Links of the Week - 3 May 2013

The Ignoramus Strategy
Paul Krugman

Lee Atwater’s Infamous 1981 Interview on the Southern Strategy
Rick Perlstein

Banks Have Become “Too Big To Fail” Again. Uh-Oh.
Simon Johnson

Tax Day!
Jared Bernstein

How to Save American Finance from Itself
Robert Solow

The incomparable economist
Paul Krugman

Samuelson Memorial
Paul Krugman

Hedging America
Robert Solow

Brad DeLong on "What is Macro?"

Brad DeLong:

This year I am on sabbatical--which means I do not teach. And I do miss it. Thus, from my perspective at least, this next hour is going to be an hour of pure fun.

I hope it will be an hour of pure fun for you all as well.

As Bob Strom said, right now in this MBA class you are transitioning from studying micro to studying macroeconomics. You are moving away from studying that part of economics where you talk about how the market system works well: how supply balances demand to make the maximum possible amount and value of win-win deals, and how people respond to the incentives they’re given to change their behavior. To the extent that things go wrong in microeconomics--to the extent that when you step back and look at the situation you say "Geewillickers! I really wish this had not happened!"--it is because you wish that you or the market system had not given people the incentives that it in fact did.

Practically everything that goes wrong in micro goes wrong because somewhere in the system some people have what we regard as the "wrong" incentives, and have responded to them. In such a situation you frantically scramble to fix it and correct it. And you do so by finding ways to change public policies so that people in fact have the right incentives.

Micro is somewhere between half and three-quarters of economics.

The other quarter or so of economics is macroeconomics.

Macro is different. Macro deals with the fact that sometimes the economy seems to have some sort of a grand mal epileptic seizure. It freezes up. Something goes mysteriously wrong--and wrong not with an individual firm, or an individual industry, or an individual sector of the labor market, but wrong with pretty much the whole thing. This happened to the US economy in 2008 and 2009.


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Quote of the Day - Ownership Culture

"No one washes a rented car."

-Origin unclear, variously attributed to Larry Summers, Tom Friedman, Jack Kemp, and an unnamed aircraft maintenance crew chief in a book by Thomas Peters and Nancy Austin...

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still more

Man washing a Zipcar: NCSU, 10 April 2013

Links of the Week - 26 April 2013

A slow week for curated news:


Why gold and bitcoin make lousy money
David Andolfatto

Inside the offbeat economics department that debunked Reinhart-Rogoff
Dylan Matthews

'Unemployment and the Free Market'
Chris Dillow, via Mark Thoma

Quote of the Day - Michael Lewis on Capital

"I also found myself thinking: the English may finally have decided they have had enough of their experiment with the American financial way of life. If what happened in the Western world financial system had happened at another time in history, there would have been an obvious political response: a revolt against the Roger Younts of the world and, more generally, the grotesque inequities spawned by the putatively free financial marketplace. If the memory of British socialism wasn’t so fresh—if people didn’t still recall just how dreary London felt in 1980—they’d be pulling down the big banks, and redistributing the wealth of the bankers, and it would be hard to find a good argument to stop them from doing it. The absence of the satisfying political response to the financial crisis is due, at least in part, to the absence of an ideological vessel to put it in. No one wants to go forward in the same direction we’ve been heading, but no one wants to turn back either. We’re all trapped, left with, at best, the hope that our elites might experience some kind of moral transformation."

-Michael Lewis, on Capital, by John Lanchester


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Links of the Week - 19 April 2013

Kind of a big week for links, but then it was kind of a big week for news. There was such a big pile of links this week that I put them into categories. This may become a trend, but no promises yet.

Gold:

The Gold Bubble Is Bursting: Who’s To Blame? - David Glasner 

12 Rules of Goldbuggery - Barry Ritholtz

Bitcoin:

Bitcoin is ludicrous, but it tells us something important about the nature of money - Neil Irwin 

Adam Smith Hates Bitcoin - Paul Krugman

Thatcher Roundup:

David Corn 

Wonkblog 

Paul Routledge

General Macro:

Milton Friedman, Currency Debaser - Paul Krugman

Empirical Methods and Progress in Macroeconomics - Mark Thoma

Getting Back to Full Employment - Jared Bernstein 

U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion - The Onion

Marathon:

‘If you are losing faith in human nature, go out and watch a marathon’ - Ezra Klein

Please, Listen to Ruslan - William Saletan (video)

The Rest:

Why doing your taxes is much harder than it ought to be - Neil Irwin 

The Limits of Good Faith - Ta-Nehisi Coates 

What are some of the most ridiculous startup ideas that eventually became successful? - Michael Wolfe

Why I Don't Love Frederic Bastiat - Matthew Yglesias

How a student took on eminent economists on debt issue - and won - Edward Krudy

Quote of the Day - Chris Hayes

"My disposition as a human being is kind of a go-along-to-get-along person. I tend to trust authority. I tend to think people in charge broadly know what they're doing, don't lie to you, aren't going to start wars for no reason, and, you know, watching Iraq happen and then watching the financial crisis happen and then Katrina in the middle of that, you know, you turn around and you think, 'Wait a second: No one is on top of anything. Who the heck is in charge here? These people who say that they know what they're doing don't know what they're doing. I'm not going to trust them the next time they tell me they know what they're doing.' It's a radically unmooring feeling to recognize that people that you just figured kind of had it under control don't have it under control and might be totally incompetent or completely corrupt or totally self-dealing."-Chris Hayes

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Links of the Week - 12 April 2013

Haircuts on Intrade - Rajiv Sethi (via Mark Thoma)


The nihilism of David Stockman - Neil Irwin

Michael Lewis on the King of Human Error

Will Bitcoins Make Me Rich? - Farhad Manjoo

Two versions of Goodhart's Law - Noah Smith

Fool's Gold - Eric Posner

Inside the Bitcoin economy - Free Exchange

Quote of the Day - Matt Yglesias

"The concept of "redistribution" falsely implies that the existence of property is prior to the existence of the state."

-Matthew Yglesias


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Conscience Warrior Store

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Links of the Week - 5 April 2013

Is "Intellectual Property" a Misnomer?
Tim Taylor

The choice between debts and austerity
Larry Summers, via Jonathan B. Wight

The problem with Twitter
Ezra Klein

The Rewards of Being Very Serious
Paul Krugman

The Price Is Wrong
Paul Krugman

Jack-booted Insurance-bringing Thugs
Paul Krugman

Soup Kitchens Caused the Great Depression
Jonathan Wight

Stockman, Morality Plays, and Wishful Thinking

An excellent video here on the David Stockman kerfuffle. The most important takeaway for me was the idea, previously articulated elsewhere, that macroeconomics is not a morality play. That is to say, if the answer to a macro problem is normatively pleasing, that fact is a coincidence.

Many of us have normative views about 'what ought to be.' These views may differ from person to person; that's ok. Views on 'how the world works' are of a different genus. These things are testable. Disagreements of this nature are resolvable through empiricism, if the data exist.

A related idea: if your theory of how the world works is untestable, it's not really a theory; it's probably just a wish.



**UPDATE: Neil Irwin disassembles Stockman's argument, looks around inside, and doesn't find much.