The Pattern of Normal Politics, 1870-1914: An Outtake from “Slouching Towards Utopia?: An Economic History of the Long 20th Century, 1870-2016”

Left-wing avowedly socialist—parties in pre-World War I Europe wanted, for the present, only weak tea. The Socialist Party of Germany’s Erfurt and Gotha programs seek things like: universal male and female suffrage; the secret ballot, proportional representation and an end to gerrymandering; annual government budgets; elected local administrators and judges; the right to bear arms; free public schools and colleges; free legal assistance;...

The Annunciation by Henry Ossawa Tanner

What’s Wrong with this Reasoning?

FACT: the population density of NYC is 27K per square mile FACT: the population density of Indianapolis is 2K per square mile FACT: COVID-19 was able to be introduced and spread in a city with only 2K susceptible people per square mile (Indianapolis is such a city). Conclusion: COVID-19 will continue to spread in NYC until either (i) the number of susceptible people falls to 2K per square mile or (ii) a vaccine.  i.e., until more than 90% of...

Announcing the US-China Trade Policy Working Group

Concerned about where the US-China trade relationship is going, we recently formed a “US-China Trade Policy Working Group.” Yang Yao, Jeff Lehman and I are co-conveners. Other members are Meredith Crowley, Robert Howse, Jiandong Ju, Feng Lu, Justin Yifu Lin, Eric Maskin, and Rob Staiger. We released our statement today. The statement is signed by 27 additional economists and legal scholars, including Philippe Aghion, Kaushik Basu, Robert...

Morning brief: Oil Jawboning, Cellphone data for social distancing

A family member’s word-a-day calendar yesterday was “jawboning” and that was apparently what the President was doing related to oil markets and Russia and Saudi Arabia (New York Times link). I will not say that is not a surprise, nor that it is unwarranted. What remains to be seen is if it works. In the past some Presidents could get away with such an announcement and force the desired outcome, but that does not seem to be the world we live in...

For These Times

If you despair of the administration bringing us safely through this test, then let this provide some hope, click here. Elgar’s Nimrod Variation IX, from the Enigma Variations – musicians of the Calgary Philharmonic Orchestra and the Edmonton Symphony Orchestra.

Kalecki on the Political Aspects of Full Employment

Michal Kalecki 1899 - 1970Sam Levey reminded me of Kalecki's 1943 article on the political aspects of full employment. This a very interesting and thought-provoking paper. I enjoyed it enough to offer my critique of it.The paper starts by taking as given what Kalecki calls the doctrine of full employment. The basic idea is that the private sector, left to its own devices, is prone to Keynesian aggregate demand failures (see here for...

Reading Amartya Sen on Poverty and Famines

The shut down of entire sectors of the economy in response a pandemic is akin to a crop failure. Both represent a sudden, large and unexpected decline in production. Both leave people without resources, without the wherewithall to command the necessities of life. So I am revisiting Amartya Sen's 1981 monograph Poverty and Famines (ungated), to see if his entitlement approach has relevance for today's crisis. Sen begins with the crucial...

Why it’s too tempting to believe good news about the coronavirus

Why it’s too tempting to believe good news about the coronavirus Wishful thinking is a powerful thing. When I read about a new disease-modelling study from the University of Oxford, I desperately wanted to believe. It is the most prominent exploration of the “tip-of-the-iceberg hypothesis”, which suggests that the majority of coronavirus infections are so mild as to have passed unrecorded by the authorities and perhaps even un­noticed by...

Patents and Competition: Thomas Edison, Xerox, Bell Labs, Medtronic

Patents are a tradeoff: they let an inventor escape direct competition, but only for a limited time and for a specific product, and in this way provide an incentive for innovation and--one hopes--heightened future competition.But of course, there are prominent cases where firms focused on the ability of patents to limit competition. For example, I wrote last fall about "The Return of the Patent Thicket" (November 22, 2019),...

Why does money matter?

If someone asks you why monetary policy is so important, you might mention the business cycle, and/or financial crises. But suppose they ask you how you know that monetary shocks cause business cycles? How would you answer? One reason that market monetarists remain in the distinct minority is that this question is really hard to answer, indeed harder than almost any other question. You can’t just say “because blah, blah blah”, you have...

World 2.0 — “There are decades where nothing happens, and weeks where decades happen”

This is from a very able and perceptive correspondent: World 1.0 World 2.0 110 successive months of job growth 10 million jobless claims in 2 weeks 10 year bull market across sectors Winners and losers with extreme outcome inequality Full employment 30% unemployment Base rate thinking First principles thinking Physical Digital Office by default Remote by default Office for work Office for connection, community, ecosystem,...

Following the Science or a National Scandal

We can see in the United States right now the dangers of having a populist [1] president running the country during a serious pandemic. Incredibly 90% of Republicans trustthe president to give them accurate information about the outbreak. A president who first called the pandemic a Democrat hoax, and then said it was under control and now wants to end social distancing to celebrate Easter. Some of those people will be paying with their lives...

If We Give Everybody Cash, Let’s Tax It

Giving people cash is a great way to soften COVID-19’s economic blow. But it’s sparked a classic debate. Should the federal government give money to everyone? Or target it to people with low incomes? Targeting has the potential to deliver the biggest benefit per dollar spent. But eligibility requirements add complexity and will inevitably screen out some people who need help. Universality is simpler and recognizes that we are all in this...

Contagion

Central banks throughout the world are charged not only with price stability, but also with maintaining financial stability. For example, the Federal Reserve is charged with maintaining maximum employment and stable prices and the Bank of England now has an entire new building packed with financial regulators.  Historically, the Fed has achieved its employment mandate by ...

What Trump Needs To Say

As in past global and national emergencies, the COVID-19 pandemic is a crisis that demands leadership from the highest levels. If the United States had a competent, humble, and humane president, here is what that person could say to bring the country together. JACKSON HOLE, WYOMING/NAPLES, FLORIDA – Recently, a reporter at the daily White House coronavirus briefing asked US President Donald...

The Covid-19 Slump Has Arrived

Over a normal two-week period we’d expect around half a million U.S. workers to file claims for unemployment insurance. Over the past two weeks we’ve seen almost 10 million filings. We’re facing an incredible economic catastrophe.The question is whether we’re ready to deal with this catastrophe. Alas, early indications are that we may be handling fast-moving economic disaster as badly as we handled the fast-moving pandemic that’s causing...

Why Kevin Williamson is wrong about poverty and bad behavior

I recently wrote a post at Bloomberg Opinion arguing that "bad behavior" - drug use, violence, single parenthood, and idleness - is not the main cause of poverty in advanced nations. As evidence, I cited the country of Japan, which has extremely low rates of drug use, violence, single parenthood, and idleness, and yet which has a poverty rate almost as high as that of the U.S., and significantly higher than those of wealthy European...

IRD and the OIA

This one has been dragging on for a while, but it's coming to a rather nice resolution.Recall that, rather some time ago, I'd made an OIA request of Inland Revenue for the data that they had collected on tax attitudes. IRD was under fire for what was considered to be partisan polling. I'd never considered it to have been partisan; tax attitudes and how they align with political party affiliation is interesting for both the tax department and...

Consumer spending during unemployment: evidence from US bank account data

Summary Unemployment insurance (UI) benefits provide an important financial cushion for the many people who lose their jobs, helping to stabilize their consumer spending while they look for new work opportunities. But is the typical duration of UI benefits in the United States of six months the appropriate length of time – or might some people be better off with a longer period, perhaps...

The Federalist Papers #8: Without Union, the States Would Either Be Subject to Devastating Wars with Each Other or Would Have Liberty Endangered by their Own Standing Armies—Alexander Hamilton

Faced with an argument that the proposed Constitution would allow a standing army, Alexander Hamilton parried with the argument that, without the Constitution, the states would end up with standing armies to defend against one another. Moreover, he argued that the transitional period to these standing armies, War, therefore, would be desultory and predatory. PLUNDER and devastation ever march in the train of irregulars.This also, is bad. John...

Big government, just in time

Big government road into town just in time, but alas when he jumped off his bronco and reached for his six-gun it became clear he wasn’t just-in-time government. What is clear, if nothing else, from the COVID-19 crisis, we should always choose our leaders with one thing in mind: character. Character determines how they will stand up to the unexpected. That’s what really matters. And frankly, all of them—municipal, provincial, federal—are...

32+ Years…

Sweden’s strategy, for the long haul

Lockdowns will slow the virus (temporarily?), but will damage the economy (temporarily?).  Sweden is trying a different strategy. “It is important to have a policy that can be sustained over a longer period, meaning staying home if you are sick, which is our message,” said Tegnell, who has received both threats and fan mail over the country’s handling of the crisis.“Locking people up at home won’t work in the longer term,” he said. “Sooner or...

Assorted Macro Musings

1. USA Today published my Op-Ed titled "Fighting the Coronavirus Pandemic: The Economic Front." In it, I make the case that the large relief package from the White House and Congress and the Fed's interventions are best seen as mobilizing for war:  The proposed government outlays can be best thought of as part of a mass mobilization for war, just like the country did for World War II. Back then, the war was against foreign powers,...

On-Line, Ready, and Now Raring to Go with Econ 1v

Seven years ago, I decided to create an on-line version of the on-campus Principles of Economics course—we call it Econ 1—that I had been giving for many years. I recall that we spent a lot of time and effort on this project back in 2013. Each day after giving a lecture to hundreds of students, I went to a recording studio and gave the same lecture, but divided it into shorter segments, designed for easier on-line viewing.  We edited the...

Whack-a-mole: the long run virus

This virus will be with us a long time. Even if the massive national shutdown stops the spread of the virus in the US by summer, there will remain hotspots. Then someone travels, reinfects a city, and here we go again.The virus is spreading around the world. Even if the US stops the virus throughout ...

Econometrica Submission Fees

Econometrica Submission Fees March 31, 2020 in academic satire, economics, Pricing strategies This morning, a missive from the Econometrics society arrived in my in box announcing “two modest fees associated with the submission and publication of papers in its three journals.” As of May 1st 2020, the Society will assess a submission fee of $50 and a page charge of $10 per page for accepted papers. With papers on the short side...

Is the coronavirus recession of 2020 unprecedented?

TweetA reporter asks:  Will this prolonged rut take longer for the American economy to recover from than any recession in their lifetime? My answer: The coronavirus recession this year is set to be worse than the Great Recession of 2007-09, is unprecedented in its suddenness, and is likely to show the deepest economic trough since the 1930s.  The most natural precedent is the global influenza pandemic of 1918-20, which has been estimated to...

Notes From Lockdown

Posted on 05 April 2020 by John Mauldin, Thoughts from the Frontline In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.- Eric HofferGreetings from Puerto Rico, where this frequent traveler is evidently home for an unusually long time.Please share this article - Go to very top of page, right hand side, for social media buttons.I want to start today...

Corona Tools 4 

The fourth in our series looking at the people who are really standing out from the crowd during this crisis for their utter, unadulterated toolishness. Just $1,000 an hour for advice on survivalism and building up a food supply: Just a guy with a home trading set-up, an Elon Musk poster, wads of cash and some sheepskin Gucci slippers: Just a former war reporter dying on a hill, trademarking alliterations: Just a VC who is f*cking...

How Trump Squandered an Opportunity to Contain Coronavirus

29 March 2020 How Trump Squandered an Opportunity to Contain Coronavirus Dr. Leif Rosenberger Chief Economist ACERTAS Introduction During this moment of global trauma, it’s hard to think about anything else except the deadly Coronavirus. Americans are stuck in their house afraid that if they even go for a walk around the block and get too close to someone, the virus could end up killing them next. Doctors and nurses without personal...

If We Give Everybody Cash, Let’s Tax It

Giving people cash is a great way to soften COVID-19’s economic blow. But it’s sparked a classic debate. Should the federal government give money to everyone? Or target it to people with low incomes? Targeting has the potential to deliver the biggest benefit per dollar spent. But eligibility requirements add complexity and will inevitably screen out some people who need help. Universality is simpler and recognizes that we are all in this...

Historically, college students who graduate into a recession have settled for lower-paying jobs at less prestigious companies

For the Class of 2020, a Job-Eating Virus Recalls the Great Recession: With interviews postponed and internships canceled, graduates seeking work fear for the future by David Yaffe-Bellany and Jaclyn Peiser of The NY Times. Excerpts: "A number of major companies, including Yelp and Disney, have suspended their internship programs, a common route to a first job for many graduating seniors. At some job fairs in early March, major...

Three Facts from Today’s Jobs Report

The employment-population ratio fell by 1.1 percentage points. This is the largest one-month drop since these data began in 1948. The number of job losers on temporary layoff showed a large spike upward (by more than 1 million people). The number of permanent job losers showed only a small increase (by less than 200,000 people).  None of this reflects the dramatic changes during the past two weeks. We will have to wait until next month's...

The new tools of monetary policy

By Haowen Chen Since the 1980s, interest rates around the world have trended downward, reflecting lower inflation, demographic and technological forces that have increased desired global saving relative to desired investment, and other factors. Although low inflation and interest rates have many benefits, the new environment poses challenges for central banks, who have traditionally relied on cuts to short-term interest rates to stimulate...

Central Banking Stories to Watch in 2019

Happy New Year, everybody! 2018 has been a quiet year for my blog, but productive on other fronts, as I've kept busy with research and my family. But here are a few central bank-related stories I'm interested in following in the new year. 1. New Governor at Reserve Bank of IndiaFollowing the early exit of Governor Urjit Patel in December, Prime Minister Modi appointed the third central bank governor in just three years: Shaktikanta Das....

Podcast: Super Mario to the rescue

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The media cannot reform itself until it acknowledges its power

As regular readers know, I have for the last few years been banging on about the importance of the media in influencing public opinion. (It formed a key part of my SPERI/News Statesman prize lecture.) It is not a partisan point about whether the media is politically biased in a particular direction. Instead it is a claim that the media can and sometimes is profoundly important in influencing major political events. I think it is fair to say...

The Coronavirus and Lessons for Preparedness

My new Mercatus policy brief is up. It is entitled, “The Coronavirus and Lessons for Preparedness.” You can find it here.

Who were the top taxpayers in 1923?

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The media cannot reform itself until it acknowledges its power

As regular readers know, I have for the last few years been banging on about the importance of the media in influencing public opinion. (It formed a key part of my SPERI/News Statesman prize lecture.) It is not a partisan point about whether the media is politically biased in a particular direction. Instead it is a claim that the media can and sometimes is profoundly important in influencing major political events. I think it is fair to say...

The media cannot reform itself until it acknowledges its power

As regular readers know, I have for the last few years been banging on about the importance of the media in influencing public opinion. (It formed a key part of my SPERI/News Statesman prize lecture.) It is not a partisan point about whether the media is politically biased in a particular direction. Instead it is a claim that the media can and sometimes is profoundly important in influencing major political events. I think it is fair to say...