A surprisingly-large number of people have recently asked me why I am interested in the history of economic thought. They make various points. First, we don't learn physics from Galileo's Discourse on Two New Sciences. There are other, better, more complete, more accurate ways of presenting the material. In any real body of knowledge, the more up-to-date has to be preferred to the less because we know more than they did. Second, there are the dangers of promoting dead...

Ah. Here's what's going on: Rex Nutting of CBS Marketwatch asks Bill Gale of Brookings and Glenn Hubbard of the CEA about the effects of "an extra $200 billion in deficits." Glenn Hubbard interprets the question to be, "What would be the consequences of increasing the deficit by $200 billion above the previously-anticipated baseline this year only, and then reversing the increase and returning the deficit back to its original baseline next year, and leaving it there into the indefinite...

Even a year ago people could think that the finances of the U.S. federal government were not grossly out of balance for at least two generations to come. Looking beyond 2050, projections of an ever-aging population and ever-growing health care costs sent the budget into increasing deficit. But the long-run budget projections in the back of the 2003 Budget documents told us that the yawning gap between the pledges and spending policies of the U.S. government on the one hand...

The most puzzling thing about the Bush Administration economic "stimulus" proposals (besides the fact that policy-oriented economists from outside--from Marty Feldstein to James Galbraith--do not believe that the proposals do enough to boost aggregate demand in the next year or two) is the administration's apparent beliefs that the benefits from reducing the double taxation of dividends more than offset the costs of widening the deficit. It is hard to argue that reducing dividend taxation will do much--will do anything--to stimulate...

Wired 11.02: VIEW Any Text. Anytime. Anywhere. (Any Volunteers?) The mechanics of a universal library are simple. The tricky part: harnessing the free labor. By J. Bradford DeLong It's a bad day in the stacks. I go three for seven: three books found, one that should be there but isn't, one recorded lost, and one checked out that will have to be recalled. The seventh is the one I really want: QB54.C661. There's no copy in UC Berkeley's main Doe...

THE VIEW FROM 2023: WSJ.com Economists Failed to Predict Shift as the Poor Get Richer By J. BRADFORD DELONG It is extraordinary how few people back in, say, 2003, foresaw the economic changes that the past two decades have brought. I certainly did not. There were plenty of clues. Some visionaries said the biotechnology revolution was about to arrive. Others trumpeted the positive effects of computers and telecommunications. Economists like Dale Jorgenson, studying productivity growth, noted the rapid fall in...

Spring 2003 Teaching and Office Hours Office Hours: Wednesdays 2-4, or call 510-643-4027 or 925-283-2709 or drop me a note at delong@econ.berkeley.edu Present Courses: Econ 210a, Economic History (Spring 2003). Econ 236, Dynamic Economics: Advanced Macroeconomics (Spring 2003). Reading Course: European Economic History (Spring 2003). Reading Course: Monetary and Fiscal Policy (Spring 2003). Economics 211: Economic History Seminar. Past Courses: Fall 2001, Economics 101b, Intermediate Macroeconomics; others accessible from the "What I Teach" page... Contact Info: Dept. of Economics, U.C....

Project Syndicate: America's Second Gilded Age: J. Bradford DeLong : November 2002 The richest Congressional district in the US is the so-called "silk-stocking" district of New York City's Upper East Side, with a per-capita income of $41,151 per year. The poorest Congressional district is a largely Hispanic-immigrant district in Los Angeles, with a per-capita income of $6,997 a year. In 1973 the poorest fifth of America's families had incomes that averaged $13,240 a year (in today's dollars); in 2000 the...

Project Syndicate: The Ghosts of Economics Past: J. Bradford DeLong: December 2002. In Charles Dicken's great novel "A Christmas Carol," the soulless businessman Ebeneezer Scrooge is tormented by a visit from the Spirit of Christmas Past. Today, economists are similarly troubled by unwanted ghosts, as they ponder the reappearance of economic ills long thought buried and dead. From Stephen Roach at Morgan Stanley to Paul Krugman at Princeton, to the Governors of the US Federal Reserve and the senior staff...

I was cited in a Washington Post profile of CEA Chair R. Glenn Hubbard yesterday: washingtonpost.com: An Economist On a Mission: ...Princeton University economist Paul R. Krugman, also a New York Times columnist, and J. Bradford DeLong, a Clinton administration Treasury official now at the University of California at Berkeley, accuse Hubbard of sacrificing his sterling academic reputation with politically motivated but nonsensical economic utterances. "This is a delicate game," DeLong wrote on his Web site. "You need to retain...

from Wired, January 2003 VIEW The Customizer Is Always Right Why I said good-bye to one-size-fits-all and became part of the mass one-to-one market. By J. Bradford DeLong Somewhere in the depths of the Lands' End Internet operation, a computer has got my number. It started with a simple email offering a free pair of pants if I would send in my waist and inseam measurements and the shape of my thigh. I did. The pants came. (Actually, a bug...

It's MLK Day. Martin Luther King - Letter from Birmingham Jail AUTHOR'S NOTE: This response to a published statement by eight fellow clergymen from Alabama (Bishop C. C. J. Carpenter, Bishop Joseph A. Durick, Rabbi Hilton L. Grafman, Bishop Paul Hardin, Bishop Holan B. Harmon, the Reverend George M. Murray. the Reverend Edward V. Ramage and the Reverend Earl Stallings) was composed under somewhat constricting circumstance. Begun on the margins of the newspaper in which the statement appeared while I...

I returned home after dropping the kids off at their schools and walking the dog on the trail. I opened the back of the station wagon, and the dog jumped out and ran thirty yards down the driveway to where her tennis ball had rolled after I put her in the car just before we headed on out. Then she ran back up wagging her tail, wanting to play "fetch" with the second most disgusting dog-slobbered tennis ball I had...

Joe Stiglitz is Losing His Argument Two of the things I learned at the American Economic Association meeting was that Joe Stiglitz is losing his argument over the desirability of international capital mobility, and why he is losing his argument. Now I think that Joe should lose the argument. I think that by and large international capital mobility is a Good Thing: I think that international capital mobility raises the earnings of savers and lowers the cost of capital...

The Wall Street Journal quotes Alan Auerbach--one floor down and eight offices north--on the likely effects of the dividend tax cut. WSJ.com - Dividend Plan Straddles Debate Among Academics: ...Alan Auerbach began arguing a new theory. He said the traditional view of dividend taxes told only half of the story. Lowering dividend taxes did make it easier for companies to raise capital, increasing a company's incentive to invest in new projects, he said. But it also made shareholders more demanding....

It's Time for Glenn Hubbard to Quit as CEA Chair On December 18th, the Wall Street Journal's Bob Davis reported: To sell a package of tax cuts that will further deepen the budget deficit, the White House says that deficits don't matter. Is that true? Certainly, says Glenn Hubbard, chairman of the White House's Council of Economic Advisers. He derides the "current fixation" with budget deficits, and labels as "nonsense" and "Rubinomics" the view espoused by former Clinton Treasury Secretary...

From Wired, December 2002 DELONG The Slow Countries US productivity keeps growing ? right through the bust. So what?s wrong with Europe? By Bradford DeLong Is it something in the water? Is there some kind of high tech fluoridation that makes equipment work better in Palo Alto, Austin, or Cambridge (Massachusetts) than in Edinburgh, Cologne, or Cambridge (England)? Of course, things have broken down on both sides of the Atlantic. The Nasdaq is down nearly three-quarters since its early 2000...

One piece of the real headline news: Virginia Postrel is tremendously amazed and excited by her purchase of a five-pound bag of flour for $0.69: Dynamist.com: The Scene (vpostrel.com): CHEAP STAPLES: I bought a five pound bag of Gold Medal flour yesterday for 69 cents. I find that amazing. [Posted 12/11.] She is completely right to be tremendously amazed and excited. Consider the overwhelming bulk of our ancestors half a millennium ago--Eurasian peasants circa 1500. Something like three-quarters of the...

In the Bush Administration, Loyalty Is a One-Way Street Only There is a story I have now heard three times about Larry Lindsey's first day in the White House in January 2001. At one point he met with the now-headless Council of Economic Advisers staff--no CEA council members had yet been named. "Well," he began. "You should all be happy: the people who understand economics are now back in charge." Today such a claim sounds totally ridiculous--mendacious, or simply mad....

Writing in the National Journal, William Powers marvels at Google: D.C. Dispatch | 2002.11.26 | Powers: ...What's intriguing about all of this—and the reason media folk are watching it somewhat nervously-is that Google gathers and presents the news automatically, without any input from people, not even journalist people. As the site itself explains, the headlines "are selected entirely by computer algorithms, based on how and where the stories appear elsewhere on the Web." The idea is that if you take...

Wile E. Coyote Explains Bush Administion Fiscal Policy One of the weirder things one hears from Republicans these days is that our current medium-sized (and our larger prospective future) federal deficits are not the accidental results of lack of policy-making competence on the part of the Bush team but part of a clever strategy to advance the long-run Republican goal of shrinking federal spending as a share of the whole economy. How is this strategy supposed to work? Republicans cut...

After the Fall of Harvey Pitt: We Are Still in Bigger Trouble than We Realize J. Bradford DeLong A First Draft Harvey Pitt was in bigger trouble than he realized. He is now gone: he submitted his resignation as Chair of the Securities and Exchange Commission [SEC] on the evening of 2002's election day. But his resignation does nothing to get the rest of us out of big trouble. There is drastic, urgent need for significant and immediate reforms in...

Media Unspun catalogs reactions to the latest Microsoft decision: Media Unspun: ...In his 1998 book "Barbarians Led by Bill Gates," the lead [Microsoft] engineer on the Pen Windows project, Marlin Eller, wrote of bucking up a discouraged co-worker after Pen Windows shipped but was not selling many copies. "Pen Windows was a winner. We shut down [the] GO [Corporation]. They spent $75 million pumping up this market, we spent $4 million shutting them down. They're toast. That company is dead....

Investment in Computers and Peripherals Once Again This time with the "advance" GDP data from the third quarter of 2002 added in... This is the chart that leads me to have a very hard time with the "we invested too much in computers in the 1990s and now have this large overhang of excess unused capital equipment in place" argument. We have a lot of excess capacity in telecommunications, yes. But elsewhere? If we have a lot of excess computer...

You never read the Wall Street Journal's editorial page expecting it to tell any story honestly and straightforwardly. For example, if you took the editorial below at face value, you would believe that lawsuits against U.S. Technologies' [the "company being sued for possible fraud"] and its CEO Gregory Earls are "phony," for "trial lawyers sue good companies every day alleging 'fraud'." And if you believed this, you would be wrong. As every reader of yesterday's Washington Post's business section knows--but...

Average hours per worker shrank at a 1.2% annual rate between the second and third quarters of 2002. The number of employees on payrolls rose at an 0.4% annual between the second and third quarters of 2002. thus total hours shrank at an annual rate of 0.8% between the second and third quarters of 2002. Real GDP grew at a 3.1% annual rate between the second and third quarters of 2002. Put these numbers together, and realize that when the...

A Couple of Figures That Will Need to Have Another Data Point Added to Them Tomorrow The share of total nominal spending (GDP) devoted to investment in information technology equipment and software. The key is that as technology has progressed--as the real price of computation has fallen--the share of GDP devoted to infotech investment has risen extremely rapidly. On top of the secular trend is superimposed the business cycle--the recessions of the early 1970s, of the mid 1980s, of the...

Optimism with Respect to the Technology, Pessimism with Respect to Its Profitability Take a look at what the Commerce Department's Bureau of Economic Analysis says about the pace of investment in computers and peripherals--both "nominal" investment (how many dollars are spent) and "real" investment (what those dollars buy in terms of computers and peripherals of the quality and performance made in 1996). If you haven't been looking at these numbers or their like recently, they do surprise you: Some salient...

An Open Letter to my friends at the Economic Policy Institute: Guys, you write: Trade deals accelerate deficits, eliminate jobs: Under NAFTA and the WTO, trade deficits have accelerated rapidly and eliminated a net total of 3 million actual and potential jobs from the U.S. economy Now I know that you never actually say that "NAFTA and the WTO" caused the growing deficits--the "under" phraseology is carefully calculated. I know that you know that the trade deficit is as much--hell,...

NATIONAL JOURNAL TECH DAILY -- October 16, 2002: Business: Google CEO, Economist Debate Maturing of Industry by Drew Clark PHOENIX -- The CEO of Google said Monday that the technology sector is becoming more mature and is slowing down, but a noted economist countered that because productivity growth remains robust, information technology has a bright future ahead. In a debate at the Agenda 2003 conference here about whether "the best is yet to come," Google CEO Eric Schmidt said: "Nothing...

[Corrected, after a kick from Glenn Reynolds...] According to Instapundit: "ED LAZARUS IS DEEPLY CONFUSED according to this post at the Volokh Conspiracy. In fact, it is reported, he has the import of Nobel Economist Vernon Smith's work exactly backwards." While Ed Lazarus thinks the Noble Prize-winning work of experimental economist Vernon Smith and behavioral psychologist Danny Kahnemann casts doubt on Richard Posner's view of the world, Juan Non-Volokh believes that Smith's and Kahneman's work reinforces Posner's view of the...

Every time I run across a passage like: A virtual fence goes up around schools in Zambia when an education "user fee" is introduced on the advice of the World Bank, putting classes out of the reach of millions of people. A fence goes up around the family farm in Canada when government policies turn small-scale agriculture into a luxury item, unaffordable in a landscape of tumbling commodity prices and factory farms.... And there is a fence that goes up...

The NBER's business cycle dating committee has a problem. Its entire methodology--inherited from Wesley Clair Mitchell and Arthur Burns back in the mists of time--is based on the belief that production, income, employment, and sales all move together relative to their long-run trends in a "business cycle." So what do they do when employment behaves differently? It's not clear, because it's not something that W.C. Mitchell expected to see happen very often at all. Yet that's where we are. I...

Economics 236: Advanced Macroeconomics: Preliminary Sketch of a Reading List Tools: Books You Must Have on Your Bookshelf: Lars Ljungqvist and Thomas J. Sargent (2001), Recursive Macroeconomic Theory (Cambridge: MIT Press: 0262194511). David Romer (2000), Advanced Macroeconomics (New York: McGraw-Hill: 0072318554). Avinash Dixit (1991), Optimization in Economic Theory (Oxford: Oxford University Press: 0198772106). Maurice Obstfeld and Kenneth Rogoff (1996), Foundations of International Macroeconomics (Cambridge: MIT Press: 0262150476). Olivier Blanchard (), Macroeconomics (). The Past: John Maynard Keynes (1934), Essays in...

Technology and Opportunity Keynote Talk at the Francisco Partners Fal1 2002 Investors Conference The Inn at Spanish Bay, Pebble Beach, CA Slides J. Bradford DeLong U.C. Berkeley and NBER October 8, 2002 Version 1.1 Last week somebody told me of his thoughts, back in the spring of 2000, when he read Yale Professor Robert Shiller's book, Irrational Exuberance. "A lot of good points here. This guy is broadly right," he remembered thinking to himself. Then he came to the passage...

Argentina's Collapse J. Bradford DeLong Berkeley and NBER The Argentinean government made a big push in the 1990s. It tried hard to implement 80 percent of the neoliberal reform program. It opened up its economy to world trade and international capital flows. It sought to guarantee a sound-money, low-inflation monetary policy. It strove to improve the functioning of its legal system, so that decisions handed down would accord with the law and create confidence that contracts would be enforced--whether or...

J. Bradford DeLong | October 4, 2002 | Version 2.0 Last year Western Europe's real GDP grew by only 1.5 percent, even though the average unemployment rate fell by 0.8 percentage points. This year Western Europe's real GDP will grow by less than one percent per year, and unemployment will rise by half a percentage point. Western Europe's economy is stagnating. Western Europe's recent economic performance is even more disappointing when compared to America. Consider that the surprisingly-large American productivity...

John M. Irons links (ArgMax Blog: Solow on Globalization) to an interview given by Robert M. Solow on pretty much everything. It's very well worth reading: every topic is good. Let me pick a bone, however, with the interview's discussion of "globalization". Solow says some very smart things: I think this is one of those cases in which focusing on growth is the wrong way to look at it. After all, what is the most you would expect international trade...

Financial Systems and Growth Prospects in Asia J. Bradford DeLong, U.C. Berkeley and NBER September 2002 (after-dinner talk at Federal Reserve Bank of San Francisco/Journal of the Japanese and International Economies conference on Financial Issues in the Pacific Basin Region) This topic, "Growth Prospects in Asia," is a nice one because the answer is easy. Growth prospects in Asia are bright. Our ongoing technological revolutions, the fall in transport and communication costs, and the growth of world trade have created...

What good are modern information-management tools if people won't use them? One of the most frustrating things about being an optimistic "computer revolution" guru is that over and over again I run into people who could use the magnificent information management tools we have at our disposal, have every incentive to use them (so as not to look stupid), and yet do not use them. Today's example: I read Slate and find Eric Umansky bashing the New York Times for...

"You know me," said one senior Federal Reserve policymaker of the 1990s, "and on the inflation-unemployment tradeoff I'm dovey-dovey. I'm not prone to undercount the distributional and productivity benefits from low unemployment. I'm not prone to overweight the costs of moderate inflation. Yet there I was, in the Chairman's [Greenspan's] office, beggin him to raise interest rates. The NAIRU [the unemployment rate at which inflation is steady] couldn't have fallen that far. Potential growth couldn't be that fast. But he...

Next Year's Analyses Next February the Commerce Department's Bureau of Economic Analysis is going to release its first estimates of production and productivity for the year 2002. When they do, everyone is going to sit up and take notice--because the numbers will be very surprising. We today already know (although very few think about it) what those numbers will be in rough outline: some 13/16 of the data for the year-to-year growth rates from 2001 to 2002 is already baked...

A Platonic Dialogue on Eldred v. Ashcroft Ignoramus Inquisitivus: I have a question. Why did the Supreme Court grant cert. [that is, agree to hear and decide] in Eldred v. Ashcroft [the case arguing that the most recent copyright extension act was unconstitutional because Article 1, Section 8, Clause 8 of the Constitution gives Congress the power to grant copyrights only for limited times, and only to promote the useful arts--and since the extension act was not intended to promote...

Tenth Avenue Freeze-Out You cannot read Eric Alterman's weblog for very long without getting out your Springsteen CDs and putting them on. And I cannot listen to Springsteen CDs for very long without going out and buying another one--in this case, a three-CD collection of Bruce Springsteen and the E-Street Band live from 1975-1985. The music is wonderful. The CDs also include a lot of stories--Bruce Springsteen tells stories before, in the middle of, and after songs. The stories are...

Uncertain Principles if you start to get close to light speed, you need Special Relativity to describe what really happens... *Sigh.* This is what happens when you read weblogs by real physicists--especially those who have been part of a team making Bose-Einstein condensates in their laboratory. (Kids! Don't try this at home!) My spreadsheet on the effects of product and income-side estimates of total output on our conception of the economic boom of the 1990s is now filled with...

Project Syndicate: The New German Problem: J. Bradford DeLong : September 2002 As Germany prepares to elect its next Chancellor, the two main candidates, Gerhard Schroeder and Edmund Stoiber, agree on one thing: unemployment must be reduced. Over the past two decades, high unemployment has transformed Europe in general and Germany in particular into a sociological time bomb. What will the unemployed - especially the long-term unemployed with only dim memories of integration into the world of work - do...

I cannot be the only economist who was disappointed by Bjorn Lomborg's column in the New York Times on Monday, August 26. Lomborg makes a number of good points: it is definitely the case that we are pumping enough CO2 and other greenhouse gases into the atmosphere to warm the earth; that many of our environmental problems are the diseases of poverty, early industrialization, and the absence of democracy; that the Kyoto Protocol would be hideously expensive; that it would...

If you're listening to this, are under 35, and haven't been to college: go to college. If you have children who are thinking of not going to college: convince them to go to college. Harvard economists Claudia Goldin and Larry Katz have called the twentieth century, "America's century of education." During that century the United States widened its lead over other industrial economies by creating the universal high school, and by developing a large and flexible system of colleges and...

America's Date with Deflation? Two years ago, at the peak of the late-1990s boom, the American economy was slightly overheated. As the unemployment rate fell to four percent and below, inflation began to creep upward, rising by between a quarter and half a percentage point each year. By late 2000 it was very clear that America's GDP was one to two percentage points above potential output--above that level at which aggregate demand balanced aggregate supply, at least in the sense...

Now will someone please explain to me why Apple's and Linux's desktop market shares are so small? On Lisa Rein's Radar: Warning To Windows Media File Collectors: Your Music Will Die With Your Computer: A guy reformatted his hard drive and then found out none of his Windows Media files would work. Turns out that Windows Media Player turns the "copy protection" (copy prevention) on by default when it rips CDs, so when he reformatted his hard drive the player...

Matthew Yglesias clearly stays up far, far too late and takes the very reasonable position that "Stalin was clearly a very, very, very, very bad man and the USSR was a very, very, very, very bad thing," and announces that he has no interest in debating whether or not Stalin was just as bad as Hitler or not. I think that he misses the point that there is an important historical question that turns on whether Stalin was just #2...

Usually reliable sources report that as the preliminary estimates of productivity growth were reported over the past year, Alan Greenspan was dumbfounded. "I don't believe it," he is supposed to have said. "You just can't get such high productivity growth in a recession. It will be revised down." And I don't know anybody who didn't agree, to some degree at least. Well, the revisions are in, and the productivity growth trend is a little bit weaker, but only a little...

"Five nines" means that if you express the reliability of a system numerically, the first five digits are nines: there is a greater than 99.999% chance that the system will do what you hope it will in any particular operation, and only one chance in 10,000 that something will go wrong and break. "Five nines" is a joke--as in, "You wanted nine fives of reliability? I thought you said nine fives!" i.e., that the system will perform as hoped...

Yet more reason that it is time to cut interest rates further... Economist.com With world stockmarkets--and political America--still reeling from a long list of corporate scandals which have destroyed some of the country's biggest companies, there seemed at least one comfort: America's economic recovery seemed strong. Now that reassurance, too, has been brushed aside. Figures issued by the government on July 31st showed that the economy grew much more slowly than expected in the second quarter of this year--by only...

Twelve-Year-Old Humor: Picture the twelve-year-old seated in the back of a summer day camp bus with the rest of his group. Picture the bus being driven by the counselor, Darryl, who is trying to park the 16-person vehicle at a swimming pool. All of a sudden Darryl hears, from the back of the bus, "Hey! Darryl! There's a spider back here!" Others add to the chorus: "Yeah! It's a spider!" "Watch out for the spider!" "We're not kidding! It's a...

Dan Kohn finds a... Dan Kohn's Blog ...inspiring WSJ story on automation improving women's lives in rural Mali. Not only is the peanut butter better -- and Mrs. Doumbia's selling easier -- so is the quality of life in the 300 Mali villages that have the machine. Girls who were kept home to help with the domestic work from dawn to dusk are now going to school. Mothers and grandmothers who would have spent a lifetime pounding and grinding now...

Mark-My-Beliefs-to-Market Time I am reading Michael Mussa's brand-new very short book on the latest Argentinian financial crisis [Michael Mussa (2002), Argentina and the Fund: From Triumph to Tragedy (Washington: Institute for International Economics: 088132339X)]. In The Importance of Being Earnest, Oscar Wilde gets a laugh out of the idea that a chapter on a rupee crisis is too exciting for young ladies--out of the idea that a technical discussion of anything having to do with international finance can be anything...

James DiBenedetto flags this from the Washington Post's style section: The Eleven Day Empire Interesting article in the Post's Style section today about something that's been going on for a while: ghostwriters hired by popular authors to crank out formulaic novels. The king of this kind of thing is, of course, Tom Clancy, who has, I don't know, 50 or so book lines that are labelled as "Created by Tom Clancy!", none of which he actually writes. Until recently, the...

An earlier organization of this website had an alternative, separate "Thoughts of the Week" page. The above link will take you to it....