J. Bradford DeLong's Blog, page 373

John Quiggin: Hackery or Heresy?: Weekend Reading

Weekend Reading: John Quiggin**: Hackery or heresy: "Henry���s recent post on the irrelevance of conservative intellectuals reminded me of this one from 2013, which concluded...

...Conservative reform of the Republican party is a project that has already failed. The only question is whether the remaining participants will choose hackery or heresy.

Overwhelmingly, the choice has been hackery (or, a little more honorably, silence).

The case for hackery is put most clearly by Henry Olsen. Starting from the evident fact that most Republican voters are white nationalists who don���t care about small government, Olsen considers the options available to small government conservatives. He rapidly dismisses the ideas of challenging Trump or forming a third party, and concludes that the only option is to capitulate. Strikingly, the option of withdrawing from party politics, and arguing for small government positions as an independent critic isn���t even considered.

As Paul Krugman has observed recently, conservative economists (at least, those who comment publicly). are a striking example for the choice of hackery over heresy. Krugman, along with Brad DeLong, has been particularly critical of a group of economists (Robert Barro, Michael Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence Lindsey, Harvey Rosen, George Shultz and John. Taylor) who���ve made dishonest arguments in favor of corporate tax cuts.

Recently, an overlapping group (Boskin, John Cochrane, Cogan, Shultz and Taylor) have taken the hackery a significant step further.

At first sight, it���s yet another piece of doom-mongering about the impending debt crisis. What���s striking is the extent to which the piece has been adjusted to fit the Republican party���s new found lack of concern about deficits, while supporting the party���s continued attack on ���entitlements���. Perhaps unsurprisingly, they make excuses for the corporate tax cut they���ve been pushing all along, even though it���s now clearly unfunded.

Rather more startling is the claim that the US government to cut entitlements in order to ���restore our depleted national defense budget���. These alleged deficit warriors don���t mention the big increase in defense spending that was just passed by the Congress, with overwhelming support from Republicans. Nor do they mention one of the notable outcomes of this largesse, namely that the Pentagon has abandoned any attempt to pursue the program of closing military bases it regards as unnecessary. That���s one of many examples of waste in the defense budget.

There was a time when free-market economists like Milton Friedman saw defense spending as the exemplar of the rent-seeking ���iron triangle��� (interest groups, bureaucrats and politicians) ensuring that public expenditure is always wasteful. I Don���t suppose that Boskin and the rest have looked at the evidence and concluded that Friedman was wrong. Rather they���ve correctly calculated that heresy on defense spending would see them cast into the outer darkness of irrelevance.

The problem is that there���s no room for heresy of any kind. Moreover, as the fate of Republicans foolish enough to oppose Trump in 2016 has shown, heresy can be retrospective. Boskin and the rest would have been better off using their 750 words to say ���Trump is right*���, 250 times over.

The last decade or so has been pretty devastating for the idea of economics as a science or profession. As I argued in my book Zombie Economics, ideas that have been utterly refuted by the evidence of the Global Financial Crisis shamble on in an undead form. The hackery I���ve described here isn���t being produced by marginal figures like Larry Kudlow but by some of the leading lights of the ���discipline���. In the end, all their expertise turns out to be nothing more than a fig-leaf for service to financial capitalism. As with evangelicals, libertarians and the Republican base as a whole, the last few years have shown that the most lurid leftwing caricatures of free-market economists have turned out to be understatements...."

John Quiggin (2013): The last three on the island: "There���s been a spate of recent articles looking at a group of political writers referred to as 'conservative reformers'...

...The term ���reformers��� is misleading since it tends to imply a shift in the direction of liberalism, which is not what the members of this group are hoping to do. More importantly, it implies the existence of a body of orthodox conservative thought against which the reformers are reacting. In reality, US conservatism has returned to the state identified by Trilling ���a series of irritable mental gestures'. The ���reformer��� label covers all those self-identified conservatives who would like to present some sort of intellectually coherent policy platform. These days, that���s a surprisingly small set���the typical list includes Douthat, Salam, Ponnuru, Barro, Brooks, Levin, and Dreher.

There used to be many more people in this group. But one by one, they���ve either abandoned ship and moved to the left (Lind, Sullivan, Frum, Bartlett, Ornstein) or descended into outright hackery, an absolute requirement for employment at any of the main rightwing thinktanks (and it���s hard to recall, but there was a time when people like Glenn Reynolds and the Volokhs seemed like serious intellectuals).

Looking at the remaining group, it���s pretty clear that Barro and Dreher are well on the road to apostasy, while Brooks and Levin are now reliable hacks, if they weren���t always. So, that leaves three reformers (Douthat, Salam and Ponnuru) still on the island.

The reactions of the remaining three reveal the pressure they are under. Salam more or less openly shills for the party line from time to time, as in his (now-deleted) attack on the DREAM Act. It seems pretty clear that he will stick with the team, come what may.

Ponnuru responded with the plaintive observation that, to accept the positions being urged on him from the left, he would have to concede that the majority of US conservatives were crazy. But, if craziness is assessed on the basis of stated views, this is evidently true, as Ponnuru surely knows.

Pluralities of US conservatives believe, or at least claim to believe, that:

The President of the US is a socialist Muslim, born in Kenya
The earth is less than 10 000 years old
Mainstream science is a communist plot
Armed revolution will likely be necessary in the near future

Ponnuru hopes that he can engage in serious policy discussion with conservatives while treating such delusional statements as mere shibboleths���harmless assertions of tribal identity

Most interesting is this piece by Ross Douthat, setting out what he sees as the reform conservative policy program. As he observes, it���s not designed to appeal to (US) liberals, and its full of arguments that have been demolished repeatedly by the left.

OTOH, as Douthat admits, there���s no sign that the Republican party has any interest in a program of this kind. More importantly there���s nothing there that would seriously upset a moderate conservative like Obama, or either of the Clintons. It���s well to the left of the revealed preferences of someone like Rahm Emanuel.

Conservative reform of the Republican party is a project that has already failed. The only question is whether the remaining participants will choose hackery or heresy.

#weekendreading

The ���Let���s Be Agnostic About Race Science��� Clowns Are In My Twitter Timeline Again: Delong Morning Coffee Podcast

Do your arithmetic, Sheeple! 1500 generations since radiation from the horn of Africa is really very little indeed...

The ���Let���s Be Agnostic About Race Science��� Clowns Are In My Twitter Timeline Again

Thx to Wavelength and the very interesting micro.blog http://help.micro.blog/2018/microcasting/ http://delong.micro.blog/2018/04/15/the-lets-be.html

Text: http://www.bradford-delong.com/2018/03/the-lets-be-agnostic-about-race-science-clowns-are-in-my-twitter-timeline-again.html

Project Jupyter: JupyterLab is Ready for Users: "We are p...

Project Jupyter: JupyterLab is Ready for Users: "We are proud to announce the beta release series of JupyterLab, the next-generation web-based interface for Project Jupyter. tl;dr: JupyterLab is ready for daily use (installation, documentation, try it with Binder)..."

#webtech #acrossthewidemissouri

Weird. Credulous business-friendly reporters willing to p...

Weird. Credulous business-friendly reporters willing to publish cries of "labor shortage" without any evidence of rising wages, or even any inquiry into how a "labor shortage" is to be defined. This seems to���rightly���annoy FRBM head Feel Kashkari: Neel Kashkari: "The extreme emotions around the labor market: 'historic, severe worker shortages'. Sounds like a real crisis. Is it?...

...By several measures, wage growth remains muted (around 2.7%)-much lower than historical episodes with "extreme worker shortages." Usually the price is the best indicator between supply and demand. Price growth for labor is low. Where's the "extreme shortage?" Interestingly, the price of oil has doubled over the past few years from around $30 to $60. I haven't heard anyone declare oil "shortage." Why not? Should we tap the Strategic Petroleum Reserve? No because it's the price responding to supply and demand.... Far fewer teens are choosing to be in the labor force today than 20 years ago. How many might choose to enter with higher wages? Our economists @MinneapolisFed always remind me about "sticky prices" - firms are reluctant to lower prices and wages in recessions. These hyperbolic headlines remind me the reluctance to adjust prices is in both directions. There's something very emotional for firms about wages. Paying more for oil, or steel, or corn is no big deal. That's just the market. But if they can't find workers at the wages they are used to paying, that's a historic worker shortage...

#shouldread #ontwitter

The most interesting thing in retrospect is how insistent...

The most interesting thing in retrospect is how insistent Marty is here that "BAD BIG GOVERNMENT" arrived suddenly and discontinuously in 1967���that the U.S. economy was fine up until then, but that afterwards things fell off a cliff with "government policies... deserv[ing] substantial blame for the adverse experience[s] of the past decade". Plus an awful lot of cherry-picking���like assessing corporate America based on the ten large firms whose stock prices plunged the most. And, of course, it was Mary's guy Ronnie whose policies wound up imposing much larger drags on societal wellbeing, from income maldistribution through draining the pool of productive savings to slow-walking equal opportunity: Out of the Frying Pan Into the Fire: Government as the Problem in the 1970s and 1980s: Martin Feldstein (1979): Introduction to The American Economy in Transition: "The post-[World] War [II] period began in an atmosphere of doubt and fear...

Many economists believed that the nation would slip back into the deep recession from which it had escaped only as the war began.... [But the first two decades of the postwar period were a time of unsurpassed economic prosperity, stability, and optimism. The contrast between the strength and achievement of the economy during those years and its poor record since then signals a major change in the performance of the economy over the postwar period.... Real GNP growth slowed from an annual rate of 3.9 percent between 1947 and 1967 to only 2.9 percent between 1967 and 1979.... The average unemployment rate rose from 4.7 percent of the labor force to 5.8 percent. The average rate of consumer price index (CPI) inflation jumped from 2 percent to 6.7 percent (since 1967) with an acceleration to an average of nearly 9 percent since 1973 and over 13 percent in 1979....

Some of the poor record of the 1970s has undoubtedly been due to inappropriate macroeconomic policies adopted during the Vietnam War, to the change in the production policy of the OPEC cartel, and to other disturbances whose impacts will eventually fade away. But the deteriorating performance of the economy may also have more fundamental causes... so deeply rooted in our social and political system that they cannot be eliminated even when the causes of the problem become better understood.... Many of the papers and comments in this volume point to the expanded role of government as a major reason, perhaps the major reason, for the deterioration of our economic performance. The government's mismanagement of monetary and fiscal policy has contributed to the instability of aggregate output and to the rapid rise in inflation. Government regulations are a principal cause of lower productivity growth and of the decline in research and development. The growth of government income-transfer programs has exacerbated the instability of family life and perhaps the decline in the birthrate. The low rate of saving and the slow growth of the capital stock reflect tax rules, macroeconomic policies, and the growth of social insurance programs.

The expanded role of government has undoubtedly been the most important change in the structure of the American economy in the post-war period.... There can be no doubt that government policies do deserve substantial blame for the adverse experience of the past decade.... The adverse consequences of government policies have been largely the unintended and unexpected by-products of well-meaning policies that were adopted without looking beyond their immediate purpose or understanding the magnitudes of their adverse long-run consequences. Expansionary monetary and fiscal policies were adopted throughout the past fifteen years in the hope of lowering the unemployment rate but without anticipating the higher inflation rate that would eventually follow. High tax rates on investment income were enacted and the social security retirement benefits were increased without considering the subsequent impact on investment and saving. Regulations were imposed to protect health and safety without evaluating the reduction in productivity that would result or the effect of an uncertain regulatory future on long-term R&D activities.... The government never considered that raising the amount and duration of unemployment benefits to the current high levels to avoid hardship among the unemployed would encourage layoffs and discourage reemployment; that Medicare and Medicaid, introduced to help the elderly and the poor, might lead to an explosion in health care costs; that welfare programs, introduced and expanded to help poor families, might weaken family structures; or that federal aid through the tax laws and through special credit programs to encourage homeownership would have such adverse effects on the cities, precipitating the relocation of business and consequent poverty and other problems for those who remained behind. The list of well-meaning policies with unintended adverse consequences could be extended almost without limit....

Unfortunately, even when the inappropriateness of old policies is recognized, change is difficult to achieve. Existing programs are maintained even though the same programs would not be adopted today. These programs survive and grow with the help of sympathetic bureaucrats and well-organized beneficiary groups. Loyalties develop to the form of public programs rather than to their basic purpose.... The government in its decision-making is inherently myopic, more myopic than either households or firms. Political accountability means that a policy will be judged on its apparent effects within as little as two years....

President Lyndon Johnson rejected the warnings of his economic advisors that taxes had to be raised in order to avoid an accelerating rate of inflation. Johnson chose to accept an increased long-run inflation rate in order to avoid the short-run political cost of a tax increase. His choice, while perhaps politically rational, was economically myopic. During the 1970s, the government and the monetary authorities focused on the short-run goal of reducing unemployment through expansionary policies that served only to exacerbate the inflationary situation. If escaping from the current high rate of inflation requires a sustained period of increased unemployment and economic slack, the shortsightedness of the political process may make this very difficult to achieve....

Of course, politicians do not have a monopoly on myopia. But although some of the political shortsightedness is undoubtedly a response to constituent pressures, the myopia of the political process actually encourages voters to be impatient.... To the extent that the poor economic performance of the past decade can be traced to the growing role of government and the inherent myopia of the political process, improvement of our performance will be difficult to achieve. Difficult but not impossible.... If the public begins to see more clearly the links between current policies and future consequences, there will be less reason to fear the unexpected consequences of myopic decisions.

The 1970s have been a decade of frustrated expectations. The size and influence of the government have grown rapidly, but the public's distrust of government has grown even more rapidly. The economics profession has discovered a new humility as the economy's performance has worsened. As the 1980s begin, there is widespread anxiety about the future. Will this decade be a period of severe economic problems with a major recession, accelerating inflation, or both? Or can the poor economic performance of the 1970s be reversed? The current data on the developing state of the economy are not clear. And, while some events may be outside our control, the success of the economy in the current decade and in the remainder of this century will depend also on whether we choose wisely as we reevaluate and restructure our major economic policies.

#shouldread

Alessandro Nicita, Marcelo Olarreaga, and Peri da Silva: ...

Alessandro Nicita, Marcelo Olarreaga, and Peri da Silva: [A trade war will increase average tariffs by 32 percentage points(https://voxeu.org/article/trade-war-w... "A trade war will increase average tariffs by 32 percentage points...

...There are growing signs that a trade war is possible, and that the multilateral trading system may not be able to prevent it. This column asks what would happen with tariffs around the world if countries were to move from cooperative tariff setting within the WTO to non-cooperative tariff setting outside the WTO. It argues that that the resulting trade war with countries exploiting their market power would lead to a 32-percentage point increase in the tariff protection faced by the average world exporter...

#shouldread

I sometimes wonder whether this isn't getting much of the...

I sometimes wonder whether this isn't getting much of the problem backward. If your personalized data collected is valuable for hacking your brain���getting you to buy or do things you afterwards wish you had not bought or done���then keeping someone, somewhere from collecting it is going to be difficult. Don't we also need defenses against seeing things from people who do not wish to inform and educate us? In short, isn't AdBlock a bigger piece of the answer?: Zeynep Tufekci: We Already Know How to Protect Ourselves From Facebook: "Personalized data collection would be allowed only through opt-in mechanisms that were clear, concise and transparent...

...The same would be true of any individualized targeting of users by companies or political campaigns���it should be clear, transparent and truly consensual.... People would have access, if requested, to all the data a company has collected on them���including all forms of computational inference (how the company uses your data to make guesses about your tastes and preferences, your personal and medical history, your political allegiances and so forth). Third, the use of any data collected would be limited to specifically enumerated purposes, for a designed period of time���and then would expire.... The aggregate use of data should be regulated. Merely saying that individuals own their data isn���t enough: Companies can and will persuade people to part with their data in ways that may seem to make sense at the individual level but that work at the aggregate level to create public harms.... Facebook may complain that these changes to data collection and use would destroy the company. But while these changes would certainly challenge the business model of many players in the digital economy, giant companies like Facebook would be in the best position to adapt and forge ahead. If anything, we should all be thinking of ways to reintroduce competition into the digital economy.... Right now, Silicon Valley is stuck in a (very profitable) rut. To force it to change would not only make us safer but also foster innovation...

#shouldread

Well, you write documentation for the you that is writing...

Well, you write documentation for the you that is writing the code. You don't write documentation for the enormous idiot who will read and have to try to understand the code���i.e., the you two years into the future https://twitter.com/economeager/status/986797153183035392:

Rachael Meager: Me trying to read code I wrote 2 years ago:

Folks this code is documented. The problem is you write documentation from a biased perspective...

#ontwitter #shouldread #datascience

"If getting China to pay what it owes for technology were...

"If getting China to pay what it owes for technology were the goal, you���d expect the U.S.... to make specific demands... and... build a coalition", a Tran-Pacific Partnership, so to speak: Paul Krugman: The Art of the Flail: "Whenever investors suspect that Donald Trump will really go through with his threats of big tariff increases... stocks plunge...

...Incoherence rules: The administration lashes out, then tries to calm markets by saying that it might not carry through.... If getting better protection of patent rights and so on were the goal, America should be trying to build a coalition with other advanced countries to pressure the Chinese; instead, we���ve been alienating everyone in sight. Anyway, what seems to really bother Trump aren���t China���s genuine policy sins, but its trade surplus with the United States, which he has repeatedly said is $500 billion a year. (It���s actually less than $340 billion, but who���s counting?)... This is junk economics. Except at times of mass unemployment, trade deficits aren���t a subtraction from the economies that run them, nor are trade surpluses an addition to the economies on the other side of the imbalance.....

Now, Trump himself might be O.K. with large-scale deglobalization. But as we���ve seen, his beloved stock market hates the idea, and with good reason: Businesses have invested heavily on the assumption that a closely integrated global economy is here to stay, and a trade war would leave many of those investments stranded. Oh, and a trade war would also devastate much of pro-Trump rural America, since a large share of our agricultural production���including almost two-thirds of food grains���is exported. And that���s why things seem so incoherent...

#shouldread

The Tech Boom and the Fate of Democracy: Ars Technica Live: Definitely Not My Morning Coffee

Definitely Not My Morning Coffee: Ars Technica Live: Annalee Newitz and Brad DeLong: The Tech Boom and the Fate of Democracy "Ars Technica Live #21... Filmed by Chris Schodt, produced by Justin Wolfson...

Annalee writes: "Last week, we had lots of questions about the fate of democracy in a world where the Internet feeds us propaganda faster than we can fact check it...

...Luckily, Ars Technica Live featured guest Bradford DeLong, an economist who has spent his career studying tech and industrial revolutions, as well as the connections between economics and democracy. So we had a lot to discuss, and the result is the longest Ars Technica Live episode ever.

Brad worked in the US Treasury department during the Clinton administration, and he's a professor at UC Berkeley. So he's familiar with economic theory and history, as well as what happens when the rubber meets the road in trade agreements, regulations, and policy.

First, we talked about what a "tech boom" is and how they happen. Brad took us on a trip back through history and explained how even the invention of horseback riding created social ruptures and job loss. He also explained that tech and industrial revolutions in the modern world are often correlated with new ways of communicating and publishing. So the Facebook scandal is, in a sense, nothing new. "Our brains and societies are being hacked in different ways," Brad said, but the pattern is the same.

We discussed automation and whether the rise of robots and algorithms means widespread unemployment or social unrest. Brad discussed a number of examples of how technology had changed jobs in the past and what we're likely to see as we move into the future. He believes that as some jobs are taken over by automation, new jobs are likely to emerge that only humans can do. We also had a really strange conversation in there about how, one day, I will be replaced by a robot and Brad will hire "someone like Oprah" to talk to him for 30 minutes a day about culture.

Finally, after many twists and turns, we talked about the current political climate in the US and how it's affecting the health of the tech economy. Brad described the Trans-Pacific Partnership and why we need it to protect our industries. He also made a lot of dark references to King Henry VIII. We took a few questions from the audience, and a great (if somewhat dystopian) evening was had by all.

Ars Technica Live is filmed before a live audience at Eli's Mile High Club in Oakland, California on the second Wednesday of every month. Our next guest is entomologist Neil Tsutsui, who will talk about the secret lives of bees and ants. Find out more here.

If you'd rather listen to this episode as a podcast, consider subscribing to the Ars Technicast feed here or on iTunes.