Bernstein on Fed Targets

New paper from our full employment project: Binder/Rodrigue on updating Fed toolbox by Jared Bernstein

Note to self:

Good think tanks or "centers:"

Center for Budget and Policy Priorities

Center for Economic and Policy Research

Bake on employment rate and America's stinginess

NPR Reports on the Mystery of Rivers Flowing Downstream and Men Leaving the Workforce by Dean Baker

Okay, they only consider the latter a mystery, but for those who follow the data both are equally mysterious. The piece was titled "an economic mystery: why are men leaving the workforce?" The piece noted the reduction in the percentage of prime-age men in the workforce from nearly 100 percent in the 1960s to 88.3 percent at present. It then said that no one really knows why there has been this decline.

Actually, it really is not much of a mystery. While the piece wants to attribute it to the peculiar situation men face in the labor market, it is worth noting that there has also been a sharp decline in the percentage of prime-age women in the labor market. (Actually, a better measure is simply looking at the share of people who are employed. Many workers stop saying they are looking for jobs when they are no longer eligible for unemployment benefits. With a sharp reduction in eligibility for benefits over the last three decades, people who are not working are now much less likely to say they are looking for work.)

The figure below shows the percentage of prime-age women that are working since 1990.

[figure]

The chart shows that after rising sharply from 1993 to 2000. It then fell sharply following the 2001 recession and again in 2007–2009 recession. It has since risen in the recovery but it is still 3.8 percentage points below the peak hit in 2000. The pattern among prime-age men is similar, although the employment rate is now 4.8 percentage points below the 2000 peak. (Remember the EPOP for women had been rising before the 2001 recession and was projected at the time to continue to rise.)

The fact the EPOP for men and women has followed a very similar pattern since 2000, and the declines have been associated with weak demand in the economy, suggests that the explanation might be weak demand. In other words, the problem is not too many men getting disability or lacking the skills needed in a 21st century economy, but rather just not enough demand.

If we could get the trade deficit down or got the government to spend more money then we could boost demand and get the prime-age men discussed in this piece back to work. We would do the same for prime-age women. (We could also follow the German model and reduce the length of the average work year, thereby spreading around available work.)

So the villains are not lazy men, but rather folks like Paul Ryan, Peter Peterson, and the Washington Post who insist that we have to keep our budget deficits low even in a context of near record low interest rates and very low inflation.

It is also worth mentioning that the lazy welfare cheat story doesn't fit the data at all. Benefits of various stripes have gotten more stingy over the period when men's EPOPs were declining. Also, as the report cited in the piece from the President's Council of Economic Advisers notes, the United States ranks near the bottom among wealthy countries in the generosity of benefits. It also ranks near the bottom in prime age EPOPs.

after Neoliberalism

After neoliberalism: a snippet by John Quiggin

Bullard doesn't like the plebes

St. Louis Bank President Jim Bullard Tells Us Why the Fed Needs to Be Reformed by Dean Baker

Yellen at Jackson Hole

The Federal Reserve's Monetary Policy Toolkit: Past, Present, and Future by Yellen

Fed Up story

Fed, Eager to Show It’s Listening, Welcomes Protesters by Binyamin Applebaum

Baker and DeLong on currency values

The Washington Post's TPP Challenge by Dean Baker

Since adjusting currencies are an essential part of a "free-trade" regime, a real trade deal should have rules against currency management. While the exact provisions are more than I have time for just now, Fred Bergsten (the president emeritus of the Peterson Institute for International Economics) and his colleague Joe Gagnon give us a good start here.

 Must-Read: Very good thoughts in a Kaleckian mode...
by DeLong

It is very odd. Back in 1988-1994, when I was a deficit hawk, there was reason to be: interest rates were relatively high, bad news about future deficits appeared to no longer strengthen but to slightly weaken the dollar--suggesting that the hot-money Unconfidence Fairy and the Bond Vigilantes were near if not at hand--and there was a large disconnect between the revenues and the spending that the laws in place would generate.

And now?

Not.

Interest rates are lower than anyone thought they would see in many lifetimes. The dollar's value is not in any sense threatened by deficit news. And the thirty year fiscal gap is 1.7% of GDP--a number that normal politics can deal with--and in a world of safe asset shortage many not be too high but rather, too low (and improperly backloaded).

but none of the non-Keynesian economist professional deficit hawks have shifted sides since 1992, and a new generation has grown up and started getting their deficit-panic welfare...

Duncan Weldon: Negative Yields, the Euthanasia of the Rentier & Political Economy:

I don’t understand the political economy that has brought us tight fiscal & easy money--it simply isn’t creating enough winners to be sustainable...

Rising asset values certainly have created a block of beneficiaries.... But... with gilt yields at around 0.5%... years of saving isn’t worth as much as they hoped... [and] owning a more valuable house will [not] be seen as adequate.... This cohort will get bigger each year....

Whilst the macroeconomic argument for more active fiscal policy has always been strong, the political economy conditions that may drive it are becoming clearer. Aggressive deficit-financed state spending may (unusually) create two sets of winners--the workforce who benefit from faster growth, tighter labour markets and stronger real income growth and the mass of (relatively) small scale rentiers who would benefit from higher rates.... [But the] voting public don’t seem particularly keen on deficits. I’ve wondered myself recently--whatever happened to deficit bias? It may be that, as Eric Longeran has argued, this is the best argument for helicopter money. If fiscal policy makers won’t do what is required, then perhaps monetary policymakers can.

And Paul Krugman:

fiscal policy and NGDP policy

Monetary Policy in a Low R-star World by John C. Williams

Nominal Demand Ain't What It Used to Be by David Beckworth

A Thought Provoking Essay from Fed President William by Larry Summers

Slow Learners by Krugman

Van Jones on Hillary's challenges

Van Jones on the staggering political challenges Hillary Clinton would face as president

Infrastructure, Cassidy and Krugman

AN INFRASTRUCTURE PROPOSAL THAT GOES BEYOND CLINTON AND TRUMP by John Cassidy

Wisdom, Courage and the Economy by Krugman

Now, I’m not saying that we shouldn’t try. I’d argue, in particular, for substantially more infrastructure spending than Mrs. Clinton is currently proposing, and more borrowing to pay for it. This might significantly boost growth....

Beckworth and Bernstein comment on Williams's NGDP targettting comments

The dollar’s makin’ me holler, and other tales of the macro muddle by Jared Bernstein

Nominal Demand Ain't What It Used to Be by David Beckworth

Trump voters and economic anxiety, Kwak and DeLong

That “Massive New Study” Says Nothing About Economic Anxiety by James Kwak

Must-Read: Martin Sandbu: Trump Supporters on the Couch:
by DeLong

Economic anxiety can make voters more prone to racial resentment... 

It is, of course, an old trope in social thinking that economic pressure makes it easier to wind masses up against a scapegoated group perceived as “other”. Conversely, times of widespread and rising prosperity are good for liberalism and tolerance. Brad DeLong is quite right that this is a good time to pick up Ben Friedman’s prescient pre-crisis work on the moral consequences of economic growth.... 

Racial status anxiety and economic anxiety can be one and the same phenomenon, insofar as the economic pressure is perceived as affecting a particular social group. Much is said, all correct, about how the American white working class, and Trump supporters in particular, are well off compared with minorities and the real poor. But over the past generation, the trajectory of the white working class has no doubt changed the most for the worse, compared with the previous generation. 

That is true in material, indeed plain physical, terms: while black mortality rates remain higher than those of whites, it’s only for the white working class that the secular mortality decline has gone into reverse. And it is surely true that, as a result, the relative social status of working-class whites has fallen noticeably. That reflects a sharpening of class difference with widening inequality and an unequivocally welcome reduction in racial status difference. 

All told, that is a story of tremendous progress. But there is no need to dismiss the economic roots of the racial backlash we now see...

the decline of unions and Trump

The Decline of Unions and the Rise of Trump by Neil Gross

For millennial voters, the Clinton vs. Trump choice ‘feels like a joke’ by Philip Rucker

Reich on the Democrats

Why the Shake-up at the Democratic National Committee Is Doomed by Robert Reich

Moody's and Romers on Clinton and Sanders; JW Mason on CBO

The Macroeconomic Consequences of Secretary Clinton’s Economic Policies by Moodys

SENATOR SANDERS’S PROPOSED POLICIES AND ECONOMIC GROWTH by Christina and Paul Romer

CBO Forecasts: What’s Under the Hood? by J.W. Mason

Hillary and the Scandinavian-American Dream

Hillary Clinton and the Scandinavian-American Dream by Bo Lidegaard

Tulsi Gabbard nominates Bernie Sanders

Dianne Abbot at DNC convetion in Philly

Day One of the Democratic Convention by Dianne Abbot

There is lot of interest in Jeremy Corbyn here. Most of the nonsensical British media coverage has not impacted on ordinary Americans and they see him as a progressive insurgent on the Sanders model with Sanders uncanny ability to enthuse idealistic young people. Sanders’ program, with priorities like a higher minimum wage, government health care, breaking up big banks and rebuilding infrastructure, is also very similar to the current Labour leadership.

John Cassidy on Democratic convention

BERNIE SANDERS GOES ALL IN FOR HILLARY CLINTON by John Cassidy

WHY SOME OF BERNIE SANDERS’S SUPPORTERS ARE ANGRY by John Cassidy

Amy Schumer and 2016 Emmy nominations

Schumer loves Orphan Black

My favorites:

Lead actress in a drama:

Tatiana Maslany, “Orphan Black”

Also good:
Keri Russell, “The Americans”

But Maslany should win!!!

Lead actor in a drama:
Rami Malek, “Mr. Robot”
Bob Odenkirk, “Better Call Saul”
Matthew Rhys, “The Americans”

Liev Shrieber, "Ray Donovan" is good too.

Lead actor in a limited series:
Bryan Cranston, “All the Way”

Lead actress in a limited series:
Kirsten Dunst, “Fargo” | Video

Lead actor in a comedy:
Anthony Anderson, “black-ish”
Will Forte, “Last man on Earth
Thomas Middleditch, “Silicon Valley”
Jeffrey Tambor, Transparent

Lead actress in a Comedy:
Julia Louis-Dreyfus, “Veep”
Tracee Ellis Ross, “black-ish”
Amy Schumer, “Inside Amy Schumer”

Comedy series:
“black-ish”
“Silicon Valley”
“Veep”

Drama series:
”Game of Thrones”

Outstanding Limited Series
“Fargo”
“The Night Manager”
“Roots”

TV Movie:
“All the Way”
“Confirmation”

Outstanding Supporting Actor In A Comedy Series
Louie Anderson, “Baskets”
Tony Hale, “Veep”
Matt Walsh, “Veep”

Outstanding Supporting Actor In A Drama Series
Peter Dinklage, “Game of Thrones”

Outstanding Supporting Actor In A Limited Series Or Movie
Jesse Plemons, “Fargo”
Bokeem Woodbine, “Fargo”
Hugh Laurie, “The Night Manager”

Outstanding Supporting Actress In A Comedy Series
Allison Janney, “Mom”
Kate McKinnon , “Saturday Night Live”
Anna Chlumsky, “Veep"

Outstanding Supporting Actress In A Drama Series
Maggie Smith, “Downton Abbey”
Lena Headey, “Game Of Thrones”
Emilia Clarke, “Game Of Thrones”
Maisie Williams, “Game Of Thrones”

Outstanding Supporting Actress In A Limited Series Or Movie
Jean Smart, “Fargo”

Dean Baker on Fed, Cassidy on Sanders

BERNIE SANDERS’S PHILOSOPHICAL VICTORY by John Cassidy

George Will and the Fed: Do Low Interest Rates Redistribute Upward by Dean Baker

Full employment, civil war on the left

Baker on full employment and the Democratic Platform

Vox weenies on Corbyn

Peter Frase on the center-left:

a moribund but still institutionally powerful neoliberal order that uses its accumulated power to compensate for its complete lack of compelling answers to contemporary political questions.

 Corey Robin on the Clinton forces:

The Clinton forces want nothing more than to make all of American politics—not just in this election but for the foreseeable future—into a battle between a racist, ethno-nationalist right and a multicultural, neoliberal center. Our job is to make politics into a struggle between a multicultural neoliberal center and a multicultural, multiracial socialist left.

The Youth are wise and right! You refused the call. Lady Mormont speaks harshly and truly.

The youth voted overwhelmingly for Bernie Sanders. They voted for Remain. After a pause in the discussion at the meeting of the victors over Ramsey Bolton, young Lady Mormont speaks up for Jon Snow:

"Your son was butchered at the Red Wedding, Lord Manderly, but you refused the call.

You swore allegiance to House Stark, Lord Glover, but in their hour of greatest need you refused the call.

And you, Lord Cerwyn, your father was skinned alive by Ramsey Bolton. Still, you refused the call.

But House Mormont remembers. The North remembers! We know no king but the King in the North whose name is Stark! I don't care if he's a bastard. Ned Stark's blood runs through his veins. He's my King from this day until his last day!"

"Winter is here." Game of Thrones Season 6 finale

Game of Thrones is probably my favorite TV show ever. The Ringer has a good discussion of the Season 6 finale.

WARNING

SPOILERS SPOILERS SPOILERS

Tyrion becomes Hand of the Queen as the Targaryen forces sail towards Westeros including Yara Greyjoy's fleet, the Unsullied, the Dothraki, and three dragons. Daenerys's advisers include Missandei, Grey Worm, Varys the Spider and Theon Greyjoy. Jorah Mormont is off looking for a cure to Stonescale (I would like to see him reunited with Lyanna Mormont). Daario Naharis and the Second Sons have stayed behind in Meereen.

Varys has brokered an alliance with the Dornish and Lady Olenna Tyrell (and also the Reach with Randall Tarly?).

Cersei is Queen and holder of the Iron Throne, along with Jaime, Bronn, Qyburn, and Gregor Clegane. The Sparrows and Faith Militant are gone. So is Kevan Lannister.

But the Freys are gone also, following the traitorous and disloyal Boltons into oblivion. Will Edmure Tully - now freed - and Riverrun rejoin the Starks? What about Sandor Clegane and the Brotherhood without Banners? Where is Melisandre the Red Priestess heading?

Jon Snow holds the North. Advisers include Sansa, Ser Davos, Tormund, Brienne, Podrick Payne, Lyanna Mormont and the other leaders of the Houses of the North. The Knights of the Vale and a dissatisfied Petyr Baelish. Bran Stark and Meera Reed head south past the Wall. (They know the Night King is heading south as Winter has arrived.) Samwell Tarly is studying at the Citadel. Dolorous Edd is leading the Nights Watch at Castle Black. Uncle Benjen/Coldhands is beyond the Wall.

Both Jon Snow and Sansa Stark know and like Tyrion Lannister, Hand to the Queen.

What will Euron Greyjoy do? Where will Arya head to next?

no inflation prediction in UK

pgl said in reply to Barkley Rosser...

And the risk of high inflation in the UK is zero. People are in a panic over this vote sort of like those poor people that heard a firecracker in the NYC's subway this week. I'm not saying there will not be self inflicted wounds that follow this vote but the vote itself does not mean that much. Stupid trade protection would be a bad thing but it is odd that a lot of people who are off in this panic attack lauded protectionism here. Go figure.

Friday, June 24, 2016 at 07:04 AM

Mason and Foroohar

How Should We Count Debt Owed to the Fed? by JW Mason

Why the Creative Accounting in the Microsoft-LinkedIn Deal Is So Disturbing by Rana Foroohar

Finding examples of how companies use financial engineering—instead of the realengineer—to bolster their balance sheets is like shooting fish in a barrel. The latest involves the biggest deal of the moment: Microsoft’s acquisition of LinkedIn. 

One of the reasons that LinkedIn many have wanted to be acquired, as Andrew Ross Sorkin explained in yesterday’s New York Times, is that it has been using a rather deceptive method of accounting that allows employee compensation paid in stock to be ignored as an expense. That makes for a bottom line that looks better than it really is. (This is especially true given that the amount of stock based-comp paid out by the company in the last two years was nearly equal to operating revenue, according to an analyst source.) 

LinkedIn isn’t alone in this sort of crafty accounting–most companies in the S&P now do it. (This piece is a great primer on how the funny math works.) But recently, Facebook started including stock comp in its reporting, and there’s a big push within corporate governance circles to get more companies to do that in order to get back to a more realistic version of earnings. After all, employee compensation, whether paid in cash or stock, is obviously an expense that should go on the balance sheet. 

It’s worth understanding just why, and how, stock-based compensation became such a huge deal to begin with. It marked a turning point toward short-term decision-making in corporate America. Key legislative changes that fueled the trend happened under Democratic president Bill Clinton, whose administration passed a 1993 provision on corporate pay. The measure limited corporate tax deductions for regular salaried income to $1 million but exempted “performance-related” pay above and beyond that—pay that was typically awarded in stock options. Joseph Stiglitz, a former head of Clinton’s Council of Economic Advisers, remembers this move as “one of the worst things that the Clinton administration did.” 

That’s because it created a tremendous incentive for companies to pay more compensation in options. This further fed the cycle of short-termism since executives would from then on be focused primarily on boosting stock prices, by any means necessary. As Stiglitz puts it, “It just opened up this huge span of bonus pay which was not for performance. I had written a lot about this before, that it was largely phony. I argued very strongly during the nineties that the whole stock option pay trend caused a lot of incentives for non-transparency, and that it was directly responsible for what I call creative accounting.” It allowed firms not just to deceive the market but also to avoid paying the taxes that they should have paid. 

Why does this matter so much now? Because it contributes to growing inequality and a lackluster economic recovery, by putting more and more tax-free compensation into the hands of the wealthy (who tend not to spend it after a certain point, which is a problem in an economy based mostly on consumer spending). What’s more, says Stiglitz, the performance exception didn’t really reward “performance” as much as any number of other factors, such as monetary policy that boosted stock prices. “If you’re really talking about performance, you should not get higher pay when your stock price goes up because the interest rate goes down,” he explains. “I mean, maybe Janet Yellen should get higher pay for that, but CEOs certainly shouldn’t.” He wrote in his searing memoir of the time, The Roaring Nineties, that “as the Clinton years came to a close, I wondered: What message had we in the end sent through the changes that had been brought about in our taxes?”

The Microsoft-LinkedIn deal brings all this to the fore once again. It’s a topic the next president should tackle head on, no matter the party.

After the Thrones

Another good episode of HBO's After the Thrones, where they brought in expert Mallory Rubin early to discuss the epic penultimate episode of Season 6.

Rubin - who always sports a cool T-shirt - mentioned Daenerys's quote I have in my banner area about breaking the wheel. They had an interesting discussion of all aspects of the episode focusing on things that stood out for me as well: like the fact Rickon didn't follow a serpentine rout (like in the original In-Laws movie) when running from Ramsey's arrows; that Sansa didn't alert Jon Snow that the calvary might by coming; that Davos found Shireen's toy stag and he eyed Melisandre forbodingly. I wish they had done this show throughout the series. So good.

Jo Cox, Labour MP

Jo Cox

Hiddleswift

Hiddleswift!

After the Thrones

I enjoyed After the Thrones with Mallory Rubin, @chrisryan77, and @andygreenwald. Rubin mentioned Jorah Mormont's quote which I have on my bannner:

"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."

They discussed the different fanatics, the Sparrows and Faith Militant, the followers of the Lord of Light, even Jaime who is fanatical about Cersei if not his House. They forgot to mention mention Daenerys Targaryan: "I will take what is mine!"

Go girl!

Feel the Bern

DeLong on Woodford

Must-Read: Michael Woodford: Quantitative Easing and Financial Stability by DeLong

Polanyi and Red Vienna

Karl Polanyi for President  by Patrick Iber and Mike Konczal

Red Vienna

Trump and democracy

What Trump’s Rise Means for Democracy by Jedediah Purdy

Jeremy Corbyn

Enter Left by Sam Knight

Thee astonishing political emergence of Jeremy Corbyn, the left-wing leader of the British Labour Party, is the sort of thing that passes for normal in Western democracies these days. Since the economic crash in 2008, anti-establishment types have cropped up everywhere. Corbyn, a sixty-six-year-old socialist, had never held a position of authority in his party or in government before being elected last summer on a platform of benign economic populism. He is Syriza in Greece; he is Podemos in Spain; he is Sanders in America. His politics rebel against a Britain that is eager to join foreign wars and pallid in the face of social inequality. “There has to be some kind of a reckoning,” Corbyn told me recently. “You actually have to run an economy for the benefit of people, not run for the benefit of hedge-fund managers.” 

...

McDonnell was Corbyn’s campaign manager last summer and is now the shadow Chancellor. (In British politics, the opposition creates a “shadow” cabinet to respond to the Government.) When I asked him if he could convey just how improbable it was that he and Corbyn were now in charge of Labour, McDonnell quoted Fredric Jameson, an American literary theorist and Marxist scholar. “It is easier for people to imagine the end of the earth than it is to imagine the end of capitalism,” he said. “And that is what we are about, aren’t we?”

Taibbi on the death of the GOP

R.I.P., GOP: How Trump Is Killing the Republican Party by Matt Taibbi

Varoufakis on HRC

Jared Bernstein on the costs of trade

Getting straight about the costs of trade by Jared Bernstein

Economic platitudes about how trade is always worthwhile as long as the winners can compensate the losers are an insult in the age of inequality, where the winners increasingly use their political power to claim ever more winnings. 

If we don’t deal with these costs by creating real, substantive, remunerative opportunities for those hurt by trade, some demagogue is sure to come along Trumpeting a case for xenophobia, walls, tariffs and protectionism. If he’s not … um … here already.

Jennifer Goines

Hillary Clinton could reform the Fed

Why It's a Big Deal Hillary Clinton Plans to Shake Up the Fed by Michael Maiello

Trump on torture

He should be defeated soundly, obviously.

Trump on torture: 'We have to beat the savages'

 Exactly What Kind of Torture Does Donald Trump Want to Use?

Donald Trump on waterboarding: ‘Torture works’

The Progressive Era

The Progressive Era (Wikipedia)

History of the U.S. (1865-1918) Progressive Era (Wikipedia)

Progressive Era website

The Progressive Era was one of general prosperity after the Panic of 1893—a severe depression—ended in 1897. The Panic of 1907 was short and mostly affected financiers. However, Campbell (2005) stresses the weak points of the economy in 1907–1914, linking them to public demands for more Progressive interventions. The Panic of 1907 was followed by a small decline in real wages and increased unemployment, with both trends continuing until World War I. Campbell emphasizes the resulting stress on public finance and the impact on the Wilson administration's policies. The weakened economy and persistent federal deficits led to changes in fiscal policy, including the imposition of federal income taxes on businesses and individuals and the creation of the Federal Reserve System.[80] Government agencies were also transformed in an effort to improve administrative efficiency.[81] 

In the Gilded Age (late 19th century) the parties were reluctant to involve the federal government too heavily in the private sector, except in the area of railroads and tariffs. In general, they accepted the concept of laissez-faire, a doctrine opposing government interference in the economy except to maintain law and order. This attitude started to change during the depression of the 1890s when small business, farm, and labor movements began asking the government to intercede on their behalf.[81] 

By the start of the 20th century, a middle class had developed that was leery of both the business elite and the radical political movements of farmers and laborers in the Midwest and West.

Sanders's legacy: left no longer needs the rich

Corey Robin:

NYT comes around to @karpmj's argument two months later.


Bernie Sanders’s Legacy? The Left May No Longer Need the Rich by Nate Cohn

When Bernie Sanders started gaining in the polls, it was easy to place him in a long line of idealistic insurgents like Barack Obama, Howard Dean, Bill Bradley or Jerry Brown. 

They built strong bases of support among white liberal voters, excelling in places like Boulder, Colo., and Vermont, but their chances of being nominated hinged on building a broader coalition that included nonwhite voters. Only Mr. Obama managed it. 

Mr. Sanders, despite his success in Indiana this week, has effectively lost the Democratic nomination, and for a familiar reason: He didn’t do well enough among black voters. But he gained the enthusiasm of a subtly different — and potentially larger — coalition than his liberal predecessors. 

His brand of progressivism played far better among white working-class voters than that of past liberal outsiders. At the same time, he fared far worse among the affluent Democrats who represented the core of Mr. Obama and Mr. Bradley’s coalitions. 

Mr. Sanders’s weakness among affluent Democrats and his strength among working-class Democrats might seem unsurprising, given his class-focused message. Mr. Sanders himself anticipated it in an interview with The Upshot in July. 

But in broader historical terms, it might be something of a turning point in Democratic politics: the moment when the party’s left no longer needs an alliance with wealthy liberals to compete in national elections. 

Connecticut, which held its primary April 26, vividly illustrates the huge difference between Mr. Sanders’s coalition and that of past liberal challengers.

In 2000, a flagging Mr. Bradley lost the state by 13 percentage points to Al Gore. He lost badly among nonwhite voters — losing cities like Bridgeport and Hartford by more than 40 points. He lost by more modest margins in the rural, white, working-class eastern part of the state. But he won many of the state’s affluent areas — like Greenwich and New Canaan, along with much of the traditionally liberal western and northwestern part of the state near the border with New York and Massachusetts. 

Mr. Obama won almost all of the same areas in 2008, but then added strong support from nonwhite voters — enough to give him a narrow victory over Mrs. Clinton in the state. He won places like Bridgeport and Hartford, even as he fared similarly to Mr. Bradley in places like Greenwich and New Canaan. He fared little or no better in the white, working-class parts of eastern and central Connecticut. 

The Sanders-Clinton race reversed this map. Mrs. Clinton lost almost all of the white, working-class areas of rural eastern Connecticut to Mr. Sanders, even though she had won most of it in 2008, as Mr. Gore had in 2000. But she beat Mr. Sanders by huge margins in the affluent parts of western Connecticut where Mr. Obama and Mr. Bradley fared well. She won back the nonwhite voters she lost to Obama in 2008, giving her wins in Bridgeport and Hartford that nearly matched Mr. Gore’s victory in 2000. It was enough for a clear if modest 5.4-point victory. 

It’s a pattern that has repeated itself across the country. Mr. Sanders was routed in the wealthy, liberal parts of New York where recent progressive heroes such as Bill de Blasio or Zephyr Teachout fared well — like the Upper West Side, Greenwich Village and parts of Brooklyn. 

In Massachusetts, Mr. Sanders lost the affluent, liberal voters in the Boston area, and he might well lose the Bay Area, another enclave of the wealthy and liberal. 

This is the first time since 1992 that there’s been a real split between the progressive left and affluent liberals in a Democratic primary. In that race, an iconoclastic outsider, Mr. Brown, excelled among liberals in places like Ann Arbor, Mich., with a progressive message (including opposition to trade agreements), while a more technocratic candidate, Paul Tsongas, won in wealthy liberal areas like Montgomery County, Md., which includes many suburbs northwest of Washington. Bill Clinton easily prevailed over a divided left-liberal wing of the party with strong support among working-class white Democrats and black voters. 

Why did affluent liberals support Mrs. Clinton? 

One possibility is simple class politics: Mr. Sanders’s class-oriented message didn’t resonate among this group. If true, a candidate of the progressive left would struggle to reunite the left-liberal coalition against an establishment challenger in future Democratic primaries.
But the left might have a better opportunity to reassemble the left-liberal coalition with a different progressive candidate if the problem were Mr. Sanders, not his views. (Anecdotally, I run into a lot of Hillary Clinton supporters who supported Mr. Obama in 2008 and say they would have supported Elizabeth Warren, who’s more technocratic and policy-focused than Mr. Sanders.) 

Equally important to the future of progressives in the Democratic Party is Mr. Sanders’s strength in the white working-class areas where Mr. Bradley, Mr. Obama, and both Mr. Brown and Mr. Tsongas faltered. It was Mr. Sanders’s strength among these voters that let him stay fairly competitive, even though he lost half of the traditional left-liberal coalition.
Mr. Sanders won white voters without a college degree by a double-digit margin in Connecticut, as he did in Maryland, Wisconsin, North Carolina, New Hampshire, Illinois, Oklahoma, Indiana, Vermont and Michigan. He probably did so in Rhode Island as well (no exit polls were conducted there). 

Outside the South, Mrs. Clinton probably won white voters without a college degree only in Ohio (the exit polls there show she prevailed with that group by one point). 

One possible explanation, again, is policy. Income inequality has become a vastly more important issue to Democrats since the Great Recession, and it’s reasonable to assume that white working-class Democrats might be especially drawn to the issue. This is the best case for the progressive left; it would mean that a future progressive populist could count on similar levels of support with a strong, class-oriented message. 

The evidence for this view is somewhat mixed. According a compilation of exit polls, around 40 percent of white voters without a college degree wanted more liberal policies than those of Mr. Obama, and Mr. Sanders won these voters handily. The highest number was in Vermont, where 46 percent of white voters without a degree wanted more liberal policies than Mr. Obama’s. 

That’s a big bloc that progressives can count on in the future, but it’s not a majority and it’s less than Mr. Sanders’s share of white voters without a degree. That’s in part because Mr. Sanders also won among those white working-class voters who wanted less liberal policies than those of Mr. Obama, a fact that makes Mr. Sanders look as much like a protest vote against Mrs. Clinton as the harbinger of a new Democratic socialism. 

But it is nonetheless striking that so many white Democrats without a degree wanted more liberal policies than Mr. Obama’s. In fact, white voters without a college degree were often more likely than either college-educated white voters or minorities to support more liberal policies. 

That’s consistent with the notion that white working-class Democrats really have become more receptive to a progressive candidate over the last decade, in some cases even going from being the principal impediment to a left-liberal coalition to the strongest bloc in favor of a more progressive agenda. 

According to exit poll data, liberals represented a majority of white Democrats without a college degree in nearly every primary contest. It’s a huge change from just a decade or two ago, when so many white working-class Democrats were conservative (check out this 1995 Pew Research typology of voters if you want to see what the Democratic base used to look like). Mrs. Clinton tended to win “moderate” white voters without college degrees in these states, but she lost among the self-described liberals. 

A lot of this is a generational divide. Mrs. Clinton won among white voters without a college degree who were over age 30, but she was pummeled among those who were younger. 

Whether Mrs. Clinton was so weak among young white voters because of her weaknesses or the appeal of Mr. Sanders’s policy message will probably decide whether the “Sanders Coalition” can be replicated in a future Democratic primary. 

The exit polls, again, send a mixed message. Around half of young white voters didn’t think that Mrs. Clinton was liberal enough, or they wanted policies that were more liberal than Mr. Obama’s. But Mr. Sanders also won among those younger voters who thought Mrs. Clinton and Mr. Obama were liberal enough; her weakness might have had as much (or more) to do with questions about ethical governance as about policy. 

Either way, Mr. Sanders’s success — in spite of weakness among wealthy Democrats — is important. There hasn’t been a viable candidate of the progressive left in a Democratic primary in a long time. 

Elite Democrats in places like Manhattan; Cambridge, Mass.; and Santa Monica, Calif., have been anchors of liberal politics in the United States for decades. The ability to build a robust progressive coalition without these voters — or their donations — is a new phenomenon, and it could free candidates to pursue progressive policies in future Democratic primaries, and win. 

The Democratic Party has moved far enough to the left where it’s possible to imagine a candidate of the progressive left cobbling together a majority without much support from affluent liberals. It isn’t easy — Democrats are basically satisfied with Mrs. Clinton and Mr. Obama’s positions — but it’s possible.

Sadiq Khan elected first Muslim mayor of London

Sadiq Khan Elected in London, Becoming Its First Muslim Mayor

Dean Baker on Trump

Interest on the Debt Is Near a Post-War Low by Dean Baker

This fact has largely been missing from reporting on the issue. For example a Washington Post piece warning of the end of the world if Trump tried to negotiate on the debt, told readers that the government would pay roughly $255 billion this year in interest on the debt. This includes the $113 billion that the Federal Reserve Board will receive and refund back to the Treasury. That leaves a net interest burden of $142 billion, a bit less than 0.8 percent of GDP. By comparison, the interest burden was over 3.0 percent of GDP in the early 1990s.

Purdy on the "grown-up" Democrats like Krugman

Dismissing Sanders: Democratic Condescension and the Mythic Political Grown-up by Jedidiah Purdy

Best Coast plays Bernie Sanders rally

Best Coast Play Bernie Sanders Rally: Watch

In Madison, Wisconsin back in April. Sanders win Indiana.

Happy Birthday Karl Marx

democratic helicopter money

Ben Bernanke and Democratic Helicopter Money
by Simon Wren-Lewis

“The fact that no responsible government would ever literally drop money from the sky should not prevent us from exploring the logic of Friedman’s thought experiment, which was designed to show—in admittedly extreme terms—why governments should never have to give in to deflation.”

The quote above is from a post by Ben Bernanke (who, in case anyone does not know, used to be in charge of US monetary policy). I put it up front because it expresses a macroeconomic truth that no one should ever forget: persistent recessions and deflation are never inevitable, and always represent the failure of policy makers to do the right thing.

There are many useful points in his post, but I just want to talk about one: Bernanke is in fact not talking about helicopter money in its traditional sense, but what I have called elsewhere ‘democratic helicopter money’.

When most people talk about HM, they imagine some scheme whereby the central bank sends ‘everyone’ a cheque in the post, or transmits some money to each individual some other way. It is what economists would call a reverse lump sum tax, or reverse poll tax: the amount you get is independent of your income. That makes it different from a normal tax cut.

In practice the central bank could only really do this with the cooperation of governments. It would not want to take the decision about what everyone means on its own. (Do we include children or not. How do we find everyone?) But once those details had been sorted out, a system would be in place that the central bank could operate whenever it needed to.

Bernanke suggests an alternative. The central bank sets aside a sum of newly created money, and the fiscal authorities then spend it as they wish. They could decide to use all the money to build bridges or schools rather than give it to individuals. There might be two reasons for doing HM this way. First, for some reason the fiscal authorities are reluctant to spend if they have to fund it by creating more debt, so it may allow them to get around this (normally self-imposed) ‘constraint’. Second, a money financed fiscal expansion could be more expansionary than a bond financed fiscal expansion. Lets leave the second advantage to one side, as the first is sufficient in a world obsessed by government debt.

I have talked about something similar in the past (first here, but later here and here), which I have called democratic helicopter money. This label also seems appropriate for Bernanke’s scheme, because the elected government decides on the form of fiscal expansion. The difference between what I had discussed earlier under this label and Bernanke’s suggestion is that in my scheme the fiscal authorities and the central bank talk to each other before deciding on how much money to create and what it will be spent on (although the initiative always comes from the central bank, and would only happen in a recession where interest rates were at their lower bound). The reason I think talking would be preferable is simply that it helps the central bank decide how much money it needs to create. [1]

Imagine, for example, you had a fiscal authority in one country that wanted to spend the money on ‘shovel ready’ public investment projects, and an authority in another country that wanted to spend it on some temporary tax cuts for the rich. The impact of the two different stimulus policies on demand and output are very different. If the two economies were in similar conjunctural positions, then the central bank with the tax cutting fiscal authorities would want to create a lot more money than would be required in the other economy.

In some countries it is easier for central banks to talk to the fiscal authorities than in others. When it is difficult, Bernanke’s scheme may appear attractive, but it leaves the central bank somewhat in the dark about how much money it needs to create. The big advantage of the more popular conception of HM (a cheque in the post) is that the impact of any money creation is much clearer. (As it is important to end recessions quickly, waiting to see what happens is not helpful advice.)

When central banks and governments do happily talk to each other (as in the UK, for example) then my version of democratic HM becomes an option. Arguments that this makes the central bank less independent are spurious in my view. The central bank initiates the discussion, in clearly defined circumstances. They simply ask what the government would spend any newly created money on. This question should be accompanied by the central bank’s current view on what the multipliers for various fiscal options are. The government then makes a choice, and the central bank then decides how much money to create.

While democratic HM is not talked about much among economists (Bernanke excepted), I think there are good political economy reasons why it may be the form of HM that is eventually tried. As I have said, conventional HM of the cheque in the post kind almost certainly requires the involvement of government. Once governments realise what is going on, they may naturally think why set up something new when they could decide how the money is spent themselves in a more traditional manner. Democratic HM is essentially a method of doing a money financed fiscal expansion in a world of independent central banks.


Which brings me back to the quote at the head of this post. The straight macroeconomics of most versions of HM is clear: all the discussion is about institutional and distributional details. If it is beyond us to manage to set in place any of them before the next recession that would be a huge indictment of our collective imagination, and is probably a testament to the power of imaginary fears and taboos created in very different circumstances.

[1] A sequential set-up of the kind Bernanke suggests is also more vulnerable to cheating: the government uses the money to finance something they were going to do anyway, and in effect largely offsets the money creation by reducing its own borrowing.

Euron Greyjoy

Euron Greyjoy in season 6 episode 2

Euron stops Balon on a bridge between the castle's towers in a storm.

Balon:   Let me pass. Step aside for your king.

Euron.   Haven't I always, brother?

Balon:   I thought you'd be rotting under some foreign sea by now.

Euron:   What is dead may never die.

Have the customs changed since I've been gone? Aren't you supposed to repeat the words.

Balon:   You can mock our God without my help.

Euron:   I don't mock the Drowned God ... I *am* the Drowned God. From Oldtown to Qarth when men see my sails ... they pray.

You're old, brother. You've had your time. Now let another rule.

Balon:   I've heard you lost your mind during a storm on the Jade Sea. Your crew tied you to the mast to keep you from jumping overboard.

Euron:   They did.

Balon:   And when the storm passed, you cut out their tongues.

Euron:   I needed silence.

Balon:   What kind of Ironborn loses his senses during a storm?

Euron:   I am the storm, brother. The first storm and the last, and you're in my way.

Balon stabs at Euron with his dagger and Euron throws him over the edge.

Obama's Economic Disappointment by Kocherlakota

Obama's Economic Disappointment by Narayana Kocherlakota

In January 2009, at the beginning of Obama’s first term, the nonpartisan Congressional Budget Office issued a 10-year forecast for the U.S. economy, including such indicators as unemployment, gross domestic product, the budget deficit, government debt and interest rates. Here’s a table comparing the CBO’s expectations for the year 2015 to what has actually happened:

NGDP forecast to grow 33 percent, actually grew 22 percent.

Real GDP, forecast 20 percent, actual 10.

DJ Shadow - Nobody Speak

Baker on Obama's record

Andrew Ross Sorkin's Confused Assessment of President Obama's Political Legacy by Dean Baker

The Night Manager

I really love the Night Manager on AMC. It's brilliant. The Onion and AV Club were purchased by Univision which is imposing their Clintonoid view on their subidiaries. So no more clicking there.

Mike Yard and Susan Sarandon on The Nightly Show

Mike Yard and Susan Sarandon on The Nightly Show

Hillary's Courtiers by Chris Lehmann

Hillary’s Courtiers by Chris Lehmann

Excalibur • O Fortuna - Carmina Burana by Carl Orff

Robert Reich vs. Barney Frank on Sanders

Babymetal - Gimme Chocolate!!

Aung San Suu Kyi Moves Closer to Leading Myanmar

Aung San Suu Kyi Moves Closer to Leading Myanmar

By WAI MOE and RICHARD C. PADDOCK

APRIL 5, 2016

YANGON, Myanmar — Myanmar’s democracy leader, Daw Aung San Suu Kyi, foiled by military leaders in her bid to become president, would become “state counselor” under a measure approved on Tuesday by Parliament’s lower house. The newly created role could give her authority exceeding the president’s.

Military members of Parliament denounced the measure as an unconstitutional power grab, stood up in the chamber in protest and boycotted the vote.

The measure, approved last week by Parliament’s upper house, will now go to President Htin Kyaw for his signature. The president is a close ally of Ms. Aung San Suu Kyi whom she chose for the job.

While campaigning before elections in November, she pledged to be “above” the president if her party, the National League for Democracy, was victorious. It swept the elections and now controls both houses of Parliament with large majorities.

The military-drafted Constitution bars Ms. Aung San Suu Kyi, a Nobel Peace laureate, from becoming president because her children are British citizens.

The position of state counselor would allow her to coordinate the activities of Parliament and the executive branch. She also holds the positions of minister of the president’s office and foreign minister.

Last week, she took on two more ministerial positions — education and energy — but she gave up those posts this week.

The combination of jobs means that she will oversee the president’s office, determine foreign policy and coordinate decision-making between the executive branch and parliamentary leaders. It is unclear what responsibilities that will leave for the president.

U Yan Myo Thein, a political commentator in Yangon, the country’s major city, said that it was not surprising Ms. Aung San Suu Kyi’s party and the military would clash but that he had not expected a dispute so soon. He said it could jeopardize relations between the military and civilian leaders in the coming years.

But U Tun Tun Hein, a National League for Democracy parliamentary leader and chairman of the lower house’s bill drafting committee, played down the disagreement.

“I don’t see the discussion and debate from the bill as a problem between the N.L.D. and the military,” he said. “It is the beginning of democracy in practice. There will be agreement and disagreement.”

U Kyaw Win, a Yangon writer, said that he was disappointed by the dispute and that he feared it could slow progress in reducing the military’s role in politics.

“How could we hold dialogue with the military with this tension?” he asked. “Politicians should maneuver strategically in dealing with the military, since we can’t send them back to the barracks overnight.”

The military, known as the Tatmadaw, ruled the country for more than half a century, and only in the last few years has it allowed democracy to emerge.

The military dictatorship kept Ms. Aung San Suu Kyi under house arrest for 15 years and ensured that she could not serve as president by including the constitutional prohibition effectively disqualifying her.

The Constitution gives the military a quarter of the seats in Parliament and assigns it the role of protecting the Constitution.

Col. Aung Thiha, one of the military members of the lower house, objected to the bill giving Ms. Aung San Suu Kyi new authority, in part because it identified her by name.

“The bill goes against separation of powers and violates the Constitution,” he said. “Although this is a multiparty system, the bill is about a party leader. If our Tatmadaw’s voices are not considered and accepted, we won’t join in voting on the bill.”

The former president, U Thein Sein, who stepped down last week after paving the way for the historic change in power, shaved his head, put on a robe and became a monk on Monday for five days, according to the Ministry of Information. It is common in Myanmar for Buddhists to enter a monastery for short periods.

M83 - Midnight City - Sanders

So what we are seeing already, in this campaign, is, we have received over six million individual campaign contributions. That's a political revolution, you know that? That's unprecedented, I believe, at this point in the campaign, in history. We are seeing...and when you talk about young people, please do not think that these are 23-year-olds or younger. In virtually every primary and caucus process, we have won the votes of people 45 years of age or younger. They're not just kids. And we're seeing, I think, a revitalization of American democracy.

Interview with New York Daily News

Baker on Gerald Friedman

Bernie Sanders' Non-Growth Dividend

Perhaps we can have a serious discussion of measures like paid family leave, paid vacations, and work sharing, both as measures that are good in their own right, but also have the potential to bring us closer to full employment. If the distinguished economists attacking Friedman’s analysis can stop their fuming and start thinking, perhaps we can go this route.

Clinton loses patience with Greenpeace activist

Krugman lectures "Bernie Bros"

Feel the Math by Krugman

Feel the Bern

David Lynch feels the Bern

In Dune, take a drink everytime they say "spice."

Lynch could do crazy. Baron Vladimir Harkonnen of the mad ginger House of Harkonnen or Frank from Blue Velvet.

Tatiana Maslany feels the Bern on Colbert.

SWL on heliocpter drops

Helicopters are easy to fly by Simon Wren-Lewis

Black Swan Lake

Trump was the Black Swan nobody saw coming.

Just like the financial crisis?

Elementary gets another season

Elementary gets a season 5

Feel The Bern

What Bernie Sanders Has Achieved by John Cassidy

Game of Thrones Season 6 trailer

New York Times and Orwell

How the 'New York Times' Sandbagged Bernie Sanders by Matt Taibbi

Lizza and Sandwichman on Dems; Baker and Beckworth on Fed

The Great Divide by Ryan Lizza

Bern't Offerings by Sandwichman

Arthur Burns Can’t Get the Blame for the 1970s Inflation by Dean Baker

Fed Commentary by David Beckworth

Chicago Trump rally shut down

Inside the Rowdy, Racist Canceled Trump Rally: Trump got a not-so-friendly welcome in Chicago Friday by Dan O'Sullivan

Feel the Bern and Tuesday

Sanders says in an email:

Here's our path to the nomination 

In less than 48 hours, the polls open in five large and delegate-rich states. After everything we’ve overcome together, there’s never been a more important two days for our campaign. 

I want to tell you the truth about our job on Tuesday, and it’s something you may not hear a lot about from the corporate media. Our goal on Tuesday is simply this: do well and hold Hillary Clinton’s delegate lead to a minimum. 

Because after Tuesday, the map shifts immediately and dramatically in our favor. With every vote cast after Tuesday’s primaries, her lead will only shrink. We will continue to make up delegates, week after week, in state after state, until we capture the lead on June 7th when California, New Jersey, New Mexico, Montana and the Dakotas vote. 

That is our path to victory, but we need to [do] well on Tuesday. That’s the first step.

Tariq Ali on Corbyn

Corbyn’s Progress by Tariq Ali

Sarah Silverman feels the Bern

Mark Ruffalo did last week.

reverse income policies

Time for helicopter money?

Recently, more radical proposals have surfaced, reflecting a sense of urgency and widespread disappointment with the impact of current monetary policy. Beyond advocating higher minimum wages, some are calling* for “reverse income policies,” with governments imposing across-the-board wage increases on private employers – a move that would drive up prices and defeat deflationary expectations. The fact that economists whose views typically fall nowhere near those of the far left are even thinking about such interventionism shows just how extreme circumstances have become. 

I favor all of these proposals, in some form. The details of their implementation would obviously have to vary, depending on each economy’s circumstances. Germany, for example, is in a strong position to implement a reverse income policy, given its huge current-account surplus, though there would undoubtedly be major political barriers. More spending on education, skills upgrading, and infrastructure, however, is a no-brainer almost everywhere, and is politically more feasible.

*  Getting Serious about Wage Inflation in Japan by Blanchard and Posen

Yanis Varoufakis on People's QE

MY ‘ADVICE’ TO JEREMY CORBYN… AND GEORGE OSBORNE by Yanis Varoufakis

The Labour Party has an instinctive urge to protect those left behind by the long years of uneven private-debt-fuelled growth and its austerian aftermath. This is good and proper. However, it would be a mistake to waste Labour’s energies on tirades against austerity. If I am right that austerity is a symptom of low investment (and of a government keen to push the inevitable burden on the weaker citizens), Labour should concentrate on policies that will shift idle savings into investment funding, engendering new technologies that produce green, sustainable development and high quality jobs. 
 
Such an economic program will require the creation of a public investment bank that issues its own bonds (to be supported by a non-inflationary Bank of England quantitative easing strategy targeting these bonds), but also a new alliance with enlightened industrialists and parts of the City keen to profit from sustainable recovery. Labour, I believe, will only overcome its infighting, and the toxic media campaign against its leader, by escaping into a Green, investment-led British Renaissance.

Tulsi Gabbard!

Tulsi Gabbard, Rising Democratic Star, Endorses Bernie Sanders by Yamiche Alcindor

“As a veteran of two Middle East deployments, I know first hand the cost of war,” said Ms. Gabbard, one of the first female combat veterans to serve in Congress. “I know how important it is that our commander-in-chief has the sound judgment required to know when to use America’s military power and when not to use that power.

“As a vice chair of the D.N.C., I am required to stay neutral in democratic primaries, but I cannot remain neutral any longer,” she added. “The stakes are just too high. That’s why today I’m endorsing Senator Bernie Sanders to be our next president and commander in chief of the United States.”

Ms. Gabbard, while not mentioning Mrs. Clinton by name, went on to cast Mr. Sanders as being more interested in peace and as someone who would be better trusted with the lives of American troops. She also implied that Mr. Sanders had better foreign policy judgment than his rival.

“We need a commander in chief who has foresight, who exercises good judgment, and who understands the need for a robust foreign policy which defends the safety and security of the American people, and who will not waste precious lives and money on interventionist wars of regime change,” Ms. Gabbard said. “We can elect a president who will lead us into more interventionist wars of regime change, or we can elect a president who will usher in a new era of peace and prosperity.”

Ms. Gabbard, who was born in American Samoa and is the first Hindu elected to Congress, is seen as a young, rising star of the party but has publicly battled Democratic leadership. In October, Ms. Gabbard said she was uninvited from the first Democratic presidential primary debate by the chief of staff to Representative Debbie Wasserman Schultz of Florida, the chairwoman of the national committee, after Ms. Gabbard appeared on television and called for more debates.

At the time, the party’s leadership had been criticized for allowing only a limited number of debates, which some viewed as an effort to deny Mr. Sanders more time to confront Mrs. Clinton when she was ahead in polls. Ms. Wasserman Schultz has denied that Ms. Gabbard was uninvited from the debate.

Mr. Sanders welcomed Ms. Gabbard’s endorsement Sunday.

“Congresswoman Gabbard is one of the important voices of a new generation of leaders,” Mr. Sanders said in a statement. “As a veteran of the Iraq War she understands the cost of war and is fighting to create a foreign policy that not only protects America but keeps us out of perpetual wars that we should not be in.”

Ms. Wasserman Schultz praised Ms. Gabbard with a statement of her own. “As one of the first female combat veterans to serve in Congress and the first American Samoan and Hindu member of Congress, Congresswoman Gabbard is a role model who embodies the American ideal that anyone can dream big and make a difference,” Ms. Wasserman Schultz said. “She is also a colleague in Congress and a friend, and I look forward to continuing to work alongside her when our Party unites behind whoever emerges as our nominee.”

DeLong, Waldman, and Waldmann

Welfare economics: an introduction (part 1 of a series) by Steve Randy Waldman

New Keynesian Orthdoxy and Hysteresis by Robert Waldmann
DeLong:

Must-Read: I want to endorse this line of thinking from Paul Krugman because I think it is completely right. My initial worries about Sanders-Friedman was that it made promises about where we could get as far as economic growth over the next decade that were very unlikely to be achievable. More important is the Romers' accurate critique that Sanders's plan would not even come close to getting us there even in the unlikely possibility that things do break the way that Sanders-Friedman. And that generates the corollary that is perhaps most important: Sanders's plans look seriously underpowered, and we should be trying to assemble a coalition to do even more than he envisions come 2017...

DeLong:

Must-Read: IMHO, Paul Krugman should have had not two but four parting observations:

• Primaries are valuable testing grounds for candidates' ideas and teams, which is a point he makes.
• It's dangerous to believe something because it is what you want to hear, which is a point he makes.
• A point he doesn't make but should: If you believe that hysteresis is not a one-way ratchet--that it is as easy to boost potential via a high-pressure economy as to destroy it via prolonged depression--Sanders's stimulus plans are underpowered by a factor of four.
• A point he doesn't make but should: If you believe--which I do--that so far hysteresis has only gobbled about two-thirds of the gap between current production and the pre-2008 trend, then Sanders's fiscal stimulus plans are about the right size--and HRC's are much too small.

Galbraith on orthodox forecasters

Economic Forecasting Models and Sanders Program Controversy by James K. Galbraith

Cassidy on Sanders

Bernie Sanders and the Case for a New Economic-Stimulus Package by John Cassidy

Romer, Friedman, Krugman and models

Romer and Bernstein on stimulus by Krugman

January 10, 2009

Kudos, by the way, to the administration-in-waiting for providing this — it will be a joy to argue policy with an administration that provides comprehensible, honest reports, not case studies in how to lie with statistics. 

That said, the report is written in such a way as to make it hard to figure out exactly what’s in the plan. This also makes it hard to evaluate the reasonableness of the assumed multipliers....

Vinyl - yesterday once more

helicopter drops

Helicopter drops might not be far away by Martin Wolf (2.23.16)

The world economy is slowing, both structurally and cyclically. How might policy respond? With desperate improvisations, no doubt. Negative interest rates have already moved from the unthinkable to reality (see charts). The next step is likely to include fiscal expansion. Indeed, this is what the OECD, long an enthusiast for fiscal austerity, recommends in its Interim Economic Outlook. But that is unlikely to be the end. With fiscal expansion might go direct monetary support, including the most radical policy of all: the “helicopter drops” of money recommended by the late Milton Friedman.

More recently, this is the policy foreseen by Ray Dalio, founder of Bridgewater, a hedge fund. The world economy is not just slowing, he argues, but “monetary policy 1” — lower interest rates — and “monetary policy 2” — quantitative easing — are largely exhausted. Thus, he says, the world will need a “monetary policy 3” directly targeted at encouraging spending. That we might need such a policy is also the recommendation of Adair Turner, former chairman of the Financial Services Authority, in his book Between Debt and the Devil .

Why might the world be driven to such expedients? The short answer is that the global economy is slowing durably. The OECD now forecasts growth of global output in 2016 “to be no higher than in 2015, itself the slowest pace in the past five years”. Behind this is a simple reality: the global savings glut — the tendency for desired savings to rise more than desired investment — is growing and so the “chronic demand deficiency syndrome” is worsening.

This stage of demand weakness must be seen in its historical context. The long-term real interest rate on safe securities has been declining for at least two decades. It has been near zero since the financial crisis of 2007-09. Before then, an unsustainable western credit boom offset the weakness of demand. Afterwards, fiscal deficits, zero interest rates and expansions of central bank balance sheets stabilised demand in the west, while a credit expansion funded massive investment in China. Loose western monetary policies and loose Chinese credit policies also drove the post-crisis commodity boom, though China’s exceptional growth was the most important single factor.

The end of these credit booms is an important cause of today’s weak demand. But demand is also weak relative to a slowing growth of supply. At the world level, growth of labour supply and labour productivity have fallen sharply since the middle of the last decade. Lower growth of potential output itself weakens demand, because it lowers investment, always a crucial driver of spending in a capitalist economy.

It is this background — slowing growth of supply, rising imbalances between desired savings and investment, the end of unsustainable credit booms and, not least, a legacy of huge debt overhangs and weakened financial systems — that explains the current predicament. It explains, too, why economies that cannot generate adequate demand at home are compelled towards beggar-my-neighbour, export-led growth via weakening exchange rates. Japan and the eurozone are in that club. So, too, are the emerging economies with collapsed exchange rates. China is resisting, but for how long? A weaker renminbi seems almost inevitable, whatever the authorities say.

[graph]

No simple solutions for the global economic imbalances of today exist, only palliatives. The current favourite flavour in monetary policy is negative interest rates. Mr Dalio argues that: “While negative interest rates will make cash a bit less attractive (but not much), it won’t drive . . . savers to buy the sort of assets that will finance spending.” I agree. I cannot imagine that businesses will rush to invest as a result. The same is true of conventional quantitative easing. The biggest effect of these policies is likely to be via exchange rates. In effect, other countries will be seeking export-led growth vis-à-vis over-borrowed US consumers. That is bound to blow up.

One alternative then is fiscal policy. The OECD argues, persuasively, that co-ordinated expansion of public investment, combined with appropriate structural reforms, could expand output and even lower the ratio of public debt to gross domestic product. This is particularly plausible nowadays, because the major governments are able to borrow at zero or even negative real interest rates, long term. The austerity obsession, even when borrowing costs are so low, is lunatic (see chart).

If the fiscal authorities are unwilling to behave so sensibly — and the signs, alas, are that they are not — central banks are the only players. They could be given the power to send money, ideally in electronic form, to every adult citizen. Would this add to demand? Absolutely. Under existing monetary arrangements, it would also generate a permanent rise in the reserves of commercial banks at the central bank. The easy way to contain any long-term monetary effects would be to raise reserve requirements. These could then become a desirable feature of our unstable banking systems.

The main point is this. The economic forces that have brought the world economy to zero real interest rates and, increasingly, negative central bank rates are, if anything, now strengthening. This is what the world economy is showing. This is what monetary policy is indicating. Increasingly, this is what asset prices are demonstrating.

Policymakers must prepare for a new “new normal” in which policy becomes more uncomfortable, more unconventional, or both. Can the world escape from the chronic demand weakness? Absolutely, yes. Will it? That demands greater boldness. When one has exhausted the just about possible, what remains, however improbable, must be the answer.

Kocherlakota, Baker and Thoma on the limits of growth

Growth Begets Growth: Reflections on Total Factor Productivity by N. Kocherlakota

President Obama’s Council of Economic Advisers Confirms Sanders’ Growth Projections by Dean Baker

Here’s Why Bernie Sanders’ 5% Growth Plan Isn’t Crazy After All by Mark Thoma

No Voices in the Sky - Motörhead

Baker and Konczal on the CEA letter

The Four Economists' Big Letter by Dean Baker

In Praise of the Wonk: Dissecting the CEA Letter and Sanders’s Other Proposals by Mike Konczal

Friedman and Sanders's macro policies

Bernie Sanders' Non-Growth Dividend by Dean Baker

I endorse… by Jared Bernstein

Can Sanders Do It? by J.W. Mason

letter from Jamie Galbraith to the 4 CEA chairs

“Extreme” doesn’t mean what it used to, Sanders vs the CEA by Matthew C. Klein

Yglesias on Bernienomics

Top Democratic economists don't think much of Bernienomics. He doesn’t care. by Matt Yglesias

Waldman on Bernie Sanders

Your theory of politics is wrong by Steve Randy Waldman

Better Call Saul

In the first season's episode "Hero," Kim invites Jimmy to go see the "The Thing" for some Kurt Russell action. I love her! And I love this show!

AV Club reviews "Switch"

High-Rise

Common People and Downton Abbey

AV Club reviews Downton Abbey

Colony episode 3

Will tells Katie he's playing the long game. Not only they'll get their son back but....

And the teacher saw something big in low-level orbit.

Entertainment Weekly recap.

Big Lewboski

Maud: Tell my about yourself, Jeffrey.

Lebowski: Well, not much to tell. I, um, was one of the authors of the Port Huron statement, the original statement not the compromise second draft. Did you ever hear of the Seattle Seven?

Maud: Hmmm.

Lebowski: That was me. There was six other guys. And then the music business briefly.

Maud: Oh.

Lebowski: Yeah. Roadie for Metallica. Speed of Sound tour. A little of this and little that. My career has slowed down lately.

Maud: What do you do for recreation?

Lebowski: Oh the usual. Bowl. Drive around. The occasional acid flashback.

Weisbrot on Krugman

Paul Krugman Misunderstands Bernie Sanders by Marc Weisbrot

Baker on Sanders vs Hillary; Ygelsias on Sanders and Fed

Washington Post Takes Wild Swings at Bernie Sanders by Dean Baker

Bernie Sanders has the most realistic plan to boost wages and job creation by Matt Yglesias

Psylocke

Glasner on Bernanke and QE

David Glasner has been critical of Bernanke's explanations of how QE works:

The Good News and the (Very) Bad News about Bernanke’s Speech

Bernanke’s Continuing Confusion about How Monetary Policy Works