https://www.icloud.com/keynote/05yW08oQvx5uDpAZcxmObZsZA
https://github.com/braddelong/public-files/blob/master/deveng-215-2020-10-22.pptx
https://www.bradford-delong.com/2020/10/disaster-capitalism-deveng-215-2020-10-22.html
This incorporates-by-reference the readings & lectures from week 9 of Joeva Rock's Fall 2020 instantiation of GPP 115...
Continue reading "Disaster Capitalism: DevEng 215 2020-10-22" »
https://www.icloud.com/keynote/0IS373XctkfIDo6Py2-Upe9pQ
https://github.com/braddelong/public-files/blob/master/deveng-215-2020-10-08.pptx
This incorporates-by-reference the readings & lectures from week 7 of Joeva Rock's Fall 2020 instantiation of GPP 115...
Continue reading "Philanthrocapitalism: DevEng 215 2020-10-08" »
DeLongToday: We 10:00/07:00 EDT/PDT http://delongtoday.com
Continue reading "DeLongToday: Warning Clip from Last Week" »
What can we say about the economy? That depends on the course of the coronavirus plague. So what can we say about the coronavirus plague? We can say, it turns out, little that is good. (22 minutes).
Continue reading "COVID & the Economy: As of 2020-09-09—Lecture" »
Why would one want to “think like an economist”?: What is “thinking like an economist”? Cost-benefit, opportunity cost, system equilibrium, marginality. This turns out to be useful for thinking about the economy. (Other things too: but mostly the economy.) But Dasgupta has a different take, a game theorist's take...
.#berkeley #cognition #economics #highlighted #lecture #rhetoric #2020-08-29
The “general glut”: What people used to talk about, instead of recession and depressions. It focuses on what is going on: excess supply in pretty much all of the markets. Back Up to 1803: Jean-Baptiste Say argued back then that a “general glut” was a metaphysical impossibility: “If certain goods remain unsold, it is because other goods are not produced; and that it is production alone which opens markets to produce.... Whenever there is a glut, a superabundance, [an excess supply] of several sorts of merchandize, it is because other articles [in excess demand] are not produced in sufficient quantities...” By 1830 Say had changed his mind...
.#berkeley #economics #highlighted #lecture #macro #monetaryeconomics #monetarypolicy #optional #2020-08-29
"Data Science" & "Thinking Like an Economist":
Andy Matuschak would approve of how Niccolo Machiavelli reads:
Niccolo Machiavelli (1513): Letter to Francesco Vettori https://github.com/braddelong/public-files/blob/master/readings/letter-machiavelli-vettori.pdf
.#berkeley #cognition #economics #education #highlighted #notetoself 2020-08-24
When the very sharp Eric Hilt writes of "Fogel and Engerman’s analysis of slavery as...brutal but efficient", I wince. "Efficiency" is an engineering term, meaning: achieving maximum productivity with minimum wasted effort or expense. A steam boiler powering the lifting of ore out of a mine that converts only 55% of the stored chemical energy in the coal burned into the extra gravitational potential energy of the ore is 55% efficient. The other 45% of the energy is waste heat. An efficient process is one that produced little waste. In striking contrast with an efficient engine that produces little in the way of waste products, slavery produced enormous amounts of waste: death, family separation, pain, overwork, imprisonment, unfreedom. You can call slavery "brutal, but effective in producing profits for the slavelords", and I will not quarrel: that is very true. But please don't call slavery "efficient". To do so makes a normal person think that you are an empathyless moron, or neo-Confederate-adjacent.
OK. So why does Eric Hilt, who is neither an empathyless moron nor Neo-Confederate-adjacent approvingly cite Fogel and Engerman for their "analysis of slavery as... brutal but efficient"? Because economists redefined "efficient" in a particular way. Economists called a situation "efficient" in which there were no uncompleted win-win market exchanges of commodities for money. And, indeed in slavery, there were no uncompleted win-win market exchanges of commodities for money. American slaves (in contrast to at least some Roman slaves) had no chance or opportunity to buy their freedom. So it was efficient. American slavery would only have been inefficient if masters could have (a) freed their slaves, (b) charged them a market rent for their farms, and (c) collected more in rent than they had previously extracted at the point of the lash.
Now Adam Smith thought that that was in fact the case:
The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Wherever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freemen.... The profits of a sugar plantation... are generally much greater than those of any other... and the profits of a tobacco plantation, though inferior to those of sugar, are superior to those of corn.... Both can afford the expense of slave cultivation but sugar can afford it still better than tobacco...
I always thought that Fogel and Engerman, in arguing that American slavery was "efficient", were in fact arguing against neo-Confederate-adjacents who lamented the "tragedy" of the Civil War. Their adversaries had thought that what the South needed was not Sherman commanding Thomas and his Army of the Cumberland, Schofield and his Army of the Ohio, and McPherson and his Army of the Tennessee, but rather forebearance and persuasion. That would, in the minds of these adversaries, lead to the diffusion of commercial values into the south, and then the slavelords would realize that they could make more money by going full-throttle toward the market economy, freeing their slaves, and becoming normal landlords than by the continuation of their neo-feudal fantasies.
Adam Smith (and those who followed him in seeing slavery as an expensive luxury chosen only by a ruling class in love with its image of itself as made up of dominating masters) were, I think, wrong—and the work done in Time on the Cross is a good part of what, I think, demonstrates that they were wrong.
But there is still this problem with the word "efficiency". It would be innocuous if you were talking only to economists. It would be innocuous if you wrote, instead "efficiency-in-economese". But writing that slavery is "efficient" when your audience includes any people who are in any way not full-fledged economists expecting you to speak in economese conveys the false message that American slavery was not very wasteful. And yet what is the destruction of humans' autonomous lives that is the core of slavery as an institution and practice but immense waste?
Eric Hilt: Slavery, Power and Cliometrics: A Brief Comment on Rosenthal https://economic-historian.com/2020/08/slavery-power-and-cliometrics/: ‘Rather than attempt to comment on all of Rosenthal’s paper, here I would like discuss some insights from the literature on Time on the Cross that relate to some parts of it.... Fogel and Engerman’s analysis of slavery as a brutal but efficient labor system clearly has echoes in some of the new books by historians on slavery...
Note to Self #tickler: The works & relevance of A.C. Pigou:
Ian Kumekawa (2017): The First Serious Optimist: A. C. Pigou and the Birth of Welfare Economics https://www.amazon.com/Ian-Kumekawa-ebook/dp/B071R54415/...
Ian Kumekawa (2020): We Need to Revisit the Idea of Pigou Wealth Tax https://github.com/braddelong/public-files/blob/master/readings/article-kumekuwa-pigou-wealth-tax.pdf...
Arthur Cecil Pigou (1916): The Economy & Finance of the War: Being a Discussion of the Real Costs 0f the War & the Way in Which They Should Be Met https://github.com/braddelong/public-files/blob/master/readings/book-pigou-war-finance.pdf...
Arthur Cecil Pigou (1919): The Burden of War & Future Generations https://github.com/braddelong/public-files/blob/master/readings/article-pigou-burden-of-war.pdf...
Arthur Cecil Pigou (1920): A Capital Levy & a Levy on War Wealth https://github.com/braddelong/public-files/blob/master/readings/book-pigou-wealth-tax.pdf...
Arthur Cecil Pigou (1920): The Economics of Welfare https://github.com/braddelong/public-files/blob/master/readings/book-pigou-economics-of-welfare.pdf...
Arthur Cecil Pigou (1940): The Political Economy of War https://github.com/braddelong/public-files/blob/master/readings/book-pigou-war.pdf...
Arthur Cecil Pigou (1946): Income: An Introduction to Economics https://github.com/braddelong/public-files/blob/master/readings/book-pigou-income.pdf...
Arthur Cecil Pigou (1947): A Study In Public Finance https://github.com/braddelong/public-files/blob/master/readings/book-pigou-public-finance.pdf...
#economics #equitablegrowth #inequality #politicaleconomy #notetoself #moralphilosophy #tickler #2020-06-07
John Maynard Keynes: How Much Does Finance Matter https://github.com/braddelong/public-files/blob/master/readings/article-keynes-finance-matter.pdf: ‘Where we are using up resources, do not let us submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income, with no other denominator of values but this. I should like to see that war memorials of this tragic struggle take the shape of an enrichment of the civic life of every great centre of population. Why should we not set aside, let us say, £50 millions a year for the next twenty years to add in every substantial city of the realm the dignity of an ancient university or a European capital to our local schools and their surroundings, to our local government and its offices, and above all perhaps, to provide a local centre of refreshment and entertainment with an ample theatre, a concert hall, a dance hall, a gallery, a British restaurant, canteens, cafes and so forth. Assuredly we can afford this and much more. Anything we can actually do we can afford. Once done, it is there. Nothing can take it from us. We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life?…
Continue reading "John Maynard Keynes: How Much Does Finance Matter?" »
2017: Friedrich von Hayek & the Market Algorithm (with A. Kirman and R. Sethi) https://github.com/braddelong/public-files/blob/master/readings/article-bowles-hayek.pdf...
#cognition #economics #notetoself #moralphilosophy #2020-05-28
Continue reading "Question to Self: Are These Sam Bowles's Five Greatest Works?" »
Universities will make a hash of moving online unless we answer the question: How do we learn? This video is the leadoff to a module that suggests some possible answers. We also need to know what economics is—and how it is good for. And the module that follows this video intro suggests some possible answers to those questions also.
(No: the module is not yet written up...)
Continue reading "Intro: How Do We Learn (Online Especially)?" »
Economics's woman-underrepresentation problem appears due to a drip, drip, drip, drip of small factors everywhere along the pipeline. Here Nagore Triberri and coauthors find that there is a substantial slice of papers of high enough "quality" (as measured by future citations) to get published that do not get published because they are written by women. Yet referees assess papers written by men and women similarly. And editors do not seem biased in their use of referees:
David Card, Stefano DellaVigna, Patricia Funk, and Nagore Iriberri: Gender Neutrality in Economics: The Role of Editors and Referees https://voxeu.org/article/gender-neutrality-economics-role-editors-and-referees: 'Women economists are under-represented across the discipline, from university departments to academic conferences and publishing houses. This column focuses on the editorial process and asks whether the referees and editors of four leading economics journals made gender-neutral publishing decisions between 2003 and 2013. The findings suggest that the gender of the referee does not affect the valuation of a paper and that editors are gender-neutral in valuing advice from referees. However, papers written by women appear to face a higher bar in the quest to be published...
#discrimination #economics #gender #noted #universities #2020-05-13
4149 words: https://github.com/braddelong/public-files/blob/master/lecture-east-asia-text.pdf
East Asia was on the downside of the Malthusian cycle when western Europe erupted into the eastern Pacific in the 1800s: populous, with many ingenious and efficient non-machine technologies for squeezing output out of very limited resources, but desperately poor. “The West” brought machine technologies and the global market. It also brought a measure of contempt for east Asia. Nearly all western observers thought the idea that the Mysterious East might catch up to the north Atlantic in any reasonable historical timeframe was absolutely ludicrous.
Malthusian poverty meant no domestic middle-class to demand domestic manufactures, and productivity levels in Asia were hopeless as far as manufactured exports were concerned. The military and political power gradient vis-à-vis the north Atlantic meant no ability to impose tariffs, even had a domestic middle class on whose demand one might be able to build a community of engineering practice and progress existed. The lack of a powerful domestic bourgeoisie meant rule by princes for whom broad-based economic growth was simply not a priority. And in general a “Confucian” religious orientation meant that right moral attitude was more important than the rationalization of techniques and methods.
As Melissa Dale says: If we were sitting here in the 1950s, we would not have predicted anything like east Asia’s miracles.
Yet we have had four: first the early industrialization of Japan, then the extraordinary drive of Japan to global north status from 1950 to 1975, then the four east Asian tigers, and now coastal China.
All that surprises...
Continue reading "Lecture Notes: East Asian Miracles" »
3086 words https://github.com/braddelong/public-files/blob/master/lecture-inequality-text.pdf
The large populations and low levels of material wealth and agricultural productivity in China and India checked the growth of wages. Workers could be cheaply imported and employed at wages not that far above the physical subsistence level. Low wage costs meant that commodities produced in countries open to Asian immigration were relatively cheap. And competition from the Malaysian rubber plantations checked growth and even pushed down wages of the Brazilian rubber tappers as well. The late nineteenth century saw living standards and wage rates become and remain relatively low (although higher than in China and India) throughout the regions that were to come to be called the third world. And as wages in economies that were to become the global periphery were checked, the prospects for having a rich-enough middle class to provide demand for a strong domestic industrial sector ebbed rapidly.
As a result, the chain of causation went thus:
That, in a nutshell, is the story of the relative underdevelopment of the global south. It was not that globalization left the global south alone in the years before World War I. It was that globalization put it on a road that made its industrialization more difficult, even though the openness of world markets made it more prosperous in that pre-World war I half century seen rightly as a global El Dorado.
Continue reading "Lecture Notes: The Development of Underdevelopment and W. Arthur Lewis" »
The problem of dealing with the economic policy consequences of the current coronavirus public health emergency is best analyzed in two pieces: the Jubilee, and the Hunker Down.
What is the Jubilee? It happens after we have managed to get the virus under control, so that normal public health measures of (1) testing a random panel sample periodically to understand where we are, (2) testing the symptomatic, (3) tracing and testing their contacts, and (4) hospitalizing patients with serious illnesses can manage the situation as best as it can be managed.
Note: I say “managed” rather than eliminated. The extent of asymptomatic transmission means that this disease will not be eliminated. It will become endemic. The task is to delay until our virologists can work their miracles. The task is to delay so that the medical care system is not overwhelmed so that we can keep mortality from the disease at 1% rather than 5% or more.
Once the virus is under control—by June 1, say—we will want every job that existed on February 1 and every business that was running on February 1 to resume. We will want no business to have received a “bankruptcy shut down“ from the market system. We will want no worker to have a received a “you are not wanted“ signal from the market economy.
There is a side constraint on the Jubilee: whatever policies we adopt need to be crafted to minimize unjust enrichment. Perhaps the second biggest economic policy mistake committed by the Obama administration was that its policies to deal with the great recession were both inadequate out of the fear of being perceived to contribute to unjust enrichment, and yet somehow also managed to generate a huge amount of unjust enrichment for the financial sector.
Then there is the question of how to manage the Hunker Down. In the Hunker Down, social distancing needs to reach a level that reduces the caseload to what the medical system can currently handle, but should not be pushed far beyond that point. Beyond that point, the benefits of generating a situation in which our ICUs and emergency rooms have excess capacity are low and the costs are high. In the Hunker Down, as many people as possible need to be given financial incentives to move into new productive occupations that provide useful goods and services without disrupting social distance. And in the hunker down, everyone needs to receive the income flow they need to pay their bills.
Managing the Hunker Down and bringing the Jubilee are two separate problems that need to be designed and implemented separately. We need to think about both. We need to keep worries about bringing the Jubilee from damaging our ability to undertake the Hunker Down. We need to keep inplementing the Hunker Down from impairing our power to bring the Jubilee.
Continue reading "Dealing with Coronavirus: The Hunker Down and the Jubilee" »
14487 words https://github.com/braddelong/public-files/blob/master/lecture-inequality-text.pdf
Philosophers, of course, if there are any in the audience here, will have winced by now. Perhaps they will have done more than winced—although I did not see any philosophers rise and run, screaming, from the room.
I have drawn strong conclusions about how high and important a priority reducing inequality should be for making a good society by being a bad philosopher. Philosophers would presumably say that I should first be a good philosopher. They would say that only after having reached good philosophical conclusions should I then use those conclusions as a springboard to derive “oughts” for political economy.
The problem, of course, is that there is no agreement on what the good philosophical conclusions are.
I maintain that my bad philosophy is a very useful middle ground. I draw conclusions for society from it. As you decide on what your view of good philosophy is, you move from my bad philosophy to yours, and that movement will carry with it a move of your political economy conclusions from the baseline I have established to those that you will think best. You will start with my conclusions, and adjust them in light of the difference between my bad and your good moral philosophy. My bad philosophy thus provides you with a convenient basecamp from which you—with your good philosophy—can begin your climb of the mountain of truth...
Continue reading "Lecture Notes: Inequality" »
Continue reading "Bloomberg-BNN TalkIng Points on Economic Situation" »
Weekend Reading: John Maynard Keynes: On Speculation, from The General Theory of Employment, Interest and Money https://www.bradford-delong.com/2015/02/weekend-reading-john-maynard-keynes-the-general-theory-of-employment-interest-and-money-by-john-maynard-keynes-1.html: 'The professional investor is forced to concern himself with the anticipation of impending changes, in the news or in the atmosphere, of the kind by which experience shows that the mass psychology of the market is most influenced. This is the inevitable result of investment markets organised with a view to so-called ‘liquidity’. Of the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity, the doctrine that it is a positive virtue on the part of investment institutions to concentrate their resources upon the holding of ‘liquid’ securities. It forgets that there is no such thing as liquidity of investment for the community as a whole. The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment to-day is ‘to beat the gun’, as the Americans so well express it, to outwit the crowd, and to pass the bad, or depreciating, half-crown to the other fellow...
why would one want to think like an economist? What is thinking like an economist—rather than like a sociologist (looking for the webs of human connections and common belief), a political scientist (looking at power and at authority both given and taken), or a historian (looking at origins and development)? One wants to think like an economist because it is an especially useful way of thinking about the economy. What, then, is the economy? And why is “thinking like an economist”—marginal, interdependence, benefit-cost, and opportunity cost calculations—a good way of understanding it?
Partha Dasgupta provides the best short answer to those two linked questions, and in the process of doing so provides the best introduction to economics, that I have seen
https://www.icloud.com/pages/0CLYIvKyZgxnRUMDgkL7RyWZQ
https://www.icloud.com/keynote/0hD8Le6gFIjTAwOWnBGv8PF5A
Partha Dasgupta: Economics: A Very Short Introduction https://delong.typepad.com/files/dasgupta-economics.pdf
Continue reading "Reading Notes on Dasgupta's "Economics: A Very Short Introduction"" »
From: [email protected]
Subject: Your Squawk Box segment this Thursday, January 2: Please get to the studio at UC Berkley by 6:40am est
Body: The anchors will be Joe and Becky. You’ll share the segment with Shermichael Singleton, political consultant, contributor at The Hill. The discussion will be about "running against the Trump economy". Trump has had the best 3 year performance out of every president since Reagan, since being elected. How does one run against this? Who has the potential to compete? Can Trump keep it up, how? Please send thoughts and talking points.
Jump in the S&P over the past eight years from 1300 to 2600 3200 [1]
The talk I hear about the "strong Trump economy" makes no allowance for the difficulty of the dive he has faced relative to that that other presidents face...
It looks like we have dodged a recession...
The most striking aspect of the political situation is the strong divergence between Trump's good unemployment and inflation numbers and his lousy approval numbers
Continue reading "Scheduled for Squawk Box: January 2, 2020 6:50 AM EST: Talking Points" »
Hoisted from the Archives: Note that if 600 billion in fiscal stimulus would have reduced the expected unemployment rate as of the end of 2010 from 9.5% to 8%, 900 billion would still have left the economy with an expected end-of-2010 unemployment rate of 7.25%. And, of course, the memo ought to have highlighted that things had a 50% chance of being worse than expected—even considerably worse, which they were: the end of 2010 unemployment rate was 9.3%. To seek as your economic policy goal a set of policies that would might well have—and did—leave the unemployment rate two years hence above 9% seemed like malpractice on the part of the Obama-Emmanuel-Biden team then. It still seems like it was malpractice now: Obama National Economic Council Presumptive (December 2008): EXECUTIVE SUMMARY OF ECONOMIC POLICY WORK https://delong.typepad.com/20091215-obama-economic-policy-memo.pdf: 'In the absence of fiscal stimulus the economy is projected to lose 3 to 4 million jobs in 2009. Together with the jobs we have already lost and population growth, we will be 7 million jobs short of full employment. The unemployment rate is projected to rise above 9 percent and not projected to start falling until 2011. We believe that $600 billion in stimulus over two years would create 2.5 million jobs relative to what would happen in the absence of stimulus. However, this falls well short of filling the job shortfall and would leave the unemployment rate at 8 percent two years from now. This has convinced the economic team that a considerably larger package is justified.... The memo outlines four alternative plan ranging from $550 billion to $890 billion...
FRED: Gross Private Domestic Investment/Nominal Potential Gross Domestic Product https://fred.stlouisfed.org/graph/?graph_id=516170&rn=79#0...
Continue reading "Which Political Party's Policies Boost Investment in America, Again?" »
I do confess that I am sad that §7.6 of my "Smith, Marx, Keynes" lecture notes https://www.icloud.com/keynote/0osOOsPvSrTaiK4__D5MghPVA is still just huge honking quotes from Paul Krugman's Mr. Keynes and the Moderns https://delong.typepad.com/files/keynes-moderns.pdf. I kinda want to say "just read the whole thing". But here are the passages I chose:
Chapter 12 is, of course, the wonderful, brilliant chapter on long-term expectations, with its acute observations on investor psychology, its analogies to beauty contests, and more. Its essential message is that investment decisions must be made in the face of radical uncertainty to which there is no rational answer, and that the conventions men use to pretend that they know what they are doing are subject to occasional drastic revisions, giving rise to economic instability. What Chapter 12ers insist is that this is the real message of Keynes, that all those who have invoked the great man’s name on behalf of quasi-equilibrium models that push this insight into the background, from John Hicks to Paul Samuelson to Mike Woodford, have violated his true legacy...
I have finished (a draft of) my "Smith, Marx, Keynes" lecture notes—well, I have not written 7.6 and 8.2. For 7.6, I have simply dumped in (much of) Paul Krugman's Mr. Keynes and the Moderns. 8.2 I have not written anything on. But what it is, it is...
Continue reading "Lecture Notes: Smith, Marx, Keynes: Thanksgiving 2019 DRAFT" »
Outside of the charmed magic circle of western and central Europe, North America, and the other Anglo-Saxon settler colonies, few indeed are the economies that have managed successful economic development in the sense of convegence: materially closing any significant fraction of their productivity and living standards gap vis-a-vis the world's economic leaders. The Northeast Asian Pacific Rim, now including China; further south, Malaysia, Thailand, Indonesia, and Vietnam; India and Sri Lanka; elsewhere, Turkey, Chile, Botswana, Mauritius, and Cabo Verde. That is all. And with perhaps one or two exceptions, those few have followed the particular economic development path of using low-wage manufacturing exports to nurture their domestic communities of engineering practice—a path that is now closing.
It has long been easy to see the glass half-full with respect to global economic growth: technologies and organizational forms can be imitated and adopted, do diffuse, and even the poorer parts of the globe are much richer than they were two or one or even half a century ago. It has been much harder to see the glass half-full with respect to convergence: the catching-up and closing of the gap vis-a-vis the world's industrial leaders. Why have so few countries been able to walk the path? And what are our prospects for the future? With the prospective closing of the standard parth for convergence, seeing the glass half-full is becoming harder: perhaps there will be no glass at all.
Continue reading "Convergence" »
Adam Smith starts with the observation that humans are largely but not exclusively self-interested creatures: we are, largely but not exclusively greedy. Yet we have a complex and sophisticated societal division of labor. And that division of labor is essential to our prosperity. Indeed, it is essential to our survival: drop one or two of us into the Sierra Nevada, even in summer, and we will quite likely die. Drop 100 of us, and we will quite likely survive, and even flourish. How can animals that are by nature greedy nevertheless cooperate on a large scale? That is the deep moral-philosophical question that we can see in both of Smith’s big books...
#berkeley #economics #highighted #historyofeconomicthought #lecturenotes #moralphilosophy #politicaleconomy #2019-11-21
Cotto/Gottfried: What Happens to America's Economy If Trump Is Reelected? Brad DeLong Explains https://www.youtube.com/watch?v=MZZEI4jRqEo&feature=youtu.be: "Donald Trump... if he manages to secure a second term, what would four more years of his presidency mean for America's economy? Former Deputy Assistant Secretary of the US Treasury Brad DeLong, who now is an economics professor at UC Berkeley, addresses this hugely important question¸—and much more—on 'Cotto/Gottfried.'... See more episodes here: https://wtcgcottogottfried.blogspot.com/. San Francisco Review of Books main page: http://www.sanfranciscoreviewofbooks.com...
Continue reading "Podcast: Trump's Impact on the Economy" »
Back in 1800, nearly the entire world lived in dire poverty—what we today see as the dire poverty line of $1.90 a day, a level at which you are spending more than half your income on bare calories and essential nutrients, the minimum of heat and shelter, and the minimum of clothing. Below that line, certainly your health and perhaps your life is impacted: women become too skinny to reliably ovulate, and children become too malnourished to have healthy and effective immune systems. Back in 1800, there were only a few economies where the median household had a standard of living of more than $3 a day: Germany, France, Austria, Denmark, Belgium, Holland, Switzerland, the U.K., the U.S., and that was it.
Continue reading "Introducing Partha Dasgupta: Economics: A Very Short Introduction" »
DRAFT: A Competitive Market: A Python class for a competitive market equilibrium with linear supply and demand curves—equilibrium price, equilibrium quantity, producer surplus, consumer surplus, total surplus. Looks for input parameters giving the slopes of the demand and supply curves, plus the maximum willingness-to-pay of the most eager demander and the minimum opportunity cost of the most efficient supplier. Now ready to hand over to others for editing, tightening, and additions.
https://nbviewer.jupyter.org/github/braddelong/LS2019/blob/master/2019-08-10_market.ipynb
Continue reading "A Competitive Market: Python Class/Notebook" »
What the Washington Post's headline writers thought that Bob Woodward's The Agenda: Inside the Clinton White House was about back in 1994:
Clinton Felt Blindsided Over Slashed Initiatives; 'We're Losing Our Soul' in Cutting Deficit. President and the Fed Forge New Relationship; Greenspan's Economics Lesson Etches Deep Impression in the Clinton Plan. Memo From Consultants Rattles the White House; 'Turkey' of a[n Economic Deficit-Reduction] Plan Still Needed Selling. A War Among Advisers For the President's Soul; Decision-Making, Clarity of Vision Suffer
According to the Washington Post's headline writers (and according to pretty damn near everybody else who read The Agenda that I have talked to), Woodward's book tells the story of a president who (a) feels "blindsided" by their actions, (b) feels that the policies his administration is adopting means that he is losing his soul, (c) finds that the Republican Federal Reserve Chair's views are etching a deep impression on policy, (d) finds himself stuck with a "turkey" of an economic plan, (e) has advisors who fight fiercely in order to (f) control a wishy-washy president, and as a result (g) decision-making suffers and (h) clarity of vision is lost.
Now I was there.
Berkeley Economics: Economics CIP Code Update and FAQs | Department of Economics: "(5) What are the practical effects of this change for domestic students? For international students? The reclassification of Economics as a STEM major may enhance research and funding opportunities, job market placement and diversity and growth in the field that can be associated with other STEM majors. For international students, the STEM classification increases accessibility to US job opportunities with an extension of work visas, etc. This was not an available option with our current general economics CIP code.... (6) As an international student, how will this impact my Optional Practical Training (OPT)? OPT is work authorization available to F-1 international students who have been full-time students for at least two consecutive semesters and who plan to seek employment in the United States in their fields of study. On March 11, 2016, the U.S. Department of Homeland Security (DHS) published a new STEM Final Rule, with effective date May 10, 2016. Eligible students may now apply for a 24 Month STEM Extension up to 90 days prior to the expiration of their OPT Employment Authorization Document (EAD). Our CIP code approval qualifies our degree programs as a STEM related field of study for the Optional Practical Training (OPT) extension for employment of 24 months. For further information about your OPT options, please consult with the Berkeley International Office (BIO)...
John Maynard Keynes (1926): The End of Laissez-Faire (1926): "Suppose that by the working of natural laws individuals pursuing their own interests with enlightenment in condition of freedom always tend to promote the general interest at the same time! Our philosophical difficulties are resolved-at least for the practical man, who can then concentrate his efforts on securing the necessary conditions of freedom. To the philosophical doctrine that the government has no right to interfere, and the divine that it has no need to interfere, there is added a scientific proof that its interference is inexpedient. This is the third current of thought, just discoverable in Adam Smith, who was ready in the main to allow the public good to rest on 'the natural effort of every individual to better his own condition', but not fully and self-consciously developed until the nineteenth century begins. The principle of laissez-faire had arrived to harmonise individualism and socialism, and to make at one Hume's egoism with the greatest good of the greatest number. The political philosopher could retire in favour of the business man—for the latter could attain the philosopher's summum bonum by just pursuing his own private profit...
Continue reading "Weekend Reading: John Maynard Keynes: from The End of Laissez-Faire (1926)" »
This is so great! And so deserved! I have always thought that the principal benefit to beiong an economist at U.C. Berkeley is how incredibly lucky we all are with our colleagues. It's nice to see the world recognizing that: American Economic Association: 2019 John Bates Clark Medal: "Emi Nakamura is an empirical macroeconomist who has greatly increased our understanding of price-setting by firms and the effects of monetary and fiscal policies. Nakamura’s distinctive approach is notable for its creativity in suggesting new sources of data to address long-standing questions in macroeconomics. The datasets she uses are more disaggregated, or higher-frequency, or extending over a longer historical period, than the postwar, quarterly, aggregate time series that have been the basis for most prior work on these topics in empirical macroeconomics. Her work has required painstaking analysis of data sources not previously exploited, and at the same time displays a sophisticated understanding of the alternative theoretical models that the data can be used to distinguish...
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The Market as an Institution: “The Market” as an Institution:
We start from what look like to us deep truths of human psychology
We devised property as a way of constructing expectations of trust…
We devised money as a substitute for trust…
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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:
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....
be out-of-equilibrium...
possess actors have market power...
be afflicted—if that is the word—by non-rivalry (increasing returns to scale; natural monopolies)...
suffer externalities (in production and in consumption, positive and negative; closely related to non-excludibility)...
suffer from information lack or asymmetry...
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…
suffer from non-excludability (public goods, etc.)...
suffer from miscalculations and behavioral biases...
suffer from failures of aggregate demand...
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key: https://www.icloud.com/keynote/0UtILjGfChXSFFUBSCJ3PTf1g
pages: https://www.icloud.com/pages/0eLbd_zXINsC-YRNSL1zQxIdA
html: http://www.bradford-delong.com/2019/02/haunted-by-the-shadow-of-the-greater-recession.html
#highlighted #presentations #greatrecession #macro #economicgrowth #economichistory #economics #finance #monetaryeconomicss
Forecasting: Because of the shutdown, we are flying much more blind than we would like to be. We are not getting the normal data flow. Thus there is more than the usual level of uncertainty. Given that:
In the last yield-curve inversion, in 2006, they were worried about an inflationary spiral breaking out because of rising oil prices—they should not have been worrying about it, but they were. In the yield-curve inversion before that, in 2000, they were worried about the dot-com bubble. There is nothing like either of those going on now.
Some people think the Federal Reserve is about to back off. Some people think that this time really is different—that the bond market is spooking at shadows this time. Give each of these a 25% chance of being right, and you have to say that there is a 50% chance the U.S. will be in recession in a year and a half. We hope the recession, if it comes, will be a small one. We hope we will, somehow, dodge the bullet and not have a recession.
But, at least as I see it, that is the forecast: a 50% chance of 1.5%-2.5% growth over the next year and a half, and a 50% chance of negative growth.
If you want a more precise forecast, my advice is to consult your Magic-8 Ball.
Because of the shutdown, we are flying much more blind than we would like to be. We are not getting the normal data flow. Thus there is more than the usual level of uncertainty.
Given that:
Continue reading "The Economic Forecast: Commonwealth Club Non-Public Event Opening Statement" »
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...
The very sharp Arindrajit Dube was, as one does, procrastinating on twitter:
Arindrajit Dube: Somehow I find the econ podcast space is mostly occupied by ideological right wingers, as opposed to people interested in an open minded, evidence informed economics. Who am I missing?
And my instantaneous reaction was: BE THE PODCAST YOU WANT TO SEE IN THE WORLD!
Brad DeLong: Let's start a podcast!
Arindrajit Dube: Wait Brad, is this a serious offer? :-)...
And the public chimed in:
Suresh Naidu: Do it!
Matthew Yglesias: You guys should do this for real
Robert Waldmann: You really do have to do the podcast (or block me). I will tweet complaints until you do it.
Aaron Sojourner: It would be incredibly valuable service.
Erik: Do it!
Dr. A. Duus Pape: I'd subscribe in a heartbeat.Arindrajit Dube: God damn it Brad now Matt Y is on board and I am seriously screwed...
So it looks like we may be doing this for real—once a week, half-hour chunks, starting out as amateur hour only. First topic: thinking about what marginal tax rates on the rich should be.
What say you all?
Continue reading "Be the Podcast You Want to See in the World!" »
Seems to me @biscuit_ersed and everybody else needs their first game-theory lecture to be (1) defect-defect as dominant-strategy Nash equilibrium in prisoner's dilemma, (2) the unraveling equilibrium in finite related prisoner's dilemma, and (3) this first prisoner's dilemma ever played: http://www.j-bradford-delong.net/economists/prisoners_dilemma.html https://twitter.com/biscuit_ersed/status/1084812993509105671...
Hoisted from 2008: Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: 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... https://delong.typepad.com/stolper-samuelson_finger_exercise-1.pdf
Richard Thaler: The Power of Nudges, for Good and Bad: "All nudging should be transparent and never misleading.... It should be as easy as possible to opt out.... There should be good reason to believe that the behavior being encouraged will improve the welfare of those being nudged.... Government teams in Britain and the United States that have focused on nudging have followed these guidelines scrupulously. But the private sector is another matter. In this domain, I see much more troubling behavior...
Not what I said at the Blum Center Development Lunch today: more what I wish I had said—albeit it is still incoherent and disorganized:
Let me begin with three direct responses to points Michael Nacht made. Let me then try to—briefly—propose a framework, perhaps a framework for analysis, perhaps merely a framework for convincing people in the national security community that they should take issues of economic development seriously, and so give large grants so that the Berkeley development community can do more things—things closely related to what we would be doing anyway.
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Note to Self: Books for Econ 210a: Introduction to Economic History (Spring 2019)
http://delong.typepad.com/the-digital-revolution-and-the-state--book-talk.pdf
Bill Janeway: Doing Capitalism in the Innovation Economy 2.0 https://books.google.com/books?isbn=1108471277: "The innovation economy begins with discovery and culminates in speculation. Over some 250 years, economic growth has been driven by successive processes of trial and error: upstream exercises in research and invention and downstream experiments in exploiting the new economic space opened by innovation...
...Drawing on his professional experiences, William H. Janeway provides an accessible pathway for readers to appreciate the dynamics of the innovation economy. He combines personal reflections from a career spanning forty years in venture capital, with the development of an original theory of the role of asset bubbles in financing technological innovation and of the role of the state in playing an enabling role in the innovation process. Today, with the state frozen as an economic actor and access to the public equity markets only open to a minority, the innovation economy is stalled; learning the lessons from this book will contribute to its renewal...
The first write-up of the Prisoner's (or is it Prisoners'?) Dilemma: Merrill Flood (1958): Some Experimental Games: "Summary: Two players non-cooperatively choose rows and columns of their payoff matrices in a series of 100 plays of a non-constant sum game. The purpose of this experimental game is to determine which of several theories best describes their behavior. The players, being familiar with zero-sum game theory, happen to choose a poor solution for their non-constant-sum game...
Hoisted from the Archives: Prisoner's Dilemma: An extended passage from William Poundstone's (1992) marvelous book Prisoner's Dilemma (New York: Doubleday: 038541580X) https://books.google.com/books?isbn=0307763781. Economists will find it hilarious and thought-provoking. Others will probably find it bizarre and weird. It comes from pp.106-118.
Flood and Dresher devised a simple game where [the Nash equilibrium wasn't such a good outcome for the players].... The researchers wondered if real people playing the game--especially, people who had never heard of Nash or equilibrium points--would be drawn mysteriously to the equilibrium strategy. Flood and Dresher doubted it.
The two researchers ran an experiment that very afternoon. They recruited two friends as guinea pigs, Armen Alchian of UCLA ("AA" below), and RAND's John D. Williams ("JW"). The game was presented purely as a payoff table. The payoffs were:
(AA's payoff, JW's payoff) JW's Strategy 1 [Defect] JW's Strategy 2 [Cooperate] AA's Strategy 1 [Cooperate] (-1, 2) (1/2, 1) AA's Strategy 2 [Defect] (0, 1/2) (1, -1)
Continue reading "Prisoner's Dilemma, or Prisoners' Dilemma?: Hoisted from the Archives" »
DeLong's Grasping Reality © J. Bradford DeLong 1995-2019
