J. Bradford DeLong's Blog, page 211

Donald Tusk: "There is a special place in hell for those ...

Donald Tusk: "There is a special place in hell for those who promoted Brexit without even a sketch of a plan": ���According to our Pope, hell is still empty. It means there is a lot of space.��� European Commission President Jean-Claude Juncker interjected: ���Don���t go to hell!���...

#noted

Comment of the Day: Erik Lund: "In later stages, the AI t...

Comment of the Day: Erik Lund: "In later stages, the AI taught itself to recognise school ties and to perform Masonic handshakes. Unfortunately, on being informed that software wasn't eligible for Skull and Bones or Opus Dei, it became critically unstable and tried to run away to join SEAL Team 6...

#commentoftheday

I agree. This is bending to reality. But the reality has ...

I agree. This is bending to reality. But the reality has only changed a little bit since last December: John Authers: Federal Reserve Bends to Economic Reality: "Looking at various��recession indicators, several of which are produced by the Fed, it looks as though Powell may be bending to the evidence of economic trouble ahead��and not, as many claim, bending to pressure from the financial markets...

#noted

John Authers: Things Are Finally Looking Up for Theresa M...

John Authers: Things Are Finally Looking Up for Theresa May: "EU... patience has run out and they do not want to waste more time waiting for the infuriating British to make up their minds.... EU��leaders have decided that they are ready for a no-deal��Brexit and could handle the consequences. This is probably not true of the U.K. And so the EU is prepared to risk forcing the issue, and forsaking the (still slim) chance that the U.K. might yet��decide to stay. Thus, Theresa May, for whom personal support appears to have evaporated, might conceivably be in position to snatch victory from the jaws of defeat...

#noted

The real lesson, I think, from AI-machine learning is tha...

The real lesson, I think, from AI-machine learning is that AI-machine learning is a lot like "human judgment"���we have remarkably little insight into what features decisions of the situation are salient to the mind or to the whatever that is actually making the deciding. Thus this is not just a cautionry tale for AI-machine learning, it is also a cautionary tale for human "experts": Andrew Hill: Amazon Offers Cautionary Tale Of AI-Assisted Hiring: "Amazon, one of the most innovative and data-rich companies in the world, leapt on that possibility as early as 2014. It built a recruiting engine that analysed applications submitted to the group over the preceding decade and identified patterns. The idea was it would then spot candidates in the job market who would be worth recruiting...

..."Everyone wanted this holy grail,��� one person familiar with the initiative told Reuters, which broke the story in October. Unfortunately, the data were dominated by applications from men, and the AI taught itself to prefer male candidates, discriminating against CVs that referred to ���women���s��� clubs, and setting aside graduates from certain all-women���s colleges. The initiative was downgraded and the research team scrapped. Amazon has claimed it never used the programme to evaluate applicants...

#noted

In response to a query from Nancy M. Birdsall on what are...

In response to a query from Nancy M. Birdsall on what are the most important contributions to feminist economics, Equitable Growth's Kate Bahn provides a shoutout to, among others, my college classmate Joyce Jacobsen of Wesleyan���who got me my first economics RA job: Kate Bahn: "Some good resources are Beyond Economic Man and Toward a Feminist Philosophy of Economics. I particularly like Joyce Jacobsen's essay on 'Some implications of the feminist project in economics for empirical methodology' in the latter...

#noted

A brilliant paper. But I have a worry: those at the upper...

A brilliant paper. But I have a worry: those at the upper tail of the income distribution are, to a substantial degree, those whose broadly-construed portfolios are ludicrously risky who happen to be unusually lucky. I am not sure they have properly accounted for luck here: Matthew Smith, Danny Yagan, Owen M. Zidar, and Eric Zwick: Capitalists in the Twenty-First Century: "Entrepreneurs who actively manage their firms are key for top income inequality. Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries. Private business profit falls by three-quarters after owner retirement or premature death...

...Classifying three-quarters of private business profit as human capital income, we find that most top earners are working rich: they derive most of their income from human capital, not physical or financial capital. The human capital income of private business owners exceeds top wage income and top public equity income. Growth in private business profit is explained by both rising productivity and a rising share of value added accruing to owners...

#noted

Raising the Curtain: Trade and Empire

Yet Another Outtake from "Slouching Towards Utopia?: An Economic History of the Long Twentieth Century, 1870-2016"

Raising the Curtain: The Long Twentieth Century���Trade and Empire

The extent to which the navies and trading fleets of the great European sea-borne empires of the sixteenth, seventeenth, and eighteenth centuries shaped the industrial development of western Europe has always been one of the most fiercely-debated and unsettled topics in economic history. That European expansion in the sixteenth, seventeenth, and eighteenth centuries were catastrophes for the regions of west Africa that were the sources of the slave trade; for the Amerindians of the Caribbean; for the Aztecs, Incas, the mound-builders of the Mississippi valley; and for the princes of Bengal and others who found themselves competing with the British East India Company in the succession wars over the spoils of India���s Moghul Empire���that is not in dispute.

But how much did pre-industrial trade and plunder affect European development? That is not so clear.

It is clear is that even at the end of the eighteenth and the first half of the nineteenth century trade not in luxuries but in staples had begun to profoundly shape history. For the first time transoceanic trade mattered not just for a ruling elite but for an economy as a whole. The export of cotton from the American South and had mattered. Without the appetite of British and New England factories for cotton and the power to ship ginned cotton to them cheaply, the slaves of the American South in 1860 would have been what they were for George Washington in the 1790s: a quarter of your wealth that you were willing to free, at least upon your death, because it was the right thing to do. By contrast, for Jefferson Davis it wasn���t his land but rather his slaves that were three-quarters of his wealth���and so the U.S. Civil War of 1861-5 came.

Early-nineteenth century cotton showed what late-eighteenth century sugar had prefigured. The export of sugar from the Caribbean islands and Latin America (and also tobacco, tea, coffee, chocolate, and so forth) meant that European agriculture did not have to grow nearly as much flax or raise as much wool or produce as many calories. It provided an extra edge to the British economy: as if there was perhaps one additional ghost worker who did not have to be fed or paid alongside every ten.

That, from the perspective of 1870, was what the expanded intercontinental division of labor and the higher productivity that resulted from it had done up to that point.

#slouchingtowardsutopia #outtakes #economichistory

James Felton: Nine days from ���Brexit day���, does anyon...

James Felton: Nine days from ���Brexit day���, does anyone have a clue what���s happening?: "We���re begging for an extension and seeking trade deals with the mighty Liechtenstein. Everything is fine.... It was admittedly quite funny that Theresa May is in the position of defending getting people to vote over and over again until she gets the result that she wanted.... After the announcement, some ERG members expressed dismay that they weren���t allowed to vote again (see how funny this is?) Strongly approve of Bercow making decisions based on how funny they are to people who retain the capacity for rational thinking)....If only they���d treated the meaningful vote more like a meaningful vote and less like tantric legislative foreplay before a full 29 March climax, but you live and learn.... So here we are. Nine days to go, hoping that 27 countries that May said would be crushed if they didn���t offer her a good deal are kind enough to all let us stay a little longer if we beg. If we���ve annoyed any one of them enough, say, by calling them Nazis or likening them to Soviet prisons for the past three years, they could veto our extension...

#noted

���An Extraordinary Episode in the Economic Progress of Man!���: Yet Another Outtake from "Slouching Towards Utopia?: An Economic History of the Long Twentieth Century, 1870-1914"

DIE, DARLINGS, DIE!!!!!

���An Extraordinary Episode in the Economic Progress of Man!���

Yet all in all it is not possible to see the 1870-1914 making of the single global economy���and society���as anything other than an extraordinary and wonderful episode in the history of humanity. Looking back from 1919 on the optimistic, economists��� world that he had thought he had lived in up until the start of World War I in August 1914, John Maynard Keynes wrote, in his Keynes-centric upper-class-focused way:

What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914!... Conveniences, comforts, and amenities beyond the compass of the richest and most powerful monarchs of other ages. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages.... He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate....

But, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice���

And for those who were not part of the British upper class, it was still the case that the world on the eve of World War I was more prosperous and less inhuman than it had ever been before.

Yet turning this potential, and to a substantial degree actual, progress into a move in the direction of utopia really did require that humanity grow up���and not in the sense of Rudyard Kipling���s ���White Man���s Burden��� of European proconsuls using the maxim gun to tell everybody what to do.

Rather, it required what Norman Angell wanted to bring into being:

It is not we who are the ���theorists���, if by ���theorists��� is meant the constructors of elaborate and deceptive theorems in this matter. It is our opponents, the military mystics.... What... makes these fantastic political doctrines possible... are a few false general conceptions... that nations are rival and struggling units, that military force is consequently the determining factor of their relative advantage; that enlargement of political frontiers is the supreme need, and so on. And the revision of these fundamental conceptions will... be the work of individual men. States do not think. It is the men who form the states who think...

Was humanity growing up? In the final analysis, even Rudyard Kipling did not think so. Let us give the mic again to him, writing on the occasion of Queen Victoria���s Diamond Jubilee in 1897:

God of our fathers, known of old/Lord of our far-flung battle-line,

Beneath whose awful Hand we hold/Dominion over palm and pine���

Lord God of Hosts, be with us yet/Lest we forget���lest we forget!

The tumult and the shouting dies/The Captains and the Kings depart:

Still stands Thine ancient sacrifice/An humble and a contrite heart.

Lord God of Hosts, be with us yet/Lest we forget���lest we forget!

Far-called, our navies melt away/On dune and headland sinks the fire:

Lo, all our pomp of yesterday/Is one with Nineveh and Tyre!

Judge of the Nations, spare us yet/Lest we forget���lest we forget!

If, drunk with sight of power, we loose/Wild tongues that have not Thee in awe,

Such boastings as the Gentiles use/Or lesser breeds without the Law���

Lord God of Hosts, be with us yet/Lest we forget���lest we forget!

For heathen heart that puts her trust/In reeking tube and iron shard,

All valiant dust that builds on dust/And guarding, calls not Thee to guard,

For frantic boast and foolish word���Thy mercy on Thy People, Lord!

One task that Kipling is accomplishing in this poem is the reversal of the European/non-European civilization/barbarism trope. In the same way as Joseph Conrad���s protagonist in Heart of Darkness travels up the Congo River into a land that is supposed to be the heart of darkness and yet finds that the true heart of darkness is the heart of European colonizer Kurtz, so the ���heathen heart��� is he who puts his trust in modern European industrial military technology, and the ���lesser breeds without the Law��� are German and Russian imperial policymakers who fear God not���and whom Kipling fears that the British policymakers are becoming. Perhaps the best paraphrase of the poem is: We here in Britain have great power; with great power comes great responsibility.

And if the 1870-1914 wave of imperial conquest had not taught everybody that humanity had not grown up, come 1914 the start of World War I would do do the teaching.

#slouchingtowardsutopia #outtake #economichistory