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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
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[Walrus Cam - Round Island - Oceans - explore](http://explore.org/live-cams/player/walrus-cam-round-island): Continue reading
Posted yesterday at Brad DeLong's Grasping Reality...
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[**Over at Equitable Growth:**][1] **Robert Waldmann**: [In Which I try to Defend Janet Yellen from Brad DeLong](http://angrybearblog.com/2015/05/in-which-i-try-to-defend-janet-yellen-from-brad-delong.html): "Fed Chair Janet Yellen said, among other things: >>For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term. After we begin raising the federal funds rate, I anticipate that the pace of normalization is likely to be gradual. The various headwinds that are still restraining the economy... [**READ MOAR**][1] [1]: http://equitablegrowth.org/?p=11572 >The news is that “some point this year” means “not next month” A possible increase in June 2015 used to be discussed a lot. >Brad DeLong argues that raising rates “sometime this year” would be crazy... the speech includes no consideration of the risk of hitting the zero lower bound due to a shock after raising rates.... I’m going to go to... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality...
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**Must- and Should-Reads:** * **Richard Thaler**: [Unless You Are Spock, Irrelevant Things Matter in Economic Behavior](http://mobile.nytimes.com/2015/05/10/upshot/unless-you-are-spock-irrelevant-things-matter-in-economic-behavior.html?smid=tw-share&_r=0&referrer=) * Social Credit! **Mark Blyth, Eric Lonergan and Simon Wren-Lewis**: [Now the Bank of England needs to deliver QE for the people. We propose that the government legislates to empower the Bank with the ability to make payments directly to the household sector...](http://www.theguardian.com/business/economics-blog/2015/may/21/now-the-bank-of-england-needs-to-deliver-qe-for-the-people?CMP=share_btn_tw) * **Must-Read: Christopher L. Foote and Christopher F. Goetz** (2005): [The Impact of Legalized Abortion on Crime: Comment](http://equitablegrowth.org/?p=11553) * **Must-Read: Nicholas Bagley**: [Wreck the RUC](http://equitablegrowth.org/?p=11551) * **Must-Read: William Lazonick**: [Stock buybacks: From retain-and reinvest to downsize-and-distribute](http://equitablegrowth.org/?p=11555) * **Simon Johnson and Andrei Levchenko**: [The Trans-Pacific Partnership (TPP): This Is Not About Ricardo](http://baselinescenario.com/2015/05/21/the-trans-pacific-partnership-tpp-this-is-not-about-ricardo/) **Over at [Equitable Growth](http://EquitableGrowth.org)--[The Equitablog](http://equitablegrowth.org/blog)** * **Casey Schoeneberger**: [Weekend reading](http://equitablegrowth.org/) * **Kavya Vaghul**: [What about commuting to new economic opportunities?](http://equitablegrowth.org/) **Plus:** * [Things to Read on the Evening of May 25, 2015](http://equitablegrowth.org/?p=11570) **And Over Here:** * [Federal Reserve ??????????](http://equitablegrowth.org/2015/05/22/federal-reserve/) * [Four Ways in Which the World Has Surprised Me Over the Past Decade with Its Economics](http://equitablegrowth.org/2015/05/22/four-ways-world-surprised-past-decade-economics/) **Might Like to Be Aware of:** * **Will Moore**: [A glass-half-full view of academic fraud in political science - The Washington Post](http://www.washingtonpost.com/blogs/monkey-cage/wp/2015/05/21/a-glass-half-full-view-of-academic-fraud-in-political-science/) * **Daniel Zadik**: ["The Y chromosomes of the majority of European men... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality...
**Comment of the Day: Kip W** [on G.K. Chesterton:](http://nielsenhayden.com/makinglight/archives/016231.html#016231) " I have enjoyed Chesterton's Father Brown series a good deal... >...but I get a whiff from it now and then that makes the simple man of faith and his universe seem like a bit of a stacked deck, and this makes me sad. >Of course, all freethinkers are idiots or knaves in his world (though he does have barbs for those who take too much on authority, it seems). >Then there's N. >Ned, the black boxer who figures highly in 'The God of the Gongs.' Ned is his first name, N. stands for his descriptor, the n- word. Chesterton goes full jacket racist on Ned (I sometimes excuse stereotyping in older sources as xenophobia, rather than racism; a slightly lesser sin, but here, I can't even offer that straw.), larding his descriptions with animal comparisons, and having Ned roll his eyes whilst wearing a silk hat. The frosting on the cake comes when Father Brown himself, the humblest, most pious soul in the universe which he inhabits, tells his associate: >>That negro who has just swaggered out is one of the most dangerous men on earth, for he has the... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality...
**Eleanor Rooseelt**: [My Day](https://www.gwu.edu/~erpapers/myday/displaydoc.cfm?_y=1945&_f=md000033): >HYDE PARK, Thursday—I have a letter from the Veterans Administration informing me that the educational age limit in the GI Bill of Rights is not nearly as crippling as it might seem. >'Any veteran,' they write: >>who meets the basic eligibility requirements, Title #2, Public #346, 78th Congress, in respect to length and character of active service may (without regard to his age at the time of his entrance into active service) pursue a refresher or re-training course for a period of time not in excess of one year, or the equivalent thereof of part-time study, or for such lesser time as may be required for completion of the course chosen by him. >>It is only when the question of education or training for a period or periods in excess of one year arises that the age of the veteran, at the time of his entrance into active service, becomes an essential consideration. If a person who was over 25 when he entered active service is able to establish, by competent and acceptable evidence, that his education was impeded, delayed, interrupted or interfered with by reason of his entrance into active service, he may be entitled... Continue reading
Posted yesterday at Brad DeLong's Grasping Reality...
**Live from La-La Land:** Is Maureen Dowd really this clueless as to how she is appearing to Uber drivers--and to her readers? **Maureen Dowd**: [Driving Uber Mad](http://www.nytimes.com/2015/05/24/opinion/sunday/maureen-dowd-driving-uber-mad.html?_r=0): "I had Uber. Even in the land of movie stars, you could feel like a movie star when your Uber chauffeur rolled up... >...But, suddenly, they scattered in the opposite direction. I stood in the driveway, perplexed. Finally, a car pulled up, and the driver waved me in. ‘Do you know why no one wanted to pick you up?’ he asked. ‘Because you have a low rating.’... I was shocked. Blinded by the wondrous handiness of Uber, I had missed the fact that while I got to rate them, they got to rate me back. Revealing that I had only 4.2 stars, my driver continued to school me. ‘You don’t always come out right away,’ he said, sternly, adding that I would have to work hard to be more appealing if I wanted to get drivers to pick me up. Uber began to feel less like a dependable employee and more like an irritated boyfriend.... >What I had loved about Uber was that, unlike in every other aspect of my high-tech world, I... Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality...
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****: [Hoover and Truman](https://www.trumanlibrary.org/hoover/internaltemplate.php?tldate=1945-05-24&groupid=5130&collectionid=hoover): >Diary entry, Eben Ayers, May 24, 1945: ---- >*Streams: Liveblogging History* Continue reading
Posted 2 days ago at Brad DeLong's Grasping Reality...
**Prime Minister Antonio Salandra**: [Italian Entry into the War](http://www.firstworldwar.com/source/italiandeclaration.htm): >I address myself to Italy and to the civilized world in order to show not by violent words, but by exact facts and documents, how the fury of our enemies has vainly attempted to diminish the high moral and political dignity of the cause which our arms will make prevail. >I shall speak with the calm of which the King of Italy has given a noble example, when he called his land and sea forces to arms. I shall speak with the respect due to my position and to the place in which I speak. >I can afford to ignore the insults written in Imperial, Royal, and Archducal proclamations. Since I speak from the Capitol, and represent in this solemn hour the people and the Government of Italy, I, a modest citizen, feel that I am far nobler than the head of the house of the Hapsburgs. >The commonplace statesmen who, in rash frivolity of mind and mistaken in all their calculations, set fire last July to the whole of Europe and even to their own hearths and homes, have now noticed their fresh colossal mistake, and in the Parliaments of... Continue reading
Posted 3 days ago at Brad DeLong's Grasping Reality...
>*Streams: Cycle: For the Weekend* Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
[**Over at Equitable Growth**][1] It seems to me that this is likely to be analytically wrong--or, at least, far from the optimal policy under any expections scenario: **Janet Yellen**: [The Outlook for the Economy--May 22, 2015](http://www.federalreserve.gov/newsevents/speech/yellen20150522a.htm): "Given this economic outlook and the attendant uncertainty... [**READ MOAR**][1] [1]: http://equitablegrowth.org/?p=11562 >...how is monetary policy likely to evolve over the next few years? Because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward-looking manner. Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy. For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term. >After we begin raising the federal funds rate, I anticipate that the pace of normalization is likely... Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
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[**Over at Equitable Growth**][1] A good day yesterday at the University of California center in Sacramento, which is in the basement on K St. a couple of blocks away from the California state capital. 20 students, and then 100 for the lecture. (And I do not yet have the URL for the videotape.) [**READ MOAR**][1] [1]: http://equitablegrowth.org/?p=11560 I started out saying: I find my peers, as they age, become increasingly unwilling to mark their beliefs to market. They increasingly turn their smarts and their cleverness to rationalizing why they can still believe what they believed in their 20s. This is not wise. This is, in fact, very dumb. And this is boring. I said: I do not want to be boring here today. You do not want me to be boring here today. So let me go against this type of the aging middle-aged professor. Let me, instead, spend my time this lunchtime detailing four points in economics at which the world has surprised me over the past decade, and in which as a result reality has led me to shift my beliefs. In brief: * The world has turned out to be more Keynesian than I would have imagined... Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
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**Must-Read: William Lazonick**: [Stock buybacks: From retain-and reinvest to downsize-and-distribute](http://equitablegrowth.org/?p=11555): "Stock buybacks are an important explanation for both the concentration of income... >...among the richest households and the disappearance of middle-class employment opportunities in the United States over the past three decades. Over this period, corporate resource-allocation at many, if not most, major U.S. business corporations has transitioned from ‘retain-and-reinvest’ to ‘downsize-and-distribute,’ says William Lazonick in a new paper.... Lazonick also challenges many of the notions associated with maximizing shareholder value, an ideology that has come to dominate corporate America. Lazonick calls for a decrease, or even a ban, in stock buybacks so companies will be able to use these funds to finance capital expenditures but more importantly to attract, train, retain, and motivate its career employees. And some of the funds made available by a buyback ban can even flow to the government, he argues, as tax revenues for investments in infrastructure and human knowledge that can underpin the next generation of innovation. > Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
**Must-Read: Christopher L. Foote and Christopher F. Goetz** (2005): [The Impact of Legalized Abortion on Crime: Comment](http://equitablegrowth.org/?p=11553): "This comment makes three observations about Donohue and Levittʹs [2001] paper on abortion and crime... >...First, there is a coding mistake in the concluding regressions, which identify abortionʹs effect on crime by comparing the experiences of different age cohorts within the same state and year. Second, correcting this error and using a more appropriate per capita specification for the crime variable generates much weaker results. Third, earlier tests in the paper, which exploit cross‐state rather than within‐state variation, are not robust to allowing differential state trends based on statewide crime rates that pre‐date the period when abortion could have had a causal effect on crime. > Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
**Live from the Elmwood Cafe: Charlie Jane Anders**: ["Mad Max: Fury Road Is An Astonishing Work Of Art ](http://io9.com/mad-max-fury-road-is-an-astonishing-work-of-art-1704715858): "Mad Max: Fury Road is like a really great rock concert... >...where you hold up your lighter until you burn your fingertips and you scream yourself hoarse and afterwards you feel like you’ve had a personal, beautiful mindf---. This is one of the few movies I’ve ever seen where the whole audience broke into spontaneous, loud applause a third of the way in. The over-the-top, stylized, absurdist aesthetic is pushed to its limit (and a lot of the film’s dialogue is frankly ridiculous), but the ultimate result is so extreme, and married to such beautiful imagery, that it becomes a great work of art. I have a new favorite movie quote: "Look. It will be hard day." >**Furiosa:** And how, exactly, do we take the Citadel? Assuming we are still alive by then? >**Toast the Knowing:** If we can block the pass, it will be easy. All that is left are his warpups, and warboys too sick to fight. >**Capable:** And we will be with Nux. He's a warboy. He will be bringing us home, like he is meant to. >**Nux:**... Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
**Must-Read: Nicholas Bagley**: [Wreck the RUC](http://equitablegrowth.org/?p=11551): "The American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC).... >...Rife with conflicts of interest and not especially transparent, the RUC is a specialist-dominated committee that ‘donates’ more than $8 million of its own services each year to Medicare, presumably out of the goodness of its heart.... Since CMS has been starved of the resources necessary to independently review physician services, the agency has little choice but to rubber-stamp most of the RUC’s recommendations.... Doing the job right would cost real money, but it’d be a pittance when compared to the $70 billion spent on physician payments in 2013. If we insist on running Medicare on a shoestring, we shouldn’t be surprised when it doesn’t work very well. Sometimes you get what you pay for. > Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
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**Must- and Should-Reads:** * [Pros And Cons Of Raising The Minimum Wage](http://www.theonion.com/graphic/pros-and-cons-raising-minimum-wage-50476) * **Allison Preiss**: [RELEASE: 1 Million Entrepreneurs Went Missing in the U.S. Economy Before Recession](https://www.americanprogress.org/press/release/2015/05/21/113308/release-1-million-entrepreneurs-went-missing-in-the-u-s-economy-before-recession-new-cap-report-reveals/) * **Must-Read: John Cassidy**: [A Fascinating Minimum-Wage Experiment Is About to Unfold](http://equitablegrowth.org/?p=11496) * [Hillary Clinton produces first campaign listicle for social media](http://mashable.com/2015/05/21/hillary-clinton-listicle/) * **Must-Read: Richard Kogan et al.**: [Difference Between Economic Growth Rates and Treasury Interest Rates Significantly Affects Long-Term Budget Outlook](http://equitablegrowth.org/2015/05/21/must-read-richard-kogan-et-al-difference-economic-growth-rates-treasury-interest-rates-significantly-affects-long-term-budget-outlook/) * **Must-Read: Dan Davies**: [Time for a Delivery of Eurofudge](http://equitablegrowth.org/?p=11509) * **Must-Read: Paul Krugman**: [Stop-Go Austerity and Self-Defeating Recoveries](http://equitablegrowth.org/?p=11514) **Over at [Equitable Growth](http://EquitableGrowth.org)--[The Equitablog](http://equitablegrowth.org/blog)** * [Fiscal Policy and Economic Growth](http://equitablegrowth.org/2015/05/22/fiscal-policy-economic-growth/) * [Thursday Musings on Macroeconomic Policy and "The Right"](http://equitablegrowth.org/2015/05/21/thurday-musings-macroeconomic-policy-right/) * **Kavya Vaghul**: [What about commuting to new economic opportunities?](http://equitablegrowth.org/news/commuting-new-economic-opportunities/) **Plus:** * [Things to Read on the Morning of May 22, 2015](http://equitablegrowth.org/?p=11533) **And Over Here:** * [Liveblogging the Cold War: May 22, 1945: Harry S Truman](http://www.bradford-delong.com/2015/05/liveblogging-the-cold-war-may-22-1945-harry-s-truman.html) * [DeLong FAQ: How Did I Get into the Weblogging Business?](http://www.bradford-delong.com/2015/05/cycle-delong-faq-how-did-i-get-into-the-weblogging-business.html) * [Comment of the Day: Robert Waldmann: Links and Tweets...: 'I am not going to type that...](http://www.bradford-delong.com/2015/05/comment-of-the-dayrobert-waldmann-links-and-tweetshttpwwwbradford-delongcom201505links-and-tweetshtmlcid.html) * [Liveblogging World War II: May 21, 1945: Hoping for Japanese Surrender(http://www.bradford-delong.com/2015/05/liveblogging-world-war-ii-may-21-1945-hoping-for-japanese-surrender.html) **Might Like to Be Aware of:** * **Ev Williams**: ["Anyone can write something as a response... Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
**Harry S Truman**: [Longhand Note](http://www.trumanlibrary.org/whistlestop/study_collections/trumanpapers/psf/longhand/index.php?documentid=hst-psf_naid735220-01&documentYear=1945&documentVersion=both&pagenumber=1): >Had a long talk with Joe Davies last night on the Russian situation. Had previously discussed it with him on May 13. He suggested a cable by him to Molotov for Stalin in which he suggested a meeting of Stalin & myself in Alaska or Siberia or on a warship somewhere in that neighborhood. >He'd come over to tell me how blue he was over our deteriorating relations with Russia. >I informed him that at Harriman's suggestion and after a consultation with Hull, Byrnes and one or two others, I'd sent Harry Hopkins to see Stalin with instructions to tell Stalin what my views were and that I'd be pleased to meet him face to face. >Told Davies I'd sent Hopkins because I trusted him and because he had been Roosevelt's messenger to Russia on a previous and similar occasion, that Hopkins was noted an advanced 'Liberal' but not a professional one (I consider the latter the lowest form of politician), that he had horse sense and knew how to use it. >I'd previously suggested to Davies on May 13th that he go but his health would not allow it. Anyway as it worked out... Continue reading
Posted 4 days ago at Brad DeLong's Grasping Reality...
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[**Over at Equitable Growth:**][1] [Fiscal Policy and Economic Growth](https://www.icloud.com/keynote/AwBUCAESEMov4kOl2DicvYCD0fI8Eu4aKfVGvXU9Udvve7tbgnxV1L2az5aDYRE75z8L6583DRcQdTY5Qcx5dBXeMCUCAQEEIAz-2WwoZQl_AA1dOUmlYEliL3E8IU_4krkvmpxaAPCY#2015-05-21_Fiscal_Policy_and_Economic_Growth.key) [1]: http://equitablegrowth.org/?p=11535 ---- [Fiscal Policy and Economic Growth](https://www.icloud.com/keynote/AwBUCAESEMov4kOl2DicvYCD0fI8Eu4aKfVGvXU9Udvve7tbgnxV1L2az5aDYRE75z8L6583DRcQdTY5Qcx5dBXeMCUCAQEEIAz-2WwoZQl_AA1dOUmlYEliL3E8IU_4krkvmpxaAPCY#2015-05-21_Fiscal_Policy_and_Economic_Growth.key) J. Bradford DeLong U.C. Berkeley May 21, 2015 UC Center, Sacramento What Is the Government’s Impact on Economic Growth? * Federalism * Global government (to the extent that such a thing exists) * National government * State government * Local government * Modes of operation * Building capacities * Insuring people * Opening markets * Regulating economic activity * Ideologies * Laissez-faire * Developmental state * Republic of virtue * Redistribution My Task Today: Bringing You the News * What have we learned over the past ten years or so as we have watched governments act and react to the changing world? * I think that we have learned—or perhaps I have learned: * At the global/national level, government spending in general is much more beneficial than we had thought * As long as there is a backstop bond-purchaser-of-last-resort * At the state level, slimming down the government for the sake of slimming it down has not worked * At the administrative level, the government appears better at structuring markets and complex administrative tasks than I had thought. * At the local level,... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
[DeLong FAQ](http://delong.buffalo.io/delong-faq): How did I get started [weblogging][a]? In my memory, I got started weblogging because one afternoon sometime in the 1990s that convinced me that weblogging was likely to become a key part of the forthcoming ecology of intellectual influence. [a]: http://en.wikipedia.org/wiki/Blog I was sitting in my Berkeley office, [looking out over the Golden Gate][b], reading [the May/June 1998 issue of *Foreign Affairs*][c]. I noted a very positive citation to something I had written by [Paul Krugman][d]. Shortly thereafter I noted a second--very negative--citation by [Jagdish Bhagwati][e]. I really didn't care that Bhagwati was quoting-me-to-criticize. I cared that that was two Nobel Prize-caliber economists noticing my existence. That did not happen every day: in fact, that had never happened before. I looked more closely at the quotes they had taken. Neither was reading published dead-tree paper versions. Both were quoting from online versions. The next image that flashed through my brain was of Krugman and Bhagwati, both under deadline pressure as they wrote for *Foreign Affairs*, both working in their offices late at night, both searching this new-fangled internet thing for another quote and reference to buttress their arguments. And I thought: This pattern is only going to grow... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
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**Across the Wide Missouri: Sarah Gosslee**: [Pissing in the pool](http://www.sarahgoslee.com/2015/04/06/pissing-in-the-pool/): "I grew up reading the Hugo award winners anthologies... >...those collections of the best works of the year. It wasn’t until much later that I learned how the Hugos work, and even later that I made the miraculous discovery that I could participate.... But this year, someone pissed in the brain-pool. A group calling themselves the Sad Puppies has been trying to game the system for a couple years, and this year they and their more extreme Rabid Puppy buddies managed it incredibly successfully, getting entire categories filled with nothing but their nominees. I find the members of both groups to be odious human beings. Not only did they put together a full slate, there is evidence that they recruited people explicitly to vote for that slate as a whole. The delight is utterly missing. >Although I find the members of these groups problematic, and many of the works they nominated unpalatably bad, the existence of the slate itself is the bigger problem.... There’s a new record for number of nominations of a single person in one year, and for a writer who’s not all that good. There were also... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
**Must-Read: Paul Krugman**: [Stop-Go Austerity and Self-Defeating Recoveries](http://equitablegrowth.org/?p=11514): "Britain’s election results... were consistent with the general proposition that elections hinge... >...on whether things are improving in the six months or so before the vote. Cameron and company imposed austerity for a couple of years, then paused... the economy picked up... [and so gave] them a chance to make the same mistakes all over again. They’ll probably seize that chance. And... there’s a good chance that the resumption of austerity will usher in another era of stagnation.... There’s a somewhat similar problem in the euro area, as Barry Eichengreen noted.... The policies that pulled Europe back from the brink were made politically possible by fear... of collapse... [and] deflation. But as the fear abates, so does pressure.... My pessimism here could be all wrong.... But my guess is that we’re looking at an era of stop-go austerity, in which politicians who refuse to learn the right lessons from history doom their citizens to repeat it. > Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
**Must-Read: Dan Davies**: [Time for a Delivery of Eurofudge](http://equitablegrowth.org/?p=11509): "“They pretend to pay us” — or in this case... >...“The institutions pretend to give Greece debt relief”. How much would it change things if the Eurozone partners were to agree to a 20% face value reduction in all of Greece’s liabilities? In my view, it would change things not at all. Greece needs, and one day will get, a much larger reduction than that, and everyone knows it (although plenty of people find it more convenient to suppress this knowledge and pretend they don’t). So announcing it would make no difference to the real debt burden on Greece, and no difference to the amount of repayment that the Eurozone can reasonably expect. But it would make things hugely politically easier for Syriza, which is beginning to realise that it is going to have to back down on some “red line”issues in order to get a deal. >Of course, a face value reduction would make things more difficult politically for some of the Eurozone partners, and would probably be impossible for the IMF to agree to. But a face-value constant NPV reduction would be less so — extending the term (again) and reducing the coupons... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
**Must-Read: Richard Kogan et al.**: [Difference Between Economic Growth Rates and Treasury Interest Rates Significantly Affects Long-Term Budget Outlook](http://equitablegrowth.org/2015/05/21/must-read-richard-kogan-et-al-difference-economic-growth-rates-treasury-interest-rates-significantly-affects-long-term-budget-outlook/): "An underappreciated factor in long-term budget projections is how the projected interest rate... >...('R') that the federal government pays on its debt and the projected growth rate of the economy ('G') relate to one another. In a nutshell, policymakers can more easily restore the nation's fiscal health when the economic growth rate exceeds the average interest rate than vice versa. That's because, when economic growth rates exceed Treasury interest rates, the burden of existing debt shrinks over time. (Or, putting it technically, policymakers can more easily achieve long-run debt sustainability when R minus G, or R-G, is negative than when it's positive.) For decades, analysts have made budget projections that extend 25, 50, or even 75 years into the future. Most generally show that debt as a percent of the economy (i.e., the 'debt ratio') could eventually rise to economically dangerous levels. That's in large part because the government is running primary deficits -- that is, separate and apart from interest costs, program costs exceed revenues -- and these primary deficits are projected to continue at least through 2040.... Another reason... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
**Must-Read: John Cassidy**: [A Fascinating Minimum-Wage Experiment Is About to Unfold](http://equitablegrowth.org/?p=11496): "The increases in the minimum wage that will be introduced over the next few years... >...are so substantial that some response from employers seems likely.... Southern California will be particularly intriguing. The new law only applies to the city of Los Angeles, which is surrounded by independently run cities and localities. While some of these places may well follow L.A.’s lead, others won’t.... Michael Reich... argues that the fact that the increases in the minimum wage are being phased in over several years will give employers time to adjust to them; he predicts that the ultimate impact on employment will be very minor... that raising the minimum wage to fifteen dollars an hour would cost the city just three thousand four hundred and seventy-two jobs by 2019, which is about 0.2 per cent of over-all employment. And... Reich and his colleagues predicted that Los Angeles County, as a whole, would see a gain in employment of five thousand two hundred and sixty-two jobs by 2019. That’s because all of the low-wage workers who kept their jobs, many of whom live outside the city limits, would get a sizable pay... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...
[**Over at Equitable Growth**][1] I have two things I want to say this morning. First, Amtrak wifi really is c---, isn't it? Second, I think that Paul Krugman gets one thing wrong here, in his talk of "the right" and macroeconomic policy... [**READ MOAR**][1] [1]: http://equitablegrowth.org/wp-admin/post.php?post=11472&action=edit&message=6 There has not been one single right on macroeconomic policy since the Great Depression. There have been two. The lunatic right has been opposed to every single possible anti-recession policy except for union-busting, on the grounds that the market must be optimal: the market giveth, The market taketh away, blessed be the name of the market, and impious is he who tries to reverse or soften its judgment. The non-lunatic right holds that market economies are indeed macroeconomically unstable but they can be balanced by minimal interventions in aggregate variables: that is, by assigning the central bank the cost of controlling the money supply in order to make Say's Law true in practice even though it is false in theory. As the extremely-sharp Paul Romer has been noting recently as he rages around the internet, Chicago's George Stigler's reaction in microeconomics to the idea that markets might significantly fail was to rule such thoughts... Continue reading
Posted 5 days ago at Brad DeLong's Grasping Reality...