J. Bradford DeLong's Blog, page 153

Hoisted from the Archives: What Was the Point of Robert Woodward's "The Agenda"?

What the Washington Post's headline writers thought that Bob Woodward's The Agenda: Inside the Clinton White House was about back in 1994:

Clinton Felt Blindsided Over Slashed Initiatives; 'We're Losing Our Soul' in Cutting Deficit. President and the Fed Forge New Relationship; Greenspan's Economics Lesson Etches Deep Impression in the Clinton Plan. Memo From Consultants Rattles the White House; 'Turkey' of a[n Economic Deficit-Reduction] Plan Still Needed Selling. A War Among Advisers For the President's Soul; Decision-Making, Clarity of Vision Suffer

According to the Washington Post's headline writers (and according to pretty damn near everybody else who read The Agenda that I have talked to), Woodward's book tells the story of a president who (a) feels "blindsided" by their actions, (b) feels that the policies his administration is adopting means that he is losing his soul, (c) finds that the Republican Federal Reserve Chair's views are etching a deep impression on policy, (d) finds himself stuck with a "turkey" of an economic plan, (e) has advisors who fight fiercely in order to (f) control a wishy-washy president, and as a result (g) decision-making suffers and (h) clarity of vision is lost.

Now I was there.

(a) is simply wrong. (b) is sorta true, sorta false--Clinton was conflicted. (c) is true. (d) is false--it was a damned good economic plan. (e) is true. But (f) is false: wrestling intently and intelligently with hard choices does not make you the puppet of your advisors. (g) is wrong: the process produced a very good outcome. And (h) is wrong too.

I want to set this out because in comments we have Bob Woodward claiming that his book was about... something else than the Washington Post headline writers who got the first excerpts from it and published them thought it was about:

Why Oh Why Can't We Have a Better Press Corps?: Why can't we have better economists and better old-time bipartisan hands? That is my question to you guys. You are so loose with information.

First, I never said we knew less than 5 percent; I quoted Al Gore saying we only knew 1 percent. I never said I missed the big economic story. The Agenda came out in 1994, and it was impossible to assess the impact of Clinton's economic plan. Go read the epilogue (pages 321 to 343) that reports on a range of views (I never reach a conclusion, as you would know if you read what is in the book). Bob Rubin is reported to have told Clinton: "We've created a solid foundation with the deficit reduction and commitment to new investments." But he said the best answer to the question of how the economy would fare by 1996 was, "Who the hell knows?" Good answer.

Bentsen told the president "that is would take time for him to reap the rewards from his economic plan."

George Stephanopoulos "felt they were on the right track, and so far, Clinton had more than his part."

There is no way to read that epilogue or anything in the book and say I reached conclusions. Did not happen. In media promotion for the book, I did say that the process was "chaos," but I always said we do not know how it might work. (The chaos comment is easy to remember, but the measured truth that we just don't know is not as memorable. Rubin had it right.)

The old-hand says I am guilty of "disregarding results and outcomes." This is comic. In 1994 it was impossible to know. I cite Rubin again.

This old-hand likewise says that I "mistakenly concluded Bush and his aides were first-rate policy makers." Read the books. Never happened.

Brad, you better find an old-hand who can read.

I have said repeatedly that the Clinton economic plan turned out exceptionally well, probably better than anyone expected. I have even said it is the crown-jewel of the Clinton presidency. But no one could tell in 1994. You can't put in a book what has not yet happened.

#hoistedfromthearchives #publicsphere




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Note to Self: The establishment-survey payroll-employment...

Note to Self: The establishment-survey payroll-employment number (red line) contain within them a guess as to how many newly-formed forms there are that have not yet caught up to and entered the payroll system. When a recession starts, that guess at the fudge factor can be way high.

On the other hand, the household-survey employment number (blue line) has a lot more statistical noise in it.

The bet right now is that late last year the household survey interviewers just happened by luck on a bunch of people enthusiastic about working, but nothing is guaranteed. It might be that the firm birth-death guess is leading the establishment survey (red line) astray:

(There also, of course, is the consideration that the establishment-survey counts a person with two jobs twice, and a person who is off-the-books not at all, and there is no reason why those numbers should be constant fractions of employment.)

#notetoself #macro #forecasting #labormarket

Duncan Black: "But Trump Was Always Like This": "Many peo...

Duncan Black: "But Trump Was Always Like This": "Many people say Trump has not changed, that he was like this all of his life, and that the brain worms don't exist. 1990s Trump was a dumbass lying blowhard just like the current one, but he wouldn't have talked about George Washington and the airports...

#noted

Ok. But what drives these differential rates of return, a...

Ok. But what drives these differential rates of return, anyway? And how much can this really approach the dream of taxing luck and inheritance rather than enterprise?:

Fatih Guvenen: Use It Or Lose It: Efficiency Gains from Wealth Taxation: "When individuals differ from each other in the rate of return they earn... capital income and wealth taxes have opposite implications for efficiency as well as for some key distributional outcomes. Under capital income taxation, entrepreneurs who are more productive... pay higher taxes. Under wealth taxation, on the other hand, entrepreneurs who have similar wealth levels pay similar taxes regardless of their productivity.... A revenue-neutral tax reform that replaces capital income tax with a wealth tax raises average welfare by about 8% in consumption-equivalent terms.... The optimal wealth tax is positive, yields larger welfare gains than the tax reform, and is preferable to optimal capital income taxes.... Wealth taxes can yield both efficiency and distributional gains...

#noted

The echoes of the 1930s appear to me to be getting strong...

The echoes of the 1930s appear to me to be getting stronger and stronger. Hannah Arendt���who did not show up in the United States until 1941���always thought we were better than we were, and are: more insulated from European nihilism:

Charles Sykes: Some Thoughts on David French���s Thoughts: "This seems a good time to remind you to go get a copy of Hannah Arendt���s Origins of Totalitarianism, in which she describes the rise of fashionable cruelty among the intellectual elites of the 1930s. Arendt writes about how 'it seems revolutionary to admit cruelty, disregard for human values, and general amorality, because this at least destroyed the duplicity upon which the existing society seemed to rest. What a temptation to flaunt extreme attitudes in the hypocritical twilight of double moral standards, to wear publicly the mask of cruelty if everybody was patently inconsiderate and pretended to be gentle'...

#noted

The late and persistent apparent rise in margins pretty m...

The late and persistent apparent rise in margins pretty much everywhere in the U.S. economy is one of the most surprising things to happen in the past generation. I do not know anyone very confident they know why this has taken place, or what all of its implications are. But it does seem highly likely that it calls for tougher antitrust policy. Here we have some very smart words from a murderers' row of thoughtful experts:

Jonathan B. Baker, Nancy L. Rose, Steven C. Salop, and Fiona Scott Morton: Five Principles to Guide Vertical Merger Enforcement: "Agencies should consider and investigate the full range of potential anti-competitive harms.... Agencies should decline to presume that vertical mergers benefit competition on balance in... oligopoly markets.... Agencies should evaluate claimed efficiencies resulting from vertical mergers as carefully and critically as they evaluate claimed efficiencies resulting from horizontal mergers.... Agencies should decline to adopt a safe harbor for vertical mergers, even if rebuttable.... Agencies also should consider adopting presumptions (rebuttable) that a vertical merger harms competition when certain factual predicates are satisfied...

#noted #worthyreads

Comment of the Day: Ronald Brakels: "If you record a bitc...

Comment of the Day: Ronald Brakels: "If you record a bitch's new born puppy and then play that sound on a tape deck or other audio device the bitch will pick up that device and treat it like a pup. Dogs have about 2 billion plus neurons but this shows they are still very stupid. But no one seems to have a problem with this epic level of idiocy in our closest animal companions, but as soon as a program identifies a tape player as a puppy people can't wait to mock it for being so stoopid And they're right. It is stoopid. But they always seem to overlook the fact we're pretty stoopid ourselves. Take, for example, pornography. Humans can be fooled by glowing phosphors into sexual activity that has pretty much zero chance of creating descendants.

#commentoftheday

Liveblogging: The Anglo-Saxon Chronicle: The Holy Pope Gregory, and Columba

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): The Holy Pope Gregory, and Columba]: "A.D. 560. This year Ceawlin undertook the government of the West-Saxons; and Ella, on the death of Ida, that of the Northumbrians; each of whom reigned thirty winters...

...Ella was the son of Iff, Iff of Usfrey, Usfrey of Wilgis, Wilgis of Westerfalcon, Westerfalcon of Seafowl, Seafowl of Sebbald, Sebbald of Sigeat, Sigeat of Swaddy, Swaddy of Seagirt, Seagar of Waddy, Waddy of Woden, Woden of Frithowulf.

This year Ethelbert came to the kingdom of the Cantuarians, and held it fifty-three winters.

In his days the holy Pope Gregory sent us baptism. That was in the two and thirtieth year of his reign. And Columba, the mass-priest, came to the Picts, and converted them to the belief of Christ. They are the dwellers by the northern moors. And their king gave him the island of Hii, consisting of five hides, as they say, where Columba built a monastary. There he was abbot two and thirty winters; and there he died, when he was seventy-seven years old. The place his successors yet have.

The Southern Picts were long before baptized by Bishop Ninnia, who was taught at Rome. His church or monastery is at Hwiterne, hallowed in the name of St. Martin, where he resteth with many holy men. Now, therefore, shall there be ever in Hii an abbot, and no bishop; and to him shall be subject all the bishops of the Scots; because Columba was an abbot���no bishop...

#liveblogging #history #anglosaxonchronicle

U.C. Davis economic historian Eric Rauchway continues his...

U.C. Davis economic historian Eric Rauchway continues his long twilight struggle against the Obama administration's claims that it did better with its crises than FDR did with his in the Great Depression-ridden 1930s. I'm with Eric here: Roosevelt knew less about how the economy worked and what to do, yet in retrospect did much better given the state of things when he took office. He did not know what to do other than to try everything and reinforce success. He did not know what the New Deal would be. But he definitely knew that there would be a New Deal:

Eric Rauchway: The New Deal Was on the Ballot in 1932: "During the 1932 campaign, Franklin Roosevelt explicitly committed himself to nearly all of what would become the important programs of the New Deal. In the months before his March 4, 1933, inauguration, he made his proposed policies even clearer. Yet many Americans have forgotten this clarity of purpose.... One historian [Roger Daniels] recently declared, 'The notion that when Franklin Roosevelt became president he had a plan in his head called the New Deal is a myth that no serious scholar has ever believed'. Outgoing president Herbert Hoover (and voters and politicians and diplomats at the time) knew better...

#noted

It's not "the market or the state"; it is, almost always,...

It's not "the market or the state"; it is, almost always, "the market and the state". A state that can enforce property rights is highly likely to be able to do a lot more useful things. A state that cannot do many useful things���one that is incompetent or corrupt���is highly likely to be unable to enforce the property rights that underpin markets either: Timothy Besley and Torsten Persson: The Origins of State Capacity: Property Rights, Taxation, and Politics: "'Policy choices' in market regulation and taxation are constrained by past investments in the legal and fiscal capacity of the state. We study the economic and political determinants of such investments and find that legal and fiscal capacity are typically complements. Our theoretical results show that, among other things, common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity of both forms. Our preliminary empirical results uncover a number of correlations in cross-country data which are consistent with the theory...

#noted