The only mistake in this post is the use of the word "mistake". No mistakes were made, the lackeys of the Plutocracy got exactly the outcome they desired: skyrocketing stock prices and flat wage growth. I know you're a smart guy Brad, but how do you consistently miss the obvious?

I'm sensitive to Krugman's concerns, but he forgets that ordinary people get to register their political opinions only once every year or two, unlike famous NYT columnists who do it several times a week. We are loath to surrender that rare opportunity. Being urged to assimilate to the Democratic Borg so that the Republican Borg won't get us is the kind of thing that makes me want to move to Canada.

So surprise me: please elaborate. I have no idea what you mean.

I find troubling PK's slavish devotion to HRC despite her having abetted the worst US foreign disaster since Vietnam. But even more egregious is his punting on Trump v. Cruz outside economics. Trump is much better than Cruz on gay rights, Planned Parenthood, and entitlements. Maybe PK doesn't think those are important issues?

OK, but that doesn't seem substantially different from what I said. Whether you call it "unorthodoxy" or "liberalism", the GOP is afraid Trump will be too accomodating of blue collar economic concerns.

As a socialist I don't follow either the WSJ or Douthat closely, so I may be way off-base here. But it seems obvious to me that Trump is opposed by the GOP hierarchy because he is too liberal: on gay marriage, Planned Parenthood, the Iraq war, and entitlements Trump is well to the left of the party bigwigs. Trump seems to be proposing a new modus vivendi for the party and its base: let us destroy the last vestige of progressive taxation and we'll let you keep SS and medicare, and even avoid sending your kids out on foreign misadventures. To many in the current GOP that seems to be giving away too much of the store. Maybe I'm misreading it, but the WSJ piece seems (as far as I can tell, it's behind a paywall) to be signaling that they're OK with that. Reading Douthat's column in a vacuum you would think that this Trump he talks about is the embodiment of regressivity, a sign that no conservatives are taking reform seriously. But I think rather that Trump is exactly what reform in the GOP was fated to look like. If not for Trump's social liberalism I'd guess that Douthat would have found it possible to support him. Of course Trump's brownshirt manner with mobs is disturbing (don't bother invoking Godwin's Law, Trump has made it superfluous), but I think that most of the GOP establishment could have made excuses for it if he hadn't strayed so far off the reservation in other matters. OK, where am I wrong?

"Never look back at your forecasts--you may lose your nerve." My God, what terrible advice. We need economists with less nerve and more humility. No wonder Fischer didn't mention his role in the Asian crisis. And sure enough, he hasn't lost his nerve.

"In my view, voting for candidates who will enact the right policies is a far more direct strategy for addressing inequality – and much else – than voting for those who want to break up the banks to reduce the amount of money available to dissuade voters from supporting the right candidates." This is so wrong as to sound dishonest: you have to address the systemic infection before the organs can heal, otherwise you're just spinning your wheels fighting the same battle over and over.

This is where my cynicism kicks in: do Dem wonks really oppose initiatives because they're politically difficult, or is that just a convenient excuse to side with the plutocrats?

I agree. Maybe the problem is incentives: if you take sides on the issues you immediately alienate half your potential audience, so pundits find it more profitable to stay "neutral"and take on the meta-issues instead.

Minor point: when Vollrath says "more curved than log" doesn't he really mean "less curved"? Like e.g. linear?

Could someone explain what "struggle" means in this context? I'm pretty sure it means something different for banks than it does for me.

Anyone who trusted Bush with the AUMF probably has the deeds to half a dozen major metropolitan bridges in her safe deposit box. If Hillary was unwilling to defend the congressional prerogative to declare war while she was a senator we can only expect the worst from her as president. I can't vote for Hillary till she apologizes for that. Nevertheless, should she be elected president I'll be cheering on inauguration day.

Or prices could rise, the rich sell to each other, and the proles go extinct.

It seems Shin is taking present liquidity trap conditions and assuming they will be the norm for the future. But I'm probably missing something?

Right, it's easier for a small number of agents to cooperate. I thought rsj made a good point that this model assumes both groups have equal monopsony power, which seems very unrealistic. Let me rephrase my question about inflation. You introduce this post as being about the effect of loosening monetary policy. But the M in the model represents personal cash holdings. Does loose monetary policy really mean that everyone's cash holdings go up? The ZLB hasn't had that effect on me.

Roger: Are you sure you want to use log 0 = -infinity? Nick: I think I get it now. I was confused by the Prisoners' Dilemma aspect of the model: if M >= 100P and the Alphas and Betas are all saints then they will agree to each sell 100 units, which maximizes both total and individual utility. But if they are the homo economicus of modelers' dreams, greed forces the solution to the Nash equilibrium, which actually provides less utility for everyone. In fact the disparity between the cooperative and selfish solutions is greater for larger M. In other words greater wealth gives agents greater scope for selfishness. Whereas in the monopoly case the buyer does not have complete freedom to set the quantity, the seller can cut him off at 100, making A=B=100 a Nash equilibrium. Follow up questions: 1. Does this model suggest that monopsony is "worse" than monopoly? Or are there other examples where the reverse is true? 2. Perhaps the assumption of constant maximal greed that is built into the Nash equilibrium is unrealistic? 3. I'm still bothered that this model doesn't capture inflation. That increasing the money supply should lower the value of money seems so fundamental that it should be built into the model before anything else. In other words why I should I trust anything from a model that can't handle inflation? Or are you assuming ZLB conditions here? But in that case wouldn't you have to make other modifications, e.g. in the relative utilities of A/B versus M?

Is the condition (for P < M/100) for monopsony a typo? Shouldn't it still be ">"?

Thanks for responding, here's another question. For monopoly you have the condition P > M/100 but for monpsony you have P < M/100. Why aren't they the same?

In not an economist, so this may be completely off base. I don't think that the mangoes in your model are a reasonable proxy for money. Mangoes have intrinsic value, money does not, so increasing M increases wealth in a way that increasing the money supply does not. If everyone in an economy suddenly had twice as much cash it would cause the value of money to be halved. This would apply even to the monopsonists' calculation of the optimal point on the supply curve. Of course at the zlb that inflation would no longer be expected. But would the zlb affect your model in other ways as well?

"Raising taxes will destroy or prevent the creation of jobs that otherwise would have been created." So stated this is unfalsifiable.

Interesting article by Dickens. He may have been even-handed by Victorian standards but he was clearly to the left of the modern GOP.

"Offensive" is overstating it, just typical political polemic. Perhaps we should expect more from a Harvard Prof though. BTW isn't this a rerun of the article linked a few days ago? Really don't need to read this twice.

No, Frankel does very little to unpack the issues, which are extremely complicated. His column is just an ad for the TPP. Which isn't to say he's wrong, just that he hasn't troubled to build a case for it.