Day Book

by Brad DeLong

  • The curse of Teddy White
  • Who Votes for Trump?
  • Whose Skin, What Game?


Office Hours

  • Danny Yagan: zero marginal-product workers, residential investment, and Yuriy Gorodnichenko's Brookings paper on Amerosclerosis...
  • Ammar Inayatalli on unicorns, manias, and panics...
  • Marty Olney on Econ 1...
The two .net booms...
Recouping the pre-2004 real housing-price runup...
The long-run reaction to the end of the housing bubble came first--smooth adjustment of production shares in response to changing demand. The short-run reaction came second--after the fuse of the financial crisis reached the gunpowder.


Never before in the Golden Gate Club at the Presidio. The club itself--what I presume was the 1930s or perhaps 1950s US Army Officers' Club--is very much worth keeping. The rest? US Army early 20th century architecture is undistinguished, and makes very bad use of the space...


Oregon Economic Forum Upcoming on October 15, 2015

  • 10 minutes--Bruce on finance, Tim on the Oregon economy
  • Major issues:
    • Fed--Staiger, Stock, and Watson
    • China?
    • Where is the value-added going? Not to labor, not to rentiers, to businesses but they are now leery of investing, where else?
    • Portland vs. KC
    • What are Oregon's exports going to be?
    • How fast are we moving from an economy where resources determine location to one where style of life determines location--and what makes some regions very good at manufacturing an attractive style of life?
    • Mel Watt: FNMA, the future of housing finance, and the continued using drought--UMPQUA
    • Capacity utilization and the employment-population ratio both still suggest lots of slack
    • Analogies between 1924 and the retirement of the baby-boomers?
    • December government shutdown?

Trekonomics Questions

Speakers' badges/credentials will be available to be picked up at the NYCC "Will Call", Crystal Palace section of Javits Center.

  • From credits and trillium to latinum: what's the role of currency or the absence thereof in Trek? Is such even possible IRL?
  • Post-scarcity: Is it a policy choice in Trek (in the Federation)? Or is it a function, a natural consequence, of technology-assisted cornucopia (replicators etc...)? How do we interpret the role of technological progress and productivity gains in Trek's future?
    • Is Trek an anomaly in scifi (both TV and written), and if so, to what extent?
    • Why is there so little utopia in scifi?
  • Is Trek possible or desirable from an anthropological standpoint?
  • Is Trek possible or desirable from an economic standpoint?
  • Iain Banks once claimed that post-scarcity can only exist at a galactic level--with full and unfettered access to the universe's resources. Is space settlement necessary for post-scarcity, or is this another Malthusian claim to debunk?
  • What the hell does 'prosper' mean in 'live long and prosper'?

Washington Workaholicism and the Bentsen Treasury

I am actually more on Anne-Marie Slaughter's side of this one. Nobody can be really sharp for more than six hours a day. And it is very important that the people assembling the pieces of the State Department's position and those constructing the architecture be very sharp when they do their work.

In my experience, the 16-hour government workdays are mostly engaged in by those who profoundly distrust--often with very good reason--either the motives, the confidence, or the collegiality of their colleagues and subordinates.

The Bentsen Treasury may have been unusual, for the 6 PM cocktail and 8 PM dinner hour were dedicated by Bentsen to congressional relations and public liaison. But since the secretary was out of the building after 6 PM, well that was a very good thing that one of Alicia Munnell's deputies in economic policy be in the building in the evening, there was no reason for all three of us to be there--as long as we trusted each other, and as long as we were willing to pick up the phone wherever we were and give concise answers when our colleague in the building asked: "what should I say about X in meeting Y that is happening in the West Wing in 15 minutes?

But I have never been certain whether J.P. Morgan's "I can do a year's work in nine months but not in 12" is a profound truth or a clever con...

Multiple Fashion Weeks

There was always an upper-class and middle-class women's world in which fashion was of decisive importance. These worlds are now merging--thank of an espionage novel crossed with the regency romance. I think that the court of Louis 14th turned to fashion because there was, quite deliberately on Louis' part, nothing else for them to do. Similarly with Gigi, Bertie Wooster, Oscar Wilde, etc. We are different: there is a huge amount to be done now, still...

That said, you are largely correct. This is not a good trend. The older gender-divided pattern came from a world in which women were shut out of pretty much everything except the long run genetic in the family agendas, and turned to fashion both as a diversion and as a weapon in advancing those agendas.


Pierre-Olivier Gourinchas observes that my mental North Atlantic-centricity has once again betrayed me: It is not the last three Federal Reserve tightening cycles that have provoked and revealed previously-underweighted sources of systemic risk. It is, rather, the last four.

There are not just American housing subprime and home equity in 2005-2008, the endogenous duration of mortgage-backed securities in 1994-1995, and Texas and other U.S. Savings-and-Loans in 1988-1990, but also Latin American debt and New York money-center banks in 1979-1982. Sources of global financial systemic risk in what will in October be either an already-initiated or an imminently-anticipated Federal Reserve tightening cycle is an obvious thing to worry about...

Also note: as of next week Gita Gopinath will be the world's expert on the international transmission of inflation shocks. The fact that the U.S. dollar is the world's default unit of account and associated invoicing patterns serve as yet another source of exorbitant privilege for the US. That provides America what's substantial amounts of insulation against inflationary and deflationary shocks abroad while automatically transmitting such shocks in America to overseas. What the global pattern of inflation and thus of likely currency movements will be if inflation does start to rise is also potentially of substantial interest…



  • Haxamanish? 705-?
  • Tishpish 675-640 (son of Haxamanish)
  • Kurush I -580 (son of Tishpish)
  • Kamboujie I 600-559 (son of Kurush I)
  • Kurush II the Great 576-530 (son of Kamboujie I and Mandane)
  • Kamboujie II -522 (son of Kurush II and Kassandane)
  • Bardiya (Gaumata?) -522 (son of Kurush II?)
  • Darayavush I the Great 550-486 (second cousin once removed of Kurush II; married daughter of Kurush II)
  • Xshayaṛsha I 519-465 (son of Darayavush I and Atossa)
  • Artaxshaca I -424 (son of Xshayaṛsha I and Amestris)
  • Xshayaṛsha II -424 (son of Artaxshaca I)
  • Shecydianush -423 (son of Artaxshaca I)
  • Daryavush II Ochus -405 (son of Artaxshaca I)
  • Artaxshaca II Mnemon 435-358 (son of Darayavush II and Parysatis)
  • Artaxshaca III Ochus -338 (son of Artaxshaca II and Stateira)
  • Artaxshaca IV Arses -334 (youngest son of Artaxshaca III and Atossa)
  • Darayavush III Artashata 380-330 (nephew of Artaxshaca III)
  • Artaxshaca V Bessus -329 (nephew of Darayavush III)


Scott Walker wins his neighboring state IO. Donald Trump commands a solid-but-not-growing 25 percent--and gets it everywhere. Jeb Bush defeats John Kasich and Chris Christie in NH. But then Mario Rubio defeats Jeb Bush in FL. Meanwhile, Rand Paul and Ted Cruz underperform and drop off the mediascape.

Scott Walker, Mario Rubio, and Jeb Bush then all finish neck-and-neck in SC--but all of them are behind Trump. And by this time the top four have all thrown mud. They have all thrown so much mud that the teams of each of the other three will never get behind the fourth. It is at this point that John Kasich, Ted Cruz, and Rand Paul make the pitch to the billionaires that they could be the unity count. All of them get their funding topped-up, and reenter the late primaries with huge media blitzes.


It's unlikely--these things have tipping points. But it could happen


Live from Philz Coffee on Bullwinkle Plaza: In confess that I am disappointed and saddened by Jamaica Blue Mountain. Why, exactly, is this supposed to be better than other coffees? What is supposed to make it so great?

Make That 85% Clown:

Understanding John Cochrane is relatively easy. John Cochrane had and has three main priors:

  1. His internal Markov & Bayes distributions are set by his background in finance. What is important is how asset prices are determined (time, risk, cash flows, decision-making at the atomic level). The firm is the unit of organization, and society is best run when it is run like a very large firm in the market, maximizing the value of its shareholders.

  2. We all wish for success for the people we eat lunch with. John Cochrane eats lunch with Chicago economists, MBA students and Republican politicians.

  3. Chicago economics is the best economics. Friedman and Lucas defeated the quasi-socialism of Keynes & Co., and Krugman & Co are shrill for refusing to accept this.

This was all true of him when I took his asset pricing class in 2004, but pre-meltdown, macroeconomic austerity was Shock Doctrine for 3rd world basket cases. Economic distribution was something only the Dirty Hippies were talking about. So there was no countervailing argument within reach of his ears at that time. He mistook that silence for surrender. He erred in thinking that prior #1 was transferable from finance to macroeconomics, that #2 is a representative sample of the world, and that Paul Volker’s success at fighting inflation with tight monetary policy in the 70’s negated Keynes’s success at fighting depressions in the 30’s with fiscal policy. I like John Cochrane personally. He is charming, witty, a brilliant researcher and wonderful teacher, but he’s working from bad assumptions and getting bad results.

Professor DeLong,

I took your macro economics course a few years ago and remember your perspective about how useful it would be to have a “Math for adults” class at CAL to teach the useful math, estimation tricks, use of rule of 72, etc.

Do you know of anything like this that exists, or do you have a lecture that walks through a few of these? I would find it very helpful in the real world (I’m sure others would too!).

Thank you!

George Jaber

Very good question. I can’t bring anything to mind immediately in terms of basic numerical-quantitative-calculating literacy, but I can bet that if anybody does, either Marty Olney, Cathy O’Neil, or her uncle Bob will…


Sanjoy Mahajan: Street-Fighting Mathematics

Course Description: This course teaches the art of guessing results and solving problems without doing a proof or an exact calculation. Techniques include extreme-cases reasoning, dimensional analysis, successive approximation, discretization, generalization, and pictorial analysis. Applications include mental calculation, solid geometry, musical intervals, logarithms, integration, infinite series, solitaire, and differential equations. (No epsilons or deltas are harmed by taking this course.) This course is offered during the Independent Activities Period (IAP), which is a special 4-week term at MIT that runs from the first week of January until the end of the month.

Major Economic Ages:

  • The Agrarian Age: Focused overwhelmingly on making 2000 calories/day plus essential nutrients...
  • The Manufacturing Age: Focused on using non-human power sources and wood, metal, and fabric-shaping technologies to make material necessities, conveniences, and luxuries...
  • The Behavioral age: Focused on helping one another make better decisions and think longer-term as to what we really want to do...

Live from the IMF: High praise: "You are the heir to Mike Mussa..."

The Acceptable Year of the Lord:

We know how the Gospel according to St. Luke begins: genealogy, annunciation, infancy, adolescence, John the Baptist, temptation in the wilderness. Then Jesus begins to preach. His first sermon, in his hometown of Nazareth, is about Isaiah's promise of the Messiah. Jesus says: "The Messiah--the Lord's anointed--is here now." What does Jesus (and Isaiah) say that the Messiah is anointed to do? This:

  1. to preach the gospel to the poor...
  2. to heal the brokenhearted,
  3. to preach deliverance to the captives...
  4. recovering of sight to the blind
  5. to set at liberty them that are bruised,
  6. to preach the acceptable year of the Lord.

The "acceptable year of the Lord" is the Jubilee: the year that the prophets called for in which debts would be cancelled and land redistributed evenly. In his first sermon, Jesus says that the Messiah is here and that the Messiah brings foreclosure relief.

Forty miles down the road, further from nature and closer to the high-end boutiques, we have the Goldbug counterconference organized by the American Principles Project. The American Principles Project was founded by Robert George, theologian and jurisprudent, of Princeton University. I googled Robert George. The first three things that came up were him saying:

  • "The Pope has no special knowledge, insight, or teaching authority pertaining to... whether, or to what extent, the climate changes (in various directions) of the past several decades are anthropogenic.... A view that he adopts based on what a climate-change scientist or group of scientists—be he or they believers (known to their critics as ‘alarmists’) or skeptics (known to their critics as ‘deniers’)—say, could be wrong.... Let’s imagine that a Pope writing in an encyclical says that pregnant women should not take ibuprofen... because it will cause the death of the children they are carrying.... One need not believe that ibuprofen is an abortifacient (since there are very good reasons for believing it is not—and, in fact, it is not).... To disagree with a pope on the question of empirical fact about whether ibuprofen is an abortifacient is not necessarily to dissent from his teaching..."

  • The Supreme Court's decision that state governments should allow same-sex couples to contract civil marriage is "an anti-constitutional and illegitimate ruling in which the judiciary has attempted to usurp the authority of the people and their elected representatives..."

  • "The [same-sex marriage] lynch mob is now giddy with success and drunk on the misery and pain of its victims. It is urged on by a compliant and even gleeful media. It is reinforced in its sense of righteousness and moral superiority by the “beautiful people” and the intellectual class. It has been joined by the big corporations who perceive their economic interests to be in joining up with the mandarins of cultural power. It owns one political party and has intimidated the leaders of the other into supine and humiliating obeisance. And so, who if anyone will courageously stand up to the mob? Who will resist? Who will speak truth to its raw and frightening power? Who will refuse to be bullied into submission or intimidated into silence?..."

One does have to wonder: In an earlier age would Robert George would have dared to talk so angrily and vociferously about the lynch mobs and the pain and misery they were inflicting on those who did not want to make flower arrangements for Papist weddings. Or the pain and misery lynch mobs were inflicting on those who did not want to serve African-Americans at their lunch counters?

It is hard to read the gospel according to Robert George--against accurately recording the costs of pollution in our global economic calculus, for discrimination against homosexuals--as anything other than one of small-minded evil. And one has to wonder: How does bringing good news to the poor, sight to the blind, freedom to the prisoners, hope to the broken-hearted, and foreclosure relief get translated into an opposition to carbon taxes that burden coal and oil companies, an opposition to allowing same-sex marriages, and enthusiasm for discrimination against homosexuals? The fact that Robert George can inflict this transformation on the message of Rabbi Yeshua bar Yosef strikes me as a rather powerful argument for the existence of original sin, and for humanity's fallen nature.

Notes for Conversation with Tom Edsall:

(1) "What’s your take on the Summers-Ball CAP report and the Stiglitz et al report from the Roosevelt Institute? Are these futile attempts to sail into the wind?"

No reasoned and well-intentioned argument is futile ex ante. The turn-of-the-twentieth-century Progressive Movement failed, but its blueprints were dusted off and largely implemented during the New Deal, to our great benefit. Larry Summers and Ed Balls said a great many true things and recommended a great many useful policies that ought to command widespread and bipartisan approval, and some day they may. Stiglitz and Wong's policies will not command broad bipartisan approval because too many of them are aimed at diminishing the power and wealth of our plutocracy.

But even plutocrats should reflect that they really should be playing to create a good world for their great-grandchildren, and odds are that the money will be (largely) gone by then. (Consider that if the rich branch of my family tree had taken its $20M nominal in 1970, restricted spending to 3%/year, and invested the sum in diversified global equities, we would now have $500 million to split among the eight members of my generation. Instead, the money is all gone--save into the human capital of some of us. The Piketty Game is immensely powerful, but those who win it have to be lucky, smart, patient, and have good trust lawyers.)

And, as Paul Krugman wrote very recently: "Legends about the past matter. Really bad economics flourishes in part because Republicans constantly extol the Reagan record, while Democrats rarely mention how shabby that record was compared with the growth in jobs and incomes under Clinton.... Lies, incompetence, and corruption... should not be allowed to slip into the mists. And it’s not just an American issue. Europe’s problems are made significantly worse by the selectivity of German historical memory, in which the 1923 inflation looms large but the Brüning deflation of 1930-32, which actually led directly to the fall of Weimar and the rise of you-know-who, has been sent down the memory hole. There’s a reason conservatives constantly publish books and articles glorifying Harding and Coolidge while sliming FDR; there’s a reason they’re still running against Jimmy Carter; and there’s a reason they’re doing their best to rehabilitate W. And progressives need to fight back..."

(2) "You conclude: 'I am at my wit’s end as to what alternative political-economic agenda could both (a) work technocratically and (b) be sold to North Atlantic electorates politically. Hell, our failure to maintain political coalitions to even implement Milton Friedman’s cures for depression, let alone John Maynard Keynes’s, is terribly depressing.' How much is the inability to find a 'new framework' and the failure 'to maintain political coalitions' the result of changing politics and how much is the result of changing economics?"

Oh, I think it's almost all politics. To the extent that our inequality and sub-top 1% income growth are due to our underinvestment in education, that was a political decision. To the extent that it was due to a failure to properly support our communities of engineering practice as globalization came, that was a political decision. George Romney would not have dared ask American Motors for, and his board would not have given him, Mitt Romney's pay level because of the political and union-organizational blowback that it would have generated. The economics may be chomping on the ability of the least-well-prepared 10% of our male population's ability to find a useful societal role today, and the economics may chomp most of us when the Rise of the Robots really happens, but that still looks to be a generation off. Slack aggregate demand, insufficient public investment, insufficiently progressive taxes and transfers, and too much successful rent-seeking and NIMBYism in location, finance, and elsewhere that either market power or behavioral vulnerabilities can be exploited.

But why are you asking me? You know better than me the story of how progressive taxes and social insurance were things that were good for us from the New Deal until the death of Martin Luther King, and became things that were good for them thereafter...

(3) "When you use the phrase 'the age of Social Democracy', are you describing a more equitable economic system that without significant government intervention distributed the benefits of growth relatively fairly, or are you describing a structure of government intervention that made possible a more equitable system of pay and benefits?"

Both! You can do predistribution or redistribution. You can do either well or badly. Properly structure the market so that wages are fair! Properly structure social insurance so that luck--especially the luck of having chosen the right parents--isn't decisive in whether you can lead a good and prosperous life! I don't have a dog in that fight.

(4) "Can you explain how the 'Brezhnevite stagnation of the Soviet Union' undermined the left-neoliberal warning to conservatives 'that social democracy is the only political system that can in the long run underpin a market economy that preserves a space for private property and private enterprise. [Therefore the right had better shut up and try to make social democracy work, or else][3]'.

I thought this was genuinely accepted?

IIRC, even in the 1960s Paul Samuelson was saying: (a) the command economy of the Soviet Union sacrifices 25% of total productivity; but (b) because the USSR can suppress domestic consumption its savings rate is 3 times the US one; so (c) in the long-run the USSR is heading for a position with three times the capital-output ratio and 30% higher output per worker (although 30% lower consumption); and (d) that is a sustainable model. Thus, I thought, the High Cold-War national task that commanded enthusiastic assent from the entire Establishment was to demonstrate that America could deliver better broad-based and egalitarian prosperity. And as the view of the USSR shifted from a place that might well, as Khrushchev put it, "outlive [us] and so conduct our funeral" to "Upper Volta with missiles", the center- and right-wing Establishment's Eisenhowerish concern with ensuring rising prole living standards melted away...

But once again I thought this was a story that you knew better than I...

[3]: .

Berkeley Economics Behavioral Center

Stefano DellaVigna, John MORGAN, Ben Handel, Brad DeLong, Teck Hua Ho, David Sraer, Ned Augenblick, Don Moore, Aaron Bodoh-Creed, Philipp Strack, Terrance Odean, Shachar Kariv, AkerlofGeorge A., Ulrike Malmendier, Daniel L McFadden, Edward Andrew Miguel, David Card...


Three places to start with the story of the euro:

  • The international exchanges...
  • The pattern of industrial-era total war...
  • The Franco-German relationship in the very long run... UNFINISHED

Utilitarianism and the Irish Famine

dsquared: The problem was there right back in the utilitarian roots though - have a look at some of the things written in The Economist and by people like Nassau Senior to justify doing nothing about the famine in Ireland.

Say, rather, that a desire by Nassau Senior and others to appear to be tough-minded (plus their bred-in-the-bone anti-Keltic Saxonism) led them to pose the false choice between an Ireland in which a steady-state population of 8 million are miserable, and one in which 4 million starve to death and 4 million are then prosperous. And, of course, the right policy was one that the Irish themselves funded as soon as they could scrape the resources together: 3 million headed overseas. (After 1 million starved, of course.)

The Longstanding Cognitive Errors of Duke Professor Jerry Hough

IIRC, Jerry Hough's revision of Merle Fainsod’s How Russia Is Ruled kinda seriously exaggerated the legitimacy of the Soviet Union’s régime. Many were surprised at 1988-1992, but he was among the very most surprised...

IIRC, he changed the title from How Russia Is Ruled to How the Soviet Union Is Governed...


XXXXXXXX: I guess no one told them that Costa-Gavras is supposed to be taken METAPHORICALLY.

Nope. Nobody did.

I am swinging around to the position that the implementation of Friedman rule—massively expand the money stock—and of the first half of the Bagehot Rule—lend freely on collateral that is good in normal times—has landed Europe at least in a position in which things are actually worse economically now, seven years after 2008, than they were seven years after 1929. And I think back on Christie Romer’s reaction to the 2009 Jackson Hole conference, when she saw all the central bankers patting themselves on the back and declaring the crisis over…

Live from the Founding Farmer: Put this 250-lb. California boy strongly on the female side of this debate: Washington DC air conditioning levels are totes ridiculous. (Of course, the climate outside is totes ridiculous too, in the opposite direction):

Joseph Stromberg: Why your office is so cold: Its AC system is designed entirely for men: "If you work in an office...

...there's a good chance it's absurdly over-air-conditioned during the summer.... The formulas used to design and calibrate most heating and cooling systems are based on a single estimate of the metabolic activity of a 40-year-old, 155-pound male... [and make] no attempt to take women or people of different sizes or ages into account.... A new study published today in Nature Climate Change finds that women have much lower metabolic rates than the standard.... 'This leads to uncomfortable people and is a waste of energy,' says Boris Kingma of Maastricht University, the study's lead author"...

Live from the Founding Farmer: Once again: the best and most efficient use of a laptop is as a rather oddly-shaped and low power-density external battery pack for a phone...

Live from the Founding Farmer: As somebody who did not watch last night's Republican debate, I can only say that I find Rubio's admission that Hilary Rodham Clinton's past experience makes her best-qualified of all candidates for the presidency to be remarkable:

If this election is a resume competition, then Hillary Clinton is going to be the next president

Apparently Fox News put its thumb heavily on the scale in order to try to give Bush, Rubio, and Kasich questions that would make them look good. The chatter I am seeing says: "Didn't help Bush"...


Live from Evans Hall: Is there any reason to assign Econ 1 students a big textbook rather than, say, Marty Olney's Microeconomics as a Second Language and Macroeconomics as a Second Language? UNFINISHED

Live from Evans Hall: Once again I reach the ground floor of Evans Hall already too tired and weary to make the six floor climb up to my office. Thus I once again take refuge in Gerard Debreu's famous invariance principle: the expected life extension from better fitness created by climbing the stairs of Evans is equal to the time it takes to climb the stairs of Evans...


Live from Bullwinkle Plaza: there is a line in my globalization lecture that I am going to have to take out.

Hitherto, when talking about how connected the world is, I hold up my cell phone and say: "The number of this phone is on my CV, and any phone number in the world can call it and I will answer--that is, I will answer it once, and more if I find you interesting enough."

Because of cellphone spam--"Your business has been approved for a loan of $250,000!"--that is no longer true...

Today's Economic History: Eric Rauchway’s The Money Makers is one of the very best books to read to understand our economy today. It tells the story of how Franklin Delano Roosevelt and the people who work for him pragmatically—experimenting with institutional redesign, reinforcing success, dropping failure, focusing on what worked—refuted via action the ideologues of the left and the right who to this day condemn his New Deal is ineffective or destructive.

(Hold until 2015-10-26.)

Federal Reserve Ad Hocracy, Precedent, and Legal Realism: In the Inbox:

On Monday, Aug 3, 2015 at 7:50 AM, Philip Wallach ********, wrote:


Thanks for noting, via David Zaring’s post, the debate I had with Peter Conti-Brown about Lehman’s demise and the Fed’s legal powers in relation to it.

I have a small point to make it relation to your response, which is that if the question is “What can the Fed do legally?” then replying that "the Fed can do many things ultra vires" is something of a non sequitur, no?

But overall I appreciate the thrust of your post—which I do think is directly responsive to the far more important question of, “What kind of thing is the Fed and how should we understand its role during financial crises?” In terms of the economics, I think I am sold on idea that central banks should be endowed with the power to do “whatever it takes” and the independence to decide what that is. But I have some worries about the politics—i.e., how do central banks get the legitimacy to wield that tremendous power in the context of 21st century democratic political life? I think the ultra vires position is especially problematic in that light, quite apart from any convictions about whether it should be. To the average politically literate American or even member of Congress, the idea that “the Fed” is not just a part of “the government” is very hard to parse, let alone justify.

If you’re so inclined, you might enjoy some of the other blog posts I put up at the Yale Journal of Regulation Blog:

All inspired by material from my new book, To The Edge: Legality, Legitimacy, and the Responses to the 2008 Financial Crisis I suspect you’d enjoy it, and I’m sure Brookings Press can send you a copy if you are interested.

Here’s a 10-page attempt to boil down some of the major themes

Best regards,


Philip Wallach, Ph.D. Fellow, Governance Studies Brookings Institution office: (202) 540-7786 <>

I think that my point is that there is long-settled Trans-Atlantic precedent for central banks acting ultra vires in a financial crisis—and in fact getting upfront assurances, via a suspension letter from the Chancellor of the Exchequer that he would not sanction violations of the note-issue restrictions of the Recharter of 1844, that such ultra vires behavior will not be sanctioned. Whether something that the government asks you to do and promises not to sanction you for is illegal is something that the Legal Realists would probably have something to say about…

Robert Peel’s remarks around the Recharter of 1844 about just why they were writing the Recharter to forbid the Bank of England to do things in a crisis that they did, in fact, hope it would assume responsibility and do are, I think, very interesting…

How come I have not read your book already?

"It's always worth considering, on the positive side of the ledger, that as chairman of Judiciary in 1987 [Joe Biden] organized hearings that calmly and effectively built the case against Robert Bork--who was then defeated 58 to 42. It's no exaggeration to say that the world is a different place because that seat now belongs to Anthony Kennedy."


  • On Twitter:

  • @Noahpinion: A sufficiently advanced level of technology will mean the end of economics as we know it:
  • @delong: .@Noahpinion In the Agrarian Age, 75% of the work was getting and preparing 2000 calories a day plus essential nutrients. Now that is down to 3%. As far as the production of basic edible calories and nutrients are concerned, we are already 19/20 of the way to the replicator. Yet I see no sign of any end of the economy, not even the food economy--in fact we spent $85 on dinner for 2 at the Juhu Beach Club Plus we are getting close to the manufacturing replicator as well...
  • @mathowie: Soylent is Gruel 2.0 and everyone should live a life of righteous efficient austerity #ick #gross #nothanks
  • @hondanhon: @mathowie yeah that's totally why in Utopian Star Trek Picard is like "Computer, Soylent 10, Hot"
  • ‏@t0nyyates: @delong @Noahpinion that's optimistic given we are not sure our improvements are sustainable.
  • @Apinak: @t0nyyates Exactly, global population has doubled last 40 yrs & exceeding ecological boundaries, not a straight line @delong @Noahpinion
  • @kltblom: @delong @Noahpinion As I wrote last week "We have produced enough calories for all of us for a long time" -
  • @DaLeftHook: @Noahpinion @delong .@maxkeiser and .@stacyherbert were just talking about this the other day on the @KeiserReport
  • @DaveAshelman: @delong @pardoguerra @Noahpinion Yet goods & svcs are still produced based on hedonism. We as a species/society have not moved beyond that.
  • @AdamPosen: Read all four parts. On automation. I agree with @delong
  • @Noahpinion: delong Have you considered the possibility that the tech productivity puzzle is actually the very beginning of Trekonomics?
  • @TimDuy: @Noahpinion @delong Seems like the the replicator did not diminish the Ferengi desire to accumulate latinum.
  • @Noahpinion: @TimDuy @delong The Ferengi engage in commerce for religious reasons!
  • ‏@YorkshireMao: @TimDuy @Noahpinion @delong greed was also their religion - they needed Latinum to bribe their way into the afterlife.
  • @trekonomics: @TimDuy @delong @Noahpinion But the Ferengis are not Federation, and they do change over time from John Galt to @NYTimeskrugman keynesians
  • @ticketdust: @trekonomics @delong @TimDuy @Noahpinion @NYTimeskrugman This happens due to contact with HOOMAN FEMALES, so there's hope for Gamr G8 yet.
    • @trekonomics: @ticketdust @delong @TimDuy @Noahpinion @NYTimeskrugman the puppies will never like Star Trek.
  • @pardoguerra: @delong @Noahpinion Mixing apples and pears? Is 2000 calories of gruel or 2000 cals w/ entertainment + signalling?
  • delong: .@pardoguerra @Noahpinion I think my point is that our economy has long since moved past the horizon of the kingdom of necessity--in which we produce the necessities and conveniences of life--to the kingdom of freedom--in which we produce luxury of various kinds to suit our manifold purposes--entertainment, signaling, curiosity, aims we have decided are good to pursue for reasons that we think good and sufficient. Yet this transit from the kingdom of necessity to the kingdom of freedom has not produced the kind of structural change in our economy--and in its very existence--that John Maynard Keynes or Karl Marx expected. We have some "from each according to their ability, to each according to their needs" in the mix--and some Wikipedia-like free associations of associated associated producers, but not an overwhelming amount of that...
  • @pardoguerra: @delong @Noahpinion agreed. And as long as there are tastes, status, and competition, there will be (at the very least, food) markets.
  • ‏@czwalsh: @delong @pardoguerra @Noahpinion Keynes thought we'd be working 3 hrs a day by now, and only by choice.
  • @trekonomics: @delong @pardoguerra @Noahpinion but luxury still *very unevenly distributed in @GreatDismal words
  • @trekonomics: @pardoguerra @delong @Noahpinion post-scarcity in ST is not absence of markets. In fact I'd argue reputation is ST's main currency.
  • @jmfinn: @delong @Noahpinion We're trying to apply 20th century models of economics and governance to something that is far beyond that.


I do have the greatest job in the world...

Show up at Strada Coffee at 9:15, and fall into conversation with the newly-returned-from-sabbatical Nezar Al-Sayyed.

Get treated to a 30-minute interactive impromptu lecture on Near- and Middle-Eastern urban settlement patterns, the wanderings of the River Nile, Khartoum and Omdurman, Alexandria-in-Egypt and Rosetts, the Al-Fayyum oasis, the Greek-ethnicity-urban-colonial-settlement imperial regional domination strategy of the Seleukids and the Ptolemaids, and other topics. With bonus summaries of superb papers I would never otherwise have read from the Journal of Hydraulic Archaeology about the dam-building projects of Ptolemaios III...


Shrimp Saganaki:

  • 2 tablespoons olive oil
  • 1 onion
  • 2 garlics clove, thinly sliced (roasted garlic works well also)
  • ½ teaspoon red pepper flakes
  • 1 pint grape or cherry tomatoes, halved
  • 1/2 cup pitted kalamata olives, rinsed and halved
  • 15 ounce can cannellini beans
  • ½ cup vegetable stock
  • 1 pound large shrimp
  • 2 tablespoons chopped fresh oregano
  • 1/4 cup chopped fresh dill
  • 1/2 cup chopped fresh flat-leaf parsley
  • 6 ounces feta cheese, crumbled
  • ¼ teaspoon salt
  • Freshly ground black pepper to taste

Cf.: Odeum


Brian Deese Presenting the White House Point of View

Approaching Fiscal Milestones from the White House's Point of View:

  • Highway Trust Fund expires (August)
  • Return of sequester funding levels (October)
    • Promise of veto to any lock-in of sequester funding levels
    • Small bipartisan budget deal a la 2013--hopefully without another 17-day shutdown
  • Tax extenders expire (January)
    • Do something less temporary for transportation?

Low-Probability Opportunities for Policy:

  • Criminal justice reform? (Neera on the breadth and depth of the CJR substantive policy-reform coalition...)

Appropriations and Policy:

  • President: we will not let the appropriations process be used to constrain substantive policy initiatives.
  • It wasn't a hard conclusion that this could be done, because these are hard votes for some Senate Democrats
  • Hardest vote: the DoD bill. Senate Democrats held.
  • Gridlock until an agreement is reached on overall appropriations

Hard to make the argument that Obama economic policy has been sub-par when it has clearly been best-of-breed across the North Atlantic...

We Have (Close to the Equivalent of) Replicators: So Why Do We (Still) Have Non Personal-Service Jobs?

What proportion of jobs these days are really "your mom isn't here!" jobs? That is, what proportion of jobs wouldn't it be necessary if people would only behave--if people would reliably and properly drop the money they owe into the jar, would clean up if they spilled something and leave the place in the clean state it was when they arrived, would not break machines by trying to operate them when they do not understand how to do so?



Conversation on 2015-06-29 with Alexis Hope of FOLD:

What I would prioritize:

  • Markdown engine for text cards...
  • Remixing cards--including remixing main-narrative cards as context cards elsewhere...
  • Link context cards with four elements: (i) title, (ii) comment, (iii) search string, and (iv) clickable URL. Have the Link context card then display the title, comment, clickable URL, and the linked-to document starting at the search string...


Yes, John Cochrane Is Now at Least 75% Clown:

I am looking at the Cochrane graphs, and in particular the second graph, decadal averages. Can someone explain to me why, if for 20years (1955 to 1975) we had roughly, more then 4% growth, why we can't do it again ?

Because from 1955-1975: (a) our labor force was growing 1%-point/year faster than it is now, (b) we disrupted confidence in price stability and shifted expectations of annual inflation up from 2%/year to 7%/year while getting a lot of years of a high-pressure economy and faster growth out of that upward shift, and (c) there are strong signs that growth then was boosted by the backlog of low-hanging innovation fruit produced by the second industrial revolution at the end of the nineteenth century and then the interruption of its technological buildout by the Great Depression and World War II.

If you want to set out a serious argument that we can generate countervailing factors to make up for (a), (b), and (c), you can say that 4%/year growth might be attainable. If you merely say "the time series shows we did it then, we can do it again!" you are nothing but a clown...


Optimal Control:

It is one of Herbert Simon's principles that one should model the most striking features of a situation, take the model as your guide, solve for the optimal policy for your oversimplified model, and then hope that the optimal solution to the oversimplified model is a good solution to the real world policy problem.

In the case of the Federal Reserve, the natural way to model it's task is as an optimal control problem. In such a problem, the optimal path for your control--which is, in this case, the short-term safe nominal interest rate that the Federal Reserve sets--is one in which it is expected to drift up or down only slowly. And whenever new information arrives, the optimal policy is for the control path to jump until once again the control variable is at a level at which you expect it to drift one way or the other only slowly.

All this is true assuming that one can either lay raise or lower one's control variable as one wishes.

If your control variable has a bound--like the zero lower bound on interest rates--the optimal control policy is different. The fact that you cannot lower your control variable below its bound adds an extra term to the math. This extra term makes it unpleasant to be even near the bound. So you should take steps to stay away from it--which means lowering your control variable closer to the bound as you get near it. And the nearer to it you are, the more you lower it below what it would be if there were no bound constraining it.

This bound principle has the implication that if do you wind up at the bound, you want to get off of it as soon as possible in a way that makes it highly unlikely you will wind back at it. Hence you stay at the bound until your optimal policy in the absence of the bound is well away, and then you move your control variable rapidly until it once again is expected to drift only slowly.

Thus Janet Yellen's declaration today makes no sense: from an optimal control of you, you want to wait to raise interest rates until the economy is sufficiently strong that the appropriate interest rate raise is a substantial one.

The Federal Reserve knows the logic of this optimal control argument at least as well as I do. But so far I have not heard or seen anywhere a coherent explanation of why it does not or even might not apply right now.



A good day today 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.)

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 a decade ago.
  • Low-tax low-service U.S. state level political economy has proved to be ineffective as an economic development model. I was always pretty sure that it was a lousy bet from the standpoint of societal welfare. But a decade ago I thought it at least boosted state-level GDP. Now I do not.
  • The success of the implementation of Obamacare has raised my estimation of the administrative competence of the government.
  • And the aggregate economic costs to America of local NIMBYism now appear to me to be much larger than I would have thought reasonable decade ago: we are no longer a country in which people can afford to move to places where they will be more productive and more highly paid because high-productivity places refuse to upgrade their residential density.

All this, I said, has powerful political consequences. And the politics of the last decade has also been very surprising to me. But I did not have time to get into that in any depth...


People: "Game of Thrones" Is Horror!:

In the very first scene of the very first episode of the very first season of "Game of Thrones", three members of the Night's Watch--an older veteran-type Gared, and two callow-youth types, one in command named Waymar Royce and the other named Will--set out on patrol. By 2:45 the point rider Will has encountered horrible evil. By 3:30 the veteran-type Gared has told the two callow-youth types that they need to head back to their base. By 5:50 they learn that the evil is supernatural, and start to die. By 6:15 the survivors' courage has broken and they are running south as fast as they can. By 7:00 there is only one survivor--the un-arrogant callow youth Will.

Then comes the introductory series title, which announces that the series's headline star is Sean Bean and takes us to 8:58.

At 8:58 the very second scene begins. The one survivor of the characters from scene 1, Will, has not recovered his courage but instead continued his mad flight south all the way to Winterfell. Will is captured.

At 9:45 scene three begins at Winterfell, showing us Eddard Stark, Warden of the North and Lord of Winterfell--played by Sean Bean--and his family: his wife Catelyn, his legitimate children Robb, Sansa, Arya, Bran, and Rickon, and his presumed illegitimate son Jon Snow.

At 12:10 scene four begins. Eddard Stark confronts Will, the surviving Night's Watchman from scene one.

When, in The Lord of the Rings, Aragorn son of Arathorn, Head Ranger, Elf-Friend, Chief of the Dunedain of the North, King Elessar of Gondor, confronts those of his soldiers who have similarly lost their courage when confronted with a supernatural evil beyond their expectation or comprehension:

So desolate were those places and so deep the horror that lay on them that some of the host were unmanned, and they could neither walk nor ride further north. Aragorn looked at them, and there was pity in his eyes rather than wrath; for these were young men from Rohan, from Westfold far away, or husbandmen from Lossarnach, and tothem Mordor had been from childhood a name of evil, and yet unreal, a legend that had no part in their simple life; and now they walked like men in a hideous dream made true, and they understood not this war nor why fate should lead them to such a pass.

‘Go!’ said Aragorn. ‘But keep what honour you may, and do not run! And there is a task which you may attempt and so be not wholly shamed. Take your way south-west till you come to Cair Andros, and if that is still held by enemies, as I think, then re-take it, if you can; and hold it to the last in defence of Gondor and Rohan!’

That is not what Eddard Stark does.

At 13:45 Eddard Stark executes Will--for he is a deserter.

At 55:25 the 13-year-old Daenerys Targaryen is sold as a bride to Khal Drogo. They share no languages in common. At 57:15 he pushes her down, doggy-style. She is weeping.

That is the kind of show we have here. By the end of the first episode it is clear that horrible things happen to people.

For, as anyone who has read other things by George R.R. Martin like “After the Festival” or “A Song for Lya” would expect, it is a horror show.

Although George R.R. Martin cloaks his story in the tropes of other genres, what he is really writing is horror. I am not saying you should watch "Game of Thrones". I am not saying that you should enjoy "Game of Thrones". I am not even saying that there are psychologically healthy people who enjoy "Game of Thrones". But what happened to Sansa Stark at the end of season five, episode six is not as bad as what happened to Daenerys back in the first episode of season one, or what happened to innumerable other women not constantly in the camera’s eye episode after episode as among the good-guy Starks. The horrible things that happened in season one were not exceptional plot-driving motivators. They are the warp and woof life as it is lived in Martin's Westeros.

For me, the most horrible moment was Daenerys's tears and wedding-night rape at the end of episode one of season one. The second-worst moment was when I realized that Martin had just turned me into a monster cheering at the agonizing murder by poison of a mentally-ill 15-year-old. The third-worst moment was the sexual-torture-murder of Roz by said mental-ill 15-year-old Joffrey. "Game of Thrones" fascinates. And I admit I am desperately curious as to what happens next. But… it is horror. And is with all horror, it is not clear that you are supposed to enjoy it, or that if you do "enjoy" it you are not mentally ill...


George Stigler: Ideologue Rather than Technocrat:

I see that over on the Twitter machine Noah Smith is engaging Paul Romer, in an attempt to get Paul to elucidate his "Mathiness" paper.

It seems clear to me that George Stigler was, in Paul Romer's beastiary, an ideologue rather than a technocrat. George Stigler thought Chamberlainian and other models of imperfect competition were intellectually dangerous: not good to think with. Why? Because they gave an intellectual opening to "planners"--who were completely unaware of thie magnitudes of potential government failure--to argue for their interventionist "planning".

A sound analysis, I think Stigler thought, would take account of the magnitudes of potential government failures. It would lead to the correct conclusion that, even with Chamberlainian features in the model, anything other then letting the market rip would be a bad policy mistake. But models that ignored government failure could be used to argue for all kinds of destructive interventionist policies--antitrust, Keynesian, you name it. In this context, requiring that models assume perfect competition in their microfoundations was a "Noble Lie", a proper esoteric teaching.. It led those who could not grasp the true esoteric teaching about the magnitude of government failure to the right and true conclusions. And one could teach those who could handle it the esoteric teaching--including the point that perfect competition was the proper microeconomic foundation to assume in the course of teaching gentlemen, and was a proper part of the methodology of positive and normative economics.

The problem is that Paul Romer wants to analyze issues in which perfect competition is not an assumption that leads one to anything like the True Knowledge about appropriate policies for economic growth. And yet Lucas and company are insisting that he make it. And it is to this, I think, that Paul Romer objects--most strongly.