#berkeley Feed

The Market: As an Institution, Its Pros, and Its Cons

Berkeley png The Market as an Institution: “The Market” as an Institution:

  • We start from what look like to us deep truths of human psychology

    • People are acquisitive
    • People engage in reciprocity—i.e., want to enter into reciprocal gift-exchange relationships
      • In which they are neither cheaters nor saps
      • With those they trust…
  • We devised property as a way of constructing expectations of trust…

  • We devised money as a substitute for trust…

Continue reading "The Market: As an Institution, Its Pros, and Its Cons" »


Modes of Market Failure

Berkeley png

At lunch last week Richard Thaler was skeptical that I had managed to identify ten different modes of market failure. I admit that this list has a little too much of the Borges-List Nature, but I do think it holds up. What do you think?: The Market Economy: Modes of Failure: Markets can go wrong—badly wrong. They can:

  1. not fail, but be failed by governments, that do not properly structure and support them—or that break them via quotas, price floors/ceilings, etc....

  2. be out-of-equilibrium...

  3. possess actors have market power...

  4. be afflicted—if that is the word—by non-rivalry (increasing returns to scale; natural monopolies)...

  5. suffer externalities (in production and in consumption, positive and negative; closely related to non-excludibility)...

  6. suffer from information lack or asymmetry...

  7. suffer from maldistributions—for the market will only see you if you have a willingness to pay, which is predicated on an ability to pay…

  8. suffer from non-excludability (public goods, etc.)...

  9. suffer from miscalculations and behavioral biases...

  10. suffer from failures of aggregate demand...

Continue reading "Modes of Market Failure" »


Harry Brighouse: Navigating the Need for Rigor and Engagement: How to Make Fruitful Class Discussions Happen: "Derek Bok... a passage that, ultimately, transformed my teaching:

Teaching by discussion can also seem forbidding because it makes instructors uncomfortably aware of their shortcomings. Lecturers can delude themselves that their courses are going well, but discussion leaders know when their teaching is failing to rouse the students’ interest by the indifferent quality of responses and the general torpor of the class. Trying to conduct a discussion with apathetic students is much like giving a bad dinner party...

Continue reading "" »


Note to Self: _A Comment on Development Engineering: With respect to "doing good versus doing well"...

From an economist's point of view, the economy is a decentralized societal calculating machine. It looks at everybody, and tries, in a utilitarian way, to increase social welfare—which it roughly defines as summing everybody's well-being, with each person's well-being weighted by their lifetime wealth. This produces a system in which incentives are, and "doing well" achieved by, increasing resources that produce things for which rich people have a serious Jones.

Serving the global poor is not going to do that. Som making a living serving the poor requires focusing on one of two things:

  1. Finding an organization—a government or an NGO—that is willing to some degree to commit resources to bend this market logic of "to those who have, more shall be given"

  2. Find some people who have skills and resources and industry that are somehow blocked from the sight of the world market, and figure out a narrow strategic intervention that will makes those resources visible—and hence valuable.

Continue reading " " »


Some Great Past First-Year Berkeley Economic History Course Papers

Economic history Google Search

Yes, some of these have been highly revised since they were submitted for a grade. Why do you ask? :-)

Continue reading "Some Great Past First-Year Berkeley Economic History Course Papers" »


Commonwealth Club Talking Points (January 25, 2019): Forecasting and Steve Moore Edition

The Embarcadero Google Maps

The Shutdown: Let's review the bidding: Pelosi, Ryan, McCarthy, Schumer, McConnell, Trump reached a deal. Deal passes Senate unanimously. Trump watches "Fox and Friends". Trump announces he won't sign the deal. Paul Ryan—desperate not to embarrass Trump more—won't let the House vote on the deal. Ryan goes out and Pelosi gets in on January 4, and Pelosi passes the deal through the House. But because it is a new congressional session, the Senate's approval has expired. And McConnell—desperate not to embarrass Trump more—is now holding things up in the Senate.

From Pelosi and Schumer's standpoint, the big problem is this: they reach a new deal with Trump, Fox and Friends finds some reason to slag it, Trump backs out again.

The right, rational response to this situation is for Pelosi, McCarthy, Schumer, and McConnell to strike deals and then pass them with veto-proof majorities. But McCarthy and McConnell are too scared of Trump and not concerned enough about the well-being of the country to do that.

2.5 million people aren't getting their paychecks and 800,000 are getting very little work done. That's about a 0.5%—10 billion over the past month—hit to the economy. We won't see that because of oddities in the how the public sector is folded into official statistics, but it is there. Will there be a multiplier applied to it? In a year I will have the data so that then I will be able to look back and tell you. I cannot tell you now...

Continue reading "Commonwealth Club Talking Points (January 25, 2019): Forecasting and Steve Moore Edition" »


Commonwealth Club: Annual Economic Forecast

The Embarcadero Google Maps

Streaming: https://www.facebook.com/thecommonwealthclub/videos/2219824924924010/ https://www.youtube.com/watch?v=Gj398AqszD0

Commonwealth Club: Brad DeLong and Stephen Moore: Bank of America/Merrill Lynch Walter E. Hoadley Annual Economic Forecast | Commonwealth Club: "FRI, JAN 25 / 12:00 PM :: The Commonwealth Club :: 110 The Embarcadero :: Taube Family Auditorium :: San Francisco, 94105: With changes to taxes, trade wars with China and other countries, health care in flux, housing prices continuing to rise, continued governmental gridlock as well as international challenges to the United States, what does all of this mean for your business, your investments and the overall economy for 2019?...

Continue reading "Commonwealth Club: Annual Economic Forecast" »


According to my Grandmother Florence Richardson Usher Lord, my Great-Great Uncle Abbott Payson Usher back in The Day used to teach—very boringly, she said—(1) Middle Ages, (2) Commercial Revolution, (3) Industrial Revolution, (4) Age of Modern Science, with growth accelerations in each of the four: Dietz Vollrath: Sustained growth and the increase in work hours: "Jane Humphries and Jacob Weisdorf... labor contract terms in England over several centuries... annual labor contracts starting seeing sustained growth in their value around 1650 or so, far sooner than the day wages indicated...

Continue reading "" »


Why Economic History?

Economic history Google Search

The unfortunate fact is that economists have gotten too good at making theories. In fact, the set of plausible and admissible economic theories is now dense in the space of possible conclusions: For every desired conclusion X, for every ε, and for a norm of "closeness" ||, there is a chain of theories T of increasing complexity indexed by n and a degree of theoretical complexity nδ such that:

(∀X)(∃nδ)(∃T(.))(∀n)(n > nδ -> | T(n) - X | < ε)

Or: with enough time and ingenuity and sweat, a theorist can prove that anything can be an equilibrium.

Continue reading "Why Economic History?" »


"You don’t get to claim that you’re not attacking the university when your first few sentences read like that. It suggests a lack of clarity in the argument—a sentence I would have written if I had been asked to peer-review this essay". Dan Drezner mocks the anti-humanities industry, and, boy, is it mockable: Daniel Drezner: A Paper That Would Never Have Gotten Past Peer Review Criticizes the Academy. Film at 11: "Last year scholars James A. Lindsay and Peter Boghossian proudly declared that they had hoodwinked a peer-reviewed journal into publishing nonsense.... That... was riddled with problems, not the least of which was that the journal they had hacked was a pay-for-play scam...

Continue reading "" »


Note to Self: Books for Econ 210a: Introduction to Economic History (Spring 2019)

Continue reading "" »


Note to Self: Optional Readings by This Year's Note Prize Winners:

  1. Paul Romer (1989): Endogenous Technological Change: "Growth in this model is driven by technological change that arises from intentional investment decisions made by profit maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a nonrival, partially excludable good...

  2. Paul Romer (2015): Economic Growth: "Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas...

  3. William D. Nordhaus (1996): Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not: "During periods of major technological change, the construction of accurate price indexes that capture the impact of new technologies on living standards is beyond the practical capability of official statistical agencies. The essential difficulty arises for the obvious but usually overlooked reason that most of the goods we consume today were not produced a century ago...

  4. William D. Nordhaus (2007): A Review of the Stern Review on the Economics of Climate Change: "How much and how fast should we react to the threat of global warming? The Stern Review argues that the damages from climate change are large, and that nations should undertake sharp and immediate reductions in greenhouse gas emissions...

Continue reading "" »


Just in time for midterm exams: M. Aurelius Antoninus: :M. Cornelius Fronto: "To my teacher: I received two letters from you at the same time. In one of them, you were criticizing me and you were showing that I wrote a sentence rashly; in the second, however, you were trying to approve my work with praise. Still, I swear by my mother and by my health that I got more joy from the first letter...

Continue reading "" »


Resources on the Kinds of Uses of Math I Am Trying to Use in Econ 101b This Fall...

School of Athens

Street-Fighting Mathematics and Other Tools

Sanjoy Mahajan: Street-Fighting Mathematics: The Art of Educated Guessing and Opportunistic Problem Solving
George Pólya: How to Solve It: A New Aspect of Mathematical Method https://books.google.com/books?isbn=1400828678
George Pólya: Mathematics and Plausible Reasoning: Induction and Analogy in Mathematics https://books.google.com/books?isbn=0691025096
George Pólya: Mathematics and Plausible Reasoning: Patterns of Plausible Inference https://books.google.com/books?isbn=069102510X Paul Zeitz: _The Art and Craft of Problem Solving https://books.google.com/books?isbn=1118916662

Tools: Uses of Mathematics in Economics
Macro Textbook Chapter 3: Thinking Like an Economist
How to Think Like an Economist (If, That Is, You Wish to...)
Optional Teaching Topic: How to Think Like an Economist... (Provided, That Is, You Wish to...) (Pre-Class? Mid-Class?)


This File: http://delong.typepad.com/teaching_economics/street-fighting-math.html


Big Questions for Left Opposition Social Scientists: Cedarbrook Notes

2018-03-12_Brad_DeLong_Party_Card_pages

Cedarbrook Notes: Occupy had zero impact on austerity budgets. Mont Pelerin was not important because they gathered by a lake, sang “kumbaya”, and felt a sense of solidarity. We should not pretend defeats were victories.

What can we do? I think there are three levels that we ought to be operating on—all, right now, understanding the world rather than trying to change it: understanding policies, understanding mobilizations, and understanding utopia:

  • The first is understanding the effects of policies: the policies adopted between 1980 and 2007 did not have the results that their advocates expected nor the results that their critics expected. We really do need to figure out how to understand what the social world is rather than what the models—both pro and con—in use during the neoliberal era said the social world was.

  • The second is understanding the vicissitude of mobilization. The standard political center-left plans to promote full employment, progressive taxation and social insurance, upward mobility, and infrastructure and public services—equitable growth—all these are things that should meet with near-universal applause. By contrast, con-game kleptocracy in the interest of plutocracy should not get 60 million votes. Fascism—the belief that you need a strong leader who is a bully, because he is your bully, and he will bully your enemies, who may be corporations, foreigners, people who look or think differently, and who are always the rootless cosmopolites—should not be attractive to a 21st-century electorate on any level. Yet, somehow, it, terrifyingly, is. The same social-science models that failed to adequately track the effects of neoliberal policies failed to predict the seductive attractiveness of 21st century neo-fascism. Thus we have two different levels at which we need to understand the societal world: the effects of neoliberal policies, and the possibilities for mobilization.

  • The third is the question of what our Utopia is. How will our different view of the social world change our goals for a good society? Our utopia will almost surely still include full employment, progressive taxation and social insurance, upward mobility, and lots of infrastructure. But it will also include other and deeper objectives—objectives that have not been on the New Deal and social democratic bucket lists.

These three tracks all need to be pushed forward. But they also very much need to be three tracks. And they need to be three different tracks.


On Removing My Tweed Jacket at the Start of Lecture...

Observing Drought in California with Remote Sensing LP DAAC NASA Land Data Products and Services

A word about this peculiar costume—the closest thing you can get to goretex if all you have is a sheep—that I am now taking off...

Because of central heating, these male formal and semi-formal clothes aren't comfortable these days even in Oxford and Cambridge, England, where they were originally developed. They are really only comfortable in Scotland. That is well-and-good if you teach at the University of Edinburgh or in Glasgow—or, perhaps, in Stockholm, Oslo, Helsinki, or maybe in Washington or Oregon.

It used to be that these clothes were comfortable here in Berkeley. But, because of global warming, the climate here these days is a lot like what I remember Santa Barbara being like half a century ago when I was a child. When I got a job here at Berkeley in the mid-1990s, I looked forward to living in a place in which tweed jackets and such were comfortable both inside and out. The fact that these clothes were actually comfortable here was a factor—a small factor, but a factor. Increasingly, however, that is no longer the case. A problem resulting from global warming, albeit a small problem.

Continue reading "On Removing My Tweed Jacket at the Start of Lecture..." »


Comment of the Day: Tracy Lightcap: Jacob Levy: I don’t think there’s anything—anything—on which I’ve gotten so much disbelief-that-becomes-near-anger as when I contradict the post-2014 Fox narrative about campus life...: "This is it, but I think the process is a bit more complicated. People who have made up their minds on a topic and committed themselves to it are still susceptible to arguments that work through repetition to undermine authority figures...

Continue reading "" »


This may, to some degree, be the growing pains of new technology. There were people who strongly objected to printing, on the grounds that the only way to truly grok a book was to copy it out word-for-word by hand. In their view, printing produced a bunch of shallow intellectual poseurs who would have only a surface and inadequate knowledge of the books that they had not really read but only skimmed (cf.: Elizabeth L. Eisenstein (1980): The Printing Press as an Agent of Change https://books.google.com/books?isbn=0521299551; Johannes Trithemius (1492): In Praise of Scribes https://books.google.com/books?isbn=0919026087). And Sokrates's attitude toward writing as a greatly inferior simulacrum and inadequate mimesis that could not create the true knowledge obtained through real dialogue is well known (cf.: Plato (370 BC): Phaedrus). Nevertheless, we believe that we have managed to adapt to printing and indeed to the creation of manuscript rather than just the oldest oral master-and-apprentice intellectual technologies. Perhaps we will find different things to be true once we will have trained our information-technology networks to be our servants as trusted information intermediaries and intellectual force multipliers, rather than (as they know are) the servants of the advertisers that pay them and thus that try to glue our eyeballs and attention to screens whether having our eyeballs and attention so-glued helps us become more like our best selves or not. But as of now the empirical evidence has become overwhelming: Susan Dynarski: For better learning in college lectures, lay down the laptop and pick up a pen: "When college students use computers or tablets during lecture, they learn less and earn worse grades. The evidence consists of a series of randomized trials, in both college classrooms and controlled laboratory settings...

Continue reading "" »


2018 Fall DEVENG 215 Pre-Class Introduction and Notes

School of Athens

DEVENG 215: Global Poverty Challenges and Hopes: A Perspective for Development Engineers:

Discussion: J. Bradford DeLong: TU 4:00 pm - 5:00 pm Mulford 230
Lecture: Fatmir Haskaj: TU, TH 2:00 pm - 3:29 pm Valley Life Sciences 2050

This graduate Development Engineering class has the following goals:

  1. Assist students in orienting themselves to the current global debates about poverty and inequality by exposing them to alternative paradigms of development and welfare situated in their historical context.

  2. Assist students in familiarizing themselves with the institutions and actors—from the World Bank to global social movements, from national and local governments to nonprofits and NGOs, from multinational corporations to philanthropic foundations—attempting to act to diminish global poverty.

  3. Assist students in critically reflecting upon philosophies of global justice, the ethics of global citizenship, their own engagements with poverty action, and their own aspirations for social change.

  4. Prevent students from maintaining or accepting the the comfortable perception that poverty exists elsewhere, can be contained at a distance, does not affect them and their communities every day.

The hope is to accomplish all these tasks at the graduate student level, with a focus on how the social-political-economic context constrains and opens opportunities for successful Development Engineering. The hope is to do this on the cheap, without committing lots of additional resources.

My idea is to do this by building on the lectures and readings of Fatmir Haskaj's undergraduate course GPP 115: Global Poverty: Challenges and Hopes in the New Millennium. We will add additional readings and a graduate-level discussion seminar to attempt to supercharge what Fatmir does. Hence this syllabus incorporates-by-reference the GPP 115 syllabus…

Fatmir's course describes itself as:

seek[ing] to provide a rigorous understanding of 20th century development and thus 21st century poverty alleviation. Students will take a look at popular ideas of poverty alleviation, the institutional framework of poverty ideas and practices, and the social and political mobilizations that seek to transform the structures of poverty...

From the graduate Development Engineering Program perspective, this course—while completely fine for what it is—is not quite what we want. It is too "idealist"—incorporates too much of an implicit belief that once one understands the world, it will immediately become obvious how to change it, which belief is a common disease thought by academics like me. And it is too "macro"—individual development engineers are not going to lead social and political mobilizations and transform structures, but rather work in the context created by existing structures and mobilizations, in the hope of taking small steps in a good direction. Therefore post-lecture discussions will focus on: "OK. Very good. Now how does this affect how we will act when the rubber meets the road?"

Continue reading "2018 Fall DEVENG 215 Pre-Class Introduction and Notes" »


As I often say, academic freedom is not "free speech". Universities are safe spaces for people to learn, for scholars to grow, and for ideas to be propounded and evaluated. You can argue—as Ernst Kantorowicz did, and as I more than half believe—that grownup full members of a university are their own sovereign judges of this propounding-and-evaluating business: that they are under an obligation to think as hard as they can and to argue fairly and fully for what they believe to be the truth, and that the sole sovereign judges of whether they have met this responsibility are their consciences day and their gods. And that makes it very, very important indeed to draw a clear line between those who can and those who cannot fulfill this responsibility: Dani Rodrik: No to Academic Normalization of Trump by Dani Rodrik: "Those who have served the current US president are necessarily tainted by the experience. While they should not be barred from speaking... they should be accorded none of the trappings of institutional esteem such as fellowships, named lectures, and keynote speeches...

Continue reading "" »


(Early) Monday Smackdown: Bard College Has a Quality Control Problem Here: Roger Berkowitz Needs to Learn to Quote Fairly and Accurately

I think that almost every discussion about "cultural appropriation" should be, instead, a discussion about: "don't be a d-ck". Clarifies matters immeasurably.

The brilliant national treasure Roxane Gay is, in my opinion, 100% correct when she writes: "stay in your lane.... The great thing about writing is that you can develop new lanes through research, immersion and effort..." That is not "being a d-ck". But When I read these exchanges (and Jennifer Schuessler's piece), I think Jennifer, Nina, and Burleigh are all being d-cks—especially Roger Berkowitz, who I think is being a major a--hole here, and doing so while claiming to be the heir and channeler of Hannah Arendt:

Jennifer Schuessler: "I wrote about the controversy over @thenation ’s publication of a poem by a white poet using black vernacular, with a little bit on the long debate over what counts as literary 'blackface' (looking at you, Vachel Lindsay & John Berryman)..."

Nina Burleigh: "Probably shouldn't wade into this but, by @rgay 'stay in your lane' logic, every entitled male screenwriter-white or black-should be banned from writing female characters of any race. I'm actually all for that, but piling on to crush the career of a young poet? geez..."

Roxane Gay: "Well, Nina, this is the problem with journalists taking tweets out of context and using them in their articles, instead of asking people for a more fully fleshed out statement. My tweets are my opinions...

Continue reading "(Early) Monday Smackdown: Bard College Has a Quality Control Problem Here: Roger Berkowitz Needs to Learn to Quote Fairly and Accurately" »


Monday Smackdown: Who Wants Charles Murray to Speak on Their Campus, and Why?

I have a question for Stanford's Michael @McFaul ...

We know that "If the heritability of IQ were 0.5 and the degree of assortation in mating, m, were 0.2 (both reasonable, if only ballpark estimates), and if the genetic inheritance of IQ were the only mechanism accounting for intergenerational income transmission, then the intergenerational correlation of lifetime incomes would be 0.01..." (see Bowles and Giants (2002)). That is only two percent the observed intergenerational correlation—49/50 of the intergenerational transmission of status in America comes from other causes.

Why, then, is it important to invite to your campus to speak someone whose big thing is the intergenerational transmission of intelligence through genes, and racial differences thereof? And if one were going to invite to your campus to speak someone, etc., why would you pick somebody who likes to burn crosses? Wouldn't a healthier approach be to regard such a person—who focuses on the intergenerational transmission of intelligence through genes, harps on genetic roots of differences between "races", and likes to burn crosses—as we regard those who know a little too much about the muzzle velocities of the main cannon of the various models of the Nazi Armored Battlewagon Version 4?: Jonathan Marks: Who wants Charles Murray to speak, and why?: "The Bell Curve cited literature from Mankind Quarterly, which no mainstream scholar cites, because it is an unscholarly racist journal... http://anthropomics2.blogspot.com/2017/04/who-wants-charles-murray-to-speak-and.html

Continue reading "Monday Smackdown: Who Wants Charles Murray to Speak on Their Campus, and Why?" »


What Is the Best Way to Introduce Myself to Audiences These Days?

image from www.evernote.com

J. Bradford Delong is Professor of Economics and Chief Economist of the Blum Center for Developing Economies at the University of California at Berkeley. He is also a weblogger for the Washington Center for Equitable Growth and a Research Associate of the National Bureau of Economic Research. From 1993 to 1995 he was Deputy Assistant Secretary for Economic Policy at the United States Department of the Treasury. Right now he is best known for:


Is this ⬆︎⬆︎⬆︎⬆︎ it? What would be better?


Well, Our Three Bridge View from the Graduate Student Lounge Is Not at Its Best This Morning, Is It?

No subject brad delong gmail com Gmail

Well, our three bridge view from the Peixotto Graduate Student Lounge is not at its best this morning, is it?

That is a pity because the new first-year graduate students are arriving this morning...

Continue reading "Well, Our Three Bridge View from the Graduate Student Lounge Is Not at Its Best This Morning, Is It?" »