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Josiah Ober: The Greeks and the Rational: The Discovery of Practical Reasons

School of Athens

Josiah Ober: The Greeks and the Rational: The Discovery of Practical Reasons: "September 19 Lecture 1. Gyges’ Choice: Rationality and Visibility. September 26 Lecture 2. Glaucon’s Dilemma: Origins of Social Order. Lecture 3. Deioces’ Ultimatum: How to Choose a King. Lecture 4. Cleisthenes’ Wager: Democratic Rationality. Lecture 5. Melos’ Prospects: Rational Domination. Lecture 6. Agamemnon’s Cluelessness: Reason and Eudaimonia...

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I never understood why so many people were desperate to interpret financial crises as things that destroyed firms' abilities to produce rather than things that made people want to hoard their cash. Yes, a numbers of firms are short of cash and need trade credit. But most healthy firms do not:

Felipe Benguria and Alan M. Taylor: After the Panic: Are Financial Crises Demand or Supply Shocks? Evidence from International Trade: "Are financial crises a negative shock to demand or a negative shock to supply?... Arguments for monetary and fiscal stimulus usually interpret such events as demand-side shortfalls. Conversely, arguments for tax cuts and structural reform often proceed from supply-side frictions.... simple small open economy... deleveraging shocks that impose binding credit constraints on households and/or firms.... Household deleveraging shocks are mainly demand shocks, contract imports, leave exports largely unchanged, and depreciate the real exchange rate. Firm deleveraging shocks are mainly supply shocks, contract exports, leave imports largely unchanged, and appreciate the real exchange rate.... Empirical analysis reveals a clear picture: after a financial crisis event we find the dominant pattern to be that imports contract, exports hold steady or even rise, and the real exchange rate depreciates. History shows that, on average, financial crises are very clearly a negative shock to demand...

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I confess that I am a profound skeptic about deep negative nominal interest rates. A slightly higher inflation target and policies to fight the asset price configuration called "secular stagnation" would largely obviate the need, and leave behind a problem easily and straightforwardly dealt with via expansionary fiscal policy. And we really do not know how such an institutional reconfiguration would actually work. Confronted with a choice between known and understood policies that would work, and new ones with unknown side effects and effects that might, I do not undertstand the enthusiasm for the second:

Ruchir Agarwal and Miles Kimball: Enabling Deep Negative Rates to Fight Recessions: A Guide: "we (i) survey approaches to enable deep negative rates... (ii) establish... enabling negative rates while remaining at a minimum distance from the current paper currency policy and minimizing the political costs; (iii) discuss why standard transmission mechanisms... are likely to remain unchanged in deep negative rate territory; and (iv) present communication tools that central banks can use...

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I think Kevin Drum is wrong here: if Trump were merely a race-baiter, he could turn it and and off—and would, for tactical effectiveness reasons. He can't turn it off. The Washington Post of course has bigger problems: it's not a "branding crisis":

Kevin Drum: Here’s How Donald Trump Can Fix His Racist Branding Problem: "The Washington Post has a headline today that makes you go hmmm: 'Trump Vexed by Branding Crisis: How to Shed the Label of "Racist".' I think we all have a pretty good idea of how Trump could avoid being called a racist. He could stop saying racist stuff all the time. Easy peasy. For my money, I probably wouldn’t call Trump a racist.... I’d call him a race-baiter... someone who may or may not be personally racist but is perfectly happy to make money or win political office by appealing to racists.... Race-baiters the most dangerous of them all. Fox News is far worse than their viewers and Donald Trump is far worse than his base. Those are the people to fight, not the yahoos who yell 'Send them back!' at Trump rallies. Without Trump, they’d just be sitting at home and occasionally telling off-color jokes to their buddies. It’s only with people like Trump around that they become toxic...

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Telling lies about what the law has been in the past in the hope of persuading people that this is how the law should be in the future: this is a very strange mode of rhetoric indeed...

I suppose we owe this to Sir Edward Coke: "I am afraid we should get rid of a great deal of what is considered law in Westminster hall, if what Lord Coke says without authority is not law..."—William Best (1824).


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Neoliberalism and Its Discontents: Podcast

Brad DeLong, Reed Hundt, and Joshua Cohen: Neoliberalism and Its Discontents: "At the end of the Carter administration and throughout the Reagan Revolution, belief in the power of markets became America's preferred economic policy doctrine. President Bill Clinton all but announced the triumph of free markets when he declared that 'the era of big government is over'. President Barack Obama faced the worst economic crisis since the Great Depression and pushed a recovery plan that was more limited than many had hoped, seeming to protect the very sectors that had created it.... In his new book, A Crisis Wasted, Reed Hundt... makes the argument that Obama missed an opportunity to push for a new progressive era of governance, a miscalculation that ultimately hobbled his administration.... A very special conversation between Hundt and DeLong about the limits of, and challenges to, free-market economics... in conversation with Joshua Cohen, co-editor of Boston Review...

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Gary Forsythe: A Critical History of Early Rome: "Beloch (1926, 602) estimated that at the end of the Latin War Roman territory had grown to 5,289 square kilometers, which is about three and a half times his estimate of 1,510 square kilometers for the size of the Roman state in 396 B.C., following the conquest and annexation of Veii. Under the Varronian year 332 B.C., Livy (8.17.10) records that the Romans concluded a treaty with Alexander, the king of Epirus and the uncle of Alexander the Great, who had crossed over into southern Italy at the request of Tarentum in order to defend the Greek cities from the expanding pressure of Oscan-speaking people.15 The only major military operations conducted by the Romans during these years were directed against the Volscian town of Privernum (Livy 8.20–21). This minor war, however, offers perhaps the first clear picture of Roman stan- dard methods and thoroughness in dealing with resistance. After putting up a valiant effort against Rome for a few years, Privernum was finally cap- tured in 329 B.C., and the principal leader of the resistance, Vitruvius Vaccus, was apprehended and executed, while the senators of Privernum were sentenced to live north of the Tiber. Although Livy (8.21.10) says that the general population of Privernum was given Roman citizenship, it is likely that they received the status of civitas sine suffragio, just like the neigh- boring Volscian towns of Fundi and Formiae. Besides this modest augmen- tation, the Romans founded three colonies at this time. In 334 (Livy 8.16.13–14), the Latin colony of Cales was established with twenty-five hun- dred settlers, on land in northern Campania near Teanum Sidicinum and the Ager Falernus, one of the richest agricultural districts in Italy. In 329 (Livy 8.21.11), three hundred settlers were sent out to form a Roman maritime colony at the Volscian coastal site of Anxur, which was renamed Terracina. It commanded a strategic node along the Volscian coast, a place where the mountains come down almost to the sea, forming a narrow pass. In 328 (Livy 8.22.2), a Latin colony was founded at Fregellae on the farther bank of the Liris River near its junction with the Trerus. It was doubtless intended to be an outpost to confront the Samnites...

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Tim Duy believes that the Fed will cut interest rates fast enough and far enough to avoid a recession, and that that—rather than a recession—is the scenario driving the current inversion of the yield curve. After the recent declines in interest rates, I would give that only a 50-50 chance of being true. Equilibria are fragile, and multiple. At an equity P/E of 20, a 100 basis-point fall in the very long bond rate should carry with it a 20% increase in equity value, holding risk adjusted expected future cash flows constant. Yet the S&P composite has not moved since late October. That is a hell of a large fall in risk adjusted expected future cash flows:

Tim Duy: On Rising Recession Probabilities: "My interpretation is that market participants have correctly anticipated the Fed’s reaction function with the expectation of substantial easing in the months ahead hence creating the inversion on the short end. This easing will be sufficient to derail impending recessionary threats. If the Fed’s easing was expected to be insufficient, I would expect that the 10s2s spread would be inverted. Consequently, at this point I still do not expect a recession in the near year. Under my baseline scenario, the Fed’s upcoming rates cuts will slightly steepen yield curve and the picture will look like 1995...

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I would like to say that the very sharp Rana Foroohar is wrong here, that global recession probabilities are low. The problem is that we live in a world of multiple equilibria, and so—if enough people are now thinking like she is thinking—she may well be right: Rana Foroohar: Braced for the Global Downturn: "Well-meaning central bankers cannot offset the impact of an erratic US president on the real economy.... Last week’s market volatility... at heart, it’s about the inability of the Federal Reserve to convince us that its July rate cut was merely 'insurance'... Any number of indicators now show... [that] the global downturn has already begun. Asset prices will undoubtedly begin to reflect this, and possibly quite soon.... 'US equities are at the second most expensive period in 150 years', says Mr Lindahl. 'Prices must fall'. I don’t think it’s a question of whether we’ll see a crash—the question is why we haven’t seen one yet...

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Frederick Douglass (1870): The Cause of Death of Robert E. Lee: "We are beginning to get at the cause of General Lee's death. Jeff. Davis says, that 'he died of a broken heart'; and one journal has declared, that he died being sadly depressed at the condition of the country, that he could stand it no longer. From which we are to infer, that the liberation of four millions of slaves and their elevation to manhood, and to the enjoyment of their civil and political rights, was more than he could stand, and so he died...

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Let me direct your attention to one of the WCEG's young whippersnapper grantees writing smart things: Samir Sonti: The Politics of Inflation: "amir Sonti studies 20th century U.S. labor and economic history. Sonti’s dissertation focuses on the politics of inflation in the United States from the 1930s to the 1980s. He received a bachelor of arts degree in political science and a bachelor of science degree in economics from the University of Pennsylvania...

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I used to push back against those who said that, with Trump administration immigration policy, the cruelty is the point. I can no longer do so. In Guatemala, Maria Isabel Bueso would die quickly for lack of cutting-edge treatments:

Farida Jhabvala Romero: Feds to Reconsider Case of Bay Area Woman Getting Lifesaving Treatment Who Faces Deportation: "Maria Isabel Bueso has overcome many challenges as a result of the debilitating genetic disease she was born with that eventually left her confined to a wheelchair, breathing through a device and reliant upon weekly treatments to survive. She trained to become a dance teacher and now is an instructor, and she graduated summa cum laude from California State University, East Bay—where she set up a scholarship fund for students with disabilities. She also advocates for people with her disease and other rare illnesses, traveling to Washington, D.C., to lobby for medical research. Now, Bueso is fighting for her life once more. Immigration authorities previously told her and her family to leave the U.S. by mid-September—or face deportation to her home country of Guatemala...

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Being poor—and, more so, being poorer than you had expected you would be and having to retrench—stresses you out and makes you unhappy. Blanchflower and Clark decompose the children-make-you-unhappy fact in Europe into a "poverty" and an "other" component, and what they report makes a slot of sense: Children in a well-funcioning family setting are a source of profound happiness, and poverty in particular and stress in general are sources of profound unhappiness:

David G. Blanchflower and Andrew E. Clark: Children, Unhappiness and Family Finances: Evidence from One Million Europeans: "The common finding of a zero or negative correlation between the presence of children and parental well-being continues to generate research interest.... One million observations on Europeans from ten years of Eurobarometer surveys.... Children are expensive, and controlling for financial difficulties turns almost all of our estimated child coefficients positive.... Marital status matters. Kids do not raise happiness for singles, the divorced, separated or widowed...

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Hoisted from the Archives: In the interest of keeping our eye on the ball in FinReg, let me present Alan Blinder stating that incentives in banks that are too big to fail simply must be totally and completely broken and misaligned:

Alan Blinder (2005): On Raghuram Rajan: "I’d like to defend Raghu a little bit against the unremitting attack he is getting here for not being a sufficiently good Chicago economist.... The way a lot of these funds operate, you can become richer than Croesus on the upside, and on the downside you just get your salary. These are extremely convex returns. I’ve wondered for years why this is so. You don’t need to have public regulatory concerns to worry about it.... I remember a discussion I had with... one of the principals of the LTCM, while it was riding high. He agreed with me that the skewed incentives are a problem. But they weren’t solving it.... What can make it a systemic problem is herding, which Raghu mentioned, or bigness, which is related to the discussion that Fraga raised, and so on. If you are very close to the capital—for example, if the trader is the capitalist—then you have internalized the problem. So, it may be that bigness has a lot to do with whatever systemic concerns we have. Thus, I’d draw a distinction between the giant organizations and the smaller hedge funds. Whether that thinking leads to a regulatory cure, I don’t know. In other domains, we know, bigness has been dealt with in a regulatory way...

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Let me endorse this from Larry Summers: Hailey Waller: Economy at Riskiest Point in a Decade, Lawrence Summers Says: "Former treasury secretary calls U.S. trade conflicts ‘foolish’. Economy to be ‘worse off’ based on current policies: Summers: The U.S. and world economies are at their riskiest moment since the global financial crisis a decade ago as trade tensions continue to grow, former Treasury Secretary Lawrence Summers said on Sunday. Summers spoke on CNN’s 'Fareed Zakaria GPS' about what he called a 'sadomasochistic and foolish trade conflict' the U.S. has engaged with China under President Donald Trump. 'We are losing very substantial amounts in terms of uncertainty, reduced investment, reduced job creation, for the sake of benefits that are very unlikely to be of substantial magnitude.... I don’t think there’s any question that American workers are going to be poorer, American companies are going to be less profitable, and the American economy is going to be worse off because of the course we’re on'...

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The interest rate is an optimal-control variable. Almost always, in an optimal control problem—like in steering a boat—you are doing one of two things (1) as much as you can (wheel hard left or hard right), or (2) staying the course (wheel center, unsure whether your next move will be to nudge it left or right, but certainly your next move will be small. Only when something special is going on—like following a narrow channel, or passing a reef—do you tend to deviate from that rule. The Fed knows that its next move is highly likely to be a rate cut. I see no reef. I see no island. Why has the rate cut not happened already? What is the reason?: Tim Duy: Gearing Up For A Rate Cut: "One take on the numbers is fairly positive. The economy continues to generate jobs at a pace sufficient to either lower unemployment further or encourage more people to enter the labor force. The jump in wage growth might even suggest that the economy is finally bumping up against full capacity and that is the primary culprit behind slower job growth. And maybe the August jobs number is revised up. Another take is less positive.The job market has clearly slowed, and, after accounting for the Census hires, may have slowed very close to the point where unemployment at best holds steady. That significant downshift in momentum is very worrisome. The second derivative here is not our friend. Moreover, don’t take too much comfort in the stronger wage numbers as that can easily be a lagging variable; wages might not take a hit until unemployment starts rising.... GDP tracking measures from the New York and Atlanta Federal Reserve Banks are both at a below trend 1.5% for the third quarter. New York is looking at 1.1% growth for the fourth quarter. Most definitely nothing to write home about...

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Per Kurowski: We Need Worthy and Decent Unemployments: "Two decades ago, concerned about growing unemployment, half in jest, in an Op-Ed in El Universal of Caracas, I asked something like whether it was better to have one hundred thousand unemployed running each on his side as broody hens, or to seat them all in a huge human circle where everyone would scratch the backs of one of his neighbors, charging a lot for his services, while his own back was scratched by his other neighbor, at an equally high price. The tragedy is that this question seems to me now less and less hypothetical...

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Nice piece on the origins of the alt-right: John Ganz: The Year the Clock Broke: "Murray Rothbard loved The Godfather... even thought that the Godfather reflected his own worldview: 'Organized crime is essentially anarcho-capitalist, a productive industry struggling to govern itself.'... As early as the Reagan years, [Samuel] Francis called for Middle Americans to ally with a populist, 'Caesarist' presidency to accomplish their revolution, just as the French bourgeoisie aligned themselves with Napoleon.... He didn’t know it yet, but his Bonaparte was right there the whole time. On November, 9, 1992... New York magazine put Donald Trump on the cover...

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One problem here is that strongly progressive taxes, national health insurance, expanded social security, and universal basic income are the most effective remedies to inequality and insecurity, yet those who vote for modern-day neo-fascist poliicians vote for politicians who oppose such police, root and branch—maybe not in their rhetoric, but in committee and on the floor where the rubber hits the road. The dominant rhetorical mode is not "we need to help each other through our agency that is the government" but rather "we need to crush our enemies, and then everything will be okay". My view is that equitable growth policies are worth doing for their own sake, but do not expect them to have much purchase in preserving liberal democracy:

Dani Rodrik: What’s Driving Populism?: "If... [fascism] is rooted in... culture and values, however, there are fewer options. Liberal democracy may be doomed by its own internal dynamics and contradictions.... Racism in some form or another has been an enduring feature of US society and cannot tell us, on its own, why Trump’s manipulation of it has proved so popular.... Will Wilkinson... urbanization... creates thriving, multicultural, high-density areas where socially liberal values predominate. And it leaves behind rural areas and smaller urban centers that are increasingly uniform in terms of social conservatism and aversion to diversity. This process, moreover, is self-reinforcing.... The cultural trends... are of a long-term nature, they do not fully account for the timing of the populist backlash.... Those who advocate for the primacy of cultural explanations do not in fact dismiss the role of economic shocks. These shocks, they maintain, aggravated and exacerbated cultural divisions, giving... [fascists] the added push they needed..... The precise parsing of the causes... may be less important than the policy lessons.... There is little debate here. Economic remedies to inequality and insecurity are paramount...

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The extremely sharp center-right economist Ricardo Hausmann comes from Venezuela, and has been trying to understand the roots of the collapse of the social contract there. The great fear is that Venezuela is, for us, the canary in the coal mine. His argument is strong, and I think that I have heard his argument before, in Plutarch's understanding of the downward spiral of the last days of the Roman Republic:

Plutarch: _ Life of Tiberius Gracchus_: "This is said to have been the first sedition at Rome, since the abolition of royal power, to end in bloodshed and the death of citizens; the rest though neither trifling nor raised for trifling objects, were settled by mutual concessions, the nobles yielding from fear of the multitude, and the people out of respect for the senate...":

Ricardo Hausmann: How the Failure of “Prestige Markets” Fuels Populism: "Given the requirements of today’s technology, dismissing expertise as privilege is dangerous. That's why a well-functioning prestige market is essential to reconciling technological progress and the maintenance of a healthy polity.... Henrich suggests... prestige is payment for the generosity with which the prestigious share their knowledge.... A model of human behavior proposed by George Akerlof and Rachel Kranton.... Rising wage differentials may destroy the equilibrium proposed by Henrich. If the prestigious are already very well paid, and are not perceived as being generous with their knowledge, prestige may collapse. This may be another instance of the incompatibility between homo economicus and community morality emphasized by Samuel Bowles.... The collapse in the prestige equilibrium can do enormous damage to a society, because it may break the implicit contract whereby society uses critical skills. To see why and how, look no further than what has happened in Venezuela...

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It is certainly true that you have to look at both demand and supply to figure out what happens in equilibrium. But Milton Friedman's first rule is that supply curves do slope upward. Things have to be very weird indeed for equilibrium effects to do more than modestly attenuate impact effects. Sometimes things are really weird But that is not the way to bet: Raj Chetty: In Conversation: "We talked about moving-to-opportunity.... You might worry that if we help one low-income family move out of a low-opportunity area, do they simply get replaced by another low-income family who moves into that area, so we have essentially a musical chairs phenomenon?... Empirical research has recently mainly been focused on identifying individual-level effects. But trying to figure out how things play out in equilibrium is a very challenging problem, which, I think, is something we should have on our agenda to focus on going forward...

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Filipe Campante and Edward L. Glaeser: Yet Another Tale of Two Cities: Buenos Aires and Chicago: "Buenos Aires and Chicago grew during the nineteenth century for remarkably similar reasons. Both cities were conduits for moving meat and grain from fertile hinterlands to eastern markets. However, despite their initial similarities, Chicago was vastly more prosperous for most of the twentieth century. Can the differences between the cities after 1930 be explained by differences in the cities before that date? We highlight four major differences between Buenos Aires and Chicago in 1914. Chicago was slightly richer, and significantly better educated. Chicago was more industrially developed, with about 2.25 times more capital per worker. Finally, Chicago’s political situation was far more stable and it was not a political capital. Human capital seems to explain the lion’s share of the divergent path of the two cities and their countries, both because of its direct effect and because of the connection between education and political instability...

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Fifteen Worthy Reads for September 6, 2018

Worthy Reads from Equitable Growth:

  1. A working paper I thought was very good, but that for some reason did not get a lot of attention: My take was always that this was overwhelmingly that "feminized" occupations have low pay. But Folbre and Smith make a strong case that other causes are also important: Nancy Folbre and Kristin Smith: The wages of care: Bargaining power, earnings and inequality: "The earnings of managers and professionals employed in care industries (health, education, and social services), characterized by high levels of public and non-profit provision, are significantly lower than in other industries...

  2. Another working paper from our past that should have gotten more buzz than it did: Yes, "overeducation" is a thing: Ammar Farooq: The U-shape of over-education? Human capital dynamics & occupational mobility over the life cycle: "The proportion of college degree holders working in occupations that do not require a college degree is U-shaped over the life cycle and that there is a rise in transitions to non-college jobs among prime age college workers...

  3. Applause for our attempt to focus on the broader implications of rising monopoly: Noah Smith: [Economists Gear Up to Challenge the Monopolies(https://www.bloomberg.com/view/articles/2018-09-04/economists-gear-up-to-challenge-the-monopolies): "The antitrust movement is making a comeback.... Think tanks like the Washington Center for Equitable Growth are starting to zero in on the issue as well": Jacob Robbins: How the rise of market power in the United States may explain some macroeconomic puzzles - Equitable Growth: "Gauti Eggertsson, Ella Getz Wold, and I at Brown University argue that these diverse trends are closely connected, and that the driving force behind them is an increase in monopoly power together with a decline in interest rates...

  4. Equitable Growth alumnus makes an excellent catch here: Nick Bunker: Fascinating: "Fascinating dive into the data on industries with above-average earnings in the 90s, but now pay less than average": Andrew Van Dam and Heather Long: How the U.S. economy turned six good jobs into bad ones: "Six industries that provided an above-average weekly paycheck in the 1990s but now pay less than an average wage.... These downgraded jobs have one thing in common: They don’t require a college degree...

  5. Homeowner bankruptcy and foreclosure are liquidity events, not solvency events: Peter Ganong and Pascal Noel: Liquidity vs. wealth in household debt obligations: Evidence from housing policy in the Great Recession: "We use variation in mortgage modifications to disentangle the impact of reducing long-term obligations with no change in short-term payments ('wealth'), and reducing short-term payments with approximately no change in long-term obligations ('liquidity')...

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Larry Meyer: In John Cassidy: The Decline of Economics: "In our firm, we always thanked Robert Lucas for giving us a virtual monopoly. Because of Lucas and others, for two decades no graduate students are trained who were capable of competing with us by building econometric models that had a hope of explaining short-run output and price dynamics. [Academic economics Ph.D. programs] educated a lot of macroeconomists who were trained to do only two things--teach macroeconomics to graduate students, and publish in the journals...

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Josiah Ober: The Greeks and the Rational: The Discovery of Practical Reasons: "September 19 Lecture 1. Gyges’ Choice: Rationality and Visibility. September 26 Lecture 2. Glaucon’s Dilemma: Origins of Social Order. Lecture 3. Deioces’ Ultimatum: How to Choose a King. Lecture 4. Cleisthenes’ Wager: Democratic Rationality. Lecture 5. Melos’ Prospects: Rational Domination. Lecture 6. Agamemnon’s Cluelessness: Reason and Eudaimonia...

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Jess Phillips: House of Commons: ""Tonight I will vote against a general election just like I will vote against pretty much anything the current PM put in front of me.... I have no faith in literally anything the prime minister says. There is no distance that I could trust him.... The PM is playing some bully boy game, of some bully boy public school that I probably won't understand. [Tory MP shouting] Sorry, would the hon gentleman like to make an intervention? Crack on.... Yesterday I watched Conservative colleagues begging him to tell them what he wanted... to give them a deal to vote for. This is some game that three men in No. 10 have come up with to try to game the system so that they win.... Personally I will not vote for any election that falls before October 31st..... "It's just a shame that quite a lot of the people who are sat in front of me who know that what happened over the last two days is wrong are too cowardly to actually say in here, in public, what they're all saying in the tea rooms. "You've all crowed and given sympathy to me about the problems that we have in the Labour Party and you have just sat by silently as your colleagues were marched out.... "We shouldn't go on conference recess. We shouldn't be proroguing parliament. We are currently in a national crisis. This is not a game. This is not some toy we can play with.... I'm meant to believe the PM is really doing this because he has a vision for the people in this country? He has a vision that comes to him every night and it is his own face..."

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Alexis Lothian: Alice Sheldon and the Name of the Tiptree Award: "In recent days, we’ve seen questions raised on social media about whether the name of the Tiptree Award should be reconsidered.... The questions relate to Alice Sheldon’s actions at the end of her life. On May 19, 1987, she shot first her husband, Huntington Sheldon, and then herself.... The Motherboard does not believe that a change to the name of the Tiptree Award is warranted now. But we believe that this is a very important discussion, and we do not think it is over. The community that has grown up around this award since its founding in 1991 deserves to have its voice heard in any conversation as significant as renaming.... Alice Sheldon... the story of how she and her husband, Huntington Sheldon (known as Ting), died. Friends and family—and the science fiction community at the time—viewed this tragedy as resulting from a suicide pact: the desperate and tragic result of a combination of physical and mental illness and the Sheldons’ desire to die on their own terms. He was 84 years old; she was 71. However... the story can also be seen as an act of caregiver murder.... Ting’s friends and family understood his death and Alice’s as the fulfilment of an agreement between the two of them.... Phillips writes: 'Ting didn’t leave a statement, but all Ting’s friends that I talked to plus his son Peter were unanimous that it was a pact, and that Ting’s health was failing'...

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Aldous Huxley: Brave New World: "Outside, in the garden, it was playtime. Naked in the warm June sunshine, six or seven hundred little boys and girls were running with shrill yells overs the lawns, or playing ball games, or squatting silently in twos or threes among the flowering shrubs […] The air was drowsy with the murmur of bees and helicopters. The Director and his students stood for a short time watching a game of Centrifugal Bumble-puppy. Twenty children were grouped in a circle round a chrome steel tower. A ball thrown up so as to land on the platform at the top of the tower rolled down into the interior, fell on a rapidly rotating disk, was hurled through one or other of the numerous apertures pierced in the cylindrical casing, and had to be caught. 'Strange', mused the Director, as they turned away, 'strange to think that even in Our Ford’s day most games were played without more apparatus than a ball or two and a few sticks and perhaps a bit of netting, imagine the folly of allowing people to play elaborate games which do nothing whatever to increase consumption. It’s madness. Nowadays the Controllers won’t approve of any new game unless it can be shown that it requires at least as much apparatus as the most complicated of existing games'...

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Doug Jones: language Evolution: "People don’t just communicate by encoding and decoding literal meanings, but by inferring one another’s communicative intentions, always thinking 'I wonder what he meant by that'. There’s a whole branch of linguistics, linguistic pragmatics, that studies how this works. And pragmatic inference in language is just one instance of a special, powerful human aptitude for creating shared intentions. This aptitude means that there are always ways to subvert official speech, in any language, even Ascian or Newspeak. Or Korean: the news several years ago was that North Korea had banned sarcasm:׳Officials told people that sarcastic expressions such as “This is all America’s fault” would constitute unacceptable criticism of the regime׳...

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In the modern world, it is not tariff reduction but regulatory harmonization that is required for grasping increased benefits from the world division of labor. We need to work to level up rather than level down or level stupid, but we need to work to level the regulatory landscape. The Brexit hope is for a free-trade zone with the United States but also with "national sovereignty" over regulatory matters. That is just not how it works:

N. Piers Ludlow: Did We Ever Really Understand How the EU Works?: "Michael Gove... referred... to a free trade zone... from Iceland to Turkey of which Britain would, he was confident, still be part... irrespective of the outcome of the referendum. But this focus on tariffs was quaintly anachronistic, because ever since the 1980s the main target of European liberalisation efforts has... been... non-tariff barriers... regulatory convergence...

Sixteen Worthy Reads for August 30, 2018

Worthy Reads at Equitable Growth:

  1. IMHO, this is closely akin to William Julius Wilson's "the declining significance of race"—i.e., the rising significance of class: Robert Manduca: How rising U.S. income inequality exacerbates racial economic disparities: "In 1968... median African American family income was 57 percent of the median white American family income. In 2016, the ratio was 56 percent. The utter lack of progress is striking...

  2. How much of this correlation is causal? And how much is associational? I do not think we really know, in spite of studies of the build-out of broadband in France. The U.S. is a very different country. Nevertheless, I for one think that it is long past time to put universal broadband in the same bucket as basic sanitation and rural electrification—as something that is part of the citizens' share of being an American: Delaney Crampton: Why accessibility to broadband matters in reducing economic inequality in the United States: "A strong correlation between household income and in-home connectivity—a pattern that persists across both rural and economically depressed urban communities...

  3. Austin Clemens: Schumer and Heinrich Introduced a Bill to Create New Measures of Economic Growth: "Very excited.... @HBoushey and I have written extensively about the need to track growth not just for the economy as a whole but for Americans at every point along the income curve...

  4. Kate Bahn sends us to NPR's Planet Money: Kate Bahn: My Girl Joan Robinson: "My girl Joan Robinson is discussed in this episode of @planetmoney on underrated economists https://www.npr.org/sections/money/2018/08/22/641002632/the-underrated-economists...

  5. Newly-arrived at Equitable Growth, Will McGrew retweets Matthew Yglesias quoting Ryan Cooper: Will McGrew: Matthew Yglesias: "Ryan Cooper: 'There was no skills gap, nor an innovation shortage, nor an explosion of stay-at-home dads. There was a collapse in aggregate demand that was left to rot, while a lot of people who should have known better made things worse...'

  6. Equitable Growth alumnus Nick Bunker reminds us of this WCEG working paper from a year and a half ago: Emmanuel Saez, Thomas Piketty, and Gabriel Zucman: Economic growth in the United States: A tale of two countries: "We combine tax, survey, and national accounts data to build a new series on the distribution of national income...

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Erica Grieder (2015)The Politics of Jade Helm: "Greg Abbott’s announcement... that he would direct the Texas State Guard to monitor Operation Jade Helm... has been widely derided as political pandering, stoking paranoia, wasting state resources, and making Texas look silly. Way harsh, guys.... LTC Mark Lastoria did a good job of explaining the purpose of the operation and how local residents specifically might be affected. Less clear, at least to me, is whether the community as a whole was being unduly conspiratorial.... Several... had tinfoil-hat type questions.... Others may just have been wondering whether to make note of any planned amphibious landings at Lost Pines, or trying to assess the risk of cross-fire at Buc-ees. The latter type of concern is not deranged, especially coming from civilians who may have had little personal experience with the military or military personnel. And Abbott’s announcement is apparently in response to such concerns, rather than those being fueled by the right-wing fear machine.... Abbott notes that US Special Operations Command has already assured the state that there will be no risks to the safety of residents, or their rights, but he wants the Texas State Guard to keep an eye on the situation, just in case.... Activating the Texas State Guard in such a situation would entail some costs to the state (from current appropriations) and I wouldn’t call it the best use of state resources. Other than that, though, I don’t really see the harm...

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Steve M.: Neither Haley Nor Pence Will Be the Republican Nominee: "Elizabeth Bruenig... a conversation... with several evangelical Trump supporters in Texas.... 'I asked whether any of them would be willing to vote for a more traditional evangelical challenger to Trump, should one hypothetically rise to oppose him in the primaries.... Maria Ivy warned that Pence is soft compared with Trump, too decent and mannerly.... Bob Collins agreed: “The president is having to deal with a den of vipers,” he said. “I’m not sure Pence could do that.” “It’s spiritual warfare,” Dale Ivy added, emphasizing that Trump is the only man in the field who seems strong enough to confront it.' Given the choice between a brawler who doesn't talk about Jesus enough and a devout Christian who doesn't brawl enough, evangelical voters will choose the brawler every time.... Dan Crenshaw, Tom Cotton, Liz Cheney, Matt Gaetz, Donald Junior. (UPDATE: I should add Josh Hawley to this list.)... The nominee won't be a break from Trumpism or a 'healer'...

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Duncan Black: No Method In The Madness: "One might be tempted to see bucking trade orthodoxies and reconsidering our various relationships with China as good things. They probably are good things! But Trump has no idea what he's doing and even if he accidentally settled on smart policies he'd forget about them and do something differently the next day...

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Duncan Black: But 100% Of Trump Supporters Who Say They Still Support Trump Still Support Trump: "The bizarre coverage of the electorate in the age of Trump-and all reporters are quite aware of this criticism and they do it anyway-is that the only voters who matter are the people who support Trump. Weirdly if you focus on them, it seems like Trump has 100% support!... Trump has never been popular.... But Obummer was always treated as a fairly unpopular president-with his critics dominating the narrative-and Trump has been treated as a popular one. Again, reporters know this.... They are not too stupid to be aware that this is what they have been doing.... 'Trump's low approval provides a unique challenge for Democrats' will be a NYT headline soon. And the sad thing is, Democrats will believe it...

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John Haltiwanger: @jchaltiwanger: "In the past 24 hours Trump cancelled a trip to Denmark because it wouldn’t sell him Greenland, referred to American Jews who vote Democratic as disloyal, and tweeted Israeli Jews view him as the 'second coming of God' and the 'King of Israel'...

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Kevin Drum: Donald Trump Is Not Well: "Prime Minister Mette Frederiksen of Denmark said today that talk of selling Greenland to the US was an “absurd discussion,” adding that Greenland Premier “Kim Kielsen has of course made it clear that Greenland is not for sale. That’s where the conversation ends.” Donald Trump responded by canceling his upcoming visit to Copenhagen: Donald J. Trump: 'Denmark is a very special country with incredible people, but based on Prime Minister Mette Frederiksen’s comments, that she would have no interest in discussing the purchase of Greenland, I will be postponing our meeting scheduled in two weeks for another time...' Can we finally start talking publicly about Trump’s mental state? This is the action of a child, not an adult in full control of his faculties. Everyone aside from Trump understood that his Greenland compulsion was a sign of cognitive regression in the first place, and this episode demonstrates that it was no passing fantasy. Trump took it seriously enough to treat Frederiksen’s comments as just another incitement to a feud with a political enemy. The man is not well. I don’t care what you want to call his condition, but he’s not well. I can only shiver at the thought of what the folks who work regularly with Trump really think of him these days...

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Ben Thompson: The WeWork IPO: "The 'unsavoriness'... is hardly limited to the fact that WeWork can stiff its landlords in an emergency. The tech industry generally speaking is hardly a model for good corporate governance, but WeWork takes the absurdity an entirely different level. For example: WeWork paid its own CEO, Adam Neumann, $5.9 million for the 'We' trademark.... WeWork previously gave Neumann loans to buy properties that WeWork then rented. WeWork has hired several of Neumann’s relatives, and Neumann’s wife would be one of three members of a committee tasked to replace Neumann if he were to die or become permanently disabled over the next decade. Neumann has three different types of shares that guarantee him majority voting power.... Neumann has already reportedly cashed out 700 million of his holdings via sales and loans. Everything taken together hints at a completely unaccountable executive looting a company that is running as quickly as it can from massive losses that may very well be fatal whenever the next recession hits.... The WeWork bull case and bear case... both are the logical conclusion of effectively unlimited capital. The bull case is that WeWork has seized the opportunity presented by that capital to make a credible play to be the office of choice for companies all over the world, effectively intermediating and commoditizing traditional landlords. It is utterly audacious, and for that reason free of competition. The bear case, meanwhile, is that unlimited capital has resulted in a complete lack of accountability and a predictable litany of abuses, both in terms of corporate risk-taking and personal rent-seeking...

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Harry Brighouse: Advice for New College Students: "Bear in mind that while there’s such a thing as getting into too much debt, there’s also such a thing as working too many hours. Seek balance (Finding it is easier said than done). Choose classes on the following bases: does the subject interest you?; how big is the class? (seek out small classes even if you are shy; especially if you are shy, because that’s how you’ll learn not to be); how good is the professor? How do you know who’s a good professor?... Do they engage?... Are they open to a full range?... Do they make you write a lot? (if so, that’s a positive, not a negative) Do they seem to enjoy teaching?... Find out from your friends. Or from your enemies if that’s the best you can do!...

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Donald Trump: That is why we need strong, sound, and steady [pause] leadership, at the United States Federal Reserve. I have nominated Jay to be our next Federal Chairman. [pause] And so important, because he will provide exactly that type of leadership. He's strong. He's committed. He's smart. And, if he is confirmed by the Senate, Jay will put his considerable talents to work, leading our nation's independent central bank. Jay has learned the respect and admiration of his colleagues for his hard work, expertise, and judgment. Based on his record, I am confident Jay has the wisdom and leadership to guide our economy through any challenges that our great economy may face...

Donald Trump: Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to “will” the Economy to be bad for purposes of the 2020 Election. Very Selfish! Our dollar is so strong that it is sadly hurting other parts of the world. The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!..

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Guido Alfani and Cormac Ó Gráda: The Timing and Causes of Famines in Europe: "Studies of modern famines tend to consider them ‘man-made’, resulting from war or from adverse shocks to food entitlements. This view has increasingly been applied to historical famines, against the earlier Malthusian orthodoxy. We use a novel dataset and temporal scan analysis to identify periods when famines were particularly frequent in Europe, from ca. 1250 to the present. Up to 1710, the main clusters of famines occurred in periods of historically high population density. This relationship disappears after 1710. We analyse in detail the famines in England, France and Italy during 1300–1850, and find strong evidence that before 1710 high population pressure on resources was by far the most frequent remote cause of famines (while the proximate cause was almost invariably meteorological). We conclude, in contrast with the currently prevailing view, that most preindustrial famines were the result of production, not distribution issues. Only after 1710 did man-made famines become prevalent...

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Project Syndicate: Brad DeLong for PS Say More: "Welcome to Say More, a new weekly newsletter that brings Project Syndicate's renowned contributors closer to readers. Each issue invites a selected contributor to expand on topics covered in their commentaries, delve into new ones, and share recommendations, offering readers exclusive insights into the ideas, interests, and personalities of the world's leading thinkers. This week, Project Syndicate catches up with Brad DeLong...

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I missed this too when it came out three years ago: Chris Blattman: Black Lives Matter, Economic History Edition: "Trevon Logan’s Presidential address to the National Economics Association. Partly he calculates the productivity of his sharecropping ancestors relative to slave holding estates a century before (a persistent question in American economic history). But mainly he makes an argument for doing more qualitative interviews, which seems like an obvious point, except that systematic qualitative work is the exception in economic history (as it is in development economics): 'That richer, fuller picture reveals that the work behind the estimates came to define the way that the Logan children viewed racial relations, human capital, savings, investment, and nearly every aspect of their lives..... We also learn that it is impossible to divorce the work from its social environment, an era in which Jim Crow, segregation, and other elements of overt racial oppression were a fact of life...

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Tim Duy: Paving The Way To Rate Cuts: "The Fed will cut interest rates at least 25bp in September.... The manufacturing sector is weak.... Still... the slowdown in the sector has yet to match that of 2015-16 nor does it even approach something consistent with a recession. I have said this before, but it should be said again: As manufacturing becomes a smaller portion of the economy, we should expect more instances of manufacturing downturns or even manufacturing recessions being separate from the overall business cycle. In contrast, the much larger consumer sector of the economy continues to power forward. Retail sales sustained the rebound from turn-of-the-year weakness and core sales are again growing at a roughly 5% year-over-year rate.... The general continued strength in spending reflects the solid labor market. In my opinion, job losses need to mount before consumer spending will crumble. Low and steady initial unemployment claims indicate that those job losses are not yet on the horizon...

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Federal Reserve Bank of New York: Nowcasting Report: Aug 16, 2019: : "The New York Fed Staff Nowcast stands at 1.8% for 2019:Q3. News from this week's data releases increased the nowcast for 2019:Q3 by 0.2 percentage point. Positive surprises from building permits and retail sales were only partially offset by negative surprises from industrial production and capacity utilization...

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Worthy Reads at Equitable Growth and Elsewhere... August 16, 2018

Worthy Reads at Equitable Growth...

  1. An excellent piece from Marinescu, Dinan, and Hovenkamp: one of our working papers laying out how the analysis of how antitrust policy should be done given that compensated firms face their counter parties not just in the product but in labor markets. I think this is the most important thing I have seen out of our shop here at Equitable Growth this week*Ioana Marinescu, James G. Dinan, and Herbert Hovenkamp*: Anticompetitive mergers in labor markets: "Increased market concentration in labor markets threatens to facilitate coordinated interaction among employers that could lead to lower output and wage suppression in employment markets...

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

  3. The analysis of rising inequality and its effects in the United States and elsewhere over the past generation has suffered from a relative downplaying of the role of the family and how income gets earned and then transformed Into well-being. Central to this is the rapidly changing economic role of women in the workforce, but that is not all of it. We need more and better analyses of her public policy needs to shift in the context of changing family structure and rising inequality. Elizabeth Jacobs presents some of our thinking about how Equitable Growth is and will be trying to support this effort: Elizabeth Jacobs: Rethinking 20th century policies to support 21st century families: "...As a raft of research illustrates, economic growth is increasingly concentrating at the top...

  4. Our Kate Bahn Reminds us: Kate Bahn: "This needs to be screamed from the rooftops.... We cannot have a substantive conversation about how tight the labor market is without examining demographic disparities..." ands sends us to Equitable Growth alumnus John Schmitt quoting Janelle Jones at: Laura Maggi: Despite Drop in Black Unemployment, Significant Disparities Remain: "The African-American unemployment rate... low—compared to historic numbers. In July, it was 6.6 percent...

  5. Not to put the pressure on or anything, but I expect very good things from our Equitable Growth grant to: Matthew Staiger: Parental Resources And The Career Choices of Young Workers: "With a specific focus on the impact of parental resources on entrepreneurship and job mobility...

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