J. Bradford DeLong's Blog, page 426

Should-Read: William Best (1824): Sir Edward Coke,: "The ...

Should-Read: William Best (1824): Sir Edward Coke,: "The fact is, Lord Coke had no authority for what he states...

...but I am afraid we should get rid of a great deal of what is considered law in Westminster hall, if what Lord Coke says without authority is not law...

Should-Read: Nathan Jensen: Learning public policy from A...

Should-Read: Nathan Jensen: Learning public policy from Amazon: "Second, many of these state and local incentive programs are designed to provide very weak tests for providing incentives...

...The Texas Chapter 313 program says companies simply need to state that incentives are ���a determining factor��� in their decision. To qualify, companies only need to claim they have other options or that the incentive is necessary to make the project financially viable. No disclosures are required.

The bidding war for Amazon���s second headquarters demonstrates that some public officials are losing sight of many of these lessons. Many cities and states are putting on the table their best possible offers, but is that really good public policy? What if Amazon has already chosen a location���or, more likely, narrowed the choice down to a select few places and is simply taking bids to maximize its benefits? Whatever location wins the new project needs to be sure it conducts a thorough cost analysis to learn whether any tax abatements are really worth the cost...

Technocracy at Bay: No Longer Fresh at Project Syndicate

Project Syndicate: Keeping US Policymaking Honest: Last month here at Berkeley I heard great optimism from the illustrious Alice Rivlin. What ���technocracy��� in the good sense the United States has���what respect is paid to sound analysis and empirical evidence in the making of policy���is due more to Alice Rivlin than to any other living human.

When young, she was denied admission to the graduate program of Harvard���s Littauer Center for Public Administration because of ���unfortunate experiences��� with previous admissions of ���women of marriageable age���. In those phrases we can hear the echo of some New England Puritan divine���s sermon on the alliance of Eve with the Serpent and her subsequent Temptation of Adam. Her founding of the Congressional Budget Office is only one, albeit the most important one, of the times that Alice Rivlin has indeed eaten from and forced the rest of us to eat from the tree of knowledge. And we are all massively better for it.

Alice Rivlin asserted with great confidence that high-quality policy analysis would continue to flourish in the 21st-century public sphere and would continue to carry substantial weight, if not its full due weight, in the decisions of legislators and presidents and their staffs. And, indeed, she is correct. The CBO she founded has never been more influential than it has been this year. And this year its influence has not been through its place in congressional procedure. Rather, this year its influence has been high because its assessments have been taken as highly-informed good-faith���dare I say ���non-partisan���?���estimates of what legislative proposals are likely to do to change the country. So far, so good. So far she has been right.

But I am not so optimistic about the future. She asserted that there was and would remain substantial near-consensus within the body of good economics, and that near-consensus would guide the assessments and estimates and models used in public policy discourse and debate. She noted that there used to be many economists of note and reputation who thought a simple monetary rule was is a magic bullet for avoiding depressions and outbreaks of inflation; and now there are none.

That is true. But by the time you read this Stanford economist John Taylor will will either have been designated or have come to the edge of being designated the next chair of the Federal Reserve. And Taylor has his own particular monetary rule that he clings to extremely strongly in spite of the complete lack of any theoretical argument that is it is indeed optimal or any empirical evidence that it would have performed better than the Federal Reserve actual procedures in any decade since the 1970s.

And on the fiscal policy side of the Trump administration, assurances I heard in the spring that Kevin Hassett, if he became CEA chair, would be a ���normal��� CEA Chair have not been fulfilled. He would understand the importance of keeping the CEAs estimates credible, and thus the necessity that they remain within the range of the main screen policy analysis community. He would understand the importance of building up analysis groups like the JCT staff, OMB, CBO, OTA, TPC, CBPP and others who is principal allegiance was to getting the estimates right rather than pleasing their funders or their political masters.

Yet Hassett has devoted a lot of effort to tearing down the estimates of the Tax Policy Center���the TPC���even though there will be times in the future when its estimates will be as or uncomfortable for his political and partisan adversaries as they are for him today. In our world the near-consensus estimates of the share of the corporate tax born by labor and the share of the initial revenue reduction from a corporate income tax cut will be recouped via higher future investment are both a quarter. Yet Hassett has the CEA claim to estimate numbers that makes sense only if both are 82%���that made Larry Summers both angrier and more frightened that I can remember him being about an issue of public policy, and let him to call Hassett ���some combination of dishonest, incompetent, and absurd��� https://www.cnbc.com/2017/10/17/hassetts-flawed-analysis-of-trump-tax-plan-larry-summers-commentary.html.

Benjamin Franklin famously told the American people that the Constitution would provide them with ���a republic, if you can keep it���.

In her long and very distinguished career Alice Rivlin and company have provided us with a rational policy process, if we can keep it.

Should-Read: Yes, Topher Spiro has gone over the edge int...

Should-Read: Yes, Topher Spiro has gone over the edge into shrillness...

He is, however, right: The Tax Foundation is not doing "dynamic scores" of anything. They may build a model of the interaction of taxes, government financial flows, international considerations, and economic growth to do them in the future. They do not have one now. John Harwood and company should not be citing them in the same breath as TPC, PWM, CBO, and JCT:

Topher Spiro: @topherspiro on Twitter: "John Harwood...

...but there are dynamic scores from Tax Foundation, Tax Policy Center, and Penn-Wharton. none of them show economy reaching sustainable 3% growth that WH has touted https://www.cnbc.com/2017/11/27/wavering-gop-senators-must-face-three-hard-truths-on-tax-reform.html

@crampell: CBO: it's not "practicable" for JCT to come up with a dynamic score of tax bill before filing of Senate Finance Committee report, given compressed time frame https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/reconciliationrecommendationssfc.pdf

Please, please do not cite Tax Foundation in the same breath.

The CRFB is, for once, playing a positive role in adding light to this debate with a well-drawn graph:

This shows how much of an outlier the Tax Foundation "estimate" is. And this shows why: the Tax Foundation ignores the drag on private investment produced as private businesses find themselves facing increased competition as the Treasury borrows money to finance the larger deficits that would otherwise have flowed into private investment. The Tax Foundation's excuse, which is the same as that of the Nine Unprofessional Republican Economists, is that there is no significant drag on growth from financing larger deficits because "the United States operates in an international capital market". I tell this to international economists at Berkeley and elsewhere. And they laugh. That's not how things work in a world not of perfect but of imperfect capital mobility in which the U.S. is not a small open but a very large semi-open economy.

Must-Read: Enrico Moretti: Fires Aren���t the Only Threat...

Must-Read: Enrico Moretti: Fires Aren���t the Only Threat to the California Dream: "The fires that ravaged Northern California in October claimed lives, weakened communities and scarred one of the West���s most distinctive landscapes...

...The destruction of an estimated 14,000 homes in the wine country north of San Francisco will worsen a severe housing shortage in a region where rents and housing values are already sky-high. The shortage harms rural communities on the fringes of the Bay Area, but it is rooted in urban communities in the region���s core.... It is exacerbated by well-meaning but misguided housing policies championed by urban liberals. The area has some of the most progressive voters and policymakers in the nation, yet it has also adopted some of the most regressive housing policies, with large costs for low-income renters and the environment....

The problem is largely self-inflicted: the region has some of the country���s slowest, most political and cumbersome housing approval processes and most stringent land-use restrictions. Thanks to aggressive lobbying by an odd coalition of Nimby homeowners and progressives���radical county supervisors, tenants��� unions, environmental groups���in places like San Francisco and Oakland, it takes years (and sometimes even decades), harsh political battles and arduous appeals to get a market-rate housing project approved....

Just like fires, bad housing policies can carry horrendous social and environmental costs. As the smoke from the Northern California fires clears, our urban communities should follow the examples of other progressive cities, and embrace smart growth. For this to happen, local urban progressives must moderate their reflexive opposition to all new market-based housing. The main winners will be the region���s most vulnerable: urban renters as well as the land and inhabitants of areas incinerated by the recent infernos.

Should-Read: Erik Brynjolfsson, Daniel Rock, and Chad Syv...

Should-Read: Erik Brynjolfsson, Daniel Rock, and Chad Syverson: Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics: "We describe four potential explanations for this clash of expectations and statistics...

...false hopes, mismeasurement, redistribution, and implementation.... Lags are likely to be the biggest reason for paradox.... Full effects won���t be realized until waves of complementary innovations are developed and implemented.... National statistics will fail to capture the full benefits... and some may even have the wrong sign...

Madmen in the Attic: Hoisted from the Archives from 2006

No, this is not about Martin Peretz...

2006: Madmen in the Attic...: Here Mark Thoma watches Tony Giddens in the Guardian discourse on conditions for a 'revival of sociology.' I listen for a while, and then I want to sidle quietly away before I am noticed:

Economist's View: Did Economics Crowd Out Sociology?: A call to arms, by Anthony Giddens, Commentary, The Guardian:

All you sociologists out there! All you ex-students of sociology! All of you (if there are such people) who are simply interested in sociology and its future! I'd like to hear from you. We live in a world of extraordinary change, in everyday life, family relationships, politics, communications and in global society. We are witnessing, among other things, a return of the gods, as religion re-emerges as a major force in our societies, locally and on a worldwide level.... [W]hy isn't sociology again right at the forefront of intellectual life and public debate?...

I would suggest two main ones. First, sociology's star was dimmed by the rise of market-based philosophies from the early 1980s onwards. As a phase of government, market fundamentalism lasted some twenty years-roughly the period covered by the Reagan and Thatcher governments.... If markets settle most aspects of social life, including social justice, the scope of social factors-the prime province of sociology - is correspondingly reduced. The economic, as it were, predominates heavily over the social.

A second reason I would single out is the impotence many people feel in the face of the future. There are no longer utopian projects that would supply a source of direction.... [S]ociological thinking... was regularly stimulated by an engagement with those who wanted to change the world for the better. ...

What is the remedy...? Market fundamentalism is disappearing from the scene. The stage is set for a return to the social. After all, even the IMF these days gives social and political factors a significant place in development processes���and Mrs Thatcher is long gone....

The answer for me is a return to the style of thinking that originally drove the sociological enterprise. A little bit more utopian thinking might help too... We need more positive ideals in the world... that link to realistic possibilities of change...

I would be less alarmed by Tony Giddens if I believed that he knew that, of the two Bretton Woods institutions, it is the IMF���the 'Fund'���that is focused on international capital flows, reserves, and exchange rates; and that it is the IBRD���the 'World Bank'���that is focused on development processes.

I would be less frightened of Tony Giddens if I believed he took the extraordinary reach and power of market exchange in our world to be something important and interesting to analyze, rather than something regrettable that we mention as little as possible now that Mrs. T. no longer lives in Downing Street, and that we deal with by boxing it up into obsolete Marxist categories.

And I might even be comfortable with Tony Giddens's having access to metal and not just plastic knives if there was less visible nostalgia for the days when so many sociologists were stooges in search of a Stal... well, that's not completely fair.

But let us roll the videotape, and remember just what the 'utopian thinking' of the 1970s that Giddens sees as a source of energy for sociology really was���from The Capitalist World Economy that I was assigned in my junior year:

Immanuel Wallerstein, 'Modernization: Requiescat in Pace': [Modernization theory] was unquestionably a worthy parable... manipulated by the masters of the world.... [T]he time has come to put away childish things... look reality in the face. We do not live in a modernizing world but in a capitalist world.... The problem for oppressed strata is not how to communicate within this world but how to overthrow it....

[O]nce capitalism was consolidated as a system and there was no turnback... the proletarianization of labor and the commercialization of land.... It will in fact only be with a socialist world-system that we will realize true freedom (including the free flow of the factors of production). This is indeed what lies behind Marx's phrase about moving from the 'realm of necessity into the realm of freedom'.

I do not intend here to preach a faith. Those who wish will believe. And those who do not will struggle against it. I wish rather to suggest an agenda of intellectual work for those who are seeking to understand the world-systemic transition from capitalism to socialism in which we are living, and thereby to contribute to it....

This then brings me to the fourth system based on a socialist mode of production, our future world government. We are living in the transition to it, which will continue for some time to come. But how are we relating to it? As rational militants contributing to it or as clever obstructors of it (whether of the malicious or cynical variety)?...

That was what Tony Giddens's type of "sociology" was at the very start of the 1990s. Good riddance!

Should-Read: Andrew Prokop: Senate tax reform vote count:...

Should-Read: Andrew Prokop: Senate tax reform vote count: key Republicans to watch: "At least 10 GOP senators have expressed some concerns about the current Senate bill...

...Now McConnell is trying to win over these holdouts by modifying the bill to meet their concerns.... The next big step is a procedural vote in the Senate Budget Committee.... Two GOP senators who���ve expressed concerns... Ron Johnson... Bob Corker... and if either votes ���no,��� the bill would be stopped... for the time being.... [After] committee, McConnell would then have to round up 50 votes to get it through the full Senate. Since no Democratic support is expected, that would entail winning 50 of 52 Republicans. Any three defections would likely kill the bill. Here, then, are the key GOP senators who need to be won over....

Retiring deficit hawks with nothing to lose: Bob Corker and Jeff Flake.... The quieter, non-retiring deficit hawks: Jerry Moran, James Lankford, Todd Young.... They���ll naturally feel more pressure to support their party���s top legislative priority. Additionally, none of them have much of a history of bucking GOP leadership. Still, for the time being, they do need to be won over.... The pass-through-ers: Ron Johnson and Steve Daines.... The moderates: Susan Collins and Lisa Murkowski.... The wild card: John McCain...

Should-Attend: Mohamed Saleh and Jean Tirole: Taxing Unwa...

Should-Attend: Mohamed Saleh and Jean Tirole: Taxing Unwanted Populations: Fiscal Policy and Conversions in Early Islam: "Hostility towards a population, whether on religious, ethnic, cultural or socioeconomic grounds...

...confronts rulers with a trade-off between taking advantage of population members' eagerness to keep their status and inducing them to "comply" (conversion, quit, exodus or any other way of pleasing the hostile rulers). This paper first analyzes the rulers' optimal mix of discriminatory and non-discriminatory taxation, both in a static and an evolving environment. It thereby derives a set of unconventional predictions. The paper then tests the theory in the context of Egypt's conversion to Islam after 641 using novel data sources. The evidence is broadly consistent with the theoretical predictions...

Should-Read: Angus Johnston: @studentactivism on Twitter:...

Should-Read: Angus Johnston: @studentactivism on Twitter: "One more quick thing about that NYT profile of Hovater...

...Remember the podcast the author mentions?... Heimbach does most of the talking on the podcast. Hovater is mostly his sidekick and foil. I never heard them disagree. Here's what I did hear: Heimbach is obsessed with Jews, and with supposed Jewish domination of society. He uses the phrase "the Jew" a lot. He's a big fan of Hitler. He drops quotes multiple times into both episodes, usually banal ones. "As Adolf Hitler says..." Both of them are aggressively hostile toward gays and feminists, aspects of their bigotry that are never mentioned in the Times piece. It's clear that they're hoping for and working toward a Nazi takeover of the US. Heimbach uses the term "Weimerica" to describe the US today. The themes of the podcast (mostly) aren't absent from the piece. They are, however, muted in the story. Alluded to rather than illustrated.

What emerges in the podcast, and what IS absent from the story, is a clear sense of Heimbach and Hovater's organizing project, and their political vision.

As I said in my previous thread, these guys aren't "Nazi sympathizers," as the article put it. They're Nazis. They're Nazis. Nazis organizing other Nazis..."