Assorted links


#3 is interesting. No Mention of Krugman by Tyler? It's as if Krugman's SNAFUs are barely worth mentioning anymore.

SNAFU implies unintentional. I don't think that is the case.

Re #5: With "thousands of talented bands" out there, most will fail even if the long tail is entirely true.

#3...I first began reading and commenting on Econ Blogs in Aug. of 08. For the first time in my life, I had lots of free time, as I had retired, so I focused on Blogs that interested me and which I could comment on so as to be writing again often. I found the Econ Blogs the most interesting, and this was one of, if not the first, Econ Blogs I began reading. I also discovered a Blog called Follow the Money by Brad Setser, and it was reading his blog that Aug. that really got me interested and scared. I can even refer to a particular post:
For the life of me, I couldn't understand why China was selling GSEs and buying Treasuries. Although the GSEs were described as Implicitly Guaranteed, my view of Political Economy included the view that they were in reality Explicitly Guaranteed. Since Bear Stearns had been saved and the GSEs were, in fact, in the process of being saved, I didn't see the point of the shift. I also believed, by the way, very strongly, that Lehman would be saved. I also called what China was doing a Flight to Safety, and thought, like everybody, I thought, this would mean lowering yields. My main point would be that I found no discussion of this significant shift in the Fed Minutes. Maybe I missed them. But it does seem to me a very disturbing fact that the Charts & Such which they used didn't include such important facts.

Another Blog I began following was the Economics of Contempt, and it was there that I learned about what happened at the Special Trading Session held on Sunday, Sept. 14th, concerning Lehman. I did not know about this event before it happened, but learned about it not long after. I was shocked to read that Traders had spent the say fleeing Lehman, not bolstering it up, and discussing what would happen in the coming week when Merrill-Lynch would, according to them, go bankrupt. They were foretelling a financial disaster. Again, I find no mention of this event in the Minutes. I even used Finder.

If we're just going to follow specific rules and charts, why not let a computer set our policy? In any case, somebody at the Fed must have known how bad things might get since Merrill-Lynch was indeed saved that week, in fact, possibly that very day, although negotiations continued I've read. It's as if you have one group of people dealing with the real world and another group of people dealing with a fantasy world. Whatever else we do, we need the Fed Voters to focused on the real world, and not a fantasy world.

I'm all for pragmatically trying something besides Inflation Targeting, although I still believe you could have gotten the proper response to events using it, which is why I think more must be included in the Future Minutes besides whatever target we choose.

3. As much as I favor monetary rules over discretion, I can't take seriously an economist who believes:

1. There was no housing bubble, and
2. The Fed could have prevented the recession with stronger and sooner monetary easing.

The recession was the bitter herbs of more than a decade of excessive residential and nonresidential investment.


How would cutting rates (to zero) or slashing reserve requirements have stopped the "bleeding" concomitant with a $trillion in defaulted loans/worthless paper?

Bankers, the Fed, FNMA/FHLMC/FHA/HUD, and politicians (recieved huge graft payments from FNM/FRE) blew up the economy. Then, they bailed out each other. Then, they doubled-down with more QE's/stimuli/ and laws/policies/regulations impeding the recovery and worsening misallocations of capital. At least the Fed didn't run a political slush fund . . .

Forget buying equities (DJIA up 150% from March 2009) or gold (up 90% from December 2008). Buy ammunition and water/rations.

Whatchoo talkin' 'bout, Willitts?

(OK, I've been waiting to use that one FOREVER.)

1. Do you take Fama seriously? I don't want to debate bubbles here, but I don't think bubbleology is a slam dunk.

2. Yeah, Sumner's a bit strong on his claims here. But maybe it didn't need to be so harsh.

I have to say that Sumner's arguments the past few years have caused me to shed an overly-Austrian view of our excess and necessary penance. I was dead wrong about inflation in 2008, like a lot of people.

Let's put it this way: I'd rather have Sumner as Fed Head than Yellen.

I believe markets are mostly efficient and really hard to exploit when there are inefficiencies. It is really hard to deny that house prices in 2006 did not exceed their intrinsic values. Expectations, free put options, leverage, and a lot of stupidity fed that fire.

When we have the ability to sell someone else's house short, it might help. An NGDP futures market isnt a bad idea, but the absence of one is a matter of some significance. Sumner apparently doesnt believe in incomplete markets. It's difficult to fathom how any modern economist doesn't believe in market failures.

I think Sumner is Freidman's heir: a kind-of auto-pilot with NGDP, rather than inflation, as the target.

It's hard to argue that Fed policy in 2013 didn't overcome a significant amount of 'fiscal consolidation' (fancy term for the government dialing back its trillion-dollar deficit by about half).

Conservatives need to get over their tight money hang-ups and see that the Fed is our only hope of reining in Leviathan.

"6. Bryan Caplan on Peter Thiel’s minimum wage argument. "

That's a nice logical and well laid out argument by Caplan.

I suspect Thiel was just conceding the obvious and not really making an argument for raising the minimum wage. Another formulation would be, "Yeah, I'm going to jail and maybe I can lose some weight while I'm there."

Public policy in a democracy is about who robs whom.

Thiel is simply not an ideological purist. For example, he also said the other day that he'd be willing to pay more taxes in exchange for regulatory rollback. Or that he'd pay more to the government if it were as effective in spending that money as it was in the 50's. So, I take what he's saying about a minimum wage increase at face value.

So, everyone who has an indifference curve over taxes and regulations is necessarily non-ideological? That is, anyone who can say how much they'd give up in tax increases for decreases in regulations must not really be interested in contraction of government generally? Well, okay, but then the creature doesn't exist in the wild.

An entire article and many comments without a single use of the "I" word (immigration). What makes this remarkable is that immigration is almost certainly the largest influence (by far) on the low skill labor market.

Yet, it goes completely unmentioned. Sadly, predictable.

Here are the real economics. Raise the minimum wage and the domestic supply of labor goes up. The need for unskilled immigrants goes down. More Americans work, and fewer illegals get jobs.

Of course, MR knows all of this. Let me quote from "How to Unemploy Immigrants" (

"The mean-spirited, Machiavellian nature of their op-ed is chilling but I will give Dukakis and Mitchell this, their logic is impeccable"

Some people view giving poor Americans better jobs with higher wages as "mean-spirited". Other see it as "so obviously right that no reasonable citizen could disagree".

Raise the minimum wage and the domestic supply of labor goes up. The need for unskilled immigrants goes down. More Americans work, and fewer illegals get jobs.

Or, raise the mininum wage and the domestic demand for labor goes down, and the demand for non-domestic labor goes up. You can't skip the step of fixing the problem of hiring the illegal immigrants.


" You can’t skip the step of fixing the problem of hiring the illegal immigrants"

True enough. However, it's easier to do when Americans are clamoring for the jobs. As many people have long said, America would have a 300 foot fence on its southern border, if illegals were competing for jobs as journalists.

Caplan is persuasive that unemployment will increase, but I find it odd that he focuses discussion on the amount of labor supplied/demanded. To me, we should either be focusing on the size of the deadweight loss triangles or on the welfare of the workers affected by the minimum wage. It seems to me that the impact of a minimum wage on efficiency is completely ambiguous, determined in Caplan's graphs by his arbitrary choices welfare/minimum wage levels, while I don't think that this sort of simple supply/demand analysis has anything to offer about the welfare of low wage workers.

Continuing to consider the effects of a minimum wage increase keeps ignoring the fact that it's wrong for the government to get in the middle of voluntary contracts in the first place. It's not constitutional. If the citizens truly want this kind of government domination of their lives it's time for a constitutional convention. Of course, the new one would be just as quickly ignored as the original was.

"Continuing to consider the effects of a minimum wage increase keeps ignoring the fact that it’s wrong for the government to get in the middle of voluntary contracts in the first place. It’s not constitutional. "

The US citizenry lost that fight with the 'Wickard v. Filburn' decision in 1942.

Nine geriatrics told a nation full of English-speaking citizens that they can't understand their own language. Then, as now, the document was flung down and danced upon.

Whosoever God grants an office, he also grants the ability to hold it.

#1: "Many of us are a lot like UPS drivers in our daily lives: The only difference is we spend our days shepherding virtual bits between destinations rather than driving physical boxes around. But we still face many of the same prioritization and optimization challenges."

Hand-waving -- very few of us are anything like UPS drivers in our work lives. I thought this was a better piece about UPS automation/optimization:

+1 (I remember reading that article a few months ago)

from the comments:

"This driver reports that whenever any driver strictly adheres to the "trace" Orion sets that it MAY save a mile or two but causes hours of overtime, every time. He says it has gotten so bad and the management so desperate to show the program is working that they have shipped off a chunk of their deliveries to a non-Orion hub to show a reduction in overall mileage. He also explained that management stopped bothering drivers about using the system because every driver who did had so many overtime hours it was causing too much mayhem. Apparently when drivers feel grumpy they will strictly adhere to the Orion routes as a form of punishment on the immediate management. This caused a tacit agreement between the immediate management and the drivers to not follow the system but it did not outperform the experienced driver's heuristics."

I disagree.

1. The point of the Orion UPS system is not that a machine can provide the final answer to life, the universe and everything, but that a machine can ADD VALUE to the decision-making process. The optimum solution is that drivers have Orion, look at it to augment their decision-making, and overrule it intelligently when necessary. Ideally, the system would track when drivers make different choices and try to find out why.

I am sure the designers of Orion are biased towards thinking it is better than status quo - at least on average if not in every case. They could then be hamhanded in rolling it out. I am also sure many professional drivers will think they can do it better - and in fact will think they DID it better, confirmation bias. It would be nice to see some empirical data on if the drivers really can do better.

2. Sure, we don't drive UPS trucks, but we can all benefit from the aid of systems to help us make decisions. On my commute I can tell when the traffic will back up, but often too late to avoid it. If I remember to check my phone before I commit to the route, I can make an informed choice. Ideally, my phone (or the cloud it is connected to) would know where I work, where I live, what time I leave and what route I take, so I can get a message as I get into my car if I should take the regular route or a detour. Etc.

Sure, we don’t drive UPS trucks, but we can all benefit from the aid of systems to help us make decisions. On my commute...

Maybe we could benefit, but notice that the only example you've provided is a driving example. Of course we're all a bit like UPS drivers when driving (but even then only a bit -- we're generally going from A to B rather than trying to hit a large number of destinations in an efficient tour. We're commuters not travelling salesmen). I'm not saying that it's impossible that other occupations wouldn't benefit from computerized decision support systems. But I will say that A) it's not really clear at this point how much UPS has benefited, and B) UPS's work is highly tailored to their specific domain -- it's not going to yield a generalized decision-support system that's applicable to a wide variety of other kinds of businesses and activities.

If you want to limit it just to UPS, sure, they have not yet reached nirvana.

However, there are plenty of non-driving examples.

I have a calorie counting app on my phone. After a bit of setup I can pretty smoothly enter what I eat, as I eat it. I can check out a food before I commit, and I can even scan the package's barcode and have all the nutrition information entered and analyzed. I can then decide if I should have that second beer that night based on this information. Ditto to exercise information, although there I can benefit from GPS and accelerometers to track my motion and how many calories I really burn.

Whenever I want to travel to a new city, I can determine which lodging I am likely to enjoy based on a host of criteria.

I won't even go into my day job, which is in software and data analysis, where I can search and map the connections between thousands or hundreds of thousands of files in seconds, across millions of lines, to get to exactly the place I need to make a modification.

Sure, that's all fine, but it's not what we're talking about -- there's no AI involved in any of that.

Sure we are. It is all just math applied to data, just questions of degrees.

I have read dozens of articles on the UPS system and everyone of them strongly contradicted what Charles S is saying.

So why should I accept his comments at face value in the face of so much contradictory evidence,
especially the point about overtime? If that had happened I'm confident one of the numerous other reports on UPS I have read would have reported it.

I'm impressed you all made it past this line:
"Given that legendary UCLA basketball coach John Wooden has been recognized (by ESPN surveys, Sporting News, and others) as the top coach of all time, the question is: How do we Woodenize software?"

@3 Scott Sumner's writings boil down to this: "I take myself very seriously, so everyone else should as well."

#2 A touching story, but:

Liu was one of the 31 migrant workers elected to the National People's Congress last year. She is a foot masseuse in southeast China's Xiamen City. A native of south China's Anhui Province, Liu was a school dropout at the age of 14 and worked to support the schooling of her siblings.

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