J. Bradford DeLong's Blog, page 166

F--- you, @jack:#notetoself

F--- you, @jack:

#notetoself

Is this like a human making a tool, or a bird making a ne...

Is this like a human making a tool, or a bird making a nest? And what is a bird making a nest like anyway?: Dietrich Stout: Stone Age Hand Axe Shaped by Complex Brain: "Train[ing] novices to make Stone Age tools to explore the evolution of the human brain:

...

#noted

Why Charles L. Black thought Wechsler, Bickel, and compan...

Why Charles L. Black thought Wechsler, Bickel, and company were mendacious morons: Charles L. Black (1960): The Lawfulness of the Segregation Decisions: "IF the cases outlawing segregation 1 were wrongly decided, then they ought to be overruled... [and] will be overruled, slowly or all at once, openly or silently.... The hugely consequential error cannot stand and does not stand.... There is call for action in the suggestion that the segregation cases cannot be justified... practical and not merely intellectual significance in the question whether these cases were rightly decided. I think they were rightly decided, by overwhelming weight of reason, and I intend here to say why I hold this belief. My liminal difficulty is rhetorical-or, perhaps more accurately, one of fashion. Simplicity is out of fashion, and the basic scheme of reasoning on which these cases can be justified is awkwardly simple.... The equal protection clause of the fourteenth amendment... the Negro race... is not to be significantly disadvantaged by the laws of the states.... Segregation is a massive intentional disadvantaging of the Negro race.... That is really all there is to the segregation cases. If both these propositions can be supported by the preponderance of argument, the cases were rightly decided...

...The first of these propositions has so far as I know never been controverted in a holding of the Supreme Court.... The lurking difficulty [is that]... "reasonable" necessarily finds its way into "equal protection".... "Equal" thereby comes to mean not really "equal," but "equal unless a fairly tenable reason exists for inequality." But the whole tragic background of the fourteenth amendment forbids the feedback infection of its central purpose with the necessary qualifications that have attached themselves to its broader and so largely accidental radiations.... The fourteenth amendment... must be read to say is that the Negro is to enjoy equal protection of the laws, and... being a Negro is not... reason for denying him this... however "reasonable" that might seem to some people....

Does segregation offend against equality?... If a whole race of people finds itself confined within a system which is set up and continued for the very purpose of keeping it in an inferior station, and if the question is then solemnly propounded whether such a race is being treated "equally," I think we ought to exercise one of the sovereign prerogatives of philosophers-that of laughter. The only question remaining (after we get our laughter under control) is whether the segregation system answers to this description. Here I must confess to a tendency to start laughing all over again.... It is actionable defamation in the South to call a white man a Negro.... These points... are matters of common notoriety.... A court may advise itself of them as it advises itself of the facts that we are a "religious people," that the country is more industrialized than in Jefferson's day, that children are the natural objects of fathers' bounty, that criminal sanctions are commonly thought to deter, that steel is a basic commodity.... It would be the most unneutral of principles, improvised ad hoc, to require that a court faced -with the present problem refuse to note a plain fact about the society of the United States-the fact that the social meaning of segregation is the putting of the Negro in a position of walled-off inferiority-or the other equally plain fact that such treatment is hurtful to human beings. Southern courts, on the basis of just such a judgment, have held that the placing of a white person in a Negro railroad car is an actionable humiliation;1s must a court pretend not to know that the Negro's situation there is humiliating?...

#noted

Barry Eichengreen: Unconventional Thinking about Unconven...

Barry Eichengreen: Unconventional Thinking about Unconventional Monetary Policies by Barry Eichengreen: "Defenders of central-bank independence argue that quantitative easing should have been avoided last time and is best avoided in the future, because it opens the door to political interference with the conduct of monetary policy. But political interference is even likelier if central banks shun QE in the next recession...

#noted

Right-wing grifters gotta grift: Jemima Kelly: The Rick S...

Right-wing grifters gotta grift: Jemima Kelly: The Rick Santorum-Backed Coin for Catholics: "Backing a project that combines his religious fervour with another area of modern-day fanaticism: blockchainism (thanks to Buttcoin and in particular contributor David Gerard for drawing our attention to this)... a company and soon-to-be digital coin (stablecoin, specifically) called Cathio... 'a new payment, remittance and funding platform which provides efficient, secure, and transparent movement of funds within the Catholic world', promising to provide a 'turnkey solution for Catholic organizations to bring their financial transactions into alignment with their beliefs'...

#noted

Hoisted from Eleven Years Ago: Poverty Traps: The High Price of Investment Goods in Poor Countries

Hoisted from Eleven Years Ago: Poverty Traps: The High Price of Investment Goods in Poor Countries http://www.bradford-delong.com/2007/06/poverty-traps-t.html:Here is how Larry Summers and I formulated it back in the early 1990s, and I believe that we were correct:

Begin with the large divergence between purchasing power parity and current exchange rate measures of relative GDP per capita levels. The spread between the highest and lowest GDP per capita levels today, using current exchange rate-based measures, is a factor of 400; the spread between the highest and lowest GDP per capita levels today using purchasing power parity-based measures is a factor of 50. If the purchasing power parity-based measures are correct, real exchange rates vary by a factor of eight between relatively rich and relatively poor economies. And the log GDP per capita level accounts for 80 percent of the cross-country variation in this measure of the real exchange rate, with each one percent rise in GDP per capita associated with an 0.34 percent rise in the real exchange rate.

Why? Because real exchange rates are such as to make the prices of traded manufactured goods roughly the same in the different nation-states of the world, putting to one side over- or undervaluations produced by macroeconomic conditions, tariffs and other trade barriers, and desired international investment flows. Thus the eight-fold difference in real exchange rates between relatively rich and relatively poor economies is a reflection of an approximately eight-fold difference in the price of easily-traded manufactured goods: relative to the average basket of goods and prices on which the "international dollar" measure is based, the real price of traded manufactures in relatively rich countries is only one-eighth the real price in relatively poor countries.

This should come as no surprise. The world's most industrialized and prosperous economies are the most industrialized and prosperous because they have attained very high levels of manufacturing productivity: their productivity advantage in unskilled service industries is much lower than in capital- and technology-intensive manufactured goods.

And a low relative price of technologically-sophisticated manufactured goods has important consequences for nation-states' relative investment rates. In the United States today machinery and equipment account for half of all investment spending; in developing economies--where machinery and equipment, especially imported machinery and equipment is much more expensive--it typically accounts for a much greater share of total investment spending (see Jones, 1994; DeLong and Summers, 1991).

Consider the implications of a higher relative price of capital goods for a developing economy attempting to invest in a balanced mix of machinery and structures. There is no consistent trend in the relative price of structures across economies: rich economies can use bulldozers to dig foundations, but poor economies can use large numbers of low-paid unskilled workers to dig foundations. But the higher relative price of machinery capital in developing countries makes it more and more expensive to maintain a balanced mix: the poorer a country, the lower is the real investment share of GDP that corresponds to any given fixed nominal savings share of GDP.

The gap between nominal savings and real investment shares of GDP that follows from the high relative price of machinery and equipment in poor countries that wish to maintain a balanced mix of investment in structures and equipment is immense. For a country at the level of the world's poorest today--with a real exchange rate-based GDP per capita level of some $95 a year--saving 20% of national product produces a real investment share (measured using the "international dollar" measure) of only some 5% of national product.

In actual fact poor economies do not maintain balanced mixes of structures and equipment capital: they cannot afford to do so, and so economize substantially on machinery and equipment. Thus here are three additional channels by which relative poverty is a cause slow growth:

First, the fact that investment in general--taking equipment and structures together--is expensive relative to consumption goods and services in poor countries provides them with an incentive to diminish their nominal savings effort: to reduce the share of nominal incomes saved.

Second, the fact that relative poverty is the source of a high real price of capital means that poor countries will have a low rate of real investment corresponding to any given nominal savings effort, and thus a low steady-state aggregate capital-output ratio corresponding to any given nominal savings effort.

Third, to the extent that machinery and equipment are investments with social products that significantly exceed the profits earned by investors (see DeLong and Summers, 1991), the price structures in relatively poor developing economies lead them to economize on exactly the wrong kinds of capital investment...

References:

"The Singer-Prebisch Thesis," Wikipedia http://en.wikipedia.org/wiki/Singer-Prebisch_thesis (accessed June 25, 2007).

J. Bradford DeLong (1997), "Cross-Country Variations in National Economic Growth Rates: The Role of 'Technology'", in Jeffrey Fuhrer and Jane Sneddon Little, eds., Technology and Growth (Boston: Federal Reserve Bank of Boston) http://www.j-bradford-delong.net/Econ_Articles/Growth_and_Technology/Role_of_Technology_.pdf (accessed June 25, 2007).

J. Bradford DeLong and Lawrence H. Summers (1991), "Equipment Investment and Economic Growth," Quarterly Journal of Economics 106: 2 (May), pp. 445-502 http://www.j-bradford-delong.net/movable_type/archives/000606.html (accessed June 25, 2007).

J. Bradford DeLong and Joseph Rosenberg (2006), "Problem Set 3: Economic Growth: Further Explorations," U.C. Berkeley Economics 101b, Fall 2006 Version http://delong.typepad.com/print/20060911_101b_f06_ps3.pdf (accessed June 25, 2007).

Francesco Caselli and James Feyrer (2007), "The Marginal Product of Capital" http://www.aeaweb.org/annual_mtg_papers/2006/0106_1430_0703.pdf (accessed June 25, 2007).

Chang-Tai Hsieh and Pete Klenow (2006), "Relative Prices and Relative Prosperity" http://www.klenow.com/RPandRP.pdf (accessed June 25, 2007).

Charles Jones (1994), "Economic Growth and the Relative Price of Capital," Journal of Monetary Economics 34, pp. 359-82 https://delong.typepad.com/jones94.pdf (accessed June 25, 2007).

#highlighted #economicgrowth #equipmentinvestment #investment #industrialpolicy #hoistedfromthearchives

Liveblogging: The Anglo-Saxon Chronicle: Introduction

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Introduction: "The island Britain is 800 miles long, and 200 miles broad. And there are in the island five nations; English, Welsh (or British), Scottish, Pictish, and Latin...

...The first inhabitants were the Britons, who came from Armenia, and first peopled Britain southward.

Then happened it, that the Picts came south from Scythia, with long ships, not many; and, landing first in the northern part of Ireland, they told the Scots that they must dwell there. But they would not give them leave; for the Scots told them that they could not all dwell there together; "But," said the Scots, "we can nevertheless give you advice. We know another island here to the east. There you may dwell, if you will; and whosoever withstandeth you, we will assist you, that you may gain it." Then went the Picts and entered this land northward. (Southward the Britons possessed it, as we before said.) And the Picts obtained wives of the Scots, on condition that they chose their kings always on the female side; which they have continued to do, so long since.

And it happened, in the run of years, that some party of Scots went from Ireland into Britain, and acquired some portion of this land. Their leader was called Reoda (5), from whom they are named Dalreodi (or Dalreathians)...

#liveblogging #history #anglosaxonchronicle

Comment of the Day: HankP: "Under Bush we had the imposit...

Comment of the Day: HankP: "Under Bush we had the imposition of torture as policy, now trump has added concentration camps. Republicans applauded loudly in both cases. Everyone knows where this is headed if we don't stop it...

#commentoftheday

I wouldn't call it "crashing", but... And it is not just ...

I wouldn't call it "crashing", but... And it is not just the south: Wisconsin and Kansas joined, and Michigan and Indiana and Ohio are teetering on the edge:

John Cole: The Decline of the South: "...Good piece in the WSJ about the crashing economy in the south":

Sharon Nunn: The South���s Economy Is Falling Behind: ���All of a Sudden the Money Stops Flowing���: "Since 2009, the South���s convergence has turned to divergence, as the region recorded the country���s slowest growth in output and wages, the lowest labor-force participation rate and the highest unemployment rate.... Low taxes and low wages that attracted factories and blue-collar jobs���have proven inadequate in an expanding economy where the forces of globalization favor cities with concentrations of capital and educated workers. 'Those policies worked before, then they became fundamental constraints on the [South���s] long-term growth', said Richard Florida, an urbanization expert at the University of Toronto.... In part because of its legacy of racial segregation the region has, relative to others, underinvested in human capital.... Against the Northeast...the South���s per capita income peaked at 79.1% of the Northeast���s level, and has since fallen to 71.6%.... Sunbelt cities like Charlotte and Atlanta have attracted both wealthier white-collar workers and retirees....Texas, with its own unique economy... is relatively urban, with five major metro centers... a thriving tech sector and ample reserves of oil and gas....Many economists say the most effective way for the South to regain its momentum would be to invest more in education, which would over time create a more skilled workforce to attract employers. But Mississippi State University economist Alan Barefield notes that is difficult to reconcile with southern states��� historic desire to keep spending and taxes low...

#noted

I'm with "ignorant" rather than "willfully wrong" here, E...

I'm with "ignorant" rather than "willfully wrong" here, Eric: Eric Rauchway: "Ross Douthat says: 'The crisis of the 1930s ended happily for liberalism because a reactionary imperialist withstood Adolf Hitler and a revolutionary Bolshevik crushed him.' This argument is at best ignorant and incomplete, and at worst willfully wrong. If you... hear any of many edited versions of Churchill's great 'never surrender' speech, you might miss its major point, because often people cut it off after the words 'never surrender'. THAT'S NOT HOW THE SPEECH ENDS. The speech is directed at the administration and the radio audience across the ocean, in the United States... 'even if, which I do not for a moment believe, this Island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God���s good time, THE NEW WORLD, with all its power and might, steps forth to the rescue and the liberation of the old'. That speech is a plea for American materiel, inasmuch as much British materiel���'the first-fruits of all that our industry had to give'���was left on the beach at Dunkirk.... The 'reactionary imperialist' needed American aid.... Certain elements didn���t want him to have it... America First... portray[ed] Roosevelt as a warmonger... the Willkie campaign in 1940 followed suit.... The Nazis financed anti-Roosevelt propaganda in the US and even tried to set up a credible left alternative to him in the 1940 election, knowing that of all US politicians, Roosevelt was the worst news for them. Roosevelt, as you know, won reelection anyway���and shortly afterward... announced... lend-lease...

#noted