Archive for June 2020


Adam Smith Institute seminar on NGDP targeting

I recently participated in an Adam Smith Institute seminar on NGDP targeting (with Anthony Evans and Matt Kilcoyne.) I had my usual technical problems with Zoom, and lost my train of thought a few times. But otherwise it went well.

I also updated my 2011 NGDP paper.

Commenter Matt Moore pointed me to another pro-NGDP targeting paper by another UK think tank (The Centre for Policy Studies). It’s written by Sajid Javid, who was recently the Chancellor of the Exchequer.

Perhaps the tide is turning in the UK. In any case, it’s only a matter of time.

Have you noticed . . .

. . . that the same sort of conservative who regards the mercy killing of a 91-year old man with terminal lung cancer as a moral abomination, brushes off those who worry about healthy 76-year olds dying of Covid-19.

. . . the same sort of conservative who thinks 9/11 was a great national tragedy because 3,000 died, and who favored going to war with much of the Muslim world in response, and who favored intrusive bureaucracies such as “Homeland Security”, regards wearing a mask to prevent a disease that kills more than 3000 a week as acting like a coward.

Trump kills Americans to look good? No kidding!

I have argued that Trump would gladly kill enormous numbers of Americans to get re-elected. On the other hand, that’s not the sort of thing that a president admits publicly. It sounds kinda bad.

To his credit, Trump is willing to admit this quite publicly. His administration was so horrified by his recent comments that they rushed out a statement saying that he was just kidding, as they did after numerous other “gaffes”.

But Trump’s having none of that, he continues to insist that he’s dead serious:

A day after the White House said President Trump was joking about ordering a slowdown in coronavirus testing to avoid an embarrassing increase in the number of cases, Trump responded to a question about the incident by saying, “I don’t kid.”

Trump made the eye-opening claim at his rally in Tulsa Saturday night. “When you do testing to that extent, you’re going to find more people. You’re going to find more cases!” he told the crowd. “So I said to my people, ‘Slow the testing down, please!’”

The president had expressed frustration over the rise in cases, attributing it to more widespread testing. According to data from Johns Hopkins University, there have been more than 2.3 million confirmed coronavirus cases in the United States, far more than in any other country.

Now it’s possible that Trump’s one of those post-modern comedians that maintains the act for an unusually long period of time. Maybe at the end of his administration he’ll admit that it was all a joke—the comments on bleach, testing, Russian help in sabotaging Hillary’s campaign, and all the rest. He’s the Andy Kaufman of politicians, able to play it straight until we’re all squirming in our seats.

Or maybe he’s just completely nuts.

PS. Note to commenters. I’ve taken no position on whether Trump was kidding or not. So don’t leave comments suggesting I have. Nor do I have an opinion on whether Peter Navarro was joking when he said the China trade deal was called off, or later in the day when he retracted that claim.

I just think it’s kind of interesting that we now live in a country where the executive branch seems confused as to whether the president is kidding. At this rate, what’s Trump going to be like in 2024, when he’s 4 years older?

BTW: What’s worse? The staff claim that Trump likes to joke about a plague that’s killed 120,000 Americans? Or Trump’s call to slow the testing because it looks bad? Decisions, decisions . . .

PPS. Andy Kaufman would have also made an interesting president.

PPPS. One last NYT quote, in case I have to start boycotting the newspaper later this week:

It has always been ludicrous for the Trump campaign to denounce “Beijing Biden,” when Trump publicly lavishes more affection on Xi than on Melania. “President Xi is extremely capable,” is “strong, sharp and powerfully focused,” is “doing a very good job,” and is “a man who truly loves his country,” Trump has said on various occasions this year alone.

My own view as a China-watcher who lived for years in Beijing is that we should stand up to Xi where we need to — while also negotiating on trade and seeking ways to cooperate on climate change, pandemics and more. Trump does the opposite: He bungles trade and achieves nothing there, fails to cooperate on climate or health, damages America’s alliances and ignores Xi’s worst abuses, all while flattering Xi in apparent hopes of getting re-election help.

Slate Star Codex is more valuable than the New York Times

Update: If this tweet is accurate, the NYT thought it was more important to out Scott Alexander than to get an interview with him—which would have made the story ten times more interesting.

As you may know, Slate Star Codex was recently deleted because the NYT has threatened to print a story with the real name of Scott Alexander.

When I suggest that Slate Star Codex is more valuable than the NYT, I mean in an intellectual sense. Obviously the NYT has a greater market value.

If the NYT disappeared tomorrow, we could still learn about the world by reading the WaPo, the WSJ, the FT, etc. That mix of news outlets would not be a perfect substitute, but it would be a close substitute.

There is no close substitute for SSC, and its loss will further degrade an internet that was already hurt by the movement of people from blogging to twitter.

Even if you reject my utilitarian view that welfare maximization is the only valid moral principle, there is no “right to know” principle at stake here as the NYT often withholds names for many different reasons.

Hard money is giving us socialism

Over the past few years, I’ve occasionally done some posts with titles like “Inflation of socialism?” It’s now clear that society has decided on socialism. So how did we get here?

I’ve recently listened to some excellent discussions in a Cato seminar on reforming the Fed. Many of the participants have suggested that the recent increase in activist credit and fiscal policies is an inevitable and/or desirable outcome, given the severity of the recession. Obviously I don’t agree, but just as obviously I’m in the minority.

By far the most important cause of the rise in credit/fiscal policies is the fact that interest rates have fallen to zero. This impacts policy in two unfortunate ways:

1. When rates fall to zero, most people (wrongly) assume that monetary policy is out of ammunition. As a result they advocate fiscal stimulus.

2. At zero interest rates there is a large increase in the demand for base money. As central bank balance sheets increase sharply, they begin accumulating a wide range of assets—shifting from pure monetary policy toward credit allocation.

The supreme irony here is that the tight money policies that put us into this situation are advocated by a variety of right-of-center types (traditional monetarists, Austrians, New Classicals, etc.) that almost universally abhor socialism. That’s right, it’s the Bob Murphys of the world that are unwittingly pushing us toward socialism.

And you can’t say I didn’t warm you. Ever since I began blogging in early 2009, I repeatedly warned that neoliberalism could only thrive under stable NGDP growth, and that falling NGDP growth always led to statist polices. People wrongly blamed the “free market” for problems that were actually caused by excessively tight money. (Because money didn’t “look tight”.)

That doesn’t necessarily mean we need a higher inflation target. It would be worthwhile to first try two other options:

1. Eliminate IOR

2. Switch to level targeting

Maybe these two options would be enough to get us out of the zero bound trap. But if they are not, then 3% inflation is far, far, far, far, far, far, far, far, far better than socialism.

Off topic: I recommend this excellent Noah Smith article on Covid-19. He puts the lockdowns in their proper perspective:

Together, this toolkit — masks, testing and tracing and targeted lockdown-lite — can control the virus until a treatment or vaccine arrives, while causing minimal damage to the economy.

I’d replace lockdown lite with “voluntary social distancing”, but otherwise almost entirely agree.

Unfortunately, the US has decided to go in a different direction.

PS. The recent data suggest that, at a global level, the Covid-19 pandemic has taken a turn for the worse. Hopefully it’s just a blip.