Grasping Reality on TypePad, by Brad DeLong

Hoisted from 2012: Brad DeLong: Why Next to No Political Reaction to the Second Gilded Age?: Oh dear, that's a really tough question. So let me make it tougher by sharpening it and give it historical context. During the Gilded Age of the 1890s and 1900s you had strong political movements saying "something is going remarkably wrong with this, this isn’t the country we thought we were going to live in". The way that the historian—I'm blanking—Ray Ginger? Harley Shaiken: Yes, Ray Ginger. Brad DeLong: Ray Ginger put it in two absolutely brilliant books—Altgeld’s America and The Age of Excess—even the Republicans thought that they wanted to live in Abe Lincoln’s America, where when you are young you split wood into fence rails and go to law school at night and when you are middle-aged you become a lawyer and get rich and when you are old you enter politics and save the Union and free the slaves. They wanted to live in that kind of world, of upward mobility, in which opportunity is wide open even to the son of a penniless and not very successful rural farmer. But by 1890 they discovered that they weren’t living in Abe Lincoln's America at all...

Hoisted from the Archives: Matthew Yglesias: The Lies, The Lies: "Andrew Sullivan has been a pretty consistent proponent of the view that Paul Krugman is some sort of liar... [because of his] repeated insistences that George W. Bush's economic policy is founded on a tissue of lies. Krugman is, of course, entirely correct about this. The unnoted irony here is that in his May 14, 2001 column 'Downsize', Sullivan conceded Krugman's point: 'Ah, but the details. The Krugmans and the Chaits will shortly have a cow, if not a whole herd of them. The Times will weigh in again with yet another barrage of articles, editorials, and op-eds opposing any tax relief that would actually benefit those who pay most of the taxes. And, to be fair to these liberal critics, they're right...

Here is one difference between a Clinton Administration and a Trump Administration. The Clinton administration of 1993-2001 sold its 1993 deficit-reduction reconciliation bill as a phased-in five-year plan to boost American economic growth and American incomes. By raising taxes and by cutting government spending relative to the then-projected baseline—half of the cuts coming from the military, half of the cuts coming from the social insurance programs—Clinton sought to redirect 1%-point of GDP's worth of funds each year for five consecutive years from funding the government debt to funding productive private investment.

Over the five years as the program was being phased in, this boost in investment was projected by the administration—i.e., by me and others—to be a supply-side economic stimulus raising the rate of growth of potential output and boosting the rate of economic growth and thus of American incomes by 0.2%-points per year. Thereafter, once it was fully phased in, the program was projected by the administration—i.e., by me and others—to boost investment relative to the baseline by 4%-points of national product and so boost the rate of potential output growth and thus of American incomes relative to bas3eline by 0.4%-points per year. The program was supposed to make the U.S. 1% richer after 5 years; 3% richer after 10 years; 5% richer after 15 years, and so on.

It worked. Investment grew. Growth accelerated. Income rose relative to the baseline.

Note to Self: Coffee with Brink Lindsey, co-author of The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality https://books.google.com/books?isbn=0190627778: "Brink Lindsey and Steven M. Teles identify a common factor behind... breakdowns in democratic governance that allow wealthy special interests to capture the policymaking process for their own benefit...

Alfred lost. But a very good anti-NIMBY set of posters...

Brink Lindsey and Steve Teles: The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality https://books.google.com/books?isbn=0190627778

#books #NIMBYism

A year ago, during the Trump-McConnell-Ryan corporate tax cut debate, Greg Mankiw wrote that "a relevant exercise for my readers... [is assuming] the capital stock adjusts so that the after-tax marginal product of capital equals the exogenously given world interest rate r..." That was unprofessional. That is not a relevant model for a large country with a floating exchange rate. If you want an investment boom, cut the deficit—like Clinton-Mitchell-Gephardt did over 1993-1996.

Paul Krugman explains why: Paul Krugman: Why Was Trump’s Tax Cut a Fizzle?: "The blue wave means that Donald Trump will go into the 2020 election with only one major legislative achievement: a big tax cut for corporations and the wealthy. Still, that tax cut was supposed to accomplish big things. Republicans thought it would give them a big electoral boost, and they predicted dramatic economic gains. What they got instead, however, was a big fizzle...

Blum Center: Why did you decide to become an economist?: I would say that it was a long, slow process. As I look back, some milestones stand out:

• Back when I was a child, my best friend Michael Froomkin’s father Joseph Froomkin was an economist—he always seemed to have very interesting and smart things to say that came at the world from a different and very insightful perspective than others.
• When I was 12, I think, at the American Academy of Arts and Sciences meeting I got to spend a day playing with the “World Dynamics” global economic-ecological model. The model, I now think, was very wrong—we are certainly not on any of the trajectories it forecast. But the idea that you could do such a thing was very interesting.
• When 1982 came around and I graduated from college, the unemployment rate was heading for 11%: my classmates weren’t having as easy a time getting jobs, and so staying in school seemed attractive.
• Becoming a lawyer seemed to involve too much proofreading of documents, becoming a lab scientist seemed to involve too much moving of small volumes of liquid from one test tube to another...

Hoisted from 2012: Brad DeLong: Why Next to No Political Reaction to the Second Gilded Age?: Oh dear, that's a really tough question. So let me make it tougher by sharpening it and give it historical context. During the Gilded Age of the 1890s and 1900s you had strong political movements saying "something is going remarkably wrong with this, this isn’t the country we thought we were going to live in". The way that the historian—I'm blanking—Ray Ginger? Harley Shaiken: Yes, Ray Ginger. Brad DeLong: Ray Ginger put it in two absolutely brilliant books—Altgeld’s America and The Age of Excess—even the Republicans thought that they wanted to live in Abe Lincoln’s America, where when you are young you split wood into fence rails and go to law school at night and when you are middle-aged you become a lawyer and get rich and when you are old you enter politics and save the Union and free the slaves. They wanted to live in that kind of world, of upward mobility, in which opportunity is wide open even to the son of a penniless and not very successful rural farmer. But by 1890 they discovered that they weren’t living in Abe Lincoln's America at all...

Note to Self: Alan Greenspan and the Bush Tax Cut: Was Alan Greenspan in 2001 playing a subtle reputation-enhancing game—anxious to give testimony that the administration and its press lapdogs would spin as a green-light endorsement, but in which economists like me and financiers like Robert Rubin would be unable to find any sentence that was truly objectionable? Perhaps... Perhaps not...

Let's give the mike to Alan Greenspan, p. 220 ff.:

Bob Rubin phoned.... With a big tax cut, said Bob, "the risk is, you lose the fiscal discipline."... "Bob, where in my testimony do you disagree?"

Yes, "overeducation" is a thing: Ammar Farooq: The U-Shape of Over-Education? Human Capital Dynamics nd Occupational Mobility Over the Life Cycle: "The proportion of college degree holders working in occupations that do not require a college degree is U-shaped over the life cycle and that there is a rise in transitions to non-college jobs among prime age college workers...

Daniel Little: Social Mobility Disaggregated: "Valuable contribution from the research group around Raj Chetty, Nathan Hendren, and John Friedman... on... neighborhood-level social mobility.... Children born in Highland Park, Michigan earned an average individual income as adults in 2014-15 of $18K; children born in Plymouth, Michigan earned an average individual income as adults of $42K...

https://www.icloud.com/keynote/0GHqV3TinhaI6-9xChQ1a0R5Q#DevEng_215_Slides

Note to Self: The Song of Everlasting Sorrow and Historical Patriarchy: I was reading, as one does—I do not remember why I was reading this, however—an English translation_ of poet, landlord, scholar, bureaucrat, drunkard Bai Juyi's Song of Everlasting Sorrow. And I was struck by four short lines:

The overturning of the natural order as a consequence of the love of Emperor Xuanzong for Lady Yang Guifei was so great that all cross the empire parents wished for girl- rather than boy-children...

This struck me as having obvious bearing on my ["Historical Patriarchy"][] lecture...

As Michael Kades writes, “the stakes are much higher than an ideological battle or technical adjustments to a legal regime” here. We need to understand how anti-trust practice affects the degree of monopoly in the United States and Hal monopoly effects equitable growth and societal well being. We do not. I think that attempting to understand these two issues is the most important analytic issue for policy relevant economic research in the United States today: Michael Kades: Why market competition matters to equitable growth: "At first glance, competition in the U.S. economy may seem far afield of the topic of equitable growth.... What could antitrust enforcement have to do with maintaining a healthy economy?...

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.

I find Corey Robin smart most of the time. I find him annoyingly and profoundly stupid some of the time. Why? Because of occasional but stubborn blindnesses to very important parts of recent history and, indeed, very important parts of the world in which he lives—what seems to me a willful, trollish blindnesses.

For example, his piece in the New York Times last week. It really could have used some proper editorial attention it did not get: The examples presented of what is wrong with "the market" are simply... not examples...

Robin writes of "the anxious parent, desperate not to offend the insurance representative on the phone, lest he decree that the policy she paid for doesn’t cover her child’s appendectomy". But that is not a problem with "the market": that is a problem with bureaucracy. National health systems face the same problems and make the same kinds of decisions with respect to "medical appropriateness" as do private insurers.

Robin writes of freedom from "the need to smile for the sake of a sale". But that is not a problem with "the market": that is a problem with the need we have for a complex division of labor in order to be a rich society, in the context of the very human fact that people will not be eager to deal with you as a cooperative partner if you are a misanthropic grouch.

The market provides a partial way around the unfreedoms generated by institutions of bureaucratic organization and social cooperation. The market—if and only if you have wealth—allows you to be a misanthropic grouch and still get people to cooperate with you. The market—if and only if you have wealth—allows you to avoid having to work to make the gear-wheels of bureaucracy turn and yet still gain access to resources. It is certainly the case that if people are poor then the market does them no good at all. It cannot, then, be a way around bureaucracy or norms of social agreeableness. The market pays attention to the wealthy and only the wealthy. But the problem then is one of poverty—that we have managed to arrange a very wealthy society in such a way that it has a lot of not-wealthy people in it.

Contrary to what Robin claims, utopia is indeed the liberal dream of freedom plus groceries—with "groceries" standing in for enough wealth to route yourself around the unfreedoms created by bureaucracy and by your own misanthropic nature when they bind too tightly. The problem is not "the market" or "capitalism": Corey Robin: The New Socialists: "Under capitalism, we’re forced to enter the market just to live...

How George Borjas p-hacked his way to his conclusion that immigrants have big negative effects on native-worker wages: Jennifer Hunt and Michael Clemens: Refugees have little effect on native worker wages: "Card (1990) found that a large inflow of Cubans to Miami in 1980 did not affect native wages or unemployment...

Assessing the China Shock: I enter into a conversation between Noah nd Larry to give my views:

Noah Smith: An easy way to reconcile @de1ong and @joshbivens_DC on trade is to see the China Shock (and thus China's entry into the WTO) as sui generis http://www.bradford-delong.com/2018/08/eg-it-has-always-seemed-to-me-that-the-sharp-josh-bivens-is-engaging-in-some-motivated-reasoning-here-1-_putting-pen-to-.html

Larry Mishel: What I don't like about the 'shock' terminology is that the damage to jobs and wages are permanent, not a temporary phenomenon. One can argue...

Robert C. Allen, Jean-Pascal Bassino, Debin Ma, Christine Moll-Murata, and Jan Luiten van Zanden (2005): Wages, Prices, and Living Standards in China, Japan, and Europe, 1738-1925: "'The difference between the money price of labour in China and Europe is still greater than that between the money price of subsistence; because the real recompence of labour is higher in Europe than in China.' –Adam Smith, Wealth of Nations, 1776, p. 189...

In retrospect, this from the usually-reliable Karl Smith and Brandon Arnold looks really, really, really awful, no?

But they really should have known better: Anyone who goes the extra mile to give the version of Kevin Hassett on display these days the benefit of the doubt is likely to wind up naked on the Moon. That, I think, is the real lesson here—shading your thoughts to think more highly of Kevin these days either out of comity or because you think he is broadly on your policy side will put you in the same position as those who surrender their dignity to Donald Trump: Karl Smith and Brandon Arnold: Kevin Hassett’s Defense of Tax Reform is Right on Point: "The Tax Policy Center... had recently issued a report suggesting that the “Big Six” tax-reform proposal would add nearly $2.4 trillion to the budget deficit over the next ten years, raise taxes on many upper-middle class households, and slash taxes for the top 1 percent. Mr. Hassett was invited to respond to the report. His remarks were, unsurprisingly, unsparing. After all, the government’s top economist shouldn’t sit quietly while premature invectives are launched at the administration’s signature fiscal proposal...

Hoisted from them Archives: Should Kansas's (and Missouri's) Future Be "a Lot More Like Texas"?: That is one of Kansas Governor Sam Brownback's constant applause lines—that he wants Kansas to be a lot less like California and a lot more like Texas.And so I was reading Bryan Burrough on Erica Grieder: ‘Big, Hot, Cheap and Right’: What America Can Learn from the Strange Genius of Texas.... Burrough applaud's Erica Grieder's "counter[ing] much of this silliness" that "Texas is corrupt, callous, racist, theocratic, stupid, belligerent, and most of all, dangerous.” The problem is that three paragraphs later Burrough is writing of how:

Texas’s laissez-faire mix of weak government, low taxes and scant regulations is deeply rooted in its 1876 Constitution, which was an attempt to vehemently dismantle an oppressive post-Civil War government of Radical Reconstructionists…

What was most "oppressive" about the Radical Reconstructionists? It was, of course, that they thought African-Americans should vote, and enabled them to do so.

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?"

Once the people—the male people at first, and the white people overwhelmingly, and the adult people always, that is—had the vote, what were they going to do with it?

5.2.1: Inequality in the First Gilded Age: The coming of (white, male) democracy in the North Atlantic was all mixed up with the coming of modern industry—the move out of agriculture and into industrial and service occupations—the coming of the modern city (the move from the farm to someplace more densely populated), and the coming of heightened within-nation income inequality.

We really do not know what effect a trade war would have on the global economy. All of our baselines are based off of what has happened in the past, long before the age of highly integrated global value chains. It could be small. It could be big. The real forecast is: we just do not yet know: Dan McCrum: Trade tension and China : "The war on trade started by the Trump administration is percolating through the world's analytical apparatus.... Tariffs could be bad for the global pace of economic activity, but only if the economic warfare escalates...

Aspen: Security: Nine Reactions to the Four Ex-National Security Advisors Panel: Most important:

• Joe Nye—and the others—should not have pretended that that the Trump Administration has a strategy, and is some sort of unitary actor. It doesn't. It isn't. For the right analogies, we need to reach back to the Tudor or Stuart dynasties—a King Charles II Stuart without the work ethic, mostly concerned with his mistresses, his parties, and deference to himself; easily bribed by the King of France, &c.; plutocrats maneuvering and using access to advance their interests; other kleptocrats manuevering and using access to advance their interests; and a few technocrats—a Pepys, a Godolphin—trying to hold things together. Graham Allison's three analytical perspectives—rational actor-organizational process-bureaucratic politics—are not sufficient to understand this thing. We need a fourth perspective: weak chaos monkey king, perhaps?...

And here are eight more:

• A common thread in a bunch of the initial comments here was: valuation and assessment...: We need to settle on a single set of global societal indicators that will have the mindshare that the market financial and other indicators have. I have no answers. I only have a plea for coordination...

• Introducing considerations of strategy into development is a very sharp two-edged sword...: The Cold War focused the attention of the entire American government on making the redevelopment of northwest and the development of southwestern Europe and of East Asia... a success...

• I remember pressing the Treasury International people on how better funding and more substantive independence for multilateral institutions ought to be a much higher priority...: And then, lo and behold, Bob Dole unleashes Al D'Amato to make trouble about the Mexican financial crisis and the fallout from that leaves the US hobbled with 1997-8 comes around...

• The extraordinary disjunction between the two acts of Chiang Kai-Shek's career...: The second act—Chiang Kai-Shek and his Guomindang as rulers of Taiwan after 1949—is one of the most glorious episodes of economic development...

• The farmer and the cowman can be friends only when there is a matriarch with a shotgun in the picture...: One reading of world history is that a huge amount of the civilizing process is accomplished when people's mothers and aunts gain social power...

• Aspen, CO: In the end, starting up the trail only 18 hours after landing in Aspen was probably a mistake...

Aspen: Development Finance: A common thread in a bunch of the initial comments here was: valuation and assessment. This is a piece of a much broader problem. We have absolutely powerful measures for assessment as far as things that go through the market. We see them every hour on practically every news channel: GDP, employment, wages, equity values, interest rates. We have no similar set of indicators that are brought in front of our eyes and injected into our consciousnesses with respect to any of the broader societal welfare measures that we really want to advance—and the things that we really want Mars to advance. I do not know what the solution to this is. Clearly it is not another report with another set of indicators to add to the cacophony. But I do think we need to settle on a single set of global societal indicators that will have the mindshare that the market financial and other indicators have. I have no answers. I only have a plea for coordination...

Aspen: Development Finance Introducing considerations of strategy into development is a very sharp two-edged sword. On the one hand, the Cold War focused the attention of the entire American government on making the redevelopment of northwest and the development of southwestern Europe and of East Asia—Korea and Taiwan and Japan—a success. That was of enormous value in making the US development efforts the greatest successes we have ever had.

In addition, as Barney Frank once said when my colleague Barry Eichengreen was testifying in front of him, the Cold War was worth 60 votes in the House of Representatives. Now we have a much harder row to hoe.

On the other hand, there have been many times over the past 70 years in which strategic logic has overcome development logic. And there are dangers in poisoning the entire effort to the extent that strategic logic takes on too large a place. Walt Whitman Rostow had John F Kennedy primed up talk to Sukarno about all the wonderful things the US was going to do for Indonesian development. But Suharto—sorry, Sukarno, Sukarno, Sukarno—was interested in two and only two things: Irian Jaya, and free cash flow that he could use to reward elements of his political coalition...

James Scott and Friedrich Hayek: My review of James Scott (1998), Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed (New Haven: Yale University Press: 0300070160):

I. Introduction

There is a lot that is excellent in James Scott's Seeing Like a State.

On one level, it is an extraordinary well-written and well-argued tour through the various forms of damage that have been done in the twentieth century by centrally-planned social-engineering projects—by what James Scott calls 'high modernism' and the attempt to use high modernist principles and practices to build utopia. As such, every economist who reads it will see it as marking the final stage in the intellectual struggle that the Austrian tradition has long waged against apostles of central planning. Heaven knows that I am no Austrian—I am a liberal Keynesian and a social democrat—but within economics even liberal Keynesian social democrats acknowledge that the Austrians won victory in their intellectual debate with the central planners long ago.

If you take the appropriate measure of labor market tightness to be the prime-age employment rate, there is no wage growth puzzle. So why does the Federal Reserve take the unemployment rate as the relevant labor market tightness variable and wring its hands about the wage-growth puzzle, rather than taking the prime-age employment rate as its relevant labor market tightness variable? It is a mystery: Adam Ozimek: Wage growth is right on target folks!:

I messed this up the first time. And I apologize to Stefania. Let me see if I can fix it: The very sharp Stefanie Stantcheva gets trapped into linguistic quicksand, and disappears into the mire. Her Let me disagree with the very sharp Stefanie Stantcheva's statement that "it’s good to be clear... whether you are making an efficiency argument about the reaction to taxes or expressing a social value judgment..." is totally incoherent: so-called "efficiency" arguments rest on a social value judgment—that the existing distribution of wealth corresponds to utility and deservingness, so that reducing the areas of the economy's Harberger triangles would raise societal wellbeing, holding the distribution of wealth constant, while increasing the areas of the economy's Harberger triangles would raise societal wellbeing, holding the distribution of wealth constant. I think that is wrong: the Harberger triangles' changes go to and come from people with different marginal utilities of wealth. Thus whether the total of behavioral responses to balance-preserving fiscal interventions raise or reduce societal wealth, holding the distribution of wealth constant, hinges on who the Harberger triangles go to or come from. If the people they go to and come from do not have the same marginal utility of wealth, then:** "efficiency" can be inefficient.

And to claim the the current distribution of wealth corresponds to utility and deservingness ought to be a lie too big for anyone to swallow. **It's not anything Stefanie Stantcheva would ever say—rather the reverse—but it does implicitly underpin the belief that the sum-of-the-areas-of-the-economy's-Harberger-triangles is meaningful.

I think all these messes are potentially avoided by working in utility space rather than wealth space from teh get-go. But what do I know?

And, otherwise, her twitter thread is totally great: Stefanie Stantcheva: "Optimal Capital Taxation in 7 Tweets: "Simplifying a lot, but here is the core logic...

Ann Marie Marciarille: David Slusky on The Impact of the Flint Water Crisis on Fertility: "K.U.'s David Slusky gave an interesting talk on "The Impact of the Flint Water Crisis on Fertility".  A 4.9% decrease in birth weight is hard to ignore...

A brilliant 10 minute talk on economics as it really is—or should be: Trevon Logan: Ohio State University Masterminds: "Think of the first questions you ask someone when you meet them: 'What do you do?'...

Current Versions of Chapters 1-3:

1. DRAFT: My Grand Narrative
2. DRAFT: Themes
3. DRAFT: Making a Global Economy and Society, 1870-1914

Outtakes and Deleted Scenes:

• The Circa-1870 Disjunction Between Production and Distribution: A Possible Outtake from "Slouching Towards Utopia?: An Economic History of the Long 20th Century"
• Why Was the 20th Century Not Another Chinese Century?
• Imprisonment by Malthus and "Negative Liberty"

No, the Trump administration is not very competent at achieving its stated goals. But that does not mean that the Trump administration is not doing enormous harm under the radar by simply being its chaos-monkey essence. The smart David Leonhart tries to advise people how to deal with this: David Leonhardt: Trump Tries to Destroy the West: "[Trump's] behavior requires a response that’s as serious as the threat...

Do I have space for this in the ms.? Or do I need to go into kill-my-darlings mode?

3.1: The ca.-1870 Disjunction Between Production and Distribution

In the world as it stood in 1870 there was seen to be a huge disjunction between the growing effective economic power of the human race and the proper distribution of this potential wealth to create a prosperous and happy society. That science, technology, and organization could wreak miracles had become commonplaces. Best friends Karl Marx and Friedrich Engels probably put it best in 1848:

The business class, during… scarce 100 years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to [hu]man[ity], machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?…

Don't like the others? I have my neoliberal party card:

Cedar Brook Notes: LYes, the world as a whole has become more equal over the past generation. This is overwhelmingly because two very large countries—India and China—have harvested a great deal of the low-hanging fruit of development because of better policies. If you think they will continue to do so, well and good: then you can be optimistic. If you think they will or may well not, then globalization and the rise of a global overclass augur for a future in which the rise of the Second Gilded Age is truly global rather than nationally American.

Comment of the Day: Interesting from Graydon. But I do not see textiles as the problem. Yes, in the Odyssey Penelope, Kalypso, the 50 maidservants of Alkinous, Kirke, and the nymphs who are called Naiads are all spoken of as at their looms. Yes, the mother of Nausikaa, the 50 maidservants of Alkinous (again), Penelope (again), and the maidservants of Odysseus are all spoken of as at their spindles. Yes, in the Iliad Khryseis, Helen, Andromakhe, "a woman" are all spoken of as at their looms. yes, Andromakhe (again), "the fair spinster", and Kritheis are all spoken of as at their spindles. Textile work is (or does not have to be) not drudgery—it is (or can be) a very social activity, for to an experienced seamstress or spinner of weaver the cognitive load of the task is not large enough to discourage conversation.

Instead, I blame the Yamnaya: the Aryans, the Indo-Europeans, the Masters of the sword, the wheel, and the bow, who spread fire and sword and the chariot and the steed from Gibraltar and Cape Finisterre to the Deccan and even to the upper reaches of the Yellow River: Graydon: Feminism in the Long 20th Century: An In-Take from "Slouching Towards Utopia: The Economic History of the Long 20th Century": "If you look at the DNA information and compare it to historical timelines, patriarchy comes in after a period of clan-based warfare that wipes out most Y-chromosome lineages and does nothing to the diversity of X-chromosome lineages...

With November 8, 2016, the Long 20th Century comes to an end. It began in 1870, when the combination of the development of the industrial research lab, the screw-propellered iron-hulled steamship, the submarine telegraph network, and America's openness to (European) immigration brought the world out of the age of gunpowder empires and set it on the escalator to prosperous modernity. It ended in 2016, when the U.S. abandoned its role as Kindlebergian hegemon and as the, at least in its own mind, City Upon a Hill.

So it is time to finish my twentieth century history book, which has been hanging fire for two decades now as the 20th Century seemed to refuse to stop—as things kept happening that seemed to be the continuation of 20th Century processes.

Right now I am working on Chapter 2: Themes. I am making a hash of it. This part of it does not say what I want it to say, and I am not sure that what I want to say is what I should say. Advice, anybody?

2.2: The Arrival of Feminism

Department of "Huh?" General Motors Bailout Edition: Why oh why can't we have a better press corps? Why oh why do we watch the New York Times in a death spiral? Why does it publish Roger Lowenstein telling us that: "Extravagant Pensions Are Killing General Motors.... G.M. acknowledged in its most recent annual report that from 1993 to 2007 it... has been sending far more money to its retirees than to its owners..." When GM offered the UAW more lavish benefits, it did so in order to induce the UAW to accept less generous wages. The money that GM paid in the 1990s and 2000s to fund pension and retiree health benefits was offset by wages that GM did not have to pay in the 1960s, 1970s, and 1980s. Lowenstein appears to want to live in a world in which GM (a) gets a break on its wage costs in the 1960s, 1970s, and 1980s; and can do so (b) without having to pay any money to fund pensions in the 1990s and 2000s. I don't want to live in Roger Lowenstein's world.

Washington Post Death Spiral Watch: Words fail me: "Gerson: The Immorality of Food Stamps". Why oh why can't we have a better press corps?

The Transparent Society: Distributed global surveillance: "Spotted Brad DeLong wearing a "Jedi Masters for Barack Obama" t-shirt..."

An argument that I think is true—and important—but that I have never been able to get anybody else to pay attention to. Maybe I have just made an algebra mistake, and people are silent because they would feel embarrassed if they pointed that out. But I do not think so:

J. Bradford DeLong (2008): Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: One of the basic building blocks of the political economy of international trade is the Stolper-Samuelson result: the shift from no trade to free trade is good for the owners of the abundant factor of production, but bad for the owners of the scarce factor of production. This accounts for why support for free trade tends to be stronger in democratic than in authoritarian regimes. The scarce factor of production tends to be, well, scarce. Hence not many potential voters own a lot of it. Hence the political support for trade protection in any system of government that gives weight to broad, as opposed to strong, preferences will tend to produce trade liberalization.

In the United States, and to some degree in western Europe, things are widely thought to be different—or so the argument goes, The relatively abundant factors of production are things like capital, organization, and technology, which have concentrated ownership. The scarce factor of production is labor. Hence free trade tends to be politically unpopular because it is not in the interest of the majority of potential voters.

This argument of an inconsistency between free trade and the well-being of the majority of potential voters rests substantially on the two-factor example of the Stolper-Samuelson result. It does not fare too well when we generalize to a situation in which there are a number of different factors—even if the ownership of the abundant factors of production is very concentrated indeed....

For λ very close to one, the critical φ* is also close to one. Trade among countries with small differences in relative proportions of the trade-relevant factors of production is good only for households that hold a greater than proportionate share of the initially abundant factor... households for which φ > 1. But as λ moves away from 1 things change. Efficiency and productivity gains grow faster than do the income redistributions from changing factor prices. Even households where the share of ownership of the initially-abundant factor is significantly less than proportionate can benefit. In the limit as N becomes large, the condition on φ for free trade to benefit the household becomes: φ* > ln(λ)/(λ−1)... Read MOAR

#delongpapers
#politicaleconomy
#globalization
#free trade

Brian Fennessy: "Gavin Wright keeping the slave-capitalism debate lively: slavery was profitable to slaveholders but it kept the region underdeveloped and claims about its centrality to US Econ growth are exaggerated! #DukeMonumentsSymposium… https://t.co/un2nRZZ6jv..."

Neoliberal: "'We have to build more housing. We have to build more housing. We have to build more housing, and I will be relentless in my pursuit to get the job done.' 😍😍😍😍😍😍" https://twitter.com/ne0liberal/status/1007855832762109952 "London Breed just made history as San Francisco's mayor-elect..."

There were "economists" last fall telling us that the Trumpublican tax cut was going to raise real wages in America substantially and soon: Robert J. Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, John. B. Taylor; Larry Lindsey and Douglas Holtz-Eakin; James Miller, Charlie Calomiris, Jagdish Bhagwati; Kevin Hassett; Greg Mankiw; and the others. The people who last fall were telling us that the Trumpublican tax cut was going to raise wages by boosting growth by a number they decided was 0.4% per year—get us an extra 80 billion dollars of prosperity each year growing over time—all did so by pointing to the investment channel: (a) the tax cut would make investment more profitable, (b) we would then have about 800 billion a year of extra investment, (c) the added production made possible by that investment would be 80 billion a year, (d) and eventually wages would rise. (a) has happened. (b) was supposed to take effect quickly—this year. But (b) has broken down: business investment "should" be jumping from 13% to 17% of total production. It is not. So far it has jumped from 12.4% to 13.1%—one-sixth of the jump we were promised:

This comes as no surprise: Paul Krugman: Tax Cuts and Leprechauns: "The immediate effect of cutting the corporate tax rate... a big fall in taxes collected from corporations...

Well, since capitalism delivers higher real wages than any other system we know about, how can you oppose it root-and-branch except by somehow claiming it is fruit from a poisoned tree?: Matthew Yglesias: "I would like to read an intellectual history of how exactly “slavery was a boon to economic development” became the leftist position, and “actually, slavery is a retrograde anti-growth system as well as an immoral one” (Marx’s view!) became the neoliberal sellout view:"

• Alex Bell et al.: Who becomes an inventor in America? The importance of exposure to innovation: "Using deidentified data on 1.2 million inventors from patent records linked to tax records...

• More and more it looks as though minimum wage laws—and unions—are positive second-best interventions that raise societal wellbeing by blunting the impact of employer monopsony: Kevin Rinz and John Voorheis: The Distributional Effects of Minimum Wages: "States and localities are increasingly experimenting with higher minimum wages in response to rising income inequality and stagnant economic mobility...

• If you did not read this over at Equitable Growth Value Added a year and a half ago when it came out, you should go read it now: Emmanuel Saez (2016): Taxing the rich more—evidence from the 2013 federal tax increase: "In 2013, a surtax on high earners was levied to help pay for the Affordable Care Act at the same time as the 2001 tax cuts for high-income earners that were signed into law by President George W. Bush expired...

Not quite true. It is what the Left New Dealers' consensus was. They had lost power in the U.S. But enough of them made it across the Atlantic to do a lot of good: Daniel Davies: "If you like the German social, political and economic model, it's worth remembering that what it really represents is the consensus of American opinion on how to build a stable non-Communist polity if you were starting from scratch, circa 1945..."

#shouldread

John Holbo used to talk about “Dark Satanic Millian Liberalism“. But what he never said was that it has its origins in John Stuart Mill himself.

Here are three passages from Principles of Political Economy I find interesting:

• A Spontaneous Order: Women and the Invisible Fist: RadGeek produces what I can only call the intellectual love child of Susan Brownmiller and Friedrich Hayek. Extremely well done: "When a large enough minority of men choose to commit widespread, intense, random acts of violence against a large enough number of women. And it can happen quite naturally without the raping men, or the protecting men, or the women in the society ever intending for any particular large-scale social outcome to come about. But what will come about, quite naturally, is that women’s social being—how women appear and act, as women, in public—will be systematically and profoundly circumscribed by a diffuse, decentralized threat of violence. And, as a natural but unintended consequence of many small, self-interested actions, some vicious and violent (as in the case of men who rape women), some worthwhile in their origins but easily and quickly corrupted (as in the case of men who try to protect women from rape), and some entirely rational responses to an irrational and dangerous situation (as in the case of women who limit their action and seek protection from men), the existence and activities of the police-blotter rapist serve to constrain women’s behavior and to become dependent on some men—and thus dependent on keeping those men pleased and serving those men’s priorities—for physical protection from other men. That kind of dependence can just as easily become frustrating and confining for the woman, and that kind of power can just as easily become corrupting and exploitative for the man, as any other form of dependence and power. (Libertarians and anarchists who easily see this dynamic when it comes to government police and military protection of a disarmed populace, shouldn’t have any trouble seeing it, if they are willing to see it, when it comes to male 'protection' of women)..."

1870: The Real Industrial Revolution?:: The most important fact to grasp about the world economy of 1870 is that the economy then belonged much more to its past of the Middle Ages than to its future of—well, of us, and what our successors eventually decide they want to use as an overarching term with which to label our age of fuel, machine, and digit.