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Monday, July 15, 2019

Milton Friedman and the Keynesians Not an Old English Folk Tale

I wrote a post with this title which is poor, solitary, nasty, and long.

the bottom line is I say Friedman was always a Keynesian except for his insistence that the effect of the nominal interest rate on money demand is more or less pretty much negligible. This means that I argue that he differed from Keynes because he was a monetarist. In the 80s the difference between monetarists and Keynesians (which always was a matter of a paremeter estimate and not any fundamental disagreement) was dwarfed by the difference between them and the fresh water new classical ratexians. But the point, if any of the rant is that Friedman is determined not to be trapped among the Keynesians and that he bases his efforts fundamentally on the importance of i.

The failed aim was to introduce the following modified children's story in which an innocent red hen which happens to be red is rejected by red haters who can't admit that they agree with non conservatives. This post is very pointless too (Especially to people not told the story when they were children).

“Who will prime the pump?”

But Friedman said, “Not i,”

she ran about calling briskly: “Who will cut the tax?”

Friedman said, “Not i,”

“Who will press demand?”

But Freidman, with a grunt, said, “Not i,”

“Who will demand the Wheat on the market to be sold?”

Turning his back with snippy glee, Friedman said, “Not i,”

“Who will make some bread?”

Milt said "Not i"

Milton Friedman and the Keynesians

Brad DeLong noted that new Keynesians are actually Friedmanites. On all points where 1960s Keynesians disagreed with Friedman, they concede. The fusion of Keynesians and Monetarists would seem odd to anyone who can't conceive of real business cycle theory (really anyone who can't conceive of a human being taking real busines cycle theory seriously, that is, all normal human beings and most economists). Paul Krugman notes a return of Paleo Keynesians. Then discuses it more.

By the way, Krugman's link to DeLong doesn't work any more The Washington Center for Equitable Growth returns a 404 error. I went to Krugman to get the link to Brad, noted Krugman said brilliant things (no surprise) *and* that his link is rotten (that's news).

I'm going to get to the point soon but I have to discuss Krugman now.

Oh boy this introduction ran away from me. I am going to put the whole rant after the jump. the bottom line is I say Friedman was always a Keynesian except for his insistence that the effect of the nominal interest rate on money demand is more or less pretty much negligible. This means that I argue that he differed from Keynes because he was a monetarist. In the 80s the difference between monetarists and Keynesians (which always was a matter of a paremeter estimate and not any fundamental disagreement) was dwarfed by the difference between them and the fresh water new classical ratexians. But the point, if any of the rant is that Friedman is determined not to be trapped among the Keynesians and that he bases his efforts fundamentally on the importance of i.

Tuesday, June 25, 2019

Kevin Drum Talking 'bout my generation

Kevin Drum has a funny but also genuinely interesting post on how boomers are not really to blame for messing up America (he half tongue in cheek blames the silent generation). I don't think the defensiveness is entirely an act. He does concede

Now, if you want to blame boomers for welfare reform, sure. Bill Clinton was (barely) a boomer. If you want to blame boomers for the Iraq War, I guess so. George Bush was (barely) a boomer—though the real force behind it was Dick Cheney (b. 1941). If you want to blame us for screwing up Obamacare, that seems sort of churlish, but whatever. Barack Obama was (barely) a boomer—though the real roadblock to a public option was Joe Lieberman (b. 1942) and his centrist pals.

I comment

One interesting thing, you list welfare reform with invading Iraq (and also the ACA but call that churlish) and admit that it was a boomer misdeed (blaming Cheney for Iraq and Lieberman for weaknesses of the ACA which was still a great step forward). This interests me, because our one point of regular disagreement was over how horrible welfare reform is (it is current policy so the present tense is necessary).

Oddly, I learned of the association with a sharp increase in deep poverty here (I think your second post of the series in which you briefly conceded that welfare reform was severely damaging). I never understood your motivation . Now I see how important 2 years can be (also this post makes me feel young -- thanks). I was born in 1960 so late boom (or between boomer and gen X). I definitely do not consider Bill Clinton to be from my generation. Welfare reform is something old guys did to my country.

I wonder if there is actually something non-humorous and ironic on the square here. I do really find your discussion of the topic unreasonable. Here I comment that you depend on arguing that a 50% increase is negligible https://angrybearblog.com/2016/02/drum-on-drum-on-sanders-on-welfare-reform.html

I think you actually depend on our eyes perceiving 0.1*f(x) as more nearly horizontal than f(x) so they are deceived by scale. You discuss the murder rate often. Try adding percentage of Americans murdered to the graph with different definitions of "percentage of households with childred in extreme poverty" and see how invisible the changes are.

OK "churlish" triggered me (you once mentioned that you think I don't mind being churlish -- don't expect you to remember). I will try to unchurl. I think there is a very basic problem with US welfare policy. Hatred of welfare means there are some people in the USA much poorer than anyone should be. As you noted, the dollar cost of eliminating severe poverty is tiny. I am sure you believe, as I do, that the long run poverty trap culture of poverty effects are an advantage of bringing back more generous cash welfare. But we agree that "bring back old welfare" is political poison.

I think we can agree that welfare hatred is based on racism (racists being more open than they were 10 years ago). I think there is a political problem for how to get policy around the barrier of welfare hatred. I note that the left more candidates talk about giving to college graduates (forgiving student debt) more than about giving to children in severe poverty. I think even Sanders is afraid of welfare (and of course gun control). Finally I think all the tech bro talk of UBI and how everyone will be put out of work by the robot apocalypse so you, white man, will need welfare too is all an effort to get around welfare hatred.

It is a topic you clearly understand very well (I assume growing up in Orange county is relevant) and it is very important. I now ask for a post on welfare and welfare hatred.

Sorry to comment almost off topic and at length.

Tuesday, June 11, 2019

The Whole Trinity

Not the Father the Son and the Holy Ghost. There are other trinities in our religious tradition. One is faith hope and caring. They sure are three separate things. I care a lot but I have very little hope. Another is that God is omnipotent, benevolent and omniscient. I realize that I believe in two Gods. There are the laws of nature which are all powerful but have no mind, no understanding, no clue. There is the moral law which is benevolent but absolutely powerless. It can't make things happen. It can't even speak to us. However, there isn't pure knowledge nor could there be. The point is that I see no deep connection between what is and what should be. Hence caring with little hope.

Monday, May 27, 2019

Comment on DeLong on Buchanan

Read Brad's post.

my comment on "Milton Friedman's redefinition of "neutral monetary policy" to mean "whatever monetary policy keeps nominal GDP on its trend growth path" led people prone to motivated reasoning in a laissez-faire direction completely and horribly astray... astonishing failure to mark one's beliefs to market"

Someone should write a book "Economic Theory: What Went Wrong". You had a draft in your mind some years ago. PseudoDeLong wrote that economics had been healthy, although inevitably influenced by ideology. In the good old days, there were fruitful debates between libertarians like Friedman, Stalinists like Sweezy and everyone in between.

Then Lucas and Prescott made a mess of things, abandoning evidence for pure theory. Or rather, they made a non mess of things, focusing on their favored models and ignoring non messy reality.

This is an attractive story, but it does not correspond to the actual history of what was actually written and said. It is, roughly, salt water good, fresh water bad. Fresh water means both back engineering theory from free market policy preferences and favoring rigorous analysis of the implications of absurd assumptions both to common sense and to empirical rigor "progress don't regress" "Theory ahead of business cycle measurement".

The problems are (at least) two. First the fresh/salt division isn't identical to left/right. The terms were introduced by Hall a salty conservative. Sargent and Hansen are distilled water center-lefties.

But second, many salty lefties manage to be almost as receptive to actual evidence as Prescott. You present an example. I think Friedman is another. Actually Lucas himself is a brilliant rhetorician -- he can do it with words as well as with equations.

Notice, I classify Friedman as a salt water economist. I do insist that Friedman and Lucas are methodological opposites (it isn't merely that their statements contradict, so they can't both be right, one is the negation of the other so they can't both be wrong) http://rjwaldmann.blogspot.com/2012/03/modern-macroeconomic-methodology-modern.html

They are on the same team with teammates named Laffer, Kudlow and Moore. They are (or sadly were) geniuses, but they work back from the conclusion and are more loyal to small government ideology than to their stated methodologies. This must be true, because they consider themselves part of the same school even though they have opposite methodologies.

Saturday, May 04, 2019

G and GDP update

I think it might be time for an update on the crudest of tiny sample reduced form analysis of fiscal policy and the current recovery.

One reason for my continued interest is that there was a rather large tax cut enacted in 2017. Trump critics tend to argue that it failed to encourage investment, but did affect aggregate demand. I wonder if the noticeable increase in GDP growth is due to the tax cut or the spending increase from the 2017 omnibus spending bill.

So I look at GDP and G (government consumption plus investment) again. Both are annual changes in billions of 2012 dollars (Not logs). I subtracted 400 billion from the change in quarterly GDP (multiplied by 4 to give an annual rate). Also I multiplied G by 1.5 which is a common estimate of the multiplier (say by Blanchard and Leigh Nakamura and Steinsson). Here an effect of the tax cut would appear as an anomaly -- an increase in GDP not fit by the change in G times the multiplier (or the $ 400 Billion and year trend).

I do not see an anomaly either when the tax bill passed in 2017 or in 2018 when tax witholding changed. As I mentioned back in 2014 I don't see an anomaly in either growth or government consumption plus investment when sequestration started in 2013 q1. The anomalies are high growth from 2014 q 1 to 2015 q 1 then low growth from 2015 q1 and q2 to 2016 q1 and q2, that is a level anomaly at a time when there weren't policy shifts.

I notice again that theory and data both suggest that changes in G are more important than changes in taxes. Nonetheless the practice is to measure the fiscal stance with the full employment budget deficit, that is, to assume that the balanced budget multiplier is zero.

Sunday, April 28, 2019

Barry Barry Ritholtz asks how the New York Times got 2 very different figures from the same data

Barry Ritholtz has doubts about data presentation at the New York Times

His commentary is very brief "What is this about? Is it guilty conscience, or something else?"

The graphs are strikingly different

and

Alberto Cairo explains

I have a guess about what happened. I guess the second figure is a regression with counties weighted by population and the first is unweighted. I consider both semi reasonable things to do, but weighting to be better (it is also the second to be produced if I understand correctly)

First the fact that the size of the circles depends on total votes in the second figure suggests that the regression was weighted by total votes. Second it is clear that the big blue counties pull the line more in the second figure. I note that the estimated effect of government assistance on the Trump vote is greater in the second figure.

Others have another guess -- that the first line was hand drawn after eyeballing and isn't a regression line. That seems unlikely to me. Someone tweeted that it is clearly not an OLS regression. I suspect that the eye is even more influenced by outliers than OLS is. The dense cloud of many fairly similar observations does not impress us as much as it impresses a computer running OLS

I think I'm going to give a hostage to fortune and guess that, if someone sends me the raw data, I can run an unweighted OLS regression and get figure 1. I feel pretty safe, because I am pretty sure few people will read this and none will download and e-mail the data to robert.waldmann@gmail.com

Reply to PGL comment on Brad DeLong Post on Stealing Candy From Fish in a Barrel

This is a comment on a comment and is here only because I can't insert a figure in a comment section. Click the link. Good point. Also the GOP supply side story is about non residential fixed investment. They have been promising for 39 years that their tax cuts will cause a huge increase in business investment and that Democrats' tax increases will cause it to collapse.

Also there has been a very clear pattern, which happens to be the exact opposite. The ratio of non residential fixed investment to GDP is high when a Democrat is in the White House (especially if he is a peanut farmer from Georgia) and collapses when a supply-sider is in the White House.

The pattern is so clear that it is hard to avoid seeing it. The incentives to claim to have managed not to see it are clearly very strong.

Also Brad why real/real. Two famous economists have stressed that the causes of high investment cause high nominal/nominal while effects are due to real/real so one can test causation using relative prices. One of them is named DeLong. The tax bill doesn't affect the relative price of capital goods, I think it is best to look at dollars/dollars and leave price indices out of it.

Thursday, April 25, 2019

Houston Houston can you read me giving a hostage to fortune

Who told Kay Steiger that I don't read Raccoona Sheldon AKA James J Tiptree Jr I-m not actually sure that's who she accused her readers (including me) of overlooking. I just have this
OK so now I click Bingo "Sheldon primarily wrote under a male pseudonym — James Tiptree Jr."

Tuesday, March 05, 2019

St Leo the Great in Chalcedon

Pope Leo I had an interesting career involving some difficult negotiations. He reasond with Attila about the wisdom of invading Italy and convinced Attila that he should settle for marrying Honoria (sister of the emperor who appears from her correspondence with Attila to have preferred the prospect of marriage with Attila to forced celibacy). He also negotiated with Genseric who had an army while Leo did not. They reached agreement on ground rules for the second sack of Rome.

But then he ran into real trouble. He was named chairman of the council of Chalcedon to preside over the debate between Nestorius and Eutycheus over whether the divine and human aspects of Christ were separate or united. He did try to convince his fellow bishops that problems with Huns and Vandals and such might be considered almost as important as theological disputes.

The Council did decide that Jesus Christ is one being with two natures (current Catholic and Orthodox doctrine) rejecting the Nestorian doctrine (accepted by the Assyrian Church) and the Eutychian doctrine (accepted by the Armenian Church).

The furious theological dispute was especially frustrating for Leo I because he did not speak Greek. He only spoke Latin. He had to ask for translations of the furious disputes about whether this or that Greek word described Jesus. This was challenging especially when the furious dispute was over two Greek words which had the same Latin translation.

All in all, the months of arguing about words while Rome burned must have been frustrating.

But at least he never had to discuss Modern Monetary Theory.

Thoughts and Priors : on the limits of Bayesian Reasoning

Don't you hate it when you have a good title and no post to go after it ?

Monday, March 04, 2019

Scott Fullwiler

I have to write this. It isn't worth tweeting or posting at Angrybear. It's about me and no one should care.

I am having a problem with Scott Fullwiler @stf18

Actually many problems.

1) I tweeted a lot of silly stuff yesterday. I want to explain it. I know no one is interested so I will explain it here.

2) I have been trying to find a tweet of his with a useful quote from 2002 from the person who actually handled open market operations in New York. For one thing, I forget her name. But I can't find it because looking through his tweets enrages me.

I will start with

2)The tweet includes a very intersting quote by the woman who actually did it. The point is that even back in 2002 an announcement of a new target was, on average, roughly enough to achieve the new target FF rate. There was not a clear correlation between changes in the target rate and the sign of open market operations. That's interesting. Now one problem is that Fullwiler summarized the quote leaving out "roughl" and "correlation" and wrote something which, if taken literally, implies that there were no open market operations at all. I mean that is exactly what he typed. My extensive efforts to explain that the quoted passage was a statement about the expected sign and the magnitude but not the existence of open market operations were not successful. Also he said he would bet me $$ that I couldnĂ t tell him what he claimed. I agreed to a $100 bet, because all I have to do to win it is cut and paste what he wrote. I mean he is willing to bet me that I don't know and can't find out what he tweeted. He placed no limit on the $$, so I believe he owes me $100 because "Fed hasn't actively changed the monetary base when it changes the interest rate target since maybe pre-1994,". I don't expect to collect, because I'm sure he is a welcher.

But the problem is that I can't find the valuable quote, because I can not stand his twitter thread.

OK the embarrassing (to me) twitter flame war explained

1) It began with someone who tweets as @fiat_money . I don't know this person's name in real life. I would tend to guess that he or she might be a Ron Paul type gold bug. I have no reason to think this person has any interest in MMT. Also he or she was blocked by Brad DeLong.

After I tweeted many silly things, I wrote a thread explaining what I should have said

https://twitter.com/robertwaldmann/status/1102112291745685504

I cut and paste

Robert Waldmann

‏ @robertwaldmann 24h24 hours ago

I am discussing this claim "Fed makes sure T-bonds are instantly convertible to USD, so printing treasuries is equivalent to printing dollars." do you agree that printing treasuries is equivalent to printing dollars ?"

The Fed does no such thing. There is a very thick secondary market for t-bills, so they can be converted to USD instantly (at a market price which varies).

The Fed does buy and sell t-bills for reserves with open market operations but it doesn't make the market. It doesn't make sure t-bills are liquid. The private secture sure does, but that's not the Fed's job.

Since the Fed absolutely does not act as a t-bill/USD market maker, issuing them is not at all like printing money. It is very possible that the Fed's reaction to increased deficits is to sell t-bills contracting the supply of reserves. The FOMC does what it chooses to do.

It is absolutely not true at all that increased deficits automatically cause increased reserves. If the FOMC just sits there (no open market operations) then there is no change in reserves. The MMT position is nonsense.

The fact that MMTers contested my criticism of "printing treasuries is equivalent to printing dollars" lowers my opinion of them (which before today was vague as I had not thought about them much).

Embarrassingly, before tweeting the thread copied and pasted above, I replied to replies to my ciriticsm of the quoted claim. In the resulting twitter flame war, I asked Scott Fullwiler who is very expert on how monetary policy is actually implemented whether he knew what an open market operation is. He does. He knows quite a lot about open market operations and how they are currently almost irrelevant (a claim I started making in 2010 https://angrybearblog.com/2011/05/qe-ii-mmmclxxvi.html)

I feel the need to explain what happened. I criticized the claim "Fed makes sure T-bonds are instantly convertible to USD, so printing treasuries is equivalent to printing dollars." saying that T-bonds and USD are not perfect substitutes (note unlike T-bills and notes T-bonds mature after 30 years, they are quite different from dollars). Someone replied to me arguing that t-bills are used by financial firms as a means of payment (true as I have noted from time to time). I proved that t-bills and USD are not perfect substitutes by graphing the t-bill interest rate. I think this proves @fiat_money was wrong. Scott Fullwiler jumped in laughing at me.

Now I knew that MMTers assert that deficit spending automatically causes an increase in reserves. I didn't know why they say that (it absolutely isn't true if the standard definitions of "deficit spending" and "reserves" are used). Foolishly I guessed they were using an eccentric definition of reserves and claiming that t-bills and dollars are perfect substitutes (always and not just now (approximatel) in the liquidity trap). If this were true, then open market operations would have no effect, hence my question.

But now I know that they use an eccentric definition of deficit spending. They define it as spending financed by money creation. Then the actual process of spending financed by the auctioning of Treasury securities, they describe as 2 events -- deficit spending and bond sales. This *should* be a harmless eccentricity. The disagrement is purely 100% semantic. There is no disagreemnt if NMTers vs other economists about the policy options open to the US Federal Government. It is very bad to insist on using terms with definitions other than the standard definition. Typically the only result is confusion. But in this case it is much worse because MMTers insist that the purely semantic distinction is substantive and very important. I think this demonstrates that they have nothing useful to contribute to any discussion. But it sure doesn't mean they don't know what open market operations are.

The claim that deficitm spending implies an increase in reserves is based on the definition of "deficit spending" as meaning what 99% of economists mean by "deficit spending and open market operations so that the balance of bonds outstanding does not change and the supply of high powered money increases by an amount equal to the deficit". On the other hand, they use the word "reserves" with its standard definition.

There was a twitter flame war during which I did not manage to communicate that my objection was with the claim that bonds and USD are perfect substitutes (I did type that this was my point (if any) many times).

I have sincere advice for MMTers. If they want others to consider them anything other than a cult of flakes, they should use standard definitions of words. If,for some deep psychological reason, they must use there own eccentric definitions, they should say so in every document they write using the eccentric definitions (which means ever tweet). Jargon is useful for excluding people, but a tiny bunch of people do not gain by excluding everyone else.

I fear that the problem with this is that, aside from the eccentric terminology and ignorance about residential investment and open economies, they have nothing original to contribute. They certainly haven't presented any argument that they have something useful to add to the discussion that has convinced more than a tiny number of outsiders.

OK

Sunday, February 10, 2019

The Empty Quarter, Greenwich and the Mason Dixon Line

I recall being surprised to learn that I was born, bred and then living South of the Mason Dixon line. I considered the border between North and South to be the Patomac river (honestly felt I was entering enemy territory when I entered Northern Virginia -- this was very long ago). My dad explained it was the border between Pennsylvania (North) and Maryland (South). My 91 year old mother recently confessed that she had some doubts about moving South of the Mason Dixon line to live with my Dad. The border is now roughly where 270 shrinks into a normal sized highway. The line is arbitrary.

I thought of it when I saw the very common figure showing the empty quadrant of US public opinion. A solid majority is more egalitarian than the center and more socially conservative than the center.

What the hell is this center ? The question is made more difficult by the fact that the two dimensions are indices constructed combining answers to many questions. I am fairly sure that historically the "economic dimension" is the first principle component of the cloud of answers and the "social/identity dimension" is the second. But I am talking about the placement of the axes. It is that arbitrary, unmotivated and unexplained choice which causes the South East quadrant to be empty. One natural placement is that the division between left and right on the economic dimension is the median level of the economic index and the division between socially conservative and socially liberal is the median level of social/identity index. This is clearly not the choice made by *all* political scientists, sociologist and survey researchers. It is clear that the median US adult has left of center views on economic issues and more conservative than centrist views on social/identity issues.

I assert that there is some elitist nonsense going on here. I haven't looked very hard, but I also haven't found any definition of what makes some point (0,0). So I speculate.

Everything is relative, so to the standard statement that public opinion is skewed conservative populist, I assert thatelite opinion is skewed libertarian -- it's that the axes are oddly placed given the data points, not that the datapoints are oddly placed given the axes.

Of course it isn't simply a matter of eliminating a central claim of US political science by adding a constant to the economic index scores and subtracting one from the social/identity index scores. The cloud would look strange because it would end abruptly at the values which are now econmic ultraleft -1 and ultra social conservative +1. The issue isn't just the processing of the answers to questions which are the raw data -- it is also the questions. A large number of people (including some Trump voters) give the left more answer to every economic question and a smaller but still large number give the most conservative answer to every social/identity question. This shows the elite libertarianish skew of the people who chose the questions.

If the economic question is "should the rich be lined up and shot after all their wealth is confiscated or is making them poor punishment enough" then almost all US adults would agree on something with a libertarian. If the social/identity question is "was Moses right that gay sex should be punished with death" again a substantial majority would side with libertarians. But those questions are considered absurd, because they are outside of the range of elite opinion. (indeed as a child of the elite I absolutely oppose killing rich people, killing gay people and oppose killing rich gay people). The point is just that the questions matter. Most of the 10% most egalitarian Americans are to the right of Mao Tse Tung. The most socially conservative are to the left of Cotton Mather (haven't heard much agitation for witch trials lately).

So what is this elite ? My guess is that it would be political scientists, sociologists, and survey researchers. But it could be members of congress. I haven't read the questions, but they might be issues on the Federal Government agenda -- nothing so far left as a top income tax rate of 70% until roughly last week. Or it could be pundits, columnists, "sophisters, economists, and calculators". In any case, the figure tells us as much about the people who chose the questions as about those who chose the answers. !"

Sunday, January 20, 2019

Weak Chait Snark

The smart and ruthless Jon Chait writes of the Trump administration "(petty graft ranging from lavish office expenses to making staff procure high-end hand cream)". Wrong Jon. You meant to write "(petty graft randing from emoluments to emollients)" Also some actual pedantry. As has become common recently, Chait used "singular" to mean "single" here "Here is the crown jewel of the Trump presidency, the singular legislative achievement". This usage error has spread singularly quickly, but "singular" in this context means "strange" not "the only one". The single best way to assert that an event is unique is to type or say "single". I guess that "singular" sounds more literaryular or maybe dramaticular or somethingular. Also "fulsomely" means disgustingly not fully or completely.

Thursday, January 17, 2019

Reagan's Tax Cuts and the Volcker Recession

Max Boot is a candidate member of the Rubin Gerson can't be a conservative anymore, because I always agree with them club of Washington Post columnists. But he is a bit confused about US macroeconmic history and macroeconomics. He wrote

"The deficit spending of the Reagan years was at least justified because it boosted the economy out of a deep recession "

As a matter of timing, this can't be right. The Kemp Roth tax cut was enacted in 1981. Real GDP peaked in 1981q3 -- the tax cut corresponds to the beginning of the recession not the end.

The part that Boot misses (because it has been unimportant for the past 10 years) is monetary policy. It is possible to cause a severe recession in spite of fiscal stimulus by driving the Federal Funds rate up over 19 %. The combination of loose fiscal and very tight monetary policy caused huge real interest rates and a collapse of investment. It also caused an over-valued dollar, a huge surge in imports and deindustrialization.

One can discuss the effects of fiscal policy without considering the response of monetary authorities only when monetary policy is constrained by the zero lower bound. If GDP is determined by the Fed's ideas about what level is consistent with low inflation, then fiscal policy which is, in itself, stimulatory just changes the composition and not the level of demand.

Wednesday, January 16, 2019

"If Only Obama had Done the Things Obama Actually Did" J-chait

Jon Chait remains as enthusiastic about Barack Obama as I am, so it isn't surprising that he wrote a blog post entitled "If Only Obama had Done the Things Obama Actually Did". But the title does raise a question. Is Chait dumping on the very serious centrists (cough David Brooks couch) who argued that Obama should reach out to Republicans by proposing reasonable centrist policies which he had proposed (as Chait often does) or is Chait hippy punching (as Chait does when he isn't Republipunching).

The first two words in the post answer the question "Matt Stoller" OK here comes some hippy punching (I haven't read past "Stoller"). In contrast, something is very predictable. I almost always agree with Chait (unless he is writing about charter schools and neglects to mention that he is married to a manager of a charter school company).

Charlie Pierce has been there and done that. No need to read his post to get the point -- the subtitle is thermonuclear

"I'm Going to Guess This Isn't a Winning Democratic Platform for 2020

Also, Rand Paul is not a major figure in American politics."

Just imagine a Pierce Chait debate -- might be the critical mass of snark which causes the false vacuum to decay ending the universe (which on balance wouldn't necessarily be a good thing)).

Now hippy punching can be fun, but really guys, pick on someone in your league -- it isn't nice to dunk on a junior high school guard.

update: I clicked through to an older and excellent Chait article complaining that liberals did't appreciate Obama in 2010 (now liberals do -- the current complaints come from democratic socialists who denounce mere liberals).

He is forces to almost admit that FDR accomplished more than Obama. However, he also demonstrates historical ignorance writing

Roosevelt did not run for office promising to boost deficit spending in order to stimulate the economy. He ran castigating Herbert Hoover for permitting high deficits, then immediately passed an austerity budget in his first year.

It is true that Roosevelt castigated Hoover for permitting high deficits. However, the austerity budget which included an Ocasional Cortezian 63% top marginal income tax rate was The Revenue Act of 1932 (June 6, 1932, ch. 209, 47 Stat. 169). Notably 1932 was Hoover's last year not Roosevelt's first year. The bill was signed by tax and don't spend conservative Hoover.

In fact, in Roosevelt's first budget (spent in fiscal 1934 the first fiscal year for which he proposed a budget) there was a huge increase in Federal Spending. There was an increase in 1933, even though there was already a budget (& recall FDR became president in March not January). I guess the idea of a Republican soaking the rich is incomprehensible, but it happened. (to make a historiographic error avoided by Amity Schlaes should be embarrassing).

The budget passed (by Congress) in Roosevelt's first year increased Federal Government current spending by over 30%. Rather a larger proportional increase than the ARRA. This is not a subtle point.

As an aside, fiscal stimulus does not require deficit spending. The balanced budget multiplier is positive (this claim isn't mere theory it is based on evidence). I do not know why it is regularly asserted that the fiscal stance can be measured by the full employment budget balance (this is a point on which Robert Lucas and Christine Romer sometimes agree & they are both obviously wrong)

Sunday, January 13, 2019

The Ethics of Clinical Trials

In a clinical trial the therapy is decided by a pseudo random number generator. How can this be ethical ? People are treated differently for no reason related to different interests different values and priorities or even different merit (assuming merit can differ).

There is a utilitarian rational for clinical trials. Through such trials doctors learn, and that knowledge is useful to future patients. But this rationale is utterly rejected as ethically unacceptable, because it was used to justify depraved experiments.

I think the current discussion of the ethics of clinical trials is based on a mixture which is partly consequentialist and partly deontological, and that it is incoherent, because people feel the need to claim it is totally both, while the two are inevitably in conflict.

So it is asserted that physicians must act in the interest of the patient – each and every patient. It is also argued that clinical trials are morally acceptable. This does not make sense.

It is only possible if the expected welfare of the patients is identical under the two treatments over which one randomizes. Any difference, no matter how tiny, in expected welfare would compel the use of only the current standard therapy, or of only the new experimental therapy.

I think the failed effort to avoid this is to reject the concept of expected welfare. It is argued that it is OK to do one or the other because one does not know which is better for the patient.

It would be OK if one were to say all probabilities must be rounded to 0, 1 or 0.5 so we don’t know means each is exactly equally likely. However, this approach would make life strange and brief. In particular it would rule out general anesthesia for any procedure not necessary to save a life. The chance of death is very low but demonstrably not zero. Don’t operate unless you would operate with a 50% chance of killing the patient would rule out almost all surgery. We must make choices under uncertainty and can’t pretend that all uncertainty is the same and survive for long.

Consider 2 examples.

Another is that there are 2 treatments, and, with best estimates, with treatment A the probability that the patient lives is 50% and with treatment B the probability is 30%.

Another is that there are 2 treatments, and, with best estimates, with treatment C the probability that the patient lives is 50% and with treatment D the probability is 30%.

According to current medical ethics, one must provide treatment A not treatment B but one may chose treatment D or treatment C. This always is based on the assertion that the interests of the patient is all that matters. Yet I have assumed that, for the patient, the two pairs of choices are identical. This can’t make sense.

In the first case there is an unobservable difference between patients of type 1 or type 2 where if they are type 2, then treatment A kills them on the spot. 10% of people are of type 2 (as learned from decades of painful experience). If someone is of type 1, their chance of surviving with treatment A is 5/9. In contrast with treatment B all have a 30% chance of living. With decades of painful experience it is known with essentially complete certainty that the probabilities are 50% and 30%.

In the second case, there aren’t two types, but the evidence on treatment C is preliminary based on a small (phase II) trial. The fraction who survived in the trial was 50% but the 95% confidence interval is 20% to 80%. The null that the true chance is 30% is not rejected at standard confidence intervals. By standard reasoning it is time for a phase III trial with randomization.

In each case, we know that giving A not B might cause a patient to die who would otherwise live and our best estimate of the probabilities of survival are higher with A than with B and higher with C than with D. I think the difference is that one learns something by randomizing and giving half of the patients D and that this outweighs the expected deaths due to the randomization.

I think it is possible to believe people have a right to care, and also conduct randomized trials, if one says there must be a standard of care, and all people have right to that. That one may deviate if the weight of evidence suggests that an experimental therapy is better, but that such deviation is a matter of utilitarian total expected welfare maximization not individual rights which trump average interests.

But it is not easy or comfortable to believe this, so I think that doctors have decided to rely on statistics but reject the very concept of probability. The logical inconsistency might cause some discomfort. It would cause more if the concept of probability weren’t so utterly alien to normal human thought. But in any case the tension between believing in rights and believing those rights don’t always trump utilitarian calculations clearly causes more discomfort.

Friday, January 11, 2019

Incurious George

When incurious George made a total mess of everything, I hoped the man in the yellow hat would save the day. But I didn't photoshop it.

When you gotta go, you gotta go. If that's not an emergency, what is ?

Rep. Matt Gaetz (R-FL) said that he doesn’t want President Donald Trump to declare a national emergency to fund the wall because of the precedent it would set for the next Democratic President, according to a Thursday Wall Street Journal report.

“I don’t want the next national emergency to be that some Democrat President says we have to build transgender bathrooms in every elementary school in America,” Gaetz said.

I can't help assuming that (perhaps because of the fear of trans bathrooms) Gaetz was about to piss his pants as he answered the question. What is it with Republicans and pee (no don't answer that question -- I don't want to know).

Also, uh Donald, if you've lost Matt Gaetz, you've lost.

Wednesday, January 09, 2019

Charlie I like you a lot, but if you factcheck you better check the facts

The very wonderful Charlie Pierce faceplants here

In an interview with Anderson Cooper, she [@AOC]posed a top marginal tax rate of 70 percent, or 20 percent lower than that which existed under Eisenhower, but 20 points higher than it was after JFK's tax cut,

In fact, after JFK's tax cut the top marginal tax rate was 70% not 50%. Rep Ocasio-Cortez is proposing exactly the top marginal rate imposed during the period of most rapid GDP growth since FDR died.

On the other hand

the entire conservative movement decided to make her a national brand, and it did its job splendidly well, and then she did the rest. Did they actually think that a collection of aging gray-boys was going to out-heckle a former NYC bartender? Did they think they were going to beat someone of her age and obvious savvy on social media? (Didn't getting whipped like rented mules by the Parkland survivors teach them anything about that?) She literally danced in their faces, and then she danced in their faces again. And people loved it in ways the gray-boys will never understand.

is wonderful.