J. Bradford DeLong's Blog
August 21, 2023
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January 30, 2023
May 18, 2021
DeLongTODAY: China Stands Up: 1978-2020: Part III: China Policy
http://delongtoday.com
https://youtu.be/DXNCE__FjXk
https://www.icloud.com/keynote/0FewWYNr-v0NT4Mlf-iw7Sa0w
https://www.bradford-delong.com/2021/05/delongtoday-china-stands-up-1978-2020-part-iii-china-policy.html
https://braddelong.substack.com/p/delongtoday-china-iii-china-policy
https://github.com/braddelong/public-files/blob/master/delongtoday-2021-05-14-china-iii.pptx
2021-05-14
May 16, 2021
PODCAST: Hexapodia XIV: The Capital Gains Tax
<https://api.substack.com/feed/podcast/47874.rss>
Key Insights:
Economic arguments against higher taxes that may have been somewhat plausible back in the days of 70% or so maximum individual and 40% or so maximum capital gains tax rates simply do not apply now.
Right-wing parties that don't think they can credibly make the argument that cosseting their core constituencies is necessary for rapid economic growth search for some non-economic cleavage in which the rich and the right-thinking poor, or the right-colored poor, can be on one side and the people who seek a fairer and more equal distribution of income and higher taxes on the rich can be put on the other���let's all yell about critical race theory, and maybe they won't pay attention to the fact that we just, you know, take everybody's money.
Capital to fund investment is really not a big constraint right now���incentivizing savings in financial assets really is just pushing on a string.
Companies with investments that have high societal value in expansion need to be properly incentivized���either by the smell of more profits next year from serving a larger market with lower costs of production through larger scale, or through the government paying and so getting prices righter than the free market gets them.
���Doge coin��� is pronounced with a soft ���g��� sound.
No, Doge coin is not named after the title of the head of state of the Venetian Republic
Doge coin���s name comes from the Homestar Runner line: ���I want a doge������
Hexapodia!
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References:
Len Burman (2021): Biden Would Close Giant Capital Gains Loopholes���At Least For The Rich <https://www.taxpolicycenter.org/taxvox/biden-would-close-giant-capital-gains-loopholes-least-rich>
Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production I: Production Efficiency <https://www.jstor.org/stable/1910538>
Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production II: Tax Rules <https://assets.aeaweb.org/asset-server/journals/aer/top20/61.3.261-278.pdf>
Ken Judd (1999): Optimal Taxation and Spending in General Competitive Growth Models <http://darp.lse.ac.uk/PapersDB/Judd_(JPubE_99).pdf>
Paul Krugman (2021): Why Doesn���t Cutting Taxes on the Wealthy Work?<https://www.nytimes.com/2021/04/30/op...
Jacob Lundberg & Johannes Nathell (2021): Tax Burden on Capital Income: International Comparison <https://taxfoundation.org/tax-burden-on-capital-income/>
Robert McClelland (2021): Avoiding Biden���s Proposed Capital Gains Tax Hikes Won���t Be So Easy. Or Will It? <https://www.taxpolicycenter.org/taxvox/avoiding-bidens-proposed-capital-gains-tax-hikes-wont-be-so-easy-or-will-it>
Alicia Munnell (2021): Biden���s Plan to Fully Tax Capital Gains Is Good Policy<https://www.marketwatch.com/story/bidens-plan-to-fully-tax-capital-gains-is-good-policy-11620658190>
Garrett Watson & Erica York (2021): Capital Gain Rates Under Biden Tax Plan<https://taxfoundation.org/biden-capital-gains-tax-rates/>
Thomas Piketty & Emmanuel Saez (2012): A Theory of Optimal Capital Taxation <http://gesd.free.fr/w17989.pdf>
Ludwig Straub & Ivan Werning (2020): Positive Long-Run Capital Taxation: Chamley-Judd Revisited <https://www.aeaweb.org/articles?id=10.1257/aer.20150210>
Tax Foundation (2017): Preliminary Details and Analysis of the Tax Cuts and Jobs Act <https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/>
&, of course:
Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>
<https://braddelong.substack.com/p/podcast-hexapodia-xiv-the-capital>
INTERVIEW: Inflation Concerns in the US Following Secretary Treasury Janet
Brad DeLong: INTERVIEW: Inflation Concerns in the US Following Secretary Treasury Janet: ���Apple Podcasts: tbs eFM This Morning: 0514 IN FOCUS��� <https://podcasts.apple.com/kr/podcast/0514-in-focus-2-inflation-concerns-in-us-following/id1038822609?i=1000521665790&l=en>
<https://braddelong.substack.com/p/interview-inflation-concerns-in-the-0b5>
Cory Doctorow on How Weblogging Made His Brain What It Is Today; & BRIEFLY NOTED: For 2021-05-16 Su
First:
An all-in commitment to weblogging has been extraordinarily successful for Cory Doctorow. But for most of us the connections between the current flow, the past stock, and the larger projects that he has managed to maintain have eluded us. We can either manage the flow, curate the stock, or ship large projects���only one at a time:
Cory Doctorow: The Memex Method. When Your Commonplace Book Is a Public Database: ���The very act of recording your actions and impressions is itself powerfully mnemonic���. The genius of the blog was��� in the publishing. The act of making your log-file public requires a rigor that keeping personal notes does not���. Repeated acts of public description adds each idea to a supersaturated, subconscious solution of fragmentary elements that have the potential to become something bigger. Every now and again, a few of these fragments will stick to each other and nucleate���. When one of those nucleation events occurs, the full-text search and tag-based retrieval tools built into Wordpress allow me to bring up everything I���ve ever written on the subject���. The availability of a deep, digital, searchable, published and public archive of my thoughts turns habits that would otherwise be time-wasters���or even harmful���into something valuable���. Systematically reviewing your older work to find the patterns in where you got it wrong (and right!) is hugely beneficial���it���s a useful process of introspection that makes it easier to spot and avoid your own pitfalls���. Two decades in, I can safely say that this community of peers, mentors, sounding boards, prot��g��s, friends, combatants and interlocutors is more useful to me as a writer and a person than the even the prodigious instrumental benefits that blogging brings to my composition process���
LINK: <https://doctorow.medium.com/the-memex-method-238c71f2fb46>
One Video:
Two of my very favorite science-fiction authors:
Martha Wells: In Conversation with Kate Elliott <https://www.youtube.com/watch?v=jr4sDr3vm9c>:
Very Briefly Noted:
This this THIS is always the principal thing to remember in any discussion of Donald Trump: David Corn: ���400,000 preventable American deaths. That is the story of the Trump presidency: May 14, 2020 TRUMP: ���When you test, you have a case. When you test, you find something is wrong with people. If we didn���t do any testing we would have very few cases������ <https://twitter.com/DavidCornDC/status/1393896639690153984>
Martin Wolf: Why Radical Reform of Urban Planning Is Essential <https://www.ft.com/content/b2cd5d2e-83bf-4a04-8a40-dc114c5a25b7>
NIDIS: Snow Drought Current Conditions and Impacts in the West: ���Snow Drought Update for May 13, 2021��� <https://www.drought.gov/drought-status-updates/snow-drought-current-conditions-and-impacts-west-3>
Kim Stanley Robinson: Response: ���I���ll happily express my appreciation for all the generous giving of time and thought that I see in the responses below; and I���ll do my best to answer any questions they ask. If there are complaints about my book (and there are), I���ll stick to my long-time practice, and hold my tongue��� <https://crookedtimber.org/2021/05/14/response-7/>
Richard W. Peach & Karen Alvarez (1996): Core CPI: Excluding Food, Energy��� & Used Cars?: ���Although used car prices represent only a small portion of the consumer price index, their extreme volatility has had a major impact on the measured inflation rate. To explain this relationship, the authors describe how used cars are treated in the CPI and explore what might cause the wide swings in used car prices��� <https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci2-4.pdf>
Sohee Kim & Sam Kim: Korea Unveils $450 Billion Push for Global Chipmaking Crown: ���Samsung and SK Hynix leading investment to rev up capacity. Severe chip shortages prompt global race to shore up supply��� <https://www.bloomberg.com/news/articles/2021-05-13/korea-unveils-450-billion-push-to-seize-global-chipmaking-crown>
Brad DeLong: ���Ignoring history leads people to propose unworkable Sisyphean solutions because they attempt to reverse the powerful forces that, in history, pushed us and are still pushing us to where we are now��� <https://twitter.com/delong/status/1392158906781081602>
Brad DeLong: ���I have a quite capable although sub-Turing instantiation of an imago of Jorge Agust��n Nicol��s Ruiz de Santayana y Borr��s running on my wetware��� <https://twitter.com/delong/status/1392158906781081602>
Share Brad DeLong's Grasping Reality
Paragraphs:
Theda Skocpol used to lecture about how party-based associations in Pre-World War I Germany were an important source of social connection in the rise of the SPD. He did not stress how they���and oppositional working class culture���limited its appeal as well. The chickens certainly came home to roost in the 1930s. Which team are chickens are now roosting right now in Europe, with what looks like the collapse of its social-democratic parties. And the chickens are circling here in the U.S.A. as well:
Sheri Berman: Revisiting ���Civil Society and the Collapse of the Weimar Republic���: ���In this situation Germany���s vibrant civil society did not strengthen or promote democracy. Indeed, the opposite was the case; rather than reconciling the interests of different groups or bridging the cleavages in Germany society, civil society reinforced and deepened them. Socialists, Catholics, nationalists, and so on joined their own hiking groups, bird-watching clubs, and community organizations, contributing to the formation of what one scholar called ���ferociously jealous ���small republics������[3]���or what we would today call social ���bubbles��� in German society. By helping to lock in social divisions and animosities, German civil society contributed to the weakening of the Weimar Republic, leaving it easier prey for the Nazis during the Great Depression���
LINK: <https://histphil.org/2021/05/13/revisiting-civil-society-and-the-collapse-of-the-weimar-republic/>
I confess I do not understand what Scott thinks is different about today. In the past there was an argument that one reason we should give more resources to the rich is that it would incentivize them to work harder, plus that one reason we should take away resources from the poor and the brown people was that it would incentivize them to work harder. Perhaps back in the 1950s they believed in this rationale. Certainly in the 1920s they did. But nobody after 1990 ever looked at the data and then went out and, with a straight face, claimed that Reagan-Volcker policies had raised the rate of economic growth vis-a-vis the 1970s:
Scott Lincicome: Will the Culture War Dictate Republican Economic Policy?: ���Both��� seem not to recognize just how little policy���conservative, liberal, or some kind of ���Trumpian��� hybrid���matters in the Stefanik/Cheney saga���. Trump-supporting Stefanik actually voted with Trump much less often than Trump-critic Cheney���. The GOP���s current (momentary?) elevation of Trump���and the culture war that he (still) leads���above policy and principles extends beyond the Cheney-Stefanik situation and even made-for-TV dramas like Dr. Seuss. Instead, GOP ���policy��� this year has repeatedly been reverse-engineered���pick targets and then craft policy to effect them���to advance various Trump and culture war priorities���. Republican ���economic policy is now seen mainly as a cudgel against cultural antagonists������and often in ways diametrically opposed to the conservative positions Republicans claim to hold���. Either Republicans are keeping their policy priors���tax cuts are still good, current U.S. union policies are bad, etc.���and just excepting certain corporate villains from the general rules, or they just never believed in those policies in the first place. Texas Sen. Ted Cruz, for his part, seems to have admitted the latter a few weeks ago in the Wall Street Journal���
LINK: <https://capitolism.thedispatch.com/p/will-the-culture-war-dictate-republican>
Animal spirits!
John Maynard Keynes (1936): The General Theory of Employment, Interest, and Money: ���It is safe to say that enterprise which depends on hopes stretching into the future benefits the community as a whole. But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits, so that the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death���. We should not conclude from this that everything depends on waves of irrational psychology. On the contrary, the state of long-term expectation is often steady, and, even when it is not, the other factors exert their compensating effects. We are merely reminding ourselves that human decisions affecting the future, whether personal or political or economic, cannot depend on strict mathematical expectation, since the basis for making such calculations does not exist; and that it is our innate urge to activity which makes the wheels go round, our rational selves choosing between the alternatives as best we are able, calculating where we can, but often falling back for our motive on whim or sentiment or chance���
LINK: <https://cruel.org/econthought/texts/generaltheory/chap12.html>
This is an argument that looked very good back in 2005. But how good does it look now?
Thomas P.M. Barnett (2007): An Overwrought, Ideologically Myopic Argument: ���China is no ���new��� model or threat. It follows the model of Singapore, and before that South Korea, and before that Japan: a single-party state that bases almost all of its legitimacy on rising income and development through export-driven growth. It is a self-liquidating model: eventually the society wants more political freedom to go with that wealth. China���s just so fricking huge and so poor that this process isn���t going fast enough for Mann���. China���s path is but a stepping stone to outcomes we naturally seek. I mean, crawling might be described as an alternative to walking, but only until you���re able to walk���. China���s ���model������ is about transforming a hugely rural, impoverished, disconnected society (one-sixth of humanity) into an urban, consumeristic, connected one. Once achieved��� its model self-liquidates���. Confusing China���s influence-peddling with model propagation is a new academic fad in search of actual data���
Poor na��ve New Dealer Henry Wallace:
Henry A. Wallace (1952): Where I Was Wrong: ���Before 1949 I thought Russia really wanted and needed peace. After 1949 I became more and more disgusted with the Soviet methods���. Fist were the shocking revelations of the activities of Russia���s atomic spies���. Next, I was deeply moved by reports of friends who had visited Czechoslovakia shortly after the Communist took control���. I labored under the illusion that the Communists had beaten us to the punch in popular appeal���. My analysis��� failed utterly to take into account the ruthless nature of Russian-trained Communists whose sole objective was to make Czechoslovakia completely subservient to Moscow���.. In 1948 I believed both Russia and the U.S. should take their troops out of Korea. Today��� I am sure it was a serious mistake when we withdrew our troops���. Russia is still on the march, and the question now is whether she will be able to take over all of Asia, including India and the Near East���
<https://braddelong.substack.com/p/briefly-noted-for-2021-05-16-su>
<https://braddelong.substack.com/p/briefly-noted-for-2021-05-16-su>
BRIEFLY NOTED: For 2021-05-13 Th
First:
The world would have been much better advised fifteen months ago to, rather than listening to the infectious-disease community, WHO, & CDC, to have simply observed: This thing evolved it batcaves. Avoid batcaves. Make sure that the respiratory environment in which you breathe is as close to being the exact opposite of a batcave as you can���ventilation, outdoors, distanced, masks:
Zeynep Tufekci: The Few Sentences That Explain Much of What Went Wrong With Our Pandemic Response: ���How could it be so wrong, even after more than a year?��� Some of the founders of public health and the field of infectious control of diseases around the world made key errors and conflations around the turn of the 20th century. These errors essentially froze into tradition and dogma that went unchanged and uncorrected for more than a century, until a pandemic forced our hand���. Infection, which is easier at close range, was seen to be due to particles sprayed out of one���s mouth, which fell quickly to the ground but could land on people. The possibility that, even at close range, people were inhaling floating little particles (aerosols!) that could also travel farther, was discounted���. Charles Chapin��� was also concerned that belief in airborne transmission, which he associated with miasma theories, would make people feel helpless and drop their guard against contact transmission. This was a mistake that would haunt infection control for the next century and more���. Of course, the data did not fit this theory. Infections were happening mostly indoors, not outdoors, whereas droplets would be indifferent to existing indoors or outdoors since gravity is the same in both. Infections were occurring at longer distances���. Superspreading was driving the pandemic���. Droplets aren���t very conducive to such superspreading. Scientists who understand all this tried to raise the alarms���. They were rebuffed for almost a year. Last fall, under fire, the WHO assigned reviews of this topic to the very people who had loudly proclaimed their opinions for many months that the virus was being spread via respiratory droplets���
LINK: <https://www.theinsight.org/p/the-few-sentences-that-explain-much>
One Video
Bob Litan: An Economist Walks into a Bar<https://www.youtube.com/watch?v=4SkoG9FWP4>:
Very Briefly Noted:
Ben Reinhardt: Shifting the Tmpossible to the Tnevitable: A Private ARPA User Manual<https://benjaminreinhardt.com/parpa>
Max Levy: This Is Your Brain Under Anesthesia <https://www.wired.com/story/this-is-your-brain-under-anesthesia/>
Solimo: Espresso Capsules <https://www.amazon.com/Amazon-Brand-Espresso-Compatible-Nespresso/dp/B089GQ2HCW/>
Roastesso: Sunset Decaf Coffee Capsules for Nespresso Machines<https://www.roastesso.com/products/sunset-decaf>
Paragraphs:
For a century now the forces that are now Likud and the forces that are now Hamas have chosen violence in the Middle East���glory in it, and think that it strengthens them vis-a-vis their own internal political opponents, as long as each can pretend to its core supporters that it is protecting them rather than endangering them by amplifying violence. We almost got this under control in 1995. But then Israeli rightists assassinated Yitzhak Rabin, and Likud and Hamas both managed to choose violence and make chaos their ladders to victory over their internal political adversaries. And here we still are today:
Jonathan Katz: Finding what you���re looking for: ���The trigger for the current crisis was an attempt by Jewish settlers to seize four Palestinian homes���. The incompetence and viciousness of Jerusalem���s Jewish authorities and the government of Benjamin Netanyahu���. Israeli police responded��� with brutal force, and then, inexplicably, by attacking the Al-Aqsa Mosque���the third holiest site in Islam���with tear gas, rubber-tipped bullets, and stun grenades, during Ramadan prayers���. Hamas responded with rockets���. Israel responded by murdering Gazan civilians. And now here we are���. Hamas has no more monopoly on resistance to Israeli occupation or apartheid than Netanyahu���s Likud Party and its ethnonationalist allies do on the fight for the survival of Jews. Both can and must be opposed. The other is to keep in mind the humanity of the individuals involved���. Only a common understanding of one another���s humanity and the rights that humanity entails will ultimately end it. Otherwise, there will be only more suffering���
LINK: <https://katz.substack.com/p/finding-what-youre-looking-for>
What happens in 2024 should there be Republican congressional majorities that disenfranchise California���s electoral votes. I presume then Kamala Harris will try to defuse the situation by gaveling the joint session into recess, and California will then appeal to the Supreme Court to mandate that congress count the votes, on the grounds that while the Constitution says that each House shall set its own procedures (by majority vote) it says no such thing about the procedures for a joint session. But we are, still, on the edge of a knife:
Martin Wolf: The Struggle for the Survival of US Democracy: ���In a liberal democracy fair elections determine who holds power. Trying to distort or overturn the vote is treason Donald Trump tried to do both before and after last year���s presidential election. He tried to turn the United States into a dictatorship. This was not at all surprising: It was clear from the beginning of his political career that this was his goal���
LINK: <https://www.ft.com/content/aebe3b15-0d55-4d99-b415-cd7b109e64f8/>
When global uplift became an explicit major policy goal of the United States of America:
Harry S. Truman: 1949 Inaugural Address: ���[1] We will continue to give unfaltering support to the United Nations and related agencies, and we will continue to search for ways to strengthen their authority and increase their effectiveness���. [2] We will continue our programs for world economic recovery���. [3] We will strengthen freedom-loving nations against the dangers of aggression���. [4] We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas���
LINK: <https://en.wikipedia.org/wiki/Harry_S._Truman%27s_1949_inaugural_address>
As Duncan says, not all journalists, but when did America���s journalists become people who worked so hard to be soulless psychopaths?:
Duncan Black: Eschaton: We���re in a Guild Not a Union: ���#Notalljournalists, of course, but after decades of employment in their industry getting destroyed, and associated impact on the career paths of most of those that remain, the willingness of journalists run with ���what if minimum wage workers have it TOO GOOD?��� stories is a bit shocking and doesn���t fill me with too much sympathy for this vital function���
LINIK: <https://www.eschatonblog.com/2021/05/were-in-guild-not-union.html>
Hoisted from the Archives:
Twenty Years Ago: Review of Richard Evans, Lying About Hitler: ���how can Evans draw a bright, distinguishing line between historians like Thucydides, Syme, Taylor, and Gibbon���more-than-reputable historians, great historians���all of whom go beyond the boundaries of their evidence in one way or another, and David Irving? Evans has a response: that what makes Irving ���discredited��� is not the imaginative interpretations he builds on top of the historical evidence he has found, but instead his���mendacious���handling of the evidence itself��� <https://github.com/braddelong/public-files/blob/master/review-evans-lying-about-hitler.pdf>
Ten Years Ago: Another Note on Von Mises���s (and Ron Paul���s) Monetary Mental Disorder: Our text remains: ���Ludwig von Mises: 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������ Note that this does not just apply to fiat money produced by a government. This applies to all financial market asset valuations in excess of capital cost of production (or perhaps the value of the inventions of the gigantic Krell-like brain of John Galt). They are, to von Mises, all cheats. Thus Von Mises loathes fractional reserve bankers and IPO-mongers as much as he loathes modern central bank chairs. The ���value equals cost of production constant returns to scale��� viewpoint is an astonishingly powerful set of blinders to wear. Anybody have a better theory?��� <https://www.bradford-delong.com/2011/11/another-note-on-von-misess-and-ron-pauls-monetary-mental-disorder.html>
Five Years Ago: Matt Rognlie: Deciphering the Fall & Rise in the Net Capital Share: ���The long-term rise in capital income is driven mostly by housing, not labor division��� <https://www.brookings.edu/bpea-articles/deciphering-the-fall-and-rise-in-the-net-capital-share/> & Dan Wang: How Smartphones Made Shenzhen China���s Innovation Capital <https://www.vox.com/new-money/2016/11/4/13498504/shenzhen-smartphone-innovation-capital>
One Year Ago: George Robert Schwarz: The History and Development of Caravels: ���Outclassed its contemporaries��� its shallow draught, speed, maneuverability, and ability to sail close to the wind��� the ideal ship for reconnaissance along the rocky African coastline, as well as for making the transatlantic voyages to the New World��� [its] development��� was gradual��� <https://www.bradford-delong.com/2020/05/george-robert-schwarz-_the-history-and-development-of-caravels_-a-thesis-by-george-robert-schwarz-submitted-to-the-o.html>
Six Months Ago: Jack Maskell & Elizabeth Rybicki: Counting Electoral Votes: An Overview of Procedures at the Joint Session, Including Objections by Members of Congress: ���Basis for Objections: The general grounds for an objection to the counting of an electoral vote or votes would appear from the federal statute and from historical sources to be that such vote was not ���regularly given��� by an elector, and/or that the elector was not ���lawfully certified������ <https://fas.org/sgp/crs/misc/RL32717.pdf>
Three Months Ago: A Video Well Worth Your Watching: Alan Krueger, Richard Blundell, & Arindrajit Dube (2016): RES Plenary Session: Minimum Wages <https:// www.youtube.com/watch?v=mf2LWR0bBjs>
<https://braddelong.substack.com/p/briefly-noted-for-2021-05-13-th>
HOISTED FROM THE ARCHIVES: Review of Richard Evans: "Lying About Hitler"
Richard Evans (2000), Lying About Hitler: History, the Holocaust, and the David Irving Trial (New York: Basic Books: 0465021522).
Richard Evans (1997), In Defense of History (New York: Norton: 0393319598).
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The Irving Case
For about a decade Richard Evans's (1987) book Death in Hamburg: Society and Politics in the Cholera Years 1830-1910 had been on my "read someday" list. But at the beginning of 2000 I ran across his name again. He was to be an expert witness for author Deborah Lipstadt in her defense against David Irving's charge that she had libeled him by calling him a "Holocaust denier."
Irving had sued Lipstadt because her 1994 book Denying the Holocaust, had called him a "discredited" historian with "neofascist" connections, an ardent admirer of Hitler who "on some level... seems to conceive himself as carrying on Hitler's legacy," who skews documents and misquotes evidence to reach historically untenable conclusions in the interest of exonerating Hitler (see Evans (2000), p. 6). Irving demanded that Penguin Books, Lipstadt's publisher, withdraw her book from circulation. Penguin refused. And in the summer of 1996 David Irving sued.
Deborah Lipstadt and Penguin Books then had two choices: (a) withdraw the book and apologize to Nazi sympathizer David Irving, or (b) defend themselves. And, as Richard Evans explains, under British law a libel defense amounts to a no-holds-barred, fangs-bared, go-for-the-jugular attack on the reputation of the plaintiff. As he writes (Evans (2000), p. 193): "[A] successful libel defense... has to concentrate... on massively defaming the person and character of the plaintiff, the only restriction being that the defamation undertaken in court has to be along the same lines as the defamation that gave rise to the case in the first place, and that it has, of course, to be true." Thus the structure of the case: if she were to escape an adverse judgment, Deborah Lipstadt's attorneys had to demonstrate that David Irving was a Holocaust denier who skews documents and misquotes evidence. In short, they would have to demonstrate that he was "discredited": not a credible historian at all.
It was here that Evans was brought in as an expert to provide an assessment of Irving's work as a historian. He agreed to serve as an expert witness at least in part because he was deeply concerned with what makes a historian: Evans had recently (1997) published a book, In Defense of History, that had wrestled with the question of what historians did, and how they did it.
Irving and His Defenders
Irving argued that, even though his politics were unpopular and his historical researches had distressed the Jews and their allies, he was a reputable historian with a reputation to protect against slander and libel. And Irving did have his defenders. After Irving lost the trial, diplomatic historian Donald Cameron Watt believed that Irving's work had been subject to excessive scrutiny and held to an excessively high standard: "five historians with two research assistants... querying and checking every document cited in Irving's books." "Show me one historian," Watt demanded, "...who has not broken into a cold sweat at the thought of undergoing similar treatment." On the witness stand Watt asserted that "there are other senior historical figures... whose work would [not] stand up to this kind of examination" (see Evans, 2000, pp. 245-6).
Watt argued that the active shaping of one's views and interpretations of the past by one's present politics did not keep one from being a historian, and even a great historian: "Edward Gibbon's caricatures of early Christianity... A.J.P. Taylor," and others clearly "allowed their political agenda... to influence their professional practice," like Irving. Military historian John Keegan agreed: Irving had "many of the qualities of the most creative historians" and "has much that is interesting to tell us." In Watt's view, "only those who identify with the victims of the Holocaust disagree" with the proposition that Irving is a reputable historian. And, in Watt's view, Irving's critics are not primarily concerned with pointing out flaws in his historical writings but with stoning a heretic: "[f]or them Irving's views are blasphemous and put him on the same level of sin as advocates of paedophilia" (Evans, 2000, pp. 244-6).
Evans would not disagree that many historians throughout the ages had shown themselves to be biased and negligent, and had let their political agenda shape their history. Evans wrote (Evans, 2000, pp. 261-2) of visiting Washington D.C.'s Holocaust Museum and being:
"...struck by its marginalization of any other victims apart from Jews, to the extent that it presented photographs of dead bodies in camps such as Buchenwald or Dachau as dead Jewish bodies, when in fact relatively few Jewish prisoners were held there. Little attention was paid to the non-Jewish German victims of Naziism... the two hundred thousand mentally and physically handicapped... the thousands of Communists, Social Democrats, and others.... The German resistance received almost no mention at all apart from a brief panel on the student 'White Rose' movement during the war, so that the visitor almost inevitably emerged from the museum with a belief that all Germans were evil antisemites..."
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What Do Historians Do?
Indeed, it is hard to see how anyone could write a history that was not informed by their current political agenda, or make leaps of interpretation or judgments about sources that would strike others as highly strained or worse. For nearly two centuries the touchstones of the historian's task have been those of Leopold von Ranke: to relate the past "wie es eigentlich gewesen"--how it essentially was (see Ranke, 1981); and not to cram the past into categories that make sense only in the present, for "every age must be regarded as immediate to God" (Ranke, quoted in Fritz Stern, Varieties of History). But we don't know how it essentially was: we weren't there. And it is not enough to simply present the documents and records we have: they only give us knowledge of the skeleton, not the whole animal. So a historian must recreate the past, must imagine it. As Evans (1997, pp. 21-22) summarizes George M. Trevelyan, history was "a mixture of the scientific (research), the imaginative or speculative (interpretation), and the literary (presentation).... The historian who would give the best interpretation of the Revolution was the one who, 'having... weighted all the important evidence... has the largest grasp of intellect, the warmest human sympathy, the highest imaginative power...'"
Thus in doing his or her job a historian must go beyond the bounds that his or her sources prescribe. Consider one of the first historians, Thucydides the Athenian, who wrote the history of the Peloponnesian War between Athens and Sparta at the end of the fifth century B.C. With respect to the narrative of events, Thucydides says that he did not "...derive it from the first source that came to hand" or even "...trust my own impressions, but it rests partly on what I saw myself, partly on what others saw for me, the accuracy of the report being always tried by the most severe and detailed tests possible. My conclusions have cost me some labour from the want of coincidence between accounts of the same occurrences by different eye-witnesses, arising sometimes from imperfect memory, sometimes from undue partiality for one side or the other."
However, Thucydides relates not just the events but many of the speeches of commanders and politicians, "...some [of which] were delivered before the war began, others while it was going on; some I heard myself, others I got from various quarters..." In all cases it was "difficult to carry them word for word in one's memory." So in the History of the Peloponnesian War the speeches are, Thucydides says, "what was in my opinion demanded of them by the various occasions, of course adhering as closely as possible to the general sense of what they really said."
What, then, is the status of a passage from the Peloponnesian War like Pericles's "Funeral Oration"? It is a combination of what Thucydides and his other sources remember Pericles having said, mixed with what Thucydides thinks it would have been appropriate for Pericles to have said, all shaped by Thucydides's own view of what was important about Athens and its empire at the start of the war.
Or consider Ronald Syme's book, The Roman Revolution, which I at least think is the greatest of all historical accounts of the rise and reign of the Emperor Augustus. Written in the 1920s, it clothes the bones of the historical record with the flesh of... Mussolini. It tells the story of the rise of Augustus seen as a fascist dictator, exploiting his material and patronage resources, adding to them lies, propaganda, and a good dose of terror, and emerging as top dog surrounded by sycophantic admirers and conspiring would-be successors.
The Roman Revolution is not a book that could have been written before the 1920s. Until we had seen Mussolini, it was not possible to use the example of Mussolini's rise to and exercise of power to fill in the wide, wide gaps our sources leave in our knowledge of the creation of the Roman Empire. The Roman Revolution is not history as it essentially happened: Augustus in 30 B.C. was almost surely not as close a copy of Mussolini 1950 years later as Syme maintains. But The Roman Revolution is surely closer to history as it essentially happened than the depiction of Augustus as pater patriae and wise demigod presented by his sycophants, or the standard picture of Augustus as a wise nineteenth-century British gentleman, statesman, and empire builder. And it is a superb book.
Or consider the examples raised by Donald Cameron Watt: Edward Gibbon and A.J.P. Taylor. A.J.P. Taylor set out to write the Origins of the Second World War as if Hitler were an eighteenth-century king who aimed at reversing the (limited) results of the last (limited) war: a portrait of Hitler as, as John Lukacs phrase, like the Empress Maria Theresa maneuvering to recover the lost province of Silesia. All evidence that Hitler was something else is thrown overboard, or ignored completely.
Now Taylor's history is not history as it really happened. All you have to do is glance an inch beyond the frame of Taylor's picture--at Nazi domestic policy and the Night of Broken Glass, or at Hitler's conduct of World War II--and you find events grossly and totally inconsistent with Taylor's portrait of an opportunist looking for diplomatic victories on the cheap. Taylor's Hitler would never have widened the war by attacking the Soviet Union and declaring war on the United States, or weakened his own military resources by exterminating six million Jews, four million Russian prisoners of war, and millions of others rather than putting them to work in the factories making tanks and ammunition. Nevertheless, you can learn a lot from Origins...
Edward Gibbon set out to write the story of the decline and fall of the Roman Empire with two purposes: to tell a good story, and to provide a lesson for the future of the danger of barbarism and religious fanaticism. Donald Cameron Watt refers to Gibbon's "caricature of early Christianity" as history not as it really happened but instead molded by Gibbon's own--Enlightenment, tolerant--political agenda. It is not clear to me that Gibbon's picture of early Christian bishops and theologians is a caricature. The council of Nicaea seems to caricature itself quite well, for there the bishops and theologians proclaimed that anyone having trouble understanding the phrase "eternally begotten" could mean was condemned to hell. Such behavior seems profoundly... un-Christian. Gibbon focuses on theologians who played intellectual dominance games and on bishops who played power games rather than on saints or believers seeking to live holy and just lives. But there were such theologians and bishops (just as there were saints and believers).
So how can Evans draw a bright, distinguishing line between historians like Thucydides, Syme, Taylor, and Gibbon--more-than-reputable historians, great historians--all of whom go beyond the boundaries of their evidence in one way or another, and David Irving?
Irving and His Sources
But Evans has a response: that what makes Irving "discredited" is not the imaginative interpretations he builds on top of the historical evidence he has found, but instead his--mendacious--handling of the evidence itself. In his evidence before and at the trial, Evans focused on a very basic question: Does Irving tell the truth about what his source materials say, or does he lie about them? Evans's answer was that Irving did not tell the truth, that he did habitually lie, and so he was not a historian at all. Let me cite three of Evans's examples.
A first example, found on pp. 49-51 of Evans (2000), is Irving's claim that when the Nazis came to power many German Jews were criminals: "In 1930 Jews would be convicted in 42 of 210 known narcotics smuggling cases... 69 of the 272 known international narcotics dealers were Jewish... over 60 percent of... illegal gambling debts... 193 of the 411 pickpockets arrested..." But Irving's source turns out of be SS General Kurt Daluege, a Nazi party member since 1926 who had joined the SS in 1930. Irving had used, as Evans says, "antisemitic propsaganda by a fanatical Nazi... as a statistical source for the participation of German Jews in the Weimar Republic in criminal activities." These numbers are "utterly useless" and are radically inconsistent with the fact that only one percent of so of prison inmates were identified as Jewish.
Second, consider Irving's summary views of Adolf Hitler, quoted on pages 40-41 of Evans (2000):
"Adolf Hitler was a patriot--he tried from start to finish to restore the earlier unity, greatness, and splendour of Germany. After he had come to power in 1933... he restored faith in the central government; he rebuilt the German economy; he removed unemployment; he rebuilt the disarmed German armed forces, and then he used this newly-won strength to attain Germany's sovereignty once more, and he became involved in his adventure of winning living-space in the East. He has no kind of evil intentions against Britain and its Empire, quite the opposite.... Hitler's foreign policy was led by the wish for secure boundaries and the necessity of an extension to the east.... The forces which drove Germany into the war did not sit in Berlin."
This clearly will not do. The forces that drove Germany into the war did sit in Berlin: Hitler attacked Poland, Denmark, Norway, Belgium, Holland, Luxemburg, Yugoslavia, Greece, and Russia, after all. Britain might (but might not) have been able to stay out of the war had the British government not sought even at the risk of war to protect other peoples from Nazi rule and preserve the balance of power in Europe--but there would have been war in any event. Moreover, the phrases "necessity of an extension to the east" and "adventure of winning living-space" are deeply mendacious: they cover Hitler's plans for the large-scale ethnic cleansing of Poland and the Ukraine and the demographic replacement of their existing populations by ethnic Germans with a likely resulting civilian death toll of more than fifty million. In Hitler's plans the Holocaust as we know it was merely an appetizer. Had the Nazis won the war on the Russian Front we would have seen the main course.
A third example, found on pages 62-63 of Evans (2000), is Irving's handling of the documentary record surrounding the Nazi pogrom of "the Night of Glass" in 1938. The source is the diary of Nazi Propaganda Minister Josef Goebbels. As Evans writes:
"Goebbels... reported on it in his diary on 11 November.... 'I report to the Fuehrer at the Osteria. He agrees with everything. His views are totally radical and aggressive. The action itself has taken place without any problems. 17 dead. But no German property damaged. The Fuehrer approves my decree concerning the ending of the actions, with small amendments. I announce it via the press and the radio. The Fuehrer wants to take very sharp measures against the Jews. They must themselves put their businesses in order again. The insurance companies will not pay them a thing. Then the Fuehrer wants a gradual expropriation of Jewish businesses.' This entry clearly suggested to me, as it would surely have done to any historian with an open mind, first, that Hitler approved of the pogrom, and second, that it was Hitler who devised some of the economic measures ordered against the Jews...."
But what does Irving do with this material? Evans provides three quotes from Irving, one from 1992: "according to [Goebbels's] diaries, Hitler was closely implicated with those outrages.... I have to revise my own opinion. But a historian should always be willing to revise his opinion"; one from 1993: "'[w]ait a minute, this is Dr. Goebbels writing this.' Dr. Goebbels who took all the blame for what was done. So did he have perhaps a motive for writing in his private diaries subsequently that Hitler endorsed what he had done? You can't entirely close that file"; and one from 1996, by which time "...Irving had... a total conviction that Goebbels was lying... not influenced by any further discoveries of new documentary material" (Evans, 2000, pages 62-63).
Indeed, Evans found that Irving's misinterpretations were remarkably obvious, and his embrace of Nazi rhetorical modes remarkably complete. Irving is a man who refers to Jews as "our traditional enemies." He speaks of "the Jewish ghettos of Great Britain." He attacks the "odd and ugly and perverse and greasy and slimy community of "anti-Fascists" that run the very real risk of making the world fascist respectable by their own appearance!" He has prophesied that American Jews' "moving in to the same positions of predominance and influence (media, banking, business, entertainment, and the more lucrative professions like law, medicine and dentistry) that they held in Weimar Germany" would lead to a rise of Nazism in America in twenty or thirty years (Evans, 2000, pp. 136-7).
And near the end of the trial he addressed the presiding judge as "Mein Fuehrer" (Evans, 2000, page 224).
Evans thus concluded that Irving was not just a bad historian whose mistakes were due to "negligence... random in its effects," but not a historian at all: "all the mistakes... in the same direction... deliberate manipulation and deception" (Evans, 2000, page 205). That was, for Evans, the touchstone. In Evans's mind historians should not be negligent, and they should not be biased: "...there have been too many cases in the past of historians selecting and suppressing evidence." But the one thing they could not do and remain historians was to deliberately lie about what the historical evidence said (Evans, 2000, p. 247). His overwhelming fascist sympathies and what he had done to try to get people to accept them meant that Irving's work simply could not be trusted: as Hugh Trevor-Roper put it politely, whenever Irving was most original he was least reliable.
Conclusion
So I believe that Richard Evans and the other witnesses called by the attorneys for Deborah Lipstadt and Penguin proved their case: the assertions about Irving made in Denying the Holocaust were substantially true. Her book would not be suppressed in Britain. According to Evans's categorization--with its stress on being a truthful voice of the documents and other primary evidence--Irving was not a historian at all, or not a very good historian. (Of course, it is hard to see how A.J.P. Taylor can maintain his reputation in Evans's eyes, given various passages sin Origins of the Second World War.)
In Evans's view, a historian is a member of and a participant in an ongoing discourse that grounds itself most firmly in the available primary sources. Arguments between historians are believable and effective to the extent that they are rooted in credible and genuine sources. The imaginative structure of interpretation--the flesh that clothes the primary-source bones--is important, but energy, ingenuity, and creativity in interpretation cannot offset a weak base in what the sources actually say.
But is this enough? Don't we actually demand more of a historian? Don't we demand not just that a historian accurately represent his or her primary sources, but that the primary sources he or she relies on be the most important or the most interesting or the most typical ones?
Moreover, doesn't the interpretive structure built on the primary sources have to be convincing, psychologically plausible, and accessible to the reader as well? Ronald Syme's Roman Revolution is a success not just because it uses (and uses well) the bulk of the (little) primary source information we have, and because we finish the book thinking that was how it well could have been. Thucydides... well, we really do not know how good a historian Thucydides was, because we cannot challenge his judgments and emphases. But we do know that he worried about the right questions of how to achieve as accurate an account as possible. Gibbon... we today read Gibbon as a work of literature, not of history. And A.J.P. Taylor's Origins of World War II is ultimately a failure because its psychological picture of Hitler's motivations and aims is inconsistent with what else we know about Hitler from primary sources outside the book.
So it seems to me that ultimately Evans's attempt to draw a bright line between Irving and the historians fails. When Watt worries that the forces unleashed by the Irving trial will impinge on the reputation of historians like Gibbon and Taylor who "allowed their political agenda... to influence their professional practice," and who used the available primary evidence selectively and tendentiously, he is right: it will. Misquotation and mistranslation are greater sins against Clio than merely averting one's eyes from pieces of evidence, or telling history to make a particular point rather rather than as it really happened. But they are not the only sins.
And how did Watt and Keegan react to the verdict of the trial? They seemed to react by lashing out. Watt wrote of how "[p]rofessional historians have been left uneasy by the whole business" (Evans, 2000, p. 246). Keegan denounced Lipstadt "as dull as only the self-righteously politically correct can be. Few other historians had ever heard of her before this case. Most will not want to hear from her again." They spoke as if they would have preferred it had Irving won his case.
Evans writes, "I had to pinch myself" in order to remember that it was Irving who "...had launched the case... was attempting to silence his critics... wanted a book withdrawn... and pulped... [demanded to be paid] damages and costs, and undertakings given that the criticisms... of his work should never be repeated" (Evans, 2000, p. 27).
Evans quotes Neal Ascherson, who asked why Watt and Keegan saw the trial's outcome--the failure of the judge to grant Irving's demand to suppress Lipstadt's book in Britain--"as a form of censorship, a clamp on the limits of historical enquiry." Ascherson observed that "both see Irving as still somehow 'one of us'--wrong but romantic. But Lipstadt is a respectable historian too, more honest in her use of documents than Irving, and the trial vindicated what she said about him. So why is she being slighted as somehow not quite one of us?" (Evans, 2000, p. 252). Evans observes that Ascherson, "perhaps wisely," did not answer his own "rather disconcerting question." Evans does not answer it either. But the answer seems obvious: Deborah Lipstadt is female, American, and Jewish. How could men like Watt and Keegan ever regard her as "one of us"?
Other references:
John Keegan (2000), "The Trial of David Irving--and My Part in His Downfall" http://abbc.com/aaargh/fran/polpen/dirving/dtjk000412.html
Leopold von Ranke (1981), The Secret of World History: Selected Writings on the Art and Science of History (ed. Roger Wines) (New York, 1981).
Fritz Stern (1973), Varieties of History (New York: Random House).
Also at: <https://github.com/braddelong/public-files/blob/master/review-evans-lying-about-hitler.pdf>
<https://braddelong.substack.com/p/reading-review-of-richard-evans-lying>
BRIEFLY NOTED: For 2021-05-12 We; + A Guess at the State ...
First:
A Snippet from a Dialogue: The Current Plague in India:
Axiothea: How much worse are things in India than the statistics the Indian government is reporting say?
Parmenides: We do think that here in the United States we have had 900,000 rather than 600,000 deaths���out of a total caseload of perhaps 60 million, perhaps 120 million. How bad are things in India right now, really? And how bad are they going to get?
Aesclepius: We do not know. We guess that true plague deaths are between three and eight times officially recorded deaths. And we guess that India is only halfway through this current plague wave.
Axiothea: If so, note that India currently is at 200 reported deaths per million���say the true number is 1000, 0.1% of the population, and it is going to double before this wave is through. With a population of 1.4 billion, that would be 3 million dead by the time this wave ebbs���
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The Right-Wing Short Con:
With America���s right wing, it is always, always the grift. Always:
Paul Campos: Josh Hawley, Grifter: ���I clicked on the link so you don���t have to, and discovered that my $75 contribution will keep happening every month automatically unless I unclick an already helpfully checked box that makes my contribution recurring. Also too unless I unclick another already clicked box I will make yet another $75 contribution on May 15th, to help stem the yellow red black brown tide of Joe Biden���s and Chuck Schumer���s and Nancy Pelosi���s Radical Left agenda. As always, Rick Perlstein���s now nine-year-old essay on the Long Con remains essential reading, although I suspect Sen. Hawley himself is strictly short-time, as they say in the rackets���
LINK: <https://www.lawyersgunsmoneyblog.com/2021/05/give-a-man-a-fish-and-he-will-eat-for-a-day>
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Charles Goodhart: Less Lower for Longer; More Higher and Sooner <https://www.youtube.com/watch?v=wFGQ_4msKUA>:
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Very Briefly Noted:
German Lopez: Health Experts: Vaccinated People Can Relax About Their Covid���19 Risk Now. Really: ���I asked health experts about their post-vaccination lives. Most no longer worry about their own risk of Covid���19��� <https://www.vox.com/22423098/covid-19-vaccine-coronavirus-protection-herd-immunity>
Michael Lovell, Robert Lucas, Dale Mortensen, Robert Shiller, & Neil Wallace: Rational Expectations: Retrospect and Prospect<https://web.archive.org/web/20150314233047/http://hope.econ.duke.edu/sites/default/files/Rational%20Expectations%20Panel%20_30%20May%202011_.pdf>
Charlie Jane Anders: What Samuel Johnson Can Teach Us About Separating Art from the Artist <https://buttondown.email/charliejane/archive/what-samuel-johnson-can-teach-us-about-separating/>
Paul Krugman: What a Blue State Really Gets Wrong: ���Blue states can do fine while raising money from the rich, [but] they do a lot of harm by preventing the construction of new housing for ordinary people��� <https://messaging-custom-newsletters.nytimes.com/template/oakv2?>
Jeet Heer: Never Trump or Forever Trump?: ���The history of Jacksonian democracy certainly suggests that epiphanies of enlightenment are rare. A major party committed to demagogic authoritarian racism can persist for decades. The small dissident forces inside the GOP adopted the slogan ���Never Trump.��� We need to prepare for the opposite possibility: Forever Trump���. For those of us not running for office, there is no need to make feel-good predictions. It���s better to have a clear-eyed view of reality, free of consoling illusions. Those opposed to Trumpism need to steel themselves for a long war��� <https://jeetheer.substack.com/p/never-trump-or-forever-trump>
Robert Solow (1956): A Contribution to the Theory of Economic Growth <http://piketty.pse.ens.fr/files/Solow1956.pdf>
Patrick Iber: Ungrading <https://twitter.com/PatrickIber/status/1391777253852393476>
Thomas Piketty & Gabriel Zucman: Capital Is Back<http://piketty.pse.ens.fr/capitalisback>
Patrick Iber: Syllabus: Modern Latin America <https://patrickiber.org/ 2021/01/05/syllabus-modern-latin-america-2021/>
Glenn Fleishman: ���[Swenson���s] book��� is an explanation of all the strategies to avoid and advice on ���meeting��� not beating the market��� a regularly rebalanced mix of Vanguard funds to avoid high fees��� <https://twitter.com/GlennF/status/1391776996342997001>
Daniel Larison: How Can Iran ���Re-Enter��� an Agreement That It Never Left?: ���There isn���t going to be a subsequent agreement, and insisting that there has to be one is a good way to make sure that we lose the agreement that already exists��� <https://daniellarison.substack.com/p/how-can-iran-re-enter-an-agreement>
Roy Edroso: It���s like they speak a secret language���one I���m not even sure their subscribers speak: The Washington Times: "NEWS ALERT: Americans eager for ���revenge travel��� battered by speed bumps: Americans eager to travel are running into rising gas prices, ever-shifting travel rules, and a shortage of foreign workers who fill seasonal jobs at U.S. parks and resorts���
Paragraphs
Paul Campos: The Significance of the Liz Cheney Auto-da-fe: ���The tiny remaining remnant of genuine Never Trump conservatives is pointing out that there���s something happening here, and what it is is precisely clear���. The new GOP consensus [is] that, going forward, no victory by a Democratic presidential candidate will ever be certified by Republicans���. We are on the verge of not having meaningful presidential elections in this country, just as there are no meaningful national leadership elections in places like China and Russia. I���m aware this sounds like hysterical hyperbole when stated in words of one syllable. It���s nevertheless nothing but a simple statement of the present danger���
LINK: <https://www.lawyersgunsmoneyblog.com/2021/05/the-significance-of-the-liz-cheney-auto-da-fe>
Robert McClelland: Avoiding Biden���s Proposed Capital Gains Tax Hikes Won���t Be So Easy. Or Will It?: ���Current law does allow them to turn to the time-honored strategy of not realizing their gains and passing them tax-free to their heirs. In the past, that technique was so successful that it was possible a sharp increase in capital gains rates could raise little or no money for the federal government���. The second piece of the Biden plan anticipates this. It would tax at death unrealized capital gains that exceed $1 million���. Only a very small share of estates would owe any taxes��� 3 percent��� Ultimately, if this new approach is successful, many wealthy taxpayers will probably escape paying higher taxes, but most of their gains probably will not���
Leonard E. Burman: Biden Would Close Giant Capital Gains Loopholes���At Least For The Rich: ���Critics of Biden���s proposal have several complaints. None hold water. Critics worry that raising capital gains taxes would lower the after-tax return for individual investors and drive down stock prices. However, taxable individuals hold less than one-third of corporate stock. The rest is owned by nonprofits, retirement plans, life insurance companies, and foreigners���none of whom pay individual income taxes on US capital gains and dividends���
LINK: <https://www.taxpolicycenter.org/taxvox/biden-would-close-giant-capital-gains-loopholes-least-rich>
Cory Doctorow: ���Seriously. Like Clarke���s Third Law/indistinguishable from magic Amazing. How amazing? Well. compared to conventional vaccine production, mRNA factories are: 99���99.9% smaller, 95���99.7% cheaper, 1,000% faster. If you convert a single closet in a conventional factory to mRNA production, it will make more doses than the rest of the factory COMBINED. Only part of the factory needs to be a high-spec cleanroom facility, and the rest can be cheaper and more easily maintained. Spend $20m to build one of these microfactories, install a 5l bioreactor, and, for $100m/year, it will produce ONE BILLION VACCINE DOSES���
LINK: <https://twitter.com/doctorow/status/1389978956716122116>
John Maynard Keynes: The General Theory of Employment, Interest, and Money: ���Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits�����of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come. Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die;�����though fears of loss may have a basis no more reasonable than hopes of profit had before. It is safe to say that enterprise which depends on hopes stretching into the future benefits the community as a whole. But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits, so that the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death���
LINK: <https://cruel.org/econthought/texts/generaltheory/chap12.html>
<https://braddelong.substack.com/p/briefly-noted-for-2021-05-12-we>
BRIEFLY NOTED: For 2021-05-11 Tu
First:
Here we see a striking difference between Paul Krugman and Larry Summers. Krugman sees models as intuition pumps���and believes strongly, very strongly, that if you cannot make a simple model of it, it is probably wrong. Summers believes that our models are, at best, filing systems (and at worst tools for misleading the unwary)���and that the right way to think about the economy is as, in some way, a two-state system, with expansion being one state and recession the other, so that you cannot halt an expansion without tipping the economy fully into recession:
Paul Krugman: Wonking Out: Braking Bad?: ���A more explicit critique comes from Larry Summers, who has warned that the stimulus may lead to stagflation. He appears to believe that the Fed can���t use monetary tightening to offset overheating generated by fiscal expansion without causing a nasty recession. But I have to admit to being a bit puzzled about why���. Summers[���s]��� underlying macroeconomic model is pretty much the same as mine���. And that model seems to say that the Fed can indeed tap on the brakes if needed. Indeed, the Fed has done that in the past: in the 80s and again in the 90s it acted to rein in booms without causing recessions���. Claims that we can���t rely on the Fed to rein in inflation if the stimulus turns out to be too big have to rest on some departure from the workhorse model most sensible people use to think about macroeconomic policy���. Even if you���re uncomfortable with President Biden���s fiscal policies, you should be very cautious about making arguments against them that rely on novel propositions about why inflation can���t be contained. Conventional analysis says what Janet Yellen said: If the stimulus proves bigger than needed, the Fed can keep things under control. If you���re asserting otherwise, think hard about why you���re saying that���
LINK: <https://messaging-custom-newsletters.nytimes.com/template/oakv2>
My take? Of the last six tightening cycles, three have been followed by demand-shock recessions within two years of the tightening cycle���s end. I interpret this as: you gotta halt the tightening before you overdo it, and that is not the easiest thing in the world. But there is no law-like regularity there.
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Snippet from a Dialogue:
Axiothea: The gap between the labor-force participation rate for prime-age workers and the unemployment rate is still large���as large as it was in 2014. That suggests to me that our first take should be that, except for rate-of-change effects, the labor market now is about as tight as it was in 2014.
Kephalos: That the ���labor shortage��� crowd thinks that the unemployment rate includes a bunch of people who are really out-of-the-labor-force is something I find somewhat disturbing. Or do they not know that unemployment is still elevated?
Glaukon: The job-openings series hit an extraordinary record high at the end of March: over 8 million. I suggest that helps answer some of the questions. It certainly would not be easy to fill that many slots quickly, no matter what level of benefits people are receiving (or indeed, how quickly employers boost wages).
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polyMATHY: Romanes Eunt Domus EXPLAINED:
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Yes, there is a substantial amount of craziness in the froth around the ���fight structural racism��� movement. No: I do not think it is terribly important. Any further questions?
John Ganz: ���That���s Not A Personality, Sweetie���: ���Tema Okun���s anti-racism training materials��� with a slightly different emphasis��� sound like���white nationalis[m]���. They suggest only ���white supremacy culture��� inculcates fastidiousness, precision and a concern with logic and objectivity��� white supremacist propaganda that connects ���civilization��� necessarily with whiteness���
LINK: <https://johnganz.substack.com/p/thats-not-a-personality-sweetie>
When Tim Duy left the open internet, the public sphere took a big loss:
Tim Duy: Fed Watch 2021���05���10: ���It strains credibility to argue that the enhanced unemployment benefits do not disincentive job search efforts. That said, I fear unemployment benefits receive outsized attention���. Financial support from tax rebates, ongoing pandemic fears, lack of access to childcare and schools, and retirements. Together, these factors point toward a fairly slow recovery of the labor supply���. There is also the fundamental issue that firing happens more quickly than hiring���. A level shift up in wages and prices does not by itself equate to a change in the underlying dynamic that would perpetuate into persistently higher inflation. We most likely will not have much sense of the persistence of inflation until the known base and reopening effects pass. That means the Fed will not want to validate any moves by market participants to pull rate hikes forward again on the basis of near-term inflation numbers���
I do think that worry about raising taxes should be postponed until interest rates have semi-normalized. But, otherwise, this is very wise indeed:
Barry Eichengreen: Will the Productivity Revolution Be Postponed?: ���The 1918���20 influenza��� came on the heels of advances��� the assembly line��� the superheterodyne receiver��� Radio Corporation of America, the leading high-tech company��� chemical processes��� lowered fertilizer costs���. But��� the full impact was felt only in the 1930s. Firms used downtime during the Great Depression to reorganize production, and those least capable of doing so exited���. Government invested in roads, allowing the nascent trucking industry to boost productivity in distribution. But more than a decade first had to pass���. This extended delay suggests two important lessons. First, some lag is likely���. Second, government can take steps to ensure that the acceleration commences sooner rather than later���. It would be counterproductive, obviously, to curtail infrastructure spending��� or spending on early childhood education���. But the more concerned you are about a delay before faster productivity growth materializes, the more strenuously you should insist that Biden���s spending plans be financed with taxes in order to avert the overheating scenario���
���Neoconservatism��� focused on the Cold War and the ���traditional family������with more than a soup��on of racism attached. ���Neoliberalism��� focused on economic structure and incentives. They were not, really, allied, except at moments of convenience. This is not to say that people could be both. But it is also worth noting that ���neoconservatism��� was a strong reaction against Nixon-Kissinger-Ford foreign policy:
Adam Tooze: Chartbook Newsletter #19: ���In 1971 Congress passed the Comprehensive Child Development Bill���. As Walter Mondale remarked at the time: ���the American people must realize that there is no answer to the unfairness of American life that does not include a massive preschool comprehensive child development program. Anything less than that is an official admission by this country that we don���t care.��� Despite the fact that the Bill was passed with bipartisan support by both the House and the Senate, it was vetoed by Richard Nixon. In the explanation for his veto he warned that public child care would weaken the family and import to the United States the practices of the Soviet Union���. The alliance between neoliberalism and neoconservatism��� linking a defense of a restored ���traditional��� family to a reassertion of the market order and an overturning of the New Deal compromise on welfare���
LINK: <https://adamtooze.substack.com/p/chartbook-newsletter-19>
Longer:
Furman and Powell are talking sense, both about the current situation and about the uncertainties:
Jason Furman & Wilson Powell: The US Labor Market Is Running Hot��� or Not?: ���The United States added 266,000 jobs in April while the unemployment rate rose slightly to 6.1 percent with the realistic unemployment rate, which adjusts for misclassification and the unusual decline in labor force participation, falling to 7.6 percent��� still 10 million jobs short of its pre-pandemic trend in April with the employment rate down 3.2 percentage points since February 2020���.
The labor market has still been behaving as if there was relatively little or even no slack left: Openings were at record levels, quits were near record levels in February, composition-adjusted wages were growing at the same pace they did in the relatively tight 2019 labor market with the largest wage gains for the lowest-wage workers, wages not adjusted for changing composition rose 0.7 percent in April, and average weekly hours remain very high���. With so many conflicting signals as the labor market changes rapidly with demand and supply returning to different degrees in different sectors, it is hard to make a confident assessment���.
The labor market has a ways to go before it is healed. The question is what form this adjustment will take and what the risks are���. Looking forward there are good reasons to expect large increases in both demand for labor and supply of labor���. One downside scenario is overheating���. A second downside scenario is an incomplete jobs recovery���. The third downside scenario is that the virus itself takes a turn for the worse��� The most likely outcome may be the Goldilocks scenario. In this scenario both demand and supply return. Patches of mismatch in timing and sectors would lead to noticeable shortages and price and wage increases in some areas, especially over the spring and summer as high demand is temporarily unable to fully be satisfied by available labor. However, these mismatches work themselves out with only transitory increases in the level of prices and no persistent changes in inflation or inflation expectations.���
LINK: <https://www.piie.com/blogs/realtime-economic-issues-watch/us-labor-market-running-hotor-not>
Share Brad DeLong's Grasping Reality
Hoisted from the Archives:
When I first saw the Solow growth model in one of my first economics classes, I raised my hand, and I asked: Why is it assumed that gross savings is a constant share of gross income���that is, income plus depreciation. Isn���t that the same as assuming that people are too stupid to calculate deprecation? Shouldn���t the right assumption be that net savings is a constant share of netincome?
The teacher then filibustered.
I eventually asked Bob Solow this question. He said���accurately���that in his original paper it had indeed been net savings and net output (Cf. Solow (1956): A Contribution to the Theory of Economic Growth <http://piketty.pse.ens.fr/files/Solow1956.pdf>, in which there is no deprecation���the key parameters are ���the savings rate, the capital-output ratio, the rate of increase of the labor force). When asked why he had shifted to gross savings as a constant share of gross income, he shrugged his shoulders and said ���referees".
Indeed.
Unless you assume that people cannot calculate depreciation, the first optimizing model for a representative agent one would naturally write down has net savings a share of net income, with the share depending on expected real risk and return.
I have always taken it to be a sign of the low quality of so much of the criticism of Thomas Piketty���s Capital in the 21st Century that professors claim Piketty���s assumption that net savings is a constant share of net income is a gotcha���is (a) some kind of an analytical mistake, because it implies an ever-growing share of depreciation in gross output in a world where the economic growth rate of the economy n+g = 0 is zero; and (b) that it is a hugely consequential mistake. IMHO, you can only maintain it is consequential if you lack familiarity with the NIPA, and its depreciation rates���if the ���illustrative��� deprecation rate you keep in year head is 10% of income-earning wealth a year, and so think that in the U.S. today annual deprecation allowances are more like $12 trillion/year (60% of GDP, 12% of the income-earning wealth stock) than like $4 trillion/year (15% of GDP; 4% of the income-earning wealth stock).
This, seven years ago, really did not go well at all.
You woulda thunk that people wouldn���t double down after it was pointed out to them that (a) far from being fundamental and canonical, depreciation was not even in the Solow (1956) that is cited ten times a day, and (b) that something is badly wrong with your thinking if the numbers you have in your head say that depreciation���capital consumption allowances���are 60% of U.S. GDP. But no! Far from it!:
Per Krusell & Tony Smith: Is Piketty���s ���Second Law of Capitalism��� Fundamental?���[Piketty���s] argument about the behavior of k/y as growth slows, in its disarming simplicity, does not fully resonate with those of us who have studied basic growth theory��� or��� optimizing growth���. Did we miss something important, even fundamental, that has been right in front of us all along? Those of you with standard modern training��� have probably already noticed the difference between Piketty���s equation and the textbook version���. The capital-to-income ratio is not s/g but rather s/(g+��), where �� is the rate at which capital depreciates when growth falls all the way to zero, the denominator would not go to zero but instead would go from, say 0.12���with g around 0.02 and ��=0.1 as reasonable estimates���to 0.1������
LINK: <https://web.archive.org/web/20150529012920/http://www.econ.yale.edu/smith/piketty1.pdf>
James Hamilton: Educating Brad DeLong: ���Reader Salim points out that I was misinterpreting Piketty���s use of a 10% figure in his book���s calculations of depreciation. Piketty uses 10% for depreciation as a percent of GDP, not as a percent of capital as my original post suggested. In order not to mislead, I have deleted the inaccurate paragraphs that were included in the first version of this post������
LINK: <https://econbrowser.com/archives/2014/06/educating-brad-delong>
Per Krusell: ���We consider the subject of Piketty���s work really important���. This��� however, is no excuse for using inadequate methodology or misleading arguments���. We provided an example calculation where we assigned values to parameters���among them the rate of depreciation. DeLong���s main point is that the rate we are using is too high���. It is, however, disappointing that DeLong���s main point is a detail in an example aimed mainly, it seems, at discrediting us by making us look like incompetent macroeconomists���. We have read Piketty���s book and papers, and so we of course know that Piketty knows; our note is thus not written for him but instead, as we say in the introduction to the paper, for all of those who might be puzzled by the striking result that he derives from his non-standard theory������
LINK: <https://ekonomistas.se/2014/05/29/krusell-och-smith-darfor-koper-vi-inte-pikettys-prognos/>
Brad DeLong: Brad DeLong brad.delong@gmail.com Wed, Jun 4, 2014, 2:34 PM: Please tell me if I am crazy���.
Piketty���s estimates of the capital/annual income ratio in France and Britain in 1910 are both equal to 7. At an annual depreciation rate of 10% and with a net-of-depreciation concept of income, that means that 41.176% of gross income is devoted to replacing worn-out capital.
That can���t be what anybody thinks, can it? For Piketty���s purposes, a 10%/year rate of deprecation cannot be a sensible choice can it? Krusell and Smith���s choice of a 10%/year depreciation rate to calibrate Piketty���s model makes no sense, does it?
Do people really think that in 1900 41.176% of French gross output was taken up by capital consumption?
Physical capital depreciation rates in growth (as opposed to business-cycle) models are more like 5% than 10%, aren���t they?
And to the extend that a substantial chunk of your capital stock takes the form of high-productivity land���which doesn���t depreciate���5% is too large, isn���t it?
Am I crazy?
Sincerely Yours,
Brad DeLong
Thomas Piketty: ���Hello, we do provide long run series on capital depreciation in our ���Capital is back��� paper with Gabriel (see <http://piketty.pse.ens.fr/capitalisback>, appendix country tables US.8, JP.8, etc.). The series are imperfect and incomplete, but they show that in pretty much every country capital depreciation has risen from 5���8% of GDP in the 19th century and early 20th century to 10���13% of GDP in the late 20th and early 21st centuries, i.e. from about 1% of capital stock to about 2%���
Best,
Thomas���
Dear Professors Krusell, Smith, Hamilton:
This is not going well at all���.
At Piketty���s reported wealth-to-annual-income ratio for France in 1910 of 700%, a 10%/year depreciation rate implies that capital consumption is 70% of net income���41% of gross output.
Thus I have seven questions:
Do you believe that capital consumption was 70% of net income/41% of gross output in France in 1910?
If you do so believe, how is such a remarkably high share���40% of all economic activity in France devoted to replacing and repairing capital as it wears out and becomes obsolete���consistent with even a surface acquaintance of the structure of the French economy in 1910?
If you do so believe, can you point me to any sources to back up such a huge wedge between gross output and net income, especially since Piketty and Zucman���s estimates of the wedge between gross output and net income tend to be in the 5���8% range for the nineteenth century and the 10���13% range for today?
If not, why did you assume a deprecation rate that would lead to such an absurd picture of the structure of the French economy as of 1910?
Have you thought about what the appropriate depreciation rate should be?
How responsive do you believe the gross savings rate is to shifts in the wealth-to-annual-income ratio W/Y?
How much trust do you have in life-cycle models of the impact of wealth on consumption in an environment of extreme inequality, like that of the Belle ��poque, or (perhaps) the mid���21st century?
Sincerely yours,
Brad DeLong
Per Krusell: ���I really did not appreciate the tone of your blogs on this matter. Because of the importance of the topic covered in the book���it is one I care greatly about���and because so many people are interested in it, I nevertheless decided it made sense to write a short answer together with Tony. But, in general, on the few occasions when I write columns or guest blogs, I have a rule not to respond to people who do not maintain a minimum of politeness in their questions/comments. Without this rule, it would simply be too emotionally draining for me, and simply not worth it. Since the tone of the email you just sent is still rather unpleasant, with rhetorical questions and a clear unwillingness to engage in our arguments, I will henceforth not respond������
And so let me give the last word to Thomas Piketty:
Thomas Piketty: ���Thomas Piketty: ���There are huge variations across industries and across assets, and depreciation rates could be a lot higher in some sectors. Same thing for capital intensity. The prolemb with taking away the housing sector (a particularly capital intensive sector) from aggregate capital stock is that once you start to do that it���s not clear where to stop (e.g. energy is another capital intensive sector). So we prefer to start from an aggregate macro perspective (including housing), and here it is clear that 10% or 5% depreciation rates do not make sense������
<https://braddelong.substack.com/p/briefly-noted-for-2021-05-11-tu>
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