Archive for November, 2008

So said John Maynard Keynes.  Except that his writings and his understanding of economics is something that we are finding very important these days, and that leads us into some links for today.

  • We start with Krugman, like we often do. Krugman responds to some criticism from Mankiw, but also makes the point that while parts of the economy have changed, and the language of economics has definitely changed, Keynes’s analysis remains very valid today.
  • We have a one-two punch of takedowns on an article that Wall Street Journal that goes after Krugman’s ideas of Keynesian fiscal policy. First, Krugman with the direct rebuttal, and second, Delong pointing out that her argument is totally incoherent.
  • I’ve been calling Mark Thoma’s work “Economist’s View,” and while that’s the blog title, he doesn’t post anonymously. I’ll be changing that in the future, though it’s the same writer. Here is Mark Thoma, then, with a very interesting point. We are working on liquidity, capital, and solvency. What about the information flows that we’re used to? We no longer trust them. Analysts no longer trust numbers coming out of companies, investors no longer trust analysts, and nothing is being done to rectify the situation. It’s a bit long, but well worth the read. He has a great point, and he spells it out much better than the “crisis of confidence” language that some have been using.
  • Two interesting things from Brad DeLong. First, he talks about what he was expecting from the economy and why he didn’t see the current crisis. Second, in a column he talks about the two big mistakes that were made in this crisis. To recap: they let Lehman Brothers fail, and the fed tried to avoid nationalizing all or part of banks. I wish he expanded on his second point more, because I’d like to hear more about why he believes that was the second big mistake, and not any number of other things.
  • The Thrilla in Manila it ain’t, but Krugman talks a bit about the Milton Friedman-Keynes debate on how to look at the Great Depression, and more importantly, how big a role the Federal Reserve and its monetary policy could have had in preventing it. Again, Keynes is looking better and better, while Friedman has taken a solid hit recently.
  • Krugman reminds us that once we’re done with the current crisis, don’t forget to regulate the stuff that got us into it!
  • The Washington Post had a great look back at Paul Volcker and how much he was hated at the time, but as we get farther and farther from his tight interest rate control, how he looks smarter and smarter. Volcker, of course, will chair Obama’s Economic Recovery Advisory Board.
  • Finally, we’ll end on a lighter note: college football. Someone on Deadspin suggests a soccer-style relegation/promotion system be instituted in college football. It’s a fascinating idea that will never happen. One more story from college football. Rhodes Scholar and Florida State Football are being used together to talk about one student. (he got the scholarship) Who ever would have thought that would happen?

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Same as the Old Boss

As we wind down toward a holiday weekend, here are some links that I’ve found interesting in the past few days.

  • In the “Meet the new boss, same as the old boss” category, we have a few stories of prominent people looking at new roles. Bill Clinton? The next senator from New York? I’d say it’s unlikely, but possible. As pointed out, an interesting change of gender roles, where the husband gets appointed to fill out the wife’s term. Next, Chris Matthews may be looking at Arlen Specter’s seat (note that I skipped any of the obvious “Hardball” jokes there). Again, unlikely but possible. Finally, where does Dick Holbrooke fit? Special Envoy to the Middle East sounds good to me. (thanks to Flan for the Clinton link
  • Three(!) items on John Maynard Keynes too. First, Krugman letting us know that one of Keynes’s early essays is now available–this one before he had developed his general theory. Worth a read. Second, here is Keynes’s Open Letter to Roosevelt, as published in the NY Times in 1933. Again, this is before his General Theory (which he published in 1936), but it’s clear that he’s already developing many of the ideas–notably how expansion of government spending is so important to helping the national economy. Finally, an economist interpreting a letter to Roosevelt in 1938. Very interesting. Remember, this is now after his General Theory was published, and after some of the new deal spending had started to have an effect. 1938 was actually when Roosevelt listened to those who were calling for “restraint,” and the economy actually slowed its recovery.
  • A bonus historical article by John Kenneth Galbraith. When a recession hits, don’t panic. Good advice, methinks.
  • A few different people try to answer the question: “How much does creating a job cost?” First, Greg Mankiw calculates that $700 billion for 2.5 million jobs makes it $280,000/job. He says that sounds unreasonable. Over at Economist’s View, there’s a much deeper analysis of how much it actually costs to create a job. It’s pretty interesting to see the numbers actually get run and how government spending can actually affect things.
  • Three angry posts on the Citigroup bailout. Nobody really seems to like it. Krugman calls it an outrage. Economist’s View has quite the lineup of economists talking about how bad the whole thing is. Also, Economist’s View wrote a more general idea on designing a bank bailout that might work. Finally, Brad DeLong wonders in great deal about the whole structure of Citi.
  • If the Fed is confusing Krugman, how do the rest of us have a chance?
  • Brad DeLong is angry. Economics is really complicated, and if journalists who write about it don’t know what they’re talking about, it’s not helping the general public understand.
  • We’ll end today with a few foreign policy links. The middle east and Afghanistan get more of the press, but there are other places where the US has interests. Next, an argument that we need to get away from the left-right spectrum when talking about foreign policy.

Last but not least, from GraphJam (via Andrew Sullivan)

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On Losing Campaigns

Like in 2004, Newsweek has recently published their giant story on the presidential campaign. It’s very long, but definitely worth a read.

After reading both the 2004 campaign review and the 2008 campaign review, one thing struck me about the three losing campaigns that they talked about (McCain, Clinton, and Kerry).  In all three campaigns, the candidate was portrayed as being indecisive and reluctant to make personnel decisions, while in the winning campaigns, the candidate really wasn’t even asked to make personnel decisions–they had a strong campaign manager (Axelrod, Rove) who simply handled all of that for him.  In all the stories, the losing candidate’s problems with making personnel decisions led to infighting and strategy that was all over the map.

We have three things that I’m interested in: a candidate’s skill at making personnel decisions, campaign infighting, and being a winning campaign.  What is the relationship among those three, and should any of these things be something that we select for in choosing future candidates? (aside from winning, obviously–we want any selected candidate to win)

There is clearly a strong correlation between an infighting campaign and a losing campaign, and causation is probably impossible to pick up in that case.  Most likely, there is a downward spiral where some infighting leads to a few early losses, which leads to more infighting, and so on.

That leaves us with personnel management.  In the winning campaigns, the candidate wasn’t even really involved with personnel decisions–they had a campaign manager who took basically took care of it, but there wasn’t much for micromanaging.  On the losing campaigns however, the common theme was that the candidates were involved in the day-to-day personnel decisions.  In addition, the candidates were always either waffling on their personnel decisions or simply not making personnel moves.

I wonder–which came first.  Does a candidate’s direct involvement in day-to-day personnel decisions cause turmoil and therefore losing, or does the losing and turmoil necessitate direct involvement, which the candidate then isn’t able to handle?  Clearly the indecision in personnel matters once the problems start happening is not a skill that we want in a high leadership position, but I wouldn’t have thought that it was a killer fault until this article.

My last question then is: Should we be selecting for these skills, and how do we do that?  Or is the more important thing that we find campaign managers who are better at handling these matters and delegating authority?

Something to think about as you’re waiting for the Franken-Coleman recount to end.

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Welcome to our new blog.  There will soon be content.

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