J. Bradford DeLong's Blog, page 145

Monday Smackdown: Batshit Insane American Nat-Cs Department: Intellectual Leading Light Samuel P. Huntington

Apropos of our National Conservatives���our Nat-Cs���here in America today. It is worth remembering how batshit insane is right-wing "class of civilizations" urberguru Samuel Hintington. Witness his firm belief that immigrants from Cuba have ruined Miami: "Anglos had three choices... [i] accept their subordinate and outsider position... [ii] assimilate into the Hispanic community������acculturation in reverse���... [iii] they could leave Miami, and between 1983 and 1993, about 140,000 did just that, their exodus reflected in a popular bumper sticker: 'Will the last American to leave Miami, please bring the flag'...

Samuel P. Huntington: The Hispanic Challenge: "The persistent inflow of Hispanic immigrants threatens to divide the United States into two peoples, two cultures, and two languages. Unlike past immigrant groups, Mexicans and other Latinos have not assimilated into mainstream U.S. culture, forming instead their own political and linguistic enclaves���from Los Angeles to Miami���and rejecting the Anglo-Protestant values that built the American dream. The United States ignores this challenge at its peril.... Miami is the most Hispanic large city in the 50 U.S. states. Over the course of 30 years, Spanish speakers���overwhelmingly Cuban���established their dominance in virtually every aspect of the city���s life, fundamentally changing its ethnic composition, culture, politics, and language. The Hispanization of Miami is without precedent in the history of U.S. cities...

...The Cuban takeover had major consequences for Miami. The elite and entrepreneurial class fleeing the regime of Cuban dictator Fidel Castro in the 1960s started dramatic economic development in South Florida. Unable to send money home, they invested in Miami. Personal income growth in Miami averaged 11.5 percent a year in the 1970s and 7.7 percent a year in the 1980s. Payrolls in Miami-Dade County tripled between 1970 and 1995.

The Cuban economic drive made Miami an international economic dynamo, with expanding international trade and investment. The Cubans promoted international tourism, which, by the 1990s, exceeded domestic tourism and made Miami a leading center of the cruise ship industry. Major U.S. corporations in manufacturing, communications, and consumer products moved their Latin American headquarters to Miami from other U.S. and Latin American cities. A vigorous Spanish artistic and entertainment community emerged. Today, the Cubans can legitimately claim that, in the words of Prof. Damian Fern��ndez of Florida International University, ���We built modern Miami,��� and made its economy larger than those of many Latin American countries.

A key part of this development was the expansion of Miami���s economic ties with Latin America. Brazilians, Argentines, Chileans, Colombians, and Venezuelans flooded into Miami, bringing their money with them. By 1993, some $25.6 billion in international trade, mostly involving Latin America, moved through the city. Throughout the hemisphere, Latin Americans concerned with investment, trade, culture, entertainment, holidays, and drug smuggling increasingly turned to Miami.

Such eminence transformed Miami into a Cuban-led, Hispanic city. The Cubans did not, in the traditional pattern, create an enclave immigrant neighborhood. Instead, they created an enclave city with its own culture and economy, in which assimilation and Americanization were unnecessary and in some measure undesired. By 2000, Spanish was not just the language spoken in most homes, it was also the principal language of commerce, business, and politics. The media and communications industry became increasingly Hispanic. In 1998, a Spanish-language television station became the number-one station watched by Miamians ��� the first time a foreign-language station achieved that rating in a major U.S. city. ���They���re outsiders,��� one successful Hispanic said of non-Hispanics. ���Here we are members of the power structure,��� another boasted.

���In Miami there is no pressure to be American,��� one Cuban-born sociologist observed. ���People can make a living perfectly well in an enclave that speaks Spanish.��� By 1999, the heads of Miami���s largest bank, largest real estate development company, and largest law firm were all Cuban-born or of Cuban descent. The Cubans also established their dominance in politics. By 1999, the mayor of Miami and the mayor, police chief, and state attorney of Miami-Dade County, plus two-thirds of Miami���s U.S. Congressional delegation and nearly one half of its state legislators, were of Cuban origin. In the wake of the Eli��n Gonz��lez affair in 2000, the non-Hispanic city manager and police chief in Miami City were replaced by Cubans.

The Cuban and Hispanic dominance of Miami left Anglos (as well as blacks) as outside minorities that could often be ignored. Unable to communicate with government bureaucrats and discriminated against by store clerks, the Anglos came to realize, as one of them put it, ���My God, this is what it���s like to be the minority.���

The Anglos had three choices. They could accept their subordinate and outsider position. They could attempt to adopt the manners, customs, and language of the Hispanics and assimilate into the Hispanic community������acculturation in reverse,��� as the scholars Alejandro Portes and Alex Stepick labeled it. Or they could leave Miami, and between 1983 and 1993, about 140,000 did just that, their exodus reflected in a popular bumper sticker: ���Will the last American to leave Miami, please bring the flag���...

#mondaysmackdown #orangehairedbaboons #racism #fascism

Scott Aaronson: Why Philosophers Should Care About Comput...

Scott Aaronson: Why Philosophers Should Care About Computational Complexity: "One might think that, once we know something is computable, how efficiently it can be computed is a practical question with little further philosophical importance. In this essay, I offer a detailed case that one would be wrong. In particular, I argue that computational complexity theory���the field that studies the resources (such as time, space, and randomness) needed to solve computational problems���leads to new perspectives on the nature of mathematical knowledge, the strong AI debate, computationalism, the problem of logical omniscience, Hume���s problem of induction, Goodman���s grue riddle, the foundations of quantum mechanics, economic rationality, closed timelike curves, and several other topics of philosophical interest. I end by discussing aspects of complexity theory itself that could benefit from philosophical analysis...

#noted

Miriam Bruhn, Dean Karlan, and Antoinette Schoar: The Imp...

Miriam Bruhn, Dean Karlan, and Antoinette Schoar: The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico: "A randomized control trial with 432 small and medium enterprises in Mexico shows positive impact of access to 1 year of management consulting services on total factor productivity and return on assets. Owners also had an increase in 'entrepreneurial spirit' (an index that measures entrepreneurial confidence and goal setting). Using Mexican social security data, we find a persistent large increase (about 50 percent) in the number of employees and total wage bill even 5 years after the program. We document large heterogeneity in the specific managerial practices that improved as a result of the consulting, with the most prominent being marketing, financial accounting, and long-term business planning...

#noted

Comment of the Day: Ronald Brakels: "Why do they publicly...

Comment of the Day: Ronald Brakels: "Why do they publicly hate trans people? Because they no longer get a thrill/votes from publicly hating gay people. It may be hard to see from the inside, but here in foreignland it is very clear that once people who wear suits stopped automatically nodding their heads in agreement with politicians who relied on casting themselves as being in opposition to a despised out group of people who have homosexual relations or look like they might, they pivoted to hating trans people. It all lookws horrifically artificial from over here. They are setting out to ruin lives and drive people to suicide because they find that preferable to obtaining political success by standing for something other than standing in opposition to some hated other.

[byomtov]: "Why do they publicly hate trans people? Because they no longer get a thrill/votes from publicly hating gay people. It may be hard to see from the inside. Not hard to see at all. The need is to hate someone. Once it becomes unacceptable to hate (at least publicly) some groups-Jews, blacks, homosexuals-it becomes necessary to find a new target...

#commentoftheday

James D. Muhly: Sources of Tin and the Beginnings of Bron...

James D. Muhly: Sources of Tin and the Beginnings of Bronze Metallurgy: "Although there is still some uncertainty over exact details, it is now generally agreed that arsenical copper was produced by the direct smelting of an arsenical copper ore. The arsenic came down into the molten copper because it was present in the ore body, not because it had been added as a separate alloying element. It was thus impossible to control the amount of arsenic present in the copper. Published analyses of arsenical copper artifacts covering the years 4000-2000 B.C. show that arsenic content varied widely, supporting the theory that arsenical copper is a natural alloy...

#noted

Monday Smackdown/Hoisted from the Archives: Scott Sumner Knew Better than to Do This!

Hoisted from 2011: Sumner really knew better than to do this, and really ought to have restrained himself:

Scott Sumner: A Slightly Off-Center Perspective on Monetary Problems: "They are both basically saying: 'if we hold nominal spending constant, fiscal policy can���t fix it.'... [I]t���s really rather sad when people like Krugman and Brad DeLong keep insisting that these guys don���t understand basic macro principles.... I don���t know for sure that Fama was using the same implicit assumption... [but] I think it quite likely that Fama was also cutting corners.... Lots of brilliant people talking past each other.... Welcome to elite macroeconomics, circa 2011.... If I was going to assign blame I���d single out Krugman/DeLong for rudeness and Fama/Cochrane for poor communication skills...

Me:

Economists' Views of Fiscal Policy: RetCon Department: The argument that Sumner attributes to Cochrane and Fama (and, wrongly, to Barro) is not a coherent argument: if you say "if I assume that fiscal policy does not affect nominal spending, then fiscal policy does not affect nominal spending, and so I have proved my case" you haven't made an argument at all....

A coherent argument would have to succeed in arguing both....

Even though the government is a very large organization that does not need to back each dollar of its spending by the same amount of transactions cash money as private households, when the government ramps up its spending the extra transactions cash balances it needs to hold will lead to an equal reduction in the transactions cash balances in the hands of households....

Even though right now short-term safe nominal interest rates are zero and a great many households and businesses are holding cash as a safe savings vehicle rather than treating it as part of their transactions cash balances... bond sales by the Federal Reserve will not lead households and businesses to swap out that cash in their portfolio for Treasury bonds and so raise the transactions money stock.

Cochrane and Fama, of course, do not make either of those arguments convincingly. They do not make either of those arguments at all....

And do recall the initial markers laid down by those who claimed that fiscal expansion would have no effects at all:

John Cochrane: [That spending can spur the economy] is not part of what anybody has taught graduate students since the 1960s. They are fairy tales that have been proved false. It is very comforting in times of stress to go back to the fairy tales we heard as children but it doesn���t make them less false...

John Cochrane: Most fiscal stimulus arguments suffer from three basic fallacies. First, if money is not going to be printed, it has to come from somewhere. If the government borrows a dollar from you, that is a dollar that you do not spend, or that you do not lend to a company to spend on new investment. Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can���t help us to build more of both. This is just accounting, and does not need a complex argument about ���crowding out���...

John Cochrane: Suppose... people or banks... are pathologically sitting on cash.... Suppose the government could [re]direct that money to people who are willing to keep spending it.... This is not a convincing analysis of the present situation however...

Eugene Fama: Government bailouts and stimulus plans seem attractive when there are idle resources - unemployment. Unfortunately, bailouts and stimulus plans are not a cure. The problem is simple: bailouts and stimulus plans are funded by issuing more government debt. (The money must come from somewhere!) The added debt absorbs savings that would otherwise go to private investment. In the end, despite the existence of idle resources, bailouts and stimulus plans do not add to current resources in use. They just move resources from one use to another���. A common counter to my arguments about why stimulus plans don't work is to claim that the current situation is different. Specifically, the investment equal savings equation doesn't work because savers currently prefer to invest in low risk assets like government bonds rather than in potentially productive but more risky private investment projects. In other words, there is a "flight to quality." Sorry, but this is a fallacy. A flight to quality does raise the prices of less risky assets and lower the prices of more risky assets. But when new savings are used to buy government bonds, the people who sold the bonds must do something with the proceeds. In the end, the new savings have to work their way through to new private investment, and equation (1) always holds.

Robert Lucas: Christina Romer--here's what I think happened. It's her first day on the job and somebody says, you've got to come up with a solution to this--in defense of this fiscal stimulus, which no one told her what it was going to be, and have it by Monday morning.... [I]t's a very naked rationalization for policies that were already, you know, decided on for other reasons���. If we do build the bridge by taking tax money away from somebody else, and using that to pay the bridge builder--the guys who work on the bridge -- then it's just a wash... there's nothing to apply a multiplier to. (Laughs.) You apply a multiplier to the bridge builders, then you've got to apply the same multiplier with a minus sign to the people you taxed to build the bridge. And then taxing them later isn't going to help, we know that...

In claiming that Cochrane and Fama were really only making the tautological claim that "if we assume nominal GDP is fixed, fiscal policy doesn't affect nominal GDP", Scott is retconing.

"Retcon" is short for "retroactive continuity": the classic example is Damian Cugley's analysis of the coming series Saga of the Swamp Thing, in which a new issue revealed "facts" that up to that point "[were] not part of the narrative and were not intended by earlier writers.... The revelation is that the [Swamp Thing's] memories are false and he is not who he thinks he is...

#economicsgonewrong #fiscalpolicy #highlighted #hoistedfromthearchives #macro #mondaysmackdown #orangehairedbaboons

Let Me Smackdown Jared Bernstein on International Trade Here...

I really, really wish Jared Bernstein would not do this. It is simply not the case���as he knows well���that policymakers "quickly forgot about the need to compensate for the losses" from expanded international trade. Democratic policymakers���of whom Jared is one���well-remembered this, but after November 1994 did not have the power. Republican policymakers did not see the need as a need at all: they did not forget it: they ignored it.

Do you want to know what I think? I think a lot of not completely consistent things. Here are three things to read:

2017: Gains from Trade: Is Comparative Advantage the Ideology of the Comparatively Advantaged?: The true arguments for free trade have always been a level or two deeper than 'comparative advantage': that optimal tariff equilibrium is unstable; that other policy tools than trade restrictions resolve unemployment in ways that are not beggar-thy-neighbor; that countries lack the administrative competence to successfully execute manufacturing export-based industrial policies; that trade restrictions are uniquely vulnerable to rent seeking by the rich; and so forth. The... internal misdistribution hole...[patched by] the late 19th C. 'social Darwinist' redefinition of the social welfare function as not the greatest good of the greatest number but as the evolutionary advance of the 'fittest'���that is, richest���humans.... 'Comparative advantage'... an exoteric teaching: an ironclad mathematical demonstration that provides a reason for believing political-economic doctrines that are in fact truly justified by more complex and sophisticated arguments... more debatable and dubious than a mathematical demonstration that via free trade Portugal sells the labor of 80 men for the products of the labor of 90 while England sells the labor of 100 men for the products of the labor of 110...

2016: The Benefits of Free Trade: Time to Fly My Neoliberal Freak Flag High!: I figure that, all in all, not 5% but more like 30% of net global prosperity���and considerable reduction in cross-national inequality���is due to globalization. That is a very big number indeed. But, remember, even the 5% number cited by Krugman is a big deal: 4 trillion a year, and perhaps 130 trillion in present value...

2008: Brad DeLong: Trade and Distribution: A Multisector Stolper-Samuelson Finger Exercise: We have a world with multiple sectors and with substantial differences in factor endowment intensities... a fair degree of formal and informal cross-ownership���formal cross-ownership via property rights... the financing of the government... labor rent sharing, efficiency wages, monopoly power based on location, monopolistic competition, and all the other deviations from perfect competition that can give... stakeholders... effective claim on the cash flows.... Thus it seems a slam-dunk to presume that in the real world free trade is very likely to benefit the overwhelming majority of people in nearly every country, in spite of the intuitions generated by the two-good two-factor two-country version of Stolper-Samuelson...

And here is Jared:

Jared Bernstein: What Economists Have Gotten Wrong For Decades: "theory never said expanded trade would be win-win for all. Instead, it (and its more contemporary extensions) explicitly said that expanded trade generates winners and losers, and that the latter would be our blue-collar production workers exposed to international competition. True, the theory maintained (correctly in my view) that the benefits to the winners were large enough to offset the costs to the losers and still come out ahead. But as trade between nations expanded, policymakers quickly forgot about the need to compensate for the losses...

#mondaysmackdown #freetrade #globaliztion #highlighted

Scott Aaronson: On Two Blog Posts of Jerry Coyne: "David ...

Scott Aaronson: On Two Blog Posts of Jerry Coyne: "David Gelernter... right-wing commentator... argued that recent work has definitively disproved Darwinism as a mechanism for generating new species, and until something better comes along, Intelligent Design is the best available alternative.... Gelernter���s argument falls flat... because it indulges in bad math and computer science.... Gelernter says that (a) a random change to an amino acid sequence will pretty much always make it worse, (b) the probability of finding a useful new such sequence by picking one at random is at most ~1 in 10^77, and (c) there have only been maybe ~10^40 organisms in earth���s history. Since 10^77 >> 10^40, Darwinism is thereby refuted���not in principle, but as an explanation for life on earth. QED. Gelernter can���t personally see how a path could cut through the exponentially large solution space in a polynomial amount of time, so he asserts that it���s impossible. Many of the would-be P���NP provers who email me every week do the same. But this particular kind of 'argument from incredulity' has an abysmal track record: it would���ve applied equally well, for example, to problems like maximum matching that turned out to have efficient algorithms. This is why, in CS, we demand better evidence of hardness���like completeness results or black-box lower bounds���neither of which seem however to apply to the case at hand. Surely Gelernter understands all this, but had he not, he could���ve learned it from my lecture at the workshop in France!...

#noted

I disagree: at some level, this is a joke; I'm just not s...

I disagree: at some level, this is a joke; I'm just not sure at what level: Justin Weinberg: Mini-Heap: "Colin McGinn launches consulting firm handling matters 'from workplace ethics to catastrophe avoidance'���I���m assured this is not a joke. Do check out the list of advisors... Philosophical Applications: "We bring the right people together to challenge established thinking and drive transformation.... Advisors: Roger Scruton... Rebecca Goldstein... Simon Blackburn... Thomas Nagel... Stephen Pinker... Michael Shermer... A.C. Grayling... Marie McGinn...

#noted

Mistermix: Only Play with Money, Careful: "Atrios, on why...

Mistermix: Only Play with Money, Careful: "Atrios, on why Democratic Senators in purple states don���t support popular things....'Polls say it���s popular but a candidate can���t win if they support it? Does not compute does not compute beep beep beep. The reason it does compute is that... the calculation is not 'boy if I support a higher minimum wage then the voters will get mad'. The calculation is 'boy if I support a higher minimum wage then the voters will like that, BUT the Chamber of Commerce types will dump a bunch of money into the race to oppose me and run ads calling me a child molester (or highlighting something else that might be unpopular about me)'. Supporting the popular thing is a problem not because the popular thing is unpopular (by definition!), but because it���s tough to win as a Democrat generally and extra hard if the big money comes after you.' I think this describes the mindset correctly, but I don���t know if it reflects the current reality.�� Whether or not you support something popular, if you���re a Democrat in a state that���s anything but completely blue, there is so much third-party money in these races that you���re going to be awash in negative ads for months prior to the election.��So you might as well shout out loud and proud about popular things like a minimum wage hike, because the millions in third party spending will be there anyways...

#noted