J. Bradford DeLong's Blog, page 1108

Over at Equitable Growth: The Federal Reserve Discounts the Bond Market's View: Daily Focus

Over at Equitable Growth Torsten Slok says:

And Tim Duy says:

Tim Duy: Challenging the Fed: Both Paul Krugman and Ryan Avent are pushing back on the Federal Reserve's apparent intent to raise rates in the middle of next year. Why is the Fed heading in this direction?... I don't think that the Fed is reacting to external criticism. READ MOAR

What I think is that there are two basic views of the world. In one view, the post-2007 malaise is simply the hangover from a severe financial crisis. Time heals all wounds, including this one, and the recent data suggests such healing is underway.

The alternative view is that the economy is suffering from secular secular stagnation... suggests the need for a very low or negative real interest rates to maintain full employment.... I believe that the consensus view on the Fed is the former, that the malaise is simply temporary ("a temporary inconvenience") and now ending.... The Summary of Economic Projections['s] implied equilibrium Federal Funds rate is around 3.75%... below what might have been perceived as normal ten years ago... [but from] slower potential growth rather than secluar stagnation....

Gavin Davies... catches... Stanley Fischer... reject[ing] the main monetary policy implication of the secular stagnation hypothesis.... I find it hard to believe that Fischer carries anything but extreme intellectual weight within the Fed.... This is not to say that I do not share Krugman's and Avent's concerns. I most certainly do....

If you want to know what the Fed is thinking at this point, a journalist needs to push Yellen on the secular stagnation issue at next week's press conference. Does she or the committee agree with Fischer? And does she see any inconsistency with the SEP implied equilibrium Federal Funds rates and the current level of long bonds?

As Torsten Slok points out, 10-Year Treasury yields are now where they were in September 2011, when the Fed Funds futures told us that it was 24 months until the first Federal Reserve rate hike, even though right now Federal Funds futures are telling us that the market expects the first Federal Reserve rate hike to come in eight months.

Since the start of 2009, the 10-Year Treasury and the Federal Funds futures have traded in a pattern in which a one-month acceleration in the relative timing of the first rate hike is associated with a ten-basis-point--an 0.1%-point--increase in the 10-Year Treasury rate. Right now the 10-Year Treasury diverges from that pattern by 160 basis points--by 1.6%-point.

That means one of two things, or a mixture:

The bond market expects that the long-term nominal interest rate at which Federal Funds will settle post-normalization is 1.6% points lower than the 4.5% or so it expected back in those halcyon days before last January.

The bond market expects a roughly 50% chance that the Federal Reserve's attempt to normalize interest rates will fail, and that in two or three years the Federal Reserve will find itself doing a Sweden--cutting the short-term safe nominal interest rate back to zero again, and so reentering the liquidity tap.

Given the balance of risks, the FOMC would have to be discounting the possibility of option (2) and that the bond market's view of the world is correct by roughly 100% for it to continue on its current policy path.

Evening Must-Read: Jack Lew: Fires Back at Elizabeth Warren

Jack Lew:
Fires Back at Elizabeth Warren: 'You need multiple perspectives' | WashingtonExaminer.com:
"You need multiple perspectives represented in a department like the Treasury. I think you’re hearing more from the few than from the many.... It is a natural thing for there to be some lingering concerns about whether or not the institutions... that caused the last crisis are truly changed. It’s a lot to expect for the American people who are struggling with wages that are not rising as fast as they should to say everything’s fine."

If Jack Lew wants to say that Antonio Weiss is the best candidate he can find who would accept the position of Under Secretary of the Treasury for Domestic Finance, he should be able to make a much stronger case than that.

The surface case against Antonio Weiss is that the job needs someone who is (a) a superb regulator, or (b) a superb bond seller, and that he is, instead, (c) a superb merger-maker who has (d) profited immensely from the current order on Wall Street and thus inevitably predisposed to assume that the current order on Wall Street is a good one. The case against is that (d) could be accepted if it came with (a) or (b), but it doesn't: it comes with (c) instead.

The deep case against Antonio Weiss is that the Treasury has, from the Senate's perspective, behaved very badly under Obama--starting with its inability to find a way to spend the first $50 billion tranche on mortgage relief that it had promised to spend. As a result, the Treasury deserves no deference--and must overcome a high bar in order to get the people it wants into big cushy plum jobs like Under Secretary of the Treasury.

The deep case for Antonio Weiss is that Under Secretary of the Treasury is not, for him, a big cushy plum present of a job--it pays less by a lot than Lazard, it does not materially boost his future earning power on the future speaker circuit (as it would for an academic), it is the equivalent of taking out the garbage.

Now people like to think that they are doing something useful, and taking out the garbage is a very useful thing to do, and it is very satisfying to look back and think that you have successfully taken out the garbage--especially if you are unsure or ambivalent about the social value of the rest of what you have done in your career. I know that the fact that I may have turned the scales (as everyone working on it turned the scales) in passing the 1993 Clinton Reconciliation bill, and probably was a (one of many) decisive factors in making sure that bill included a major expansion of the Earned Income Tax Credit and thus a significant constructive shift in America's income distribution is a great comfort and source of pride to me.

But if the Senate were doing Antonio Weiss a favor by confirming him, it is only that it is letting him have a try at being an effective public servant for part of his career. It is not giving him a big plum cushy job as a present.

And the government functions better when jobs are filled.

So: I ask Elizabeth Warren; I ask Simon Johnson; I ask Franken, Durbin, Shaheen, Sanders, and Manchin; I ask every Republican Senator save Hatch and Bennet: if not Antonio Weiss, who? Who is your Yellen to Weiss-as-Summers? Who is your Warren to Weiss-as-Barr? Who who would take the job would be better at the job than Antonio Weiss, and why?

Noted for Your Afternoon Procrastination for December 11, 2014

Over at Equitable Growth--The Equitablog

Ariel Kalil: Addressing the Parenting Divide to Promote Early Childhood Development for Disadvantaged Children
Daniel Strauss: Sen. Warren Tears Into Defenders Of Poetry-Loving Obama Treasury Nominee Antonio Weiss
Dylan Scott: Sorry, Haters: Here's Another Big Way Obamacare Is Working As Planned
Bridget Ansel:
Nutrition, pregnancy, and long-run labor market outcomes* Carter Price:
Carter Price: OECD: Inequality harms economic growth
Nick Bunker:
What’s happening to married mothers in the workforce?

Plus:

Things to Read on the Afternoon of December 11, 2014

Must- and Shall-Reads:

Amartya Sen:
Social Choice and Social Welfare
Diane Coyle and Andrew Haldane:
What’s Wrong with Economics?: It Didn't Predict the Crash--and That Isn't Its Only Flaw
Olivier Blanchard (1993):
[Movements in the Equity Premium](http://www.brookings.edu/~/media/Proj... 2/1993b_bpea_blanchard_shiller_siegel.PDF)
Federico Cingano:
Trends in Income Inequality and its Impact on Economic Growth
Mark Thoma: Inequality Harms the Most Vulnerable
Rosa Brooks: Tick, Tick, Bull, Shit: Don’t believe the CIA’s ticking time bomb excuse when it says it had to torture
Guillermo Roditi Dominguez:
The Personal Savings Rate and the Balance of Payments
Greg Ip: The Federal Reserve: Opportunistic Overheating
Ariel Kalil: Addressing the Parenting Divide to Promote Early Childhood Development for Disadvantaged Children
Daniel Strauss: Sen. Warren Tears Into Defenders Of Poetry-Loving Obama Treasury Nominee
Andrew Sullivan: Darkness Visible: Live-Blogging The Torture Report
Dylan Scott: Sorry, Haters: Here's Another Big Way Obamacare Is Working As Planned
Paul Krugman: Jean-Claude Yellen
Dylan Matthews:
We have a spending deal

And Over Here:

Andrew Sullivan: Darkness Visible: Live-Blogging the Torture Report
Daniel Strauss: Sen. Warren Tears Into Defenders Of Poetry-Loving Obama Treasury Nominee Antonio Weiss
MOAR American Enterprise Institute-Quality Thought
Liveblogging the American Revolution: December 11, 1776: Crossing the Delaware (Going the Wrong Way...)

Ariel Kalil:
Addressing the Parenting Divide to Promote Early Childhood Development for Disadvantaged Children:
"Growing income inequality over the past three decades has created a social divide with stagnated incomes for families at the bottom of the distribution and sharply increased earnings for those at the top (Atkinson, Piketty, and Saez 2011). As the economic destinies of affluent and poor American families have diverged, so too has the educational performance of the children in these families (Reardon 2011). Socioeconomic gaps in children’s cognition and behavior open up early in life and remain largely constant through the school years (Duncan and Magnuson 2011). However, rising inequality in income is not the sole cause of the divergence in children’s achievement and behavior (Duncan et al. 2013). Parents do more than spend money on children’s development—they also promote child development by spending time with their children in cognitively enriching activities and by providing emotional support and consistent discipline. The ‘parenting divide’ between economically advantaged and disadvantaged children is large and appears to be growing over time along these dimensions (Altintas 2012; Hurst 2010; Reeves and Howard 2013). Consider the parenting time divide between economically advantaged and disadvantaged households. National time diaries show that mothers with a college education or greater spend roughly 4.5 more hours each week directly interacting with their children than do mothers with a high school diploma or less..."

Daniel Strauss:
Sen. Warren Tears Into Defenders Of Poetry-Loving Obama Treasury Nominee: In leaving Lazard, Warren noted that Weiss would receive a golden parachute of about $20 million. "For me, this is just one spin of the revolving door too many. Enough is enough," Warren said. "The response to these concerns has been, let's say, loud. First his supporters say 'come on, he's an investment banker so of course he should be qualified to oversee complicated financial work at treasury. But his defenders haven't shown his actual experience that qualifies him for this job at treasury." One of the more substantive arguments against Warren's opposition to Weiss is that he's as good as could possibly be gotten in a nominee for a top treasury position. Warren said she has supported qualified people with ties to Wall Street but that's not what Weiss is...

Andrew Sullivan:
Darkness Visible: Live-Blogging The Torture Report:
"I want to end on a positive note. Everything that happened in this damning report is because of Americans. But the report itself is a function of other Americans determined to push back against evil done in this country’s name. Those Americans have been heroes in exposing this horror from the get-go, and they include many CIA agents who knew full well what this foul program was doing to their and America’s reputation. But they also include the dogged staff of the Select Committee.... Dan Jones... was the key figure in putting this together. He was handed with literally millions of pages of often incomprehensible and weirdly filed documents, and somehow had to pull them all together.... There were many early mornings when he carried on, not knowing if any of this would ever see the light of day--and, of course, both the CIA and the Obama administration did all they could to stop its release. It’s so easy to dismiss them many people working in government in Washington.... This report is arguably the most important act of public service in holding our government accountable in modern times. The great achievement of this report, moreover, is its meticulousness. No one can now claim that these torture sessions gave us anything of any worth.... They will still claim torture worked – but they will be lying or rather desperately repeating talking points that the CIA’s own documents have now categorically refuted. So the last word goes to Feinstein: 'All of us owe them our deepest thanks. Even on this darkest of days, they give me hope.'... Ambers notes that this is not an act of interrogation: 'Over and over, the CIA justified ratcheting up the techniques based not on any intelligence or evidence that the detainees did know more than they were sharing, but instead to increase their own confidence that the detainees had shared everything they knew. In other words, the thinking was: "We’ll enhance his interrogations until it’s not possible that he could withhold actionable information from us." "Our assumption is the objective of this operation is to achieve a high degree of confidence that [AbuZubaydah] is not holding back actionable information concerning threats to the United States," was how Zubaydah’s top interrogator put it in a cable to headquarters. Even though the CIA was telling the executive branch that the prisoner was holding back information and that they needed to rough him up to get it out of him, the operational order for the torture itself said otherwise.' If this is the rationale for torture, then every person in interrogation should be tortured. You’ve got to prove they don’t have anything else to tell us. I guess that was the kind of decision made when pondering whether to do the 151st near-drowning, after the 150th. All I want you to do is imagine if you were witnessing this scene in a movie. The interrogators would be Nazis, wouldn’t they? And now they are us."

Dylan Scott:
Sorry, Haters: Here's Another Big Way Obamacare Is Working As Planned:
"It hasn't been at the top of the conversation about Obamacare, but new evidence suggests that yet another piece of the law is working exactly as it's supposed to. A key provision of the Affordable Care Act that was designed to keep insurers from overspending on administrative costs or else be forced to rebate premiums to customers looks to be succeeding in not only reducing those costs but in lowering premiums. A new report from federal health officials, which concludes that health spending had grown at a historically slow rate in 2013, says the so-called MLR provision is helping drive the broader easing of spending growth in the industry. The medical-loss-ratio requirement mandates that insurance companies spend at least 80 percent of premiums on actual health benefits. It is one of the various provisions intended to help shape the behavior of insurance companies, making the market more efficient and cost-effective for consumers. Administrative costs are kept down, meaning that more of people's money is going to real care. 'The medical loss ratio requirement and rate review mandated by the ACA put downward pressure on premium growth,' officials from the federal Centers for Medicare and Medicaid Services wrote in their report. Overall private insurance spending, of which premiums are a part, grew at a 2.8-percent rate -- the lowest since at least 2007. As Larry Levitt, vice president at the non-partisan Kaiser Family Foundation, put it to TPM in an email: 'That is how it's intended to work.'"

Paul Krugman:
Jean-Claude Yellen:
"My guess--and it’s only that--is that they have, maybe without knowing it, been bludgeoned into submission by the constant attacks on easy money. Every day the financial press, many of the blogs, cable financial news, etc, are full of people warning that the Fed’s low-rate policy is distorting markets, building up inflationary pressure, endangering financials stability. Hard-money arguments, no matter how ludicrous, get respectful attention; condemnations of the Fed are constant. If I were a Fed official, I suspect that I would often find myself wishing that the bludgeoning would just stop, at least for a while--and perhaps begin looking for an opportunity to prove that I’m not an inflationary money-printer, that I can take away punchbowls too. So my guess is that the Fed, given an improving US job market, is strongly tempted to buy some peace by hiking rates a little, just to quiet the critics for a few months. But the objective case for a rate hike just isn’t there. The risks of premature tightening are huge, and should not be taken until we have a truly solid recovery that includes strong wage gains and inflation clearly on track to rise above target. We don’t have any of that, and if the Fed acts nonetheless, it has the makings of tragedy."

Dylan Matthews:
We have a spending deal:
"Congressional negotiators have reached a deal to fund the federal government through September (except the Department of Homeland Security, because immigration).... Support... lukewarm at best among House Democrats, and several House Republicans are already pledging to oppose it. The deal will cancel the votes of the thousands of DC voters who backed marijuana legalization last month. But it'll also stop the DEA from cracking down on medical marijuana dispensaries in states where that's legal. The deal also dramatically loosens limits on donations to political parties. That might not be a bad policy, though. There's a pretty remarkable provision giving Blue Cross Blue Shield a break on a key Obamacare rule. Funds for crime victims are nearly quadrupled in the bill. The deal repeals part of Dodd-Frank meant to prevent banks from making risky investments with federally-insured money. Here's why it's important. That provision led Elizabeth Warren to come out strongly against the spending deal. There are a whole bunch of other random riders too, including ones delaying rules on whole grains and sodium in school lunches and blocking trucker-sleep regulations."

Should Be Aware of:

NASA Wallops Visitor Center

BooMan:
Not that anyone asked, but I never held and/or enjoyed any office or position of honor, trust or profit at The New Republic, whether under the regime of racist Marty Peretz or otherwise. Therefore, I do not have to say that I am in no position to criticize those who did hold such positions..."
Elizabeth Stoker Bruenig:
The Personal and the Political
Hellbanning
Margaret Sullivan:
[The Torture Report and The Times](http://publiceditor.blogs.nytimes.com... Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body)
Ann Telnaes:
A particularly disturbing CIA interrogation technique

 

Kevin Outterson:
10 Million Deaths by 2050 from Antimicrobial Resistance?:
"The Review on Antimicrobial Resistance, chaired by economist Jim O’Neill. The numbers are eye-popping: 10 million deaths by 2050, with equally huge global economic costs. These numbers dwarf the estimates in the 2013 CDC Threat Assessment. All microbial resistance is included in these estimates, bacteria, viruses, parasites and fungi. Much of the global burden of resistance will come in malaria, TB and HIV, in addition to bacteria.... Many are viewing these estimates as a ‘worst case’ scenario, assuming the governments of the world don’t achieve global collective action to address the problem of antimicrobial resistance. But this might not represent the worst case. The models do not include true pandemics such as the 1918 influenza. Last year, no one would have guessed that 2014 would be the year of Ebola. My bottom line: these model estimates require much careful additional work, but correctly identify the magnitude of the problem and the potential macroeconomic impact. It should also help us frame an appropriate response."

Paul Krugman:
American Evil: "As the Bush administration fades away in the rearview mirror, my sense is that many people — even liberals — are forgetting what it was really like. It becomes, in memory, just another administration whose policies you disapprove of, like the reign of Bush the elder. But it wasn’t. It was an administration that deliberately misled us into war, exploiting an atrocity to pursue an agenda that had nothing to do with that atrocity — and causing vast amounts of death and destruction in the process, not to mention undermining American strength. And it was an administration under which America became a torturer, with the enthusiastic approval of top officials. This wasn’t normal. And if it’s going be normal from now on, all the more reason to remember the Bush years with horror."

Liveblogging the American Revolution: December 11, 1776: Crossing the Delaware (Going the Wrong Way...)

The History Place:

Washington takes his troops across the Delaware River into Pennsylvania. The next day, over concerns of a possible British attack, the Continental Congress abandons Philadelphia for Baltimore. Among Washington's troops is Thomas Paine, author of Common Sense, who now writes:

These are the times that try men's souls: The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of his country: but he that stands it NOW deserves the love and thanks of man and woman. Tyranny, like Hell, is not easily conquered. Yet we have this consolation with us, that the harder the conflict, the more glorious the triumph.

MOAR American Enterprise Institute-Quality Thought: Live from the Association for Research and Enlightenment

We here are all old enough and wise enough to know that, whenever somebody's opening bid is blaming-the-victim rather than blaming-the-perpetrator, the primary goal is not to help keep future potential victims from becoming victims.

The primary goal is, rather, to keep victims in their place--and perpetrators in theirs.

Seriously: If the American Enterprise Institute wanted to stop shredding its reputation, it should replace Charles Murray. With David Frum, perhaps?

Over on The Twitter Machine: https://twitter.com/delong/status/543038648653193217:

@charlesmurray: If you are drunk or high, to what degree can you say you are a victim when something bad happens to you? A question to take seriously.

@jonathanshainin: "Most people know me as a famous racist, but you might also enjoy my work promoting rape culture."

@delong: .@charlesmurray If UR without yr mesnie of 25 armed cap-a-pie, can U say UR a victim when bad things happen? Serious question!

@delong: .@charlesmurray if UR not in full burkha attended by yr father’s 4 eunuch guards, can U say UR a victim when bad things happen? Serious Q!

@delong: .@charlesmurray if U leave the harim & R female, can U say UR a victim when bad things happen? Serious question!

@delong: .@charlesmurray those of us men who actually like women want women to feel as though anyplace we R is a safe space for them

@StephenFrug: @delong @charlesmurray And for "like women" read "have an ounce of decency"

@nicasaurus: @delong @charlesmurray What if U R in a coma?

@delong: .@charlesmurray cross-burning thug…

@huzzahmpls: Everything you wanted to know about Charles Murray but were afraid to ask ($289 on lunch!) http://t.co/WPVFajgCWt @delong @charlesmurray

@arosaen: So much for collegiality among public intellectuals-->"@delong: .@charlesmurray cross-burning thug…"

@delong: .@arosaen "cross-burning thug" is just descriptive, not evaluative... @charlesmurray

@BellCV: @delong @charlesmurray When a person is impaired does he lose his property rights? No, we hold that dear. Shd bodies receive less protection?

@nicasaurus: @BellCV @delong @charlesmurray Bell throws Murray a curve. Neat.

BellCV: @nicasaurus @delong Haha. Thanks! His logic threw me for a loop so that seems fair.

@mumbly_joe: @delong If you're black and in the same town as @charlesmurray after sunset, isn't it also sort of YOUR fault what happens next? Super-srs Q

@delong: .@mumbly_joe seriously: we're @charlesmurray to get drunk & somebody rape him, it would be horrible & not his fault at all...

Afternoon Must-Read: Daniel Strauss: Sen. Warren Tears Into Defenders Of Poetry-Loving Obama Treasury Nominee Antonio Weiss

If Elizabeth Warren and Simon Johnson had names--or a name--of a better candidate than Antonio Weiss who would take the job of Undersecretary of the Treasury, they would have a much stronger case than they do.

To argue for Janet Yellen over Larry Summers as Fed Chair was not silly. To argue for Elizabeth Warren over Michael Barr as CFPB Director was not silly.

To argue for an empty seat over Antonio Weiss is, however, a much, much harder lift to make...

Daniel Strauss:
Sen. Warren Tears Into Defenders Of Poetry-Loving Obama Treasury Nominee: In leaving Lazard, Warren noted that Weiss would receive a golden parachute of about $20 million. "For me, this is just one spin of the revolving door too many. Enough is enough," Warren said. "The response to these concerns has been, let's say, loud. First his supporters say 'come on, he's an investment banker so of course he should be qualified to oversee complicated financial work at treasury. But his defenders haven't shown his actual experience that qualifies him for this job at treasury." One of the more substantive arguments against Warren's opposition to Weiss is that he's as good as could possibly be gotten in a nominee for a top treasury position. Warren said she has supported qualified people with ties to Wall Street but that's not what Weiss is...

They need an alternative candidate or candidates. Badly.

Morning Must-Read: Andrew Sullivan: Darkness Visible: Live-Blogging the Torture Report: Daily Focus

Morning Must-Read: Andrew Sullivan:
Darkness Visible: Live-Blogging The Torture Report:
"I want to end on a positive note...

Everything that happened in this damning report is because of Americans. But the report itself is a function of other Americans determined to push back against evil done in this country’s name. Those Americans have been heroes in exposing this horror from the get-go, and they include many CIA agents who knew full well what this foul program was doing to their and America’s reputation. But they also include the dogged staff of the Select Committee....

Dan Jones... was the key figure in putting this together. He was handed with literally millions of pages of often incomprehensible and weirdly filed documents, and somehow had to pull them all together.... There were many early mornings when he carried on, not knowing if any of this would ever see the light of day--and, of course, both the CIA and the Obama administration did all they could to stop its release.

It’s so easy to dismiss them many people working in government in Washington.... This report is arguably the most important act of public service in holding our government accountable in modern times. The great achievement of this report, moreover, is its meticulousness. No one can now claim that these torture sessions gave us anything of any worth.... They will still claim torture worked – but they will be lying or rather desperately repeating talking points that the CIA’s own documents have now categorically refuted.

So the last word goes to Feinstein:

All of us owe them our deepest thanks. Even on this darkest of days, they give me hope....

Ambers notes that this is not an act of interrogation:

Over and over, the CIA justified ratcheting up the techniques based not on any intelligence or evidence that the detainees did know more than they were sharing, but instead to increase their own confidence that the detainees had shared everything they knew. In other words, the thinking was: "We’ll enhance his interrogations until it’s not possible that he could withhold actionable information from us." "Our assumption is the objective of this operation is to achieve a high degree of confidence that [Abu Zubaydah is not holding back actionable information concerning threats to the United States," was how Zubaydah’s top interrogator put it in a cable to headquarters. Even though the CIA was telling the executive branch that the prisoner was holding back information and that they needed to rough him up to get it out of him, the operational order for the torture itself said otherwise.

If this is the rationale for torture, then every person in interrogation should be tortured. You’ve got to prove they don’t have anything else to tell us. I guess that was the kind of decision made when pondering whether to do the 151st near-drowning, after the 150th. All I want you to do is imagine if you were witnessing this scene in a movie. The interrogators would be Nazis, wouldn’t they? And now they are us.

https://www.google.com/#safe=off&...

I hope, for the sake of the souls of those who gave me pushback, I will get some apologies today.

Noted for Your Morning Procrastination for December 10, 2014

Over at Equitable Growth--The Equitablog

Alfred Kazin (1989): The New Republic: A Personal View
Peter Orszag: The Battle Over Douglas Elmendorf
Sam Ro: Crude Oil Cost Of Production
Ryan Avent: The Fed Prepares to Make a Mistake

Plus:

Things to Read on the Morning of December 10, 2014

Must- and Shall-Reads:

Ratna Sahay and Preya Sharma:
Emerging Markets & Volatility: Lessons from the Taper Tantrum
Bruce Bartlett:
The Joint Economic Committee in the Early 1980s: Keynesians versus Supply-Siders
Jason Zengerle:
The Civil Rights Movement Is Going in Reverse in Alabama
Larry Elliott:
Revealed: how the wealth gap holds back economic growth
Peter Sacco:
Venezuela's Plummeting Bolívar Dips into Hyperinflation
Alfred Kazin (1989): THE NEW REPUBLIC: A PERSONAL VIEW
Peter Orszag: The Battle Over Douglas Elmendorf--and the Inability to See Good News
Sam Ro: Crude Oil Cost Of Production
Ryan Avent: The Fed prepares to make a mistake
Ta-Nehisi Coates:
The New Republic: An Appreciation
James Heckman (1995):
Cracked Bell

And Over Here:

Liveblogging the American Revolution: December 10, 1776: Particularly to the People of Pennsylvania...
Hoisted from the Archives from June 2013: Michael Kinsley Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging
David Keohane Sends Us to Our Laugh of the Day: Live from the Amherst MA Whole Foods
:
This Morning in the Old New Republic: Live from Atkins Farm
Liveblogging World War II: December 9, 1944: Italy--Captain John Brunt VC
A Dialogue on a Focus Group from the Unfogged Commentariat on the New Republic: The Honest Broker for the Week of December 12, 2014
Monday DeLong Smackdown Watch: Scott Sumner

(Via Corey Robin:)
Alfred Kazin (1989):
THE NEW REPUBLIC: A PERSONAL VIEW:
"I am just a vear older than THE NEW REPUBLIC and have been writing for it, on and off, since I was a 19-year-old City College senior in 1934.... What I read in the front of the book is informative, saucy, in tone terribly sure of itself. It gives me no general enlightenment... no inspiration.... I wish I conld think of TNR as moving beyond post-leftist crowing—-beyond a certain parvenu smugness, an excessive familiarity with the inside track and the inside dope, and, above all, beyond that devouring interest in other journalists that confines so many commentaries out of Washington to triviality. I wish I could think of TNR as moving beyond the bristling, snappv, reactive common-sense of the disenchanted liberal. There are worlds within worlds, even in Washington, that are [not] apparent... to the wearilv clever, easily exasperated, heirs and guardians of the liberal democracy that is the one tradition we seem to have left."

Peter Orszag:
The Battle Over Douglas Elmendorf--and the Inability to See Good News - NYTimes.com:
"Senator Kent Conrad... asked Mr. Elmendorf whether the legislation was likely to curb the growth in health costs, as its advocates asserted. ‘From what you have seen,’ Mr. Conrad asked, ‘do you see a successful effort being mounted to bend the long-term cost curve?’ Mr. Elmendorf’s answer was clear. ‘No, Mr. Chairman,’ he said. ‘We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs.’ For anyone who remembered health care history, the moment was ominous.... Congressional Democrats knew that the budget office had the loudest voice, and their staff members got to work... to nudge the health care system away from paying for the quantity of medical care rather than the quality. Ultimately, the C.B.O. judged those provisions to be substantive. The Affordable Care Act would reduce the deficit in the long run, the budget office forecast.... A central plank of the anti-Elmendorf case is the notion that his budget office has underestimated health care costs. Senator Pat Roberts, the Kansas Republican, went so far this year as to call for a hearing on the subject. In reality, the Congressional Budget Office--like nearly every other group of health care analysts--has overestimated medical costs. We’re in the midst of a historic slowdown in the growth of medical costs.... The Affordable Care Act--specifically, those provisions meant to reward quality, like one that tries to cut down on needless hospitalization--plays some role in the slowdown"

Sam Ro:
Crude Oil Cost Of Production:

Ryan Avent:
The Fed prepares to make a mistake:
"ON FRIDAY my colleague noted that while job growth in America is hustling along, inflation remains well below the Fed's target rate.... I think... the Fed is close to making a big mistake.... Set aside potential downside risks (from a Russian financial crisis, or renewed euro-zone troubles, or a Chinese hard landing, or lord knows what else) and just focus on the dynamics within the American economy. Almost since the Fed announced that it was officially targeting an inflation rate of 2%, as measured by the price index for personal consumption expenditures, actual PCE inflation has run below the target, and often well below. It remains below target now.... You'd have to be mad to think that inflation will average 2% over the course of this business cycle. The Fed has been content to let inflation rest below target for most of the last four years.... The longer the Fed fails to hit 2% on average the more likely the public is to expect below-target inflation on an ongoing basis.... And while inflation is low interest rates will remain low.... The risk to waiting to tighten is so comparatively small. That's the worst bit. In a year or two people will find themselves wondering why the Fed made this particular error, and there simply will not be good answers to give."

Ta-Nehisi Coates:
The New Republic: An Appreciation:
"My first editor at The Atlantic came from TNR, as did the editor of the entire magazine. More than any other writer, TNR alum Andrew Sullivan taught me how to think publicly. More than any other opinion writer, Hendrik Hertzberg taught me how to write with "thickness," as I once heard him say. A semester in my nonfiction class is never quite complete without this piece by Michael Kinsley. TNR's legacy is so significant that I could never have avoided being drawn into the magazine's orbit. Even if I had wanted to.... The family rows at TNR's virtual funeral look like the "Whites Only" section of a Jim Crow-era movie-house. For most of its modern history, TNR has been an entirely white publication, which published stories confirming white people's worst instincts. During the culture wars of the '80s and '90s, TNR regarded black people with an attitude ranging from removed disregard to blatant bigotry. When people discuss TNR's racism, Andrew Sullivan's publication of excerpts from Charles Murray's book The Bell Curve (and a series of dissents) gets the most attention. But this fuels the lie that one infamous issue stands apart. In fact, the Bell Curve episode is remarkable for how well it fits with the rest of TNR's history."

Should Be Aware of:

Daniel Drezner:
The insane narrative you are supposed to believe about the torture report
Bloomberg View today announced that Justin Fox will join the opinion and analysis site on January 5 as a columnist covering corporate strategy and trends, innovation and the broad business landscape
reported.ly
Chris Dillow:
Inequality and Productivity
Alec MacGillis:
Chris Christie's Rise and Fall: Chris Christie's Entire Career Reeks: It's not just the bridge
Michael Hobbes:
Development Ideas that Work: Pay for Results and Data Analysis

 

Robert Waldmann:
"Google will protect me from any loss from the creation of the New New Republic.... I will google 'Jonathan Cohn' and find him wherever he is.... Most New Republic writers didn't stay at The New Republic. It was a gateway and Martin Peretz was not a good gatekeeper.... I think the real sincere genuine lament is for the loss of influence of TNR.... This is an expression of the liberal principle that debate should be exclusive and that participation in debate should be based on patronage by those who inherit (or marry) wealth. Or, to totally lose it... those who mourn the passing of the Old New Republic absolutely reject liberalism as such. They are not Burke mourning the passage of the age of chivalry. But they come as close as anyone can in these fallen times."

Tim Duy:
Fed Updates Ahead of FOMC Meeting:
"Bottom Line: Fed is still positioning to begin normalizing rates in the middle of 2015. The data is less of an impediment with each passing day. The time to eliminate the 'considerable period' language is fast approach. The press conference calendar argues for next week. Honestly, I hope they will skip this meeting in favor of the January meeting just to prove that every FOMC meeting is a live meeting. Alas, I think they believe they need the press conference to temper any adverse reactions from market participants. Finally, I am wary with the consensus view that the oil price decline in disinflationary. Open up to the possibility of the opposite. Look back to what you believed in 2011."

Liveblogging the American Revolution: December 10, 1776: Particularly to the People of Pennsylvania...

The representatives of the United States of America, in Congress assembled, to the people in general, and particularly to the inhabitants of Pennsylvania, and the adjacent states:

FRIENDS and BRETHREN,

WE think it our Duty to address a few Words of Exhortation to you in this important Crisis. You are not unacquainted with the History of the Rise and Progress of this War. A Plan was carried on by the British Ministry for several Years in a systematic Manner to enslave you to that Kingdom. After various Attempts in an artful and insidious Manner to bring into Practice the laying you under Tribute, they at last openly and decisively asserted their Right of making Laws to bind you in all Cases whatsoever.

Opposition was made to these Encroachments by earnest and humble Petitions from every Legislature on the Continent, and more than once by the Congress representing the whole. These were treated with the utmost Contempt. Acts of the most unjust and oppressive Nature were passed and carried into Execution, such as exempting the Soldiers charged with Murder in America from a legal Trial, and ordering them to be carried to Britain for certain Absolution, as also directing Prisoners taken at Sea to be entered on board their Ships, and obliged either to kill their own Friends or fall themselves by their Hands. We only mention these from among the many oppressive Acts of Parliament as Proofs to what horrid Injustice the Love of Dominion will sometimes carry Societies as well as Men. At the same Time to shew how insensible they will be to the Sufferings of others, you may see by the Preambles to the Acts and Addresses to the King, that they constantly extol their own Lenity in those very Proceedings which filled this whole Continent with Resentment and Horror.

To crown the whole, they have waged War with us in the most cruel and unrelenting Manner, employing not only the Force of the British Nation but hiring foreign Mercenaries, who, without Feeling, indulge themselves in Rapine and Bloodshed. The Spirit indeed of the Army in general is but too well determined, by their inhuman Treatment of those who have unhappily fallen into their Hands.

It is well known to you, that at the universal Desire of the People, and with the hearty Approbation of every Province, the Congress declared the United States free and independent; a Measure not only just, but which had become absolutely necessary. It would have been impossible to have resisted the formidable Force destined against us last Spring, while we confessed ourselves the Subjects of that State against which we had taken Arms. Besides, after repeated Trials, no Terms could be obtained but Pardon, upon absolute Submission, which every public Body in America had rejected with Disdain.
Resistance has now been made with a Spirit and Resolution becoming a free People, and with a Degree of Success hitherto which could scarce have been expected. The Enemy have been expelled from the northern Provinces where they at first had Possession, and have been repulsed in their Attempts upon the southern by the undaunted Valour of the Inhabitants. Our Success at Sea, in the Capture of the Enemies Ships, has been astonishing. They have been compelled to retreat before the northern Army. Notwithstanding the Difficulty and Uncertainty at first of our being supplied with Ammunition and military Stores, those we have now in Abundance, and by some late Arrivals and Captures there is an immediate Prospect of sufficient Clothing for the Army.

What we have particularly in View, in this Address, is not only to promote Unanimity and Vigour through the whole States, but to excite the Inhabitants of Pennsylvania, New Jersey, and the adjacent States to an immediate and spirited Exertion in Opposition to the Army that now threatens to take Possession of this City. You know that during the whole Campaign they have been checked in their Progress, and have not till within these two Weeks ventured above ten Miles from their Shipping. Their present Advances are owing not to any capital Defeat, or a Want of Valour in the Army that opposed them, but to a sudden Diminution of its Numbers from the Expiration of those short Enlistments which, to ease the People, were at first adopted. Many have already joined the Army to supply the Deficiency, and we call in the most earnest Manner on all the Friends of Liberty to exert themselves without Delay in this pressing Emergency. In every other Part your Arms have been successful, and in other Respects our sacred Cause is in the most promising Situation. We think it proper to inform and assure you that essential Services have been already rendered us by foreign States, and we have received the most positive Assurances of further Aid. Let us not then be wanting to ourselves. Even a short Resistance will probably be effectual, as General LEE is advancing with a strong Reinforcement, and his Troops in high Spirits.

What Pity is it then that the rich and populous City of Philadelphia should fall into the Enemy's Hands, or that we should not lay hold of the Opportunity of destroying their principal Army now removed from the Ships of War, in which their greatest Strength lies.

It is certainly needless to multiply Arguments in such a Situation. All that is valuable to us as Men and Freemen is at Stake. It does not admit of a Question, what would be the Effect of our finally failing. Even the boasted Commissioners for giving Peace to America have not offered, and do not now offer any Terms but Pardon on absolute Submission. And though (blessed by God) even the Loss of Philadelphia would not be the Loss of the Cause--Yet while it can be saved, let us not, in the Close of the Campaign, afford then, such Ground of Triumph; but give a Check to their Progress, and convince our Friends, in the distant Parts, that ONE SPIRIT ANIMATES THE WHOLE.
Confiding in your Fidelity and Zeal in a Contest the most illustrious and important, and firmly trusting in the good Providence of God, we wish you Happiness and Success.

Given at Philadelphia, December 10, 1776.

By order of Congress,

JOHN HANCOCK, President.

Hoisted from the Archives from June 2013: Michael Kinsley Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging

In Which I Finally Make Time to Shape-Shift Back into My Direwolf Form and Think About Michael Kinsley: Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query Weblogging (Brad DeLong's Grasping Reality...):

So I finally made a chunk of time to read and think about Michael Kinsley's response to Paul Krugman's rebuttal of Kinsley's claim that Krugman was engaged in a "misguided moral crusade against" rather than a technocratic critique of "austerity".

First and most essential, I need to set some rules here: If I'm going to be called a canine of any form, standards must be maintained.

I insist that it be not "attack dog" but either:

the Maoist "running dog", or
Jon Snow's direwolf: Ghost.

Those are the approved options. Pick one. Use it. Stick to it. It's really not hard at all to do.

Capisce?

I hope that that is now clear...

Second, I read through Kinsley's new piece.

The first seven paragraphs appeared to me to be throat-clearing--and rather strange throat clearing:

I read claims like "Krugman started this round" that link to a piece that Krugman explicitly positions as a response to Kinsley's "somewhat bizarre attack". How can you start a round with a response?

I noted that Kinsley's first seven paragraphs contain links to Evan Wolfson, Andrew Sullivan, Dan Drezner, Charles Pierce, Paul Krugman, and me--but only Paul and I are named. You don't need to name everyone you link to, you don't need to link to everyone you name, you don't need to quote everyone you name, and you don't need to quote everyone you link to. But in his first seven paragraphs Kinsley quotes from only one and names only two of the six people he links to. That's odd.

And in context it is even odder. Kinsley's earlier article contains eighteen occurrences of "Krugman"--yet not a single link to anything Krugman has written, and not a single quote from anything Krugman has written.

The previous article did have one single link. It did quote from the article it linked to. That article was by Stuckler and Basu. The name "Stuckler" did not appear in Kinsley's article at all. The name "Basu" did not appear in Kinsley's article at all. Stuckler and Basu are called "two academics", "social scientists from Stanford and Oxford", "they", and thrice "the authors", but they are never called "Stuckler and Basu".

This seemed to me to be Kinsley exhibiting a strange passive-aggressive twitch--telegraphing to Stuckler and Basu: I'm going to attack your article, and I'm going to link to it, but I'm never going to mention your names, ha, ha!!

And what is the connection of Stuckler and Basu's article to the never-quoted and never-linked to but mentioned-eighteen-times Paul Krugman?

It is, Kinsley writes:

[Krugman] did not write the paper about how austerity kills, but it fits comfortably with everything else he’s been writing on the subject.

In short: Krugman didn't write it, and I am too lazy to quote from anything Krugman did write, so I will say it "fits comfortably" with what he writes, and proceed as if Krugman did write it.

Whiskey-Tango-Foxtrot-Bang-Query-Bang-Query.

Or, Franklin Foer is paid a pretty penny by Chris Hughes to be an editor! Where is Franklin Foer in this?!?!

After those seven paragraphs, I was pleased to find that, come paragraph eight, Kinsley makes an argument:

Michael Kinsley vs. the Anti-Austerians: I was particularly intrigued by this idea of purposely holding back a recovery until you can take credit for it. Why wait for that? Paul Krugman takes credit for good economic news whenever it happens. On Krugman’s blog site (“The Conscience of a Liberal”) last week were two bits of prose side-by-side. One was an ad for his latest book, End This Depression Now! “How bad have things gotten?” the ad asks rhetorically.” How did we get stuck in what now can only be called a depression?”

Right next door is Krugman’s gloat about the recent pretty-good economic news. “So where are the celebrations,” he asks, “now that the debt issue looks, if not solved, at least greatly mitigated?” Greatly mitigated? By what? Certainly not by anyone taking Paul Krugman’s advice. He has been, in his own self-estimate, a lone, ignored voice for reason crying out in an unreasoning universe.

Unfortunately, Kinsley's argument is not a tight argument. It is a fuzzy argument. It appears to me to move in six stages:

Paul Krugman fears Republicans are trying to delay recovery until they are in power, at which point they will be able to take credit for it.
But that makes no sense, for you can take credit for recovery whenever it happens--even if you are not in power.
For example, Paul Krugman thinks we are in a depression, but he also takes credit for recent pretty-good economic news about the falling deficit
In fact, he gloats about how good the recent economic news about the deficit has been.
Even though he had nothing to do with generating the good news about the deficit.
Paul Krugman is a hypocrite.

However, if you were to say that Kinsley's paragraph is too fuzzy to understand what he is trying to say, I would have a hard time rebutting you. Perhaps I have misread it? Perhaps there isn't much to misread?

In support of his argument, Kinsley quotes:

one sentence from ad copy for End This Depression Now

one sentence from Krugman's post: "So where are the celebrations now that the debt issue looks, if not solved, at least greatly mitigated?"

Here is Krugman's entire post:

Where Are The Deficit Celebrations?: For three years and more Beltway politics has been all about the deficit. Urgent action was needed to avert crisis. A Grand Bargain absolutely had to be reached. Fix the Debt, now now now!

So where are the celebrations now that the [decline in the deficit and the stabilizing of the projected debt-to-annual-GDP ratio mean that the] debt issue looks, if not solved, at least greatly mitigated? And it’s not just recovering revenues: health costs, the biggest driver of long-run spending, have slowed dramatically.

What we’re getting from the deficit scolds, however, are at best grudging admissions that things may look a bit less dire — if not expressions of regret that the public seems insufficiently alarmed.

Jamelle Bouie gets at a large part of it by noting what was obvious all along: for many deficit scolds, it was never really about the debt, it was about using deficits as a way to attack the social safety net. Deficits may have come down, but not the way they were supposed to — hey, we were supposed to be kicking 65 and 66 year-olds off Medicare, not doing something so goody-goody as managing costs better.

There is, however, a secondary factor: think about the personal career incentives of the professional deficit scolds. You’re Bowles/Simpson, with a lucrative and ego-satisfying business of going around the country delivering ominous talks about The Deficit; you’re an employee of one of the many Pete Peterson front groups; and now, all of a sudden, the deficit is receding, and you had nothing to do with it. It’s a disaster!

And so the deficit progress must be minimized and bad-mouthed.

I looked in this for Paul Krugman taking credit for the falling deficit. I didn't find it. If you find it, email me.

I looked in this for Paul Krugman "gloat[ing] about the pretty-good economic news" of the deficit.

And I didn't find it.

Why not? Because the falling deficit is pretty-good economic news for austerians, but not for Paul Krugman. Nowhere does he say it is really good news--what he argues is that it should be reason for austerians, who have been fearing an exploding debt and claiming that because of it we must do all kinds of unpleasant things that they claim they really would rather not do, to sigh in relief and say "never mind". For Krugman, however, the falling deficit is bad news--it is weakening the economy.)

I looked in this for a claim that Paul Krugman has been "in his own self-estimate, a lone, ignored voice for reason crying out in an unreasoning universe." And I didn't find it.

What I do find, elsewhere, is Paul believing that he is having an impact, that argument matters and matters greatly, and that the fact that the U.S. is doing much better than Britain or continental Europe is powerful evidence to that effect--that behind our efforts there must be found our further efforts.

So I moved on to paragraph nine, in the hope that Kinsley would step up his game.

Alas, paragraphs nine through thirteen struck me as more throat-clearing.

For example:

"if Paul Krugman wants to get into a contest about who has spent more time in a comfortable, air-conditioned office dreaming up new ways for the government to spend someone else’s money on programs to help a third party, I’m pretty sure I would win...
"I supported Obama’s tax increase on upper brackets..."
"I don’t appreciate being called a neo-con any more than Paul Krugman would..."
"I assume from the way [Paul Krugman] writes that he is out there most Sunday mornings painting poor people’s houses, serving up soup and making sandwiches. And I congratulate him for it..."
"what does [Paul Krugman] himself get for a speech?... I think there’s nothing wrong with [giving paid speeches..."
"what about the motives of the anti-austerians like Krugman? Are they purposely keeping the economy sputtering until they can take power and take credit?"
"an Atlantic blogger"--note, again, the absence of a reference by name--"who thinks he’s going to live forever, had the bad manners to point out that I’m over 60." This last is worth pausing on: this is a reference to Matt O'Brien. Matt's point was not that he is young while Kinsley is old and going to die soon. Matt's point was, instead, that people in their 60s are often found making inappropriate analogies between today and the 1970s simply because the 1970s were their formative years. And "an Atlantic blogger"--that is so 2003...)

However, paragraph eight is there, and it is an argument. But it is an argument that relies on misconstruing what it is criticizing. So there is really not very much meat here. Certainly there is not enough for which a poor overworked direwolf might feed.

But I try my best...

Third, Michael Kinsley claims:

There are two possible explanations [for people's displeasure with his "Paul Krugman's Misguided Moral Crusade Against Austerity"]. First, it might be that I am… just so spectacularly and obviously wrong that there is no point in further discussion. Or second, to bring up the national debt at all in such discussions has become politically incorrect…

Dan Drezner--unnamed by Kinsley, but linked to--says, correctly, that Kinsley nails it with the first: Kinsley is wrong.

And why should Kinsley be surprised that he is wrong? Kinsley writes:

I can’t help feeling that the gold bugs are right…. My fear is not the result of economic analysis. It’s more from the realm of psychology. I mean mine. […] The puritan in me says that there has to be some pain. That’s not to say that there hasn’t been plenty of economic pain. But that pain has come from the recession itself, not the cure…

And:

I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be. And future sufferers are not necessarily different people than the past and present sinners. That’s too easy.... The problem is the great, deluded middle class—subsidized by government and coddled by politicians.... If you make less than $250,000 a year, Obama has assured us, you are officially entitled to feel put-upon and resentful. And to be immune from further imposition...

Kinsley has no good substantive, analytical, technocratic arguments.

He has a pre-analytical "belief" that "we have to pay a price" and a "feeling... from the realm of psychology" that is "not the result of economic analysis". It is not the result of economic analysis because there is no economic analysis that connects the "great, deluded middle class--subsidized by governments and coddled by politicians" with our current major problem of low demand, idle capacity, and unemployed workers.

So why should Kinsley be surprised to find that the only people backing him up are Chuck Lane and Joe Scarborough?

He says up front that he does not have an argument.

He follows through by not making an argument.

Why does he then claim to be surprised when it turns out that he is treated with less respect--subjected to "one of those flattering but scary web hailstorms"--than people who do have arguments?

Fourth, there remains the second prong of Michael Kinsley: Kinsley wants to believe that the internet hailstorm was not because he was wrong, but because bringing up the national debt has become "politically incorrect".

Bringing up the national debt has not become politically incorrect--and if it were, that would be no reason not to bring it up. Moreover, just because Kinsley is wrong does not mean that further discussion is useless. Further discussion is not useless. Further discussion is very useful.

But what is needed is informed discussion.

We need honest arguments and honest disagreements about things we can see. We do not mere knee-jerk gut feelings. We do not need mere psychological reactions and complexes.

The debate over whether prudent economies should pursue additional temporary fiscal stimulus and boost government purchases, until the bond market tells us otherwise via sharp increases in long-term interest rates, or turn toward austerity and cut government purchases starting right now is a technocratic debate. It has two sides: a benefits-of-stimulus side and a costs-of-stimulus side.

On the fiscal-stimulus-has-low-benefits side, the arguments for austerity were three. They were that:

Even for reserve-currency sovereigns that control their own money supplies, further expansion of government purchases will trigger rapid and substantial increases in interest rates that will make fiscal multipliers small or even negative--hence no or small benefits.

Even for reserve-currency sovereigns that control their own money supplies, further expansion of government purchases will trigger rapid and substantial increases in uncertainty that will lead businesses to place a low value on expanding or even maintaining their operations and in the process depress the stock market, and so make fiscal multipliers small or even negative--hence no or small benefits.

There are other superior monetary-policy tools for fighting unemployment and slack capacity, like quantitative easing, adopting a crawling price-level target, and nominal GDP targeting.

Over the past five years, reality has spoken very harshly against (1) and (2). The world's central banks (with the possible exception of Japan) do not believe in (3). There are powerful theoretical arguments against (3). Certainly if it is correct it requires operations on a much larger scale than I at least would have thought needed five years ago. But it is possible that (3) is indeed a better policy road than additional temporary fiscal stimulus.

On the fiscal-stimulus-has-high-costs side, the arguments for austerity are:

Additional government purchases will raise the debt-to-GDP ratio in the long run substantially, rather than having little effect or lowering it, as debt accumulation will raise the numerator by a greater proportion than a more rapid and complete recovery will raise the denominator in the long run.

A higher long-run debt-to-GDP ratio runs a high risk of triggering an episode of fiscal dominance. In an economy with a long-run real growth rate g, a normal-time required rate of return on government bonds r, a debt D, a price level P, a level of GDP Y, and a maximum politically-sustainable long-run primary government budget surplus of σ, when the economy normalizes the price level will be given by: P=(r-g)D/(σY). Too-high a level of debt given r, g, Y, and σ thus will trigger a very large burst of inflation that will prove very costly.

A higher long-run debt-to-GDP ratio runs a high risk of requiring financial repression--a draconian regulatory regime over finance in order to keep the costs of amortizing the debt low that will be very bad for the efficiency of the financial system and will substantially retread growth.

It is not the case that the world economy's demand for safe assets will be so high--that savers will be both patient and risk-averse enough--that it is beneficial for growth that the government step in and provide the AAA assets savers have such a high demand for that the combination of investment bank security origination and rating agencies can no longer provide.

Here reality has not spoken nearly as strongly over the past five years.

What we do know is that the bond market strongly disbelieves in (1): unless you think that investors in long-term bonds have systematically gotten bond values very wrong, the arithmetic is that additional government purchases right now lower rather than raise debt-to-GDP ratios.

What we do know is that the history of Japan over the past decades as well as the Great Depression indicates that the fear of (2) or inflation driven by fiscal dominance is a very distant and unlikely threat, if it is a threat at all.

We do know, with respect to (3), that Reinhart and Rogoff misread their historical results: the costs of required financial repression are not low up to a debt-to-annual-GDP ratio of 90% and do not become high above that level. The historical record suggests that if there are costs to financial repression they are small. They increase slowly and continuously as debt rises.

And (4) is, as they say, "at the research frontier".

Over the past four years we have learned an awful lot about the benefits and costs of austerity vs. stimulus, and what we have learned has greatly strengthened the intellectual case for the stimulus side.

Given that this is the state of the technocratic debate, what is Michael Kinsley's proper role? It is:

To listen carefully, and try to understand what the serious and valid technocratic arguments are.

To try to find better and clearer ways to accurately convey the valid technocratic conclusions to the chattering classes and thus, eventually, we hope, to the electorate.

If that is not the role he seeks, than what is the point of it all, at all?

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