J. Bradford DeLong's Blog, page 209
March 24, 2019
Mohamed A. El-Erian: Fed Signals No Rate Hikes in 2019, N...
Mohamed A. El-Erian: Fed Signals No Rate Hikes in 2019, New Approach to Balance Sheet: "The central��bank���s��guidance on interest rates is��more dovish than even the most sanguine��bulls had hoped.... Three months ago, the Fed was still signaling several rate hikes this year...
...At the conclusion of its two-day policy meeting Wednesday, it slashed that forecast to none and announced what many would have regarded as an unusually early end to the removal of exceptional liquidity.... The reaction of financial asset prices reflected the view that the Fed gave markets the policy guidance that the most optimistic bulls had hoped for, but few believed that the central bank would deliver....
Historically, a dramatic U-turn in Fed policy like the one solidified on Wednesday would have been prompted by a significant worsening in the economy and its outlook, and/or major financial market dysfunction, particularly given the extent to which the central bank is sacrificing short-term policy optionality. Yet neither factor is at work here.... Other issues could have... played a role.... Concern about the return of... market volatility.... A desire to provide greater insurance... China-U.S. trade negotiations, Brexit and other factors.... A desire to minimize the likelihood of renewed political attacks.... The greater the role played by these concerns, the greater the threat of financial and economic instability down the road,��and the higher the risks associated with the Fed���s decision to give up its policy optionality so early in 2019....
#noted
Over the past three centuries success at economic develop...
Over the past three centuries success at economic development has always gone with an absolute conception of property rights. in China today, however ,your property rights are always conditional on your service to the state and on the power of your friends in the party. Thus American corporations and their American shareholders are going to find serving China���s market a very interesting thing indeed over the next generation:
Ben Thompson: China Blocks Bing; Tencent, China, and Apple;: "The warning signs for Apple are flashing bright red: not only is Apple the most successful hardware company in China (and, relatedly, the most successful software company), the company also runs by far the most profitable service. China is the biggest market for the App Store, and it is fair to wonder how long China will tolerate Apple���s total control of app installation for the iPhone...
...Certainly Apple is doing its best to foreclose that possibility: the company kicked out VPN apps in 2017, and purged an additional 25,000 apps that state media claimed were illegal last fall. Then again, Microsoft did its best to keep Bing in China���s good graces as well: now we know how that turned out. If I were Apple I would pretty nervous about the long-term viability of, at minimum, that 30% share of purchases in the App Store, and potentially the exclusivity of the App Store completely...
#noted
The great and the good of America's establishment have be...
The great and the good of America's establishment have been unwilling to use the F-word as a label for the political movement that now rules in places like Hungary, Poland, India, and Brazil. But Madeleine Albright goes there: Sean Illing: "Fascism: A Warning" from Madeleine Albright: "A seasoned US diplomat is not someone you���d expect to write a book with the ominous title Fascism: A Warning. But that is what Madeleine Albright, who served as the first female secretary of state from 1997 to 2001, has done���and it���s not a reassuring read. In it, she sounds the alarm about the erosion of liberal democracy, both in the US and across the world, and the rise of what she describes as a 'fascist threat'. And yes, she talks about President Donald Trump...
#noted
March 23, 2019
Via Adrienne Porter Felt: A "SMASH THAT LIKE BUTTON!!' fr...
Via Adrienne Porter Felt: A "SMASH THAT LIKE BUTTON!!' from 1355: William: William and the Werewolf:
...And there he saw the lovely child, weeping in that horrible hollow, clothed like a king's son.
So ends the first part of this tale. All who would like to hear more should offer an 'Our Father' to the High King of Heaven for the noble Earl of Hereford, Sir Humphrey de Bohun, nephew of old King Edward who lies at Gloucester. For he is the first to have this tale translated from French into English for the benefit of all Englishmen; whoever prays thus, may God grant him bliss!
The cowherd's wife looked after the little boy as though he were her own son...
#noted
I do not think that Steve Moore was "an amiable guy" to t...
I do not think that Steve Moore was "an amiable guy" to the people of Kansas (except for those who benefitted from his pass-through loophole). I would accept "a seemingly-amiable grifter", but "an amiable guy" seems to me to miss the mark...
Now where are all the other professional Republican economists? Coming out against Moore-to-the-Fed is a really cheap and easy virtue signal to make even if you are not virtuous at all. Failing to come out against Moore-to-the-Fed is to send a strong vice signal to the administration, and the world:
Greg Mankiw: Memo to Senate: Just Say No: "The president nominates Stephen Moore to be a Fed governor. Steve is a perfectly amiable guy, but he does not have the intellectual gravitas for this important job.... It is time for Senators to do their job. Mr. Moore should not be confirmed...
#noted
David Glasner: James Buchanan Calling the Kettle Black: Weekend Reading
IIR, back in 1986 I was one of two two people at the MIT economics Wednesday faculty lunch willing to say that I thought the award of the Nobel Prize to James Buchanan was not a travesty and a mistake. I would now like to withdraw that opinion.
Buchanan was a hedgehog. Hedgehogs are wise in one big thing and very stupid otherwise. They may be intellectually useful for a community, or they may be tremendously destructive���it depends. But they are not wise. And they should not be given prizes that lead outsiders to think that they are wise:
David Glasner: James Buchanan Calling the Kettle Black: "In the wake of the tragic death of Alan Krueger, attention has been drawn to an implicitly defamatory statement by James Buchanan about those who, like Krueger, dared question the orthodox position taken by most economists that minimum-wage laws increase unemployment among low-wage, low-skilled workers whose productivity, at the margin, is less than the minimum wage that employers are required to pay employees. Here is Buchanan���s statement...
...The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the presupposition that human choice behavior is sufficiently relational to allow predictions to be made. Just as no physicist would claim that ���water runs uphill,��� no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teachings of two centuries; we have not yet become a bevy of camp-following whores.
Wholly apart from its odious metaphorical characterization of those he was criticizing, Buchanan���s assertion was substantively problematic....
Buchanan was obviously wrong not to acknowledge... obvious circumstances in which a minimum-wage law could simultaneously raise wages and reduce unemployment without contradicting the inverse relationship between quantity demanded and price. Such circumstances obtain whenever employers exercise monopsony power in the market for unskilled labor....
The second problem with Buchanan���s position is less straightforward and less well-known, but more important, than the first. The inverse relationship by which Buchanan set such great store is valid only if qualified by a ceteris paribus condition.... Labor markets, except at a granular level, when the focus is on an isolated region or a specialized occupation, cannot be modeled usefully with the standard partial-equilibrium techniques of price theory, because income effects and interactions between related markets cannot appropriately be excluded from the partial-equilibrium analysis of supply and demand in a broadly defined market for labor.... Moreover, the idea that the equilibration of any labor market can be understood within a partial-equiilbrium framework in which the wage responds to excess demands for, or excess supplies of, labor just as the price of a standardized commodity adjusts to excess demands for, or excess supplies of, that commodity, reflects a gross misunderstanding of the incentives of employers and workers in reaching wage bargains for the differentiated services provided by individual workers....
The truth is we don���t have a good understanding of how wages adjust, and so we don���t have a good understanding of the effects of minimum wages. But in arrogantly and insultingly dismissing Krueger���s empirical research on the effects of minimum wage laws, Buchanan was unwittingly exposing not Krueger���s ideological advocacy but his own.
#weekendreading
Leonid Bershidsky: Russia's Annexation of Crimea 5 Years ...
Leonid Bershidsky: Russia's Annexation of Crimea 5 Years Ago Has Cost Putin Dearly - Bloomberg: "His overconfidence after the successful annexation lured him into a trap where he lost all bargaining power: Five years ago, on March 16, 2014, the Kremlin held a fake referendum in Crimea to justify after the fact the peninsula���s annexation from Ukraine.... The highest cost to Putin came in bargaining power rather than in cash. Immediately after Crimea, geopolitical bargains were still possible for Putin.... After the eastern Ukraine adventure, and especially after the downing of Flight MH17 and all the laughable Russian denials that followed, his credibility was shot. Nobody knew if he would keep his end of any bargain.... Putin���s lack of��credibility is an important reason he can���t build any alliances at all.... At the same time, Russians��� post-Crimea enthusiasm is gone, eroded by six years of falling incomes.... Russia, the world and, likely, parts of the Russian establishment are waiting for Putin to go, even if no one can make him leave.... Meanwhile, Fortress Russia is locked and no one���s coming to parley...
#noted
I confess, I do not understand any of these three objecti...
I confess, I do not understand any of these three objections: (1) Weinberg is disturbed by many-worlds just as earlier physicists were disturbed by quantum waves, but the universe does not care and does not avoid every feature that might disturb East African Plains Apes. (2) The Born rule is a problem for all formulations of quantum mechanics, but many-worlds has come closer to it than any other formulation and may well have derived it. (3) The non-locality of EPR, "entanglement", and "spukhafte Fernwirkung" is not a problem for many-worlds, but rather a problem for all other formulations���including instrumentalist ones���as Sidney Coleman said, it's either "quantum mechanics in your face" or non-locality; it's not "quantum mechanics in your face" and non-locality: Steven Weinberg: The Trouble with Quantum��Mechanics: "The realist approach has a very strange implication... Hugh Everett... The vista of all these parallel histories is deeply unsettling, and like many other physicists I would prefer a single history. There is another thing that is unsatisfactory about the realist approach.... We can still talk of probabilities as the fractions of the time that various possible results are found when measurements are performed many times in any one history.... Several attempts following the realist approach have come close to deducing rules like the Born rule that we know work well experimentally, but I think without final success. The realist approach to quantum mechanics had already run into a different sort of trouble... Einstein... Podolsky and... Rosen... 'entanglement'.... Strange as it is, the entanglement entailed by quantum mechanics is actually observed experimentally. But how can something so nonlocal represent reality?...
#noted
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