J. Bradford DeLong's Blog, page 2080

Why Oh Why Can't We Have a Better Press Corps?: Glass-Bead-Game Edition

In general the glass-bead-game is not a good game to play.

Henry Farrell sends us to:

The Intellectual Field: Laura at 11D:

There was a stage set for Remnick and Gladwell. … When they came out, Remnick immediately brought up the Gladwell’s social media article from a few weeks ago, where Gladwell wrote that social media only created weak ties and wasn’t sufficient to push a people to form a social movement. He took a lot of heat in the past few weeks, since social media may have played some role in the uprisings in Egypt. Gladwell was pretty hostile to his critics. He scoffed that his critic was some blogger from Huffington Post. Why should we listen to some pajama-wearing blogger, he asked? Some pajama-wearing blogger who lives in Brooklyn, he added for extra laughs. Well, I’m not sure why we should listen to a journalist who doesn’t like to travel north of 14h Street. Look, it was a very entertaining evening. Those guys were funny and witty and shared lots of amusing stories. But they didn’t know anything about revolutions or social media or Egypt. That’s okay. Journalists don’t have know be experts in their field. But they have to acknowledge that they aren’t experts and they really have an obligation to talk to people who spend their lives studying those subjects. … Why should anyone care what Malcolm Gladwell thinks about Egypt and Facebook, when there are people who have travelled to the Mid East, are fluent in Arabic, and spend most of their waking hours learning about this subject.

Arthur Goldhammer

It must have been more than 30 years ago now that Michel Foucault wrote an article entitled “La mort de l’intellectuel.” Apparently Le Monde didn’t get the message, because it invited four “intellectuals” to comment on the “Arab revolts.” The choice of participants in this forum tells you something about what the word “intellectuel” means today. We hear from Alain Touraine, Alain Badiou, Elisabeth Roudinesco, and André Glucksmann. None is a specialist on the region in turmoil, on the history of revolutions, on Islam, on Arab culture, on the political economy of the rebellious states, on social movements in the Arab world, on previous rebellions against military dictatorships, on relations between the military and civil society, or any of a hundred other topics that might confer authority to speak about one or another aspect of the unfolding wave of rebellion. In France, to be a specialist is almost a disqualification to speak as an “intellectual.” An intellectual is one who has risen above his or her specialty, if any, to acquire a quasi-priestly authority to pronounce on n’importe quoi—and as often as not, to say n’importe quoi about it. But I wonder if this sort of rootless speculation has any purchase on the French audience today. Perhaps a piece like this in Le Monde is simply a throwback to the day when large numbers of people hungered to know what Sartre or Camus thought about the events of the day.

And Henry comments:

When I read these posts (nearly back to back – I’ve been away from the internets for a few days), the similarities were striking. The current crop of French intellectuals is rather like Malcolm Gladwell. And (such comparisons being commutative) Malcolm Gladwell is rather like the current crop of French intellectuals. I wonder which would take greater umbrage at the comparison.

Mark Zandi: GOP Spending Plan Would Cost 700,000 Jobs

Had John McCain won the 2008 election, Mark Zandi would be in ne of the hot seats.

Lori Montgomery.

GOP spending plan would cost 700,000 jobs, new report says: A Republican plan to sharply cut federal spending this year would destroy 700,000 jobs through 2012, according to an independent economic analysis set for release Monday. The report, by Moody's Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months.

Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.

His report comes on the heels of a similar analysis last week by the investment bank Goldman Sachs, which predicted that the Republican spending cuts would cause even greater damage to the economy, slowing growth by as much as 2 percentage points in the second and third quarters of this year...

One question: in what sense was Mark Zandi an "architect of the 2009 stimulus plan"? I don't get that at all.

Senator Burton K. Wheeler Liveblogs World War II

BKW:

The Menace of Lend-Lease: The Lend-Lease policy, translated into legislative form, stunned a Congress and a nation wholly sympathetic to the cause of Great Britain. The Kaiser's blank check to Austria-Hungary in the First World War was a piker compared to the Roosevelt blank check of World War II. It warranted my worst fears for the future of America, and it definitely stamps the President as war-minded.

The lend-lease-give program is the New Deal's triple-A foreign policy; it will plow under every fourth American boy.

Never before have the American people been asked or compelled to give so bounteously and so completely of their tax dollars to any foreign nation. Never before has the Congress of the United States been asked by any President to violate international law. Never before has this nation resorted to duplicity in the conduct of its foreign affairs. Never before has the United States given to one man the power to strip this nation of its defenses. Never before has a Congress coldly and flatly been asked to abdicate.

If the American people want a dictatorship - if they want a totalitarian form of government and if they want war - this bill should be steam-rollered through Congress, as is the wont of President Roosevelt.

Approval of this legislation means war, open and complete warfare. I, therefore, ask the American people before they supinely accept it - Was the last World War worthwhile?

If it were, then we should lend and lease war materials. If it were, then we should lend and lease American boys. President Roosevelt has said we would be repaid by England. We will be. We will be repaid, just as England repaid her war debts of the First World War - repaid those dollars wrung from the sweat of labor and the toil of farmers with cries of "Uncle Shylock." Our boys will be returned - returned in caskets, maybe; returned with bodies maimed; returned with minds warped and twisted by sights of horrors and the scream and shriek of high-powered shells.

Considered on its merits and stripped of its emotional appeal to our sympathies, the lend-lease-give bill is both ruinous and ridiculous. Why should we Americans pay for war materials for Great Britain who still has $7 billion in credit or collateral in the United States? Thus far England has fully maintained rather than depleted her credits in the United States. The cost of the lend-lease-give program is high in terms of American tax dollars, but it is even higher in terms of our national defense. Now it gives to the President the unlimited power to completely strip our air force of its every bomber, of its every fighting plane.

It gives to one man - responsible to no one - the power to denude our shores of every warship. It gives to one individual the dictatorial power to strip the American Army of our every tank, cannon, rifle, or antiaircraft gun. No one would deny that the lend-lease-give bill contains provisions that would enable one man to render the United States defenseless, but they will tell you, "The President would never do it." To this I say, "Why does he ask the power if he does not intend to use it?" Why not, I say, place some check on American donations to a foreign nation?

Is it possible that the farmers of America are willing to sell their birthright for a mess of pottage? Is it possible that American labor is to be sold down the river in return for a place upon the Defense Commission, or because your labor leaders are entertained at pink teas? Is it possible that the American people are so gullible that they will permit their representatives in Congress to sit supinely by while an American President demands totalitarian powers - in the name of saving democracy?

I say in the kind of language used by the President - shame on those who ask the powers - and shame on those who would grant them.

You people who oppose war and dictatorship, do not be dismayed because the warmongers and interventionists control most of the avenues of propaganda, including the motion-picture industry. Do not be dismayed because Mr. Willkie, of the Commonwealth & Southern, agrees with Mr. Roosevelt. This merely puts all the economic and foreign "royalists" on the side of war.

Remember, the interventionists control the moneybags, but you control the votes.

Liveblogging World War II: February 27, 1941

Okuda:

From: Honolulu (Okuda)


To: Tokyo (Gaimudaijin)


27 February, 1941


(J17 K6)

034

Re my #29*.

Apparently the [U.S. Pacific] Fleet goes to sea for a week of training and stays in Pearl Harbor one week. Every Wednesday, those at sea and those in the harbor change places. This movement was noted on last Wednesday, the 26th.

The following vessels were seen in Pearl Harbor on the 27th: 4 battleships (1 of the California class and 3 of the Maryland class); 4 heavy cruisers (all of the San Francisco class); 6 light cruisers (4 of the Honolulu class and 2 of the Omaha class); 25 destroyers of which 3 were outside of the harbor); 2 destroyer tenders; 1 troop transport; several transports; several submarines; and 2 submarine tenders.

The Yorktown was not in port. A vessel which appeared to be a heavy cruiser was anchored outside of the harbor.

Plato in Syracuse--or, Rather, Leptis Magna

Robert Putnam today speaking about his 2007 meeting with Gaddafi:

Two view of Gadhafi « PHILOSOPHY IN A TIME OF ERROR: Students of Western political philosophy would categorize Col. Gadhafi as a quintessential student of Jean-Jacques Rousseau: He made clear that he deeply distrusted any political group that might stand between individual citizens and the “General Will” as interpreted by the Legislator (i.e., Col. Gadhafi himself). When I argued that freedom of association could enhance democratic stability, he vehemently dismissed the idea. That might be so in the West, he insisted, but in Libya it would simply strengthen tribalism, and he would not stand for disunity. Throughout, he styled our meeting as a conversation between two profound political thinkers, a trope that approached the absurd when he observed that there were international organizations for many professions nowadays, but none for philosopher-kings. “Why don’t we make that happen?” he proposed with a straight face. I smiled, at a loss for words. Col. Gadhafi was a tyrant and a megalomaniac, not a philosopher-king, but our visit left me convinced that he was not a simple man.

Anthony Giddens in March 2007:

Anthony Giddens on Gaddafi in The Guardian in March 2007: As one-party states go, Libya is not especially repressive. Gadafy seems genuinely popular. Our discussion of human rights centred mostly upon freedom of the press.... Will real progress be possible only when Gadafy leaves the scene? I tend to think the opposite. If he is sincere in wanting change, as I think he is, he could play a role in muting conflict that might otherwise arise as modernisation takes hold. My ideal future for Libya in two or three decades’ time would be a Norway of North Africa: prosperous, egalitarian and forward-looking. Not easy to achieve, but not impossible.

Benjamin Barber in August 2007:

Benjamin R. Barber - Gaddafi's Libya: An Ally for America?: But the real drama is not in Sarkozy's agile grandstanding... or in the protracted negotiations involving... Gaddafi's gifted son, Saif al-Islam. Rather, the release [of the Bulgarian nurses] points to deep changes in the Libyan regime that began in 2003, when Libya gave up its nuclear program voluntarily, and that continue today with gradual shifts in Libyan governance, its economy and civil society that have been largely ignored by the West. The real architect of the release was Libya's leader. Written off not long ago as an implacable despot, Gaddafi is a complex and adaptive thinker as well as an efficient, if laid-back, autocrat. Unlike almost any other Arab ruler, he has exhibited an extraordinary capacity to rethink his country's role in a changed and changing world.

I say this from experience. In several one-on-one conversations over the past year, Gaddafi repeatedly told me that Libya sought a genuine rapprochement with the United States and that the issues of the Benghazi Six -- along with the still-outstanding final payment from Libya to families of the Lockerbie, Scotland, bombing victims -- would be resolved. And behold: The nurses are free.

In all my public and private conversations with Gaddafi, including a roundtable moderated by David Frost and televised by BBC in March during which Gaddafi responded to unrehearsed questions, Gaddafi acknowledged his history of enmity with the West and did not deny Libya's erstwhile involvement in terrorism. But he spoke of a new chapter for Libya and backed it up with a commitment to societal change. He insisted that in the Libya that comes after him there would be no new Gaddafi but self-governance. This isn't mere bluster. Gaddafi has taken grave risks in the name of change: offending the Benghazi clans that engineered the nurses' arrest; giving up his nuclear program while rogue nations such as Iran and North Korea use theirs to blackmail the West; holding open conversations over the past year with Western intellectuals, not just progressives such as Robert Putnam of Harvard and me but neocon pundit Francis Fukuyama and the tough New Democrat defense expert Joseph N. Nye. Moreover, in seeking to modify the banking industry and economy, he has rattled the existing elite who benefit from the status quo. Surprisingly flexible and pragmatic, Gaddafi was once an ardent socialist who now acknowledges private property and capital as sometimes appropriate elements in developing societies. Once an opponent of representative central government, he is wrestling with the need to delegate substantial authority to competent public officials... he himself surfs the Internet.

Libya under Gaddafi has embarked on a journey that could make it the first Arab state to transition peacefully and without overt Western intervention to a stable, non-autocratic government and, in time, to an indigenous mixed constitution favoring direct democracy locally and efficient government centrally.... Completely off the radar, without spending a dollar or posting a single soldier, the United States has a potential partner in what could become an emerging Arab democracy smack in the middle of Africa's north coast. This partner possesses vital sulfur-free gas and oil resources, a pristine Mediterranean shoreline, a non-Islamist Muslim population, and intelligence capacities crucial to the war on terrorism. Gaddafi, for example, ardently opposes the al-Qaeda brand of Wahhabist fundamentalism that Saudi Arabia sponsors.

Cynics will disregard all this; but after America's "realist" experiences in Iraq, Afghanistan and Pakistan, this may actually turn out to be a recipe for peace and partnership in the unlikeliest of places.

Donna Dubinsky: Money Wont Buy You Health Insurance

Donna Dubinsky:

Money Won’t Buy You Health Insurance: THIS isn’t the story of a poor family with a mother who has a dreadful disease that bankrupts them, or with a child who has to go without vital medicines. Unlike many others, my family can afford medical care, with or without insurance. Instead, this is a story about how broken the market for health insurance is, even for those who are healthy and who are willing and able to pay for it.

Most employees assume that if they lose their job and the health coverage that comes along with it, they’ll be able to purchase insurance somewhere. The members of Congress who want to repeal the provision of last year’s health insurance law that makes it easier for individuals to buy coverage must assume that uninsured people do not want to buy it, or are just too cheap or too poor to do so. The truth is that individual health insurance is not easy to get. I found this out the hard way. Six years ago, my company was acquired. Since my husband had retired a few years earlier, we found ourselves without an employer and thus without health insurance. My husband, teenage daughter and I were all active and healthy, and I naïvely thought getting health insurance would be simple.

Why did we even need insurance? First, we wanted to know that, if we had a medical catastrophe, we would not exhaust our savings. Second, uninsured patients are billed more than the rates that insurers negotiate with doctors and hospitals, and we wanted to pay those lower rates. The difference is significant: my recent M.R.I. cost $1,300 at the “retail” rate, while the rate negotiated by the insurance company was $700. An insurance broker helped me sort through the options. I settled on a high-deductible plan, and filled out the long application....

Then the first letter arrived — denied. It never occurred to me that we would be denied! Yes, we had listed a bunch of minor ailments, but nothing serious. No cancer, no chronic diseases like asthma or diabetes, no hospital stays. Why were we denied? What were these pre-existing conditions that put us into high-risk categories? For me, it was a corn on my toe for which my podiatrist had recommended an in-office procedure. My daughter was denied because she takes regular medication for a common teenage issue. My husband was denied because his ophthalmologist had identified a slow-growing cataract. Basically, if there is any possible procedure in your future, insurers will deny you....

The new health care reform legislation is not perfect. Nothing that complex could be. But I have no doubt that the system is broken and reform is absolutely essential. If we are not going to have universal coverage but are going to rely on employer plans, then we must offer individuals, self-employed people and small businesses a place to purchase insurance at a reasonable price.

If members of Congress feel so strongly about undoing this important legislation, perhaps we should stop providing them with health insurance...

Gaddafi Nearing His End?

Heba Saleh in Cairo and Reuters:

FT.com / Middle East & North Africa - Tripoli slipping from Gaddafi’s grip: Col Gaddafi’s grip on power appeared to be slipping on Saturday as his regime lost control of parts of Tripoli, after ten days of a leaderless popular uprising inspired by the revolts which ousted the leaders of Egypt and Tunisia. Security forces abandoned the working-class Tajoura district as poor neighbourhoods of the Libyan capital Tripoli openly defied col Gaddafi, Reuters reported. Col Gaddafi’s strongest European ally, Italian prime minister Silvio Berlusconi, said that he no longer appeared to be in control of the country. The entire eastern region and parts of western Libya near the border with Tunisia have already slipped from the regime’s grip.

But local witnesses told the Financial Times security forces appeared to be digging in to defend the centre of Tripoli. “The security presence now is all around the city which they have cordoned off to prevent any forces coming from outside,” said Samir, a Tripoli resident. “They have stationed tanks and anti-aircraft guns on roads leading into the city. The other security cordon is around Bab al-Aziziah [Gaddafi residence] there of course he has a whole arsenal of weapons. “The streets are quite and there are few people around. There were some 150 supporters of Gaddafi in Green Square, mostly kids,” he said.

Forces loyal to the embattled leader were also attempting regain territory lost to rebels in other parts of the country. There were battles at an airbase outside Misrata on Saturday morning between pro-Gaddafi forces and the local population supported by units of the army. Regime forces have been attempting since Friday to capture Misrata, the third city in Libya which lies on the coast 200 kilometres east of Tripoli. The civilian airport outside the city which lies on the coast 200 kilometres east of Tripoli was attacked and burnt down by regime forces on Friday, according to Ibrahim an eye witness who spoke to the Financial Times. He said the grounds of the airport were strewn with shells. Gharian an area of Misrata was shelled yesterday on Friday night and the number of casualties is unknown, he said. “We are surrounded by regime forces from all directions,” he said. “We don’t know how many martyrs have fallen. They have also abducted several people.”

With the UN debating sanctions against the regime, Col Gaddafi is now desperate to hold on to Tripoli, home to 2m people, or a third of the population of the north African nation. The city is the centre of the shrinking circle of territory still under the control of the Libyan leader...

Mark Thoma's Frustration

MT:

Economist's View: I have never argued that monetary policy won't work at all when the economy is near the zero bound. What I have said is that monetary policy alone cannot close the output and employment gaps in severe recessions, and that fiscal policy has an important role to play.... I have called for more aggressive QE... I complained about the Fed waiting until the election was over before announcing the policy -- and I have also called for more aggressive fiscal policy. When I respond to those who call solely for monetary policy, it is not because I think that monetary policy won't work at all, it's because monetary policy alone is likely to be insufficient.... From the very start of this crisis, I have called for a portfolio of policies as a response to our considerable uncertainty over both monetary and fiscal policy multipliers. My view is that fiscal policy is more powerful than monetary policy in severe recessions, but we don't know all that much about these multipliers in normal times, and we know even less about how they work in severe recessions (most estimates of monetary and fiscal policy multipliers come from models that don't connect the financial and real sectors very well, and hence miss a key transmission mechanism in this recession, and the studies use data that mostly come from normal times). The portfolio approach is useful when there is so much uncertainty over the effectiveness of policy because if one of the policies doesn't work as well as hoped, perhaps another will fill the void.... We haven't done enough of either type of policy, and what we have done has been put into place much later than would have been optimal....

I also believe that what has been done on both the monetary and fiscal policy fronts has helped. The empirical evidence isn't all in and won't be for some time, but my reading of the evidence to date is that these policies helped to avoid a much worse outcome.... Right now, we could use more of both types of policy, it's not too late to do more given the expectation that full recovery of employment is years away. Thus, I am also frustrated with the "painfully small additional aid for a very troubled economy," but my frustration is not just with monetary policymakers. Fiscal policymakers have also failed to do enough.

Christina Romer: Empiricists and Theorists on Federal Reserve Policy

I would have put it differently--and less politely.

CR:

The Inflation Debate That’s Muting the Fed’s Response : Monetary policy makers are all hawks now. Even those who most emphasize the Fed’s role in fighting unemployment oppose policies that would raise inflation noticeably above the Fed’s implicit target of about 2 percent. The real division is not about the acceptable level of inflation, but about its causes, and the dispute is limiting the Fed’s aid to the economic recovery. The debate is between what I would describe as empiricists and theorists.

Empiricists... put most weight on the evidence... that the main determinants of inflation are past inflation and unemployment. Inflation rises when unemployment is below normal and falls when it is above normal. Though there is much debate about what level of unemployment is now normal, virtually no one doubts that at 9 percent, unemployment is well above it. With core inflation running at less than 1 percent, empiricists are therefore relatively unconcerned about inflation in the current environment.

Theorists... assume people are highly rational in forming expectations of future inflation.... Fed actions that call its commitment to low inflation into question can cause inflation expectations to spike, leading to actual increases in prices and wages. For theorists, any rise in an indicator of expected or future inflation, like the recent boom in commodity prices, suggests that the Fed’s credibility is at risk....

Now, not every monetary policy maker fits neatly into these categories. Most empiricists care about expectations of inflation and would hesitate to take extreme actions for fear that they would damage the Fed’s credibility. Some theorists oppose monetary expansion on other grounds, like the fear of setting off asset price bubbles. But the main division is between the empiricists who say “inflation is unlikely at 9 percent unemployment” and the theorists who say “inflation could bite us at any moment.”...

Most monetary policy makers agree that quantitative easing can stimulate the economy.... The fight over quantitative easing is about the costs. The empiricists say the policy won’t cause inflation because the economy remains so weak. The theorists argue that a small gain in growth could come at the price of a rapid rise in inflation.... As a confirmed empiricist, I am frustrated that the two sides have been able to agree only on painfully small additional aid for a very troubled economy. For a sense of how much more useful monetary policy could be, one can look to the Great Depression....

Franklin D. Roosevelt took the United States off the gold standard in April 1933, and rapid devaluation led to huge gold inflows and a large increase in the money supply. Roosevelt also made it clear that the monetary expansion would not be reversed. Expectations of deflation, which had been enormous, abated quickly. As a result, with nominal rates at zero, real interest rates (the nominal rate less expected inflation) plummeted. The first types of demand to recover were ones that were sensitive to interest rates. Automobile production, for example, jumped 42 percent from March to April in 1933. Inflation did pick up somewhat in the mid-1930s, in part because of other New Deal measures like the National Industrial Recovery Act. But the inflation was modest, and after the crushing deflation of the early 1930s, widely celebrated.

THE triumph of hawkish views on inflation means that there is no appetite today for a Roosevelt-style, inflationary monetary policy. But that doesn’t mean the Fed couldn’t be more aggressive if the empiricists were willing to risk a split with the theorists.

In a strongly worded article and speech several years ago, before he was Fed chairman, Ben S. Bernanke provided a user’s manual for responsible but unconventional monetary policy. Mr. Bernanke focused on Japan in the 1990s, but his recommendations could apply just as well to the United States today. The Fed could engage in much more aggressive quantitative easing, both in size and in scope, to further lower long-term interest rates and value of the dollar. It could more effectively convey to markets its intentions for the funds rate, which would also lower long-term rates. And it could set a price-level target, which, unlike an inflation target, calls for Fed policy to take past years’ price changes into account. That would lead the Fed to counteract some of the extremely low inflation during the recession with a more expansionary policy and lower real rates for a while.

All of these alternatives would be helpful and would retain the Fed’s credibility as a defender of price stability. And any would be better than doing too little just because some Fed policy makers believe in an unproven, theoretical view of how inflation works.

Janet Yellen on Unconventional Monetary Policy

JY:

FRB: Speech: February 25, 2011: To assess the macroeconomic effects of the Fed's large-scale asset purchase program, I would like to highlight some findings from a recent study by four Federal Reserve System economists.... The baseline incorporates the first round of asset purchases--which brought the Federal Reserve's securities holdings to a little more than $2 trillion. It embeds an assumption that the FOMC will complete the purchases announced last November so that the balance sheet expands to about $2.6 trillion by the middle of this year. From that point forward, the authors assume that the overall size of the portfolio will remain unchanged until mid-2012 and then shrink gradually at a rate sufficient to return it to its pre-crisis trend line by mid-2016.... [T]he overall characteristics of this assumed trajectory seem broadly consistent with the sense of the Committee's discussions last spring.... [T]he counterfactual scenario in which the FOMC never conducts any asset purchases.... The pace of recovery under the baseline scenario is expected to be painfully slow. But the counterfactual scenario suggests that conditions would have been even worse in the absence of the Federal Reserve's securities purchases: The unemployment rate would have remained persistently above 10 percent, and core inflation would have fallen below zero this year. Of course, considerable uncertainty surrounds those estimates, but they nonetheless suggest that the benefits of the asset purchase programs probably have been sizeable...