Scotland

Krugman and Wren-Lewis worry about the Euro disaster replicating itself in London.

The radical Left:

"So what, then, are socialist arguments for independence that would meet these requirements? The most obvious is the possibility of breaking up the British imperialist state."

A referendum called while the occupation of Afghanistan was still ongoing, with the Iraqi and Libyan interventions a recent memory, is inseparable from the arguments against these wars and the British state’s subordinate alliance with the American empire. Scottish secession would at the very least make it more difficult for Britain to play this role, if only by reducing its practical importance for the US.

Why Scotland Should Vote Yes by Neil Davidson

I guessed correctly. No Tony Blair poodle. American imperialism isn't great but Chinese or Russian imperialism won't be better and will probably be worse.

Steampunk - The Knick

AV Club reviews The Knick: “They Capture The Heat”

NGDP path level targeting

Level versus Growth Targeting by Scott Sumner

Here’s Lars Christensen:

In fact I am pretty sure that if somebody had told Scott in July 2009 that from now on the Fed will follow a 4% NGDP target starting at the then level of NGDP then Scott would have applauded it. He might have said that he would have preferred a 5% trend rather than a 4% trend, but overall I think Scott would have been very happy to see a 4% NGDP target as official Fed policy. 

Actually I would have been very upset, as indeed I was as soon as I saw what they were doing. I favored a policy of level targeting, which meant returning to the previous trend line. 

Now of course if they had adopted a permanent policy of 4% NGDP targeting, I would have had the satisfaction of knowing that while the policy was inappropriate at the moment, in the long run it would be optimal. Alas, they did not do that. The recent 4% growth in NGDP is not the result of a credible policy regime, and hence won’t be maintained when there is a shock to the economy. 

However I do agree with Lars that the Fed has done much better than the ECB.

Piketty & the euthanasia of the rentier

Piketty and the Money View by JW Mason

social insurance

In defense of social insurance by Max Sawicky

macro, Keynes and monetarism

Their Own Imaginary Keynes (Wonkish) by Krugman

IS-LM as “Obfuscation”? No: Thursday Focus for September 11, 2014 by DeLong

Nick Rowe on Money and Coordination Failures by David Glasner

What Is Special About Recessions in a “Monetary Economy”: Trollng Nick Rowe: Wednesday Focus for September 10, 2014 by DeLong

Adam Posen on the Old Normal

(via DeLong)

universal basic income

Preferences vs Interests by Chris Dillow

America is running out of jobs. It's time for a universal basic income. by Ryan Cooper

The Replacements

By chance I caught the reunited Replacements playing on Jimmy Fallon's show which was weird.

Veronica Mars

Okay, Kristen Bell has gone way up in my book. I saw the Veronica Mars movie on HBO and since then have been watching the TV show. My future dream project is a steampunk The Knick-Outlander mashup about Ada Lovelance, but instead of being exactly like the Outlander heroine she'd be more like the witty, melancholic class warrior of Veronica, a teenage outlook in an adult body. But with computer smarts so a combo Veronica-Cindy "Mac" Macenzie. I'll have to check if that squares with the historical Lovelace.

helicopter drop, Kalecki, and Lenin

To fix the economy, let's print money and mail it to everyone by Dylan Matthews

Interview with Brown political economist Mark Blyth and hedge fund manager Eric Lonergan

Mark Blyth: There was a brilliant piece in 1943 by the Polish economist Michał Kalecki. It was a critique of full employment policy. He said a problem with Keynesian macroeconomics is that if we get away with it, if you have permanently full employment, two things happen. One, job switching becomes costless and employers no longer have the whip hand. There will be a political revolution, employers will find economists who'll say it's unsustainable, and they'd try to overturn it. He wrote that in 1943, and that was basically the neoliberal revolution foretold.
Two, capitalism embodies an ethic that you must earn your crust, and if you create an economy whereby the crust is there without being earned, it's deeply disturbing on some political, ideological, and moral level. The other thing, besides the vested interest of employers in stopping full employment, is the idea that there must just be something wrong with doing this. 

Deep down inside, many people refuse to accept something simple: central banks, in a fiat money system, are just printing. There's no corresponding liability besides the balance sheet convention of listing cash as a liability. There's nothing claimed against anything else like gold. All that matters is the credibility of policy — that the place is reasonably well-run — and that you have the intergenerational ability to tax. If you have both of these things, you're just printing. So instead of printing it, shoving it through the banking system and hoping some of it trickles down after it's blown the stock market up to 15,000, why not just give people the cash?

And as Chris Dillow wrote:

I agree with Steve that the rich hate inflation not least because it creates uncertainty. (There's also the historical point that the inflationary 70s also saw the nadir of the fortunes of the 1%: this might be just coincidence, but why risk it?) 

This alone creates a bias to tighten. What amplifies this bias is that the rich can tolerate mass unemployment. Nick's parallel with the 1930s is, I think, irrelevant. Back in the 30s, mass unemployment was a threat to the rich because workers could see a plausible alternative to the existing order in communism. Today, by contrast, there are no big feasible alternatives to capitalism and so unemployment is not a political danger - which means it is more tolerable. 

This answers Peter's question: why has the Keynesian coalition vanished from modern politics? It's because it is no longer politically necessary. It was not Keynes who convinced capitalists of the need for full employment but Lenin.

The timeline is a little off. The Soviet Union didn't collapse until the earlier 90s, but basically things turned in the 70s. America destroyed Vietnam in order to save it and Nixon turned the Chinese Communists against the Soviets. Then Reagan and Thatcher came in the 80s as Mitterand's Socialists buckled under pressure from the bond vigilantes.

12 Years a Slave

Spoiler Alert.

Finally, I saw 12 Years a Slave last night and it was really good. The kidnapped Solomon Northrop finally escapes slavery as he is rescued after getting a letter back to the North describing what happened to him. Then he becomes active in the abolitionist movement. Damn hippy activists.

the rich and unemployment

Interest Rates and the 1 Percent by Chris Dillow

...
I agree with Steve that the rich hate inflation not least because it creates uncertainty. (There's also the historical point that the inflationary 70s also saw the nadir of the fortunes of the 1%: this might be just coincidence, but why risk it?) 

This alone creates a bias to tighten. What amplifies this bias is that the rich can tolerate mass unemployment. Nick's parallel with the 1930s is, I think, irrelevant. Back in the 30s, mass unemployment was a threat to the rich because workers could see a plausible alternative to the existing order in communism. Today, by contrast, there are no big feasible alternatives to capitalism and so unemployment is not a political danger - which means it is more tolerable. 

This answers Peter's question: why has the Keynesian coalition vanished from modern politics? It's because it is no longer politically necessary. It was not Keynes who convinced capitalists of the need for full employment but Lenin."

Steampunk - The Knick and You're the Worst

AV Club reviews The Knick: “Where’s The Dignity”

AV Club reviews  You’re The Worst: “Finish Your Milk”

that uneasy feeling & Europe

The Pent-Up Wage Growth Story: Why Does Janet Yellen Say These Things? by Dean Baker

ECB will start buying ABS, covered bonds in October

Jobs Day! First Impressions–It’s a disappointing report, but one month does not a new trend make. by Jared Bernstein

As Dean Baker and I stress, and EPI economists makes the same case here, one standard benchmark is the rate of productivity growth:

…for workers to get their fair share of the economy’s growth, real wages should keep pace with productivity growth. Productivity growth has been weak recently, most economists put the underlying trend at close to 1.5 percent. This means that wage growth at a 3.5 percent annual rate (2 percent inflation plus 1.5 percent productivity growth) would be consistent with the Fed’s inflation target.  

But there’s even more room for non-inflationary wage growth than that. In recent years we’ve seen a large shift within national income from wages to profits. Wage growth paid for by a shift back toward to a more normal split between wages and profits does not put pressure on prices. 

So the persistent trend in average nominal hourly wages of about 2% per year has a lot of room to grow.

Whit Stillman

Stillman has a new show on Amazon called The Cosmopolitans. He was on Charlie Rose last night and I share his sensibility very much. Metropolitan is about how not all of the one percent are assholes. Barcelona was a plea for foreigner to treat Americans in their countries better. Not all Americans are assholes. His father worked for Kennedy and FDR Jr.  He's a romantic but like Salinger and Woody Allen brings some humor to the romanticism.

The Cosmopolitans is set in Paris and about bringing romanticism and nostalgia to the present day, very much like Midnight in Paris. By the way, Corey Stoll who played Hemingway in that is on The Strain.

AV Club gives it a B+.

dangerous times for the 1 percent

Class interests by Simon Wren-Lewis

So if you wanted to critique my (and Kalecki’s) characterisation of the views of the wealthy, you might say that keeping unemployment above its natural rate is not a sustainable strategy (and therefore not rational). To which I would respond maybe, but there could be a reason why now, like the 1980s, is a particularly important time to keep unemployment high for a while. 

The reason for this is that the aftermath of financial crisis is extremely threatening to the neoliberal political consensus and the position of the 1%. I remember saying shortly after the crisis that the neoliberal position that government regulation was always bad and unregulated markets always good had been blown out of the water by the crisis. This was politically naive, in part because a crisis caused by unregulated markets was morphed by the right into a crisis caused by too much government debt, or too many immigrants. But that fiction will not be sustainable once a strong recovery has reduced both government debt and unemployment. For the 1%, these are very dangerous times, and they want to be on favourable territory for the battles ahead.

See Piketty.

inflationistas

Hard money is not a mistake by Steve Randy Waldman

entrepeneurship

via Waldman's tweet

While it is true that France has some old laws that block innovation (e.g. Uber vs Taxis), it is also true that the French National Unemployment Agency (Pole Emploi) is the first business angel in France. Thanks to its monthly allocation, I was personally able to give up a well paid internship at Microsoft to start my own company. 

I know several entrepreneurs who quit their jobs at big companies, knowing they would get 2 years of allocation, so that they could start their own companies, without having to worry about money for rent. France makes these resources possible to entrepreneurs.

eutanasia of the rentier

Christopher Sims: Ultra-liquidity by Frances Coppola

(via Thoma)