Brad DeLong's Grasping Reality...

Thursday Idiocy on Wednesday: Ezra Klein Does the Intellectual Trash Pickup: Afternoon Must-Read: Ezra Klein: Does David Brooks Know That Simpson-Bowles Failed? Plus Moar!

• Thursday Idiocy: Friedrich von Hayek Does Not Like Them "Levantines" - Loyal to the Group of Seventeen
• No. The American Enterprise Institute Has No Idea What America's Middle Class Is. Why Do You Ask? - Loyal to the Group of Seventeen

And we haven't even gotten to Michael Kinsley!

Plus:

Ezra Klein: Does David Brooks know that Simpson-Bowles failed?: "In a mighty odd column...

David Brooks pens a paean to technocratic autocracies like Singapore and suggests that the US needs to "make democracy dynamic again" if it's going to keep up. How will it make democracy dynamic again? Glad you asked:

The quickest way around all this is to use elite Simpson-Bowles-type commissions to push populist reforms. The process of change would be unapologetically elitist. Gather small groups of the great and the good together to hammer out bipartisan reforms--on immigration, entitlement reform, a social mobility agenda, etc.--and then rally establishment opinion to browbeat the plans through.

Of course, there already was a Simpson-Bowles-type commission that overwhelmingly rallied establishment opinion to its side. It was called the Simpson-Bowles commission. And it failed. So did its descendants like the Senate's Gang of Six and the Supercommittee. Whatever you think of the Simpson-Bowles plan, the outcome proved that these kinds of elite committees aren't able to browbeat their plans through Congress. The outcome of Simpson-Bowles is a big part of the reason some in Washington have begun envying the decisiveness of East Asian autocracies, not a model for how the US can mimic their decisiveness...

Noted for Your Evening Procrastination for May 22, 2014

Over at Equitable Growth--The Equitablog

• Afternoon Must-Read: Matthew Yglesias: Facebook Product Director Furious at Facebook’s Effect on News
• Morning Must-Read: Erik Loomis: Histories of the Gilded Age, Written by Hacks of the New Gilded Age
• Morning Must-Read: Lawrence H. Summers: Review of Thomas Piketty's "Capital in the Twenty-First Century" I: Piketty's Accomplishment
• The Honest Broker: Mr. Piketty and the “Neoclassicists”: A Suggested Interpretation: For the Week of May 17, 2014
• Morning Must-Read: Heather Boushey: It Wasn't Household Debt That Caused the Great Recession

Plus:

• Washington Equitable Center for Growth | Things to Read on the Evening of May 22, 2014

And:

Ben Carson Defends Obamacare Remarks: 'In A Way, Anything Is Slavery That Robs You' : Live from the Roasterie CLXXX: May 22, 2014

Oh wow!

David: Ben Carson Defends Obamacare Remarks: 'In A Way, Anything Is Slavery That Robs You': Conservative darling Dr. Ben Carson on Sunday defended...

...comparing President Barack Obama's health care law to slavery by insisting that "anything is slavery that robs your of your ability to control your own life."

The Honest Broker: Mr. Piketty and the “Neoclassicists”: A Suggested Interpretation: For the Week of May 17, 2014

Over at the WCEG Equitablog:

Mr. Piketty and the "Neoclassicists": A Suggested Interpretation

J. Bradford DeLong

U.C. Berkeley and NBER :: [email protected] :: http://equitablegrowth.org/blog/ :: @delong :: http://delong.typepad.com/

May 2014

Slides: https://www.icloud.com/iw/#keynote/BAJs-2mixMk5lB4hKcKBifsco49lBMrormKF/20140520_Mr._Piketty_and_the_%22Neoclassicists%22--A_Suggested_Interpretation.key

I. Introduction

The reference of course, is to Hicks (1937): “Mr Keynes and the ‘Classics’: A Suggested Interpretation”. An important, sprawling book of economic analysis. A complex and nonobvious relationship to a previous economics literature. Large political economy and policy stakes at hazard. Is this John Maynard Keynes's General Theory of Employment, Interest, and Money? Or is this Thomas Piketty’s Capital in the Twenty-First Century? READ MOAR

Liveblogging World War II: May 22, 1944: Supplying Anzio Beachhead

Noted for Your Evening Procrastination for May 21, 2014

Over at Equitable Growth--The Equitablog

• Evening Must-Read: William Dudley: What Kinds of Jobs Have Been Created During the Recovery?
• Afternoon Must-Read: Ezra Klein: Does David Brooks Know That Simpson-Bowles Failed?

Plus:

• Things to Read at Nighttime on May 21, 2014

And:

• Thursday Idiocy on Wednesday: Ezra Klein Does the Intellectual Trash Pickup: Afternoon Must-Read: Ezra Klein: Does David Brooks Know That Simpson-Bowles Failed? (Brad DeLong's Grasping Reality...)

Noted for Your Morning Procrastination for May 21, 2014

Over at Equitable Growth--The Equitablog

• Morning Must-Read: Ezra Klein: The Green Lantern Theory of the Presidency, Explained
• Federal Reserve Nominal GDP Growth Undershoot Episode VII: The Undershooting...: Wednesday Focus: May 21, 2014
• The Obama Stagnation: What Went Wrong? Yet Again!: Tuesday Focus: May 20, 2014
• Morning Must-Read: Paul Krugman: That 80s Show

Plus:

• Things to Read on the Morning of May 21, 2014

And:

The Most Wonderful Thing About the Potomac Palisades Neighborhood of Washington DC: Live from Cosi CLXXIX: May 21, 2014

The most wonderful thing about the Potomac Palisades neighborhood of Washington DC is the 5:40 AM alarm. Benjamin Franklin would be proud!

Over at the WCEG Equitablog: Federal Reserve Nominal GDP Growth Undershoot Episode VII: The Undershooting...: Wednesday Focus: May 21, 2014

Over at the WCEG Equitablog: Et tu, Alan? When I read things like this, I become deeply, deeply depressed...

As a piece of Fed watching--a description of what the Federal Reserve as currently constituted is likely to do--this is, as you can rely on Alan Blinder to be, excellent: clear, insightful, accurate, illuminating:

Alan Blinder: Alan Blinder: Fed Hawks vs. Doves: The Sequel: "Once the Federal Open Market Committee (FOMC) announces a few more $10-billion-a-month 'taperings' of asset purchases...

...the financial markets will fixate completely on the Federal Reserve's eventual "exit" from its current extraordinarily easy monetary policy.... When will this happen? My guess is around July 30, when the FOMC reduces its monthly purchases to $25 billion.... It will probably be accompanied by a revival—likely a loud revival—of the hawk-dove wars at the central bank. Right now, an uneasy truce prevails, as everyone has signed on to the strategy of gradual tapering. That truce won't last. The FOMC will have to figure out how and when to exit from two main policies: its near-zero interest rates and its bloated balance sheet (which should be around $4.5 trillion when the asset purchases end).

Hawks and doves will do battle over three main issues: READ MOAR

Liveblogging World War II: May 21, 1944

West Loch disaster - Wikipedia:

The West Loch Disaster was an American maritime accident during World War II at the Pearl Harbor U.S. Naval Base in Hawaii. The incident, which occurred just after 3pm on Sunday 21 May 1944, began following an explosion in a staging area for Landing Ships, Tank (LSTs) and other amphibious assault ships in West Loch. A fire quickly spread among the ships being prepared for Operation Forager, the invasion of the Japanese-held Mariana Islands. Over the next 24 hours, six LSTs sank, 163 naval personnel died and 396 were injured.

Wednesday Visualization Weblogging: The Gigantic Krell-Like Brain...

Glass Brain | Projects | Neuroscape lab:

Over at the WCEG Equitablog: The Obama Stagnation: What Went Wrong? Yet Again!: Tuesday Focus: May 20, 2014

Over at the WCEG Equitablog: Yet again? Yet again! It cannot be healthy for me to keep worrying this over and over again. But I do. The question of how we got into this Obama Stagnation--this situation in which US real GDP is 8% below its pre-2008 trend, with no signs of it ever reapproaching that trend--continues to bother me.

I continue to worry it for two big reasons:

1. It is the lowest-hanging fruit for equitable growth here in America. If you want to grow the economy in a way that shrinks income disparities, rebalancing the macroeconomy and returning to the old 1990s full-employment high-pressure economy is by far the easiest way to do the most good.

2. It is, I think, by far my greatest career analytical failure. I used to think that my greatest analytical failure was not seeing that NAFTA would generate a demand by Mexico's wealthy for assets in the U.S. that would swamp the demand it would create by America's corporations for factories in Mexico. Thus I did not see that NAFTA would weaken rather than strengthen the peso. But this is a bigger analytical howler. If you had asked me back in 2007 what the chances were that we would be here today, I would have given you all probably 100-to-1, and certainly 20-to-1 against--and I would have been willing to bet a substantial portion of my net worth on that position. And I would have been taken to the cleaners. READ MOAR

Libertarianism and Liberty: Tuesday Hoisted from the Archives from Three Years Ago Weblogging

Elizabeth Stoker on Twitter sends us back to 2011:

J. Bradford DeLong: Libertarianism and Liberty | Boston Review: Scanlon says that there are three roads to libertarian conclusions:

The first employs the empirical assertion that libertarian policies lead to the greatest good of the greatest number. But, he says—correctly—this argument gives us no reason to accept libertarian philosophy because it is not based on the value of liberty. A utilitarian could accept libertarian policies for the same reason.

The second road uses the claim that human autonomy is the greatest good.

The third rests on the Lockean right of non-interference. But, Scanlon argues, neither of these latter paths gets you to libertarian policies.

What I want to argue here is that there is a sense in which much of Scanlon’s argument is not necessary, for the the second and third roads are largely, if not completely, superfluous.

Liveblogging World War II: May 20, 1944: In the South Pacific

From World War II Today: James J Fahey: Pacific War Diary, 1942-1945:

Arose at 4:30 A.M. We left Munda at 5:50 A.M. We will travel to Bougainville for more gunnery exercises against pillboxes. On the way to our destination, Captain Hoffman spoke to the crew, saying that our targets will be live. There are still japs on the end of the island that we will be shooting at. Shore batteries are reported there by a destroyer that was passing when the guns opened up on it.

The Kansas Economy Is Foundering: Live from the Roasterie CLXXVIII: May 20, 2014

Alan Pyke: After Huge Tax Cuts For The Rich, Kansas's Economy Is Foundering: "In a time of slack economic growth and high unemployment around the country...

...Kansas lawmakers thought they had the solution: massive tax cuts for the wealthy would lure economic activity and jump-start the state’s economy. But after Gov. Sam Brownback (R) signed $1.1 billion worth of tax cuts into law over the past two years, the state is behind the national average for economic growth. A new forecast from Kansas’s budget officials projects that “personal income in Kansas will grow more slowly than U.S. personal income in 2014 and 2015”.... At the same time that Brownback’s promised economic growth is failing to materialize, his critics‘ predictions about the tax cuts are largely coming true. The tax package is starving the state of revenue. With less money coming in, Kansas is cutting public services....

The poverty rate in Kansas had risen each year since the governor was elected after vowing to reduce child poverty.... Brownback’s official response to the state’s poverty problem was a brief report that advocated fighting poverty by encouraging traditional family structures through eight-hour “pre-marital education” classes for couples wishing to wed, kicking tens of thousands of residents off of food stamps so that they will work harder, and finding mentors for the state’s kids.

Noted for Your Morning Procrastination for May 19, 2014

Over at Equitable Growth--The Equitablog

• Morning Must-Read: Austin Frakt: The Cost-Benefit of Universal Coverage
• IMHO Mitch McConnell Hacked Himself: Monday Focus: May 19, 2014
• Morning Must-Read: Acemoglu, Naidu, Robinson, and Restrep: Democracy and Growth

Plus:

• Things to Read on the Morning of May 19, 2014

And:

Over at Equitable Growth: Morning Must-Read: Acemoglu, Naidu, Robinson, and Restrep: Democracy and Growth

Over at the Equitablog: Daron Acemoglu, Suresh Naidu, James A. Robinson, and Pascual Restrepo: Democracy and growth: New evidence: "A country that switches from non-democracy to democracy...

...achieves about 20% higher GDP per capita over the subsequent three decades... between 1960 and 2010.... These are large but not implausible effects, and suggest that the global rise in democracy over the past 50 years (of over 30 percentage points) has yielded roughly 6% higher world GDP.... We predict the probability of democratizing based on 4 years of GDP, and then reweight country-years so that we are effectively comparing the path of GDP following a democratization with the path of GDP following an 'almost democratization'.... We develop an instrument for democracy based on regional waves of democratization.... The IV coefficients are much larger than the OLS coefficients compared to our measure, suggesting that we have reduced the measurement error in the democracy variable....

David Brooks defending the Egyptian military coup: 'It’s not that Egypt doesn’t have a recipe for a democratic transition. It seems to lack even the basic mental ingredients.' Judge Posner also agrees with this conclusion and writes: 'Dictatorship will often be optimal for very poor countries. Such countries tend not only to have simple economies but also to lack the cultural and institutional preconditions to democracy.' Is there any evidence that democracy is only good for already developed economies? The answer is no.... So why does democracy increase growth?... We find that civil liberties are what seem to be the most important. We also find positive effects of democracy on economic reforms, private investment, the size and capacity of government, and a reduction in social conflict...

Liveblogging World War II: May 19, 1944: British 6th Airborne Division Trains for Normandy

R.N. Gale: With the 6th Airborne in Normandy:

I think the King and Queen and the Princess enjoyed their day with us. To us all it was a great occasion, one that I am sure none of us will ever forget. Their Majesties had tea at the Royal Air Force station at Netheravon, Air Vice-Marshal Hollinghurst’s headquarters. The whole occasion was so happily informal and gay. This, too, at the end of a long day of inspections and endless walking along lines of troops which, in spite of all the interest that there undoubtedly was, must have been tiring to the Queen.

Venturing into Ronald Reagan George Washington National Airport Terminal "A" for the First Time in Years: Live from Caribou Coffee at 17th and Pennsylvania, NW CLXXVII: May 19,2014

Whenever I have flown into or out of DCA in the past decade, it has always been via United or USAir--via the "new" terminal, and not through what was in my youth the only part of Washington National Airport. But this weekend I encountered the Southwest/Jet Blue Terminal "A" part of RRGWNA. And I have some questions:

1. Where the #@$%^ is the pedestrian walkway from Parking Garage "A" to Terminal "A"? It is on the map. I could not find it in reality. Bushwhacking through scrub and across roads without crosswalks under the eyes of too-many security personnel with too-many guns is not fun...

2. Why is there a whole airport's worth--all of what Washington National Airport was in my youth--of dead space between the small round gate space at the end of a corridor that is Jet Blue/Southwest and the "new" Terminals "B" and "C". Why not use any of the original Washington National Airport as, like, an airport? With planes and gates and luggage and hydration stations and caffeine stations and blood-sugar stations and such?...

3. If one does resort to shuttle buses rather than to the fruitless search for the pedestrian walkway connecting Terminal "A" to Parking Garage "A", what determines where the shuttle buses go? I mean, I know that at the Kansas City Airport the buses that go among the terminals will at some point drop you off at a desolate flat spot in the middle of the prairie for you to wait for the buses that take you to economy parking. But this is not an example to emulate...

Monday Smackdown Weblogging: Tim Geithner Is Wrong, by Atif Mian and Amir Sufi

Atif Mian and Amir Sufi: Tim Geithner Is Wrong: "We published our post over at WaPo’s WonkBlog...

...one of our favorite sites.... As a quick follow up, here is a quote from a research paper by Richard Disney and others:

However, we do find a strong asymmetry in the response for households in “negative equity”—households in negative equity experiencing a surprise gain exhibit a consumption response five times stronger than households that had initially positive equity values in their housing stock.”

Again, the MPC estimate that Geithner uses is absurdly small, outside of the range that most economists use...."

Noted for Your Lunchtime Procrastination for May 18, 2014

Over at Equitable Growth--The Equitablog

• Nighttime Must-Read: Felix Salmon: Tim Geithner as Unreliable Narrator
• Evening Must-Read: Neera Tanden, Zeke Emanuel, and Topher Spiro: A New Management Structure for a New Phase of the Affordable Care Act
• Afternoon Must-Read: Jonathan Chait: Obama’s Moment of Environmental Decision:
• Afternoon Must-Read: Matt O'Brien: Unemployment: It's Not Personal

Plus:

• Things to Read at Lunchtime on May 18, 2014

And:

Liveblogging World War II: May 18, 1944:Deportation of the Crimean Tatars

Deportation of the Crimean Tatars - Wikipedia

The state-organized and forcible deportation of the Crimean Tatars from the Crimean Peninsula by the Soviet Union in 1944 was ordered by Joseph Stalin as a form of collective punishment for alleged collaboration with the Nazi occupation regime in Taurida Subdistrict during 1942-1943. The event is also known as Sürgünlik in Crimean Tatar (meaning "exile").

Nighttime Must-Read: Felix Salmon: Tim Geithner as Unreliable Narrator

Felix Salmon: Tim Geithner as Unreliable Narrator: "Geithner makes simple declarations...

...which are easily fact-checked. So let’s turn to pages 79-81, where Geithner is covering his early tenure as the president of the New York Fed....

In my very first public speech at the New York Fed in March 2004, I tried to push back against complacency, telling a room full of bankers that the wonders of the new financial world would not necessarily prevent catastrophic failures of major institutions, and should not inspire delusions of safety on Wall Street. I even cited my favorite theorist on financial irrationality, the leading promoter of the idea that periodic financial crises are practically inevitable.

“These improvements are unlikely to have brought an end to what Charles Kindleberger called ‘manias and panics,’ ” I said. “It is important that those of you who run financial institutions build in a sufficient cushion against adversity.” …

This is Geithner at his most prescient and heroic. He enters a hidebound wood-paneled institution where coffee is brought to his desk on a silver tray while briefings involved precious little discussion or debate; and in his very first speech he... speak[s] truth to entrenched financial power... 'push[es] back against complacency' and warn[s] against the rise of the shadow banking system....

But here’s the thing: we can read the speech....

Noted for Your Afternoon Procrastination for May 17, 2014

Over at Equitable Growth--The Equitablog

• Over at Grasping Reality: Weekend Reading
• Lunchtime Must-Read: Colin Lewis: Larry Summers, Thomas Piketty, and the Rise of the Robots
• I Do Think It Is Time for Marty Feldstein to Stop Writing Things for the Wall Street Journal Op-Ed Page
• Lunchtime Must-Read: Ryan Avent on Doug Campbell, Ju Hyun Pyun, and the Strong Dollar Policy
• hy I Am at Best Ambivalent About Stories That Place Consumption Spending Declines at the Heart of Our Current Cyclical Relative Stagnation
• Reviewing Ryan Avent's Review of Amir Sufi and Atif Mian's House of Debt: Friday Focus: May 16, 2014

Plus:

• Things to Read on the Afternoon of May 17, 2014

And:

Weekend Reading: Adam Smith: Republican Virtue in the North American Colonies

Adam Smith: [An Inquiry into the Nature and Causes of the Wealth of Nations]: "In every thing except their foreign trade...

the liberty of the English colonists to manage their own affairs their own way, is complete. It is in every respect equal to that of their fellow-citizens at home, and is secured in the same manner, by an assembly of the representatives of the people, who claim the sole right of imposing taxes for the support of the colony government. The authority of this assembly overawes the executive power; and neither the meanest nor the most obnoxious colonist, as long as he obeys the law, has any thing to fear from the resentment, either of the governor, or of any other civil or military officer in the province.

The colony assemblies, though, like the house of commons in England, they are not always a very equal representation of the people, yet they approach more nearly to that character; and as the executive power either has not the means to corrupt them, or, on account of the support which it receives from the mother country, is not under the necessity of doing so, they are, perhaps, in general more influenced by the inclinations of their constituents. The councils, which, in the colony legislatures, correspond to the house of lords in Great Britain, are not composed of a hereditary nobility. In some of the colonies, as in three of the governments of New England, those councils are not appointed by the king, but chosen by the representatives of the people. In none of the English colonies is there any hereditary nobility. In all of them, indeed, as in all other free countries, the descendant of an old colony family is more respected than an upstart of equal merit and fortune; but he is only more respected, and he has no privileges by which he can be troublesome to his neighbours.

Before the commencement of the present disturbances, the colony assemblies had not only the legislative, but a part of the executive power. In Connecticut and Rhode Island, they elected the governor. In the other colonies, they appointed the revenue officers, who collected the taxes imposed by those respective assemblies, to whom those officers were immediately responsible. There is more equality, therefore, among the English colonists than among the inhabitants of the mother country. Their manners are more republican; and their governments, those of three of the provinces of New England in particular, have hitherto been more republican too...

Weekend Reading: Emanuel Derman: Berkeley Masters in Financial Engineering Commencement Speech:

Emanuel Derman: "Speech at Commencement 2014 to Berkeley MSE Grads: March 21, 2014...

...It’s truly a great pleasure for me to be at the University of California at Berkeley today. Not quite 50 years ago, when I was an undergraduate studying physics in Cape Town, I began applying to go to the United States for graduate school. It seemed to be the right thing to do if you were serious about your field.

So I applied to three schools: Columbia, because I knew someone in Cape Town who had just gone there, and because it was in New York City; Caltech, because Feynman was there and had recently been awarded the Nobel prize and also published the stylish and insightful Feynman lectures on physics, though I didn’t understand at the time what he had actually accomplished; and Berkeley, because it was in the news for the start of the revolts against arbitrary authority on campus. I read the other day that year is the 50th anniversary of the Berkeley Free Speech Movement that seem to me to have kicked off the Sixties. For those of you who are too young to remember that, whichI suppose  is all of you graduating today and maybe much of the faculty too, take a look — it’ll make interesting reading.