J. Bradford DeLong's Blog, page 157

A Year Ago on Equitable Growth: Fifteen Worthy Reads from Around the Week of July 5, 2018

Most Important: 1921���six years after the Ku Klux Klan revival sparked by "Birth of a Nation"���the early 20th Century's "Uncle Tom's Cabin" in reverse: 39 officially dead, 800 wounded, more than 35 blocks destroyed, more than 10000 people left homeless: Erik Loomis (2016): Tulsa: "The Tulsa Race Riot is one of the most shameful events in all of American history and as we know, that���s a high bar to meet...

Worthy Reads at Equitable Growth:

Austin Clemens: Realizing the promise of place-based economics requires more and better data from across the United States - Equitable Growth: "The recent pivot by researchers and policymakers to studying the economics of place is a welcome development. But this research is especially data intensive. If policymakers are serious about the promise of place-based policymaking, then they also need to be serious about collecting good data and making it accessible to researchers...

Raj Chetty, Nathaniel Hendren, Maggie R. Jones, and Sonya R. Porter: Race and economic opportunity in the United States: "Racial disparities persist across generations in the US.... Black men have much lower chances of climbing the income ladder than white men even if they grow up on the same block. In contrast, black and white women have similar rates of mobility...

Heather Boushey and Greg Leiserson: Worsening Inequality: "The Tax Act worsens inequality both in the tax changes and in the program cuts used to address the resulting deficit...

Gabriel Zucman: If Ronaldo Can���t Beat Uruguay, the Least He Can Do Is Pay Taxes: "Have you ever been invited by a Swiss bank to a golf tournament in Miami or an exhibition���s opening in Paris? Neither have I. But the world���s ���ultrahigh-net-worth individuals������whether they live in the United States, France or elsewhere���regularly are. Law firms and financial intermediaries sell the superrich on shell companies, offshore bank accounts, trusts and foundations���arrangements whose purpose is to conceal assets by disconnecting wealth, and the income it generates, from its actual owner. Although this industry presents itself as legal and legitimate, in many cases the products it sells are illegal...

Gene Kimmelman and Mark Cooper: A communications oligopoly on steroids: "Only with appropriately focused regulatory oversight alongside strict antitrust enforcement can the service providers in the cable, telecommunications, wireless, and broadband industries be driven to offer competitive, nondiscriminatory, innovative, and socially beneficial video and broadband services that maximize consumer value and choice in both the economic market and the marketplace of ideas...

Worthy Reads Elsewhere:

Janos Kornai: Speaking for Open Inquiry at the Central European University: "I am very proud to have been awarded the Open Society Prize.... CEU does more than merely advocate the idea of university autonomy, the fundamental principle of the world of universities that goes back hundreds of years. CEU embodies that idea in the way it works, giving us an example of how to put it into practice. The life of CEU is characterized by free debate, discussion of conflicting ideas, competition between schools of thought, openness to alternative principles, and diversity. Ideas do not recognize borders, do not apply for entry or exit visas...

Given the magnitude of the shocks that have hit the world economy since 2005, Alan Greenspan's decision in the mid-1990s to set the Federal Reserve's inflation target at 2% per year rather than 3% or 4% per year looks like a bad mistake. Given what they learned and what we are still learning since 2005, Ben Bernanke, Janet Yellen, and now Jay Powell's refusal to revisit Greenspan's decision is more likely than not to prove a worse mistake. So I go further out on this limb than does the very sharp Karl Smith: Karl Smith: Hey Fed, Don���t Be Scared of a Little More Inflation: "Even if the economy is at full employment, there���s benefit to letting it run hot for a while...

It would be good for me to understand this: Victor Chernozhukov et al.: [1608.00060] Double/Debiased Machine Learning for Treatment and Causal Parameters: "Most modern supervised statistical/machine learning (ML) methods are explicitly designed to solve prediction problems very well..

Required for equitable growth: predictability���established rules of the game and due process of law, rather than random reality-TV policies by chaos monkeys. Also required: an activist government willing to create and support the communities of engineering practice and the essential services that underpin the highly-productive value chains of the future. Plus a willingness to enforce an equitable income distribution. Ricardo Hausmann fears that the United States���at least the Trump-dominated United States���has none of these: Ricardo Hausmann: Does the West Want What Technology Wants? : "To ascertain what technology wants requires understanding what it is and how it grows. Technology is really three forms of knowledge...

The answer is: probably in the late 1960s: Joe McMahon: When was the last time all the computing power in the world equaled one iPhone?: "When was the last time all the computing power in the world equaled one iPhone?...

es, the ability to plan your family while being sexually active was a huge liberating force for young American women in the mid-20th Century: Claudia Goldin and Lawrence Katz: The Power of the Pill: Oral Contraceptives and Women's Career and Marriage Decisions

"Perhaps smack of desperation, and pull us into a tighter relationship with other parts of government"���those were the arguments of Vince Reinhart in 2003 against the aggressive policies (like currency depreciation, money-financed tax cuts, discount-window lending, purchases of corporate debt and equity, and reductions in reserve requirements) that Ben Bernanke had previously argued that a central bank should follow at the zero lower bound. But if you maintain your independence by not doing the right thing, you were never independent in the first place. And desperation is the appropriate response to being at the zero lower bound on interest rates: it is a desperate situation. I think that somehow Bernanke (and Reinhart, and the Fed) came to believe that "encouraging investors to expect short rates to be lower in the future than they currently anticipate; shifting relative supplies to affect risk premiums; oversupplying reserves at the zero funds rate" had a good chance of being effective. It was not clear to me why they should have thought this. And it looks like they were wrong: Laurence Ball (2012): Ben Bernanke and The Zero Bound (as in Hausmann, Hwang, and Rodrik 2007) the only robust determinant of economic growth? Robust, that is, to correcting for endogenity and OVB as best as possible? This new paper from the IMF says yes https://t.co/C3DkRzqr8d..."

1921���six years after the Ku Klux Klan revival sparked by "Birth of a Nation"���the early 20th Century's "Uncle Tom's Cabin" in reverse: 39 officially dead, 800 wounded, more than 35 blocks destroyed, more than 10000 people left homeless: Erik Loomis (2016): Tulsa: "The Tulsa Race Riot is one of the most shameful events in all of American history and as we know, that���s a high bar to meet...

#noted
#equitablegrowth
#hoistedfromthearchives

Liveblogging: The Anglo-Saxon Chronicle: Cerdic and Cynric

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Cerdic and Cynric: "A.D. 501. This year Porta and his two sons, Beda and Mela, came into Britain, with two ships, at a place called Portsmouth. They soon landed, and slew on the spot a young Briton of very high rank...

...A.D. 508. This year Cerdic and Cynric slew a British king, whose name was Natanleod, and five thousand men with him. After this was the land named Netley, from him, as far as Charford.

A.D. 509. This year St. Benedict, the abbot, father of all the monks, ascended to heaven.

A.D. 514. This year came the West-Saxons into Britain, with three ships, at the place that is called Cerdic's-ore. And Stuff and Wihtgar fought with the Britons, and put them to flight.

A.D. 519. This year Cerdic and Cynric undertook the government of the West-Saxons; the same year they fought with the Britons at a place now called Charford. From that day have reigned the children of the West-Saxon kings.

A.D. 527. This year Cerdic and Cynric fought with the Britons in the place that is called Cerdic's-ley.

A.D. 530. This year Cerdic and Cynric took the isle of Wight, and slew many men in Carisbrook.

A.D. 534. This year died Cerdic, the first king of the West-Saxons. Cynric his son succeeded to the government, and reigned afterwards twenty-six winters. And they gave to their two nephews, Stuff and Wihtgar, the whole of the Isle of Wight...

#liveblogging #history #anglosaxonchronicle

Hoisted from July 3, 2008: Optimal Control

Hoisted from July 3, 2008 Optimal Control: Was the Federal Reserve too volatile and hair-trigger? Or was the ECB too sluggish?:

#shouldread

Worthy Reads for January 3, 2019

Worthy Reads at Equitable Growth

If you have not already read all of the WCEG's top 12 of 2018, go read them now: Equitable Growth: Top 12 of 2018: "The effects of wealth taxation on wealth accumulation and wealth inequality.... Why macroeconomics should further embrace distributional economics.... The links between stagnating wages and buyer power in U.S. supply chains.... U.S. income growth has been stagnant. To what degree depends on how you measure it.... Income inequality and aggregate demand in the United States.... Presentation: U.S. Inequality and Recent Tax Changes.... The latest research on the efficacy of raising the minimum wage above $10 in six U.S. cities.... Competitive Edge: There is a lot to fix in U.S. antitrust enforcement today.... Labor Day is a time to reflect on reviving workers��� power in the U.S. economy.... Kaldor and Piketty���s facts: The rise of monopoly power in the United States.... How the rise of market power in the United States may explain some macroeconomic puzzles.... Puzzling over U.S. wage growth...

Robert Bork and his followers' belief that the test for anticompetitive behavior was whether it could be moved anticompetitive in theory beyond a reasonable doubt was poisonous. And here we see people having to argue against it again in a new context: Jonathan B. Baker and Fiona Scott Morton: Antitrust Enforcement Against Platform MFNs: "Antitrust enforcement against anticompetitive... pricing parity provisions... can help protect competition in online markets.... These contractual provisions may be employed by a variety of online platforms offering, for example, hotel and transportation bookings, consumer goods, digital goods, or handmade craft products. They have been the subject of antitrust enforcement in Europe but have drawn only limited antitrust scrutiny in the United States. Our Feature explains why MFNs employed by online platforms can harm competition by keeping prices high and discouraging the entry of new platform rivals, through both exclusionary and collusive mechanisms, notwithstanding the possibility that some MFNs may facilitate investment by limiting customer freeriding...

The Joint Tax Committee should do this, staring January 4, 2019: Greg Leiserson and Adam Looney: A framework for economic analysis of tax regulations - Equitable Growth: "The economic analysis conducted in these cases should focus on the revenues raised and the economic burden imposed on the public as a result of the agencies��� exercise of discretion or the new application of existing authority. The revenues raised and the burden imposed reflect the fundamental tradeoff in taxation, and thus determine a regulation���s costs and benefits. However, the analysis should not attempt to quantify the net benefit or net cost of a regulation as doing so would require the agencies to make controversial assumptions about the social value of revenues and the appropriate distribution of the tax burden. Treasury���s Office of Tax Analysis is well-equipped to provide estimates of revenues and burden as they can be built from analyses the Office already produces: revenue estimates, distributional analyses, and compliance cost estimates...

We here at Equitable Growth are certainly doing a good job of picking them, so far: Corey Husak: "So excited and honored that 5 of the 8 Best Young Economists named by @TheEconomist are grantees of @equitablegrowth! Its great to work with and fund the best economic minds of our generation https://twitter.com/TheEconomist/status/1075370969789882368...

And if you want to join some future such list of 8, take a look at our current Equitable Grrowth Request for Proposals at: https://equitablegrowth.org/research-paper/request-for-proposals/?longform=true

 

Worthy Reads Elsewhere

Perhaps Congress's Pay-as-You-Go principle made some sense in the 1990s, when there were Republican as well as Democratic legislators willing to take it seriously. And you can argue that adopting it is a public relations rather than a substantive exercise���the House can waive it with a simple majority, and the Senate can waive it as easily as it can overcome a filibuster. So if there are the votes to circumvent the other procedural hurdles, there are the votes to waive PAYGO when it is desirable. But it is a strange thing to make a priority: Josh Bivens: The Bad Economics of PAYGO Swamp Any Strategic Gain from Adopting It: "A PAYGO rule means that any tax cut or spending increase passed into law needs to be offset in the same spending cycle with tax increases or spending cuts elsewhere in the budget.... Many Washington insiders assert forcefully that committing to PAYGO rules in the House for the next Congress is good politics.... The strength of evidence supporting this political claim is debatable. What���s less debatable is that PAYGO really has hindered progressive policymaking in the not-so-recent past. For example, it was commitments to adhere to PAYGO that led to the Affordable Care Act (ACA) having underpowered subsidies for purchasing insurance and, even more importantly, having a long lag in implementation...

That neither the Bernanke nor the Yellen Fed rethought its commitment to its���asymmetric!���2% per year inflation target has always been a mystery to me. Here the ex-President of the Federal Reserve Bank of Mnneapolis outlines some of the risks: Narayana Kocherlakota: The Fed���s Risky Plan to Boost Unemployment: "The Fed is planning to raise its interest-rate target above its long-run level of around 2.8��percent. We can actually see this happening in the Fed���s rate forecasts for the next three years.... The Fed is planning to eliminate over a million jobs���and put millions more at risk���in order to avoid a tiny deviation from its inflation target. I���ll leave it for readers to judge whether this is a desirable gamble...

60 million active Facebook users���and Facebook looks like a 2.5% boost to each on average in terms of real-income equivalence over and above its contribution to GDP. And Facebook is only one of five of the magical highly-valued tech FAANG companies���Facebook, Amazon, Apple, Netflix, Google. If they have equivalent benefits we are undervaluing growth at 0.5% per year. And what share are the FAANGs of societal surplus generated by tech? It is still possible to be a techno-optimist about economic growth: Jennifer Ouelette: Economists Calculate the True Value of Facebook to Its Users in New Study: "Facebook users required more than $1000 to deactivate their account for one year...

Civility makes for a better society. But expectations of civility are easily maintained only when violations are sanctioned, ummm..., in an uncivil fashion. This is a paradox of social life. But it has long been clear to me that those complaining about SJWs and "virtue signaling" are the bad guys here: Jeffrey A. Sachs: The SJWs Are Winning and You're All Just Going to Have to Deal With It: A thread.": "Reading this @JohnHMcWhorter piece is an exercise in vertigo. The central claim is that "third wave anti-racism" (i.e. the broad nexus of PC, social justice, and ID politics) is doomed to failure. That the aims are good, but strategically it's a dead end. This is a common view among centrist liberals and libertarians: 'Yes, racism and sexism are serious problems and must be addressed, but the SJW Left is going about it all wrong. In fact, its tactics are actually making these problems worse, not better'...

I confess I was split between thinking that (small) increases in minimum wages have no noticeable effect lowering employment because labor-supply curves are typically nearly vertical and thinking that (small) increases in minimum wages raise employment because they curb employer market power. But the evidence continues to pile up that Card and Krueger are right, and that it is the second���that there is no downside to raising minimum wages at all: Barry Ritholtz: What Minimum-Wage Foes Got Wrong About Seattle: "An initial study said the increase to $15 would cost workers jobs and hours. That didn���t happen.... The increase was an 'economic death wish' that was going to tank the expansion and kill jobs, according to the sages at conservative think tanks. The warnings were as unambiguous as they were specific...

The English-language public sphere broke a century after Gutenberg, with the coming of the cheap pamphlet and the resulting domination of the public sphere by the God-maddened, the bought-and-paid-for, the attention-seekers, and combinations of those categories. From John Knox's frantic denunciations of the wielding of political power by people with uteruses named Mary (Mary of Guise, Mary Tudor, and Mary Stuart) to Jonathan Swift's assuming the role of Breitbart to denounce the personal moral and the financial probity of the Whig politicians his Tory paymasters wanted out of office, the ability of the public sphere to separate wheat from chaff collapsed���and then, in the eighteenth century, recovered. We seem to have similar currents at work today: Bijan Parsia: Blocked on Twitter: "Noted author and literary journalist Ron Rosenbaum... made a mistake: https://twitter.com/RonRosenbaum1/status/1079006088522067969. The thread is hilarious: https://twitter.com/maxkennerly/status/1078777955562729472?s=21.... Ron did not handle this well.... I decided to jump in but to do so without mockery and with some attempt at sympathy: https://twitter.com/bparsia/status/1079073455725862913?s=21 In particular: https://twitter.com/bparsia/status/1079080278155579392?s=21 Welp, Ron did not like this and went down the insult trail until he blocked me.... Note that one move I made that definitely didn���t help was not giving him any way of being right. Of course, there is in fact no way for him to be right but it���s even harder for people to get out of those situations without a way of feeling that they were right about something...

If you are having trouble figuring out how to manage your information flow, consider what you would do if you wanted to make it as useless as possible���and then do the opposite: Barry Ritholtz: More Noise, Less Signal: "What would happen if you purposefully tried to assemble a ���How-to��� list to pursue the exact opposite goal���how to get more noise, and less signal? In other words, what are the exactly wrong things to do as an investor? I took last week���s list, and updated it to be the anti-list...

The very sharp Barry Ritholtz pleading for us to take what we can learn from different state experiences seriously: Barry Ritholtz (2016): The Counterfactual: "States, those so-called laboratories of democracy, have been engaging in a variety of different policy experiments.... Consider the following... fourteen states begin the new year with higher minimum wages... and, during the next few years, minimum wage increases are scheduled to take place in California, New York, Oregon and elsewhere. Regardless of your views... we will get a huge run of data in the coming years. Whatever your beliefs may be, you should pay attention to this data to learn if they are well-supported or not. We also see similar experiments taking place in tax policy.... During the past few years, we saw big tax cuts in Kansas, Louisiana and New Jersey, with big tax increases in others...

Why do people do this? Because it gets you invited back on to CNN. Why does it get you invited back on to CNN? That remaions a mystery to me, and to others: Brad Reed: Trump-Loving Economist Caught Red-Handed 'Making Up Numbers' by Ann Guest: "...

...Washington Post columnist Catherine Rampell busted Trump-loving economist Stephen Moore on Friday when he falsely claimed that we are seeing vast 'deflation' in the United States economy thanks to interest rate hikes by the Federal Reserve.... 'Wait, wait, wait!' interjected Rampell. 'There is no deflation!' 'Yeah there is', Moore replied. 'No there is not', she shot back. 'Look at the Consumer Price Index!'... Rampell then nailed Moore for his false warnings during the Obama presidency that it was unwise for the Fed to keep interest rates low because it would lead to hyperinflation���despite the fact that the economy at the time was deeply depressed and much more in need of easy money...

And why do people do this? Yes, if you assume that the U.S. economy is as proportionally tied in to the world economy and has as little weight in the world economy as Canada���and further assume falsely that the Federal Reserve has a hard target for the real exchange rate���you could "reasonably" argue that a policy like Trump's tax cuts would increase growth by as much as a quarter of percentage point per year. But a quarter is not a half. The U.S. is not like Canada in its size in and openness to the world economy. And the Federal Reserve is not fixing the exchange rate. An argument that requires three grossly false and important arguments to make it fly is not a reasonable one; Greg Mankiw: The Bad Economics Behind Trump's Policies : "One might reasonably argue that Trump���s tax cuts will increase growth over the next decade by as much as half a percentage point per year...

Willem Jongman (2006): The Decline and Fall of the Roman ...

Willem Jongman (2006): The Decline and Fall of the Roman Economy: "The real beginnings of that decline and fall, however, may have been in the beginning of a period of much colder and dryer weather, and in the scourge of the Antonine Plague. With the growth of its Empire, with the growth of its cities, and with the growth of a system of government and transportation based on those cities, Rome had created the perhaps most prosperous and successful pre-industrial economy in history. The age of Antoninus Pius was indeed probably the best age to live in pre-industrial history...

#noted

Mark Thoma sends us to: Chlo�� Michel, Michelle Sovinsky,...

Mark Thoma sends us to: Chlo�� Michel, Michelle Sovinsky, Eugenio Proto, and Andrew Oswald: Advertising as a Major Source of Human Dissatisfaction: "Although the negative impact of conspicuous consumption has been discussed for more than a century, the link between advertising and individual is not well understood. This column uses longitudinal data for 27 countries in Europe linking change in life satisfaction to variation in advertising spend. The results show a large negative correlation that cannot be attributed to the business cycle or individual characteristic...

#noted

Interesting numbers on multipliers. The problem I am havi...

Interesting numbers on multipliers. The problem I am having is that I am not sure whether these are Keynesian demand multipliers, or something more like Enrico Moretti regional-export multipoliers. The decision by DoD to support a factory in congressional district X looks, to me, a lot like a regional positive productivity shock:

Alan Auerbach, Yuriy Gorodnichenko, and Daniel Murphy: Local Fiscal Multipliers and Spillovers in the US: "Our baseline estimates imply that a dollar of DOD spending in a city increases GDP in that city by a dollar and increases labour earnings by 0.35, and that an increase of DOD spending equal to a percent of local earnings increases employment by 0.2%...

...These estimates are close to the city-level multiplier estimates from Demyanyk et al. (2018).... The spending shocks also have positive effects on nearby localities, increasing earnings in proximate cities by about half of the own-city effect and increasing GDP in other cities across the same state by between half and a whole of the own-city effect.��Our estimated state-level GDP multiplier effect of around 1.5 is consistent with the state-level estimates in Nakamura and Steinsson (2014).��The positive geographic spillovers imply that any negative spillover effects that operate through factor markets (e.g. pulling in labour from nearby locations) are outweighed by positive demand spillovers (e.g. input-output linkages or induced consumer spending).��These findings imply that the increase in local demand is not accommodated by a net reallocation of labour from nearby locations...

#noted

If the use-case data is not (a subset of) the training da...

If the use-case data is not (a subset of) the training data, Deep Learning blows up spectacularly. And since we do not understand why Deep Learning works, we have no clue as to how to fix this���how to make Deep Learning algorithms at all robust. A human brain has a hundred billion neurons, and each neuron and its interconnections are roughly equivalent to perhaps 100000 transistors. the iPhone's A11 has 4 billion transistors���that means 2500000 iPhones wired together to approach brain-like levels of complexity. Add to that a billion years of the genetic algorithm tuning networks of neurons... and anything like human-level intelligence, or even the robustness of behavior characteristic of insects, looks far off still:

Hal Hodson: DeepMind and Google: The Battle to Control Artificial Intelligence: "The power of reinforcement learning and��the preternatural ability of DeepMind���s computer programs.... But... if the virtual paddle were moved even fractionally higher, the program would fail. The skill learned by DeepMind���s program is so restricted that it cannot react even to tiny changes to the environment that a person would take in their stride.... Releasing programs perfected in virtual space into the wild is fraught with difficulty.... Success within virtual environments depends on the existence of a reward function.... Unfortunately, the real world doesn���t offer simple rewards.... It is rare for human brains to receive explicit feedback about the success of a task while in the midst of it.... Current and former researchers at DeepMind and Google, who requested anonymity due to stringent non-disclosure agreements, have also expressed scepticism that DeepMind can reach AGI.... The focus on achieving high performance within simulated environments makes the reward-signal problem hard to tackle. Yet this approach is at the heart of DeepMind...

#noted

Liveblogging: The Anglo-Saxon Chronicle: Alfred King of England and His Successors

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Origins of Wessex: "Then succeeded Alfred, their brother, to the government. And then had elapsed of his age three and twenty winters, and three hundred and ninety-six winters from the time when his kindred first gained the land of Wessex from the Welsh. And he held the kingdom a year and a half less than thirty winters...

Then succeeded Edward, the son of Alfred, and reigned twenty-four winters. When he died, then succeeded Athelstan, his son, and reigned fourteen years and seven weeks and three days. Then succeeded Edmund, his brother, and reigned six years and a half, wanting two nights. Then succeeded Edred, his brother, and reigned nine years and six weeks. Then succeeded Edwy, the son of Edmund, and reigned three years and thirty-six weeks, wanting two days. When he died, then succeeded Edgar, his brother, and reigned sixteen years and eight weeks and two nights. When he died, then succeeded Edward, the son of Edgar, and reigned...

#liveblogging #history #anglosaxonchronicle

Pay transparency is perhaps the most powerful anti-pay-di...

Pay transparency is perhaps the most powerful anti-pay-discrimination tool there is in America as it is today: Raksha Kopparam and Kate Bahn: A Judicial Victory for Pay Transparency in the United States in the Run-Up to Women���s Equal Pay Day: "It���s important to consider the importance of a judge���s ruling last month that reinstated the collection of pay data by firms who report their employment practices to the EEOC to boost pay transparency.... On March 5, 2019, the judge... ordering the EEOC to collect pay data in the next EEO-1 report.... The ruling could not have been more timely. Just one case in point: In a survey of employees at large technology firms, 60 percent of respondents said that their employer either banned or discouraged discussion of wages...

#noted