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DeLongTODAY: China Stands Up: 1978-2020: Part III: China Policy

DeLongTODAY: China Stands Up: 1978-2020: Part III

http://delongtoday.com
https://youtu.be/DXNCE__FjXk
https://www.icloud.com/keynote/0FewWYNr-v0NT4Mlf-iw7Sa0w
https://www.bradford-delong.com/2021/05/delongtoday-china-stands-up-1978-2020-part-iii-china-policy.html
https://braddelong.substack.com/p/delongtoday-china-iii-china-policy
https://github.com/braddelong/public-files/blob/master/delongtoday-2021-05-14-china-iii.pptx
2021-05-14


PODCAST: Hexapodia XIV: The Capital Gains Tax

Noah Smith & Brad DeLong's 30:00 < [Length of Weekly Podcast] < 60:00

Key Insights:

  1. Economic arguments against higher taxes that may have been somewhat plausible back in the days of 70% or so maximum individual and 40% or so maximum capital gains tax rates simply do not apply now.

  2. Right-wing parties that don't think they can credibly make the argument that cosseting their core constituencies is necessary for rapid economic growth search for some non-economic cleavage in which the rich and the right-thinking poor, or the right-colored poor, can be on one side and the people who seek a fairer and more equal distribution of income and higher taxes on the rich can be put on the other—let's all yell about critical race theory, and maybe they won't pay attention to the fact that we just, you know, take everybody's money.

  3. Capital to fund investment is really not a big constraint right now—incentivizing savings in financial assets really is just pushing on a string.

  4. Companies with investments that have high societal value in expansion need to be properly incentivized—either by the smell of more profits next year from serving a larger market with lower costs of production through larger scale, or through the government paying and so getting prices righter than the free market gets them.

  5. “Doge coin” is pronounced with a soft “g” sound.

  6. No, Doge coin is not named after the title of the head of state of the Venetian Republic

  7. Doge coin’s name comes from the Homestar Runner line: “I want a doge”…

  8. Hexapodia!

 


 

References:

Len Burman (2021): Biden Would Close Giant Capital Gains Loopholes—At Least For The Rich <https://www.taxpolicycenter.org/taxvox/biden-would-close-giant-capital-gains-loopholes-least-rich>

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production I: Production Efficiency <https://www.jstor.org/stable/1910538>

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production II: Tax Rules <https://assets.aeaweb.org/asset-server/journals/aer/top20/61.3.261-278.pdf>

Ken Judd (1999): Optimal Taxation and Spending in General Competitive Growth Models <http://darp.lse.ac.uk/PapersDB/Judd_(JPubE_99).pdf>

Paul Krugman (2021): Why Doesn’t Cutting Taxes on the Wealthy Work?<https://www.nytimes.com/2021/04/30/opinion/tax-cuts-rich.html>

Jacob Lundberg & Johannes Nathell (2021): Tax Burden on Capital Income: International Comparison <https://taxfoundation.org/tax-burden-on-capital-income/>

Robert McClelland (2021): Avoiding Biden’s Proposed Capital Gains Tax Hikes Won’t Be So Easy. Or Will It? <https://www.taxpolicycenter.org/taxvox/avoiding-bidens-proposed-capital-gains-tax-hikes-wont-be-so-easy-or-will-it>

Alicia Munnell (2021): Biden’s Plan to Fully Tax Capital Gains Is Good Policy<https://www.marketwatch.com/story/bidens-plan-to-fully-tax-capital-gains-is-good-policy-11620658190>

Garrett Watson & Erica York (2021): Capital Gain Rates Under Biden Tax Plan<https://taxfoundation.org/biden-capital-gains-tax-rates/>

Thomas Piketty & Emmanuel Saez (2012): A Theory of Optimal Capital Taxation <http://gesd.free.fr/w17989.pdf>

Ludwig Straub & Ivan Werning (2020): Positive Long-Run Capital Taxation: Chamley-Judd Revisited <https://www.aeaweb.org/articles?id=10.1257/aer.20150210>

Tax Foundation (2017): Preliminary Details and Analysis of the Tax Cuts and Jobs Act <https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/>

&, of course:

Vernor VingeA Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

 

 

<https://braddelong.substack.com/p/podcast-hexapodia-xiv-the-capital>

 

 


INTERVIEW: Inflation Concerns in the US Following Secretary Treasury Janet

An 11 minute IN FOCUS interview for tbs eFM in Korea...

Brad DeLongINTERVIEW: Inflation Concerns in the US Following Secretary Treasury Janet: ‘Apple Podcasts: tbs eFM This Morning: 0514 IN FOCUS… <https://podcasts.apple.com/kr/podcast/0514-in-focus-2-inflation-concerns-in-us-following/id1038822609?i=1000521665790&l=en>

 

<https://braddelong.substack.com/p/interview-inflation-concerns-in-the-0b5>


Cory Doctorow on How Weblogging Made His Brain What It Is Today; & BRIEFLY NOTED: For 2021-05-16 Su

Things that went whizzing by that I want to remember...

An all-in commitment to weblogging has been extraordinarily successful for Cory Doctorow. But for most of us the connections between the current flow, the past stock, and the larger projects that he has managed to maintain have eluded us. We can either manage the flow, curate the stock, or ship large projects—only one at a time:

Cory DoctorowThe Memex Method. When Your Commonplace Book Is a Public Database: ‘The very act of recording your actions and impressions is itself powerfully mnemonic…. The genius of the blog was… in the publishing. The act of making your log-file public requires a rigor that keeping personal notes does not…. Repeated acts of public description adds each idea to a supersaturated, subconscious solution of fragmentary elements that have the potential to become something bigger. Every now and again, a few of these fragments will stick to each other and nucleate…. When one of those nucleation events occurs, the full-text search and tag-based retrieval tools built into Wordpress allow me to bring up everything I’ve ever written on the subject…. The availability of a deep, digital, searchable, published and public archive of my thoughts turns habits that would otherwise be time-wasters—or even harmful—into something valuable…. Systematically reviewing your older work to find the patterns in where you got it wrong (and right!) is hugely beneficial—it’s a useful process of introspection that makes it easier to spot and avoid your own pitfalls…. Two decades in, I can safely say that this community of peers, mentors, sounding boards, protégés, friends, combatants and interlocutors is more useful to me as a writer and a person than the even the prodigious instrumental benefits that blogging brings to my composition process… 

LINK: <https://doctorow.medium.com/the-memex-method-238c71f2fb46>

 

Continue reading "Cory Doctorow on How Weblogging Made His Brain What It Is Today; & BRIEFLY NOTED: For 2021-05-16 Su" »


BRIEFLY NOTED: For 2021-05-13 Th

Things that went whizzing by that I want to remember...

 

First:

The world would have been much better advised fifteen months ago to, rather than listening to the infectious-disease community, WHO, & CDC, to have simply observed: This thing evolved it batcaves. Avoid batcaves. Make sure that the respiratory environment in which you breathe is as close to being the exact opposite of a batcave as you can—ventilation, outdoors, distanced, masks:

Zeynep TufekciThe Few Sentences That Explain Much of What Went Wrong With Our Pandemic Response: ‘How could it be so wrong, even after more than a year?… Some of the founders of public health and the field of infectious control of diseases around the world made key errors and conflations around the turn of the 20th century. These errors essentially froze into tradition and dogma that went unchanged and uncorrected for more than a century, until a pandemic forced our hand…. Infection, which is easier at close range, was seen to be due to particles sprayed out of one’s mouth, which fell quickly to the ground but could land on people. The possibility that, even at close range, people were inhaling floating little particles (aerosols!) that could also travel farther, was discounted…. Charles Chapin… was also concerned that belief in airborne transmission, which he associated with miasma theories, would make people feel helpless and drop their guard against contact transmission. This was a mistake that would haunt infection control for the next century and more…. Of course, the data did not fit this theory. Infections were happening mostly indoors, not outdoors, whereas droplets would be indifferent to existing indoors or outdoors since gravity is the same in both. Infections were occurring at longer distances…. Superspreading was driving the pandemic…. Droplets aren’t very conducive to such superspreading. Scientists who understand all this tried to raise the alarms…. They were rebuffed for almost a year. Last fall, under fire, the WHO assigned reviews of this topic to the very people who had loudly proclaimed their opinions for many months that the virus was being spread via respiratory droplets…

LINK: <https://www.theinsight.org/p/the-few-sentences-that-explain-much>

Continue reading "BRIEFLY NOTED: For 2021-05-13 Th" »


HOISTED FROM THE ARCHIVES: Review of Richard Evans: "Lying About Hitler"

I always wish I had done something more with this...

Richard Evans (2000), Lying About Hitler: History, the Holocaust, and the David Irving Trial (New York: Basic Books: 0465021522). 

Richard Evans (1997), In Defense of History (New York: Norton: 0393319598).


 

The Irving Case

For about a decade Richard Evans's (1987) book Death in Hamburg: Society and Politics in the Cholera Years 1830-1910 had been on my "read someday" list. But at the beginning of 2000 I ran across his name again. He was to be an expert witness for author Deborah Lipstadt in her defense against David Irving's charge that she had libeled him by calling him a "Holocaust denier."

Irving had sued Lipstadt because her 1994 book Denying the Holocaust, had called him a "discredited" historian with "neofascist" connections, an ardent admirer of Hitler who "on some level... seems to conceive himself as carrying on Hitler's legacy," who skews documents and misquotes evidence to reach historically untenable conclusions in the interest of exonerating Hitler (see Evans (2000), p. 6). Irving demanded that Penguin Books, Lipstadt's publisher, withdraw her book from circulation. Penguin refused. And in the summer of 1996 David Irving sued.

Deborah Lipstadt and Penguin Books then had two choices: (a) withdraw the book and apologize to Nazi sympathizer David Irving, or (b) defend themselves. And, as Richard Evans explains, under British law a libel defense amounts to a no-holds-barred, fangs-bared, go-for-the-jugular attack on the reputation of the plaintiff. As he writes (Evans (2000), p. 193): "[A] successful libel defense... has to concentrate... on massively defaming the person and character of the plaintiff, the only restriction being that the defamation undertaken in court has to be along the same lines as the defamation that gave rise to the case in the first place, and that it has, of course, to be true." Thus the structure of the case: if she were to escape an adverse judgment, Deborah Lipstadt's attorneys had to demonstrate that David Irving was a Holocaust denier who skews documents and misquotes evidence. In short, they would have to demonstrate that he was "discredited": not a credible historian at all.

It was here that Evans was brought in as an expert to provide an assessment of Irving's work as a historian. He agreed to serve as an expert witness at least in part because he was deeply concerned with what makes a historian: Evans had recently (1997) published a book, In Defense of History, that had wrestled with the question of what historians did, and how they did it.

Continue reading "HOISTED FROM THE ARCHIVES: Review of Richard Evans: "Lying About Hitler"" »


BRIEFLY NOTED: For 2021-05-12 We; + A Guess at the State of the Plague in India, & the Right Wing Long Con

 

First:

A Snippet from a Dialogue: The Current Plague in India:

Axiothea: How much worse are things in India than the statistics the Indian government is reporting say?

Parmenides: We do think that here in the United States we have had 900,000 rather than 600,000 deaths—out of a total caseload of perhaps 60 million, perhaps 120 million. How bad are things in India right now, really? And how bad are they going to get?

Aesclepius: We do not know. We guess that true plague deaths are between three and eight times officially recorded deaths. And we guess that India is only halfway through this current plague wave.

Axiothea: If so, note that India currently is at 200 reported deaths per million—say the true number is 1000, 0.1% of the population, and it is going to double before this wave is through. With a population of 1.4 billion, that would be 3 million dead by the time this wave ebbs…


Continue reading "" »


BRIEFLY NOTED: For 2021-05-11 Tu

Things that went whizzing by that I want to remember...

First:

Here we see a striking difference between Paul Krugman and Larry Summers. Krugman sees models as intuition pumps—and believes strongly, very strongly, that if you cannot make a simple model of it, it is probably wrong. Summers believes that our models are, at best, filing systems (and at worst tools for misleading the unwary)—and that the right way to think about the economy is as, in some way, a two-state system, with expansion being one state and recession the other, so that you cannot halt an expansion without tipping the economy fully into recession:

Paul KrugmanWonking Out: Braking Bad?: ‘A more explicit critique comes from Larry Summers, who has warned that the stimulus may lead to stagflation. He appears to believe that the Fed can’t use monetary tightening to offset overheating generated by fiscal expansion without causing a nasty recession. But I have to admit to being a bit puzzled about why…. Summers[’s]… underlying macroeconomic model is pretty much the same as mine…. And that model seems to say that the Fed can indeed tap on the brakes if needed. Indeed, the Fed has done that in the past: in the 80s and again in the 90s it acted to rein in booms without causing recessions…. Claims that we can’t rely on the Fed to rein in inflation if the stimulus turns out to be too big have to rest on some departure from the workhorse model most sensible people use to think about macroeconomic policy…. Even if you’re uncomfortable with President Biden’s fiscal policies, you should be very cautious about making arguments against them that rely on novel propositions about why inflation can’t be contained. Conventional analysis says what Janet Yellen said: If the stimulus proves bigger than needed, the Fed can keep things under control. If you’re asserting otherwise, think hard about why you’re saying that…

LINK: <https://messaging-custom-newsletters.nytimes.com/template/oakv2>

My take? Of the last six tightening cycles, three have been followed by demand-shock recessions within two years of the tightening cycle’s end. I interpret this as: you gotta halt the tightening before you overdo it, and that is not the easiest thing in the world. But there is no law-like regularity there.


Continue reading "BRIEFLY NOTED: For 2021-05-11 Tu" »


BRIEFLY NOTED: For 2021-05-11 Tu

Things that went whizzing by that I want to remember...

First:

Here we see a striking difference between Paul Krugman and Larry Summers. Krugman sees models as intuition pumps—and believes strongly, very strongly, that if you cannot make a simple model of it, it is probably wrong. Summers believes that our models are, at best, filing systems (and at worst tools for misleading the unwary)—and that the right way to think about the economy is as, in some way, a two-state system, with expansion being one state and recession the other, so that you cannot halt an expansion without tipping the economy fully into recession:

Paul KrugmanWonking Out: Braking Bad?: ‘A more explicit critique comes from Larry Summers, who has warned that the stimulus may lead to stagflation. He appears to believe that the Fed can’t use monetary tightening to offset overheating generated by fiscal expansion without causing a nasty recession. But I have to admit to being a bit puzzled about why…. Summers[’s]… underlying macroeconomic model is pretty much the same as mine…. And that model seems to say that the Fed can indeed tap on the brakes if needed. Indeed, the Fed has done that in the past: in the 80s and again in the 90s it acted to rein in booms without causing recessions…. Claims that we can’t rely on the Fed to rein in inflation if the stimulus turns out to be too big have to rest on some departure from the workhorse model most sensible people use to think about macroeconomic policy…. Even if you’re uncomfortable with President Biden’s fiscal policies, you should be very cautious about making arguments against them that rely on novel propositions about why inflation can’t be contained. Conventional analysis says what Janet Yellen said: If the stimulus proves bigger than needed, the Fed can keep things under control. If you’re asserting otherwise, think hard about why you’re saying that…

LINK: <https://messaging-custom-newsletters.nytimes.com/template/oakv2>

My take? Of the last six tightening cycles, three have been followed by demand-shock recessions within two years of the tightening cycle’s end. I interpret this as: you gotta halt the tightening before you overdo it, and that is not the easiest thing in the world. But there is no law-like regularity there.


Continue reading "BRIEFLY NOTED: For 2021-05-11 Tu" »


BRIEFLY NOTED: For 2021-05-10 Mo, & Anti-Anti Tory Little-Englandism

First:

A Snippet from a Dialogue: Anti-Anti Tory Little Englandism:

Kephalos: I am pretty sure that—within the population of Great Britain—the Tories are a marked minority.  And—yet—they could easily be governing with a pretty comfortable margin for the next 10 years.  It is kind of unnerving how a minority faction has—more or less—run the joint ever since “the strange death of Liberal England”.   Even when Blair and Gordon were PMs—they still had to triangulate. And—perhaps the strangest thing of all – the Conservatives have run the joint, but everyone else gets blamed for (i) haphazard retreat from Empire and (ii) relative economic decline. Its almost as if the Conservative are “alcoholic Daddy” who everyone is supposed to clean up after…

Thrasymakhos: “Almost”? The Tories are a minority in Great Britain. There is, however, a durable majority that would rather see the Tories rule than Labour rule. They would like somebody else—not, of course, them; heavens forbid!—to rid them of feather-bedding union members, officious bureaucrats, and uppity women; and ensure that the Pakies are kept in their place.

This majority can be overcome when Labour’s leadership persuades the electorate that it is really a centrist Liberal Party in disguise. The problem is that the base and the cadres very strongly disagree with this “New Labour” position. And Blair and Brown were incapable of constructing any alternative organizational base.

Otherwise, no matter how badly the Tories cock it up, they are not enablers of feather-bedding union members, officious bureaucrats, uppity women, and Pakies…

Ask not, American Democrats, for whom the bell tolls…

Continue reading "BRIEFLY NOTED: For 2021-05-10 Mo, & Anti-Anti Tory Little-Englandism" »


BRIEFLY NOTED: For 2021-05-09 Su

Things that went whizzing by that I want to remember...

Continue reading "BRIEFLY NOTED: For 2021-05-09 Su" »


BRIEFLY NOTED: For 2021-05-08 Sa

Things that went whizzing by that I want to remember...

 

First:

Duncan BlackThe Story Of The Day: ‘“Everyone” expected a big jobs number today, everyone was all set for their “ZOMG LABOR SHORTAGE CANCEL THE UI” pitches, and then it was a small jobs number and they… ran with it anyway: Justin Wolfers: "This one simple trick can turbocharge the recovery: Get vaxxed, get your friends to join you, make the marketplace safe, and watch people return. If counterfactual you would have interpreted a strong payrolls report as evidence that labor demand was running ahead of labor supply stoking concern about a ‘labor shortage,’ then you shouldn’t also be in the business of seeing a weak payrolls report and yelling ‘labor shortage’…

LINK: <https://www.eschatonblog.com/2021/05/the-story-of-day.html>

 

Continue reading "BRIEFLY NOTED: For 2021-05-08 Sa" »


BRIEFLY NOTED: For 2021-05-07 Fr

First:

Kevin Kwok: Populism: 'We have lived in the golden era provided by the industrial revolution in so many ways that we take for granted. One of them is that the industrial revolution was an innately distributed wave. It was a huge technological, productivity, and financial wave. But it required a large base of humans. This is because its returns to scale tilted towards many mid to large cities co-located with transportation and natural resource hubs. And labor was a major factor of production. This was not the sole factor, but one of the major ones for why we see a middle class arise in the world. Before the industrial revolution we see far greater inequality, with elites capturing far more power and wealth.... The question then, is whether we are living through the reversion to the mean..... Another macro trend... for the last 75 years, the US has been an anomalous market by absorbing value from the rest of the world... Platform Americana. By rejecting the full stack nature of the European Colonial Approach and instead becoming a platform–the US struck a bargain with the rest of the world. It would provide the production, consumption, guarantee of trade routes, security, and financing for the world. Our middle class is a function of the value that was supposed to be generated in the rest of the world that we captured as the platform for world.... To be in the US then, appears akin to sitting on a beach watching the waves flow back to the ocean.... We’re seeing a similar dynamic... playing out... with blue-collar white males.... centuries because of legal, cultural, and fiat norms around women.... The adage “Growth solves all problems” is not just true of companies. It’s true of countries too. With growth, people believe in cooperation. They find common ground in the pursuit of mutual success and growth. Without growth, people become zero sum…

LINK: <https://kwokchain.com/2018/10/02/populism/>

Continue reading "BRIEFLY NOTED: For 2021-05-07 Fr" »


PROJECT SYNDICATE: Is þe US Economy Recovering or Overheating?

The fact that core inflation is rising on the back of substantial GDP growth and declining unemployment should not come as a surprise. Those who are wringing their hands about economic "overheating" should remember that an absence of price increases would reflect an economy that is still struggling. <https://www.project-syndicate.org/commentary/us-inflation-shows-economy-is-reshuffling-and-recovering-by-j-bradford-delong-2021-05>


 

BERKELEY – The financial and economic news in the United States lately has been dominated by concerns about inflation. “Runaway inflation is the biggest risk facing investors, Leuthold’s Jim Paulsen warns,” according to the cable news channel CNBC. As a potential hedge against inflation, “Bitcoin’s time to shine is fast approaching,” reportsFortune’s Robert Hackett. According to US News and World Report, “There is a lot of talk about inflation in 2021 as fears of high government spending creep in and the recent rebound in prices from pandemic-related levels has some investors worried that the trend will continue for some time.”

Continue reading "" »


BRIEFLY NOTED: For 2021-05-05 We

Things that went whizzing by that I want to remember... <https://braddelong.substack.com/p/briefly-noted-for-2021-05-05-we>

 

 

First:

Ian Leslie: Biden's Bet: ‘Biden... is... hinting at... “I think they’re going to write about this point in history… about whether or not democracy can function in the 21st century. Not a joke. Whether autocracy is the answe—these were my debates I’d have in the many times I met with Xi.”... Biden believes that technology and science are moving so fast that they pose an existential challenge to democracy itself. The consensus used to be that if China wanted to catch with the West it would have to democratise—become more free, and more diverse, with power less centralised. But Xi has doubled down on autocracy and centralisation, partly by deploying new technologies. China is still growing. For Biden, it’s up to America to show the rest of the world that democracy is still the best platform… 

LINK: <https://ianleslie.substack.com/p/bidens-bet>

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Very Briefly Noted:

Share Brad DeLong's Grasping Reality


Paragraphs:

Paul McLeary (2007): Is Perry Bacon Serious?: ‘Perry Bacon Jr. wrote what may be the single worst campaign ‘08 piece to appear in any American newspaper so far this election cycle. In the front-page piece, Bacon muses over how the chances of Barack Obama getting elected president might be affected by the fact that he’s not Muslim. Seriously. To build his case, Bacon stumbles artlessly through all manner of rumor, innuendo, and xenophobic smear—never bothering to refute any of it, even though there is plenty of well-documented evidence to knock down much of this stuff. Bacon kicks the whole sorry mess off with the unsubstantiated statement that: “In his speeches and often on the Internet, the part of Sen. Barack Obama’s biography that gets the most attention is not his race but his connections to the Muslim world.” Who, exactly, gives this the most attention?… This habit of reporters—perpetuating untruths by writing stories about the “phenomenon” of those untruths—drives us nuts. Was LexisNexis broken in the scant few minutes it must have taken him to write this story? If so, Bacon must have taken to Internet message boards to troll for xenophobic posts…. Bacon then wraps up by tossing in a quote from an Obama adviser telling us that all’s fine, there’s nothing to worry about. Oh, well, with that tidbit at the end Bacon achieved the all-important Balance, so all’s well in newspaper-land.

LINK: <https://archives.cjr.org/campaign_desk/post_75.php>


Iskander RehmanMetus Hostilis: Sallust, American Grand Strategy, & the Disciplining Effects of Peer Competition with China=: ‘Sallust’s theory remains starkly unforgiving, almost uncomfortably so, for a modern reader. As political scientist Daniel Kapust notes, this creates a dilemma whereby “the coherence of a community may become linked to the existence of a dangerous foreign enemy.” Healthy democracies should be able to guarantee the conditions of their own success without fear of a great-power competitor, and no sensible individual would argue in favor of cultivating foreign enmity for its own sake. And yet, Sallust’s grim insights, however unsettling, may hold some truth…. An unwelcome new strategic dispensation… may paradoxically provide a clarifying and restorative sense of purpose to a deeply fractious American democracy…. Intense domestic polarization has rendered U.S. foreign policy more volatile, unpredictable and—in the eyes of international observers—unreliable…

LINK: <https://warontherocks.com/2021/05/metus-hostilis-sallust-american-grand-strategy-and-the-disciplining-effects-of-peer-competition-with-china/>


Adam OzimekFuture Workforce: ‘Companies continue to be remote: Nine months into the pandemic, 41.8 percent of the American workforce remains fully remote. Companies say remote work is getting easier, not harder, as time goes on: 68 percent of hiring managers say remote work is going more smoothly now than when their company first made the shift to at the start of the pandemic. Remote work will continue through 2021: Managers believe that 26.7 percent of the workforce will be fully remote in one year suggesting that individuals will gradually continue to return to the office, but a significant share will remain remote in the near future.  The number of remote workers in the next five years is expected to be nearly double what it was before COVID–19: By 2025, 36.2 million Americans will be remote, an increase of 16.8 million people from pre-pandemic rates. Increased productivity and flexibility continue to be key benefits of remote work: Hiring managers cite reduction of non-essential meetings, increased schedule flexibility, and no commute as aspects of remote work that have worked better than expected…

LINK: <https://www.upwork.com/press/releases/economist-report-future-workforce>


Nancy QianThe Two Sides of Chinese GDP: ‘In 2019… China’s per capita GDP in 2019 was $8,242, placing the country between Montenegro ($8,591) and Botswana ($8,093). Its per capita GDP in purchasing power parity (PPP) terms—with income adjusted to take account of the cost of living—was $16,804… between Suriname ($17,256) and Bosnia and Herzegovina ($16,289)…. GDP per capita in PPP terms in the US and the European Union is $65,298 and $47,828, respectively…. China’s current level of income inequality… is similar to that found in the US and India…. 600 million people have… an annual income of $1,860…. The Chinese government… will be preoccupied for at least another generation by the need to increase domestic incomes. But… governments can also bolster their popular support in ways that do not foster economic growth… defending… against… earthquakes or the COVID–19 pandemic… territorial disputes in the South China Sea and along the Chinese-Indian border…. The backlash effect…. Many Chinese think the West is seeking to reassert political dominance and feel painful reminders of colonialism and World War II…. Behind the world’s second-highest GDP are hundreds of millions of people who just want to stop being poor…

LINK: <https://www.project-syndicate.org/commentary/china-poverty-aggregate-per-capita-gdp-by-nancy-qian-1-2021-04>


Jeet HeerCan We Bring Back Blogging?: ‘The golden age of blogging was… a digital party, where bouncing around through hyperlinks was always bringing in new writers and new perspectives… fresh voices and also of changing minds…. The blogosphere opened up debate, especially in the 21st century revival of feminist, anti-racist, and socialist politics…. There were a lot of factors that led to the decline of blogging… ads… Google and Facebook ate up that revenue. Social media like Twitter and Facebook also provided a new way to micro-blog…. I’m still finding my sea legs as a Substacker. I want to know what works and what doesn’t…

LINK: <https://jeetheer.substack.com/p/can-we-bring-back-blogging>


PROJECT SYNDICATE: Is þe US Economy Recovering or Overheating?

The fact that core inflation is rising on the back of substantial GDP growth and declining unemployment should not come as a surprise. Those who are wringing their hands about economic "overheating" should remember that an absence of price increases would reflect an economy that is still struggling. <https://www.project-syndicate.org/commentary/us-inflation-shows-economy-is-reshuffling-and-recovering-by-j-bradford-delong-2021-05>

 

BERKELEY – The financial and economic news in the United States lately has been dominated by concerns about inflation. “Runaway inflation is the biggest risk facing investors, Leuthold’s Jim Paulsen warns,” according to the cable news channel CNBC. As a potential hedge against inflation, “Bitcoin’s time to shine is fast approaching,” reportsFortune’s Robert Hackett. According to US News and World Report, “There is a lot of talk about inflation in 2021 as fears of high government spending creep in and the recent rebound in prices from pandemic-related levels has some investors worried that the trend will continue for some time.”

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PODCAST: Hexapodia XIII: "Mandated Interoperability": We Can't Make It Work, or Can We?

With Cory Doctorow; Noah Smith & Brad DeLong's 30:00 < Weekly Podcast < 60:00 <https://braddelong.substack.com/p/podcast-hexapodia-xiii-mandated-interoperability>

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Key Insights:

  • Cory Doctorow is AWESOME!

  • It is depressing. We once, with the creation of the market economy, got interoperability right. But now the political economy blocks us from there being any obvious path to an equivalent lucky historical accident in our future.

  • The problems in our society are not diametrically opposed: Addressing the problems of one thing doesn't necessarily create equal and opposite problems on the other side—but it does change the trade-offs, and so things become very complex and very difficult to solve.

  • Always keep a trash bag in your car.

  • Hexapodia!

 

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References:

Books:

Cory Doctorow: How to Destroy Surveillance Capitalism <https://www.google.com/books/edition/How_to_Destroy_Surveillance_Capitalism/W20NzgEACAAJ>

Cory Doctorow: Attack Surface <https://www.google.com/books/edition/Attack_Surface/rFfEDwAAQBAJ>

Cory Doctorow: Walkaway <https://www.google.com/books/edition/Walkaway/MKMsDAAAQBAJ>

Cory Doctorow: Down & Out in the Magic Kingdom <https://www.google.com/books/edition/Down_and_Out_in_the_Magic_Kingdom/h8DvDwAAQBA>

Cory Doctorow: Little Brother <https://www.google.com/books/edition/Little_Brother/r1zne2mZDW8C>

William Flesch:Comeuppance: Costly Signaling, Altruistic Punishment, and Other Biological Components of Fiction<https://www.google.com/books/edition/Comeuppance/JSRWPYp1nNUC>

Daniel L. Rubinfeld: A Retrospective on U.S. v. Microsoft: Why Does It Resonate Today? <https://journals.sagepub.com/doi/abs/10.1177/0003603X20950227>

Louis Galambos & Peter Temin: The Fall of the Bell System: A Study in Prices & Politics <https://www.google.com/books/edition/The_Fall_of_the_Bell_System/CXNPVjdxfAEC>

Websites:

Electronic Frontier Foundation: <http://www.eff.org>

Cory Doctorow: Craphound <http://craphound.net>

Cory Doctorow: Pluralistic <https://pluralistic.net>

&, of course:

Vernor VingeA Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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BRIEFLY NOTED: For 2021-05-02 Su

Things that went whizzing by that I want to remember...

First:

Zeynep TufekciSunday Open Thread for Subscribers: ‘The one big part of the tragedy here is that we had most of the science we needed really early on…. There was more to learn, for sure, but the basics were there. There have been very few scientific surprises… outside of how vaccinable this (luckily!) turned out to be (we didn’t know partly because we didn’t really try for the others exactly because we didn’t care). But sociologically, I am shaken. I knew about all of this, because I teach and study it. The group-think, the institutional resistance and inertia, the cognitive biases, the social dynamics… I know about them all! But I’ve been truly surprised most is how much stronger than I thought these dynamics were, even in a crisis. Perhaps because of the crisis. I’ve learned a lot about viruses last year, but I did not really need that much beyond an introductory textbook to write the policy oriented pieces I’ve published. I think we need to update our social science textbooks and assumptions, though. The dynamics that have dominated our world aren’t novel in the sense that we were new to them, but they are clearly so much stronger than we usually acknowledge…

LINK: <https://www.theinsight.org/p/sunday-open-thread-for-subscribers-d93>

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HOISTED FROM THE ARCHIVES: Five Books on the Classical Economists (2020-09-29)

This, I thought, was an interview that turned out very well...

 

The Best Books on the Classical Economists

recommended by Brad DeLong

They were an eclectic bunch, including, among others, a stock market speculator, a moral philosopher, a cleric, a lawyer and a journalist. From the late-18th to the mid-19th century, they provided the first systematic explanations of how economies work, where they fail and how they might be made to work better. Here, Brad DeLong, a professor of economics at UC Berkeley, introduces the classical economists, and suggests books to read to learn more about them and what they were trying to achieve.

Interview by Benedict King


The Passions and the Interests by Albert Hirschman

The Worldly Philosophers by Robert L Heilbroner

The Classical Economists Revisited by D. P. O'Brien

Economic Sentiments: Adam Smith, Condorcet and the Enlightenment by Emma Rothschild

Karl Marx: A Nineteenth-Century Life by Jonathan Sperber

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HOISTED FROM THE ARCHIVES: Lessons from the New Deal (2009-03-31)

My testimony before Sen. Sherrod Brown's subcommittee...

 

Earlier today Eric Rauchway @rauchway wrote that people should take a look at my 2009-03-31 testimony that Sen Sherrod Brown (D-OH) invited me to give:

Twitter avatar for @rauchwayEric Rauchway @rauchway
or see @delong 's Congressional testimony of 2009 Lessons from the New Dealbooks.google.com

He is right: my 2009-03-31 testimony is damned good!

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BRIEFLY NOTED: For 2021-04-30 Fr

Things that went whizzing by that I want to remember...

 

First:

Free speech advocates who care about the functioning of their community have never thought it appropriate for the free-speech principle to empower chaos monkeys who seek to destroy their society and replace it with something with speech that would be less free:

John MiltonAreopagitica: ‘Yet if all cannot be of one mind—as who looks they should be?—this doubtless is more wholesome, more prudent, and more Christian, that many be tolerated, rather than all compelled. I mean not tolerated popery, and open superstition, which, as it extirpates all religions and civil supremacies, so itself should be extirpate, provided first that all charitable and compassionate means be used to win and regain the weak and the misled: that also which is impious or evil absolutely either against faith or manners no law can possibly permit, that intends not to unlaw itself: but those neighbouring differences, or rather indifferences, are what I speak of, whether in some point of doctrine or of discipline, which, though they may be many, yet need not interrupt THE UNITY OF SPIRIT, if we could but find among us THE BOND OF PEACE…

LINK: <http://www.gutenberg.org/files/608/608-h/608-h.htm>

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John AuthersMarkets Give Powell a Break on Inflation. It May Be Transitory: ‘The latest Federal Open Market Committee meeting still left us with a few more clues on how the Fed intends to navigate through an exceptionally dangerous environment…. Virtually every data release for the last month has suggested a very strong recovery. The Fed wants great improvement in unemployment, which is still running at a 6% rate, compared to 3.5% before the pandemic…. So there are two questions. Do we see any signs of rising prices caused by anything more than a transitory bottleneck? And, are inflation expectations showing signs of settling “materially above 2%”? If there is any clear sign of a possible bottleneck, it is in… industrial metals…. Markets give us nice and precise measures of inflation expectations, via the breakevens between inflation-protected bonds, or TIPS, and conventional fixed-income Treasuries. The prediction this generates for average inflation over the next five years is just under 2.5%…. Ten-year expectations are slightly lower…. The best measure to justify continued lenience is the so-called 5-year, 5-year breakeven…

LINK: <https://www.bloomberg.com/opinion/articles/2021-04-29/markets-give-powell-a-break-on-inflation-it-may-be-transitory>


Patrick WymanAncient South Asia: ‘If we were to touch down in South Asia at the end of the Younger Dryas and the beginning of the Holocene around 12,000 years ago, however, we wouldn’t have seen many people. Archaeological traces of a human presence are few and far between at the end of the Pleistocene. Much of the region wasn’t particularly welcoming to people at that time; the Deccan Plateau, which makes up much of South Asia, would have been exceptionally arid. That is largely because the monsoon, which brings torrential but life-giving rain every summer, was either much weaker or altogether absent. The rain-fed seasonal rivers that make much of South Asia welcoming to people wouldn’t have flowed, leaving only the river valleys of the Indus and Ganges as particularly viable spots for people to live. As the Pleistocene gave way to the Holocene, the monsoon began to take on something more like its current form. As was the case elsewhere in the world at that time, the number of people living in South Asia dramatically expanded with improving climatic conditions. Many of these new residents were the descendants of long-established hunter-gatherers. Some of them kept foraging; others experimented with new ways of life. But others were new arrivals who set themselves up on the edges of the Indus Valley, bringing with them an agricultural package first developed far to the west in the Fertile Crescent…

LINK: <https://patrickwyman.substack.com/p/ancient-south-asia>


Joseph A. Francis: King Cotton, the Munificent Slavery & (Under)development in the United States, 1789–1865: ‘Slaves were necessary for the country’s cotton boom because cotton was not sufficiently remunerative to attract yeoman farmers. Cotton exports then balanced the imports that the Federal Government taxed to obtain most of its revenues. Those revenues were used to fund westward expansion, both directly through the acquisition and conquest of new territory, and indirectly through the policy of retiring the national debt, which pumped liquidity into the country’s nascent capital markets and bolstered the reputation of American bonds among foreign investors. State government could then borrow to finance the transportation infrastructure that connected the new lands to markets, allowing them to be serrled. Westward expansion tended to weaken slaveholders’ position in Congress because they were excluded from the rapidly growing Midwest. They therefore seceded. The North would not let the South leave the Union, however, because secession threatened to take away the Federal Government’s main source of revenues. As a result, the Civil War began, leading to emancipation. Slavery had thus financed the development of the settler society that would eventually abolish it, while the slaves themselves became an underdeveloped nation within a nation… 

LINK: <https://joefrancis.info/pdfs/FrancisUS_slavery.pdf>


Aswath DamodaranEquity Risk Premiums (ERP): Determinants, Estimation, and Implications–The 2021 Edition: ‘The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets like the United States, which have long periods of historical data available, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in non-equity markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generate expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis…

LINK: <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3825823>


Gary GortonRecent Changes & the Future of the US Financial System: ‘The financial crisis has not been solved because financial crises are inherent in market economics. A financial crisis is always about runs on short-term debt, e.g. in the repo market. The general trend in the past couple decades has been a decline in deposits replaced with other short-term debt instruments like repo contracts…. Stablecoin is essentially unregulated free banking that issues deposits. However, free banking never worked in the past, even in cases whether the government required backing. There needs to be credible backing for Stablecoin as they are now runnable without any entity overseeing them…. The fundamental theorem of bank regulation stipulates that bank regulators can only decide the location of the banking system. Without carrots—or incentives—to keep a bank, they can move, as evidenced by the rise of mortgage and loan origination outside of the banking system given the high costs of staying a bank…

LINK: <https://bcf.princeton.edu/events/gary-gorton-on-recent-changes-and-the-future-of-the-us-financial-system/>


Anton Troianovski‘We Know How to Defend Our Interests’: Putin’s Emerging Hard Line: ‘KYIV, Ukraine — The world according to President Vladimir V. Putin looks like this: Russia is on the rise while the West is in chaos. The West, spurred on by a new American president who is more anti-Russian than his predecessor, seeks Russia’s—and Mr. Putin’s—destruction. And it is time for Russia, imbued with a moral authority and a thinning supply of patience, to hit back. “They may think that we are like them, but we are different, with a different genetic, cultural and moral code,” Mr. Putin said last month, excoriating the United States. “We know how to defend our interests”…

LINK: <https://www.nytimes.com/2021/04/20/world/europe/putin-biden-ukraine-navalny.html?searchResultPosition=3>


James H. Stock & Mark W. WatsonIdentification & Estimation of Dynamic Causal Effects in Macroeconomics Using External Instruments: ‘The increasing use of external sources of as-if randomness to identify the dynamic causal effects of macroeconomic shocks… the time series counterpart of the highly successful strategy in microeconometrics of using external as-if randomness to provide instruments…. This lecture exposits this approach and provides conditions on instruments and control variables under which external instrument methods produce valid inference on dynamic causal effects…. We consider two methods, a one-step instrumental variables regression and a two-step method that entails estimation of a vector autoregression…

LINK: <https://www.princeton.edu/~mwatson/papers/Sargan_Lecture_Stock_Watson_20180104.pdf>


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BRIEFLY NOTED: For 2021-04-29 Th

Things that went whizzing by that I want to remember...

John Scalzi’I’m a dude with the usual amount of bullshit on his karma; I try to imagine the better version of me, and then cosplay that in public until hopefully it sticks. Or to quote Vonnegut: “We are what we pretend to be, so we must be careful about what we pretend to be”…


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Twitter avatar for @EyePatchWolfEyepatch Wolf @EyePatchWolf
Buying a PC with Dell: My Journey Into Hell

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John QuigginRepublicans & the End of Hard Neoliberalism: ‘After four years of the Trump Administration, and a few months of post-election madness, the Republican Party has completed a transition that has been going on for decades. In the 1980s and 1990s, the Republicans were a hard neoliberal party…. Now the situation is reversed. The Republicans are a white grievance party… [that] still attempt to attract support from corporations by advocating tax cuts….

Think of the Eisenhower-era Republican party as a complicated mixture of many dissolved ingredients, in which the dominant element was the business establishment, and the Trump era party as a crystalised mass of plutocratic economics, racism and all-round craziness. The development over the 60 years between the two has consisted of keeping the mixture simmering, while adding more and more appeals to racial animus and magical thinking (supply-side economics, climate denial, the Iraq war and so on). In this process various elements of the original mix have boiled off or precipitated out and discarded as dregs.

Boiling off is the process by which various groups (Blacks and Northeastern liberal Republicans in C20, liberaltarians more recently) have left the Republican coalition in response to its racism and know-nothingism. The dregs that have precipitated out are ideas that were supposed to be important to Republicans (free trade, scientific truth, classical liberalism, moral character and so on) that turned out not to matter at all. Trump’s arrival is the catalyst seed crystal that produces the phase change. The final product of the reaction emerges in its crystallised form.

LINK: <https://crookedtimber.org/2021/04/26/republicans-and-the-end-of-hard-neoliberalism/>


Matthew ZeitlinPersonnel Isn’t Policy, Policy Is Personnel: ‘Janet Yellen is a fiscal and monetary hawk. Or at least she was. Sorta. But no longer…. The Biden administration, as might be expected, has many of the same figures from the Obama years and even the Clinton years…. Yellen herself was Obama’s choice to run the Federal Reserve and the chair of Bill Clinton’s Council of Economic Advisors after some time on the Fed Board. While on the Fed and in the Clinton White House, she supported policies that would be anathema to the current administration, she was affiliated with deficit hawk groups that, for now, have no particular hold over current Democratic Party thinking. And yet I have no doubt that Yellen will be an effective advocate and architect of exactly what the Biden administration and Democratic congress wants to do right: spend money on families, Covid relief, the environment, and not get too stressed about the deficit….

It wasn’t Larry Summers who allegedly told Romer that monetary policy had “shot its wad,” or tried to explain high unemployment with reference to bank tellers and ATMs.  It was Barack Obama…. We are attuned to a model where advisors influence and shape the thinking of their “principal,” but it seems just as likely that the principal shapes the advisors, or essentially farms out different “modules” of thinking to different people (a deficit hawk here, a stimulus advocate there, a health care reformer over there) and then shifts the degree to which she takes their input in accordance with what she already wants to do. Inasmuch as the advisors differ, they differ within a fairly narrow band set by the principal…. [Summers] is as on board for more spending as anyone in Greater Bidenberg—but will remain at least somewhat estranged, even if the winds of change blow from the same direction both within and without it…

LINK: <https://zeitlin.substack.com/p/personnel-isnt-policy-policy-is-personnel>


Antonio GramsciPrison Notebooks III: ’That facet of today’s crisis which is lamented as a “wave of materialism” is related to the so-called “crisis of authority”. The ruling class has lost its coordination—is not leading but merely dominant solely by force. The overwhelming majority no longer believe what they used to believe, and so have become unmoored from the ideologies of tradition. This, precisely, is the crisis: The old order is dying. The new order cannot be born. There is an interregnum. It is a time of monsters….

Can a gap between the popular majority and the ideologies of the rulers as serious as that since World War I ended be bridged by simple force, which attempts to stop the ideologies of the future from coming to organize society. Will the current interregnum end not in the normal-history process, which naked force blocks, but rather in a restoration? The shape of the ideologies is such that that can be ruled out in any practical if not absolute sense. he character of the ideologies, that can be ruled out-yet not in an absolute sense. In the meantime depression will lead eventually to wide scepticism, and a new accommodation—catholicism will even more become simply Jesuitism, and so forth.

These are highly favorable conditions for an unprecedented expansion of Marxism’s influence. Marxism’s oversimplicity and inadequacy when it takes its popular form will help it spread. Dead old ideologies turn into skepticism with respect to all theories and frameworks, to a focus on economic fact and money, and to politics that is either fantastical or cynical…. But this reduction to economic money and to political power means exactly the disappearance of established frameworks of ideas as anything other than rationalizations. That opens up the possibility—and creates the necessity—of creating the new culture…


Hoisted From the Archives:

From 2011: LECTURE: Seven Sects of Macroeconomic Error: Wrong Models of the Great Recession

<https://www.icloud.com/pages/0zwSkfmRDPILOSmiq0_91g5nw><https://github.com/braddelong/public-files/blob/master/seven-sects-of-macroeconomic-error-2011-03-14.pdf> <https://www.bradford-delong.com/2021/04/seven.html> 2011-03-14

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PODCAST: Hexapodia XII: Þe Cambridge Capital Controversy

By Noah Smith & Brad DeLong: Joan Robinson to Bob Solow: "I would not be unkind if you would not be pig-headed..."

Key Insights:

  1. Getting the rate of profit—the sums that are charged businesses for renting machines and renting space, and for access to the generalized social power to deploy resources that is finance—right is a very, very important thing to do. Why? Because the market economy is a complicated institutional calculating machine for determining how to promote societal wellbeing. It cannot do its job if it cannot see the the constraints imposed on us by nature and current technology. And having the market get the profit rate right is a very important part of that. To say “it’s all ideology” or “it’s all power” or “it’s all distribution” and go the full Sraffa production-of-commodities-by-means-of-commodities is to miss a truly powerful, relevant, and important insight. That’s the strongest statement of what the Cambridge, Massachusetts-MIT side was really getting at—or ought to have been getting at, although they phrased it badly and inaccurately.

  2. If we attempt to use toy mathematical models applied to macro aggregates to say anything quantitative about whether business owners are getting paid “too much” or “too little”, we will fail embarrassingly. Therefore we should never use toy models to do that.

  3. To say that the market-equilibrium profit rate is the optimal one from the perspective of societal well-being is to commit the pseudo-pharisaical mistake of reversing the order of importance. Rather, recognize: the market was made for man, not man for the market. 

  4. The particular language in which the economists of the 1960s carried out this debate was extremely poorly suited to shed light. They cared deeply, they wrote angrily, and most of what they wrote was drivel. So: whenever you are having a discussion, if you want to learn or teach anything, first do this: try hard to figure out what issues really are, and then try hard to figure out what is the right language to talk about these issues.

  5. As always, the key insight is: “Hexapodia”.

 

<https://braddelong.substack.com/p/podcast-hexapodia-xii-the-cambridge>


BRIEFLY NOTED: For 2021-04-27 Tu

FIRST:

Robert P BairdThe Invention of Whiteness: The Long History of a Dangerous Idea: ‘By the time The Bell Curve appeared, Du Bois’s assertion that racial categories were not biologically grounded was widely accepted. In the years since, the scientific evidence for that understanding has only become more overwhelming. A 2017 study examined the DNA of nearly 6,000 people from around the world and found that while that while some genetic differences among humans can be traced to various ancestral lineages—for example, eastern African, southern European or circumpolar—none of those lineages correspond to traditional ideas about race…. During the second half of the 20th century a number of historians demonstrated that… Du Bois… was correct that it was only in the modern period that people started to think of themselves as belonging to something called the white race.…

LINK: <https://www.theguardian.com/news/2021/apr/20/the-invention-of-whiteness-long-history-dangerous-idea?CMP=Share_iOSApp_Other>

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Dietz VollrathWho Are You Calling Malthusian?: ‘I recently had a student ask me if I was a “Malthusian”…. It’s always asked in a way that implies it is a belief system, similar to “Christian”, “Muslim”, or “Packer Fan”…. I’m not a Malthusian “believer”, because that isn’t a thing. But I do think that several of Malthus’ assumptions about how economies function, in particular prior to the onset of sustained growth during the 1800’s, are well founded. And those assumptions have implications that help make sense of the world…

LINK: <https://growthecon.com/blog/Malthus/>


W.E.B. Du BoisThe Souls of White Folk: ‘The Middle Age regarded skin color with mild curiosity; and even up into the eighteenth century we were hammering our national manikins into one, great, Universal Man, with fine frenzy which ignored color and race even more than birth. Today we have changed all that, and the world in a sudden, emotional conversion has discovered that it is white and by that token, wonderful! This assumption that of all the hues of God whiteness alone is inherently and obviously better than brownness or tan leads to curious acts; even the sweeter souls of the dominant world as they discourse with me on weather, weal, and woe are continually playing above their actual words an obligato of tune and tone, saying “My poor, un-white thing! Weep not nor rage. I know, too well, that the curse of God lies heavy on you. Why? That is not for me to say, but be brave! Do your work in your lowly sphere, praying the good Lord that into heaven above, where all is love, you may, one day, be born-white!” I do not laugh. I am quite straight-faced as I ask soberly: “But what on earth is whiteness that one should so desire it?” Then always, somehow, some way, silently but clearly, I am given to understand that whiteness is the ownership of the earth forever and ever, Amen! Now what is the effect on a man or a nation when it comes passionately to believe such an extraordinary dictum as this?…

LINK: <https://loa-shared.s3.amazonaws.com/static/pdf/Du_Bois_White_Folk.pdf>


EconomistThe Kremlin Has Isolated Russia’s Economy: ‘Since 2014, when Russia annexed Crimea and invaded eastern Ukraine, the Kremlin has commanded the economy like a fortress under siege, building up reserves, decoupling from the world economy, and preparing for the potential impact of Western sanctions or fluctuations in oil prices…. Russia’s economy remains highly dependent on hydrocarbons. Despite years of promises, no meaningful diversification has taken place. Hydrocarbons still account for more than 60% of exports…. Russia’s covid–19-related stimulus measures amounted to just 4% of gdp, according to the World Bank. The pandemic, in Mr Putin’s eyes, is not the proverbial rainy day the nwf was intended for…

LINK: <https://www.economist.com/briefing/2021/04/24/the-kremlin-has-isolated-russias-economy>


M.G. SieglerIn(tel) Command: ‘Might Gelsinger pull it off…. I finally got around to watching the “Intel Unleashed” presentation from March. While I’m far from an expert on Intel, like a lot of folks in tech, I’m fascinated…. The good news seems to be that new CEO Pat Gelsinger clearly gets this. And perhaps just as importantly, he clearly cares about this, as someone who worked at Intel for 30 years and has now returned to right the ship. And most important still, he seems to have a plan. And to be in command of the situation…. Gelsinger’s… is an actual presentation and not a Q&A. Still, the same thing is conveyed: just how in command he is. And perhaps even more so than Jobs, just how enthusiastic he is about the opportunity…

LINK: <https://5ish.org/p/intel-command>


Cosma ShaliziIn Soviet Union, Optimization Problem Solves You: ‘There is a passage in Red Plenty which is central to describing both the nightmare from which we are trying to awake, and vision we are trying to awake into. Henry [Farrell] has quoted it already, but it bears repeating:

Marx had drawn a nightmare picture of what happened to human life under capitalism, when everything was produced only in order to be exchanged; when true qualities and uses dropped away, and the human power of making and doing itself became only an object to be traded…. The motion of society turned into a kind of zombie dance, a grim cavorting whirl in which objects and people blurred together till the objects were half alive and the people were half dead. Stock-market prices acted back upon the world as if they were independent powers, requiring factories to be opened or closed, real human beings to work or rest, hurry or dawdle; and they, having given the transfusion that made the stock prices come alive, felt their flesh go cold and impersonal on them, mere mechanisms for chunking out the man-hours. Living money and dying humans, metal as tender as skin and skin as hard as metal, taking hands, and dancing round, and round, and round, with no way ever of stopping; the quickened and the deadened, whirling on.…

And what would be the alternative? The consciously arranged alternative? A dance of another nature, Emil presumed. A dance to the music of use, where every step fulfilled some real need, did some tangible good, and no matter how fast the dancers spun, they moved easily, because they moved to a human measure, intelligible to all, chosen by all…

There is a fundamental level at which Marx’s nightmare vision is right: capitalism, the market system, whatever you want to call it, is a product of humanity, but each and every one of us confronts it as an autonomous and deeply alien force. Its ends, to the limited and debatable extent that it can even be understood as having them, are simply inhuman. The ideology of the market tell us that we face not something inhuman but superhuman, tells us to embrace our inner zombie cyborg and loose ourselves in the dance. One doesn’t know whether to laugh or cry or running screaming.

But, and this is I think something Marx did not sufficiently appreciate, human beings confront all the structures which emerge from our massed interactions in this way. A bureaucracy, or even a thoroughly democratic polity of which one is a citizen, can feel, can be, just as much of a cold monster as the market. We have no choice but to live among these alien powers which we create, and to try to direct them to human ends. It is beyond us, it is even beyond all of us, to find “a human measure, intelligible to all, chosen by all”, which says how everyone should go. What we can do is try to find the specific ways in which these powers we have conjured up are hurting us, and use them to check each other, or deflect them into better paths.

Sometimes this will mean more use of market mechanisms, sometimes it will mean removing some goods and services from market allocation, either through public provision or through other institutional arrangements. Sometimes it will mean expanding the scope of democratic decision-making (for instance, into the insides of firms), and sometimes it will mean narrowing its scope (for instance, not allowing the demos to censor speech it finds objectionable). Sometimes it will mean leaving some tasks to experts, deferring to the internal norms of their professions, and sometimes it will mean recognizing claims of expertise to be mere assertions of authority, to be resisted or countered.

These are all going to be complex problems, full of messy compromises. Attaining even second best solutions is going to demand “bold, persistent experimentation”, coupled with a frank recognition that many experiments will just fail, and that even long-settled compromises can, with the passage of time, become confining obstacles. We will not be able to turn everything over to the wise academicians, or even to their computers, but we may, if we are lucky and smart, be able, bit by bit, make a world fit for human beings to live in…

LINK: <https://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/>


From the Archives:

Brad DeLong (1999): An Appalling Article on Graduate Student Unionization by Yale Historian Paul Kennedy: I don’t know what I find more appalling: The open snobbery with which Paul Kennedy ridicules the idea that lower-class union leaders and members might have something to teach about or some concern over conditions of employment of graduate students…. The casual mendacity in his implication that the typical humanities graduate student at a private university gets his or her tuition paid and $12,000 a year with no strings attached…. The sneer at humanities graduate student section leaders at his own university—paid I believe, about $10 an hour… with little prospects for ever getting a tenured professorship like Paul Kennedy’s—for “imagin[ing themselves] as an aggrieved member of an exploited academic proletariat.”… The claim that the UAW’s paying its lead organizer at Yale (a more than full-time job) some $10 an hour is an extraordinarily generous subsidy that will lead to a “new career track for Ph.D.s who find all this campaigning much more exciting than their work on Milton or Freud”…

LINK: <https://delong.typepad.com/delong_long_form/1999/04/paul-kennedy-on-graduate-student-unionization.html>

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READING: MacFarquhar (1992): Deng’s Last Campaign

MacFarquhar's final prediction turned out to be true: "Communism in China... end[ed] not with a bang but a whimper"

Roderick MacFarquhar (1992–12–17): Deng’s Last Campaign: ‘China had its own form of grueling political campaign this year, which ended when the Fourteenth Congress of the Communist Party (CCP) took place in October. There, too, the issue was “change” and the main concern the economy. But in China the economy has been in good shape: it was the aged incumbent who wanted ever more change to keep it that way, and he won.

Of course, Deng Xiaoping is a very peculiar sort of “incumbent.” The “patriarch,” as some Hong Kong papers like to call him, no longer has any formal post. At eighty-eight, he reportedly spends much of his time amusing his grandchildren and playing bridge with his cronies, leaving the daily conduct of affairs to the general secretary of the Chinese Communist Party, Jiang Zemin, the premier, Li Peng, and their colleagues in the Politburo standing committee (PSC). It is only on major matters of national policy, such as voting in the UN on the use of force against Saddam Hussein, that the PSC consults Deng and does what he “advises.”

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RHETORICAL QUESTION: Why Do Economists Ignore þe Greatest of All Market Failures?

Trevon D Logan’This is actually a deep point DeLong is making: we have not recognized the single largest market failure in the economy. And we rarely talk about it as a market failure at all. The answer: that’s how they wanted it when they sold it to you! Anyone who has seriously thought about equilibrium theory knows that the lack of attention to endowments is pretty shameful. DeLong extends that here to thinking of the weights we apply and why it should encourage, not discourage, redistribution. But we never quite get there…

Ben Boehlert: ’I’m consistently shocked in my undergrad Econ classes how inequality of opportunity almost never comes up. In a world where everyone is perfectly rational, it seems like pretty big deal!…

Brad DeLongI remember back in the… spring of 1981, I think it was. I asked my professor, William Thomson, visiting from Rochester, roughly this: 

The utilitarian social welfare function is Ωu = U(1) + U(2) + U(3)… The competitive market economy maximizes a market social welfare function Ωm = ω(1)U(1) + ω(2)U(2) + ω(3)U(3)…, where the ω(i)s are Negishi weights that are increasing functions of your lifetime wealth W(i)—indeed, if lifetime utility is log wealth, then ω(i)=W(i). Market failures drive wedges between what the economy achieves and what it could achieve. There are massive, massive differences between the Ωu that is the true social welfare function and the function Ωm that the well-working market maximizes.

Why isn’t the unequal distribution of ex ante expected lifetime income—inequality of opportunity—conceptualized by us economists as the greatest of all market failures? And why isn’t the distribution of political power that creates & preserves a property order of unequal wealth seen as the greatest of all “regulatory capture by a special interest group” flaws in the working of society, economy, and the state?" 

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Thomson did not have a good answer. My other teacher Joe Kalt, however, did. “These Chicago Boys are all right-wing Marxists,” he said:

They buy the Marxian proposition that the state is an executive committee for rigging the economy in the interest of the ruling class. But they think that that is a good thing as long as the ruling class is based on wealth, however previously acquired. All their objections are to those who use some form of societal power other than wealth to try to rig the economy in their interest. And while there is an argument that a wealth-based ruling class is in general best, it is a weak argument.

And do remember that I learned much of my political economy from Richard Musgrave and his TA Manuel Trajtenberg, who explicitly conceptualized public finance as having 3 branches: (1) repairing Pigovian externalities, (2) fiscal policy for full employment, (3) redistribution to shrink all the Negishi weights in the market’s SWF toward one.

The Chicago School underwent an enormous change between the Midwestern Populist days of Henry Simons, for whom private monopoly was the big foe and large inequalities an enormous menace, & the monopoly-tolerant fundraising paradise that Stigler & co. created. This transformation from Simons to Stigler was possible only by “othering” the non-rich by every means possible, so that their low weight in the market’s Negishi-weighted SWF could be dismissed as deserved.

I put it to you that taking the Murray Rothbard Road in race relations—trying to bring to life their anti-New Deal monopoly-tolerant union-busting economic policy agenda by white racism and supremacy, as Frankenstein’s monster was brought to life by the lightning—was a very important part and remains a very important part of that shift away from economics understood as a policy science that attempts to implement a Benthamite or a Millian utilitiarianism that seeks the greatest good of the greatest number.

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Twitter avatar for @TrevonDLoganDr. Trevon D Logan @TrevonDLogan
This is actually a deep point @delong is making— we have not recognized the single largest market failure in the economy. And we rarely talk about it as a market failure at all. The answer: that’s how they wanted it when they sold it to you!

Brad DeLong: 'Live long, & prosper!' @delong

@Undercoverhist @Econ_Marshall I remember back in the... spring of 1981, I think it was. I asked my professor, William Thomson, visiting from Rochester, roughly this: "The utilitarian social welfare function is Ω = U(1) + U(2) + U(3)... The competitive market economy maximizes a market social welfare 1/

(This has been a rhetorical question: I think we all know why almost all neoliberal and further-right economists ignore the greatest of all market failures. I think we know that well.)

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BRIEFLY NOTED: For 2021-04-23 Fr

Things that went whizzing by that I want to remember...

FIRST:

It is elementary geopolitics that if you think you are a rising power, you soft-pedal it. You take every opportunity to defuse conflict and to diminish potential flashpoints. Time is, after all on your side. The most that you do is point out the incompetence and failures of the declining powers, and suggest that those are very likely to continue. Thus you do not have to risk conflict in order to increase your influence. Influence flows to you from others who take note of the rising sun and adapt to it. But China seems to be behaving differently—as though assertions of national strength and power are essential moves in some domestic-policy stabilization task?

Bill BishopXi’s New World Order for the New Era: ‘That increasingly seems to be Xi Jinping’s goal, couched amidst calls to “to safeguard the UN-centered international system, preserve the international order underpinned by international law”. Xi’s speech… at the Boao Forum for Asia Annual Conference 2021…. Xi and his CCP clearly see massive opportunities from the carnage of the pandemic and the multiple strategic disasters of US domestic and foreign policy to change fundamentally the substance of the world order while keeping the edifice in place. And their odds of succeeding look higher than the foreign policy elite in America and its allies would like to admit. Is there a “Minsky Moment” concept for geopolitics? It is starting to look like Xi and his team think there is, or are at least willing to gamble on one…

LINK: <https://sinocism.com/p/xis-new-world-order-for-the-new-era>

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Very Briefly Noted:

  • Steven PerlbergThe New York Times Responds to the Substack Boom: ‘The New York Times is readying a big newsletter push as Substack tries to poach its top writers with advances worth hundreds of thousands… <https://www.businessinsider.com/new-york-times-responds-to-the-substack-boom-2021-4>

  • Charles Q. ChoiBrain Signals Can Drive Exoskeleton Parts Better With Therapy: ‘Training patients to use muscle electrodes for robotic limb control works better than previously thought possible… <https://spectrum.ieee.org/tech-talk/biomedical/devices/brain-computer-interface-exoskeleton-neural-link#disqus_thread>

  • Molly Jong-FastWhy The U.S. Should Be Shipping Its Vaccines to the Rest of the World—Right Now <https://www.vogue.com/article/export-covid-vaccine>

  • ENDORSE!! PLEASE CANCEL ME, GLENN!!!!: Charlie WarzelThe Failing Galaxy Brain: ‘There are hundreds of us… HUNDREDS!…. CANCEL ME, GLENN! DADDY IS THINKING ABOUT INVESTING IN SOME NON-IKEA FURNITURE… LINK: <https://warzel.substack.com/p/the-failing-galaxy-brain> <http://braddelong.substack.com>

  • Jan Pieter Krahnen & al.EU Economic Policy & Architecture After Covid: Rebootingthe Debate on the EU Reform Roadmap: ‘The financial crisis of 2007–2012 was the first wake up call to the inadequacy of the euro area architecture when facing a large systemic crisis. This column explains why the Covid crisis will leave a deeper impact on the European policy system, and re-introduces the Vox debate on Europe’s economic architecture in the context of the transformations that we have witnessed… LINK: <https://voxeu.org/article/eu-economic-policy-and-architecture-after-covid-rebooting-debate-eu-reform-roadmap>

  • Charlie StrossDude, You Broke the Future!: ‘I’m talking about the very old, very slow AIs we call corporations, of course. What lessons from the history of the company can we draw that tell us about the likely behaviour of the type of artificial intelligence we are all interested in today?… LINK: <http://www.antipope.org/charlie/blog-static/2018/01/dude-you-broke-the-future.html>

  • CIFARInnovation, Equity & The Future of Prosperity: ‘The program examines how the policies used to generate and diffuse innovation affect the distribution of opportunities and outcomes in society. It also looks at which institutions and other factors facilitate or impede the development and implementation of distribution-sensitive innovation policies, programs and practices…. Upcoming Meetings: Friday April 23, 2021 from 10 a.m…. (Ken Lipartito)… LINK: <https://events.cifar.ca/website/20693/>

  • John GanzThe Politics of Cultural Despair: ‘The preoccupation with despair is itself a form despair: an indulgence in gloom that feeds on itself. The practice of cultural criticism itself might be such a form of despair…. Maybe the basics are too often neglected in favor of grandiose dreams. As Hegel wrote, “Seek food and clothing first, and then the kingdom of God shall be added unto you.” And with that, I’m going to get dressed and eat my breakfast … LINK: <https://johnganz.substack.com/p/the-politics-of-cultural-despair>

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Paragraphs;

Love LimanHedge Fund’s Collapse in Sweden Puts Spotlight Back on Quants: ‘IPM shuts its doors after losing $4 billion in the pandemic. More hedge funds closed than opened in last six years…. Lars Ericsson, the chairman of soon-to-be defunct Informed Portfolio Management, says it’s clear now that the quantitative strategies his fund used failed to cope with the market moves brought on by the pandemic. But he rejects the idea that quants have had their day. “There is definitely a future for quantitative hedge funds,” he said on Thursday. IPM, a systematic macro fund based in Stockholm, started bleeding client money more than a year ago, with about $4 billion in assets under management flowing out since late 2019. Ericsson says the fund’s medium-term models failed to cope with the shock that hit markets in early 2020…. IPM… managed to come back from the brink, but bad trades that predated the pandemic came back to haunt the fund. Its relative equity models had been weighing on performance for years, partly due to a strategy relying on value stocks…. Ericsson says he still thinks everything would have worked out had IPM had a little longer…. More hedge funds have closed than started in the last six years, with 770 of them shuttering in 2020, according to data compiled by Hedge Fund Research Inc…

LINK: <https://www.bloomberg.com/news/articles/2021-04-22/hedge-fund-s-collapse-in-sweden-puts-spotlight-back-on-quants?cmpid%3D=socialflow-twitter-markets>


Ezra Klein & Tressie Mcmillan CottomThe Conversation Has Never Been Wider: ‘EZRA KLEIN: Well, I’m always asking for us to bring back blogging…. TRESSIE MCMILLAN COTTOM: Hmm. OK. So I now work with a lot of internet people. I’m in an information school at a university. And so a lot of my very good friends are those people, so I want to tiptoe carefully. I do think that there was a clubbiness and a camaraderie, even among people who politically disagreed. There was a class of thinkers, a class of writers who came up in that web 2.0 that does feel like, yeah, we lost something there. There was a humanity there for good or for bad…. There’s a reason they had chosen to be in that space before it all became about chasing an audience in a platform and turning that into influencer and translating that into…. And that’s what I think we’re missing when we become nostalgic for that web 2.0. I think it’s the people in the machine. Having said that, I am very resistant to nostalgia as a thing because usually what we are nostalgic for is a time that just was not that great for a lot of people…. EZRA KLEIN: But I think you’re right about that criticism of it, too. Something that, for all that I can tip into nostalgia, something that I think is often missed in today’s conversation is the conversation has never been wider. TRESSIE MCMILLAN COTTOM: Yes. EZRA KLEIN: People talk all about things they can’t say, but it has never been wider. TRESSIE MCMILLAN COTTOM: Yup. EZRA KLEIN: There’s never been a larger allowable space of things you could say. TRESSIE MCMILLAN COTTOM: That’s right. EZRA KLEIN: And people have also never been more pissed about how it feels to participate in it. I don’t want to say never, but broadly, there is an intensity to that conversation that is distinct, and I don’t think those things are unrelated, right? I think it is the wideness of the conversation and the fact that there are so many people you might hear from that make you feel cautious and insecure and unsafe, and the good of it is the bad of it… LINK: <https://kottke.org/21/04/the-conversation-has-never-been-wider>


Adam PosenAmerica’s Self-Defeating Economic Retreat: ‘Populist anger is the result not of economic anxiety but of perceived declines in relative status. The U.S. government has not been pursuing openness and integration over the last two decades. To the contrary, it has increasingly insulated the economy from foreign competition, while the rest of the world has continued to open up and integrate. Protecting manufacturing jobs benefits only a small percentage of the workforce, while imposing substantial costs on the rest. Nor will there be any political payoff from trying to do so: after all, even as the United States has stepped back from global commerce, anger and extremism have mounted.…

LINK: <https://www.foreignaffairs.com/articles/united-states/2021-04-20/america-price-nostalgia>


Anders ÅslundRussia’s Bear Economy: ‘Russia… ha[s]… registered no real growth since 2014…. Though Russia had a higher per capita GDP (in terms of purchasing power parity) than Croatia, Poland, Romania, and Turkey as recently as 2009, all of these countries have since overtaken it. Russians today are shocked to learn that they are worse off than Romanians and Turks. Among EU member states, only Bulgaria is still poorer than Russia. With its close proximity to the EU single market, Russia could have had higher growth if it had pursued sound economic policies. Instead, Putin has utterly squandered the country’s abundant human capital through corrupt cronyism and systematic deinstitutionalization. His politicization of the courts and law enforcement has eliminated any pretext of rule of law—a prerequisite for private investment and business development. Apparently, Putin believes the economy is less important than the ability to kill opponents like Boris Nemtsov and Alexei Navalny (who was recently transferred from prison to a hospital, reportedly near death)…

LINK: <https://www.project-syndicate.org/commentary/putin-economic-policy-and-sanctions-cripple-russian-economy-by-anders-aslund-2021-04>


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