J. Bradford DeLong's Blog, page 218

Larry Kudlow (December 7, 2007): Bush Boom Continues: "Th...

Larry Kudlow (December 7, 2007): Bush Boom Continues: "There���s no recession coming. The pessimistas were wrong. It���s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that���s a minimum). Goldilocks is alive and well. The Bush boom is alive and well. It���s finishing up its sixth consecutive year with more to come. Yes, it���s still the greatest story never told...

Larry Kudlow (February 5, 2008): ���I���m going to bet that the economy will be rebounding sometime this summer, if not sooner. We are in a slow patch. That���s all. It���s nothing to get up in arms about...

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Even though the first quarter of 2019 is only three-quart...

Even though the first quarter of 2019 is only three-quarters over, practically all of the private-sector decisions that will determine the level of economic growth from the first quarter of 2018 to the first quarter of 2019 have already been made. Moreover, because of a statistical quirk 8/9 of the components of the growth rate have already occurred, and we have reasonable data on 2/3 of the components. So the Federal Reserve Bank of New York's forecast that the first-quarter growth rate will be only 1.4% is now a semi-solid thing: you cannot take it to the bank, but you can borrow on it (the last three month-out misses were 0, +0.2, and -0.4 respectively):

It's not a recession. But it is clear that even if 2.5% were the right target for the short safe nominal interest rate two months ago, it is not the right target for the short safe nominal interest rate now. The Fed should cut.

It is far from clear to me that the risk of a U.S. recession this year is low. The risk that a recession will be called is low. The risk that a recession will start is 30%:

Gavyn Davies: Alarm Bells Ring for the��Goldilocks World Economy: "Markets seem willing to overlook the continuing slowdown in the advanced economies, which has taken the latest growth rate to only 0.8 per cent.... This is perversely seen as good news because it will reduce the likelihood of further interest rate increases.... The dovish turn in US monetary policy has been confirmed by an unusual��volte-face in policy guidance by the Fed leadership in the space of a few weeks.... This phase of the cycle is often described as the��Goldilocks zone, in which growth ��� like the heroine���s porridge in��The��Story of the Three Bears���is neither too hot nor too cold.... Meanwhile, growth is still high enough to indicate that the risk of outright recession in the next 12 months remains close to zero.... While the US is still clinging to the middle of the��Goldilocks zone, the eurozone is flirting with the bottom boundary of its zone. Any further decline in the nowcast would see a large increase in the probability of a European recession this year. With the Japanese nowcast already in negative territory and Asian trade flows headed sharply downwards, the markets may not be able to ignore much further weakness in the world economy...

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Let me hoist this from last year: Kate Bahn summarizing t...

Let me hoist this from last year: Kate Bahn summarizing the evidence that imposing work requirements simply does not work: it has none of the benefits that people wish that it would have, and all of the drawbacks you can think of: Kate Bahn: Work Requirements for U.S. Public Assistance Programs Don���t Work: "Analysis from the Center on Budget and Policy Priorities finds that imposing work requirements simply doesn���t work. One reason is because increased red tape may lead to eligible recipients losing their benefits even though they are eligible for them. People with volatile work hours or who hold multiple jobs may have a hard time collecting and submitting sufficient documentation to demonstrate they are working regularly. As CBPP points out, completing work-requirement red tape is even harder for self-employed workers, which should be cause for concern as gig-based employment becomes more prevalent...

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Comment of the Day: JEC: "This sentence: 'This high-stake...

Comment of the Day: JEC: "This sentence: 'This high-stakes approach was much criticised by liberals, who feared nuclear Armageddon more than they feared the consequences of appeasing the Soviet Union...' It tells you everything you need to know about Niall Ferguson. Well, that and the fact that Ferguson imagines this to be a sick burn on the 'liberals', rather than an acknowledgment of their obviously superior wisdom, prudence, and foresight...

#commentoftheday

Marcy Wheeler: Art of the Get-Screwed-in-Your-Russian-Qui...

Marcy Wheeler: Art of the Get-Screwed-in-Your-Russian-Quid-Pro-Quo Deal | emptywheel: "Putin���s election year operation exacerbated the polarization between Democrats and Republicans such that most Republicans and a goodly number of Democrats have been unable to step back and say, holy shit, this country got attacked and we need to come together to do something about it. Trump���s win got Republicans to fear Trump���s base so much that they care more about those fevered hordes than doing what is right for this country. And Democrats rightly want to punish Trump for cheating, but haven���t thought about what a least-damaging off-ramp for that cheater might look like. Putin doesn���t care if Trump benefits... though he is happy to keep toying with Trump like a cat plays before he eviscerates his mouse.... There are multiple ways for him to get a win out of this, whether or not Trump manages to eke out any kind of real payoff... Putin isn���t the only one playing this game. Certainly, Mohammed bin Salman feels the same way, even if his record of ruthless dealmaking is shorter and sloppier than Putin���s.... Donald Trump and Jared Kushner are easy marks for a whole range of skilled operators willing to stroke their egos and dangle loot... to the detriment of the interests of the United States. That they are so bad at deal making in no way disproves their culpability. There is no Trump Tower in Moscow. But there never had to be. All that was needed was the promise of a ridiculously lucrative narcissism-stroking deal for the Trump family to agree to shit that would hurt this country. And all the evidence suggests that they did, and continue to do so...

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Melissa Dell: The Persistent Effects of Peru���s Mining M...

Melissa Dell: The Persistent Effects of Peru���s Mining Mita: "This study utilizes regression discontinuity to examine the long-run impacts of the mita, an extensive forced mining labor system in effect in Peru and Bolivia between 1573 and 1812. Results indicate that a mita effect lowers household consumption by around 25% and increases the prevalence of stunted growth in children by around 6 percentage points in subjected districts today. Using data from the Spanish Empire and Peruvian Republic to trace channels of institutional persistence, I show that the mita���s influence has persisted through its impacts on land tenure and public goods provision. Mita districts historically had fewer large landowners and lower educational attainment. Today, they are less integrated into road networks and their residents are substantially more likely to be subsistence farmers...

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Financial Times: The ECB Is Attempting to Get Ahead of Ev...

Financial Times: The ECB Is Attempting to Get Ahead of Events: "The European Central Bank���s U-turn this week���reviving part of its stimulus programme after two years of weaning the eurozone off easy money���took markets by surprise. It should not have done. Signs of eurozone weakening, especially in Germany, and in key partners such as China, had been evident for months. Once the US Federal Reserve signalled a pause before lifting rates again, the ECB became likely to follow suit. In his final months in the role, ECB president Mario Draghi is clearly trying to get ahead of events. Less clear is whether the bank has done enough, or has the means to do so, if the weakening continues...

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Nick Rowe: Reverse-Engineering the MMT Model: "The MMT AD...

Nick Rowe: Reverse-Engineering the MMT Model: "The MMT AD curve is vertical.... Fiscal policy can be used, and must be used, because this model, with its vertical AD curve, has no inherent tendency towards 'full employment' output...

...Since monetary policy has no role to play in determining AD, the central bank... might as well set a nominal interest rate near zero, since this reduces... transactions costs of people converting between currency and bonds.... The rate of interest plays no allocative role in savings and investment. It does not coordinate intertemporal consumption and production plans of households and firms. It merely re-distributes wealth between borrowers and lenders....

The central bank... might as well set a rate of interest below the growth rate of GDP.... [Then] there is no long run government budget constraint in the normal sense. The only constraint on fiscal policy is that if the government runs too big a deficit and/or allows the debt to grow too large this would cause the IS to shift to the right of full employment output, and so causes accelerating inflation...

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Fairly Recently: Must- and Should-Reads, and Writings... (March 10, 2019)

Weekend Reading: Lara Putnam and Gabriel Perez-Putnam: What Dollar Stores Tell Us About Electoral Politics

John Quiggin: Monopoly: Too Big to Ignore: "Two hundred years after the birth of Karl Marx and fifty years after the last Western upsurge of revolutionary ferment in 1968, the term 'monopoly capitalism' might seem like a relic of outmoded enthusiasms. But economists are increasingly coming to the view that monopolies, and associated market failures, have never been a bigger problem...

Mary Beard: The Public Voice of Women: "As Homer has it, an integral part of growing up, as a man, is learning to take control of public utterance and to silence the female of the species.... Telemachus... says ���speech��� is ���men���s business���... authoritative public speech (not the kind of chatting, prattling or gossip that anyone���women included, or especially women���could do)...

Fear of Reese Witherspoon Look-Alikes on the Pill

Who Will Donald Trump Turn Out To Be?: "We have very little indication of what policies Donald Trump will try to follow or even what kind of president he will be. The U.S. press corps did an extraordinarily execrable job in covering the rise of Trump���even worse than it usually does. Even the most sophisticated of audiences���those interested in asset prices and how they are affected by government policies���have very little insight into Trump's views or those of his key associates...

Yes, it is time for the center-left to pass the baton. But what does that mean, concretely, for policies? Paul Krugman gives his opinion: Paul Krugman: "A few thoughts inspired by @delong's 'Brad is really saying two things...

Noah Smith: Book Review: The Revolt of the Public, by Martin Gurri: "A new framework... to... think about the political chaos...

Sam Bowles (2011): Is Liberal Society a Parasite on Tradition?: "Markets and other liberal institutions... enhance rather than erode... values...

CPPC: Senate Finance Committee Grills Drug Executives on Rising Prices, Criticize Them for Terrible Practices: "Grassley... Wyden... bipartisan investigation into the high price of insulin...

Chye-Ching Huang: Fundamentally Flawed 2017 Tax Law Largely Leaves Low- and Moderate-Income Americans Behind: "A restructuring... can fix these flaws...

Andrei Markevich: Russia in the Great War: Mobilisation, Grain, and Revolutio: "The economics and politics of the Russian grain and labour markets.... It was impossible simultaneously to mobilise 15 million males into the Russian army, procure the grain to feed them as soldiers, and avoid revolution...

Wikipedia: Posset: "A posset (also historically spelled poshote, poshotte) was originally a popular British hot drink made of milk curdled with wine or ale, often spiced, which was often used as a remedy...

Wikipedia: IBM 1620 - : "Many in the user community recall the 1620 being referred to as CADET, jokingly meaning 'Can't Add, Doesn't Even Try', referring to the use of addition tables in memory rather than dedicated addition circuitry.... The internal code name CADET was selected for the machine. One of the developers says that this stood for 'Computer with ADvanced Economic Technology', however others recall it as simply being one half of 'SPACE-CADET', where SPACE was the internal code name of the IBM 1401 machine, also then under development...

Wikipedia: Charles, Duke of Orl��ans: "24 November 1394 ��� 5 January 1465: Now remembered as an accomplished medieval poet owing to the more than five hundred extant poems he produced, written in both French and English, during his 25 years spent as a prisoner of war and after his return to France...

Alexandria Ocasio-Cortez: Automation Is a Good Thing: "In a talk at SXSW, the New York Congresswoman notes that automation is a net positive when the government offers a social safety net...

Marcy Wheeler: @emptywheel: "There's a belief among Russian denialists that bc there's not a Tower in Moscow w/Trump's name on it, the conspiracy didn't happen. That's now how conspiracy law works...

Kevin Drum: Here���s Why Liz Cheney Voted Against the Anti-Semitism Resolution: "On Thursday the House finally took up its resolution opposing anti-semitism, and it passed unanimously among Democrats. However, 23 Republicans voted against it. Here is Rep. Liz Cheney.... Cheney made it clear that unless the resolution was specifically aimed at a Democrat, it wasn���t worth voting for. It���s hard to see why anyone wouldn���t see this as the principled stand that it is...

Mark Thoma sends us to: Stumbling and Mumbling: The 1% vs the 0.1%: "Many of you might react to the FT���s story about the 'squeezed 1%' by getting out the world���s smallest violin. I think this is a mistake. It reminds us that the damage done by inequality extends beyond the general social and economic harm. It hurts even those who are a long way up the income ladder...

Today's Republican Party is grifters all the way down: American Enterprise Institute edition:. And the New York Times loves to give them space, space, and more space: Mark Schmitt: mschmitt9: "Am I the only one who remembers that this is the same @arthurbrooks who published a book in 2010 called +The Battle_, literally calling for 'a culture war' over economic policy??: Arthur Brooks: @arthurbrooks: 'Contempt makes persuasion impossible ��� no one has ever been hated into agreement, after all���so its expression is either petty self-indulgence or cheap virtue signaling, neither of which wins converts... https://www.nytimes.com/2019/03/02/opinion/sunday/political-polarization.html

W. V. Harris: Roman Power: A Thousand Years of Empire (9781107152717): "William V. Harris sets out to explain, within an eclectic theoretical framework, the waxing and eventual waning of Roman imperial power, together with the Roman community's internal power structures (political power, social power, gender power and economic power). Effectively integrating analysis with a compelling narrative, he traces this linkage between the external and the internal through three very long periods, and part of the originality of the book is that it almost uniquely considers both the gradual rise of the Roman Empire and its demise as an empire in the fifth and seventh centuries AD. Professor Harris contends that comparing the Romans of these diverse periods sharply illuminates both the growth and the shrinkage of Roman power as well as the Empire's extraordinary durability...

Rhonda Sharpe is praising us here at Equitable Growth for trying to diversify the economics profession: Rhonda V. Sharpe: On Twitter: "L @LipstickEcon E @ @equitablegrowth T @ @TrevonDLogan ' S @SandyDarity D @drlisadcook I @itsafronomics V @ValerieRWilson E @Em_Gorman R @rbalakra S @SadieCollective I @IAFFE F @femme_economics Y @YanaRodgers T @TrevonDLogan H @HBoushey E @eliselgould...

Why the focus of the Republican business lobby's power in the areas of tax cuts and deregulation alone? Why the lack of concern for business complaints about "immigration crackdown[s]... tariff wars... government shutdowns"? One large piece of the answer, I think, is gerentocracy���the transformation of the Republican base, even the rich base, into a group of relatively old people who no longer see change as their potential friend and entrepreneurship as even possible for them, but who seek solely to hold on to their rents: Edward Luce: The Fading of the US Multinational Lobby: "When Apple���s iPhone sales undershoot, as they did last week, China suffers. Or so the theory goes.... What is bad for some of America���s biggest brands is apparently good for its president. It is hard to overstate the departure from how US presidents normally behave...

Excellent testimony from Heather Boushey, our Fearless Leader at the WCEG. But am I allowed to whimper that focusing too much on the EITC and the CTC may distract attention from the fact that SSI and SSDI are broken, and that the interface between the safety net for the employed and the safety net for the non-employed is very broken?: Heather Boushey: Testimony Before the Ways and Means Committee: "At the bottom end, one easy step is to preserve and expand evidence-backed refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit, which lifted 8.9 million American out of poverty in 2017. In the middle, it is important to make sure the fruits of growth are widely shared and to make the economy work for workers and families. Some proven ways to do this include making sure every family can afford to send their children to high quality, affordable childcare and offering a national paid family and medical leave. It can also mean investing in infrastructure. And we need to know much more about the top. Many of the statistics we rely on to inform us about the state of our economy are measures of the average...

Odd from the usually-reliable and very smart Mohamed A. El-Erian. Yes, the great and good were much too optimistic a year ago���but that is not economists' fault, save for those economists who have betrayed their calling by becoming cheerleaders for Trump, Brexit, austerity, and plutocracy. Yes, the Federal Reserve needs reform���but its decisions that it does not are not the fault of we outsiders who have been pointing out how it might do better. And on Trump's trade war with China... the major things that need to be said are political and administrative: Trump and his administration are incompetent, and everything they touch turns to s---, so game-theoretic and welfare-economic disquisitions on how to manage trade are simply beside the point: Mohamed A. El-Erian: Why Economics Must Get Broader Before It Gets Better: "In...12... went from celebrating a synchronized global growth pickup to worrying about a synchronized global slowdown.... Neither the extent nor the speed of the change in consensus seems warranted by economic and financial developments, which suggests that economists may have misdiagnosed the initial conditions.... Professional economists still have not spoken up clearly enough about the challenges facing the US Federal Reserve���s communication strategy.... Economists should be urging the Fed to adopt an approach more like that of the Bank of England, which emphasizes scenario analyses and fan charts. Economists could also be doing more to inform���and perhaps even influence���the Fed���s ongoing review of its policy frameworks and communications strategy.... The Sino-American trade conflict.... The vast majority of economists have trotted out the conventional argument that tariffs (real or threatened) are always bad.... Those who wanted to make a productive contribution to the debate should have taken a more nuanced approach, applying tools from game theory to distinguish between the 'what' and the 'how' of trade warfare. These are just three recent examples of how economists have dropped the ball...

The past year has seen one-fifth of the jump in investment that the boosters of the Trump tax cut were claiming would happen back in last 2017. One fifth. And I haven't seen a peep from anyone even expressing curiosity on why their miss was so great: Tyler Cowen (November 2017): Yes, a Corporate Tax Cut Would Increase Investment: "A common criticism of the current Republican tax plans is that they will not boost private investment. While I have major reservations about these plans as a whole, this particular objection is oversold. The most likely result is that lower corporate tax rates will lead to more investment projects and thus more aggregate economic activity.... When companies have more 'free cash' at hand, they tend to invest more.... The... 'giveaway' to business... is precisely the mechanism that tends to boost investment...

Doug Jones: Coals to Newcastle: "320-304 million years ago: It seems like Gaia really went on a bender in the late Carboniferous, getting drunk on oxygen. By some estimates, the atmosphere was over 30% oxygen back then, compared to 21% today. Living things took advantage of the opportunity. Insects apparently face an upper limit in size because they rely on diffusion through tracheas instead of forced respiration through lungs to get oxygen into their bodies. With more oxygen in the air, this limit was raised. The Carboniferous saw dragonflies with a wingspan up to 70 centimeters, and body lengths up to 30 centimeters, comparable to a seagull...

Jong-Wha Lee: Lessons of East Asia���s Human-Capital Development: "Developing countries should be placing a high priority on boosting human capital. The experience of East Asia���s prosperous economies holds valuable lessons.... A child born today in Singapore will be 88% as productive when she grows up as she could be if she enjoyed complete education and full health. In Sub-Saharan Africa, by contrast, a child will be only 40% as productive. Globally, 57% of all children born today will grow up to be, at best, half as productive as they could be.... Public policy was central to this success, with East Asian leaders ensuring that economic-development plans and associated measures always accounted for human-capital objectives. In South Korea, each of the five-year development plans implemented from 1962 to 1996 contained action plans for manpower development, including education and training policies...

#noted #weblogs

Jong-Wha Lee: Lessons of East Asia���s Human-Capital Deve...

Jong-Wha Lee: Lessons of East Asia���s Human-Capital Development: "Developing countries should be placing a high priority on boosting human capital. The experience of East Asia���s prosperous economies holds valuable lessons.... A child born today in Singapore will be 88% as productive when she grows up as she could be if she enjoyed complete education and full health. In Sub-Saharan Africa, by contrast, a child will be only 40% as productive. Globally, 57% of all children born today will grow up to be, at best, half as productive as they could be.... Public policy was central to this success, with East Asian leaders ensuring that economic-development plans and associated measures always accounted for human-capital objectives. In South Korea, each of the five-year development plans implemented from 1962 to 1996 contained action plans for manpower development, including education and training policies...

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