J. Bradford DeLong's Blog, page 302

Larry Summers: The Five Best Books on Globalization: "The...

Larry Summers: The Five Best Books on Globalization: "The Economic Consequences of the Peace https://books.google.com/books?id=AX1EAAAAIAAJ, by John Maynard Keynes; Manias, Panics, and Crashes https://books.google.com/books?isbn=0230365353, by Charles Kindleberger; Globalization and Its Discontents https://books.google.com/books?isbn=0393071073, by Joseph E Stiglitz; Why Globalization Works https://books.google.com/books?isbn=0300102526, by Martin Wolf; and _The Great Convergence https://books.google.com/books?isbn=0674972686, by Richard Baldwin...

...The Economic Consequences of the Peace (1919) is among the dozen���perhaps half-dozen���most influential economics books that have ever been written. For a hundred years, it has set the terms of the debate over the Versailles Treaty. It galvanized the political dialogue around what was going to take place post-World War I. This book, combined with subsequent events, shaped the much more generous approach that was taken to the defeated countries in creating an international system after World War II.... Manias, Panics, and Crashes... is the definitive informal history of financial bubbles and euphorias, which have done so much to shape history.... Kindleberger���s book carries the message that, while policies may change and economic circumstances may vary, human psychology and oscillation between fear and greed are likely to always be with us.... Globalization and its Discontents ... is a book that anyone looking for a rounded set of perspectives on globalization should read.... His critiques... were pres... popular resistance to trade.... Why Globalization Works... makes, in the most effective way I have seen, the classical economic arguments for openness... all the benefits of exchange.... Wolf writes as a citizen of the world, placing emphasis on the importance of economic events like the hundreds of millions of people lifted out of poverty in China.... Ultimately, a world in which poor countries stay poor and in which rich countries are pursing policies that are actively keeping them poor is very unlikely to be a stable or a successful world. That���s why the lessons of Wolf���s book are very powerful. Finally... Richard Baldwin���s The Great Convergence... a very powerful description of the newest phase of globalization... global supply chains... the role of trade and globalization in sharing knowledge.... It���s one thing for a soccer team in one country to play against a soccer team in another country. It���s a very different thing if the coach in one country starts to coach teams in many countries and therefore promotes convergence. Baldwin argues that the second type of openness may be more problematic than the first. And, increasingly, trade is taking that form...

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Equitable Growth in Conversation: An interview with David Card and Alan Krueger: Hoisted from the Archives

Hoisted from the Archives from 2016: David Card, Alan Krueger, and Ben Zipperer: Equitable Growth in Conversation: An Interview: Zipperer: "At the beginning of this discussion, a lot of arrows seemed to point back to Orley Ashenfelter. Could you talk about his influence on your work and maybe the field generally?"

Card: Well, for me it���s very strong because he was my thesis adviser and really the reason why I went to Princeton as a grad student. And even as an undergraduate, the two professors who I took courses from that had the most influence on me were students of Orley���s...

...So my connection to him goes back a long time. And we wrote a bunch of papers together over the years and advised many students. But also many of the people of my generation of labor economists, like Joe Altonji, John Abowd, or other people like that, were strongly influenced by Orley.

Right from the get-go, he was a very, very strong proponent of ���experiments if you can do them��� and ���collect your own data if you can do it��� and ���spend the money if you can.��� One time, he and Alan went to Twinsburg Twins Festival and collected data on twins.

Krueger: One time? Four summers in a row we went to Twinsburg, Ohio, with a group of students. We brought a dozen students. (Laughter.)

And it was actually classic Orley because he spent a lot of time choosing the restaurant for dinner, a lot of time chatting with some people, and not too much time collecting data, as I recall.

I read Orley���s work when I was an undergraduate. And a big part of the attraction for me to come to Princeton was Orley, and then David was just really a bonus who I ended up working with so closely for a decade.

And I think Orley kind of set the tone for the Industrial Relations Section. He had done work on the minimum wage with Bob Smith at Cornell, on non-compliance and how much non-compliance there was���which made us think that, if you really want to look for the effects on minimum wage, you need to look in places where it���s binding and companies are complying.

He had a healthy dose of skepticism about the research that had come from the National Minimum Wage Study Commission. Which sometimes he called, as I recall, the National Minimum Study Commission.

Card: Minimum Study Wage Commission.

Krueger: The Minimum Study Wage Commission. (Laughter.)

Card: You can quote me on that.

Krueger: We���re just quoting him. (Laughter.) And he used to like to tell a story, which I remember vividly, where he met with some restaurant group when he worked, I think, at the Labor Department. And they said, we���ve got a problem in our industry: The minimum wage is too low and we can���t get enough workers.

And that���s inconsistent with the kind of view that the market determines the wage, and you get all the workers you want at the going wage, and you can raise the wage if you can���t get enough workers. And I think he was always sympathetic to the famous quote, in ���A Wealth of Nations,��� where Adam Smith said that employers rarely get together when the subject doesn���t turn to how to keep wages low; that there���s a tacit and constant collusion by employers. So I think he kind of set a tone where it was acceptable if you found results that went against the conventional wisdom.

And I came from an environment where even Richard Freeman at the time, who was a somewhat heterodox economist, had written that there���s a downward sloping demand curve for low-wage workers and a higher minimum wage reduces employment, but not all that much, but you get the conventional effects. So that was my background coming in...

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Claudia Sahm: Alice in Wonderland: "One year ago today, A...

Claudia Sahm: Alice in Wonderland: "One year ago today, Alice Wu���s research about sexism at an online economics forum made the news...

...What did I learn this year? One person cannot do much, but a collection of ���one persons��� can do a hell of a lot. I have been repeatedly inspired by the generosity, ingenuity, and unflagging energy of others in getting us organized in the past year. The next steps won���t be easy, as I said in my last post. Economics can be a more diverse, more inclusive profession, but that work can���t be outsourced to committees or a few ���obsessed��� souls. If it matters, it must matter to all of us, and we all have to carve out time for conversations and action. Thanks to Alice Wu for kicking us down this rabbit hole...

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Uncharted 2018: The Berkeley Festival of Ideas: October 5...

Uncharted 2018: The Berkeley Festival of Ideas: October 5-6, 2018

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Caitlin Rosenthal: How Slavery Inspired Modern Business M...

Caitlin Rosenthal: How Slavery Inspired Modern Business Management: "To move beyond denial requires not only an acknowledgment that slaveholders practiced a kind of scientific management but also a broader rethinking of deep-seated assumptions about the relationship between capitalism and control...

...Though there are many exceptions, histories of business practices���at least those that reach a general audience���tend to be both individual and social success stories. They tell stories that are win-win, with businesspeople earning profits and customers, laborers, and communities benefiting along the way. This can, of course, be true. The shift from seeing trade as zero-sum to positive-sum was one of the most important transitions underpinning the rise of capitalism. But capitalism does not make this win-win inevitable.

Growing the pie brings no guarantee about how it will be divided. The sharing of rewards depends on how the rules are written or, differently put, on how markets are regulated. Slavery shows how one particular set of rules enabled precise management but paired its efficiencies with horrifying costs. Slavery also illustrates how certain kinds of market expansion���allowing lives to be bonded in labor and sold���can produce radical inequality. Economic growth can accompany the expansion of freedom and opportunity. But, as in the case of slavery, the expansion of market freedoms for a few can depend on the limitation of all kinds of freedoms for others. Growth can accompany choice, but it can also build on violence and injustice.

Certain kinds of management flourish when managers enjoy a very high level of control over their workers. The rise of scientific management in the late nineteenth century should be seen both as a moment of innovation and as the reemergence of old technologies of control. With the closing of the frontier, workers had fewer opportunities to leave the factory to return to the land. With immigration and rising inequality, manufacturers enjoyed access to a plentiful labor supply. The age of trust and monopoly limited outside options, and collusion meant that even when workers could legally go elsewhere, the circumstances were not necessarily better. Only in circumstances such as these did it make sense for managers such as Taylor to attempt to calculate ���what fraction of a horse power a man power is,��� with the expectation that this maximum rate of work could be acquired for an hourly wage, or perhaps a wage and a ���bonus.���

Modern narratives of capitalist development often emphasize the positive-sum outcomes of many individual choices. They suggest that free, even selfish, decisions go hand in hand with growth and innovation. They often assume that vast wealth accumulated by a few accompanies improved circumstances for many. The history of slavery���s capitalism warns against all these expectations. My new book, Accounting for Slavery, as well as work by historians such as Daina Ramey Berry and Calvin Schermerhorn, shows that slavery in the eighteenth and nineteenth centuries was highly adaptable to the pursuit of profit. Free markets for slaveholders flourished, and their control over men, women, and children expedited production, both by pushing up the pace of labor and by transporting it to new, more fertile soils. Slaveholders��� manipulation of human capital compounded it into massive fortunes���both through financial maneuvering and through human reproduction.

When Harvard Business Review marked its ninetieth anniversary in 2012, Taylor made it into all three featured essays, offering an inspirational point of reference for the ability of managers to transform the broader economy. The business history of plantation slavery offers a very different point of reference���a cautionary tale that warns us what profit-seeking can look like when everything, including lives, is up for sale. The heritage of U.S. business includes both stories of innovation and those of extreme violence. Often the two are deeply intertwined. This was true in specific ways for scientific management, and it was undeniable for plantation slavery. Reckoning with these uncomfortable histories can help us to see the deep connections between capitalism and control and, perhaps, even to find a more humane way forward....

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Narayana Kocherlakota: The Fed Should Prepare for the Une...

Narayana Kocherlakota: The Fed Should Prepare for the Unexpected: "The staff paper downplayed and Powell ignored what I see as the most important risk...

...that the U.S. economy could face a recession in the next couple years. As then-chair Janet Yellen���s speech at Jackson Hole two years ago revealed, the Fed lacks tools to deal with such a contingency. The best way to prepare is to ensure that the economy is as strong as possible when the downturn hits. And that requires keeping interest rates lower than the Fed is currently planning to do...

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Economist: Why is macroeconomics so hard to teach?: "Mr R...

Economist: Why is macroeconomics so hard to teach?: "Mr Rowe remained... 'fairly low down the totem pole' as a researcher. But he became a thunderbird at conveying macroeconomic intuition...

...Worthwhile Canadian Initiative, an economics blog. Many a controversy has benefited from one of his ingenious analogies or numerical parables.... Professors may find themselves ill-prepared for the macro classroom. To become academics they had to answer erudite questions posed by more senior members of the discipline. To become good teachers of introductory macro, they have to give clear answers to muddled students. That requires an intuitive feel for the subject. It is not enough to crank through the equations. Indeed, Mr Rowe attributes part of his success as a teacher to his shortcomings as a mathematician....

Macroeconomics is difficult to teach partly because its theorists (classical, Keynesian, monetarist, New Classical and New Keynesian, among others) disagree about so much. It is difficult also because the textbooks disagree about so little. To reach the widest possible audience, most cover similar material: a miscellany of models that are not always consistent with each other or even with themselves. The result is that many professors must teach things they do not believe. Professors can also sometimes forget that macroeconomics is full of faux amis: words that mean something different in everyday speech. ���Saving��� is an example. In ordinary life, it means the opposite of spending. In macroeconomics it means the opposite of consumption (or, more precisely, not buying new consumer goods with income earned from production). In macro, someone who spends a fortune on a house is saving even if they have emptied their bank account to do so. The term can be so confusing that Mr Rowe thinks it should be banished from the discipline.

More difficulties, Mr Rowe suggests, follow from the fact that macroeconomics is a bit ���weird���. For him, the discipline���s fundamental question is the one broached by Jean-Baptiste Say 200 years ago: does supply create its own demand? The answer, which is often no, is odd. Why do people go to the trouble of producing and marketing stuff (thereby adding to supply) if not to obtain equally valuable goods with the proceeds (thereby adding to demand)? Because students take recessions for granted, they may not realise how peculiar they are. Professors may recognise the strangeness. But they sometimes struggle or neglect to explain it. Mr Rowe did not encounter Say���s law explicitly until well into graduate school...

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Roland Nikles: Sovereign of My Opinions: "The unholy inti...

Roland Nikles: Sovereign of My Opinions: "The unholy intimacy between readers and writers on the Internet, say the N+1 editors, has made op-ed writers of us all...

...Op-eds... in the New York Times, the Washington Post, the Wall Street Journal, can slide by without actually defending their ideas, opinions and statements as they strive for clicks and shares... marked by editorial bad faith. ���From an op-ed writer���s perspective,��� say the N+1 editors, ���good readers who see through editorial bad faith and express their outrage, have become indistinguishable from bad readers who don���t (but click and share) because outrage is a sign of consequence, and both guarantee traffic.���

As a member of the diligent (and largely unread) Internet Proletariat my commitment is to editorial good faith. I strive to have the sovereignty of my opinion rest on a constituency of the most solid ideas I can find. And for those solid ideas I look to experts, people who appear to me trustworthy; others who know more and appear to have editorial integrity. It���s the only path I know to becoming the sovereign of my ideas. Will the N+1 piece disappear ���like all the others, carried along the swift-moving current of the social feed only to be buried in the riverbed and ignored forever?��� I imagine so, but before it does, do go read it...

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EG: Adam Ozimek: Wider Labor Market Slack Implies Lower R...

EG: Adam Ozimek: Wider Labor Market Slack Implies Lower Rates: "Wider slack measured using the prime non-employment rate���the share of people age 25 to 54 who don���t have a job���does a better job explaining wage growth over the last few decades than the unemployment rate, making it a plausibly better recent measure of labor slack.... Continued slack is consistent with strong monthly job growth alongside near-target inflation...

....What���s more, it is not clear that 2007 marks the best benchmark for full employment. The prime non-employment rate today remains significantly elevated compared with the early 2000s and is still improving quickly without generating above-target inflation. If we assume full employment is the rates from the end of the first quarter of 2001, the effects on the federal funds rate of wider slack are even more significant.... These results do not definitively establish where the federal funds rate should be set. Monetary policy is difficult and complex, and there are a variety of factors to consider beyond the labor market. But it is useful to understand that if wider labor market slack is best measured by the prime non-employment rate, and if full employment would mean getting back to 2001 levels, this suggests that a highly accommodative federal funds rate could still be optimal....

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Roland Nikles: News, Reviews & Views: Trump Lies About Ev...

Roland Nikles: News, Reviews & Views: Trump Lies About Everything, All the Time, and his Base Doesn't Care: "We could do worse than contemplate [Hannah] Arendt's description here...

...A mixture of gullibility and cynicism had been an outstanding characteristic of mob mentality before it became an everyday phenomenon of masses. In an ever-changing, incomprehensible world masses had reached the point where they would, at the same time, believe everything and nothing, think everything was possible and that nothing was true. The mixture in itself was remarkable enough, because it spelled the end of the illusion that gullibility was a weakness of unsuspecting primitive souls and cynicism the vice of superior and refined minds. Mass propaganda discovered that the audience was ready at all times to believe the worst, no matter how absurd, and did not particularly object to being deceived because it held every statement to be a lie anyhow.

The totalitarian mass leaders based their propaganda on the correct psychological assumption that, under such conditions, one could make people believe the most fantastic statements one day, and trust that if the next day they were given irrefutable proof of their falsehood, they would take refuge in cynicism; instead of deserting the leaders who had lied to them, they would protest that they had known all along that the statement was a lie and would admire the leaders for their superior tactical cleverness...

There is nothing new under the sun. ��With a mixture of gullibility and cynicism Trump's base is willing to believe everything and nothing. Fox and friends have discovered that they can "make people believe the most fantastic statements" secure in the knowledge that if viewers are given irrefutable proof of falsehood, they will take refuge in cynicism and admiration of Trump's superior tactical cleverness.

The saving grace, for now, is no violence, no paramilitary militias, and a strong democratic resistance....

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