J. Bradford DeLong's Blog, page 442

(Early) Monday Smackdown Watch: John Taylor Edition

Live from the Republican' Economists' Self-Made Clown Show: I still cannot believe that Stanford economist (and Fed Chair "finalist") John Taylor presents these "trend" lines in public. Something is just not right:

Weekend Reading: Context for Matthew Klein Talking to Stephen Kotkin about Stalin

Matthew Klein: Some context for our chat with Stephen Kotkin about Stalin: "We recently had the chance to chat with Princeton historian Stephen Kotkin about the second volume of his biography of Joseph Stalin: Waiting for Hitler...

...The podcast will go live tomorrow, but we thought those who haven���t yet had the chance to read Paradoxes of Power ��� Kotkin���s first volume in the three-volume series ��� might appreciate a quick primer. There will also be a post on Monday covering material from Waiting for Hitler that we didn���t get a chance to discuss during our chat.

Kotkin���s core argument in Paradoxes of Power is that the first fifty years of Stalin���s life can be explained by his fanatical devotion to Marxist-Leninism, his intelligence, and his incredible work ethic.

(Kotkin expands this thesis in Waiting for Hitler by arguing that Stalin���s personality was warped by his long experience governing as a dictator.)

Stalin thought of Lenin as his teacher, a man who demonstrated by example how to relentlessly pursue his objectives despite seemingly overwhelming opposition. Stalin was the only senior party member who supported Lenin���s plan to launch the Bolshevik coup in November 1917. Lenin and Stalin found nothing inherently desirable about violence for its own sake, but as ���principled��� revolutionaries, they would always be willing to do whatever was needed to seize power and advance their agenda.

Stalin also absorbed his teacher���s ideology: Capitalists were the enemy. Bolshevism, because it was anticapitalist, would always be the target of aggression by every other country, in this worldview. Similarly, Stalin, along with the other true believers, worried about the danger of subversion by former capitalists who hadn���t been assimilated into the ���proletariat���. Any independent source of authority or power was a threat, because it could be turned away from the Leninist party vanguard and potentially aid the capitalists.

Kotkin also makes it clear how intelligent Stalin was. Despite unremarkable origins, he was admitted to the seminary at Tiflis (now Tbilisi) and did well in his coursework. He also had modest early success as a poet. Most importantly, he was a voracious reader who absorbed what he learned. He spent his years in internal exile before 1917 studying history, international relations, and of course Marxist and Leninist theory.

This ties in with Stalin���s formidable work ethic. He was always the most prepared person in every meeting he attended. He stayed up late into the night reading memos on everything from foreign intelligence reports to aircraft designs to grain statistics, and took careful notes in blue pencil.

Kotkin argues Stalin was able to accumulate so much power in the 1920s because, unlike the other senior Bolsheviks ��� most obviously Trotsky ��� Stalin was willing to do the grunt work of administration. Instead of making grandiose speeches and writing pamphlets, Stalin sat in his office and made sure the young bureaucrats were being assigned to the right jobs and the technocratic holdovers from the Tsarist era were following orders.

This difference also helps explains the extreme animosity between Stalin and Trotsky. Trotsky (wrongly) thought Stalin was uncultured and lacked mastery of Marxist theory. Stalin thought Trotsky was a pompous blowhard who never did anything useful and dared to consider himself Lenin���s equal.

No one seriously resisted Stalin���s rise to preeminence in the 1920s after Lenin���s incapacitating strokes because it wasn���t clear who would handle the responsibilities of making the Party organisation work properly. Stalin was indispensable. This indispensability, when combined with Stalin���s skill at presenting himself as Lenin���s faithful pupil and the Bolsheviks��� inability to distinguish between disagreement and treason ��� another Leninist legacy ��� prevented the emergence of any coherent opposition.

Of course, if Stalin���s colleagues in the leadership had had any inkling of what was to come ��� such as their own forced confessions for treason and subsequent execution ��� they could have easily removed Stalin at any point in the 1920s. Stalin had offered to resign multiple times but was begged to stay.

Kotkin argues nobody feared Stalin because his despotic tendencies didn���t develop until much later. His personality was perfectly ���normal��� until the mid-1930s, and would have given no hint of his darker potential. Rather than something inherent in Stalin the man, the despotism, in Kotkin���s view, was a product of the system in which Stalin operated. It was the experience of wielding the power of life and death that changed Stalin from a brutal dictator into a capricious monster. (But that���s the story of Waiting of Hitler.)

By the start of Volume 2 in the late 1920s, Stalin felt comfortable enough in his position to take an enormous risk: he declared that the Soviet Union would enslave the peasants.

His word choice was a little different, but our characterisation captures the substance of what Stalin had in mind. Peasants would no longer own land, they would have no ability to leave the countryside, and (in the original plan) they would donate everything they produced above subsistence to the state. This was a new policy, but it was consistent with Bolshevik principles.

.As you will hear Kotkin explain at the beginning of our conversation, the reintroduction of serfdom would have happened sooner had ���Soviet power��� been stronger. But Stalin realised that a few years of peace were needed to rebuild before the party had the resources to enforce its policies in the countryside.

The Russian Revolution was not a single event. To oversimplify, there was an urban/industrial revolution, eventually resulting in the Soviet Union run by the Bolsheviks, and there was a peasant revolution that led to land redistribution from the aristocratic magnates to the farmers who actually worked the land. The revolution in the countryside, not the Bolshevik coup, was the event that affected the large majority of the population.

The Bolsheviks had won the civil war and consolidated their power in the cities by the early 1920s, but their regime was fragile. Trotsky���s diplomacy with Germany at the end of WWI had been a disaster, leading to large territorial losses. The USSR lost additional territory, and men, after being defeated in battle by newly-independent Poland. Disease and famine in the early 1920s were extreme.

Lenin concluded they should therefore make (temporary) peace with the peasants and allow ���capitalism��� in the countryside. This ���New Economic Policy���, which was vehemently opposed by Trotsky and other members of the so-called ���left opposition���, was considered the domestic equivalent of the Brest-Litovsk treaty ��� a humiliating but necessary measure to allow the new socialist state time to develop.

As with Eastern Europe, the expectation was that the Soviets would make revisions to this ���agreement��� once the correlation of forces had changed. By the time Stalin decided to act, the debate was about whether the Bolsheviks had the resources to subdue the countryside. Sceptics, such as Bukharin, did not disagree about whether collectivisation was the right thing to do but about the ability of the Soviet regime to pull it off at the end of the 1920s.

(Mass starvation does not mean the sceptics were ���right��� in any meaningful sense, since they shared Stalin���s belief that private property in the countryside was inherently bad and had to be abolished.)

There is lots more in Paradoxes of Power, but this should get you up to speed for our chat.

For the Weekend: Stephen Vincent Benet: The Devil and Daniel Webster IX

For the Weekend: Stephen Vincent Benet: The Devil and Daniel Webster IX http://gutenberg.net.au/ebooks06/0602901h.html: "And with that the fire burned blue and the door blew open and twelve men entered, one by one...

...If Jabez Stone had been sick with terror before, he was blind with terror now. For there was Walter Butler, the loyalist, who spread fire and horror through the Mohawk Valley in the times of the Revolution; and there was Simon Girty, the renegade, who saw white men burned at the stake and whooped with the Indians to see them burn. His eyes were green, like a catamount's, and the stains on his hunting shirt did not come from the blood of the deer. King Philip was there, wild and proud as he had been in life, with the great gash in his head that gave him his death wound, and cruel Governor Dale, who broke men on the wheel.

There was Morton of Merry Mount, who so vexed the Plymouth Colony, with his flushed, loose, handsome face and his hate of the godly. There was Teach, the bloody pirate, with his black beard curling on his breast. The Reverend John Smeet, with his strangler's hands and his Geneva gown, walked as daintily as he had to the gallows. The red print of the rope was still around his neck, but he carried a perfumed handkerchief in one hand. One and all, they came into the room with the fires of hell still upon them, and the stranger named their names and their deeds as they came, till the tale of twelve was told. Yet the stranger had told the truth���they had all played a part in America.

"Are you satisfied with the jury, Mr. Webster?" said the stranger mockingly, when they had taken their places.

The sweat stood upon Dan'l Webster's brow, but his voice was clear.

"Quite satisfied," he said. "Though I miss General Arnold from the company."

"Benedict Arnold is engaged upon other business," said the stranger, with a glower. "Ah, you asked for a justice, I believe."

He pointed his finger once more, and a tall man, soberly clad in Puritan garb, with the burning gaze of the fanatic, stalked into the room and took his judge's place.

"Justice Hathorne is a jurist of experience," said the stranger. "He presided at certain witch trials once held in Salem. There were others who repented of the business later, but not he."

"Repent of such notable wonders and undertakings?" said the stern old justice. "Nay, hang them���hang them all!" And he muttered to himself in a way that struck ice into the soul of Jabez Stone.

Should-Read: Kim Clausing gets one wrong. Greg Mankiw���I...

Should-Read: Kim Clausing gets one wrong. Greg Mankiw���I leave Casey Mulligan to one side, for I will not call him an "economist"���does not say that "it is possible for a 1 dollar reduction in corporate taxes to result in a more than 1 dollar increase in wages". He says, instead: in a model in which the U.S. is a small open economy, in which all corporate profits are a return to capital investment (rather than some of them being rents, returns to bearing risk, or market power), in which the revenue lost is made up by other taxes that do not cause economic distortions, then at least the "static" assessment is that a one dollar reduction in corporate taxes generates a 1/(1-t) dollar increase in wages.

Now since the U.S. is not a small open economy, since a substantial share of corporate profits are not returns to corporate investment, since steps to rebalance the public fisc will induce other economic distortions, and since misinterprets what a "static" assessment is (or���more likely, I think���made an algebraic error), he in fact does not say that it is conceptually possible that "cutting [U.S.] corporate taxes [would] raise workers' incomes". Nevertheless, he leaves himself open to Clausing's thumbnail as a summary:

Kim Clausing: Would Cutting [U.S.] Corporate Taxes Raise Workers' Incomes?: "Overall, it is difficult to document a relationship between lower corporate taxes and higher wages...

...Some... including Jason Furman, Lawrence Summers, and Paul Krugman, found it implausible to argue that for every dollar of corporate tax cut, workers wages would rise by at least $2.50, and perhaps as much as $5.50, as implied by the CEA's report. Other economists have argued that it is possible for a $1 reduction in corporate taxes to result in a more than $1 increase in wages (see for instance Casey Mulligan and Greg Mankiw), but even most of those economists do not back the wildly optimistic numbers of the CEA report.

Some cross-country analyses report a pattern between higher corporate taxes and lower wages, but these studies have some important limitations; I have found no empirical evidence in my own research to support the idea that countries with higher corporate tax rates have lower wages...

Another Question I Didn't Have Time to Ask Ask Alice Rivlin: Possibilities for Technocracy

You said that technocracy was still possible because there was still substantial agreement on models���and as an example you pointed out that there used to be strong disagreements about monetary policy and whether policy should be made by a "rule", and now there isn't much of anybody who thinks so.

But there is now a 50/50 chance that the next Fed Reserve Chair will be John Taylor, who does believe in a rule���his rule, in spite of what I at least see as a total absence of any empirical or theoretical support for the claim that would produce good outcomes.

And we now have Kevin Hassett running the CEA. It was clear back in 1999 when he wrote Dow 36000 that he was not a normal economist. In Dow 36000 he replaced dividends with earnings in the Gordon stock valuation equation. He specified the equity return premium as a factor that lowers stock prices, rather than a force that lowers stock and raises safe bond prices. Both of these are analytical mistakes that a competent, honest economist would not make.

Leave to one side whether it is the "competent" or the "honest"���or both���that is at issue here. When Kevin Hassett was seeking support for his CEA bid, assurances were made that CEA estimates would continue to be in the range of near-consensus economic models, and that he understood our common and collective interest in building up the authority and credibility of competent technocratic institutions like CBO; the JCT, OTA, OMB, and CEA staff; TPC, Urban, and the CBPP.

Neither of these assurances have been kept.

Hassett's attacks on the professionalism of TPC are beyond the pale. And Hassett's estimates of the effects of corporate tax cuts are beyond the pale. Consensus estimates are that tax incidence goes about 25% to labor and about 75% to capital, with growth recapturing about 20% of the "static" revenue loss if the lost revenue were to be replaced by non-distortionary lump-sum taxes. A 200 billion dollar corporate tax cut would thus produce a 62.5 billion increase in wages.

Hassett's claim: 975 billion���15 times larger.

And remember the Heritage Foundation "model" of the 2011 Ryan Plan: that it would push the unemployment rate down to 2.8%.

So far, yes, the technocracy has held. But I am not confident that it will not break in the next decade. What can you tell to reassure me?

Should-Read: Equitable Growth: Research on Tap: Promoting...

Should-Read: Equitable Growth: Research on Tap: Promoting equitable growth through tax reform: "Join us on November 6, 2017, for the second event in Equitable Growth���s new 'Research on Tap���' conversation series...

...a space for drinks, dialogue, and debate. The conversation will focus on three questions at the intersection of tax policy, inequality, and growth: What is equitable growth? What can tax reform do to promote it? And how would tax reform motivated by the pursuit of equitable growth compare with the version represented by proposals from the Trump administration and Congress?... Jason Furman... Melissa Kearney... Greg Leiserson...

A Question I Did Have Time to Ask Alice Rivlin

She gave a good answer...

My question:

Barack Obama ran for President with a very strong and firm belief that here were no Red states and no Blue states, only Purple states. And he won the enthusiastic support of the entire Democratic Party for this point of view���that was his biggest applause line at the 2004 Democratic National Convention.

He then attempted to implement centrist policies:

Mitt Romney���s health care policy
John McCain���s climate Policy
Bill Clinton���s tax policy
George H.W. Bush���s foreign policy
Gerald Ford���s support for a Fed that regarded fighting inflation as job 1
Ronald Reagan���s optimism
Entitlement spending growth cuts a la Simpson-Bowles

It sounds to me like Obama was your ideal centrist President. What should Obama have done differently���other than not be Black?

(Early) Monday Smackdown: Male Ex-Old New Republic Editors Are Simply Not Credible Here...

I agree with Matthew Yglesias here: This from Franklin Foer simply does not pass the most-basic "plausibility" test. "I was totally oblivious to what was going on in the office I ran" = "I took and kept a job at which I was totally incompetent". I don't think anybody has ever called Franklin Foer incompetent. And what we are hearing is not about the various editors-in-chief's ignorance. What we are hearing is about the various editors-in-chief's complicity.

��_(���)_/��

Matthew Yglesias: @mattyglesias on Twitter: "I���m a little confused as to what story we���re being told about male OTNR editors��� knowledge of the situation...

...How can you recommend an article whose first paragraph says it was openly known while denying that you knew anything about it?

��_(���)_/�� @adropboxspace: by talking to your inhouse lawyer about what is and isnt an actionable admission.

Jonathan Chait @jonathanchait Replying to @mattyglesias: As I said, everybody heard he was committing adultery. Other details were know by many fewer people. I'm guessing @mcottle would confirm.

Matthew Yglesias @mattyglesias: I understand what you���re saying. It just seems different than what she wrote. But perhaps I���m misreading.

Jonathan Chait @jonathanchait: Many people consider adultery inappropriate.

Matthew Yglesias @mattyglesias: Again, that seems to me to be an odd read of the story. Or consider @ruth_franklin���s account:

Ruth Franklin: I worked for Leon Wieseltier at The New Republic from 2001 until 2014 Leon gave me the opportunity to review books and encouraged me as a writer in a way that no one ever had before. I owe a great deal to his support and his mentorship, and I feel grateful for it. It was no secret that Leon regularly acted inappropriately with many women on staff, including me. He was no Harvey Weinstein, but he made sexualized remarks and in some cases went beyond that. His actions were largely overlooked because he wielded enormous power and because he was often charming, funny, and brilliant. Regardless of what he intended, numerous women found his actions and remarks patronizing, insulting, or damaging. His behavior and the top editors' complicity in it created an environment in which women on staff were constantly undermined. Despite my personal gratitude to Leon, I am sad and angry that he consistently said and did things that made me and so many other women very uncomfortable���or worse. I hope that the era in which such behavior is silently tolerated is coming to an end.

Jonathan Chait @jonathanchait: Ruth worked directly for Leon and knew much more about him than many other people did.

Matthew Yglesias @mattyglesias: Perhaps she���s mistaken (I wasn���t there and I don���t know) but she says it was ���no secret��� and refers to ���complicity��� of ���top editors.���

Jonathan Chait @jonathanchait: oh, Ruth's piece? I assume top editors means either Marty or the editor.

**Matthew Yglesias @mattyglesias: I assume so, too. But that seems interesting and important!

Jonathan Chait @jonathanchait: Right. The typical front of the book staffer would get a lot of Leon's opinions on politics at the weekly meeting, little other interaction

Matthew Yglesias @mattyglesias: I understand. But, like, some of these stories made their way to me (admittedly, a known Leon-hater) so I assume some crossed the hallway.

Bolivia @oliviaLbecker: Replying to @mattyglesias: what���s confusing? Everyone knew and now they���re trying to play hot potato

Yellojkt @yellojkt: Replying to @mattyglesias: Please tell me there was not sexual harassment going on at TNR during the @sullydish era.

��������� ������������ @ArrogantMonkey: Replying to @mattyglesias
���ooooooooooh that���s what you mean by sexual harassment. I thought it was something else.���

West Coast Centrist @WestCoastNormal Replying to @mattyglesias: It will be a deluge of CYA from people who knew and kept quiet or now realize they were oblivious to what was in front of them.

Geli Tripping @Geli_Tripping: Replying to @mattyglesias: He���s the anti-Socrates: he didn���t know that he knew.

Yarbutus @darosenthal: Replying to @mattyglesias: What he wishes he knew is not the behavior but that it was his job to do something.

Abstain on Cy @manhattannada: Replying to @mattyglesias: Anyone ask Hertzberg or Kinsley yet about Wieseltier?

Should-Read: Bill Moyers: LBJ: 'Convince the Lowest White...

Should-Read: Bill Moyers: LBJ: 'Convince the Lowest White Man He's Better Than the Best Colored Man': "We were in Tennessee. During the motorcade, he spotted some ugly racial epithets scrawled on signs... http://www.snopes.com/lbj-convince-the-lowest-white-man/

...Late that night in the hotel, when the local dignitaries had finished the last bottles of bourbon and branch water and departed, he started talking about those signs. ���I���ll tell you what���s at the bottom of it,��� he said. ���If you can convince the lowest white man he���s better than the best colored man, he won���t notice you���re picking his pocket. Hell, give him somebody to look down on, and he���ll empty his pockets for you���...

Another Question I Do Not Have Time to Ask Alice Rivlin

Barack Obama came into office hoping to follow:

Mitt Romney���s health care policy
John McCain���s climate Policy
Bill Clinton���s tax policy
George H.W. Bush���s foreign policy
Gerald Ford���s concern for avoiding too high-pressure an economy
Ronald Reagan���s optimism

with

a very strong belief that here were no ed states and no Blue states, only purple states.

What should Obama have done differently?