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Risks of Debt: The Real Flaw in Reinhart-Rogoff: Hoisted from the Archives

There never was a 90% cliff. And most of the downward slope in teh scatter came not from debt accumulation but from growth that had been slow for other reasons. See Owen Zidar (2013): Debt to GDP & Future Economic Growth:

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Hoisted from the Archives: Risks of Debt: The Real Flaw in Reinhart-Rogoff: 2013: A country that spends and spends and spends and spends and does not tax sufficiently will eventually run into debt-generated trouble. Its nominal interest rates will rise as bondholders fear inflation. Its business leaders will hunker down and try to move their wealth out of the corporations they run for fear of high future taxes on business. Real interest rates will rise because of policy uncertainty, and make many investments that are truly socially productive unprofitable. When inflation takes hold, the web of the division of labor will shrink from a global web he'd together by thin monetary ties to a very small web solidified by social bonds of trust and obligation—and a small division of labor means low productivity. All of this is bound to happen. Eventually. If a government spends and spends and spends but does not tax sufficiently.

But can this happen as long as interest rates remain low? As long as stock prices remain buoyant? As long as inflation remains subdued. My faction of economists—including Larry Summers, Laura Tyson, Paul Krugman, and many many others—believe that it will not...

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The Fed now seems to be saying: "We misjudged the situation late last year. We are going to reverse our policy. But not quite yet." And I do not understand the frame of mind in which that is a coherent system of thought. I wish they would explain: Tim Duy: Rate Cut On The Way: "The Fed turned... dovish... basically announcing a July rate cut as clearly as they could without taking out an ad in the Wall Street Journal... increased 'uncertainties'... 'muted inflation pressures'.... The proximity to the lower bound coupled with low inflation was always going to lead the Fed to err on the side of a rate cut. It just took them some time to find their way there.... The dot plot was far more dovish than I anticipated.... Eight participants expecting lower rates.... Forecasts were dovish as well.... Market participants have priced in a 100% change of a rate hike in July. The 2 year treasury yield is also begging the Fed to cut rates.... It would take some spectacular data to call the July cut into question.... It would be exceedingly difficult to pull back on a rate cut now. Nor is there any reason to...

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Hoisted from Six Years Ago: To Steal a Line from Leon Trotsky: "Every Man Has a Right to Be Stupid, but John Cochrane Abuses the Privilege..."

Consumer Price Index for All Urban Consumers All Items Less Food and Energy FRED St Louis Fed

Hoisted from the Archives: Stupidity Is a Willed Choice Files: John Cochrane: Reading Paul Krugman calls to mind that I never reacted to John Cochrane's July 2012 failure to mark his beliefs to market and, instead, doubling down on his claim that the biggest risk the U.S. economy faces is that of becoming "Argentina" "quickly".

I must say that if I had been opining stridently about issues of public policy without doing my homework five years ago, and if between then and now events had developed in directions strongly contrary to my expectations, I would not double down on what I had thought then--I would rather try hard to do my homework and to mark my beliefs to market.

And if I were going to criticize people for not citing my work, I would not claim that a sentence they wrote which comes immediately after a four-paragraph quote from me as an example, and I would have read their explanation of why they think expansionary fiscal policy right now does not raise the risks of "fiscal dominance" rather than remain in ignorance of it.

But to each his own!

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Hoisted from the Archives: John Cochrane's Claim in Late 2008 That a Recession Would Be a Good Thing Deserves Some Kind of Award...

Hoisted from the Archives: The fact is that by the end of 2007 the construction sector had rebalanced: there was no excess of people pounding nails in Nevada—even if you did believe the false theory that recessions have recessions do the "necessary work of rebalancing", there was no rebalancing work to be done after 2007. Even a quarter-competent Schumpeterian who kept even half an eye on the data should have been able to recognize that...

More than Two Decades of Macroeconomic History Through the Lens of Four Key Components of Aggregate Demand


To: @johnmlippert: If I may beg a small slice of your attention...

I am tracking down John Cochrane's claims that (i) in your December 23, 2008 article you were "only... on a hunt for embarrassing quotes", (ii) he had "spent about 10 hours patiently trying to explain some basics" to you, and (iii) you took him out of proper context when you wrote: "'We should have a recession', Cochrane said in November, speaking to students and said in November, speaking to students and investors in a conference room.... 'People who spend their lives pounding nails in Nevada need something else to do'."

Do you by chance remember the larger context of Cochrane's "pounding nails" comment, and do you have any idea why he now claims that you took him out of context? Or what he thinks the proper context would have been?

I would be grateful for any light you can shed on this.

Yours,

Brad DeLong brad.delong@gmail.com


John M. Lippert: "Hi Professor DeLong.

Thanks for your note. Professor Cochrane’s complaint is something of which I became aware several months after we published our story in 2008.... The bottom line is that Bloomberg did not respond to Cochrane’s comments. He never sent them to us, despite my request that he do so.

When we became aware of his complaint, we saw no reason to make a correction. Cochrane made the ‘pounding nails’ comment at a Chicago Booth forum at the Gleacher Center in downtown Chicago in November 2008. It was part of an ongoing lecture series, as I recall. It was kind of a big event, with a couple hundred people. So they may have a recording that you can access.

Good luck with your inquiries.

Tks,

John Lippert

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The Intergenerational Burden of the Debt: Nick Rowe Tempts Fate Weblogging: Hoisted from the Archives

Cursor and 30 Year Treasury Inflation Indexed Security Constant Maturity FRED St Louis Fed

Until secular stagnation ends—until the yield on U.S. government debt exceeds the growth rate of the economy—worry about reducing of even stabilizing the debt-to-GDP ratio of a country like the U.S. that has assume running room via financial repression to stabilize demand for its debt is premature. Thus the takeaway is this: It would be much more productive right now to worry about how do we maintain normal levels of net investment in a high government debt post-interest rate normalization environment than to propose sending the economy back into recession in order to reduce government debt accumulation. Recession and high unemployment in the short- and medium-run are problems. Low investment in the medium- and long-run are problems. Government debt is a tool to avoid the first and a source of risk of the second. But it is better to keep your mind focused on the things that are real problems:

Hoisted from the Archives: The Intergenerational Burden of the Debt: Nick Rowe Tempts Fate Weblogging...: Nick Rowe:

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Economists Think of Most Lawyers Like Cats Think of Small Birds: Hoisted from the Archives

Hoisted from the Archives: Economists Think of Most Lawyers the Way Cats Think of Small Birds: June 13, 2002: I find that right-wingers Glenn Reynolds, Tom Maguire, and company have elevated me to the high and mighty rank of Democratic Party Hack. Alas! The real ideological partisans scorn me: I have too great a tendency to think about what I should say and then say what I think, rather than to simply jerk my knee and line up in my assigned place on some ideology- or patronage-based team.... Reynolds and company want very badly to say something critical about... Paul Krugman. Unfortunately for them, Krugman's recent column has nothing to take exception to.... So since they can't argue substance, they decide to try to argue procedure.

I can imagine what they thought: "Paul Krugman quotes Brad DeLong! And he doesn't say that DeLong was Deputy Assistant Secretary of the Treasury in the Clinton administration!! That's 'material nondisclosure'!!! Krugman has done a bad thing!!!!" Never you mind that this isn't an issue on which there is any partisan dispute, and thus that 'disclosure' of the partisan allegiance of one's sources is not relevant. To an economist like me this style of—let's be polite, and call it "lawyerlike"—discourse is sad.... Try your best to make the listener forget what the big issue is (in this case, is Krugman right?)--and, instead, argue that there is something wrong with your adversary's procedure. This is, I think, the reason that we economists regard most lawyers like cats regard small birds: Flighty things. Unable to keep their minds focused on what matters. And our lawful prey.

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Hoisted from Eleven Years Ago: Poverty Traps: The High Price of Investment Goods in Poor Countries

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Hoisted from Eleven Years Ago: Poverty Traps: The High Price of Investment Goods in Poor Countries http://www.bradford-delong.com/2007/06/poverty-traps-t.html:Here is how Larry Summers and I formulated it back in the early 1990s, and I believe that we were correct:

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DeLong Smackdown Watch: Yield Curve: Hoisted from the Archives from 2006

Ooh boy. Was I wrong in 2006. I am not betting against the yield curve again:

From 2006: DeLong Smackdown Watch: Yield Curve: Worthwhile Canadian Initiative thinks I'm wrong when I write: Yes, we should be worrying about the US yield curve: This inversion of the yield curve, however, is generated not by domestic investors' thinking that a recession is on the way, but by foreign central banks' desires to keep buying lots of dollar-denominated bonds in order to keep their currencies from appreciating. Thus while an inverted yield curve is usually a sign that a bunch of people are trading bonds on their belief that a recession is likely, that is not what is going on in this case...

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A Year Ago on Equitable Growth: Twenty Worthy Must- and Should-Reads from the Past Week or so: June 7, 2018

stacks and stacks of books

Worthy Readings at Equitable Growth:

  1. That monetary policy is best which avoids creating needless unemployment while still maintaining confidence in the value of the unit of account. Yet surprisingly little thought has been devoted to figuring out which monetary policy jumps the highest with respect to this objective: Nick Bunker: Getting on the level with the Fed’s targeting of prices: "John Williams’s move to New York is a sign that the Federal Reserve may soon reconsider its target for monetary policy. It’s not clear whether a new target would emerge from such a process or how radical a change current members of the FOMC would consider. The current inflation targeting structure may have gotten the U.S. economy to where it is, but it took some time. A quicker recovery from the next recession would be to the benefit of everyone in the U.S. economy. So, a rethink is needed. Hopefully it’s coming soon..."

  2. I think "top 20%" is wrong. The fact that most of percentiles 80%-97% perceive themselves as having catastrophically lost the game of relative status vis-a-vis percentiles 98% and 99%—and that most of percentiles 98% and 99% perceive themselves as having catastrophically lost the game of relative status vis-a-vis the 99.9%, and most of the 99.9% perceive themselves as having catastrophically lost the game of relative status vis-a-vis 99.99% makes arguing that they have in some sense succeeded in realizing a dream that they now hoard a hard argument to make: Richard Reeves: Equitable Growth in Conversation_: "Dream hoarders... are the people at the top... the winners of the inequality divide... the top 20 percent roughly of the income distribution. That means they earn healthy six-figure household incomes, with average incomes of about $200,000 a year..."

  3. There was a lot of noise about how giving repatriated profits a tax break would boost investment in America. As near as I can see it, none of it was well-founded at all: Kimberly Clausing: Equitable Growth in Conversation: "We are distorting repatriation decisions by having this repatriation tax. But I don’t think we’re dramatically changing the investments found in the United States. The companies that have profits abroad can borrow against them to finance any desired investment. And some of the money isn’t really truly abroad—it’s invested in U.S. assets..."

  4. This web page at Slate has the wrong headline. It should be: "Education Won’t Solve Inequality: Not without workers’ power too". Sigh. On the substance, blaming increasing inequality on "Skill Biased Technical Change" was always a non-sequitur. Given the way the models were set up, SBTC was a residual: anything that diminished worker bargaining power was going to be labeled "SBTC" regardless of what it really was: Kate Bahn: Study: Unions increasingly represent educated workers: "Herbst, Kuziemko, and Naidu throws a wrench in the SBTC [Skill-Biased Technical Change] explanation of rising inequality. They find that the education level of union members also followed a U-shape curve from 1936–2016..."

  5. Looking forward to what we can learn from this BLS initiative: Kate Bahn: New data on contingent workers in the United States: "On Thursday, June 7, the U.S. Bureau of Labor Statistics will release data from its freshly collected Contingent Worker Supplement. It’s important for policymakers and economists alike to know what to look for ahead of Thursday’s data release..."

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Joseph Schumpeter on "Liquidationism": Hoisted from the Archives

Il Quarto Stato

Hoisted from the Archives: Joseph Schumpeter on "Liquidationism": Hoisted from the Archives: "The problems presented by periods of depression may be grouped as follows: First, removal of extra economic injuries to the economic mechanism: Mostly impossible on political grounds. Second, relief: Not only imperative on moral and social grounds, but also an important means to keep up the current of economic life and to steady demand, although no cure for fundamental cases. Third, remedies: The chief difficulty of which lies in the fact that depressions are not simply evils, which we might attempt to suppress, but—perhaps undesirable—forms of something which has to be done, namely, adjustment to previous economic change. Most of what would be effective in remedying a depression would be equally effective in preventing this adjustment. This is especially true of inflation, which would, if pushed far enough, undoubtedly turn depression in to the sham prosperity so familiar from European postwar [i.e., World War I] experience, but which, if it be carried to that point, would, in the end, lead to a collapse worse than the one it was called in to remedy...

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A Year Ago on Equitable Growth: Twenty Must- and Should-Reads from the Week of May 31, 2018 for si...

stacks and stacks of books

Five Worthy on Equitable Growth:

  1. From two years ago: a minimum wage meta-analysis: Arindrajit Dube and Ben Zipperer: Pooling multiple case studies using synthetic controls: An application to minimum wage policies | Equitable Growth

  2. Worth reading from last October: Darrick Hamilton: Post-racial rhetoric, racial health disparities, and health disparity consequences of stigma, stress, and racism | Equitable Growth

  3. Also worth reading from last October: Papers from our co-hosted antitrust symposium: Michael Kades: Unlocking Antitrust Enforcement: New Yale symposium examines proposals to make antitrust enforcement more effective | Equitable Growth

  4. Nick Bunker gathers scattered threads and sets out the issues: Nick Bunnker: Puzzling over U.S. wage growth

  5. As I say, this is exactly the kind of debate we should be hosting and encouraging: Jesse Rothstein: Inequality of Educational Opportunity? Schools as Mediators of the Intergenerational Transmission of Income: "Chetty et al. (2014b) show that children from low-income families achieve higher adult incomes... in some commuting zones (CZs) than in others...

 

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Interview: "NAFTA Is Just Not a Big Deal for the U.S.": Hoisted from the Archives from 2017

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Joseph Ford Cotto: J. Bradford DeLong says "NAFTA is just not a big deal for the U.S.", explains why: "Support for Bernie Sanders and the Donald did not rise out of nowhere, after all. In such turbulent waters as these, it is important to seek the guidance of a wise, seasoned captain. Insofar as the sea of dollars and cents is concerned, J. Bradford DeLong is just that fellow. He is "a professor of economics at UC Berkeley, a weblogger for the Washington Center for Equitable Growth http://equitablegrowth.org/blog, a research associate of the National Bureau of Economic Research, and former deputy assistant secretary of the U.S. Treasury in the Clinton administration .... He also writes the weblog Grasping Reality: http://bradford-delong.com," as DeLong's U.C.B. biography explains. Dr. DeLong recently spoke with me about many topics relative to our nation's economy. Some of our conversation is included below....

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James Buchanan (1997): Has Economics Lost Its Way?: Hoisted from the Archives

Hoisted from the Archives: This serves as a good index of how much Milton Friedman's redefinition of "neutral monetary policy" to mean "whatever monetary policy keeps nominal GDP on its trend growth path" led people prone to motivated reasoning in a laissez-faire direction completely and horribly astray. It also serves as an example of an astonishing failure to mark one's beliefs to market. Never mind that the rough constant of M2 velocity before 1980 had been an obvious example of Goodhart's Law, and never mind that even before 1980 forecasts of the state of the economy one and two years out based on M2 were inferior to other forecasts, by 1997 James Buchanan had just seen a remarkable five-year 30% runup in M2 velocity. and the complete ditching of monetary aggregates not just as targets but even as indicators by Alan Greenspan in favor of a neo-Wicksellian "neutral interest rate" approach that had nothing whatsoever to do with an "effective monetary constitution" of any type:

FRED Graph FRED St Louis Fed

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A Year Ago on Equitable Growth: Twenty Worthy Reads from the Week Before May 24, 2018

Hoisted From the Archives**: Worth Reading from A Year Ago

Five Things Worthy at Equitable Growth:

  1. Austin Clemens and Heather Boushey: Disaggregating growth: "NIPA... were a radical advance in economic measurement when they were instituted.... The lack of data on how income is distributed is especially glaring now in the face of rapidly increasing economic inequality.... Instead of revolutionizing GDP, U.S. policymakers should evolutionize it... add an explicitly distributional component to GDP..."

  2. Hold it! Why does the spread of Microsoft Office shift workers away from "non routine analytic" and toward "routine cognitive and routine manual" tasks?: Enghin Atalay et al.: New technologies and the labor market: "Most new technologies are associated with an increase in nonroutine analytic tasks, and a decrease in nonroutine interactive, routine cognitive, and routine manual tasks.... Through the lens of the model, the arrival of ICTs broadly shifts workers away from routine tasks, which increases the college premium. A notable exception is the Microsoft Office suite, which has the opposite set of effects..."

  3. And I do think that grappling with the work and legacy of John Kenneth Galbraith is a very important but rarely operated railway line within economics. So I put a signpost to it here: Brad DeLong: Galbraithian economics: Countervailing power edition | Equitable Growth

  4. Is this a worthwhile and successful way of doing something roughly aligned with but substantially different from not only Mark Thoma but also Liz Hipple: Weekend Reading: a weekly post... with links to articles that touch on economic inequality and growth...? Brad DeLong: Worthy reads on equitable growth, May 10-17, 2018

  5. Jacob Robbins: How the rise of market power in the United States may explain some macroeconomic puzzles: "Surprising... facts about... growth and rising... inequality.... 1. Financial wealth has increased... despite no real increase in... investment.... 2. The financial value of many firms now is permanently higher than the cost of their assets.... 3. These more valuable firms haven’t invested more.... 4. The average rate of return on capital has stayed steady while interest rates have dropped. 5. The share of income going to labor... has declined.... The driving force behind them is an increase in monopoly power together with a decline in interest rates...

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"Neoliberalisms", Left and Right: Hoisted from the Archives

stacks and stacks of books

Hoisted from the Archives: From 2015: _"Neoliberalisms", Left and Right: Today's best piece I have read on the internet is by the extremely sharp John Quiggin: The Last Gasp of (US) [Left-]Neoliberalism: "US neoliberalism is... closer to Blair’s Third Way than to Thatcher....

...[US] neoliberalism maintained and even extended ‘social liberalism’, in the US sense of support for equal marriage, reproductive choice and so on. In economic terms, its central claim was that the goals of the New Deal... could best be pursued through market-friendly policies that would earn the support of the financial sector.... [The] signature issues for US neoliberals were free trade, cuts in ‘entitlement’ spending, and school reform... a ‘grand bargain’, in which Republicans would accept minimal increases in taxation in return for the abandonment of most of the Democratic program. The Clinton administration was explicitly neoliberal.... And, while Obama’s 2008 election campaign was masterfully ambiguous, his first Administration neoliberal through and through.... But developments since then, including the global financial crisis, the failure of school reform and increasing awareness of entrenched inequality have destroyed the appeal of neoliberalism...

I think that John Quiggin is largely correct—if you correct "abandonment" to "reconfiguration".

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"Attempts to Make Sense Out of Right Wing Austrian Economics Can Never Amount to Anything"—rootless_e: Hoisted From the Archives

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rootless_e is correct: Ludwig von Miese is not: Hoisted from the Archives: Quote of the Day: November 12, 2011: "Attempts to carry out economic reforms from the monetary side can never amount to anything but an artificial stimulation of economic activity by an expansion of the circulation, and this, as must constantly be emphasized, must necessarily lead to crisis and depression. Recurring economic crises are nothing but the consequence of attempts, despite all the teachings of experience and all the warnings of the economists, to stimulate economic activity by means of additional credit"—Ludwig von Mises, The Theory of Money and Credit...

"Attempts to make sense out of right wing Austrian economics can never amount to anything."—rootless_e...

"Fictitious" Wealth and Ludwig von Mises: Nevertheless, like a moth to a flame—or like a dog to vomit, or like a dog to something worse—I find myself under a mysterious but inexorable and irresistible compulsion to waste what would otherwise be productive work time trying to make some kind of sense of it—to at least understand wherein lies the error, and how somebody trying very hard to understand the economy (never mind that he is a big fan of the political leadership of Benito Mussolini) can go so pathetically wrong. It is, of course, not the case that every expansion of the circulation is an "artificial" (and unnatural) "stimulation of economic activity" that must "necessarily lead to crisis and depression". So why does Ludwig von Mises think that it must? Here is my current guess as to where von Mises is coming from:

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Hoisted from the Archives: What I Wrote in Advance of the FOMC's September 2018 Meeting

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What a difference six months makes! And now the Fed really wishes it had not raised interest rates in the second half of 2018 and yet is unwilling to move them now back to the summer-of-2018 level. Why they are unwilling I do not know:


Hoisted from the Archives: Next week the Federal Open Market Committee—the principal policymaking body of the United States's Federal Reserve system—is overwhelmingly likely to raise the benchmark interest rate it controls, the Federal Funds rate that governs short-term safe nominal bonds, by one quarter of a percentage point from the range of 1.75-2% per year to the range of 2-2.25% per year. That would make it a little more expensive to borrow and spend and a little more attractive to cut spending and save. Thus there would be a little less spending in the economy, and so a few fewer jobs. Economic growth would be a little slower. The economy would be a little less resilient in the face of adverse shocks to resources or confidence that might generate a recession. These are all minuses—small minuses from a 25 basis point increase in the Federal Funds rate, but minuses.

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Monday Smackdown/Hoisted from Others' Archives from Six -and-a-HalfYears Ago: Dan Drezner on Chuck Lane

Clowns (ICP)

Every time I try to get out, they drag me back in...

Now I am being told that nobody with any audience ever thought 15/hour in California was a really bad idea. So time to recall this:

Monday Smackdown/Hoisted from Others' Archives: A correspondent asks me for help: Chuck Lane is being used as an authority on the California's 15/hr by 2023 minimum wage proposal. And Chuck Lane says:

A hot concept in wonkdom these days is “evidence-based policymaking.”… Gov. Jerry Brown and the state’s labor leaders have announced legislation to raise the state’s minimum wage… to $15 per hour…. Whatever else might be said about this plan, it does not represent an exercise in evidence-based policymaking. To the contrary: There’s a total lack of evidence that the potential benefits would outweigh potential costs—and ample reason to worry they would not…

Dan Drezner: Why I Don’t Need to Take Charles Lane Seriously: "The Washington Post’s Chuck Lane wrote an op-ed arguing in favor of Jeff Flake’s amendment...

...to cut National Science Foundation funding for political science. In fact, Lane raised the ante, arguing that NSF should stop funding all of the social sciences, full stop. Now, I can respect someone who tries to make the argument that the opportunity costs of funding the social sciences are big enough that this is where a budget cut should take place.  It’s harder, however, to respect someone who: 

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Hoisted from the Archiyes: Why We Hate Chickenhawks: Selections from SFF Author David Drake

Hammers slammers Google Search

David Drake, a good chunk of whose work is best classified as horror and is really about his experiences as an interrogator in the 11th Armored Cavalry Regiment, the "Blackhorse", when it went through the Cambodian market town of Snuol:

I [now] had much more vivid horrors than Lovecraft's nameless ickinesses to write about.... I wrote about troopers doing their jobs the best they could with tanks that broke down, guns that jammed—and no clue about the Big Picture.... I kept the tone unemotional: I didn't tell the reader that something was horrible, because nobody told me.... Those stories... were different. They didn't fit either of the available molds: "Soldiers are spotless heroes," or... "Soldiers are evil monsters"... [...] The... stories were written with a flat affect, describing cruelty and horror with the detachment of a soldier who's shut down his emotional responses completely in a war zone... as soldiers always do, because otherwise they wouldn't be able to survive. Showing soldiers behaving and thinking as they really do in war was... extremely disquieting to the civilians who were editing magazines...

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Hoisted from the Archives: Why We Have Good Reason to Hate Chickenhawks

I need an adult How are you supposed to even play Muscovy in ironman eu4

Hard Power, Soft Power, Muscovy, Strategy, and My Once-Again Failure to Understand Where Niall Ferguson Is Coming From: Live from Le Pain Quotidien: In which I once again fail to understand where Niall Ferguson is coming from:

Niall Ferguson: The ‘Divergent’ World of 2015: "Hard power is resilient...

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Note: The Ten Americans Who Did the Most to Win the Cold War: Hoisted from the Archives

Berlin No More Walls Pamela Anderson

Hoisted from the Archives: Note: The Ten Americans Who Did the Most to Win the Cold War:

  • Harry Dexter White: Treasury Assistant Secretary* who was the major force behind the Bretton Woods Conference and the institutional reconstruction of the post-World War II world economy. He accepted enough of John Maynard Keynes's proposals to lay the groundwork for the greatest generation of economic growth the world has ever seen. It was the extraordinary prosperity set in motion by the Bretton Woods' System and institutions--the "Thirty Glorious Years"--that demonstrated that political democracy and the mixed economy could deliver and distribute economic prosperity.

  • George Kennan: Author of the "containment" strategy that won the Cold War. Argued--correctly--that World War III could be avoided if the Western Alliance made clear its determination to "contain" the Soviet Union and World Communism, and that the internal contradictions of the Soviet Union would lead it to evolve into something much less dangerous than Stalin's tyranny.

  • George Marshall: Architect of victory in World War II. Post-World War II Secretary of State who proposed the Marshall Plan, another key step in the economic and institutional reconstruction of Western Europe after World War II.

  • Arthur Vandenberg: Leading Republican Senator from Michigan who made foreign policy truly bipartisan for a few years. Without Vandenberg, it is doubtful that Truman, Marshall, Acheson, and company would have been able to muster enough Congressional support to do their work.

  • Paul Hoffman: Chief Marshall Plan administrator. The man who did the most to turn the Marshall Plan from a good idea to an effective aid program.

  • Dean Acheson: Principal architect of the post-World War II Western Alliance. That Britain, France, West Germany, Italy, and the United States reached broad consensus on how to wage Cold War is more due to Dean Acheson's diplomatic skill than to any single other person.

  • Harry S Truman: The President who decided that the U.S. had to remain engaged overseas--had to fight the Cold War--and that the proper way to fight the Cold War was to adopt Kennan's proposed policy of containment. His strategic choices were, by and large, very good ones.

  • Dwight D. Eisenhower: As first commander-in-chief of NATO, played an indispensable role in turning the alliance into a reality. His performance as President was less satisfactory: too many empty words about "rolling back" the Iron Curtain, too much of a willingness to try to skimp on the defense budget by adopting "massive retaliation" as a policy, too much trust in the erratic John Foster Dulles.

  • Gerald Ford: In the end, the thing that played the biggest role in the rise of the dissident movement behind the Iron Curtain was Gerald Ford's convincing the Soviet Union to sign the Helsinki Accords. The Soviet Union thought that it had gained worldwide recognition of Stalin's land grabs. But what it had actually done was to commit itself and its allies to at least pretending to observe norms of civil and political liberties. And as the Communist Parties of the East Bloc forgot that in the last analysis they were tyrants seated on thrones of skulls, this Helsinki commitment emboldened their opponents and their governments' failures to observe it undermined their own morale.

  • George Shultz: Convinced Ronald Reagan--correctly--that Mikhail Gorbachev's "perestroika" and "glasnost" were serious attempts at reform and liberalization, and needed to be taken seriously. Without Shultz, it is unlikely that Gorbachev would have met with any sort of encouragement from the United States--and unlikely that Gorbachev would have been able to remain in power long enough to make his attempts at reform irreversible. *Also, almost surely an "Agent of Influence" and perhaps an out-and-out spy for Stalin's Russia. If so, never did any intelligence service receive worse service from an agent than Stalin's Russia did from Harry Dexter White....


#hoistedfromthearchives #politics #security #history #highlighted

"Gunpowder Empire": Should We Generalize Mark Elvin's High-Level Equilibrium Trap?: Hoisted from the Archives

Natalie Pierson A Comparative Look at the Gunpowder Empires

Hoisted from the Archives: "Gunpowder Empire": Should We Generalize Mark Elvin's High-Level Equilibrium Trap?: OK. Popping the distraction stack again. A chance remark by the extremely sharp Cosma Shalizi when he came through Berkeley has caused me to spend a lot of time meditating upon a passage written by Bob Allen:

Robert Allen (2006): The British Industrial Revolution in Global Perspective: "The different trajectories of the wage-rental ratio created different incentives to mechanize production.... It was not Newtonian science that inclined British inventors and entrepreneurs to seek machines that raised labour productivity but the rising cost of labour... due to... Britain’s success in the global economy... in part the result of state policy... Britain['s] vast and readily worked coal deposits...

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Adrian Wooldridge Is... the Vicar of Bray!: Hoisted from the Archives

Hoisted from the Archives: Adrian Wooldridge Is... the Vicar of Bray!:

"The Illustrious House of Hannover,
And Protestant succession,
To these I lustily will swear,
Whilst they can keep possession:
For in my Faith, and Loyalty,
I never once will faulter,
But George, my lawful king shall be,
Except the Times shou'd alter."

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Note to Self: The Heritage Foundation, the Club for Growth, and Stephen Moore Have No Principles Whatsoever. Why Do You Ask?: Now that Stephen Moore has signed up with Donald Trump, he is opposed to the Trans Pacific Partnership.... On Trish Regan's show with him, he made four points about TPP: 1. The agreement is long, and has lots of pages in it. 2. The agreement does not commit the Asians to stop copying our intellectual property. 3. The agreement does allow the U.S. to impose retaliatory penalties on other signatories if they do copy our intellectual property, but they will copy anyway. 4. The agreement is unlike NAFTA, which is a good thing. But... short months ago...

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Hoisted from the Archives: The Kansas Republican Governance Experiment. Or Is That "Governance 'Experiment'"? Or Is That "'Governance' Experiment"?: Nothing like this was seen before.... It is only under Brownback that it has been down, down, down, down. You can argue how much of it is hostility to immigrants and strangers. How much of it is the profoundly un-Christian cast of a "Christian" government, and how much of it is the collapse of public services. But it has been effective. My friend Dan Davies says that the best proof that there is a skill and art of management comes from the fact that nobody doubts that there is such a thing as gross mismanagement. Similarly, the best proof that there is such a thing as good technocratic government leading to shared prosperity and equitable growth is... Brownback, and his acolytes and supporters, in Kansas:

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Hoisted from the Archives from 2016: Ben White: "Ben White: Morning Money: "Larry Kudlow and Steve Moore... [were] confident he and Kudlow could help nudge Trump away from his protectionist trade policies.... Moore noted that Trump has largely stopped talking about big tariffs on Chinese goods. Kudlow added: 'I think Mr. Trump does not want to see a wall of tariffs. He's actually pushed that rhetoric aside in recent months'...

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Hoisted from the Archives from 2010: If You Did Not Think UCLA Law Professor Steve Bainbridge Had Lost His Mind—or Perhaps Had No Mind to Lose—You Do Now...: I genuinely thought this was a joke when I first saw it. But, no, people who deal with him every week have persuaded me UCLA law professor Steve Bainbridge really does think Paris Hilton is the tenth worst American of all time. The misogyny is strong in this one: "20 Worst American... Aldrich Ames... John Wilkes Booth... James Buchanan... Aaron Burr... Robert Byrd... Jefferson Davis... Louis Farrakhan... Nathan Bedford Forrest... Rutherford B. Hayes... Paris Hilton...

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Hoisted from the Archives from 2005: Kevin Drum: The Wall Street Journal Editorial Page Is More of a Joke than Ever: "Stephen Moore's maiden outing as a member of the WSJ editorial board.... Moore's sermon today is about the wonders of supply side economics.... 'President Ronald Reagan chopped the highest personal income tax rate from the confiscatory 70% rate that he inherited when he entered office to 28% when he left office and the resulting economic burst caused federal tax receipts to almost precisely double.'... Tax revenue doubled!... First, we should adjust for inflation.... Population increased... tax revenue was $2,283 per person in 1980 and $2,694 per person in 1990. That's not double. It's an increase of 18%... a lot of that is due to consistent tax increases throughout the 1980s.... We can play this game with any decade.... Adjusting for inflation and population growth... 70s produced an increase... of 25%. The Clinton 90s produced... 40%.... Reagan produced the slowest growth in... any decade since World War II. That's a real supply side triumph. Welcome to the Journal, Steve. You guys deserve each other...

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Costs and Benefits of International Capital Mobility: Reply to Bhagwati: Hoisted from 20 Years Ago

Needless to say, time has left me a lot wiser: We need to design economies so that they can operate without disaster even when deregulatory clowns like those of the George W. Bush or the Donald J. Trump administrations are in control of the levers of policy at key moments. How to do that is not so clear. What is clear is that only a fool today would think that our political economy would support a clever technocracy so that we might have our cake and eat it too. Indeed, the most likely scenario seems to be that we will be unable to eat our cake, and then the kleptocrats will steal it out from under our noses so that we will not have it either. In short: I should have listened harder to Jagdish 20 years ago...

2000s_financial_deregulation_republican_congressmen_-_Google_Search.png


Hoisted from the Archives: Reply to Bhagwati: "I open my May/June [1998] issue of Foreign Affairs to discover myself pilloried in an article by Jagdish Bhagwati between Paul Krugman and Roger C. Altman (excellent company to be in, by the way: much better than I am used to) as a banner-waving proponent of international capital mobility, guilty of "assum[ing] that free capital mobility is enormously beneficial while simultaneously failing to evaluate its crisis-prone downside."

I rub my eyes in surprise. I had not thought of myself as a banner-waving proponent of international capital mobility.

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Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: Hoisted from 2008

Il Quarto Stato

Hoisted from 2008: Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: This argument of an inconsistency between free trade and the well-being of the majority of potential voters rests substantially on the two-factor example of the Stolper-Samuelson result. It does not fare too well when we generalize to a situation in which there are a number of different factors—even if the ownership of the abundant factors of production is very concentrated indeed... https://delong.typepad.com/stolper-samuelson_finger_exercise-1.pdf

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Reading: Homer, Odysseus, Emily Wilson, David Drake: Hoisted from the Archives

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Hoisted from the Archives: Homer's Odyssey Blogging: "Like Little Birds... They Writhed with Their Feet... But for No Long While...": Let me riff off of something that crossed my desk.... Emily Wilson's reflections on her translation of the Odyssey, and on the Odyssey itself. There is one passage that always has been, to me at least, horrifyingly freaky in a very bad way. As David Drake—one of my favorite science fiction and fantasy authors—puts it:

Odysseus caps his victory by slowly strangling–the process is described in some detail–the female servants who have been sleeping with Penelope’s suitors. This is only one example (although a pretty striking one) of normal behavior in an Iron Age culture which is unacceptable in a society that I (or anybody I want as a reader) would choose to live in... a hero with the worldview of a death camp guard...

Indeed:

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The Democrats’ Deficit Line in the Sand: Hoisted from the Archives

Federal Surplus or Deficit as Percent of Gross Domestic Product FRED St Louis Fed

From ten years ago: J. Bradford DeLong: The Democrats’ Line in the Sand: "A dilemma for Democratic deficit-hawk economists trying to determine what good economic policies would be should Barack Obama become president.... A chain is only as strong as its weakest link, and it seems pointless to work to strengthen the Democratic links of the chain of fiscal responsibility when the Republican links are not just weak but absent...

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An Unrealistic, Impractical, Utopian Plan for Dealing with the Health Care Opportunity of 2007: Hoisted from the Archives

Medicine Google Search

Of historical interest only: Hoisted from the Archives: An Unrealistic, Impractical, Utopian Plan for Dealing with the Health Care Opportunity: First, it's definitely not a plan, and it's certainly not a proposal for the current or any forseeable future policy and political environment. Think of it as a utopia—and think of it as a utopia coming from a guy who is not a real health economist but has an undeserved reputation because he was good at translating the economese spoken by real health economists like David Cutler, Sherry Glied, Ken Thorpe, Len Nichols, et cetera in a way that made it intelligible to senior Bentsen aides like Marina Weiss and Michael Levy.

So here it is:

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Fama's Fallacy: Hoisted from Ten Years Ago

Clowns (ICP)

I was profoundly embarrassed by and ashamed of the Swedish Nobel Committee and of being an economist when they awarded the Nobel Prize to Eugene Fama.

You see, the economists who cheerled for the Trump-McConnell-Ryan tax cut and claimed it would rapidly and permanently boost annual investment in America by 800 billion had arguments—bad arguments. The economists who condemned Benanke's quantitative easing and claimed it would soon lead to high inflation and a debased dollar had arguments—bad arguments. I do not think any of them made those bad arguments in good faith: the failure of those in either group to acknowledge that they got a big one wrong and to engage in Bayeisan updating is interesting: that silence speaks volumes.

But Fama and the others who claimed a decade ago that, while private decision to spend more boosted employment and production, public decisions to spend more—fiscal stimulus—not only would not, but could not possibly ever boost employment and production... they had no argument at all.

What do I mean? This. This is why I am embarrassed and ashamed: Hoisted from Ten Years Ago: Fama's Fallacy, Take I: Eugene Fama Rederives the "Treasury View": A Guestpost from Montagu Norman, former Governor of the Bank of England:

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Matthew Yglesias: The Lies, The Lies of Andrew Sullivan: Hoisted from the Archives

Clowns (ICP)

Hoisted from the Archives: Matthew Yglesias: The Lies, The Lies: "Andrew Sullivan has been a pretty consistent proponent of the view that Paul Krugman is some sort of liar... [because of his] repeated insistences that George W. Bush's economic policy is founded on a tissue of lies. Krugman is, of course, entirely correct about this. The unnoted irony here is that in his May 14, 2001 column 'Downsize', Sullivan conceded Krugman's point: 'Ah, but the details. The Krugmans and the Chaits will shortly have a cow, if not a whole herd of them. The Times will weigh in again with yet another barrage of articles, editorials, and op-eds opposing any tax relief that would actually benefit those who pay most of the taxes. And, to be fair to these liberal critics, they're right...

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"How an Economy Can Live Beyond Its Means on Its Wits...": Hoisted from the Archives

Preview of How an Economy Can Live Beyond Its Means on Its Wits Hoisted from the Archives

Hoisted from the Archives: How an Economy Can Live Beyond Its Means on Its Wits: P.J. Grigg attacking John Maynard Keynes:

I distrust utterly those economists who have with great but deplorable ingenuity taught that it is not only possible but praiseworthy for a whole country to live beyond its mens on its wits and who, in Mr. Shaw's description, teach that it is possible to make a community rich by calling a penny tuppence—in short who have sought to make economics a vade mecum for political spivs...

Confront economists' theories of depressions and what (if anything) the government should do about them and you find yourself immediately confronted with what look to be at least seven different theories:

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Monday Smackdown: Ezra Klein Smacks Down Paul Ryan as a Grifter, and Himself for a Griftee...

Smackdown

Very welcome to see: Remember: Fool me once, shame on you; fool my twice, shame on me: Ezra Klein: Speaker Paul Ryan Retires: His Legacy Is Debt and Disappointment: "Ryan says that debt reduction is one of those things 'I wish we could have gotten done'. Ryan, the man with the single most power over the federal budget in recent years, sounds like a bystander.... To understand the irony and duplicity of that statement, you need to understand Ryan’s career. After the profligacy of the George W. Bush years and the rise of the Tea Party, Ryan rocketed to the top ranks of his party by warning that mounting deficits under President Obama threatened the 'most predictable economic crisis we have ever had in this country'. Absent the fiscal responsibility that would accompany Republican rule, we were facing nothing less than 'the end of the American dream'. Ryan’s reputation was built on the back of his budgets: draconian documents that gutted social spending, privatized Medicare, and showed the Republican Party had embraced the kinds of hard fiscal choices that Bush had sloughed off. And Ryan presented himself as the wonkish apostle of this new GOP...

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Monday Smackdown/Hoisted from 2008: Why We Called Donald Luskin "The Stupidest Man Alive"

Cargo-Cult economics. Or perhaps "TV economics". Going through motions sorta-kinda like what economists do without understanding why or what the calculations mean: Hoisted: Donald Luskin: Stupidest Man Alive: I remember a similar mistake from the past: Luskin's attempt to compute the real exchange rate produced this:

Grasping Reality with Both Hands The Semi Daily Journal Economist Brad DeLong

on which Luskin commented:

The chart... shows the real exchange rate of the US dollar for a decade before the 1982 memo, and then through the end of the Reagan presidency. It did drift slightly lower for the first couple of years after the memo. But then it took off to new highs—nothing resembling anything like [Summers's and Krugman's late 1982 prediction of] a "return to approximately their historical levels."

in fact the actual real exchange rate was:

Grasping Reality with Both Hands The Semi Daily Journal Economist Brad DeLong

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Weekend Reading: Robert Skidelsky on Writing the Biography of John Maynard Keynes: Fifteen Years Ago on the Internet Weblogging

Hoisted from the Archives/Weekend Reading: "Let us now praise famous men, and our fathers that begat us. The Lord hath wrought great glory by them through his great power from the beginning. Such as did bear rule in their kingdoms, men renowned for their power, giving counsel by their understanding, and declaring prophecies: Leaders of the people by their counsels, and by their knowledge of learning meet for the people, wise and eloquent are their instructions: Such as found out musical tunes, and recited verses in writing: Rich men furnished with ability, living peaceably in their habitations: All these were honoured in their generations, and were the glory of their times. There be of them, that have left a name behind them, that their praises might be reported.

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How Powell May Approach Regulation: Bloomberg Daybreak Asia 2017-12-01: Hoisted from the Archives

From a year ago. Not a transcript but much more what I wish I had said—that is, heavily edited and revised to increase clarity, decrease stupidity, and file a little bit of the ragged stream-of-consciousness rough edges off.

Nevertheless, holds up very nicely, no?

Needless to say, the backdrop here is not the view from the Berkeley Northgate TV studio:

How Powell May Approach Regulation If Named Fed Chair Bloomberg

but this is the view from the conference room in which I am holding pre-exam-week office hours:

View from Blum Center

Unfortunately, the view of the Golden Gate to the left of the frame is blocked by three tall pine trees that have no reason to live, and the peak of Mount Tamalpais is hidden by the salmon-and-white apartment building on the right.

People over the nexzt three months trying to decide between jobs at Berkeley and at universities with larger endowments take norte..

How Powell May Approach Regulation If Named Fed Chair: From 2017-11-01: Anchor: Do you think that's concerning or do you think it's refreshing that Powell comes from the private sector?

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Hoisted from the Archives (December 20, 2010): Can't Anybody in Obama's Inner Circle Play This Game?

Clowns (ICP)

Hoisted from the Archives: Can't Anybody in Obama's Inner Circle Play This Game?: When people in the White House ask me whether I think Obama's SOTU address should be about tax reform or Social Security reform (i.e., 2/3 Social Security benefit cuts, 1/3 tax increases offered by the administration--and God alone knows what happens after that), I want to say: Why not make the SOTU address about jobs and economic recovery?...

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Margaret Thatcher Against Friedrich von Hayek's Pleas for a Lykourgan Dictatorship in Britain: Hoisted from the Archives

Hoisted: Margaret Thatcher Against Friedrich von Hayek's Pleas for a Lykourgan Dictatorship: "My dear Professor Hayek, Thank you for your letter of 5 February. I was very glad that you were able to attend the dinner so thoughtfully organised by Walter Salomon. It was not only a great pleasure for me, it was, as always, instructive and rewarding to hear your views on the great issues of our time...

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Monday Smackdown/Hoisted: The "Hastert' and "Hastertland" Paragraphs from Wooldridge and Micklethwaite's "The Right Nation"

These may be the paragraphs written in this millennium that have aged least well: John Micklethwaite and Adrian Woodridge: The "Hastert' and "Hastertland" Paragraphs from Wooldridge and Micklethwaite's "The Right Nation": "Looking at 'Pelosiville' and 'Hastertland', it is not difficult to see why American politics has shifted to the Right. If American politics is a seesaw, it is an unevenly balanced one. Imagine Dennis Hastert at one end of the seesaw and Nancy Pelosi on the other end, and you have some idea about which party is sitting with its legs dangling in the air. In the war between the two Americas, Hastertland has been winning...

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Monday Smackdown/Hoisted: John Cochrane's Claim in Late 2008 That a Recession Would Be a Good Thing Deserves Some Kind of Award...

The fact is that by the end of 2007 the construction sector had rebalanced: there was no excess of people pounding nails in Nevada...


To: @johnmlippert: If I may beg a small slice of your attention...

I am tracking down John Cochrane's claims that (i) in your December 23, 2008 article you were "only... on a hunt for embarrassing quotes", (ii) he had "spent about 10 hours patiently trying to explain some basics" to you, and (iii) you took him out of proper context when you wrote: "'We should have a recession', Cochrane said in November, speaking to students and said in November, speaking to students and investors in a conference room.... 'People who spend their lives pounding nails in Nevada need something else to do'."

Do you by chance remember the larger context of Cochrane's "pounding nails" comment, and do you have any idea why he now claims that you took him out of context? Or what he thinks the proper context would have been?

I would be grateful for any light you can shed on this.

Yours,

Brad DeLong brad.delong@gmail.com


John M. Lippert: "Hi Professor DeLong.

Thanks for your note. Professor Cochrane’s complaint is something of which I became aware several months after we published our story in 2008.... The bottom line is that Bloomberg did not respond to Cochrane’s comments. He never sent them to us, despite my request that he do so.

When we became aware of his complaint, we saw no reason to make a correction. Cochrane made the ‘pounding nails’ comment at a Chicago Booth forum at the Gleacher Center in downtown Chicago in November 2008. It was part of an ongoing lecture series, as I recall. It was kind of a big event, with a couple hundred people. So they may have a recording that you can access.

Good luck with your inquiries.

Tks,

John Lippert


Just FYI, if I were John Cochrane I would not characterize my 2008 CRSP Forum Keynote as something "I did not write...". And I would not characterize accurate quotations from it as:

an attribution, taken out of context, from a http://bloomberg.com article, written by a reporter [John Lippert] with whom I spent about 10 hours patiently trying to explain some basics, and who also turned out only to be on a hunt for embarrassing quotes...

John Cochrane: How Did Paul Krugman Get It So Wrong?: "As one little example, take my quotation about carpenters in Nevada...

...Krugman writes:

And Cochrane declares that high unemployment is actually good: “We should have a recession. People who spend their lives pounding nails in Nevada need something else to do.” Personally, I think this is crazy. Why should it take mass unemployment across the whole nation to get carpenters to move out of Nevada?

I did not write this. It is an attribution, taken out of context, from a http://bloomberg.com article, written by a reporter [John Lippert] with whom I spent about 10 hours patiently trying to explain some basics, and who also turned out only to be on a hunt for embarrassing quotes.

Nevertheless, I was trying to explain how sectoral shifts contribute to unemployment. I never asserted that ‘it takes mass unemployment across the whole nation to get carpenters to move out of Nevada’. You cannot even dredge up an out-of-context quote for that monstrously made-up opinion. What is the point in conducting debate this way? I do not think that Krugman disagrees that sectoral shifts result in some unemployment, so the quote actually makes sense as economics. The only point is to make me, personally, seem heartless–a pure, personal, calumnious attack, which has nothing to do with economics...


Paul Krugman (2009): How Did Economists Get It So Wrong?: "Milton Friedman certainly never bought into the idea that mass unemployment represents a voluntary reduction in work effort or the idea that recessions are actually good for the economy. Yet the current generation of freshwater economists has been making both arguments...

...Thus Chicago’s Casey Mulligan suggests that unemployment is so high because many workers are choosing not to take jobs: “Employees face financial incentives that encourage them not to work... decreased employment is explained more by reductions in the supply of labor (the willingness of people to work) and less by the demand for labor (the number of workers that employers need to hire).” Mulligan has suggested, in particular, that workers are choosing to remain unemployed because that improves their odds of receiving mortgage relief.

And Cochrane declares that high unemployment is actually good: “We should have a recession. People who spend their lives pounding nails in Nevada need something else to do.” Personally, I think this is crazy. Why should it take mass unemployment across the whole nation to get carpenters to move out of Nevada?

Can anyone seriously claim that we’ve lost 6.7 million jobs because fewer Americans want to work?

But it was inevitable that freshwater economists would find themselves trapped in this cul-de-sac: if you start from the assumption that people are perfectly rational and markets are perfectly efficient, you have to conclude that unemployment is voluntary and recessions are desirable.

Yet if the crisis has pushed freshwater economists into absurdity, it has also created a lot of soul-searching among saltwater economists. Their framework, unlike that of the Chicago School, both allows for the possibility of involuntary unemployment and considers it a bad thing. But the New Keynesian models that have come to dominate teaching and research assume that people are perfectly rational and financial markets are perfectly efficient. To get anything like the current slump into their models, New Keynesians are forced to introduce some kind of fudge factor that for reasons unspecified temporarily depresses private spending. (I’ve done exactly that in some of my own work.) And if the analysis of where we are now rests on this fudge factor, how much confidence can we have in the models’ predictions about where we are going?

The state of macro, in short, is not good. So where does the profession go from here?...


Monday Smackdown/Hoisted: The "Hastert' and "Hastertland" Paragraphs from Wooldridge and Micklethwaite's "The Right Nation"

These may be the paragraphs written in this millennium that have aged least well: John Micklethwaite and Adrian Woodridge: The "Hastert' and "Hastertland" Paragraphs from Wooldridge and Micklethwaite's "The Right Nation": "Looking at 'Pelosiville' and 'Hastertland', it is not difficult to see why American politics has shifted to the Right. If American politics is a seesaw, it is an unevenly balanced one. Imagine Dennis Hastert at one end of the seesaw and Nancy Pelosi on the other end, and you have some idea about which party is sitting with its legs dangling in the air. In the war between the two Americas, Hastertland has been winning...

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Hoisted from the Archives: Robert Skidelsky vs. Niall Ferguson: John Maynard Keynes Is Not Ke$ha (Also, the U.S. Is Not Greece, and 2013 Is Not 1923)

Thinking how to talk about Schumpeter's "Ricardian Vice" and the extremely peculiar boosting by economists formerly of note and reputation of the Trump corporate tax cut, and so revisiting this https://www.bradford-delong.com/2013/05/robert-skidelsky-vs-niall-ferguson-john-maynard-keynes-is-not-keha-also-the-us-is-not-greece-and-2013-is-not-1923.html


Hoisted from the Archives: Robert Skidelsky vs. Niall Ferguson: John Maynard Keynes Is Not Ke$ha (Also, the U.S. Is Not Greece, and 2013 Is Not 1923)

And Robert Skidelsky explains what John Maynard "We'll Keep Dancing 'Till We Die" Keynes really meant by "In the long run we are all dead":

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Hoisted from the Archives: Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging

Thinking how to talk about Schumpeter's "Ricardian Vice" and the extremely peculiar boosting by economists formerly of note and reputation of the Trump corporate tax cut, and so revisiting this https://www.bradford-delong.com/2013/05/niall-ferguson-is-wrong-to-say-that-he-is-doubly-stupid-why-did-keynes-write-in-the-long-run-we-are-all-dead-weblogging.html:


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Niall Ferguson:

An Open Letter to the Harvard Community: Last week I said something stupid about John Maynard Keynes.  Asked to comment on Keynes’ famous observation “In the long run we are all dead,” I suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay. This was doubly stupid. First, it is obvious that people who do not have children also care about future generations. Second, I had forgotten that Keynes’ wife Lydia miscarried.

Niall is wrong. His suggestion was not doubly stupid. There is more.

Niall speaks of Keynes's "In the long run we are all dead" as if it is a carpe diem argument--a "seize the day" argument, analogous to Marvell's "To His Coy Mistress" or Herrick's "To the Virgins"--and Ferguson sees his task as that of explaining why Keynes adopted this be-a-grasshopper-not-an-ant "party like we're gonna die young!" form of economics, or perhaps form of morality.

But that is not it at all.

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"In the Long Run We Are All Dead" in Context...

John Maynard Keynes (1923): A Tract on Monetary Reform", pp. 80-82: "[T]he [Quantity] Theory [of Money] has often been expounded on the further assumption that a mere change in the quantity of the currency cannot affect k, r, and k',—that is to say, in mathematical parlance, that n is an independent variable in relation to these quantities. It would follow from this that an arbitrary doubling of n, since this in itself is assumed not to affect k, r, and k', must have the effect of raising p to double what it would have been otherwise. The Quantity Theory is often stated in this, or a similar, form...

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