J. Bradford DeLong's Blog, page 255

Laboratories of democracy! It seems pretty clear that Bro...

Laboratories of democracy! It seems pretty clear that Brownback was in on the grift, but expected���hoped?���that his tax cuts would pull enough activity and people from Kansas City, MO to Kansas City, KS that that plus a normal rapid recovery would allow him to claim a "Kansas boom". But his henchmen still control the Kansas Republican Party: Heather Boushey: Failed Tax-Cut Experiment in Kansas Should Guide National Leaders: "Sam Brownback���s failed ���red state experiment��� has truly come to an end.... In 2012 and 2013, Republican Gov.��Sam Brownback signed into law the largest tax cuts in Kansas history. The top state income tax rate fell by nearly one-third and passthrough taxes that affected mainly relatively wealthy individuals were eliminated. With the decline in revenues came significant spending cuts...

...���Our new pro-growth tax policy,��� Brownback predicted, ���will be like a shot of adrenaline into the heart of the Kansas economy.���... Brownback... called his plan ���a real live experiment.���... But experiments can go badly wrong, and unfortunately, Kansans were guinea pigs for one of the worst. It soon became clear that the Brownback experiment had failed to deliver.... The reason for the failure of the Brownback experiment, and the likely failure of the Trump tax cuts, is that they didn���t account for the ways that economic inequality today obstructs, distorts and subverts the pathways to economic growth that is strong, stable and broadly shared...

#noted #fiscalpolicy #orangehairedbaboons

Debating Societies, Talking Points, and Choosing Our Governors

Debating Societies, Talking Points, and Choosing Our Governors This is a piece that never came together���on Ted Cruz, Bernie Sanders's henchman Warren Gunnels, JEB!! henchman Franklin Foer, and other people who have paved our way to our current Trumpist detachment of media and political discourse from, you know actual governance.

But here it is, for what it is worth:

With Bill Clinton, or Bill Bradley, or Al Gore, or Barack Obama, or Lloyd Bentsen, or Hillary Rodham Clinton���you listen to them, or you talk to them, and you know there is a mind back there deeply knowledgeable about and wrestling with substantive issues of societal welfare and technocratic policy.

With other high politicians, not so much. I gather that New Jersey Governor Chris Christie boldly stated that Marco Rubio failed his Turing test���and large numbers of observers agreed. Or take Ted Cruz, who starts out with a quite reasonable discourse on the fundamental aims of monetary policy:

Look, a dollar is a unit of measurement. It is the measure by which we assess: What is more valuable, a television or an automobile? The way we assess that is using the dollar to measure the comparative value. You know, think about it in a different context, think of the unit of measurement of time���an hour. Now, do you want a long hour or a short hour? As a practical matter, we want an hour to be 60 minutes, every time, over and over again. We want a stable hour, because it���s a unit of measurement. Money is the same thing���it���s a unit of measurement���

And then there comes a moment when it becomes clear that he is just mouthing the words and does not understand the ideas that he is���not at all badly���parroting:

... ideally tied to gold, so you have stability���

Demand for the safe, liquid, collateralizable Store is a value that we call "money" slosh about with luck, circumstance, and animal spirits. Linking your money to the very peculiar commodity of gold guarantees that it cannot be stable, relative to demand for it, either in availability or in price. That is why everyone trying to run a modern industrial economy as well and creating a central bank and assigning it broad responsibility.

So how then are we to understand Ted Cruz's earlier echoing of what the very wise John Maynard Keynes said back in 1923? That:

The Individualistic Capitalism of today, precisely because it entrusts saving to the individual investor and production to the individual employer, presumes a stable measuring-rod of value, and cannot be efficient���perhaps cannot survive���without one���

It gets���well, not worse, but repeatedly as bad���when we run into things like:

...We should look at going toward rules-based monetary supply���

Paul Volcker tried it���he went toward rules-based monetary supply at the start of the 1980s. It did not work. He backed off: luck, circumstance, and animal spirits meant that the rule he thought would be good turned out not to be so, and all economic history since has strongly taught the lesson that whatever rule would have been optimal policy in the last decade will fail in the next.

Or:

...The reason why we see these rapid oscillations in commodities markets, it���s because of unstable currencies���

What unstable currency is supposed to have caused this?:

This is not ���unstable currencies���. This is supply and demand, oligopoly, the court politics of the Al-Saud family, the industrialization of China, the post-2007 global crash, war in the Middle East, a forthcoming transition away from carbon energy with a very uncertain date, and speculators��� attempts to defeat the dark forces of time and ignorance which envelop our future���or, more often, ������to beat the gun������ outwit the crowd, and��� pass the bad, or depreciating, half-crown to the other fellow������

What we have here is governance-as-debate-contest-talking-point, not governance as... governance.

And it is not just, although it is primarily, Republicans. I think Bernie Sanders is a good guy. I think Bernie Sanders has been an effective legislator. I think Bernie Sanders���putting his carrying water for the gun-murder lobby and a few other things aside���has, broadly, been a very positive force in American governance over the course of his career. But the arithmetic behind his campaign health-care ideas didn't add up. And when the extremely sharp Ken Thorpe set out his take on the numbers, the response of Sanders campaign senior policy advisor Warren Gunnels was that Thorpe had done ���total hatchet job [that was]��� disappointing, but not surprising���, since the Sanders campaign���s firm position is that Ken Thorpe is in the tank for the medical-industrial complex.

Ken Thorpe is not in the tank for the medical-industrial complex.

Ken Thorpe is doing the best he can.

Ken Thorpe just has a low tolerance for Rosy Scenarios.

I have long thought that one of many roots of our problem is our press corps: that it views its role in elections and with respect to public policy more generally not as soberly helping us to choose and advise the trustees to whom we entrust a great deal of our common wealth and enterprises, but rather as a version of ���Keeping Up with the Kardashians��� or ���Kocktails with Khlo��������but just with much uglier people. (Come to think of it, however, I learned much more from Snoop Dogg���s appearance on ���Kocktails with Khlo����� than from, say, Franklin Foer���s plumping for JEB!!; and I resent Jeet Heer for inciting me to read it.)

Well, we keep trying���keep rolling the boulder up the hill. One more try today���

#highlighted #publicsphere #orangehairedbaboon #moralresponsibility

This is the word on how the government ought to analyze p...

This is the word on how the government ought to analyze proposed tax regulations: Greg Leiserson and Adam Looney: A Framework for Economic Analysis of Tax Regulations: "Treasury and the IRS should conduct a formal economic analysis of regulations in two cases. First, for regulations that implement recent tax legislation, the agencies should conduct an analysis if they have substantial discretion in designing the regulation and if different ways of doing so would vary substantially in their economic effects. Second, for regulations unrelated to recent legislation, the agencies should conduct an analysis if the regulation would have large economic effects relative to current practice...

...The economic analysis conducted in these cases should focus on the revenues raised and the economic burden imposed on the public as a result of the agencies��� exercise of discretion or the new application of existing authority. The revenues raised and the burden imposed reflect the fundamental tradeoff in taxation, and thus determine a regulation���s costs and benefits. However, the analysis should not attempt to quantify the net benefit or net cost of a regulation as doing so would require the agencies to make controversial assumptions about the social value of revenues and the appropriate distribution of the tax burden. Treasury���s Office of Tax Analysis is well-equipped to provide estimates of revenues and burden as they can be built from analyses the Office already produces: revenue estimates, distributional analyses, and compliance cost estimates...

#shouldread #fiscalpolicy

Gather Round, Kids, While I Tell You About What I Call.. "The Greatest S---show in Crypto"

Ray [REDACTED]: Gather Round, Kids, While I Tell You About What I Call.. "The Greatest S---show in Crypto": "Many of you will be surprised to learn that there is a thriving industry of paid advice on buying and selling cryptos assets, including newsletters, telegram groups, and subscriber-only emails. Until very recently, one of the most popular paid services was something called Standpoint research, seen here on CNBC with Mr. Wonderful from SharkTank. In February of 2018, Standpoint Research recommended that its subscribers buy an unknown asset known as $DIG, because the owner of Standpoint thought there was insider trading going on. You read that right. He suspected fraud, so he issued a 'buy' recommendation. The coin then subsequently grew from a fraction of a penny to 16 cents per token, as buyers rushed in to acquire this asset. For the craziest reasons you can imagine. The coin itself claims to be backed by $15 billion (not a typo) in Gold Bullion. Their website, if you are curious, is http://arbitrade.io ...

#noted #finance #behavioral

Barry Eichengreen: The Euro at 20: An Enduring Success bu...

Barry Eichengreen: The Euro at 20: An Enduring Success but a Fundamental Failure: "The belief of... Francois Mitterrand and... Helmut Kohl that a single European currency would apply irresistible pressure for political integration. It would lead eventually to their ultimate goal.... To function smoothly, monetary union requires banking union... an integrated fiscal system.... Banking union and fiscal union will only be regarded as legitimate if those responsible for their operation can be held accountable for their decisions by citizens.... Monetary integration creates a logic and therefore irresistible pressure for political integration. Or so the euro���s architects believed...

#noted #globalization #politicaleconomy

What more would it take to get Pence to Invoke #Amendment...

What more would it take to get Pence to Invoke #Amendment25?: Daniel Dale: These Are Headlines About One Trump Cabinet Meeting:

#noted #orangehairedbaboons

Maybe now that Trump has embraced lowering corporate prof...

Maybe now that Trump has embraced lowering corporate profits as a policy goal, Mike Pence will be willing to invoke Amendment 25: Josh Barro: China Is Losing Trump���s Trade War���and So Are We: "This is the insanity of the president���s trade war policy: it���s negative-sum.... Trump���s own economic adviser is going on television and saying his policy is going to reduce corporate profits. I��wrote a couple of weeks ago��about the strange disconnect between financial markets and economic data.... Well, as Bloomberg��put it in a headline this morning, 'Bad Stuff the Stock Market Worried About Is Starting to Happen'.... The economy is weakening, and market participants know it, but the weakened performance has not yet shown up in lagging economic data...

#noted #globalization #orangehairedbaboons

Yes, it was a mistake for the Federal Reserve to raise in...

Yes, it was a mistake for the Federal Reserve to raise interest rates last month: Chris Matthews: Dow Tumbles 650 points as Apple News, Manufacturing Data Spark Fears of Global Slowdown: ".S. stock indexes closed sharply lower Thursday, after a survey of American manufacturers showed the sector growing at its slowest pace in two years, and after a sales forecast cut by Apple Inc AAPL, -9.96% intensified fears of a slowing Chinese economy. The Dow Jones Industrial Average DJIA, -2.83% fell 661.58 points, or 2.8%, to 22,684.66, the S&P 500 index SPX, -2.48% , shed 62.18 points, or 2.5%, to 2,447.87, while the Nasdaq Composite COMP, -3.04% tumbled 202.43 points, or 3%, to 6,463.50...

#noted #finance

What Is Going on This Morning Over at "National Review"? Is It Worth Reading? No.

What is going on this morning over at National Review? Is it worth reading? I read 10 articles, and graded each ops 0-to-10 scale. Total score (out of 100); -45. Beam me up, Scotty. There is no intelligent life there at all:

Kyle Smith: They���re Lying about Louis C.K.: "���Transgressive��� is good, except when the Left gets offended.... A bit C.K. had performed at a Long Island night club on December 16, with no intention that a national audience hear it, and that leaked online without his permission.... 'You���re not interesting because you went to a high school where kids got shot', C.K. said. 'Why does that mean I have to listen to you? Why does that make you interesting? You didn���t get shot. You pushed some fat kid in the way and now I���ve got to listen to you talking?' C.K. also made fun of hypersensitive, scoldy, uptight young people and their pronoun posturing..." Mocking the Parkland kids is taboo. And taboo-busting was a great compliment. Still is. C.K. was being transgressive. And transgressive was a great compliment. Still is. One almost begins to entertain a rumor of a hint of a suspicion that the culture cops don���t approve of transgression per se, but only of the transgression of boundaries cherished by people they don���t like.... The premise of his Parkland bit is that surviving a school shooting doesn���t make you an expert on any public-policy question. This is not only true, it���s obvious. C.K. is doing the same kinds of bits he has always done." Score (on a 0-to-10 scale): -10. Why did I think reading National Review was a good thing to do, again? Louis C.K.'s natural fan base is supposed to be people like me���he's supposed to figure out what I would find funny. And at the moment Parkland jokes are funny only if they are metaled the way that Johnny Carson did to Lincoln-at-Ford's-Theater jokes: "See? Too soon!"

Ben Shapiro: Mitt Romney���s Anti-Trump Op-Ed Is Counterproductive: "By forcing a 'Love Trump or Leave Trump' choice on Republicans, he���s actually doing the work of both the most ardent Trumpists and the most viciously antagonistic members of the Democratic party and the media." Score (on a 0-to-10 scale): -10. Why did I think reading National Review was a good thing to do, again? Romney can't be both doing the work of Trump and doing the work of Trump's most vicious antagonists. There's this principle���it dates back to the Stagirite, and his Peri Hermeneias.

Kevin Williamson: Free Speech: Why Global Technology Companies Cave to China & Saudi Arabia: "I am generally in favor of an open, liberal cosmopolitanism. But the virtue of that cosmopolitanism is that it enables the free movement of people and capital���and, most important, ideas. A repressive cosmopolitanism that defers to the judgment of Riyadh or Beijing is of no intellectual value at all. In that instance, call me a nationalist: I am happy for Netflix to export the work of Hasan Minhaj, but I would be more happy to see it flex some of its considerable corporate muscle to export the First Amendment, too. Of course Netflix is only doing what���s best for its business. So was IG Farben, and its directors were tried���and 13 of them convicted���at Nuremberg." Score (on a 0-to-10 scale): 0. There are now a bunch of right-wing people out there who either think that I.G. Farben's crime was suppressing radio programs critical of Adolf Hitler or that Netflix supplies nerve gas to extermination camps. Nice work, Kevin. But we grade on a curve: and at least today you aren't calling for the hanging of one in five American women.

Michael Strain: Expected Wage Growth 2019: "Rich argues that President Trump should talk more about wage growth and less about the stock market. The good news for workers is that this advice will likely be as correct in 2019 as it has been in 2018. Wages are growing. The most recent data on wages (more specifically, average hourly earnings) finds that they are up over 3 percent relative to one year prior. And the pace of wage growth accelerated throughout 2018. The early months of 2018 saw wages growing at about 2.6 percent, noticeably slower than the 3+ percent growth workers have recently enjoyed..." Score (on a 0-to-10 scale): 0. WTF, Michael? "Wages", unqualified, will be understood by well over half your readers to mean "inflation-adjusted real wages". You shouldn't be reporting nominal wages unqualified. You are better than this���or I thought you were.

Michael Strain: Working Class in America: "There is a growing consensus that the working class is in crisis following years of difficult economic change and due in part to their being ignored by Washington. This view has been considerably strengthened in the conservative movement and within the Republican party by the election of President Trump.... This view of the working class has created some sympathy for class-based politics, and for a narrative of victimhood about this group.... I am struggling to find empirical support for this narrative when the working class is compared to lower-income Americans..." Score (on a 0-to-10 scale): 0. What is the "working class"? I find that it is "adults between the ages of 25 and 64, who have graduated from high school but who have not completed a four-year college degree, and whose annual household income is greater than that of the bottom 20 percent of the population, but less than the median". I know that you are trying to do the LORD's work her, Michael���but sampling on the dependent variable never works.

Conrad Black: Trump���s Mueller & Political Victory Is Already Assured: "The attacks on him are piffle. As the year ends, the Trump legal drama winds down towards its tawdry end. The immense fraudulent fantasy of a Benedict Arnold on steroids collaborating with a foreign enemy, a Manchurian Candidate 'groomed for the presidency by his Russian controllers', has come down to a squalid dispute between the president, his crooked former lawyer, and the publisher of the National Enquirer over the nature of incentivizing the pre-electoral silence of a porn star and a former Playboy bunny. The slab-faced, trim and grim Robert Mueller, closing in like a heat-seeking missile on the start of the third year of the most ineffective and redundant investigation in history, could be a brilliant straight man, desperately serious and purposeful as he silently marches across our television screens every night in reruns of the same old news film in the elaborate pretense that he is doing something useful and important..." Score (on a 0-to-10 scale): -10. I don't think even Conrad Black believes this. And why is NR publishing it? Does he own the magazine?

Victor Davis Hanson: Wealth, Poverty, and Flight: The State of California: "The Crime Whose Name Must Not Be Spoken: Both legal and illegal immigration have also radically changed the demography of the state.... 40 percent of the nation���s 11���20 million immigrants live in California.... Two or three generations of mass influxes of impoverished residents who on average arrive without a high-school diploma, English proficiency, capital, or often legality. California now hosts one of three Americans who are on some sort of federal, state, or local welfare supplement. About a fifth of the state lives below the poverty level. Half of all births in California were paid for by the state-run Medi-Cal program, and 30 percent of Medi-Cal births were to mothers of undocumented immigration status.... The presence of millions without English and without diplomas helps explain much of the alarming poverty in California.... So why is California a blue state?... Its conservative base fled, a future blue-state constituency arrived, and both the very wealthy and the very poor, albeit for quite different reasons, preferred a high-tax, big-government redistributionist state government.... One population has wealth and privilege enough to create a garden of Eden, with the proviso that it need not experience firsthand any downsides of its envisioned utopia. The second population... immigrants... poor and dependent on generous state entitlements and the non-enforcement of myriads of rules, and regulations.... The third zombie population: those who want to, or in fact are preparing to, follow the millions who left... lack the connections and clout... [to] navigate around the new regulatory morass... pay[ing] more in taxes than they receive in state services... lack[ing] the romance of the distant poor and the panache of the coastal affluent.' Score (on a 0-to-10 scale): -10. MOAR CALIFORNIA DYSTOPIA PORN!

Jonah Goldberg: Conservative Facts: Many Toss Facts & Embrace Meanness: "General Mattis���s resignation, the border-funding fooferall... Trump���s capitulation to both Ann Coulter and the president of Turkey, and whatever happened in the last few minutes since I checked Twitter has people across Washington lamenting that they picked the wrong week to stop sniffing glue. All of this came after a federal judge floated the idea that Michael Flynn was a traitor... James Comey admitted he broke FBI protocol to get a government official, the stock market continued to slide into the worst December since the Great Depression, and the Trump Foundation announced it would close down, leaving Palm Beach residents to wonder who will pay for Donald Trump���s portraits of Donald Trump now. Also this week, reports that The Weekly Standard would be shut down and harvested for subscribers were confirmed.... I want to address what its shuttering brought to light: the bizarre need of some of Trump���s biggest fans to be dumb or dishonest in his defense....

 

There was always a yin-yang thing to conservatism. Its hard-headedness and philosophical realism about human nature and the limits it imposes on utopian schemes appealed to some and repulsed others.... The problem conservatism faces these days is that many of the loudest voices have decided to embrace the meanness while throwing away the facts. This has been a trend for a long time now. But Donald Trump has accelerated the problem to critical mass, yielding an explosion of stupid and a radioactive cloud of meanness. It���s as if people have decided they should live down to Hillary Clinton���s ���deplorable��� epithet.... The larger point, however, is.. Trump���s sense of persecution is as contagious as his debating style. Facts are being subordinated to feelings, and the dominant feelings among many Trumpists are simply ugly. And even those who have not turned ugly see no problem working hand in hand with those who have. And how could they, given who they herald as their Moses." Score (on a 0-to-10 scale): +5. There is no action plan���not even a hint at a guide for the perplexed on the conservative side as to what they should do. But at least he is worrying about something real.

John O'Sullivan: Donald Trump & Theresa May: Leaders Bring Knives to Brexit and Shutdown Gunfights: "When May framed the choice as one between her deal and no deal, she was relying on the conventional assumption, grounded less in facts than in establishment groupthink, that a no-deal Brexit was unthinkable. She did her best to drive home that assumption with Project Fear. But the more that no deal looks better than her bad deal, the more likely she is to lose���and the more likely a sharper and more independent Brexit (maybe a managed no deal leading to a Canada Plus deal) will emerge from the ruins of her policy. May���s mistake was a simple one: She assumed her opponent had no real weapon when he turned out to be well-armed. She has probably lost as a result..." Score (on a 0-to-10 scale): 0. I do not believe John O'Sullivan knows what a Canada-Plus Deal is���other than that it is being recommended by this week's Boris Johnson.

Armond White: 'Mary Poppins Returns,' with Socialist Subtext: "Who is this white British twit with a cinched overcoat and bumbershoot who goes about ordering around her betters and consorting with working-class inferiors?... Unmistakable is the nasty political undercurrent that prevents this reboot from being escapist fun. Take the new politically instructive songs in Mary Poppins Returns... that lack the memorable delight of Richard and Robert Sherman���s songs for the original Mary Poppins in 1964.... Shaiman assimilates the #Resistance mood that has overtaken Broadway and Hollywood. Though pretending to be innocuous family entertainment, the knock-off tunes have a faintly repressive, pedantic note, especially in Shaiman���s balloon-song finale 'Nowhere to Go but Up'. To careful listeners, it sounds like showbiz Stalinism: 'The past is the past / It lives on as history / Let the past take a bow / Forever is now'. Why should a family-movie ditty recall the essence of Soviet erasure of history?" Score (on a 0-to-10 scale): -10. White never saw Walt Disney's original Mary Poppins with its depiction of the financial sector, did he?

#journamalism #moralresponsibility #smackdown

Richa Gupta and Umang Aggarwal: Is there a ���Late Conver...

Richa Gupta and Umang Aggarwal: Is there a ���Late Converger Stall��� in Economic Development? Can India Escape it?: "A major driver of these good times is 'economic convergence', whereby poorer countries have grown faster than richer countries and closed the gap in standards of living. The convergence process has been broadening and accelerating for the last 20-30 years.... [But] the possibility of... a 'Late Converger Stall'...

...arises because of four possible headwinds in the post-Global Financial Crisis era that were largely absent for the early convergers such as Japan and Korea. These headwinds include: the backlash against globalization which reduces exporting opportunities, the difficulties of transferring resources from low productivity to higher productivity sectors (structural transformation), the challenge of upgrading human capital to the demands of a technology-intensive workplace, and coping with climate change-induced agricultural stress. India has so far defied these headwinds but can continue to do so only if the challenges are decisively addressed...

#noted #economicgrowth #economichistory #globalization