J. Bradford DeLong's Blog, page 1086

Liveblogging the American Revolution: January 28, 1777: John Burgoyne

Wikipedia: John Burgoyne:

On the outbreak of the American war, he was appointed to a command, and arrived in Boston in May 1775.... In 1776, he was at the head of the British reinforcements that sailed up the Saint Lawrence River and relieved Quebec City, which was under siege by the Continental Army. He led forces under General Guy Carleton in the drive that chased the Continental Army from the province of Quebec. Carleton then led the British forces onto Lake Champlain, but was, in Burgoyne's opinion, insufficiently bold when he failed to attempt the capture of Fort Ticonderoga after winning the naval Battle of Valcour Island in October.

Burgoyne, seeking to command a major force, proposed to isolate New England by an invasion from Quebec into New York. This had already been attempted by General Carleton in 1776, although he had stopped short of a full-scale invasion due to the lateness of the season. Carleton was heavily criticized in London for not taking advantage of the American retreat from Quebec, and he was also intensely disliked by Germain. This, combined with rival Henry Clinton's failed attempt to capture Charleston, South Carolina, placed Burgoyne in a good position to get command of the 1777 northern campaign.

Burgoyne presented a written plan to Lord Germain on February 28, 1777; Germain approved it and gave Burgoyne command of the main expedition.

Burgoyne's invasion plan from Quebec had two components: he would lead the main force of about 8,000 men south from Montreal along Lake Champlain and the Hudson River Valley while a second column of about 2,000 men (which Barry St. Leger was chosen to lead), would move from Lake Ontario east down the Mohawk River valley in a strategic diversion. Both expeditions would converge upon Albany, where they would link up with troops from Howe's army marching up the Hudson. Control of the Lake Champlain-Lake George-Hudson River route from Canada to New York City would cut off New England from the rest of the American colonies.

The last part of Burgoyne's proposal, the advance by Howe up the Hudson from New York City, proved to be the most controversial part of the campaign. Germain approved Burgoyne's plan after having received Howe's letter detailing his proposed offensive against Philadelphia. Whether Germain told Burgoyne, who was still in London at that time, about Howe's revised plans is unclear: while some sources claim he did, others state that Burgoyne was not notified of the changes until the campaign was well underway. Historian Robert Ketchum believes that Burgoyne would probably have been aware of the problems that lay ahead had he been notified of the Philadelphia plan.

Whether Germain, Howe, and Burgoyne had the same expectations about the degree to which Howe was supposed to support the invasion from Quebec is also unclear. What is clear is that Germain either left his generals with too much latitude, or without a clearly defined overall strategy. In March 1777 Germain had approved of Howe's Philadelphia expedition and did not include any express orders for Howe to go to Albany. Yet Germain also sent Howe a copy of his instructions to Carleton which plainly stated that the northern army was to make a junction with Howe's army at Albany. In a letter from Germain to Howe dated May 18, 1777 he made clear that the Philadelphia expedition should:

be executed in time for you to co-operate with the army ordered to proceed from Canada and put itself under your command.

This last letter, however, was not received by Howe until after he had departed New York for the Chesapeake. To attack Philadelphia Howe could either have moved overland through New Jersey or by sea via the Delaware Bay, both options would have kept him a position to aid Burgoyne if necessary. The final route he took, through the Chesapeake Bay, was immensely time-consuming and left him wholly unable to assist Burgoyne as Germain had envisioned. The decision was so difficult to understand that Howe's more hostile critics accused him of deliberate treachery.

Burgoyne returned to Quebec on May 6, 1777, bearing a letter from Lord Germain which introduced the plan but lacked some details. This produced another of the conflicts of command that plagued the British throughout the war. Lieutenant General Burgoyne technically outranked Major General Carleton, but Carleton was still the governor of Quebec. Germain's instructions to Burgoyne and Carleton had specifically limited Carleton's role to operations in Quebec. This slight against Carleton, combined with Carleton's failure to get command of the expedition, led to his resignation later in 1777, and to his refusal to supply troops from the Quebec regiments to garrison the forts at Crown Point and Ticonderoga after they were captured.

Noted for Your Afternoon Procrastination for January 27, 2015

Over at Equitable Growth--The Equitablog

Heather Boushey: On "Capital in the Twenty-First Century"
Simon Wren-Lewis: Post-Recession Lessons
W. Arthur Lewis, 1915-1991
: Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on
Heather Boushey: On "Capital in the Twenty-First Century"
Bridget Ansel: The pitfalls of just-in-time-scheduling

Plus:

: Things to Read on the Afternoon of January 27, 2015

And Over Here:

Barack Obama's 23 Hurricane Katrinas: Live from teh Roasterie
Re-Reading My Weblog: June 2005
Liveblogging 300 BC: Summer: Rights of Roman Citizens

Must- and Shall-Reads:

Cindra Ladd: "I only revealed nine years ago what happened that night to my husband of nearly 30 years after another woman went public with similar allegations and sued Cosby. I always thought I was the only one. I couldn't believe he had done this to others. I told my story to our attorney, who is also a good friend, because I was considering going public then, but eventually chose not to because the case was settled."
Wayne Glauser (1990): Three Approaches to Locke and the Slave Trade
Dylan Matthews: For the last time: poor people didn't cause the financial crisis
Mark Thoma: Taxing the Wealthy Promotes Economic Growth
Matthew Yglesias: The Rent is Too Damn High Guy Is Getting Evicted from His Rent-Controlled Apartment
Heather Boushey: On "Capital in the Twenty-First Century"
Simon Wren-Lewis: Post Recession Lessons
W. Arthur Lewis
Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on
Dean Baker: Did Cutting the Duration of Unemployment Benefits Lead to Faster Job Growth in 2014?

 

Heather Boushey: On "Capital in the Twenty-First Century": "We... have lived through an era where the presumption is that our society marches always towards greater equality or less discrimination, even if slowly. But if Thomas is right... this era could be at an end... Downton Abbey... no other way for Grantham’s three daughters to maintain their standard of living other than marrying well. So, the show’s first season focuses on whether the eldest daughters would concede to marry her cousin Matthew. If Thomas is right, then once again, the rules over inheritances will make all the difference for the potential for women’s equality.... In 2014, only one-in-ten U.S. billionaires were women (11.4 percent) and the female share of self-made billionaires is only 3.1 percent..."

Simon Wren-Lewis: Post Recession Lessons: "I regard 2010 as a fateful year for the advanced economies... the year that the US, UK and Eurozone switched from fiscal stimulus to fiscal contraction... this policy switch is directly responsible for the weak recovery in all three countries/zones. A huge amount of resources have been needlessly wasted as a result, and much misery prolonged. This post is... about... taking that as given and asking what should we conclude.... To answer that question, what happened in Greece (in 2010, not two days ago) may be critical.... Let me paint a relatively optimistic picture of the recent past. Greece had to default because previous governments had been profligate and had hidden that fact from everyone.... Recessions... tend to be when things like that get exposed. If Greece had been a country with its own exchange rate, then it would have been a footnote... fiscal stimulus that had begun in all three countries/zones in 2009 would have continued (or at least not been reversed), and the recovery would have been robust. Instead Greece was part of the Eurozone.... Policy makers in other union countries prevaricated.... So the Greek crisis became a Eurozone periphery crisis.... This led to panic not just in the Eurozone but in all the advanced economies. Stimulus turned to austerity. By the time some in organisations like the IMF began to realise that this shift to austerity had been a mistake, it was too late. The recovery had been anemic..."

W. Arthur Lewis:

Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on: "There is considerable controversy over why sluggish economic growth persists across many advanced economies six years after the onset of the financial crisis. Theories include a secular deficiency in aggregate demand, slowing innovation, adverse demographics, lingering policy uncertainty, post-crisis political fractionalisation, debt overhang, insufficient fiscal stimulus, excessive financial regulation, and some mix of all of the above. This paper surveys the alternative viewpoints. We argue that until significant pockets of private, external and public debt overhang further abate, the potential role of other headwinds to economic growth will be difficult to quantify."

Dean Baker: Did Cutting the Duration of Unemployment Benefits Lead to Faster Job Growth in 2014?: "Hagedorn, Manovskii, and Mitman.... The LAUS data are largely model driven... little direct data for many counties. The Bureau of Labor Statistics (BLS) generates employment estimates for these counties from a variety of variables.... The same sort of test can readily be constructed at the state level using the CES data... a much larger survey... of employers... [with] considerably less noise... measuring the number of jobs in the same states as we are measuring changes in benefit duration. Following HMM, I divided the states into a long duration group... and short duration group.... While HMM found the long duration group had a sharper uptick in job growth, the CES data show the opposite..."

Should Be Aware of:

https://perma.cc/
Jesus McQueen: "I thought the post might say something more controversial than 'Economists are amoral, Mammon-worshipping robots.'"
John Holbo (2003): Dead Right

 

Greg Sargent: Republican State Officials Cast Doubts on Anti-Obamacare Lawsuit: "Several state officials who were directly involved at the highest levels... all of them Republicans or appointees of GOP governors... [say] that at no point in the decision-making process... was the possible loss of subsidies even considered as a factor. None of these officials... read the statute as the challengers do. Cindi Jones.... This week, a number of states will file a brief siding with the government, arguing that nothing in the ACA indicated opting for the federal exchange would cost them subsidies. They will argue... that the challengers’ interpretation raises serious constitutional questions: The states were never given clear warning that the failure to set up exchanges could bring them serious harm.... John Watkins.... Sandy Praeger.... Linda Sheppard..."

Ogged: Have We Talked About Number Needed to Treat?: "Nice summary here. Longer Wired article here. NNT site here. Table of NNTs for common stuff here. Elegant little Wikipedia table here. Amazing how little effect so many established therapies have."

Links:

Matthew Yglesias: The Rent is Too Damn High Guy Is Getting Evicted from His Rent-Controlled Apartment http://www.vox.com/2015/1/27/7921317/jimmy-mcmillan-eviction
Mark Thoma: Taxing the Wealthy Promotes Economic Growth http://www.thefiscaltimes.com/Columns/2015/01/27/Taxing-Wealthy-Promotes-Economic-Growth
Simon Wren-Lewis: Post Recession Lessons http://mainlymacro.blogspot.com/2015/01/post-recession-lessons.html
W. Arthur Lewis http://en.wikipedia.org/wiki/W._Arthur_Lewis
John Holbo (2003): Dead Right http://examinedlife.typepad.com/johnbelle/2003/11/dead_right.html
Ogged: Have We Talked About Number Needed to Treat?
Jesus McQueen: "I thought the post might say something more controversial than 'Economists are amoral, Mammon-worshipping robots.'" http://www.unfogged.com/archives/comments_14361.html#1778295
Dylan Matthews: For the last time: poor people didn't cause the financial crisis http://www.vox.com/2015/1/26/7897035/poor-financial-crisis-mortgage
Dean Baker: Did Cutting the Duration of Unemployment Benefits Lead to Faster Job Growth in 2014? http://www.cepr.net/index.php/blogs/cepr-blog/did-cutting-the-duration-of-unemployment-benefits-lead-to-faster-job-growth-in-2014
Wayne Glauser (1990): Three Approaches to Locke and the Slave Trade http://www.jstor.org/stable/2709512?seq=2#page_scan_tab_contents
Heather Boushey: On "Capital in the Twenty-First Century" http://equitablegrowth.org/research/scepa-presents-thomas-piketty
Greg Sargent: Republican State Officials Cast Doubts on Anti-Obamacare Lawsuit http://www.washingtonpost.com/blogs/plum-line/wp/2015/01/27/republican-state-officials-cast-doubts-on-anti-obamacare-lawsuit
Cindra Ladd: "I only revealed nine years ago what happened that night to my husband of nearly 30 years after another woman went public with similar allegations and sued Cosby. I always thought I was the only one. I couldn't believe he had done this to others. I told my story to our attorney, who is also a good friend, because I was considering going public then, but eventually chose not to because the case was settled." http://www.huffingtonpost.com/cindra-ladd/bill-cosby-trust-me_b_6526064.html?utm_hp_ref=tw
Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on http://www.ritholtz.com/blog/2015/01/secular-stagnation-debt-overhang-and-other-rationales-for-sluggish-growth-six-years-on

Morning Must-Read: Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on

I have a very easy time believing that debt overhangs--private, international, and public--can be enormous headwinds and exert substantial drag on growth and recovery. What I cannot understand is how debt can do so without also being an impaired asset to those who hold it. Debt that is painful enough to bear that it discourages enterprise and spending is also debt that may not be collected in the end, and thus debt that sells at a low price and carries a high face interest rate.

The claim that the pieces of debt selling at record-high prices and carrying record-low face interest rates--which is the case right now for the death of credit-worthy sovereigns possessing exorbitant privilege--are in any sense a drag or a headwind seems to me to be simply wrong. I do not understand how people of note and reputation can believe it...

Stephanie Lo and Kenneth Rogoff: Secular Stagnation, Debt Overhang, and Other Rationales for Sluggish Growth, Six Years on: "There is considerable controversy...

...over why sluggish economic growth persists across many advanced economies six years after the onset of the financial crisis. Theories include a secular deficiency in aggregate demand, slowing innovation, adverse demographics, lingering policy uncertainty, post-crisis political fractionalisation, debt overhang, insufficient fiscal stimulus, excessive financial regulation, and some mix of all of the above.

This paper surveys the alternative viewpoints. We argue that until significant pockets of private, external and public debt overhang further abate, the potential role of other headwinds to economic growth will be difficult to quantify.

Noted for Your Afternoon Procrastination for January 26, 2015

Over at Equitable Growth--The Equitablog

The Future of the European Project, and the Future of the Eurozone: The Honest Broker
Robert Waldmann on the Fiscal Cliff and Fiscal Multipliers: Focus
Kenneth Thomas: What Is Noah [Smith] Thinking?
Ann Friedman: Heather Boushey on Can We Solve Our Child-Care Problem?
: Brian Buetler: Repealing Obamacare Would Be Immoral
Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s?
Nick Bunker: Did credit really replace wage growth in the mid-2000s?

Plus:

Things to Read on the Afternoon of January 26, 2015

Must- and Shall-Reads:

Heather Boushey: The leap not taken: Wage growth | Marketplace.org
Luke Brinker: "Look no further than Europe's economic mess for a lesson in the folly of austerity..."
Jared Bernstein: Technocrats know how to fix the economy. And they did
Via Mark Thoma: Francis Saraceno: Who are the Radicals in Europe?
Mark Thoma: "Jamie Galbraith in interviewed by Roger Strassburg on the upcoming Greek election and the prospects and consequences of a possible Syriza government"
Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s?
Brian Buetler: Repealing Obamacare Would Be Immoral
Ann Friedman: Can We Solve Our Child-Care Problem?
Kenneth Thomas: What Is Noah [Smith] Thinking?
Arun Garg: Value Investing as Software Eats the World

And Over Here:

Live from La Farine: In Which We Watch the Daily Cal Foreclose a Discussion of the Classical Social Theory Syllabus...
The Future of the European Project, and the Future of the Eurozone: A Talk from 2013: The Honest Broker for the Week of January 25, 2015
Monday Smackdown: Robert Waldmann: Fiscal Multipliers and the Fiscal Cliff: Focus
Liveblogging World War I: January 26, 1915: Harry S. Truman to Bess Wallace
Protip for Authorities: Live from Tampa Airport
Yes. Actual English Politics in the Fifteenth Century Was Weirder than Anything in "Game of Thrones". Why Do You Ask?
Liveblogging the American Revolution: January 25, 1777: Massachusetts Raises Troops for the Continental Army
Weekend Reading: Marc Andreessen (2011): Why Software Is Eating the World

Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s?: "So were the middle class and the rich were taking out much larger loans than before or more mortgages? According to Adelino, Severino, and Schoar... more so the latter... new borrowers entering the market.... Adelino, Severino and Schoar’s paper would seem to indicate that what caused the run up in mortgage debt wasn’t due to a change in ‘lending technology’ such as securitization or looser government policies. Rather, the debt was built by the same kind of bubble dynamics that leads to investors betting that an asset will never lose value. Which story is true is still up for debate, but it could just be that this time wasn’t no different after all..."

Brian Buetler: Repealing Obamacare Would Be Immoral: "As a political matter Obamacare probably can’t be repealed outright.... Strain also notes that conservatives might ‘have their way with Obamacare’ if ‘the Supreme Court deals it a death blow.’... [Strain's] wishing for this outcome is morally dubious, and Strain’s counterclaim is unusually weak. 'In a world of scarce resources, a slightly higher mortality rate is an acceptable price to pay for certain goals--including more cash for other programs, such as those that help the poor; less government coercion and more individual liberty; more health-care choice for consumers.... Such choices are inevitable. They are made all the time.' This argument about ends is concise, unobjectionable, and completely unresponsive to the situation at hand. If the Supreme Court eliminates ACA subsidies... the federal government will indeed spend less.... But none of the other tradeoffs Strain lists will happen... [no] programs that help the poor... individual liberty will not increase... a wider array of health plans will not materialize. Millions will lose their coverage, insurance markets will collapse.... The moral implications of this outcome are hideous..."

Ann Friedman: Can We Solve Our Child-Care Problem?: "I called economist Heather Boushey to find out. ‘What’s interesting about the cost question is that it presumes that no one is paying the costs right now.... We are paying for it, we’re just paying for it in this inefficient way that doesn’t work for families and isn’t good for kids.’ Families that can scrape together the money for safe, inspected day-care facilities are forgoing other priorities like saving for retirement or buying new shoes. Families who can’t afford day care are relying on a relative or a neighbor to provide informal care, which may or may not be paid.... Obama’s suggested tax credit is a first step. But he was not proposing a network of state-run, quality day-care facilities--which actually did exist, during World War II, when men were at war and women flooded the workplace.... Nixon vetoed a bill that would have established a network of federally subsidized child-care centers, open to all parents on a sliding scale. He cited the bill’s ‘family-weakening implications’.... The notion that affordable day care is harmful to families sounds downright crazy today.... Sure, personal politics play a role in how each family makes child-care decisions. But in the vast majority of cases, the economics matter far more..."

Kenneth Thomas: What Is Noah [Smith] Thinking?: "Noah Smith put up a post Sunday purporting to show that things aren’t so bad for the middle class... immediately shows us a chart of median household income. Stop right there..... We need to look at individual data, aggregated weekly... to know what’s going on.... The individual real weekly wage is still below 1972 levels, [so] households... have traded time and debt for current consumption. This is not an improvement in the middle class lifestyle.... Richard Serlin points out that we also need to consider risk.... The middle class is less secure than it was in 1972. Noah has lots of interesting things to say, and you should check out his blog if you haven’t already. But this is an error on his part, and I don’t understand what he’s thinking."

Arun Garg: Value Investing as Software Eats the World: "Venture capitalist Marc Andreessen’s trenchant phrase--‘Software is Eating the World’--evokes the reach and power of this pervasive and powerful phenomenon.... There are serious investing implications.... The following is just a small sample of companies that once used to dominate their niche are now are either gone, or fundamentally transformed, by the encroachment of software: The bookstore chain Borders got ‘eaten’ by software-based Amazon. The music store chain Tower Records got ‘eaten’ by iTunes software. Apple’s iTunes itself is getting ‘eaten’ by Pandora and Spotify streaming software. The video chain Blockbusters got ‘eaten’ by Netflix software. Newspapers and magazines got ‘eaten’ by the websites and blogs and online ads. Yellow Pages got ‘eaten’ by Google software. Kodak got ‘eaten’ by digital photos and smartphone cameras. AT&T and Vodaphone are under attack from Skype, Whatsapp, Facetime, and Facebook. Retailing giants like Sears, Target, Walmart, and Tesco are being ‘eaten’ by Amazon. Bank clerks got ‘eaten’ by ATM machines. Human brokers were ‘eaten’ by online brokerage sites. Travel agencies are being ‘eaten’ by Expedia and Travelocity, etc. Recruiters are being ‘eaten’ by LinkedIn and other social networks. Insurance underwriters and actuaries are being ‘eaten’  by ‘big data’ analytic software.... the list grows every day. This should be of critical interest to all value investors since companies in the process of being eaten alive can often seem attractive to investors--inexpensive on the basis of the usual valuation ratios--right until their very end.... It seems clear, at least to me, that the old value investing strategy of avoiding technology stocks is no longer tenable as software keeps eating more and more of the world..."

Should Be Aware of:

Dean Baker: "Several readers sen[t] me a blogpost from Scott Sumner saying... Keynesians have been dishonest... not owning up to... [their] predicting a recession in 2013.... I certainly agreed that budget cutbacks and the end of the payroll tax cuts would dampen growth, but the number was between 0.5-0.8 percentage points. This left us far from recession..."

 

Andrew Kaczynski: Ben Carson Advocated Partial Government Health Care Takeover In His 2012 Book: "Dr. Ben Carson advocated for government-run catastrophic health care as late as 2012. Responding to a report from BuzzFeed News during a press conference at the Iowa Freedom Summit on Saturday, Carson said that a 1996 essay that ran in the Harvard Journal of Minority Public Health in which he proposed government-run nationalized catastrophic care and end-of-life national guidelines for who should and should not receive care, ‘bears about as much resemblance to my current views as our views on Afghanistan did 20 years ago.’ Carson, however, advocated a nearly-identical proposal to reform health care in his 2012 book, 'America the Beautiful'..."

Simon Wren-Lewis: Alternative Eurozone Histories: "It would be very nice if this was all about history. Unfortunately exactly the same mistakes are continuing, with equally damaging effects. Fiscal policy continues to be pro-cyclical, meaning that we had a second Eurozone recession and no real recovery from that. Monetary policy is either perverse (2011), or 6 years too late (!) and continues to openly encourage fiscal austerity. That most policy makers in the Eurozone have still not understood past errors remains scandalous..."

Andrea Matranga: Climate-driven technical change: seasonality and the invention of agriculture: "During the Neolithic Revolution, seven populations independently invented agriculture. In this paper, I argue that this innovation was a response to a large increase in climatic seasonality. Hunter-gatherers in the most affected regions became sedentary in order to store food and smooth their consumption. I present a model capturing the key incentives for adopting agriculture, and I test the resulting predictions against a global panel dataset of climate conditions and Neolithic adoption dates. I find that invention and adoption were both systematically more likely in places with higher seasonality. The findings of this paper imply that seasonality patterns 10,000 years ago were amongst the major determinants of the present day global distribution of crop productivities, ethnic groups, cultural traditions, and political institutions."

Links:

Nick Bunker: Did Credit Replace Wage Growth in the Mid-2000s? http://equitablegrowth.org/news/credit-really-replace-wage-growth-mid-2000s
Brian Buetler: Repealing Obamacare Would Be Immoral http://www.newrepublic.com/article/120847/repealing-obamacare-king-vs-burwell-would-be-immoral
Andrew Kaczynski: Ben Carson Advocated Partial Government Health Care Takeover In His 2012 Book http://www.buzzfeed.com/andrewkaczynski/ben-carson-advocated-partial-government-health-care-takeover#.srVoRP9KG
Jared Bernstein: Technocrats know how to fix the economy. And they did http://www.washingtonpost.com/opinions/technocrats-know-how-to-fix-the-economy-and-they-did/2015/01/23/4d6cf83c-a29c-11e4-903f-9f2faf7cd9fe_story.html
Simon Wren-Lewis: Alternative Eurozone Histories http://mainlymacro.blogspot.com/2015/01/alternative-eurozone-histories.html
Dean Baker: "Several readers sen[t] me a blogpost from Scott Sumner saying... Keynesians have been dishonest... not owning up to... [their] predicting a recession in 2013.... I certainly agreed that budget cutbacks and the end of the payroll tax cuts would dampen growth, but the number was between 0.5-0.8 percentage points. This left us far from recession..." http://www.cepr.net/index.php/blogs/beat-the-press/did-the-keynesians-get-it-wrong-in-predicting-a-recession-in-2013
Luke Brinker: "Look no further than Europe's economic mess for a lesson in the folly of austerity..." http://www.salon.com/2015/01/23/krugman_austerians_balanced_budget_fetish_is_deeply_irresponsible/?utm_source=facebook&utm_medium=socialflow
Via Mark Thoma: Francis Saraceno: Who are the Radicals in Europe? https://fsaraceno.wordpress.com/2015/01/25/who-are-the-radicals-in-europe
Mark Thoma: "Jamie Galbraith in interviewed by Roger Strassburg on the upcoming Greek election and the prospects and consequences of a possible Syriza government" http://economistsview.typepad.com/economistsview/2015/01/the-prospects-and-consequences-of-a-possible-syriza-government.html
Arun Garg: Value Investing as Software Eats the World http://arunsplace.com/2014/09/23/the-challange-of-value-investing-as-software-eats-the-world
Andrea Matranga: Climate-driven technical change: seasonality and the invention of agriculture http://www.andreamatranga.net/uploads/1/5/0/6/15065248/andrea-matranga-jmp---nov07.pdf
Ann Friedman: Can We Solve Our Child-Care Problem? http://nymag.com/thecut/2015/01/can-we-solve-our-child-care-problem.html
Heather Boushey: The leap not taken: Wage growth | Marketplace.org http://www.marketplace.org/topics/economy/leap-not-taken-wage-growth#.VMOS1SiK6fI.twitter

Live from La Farine: In Which We Watch the Daily Cal Foreclose a Discussion of the Classical Social Theory Syllabus...

As someone who thinks that the "great books" approach to classical social theory is past its sell-by date, I am now distressed. I confess that I believe that, over in sunny California, the Daily Cal is trolling us all when it decides to print this:

Rodrigo Kazuo and Meg Perrett: Occupy the Syllabus: "We are calling for an occupation of syllabi...

...in the social sciences and humanities. This call to action was instigated by our experience last semester... [with] a standardized canon of theory that began with Plato and Aristotle, then jumped to... Hobbes, Locke, Hegel, Marx, Weber and Foucault, all of whom are white men... pretend[ing] that... economically-privileged white males from five imperial countries (England, France, Germany, Italy and the United States)... are the only people to produce valid knowledge.... We must demand the inclusion of women, people of color and LGBTQ* authors on our curricula...

And, of course, one's first reactions are:

Why do Kazuo and Perrett think that Plato came from Italy? Do they not know that Plato came from Athens? Or do they not know that Athens is in Greece?

Why do Kazuo and Perrett think that Aristotle came from Italy? Do they not know that he was born in Stagira in Greek Macedonia, where his father was physician to the Greek-speaking king of Macedon? Do they not know that after his father's death he was raised in Atarneus--a Greek-speaking city in what is now Turkey--by his uncle Proxenos? Do they not know that he then married the daughter of Hermios Tyrant of Atarneus? Or do they think that Stagira and Atarneus are somehow in Italy?

Do Kazoo and Perrett not know that Plato, Aristotle, and Foucault would all be coded and classified as LGBTQ* today? Or do they know and just want to hide that knowledge from their readers?

If the Daily Cal wanted to publish an article conveying the message that everyone should dismiss challenges to the focus of social theory courses on Plato-Aristotle-Hobbes-Locke-Hume-Smith-Hegel-Tocqueville-Mill-Marx-Weber-Durkheim and company are idiots, it certainly looks like they found a piece that serves that purpose.

And I think that is too bad. For, as I said, I do think that the "great books" approach to classical social theory is past its sell-by date...

The Future of the European Project, and the Future of the Eurozone: A Talk from 2013: The Honest Broker for the Week of January 25, 2015

The Future of the European Project, and the Future of the Eurozone

J. Bradford DeLong :: U.C. Berkeley and NBER :: April 16, 2013 http://eurofuture2013.wordpress.com/1

My problem this morning is that I have four starting points. Or maybe my problem is that I have five starting points:

 

I. A Little Dutch History

My first starting point is the history of the Netherlands.

I would have to be more rash indeed than the fifteenth century's Charles de Valois-Burgogne,2 the last sovereign Duke of Burgundy, to dare to opine about classical Dutch history with Jan de Vries in the room. But my read of it tells me that "political union" is a very vague and sketchy concept indeed. Consider the "political union" of what was surely the strongest power in seventeenth-century Western Europe: the seven United Provinces of the Netherlands that dominated the economy and were the political-military lynchpin of the coalition to contain the aggressive King Louis XIV Bourbon of France. READ MOAR

As I understand it, the Dutch political union then consisted of:

A talk-shop in the Hague, with rather less power than currently held by the organs of the European Union in Brussels and Strasbourg.
The holding of the seven offices of stadthouder of each of the provinces by the then-current Prince of Orange, whoever that happened to be.
The fact that the single province of Holland had 60% of the GDP of the whole; and thus could credibly threaten to go it alone, do what was necessary, make a little list of those who had not enthusiastically contributed their share of the resources needed for the common good, and remember.3

That was enough of a political union to support a great power in the seventeenth century that could dominate the seas and orchestrate the best-funded and most powerful military coalition on land as well. Certainly the most memorable piece of bureaucrat and raconteur Samuel Pepys Diary of his life in Stuart-Restoration England is his lament, one night as he watched the warfleet he had spent so much of his career trying to build burn in the Thames estuary, that it seemed to him "the Devil shits Dutchmen!"4

It was enough then. Will that amount of "political union" be enough for Europe today? I do not know. That is my first point--that "political union" is a vague thing, and often you only know that you had it after the fact when you look back, and see that things worked, and that in fact it did not all fall apart.

 

II. The Classical Political Theory Tradition (and James Madison)

My second starting point is to ask whether a stronger political union than what Europe has now--or than the Dutch Republic of the seventeenth century--is even possible.

Here the place to start is with the classical political tradition plus James Madison. Aristotle of Stagira5 believed that there were and could be no stable democracies, and certainly no good democracies. They were, he thought to the innermost core of his bones, inevitably ruled by faction--so much so that the end-state of democratic politics was a downward spiral of street-fights and purges ending in tyranny. And while this process worked itself out, he thought, at those times when you could get enough people assembled in the Assembly to make a decision, the policies that resulted would be irrational and random. They would decide today that they should execute every adult male in the recently-recaptured city of Mitylene because even the demos had been unwise enough to follow the lead of the aristoi when they had decided to rebel and affiliate with Sparta. They would decide tomorrow--after what must have been an incredibly intense night of bribery by Mitylene's ambassadors and well-wishers in Athens--that their decision of today had been unwise, reversing themselves, and sending a second messenger-ship across the Aegean to tell the occupying fleet not to do what the previous day's messenger-ship had commanded them to do.6

Moreover, a democracy would be a bad neighbor. It would be always prepared for aggressive war, for war would bring the demos paid employment in the fleet and their share of plunder as well. Since those who were prosperous and had something to lose did not have a big voice in the government, the government would not pay proper attention to the destructive side of war.

Faction-ridden, irrational, aggressive, militaristic--the classical Athenian democracy, Aristotle said, and for good reason, was very bad news for its neighbors and for itself.

A better alternative government, Aristotle thought, would contain an element of "monarchy"--top-down direction of an elite competition for winning zero-sum status in serving the government and the people--an element in which the ruling principle of politics was "honor", as Montesquieu would put it 2000 years later7. A better alternative government, Aristotle thought, would even be one of despotism--under despotism the ruling principle would be fear, but at least order would be maintained, and life and prosperity could proceed for all except the few who got crosswise of the despot. Perhaps the best regime would be a "republic"--a government where, again in Montesquieu's words, the ruling principle would be a positive-sum contest for displaying "virtue" in serving the republic. But such needed to be small--the virtuous cycle of public spirit and public-spirited action could only be maintained in a small community where the behavior of all could be seen. Thus a small city-state with a not-very-democratic mixed-constitution virtue-oriented regime could approximate the Just City, for a while, if you were lucky, if you had a good initial lawgiver, but only as long as the extent of territory did not grow too great.

And if territory did grow too great? Then the good republic was unsustainable, and you would oscillate between monarchy and despotism--as Aristotle must have reflected many times during his life first as tutor to and then as subject of Alexander III Argeios of Macedon, called "the Great".

Thus the classical tradition says that something like today's "Europe"--a highly-democratic republic on a continent-wide scale--cannot be a possible good regime. To this James Madison, writing in The Federalist, says: "Not so! Look at the institutions of the second-century BC Aeolian League."8 (I have not found any other references in secondary works that might have been read by James Madison: he must have trawled deeply indeed to come up with this one as a possible model for what he hoped the United States would become.) It is true that democratic politics tends to be faction-ridden. It is true that political decision-making tends to be irrational--ruled by transitory passions rather than durable interests. But start with a large enough territory, add enough cooling constitutional elements to the orrery of government, construct an eighteenth-century Enlightenment mechanical system of political order with the right properties, and if in its division of power between president, senate, and house of representatives it just happens to mimic the division in Great Britain of power between king, lords, and commons at the accession of King George III Hanover of Great Britain--well then, says Madison, it just might work. The constitutional cooling-off elements tame the irrationality. The extent of territory makes it more difficult for factions, limited to one class in one region, to out-organize the rational upholders of good government.

So Madison, trying to correct Aristotle and found the United States, raises at least the possibility that "Europe" could work--with the right constitutional order.

 

III. The Necessity of Political Union in the Dark Continent

My third starting point is the absolute necessity of political union in Europe today. It is just too costly and too terrible not to have one: the history of the first half of the twentieth century and then the edge-of-nuclear-terror decades of the Cold War teach that very strongly.

Was it 111 BC that the Kimbri and the Teutones, having moved down from Jutland to what is now Austria and crossed the Danube, decided they would rather cross the Rhine into the land of feta and olives in the Rhone Valley rather than eat Sauerkraut and sausage--or, back then, probably auroch jerky--in Noricum, near what is now Salzburg? So they went. And so they looted, burned, ravaged, killed, and ruled until a decade later they were broken at the battles of Aquae Sextiae and Vercellae by the new-model Roman Republican army commanded by Gaius Marius C. f. seven times consul.9 Ever since then, by my count, it is every thirty-seven years that a hostile army crosses the Rhine going one way or the other bringing fire and sword. The original Swiss--the Helvetii. Julius Caesar. All of those who claimed to be Julius Caesar's adoptive descendants. The Visigoths heading for Andalusia. Louis XIV commanding his armies to make sure that nothing grows in the Rhinish Palatinate so that his armies attacking Holland have a secure right flank. And, last, Remagen bridge in 1945. Every thirty-seven years, with increasing destructiveness as time passes.

Thirty-seven years after 1945 carries us to 1982. Thirty-seven years after 1982 will carry us to 2019. By 2019 we will have missed two of our appointments with slaughter. We desperately need political union in Europe lest the bad old days from 111 BC to 1945 come again as we once again fall victim to the tragedy of great power politics10. That means that politicians find some way to union--so that differences are thrashed out in conference rooms in Brussels and Strasbourg rather than in the streets with Molotov cocktails, submachine guns, armed drones, and worse. That is the necessity.

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IV. Kindlebergian Hegemony?

The fourth starting point: return to the question of the possibility of a unified Europe. A presupposition of the Madisonian hope for a durable and well-functioning democratic government of great extent and territory was a certain original cultural not homogeneity but affinity: people in Georgia had to look at people in Maine as friends and allies by default, with the growth of faction needed to convince them otherwise. Suppose that is lacking. What then?

You then have to jury-rig something. You then have to hope for or to somehow generate a benevolent Kindlebergian hegemon11--some actor large enough to be the first-mover, to set the policy, because it is our way or the highway. This requires a willingness on the part of the hegemon to follow-through on its policy commitments--to mean it when it says "our way or the highway". This also requires a willingness on the part of the hegemon to be exploited to some degree--to let others free-ride on the public goods of international civil, political, and economic order that it establishes and provides. The hegemon has to be large and powerful enough to have an overarching interest in those international public goods. And it has to value public order, or public order plus various 12 benefits of hegemony, more than it feels taken advantage of by the free-riding.

Absence of a hegemon is, in brief, Kindleberger's theory of why the history of the North Atlantic economy between 1919 and 1939 was such a tragedy: Britain no longer but the United States not yet willing and perhaps not yet able to be the hegemon. That leads one to fear that perhaps, at the deepest level, the central problem with Europe today is that the United States is no longer the Cold-War North Atlantic benevolent hegemon it once was, but that Germany has not or has not yet stepped into that benevolent-hegemon role--or because of German history and German attitudes would not be tolerated by the rest of Europe in that role.

 

V. External Pressure?

The fifth and last starting point is what Madison left out: who the Aetolian League actually worked. It did work. It was remarkably stable. It had an executive. Its executive had powers and made decisions. It could command rather than request from its city-state members--and its commands were obeyed. But the Aetolian League was impossible to imagine without Macedon to the north. A hostile great power on its borders was essential to induce the surrenders of sovereignty needed for the Aetolian League to function. Analogously, a hostile Great Britain that would not have minded scooping up an ex-colony or two that wished to return to the bosom of Westminster--and confiscate the fortunes, and perhaps the lives and sacred honor--of the politicians who had led them astray into independence was essential to induce the surrenders of sovereignty needed for Madison's constitution and Madison's United States. In the absence of potentially hostile Great Britain, it is very difficult to imagine the politicians of Rhode Island agreeing to their voice being all-but-drowned-out in the lower house of representatives, and impossible to imagine the politicians of Virginia and Massachusetts agreeing to their voice being reduced to no louder than Rhode Island's voice in the upper house of the senate.

There is a story that when Paul-Henri Spaak was Secretary-General of NATO, he was asked if it would not be a good idea to erect statues to the founders of what was then becoming the European Union--the ECSC, the EEC, the EC, et cetera. His response, supposedly: "What a wonderful idea! There should be a fifty-foot tall statue of Josef Stalin in front of the Berlaymont Palace to remind us of why we are all here!" It was the Red Army's Group of Soviet Forces in Germany at the Fulda Gap that concentrated people's minds behind the ideas of the Monnets and the Schumanns most powerfully in the decades after World War II. That potentially-hostile superpower created a powerful desire on the part of many to make sure the ECSC, then the EEC, then the EC, and finally the EU succeeded.

And all of that vanished at the start of the 1990s--although there is a chance that we may in a few years be thanking Vladimir Putin for bringing it back.

Where do all five of these starts leave us?

 

VI. The Euro and the Lessons of 1919-1939

We ought, when we started the euro, have remembered the principal lessons of 1919-1939.

First, there is the lesson that John Maynard Keynes tried unsuccessfully to teach Harry Dexter White at Bretton Woods: that in order for an international market economy to be stable and prosperous, adjustment to macroeconomic disequilibrium needs to be symmetrically undertaken by both surplus and deficit regions, and not by deficit regions alone.[][]

When Christina Romer was in office back in 2010, she would stand up at OECD meetings and say: "What Europe needs to do in order to solve its financial and structural crises is not just a shift to sounder finance and more public austerity in the periphery, but pro-growth policies in the core." Everyone would say "yes, yes" and applaud. But what Christie would mean by "pro-growth policies in the core" is for a proportional share of the adjustment burden to be undertaken by surplus regions, which would mean 4%/year inflation in Germany and Holland. That would have been required for 2%/year inflation in the Eurozone as a whole, and thus for structural adjustment in Southern Europe to take place without grinding wage deflation. Deflation in the periphery and only 2%/year inflation in Germany means you won't hit your 2%/year inflation target for the Eurozone as a whole. And you won't get structural adjustment until generations have passed.

Second, if an international economy is to have any chance of avoiding crises, an integrated banking system requires an integrated banking supervisory system. Either you have to cut banking systems off from each other and run credits and debits through sovereigns--and then backstop those sovereigns, as the government of Austria was not backstopped when it tried to support the Credit-Anstalt back in 1931--or if you let banks hold assets and liabilities across national borders the supervision with an eye toward minimizing and then dealing with systemic risk needs to cross national borders and be global as well.

Third, for crises to be successfully managed, the lender of last resort must truly be a lender of last resort. The first part of the Bagehot rule is lend freely--and the lending must be truly free, and truly unlimited in quantity. The lender must be able to create whatever asset the market thinks is their port-of-safe-refuge and do so in whatever quantities the market thinks it might every possibly demand. It cannot get hung up on, say, Pierre Laval's desire to win points for himself in French domestic politics by vetoing Austro-German plans to increase the tax base via customs union as a way of making it sustainable for the German Weimar Republic's Reichbank to rescue the OeNB which was trying to rescue the Credit-Anstalt which had tried to moderate the Great Depression in the Danube basin by continued lending into the post-1929 downturn.

Fourth, in order for any monetary union or fixed exchange-rate union larger than the size of a true optimum currency area to survive, it must be willing to undertake large-scale fiscal transfers to compensate for the absence of the prohibited exchange rate movements that would otherwise shift terms of trade and rebalance the economy. Monetary union on a scale as large as the Eurozone requires large fiscal transfers, which are unthinkable without some operating and functioning form of political union.

I do know that those of us who were, back at the start of the 1990s, watching the project of the establishment of the Eurozone assumed that the establishment was being carried out by people who had learned these lessons. They were, after all, obvious--or maybe obvious only to people who watched international finance, or maybe obvious only to people with Ph.D.'s in economics who had written their dissertations in international finance, or maybe obvious only to those few of us who had made a relatively deep study of 1919-1939. We now find that the Princes and Princesses of Eurovia today do not appear to have learned these lessons. History taught the lessons. It taught them, I thought, fairly convincingly. But were the Princes and Princesses of Eurovia listening?

How did this come about? Why didn't Maastricht set up a single Eurovia-wide banking supervisor to align financial regulatory policies across the Eurozone? Why didn't Maastricht explicitly set up the fiscal transfer funds that, it was clear then, would be needed whenever some regional component of Eurovia were to fall into a deep recession--as some regional component surely would at some time? Why did Maastricht leave a good deal of lender-of-last-resort authority in the hands of national governments that could not print money--could not create the safe asset for the system--and implicitly task them with responsibility for their banking system? And why, given that one country's exports are another country's imports by necessity--and given that the United States will not always be enthusiastically the possessor of a hyper-strong dollar and the importer of last resort to guarantee full employment throughout Europe--does not the adoption of policies in Eurovia deficit regions to shrink their imports automatically trigger the adoption of corresponding policies in Eurovia surplus regions to boost their imports?

Part of the reason was the general belief in the Berlaymont and elsewhere that requiring the specification of what were seen as ancillary details at Maastricht would postpone the project for years if not decades. The logic of events, it was thought by many, would inevitably lead to the development of the missing pieces: first the common banking regulatory union, then over time the fiscal union, and then the political union necessary to make the fiscal union durable and acceptable, and then the making of the Europeans needed to populate the political union and keep it stable against centrifugal tendencies. And as for the fear that surplus countries might be reluctant to share in adjustment--well, back in 1992 it must have seemed extremely unlikely that politicians anywhere in Europe would ever have turned down an IMF-blessed demand that they expand their economies and reduce their levels of unemployment.

Surely when the crisis came we thought--at least those of us who worked in the U.S. Treasury and talked to the IMF thought--if it is indeed necessary that some European countries expand in the interest of structural adjustment, the IMF blessing of that expansion would neutralize any domestic political opposition to "sound finance". Yet we seem today to live in a very different world indeed from the world that we thought then that we did.

And, of course, underlying everything at Maastricht and in those Helmut Kohl post-Cold War years was a background gestalt that Maastricht was in large part Germany renewing its commitment to the continued and further integration of Europe in the aftermath of the very strong support given by the rest of continental Europe to the Bundesrepublik's absorption of the German East. If it turned out that someone had to pay somehow somewhen for the sin of not clearly foreseeing the consequences of the single currency and the Eurozone, this political support by the rest of continental Europe in the face of some skepticism as to the wisdom of immediate German unification from the United States and Russia meant that the rest of Europe had a very deep well of credit with Germany on which it could draw. Germany would remember. And Germany would be eager to pay.

It may well all work out. Fifty years from now historians may well be writing that Maastricht was a gamble--and was, like Waterloo, a near-run thing--but a gamble that in the end paid off after all. "After all", historians may say in 2063, "it has now been 108 years since an army crossed the Rhine with fire and sword, and the unforeseen costs of Maastricht are a very small payment for an insurance policy against that eventuality". There may still be large differences in prosperity between Europe's core and its periphery. But come 2063 Europe as a whole may well be so rich that these are and are seen as second-order concerns at most. In 2063 Northern Europeans may still grumble that Southern Europeans lack a proper work-ethic, but when they do so they may do so as they pay through the nose for the amenities of all of their Mediterranean vacations.

After all, being taxed a bit to support the common European project has large benefits. The Kimbri and the Teutones never got to enjoy the feta and the olives and the sunshine. We have every reason to think that the Northern Europeans of 2063 will.

Perhaps.

Perhaps not.

But right now, it looks to me as though history did indeed teach the lesson, but that while history was teaching the lesson the Princes and Princesses of Eurovia today were too busy texting on their cell phones to pay any attention.

| Notes

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Monday Smackdown: Robert Waldmann: Fiscal Multipliers and the Fiscal Cliff: Focus

Over at Equitable Growth: I was writing a piece about the rather strange belief I hear that the failure of the U.S. economy to fall into a recession in 2013-2014 demonstrates that fiscal multipliers are relatively small. But Robert Waldmann did it first, and better than I was doing:

Robert Waldmann: 2013 and All That: "There is continued discussion...

...of how fiscal tightening in the first quarter of 2013 (the fiscal cliff in January and Sequestration in March) was followed by decent growth in the second half of 2014.... I have two more thoughts. First... there was a contractionary fiscal shock... and a contractionary forward guidance of monetary policy shock.... No matter what one’s view of the relative effectiveness of fiscal policy and of non standard monetary policy at zero lower bound, one would expect disappointing growth... very disappointing compared to forecasts of rapid growth reducing the output gap as all past US output gaps have shrunk. READ MOAR

Second the lags people use are getting extremely long and variable. The debate was triggered by the surprisingly high growth in the third quarter of 2014... six quarters after.... This is very odd data analysis...

And:

Robert Waldmann: 2013 and All That II: "A fairly large number of economists...

...have argued that Keynesians predicted that the fiscal cliff January 2013 and sequestration March 2013 would cause a recession. A fairly large number of Keynesian economists have denied personally making that prediction.... it is fairly easy to decide if the orthodox Keynesian view was that 2013 fiscal contraction would cause a recession... [because] official... forecasting models range from new Keynesian (with added epicycles) for the Bank of England, to paleo-Keynesian for the Fed.... Official forecasts... give a hostage to fortune....

Strikingly the CBO seems to have qualitatively nailed it. The report starts:

Economic growth will remain slow this year, CBO anticipates, as gradual improvement in many of the forces that drive the economy is offset by the effects of budgetary changes that are scheduled to occur under current law. After this year, economic growth will speed up, CBO projects, causing the unemployment rate to decline and inflation and interest rates to eventually rise from their current low levels.

They didn’t predict the polar vortex, but seem to have done OK.... The CBO didn’t forecast a recession.... 'In November 2012, the CBO specifically addressed the “fiscal cliff” here: http://www.cbo.gov/publication/43694 and predicted a very mild recession IF Congress did absolutely nothing to moderate or prevent the tax hikes and budget cuts scheduled for January 2013. Of course, we didn’t go off the cliff. Instead, we went on a moderated glide path.'...

The Fed... is a methodologically and ideologically diverse bunch... but it sure looks as if they all or almost all expected an acceleration of GDP growth from 2013 to 2014... no mention of any possible recession in 2013.... [The] Federal Bank of New York staff forecasts... "Significant fiscal drag in 2013", showing they are Keynesian. No recession forecast.... A year later, May 2013, with funds actually sequestered, the FRBNY staff seemed not to have changed their views.... I don’t see any special challenge to the CBO New York Fed orthodoxy in the data.

Over at Equitable Growth: Robert Waldmann: Fiscal Multipliers and the Fiscal Cliff: Focus

Over at Equitable Growth: I was writing a piece about the rather strange belief I hear that the failure of the U.S. economy to fall into a recession in 2013-2014 demonstrates that fiscal multipliers are relatively small. But Robert Waldmann did it first, and better than I was doing:

Robert Waldmann: 2013 and All That: "There is continued discussion...

...of how fiscal tightening in the first quarter of 2013 (the fiscal cliff in January and Sequestration in March) was followed by decent growth in the second half of 2014.... I have two more thoughts. First... there was a contractionary fiscal shock... and a contractionary forward guidance of monetary policy shock.... No matter what one’s view of the relative effectiveness of fiscal policy and of non standard monetary policy at zero lower bound, one would expect disappointing growth... very disappointing compared to forecasts of rapid growth reducing the output gap as all past US output gaps have shrunk. READ MOAR

Second the lags people use are getting extremely long and variable. The debate was triggered by the surprisingly high growth in the third quarter of 2014... six quarters after.... This is very odd data analysis...

And:

Robert Waldmann: 2013 and All That II: "A fairly large number of economists...

...have argued that Keynesians predicted that the fiscal cliff January 2013 and sequestration March 2013 would cause a recession. A fairly large number of Keynesian economists have denied personally making that prediction.... it is fairly easy to decide if the orthodox Keynesian view was that 2013 fiscal contraction would cause a recession... [because] official... forecasting models range from new Keynesian (with added epicycles) for the Bank of England, to paleo-Keynesian for the Fed.... Official forecasts... give a hostage to fortune....

Strikingly the CBO seems to have qualitatively nailed it. The report starts:

Economic growth will remain slow this year, CBO anticipates, as gradual improvement in many of the forces that drive the economy is offset by the effects of budgetary changes that are scheduled to occur under current law. After this year, economic growth will speed up, CBO projects, causing the unemployment rate to decline and inflation and interest rates to eventually rise from their current low levels.

They didn’t predict the polar vortex, but seem to have done OK.... The CBO didn’t forecast a recession.... 'In November 2012, the CBO specifically addressed the “fiscal cliff” here: http://www.cbo.gov/publication/43694 and predicted a very mild recession IF Congress did absolutely nothing to moderate or prevent the tax hikes and budget cuts scheduled for January 2013. Of course, we didn’t go off the cliff. Instead, we went on a moderated glide path.'...

The Fed... is a methodologically and ideologically diverse bunch... but it sure looks as if they all or almost all expected an acceleration of GDP growth from 2013 to 2014... no mention of any possible recession in 2013.... [The] Federal Bank of New York staff forecasts... "Significant fiscal drag in 2013", showing they are Keynesian. No recession forecast.... A year later, May 2013, with funds actually sequestered, the FRBNY staff seemed not to have changed their views.... I don’t see any special challenge to the CBO New York Fed orthodoxy in the data.

Liveblogging World War I: January 26, 1915: Harry S. Truman to Bess Wallace

Letter from Harry S. Truman to Bess Wallace, January 26, 1915:

Grandview Jan. 26, 1915

Dear Bess:

I am going to try and send you a Wednesday letter.

I have been chasing to town every day on account of Uncle Harry. He has been almost on the point of cashing in. I can't get him to come home. I took Mamma in yesterday and she couldn't even get him to come. I took her to the Orpheum in the afternoon. She sure enjoyed it. It is a fairly good bill, but if Martin Beck pays Lina Abarbanell two thousand dollars a week he'd better save his money and buy booze. She claims to be the Bernhardt of song. She has the movement all right but not the voice.

You don't know how sorry I am to hear you are confined to your couch. I am very sure you'd rather be in most any other place. I had our tickets exchanged for next Saturday evening. If you're not well enough to go then I'll trade them off again etc. ad lib. until you can go.

Your letter has never come yet. I suppose Uncle Samuel is reading it at Washington or some other wayside station. I had purchased a foot warmer and had two more side curtains put on so that Old Lizzie was as warm as a church. I think she was right disappointed at not getting herself tired out. I am going to have to take her back to the factory though as she is suffering from a worse knock than before she was fixed. I have an idea that the 'expert' who worked on her jimmied her innards a little to get her brought back. He wanted to put on a new piece and I wouldn't let him. If I can make Stafford believe he fixed it wrong, I can get it fixed over for nothing.

I am going to send you a Life for last week. The cover is very good if the insides are not.

I am hoping to see you soon.

Will split this letter and write another the end of the week.

Most sincerely, Harry

Protip for Authorities: Live from Tampa Airport

Dear Tampa Airport: Protip: Have a script that checks to be sure your wifi network is not currently wedged before you broadcast the announcement of free wifi over the public address system...