J. Bradford DeLong's Blog, page 313

Barry Eichengreen and Poonam Gupta (2016): Managing Sudde...

Barry Eichengreen and Poonam Gupta (2016): Managing Sudden Stops: "The recent reversal of capital flows to emerging markets has pointed up the continuing relevance of the sudden stop problem...

...This paper analyzes the sudden stops in capital flows to emerging markets since 1991. It shows that the frequency and duration of sudden stops have remained largely unchanged, but that the relative impor- tance of different factors in their incidence has changed. In particular, global factors appear to have become more important relative to country-specific characteristics and policies. Sudden stops now tend to affect different parts of the world simultaneously rather than bunching region- ally. Stronger macroeconomic and financial frameworks have allowed policy makers to respond more flexibly, but these more flexible responses have not guaranteed insula- tion or mitigated the impact of the phenomenon. These findings suggest that the challenge of understanding and coping with capital-flow volatility is far from fully met...

#shouldread

Racism and "Race": Some Fairly-Recent Must- and Should-Reads

Erin Hengel: Kenneth Arrow on competition driving out discrimination: "If any firms do not discriminate at all, these would be the only firms to survive the competitive struggle. Since racial discrimination has survived for a long time, we must assume that this model has some limitations..."

Jennifer Pitts: A Turn to Empire: The Rise of Imperial Liberalism in Britain and France: "A dramatic shift in British and French ideas about empire unfolded in the sixty years straddling the turn of the nineteenth century...

Noah Smith: "MS-13" is just Republican for "Hispanic people"...

Noah Smith sends us to hard but very important truths about why American African-Americans are so poor relative to their fellow citizens: William Darity plus a team of six more: What We Get Wrong About Closing the Racial Wealth Gap: "A narrative that places the onus of the racial wealth gap on black defectiveness is false in all of its permutations. We challenge the conventional set of claims that are made about the racial wealth gap in the United States. We contend that the cause of the gap must be found in the structural characteristics of the American economy, heavily infused at every point with both an inheritance of racism and the ongoing authority of white supremacy..."

This is not new, but it is true, and I take it as a sign of hope that this can now be said and attract a mass audience: George Yancy: The Ugly Truth of Being a Black Professor in America

Liz Hipple: New research on the relationship between race, place, and opportunity in the United States: "Raj Chetty and fellow researchers Nathaniel Hendren, Maggie R. Jones, and Sonya R. Porter released... ���Race and Economic Opportunity in the United States: An Intergenerational Perspective���...

Quinn Slobodian: The World Economy and the Color Line: Wilhelm R��pke, Apartheid, and the White Atlantic: "The article takes 'white Atlantic' as a useful term to describe the worldview that R��pke and his collaborators cultivated in this period...

Matthew Yglesias: "The highbrow intellectual leaders of the modern conservative movement explicitly conceptualized it as a white nationalist undertaking. Trump is true to this legacy and his intra-movement critics are the innovators...

Kevin Drum: The Republican Party Is in Full-On Panic Mode, and We Get to Watch: "Republicans are in panic mode over the possibility that Robert Mueller is about to start plowing relentlessly through the White House like a bulldozer leveling an old shack...

Jeffrey Friedman: Public Choice Theory and the Politics of Good and Evil: "So now we finally know. Libertarians aren���t the ditzy bumblers exemplified by 2016 presidential candidate Gary (���What is a leppo?���) Johnson...

Encyclopedia of Chicago (1899): Mr. Dooley Explains Our "Common Hurtage": "In the late 1890s, Finley Peter Dunne's newspaper columns in Irish dialect brought to life a fictional Bridgeport bartender, Mr. Dooley...

(Early) Monday Smackdown: New York Magazine Has a Huge Quality Control Problem with Andrew Sullivan. It Needs to Fix It...

Seems to me I can think of many reasons why his friends would have told him this would not be a good book to write: Joe Patrice: Law School Professor Has New Murder Mystery: "Law professor who quit Twitter in a temper tantrum is back with a new book.... Earlier this year, the conservative Edmund Burke Society at the University of Chicago advertised an event to discuss whether or not immigrants were 'toilet people'...

I have a question for Stanford's Michael @McFaul... We know that "If the heritability of IQ were 0.5 and the degree of assortation in mating, m, were 0.2 (both reasonable, if only ballpark estimates), and if the genetic inheritance of IQ were the only mechanism accounting for intergenerational income transmission, then the intergenerational correlation of lifetime incomes would be 0.01..." (see Bowles and Giants (2002)). That is only two percent the observed intergenerational correlation. Why, then, is it important to invite to your campus to speak someone whose big thing is the intergenerational transmission of intelligence through genes, and racial differences thereof? And if one were going to invite to your campus to speak someone, etc., why would you pick somebody who likes to burn crosses? Wouldn't a healthier approach be to regard such a person���who focuses on the intergenerational transmission of intelligence through genes, harps on genetic roots of differences between "races", and likes to burn crosses���as we regard those who know a little too much about the muzzle velocities of the main cannon of the various models of the Nazi Armored Battlewagon Version 4?: Jonathan Marks: Who wants Charles Murray to speak, and why?: "The Bell Curve cited literature from Mankind Quarterly, which no mainstream scholar cites, because it is an unscholarly racist journal... http://anthropomics2.blogspot.com/2017/04/who-wants-charles-murray-to-speak-and.html

Dave Roberts: American white people really hate being called ���white people���: "They want their America, the America where white dominance is so ubiquitous as to be unremarkable, back. They keep saying so.... Being judged and asked to justify itself, as so many subaltern groups are judged and asked to justify themselves, feels like an insult. If you doubt that, go read this Twitter thread."

There are two ways this could go���extending "whiteness" or permanent Republican minority status. In the past, "whiteness" has always been expanded so that it includes a vast majority of the American population���and so now we have people named Mark Krikorian denouncing the threat of a Hispanic wave that will pollute America: Kevin Drum: White Party, Brown Party: "I don���t think that our political system will literally become the White Party vs. the Brown Party, but it���s already closer to this than any of us would like to admit. What���s worse, it���s all but impossible to imagine how Republicans can turn things around in their party. They���re keenly aware of the need to address their demographic challenges, but the short-term pain of reaching out to non-whites is simply too great for them to ever take the plunge. Democrats aren���t in quite such a tough spot, but their issues with the white working class are pretty well known, and don���t look likely to turn around anytime soon either...

On counterfactuals: Judea Pearl: The Book of Why: The New...

On counterfactuals: Judea Pearl: The Book of Why: The New Science of Cause and Effect https://books.google.com/books?isbn=0465097618: "I think that his critics (and perhaps Lewis himself) missed the most important point. We do not need to argue about whether such worlds exist as physical or even metaphysical entities...

...If we aim to explain what people mean by saying ���A causes B,��� we need only postulate that people are capable of generating alternative worlds in their heads, judging which world is ���closer��� to ours and, most importantly, doing it coherently so as to form a consensus. Surely we could not communicate about counterfactuals if one person���s ���closer��� was another person���s ���farther.��� In this view, Lewis���s appeal ���Why not take counterfactuals at face value?��� called not for metaphysics but for attention to the amazing uniformity of the architecture of the human mind.

As a licensed Whiggish philosopher, I can explain this consistency quite well: it stems from the fact that we experience the same world and share the same mental model of its causal structure. We talked about this all the way back in Chapter 1. Our shared mental models bind us together into communities. We can therefore judge closeness not by some metaphysical notion of ���similarity��� but by how much we must take apart and perturb our shared model before it satisfies a given hypothetical condition that is contrary to fact (Joe not taking aspirin).

In structural models we do a very similar thing, albeit embellished with more mathematical detail. We evaluate expressions like ���had X been x��� in the same way that we handled interventions do( X = x), by deleting arrows in a causal diagram or equations in a structural model. We can describe this as making the minimal alteration to a causal diagram needed to ensure that X equals x. In this respect, structural counterfactuals are compatible with Lewis���s idea of the most similar possible world...

#books
#philosophy
#cognition

I concur with Noah Smith here that the biggest dangers of...

I concur with Noah Smith here that the biggest dangers of machine learning, etc., are not on the labor but on the consumer side. They won't make us obsolete as producers. They could make us easier to grift as customers. Consider that nearly all of Silicon Valley these days is seeking not to make electrons get up and dance in circuits or to make circuits get up and dance in applications that accomplish tasks users wish done, but rather in trying to hack users' brains so their eyeballs will stay glued to screens: Noah Smith: Artificial Intelligence Still Isn���t All That Smart: "Machine learning will revolutionize white-collar jobs in much the same way that engines, electricity and machine tools revolutionized blue-collar jobs...

....Just like machine tools allow workers to skip some physical tasks and apply their muscle power only to a few essential things, machine learning tools will allow workers to skip some mental tasks and apply their brain power to only a select few things. The result, presumably, will be another big increase in productivity. On the downside, if the set of tasks amenable to machine learning increases at a very rapid clip, it could leave lots of workers displaced and adrift as they are constantly forced to change their job description.... This is a very simplified picture of the economics of machine learning.... In a new paper, legendary economist Hal Varian... briefly addresses some of the thornier questions....

Machine learning-enabled price discrimination might allow companies to figure out exactly how much customers are willing to pay for things, and gouge them for every penny.��Machine learning-enabled network effects could aggravate the problem of big-company dominance. Algorithms could collude with each other to rig markets, without humans even realizing the collusion is happening. In the end, the only way to really know what machine learning will do to the economy is to wait and find out. It���s important to anticipate and be ready for possible problems... but... machine learning���s ultimate effects will probably surprise all of us....

#shouldread
#riseoftherobots

A plea of despair for our politics and public sphere disc...

A plea of despair for our politics and public sphere discourse from Duncan Black: Duncan Black: Eschaton: "Nobody Who Works Full Time Should Live In Poverty": "This, or a version of this, has become some sort of crazy left idea...

...(the real crazy left idea is "nobody should live in poverty") to the right. But how can this be some sort of crazy idea? We can argue about how to ensure it happens, or why it too often doesn't happen, but we're the richest damn country in the world (close enough) and if you work full time and still can't manage to eke out a basic stable existence then something is wrong with our grand economic model...

#shouldread

I disagree with Jeff here: the Federal Reserve has not be...

I disagree with Jeff here: the Federal Reserve has not been doing a good job since 2010. Its central task as of 2010 was to (a) get the U.S. economy rapidly back to full employment at (b) a configuration of economic variables that would give it a short-term safe nominal interest rate of 5% or more so it would have room to properly fight the next recession whenever it should come. You could argue that the rest of the government make it impossible for the Fed to do a good job. But you cannot argue that the Fed should be satisfied with the job it has done since 2010: Jeffrey Frankel: The Depth of the Next US Recession: "Whatever the immediate trigger of the next US recession, the consequences are likely to be severe.... Pro-cyclical fiscal, macro-prudential, and even monetary policies... [leave] authorities are in a weak position to manage the next inevitable shock...

...While it is hard to get counter-cyclical timing exactly right, that is no excuse for pro-cyclical policy, an approach that puts the US in a weak position to manage the next inevitable shock.... America���s deficit is being blown up on both the revenue and expenditure sides.... The Trump administration���s embrace of financial deregulation is also pro-cyclical and intensifies market swings.... Now is the right point in the cycle to raise banks��� capital requirements as called for under Dodd-Frank. The cushion would minimize the risk of a future banking crisis.... When it comes to monetary policy, the US Federal Reserve has been doing a good job; but its independence is increasingly under attack from Republican politicians. If this assault succeeds, counter-cyclical monetary policy would be impaired...

#shouldread

As Michael Kades writes, ���the stakes are much higher th...

As Michael Kades writes, ���the stakes are much higher than an ideological battle or technical adjustments to a legal regime��� here. We need to understand how anti-trust practice affects the degree of monopoly in the United States and Hal monopoly effects equitable growth and societal well being. We do not. I think that attempting to understand these two issues is the most important analytic issue for policy relevant economic research in the United States today: Michael Kades: Why market competition matters to equitable growth: "At first glance, competition in the U.S. economy may seem far afield of the topic of equitable growth.... What could antitrust enforcement have to do with maintaining a healthy economy?...

...By the late 1960s and 1970s... a new critique, born at the University of Chicago... antitrust enforcement as more likely to be the problem than the solution... concluded that most mergers were efficient and beneficial... theorized that anticompetitive conduct was unlikely to work... [and] anticompetitive effects were likely transient. Much ink has been spilled about the actual impact of the Chicago School on antitrust enforcement. It has faced significant criticisms within the antitrust community, but even those critics agreed with many of its principles....

Courts���sometimes over the objection of government enforcers, as with the California Dental and American Express decisions, for example���continued their rightward turn. More importantly, new research questions how competitive the economy actually is. Labor economists have documented the pervasiveness of monopsony.... There is increasing evidence that mark-ups and corporate profits are growing and are persistent. Firms are not just earning higher profits; they are also more likely to maintain that profitability over time.... The benefits of competition are broad, and research increasingly shows that the elimination of competition can contribute to... raises [in] the cost of living... to economic inequality... [to] wage stagnation... [to] suppressing innovation and stifling entrepreneurship, which is at a historical low....

No consensus has developed about whether the U.S. economy suffers from a monopoly problem. If there is a monopoly problem... it is worth asking to what degree competition policy in general���and the antitrust laws in particular���are responsible.... Equitable Growth has been participating in this discussion for some time.... There are three related questions for competition policy in the United States today:

Is monopoly power prevalent in the U.S. economy?
If the answer to the first question is yes, then to what extent is lax antitrust doctrine responsible for the existence of monopoly power?
If the answer to the second question is to a significant extent, then what are the solutions to failures in antitrust doctrine in particular and competition policy more generally?...

The stakes are much higher than an ideological battle or technical adjustments to a legal regime...

#shouldread

Kaja Whitehouse: Columbia professor found liable for sexu...

Kaja Whitehouse: Columbia professor found liable for sexual harassment: "Economics Professor Geert Bekaert took retaliatory jabs at his junior research partner, Enrichetta Ravina, the Manhattan federal court jury found...

...E-mails introduced at trial showed Bekaert trash-talking Ravina to colleagues after she complained about him���calling her ���incredibly evil,��� ���insane,��� ���unstable,��� ���schizophrenic��� and an ���incredibly mean b.��� Ravina���s lawyers claimed Bekaert purposefully stalled their joint research project so that she couldn���t present it at her tenure hearing. avina told the jury that Bekaert approached her to work on the research project together and soon became her mentor. But he often pushed work aside to talk about his sex life. ���He talked about pornography, prostitution, and how prostitutes are important,��� Ravina said.

The jury did not find Bekaert guilty of gender discrimination and they have yet to put a dollar figure on the verdict, which will be decided following a shorter trial about the emotional and economic hardship Ravina claims she suffered. She is asking for $31 million. The jury also let Columbia off the hook on all claims except for its responsibility tied to Bekaert���s retaliation...

#shouldread

DeLong Fall 2018 Teaching Schedule

Email delong@econ.berkeley.edu for an appointment outside of office hours...

View at: https://www.icloud.com/numbers/0fSxKotxqSU27JCPbCUVOXLdg

Ann Marie Marciarille: Implementation Considerations for ...

Ann Marie Marciarille: Implementation Considerations for Universal Coverage: ERISA: "What About State Specific Health Care Reform?...

ERISA may prohibit an employer mandate(because it ���relates to��� employer sponsored plans)
An individual mandate is most likely to avoid challenge if it makes no reference to employer-sponsored health plans.
Even taxes can raise ERISA preemption problems if state law conditions tax advantages or disadvantages on plan design features...