DeLong Debt Memo: 2020-11-17

You asked me to think about long-run downside via fiscal drag and higher required tax rates and revenues in the future, after the economy has returned to full employment, from additional debt-financed COVID depression-fighting stimulus expenditures. You asked me to think in the context of Larry Summers’s and my “Fiscal Policy in a Depressed Economy” of a decade ago.

My conclusion: RIGHT NOW THERE IS NO PROSPECT OF ANY FUTURE FISCAL DRAG FROM ADDITIONAL DEBT-FINANCED FISCAL STIMULUS...

https://www.icloud.com/keynote/0UJ2pg4UkvegNtUljgTL-Qhdg

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The Siren Song of Austerity: Project Syndicate

J. Bradford DeLong: The Siren Song of Austerity https://www.project-syndicate.org/commentary/return-of-austerity-in-us-by-j-bradford-delong-2020-11: ‘Among the many lessons of the 2008 financial crisis and its aftermath in the United States is that there is no good reason to start worrying about debt when unemployment remains high and interest rates low. The hasty embrace of austerity derailed the last recovery, and it must not be allowed to do so again: BERKELEY–Ten years and ten months ago, US President Barack Obama announced in his 2010 State of the Union address that it was time for austerity. “Families across the country are tightening their belts and making tough decisions,” he explained. “The federal government should do the same.” Signaling his willingness to freeze government spending for three years, Obama argued that, “Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t.” So great was the perceived need for austerity that he even vowed to “enforce this discipline by veto,” just in case congressional Democrats had something else in mind…

https://www.icloud.com/keynote/0mfYblEaFhtRC9uF-9OFxB5bw

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Brad DeLong & Scott Galloway: CoronaNomics Podcast

Brad DeLong & Scott Galloway: COVID-19, Technology, & Surveillance Capitalism: CoronaNomics 2:4 https://www.youtube.com/watch?v=IEQ8zbEFJbE&feature=youtu.be&t=203 2020-11-16

EconFilms: CoronaNomics https://www.youtube.com/channel/UCGiaO8Jc_UtHJPlKjG9anTw

https://www.icloud.com/keynote/0txwoGyiStINtGNbmuMZlhU2g
2020-11-16

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Do I Really Need to Say, Again, That Judy Shelton Does Not Belong on the Federal Reserve's Board of Governors? Apparently I Do...

And it looks like even without Trump Republican senators will continue to be orange-haired baboons:

That any Republican senators at all are thinking of voting for Judy Shelton—a woman views whom Milton Friedman dismissed by saying "it would be hard to pack more error into so few words"—for a Fed Governor position reveals an astonishing lack of spine. Yet the Senate Banking Committee chair appears to be attempting to advance her nomination on Tuesday:

Hoisted from the Archives:_ Shelton the Charlatan_ https://www.bradford-delong.com/2020/03/shelton-the-charlatan-project-syndicate.html: In 1994 Milton Friedman wrote about Judy Shelton: "In a recent Wall Street Journal op-ed piece (July 15)... Judy Shelton started her concluding paragraph: “Until the U.S. begins standing up once more for stable exchange rates as the starting point for free trade...” It would be hard to pack more error into so few words.... A system of pegged exchange rates, such as the original IMF system or the European Monetary System, is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital..." https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_09_12_1994.pdf. To turn monetary policy away from internal balance toward preventing exchange rate movements that market fundamentals wanted to see occur was, in Friedman's view, the road toward disaster. It was simply wrong. And it could be held together only if economies moved from free trade back toward managed trade—and so beggared not just their neighbors but themselves.

Two and a half decades later, today's Judy Shelton seems no freer from error, but to it has added an enormous amount of incoherence. There is no consistent thread of argument in what she says. She is, rather, a weathervane pointing in the direction of whatever political wind she thinks likely to get her her next job. Last year she said that the Federal Reserve should be careful not to do anything to curb stock prices: "More than half of American households are invested through mutual funds or pension funds in this market. I don’t want the Fed to pull the rug out from under them..." https://www.bloomberg.com/news/articles/2019-07-05/trump-fed-pick-shelton-says-central-bank-should-support-markets. But in 2016—when unemployment was higher and the case for easy money stronger—it was the Fed's "appeasing financial markets" that was the thing to be avoided https://www.washingtonpost.com/opinions/yes-trumps-latest-fed-pick-is-that-bad-heres-why/2020/02/10/a13fa1ec-4c44-11ea-9b5c-eac5b16dafaa_story.html. Back then under the Obama administration when there were lots of unemployed workers who could be put to work producing exports, policies to produce a weaker dollar to boost exports were to be shunned: "The obvious quick route to export success for any nation is to depreciate its currency. Dollar depreciation is already being pushed by the Obama administration.... Let's not compromise our currency in a misguided attempt to boost U.S. job growth. America's best future is forged through sound finances and sound money..." https://www.wsj.com/articles/SB10001424052748704698004576104260981772424. These days "compromising the currency" is a plus from the interest-rate cuts she wants to see https://www.marketwatch.com/story/trumps-fed-choice-judy-shelton-says-interest-rate-cut-needed-because-europe-is-set-to-devalue-euro-2019-07-05. Today monetary policy should be made looser "as expeditiously as possible" https://www.washingtonpost.com/business/2019/06/19/fed-meets-trumps-potential-next-pick-wants-see-lower-rates-fast-possible. Back then "loose monetary policy... leads to internal bankruptcy... whole nations have foundered on this path..." https://www.wsj.com/articles/SB123742149749078635.

Catherine Rampell https://www.washingtonpost.com/opinions/yes-trumps-latest-fed-pick-is-that-bad-heres-why/2020/02/10/a13fa1ec-4c44-11ea-9b5c-eac5b16dafaa_story.html earlier this month correctly called Judy Shelton "an opportunist and a quack", and reported that Republican senators think she is not qualified.

Kevin Cramer (R-ND) said: "I wouldn't want five [Fed Board] members like her".

Thom Tillis (R-NC) said that her views on the gold standard do not matter because return to the gold standard is off the table.

Tim Scott (R-SC) agreed with Tillis, stating that "controversial statements" were "not relevant".

Pat Toomey (R-PA) worried about the "very, very dangerous path to go down" she advocated. Richard Shelby (R-AL) was "concerned".

John Kennedy (R-LA) said: "Nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas" https://www.wsj.com/articles/republican-senator-raises-concerns-over-sheltons-fed-candidacy-11581608467?mod=hp_major_pos1.

But the Wall Street Journal editorial board has decided to back Judy Shelton's "more error packed into so so few words" over Milton Friedman by praising her as a believer that "monetary policies that ignore exchange-rate stability wreak political and economic havoc". Trump wants Judy Shelton on the Fed Board so he can threaten to—and possibly actually—replace Jay Powell with her as chair. If we have learned anything over the past three years, it is that furrowed brows of concern from Republican senators are worth precisely nothing. John Kennedy (R-LA) followed his furrowed brow by saying "I’m not saying that’s the case here". Mike Crapo (R-ID) praised her "deep knowledge of democracy, economic theory and monetary policy", and denounced the "war on Judy Shelton".

If Republican senators are going to save the country from yet another Trump misstep that makes America less great, first core Republican supporters have to step up and give their senators 53 spine transplants.


Maskell & Rybicki: Counting Electoral Votes: An Overview of Procedures at the Joint Session

Note to Self: I very much hope that Pelosi and Schumer are already talking to Collins, Murkowski, Romney, Sasse, and company: the potential for an absolute dog’s breakfast on January 6, 2021 is already remarkably high, and may well increase in probability as things get crazier and crazier over the next two months.

It is also not too early for the House of Representatives to be thinking hard about how to maintain their own security—both on the U.S. Capitol grounds, and for members in transit to the Capitol itself.

The argument that Trump is not trying to gain support among the Republicans for a coup, and that Republicans are not egging one another one to see if they dare to do it, but rather doing something else seems to me to be overhasty and overconfident. Yes, Trump might be trying to establish an extradition-free bolthole for himself in Abu Dhabi. Yes, Trump might be trying to destroy as much evidence linking him to criminality as he can. Yes, Trump might be trying to show that he can disrupt the system so that he can then strike a deal that will leave him confident he will remain out of jail next year. Yes, Trump might simply be confused.

But he might not. And while Giuliani is clearly neither his Göring, his Himmler, or his Heydrich, that does not mean that nobody else is:

Jack Maskell & Elizabeth Rybicki: Counting Electoral Votes: An Overview of Procedures at the Joint Session, Including Objections by Members of Congress https://fas.org/sgp/crs/misc/RL32717.pdf: ‘Basis for Objections: The general grounds for an objection to the counting of an electoral vote or votes would appear from the federal statute and from historical sources to be that such vote was not “regularly given” by an elector, and/or that the elector was not “lawfully certified”...

https://www.icloud.com/keynote/0r5Pt_jJe95PxqqyIbfHlMvPg
https://www.bradford-delong.com/2020/11/maskell-rybicki-counting-electoral-votes-an-overview-of-procedures-at-the-joint-session.html
2020-11-10

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Frost: Entrepreneurial Transformation of Socialist China—Noted

Adam Frost: Entrepreneurial Transformation of Socialist China https://ysi.ineteconomics.org/project/5f316897689c756fb5c52785/event/5f6b2b94a21037043d0c1458: ‘Generations of scholars argued that beginning with the Communist’s victory over the Nationalists in 1949 and culminating until the establishment of collective economic institutions in 1957, private entrepreneurship was effectively purged from the Chinese economy.... [But] capitalist entrepreneurship was an enduring feature of the modern Chinese economy.... 2,600 cases of “speculation and profiteering” that were prosecuted by local government agencies in the 1960s and 1970s...

https://www.icloud.com/keynote/0z0Btdoy-vo9Rm1GKFxXBwoBw

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BioNTech 90% Effective Messenger RNA COVID Vaccine?

https://www.icloud.com/keynote/0aP8gr2_cfSeHzTQEw9OVC6hg

Little additional information seems to be available at this moment:

Pfizer and BioNTech (2020-11-09): Announce Vaccine Candidate Against COVID-19 Achieved Success in First Interim Analysis from Phase 3 Study https://www.businesswire.com/news/home/20201109005539/en/: ‘Vaccine candidate was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis. Analysis evaluated 94 confirmed cases of COVID-19 in trial participants. Study enrolled 43,538 participants, with 42% having diverse backgrounds, and no serious safety concerns have been observed; Safety and additional efficacy data continue to be collected. Submission for Emergency Use Authorization (EUA) to the U.S. Food and Drug Administration (FDA) planned for soon after the required safety milestone is achieved, which is currently expected to occur in the third week of November. Clinical trial to continue through to final analysis at 164 confirmed cases in order to collect further data and characterize the vaccine candidate’s performance against other study endpoints…

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9.2.0. Intro Video: Glorious Post-WWII Years in the Global North: Equitable Growth & Inclusion: Econ 115

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

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

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


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

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

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

https://share.mmhmm.app/ed6bb654a1bb406394e149ce53ecbbd4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But why then did things fall apart in 1980?

Keep that question in the back of your minds.

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

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

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

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

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

But I digress.

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

And working class people are people.

And women became people too.

Next: America is a Protestant nation.

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

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

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

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

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

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

We are not there yet.

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

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

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

1268 words 11.00 minutes


Wolf: Long Economic COVID—Noted

Martin Wolf: The Threat of Long Economic Covid Looms https://www.ft.com/content/f9a0c784-712e-4bf9-b994-55f8d63316d9: ‘Covid-19 has left many patients with debilitating symptoms after the initial infection has cleared. This is “long Covid”. What is true of health is likely to be true of the economy, too…. To meet the threat of a “long economic Covid”, policymakers must avoid repeating the mistake of withdrawing support too soon, as they did after the 2008 financial crisis. This danger is real, even if there remains much uncertainty about how the crisis will unfold…. We know that many businesses have been hurt, as demand for their output collapsed or they were locked down. The second waves of the disease now crashing on to many economies will make this worse.... But we also know that things could have been far worse. The world economy has benefited from extraordinary support from central banks and governments.... We know, nevertheless, that what has already happened is going to leave deep scars. The longer the pandemic continues, the bigger those scars will be.... Fiscal policy has to play a central role, as it alone can provide the necessary targeted support... Governments have to spend. But, over time, they must shift their focus from rescue to sustainable growth. If, ultimately, taxes have to rise, they must fall on the winners. This is a political necessity. It is also right…


.#noted #2020-10-30 <https://www.bradford-delong.com/2020/10/wolf-long-economic-covidnoted.html>

Trump: In California, You Have a Special Mask...—Noted

Donald Trump: 'In California https://twitter.com/atrupar/status/1321548174427852801, you have a special mask. You cannot under any circumstances take it off. You have to eat through the mask. Right, right, Charlie? It's a very complex mechanism. And they don't realize those germs, they go through it like nothing…

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DeLONGTODAY 2020-10-30: American Republicans Are Bad Economic Managers

Video at: http://delongtoday.com

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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Today is an economic-analysis day:

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

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

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

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


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

Continue reading "DeLONGTODAY 2020-10-30: American Republicans Are Bad Economic Managers" »


The Economic Incompetence of Republican Presidents: Project Syndicate

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

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


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

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

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

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

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

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

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

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

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

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

829 words


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

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

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

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

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

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

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

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

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

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

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

829 words


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

Continue reading "The Economic Incompetence of Republican Presidents: Project Syndicate" »


Briefly Noted for 2020-10-26

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DeLong: COVID Dashboard https://research.stlouisfed.org/dashboard/56322

Ulrike Malmendier, Stefan Nagel, & Zhen Yan: The Making of Hawks & Doves: Inflation Experiences on the FOMC https://www.nber.org/papers/w23228.pdf...

Dan Froomkin: New York Times Nailed for Publishing Republican Propaganda—Yet Again https://www.salon.com/2020/10/23/new-york-times-nailed-for-publishing-republican-propaganda--yet-again/: ‘Two supposedly "average" voters in a Times story turn out to be hardcore Republicans. And it's happened before... It raises serious questions about whether Times editors and reporters, rather than actually trying to determine how voters feel, are setting out to find people to mouth the words they need for predetermined story lines that, not coincidentally, echo the Trump campaign's propaganda…

Fox and Briar: Mediterranean Lamb Bowls https://www.foxandbriar.com/mediterranean-lamb-bowls/

Marc Flandreau: How Vulture Investors Draft Constitutions: North & Weingast 30 Years Later https://us02web.zoom.us/w/86160838299?tk=duPA9Ka5nc9J1jZ0ZeuMESHoiEx_l54-alP8YvwejVE.DQIAAAAUD5YOmxZkLVd6UEtOZFFOU2pXZEJZblV5bHpnAAAAAAAAAAAAAAAAAAAAAAAAAAAA

George Dangerfield: The Strange Death of Liberal England, 1910-1914 https://github.com/braddelong/public-files/blob/master/readings/book-dangerfield-strange-death.pdf

Gaius Julius Caesar: The Civil War https://github.com/braddelong/public-files/blob/master/readings/book-caesar-civil.pdf

Gaius Julius Caesar: The Gallic War https://github.com/braddelong/public-files/blob/master/readings/book-caesar-gallic-war.pdf

Marcus Tullius Cicero: Letters to Atticus https://github.com/braddelong/public-files/blob/master/readings/letters-cicero-atticus-i.pdf https://github.com/braddelong/public-files/blob/master/readings/letters-cicero-atticus-ii.pdf https://github.com/braddelong/public-files/blob/master/readings/letters-cicero-atticus-iii.pdf

Marcus Aurelius Antoninus: Meditations https://github.com/braddelong/public-files/blob/master/readings/book-marcus-aurelius-meditations.pdf

Sonam Sheth & Eliza Relman: Former Republican Presidential Candidate Herman Cain Has Died After Being Hospitalized for Coronavirus https://www.businessinsider.com/herman-cain-dies-after-being-hospitalized-for-covid-19-2020-7...

 

 

George Borjas (2016): EJMR https://web.archive.org/web/20160701000601/https://gborjas.org/2016/06/30/a-rant-on-peer-review/: ‘Janet Currie… takes an even easier approach to dismiss EJMR: sexism. I personally find the forum refreshing. There’s still hope for mankind when many of the posts written by a bunch of over-educated young social scientists illustrate a throwing off of the shackles of political correctness and reflect mundane concerns that more normal human beings share: prestige, sex, money, landing a job, sex, professional misconduct, gossip, sex, and putting down “reg monkeys”… https://twitter.com/delong/status/750084264335544320

Women’s Untold Stories https://www.myscience.org/news/wire/berkeley_s_campus_community_explores_women_s_untold_stories-2020-berkeley: ‘In the 1970s, Berkeley economics professor Laura D’Andrea Tyson would endure derogatory treatment for being a woman... was told not to wear "tight jeans" while teaching, because it would make the "boys crazy." "There was a way in which my failure to recognize that economics was a male-dominated discipline for a long time really helped me," Tyson said in an interview with Berkeley’s economics department. "... But when I realized that there were likely to be very few women in my program, and that there were very few well-known women in economics, I started to have my doubts”…

Continue reading "Briefly Noted for 2020-10-26" »


8.2.0. WWII & Cold War Intro Video: Econ 115

https://share.mmhmm.app/d76c99fa29734fa2a9b2445ede510ba6


8.2.0. WWII & Cold War Intro Video: Econ 115

https://github.com/braddelong/public-files/blob/master/econ-115-8.2.0-wwii-%26-cold-war-video-intro-10.0.pptx
https://www.icloud.com/keynote/0LhfMB65IaKYZYESYgmuUqZhA
https://www.bradford-delong.com/2020/10/820-wwii-cold-war-intro-video-econ-115.html

10:00 :: 1100 words
2020-10-25

Continue reading "8.2.0. WWII & Cold War Intro Video: Econ 115" »


The Unequal World: Has Resource Access Had an Important Role to Play?: Econ 115: Problem Set 3

https://nbviewer.jupyter.org/github/braddelong/econ-115-f-2020-assignments/blob/master/ps03.ipynb
https://www.bradford-delong.com/2020/10/the-unequal-world-has-resource-access-had-an-important-role-to-play-econ-115-problem-set-3.html

Continue reading "The Unequal World: Has Resource Access Had an Important Role to Play?: Econ 115: Problem Set 3" »


Review: Exponential Growth & Dataframe Access: Econ 115: Problem Set 7

https://github.com/braddelong/econ-115-f-2020-assignments/blob/master/ps07.ipynb
https://nbviewer.jupyter.org/github/braddelong/econ-115-f-2020-assignments/blob/master/ps07.ipynb
https://www.bradford-delong.com/2020/10/review-exponential-growth-dataframe-access-econ-115-problem-set-7.html

Continue reading "Review: Exponential Growth & Dataframe Access: Econ 115: Problem Set 7" »


Disaster Capitalism: DevEng 215 2020-10-22

https://www.icloud.com/keynote/05yW08oQvx5uDpAZcxmObZsZA
https://github.com/braddelong/public-files/blob/master/deveng-215-2020-10-22.pptx
https://www.bradford-delong.com/2020/10/disaster-capitalism-deveng-215-2020-10-22.html

This incorporates-by-reference the readings & lectures from week 9 of Joeva Rock's Fall 2020 instantiation of GPP 115...

Continue reading "Disaster Capitalism: DevEng 215 2020-10-22" »


Briefly Noted for Tu 2020-10-20

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Daniel Davies: Book Talk—Lying for Money: How Legendary Frauds Reveal the Workings of Our World https://watson.brown.edu/events/2020/book-talk-dan-davies-lying-money-how-legendary-frauds-reveal-workings-our-world...

Cities with More than 10000 Population https://www.evernote.com/l/AAHhz3j2xe1PY4XJUj0HaDcRMn0VD2bgtqcB/image.png...

Half the World Population https://www.evernote.com/l/AAETx7xhCWVPmbK_sKWWe2Nl2oc6ETuYnTEB/image.png...

Population Density https://www.evernote.com/l/AAFG80xx73hPrJ-o7SASlYf1AOAHSm_LndkB/image.png...

Sidney Kaplan (1976): The "Domestic Insurrections" of the Declaration of Independence https://github.com/braddelong/public-files/blob/master/readings/article-kaplan-domestic-insurrections.pdf...

Nisreen Alwan: What Exactly Is Mild Covid-19? https://github.com/braddelong/public-files/blob/master/readings/article-alwan-mild-covid-19.pdf...

Persi Diaconis & Frederick Mosteller: Methods for Studying Coincidences https://github.com/braddelong/public-files/blob/master/readings/article-diaconis-coincidences.pdf...

Stephen Pulvirent: Hodinkee Radio Episode 107: All About the Apple Watch https://www.hodinkee.com/articles/hodinkee-radio-episode-107-apple-watch-alan-dye: ‘A comprehensive deep-dive into Apple's latest smartwatch…

Anna Mikusheva & Jim Stock (2007): Weak Instruments https://ocw.mit.edu/courses/economics/14-384-time-series-analysis-fall-2013/lecture-notes/MIT14_384F13_lec7and8.pdf: ‘Anderson-Rubin (1949) https://www.evernote.com/l/AAGO6SDBHehDP6AIs3ixnvRIAO0W38s2P10B/image.png https://www.evernote.com/l/AAH4RvtsQutIcoIV5gw7ku-orITWdgvgD-oB/image.png...

Arjun Jayadev & Mike Konczal (2010); The Boom Not The Slump: The Right Time For Austerity https://web.archive.org/web/20110802015309/http://www.rooseveltinstitute.org/sites/all/files/not_the_time_for_austerity.pdf: ‘Such a conclusion is unmerited. The overwhelming majority of the episodes used by A & A did not see deficit reduction in the middle of a slump. Where they did, it o#en resulted in a decline in the subsequent growth rate or an increase in the debt-to-GDP ratio. Of the 26 episodes that they identify as ‘expansionary’, in virtually none did the country a) reduce the deficit when the economy was in a slump and b) increase growth rates while reducing the debt-to-GDP ratio…

 

Plus

Mary Daly: Interview https://www.wsj.com/articles/transcript-wsj-interview-with-san-francisco-fed-president-mary-daly-11602788005 'The bridge… over the coronavirus depends considerably on fiscal agents doing the part that they need to do to…. Without that fiscal stimulus, my outlook is quite a bit more muted. And whether it’s next month or the month after probably doesn’t determine the outlook for the next couple of years, but it definitely does determine how much suffering and pain many American households face.

Wendy Edelberg & Louise Sheiner: What Could Additional Fiscal Policy Do in the Next Three Years? https://www.brookings.edu/research/what-could-additional-fiscal-policy-do-for-the-economy-in-the-next-three-years/: ‘We find that enacting all five of those illustrative policies and increasing federal spending by $2 trillion would raise the level of real (i.e, inflation adjusted) GDP by 0.2 percent in 2020, 4.0 percent in 2021 and 2022, and 1.6 percent in 2023 above the level it would otherwise be (authors’ calculations). If all five policies were enacted, economic activity would return to its projected path prior to the pandemic by the third quarter of 2021. Under current law, that return likely would not occur for perhaps as long as a decade…

Continue reading "Briefly Noted for Tu 2020-10-20" »


Briefly Noted for 2020-10-16

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Philippe Weil (1989): The Equity Premium Puzzle & the Riskfree Rate Puzzle https://github.com/braddelong/public-files/blob/master/readings/article-weil-1989-riskfree.pdf...

Donald Harris: Introduction to Bukharin: “Theory of the Leisure Class” https://github.com/braddelong/public-files/blob/master/readings/article-harris-bukharin-intro.pdf

Constance L. Hunter: Economic Outlook: Riding the COVID-Coaster https://github.com/braddelong/public-files/blob/master/readings/presentation-hunter-covid-coasterpresentation-hunter-covid-coaster.pdf

Joan Robinson: Rereading Marx https://github.com/braddelong/public-files/blob/master/readings/article-robinson-rereading-marx……

Vanessa Stovall: A Tale of Two Creons: Black tragedies, White anxieties, and the Necessity of Abolition https://medium.com/corona-borealis/a-tale-of-two-creons-black-tragedies-white-anxieties-and-the-necessity-of-abolition-4d1816ce3f7a...

Athol Fugard, John Kani, & Winston Ntshona: The Island (Play) https://en.wikipedia.org/wiki/The_Island_(play)

Emmanuel Saez & Gabriel Zucman: The Rise of Income & Wealth Inequality of America: Evidence from Distributional Macroeconomic Accounts https://www.law.nyu.edu/sites/default/files/The%20Rise%20of%20Income%20and%20Wealth%20Inequality%20in%20America-%20Zucman.pdf...
 Scott Hanselman (2014): Virtual Machines, JavaScript and Assembler https://youtu.be/UzyoT4DziQ4?t=94

 

Plus:

I must say, the world-historical reception of Karl Marx would have been very different had he stuck to his initial word choices, and not substituted "bourgeoisie" and "bourgeois" for what he had originally called "Juden" and "Judentum" as labels for his concepts: Shlomo Avinieri (2019): Karl Marx: Philosophy & Revolution https://github.com/braddelong/public-files/blob/master/readings/book-avineri-marx.pdf: ‘In German parlance of the time, Judentum also stood for commerce, trade, huckstering in general, just as the English verb “to jew” (now excised from the Oxford English Dictionary) used to mean “to cheat.” So when Marx says that American society is the apotheosis of the power of “Judaism” or that society should be emancipated from the thrall of “Judaism,” there is a subtext here: contemporary readers would recognize that he was not writing just about Jews. Fear of censorship might also have convinced Marx to use the colloquial Judentum rather than “capitalism.” Second, and ironically, Marx’s identification of Judaism with capitalism has a paradoxical literary origin. It appears for the first time in Germany in an article by Marx’s socialist colleague Moses Hess called “On Money” [Über das Geldwesen]…

Really, really not my favorite person. Someone who knows nothing at all about how market economies work, and yet thinks his political allegiance to something he calls "Marxism" makes him an expert. The U.S. in 2008-9 was—as anyone looking at interest rates would know—very far indeed from exhausting its debt capacity: David Harvey (2009): Why the U.S. Stimulus Package Is Bound to Fail https://delong.typepad.com/sdj/2009/02/department-of-huh-in-praise-of-neoclassical-economics-department.html: ‘Any attempt to find an adequate Keynesian solution has been doomed at the start.... A Keynesian solution would require massive and prolonged deficit financing.... The problem for the United States in 2008-9 is that it starts from a position of chronic indebtedness to the rest of the world (it has been borrowing at the rate of more than $2 billion a day over the last ten years or more) and this poses an economic limitation upon the size of the extra deficit that can now be incurred. (This was not a serious problem for Roosevelt who began with a roughly balanced budget). There is also a geo-political limitation since the funding of any extra deficit is contingent upon the willingness of other powers (principally from East Asia and the Gulf States) to lend…

Continue reading "Briefly Noted for 2020-10-16" »


Briefly Noted for 2020-10-14

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Excellent to watch to see Michael Kades present his point-of-view on video: Michael Kades: Proposals to Strengthen the Antitrust Laws & Restore Competition Online https://www.youtube.com/watch?v=--jXAdjieTo

Ta-Nehisi Coates: Leak: The Atlantic Had A Meeting About Kevin Williamson https://www.huffpost.com/entry/leak-the-atlantic-had-a-meeting-about-kevin-williamson-it-was-a-liberal-self-reckoning_n_5ac7a3abe4b0337ad1e7b4df: ‘Black writers... would be brought in... [to] give a view of black life that I felt like very few black people actually would recognize themselves in their own private spaces.... I got incredibly used to learning from people... who... were fucking racist.... I didn’t... have the luxury of having teachers who... saw me completely as a human being.... I couldn’t speak to Andrew on the blog the way I would speak to my wife about what Andrew said on the blog in the morning when it was just us…

Neel Kashkari: Why I Dissented https://medium.com/@neelkashkari/why-i-dissented-feb698ae4d08: ‘We misread the labor market.... We heard repeatedly from businesses who complained that... we had a “historic worker shortage.”... [My] proposed language guards against the risk of underestimating slack.... We would only lift off... [after] core inflation... had... actually hit or exceed[ed] 2 percent...

God! He's long-winded: Joseph Schumpeter: Fiat Money & Social Product https://github.com/braddelong/public-files/blob/master/readings/article-schumpeter-fiat-money-and-social-product.pdf...

Forbes: Schumpeter & Keynes https://www.forbes.com/2007/10/10/schumpeter-keynes-economics-biz-cz_pd_1011schumpeter.html#182b9957d4f7: ‘THE TWO MEN WERE NOT ANTAGONISTS.... While Schumpeter considered all of Keynes' answers wrong, or at least misleading, he was a sympathetic critic…

Forbes: Schumpeter & Keynes https://www.forbes.com/2007/10/10/schumpeter-keynes-economics-biz-cz_pd_1011schumpeter.html#182b9957d4f7: ‘Keynes, in turn, considered Schumpeter one of the few contemporary economists worthy of his respect. In his lectures he again and again referred to the works Schumpeter had published during World War I, and especially to Schumpeter's essay on the Rechenpfennige (i.e., money of account) as the initial stimulus for his own thoughts on money…

Bapu Jena & al.: Acute Myocardial Infarction Mortality During Dates of National Interventional Cardiology Meetings https://pubmed.ncbi.nlm.nih.gov/29523525/

Tim Miller: Actually, Virtue Signaling Is Good https://thebulwark.com/actually-virtue-signaling-is-good/...

Kate Bahn: 'Unemployment Benefits Initial Claims https://twitter.com/LipstickEcon/status/1311648495300947968 [are] not good... have plateaued around 800,000 [per week] for the last 8 weeks... at the level and about the length (from my eyeballing) of the peak during the Great Recession.... It's just so bad…

Franklin Delano Roosevelt: 1933 Inaugural Address https://www.c-span.org/video/?5792-1/president-roosevelt-1933-inaugural-address https://avalon.law.yale.edu/20th_century/froos1.asp

Tim Duy: Trump Kills Fiscal Stimulus Negotiations https://blogs.uoregon.edu/timduyfedwatch/2020/10/06/trump-kills-fiscal-stimulus-negotiations/: ‘From a campaign perspective, it seems ludicrous.... Ultimately, I think McConnell just isn’t willing to get a deal done.... Interestingly, Trump’s abandonment of fiscal stimulus comes soon after the latest plea from Federal Reserve Chair Jerome Powell for additional support for what he sees as a still struggling economy...

Vladimir Lenin (1917): State & Revolution https://github.com/braddelong/public-files/blob/master/readings/book-lenin-1917-state-%26-revolution.pdf

Leon Smolinski: Lenin & Economic Planning https://github.com/braddelong/public-files/blob/master/readings/article-smolinski-lenin.pdf

Carl Shapiro & Hal Varian (1998): Information Rules: A Strategic Guide to the Network Economy https://books.google.com/books?id=aE_J4Iv_PVEC

Ryan McMorrow, Nian Liu, & Sherry Fei Ju: The Transformation of Ant Financial https://github.com/braddelong/public-files/blob/master/readings/articler-mcmorrow-ant.pdf

Josef Schumpeter (1917): Fiat Money & the Social Product https://github.com/braddelong/public-files/blob/master/readings/article-schumpeter-fiat-money-and-social-product.pdf

Mall History: Ku Klux Klan Rally http://mallhistory.org/items/show/175: ‘In 1925 the Ku Klux Klan (KKK) marched down Pennsylvania Avenue in Washington, DC. The organized event brought 25,000 members in full regalia to the city…

EPI: The Productivity–Pay Gap https://www.epi.org/productivity-pay-gap/

Eric Lemieux: This Day in Labor History: July 28, 1932 https://www.bradford-delong.com/2016/07/liveblogging-history-july-28-1932-the-bonus-army.html: ‘On July 28, 1932, the U.S. Army 12th Infantry regiment commanded by Douglas MacArthur and the 3rd Calvary Regiment, supported by six battle tanks commanded by Major George Patton violently evicted the Bonus Army from their Washington, D.C. encampment. This violent action and horrible treatment of impoverished veterans shocked the American public and demonstrated the utter indifference of Herbert Hoover to the desperate poverty the nation faced…

 

 

Plus:

John Bellamy Foster: On the Laws of Capitalism https://monthlyreview.org/2011/05/01/on-the-laws-of-capitalism/#en19: ‘The Socialist Party of Boston wrote to the Harvard economics department, proposing a debate on capitalism and socialism.... The debate was held... with Sweezy and Schumpeter as the two protagonists, before a packed audience in Harvard’s Littauer Auditorium…. Leontief, as chair, summarized.... "The patient is capitalism. What is to be his fate? Our speakers are in fact agreed that the patient is inevitably dying. But the bases of their diagnoses could not be more different. On the one hand there is Sweezy, who utilizes the analysis of Marx and of Lenin to deduce that the patient is dying of a malignant cancer. Absolutely no operation can help. The end is foreordained. On the other hand, there is Schumpeter. He, too, and rather cheerfully, admits that the patient is dying. (His sweetheart already died in 1914 and his bank of tears has long since run dry.) But to Schumpeter, the patient is dying of a psychosomatic ailment. Not cancer but neurosis is his complaint. Filled with self-hate, he has lost the will to live. In this view capitalism is an unlovable system, and what is unlovable will not be loved. Paul Sweezy himself is a talisman and omen of that alienation which will seal the system’s doom...

 

Om Malik: Apple Watch’s Sensory Overload https://om.co/2020/09/15/apple-watchs-sensory-overload/: ‘Longtime readers are familiar with my theory around hyper-personalization, and Apple has brought that to a mass-produced product. Oh, and it also tells time!" || This Mirror with Sensors Points to a New Connected Future. Here Is Why https://om.co/gigaom/this-mirror-with-sensors-points-to-a-new-connected-future-here-is-why/: ‘By offering a uniquely/hyper personal experience, simplehuman can go from being an invisible brand to one that is center stage in our minds. Think of it this way—connectivity and sensors allow us  to turn any large-scale platform into a personal one. Call me crazy, by when we add a dash of connectivity to those omnipresent sensors then interesting and/or magical things can happen...

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Tolley: Growth, Globalization, & Political Economy—Comment

Comment of the Day: Alex Tolley: Growth, Globalization, & Political Economy in the North Atlantic, 1870-1914—Lecture https://www.bradford-delong.com/2020/09/growth-globalization-political-economy-in-the-north-atlantic-1870-1914lecture.html#tpe-action-posted-6a00e551f080038834026be41082a6200d: ‘The claim that we could have a steampunk world of 7+ billion people with low economic growth seems unlikely to me. We needed a number of technologies to ensure that we could feed and distribute feed to this population. With low economic growth, more people would be on the land farming, farms would be smaller, and productivity lower. There would be far fewer jobs based on the growing economy, a need for huge cities to concentrate the labor for manufacturing and later services…

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Briefly Noted for 2020-10-12

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Wikipedia: Martha Gellhorn https://en.wikipedia.org/wiki/Martha_Gellhorn

Martha Gellhorn: The Face of War https://github.com/braddelong/public-files/blob/master/readings/book-gellhorn-face.pdf...

Yun Sheng: Little Emperors: Memoir of an Only Child https://www.lrb.co.uk/the-paper/v38/n10/sheng-yun/little-emperors

Evan Cheng & Sandi Khine: Over 100 Faculty Sign Open Letter Calling for Faculty Senate to Reconsider Hoover Institution’s Relationship with Stanford https://www.stanforddaily.com/2020/09/23/over-100-faculty-sign-open-letter-calling-for-faculty-senate-to-reconsider-hoover-institutions-relationship-with-stanford/

Matthew Yglesias: One Billion Americans: The Case for Thinking Bigger https://www.amazon.com/One-Billion-Americans-Thinking-Bigger-ebook/dp/B082ZR6827

PAA DEI Committee: Demographics of Racial Violence https://us02web.zoom.us/webinar/register/WN_pbVXnchhQtac5enVKSPzxw

Ursula K. LeGuin (1973): The Ones Who Walk Away from Omelas https://github.com/braddelong/public-files/blob/master/readings/story-leguin-omelas.pdf...

Wikipedia: The Ones Who Walk Away from Omelas https://en.wikipedia.org/wiki/The_Ones_Who_Walk_Away_from_Omelas...

Gabrielle Bellot (2017): Ursula Le Guin’s “The Ones Who Walk Away from Omelas” Defies Genre https://www.tor.com/2017/08/07/ursula-le-guins-the-ones-who-walk-away-from-omelas-defies-genre/...

Our World in Data: Coronavirus Pandemic https://ourworldindata.org/coronavirus

Wikipedia: Sophie, Duchess of Hohenberg https://en.wikipedia.org/wiki/Sophie,_Duchess_of_Hohenberg

Wikipedia: Vaso Čubrilović https://en.wikipedia.org/wiki/Vaso_%C4%8Cubrilovi%C4%87#World_War_II_and_later_life

KJV: Revelation 6 https://www.biblegateway.com/passage/?search=Revelation%206&version=KJV: ‘And I saw when the Lamb opened one of the seals, and I heard, as it were the noise of thunder, one of the four beasts saying: "Come and see!"…

Manton Reece: Micro.blog 2.0 Makes It Easier to Customize Your Blog https://news.micro.blog/2020/09/29/press-release-microblog.html

Nic Newman: The Resurgence & Importance of Email Newsletters http://www.digitalnewsreport.org/survey/2020/the-resurgence-and-importance-of-email-newsletters/: ‘Email newsletters... are proving increasingly valuable to publishers looking to build strong direct relationships with audiences…

Noah Smith: The Late '10s Were Better for Incomes than the '90s https://www.bloomberg.com/opinion/articles/2020-09-23/median-household-income-grew-more-in-the-10s-than-the-90s...

Claudia Foroni, Massimiliano Marcellino, & Dalibor Stevanovic: Forecasting the COVID-19 Recession & Recovery https://voxeu.org/article/forecasting-covid-19-recession-and-recovery: ‘Adjusting for forecasting errors made during the financial crisis of 2007-2009 better aligns the COVID forecasts with observed data. The results suggest a slow recovery to pre-COVID-19 levels, lasting several years…

 

Plus:

George-Marios Angeletos & Chen Lian: Confidence & the Propagation of Demand Shocks https://github.com/braddelong/public-files/blob/master/readings/article-angeletos-%26-lian-confidence.pdf: 'Intertemporal substitution in production... rational confusion (or bounded rationality) in consumption. The first element allows aggregate supply to respond to shifts in aggregate demand.... The second introduces a “confidence multiplier,” namely a positive feedback loop between real economic activity, consumer expectations of permanent income, and investor expectations... [that] amplifies the business-cycle fluctuations triggered by demand shocks (but not those triggered by supply shocks); it helps investment to comove with consumption; and it allows front-loaded fiscal stimuli to crowd in private spending...

 

Duncan Dowson & Bernard Hamrock (1980): History of Ball Bearings https://ntrs.nasa.gov/citations/19810009866: ‘The familiar precision rolling-element bearings of the twentieth century are products of exacting technology and sophisticated science. Their very effectiveness and basic simplicity of form may discourage further interest in their history and development. Yet the full story covers a large portion of recorded history and surprising evidence of an early recognition of the advantages of rolling motion over sliding action and progress toward the development of rolling-element bearings. The development of rolling-element bearings is followed from the earliest civilizations to the end of the eighteenth century. The influence of general technological developments, particularly those concerned with the movement of large building blocks, road transportation, instruments, water-raising equipment, and windmills are discussed, together with the emergence of studies of the nature of rolling friction and the impact of economic factors. By 1800 the essential features of ball and rolling-element bearings had emerged and it only remained for precision manufacture and mass production to confirm the value of these fascinating machine elements...

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Boushey: The New Employment Data—Noted

This is significantly better in terms of the employment report than I was expecting to see. It heartens me about the economy for the third quarter and maybe the fourth. But it depresses me about 2021, as it seems to indicate a lot of the country’s decision makers are not taking the virus as seriously as they should Perhaps this week will change their minds:

Heather Boushey: New Employment Data https://twitter.com/HBoushey/status/1312007393480511490: ‘The economy added 661,000 jobs in September.... We are still down 10.7 million jobs.... People searching for work for 27 weeks or more rose by 781,000 to 2.4 million. Regular unemployment benefits end after 26 weeks. Congress will need to act to extend the # of weeks for these benefits.... Given that the pandemic isn't over, the change in this # concerns me: "22.7 percent of employed people teleworked in September because of the coronavirus pandemic, down from 24.3 percent in August." Employers brought folks back to work in September: Of those who are no longer unemployed, 1.5 million of them had been on temporary layoff. Yet, at the same time, 345,000 people transitioned from temporary to permanent layoff…

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The Great Depression in Context: The World Economy in the 20th Century: Module 5 Intro Video

Link to Interactive Recording: https://share.mmhmm.app/674d81473029474195eb45ef0445a2c3 5:37

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Briefly Noted for 2020-09-25

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Well, a decade late and many dollars short, we seem to have become the conventional wisdom! Would only that the Economist had listened to our arguments, and been on our side a decade ago! It was always more than tenable. It was always very attractive:

Economist: Governments Can Borrow More than Was Once Believed https://www.economist.com/schools-brief/2020/09/12/governments-can-borrow-more-than-was-once-believed: ‘The global financial crisis pushed rates around the world to near zero.... In 2012 Larry Summers... and Brad DeLong... suggested a large Keynesian stimulus... the gains it would provide by boosting the growth rate of gdp might outstrip the cost of financing the debt…. As the years went by... the notion of borrowing for fiscal stimulus started to seem more tenable, even attractive…. Governments ideally ought to make sure that new borrowing is doing things that will provide a lasting good, greater than the final cost of the borrowing. If money is very cheap and likely to remain so, this will look like a fairly low bar…

 

Walter Womacka: Socialist "Realist" Stained Glass https://www.bradford-delong.com/2019/12/walter-womackas-socialist-realist-stained-glass.html: ‘East Germany as it wished it had been, was, and would become…

Sagarmatha https://en.wikipedia.org/wiki/Mount_Everest

Bertolt Brecht: To Those Born Afterward https://holgerszesnat.wordpress.com/2005/04/25/bertolt-brecht-to-those-born-later/

URL to Interact https://url-to-interact.herokuapp.com/

Daron Acemoglu: Colonial Origins Data Archive https://economics.mit.edu/faculty/acemoglu/data/ajr2001: ‘The zipped data and program files necessary for reproducing the tables and figures in The Colonial Origins of Comparative Development: An Empirical Investigation...

Wikipedia: Dark Shadows https://en.wikipedia.org/wiki/Dark_Shadows_(televised_storylines): ‘Storylines…

Dan Seifert: Ring’s Latest Security Camera Is a Drone that Flies Around Inside Your House https://www.theverge.com/2020/9/24/21453709/ring-always-home-cam-indoor-drone-security-camera-price-specs-features-amazon

Chrystia Freeland: The rise of the New Global Super-Rich https://www.youtube.com/watch?v=d6NKdnZvdoo

Walter Greason & Kari Leigh Merritt: The 2020 Election & Beyond https://www.youtube.com/watch?v=p9XvCoYh6Tk: ‘Greason explains how we should not become solely focused on the upcoming election, but instead see the broader picture and honor the successes of the MOVEMENT. He discusses his experiences as a multi-cultural organizer and lays out a brilliant plan to help save higher education.... The importance of art, comics, and Afrofuturism.... The importance of friendship, camaraderie, and community…

At a 1% mortality rate, this means COVID-19 had as of three weeks ago already burned through 1/10 of the African-American community—as opposed to 1/20 of the white American community. But there is large differential mortality comparing African-Americans and white Americans as well, which I cannot now put my hands on good estimates of: Trevon Logan: ’1 in 1020 Black Americans https://twitter.com/TrevonDLogan/status/1309475741231460352 have died of COVID-19.

This is a very useful near real-time take on what is going on right now, out there in the economy: Raksha Kopparam & al.: Equitable Growth’s Household Pulse Graphs: September 2–14 Edition https://equitablegrowth.org/equitable-growths-household-pulse-graphs-september-2-14-edition/: ‘Over 50 percent of respondents in households making less than $50K reported having experienced loss of employment income since March 13…

I do not think we understand who the median effective investors in financial markets are, and why they think what they do: John Auther: It's a Weird World Where FANGs Are a Haven Asset https://delong.typepad.com/files/column-authers-2020-09-21-fangs.pdf: ‘FANG popularity... rests on the perception that they are defensive... eentrenched competitive position[s]... thought to offer safety. Meanwhile, the banks are the polar opposite…. [Since] March… the 10-year Treasury yield… has oscillated… around... 0.666% level... strange because the Federal Reserve isn’t yet formally attempting to control 10-year yields, despite widespread speculation that it will start to do so before long. And views on inflation... have gone through huge changes during the .666 era…

Shapiro and Varian have long had great success by saying that the information-age economy raises little in the way of questions about antitrust that the First Gilded Age did not. But that is not quite true: Michael Kades & Fiona Scott Morton: Interoperability as a Competition Remedy for Digital Networks https://equitablegrowth.org/working-papers/interoperability-as-a-competition-remedy-for-digital-networks/: ‘Addressing entry barriers created by network effects is critical to remedying... monopolization... (e.g. Facebook).... Interoperability... a necessary, but not necessarily a sufficient, condition.... How to make an interoperability requirement effective... how rulemaking could ameliorate these challenges…

Not even Johnson in Britain or Bolsonaro in Brazil has as limited and faulty a grasp of what's what as American president. And nobody in the administration appears to be doing anything constructive: Jonathan Bernstein: ‘Some 200,000 people in the U.S. have died.... https://delong.typepad.com/files/column-bernstein-2020-09-22-trump-denial.pdf The fight against the pandemic... has... severely disrupted the lives of almost everyone. For a dissenting view, however, we have the president… “Below the age of 18, like—nobody… It affects virtually nobody....” Emphasis added. Look: I don’t like to dwell on this stuff. But... this is monstrous behavior from any elected official…

Reporting from an Ohio county that went for Trump over HRC by 3-to-1 in 2016, John Scalzi finds the Trumpists will be dead and damned before they will mask up themselves: John Scalzi: The State of Masking in Trump Country: An Anecdotal Report https://whatever.scalzi.com/2020/09/22/the-state-of-masking-in-trump-country-an-anecdotal-report/: ‘Trump... has made wearing them both political and a referendum on masculinity, so it’s not entirely surprising if his supporters have followed suit. Does this mean that I am getting terrible looks from dudes because I’m wearing a mask? Not at all; mostly everyone in Kroger and elsewhere is working on minding their own business…. My anecdotal experience is anecdotal…. I’m not thrilled…. What I’m going to do is a) stay home most of the time, b) mask myself up when I do go out, and c) keep out of the way of the maskless when I can, and I mostly can…

 

Plus:

This is by far the worst news I have seen in six months, because Aaron Carroll is a very credible observer and guide, and he is now profoundly depressed. Given American political dysfunction and given the current prevalence of the virus, we need to get testing up to 10 million a day—and then act on what those tests tell us—to have a chance of pushing our current well below one so that anything like normal life can resume. Yet there are no signs we are on a path to anything like that outcome:

Aaron Carroll: Stop Expecting Life to Go Back to Normal Next Year https://www.nytimes.com/2020/09/15/opinion/coronavirus-precautions.html?smid=tw-share: ‘We still need to figure out how to live in this new world, now, and that means embracing, finally, all the strategies for fighting the virus that many of us have resisted. It’s not too late to invest in testing both symptomatic and asymptomatic people. Back in the spring, I estimated that we might need a million tests a week to manage the virus. That estimate assumed that America would drive the prevalence rate of the disease into the ground, much as other countries did. We failed.... We need much more than a million tests a week... ubiquitous, cheap, fast tests... distributed widely... isolate... quarantine.... We need to normalize mask-wearing.... Finally, we need a functioning scientific infrastructure to provide detailed and specific plans.... This is a marathon, not a sprint. Both, though, require running…

 

Start with the propositions the role of the university system is to maximize societal value-added well also enabling upward social mobility. With those goals in mind, we could then have discussions about (a) how much to invest in higher-education institutions (b) of which types, and (c) how to allocate places in those institutions, plus (d) what is the best way to finance that societal investment. Very, very, very few discussions of admissions policies have this framing. One result is that we know astonishingly little about the effects of different setups. Here the very wise Zach Bleemer closes some of our knowledge gap:

Zachary Bleemer: Top Percent Policies & the Return to Postsecondary Selectivity http://zacharybleemer.com/wp-content/uploads/2020/03/ELC_Paper.pdf: ‘University policies that boost the chances of admission for targeted groups with relatively low standardized test scores are highly controversial. I provide new evidence on the impact of a “top percent” admissions policy implemented by the University of California (UC) system between 2001 and 2011. Eligibility in the Local Context (ELC) guaranteed admission to participating UC campuses for the top 4 percent of graduates from most California high schools. Using a novel longitudinal database covering the ELC era’s 1.7 million UC applicants–including each student’s enrollments, degree attainment, and early-career earnings–and a regression discontinuity research design, I begin by showing that ELC eligibility increased the likelihood that barely-eligible applicants from bottom-SAT-quartile high schools enrolled at four selective UC campuses by 16 percentage points, all of whom would have otherwise enrolled at a less-selective public college or university in California. Those barely-eligible ELC participants had higher five-year graduation rates than barely-ineligible students by 31 percentage points and higher annual mid-20s California earnings by $15,000. ELC participants who would have other- wise enrolled at community colleges or California’s least-selective public universities benefited the most from UC enrollment under ELC; indeed, universities’ graduation rates are shown to effectively proxy ELC participants’ causal effect of enrollment. These results suggest that ELC participants substantially gained from increased overall university quality despite having lower average SAT scores than their UC peers by almost 300 points, dispelling concerns about mismatched university ‘fit’ for the targeted high-GPA low-SAT applicants...

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