J. Bradford DeLong's Blog, page 352

Note to Self: John Gaddis's Strategy is a weird book. I d...

Note to Self: John Gaddis's Strategy is a weird book. I do not recommend it. But there are some gems. This is one of them���British late nineteenth-century Prime Minister the Earl of Salisbury's attitude towards America:

Salisbury as explicated by Andrew Roberts, transmitted via Gaddis:

One night during the [United States] Civil War, Georgina Cecil awoke to find her husband standing, asleep but agitated, before an open second-floor window. He seemed to be expecting invaders, ���presumably Federal soldiers or revolutionary mob���.... Lord Robert Talbot Gascoyne-Cecil.... Never... his wife recalled, did he suffer ���such extremes of depression and nervous misery as at that time.���... He despised democracy���so deeply that he sympathized with secession, favored the Confederacy, and regarded Lincoln���s assassination as a legitimate last act of resistance.... ���If we had interfered,��� he���d written of the Civil War in the last year of his life, it might have been possible ���to reduce the power of the United States to manageable proportions. But two such chances are not given to a nation in the course of its career.���...

Baited... on two fronts, Salisbury yielded on one. ���There is no such thing as a fixed policy,��� he observed, ���because policy like all organic entities is always in the making.��� And so he and his successors began methodically and unilaterally eliminating all sources of friction with the United States... Venezuela... the Spanish-American War (Britain stayed neutral)... the Philippines (Salisbury supported American, not German, annexation)... a future Panama Canal (Britain relinquished long-held rights in the region), and... Alaska���s boundary (Canada sacrificed for the greater good). It may not have been appeasement, but it was lubrication: like Mikhail Gorbachev almost a century later, Salisbury set out to deprive an enemy of its enemy....

The impulse of democracy, which began in another country in other lands, has made itself felt in our time, and vast changes in the centre of power and incidence of responsibility have been made almost imperceptibly without any disturbance or hindrance in the progress of the prosperous development of the nation...

The sleepwalker still regretted the Confederacy���s defeat, and the consequent loss of a balance of power in North America. The strategist, however, never forgot that ���we are fish,��� and ���alone can do nothing to remedy an inland tyranny.��� So Great Britain learned to live with a democracy dominating a continent. For that, with whatever ambivalence, Salisbury had Lincoln to thank...

#shouldread

Jennifer Pitts: A Turn to Empire: The Rise of Imperial Li...

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...

...Adam Smith, Edmund Burke, and Jeremy Bentham were among many at the start of this period to criticize European empires as unjust as well as politically and economically disastrous for the conquering nations. By the mid-nineteenth century, however, the most prominent British and French liberal thinkers, including John Stuart Mill and Alexis de Tocqueville, vigorously supported the conquest of non-European peoples. Pitts explains that this reflected a rise in civilizational self-confidence, as theories of human progress became more triumphalist, less nuanced, and less tolerant of cultural difference. At the same time, imperial expansion abroad came to be seen as a political project that might assist the emergence of stable liberal democracies within Europe.... Liberal thinkers usually celebrated for respecting not only human equality and liberty but also pluralism supported an inegalitarian and decidedly nonhumanitarian international politics. Yet such moments represent not a necessary feature of liberal thought but a striking departure from views shared by precisely those late-eighteenth-century thinkers whom Mill and Tocqueville saw as their forebears...

#shouldread

Josh Marshall: And you shall know him by his body languag...

Josh Marshall: And you shall know him by his body language

#shouldread

Monday Smackdown: Stupidest Man Alive Donald Luskin Retains His Crown!

I know I promised only one Smackdown a week���or, at least, only one non-DeLong Smackdown a week. But...

I put this in the tickler file three years ago, to see whether OPEC could raise prices and oil would go to $30 a barrel and whether lower oil prices would in fact trigger an oil patch and global superzoom, as "there will be no limits to growth in the global economy in a few years when... oil... becomes, for all practical purposes, free... the lower oil prices go, the more money the frackers can make...". Look today, and what do we see: 75 dollars a barrel. Not: 30. Nor: "for all practical purposes, free":

And the promised oil patch superboom���"the lower oil prices go, the more money the frackers can make..."? Employment in Oklahoma City relative to the nation as a whole:

Donald Luskin and Michael Warren (2015): The Shale Boom Shifts Into Higher Gear: "The question is whether U.S. frackers can adapt to the lower prices they created...

...Leading-edge operators report that they can produce more profitably today at a price of $65 a barrel than they could at $95 a barrel three years ago. Where can they be profitable three years hence���$40 a barrel? $30? The oil patch today is afire with the same technological imperative and competitive mission that has powered the U.S. electronics revolution... to dash headlong down the learning curve, crushing costs and prices and making up for it in volume.... The conventional wisdom is that fracking is... less amenable to the economies of scale exploited by traditional methods. But for today���s shale operators, that���s a feature, not a bug.... Wells in light tight-oil formations can be drilled and completed for millions--not billions���of dollars.... OPEC... can���t raise prices.... The American fracker is the man at the margin now. And as his productivity continues to improve, that margin moves lower and lower.... There will be no limits to growth in the global economy in a few years when... oil... becomes, for all practical purposes, free. And the lower oil prices go, the more money the frackers can make...

Monday Smackdown: Finally We Find What Makes Clive Crook Stop Being an Anti-Anti-Trump Poseur!

A correspondent who wishes me ill writes and asks me what I think of Niall Ferguson and Clive Crook these days. I won't rise to the bait for Niall, but I will note that trade issues have made Clive Crook forget that back in November 2016 he decided to swim with what he saw as the tide carrying him to his niche as an anti-anti-Trump poseur. The talk about how we must be measured in our response���must listen carefully and respectfully to those with "the intelligible and legitimate opinions of that large minority" who will, after they have been marinated in Fox News, applaud Trump's actions���is gone, 100% gone:

Clive Crook: Congress Must Blunt Trump���s Assault on Trade: "What Trump did last week matters...

...Fir[ing] the first shot in what could become a trade war against U.S. allies demands a whole new level of alarm about the damage this president might do.... Decades from now, historians might be amazed that Trump chose to disdain U.S. alliances just as China's ambitions as an ideological rival and emerging military superpower had come more sharply into focus.... Few had expected him to carry out his earlier threat to put tariffs on imports of steel and aluminum from Canada, Mexico and Europe.... The harm to a highly integrated global economic system could be immense.... You'd surely expect to see more local resistance.... Congress should be pressing to take back control of trade policy. This could and should be a bipartisan endeavor.... The idea that steel imports from Canada raise national-security concerns is fatuous.... Most Republicans in Congress think the president's approach is misconceived. But only a handful of GOP senators appear ready to support legislation to rein in Trump's freedom of action.... It's an abdication of Congress's responsibility under the Constitution���and could be the most consequential dereliction of duty so far...

But I remember the earlier Clive. For example...

Last summer Ramesh Ponnuru wrote: Ramesh Ponnuru: Bury the Confederacy for Good: "The meaning of public symbols is not a private matter...

...We remember Jefferson the slave master; but we also remember the Declaration of Independence, the University of Virginia, a role in our national history that is not reducible to his slaveholding. Jefferson Davis, on the other hand, to this day has a highway with his name on it in Virginia because, and only because, he tried to found a nation with slavery as its cornerstone.... It was not necessary to have a vicious character to fight for the Confederacy in 1861, though one is required to root for it today.... Ulysses Grant acknowledged that Lee had fought ���long and valiantly,��� but in the same breath noted that he ���had suffered so much for a cause, though that cause was, I believe, one of the worst for which a people ever fought, and one for which there was the least excuse.��� To judge such choices with mercy is not to honor those choices....

Those who defend Lee statues and worse often say they are motivated by ���heritage not hate.���... But the meaning of a public symbol is not a private possession.... Can they really tell black people... who look at that statue, erected in the same period as ���The Birth of a Nation��� and the second Ku Klux Klan, and see a public display of contempt for their dignity and rights���that their reaction is absurd? The marching racists were vile and stupid. But they weren���t crazy to treat the statue as a vestige of white supremacy...

And then Clive Crook decided not to echo him but to say that the real victims of the public debate in the aftermath of Charlottesville were those who liked the Confederate statues whose feelings were wounded: Clive Crook: Why People Still Support Trump: "Trump's supporters are loyal.... [That] is a terrible indictment of the Democratic Party and much of the media. Why aren't the intelligible and legitimate opinions of that large minority given a hearing?... It's worth pondering that opposing the removal of Confederate monuments may soon make you a racist, if it doesn't already...

I am with Ramesh here: Those who look at the Confederate statues and tell Black people that they are not "a public display of contempt for their dignity and rights" are gravely lacking in empathy and historical knowledge, and are crazy in treating the statues as other than a vestige of white supremacy.

So why does Clive Crook think that they deserve to be treated with more dignity than those who have���rightly���felt the statues to be a racist warning in intent and effect that they have "no rights which the white man is bound to respect"?

But do note that this is the position that Clive Crook has fallen back to. He is no longer defending the rank idiocy he was blathering in mid-2017:

Clive Crook: Trump's Opponents Are His Only Hope: "I'd bet my West Virginia neighbors that President Donald Trump's support will soon collapse...

...and... the Republican Party will take a beating in next year's midterm elections. This amuses them very much, and they ask to be introduced to more people from Washington who think they know what they're talking about. You'll see, they say, Trump will be fine and the Republicans will increase their majorities next year.... I still expect to win my bet. [Even though] his opponents are a tremendous asset, never to be underestimated... he looks beyond saving. My neighbors, in case you're wondering, will pay up with a smile. They're good people...

Trump[s] opponents... have been... his great enablers, celebrating every misstep, putting the worst possible construction on every dumb comment, howling at every pratfall, one day hyperventilating and the next yucking it up���all as if to tell Trump's supporters, "There you are, morons, you see we were right."... However justified, that chorus of contempt for Trump's supporters isn't going to encourage them to defect.... The refusal from the start to give him a chance (sorry for bringing that up again) continues to undermine his critics' credibility even though, by now, he's had his chance and blown it...

Or the even more extreme idiocy he was blathering in late 2016:

Clive Crook*: Consider This: Trump Might Be a Good President: "His critics... have been so harsh that it won���t be difficult for Trump to prove them wrong...

...I have to give credit to Slate���s Jamelle Bouie... crazy zealot... but at least he's consistent...

Clive Crook: Consider This: Trump Might Be a Good President: "His critics... have been so harsh that it won���t be difficult for Trump to prove them wrong...

...The view that he���s a far-right racist zealot, a 21st-century Hitler, shouldn���t be hard to refute: He just needs to avoid dressing his supporters in paramilitary uniforms, declaring martial law in the inner cities, and building a network of concentration camps. President Obama and Hillary Clinton tapered their denunciations of Trump once he was elected, choosing to be gracious and open-minded. Bernie Sanders and Elizabeth Warren have both said that, much as they detest Trump, they���ll work with him....

I have to give credit to Slate���s Jamelle Bouie... the crazy zealot... but at least he's consistent. If Trump were indeed a Hitler for our times, you would be right to refuse any and all cooperation, and to stop him by any means necessary....

Trump... isn���t ���far-right.��� In the agreements he���ll aim to reach with Republicans in Congress, he���ll often be a moderating influence, pulling to the left.... Trump has said he wants to cut taxes and increase spending on infrastructure. A big fiscal stimulus is exactly what many liberal economists have been calling for these past several years. Today, as you might expect, they're no longer so sure. Some damn-the-torpedoes Keynesians now see the merit in fiscal conservatism.... [But] a Trump presidency could give them a macroeconomic policy that���s closer to the one they���ve been advocating than anything they���ve seen so far. And in the short run, it would boost growth....

Trade, so central in his campaign, is apparently not among the three things he wants to address right away. Those would be tax reform, immigration and health care.... It will help that Trump has no ideology.... His goal isn���t to drive through, at any cost, some radical transformation of America���s society and economy, or to reorder international relations and remake the world. It���s to prove his critics wrong, and keep on winning.

Clive Crook: Why People Still Support Trump: "Trump's supporters are loyal. What is one to make of this?...

...There are two main theories of Trump's support. One is that a large minority of Americans���40 percent, give or take���are racist idiots.... The other is that a large majority of this large minority are good citizens with intelligible and legitimate opinions, who so resent being regarded as racist idiots that they'll back Trump almost regardless. They may not admire the man, but he's on their side, he vents their frustration, he afflicts the people who think so little of them���and that's good enough.... The first theory is absurd and the second theory basically correct. The first theory, if it were true, would be an argument against democracy.... This sense that democratic politics is futile if not downright dangerous now infuses the worldview of the country's cultural and intellectual establishment. Trump is routinely accused of being authoritarian and anti-democratic, despite the fact that he won the election and, so far, has been checked at every point and has achieved almost nothing in policy terms....

The second theory���the correct theory���is a terrible indictment of the Democratic Party and much of the media. Why aren't the intelligible and legitimate opinions of that large minority given a hearing?... Those who scorn Trump's supporters might argue that none of their opinions are in fact intelligible or legitimate.... [But] it isn't racism to favor tighter controls if you believe that high immigration lowers American wages.... It's worth pondering that opposing the removal of Confederate monuments may soon make you a racist, if it doesn't already.... I think the statues should go���read Ramesh Ponnuru on this���but most of those who support leaving them in place aren't racist.... Refusing to engage, except to mock and condescend, is both anti-democratic and tactically counterproductive. Proof of that last point is the dispiriting tenacity of Trump's support... https://www.bloomberg.com/view/articles/2017-08-28/why-people-still-support-trump

Very much worth reading from Nick Bunker: Nick Bunker: Pu...

Very much worth reading from Nick Bunker: Nick Bunker: Puzzling over U.S. wage growth: "Hiring has not been particularly strong during this recovery...

...Even accounting for the low unemployment-to-vacancy ratio hiring is down. But only certain kinds of hiring are down. Hiring of workers who were previously unemployed or out of the labor market is in-line with the previous labor market recovery. The hiring that is down is the hiring of already-employed workers.... Analysis of the data shows a weak relationship between the unemployment rate and a good measure of wage growth. The prime employment rate has a much stronger relationship and has done a good job predicting wage growth out of the sample it draws from. The relationship is holding up in practice. Economists and analysts may just need to figure out how it works in theory...

The big problem China will face in a decade is this: an a...

The big problem China will face in a decade is this: an aging near-absolute monarch who does not dare dismount is itself a huge source of instability.

The problem is worse than the standard historical pattern that imperial succession has never delivered more than five good emperors in a row. The problem is the aging of an emperor. Before modern medicine one could hope that the time of chaos between when the grip on the reins of the old emperor loosened and the grip of the new emperor tightened would be short. But in the age of modern medicine that is certainly not the way to bet.

Thus monarchy looks no more attractive than demagoguery today.

We can help to build or restore or remember our ���republican remedy for the diseases most incident to republican government���. An autocracy faced with the succession and the dotage problems does not have this option. Once they abandon collective aristocratic leadership in order to manage the succession problem, I see little possibility of a solution.

And this brings me to Martin Wolf. China's current trajectory is not designed to generate durable political stability: Martin Wolf: How the west should judge the claim sof a rising China: ���Chinese political stability is fragile...

...History suggests that they are right. The past two centuries have seen many man-made disasters, from the Taiping Rebellion of the 19th century to the Great Leap Forward and cultural revolution. It is quite easy therefore to understand why members of the elite seem convinced that renewal of the Communist party, under the control of Xi Jinping, is essential. We must recall that the upheaval of modernisation and urbanisation through which China is now going, destabilised Europe in the 19th and early 20th centuries. Yet this tightening of control could derail the economy or generate a political explosion in a country containing an ever more literate, interconnected and prosperous people. China wishes to be a huge Singapore. Can it?

Western models are discredited: The Chinese elite is right: they are, alas. The dominant view among the rest used to be that the west was interventionist, selfish and hypocritical, but competent. After the financial crisis and the rise of populism, the ability of the west to run its economic and political systems well has come into doubt. For those who believe in democracy and the market economy as expressions of individual freedom, these failures are distressing. They can only be dealt with by reforms. Unfortunately, what the west is getting instead is unproductive rage.

China does not want to run the world: On this point, we can express doubts.... Like all great powers before it, China will surely wish to arrange the global order... to its liking.... It is also trying to influence behaviour, not least of all Chinese students, abroad. All this represents the inevitable extension of Chinese power abroad.

China is under attack by the US.... The truth is that power is inevitably a zero-sum game. The rise of Chinese power will be seen as a threat by the US, whatever China���s intentions may be. Moreover, many... do not really accept Chinese positions on Tibet and Taiwan, are suspicious of China���s intentions and resent its success....

US goals in trade talks are incomprehensible: China is right: they are ridiculous. But within them are genuinely important issues, notably intellectual property.

China will survive these attacks: This is almost certainly true.... A greater threat to China would lie in the domestic reaction to a far more hostile external environment....

This will be a testing year: It will. In fact, it will be a testing century.... The west needs to think much harder.... The US administration���s view���that the unilateral exercise of US power is all that is needed���will fail. It will not manage the global commons that way, not that the Trump administration cares.... It will also not achieve stability.... It is essential for westerners to realise that our biggest enemy has become our inability to run our own countries well. Meanwhile, the only future for an interdependent world has to be based on mutual respect and multilateral co-operation...

#shouldread

Reviewing Richard Baldwin's _The Great Convergence...

My review of the superb and extremely thought provoking: Richard Baldwin (2016): The Great Convergence: Information Technology and the New Globalization http://amzn.to/2sIcr6C. Reviewed for Nature http:nature.com: The iron-hulled oceangoing steamships and submarine telegraph cables of the second half of the 19th century set off a first wave of economic globalization. The intercontinental transport of both staple commodities and people became extraordinarily cheap. The container of the second half of the 20th century made the transport of everything non-spoilable���and some things spoilable���essentially free. It set off a second wave of economic globalization.

Now, Richard Baldwin argues, we have a third wave of economic globalization as important as each of the first two: The internet and the intercontinental airliner have made it possible, for the first time, to transfer, with sufficient effort, the engineering expertise for efficient manufacturing production. Thus manufacturing goods can now be produced efficiently any place property rights are secure, and a literate labor force and technical cadre can be assembled.

The first two waves of globalization were global boons, nearly unmixed. This third wave, Richard Baldwin argues, is working primarily to the advantage of first world intellectual property owners, and secondarily to the advantage of those workers and communities in emerging markets able to find places in highly productive global value chains.

It is, however, working to the disadvantage of first-world communities and manufacturing workers. They used to have preferential advantage to the technical expertise needed to support high productivity manufacturing production. They no longer do so...

Seth Godin: Failsafe tip: "The last thing to add to an im...

Seth Godin: Failsafe tip: "The last thing to add to an important email is the email address...

...Write the thing, save it as a draft, and, an hour later, put the email address in and then hit send. It's not clear that you should send an important text, but if you're going to, write it in a notes app, then copy, paste and send. Send it when you're ready, not before. There's no 'recall' button...

#shouldread

Necessities become things that are beneath our notice. Co...

Necessities become things that are beneath our notice. Conveniences become necessities. Luxuries become conveniences. And then we invent new luxuries���like feeling put upon yesterday because a new 2 terabyte backup disk cost as much as $70 and took 8 hours to get delivered to my door, so I couldn't get all of my backups done last night: Jeff Bezos: Divine Discontent: Disruption���s Antidote: "One thing I love about customers is that they are divinely discontent...

...Their expectations are never static���they go up. It���s human nature. We didn���t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday���s ���wow��� quickly becomes today���s ���ordinary���. I see that cycle of improvement happening at a faster rate than ever before. It may be because customers have such easy access to more information than ever before ��� in only a few seconds and with a couple taps on their phones, customers can read reviews, compare prices from multiple retailers, see whether something���s in stock, find out how fast it will ship or be available for pick-up, and more. These examples are from retail, but I sense that the same customer empowerment phenomenon is happening broadly across everything we do at Amazon and most other industries as well. You cannot rest on your laurels in this world. Customers won���t have it...

#shouldread