J. Bradford DeLong's Blog, page 259

This by the very sharp Henry Farrell seems to me to be la...

This by the very sharp Henry Farrell seems to me to be largely wrong.

Farrell thinks that parties, plural, became "unwilling to compete for voters across tricky political issues". I see it as right-wing party, singular, taking the neo-fascist turn to which the system was always vulnerable���winning mass support for policies of plutocracy and kleptocracy by mobilizing fear and hatred of a distinct and sinister internal and external other.

Four times in the past hundred yeras have we seen this in the United States. Teddy Rooevelt vs. the Malefactors of Great Wealth, Ike Eisenhower vs. the McCarthyites, and Richard Nixon's Flaws vs. Richard Nixon and Pat Buchanan were three earlier episodes. We won through because of conservative elitss that valued liberty and an open society. We may win through again: Henry Farrell: The Hollowing Out of Democracy: "There are strong similarities between what is happening in the United States, Hungary, the United Kingdom, and France... where democracy is backpedaling rapidly, such as the Philippines. This is the product both of common shocks... and of cross-national reinforcement... the family resemblances are��undeniable. What Davies arguably gets wrong though is the significance of these changes...

...Notably, he doesn���t provide any very specific theory of why we are changing from one alignment to another.... The most convincing of these theories is... Peter Mair... Colin Crouch... the shock to party systems... failures of systems of representation.... ���Cartel parties���... declined to compete for voters across tricky political issues... delegating these issues to purportedly non-political bodies within the state... or above them.... This coincided with the fracturing of traditional class alignments, which made it harder for voters to organize according to their material interests, and for parties to compete for voters on the basis of those interests.... The old parties had no useful solutions to offer, while the real decisions were being taken at a level where voters had little influence. Under this account, populism is a ���predictable reaction to the increasingly undifferentiated policy positions of the mainstream parties and the growing detachment of elected politicians from civil society.���...

This does not mean that we are staggering along the precipice, about to fall into a new age of violent irredentist and indeed eliminationist nationalism. What it does mean is that we cannot assume that forces which are at best indifferently committed to democracy will necessarily be contained within democratic institutions.... Such optimism may not only be misleading, but actively��treacherous...

#shouldread

John Steinbeck: The 1930s: A Primer: "Except for the fiel...

John Steinbeck: The 1930s: A Primer: "Except for the field organizers of strikes, who were pretty tough monkeys and devoted, most of the so-called Communists I met were middle-class, middle-aged people playing a game of dreams. I remember a woman in easy circumstances saying to another even more affluent: ���After the revolution even we will have more, won���t we, dear?��� Then there was another lover of proletarians who used to raise hell with Sunday picnickers on her property. I guess the trouble was that we didn���t have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist. Maybe the Communists so closely questioned by investigation committees were a danger to America, but the ones I knew--at least they claimed to be Communists--couldn���t have disrupted a Sunday-school picnic. Besides they were too busy fighting among themselves...

#shouldread

Paul Krugman: "Disputes over trade can seem gentlemanly b...

Paul Krugman: "Disputes over trade can seem gentlemanly because economists, at least, mostly talk sense. Disputes over macroeconomic policy can't, because they don't. Sad!...

...Some navel-gazing here. I've been getting very positive reactions to my Trade Talks podcast. (Yes, @ChadBown really is that tall.) But some of it comes with backhanded criticism; "Why don't you sound like that all the time?" https://piie.com/experts/peterson-perspectives/trade-talks-episode-66-paul-krugman-talks-trade So I thought I'd talk about how it looks from here. As far as I can tell, my commentary on macroeconomics has been comparable to what I said about trade; it's an area where I did real research, and pay close attention to real developments. The difference is that while people say dumb things about trade, you don't have a faction within the economics profession determined to support those dumb things. In macro, by contrast, prominent economists have been destructively ignorant and deeply partisan. So writing and talking about monetary and fiscal policy necessarily has an edge��� a bit of ugliness, if you like���that talking about trade doesn't.

I don't see any way to avoid it: being nice about the macro debates would mean being dishonest with your readers. Put it this way: you didn't have famous professors at Chicago denying comparative advantage, but you did have such people insisting on the validity of Say's Law and warning about phantom inflation. Basically, disputes over trade can seem gentlemanly because economists, at least, mostly talk sense; disputes over macroeconomic policy can't, because they don't. Sad!...

#shouldread

Jacob Levy: Populism's Dangerous Companions: "It���s an i...

Jacob Levy: Populism's Dangerous Companions: "It���s an interesting and illuminating exercise to single out a shift from debates about cultural moralism to those about nationalism as the important destabilizing influence.... Jerry Falwell Jr.���s sycophancy toward a serial adulterer, multiple divorc��, and seeker of sexual favors from nude models and porn actresses is a nice synecdoche for the apparent surrender of the old religious right, even in the United States, on everything except abortion...

...But... economic anxiety... the new style of politics. But of course it remains true that it���s not the genuinely poor and precarious who have embraced it.... The kind of politics Davies is describing is a fearful one, and always ripe for demagoguery and hysteria. The more terrifying a picture can be painted of aliens and immigrants, foreigners and elites, the better for the electoral prospects of those promoting borders closed to trade and migration.... National collectivism has predecessors and ancestors.... There have been normal parties committed to economic protectionism, but hostility to immigration and immigrants calls forth something��else.... The combination of a longing for unity and distrust of elites makes populism congenial to one-man rule. A would-be autocrat can speak in one unified voice, as competing elites cannot. He can offer the many an alliance against the few, marking them as enemies of the true people....

Davies argues that unlike the free market conservatives, the national collectivists ���support an active economic role for government and a large and generous but strictly national welfare��state.��� But at least in the United States, supposed ���free market conservatives��� have held that latter position for generations... agricultural subsidies, Social Security, the Federal Housing Administration, and the GI Bill amount to a large and generous but mostly white welfare state from the 1930s on.... None of this was ever seriously challenged even under Reagan or��Gingrich. It was the additions to the redistributionist state of the 1960s, aimed at urban and minority recipients, that were stigmatized.... The broad base of voters electing people Davies calls ���free market conservatives��� were only very rarely really free market conservatives as Davies imagines that position. And the distance they have traveled thus isn���t as large as he imagines it to be. Race is always one of the dimensions of alignment in the United States, and it exerts a gravitational pull on the others....

Davies may... understate the exceptional character of... Trump... by treating it as the birth pangs of a new normal partisan alignment.... He ma... overstate its novelty in substantive ideological��terms...

#shouldread

Fairly Recently: Must- and Should-Reads, and Writings... (December 27, 2018)

We Are with Her!

Note to Self: I need to resolve this. I am profoundly dissatisfied with teaching the origin of business cycles and "general gluts" via John Stuart Mill's 1829 "excess demand for money is excess supply of everything else", and in an economy of sticky prices, wages, and debts produces the recessions and depressions that we all know and love so well. It is a quick way to get into the subject. It is a convincing way. But it is not a correct way...

Comment of the Day: Leah Boustan: "First Gilded Age ������ Progressivism; Second Gilded Age ������ conspiracy theories, nationalism, blaming outsiders. The problem with the Kuznets Curve is that, at some point, inequality gets so bad that it prompts a political reaction but it���s not obvious what reaction will be...

Comment of the Day: Maynard Handley: Ancient Technologies of Organization and Mental Domination, Clerks, Linear B, and the Potnia of Athens: "I think this sort of theorizing about ancient religion is too much based on current monotheic religion which has a very strong us vs them (gods are VERY different from humans) post ~100CE or so vibe. The right way (IMHO) to think of ancient religion (and much of lived medieval European religion vis a vis saints) is that gods played the same role as celebrities in our time. They bigger, better, more outrageous than us. Some of us are lucky enough to be their hairdressers and pool cleaners, a few more maybe saw them one time on the street walking down Rodeo Drive, ad the rest of us have to make do with photos and whatever gossip is being reported right now...

Fall 2018���Smart Things I Wrote Here too Short to Be Highlighted Posts...: How did "Evangelicals" miss the memo that God saves you later only if you save the image of God in your neighbor today?.... It's not the white working class who have been totally grifted by Trump���it's those who call themselves "Evangelicals"...

Hoisted from 2012: This Post Got Lost Somehow: Why Next to No Political Reaction to the Second Gilded Age?: Theodore Roosevelt wove his political career out of being head of the Republican party and head of the Progressive Movement... non-Progressive Republican President Taft simply offended him one time too many... Roosevelt decided to blow up the Republican Party and hand the presidency to Woodrow Wilson from 1912-1920.... By the late 1920s Progressivism is rising again���even Hoover is running as a Progressive. Then when the Great Depression comes Franklin Roosevelt comes in and he takes the entire progressive agenda off the shelf and promptly begins to implement it. We haven���t had anything like that over the past thirty years. And here I���m simply going to throw up my hands and say that I don't know why...

Saddest of all were Ron McKinnon and Jagdish Bhagwati...: Ah, yes. There is a distinct asymmetry between economists who are Democrats and economists who are Republicans.... Paul Krugman: "Thinking about Trump's attempt to bully the Fed, I found myself remembering the open letter by a who's who of conservative economists (plus some 'economists') accusing Ben Bernanke of 'currency debasement'. Four years later, Bloomberg went to ask signatories why they were wrong; none of them���not one���would admit having been wrong...

Paul Krugman: "Thinking about Trump's attempt to bully the Fed, I found myself remembering the open letter by a who's who of conservative economists (plus some 'economists') accusing Ben Bernanke of 'currency debasement' https://economics21.org/html/open-letter-ben-bernanke-287.html. Four years later, Bloomberg went to ask signatories why they were wrong; none of them���not one���would admit having been wrong https://www.bloomberg.com/news/articles/2014-10-02/fed-critics-say-10-letter-warning-inflation-still-right... #economicsgonewrong #monetarypolicy #fiscalpolicy

Terry Bisson: They're Made of Meat

Menzie Chinn: ���Top US Economist Stephen Moore: Powell Should Resign���: "Sunday (12/23/2018)... Stephen Moore.... [Trump] 'was infuriated that the Fed, through very tight monetary policy, reversed the economic expansion. Donald Trump wanted to drain the swamp. Well, John, the Fed is the swamp.��The big question now that���s been debated about is whether Donald Trump has the authority as president to replace the Federal Reserve Chairman. The law says he can replace the Federal Reserve Chairman for��cause. I would say, well, the cause is that he���s wrecking our economy.... (12/16/2015) Stephen Moore: Fediculous: Years Of Loose Money Destabilized The Economy**: The Fed is expected to bid farewell to seven years of its zero interest rate policy.... The high from easy money, just as with any hallucinogenic drug, has been temporary at best and likely damaging in the longer run.... Over time, prices and output economy-wide adjust to the larger volume of money. The printing press, alas, is not a job creator. If it were, Mexico and Argentina would be the richest countries in the world, and people would be lining up at the U.S. southwest border to get out rather than to get in...#economicsgonewrong #orangehairedbaboons #monetarypolicy

Stephen Moore: Fediculous: Years Of Loose Money Destabilized The Economy

Hendrik Bessembinder: Do Stocks Outperform Treasury Bills?: "The majority of common stocks... since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing 4% of listed companies explain the net gain for the entire US stock market since 1926.... The important role of positive skewness... skewness in monthly returns and to the effects of compounding. The results help to explain why poorly diversified active strategies most often underperform market averages... #finance #behavioral

Irwin Collier: Chicago. Unions and wages problem set. Murphy, 2008: Suresh Naidu: "didn't know Murphy was so into comparative labor institutions: obviously A+B) is scandinavian-style economy-wide collective bargaining, with C) put in small open economy, and D) is trades/craft unionism a la Anglo-American model...

Vagrant Cow: are just monkeys with car keys. Adjust your expectations accordingly...

Cosma Rohilla Shalizi and Andrew C. Thomas: Homophily and Contagion Are Generically Confounded in Observational Social Network Studies: "Homophily, or the formation of social ties due to matching individual traits; social contagion, also known as social influence; and the causal effect of an individual's covariates on their behavior or other measurable responses. We show that, generically, all of these are confounded with each other. Distinguishing them from one another requires strong assumptions.... We sketch three constructive responses... to randomize over the network, to place bounds on unidentifiable effects, and to use the division of the network into communities as a proxy for latent homophily...

Sign me up with Jacob Levy here: by publishing Francis Buckley, Cato is not providing a forum for but rather assisting in an attack on reasonable public discourse and discussion, along the lines of Henry Farrell and Bruce Schneier's arguments about Common-Knowledge Attacks on Democracy: Jacob T.��Levy: "Make America Free Again" Isn't Trump's Agenda: "I cannot, however, let Francis Buckley���s apology for Donald Trump, for whom he has previously worked as a speechwriter, pass without comment, as it is marked by grave��falsehoods. It is false in its particulars, for example, that, 'on average immigrants are less educated than they were in the past'... And it is false in its larger central claims. Among these are that the Trump presidency stands for the rejection of the privilege of inherited wealth; a return to respect for the rule of law; and equal opportunity to prosper rather than 'the old boy network', deal-making, and��cronyism. I hardly know where to begin...

Let me shill for our other weblog at Equitable Growth: Competitive Edge: (I would point out that "the Octopus" is usually the Southern Pacific Railway, not Standard Oil. You can argue the merits with respect to whether Standard Oil's monopoly was a net plus by society; nobody argues the merits for the Southern Pacific except for those paid to do so, and the crazed.): Terrell McSweeney: Competitive Edge: Antitrust Enforcers Need Reinforcements to Keep Pace with Algorithms, Machine Learning, and Artificial Intelligence: "The Washington Center for Equitable Growth is launching a new blog titled 'Competitive Edge'... on a broad range of topics: potential areas for antitrust enforcement, concerns about existing doctrine, practical realities enforcers face, proposals for reform, and broader policies to promote competition.... The octopus image, above, updates an iconic editorial cartoon first published in 1904 in the magazine Puck to portray the Standard Oil monopoly...

Yastreblyansky: The non-general in his labyrinth: "Baker and Haberman also find some sources to say things are going just fine: '"It���s absolutely fair to say that it���s better to have Nancy Pelosi as a foil than Paul Ryan as a foil", said Marc Short, the president���s former legislative affairs director..... "The reality is the Democrats could overplay their hand."... Fred Fleitz, who worked for nearly six months this year as chief of staff for John R. Bolton, the current national security adviser, said the new team is more cohesive and better suited to Mr. Trump than one constantly undermining him.' (Fleitz��has actually fled the White House, in the wake of the Trump mismanagement of the Khashoggi murder, and gone home to Frank Gaffney's Center for Security Policy, but I'm glad he found something nice to say.) But... a president going to work later every day, and keeping the TV on in the office so he can be watching Fox whenever an ongoing meeting gets boring or irritating, and seeing himself surrounded by enemies even inside the family, really is a picture of someone getting less and less capable of coping... as failure succeeds failure...

Damon Jones: @nomadj1s: "Highlights from the #econlife panel 9/25/18. Questions & advice on The Job Market���. Featured panelists: @paulgp, @PJakiela, @seema_econ, & @NWPapageorge...

Paul Krugman: Hard-Money Men, Suddenly Going Soft: "I have been insufficiently cynical about modern conservative economics.... While I yield to nobody in my appreciation of the right���s fiscal fraudulence, I took its monetary hawkishness seriously. I thought that all those dire warnings about the inflationary consequences of the Federal Reserve���s efforts to fight high unemployment, the constant harping on the evils of printing money, were grounded in genuine���stupid, but genuine���concern. Silly me. It���s no surprise that Individual-1, who lambasted the Fed for keeping interest rates low while Barack Obama was president, is demanding that it keep rates low now that he���s in the White House. After all, nobody has ever accused Donald Trump of having consistent, principled views about monetary policy (or anything else). But it is a shock to see so many conservative voices���including, incredibly, the editorial page of The Wall Street Journal���echoing Trump���s demands... #orangehairedbaboons #econmicsgonewrong

Paul Krugman: Hard-Money Men, Suddenly Going Soft: "I hav...

Paul Krugman: Hard-Money Men, Suddenly Going Soft: "I have been insufficiently cynical about modern conservative economics.... While I yield to nobody in my appreciation of the right���s fiscal fraudulence, I took its monetary hawkishness seriously. I thought that all those dire warnings about the inflationary consequences of the Federal Reserve���s efforts to fight high unemployment, the constant harping on the evils of printing money, were grounded in genuine���stupid, but genuine���concern. Silly me. It���s no surprise that Individual-1, who lambasted the Fed for keeping interest rates low while Barack Obama was president, is demanding that it keep rates low now that he���s in the White House. After all, nobody has ever accused Donald Trump of having consistent, principled views about monetary policy (or anything else). But it is a shock to see so many conservative voices���including, incredibly, the editorial page of The Wall Street Journal���echoing Trump���s demands...

...It���s hard to overstate just how consistent and intense The Journal and others of like mind used to be in their attacks on easy money.... Now, you might say that the explanation for the right���s about-face on monetary policy is the same as the explanation of its about-face on deficits. That is, Republicans want pain and suffering when there���s a Democratic president, but a nonstop party when one of their own sits in the White House.... I used to think there was something more to the story.... The right���s emotional response to Fed policy���its hatred for using the printing press to boost the economy, no matter what the circumstances���always seemed real to me. I never believed that Paul Ryan really cared about the deficit, but I did believe his assertion that his views on monetary policy were derived from the denunciation of paper money as a form of looting in Ayn Rand���s ���Atlas Shrugged.���...

Then Trump decided to pressure the Fed, and many of the erstwhile hard-money men became easy-money men overnight. I mean that more or less literally. Consider the case of Kevin Warsh, a former member of the Federal Reserve Board who was for a time considered a likely Fed chairman. Up until two months ago he was always for higher interest rates���but this week he suddenly wrote an op-ed article calling on the Fed to stop rate hikes.... These days the G.O.P. is all about power; there are no principles it will adhere to if they involve any political cost. And it���s a party that belongs to Trump: What he says is the party line, on any and every issue. Trumpism, it turns out, trumps everything else���even Ayn Rand....

#shouldread #orangehairedbaboons #econmicsgonewrong

Yastreblyansky: The non-general in his labyrinth: "Baker ...

Yastreblyansky: The non-general in his labyrinth: "Baker and Haberman also find some sources to say things are going just fine: '"It���s absolutely fair to say that it���s better to have Nancy Pelosi as a foil than Paul Ryan as a foil", said Marc Short, the president���s former legislative affairs director..... "The reality is the Democrats could overplay their hand."... Fred Fleitz, who worked for nearly six months this year as chief of staff for John R. Bolton, the current national security adviser, said the new team is more cohesive and better suited to Mr. Trump than one constantly undermining him.' (Fleitz��has actually fled the White House, in the wake of the Trump mismanagement of the Khashoggi murder, and gone home to Frank Gaffney's Center for Security Policy, but I'm glad he found something nice to say.) But... a president going to work later every day, and keeping the TV on in the office so he can be watching Fox whenever an ongoing meeting gets boring or irritating, and seeing himself surrounded by enemies even inside the family, really is a picture of someone getting less and less capable of coping... as failure succeeds failure...

#shouldread

Let me shill for our other weblog at Equitable Growth: Co...

Let me shill for our other weblog at Equitable Growth: Competitive Edge: (I would point out that "the Octopus" is usually the Southern Pacific Railway, not Standard Oil. You can argue the merits with respect to whether Standard Oil's monopoly was a net plus by society; nobody argues the merits for the Southern Pacific except for those paid to do so, and the crazed.): Terrell McSweeney: Competitive Edge: Antitrust Enforcers Need Reinforcements to Keep Pace with Algorithms, Machine Learning, and Artificial Intelligence: "The Washington Center for Equitable Growth is launching a new blog titled 'Competitive Edge'... on a broad range of topics: potential areas for antitrust enforcement, concerns about existing doctrine, practical realities enforcers face, proposals for reform, and broader policies to promote competition.... The octopus image, above, updates an iconic editorial cartoon first published in 1904 in the magazine Puck to portray the Standard Oil monopoly...

#shouldread

Note to Self: I need to resolve this. I am profoundly dis...

Note to Self: I need to resolve this. I am profoundly dissatisfied with teaching the origin of business cycles and "general gluts" via John Stuart Mill's 1829 "excess demand for money is excess supply of everything else", and in an economy of sticky prices, wages, and debts produces the recessions and depressions that we all know and love so well. It is a quick way to get into the subject. It is a convincing way. But it is not a correct way. There are, however, two problems:

What is the "correct" way, exactly?
How can we teach something closer to the "correct" way than Mill's "excess demand for money is excess supply of everything else" without losing our audience?

In the meanwhile, think upon:

Daniel Kuehn: Whack-A-Mole General Gluts and Money: The interest rate is really one price functioning in two markets.... You can arbitrage your way out of whack-a-mole gluts. You cannot arbitrage your way out of an overdetermined system...

Nick Rowe: Walras' Law vs Monetary Disequilibrium: "Walras' Law says that a general glut (excess supply) of newly-produced goods (and services) has to be matched by an excess demand for... money... bonds; land; old masters; used furniture; unobtainium; whatever.... Monetary Disequilibrium Theory says that a general glut of newly-produced goods can only be matched by an excess demand for money. There's only one mole to whack. Money is special. A general glut is always and everywhere a monetary phenomenon...

Paul Krugman: There's Something About Macro: "Money as an ordinary good begs many questions: surely money plays a special sort of role.... [Plus] there is something not quite right about pretending that prices and interest rates are determined by a static equilibrium problem.... Finally, sticky prices play a crucial role... [but] the assumption of at least temporarily rigid nominal prices is one of those things that works beautifully in practice but very badly in theory...

And please tell me what to do instead of Mill (1829)!

#shouldread #macro #monetarytheory

Sign me up with Jacob Levy here: by publishing Francis Bu...

Sign me up with Jacob Levy here: by publishing Francis Buckley, Cato is not providing a forum for but rather assisting in an attack on reasonable public discourse and discussion, along the lines of Henry Farrell and Bruce Schneier's arguments about Common-Knowledge Attacks on Democracy: Jacob T.��Levy: "Make America Free Again" Isn't Trump's Agenda: "I cannot, however, let Francis Buckley���s apology for Donald Trump, for whom he has previously worked as a speechwriter, pass without comment, as it is marked by grave��falsehoods. It is false in its particulars, for example, that, 'on average immigrants are less educated than they were in the past'... And it is false in its larger central claims. Among these are that the Trump presidency stands for the rejection of the privilege of inherited wealth; a return to respect for the rule of law; and equal opportunity to prosper rather than 'the old boy network', deal-making, and��cronyism. I hardly know where to begin...

...The more crucial falsehood... is this:
��

They don���t really understand us, the Europeans.... The Trump movement... is a liberal nationalism based on the sacred texts of our founding... that we have a special mission to promote liberty, as promised by the Declaration of Independence and guaranteed by the Bill of Rights.... Our constitutional liberties are the icon of American nationhood and constitutive of our identities as Americans. For Americans, as Americans, illiberalism is self-defeating, and if some Americans (including Trump) have been illiberal, in time they���ve been seen to be��un-American...

American nationalism is a complicated mixture of the creedal and the ethnonational, sometimes coexisting quite comfortably and sometimes in tension with each other, but neither ever simply disappearing.... Self-conscious American nationalism has been white nationalism for a great deal of American history. One can wish it were otherwise���I certainly do���but that���s very different from asserting that it has always been otherwise... And Donald Trump is very far from emphasizing the creedal side of American nationalism.... He rode to office on racialized demagoguery about Mexican and Muslim threats, and those remain centerpieces of his rhetoric in office: the travel ban, the wall, invading caravans of Central American refugees that are somehow both filled with radical Islamist terrorists and funded by globalist��Jews. He has tilted toward Viktor Orban, praising him as ���strong and brave��� for walling out Muslim refugees; attacked Angela Merkel for failing to do so; and recurrently endorsed the European far right���s narrative about the decline of white Christian European civilization. He sees kindred spirits in European politicians like Marine Le Pen. He embraces what Buckley says he has nothing to do��with....

Buckley closes his essay with a paean to the 2016 election and what has happened since, and in an overlapping essay elsewhere he claims that ���Trump has triumphed over a tone-deaf Republican Establishment, killed off the old party and created a new one called the Republican Workers Party. No mean feat. So whatever happens to him, the causes he identified will continue to dominate American politics and his effect on that will be��indelible.��� I think it���s fair to say that he thinks he���s defending the real Donald Trump, his real campaign, administration, and presidency. And that defense rests on claims that simply are not��true...

#shouldread #orangehairedbaboons #publicsphere #journmalism