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No, We Don’t “Need” a Recession

No__We_Don’t_“Need”_a_Recession_by_J__Bradford_DeLong_-_Project_Syndicate

Project Syndicate: No, We Don’t “Need” a Recession https://www.project-syndicate.org/commentary/myth-of-needed-recession-by-j-bradford-delong-2019-10: Business cycles can end with a "rolling readjustment" in which asset values are marked back down to reflect underlying fundamentals, or they can end in depression and mass unemployment. There is never any good reason why the second option should prevail: BERKELEY – I recently received an email from my friend Mark Thoma of the University of Oregon, asking if I had noticed an increase in commentaries suggesting that a recession would be a good and healthy purge for the economy (or something along those lines). In fact, I, too, have noticed more commentators expressing the view that “recessions, painful as they are, are a necessary growth input.” I am rather surprised by it.

Of course, it was not uncommon for commentators to argue for a “needed” recession before the big one hit in 2008-2010. But I, for one, assumed that this claim was a decade dead. Who in 2019 could say with a straight face that a recession and high unemployment under conditions of low inflation would be a good thing?

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America’s Superpower Panic: Project Syndicate

America s Superpower Panic by J Bradford DeLong Project Syndicate and America s Superpower Panic Project Syndicate

Project Syndicate: America’s Superpower Panic: History suggests that a global superpower in relative decline should aim for a soft landing, so that it still has a comfortable place in the world once its dominance fades. By contrast, US President Donald Trump's incoherent, confrontational approach toward China could seriously damage America’s long-term interests.

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Is Plutocracy Really the Biggest Problem?: No Longer Fresh at Project Syndicate

Is Plutocracy Really the Problem by J Bradford DeLong Project Syndicate

Project Syndicate: Is Plutocracy Really the Biggest Problem?: After the 2008 financial crisis, economic policymakers in the United States did enough to avert another Great Depression, but fell far short of what was needed to ensure a strong recovery. Attributing that failure to the malign influence of the plutocracy is tempting, but it misses the root of the problem:

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U.S. as Doofus Country, China, and Grand Strategy

Il Quarto Stato

No Longer Fresh at Project Syndicate: In the New York Review of Books, Adam Tooze recently wrote that: "across the American political spectrum, if there is agreement on anything, it is on the need for a firmer line against China". He is correct: On this, the bombs-and-bullets people, the geopolitics people, and the blame-somebody-else people are all agreed. The U.S. needs to do something to strengthen its relative position, and that means it needs to start doing something to China.

But that would be going about it the wrong way. Thinking that the right way to do something is to do something to China is a very bad way to think.

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Robo-Apocalypse? Not in Your Lifetime: No Longer Fresh at Project Syndicate

Robo Apocalypse Not in Your Lifetime by J Bradford DeLong Project Syndicate

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

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What to Do About China?: Live at Project Syndicate

What to Do About China by J Bradford DeLong Project Syndicate

Live at Project Syndicate: What to Do About China?: BERKELEY–In a recent issue of The New York Review of Books, the historian Adam Tooze notes that, “across the American political spectrum, if there is agreement on anything, it is on the need for a firmer line against China.” He’s right: On this singular issue, the war hawks, liberal internationalists, and blame-somebody-else crowd all tend to agree. They have concluded that because the United States needs to protect its relative position on the world stage, China’s standing must be diminished.... But that is the wrong way to approach the challenge.... It is entirely foreseeable that America’s attempt to “get tough” with China could accelerate its own relative decline, effectively handing China the semi-hegemony it is already approaching.... So, what should the US do to shore up its position vis-à-vis China?... The US could start to become what it would have been if Al Gore had won the 2000 presidential election, if Hillary Clinton had defeated Trump, and if the Republican party had not abandoned its patriotism... Read MOAR at Project Syndicate

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Robo-Apocalypse? Not in Your Lifetime: Live at Project Syndicate

Robo Apocalypse Not in Your Lifetime by J Bradford DeLong Project Syndicate

Live at Project Syndicate: Robo-Apocalypse? Not in Your Lifetime: "Will the imminent “rise of the robots” threaten all future human employment? The most thoughtful discussion of that question can be found in MIT economist David H. Autor’s 2015 paper, “Why Are There Still so Many Jobs?”, which considers the problem in the context of Polanyi’s Paradox. Given that “we can know more than we can tell,” the twentieth-century philosopher Michael Polanyi observed, we shouldn’t assume that technology can replicate the function of human knowledge itself. Just because a computer can know everything there is to know about a car doesn’t mean it can drive it. This distinction between tacit knowledge and information bears directly on the question of what humans will be doing to produce economic value in the future... Read MOAR at Project Syndicate

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The Fed Board Unmoored: Live at Project Syndicate

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Live at Project Syndicate: The Fed Board Unmoored: "In December 2015, the right-wing commentator Stephen Moore, US President Donald Trump’s pick to fill a vacancy on the US Federal Reserve Board of Governors, savagely attacked then-Fed Chair Janet Yellen and her predecessor, Ben Bernanke, for maintaining loose monetary policies in the years following the 'Great Recession'.... On December 26, 2018, he savagely attacked Yellen’s successor, Jerome Powell, for raising interest rates to unwind the very approach that he had condemned three years earlier. 'If you cut engine power too far on a jetliner', he warned, 'it will stall and drop out of the sky'. Moore complained that after having 'risen by 382 points on hopes that the Fed would listen to Trump and stop cutting power', the Dow Jones Industrial Average had “plunged by 895 points” on the news of another interest-rate hike. This, he concluded, was evidence that 'the Fed’s monetary policy has come unhinged'...

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The Fed Should Buy Recession Insurance: Now Not Quite so Fresh at Project Syndicate

Hundred Dollar Bill Peel and Stick Jumbo Size Removable Wall Decal 100 Dollar Bill Google Express

Now Not Quite so Fresh at Project Syndicate: The Fed Should Buy Recession Insurance: If the United States falls into recession in the next year or two, the US Federal Reserve may have very little room to loosen policy, yet it is not taking any steps to cover that risk. Unless the Fed rectifies this soon, the US–and the world–may well face much bigger problems later.

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The Fed Should Buy Recession Insurance: Fresh at Project Syndicate

Hundred Dollar Bill Peel and Stick Jumbo Size Removable Wall Decal 100 Dollar Bill Google Express

Fresh at Project Syndicate: The Fed Should Buy Recession Insurance: If the United States falls into recession in the next year or two, the US Federal Reserve may have very little room to loosen policy, yet it is not taking any steps to cover that risk. Unless the Fed rectifies this soon, the US–and the world–may well face much bigger problems later. The next global downturn may still be a little way off. The chances that the North Atlantic as a whole will be in recession a year from now have fallen to about one in four. German growth may well be positive this quarter, while China could rebound, too. And although US growth is definitely slowing–to 1% or so this quarter–this may yet turn out to be a blip. Let’s hope so. Because if the next downturn is looming, North Atlantic central banks do not have the policy room to fight it effectively... Read MOAR at Project Syndicate

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U.S. Recession No Longer Improbable: No Longer Fresh at Project Syndicate

The World Economy Goes Hollywood by Anatole Kaletsky Project Syndicate

Project Syndicate: U.S. Recession No Longer Improbable: Over the past 40 years, the U.S. economy has spent six years in four recessions: in a downturn 15% of the time, with the odds that a current expansion will turn into a downturn within a year being one-in-eight. Of these four downturns, one—the extended downturn of 1979-82—had a conventional cause: the Federal Reserve thought inflation was too high, and so hit the economy on the head with the high interest-rate brick to stun it and induce workers to moderate their demands for wage increases and firms to cut back planned price increases. The other three have been caused by derangements in financial markets: the collapse of sunbelt Savings-and-Loans for 1991-92, the collapse of dot-com valuations in 2000-2, and the collapse of mortgage-backed securities in 2008-9.

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What Will Cause the Next US Recession?: Live at Project Syndicate

The Digital Research Library of Illinois History Journal™ The Panic of 1893 in Illinois and Chicago

Live at Project Syndicate: U.S. Recession No Longer Improbable: The next recession most likely will not be due to a sudden shift by the Fed from a growth-nurturing to an inflation-fighting policy. Given that visible inflationary pressures probably will not build up by much over the next half-decade, it is more likely that something else will trigger the next downturn.... The culprit will probably be a sudden, sharp “flight to safety” following the revelation of a fundamental weakness in financial markets. That... is the pattern that has been generating downturns since at least 1825, when England’s canal-stock boom collapsed.

Needless to say, the particular nature and form of the next financial shock will be unanticipated. Investors, speculators, and financial institutions are generally hedged against the foreseeable shocks.... The death blow to the global economy in 2008-2009 came not from global imbalances or from the collapse of the mid-2000s housing bubble, but from the concentration of ownership of mortgage-backed securities... Read MOAR at Project Syndicat

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