Grasping Reality on TypePad, by Brad DeLong

Required Readings Note:

The required readings for Module 11 are rather long—but not nearly as long as for Modules 9 & 5, where I wound up taking two weeks per module.

There is Skidelsky chapter 6 https://github.com/braddelong/public-files/blob/master/readings/chapter-skidelsky-keynes-6.pdf. The chapters of Skidelsky before this one I've been all about how Keynes was smart and right. This chapter is, from Skidelsky’s view as of 1995, as an enthusiastic advocate of the neoliberal turn, how Keynes’s disciples were dumb and wrong. It is a very good analysis, on the level of events and ideas, of why people decided to take the neoliberal turn.

11.1. The Neoliberal Turn, & Hyperglobalization: Readings
https://www.icloud.com/keynote/0wiN44cBruFAXnvv0weXzgCNw
https://github.com/braddelong/public-files/blob/master/econ-115-module-11.1-neoliberal-turn-readings.pptx
https://www.bradford-delong.com/2020/11/111-the-neoliberal-turn-hyperglobalization-readings.html
https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f080038834026bdea77620200c/edit Frame your reading of it around these three quotes:

Interactive Video: https://share.mmhmm.app/ed6bb654a1bb406394e149ce53ecbbd4

https://www.icloud.com/keynote/0veWFCQ04v48yvwHSZVb2i6kA

https://github.com/braddelong/public-files/blob/master/econ-115-module9-intro-video-2.0-11.00.pptx
https://share.mmhmm.app/ed6bb654a1bb406394e149ce53ecbbd4
1268 words
11:00 minutes

.#economicgrowth #economichistory #highlighted #slouchingtowardsutopia #socialdemocracy #thirtygloriousyears #2020-11-03

Introductory Video for Fall 2020 Instantiation of Econ 115 Module 9: Post-WWII Glorious Years of Equitable Growth & Inclusion in the Global North

econ-115-9.2.0-module-intro-video-11.00-2020-10-28

https://share.mmhmm.app/ed6bb654a1bb406394e149ce53ecbbd4

As of 1945, there was not that many grounds for optimism, as far as the world economy and the world political economy were concerned.

The greater totalitarianism had been squashed. The lesser was flourishing. It used the blood of the Russian people spilled fighting Nazism over 1941 to 1945 as a powerful source of legitimating energy—never mind the active and eager collaboration of Stalin and his acolytes with Hitler whenever it had seemed to be to their even momentary advantage.

Market economies continued to fail to deliver Polanyian rights. Their ability to even deliver economic growth at all had been cast in the grave doubt by the Great Depression. As for democratic parliamentary politics—it could still be easily dismissed as a swamp that needed to be drained.

Yet 1940-1980 saw the victory and secure establishment of the market-heavy mixed economy as an engine for delivering unprecedented economic growth in the global north. It also saw the overwhelming victory of parliamentary democracy as a system that could generate good economic management and also increasing human freedom. And it saw the world system deliver independence and somewhat increasing prosperity, if neither democracy nor economic convergence, to the global south.

• In the G7 nations, 1870 to 1913 had delivered average measured real-income growth of 1.4% per year, albeit unequally distributed.

• That fell over 1913 to 1938 to 0.7% per year.

• But then 1938 to 1973 saw growth at 3.0% per year, catching up to and leaping ahead of what a continuation of pre-1913 trends would have forecast.

Why did things go so right? And why, given that things went so right up through the 1970s, was that system of mixed-economy social democracy rejected for one of neoliberalism after 1980?

• Some of it was that Keynes was at least half right, and his technical and technocratic adjustments to economic management did a great deal of good.

• Some of it was that the disasters of 1913 to 1938 and the disaster on the other side of the iron curtain that was really-existing socialism that might move west—and east—concentrated everybody’s mind on making an imperfect system work.

• Some of it was that the backlog of potential innovations undeployed over 1913 to 1938 made growth easy

• Much of it was that with strong and equitable growth the market economies’ failure to vindicate Polanyian rights no longer seemed so salient

• Some of it was that social insurance systems did, to some extent, manage to vindicate Polanyian rights

• And much of it was that the plutocrats and the rightists had lost their nerve, after the disasters that their attempts to suppress labor organizations and political majorities had generated

But why then did things fall apart in 1980?

Keep that question in the back of your minds.

In addition to strong economic growth that was equitable, in the sense of being divided across economic classes rather than hogged by one, there was the increase in human freedom.

The equitable growth of 1938 to 1980 stopped afterwards in the age of neoliberalism. But the forward march of inclusion has continued.

Inclusion of people as first-class citizens. Who are the first-class citizens of the civilization that we define as the one in which the Anglo-Saxon language is the lingua franca—the tongue spoken by free people? At the start, in the days of Leader Elf-Wisdom of the west branch of the knife-guys—King Alfred of Wessex—it was his own landholding trained-warrior male-Saxon thains. But even in Alfred’s day, he was reaching to include others, and not just other branches of the Saxon tribe. Alfred called his expanded kingdom “England”, after the name of the neighboring tribe of the Angles that he wanted to include as well.

And as history passes it becomes the English, and then the British—but, remember, the WOGS—the worthy oriental gentlemen—begin as soon as you cross the English Channel and set foot on the European continent at the port of Calais.

There are still those who hold to that. England, if not Great Britain, is still in its majority in support of its ruler Boris Johnson. Boris at least claims to believe that the most important thing is to keep England pure from European pollution. (You are not supposed to remember his full name: Alexander Boris de Pfefle Johnson. Alexander is Greek. Boris is Russian. The de is French. The Pfeffel is German. The Johnson is Welsh, half Keltic, not fully Saxon. If you trace his male line of descent, it goes back not to the Saxons or the Vikings but rather a Turkish nomads who came boiling out of Kazakhstan in days gone bye.)

But I digress.

From male, British, and upper-class, the set of “gentlemen” expands. It expands to include the middle-class males who have good manners. And then Anglo-Saxon is expanded to include by courtesy others of Northern European stock who walk the walk. By the time of Teddy Roosevelt it is anyone white, or mostly white, who is willing to behave like a male Anglo-Saxon Puritan—children of the Mayflower by adoption as well as by birth. And Teddy Roosevelt still believed in the Republican parties historical obligation for the freedom and uplift of African-Americans. He was swimming against the tide of the American power structure of his day. But he was swimming.

And working class people are people.

And women became people too.

Next: America is a Protestant nation.

With the coming of World War II and the strong need to rally everyone against Nazism, and then with the coming of the age of social democracy, the progress of full inclusion speeds up.

Then: America is a Christian nation. Then: America is a Judeo-Christian nation. Republican President Dwight D. Eisenhower says: “It is very important that an American have a strong faith and I don’t care what”.

Jimmy Carter as president in the 1960s talks about the “Abrahamic” faiths, bringing Muslims into the religious circle of inclusion. But that does not seem to stick.

Women become full people. Freedom is redefined so that your freedom does not include the right to discriminate against African-Americans in public accommodations. Who people love or choose to be in their private lives becomes “not your business” as well.

But Senator Rand Paul still believes in his heart of hearts that it does. Only the fact that it is not electorally wise to say that out loud, even in Kentucky, keeps him quiet now. And every year Fox News and company try to remove the Judeo- from “Judeo-Christian nation” and roll back inclusion by demanding an end to the “war on Christmas”.

We know where we are supposed to be now: equal opportunity as a goal, rather than a joke; tolerance and celebration of our diversity because trapping yourself in one point of view is going to makes you stupid and narrow.

We are not there yet.

The cultural DNA of the global north today is still roughly 50% from the North-Atlantic Anglo-Saxons of the Victorian era.

But this is a civilization in which people are less limited by what their parents happenned to look like and be than any previous one.

A story to inspire. But not a story to make us comfortable about where we are right now.

1268 words 11.00 minutes

Video at: http://delongtoday.com

https://github.com/braddelong/public-files/blob/master/delongtoday-2020-10-30.pptx
https://www.icloud.com/keynote/0N6bJBYfxAcdZMKxUYEc8q2gQ
https://www.bradford-delong.com/2020/10/2020-10-30-american-republicans-are-bad-economic-managersdelongtoday.html 2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

Today is an economic-analysis day:

• I will start with the large gap between economic performance under Democratic and under Republican presidents, and with Alan Blinder’s and Mark Watson’s puzzlement as to where it comes from

• I will then run through the history of what went wrong with Republican economic policy

• I will then point out the technocratic idiocies of economic policy under the Trump administration

• And I will then set forth my theory of where the performance gap—that American incomes grow 1.8%-points per year faster when Democrats are president than when Republicans are—comes from. Democratic politicians and legislators are willing, at least sometimes, to listen to their economists. Republican politicians and legislators will not even let their economists into the room where it happens until they have agreed that the politicians and legislators are already pursuing great policies.

.#forecasting #economicgrowth #highlighted #politicaleconomy #politics #2020-10-30

J. Bradford DeLong: The Economic Incompetence of Republican Presidents https://www.project-syndicate.org/commentary/democratic-administrations-historically-outperform-on-economy-by-j-bradford-delong-2020-10: In a United States rife with disinformation, one of the most persistent myths is that Republicans are better than Democrats for business and economic growth. In fact, Republicans have consistently under-performed on the economy for almost a century. One hears many strange things nowadays, not least because “they” (a complicated term) are flooding the zone with misinformation. Without a shared set of facts upon which to base ethical and policy debates, democracy inevitably breaks down. The system’s virtue lies in its unique ability to elevate and consider a broad range of ideas emanating from society. Ideally, through a good-faith exchange of arguments and a weighing of the alternatives, a majority of voters converges on the best course of action...

https://github.com/braddelong/public-files/blob/master/delong-project-syndicate-2020-11-01.pdf https://www.project-syndicate.org/commentary/democratic-administrations-historically-outperform-on-economy-by-j-bradford-delong-2020-10 https://www.icloud.com/pages/0X3WOZxicKKMrstEB66_3N7eA https://www.icloud.com/keynote/0-wFK4esatnHmRMnSxPg-B8Lg https://www.bradford-delong.com/2020/10/the-economic-incompetence-of-republican-presidents-project-syndicate.html
2020-10-30

We hear many strange things today. They—and it is a complicated “they”—are flooding the zone with misinformation. Why? For lots of reasons. But democracy breaks down under a flood of misinformation. Democracies’ excellences spring from its ability to consider ideas from different places in society, and converge on the good ones. But that requires that the flow of information into the public-sphere be reality-based—or at least that there be confrontations in which the people can watch Lincoln debate Douglas and decide who is trustworthy and correct and who is not. And we have lost that.

But we keep on trying. Here Sisyphus. Here rock. Here hill. And, as Camus wrote now long ago, we must imagine Sisyphus happy, with what he meant depending on which of the many possible ways we choose to read the word “must”.

One piece of misinformation I see more and more these days is that on election day America faces a tradeoff. On the one hand, electing a Democrat means that America will no longer have a government that permanently kidnaps children just because it can. On the other hand, electing a Democrat “who will be radical and hurt the economy…”, as the Wall Street Journal columnist Peggy “No Republicans Should Ever Stab Trump in the Back” Noonan puts it, before writing that “[Biden] should not be going out for ice cream in a mask like John Dillinger on the lam…” and that “[Kamala Harris] is embarrassing. Apparently you’re not allowed to say these things because she’s a woman…. I will not sweat it, I will be myself…. If you can’t imitate gravity, could you at least try for seriousness?…”

So let me give the microphone to economists Alan Blinder and Mark Watson, who write that: “The superiority of economic performance under Democrats rather than Republicans is nearly ubiquitous: it holds almost regardless of how you define success…. The performance gap… strains credulity…. 1.8 percentage points [per year]… from Truman through Obama…” And note that if they went back two more presidents—to Hoover-Roosevelt—the gap would be even bigger: about 3%/year.

Note that in this context Trump was an unusually good president as far as economic performance in his first three years was concerned. In teh first three years of his presidency the economy matched the 2.4%/year growth it achieved in Obama’s second term. Even matching the previous Democrat is something that Trump’s and only Trump’s, of all post-WWII Republican presidencies, has seen.

Blinder and Watson are flummoxed on where this performance gap comes from: greater fixed investment, more consumer optimism and thus spending on durables, fewer unfavorable oil shocks, and perhaps stronger growth abroad. But these can explain less than half of the gap. It is not that Democrats pursue overinflationary policies that borrow growth from the future and move it into the present.

When I first read Blinder and Watson, the oil factor jumped out at me. Both President George Bushes—and also Nixon and Ford’s Secretary of State Henry Kissinger—were deeply confused about whether the U.S. wanted a high or a low price of oil as far as boosting real income growth was concerned. Other presidents grabbed for chances to make or keep oil prices lower.

When we look back at history, it seems that Republican presidents and their administrations have little sense of what economic policies are likely to work. It simply never entered George W. Bush’s mind, or the mind of anyone in his administration, that a financial crisis could be produced by underregulation and would be a bad thing. It simply never entered Ronald Reagan’s mind, or the mind of anyone in his administration, that the big budget deficits they created gave America a choice between seeing investment collapse—slowing growth—or borrowing from abroad and in the process importing lots more manufactures—thus turning the Midwest into a rust belt. And Nixon’s belief that low interest rates plus wage-and-price controls could keep both inflation and unemployment low was hard to fathom either at the time.

Here we can say of Trump that he has played true to type. NAFTA: worst trade deal in American history. TPP: second worst. Add some TPP provisions to NAFTA and call it USMCA, and all of a sudden it makes America great again. A trade war with China: “good, and easy to win”. But the result has been no change in manufacturing employment, a widened manufacturing trade deficit, U.S. consumers suffering reduced real incomes because they, not China, have paid the tariffs. Why? Because Robert Lighthizer and company had no clue how to plan or fight a trade war.

Republican presidents with their repeated failures to understand how the economy works have been hurting it since at least 1928. There is no tradeoff here.

829 words

.#economicgrowth #highlighted #macro #politicaleconomy #projectsyndicate #2020-10-30<!--more-->

We hear many strange things today. They—and it is a complicated “they”—are flooding the zone with misinformation. Why? For lots of reasons. But democracy breaks down under a flood of misinformation. Democracies’ excellences spring from its ability to consider ideas from different places in society, and converge on the good ones. But that requires that the flow of information into the public-sphere be reality-based—or at least that there be confrontations in which the people can watch Lincoln debate Douglas and decide who is trustworthy and correct and who is not. And we have lost that.

But we keep on trying. Here Sisyphus. Here rock. Here hill. And, as Camus wrote now long ago, we must imagine Sisyphus happy, with what he meant depending on which of the many possible ways we choose to read the word “must”.

One piece of misinformation I see more and more these days is that on election day America faces a tradeoff. On the one hand, electing a Democrat means that America will no longer have a government that permanently kidnaps children just because it can. On the other hand, electing a Democrat “who will be radical and hurt the economy…”, as the Wall Street Journal columnist Peggy “No Republicans Should Ever Stab Trump in the Back” Noonan puts it, before writing that “[Biden] should not be going out for ice cream in a mask like John Dillinger on the lam…” and that “[Kamala Harris] is embarrassing. Apparently you’re not allowed to say these things because she’s a woman…. I will not sweat it, I will be myself…. If you can’t imitate gravity, could you at least try for seriousness?…”

So let me give the microphone to economists Alan Blinder and Mark Watson, who write that: “The superiority of economic performance under Democrats rather than Republicans is nearly ubiquitous: it holds almost regardless of how you define success…. The performance gap… strains credulity…. 1.8 percentage points [per year]… from Truman through Obama…” And note that if they went back two more presidents—to Hoover-Roosevelt—the gap would be even bigger: about 3%/year.

Note that in this context Trump was an unusually good president as far as economic performance in his first three years was concerned. In teh first three years of his presidency the economy matched the 2.4%/year growth it achieved in Obama’s second term. Even matching the previous Democrat is something that Trump’s and only Trump’s, of all post-WWII Republican presidencies, has seen.

Blinder and Watson are flummoxed on where this performance gap comes from: greater fixed investment, more consumer optimism and thus spending on durables, fewer unfavorable oil shocks, and perhaps stronger growth abroad. But these can explain less than half of the gap. It is not that Democrats pursue overinflationary policies that borrow growth from the future and move it into the present.

When I first read Blinder and Watson, the oil factor jumped out at me. Both President George Bushes—and also Nixon and Ford’s Secretary of State Henry Kissinger—were deeply confused about whether the U.S. wanted a high or a low price of oil as far as boosting real income growth was concerned. Other presidents grabbed for chances to make or keep oil prices lower.

When we look back at history, it seems that Republican presidents and their administrations have little sense of what economic policies are likely to work. It simply never entered George W. Bush’s mind, or the mind of anyone in his administration, that a financial crisis could be produced by underregulation and would be a bad thing. It simply never entered Ronald Reagan’s mind, or the mind of anyone in his administration, that the big budget deficits they created gave America a choice between seeing investment collapse—slowing growth—or borrowing from abroad and in the process importing lots more manufactures—thus turning the Midwest into a rust belt. And Nixon’s belief that low interest rates plus wage-and-price controls could keep both inflation and unemployment low was hard to fathom either at the time.

Here we can say of Trump that he has played true to type. NAFTA: worst trade deal in American history. TPP: second worst. Add some TPP provisions to NAFTA and call it USMCA, and all of a sudden it makes America great again. A trade war with China: “good, and easy to win”. But the result has been no change in manufacturing employment, a widened manufacturing trade deficit, U.S. consumers suffering reduced real incomes because they, not China, have paid the tariffs. Why? Because Robert Lighthizer and company had no clue how to plan or fight a trade war.

Republican presidents with their repeated failures to understand how the economy works have been hurting it since at least 1928. There is no tradeoff here.

829 words

.#economicgrowth #highlighted #macro #politicaleconomy #projectsyndicate #2020-10-30

Video at: http://delongtoday.com

https://github.com/braddelong/public-files/blob/master/delongtoday-2020-10-23.pptx
https://www.icloud.com/keynote/0HswGhv7jKY3tBhwvoawH16iQ
2020-10-23

https://www.youtube.com/watch?v=g5oOUsPuOKo

.#acceleration #democratization #economicgrowth #economichistgory #globalization #highlighted #growth #watershed #1870-1914

Anton Howes: The Spanish Engine https://antonhowes.substack.com/p/age-of-invention-the-spanish-engine: ‘Jerónimo de Ayanz y Beaumont.... The steam engines invented by Savery and then Newcomen in the 1690s and 1700s mainly exploited the observation that the air had a weight...

William Kristol: Is the Republican Party a Lost Cause? https://thebulwark.com/can-the-republican-party-be-saved/: ‘With embarrassingly few exceptions at every level, the Republican party is Donald Trump’s party. So in many ways it deserves to be a lost cause. On the other hand, after November 3, the GOP may stop—more or less suddenly, and more or less convincingly—being Donald Trump’s party. It might even stop being the party of Trumpism. On the third hand, it will still have been Donald Trump’s party. And that moral and political stain can’t, and shouldn’t, simply be wished away. On the fourth hand: It would be good for the country if there were a conservative party that wasn’t a nativist/proto-authoritarian/nationalist-populist party. This would be the case for not giving up on the GOP, but rather fighting to save it. But on the fifth hand, wishing for a sound conservative party won’t make it so. And even fighting for one may not make it so, either. It may be that American conservatism has been so damaged that a “new center”—whether as a party or some sort of cross-partisan coalition—is a better way to go than trying to save the GOP. On the sixth hand (I know, we’re in octopus territory here): Maybe we should root for the GOP to be salvaged, while acknowledging it won’t be saved by us people like us. After all, if the GOP is to be rebuilt, it will likely have to be done by people who have been complicit in Trumpism.... So Never Trumpers will be personae non gratae. The only people who will be afforded the opportunity to save the GOP are the ones who helped wreck it.... Such is politics.... Often the best one can do is... simply to fight for an outcome that is right and just in the short term. While at the same time keeping an open mind for the medium and long term. I will admit that my heart, today, is with “the Republican party is a lost cause” faction… .#noted #2020-07-16

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...

Econ 135: Assignment 8: Character of Modern Economic Growth Paper https://www.bradford-delong.com/2020/03/economic-growth-in-historical-comparative-perspective-assignment-8-economic-growth-in-historical-perspective.html: Explain, in about 500 words, how the character of modern economic growth as it has been seen in the world since 1870 differs from economic growth—or not-growth—in previous eras since the invention of agriculture. Upload your short essay to this webpage. Submitting: a text entry box. Due Apr 8 at 11:59pm...

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

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

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

Th Feb 6: 2.1. Malthusian Agricultural Economies

• Read Before: Jared Diamond (1997): The Worst Mistake in the History of the Human Race https://www.discovermagazine.com/planet-earth/the-worst-mistake-in-the-history-of-the-human-race
• Read Before: The Man Who Saw the Deep (Gilgamesh), selections https://delong.typepad.com/files/gilgamesh-selections.pdf
• Slides: https://github.com/braddelong/public-files/blob/master/econ-135-lecture-5.pptx

Slides: https://github.com/braddelong/public-files/blob/master/econ-135-lecture-4.pptx
Read: J. Bradford DeLong: Lecture Notes: Determinants of Ideas Growth https://github.com/braddelong/long-form-drafts/blob/master/solow-model-6-innovation.ipynb

What you need to know:

1. The Malthusian equilibrium level of productivity and income is (a) the zpg subsistence level of necessities consumption (b) times the taste for luxuries (including urbanization and an upper class, as well as middle-class conveniences) (c) bumped up to make the economy prosperous enough to support population growth at the rate (d) warranted by progress in technology and organization.

2. The Malthusian equilibrium level of population is (a) the quotient of useful ideas divided by the zpg subsistence level of necessities consumption, (b) times the ratio of the savings rate (boosted by law-and-order and by any imperial peace) to the depreciation rate raised to the elasticity of production with respect to capital intensity, (c) divided by the taste for luxuries, (d) all raised to the salience γ of ideas as opposed to resources in productivity, with (e) two nuisance terms tagging along.

GitHub: https://github.com/braddelong/lecture-support-2020/blob/master/brief-note-solow-malthus.ipynb
datahub:

This File: https://www.bradford-delong.com/2020/01/a-brief-cheat-sheet-note-on-the-solow-malthus-model-for-understanding-pre-industrial-economies.html

Edit This File: https://www.typepad.com/site/blogs/6a00e551f08003883400e551f080068834/post/6a00e551f0800388340240a5067c53200b/edit

Up a Level: Malthusian Perspectives https://delong.typepad.com/teaching_economics/malthus.htm

#ancienteconomies #economicgrowth #economichistory #highlighted #lecturenotes #teachinggrowth #teachinghistory #2020-01-30

How does an economy well-approximated by the Solow growth model—one that has a constant labor-force growth rate n and labor-efficiency growth rate g; a constant savings-investment share of production s and capital deprecation rate δ; and a constant elasticity θ of production Y with respect to the economy's capital intensity κ, where capital intensity is defined as κ = K/Y, the quotient of the economy's capital stock K and its production level Y—behave? What does it do? How are you—if you are a student—to understand it? And to use it?

Standard explanations often focus on graphs like:

which are often unhelpful.

With this class I would like—if I can get it working—to take another tack. If you have a Berkeley CalNet account, click on this link: https://datahub.berkeley.edu/hub/user-redirect/git-pull?repo=https%3A%2F%2Fgithub.com%2Fbraddelong%2Flecture-support-2020&urlpath=tree%2Flecture-support-2020%2F. If you have access to another Jupyter notebook server, go to https://github.com/braddelong/lecture-support-2020. In either case, then open the file: lecture-support-solow-2020-01-23.ipynb. You should then have, open, my Solow Growth Model Simulator. Click in the second code cell—the one whose first line is—"# SET PARAMETERS, INITIAL CONDITIONS, AND SCENARIO LENGTH IN THIS CELL". You can now edit the text in this code cell. Do so in order to either accept defaults or change the variable assignment statements (those with no "#" in the first column and an "=" sign in them to set values for the model parameter in the lines:

• n = 0.01 # the labor-force L proportional growth rate
• g = 0.02 # the labor-efficiency E proportional growth rate
• s = 0.12 # the share of production Y that is saved and invested
• δ = 0.03 # the capital depreciation rate
• θ = 1.09 # the elasticity of production Y with respect to capital intensity κ

Then click lower down and edit in order to accept default or choose alternative starting values L_0, E_0, and κ_0 for the initial values as of time 0 for the labor force, labor efficiency, and capital intensity in the lines:

• L_0 = 1
• E_0 = 1
• κ_0 = 8

Then click lower down again and either accept the default or choose the length of time for which the simulation will run in the lines:

• T = 100

Then go up to the top of your environment. In the "Kernel" drop down menu click on "Restart Kernel and Run All Cells"

Then scroll down the webpage. If all has gone well you should see, interspersed among the code, ten graphs showing how each of and some combinations of the model variables behave over time.

Note what looks interesting. Then go back to the top, and change something in the second code cell. Once again, go up to the top of your environment, and in the "Kernel" drop down menu click on "Restart Kernel and Run All Cells". What has changed? What strikes you as interesting? Take notes.

Repeat until you think you have an understanding of how an economy that happened to be well-modeled by the Solow growth model would behave.

The assignment? Write 200-300 words on the simulations you carried out, why you chose the parameter values and starting conditions you did, what (if anything) you learned from this exercise, and how useful you think models and exercises like this are in understanding economic growth out there in the real world.

https://nbviewer.jupyter.org/github/braddelong/lecture-support-2020/blob/master/lecture-support-solow-2020-01-23.ipynb

Th Jan 23: Robert Solow's Growth Model

• Read: J. Bradford DeLong: Lecture Notes: The Solow Growth Model https://tinyurl.com/dl-2020-01-18f
• Read: Partha Dasgupta (2007): Economics: A Very Short Introduction, chapters 5-8 & Epilogue https://delong.typepad.com/files/dasgupta-economics.pdf
• Do Assignment 2 (3 pts): Letter to GSI, due Sa Jan 25 9:00 am https://tinyurl.com/dl-2020-01-12g

Notes & Further Readings:

• Reading Notes on Dasgupta's Economics: A Very Short Introduction https://tinyurl.com/dl-2020-01-12e

Jupyter (formerly iPython) notebook:

https://nbviewer.jupyter.org/github/braddelong/public-files/blob/master/long-form-drafts/solow-model.ipynb
https://nbviewer.jupyter.org/github/braddelong/public-files/blob/master/long-form-drafts/solow-model-2-basics.ipynb
https://nbviewer.jupyter.org/github/braddelong/public-files/blob/master/long-form-drafts/solow-model-3-growing.ipynb
https://nbviewer.jupyter.org/github/braddelong/public-files/blob/master/long-form-drafts/solow-model-4-using.ipynb
https://nbviewer.jupyter.org/github/braddelong/public-files/blob/master/long-form-drafts/solow-model-5-pre-industrial.ipynb

T Jan 21: Growth in Historical Perspective, Humans and Their Economies

• Read: Gregory Clark (2005): The Condition of the Working Class in England, 1209-2003 https://delong.typepad.com/files/clark-condition.pdf
• Read: Lant Pritchett (1997): Divergence, Big Time https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.11.3.3
• Slides: https://tinyurl.com/dl-2020-01-12f

Notes & Further Readings:

• Reading Notes on Clark's The Condition of the Working Class in England, 1209-2003 https://tinyurl.com/dl2020-01-18b
• Reading Notes on Pritchett's Divergence, Big Time https://tinyurl.com/dl-2020-01-18c

Melissa Dell's Calvo Lecture: Melissa Dell: Persistence and Transformation in Economic Development https://www.youtube.com/watch?v=y5viPnW240A:

1. Acquire: An iClicker, and access to the course readings

2. Read: Course administration documents https://delong.typepad.com/files/135-course-summary.pdf https://delong.typepad.com/files/135-course-procedures.pdf https://delong.typepad.com/files/135-administrative.pdf

3. Read: Partha Dasgupta (2007): Economics: A Very Short Introduction, Prologue & chapters 1-4 https://delong.typepad.com/files/dasgupta-economics.pdf

4. Read: Aristotle: Politics, Book I https://delong.typepad.com/files/aristotle-politics-book-i.pdf

5. Do Assignment 1 (3 pts) https://tinyurl.com/dl-2020-01-18a: Write & answer a syllabus FAQ question, due T Jan 21 9:00 am.

Notes & Further Readings:

• Reading Notes on Book I of Aristotle's Politics https://tinyurl.com/dl-2020-01-12d
• Reading Notes on Dasgupta's Economics: A Very Short Introduction https://tinyurl.com/dl-2020-01-12e

Suggested Question (and Answer) for Course FAQ List: Assignment 1: Read the syllabus documents: https://delong.typepad.com/files/135-course-summary.pdf https://delong.typepad.com/files/135-course-procedures.pdf https://delong.typepad.com/files/135-administrative.pdf

Using the information in the syllabus, think up a question that should be on the FAQ—the Frequently Asked Question—list for the course.

Answer the question you thought up.

Upload your question and answer to your account at the course on canvas.

Let me remind you about Aristoteles son of Nikomakhos of Stagira:

He lived from -384 to -322, in the Greek-speaking communities around the Aegean Sea. He spent most of his time in Athens. For the two millennia following his death, he would be, for a large chunk of the world, THE Philosopher: capital “P” and capital “THE”. 1650 years after his death, poet Dante Alighieri would call him “the Master… of those who know”, “il Maestro di color che sanno”. Aristotle’s was, even at so long a distance in time, the most powerful intellectual name that one could conjure with...

https://www.icloud.com/pages/0nLIYWAFXAkPWR0xug-NT21vg

https://www.icloud.com/keynote/0SKox_f6G3cEvDxV-biXLgcPA

Aristotle: Politics, Book I https://delong.typepad.com/files/aristotle-politics-book-i.pdf

For the weekend: One powerful and very common presumption among the thinkers of the nineteenth century was that if the problems of overpopulation could be solved, and if that coupled with better technology solved the problem of inadequate resources to provide necessities, then the distribution of conveniences and luxuries would take care of itself, and the distribution of necessities would be unproblematic as an immediate consequence of common humanity in an age of abundance. They were wrong:

Edward Bellamy: Looking Backward 2000-1887 https://delong.typepad.com/files/bellamy-backward.pdf: '“Who is capable of self-support?” he demanded. “There is no such thing in a civilized society as self-support. In a state of society so barbarous as not even to know family coöperation, each individual may possibly support himself, though even then for a part of his life only; but from the moment that men begin to live together, and constitute even the rudest sort of society, self-support becomes impossible. As men grow more civilized, and the subdivision of occupations and services is carried out, a complex mutual dependence becomes the universal rule. Every man, however solitary may seem his occupation, is a member of a vast industrial partnership, as large as the nation, as large as humanity. The necessity of mutual dependence should imply the duty and guarantee of mutual support; and that it did not in your day constituted the essential cruelty and unreason of your system”...

https://www.icloud.com/pages/0jK0cjqqw-D4wRayNOo87pLYw

Note to Self: Progress in Pottery:

Project Syndicate: How Trolls Overran the Public Square https://www.project-syndicate.org/commentary/trolls-win-control-of-the-public-square-by-j-bradford-delong-2019-12: Since the invention of writing, human innovation has transformed how we formulate new ideas, organize our societies, and communicate with one another. But in an age of rapid-fire social media and nonstop algorithm-generated outrage, technology is no longer helping to expand or enrich the public sphere: Every year since 1900 we have had change in human technology and organization at a blistering pace: human productivity, organization, and technological capabilities now change at a rate that packs into one year what would have been 50 years of change back before 1500. It used to be that culture, war, the rise and fall of individuals' statuses, and politics were the meat of human history, with technology and organization much of an unchanging background, and productivity growing only very slowly on average. But that is not the world we live in today.

https://www.icloud.com/keynote/0N4QFCcL94j_TnZYP0SUTjcUA

• Suppose you were a stranger to humanity, and looked at this graph of trends in the investment share of output under various administrations.
• Would you then credit the claim that the red-presidents political party was dedicated to boosting investment in America, and that the blue-presidents political party was dedicated to sacrificing investment and growth to achieve egalitarian redistributional social goals?
• No.
  • One might claim that presidents don't control the economy or economic policy.
  • But presidents get most of what they ask for in terms of economic policy, and economic policy has a substantial impact on the actual economy.
  • One might claim that the big collapses of investment from the S&L and the subprime housing crises were bad luck for both Bush presidents.
  • But didn't mis- and under-regulation have something to do with it?

FRED: Gross Private Domestic Investment/Nominal Potential Gross Domestic Product https://fred.stlouisfed.org/graph/?graph_id=516170&rn=79#0...

Introduction

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.

Milton Friedman* (1982): Free Markets and the Generals: "The adoption of free-market policies by Chile with the blessing and support of the military junta headed by General Pinochet has given rise to the myth that only an authoritarian regime can successful ly implement a free-market policy. The facts are very different. Chile is an exception, not the rule. The military is hierarchical, and its personnel are imbued with the tradition that some give and some obey orders: it is organized from top down. A free market is the reverse. It is voluntaristic, authority is dispersed; bargaining, not submission to orders, is its watchword; it is organized from the bottom up...

Note to Self: Industrial Policy in Korea: Readings:

Alice Amsden (1989): Asia's Next Giant https://www.google.com/books/edition/Asia_s_Next_Giant/j0E9qKIqD-cC chs. 1-6...

Nathan Lane (2019): Manufacturing Revolutions: Industrial Policy and Networks in South Korea https://delong.typepad.com/lane-korea.pdf...

L.E. Westphal: (1990): Industrial Policy in an Export Propelled Economy: Lessons from South Korea’s Experience https://delong.typepad.com/files/westphal.pdf

Ha-Joon Chang (1993): The political economy of industrial policy in Korea." Cambridge Journal of Economics 17.2 (1993): 131-157 https://delong.typepad.com/files/chang.pdf

Rodrik, Dani. "Getting interventions right: how South Korea and Taiwan grew rich." Economic Policy 10.20 (1995): 53-107 https://delong.typepad.com/files/rodrik-korea-taiwan.pdf

Dietz Vollrath: The Deep Roots of Development: "Think statistically, rather than in absolutes.... It is plausible that ethnic groups in areas where there were large returns to long-run investment in agricultural production may end up more patient in the long-run as well.... There is a significant relationship of productivity with patience... but the R-squared is about 10%.... [And] the results don’t mean that ethnic group A with higher productivity had to have higher patience than group B with lower productivity.... Lots of other things affect the patience of an ethnic group over and above the productivity level, and hence lots of things could have changed over the course of history to explain patience.... The findings... do not mean it is impossible to change the development level of countries or groups today. But the deep-rooted nature of development may mean we have to find other policy levers to push, as we cannot go back in time and roll back colonization, or change inherent agricultural productivity...

Note to Self: Lessons from East Asian Development: Japanese Industrial Policy: Readings:

• Oriol Pons-Benaiges (2017): Did Government Intervention Target Technological Externalities? Industrial Policy and Economic Growth in Postwar Japan, 1964-1983 https://delong.typepad.com/06_tech_externalities_japan.pdf

• Chalmers Johnson (1982): MITI and the Japanese Miracle: The Growth of Industrial Policy in Japan https://archive.org/details/mitijapanesemira00chal

• Paul R. Krugman (1984): The U.S. Response to Foreign Industrial Targeting krugman-targeting.pdf...

• Paul R. Krugman (1983): Targeted Industrial Policies: Theory and Evidence https://delong.typepad.com/krugman-kc.pdf

• Nathan Lane: Manufacturing Revolutions: Industrial Policy and Networks in South Korea https://delong.typepad.com/lane-korea.pdf

Slouching Towards Utopia?: An Economic History of the Twentieth Century, 1870-2016

I. Grand Narrative

J. Bradford DeLong :: U.C. Berkeley, NBER, WCEG https://www.icloud.com/pages/0TzensY9YyNvqcY8elYagLUnQ https://www.icloud.com/keynote/0_nA1dc3XLgFa_2rEVsk3nuWQ

1.1: The Long 20th Century in Human History

The Long 20th Century began around 1870 and ended in 2016.

Before 1870 humanity was poor, and life was typically nasty, brutish, and short. Before 1870, over and over again, technology lost its race with human fecundity, and greater numbers coupled with resource scarcity to produce a humanity where most people most of the time could not be confident that they and their families would have their 2000 calories, plus essential nutrients, plus a roof over their head in a year. Before 1870 those on the make overwhelmingly focused on how to take from others or keep what they had while maintaining order, rather on how to make more for everyone. It is true that between 1800 and 1870 technology and organization gained a step or two in their race with fecundity. But only a step. Any post-1870 slackening of the pace of technological or organizational progress, or any major redivision of society’s dividends devoting less to the sinews or peace and more to the sinews of war, and “nasty, brutish, and short” would reassert itself.

But starting in 1870 all that changed. Science reached critical mass and gave birth to engineering. A liberal political order gave birth to a market economy. Engineering and the market produced an explosion of economic growth: these days one single year sees as much proportional technological and organizational advance and change in the human economy as a typical fifty years did back before 1800.

Let us set the scene with an introductory note:

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.

Sources of American Exceptionalism

In 1870 the focus of economic growth crossed the Atlantic to America, where continent-wide scale, a flood of immigration, vast resources, and an open society that made inventors and entrepreneurs culture heroes welcomed economic growth. In the United States the Belle Époque, the Gilded Age, the period of the explosion of prosperity set in motion around 1870 lasted without interruption longer than elsewhere in the world. China collapsed into revolution in 1911. Europe descended into the hell of World War I in 1914. In America the period of progress and industrial development lasted longer—perhaps from when the guns fell silent at the end of America’s Civil War at Appomattox in 1865 until the start of the Great Depression in the summer of 1929.

Introducing Partha Dasgupta: Economics: A Very Short Introduction

http://amzn.to/2gR2jH3

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.

DRAFT: Ancient Economies: A Malthusian Model : The math for complicating the standard Solow Growth Model with (a) a rate of population growth that depends positively on the excess of spending on necessities above "subsistence" and (b) a level of the efficiency-of-labor that depends inversely on population, as a higher population induces resource scarcity that makes labor less productive. For understanding both the long-term apparent stagnation of living standards between the Neolithic and the Industrial Revolutions, and for understanding the rise and fall of ancient civilizations. Question: How should we add on to the Python class for the Solow Growth Model to turn this into a tool for doing problem sets for Econ 101b (and perhaps 135):

https://nbviewer.jupyter.org/github/braddelong/LS2019/blob/master/2019-08-17-Ancient_Economies.ipynb

Note to Self: A historical question I want answered: What difference did it make for medieval economies—and for the relative prosperity of the Muslim world in the middle ages—that Muhammed was a merchant?

Note to Self: Playing with Sargent-Stachurski QuantEcon http://quantecon.org: I have long been annoyed with the standard presentation of the Solow Growth Model because the state variable k—capital per effective worker—is not observable in the real world, while the capital-output ratio κ is. Moreover, the steady-state capital-output ratio has an easy to remember and intuitive description: it is the savings rate divided by the economy's steady-state investment requirements. Capital per effective worker has no such intuitive description. Plus the capital-output ratio exhibits exponential convergence to the steady-state. Capital per effective worker does not:

No Longer Fresh at Project Syndicate: Robo-Apocalypse? Not in Your Lifetime: "Will the imminent “rise of the robots” threaten all future human employment? The most thoughtful discussion of that question can be found in MIT economist David H. Autor’s 2015 paper, “Why Are There Still so Many Jobs?”, which considers the problem in the context of Polanyi’s Paradox. Given that “we can know more than we can tell,” the twentieth-century philosopher Michael Polanyi observed, we shouldn’t assume that technology can replicate the function of human knowledge itself. Just because a computer can know everything there is to know about a car doesn’t mean it can drive it. This distinction between tacit knowledge and information bears directly on the question of what humans will be doing to produce economic value in the future... Read MOAR at Project Syndicate

Reda Cherif and Fuad Hasanov: Principles of Industrial Policy: "The return of the policy that shall not be named: The 'Asian miracles' and their industrial policies are often considered as statistical accidents that cannot be replicated.... We can learn more about sustained growth from these miracles than from the large pool of failures.... Industrial policy is instrumental in achieving sustained growth. Successful policy uses state intervention for early entry into sophisticated sectors, strong export orientation, and fierce competition with strict accountability...

Pam Jakiela: Taking Preferences Seriously, Not Literally:

Hoisted from Eleven Years Ago: Poverty Traps: The High Price of Investment Goods in Poor Countries http://www.bradford-delong.com/2007/06/poverty-traps-t.html:Here is how Larry Summers and I formulated it back in the early 1990s, and I believe that we were correct:

Joseph Ford Cotto: J. Bradford DeLong says "NAFTA is just not a big deal for the U.S.", explains why: "Support for Bernie Sanders and the Donald did not rise out of nowhere, after all. In such turbulent waters as these, it is important to seek the guidance of a wise, seasoned captain. Insofar as the sea of dollars and cents is concerned, J. Bradford DeLong is just that fellow. He is "a professor of economics at UC Berkeley, a weblogger for the Washington Center for Equitable Growth http://equitablegrowth.org/blog, a research associate of the National Bureau of Economic Research, and former deputy assistant secretary of the U.S. Treasury in the Clinton administration .... He also writes the weblog Grasping Reality: http://bradford-delong.com," as DeLong's U.C.B. biography explains. Dr. DeLong recently spoke with me about many topics relative to our nation's economy. Some of our conversation is included below....

Brad DeLong: FT Alphachatterbox: Hamiltonian Economics

After hearing Ellora Derenoncourt rave about being a TA for Melissa Dell and her Econ 142: The History of Economic Growth, I have decided to go full parasite and stand up my own version of the course for the spring of 2020 here at U.C. Berkeley. Tell me what you think! Here are my notes so far:

Course to be at: Teaching Economics: https://delong.typepad.com/teaching_economics/econ-135.html

Econ 135: Economic Growth in Historical Perspective

This course examines the idea and reality of economic growth in historical perspective, beginning with the divergence between human ancestors and other primates and continuing through with forecasts for the 21st century and beyond. Topics covered include human speciation, language, and sociability; the discovery of agriculture and the domestication of animals; the origins and maintenance of gross inequality; Malthusian economies; the commercial and industrial revolutions; modern economic growth; international prosperity differentials; OECD convergence and East Asian miracles; the political economy of growth and stagnation; and the stubborn persistence of poverty.

Note to Self: Comment on Richard Baldwin: The Globotics Upheaval: Globalization, Robotics, and the Future of Work: Start from the observation the the human brain is a massively-parallel supercomputer that fits inside a breadbox and draws 50 watts of power.

For 6,000 years, since the domestication of the horse, human backs, human thighs, and human fingers have becoming less powerful as sources of economic value, as animals and machines have increasingly competed with and substituted for them. Up until recently, however, every domesticated animal every machine had required a microprocessor. And the highly-productive decentralized societal division of labor of enormous extent created huge and increasing amounts of need for white-collar information processing: the accounting, control, transmission of information, and purveyance of misinformation jobs that are most of what people like us here do. Thus while human backs and thighs and fingers became less powerful as sources of economic value as time passed, human brains become more valuable. But now we have robots which contain their own microprocessors, and software 'bots that handle huge amounts of the white-collar information processing. So the job-creating aspects of technological creative destruction are now open to question

From this standpoint, we can worry along either of two dimensions:

The extra quarter's worth of data from the new BEA NIPA release raises this, once again, to the top of the pile: Note the contrast between the path of investment, on the one hand, implicit in the growth forecast of the effects of the Trump-Ryan-McConnell tax cut that Robert J. Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz and John. B. Taylor, and, on the other hand, reality:

If you are even 10% in the explain-the-world business—if you are even 1% in the explain-the-world business—such a sharp disjunction between what you had predicted and the outcome calls forth curiosity, interest, and explanations of why you think you went wrong and what your future research projects will be to figure it out.

Only if you are 100% in the I-am-engaging-in-vice-signalling-by-writing-bulls----to-please-my-political-masters business are you left doing <crickets> in response to such a very sharp disjunction between your predictions and reality.

Yet as I listen to each and very one of the Nine Unprofessional Republican Economists, all that I hear is: <crickets>...

• Economics as a Professional Vocation: Bulls--- Detection as a Student Learning Goal
• The Nine Unprofessional Republican Economists Have Become Even More Unprofessional

Come to think of it, none of the nine has dared to see that Steve Moore is unqualified to serve on the Federal Reserve, either—and two of the nine, Taylor and Lindsey, are, I am assured, in his corner...