J. Bradford DeLong's Blog, page 282

Note to Self: I had thought that the question of where th...

Note to Self: I had thought that the question of where the sun will be in the sky so you know where to erect the sunshades was a solved problem���a problem solved in 3000 BC by the Babylonians. Apparently not:

#berkeley

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

"I have never subscribed to the notion that someone can unilaterally impose an obligation of confidentiality onto me simply by sending me an unsolicited letter���or an email..." ��� Patrick Nielsen Hayden

"I can safely say that I have learned more than I ever would have imagined doing this.... I also have a much better sense of how the public views what we do. Every economist should have to sell ideas to the public once in awhile and listen to what they say. There's a lot to learn..." ��� Mark Thoma

"Tone, engagement, cooperation, taking an interest in what others are saying, how the other commenters are reacting, the overall health of the conversation, and whether you're being a bore..." ��� Teresa Nielsen Hayden

"With the arrival of Web logging... my invisible college is paradise squared, for an academic at least. Plus, web logging is an excellent procrastination tool.... Plus, every legitimate economist who has worked in government has left swearing to do everything possible to raise the level of debate and to communicate with a mass audience.... Web logging is a promising way to do that..." ��� Brad DeLong

"Blogs are an outlet for unexpurgated, unreviewed, and occasionally unprofessional musings.... At Chicago, I found that some of my colleagues overestimated the time and effort I put into my blog���which led them to overestimate lost opportunities for scholarship. Other colleagues maintained that they never read blogs���and yet, without fail, they come into my office once every two weeks to talk about a post of mine..." ��� Daniel Drezner

#workingmemory
#publicsphere
#internet
#weblogging
#weblogs

Angus Deaton: The U.S. Can No Longer Hide From Its Deep P...

Angus Deaton: The U.S. Can No Longer Hide From Its Deep Poverty Problem: "According to the World Bank, 769 million people lived on less than $1.90 a day in 2013; they are the world���s very poorest. Of these, 3.2 million live in the United States, and 3.3 million in other high-income countries (most in Italy, Japan and Spain)...

...As striking as these numbers are, they miss a very important fact. There are necessities of life in rich, cold, urban and individualistic countries that are less needed in poor countries. The World Bank adjusts its poverty estimates for differences in prices across countries, but it ignores differences in needs.... Robert Allen recently estimated needs-based absolute poverty lines for rich countries that are designed to match more accurately the $1.90 line for poor countries, and $4 a day is around the middle of his estimates. When we compare absolute poverty in the United States with absolute poverty in India, or other poor countries, we should be using $4 in the United States and $1.90 in India. Once we do this, there are 5.3 million Americans who are absolutely poor by global standards...

#shouldread #poverty #equitablegrowth

Back at the end of the nineteenth century the quest for b...

Back at the end of the nineteenth century the quest for better economic statistics was a bipartisan, bi-ideology, bi-analytic approach effort. Liberals and conservatives, reactionaries and social democrats, socialists and centrists in America all thought that good statistics would reveal that America matched their images of it and would show that their policies were good ones. We need to recover that: Austin Clemens: In an age of inequality, aggregate and mean economic statistics don't tell us enough: "I have argued that we should disaggregate the reporting of GDP growth so we can understand who prospers when the economy grows. But we don���t need to stop there. As income inequality increases and we increasingly see two Americas���one for rich and one for everyone else���it is more important than ever to see more granular breakdowns...

...Case in point.... The data show that African Americans face a very different economy than white Americans. And Equitable Growth grantee Xavier Jaravel found that even inflation varies significantly according to whether you are rich or poor, with low-income consumers experiencing inflation that is 0.65 percent higher than those with high income.... Inflation is used to index supplemental nutrition assistance benefits... and Jaravel���s results indicate that these adjustments may be too small.

The surveys that are used in... the Current Population Survey and the American Community Survey... democratize economic analysis by providing raw survey data publicly. Unfortunately, survey rates are declining, and the surveys are ill-suited to certain aspects of our modern economy... the estimates of income inequality... are not particularly reliable because the survey does not contact high-income households....

The Census Bureau, the Bureau of Labor Statistics at the U.S. Department of Labor, and the Bureau of Economic Analysis at the U.S. Department of Commerce will have to make broader use of administrative data from the Internal Revenue Service and elsewhere. But today���s report is an example of the kind of official statistical reporting about the economy that policymakers should aspire to produce more frequently. In an era of high income inequality, disaggregating U.S. economic statistics is the right way to understand who exactly the U.S. economy serves best and who it serves least...

#shouldread

Anybody looking back at economic history cannot help but ...

Anybody looking back at economic history cannot help but note that female physical autonomy and its absence has played an absolutely huge role. Kate Bahn and company are pulling together the evidence that this is not just history���that it still matters a lot in America today: Kate Bahn: Understanding the link between bodily autonomy and economic opportunity across the United States: "All of these connective threads are examined in a forthcoming paper of mine...

...along with co-authors Adriana Kugler at Georgetown University, Melissa Mahoney at the University of North Caroline, Asheville, and Annie McGrew at the University of Massachusetts Amherst.... We examine the past history of evidence of how bodily autonomy, through the availability of contraception and abortion, contributed to women���s economic advancement and what it means for women���s current labor market opportunities. We examine in particular the patchwork of simultaneous expansions and attacks on reproductive health services in the United States and its impact on women in the U.S. labor market...

#shouldread #gender

The Grand Strategy of the United States of America: From the Archives from 2003

Hoisted From the Archives from 2003: The Grand Strategy of the United States of America: Archive Entry From Brad DeLong's Webjournal: "The economic policy of the Bush administration has been frightening: The deliberate unbalancing of the long-term finances of the U.S. government in the hope of sharpening the funding crisis of the social-insurance state���with the effect of slowing capital formation and economic growth, and increasing the interest of economic crisis. The backing-away from the Republican Party's historic commitment to free trade. The reversal of Newt Gingrich's proudest achievement: the partial reform of the farm subsidy program.

The security policy of the Bush administration has been more than frightening; it has been terrifying... <!���more���>

... At the moment administration insiders are trying to convince elite reporters that the Bush administration did not deceive outsiders about Saddam Hussein's nuclear weapons program as much as deceive itself���that the highest levels of the Bush administration proved grossly incompetent at the basics. They did not know how to assess intelligence. Nobody had heard of Machiavelli's 500-year-old warning not to trust exiles: "Such is their extreme desire to return to their homes that they naturally believe many things that are not true, and add many others on purpose; so that, with what they really believe and what they say they believe they fill you with hopes..." Note that this declaration of incompetence is the Bush administration's spin on what happened.

But the most awful and dreadfully terrifying aspect of all has been whenever Bush administration intellectual allies talk about what they see as the motivating theory of the world underlying Bush administration security policy. They call the Clinton Administration naive for believing that international relations is a positive-sum game in which all sides can win. They speak of explicit concern on the part of the United States not just for its absolute but its relative economic power. As the University of Chicago's Dan Drezner puts it, the logic of Bush's National Security Strategy is to "prevent other great powers from rising, in order to ensure the long-term growth of freedom, democracy and prosperity."

But what does "prevent other great powers from rising" mean? What could it possibly mean other than "try to keep China and India desperately poor for as long as possible"���for when China and India close even half the gap in prosperity separating them from the industrial core, their populations alone guarantee that they will be very great powers indeed.

It is certainly not in the interest of world prosperity, or in the interest of China or India, to try to keep them poor. It is not in the national interest of the United States either. The history of the late nineteenth and twentieth centuries teaches us that there may well be something uniquely dangerous to world peace and political sanity during the two generations in which a culture is passing from a poor rural agricultural to a rich urban industrial (or post-industrial) economy. Whether the aggressive foreign policy pursued by Wilhelmine Germany, the Leninist and Stalinist agony of Russia, the terrors of Mao, the dictatorships of Mussolini and Franco, or the most monstrous Nazi regime���the twentieth-century transition to industrial society appears to be a very dangerous time both for the citizens of the country in transition and for neighbors and passers-by.

Is it really in the interest of the United States to try to "prevent other great powers from rising" at the cost of lengthening the period of time during which other societies are vulnerable to the devils that afflicted most notably Germany in the twentieth century? Wouldn't the rest of us rather minimize than maximize the time we might be faced with the problem of containing a National Hinduist India, a Wilhelmine China, or a Weimar Russia?

And do the rest of us want the children of China and India to be taught in fifty years that the rich countries at the turn of the twentieth century did all they could to accelerate the growth and increase the prosperity of China and India, or that the rich countries strove to "prevent other great powers from rising"?

It is long past time for a complete change of personnel at all levels of the Bush administration. The world cannot afford to have neoconservatives at high levels of the U.S. government who do not work for global prosperity and peace, but instead for maximum U.S. relative power. Now we do know that there are grownups in the Republican Party���statesmen who work for more rapid economic development, for multilateral cooperation, and for a world in which the United States leads because of its fortunate position rather than dominates because of its military power. They staffed the first Bush administration. Where are they?

#shouldread #security #hoistedfromthearchives

Simon J��ger, Benjamin Schoefer, Samuel G. Young, Josef Z...

Simon J��ger, Benjamin Schoefer, Samuel G. Young, Josef Zweim��ller: Wages and the Value of Nonemployment: "Nonemployment is often posited as a worker's outside option in wage setting models such as bargaining and wage posting. The value of this state is therefore a fundamental determinant of wages...

...We measure the effect of changes in the value of nonemployment on wages in existing jobs and among job switchers. Our quasi-experimental variation in nonemployment values arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit levels.... The insensitivity of wages to the nonemployment value we document presents a puzzle to widely used wage setting protocols, and implies that nonemployment may not constitute workers' relevant threat point. Our evidence supports wage-setting mechanisms that insulate wages from the value of nonemployment...

#shouldread #labormarket

Fairly Recently: Must- and Should-Reads, and Writings... (November 7, 2018)

I Want a FiveThirtyEight Post-Mortem! #politics

The first news: FiveThirtyEight's forecast goes from H+36 S-1 to H+42 S+0...

Was the Great Recession More Damaging Than the Great Depression?: Over at the Milken Review

Note to Self: Yes the American right wing is strongly anti-semitic. Any questions?

Weekend Reading: Keynes Quoting Malthus

Weekend Reading: Jan Christian Smuts to M.C. Gillett: The Griqua prayer...

Jiahua Che and Yingyi Qian: Insecure Property Rights and Government Ownership of Firms>: "The ownership of firms in an environment without secure property rights against state encroachment. 'Private ownership' leads to excessive revenue hiding, and 'state ownership' (i.e., national government ownership) fails to provide incentives for managers and local governments in a credible way.... 'Local government ownership'... may better serve the interests of the national government...

Neel Kashkari: Pause Interest-Rate Hikes to Help the Labor Force Grow: "The Fed has raised the federal-funds rate eight times in the past three years, and inflation now stands right at the 2% goal. A hard inflation ceiling would justify pre-emptive rate increases to ensure inflation doesn���t climb any higher. But the symmetric objective gives the Federal Open Market Committee the flexibility to see how the economy evolves before determining if further rate increases are necessary. The FOMC should seize this opportunity for a pause...

Ricardo Hausmann: The Venality of Evil: "Paul Samuelson once commended macroeconomics for having transformed 'the pre-war dinosaur into a post-war lizard'. The discovery of the mechanisms by which large economic fluctuations occur had led to an understanding of how to use fiscal and monetary policies, to tame, if not to prevent, crises such as the Great Depression...

Seth Godin: Writing for People Who Don���t Read: "Right there, there���s your problem. I know you���d like to reach more people, and most people don���t read. But if you���re going to write, the only choice you have is to reach people who will choose to engage with you. Do it properly, and there���s a chance that those voluntarily literate people will tell their friends and colleagues...

If you believe in the "plucking model", by which the economy when "plucked" into a state below normal employment by a negative shock then returns to normal, there is not strong reason to begin a recession watch until normal employment has resumed or has almost resumed. It has. So it is time to start a "what will cause the next recession?" watch. Tim Duy says: it will not be weakness in housing. I concur: the current weakness in housing is what the Federal Reserve wants to see, and is the intended effect of its raising interest rates���a little less employment in housing construction producing a little more room for higher employment in other sectors: Tim Duy: Decision Time: "Remember the recession calls in 2016 when manufacturing rolled over? The thinking was that every time industrial production falls by 2%, a recession followed, and this time would be no different. But it was different. Those calls did not play out because the shock was largely contained to that sector; recessions stems from shocks that hit the entire economy. And even if a recession could be boiled down to a single indicator, I would pick the yield curve over housing...

I have never believed the critics of Whorfianism���those who claim that the language you speak does not shape what you see and how you think. Non-native speakers have a very hard time even hearing the native phonemes of a language, so how can their thoughts be unaffected? Linguistic sources of gender essentialism: Pamela Jakiela and Owen Ozier: Gendered Language: "At the cross-country level, this paper documents a robust negative relationship between the prevalence of gender languages and women���s labor force participation...

James Cloyne: Taxes and Growth: New Narrative Evidence from Interwar Britain: James Cloyne, Nicholas Dimsdale, and Natacha Postel-Vinay: Taxes and Growth: New Narrative Evidence from Interwar Britain: "The impact of fiscal policy on economic activity is still a matter of great debate. And, ever since Keynes first commented on it, interwar Britain, 1918-1939, has remained a particularly contentious case, not least because of its high debt environment and turbulent business cycle...

James Davis Nicoll: Sorry to Crush Your Dreams, But We���re Not Colonizing Space Anytime Soon: "Of course, the initial success of the Darien Scheme proves that you can attract investors by targeting rich idiots. Such schemes are most successful when they are intended to attract cash rather than deliver a shiny space colony. Just make sure to buy your ticket for a nation without extradition well in advance. And you may want hire bodyguards. Loyal bodyguards...

Nathaniel Rakich: How To Watch The Midterms: An Hour-By-Hour Guide: "6 p.m.: Polls close in: most of Indiana, eastern Kentucky. As the first polls close, we���ll start to see results in two districts that could hold clues for how the rest of the night will unfold: the Kentucky 6th and Indiana 9th. The Kentucky 6th is rated1 as Toss-Up in the Classic version of our model. If Democratic challenger Amy McGrath is able to oust GOP Rep. Andy Barr, it will be an early sign of a Democratic wave, as the Kentucky 6th is about 10.5 points more Republican-leaning than the nation as a whole, according to FiveThirtyEight���s partisan lean metric. On the other hand, our model rates the Indiana 9th as Likely Republican, so if Democrat Liz Watson somehow pulls off an upset against Republican Rep. Trey Hollingsworth, it may point to a very long night for Republicans. The 6 p.m. poll-closing hour will also yield early returns in the Indiana U.S. Senate race, a seat that Democrats must hold in order to have any hope of capturing the Senate. Democratic Sen. Joe Donnelly currently has a 7 in 10 chance there... #politics

Lyndon Johnson: "I can think of nothing more dangerous, more divisive, or more self-destructive than the effort to prey on what is called 'white backlash.' I thought it was a mistake to pump this issue up in the 1964 campaign, and I do not think it served the purpose of those who did. I think it is dangerous because it threatens to vest power in the hands of second-rate men whose only qualification is their ability to pander to other men's fears. I think it divides this nation at a very critical time���and therefore it weakens us as a united country... #politics #orangehairedbaboons #history

And, of course, in 2016 three million more voters cast their votes for Democratic than for Republican Senate candidates. And the 2018 House vote went Democratic by 9.2 percentage point:: FiveThirtyEight: Significant Digits For Wednesday, November 7, 2018l: "Voters cast 44.7 million votes for Democratic Senate candidates and 32.9 million votes for Republican Senate candidates... 57 percent of Senate votes went for Democrats...

Wikipedia: Beto O'Rourke

Matthew Yglesias: Austin Can't Stay Weird: "One could go on and on about this stuff���bus lanes, a modest Inclusionary Zoning requirement, etc.���but the details aren���t especially different from what I���d say about anything else. The key point is that the mentality would have to be, 'Hey, Austin is really great, and so a lot of people want to live here or locate businesses here. We should build lots of houses and office buildings and transportation infrastructure and schools to accommodate them...' #nimbyism

#shouldread #weblogging

Jiahua Che and Yingyi Qian: Insecure Property Rights and ...

Jiahua Che and Yingyi Qian: Insecure Property Rights and Government Ownership of Firms>: "The ownership of firms in an environment without secure property rights against state encroachment. 'Private ownership' leads to excessive revenue hiding, and 'state ownership' (i.e., national government ownership) fails to provide incentives for managers and local governments in a credible way.... 'Local government ownership'... may better serve the interests of the national government...

...and thus local government ownership may credibly limit state predation, increase local public goods provision, and reduce costly revenue hiding. We use our theory to interpret the relative success of local government-owned firms during China's transition to a market economy...."

#shouldread

Matthew Yglesias: Austin Can't Stay Weird: "One could go ...

Matthew Yglesias: Austin Can't Stay Weird: "One could go on and on about this stuff���bus lanes, a modest Inclusionary Zoning requirement, etc.���but the details aren���t especially different from what I���d say about anything else. The key point is that the mentality would have to be, 'Hey, Austin is really great, and so a lot of people want to live here or locate businesses here. We should build lots of houses and office buildings and transportation infrastructure and schools to accommodate them...'

...You wouldn���t be able to preserve weirdness���there���d be lots of new buildings and probably a lot of the architecture would be unimaginative. But you could preserve one of the biggest strengths of the Texas economic model: the availability of both middle-class jobs and cheap houses. Otherwise, if you turn against new construction, you���ll end up with the ���coastal��� paradigm (which also happens in Denver, and, frankly, a lot of college towns) where you have a great place to live but a lot of people can���t actually live there...

#shouldread #NIMBYism