidential actions that the independent Government Accountability Office have found to be unlawful, and that constitutional scholars on the left and right have said are dangerous and unprecedented.... First, let the oversight committees get back to basics. During the impeachment process, a number of House committees went largely quiet. Now they should aggressively pursue unfinished business, including addressing Trump’s efforts to take away health-care protections for people with preexisting conditions and to raid the U.S. military budget to fund his useless wall at the southern border.... Second, complete the story that the Senate Republican leadership wanted to spike. The House majority should expose the Senate impeachment trial for what it was—a coverup—by subpoenaing witnesses such as Bolton, Mulvaney, Trump’s personal lawyer Rudolph W. Giuliani, and Giuliani associates Lev Parnas and Igor Fruman...

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Kim Clausing's Open is high on my list for very good policy books of the past year. Attempts to achieve social and egalitarian goals by closing off the international economy buy what they buy at an extremely heavy price, and Kim Clausing is very convincing that that price is rarely worth paying. And that leaves out all of the restrictions on openness that are not aimed at accomplishing egalitarian and social goals: Kimberly Clausing: Open: The Progressive Case for Free Trade, Immigration, and Global Capital http://irle.berkeley.edu/event/open-the-progressive-case-for-free-trade-immigration-and-global-capital: "International trade brings countries together by raising living standards, benefiting consumers, and making countries richer. Global capital mobility helps both borrowers and lenders. International business improves efficiency and fosters innovation. And immigration remains one of America’s greatest strengths, as newcomers play an essential role in economic growth, innovation, and entrepreneurship. Closing the door to the benefits of the open economy would cause untold damage for Americans. Instead, Clausing outlines a progressive agenda to manage globalization more effectively, presenting strategies to equip workers for a modern economy, to modernize tax policy for a global economy, and to establish a better partnership between society and the business community...

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Claudia Sahm is making the podcast circuit. Definitely worth listening to: Tracy Alloway and Joe Weisenthal: This Is How to Use Fiscal Stimulus to Stave Off The Next Recession https://www.bloomberg.com/news/articles/2020-02-03/this-is-how-to-use-fiscal-stimulus-to-stave-off-the-next-recession: 'There's a growing consensus that governments need to act more aggressively in using fiscal policy to stave off the next recession, and that monetary policy simply isn't powerful enough. But how do you actually go about it? What do you spend the money on, and how do you get politicians to disburse it in a timely manner? On this week's Odd Lots, we speak with Claudia Sahm, a former Fed economist who is now at the Washington Center for Equitable Growth, on ways to systematize and automate an early and aggressive fiscal response to economic weakness. Sahm has achieved fame for her so-called "Sahm Rule" which can provide policymakers with an early warning sign of when a recession might be brewing...

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Social democracy makes progress in the U.S. only when the middle class thinks it has interests in common with the working class and the poor. On a substantive level, this is always the case: there is a lot of mobility across the generations, and middle-class parents are highly likely to have some poor children who need more than just a safety net. On a rhetorical level, however...: Jorge G. Castañeda: Is America Ready for a Welfare State? https://www.project-syndicate.org/commentary/democratic-presidential-candidates-support-welfare-state-by-jorge-g-castaneda-2019-05: 'Several leading Democratic candidates in the 2020 US presidential race favor introducing elements of a modern welfare state in health care, childcare, and education. Whether a Democrat wins or loses in 2020, social democracy has re-emerged in American politics for the first time since the 1930s.... America’s middle class swelled and prospered... effectively preventing the emergence of the sort of welfare state that other rich countries began to establish from the late nineteenth century onward. True, the US introduced a federal old-age pension (Social Security) in the 1930s, and established the government-funded Medicare and Medicaid health-insurance programs in the 1960s. But as long as middle-class Americans enjoyed full employment and relatively high wages, bolder ideas, such as universal government-funded health care and proper unemployment insurance, remained off the mainstream political agenda.... Several obstacles stand in the way of bringing these welfare-state proposals to fruition after 2020.... Nonetheless, leading Democratic candidates are advocating welfare-state policies that seemed almost unthinkable in America until recently. As these ideas gain traction among the country’s squeezed middle class, they are changing the terms of US political debate. For that reason alone, the 2020 presidential campaign already seems light years away from the bromides and vacuous invective of 2016...

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Playing my position requires not playing my position once again, but sending you to Last Honest Tory Martin Wolf: Martin Wolf: Trump’s Re-Election Would Be Dangerous for the World https://www.ft.com/content/3749175a-4c17-11ea-95a0-43d18ec715f5: 'With one bound, US President Donald Trump was free. With the expected display of naked partisanship, Senate Republicans (with the exception of Mitt Romney) abandoned their constitutionally mandated role as judges of his alleged abuse of power. They have deferred the decision to the voters in November’s presidential election. Mr Trump will possess many advantages: passionate supporters; a united party; the electoral college; and a healthy economy. His re-election seems likely.... If Mr Trump wins, this victory could well be even more significant than his first. For the American people to choose a classic demagogue twice could not be dismissed as an accident. It would be a decisive moment. The most obvious implication of Mr Trump’s victory would be for liberal democracy in the US. The president believes he is above accountability to the law or to Congress for what he does in office. He holds himself accountable only to the electorate (or, rather, to his electorate). He believes, too, that appointed members of his administration, public servants and the elected officials of his party all owe their loyalty to himself, not to any higher cause. The founding fathers feared just such a man.... We are living through a hinge moment in history. The world needs exceptionally wise and co-operative global leadership. We are not getting it. It may be folly to expect it. But Mr Trump’s re-election could well mark a decisive failure. Pay attention: the year 2020 matters...

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Weekend Reading: Jongman on Poverty in the Roman World

From 1680 to 1780 the population of Massachusetts doubled every forty years: that is what a nutritionally unstressed pre-industrial population does. Living standards? Perhaps 4 to 5 dollars a day as today's development economists measure things, figure 1500 real (and 50 nominal) dollars a year per capita. At that level of prosperity the Massachusetts population was then nutritionally unstressed. The Roman imperial population was definitely nutritionally stressed: we think it was the same size in 200 as it had been in the year 1, and the population of the area that had been the year-200 Roman Empire was down by 25% come 600. Three great plagues (antonine, 165-80, St. Cyprian 249-62, and Justinian 541-2) played a role in the decline: the Roman population from 150-600 was not living below long-run subsistence. But it is very hard looking at the population history to ascribe a standard of living of more than 2.50 dollars a day per capita to the typical inhabitant of the Roman Empire. Things—at least as far as consumption of necessities relevant to reproductive fitness (and plague and other disease load) were concerned were probably better between -1000 and the year 1, as the population of the Roman Empire area jumped from 15 million in -1000 to 25 million in -500 to 50 million in the year 1: Willem Jongman: Poverty in the Roman World https://delong.typepad.com/egregious_moderation/2008/08/jongman-on-pove.html: 'Margaret Atkins and Robin Osborne, editors, Poverty in the Roman World: How successful was the Roman economy? For the last few decades, and in the footsteps of the late Sir Moses Finley, the prevailing opinion has been pessimistic: ancient Rome was a world without economic growth, and with great social inequality. Thus, only a small elite escaped life near subsistence, and even they did not escape the horrors of a demographic regime of high mortality. Thus the Roman economy never changed much over time: it was just a grim longue durée of poverty and underdevelopment. The fall of the later Roman Empire thus also became the "transformation of the world of late antiquity," since there had been nothing much to decline from. In a sense, the medievalists had won the day: the Middle Ages had not been a Dark Age after the grandeur that had been Rome. Perhaps surprisingly, this bleak view of Roman economic performance was barely ever validated empirically. Instead, research focused on possible explanations, such as elite economic mentality, technological stagnation or the scale and status of trade. Empirical research on the actual Roman standard of living was—and is—surprisingly rare...

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MIT Technology Review noted Equitable Growth leader Heather Boushey's book Unbound: David Rotman: The Best Books in 2019 on the Economy We Live in https://www.technologyreview.com/s/614993/the-years-best-books-on-the-economy-we-live-in/: 'The year 2019 produced some evidence-based antidotes to the trendy political narratives of robot domination and the collapse of capitalism. I’m struck by the number of truly brilliant books on economics this year. My list of favorites is below.... Unbound: How Inequality Constricts Our Economy and What We Can Do about It by Heather Boushey: Think rising levels of inequality are just an inevitable outcome of our market-driven economy? Then you should read Boushey’s well-argued, well-documented explanation of why you’re wrong...

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From the smart people at the Center for American Progress: The gap between campaign promise and policy reality under the Trump administration appears to me at least to be... uniquely wide. And I do not think that this is motivated reasoning on my part: Center for American Progress: Trump’s Broken Promises https://trumpsbrokenpromises.org/: 'What Trump Promised: As a 2016 candidate, Donald Trump made huge promises to American families, claiming that he’d work for them rather than wealthy donors and corporate interests. He promised to lower drug prices and give people great health care. He claimed he’d increase wages. He boasted that factories would stop moving overseas. Here’s the Reality: He’s siding with insurance companies to end protections for people with pre-existing conditions. He’s siding with drug companies as drug prices soar. And he passed a tax bill that gave almost all the benefits to the wealthy and big corporations that even rewarded companies for moving jobs overseas...

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Ben Thompson: The Tragic iPad https://stratechery.com/2020/the-ipad-at-10-the-ipad-disappointment-ipads-missing-ecosystem/: 'John Gruber is disappointed in the current state of the iPad.... "I don’t think the iPad has come close to living up to its potential. By the time the Mac turned 10, it had redefined multiple industries. In 1984 almost no graphic designers or illustrators were using computers for work. By 1994 almost all graphic designers and illustrators were using computers for work. The Mac was a revolution. The iPhone was a revolution. The iPad has been a spectacular success, and to tens of millions it is a beloved part of their daily lives, but it has, to date, fallen short of revolutionary…. Software is where the iPad has gotten lost. iPadOS’s “multitasking” model is far more capable than the iPhone’s, yes, but somehow Apple has painted it into a corner in which it is far less consistent and coherent than the Mac’s, while also being far less capable. iPad multitasking: more complex, less powerful. That’s quite a combination..." I could not agree more with Gruber’s critique. In my opinion, multi-tasking on the iPad is an absolute mess, and it has ruined the entire interface; I actively dislike using the iPad now, and use it exclusively to watch video and make the drawings for Stratechery. Its saving grace is that it is hard to discover.... There are, needless to say, no companies built on the iPad that are worth anything approaching $1 billion in 2020 dollars, much less in 1994 dollars, even as the total addressable market has exploded, and one big reason is that $4.99 price point. Apple set the standard that highly complex, innovative software that was only possible on the iPad could only ever earn 5 bucks from a customer forever (updates, of course, were free). This remains one of Apple’s biggest mistakes.... Being a great platform for developers is about more than having a well-developed SDK, or an App Store: what is most important is ensuring that said developers have access to sustainable business models that justify building the sort of complicated apps that transform the iPad’s glass into something indispensable. That simply isn’t the case on iOS. Note carefully the apps that succeed on the iPhone in particular: either the apps are ad-supported (including the social networks that dominate usage) or they are a specific type of game that utilizes in-app purchasing to sell consumables to a relatively small number of digital whales. Neither type of app is appreciably better on an iPad than on an iPhone; given the former’s inferior portability they are in fact worse. A very small number of apps are better on the iPad though: Paper, the app used to create the illustrations on this blog, is a brilliantly conceived digital whiteboard that unfortunately makes no money.... Garageband and iMovie are spectacular, but neither has the burden of making money.... To be fair, would that we all could “fail” like the iPad; it was an $11 billion business last fiscal year, more than double the size of the Mac. That, though, is why I did not call it a failure: the tragedy of the iPad is not that it flopped, it is that it never did, and likely never will, reach that potential so clearly seen ten years ago...

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Josiah Ober: Melos's Prospects https://delong.typepad.com/files/ober-melos.pdf: 'Athens inherited, and, under Pericles’ leadership perfected, the Minos paradigm of naval power, colonization, hostility to non-Greek populations, and subjection of weaker states. By the time of the outbreak of the Peloponnesian War, most of Athens’ formerly free allies had been reduced to the status of tribute paying subjects. Thucydides is certainly right to suppose that this was coalition-building on a scale unequalled by earlier Greek hegemonies. Based on epigraphic evidence and population estimates, at its height, Athens’ empire encompassed some 300 communities and perhaps two and a half million persons–roughly a third of the total Greek-speaking population. But Thucydides had shown his reader that Athens followed a well-trodden path, and that the path was predicated on bargains based on mutual advantage...

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Joel Mokyr, Assaf Sarid, & Karine van der Beek: Human Capital, Millwrights, and Industrialisation in 18th-Century England https://voxeu.org/article/human-capital-millwrights-and-industrialisation-18th-century-england: 'The consensus among economic historians has been that Britain’s leadership during the Industrial Revolution owed little to the school system. But recent work on human capital suggests that we should rethink this consensus on the role of human capital. This column shows how millwrights–highly skilled carpenters who specialised in constructing and repairing watermills–had a persistent effect on the mechanisation of textile- and iron-making and on the economic expansion that was taking place on the eve of the Industrial Revolution...

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Paul Krugman (2015): The Regrettable Man https://krugman.blogs.nytimes.com/2015/02/28/the-regrettable-man/: 'Never mind the bubble denial; almost five years have passed since Greenspan declared that we were on the verge of becoming Greece, Greece I tell you, and wrote one of the most awesomely terrible passages in the history of economic policy: "Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences." Yep: he was annoyed at the markets for failing to deliver the crisis he was expecting, and considered it “regrettable” that the crisis had not arrived. Actually, though, this isn’t too different from the sentiment expressed by Paul Ryan and John Taylor, denouncing the Fed’s actions because they were preventing a fiscal crisis. Anyway, the saga of the inflation cult continues...

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A common thread these days: the enormous disconnection of so much of our elite and governing discourse from anything tart could be described as "reality". Consider Martin Wolf observing Boris Johnson's attempts to do the job of Great Britain's Head of Government: Martin Wolf: UK About to Shoot Itself in Both Feet https://www.ft.com/content/de2a1e52-4677-11ea-aee2-9ddbdc86190d: 'Britain’s demands for its negotiations with the EU are unrealistic: Boris Johnson has an autonomy fetish. The UK prime minister’s fetish is the belief that his country not only has the sovereign right to shoot itself in both feet, but also has a duty to do so if the alternative is to allow EU institutions any role in its affairs. Brexit, he insists, means autonomy. If he persists with this demand, it is likely that, early next year, the UK will suffer the complete rupture of trading relationships it has built up over 47 years.... British government... demands... are unrealistic in three respects: the first is the hope that any agreement will be between “sovereign equals”; the second is the belief that the EU would agree a Canada-style agreement; and the third is that an Australian relationship with the EU, governed by World Trade Organization rules, is a reasonable alternative.... Sovereignty is not the same thing as power. The EU has 446m people, against the UK’s 66m.... Let us be clear: this is not a relationship between equals. The difficulty for the UK in its relationship with the EU is rather that it is too small to be an equal and too big not to matter.... The EU is saying here is that your autonomy stops where it inconveniences us. If the UK insists upon it, then the deal it seeks may not be agreed. To the reasonable conclusion that no deal is likely, three replies are possible.  The first is that the EU will give in. That is quite unlikely. For the EU to back down on the issue of the “level playing field”, to take one example, would require it to trust the UK not to compete by undermining the EU’s standards. But what else—the EU will ask—is all this freedom for?... A second response is that it does not matter to the UK if no deal is reached. But it does.... A last response is that, in the end, Mr Johnson will retreat from his red lines. That is what he did last October over the Irish border issue, when he accepted the economic dismemberment of his own country, something his predecessor had refused outright, all the while denying he had done any such thing. The ability to surrender while successfully insisting that one has not is a form of genius. Maybe, the prime minister can find a description for humiliating surrenders that dress them up as great victories. I would certainly not put it past him. This, however, is hope against hope...

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A new attempt to launch a journal not so much of historical political economics, but of historical human sciences economics, from the extremely sharp and thoughtful Marc Flandreau. We wish him well: Marc Flandreau: Capitalism: A Journal of History and Economics https://cap.pennpress.org/: 'Capitalism: A Journal of History and Economics offers a trans-disciplinary forum for the examination of the history of economic phenomena broadly conceived. It features original and peer-reviewed contributions by authors from across the humanities and social sciences on the historical dimensions of markets, capitalism, political economy, and economic thought. It is also interested in how economic questions interact with those of power, knowledge, race, class, and gender, as well as the interplay between the environment and the economy, in any region of the world. The journal aims to publish canon-questioning research that challenges and denaturalizes existing categories and modes of analysis. To those ends, we welcome any methodological or theoretical approach so long as there is a historical dimension to the analysis...

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I learned from Claudia Goldin that women's acquiring the social and technological power to plan win childbearing would take place was one of the most liberating things that happened to American women in the 20th century. Still true. Rolling back that power has huge costs: Kate Bahn: _"New research demonstrates https://twitter.com/LipstickEcon/status/1222557020747857925 the costs associated with abortion restrictions. I spoke to Emily R Peck about how “it’s not just whether you have a child or not but whether you have control over those decisions.” Bodily autonomy translates to more opportunities in the economy...

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If you are in DC, definitely a thing to go to: Equitable Growth: EconCon 2020 https://econcon2020.org/: 'We are the economy: EconCon 2020 is a movement-wide convening that brings together organizers, campaign professionals, researchers, experts, communicators, and advocates from across the country and the movement. Attendees will build connections, discuss pressing issues of the day, plan for the future, and learn how to fit a wide range of policy debates into a coherent progressive economic worldview. Together, and by using every channel available, we will be able to advance an economic vision that delivers shared, sustainable growth and true prosperity for all...

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Back from nine years ago now—how technology cannot be the successful key to development because it is a force multiplier for both honesty and dishonesty, both fair-dealing and corruption, for competence and incompetence. And the problems of economic development have always been primarily problems of corruption, dishonesty, and incompetence: Kentaro Toyama: Technology Is Not the Answer: "Information technology amplified the intent and capacity of human and institutional stakeholders, but it didn't substitute for their deficiencies. If we collaborated with a self-confident community or a competent non-profit, things went well. But, if we worked with a corrupt organization or an indifferent group, no amount of well-designed technology was helpful.... We also expect too much from other technologies, institutions, policies and systems.... Something other than TIPS still demands attention—something I've so far called good 'intent and capacity', and what in future posts I'll call virtue...


#noted #2019-08-29 

Note this and note this well: The principal reason U.S. relative female labor-force participation is lagging behind OECD peer economies is that our society is markedly less friendly to women working outside the home than our peer societies are: Elisabeth Jacobs and Kate Bahn: Women’s History Month: U.S. Women’s Labor Force Participation: "A change in direction for U.S. policies related to childcare and early education, along with a strong national paid leave policy for family leave could help to reverse the downward trend of U.S. women’s labor force participation and put it back on the same path that most other developed countries are on...

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If you believe that the proper purpose of markets is to be effective societal decision-making mechanisms for choosing the path to equitable growth, then financial markets raise to special concerns. As John Maynard Keynes put it, the special object of financial markets is then "to defeat the dark forces of time and ignorance which envelop our future". But here there are two problems: First, people have a very limited ability to form reasonable expectations and make correct judgments, and so the building blocks of which financial markets are constructed are far from adequate. Second, the bandwidth of the signals that are financial market prices is not wide enough to allow for the coordination of expectations and beliefs——even supply supply balances demand in financial markets, many peoples expectations I will be brutally disappointed even if there are no surprise events in the outside world, and that disappointment of expectations is a cause of major trouble. The Clower-Leijonhufvud UCLA macro school of the 1960s worried intensively about these issues. It was ignored. Now it has only one remaining eloquent standardbearer. Listen to him: David Glasner: My Paper “Hayek, Hicks, Radner and Four Equilibrium Concepts” Is Now Available Online https://uneasymoney.com/2020/01/30/my-paper-hayek-hicks-radner-and-four-equilibrium-concepts-is-now-available-online/: 'Here is the abstract: "Hayek was among the first to realize that for intertemporal equilibrium to obtain all agents must have correct expectations of future prices. Before comparing four categories of intertemporal, the paper explains Hayek’s distinction between correct expectations and perfect foresight. The four equilibrium concepts considered are: (1) Perfect foresight equilibrium of which the Arrow-Debreu-McKenzie (ADM) model of equilibrium with complete markets is an alternative version, (2) Radner’s sequential equilibrium with incomplete markets, (3) Hicks’s temporary equilibrium, as extended by Bliss; (4) the Muth rational-expectations equilibrium as extended by Lucas into macroeconomics. While Hayek’s understanding closely resembles Radner’s sequential equilibrium, described by Radner as an equilibrium of plans, prices, and price expectations, Hicks’s temporary equilibrium seems to have been the natural extension of Hayek’s approach. The now dominant Lucas rational-expectations equilibrium misconceives intertemporal equilibrium, suppressing Hayek’s insights thereby retreating to a sterile perfect-foresight equilibrium..." And here is my concluding paragraph: "Four score and three years after Hayek explained how challenging the subtleties of the notion of intertemporal equilibrium and the elusiveness of any theoretical account of an empirical tendency toward intertemporal equilibrium, modern macroeconomics has now built a formidable theoretical apparatus founded on a methodological principle that rejects all the concerns that Hayek found so vexing denies that all those difficulties even exist. Many macroeconomists feel proud of what modern macroeconomics has achieved, but there is reason to think that the path trod by Hayek, Hicks and Radner could have led macroeconomics in a more fruitful direction than the one on which it has been led by Lucas and his associates..."

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Claudia Sahm's Sahm Rule for direct payments when unemployment rises is getting more airplay right now—and the unemployment rate is now likely to rise over the next six months. I first saw this proposal in a novel Robert Heinlein published in 1947, Beyond This Horizon about life in a future near utopia: Jeanna Smialek: ‘Now Is the Time’: A Fed Official Urges Congress to Plan for Recessions https://www.nytimes.com/2020/02/21/business/economy/fed-rate-recession-congress-stimulus.html: 'One such proposal is the so-called Sahm Rule. Created by Claudia Sahm, a former Fed economist, it would use a pronounced jump in the unemployment rate to trigger a fiscal response such as stimulus payments to households. Ms. Brainard’s colleague Mary C. Daly, president of the Federal Reserve Bank of San Francisco, has also made a case for government spending policies that kick in immediately. Central bankers “face greater uncertainty about the impact of our tools and their ability to achieve our goals,” she said in a speech this month. “Fiscal policy will need to play a larger role in smoothing through economic shocks,” and “expanding the array of automatic stabilizers that form part of the social safety net can help mitigate the depth and duration of economic downturns.”...

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Comment of the Day: Perhaps the greatest harm done by Robert Bork and Richard Posner to American well-being https://www.bradford-delong.com/2020/02/perhaps-the-greatest-harm-done-by-robert-bork-and-richard-posner-to-american-well-being-was-their-extremely-aggressive-push-o.html#comment-6a00e551f0800388340240a4ec967e200d was their extremely aggressive push of the idea that vertical integration could never be bad.... pgl: 'How did Bork and Posner miss this excellent discussion? https://www.jstor.org/stable/1802783?seq=1 Fred M. Westfield: Vertical Integration: Does Product Price Rise or Fall?...

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Perhaps the greatest harm done by Robert Bork and Richard Posner to American well-being was their extremely aggressive push of the idea that vertical integration could never be bad: Phil Weiser: Competitive Edge: The States’ View of Vertical Merger Guidelines in U.S. Antitrust Enforcement https://equitablegrowth.org/competitive-edge-the-states-view-of-vertical-merger-guidelines-in-u-s-antitrust-enforcement/: 'Vertical integration is not always benign and indeed has the potential to create significant anticompetitive harms.... Indeed, in some cases, a vertical merger may remove the most likely potential rival to an incumbent firm. Consider, for example, the case of Live Nation Entertainment Inc.’s merger with Ticketmaster in 2010. In that case, Live Nation’s concert promotion and venue business prepared Live Nation to enter into the ticketing platform business, but the merger with Ticketmaster undermined that nascent competition. Indeed, Live Nation had already begun that entry before the merger. This is why a vertically related firm in one market (say, wholesale distribution) might be the natural entity to sponsor entry against a dominant firm in a related market (say, retail sales), and that potential sponsorship could be undermined on account of the merger between the dominant firm and the vertically related one. That is particularly true in evolving or fast-growing sectors such as technology markets. Second, it is important to recognize how vertical mergers, once completed, can be used to undermine existing rivals or raise entry barriers that make future entry materially more difficult. Colorado, like other states, has addressed such dangers...

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If we do not remember our history, we are condemned to repeat it:Robynn Cox and Dania Francis: Improved public School Teaching of Racial Oppression Could Enable U.S. society to Grasp the Roots and Effects of Racial and Economic Inequality https://equitablegrowth.org/improved-public-school-teaching-of-racial-oppression-could-enable-u-s-society-to-grasp-the-roots-and-effects-of-racial-and-economic-inequality/: 'There is a lot more to black history than what our schools showcase during the shortest month of the year. Many Americans don’t ever truly discover the depths of the African American experience in ways that fully convey the harm inflicted upon those enslaved before the Civil War and the generations of blacks who continued to suffer from blatant and pervasive racial discrimination over the next 150-odd years. Public schools tend to gloss over the details of enslavement. And most teachers are not properly equipped to handle discussions of this sordid past in their classrooms or to teach their students about the violent resubjugation of blacks in the South after the Civil War via race riots, lynchings, mass incarceration, voter disenfranchisement, and segregation—actions that spread across the nation as African Americans embarked on the Great Migration out of the South beginning in the late 19th century and continuing well into the post-WWII era...

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This is an excellent not-podcast from Kate Bahn and Adia Harvey Wingfield. Why the Equitable Growth muck-a-mucks don't make this into an explicit podcast series is beyond me: Kate Bahn**: In Conversation with Adia Harvey Wingfield https://equitablegrowth.org/in-conversation-with-adia-harvey-wingfield/: 'Director of Labor Market Policy and economist Kate Bahn talks with sociologist Adia Harvey Wingfield, Mary Tileston Hemenway Professor of Arts & Sciences and associate dean for faculty development at Washington University in St. Louis. Her research examines how and why racial and gender inequality persists in professional occupations. She is the author of several books, most recently Flatlining: Race, Work, and Health Care in the New Economy.... Bahn and Wingfield explore: Racial and gender inequality and U.S. labor market outcomes. Race, gender, and occupational status. Lack of diversity and representation in U.S. services industries. The consequences of lack of diversity for black professionals in the healthcare industry. Policies to improve racial and gender inequality in U.S. labor market outcomes. How sociologists can elevate their findings and solutions in economic policymaking. Lack of racial diversity in scholarly research. Diversity itself as a research topic...

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As of the end of February the stock market is forecasting a very sharp, sudden recession in the probability of a recession from near zero a week ago to better-than-even today: that is the only way to make sense of the S&P 500 over the past week. Thus it is not too late to plan. It is, rather, time to act to offset the likely spending contraction we now see much closer than the horizon. Here are the plans we should have made: Alyssa Fisher: Planning for the Next Recession by Reforming U.S. Automatic Stabilizers https://equitablegrowth.org/planning-for-the-next-recession-by-reforming-u-s-macroeconomic-policy-automatic-stabilizers/: 'Equitable Growth has joined forces with The Hamilton Project to advance a set of specific, evidence-based policy ideas for shortening and easing the impacts of the next recession... _Recession Ready: Fiscal Policies to Stabilize the American Economy.... Six concrete ideas... expand eligibility for Unemployment Insurance and encourage take-up of its regular benefits... reduce state budget shortfalls during recessions by... increasing the federal matching rate for Medicaid and the Children’s Health Insurance Program... eliminate work requirements for supplemental nutrition assistance during recessions... expand federal support for basic assistance during recessions... an automatic infrastructure investment program... boost consumer spending during recessions by creating a system of direct stimulus payments to individuals that would be automatically triggered when rising unemployment signaled a coming recession.... Congress should consider them now, because when the next recession appears on the horizon, it may be too late...

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A very nice broadside from the highly intelligent Dan Nexon against one of the many "Popular Front of Judaea" movements that afflict our online left today: Dan Nexon: Grifters and Useful Idiots http://www.lawyersgunsmoneyblog.com/2020/02/grifters-and-useful-idiots: 'Sanders is unusual in that he’s, in multiple senses of the term, an "old leftist" who has nonetheless updated his views in light of the significant changes in world politics since the collapse of the Soviet Union.... While American dark money supports the reactionary right abroad, Russia has become a state sponsor of anti-progressive forces; mutual empowerment among authoritarian, often kleptocratic, regimes blurs ideological lines. It is easier than ever to oppose American-sponsored regime change without actively embracing the corrupt and autocratic government in Venezuela or the corrupt, autocratic, and mass-murdering government of Syria. The pursuit of global social justice neither demands nor benefits from the idea that “the enemy of my enemy is my friend, and my enemy is American foreign policy”. Unfortunately, there are plenty of grifters and useful idiots selling that line in defense of corrupt, repressive, and mass-murdering regimes. Charles Davis has written a number of scathing assessments of these self-styled anti-imperialists. Now Joshua Collins has begun a three-part series on their major personalities.... As far as I’m concerned, this version of the “anti-imperialist” left is our alt-right, and they’ve grown in a parallel way: by bootstrapping onto the rest of the progressive left, taking positions that make them appear as credible allies, and then inserting their propaganda...

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Still not playing my position. But things like this are very important: Dan Nexon: How Many Hidden Thresholds of Soft Authoritarianism have we Already Crossed? http://www.lawyersgunsmoneyblog.com/2020/02/how-many-hidden-thresholds-of-soft-authoritarianism-have-we-already-crossed: 'For example, aspects of liberal international ordering have already substantially unravelled—but it seems like many international-affairs experts either don’t realize it or, at the other extreme, think that ongoing mutations in international order presage some kind of collapse into multipolar chaos.... Our tendency to think in “all or nothing” terms... obscures a great deal of alteration in political orders. Even the kinds of events—such as impeachment—that I once thought would change this dynamic seem to be resolving into collective anticlimax. Meanwhile, Trump has transformed, in a way unlike any other modern president, the Republican party into his own personal patrimony. And the self-abasement of Senators before the Mad Emperor now just seems like par for the course.... But it’s worth noting that many of the most vulnerable people already live in an illiberal state, and Trump’s policies have overall broadened and deepened the extent of American pocket authoritarianism. To wit: 'The strangers trying to arrest his mom’s boyfriend weren’t wearing uniforms or badges, and they didn’t have a warrant. So 26-year-old Eric Diaz did the only thing he could think of: Outside his front door, on the otherwise quiet Brooklyn street, he confronted the plainclothes officers. Then, one of them shot him in the face—just below his right eye...

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Perhaps it is the growing recognition that while Tesla has its problems its competitors are all trapped in Clayton Christensen's innovator's dilemma to a previously unforeseen degree? Yes, shorts are always vulnerable to a squeeze—almost by definition, they cannot stay solvent long enough to outlast any serious outburst of market irrationality. But I must confess I agree with Josh Brown here: the bloodbath of the Tesla bears is definitely one for the ages: Joshua M Brown: Greatest Short Squeeze of All Time? https://thereformedbroker.com/2020/02/04/greatest-short-squeeze-of-all-time/: 'Now this is just breathtaking–I have no skin in the game on this one but cannot stop watching it. I think what’s happened with Tesla recently represents the greatest short squeeze of all time. A rally since around October when they surprised to the upside in an earnings report has just culminated in an explosive 100% year-to-date gain at this morning’s open...

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Note to Self: MOAR political economy readings, 1920-1950


#history #notetoself #politicaleconomy #2020-02-22

From last March, but very much worth reading: Elisabeth Jacobs and Kate Bahn: U.S. Women’s Labor Force Participation https://equitablegrowth.org/womens-history-month-u-s-womens-labor-force-participation/: 'For women in the United States, labor force participation rates have not followed a straight path. It has been a complicated narrative, deeply affected by women’s family roles, by discrimination, by the changing economy, by technological change, and by their own choices. And it is a continuing story, with surprising twists that economists continue to explore. In a sense, this story begins with its first twist, in the 18th and 19th centuries. To be clear, this is a twist for us today, not for those who experienced it. From our modern perspective, we might assume that significant participation by women in the workforce was practically nonexistent until it began rising gradually in the 20th century. We would be wrong. A number of economists, and especially Claudia Goldin of Harvard University, have shown that women in the 18th and 19th centuries played a considerably more important role in the economy than we might have thought. They were critical to their families’ economic well-being and their local economies, not in their rearing of children or taking care of household responsibilities but by their active participation in growing and making the products that families bartered or sold for a living...

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An excellent catch from Claudia Sahm: Claudia Sahm: When will everyone who wants to work have a job in the United States? https://equitablegrowth.org/when-will-everyone-who-wants-to-work-have-a-job-in-the-united-states/: 'Ayanna Pressley (D-MA) prefaced her questions directed to Federal Reserve Chair Jerome Powell at last week’s semiannual Humphrey-Hawkins congressional hearings with a history of the full employment mandate.... President Franklin Delano Roosevelt called for a Second Bill of Rights, including a right to a “useful and financially rewarding job.” Supreme Court Justice Thurgood Marshall argued that the “right to a job” was secured by the 14th Amendment. Martin Luther King Jr. called for a job to all “who want to work and are able to work.” She underscored that the March on Washington for Jobs and Freedom was a march for “economic justice.” After Dr. King’s assassination, Coretta Scott King carried on fight for the full employment mandate. She attended the signing of the Humphrey-Hawkins Act in 1978, and the reason why Powell was there to testify. Rep. Pressley then asked Powell, “Yes or no, given persistent concerns about inflation, do you believe the Federal Reserve can achieve full employment?” Powell began by thanking her for the history, which he said he “did not know”...

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Edward Gibbon: History of the Decline & Fall of the Roman Empire: Weekend Reading

Edward Gibbon: History of the Decline & Fall of the Roman Empire https://www.gutenberg.org/files/25717/25717-h/25717-h.htm#Alink2HCH0001: 'If a man were called to fix the period in the history of the world, during which the condition of the human race was most happy and prosperous, he would, without hesitation, name that which elapsed from the death of Domitian to the accession of Commodus. The vast extent of the Roman empire was governed by absolute power, under the guidance of virtue and wisdom. The armies were restrained by the firm but gentle hand of four successive emperors, whose characters and authority commanded involuntary respect. The forms of the civil administration were carefully preserved by Nerva, Trajan, Hadrian, and the Antonines, who delighted in the image of liberty, and were pleased with considering themselves as the accountable ministers of the laws. Such princes deserved the honor of restoring the republic, had the Romans of their days been capable of enjoying a rational freedom. The labors of these monarchs were overpaid by the immense reward that inseparably waited on their success; by the honest pride of virtue, and by the exquisite delight of beholding the general happiness of which they were the authors. A just but melancholy reflection imbittered, however, the noblest of human enjoyments. They must often have recollected the instability of a happiness which depended on the character of single man. The fatal moment was perhaps approaching, when some licentious youth, or some jealous tyrant, would abuse, to the destruction, that absolute power, which they had exerted for the benefit of their people. The ideal restraints of the senate and the laws might serve to display the virtues, but could never correct the vices, of the emperor. The military force was a blind and irresistible instrument of oppression; and the corruption of Roman manners would always supply flatterers eager to applaud, and ministers prepared to serve, the fear or the avarice, the lust or the cruelty, of their master. These gloomy apprehensions had been already justified by the experience of the Romans. The annals of the emperors exhibit a strong and various picture of human nature, which we should vainly seek among the mixed and doubtful characters of modern history. In the conduct of those monarchs we may trace the utmost lines of vice and virtue; the most exalted perfection, and the meanest degeneracy of our own species. The golden age of Trajan and the Antonines had been preceded by an age of iron...

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Some of my thoughts, now two decades old, on Piketty and other issues. Surprisingly, I still think much the same as I did then: Brad DeLong: Bequests: An Historical Perspective https://www.bradford-delong.com/2014/04/bequests-an-historical-perspective-hoisted-from-the-archives-for-april-2-2014.html: 'Practically every major aspect of our system of inheritance today is less than two hundred and fifty years old. Two hundred and fifty years ago, inheritance proceeded through primogeniture--as if those leaving bequests cared not for the well-being of their descendants but only for the wealth and power of the lineage head. Before the industrial revolution, inheritance played an overwhelming and crucial role in wealth accumulation and wealth distribution that it does not play today. Migration to the New World was accompanied by a rapid shift in the perception of the purpose of inheritance as the old patterns failed to flourish in a land-rich, rapidly-growing frontier-settler economy. By the start of the twentieth century inherited wealth was regarded with suspicion in America, with even some of the richest calling for estate taxes to keep the rich from diverting the public trust of their fortunes into the pockets of their descendants. Thus the coming of social democracy to America brought with it high statutory rates of tax on large estates, which nevertheless did not raise a great deal of revenue...

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Kate Bahn and Austin Clemens: Equitable Growth’s Jobs Graphs: January 2020 Report Edition https://equitablegrowth.org/equitable-growths-jobs-day-graphs-january-2020-report-edition/: 'On February 7th, the U.S. Bureau of Labor Statistics released new data on the U.S. labor market during the month of January. Below are five graphs compiled by Equitable Growth staff highlighting important trends in the data. Prime-age employment-to-population ratio increased to 80.6% in January, reflecting a healthy labor market 10 years into the expansion...

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Once again, playing my position requires not playing my position, and stating that Bill Barr does not speak like an official of the American government should. He is a civil servant, not an uncivil master: Scott Lemieux: Those Who Want Equal Protection of the Laws Give Unquestioned Deference to the Authoritiesy http://www.lawyersgunsmoneyblog.com/2019/12/those-who-want-equal-protection-of-the-laws-give-unquestioned-deference-to-the-authorities: 'Trump Family Capo Bill Barr expresses his view of the appropriate relationship between law enforcement and the citizenry.... "Today, American people have to focus on... the sacrifice and the service that is given by our law enforcement officers.... They have to start showing, more than they do, the respect and support that law enforcement deserves.... If communities don’t give that support and respect, they might find themselves without the police protection they need.” I dunno, I’m beginning to think that making a mobbed-up authoritarian President of the United States was bad...

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Equitable Growth's great new hire Claudia Sahm on diversity in innovation: Claudia Sahm: The U.S. House Committee on Small Business https://twitter.com/Claudia_Sahm/status/1217559995597971462 had an important meeting on Enhancing Patent Diversity for America’s Innovators https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=110372. They heard from Andrea Ippolito… from W.E. Cornell.... “Who Becomes an Inventor in America? The Importance of Exposure to Innovation".... Why it is important for the government to collect demographic information on who receives patents.... Chaleampong Kongcharoen.... Rick Wade shared facts about the need for more diversity among our innovators...

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Milton Friedman on Trump Fed nominee Judy Shelton. Uncle Milton would be really, really unhappy to see this nomination approved: Milton Friedman (1994): Free-Floating Anxiety https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_09_12_1994.pdf: 'In a recent Wall Street Journal op-ed piece (July 15) recommending a return to gold, Judy Shelton started her concluding paragraph: “Until the U.S. begins standing up once more for stable exchange rates as the starting point for free trade...” It would be hard to pack more error into so few words. A true gold standard—a unified currency—is indeed consistent with free trade. But a system of pegged exchange rates, such as the original IMF system or the European Monetary System, is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital...

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Study Questions: Pre-Commercial Revolution Economies

Study Questions for the History of Economic Growth: For Midterm 1: Econ 135

  1. Explain in words what the steady-state balanced-growth path Solow-Malthus equilibrium equation for real living standards https://delong.typepad.com/.a/6a00e551f0800388340240a50c1a9a200b-pi tells us about what the level of income will be in a Malthusian society.
  2. Explain in words what the steady-state balanced-growth path Solow-Malthus equilibrium equation for the level of population https://delong.typepad.com/.a/6a00e551f0800388340240a50c1aa8200b-pi tells us about what the level of population will be in a Malthusian society.
  3. What do you think are the three most reasons not to take the Solow-Malthus model as gospel in understanding pre-Industrial Revolution economic growth—and its absence?
  4. What are three data sources that economic historians rely on to try to get a handle on the pace of economic growth in pre-modern times?
  5. Why did average incomes and prosperity levels remain so low back before the year 1500?
  6. What were the most important changes that made the Industrial Revolution possible?
  7. Where and when did the Industrial Revolution take place?
  8. What theory about why the Industrial Revolution happened when and where it did do you find most attractive?
  9. What are the limitations of and problems with the theory that you find most attractive about why the Industrial Revolution happened when and where it did?
  10. Were income and standards of living under the Roman Empire subject to Malthusian constraints?
  11. How, so far in this course, has the concept of economic class been important in shedding light on understanding processes of economic growth?
  12. Based on what we have covered in this course so far, what do you expect to see in economic growth in the world economy over the next 50, 100, and 1000 years?
  13. In the Solow growth model, what are the important determinants of prosperity in the sense of income per worker, and how do those determinants interact?
  14. Why is Michael Kremer's (and Paul Romer's, and Jared Diamond's) theory of growth—that much of economic growth can be explained by the facts that ideas are non-rival and that two heads are better than one—attractive?
  15. Why is Michael Kremer's (and Paul Romer's, and Jared Diamond's) theory of growth—that much of economic growth can be explained by the facts that ideas are non-rival and that two heads are better than one—inadequate?
  16. Why is it probably wrong to suppose that humanity's effective effort at innovation and technology development at any point in time is proportional to the human population then?
  17. What kinds of innovative effort are positive-sum? What kinds of innovative effort are negative-sum?
  18. Why do extensive empires often appear to have higher standards of living than other, more divided societies that possess the same level of useful ideas about technology and organization?
  19. Why do extensive empires often appear to have greater population densities than other, more divided societies that possess the same level of useful ideas about technology and organization and the same quality of natural resources?
  20. What was the "Columbian Exchange" and why was it important for economic growth?
  21. What was the impact of the Spanish Conquest on the population levels and the living standards of the Amerindian population living in the Americas when the conquistadores arrived?
  22. Explain why you are annoyed by Jared Diamond's claim that the invention of agriculture was a big mistake.
  23. On what evidence does Greg Clark base his conclusion that English working-class standards of living were roughly $2.50 a day in the eight centuries before 1800?
  24. Was the standard of living of the English working class highest in 1310, 1450, or 1800; and why was it highest when it was highest?
  25. Why does Lant Pritchett believe the world today is much more unequal than it was back in 1800? Do you buy his argument?
  26. Why, in Partha Dasgupta's view, is money an extremely useful societal invention?
  27. Why, in Partha Dasgupta's view, does "Becky" have so much more social power and opportunities than does "Desta"?
  28. At what rate does income per worker grow in the Solow growth model when an economy is on its equilibrium balanced-growth path? Why does it grow at that rate?
  29. At what rate does society's total income grow in the Solow growth model when an economy is on its equilibrium balanced-growth path? Why does it grow at that rate?
  30. What changes would tend to make an economy following the Solow growth model and on its equilibrium balanced-growth path richer?
  31. What changes would tend to make an economy following the Solow growth model and on its equilibrium balanced-growth path poorer?
  32. What is meant by saying that an economy is a "Malthusian economy"?
  33. What is meant by the "demographic transition"?
  34. Why doesn't technological progress raise standards of living in a Malthusian economy on its steady-state balanced-growth path?
  35. What do economic theorists think is the reason that the much larger global STEM workforce today than in 1870-1900 has not led to a faster proportional rate of technological progress now than back then?
  36. What does Aristotle claim are the four branches of household resource management, and which of the four does he think is most important?
  37. How much does Aristotle think a philosopher—or any aristocratic Greek male—should know about economic matters: market prices of commodities and production technologies?
  38. Why does Aristotle believe that markets and merchants are useful for a city-state, and for a Greek aristocratic male?
  39. Why does Aristotle believe that markets and merchants and too much knowledge about them are dangerous and destructive for a city-state, and for a Greek aristocratic male?
  40. Why does Gilgamesh deserve to be King of Uruk? And what should his people do when they recognize that he has turned into an overbearing tyrant?
  41. Why does Willem Jongman believe that the classical Mediterranean became so rich and prosperous, so much so that, in the words of the historian Edward Gibbon: "If a man were called to fix the period in the history of the world, during which the condition of the human race was most happy and prosperous, he would, without hesitation, name that which elapsed from the death of [the Emperor] Domitian [in 96] to the accession of [the Emperor] Commodus [in 180]..."?
  42. Why, in Willem Jongman's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of or even the maintenance of equal prosperity?
  43. What happened to the living standards of peasants and craftsmen in western Europe in the two centuries after the 1346-1348 Bubonic Plague, and why do economic historians (led by Robert Brenner) think what happened happened?
  44. What happened to the living standards of peasants and craftsmen in eastern Europe in the two centuries after the 1346-1348 Bubonic Plague, and why do economic historians (led by Robert Brenner) think what happened happened?
  45. Consider the course of history in western Europe after the Bubonic Plague of 1346-8, the course of history in eastern Europe after the Bubonic Plague of 1346-8, and the course of history in the Roman Empire after the Antonine Plague of 165-180. Which two do Willem Jongman and Melissa Dell think are more closely analogous? Why and how?
  46. Why, in Peter Temin's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of prosperity and a 1500 years-earlier Industrial Revolution?
  47. Why, in Peter Temin's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of prosperity that carried the proportional growth rate of the value of the stock of useful human ideas about technology and organization up from the 0.06%/year of the year -1000 to year 1 Axial Age to something like the 0.15%/year of the year 1500 to year 1700 Commercial Revolution Era?
  48. Why, in Moses Finley's view, was the prosperity of the Antonine-Age Roman Empire between the assassination of the Emperor Domitian in 96 and the accession of the Emperor Commodus in 180 not followed by a further expansion of or even the maintenance of equal prosperity?
  49. What factors made it so that the year 1 was much more likely to have seen the Mediterranean dominated by a Rome-based formal empire of conquest and legions first and trade and cultural influence second than an Athens-based informal empire of trade and cultural influence first and conquest and fleets second?
  50. What, in Josh Ober's view, was the likelihood that classical Mediterranean civilization might have attained something like the pace of commercial activity and productivity growth of the 1500-1700 Commercial Revolution Era?
  51. What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the long Agrarian Age between the invention of agriculture in the year -8000 and the year 1500? Why was this rate of growth so low?
  52. What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Commercial Revolution Era of 1500-1770? Why was this rate of growth so much higher than in the previous Agrarian Age? Why was this rate of growth so much lower than in the subsequent Industrial Revolution Era?
  53. What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Industrial Revolution Era of 1770-1870? Why was this rate of growth so much higher than in the previous Commercial Revolution Era? Why was this rate of growth so much lower than in the subsequent Modern Economic Growth Era?
  54. What is Brad DeLong's guess of the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization in the Modern Economic Growth Era of 1870-today? Why was this rate of growth so much higher than in the previous Industrial Revolution Era?
  55. What is Brad DeLong's guess of what the average proportional rate of growth of the real value of the stock of useful human ideas about technology and organization will be in the next five centuries? Why doesn't he think it will be higher? Why doesn't he think it will be lower?
  56. What is Brad DeLong's guess of what the average proportional rate of growth of human living standards was between the year -6000 and 1500. What factors made it so low?
  57. What is Brad DeLong's guess of what the average proportional rate of growth of human living standards was between the year -6000 and 1500. What factors made it so much lower than the rate of growth of the useful ideas stock?
  58. Suppose that the rate of growth of the real value of the stock of useful human ideas about technology and organization in the world had stuck at its Commercial Revolution Era 1500-1770 pace. What would you guess the world economy would look like today in terms of total human population and average living standards and productivity levels?
  59. Suppose that the rate of growth of the real value of the stock of useful human ideas about technology and organization in the world had stuck at its Industrial Revolution Era 1770-1870 pace. What would you guess the world economy would look like today in terms of total human population and average living standards and productivity levels?
  60. Suppose population growth in the "advanced west"—the European North Atlantic coast countries that were the most technologically advanced and became militarily powerful in the Commercial Revolution Era 1500 to 1770—had been at its historic level of 0.4%/year over 1500 to 1770, that invention and innovation had proceeded as in actual world history, but that the rest of the world had managed to fight off European colonialism and retain control of the Americas and of Indian Ocean trade in non-European hands. Would living standards in the European North Atlantic coast countries have then been likely to increase between 1500 and 1770? (In our history they increased by some 40% over that period.)

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Worthy Reads from February 13, 2019

Worth Reads at Equitable Growth:

  1. Excellent testimony from Heather Boushey. But am I allowed to whimper that focusing too much on the EITC and the CTC may distract attention from the fact that SSI and SSDI are broken, and that the interface between the safety net for the employed and the safety net for the non-employed is very broken?: Heather Boushey: Testimony Before the Ways and Means Committee: "At the bottom end, one easy step is to preserve and expand evidence-backed refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit, which lifted 8.9 million American out of poverty in 2017. In the middle, it is important to make sure the fruits of growth are widely shared and to make the economy work for workers and families. Some proven ways to do this include making sure every family can afford to send their children to high quality, affordable childcare and offering a national paid family and medical leave. It can also mean investing in infrastructure. And we need to know much more about the top. Many of the statistics we rely on to inform us about the state of our economy are measures of the average...

  2. And it is time for Equitable Growth's monthly charticle about the most useful monthly employment report—not the (usually) first-Friday report, but rather the JOLTS report: Kate Bahn and Raksha Kopparam: JOLTS Day Graphs: December 2018 Report Edition: "Every month the U.S. Bureau of Labor Statistics releases data on hiring, firing, and other labor market flows from the Job Openings and Labor Turnover Survey, better known as JOLTS. Today, the BLS released the latest data for December 2018. This report doesn’t get as much attention as the monthly Employment Situation Report, but it contains useful information about the state of the U.S. labor market. Below are a few key graphs using data from the report...

  3. An excellent catch from Equitable Growth's Michael Kades here. The debate over hospital mergers was mostly about whether scale-driven improvements in quality and reductions in cost would or would not be outweighed by the harm done by greater monopoly-power margins in charges to insurance companies and to patients. But it is looking increasingly likely that there are no scale driven improvements in quality or reductions in costs. He sends us to the extremely sharp Austin Frakt: Michael Kades: "The hospital industry, perhaps more than any other, had argued that consolidation will improve quality. Data increasingly says no: Austin Frakt: Hospital Mergers Improve Health? Evidence Shows the Opposite: "The claim was that larger organizations would be able to harness economies of scale and offer better care...

  4. Kate Bahn sends us to Equitable Growth alumnus Nick Bunker. Nick continues his campaign to get people to look not at inflation but at wage growth—which has been slowly inching up since 2014—to gauge how close we are to that mysterious "full employment". Bottom line: we are not there yet: Nick Bunker: "Inflation-adjusted average hourly earnings up 1.7% over the past year. A friendly-reminder that real wage growth isn’t a good metric for assessing short-term health/slack of labor market. (Unless, of course, you think swings in energy prices are telling you something very important about the US labor market.) Far less volatility when you look at core inflation, but at this point why not just look at nominal wage growth?...

  5. I must confess that my knee-jerk reaction given my socialization into the neoliberal cult when young to paid leave programs is to worry that loading responsibility for providing social insurance onto employers is a hazardous activity—it is not the 1920s, and we are not the tarry-eyed Edward Filene certain that paternalistic companies engaged in welfare capitalism can do more to enhance societal well-being than the ardent socialists and social democrats. But evidence is piling up from the laboratories of social insurance that are the states that my knee-jerk reaction is wrong: Heather Boushey: Increasing Evidence of the Benefits of Paid Leave Means Congress Needs to Consider a Federal Program like the FAMILY Act: "The existing state programs—the oldest, in California, dates back to 2004—have provided a laboratory for researchers to study labor and health outcomes for individuals, performance and productivity outcomes for firms, and broader macroeconomic outcomes of paid family and medical leave. This work builds on a considerable body of research from long-established programs in some European countries. The answers to many questions are already coming into focus.... In states with paid leave insurance programs, mothers who use paid leave are more likely to remain in the workforce in the year following a birth. The women experiencing the benefits of these new programs are more likely to be less educated, which makes sense given that they are less likely to have had access to paid leave in the absence of a state program.... In instances where paid leave is provided there is less reliance on public assistance to contend with family medical emergencies. Moreover, there has been no evidence of higher employee turnover or rising wage costs for businesses. Research on parental leave programs abroad also suggests that paid leave of the length contemplated by the FAMILY Act, up to 12 weeks, has a positive effect on women’s income and likelihood of remaining in the workforce...

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Alix Gould-Worth: A Valentine’s Day love letter to the Unemployment Insurance program - Equitable Growth: "UI’s social insurance structure is part of its allure. Both means-tested and social insurance programs are vital to the health and well-being of the U.S. population. But research shows that claimants feel less stigma when applying for and receiving benefits from social insurance programs than means-tested programs. And typically, social insurance programs enjoy support that protects them from being dismantled by overeager budget cutters. But what makes UI different from all other social insurance programs? Why does it hold a special place in my heart? Let me count the reasons...

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Weekend Reading: Peter Temin: Land Tenure and Exploitation from the Roman Empire to Lord Peter Wimsey

Chalons

Peter Temin: The Roman Market Economy https://delong.typepad.com/files/temin-roman.pdf: Land Ownership: 'For at least four centuries... the Roman Empire preserved peace around the Mediterranean basin and allowed the system of land ownership and taxation to continue. Starting in the fifth century, the ability of the western Empire to preserve peace began to erode. Rome was sacked early in the fifth century, a traumatic event that led Augustine to write the City of God distinguishing belief in the Catholic Church from the defense of any earthly city. More important if less visible to most people living through it was the capture of Africa by the Vandals in 439. This loss deprived the central government of an important component of its tax base and made it impossible for the government to mount effective counterattacks against the various invaders of the Roman Empire. This clearly set up a cumulative process that led in a few decades to the demise of the western Empire (Heather 2005; Wickham 2009). What was the effect of this cataclysmic change on Roman property own- ers? I suggest that many landowners were unaffected as the decline of central authority began. Most of their activities were local, and local authorities continued to guide local economies. Invasions were sporadic and affected only swaths through the vast empire. Landowners in the path of the invaders must have experienced problems with their land ownership, but landowners in other areas probably carried on as they and their fathers had done before. Imported goods to any area became more rare and expensive as travel became more dangerous. “Across the sixth and seventh centuries African goods are less and less visible in the northern Mediterranean; they vanish first from inland sites, and then from minor coastal centres” (Wickham 2009, 218). The process of Roman decline was not one of uniform decline that affected everyone alike. Instead it was a selective process that involved more and more people over time...

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Read this very nice piece by Equitable Growth young whippersnapper Raksha Kopparam summarizing the strong evidence that societal well-being is badly damanged by yet another pharmaceutical industry market failure: "killer acquisitions": Raksha Kopparam: Killer Acquisitions Lead to Decreased Innovation and Competition in the U.S. Prescription Drug Market https://equitablegrowth.org/killer-acquisitions-lead-to-decreased-innovation-and-competition-in-the-u-s-prescription-drug-market/: "Colleen Cunningham... Florian Ederer and Song Ma... consolidation in the pharmaceutical industry is probably stifling rather than promoting innovation. Approximately 6 percent of pharmaceutical acquisitions are what the authors refer to as 'killer acquisitions', in which an incumbent firm acquires a product in development that could compete with the incumbent’s own product and then subsequently terminates development of the target firm’s product, thus killing competition and innovation.... Questor Pharmaceuticals Inc.’s acquisition of the drug Synacthen from Novartis International AG of Switzerland. United States-based Questor in 2000 held a monopoly over an adrenocorticotropic hormone drug called Acthar, the then-dominant treatment for rare epileptic diseases such as infantile spasms. In 2000, Acthar was priced at roughly $40 a vial. In the mid-2000s, however, Novartis began developing Synacthen, a synthetic version of Acthar. In 2013, Questor acquired the production rights for Synacthen and shut down development of the drug shortly thereafter...

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