J. Bradford DeLong's Blog, page 269

Cosma Shalizi (1998): Psychoceramics: "Psychoceramics cou...

Cosma Shalizi (1998): Psychoceramics: "Psychoceramics could... play a... role... analogous to that of lesion studies in neuropsychology. A working intellectual discipline, like probability theory or Sanskrit philology, has mechanisms which keep it from going off the rails, and keep cranks from taking over; most of the time and on balance, they produce reliable knowledge. This is manifestly not the case outside the bounds of such disciplines...

...But kooks represent not merely your average, garden-variety human irrationality and credulity; your kook is a person who has worked at his crackpot thinking, at least as much as a probabilist or Sanskrit scholar has specialized in their discipline. It would be fascinating and useful to know what the institutions and mechanisms are which lead some to the production of reliable knowledge, and others to the production of eccentric crap, and what the intermediate stages are (IQ-mongering, some sorts of literary criticism, UFOlogy and systematic theology all spring to mind). In fact the intermediate forms, the cults and sects and organized pseudo-sciences, which inhabit, in Medawar's great phrase, Pluto's Republic, might be more informative, though less entertaining, than the ravings of individual loons, since there one can look at the effects of lesioning different institutions possessed by real science and scholarship...

#shouldread #orangehairedbaboons #publicsphere #cognitive

Comment of the Day: Charles Steindel: It Is Such a Bad Id...

Comment of the Day: Charles Steindel: It Is Such a Bad Idea for a Central Bank to Invert the Yield Curve: "To my mind a somewhat comparable puzzle is the damage done by financial crises. It is true that it is extremely difficult for monetary policy to reverse a recession spurred by a financial crisis all on its own: crises tend to drive safe short rates down to zero all on their own, leaving little room for the Central Bank to do its thing. Thus we have had those awkward "unconventional" tools. We know--or should know!-- that fiscal policy can readily fill the gap; that's typically not adequately done, apparently because the surge in deficits spurred by the recession raises debt fears that can't seem to be beaten back...

...Now those are the positive reasons the recession lingers (there's also, of course, some behavioral factors���big increases in risk aversion, for instance���but as the 1940s showed, nothing that sufficiently strong fiscal policy can't blow away), and I think the reason we see this pattern in the historical record. But we have serious and sane people repeating the mantra that the economic recoveries from financial crises must be tepid. I don't really understand why, unless, perhaps, the whole financial system loses the "capacity" to handle basic activity���but that is surely very, very rare (not the recent industrial world, for instance)...

#shouldread

Two Differences Between a Clinton Administration and a Trump Administration...

Here is one difference between a Clinton Administration and a Trump Administration. The Clinton administration of 1993-2001 sold its 1993 deficit-reduction reconciliation bill as a phased-in five-year plan to boost American economic growth and American incomes. By raising taxes and by cutting government spending relative to the then-projected baseline���half of the cuts coming from the military, half of the cuts coming from the social insurance programs���Clinton sought to redirect 1%-point of GDP's worth of funds each year for five consecutive years from funding the government debt to funding productive private investment.

Over the five years as the program was being phased in, this boost in investment was projected by the administration���i.e., by me and others���to be a supply-side economic stimulus raising the rate of growth of potential output and boosting the rate of economic growth and thus of American incomes by 0.2%-points per year. Thereafter, once it was fully phased in, the program was projected by the administration���i.e., by me and others���to boost investment relative to the baseline by 4%-points of national product and so boost the rate of potential output growth and thus of American incomes relative to bas3eline by 0.4%-points per year. The program was supposed to make the U.S. 1% richer after 5 years; 3% richer after 10 years; 5% richer after 15 years, and so on.

It worked. Investment grew. Growth accelerated. Income rose relative to the baseline.

The Trump administration sold its 2017 tax-cut reconciliation bill as a plan to boost American growth and American incomes by reducing, corporate taxes, transferring $2 trillion���equivalent to 10%-points of a year's GDP���of wealth to the upper class, thus increase incentives to save, and boost the flow of funds into private investment in one year. In the year after the tax cut was passed the program was projected to boost investment relative to baseline by 4%-points of national product and so boost the rate of potential output growth and thus of American incomes relative to baseline by 0.4%-points per year not by demand-side stimulus boosting spending and reducing unemployment but by supply-side stimulus boosting investment in America and America's capital stock. The program was supposed to make the U.S. 1% richer after 5 years; 3% richer after 10 years; 5% richer after 15 years, and so on.

Where is this extra 4%-points of investment spending as a share of national income and product? Nowhere. The investmen share did not leap upward. It is not leaping upward. It will not leap upward. Relative to baseline, incomes are not boosted by any supply-side stimulus raising potential output.

Here is another difference between the Clinton administration and the Trump administration���a difference in how their economists behave. Clinton administration economists eagerly watched to see whether the plan was in fact working���whether incomes and growth were increasing, and whether the increases relative to previously-projected baselines were in line with the ex ante modeling predictions made. Trumpists are now watching their ex ante modeling predictions fail, catastrophically. Are they curious? Are they writing about why things are different than they had projected? No.

Do we have anything from Barro, Boskin, Cogan, Holtz-Eakin, Hubbard, Lindsey, Rosen, Shultz, and Taylor saying why it is turning out not to be the case that the supply-side investment-driven boost relative to baseline from the tax cut would be "3% to 4%... if achieved over a decade, the... increase in... annual... growth would be about 0.4%..."? No. Do we have anything explaining why reality has disagreed from Hubbard, Lindsay, Holtz-Eakin, and a fourth (who is either Lazear or Mankiw) who forecast privately, according to Sen Susan Collins (R-ME), that the tax cut would boost growth by enough to raise tax collections enough to keep the deficit from going up by much? No. Do we have anything from Miller, Calomiris, Bhagwati, Luskin, and a hundred-odd others who confidently predicted a supply-side growth boost by enough to raise tax collections enough to keep the deficit from going up at all���and boost annual growth by 0.4%���assessing why, so far, they are wrong? No. Do we have anything from Kevin Hassett and Greg Mankiw, who told us that these productivity gains would primarily boost wages not profits because the relevant model was one in which foreigners would flood America with savings, lending to and investing in this country on a large scale to finance the bulk of this surge and investment, explaining why we are not, right now, seeing the rise of a mammoth inflow of capital into America? No.

Back when all these economists from Barro through Taylor were setting out their claims, these drew sharp dissents from not just economists associated with former Democratic administrations but from scorekeepers like the Tax Policy Center whose entire model of operations rests on pleasing not politicians and donors but rather making the best forecasts they can. The disagreements in turn drew an anguished cry from reporter Binyamin Applebaum:

I am not sure there is a defensible case for the discipline of macroeconomics if they can���t at least agree on the ground rules for evaluating tax policy. What does it mean to produce the signatures of 100 economists in favor of a given proposition when another 100 will sign their names to the opposite statement? How does Harvard, for example, justify granting tenure to people who purport to work in the same discipline and publicly condemn each other as charlatans? How are ordinary people, let alone members of Congress, supposed to figure out which tenured professors are the serious economists?...

I think we can now answer Applebaum's question. The 100-odd economists from Barro through Taylor were not engaged in any intellectual discipline. When you are engaged in an intellectual discipline, it is very interesting when you get something wrong���it is a sign that you have something to learn. And so, in every intellectual discipline, you try to learn it: you study it, analyze it, debate about it, in the hope of making yourself smarter���if, that is, you see yourself as a thinker.

There has been none of that.

There has been silence.

There has been silence because the absence of the promised 800 billion surge in investment in America this year continued through next year and beyond is not something anybody is surprised to see. Overwhelmingy, those writing opeds and releasing studies boosting last year's Trump-McConnell-Ryan corporate tax cut knew that the forecasts they made last year were overwhelmingly likely to be wrong. So they are not surprised when they turn out to be wrong. And they do not even think it worthwhile to go through the motions of pretending to be surprised that the investment share of national income and product in 2012 dollars is 18% and not 22%.

So I say to Binyamin Applebaum, and to other reporters who wrote up���much less critically then they should have���what the administration was saying and what corporate tax cut-boosting economists from Barro to Taylor and company were saying last year: remember: "fool me once, shame on you; fool me twice, shame on me".

#orangehairedbaboons #moralresponsibility #journamalism #fiscalpolicy #economicsgonewrong #highlighted

Note to Self: Watching Niskanen Center Live Stream: Start...

Note to Self: Watching Niskanen Center Live Stream: Starting Over: The Center-Right After Trump. People seem to be dividing among four positions:

It is Hillary Clinton's fault for being such a lousy candidate, and Barack Obama's for not squelching Middle Eastern terrorism...
We here on the center-right have lost confidence in our base, and so we need to dissolve the base and elect another...
If only the butterfly's wings had flapped differently, we would not be here...
We are doomed by the Curse of Goldwater and Gingrich that have led to the Southern Captivity of the Republican Party...

Unfortunately, none of these are a plan, or even an ask...

#shouldread #politics #neofascism #orangehairedbaboons

Fairly Recently: Must- and Should-Reads, and Writings... (December 11, 2018)

John Holbo: Hack Gaps and Noble Lies: "I actually find that sort of thing very painful. If I were saying something so oversimple that It feels like a lie ��� rather than a partial truth���I wouldn���t say it. I would feel compelled to flag and label it as a heuristic model. You say ���there���s a more complicated story but let���s start here, even though ultimately I think we end up thinking about it very differently.��� Some warning label like that. I never try to make my students believe a proposition that I myself think is just out-and-out false. I guess I just think it���s so rare for good ideas to be indefensible on the merits (because your audience is too morally/intellectually disordered) yet falsely defensible on the demerits, as it were...

Paul Krugman: "The Paul Ryan question isn't why he has proved to be a phony. It's why so many commentators took him seriously in the teeth of his obvious fraudulence. I called him out from the beginning���but was dismissed and attacked as being 'partisan'. The irony was that the real judgment-distorting partisanship was on the part of centrists, whose ideology demanded that there be Serious, Honest Conservatives to justify bothsidesism. Ryan was neither serious nor honest, and it took almost no work to figure that out. But centrists needed someone to fill the box, so they promoted Ryan into that role. It was a massive moral as well as intellectual failure. Has anyone learned from it?...

*Niskanen Center Live Stream *: Starting Over: The Center-Right After Trump

Ian Dunt: Week in Review: All May's faults come home to roost: "For two and a half years we have been forced to watch Theresa May's cack-handed administration trundle on.... The agreement she's come back with... It hugs the EU tight enough to remove control, but keeps it distant enough to still take ruinous economic damage. It is like a recipe book on how to injure yourself with crockery.... Indeed it is hard to think of a single genuine supporter of it outside Downing Street...

It is such a bad idea for a central bank to invert in the yield curve. If central bankers kendo only one thing, that is probably the thing they should know: Glenn D. Rudebusch and John C. Williams: Forecasting Recessions: The Puzzle of the Enduring Power of the Yield Curve: "For over two decades, researchers have provided evidence that the yield curve... contains useful information for signaling future recessions.... Professional forecasters appear worse at predicting recessions a few quarters ahead than a simple real-time forecasting model that is based on the yield spread...

Note that the model also predicts that if bonds outperform stocks over the next 10 years, then strocks are nearly certain to outperform bonds by much more in the following 10 years: Christopher G. Collins and Joseph E. Gagnon: The Stock Market Correction in Context: Are Equities Cheap or Expensive?: "Stock prices are indeed expensive in historical context. Nevertheless, stocks are likely to outperform bonds over the next 10 years; the model implies about a 25 percent chance that stocks perform worse than bonds. Moreover, if earnings in 2018 and 2019 come in close to their levels after 2009 rather than their levels in 2008 and 2009, and if stock prices and bond yields remain at their October 31 level through the end of 2019, then the ex ante EP would rise to 2.1 and the model would suggest only a 20 percent probability that stocks would perform worse than bonds over the following 10 years...

This is something that is not getting enough airplay: if Democrats do not win the House vote by more than 4%-points in 2020, they lose the House. Things, of course, will change in 2022, but that is the map America faces in 2020. And that is without additional voter suppression: Paul Krugman: We Had a Narrow Escape. We're Still Very Much at Risk of Being Hungary Writ Large: "I've been doing some electoral math using the Cook House popular vote tracker, and it's kind of disturbing. Before the election, it was widely asserted that Dems had a big structural disadvantage due to gerrymandering and geographical concentration of minority voters. In the end, though, they turned an 8.6% lead in the popular vote into a roughly 8 percent lead in seats.... But Dems won the median seat by 4.1%���i.e., they probably would have failed to take control if their margin had been less than that. That's a couple of points lower than most pre-election analyses suggested, but still a lot... #politics #orangehairedbaboons #neofascism

Chenzi Xu: Reshaping Global Trade: The Immediate and Long-Run Effects of Bank Failures: "The unexpected failure in May 1866 of Overend and Gurney, London���s largest interbank lender... led to widespread bank runs in London that caused 12 percent of British multinational banks to fail. These multinational banks played a dominant role in financing international trade during the 19th century... #economichistory #finance #financialcrises

Paul Krugman: The Economic Future Isn���t What It Used to Be: "Lehman failed ten years... ago.... In honor of the anniversary, there have been approximately 1,000,000,000 pieces reflecting on the 2008 financial crisis and its effects. Many have suggested, rightly, that the political fallout continues to shape our world today. But as far as I can tell, surprisingly few have focused on the long-run economic effects.... These effects were huge.... Antonio Fat��s and Larry Summers have been banging on this drum for years, as has Larry Ball.... More than 11 percent as of 2018.... The U.S. economy is as far below pre-crisis expectations now as it was in the depths of the Great Recession, even though we have supposedly recovered from the crisis... #hysteresis

Continuing the project of assessing how huge of a deal the birth control pill was it is:* Martha Bailey*: Momma���s Got the Pill: : How Anthony Comstock and Griswold v. Connecticut Shaped US Childbearing: "The 1960s ushered in a new era in US demographic history characterized by significantly lower fertility rates and smaller family sizes. What catalyzed these changes remains a matter of considerable debate. This paper exploits idiosyncratic variation in the language of 'Comstock' statutes, enacted in the late 1800s, to quantify the role of the birth control pill in this transition. Almost 50 years after the contraceptive pill appeared on the US market, this analysis provides new evidence that it accelerated the post-1960 decline in marital fertility...

A great interview with my Berkeley colleague the wise Hilary Hoynes: Equitable Growth: In conversation with Hilary Hoynes: "Our social safety net... very much moved toward toward work-contingent types of activity.... Some quantification or estimation of the question: Does providing more assistance through the social safety net, particularly aimed at children, lead to differences in where children end up in adulthood?... #socialinsurance #equitablegrowth

Antonio Fatas: Global Rebalancing: "Prior to the Global Financial Crisis the world economy experienced a period of increasing global imbalances.... Today the world displays smaller imbalances than at the peak of 2008 but what it was more interesting is the extent to which rebalancing had happened between different country groups...

Lend freely at a penalty rate on collateral that is good in normal times: David Warsh: What Have We Learned Since Bagehot?: "Fighting Financial Crises: Learning from the Past... by Gary Gorton and Ellis Tallman... offer five 'guiding principles' for dealing with financial crises in the future. Find the short-term debt.... Suppress bank-specific information... emergency lending facilities.... Prevent systemically important institutions from failing.... And consider that certain laws and regulations need not be applied during a financial crisis... #finance #centralbanking #monetarypolicy #financialcrises

Lend freely at a penalty rate on collateral that is good ...

Lend freely at a penalty rate on collateral that is good in normal times: David Warsh: What Have We Learned Since Bagehot?: "Fighting Financial Crises: Learning from the Past... by Gary Gorton and Ellis Tallman... offer five 'guiding principles' for dealing with financial crises in the future. Find the short-term debt.... Suppress bank-specific information... emergency lending facilities.... Prevent systemically important institutions from failing.... And consider that certain laws and regulations need not be applied during a financial crisis...

...All of these were applied in 2008, though seldom masterfully. ��It took more than two weeks for the Treasury Department to come up with a plan to render opaque the condition of the banking system overall���by forcing healthy banks to accept emergency TARP loans along with the weak. Secrecy had been no part of Bagehot���s playbook, perhaps because discretion was so deeply embedded in British banking traditions as to be taken for granted. ��Regulators had to find a way to reinvent a practices that had been a standard part of the clearing house playbook. With illustration, analysis, and nuance on every page,��Fighting Financial Crises��is one hundred and fifty years better than��Lombard Street...

#shouldread #finance #centralbanking #monetarypolicy #financialcrises

Fairly Recently: Must- and Should-Reads, and Writings... (December 10B, 2018)

Reasoning���Individual, Social, and Societal: I am all but certain to never teach a course on: Reasoning���Indivdual, Social, and Societal. But if I were to teach such a course, would this be the best reading list? And if not these readings, what would be better replacements?...

Hoisted from the Archives from 2004: Mark Kleiman: Avodim Hayyinu l���pharoh b���Mitzrayim: "Linked to the commandments in Deuteronomy, that phrase comes to mean: 'We were slaves' and therefore must never, never, ever act like slaveowners. That makes sense of the empirical link between Judaism and liberalism. No, there���s no reason to think that the 'liberal' viewpoint on any given policy issue is superior to the ���conservative��� one. With respect to crime, which is my own study, I���d have to say that the liberal tendency over the past half-century has mostly pointed toward the wrong answers.... But...

Hoisted from the Archives: "How an Economy Can Live Beyond Its Means on Its Wits...": Confront economists' theories of depressions and what (if anything) the government should do about them and you find yourself immediately confronted with what look to be at least seven different theories: Monetarism... Wicksellianism... Minskyism... Austrianism... Vulgar Keynesianism... Hickianism... Post-Keynesianism...

Monday Smackdown: Ezra Klein Smacks Down Paul Ryan as a Grifter, and Himself for a Griftee...: Very welcome to see: Remember: Fool me once, shame on you; fool my twice, shame on me: Ezra Klein: Speaker Paul Ryan Retires: His Legacy Is Debt and Disappointment: "I took Ryan seriously.... I covered the arguments Ryan made, the policies he crafted, and I treated them as if they offered a guide to how Republicans would govern. I listened.... Now, as Ryan prepares to leave Congress, it is clear that his critics were correct and a credulous Washington press corps���including me���that took him at his word was wrong.... Ryan proved himself and his party to be exactly what the critics said: monomaniacally focused on taking health insurance from the poor, cutting taxes for the rich, and spending more on the Pentagon. And he proved that Republicans were willing to betray their promises and, in their embrace of Trump, violate basic decency to achieve those goals...

Blogging: What to Expect Here...: The purpose of this weblog is to be the best possible portal into what I am thinking, what I am reading, what I think about what I am reading, and what other smart people think about what I am reading: "Bring expertise, bring a willingness to learn, bring good humor, bring a desire to improve the world���and also bring a low tolerance for lies and bullshit..." ��� Brad DeLong...

Monday Smackdown/Hoisted from 2008: Why We Called Donald Luskin "The Stupidest Man Alive": Cargo-Cult economics. Or perhaps "TV economics". Going through motions sorta-kinda like what economists do without understanding why or what the calculations mean...

Kate Bahn: Understanding the Importance of Monopsony Power in the U.S. Labor Market: "In a dynamic monopsony model, so-called search frictions���including imperfect information and other constraints to job mobility... would give employers more power to set wages below competitive levels, while still maintaining a sufficient supply of workers.... Doug Webber tests the hypothesis of widespread dynamic monopsony and whether search frictions appear to maintain low wages across the U.S. labor market in his 2015 paper, 'Firm market power and the earnings distribution'. Webber finds pervasive monopsony across the labor market, with the key finding that less monopsony power would lead to less income inequality...

Elizabeth Jacobs: California���s Paid Family Leave Policy Is Decreasing Nursing Home Use and Saving Medicaid Dollars: "Kanika Arora and... Douglas Wolf provide the first-ever empirical study assessing the impact of paid family and medical leave... utiliz[ing] longitudinal, state-level data to assess whether California���s state paid family and medical leave policy led to a decrease in nursing home utilization. California enacted a comprehensive paid leave policy in 2004, providing access to six weeks of leave for both new parents and family caregivers.... The estimated effect of paid family and medical leave on nursing home utilization in California is a decline of more than 11 percent in the share of the elderly residing in nursing homes...

Like wood fires and nuclear fusion, ideology is a very bad master. But also, like wood fire in nuclear fusion, it is a most excellent servant. Therefore I cannot sign-on for Jerry Taylor���s decision to abandon ���ideology���. The task, I think, is to make ideologies useful by making them self reflective. After all, if a libertarian founder like John Stuart Mill can say that Positive Liberty is essential���that the British working class of his day was "imprisoned" in spite of all their negative liberty by Malthusian poverty, there is ample space for a libertarianism that keeps its good focus on human choice, potential, and opportunity without blinding itself to a great deal of reality: Jerry Taylor: The Alternative to Ideology: "When we launched the Niskanen Center in January 2015, we happily identified ourselves as libertarians... heterodox libertarians... left-libertarianism concerned with social justice (a libertarian perspective that I���ve defended in debates with more orthodox libertarians here and here)...

The website for Zucman, Wier, and Torslav on on missing profits from tax avoidance and tax evasion (yes, I have decided I should spend some time listing paper authors in reverse alphabetical order): Gabriel Zucman: The Missing Profits of Nations: [Working paper][1], June 2018. [Online appendix][2], June 2018. [Presentation slides][3], June 2018...

Antonio Fat��s: Europe's fiscal policy doom loop: "The damage done by procyclical fiscal policy in the euro area between 2010 and 2014 is likely to be even larger.... Fiscal policymakers... created a 'doom loop', with unfounded pessimism feeding into policy... the consequences of those policies increasing pessimism... hysteresis, permanently reducing GDP...

Go watch the video: Equitable Growth: Building a New Consensus on #Antitrust Reform

You cannot understand either globalization or international migration without knowing the history. David and Jon know the history very very well: David S. Jacks and John P. Tang: Trade and Immigration, 1870-2010: ���global merchandise trade and immigration from 1870 to 2010. We revisit the reasons why these two forces moved largely in parallel in the decades leading up to World War I, collapsed during the interwar period, and then rebounded (but with much more pronounced growth in trade than in immigration)...

Absolutely remarkable: Erik Larson and Christopher Cannon: Madoff���s Victims Are Close to Getting Their $19 Billion Back: "A decade after Bernard Madoff was arrested for running the world���s biggest Ponzi scheme, the bitter fight to recoup investors��� lost billions has astounded experts and victims alike... #finance

I have enormous respect for Ken, but I think he is largely wrong here. In any dystopian or failed state, why would you want to accept RogoffCoin? or DeLongCoin? Or any of the other ICOs coming down the pike. Yes, there is a space for a blockchain-supported anonymous currency. But the currency that will be adopted will be one that has substantial backing from somewhere���either some large organization with real asset and payments that decides it want to use it (a "cameralist" valuation), or a central focal point (which BitCoin might hold). I can see BitCoin being worth a hundred dollars in the long run because having been first mover is a potential focal point. I can't see anything else having value in the long run. It is not "cryptocurrency coins" that are "lottery tickets that pay off in a dystopian future"; it is (maybe) BitCoin. After all, the South Sea Company had detected a true market opportunity���there would be durable demand for standardized Gilts. But, as Ken says, "the private sector may innovate, but in due time the government regulates and appropriates": the profits were reaped not by the South Sea Company or any of its competitors but by the British Treasury. In the meantime, of course, there are Greater Fools for Fools to sell to, and so folly has a chance of looking wise ex post: Kenneth Rogoff: Betting on Dystopia: "The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. That means that cryptocurrencies are not entirely worthless...

Josh Zumbrun: IMF departing chief economist warns on U.S. growth - MarketWatch: "Mr. Obstfeld said Asian and European economic data disappointed in the third quarter. In Japan and Germany, for example, gross domestic product shrunk. The U.S. will likely post stronger growth, but he doesn't expect it to avoid the global downdraft entirely. 'For the rest of the world there seems to be some air coming out of the balloon and that, I think, will come back and also affect the U.S.', he said...

Tim Duy: Unpleasant: "The situation on Wall Street is, well, unpleasant, and it in turn is creating considerable uncertainty about the outlook for monetary policy.... Powell & Co.['s]... outlook is fundamentally hawkish as it describes policy as continuing to tighten even as growth decelerates. Moreover, incoming data remains supportive of that outlook. This isn���t really a problem for rate hikes next year; the data could cut either way by March. It is a bit of a challenge for next week���s meeting as the Fed is loath to appear reactive to markets alone...

Paul Krugman: The Art of the Imaginary Deal: "China is not a good actor in the world economy. It engages in real misbehavior, especially with regard to intellectual property.... So there is a case for toughening our stance on trade. But... in concert with other nations... and... clear objectives. The last person you want to play hardball here is someone who doesn���t grasp the basics of trade policy, who directs his aggressiveness at everyone... and who can���t even give an honest account of what went down in a meeting. Unfortunately, that���s the person who���s now in charge...

Steve Benen: Wisconsin and the 'If Only Those People Weren't Here' Phenomenon: "One of the most powerful officials in Wisconsin���s state government suggested that... certain parts of his home state [should] not count.... After Hillary Clinton won the presidential election���s popular vote.... All Americans count, the argument went, but maybe Americans in California and New York shouldn���t.... Byron York... Obama���s... 'sky-high ratings among African-Americans make some of his positions appear a bit more popular overall than they actually are'...

Reasoning and Cogitation���by Individuals, by Social Groups, and by Societies

I am all but certain to never teach a course on: Reasoning���Indivdual, Social, and Societal. But if I were to teach such a course, would this be the best reading list? And if not these readings, what would be better replacements?

William Poundstone (2011): Labyrinths of Reason: Paradox, Puzzles, and the Frailty of Knowledge https://books.google.com/books?isbn=030776379X
Hugo Mercier and Dan Sperber (2017): The Enigma of Reason: A New Theory of Human Understanding
https://books.google.com/books?isbn=0674368304
Daniel Kahneman (2011): Thinking, Fast and Slow https://books.google.com/books?isbn=0385676522
T. M. Scanlon (2014): Being Realistic about Reasons https://books.google.com/books?isbn=019100314X
Joshua D. Angrist and J��rn-Steffen Pischke (2008): Mostly Harmless Econometrics: An Empiricist's Companion https://books.google.com/books?isbn=1400829828
Judea Pearl and Dana Mackenzie (2018): The Book of Why: The New Science of Cause and Effect https://books.google.com/books?isbn=0465097618
William Flesch (2007): Comeuppance: Costly Signaling, Altruistic Punishment, and Other Biological Components of Fiction https://books.google.com/books?isbn=0674026314
Josiah Ober (2008): Democracy and Knowledge: Innovation and Learning in Classical Athens https://books.google.com/books?isbn=1400828805
Henry Farrell and Cosma Shalizi (2012): "Cognitive Democracy" http://crookedtimber.org/2012/05/23/cognitive-democracy/
Cosma Shalizi (2012): "In Soviet Union, Optimization Problem Solves You" http://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/
Herbert Simon (1969): The Sciences of the Artificial https://books.google.com/books?isbn=0262264498
Partha Dasgupta (2007): Economics: A Very Short Introduction https://books.google.com/books?isbn=0192853457
Milton Friedman and Rose Director Friedman (1990): _Free to Choose: A Personal Statement https://books.google.com/books?isbn=0547539754
Tom Slee (2006): No One Makes You Shop At Walmart https://books.google.com/books?isbn=1897071884
Paul Seabright (2010): The Company of Strangers: A Natural History of Economic Life https://books.google.com/books?isbn=1400834783
Richard Thaler (2015): Misbehaving: The Making of Behavioral Economics https://books.google.com/books?isbn=0393246779



#berkeley #cognitive #highlighted

Hoisted from the Archives from 2004: Mark Kleiman: Avodim Hayyinu l���pharoh b���Mitzrayim

Mark Kleiman: Avodim Hayyinu l���pharoh b���Mitzrayim: "So the Bush Administration is supporting the anti-gay marriage FMA.... And the right-wing media are loudly cheering for Gibson���s Passion, with its blatantly anti-Semitic retelling of the Crucifixion wrapped in a pornography-of-violence package. I wonder whether, now that their own oxen are being gored to right-wing applause, conservative Jews and conservative gays will reflect on the extent to which 'conservatism' as a political practice in American (as opposed to the conservative strand in political thought represented by Burke, Hayek, and Oakeshott) turns out to embody a willingness���and sometimes a gloating eagerness���to stomp on the out-groups...

...The willingness of Jews to stand up for vulnerable non-Jews, which I had always attributed to centuries of being the out-group, turns out on closer examination to be��quite deeply rooted in the religion. Last week in the faculty Torah study group at UCLA���which has been fighting its way through Deuteronomy at the rate of about����four verses a week for the past decade���we were examining Deut. 24:17-18:

Thou shalt not pervert the justice due to the stranger, or to the fatherless; nor take the widow���s raiment to pledge.
But thou shalt remember that thou wast a bondman in Egypt, and the Lord thy God redeemed thee thence; therefore I command thee to do this thing.

A quick check with a concordance showed that the formula: ���Do X, because you were slaves in Egypt and the Lord redeemed you��� occurs five times in Deuteronomy, in each case following a commandment about dealing fairly with the vulnerable.... That, then, is the deeper meaning of the first phrase in the answer to the Four Questions at the Passover Seder: ���Avodim hayyinu���������We were slaves.��� It seems, if you think about it, a rather remarkable assertion to put at the very center of a celebratory feast. What other group, instead of boasting about being nobly born, makes a fuss about being descended from slaves, and then personalizes it so as to say that everyone present was a slave until redeemed? But linked to the commandments in Deuteronomy, that phrase comes to mean: ���We were slaves��� and therefore must never, never, ever act like slaveowners. That makes sense of the empirical link between Judaism and liberalism.

No, there���s no reason to think that the ���liberal��� viewpoint on any given policy issue is superior to the ���conservative��� one. With respect to crime, which is my own study, I���d have to say that the liberal tendency over the past half-century has mostly pointed toward the wrong answers, though the conservative tendency hasn���t noticeably pointed to the right ones. Nor is it the case that all claims made on behalf of vulnerable groups are justifiable��claims, or even that satisfying those claims will in fact be good for the groups in question. But I���d still rather start with a political philosophy consistent with ���avodim hayyinu��� than with one rooted in the impulse to defend the power and wealth of the wealthy and the powerful, and to demonstrate���as, for example, Rush Limbaugh, Honorary Member of the House Republican Class of 1994, does so amusingly to his millions of listeners���that despised groups are really despicable...

#shouldread #hoisted #moralresponsibility

"How an Economy Can Live Beyond Its Means on Its Wits...": Hoisted from the Archives

Hoisted from the Archives: How an Economy Can Live Beyond Its Means on Its Wits: P.J. Grigg attacking John Maynard Keynes:

I distrust utterly those economists who have with great but deplorable ingenuity taught that it is not only possible but praiseworthy for a whole country to live beyond its mens on its wits and who, in Mr. Shaw's description, teach that it is possible to make a community rich by calling a penny tuppence���in short who have sought to make economics a vade mecum for political spivs...

Confront economists' theories of depressions and what (if anything) the government should do about them and you find yourself immediately confronted with what look to be at least seven different theories:

Monetarism, the doctrine of Irving Fisher and Milton Friedman, that a depression is the result of the money stock falling too low, where the money stock is the economy's sum total of liquid assets that are generally accepted as and held in people's portfolios for the usefulness as means of payment. A depression thus begins with a shortage of and an excess demand money.

Wicksellianism, the doctrine of Swedish economist Knut Wicksell, that a depression happens when the workings of the banking system lead the market rate of interest to be above the natural rate of interest that balances the supply of funds saved and the demand for funds to finance business investment. A depression thus begins with a shortage of and an excess demand for financial investment vehicles���a fall in the neutral rate of interest that is not validated by the market.

Minskyism, the doctrines of Hyman Minsky--and also Walter Bagehot and Charles Kindleberger--that a depression begins with a panic and a flight to quality, as everybody tries to sell their risky assets and cuts back on their spending in order to try to shift their portfolio in the direction of safe, high-quality assets--which, of course, everybody cannot all do at the same time. A depression thus begins with a shortage of and excess demand for safe assets.

Austrianism, the doctrine that because of past irrational exuberance and over- or malinvestment, that there is nothing of social value a large chunk of the labor force can do other than sit on its hands unemployed and wait for circumstances to change, the existing capital stock to depreciate, and profitable investment and employment opportunities to open up.

Vulgar Keynsianism, the doctrine that depressions happen because something has reduced the flow of aggregate demand.

Hickianism, something you have forgotten from intermediate macroeconomics courses of a decade or two ago that involves IS and LM curves, which is actually a combination of monetarism (LM) and Wicksellianism (IS).

Post-Keynesianism, which seems to be a combination of Wicksellianism and Minskyism.

If you aren't an economist--hell, if you are an economist���the relationship between all seven of these theories is obscure and confusing...

#shouldread #highlighted #hoisted #macro