J. Bradford DeLong's Blog, page 1094

Hoisted from Other People's Archives from 97 Years Ago: The Already-Written Fidel Castro Obituary--(Rosa Luxemburg, "The Russian Revolution" Chapter 6)

Fidel Castro's obituary was written 97 years ago:

Rosa Luxemburg:
The Russian Revolution (Chap.6):
"Lenin says [in The State and Revolution: The Transition from Capitalism to Communism]...

...the bourgeois state is an instrument of oppression of the working class; the socialist state, of the bourgeoisie. To a certain extent, he says, it is only the capitalist state stood on its head. This simplified view misses the most essential thing: bourgeois class rule has no need of the political training and education of the entire mass of the people, at least not beyond certain narrow limits. But for the proletarian dictatorship that is the life element, the very air without which it is not able to exist.

‘Thanks to the open and direct struggle for governmental power,’ writes Trotsky, ‘the laboring masses accumulate in the shortest time a considerable amount of political experience and advance quickly from one stage to another of their development.’

Here Trotsky refutes himself and his own friends. Just because this is so, they have blocked up the fountain of political experience and the source of this rising development by their suppression of public life! Or else we would have to assume that experience and development were necessary up to the seizure of power by the Bolsheviks, and then, having reached their highest peak, become superfluous thereafter. (Lenin’s speech: Russia is won for socialism!!!)

In reality, the opposite is true! It is the very giant tasks which the Bolsheviks have undertaken with courage and determination that demand the most intensive political training of the masses and the accumulation of experience.

Freedom only for the supporters of the government, only for the members of one party – however numerous they may be – is no freedom at all. Freedom is always and exclusively freedom for the one who thinks differently. Not because of any fanatical concept of ‘justice’ but because all that is instructive, wholesome and purifying in political freedom depends on this essential characteristic, and its effectiveness vanishes when ‘freedom’ becomes a special privilege.

The Bolsheviks themselves will not want, with hand on heart, to deny that, step by step, they have to feel out the ground, try out, experiment, test now one way now another, and that a good many of their measures do not represent priceless pearls of wisdom. Thus it must and will be with all of us when we get to the same point–even if the same difficult circumstances may not prevail everywhere.

The tacit assumption underlying the Lenin-Trotsky theory of dictatorship is this: that the socialist transformation is something for which a ready-made formula lies completed in the pocket of the revolutionary party, which needs only to be carried out energetically in practice. This is, unfortunately – or perhaps fortunately – not the case. Far from being a sum of ready-made prescriptions which have only to be applied, the practical realization of socialism as an economic, social and juridical system is something which lies completely hidden in the mists of the future. What we possess in our program is nothing but a few main signposts which indicate the general direction in which to look for the necessary measures, and the indications are mainly negative in character at that. Thus we know more or less what we must eliminate at the outset in order to free the road for a socialist economy. But when it comes to the nature of the thousand concrete, practical measures, large and small, necessary to introduce socialist principles into economy, law and all social relationships, there is no key in any socialist party program or textbook. That is not a shortcoming but rather the very thing that makes scientific socialism superior to the utopian varieties.

The socialist system of society should only be, and can only be, an historical product, born out of the school of its own experiences, born in the course of its realization, as a result of the developments of living history, which – just like organic nature of which, in the last analysis, it forms a part – has the fine habit of always producing along with any real social need the means to its satisfaction, along with the task simultaneously the solution. However, if such is the case, then it is clear that socialism by its very nature cannot be decreed or introduced by ukase. It has as its prerequisite a number of measures of force – against property, etc. The negative, the tearing down, can be decreed; the building up, the positive, cannot. New Territory. A thousand problems. Only experience is capable of correcting and opening new ways. Only unobstructed, effervescing life falls into a thousand new forms and improvisations, brings to light creative new force, itself corrects all mistaken attempts. The public life of countries with limited freedom is so poverty-stricken, so miserable, so rigid, so unfruitful, precisely because, through the exclusion of democracy, it cuts off the living sources of all spiritual riches and progress. (Proof: the year 1905 and the months from February to October 1917.) There it was political in character; the same thing applies to economic and social life also. The whole mass of the people must take part in it. Otherwise, socialism will be decreed from behind a few official desks by a dozen intellectuals.

Public control is indispensably necessary. Otherwise the exchange of experiences remains only with the closed circle of the officials of the new regime. Corruption becomes inevitable. (Lenin’s words, Bulletin No.29) Socialism in life demands a complete spiritual transformation in the masses degraded by centuries of bourgeois rule. Social instincts in place of egotistical ones, mass initiative in place of inertia, idealism which conquers all suffering, etc., etc. No one knows this better, describes it more penetratingly; repeats it more stubbornly than Lenin. But he is completely mistaken in the means he employs. Decree, dictatorial force of the factory overseer, draconian penalties, rule by terror – all these things are but palliatives. The only way to a rebirth is the school of public life itself, the most unlimited, the broadest democracy and public opinion. It is rule by terror which demoralizes.

When all this is eliminated, what really remains? In place of the representative bodies created by general, popular elections, Lenin and Trotsky have laid down the soviets as the only true representation of political life in the land as a whole, life in the soviets must also become more and more crippled. Without general elections, without unrestricted freedom of press and assembly, without a free struggle of opinion, life dies out in every public institution, becomes a mere semblance of life, in which only the bureaucracy remains as the active element. Public life gradually falls asleep, a few dozen party leaders of inexhaustible energy and boundless experience direct and rule. Among them, in reality only a dozen outstanding heads do the leading and an elite of the working class is invited from time to time to meetings where they are to applaud the speeches of the leaders, and to approve proposed resolutions unanimously – at bottom, then, a clique affair – a dictatorship, to be sure, not the dictatorship of the proletariat but only the dictatorship of a handful of politicians, that is a dictatorship in the bourgeois sense, in the sense of the rule of the Jacobins (the postponement of the Soviet Congress from three-month periods to six-month periods!) Yes, we can go even further: such conditions must inevitably cause a brutalization of public life: attempted assassinations, shooting of hostages, etc. (Lenin’s speech on discipline and corruption.)

Noted for Your Afternoon Procrastination for January 10, 2015

Over at Equitable Growth--The Equitablog

What Was and Is the Real Macroeconomic Research Frontier?: Daily Focus
[Raj Chetty: Behavioral Economics and Public Policy http://equitablegrowth.org/2015/01/10...)
Andrew Kaczynski (2012): Mitt Romney's Long, Careful Health Care Evolution
Nick Bunker's Weekend Reading
Tim Worstall: Someone Needs To Tell Vox.com That Numbers Don't Work Quite This Way
Tim Duy: Wage Growth-or Lack of -Continues to Surprise

Plus:

Things to Read on the Afternoon of January 10, 2014

Must- and Shall-Reads:

Scott Walker:
"In the end, there’s no real substantive difference between a federal exchange, or a state exchange, or the in between, the hybrid, the partnership..."
Mark Thoma:
Economist's View: Kathy Ruffing 'Getting It Wrong on Disability Insurance'
John Kay:
Rise in US and UK inequality principally due to financialisation and executive pay
Financial Times:
Markets Prophesy Secular Stagnation
http://www.ft.com/intl/cms/s/0/0c10f33e-966c-11e4-922f-00144feabdc0.html#axzz3OAA6Wox1


Raj Chetty:
Behavioral Economics and Public Policy

Andrew Kaczynski (2012):
Mitt Romney's Long, Careful Health Care Evolution
Paul Krugman:
Orthodoxy, Heterodoxy, Ideology
Nick Bunker:
Weekend Reading
Tim Duy:
Wage Growth--Lack of--Continues to Surprise
Tim Worstall:
Someone Needs To Tell Vox.com That Numbers Don't Work Quite This Way
Mark Thoma:
Retail jobs are better than you might think
Mark Thoma:
Economist's View: The Mythical Confidence Fairy

And Over Here:

Over at Equitable Growth: What Was and Is the Real Macroeconomic Research Frontier?: Daily Focus
Liveblogging World War II: January 10, 1945: Eleanor Roosevelt

Raj Chetty:
Behavioral Economics and Public Policy

Andrew Kaczynski (2012):
Mitt Romney's Long, Careful Health Care Evolution:
"Romney’s path... tracked a hardening Republican reaction... in real time.... January 30[, 2009] speech... [called for] market dynamics, free choice, and personal responsibility, a phrase typically used to refer to the individual mandate.... [On] February 27, Romney said: ‘We need to advance a conservative plan... based on free choice, personal responsibility, and private medicine... like what I proposed in Massachusetts... the plan is a good model.’... In May, Romney wrote an op-ed... largely based off his Massachusetts plan, including an individual mandate.... On June 1... Romney thanked Heritage for helping craft health care reform in Massachusetts.... On June 14 Romney... said the President could learn from RomneyCare, saying: ‘I understand the President considers his plan in respects following the model of Massachusetts. Let's learn from our experience.’... [On] June 24 Romney said... of the President reviving the exchanges put in place in RomneyCare, ‘we put together an exchange, and the president’s copying that idea. I’m glad to hear that’...

Paul Krugman:
Orthodoxy, Heterodoxy, Ideology:
"I’m very much in accord with Simon Wren-Lewis on the remarkable unhelpfulness of recent heterodox assaults... misidentifies the problem... gives aid and comfort to the wrong people.... Standard macroeconomics does NOT justify the attacks on fiscal stimulus and the embrace of austerity.... Formal modeling and quantitative analysis doesn’t justify the austerian position; on the contrary, austerians had to throw out the models and abandon statistical principles to justify their claims.... So if you go around claiming that model-oriented, quantitative economics gave rise to austerity mania, you’re getting the story all wrong... [and] covering up for the austerians’ intellectual sins..."

Nick Bunker:
Weekend Reading:
"Frances Coppola on the fiscal theory of monetary expansion... Ben Walsh argues that the boom in oil jobs... is over.... Shane Ferro reports that one million Americans are at risk of losing access to the Supplemental Nutrition Assistance Program.... The United States has the highest GDP per capita, but as Matt Bruenig shows, incomes at the bottom are higher in other developed countries.... What explains the decline in the labor share of income? Dylan Matthews looks into the competing hypotheses.... Cardiff Garcia lays out his observations from the annual Allied Social Sciences Associations meeting.... Ben Casselman and Andrew Flowers... noticed that economists seem to be more engaged with policy."

Tim Duy:
Wage Growth--Lack of--Continues to Surprise:
"The December employment report... surprising combination of solid job gains and decelerating wage growth.... Overall, the story is one of ongoing improvement in labor markets.... Wage growth, however, nosedived.... If June rolls around with no inflation and no greater wage growth, the Fed will find it challenging to begin normalization.... The wage numbers present a dilemma for the Fed. Simply put, no wage growth means the Fed can't be particularly confident that inflation will trend toward target.... The Fed is still looking at June, but they need some more help from the data. Of course, June is still a long way off..."

Tim Worstall:
Someone Needs To Tell Vox.com That Numbers Don't Work Quite This Way:
"A TEU being a twenty foot container equivalent unit, the standard measure of these things, half the size of the container you see on an 18 wheeler trucking rig.... You can get 30 cubic metres of packing peanuts into one and not have to worry very much about the weight. But 30 cubic metres of gold or lead placed on the back of a truck will have the axles exploding into metal shards pretty much instantaneously.... Less than half the density of water and it’s volume that is important. More than that and it’s the weight.... The larger picture about shipping and containerisation [is that] it’s almost certainly true that this one technology is vying with the mobile phone as being the most important influence upon our lifestyles since WWII. Certainly vastly more important than anything that has come out of Congress or the House of Commons in that time. If you want to know quite how much difference then I recommend The Box (although I think he manages to underplay the economic impact)....And both the Vox and BBC pieces are interesting as well. Even if MSC Oscar cannot in fact carry 900 million cans of dog food."

Mark Thoma:
Retail jobs are better than you might think:
"Many workers shy away from retail jobs believing they're occupations with low pay, low benefits and low opportunity. Is this true? Are they mostly dead-end, minimum wage jobs?.. While these jobs do not pay as well as jobs in the manufacturing sector, large, modern, multi-establishment retail chains pay better than many people believe and offer better opportunities for advancement than many other occupations.... Retail pays better than service sector jobs: '...service occupations paid $13.97 and $11.15 for men and women, respectively, while retail occupations paid $16.28 and $12.79...' In addition, although retail jobs pay less on average than manufacturing jobs, employment in manufacturing has declining, while the growth in retail has been 'pronounced.' In 1963, multi-establishment retail chains accounted for 20 percent of all retail. But by 2000, the share had grown to 35 percent, and it has continued to grow since. Furthermore, and importantly, retail jobs offer more opportunity for advancement than most other jobs due to the high rate of growth of retail establishments and the multi-tiered nature of these firms..."

Mark Thoma:
Economist's View: The Mythical Confidence Fairy:
"After harming the recovery from the Great Recession--and making it harder for the unemployed to find jobs--through austerity, blocking jobs bills, and standing in the way of additional stimulus measures, Republicans are trying to take credit for the recovery. They made things worse, and when they stopped doing harmful things, the economy improved and they want credit for that.... That deserves ridicule. Republicans were terribly wrong about Federal Reserve policy, just as wrong about austerity and the confidence fairy, yet here they are once again telling us that the confidence fairy rather than the end of their awful policy is responsible for the recovery."

Should Be Aware of:

Kevin Kelly:
Cool Tools: "So Good They Can’t Ignore You" by Cal Newport
Greg Botelho and Christine Sever:
George Zimmerman arrested on suspected domestic violence - CNN.com
Dave Weigel:
"I can remember when Romney stood out from the 2012 field bc the REAL GOP talent was waiting for 2016..."
Robert Skidelsky:
"It is wicked to be appropriating hundreds of billions of dollars to guard against largely imaginary dangers while starving our healthcare, education and welfare services of the money they need to help the poor to a better life. Yet the foreign policy and defence establishments are busily constructing a narrative in which an arms build-up appears a justified response to Russian expansionism..."
Simon Wren-Lewis:
Heterodox Laziness (or Worse)

 

Jack Baruth:
Why Chrysler's rotary gear selector is the way of the future: "Your parents went on month-long roadtrips carrying only a crumpled map and a classical education but you have to take five electronic devices and three food items just to pick up your 0.8 children from their aftercare program. There's no room for any of it in your car. It's one thing to put up with this indignity so you can drive a Dodge Viper TA 2.0, but are you really willing to deal with having a 2.1-amp-rapid-charged iPhone 6XXS raising the temperature between your legs to Death Valley levels all day because your center console is devoted to pretending your mid-priced sedan or luxury-equipped CUV has a fake stick shift?..."

Glenn Fleishman:
The Software and Services Apple Needs to Fix: "Marco Arment's excellent post on Apple's current state of development has this pithy sentence: 'The software quality has fallen so much in the last few years that I’m deeply concerned for its future.'... None of us think Apple will go out of business. Rather, that we will lose the reasons we have selected using Apple's products over those of other companies..."

Rebecca Schoenkopf:
Inside The Collapse of The New Yorker’s Inside The Collapse of The New Republic: "We haven’t had much--or anything?--to say about the mass hissyfit at The New Republic, because, honestly, how could we care? But that was before we read Ryan Lizza’s Inside the Collapse of The New Republic at the New Yorker, to which we could only sit at our kitchen table and moan OH SAVE US SWEET JESUS. Lizza, a TNR alumnus who points out he is hardly an impartial observer--which is fine!--paints the whole wretched episode in gleaming detail. But the details he unearths--how to put this--make his colleagues and cohorts look like a bunch of petty children so insulated in their shiny, important workplace they’ve forgotten how the rest of the world, not to mention journalism, works..."

Pascal-Emmanuel Gobry:
How the Catholic Church made its peace with Charlie Hebdo - The Week:
"At the Second Vatican Council, the Catholic Church... accept[ed] religious freedom and pluralism. But let's face it: the Catholic Church fought liberalism, and lost. I love the Catholic Church more than anything in the world, and I hope I would die for her if I had to--but I am glad she lost. Charlie Hebdo reminded me that... I am also a man of Enlightenment liberalism.... An attack against people with whom I disagree on almost everything [is] an attack on my values, on what I believe in and cherish. That is the value system that any civilization worth cherishing must incorporate--and that is the value system that we must defend against these jihadi barbarians."

Paul Krugman:
Deflation As Betrayal:
"Ambrose Evans-Pritchard writes that Europe’s slide toward deflation amounts to a ‘betrayal’ of Southern Europe. This sounds over the top, but it is the simple truth.... The ECB should have been aggressively expanding as soon as it became clear that inflation was sliding. There should have been a determined effort to offset fiscal austerity in southern Europe with expansion in the north. Instead, inflation and deficit obsession were allowed to rule for years; and now the situation is very close to irretrievable. The market clearly thinks the cause is almost lost. German 5-year bonds are yielding zero; index bonds of the same maturity are yielding -0.2. That’s an implied forecast of just 0.2 percent inflation over the next five years, which means intense deflationary pressure in the south. Really not good."

Jim Henley:
Jim’s Rule of Buts:
"The most obvious example of the power of Jim’s Rule of Buts is the classic apology. Compare, ‘I’m sorry I yelled at you, but what you said made me really angry.’ and ‘What you said made me really angry, but I’m sorry I yelled at you.’ As a coordinating conjunction, ‘but’ joins independent and theoretically equal clauses. But in practice, what follows ‘but’ always dominates what precedes it. So if you really want to apologize, and really want to mollify your interlocutor, you really want to make sure the apology itself is in the dominant position. Otherwise, you’re not apologizing; you’re excusing.... If you really want to soothe rather than rile, learn Jim’s Rule of Buts today! It will do you good for many days to come."

Over at Equitable Growth: What Was and Is the Real Macroeconomic Research Frontier?: Daily Focus

Over at Equitable Growth: The last time I taught graduate macroeconomics to students about to take their pre-thesis oral exams was way, way, way, way back in 2003. This was what I thought then was the real research frontier in macroeconomics--the papers and directions which people should be extending and in which people should be working if they wanted to do economic research that would truly add to our stock of useful tools and boost our understanding of the macroeconomy.

Which of the bets that I wanted people to place more than a decade ago now have paid off? Which have not? What are the papers from which people should start thinking about further progress in these directions now? And what bets should I have advised graduate students a decade and more ago to make, but did not?

Brad DeLong : Economics 236: Your Last Course in Macroeconomics

PART I: A QUICK OVERVIEW

January 22: Introduction

Olivier Blanchard (2000), "What Do We Know About Macroeconomics that Fisher and Wicksell Did Not?" Quarterly Journal of Economics 115:4 (November), pp. 1375-1410.
Olivier Blanchard (1990), "Why Does Money Affect Output? A Survey", in B.M. Friedman and F. Hahn eds, Handbook of Monetary Economics, 1990, Vol 2, 779-835.

January 29: Unemployment and Institutions READ MOAR

Dale Mortensen and Christopher Pissarides (1994), "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies 61, pp 397-416.
Olivier Blanchard and Justin Wolfers (2000) "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, 110 (March), pp. C 1 —33.
Olivier Blanchard and Lawrence Katz (1997), "What We Know and Do Not Know About the Natural Rate of Unemployment", Journal of Economic Perspectives 11-1 (Winter), pp. 51-73.
Steven Nickell (1997), "Unemployment and Labor Market Rigidities: Europe versus North America", Journal of Economic Perspectives 11-3 (Summer), pp. 55-74.

February 5: Contracts and Aggregate Output

Robert Townsend (1979) "Optimal Contracts and Competitive Markets with Costly State Verification", Journal of Economic Theory 21 (October), pp. 265-293.
Benjamin Bernanke and Mark Gertler (1989), "Agency Costs, Net Worth, and Business Fluctuations," American Economic Review 79 (March), pp . 14-31.

February 12: Taking Technology-Shock Theories Seriously

Susanto Basu and John Fernald (2000), "Why Is Productivity Procyclical? Why Do We Care?" (Cambridge: NBER Working Paper W7940, October).
Andrei Shleifer (1986), "Implementation Cycles," Journal of Political Economy 94-6 (December), pp. 1163-1190.
Dale Jorgenson and Kevin Stiroh (2000), "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity 2000-1 (Spring), pp. 125-235.

PART II: THE GROWING STRENGTH OF BEHAVIORALIST APPROACHES

February 19: The Rationale for Behavioralist Approaches

George Akerlof and Janet Yellen (1985), "Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria?" American Economic Review 75-4 (September), pp. 708-20.
J. Bradford DeLong, Andrei. Shleifer, Lawrence Summers, and Robert Waldmann (1990), "Noise Trader Risk in Financial Markets," Journal of Political Economy 98-4 (August), pp. 703-38.
Richard Thaler (1986), "The Psychology and Economics Conference Handbook," Journal of Business 59-4 part 2 (October), pp. S279 - 284.

February 26: Unemployment and Behavioral Economics

George Akerlof (1982), "Labor Contracts as Partial Gift Exchange", Quarterly Journal of Economics pp. 543-69.
Truman Bewley (1998), "Why Not Cut Pay?" European Economic Review pp. 459-490.
Matt Rabin (1998), "Economics and Psychology," Journal of Economic Literature 36-1 (March)pp. 11-46.

March 5: Money Illusion and Aggregate Output

George Akerlof and Janet Yellen (1985), "A Near-Rational Model of the Business Cycle, with Wage and Price Inertia," Quarterly Journal of Economics pp. 823-838.
Robert Shiller (1997) "Public Resistance to Indexation: A Puzzle", Brookings Papers on Economic Activity 1997-1 (Spring), pp. 159-228.
E. Shafir, P. Diamond, and A. Tversky (1997), "Money Illusion", Quarterly Journal of Economics 112-2 (May), pp. 341-374.
George Akerlof, William Dickens, and George Perry, "The Macroeconomics of Low Inflation", Brookings Papers on Economic Activity, 1996-1 (Spring), pp. 1-76

March 12: Savings and Economic Psychology

David Laibson (1997), "Golden Eggs and Hyperbolic Discounting," Quarterly Journal of Economics, 112-2 (May), pp. 443-77.
D Laibson, A. Repetto, and J. Tobacman (1998), "Self-Control and Saving for Retirement", Brookings Papers on Economic Activity, 1998-1 (Spring), pp. 91-196.
D Laibson, A. Repetto, and J. Tobacman (1998), "A Debt Puzzle" http://www.economics.harvard.edu/facu....
E. Duflo and E. Saez (2001), "Participation and Investment Decisions in a Retirement Plan: The Influence of Colleagues' Choices" (Cambridge: NBER Working Paper W7735).

March 19: What Should Investors Do?

Hal Varian (1987), "The Arbitrage Principle in Financial Economics," Journal of Economic Perspectives, 1-2 (Fall), pp. 55-72.
Stephen LeRoy (1989), "Efficient Capital Markets and Martingales," Journal of Economic Literature 27, pp. 1583-1621.
Narayana R Kocherlakota (1995), "The Equity Premium: It’s Still a Puzzle," Journal of Economic Literature, 1996-1, pp. 42-72.
John H. Cochrane (1991), "Volatility Tests and Efficient Markets: A Review Essay, Journal of Monetary Economics 27, pp. 463-485.

FIRST FIVE-PAGE THESIS PAPER IDEA DUE

April 2: What Do Investors Do?

Terence Odean (1998), "Are Investors Reluctant to Realize Their Losses?" Journal of Finance, pp. 1775-1798
Terence Odean (1999), "Do investors trade too much?" American Economic Review (December).
Andrei Shleifer and Robert Vishny (), "The Limits of Arbitrage", Journal of Finance 52, 25-55.

April 9: Whither Behavioral Macro?

Matt Rabin (2001), "Risk Aversion and Expected-Utility Theory: A Calibration Theorem", Econometrica http://emlab.Berkeley.EDU/users/rabin...
John Gruber and Botond Koszegi (2001), "Is Addiction 'Rational'?: Theory and Evidence," Quarterly Journal of Economics 116-4 (Fall), pp. 1261-1305.
Xavier Gabaix and David Laibson (2001) "Bounded rationality and directed cognition" http://web.mit.edu/xgabaix/www/papers....
E. Fehr, E. S. and Gachter (1998), "Reciprocity and Economics: The Economic Implications of Homo Reciprocans", European Economic Review pp.845-59 http://www.iew.unizh.ch/home/fehr/.
Matt Rabin (1993), "Incorporating Fairness into Game Theory and Economics", American Economic Review 103, pp.1058-82.

PART III: GROWTH ONE LAST TIME

April 16: Corruption and Political Blockages to Growth

Andrei Shleifer and Robert Vishny (1992), "Corruption," Quarterly Journal of Economics 108, pp. 599-618.
Paulo Mauro (1995), "Corruption and Growth," Quarterly Journal of Economics 110-3, pp. 681-713.
Jonathan Temple and Paul Johnson (1998), "Social Capability and Economic Growth," Quarterly Journal of Economics 113, pp. 965-990.
William Easterly and Ross Levine (1997), "Africa's Growth Tragedy: Policies and Ethnic Divisions," Quarterly Journal of Economics 112, pp. 1203-1250.

SECOND FIVE-PAGE THESIS IDEA PAPER DUE

April 23: Trade and Growth

Paul Krugman and Anthony Venables (1995), "Globalization and the Inequality of Nations," Quarterly Journal of Economics 110, pp. 857-880.
Paul Krugman (1991), "Increasing Returns and Economic Geography," Journal of Political Economy 99-3 (June), pp. 483-499.
Gene Grossman and Elhanen Helpman (1990), "Comparative Advantage and Long-Run Growth," American Economic Review 80-4 (September), pp. 796-815
Jaume Ventura (1997), "Growth and Interdependence," Quarterly Journal of Economics 112-1 (February), pp. 57-84.
Daron Acemoglu and Jaume Ventura (2001), "The World Income Distribution" (Cambridge: NBER Working Paper W8083, January).

April 30: Institutional Roots of Growth

Lant Pritchett (1997), "Divergence, Bigtime," Journal of Economic Perspectives 11-3 (Summer), pp. 3-18.
Daron Acemoglu, Simon Johnson, and James Robinson (2002), "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," Quarterly Journal of Economics 117 (November).
Daron Acemoglu, Simon Johnson, and James Robinson (2001), "The Colonial Origins of Comparative Development," American Economic Review 91-5 (December), pp. 1369-1401.
Stanley Engerman and Kenneth Sokoloff (1997), "Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies," in Steven Haber, ed., How Latin America Fell Behind (Palo Alto: Stanford University Press).

THIRD FIVE-PAGE THESIS PAPER IDEA DUE

Liveblogging World War II: January 10, 1945: Eleanor Roosevelt

Eleanor Roosevelt:
My Day:

WASHINGTON, Tuesday—Here is the quotation I promised you yesterday, to illustrate the point I made about prejudices and lack of knowledge.

Why not write a column on where the British troops are? Since they were given leave to go home to increase the English population, you hear no more about them. Is theirs permanent leaves? It sure seems like it! Why do our boys have to fight alone in this war the British got us into?

The writer seems to have forgotten that the British had nothing to do with our going into the war.

It was the Japanese attack on our islands at Pearl Harbor that took us into the war, and the Germans later declared war on us. The British have been fighting on every front with us steadily, and they have had fewer leaves for their troops considering the length of time they have been on various fronts. Even out in the Pacific, the Australians and New Zealanders are fighting side by side with us.

By now you would think there would be no one left in this country who thinks that the British got us into this war. In fact, you would think Pearl Harbor Day would settle that once and for all. But no one is so blind as a person who does not wish to see. As I said yesterday, prejudice inherited from our ancestors will often lead us by the nose if we do not make up our minds to face facts as they are and to obtain knowledge.

I think it has been desperately hard for our soldiers to fight for us so far away from their own shores. It is easier for men to fight on the ground which they love, for they can feel that, step by step, they are defending their own homeland. Yet while this has been harder for our men, it has made it infinitely easier for us here at home. It makes it possible for us to gripe about the little things because we do not know what the big things would be like.

The sooner we face up to the fact that this is our war, and that we owe our men more because they kept it away from our shores at a cost of greater hardship to themselves, the sooner we at home will do the job which other men and women civilians have done and are doing all over the world. They probably do not like it any better than we do; but they know what war on their own doorstep is like, and that makes it easier for them to face their own great hardships. No one can imagine the loss and suffering of those whose dear ones die or are wounded in combat, and that has come to many, many homes in this country. But as civilians in our daily lives, we are not enduring the hardships of nations nearer the war.

In case you have not seen it, there is a publication by the U.S. Camera Publishing Corporation which is worth your looking through. It is called 'Born Free and Equal,' and the text and photographs are by Ansel Adams. It is one of the publications designed to temper one of our prejudices, and I think it does it very successfully.

Noted for Your Nighttime Procrastination for January 9, 2015

Over at Equitable Growth--The Equitablog

BLS: Employment Situation Summary
Laurence Ball and Sandeep Mazumder: Understanding Recent US Inflation
Aidan Regan: Europe’s ‘Structural Reform’ Agenda Little More than a Fairytale
Simon Wren-Lewis: Jeffrey Sachs and the Age of Diminished Expectations
Megan McArdle: Republicans Are Making Obamacare Harder to Repeal
Ben Zippered:
More U.S. jobs but paltry wage gains for most workers

Plus:

Things to Read at Night on January 9, 2015

Must- and Shall-Reads:

Paul Marshall:
"Put simply, the economy is run by the rich for the rich..."
Dina ElBoghdady:
Obama announces plan that could save home buyers hundreds of dollars a year
Roberto A. Ferdman:
"There is little empathy at the top. Most of America's richest think poor people have it easy in this country, according to a new report released by the Pew Research Center..."
Jordan Weismann:
Thomas Piketty’s Capital: How the French Professor Changed Economics Conversation in 2014
Megan McArdle:
Republicans Are Making Obamacare Harder to Repeal
Simon Wren-Lewis:
Sachs and the Age of Diminished Expectations
Aidan Regan:
Europe’s ‘Structural Reform’ Agenda Little More than a Fairytale
Laurence Ball and Sandeep Mazumder:
Understanding Recent US Inflation

And Over Here:

For the Weekend...
Liveblogging World War II: January 9, 1945: Battle of Luzon
Bloomberg Surveillance This Morning: Live from 59 & Lexington

Megan McArdle:
Republicans Are Making Obamacare Harder to Repeal:
"Weakening the employer mandate is not going to get [Republicans] any closer to repealing Obamacare.... If they actually succeeded in getting this bill passed... they... further entrench the 2010 health-care bill.... A weaker employer mandate will push more people onto the exchanges. Many of those people would be receiving subsidies. The more people who receive subsidies, the harder repeal of the whole law will be.... It's hard to see why Republicans want to push more people into that part of the system, and hasten the sclerosis that makes programs so hard to kill or change once they have accumulated a lot of users. We haven't even discussed the extra cost of providing subsidies to millions more people. Republicans seem to like taking votes against Obamacare so much that they'll vote for anything that undoes what Democrats put in place--even if that thing costs a bunch of money, and takes them further from their stated goal of repealing the whole bill. They need a better hobby..."

Simon Wren-Lewis:
Sachs and the Age of Diminished Expectations:
"I am getting increasingly fed up with people telling me that US growth disproves the idea that austerity is bad for you at the Zero Lower Bound (ZLB). Jeffrey Sachs just joins a long list.... With recent US experience, there is no case against Keynesian analysis to answer. This suggests to me two things. First, lots of people are desperate to show that critics of austerity at the ZLB are wrong, and are prepared to make nonsense arguments to that end. This may be particularly true if you very publicly proclaimed the need for austerity in 2010.... Second, it is a sad day when anyone thinks that 2.3% growth is 'brisk' when we are recovering from a deep recession and interest rates have remained at the ZLB. It is so very dangerous when these diminished expectations become internalised by the elite..."

Aidan Regan:
Europe’s ‘Structural Reform’ Agenda Little More than a Fairytale:
"So what is the core economic idea that [Europe's power-brokers] share? It is the magic economy dust formula of ‘structural reforms’. It is the idea that if national governments just sprinkle enough structural reforms into the economy to enhance market competition they will, eventually, generate the conditions for employment growth. This is captured perfectly in a recent analysis by Marco Buti, the Director General (DG) of the Economic and Finance Commission. He outlines a trilemma for the Eurozone: we cannot have the welfare state in a fixed monetary union that requires reducing fiscal deficits to 3 per cent of GDP. This is true. In order to keep the welfare state, he proposes a consistent policy ‘trinity’: banking union, symmetric adjustment (i.e. inflation in the core) and deep structural reforms. These, we are told, will generate the conditions for economic growth. In turn, with full employment, the welfare state is secure. This is the core idea behind the policy response to the Eurozone crisis and it is worth stating clearly if its merits can be tested against rational argument and empirical evidence..."

Laurence Ball and Sandeep Mazumder:
Understanding Recent US Inflation:
"Researchers have put forward two explanations for the failure of the US inflation rate to fall as far during the Great Recession as the Phillips curve would predict. Either expectations have been successfully anchored by the Fed’s inflation target, or the Phillips curve is focusing on the wrong thing--aggregate unemployment instead of short-term unemployment. This column shows that the two explanations are complementary; together, they explain the puzzle, but separately they cannot..."

BLS:
Employment Situation Summary:
"Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent.... The unemployment rate declined by 0.2 percentage points... and the number of unemployed persons declined by 383,000 to 8.7 million.... The civilian labor force participation rate edged down by 0.2 percentage point
to 62.7 percent in December."

Should Be Aware of:

Chris Blattman:
Please Don’t Write Well, Write Clearly
Leah Goodman:
David Miranda and the Human-Rights Black Hole

 

Neil Collins:
Archaic BoE was ill-equipped to prevent financial crisis:
"Spare a sympathetic thought... for the 15 non-executive directors of the Court of the Bank of England in 2007.... There... for the burnishing of their CVs, curiosity, and perhaps a sense of public duty... none is a central banker... all jolly busy with day jobs.... When it comes to the technical consequences of rescuing Northern Rock, they have little to add. Actually, it is worse than that. Their chairman, John Parker, reprimands them for leaking the appointment of a deputy governor (to the FT, naturally) and implies that if they cannot keep quiet, they will be told even less.... Given this environment, it is hardly surprising that the volumes covering the Great Banking Crisis portray Court members as flapping around like fish on a slab. Since even the technocrats were bewildered by the speed and novelty of the events... it seems particularly unfair to savage the non-execs. The whole set-up was archaic, but it suited the executives to keep it that way..."

Liveblogging World War II: January 9, 1945: Battle of Luzon

Wikipedia:
Battle of Luzon:

The assault on Luzon was launched... on 9 January 1945, codenamed S-day.... More than 70 Allied warships enter[ed] the Lingayen Gulf. Pre-assault bombardment of Japanese shore positions from these ships began at 7:00.... The landing forces faced strong opposition from Japanese kamikaze aircraft. The escort carrier Ommaney Bay was destroyed.... The landings... were carried out by the 6th Army under the command of General Walter Krueger. Approximately 175,000 troops from the 6th Army landed along the 20-mile (32 km) beachhead within a few days.... The U.S. forces did not meet much resistance until they reached the Clark Air Base on 23 January. The battle there lasted until the end of January, and after capturing the base, XIV Corps advanced toward Manila...

Bloomberg Surveillance This Morning: Live from 59 & Lexington

Tom Keene: Bloomberg Surveillance

http://search1.bloomberg.com/search/?content_type=video&page=1&template=tv&q=DeLong

Noted for Your Nighttime Procrastination for January 8, 2015

Over at Equitable Growth--The Equitablog

Today's Essay at Trying to Understand Current FedThink: Daily Focus
Jon Hilsenrath: Could Lower 10-Year Yields Spark A More Aggressive Fed?
Nick Bunker: How patents might hold back innovation
Financial Times: Markets Prophesy Secular Stagnation
The Early Impact of the Affordable Care Act: Comment
Comment on Eberly and Krishnamurthy: Efficient Credit Policies in a Housing Debt Crisis
Afternoon Must-Read: Gillian Tett: US Export Economy Fails to Import Jobs

Plus:

Things to Read on the Evening of January 8, 2014

Must- and Shall-Reads:*

Nick Bunker:
How patents might hold back innovation
Helaine Olen:
All of Us Worried, None of Us Angry About Inequality
Charlie Warzel:
"‘Move fast and break things’ doesn’t work when the ‘things’ are real people"
Jon Stewart:
On Charlie Hebdo: "Very few people go into comedy as an act of courage"
Gillian Tett:
US Export Economy Fails to Import Jobs
Financial Times:
Markets Prophesy Secular Stagnation
Jon Hilsenrath:
Could Lower 10-Year Yields Spark A More Aggressive Fed?
Joshua Green:
Why the Fight Over the Keystone Pipeline is Completely Divorced From Reality
Peter Beinart:
Jeb Bush Presidential PAC

And Over Here:

Today's Essay at Trying to Understand Current FedThink: Daily Focus
Hoisted from the Archives: My "Sisyphus as Social Democrat: A review of 'John Kenneth Galbraith: His Life, His Politics, His Economics', by Richard Parker,"
Liveblogging World War II: January 8, 1945: Battle of the Bulge
Weather Elsewhere...

Gillian Tett:
US Export Economy Fails to Import Jobs:
"In 2009, exports created 9.7m jobs; by 2013 the tally was 11.3m.... Back in 2009, each billion dollar’s worth of exports was creating 6,763 jobs. In 2013, it was 5,590 jobs. That is a fall of 17 per cent--in just four years.... American companies are becoming more innovative and competitive on the world stage.... There is a more pessimistic twist to all this: what will the surplus workers do?... Mr Kleinfeld has recently started working with community colleges on retraining programmes, in a bid to help workers to adapt. Other companies are doing the same. But what is lamentably missing is any coherent policy from Washington to support such endeavour.... That needs to change--well before the current recovery loses steam."

Financial Times:
Markets Prophesy Secular Stagnation:
"This is indeed a downbeat story. It is neither healthy nor sustainable for long-term rates to stay this low for this long.... Savers cannot survive on negative real returns. Pension funds are already struggling.... Although finance ministries sell bonds more easily in such an environment, they should not look to prolong it. Their policies should aim at restoring growth to levels that would lead to a higher level of interest rates.... he first recourse is for central banks to show fewer qualms in pursuit of higher inflation. But a useful next step would be for governments to take advantage of these cheap rates to borrow and invest.... It is hard to imagine a future finance minister wishing he had borrowed less when the price was negative."

Jon Hilsenrath:
Could Lower 10-Year Yields Spark A More Aggressive Fed?:
"Falling long-term interest rates pose a quandary for Federal Reserve officials.... If falling yields are a reflection of diminishing inflation prospects... it ought to prompt the Fed to hold off on raising short-term interest rates.... If... lower long-term rates are a reflection of investors pouring money into U.S. dollar assets, flows that could spark a U.S. asset price boom, it might prompt the Fed to push rates higher sooner.... The latter interpretation is less conventional, but it is one that New York Fed President William Dudley made.... 'During the 2004-07 period, the (Fed) tightened monetary policy nearly continuously, raising the federal funds rate from 1 percent to 5.25 percent in 17 steps. However, during this period, 10-year Treasury note yields did not rise much... the availability of mortgage credit eased.... With the benefit of hindsight, it seems that either monetary policy should have been tightened more aggressively or macroprudential measures should have been implemented in order to tighten credit conditions in the overheated housing sector.' Mr. Dudley’s conclusion was that the pace of the Fed’s short-term interest rate moves this time around ought to be dictated in part by whether the rest of the financial system is moving with or against the Fed’s intentions when it decides it ought to start restraining credit creation: 'When lift-off occurs, the pace of monetary policy normalization will depend, in part, on how financial market conditions react to the initial and subsequent tightening moves.'... The challenge for the Fed is that one can make any number of arguments about the cause of falling long-term rates today.... The Fed’s next policy meeting is three weeks away. It is clear officials will spend a considerable time debating the correct response to a perplexing lurch down in long-term rates."

Joshua Green:
Why the Fight Over the Keystone Pipeline is Completely Divorced From Reality:
"Several years ago, liberals... settled on Keystone because the oil it would transport... is especially damaging to the environment.... Conservatives seized on Keystone because it offered a clear example of liberals prioritizing the environment over the jobs the pipeline’s construction would create, an effective political attack in a lousy economy. President Obama’s... only added to the appeal.... Keystone has attained tremendous symbolic importance for both Democrats and Republicans. But... the pipeline’s actual importance to oil markets, the economy and the environment has steadily diminished. Whoever wins, the ‘victory’ will be pointless and hollow..."

Peter Beinart:
Jeb Bush Presidential PAC:
"If Jeb Bush is trying to show Republicans that he’s conservative enough to be their nominee, he has a strange way of showing it.... His... political action committee, The Right to Rise... income inequality as a core economic problem.... In a Pew poll last spring, only 19 percent of Republicans called the divide between rich and poor a ‘very big problem.’ And when asked why that gap exists, a plurality of Republicans said it was because the poor don’t work as hard.... The notion that... Americans... have rights to a minimum standard of economic well-being was made famous by Franklin Roosevelt.... Ever since FDR outlined these ‘positive rights,’ rejecting them has constituted an important part of what it means to be an American conservative.... ‘The right to rise’ may sound more entrepreneurial than the right to health care, housing, and a decent job, but it amounts to the same thing.... In the 2011... op-ed... [Bush] did say that Americans also have the right to fall.... But now that he’s running for president as the Republican who can win over non-Republicans, Jeb has jettisoned that part.... His rhetoric effectively makes upward mobility a government obligation.... It’s unlikely to impress real conservatives, who will sooner or letter realize that a politician they already distrust is trying to have it both ways."

Should Be Aware of:

Tinyletter Archive: Yet, Somehow, Reality Continues to Elude My Grasp... http://tinyletter.com/braddelong/archive
Francis Wilkinson:
Charlie Hebdo and the War on Cosmopolitanism
Hussein Ibish:
The False Piety of the Hebdo Hoodlums

 

James Pethokoukis:
The GOP said Obamanomics would kill the economy. It didn't. Now what?:
"Making the case that an improving economy would be improving even faster with smarter GOP policies isn't as politically compelling as simply pointing to an economy in flames.... Also, a lot harder.... The GOP's recent aversion to the Federal Reserve makes it tough to offer up active monetary policy as an alternate theory--despite its explanatory power--for why the U.S. is doing far better than other advanced economies.... It's not just that Republicans need to offer a positive agenda; they also need one that goes beyond an obsession with deficits and debt and that tackles the everyday concerns of most Americans.... One big worry for many parents is that their kids will have less opportunity than they did.... The U.S. economy has plenty of pressing problems, just often not the ones Republicans have been most worried about."

Paul Krugman:
Professors, Politicians, and Moments of Truth: "Simon Wren-Lewis... whether US growth despite sequestration is a huge problem for Keynesians.... Look at the scatterplot.... [Has the U.S.] done... better enough to be considered a serious challenge?... Really? The question then becomes, why would... [an] economist with a reputation to defend... make that claim?... Wren-Lewis points us to a 2010 article... co-authored by Jeff Sachs and... George Osborne... all about the invisible bond vigilantes and the confidence fairy.... 2010 was a real moment of truth.... Being a forthright Keynesian at the time meant sticking out your neck... running very much counter to... the Very Serious People.... As it turned out, however, the Keynesian view came out looking very good, and siding with the VSPs was not a good move after all.... If you’re an economist... it’s not so easy to walk away unscathed.... Enough said."

Justin Fox:
Samsung Gets Mugged in Androidland:
"What just happened here? What happened is that Samsung had a fun little run as the premium maker of devices in a burgeoning technology ecosystem it doesn't control, and now the inexorable forces of competition, commoditization, modularity and the like have brought it back to earth... selling smartphones is turning out to be less lucrative than it looked to be a couple of years ago. This shouldn't surprise anyone who was reading the business pages in the 1990s.... History never repeats itself, it only rhymes, so there are also differences.... Nobody controls the Android ecosystem the way that Microsoft and Intel controlled PCs.... Apple has done a much better job this time around of defining a role for itself. It’s got... 11.7 percent to Android’s 84.4.... But that 11.7 percent represents the most affluent, profitable customers.... I have no idea how long Apple can maintain this lock on unimaginative affluent people. (I needed to buy a new phone this week, spent about 30 seconds thinking about it, then ordered an iPhone 6.)... In the... Android ecosystem... consumers... especially [the] less-affluent... are getting the windfall. Thanks, Google! Sorry, Samsung! And now let me go check if my new iPhone 6 has arrived yet."

Afternoon Must-Read: Gillian Tett: US Export Economy Fails to Import Jobs

Gillian Tett:
US Export Economy Fails to Import Jobs:
"In 2009, exports created 9.7m jobs...

...by 2013 the tally was 11.3m.... Back in 2009, each billion dollar’s worth of exports was creating 6,763 jobs. In 2013, it was 5,590 jobs. That is a fall of 17 per cent--in just four years.... American companies are becoming more innovative and competitive on the world stage.... There is a more pessimistic twist to all this: what will the surplus workers do?... Mr Kleinfeld has recently started working with community colleges on retraining programmes, in a bid to help workers to adapt. Other companies are doing the same. But what is lamentably missing is any coherent policy from Washington to support such endeavour.... That needs to change--well before the current recovery loses steam.

Comment on Eberly and Krishnamurthy: Efficient Credit Policies in a Housing Debt Crisis

Comment on:
Janice Eberly and Arvind Krishnamurthy:
[Efficient Credit Policies in a Housing Debt Crisis](http://www.brookings.edu/~/media/proj... 2014/fall2014bpea_eberly_krishnamurthy.pdf):

Very nicely done by the very sharp Janice Eberly and Arvind Krishnamurthy, yet after reading it I am more mystified than I was before. I am more mystified that conforming-refinancing loans with equity kickers were not offered to all underwater and above-water homeowners alike. I am mystified that, instead, the debt overhang was removed via foreclosures and some case-by-case renegotiations. It was brutal, as discussant Paul Willen had acknowledged, and it is not clear that it is over yet. Even though during the housing bubble a million single-family homes above trend were being built each year, since 2007 the annual total has dropped to half a million, far below the long-run trend of 1.2 million.

Now the country is 4 million single-family homes short based on pre-housing-bubble trends. That translates into 4 million families living in makeshift situations--primarly their relatives’ basements and attics. Yet, strangely, this enormous overhang is not exerting any pressure for a single-family housing construction recovery.

It is clear that both these potential homeowners and the lenders are unwilling to take on the types of risk they routinely took before 2008. The single-family housing credit channel has not been restored to its old status. Is this a good finance pattern? Was the previous pattern a poor idea in the first place? Or is the country now incurring enormous societal welfare losses due to the Obama administration's failure to use its administrative powers to fix the housing-finance credit channel?