## August 2019

New York Times reporters, editors, and owners go extra-easy on Trump, Republicans in general, and other right-wingers because they agree with them and want them in power:

Duncan Black: Because We Agree With Them: "A perfect distillation of 'we must obey critics on the Right, and get VERY VERY MAD AT CRITICS ON THE LEFT.' 'In regard to the debate on how to cover race, some staffers inside The Times agreed wholeheartedly with Baquet's approach. "Using that language is a turn off to some readers," one said. "And there are a lot of people that think The Times is too liberal, and when you start throwing words like that around, people will accuse us of editorializing."'... [That] doesn't make any sense. Journalists who say these things aren't scared of conservatives. They agree with them. Left wing criticism makes them mad because they don't agree with left wing critics. It's that simple. They aren't worried that they're 'editorializing' the other way...

Benito Cereno: The Untold Truth of the Holy Grail: "After settling into Jerusalem, the Templars protected pilgrims on their way in and out of the city. Over time, the group of knights grew to be a powerful military order for the church. Kings from all around Europe gave the knights land and lordships, so they wound up super rich and bought the island of Cyprus. Though they were valiant fighters known for their bravery, the Templars became just as well known for proto-banking skills. They invented paying by check. That may not sound as exciting as hiding messages in Da Vinci paintings, but it was a pretty big achievement. Pilgrims could give the Templars however much money they'd need in the Holy Land. It would be safer with the group of fearsome knights than a bunch of regular folks walking through the desert. So, the Templars would give the pilgrims a promissory note and make sure all the money would be waiting for them when they got there. They moved enough gold that the Templars became the most powerful bankers in the land. Again, this is probably not the kind of thing that would go in a summer blockbuster, but it's one of the few things we know for sure about the Templars...

Important to today, I think, is that the aliens in Ossian's Ride are refugees: Henry Farrell: Ossian’s Ride: "In 1959 the famous British astronomer Fred Hoyle published his novel, Ossian’s Ride... a future Ireland miraculously transformed into a technological superpower.... Hoyle wasn’t really interested in talking about Ireland.... Instead, he wanted to score points in an internal fight over British identity... responding to the Christian apologist C.S. Lewis, who regularly denounced Hoyle as a secular atheist on radio and had written his own science fiction novel, That Hideous Strength, a decade before. The villain of Lewis’s book was a sinister institute called NICE, which Satanic aliens wanted to impose contraception, lesbianism, secularism and surrealist art on an unsuspecting Britain.... Hoyle riposted with a novel where rational and benevolently ruthless aliens used an organization called ICE to pull the priest-ridden republic next door into the technological age. His satirical portrait of Ireland told British readers that the world was being transformed around them, and that even their most backwards seeming neighbor would outstrip them if they didn’t embrace modernity. The irony of history is that Hoyle’s parody is now the truth...

I really do not understand this: if it were to be optimal policy to cut by 50 bp in a month, it is certainly optimal policy to cut by 25 bp now and probably optimal policy to cut by 50 bp now: Tim Duy: Another Portion of Yield Heading Toward Inversion: "Neither of the today’s developments–'easing' trade tensions or higher inflation–should prevent the Fed from easing at next month’s meeting. I suspect though that they make it hard for the Fed to justify a 50bp cut in September. If the economy needs a more aggressive Fed response up front to prevent recession, then a lower chance of that outcome... should induce the longer end of the yield curve to flatten further and then invert...

## America’s Superpower Panic: Project Syndicate

Project Syndicate: America’s Superpower Panic: History suggests that a global superpower in relative decline should aim for a soft landing, so that it still has a comfortable place in the world once its dominance fades. By contrast, US President Donald Trump's incoherent, confrontational approach toward China could seriously damage America’s long-term interests.

Continue reading "America’s Superpower Panic: Project Syndicate" »

## Liveblogging: The Anglo-Saxon Chronicle: Egelbert

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Egelbert: "A.D. 650. This year Egelbert, from Gaul, after Birinus the Romish bishop, obtained the bishopric of the West-Saxons...

...A.D. 651. This year King Oswin was slain, on the twentieth day of August; and within twelve nights afterwards died Bishop Aidan, on the thirty-first of August...

Continue reading "Liveblogging: The Anglo-Saxon Chronicle: Egelbert" »

## Is Plutocracy Really the Biggest Problem?: No Longer Fresh at Project Syndicate

Project Syndicate: Is Plutocracy Really the Biggest Problem?: After the 2008 financial crisis, economic policymakers in the United States did enough to avert another Great Depression, but fell far short of what was needed to ensure a strong recovery. Attributing that failure to the malign influence of the plutocracy is tempting, but it misses the root of the problem:

Continue reading "Is Plutocracy Really the Biggest Problem?: No Longer Fresh at Project Syndicate" »

Another of the long-time right-wing affinity-fraud grifters, S.E. Cupp, decides that it is time to leave the good ship SS. Trump & National Rifle Association: Ed Mazza: Conservative Pundit S.E. Cupp Quits The NRA, Makes Powerful Plea For Gun Control: "The former 'NRA Mom' now says 'we must do something'.... S.E. Cupp.... 'I am so sick and tired of participating in this predictable cycle of politics, where a mass shooting happens, the left calls for new gun laws―some meaningful, some unproductive―the right yells "slippery slope" and hides behind the Constitution....' She said that in the past, she’s defended the NRA and its members and argued against stricter gun laws. But not this time: 'I am no longer an NRA member. Being right no longer feels righteous because in the wake of more mass shootings, acts of senseless violence that sent innocent people running for their lives, leaving children orphaned, loved ones dead on the ground, we must do something about guns'... universal background checks, gun violence restraining orders, raising the minimum age for gun purchases to 21, banning 100-round drums, fixing the National Instant Criminal Background Check System, and mental health programs in schools. And she said some people, including domestic abusers and those who make violent threats, 'should never have access to a gun of any kind, period'...

## The Flight to Safety in Asset Markets Has Now Become a Thing in Itself...

Note to Self: The market has now delivered 100 basis points of easing in the ten-year Treasury window since the end of last October. On the 30-year bond, you would have made a 20% profit if you bought it last October and sold it today, compared to a 3.5% profit on the S&P Composite over the same period. That is a major, major sentiment shift. That means that a number of people short debt with riskier operations than the S&P Composite are about to face margin calls and rollover difficulties. We will shortly see how solvent the market judges them.

No, it is not yet August 2007. But it is much closer to August 2007 than I expected to see for another generation:

Continue reading "The Flight to Safety in Asset Markets Has Now Become a Thing in Itself..." »

## Liveblogging: The Anglo-Saxon Chronicle: Death of Oswald

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Death of Oswald: "A.D. 642. This year Oswald, king of the Northumbrians, was slain by Penda, king of the Southumbrians, at Mirfield, on the fifth day of August; and his body was buried at Bardney. His holiness and miracles were afterwards displayed on manifold occasions throughout this island; and his hands remain still uncorrupted at Barnburgh...

...The same year in which Oswald was slain, Oswy his brother succeeded to the government of the Northumbrians, and reigned two less than thirty years. A.D. 643. This year Kenwal succeeded to the kingdom of the West-Saxons, and held it one and thirty winters. This Kenwal ordered the old (20) church at Winchester to be built in the name of St. Peter. He was the son of Cynegils.

Continue reading "Liveblogging: The Anglo-Saxon Chronicle: Death of Oswald" »

Jacob L. Vigdor: Is Urban Decay Bad? Is Urban Revitalization Bad Too?: "Many observers argue that urban revitalization harms the poor, primarily by raising rents. Others argue that urban decline harms the poor by reducing job opportunities, the quality of local public services, and other neighborhood amenities. While both decay and revitalization can have negative effects if moving costs are sufficiently high, in general the impact of neighborhood change on utility depends on the strength of price responses to neighborhood quality changes. Data from the American Housing Survey are used to estimate a discrete choice model identifying households' willingness-to-pay for neighborhood quality. These willingness-to-pay estimates are then compared to the actual price changes that accompany observed changes in neighborhood quality. The results suggest that price increases associated with revitalization are smaller than most households' willingness to pay for neighborhood improvements. The results imply that, in general, neighborhood revitalization is more favorable than neighborhood decline...

Walter Scheidel: A Comparative Perspective on the Determinants of the Scale and productivity of Maritime Trade in the Roman Mediterranean: "The scale and productivity of maritime trade is a function of environmental conditions, political processes and economic development that determine demand, and more specifically of trading costs. Trading costs are the sum of transportation costs (comprised of the cost of carriage and the cost of risk, most notably predation), transaction costs and financing costs. Comparative evidence from the medieval and early modern periods shows that the cost of predation (caused by war, privateering, piracy, and tolls) and commercial organization (which profoundly affects transaction and financing costs as well as the cost of carriage) have long been the most important determinants of overall trading costs. This suggests that conditions in the Roman period were unusually favorable for maritime trade. Technological innovation, by contrast, was primarily an endogenous function of broader political and economic developments and should not be viewed as a major factor in the expansion of commerce in this period...

Jamie Powell: A Delirious Defence of Uber: "What’s the counterargument here? Well, we soon find out: 'In other words, this company isn't losing money. It's the opposite. It's gathering in enormous sums: Gross bookings were up 31% to nearly $16 billion. Revenue was up 14% to$3.2 billion. Riders increased 30% to 99 million. It's difficult to look at those numbers and conclude that Uber is dysfunctional.' But the Business Insider article just told us that it is losing money: 1.6bn in six months.... Revenue growth, in and of itself, is only impressive when combined with positive economics. With an ebitda margin of negative 28.6 per cent last quarter, Uber is still a long way off proving that its business model works sustainably. For completion’s sake, here are the final few paragraphs.... 'Uber did increase its various operational expenses, such as marketing, R&D, and salaries & admin costs. But those are all costs that Uber can control, and cut in the future if need be. For now, the company is investing in its own growth. In other words, this company is still behaving like an "early stage" tech start-up—albeit on a vast scale. This company has a LONG way to go before it tops out. (Think about Facebook when it reached 1 billion people and everyone thought Facebook would slow down.) Investors are idiots for selling their stock right now.' Uber is a decade old global brand whose core business—ride-sharing—is now growing at just 2 per cent. It is also betting heavily that its smaller business lines, such as food delivery and freight, will be a source of future growth. In other words, it’s acting less like a start-up, and more like a legacy tech company scrambling for new growth. Think Oracle, IBM or perhaps even the modern-day Apple. Notice the difference, however. All of these companies have 'cash cow' products which help to keep the buybacks and dividends flowing, as well as funding future bets. Uber on the other hand... Look, there’s something to be said for the hysterical way quarterly results are sometimes reported by the press. After all they often contain a lot of noise and, in isolation, are not that indicative of how a business is really doing. But let’s not pretend Uber’s financials, to date, show a company gathering in cash “'in enormous sums'...

I still don't understand whether Scaramucci has had a genuine Road-to-Damascus moment or whether he has decided that the wind has shifted, and there is more money to be earned via affinity fraud by being anti-Trump than pro-Trump. In either case, it is information that this is happening:

Anthony Scaramucci: The Mooch Says GOP Needs Someone To Replace Trump On The Ticket: "So you and Alisyn have often asked me that and people say, okay, where's the red line where you break from your support from somebody. Because remember, loyalty is symmetrical. It's not asymmetric. What I said to you last week was, geez, this is really polarizing. this is very divisive. As a supporter of his, I would caution we not go in this. You brought up stochastic terrorism. I brought up how this charged rhetoric coming from the bully pulpit of the presidency could lead to some unintended tragic consequences. All I said was, 'I wish the president would stop doing that.' One scintilla of criticism, you get this sort of backlash. And so for me, it's one step too far with the racial charging of his rhetoric and his twitter feet. and you could say, okay, the only reason you're breaking from him now is that he went after you specifically on Twitter. And I'll accept that. I think that to me was a big turning point because I'm looking at that saying, wait a minute. I'm out here supporting him. The guy fired me two years ago. I have been super loyal to this guy, super loyal to the president's agenda. But there's something wrong with the guy as a leader if he can't take constructive criticism or advice from people that have been super loyal to him...

## Fairly Recently: Must- and Should-Reads, and Writings... (August 11, 2019)

• Reflections 11 Years After the Crash: As long as people were confident that the 500 billion of bad mortgage debt would ultimately land on somebody who could absorb it, the only thing that would make a bad recession was if people anticipated a bad recession. And with no Lehman panic—if Bernanke, Paulson, and Geithner had not caused everybody to say quote what the fuck is going on" by allowing Lehman's bankruptcy uncontrolled and then justifying their actions by claiming that they were forbidden by law to support a too-big-to-fail institution that was insolvent and not just illiquid... Without that, no reason to fear even as bad as the S&L crisis...

• Weekly Forecasting Update: August 9, 2019: There was essentially no news about real GDP last week: The Federal Reserve Bank of New York nowcast continues to stand at 1.6% for 2019:Q3. We did see another fifteen basis points of market easing at the long end of the yield. Curve: the 10-Year TIPS yield is now 0.09%. And that, of course, makes equity stock market investments a deal. Patrick Chovanec is worth reading...

• Hoisted from the Archives: A Now-Extended Non-Sokratic Dialogue on Website Design

• DeLong Smackdown: Why I Was Wrong Over 2006-2010...: Let me say what things I was "expecting," in the sense of anticipating that it was they were both likely enough and serious enough that public policymakers should be paying significant attention to guarding the risks that it would create...

• Note to Self: We know that big data can find correlations. We thus fear people will then use those correlations to hack our brains for their profit or advantage—and for our loss.... On the other hand... Big Ad Data is not smart enough to figure out: "although this internet identity is associated with this credit card number, the person surfing the web right now is not the person who buys the bras"...

• Note to Self: et me say that I am 100% behind Roxane Gay here. When Jonathan Weisman was covering economics and monetary policy, he was a "Paul Krugman and Donald Luskin disagree about the shape of the earth: who can tell who is right?" guy. Those of us who talked to him took the incompetence for granted—and more than that: a willful desire to not understand the issues because then he might be unable to properly suck up to the sources he wished to suck up to...

• Note to Self: Why was Jonathan Weisman's economic policy reporting for the Washington Post so execrable back in the mid-2000s? A person who was, as they say, very, very, very, very, very familiar with the matter: "Jonathan's big problem is that he's not that deep into the issues, and he has no backup. There's nobody that he can go to in that building to tell him 'this was how X was trying to mislead you' or 'this is Y's history' or 'be very careful here: if you get this detail Z wrong, they'll come down on you extremely hard'"...

• Note to Self: For programming and Python Jupyter Notebook νBs, who are wondering what they are getting themselves into: Programming Dos and Don'ts: A Running List...

• Looking Backward: From This Week at 24, 20, 16, 12, 8, 4, 2, 1, 1/2, and 1/4 Years Ago (July 31-August 6, 2019): MUST OF THE MUSTS: James M. Buchanan: The "Social" Efficiency of Education: You have to be able to hold in your mind two things at once in order to understand economist James M. Buchanan: (1) He was a total loon: a strong believer in the de Maistrean trinity of Patriarchy, Orthodoxy, Autocracy as necessary for society—essential Noble Lies; a man who in 1970 wanted to shut down America's universities as teachers of evil, and regretted the failure of nerve that made that impossible; a man who saw Martin Luther King Jr. as a teacher of evil—whose response to the Civil Rights movement and its peaceful civil disobedience campaign was not Edmund Burke's "to make us love our country, our country must be lovely", but rather: how dare MLK claim that an African American should be "openly encouraged to use his own conscience"—rather than shutting up and accepting his subservient Jim Crow position in society! (2) A man who saw things that other economists did not and would not have without him...

• Comment of the Day: Graydon: "You get what you reward, and the present mechanism of reward is advertising, fundamentally aligned with increasing people's insecurity so as to increase their likelihood of making a purchase to address that insecurity...

• Comment of the Day: Cosma Shalizi: ":I have used Google as pretty much my only search engine since it became available.... Google should thus have a very complete idea of what I'm interested in.... I can, with charity, understand 'homemaking and interior decor' (because I'd been researching new window blinds), and 'pet food and supplies' (though my cat had died more than a year before). Everything else was just flat wrong, and often mystifyingly so...

• Comment of the Day: Doctor Jay: "I'm very much not getting what I want out of social media. I very much AM getting what I want out of internet search...

• For the Weekend: J.R.R. Tolkien (1925): Light as Leaf on Linden Tree:

• Liveblogging: The Anglo-Saxon Chronicle: Cynegils: "A.D. 635. This year King Cynegils was baptized by Bishop Birinus at Dorchester; and Oswald, king of the Northumbrians, was his sponsor. A.D. 636. This year King Cwichelm was baptized at Dorchester, and died the same year. Bishop Felix also preached to the East-Angles the belief of Christ...

• Liveblogging: The Anglo-Saxon Chronicle: Erkenbert: ""A.D. 639. This year Birinus baptized King Cuthred at Dorchester, and received him as his son...

1. Brian Chappatta: Trump Risks Losing the Fed as a Recession Scapegoat: "The Federal Reserve cut interest rates to account for a 'simmering' trade war. Then the president turned up the heat and put a downturn in play himself. The market signal for a recession is blinking fast and Trump has only himself to blame. The markets have spoken. If they are to be believed, the potential for a U.S. recession has never been greater in the post-crisis era than it is right now. That’s a problem for President Donald Trump because after the events of the past few days, it should be clear that he has effectively forfeited the ability to use the Federal Reserve as a scapegoat for any economic slowdown, an angle he was clearly prepared to play...

2. Jeremy R. Hammond: The Lies that Led to the Iraq War and the Myth of 'Intelligence Failure'

3. Jonathan Stein and Tim Dickinson: Lie by Lie: A Timeline of How We Got Into Iraq: "Mushroom clouds, duct tape, Judy Miller, Curveball. Recalling how Americans were sold a bogus case for invasion...

4. Hubert Horan: Uber’s Path of Destruction: "Uber has disrupted... the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency.... Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else...

5. Yereth Rosen: Record-Low Sea Ice in July Sets Up Conditions For an Ultra-Low Minimum Extent This Fall: "Sea ice extent in September of 2019 is likely to be among the five lowest minimums recorded...

6. Patrick Chovanec: U.S. Market and Economic Review—August 2019

7. Kieran Healy: Frank Oz Muppets and the Big Five Personality Traits

Continue reading "Fairly Recently: Must- and Should-Reads, and Writings... (August 11, 2019)" »

Kara Swisher: Can anyone tame the next internet?: "which jobs will be impacted? It’s not just factory workers, burger flippers, and long-haul truckers. Highly paid lawyers, skilled doctors (don’t let your daughter be a radiologist), and, yes, even lowly journalists will need to find new lines of work. And those tectonic workplace realignments will only become more profound as the AI becomes inevitably—and exponentially—better. To thrive in this environment will require being in a profession that is creative, where analog interactions are critical—one that cannot be easily made digital. Think art, think the caring professions, think anything in which being human trumps cyborg. And since AI becomes ever smarter, it will make sense to allow it to do more and more as we become ever less so.... We’ll also soon see the effects of radical advances in robotics and automation.... The way we wage war is changing dramatically, but it’s not the killer robots we think of...

Pascal Michaillat and Emmanuel Saez: How to design a stimulus package | VOX, CEPR Policy Portal: "the size of the stimulus does not follow the bang-for-the-buck logic.... Stimulus spending should be similarly small when multipliers are small and large. The stimulus should only be large for medium multipliers. Relatedly, the threshold value of one for the multiplier plays no role at all.... A well-designed stimulus package should also depend on the usefulness of public expenditure.... When the elasticity of substitution is higher, extra public goods are more valuable, so stimulus spending is more desirable.... We find that the output multiplier is not a robust statistic to use in stimulus discussion. Instead, we should use the ‘unemployment multiplier’...

Olivier Blanchard and Lawrence H. Summers: Evolution or Revolution: An Afterword: "Since... we wrote... neutral... have likely declined even as the crisis has receded. The notion that low rates largely reflected the after-effects of the financial crisis and would slowly fade away has simply proven wrong.... Fiscal policy has continued to be expansionary in Japan and has turned strongly expansionary in the US and mildly expansionary in Europe.... Inflation has barely reached the Fed’s inflation target.... In the euro area and in Japan, inflation remains below target.... Output is still below potential, at least in the euro area and in Japan.... These facts lead to the inevitable conclusion that fiscal policy will have to play a much bigger role in the future than it has in the past.... For a long time, economists looking at Japan pointed to mistakes in policy and excessive reliance on deficits; it is now clear that the Japanese macroeconomic response was, on net, the right one.... We noted... that both the Depression and the Great Inflation of the 1970s led to dramatic changes in macroeconomic thinking–much more dramatic than have yet occurred in response to the events of the last decade. We think it is increasingly likely that this gap will close in the next few years...

Geoffrey Skelley: Why So Many House Republicans Are Retiring, And Why More Could Be On The Way: "Four Republicans who have criticized Trump or... opposed him.... Texas Rep. Will Hurd.... Indiana Rep. Susan Brooks.... Michigan Rep. Paul Mitchell didn't vote to condemn the president over his tweets, [but] he was openly critical of them.... Alabama Rep. Martha Roby hasn't been critical of Trump recently, and has a very pro-Trump voting record overall, she did say she wouldn't vote for him in 2016 after the release of an Access Hollywood video.... She faced [opposition from a write-in candidate][30] in 2016 and had to survive a primary runoff in 2018.... Tough reelection bids... Hurd.... Georgia Rep. Rob Woodall... only held onto his seat after a recount.... Reps. Kenny Marchant and Pete Olson... won reelection in 2018 by fewer than 5 points.... Republican conference rules... do not allow members to lead committees for more than three consecutive terms, unless they get a special waiver (which is rare).... Texas Rep. Mike Conaway and Utah Rep. Rob Bishop, as each was in his third term.... These early retirements don't necessarily signal a wave of future exits. But... don't be shocked if more Republicans decide to exit stage right...

One very peculiar thing about America is majorities that believe that government doesn't have our back and indeed, shouldn't have our back. This is a very puzzling attitude to see in a democracy: Gillian Tett: Why Japan Isn’t Afraid of Robots: "The social safety net.... 63 per cent of people in Japan think that it is up to the government... to help the population adapt to automation.... In the US, however, only about 30 per cent of the public expect the government to help.... A recipe for anxiety: some of America’s current problems can be traced to the sense of abandonment felt by many workers in deindustrialised regions...

Arthur Eckstein: Mediterranean Anarchy, Interstate War, and the Rise of Rome: "Tarentine ambitions and strategies... were unrealistic: their resources, large though they were for a city-state, were inadequate for dominion over southern Italy... failure to create a stable hegemonic structure. Tarentum was not powerful enough to impose a hierarchical alliance system upon the Italiotes in the manner of Athens in fifth-century Greece, yet it also failed to create a cooperative and integrative league, such as the Achaeans and Aetolians did in Hellenistic Greece. Nothing in that direction was really attempted.... Thus Tarentum differed from Rome in organizational vision and ability—but it was as militaristic and diplomatically aggressive as Rome.... The citizen army remained strong; the government adapted to the increasing pressure from the Italic highlanders with a reasonable policy of hiring mercenaries... and bringing in famous generals... [and] the last half of the fourth century witnessed the erection of the great statues of Nike and Zeus the Thunderer in the city center. The wide claims of Tarentum show that Rome was not alone in Italy in making such claims—just alone in the capacity to enforce them...

I am not sure whether what is needed is for economics to "go digital" as for economics to finally recognize what John Maynard Keynes called "the end of laissez-faire". But since he wrote about the end of laissez-faire 94 years ago, I am not holding my breath for a better economics:

Diane Coyle: Why Economics Must Go Digital: "Drug discovery is an information industry, and information is a non-rival public good which the private sector, not surprisingly, is under-supplying.... Yet the idea of nationalizing part of the pharmaceutical industry is outlandish from the perspective of the prevailing economic-policy paradigm.... Should data collection by digital firms be further regulated?.... The standard economic framework of individual choices made independently of one another, with no externalities, and monetary exchange for the transfer of private property, offers no help...

## J.R.R. Tolkien (1925): Light as Leaf on Linden Tree: For the Weekend

J.R.R. Tolkien: Light as Leaf on Linden Tree:

The grass was very long and thin,
The leaves of many years lay thick,
The old tree-roots wound out and in,
And the early moon was glimmering.
There went her white feet lilting quick,
And Dairon’s flute did bubble thin,
As neath the hemlock umbels thick
Tinûviel danced a-shimmering.

Continue reading "J.R.R. Tolkien (1925): Light as Leaf on Linden Tree: For the Weekend" »

Back, eight short years ago, when Conor Friedersdorf embraced the racism as part of what he saw as an attractive package deal: Conor Friedersdorf (2011): Grappling With Ron Paul's Racist Newsletters: "Were it 1964, I'd never vote for Paul.... But it is not 1964. Other injustices better define our times.... I wouldn't begrudge someone who... decided... the racist newsletters are reason enough to refrain from supporting Paul. In some ways, it would be easiest for me to reach that conclusion.... Among the candidates who could win, Paul is... least likely to deprive innocent foreigners of their God given rights to life, liberty and the pursuit of happiness... most committed to civil liberties and drug legalization at home.... Bygone complicity in racist newsletters doesn't... tell us whose policies, which candidate, would do the most to square American government with the highest ideals of our polity. Support for Paul is grounded for many in the judgment that he is that candidate.... I remain sympathetic to that argument...

There are many obstacles to the successful reintegration of ex-convicts. This—access to credit resources—now looks like a surprisingly important one: Carlos Fernando Avenancio-León: Without Access to Credit, Ex-Cons May Return to Lives of Crime: "Within the former inmate population, those experiencing sharper drops in credit availability are more likely to engage in future criminal activity: For each thousand dollars of available credit card limit lost, recidivism increases by 1.4 percentage points. Accordingly, a history of incarceration and lack of access to credit creates credit-driven crime cycles for this population.  Yet, after accounting for credit history and income, former inmates are less likely to default on loans than individuals who have never been incarcerated. Because former inmates present lower credit risks, lenders extend former inmates slightly more loans, albeit not nearly enough to overcome a lending contraction driven by low credit scores...

Jane Waldfogel and Emma Liebman: Paid Family Care Leave: "The unmet need for leave to care for a family member with a serious illness is actually more widespread and more frequent than it is for the other types of family leave. This is why its relative neglect in research and its uneven treatment by policymakers is all the more striking. For these reasons, this paper focuses on reviewing what we know and do not know about family care leave. In particular, this paper contributes to an understanding of the need for paid leave to care for a seriously ill family member and the current state of policy and research. In doing so, we draw on the best available research on family care leave where available, but because such research is often lacking, we also draw on evidence about family and medical leave more generally when necessary...

I confess I do not understand what is to be done here. These internet platforms are not utilities—the technology is not stable and investments are not large enough—so rate regulation would seem inappropriate. The economies of scale on the production side and the economies of scope on the consumption side are very large, and so it would seem inappropriate to sacrifice them to generate competition at the core services of each platform. Consumer surplus appears to be very large, so reducing the profits to successful innovators seems a very bad idea. And there is the question of whether these firms are giving their customers what they need instead of what they think they want—but do recall that in early generations one socialist critique of the market was that the market economy was making people unfree by failing to force them to wear identical blue overalls, drive identical utilitarian black cards, and listen to properly uplifting music:

Ben Thompson: Tech and Antitrust: "That is not to say that tech deserves no regulation: question of privacy, for example, are something else entirely. Nor, for that matter, is antitrust irrelevant in the United States generally: concentration has increased dramatically throughout the economy. What is driving that concentration matters, though: at the end of the day tech companies are powerful because consumers like them, not because they are the only option. Consumer welfare still matters, both in a court of law and in the court of public opinion...

Our Fearless Leader at Equitable Growth on the very sad, very depressing story of Arthur Laffer. "Charlatans and cranks" was what George W. Bush's chief economist Greg Mankiw called him and his ilk. And Laffer's early promoter Irving Kristol, later half-apologized for his "rather cavalier attitude" toward whether Laffer actually knew what he was talking aboug: "The task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority-so political effectiveness was the priority, not the accounting deficiencies of government":

Heather Boushey: "A few thoughts on Arthur Laffer’s legacy:: "Laffer promoted a set of ideas to policymakers that promised to deliver a more fulsome American Dream, even though they were not grounded in empirical evidence. Time and again, we’ve seen that Laffer’s hypothesis that tax cuts will lead to an amount of growth that would make up for lost revenue and improve economic well-being broadly is false.... Research undermines the contention since the 1970s that lower rates stimulate the economy. What they seem to do instead is increase inequality. Millions of families have felt the effects of stalled incomes and cutbacks in much-needed government services, including education.... Former Kansas Gov. Sam Brownback, a proponent of Laffer’s ideas, admitted that putting his supply-side tax cut plan in place would be ‘a real live experiment’, one that failed so spectacularly his Republican legislature overrode his veto...

Izabella Kaminska: Uber Becomes Modern Art: "Back in September 2016, we cited a BCA report which questioned Uber’s 62.5bn valuation, arguing its model was neither innovative or viable. Unfortunately, the report didn’t really register with the great and the good who have money to burn. Ahead of Uber’s IPO... as much as 120bn was being thrown about by some enthusiastic bankers. Fast forward to August 8, and Uber has truly beaten even the most extravagant of money-burning expectations. Here’s the Q2 results table, possibly in need of framing.... The thing that really hit market sentiment was the slowdown in revenue growth at 14 per cent to $3.2bn. Analysts had been expecting a 20 per cent rate which would have taken the top line to$3.4bn. This is important because Uber’s investment case is based on the thesis that the continuous net losses don’t matter because it’s still a growth company, and its pathway to profitability is through market domination and, of course, revenue growth...

Jean-Claude Juncker: “If it comes to a hard Brexit, that is in no one’s interest, but the British would be the big losers. They are acting as though that were not the case but it is. We are fully prepared even though some in Britain say we are not well set up for a ‘no deal’. But I am not taking part in these little summer games.... We have made clear that we are not prepared to hold new negotiations on the withdrawal agreement but only to make certain clarifications in the framework of the political declarations that regulate future relations between the United Kingdom and European Union. We are well prepared (for no deal) and I hope the British are too...

This was what Conor Friedersdorf back in 2012 was endorsing as part of an attractive package deal: Ron Paul (1992): Fundraising Letter: "I have unmasked the plot for world government, world money, and world central banking... high officials who are wholly owned subsidiaries of the Trilateral Commission and the Council on Foreign Relations.... I’ve been told not to talk, but these stooges don’t scare me. Threats or no threats, I’ve laid bare the coming race war in big cities. The federal-homosexual cover-up on AIDS.... The Israeli lobby, which plays Congress like a cheap harmonica.... The Soviet-style 'smartcard' the Justice Department has in mind for you.... Welfare riots in the big cities. Massive unemployment. The destruction of wealth. The erosion of personal liberties. Vicious economic controls. The exaltation of envy. The suppression of privacy. Authoritarian clamp-downs. Bank and S&L closings on a massive scale. A world dollar crisis as the greenback (or 'pinkback') is rejected for almost any non-paper alternative...

Gary Forsythe: A Critical History of Early Rome: "Historians have traditionally labeled the period c. 1100–800 B.C. the Greek dark age, characterized by village societies headed by local chieftains, from which the city-state eventually arose. The unsettled conditions of the late second millennium B.C. might have extended as far west as eastern Sicily. Coastal sites exposed to sea raids were abandoned, and the inhabitants occupied defensible positions of the interior, such as Pantalica near Syracuse (Holloway 1981, 107–14). It is also noteworthy that at the close of the Bronze Age the major site in the Lipari Islands met with violent destruction and was reoccupied by people from the Apennine Culture of Italy...

Overly cynical, IMHO: Modernization theory is correct in that the "advanced" shows the "backward" more about the "backward"'s own future than the "backward"'s own past and present show. Picking the most attractive "advanced" society and trying to replicate what it does well is always a smart development strategy, if you can go about it smartly—in an Alexander Hamiltonian vein, say:

Nils Gilman: Modernization Theory Never Dies: "Modernization theory was among the most influential historical and policy paradigms to emerge in the United States during the 1950s, but fell into steep academic disrepute from the 1970s forward. Despite this loss of intellectual credibility, however, it has for fifty years continued to exercise a major influence on the developmental imaginary both in the United States and in many other countries. This article examines how modernization theory’s leading progenitor, Walt Whitman Rostow, developed his narrative of modernization to provide a metahistorical theory of development and asserts that the enduring appeal of modernization theory, despite its intellectual flaws, rests on the optimistic historical narrative it proposes and the flattering role it provides in that narrative for policy and intellectual elites...

Comment of the Day: Cosma Shalizi : "I have used Google as pretty much my only search engine since it became available, and used Gmail for all my mail since 2012. I've never shared my account (or my credit cards) with anyone else. Google should thus have a very complete idea of what I'm interested in. Here, as of late 2016 when I poked it, was its list of my inferred interests (verbatim): http://www.stat.cmu.edu/~cshalizi/dm/19/crs-google-interests-2016.png I can, with charity, understand 'homemaking and interior decor' (because I'd been researching new window blinds), and 'pet food and supplies' (though my cat had died more than a year before). Everything else was just flat wrong, and often mystifyingly so (I've never played shooter games, can't stand musicals, had to look up reggaeton, and have no feelings or opinions about Chevrolet one way or the other). In conclusion, superintelligence is the idea that eats smart people....

## August 9, 2019: Weekly Forecasting Update

There was essentially no news about real GDP last week: The Federal Reserve Bank of New York nowcast continues to stand at 1.6% for 2019:Q3. We did see another fifteen basis points of market easing at the long end of the yield. Curve: the 10-Year TIPS yield is now 0.09%. And that, of course, makes equity stock market investments a deal. Patrick Chovanec is worth reading:

Patrick Chovanec: Outlook: "Besides consumption and government spending... the rest was negative in Q2...

...Exports fell by −5.2% while imports were flat... business investment fell by −0.6%, its first quarterly decline in over three years.... Durable goods orders in Q2 were down −2.1% from a year ago.... (The slowdown in U.S. manufacturing matches similar purchasing manager surveys in Europe, Japan, and China, which are all in outright contraction).... Residential investment fell −1.5% in Q2.... New housing permits... were down −4.5% in Q2, from a year ago...

The new tariffs on China—10% on virtually all imports that aren’t already tariffed at 25%, scheduled to take effect in September—are exactly what U.S. companies across multiple sectors have worried and warned about for nearly a year now. Though their direct impact may be limited, the prospect of further escalation hangs like a cloud over business confidence....

Given these uncertainties, U.S. share prices may look daunting even at a 12-month trailing P/E ratio of 19.1x operating earnings, which is far from excessive by historical terms. But they look better compared to U.S. Treasuries at an implied P/E ratio of 60x, returning little more than inflation, or the nearly \$15 trillion in bonds around the world selling at negative yields. Safe harbors are expensive, and likely to prove costly over the longer term, even if the economy could stumble in the meantime. With an equity risk premium at 5.6%—before the latest dip in share prices and bond yields—the prospective rewards to riding out the storm, as opposed to running for cover at any price, are too high for an investor who can endure a few bumps along the way to ignore...

Continue reading "August 9, 2019: Weekly Forecasting Update" »

## Liveblogging: The Anglo-Saxon Chronicle: Erkenbert

The Anglo-Saxon Chronicle (J.A. Giles and J. Ingram trans.): Erkenbert: "A.D. 639. This year Birinus baptized King Cuthred at Dorchester, and received him as his son. A.D. 640. This year died Eadbald, King of Kent, after a reign of twenty-five winters. He had two sons, Ermenred and Erkenbert; and Erkenbert reigned there after his father. He overturned all the idols in the kingdom, and first of English kings appointed a fast before Easter. His daughter was called Ercongota—holy damsel of an illustrious sire! whose mother was Sexburga, the daughter of Anna, king of the East-Angles. Ermenred also begat two sons, who were afterwards martyred by Thunnor...

Continue reading "Liveblogging: The Anglo-Saxon Chronicle: Erkenbert" »

## A Year Ago on Equitable Growth: Fifteen Worthy Reads On and Off Equitable Growth for August 9, 2018

Worthy Reads from Equitable Growth and Friends:

1. J. Bradford DeLong: The Ahistorical Federal Reserve: "Economic developments over the past 20 years have taught–or ought to have taught–the US Federal Reserve four lessons. Yet the Fed’s current policy posture raises the question of whether it has internalized any of them.... The proper inflation target... should be 4% per year.... The two slope[s of] the Phillips Curve... are smaller.... Yield-curve inversion... monetary policy is too tight.... Principal shocks have not been inflationary...

2. Mark Paul, Khaing Zaw, Darrick Hamilton, and William Darity Jr.: Returns in the labor market: A nuanced view of penalties at the intersection of race and gender - Equitable Growth: "Multiple identities cannot readily be disaggregated in an additive fashion. Instead, the penalties associated with the combination of two or more socially marginalized identities interact in multiplicative or quantitatively nuanced ways...

3. Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu: Do Americans want to tax capital? Evidence from online surveys: "Our regression results yield roughly linear desired tax rates on income of about 14 percent... positive desired wealth taxation... three percent when the source of wealth is inheritance, far higher than the 0.8 percent rate when wealth is from savings.... These tax rates are consistent with reasonable parameterizations of recent theoretical optimal wealth tax formulae...

4. Equitable Growth: #JOLTS: "The quit rate... historically high level.... The ratio of unemployment-to-job openings trended upward slightly in June to just under 1.0.... The Beveridge Curve continues to be at levels similar to those in the expansion of the early 2000s...

5. Bridget Ansel and Heather Boushey (2017): Modernizing U.S. Labor Standards for 21st-Century Families: "Boosting women’s economic outcomes [via] paid family leave, fair scheduling, and combatting wage discrimination...

Continue reading "A Year Ago on Equitable Growth: Fifteen Worthy Reads On and Off Equitable Growth for August 9, 2018" »

The China shock was not the only shock American manufacturing has experienced. yet New England politics did not turn nativist in the 1960s. What was the difference? No Fox News?: John F. Kennedy: New England Industry and the South: "The southward migration of industry from New England has too frequently taken place for causes other than normal competition and natural advantages...

Maciej Ceglowski: Our Comrade The Electron: "I want to close with my favorite Termen anecdote, from the end of his life. Termen spent years trying to join the Communist party, and they kept making excuses to turn him away. When he was ninety years old, he applied again, but they told him that to join he had to take a five-year advanced course in Marxism-Leninism. So he did it. He went to night school and did it. In 1991, literally weeks before the fall of the Soviet Union, Termen got his party badge. The 95-year-old Bolshevik was briefly the youngest Communist in the country. Naturally people asked him, 'Lev Sergeyevich, why on Earth would you join the Communist Party now, when everyone else is leaving?' He gave them the most badass answer imaginable: 'I promised Lenin'...

Note to Self: Why was Jonathan Weisman's economic policy reporting for the Washington Post so execrable back in the mid-2000s? A person who was, as they say, very, very, very, very, very familiar with the matter:

Jonathan's big problem is that he's not that deep into the issues, and he has no backup. There's nobody that he can go to in that building to tell him 'this was how X was trying to mislead you' or 'this is Y's history' or 'be very careful here: if you get this detail Z wrong, they'll come down on you extremely hard'...

In retrospect, I think we can conclude that it was not that Weisman was mismanaged by the Washington Post editorial staff: I'm happy to believe that there was gross mismanagement, but gross mismanagement does not lead one to contrast the view of Paul Krugman with that of Donald Luskin or of a White House aide who does not dare give his name and say "economists furiously debate". That is someone who has made a deliberate decision to make their career by being a complaisant mouthpiece for insider anonymous sources

Note to Self: Let me say that I am 100% behind Roxane Gay here. When Jonathan Weisman was covering economics and monetary policy, he was a "Paul Krugman and Donald Luskin disagree about the shape of the earth: who can tell who is right?" guy. Those of us who talked to him took the incompetence for granted—and more than that: a willful desire to not understand the issues because then he might be unable to properly suck up to the sources he wished to suck up too.

Given that history, my mind is closed on the incompetence question. And I'm happy to listen on the racism one:

Roxane Gay: "Guys, Jonathan Weisman emailed me to say he thinks I owe him an 'enormous apology'. The audacity and entitlement of white men is fucking incredible. I am legitimately shocked. Like. What? He also emailed my assistant. WTF? And he also emailed Harper Collins. Uhh, @nytimes, get your boy...
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