UnBallanced Post

Kudos to Michael Birnbaum who writes it as it was in the sometimes Ballanced Washington Post

"raising fears of further violence after police and their plainclothes allies killed at least 80 Morsi supporters Saturday."  

Yep wasn't a bunch of angry civilians who just happened to shoot their political opponents when conveniently close to and protected by uniformed police.  

Minesweeper

Minesweeper in the Washington Post.

“It’s like Minesweeper,” former Wyden staffer Jennifer Hoelzer told The Washington Post’s Ezra Klein in June, referring to the computer game in which players slowly probe unknown territory, looking for bombs. “You just have to ask questions to try to get the outlines of what they’re not telling you. Because they can’t tell you what they’re not telling you.”

          [skip]

Instead of targeting just the calls of terrorism suspects, the program records “metadata” for millions of calls between average Americans. This includes the numbers dialed and the duration of calls, but not the content of calls. Intelligence officials have defended this program, saying their ability to connect phone numbers has led them to disrupt dozens of terrorist plots in the United States and overseas.

Notice that "intelligence officials" didn't say that meta data from US to US phone calls has been useful in disrupting a terrorist plot.   Note that the officials didn't say how many plots were in the USA or whether they are counting the guy who planned to bring down the Brooklyn Bridge with a blowtorch.  

I think it is safe to assume that they would have stressed such highly relevant facts if the facts didn't prove the opposite of their claim.  Recall how intelligence officials described useful data obtained from the high value detainee interrogation program (the program which eventually involved "enhanced interrogation") and neglected to mention that the information was obtained *before* the interrogation was "enhanced."

Krugman Katz Horatio Alger William Julius Wilson moving to Opportunity Horatia Alger and Sprawl

Krugman has a fascinating post noting how there is more intergenerational class mobility in denser cities.  He asks if sprawl killed Horatio Alger

I say he should look up Katz et al on the Moving to Opportunity Experiment

There is honest to God experimental evidence related to Horatio Alger his sister Horatia Alger, sprawl and W.J Wilson -- the moving to opportunity experiment.  This starts with people in the projects who want section 8 housing vouture.  Then a lottery some lose and get back in line waiting for a voucher, some win a regular voucher and some win a special on which can be used only in low poverty areas .  The results are special vouchur causes differences from the controls larger than regular voucher.  The vouchers are good for girls an bad for boys.  The bad for boys part is quite strong with a  higher probability of being arrested.

http://www.huduser.org/periodicals/cityscpe/vol14num2/Cityscape_July2012_long_term_effects_youth.pdf

Google scholar Larry Katz.  Also Brad has a summary on his blog.

A disclaimer.  The study was conducted in the late 90s. The original question is would people with the special voutures find jobs.  In the late 90s everyone did including the lottery losers stuck in the projects. Assuming the results would be the same in the roaring 90s and the terrible teens is foolish.

But enough of a glaring blaring gender difference that I would check if the low mobility sprawl effect is stronger for females than males.  If not I strongly guess the issue is that evil uh sorry Republican politicians don't regulate building or help the poor at all so non-causal correlation.  If so it ooks like sprawl killed Horatia Alger at least.

OK now stuff past his ruthless character limit.  I would guess that the bad effect on boys is related to bitter resentment of relative poverty compared to classmates etc. I guess also opportunity (more property around equals more temptation for property crimes).  Also maybe more police mean more arrests for the same rate of crimes.

The linked study is *not* the one I had in mind when I started typing.  I was thinking of an earlier interim study.  Now with more time after the lottery, the effects are smaller.  The good for girls is statistically significant mostly for psychological health, the bad for boys mostly for crime and delinquency.  You can look up the interim study and more than you coul ever read googling [Katz moving to opportunity girls boys] or much much more without the girls and boys.

QOTD

Julio said in reply to Darryl FKA Ron...

From the We Need That Word dept:
deceipt(n.): a piece of paper given to you by a corporation, as proof that you've been had.

My Father's Photos

My Dad's Photos. Now on Flikr

For example

Show me the Model

Uh oh. Please click this link to read it here.

Antonio Fatas wrote

Show me the modelMost of the commentary one reads these days about the negative consequences of the policies set by central banks (low-interest rate and quantitative easing) are not backed by any economic model that I know.[skip]
But what is the economic model that can provide a theoretical justification to an environment where the central bank can significantly affect equilibrium asset prices and interest rates for a prolonged period of time and without causing inflation?  I have not seen it yet.
[skip]
When we teach the effects of monetary policy we tend to use economic models that have a Keynesian flavor to it, with some form of price rigidity and where changes in the nominal interest rate by central banks have a short-run impact on real interest rates (as inflation moves slowly). But this only works in the short run, while prices are rigid."

Emphasis mine.   OK I shall do so below (it will be a sketch of a model).

I claim that I can think up an economic model with rational agents which has any behavior I choose.  Thus I consider "Show me the model" a challenge which I can't honorably ignore.

I also like to argue that the insights which macroeconomists think they have obtained from models always and invariably are implied by the simplifying assumptions which no one claims are realistic.  

First, before going on, I note that my objection to current Fed policy is that I think that they should promise to keep the target federal funds rate essentially zero until inflation is over 4% and not until either inflation is over 2.5% or unemployment is under 6.5%.  Also I object to QE 3 because I think they should buy only agency issued mortgage bonds issued the day before the purchase and that they should buy 100% of them.  That is I want Fed policy to have the effect which I claim it can have.

Second note Fatas's equivocation.  He mentions "quantitative easing," he asks for a model in which "the central bank can," but when he discusses existing models he discusses only "changes in the nominal interest rate".  Quantitative easing has vanished, because it is not considered in standard models. The absense of quantitative easing in standard models is a reason to not rely on standard models, not a reason to dismiss arguments about the effect of quantitative easing.

Third note that Fatas implicitly asserts that there is only one nominal interest rate when he writes "the nominal interest rate." In fact there are thousands of nominal interest rates on debt with different maturities and defult risks.

Clearly the Fed can affect risk premia permanently by changing the amount of risky asset which private investors hold.  It is also easy to obtain such an effect in standard asset pricing models.  This means that central banks can subsidize sectors.  It is clear that the Fed is attempting to do exactly this by buying RMBS (residental mortgage backed securities).  It is clear that, even without nominal rigidity of any kind, the Fed could affect the economy if it could purchase RMBS issued by profit seeking firms for prices much higher than the market price.  This would be a subsidy to mortgage lending.  In a flexible price real business cycle type model, it would cause higher investment in housing and lower investment in plant and equipment.

This would have effects which would be modest unless the Fed's purchases were huge -- say $ 85 billion a month.  Actually the effects need not be modest even for less huge purchases.  If you add Marshallian (Romer 86) type spillovers caused by equipment investment but not by housing investment, then the Fed policy could cause a permanently lower GDP growth rate in a model with perfect foresight and flexible prices.  In general, I would strongly oppose such a policy.  I strongly support it now, because the economy is in a liquidity trap so housing investment doesn't crowd out other investment.  But the claim that central banks can't influence the real economy permenently is clearly based on absolutely false assumptions about what central banks are doing.

OK finally the last bolded "if".  In the USA the Fed can't buy RMBSs issued by a profit seeking firm. They can only buy Federal agency issued RMBS.  The weak link in the chain linking Fed policy and the real economy is the FHFA which is legally obliged to minimize the cost (soon to maximize the profit) to the Treasury of the Fannie Mae/Freddie Mac, but whose actions are more easily understood if the aim were to minimize GDP.  But models are magic and I can assume that the scales will fall from Ed DeMarco's eyes in my model.

OK so the model would be a totally non standard model in which there is a housing sector and in which the nominal mortgage interest rate is higher than an equal maturity nominal default risk free rate.  Then this risk premium has effects and Fed purchases of RMBS have portfolio balance effects.  It is totally conventional for macroeconomists to assume that there is no housing sector.  I think this is just one of many many reasons why standard macroeconomic models are not useful.

Adam Smith on Deportation

"To remove a man who has committed no misdemeanour from the parish where he chuses to reside, is an evident violation of natural liberty and justice. " - Adam Smith

He wrote about restrictions on migration within England, but I think it is clear how he would vote on comprehensive immigration reform.

A quote from Samuelson and Solow 1960

Click this link or else bears will be angry.

I think this quote makes it clear that the rational expectations revolution was based on fraudulent intellectual history.  I don't think it shows that the fresh water and new Keynesian schools of macroeconomics have made no useful advances during my lifetime (that is since 1960).  I'm sure they have made useful advances, although their claim to have improved on the thought of Samuelson and Solow is based entirely on critiquing the legend of one figure quoted out of context.   It is the legend to their figure 2 which shows a stylized Phillips curve.  The following paragraph basically explains what a graph is.

I quote the immediately following three paragraphs as published in May 1960 before I was born.
(update: emphasis mine)

Aside from the usual warning that these are simply our best guesses we must give another caution.  All of our discussion has been phrased in short-run terms, dealing with what might happen in hte next few years.  It would be wrong, though, to think that our Figure 2 menu that related obtainable price an unemployment behavior will maintain its same shape in the longer run.  What we do in a policy way during the next few years might cause it to shift in  a definite way. 

Thus, it is conceivable that after they ha produced a low-pressure economy, the believers in demand-pull might be disappointed in the short run; i.e., prices might continue to rise although unemployment was considerable.  Nevertheless, it might be that the low-pressure demand would so act upon wage and other expectations as to shift the curve downward in the longer run -- so that over a decade, the economy ight enjoy higher employment with price stability than our present day estimate would indicate. 

But also the opposite is conceivable.  A low-pressure economy might build within itself over the years larger and nd larger amounts of structural unemployment (the reverseof what happene from 1941 to 1953 as a result of strong war and postwar demands).  The result would be an upward shift of our menu of choice, with more and more unemployment being needed just to keep prices stable.

 "Analytical Aspects of Anti-Inflation Policy" Paul H. Samuelson; Robert M. Solow American Economic Reivew Vol. 50, No. 2, Papers and Procedings of the Seventy-second Annual Meeting of the American Economic Association (May, 1960), 177-194.

I don't think that Milton Friedman had anything useful to add.

In 1960 Samuelson and Solow  did not at all write what Friedman insinuated that they wrote.  In fact, in 1960 they said the Phillips curve showed a short term but *not* a long term tradeoff. They explained that it would shift for two reasons. First, they predicted that it would shift up and down with expected inflation.  In other words, Friedman is guilty not only of distorting the claims of Samuelson and Solow but of presenting their clearly stated prediction as his own.  Not to put to fine a point on it, he plagiarized them when pretending to critique them.  But wait, there's more.

 In the next paragraph they went on to note that the Phillips curve will shift out as cyclical unemployment becomes structural.  Samuelson's nephew (and OJ Blanchard) presented this insight as original 25 years later and called it "hysteresis".  In standard watererd down for the public histories of macro thought it is fairly common  to present the progression Samuelson and Solow claimed the Phillips curve was a stable long term tradeoff.  Friedman and Phelps achieved a scientific revolution by noting that the Phillips curve depended on expected inflation. Further research suggests it is even more complicated that Friedman knew as the NAIRU can shift due to hysteresis (this is still so brand new that it hasn't been incorporated into standard macro models after an alleged 28 but actual 52 years).  In fact, it is all there in Samuelson and Solow 1960.

update: typo corrected and a word bolded

Accountability betting

Pundit Steve Benen notes that punditry is an accountability free field.  

Republican officials and the Beltway media gambled on the IRS "scandal," betting heavily on its viability and seriousness, convinced that the odds were in their favor
[skip]
Ideally, this would a time for at least some accountability. There were countless Republicans and mainstream pundits -- left, right, and center, from Limbaugh to Jon Stewart -- who were absolutely convinced that this story was legitimate and President Obama bore responsibility for the wrongdoing we now know didn't exist.

In comments "JMK of CT
You really think you are going to hear any of those people say "Oooops"? Dont hold your breath."

OK so I open betting.  I am willing to offer 1 to 2 odds that Jon Stewart will admit that he was wrong. If he does you owe me one "I told you so" if not I owe you two "I told you sos".  Given the huge number of bets which I expect in comments, I will set up a tote board and update the odds.

Get the Lead Out III

Criminology is a predictive science.  In 2007, I predicted that UK violent crime would peak in around 2008 13 years after the US peak because the UK began the phaseout of leaded gasoline 13 years after the USA.  The data are in.  The UK crime peak came in 2006/7.  So says The Royal Statistical Society

1. Crime: 58% do not believe that crime is falling, when the Crime Survey for England and Wales shows that incidents of crime were 19% lower in 2012 than in 2006/07 and 53% lower than in 1995. 51% think violent crime is rising, when it has fallen from almost 2.5 million incidents in 2006/07 to under 2 million in 2012.

Shocked Shocked

Noted without with brief comment

“Partners do not spy on each other,” said EU Justice Commissioner Viviane Reding. “We cannot negotiate over a big trans-Atlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators. The American authorities should eliminate any such doubt swiftly.”

Oh really

Searching for the second link, I find that google can't help noticing that Europeans are Shocked Shocked that   spying is going on in here.

Oh What Brave New Virtual World

Ah globalization oh the internet.  What could be more wonderful that viewing from the comfort of my home in Rome an animation made in Taipei illustrating events in Austin ?  Finding the video embeded at the national memo where estemed Washington Post columnist E.J. Dionne shares the masthead with @lolgop who is, as far as I know, identified only by the handle and the avatar of an elephant felating itself (clearly representing the overwhelming self absorption of the amazingly massive internet).

update: OK so right under the elephant felating itself his twitter profile says "IRL:@JasonSattler Ann Arbor, Michigan" so sue me.



Almost as wonderful is how I read extensive excerpts of Jon Chait's post on how Gleen Greenwald is Ralph Nader (except for the part about running for president and getting Bush elected which makes me think "Well except for that how did you like the play?").

Chait's exhibit B is that Greenwald wrote "“there is a reasonable debate to be had among reform advocates over whether this bill is a net benefit or a net harm.” he such language Glenn.  My translation is "Let's not dismiss Jane Hamsher as a nutcase but pretend she has a case so we can work with her against say Al Wynn and Joe Lieberman".  To Chait an unwillingness to exclude Hamsher from all reasonable debate is proof of arrogant extremism.

I decided to skip that Chait post (I generally check if there is a new Chait post at least 3 times before he finally posts one).  But I ran into an extensive excerpt followed by the ironic comment "Needless to say, I find the description of this behavior odd as I have never witnessed such a thing in all of my born days.

Must be an urban myth or something…" at firedoglake where Tbogg pretty much endorsed the view that anyone who doesn't dismiss the nonsense one reads at firedoglake out of hand must be a Nader clone.

The US left and right are not symmetric. Imagine reading something like that at The Corner.  In fact the left and the center are not symmetric.  Imagine hearing something like that on CNN.

Washington Monthly Vs Washington Monthly

Bare Knuckle Brawl in Ten Miles Square

I read Ed Kilgore every day and think very highly of him.  However there are two topics on which we disagree -- welfare reform and the DLC.  The DLC doesn't exist anymore so I won't bore any potential readers discussing it.  But I was struck by what I saw when I surfed to Kilgore's blog and commented.

Grinding a new ax. This is off topic and I would understand if you delete it. I tend to agree with you but very very strongly contest your post criticizing Jason deParle and Ezra Klein for criticizing welfare reform.

http://www.washingtonmonthly.com/political-animal-a/2012_04/ryan_budget_not_the_new_welfar036597.php

In which you link to the clearly titled post by  Elaine Kamark on Ten Miles Square

No Time to Go Wobbly on Welfare Reform

By Elaine Kamarck

http://www.washingtonmonthly.com/ten-miles-square/2011/09/no_time_to_go_wobbly_on_welfar032288.php

 I think it is past time for you and Kamark to admit that you were wrong and that they were right.

Just now I surfed to Kilgore's blog and found a clickable link to 
"Why is Child Poverty Worsening in the U.S.?"By Katelyn Fossett
at 10 miles square.

I quote the latest word on the topic from The Washington Monthly

According to figures recently released by the Annie E. Casey Foundation, nearly a quarter of U.S. children live below the poverty line, compared with15 percent of Americans generally - and that number keeps growing."
[skip]
But perhaps the most unsettling part of the new numbers is the fact that increasing child poverty is a trend that seems immune to the factors that should be reining it in.
[skip]
Whatever the causes of this disturbing trend, public policy needs to keep up. Recent reports, for instance, point to a thirteen year-long decline in the purchasing power of Temporary Assistance for Needy Families, and budget cuts to social programs can only worsen the increase. Now is not the time to do away with the support that could raise up the poorest group of Americans - children.

The concluding paragraph. But now is not the time to sharpen old axes by discussing the latest data and certainly not the time to question the decision to replace AFDC with a block grant. 

Also, by the way, it has been scientifically proven that welfare reform kills.

A randomized controlled trial with a p-value less than 0.1%  should settle the question (note also it considered Lawton Chiles's welfare reform not Newt Gingrich's).  Oddly you didn't mention the study.

And again. The EITC increase passed in 1993 was not part of the welfare reform bill passed in 1996.  

It's a big Fracking Deal

I learn via Alan Krueger* that the US Federal Government played a major role in the development of Fracking.  See my first google hit.

Al Gore didn't invent fracking, but a lot of the financing came from Jimmy Carter's DOE.  It is odd how frequently evidence of the wonders of US capitalism ends up being evidence that Carter was a brilliant President (see also interstate trucking deregulation, airline deregulation and beer deregulation -- someone sometime discussed the wonders of disruptive entrepreneurial companies including Southwest Airlines and micro breweries -- both made possible by Jimmy Carter).

See also computers, internet (the) and mortgage bonds (can't win them all).

QOTD

I wish I'd written that

the latter “momentum” idea is classic Beltway-talk based on the idea that House Republicans won’t be able to resist a good bipartisan bandwagon, which sort of ignores the fact that large numbers of them view their very purpose in life to be to the ambushing and destruction of such vehicles.

Ed Kilgore 

Josh Barro's Claims of Fact are Mostly Accurate

Josh Barro's claims of fact are mostly right, but this claim is BS.

Josh Barro wrote

"Liberals don't actually oppose all fiscal austerity. They cheered for the expiration of the Bush tax cuts on the wealthy and mostly shrugged at the end of the payroll tax holiday."


As Jon Chait notes "mostly shrugged" amounts to uh nothing.  Not denouncing one of the moves towards austerity enough to satisfy Barro is not the same as supporting austerity when a Democrat is in the White House and spending like drunken sailors when a Republican is.

I will now google to see what "mostly shrugged" means

Ezra Klein recently sure doesn't claim he shrugged (in a context such that he would be tempted) http://wapo.st/1ayBRDa
"I’m not willing to throw out the idea that raising payroll taxes hurts the economy. But I have to admit that the payroll tax increase hasn’t hurt as much as I expected."

Dylan Matthews "Mark Zandi has argued that payroll tax cuts generate $1.24 of economic activity for every $1 they cost."

This is not a shrug http://krugman.blogs.nytimes.com/2011/08/05/anti-stimulus-politics/

nor this https://bitly.com/shorten/
"Politically the best way to get more stimulus is probably extending the payroll tax holiday for workers and "

Brad Plumer didn't shrug http://wapo.st/10Pj0Df

uncontestably ideological DailyKos and David Dayen agree http://bit.ly/13BIy5b


My mom and dad's representative didn't shrug (he's in the leadership) http://wapo.st/SSo6a3

when it come to BS "mostly" is mostly a strong enough weasel word to get away with anything, but Barro's claim does not stand up to googling.

Barro fell for Ballance http://bit.ly/18OV8nl


(which is remarkable enough as he was a conservative recently).

Rob Ford thinks his scandal might be good for Toronto

Rob Ford thinks his scandal might be good for Toronto

Huh ! OK just ask youself, if you see two headlines "Worthwhile Canadian Initiative" and "Mayor Filmed Smoking Crack" which story are you going to read ?

To you unfortunate people living hin huge, beautiful, liveable cities* which no one can find on the map, keep up hope.  There's a Ford in your future.

* I live in Rome which is huge a beautiful.  Everyone can find us, because all roads lead to Rome. This only partially explains the traffic.  

OK I have to tell the boring story.  I'm late (as usual) I approach a traffic circle with the big red and white transoms put up so that people who ignore the circularity notice their mistake but aren't killed (they are ugly and clash with the nearby wall constructed before the birth of Christ but I love them) .  The access lane to the circle is completely blocked by a bus with the engine running and the driver walking around on the sidewalk talking on a cell phone.  I flash my lights and wonder what to do.  I could, in theory, cross the double solid white line and drive on the wrong side of some transoms on the exit from the circle then turn right.  But that would be illegal and, much worse, driving the wrong way towards a blind curve and maybe into an oncoming car.

A police car drives up.  I am relieved as I assume there is a bent fender and I can ask one of the police officers to stop traffic so I can get to the traffic circle. Barely pausing the policeperson  driver goes across the double white line and drives the wrong way around the transom.  Oh.  Someone behind me honks.  I now fear that the police will ticket me if I do what one of them just did. But I do it anyway.  

I drive a Ford Ka.  I'm pretty sure there is a Ford in my future, driving the other way, head on.

But our neo Fascist mayor was never filmed smoking crack. So there.

On Thoma on Dorman on AS-AD on the Web

Mark Thoma makes me think.

The question is why is the AS-AD model rarely seen on econoblogs.

I comment.

It seems to me you get an AS curve pretty quickly by assuming that, in the short run, some firms adjust prices and others don't.  I mean you don't have to get into Calvo pricing to get to "facing increased demand for a given price a firm might produce and sell more or raise prices so let's assume a bit of both (really some firms don't change prices at all most days but uh aggregate wave hands jump to aggregate demand)".
You have to say something about imperfect competition and second order costs of other than optimal pricing, but really, perfect competition is a strange idea which people don't grasp at first.  I think the hard part is the counter-intuition explaining why with perfect competition and flexible prices the AS curve is vertical.
AD has to be given as a function of the money supply.  I mean that's the way things are.  Yes real world central banks target an interest rate.
I think there is little AS-AD on the web not because bloggers appeal to DSGE, but because most have gone all the way back to an IS curve (real interest and output) assuming AS doesn't matter and with the LM curve replaced with something like a Taylor rule.  AS if anything, is an adaptive expectations augmented Phillips curve which matters only because of real interest rates, the monetary authority's response to inflation and debt deflation/inflation.
I don't know of anyone whose policy advice or discussion of current events shows any hint of any intellectual influence of DSGE models.  I see basically Friedmanites who say monetary policy is key (I don't understand their arguments) Keynesians who seem to be thinking of an IS curve and a few new classicals who, frankly, seem to have gone quiet lately (by which I really mean neither you, nor DeLong nor Krugman link to them).
I read DSGE in discussion of new Keynesian DSGE models but I can't remember having any sense of anything coming from them beyond aggregate demand matters, expected inflation matters, and there is something like an expectations augmented Phillips curve (except for hysteresis which we will ignore).  This is, I think Keynesian economics as of 1960.

OK OK so I ended up dumping on DSGE as usual, but I did think for a minute there.

On Douthat on Reform Conservatism

Many people (too many) have commented on Ross Douthat's reform conservatism op-ed.

I have nothing new to say.

There are  two obvious points. As noted by Douthat, the proposal has nothing to do with really existing US Conservatism "Is it an agenda that the party is likely to actually embrace anytime soon? That’s much more doubtful".  This is reform conservatism not reform liberalism and is based on the assumption that Douthat et al have something to teach liberals too.

I admire Douthat's dedication and patience, but I don't think he has useful policy proposals which are new to say Obama.  He has a diagnosis which is roughly that inequality is a problem (not per se but in se or something) and existing social welfare programs are not perfect. I am going to skip to the proposals and fisk.

a. A tax reform that caps deductions and lowers rates,
There is no hint of a justification for the proposal to lower rates in the diagnosis which I didn't cut and paste or later in the op-ed.  The justification is, I guess, that reform conservatism must be conservative and to be a conservative one must propose lower tax rates.  Clearly Douthat was just clearing his throat -- my guess is that he didn't seriously consider the possiblity of not typing "lowers rates" in a sentence which included "tax".but also reduces the burden on working parents and the lower middle class, whether through an expanded child tax credit or some other means of reducing payroll tax liability. (Other measures that might improve the prospects of low-skilled men, ranging from a larger earned income tax credit to criminal justice reforms that reduce the incarceration rate, should also be part of the conversation.)
Been there done that.  This was part of the ARRA (which Douthat denounces below) extended for two years with the payroll tax partial holliday whose further extension was blocked by Republicans.  The tax proposal is to agree that the Democrats are right (and stop talking about the 47%).  then a bit of soft on crime as the icing on the cake.  I agree, but this is moderate leftism not reform conservatism.b. A repeal or revision of Obamacare that aims to ease us toward a system of near-universal catastrophic health insurance, and includes some kind of flat tax credit or voucher explicitly designed for that purpose.
Ah catastrophic health insurance related program activities.  "ease us towards" was too radical, so he added the additional weasel word "aims".  Also been there done that. It is the tax on cadillac health plans.  It clearly was the maximum which was politically possible.  the proposal in general would be rejected by both parties and the vast majority of the public.  c. A Medicare reform along the lines of the Wyden-Ryan premium support proposal, and a Social Security reform focused on means testing and extending work lives rather than a renewed push for private accounts.
Here Douthat assumes that Medicare advantage on steroids will reduce costs even though Medicare advantage increased costs.  This is a triumph of faith over evidence.  It is just not reality based.  Means testing social security will create perverse incentives (it punishes saving) and save little money.  Extending work lives is the most regressive approach to social security reform and makes no sense (we work to live we don't live to work).  

d. An immigration reform that tilts much more toward Canadian-style recruitment of high-skilled workers, and that doesn’t necessarily seek to accelerate the pace of low-skilled immigration. (Any amnesty should follow the implementation of E-Verify rather than the other way around, guest worker programs should not be expanded, etc.)
Douthat agrees with Obama on immigration reform.  Notably he sides with the AFL-CIO against the Chamber of Commerce.  I agree that keeping unskilled workers out is right wing, but I'm the only one.  This is just agreeing with Obama but trying to be rude about it.e. A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today.
I don't think this will work.  I have written much too much about it.  Note that Douthat advocated further fiscal stimulus as point a. f. An attack not only on explicit subsidies for powerful incumbents (farm subsidies, etc.) but also other protections and implicit guarantees, in arenas ranging from copyright law to the problem of “Too Big To Fail.”
The path to reform is for Conservatives to occupy Wall Street.  Here he is well to the left of Obama and out there with Sherrod Brown (and the diaper guy).

The reform conservatism is moderate progressivism (basically the Obama agenda) plus the Ryan Medicare proposal (try what's failed) and standard conservative tics (lower rates, Any amnesty should follow, no further fiscal stimulus).

I am going to skip back to the diagnosis part.  I think that Douthat's proposals suggest only one objection to 

1) The core economic challenge facing the American experiment is not income inequality per se, but rather stratification and stagnation [skip]
2) The existing welfare-state institutions we’ve inherited from the New Deal and the Great Society, however, often make these tasks harder rather than easier: Their exploding costs crowd out every other form of spending, require middle class tax increases and threaten to drag on economic growth; their tangled web of subsidies and credits and tax breaks often benefit the already-affluent and create perverse incentives for the poor, and the distortions created by the way they pay for health care, in particular, contribute mightily to the rising cost of health insurance and thus the stagnation of middle class incomes.

Note the proposal suggests nothing (more exactly nothing not done already by Democrats and reversed by Republicans) about the alleged "perverse incentives for the poor." I haven't clicked the link, but I note that Douthat's only proposal to this is something along the lines of a making work pay tax credit -- that is from Obama's 2008 proposal (temporarily) enacted in 2009.He wants to reduce tax breaks for the affluent. This was in Obama's 2008 proposal and he is still fighting for it.  Much of this is endorsement of Obama 2008 program disguised by "welfare state" New Deal" and "Great Society."

 Douthat provides no link or argument about how public spending on health care drives up private health insurance premiums.  I think he doesn't because he can't.   I guess he could be referring to the fact that health insurance isn't taxed.  This is not social welfare or inherited from the New Deal or the Great Society.  Replacing the exemption with a tax credit is an egalitarian move.  Obamacare is the first step in that direction.  

But my point (if any) in quoting the diagnosis is to note that none of the proposals have anything to do with anti poverty programs.  The only link between the diagnosis and the proposals is that both have something to do with health care spending. 

Noah Smith and me

I bring a comment thread debate over here.


Me:
I claim DSGE models generally need one arbitrary constant per phenominon to explain...The number of exogenous unexplained random variables keeps growing...DSGE seems not to have pulled away with this paper.

Smith:
I'd say instead that it's not clear that DSGE has pulled away. A new parameter has been added to explain a previously ignored phenomenon. But that doesn't mean that the model will then fail to "pull away" by explaining more phenomena in the future without the addition of yet more parameters.

me:
hmm I can't resist arguing about grammar.  "DSGE seems not to *have* pulled away" is in some past tense.  I didn't make a claim about what "will then" happen in the future. Well uh tenses uh grammar.  I stand by my claim.

Me: Fitting is not forecasting. It is easy to be wise after the fact.

Smith: Yes, sure. BUT, keep in mind that pseudo-out-of-sample forecasting, while not the same thing as true out-of-sample forecasting, is also not the thing as fitting.

Me:
I think that pseudo out of sample forecasting can be substantially the same as fitting.

The ways this can happen are
A)one tries something find it doesn't fit pseudo out of sample then one tries something else. This is fitting.  the Computer isn't doing all of the work but the process is trying different things till one gets a good fit.

B) Pseudo explaining an ad hoc reduced from model which fits the data.  First fit.  Then figure out a model which implies the coefficients of the reduced form model. In this case, step 1 is look for dramatic extraordinary behavior of time series in 2008 (many are well know and were discussed a lot in 2008-9 especially including huge quality premia).
Step 2 toss one in a VAR along with the DSGE state from some sort of filter. This is fitting not forecasting
Step 3 motivate the variable as an indicator of an otherwise hard to observe rare shock and again filter so that the deep disturbance in the problematic period is basically that newly introduced shock.

I think we have a case B and that step 2 is here

http://libertystreeteconomics.newyorkfed.org/2012/04/forecasting-the-great-recession-dsge-vs-blue-chip.html

my thought from 4/16/12

"'The other difference between this model and SWπ is the use of observations on the Baa-ten-year Treasury rate spread, which captures distress in financial markets.'

is a red flag. How is this incorporated ??? I think it is an ad hoc add on based on regressing outcomes on DSGE forecasts and the spread."


8:45 PM