The economist Albert O Hirschman loved to reintroduce forgotten historical thinkers in his writing, and he delighted in the discovery of the invisible, those hidden intellectual currents running beneath the contemporary trends of his time.Not aiming just to scold the followers of the latest intellectual fashions, Hirschman wanted to reveal the circumstances in which the same idea emerges again and again through the ages, with new thinkers each time believing they had made the discovery themselves. “The Passions and the Interests”, his gorgeous little book about the evolving justifications for capitalism dating to Machiavelli, even includes a mild chiding of Keynes for having ignored those very justifications and thinking his own contribution original.Hirschman published “Social Conflicts

That’s chart 1.13.3 from the IMF’s Global Financial Stability report. Mind the y-axes.The chart reinforces one bit of conventional wisdom, which is that US policymakers responded more aggressively than their counterparts in the euro area and Japan to the onset of the financial crisis.Fiscal policy looks to have loosened more in America when compared to its recent past, although the scale makes it difficult to compare policies across countries given the different sizes of the economies involved. In monetary policy the trend is less ambiguous: the Fed moved first and moved fastest, although it has since retreated.All true enough, though the US could have been more aggressive still, and furthermore could have allowed the looser policy to continue for longer. The agonisingly slow decline in

[embedded content]Alphachat is available on Acast, iTunes and Stitcher.Alphachat producer Aimee Keane sits in front of the mic this week for a chat with urban studies theorist Richard Florida about his latest book, The New Urban Crisis. They discuss the evolution of his views on the creative class, the rise of geographic inequality and its effects on suburbs and rural areas, issues specific to developing economies, and potential solutions.And here’s an excerpt from their chat:Aimee Keane And so the premise of your new book, The New Urban Crisis, is that yes, that return to the city, that meant boom time for the creative class in many ways, but it also came at the expense of the poor and the working class; a lot of those people were pushed out of the city centres; in some cases out to the

Debates about the longterm rise in the number of Americans receiving disability benefits are often about incentive design and cost.One typical worry is that people who start receiving these benefits will try never to stop. David Autor has written that “the program provides strong incentives to applicants and beneficiaries to remain out of the labor force permanently, and it provides no incentive to employers to implement cost-effective accommodations that would enable disabled employees to remain on the job”.Others disagree, but the point here isn’t to adjudicate whether these claims are right or wrong — see our Related Links section below for more — but rather to highlight a potential development that hasn’t received much attention.Torsten Slok’s latest overview of the labour market

Elsewhere on Thursday, a few headlines… — First Evidence That Online Dating Is Changing the Nature of Society (Technology Review)— David Beckworth’s podcast episode with Olivier Blanchard (Macro Musings)— Uber, Lyft reduce transit use, increase vehicle miles, report says (SF Gate)— Post-racial rhetoric, racial health disparities, and health disparity consequences of stigma, stress, and racism (Equitablog)— Puerto Rico, Trump and Taxes (Krugman)— The Audacity of Blaming ‘Sex Addiction’ (The Atlantic)— Svengali Philosopher King Ray Dalio Is About To Make The NBA Interesting This Season (Dealbreaker)

Elsewhere on Wednesday, a few headline… — What Puerto Rico tells us about global trade (Brad Setser)— Leverage in the small and in the large (Hyun Song Shin)— Kevin Warsh, Very Serious Person (Tim Duy)— Defending Thaler from the guerrilla resistance (Noah Smith)— In search of the next Genius Bar (Slate)— The economic effects of goods and factor markets integration (Vox EU)— Why do we watch Black Mirror? (Kottke)

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Elsewhere on Tuesday, a few headlines…— Duncan Weldon on Ed Wolff on US wealth inequality (Prospect):Wolff is unencumbered by any such grand theory. Instead, he works within a much tighter frame, which allows for a more detailed look at the specifics of wealth by age, race and educational background and so on. And working with this tighter focus, he is able to produce some remarkable new facts, about how financially frail ordinary Americans have become. A generation ago, in 1989, the middle quintile of earners typically had accumulated enough financial wealth to maintain 3.6 months of normal spending if they lost their income. By 2013, that figure had fallen to just 0.2 months. In other words, the typical safety cushion was now down to just a week or so’s normal spending. Is it any wonder

Dick Thaler has won The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2017.Granting the award to a behavioural economist has an inherent advantage for anyone tasked with explaining the economist’s work: experiments highlighting human imperfections, inconsistencies and irrationalities are great fun to talk about. Journalists still baffled by how to explain the work of 2014 winner Jean Tirole can especially appreciate this.But while some will point to Thaler’s famous “nudges” such as the fly in the urinal, my own favourite example of Thaler’s ability to explain behavioural quirks is somewhat different. It resides in the ostensibly dreary realm of closed-end mutual funds.Thaler presented this example at the 2016 American Economic Association annual meetings, but

Elsewhere on Monday, a few headlines…— Will technology enable workers or replace them? A long-read Q&A with Daron Acemoglu (AEI)— Rethinking diversity in economics (Claudia Sahm)— Referendums: Yes or No? (NY Review of Books)— MMT: school of thought or set of personalities? (Eric Lonergan)— Finding the *right* level of household debt (Principles and Interest)— The FBI’s Hunt for Two Missing Piglets Reveals the Federal Cover-Up of Barbaric Factory Farms (The Intercept)— Official Investors and the Eurozone Debt Market (Brad Setser)— Going West: Before there was Walter O’Malley, there was Kenneth Arrow (David Warsh)

[embedded content]Alphachat is available on Acast, iTunes and Stitcher.Becoming familiar with the original works of Albert O Hirschman is an intellectual delight that should appeal to anyone who cares about economics and the social sciences. And perhaps the best gateway into Hirschman’s life and works is Worldly Philosopher, the magnificent biography of his life written by Jeremy Adelman and published in 2013.Adelman, a Princeton historian, first appeared on Alphachat earlier this year to discuss Hirschman’s The Passions and the Interests. On this week’s episode, Adelman returns to guide listeners through Exit, Voice & Loyalty, Hirschman’s best-known book. Enjoy!

The images, anecdotes, and videos coming out of Venezuela in the past year have been heartbreaking. Shortages of medicines and basic household supplies, people rummaging through garbage for food, violent clashes, a seemingly hopeless future.The data if anything understate the scale of the catastrophe. Entirely avoidable, the combination of policies and circumstances leading to it have been in place for years. Ricardo Hausmann, a Harvard-based Venezuelan economist deemed persona non grata by the government for his fierce criticisms, appeared on Alphachat recently to discuss the sequence of events preceding this cataclysmic economic situation. He also talked listeners through the relevant Venezuelan history, the country’s dependence on oil, and the conditions in place that made it possible

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Introducing Alphachat, the FT Alphaville podcast
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Sal Arnuk on high frequency trading
Alphachat returns
Snap Cyprus edition
The cunning plan edition
Dragons of

Elsewhere on Friday,— The IMF’s China Problem (Brad Setser)— Why Does Sweden Have So Many Start-Ups? (The Atlantic)— The repressive, authoritarian soul of “Thomas the Tank Engine & Friends” (New Yorker)— How Venezuela’s resistance movement — and the country’s democracy — reached a breaking point during one week in July. (Longreads)— Chinese-North Korean Relations: Drawing the Right Historical Lessons (38 North)— The siren call of T+0, or real-time settlement (JP Koning)— Our Open-Plan Office Failed, So We’re Moving to a Towering Panopticon (McSweeney’s)— Thoughts on the Unified Framework for Fixing our Broken Tax Code (John Cochrane)— Employment Hysteresis from the Great Recession (NBER)

Income gains were widely, if not evenly, shared across every measured economic, age, educational, and racial and ethnic category in the three years to the end of 2016, according to the triennial Survey of Consumer Finances released Wednesday by the Federal Reserve.This was a hugely welcome development. The previous edition of the survey had shown that median incomes and median wealth had actually declined from 2010 to 2013.A few more bits of good news from the summary (my bolding):— Families without a high school diploma and nonwhite and Hispanic families experienced larger proportional gains in incomes than other families between 2013 and 2016, although more-educated families and white non-Hispanic families continue to have higher incomes than other families. …— Families without a college

Back in November 2013, nearing the end of his term as Fed chair, Ben Bernanke offered perhaps the clearest articulation of his views on the mechanisms through which the Fed’s distinct policies affect monetary conditions.My colleague Gavyn Davies then described the critical element in Bernanke’s speech as the separation principle, writing:Mr Bernanke’s core point is that the Fed’s reading of monetary conditions now distinguishes sharply between two distinct factors, which are the expected forward path for short rates, and the term premium built into long term bond yields. Asset purchases by the central bank are intended to affect the second of these factors, the term premium, but are not intended to give any signal to the markets about the Fed’s willingness to keep short rates at zero for a

Elsewhere on Tuesday, — Raj Chetty has posted the slides and lectures to his course on the use of Big Data in economics (Chetty)— The middle-income trap can be escaped (OECD)— Eight lessons from Germany’s elections (Der Spiegel)— A survey finding that college students don’t care about free speech used junk methodology (Dan Drezner)— A huge proxy battle at Proctor & Gamble may be decided by retail investors (Reuters)— The horrible conditions in Puerto Rico (Washington Post)— Hyman Minsky once interpreted Donald Trump’s The Art of the Deal (Journal of Post Keynesian Economics)— “Saudi Arabia’s education minister has apologised for the production of a school textbook in which the Star Wars character Yoda is seen superimposed on a photograph of the late King Faisal.” (BBC)— Demographics and

Elsewhere on Monday, — Projected evolution of the Fed’s balance sheet (FEDS Notes)— China is revamping its industrial policy, again (The Economist):The “Made in China” plan, its latest industrial-policy craze, is derived in part from Germany’s “Industry 4.0” model, which focuses on creating a helpful environment through training and policy support but leaves business decisions to companies. China’s version is much more hands-on. By the start of this year, officials had established 1,013 “state-guided funds”, endowed with 5.3trn yuan ($807bn), much of it for “Made in China” industries. In August the Ministry of Industry and Information Technology unveiled a manufacturing-subsidy programme, spread across as many as 62 separate initiatives. Most contentiously, the government has laid out

7:22 pm

CG7:22pmHello!

MCK7:22pmHello everyone!

Gia
hiya

CG7:24pmWe’re experiencing technical difficulties and can’t promise resolution

7:24 pm

CG7:24pmBut we’ll forge ahead until the meltdown is complete

MCK7:24pmCardiff, you need to have faith that it’s just "transitory"

Acker
lol @ transitory

CG7:24pmI’m trying to see past it, Matt, and make my judgement based on teh underlying trends

John Dillinger
hello

7:24 pm

CG7:25pmanyways, let’s do links

Chief Gucci Sosa
Ahoy

CG7:25pmHere are the new SEPs

CG7:25pmhttps://www.federa…ojtabl20170920.pdf

7:25 pm

CG7:25pmHi Gia,

Matt Klein and I will be hosting a special edition of Markets Live to cover Janet Yellen’s press conference following the release of the new FOMC statement.The presser starts at 2:30pm, but we’ll kick off the show at 2:20pm EST (7:20pm in London) to discuss the statement and the new set of economic projections. You can participate by clicking here.My post last week discussed the complexities of reducing the Fed’s balance sheet, the beginning of which is expected to be announced tomorrow. And the FT’s Sam Fleming has a preview out this morning. Here’s an excerpt:Nearly a decade after unleashing a stimulus programme that more than quadrupled the size of its balance sheet, the Federal Reserve is on Wednesday likely to formally announce the process of unwinding quantitative easing, in a signal

The Fed has offered some idea of how it will start reducing the size of its balance sheet, but there’s no way to anticipate how or when it will end.What will be the impact on the real economy? If it results in more tightening of financial conditions than the Fed desires, how will it be offset? How big will the balance sheet still be when the Fed deems it fully normalised? At what balance-sheet size would the competition for reserves from financial institutions start overriding the effect of the interest paid by them? If the economy once again tips into a downturn, will the Fed consider once again growing its portfolio holdings?Although these questions don’t yet have answers, the many attendant complexities are explored in a deeply researched, comprehensive new note from Nomura’s Lew

[embedded content]Alphachat is available on Acast, iTunes and Stitcher.

Introducing Alphachat, the FT Alphaville podcast
Podcast bleg: Alphachat returns
Sal Arnuk on high frequency trading
Alphachat returns
Snap Cyprus edition
The cunning plan edition
Dragons of

Elsewhere on Friday, — What are the technology requirements for a central bank digital currency? (Bank Underground)What type of technology would you use if you wanted to create a central bank digital currency (CBDC) i.e. a national currency denominated, electronic, liability of the central bank? It is often assumed that blockchain, or distributed ledger technology (DLT), would be required; but although this could have some benefits (as well as challenges), it may not be necessary. It could be sensible to approach this issue the same way you would any IT systems development problem – starting with an analysis of requirements, before thinking about the solution that best meets these.— Korea’s external surplus is not in any way mysterious (CFR):China’s efforts to squeeze Korea economically

Elsewhere on Thursday, — Ford disguised a man as a car seat to research self-driving (TechCrunch)— “I am not too concerned about what Alibaba does with my money since it’s too big to collapse.” (WSJ)— Darwin and the welfare state (New Statesman)— What’s the case against civilization? (John Lanchester)— How QE was unwound in the 1930s (NBER)— The sociopolitical leanings of tech entrepreneurs, graphed (The Economist)— A shallow pool of safe assets and the equity risk premium (AEA)— Russia wants innovation but keeps arresting its innovators (New York Times)

Elsewhere in Wednesday, — Catching up on the Chinese economy (Balding’s World)— A new way to learn economics (New Yorker)— Amazon is hiring all the MBAs (Quartz)— Which came first: the opioids or the despair? (Justin Fox)— The sickening behaviour of SoFi managers (New York Times)— iPhone prices from the original to iPhone X (Venture Beat)— Google has a Goldman Sachs problem: the new politics of Big Tech (Buzzfeed)— Hillary Clinton almost included a Universal Basic Income in her campaign platform (Vox)— A clever idea to punish the poor and increase the deficit (Catherine Rampell)

Elsewhere on Tuesday, — On Brexit and the Irish question (Fintan O’Toole):The Republic of Ireland was one of the most ethnically and religiously monolithic societies in the developed world. … Three big things changed. The power of the Catholic Church collapsed in the 1990s, partly because of its dreadful response to revelations of its facilitation of sexual abuse of children by clergy. The Irish economy, home to the European headquarters of many of the major multinational IT and pharmaceutical corporations, became a poster child for globalization. And the search for peace in Northern Ireland forced a dramatic rethinking of ideas about identity, sovereignty, and nationality. These very questions had tormented Ireland for centuries and were at the heart of the vicious, low-level, but

Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman have posted a new working paper that offers new details about the composition of wealth held in offshore tax havens.Partly updating earlier work by Zucman, they write:In 2016, a number of prominent offshore financial centers—including Switzerland, Luxembourg, the Channel Islands, and Hong Kong—started disclosing bilateral data on the amount of bank deposits that foreigners own in their banks.These data have been collected for several decades by the Bank for International Settlements (BIS), but until 2016 the BIS only disclosed statistics aggregated at the country level (such as the total amount of foreign-owned bank deposits in Hong Kong) rather than at the bilateral level (such as the amount of bank deposits owned by Indian

I do enjoy dealing with cold callers to the office pic.twitter.com/i8g9gYQpOM— Bank of England NE (@BoENorthEast) September 5, 2017

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[embedded content]Alphachat is available on Acast, iTunes and Stitcher.Ricardo Hausmann speaks with us about the macroeconomic and humanitarian catastrophe in Venezuela. Hausmann is the Director of the Center for International Development at Harvard, where he also runs the Growth Lab. The topics we cover in the chat include an overview of Venezuelan history since the 1950s, the state’s reliance on oil, the specific policies enacted by Hugo Chavez that are responsible for the current disaster, his own antagonistic relationship with the Venezuelan government, the bleak prospects for the country’s future, and the fate of its debt.Some of the articles we referenced, with links embedded:— Venezuela’s unprecedented collapse— Maduro bonds— Venezuela’s path to a debt restructuring grows more

Tim Duy has the right response to Lael Brainard’s speech today: Despite the Fed governor’s persuasive attempt, she’ll find it harder to push the Fed in a more dovish direction than she did at the end of 2015, when the Fed was predicting four rates hikes in the next year but only made one.Two years ago, worries about the depressed prospects for the global economy complemented her argument. In addition to the expectation that the oil-price collapse would lead domestic inflation downward, Chinese instability and a dour outlook for Europe, among other macro trends, bolstered the case for the Fed to proceed cautiously.Since then, global growth has outperformed expectations, while the US labour market has continued adding jobs at a reasonable monthly pace, and the unemployment rate is now

We hope our readers in the US enjoy some deserved R&R this long Labor Day weekend — we’re all going to need it ahead of what is likely to be a chaotic autumn.September will be the busiest month of the year for economic policymaking, with at least three items that directly and immediately affect the economy sure to be debated by Congress and the President.First, a spending bill to keep the government running and avoid yet another shutdown must be passed by September 30th, whether it’s a new budget or a temporary continuing resolution.Second, the Treasury is expected to run out of options to avoid hitting the debt ceiling by early- to mid-October. For obvious reasons it would be helpful to have raised the ceiling by the end of September, before the potential shutdown.Third, the President