#noted Feed

Gregory Travis: How the Boeing 737 Max Disaster Looks to a Software Developer: "Design shortcuts meant to make a new plane seem like an old, familiar one are to blame.... This propensity to pitch up with power application thereby increased the risk that the airplane could stall when the pilots 'punched it'.... Pitch changes with power changes are common.... Pitch changes with increasing angle of attack, however, are quite another thing. An airplane approaching an aerodynamic stall cannot, under any circumstances, have a tendency to go further into the stall. This is called 'dynamic instability', and the only airplanes that exhibit that characteristic—fighter jets—are also fitted with ejection seats...

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Clive Crook pretends not to understand that Britain is a small island off the coast of Europe that will be much poorer without vibrant trade with Europe. Hence Britain is either (a) poor, (b) a member or quasi-member of the EU, or (c) a powerless rule-taker. No amount of national will spurred by Johnson's and Farage's desires to become prime minister can change that. Yet Crook somehow thinks or pretends to think that it can—that hard Brexit does not end in (a) or (c). I wonder why:

Clive Crook: Brexit: In the End, the U.K.'s Choice Will Be Stay or Go: "There’s no point in seeking compromise when no good compromise is possible..... what many see as an appealingly soft Brexit: so-called Norway-plus.... [It] would...leave the U.K. as a powerless rule-taker.... Support for Brexit comes chiefly from resentment at Britain’s lack of control over the policies that affect it. Norway-plus would make that problem vastly worse... politics... devoted to butting heads with the EU over successive policy innovations over which it has no say...

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Fairly Recently: Must- and Should-Reads, and Writings... (April 18, 2019)

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  • Note to Self: Is it really INBOX ZERO if one has snoozed 365 messages? Asking for a friend...

  • Comment of the Day: Tracy Lightcap: "Well, it had to happen sooner or later. Someone would resurrect Enoch Powell. Just to remind folks what people thought when he was still around: http://www.private-eye.co.uk/covers/cover-182. Yep. An unrepentant racist and a constant figure of fun for everyone with a head on their shoulders and anything resembling civic virtue...

  • Comment of the Day: Once again RJW is the first... and, I fear, perhaps the only... person on the internet to understand me: Robert Waldmann: Fascism: "'weapon-or-strong' should be 'weapon-our-strong'. Also great hyphenated fascism there. But then I read the Scruton quote. Ugh. Please don't do that again...

  • Comment of the Day: Robert Waldmann: "The problem, as you note, is that, when they are right, MMTers have a whole lot of company.... They may have contributed something... but you provide no evidence that they have...


  1. Legal Eagle: Real Lawyer Reacts to My Cousin Vinny

  2. Wikipedia: Michael Perelman

  3. William Shakespeare: Richard III

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I confess that this is not a change: this is what we had before Trump: Dani Rodrik: Peaceful Coexistence 2.0: "China has little patience for arguments that its exports have been responsible for significant whiplash in US labor markets or that some of its firms are stealing technological secrets. It would like the US to remain open to Chinese exports and investment. Yet China’s own opening to world trade was carefully managed and sequenced, to avoid adverse impacts on employment and technological progress.... Peaceful coexistence would require that... China... have a free hand to conduct its industrial policies and financial regulations, in order to build a market economy with distinctive Chinese characteristics. The US would be free to protect its labor markets from social dumping and to exercise greater oversight over Chinese investments that threaten technological or national security objectives...

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The empirical evidence so far seems to be telling us that policies prohibiting employers from knowing early about applicants' criminal records may be leading to employers not looking at all at young Black men. If this holds up, it would be very distressing and suggest strongly that such policies are truly counterproductive: Jennifer L. Doleac: Empirical Evidence on the Effects of "Ban the Box": "I have prepared this written testimony to review existing empirical evidence on policies that prohibit employers from asking job applicants about their criminal records until late in the hiring process...

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I am still recovering from my joint appearance at San Francisco's Commonwealth Club with Steve Moore, and my having to listen to an extraordinary number of things from his mouth that simply were not true. It is draining to find oneself thinking over and over again: "But this is different than you said last year" and "but that prediction will be so obviously wrong in six months".

Menzie China has a similar reaction: Menzie Chinn: Why Isn’t Stephen Moore Still Bragging about Coal As #1?: "Recall from July 2017, when Stephen Moore wrote an article entitled 'When It Comes To Electric Power, Coal Is No. 1'? No more. Now, lying has never been an impediment to Mr. Moore claiming something that was untrue (see [1] [2] [3] [4] [5] [6] [7] )—but in this case perhaps it’s just so clearly untrue, he was chastened. So much for “winning” (coal edition). Not that I’m complaining: http://econbrowser.com/wp-content/uploads/2019/02/powergenshares-1.png

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There are many, many ways of generating adverse selection effects that confound statistical studies, and very very few good instruments. Thus I have found myself always very suspicious of the whole "assessing charter schools" literature—not suspicious particularly against any one side, but just suspicious:

Patrick L. Baude, Marcus Casey, Eric A. Hanushek, Greg Phelan, and Steven G. Rivkin (April 2018): The Evolution of Charter School Quality: "Quality dynamics among Texas charter schools from 2001-2011.... Exits, improvement of existing charter schools, and higher quality of new entrants increased charter effectiveness relative to traditional public schools...

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It looks as though declining rates of marriage and increasing rates of cohabitation among the American working class are not—whatever hordes of American Enterprise Institute funders are eager to pay people to say—in any sense "sociological breakdown", but rather economic precarity:

Daniel Schneider, Kristen Harknett, and Matthew Stimpson: Job Quality and the Educational Gradient in Entry into Marriage and Cohabitation: "Men’s and women’s economic resources are important determinants of marriage timing.... Declining job quality and rising precarity in employment and suggests that this transformation may matter for the life course...

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David Glasner: Arthur Burns and How Things Fell Apart in the 1970s: "Believing the Fed incapable of controlling inflation through monetary policy, restrictive monetary policy affecting output and employment rather than wages and prices, Burns concluded that inflation could controlled only by limiting the wage increases negotiated between employers and unions. Control over wages, Burns argued, would cause inflation expectations to moderate, thereby allowing monetary policy to reduce aggregate spending without reducing output and employment. This, at any rate, was the lesson that Burns drew from the short and relatively mild recession of 1970 after he assumed the Fed chairmanship in which unemployment rose to 6 percent from less than 4 percent, with only a marginal reduction in inflation...

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David Glasner: Ralph Hawtrey Wrote the Book that Arthur Burns Should Have Read — but Didn’t: "These mistakes all stemmed from a failure by Burns to understand the rationale of an incomes policy. Burns was not alone in that failure, which was actually widespread at the time. But the rationale for such a policy and the key to its implementation had already been spelled out cogently by Ralph Hawtrey in his 1967 diagnosis of the persistent failures of British monetary policy and macroeconomic performance in the post World War II period, failures that had also been deeply tied up in the misunderstanding of the rationale for–and the implementation of—an incomes policy...

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Amy Finkelstein: Welfare Analysis Meets Causal Inference: A Suggested Interpretation of Hendren: "In a pair of interconnected, important and impenetrable papers, Nathan Hendren has provided a framework for translating estimates of the causal effects of policies into welfare analyses of these policies. In this brief note, I describe the framework-which Hendren has named 'The Marginal Value of Public Funds' (MVPF)-and how it can be used for empirical public finance welfare analysis. I also discuss how the MVPF relates to 'traditional' public finance welfare analysis tools such as the marginal excess burden (MEB) and marginal cost of public funds (MCPF). Finally, I describe several recent empirical applications as a way of further illustrating and clarifying the approach...

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Carole Cadwalladr: Facebook's role in Brexit—And the Threat to Democracy: "The UK's super-close 2016 vote to leave the European Union. Tracking the result to a barrage of misleading Facebook ads targeted at vulnerable Brexit swing voters -- and linking the same players and tactics to the 2016 US presidential election—Cadwalladr calls out the 'gods of Silicon Valley' for being on the wrong side of history and asks: Are free and fair elections a thing of the past?...

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horsesatemymoney: "Abbreviated version of prospectus: We don't make money. We probably will never make money. Our current business relies on shareholders to fund cheap cab rides in the hope that regulators will let us become a monopoly and charge whatever we want but the regulators are not playing along. We have therefore spent more money expanding into other low margin highly competitive activities like food delivery or trucking despite there being lots of specialist logistics firms so not obvious how we are going to make any money there either. We hope in the future there will be driverless cars and that we can then make money because no drivers but other people are developing them too. We have annoyed lots of regulators so we have lots of disputes and problems with regulators. We don't pay much tax and have done lots of aggressive tax planning and so we have lots of disputes and problems with tax authorities. We don't employ anyone (or we say we don't) but we have lots of de facto employees and so we have lots of disputes and problems with drivers and employment tribunals. We don't actually own many assets because we managed to get our drivers to provide their own cars. We have an app but other cab companies also have apps. Current investors want to get out and so we hope you will buy some shares anyway because you have heard of us. Also we need more money to fund the businesses that don't make money. We are expanding into more business lines that don't make money and we need more money to fund those. We are really big and you have heard of us plus we say we are a tech disruptor so don't worry that we make no money it will all be great because you will be an Uber investor...

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Arthur Goldhammer: Grieving for Notre Dame: "The survival of the towers, the facade, the windows, the walls, the buttresses—all this is more than I hoped for in those first moments of grief. It was as though France herself had emerged from the smoke and gloom, a survivor—hurting, naked, and vulnerable, but still France. Of course, Notre Dame herself has been through this before. When Paris was liberated in 1944, de Gaulle went to the cathedral for a Te Deum mass. The moment was captured on film by Henri Cartier-Bresson. On the night of the fire, almost 75 years later, President Macron also went to Notre Dame and announced that the damage would be repaired. In 1944 Notre Dame stood witness to the rebirth of France. In 2019 the French president stood witness to the survival of Notre Dame. One good turn deserves another...

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Lori Hinnant: Shock, Sadness, But No Panic: Minutes that Saved Notre Dame: "The first alarm sounded at 6:20 p.m.... For twenty-three minutes, it seemed like a false alarm. Then at 6:43 p.m. a second smoke detector went off and the fire showed its face, flickering in the wooden timbers and visible to anyone who happened to look north from Paris’ Left Bank.... At 7:49 p.m., the 19th-century spire that was the architectural masterpiece of Eugène Emmanuel Viollet-le-Duc and his post-Revolutionary restoration broke apart and fell through the nave. The bronze weathercock tumbled, taking with it three relics sealed inside in 1935. It had been 66 minutes since the first flames were spotted. The sky above the cathedral flamed orange, and the fire lurched toward Notre Dame’s iconic towers, then slipped inside. As darkness fell, 20 firefighters climbed inside the two towers 'at great risk to their lives, to attack the fire from the inside and save the building', said Laurent Nunez, deputy interior minister.... The 20 firefighters struggled on in the towers. Red-hot embers floated down from the glowing hole where the spire once stood, settling on the blackened marble floor and the pile of debris that was all that was left of the spire.... At 11:23 p.m., the fire chief said the rest of the structure, including the cathedral’s twin bell towers, had been saved. It had been within 30 minutes of collapse...

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Jonathan Portes sends us to choice quotes from a friend of Hungarian wannabe dictator Victor Urban: Roger Scruton. This is the guy whom Niall Ferguson lines up with, against George Soros and the Central European University; the rest of us rootless cosmopolites who believe in liberal virtues, the open society, and promoting and rewarding the talented whether they come with a white skin or not; and Britain's Tory government. Lots of times these days authoritarians claim to be the real liberals in the tradition of John Stuart Mill, rather than we-are-a-bundle-of-sticks-tied-with-thongs-and-thus-a-brutal-weapon-our-strong-leader-can-use-to-beat-his-enemies people.

But sometimes the mask drops:

Roger Scruton (2010): The Roger Scruton Reader: "The Cumaean Sybil... is foreseeing the troubles that come from immigration.... The immigrant... travels... at the head of a determined retinue, carrying his household gods and a divine right of residence. His intention to settle is not to be brooked.... Modern immigrants don't, on the whole, behave so badly. They don't need to. They come as the heads of families, and even if the family might comprise four wives and twenty children, it arrives to a red carpet of legal privileges, eagerly unrolled by publicly funded lawyers, and to a welcome trough of welfare benefits that few indigenous citizens can claim, however much they have contributed to the common fund.... Our immigrants come... with an unbrookable intention to make a home for themselves. And if their gods dislike the indigenous rivals, they will soon make this fact known. Such predictions as [Enoch] Powell made in his speech, concerning the tipping of the demographic balance, the ghettoization of our industrial cities, and the growth of resentment among the indigenous working class have been fulfilled...

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The extremely sharp Jeremy Stein is correct here: we should be talking about positive portfolio balance effects rather than negative reaching for risk effects, unless you have concrete evidence that the people reaching for risks are assuming positions they are unqualified to evaluate:

Olivier Blanchard: “Have low interest rates led to excessive risk taking?”.... Jeremy Stein: “It seems pretty clear that the low interest rates (plus QE) of the last several years have led to significant downward pressure on a variety of risk premiums. Of course, all of this is to be expected, and was explicitly intended to be part of the transmission mechanism for low rates--the so-called 'portfolio balance' channel, which is a nicer and more politically correct euphemism than the 'risk-taking' or 'reaching for yield' channel...

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As I have said, until there is a center-right that seriously intends to work to make people's lives better, there is no point to trying to construct a centrist coalition. Until, say, we have Republican policy economists who will not endorse a tax cut unless it will actually boost investment and economic growth, the baton is passed to the left:

Simon Wren Lewis: Triangulation or Bipartisanship Does Not Work When One Side Goes Off the Scale: "The lesson of Brexit and Trump is if you fight a culture war and lies with just well researched and targeted policy proposals, you lose. It is better to fight a culture war with an alternative vision and popular policy proposals, and a bit of class war too...

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Austan Goolsbee: You Never Know When a Recession Will Sneak Up on You: "The 2001 recession developed when the internet bubble popped.... But... the internet accounted for, at most, about 2 percent of the economy then. If we use the logic we’ve been applying to trade wars and government shutdowns, it would seem that popping the internet bubble shouldn’t have been enough to cause a recession. But it did...

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Liz Hipple on where the labor market is failing—and on how we have learned about these failures from economic research, and could learn useful things about other market failures if only we spent more money getting ourselves better data:

Liz Hipple: U.S. Economic Policies That Are Pro-Work and Pro-Worker: "The Measuring Real Income Growth Act, introduced by Senate Minority Leader Chuck Schumer (D-NY), would allow policymakers to see which income segments, demographic groups, and geographic areas of the country are actually experiencing economic growth by disaggregating the Gross Domestic Product statistics that the federal government produces. This is a key first step to better measuring.... There are clearly ways that policy could be doing a better job.... Unpredictable schedules, the lack of paid leave, and monopsony power are all examples of areas where research shows that breakdowns in the market...

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This is 100% correct: Narayana Kocherlakota: U.S. Economy: Fed Needs to Start Fighting the Next Recession Now: "Its tools are limited, so the central must compensate by being aggressive: The Fed should be taking steps now to prepare.... Less firepower than in any previous recession.... What, then, can the Fed do? In my view, it needs to be much more aggressive.... If your medicine chest is nearly empty, you want to keep your patient as healthy as possible. That means cutting interest rates now to lower the unemployment rate even further.... A pre-commitment to strong growth could also help. In the last recession and ensuing slow recovery, the Fed treated its low-interest-rate policy largely as an emergency step that would be removed within the next year or two. Instead, the Fed should publicly commit now to maintain maximum stimulus after a recession... as long as the year-over-year core inflation rate remains below 2.5 percent...

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Matthew O. Jackson and Leeat Yariv: The Non-Existence of Representative Agents: "We characterize environments in which there exists a representative agent: an agent who inherits the structure of preferences of the population that she represents. The existence of such a representative agent imposes strong restrictions on individual utility functions—requiring them to be linear in the allocation and additively separable in any parameter that characterizes agents' preferences (e.g., a risk aversion parameter, a discount factor, etc.). Commonly used classes of utility functions (exponentially discounted utility functions, CRRA or CARA utility functions, logarithmic functions, etc.) do not admit a representative agent...

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Niall Ferguson says that in order to defend intellectuals and the public sphere we should line up alongside Hungarian proto-dictator Victor Orban and his friend Roger Scruton rather than alongside George Soros, the Central European University, and... the Tory British government? There is something very wrong here. And the smart Daniel Kuehn is not amused. Nor am I. I have been around long enough to learn a thing or two, and one is that people who only find objection to what plutocrats do when they are Jewish individuals (George Soros) or institutions (Goldman Sachs) are never arguing in good faith: Daniel Kuehn: LOL at intellectuals who have trouble with the idea that there are people out there who are critical of their ideas (possibly lots of people if they consider your ideas bad enough). If this is a stumbling block for you you might be in the wrong line of work: https://twitter.com/nfergus/status/1117233701102821377. I mean I’ll whine if someone disagrees with me just like the rest of you losers do, but demanding Article 5 treatment is awfully melodramatic even for Ferguson...

Brad DeLong: Hold it! Does Ferguson claim that Scruton's "Anybody who doesn’t think that there’s a Soros empire in Hungary has not observed the facts..." is in some way taken out of context? George Soros is not running an "empire" in Hungary. Kinda surprised that Ferguson isn't invoking Article 5 to defend George Soros's place in Hungary's public sphere and the Central European University's place in Budapest against Orban...

Daniel Kuehn: "That one sort of gives away the game doesn’t it? I don’t know Scruton at all. Maybe he’s being unjustly criticized, maybe it’s perfectly justified. But meaningful defense of academic freedom in Hungary today would have to defend Soto’s if it’s to have even a hint of credibility...

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Fairly Recently: Must- and Should-Reads, and Writings... (April 12, 2019)

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  1. Peter Diamond (1965): National Debt in a Neoclassical Growth Model

  2. Barack Obama: 2010 State of the Union

  3. 2 Thessalonians 3:10: "For even when we were with you, this we commanded you, that if any would not work, neither should he eat...

  4. 1 Corinthians 11:5: "But every woman that prayeth or prophesieth with her head uncovered dishonoureth her head: for that is even all one as if she were shaven. For if the woman be not covered, let her also be shorn: but if it be a shame for a woman to be shorn or shaven, let her be covered. For a man indeed ought not to cover his head, forasmuch as he is the image and glory of God: but the woman is the glory of the man. For the man is not of the woman; but the woman of the man. Neither was the man created for the woman; but the woman for the man. For this cause ought the woman to have power on her head because of the angels...

  5. Acts 4:34: "Neither was there any among them that lacked: for as many as were possessors of lands or houses sold them, and brought the prices of the things that were sold, and laid them down at the apostles' feet: and distribution was made unto every man according as he had need...

  6. 1 Enoch 7: "It happened after the sons of men had multiplied in those days, that daughters were born to them, elegant and beautiful. And when the angels, (3) the sons of heaven, beheld them, they became enamoured of them, saying to each other, Come, let us select for ourselves wives from the progeny of men, and let us beget children.... Then their leader Samyaza said to them; I fear that you may perhaps be indisposed to the performance of this enterprise; And that I alone shall suffer for so grievous a crime. But they answered him and said; We all swear; And bind ourselves by mutual execrations, that we will not change our intention, but execute our projected undertaking.... Then they took wives, each choosing for himself; whom they began to approach, and with whom they cohabited; teaching them sorcery, incantations, and the dividing of roots and trees. And the women conceiving brought forth giants, Whose stature was each three hundred cubits. These devoured all which the labor of men produced; until it became impossible to feed them; When they turned themselves against men, in order to devour them; And began to injure birds, beasts, reptiles, and fishes, to eat their flesh one after another, and to drink their blood...

  7. Kevin Hartnett: Mathematicians Discover the Perfect Way to Multiply: "By chopping up large numbers into smaller ones, researchers have rewritten a fundamental mathematical speed limit...

  8. Joe Light: The Tax Law’s Big Winner Is the Millionaire CEO: "Cutting the top marginal rate was always going to help the wealthy the most...

  9. Gene Birz: Stale Economic News, Media and the Stock Market: "I find statistically and economically significant relationship between stale news stories on unemployment and next week’s S&P 500 returns. This effect is then completely reversed during the following week. These findings show that investors are affected by salient information and support the hypothesis that investors overreact to stale macroeconomic news reported in newspapers...

  10. Angela Lashbrook: The Next Wellness Trend Should Be Google Spreadsheets: "How focused planning—and color-coded rows and columns—can make stress melt away...

  11. David Murphy: Lock Down Your Social Media Data With the PlusPrivacy Chrome Extension

  12. Talia Lavin: I wrote up a guide to what to do if you’re targeted by the right-wing smear machine. (Remember that your relative importance doesn’t matter AT ALL; they love crushing the defenseless even more.)...

  13. John Lovett: "See but ending the Skywalker saga gives us the movie we all want: PORGS vs. EWOKS: DAWN OF JUSTICE...

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Marshall Burke, Lauren Falcao Bergquist, and Edward Miguel: Sell Low and Buy High: Arbitrage and Local Price Effects in Kenyan Markets: "Small-scale farmers are commonly observed to “sell low and buy high,” rather than the reverse. In a field experiment in Kenya... credit market imperfections.... Timely access to credit... increasing farm revenues and generating a return on investment of 29%.... In contrast to existing experimental work, the results indicate a setting in which microcredit can improve firm profitability, and suggest that GE effects can substantially shape microcredit’s effectiveness. In particular, failure to consider these GE effects could lead to underestimates of the social welfare benefits of microcredit interventions...

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BREXIT!!: Ian Dunt: Week in Review: The Frazzlfication Ends Now. For a Little Bit.: "On January 15th, Theresa May's Brexit deal was defeated by a historic margin. Immediately afterwards, Jeremy Corbyn called a no-confidence vote, which he lost. Then the Malthouse Compromise was born, as a kind of release valve for MPs' desperate stupidity. The government responded by whipping in support of its evil twin, the Brady amendment, and won, thereby sabotaging its own negotiating strategy. Labour published a new Brexit strategy, which looked suspiciously like Norway Plus but was different to it in ways they were unable or unwilling to describe. The government then proceeded to lose a vote on the policy which MPs had forced on it the week before, driving British politics into a kind of post-modern chasm in which David Lynch became the creative director of parliament. Then a group of Labour and Tory MPs split from the party to form the Independent Group. May announced she would request a dual extension of Article 50-short in the case of a deal and long if not. She later went back on this and requested only the short extension. She also secured an update to her deal with the Europeans which didn't really change anything. MPs promptly and unsurprisingly rejected it again. In response, the government put forward a convoluted motion on no-deal, whipped MPs to oppose an amendment which simplified it, lost, and had to therefore whip against its own motion even though it amounted to the exact policy it said it was pursuing anyway. Then anyone who still believed in parliamentary democracy decided maybe it wasn't such a great idea after all. Soon enough John Bercow popped up and refused to allow May to bring her deal back to the Commons a third time unless it was changed. May secured her first extension of Article 50, but then MPs passed an amendment taking control of the Brexit process, triggering a new bout of constitutional chaos. The Brexit process became a kind of executive dual carriageway, with the government pursing one strategy and parliament another. In a bid to get MPs to back her deal, May offered her own resignation as an incentive, seemingly oblivious to how logically and morally broken that was as a strategy. MPs, for their part, held a series of indicative votes and found no majority. May stripped her deal in two to get it past Bercow, put it before the Commons again, and lost again. MPs held more indicative votes and still could not find a majority. Pitiful broken toys scattered everywhere. May announced she would seek another Article 50 extension. Parliament passed a bill, independently of government, forcing her to do the thing she said she would do, given that her reputation for reliability at this stage was frankly not what it was. And then, finally, the EU offered an extension to October 31st. And now here we are. Three months later and about twelve hundred years older...

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Ellora Derenoncourt: Atlantic Slavery’s Impact on European and British Economic Development: "The economics literature on Atlantic slavery attests to its negative long-run impact on development outcomes in Africa and the Americas. What was slavery’s impact on Europe? In this paper, I test the hypothesis that slavery contributed to modern economic growth in Europe using data on European participation in the Atlantic slave trade. I estimate a panel fixed effects model and show that the number of slaving voyages is positively associated with European city growth from 1600-1850. A 10% increase in slaving voyages is associated with a 1.2% increase in port city population. Using a newly created dataset on British port-level trade, I show that for the UK, this effect is distinct from that of general overseas trade, which also increased during this period...

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This Identity Politics Stuff is Killing America...

Herman cain and steve moore Google Search

There is an argument that somebody who has built a food-processing and consumer-service business and met its payroll—like Herman Cain—should be on the Board of Governors of the Federal Reserve, in order to keep the staff and the other Governors reality-based in the sense that it would force them to explain themselves to somebody whose experience is in the real and not the financial economy. There is no argument that Herman Cain is the best businessman for the slot.

There is no argument at all that Stephen Moore—whose qualification is having played an economist on TV, and being willing to dump whatever of his previous policy positions (free trade? TPP? gold standard? anything else?) over the side whenever his political masters demand—belongs on the Fed.

The pro-Moore pro-Cain pieces that are currently being planted are reduced to closing with "Moore and Cain would only be two of 12 FOMC votes". But Republicans—save Greg Mankiw and Ross Douthat—are in lockstep behind them. Well—almost in lockstep. Herman Cain is the stronger (not strong) candidate. Republican Senators Kevin Cramer (ND), Lisa Murkowski (AK), Cory Gardner (CO), and Mitt Romney (UT) are for Moore and against Cain.

This identity politics stuff is killing America:

Jim Bianco: The Fed Would Benefit from Stephen Moore, Herman Cain: "Policymaking positions should help determine policy, not act as a rubber stamp for the staff or Chairman. They should hold divergent views, come from different backgrounds and be ready to explain themselves. Policy makers should be given the resources to flesh out their ideas. If confirmed, Moore and Cain would only be two of 12 FOMC votes. Their unique perspectives could make the Fed a stronger institution...

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HA HA HA HA HA HA!!!!! If you have no rules-of-origin checks, no tariffs, and no quotas vis-a-vis the EU, then your trade policy is not independent from the EU's, but is the EU's. It does not work any other way: Theresa May: All My Base Is Dumber than Donald Trump: "We want to obtain the benefits of a customs union—no tariffs, no rules of origin checks and no quotas -- while being able to operate our own independent trade policy...

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Barry Eichengreen, Arnaud Mehl, and Livia Chițu: Mars or Mercury Redux: The Geopolitics of Bilateral Trade: "The pre-World War I period... whether trade agreements are governed by pecuniary factors... or by geopolitical factors.... We find that defense pacts boost the probability of trade agreements by as much as 20 percentage points. Our estimates imply that were the U.S. to alienate its geopolitical allies, the likelihood and benefits of successful bilateral agreements would fall significantly. Trade creation from an agreement between the U.S. and E.U. countries would decline by about 0.6 percent of total U.S. exports...

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I would put this more strongly. Trump and the Trumpists have absolutely no idea what they should be doing or are doing with respect to U.S.-China economic relations. And it shows: Tom Mitchell: Trump Had a Chance to Gain Greater Leverage Over China But Blew It: "Last spring a senior US executive complained to a government official about President Donald Trump’s... tariffs on imports from China.... The official had a pointed response: what leverage would the executive use to change Chinese approaches that have frustrated US businesses for decades, from forced technology transfers to state-directed industrial policies?... The executive had a three-letter answer: TPP, referring to the Trans-Pacific Partnership trade pact from which the US withdrew on Mr Trump’s first day in office...

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Marcella Alsan (2015): The Effect of the TseTse Fly on African Development: "The TseTse fly is unique to Africa and transmits a parasite harmful to humans and lethal to livestock. This paper tests the hypothesis that the TseTse reduced the ability of Africans to generate an agricultural surplus historically. Ethnic groups inhabiting TseTse-suitable areas were less likely to use domesticated animals and the plow, less likely to be politically centralized, and had a lower population density. These correlations are not found in the tropics outside of Africa, where the fly does not exist. The evidence suggests current economic performance is affected by the TseTse through the channel of precolonial political centralization...

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NIMPS! Clark Kerr is supposed to have said that the life of a Berkeley Chancellor is easy as long as: (1) the students are having enough sex, (2) the alumni are watching enough football, and (3) the faculty have enough parking.

Now Carol Christ is discovering the consequences of what happens when (3) is not satisfied. And it is dire: the prospective tear-down of the 350-space Upper Hearst Parking Structure looms...

And why don't people like the "Foothill" parking lot? Sather Gate is about 300 feet above sea level, Upper Hearst about 400 feet, and Foothill about 600 feet: Carol Christ: An Update on the Upper Hearst Project: "The campus’ plan to develop faculty housing and academic space on the site of the Upper Hearst parking lot is generating legitimate concerns and questions.... We continue to engage with our colleagues at the College of Engineering and the Goldman School of Public Policy.... We need to do a better job disseminating information about the project and its impacts.... We are sharing with all members of the Academic Senate the note below that was recently sent to the College of Engineering faculty by the Provost.... We will publish and distribute a comprehensive FAQ... provide ample opportunity for comment and feedback...

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I have been dinking around thinking about minor points in Olivier Blanchard's excellent AEA presidential address, which focused on whether and when it is the relationship of the economy's growth rate to the safe government-bond interest or to the risky average profit rate that defines whether more government debt is good or bad. Blanchard's is an important and valid question. But that discussion is predicated on the assumption that the spread between the safe government-bond interest and the risky average profit rate makes sense as a risk premium. And whether or not it does—and if it does, how it works—are the big and important questions in this literature.

Study and learn from Blanchard, by all means—you can learn a lot. But keep in mind that you are ignoring the elephant in the room Olivier Blanchard: Public Debt and Low Interest Rates: "The lecture focuses on the costs of public debt when safe interest rates are low.... The current U.S. situation in which safe interest rates are expected to remain below growth rates for a long time, is more the historical norm than the exception.... Put bluntly, public debt may have no fiscal cost.... Even in the absence of fiscal costs, public debt reduces capital accumulation... [but] welfare costs may be smaller than typically assumed... [because] the safe rate is the risk-adjusted rate of return on capital. If it is lower than the growth rate, it indicates that the risk-adjusted rate of return to capital is in fact low...

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Fairly Recently: Must- and Should-Reads, and Writings... (April 10, 2019)

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  1. Does Inbox Zero count if one has snozzed 245 emails? Asking for a friend...

  2. No, I do not understand Netflix's valuation. And I do not understand what it was doing in "FAANG" in the first place. I suspect it was just Jim Cramer looking for a cute acronym, which is a hell of a way to run an porftfolio-assessment business: Tara Lachapelle: Netflix Valuation Tested by Disney, AT&T, Apple Apps: "Disney, AT&T and Apple are coming, and this time they are really bringing the heat...

  3. Sarah Halzack: Amazon Risks Missing Out on $35 Billion Click-and-Collect Market: "Big-box retailers are leading in click-and-collect services such as grocery pickup, and the gap may only widen...

  4. Command-Tab Plus: Application and Window Switching Done Right: "Hold Command and press Tab to display the active applications and then use the Tab key to cycle through your open apps...

  5. Olivier Blanchard: Public Debt and Low Interest Rates: "Seminar 237/281: 291 Departmental Seminar.... April 10 | 4-6 p.m. | 648 Evans Hall...

  6. Jeff Weintraub: Afterthoughts on the Communist Manifesto

  7. Max Nisen: Walgreens Earnings: Retail Apocalypse Now Threatens Drug Stores: "Prescription medications aren't as profitable as they used to be, leaving chains like Walgreens more exposed to industry headwinds...

  8. Ceteris Numquam Paribus: "This blog is for young economists, who want advice on how to proceed on their chosen path. Every week or so I'll bring you a short interview with an economist, giving suggestions on what to read, what to learn, and how to become an economist...

  9. Scott Lemieux: Our Green Lantern: "It’s getting hard to avoid the conclusion that Bernie is actually high on his own “our revolution will force Republican senators to vote for my agenda” supply...

  10. Joshua M. Brown: Is Economic Inequality a “National Emergency”?

  11. Robert Waldmann (2016): Dynamic Inefficiency

  12. CPPC: Senate Finance Committee Examines How PBMs Cause Higher Drug Prices: "Senator Wyden told the CEOs that 'you see there are not a lot of Democrats or Republicans holding rallies for spread pricing. Spread pricing is a rip off, plain and simple.' He asked them: if Congress proposes to ban spread pricing, will they support it? Three of the CEOs said yes they would, and the other two said they would remain neutral. For the first time, the Senate Finance Committee investigated PBMs and how they promote higher drug costs...

  13. Gramercy Park Hotel

  14. L'Express

  15. Sheisha Kulkarni

  16. John Le Carre: Tinker Tailor Soldier Spy (Novel) | Tinker Tailor Soldier Spy (Miniseries) | Tinker Tailor Soldier Spy (Film)

  17. Wikipedia: Ian Richardson

  18. Wikipedia: Colin Firth

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This annoys me. Moore and Cain have given no explanation of their switch because there is no explanation fo their switch other than that they are kowtowing to their political masters. I find David Beckworth's Scott Sumner's claim that he is "in no position to judge motives" is itself disingenuous: he is in a position to judge their motives. And that he claims not to be... erodes his credibility on all issues: Scott Sumner: Who Should Serve on the Federal Reserve Board?: "Moore and Cain were both quite hawkish when a more dovish policy was needed, and have recently become more dovish when there is far less need for monetary stimulus. Why?... President Trump is the only other person I can recall whose views on monetary policy switched from hawkish when President Obama was presiding over a weak economy, to dovish when Trump is presiding over a stronger economy.... I’m in no position to judge motives.... If their change of heart was motivated by political considerations, that would be inconsistent with the Fed’s traditional independence from the rest of the government. When politics influences Fed decisions, it can destabilize the economy...

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Martin Wolf: Xi Jinping’s China Seeks to be Rich and Communist: "President’s ambitions rely on avoiding ‘middle-income trap’ and placating a more demanding populace.... If... China... succeed[ed] in becoming rich, while its political system stayed much the same....Sustained growth of real GDP per head at 4 per cent a year over another generation.... Its economy would then be far bigger than those of the US and EU combined. This would be a new world. Yet is it a plausible one?...

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Ha Ha Ha Ha Ha!

We in the Clinton administration established the norm that Governors of the Federal Reserve should be people capable of going toe-to-toe in argument with the Fed Chair, on the grounds that the Fed Chair needed competent intellectual sparring partners if he or she, and the staff that did his or her bidding, was not to fall victim to groupthink. One of those who personally benefitted most from this norm was Larry Lindsey, who was chosen as and was quite an effective Fed Governor under George W. Bush.

But now, for some short-term advantage or other, Larry is trying to blow up this norm and outdo others in obsequious toadying to Trump.

Neither Steve Moore nor Herman Cain can make a coherent forecast. Both are for lower interest rates when Republicans and higher interest rates when Democrats are President. Neither will have the slightest impact on the thinking of the Chair or of the staff—instead, the staff will start playing the pre-Clinton administration game of, as one friend of mine who worked for the Fed called it, "Look! Here's a Governor! Let's see if we can make him say something really stupid!"

I wonder what Larry Lindsey says to himself in the morning when he looks in the mirror, and the mirror looks back and says: "You benefitted from this norm of professionalism required for Fed Governors. Now you are trying to break it. What kind of a person are you?":

Larry Lindsey: Defending Trump's Likely Fed Nominees: "Steve Moore has a master's in economics from George Mason..... Herman Cain was chairman of the board of the Kansas City Federal Reserve. He is obviously aware of how the Federal Reserve operates and how monetary policy is made.... I am a firm believer in having a variety of views, including those I do not necessarily agree with, expressed. Diversity of thought, not credentialism, is what the board needs...

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Alexander Hamilton (1787): The Federalist #9: The Union as a Safeguard Against Domestic Faction and Insurrection: "It is impossible to read the history of the petty republics of Greece and Italy without feeling sensations of horror and disgust at the distractions with which they were continually agitated, and at the rapid succession of revolutions by which they were kept in a state of perpetual vibration between the extremes of tyranny and anarchy. If they exhibit occasional calms, these only serve as short-lived contrast to the furious storms that are to succeed. If now and then intervals of felicity open to view, we behold them with a mixture of regret, arising from the reflection that the pleasing scenes before us are soon to be overwhelmed by the tempestuous waves of sedition and party rage...

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Dylan Matthews: Child Poverty Report: Food, Housing, and Money, Not Work Requirements, Work Best: "The most important report on child poverty in years is finally out.... The result of pressure from California Democratic Representatives Barbara Lee and Lucille Roybal-Allard, the provision called for the National Academy of Sciences to convene a group of experts to produce 'a nonpartisan, evidence-based report that would provide its assessment of the most effective means for reducing child poverty by half in the next 10 years'.... A 'work-based package'.... A 'work-based and universal support package'.... A 'means-tested supports and work package'...

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Steven Levitsky and Daniel Ziblatt: How Democracies Die https://books.google.com/books?isbn=1524762938: "Since the end of the Cold War, most democratic breakdowns have been caused not by generals and soldiers but by elected governments themselves.... Chávez in Venezuela... Georgia, Hungary, Nicaragua, Peru, the Philippines, Poland, Russia, Sri Lanka, Turkey, and Ukraine. Democratic backsliding today begins at the ballot box...

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Gavin Wright: Slavery and Anglo-American Capitalism Revisited: "Eric Williams... links the slave trade and slave-based commerce with early British industrial development. Long-distance markets were crucial supports for technological progress and for the infrastructure of financial markets and the shipping sector.... The eighteenth century Atlantic economy was dominated by sugar, and sugar was dominated by slavery. The role of the slave trade was central.... Adherents of an insurgency known as the New History of Capitalism have extended this line of analysis to nineteenth century America.... Such analyses overlook the second part of the Williams thesis, which held that industrial capitalism abandoned slavery because it was no longer needed for continued economic expansion...

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John Hatcher: Unreal Wages: Long-Run Living Standards and the ‘Golden Age’ of the Fifteenth Century: "The renowned ‘Golden Age’ of the fifteenth century has been exaggerated. The surge in the prosperity of the lower orders resulting from high wages, low food prices and easier access to cheap land was undoubtedly extraordinary. But not as prodigious as has customarily been assumed. Furthermore, contrary to the common belief that the economic fortunes of the labouring classes can be taken as a proxy for the living standards of the population as a whole, the scale of improvement in their good fortune was not widely shared by the rest of society who did not derive their incomes solely from wages or their subsistence solely from the market. Argument and evidence are also provided that the criticisms made in this chapter of the compilation, interpretation and application of real wage indices have implications that stretch far beyond the fifteenth century...

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Fairly Recently: Must- and Should-Reads, and Writings... (April 6, 2019)

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  • Comment of the Day: John Howard Brown: "Property rights are always conditional on the allocation of social power! When the power of the Laird of a Scots clan depended on the number of clansmen who could wield pike and claymore...

  1. Wikipedia: Late Antique Little Ice Age

  2. Mark Bergen: YouTube Executives Ignored Warnings, Let Toxic Videos Run Rampant

  3. R. Leeson et al.: [, Hayek: A Collaborative Biography]: Influences from Mises to Bartley | The Hayekian Religion | The Chicago School of Economics

  4. C. E. Cubitt: A Life of Friedrich August von Hayek https://books.google.com/books?isbn=0755202430

  5. Wikipedia: Richard Neville, 16th Earl of Warwick

  6. Wikipedia: Tywin Lannister

  7. Wikipedia: John Mair

  8. Steve Knott: Battle of Gettysburg: Why J.E.B. Stuart Ends Up in Carlisle

  9. Wikipedia: Wilhelm Voigt: "The Captain of Köpenick, which shifts the focus from the event at Köpenick itself to the prelude.... The pitiful catch-22 situation of Voigt trying to earn his living honourably in Berlin: 'No residence address-no job. No job-no residence (rented room). No residence-no passport. No passport-getting ousted...

  10. Wikipedia: Walter Nicolai

  11. Adam Gopnik: How the South Won the Civil War | The New Yorker: "Now we think that the aftermath—the confrontation not of blue and gray but of white and black, and the reimposition of apartheid through terror—is what has left the deepest mark on American history. Instead of arguing about whether the war could have turned out any other way, we argue about whether the postwar could have turned out any other way...

  12. John Van Reenen: "Why @michaelgove is unfit to hold any public office:: When Justice minister he accused me and fellow academics (including some whose relations were in the Holocaust) of being "Nazi Scientists" for saying #Brexit would be costly...

  13. Matthew Townsend and Eric Martin: Who Is Winning Trump's Trade War with China? So Far, It's Mexico: "America’s imports from Mexico surge the most in seven years as Trump’s policies shift supply chains...

  14. Potch: There should be a hotline you can call where you can safely pronounce words you've only ever read out loud for the first time, and they say 'oh sweetie' and kindly explain how it's pronounced..." vagrantcow: "Google pronunciation is a thing. 2019 is on the phone, for you...

  15. Tom Joseph: The question why Mueller didn't recommend whether Trump should face Obstruction charges is baffling people. Punting the decision to HJC doesn't make sense either. The answer may be simple—Mueller knows Trump has dementia, which makes T's intent, responsibity & charges an unknown...

  16. Brian Krassenstein: "BREAKING: "Motel 6 will pay $12 million to settle a lawsuit by the Washington state attorney general over the lodging chain's practice of handing over guest lists to U.S. Immigration and Customs Enforcement agents...

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Umair Haque: Why the Anglo World is Collapsing: "How the Dunces of Modern History Ended Up Being Us: You and me. The Anglos. I think that we have to confront a difficult truth. One that’s especially difficult for me, as an Anglo, an English-speaker, and maybe for you, too. Our societies are not looking like they are going to make it. Take a hard look at America and Britain. Do these seem like sane, enlightened, thinking societies to you anymore? Or just places where the most aggressively ignorant, cruel, and abusive rise to the top—cheered on by people who wish they were the most aggressively ignorant, cruel, and abusive?...

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The thing to note about both Cain and Moore is that they are for: (i) the gold standard, (ii) sound money, (iii) market rather than artificially-low interest rates, (iv) quantitative easing, and (v) low interest rate Federal Reserve policy. There is no there there:

Sam Fleming: Donald Trump Calls for U-turn by Federal Reserve to Stimulate Economy: "US president says rate cuts and quantitative easing would allow ‘rocket ship’ growth.... Mr Trump’s decision to propose Herman Cain... to be a governor of the Fed’s powerful board... also... nominate Stephen Moore.... It remains to be seen how the two prospective nominees will fare if they face Senate confirmation.... Mr Gapen said: 'In our view, the experience of each candidate does not seem to be the main reason the Trump administration is considering their nominations. The administration has been openly critical of recent Fed interest rate increases and would prefer lower interest rates and a more accommodative monetary policy stance. Both Cain and Moore have altered their views on appropriate policy in this direction'...

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Regular Gem: @Choplogik: "We write 'Millenials Are Killing The [X] Industry' because when you write 'Unsustainable Profit-Driven Systems Are Crumbling Around A Wage-Suppressed Global Populace Serving Roughly 2000 Aging Billionaires' people get too depressed to click through & watch our hair cream ads...

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