J. Bradford DeLong's Blog, page 1143

Over at Equitable Growth: Ebola Virus Talking Points: Wednesday Focus for October 1, 2014

Over at Equitable Growth:

Lives lost from Ebola to date are tiny, even in West Africa, compared to HIV, TB, and malaria. Ebola still not (yet) the biggest public health problem in West Africa.

Yes, the epidemic will spread to more countries.

Ebola will not become the biggest public health problem in West Africa unless deaths reach the high seven figures--which they may: it is highly likely that deaths in the six figures are now baked in the cake.

Unless the virus changes dramatically, we are almost surely safe. If you want to worry, worry that influenza or something already airborne will become more deadly, not that Ebola will become airborne.

Those at risk from the Ebola virus are overwhelmingly (a) those who love them and (b) those medical professionals who treat them--you get it from direct fluid contact with symptomatic patients. Thus risks here in the United States are very low. It is scary, but unlikely to be a serious problem here.

Why, then, are risks high in West Africa? The major problem with control is that there is no functioning health system in most of sub-Saharan Africa. Not only are resources poor, but they are uncoordinated. What we really need is a helicopter drop of trained people.

The health system was especially poor in Liberia. You have issues like no supply of gloves to hospitals. Few doctors even to begin. Had the epidemic started in Ethiopia or even Uganda, the probability of it getting out-of-control epidemic would have been much less--Uganda, for example, has excellent hospitals, good supply, competent public health, and even a decent medical school. Just how bad Liberia’s system was should not be underestimated.

Secondary problems in West Africa are that: (1) Ebola can be difficult to diagnose; (2) Ebola is easily transmitted in cultures where people are expected to die at home in non-sterile and non-antiseptic environments; and (3) Ebola is easily transmitted in cultures where people--still infectious--are prepared for burial at home.

The economic cost of Ebola to the countries most affected is and will be immense, in addition to the loss of life.

In general, we are not well-equipped for some types of global pandemics. The advance from years of nothing on AIDS to stopping SARS in its tracks was immense. But it relies on functional organizations--and we did and do not have any such in the affected West African areas.

Nevertheless, it is surprising how unprepared the WHO and international community was for for this kind of emergency. The WHO is a UN organization, and it is a mistake to expect much bureaucratic competence of UN organizations. Nevertheless, the international response should have been swifter and more effective.

The Ebola crisis is eating up resources in West Africa that are desperately needed in other areas of health and society. It's not so much money as people--doctors pulled in from caring for pregnant women to manage Ebola patients, NGOs working on violence reduction in Sierra Leone now counting the dead. Really sad. We are likely to lose most of the health-care professionals in the most severely affected sub-Saharan African countries.

The importance of investing in strong public health infrastructure--which is both massively underfunded and very cost-effective compared with acute care.

Courtesy of Chris Blattman, David Cutler, Ann Marie Marciarille, and others...

Noted for Your Afternoon Procrastination for September 30, 2014

Over at Equitable Growth--The Equitablog

Afternoon Must-Read: Dan Davies What’s Really Wrong With Bank Supervision - Washington Center for Equitable Growth
Afternoon Must-Read: Ryan Avent: Crises: They Let It Happen - Washington Center for Equitable Growth
Afternoon Must-Read: Joe Stiglitz: Reconstructing Macroeconomic Theory to Manage Economic Policy - Washington Center for Equitable Growth
Afternoon Must-Read: Daron Acemoglu et al.: Offshoring and Skill-Biased Technical Change - Washington Center for Equitable Growth
Afternon Must-Read: Martin Wolf: Why Inequality Is Such a Drag on Economies - Washington Center for Equitable Growth
Why Was Bill Gross so Certain Interest Rates Were on the Rise Back in February 2011?: Tuesday Focus for September 30, 2014 - Washington Center for Equitable Growth
Evening Must-Read: Ryan Avent: Monetary Policy: Why Is the Fed Planning to Fail? - Washington Center for Equitable Growth
Over at Project Syndicate: Need We Fear the Robot Uprising?: Monday Focus for September 29, 2014 - Washington Center for Equitable Growth
Nick Bunker: The upside to bankruptcy protection - Washington Center for Equitable Growth
Robert Lynch: U.S. Census highlights rising economic inequality - Washington Center for Equitable Growth
Nick Bunker: Are the advantages of a college degree declining? - Washington Center for Equitable Growth

Plus:

Things to Read on the Afternoon of September 30, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

Charles Goodhart: It is time to shake up housing finance
Helene Jorgensen and Dean Baker: The Affordable Care Act: A Family-Friendly Policy
Martin Wolf: Even Beijing balks at price to pay for renminbi to become a reserve currency
Joe Nocera: The Hole in Holder’s Legacy
Michael Bauer: Options-Based Expectations of Future Policy Rates
Erica Schoenberger: Los Angeles: Planning to Sprawl
Robin Greenwood, Samuel G. Hanson, Joshua S. Rudolph and Lawrence H. Summers: Government Debt Management at the Zero Lower Bound
Siri Srinivas: Why it takes 13.75 hours of minimum-wage work to earn a Metrocard in New York
Mark Thoma: Why Have Policymakers Abandoned the Working Class?

And Over Here:

Over at Equitable Growth: Why Was Bill Gross so Certain Interest Rates Were on the Rise Back in February 2011?: Tuesday Focus for September 30, 2014 (Brad DeLong's Grasping Reality...)
Hoisted from the Internet from Seven Years Ago: Tim Noah (2007): Has Jonah Goldberg gone soft on Hillary? (Brad DeLong's Grasping Reality...)
The Peculiar Thing About the Washington Press-Corps Village...: Live from Crows' Coffee (Brad DeLong's Grasping Reality...)
Grifters Gotta Grift: Kentucky's Mitch McConnell Campaign Edition: Live from The Roasterie (Brad DeLong's Grasping Reality...)
Liveblogging the American Revolution: September 30, 1776: George Washington to Lund Washington (Brad DeLong's Grasping Reality...)

Daniel Davies: What’s Really Wrong With Bank Supervision: "The banks treat supervisors like punks, and the supervisors let them.... The supervisor was, originally in the privacy of his office and talking to his own team, outraged. But then when he went to meet with the bank, all the vim and vinegar went out of him.... The problem, as everyone who is familiar with bank supervision knows, is that there is a cultural disinclination to challenge banks on their behaviour.... The biggest problem is that senior management of bank supervisors don’t have the supervisors’ backs.... Regulated institutions generally have better contacts and relationships with the top central bankers than their supervisors do. And for whatever reason, top central bankers never developed the necessary knee-jerk aggressive response to any attempts to make use of these relationships to affect the behaviour of supervisors. If you’re a bank CEO, then calling Tim Geithner for a chat--that ought to be OK. Calling Tim Geithner to complain about how your supervisor is treating you--that ought to be a third-rail, relationship-destroying, potential career ender of a call. And it isn’t..."

Joe Stiglitz: Reconstructing Macroeconomic Theory to Manage Economic Policy: Any theory of deep downturns has to answer these questions: What is the source of the disturbances? Why do seemingly small shocks have such large effects? Why do deep downturns last so long? Why is there such persistence, when we have the same human, physical, and natural resources today as we had before the crisis?... The apparent liquidity trap today is markedly different from that envisioned by Keynes in the Great Depression, and why the Zero Lower Bound is not the central impediment to the effectiveness of monetary policy in restoring the economy to full employment."

Daron Acemoglu et al.: Offshoring and Skill-Biased Technical Change: "When labour is sufficiently cheap abroad, firms have incentives to offshore low-skill tasks and invest in skill-biased technologies at home.... The production structure of Apple’s iPod illustrates some of the potential effects.... Though most production jobs are offshored, a significant number of high-skill engineering jobs and low-skill retail jobs are created in the US, and more than 50% of the value added of the iPod is captured by domestic companies. With more limited offshoring, some of the production jobs may have stayed within the US borders, increasing the demand for the services of low-skill production workers. But this would have also increased the cost and price of iPods, reducing employment not only in engineering and design occupations but also in retail and other related tasks.... The reason for this switch in the direction of technological progress is that more offshoring increases the demand for labour abroad and thus wages in the East. In turn, the closing of the wage gap between countries mutes the price effect that was fuelling skill-biased innovation.... Offshoring first increases wage inequality in the West. However, as offshoring continues, technical change eventually changes direction and may even lower the skill premium..."

Martin Wolf: Why Inequality Is Such a Drag on Economies: "A report written by the chief US economist of Standard & Poor’s, and another from Morgan Stanley, agree that inequality is not only rising but having damaging effects on the US economy... two economic consequences... weak demand and lagging progress in raising educational levels.... The costs to society of rising inequality go further--the greatest costs are the erosion of the republican ideal of shared citizenship.... As the US Supreme Court seeks to bend the constitution to the will of plutocrats, the peril is to the politically egalitarian premises of the republic. Enormous divergences in wealth and power have hollowed out republics before now. They could well do so in our age.
Yet even for those who do not share such concerns, the economic costs should matter..."

Michael Bauer: Options-Based Expectations of Future Policy Rates: "Forecasts of short-term interest rates that are based on futures rates in financial markets can be very misleading when the policy rate is near the zero lower bound. By contrast, options on future short-term interest rates can provide more accurate projections. Currently these options suggest that the federal funds rate—the Federal Reserve’s key monetary policy interest rate—is most likely to lift off from zero around mid-2015 and rise only slowly afterwards at a pace of about 1 percentage point per year."

Ryan Avent: Monetary Policy: Why Is the Fed Planning to Fail?: "THE members of the Federal Open Market Committee are not overly fond of being stuck at the zero lower bound (ZLB) [as they have been] since December of 2008.... Policy-making since then has been a monetary mess.... I'll put things more plainly. Central bankers should hate the ZLB. Whether or not policy at the ZLB tends to raise financial instability, the central bank simply can't do its job when its main interest rate is at zero. Since December of 2008 the Fed has failed miserably on both of its primary objectives: maximum employment and stable prices.... In a ZLB world the Fed does not do its job. That is a serious problem for the American economy and the Fed. It is quite possibly the most serious problem the Fed could conceivably have. So why is the Fed so determined to find itself right back at the ZLB in future, assuming it ever leaves it in the first place?... The fed funds rate rose to 5.25% prior to the Great Recession and nonetheless tumbled to the ZLB. The 2001 recession was far milder, yet in battling it the Fed reduced interest rates from a high of 6.5% down to 1%.... There is plenty of uncertainty regarding precisely how much cushion one needs between the federal funds rate and the ZLB, yet we can be pretty safe in concluding that roughly four percentage points counts as 'not nearly enough'.... Let's be clear about this. The central bank can choose the inflation rate it wants... so there is absolutely no reason why the Fed ought to find itself stuck with too low a full-employment interest rate.... One would think the Fed would want to be damn sure to get well away from the ZLB.... The Fed is going to intentionally undershoot its inflation target on average over the next three years, thereby ensuring that it returns to the ZLB during the next downturn, thereby ensuring that it continues to undershoot its inflation target while also missing its maximum employment target. And one can't be completely sure, but I think the reason they intend to do this is because they fear that setting and hitting a higher inflation target would call into question their credibility..."

Ryan Avent: Crises: They let it happen: "THE argument that American officials lacked the capability or authority to save Lehman Brothers—and, potentially, to spare the world the most wrenching financial crisis since the 1930s—never really withstood close scrutiny.... This morning the New York Times publishes a remarkable piece of reporting drawing on accounts from insiders at the Federal Reserve Bank of New York, who were there during the crisis of 2008. The Fed officials say that they were tasked to conduct analyses of Lehman's books in preparation for some sort of rescue, and came back with figures that could easily have justified a bail-out. But their results scarcely received a hearing..."

Should Be Aware of:

Mount St. Helens National Volcanic Monument
Gideon Rachman: China’s biggest political challenge since Tiananmen in 1989
As with all Wall Street Journal articles, if you hit the paywall, just google the title. The Wall Street Journal lets you jump the paywall if you come from Google...

 

Dan Drezner: The real reason pundits like to diss political science: "The debate over whether and how political science matters to policymakers has gone on long enough for me to realize what it reminds me of: the debate over whether women can be funny.... Tom Ricks, in a yeoman effort to troll the entire political science community, has decided he’s going to speak his truth to the academy.... Let’s tweak this debate by asking a slightly different question: Why are people like Tom Ricks continuing to insist that political science is irrelevant despite pervasive evidence to the contrary? My tentative answer is that more traditional foreign policy pundits like Ricks are sensing a relative decline in their own influence.... In a decade or so, the pundit and policymaking landscape will be changed in the same way that baseball commentary has been transformed over the last decade (it’s tough to find a good baseball commentator these days who doesn’t have a familiarity with sabermetrics).... The 'irrelevance' charge rings hollow, and tends to discredit those making the charge in the first place..."

Jo Walton: After Paris: Meta, Irony, Narrative, Frames, and The Princess Bride: "I am not the intended audience for William Goldman’s The Princess Bride.... I think Goldman wanted to write something like a children’s book with the thrills of a children’s book, but for adults. Many writers have an imaginary reader, and I think Goldman’s imaginary reader for The Princess Bride was a cynic who normally reads John Updike, and a lot of what Goldman is doing in the way he wrote the book is trying to woo that reader. So, with that reader in mind, he wrote it with a very interesting frame. And when he came to make it into a movie, he wrote it with a different and also interesting frame. I might be a long way from Goldman’s imagined reader, but I am the real reader. I love it.... The book-frame... came as a surprise, and it took me a while to warm to it.... Goldman may have... wanted to make the child reader of fairytales re-examine the pleasure she got out of them. Goldman would like me to have a little distance in there. I might not want that, but he was going to give it to me nevertheless.... Thinking about the meta in The Princess Bride made me a better reader, a more thoughtful one with more interesting thoughts about narrative. What Goldman says he is doing... is giving us the essence of a children’s fairytale adventure, but in place of what he says he is cutting.... The frame gives the imagined reader what the imagined reader is imagined to be used to—a story about a middle-aged married man in contemporary America who is dealing with issues.... And it’s all sad and gives a sour note—and that sour note is in fact just what the story needs.... The frame of the movie... is less sour, but more meta.... I often don’t like things that are meta, because I feel there’s no point to them and because if I don’t care then why am I bothering?... Irony should be an ingredient, a necessary salt, without any element of irony a text can become earnest and weighed down. But irony isn’t enough on its own..."

Ryan Lizza: The Revenge of Rand Paul: "In May, 2002, Paul returned to a long-held view... that government attempts to address discrimination are always wrong. His target was the Fair Housing Act.... Paul, then thirty-nine, found the F.H.A. to be a monstrous infringement on liberty: 'Decisions concerning private property and associations should in a free society be unhindered. As a consequence, some associations will discriminate.' He went on to note that although it is 'unenlightened and ill-informed to promote discrimination against individuals based on the color of their skin', a free society 'will abide unofficial, private discrimination—even when that means allowing hate-filled groups to exclude people based on the color of their skin'. Paul was beginning to think about running for political office.... In taking on the Republican establishment, Rand won over his father’s ardent supporters. 'That network was absolutely crucial'.... Rand conducted several interviews with the radio host Alex Jones, a conspiracy theorist who thinks that 9/11 was an inside job and shares Ron Paul’s view that America is perpetually on the verge of economic collapse. During an appearance in August, 2009, Rand said, 'We really don’t have a lot of time'. He worried that an economic collapse could lead to a situation similar to how 'we got Hitler in Germany', and added, 'If you get some kind of strong leader like that, then it’s all over for the Republic'..."

Over at Equitable Growth: Why Was Bill Gross so Certain Interest Rates Were on the Rise Back in February 2011?: Tuesday Focus for September 30, 2014

Over at Equitable Growth: Joshua Brown: “Do we need to fire Pimco?”: "In February of 2011, [Bill] Gross loudly proclaimed...

[that] PIMCO Total Return had taken its allocation to US Treasury bonds down to zero. As recently as the previous December, PIMCO Total Return had been carrying as much as 22 percent of its AUM in Treasurys.... Gross compounded the move by being extremely vocal about his rationale--he went so far as to call Treasury bonds a 'robbery' of investors given their ultra-low interest rates and the potential for inflation. He talked about the need for investors to 'exorcise' US bonds from their portfolios, as though the asset class itself was demonic. He called investors in Treasury bonds 'frogs being cooked alive in a pot'. The rhetoric was every bit as bold as the fund’s positioning. It’s really hard to pound the table like this and then be flexible in the aftermath...

Yes, Bill Gross's judgment in February 2011 that U.S. Treasuries were overbought has been an absolute disaster for PIMCO's Total Return Fund vis-a-vis the market portfolio: READ MOAR

Holdings of ten-year U.S. Treasuries gained 20 cents on the dollar between Gross's bet and the summer of 2012, as interest rates collapsed in the summer of 2011 and took another lurch downward in the spring of 2012. (They recouped 14 of those cents between the summer of 2012 and the end of the summer of 2013 "Taper Tantrum", but today stand ten cents above their February 2011 value.

That being said, from Bill Gross's perspective the belief that bonds as of February 2011 were overbought must have been irresistible, and not for reasons that were clearly wrong at the time. Since the start of 2008, 10-year Treasuries had been trading in a 2.5%-4% range appropriate for a safe asset in a low-inflation economy on the edge of or in the midst of a significant depression:

But at some point relatively soon, it seemed to Gross back in 2011, the economy had to recover to something like normal--in which case 10-year Treasuries ought to return to their 4%-5% trading range of the post-dot.com era:

if not to their 5%-7% trading range of the fast-growth 1990s:

And, Bill Gross thought, there was already light at the end of the tunnel: the economy was recovering, and the only things keeping expectations of recovery over the next five years from pushing up 10-year Treasury rates now was that the Federal Reserve was artificially restricting the supply of 10-year Treasuries via quantitative easing. And so when QE II ended, Gross was confident, Treasury rates would jump sharply--and Treasury bondholders would lose bigtime.

So what went wrong? Why did Gross's expectations as of the winter of 2011 turn out to be so wrong? The standard answer is that long-term rates will not normalize until investors expect the normalization of short rates within half a decade, that short rates will not normalize until the Federal Reserve is confident that the zero lower bound crisis is over and will not return, and that that confidence is further away now 3.5 years later than it was back in February 2011. The IS curve needs to shift out and to the right in order to create an environment in which the Federal Reserve is comfortable normalizing short-term rates, and why should that happen?

But is that really an adequate answer? Didn't, in the Hicksian language of the past paragraph, Bill Gross have good reasons to expect the IS curve to shift out and to the right? He must have. The puzzle is: what were they?

http://delong.typepad.com/2014-09-29-bill-grosss-directional-bet.numbers

Hoisted from the Internet from Seven Years Ago: Tim Noah (2007): Has Jonah Goldberg gone soft on Hillary?

Timothy Noah (2007): Has Jonah Goldberg gone soft on Hillary?: "Her name's been removed from his forthcoming book's subtitle...

Three months ago, I speculated that Jonah Goldberg's forthcoming book, then titled Liberal Fascism: The Totalitarian Temptation From Mussolini to Hillary Clinton, was the victim of a swift and violent paradigm shift. The 2006 elections and the right's critical drubbing of Dinesh D'Souza's The Enemy at Home: The Cultural Left and Its Responsibility for 9/11--which proposed a strategic alliance between Muslim theocrats and the American right against the degenerate American left—had rendered conservatism's lunatic fringe suddenly unfashionable. This couldn't, I thought, be good news for a book that portrayed Hillary Clinton as a goose-stepping brownshirt.

One hint that Doubleday might be feeling nervous was that the book's publication date, originally planned for 2005, had been delayed repeatedly, and had just been delayed once more, to Dec. 26, 2007. Goldberg's publisher, Adam Bellow, insisted that the book's delays were attributable entirely to the extreme care being taken to get the history just right, and Goldberg himself, after stating on National Review's online chat-fest "The Corner" that he found me to be "a bore and a fairly nasty and humorless fellow," said the book was delayed only because "it's not done yet." My "assertion that the book's delayed for marketing reasons would be a flat-out lie if it weren't flat-out conjecture," Goldberg thundered.

What Bellow and Goldberg said didn't strike me as necessarily inconsistent with what I'd written. I could well envision that the extreme care to which Bellow referred might include frantic tweaking of tone to make Goldberg sound less like Ann Coulter and more like David Brooks. But whatever the reason for the delay, the marketing plan for Goldberg's book has been altered since I last wrote, and the direction has been away from Coulterism. A book's subtitle is part of a book's marketing, is it not? Ladies and gentlemen, the subtitle has been changed. Gone is The Totalitarian Temptation From Mussolini to Hillary Clinton. Now the subtitle is The Totalitarian Temptation From Hegel to Whole Foods. This is undeniably kinder, gentler, and less political. But it isn't necessarily more truthful.

As liberal blogger Ezra Klein points out, John Mackey, founder and chief executive of Whole Foods, is a libertarian. In a recent speech, Mackey said, "The Left's goal remains either to cripple or to destroy capitalism." That doesn't sound very liberal to me. Perhaps Goldberg has found a way to write around Mackey's inconvenient politics. Or perhaps he'll have to go back to the drawing board. One option might be for Goldberg to change the title to The Road to Serfdom, which is what F.A. Hayek called this book when he published it 50-odd years ago. Goldberg should know, though, that a cartoon version of Hayek's most famous work is already in circulation.

The Peculiar Thing About the Washington Press-Corps Village...: Live from Crows' Coffee

...is that it is somehow rude to hold politicians--especially right-of-center politicians--to the standard of behaving with honor or serving the public interest, and even ruder to point out that the Washington press corps village should call them on it. Ron Fournier of the National Journal, for example, calls it "name calling".

On Twitter:

@ThePlumLineGS: RT @AdamSerwer: Tom Cotton's new ad points out welfare for farmers is ok, but not for poor people http://www.washingtonpost.com/blogs/plum-line/wp/2014/09/29/socialism-for-me-but-not-for-thee/

@ron_fournier: @ThePlumLineGS @AdamSerwer He's running in Arkansas

@ryanlcooper: @ron_fournier @ThePlumLineGS @AdamSerwer good point, I forgot how Arkansas has zero poors

@AdamSerwer: @ryanlcooper @ron_fournier @ThePlumLineGS I bet "give money to farmers instead of grubby kids and old people" wouldn't do that well in AR

@ThePlumLineGS: @AdamSerwer @ryanlcooper @ron_fournier It is impossible to get a national reporter or commentator to acknowledge this fact, though

@ryanlcooper: @ThePlumLineGS @AdamSerwer @ron_fournier Tom who? Arka-what? Medi-huh? My question is, why won't #Oblammer lead

@ThePlumLineGS: @ryanlcooper @AdamSerwer @ron_fournier Oblammer?

@ron_fournier: @ThePlumLineGS @ryanlcooper @AdamSerwer Not here. Knock off the name calling please or go elsewhere.

Greg Sargent: Socialism for me, but not for thee: "As you’ve heard, Tom Cotton, the GOP candidate for Senate in Arkansas...

...has tried to explain away his controversial vote against the farm bill by blaming it all on the Food Stamp President. Cotton was the only House Republican from Arkansas to vote against the farm bill, and Senator Mark Pryor continues to hammer him over it in ads and elsewhere. Cotton is running his own spot in response that claims he voted against the farm bill because Obama “hijacked” it and “turned it into a food stamp bill.” Cotton adds: “Career politicians love attaching bad ideas to good ones.” The ad’s claim about Obama is ridiculous: Food stamp spending has been in farm bills for decades. But as a window into Cotton’s particular brand of Tea Party economics, the more interesting claim in the ad is the suggestion that food stamp spending is a “bad idea,” while the farm bill piece itself is a “good one”:

House Republicans originally wanted to separate the farm-only piece from the food stamp piece, breaking a pattern in which the two were passed together to create a coalition of rural and urban lawmakers that together could deliver for both groups’ constituents. So House Republicans first passed a farm-only bill, and then a food-stamp-only bill that contained draconian cuts to the Supplemental Nutrition Assistance Program. Congressman Cotton voted for both of those.

But conservative groups opposed even the farm-only bill in isolation. The Club for Growth, for instance, derided it as “loaded down with market-distorting giveaways to special interests with no path established to remove the government’s involvement in the agriculture industry.” In other words, even on its own, the farm-only piece, with its subsidies and giveaways to parochial interests, was exactly the sort of government interference into the free market that Tea Party conservatives are supposed to abhor. Yet Cotton voted Yes on it — presumably the “good idea” he alludes to in his ad.

The “bad idea” Cotton alludes to in the ad was the spending on food for poor people. The food-stamp-only bill that Cotton voted for sliced spending on food stamps by $39 billion; the final bill combining the two pieces, which he voted against, cut food stamp spending by “only” $8 billion. Cotton has explicitly said spending on food stamps should be cut because recipients are doing just fine and don’t need the help, claiming: “They have steak in their basket, and they have a brand-new iPhone, and they have a brand-new SUV.”

In reality, the vast majority of recipients of SNAP have gross incomes below the poverty line. And as Jonathan Chait explains, Cotton has it exactly backwards here:

Farmers are… more affluent than the average American. Since they are overwhelmingly white and conveniently spread throughout nearly every state, their claim to public subsidy has gained some popular legitimacy…. The charge Cotton falsely makes against the food-stamp program is in fact completely true about the crop-subsidy program. It furnishes its recipients with lavish benefits and many of of them are millionaires. But this is the program Cotton, even while fighting to the death against the one that feeds extremely poor, hungry people, vows to protect…He is running not quite as a principled foe of government, but instead as a committed opponent of redistribution. Government is bad insofar as it gives money to the poor and vulnerable.

The coda here is that in the ad, Cotton evokes his own father and upbringing on a farm as follows:

On our family farm, we have a few dozen head of cattle. And one old guy with a head full of common sense: My dad. He taught me early: Farmers can’t spend more than they take in. And I listened. When President Obama hijacked the farm bill, turned it into a food stamp bill, with billions more in spending, I voted No.

In other words, Cotton’s vote against the government spending in the farm bill is supposedly rooted in an appreciation of live-off-the-land self-reliance. But Cotton voted for the portion of the bill that Chait elsewhere describes as “agri-socialism,” only voting against the final product. As David Ramsey of the Arkansas Times has explained, this two-step allows Cotton to make national conservatives happy, because the farm bill would be doomed if it were successfully split in two, while simultaneously telling his constituents he voted for the part that’s popular in Arkansas. That’s what his ad tries to do.

Indeed, many Republicans who voted for the final farm bill ultimately accepted the food stamp spending as a necessary trade-off to secure that agri-socialism. Cotton was not willing to do this, and he is casting this decision as heroic and lonely, telling Fox News that such votes are necessary to rein in Washington spending, even if they are unpopular. But the difference between Cotton and those other Republicans is not that he opposes agri-socialism. It’s the belief that packaging it with a too-high level of spending on food for poor people was too high a price to pay for it.

Liveblogging the American Revolution: September 30, 1776: George Washington to Lund Washington

From George Washington to Lund Washington, 30 September 1776:

Col. Morris’s, on the Heights of Harlem,

30 September, 1776.Dear Lund,

Your letter of the 18th, which is the only one received and unanswered, now lies before me. The amazement which you seem to be in at the unaccountable measures which have been adopted by —— would be a good deal increased if I had time to unfold the whole system of their management since this time twelve months. I do not know how to account for the unfortunate steps which have been taken but from that fatal idea of conciliation which prevailed so long--fatal, I call it, because from my soul I wish it may prove so, though my fears lead me to think there is too much danger of it.

This time last year I pointed out the evil consequences of short enlistments, the expenses of militia, and the little dependence that was placed in them. I assured [Congress] that the longer they delayed raising a standing army, the more difficult and chargeable would they find it to get one, and that, at the same time that the militia would answer no valuable purpose, the frequent calling them in would be attended with an expense, that they could have no conception of. Whether, as I have said before, the unfortunate hope of reconciliation was the cause, or the fear of a standing army prevailed, I will not undertake to say; but the policy was to engage men for twelve months only. The consequence of which, you have had great bodies of militia in pay that never were in camp; you have had immense quantities of provisions drawn by men that never rendered you one hour’s service (at least usefully), and this in the most profuse and wasteful way. Your stores have been expended, and every kind of military [discipline?] destroyed by them; your numbers fluctuating, uncertain, and forever far short of report—at no one time, I believe, equal to twenty thousand men fit for duty. At present our numbers fit for duty (by this day’s report) amount to 14,759, besides 3,427 on command, and the enemy within stone’s throw of us.

It is true a body of militia are again ordered out, but they come without any conveniences and soon return. I discharged a regiment the other day that had in it fourteen rank and file fit for duty only, and several that had less than fifty. In short, such is my situation that if I were to wish the bitterest curse to an enemy on this side of the grave, I should put him in my stead with my feelings; and yet I do not know what plan of conduct to pursue. I see the impossibility of serving with reputation, or doing any essential service to the cause by continuing in command, and yet I am told that if I quit the command inevitable ruin will follow from the distraction that will ensue. In confidence I tell you that I never was in such an unhappy, divided state since I was born. To lose all comfort and happiness on the one hand, whilst I am fully persuaded that under such a system of management as has been adopted, I cannot have the least chance for reputation, nor those allowances made which the nature of the case requires; and to be told, on the other, that if I leave the service all will be lost, is, at the same time that I am bereft of every peaceful moment, distressing to a degree. But I will be done with the subject, with the precaution to you that it is not a fit one to be publicly known or discussed. If I fall, it may not be amiss that these circumstances be known, and declaration made in credit to the justice of my character. And if the men will stand by me (which by the by I despair of), I am resolved not to be forced from this ground while I have life; and a few days will determine the point, if the enemy should not change their plan of operations; for they certainly will not--I am sure they ought not--to waste the season that is now fast advancing, and must be precious to them.

I thought to have given you a more explicit account of my situation, expectation, and feelings, but I have not time. I am wearied to death all day with a variety of perplexing circumstances--disturbed at the conduct of the militia, whose behavior and want of discipline has done great injury to the other troops, who never had officers, except in a few instances, worth the bread they eat. My time, in short, is so much engrossed that I have not leisure for corresponding, unless it is on mere matters of public business.

I therefore in answer to your last Letter of the 18th shall say:

With respect to the chimney, I would not have you for the sake of a little work spoil the look of the fireplaces, tho’ that in the parlor must, I should think, stand as it does; not so much on account of the wainscotting, which I think must be altered (on account of the door leading into the new building,) as on account of the chimney piece and the manner of its fronting into the room. The chimney in the room above ought, if it could be so contrived, to be an angle chimney as the others are: but I would not have this attempted at the expence of pulling down the partition.

The chimney in the new room should be exactly in the middle of it--the doors and every thing else to be exactly answerable and uniform--in short I would have the whole executed in a masterly manner.

You ought surely to have a window in the gable end of the new cellar (either under the Venitian window, or one on each side of it).

Let Mr. Herbert know that I shall be very happy in getting his brother exchanged as soon as possible, but as the enemy have more of our officers than we of theirs, and some of ours have been long confined (and claim ye right of being first exchanged,) I do not know how far it may be in my power at this time, to comply with his desires.

Remember me to all our neighbors and friends, particularly to Colo. Mason, to whom I would write if I had time to do it fully and satisfactorily. Without this, I think the correspondence on my part would be unavailing—-I am with truth and sincerity, Dr Lund yr affect’e friend.

Grifters Gotta Grift: Kentucky's Mitch McConnell Campaign Edition: Live from The Roasterie

From earlier this month: the incomparable Doktor Zoom:

Doktor Zoom: Mitch McConnell’s Campaign Manager Quits To Spend More Time With His (Alleged) Bribe Money: "Looks like Senate Minority Leader and Supreme Chelonian Overlord Mitch McConnell...

...is going to have to find himself a new campaign manager after the sudden resignation of Jesse Benton, who will now have more time to hold his nose and wait for Rand Paul to snap him up for 2016.

It might be a long wait, what with the guilty plea last week by Ken Sorenson, a former Iowa state senator who admitted taking bribes to switch his endorsement from Michele Bachmann to Ron Paul shortly before the Iowa caucuses in 2012. What the what? How is bribery in the Iowa caucuses two years ago connected to Yertle’s Senate hopes? Let us connect ye olde dots for you!...

But first, before the dots, McConnell's opponent Alison Londegren Grimes has some questions:

Senator McConnell:

When did you know that Benton was potentially tied to the federal criminal investigation of a bribery scandal?
What did Benton tell you his involvement was in paying off the former state senator in Iowa? Is Benton the subject of a federal investigation?
Are you certain none of your endorsers have been paid off to join your team?
Was Benton involved in dangling "shiny political prizes" to Matt Bevin to stay out of the primary? Did it have anything to do with the jewelry store listed in the ethics report?
Why did you pay nearly $500,000 to two people potentially involved in a federal criminal investigation?
What project did you pay Dimitri Kesari $70,000 to do for your campaign?
Do you own any responsibility for handpicking and keeping Benton on the payroll while he was potentially tied to this criminal federal investigation? Why did you keep Benton on your payroll months after news that he might be tied to this bribery scandal?
Did you discuss the campaign tactics of Ron Paul's campaign with Benton?
Will you use your influence to urge Benton to answer press inquiries on this subject?
Why did you reluctantly accept Benton's resignation, instead of calling for it?

Doktor Zoom continues:

On Wednesday, Sorenson, a bigwig in Iowa Republican circles, pleaded guilty to charges of bribery and obstruction of justice stemming from his accepting $73,000 from Paul’s campaign to switch his loyalty from Bachman to Paul. And as Rachel Maddow notes, bribes don’t just get taken without someone giving them. At the time, Jesse Benton was Ron Paul’s campaign manager, and while Benton wasn’t named in any of the court documents in the Sorenson case, the Lexington Herald-Leader notes that “Sorenson’s guilty plea included two sealed documents, which could threaten to involve Benton.” Further, last August, The Iowa Republican blog released a recording of a phone call in which Sorenson discussed the payments with Dennis Fusaro, who had worked on Paul’s 2008 campaign. Fusaro recorded Sorenson acknowledging that he’d received a check from Demitri Kesari, who was working with the Paul 2012 campaign, and also recorded this epic bit of dialogue when Sorensen asked Fusaro if he thought Paul campaign insiders knew about the payments:

Sorenson: Who do you think knows?

Fusaro: All these guys are corrupt. Who do I think knows? Everyone you told. Everyone Dimitri told. And Dimitri.

Sorenson: Do you think the whole Ron Paul, like all of them know? I mean the inside group?

Fusaro: Sure, I’m sure Jesse Benton knows, he’s a scum…

Sorenson: Oh, I know that Jesse knows. I know Jesse knows.

Fusaro: He’s a scumbag.

Fusaro seems nice. Fusaro, of course, is also the cheerful little wrecking-ball who, in a different recording, caught Jesse Benton saying he was mostly working for McConnell’s senate campaign this year as a way of biding his time until he could run Rand Paul’s presidential campaign in 2016. In that memorable recording, Benton said he was just barely putting up with McConnell’s old man stank:

Between you and me, I’m sorta holding my nose for two years… ’cause what we’re doing here is gonna be a big benefit to Rand in ’16.

And so late Friday, in the great tradition of pre-holiday-weekend news dumps, Benton was out, with a beautifully self-righteous press release in which he made it absolutely clear that he’d done nothing wrong but was leaving to save Mitch McConnell from the liberal media vultures:

There is no more important cause for both Kentucky, my new home I have come to love, and our country than electing Mitch McConnell Majority Leader of the United States Senate. I believe this deep in my bones, and I would never allow anything or anyone to get in the way.

That includes myself.

Recently, there have been inaccurate press accounts and unsubstantiated media rumors about me and my role in past campaigns that are politically motivated, unfair and, most importantly, untrue. I hope those who know me recognize that I strive to be a man of integrity.

The press accounts and rumors are particularly hurtful because they are false.

However, what is most troubling to me is that they risk unfairly undermining and becoming a distraction to this reelection campaign.

Working for Mitch McConnell is one of the great honors of my life. He is a friend, a mentor and a great man this commonwealth desperately needs. I cannot, and will not, allow any possibility that my circumstances will effect the voters’ ability to hear his message and assess his record....

Benton proved that he is totally innocent by ending his resignation statement with a Bible verse, which is something that a dishonest bribey scumbag could never do, seeing as how an insincere use of Scripture would surely cause his head to burst into flames:

James 16:33: “I have told you these things, so that in me you may have peace. In this world you will have trouble. But take heart! I have overcome the world.”

Top o’ the world, ma!

Mitch McConnell is reportedly wondering if he could borrow Barack Obama’s time machine so he could go back to last August and fire Benton’s ass instead of posting a cheerful Facebook photo of himself goofing around with a nose-holding Benton.

And:

Matea Gold: McConnell campaign manager Jesse Benton resigns amid federal probe into 2012 endorsement-for-pay deal: "Jesse Benton, the GOP political strategist spearheading Senate Minority Leader Mitch McConnell’s reelection campaign...

...resigned from his post Friday amid new details about an ongoing federal investigation into an endorsement-pay-scheme involving a 2012 presidential campaign he oversaw.... Benton’s decision comes two days after former Iowa state senator Kent Sorenson pleaded guilty to two federal charges, admitting that he accepted concealed payments from the 2012 presidential campaigns of Rep. Michele Bachmann of Minnesota and former Rep. Ron Paul of Texas to secure his endorsement. A top Paul campaign official, Dimitri Kesari, was involved in efforts to pay Sorenson for his support, according a state independent counsel investigation.

Benton, who is married to Paul’s granddaughter, served as chairman of the campaign. It is unclear if he knew about payments made to Sorenson, but emails published last year indicate he was involved in efforts to get him to defect from the Bachmann campaign....

And from the Doktor Zoom archives:

Mitch McConnell’s Campaign Manager Somehow Keeps His Job After Saying He Can’t Stand McConnell: "On Thursday, a tape surfaced of Mitch McConnell’s reelection campaign manager...

...describing his job as an unpleasant way to mark time until he can help Rand Paul run for President. Jesse Benton, who managed Paul’s 2010 Senate campaign, was recorded in January by conservative activist Dennis Fusaro, and said: “Between you and me, I’m sorta holding my nose for two years … ’cause what we’re doing here is gonna be a big benefit to Rand in ’16.” You’d think that sort of thing might result in a desk being cleaned out at Yertle’s Command Center For All He Surveys. Instead, it resulted in the photo above going up on the campaign’s Facebook page. See, we’re all friends, just joking, and no big deal that my campaign manager just said he can barely stand me.

Benton was of course very, very upset at being taken out of context or something, and issued a statement that he is in fact the most loyal nose-holder evar:

It is truly sick that someone would record a private phone conversation I had out of kindness and use it to try to hurt me. I believe in Senator McConnell and am 100 percent committed to his re-election. Being selected to lead his campaign is one of the great honors of my life and I look forward to victory in November of 2014.

Poor Mitch McConnell. Stuck between his own loathsomeness and a hard-right place.

Noted for Your Morning Procrastination for September 29, 2014

Over at Equitable Growth--The Equitablog

Joe Stiglitz vs. the Austerity Zombies: (Late) Friday Focus for September 26, 2014 - Washington Center for Equitable Growth
Morning Must-Read: Paul Krugman: The New Classical Clique and the Insulation of International Macro - Washington Center for Equitable Growth
Morning Must-Read: Felix Salmon on Martin Wolf's "The Shifts and the Shocks" - Washington Center for Equitable Growth
Evening Must-Read: Gillian Tett: After a Life of Trend Spotting, Bill Gross Missed the Big Shift - Washington Center for Equitable Growth
Evening Must-Read: Gavyn Davies: Labour Under-Utilisation in America - Washington Center for Equitable Growth
Morning Must-Read: Stephen Golub et al.: The Federal Reserve in the Run-Up to the Global Crisis - Washington Center for Equitable Growth

Plus:

Things to Read on the Morning of September 29, 2014 - Washington Center for Equitable Growth

Must- and Shall-Reads:

Rex Nutting: The Fed would be crazy to worry about runaway wages
Nicholas Bagley: Medicine as a Public Calling
Economist: Free exchange: Goldilocks Nationalism

And Over Here:

Morning Must-Read: Paul Krugman: The New Classical Clique and the Insulation of International Macro (Brad DeLong's Grasping Reality...)
Weekend Must-Read: Bryan Burrough: On Writing Narrative (Brad DeLong's Grasping Reality...)
Over at Equitable Growth: Joe Stiglitz vs. the Austerity Zombies: (Late) Friday Focus for September 26, 2014 (Brad DeLong's Grasping Reality...)
Liveblogging World War i: September 28, 1914: Pierre Minault (Brad DeLong's Grasping Reality...)
Liveblogging World War I: September 29, 1914: Harry S. Truman to Bess Wallace, (Brad DeLong's Grasping Reality...)
Need We Fear the Robot Uprising?: Monday Focus for September 28, 2014 (Brad DeLong's Grasping Reality...)
Monday Smackdown: Yet More Chapter 11 of David Graeber's "Debt" in Chapter 7: (Definitely Not) the Honest Broker for the Week of (Brad DeLong's Grasping Reality...)

1.Stephen Golub et al: The Federal Reserve in the run-up to the Global Crisis: "Both Greenspan and Bernanke subscribed to Bernanke and Gertler’s (2001) view that identifying bubbles is very difficult, pre-emptive bursting may be harmful, and that central banks could limit the fallout from systemic financial disturbances through ex post interventions. The successful response to the 2001 dot-com bubble boosted the Fed’s confidence in this strategy. On this basis, Blinder and Reis (2005: 73) conclude '[Greenspan’s] legacy … is the strategy of mopping up after bubbles rather than trying to pop them'. The 2001 crisis, however, did not feature leverage and securitisation, unlike in 2008.... Several of the Fed’s institutional routines likely reinforced its complacency. One such feature is the scripted nature of FOMC meetings.... Moreover, the priority on reaching consensus on interest-rate policy limits scope for sustained consideration of broader economic concerns. Further, FOMC staff briefings and FOMC discussions centre on the staff’s ‘Greenbook’ economic analyses and projections, which reinforces the tendency for consensus. Former Governor Meyer jokingly refers to the Greenbook as 'the thirteenth member of the FOMC'..."

Nicholas Bagley: Medicine as a Public Calling: "The debate over how to tame private medical spending tends to pit advocates of a single-payer approach against those who would prefer to harness market forces to hold down costs. When it is mentioned at all, the possibility of regulating medicine as a public utility is dismissed as a political impossibility — or, worse, as anathema to the American regulatory tradition. Yet there is a rich history in the United States of subjecting private businesses that wield undue power to economic regulation. Growing out of an ancient common law practice of imposing special duties on innkeepers and common carriers, the body of law governing the regulation of “public callings” had evolved by the early twentieth century into a comprehensive challenge to the principles of laissez faire. The rise of the modern medical industry in the years after the Second World War prompted the enactment of federal and state laws emerging from this tradition and directed at the business of medicine. Although the last two decades of the twentieth century saw many of these laws give way to a resurgent belief that market forces ought to guide the distribution of health-care services, an important strain of the law has always treated modern medicine as a public calling. Now that the Affordable Care Act has eased concerns about the uninsured, a stubborn set of economic problems in the medical industry — supply imbalances, access restrictions, and abusive and discriminatory pricing — may spur renewed interest in laws reflecting the principles of public utility regulation. Indeed, nascent interest in such laws suggests that we may already be heading that direction."

Gavyn Davies: Labour under-utilisation in America: "If there is still a large margin of slack in the labour market, despite tumbling unemployment figures, the Fed is unlikely to tighten monetary conditions very much in the next couple of years. Slack will also keep the wages share in national income low, thus boosting the profits share further. The utilisation of labour resources in America is thus critical not only for monetary policy, but also for the outlook for US equities. The academic discipline of labour economics, which has not really been centre stage since the wage-push inflation of the 1970s, is therefore very much back in vogue.... Despite the fact that the official unemployment rate has fallen close to the Fed’s estimates of its 'natural' or equilibrium rate, few empirical labour economists seem to believe, at least with any certainty, that labour resources are near full utilisation at present.... The hawkish case is still represented by some regional presidents on the FOMC... Fisher.... Almost all economists in policy circles acknowledge that there is great uncertainty here..."

Gillian Tett: After a Life of Trend Spotting, Bill Gross Missed the Big Shift: "The power balance between governments and the bond market has shifted. These days it is governments that are intimidating--or, at least, wrongfooting--the bond gurus... unorthodox monetary policy... is shaping bond prices now. And that is making it difficult for bond titans such as Mr Gross to recreate their old magic.... During most of his career, Mr Gross wielded brilliant trend-spotting skills.... Recently his performance has crumbled. This year his flagship fund is in the bottom 20 per cent of industry tables, measured by returns. This partly reflects the fact that low interest rates have cut returns across the board.... But Mr Gross also has been wrongfooted by government. In January 2010 he declared that the British bond market was 'sitting on a bed of nitroglycerine', suggesting UK sovereign bond yields would rise. It seemed a rational bet, given that the UK had a 7 per cent structural budget deficit.... Similarly, there was sound logic to Mr Gross’s declarations in 2010 and 2013 that the bull market in bonds was over. But instead of rising, yields fell to new lows in the US and Europe. That is partly because markets are 'under the spell' of unconventional monetary policy, as the Bank for International Settlements says..."

Felix Salmon: A Radical Response: "Martin Wolf paints a picture of a global economy being wrecked both by freedom of capital... and by the imprisonment of 18 European countries in a fixed currency system.... It’s a worldview in which central bankers, rather than their commercial brethren, are the people who really determine whether the world crashes and burns: The Jamie Dimons simply end up acting in accordance with the incentives that the Alan Greenspans put in place.... Wolf... has withering scorn for what central bankers have wrought... persuasively argues that central banks should target a much higher rate of inflation, noting that, in the eurozone, “inflation of 3 to 4 percent a year would not be a disaster” and would actually be very helpful.... Wolf... says the French economist Thomas Piketty’s recommendation of a global wealth tax “is unquestionably too ambitious.” Yet Wolf’s own recommendations are more ambitious... attempts to prevent corporations from accumulating cash; an end to the tax-deductibility of interest payments; a scaling back of international banks... a mass refinancing of European sovereign debt into eurobonds... a radical change in debt contracts to make them much more equitylike; and, of course, that idea about abolishing ­fractional-reserve banking.... Despite Wolf’s attempts to don the garb of a revolutionary, this book is actually something more familiar, and more depressing: a wonkish eschatology of how the global economy, and Europe’s in particular, is doomed.... THE SHIFTS AND THE SHOCKS: What We’ve Learned — and Have Still to Learn — From the Financial Crisis. By Martin Wolf."

Should Be Aware of:

Adam Ozimek: Enough Already With [Pierre-Emmanuel Gobry's] Sweeping Claims That Economics Is Unscientific
Paul Shankman: The Trashing of Margaret Mead: Anatomy of an Anthropological Controversy
Ed Luce: Obama’s Faustian pact with the Saudis

 

Paul Krugman: The New Classical Clique: "International macro went in a different direction, for reasons I’ll get to in a bit. So I have some sense of what was really going on.... While both Wren-Lewis and Waldmann hit on most of the main points, neither I think gets at the important role of personal self-interest. New classical macro was and still is many things--an ideological bludgeon against liberals, a showcase for fancy math, a haven for people who want some kind of intellectual purity in a messy world. But it’s also a self-promoting clique.... Economics as a discipline being what it is, attacks on Keynesian economics as being inconsistent with rational behavior were bound to get some traction, and the stagflation of the 1970s certainly helped that attack, even if it was less relevant than claimed. Animus against government activism also played a key role.... Once the thing had gotten going, however, I think you understand its dynamics much better if you stop assuming that the motives of the movement’s leaders were pure. Consider the extremism of Lucas and Sargent (pdf) in the early days, declaring Keynesian economics a complete failure--or Lucas talking about how Keynesian papers were greeted with 'giggles and whispers'.... Ken Rogoff wrote about the 'scars of not being able to publish sticky-price papers during the years of new neoclassical repression'.... The clique’s dominance became self-perpetuating--and impervious to intellectual failure. OK, I know the members of the clique will be outraged--distorting incentives only apply to other people, only bureaucrats hijack institutions to serve their personal aggrandizement, etc... As they say in Minnesota, ya sure, you betcha.... Unfortunately, the rise of the new classical clique had consequences far beyond the academy, because it ended up playing an important role in the failure of policy to effectively confront the Lesser Depression."

Liveblogging World War I: September 29, 1914: Harry S. Truman to Bess Wallace

Letter from Harry S. Truman to Bess Wallace, September 29, 1914:

Dear Bess:

I am going to try and send you a letter anyway this week. Sunday was Papa's worse day. He very nearly got so weak he could hardly talk. Today he is better but he hasn't eaten anything since Saturday morning except a little eggnog. I am very much afraid he isn't going to last so very much longer. I tried to talk to you over the phone today but you were not at home. Our phone here isn't working so very well today. Brownie tried to talk to his sister at Independence tonight but could not get a connection. I couldn't talk very much to you anyway because Papa insists on having the door from his room into the hall open so he can hear what is said. So I didn't try to call you from here this evening, although I told George I would.

I have been very busy today trying to be in several places at once. I have been to Belton and Kansas City and have bought 100 bushels of wheat in one place and 150 at Dodson, and a new drill down in the west bottom, besides getting a tire fixed and purchasing a quart of whiskey! You know, I ran over a piece of glass with my brand-new hind tire and cut a hole an inch long right through to the tube. It was sure a piece of very bad luck. The tire had only been about fifty miles. It is as good as ever now though.

I have also sent a man down to Vivian's to bring me up four mules of his to work. I am going to run two drills, two plows, and a harrow and roller the rest of this week and next week also. It is absolutely necessary to make things hum to get in two hundred acres of wheat. I have been so busy hauling Papa back and forth to K.C. that things are ‘way behind here. He says he's not going in anymore but that he's going to cure himself. If anyone asks him how he's feeling, he always says fine, even if he can't raise up his head. We can't put any faith in what he says about himself but have to watch him all the time. He was not able to get up today until about three o'clock and then he could only sit up about an hour at a time, yet he insisted that he was able to go see some cattle and wanted me to take him to help buy the wheat. He didn't get out of the house though.

Yesterday was the longest day I ever saw. There was absolutely nothing to do only sit around and pretend that there was nothing to worry about, and then of course when evening came I had to stay at home. Mary was down at Aileen's and I phoned her to come home on the K.C.S. at three o'clock. She was expecting me to come by and take her to Independence and then bring her home with me that evening. I was hoping that Papa would be well enough by seven o'clock for me to leave but he was still very weak, and Mamma thought I ought to stay at home. These Sundays that I don't get over to Independence are almighty dull Sundays, I can tell you. It seems as if I've seen very little of you in the last month but it hasn't been because I didn't want to, you can be very sure of that. I am hoping Papa will get well soon and then perhaps I can have better luck. I am really very much afraid he won't live a month. It's a road we all have to travel, though we are never ready to let those we love depart if we can help it.

I shall look for a letter this week sure, and if Papa gets better so I can leave at night I'll be over.

The Masons are having a Grand Lodge in K.C. and I'm supposed to attend night and day, but I'm not going at all. It is the first one I've missed for a good while. The rest have been in St. Louis. This one is close at home and I can't go.

I have done Uncle Harry a mean trick. He's been sitting around in here waiting for me to go to bed so he could tap that quart I spoke of awhile ago. I outsat him. He gave up just now and went to bed without his nightcap. I guess he'll make up the difference on an eye opener in the morning. He says he's going to stay with us. I hope he does. I hope you'll consider this worth an answer anyway.

Most sincerely, Harry

Over at Project Syndicate: Need We Fear the Robot Uprising?: Monday Focus for September 29, 2014

Over at Project Syndicate: The extremely sharp but differently-thinking Peter Thiel:

Peter Thiel: Robots Are Our Saviours, Not the Enemy: "Americans today dream less often of feats that computers will help us to accomplish...

...[and] more and more we have nightmares about computers taking away our jobs.... Fear of replacement is not new.... But... unlike fellow humans of different nationalities, computers are not substitutes for American labour. Men and machines are good at different things. People form plans and make decisions.... Computers... excel at efficient data processing but struggle to make basic judgments that would be simple for any human.... [At] PayPal... we were losing upwards of $10m a month to credit card fraud.... We tried to solve the problem by writing software.... But... after an hour or two, the thieves would catch on and change their tactics to fool our algorithms. Human analysts, however, were not easily fooled.... So we rewrote the software... the computer would flag the most suspicious trans­actions, and human operators would make the final judgment. This kind of man-machine symbiosis enabled PayPal to stay in business.... Computers do not eat.... The alternative to working with computers... is [a world] in which wages decline and prices rise as the whole world competes both to work and to spend. We are our own greatest enemies. Our most important allies are the machines that enable us to do new things...

Let us start with my six-fold schema about how humans have, historically, added economic value--via our legs, our fingers, our mouths, our brains, our smiles, and our minds:2

Our legs and other large muscles have moved things to where we need them to be.
Our fingers have rearranged things into patterns that we need.
Our brains have served as ideal cybernetic control loops for keeping all kinds of economic matter-and-energy-manipulation and information-flow processes on track.
Our mouths (and, later, our fingers via writing) have informed and entertained us all.
Our smiles have pleased one another, and also helped keep us all pulling roughly in the same direction.
Our minds have thought up new important and interesting things to do, and genuinely new ways to do old things.

In this schema, the very smart but differently-thinking Peter Thiel's makes his argument that robots are not our enemies but our saviors.[[1]][1] It is thus: Globalization made it possible for workers elsewhere in the world to compete for slots using our legs (1) and our fingers (2) in the global division of labor that had previously been near-exclusive property of American workers, and had allowed workers elsewhere in the world to use their new-found bargaining power to extract resources for their own consumption. This was to the detriment of America's blue-collar working and middle classes.

Computers and robots, however, are different. They do not consume anything except a little electricity. Robots and computers are becoming able to substitute not just for human legs and fingers but also for human brains as cybernetic control loops (3)--instead of having humans scrutinize every item in every batch of 1,000,000 transaction for indicia of fraud, PayPal can have computers approve the first 999,000 of the batch and then pass the 1,000 that might be fraudulent on not for mindless screening but for thoughtful consideration. One worker can thus do what PayPal would have had to hire a thousand workers to do a generation ago. And because computers do not eat, that thousand-fold increase in productivity will redound to the benefit of America's white-collar middle class. Globalization lowered the wages of America's blue-collar workers because it meant others could and would do what they did more cheaply, and then themselves consumed the value created. But computers mean that America's white-collar workers--and the surviving blue-collar workers who oversee the large robotic factories and warehouses--can do more valuable stuff, and the computers that assist them do not consume anything.

Perhaps.

It is my sense that Peter Thiel is running, in a sophisticated and non-obvious way, into the old diamonds-and-water economic paradox. The way the eighteenth century economists phrased it: Without water we all die, while without diamonds we all live happily, yet water is free and diamonds are incredibly expensive even though the first is essential and the second is nearly useless. Why? The answer, of course, is that the value of water in a market economy is set not by the total usefulness of water--nearly infinite--nor by the average usefulness of water--very large--but by the--very low--marginal value of the last drop of water consumed, which is very low (east of the Mississippi and north of Naples, at least). The wages and salaries of blue- and white-collar workers in the robot-computer economy of the future will be not the (very high) labor productivity of the one blue-collar worker on the shop floor making sure all the robots are in their places or the one white-collar worker reprogramming the software 'bots and adjudicating the edge cases, but rather by what the rest of the blue-collar and white-collar workers who find themselves outside the highly-productive computer-robot economy can find that adds value. The newly-industrialized Manchester that horrified Friedrich Engels when he worked there in the 1840s had the highest level of labor productivity the world had hitherto seen. But the wages of the workers in Manchester's factories were set not by their extraordinary productivity as they were assisted by the most advanced machines in the world, but by what they could get were they to return to the potato fields of pre-famine Ireland.

So the key question is not: will robots and computers make human labor in the goods-, high-tech services, and information-producing sectors infinitely more productive? It will. The key question is: as robots and computers push human labor out of occupations in which it is valued for what its legs, its fingers, and its brains as cybernetic-control-loops can do, can we keep the occupations of everyone not lucky enough to find a job in the high-productivity sector from being the twenty-first century equivalent of digging potatoes in 1843 Galway? Huge numbers of us will have to find valuable things to do with our mouths, our smiles, and our minds. What will those occupations be? And what will make them valuable--that is, in high demand?

From 1850-1970 or so, rapid technological progress was accompanied by first wages rising as fast as total productivity and then by an extraordinarily long-run equalization of the distribution of income as every machine installed to substitute for human legs (1) and human fingers (2) created more jobs in machine-minding as cybernetic control loops (3) and information transmission and control (4) than it destroyed in routine muscle power- or dexterity-work. And rising real incomes all around produced a great increase in leisure, and thus in demand for smiles (5) and the products of minds (6).

Will the same be true as machines take over what used to be routine brainwork as cybernetic control loops (3) just as they took over big muscle-work (1) and dexterity-work (2)? Maybe. But all of Peter Thiel's argument rests on that bet. And it is not a bet he examines.

1262 words