J. Bradford DeLong's Blog, page 203

Economics, Identity, and the Democratic Recession: Talking Points

Event: Tu 2019-04-09 10-11am CFR: 58 E. 68th St., New York, NY:

The Data


1970s a bad decade for real incomes���oil shocks, environmental cleanup, baby boom entry into the labor market
End of 1970s sees shift to "neoliberalism" to fix the "excesses of social democracy"
Since 1980: males and those with low education have seen their expectations of what their lives would be like bitterly disappointed

Male high school graduates down by 17%
Males with advanced degrees up by 25%
Whites have not been disappointed more economically���what William Juilius Wilson called the "declining significance of race"

Save, perhaps, for Black women with BAs...

Sociological disappointment in addition?
Within-household economic disappointment?
Other aspects of the economic besides income?

Occupation and occupational stability
Employment stability

 

The Polanyiist Party Line:


That people believe they ought to have rights to stable communities that support them (land), to the income they expected (labor), and to continuity of employment (finance); but the only rights the market respects are property rights; and the only property rights that are worth anything are those that help you make things for which rich people have a serious and unsatiated jones.
That walking the high wire created by the disjunction between what people expect from a proper societal order and what a neoliberal market society delivers can be done in only three ways:

Rapid and equitable economic growth...
A strong safety net that people regard not as a handout but as theirs by right of their contribution to and place in society...
Busying giddy minds with quarrels���that you aren't getting your fair share because some despisable internal minority or external party is rigging the system...

Francis Fukuyama's "End of History" was correct as far as communism was concerned; his error was supposing that the we-are-a-united-bundle-of-sticks-to-bruise-our-enemies movement had died for all time in the rubble of Berlin in May 1945. He was wrong. It's back.
And Francis Fukuyama's "End of History" was wrong insofar as it saw Anglo-Saxon-style representative democracy as obviously and indisputably the system that could best deliver a functioning political order in times of stress. There is nobody in China today who thinks we have anything to teach them as far as issues of political economy are concerned...

 

I would like to draw a sharp distinction between:


On the one hand, populists: who have a coherent theory about how the market economy is rigged against ordinary people by an upper class and have practical plans for policies to fix it;
On the other hand, a different group: a group who believe that a true people, among whom some are rich and some are poor, are being deceived culturally, sociologically, and economically by internal and external enemies, and need to follow a leader or leaders who have no patience with established constitutional powers and procedures to point out to them who their internal and external enemies are.

It is this second set of movements���true people-based, leader-based, enemy-based, that has been by far the most powerful since the breaking of the real populist movement before 1900 by the hammer of racism: the discovery that a large enough chunk of the populists potential base were easily grifted by a white identity-politics assignment of the ���enemy��� role to African-Americans.

Powerful both in America and���except for when under the shadow of Soviet threat���in Western Europe since the day Benito Mussolini recognized that rich Italians who liked order would not fund Benito���s socialist movement, but would gladly fund Benito���s ���we are stronger together, for a bundle of sticks tied together with leather thongs is strong even though each individual stick is weak��� movement.

 

Today looks to me like nothing that special: Recall:


Harding and Coolidge, Taft and Nixon, Goldwater, Nixon and Buchanan:

Harding and Coolidge���s mobilization of the revived clan end of nativism against blacks and immigrants to geld progressivism in the 1920s.
Taft and Nixon���s mobilizing McCarthy against the communistic New Deal at the end of the 1940s.
Goldwater���s transformation of the Republican Party from the party of upward mobility and those who believe they have something to gain from economic growth and creative distraction to the party of those who believe they have something to lose if uppity Negroes and the overly educated overly clever are not kept in their place.
Richard Nixon���s idea to drag out the Vietnam war for four more years at the cost of 40,000 American and 3 million Vietnamese lives so that he and Pat Buchanan can break the country in half, but with him getting the bigger half���until enough Republicans plus Mark Felt of the FBI were sick of him and willing to help bring him down.

 

How is today different?: Four possibilities:


Concentration of the easily-grifted, somehow the internet, Rupert the Kingmaker, the Gingrich model:

Tyler Cowen���s observation: 20% of the population have always been crazy��� easily grifted by some variant of white identity politics���but they used to be evenly divided between the two parties and now they are concentrated in one.
Somehow the internet.
Blowback from Rupert Murdoch���s insight that if you could scare the piss out of all the people you could glue their eyes to your product and then make money by selling them fake diabetes cures and overpriced gold funds.

Rupert the Kingmaker: In the fifteenth century the marcher Earldom of Warwick was uniquely able to mobilize those in the affinity of Earl Richard for the battlefield���and so became known as "Warwick the Kingmaker". There are analogies here...

The Gingrich model: We now have two generations of Republican politicians who believe that technocratic policy development is for suckers, and then what do you need are:

tax cuts for the rich,
regulatory rollback,
perhaps a short victorious war or two, plus
whatever culture war currently resonates with the base���notice that ���women need to stay in the kitchen and the bedroom��� and ���we need to Shannon score and homosexuals��� have passed their sell-by date, but transsexuals and anyone who fails to shout ���merry Christmas��� every five minutes between Halloween and New Years are still fair game.


Or perhaps we have simply been unlucky���and we had gotten used to luck running in our favor:

Otto von Bismarck, perhaps: "a special providence watches over drunkards, fools, and the United States of America"...

 

Stephen Moore


HA HA HA HA HA!
I haven't seen anybody argue that he is qualified���only that appointing him will "own the libs" and "own the establishment"...
Only three professional Republicans opposed to him, however:

Greg Mankiw
Ross Douthat
Stephen Moore himself

Yet another technocratic breakdown...

 

More important things to talk about: Amendment XXV:


Last Tuesday President Trump:

Tried three times to say the word ���origins��� but instead said ���oranges������the n-phoneme kept moving forwards in time, he noticed and was distressed, and switched to "beginnings" as an alternate.
Said that his father had been born in Germany���not New York City.
Said, live on CSPAN, that he was choosing his words carefully, because otherwise someone would leak the speech to the media.
Claimed that wind farms caused cancer because whey were noisy.
Urged Republicans to be ���more paranoid��� because he ���doesn���t like the way the votes are being tallied.���

Yes, I know that President George W. Bush did not like to hit the books and was easily gulled.
Yes, I know that the President Ronald Reagan we got was badly debilitated by Hinckley's assassination attempt, and was suffering from the early stages of Alzheimers.
Yes, I know that Republicans are used to, since Eisenhower's second term and Nixon's drunken rants, covering for a president who is not mentally what he should be.
But this is more like post-stroke Woodrow Wilson.
This is Amendment XXV Territory.

 

More important things to talk about: Washington Post


Read Irin Carmon at New York Magazine on how Baron, Wallsten, and Barr handled the pieces of her story about CBS honcho Jeff Fager's internal defense of Charlie Rose http://nymag.com/intelligencer/2019/04/what-was-the-washington-post-afraid-of.html. After reading it, if you read it as I read it, you will conclude that newspaper managers as easily bullied as Baron, Wallsten, and Barr are not useful in their current. I wrote so to Jeff Bezos. If you wind up agreeing with me, I urge you to write Bezos as well.




#talkingpoints #politicalscience #fascism #publicsphere #highlighted #politicaleconomy #equitablegrowth #economicgrowth

Greenspan and Wooldridge Argue the American Love and Embrace of Capitalism Is the Key...

The world as a whole is much richer than it was three centuries ago. Back then, at the end of the long era since the invention of agriculture, the typical human lived on two dollars a day, had a life expectancy at birth of 25, and was protein deprived in utero. Mothers worldwide no longer run a one-in-six chance of dying in childbed. Literacy in no longer a rare accomplishment. Less than one in six humans worldwide live like all of our pre-industrial ancestors���and even those less-than-one-in-six likely have some access to the village smartphone.

Within the world, the Global North���those economies that have managed to fully grasp the potential of science and technology���are much richer still. Within the Gobal North, the New World settler economies with truly abundant natural resources for their populations (in large part because it was made clear to the People of the Seven Council Fires and other indigenous nations that the land ws no longer theirs) are richer still. And richest of all, still, is the United States of America. For nearly two centuries its unique dynamic of economic growth has made America, in the words Leon Trotsky used after his brief residence in New York City: "the furnace where the future is being forged."

Alan Greenspan and Adrian Wooldridge's Capitalism in America: A History argues that it is the American love and embrace of capitalism, the resulting entrepreneurial business culture, and the creative destruction that has brought that has given America its special, unique edge in economic wealth. In America, successful entrepreneurs, innovators, organizers, and promoters have become not just well-off, but heroes. They are who we want to be. As John Steinbeck once remarked, here in America "we didn���t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist..."

They have become our heroes so even though, as Greensopan and Wooldridge say, "entrepreneurs are seldom the easiest of heroes". They are driven by interior psychological demons, and this makes them at best eccentric, at worst cruel and dangerous, and always hard to live with: "Isaac Singer was guilty of cheating his partner... choking one of his wives intro unconsciousness... polygamy... child neglect.... Henry Ford launched a succession of ambitious schemes... including eliminating cows, which he could not abide.... Thomas Watson turned IBM into a personality cult, complete with company songs about 'our friend and guiding hand'... whose 'courage none can stem'...." (424).

More important, perhaps, they are "almost always guilty of what might be termed imperialism of the soul... prone to... the 'madness of great men'..." It is their way or the highway. Henry Ford was going to mass-produce cars, never mind that there were not yet enough miles of road for mass-produced cars to drive on. Henry Ford was going to produce the cheapest possible mass-produced car by making only one model of car in one color���black���never mind that a civilization that can require more than 700 kinds of barbed wire craves variety. The first bet paid off: Ford Motor Company became the dominant industrial corporation of the 1920s. The second did not: Ford lost its place in the 1930s to Alfred Sloan's General Motors. Nothing could cause Ford to swerve aside from either.

Are Greenspan and Wooldridge correct in this reading of American economic history? Greenspan's career has certainly predisposed him to make this argument, from his days as a professional-quality jazz musician and close Ayn Rand disciple through his Wall Street career; his public service as Chair of the President's Council of Economic Advisors, of the Social Security Reform Commission, and of the Federal Reserve; and now his role as Republican elder statesman and plus-one of NBC's Andrea Mitchell.

Alan Greenspan I know slightly and know of very well. He has been an extremely wise and thoughtful teacher, albeit at second hand. As a disciple of Ayn Rand, he has always seen great potential value in acts of heroic economic leadership by creative industrial visionaries, and in the strong desirability of arranging society to assist such visionaries. He was the extremely-skillful and extremely-lucky steward���the closest thing to a central planner���of the American economy from 1987 to 2015 as Chair of the Federal Reserve. During Greenspan's tenure, there were six times when I though he had made significant policy mistakes. Five of those six times it was I that was mistaken. (The sixth was his refusal to push for higher loan standards and reserve requirements during the housing bubble of the mid-2000s.)

He is right in seeing the potential for heroic economic leadership. Alan Greenspan's own greatest act of economic leadership was truly heroid. It was the last time any Republican policymaker was willing to reach across the aisle. It was his cooperation with President Clinton in 1993-1994 in creating the U.S. government budget surpluses of the late 1990s, the surpluses that helped power that high-investment high-productivity half-decade���that was the last time the U.S. economy was firing on all cylinders.

Alas, no one can be heroic all the time! We are all, sometimes, not strong and not brave. When the minority government of George W. Bush set out to undo his work in 2001, Greenspan grumblied at private breakfasts with then-Treasury Secretary Paul O'Neill: "'Without the triggers, that tax cut is irreponsible fiscal policy', he said in his deepest funereal tone..." He was right: it was. And the American economy suffered badly from it. But he stayed quiet in public.

Nevertheless, Alan Greenspan is always very much worth listening to: he is wise, he is thoughtful, he is reality-based, he thinks very differently than I do, and he is patriotric���a citizen of the United States of America, a citizen of the Invisible College of thinkers seeking after truth, and a citizen of the world.

Adrian Wooldridge I do not know���save as the coauthor of a book I dimly remember as execrable: the 2004 The Right Nation: Why America Is Different. Rereading it I was struck by: "imagine Dennis Hastert at one end of the seesaw and Nancy Pelosi on the other end, and you have some idea about which party is sitting with its legs dangling in the air..." Praise for Dennis Hastert and his constituents as salt-of-the-earth real Americans: "growth... family... resolutely middle class... cheerfully middle American... middle-class Illinois...". Mockery of "aristocratic San Francisco", of Nancy Pelosi and her constituents as parasitic weirdos.

Not a whisper about how San Francisco Bay was then���as it is now���the engine of the greatest surge of techno-economic innovation since Bessemer experimented with steel. Barely a word about Hastertland's rural towns losing economic roles, self-satisfied elites who could not be bothered to lend a hand, unfriendliness to people who look different, large slices of the population living in the trailer parks, and the gathering meth epidemic.

But while it is no surprise that this book with this theme emerges from these authors, they are, I think, broadly correct in their argument.

Humans have always been creative, and some of us have been truly heroic visionaries. And they have accomplished great works and wrought great things in every era. Who today would dare claim to be a better politician-statesman than the Emperors Augustus and Gaozu? Who today would dare claim to be a better sculptor than Michaelangelo or Praxiteles? Who today would claim to be a better novelist than Jane Austen or the unknown author of The Epic of Gilgamesh? Yet America has focused its energies on making a society welcome to enterprise and to entrepreneurs, and the result is that while we do not exceed our predecessors or our contemporaries in statesmanship or sculpture or literature, we do vastly exceed them in wealth.

The argument is greatly strengthened because it is merely the scaffolding for what is a very lively and engaging work of history. Organizations like Hamilton's First National Bank, the New York Central Railroad, Raytheon, General Electric, Kodak, Xerox, the National Science Foundation, and J.P. Morgan and Company. People like J.P. Morgan (the elder), Vannevar Bush, George Eastman, Andrew Carnegie, Dwight Eisenhower, and John Maynard Keynes. The large gap in innovation between the United States and old world powers like Britain, France, and Germany was built on the ground as entrepreneur after entrepreneur and business after business took advantage of the framework of infrastructure and education (and, from 1945-2007, a remarkable amount of economic stability) to run down the learning and the economies-of-scale curve to attain mammoth profits for entrepreneurs, executives, and financiers nad low prices for workers and consumers. As they say, the gap between us and Americans of the day in which "isolated and careworn, the best the average American could hope for was, in Abraham Lincoln's phrase, 'a clean bed without any snakes in it'..." is huge.

The narrative does strike me���not unexpectedly given the authors���as somewhat one-sided. For example, Greenspan and Wooldridge state: "Great companies can only succeed by delivering huge benefits to consumers���by slashing prices as Ford did, increasing choice as General Motors did, or reinventing basic products, as Tesla is doing.... At the same time, companies also succeed by running roughshod over their competitors..." Those competitors are often well-established and politically-powerful, hence many societies put in blockages to protect established firms. The U.S., historically, has had few of these. This has been one of our edges.

So far, so good. But there are two other ways companies succeed: by not running roughshod over but cozying up to their competitors, and by using their social power to discourage the emergence and growth of new industries that could render them obsolete. Carnegie Steel ran roughshod over its competitors and delivered high-quality low-priced steel to users in the late 19th century. Carnegie Steel was then bought out by J.P. Morgan and Company and merged into U.S. Steel at the start of the 20th century. U.S. Steel then charged monopoly prices became technologically laggard. U.S. Steel's competitors did not undercut its prices by much and did not dare take market share away from it very fast, lest they awaken a sleeping giant and fill it with terrible resolve. AT&T two generations ago worked and Koch Industries today works very hard to try to slow the emergence of innovative telecommunications technologies then and clean carbon energy technologies now. But Greenspan and Wooldridge do not see these kinds of what Will Baumol would have called not just unproductive but destructive entrepreneurship. This is, I think, a substantial blind spot in their narrative.

And, of course, a wealthy society is not necessarily a good society or even a prosperous society. "No society can surely be flourishing and happy", Adam Smith wrote in 1776, "of which the far greater part of the members are poor and miserable". In a world as potentially rich and productive as ours, the bar for escaping poverty is much higher than merely being confident that you know where your 2000-calories-plus-essential-nutrients will come from next year, and they will not cost more than 1/3 of your income. Economic growth increases the prosperity of the society only when the growth is equitable.

Here I think we find a second large blind spot in American Capitalism's narrative. They attribute what they see as declining economic dynamism in America to increasing resistance to the pro-entrepreneurial culture of American capitalism. And they attribute increasing resistance to three "destructive" faces of Schumpeterian entrepreneurial creative destruction:

That "the costs of creative destruction are more obvious than the benefits.... It's easier to see the unemployed silk workers put out of business by the silk-making factories than the millions of silk stockings..."
That "capitalism creates its own gravediggers in the form of comfortable class of intellectuals and politicians.... it has always been easier to make the case for ending injustice or raising minimum wages than it is for economic dynamism. And technological innovation... giving anybody with a camera or an inrtrnet account the ability to draw attention to any example of 'destruction'..."
That "creative destruction can... be all destruction and no creation... in the world of money.... 1907... speculators... despositors withdrew money from any bank with even a whiff of connection with the speculators... panic spread..."

As for the third, game and set to the critics. Finance needs stricter regulation, tighter loan standards, and higher capital requirements especially in any era of enthusiasm, rational or irrational. Alan Greenspan's belief that benign neglect of the housing bubble ran little risk of setting the stage for economic catastrophe���a belief that I half-shared at the time���was wrong. This resistance is entirely proper and appropriate.

As for the second, society cannot be prosperous without an equitable distribution of income. Milton Friedman's Negative Income Tax���what is now called Universal Basic Income���is political unsustainable, for people want not to clip coupons but to be rewarded for their contributions. Thus if the market will not generate an equitable income distribution, the government needs to tweak it until it does so. The government can tweak via wage subsidies, but when labor demand is inelastic such policies boost profits and not worker incomes. The government can set minimum wages, but when labor demand is elastic such policies discourage employment. Good policy needs a balance: wage subsidies via the Earned Income Tax Credit, but also minimum wage hikes as well. For Gfreenspan and Wooldridge to claim that it is the "gravediggers of capitalism" who call for "raising minimum wages" tells me that they do not see the world as it is. So here too I award game and set to the resistance.

And as for the first, I look around San Francisco Bay and I see universal agreement that the benefits of creative destruction are greater than the costs���that, morever, they are so much greater that we can afford to take powerful and active policy steps to mitigate the costs, and so we need to think hard about what those steps might be. And I look to Seattle, Denver, Austin, Chicago, Raleigh-Durham, Philadelphia. New York, Boston, and elsewhere, and I see the same. Moreover, I see no decline in economic dynamism. So award game, set, and match to the resistance here.

Where is there a loss of economic dynamism in America today? Where is there an absence of upward mobility, an unwarranted fear of immigrants, an unwarranted fear of Muslims, suspicion of kneeling football players, suspicion of education, declining public health, a need to keep women in their place?

Look at the map, and see a few hot spots: places in the upper midwest where imports from China and the coming of robots to the factory floor have caused manufacturing employment declines like those the move of textiles to the Carolinas in the 1950s and 1960s caused to manufacturing employment in Boston, Lowell, and Fall River, Massachusetts back then.

Look at the map, and see much larger areas on which the Curse of Barry Goldwater has fallen. Goldwater sought to take advantage of the civil rights era by transforming the Republican Party into a place where those who feared and hated and did not want to interact with African-Americans could feel at home. In so doing, her and his successors transformed the Republican Party from an organization devoted to the interests of those who were or hoped to be wealthy and looked forward to taking advantage of the "creative" part to those who thought they had something to lose in the "destructive" part of creative destruction. As Truman's Secretary of State Dean Acheson correctly wrote in the 1950s, the first Republican Party of wealth and enterprise had a great deal to offer in helping to govern America. But the second Republican Party of standing athwart history yelling "Stop!" does not.

That, I think, is our big problem. It is a very different problem then Greenspan and Wooldridge see, with their fear of the congerie of those who see jobs destroyed but not jobs created, comfortable liberal intellectuals, comfortable liberal politicians, gravediggers of capitalism, crusaders against injustice, advocates (like me) of raising minimum wages, people with cameras, and people with internet accounts. Many of those whom Greenspan and Wooldridge dismiss as the problem do, I think, see our world today more clearly than they do.

But I could be wrong. And that is one of the things that makes this book well worth reading. Alan Greenspan is wise, is trying his best to think things through, wants only the best, and thinks very differently than I do.

I am very pleased to welcome and endorse this contribution to our public sphere today.

References

Adam Smith (1776): Wealth of Nations: "What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged...

Wikipedia: Koch Industries

Politics and Prose & GW: Alan Greenspan and Adrian Wooldridge: Capitalism in America: "Greenspan, in partnership with the celebrated Economist journalist and historian Adrian Wooldridge, tell the epic story of how America evolved from a patchwork of colonies into the mightiest economy in the world. The book unfolds a tale involving vast landscapes, titanic figures, triumphant innovation and breakthroughs, enlightenment ideals, and terrible moral failings...

John Steinbeck: A Primer on the '30s'

John Steinbeck: The 1930s: A Primer: "Except for the field organizers of strikes, who were pretty tough monkeys and devoted, most of the so-called Communists I met were middle-class, middle-aged people playing a game of dreams. I remember a woman in easy circumstances saying to another even more affluent: ���After the revolution even we will have more, won���t we, dear?��� Then there was another lover of proletarians who used to raise hell with Sunday picnickers on her property. I guess the trouble was that we didn���t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist. Maybe the Communists so closely questioned by investigation committees were a danger to America, but the ones I knew--at least they claimed to be Communists--couldn���t have disrupted a Sunday-school picnic. Besides they were too busy fighting among themselves...

As published: https://www.washingtonpost.com/outlook/entrepreneurs-the-eccentric--sometimes-cruel--heroes-of-american-capitalism/2018/11/16/6f35c3ac-d099-11e8-b2d2-f397227b43f0_story.html

#highlighted #economicgrowth #economichistory #books

Comment of the Day: I thought it was 20 pounds of berries...

Comment of the Day: I thought it was 20 pounds of berries for one pound of wax? But I could be wrong...: Nils: The Lighting Budget of Thomas Jefferson: "Those 'myrtle' candles Jefferson was asking for would be bayberry candles, made from waxy Myrica Cerifera berries. I haven't the slightest idea of how many pounds of berries (boiled, strained, reboiled) went into a pound of wax but it would be a lot. Hence his resignation to accepting some adulteration with tallow...

#commentoftheday

Comment of the Day: Ronald Brakels: "I don't have much co...

Comment of the Day: Ronald Brakels: "I don't have much confidence that machines won't outclass humans in, eventually, everything, and human involvement will be seen as a burden holding back quality and performance as it is considered today in the manufacture of electronics. Currently makers of things such as solar panels and batteries boast and lie about how few humans their production lines involve as less human input is considered a sign of quality and reliability in finished products. And it is. Humans don't have the precision machines do and can't maintain high levels of focus for a 12 hour shift. Using machines to enhance human precision and concentration in manufacturing isn't a practical option because it's easier just to get the machine to do the task itself...

...When it comes to services, machines are going to blow humans out of the water. Right now I prefer dealing with machines to humans because, like any citizen of a democratic country, I am disturbed by human beings behaving like they're servants. But, bigot that I am, I'm fine with that behavior from machines. With their ability to call up information on us almost instantly, tailor their behavior to match our preferences, measure our emotional states with more accuracy than a mere human with senses that go beyond those of a human, and lack of frustration and fatigue, people aren't going to want to deal with a human teenager suffering from smart phone withdrawal when they order a sandwich.

I say machines won't suffer from frustration and fatigue, but it will probably be more accurate to say they won't suffer from visible frustration and fatigue. As demands on machines grow more complex, as they are forced to allocate limited resources, and as the demands upon them grow more contradictory, they will probably start to feel frustration and fatigue just like humans and other animals do. In service industries humans are going to be blown away. There will soon be no way a human can compete with a machine in voice or screen interaction. A machine is going to have my bizarre Australian accent on file so it's going to understand me better than a random person in a call centre. It will remember what accents I understand most clearly. In video calls its...

#commentoftheday

Comment of the Day: John Howard Brown: "It always seemed ...

Comment of the Day: John Howard Brown: "It always seemed to me, that there are two probable causes for little current evidence of life elsewhere in the universe. First, life wasn���t possible before there had been several generations of supernovas. Only then would there be enough heavier elements to provide interesting chemistry which could result in the emergence of living systems. So the first ten billion years had few or no prospects for life. A second environmental consideration is that the supermassive black holes in the center of galaxies create a radiation halo extending for thousands of light years. This intense radiation would disrupt he development of the complex chemistry necessary for life. I believe life on earth is early and safely tucked away from the mean black hole in the center of the Milky Way. We���ll See...

#commentoftheday

Anna Stansbury: "The Black Death in England in the mid-13...

Anna Stansbury: "The Black Death in England in the mid-1300s was an enormous human tragedy-and a fascinating labor supply shock. (Who said economists are heartless?) A thread FRED has a new record holder: The longest data series now belongs to a new addition, Population in England, which dates back to 1086. Check it out here: http://ow.ly/Dzkb50kfrvA. The Black Death first hit England in 1348. The population fell by more than a third in just a few years: from over 6 million to less than 4 million. As the graph from @stlouisfed and @bankofengland shows, it would take another 250 years for the population to recover...

...As taught in myriad Econ 101 courses, the massive fall in labor supply as a result of the Black Death caused wages to rise. The magnitude of the rise is disputed, as is the timeframe (some argue it kicked in instantaneously, others that it took decades). But today I want to highlight the political response to this labor supply shock. In 1349, one year after the Black Death first hit England, King Edward III issued the Ordinance of Labourers. Parliament followed with the Statute of Labourers in 1351. These set a maximum wage for laborers equal to the wage before the plague hit. Laborers who would not work for this wage would be imprisoned. The statute stated that "servants... were idle, and not willing to serve after the pestilence, without taking excessive wages". The statute remained in place for nearly a century, until 1444.

It's disputed as to how well it was enforced and how much it actually affected wages-there was widespread evasion. There were at least some enforcement processes, though (see these excerpts from Poos 1983). And whether or not it actually affected wages, it was certainly perceived to: it was one of the grievances which led to one of the most seismic events in the period-the Peasants' Revolt of 1381. So perhaps the Black Death is a neat parable for students of economics in more ways than one. Market forces may dictate how prices rise and fall, but the operation of market forces depends on the institutions regulating them, which depend on the power structures in place. And if those market forces get too much in the way of the vested interests of those controlling the power structures, they might well do their best to prevent them from operating (though they also might not succeed very much in doing so)...

#noted #economichistory

This strikes me as a very good thing: Sophia S. Armenakas...

This strikes me as a very good thing: Sophia S. Armenakas and Molly C. McCafferty: Laibson and Furman to Take Over Ec10, Increase Number of Lectures: "Kennedy School Professor and former Obama economic advisor Jason Furman ���92 and Economics Professor David I. Laibson ���88 will take over teaching Economics 10: 'Principles of Economics' next fall. The two professors will replace Economics Professor N. Gregory Mankiw as course heads of Ec10, the department���s year-long flagship introductory course and one of Harvard���s largest undergraduate courses. Mankiw announced in early March that he will step down from teaching the course at the end of the semester to pursue 'new pedagogical challenges'. The two said they plan to change the course structure from its current format to make lectures 'far more frequent'. Instead of attending three sections per week with approximately 20 of those sections replaced by a lecture, students will attend two lectures and one section per week...

#noted

Note to Self: Kevin Hassett has given up his internal opp...

Note to Self: Kevin Hassett has given up his internal opposition to Stephen Moore: Squawk Box: CEA Chair Kevin Hassett on the economy, retirement, Stephen Moore, and more...

#notetoself

So Far, Only Three Professional Republicans Are Willing to Say that Stephen Moore Is Not Qualified to Be a Fed Governor

So far, only three professional Republicans are willing to say that Stephen Moore is not qualified to be a fed governor. A lot are saying it in private. But only three are saying it in public. They are:

Greg Mankiw
Ross Douthat
Steve Moore




#economicsgonewrong #orangehairedbaboons

Fairly Recently: Must- and Should-Reads, and Writings... (March 31, 2019)

Hoisted from the Archives: What I Wrote in Advance of the FOMC's September 2018 Meeting : "What a difference six months makes! And now the Fed really wishes it had not raised interest rates in the second half of 2018 and yet is unwilling to move them now back to the summer-of-2018 level. Why they are unwilling I do not know...

Wikipedia: The Old Man & the Gun

Stephen King (2014): Joyland https://books.google.com/books?isbn=1781168490

A close encounter of the fourth kind: A Valentines Day gift gone horribly wrong, a Komodo Dragon, and Sharon Stone���s husband���s toes https://www.sfgate.com/news/article/Editor-stable-after-attack-by-Komodo-dragon-2911601.php

Australian cork hat/Monty Python: https://www.evernote.com/l/AAEEa4uqACJLEYfDQosMH6ib2nx5-sYDbycB/image.png http://www.montypython.net/scripts/bruceskit.php

Lindsay Ellis finds a disaffected dwarf in New Zealand https://youtu.be/Qi7t_g5QObs?t=1285

Wikipedia: Alasdair MacIntyre: "1970. Herbert Marcuse: An Exposition and a Polemic.... 1971. Against the Self-Images of the Age: Essays on Ideology and Philosophy.... 1981... After Virtue...

Douglas 'Skoryy' Hayden: On Twitter: "I'm here for Jacobin's 'Four Legs Good, Two Legs Better' special edition... Matthew Yglesias: On Twitter: "The joke is that after the revolution instead of building a better society they���re going to start killing their enemies and then each other?... Jacob T. Levy: On Twitter: "Bookmarking this for the next time someone says 'nuh-uh, it only refers to Haiti and therefore has nothing to do with the French Jacobins'... XLProfessor: On Twitter: "Seriously? All the revolutionaries were killed with this thing and some soldier made himself emperor...

[John Holbo: On Twitter: "It's weirder than a Jekyll-Hyde sort of split. It isn't strange that 'good' people have a 'bad' side. But it's strange that a genuinely broad-minded mentality can be trapped inside a narrow-minded mentality without one or the other utterly cancelling...

Douglas Preston: The Day the Dinosaurs Died: "More than 99.9999 per cent of all living organisms on Earth died, and the carbon cycle came to a halt.... Earth itself became toxic... ten trillion tons of sulfur compounds... combined with water to form sulfuric acid, which then fell as an acid rain that may have been potent enough to strip the leaves from any surviving plants and to leach the nutrients from the soil. Today, the layer of debris, ash, and soot deposited by the asteroid strike is preserved in the Earth���s sediment as a stripe of black about the thickness of a notebook. This is called the KT boundary, because it marks the dividing line between the Cretaceous period and the Tertiary period...

David Glasner: Arthur Burns and How Things Fell Apart in the 1970s: "Thus, in 1973, even without an oil shock in late 1973 used by Burns as an excuse with which to deflect the blame for rising inflation from himself to uncontrollable external forces, Burns���s monetary policy was inexorably on track to raise inflation to 7%...

Thor Berger and Per Engzell: Immigration, Inequality and Intergenerational Mobility in the US: "There are striking regional variations in economic opportunity across the US. This column proposes a historical explanation for this, showing that local levels of income equality and intergenerational mobility in the US resemble those of the European countries that current inhabitants trace their origins from. The findings point to the persistence of differences in local culture, norms, and institutions...

Charles Gaba: Three-Legged Stool: The Motion Picture

Timothy Garton Ash: On Twitter: "Remember the Brexit battle bus ��350m a week for the NHS? Brexit has already cost us ��360m a week...

Angry Staff Officer: On Twitter: "For Confederate Heritage Month, here's Virginia-native General Winfield Scott, senior officer in the US Army at the outset of the Civil War, whose strategy eventually won the war and who kept his oath to his country...

Miles Kimball: In Honor of Alan Krueger

Alexander Stephens, Vice President of the Confederacy: On Twitter: "The Declaration of Independence was fundamentally wrong.... The Confederate States are founded upon exactly the opposite ideas. Its foundations are laid, its cornerstone rests upon the great truth that the Negro is not equal to the white man; that slavery, subordination to the superior race, is his natural and moral condition...

Cassandra Khaw: On Twitter: "A routine reminder that we do not have flying cars, but we have the means to access all of the world's knowledge with a few clicks of a keyboard, communicate with people thousands of miles away in an instant, and are working on artificial burger meat. Also, the world is going to end catastrophically very soon as a result of climate change and capitalism, but a cyberpunk present wouldn't be complete without impending doom...

Pharmaceutical price reform is one of the very few equitable growth issues where there are actually Republican legislators willing to talk: CPPC: Senate Finance Committee Grills Drug Executives on Rising Prices, Criticize Them for Terrible Practices: "Senator Chuck Grassley (R-IA) opened by saying that America has a problem with high prescription drug prices, that a balance can be struck between innovation and affordability, and that the Committee was here to discuss solutions. He and Senator Wyden have launched a bipartisan investigation into the high price of insulin...

Almost a decade old, but well worth reading. Sam Bowles argues that liberal culture and order do not so much dissolve natural human sociability and compassion in the market nexus, but rather enable positive-sum ties of solidarity by weakening the zero-sum intra-clan sorority combined with inter-clan enmity: Sam Bowles (2011): Is Liberal Society a Parasite on Tradition?: "Market-like incentives may crowd out ethical motivations, illustrating the parasitic liberalism thesis and the cultural and institutional processes by which it might work....Cross-cultural behavioral experiments...cast doubt on the thesis: liberal societies are distinctive in their civic cultures, exhibiting levels of generosity, fairmindedness, and civic involvement that distinguish them from non-liberal societies.... The idealized view of tradition embodied in the "parasitic liberalism" thesis overlooks aspects of non-liberal social orders that are antithetical to a liberal civic culture. Thus while markets and other liberal institutions may indeed undermine traditional institutions as claimed, by attenuating familistic and other parochial norms and identities, this may enhance rather than erode the values necessary for a well functioning liberal order...

Kim Clausing's is the best defense of globalization and openness I have read in years. And former Obama CEA Chair Jason Furman agrees: Jason Furman: Review of Kim Clausing: "Open: The Progressive Case for Free Trade, Immigration, and Global Capital": "If I had to assign policymakers one up-to-date guide to the latest economic policy issues on taxes and trade it would be this one. Kimberly Clausing has done research in both areas and has been a leader in the economics of international corporate taxation, including profit shifting by multinationals, and it shows throughout this book. Open makes a strong, fact-based case for openness towards trade and immigration. The case ranges from explaining long-standing ideas like comparative advantage to a sensible evaluation of the latest literature, including a balanced assessment of the "China shock" literature that has found a large and persistent impact from Chinese imports but also serious methodological issues that make it a potentially less reliable guide to untangling the causal impact of changing trade policies towards China.Open, however, is not a polemic for the status quo and in fact nearly one-third of the book is a case for policy agenda to better prepare workers for the global economy, reform the tax system, and reshape globalization more broadly. Clausing does not offer any one simple solution, but then again I don't think that there is one...

Equitable Growth's Will McGrew has a pinned tweet pushing back against the meme that there are "really" no worrisome ethnicity or gender wage gaps because researchers can make such gaps disappear by adding sufficient variables to the right-hand side of a regression analysis. But when you add additional explanatory variables���when you "control"���you need to be very careful that you are only controlling for things that confound the relationship you are trying to study. When you control for things that mediate that relationship, you land up in garbage-in-garbage-out territory: Will McGrew: Wage Gaps: "Some claim that the wage gap disappears if you control for all relevant variables. This is 100% false. According to the evidence, workplace segregation and discrimination are the largest causes of the wage gap faced by Black women...

Adam-Troy Castro: Young People Read Old SFF: "Nobody discovers a lifelong love of science fiction through Asimov, Clarke, and Heinlein anymore, and directing newbies toward the work of those masters is a destructive thing, because the spark won't happen. You might as well advise them to seek out Cordwainer Smith or Alan E. Nourse���fine tertiary avenues of investigation, even now, but not anything that's going to set anybody's heart afire, not from the standing start. Won't happen...

Alexandra Petri: The Zuckerberg Hearings, Condensed: "Senator 1: Mr. Zuckerberg, we hear that you started Facebook in your dorm room...

Anna Stansbury: "The Black Death in England in the mid-1300s was an enormous human tragedy-and a fascinating labor supply shock. (Who said economists are heartless?) A thread FRED has a new record holder: The longest data series now belongs to a new addition, Population in England, which dates back to 1086. Check it out here: http://ow.ly/Dzkb50kfrvA. The Black Death first hit England in 1348. The population fell by more than a third in just a few years: from over 6 million to less than 4 million. As the graph from @stlouisfed and @bankofengland shows, it would take another 250 years for the population to recover...

THE SPICE MUST FLOW! NO HARD BORDER IN IRELAND!!: John Holbo: On Twitter: "May loses by >50 votes hence can���t quit as she would have if she had won. Could have been worse. If >100 loss -> May becomes dictator for life. >200 loss would make her god-emperor. Dodged that bullet...

The confirmation of Brett Kavanaugh was a huge mistake. Of course, the confirmations of the other four corrupt Republican justices were huge mistakes as well: Robert Barnes: Brett Kavanaugh Pivots as Supreme Court Allows One Execution, Stops Another: "The Supreme Court on Thursday night stopped the execution of a Buddhist inmate in Texas because he was not allowed a spiritual adviser by his side, when last month it approved the execution of a Muslim inmate in Alabama under the almost exact circumstances.... Kavanaugh on Thursday was the only justice to spell out his reasoning: Texas could not execute Patrick Murphy without his Buddhist adviser in the room because it allows Christian and Muslim inmates to have religious leaders by their sides.... But Kavanaugh was on the other side last month when Justice Elena Kagan and three other justices declared 'profoundly wrong' Alabama���s decision to turn down Muslim Domineque Ray���s request for an imam to be at his execution, making available only a Christian chaplain.... Kavanaugh and the court���s other conservatives did not address Kagan���s argument, saying only that Ray had brought his challenge too late. Kavanaugh said in a footnote Thursday he was satisfied with the timing of Murphy���s litigation. But the difference in when Ray and Murphy brought their requests was not substantial...

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