J. Bradford DeLong's Blog, page 318

Dan Davies: "If Amazon's marketing department were a bit ...

Dan Davies: "If Amazon's marketing department were a bit sharper, they wouldn't rub my face quite so aggressively in the fact that their signature device is unreliable and breaks:

#acrossthewidemissouri
#tech

Santiago Levy Algazi: Under-Rewarded Efforts: The Elusive...

Santiago Levy Algazi: Under-Rewarded Efforts: The Elusive Quest for Prosperity in Mexico: "Why has an economy that has done so many things right failed to grow fast?...

>...Under-Rewarded Efforts traces Mexico���s disappointing growth to flawed microeconomic policies that have suppressed productivity growth and nullified the expected benefits of the country���s reform efforts. Fast growth will not occur doing more of the same or focusing on issues that may be key bottlenecks to productivity growth elsewhere, but not in Mexico. It will only result from inclusive institutions that effectively protect workers against risks, redistribute towards those in need, and simultaneously align entrepreneurs��� and workers��� incentives to raise productivity. For this transformation to take place, substantive changes to the country���s tax, labor, and social insurance regimes are required...

#shouldread

We economists spend a lot of time looking at aggregates a...

We economists spend a lot of time looking at aggregates and averages���Trevon Logan likes to quote Robert Fogel on how counting is our secret game-changing analytical technique. But it is as important to get thick description of what happens to individual people's lives, so that you know what your aggregate and average numbers mean: Blythe George: ���Them old guys... they knew what to do���: Examining the impact of industry collapse on two tribal reservations: "Using 46 in-depth interviews conducted on the Yurok and Hoopa Valley reservations...

...I answer the following research questions: is there an empirical basis for asserting a relationship between the decline of the logging industry and weakening of male labor force attachment, and for relating these economic shifts to changes in attitudes, expectations and behavior, including methamphetamine use since 1985? Using a cohort model, I describe the changes in male labor force attachment following the decline of the logging industry, as well changes in personal behavior, especially methamphetamine use from 1985 to present. These findings support existing theories of weak labor force attachment as a result of industry decline...

#shouldread

Encyclopedia of Chicago (1899): Mr. Dooley Explains Our "...

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...

...During the Spanish-American War, Dunne used his sharp humor to critique a notion of imperialism based on the superiority of the Anglo-Saxon race, particularly for Chicagoans drawn from around the globe. Mr. Dooley extended a definition of Anglo-Saxon to include most of his ethnic neighbors:

Schwartzmeister is an Anglo-Saxon, but he doesn't know it, an' won't till some wan tells him. Pether Bowbeen down be th' Frinch church is formin' th' Circle Francaize Anglo-Saxon club, an' me ol' frind Dominigo that used to boss th' Ar-rchey R-road wagon whin Callaghan had th' sthreet conthract will march at th' head iv th' Dago Anglo-Saxons whin th' time comes. There ar-re twinty thousan' Rooshian Jews at a quarther a vote in th' Sivinth Ward; an', ar-rmed with rag hooks, they'd be a tur-r-ble think f'r anny inimy iv th' Anglo-Saxon 'lieance to face. Th' Bohemians an' Pole Anglo-Saxons may be a little slow in wakin' up to what the pa-apers calls our common hurtage, but ye may be sure they'll be all r-right whin they're called on...

#shouldread
#history

Comment of the Day: Graydon: #timefortwittertogodark. Wha...

Comment of the Day: Graydon: #timefortwittertogodark. What should we all move to instead?: "Y'all have a constitutionally mandated Post Office precisely so the free exchange of ideas and particularly the free exchange of political ideas may take place.... The Post Office...

...It is painfully obvious that the correct thing to do with the cultural id amplifier is to publicly fund it as a thing the Post Office does. (Google's search capability, absent all adds and with criminal penalties for deceptive SEO, is another obvious candidate for the Post Office.)...

#shouldread

Assessing the "China Shock"

Assessing the China Shock: I enter into a conversation between Noah nd Larry to give my views:

Noah Smith: An easy way to reconcile @de1ong and @joshbivens_DC on trade is to see the China Shock (and thus China's entry into the WTO) as sui generis http://www.bradford-delong.com/2018/08/eg-it-has-always-seemed-to-me-that-the-sharp-josh-bivens-is-engaging-in-some-motivated-reasoning-here-1-_putting-pen-to-.html

Larry Mishel: What I don't like about the 'shock' terminology is that the damage to jobs and wages are permanent, not a temporary phenomenon. One can argue...

Noah Smith: A shock can be a unit root shock...

Larry Mishel: Does anyone say that? All those words by Autor and co-authors?

Noah Smith: ? I'm just saying, shocks can be permanent shocks.

Larry Mishel: Got you...

I think we are���or ought to be���looking at the total collapse of the neoclassical synthesis. Shocks having transitory Keynesian effects because of nominal wage and debt stickiness causing fluctuations around a Classical or Neo-Classical trend appears to have been the wrong horse. If it every worked���and that looks to be a big if���it was, much more likely than not, because the policy response to business-cycle shocks was attaque �� outrance, as when Eisenhower gave Burns the baton to stop recession. Once policy is run by Bernankes, Geithners, and Orszags, who believe in their bones that the economy returns rapidly to classical equilibrium���unless you frighten the bankers���then it simply does not work. And it never really worked outside the US. Only US hegemony in economics and our parochialism produced the impression it did...

The "China shock" papers all look at the micro-regional impact of competition from Chinese imports. They do not look at the micro-regional impact of Chinese financing of investment. Thus the comprehensive net effect on country very different from what's in the papers...

Noah Smith: They also don't look at trade diversion, clustering effects, etc...

They take a partial-equilibrium approach to an inherently general-equilibrium question...

Following the pattern of the Bank of England, the United ...

Following the pattern of the Bank of England, the United States's regional Federal Reserve Banks are quasi-governmental corporations with special charters, missions, and governance structures created by the central government. This provides them with an unusual degree of autonomy. For example, the Bank of England's charter strictly regulated the kinds of financial transactions it could undertake without going ultra vires. But the Bank of England did, repeatedly, engage in ultra vires actions. In fact, the Chancellor of the Exchequer would, not infrequently, write to the Governor of the Bank of England inviting him to and requesting that the Bank do so.

Somehow, in the summer of 2008, the systemically-important American investment bank of Lehman Brothers entered into a state in which it was grossly insolvent, albeit still liquid. Somehow, in the summer of 2008, the Federal Reserve failed to either to develop a plan to guide the successful conservation and resolution of Lehman Brothers should it also become insolvent or to immediately shut it down before the insolvency of this systemically-important financial income became large enough to threaten the stability of the system as a whole. So when Lehman did hit the wall in the fall of 2008, Bernanke, Paulson, and Geithner dithered. That, I think, was the biggest policy mistake of the last decade.

Ryan Cooper has a very good candidate for the second biggest policy mistake of the past decade, however: Ryan Cooper: The biggest policy mistake of the last decade: "After the 2008 financial crisis, old-fashioned Keynesians offered a simple fix: Stimulate the economy. With idle capacity and unemployed workers, nations could restore economic production at essentially zero real cost. It helped the U.S. in the Great Depression and it could help the U.S. in the Great Recession too...

...But during and immediately after the crisis, neoliberal and conservative forces attacked the Keynesian school of thought from multiple directions. Stimulus couldn't work because of some weird debt trigger condition, or because it would cause hyperinflation, or because unemployment was "structural," or because of a "skills gap," or because of adverse demographic trends. Well going on 10 years later, the evidence is in: The anti-Keynesian forces have been proved conclusively mistaken on every single argument. Their refusal to pick up what amounted to a multiple-trillion-dollar bill sitting on the sidewalk is the greatest mistake of economic policy analysis since 1929 at least. Let's take the culprits in turn.

The contrarianism began in earnest in early 2010, when two papers were published apparently finding that austerity���increasing taxes and/or cutting spending to reduce the budget deficit���was actually beneficial.... Alberto Alesina and Silvia Ardagna.... Carmen Reinhart and Kenneth Rogoff.... Both of these papers turned out to have major conceptual problems. Alesina and Ardagna... cherry-picked... unusual cases.... Reinhart and Rogoff got their causality backwards, and even had a humiliating Excel formula error.... More clues that Alesina, Ardagna, Reinhart, and Rogoff got everything wrong can be found in the real world, where the Obama administration's modest stimulus package, while too small to fix the Great Recession entirely, did make things much better. Conversely, the European countries that subjected themselves to severe austerity regimens saw their employment and production collapse, just like Keynes would have predicted....

Next up: the inflation alarmists. In late 2010, a bunch of conservative financial and economics luminaries, including Michael Boskin, John Cogan, Niall Ferguson, Kevin Hassett, Douglas Holtz-Eakin, Bill Kristol, and John Taylor, signed an open letter to then-Fed Chair Ben Bernanke warning that "[t]he planned asset purchases risk currency debasement and inflation."... A related argument from 2011-12 came from economists Tyler Cowen and Robert Gordon... that the slow post-recession growth problem was a structural one caused by lack of innovation, meaning the economy was running up against supply constraints... What connects the monetary stimulus skeptics (Boskin, Cogan, et al.) and the supply-siders (Cowen and Gorden) is... that... if the economy is bumping up against maximum capacity, then there should be price pressure.... Yet it's been six to eight years since their arguments and there's hardly been a glimmer....

Then there are... the "skills gap"... a major focus of Barack Obama's State of the Union address in 2012... the demographic trend argument, which explains a declining fraction of the prime working-age population participating in the labor market... as some kind of cultural development.... Both of these arguments... imply a labor shortage���if unemployed workers are essentially unemployable, and declining labor force participation is due to unshakable cultural trends, then workers that do have jobs should enjoy bigger wages.... [Yet] the overall wage share... fell to historic lows during the crisis and remains there to this day....

There was no skills gap, nor an innovation shortage, nor an explosion of stay-at-home dads. There was a collapse in aggregate demand that was left to rot, while a lot of people who should have known better made things worse. One nauseating irony about this blizzard of nonsense is that many of the anti-Keynesian arguments were premised on avoiding future negative growth effects. For instance, in a 2010 op-ed flogging his erroneous pro-austerity paper, Rogoff wrote, "The sooner politicians reconcile themselves to accepting adjustment, the lower the risks of truly paralyzing debt problems down the road."... The evidence for the Keynesian position is overwhelming. And that means the decade of pointless austerity has severely harmed the American economy ��� leaving us perhaps $3 trillion below the previous growth trend. Through a combination of bad faith, motivated reasoning, and sheer incompetence, austerians have directly created the problem their entire program was supposed to avoid. Good riddance.

#shouldread

Ten Years and One Month Ago on Grasping Reality: July 15-17. 2008...

Brad DeLong was totally, utterly, completely wrong on July 16, 2008. In my defense, I would say that my wrongness was because I did not understand that Bernanke, Geithner, and Paulson were about to abandon Bagehot's Rule for how to deal with a financial crisis. Why did they abandon Bagehot's Rule? None of them has ever given an explanation of their thinking that I can regard as other than transparently false: Greenspanism Looking Pretty Good...: The dot-com bubble and the real-estate bubble were bad news for the investors in Webvan, WorldCom, Countrywide, FNMA, and securitized subprime mortgages. But they were, by and large, good news for the rest of us. And investors are supposed to take care of themselves. Now we are not yet out of the woods. If the tide of financial distress sweeps the Fed and the Treasury away--if we find ourselves in a financial-meltdown world where unemployment or inflation kisses 10%--then I will unhappily concede, and say that Greenspanism was a mistake. But so far the real economy in which people make stuff and other people buy it has been remarkably well insulated from panic at 57th and Park and on Canary Wharf...

Why We Need a Different Opposition Party to Compete with the Democrats (Miscellaneous): The spinmasters for Goldwater, Nixon, and Reagan rooted the Republican Party in three beliefs: 1. the government is not on your side--the government is on the side of the Negroes. 2. tax cuts always raise revenues. 3. the people outside our borders (and the people inside our borders who came from outside our borders) are not our friends. The ramifications of these beliefs have poisoned the entire party. They are the reason that smart well-intentioned Republicans--like George H.W. Bush--turned out to be mediocre presidents; that not-smart but well-intentioned Republicans--like Ronald Reagan (who with the help of his wife and her astrologer partially escaped #3)--turned out to be lousy presidents; and Republicans who were neither smart nor well-meaning--like George W. Bush--has turned out to be either the worst or the second-worst president in American history (depending on what you think of James Buchanan)...

Let Us Now Speak Ill of the Economist of London: I would not have thought that a British publication could write an obituary for Jesse Helms that omits Helms's claim that British Prime Minister Margaret Thatcher was a communist dupe helping the Russians conquer Central America. Nevertheless, the London Economist does...

Greenspanism Looking Pretty Good...: The dot-com bubble and the real-estate bubble were bad news for the investors in Webvan, WorldCom, Countrywide, FNMA, and securitized subprime mortgages. But they were, by and large, good news for the rest of us. And investors are supposed to take care of themselves. Now we are not yet out of the woods. If the tide of financial distress sweeps the Fed and the Treasury away--if we find ourselves in a financial-meltdown world where unemployment or inflation kisses 10%--then I will unhappily concede, and say that Greenspanism was a mistake. But so far the real economy in which people make stuff and other people buy it has been remarkably well insulated from panic at 57th and Park and on Canary Wharf...

Let Us Now Speak Ill of the Economist of London: I would not have thought that a British publication could write an obituary for Jesse Helms that omits Helms's claim that British Prime Minister Margaret Thatcher was a communist dupe helping the Russians conquer Central America. Nevertheless, the London Economist does...

FNMA: A History Lesson: Truth be told, I am having a hard time understanding why FNMA and FHLMC equity has dropped so much. The power to borrow money at essentially the Treasury rate and use it to make mortgages is awesomely valuable. FNMA and FHLMC shareholders own that power--unless the Fed and the Treasury force it into a Bear Stearns- or LTCM-like fire sale. That is, I think, what the market fears...

Out of Date Already! Will Fannie and Freddie Get Government Support?: The chance that American taxpayers will actually lose any money if Ben Bernanke and Henry Paulson decide that Fannie (FNM) and Freddie (FRE) need government support is very low...

Why We Need a Different Opposition Party to Compete with the Democrats (Miscellaneous): The spinmasters for Goldwater, Nixon, and Reagan rooted the Republican Party in three beliefs: 1. the government is not on your side--the government is on the side of the Negroes. 2. tax cuts always raise revenues. 3. the people outside our borders (and the people inside our borders who came from outside our borders) are not our friends. The ramifications of these beliefs have poisoned the entire party. They are the reason that smart well-intentioned Republicans--like George H.W. Bush--turned out to be mediocre presidents; that not-smart but well-intentioned Republicans--like Ronald Reagan (who with the help of his wife and her astrologer partially escaped #3)--turned out to be lousy presidents; and Republicans who were neither smart nor well-meaning--like George W. Bush--has turned out to be either the worst or the second-worst president in American history (depending on what you think of James Buchanan)...

Rules of War: John Ashcroft says that it was perfectly OK for the ChiComs to use the water torture on American servicemen captured in Korea.... Impeach John Ashcroft. Impeach Richard Cheney. Impeach George W. Bush. Do it now...

The Grand Strategy of the United States of America: Barack Obama: "We have to hunt down those who would resort to violence to move their agenda, their ideology forward. We should be going after al Qaeda and those networks fiercely and effectively. But what we also want to do is to shrink the pool of potential recruits. And that involves engaging the Islamic world rather than vilifying it..."

New York Times Death Spiral Watch: Yep. Michael Grynbaum...

Health Care Reform Blogging: From As Good as It Gets: "Carol Connelly: F------ H.M.O. bastard pieces of shit! Beverly Connelly: Carol! Carol Connelly: Sorry. Dr. Martin Bettes: It's okay. Actually, I think that's their technical name..."

Noodle Salad Blogging: From As Good as It Gets: "Carol Connelly: OK, we all have these terrible stories to get over, and you-... Melvin Udall: That's not true. Some have great stories, pretty stories that take place at lakes with boats and friends and noodle salad. Just no one in this car. But, a lot of people, that's their story. Good times, noodle salad. What makes it so hard is not that you had it bad, but that you're that pissed that so many others had it good..." IMHO, this is Jack Nicholson's best movie line evar...

New York Times Death Spiral Watch (Time's Numbers Master Gets Shrill, Berserk, and Medieval on Adam Nagourney and Megan Thee: Karen Tumulty: "I've long made the argument that journalists care wildly more about candidates��� spouses than readers do, but someone needs to tell me why the racial dissension is 'over Michelle Obama'..."

Tragedy of the Anticommons: Highly Recommended: Michael Heller (2008), The Gridlock Economy (New York: Basic: 9780465029167)...

Kieran Healy's Standard Model of Sociophysics: "I���m looking forward to spending a bit of time at the Center for Advanced Study in the Behavioral Sciences this fall.... [T]he Stanford Superconducting Supersocializer... will propel local college sophomores at tremendous speeds into unfamiliar groups of people in an effort to plumb the structure of the elementary particles of social interaction..."

What All Schoolchildren Learn/Those to Whom Evil Is Done/Do Evil in Return: Both the Israeli and the Palestinian governments have very bloody hands. But there is a special circle of hell reserved for those who gleefully boast of their bloody hands���like Mahmoud Abbas today...

New York Times Death Spiral Watch (Adam Nagourney and Megan Thee Edition): The idea of saying anything about Black-white opinion differences based on a poll with only 300 Blacks in it... is bizarre statistical malpractice of a high order...

Why Does Mark Halperin Still Have a Job?

Ta-Nehisi Coates on the New Yorker's Obama Cover: Sadly, that picture exaggerates nothing--that's exactly what a slice of Americans believe about Barack Obama.... Later in the interview Remnick compares this to Colbert's lampooning of the Right. Um, no. Again, Colbert is so exaggerated that only an alien could think that he was actually a right-winger.... I get the intent of the picture, but I think it just fails...

Where Should Barack Obama Be Campaigning?: It's not the votes in states that the polls say are evenly divided that count the most. It's the votes in those states that will be evenly divided if the election turns out to be close that count the most...

#timefortwittertogodark. What should we all move t...

  #timefortwittertogodark. What should we all move to instead?: Sarah Perez: Twitter company email addresses why it���s #BreakingMyTwitter: "Twitter... sticking up for conspiracy theorist Alex Jones... overrun with bots... breaking... third-party Twitter clients... not taking... responsibility for its decisions... passing the buck. Big time...

...In a company email it shared today, Twitter cited ���technical and business constraints��� that it can no longer ignore as being the reason behind the APIs��� shutdown. It said the clients relied on ���legacy technology��� that was still in a ���beta state��� after more than 9 years, and had to be killed ���out of operational necessity.���... It���s not as if there���s some other mysterious force that maintains Twitter���s API platform, and now poor ol��� Twitter is forced to shut down old technology because there���s simply no other recourse. No. Twitter, in fact, is the one responsible for its User Streams and Site Streams APIs���the APIs that serve the core functions of these now deprecated third-party Twitter clients. Twitter is the reason these APIs have been stuck in a beta state for nearly a decade. Twitter is the one that decided not to invest in supporting....

The company���s email also says it hopes to eventually learn ���why people hire 3rd party clients over our own apps.��� Its own apps? Oh, you mean like TweetDeck, the app Twitter��acquired then shut down on Android, iPhone��and Windows? The one it generally acted like it forgot it owned? Or maybe you mean Twitter for Mac (previously Tweetie, before its acquisition), the app it shut down this year, telling Mac users to just use the web instead? Or maybe you mean��the nearly full slate of TV apps that Twitter decided no longer needed to exist? And Twitter wonders why users don���t want to use its own clients? Perhaps, users want a consistent experience���one that doesn���t involve a million inconsequential product changes like turning��stars to hearts��or changing the character counter to a circle. Maybe they appreciate the fact that the third parties seem to understand what Twitter is better than Twitter itself does: Twitter has always been about a real-time stream of information. It���s not meant to be another Facebook-style algorithmic News Feed. The third-party clients respect that. Twitter does not....

The question many users are now facing is what to do next? Continue to use now broken third-party apps? Move to an open platform like Mastodon? Switch to Twitter���s own clients, as it wants, where it plans to ���experiment with showing alternative viewpoints�����to pop people���s echo chambers��� on a service that refuses to kick out people like Alex Jones?... Maybe it���s time to go dark. Get off the feeds. Take a break. Move on.

The full email from Twitter is below:

Hi team,

Today, we���re publishing a blog post about our priorities for where we���re investing today in Twitter client experiences. I wanted to share some more with you about how we reached these decisions, and how we���re thinking about 3rd party clients specifically.

First, some history:

3rd party clients have had a notable impact on the Twitter service and the products we build. Independent developers built the first Twitter client for Mac and the first native app for iPhone. These clients pioneered product features we all know and love about Twitter, like mute, the pull-to-refresh gesture, and more.

We love that developers build experiences on our APIs to push our service, technology, and the public conversation forward. We deeply respect the time, energy, and passion they���ve put into building amazing things using Twitter.

But we haven���t always done a good job of being straightforward with developers about the decisions we make regarding 3rd party clients. In 2011, we told developers (in an email) not to build apps that mimic the core Twitter experience. In 2012, we announced changes to our developer policies intended to make these limitations clearer by capping the number of users allowed for a 3rd party client. And, in the years following those announcements, we���ve told developers repeatedly that our roadmap for our APIs does not prioritize client use cases ��� even as we���ve continued to maintain a couple specific APIs used heavily by these clients and quietly granted user cap exceptions to the clients that needed them.

It is now time to make the hard decision to end support for these legacy APIs���acknowledging that some aspects of these apps would be degraded as a result. Today, we are facing technical and business constraints we can���t ignore. The User Streams and Site Streams APIs that serve core functions of many of these clients have been in a ���beta��� state for more than 9 years, and are built on a technology stack we no longer support. We���re not changing our rules, or setting out to ���kill��� 3rd party clients; but we are killing, out of operational necessity, some of the legacy APIs that power some features of those clients. And it has not been a realistic option for us today to invest in building a totally new service to replace these APIs, which are used by less than 1% of Twitter developers.

We���ve heard the feedback from our customers about the pain this causes. We check out #BreakingMyTwitter quite often and have spoken with many of the developers of major 3rd party clients to understand their needs and concerns. We���re committed to understanding why people hire 3rd party clients over our own apps. And we���re going to try to do better with communicating these changes honestly and clearly to developers. We have a lot of work to do. This change is a hard, but important step, towards doing it. Thank you for working with us to get there.

Thanks,

Rob...

#shouldread

Kate Aronoff: What the ���New York Times��� Climate Block...

Kate Aronoff: What the ���New York Times��� Climate Blockbuster Missed: "Nathaniel Rich���s article illustrates American failures, not global ones...

...Rich argues that when climate change first entered the American political imagination some 40 years ago, politicians in the United States were keen to confront the problem head-on. Obviously, they did no such thing.... Rich���s story is a dogged, important, and nuanced piece of political journalism. Like much reporting on the subject, his piece attempts to understand a phenomenon feminist scholar Donna Haraway has termed the Great Dithering: our apparent inability and lack of will to curb emissions. Rich covers a lot of ground in the story���s 30,000 words, which is no easy task given how much is at stake. Still, his account still falls short in one important way: It���s still not clear that it succeeds in showing how ���we��� as a species are to blame for failing to stop a threat fueled mainly by American corporations....

Global warming is presented as a problem that humans aren���t fully equipped or prepared to confront. ���We have trained ourselves, whether culturally or evolutionarily, to obsess over the present,��� Rich writes. We ���worry about the medium term and cast the long term out of our minds, as we might spit out a poison.��� At a private event unveiling the piece Tuesday night, Rich put it more bluntly. ���We haven���t reckoned, at the level of civilization, with what we���ve done to ourselves,��� he explained. But who���s done what to whom exactly? Who is the ���we���? The fact remains that other nations���197 of them���haven���t been quite as profligate on climate action as the United States, which accounts for around 15 percent of emissions worldwide...

#shouldread
#globalwarming