J. Bradford DeLong's Blog, page 45

June 2, 2020

Acting Comptroller Brian Brooks Is Way Out of Line

Equitable Growth��s Amanda Fischer finds the acting Comptroller of the Currency going way beyond his competence, apparently in order to try to curry favor with his political masters. It is his job to help avoid unnecessary negative financial and economic fallout from necessary public health measures. It is not his job to try to put constraints that would prevent undertaking necessary and desirable public health measures:

Amanda Fischer: ��About this letter from Acting @USOCC head Brian Brooks to mayors & county officials... https://twitter.com/amandalfischer/status/1267831757950328832: ��I have not seen such an opportunistic, inappropriate & frankly dangerous statement from a financial regulatory official maybe ever https://occ.gov/news-issuances/news-releases/2020/nr-occ-2020-73a.pdf. Brooks wrote to state & city officials basically telling them, "nice economy you have there; I wouldn't want anything to happen to it." It should be read as more of a threat than a warning. And it is obviously theatrics meant to endear himself to the President. Brooks is telling mayors & county officials that there may be a banking crisis if they don't reopen, as commercial businesses default on loans & cause a cascade of defaults that elected officials should consider.

A couple points on why Brooks is wildly inappropriate:

First, he's not an epidemiologist, and the OCC is independent of the Executive branch. He has no idea if reopening is actually worse for the economy. In fact, plenty of economists have cautioned against premature reopening as being bad for long-term growth & public health.

Second, it is not mayors' or county officials' responsibility to worry about financial stability. His examiners should do a better job of predicting losses, and the OCC and Federal Reserve should do a better job of ensuring banks are well-capitalized. Don't put this on mayors. It is also rich given the actions taken by the OCC and Federal Reserve to deplete banks' loss-absorbing capital, including allowing banks to continue to pay out dividends given all the risks Brooks cites in this letter.

Finally, the letter is wild, considering the debate in Congress right now. A simple way to keep the economy on ice is to ensure people & small businesses have adequate money to pay their bills. If people have money, creditors have money, & banks will be fine. Brooks' own political leadership seems to oppose extending UI, direct payments or other relief��relief that would ease pressure on the banking sector. Instead, Brooks is trying to threaten states and cities to reopen without regard for public health recommendations��

#coronavirus #macro #noted #orangehairedbaboons #2020-06-02

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Published on June 02, 2020 09:29

Why Do We Need Automatic Triggers?

The first and most crucial tasks of economic policy in the coronavirus public health crisis are to keep the supply shock from becoming a distributional shock and from becoming a demand shock as well. Successfully accomplishing these ranks requires, first, a great increase in social insurance spending: in a country as rich as this one is, nobody should be thrown in the poverty and destitution and have to deal with those problems as well as with the disease. The expansion of social insurance spending cannot be precisely targeted: lots of people will wind up getting more than their fair share. Too bad: it is inappropriate to make the best the enemy of the good and the attainable here, and to make it such that in order to prevent some from getting more than their share, we ensure that many who need support get much much less.

Somewhat similarly, the necessary expansion of aggregate demand in order to maintain and return the economy to as close to full employment as possible will attract, in fact has already attracted, critics. Preventing the coronavirus shock from becoming a major and prolonged demand shock will be inconsistent with the government not spending a lot more, will be inconsistent with a stability in the value of the national debt, will be inconsistent with avoiding a long run increase in taxes, may well be inconsistent with any form of normalizing interest rates to gratify rentiers, And might be inconsistent with maintaining a 2% per year Inflation target. Once again, the proper societal response would be: too bad. As John Maynard Keynes said: what we can do, we can afford in the sense of arranging government finances to make it so.

Our task is to arrange government finances so that Americans can do as much as possible, and not to hit what are some times artificial and are sometimes intermediate policy objectives targets:

Heather Boushey: Off-Kilter Podcast: Beyer + Boushey https://medium.com/@OffKilterShow/beyer-boushey-8be89af1e80: ��Continuing Off-Kilter��s ongoing series on poverty and inequality in the age of COVID19�� This week brought the somber news that 2.1 million more Americans filed for unemployment in the past week. This brings the total number of unemployment claims over the last 10 weeks to 40.8 million �� more than a quarter of the American workforce. Meanwhile, 1 in 5 families, including 1 in 3 families with children, are reporting they can no longer afford adequate food.... We run through some of our listeners�� top FAQ �� like, what are automatic triggers and why do we need them?... Rebecca sat down with Democratic Congressman Don Beyer, Vice Chair of the U.S. Congress Joint Economic Committee (and self-described ��econ junkie��) and Heather Boushey, president & CEO of the Washington Center for Equitable Growth and author of Unbound: How Inequality Constricts Our Economy and What We Can Do About It. This episode��s guests: Congressman Don Beyer (D-VA), vice chair, U.S. Congress Joint Economic Committee. Heather Boushey, president & CEO, Washington Center for Equitable Growth��

#coronavirus #equitablegrowth #macro #noted #socialinsurance #2020-06-02

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Published on June 02, 2020 09:27

Tracking the Labor Market Spread of the Coronavirus Shock

Nick Bunker: May 2020 Jobs Day Preview: Tracking the Spread of the Coronavirus Shock https://www.hiringlab.org/2020/06/02/may-2020-jobs-day-preview/#sendgrid_mc_email_subscribe: ��The coronavirus has devastated the US economy, leading to the destruction of over 21 million payroll jobs since February.... The concentration of job losses so far is unsurprising, with the leisure and hospitality sector seeing total employment drop by almost 50%. Employment in the utilities sector has barely fallen, losing less than 1% of jobs. If the cumulative employment drop starts to pile up in utilities or other indirectly affected sectors, that could mean that more of the aggregate job loss is due to a systematic, economy-wide shock rather than a sector-specific one. Cumulative job loss will also put the eventual jobs recovery in a fuller context.... Hopes for a V-shaped recovery were already fleeting, but if more and more employers are shedding jobs, they might be gone for good.��Elsewhere in the report, I��ll be looking for the answers to these questions: * Will unemployment due to reasons other than temporary layoff start to rise, as job loss becomes permanent? * Will employers continue to reduce work hours and shift more workers to involuntary part-time work? * How much further will the drop in the labor force participation rate hold down the rise in the unemployment rate?��

#forecasting #labormarket #macro #noted #2020-06-02

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Published on June 02, 2020 08:00

May 31, 2020

Note to Self: Books & Articles to Save...

Note to Self: Without access to the Berkeley library, I feel that my brain is 2/3 gone. And it is time-consuming to... take steps...

Daisy, Daisy, give me your answer do...

John Maynard Keynes: Collected Works https://github.com/braddelong/private-files/tree/master/keynes-cw...

books #cognition #coronavirus #notetoself

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Published on May 31, 2020 20:54

Herbert Hoover: As Bad to Ally with Stalin and Churchill Against Hitler as to Ally with Hitler Against Stalin and Churchill: Hoisted from the Archives from 2018

Insane Clown Posse

Herbert Hoover: As Bad to Ally with Stalin and Churchill Against Hitler as to Ally with Hitler Against Stalin and Churchill https://www.bradford-delong.com/2018/08/herbert-hoover-as-bad-to-ally-with-stalin-and-churchill-against-hitler-as-to-ally-with-hitler-against-stalin-and-churchill.html: I was reading Herbert Hoover (1964): Freedom Betrayed https://books.google.com/books?isbn=0817912363 on the plane, and it is really clear to me why nobody wanted Hoover to publish it during his lifetime and why his heirs buried it for half a century. I will tell you what I think. I think Hoover does not quite dare say:

When Hitler attacked Stalin in June 1941, the U.S. should have told Britain to cool it��embargoed Britain until, and then offered it security guarantees when, it made peace with Germany. And then the U.S. should have supported Hitler in his war on Communism, by far the worst of the three totalitarianism of Communism, Naziism, and New Dealism. Afterwards, Hitler and his successors would have had their hands full ruling their Eurasian empire, and Naziism would have normalized itself, and Communism would be gone. Too bad about Nazi rule over the French, Belgians, Dutch, Danes, and Norwegians, but that would have been a price well worth paying...

He does not quite dare say it, but he is thinking it. It is Jeanne Kirkpatrick's: "we should always and everywhere support authoritarian regimes and movements against communist regimes and movements" turned up to 11.

And he tiptoes way way way up to it and almost gets there...

Herbert Hoover:

When American alliance with Russia in the Second World War loomed up at the time of Hitler��s attack upon Stalin, I stated in a nation-wide address on June 29, 1941: "Now we find ourselves promising aid to Stalin and his militant Communist conspiracy against the whole democratic ideals of the world.... It makes the whole argument of our joining the war to bring the four freedoms to mankind a gargantuan jest.... If we go further and join the war and we win, then we have won for Stalin the grip of Communism on Russia and more opportunity for it to extend in the world.... Statesmanship demands that the United States stand aside in watchful waiting, armed to the teeth, while these men exhaust themselves. Then the most powerful and potent nation in the world can talk to mankind with a voice that will be heard. If we get involved in this struggle we, too, will be exhausted and feeble. To align American ideals alongside Stalin will be as great a violation of everything American as to align ourselves with Hitler...

George Nash on Herbert Hoover on WWII:

As it happened, Hoover had been planning another major address on the war to the American people. He now saw an opportunity to change the course of world history. To his confidant John C. O��Laughlin he wrote on June 26[, 1941]:

I am convinced Germany will defeat Russia and dispose of that infecting center of Communism. And I am convinced that at the end of the campaign, which I think will move rapidly, that Hitler will propose terms to the British that they will accept. I am hoping for this speech only that it may help stay our hands from the trigger until these events arrive...

It was a remarkable disclosure. If Hoover��s geopolitical scenario played out as he expected, Nazi Germany would soon be the unchallenged master of continental Europe, Great Britain would be forced into a modus vivendi, and the war would end....

Three nights later, Hoover spoke to the American people on national radio. For the rest of his days, he considered this speech the most important one of his life.... He exhorted his fellow citizens not to make an alliance with the Soviet Union��one of the bloodiest tyrannies and terrors ever erected in history.�� Why should we hasten to the rescue of Stalin��s ��militant Communist conspiracy against the whole democratic ideals of the world��?

To collaborate now with the Soviets would make ��the whole argument of our joining the war to bring the four freedoms to mankind a gargantuan jest.... Joining in a war alongside Stalin to impose freedom is a travesty.��... ��Evil ideas contain the germs of their own defeat,�� he asserted. Hitler might prove victorious on the European continent, but he would then be saddled with tens of millions of rebellious subjects filled with ��undying hate.��

When peace came, Hoover prophesied, the Nazi system would ��begin to go to pieces.�� The once-free, conquered nationalities of Europe would never accept ��a new order based on slavery.... Conquest always dies of indigestion.�� No longer was the world conflict an unambiguous struggle ��between tyranny and freedom,�� Hoover declared in August. The alliance of the British with the Russians against Germany had destroyed ��that illusion.��...

Be patient, he urged Americans in mid-September; Hitler was ��on his way to be crushed by the vicious forces within his own regime.�� The danger of ��ultimate totalitarian success�� was ��very much less than even ten weeks ago.�� The ��fratricidal war�� between Hitler and Stalin was weakening both of them every day.... What will happen, he asked, ��to the millions of enslaved people of Russia and to all Europe and to our own freedoms if we shall send our sons to win this war for Communism?��...

Memo to Self: Timothy Walch & Dwight M. Miller, eds.: Herbert Hoover and Franklin D.��Roosevelt: A Documentary History (Westport, CT: Greenwood Press, 1998), 209��11.

Memo to Self: All of Hoover's mentions of "Jews" in Freedom Betrayed:

The Nazi regime, with its destruction of personal liberty, its materialistic and militaristic aspects, and its persecution of the Jews, has been fully described elsewhere...

The Liberty Magazine article was an analysis of the rising dangerous ideologies of Hitler and Stalin, saying in part:... Most of us intensely dislike every color of Nazism, Fascism, Socialism, and Communism. They are the negation of every ideal that we hold. They are the suppression of all liberty. In Germany the persecution of the Jews... in Russia the wholesale executions, the destruction of... worship... all of them outrage our every sense of justice...

At this moment in history, Hitler could count his new acquisitions as some 15,000,000 people from Poland, including 5,000,000 Jews in Poland and Lithuania. But Stalin��s gains were greater. He had annexed six nations totaling about 35,000,000 people, who ultimately were reduced from freedom to Communism...

Early in the war, the Jewish community in the United States had started a renewed and determined drive to force Britain to reverse her policies of restricted immigration of Jews to Palestine. In the Congress majorities of the Foreign Relations Committee of the House were supporting pleas for a Jewish homeland...

About 250,000 Jews had been buried in the Ghetto by artillery and bombs...

We noted that the population of Poland was diminished by the war, and as a result of Tehran and Yalta, from about 35,000,000 to 23,000,000. This 12,000,000 decrease was partly due to the Russian annexation of East Poland; partly to the death in battle and air raids and the execution of about 3,000,000 Jews by the Germans; and the transport of 1,400,000 Poles by the Russians to slave camps in Siberia��few of whom ever returned. We were able to confirm that some 6,000,000 Poles were expelled from the Russian-annexed area and some 6,000,000 Germans were driven from the Polish-annexed German��area. We found from the press reports and many eye witnesses that both of these human migrations were pitiable beyond any power to describe...

Note to Self: Hoover on Mussolini:

In 1938 Benito Mussolini, acknowledged founder of Fascism, was at the peak of his dictatorial glory. He had, beginning in 1922, introduced great reforms into Italy. He had reorganized the government and the army; established integrity in public officials and efficiency in the railways and public utilities; encouraged industry and agriculture. Because of these measures Italy had gained in prosperity.

Due to failures in the parliamentary form of government, Mussolini��s system had been adopted by a large part of Europe, including Germany. Few Americans observed that the economic part of Fascism was simply the adoption of the measures applied in the United States, Britain and other democracies when combatants in the First World War. In May 1936 Italy had seized Ethiopia, and as a result economic sanctions had been imposed on her by the League of Nations, but they were short-lived.

Mussolini was in 1938 making common cause with Hitler against Communism. He was a founding partner of the Anti-Comintern Pact, and jointly, he and Hitler had successfully backed General Francisco Franco in the defeat of the Russian-supported Communist revolution in Spain...

Note to Self: Hoover on the Economic Consequences of the New Deal:

No one will today doubt the enmity of many of Mr. Roosevelt��s associates to free enterprise.... The introduction of this power or compulsion economy into free enterprise is not always direct. It is often indirect through monetary and credit policies and spending. It is in part by beguilement of subsidies with public money.... My constant curiosity is whether it leads to complete Fascism, or to complete Socialism, or just plain economic nonsense.

In any event these children of men have erected a new Tower of Babel which they also camouflaged under the European term, Planned Economy. The true name is Coerced Economy. The headlines tell us of its bricks and mortar��Government Devalues Currency; Government Manages Currency; Government Manages Credit; Government Deficits; Government Debt Double Great War; Government Forced Monopolies in the N.R.A.; Government Dictation to Business, to Labor, to Farmers; Government Competes in Business with Citizens; Government Fixes Prices; Government Restricts Production; Government Pump Priming; Government Controls Elections; Abundant Life; Objectives.

It mixes all the stimulating drinks on the bartender��s shelf. This does not make for sobriety. You will find every one of these powers and these economic ideas somewhere along the Berlin-Rome-Moscow axis. And to force these ideas on America you have seen attempts to control our Courts, to control our Congress, to control our elections, to control our public opinion with mass propaganda and slogans. All that at least has a faint odor of totalitarian government��

#fascism #hoistedfromteharchives #moralresponsibility #orangehairedbaboons #politicaleconomy #2020-05-31

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Published on May 31, 2020 08:08

May 30, 2020

John Maynard Keynes: How Much Does Finance Matter?

John Maynard Keynes: How Much Does Finance Matter https://github.com/braddelong/public-files/blob/master/readings/article-keynes-finance-matter.pdf: ��Where we are using up resources, do not let us submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income, with no other denominator of values but this. I should like to see that war memorials of this tragic struggle take the shape of an enrichment of the civic life of every great centre of population. Why should we not set aside, let us say, ��50 millions a year for the next twenty years to add in every substantial city of the realm the dignity of an ancient university or a European capital to our local schools and their surroundings, to our local government and its offices, and above all perhaps, to provide a local centre of refreshment and entertainment with an ample theatre, a concert hall, a dance hall, a gallery, a British restaurant, canteens, cafes and so forth. Assuredly we can afford this and much more. Anything we can actually do we can afford. Once done, it is there. Nothing can take it from us. We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life?��

#economics #economicsgoneright #macro #noted #2020-05-30

THE COLLECTED WRITINGS OF JOHN MA YNARD KEYNES: VOLUME XXVII: ACTIVITIES 1940-1946: SHAPING THE POST-WAR WORLD: EMPLOYMENT AND COMMODITIES: EDITED BY DONALD MOGGRIDGE

Downloaded from https://www.cambridge.org/core. Law Library, Osgoode Hall Law School, York University, on 06 Jun 2018 at 05:18:21, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/UPO9781139524216

Chapter 5: EMPLOYMENT POLICY

Discussions of post-war employment policy began in the course of 1941. While Keynes was in America, the Treasury had preliminary discussions on post-war internal economic problems, but these petered out before his return as other matters were more pressing. However, the Economic Section of the War Cabinet kept up the momentum. As early as February 1941, James Meade, in the first of a long series of memoranda, had turned to the subject. A later memorandum by Meade, dated 8 July 1941 and entitled 'Internal Measures for the Prevention of Unemployment', along with the preliminary Treasury discussions, played a part in the organisation of an inter- departmental Committee on Post-War Internal Economic Problems in October 1941. This Committee was charged with ascertaining what would be the chief internal problems facing post-war economic policy makers, arranging for memoranda to examine these problems and recommending to Ministers the considerations that they should have in mind in framing policy. Meade's July memorandum was one of the first documents circulated to the Committee.
During the early stages of the Committee's work, Keynes himself made a foray into the shape of the post-war world, not for internal Treasury consumption, but as part of a series of BBC broadcasts on post-war planning.

From The Listener, 2 April 1942

HOW MUCH DOES FINANCE MATTER?

For some weeks at this hour you have enjoyed the day-dreams of planning. But what about the nightmare of finance? I am sure there have been many listeners who have been muttering:
'That's all very well, but how is it to be paid for?'

Let me begin by telling you how I tried to answer an eminent architect who pushed on one side all the grandiose plans to rebuild London with the phrase: ' Where's the money to come from?' 'The money?' I said. 'But surely, Sir John, you don't build houses with money? Do you mean that there won't be enough bricks and mortar and steel and cement?'

'Oh no', he replied, 'of course there will be plenty of all that'.

'Do you mean', I went on,' that there won't be enough labour? For what will the builders be doing if they are not building houses?'

'Oh no, that's all right', he agreed.

'Then there is only one conclusion. You must be meaning, Sir John, that there won't be enough architects'. But there I was trespassing on the boundaries of politeness. So I hurried to add: 'Well, if there are bricks and mortar and steel and concrete and labour and architects, why not assemble all this good material into houses?'

But he was, I fear, quite unconvinced. 'What I want to know', he repeated, 'is where the money is coming from'.

To answer that would have got him and me into deeper water than I cared for, so I replied rather shabbily: ' The same place it is coming from now'. He might have countered (but he didn't): 'Of course I know that money is not the slightest use whatever. But, all the same, my dear sir, you will find it a devil of a business not to have any'.

A question of pace and preference

Had I given him a good and convincing answer by saying that we build houses with bricks and mortar, not with money? Or was I only teasing him?

It all depends what he really had in mind. He might have meant that the burden of the national debt, the heavy taxation, the fact that the banks have lent so much money to the Government and all that, would make it impossible to borrow money to pay the wages of the makers of the raw material, the building labour, and even the architects.

Or he might have meant something quite different. He could have pointed out very justly that those who were making houses would have to be supported meanwhile with the means of subsistence. Will the rest of us, after supporting ourselves, have enough margin of output of food and clothing and the like, directly or by foreign trade, to support the builders as well as ourselves whilst they are at work?

In fact was he really talking about money? Or was he talking about resources in general��resources in a wide sense, not merely bricks and cement and architects?

If the former, if it was some technical problem of finance that was troubling him, then my answer was good and sufficient. For one thing, he was making the very usual confusion between the problem of finance for an individual and the problem for the community as a whole. Apart from this, no doubt there is a technical problem, a problem which we have sometimes bungled in the past, but one which today we understand much more thoroughly. It would be out of place to try to explain it in a few minutes on the air, just as it would be to explain the technical details of bridge- building or the internal combustion engine or the surgery of the thyroid gland. As a technician in these matters I can only affirm that the technical problem of where the money for reconstruction is to come from can be solved, and therefore should be solved.

Perhaps I can go a little further than this. The technical problem at the end of this war is likely to be a great deal easier to handle than it was at the end of the last war when we bungled it badly.

There are two chief reasons for this:

The Treasury is borrowing money at only half the rate of interest paid in the last war, with the result that the interest paid in 1941 on the new debt incurred in this war was actually more than offset by the relief to national resources of not having a large body of unemployed. We cannot expect that the position will be so good as this at the end of the war. Nevertheless if we keep good employment when peace comes (which we can and mean to do), even the post-war Budget problem will not be too difficult.

And there is another reason also. In 1919 public opinion and political opinion were determined to get back to 1914 by scrapping at the first possible moment many of the controls which were making the technical task easier. I do not notice today the same enthusiasm to get back to 1939. I hope and believe that this time public opinion will give the technicians a fair chance by letting them retain so long as they think necessary many of the controls over the financial machinery which we are finding useful, and indeed essential, today.

What can we afford to spend?

Now let me turn back to the other interpretation of what my friend may have had at the back of his head��the adequacy of our resources in general, even assuming good employment, to allow us to devote a large body of labour to capital works which would bring in no immediate return.

Here is a real problem, fundamental yet essentially simple, which it is important for all of us to try to understand. The first task is to make sure that there is enough demand to provide employment for everyone. The second task is to prevent a demand in excess of the physical possibilities of supply, which is the proper meaning of inflation. For the physical possibilities of supply are very far from unlimited. Our building programme must be properly proportioned to the resources which are left after we have met our daily needs and have produced enough exports to pay for what we require to import from overseas.

Immediately after the war the export industries must have the first claim on our attention. I cannot emphasise that too much. Until we have rebuilt our export trade to its former dimensions, we must be prepared for any reasonable sacrifice in the interests of exports. Success in that field is the clue to success all along the line.

After meeting our daily needs by production and by export, we shall find ourselves with a certain surplus of resources and of labour available for capital works of improvement. If there is insufficient outlet for this surplus, we have unemployment. If, on the other hand, there is an excess demand, we have inflation.

To make sure of good employment we must have ready an ample programme of re-stocking and of development over a wide field, industrial, engineering, transport and agricultural�� not merely building. Having prepared our blue-prints, covering the wholefieldof our requirements and not building alone��and these can be as ambitious and glorious as the minds of our engineers and architects and social planners can conceive��those in charge must then concentrate on the vital task of central management, the pace at which the programme is put into operation, neither so slow as to cause unemployment nor so rapid as to cause inflation. The proportion of this surplus which can be allocated to building must depend on the order of our preference between different types of project.

With that analysis in our minds, let us come back to the building and constructional plans. It is extremely difficult to predict accurately in advance the scale and pace on which they can be carried out. In the long run almost anything is possible. Therefore do not be afraid of large and bold schemes. Let our plans be big, significant, but not hasty. Rome was not built in a day. The building of the great architectural monuments of the past was carried out slowly, gradually, over many years, and they drew much of their virtue from being the fruit of slow cogitation ripening under the hand and before the eyes of the designer. The problem of pace can be determined rightly only in the light of the competing programmes in all other directions.

The difficulty of predicting accurately the appropriate pace of the execution of the building programme is extremely tiresome to those concerned. You cannot improvise a building industry suddenly or put part of it into cold storage when it is excessive. Tell those concerned that we shall need a building industry of a million operatives directly employed��well and good, it can be arranged. Tell them that we shall need a million-and-a-half or two million��again well and good. But we must let them have in good time some reasonably accurate idea of the target. For if the building industry is to expand in an orderly fashion, it must have some assurance of continuing employment for the larger labour force.

I myself have no adequate data on which to guess. But if you put me against a wall opposite a firing squad, I should, at the last moment, reply that at the present level of prices and wages we might afford in the early post-war years to spend not less than ��600 million a year and not more than ��800 million on the output of the building industry as a whole. Please remember that this includes repairs and current painting and decorations and replacements as well as all new construction, not merely on houses but also on factories and all other buildings. That, for what it is worth, is my best guess. It covers the activities of private citizens, of firms and companies, of building societies, as well as of local authorities and the central government.

Now these are very large sums. Continued, year by year, over a period of ten years or more, they are enormous. We could double in twenty years all the buildings there now are in the whole country. We can do almost anything we like, given time. We must not force the pace��that is necessary warning. In good time we can do it all. But we must work to a long-term programme.

Not all planning is expensive. Take the talk of two months ago about planning the countryside. Nothing costly there. To preserve as the national domain for exercise and recreation and the enjoyment and contemplation of nature the cliffs and coastline of the country, the Highlands, the lakes, the moors and fells and mountains, the downs and woodlands furnished with hostels and camping grounds and easy access��that requires no more than the decision to act. For the community as a whole the expense is insignificant. Or take the question of compensation, which Mr Osborn discussed so clearly and so fairly a fortnight ago. Compensation uses up no resources. It is out of one pocket into another and costs nothing to the community as a whole.

Even the planning of London to give space and air and perspective costs nothing to the nation's resources and need not involve a charge on the Budget. There is heaps of room, enough and more than enough, in a re-planned London. We could get all the accommodation we need if a third of the present built-up area was cleared altogether and left cleared. The blitz has uncovered St Paul's to the eyes of this generation. To leave it so will cost nothing to the community as a whole. To build may be costly. Let us offset that expense by a generous policy, here and there, of not building.

Where we are using up resources, do not let us submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income, with no other denominator of values but this. I should like to see that war memorials of this tragic struggle take the shape of an enrichment of the civic life of every great centre of population.

Why should we not set aside, let us say, ��50 millions a year for the next twenty years to add in every substantial city of the realm the dignity of an ancient university or a European capital to our local schools and their surroundings, to our local government and its offices, and above all perhaps, to provide a local centre of refreshment and entertainment with an ample theatre, a concert hall, a dance hall, a gallery, a British restaurant, canteens, cafes and so forth.

Assuredly we can afford this and much more. Anything we can actually do we can afford. Once done, it is there. Nothing can take it from us. We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life?

Yet these must be only the trimmings on the more solid, urgent and necessary outgoings on housing the people, on reconstructing industry and transport and on re-planning the environment of our daily life. Not only shall we come to possess these excellent things. With a big programme carried out at a properly regulated pace we can hope to keep employment good for many years to come. We shall, in very fact, have built our New Jerusalem out of the labour which in our former vain folly we were keeping unused and unhappy in enforced idleness.

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Published on May 30, 2020 11:22

May 29, 2020

Not Aged Well

Things that have not aged well. Hassett was not an excellent choice for Chairman of the CEA: Mark M. Zandi, Justin Wolfers, & al. (2017): Letter in Support of the Nomination of Kevin Hassett to be Chairman of the Council of Economic Advisers https://medium.com/@hassett.economists.letter/letter-in-support-of-the-nomination-of-kevin-hassett-to-be-chairman-of-the-council-of-economic-78c483f9821b: ��Dr. Hassett has a record of serious scholarship on a wide range of topics, including tax policy, business investment, and energy. He has engaged on an even wider range of topics in the public policy debate and in his work at the Federal Reserve and as a consultant to the Department of the Treasury during the Administrations of President George H.W. Bush and President William J. Clinton. In addition, we appreciate that Dr. Hassett has consistently made an effort to reach out to a wide range of people from across the ideological spectrum both to promote economic dialogue and to collaborate on research and public policy proposals. For all of these reasons we believe that Dr. Hassett would be an excellent choice for Chairman of the Council of Economic Advisers and urge the Committee to move as expeditiously as possible�� #economicsgonewrong #incompetence #moralresponsibility #noted #orangehairedbaboons #2020-05-29

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Published on May 29, 2020 13:30

A Very Strange White House Indeed...

Some very, very, very strange things went on inside this White House. Perhaps the strangest was how American Enterprise Institute ��economist�� Kevin Hassett persuaded Donald Trump and his coterie that COVID-19 deaths would be less than 100 a week starting May 15��or so Hassett��s enemies and ill-wishers inside the White House and their tame journalists are now claiming it went down:

David Anderson: Cubic Fits & Department of D'OH https://www.balloon-juice.com/2020/05/05/cubic-fits-and-department-of-doh/: ��The first thing a data analyst trainee should learn is that playing with Excel��s functions and tools is a great way to get into trouble when you don��t have an underlying understanding of the fundamental data��s behaviors AND don��t understand the functions and tools core assumptions.�� This is important.�� The second or third lesson a data analyst trainee will learn is to not use Excel but that is advanced training. Why does this matter? It seems like the White House is using Excel and not understanding the phenonomenon they are trying to model. Eyeballing the data, there sure as hell seems to be a day of the week seasonality. But let��s go beyond that. If we were to assume that a cubit fit is an appropriate choice to model the data, and that we can project out of the current data to the near future so that there are almost no deaths on May 15th, that requires a ��What the Hell�� response�� #coronavirus #incompetence #moralresponsibility #orangehairedbaboons #publichealth #2020-05-29

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Published on May 29, 2020 13:25

This Is Not Like the 1970s...

The extremely thoughtful David Glasner explains why those who analogize the coronavirus supply shock to the monopoly oil price shocks of the 1970s are profoundly mistaken. This is not an inflationary supply shock. This looks overwhelmingly likely be a profoundly deflationary supply shock:

David Glasner: ��The Idleness of Each Is the Result of the Idleness of All�� https://uneasymoney.com/2020/03/20/th... ��Whether the cause of the downturn is a supply shock or a demand shock. Some, perhaps many, seem to think that if the shock is a supply, rather than a demand, shock, then there is no role for a countercyclical policy response designed to increase demand...

...The problem with that reasoning is that reductions in supply are themselves effectively reductions in demand. The follow-on reductions in demand constitute a secondary contractionary shock on top of the primary supply shock, thereby setting in motion a cumulative process of further reductions in supply and demand....

The interconnectedness of the entire economy, and the inability of any individual to avoid the consequences of a social or economic breakdown by making different (better) choices��e.g., accepting a cut in wages to retain employment��was recognized by the most orthodox of all Cambridge University economists, Frederick Lavington, in his short book The Trade Cycle published in 1922 in the wake of the horrendous 1921-22 depression.... To call unemployment ��voluntary�� under such circumstances is like calling the reduced speed of drivers in a traffic jam ��voluntary.�� To suppose that the intersection of a supply-demand diagram provides a relevant analysis of the problem of unemployment under circumstances in which there are massive layoffs of workers from their jobs is absurd.

Nevertheless, modern macroeconomics for the most part proceeds as if the possibility of an inefficient Nash equilibrium is irrelevant to the problems with which it is concerned.... In the face of an adverse supply shock, a spell of inflation lasting as long as the downturn is therefore to be welcomed as benign and salutary, not resisted as evil and destructive. The time for a decline in, or reversal of, inflation ought to be postpone till the recovery is under way...

#economicsgonewrong #macro #noted

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Published on May 29, 2020 13:20

North Dakota Has a Culture Problem

Cristina Cabrera: GOP Guv. Doug Burgum Tearfully Pleads Anti-Maskers To ��Dial Up Your Empathy�� and End ��Political�� Divide https://talkingpointsmemo.com/news/gop-guv-tearfully-pleads-anti-maskers-to-dial-up-your-empathy-and-end-political-divide: ��North Dakota Gov. Doug Burgum (R) despairs.... ��If someone is wearing a mask, they��re not doing it to represent what political party they��re in or what candidates they support,�� the Republican governor said during an emotional press briefing on Friday. ��They might be doing it because they��ve got a 5-year-old child who��s been going through cancer treatments,�� he continued, voice breaking. Burgum took a moment to collect himself before continuing: ��They might have vulnerable adults in their life who currently have COVID, and they��re fighting.�� The governor begged North Dakotans to avoid ��creating a divide�� either ��ideological or political�� over the importance of wearing a mask with so many lives at stake. ��This is a, I would say, senseless dividing line,�� he said. ��And I would ask people to try to dial up your empathy and your understanding.�� Burgum��s plea comes as some of his fellow Republicans, including President Donald Trump, publicly refuse to wear masks that prevent the spread of COVID-19, disregarding the Centers for Disease Control and Prevention��s (CDC) recommendation�� #fascism #noted #moralresponsibility #orangehairedbaboons #2020-05-29

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Published on May 29, 2020 13:11