J. Bradford DeLong's Blog, page 331
July 28, 2018
Note to Self: Positive Logicism: Is the question "are all...
Note to Self: Positive Logicism: Is the question "are all ravens black?" or "what are the odds that the next raven I see will be black?"?
Comment of the Day: Graydon: Post-WWII Western Europe: "Y...
Comment of the Day: Graydon: Post-WWII Western Europe: "Y'all have seen the pictures?...
...The Great War was localized; the continuous front happened from the North Sea to Switzerland, but it didn't move very much. Chunks of France and Belgium get devastated, but not all that much else. Hitler's War/The Great Patriotic War killed an awful lot of people, and an awful lot of them were civilians. The machinery of civilization was destroyed where the now-mechanised and mobile continuous front had passed. (It took twenty years for people to start saying things like "conflicted volume", but that time was the beginning of these things; what's the front when the air war spreads over a couple thousand kilometers?)
People starved in the aftermath simply because it was impossible for food to reach them. (There were real food shortages, but also real logistical collapse.) "Rebuilt Cathedral" might make a decent band name, but there are a lot more of them than there were. And there are yet those now living who remember. (Merkel's remark on this and the lessons of history is important.)
Europe was relatively peaceful for a hundred years after the Treaty of Vienna; the memory of the memory had to fade. And Napoleon was more or less nothing in comparison to the Great Patriotic War. Doesn't mean the memory of the memory isn't fading, or that the US' role as the counterweight wasn't dependent on the degree to which the US could avoid being capitalist, or the whole thing wasn't predicated on presumptions about the possibility of economic stability which have been destroyed...
#shouldread
Public Sphere/Journamalism: Some Fairly Recent Must- and Should-Reads
I think that this is a very important thing to remember. The Fed View���and the zero-marginal-product workers view���and a lot of other pessimistic views about the economy's non-inflationary speed limit for recovery and growth were totally, catastrophically wrong over the past decade. The people who strongly advocated for such views thus had a badly-flawed Vision of the Cosmic All. Thus I think there is no reason to put a weight higher than zero on their current views of how the world works���unless they have publicly and substantially done the work to mark their beliefs to market. Certainly the Federal Reserve has not yet done so: Timothy B. Lee: "Every additional month of strong employment growth and weak wage growth makes people who said we were near full employment in 2014, 2015, 2016, and 2017 look wronger..."
Kevin Drum: We Need to Figure Out How to Fight Weaponized Disinformation: "I���ve been blogging for 15 years, and there���s never been a day when I wanted to stop...
I think Daniel Walden gets this right: the idea that there is some single "civilization" running Gilgamesh-Hammurabi-Moses-David-Athens-Sparta-Jesus-Rome-Charlemagne-Renaissance-Glorious Revolution-Representative Government-Industrial Revolution-Democracy is a rather peculiar fiction. Better to remember that M. Tullius Cicero thought Britain was not worth the bones of a single Tuscan centurion, for there was not an ounce of silver on the whole island and the Britons were too stupid and uneducated for it to be worthwhile selling them as slaves: Daniel Walden: Dismantling the ���West���: "What is this mysterious entity called ���the West��� anyway?...
Yes, Stanford has a very serious quality control problem with its Hoover Institution: Brian Contreras, Ada Statler, and Courtney Douglas: Leaked emails show Hoover academic conspiring with College Republicans to conduct ���opposition research��� on student: "Emails between the Hoover Institution���s Niall Ferguson and well-known Republican student activists John Rice-Cameron ���20 and Max Minshull ���20 reveal coordination on 'opposition research' against progressive activist Michael Ocon ���20...
Not all conservatives are Milo. Very few conservatives are Milo, in fact: Rakesh Bhandari: "Some conservative Cal students have falsely complained that they are penalized by GSI's or Profs for their political views. One student falsely said an econ prof forced him to write in favor of open borders; another complained that he was penalized for a realism paper in IR...
Another piece worrying that human beings are simply unequipped to deal with an advertising supported internet, in which money flows to those who hack your brain to glue your eyeballs to the screen: Ben Popken: As algorithms take over, YouTube's recommendations highlight a human problem: "A supercomputer playing chess against your mind to get you to keep watching...
OK, Ben: how do we write regulations that constrain aggregators that want to hack our brain and attention and empower platforms that enable us to accomplish what we prudently judge our purposes to be when we are in our best selves? How was it that printing managed to, eventually, generate a less-unhealthy public sphere? Young Habermas, where are you now that we need you?: Ben Thompson: Tech���s Two Philosophies: "Apple and Microsoft, the two 'bicycle of the mind��� companies'... had broadly similar business models... platforms.
Economists Behaving Badly: A Question I Asked a Much Shorter Version of...: "I have a question for Alan Auerbach: a question hinted at in his slide that contrasted the analyses of the tax cuts from economists from those from ���economists���..."
Brad DeLong (2012): Ahem! Niall Ferguson Fire-His-Ass-from-NewsBeast-Now Department: Niall Ferguson writes
Absolutely brilliant from Henry Farrell. If being muted by Jonathan Chait were to regularly produce such good thought, Chait should mute everybody immediately!: Henry Farrell: We���re all going to need safe spaces: "What Putin���s Russia and Xi���s China have discovered is that the best antidote to more speech is bad speech...
Chris Dillow: Economists in public: "There was a debate on Twitter this morning about how economists can better engage with the public...
Simon Wren-Lewis, Tony Yates, and Dan Davies: "Journalists need a place they can go to get an idea of what the balance of opinion is on any issue, and why economists think that way...
William Easterly: Review: Going Beyond the Limits of the Earth With ���The Wizard and the Prophet���: "Even though the explosion of population and living standards that Vogt feared did occur, the famines he expected never did...
Nicole Cliffe: @nicole_cliffe on Twitter: "It���s come to my attention that a legacy print magazine is planning to publish a piece 'outing' the woman who started the Shitty Media Men list...
Ezra Klein: ���Trump country��� stories help explain our politics, not the next election: "Michael Kruse���s Politico story revisiting diehard Trump supporters in Johnstown, Pennsylvania...
The argument against Nouriel is that asset markets are st...
The argument against Nouriel is that asset markets are still placing high valuations on everything. The argument against taking that as a sign of optimism is that true apocalypse scenarios are not priced: there is no place to hide, so fear of them produces no pressure to sell anything: Nouriel Roubini: Trump May Kill the Global Recovery: "How does the current global economic outlook compare to that of a year ago?...
...Markets gave US President Donald Trump the benefit of the doubt during his first year in office; and investors celebrated his tax cuts and deregulatory policies.... Fast-forward to 2018, and the picture looks very different.... The significant share of global growth driven by ���Chimerica��� (China and America) is now being threatened by an escalating trade war. The Trump administration has imposed import tariffs on steel, aluminum, and a wide range of Chinese goods (with many more to come), and it is considering additional levies on automobiles from Europe and the rest of the world.... The danger now is that a negative feedback loop between economies and markets will take hold....
While the Trump administration���s modest growth-boosting policies are already behind us, the effects of policies that could hamper growth have yet to be fully felt. Trump���s favored fiscal and trade policies will crowd out private investment, reduce foreign direct investment in the US, and produce larger external deficits. His draconian approach to immigration will diminish the supply of labor needed to support an aging society. His environmental policies will make it harder for the US to compete in the green economy of the future. And his bullying of the private sector will make firms hesitant to hire or invest in the US...
#shouldread
I think that this is a very important thing to remember. ...
I think that this is a very important thing to remember. The Fed View���and the zero-marginal-product workers view���and a lot of other pessimistic views about the economy's non-inflationary speed limit for recovery and growth were totally, catastrophically wrong over the past decade. The people who strongly advocated for such views thus had a badly-flawed Vision of the Cosmic All. Thus I think there is no reason to put a weight higher than zero on their current views of how the world works���unless they have publicly and substantially done the work to mark their beliefs to market. Certainly the Federal Reserve has not yet done so: Timothy B. Lee: "Every additional month of strong employment growth and weak wage growth makes people who said we were near full employment in 2014, 2015, 2016, and 2017 look wronger..."
#shouldread
Understanding Trump's Flailing About: Weekend Reading
The other alternative is that they will stick with him forever: the tax cut���redistributing $2 trillion in wealth to the superrich���is the only kahuna, after all. Nothing else matters: Nils Gilman: "What we're seeing with Trump's current political strategy is something very similar to the maneuvers of a corporation pulling out the stops to delay the inevitable coming bankruptcy...
...As with the corporate bankruptcy, one can't really predict what the final straw will be. With Trump's political bankruptcy around the corner, what's holding him together at this point is only that he has managed to put almost all the GOP electeds in DC in his debt, and if/when he goes down, they're all going to be left holding the bag. Of course, the long Trump manages to stave off his own political bankruptcy with this approach, the higher the political debts will pile for the GOP electeds. And when the main debtor goes belly up, even more of them well get pulled into the political debt vortex with him.
Trump's defenders are facing a kind of political analog to the old adage that if I owe you $5, that's a problem for me, whereas if I owe you $5m, that's a problem for you.
It won't end well for them...
#weekendreading
#orangehairdbaboons
Required for equitable growth: predictability���establish...
Required for equitable growth: predictability���established rules of the game and due process of law, rather than random reality-TV policies by chaos monkeys. Also required: an activist government willing to create and support the communities of engineering practice and the essential services that underpin the highly-productive value chains of the future. Plus a willingness to enforce an equitable income distribution. Ricardo Hausmann fears that the United States���at least the Trump-dominated United States���has none of these: Ricardo Hausmann: Does the West Want What Technology Wants? : "To ascertain what technology wants requires understanding what it is and how it grows. Technology is really three forms of knowledge...
...embodied knowledge in tools and materials; codified knowledge in recipes, protocols, and how-to manuals; and tacit knowledge or knowhow in brains.... One trick that technology uses in order to grow is modularization.... Consider the following example: Chile is the world���s largest producer of lithium and Japan���s Panasonic is the largest manufacturer of lithium-ion batteries, but it is China���s BAIC that is the largest electric vehicle (EV) manufacturer. While America���s Tesla is an admirable company, by 2025 Europe and China are expected to have over ten times more EVs than the US, which also lags far behind in the number of charging stations to support them.... Each module in the value chain benefits from connecting to other modules in the world. Modularity creates a logic that is somewhat different from simple economies of scale. EVs benefit from innovations in mining and in battery manufacturing, wherever they occur. Whoever achieves those innovations will want to connect to the places that use them.... To exploit these possibilities, innovating companies need to be able to connect to manufacturers elsewhere in a secure manner. This is exactly the opposite of what a sunset clause in the North American Free Trade Agreement would accomplish....
Implementing many technologies also requires ingredients that can be provided only through non-market mechanisms, and here governments play a critical role. Consider high-speed rail. Without government authorization and cooperation, no private company can build a rail line. Western Europe has more than 14,000 kilometers (8,700 miles) of high-speed rail, and China has over 25,000. The United States claims to have 56 kilometers, in a short stretch that covers less than 8% of the distance between Boston and Washington, DC. The reason is obvious: this is a technology that, like the electric car, requires a social decision and a government that enables that choice. In short, technology requires a society that connects to the world, both through trade and openness to talent, in order to exploit the gains from modularization....
The Spanish Empire made the choice to expel the Jews and the Moors from its realm in the late fifteenth century. It tried and failed to impose its intolerance on its dominions in the Low Countries in the sixteenth century. But after an 80-year bloody war of independence, the Netherlands emerged as a beacon of tolerance and attracted some of Europe���s greatest talent, from Descartes to Spinoza. Not surprisingly, it became the world���s richest country during the seventeenth and eighteenth centuries. Today���s populist forces may disregard what technology wants and impose their vision on the world. But they will inadvertently leave their societies, just like the US rail system, on a very slow track.
#shouldread
July 27, 2018
Announcing the John Bell Hood-Max von Gallwitz Society!
Dedicated to celebrating the memory of two field commanders who may well have been the worst in history:
Drink a toast to John Bell Hood on the 7/28 anniversary of his defeat at Ezra Church1
Hood... moved his troops out to oppose the Union army... planned to intercept them and catch them completely by surprise.... Unfortunately for Hood... Howard had predicted such a maneuver based on his knowledge of Hood from their time together.... His troops were already waiting in their trenches when Hood reached them. The Confederate army also had not done enough reconnaisance... and made an uncoordinated attack.... In all, about 3,642 men were casualties; 3,000 on the Confederate side and 642 on the Union side
And drink a toast to Max von Gallwitz���perhaps the only Imperial German commander who could have turned the Somme into a draw!
Ethan Arsht: Napoleon was the Best General Ever, and the Math Proves it
Tim Duy: Powell Wants to Create Some Mystery Around Fed M...
Tim Duy: Powell Wants to Create Some Mystery Around Fed Meetings: "A slower or faster pace of rate hikes, an extended pause, or even a��cut are all possibilities at this point...
...The Fed is preparing for a shift in their policy guidance. Why prepare for a shift? Policy rates will soon approach the central tendency range of what policy makers estimate to be neutral, currently 2.8 percent to 3.0 percent. But that range is just an estimate. The true neutral rate is unobservable. Hence, as rates approach that range, policy makers need to more carefully assess the current and expected state of the economy before blindly pushing rates higher. They could afford to be on autopilot when rates were far from neutral; they will soon no longer have that luxury.
My view is that the next two rates hikes are looking like a near certainty at this point. The economy exhibits��too little inflation to consider accelerating the pace of rate hikes with an August hike and retains too much momentum for the Fed to consider pausing at the September meeting. Moreover, I doubt this calculus will change by fourth quarter, meaning a hike in December but not October. By 2019, however, the guidance will shift away from an implicit expectation of a 25-basis-point boost each quarter. Officials will increasingly emphasize the role of��incoming data when setting policy. In his testimony, Powell provided a clue on what to look for when sifting through the data.... The Fed is not likely to believe they have reached a neutral policy stance as long as the labor market is sufficiently strong to place ongoing downward pressure on unemployment. As such, the Fed would continue pushing policy rates higher while searching for neutral. Do not underestimate the Fed���s determination on this point...
#shouldread
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