The truth that dare not speak its name (or perhaps two truths?)

There’s a very good new post by Benn Steil and Benjamin Della Rocca that explains why the BOJ does not emphasize the exchange rate channel in their monetary stimulus:

In September 2016, the Bank of Japan adopted a new strategy to boost the flagging Japanese economy: “yield curve control,” or YCC. The aim was to widen the gap between long- and short-term interest rates, by keeping shorter-term (10-year) government bond (JGB) rates at 0%, as a means of encouraging bank lending. . . .

BoJ Governor Haruhiko Kuroda has trumpeted the policy’s success in boosting lending. As shown in the bottom left figure, though, lending did not increase because of the mechanism underlying YCC—that is, a widening of the gap between what banks pay to borrow funds short-term and what they receive from borrowers longer-term. . . .

What happened, then? After YCC was announced, the BoJ’s pledge to hold 10-year JGB rates at 0% pushed bond investors to find yield outside Japan. . . .this caused the yen to fall sharply, which boosted exports. . . .

[S]hortly after Prime Minister Shinzo Abe took office, the Obama administration admonished Japanese authorities for public statements calling for yen depreciation. Abe and Kuroda learned the important lesson that one may only target the exchange rate if one does not speak of it.

Off topic, I don’t often blog on the Lucas Critique.  I wonder if anyone has commented on its applicability to the concept to sexual harassment.  Suppose that over a period of decades society does not take charges of sexual harassment very seriously.  In that environment, there may well be very few false claims of sexual harassment.  However if policy changes in such a way that accusations are presumed to be true, and also result in severe consequences, then the Lucas Critique predicts a sizable increase in false accusations.

That does not mean that harassment charges should not be taken more seriously than in the past, and also result in serious consequences.  (On balance I think they should, despite the Lucas Critique problem.)  Rather it suggests that this is not an easy black and white issue.  There is almost certainly some degree of presumption of guilt that would be counterproductive.  Imagine a world where everyone (and I’m including men, as this group is also sexually harassed fairly frequently) could destroy the lives of anyone they disliked.  No one would want that kind of world, which means that no one who claims that accusations should always be believed is telling the truth.  We are all skeptics, it’s just a matter of degree.

The world (and especially the internet/media) is like a giant high school, where we are all expected to conform to popular belief.  When that consensus changes, we are expected to dutifully fall in line.  I transferred from that high school to utilitarianism when I was in my 20s.

PS.  Here’s Scott Alexander:

About 30% of the victims of sexual harassment are men.



24 Responses to “The truth that dare not speak its name (or perhaps two truths?)”

  1. Gravatar of E. Harding E. Harding
    17. December 2017 at 13:35

    “I transferred from that high school to utilitarianism when I was in my 20s.”

    Not a single person in these comments will believe this.

    “Abe and Kuroda learned the important lesson that one may only target the exchange rate if one does not speak of it.”
    Mostly good post. Yes; people’s beliefs are usually very plastic; what is up today is down tomorrow and sideways yesterday.

    BTW, Trump actually said something utterly indefensible and contemptible (and which I condemn him for) unlike most BS from him Sumner complains about:

  2. Gravatar of Nick Ronalds Nick Ronalds
    17. December 2017 at 14:48

    On another topic entirely, have you seen this recent book on “Money and the Great Recession”? I reviewed it recently for the Financial Analysts Journal here: I was surprised not to find you in it. 😉 Aligns generally with your views of the GFC, but there’s nothing on NGDP targeting in it.

  3. Gravatar of Ben J Ben J
    17. December 2017 at 15:08

    E Harding, are you grumpy at Trump for saying that because you or your family are some of the immigrants who entered in the visa lotteries?

  4. Gravatar of E. Harding E. Harding
    17. December 2017 at 15:20

    Obviously, but your (and mine) reaction should be the same regardless, due to the merits of the statement (or lack thereof).

  5. Gravatar of ssumner ssumner
    17. December 2017 at 15:29

    Harding, You are an expert on contemptible statements.

    Nick, I am familiar with Tim Congdon’s work, but he’s not a fan of market monetarism.

  6. Gravatar of Steve F Steve F
    17. December 2017 at 15:33

    Harding, it seems you didn’t actually listen to what Trump said.

  7. Gravatar of E. Harding E. Harding
    17. December 2017 at 15:42

    @Steve F
    Actually, I did, otherwise I wouldn’t be posting this.

  8. Gravatar of Steve F Steve F
    17. December 2017 at 16:21

    What was indefensible and contemptible about what he said then?

  9. Gravatar of E. Harding E. Harding
    17. December 2017 at 16:37

    You figure it out; it’s obvious to most people, I think.

  10. Gravatar of Steve F Steve F
    17. December 2017 at 17:12

    I watched it and see something very different than what it seems would prompt somebody to say indefensible or contemptible.

  11. Gravatar of B Cole B Cole
    17. December 2017 at 17:14

    The Bank of Japan also buys large amounts of JGBs and owns 45% of total outstanding, and pays negative interest on reserves. They do some equity ETF buying.

    Japanese exports strong and tourism booming. There are more job openings than job hunters.

    David Beckworth says there is no inflation in Japan as the market expects the BoJ to sell its portfolio someday.

    Seems unlikely the Bank of Japan will ever sell its portfolio. Fascinating topic.

    In contrast, the Fed is selling its portfolio and the US has minor inflation.

    The great thing about macroeconomics is no one is ever wrong.

  12. Gravatar of Mark Mark
    17. December 2017 at 17:23

    The sexual harassment issue really re-exposes major differences in the dispositions of men and women toward sex that many people seem to want to believe don’t exist. If we define sexual harassment in a gender neutral manner, men are likely ‘harassed’ almost as much as women (some feminists count being called ‘honey’ or ‘baby’ as harassment, in which case I’m harassed by half a dozen female clerical workers every day). Even more aggressive come-ons, by women toward men, will almost certainly be either received positively by the man, or rebuffed without any action taken. Men, frankly, just aren’t as threatened by sexual overtures or topics as women tend to be. Credit it to evolutionary psychology or culture, but most men just tend not to respond the same way to what we would define as sexual harassment as most women do; it generally doesn’t register as an egregious offense.

    So, de facto, the current response sexual harassment is likely to just reinforce the tendency of many men to treat women *differently* rather than equally; that is, with proverbial kid gloves. This is because rules are only really internalized to the extent that they are enforced; so as long as men don’t bother to report women harassing them (I expect <1% ever do; most probably don't even consider it harassment), or when men 'harass' them (most men are never going to file a report with HR every time a male co-worker sarcastically accuses him of being gay or tells a raunchy joke to him). So the rules and norms many people want in response to all these news stories are, effectively, norms for how men should specifically treat women; not an equalization with how women treat men or how men treat other men.

    What we're liable to get is essentially chivalry 2.0. Now, there's nothing inherently wrong with that, but we should acknowledge what's really being asked for: stricter norms regarding how men act toward women specifically. This is being treated as a sort of feminist issue, and allegedly feminists support equality. But I've seen how men treat other men; I pretty sure that's not how women actually want to be treated, and it's certainly not what they're demanding now.

  13. Gravatar of E. Harding E. Harding
    17. December 2017 at 17:40

    Steve, why do you disagree?

  14. Gravatar of Steve F Steve F
    17. December 2017 at 18:06

    Harding, he said that the lottery selection by some other countries is to send people who do harm. This is different than saying that those who come by lottery are harmful.

  15. Gravatar of E. Harding E. Harding
    17. December 2017 at 19:02

    No; that’s not what he said. He was clearly referring to diversity visa recipients (like me) in general:
    “They have a lottery: you pick people. Do you think the country’s giving us their best people? No. What kind of a system is that? They come in by lottery. They give us their worst people. They put ‘em in a bin but in his hand, when he’s pickin’ ‘em, is really the worst of the worst. ‘Congratulations, you’re going to the United States, it’s OK.’ What a system, lottery system.”

    Besides, it’s the US that picks the visa applicants, not the other countries.

  16. Gravatar of Steve F Steve F
    17. December 2017 at 19:16

    I didn’t realize that other countries’ governments have no role in who leaves the country.

  17. Gravatar of Benjamin Cole Benjamin Cole
    17. December 2017 at 20:36

    Does the Fed need to engineer a recession to reach its (higher than we have) unemployment target?

  18. Gravatar of Student Student
    17. December 2017 at 20:50

    Why does it seem The Church has been so ahead of the game on things of late?

    1.) The #metoo movement (both its negatives and positives… such as an accusation is all it takes vis a vis the truth that people have been truly abused ) has been going on since the 1990s yet society thought clergy were just gross and now it we know it is literally everyone…

    2.) more to your post:

    Summa Theologiae, Second Part of the Second Part, Question 77. Be fair and take a close read. We have economics, morality, and monetarism (if only infantile) in like 1265…

  19. Gravatar of Benjamin Cole Benjamin Cole
    18. December 2017 at 02:39

    keep an open mind

  20. Gravatar of mpowell mpowell
    18. December 2017 at 09:12

    @Mark – while I think you are correct on the superficially not-equal treatment part, I think you are glossing over the context. As I understand it, normal or common interaction between coworkers takes place with a much different background when we consider women or men’s comments towards men compared to men’s comments towards women. It has the form of “we want this superficially tolerable behavior to be regarded as sexual harassment and forbidden because it is closely related to much more egregious and threatening behavior”. I won’t claim to be an expert on the statistics, but I am very dubious regarding claims that 30% of sexual harassment is experienced by men if we are considering only the subset of activity similar to, grabbed genitals, forced kissing, demanded sex to improve career prospects, etc.

    In some sense I think the equal treatment goal is unachievable, but if the characterization of the workplace we are seeing recently is accurate, then women are quite right to complain, “we are being treated differently and it is quite unfair”.

  21. Gravatar of John Thacker John Thacker
    19. December 2017 at 08:56

    Megan McArdle had been talking on Twitter about the Lucas Critique and accusations, and then published a column just this week:

  22. Gravatar of ssumner ssumner
    20. December 2017 at 07:23

    John, I’m not surprised, it’s a rather obvious application of the Lucas Critique.

  23. Gravatar of Michael Michael
    21. December 2017 at 01:53

    on the off-topic: I agree with the Lucas critique, and I greatly appreciate Scott Alexander, but the 30% number doesn’t pass the BS test

    I think quoting it is just confirmation bias. It can maybe serve as an example of how the lack of definition and the fuzzy limits of what constitutes sexual harassment allow for any kind of self-interested statement.

    agree with mpowell here

    And look, Alexander’s example of Mariah Carey is plausible, but note that she is — or has been — very near the top of the fame pyramid, where people are maximally corrupted, and even then, she’s no Weinstein. But even Alexander concedes that in ‘normal’ circumstances, 80% of the perpetrators are men — I think it’s an underestimate for ‘real’ sexual attacks, not just inappropriate language — and I think the gay version, should it have material numbers, will *not* be ignored

  24. Gravatar of ssumner ssumner
    22. December 2017 at 08:15

    Michael, You may well be right about the 30% figure being too high. On the other hand his deeper point seems undeniable. Anyone who looks at the world straight on, without ideological blinders, knows that at a gut level people process claims of men abusing women differently than women abusing men. (I’m probably no different from most people here.)

Leave a Reply