J. Bradford DeLong's Blog, page 326

Aspen: Security: A Question I Did Not Ask Condoleeza Ri...

Aspen: Security: A Question I Did Not Ask Condoleeza Rice: Secretary Rice, in her opening statement, focused on historical roots of our current mishegas, and how the foreign view of the U.S. as a country that is not well-governed, that cannot handle its trade and immigration issues, has been long building.

That reminded me of something that has long puzzled me: Dual containment of Iran and Iraq���that always seemed to me like a very good idea, a very good policy, a profoundly imperfect policy, yes, but the best we could do given that we live, as Cicero said, not in the Republic of Plato but in the Sewer of Romulus.

Back in 2002 we already had a serious global terrorism network problem. "One enemy at a time" is elementary strategy. Yet in 2003 we broke dual containment by invading Iraq. We broke dual containment:

without a plan for getting the 300K Arabic-speaking military police optimal for stabilization,
without a plan for a post-invasion Iraq not theologically and ideologically in sync with Iran, and
without a spur to action in the form of an advanced Iraqi nuclear weapons program.

Why we decided to launch such a war of choice in 2003 has always been opaque to me. Can you make your thinking less opaque to me, as to why this was thought to be a good idea? And what does this say about how good an idea disruption for disruption���s sake is in general?

Some of My Less Polite Thoughts from Aspen

#shouldread
#security
#acrossthewidemissouri

Dan Davies: "Expats who give us a bad name overseas by tr...

Dan Davies: "Expats who give us a bad name overseas by trying to excuse their shitty behaviour by going 'oh it's a British thing' should have their passports removed. You're meant to be on your best behaviour, tool...

...Andrew Sullivan: I���m English by origin. As a people, we will never stop giggling at funny names and Asian accents...

I mean, I know (and have known for 20 years, since I first did business trips) that when you're in the USA you don't use the c-word, you don't call African Americans "boyo", you tip 20% in restaurants. Even if this isn't how you behave at home. Sullivan has no excuse...

#shouldread

Brian Kahn: Death Valley Will Have the Hottest Month Ever...

Brian Kahn: Death Valley Will Have the Hottest Month Ever Recorded on Earth: "Every locale pales in comparison to what���s going on at Death Valley in California... in line to set a record for the hottest month ever recorded on Earth...

...Through the first 30 days of July, the average temperature there has been 108 degrees Fahrenheit. The forecast on Tuesday���the last day of the month���calls for a high of 120 degrees Fahrenheit and a low of 92 degrees Fahrenheit. If that holds, Death Valley will end July with an average temperature of 107.94 degrees Fahrenheit and a place in the history books for the hottest month reliably recorded anywhere (pending official review of course). It will take the spot of... Death Valley, which set the record last year with a July average of 107.4 degrees Fahrenheit...

#shouldread
#globalwarming

Mr. Justice McReynolds: NLRB v. Jones & Laughlin Steel: "The Court... Departs From Well-Established Principles Followed in Schechter... and Carter v. Carter Coal...": Weekend Reading

Mr. Justice McREYNOLDS: NLRB v. Jones & Laughlin Steel: Dissenting Opinion: "Mr. Justice VAN DEVANTER, Mr. Justice SUTHERLAND, Mr. Justice BUTLER and I are unable to agree with the decisions just announced....

...Considering the far-reaching import of these decisions, the departure from what we understand has been consistently ruled here, and the extraordinary power confirmed to a Board of three, the obligation to present our views becomes plain. The Court as we think departs from well-established principles followed in Schechter Poultry Corporation v. United States, 295 U.S. 495 (May, 1935), and Carter v. Carter Coal Co., 298 U.S. 238 (May, 1936). Every consideration brought forward to uphold the act before us was applicable to support the acts held unconstitutional in causes decided within two years. And the lower courts rightly deemed them controlling.

In each cause the Labor Board formulated and then sustained a charge of unfair labor practices towards persons employed only in production. It ordered restoration of discharged employees to former positions with payment for losses sustained. These orders were declared invalid below upon the ground that respondents while carrying on production operations were not thereby engaging in interstate commerce; that labor practices in the course of such operations did not directly affect interstate commerce; consequently respondents' actions did not come within congressional power.

The precise question for us to determine is whether in the circumstances disclosed Congress has power to authorize what the Labor Board commanded the respondent to do. Stated otherwise, in the circumstances here existing could Congress by statute direct what the Board has ordered?

Manifestly that view of congressional power would extend it into almost every field of human industry. With striking lucidity, fifty years ago, Kidd v. Pearson, 128 U.S. 1, 21, declared:

If it be held that the term (commerce with foreign nations and among the several states) includes the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future, it is impossible to deny that it would also include all productive industries that contemplate the same thing. The result would be that congress would be invested, to the exclusion of the states, with the power to regulate, not only manufacture, but also agriculture, horticulture, stock-raising, domestic fisheries, mining,���in short, every branch of human industry.

This doctrine found full approval in United States v. E. C. Knight Co.,; Schechter Poultry Corporation, supra, and Carter v. Carter Coal Co., supra, where the authorities are collected and principles applicable here are discussed.

Any effect on interstate commerce by the discharge of employees shown here would be indirect and remote in the highest degree. In No. 419 ten men out of ten thousand were discharged; in the other cases only a few. The immediate effect in the factor may be to create discontent among all those employed and a strike may follow, which, in turn, may result in reducing production, which ultimately may reduce the volume of goods moving in interstate commerce. By this chain of indirect and progressively remote events we finally reach the evil with which it is said the legislation under consideration undertakes to deal. A more remote and indirect interference with interstate commerce or a more definite invasion of the powers reserved to the states is difficult, if not impossible, to imagine.

The Constitution still recognizes the existence of states with indestructible powers; the Tenth Amendment was supposed to put them beyond controversy.

We are told that Congress may protect the "stream of commerce" and that one who buys raw material without the state, manufactures it therein, and ships the output to another state is in that stream. Therefore it is said he may be prevented from doing anything which may interfere with its flow.

This, too, goes beyond the constitutional limitations heretofore enforced. If a man raises cattle and regularly delivers them to a carrier for interstate shipment, may Congress prescribe the conditions under which he may employ or discharge helpers on the ranch? The products of a mine pass daily into interstate commerce; many things are brought to it from other states. Are the owners and the miners within the power of Congress in respect of the latter's tenure and discharge? May a mill owner be prohibited from closing his factory or discontinuing his business because so to do would stop the flow of products to and from his plant in interstate commerce? May employees in a factory be restrained from quitting work in a body because this will close the factory and thereby stop the flow of commerce? May arson of a factory be made a federal offense whenever this would interfere with such flow? If the business cannot continue with the existing wage scale, may Congress command a reduction?

If the ruling of the Court just announced is adhered to, these questions suggest some of the problems certain to arise.

There is no ground on which reasonably to hold that refusal by a manufacturer, whose raw materials come from states other than that of his factory and whose products are regularly carried to other states, to bargain collectively with employees in his manufacturing plant, directly affects interstate commerce. In such business, there is not one but who distinct movements or streams in interstate transportation. The first brings in raw material and there ends. Then follows manufacture, a separate and local activity. Upon completion of this and not before, the second distinct movement or stream in interstate commerce begins and the products go to other states. Such is the common course for small as well as large industries. It is unreasonable and unprecedented to say the commerce clause confers upon Congress power to govern relations between employers and employees in these local activities.

It is gravely stated that experience teaches that if an employer discourages membership in 'any organization of any kind' 'in which employees participate, and which exists for the purpose in whole or in part of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work,' discontent may follow and this in turn may lead to a strike, and as the outcome of the strike there may be a block in the stream of interstate commerce. Therefore Congress may inhibit the discharge! Whatever effect any cause of discontent may ultimately have upon commerce is far too indirect to justify congressional regulation. Almost anything--marriage, birth, death--may in some fashion affect commerce.

That Congress has power by appropriate means, not prohibited by the Constitution, to prevent direct and material interference with the conduct of interstate commerce is settled doctrine. But the interference struck at must be direct and material, not some mere possibility contingent on wholly uncertain events; and there must be no impairment of rights guaranteed.

The things inhibited by the Labor Act relate to the management of a manufacturing plant--something distinct from commerce and subject to the authority of the state. And this may not be abridged because of some vague possibility of distant interference with commerce.

The right of a person to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the purchaser of labor or prescribe the conditions upon which he will accept such labor from the person offering to sell it. So the right of the employee to quit the service of the employer, for whatever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of such employee. It was the legal right of the defendant, Adair,���however unwise such a course might have been,���to discharge Coppage because of his being a member of a labor organization, as it was the legal right of Coppage, if he saw fit to do so, however unwise such course on his part might have been���to quit the service in which he was engaged, because the defendant employed some persons who were not members of a labor organization.

In all such particulars the employer and the employee have equality of right, and any legislation that disturbs that equality is an arbitrary interference with the liberty of contract which no government can legally justify in a free land.

The right to contract is fundamental and includes the privilege of selecting those with whom one is willing to assume contractual relations. This right is unduly abridged by the act now upheld. A private owner is deprived of power to manage his own property by freely selecting those to whom his manufacturing operations are to be entrusted. We think this cannot lawfully be done in circumstances like those here disclosed.

It seems clear to us that Congress has Transcended the powers granted.

#shouldread

The Argument for Lots of Remaining Labor-Market Slack, Graphically...

Anybody have any good reason why the U.S. prime-age employment-to-population ratio could not rise another 2%-points with a high-pressure economy?

#macroeconomics
#monetarypolicy
#labormarket
#fullemployment

My More Polite Thoughts from Aspen...

A common thread in a bunch of the initial comments here was: valuation and assessment...

Introducing considerations of strategy into development is a very sharp two-edged sword...

I remember pressing the Treasury International people on how better funding and more substantive independence for multilateral institutions ought to be a much higher priority...

The extraordinary disjunction between the two acts of Chiang Kai-Shek's career...

The farmer and the cowman can be friends only when there is a matriarch with a shotgun in the picture...

#shouldread
#development
#acrossthewidemissouri
#highlighted

Aspen: Development Finance: A common thread in a bunch ...

Aspen: Development Finance: A common thread in a bunch of the initial comments here was: valuation and assessment. This is a piece of a much broader problem. We have absolutely powerful measures for assessment as far as things that go through the market. We see them every hour on practically every news channel: GDP, employment, wages, equity values, interest rates. We have no similar set of indicators that are brought in front of our eyes and injected into our consciousnesses with respect to any of the broader societal welfare measures that we really want to advance���and the things that we really want Mars to advance. I do not know what the solution to this is. Clearly it is not another report with another set of indicators to add to the cacophony. But I do think we need to settle on a single set of global societal indicators that will have the mindshare that the market financial and other indicators have. I have no answers. I only have a plea for coordination...

#aspen
#acrossthewidemissouri
#development

Aspen: Development Finance* Introducing considerations of...

Aspen: Development Finance* Introducing considerations of strategy into development is a very sharp two-edged sword. On the one hand, the Cold War focused the attention of the entire American government on making the redevelopment of northwest and the development of southwestern Europe and of East Asia���Korea and Taiwan and Japan���to be a success. That was of enormous value in making the US development efforts the greatest successes we have ever had.

In addition, as Barney Frank once said when my colleague Barry Eichengreen was testifying in front of him, the Cold War was worth 60 votes in the House of Representatives. Now we have a much harder row to hoe.

On the other hand, there have been many times over the past 70 years in which strategic logic has overcome development logic. And there are dangers in poisoning the entire effort to the extent that strategic logic takes on too large a place. Walt Whitman Rostow had John F Kennedy primed up talk to Sukarno about all the wonderful things the US was going to do for Indonesian development. But Suharto���sorry, Sukarno, Sukarno, Sukarno���was interested in two and only two things: Irian Jaya, and free cash flow that he could use to reward elements of his political coalition...

#aspen
#acrossthewidemissouri
#development

Jane Austen and Walter Scott: Not Quite Love and Friendship: Weekend Reading

Catherine Hokin: The History Girls: Jane Austen and Walter Scott: Not Quite Love and Friendship by : ���'Walter Scott has no business writing novels, especially good ones ��� it is not fair. He has fame and profit enough as a poet, and should not be taking the bread out of other people���s mouths'���...

...No one can deny, however, how well Austen can mix admiration into rivalry or the elegant dryness of her tone. This archness runs through her letters as much as her novels although the above comment (written to her niece Anna in 1814)��does continue in a rather blunter vein:��"I do not like him, and do not mean to like Waverley if I can help it-but fear I must." It's hard not to hear the gritted teeth grinding just a little.

Walter Scott was, of course, a very different writer [from] Austen... but he was generous in his appreciation of Austen's style. His [possible]��review of Emma, published in The Quarterly Review in 1816, is widely credited with bringing her work to a wider audience... stating that it showed�����a knowledge of the human heart, with the power and resolution to bring that knowledge to the service of honour and virtue,��� unlike the ���ephemeral productions which supply the regular demand of watering-places and circulating libraries.���... Her response that the authoress�����has no reason, I think, to complain of her treatment in it, except in the total omission of ���Mansfield Park.��� I cannot but be sorry that so clever a man as the Reviewer of ���Emma��� should consider it as unworthy of being noticed��� can be read in a positive or a peevish tone.

Scott continued to reflect positively on Austen's work throughout his own career. In 1826, he wrote in his private journal:

READ again, and for the third time at least, Miss Austen���s very finely written novel of Pride and Prejudice. That young lady has a talent for describing the involvements and feelings and characters of ordinary life which is to me the most wonderful I ever met with. The big bow-wow strain I can do myself like any now going; but the exquisite touch, which renders ordinary commonplace things and characters interesting, from the truth of the description and the sentiment, is denied to me...

In 1832, Scott wrote in the preface to the one novel he wrote with a more domestic setting,��St Ronan's Well, that he had no:

hope of rivaling... the brilliant and talented names of Edgeworth, Austen... whose success seems to have appropriated this province of the novel as exclusively their own."...

I would have liked to see... Austen versus Mark Twain.��Twain loathed Austen's work, interestingly he also loathed Walter Scott, so much in fact that he once cited Walter Scott disease as a prime cause of the American Civil War: "Sir Walter had so large a hand in making Southern character, as it existed before the war, that he is in great measure responsible for the war." Reading Twain on Austen reminds me of the horrors of having to teach her to teenage boys...

#shouldread

What I call Bob Rubin's Questions. They really work!: Ann...

What I call Bob Rubin's Questions. They really work!: Annie Duke: Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts: "In fact, questioning what you see or hear can get you eaten. For survival-essential skills, type I errors (false positives) were less costly than type II errors (false negatives). In other words, better to be safe than sorry, especially when considering whether to believe that the rustling in the grass is a lion. We didn���t develop a high degree of skepticism when our beliefs were about things we directly experienced, especially when our lives were at stake...

Surprisingly, being smart can actually make bias worse. Let me give you a different intuitive frame: the smarter you are, the better you are at constructing a narrative that supports your beliefs, rationalizing and framing the data to fit your argument or point of view. After all, people in the ���spin room��� in a political setting are generally pretty smart for a reason. It turns out the better you are with numbers, the better you are at spinning those numbers to conform to and support your beliefs...

Remember the order in which we form abstract beliefs: We hear something; We believe it; Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining whether or not it is true. ���Wanna bet?��� triggers us to engage in that third step that we only sometimes get to. Being asked if we are willing to bet money on it makes it much more likely that we will examine our information in a less biased way, be more honest with ourselves about how sure we are of our beliefs, and be more open to updating and calibrating our beliefs. The more objective we are, the more accurate our beliefs become. And the person who wins bets over the long run is the one with the more accurate beliefs...

One of our time-travel goals is to create moments... where we can interrupt an in-the-moment decision and take some time to consider the decision from the perspective of our past and future. We can then create a habit routine around these decision interrupts to encourage this perspective taking, asking ourselves a set of simple questions at the moment of the decision designed to get future-us and past-us involved. We can do this by imagining how future-us is likely to feel about the decision or by imagining how we might feel about the decision today if past-us had made it. The approaches are complementary; whether you choose to travel to the past or travel to the future depends solely on what approach you find most effective. Business journalist and author Suzy Welch developed a popular tool known as 10-10-10.... "What are the consequences of each of my options in ten minutes? In ten months? In ten years?" This set of questions triggers mental time travel that cues that accountability conversation.... We can build on Welch���s tool by asking the questions through the frame of the past: "How would I feel today if I had made this decision ten minutes ago? Ten months ago? Ten years ago?" Whichever frame we choose, we draw on our past experiences (including similar decisions we may have regretted) in answering the questions, recruiting into the decision those less-reactive brain pathways that control executive functioning...

In poker, because the decisions are all made in the moment and the consequences are big and immediate, routines like 10-10-10 are a survival skill. I recognized in poker that in the same way that I was not the best judge of how I was playing after losing a certain amount of money.... Just as we can convince ourselves we are sober enough to drive, it is easy for poker players to convince themselves that they are alert enough to keep playing after many hours of intense, intellectually taxing work. In my more rational moments, away from the tables, I knew I would be better off if I played just six to eight hours per session. When I reached that point in a session and considered continuing past that time limit, I could use a 10-10-10-like strategy to recruit my past- and future-self...

By planning ahead, we can devise a plan to respond to a negative outcome instead of just reacting to it. We can also familiarize ourselves with the likelihood of a negative outcome and how it will feel. Coming to peace with a bad outcome in advance will feel better than refusing to acknowledge it, facing it only after it has happened. After-the-fact regret can consume us. Like all emotions, regret initially feels intense but gets better with time. Time-travel strategies can help us remember that the intensity of what we feel now will subside over time...

#shouldread