#noted Feed

Genius no-longer-quite-so-young whippersnapper Ezra is, I think, massively overly polite here: As Ezra Klein say, Jill Abramson is part of a system that regards giving credit to others for the work they have done as a sign of weakness: Spend any time drinking with other reporters and ask them about New York Times journalists. You may well hear that they go out of their way to pretend that they have done work actually done by others, and have a strong positive aversion to acknowledging even the existence of other journalists. This attitude appears baked into their culture. This does not strike me as something the would be true of any group of people worth admiring. And Abramson appears to have it in spades.

I would note that Abramson—and, increasingly, the rest of the New York Times—these days appears to be doubling-down on anti-blogging: access not explainer journalism; stenography for favored sources not working for readers. I am not sure why they want to double-down on this, just as I am not sure why Jill Abramson thought she should carry here disdain for others working on the story beyond the book-publishing and academic plagiarism red lines, but it seems to be what they do—like saving 15% or more on car insurance:

Ezra Klein: @ezraklein: "I've long admired Jill Abramson, but the definition of plagiarism she gives here is a... looser one than has been true at the publications I've worked at, and I think it shows less generosity in citation than is appropriate...

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Fairly Recently: Must- and Should-Reads, and Writings... (February 8, 2019)

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  1. Debt Derangement Syndrome: Fresh at Project Syndicate: Standard policy economics dictates that the public sector needs to fill the gap in aggregate demand when the private sector is not spending enough. After a decade of denial, the Global North may finally be returning to economic basics...

  2. A Rant on Trump, Trade, and China...: Then, lo and behold, suddenly someone convinces trump that the TPP is the second-worst trade deal in American history—"it's almost as bad as NAFTA!"—and you switch sides: all of a sudden you are there on Trish Regan's show claiming the TPP is a horrible deal for America...

  3. Weekend Reading: : Trust and the Benefit of the Doubt: Dietz Vollrath sends us to a classic story from the late Douglas Adams.... 'This actually did happen to a real person, and the real person was me...

  4. I Want to Take a Virtual Course on the Public Sphere in the Age of Costless Electronic Reproduction. What Should I Read?

  5. Comment of the Day: Kansas Jack: A Very Nice Twitter Rant from Tom Nichols: "It isn't about anything of substance, it is about being pissed off. Period. About what? Doesn't matter.... It wasn't that it fell on deaf ears because they couldn't understand, they simply didn't care. And the more it mattered to you, the happier they were...

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Barry Ritholtz: Art of the Deal, Scott Walker Style: "As we discussed, the Foxconn-Wisconsin tax giveaway is unfolding as per expectations. Via Businessweek, here is 'The Art of the Deal', Scott Walker style: 'Interviews with 49 people familiar with Foxconn’s Wisconsin project, including more than a dozen current and former employees close to its efforts there, show how hollow the boosters’ assurances have been all along.... Insiders describe a chaotic environment with ever-changing goals far different from what Trump and others promised. Walker and the White House declined to comment for this story, although a Trump administration official says the White House would be “disappointed” by any reduced investment. The only consistency, many of these people say, lay in how obvious it was that Wisconsin struck a weak deal. Under the terms Walker negotiated, each job at the Mount Pleasant factory is projected to cost the state at least 219,000 in tax breaks and other incentives. The good or extra-bad news, depending on your perspective, is that there probably won’t be 13,000 of them.' Shocking, but not surprising...

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David Weil: In Conversation: "Franchising started to spread... a form of business organization that allows you to shed and yet control.... Information technology facilitated this because you have lower-cost mechanisms to monitor subsidiary organizations.... The end result is you have broken apart the employment relationships.... If you think this is just about employers trying to weasel out of their responsibilities, you miss this more fundamental change... [are] underestimating the difficulty of unwinding that behavior or changing that behavior in some way to deal with the consequences in the labor market...

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Back in the depths of the Great Recession, employers said that they wanted, needed, and required college graduates and the highly experienced. But what they meant was that they thought high unemployment meant that they could get overqualified workers when they went to the labor market. Now that unemployment has fallen, these needs and requirements have vanished.

Employers still want over-qualified workers. But they are no longer asking for them becuase they no longer expect to be able to get them:

Matthew Yglesias: The “Skills Gap” Was a Lie: "Alicia Sasser Modestino, Daniel Shoag, and Joshua Ballance... the skeptics were right... employers responded to high unemployment by making their job descriptions more stringent. When unemployment went down thanks to the demand-side recovery, suddenly employers got more relaxed again.... The skills gap was the consequence of high unemployment rather than its cause. With workers plentiful, employers got choosier. Rather than investing in training workers, they demanded lots of experience and educational credentials. And while job skills are obviously important, when the labor market is healthy employers have incentives to try to impart skills to workers rather than posting advertorial content about how the government should fix this problem for them...

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This is, I think, wrong: The Reagan-Thatcher era was solidified not by renewed economic growth but rather by the conquest of inflation and upward redistribution of wealth to the already-wealthy: Gideon Rachman: The Trump era could last 30 years | Financial Times: "The rapid spread of this new political style could be just the beginning of a new era that lasts decades. But there is one major qualification to this idea, that distressed liberals should hang on to. If the period of emulation and intensification is to last, the populist movement needs more than electoral success. It also needs to point to results in the real world. The trente glorieuses were deemed glorious because living standards were visibly rising across the west. In the same way, the Reagan-Thatcher era was solidified by renewed economic growth and victory in the cold war. By contrast, Brexit is in deep trouble and the Trump administration is floundering. Unless populists can deliver tangible results, their new era could yet die in its infancy...

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Dietz Vollrath (2017): Who Are You Calling "Malthusian"?: "I’m not sure how to reply. I’m not a Malthusian 'believer', because that isn’t a thing. But I do think that several of Malthus’ assumptions about how economies function, in particular prior to the onset of sustained growth during the 1800’s, are well founded. And those assumptions have implications that help make sense of the world in that period of time:

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Michael Mitterauer: Why Europe?: The Medieval Origins of Its Special Path: "While most historians have located the beginning of Europe’s special path in the rise of state power in the modern era, Mitterauer establishes its origins in rye and oats. These new crops played a decisive role in remaking the European family, he contends, spurring the rise of individualism and softening the constraints of patriarchy. Mitterauer reaches these conclusions by comparing Europe with other cultures, especially China and the Islamic world, while surveying the most important characteristics of European society as they took shape from the decline of the Roman empire to the invention of the printing press. Along the way, Why Europe? offers up a dazzling series of novel hypotheses to explain the unique evolution of European culture...

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An argument that all of behavioral economics is just a set of footnotes to Pierre Laplace: Joshua B. Miller and Andrew Gelman: Laplace’s Theories of Cognitive Illusions, Heuristics, and Biases: "Essai Philosophique sur les Probabilities anticipated many ideas developed within the past 50 years in cognitive psychology and behavioral economics, explaining human tendencies to deviate from norms of rationality in the presence of probability and uncertainty.... Laplace’s theories and reasoning... how modern they seem, how much progress he made without the benefit of systematic experimentation, and the novelty of a few of his unexplored conjectures. We argue that this work points to these theories being more fundamental and less contingent on recent experimental findings than we might have thought...

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Bruce Bartlett (October 9, 2012): Partisan Bias and Economic Forecasts: "On Sept. 27... James Pethokoukis, now employed by the conservative American Enterprise Institute, said that the United States economy was 'running out of steam' and that there was now a 50 percent chance of a recession within a year. 'It may be several years before we see unemployment below 8 percent'.... On Friday, the Bureau of Labor Statistics announced that the unemployment rate in September was 7.8 percent. On Sept. 29... David Malpass... took a similarly bearish view.... Current economic data, he said, “point to a recession in 2013.” On Oct. 1, Brian Wesbury... raised the risk of a recession to 25 percent in his weekly client letter.... In July, Mr. Malpass was predicting 2 percent real gross domestic product growth in 2012 and 3 percent in both 2013 and 2014.... [In] September survey, Mr. Wesbury was predicting 2.3 percent real growth in 2012.... The average forecast for all economists surveyed by The Journal in September was 1.9 percent real G.D.P. growth in 2012, 2.4 percent in 2013 and 2.9 percent in 2014.... None of the economists surveyed has predicted even a single quarter of negative real growth within the forecast window. Typically, a recession requires two back-to-back quarters of negative real growth...

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Rick Perlstein: How Doris Kearns Goodwin Came to Resemble Lyndon Johnson: "Doris Kearns Goodwin... in 1993 she made a wounded remark that Joe McGinnis, the author of a new Kennedy book, had plagiarized her. McGinnis contends that he cited Goodwin appropriately in his book. Whatever the case, for Goodwin to call out McGinnis was a debased act, an alienated act, in itself. For when she did it, Goodwin acted as if she had not already privately acknowledged a few years earlier stealing from an author's work herself—Lynne McTaggart's Kathleen Kennedy (1993)—then bribing her to keep quiet about it. We don't call such things bribes, of course; they are 'settlements'. Either way they are one of the more corrupt prerogatives of power in our time...

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There is no merit-based case for David Malpass to run the World Bank. Ivanka would be a massively superior candidate: Dylan Matthews: David Malpass’s World Bank Nomination, Explained: "Malpass is... an infamously bad... forecaster.... Chief economist to Bear Stearns in 2007 and 2008 as the firm collapsed due to the subprime crisis. In August 2007... wrote a Wall Street Journal op-ed titled, 'Don’t Panic About the Credit Market'.... Undeterred, Malpass spent the Obama years calling for the Fed to adopt higher interest rates, and in 2012 even argued that maintaining low rates would lead to a recession. The Fed kept rates low, a recession didn’t ensue, and most economists credit the steady recovery to the Fed’s willingness to maintain rates near zero. If anything, it erred in not trying hard enough to push long-term interest rates down...

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2018 was only the fourth hottest year in our records! Time for some more contrarianism from Steve Dubner and Steve Levitt, about how since 2016 "over the past several years the average global temperature has in fact decreased"?: Oliver Millman: 2018 Was World's Fourth Hottest Year on Record, Scientists Confirm: "World 1.5F hotter than average set between 1951 and 1980. Current five-year stretch the warmest since records began...

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Austin Carr: Inside Wisconsin’s Disastrous 4.5 Billion Deal With Foxconn - Bloomberg: "A huge tax break was supposed to create a manufacturing paradise, but interviews with 49 people familiar with the project depict a chaotic operation unlikely to ever employ 13,000 workers.... 'This is the Eighth Wonder of the World.' So declared President Donald Trump.... For some Foxconn workers watching, the president’s rhetoric didn’t match reality. The LCD components weren’t made in the USA, according to sources familiar with the operation. They were shipped from a Foxconn factory in Tijuana...

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Trolly McTrollface: The #XRPArmy, Explained: "Together, the members of the XRP Army identified by my clustering algorithm, had produced 32 tweets, 1998 retweets, 2264 likes, and 1986 replies, from a dataset of 100,000 data points. Yes, you’ve read that right: less than 1.5% of the content the XRP Army produces are original tweets. They are very rarely initiators of a thread, electing instead to jump in on existing discussions...

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Anatole Kaletsky: How EU Leaders Can Prevent a No-Deal Brexit: "Once May’s negotiating strategy is properly understood, the EU’s rational response becomes obvious: total inflexibility on the Brexit deal’s substance, but removal of the Brexit deadline..... No concessions of any kind on the withdrawal agreement... the commitment to Ireland... no hints about future trade deals. But they should also state publicly that they no longer consider March 29 a hard deadline and would be happy to extend the Brexit negotiating period for as long as is necessary not only to agree on a new UK-EU relationship, but also to demonstrate that what is agreed satisfies both sides...

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?????? it certainly seems to me as though Donald Trump wants there to be a Sino-American trade war—after all they are, as he says, easy to win. If the U.S. wants a tussle with China over intellectual property, the right strategy is for the U.S to back off now, go to the TPP members, apologize for its actions in rejecting the TPP in early 2017, join the TPP, and then negotiate as part of a United front with other TPP members. The U.S. by itself has no leverage —the IP China can grab is worth more than the cost of losing access to the U.S. market. So I have no idea what Marty thinks he is saying here: Martin Feldstein: There Is No Sino-American Trade War: "Chinese negotiators recently offered to buy enough American products to reduce the bilateral trade deficit to zero by 2024. Why, then, have US negotiators rejected that as a way to end the dispute?...

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A very nice Twitter rant from Tom Nichols. In fact, I think it is worse—if they could be bought off, it would be fine.

But they can't be bought off since they have no idea what they want.

The people of the hill country of Kentucky needed the end of pre-existing condition exclusions for the upper half of and access to Medicaid for the lower half of the working class. They buy-off was accomplished. And yet...:

Tom Nichols: "If Trump wanted to add 15 more countries to NATO and fund the World Bank from Social Security taxes, Lindsey Graham would propose the legislation and guys in diners in Ohio would be explaining why it was the right thing to do—as long as some intellectual objected first. I'm not sure how long we have to go on pretending Trump's policies reflect a 'view', any more than any other group of populist idiots. What does the current Italian govt want to do? Heard about them lately? They're bogged down in dumb stuff. Because populism isn't a program. It's stupefying to watch intelligent men and women wishcasting 'idea'" onto Trumpism or Leavers or Europopulists. There's no 'there' there. It's the Seinfeld of political movements: about nothing, but passionately about nothing. Yes, yes, I know. Immigration. Income inequality. Gas prices. Mostly, it's about change, and why people hate it, and why they want to be bought off rather than accept it. More transfers for me, and also, please magically create an idealized version of 1970 that never existed. The tell is that people are aggrieved over things that aren't true. Ask Americans-or even the French-how many Muslims live in their country. How much they think gas should be. What they think was better in 1970 or 1980 or 1990. They can't tell you in any real way. In fact, ask them what they want. As a thought exercise, say: 'You win. What do you want?' They can't really answer that, either, because they know the answer is impossible (or racist, or self-serving). Mostly, they want to piss off other people. That's the key. That's why you can never find a compromise with the hard-core 35 percent in the U.S., or the rioters in Europe. (Short of just sending cash to them as a buy-off.) Imputing 'policy' preferences to them is a mug's game, and it's long past time to stop playing it...

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Fairly Recently: Must- and Should-Reads, and Writings... (February 5, 2019)

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  1. Hoisted from the Archives: "Gunpowder Empire": Should We Generalize Mark Elvin's High-Level Equilibrium Trap?: Looking forward from even as late as 1750, therefore, it is not insane to project that the Gunpowder Empire is in the natural course of events the climax socioecological state of the Sociable Language-Using East African Plains Ape. The notional quartering of farm sizes worldwide from 500 BC to 1500 had been offset by the development of maize, of double-crop wet rice, of the combination of the iron axe and the moldboard plow that could turn northern temperate forests into farms, the domestication of cotton, and the breeding of the merino sheep. People in 1500 were as well fed and clothed as they had been in 500 BC. But what would have been the next agricultural miracle technologies... to... compensate for the further quartering of farm sizes that would have been inevitable had population growth continued and human numbers topped 2 billion in 3500[?] And where would the breakthrough to steampower—or even to enough fodder to feed enough draft animals for oxen and horses to replace or even supplement human backs and thighs—to interrupt this Gunpowder-Empire climax socioecology of the Sociable Language-Using East African Plains Ape come from?...

  2. Comment of the Day: Graydon: "Anyone who can put off investing is going to do so; there's Brexit, there's 'Ok, yeah, there isn't an adult anywhere in the Trump administration', plus there's the complete lack of statistics. Uncertainty is high and rising. Incompetence has real costs...

  3. Blogging: What to Expect Here...: The purpose of this weblog is to be the best possible portal into what I am thinking, what I am reading, what I think about what I am reading, and what other smart people think about what I am reading...

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The suprasecular stagnation VOX CEPR Policy Portal

Data!

Suppose that you were a rich person in Europe, and wanted to diversify and put some of your wealth not in landed estates or commercial ventures or bureaucratic office or mortgage loans, but instead simply wanted to lend it to the least-risky sovereign you could find. Paul Schmelzing has collected the data. It is very interesting.

I have only one data complaint: I think he should swap out the debt of the Italian city-state average—Genoa, Florence, and Venice—that he regards as the safest sovereign from 1300 to 1500 for the debt of Barcelona, which was as financially sophisticated and was secure under the aegis of the crown of Aragon in a way that the Italian city-states were not. None of them was sacked and defaulted from 1300 to 1500. But they could have been. And I read the higher interest rates of the late 1400s as powerful evidence that the debts of Genoa, Florence, and Venice ere not regarded as safe: they might decisively lose in the wars of the condottieri, or the Turk might come.

Do note that these interest rates are a different concept than the Piketty rate of profit on capital. These are, I think, best thought of as the profit rate minus an interest-rate discount for the safety and liquidity that the debt of the world's most prudent sovereign could offer. It thus depends not just on the then-current long-term rate of profit but also on perceived risks of other investments, risk tolerance, and the safe asset supply the sovereign is currently offering: Paul Schmelzing: The ‘Suprasecular’ Stagnation: "Growth rates have been stubbornly low since the financial crisis, and many have noted that the interest rate environment has been weakening since the 1980s. This column places recent episodes in the context of longer-term economic history, going back to the 14th century. Trends over recent decades are generally in line with a long-term ‘suprasecular’ trend of declining real rates. Negative real rates could become a more frequent phenomenon, and indeed constitute a ‘new normal’...

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Nicholas Lardy: Xi Jinping’s turn away from the market puts Chinese growth at risk: "Credit is flowing to state-owned companies, not more productive private ones.... Xi... has also repeatedly emphasised the role of state industrial policy and state-owned companies, despite overwhelming evidence that the latter are inefficient. Even after receiving various direct subsidies, the Chinese ministry of finance acknowledges that more than two-fifths of these state companies persistently rack up losses. They are kept afloat with massive increases in bank credit that are almost entirely responsible for the increase to record levels of leverage in China’s corporate sector.... Predictably, the return on assets of the largest state-owned companies has fallen by more than half since the merger mania began. At the same time, the productivity of private companies has increased, and in the industrial sector is now almost three times that of their state-owned counterparts.... Without a return to a more marketed-oriented economic policy, even if bilateral trade disputes with the US are resolved, the likelihood is that China’s growth will slow further—with unpleasant consequence...

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Cal Daily News: Campus Must Prioritize The Health of Cal Football Players: "Sure, the rules and regulations surrounding football go far beyond Cal, and the NCAA has revised rules regarding targeting and kickoffs to lower injury risk, but there’s still much the campus can do. A significant percentage of the revenue from football games—Cal’s most lucrative sport—should go toward CTE research and support for the players who are most likely to develop it. If the campus truly wants to support its athletes, it needs to prove it...

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Jonathan Portes (2013): Comment on Reinhart and Rogoff's FT Article: "My letter to the FT... deliberately concentrates on the case for borrowing now to finance investment, where Reinhart and Rogoff have belatedly joined a growing consensus.... I omitted a couple of points where their article is simply incoherent.... They argue that we should be cautious about borrowing because interest rates might rise: 'Unfortunately, ultra-Keynesians are too dismissive of the risk of a rise in real interest rates. No one fully understands why [real interest] rates have fallen so far so fast, and therefore no one can be sure for how long their current low level will be sustained...

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Cory Doctorow: How To: Make Up Swears: "the 'pyrrhic foot' of a 'familiar profanity compounded with a non-profane word of two unaccented syllables'... especially good for coming up with nongendered swears that are not slurs, which is useful if you're trying to insult an individual.... The best of these mean nothing, but sound wonderful, evocative and fun to say...

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The first truly good conceptual framework I have seen on where the future of employment growth may lie: David Autor: The Future Of Work: "Three trends... help explain where employment... may be headed.... 'Frontier work'... Jetson jobs... all about new technology... Supervisor, Word Processing (1980); Robotic Machine Operator (1990); Chief Information Officer (2000); Technician, Wind Turbines; and Intelligence Analyst (2010).... 'Wealth work',... jobs that primarily provide fancy-schmancy services to the rich... Hypnotherapist and Gift Wrapper (1980), Fingernail Former and Marriage Counselor (1990), Mystery Shopper, Horse Exerciser—our personal favorite—and Barista (2000); Oyster Preparer and Sommelier (2010).... 'Last mile'... what's left after machines have eaten the tasks... the atrophied husk remaining of a job when most of it has been automated... an airline ticket agent. A couple of decades ago... greet customers, help check baggage, and assign seats on the plane. Now... throwing bags on a conveyor belt and checking IDs. And so you can think of that as sort of the last mile, the last little bit of the job that remains...

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This is a very nice piece of work. Unfortunately, the major conclusion I draw from it is that there is much slippage between numbers of patents on the one hand and true economically relevant Innovation on the other. So I cannot see what conclusions to raw from what is a lot of hard and ingenious work: Bryan Kelly, Dimitris Papanikolaou, Amit Seru, and Matt Taddy: Measuring Technological Innovation over the Long Run: "We use textual analysis of high-dimensional data from patent documents to create new indicators of technological innovation. We identify significant patents based on textual similarity of a given patent to previous and subsequent work: these patents are distinct from previous work but are related to subsequent innovations...

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It would be good if this wing of the Republican Party became very strong indeed. Of course, it is still not clear to me how Brink’s approach is different from that of the Rubin Wing of the Democratic Party. Then again, a world in which the Rubin Wing of the Democratic Party were to be the dominant force in the Republican Party would surely be a world with much more space for a real debate about what policies would produce equitable growth than the world we have. Plus those policies could then be implemented! I am still scarred by the fact that not single Republican legislator would support John McCain‘s climate policy, Mitt Romney’s healthcare policy, or George H.W. Bush‘s foreign policy when they were advocated by a Democrat who happened to be a black man. And I still do not know how I should react to this... desertion: Brink Lindsey: Republicanism for Republicans: “This essay is addressed to those conservatives and Republicans, from leaners to stalwarts, whose loyalties to movement and party are now badly strained or even severed.... I understand what you’re going through.... We cannot simply wait for Trump to pass from the scene, or for Democrats to win big, and hope that things will then somehow go back to normal.... We need a new political language.... The answer is right under our noses, hiding in plain sight. The project... is... to develop and articulate the principles and program of the republican wing of the Republican Party...

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Channeling the great Aba Lerner: Simon Wren-Lewis: The Interest Rate Lower Bound Trap and the Ideas that Keep Us There: "Inflation... is the ultimate constraint on... fiscal stimulus.... If inflation is stuck below target and your measure of the output gap says that gap is zero, you should ignore the output gap measure and enact a fiscal stimulus. So why has this not happened in Japan, or the UK, or the Eurozone?... There are three candidates...

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A totally awesome and excellent choice here—if he cannot increase the amount of attention the media pays to the very important and massively underquoted EPI, nobody can: Economic Policy Institute: Pedro da Costa Joins the Economic Policy Institute as Communications Director: "The Economic Policy Institute is pleased to announce journalist and economics commentator Pedro Nicolai da Costa as the institute’s new communications director. He will work to promote EPI’s research and policy proposals through traditional and digital media. 'I am delighted to welcome Pedro to the EPI team', said EPI President Thea Lee. 'For years, he has been an important voice in the economic discourse—and his deep knowledge of economics and passion for creating a more equitable economy will be tremendous assets to EPI'...

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We had a dry run for this age of disinformation back in the McCarthy era. Back then the journalistic profession failed in much the same way as it has failed in our age that started with Iraq War weapons-of-mass destruction disinformation. Yet The journalistic community group no lessons from McCarthy—other than to deify Edward R. Murrow. The McCarthy era was less serious than ours, largely because Republican politicians withdrew their support for McCarthy when Eisenhower became president. But will anything cause a similar shift today?: Claire Wardle: 5 Lessons for Reporting in an Age of Disinformation: “Doing journalism in an age of disinformation is incredibly hard, and I simply don’t think the news industry has even started grappling with the difficult questions being raised...

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From last November: Rahm Emmanuel's words have not aged well: Charles P. Pierce: Rahm Emanuel Suggests Democratic Party Rift Between Beto O'Rourke, Nancy Pelos—Wants Outreach to Trump Voters:Political Genius Rahm Emanuel Strikes Again.... I'll never understand why Mark Penn isn't selling velvet Elvis paintings at an abandoned gas station by now, but I've learned to live with that disappointment.... In one of the first really bad moves President Barack Obama made after being elected, he brought Emanuel in as his chief of staff. (I rank this just behind installing Tim Geithner at Treasury as the worst hire of the newly formed Obama administration.) It was he who cut out the legs from under a larger stimulus program and it was he who encouraged the administration's retreat from the public option on health care...

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Carmen Reinhart and Ken Rogoff (2013): Austerity Is Not the Only Answer to a Debt Problem: "Ultra-Keynesians would go further and abandon any pretence of concern about longer-term debt reduction. This position has been in the rhetorical ascendancy in recent months.... It throws caution to the wind on debt.... The basic rationale is that low interest rates make borrowing a free lunch. Unfortunately, ultra-Keynesians are too dismissive of the risk of a rise in real interest rates. No one fully understands why rates have fallen so far so fast, and therefore no one can be sure for how long their current low level will be sustained...

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This is, in its historical context, just bizarre:

  • What happened to the 90% debt-to-annual-GDP redline?
  • What happened to the claim that the idea of secular stagnation—that interest rates were likely to be at or neat the zero lower bound for decades to come—would be forgotten in a decade?
  • What happened to the claim that "low sovereign bond yields do not necessarily capture the broader ‘credit surface’ the global economy faces"?:

Ken Rogoff: Never Mind The Debt: If There’s A Hard Brexit Britain Will Have to Splash the Cash: "What’s the point of saving for a rainy day if you don’t use the savings in an epic storm? Instead of attempting to reduce the UK’s debt-to-GDP ratio (now 84%), the government should find ways to strengthen investment in physical and human capital, to help the poorest, who will be hit the hardest, and to incentivise international businesses not to abandon ship.... It has never been remotely obvious to me why the UK should be worrying about reducing its debt–GDP burden, given modest growth, high inequality and the steady (and largely unexpected) decline in global real interest rates. It is one thing to have an exit plan for controlling the rate of debt increase after a deep financial crisis; it is entirely another thing to be in any rush to bring debt levels down.... Yes, it is wise not to let debt grow inexorably, but there is also no need to run suddenly into reverse...

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Fairly Recently: Must- and Should-Reads, and Writings... (February 3, 2019)

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  1. Weekend Reading: Tren Griffin: A Dozen Things I’ve Learned from Charlie Munger about Capital Allocation: "There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested.... We hate that kind of business”...

  2. Note to Self: A Comment on 'Development Engineering': The economy is a decentralized societal calculating machine... in which incentives are, and "doing well" achieved by, increasing resources that produce things for which rich people have a serious Jones...

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Dani Rodrik joins those who believe that Donald Trump and his administration have too little competence and too childish an understanding of the world to do substantial persistent damage to equitable growth. I would like to believe him, but I worry that Italy under Berlusconi may be a relevant case that is a counterexample. As I see it, Berlusconi's kleptocratic and chaos-monkey nature robbed Italy of a decade of economic growth. Trump can definitely do the same Dani Rodrik: Trump’s Trade Game: "Though Trump’s unilateralism and mercantilism are bad... one should not exaggerate.... If other countries do not overreact–and, so far, they have not–the consequences for world trade will remain manageable.... The shift in global demand from goods to (less tradable) services; the increased skill-intensity of manufacturing... automation... reshoring... China’s transition... to domestic-demand-led growth... are likely to have a larger impact on trade than Trump’s bluster ever could...

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But the demented yo-yo-ness of the stock market is important because it signals yo-yo-ness in investment spending three quarters down the road. "Deserve" has absolutely nothing to do with it. And Felix asks "how long is too long for real rates to be negative"? The answer is: as long as inflation is below its target—or below what the inflation target should be—it's not too long: Felix Salmon: The Case Against Raising Rates: "Brad is right that the stock market decline is new information, but it's new information that tells us more about stock-market volatility than it does about the health of the economy. The market does not deserve some kind of Fed-dispensed doggie treat just for bouncing around like a demented yo-yo...

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Harry Brighouse: Navigating the Need for Rigor and Engagement: How to Make Fruitful Class Discussions Happen: "Derek Bok... a passage that, ultimately, transformed my teaching:

Teaching by discussion can also seem forbidding because it makes instructors uncomfortably aware of their shortcomings. Lecturers can delude themselves that their courses are going well, but discussion leaders know when their teaching is failing to rouse the students’ interest by the indifferent quality of responses and the general torpor of the class. Trying to conduct a discussion with apathetic students is much like giving a bad dinner party...

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Josh Marshall: Why the Outlook for Digital Media Behemoths is Worse than You Think: "There are reasons to own a media company that posts consistent if modest profits.... even reasons to own media companies that lose predictable and relatively small amounts of money every year. The problem is that the people who currently own these companies aren’t in it for any of those reasons.... News organization don’t need to be wildly profitable. But the people who own most digital media today are owning for wild profitability or... the credible hope of future wild profitability... to sell the media companies for big returns. That’s a problem...

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Barry Ritholtz (2016): The Counterfactual: "States, those so-called laboratories of democracy, have been engaging in a variety of different policy experiments.... Consider the following... "fourteen states begin the new year with higher minimum wages"... and, during the next few years, minimum wage increases are scheduled to take place in California, New York, Oregon and elsewhere. Regardless of your views... we will get a huge run of data in the coming years. Whatever your beliefs may be, you should pay attention to this data to learn if they are well-supported or not. We also see similar experiments taking place in tax policy.... During the past few years, we saw big tax cuts in Kansas, Louisiana and New Jersey, with big tax increases in others...

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Barry Ritholtz: More Noise, Less Signal: "What would happen if you purposefully tried to assemble a “How-to” list to pursue the exact opposite goal—how to get more noise, and less signal? In other words, what are the exactly wrong things to do as an investor? I took last week’s list, and updated it to be the anti-list...

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The important takeaway from the February 1 BLS Employment Report is that good-producing wage growth was remarkably low. No one data point should cause you to change your view radically. But it is yet another brick in the wall of evidence that the Federal Reserve has been massively underestimating how much slack there is in the U.S. economy by focusing on the unemployment rate. The current employment-to-population ratio is 60.7%. The prime-age rate tells us that we should probably adjust that upward by 2.1% to take account of population aging over the last two decades. That tells us that the labor market is still slack relative to its state in the late 1990s to the extent of a full percentage point or so. We should not expect to see higher inflation now—and the Fed should not have tied itself to the mast of using the unemployment rate as thecyclical variable over the past decade. Dan Alpert brings the main course. Karl Smith, Ryan Avent, Nick Bunker: Dan Alpert: Dan Alpert on Twitter: "Hourly and weekly wages for literally all categories of goods producing jobs took a huge tumble last month-down 13 cents/hr or 0.45% on average M/M. Its good :-( that there are so few of them or wages across the board would have plummeted! This is huge news!...

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