Grasping Reality with Both Hands

links for 2009-07-10

2009-07-10T01:02:29-07:00

"The Short and Simple Annals of the Poor..."

2009-07-09T18:43:32-07:00

Thomas Gray, 1750:

Elegy Written in a Country Church-Yard":
Oft did the harvest to their sickle yield,
Their furrow oft the stubborn glebe has broke;
How jocund did they drive their team afield!
How bow'd the woods beneath their sturdy stroke!

Let not Ambition mock their useful toil,
Their homely joys, and destiny obscure;
Nor Grandeur hear with a disdainful smile
The short and simple annals of the Poor...

The first four or so times I read:

Robert C. Allen: The year 1762 witnessed two momentous changes in cropping [in Spelsbury in Oxfordshire]. First, turnip cultivation was shifted from the sainfoin [grass] enclosure to the open fields themselves.... Secondly, clover was introduced...

the word "momentous" did not strike me as at all out of place or inappropriate or funny...

Should I be alarmed? Or distressed? Or just accept that the particular road I have walked has made me a somewhat strange person?

St. Giles Church, Stoke Poges, Buckinghamshire, next door (well, only by California standards: an hour ro so by the M40 via Oxford and High Wycomb) to Spelsbury.

(Site of Gray's "Elegy," and also IIRC of the game of Centrifugal Bumble-Puppy in Brave New World, of scenes in the fims Bridget Jones's Diary and Goldfinger, and something to do with Bertie Wooster...)

A Good Seasonally-Adjusted New Unemployment Claims Number | Reuters

2009-07-09T11:07:26-07:00

But how good exactly? Reuters:

Jobless claims drop steeply, skewed by autos | Reuters: WASHINGTON (Reuters) - The number of U.S. workers filing new claims for jobless benefits fell sharply last week but the data was distorted by an unusual pattern of layoffs in the automotive industry, which amplified the decline. The Labor Department said on Thursday that initial claims for state unemployment insurance fell 52,000, the largest drop since December, to a much lower-than-expected seasonally adjusted 565,000 in the week ended July 4, from 617,000 the prior week. It was the lowest reading since January. Analysts polled by Reuters had forecast claims to drop to 605,000 from a previously reported 614,000. However, in a sign of ongoing employment weakness, so-called continued claims of people still on jobless aid after an initial week of benefits rose by 159,000 to a record 6.883 million in the week ending June 27, the latest for which data is available.

A Labor Department official said that there had been far fewer automotive and other manufacturing layoffs last week than anticipated on the basis of past experience of claims over July, when many plants are commonly idled. The "seasonal factors" the department uses to adjust the data to provide a better sense of the underlying trend had expected a large increase in claims in the latest week. Actual claims in fact rose by a much smaller amount, which when seasonally adjusted, generated a large fall. A number of states said that auto sector layoffs apparently had already happened, reflecting closures in the battered U.S. automotive industry, while other states said they did not get the layoffs they had anticipated. "I would expect the underlying trend (in claims) is probably diminishing but it's hard to tell from this number how much is noise," said Keith Hembre, chief economist at First American Funds in Minneapolis.

The 4-week moving average for new claims declined by 10,000 to 606,000, the lowest reading since February. This measure is closely watched because it irons out weekly volatility, and it has now declined in four out of the last five weeks.

Looking at graphs like this:

reminds me of how very much in the high-frequency data we typically examine rests on the seasonal adjustment process--and how important it is to get that seasonal adjustment right. Of course, to the extent that the true seasonal adjustment factors are not absolutely invariant to the phase of the business cycle it very quickly becomes impossible to estimate them accurately.

What the standard seasonal adjustment factors for initial unemployment claims tell us is: "don't worry if new claims spike in January or July. But does that mean we should be greatly encouraged if they don't spike in January or July? In January 2008, July 2008, and January 2009 the seasonally-adjusted claims number improved because unadjusted claims did not spike enough. But anyone who took those declines as evidence of an improving economy--well, I have a bridge they might be interested in purchasing...

The Pivot of Global History: The Handoff from the First to the Second Industrial Revolution

2009-07-09T08:40:48-07:00

Bob Allen of Oxford writes the smartest thing I have read in at least a year. The conclusion of Robert Allen (2009), The British Industrial Revolution in Global Perspective (Cambridge: Cambridge University Press: 9780521687850), p. 272 ff.:

I have argued that the famous inventions of the British Industrial Revolution were responses to Britain's unique economic environment and would not have been developed anywhere else.... Buy why did those inventions matter?.... Weren't there alternative paths to the twentieth century? These questions are closely related to another... asked by Mokyr: why didn't the Industrial Revolution peter out after 1815?... [O]ne-shot rise[s] in productivity [before] did not translate into sustained economic growth. The nineteenth century was different--the First Industrial Revolution turned into Modern Economic Growth. Why? Mokyr's answer... that scientific knowledge increased enough to allow continuous invention [is incomplete]....

Britain's pre-1815 inventions were particularly transformative.... Cotton was the wonder industry.... [T]he great achievement of the British Industrial Revolution was... the creation of the first large engineering industry that could mass-produce productivity-raising machinery. Machinery production was the basis of three developments that were the immeiate explanations of the continuation of economic growth until the First World War... (1) the general mechanization of industry; (2) the railroad; and (3) steam-powered iron ships. The first raised productivity... the second and third created the global economy and the international division of labor... (O'Rourke and Williamson, 1999). Steam... accounted for close to half of the growth in labor productivity in Britain in the second half of the nineteenth century (Crafts 2004). The nineteenth-century engineering industry was a spin-off from the coal industry. All three of the developments... depended on two things: the steam engine and cheap iron....

Cotton played a supporting role in the growth of the engineering industry.... The first is that it grew to immense size.... Mechanization in other activities did not have the same potential... global industry with.. price-responsive demand... cotton... sustained the engineering industry by providing it with a large and growing market for equipment....

There was a great paradox... the macro-inventions of the eighteenth century... increased the demand for capital and energy relative to labour. Since capital and energy were relatively cheap in Britain, it was worth developing the macro-inventions there and worth using them in their early, primitave forms. These forms were not cost-effective elsewhere.... However, British engineers improved this technology.... This local learning often saved the input that was used excessively in the early years of the invention's life and which restricted its use to Britain. As the coal consumption of rotary steam power declined from 35 pounds per horsepower-hour to 5 pounds, it paid to apply steam power to more and more uses.... Old fashioned, thermally inefficient steam engines were not "appropriate" technology for countries where coal was expensive. These countries did not have to invent an "appropriate" technology for their conditions, however. The irony is that the British did it for them....

[T]he British inventions of the eighteenth century--cheap iron and the steam engine, in particular--were so transformative... the technologies invented in France--in paper production, glass, and knitting--were not, The French innovations did not lead to general mechanization or globalization.... The British were not more rational or prescient than the French... simply luckier in their geology. the knock-on effect was large, however: there is no reason to believe that French technology would have led to the engineering industry, the general mechanization of industrial processes, the railway, the steamship, or the global economy.... [T]here was only one route to the twentieth century--and it traversed northern Britain.

What Bob Allen said.

N.F.R. Crafts (2004), "Steam as a General Purpose Technology: A Growth Accounting Perspective," Economic Journal 114:495, pp. 338-51.

Kevin O'Rourke and Jeffrey Williamson (1999), Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (Cambridge: MIT Press).

Ben Bernanke's Tenure

2009-07-09T08:10:35-07:00

Jon Hilsenrath, Sudeep Reddy, and David Wessel write:

White House Ponders Bernanke's Future: As the White House begins to ponder whether to reappoint or replace Ben Bernanke when his term expires in January, the Federal Reserve chairman's standing on Wall Street is on the rise while attacks on him from Congress mount. Treasury Secretary Timothy Geithner is expected to play a key role in advising President Barack Obama on whether to reappoint Mr. Bernanke. Mr. Geithner has worked closely both with Mr. Bernanke and with the leading alternative for the powerful post -- Lawrence Summers, the former Treasury secretary, who is currently the president's top economic adviser.

Before making a decision later this year, the White House also is expected to look at other economists, including Roger Ferguson and Alan Blinder, former Fed vice chairmen; Janet Yellen, president of the San Francisco Federal Reserve Bank; and Christina Romer, chairman of Mr. Obama's Council of Economic Advisers.

Mr. Bernanke's reputation on Wall Street has ebbed and flowed. But a Wall Street Journal survey conducted this week of 46 private-sector economists found that 43 endorsed his reappointment. "Bernanke's leadership during this financial crisis was outstanding, but not flawless," said Scott Anderson of Wells Fargo & Co., one of those surveyed. "But given human limitations and the limitations of economic and financial knowledge he deserves another tour of duty." Some saw benefits to continuity. "Don't change horses in midstream," said David Wyss of Standard & Poor's. Others cited the alternatives: "Stated differently: Don't appoint Summers," said Nicholas Perna of Perna Associates.

The White House isn't rushing to decide on reappointing Mr. Bernanke, who hasn't sent any signal that he wants to leave the post. The Intrade online wagering Web site puts 60% odds on reappointment. But a bad turn in the economy could prompt Mr. Obama to seek a new helmsman of his own choosing, or new embarrassing revelations about Mr. Bernanke's handling of the financial crisis could alter the picture before the president makes a decision. For now, the White House is concentrating on finding new members for the Fed board. Two of the seven seats are vacant. Two sitting governors -- Kevin Warsh, 39 years old, and Donald Kohn, 66 -- are widely believed to be eyeing the exits. The White House is seeking at least one candidate with financial-market experience, a tough task at a time when likely choices are tainted by Wall Street ties....

Mr. Bernanke has come under tough questioning on Capitol Hill, and new powers that the Obama administration proposes to give the Fed have intensified congressional scrutiny of the central bank. "If these new powers are going to be granted to the Fed, then maybe a professor of economics will never again be the best choice for the Fed chairman," said Darrell Issa (R., Calif.). Rep. Brad Sherman (D., Calif.) accuses the Fed of "a Wall Street mentality." Regarding Mr. Bernanke, he said, "Of those who are infected... better than average," but he said he would prefer a Fed chairman with "populist Democratic values."

Still, Mr. Bernanke has influential admirers -- including Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, and Rep. Carolyn Maloney (D., N.Y.), chairman of the Joint Economic Committee. Ms. Maloney, who backs Mr. Bernanke's reappointment, said, "He's basically an academic working in a nonpartisan way to save the economy." Mr. Bernanke would need to be confirmed by the Senate if reappointed for a second four-year term. Both the chairman of the Senate Banking Committee, Christopher Dodd (D., Conn.), and the panel's senior Republican, Richard Shelby of Alabama, have been critical of the Bernanke Fed...

A year ago I would have said that Ben Bernanke was almost certain to be a one-term Fed chair. The financial crisis was bad enough and enough decisions had to be made quickly enough that it was certain that he would make some big mistakes, and in the aftermath too many people would remember and he would be too damaged to be the right choice moving forward.

But given the quality of the opposition to a Bernanke reappointment that Hilsenrath and company have been able to dig up, it seems that I was wrong. The complaints about Bernanke seem... incoherent. And the consensus judgment appears to be the correct "outstanding but not flawless."

And, yes, Larry (or Janet, or Roger, or Allen, or Christy) would in all likelihood be very, very good at the job as well.

David Frum Writes About the Republican Succession

2009-07-09T07:50:04-07:00

Frum:

The Republicans' dwindling options - THE WEEK: The GOP is a party of orderly succession. Ronald Reagan finishes second in 1976, wins in 1980. George H.W. Bush finishes second in 1980, wins in 1988. Bob Dole finishes second in 1988, wins in 1996. John McCain finishes second in 2000, wins in 2008. This succession will be complicated in 2012 by the unusual fact that two men can plausibly claim to have finished second in 2008: Mitt Romney... Mike Huckabee.... So how to choose? Republicans have to worry that Huckabee -- like Palin -- cannot win a national election, even under the most favorable circumstances. Romney? That’s a more open question. There are two Romneys: the pragmatic, results-oriented candidate who got himself elected Republican governor of Massachusetts -- and the phoney hyper-ideological ex-candidate who addressed the Republican convention in St. Paul in 2008:

For decades, the Washington sun has been rising in the east -- Washington has been looking to the eastern elites, to the editorial pages of the Times and the Post, and to the broadcasters from the coast. If America really wants change, it's time to look for the sun in the west, cause it's about to rise and shine from Arizona and Alaska!

Last week, the Democrats talked about change. But let me ask you -- what do you think Washington is right now, liberal or conservative? Is a Supreme Court liberal or conservative that awards Guantanamo terrorists with constitution rights? It's liberal! Is a government liberal or conservative that puts the interests of the teachers union ahead of the needs of our children? -- It's liberal!

Is a Congress liberal or conservative that stops nuclear power plants and off-shore drilling, making us more and more dependent on Middle East tyrants? -- It's liberal! Is government spending - excluding inflation - liberal or conservative if it doubles since 1980? -- It's liberal!

Twenty years of Republican presidencies since 1980? Eighteen years of Republican majorities in the Senate? Twelve years of Republican majorities in the House? Seven of the nine Supreme Court appointments? Never happened! And for that matter, Massachusetts isn’t in the east either. The big question for Republicans is: which Romney will show up in 2012? The electable or the unelectable, the serious or the cynical, the commanding or the pandering? All Republicans have to hope that Romney brings his best self to the next election cycle -- if only because after this week, we are seriously running out of alternatives.

It's also going to get seriously ugly in Republican primary time in 2012. Remember this from Huckabee at the end of 2007:

Libby Quaid: Republican presidential hopeful Mike Huckabee, an ordained Southern Baptist minister, asks in an upcoming article, "Don't Mormons believe that Jesus and the devil are brothers?" The article, to be published in Sunday's New York Times Magazine, says Huckabee asked the question after saying he believes Mormonism is a religion but doesn't know much about it. His rival Mitt Romney, the former Massachusetts governor, is a member of the Mormon church...

The problem is that for Romney to actually be a president who might be worth electing he has to be a Jack Kemp-style Republican starting now: it takes quite a while to build up a policy and governing apparatus that can function well. And right now all of Romney's political advisors are telling him that he dare not be a Jack Kemp Republican.

Calling All Republican Politicians...

2009-07-09T06:19:19-07:00

Abraham bargained YHWH down to promising that He would not destroy Sodom and Gomorrah if Abraham could find ten righteous people in the two cities. Can anybody help me find ten righteous Republican office-holders who will say that the people of Iowa really, badly need to elect a different representative than Steven King?

Anybody seen even one?

Faiz Shakir:

Think Progress: King’s New Rationale For Voting Against Slave Labor Resolution: It Wasn’t ‘A Balanced Depiction Of History’: Yesterday... right-wing Rep. Steve King (R-IA) was the lone dissenter on a House vote to acknowledge the role that slave labor had in constructing the U.S. Capitol. The resolution would merely authorize the placement of a marker inside the new Capitol Visitor Center to acknowledge the work of slaves. In an attempt to quell the criticism, King spun his vote as an effort to defend religion. He said in a statement that he opposed the slave labor resolution because it was put up for a vote before the depiction of “In God We Trust” could be considered in the Visitor Center. But in an interview with Radio Iowa yesterday, King offered a new explanation for his vote, complaining that the slave labor resolution wasn’t a “balanced depiction of history”:

KING: I would just add that there were about 645,000 slaves that were brought to the United States. And I’m with Martin Luther King, Jr. on this. His documents, his speeches – I’ve read most of them. And I agree with almost every word that came out of him. Slavery was abhorrent, but it was also a fact of life in those centuries where it existed. And of the 645,000 Africans that were brought here to be forcibly put into slavery in the United States, there were over 600,000 people that gave their lives in the Civil War to put an end to slavery. And I don’t see the monument to that in the Congressional Visitor Center, and I think it’s important that we have a balanced depiction of history...

The Capitol Visitor Center is simply trying to recognize the work of those who built the Capitol. But King is apparently concerned that slaves are being unduly recognized while Union soldiers who fought for their emancipation are not getting any credit.... If he steps right outside the Capitol, he’ll see the Ulysses S. Grant memorial, a monument that commemorates the former general of the Union Army.... Grant’s statue is flanked on either side by monuments of fighting Union Artillery and Cavalry groups. The Grant statue faces west toward the Lincoln Memorial, which of course honors the President who led the effort to free the slaves. In addition, at the Congressional Cemetery lies the Arsenal Monument, a memorial in honor of women who died while performing services for the Union Army. And there’s also an African American Civil War Memorial that honors the contributions that African-American troops made to the war effort...

We will not mention King's mind-blowing claim that Stonewall Jackson made his flank march at Chancellorsville and George Pickett made his charge at Gettysburg "to put an end to slavery"...

links for 2009-07-09

2009-07-09T01:06:43-07:00

Paul Krugman: The paradox of thrift — for real
Radley Balko: Andy McCarthy of National Review Cheers on the Commies
James Hamilton: Back where we started

BLS reported that the total number of Americans employed in June on nonfarm payrolls came to 131.7 million workers on a seasonally adjusted basis. That's below the June 2000 figure of 131.8 million with which we started the decade.
Doug Merrill on Gold and Iron, by Fritz Stern
Justin Fox: Breaking news: Regulators are (re)discovering that maybe speculation CAN be excessive
Samuelson on Greenspan

“But the trouble is that he had been an Ayn Rander. You can take the boy out of the cult but you can’t take the cult out of the boy. “
Alan Greenspan: Economy, Housing Will Rise Together
Steve Benen: Never Underestimate the GOP Rank and File

Inexplicably quitting, for less-than-clear reasons, has managed to endear Palin to her party more. Somewhere, Mitt Romney and Mike Huckabee are probably smacking their foreheads, saying, "You've got to be kidding me."
Topless Robot - Bonus! Rob's Transformers 2 F.A.Q.s!
Conor Friedersdorf: Sarah Palin's Media Mafia

Isn’t it actually the case that a good chunk of elite America loves Sarah Palin, or at least is willing to lend rhetorical and financial support to her? Why pretend otherwise?
Meriwether Said to Shut JWM Hedge Fund After Losses
Eric Rauchway: ¡Huelga contra WPA!

What, Me Worry?: Few Expected Green Shoots in the Bond Market

2009-07-08T18:35:48-07:00

Paul Krugman has a chart:

and writes:

Bond panic subsiding?: Over the course of the spring there was a substantial rise in long-term interest rates; it was fed partly by talk of green shoots, but also, I suspect, by all the yelling about deficits and inflation. And, of course, the rise in rates was itself taken as evidence that inflation fears etc. were justified.

But the panic seems to be subsiding. Rates are still well above their post-Lehman lows, when credit markets were completely frozen and everyone was piling into govt. debt. But they’re low by historical standards, and not giving much ammunition to the worriers these days.

On the contrary, they are giving a significant amount of ammunition to the worriers--my brand of worriers, a different kind of worriers. We worry that the next two years are going to bring what happened after the end of the 2001 recession: something like this:

A recovery in which unemployment is higher two years later than when the recovery began is not much of a recovery. And I don't see what is going to keep the probability of such an eventuality low.

The lower are ten-year Treasury interest rates, the more are people trading in the bond market willing to bet their money that the future holds that kind of non-recovery recovery. And so I worry.

Republicans: The Party for People Who Don't Like Black People

2009-07-08T18:17:44-07:00

David Kurtz of TPM:

Glad He Cleared That Up: We've gotten an explanation from Rep. Steve King (R-IA) for why he was the lone vote against acknowledging the role of slaves in building the U.S. Capitol. He did it to protest "a several year effort by liberals in Congress to scrub references to America's Christian heritage from our nation's Capitol":

Our Judeo-Christian heritage is an essential foundation stone of our great nation and should not be held hostage to yet another effort to place guilt on future Americans for the sins of some of their ancestors.

So there you have it.