#commentoftheday Feed

Comment of the Day: Ebenezer Scrooge: "I've never met an absolute property right. Every damned one of them has an exception. Even a person's right to their own labor—the inalienable right guaranteed by the 13th Amendment—is subject to the draft, imprisonment, and covenants not to compete. Non-allodial rights in real estate are conditional on paying taxes and subject to takings. (While on takings, not all takings are compensated.) Copyright is subject to fair use. Property rights of use ('enjoyment', in the Hegelian trichotomy) are subject to many restrictions—consider all the things you could do with a baseball bat that would result in jail time. Property rights of exclusion or alienation I'll leave as an exercise to the reader. Etc., etc. The proper term is 'strong' property right....

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Comment of the Day: Erik Lund: This is fun! When it comes to Santa Claus, there's one thing I know for sure. He's the last great follower of Ayn Rand. When it comes to J. R. R. Tolkien, there's one thing I know for sure. He kept it brief! When it comes to Erich von Daniken, there's one thing I know for sure. He's one of the great scholars of our time! When it comes to General Custer, there's one thing I know for sure. He's one of the Great Captains. When it comes to me, there's one thing I know for sure. I provide hours of high quality comment on this blog...

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Comment of the Day: Ebenezer Scrooge: "I don't see it. The various wings of the Republican Party, ever since Nixon, have always been a coalition of losers from the democratic process who realized that they can each win in their respective sphere if they just gang up with the other losers. They never have any respect for the others' spheres. The neocons always knew their allies were evil plutocrats, racists, and Talibans. The Talibans always knew their allies were godless plutocrats and Jews. (Some Talibans are racists: others are not.) The racists always knew their allies were godbags, moneybags, and big beautiful mosaic types. But each of these groups knew that they needed the others to get their own goals. And they still know it. On this backdrop, the squabbles of a few intellectuals are irrelevant...

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Comment of the Day: RW: "Cultures do not articulate authoritarianism the same everywhere; e.g., Trump/Johnsonism appears less 1984 and more Brave New World: 'What Orwell feared were those who would ban books. What Huxley feared was that there would be no reason to ban a book, for there would be no one who wanted to read one. Orwell feared those who would deprive us of information. Huxley feared those who would give us so much that we would be reduced to passivity and egoism. Orwell feared that the truth would be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance. Orwell feared we would become a captive culture. Huxley feared we would become a trivial culture." —Neil Postman...

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Comment of the Day: Kaleberg: "'...the general effect of cold war extremism was to delay rather than hasten the great change that overtook the Soviet Union by the end of the 1980s.' - George Kennan. 'The suggestion that any Administration had the power to influence decisively the course of a tremendous domestic political upheaval in another great country on another side of the globe is simply childish. No great country has that sort of influence on the internal developments of any other one.' - also George Kennan. Still, the Cold War was a wonderful piece of myth making. It was the end of history and the start of history. Novus ordo seclorum....

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Comment of the Day: Doctor Jay: "I'm very much not getting what I want out of social media. I very much AM getting what I want out of internet search. The distinction is stark, and few writers bother to make it. In your Facebook stream are ads you didn't ask for and can't get rid of. They enjoy the tacit endorsement of your closest friends and family because of this placement. They aren't based on what you have "liked" and are interested in, they are based on who has paid to put them there. And all this is, as far as I can tell, completely legal. In comparison, the information Google has gleaned about you mostly shows up in banner ads that are placed in such a way that they enjoy no such endorsement, and are easily blocked or otherwise ignored. Often you get ads in response to searches, and usually the ads feature some aspect of what you were looking for. That doesn't seem intrusive to me. YouTube ads for me these days are mostly for things I'm interested in, or it's plausible that I would be interested in, except for a couple of political things that obviously think that a guy with my interests really ought to be interested in right-wing propaganda masquerading as The Truth. I wish more writers would understand and engage with this distinction. There may well be anti-trust issues with Google, but it doesn't have nearly the same corrosive effect on our social trust and credit that Facebook does...

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Comment of the Day: Cosma Shalizi : "I have used Google as pretty much my only search engine since it became available, and used Gmail for all my mail since 2012. I've never shared my account (or my credit cards) with anyone else. Google should thus have a very complete idea of what I'm interested in. Here, as of late 2016 when I poked it, was its list of my inferred interests (verbatim): http://www.stat.cmu.edu/~cshalizi/dm/19/crs-google-interests-2016.png I can, with charity, understand 'homemaking and interior decor' (because I'd been researching new window blinds), and 'pet food and supplies' (though my cat had died more than a year before). Everything else was just flat wrong, and often mystifyingly so (I've never played shooter games, can't stand musicals, had to look up reggaeton, and have no feelings or opinions about Chevrolet one way or the other). In conclusion, superintelligence is the idea that eats smart people....

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Comment of the Day: Graydon: "You get what you reward, and the present mechanism of reward is advertising, fundamentally aligned with increasing people's insecurity so as to increase their likelihood of making a purchase to address that insecurity. Addressing the insecurity by reducing it with free information is something the advertising revenue stream is actively against. If you want this to work at a means of improving the cross-product of information and people, so that the area under the 'could make a sound decision if they wanted to do so' line on the distribution-of-access-to-knowledge graph is maximized, you need a public mechanism of reward and to align it with people's belief in the utility of the source toward reducing their insecurity. If the post office ran it, you could have a single standard blogging platform, a per-reader token distribution system, and a cash payout based on assigned tokens. But this can't be done with patronage or with advertisers, though patronage comes closer. (There's much greater diversity of patrons than diversity of advertisers.)...

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Comment of the Day: Robert Waldmann: "I do believe that you are suggesting that the USA should welcome people named Lee who are not related to Robert E., the gentleman traitor. By your logic the USA can be number one in 2119 if we defeat the terrible threat not from the PRC but from the GOP. You might have a point there. If you descendants of Mayflower passengers can assimilate Magyars, you can assimilate anyone...

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Comment of the Day: Erik Lund: "Eh, if reading The Economist has taught me anything, it is that any effort to raise the living standard or wages of the British worker courts immediate disaster due to an unfavourable balance of trade. Attracting immigrants is right out. (I especially like the argument from 1949 that Israel had to curtail immigration immediately because there wasn't enough work for the newcomers due to the... wait for it... Labour shortage)...

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Comment of the Day: Yes, the failure modes of making jam are pretty scary: Graydon on Homer's Odyssey and David Drake's Hammer's Slammers: "Like Little Birds... They Writhed with Their Feet... But for No Long While...": "I think you're missing the central thing about Drake's writing. It is not so much that, yeah, these are not the best circumstances and our feels are in abeyance; that happens, that's depicted. But among that depiction you get what I think of as the essential Drake thing, which is a vehicle crew. They may not like each other much; they may not, in some senses of the word, trust one another. But they are entirely predictable to one another, and reliable. And it's that obligation of reliability that lets people get their head out of hell, whether as imperfectly as Danny Pritchard does it or as entirely as the protagonist of Redliners does. (You can see much the same flavour of reliable between Gunnar and Brennu-Njáll)...

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Comment of the Day: Robert Waldmann: "I disagreed with that analysis in 1980. So did Solow. The argument was gradually reducing inflation was possible, would work fine, and wouldn't cause such a severe recession. I still think that. But why are the 70s so memorable? (For us, obviously, our teens are memorable.) Krugman thinks they are remembered with horror because they were very bad for investors. Also it was part of a general ideological shift. But it is amazing how inflation around 10% (mostly a transfer which can be avoided with indexed contracts not a welfare loss) had such a huge effect on policy and academic economics and the great recession had such a small effect. I think it is very hard to reconcile this with the idea that economics is a science or that policymakers have well defined objectives and models. Also, it is clear that a bit of suffering for me and people I know has more effect than huge suffering of people of another social class. You didn't explain where the 2% target came from or why a 4% target is rejected. I don't think you can. Given the liquidity trap it makes no sense (as you and Larry Summers argued decades ago)...

Comment of the Day: Charles Steindel: in reply to Robert Waldmann: "You are precisely right about the 70's (I wuz there). Even with the big 73-75 recession it was essentially a period of strong growth; a lot of jobs created as our generation flooded the labor market. A major reason for the runup in inflation, as has been fairly well-documented (by Athanasios Orphanides), was the unexpected drop in productivity growth—that led to overestimates of how much tightening of policy would reduce inflation. A key issue examined by some in that era was the real cost of the inflation. At least as I saw it careful analysis suggested little (of course, some misallocation of resources reflecting the non-indexed tax code, but that is a fairly straightforward matter to correct). I was amused a few years ago when Olivier Blanchard may have been apparently implicitly relying on that line of reasoning in suggesting higher inflation targets; I got that message back then from the long paper Stan Fischer and Franco Modigliani wrote and it could be Olivier heard it the same as I did...

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Comment of the Day: Graydon: "I think it's quite possible to look at the Chinese per-city bans on combustion-powered busses and taxis, the quiet 'well, yes, us also' from Volvo about their electric platform coincidentally on the same schedule as the Mercedes-Benz platform (Volvo is owned by a Chinese car maker), the new battery tech Mercedes-Benz says they're adopting as drifting toward the Chinese banning sales of new private combustion-powered automobiles by 2022 or so. They're in pretty good shape to do that; nobody else is, and certainly the US is not. As a 'obvious economic self interest, so unfortunate about that carbon bubble O Oil-Empire Alleged Hegemon' move it's difficult to see why they wouldn't...

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Comment of the Day: Ronald Brakels: "Why do they publicly hate trans people? Because they no longer get a thrill/votes from publicly hating gay people. It may be hard to see from the inside, but here in foreignland it is very clear that once people who wear suits stopped automatically nodding their heads in agreement with politicians who relied on casting themselves as being in opposition to a despised out group of people who have homosexual relations or look like they might, they pivoted to hating trans people. It all lookws horrifically artificial from over here. They are setting out to ruin lives and drive people to suicide because they find that preferable to obtaining political success by standing for something other than standing in opposition to some hated other.

[byomtov]: "Why do they publicly hate trans people? Because they no longer get a thrill/votes from publicly hating gay people. It may be hard to see from the inside. Not hard to see at all. The need is to hate someone. Once it becomes unacceptable to hate (at least publicly) some groups-Jews, blacks, homosexuals-it becomes necessary to find a new target...

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Comment of the Day: Charles Steindel: "Nothing at all wrong with Weller, really. The truly odd point appears to be how he got nominated. It seems that Trump was pleased that Jim Bullard, the president of the St. Louis Fed, voted to cut the funds rate at the last meeting, and offered Jim the slot. Bullard turned it down (no regional president would ever be included to accept a Board post other than Chair or Vice Chair; no more real power, combined with less pay and no staff) and suggested Weller. That's not the usual way these things get done. The only 'hasty' Board nomination I can recall was Paul Volcker being named chair in the immediate wake of Bill Miller becoming Treasury Secretary. But in 1979 there was a clear need to have that slot filled as quickly as possible by a person of Volcker's (dare I say...) stature (groan). Update: Whoops—it slipped my mind that Martin replacing McCabe in 1951 was rushed. But the circumstances were also pretty extraordinary, even more so than 1979: the FOMC had pretty openly defied the President in the middle of a major shooting war. McCable (and Eccles) had to go as part of the Accord. Truman thought he got his guy in at the Fed, but learned otherwise...

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Comment of the Day: Ronald Brakels: "If you record a bitch's new born puppy and then play that sound on a tape deck or other audio device the bitch will pick up that device and treat it like a pup. Dogs have about 2 billion plus neurons but this shows they are still very stupid. But no one seems to have a problem with this epic level of idiocy in our closest animal companions, but as soon as a program identifies a tape player as a puppy people can't wait to mock it for being so stoopid And they're right. It is stoopid. But they always seem to overlook the fact we're pretty stoopid ourselves. Take, for example, pornography. Humans can be fooled by glowing phosphors into sexual activity that has pretty much zero chance of creating descendants.

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Comment of the Day: D. C. Sessions: "One of those 'small city research universities' is New Mexico Tech (nmt.edu), which is in a town (Socorro) of 10,000. In addition to the usual research and educational activities, NMT manages the Very Large Array radiotelescope array, the 2.4 meter fast object tracking Magdalena Ridge Optical Observatory, the Langmuir Lightning Laboratory, and the new Magdalena Ridge Optical Interferometric telescope array. I probably forgot a few. Despite this, low cost of living, and a congenial climate, Socorro is losing ground. Before trying to copy NMT across the USA, it would be wise to understand why the formula isn't working here.

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Comment of the Day: Graydon: "Intelligence is emergent. We know with some confidence that you can get it more than one way -- the way you think, and the way a parrot thinks are not the same -- and that you can get it with way fewer neurons than we use (that parrot again, or corvids) but we don't know what it emerges from or how. Which is where all the neuron complexity arguments die in a pit. I think it's more useful to think about something like Deep Mind as an artificial reflex than as artificial intelligence; a certain narrow range of stimuli produces a quick response. The emergent stuff is just not there at all.

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Comment of the Day: Erik Lund: "'Cerdic' appears to be a Brittonic name, 'Ceretic', or, in reconstructed British, Caraticos, tolerably close to 'Caratacus', a heroic leader of British resistance against the Roman invader, who appears in the Latin historians, Tacitus and Dio Cassius. It seems to be a minority argument that 'Cerdic' is 'Caratacus'. Tracing royal ancestry back to Woden is an Anglo-Saxon affectation, we all agree. (In spite of a strong argument that it is actually everyone else copying Bede, and Bede trying to patch up an acceptable genealogy for the post-Osred Bernician kings, who could no longer trace their ancestry back to Ealdfrith, and had to resort to the much less satisfactory, legendary figure of Ida.) But the House of Wessex claiming an ancient British hero as apex ancestor? That's whack...

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Comment of the Day: Kaleberg: "It depends on what you mean by a 'robot'. Do you count remote wellhead monitoring systems? That eliminates drill monitoring jobs. Do you count synthetic oils and computerized internal combustion engine control letting lubrication oil last longer? That eliminates automobile maintenance jobs. Let's not even talk about the revolution in steel making over the last 30 years that has eliminated tens of thousands of dirty, dangerous jobs. There is a long list like this. Uber and Lyft eliminate dispatcher's jobs. Reservation web sites eliminate receptionist and scheduling jobs...

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Comment of the Day: HankP: "Under Bush we had the imposition of torture as policy, now trump has added concentration camps. Republicans applauded loudly in both cases. Everyone knows where this is headed if we don't stop it...

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Comment of the Day: As Dan Davies says, finance works with criminal penalties for material misrepresentations, and works better. Would not politics also work better with such?: Graydon: "Remember that in this case, Boris made the public lie in an official capacity, was told by the relevant governmental body that it was a lie—the statistics authority officially informed the official persona of the officeholder that no, no, that's not correct; that is not close to correct—and the official persona went right on making the lie in public in ways the court refuses to find obviously immaterial. There's not much 'chilling speech' there; there's an obligation on office-holders to act in the public interest. It's unusual to use a court to hold them to it, but it's not obviously wrong to use a court to hold them to it, any more than it would be wrong to charge someone with taking bribes to act contrary to the public interest while holding a public office...


#commentoftheday

Comment of the Day: Cosma Shalizi: "Young doesn't give a table of sample sizes, but he does give a table of average maximum 'leverages', which is something like 0.25 for the two most influential observations. This matters, because regression asymptomatics are basically about the limit where leverage goes to zero (rather than sample size to infinity as such). If two observations (or clusters) are driving 1/4 of the estimate, asymptotics are irrelevant. (Young does a lot with the bootstrap to show that the pre-asymptotics aren't great either.)...

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Comment of the Day: Charles Steindel: "One interesting thing in this material was Buchanan's groaning about how he was discriminated against in Navy Officer training relative to Yankee Ivy Leaguers. Herman Wouk's recent passing stirred me to reflect on this process. As was mildly fictionalized in the Caine Mutiny, Work was outstripped in his training class by none other than Jim Tobin. Yes, both Wouk and Tobin were northern 'Ivy Leaguers' (Wouk Columbia and Tobin Harvard). But the Jew from New York and the Irish kid from Illinois would surely not have seen themselves as more on the 'inside' than Buchanan who, after all, had the same name as (an admittedly wildly unsuccessful) US President...

IMHO, what Buchanan is complaining about is this: Harvard and Columbia could and did turn people like Wouk and Tobin into effective WASPs by teaching them to turn down the accent and soft-pedal the Blarney and the Yiddishkeit. Middle Tennessee State Teachers College and the University of Tennessee were not in that business at all.

Now after spending World War II out in Hawaii on Admiral Spruance's staff and marrying Anne Bakke, a Norwegian-American nurse and then getting your Ph.D. in 1948 at the University of Chicago—after that you don't have to identify as a southerner, a governor's grandson, from a family whose land had been "ruined" by the Civil War (actually, land is hard to ruin: livestock, buildings, orchards, and most of all slaves can no longer be yours afterwards, but the lady is still there); you could identify as whitish-bread American meritocrat—like Wouk and Tobin—who happened to have been born in the shallow south. I don't know whether he thought that would have been a theft of his identity, or whether he would have taken that road if his first jobs had been in Vermont and Wisconsin rather than Florida and Virginia.

Or maybe his complaints about discrimination against him were a con, an intellectual judo move: I'm not an oppressive white establishment southerner—I'm being oppressed!

When one reads "From that day forward I have shared in the emotional damage imposed by discrimination..." and "'fairness' assumed for me a central normative position...", one does expect it to be followed by "and so I marched with King". One does not expect it to be accompanied by "and so I worked hard to devise plans whereby Virginia's public-school tax collars could be diverted to segregation academies..." It's hard for me to see to contemplate such a total lack of awareness of self and context to make "I have shared in the emotional damage imposed by discrimination..." anything other than an intellectual judo move...

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Graydon: "If you're an authoritarian, you want people to do what you say...

...You necessarily hate this fact-checking, quantified analysis stuff, and you want to make sure anybody who tries that shit winds up starving in a ditch somewhere. People are supposed to do what you say, not waste time and money producing creative excuses. There are no legitimate excuses. You do what you are told to do, whatever it takes. Nothing is important except getting it done and admitting the boss was right.

I sometimes wonder if academia suffers terribly from not having to work for that person.

I mean, yeah, you don't want to work for that person, and you really don't, in a social-health systemic-utility sense, want that person in charge of anything ever, but all the academic analysis I see doesn't believe in that person, and they're ubiquitous. They make a lot of decisions, about the economy and people's lives. They mostly succeed with the starving-in-a-ditch part, too...

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Comment of the Day: John Howard Brown: Stigler's Denunciation of the "Insolence" of Demonstrating Negroes: "As an Industrial Organization economist/quasi-historian of economic thought in IO, I found your characterization of ε-Stigler interesting. My feeling is that you may be attributing too much to ε-Stigler. Aaron Director and Milton Friedman had as much or more to do with the libertarian cast of thought developed at Chicago...

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Comment of the Day: Howard: "I must be missing something: I don't see this as a 'reach for yield' phenomena. I see this as a reach for 10x returns, and I don't think low interest rates have much to do with the willingness of people (well, high net-worth individuals and their VC and hedge fund managers) to take a shot at a 10x return. I continue to see low interest rates as the market's way of telling us we need public investment, badly...

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Comment of the Day: JEC: "I'd just add a note to lament the five decades of empirical research into the actual formation and behavioral consequences of expectations that didn't happen, thanks to the Rational Expectations Revolution in macro. We'll never get those squandered years back...

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Comment of the Day: JEC: "Against my better judgment, I find that I must demand, in the strongest possible terms, that you kids withdraw forthwith from my lawn. More specifically, this is correct: 'The concept was developed by the economist Joan Robinson in her 1933 book The Economics of Imperfect Competition to describe the labor market equivalent of a monopoly, where workers only have the option to work at one employer, so their wages will be set less than the value they create+ since they have no outside options'...

...But this is bollocks: "But work pioneered by economist Alan Manning at the London School of Economics in his book Monopsony in Motion broadens the definition of monopsony to include labor market dynamics where workers do not respond to changes in wages as would be predicted by a competitive model." Why in the world would anyone think it was a good idea to take a technical term denoting a specific market failure and turn it into a generic label for any and all market failures? O tempora o mores!

+Errr… correct-ish. "The value they create" is not an accurate rendering of "the marginal product of labor." But that's a separate rant...

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Comment of the Day: John Howard Brown: "Discussions of 'white male privilege' go... far astray. Although the phenomena is very real, most white males don't experience their lives as privileged. If anything, they feel less privileged than their fathers. Certainly their incomes are less. As Brad has pointed out, maintaining a full employment economy instead of the Fed's disinflationary bias would go far to reduce the feelings of grievance among white males. Too bad that so many 'Baby Boomers' got scared by the inflation monster in the 1970s...

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Comment of the Day: Howard: "As a white male who graduated high school in Allentown, PA in 1970, I have often noted that while I went to college and forged a reasonably well paid career as a consultant, the white males like me who didn't go to college expected to find life-long work and reasonable pay at Bethlehem Steel, Mack Truck, or the Western Electric Plant. All those jobs are long, long gone. While the area has been lucky enough to have seen big growth in healthcare, my high school classmates have had little but struggle, and I wouldn't be surprised if some good number of them were now Trumpists. That all said, i'm not sure baby boomers were scarred by the inflation monster: i think fed economists were scarred by the inflation monster, which is what produced years and years of pretending that a hard ceiling was merely a target...

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Comment of the Day: Robert Waldmann: "Also I don't like 'publicly commit'. This is based on the faith that such declarations are credited, and the prior assumption that if they are firmly and sincerely meant and therefore credible they shall be credited. The idea that agent's belief in a declaration is an aspect of the policy is the rational expectations hypothesis sneaking in the back door after having been tossed out the front door (effort to translate returning by the window after being tossed out the door for residents of a country where most windows aren't French windows). Why promise inflation after the recession rather than produce inflation now when monetary policy isn't at the zero lower bound. Is it really likely that people could be convinced that the Fed will accept inflation over 2% some years after then next time we are in the liquidity trap when it demonstrates that it won't accept it right now? They should walk the walk, not just pre-commit to possibly talking the talk at some time in the indefinite future. Still progress...

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Comment of the Day: Robert Waldmann: May 3, 2019: Weekly Forecasting Update: Little Change: "I can't insert a figure here, so the very few points of raw data are here ,https://rjwaldmann.blogspot.com/2019/05/g-and-gdp-update.html> or do click here or other bears will be angry https://angrybearblog.com/2019/05/fiscal-policy-and-gdp-2019-update.html I don't see anything funny happening in the past 8 quarters which isn't fit almost perfectly using the assumption that the government spending multiplier is 1.5 and nothing else matters...

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Comment of the Day: Eric Lund: "It's not just wrong, it's a fetish passing for scholarship, and there's far too much of it out there. While I am by no means a classicist, it seems to me that a casual eye on the new books carousel at your university library would rescue from any temptation to indulge this kind of nonsense. Nino Luraghi's Ancient Messenians: Constructions of Ethnicity and Memory (2008) will lead to Hodkinson and Powell, eds. Sparta: New Perspectives, which, even if you are as lazy as a certain blog commentator and content yourself with the Bryn Mawr review up on JSTOR, you would be quickly led to a pdf posted by H. W. Singor https://delong.typepad.com/files/5_041_036.pdf... and to the chastening realisation that the scenario Our Host describes was first laid out by Aristotle in the Politics. This ain't exactly cutting edge revisionism, folks...

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Comment of the Day: Mark Field: How Big a Problem Is the Malapportionment of the Senate?: "It's always possible that the economic argument will work this time. But given that it's been tried repeatedly and yet failed for 400 years, there's a very strong presumption against that. Ira Katznelson and his co-authors explored this in their book Southern Nation, which explored Southern politics during the period 1865-1932. Their conclusion was that left-populist economics could appeal to some Southerners (not necessarily a majority), but ONLY in a context in which voters and politicians were confident in the bulwark of white supremacy. When they had reason to be nervous about that, racial supremacy took a higher priority and support for liberal economics fell. This also explains the racial compromises FDR had to make in order to pass the New Deal programs (detailed in Katznelson's book Fear Itself). This time might be different. But we shouldn't count on that...

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

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Comment of the Day: Robert Waldmann: "The problem, as you note, is that, when they are right, MMTers have a whole lot of company. A more Keynesian than Keynesian school whose 3rd notably accomplishment is to agree with Milton Friedman does, I think, lack exclusivity (not the determination to exclude everyone else but any basis for that exclusion). Reinhart and Rogoff have been very widely ridiculed (for the spreadsheet error which was not quantitatively important, not basing their conclusion on one year in New Zealand which was). You will note distinct mockery of fiscal space by OJ Blanchard now president of the AEA after many years as head economist at the IMF. The three examples you give of points where MMT is right do not establish one point where MMT is both right and original. They may have contributed something for all I know (I have not and will not read the MMT literature) but you provide no evidence that they have...

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Comment of the Day: "It is not only crows and chimpanzees that have a 'theory of mind'-people do too!": Phil Koop: "Well thank goodness I am not the only one who feels this way! Far too much is made, in my opinion, of the [Scott Sumner's] banal observation that we can never know what someone else is thinking. This is speciously true - we can never be certain of the entirety of another's thoughts. But it is substantively false, once you allow as you ought for probable inference; we can often make a pretty good guess on salient points of interest. It is not only crows and chimpanzees that have a 'theory of mind'-people do too! And some of us are pretty good at it; we can be quite sure of this because they tend to do things like consistently win a lot of money at poker. Certainly we do not need to be telepaths to judge Moore's or Cain's motives...

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Robert Waldmann: Robert Waldmann: "The wedge comes from 2 types of irrationality. Poor portfolio diversification means the portfolio held by actual investors has high risk per return compared to the market portfolio. And also irrational loss aversion...

...But I also don't think the source of the wedge matters much.

The crude Mehra-Prescott calculation is interesting. It could be that the equity premium is high because of irrationality, and it could be that it is high because of liquidity constraints and other frictions. But in either case, considering the return a rational representative agent would accept is interesting. The premium minus what it would be if there were a rational representative agent describes the welfare effect of a sovereign wealth fund on welfare. This is John Quiggin's point and it is very important. That is the 64 trillion dollar question.

Why the policy would cause a huge increase in welfare is less important than the fact that such a policy exists, is simple, and can be implemented.

So next step is we look at a state which issued debt and buys the risky asset. The math is fairly simple and works for an OLG model with rational agents in the same way it works for a model of a representative but very stupid agent.

Notice that the leveraged state doesn't have to worry about interest rate spikes. If its debt is short term, it can respond to a loss of public confidence by liquidating its portfolio. In simple models, there aren't multiple equilibria.

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Comment of the Day: John Howard Brown: "Property rights are always conditional on the allocation of social power! When the power of the Laird of a Scots clan depended on the number of clansmen who could wield pike and claymore, they were happy to grant all able adult men usufruct in his clan. When raising sheep became more profitable than raising warriors, they were willing to forget their fellow clansmen's rights. That's why I'm an American!...

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Comment of the Day: I thought it was 20 pounds of berries for one pound of wax? But I could be wrong...: Nils: The Lighting Budget of Thomas Jefferson: "Those 'myrtle' candles Jefferson was asking for would be bayberry candles, made from waxy Myrica Cerifera berries. I haven't the slightest idea of how many pounds of berries (boiled, strained, reboiled) went into a pound of wax but it would be a lot. Hence his resignation to accepting some adulteration with tallow...

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Comment of the Day: Ronald Brakels: "I don't have much confidence that machines won't outclass humans in, eventually, everything, and human involvement will be seen as a burden holding back quality and performance as it is considered today in the manufacture of electronics. Currently makers of things such as solar panels and batteries boast and lie about how few humans their production lines involve as less human input is considered a sign of quality and reliability in finished products. And it is. Humans don't have the precision machines do and can't maintain high levels of focus for a 12 hour shift. Using machines to enhance human precision and concentration in manufacturing isn't a practical option because it's easier just to get the machine to do the task itself...

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Comment of the Day: John Howard Brown: "It always seemed to me, that there are two probable causes for little current evidence of life elsewhere in the universe. First, life wasn’t possible before there had been several generations of supernovas. Only then would there be enough heavier elements to provide interesting chemistry which could result in the emergence of living systems. So the first ten billion years had few or no prospects for life. A second environmental consideration is that the supermassive black holes in the center of galaxies create a radiation halo extending for thousands of light years. This intense radiation would disrupt he development of the complex chemistry necessary for life. I believe life on earth is early and safely tucked away from the mean black hole in the center of the Milky Way. We’ll See...

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Comment of the Day: Grizzled: "I just read How Asia Works by Joe Studwell. I don't know what economists think of the book (although considering what he thinks of economists I would guess they're not that enthusiastic). But the accounts he gives of successful asian development don't seem to emphasize absolute property rights. Property rights, sort of, but in an environment set up by the state. This is particularly true in the finance sector; they do what they're told to do...

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Brad DeLong: "Job Guarantee" vs. "Functional Finance":

Job Guarantee: "Our policy is for the government to run a deficit to offer low-quality make-work low-pay jobs that suck"

Functional Finance: "Our policy is for the government to run a deficit so that the labor market is in balance with employers getting the most value for their money possible and workers getting the most money for their time and energy possible with unemployment reduced to a 'frictional' level'

Job Guarantee is really stupid on many levels. Functional Finance is really smart. Put me down for Functional Finance, Alex, and make it a true daily double...

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