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J. Bradford DeLong
Berkeley, CA
J. Bradford DeLong is an economist teaching at the University of California at Berkeley.
Interests: history, economic history, information age, political economy, grand strategy, international relations, material culture., information technology, economics
Recent Activity
**Must-See: CHM Live**: Putting Your Finger On It: Creating the iPhone: "Nitin Ganatra, Scott Herz, and Hugo Fiennes in Conversation with John Markoff... >...It seemed that innovation in mobile devices was beginning to slip away from Silicon Valley.... That all changed abruptly when Steve Jobs stepped onstage at Moscone Center in San Francisco and asserted he was introducing “three revolutionary products” in one package—the iPhone.... Four members of the original development team will discuss the secret Apple project, which in the past decade has remade the computer industry, changed the business landscape, and become a tool in the hands of more than a billion people around the world... Continue reading
Five pieces definitely worth rereading: (1) Tanta watches the gathering financial crisis, which is still in *schadenfreude* mode; (2) Peter Orszag lays out health care reform options; (3) As You Know Bob has fun with electromagnetism; (4-6) are a bunch of well-paid journalists being dicks, and Dan Froomkin and the staff of McClatchy doing their proper jobs. * The Late, Great Tanta of Calculated Risk: The Bear Stearns Reporting Contest * Peter Orszag on Health Care Opportunities and Challenges : "Jared Bernstein says that we must all troop off and read what Peter Orszag, our Nonpartisan High Priest of Policy and Budgetary Rationality, has to say about health care..." * Possibilities for Really Cheap Entertainment : As You Know, Bob: "Come sunset, I went down to the basement and dug out a couple of 48" fluorescent bulbs, and threw them and the family into the car. We drove over to the nearest high-voltage power line, and we watched the fireflies while we waited for full dark, and then we played light sabers in the gloaming..." * Slate and Ron Rosenbaum pwn themselves completely by complaining about the salacious picture of Angelina Jolie they republish: Self-Pwnage Department * **Rick Perlstein**: :... Continue reading
**Must-Read: Nick Bunker**: Is the Fed being misguided by the Phillips curve?: "Looking at the prime-age employment rate, the labor market might have a bit more tightening to do before wage growth is going to pick up significantly... >...But if and when significantly higher wage growth does arrive, will it necessarily translate into higher inflation? That would require a strong passthrough of wage growth into higher inflation. But perhaps the recent increase in the share of income going to labor as the U.S. economy recovers indicates that companies are more willing to cut into their own share of income before hiking prices. Certainly, the relationship between wage growth and inflation today is quite flat.... >Cardiff Garcia points out at FT Alphaville that the members of the Federal Open Market Committee have continuously underestimated how low the U.S. unemployment rate can go. Perhaps inflation will pick up once the effects of nearly 4 percent unemployment are felt, but if unemployment can go lower, then underestimating inflation again will result in fewer people with jobs and lower wage growth for those with them. That would be an unfortunate miscalculation based on perhaps misguided reliance on the Philips curve... Continue reading
**Should-Read: Sergio Espuelas**: The inequality trap. A comparative analysis of social spending between 1880 and 1930: "Using social transfers as an indicator of redistribution and three alternative proxies for inequality... >...the top income shares, the ratio of the GDP per capita to the unskilled wage, and the share of non-family farms... inequality did not favour the development of social policy between 1880 and 1930.... Social policy developed more easily in countries that were previously more egalitarian, suggesting that unequal societies were in a sort of inequality trap, where inequality itself was an obstacle to redistribution... Continue reading
**Must-Read**: **Mark Thoma** sends us to: **Jens H.E. Christensen and Glenn D. Rudebusch**: New Evidence for a Lower New Normal in Interest Rates: "Inflation-indexed bond prices include a real term premium... face appreciable liquidity risk... >...To estimate the equilibrium rate of interest from TIPS in the presence of liquidity and real term premiums, we use an arbitrage-free dynamic term structure model of real yields augmented with a liquidity risk factor.... The identification of the liquidity risk factor comes from its unique loading for each individual TIPS. This loading assumes that, over time, an increasing proportion of any bond’s outstanding inventory is locked up.... By observing prices from a cross section of TIPS that have different age characteristics, we can identify the liquidity factor. With estimates of both the liquidity premium and real term premium, we calculate the equilibrium interest rate as the average expected real short rate over a five-year period starting five years ahead. Our finance-based estimate of the natural rate of interest is shown as the green line in Figure 1... Continue reading
**Must-Read**: Low-end labor markets simply do not appear to work like competitive markets. Rather, they work like markets in which employers have substantial market power—and thus minimum wage laws have the same efficiency benefits as does natural-monopoly rate regulation. Why low-end labor markets do not appear to work like competitive markets is a very interesting—and, I believe, unsolved—question. But it is in all likelihood a fact to deal with: **Michael Reich, Sylvia Allegretto, and Anna Godoey**: Seattle’s Minimum Wage Experience 2015-16: "Seattle implemented the first phase of its minimum wage law on April 1, 2015... >...raising minimum wages from the statewide $9.47 to $10 or $11, depending upon business size, presence of tipped workers and employer provision of health insurance. The second phase began on January 1, 2016, further raising the minimum to four different levels, ranging from $10.50 to $13, again depending upon employer size, presence of tipped workers and provision of health insurance.... We analyze county and city-level data for 2009 to 2016 on all employees counted in the Quarterly Census of Employment and Wages and use the “synthetic control” method.... Our study focuses on the Seattle food services industry... an intense user of minimum wage workers; if... Continue reading
**Should-Read: Eugene Wei** (2012): Amazon, Apple, and the beauty of low margins: "Amazon's core retail business is, I'd argue, still very secure... >...I can't think of a tech retail competitor that is a legitimate threat to Amazon in selling most physical goods. Where Amazon is most vulnerable in retail is those areas where the game shifted on them, and that's in the media lines where physical books, CDs, and DVDs are being digitized. Since no physical product must be transported through a distribution system, Amazon's operational efficiency advantages there are less effective against competition. But in the arena of buying something online and having a box delivered to your doorstep, who really scares Amazon? >Another advantage to low margin models is increased customer loyalty. Most of the products Amazon sells are commodity items.... In that world, the lowest price tends to win.... If you're the low-cost leader, customers will forgive a lot of sins. That margin of error, like the competitive moat, buys you peace of mind. I could spend time price-shopping every item on Amazon, but these days, I don't really bother. Amazon's website design is not going to win any design awards, it's a bit of a Frankensteinian... Continue reading
* Three Links for 2007-06-21 : "Spencer Ackerman: There are about 200 Foreign Service Officers in the U.S. Embassy in Baghdad. Ten are fluent in Arabic..." * Your #1 Source for DC News Ought to Be: McClatchy Washington Bureau * Joshua Micah Marshall thinks Rudy Giuliani Is Toast * Dogs Are Allowed * International Income Comparisons Once Again 2007-06-20 * Guest Lecture on John Maynard Keynes * Greg Ip Writes About Ben Bernanke, Mortgages, the Financial Accelerator, and the Macroeconomic Consequences of "Financial Fragility" * Mark Thoma Is Irate This Morning: Modelling the Social Value of Microsoft * Weblog Organization * Sheryl Sandberg Interviews Michael Bloomberg * Ten Links for 2007-06-20 Continue reading
**Over at [Equitable Growth]( Must- and Should-Reads:** * Hoisted from the Archives from 2007: How Supply-Side Economics Trickled Down… * **Donald A. Yerxa**: AN INTERVIEW WITH BRYAN WARD-PERKINS ON THE FALL OF ROME : "'AT THE HOUR OF MIDNIGHT THE SALERIAN GATE WAS silently opened, and the inhabitants were awakened by the tremendous sound of the Gothic trumpet... * **Heather Boushey**: The unfortunate power of stereotypes: "If stereotypes lead judges to snap judgements that are racially biased... * **Nick Bunker**: Weekend Reading: Shifting Targets Edition: "Some critics of the disability insurance system in the United States think it is too easy to access... * **Ben Thompson**: Amazon’s New Customer: "the key to understanding the purchase of Whole Foods... is that Amazon is buying a customer—the first-and-best customer that will instantly bring its grocery efforts to scale... * **Mark Thoma**: Trump’s Apprenticeships are Based upon a Problem That Doesn’t Exist: "The evidence... points to a skills mismatch... * **Izabella Kaminska**: On the rise of unproductive entrepreneurs like Travis Kalanick : "Robert E. Litan and Ian Hathaway... citing the work of William Baumol, who passed away last month... * **Paul Krugman**: A Finger Exercise On Hyperglobalization: "I find myself trying to find... Continue reading
It looks to me as though I should admit (to myself at least) that I am unlikely to ever teach my course the "classical" Mediterranean economy. Thus it is time for me to move it to the [Assignment Desk][]--things that I really wish other people work on. [Assignment Desk]: Here is the skeleton of the reading list: things that I think must be on it. They all, of course, require ancillary follow-on pieces developing, applying, and critiquing each of the principal authors' arguments. In addition, many of them are sufficiently difficult and demanding that they require a preparatory warm-up reading or two as well. All of those are absent: * **Jared Diamond** (1987): The Invention of Agriculture: The Worst Mistake in the History of the Human Race * **Rick Steckel** (2008): Biological Measures of the Standard of Living * **Moses Finley** (1954): The World of Odysseus * **Moses Finley** (1965): Technical Innovation and Economic Progress in the Ancient World * **William Baumol** (1990): Entrepreneurship: Productive, Unproductive, and Destructive * **Aldo Schiavone** (2002): The End of the Past * **Moses Finley** (1973): The Ancient Economy * **Peter Temin** (2013): The Roman Market Economy * **Paul Seabright** (2010): The Company of... Continue reading
**Should-Read: Donald A. Yerxa**: AN INTERVIEW WITH BRYAN WARD-PERKINS ON THE FALL OF ROME : "'AT THE HOUR OF MIDNIGHT THE SALERIAN GATE WAS silently opened, and the inhabitants were awakened by the tremendous sound of the Gothic trumpet... >...Eleven hundred and sixty-three years after the foundation of Rome, the Imperial city, which had subdued and civilized so considerable a part of mankind, was delivered to the licentious fury of the tribes of Germany and Scythia.” The emotion and drama that flowed so eloquently from Edward Gibbons’s pen has been largely drained from our contemporary historical imagination. Recent scholar- ship has drastically transformed the subject that fascinated students of history for centuries, and Oxford historian Bryan Ward-Perkins fears that something important is being lost... Continue reading
**Hoisted from the Archives Notes: Polanyi: Aristotle Discovers the Economy : A whole bunch of this article is simply wrong: the claims that "in the fourth century... Greeks initiated the gainful business practices that in much later days developed into the dynamo of market comnpetition" are false. This means that Polanyi is wrong when he says that Aristotle is examining a new phenomenon when he looks at the economy. Aristotle is examining an old phenomenon from the point of view of an Athenian aristocrat. But there is much of value in Polanyi's exposition of what Aristotle says... p. 79: Trade is "natural" when it serves the survival of the community by maintaining its self-sufficiency... the operation of giving a share... from on's surplus. The rate... follows from the requirement of _philia_, i.e., that the goodwill among the members persist.... The just price, then, derives from the demands of philia as expressed in the reciprocity which is of the essence of all human community... p. 80: Trade... is "natural" as long as it is a requirement of self-sufficiency. Prices are justly set if they conform to the standing of the participants in the community, thereby strenghening the goodwill on which community... Continue reading
**Should-Read: Nick Bunker**: Weekend Reading: Shifting Targets Edition: "Some critics of the disability insurance system in the United States think it is too easy to access... >...New research finds, in fact, the opposite. The Federal Reserve raised interest rates on Wednesday.... Perhaps it’s time to rethink the current targeting regime. Seventeen percent of workers in the United States have unpredictable, variable schedules.... The Kansas supply-side tax cut experiment failed. Understanding why it failed is important given that the same model underlies the proposed tax reform of the Trump administration... Continue reading
**Should-Read: Heather Boushey**: The unfortunate power of stereotypes: "If stereotypes lead judges to snap judgements that are racially biased... >...then they almost certainly will have an impact in other important areas where such arbitrary decisions could be made. A better understanding of how these stereotypes can be broken down and eliminated will help create policies that lessen such racially inequitable outcomes... Continue reading
**Must-Read: Ben Thompson**: Amazon’s New Customer: "the key to understanding the purchase of Whole Foods... is that Amazon is buying a customer—the first-and-best customer that will instantly bring its grocery efforts to scale... >...Today, all of the logistics that go into a Whole Foods store are for the purpose of stocking physical shelves: the entire operation is integrated. What I expect Amazon to do over the next few years is transform the Whole Foods supply chain into a service architecture based on primitives: meat, fruit, vegetables, baked goods, non-perishables (Whole Foods’ outsized reliance on store brands is something that I’m sure was very attractive to Amazon). What will make this massive investment worth it, though, is that there will be a guaranteed customer: Whole Foods Markets. In the long run, physical grocery stores will be only one of the Amazon Grocery Services’ customers: obviously a home delivery service will be another, and it will be far more efficient than a company like Instacart trying to layer on top of Whole Foods’ current integrated model. I suspect... Amazon Grocery Services will be well-placed to start supplying restaurants too, gaining Amazon access to another big cut of economic activity. It is the... Continue reading
**Should-Read: Mark Thoma**: Trump’s Apprenticeships are Based upon a Problem That Doesn’t Exist: "The evidence... points to a skills mismatch... >...workers employed in jobs that do not match their qualifications, or unemployed workers with the right skills but located in the wrong place – rather than a shortage of workers with the requisite skills. Once again, the solution to this problem is for firms to offer higher wages and induce qualified unemployed workers to relocate or change jobs.... [But] firm owners would prefer to fix the problem in another way. If the supply of qualified workers can be increased sufficiently through government supported retraining programs and increased immigration, then the upward pressure on wages will disappear.... >[Should] job retraining programs... be paid for by the government or individual businesses[?]... Consider... the degree of specialization in training. The government should help with very general skills that are useful across a wide variety of occupations, but the more specialized the training becomes in terms of skills that are only useful in a particular industry, the larger the share of the costs that should be paid by the firms who benefit.... The problem isn’t a skills gap. There will always be counterexamples to... Continue reading
**"A Conspiracy So Immense"**: Is the American right any crazier than it ever was? No. It was the submersion of the crazy right during the "end of ideology" age that was weird. Exhibit 1: William F. Buckley and Eliot Abrams. Buckley, remember, is the person whose reaction to Catholics being allowed into Yale on equal terms was: "let's be sure to keep the Jews down!" And Abrams... you will see... "A Conspiracy so Immense": Tail-Gunner Joe McCarthy : William F. Buckley says: >McCarthy's record is... not only much better than his critics allege, but, given his metier, extremely good.... [he] should not be remembered as the man who didn't produce 57 Communist Party cards but as the man who brought public pressure to bear on the State Department to revise its practices and to eliminate from responsible positions flagrant security risks... Elliot Abrams says: >McCarthy did not need to show that specific employees were guilty of espionage; they needed only to show that there was some evidence that an employee was a security or loyalty risk, and that the State Department... had willfully overlooked it.... What were the charges? They ranged from accusations of actual espionage—handing secret documents over to... Continue reading
**Live from the Mission: Mission Chinese**: Mongolian Long Beans: SERVES 4 AS A SIDE DISH: "I’m not exactly sure why we call these Mongolian long beans... >...our recipes have a tendency to get away from their original idea. But because Chinese cuisine is so complex and, aside from the occasional nitpicker, nobody knows anything about it anyway, we don’t get any complaints. At the end of the day, this is a really, really simple sauté, with multiple layers of spice from the chili crisp, dried chiles, and fresh horseradish. The beans are blanched and then stir-fried quickly so they retain their crunch: >* Kosher salt >* 2 cups (2-inch) pieces Chinese long beans (or substitute green beans) >* 2 tablespoons vegetable or peanut oil >* 1 tablespoon minced garlic >* 1 tablespoon Chili Crisp >* 3 Tianjin chiles or other medium-hot dried red chiles, like chiles Japones >* 1 tablespoon fermented black beans >* ¼ onion, sliced (about ⅔ cup) >* 1 teaspoon Mushroom Powder >* ½ teaspoon ground cumin >* ½ teaspoon sugar >* 2 tablespoons soy sauce >* 2 tablespoons Fried Garlic >* 1 tablespoon grated fresh horseradish >Bring a pot of salted water to a boil. Blanch... Continue reading
**Should-Read: Izabella Kaminska**: On the rise of unproductive entrepreneurs like Travis Kalanick : "Robert E. Litan and Ian Hathaway... citing the work of William Baumol, who passed away last month... >...Baumol’s overarching theory is fantastically compelling. It suggests the number of entrepreneurs in an economy is essentially fixed and what influences a nation’s entrepreneurial output is how those entrepreneurs are incentivised.... >>Entrepreneurs are always with us and always play some substantial role. But there are a variety of roles among which the entrepreneur’s efforts can be reallocated, and some of those roles do not follow the constructive and innovative script that is conventionally attributed to that person. Indeed, at times the entrepreneur may even lead a parasitical existence that is actually damaging to the economy. How the entrepreneur acts at a given time and place depends heavily on the rules of the game—the reward structure in the economy—that happen to prevail. >Baumol’s paper references Rome as a historic example of these poor incentives structures in play.... Technologies which were fully available in Roman times languished even though they would spread like wildfire during the high middle ages. What this implies is that innovation and output doesn’t necessarily languish because of... Continue reading
**Should-Read: Paul Krugman**: A Finger Exercise On Hyperglobalization: "I find myself trying to find simple ways to talk about 'hyperglobalization'... >...The idea here is to think about the effects of transport costs... the same way trade economists have long thought about 'effective protection'.... To overcome 10% transport costs this assembly operation must be 38% cheaper than in the advanced country. But this in turn means that even a seemingly small decline in transport costs could have a large effect on the location of production, because it drastically reduces the production cost advantage emerging markets need to have. And it leads to an even more disproportionate effect on the volume of trade, because it leads to a sharp increase in shipments of intermediate goods as well as final goods.... We get a lot of 'value chain' trade. This, I think, is what happened after 1990, partly because of containerization, partly because of trade liberalization in developing countries. But it’s also looking more and more like a one-time thing... Continue reading
A bunch of stuff. This is, I think, the most worth reading. It's a big problem. It's a big problem that we have had ever since Newt Gingrich launched his assault on the George H.W. Bush GOP, and the George H.W. Bush GOP responded by surrendering unconditionally: * A Proposed Pecking Order for Honest Conservatives : As far as honest conservatives are concerned, it's a difficult question. Those I usually suggest... I find dismissed as "not typical conservatives. We want a representative of the conservative point of view. Someone like Larry Kudlow or Ramesh Ponnuru."... Those who reject my advice are (as is almost always true) making a mistake.... We want an "honest conservative"--a conservative intellectual adversary we can respect, who is also intelligent. But their first move is to define a "conservative" as a public supporter of the Bush regime and its deeds. That means, I think, that they are searching the empty set. Slavoj Zizek applied this to the puppet regimes of Eastern Europe under the iron curtain: "The Trilemma: Of the three features—-personal honesty, sincere support of the regime, and intelligence—-it was possible to combine only two, never all three. If one was honest and supportive, one... Continue reading
Not as bad as Kevin Hassett's declarations that CERN's Large Hadron Collider might "swallow the Earth" and that the U.S. has "no recourse short of military action" to deal with the fact that "as science progresses, the possibility climbs ever higher that the fondest dreams of scientists might entail risks of planetary destruction.... The best science explores things far from our understanding. How can we know that things we do not understand will not kill us?" But very bad even so: **Kevin Hassett** (June 18, 2007): Why Did the Fed Help North Korea Launder Money? : "Last week the New York Federal Reserve made what may go down as the most misguided move in the history of the Federal Reserve system.... >...They laundered money for North Korea. A painful flurry of hearings may soon be on the horizon. Last week a group of influential Republicans, including the ranking member of the House Committee on Foreign Affairs, Ileana Ros-Lehtinen, asked the Government Accountability Office to investigate whether anti-laundering and counterfeit laws were broken. They may well have been. Here is the back story: >Last February, North Korea approved a new version of the Clinton administration’s framework for shutting its renegade nuclear... Continue reading
A baker's dozen: * One piece on the information-age economy (CITRIS) * One piece on finance (equity premium) * One piece on quantum weirdness (erasers) * Two pieces on the public sphere's inadequacies (Greenspanese, supply-siders) * Five pieces on journamalism (Gordon, Frankel, and Hiatt; Douthat and Ricks; Bird on Hiss; the _Economist's_ Lexington; Joe Klein) * Three pieces on the pathologies of the right (Luskin, Novak, the end of the reality-based right) * **Hoisted from the Archives from 2001**: Information Technology and the Future of Society: My CITRIS Kickoff Talk : But now as we try to realize the technological promise of information technologies, the old forms of economic organization no longer have a natural fit with the requirements of technological development and economic growth. Once an "information good" has been produced, sharing it with another person doesn't reduce the rest of society's resources and opportunities. So there is no efficient-distribution reason to charge a price for it. But where then does the flow of signals to assess which production organizations are efficient come from? In an earlier age we would be more inclined to rely on government funding, but these days we have a keen awareness of the advantages... Continue reading
**Must-Reads**: * **David Glasner**: FIFTEEN THOUSAND WORDS ON TEMPORARY EQUILIBRIUM, EXPECTATIONS, AND CONSISTENCY OF PLANS * **Neel Kashkari**: Why I Dissented Again: "The economy is sending mixed signals: a tight labor market and weakening inflation... * **Janet Yellen and Nancy Marchall Genzer**: Janet Yellen Interested in Reevaluating 2% : "Nancy Marchall Genzer, Marketplace: 'Recently, a group of economists sent the Fed a letter... * **Lawrence Summers**: 5 reasons the Fed may be making a mistake : "The... paradigm... is highly problematic. Much better would be a “shoot only when you see the whites of the eyes of inflation” paradigm... * **David Grabowski, Jonathan Gruber, and Vincent Mor**: You’re Probably Going to Need Medicaid: "Imagine your mother needs to move into a nursing home... * **Barry Ritholtz**: Tax Reform Is Dead: "The long-awaited 'pivot towards being presidential' hasn’t arrived, and by all indications never will... * **Nick Bunker**: On Twitter: "That staffer was probably looking for a long time..." * **Robert Waldmann** (2007): The Simple Analytics of Progressive Income Redistribution: "Economists generally agree that redistribution reduces money-metric welfare... ---- **Should-Reads:** * **Brad DeLong** (2007): Tom Grubisich Is One Unhappy Camper: "Tom Grubisich... a former _Washington Post_ reporter and editor [says]... *... Continue reading
**Hoisted from the Archives**: How Supply-Side Economics Trickled Down... : Bruce Bartlett's piece on supply-side economics: >How Supply-Side Economics Trickled Down - New York Times: AS one who was present at the creation of “supply-side economics” back in the 1970s, I think it is long past time that the phrase be put to rest. It did its job, creating a new consensus among economists on how to look at the national economy. But today it has become a frequently misleading and meaningless buzzword that gets in the way of good economic policy... sparked an interesting and useful debate at Mark Thoma's _Economist's View_ (which I previously noted). After thinking about it, I want to weigh in again--on the side of Bruce Bartlett as opposed to Paul Krugman. It's not that Paul says anything wrong about what he and his MIT colleagues thought at the end of the 1970s, but IMHO he underestimates the intellectual gulf between Cambridge and Washington. There are two issues here--stabilization policy and growth policy. (1) On stabilization policy: Bartlett says that the Keynesians around 1980 believed that full employment should be produced via fiscal policy--spending increases and tax cuts, preferably spending increases, to boost aggregate demand--and... Continue reading