bradford-delong.com

Concrete Economics: The Hamilton Approach to Economic Growth and Policy

Stephen S. Cohen and J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy: (Allston, MA: Harvard Business Review Press: 1422189813) http://amzn.to/1XxIyPV

Steve Cohen and I have a new book coming out from Harvard Business Review Press on March 1, 2016. A very short book. Easy and quick to read. Easy and quick to read because it tries to make one big and very important point, and avoid being distracted from it:

America’s debate about economic policy goes way wrong whenever it is ruled by ideology.

It doesn’t matter much which ideology—a rigid and ideologized Hamiltonianism would have been (almost) as bad as rigid-Jeffersonianism, an excessive attachment to outmoded industries or to ways of delivering social-insurance that were merely emergency expedients when adopted in the 1930s would be (almost) as bad as the market-worshipping sects of neoliberalism. Thus we say:

America’s debate about economic policy goes largely right whenever it is ruled by pragmatism.

Successes come whenever the question asked and answered is: What concrete steps can we take, here and now, to make America more prosperous and to share the fruits of growth equitably? Failures come whenever the question asked and answered is: Do these policy proposals conform to the ideas of Adam Smith or Edmund Burke or William Beveridge or even John Maynard Keynes?—let alone those of the Karl Marxes, the Friedrich von Hayeks, and the Ayn Rands.

So I now have a problem. HBR Press would be extremely annoyed if I were to simply dump the book (or large parts of the book) online. But I really do want to do so. I am excited about the big idea. And I want this big idea to get out into the world undistorted.

So how should Steve and I tease this book of ours?

• Concrete Economics @ SXSW!: Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3
• Speaker's Notes for: Concrete Economics @ SXSW!
• Some very nice thoughts about our "Concrete Economics" from the extremely-sharp Justin Fox
• Leading Business Books: A Radically Different Version of Economic History
• The Street: Steve Cohen: Economy Needs to Follow Hamilton’s Founding Formula
• "Concrete Economics": Justin Fox on how the U.S. could use a new economic strategy...
• "Concrete Economics": Justin Fox Tells People Where to Go to Learn About Hamilton's Economic Strategy
• "Concrete Economics": Ed Luce Says Some Very Nice Things About Steve Cohen's and My Forthcoming "Concrete Economics"
• The "In Praise of Alexander Hamilton" Section from Our "Concrete Economics". In Fortune Online
• "Concrete Economics": As You Can Tell, I at Least Am Trying to Sail as Close to the "Hamilton" Musical Boom as I Can...
• Concrete Economics: The Hamilton Approach to Economic Growth and Policy

Current Links

Most-Recent Must-Reads:

• Richard Portes and Simon Wren-Lewis: Issues in the Design of Fiscal Policy Rules
• Dani Rodrik: The Politics of Anger
• Barry Eichengreen: Confronting the Fiscal Bogeyman

Most-Recent Links:

• Toure: One Great Graf: The Trump Phenomenon Is Brought To You By the Southern Strategy by Jeet Heer: "‘The Southern Strategy was the original sin that made Donald Trump possible. If Republican voters were anywhere near as diverse as the Democrats’, a candidate like Trump would have been marginalized quickly. Conservative elites can denounce Trump all they want as a ‘cancer’ or an impostor. In truth, he is their true heir, the beneficiary of the policies the party has pursued for more than half a century.’" https://newrepublic.com/article/130039/southern-strategy-made-donald-trump-possible
• David Card and Alan Krueger to speak on the 20th anniversary of Myth and Measurement: "Wednesday, March 16 at 9:30 a.m. Eastern, the Washington Center for Equitable Growth and the Economic Policy Institute will host economists David Card and Alan Krueger for a 20th anniversary discussion of their seminal work, Myth and Measurement."
• Ed Luce: Troubling warnings for the US from the 1930s: "Western democracy faces no mortal threat but it is going through an acute stress test..."
• Richard Baldwin: The World Trade Organization and the Future of Multilateralism

Liveblogging the Cold War: March 16, 1946: Eleanor Roosevelt

Eleanor Roosevelt: My Day:

NEW YORK, Friday—Unless we build a strong United Nations Organization, it is fairly obvious that the USSR, the United States and Great Britain, the three great Allies in the European war, are each going to become the center of a group of nations, each building up its individual power.

Live from Canute's Miami: Marco Rubio, omnium consensu capax imperii, nisi imperasset...

Procrastinating on March 15, 2016

Over at Equitable Growth--The Equitablog:

• Nick Bunker: Does inequality affect high school dropout rates?
• Nick Bunker: How extending credit can fight recessions
• Heather Boushey: Why work-life policies aren't just 'something for the ladies'
• Jonathan Portes and Simon Wren-Lewis: Issues in the Design of Fiscal Policy Rules
• Dani Rodrik: The Politics of Anger
• Barry Eichengreen: Confronting the Fiscal Bogeyman

Must-Read: Richard Portes and Simon Wren-Lewis: Issues in the Design of Fiscal Policy Rules: "The potential conflict in designing rules between the need to mimic optimal policy...

Must-Read: 70 years after Karl Polanyi wrote his Great Transformation, Polanyi's understanding of the dilemmas of modern globalized capitalism and of the need for appropriate regulation remains state-of-the-art. And perhaps the most eloquent heir of Polanyi today is the highly-estimable Dani Rodrik:

Dani Rodrik: The Politics of Anger: "Perhaps the only surprising thing about the populist backlash...

(Late) Weekend Reading: Jeffrey Edleson on Sexual Harassment Here at Berkeley Edition

Jeffrey Edleson: A Dean’s Reflection on Campus Sexual Misconduct Cases: "Fleming, Marcy, and now Choudhry...

...In each of these high-level sexual harassment cases at UC Berkeley over the past year there was also high-level of misjudgment at the top of our campus administration. In the most recent case, former Dean Choudhry admitted to sexually harassing his Executive Assistant. While he claimed no bad intent, the impact of his behavior severely disrupted the career of a capable woman....

(Late) Monday Smackdown: Breitbart.com Devours Its Own Young

Live from La Farine: I suppose it means something that the "people" of breitbart.com hate their own ex-colleagues and Fox News as much as they hate Barack Obama. But I am not sure what.

And all for not liking the fact that breitbart.com would rather pretend that its own reporter Michelle Fields was not grabbed and shoved by Trump campaign staffers:

William Bigelow: Ben Shapiro Betrays Loyal Readers in Pursuit of Fox News Contributorship: "LOS ANGELES — Former Breitbart News editor-at-large Ben Shapiro announced Sunday evening via left-wing Buzzfeed...

...that he is abandoning Andrew Breitbart’s lifelong best friend, widow, hand-picked management team and friends in pursuit of an elusive contributorship at the Fox News Channel. Friends of Hamas could not be found for comment.

Today's Academic History: First Academic Chairs Department

Live from Athens: Cassius Dio: Roman History, Vol. V: "Marcus [Aurelius] went to Athens, where after being initiated into the mysteries...

...he bestowed honors upon the Athenians and gave teachers to all men in Athens, for every species of knowledge, these teachers to receive an annual salary...

Liveblogging the Cold War: March 15, 1946: Churchill's "Darkening Scene" Speech

Winston S. Churchill: The Darkening International Scene:

When I spoke at Fulton ten days ago I felt it was necessary for someone in an unofficial position to speak in arresting terms about the present plight of the world. I do not wish to withdraw or modify a single word. I was invited to give my counsel freely in this free country and I am sure that the hope which I expressed for the increasing association of our two countries will come to pass, not because of any speech which may be made, but because of the tides that flow in human affairs and in the course of the unfolding destiny of the world.

Live from La Farine: Josh Barro watches the Rubios grapple with the fact that the voters took what they said seriously:

Josh Barro: Marco Rubio Paved the Way for Donald Trump: "'You wonder if we're headed in a different direction today...

...where we're no longer capable of having differences of opinion but in fact now protests become a license to take up violence and take on your opponents physically,' Rubio said Saturday. 'This is what happens when a leading presidential candidate goes around feeding into a narrative of bitterness and anger and frustration.' This is a valid concern — but Rubio is as much to blame for it as Trump is.

Live from La Farine: Jason Kottke: Dire Straits' Walk of Life improves every movie: "It is the assertion of The Walk of Life Project that...

...the Dire Straits song "Walk of Life" is the perfect thing to play at the end of movies. I have watched more than a dozen of these and they are all great, but I picked "Lost in Translation", "There Will Be Blood" and "Terminator 2" to embed here...

Monday Smackdown: Martin Longman on Clive Crook

Martin Longman: Don’t Call it Fascism?: "Prepare to be concern-trolled by Clive Crook...

Donald Trump’s critics are making two kinds of mistake when they call him a fascist, or a proto-fascist, or a kind of fascist, or complain that his rallies evoke images of Nazi Germany and so forth. The first mistake is that he isn’t any kind of fascist. The second is that this line of attack at best serves no purpose, and at worst makes him stronger.

Live from Bunga-Bunga: The extremely-sharp Bill Emmott is on Team Trump-is-Berlusconi rather than Team Trump-as-Schwarzenegger:

Bill Emmott: Trump’s Italian Prototype: "The most apt comparison is with Silvio Berlusconi...

...the Italian media mogul who has served three terms as his country’s prime minister. It is not... reassuring model.... The most important – and the most worrying – qualities they share is an ability to substitute salesmanship for substance, a willingness to tell bald-faced lies in pursuit of publicity and advantage, and an eagerness to intimidate critics into silence.... Trump has followed much the same strategy [of] saying anything to grab another vote. The question is what this would mean if he were to make it to the White House....

Live from Grub Street: Marie Le Conte: Londoner's Diary: Barber’s bunch in cutting mood over photoshoot: "The Financial Times may be pro-EU but some staff are a bit snippy about Italian hairdressers...

Monday DeLong Smackdown Watch: Paul Krugman--Are the Principal Benefits from Globalization to Be Found in "Technology" Diffusion

Taking "technology" in the broadest possible sense as including everything that affects productivity that is not a direct resource- or investment-produced factor of production, that is...

Must-Read: Paul Krugman: Globalization and Growth: "Brad DeLong... arguing that the really big benefits of globalization come from technology diffusion...

...which make it a much more positive force than I suggest. I used to believe the same thing, and still find myself thinking along those lines now and then. But I’d argue that economists need to be, at the least, upfront about the argument’s limitations. First, it doesn’t come out of the models. As Brad says, the map is not the territory; but guesses about such things are, well, guesses. There was a time when everyone knew that import-substituting industrialization was the key to economic takeoff, based on loose historical reasoning (America and Germany did it!). Then developing countries tried it en masse, and the results weren’t great.

Live from Mayfair: I swear, every time I spend any significant number of hours listening to--let alone talking to--Olivier Blanchard, I am reminded of why, back when I was 22:

• I took every course he offered that I could...
• I tried to postpone taking courses he did not teach in the hope that he would teach them in the future...

An effing genius...

Must-Read: Barry Eichengreen: Confronting the Fiscal Bogeyman: "The International Monetary Fund... warned the assembled G-20 attendees...

Links for the Week of March 13, 2016

Most-Recent Must-Reads:

• Must-See: Kathleen Maclay: Chowdhury Center for Bangladesh Studies hosts Nobel-winning economist Amartya Sen
• Laura Tyson: Closing the Investment Gap
• Simon Wren-Lewis: A (Much) Better Fiscal Rule
• Timothy B. Lee: I just spent $154 on 26 lightbulbs, and you should too
• Cardiff Garcia: Productivity and innovation stagnation, past and future: an epic compendium of recent views

Most-Recent Links:

• Wolfgang Münchau: The European Central Bank Has Lost the Plot on Inflation
• David Wise: In measures of economic strength, social cohesion, and fiscal position, blue and purple states are generally outperforming red states
• Erik Loomis: I Guess Imperialism and Colonialism Never Happened
• German Lopez: The best explanation for Hillary Clinton's bizarre comments about the Reagans and HIV/AIDS
• Austin Frat: Medicare payment cuts, hospital closures, and patient harm
• Elise Gould: Wage inequality continued its 35-year rise in 2015
• Sean Fremstad: Partnered But Poor
• David Frum: The Republican Party's Dilemma

Liveblogging the Cold War: March 14, 1946: Stalin on Churchill's "Iron Curtain" Speech

J. V. Stalin: Interview to “Pravda” Correspondent Concerning Mr. Winston Churchill’s Speech at Fulton:

Question: How do you appraise Mr. Churchill’s latest speech in the United States of America?

Answer: I appraise it as a dangerous act, calculated to sow the seeds of dissension among the Allied States and impede their collaboration.

Liveblogging the Cold War: March 13, 1946: Eleanor Roosevelt,

Eleanor Roosevelt: My Day:

NEW YORK, Tuesday—Yesterday I did one of the stupidest things of my more or less careless existence! I wrote down that I was to be at 49th Street and Broadway at 6 p.m. but failed to note the name of the place where I was expected, apparently forgetting that there are four corners at 49th and Broadway! When I arrived there, I saw soldiers' buses lined up along the sidewalk and thought they probably had a bearing on my engagement, but I couldn't decide which of the four corners I was expected to go to—and so I went back home.

Live from Berkeley: WTF, Claude Steele?!?! WTF, Nicholas Dirks?!?!

Matier and Ross: UC bigwig, bounced in sex-harass scandal, is pulled from new job: "Graham Fleming was fired from one UC post after a sex harassment scandal last year...

...but kept on by Chancellor Nicholas Dirks to serve as an international ambassador for the school’s planned Global Campus in Richmond[. He] has been ordered removed from his new job by University of California President Janet Napolitano.

Live from SXSW: Mungowitz: Kids Prefer Cheese: Thank you Donald Trump: "People, I believe that Donald Trump is teaching many of us a valuable lesson...

...He's performing an important public service, and I for one am grateful. I'm one of those guys who thought, hey we really don't need affirmative action anymore, women are treated with respect and dignity now, fascism is a relic of a bygone age.

Procrastinating on March 13, 2016

Over at Equitable Growth--The Equitablog:

• Speaker's Notes for: Concrete Economics @ SXSW!
• Concrete Economics @ SXSW!: Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3
• The benefits of free trade: Time to fly my neoliberal freak flag high!
• Ordoliberalismus and Ordovolkismus
• Nick Bunker: Weekend reading: “Where did the fluidity go?” edition* Kathleen Maclay: Chowdhury Center for Bangladesh Studies hosts Nobel-winning economist Amartya Sen
• Laura Tyson: [Closing the Investment Gap]( http://
• Simon Wren-Lewis: A (Much) Better Fiscal Rule
• Barry Eichengreen: Confronting the Fiscal Bogeyman
• Stan Fischer: Reflections on Macroeconomics Then and Now
• Stan Fischer: Reflections on Macroeconomics Then and Now

Speaker's Notes for: Concrete Economics @ SXSW!

Speaker's Notes for: Concrete Economics @ SXSW!: Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3:

Stephen S. Cohen, J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy] (Allston, MA: Harvard Business Review Press:1422189813) http://amzn.to/22ds5TK

The Book:

• Small book
• Readable book
• Important book (we think)

The Thesis:

• America's political-economic governance from 1787-1975 or so was extraordinarily successful
• America's political-economic governance since 1975 or so not so
• What changed?
• America's political-economic governance took a destructive turn, an ideological turn, about 1975

Concrete Economics @ SXSW!: Speaking 12:30 PM Meeting 10AB Level 3 :: Signing 1:00 PM Bookstore Level 3

Stephen S. Cohen, J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth and Policy] (Allston, MA: Harvard Business Review Press:1422189813) http://amzn.to/22ds5TK

The Benefits of Free Trade: Time to Fly My Neoliberal Freak Flag High!

I think Paul Krugman is wrong today on international trade. For we find him in “plague on both your houses” mode. On the one hand:

Paul Krugman: Trade and Tribulation and A Protectionist Moment?: “Protectionists almost always exaggerate the adverse effects of trade liberalization…

…Globalization is only one of several factors behind rising income inequality, and trade agreements are, in turn, only one factor in globalization. Trade deficits have been an important cause of the decline in U.S. manufacturing employment since 2000, but that decline began much earlier. And even our trade deficits are mainly a result of factors other than trade policy, like a strong dollar buoyed by global capital looking for a safe haven.

Weekend Reading: Guy Gavriel Kay: Rhiannon of the Birds, Rhiannon of the Horses...

Weekend Reading: In the novels of Guy Gavriel Kay, even the mortal humans are of Faerie:

Guy Gavriel Kay: Rhiannon of the Birds, Rhiannon of the Horses...: From Guy Gavriel Kay (2004), The Last Light of the Sun (New York: Roc: 0451459857), pp. 46-7:

'Needful as warmed wine in winter,' someone Alun couldn't see offered from down the room. Approval for that, a nicely phrased offering. Winter memory in midsummer, the phrase near to poetry. The hostess turned to Dai, politely, beyond her husband and the cleric, to let the other Cadyri prince have a turn.

Weekend Reading: Harry Reid on Supreme Court Vacancies and the "Biden Rule"

Harry Reid: Filling the Supreme Court Vacancy:

Mr. President, we now have a new rule called the Biden rule, which I guess was invented this morning.

Live from the Barrack Room: George Orwell: Wikiquote: Misattributed: "'We sleep peaceably in our beds at night only because rough men stand ready to do violence on our behalf'...

...This has commonly been attributed to Orwell but has not been found in any of his writings. Quote Investigator found the earliest known appearance in a 1993 Washington Times essay by Richard Grenier:

Must-See: Kathleen Maclay: Chowdhury Center for Bangladesh Studies hosts Nobel-winning economist Amartya Sen: "Chowdhury Center for Bangladesh Studies hosts Nobel-winning economist Amartya Sen...

...widely known for his work on income inequality and the roles of famine, poverty and freedom in developing countries around the world.... WHEN: 4-6 p.m., Sunday, March 13. WHERE: The sanctuary of the First Presbyterian Church, 2407 Dana St., Berkeley.... Sen is the Thomas W. Lamont University Professor and Professor of Economics and Philosophy at Harvard University...

Ordoliberalismus and Ordovolkismus

At the zero lower bound on safe nominal short-term interest rates, an expansionary fiscal policy impetus of d percent of current GDP will:

1. raise current output by (μ)d,
2. raise future output by (φμ)d, and
3. raise the debt to GDP ratio by a proportional amount ΔD = (1 - μτ - μφ)d,

where μ is the Keynesian multiplier, τ is the tax rate, and φ is the hysteresis coefficient.

Must-Read: Investment has been weak because demand growth has been weak--and because the residential-investment credit channel broke in 2007, and neither Barack Obama nor Tim Geithner nor Jack Lew nor Ed de Marco nor Mel Watt nor any congressional coalition has taken any steps to fix it.

This is a very important channel for "hysteresis"--especially if, like me, you believe in powerful external benefits from investment, especially equipment investment:

Laura Tyson: Closing the Investment Gap: "BERKELEY – The weakness of private investment in the United States and other advanced economies is... worrisome... perplexing...

Must-Read: Simon Wren-Lewis: A (Much) Better Fiscal Rule: "Today the Labour Shadow Chancellor John McDonnell...

For the Weekend...

Pet Shop Boys: West End Girls:

Liveblogging the American Revolution: March 12, 1778: Marquis de Lafayette to Baron von Steuben

Marquis de Lafayette: [To Baron von Steuben(http://consource.org/document/marquis-de-lafayette-to-baron-von-steuben-1778-3-12/):

Sir,

I am grateful to have received the letters that you did me the honor to write. They arrived around the same time, and I waited to answer the first one until I could say something definite about the expedition that I had the honor to be put in charge of. The strong desire that I have to earn the esteem of a man such as yourself, and my keen appreciation for the kind letters I have received from you make me want to know your opinion about this business.

Weekend Reading: Andrew Gelman: The problems with p-values are not just with p-values

Andrew Gelman: The problems with p-values are not just with p-values:

The American Statistical Association just released a committee report on the use of p-values. I was one of the members of the committee but I did not write the report.

We were also given the opportunity to add our comments. Here’s what I sent:

---

The problems with p-values are not just with p-values

Live from Mayfair: James Altucher: 5 Ways to Do Nothing and Become More Productive: "Do nothing when you’re angry...

Econ 210a: Memo question for March 16: "Sanford Jacoby on the one hand and Suresh Naidu and Noam Yuchtman on the other...

...paint very different pictures of U.S. labor markets in the 19th century. Describe their differences and explain whether or not you think they can be reconciled.

Econ 210a: Memo question for March 9: "The U.S. and European financial systems developed very differently...

...in the course of the 19th century. What factors – economic, political, historical and other – help to explain their differing evolution and the contrasting financial structures that resulted? How much did these differences matter, and for what?

Must-Read: Stan Fischer: Reflections on Macroeconomics Then and Now: "In 1961, at the end of my school years, on the advice of a friend...

Must-Read: When I look at these five graphs below, this paragraph from Stan Fischer seems to me to be simply the wrong one-paragraph summary of the issues. Just wrong:

Stan Fischer: Reflections on Macroeconomics Then and Now: "Estimated Phillips curves appear to be flatter than they were estimated to be many years ago...

Procrastinating on March 11, 2016

Over at Equitable Growth--The Equitablog:

• Social credit is the answer
• John Holbo: It is difficult to get a man to intuit p-values when his h-index depends upon his not intuiting them
• Dan Dresser: "He thinks he can bring back American jobs from China and Mexico. He can't, because those jobs have disappeared"
• FastFT: Draghi Day
• Ben Bernanke: China’s Trilemma—and a Possible Solution
• John Maynard Keynes (1936): General Theory, chapter 23: "Notes on Mercantilism, the Usury Laws, Stamped Money and Theories of Under-consumption"

Live from Carpathia: It's YUUUGGGGEEE!!!!

Rob Beschizza**: Trump the Carpathian: "On a mountain of skulls, in the castle of pain...

...I sat on a throne of blood! And let me tell you it was really great. And I have a great relationship with the Moldavian people. They love me.

Must-Read: John Holbo: It is difficult to get a man to intuit p-values when his h-index depends upon his not intuiting them: "What p-value < .05 basically comes to...

Must-Read: Dan Dresser: "He thinks he can bring back American jobs from China and Mexico. He can't, because those jobs have disappeared": "If there’s been a policy ‘theme’...

Must-Read: FastFT: Draghi Day: "Rabobank describes the wild market moves that followed the European Central Bank rates decision and press conference as ‘carnage’...

Live from Mayfair: Roy Edroso: They Had It Coming: "Peter Beinart worries that:

Must-Read: The extremely-sharp Ben Bernanke continues to make the argument that the Washington-Consensus Great-Moderation division of labor between technocratic central banks and directly-elected governments--central banks tasked with macroeconomic stabilization, and directly-elected governments focused on rightsizing a public sector funded by an appropriately-prudent debt management system--is simply wrong and inadequate, as we have learned to our great cost. Here he addresses the problem of macroeconomic balancing in China, and says smart things:

Ben Bernanke: China’s Trilemma—and a Possible Solution: "Is the no-devaluation strategy a good one for China?...

Must-Read: John Maynard Keynes (1936): General Theory, chapter 23: "Notes on Mercantilism, the Usury Laws, Stamped Money and Theories of Under-consumption": "It is impossible to study the notions to which the mercantilists were led by their actual experiences...