J. Bradford DeLong's Blog, page 2142

Thinking About Teaching Economic History to the Graduate Students...

Can anybody think of any (short) articles that do the job these do better, so that I can improve the readings I assign the graduate students for their third economic history class?

(Yes, I know that I cannot assign four--even short--articles for every hour I teach, but you have to start somewhere...)

February 2, 12-1: Slavery, Serfdom, and Wage Labor:

Evsey Domar (1970), "The Causes of Slavery or Serfdom: A Hypothesis," Journal of Economic History, pp. 18-32

Stanley Engerman and Kenneth Sokoloff (1994), "Factor Endowments, Institutions and Differential Paths of Development Among New World Economies: A View from Economic Historians of the United States" NBER Working Paper no. 10066 http://papers.nber.org/papers/h0066.pdf

Karl Marx and Friedrich Engels (1848), "Manifesto of the Communist Party" http://www.marxists.org/archive/marx/works/1848/communist-manifesto/

Karl Marx (1847), "Wage Labour and Capital" http://www.marxists.org/archive/marx/works/1847/wage-labour/index.htm

February 2, 1-2: Agricultural Revolution:

Peter Timmer (1969), "The Turnip, The New Husbandry, and The English Agricultural Revolution," Quarterly Journal of Economics 83:3 (August), pp. 375-395 http://www.jstor.org/stable/1880527

Gregory Clark (1992), "The Economics of Exhaustion, the Postan Thesis, and the Agricultural Revolution," Journal of Economic History 52:1 (March), pp. 61-84 http://www.jstor.org/stable/2123345

George Grantham (1989), "Agricultural Supply During the Industrial Revolution: French Evidence and European Implications," Journal of Economic History 49:1 (March), pp. 43-72 http://www.jstor.org/stable/2121417


Robert Allen (2008), “The Nitrogen Hypothesis and the English Agricultural Revolution: A Biological Analysis,” Journal of Economic History 68, pp.182-210. http://journals.cambridge.org/action/displayIssue?jid=JEH&volumeId=68&issueId=01&iid=1740956

Thinking About Teaching Economic History to the Graduate Students...

Can anybody think of any (short) articles that do the job these do better, so that I can improve the readings I assign the graduate students for their first economic history class?

January 19, 12-1: Why We Study Economic History:

R.G. Hawtrey (1925), "Public Expenditure and the Demand for Labour," Economica 13 (March), pp. 36-48 http://www.jstor.org/stable/2548008

Eugene Fama (2009), "Bailouts and Stimulus Plans" (January 13) http://www.dimensional.com/famafrench/2009/01/bailouts-and-stimulus-plans.html

Paul Krugman (2009), "How Did Economists Get It So Wrong?" New York Times Magazine (September 2) http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html

Robert Solow (1985), "Economic History and Economics," American Economic Review 75:2 (May), pp. 328-331 http://www.jstor.org/stable/1805620

January 19, 1-2: The Malthusian Economy:

Jared Diamond (1987), "The Invention of Agriculture: The Worst Mistake in the History of the Human Race," Discover http://tinyurl.com/dl20090112d

Gregory Clark (2005), A Farewell to Alms draft of chapters 2 and 3 http://tinyurl.com/dl20090112e http://tinyurl.com/dl20090112j

M. I. Finley (1965), "Technical Innovation and Economic Progress in the Ancient World," Economic History Review NS 18:1, pp. 29-45 http://tinyurl.com/dl20090112f

Mary Landrieu Sounds Like She Has Come to Play as Well

Ryan Grim:

Mary Landrieu: 'Obama-McConnell Plan' Is 'Almost Morally Corrupt': Mary Landrieu, a conservative Democratic from Louisiana, lashed out Tuesday at President Obama's deal with congressional Republicans that allows tax cuts for the wealthy to be extended for two years. Extending the tax cuts for those making more than a million dollars a year is borderline immoral, Landrieu charged. "I'm going to argue forcefully for the nonsensicalness and the almost, you know, moral corruptness of that particular policy," said Landrieu, walking into a meeting with Vice President Joe Biden and Senate Democrats. "This is beyond politics. This is about justice and doing what's right."

Landrieu was fuming about the deal. On her way into the meeting, she slammed the tax-cut extension as a needless giveaway, adding, "That's all I have to say." But it wasn't. She emerged from the meeting a few moments later to continue prosecuting her case to reporters.

It's what I'm calling the Obama-McConnell plan. We're going to borrow $46 billion from the poor, from the middle class, from businesses of all sizes basically to give a tax cut to families in America today, that despite the recession, are making over a million dollars. I mean, this is unprecedented. Unprecedented. I want to repeat that....

Landrieu added, however, that she had yet to make a decision on the final package and was speaking strictly about the extension of tax cuts for the wealthy.

Nancy Pelosi and Steny Hoyer Say They Want a Fight

It is not clear how much leverage they have. But they might have some:

Pelosi attacks Obama-GOP tax plan as House Democrats signal fight: Russell Berman: House Majority Leader Steny Hoyer said Tuesday there was “no consensus or agreement reached by House leaders” on the deal Obama negotiated with the GOP, while Speaker Nancy Pelosi (D-Calif.) criticized GOP provisions in the agreement. In a post on Twitter, Pelosi said the GOP provisions in the tax proposal would add to the deficit and help the rich without creating jobs. The GOP provisions “help only wealthiest 3%, don't create jobs & add tens of billions to deficit,” the Pelosi tweet said. The Speaker expanded on her criticism of the Republican proposals in a statement that notably withheld any commitment of support. 

We will continue discussions with the president and our caucus in the days ahead. Democratic priorities remain clear: to provide a tax cut for working families, to promote policies that produce jobs and economic growth, and to assist millions of our fellow Americans who have lost their jobs through no fault of their own.

Hoyer (D-Md.) at his weekly press conference reiterated Democratic opposition to extending tax cuts for the wealthy and said House leaders would be discussing the deal with the Democratic Caucus “over the next few days.” “We'd like the Senate to move first on this issue,” Hoyer told reporters. He said House Democratic leaders gave no commitment to the president:

We had a long meeting yesterday with the president, and there was at that point in time consensus or agreement reached by the House leadership. There was a discussion. It took some time, but there was no agreement reached.

The full caucus plans to meet Tuesday evening to consider the proposal. Hoyer stopped short of saying House Democrats would demand changes to the deal, but he warned: “It’s got to pass both houses.” Earlier on Tuesday, Rep. Chris Van Hollen (D-Md.), assistant to the Speaker, also said House Democrats had not signed off on the deal. He said he would meet with the caucus Tuesday to discuss it...

The debt-limit increase and two-year periods for all of the bill's provisions are obvious things to hold out for.

Dan Froomkin Prints My Musings on the Failure of Obama to Get More for His Shifting-the-Tax-Burden-Off-the-Rich-Concessions

Most especially: where is the increase in the debt limit? If you reduce current tax collections you increase the debt the government has to sell. Any reduction in current tax collections should have a debt-limit increase attached to it automatically. I thought this deal had one. But it does not. Why not?

Dan Frommkin

Concession On Tax Cuts Sends Obama Fans To New Level Of Despair: Brad DeLong, an economics blogger and Clinton administration Treasury official, told HuffPost Tuesday:

The thing that's disappointing is the level of tactical professionalism that the core Obama White House has exhibited..., I would expect a much greater recognition of the tactical realities of the ground on which they work than they appear to possess.... My impressions was that the Clinton team had a much, much firmer grasp of what was attainable and what was not, and where to push and where not to."

As for Obama's jabs at progressives at the press conference: "That's not effective coalition maintenance," DeLong said.

But We Still Need More Fiscal Stimulus

Sudeep Reddy:

Fed Officials Push For Fiscal Stimulus: Top Federal Reserve officials are pressing lawmakers to pair a long-term plan for deficit reduction with new short-term fiscal stimulus to boost an economy that the central bank admits needs more help than it can provide. Fed Chairman Ben Bernanke has tucked support for a two-part fiscal strategy into speeches, and has pushed it behind the scenes with lawmakers, offering a boost both to deficit hawks and to proponents of spending more or taxing less in the near term. Fed Vice Chairman Janet Yellen, in a speech on Wednesday, amplified Mr. Bernanke's call:

We need, and I believe there is scope for, an approach to fiscal policy that puts in place a well-timed and credible plan to bring deficits down to sustainable levels over the medium and long terms while also addressing the economy's short-term needs.

Ms. Yellen didn't elaborate on the latter.

Even if the central bank's controversial bond-buying initiative works as its proponents hope, Fed officials acknowledge it will only do a little to boost growth and bring down unemployment... three-tenths of a percentage point....

In public, Mr. Bernanke has called for a fiscal program "that combines near-term measures to enhance growth with strong, confidence-inducing steps" to reduce the deficit. "There are limits to what can be achieved by the central bank alone," he said in a speech last month. In meetings with lawmakers, he has avoided specifics so as not to step on political terrain, leaving his views open to interpretation. "He's never defined what short-term stimulus is to me," said Sen. Bob Corker (R., Tenn.), who met with Mr. Bernanke last month. "I'm going to take that to mean keeping our tax rates where they are for at least a couple of years while we wrestle with the tremendous spending issues"...

I Think Ryan Avent and Paul Krugman and Ezra Klein Are Most Likely to Be Right Here...

Ryan Avent:

Fiscal policy: A good deal (under the circumstances): NO REASONABLE person interested in improving the American economy and insuring against debt troubles would draw up the policy compromise that seems to have been reached in Washington this week. But no reasonable person starting from scratch would design America's sclerotic political institutions.... In this imperfect political world, the agreement to temporarily extend all of the Bush tax cuts, extend unemployment insurance, and temporarily reduce payroll tax rates and allow enhanced business expensing looks like a pretty good outcome for the American economy. The sharp criticisms levied at it by both the Democrat base and the country's real deficit hawks are both overstated.... What about the deficit hawks? Obviously, it would be nice if Congress had passed, at some point, measures amounting to a credible path toward medium-term deficit reduction. But no majority exists that's willing to pass such measures, mainly because legislators don't actually care that much about the deficit, mainly because American voters don't actually care that much about the deficit. A full expiration of the tax cuts would have been straightforwardly bad policy; the American economy isn't fit to handle a broad and substantial rise in tax rates (and neither does it need one, given the current market taste for American debt). The cuts for the rich don't add nearly as much to the deficit as the cuts for the rest, and the deal for temporary extension further reduces the fiscal burden (although pundits are right to be nervous about the fact that renewal will be on the table in an election year). The rest of the package simply isn't that big a budget deal; the other policies add up to about $300 billion over two years, which isn't going to make or break the budget.

It's worth continuing to argue for sensible deficit-reduction policy. But it's difficult for me to see movement within Congress for meaningful deficit reduction until bond markets provide pressure. And the shortest way to get there is via a strong economic recovery...

Felix Salmon:

Tax cuts, Oprah-style: The outlines of the tax-cut negotiations have finally come into focus: basically, it’s a kitchen-sink approach where Republicans and Democrats all get the tax cuts they want. The Bush tax cuts get extended for people earning more than $250,000 a year — and unemployment insurance gets extended, along with various tax credits. On top of that, there’s a 2% cut in payroll taxes, and the reintroduction of the estate tax at the Republicans’ preferred level: 35% of estates over $5 million. There’s even a nice new tax deduction for businesses making new investments. This is tax cutting, Oprah-style: you get a tax cut! And you get a tax cut! And you! And you! You all get a tax cut!... This is expansionary fiscal policy, alright, but a large chunk of it is concentrated in exactly in those areas — like tax cuts for the rich — which have the lowest multipliers when it comes to kick-starting economic recovery. What the country needs is spending, and this bill instead looks very likely to give us hundreds of billions of dollars of saving. The unemployment-insurance and payroll-tax aspects of the deal will be welcomed as exactly the kind of stimulus this economy needs: substantially all of them will be spent rather than saved. But the middle- and upper-class tax cuts, paid for by extra borrowing by Treasury, will be used in large part to pay down personal debt...

Paul Krugman:

There Are No Deficit Hawks In Congress: It’s a point barely worth making, but the tax cut deal demonstrates, for the umpteenth time, that self-proclaimed deficit hawks are frauds. We can’t afford unemployment benefits or public investment, the fake hawks say — but when it come to cutting taxes on the rich, money is literally no object. It’s just possible, as Atrios says, that some journalists don’t understand this; if you do up-close-and-personal reporting, judging politicians by what they say and how they come across rather than by the content of their proposals, you might actually be snookered. But again: none of the people who claim about the deficit actually view it as anything more than a stick with which to beat down progressive ideas.

David Dayen:

Is the Tax Cut Cave a Stimulus Gambit?: I brought this up a few days ago, and now it’s being seen as the best face of a capitulation on the Bush tax cuts. Ezra, who I assume is speaking for the White House here, lays that out:

The White House has stopped negotiating for ideal — or even acceptable — tax policy and moved to negotiating stimulus policy. The Bush tax cuts will pump about $100 billion into the economy over the next two years. They’re not the most stimulative way to spend $100 billion, but they’re more stimulative than not spending it, or than raising taxes. And they won’t be alone.... [R]ather than paring the tax cuts and the deficit back, they’re making both larger. If you’re of the mind that the economy needs all the extra help it can get right now — and you should be — this is a lot more extra help than anyone expected Republicans and Democrats would agree to give it. And from a political perspective, if you believe that what matters for elections is the economy — and you should — then it’s worth it for the White House to lose news cycles in 2010 if it means adding jobs by 2012.

I think this is worth giving some attention.... [I]s this better than nothing? Yes. But it’s not the entire story. With an expanding budget deficit, we can expect the tea party-infused House to put forward substantial deficit reduction bills.... You have a lot of attention paid to the Catfood Commission report, to the extent that there’s a supermajority in the Senate next year interested in deficit reduction.... So I don’t think you can look at this stimulus in a vacuum. In a world where the Bush tax cuts expire, you have a credible argument from the perspective of Democratic deficit hawks in the Senate – who are the people who matter here, as they will hold the keys on deficit reduction – that the issue has been dealt with in the near term. In a world where this tax cut-heavy stimulus goes into place, they’re likely to whine and argue for major spending cuts to offset the hit to the deficit. In other words, I doubt you get $300 billion in stimulus in the coming year, when all is said and done. In fact, I’d expect far less than that.... I think this claim of a $300 billion stimulus is a little dubious.

Why Oh Why Can't We Have Better Deficit Commissions?

Because Obama chose the wrong people to chair it. Stan Collender on the clown show that was Simpson-Bowles

Bowles-Simpson Offers Lessons on the Deficit: I am one of the people who never thought the deficit reduction commission co-chaired by Erskine Bowles and Alan Simpson had much chance of succeeding.... The Bowles-Simpson commission was set up on a pass-fail basis, and it unquestionably failed.... Some of those who have tried the hardest to impose an alternative definition have an ulterior motive because they supplied staff to the commission and were deeply involved in the plan’s development. To say the least, their position that the plan should be viewed as a success has to be treated skeptically.

Some people are taking solace in the fact that more than a simple majority supported the plan, but my strong suspicion is that the 11 supporters were actually an overstatement. Several members likely announced their support for the plan only after they were certain it wouldn’t be adopted....

[L]essons from Bowles-Simpson are important.... First... commissions seldom work when it comes to revenue and spending... [that] most of the questions can’t be answered objectively... dooms from the start almost every effort to do what commissions are supposed to do: take the politics out of what is an inherently political decision.... Second, Bowles-Simpson showed clearly that any commission... has to make a convincing case to the public for its proposals in order to be successful... Bowles-Simpson didn’t do this.... Third... staffing is almost always a critical element.... My commission relied on Treasury staff and a few paid outside consultants; Bowles-Simpson seemed to rely on staff on loan from outside organizations with an interest in the outcome. This is a huge problem in general; in this case it also called the commission’s objectivity into question.

Stan Collender Is Shrill

Poor Stan actually thought that the Republicans might have meant it when they campaigned on how important it was to reduce the budget deficit. Silly Stan: Republican politicians believe in nothing at all:

Is The Tax Deal The Ultimate Irony Or Hypocrisy?: After making the budget deficit not just a campaign issue but the campaign issue of 2010, one of the very first legislative things the Republicans in Congress will do after the election is agree to a tax cut and extension of unemployment benefits (and god knows what else) that will...wait for it...increase the deficit.  The two-year increase in the deficit because of the deal will be greater than the stimulus bill the GOP railed against during the election. This is either one of the most exquisite ironies or extraordinary hypocrisies in the history of American politics.  It ranks right up there with Lyndon Johnson campaigning against Barry Goldwater in 1964 by criticizing his plan to increase military activities in Vietnam and then, after the election, having the Pentagon do many of the things he had criticized Goldwater for suggesting.

Most of this round of stimulus does look to be relatively low bang-for-buck, and it is not paid for over ten years, but it does look to me as though it is better than a poke in the eye with a sharp stick.

Low Tech Cyclist Goes Where Nobody Should Ever Go...

Cogitamus: