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Preview: Grasping Reality with Opposable Thumbs

Grasping Reality with Both Hands: bradford-delong.com:



If you would rather just see Highlighted Posts...



Updated: 2018-01-15T16:14:40-08:00

 




2017-12-15T07:34:53-08:00

**Note to Self**: This is your reminder: * 178.4 **180.8** million people are represented by the 48 **49** senators who caucus with the Democrats. * 144.1 **141.7** million people are represented by the 52 **51** senators who caucus with the Republicans. * 65.9 million people voted for Hillary Rodham Clinton and Tim Kaine to be their president and vice president * 63.0 million people voted for Donald Trump and Mike Pence to be their president and vice president.




2018-01-15T12:08:03-08:00

**Comment of the Day: Ethan**: [Live from Global Warming Gehenna](http://www.bradford-delong.com/2018/01/live-from-global-warming-gehenna-an-interestingand-unusualweather-pattern-with-more-energy-the-climate-can-occupy.html?cid=6a00e551f08003883401b7c945867a970b#comment-6a00e551f08003883401b7c945867a970b): "We used to call it 'Global Warming'. Later we called it 'Climate Change'. I have long preferred to call it 'Excess Solar Energy Trapped in the Bio-sphere'. That seems to me to explain it better. More energy = more movement. Storms, wind, melting ice, tides, whatever—the energy is going to go somewhere..."




2017-12-30T07:54:13-08:00

**Should-Read**: Nicely done: **David Rezza Baqaee and Emmanuel Farhi**: [The Macroeconomic Impact of Microeconomic Shocks: Beyond Hulten’s Theorem](https://scholar.harvard.edu/files/farhi/files/beyond_hulten_draft.pdf): "We provide a nonlinear characterization of the macroeconomic impact of microeconomic productivity shocks in terms of reduced-form non-parametric elasticities for efficient economies... >...We also show how structural parameters are mapped to these reduced-form elasticities. In this sense, we extend the foundational theorem of Hulten (1978) beyond first-order terms. Key features ignored by first-order approximations that play a crucial role are: structural elasticities of substitution, network linkages, structural returns to scale, and the extent of factor reallocation. Higher-order terms magnify negative shocks and attenuate positive shocks, resulting in an output distribution that is asymmetric, fat-tailed, and has a lower mean even when shocks are symmetric and thin-tailed. In our calibration, output losses due to business-cycle fluctuations are an order of magnitude larger than the cost calculated by Lucas (1987). Second-order terms also show how shocks to critical sectors can have large macroeconomic impacts, tripling the estimated impact of the 1970s oil price shocks...




2018-01-07T13:26:25-08:00

**Should-Read**: The big enchilada is, of course, the lack of affordable housing in California. It's a huge transfer to property owners and a huge tax on renters and on those who in a better timeline would move here, but cannot afford to in this one: **Ian Perry**: [California is Working: The Effects of California’s Public Policy on Jobs and the Economy Since 2011](http://laborcenter.berkeley.edu/california-is-working/): "Between 2011 and 2016, California enacted a set of 51 policy measures addressing workers’ rights, environmental issues, safety net programs, taxation, and infrastructure and housing... >...Critics predicted that these policies—collectively called “the California Policy Model” (CPM) in this paper—would reduce employment and slow economic growth.... This paper... finds that: >* Employment and GDP growth were not adversely affected by the California Policy Model. >* Wages for low-wage workers as well as overall health insurance rates statewide rose with the implementation of the California Policy Model. >* Wage inequality declined modestly as the California Policy Model was enacted. >* California was successful in putting the state on pace to meet its 2020 carbon emissions reduction goals. >* Though California has begun to address these issues, enforcement of labor standards and a lack of affordable housing remain as challenges......




2018-01-07T12:14:39-08:00

**Should-Read**: Question: has it always smelled like at least one of America's two parties is on the point of collapse and dissolution? I don't think so. But I would like somebody with more knowledge of the history to weigh in on whether this does feel like a party-breaking moment, like 1848-1854: **Kevin Drum**: [The Republican Party Is in Full-On Panic Mode, and We Get to Watch](http://www.motherjones.com/kevin-drum/2018/01/the-republican-party-is-in-full-on-panic-mode-and-we-get-to-watch/): "Republicans are in panic mode over the possibility that Robert Mueller is about to start plowing relentlessly through the White House like a bulldozer leveling an old shack... >...By the time he’s through, they’re understandably afraid there might not be much left standing.... That Republicans are acting this way... means they realize their party is in existential trouble.... On a nationwide level... the election of Donald Trump... [was] a fluke.... But at the level of the Republican Party, there was nothing flukish about it.... Trump very plainly tapped into something very real in the Republican rank-and-file psyche.... By 2012... party leaders understood perfectly well that this meant they needed better outreach to people of color, but this was something they could never pull off. Their only other option was to become even more explicitly...




2018-01-06T11:42:08-08:00

**Should-Read: Doruk Cengiz, Arindrajit Dube, Attila Lindner, and Ben Zipperer**: [The effect of minimum wages on the total number of jobs: Evidence from the United States using a bunching estimator](http://www.sole-jole.org/17722.pdf): "Comparing the excess number of jobs just above the new minimum wage following an increase to the reduction in the number of jobs below the minimum... >...Using variation in state minimum wages in the United States between 1979 and 2016... the five years following implementation.... This leaves the overall number of low-wage jobs essentially unchanged, while raising average earnings of workers below those thresholds. The confidence intervals from our primary specification rule out minimum wage elasticities of total employment below -0.06, which includes estimates from the existing literature. These bunching estimates are robust to a wide set of assumption about patterns of unobserved heterogeneity.... >We also provide estimates for specific demographic groups that are policy-relevant or studied in the literature including: teens, women, workers without a college degree, women, and black/Hispanic workers.... The overall employment effect in each case is small and there is no evidence for substantial labor-labor substitution. We also do not find evidence for substitution away from routine-task intensive occupations. In contrast to the bunching-based estimates, we...



Weekend Reading: The People’s History of Tattooine

2018-01-06T06:35:21-08:00

**Tim Carmody**: [The People’s History of Tattooine](https://kottke.org/17/12/the-peoples-history-of-tattooine): "The Tusken _People_. 'Raiders' presumes some malevolent intent. They are trying to preserve the desert habitat and Luke wants to race through it in his speeder. The Tusken are just trying to keep parts of Tatooine wild and undeveloped by heavy industry..."




2018-01-06T06:33:07-08:00

**Should-Read: Prateek Raj**: [How merchant guilds became obsolete](http://voxeu.org/article/how-merchant-guilds-became-obsolete): "For much of human history, markets were embedded in relationships.... Merchant guilds... associations of wholesale traders were networked, and were considered reliable... >rich conduits of information, settings for repeated exchange, and avenues for collective action.... In the medieval era there were no formal institutions like courts and police, and the methods of gaining information about new opportunities were limited. In such a setting, trade in impersonal settings beyond networks was risky and networked trade therefore dominated, especially trade based on relationships.... What explains the emergence of impersonal markets in northwestern Europe?... Why did the decline of merchant guilds occur only in the northwestern region? Why did the decline occur only in the 16th century, and not before? Why did other parts of Europe not benefit from the same benefits that were transforming northwestern Europe?... >City level data on the 50 largest European cities during the 14th, 15th and 16th centuries and codified the nature of the 16th century economic institutions.... Merchant guilds declined only in those cities that: were at the Atlantic coast (and hence benefiting from a commercial revolution), and had high levels of printing in the fifteenth century.... Region 1...




2018-01-04T07:59:29-08:00

**Should-Read**: How the Reagan Democrats (and non-rich Baby Boomer Reagan Republicans) hosed themselves—and their peers. There is an alternative America that went for a much larger Social Security system rather than the mirage of 401(k)s, and in which organizations like Mitt Romney's Bain Capital were not enabled and encouraged to exploit the gap between cash flow and control rights to expropriate the pension fund: **Peter Whoriskey**: [‘I hope I can quit working in a few years’: A preview of the U.S. without pensions](https://www.washingtonpost.com/business/economy/i-hope-i-can-quit-working-in-a-few-years-a-preview-of-the-us-without-pensions/2017/12/22/5cc9fdf6-cf09-11e7-81bc-c55a220c8cbe_story.html): "Tom Coomer, 79... used to work at the McDonnell Douglas plant in Tulsa before it closed in 1994... >...He and many of his co-workers could never replace their lost pension benefits.... [He] has retired twice: once when he was 65, and then several years ago. Each time he realized that with just a Social Security check, “You can hardly make it these days.” So here he is at 79, working full-time at Walmart. During each eight-hour shift, he stands at the store entrance greeting customers, telling a joke and fetching a “buggy.” Or he is stationed at the exit, checking receipts and the shoppers that trip the theft alarm. “As long as I sit down for about...




2018-01-04T07:54:57-08:00

**Should-Read**: My view is that it is more likely than not that the Never Trumpers have burned their careers as professional Republicans, as recipients of largesse from right-wing plutocrats, and that the Republican public intellectual future will belong to those who stayed quiet—neither conspicuously pro- nor anti-Trump. Which means, of course, that they will be of very low quality. The mainstream Republicans will say that the Never Trumpers overreacted: he is more public than second-term Reagan was, and much less disciplined, but it is not clear that he is any less of a chief executive than second-term Reagan was: **Sam Tanenahus**: [On the Front Lines of the GOP's Civil War](http://www.esquire.com/news-politics/a14428464/gop-never-trump/): "'Conservatives...' says Jennifer Rubin 'are not Americans first. They’re Trump defenders first'... ideological groupthink... >...It gives credence to the old argument... that a great many conservative writers and policy experts are intellectuals manqué... leashed by wealthy donors... like the Republican politicians they promote.... In truth, “Conservatism, Inc.” was... a Soviet-style nomenklatura, with a good deal of ideological policing. “I had the president of a small conservative think tank tell me he admires my anti-Trump position but he just can’t be identified that way because his donors would cut him off,”...




2018-01-04T07:43:00-08:00

**Should-Read**: The very sharp Matthew Yglesias is extremely frightened about the future of America. I am not so frightened of Trump—I think that even if Republicans holding on to both houses of Congress we will get checks and balances working either through Amendment 25 or through the Justice Department and the New York Attorney General. The thing that scares me more is the next Trump, the competent Trump, the fascist playing on ethno-cultural resentments and fueled by plutocracy. As Karl Marx wrote in his appallingly sexist way of what he saw as a similar episode with the rise of Napoleon III back in 1850: "It is not enough to say, as the French do, that their nation was taken unawares. Nations and women are not forgiven the unguarded hour in which the first adventurer who came along could violate them..." The very sharp [Charlie Stross](http://www.antipope.org/charlie/blog-static/2018/01/dude-you-broke-the-future.html) proposes that advertising-supported internet and cable have hacked our brains in the pursuit of, as Zeynep Tufekci puts it, "a dystopia to get people to click on ads", and that we are hosed. I find myself searching for analogous hackings by print post-Gutenberg, by pamphlet and folio in the Enlightenment, by the first mass media...




2018-01-04T07:43:01-08:00

**Should-Read**: Anybody know whether this is right? Whether Tether has actually managed to get a bunch of wanna-be arbitrageurs to implicity back it this way? Or, indeed, whether the Tether market issue figures are accurate? **Chris Ellis** (December 11, 2017): [Bitcoin Only Has One Way To Go If This Is True-Winklevoss Bitcoin Trust ETF (Pending:COIN)](https://seekingalpha.com/article/4129543-bitcoin-one-way-go-true): "I believe that the fundamental value of the cryptocurrency is zero... >...However, I cannot deny that it has market value. That value has been increasing, which means that some people somewhere are buying. But who? I believe that question can be answered by Tether... a cryptocurrency controlled by Tether Limited... issued (not mined) and seeks to maintain a stable exchange against the dollar (i.e. tethered)... whereby each Tether is backed by one US dollar in the company’s bank. One can acquire Tether directly through the website or trade through an exchange. One can convert Tether to USD at Tether Limited, though Tether Limited has the right to refuse for any reason.... Traders like tether for its portability across platforms as it is a digital token whereas transacting in USD would require much more hassle involving banks.... The supply of Tether has increased from virtually nothing...




2018-01-04T07:10:35-08:00

**Should-Read**: There really should not be this much monopsony in the labor market. And yet it moves: **Simon Wren-Lewis**: [mainly macro: Minimum Wages, Monopsony and Towns](https://mainlymacro.blogspot.com/2018/01/minimum-wages-monopsony-and-towns.html): "Empirical work clearly shows plenty of examples where imposing or increasing minimum wages did not reduce employment... >...Few would argue that result will hold in all situations for all levels of the minimum wage. That is why, before George Osborne raised it, the UK minimum wage level was set by the Low Pay Commission, who tried to assess these issues.... There are two main reasons why Econ 101 (first year undergraduate) economics gives the wrong answer on minimum wages: search and monopsony. Take search first... a zone around the Econ 101 wage within which variations in wages would not lead to job losses or people leaving. Where the actual wage is within that zone will depend on bargaining power between the worker and firm. Monopsony is the situation where alternative employment opportunities for workers are scarce.... I suspect many labour economists regard monopsony in the labour market as something of a special case. That perception may need updating, argues Marshall Steinbaum...



Determining Bargaining Power in the Platform Economy: Reinvent Full Transcript

2018-01-03T20:17:41-08:00

**Reinvent**: [Determining Bargaining Power in the Platform Economy](http://reinvent.net/events/event/determining-bargaining-power-in-the-platform-economy/): Our political system has been hacked by time, circumstance, chaos, and disaster... ...The failings of the electoral college, the fact that small states hacked the constitution in 1787, so we now have a world in which the minority in the Senate represents 175 million people, while the majority represents 145 million people, and the gerrymandering after the 2010 census are primary examples of this dysfunction. Fixes for the economy?: * A 4 percent inflation target from the Federal Reserve, * Incentivizing businesses to invest in workers, * Reinvigorating the idea that technology should be used to augment workers, not replace them. The possibilities for positive human flourishing from the platform economy are immense, provided the platforms actually work. Uber’s investors are currently paying 40 percent of Uber’s costs. What happens when these investors start wanting their money back? The platform economy moves bargaining power away from the service providers and from the customers, and into the hands of the platforms. This is a problem for both consumers and independent workers. What bargaining power workers will have will be correlated to the time and resources devoted to training them: when you walk, you...




2018-01-03T09:18:17-08:00

**Must-Read: Matthew Yglesias**: [Trump’s North Korea tweet was based on a cable news segment](https://www.vox.com/policy-and-politics/2018/1/3/16844404/trumps-tweets-north-korea-fox-news): "Matt Gertz... undertaking the valuable investigative work of figuring out which Fox News segment had set Trump off... >...Kim’s nuclear button boast had, of course, come more than 24 hours before Trump’s tweet. But rather than learning of it through intelligence or diplomatic channels and considering a response, Trump appears to have found out about it a day late via his TV and decided to fire off some tweets. The tweet was just one of many... a long day of bizarre tweeting... from fanning the flames of the Israeli-Palestinian conflict... attempting to take credit for airplanes being safe, calling for the prosecution of a top aide to Hillary Clinton, attacking the new publisher of the _New York Times_, and plugging Lou Dobbs’s show on the Fox Business Network. Along the way, he also reiterated a New Year’s Day dig at Pakistan. It’s a puzzling array of topics that at first glance appears to defy any explanation as a communications strategy or a set of policy priorities. But the source turns out to be clear: It’s all Fox News. Per Daniel Dale of the _Toronto Star_, that...



Why Low Inflation Is No Surprise: Fresh at Project Syndicate

2018-01-03T05:21:14-08:00

**[Project Syndicate](https://www.project-syndicate.org/)**: [Why Low Inflation Is No Surprise by J. Bradford DeLong](https://www.project-syndicate.org/commentary/low-inflation-no-surprise-by-j--bradford-delong-2018-01): BERKELEY – The fact that inflation has remained stubbornly low across the global North has come as a surprise to many economic observers. In September, the always sharp and thoughtful Nouriel Roubini of New York University attributed this trend to positive shocks to aggregate supply.... In my view, interpreting today’s low inflation as a symptom of temporary supply-side shocks will most likely prove to be a mistake. This diagnosis seems to misread the historical evidence from the period between the early 1970s and the late 1990s... [Read MOAR at Project Syndicate](https://www.project-syndicate.org/commentary/low-inflation-no-surprise-by-j--bradford-delong-2018-01)




2018-01-02T06:44:08-08:00

**Should-Read**: There are #actually two different issues that are labelled "r > g". The first is the sustainability of government debt: when the safe interest rate at which the government borrows exceeds the growth rate of the economy, government deficits heavily burden the future—as was the case before the South African gold rush of the 1890s, during the deflation of the 1930s, and from the Volcker Disinflation to the coming of the Global Savings Glut. In other times, a (well-managed and not imprudent) government debt serves as a national blessing—a source of safety for investors, and a source of financing for the government at negative overall taxpayer utility cost. The second issue is the Piketty issue: is the economy tending on its own to increase the salience of inherited wealth because the risky rate of return on passive investments exceeds the economy's growth rate—as has been the case save in periods of war, revolution, and the thirty glorious post-World War II years? But great work by: **Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, Alan Taylor**: [The rate of return on everything](http://voxeu.org/article/rate-return-everything): "Returns of major asset classes in the advanced economies over the last 150 years... >...Perhaps the most surprising...




2018-01-01T16:24:39-08:00

**Comment of the Day: JEC**: [The Crazy Used to Be Split Between the Parties...](http://www.bradford-delong.com/2017/12/should-read-tyler-cowens-line-in-early-2016that-30-of-america-has-always-been-crazy-but-that-the-crazy-used-to-be.html?cid=6a00e551f08003883401b7c941783d970b#comment-6a00e551f08003883401b7c941783d970b): "'That's precisely the political deal the United States was founded on.'... >...Well...sort of. I think it's more accurate to say that the deal was, "The national government will take no steps against slavery for the foreseeable future," with the exact duration of the foreseeable future left intentionally ambiguous. (There's something Augustinian about all of this: "Lord grant me the strength to forego human slavery...but not yet.") >The problem was that the unforeseen future arrived a lot sooner than anyone expected. I'm not sure I can pin down exactly when, but certainly no later than the Louisiana Purchase. So the "deal" lasted just fourteen years. With a major expansion clearly in the cards, the question of whether slavery would expand along with the country as a whole couldn't be ignored. Consequently, the country started to face up to the real question: was American slavery to be temporary (though perhaps likely to stick around for a long time) or truly permanent. >I think what Brad and I are quibbling over is whether "permanent" was the position of a radical minority of fire-breathers who "pushed too far," or (my...




2018-01-01T15:38:57-08:00

**Comment of the Day; Graydon**: [The Crazy Used to Be Split Between the Parties...](http://www.bradford-delong.com/2017/12/should-read-tyler-cowens-line-in-early-2016that-30-of-america-has-always-been-crazy-but-that-the-crazy-used-to-be.html?cid=6a00e551f08003883401b7c941783d970b#comment-6a00e551f08003883401b7c941783d970b): "That 'create a country of our own' step is the political system breaking... >...(Any political system rests on the acknowledgement by those participating on the level of policy that they're not going to get everything they want.) >It is entirely possible to read the progress of the political dissolution of the Union as the Union taking up through the first two years of the Civil War to realize that the slaveholders did in fact mean it; that they really did define "liberty" as "I get everything I want". It's also possible to read it as the existing political structure being so completely white supremacist that it was more or less incapable of addressing the structural problem; you can easily argue that this is true today. (Look at the basis of land tenure in US law, for instance.) >The Slavers got crushed on the battlefield; they won the political war that followed. (The US having been created to be white-supremacist, it's much easier to keep it that way than change it.) What we're seeing now is a Slaver takeover of the entire American federal system, kicked off...




2018-01-01T15:34:18-08:00

**Should-Read**: The cross-breeding between the white Bourbon Democratic Party Herrenvolk South and the old-line Republican Party—the curse of Goldwater, Nixon, and Reagan—has produced something uniquely toxic in American history. The old-line Republican Party was the party of wealth and enterprise. It valued the rich and their wealth, yes, but its need for a mass base drove it to be the party of upward mobility and creative destruction—of those for whom the American economy had not yet worked but was working, and of those who expected the American economy to work for them. Strivers, not inheritors. Creative destruction, rather than ossified wealth. But when they discovered that playing on ethnic animosity and cultural fear could work and bring a mass base of activists into the tent, all of a sudden the party shifted its policies from seeking to advance _those who expected to gain something_ to seeking to protect _those who feared to lose something_: **Paul Krugman**: ["The central fact of U.S. political economy,](https://twitter.com/paulkrugman/status/947858170533302272) the source of our exceptionalism, is that lower-income whites vote for politicians who redistribute income upward and weaken the safety net because they think the welfare state is for nonwhites... >...Now, the truth is that they're wrong:...




2018-01-01T06:23:55-08:00

**Must-Read**: "A new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal. Now we are engaged in... testing whether that nation, or any nation so conceived and so dedicated, can long endure..." I have one big disagreement with Jonathan Kirshner. The America of Joe McCarthy, Massive Resistance, William F. Buckley, and George Wallace was the same public sphere as we see now in Facebook—don't blame the Internet for echo chambers and motivated reasoning, for it simply makes what was always going on more visible. Do blame Rupert Murdoch, Robert Bartley, Paul Gigot, and Rush Limbaugh. And blame more the professional Republican establishment that fell in line—behind Donald Trump and behind Roy Moore. But Kirshner is right in saying that henceforth America will always be the nation that elected Donald Trump, and the damage from that cannot be reversed: **Jonathan Kirshner** (January 15, 2017): [America, America](http://blog.lareviewofbooks.org/essays/america-america/): "Consider what it took in Germany to bring about a Hitler... >...two decades of world war, total ruin, national humiliation and widespread misery, the Nazi party was able to claim 33% of the vote in 1932, running on its promises to ferret out and crush enemies within and restore...




2018-01-01T05:50:36-08:00

**Comment of the Day**: This is really nuts! When's the crash?: **Spike**: [Ethereum! Blockchain! BitCoin!](http://www.unfogged.com/archives/comments_16343.html): "There is a nut of some interesting technology ideas involving blockchains that could potentially have applications that would be useful to explore... >...In short, by allowing for the synchronization of data structures across a multitude of systems without requiring any single one of those systems to be "in charge," the tech enables the development a unique class of applications, the properties of which we don't yet understand. The first of these applications to be developed involved a system for tracking and transferring the the ownership of digital pogs-aka, Bitcoin. This capability was latched on to by crazed Ron Paul fans who see it as a tool for overthrowing the Fed, as well as by online drug dealers. >It was the online drug dealers who found the most actual use for it, and for a time the thing actually worked as a semi-functional currency given that specific context. The Ron Paul fans, for their part, were content to just keep buy the stuff and never sell it. It's digital gold! However, it was not libertarians or drug dealers that actually created this wealth, except to the...




2018-01-01T05:49:16-08:00

**Should-Read**: Nick Rowe gets this right. The astonishing thing is that so many people at the Federal Reserve get this wrong, and wrong, and wrong: **Nick Rowe**: [Don't even try to "Normalise" interest rates](http://worthwhile.typepad.com/worthwhile_canadian_initi/2017/12/dont-even-try-to-normalise-interest-rates.html): "If you think that the rest of the economy is normalised, so it is time to normalise interest rates too, you are wrong... >...If the rest of the economy is normalised, then interest rates must already be normalised.... We've got "normal" both in the sense of an average over time, and in the sense of a desirable norm that central banks should aim for. But when I hear the words "The Bank of Canada (or some other central bank) needs to normalise interest rates soon" I reach for my shovel. If you want to argue against some view, as I am doing here, it is usually a good strategy to try to state what that view is. This is my best guess: >>The economy was humming along normally, with the Bank of Canada setting the actual rate of interest roughly equal to the natural rate of interest, so the output gap was roughly zero, and inflation was roughly at the 2% target. Then the financial crisis...




2018-01-04T11:18:02-08:00

**Should-Read: Chris Ellis**: [Bitcoin: Additional Suspicious Developments-Winklevoss Bitcoin Trust ETF (Pending:COIN)](https://seekingalpha.com/article/4133884-bitcoin-additional-suspicious-developments): "Summary: Tethers are being issued at a pace of 13 billion per year... >* No one knows where the money is, but no one seems to care. >* Bitfinex halted new accounts registrations. >* Bitfinex employee's profile suggests that he or the company is being investigated. >* Tether Limited runs the Bitfinex playbook by imposing redemption minimums, effectively freezing customer funds. >* This idea was discussed in more depth with members of my private investing community, Core Value Portfolio. >In my previous articles, I talked about the surprising correlation between the supply of Tether and the price of Bitcoin.... There are good reasons to believe that Tether Limited is issuing Tethers that are not backed by USD as promised in order to purchase Bitcoin through Bitfinex.... I believe that Tether's correlation to Bitcoin is no simple coincidence. It continues to baffle me why this issue is not the most talked about topic in the Bitcoin community.... At the time of writing, there were over 1.2 billion Tethers outstanding. Meanwhile, no one actually knows or seems to care about where Tether Limited is holding the USD funds. If market participants...




2017-12-31T06:19:31-08:00

**Must-Read**: Once upon a time in the past the size and location of cities was underpinned by fundamentals in the sense first of agricultural resources and transport, and then of agricultural plus manufacturing resources and transport, on top of which was built, agglomeration economy, increasing returns, and congestion layer of determination. In the future it looks as though it will be not production but consumption suitability: the fundamentals underpinning cities will be where people find it pleasant to live, on top of which there will be a congestion layer, plus a three-fold path dependence increasing returns layer of determination: the consumption culture, the production culture, and the infrastructure left from the past. Will we all live in one million population mile-long thousand foot-wide thousand-foot high arcologies in Greater San Diego? Not all. But a lot of us may: **Paul Krugman**: [The Gambler’s Ruin of Small Cities](https://www.nytimes.com/2017/12/30/opinion/the-gamblers-ruin-of-small-cities-wonkish.html): "Once... towns and small cities... served as central places serving a mainly rural population engaged in agriculture and other natural resource-based activities... >...Over time... agriculture has become ever less important.... Nonetheless, many small cities survived and grew by becoming industrial centers, generally specialized in some cluster of industries held together by the Marshallian trinity...




2017-12-31T06:19:42-08:00

**Should-Read: Jelani Cobb**: @jelani9 on Twitter: "I was frankly embarrassed by @CornelWest’s threadbare commentary... >...It’s one thing to challenge and interrogate. Quite another to cloak petty rivalry as disinterested analysis. Neoliberal?... This points to a broader concern I might as well air. One of the more fascinating things I’ve observed as @tanehisicoates has become more prominent is the unifying contempt of a striking array of black intellectuals.... People as intellectually diverse as John McWhorter and Glenn Loury are mad at the same dude as @CornelWest and Adolph Reed. I can’t tell you how many times black academics have tried to turn me against my friend on the low. One who sniffed indignantly to me “He hasn’t written anything that’s not on my syllabus.” Then you should’ve sent your syllabus to @TheAtlantic. But underlying all this is another dynamic. Plain classical elitism.... Straight up: many people hate the fact that the person being hailed as possibly the sharpest black intellectual writing about race is an HBCU dropout. They prefer their self-made intellectuals to be of the deceased variety >Frankly I preferred not to say any of this. @tanehisicoates is a grown man. He can fight his own battles. But it’s a...




2017-12-30T17:13:27-08:00

**Should-Read**: And now it is official: the official non-Trumpist Republican line is now that all of that stuff about the tax "reform" bill delivering materially faster economic growth in exchange for widening inequality was just boob bait for the bubbas. Robert Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz, John. B. Taylor, James C. Miller III, Barry W. Poulson, Charles W. Calomiris, Jagdish Bhagwati, Martin Feldstein, Greg Mankiw, and company take note: **Allegra Kirkland**: [Rubio: GOP Tax Bill ‘Probably Went Too Far’ On Helping Corporations](http://talkingpointsmemo.com/livewire/rubio-republican-tax-bill-too-far-helping-corporations): "Sen. Marco Rubio (R-FL) said Friday that he believes the recently passed GOP tax bill did too much to help the bottom line of America’s largest corporations... >>...I thought we probably went too far on [helping] corporations. By and large, you’re going to see a lot of these multinationals buy back shares to drive up the price. Some of them will be forced, because they’re sitting on historic levels of cash, to pay out dividends to shareholders. That isn’t going to create dramatic economic growth...




2017-12-30T08:25:05-08:00

**Should-Read**: WTF?! To cite §2.7 of your paper to claim that a critic is wrong when _there is no §2.7 in the version of the paper that the critic read_ is just bizarre. You don't claim that critics are wrong and then cite to a rewritten version of your paper!: **Eric Posner (Written with Glen Weyl)**: Response to Matt Klein’s post on Alphaville on Harberger taxation: "Matt Klein’s post on Alphaville about a recent paper of ours made a number of errors... >...Klein’s central claim is that our proposal would benefit the rich at the expense of ordinary Americans.... Klein’s claim seems to be based on two misunderstandings of our paper. First, he appears to think that the Harberger tax is based on the nominal value of assets rather than on net worth (equity) (see section 2.7)... But there was no §2.7 in the version of the paper that Matt Klein was discussing ! **Matthew Klein**: Would debt deductibility and a generous basic income justify “Harberger taxation”?: "Earlier this month, Alphaville covered a proposal to replace private property with 'shared ownership'... >...Weyl let us know that a newer version of their paper had made two important changes.... These two innovations...




2017-12-30T08:07:41-08:00

**Comment of the Day**: [E. Messily: Awfully Specific Advice](http://www.unfogged.com/archives/comments_16337.html): "The dinner table conversation with my family got a little out of hand this year, but in a way very specific to my family... >...A question about etymology led to my father standing up (he was leaving to get more wine) and announcing "Did you know that there is a word for when you are trying to think of a word you can't remember?" We all played along "what's the word, Dad?" "I don't remember" but then he told us the word: lethologica. And I said "oh, like the river," and only one person knew what I was talking about, and amidst incredulous responses to how any river could possible be involved, several fierce side arguments ensued about Greek mythology and/or etymology. >Then it was time for dessert so everyone became friends again.




2017-12-30T07:55:12-08:00

**Live from the Orange-Haired Baboon Cage**: **Joy Ann Reid** [@JoyAnnReid on Twitter](https://twitter.com/joyannreid/status/944978787850244098): "He’s laughing at you, MAGAs... >...His “populism” was always an act. THIS is what he and his party got in the government game to do, and they’ll soon send you the bill. Merry Christmas!: >>**Katie Watson**: [@kathrynw5 on Twitter: "'You all just got a lot richer', President Trump told friends dining at Mar-a-Lago Friday night, hours after signing tax overhaul into law..."




2017-12-30T07:29:02-08:00

**Should-Read**: This seems to be a counterproductive line to pursue: the people who would be triggered to go to the polls to vote to repeal the state gasoline tax hike are also people who would like more of their SALT deduction back. They would seem eager to punish McCarthy and company for taking that away. Does the California Republican House delegation have any polling indicating otherwise? **Dan Morain**: [California congressional Republicans seek gas tax repeal](http://www.sacbee.com/opinion/opn-columns-blogs/dan-morain/article192080624.html): "Now that most of California’s House Republicans have voted for a tax overhaul that will raise taxes for many of their constituents, you have to wonder what more good cheer they’ll bring.... I’m thinking roads and other infrastructure... >...November 2018 ballot... repeal the 12-cent per gallon gasoline tax increase... to pay for road repairs, bridge maintenance and some public transit.... Potholes don’t fill themselves. That’s not stopping House Majority Leader Kevin McCarthy, R-Bakersfield, and most of California’s Republican congressional delegation from backing that repeal–with a notable exception, Rep. Jeff Denham, R-Turlock. McCarthy, a guy who knows politics, dumped $100,000 into the initiative to repeal the gas tax. Rep. Mimi Walters, an Orange County Republican, and Rep. Ken Calvert, R-Corona, chipped in $50,000 each, recent campaign...




2017-12-30T07:28:37-08:00

**Should-Read**: Tyler Cowen's line in early 2016—that 30% of America has always been crazy, but that the crazy used to be split between the two parties, and so was contained, but is now concentrated in one—has stuck with me. He meant it to be reassuring. But the crazy concentrated in the Republican Party turned out to be large enough to take it over. And then there were the 19% who were willing to go along with the crazy in November 2016. And now there are the officeholders who believe that they are tied to Trumpism. (1) Find different officeholders. (2) Break the 19%'s tolerance for Trumpism. (3) Split the 30% so it can no longer win a Republican primary. Those are the three principal tasks to recreate a constructive American politics. And easily grifted morons in and around Johnstown, PA are not key to understanding how to accomplish those tasks: **Ezra Klein**: [“Trump country” stories help explain our politics, not the next election](https://www.vox.com/policy-and-politics/2017/11/10/16625308/trump-supporters-2020-polls): "Michael Kruse’s Politico story revisiting diehard Trump supporters in Johnstown, Pennsylvania... >...Trump’s [core] supporters don’t care about his broken promises, don’t believe the swirling scandals, and haven’t heard many of the dominant criticisms. Their filter bubble leads...




2017-12-30T07:28:46-08:00

**Should-Read**: One very good line here is that Nancy MacLean's book is true about Murray Rothbard even though (largely) false about James Buchanan. But I have considerably more sympathy for MacLean than Friedman does: Just how is MacLean supposed to read ["The Public Choice Theory of John C. Calhoun"](https://www.jstor.org/stable/40751557?seq=1#page_scan_tab_contents) anyway? The disjunction between the public statements and the private correspondence of, say, a James J. Kilpatrick makes her—makes one—confident that a bunch of Southern white _herrenvolk_ discourse in the second half of the twentieth century was profoundly Aesopian: "liberty" in large part did mean "our power over Blacks"—and that was what the bulk of conservative Virginians from the 1950s to, well, very recently thought a good political system should preserve. It is hard to find American libertarians for whom liberty-as-power-over-minorities is not in the mix: everyone who draws a distinction between state action and state funding, or between state funding and public accommodation, does so: **Jeffrey Friedman**: [Public Choice Theory and the Politics of Good and Evil](https://niskanencenter.org/blog/public-choice-theory-politics-charity/): "So now we finally know. Libertarians aren’t the ditzy bumblers exemplified by 2016 presidential candidate Gary (“What is a leppo?”) Johnson... >...Nor are they ideological extremists, like the proprietor of the Ayn Rand...