Relevant and even prescient commentary on news, politics and the economy.

Top 100 Blogs

In the Category of General Blogs or blogs which focus on a variety of topics. These blogs regularly present on a variety of topics and are a great way to start understanding economics or even to keep up with current economic events.

– Marginal Revolution
– The Big Picture
– Calculated Risk
– Naked Capitalism
– Economists View
– Grasping Reality with the Invisible Hand
– EconBrowser
– Capital Markets & Economic Analysis
– Robert Reich
– The Baseline Scenario
– Cafe Hayek
– Chris Blattman
– On the Economy
– Economists Do It With Models
– Dani Rodrik’s weblog
– The Money Illusion
The Angry Bear “The Angry Bear blog is a very popular multi-author blog. This left-leaning blog provides incisive commentary on U.S./Economics, law and politics. Popular topics: Law, U.S. Economic policies, politics

Angry Bear was ranked 17th. Not bad!

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How likely is it that Donald Trump, if elected, would serve more than a few months of his term? How likely is it that he will even continue as the nominee much beyond the convention?

My opinion is that Trump is suffering from what I call “Attention-Seeking Deficit Disorder.” He doesn’t want to serve. He doesn’t want to be president; he wants the attention that accompanies the campaign. And now, I think he’s rather afraid that he might win. [Laughs] I don’t think he knows what he’s going to do as president.

— Lloyd Wright, the Democratic National Committee’s media coordinator during the 1964 race.

That quote appears in an interesting interview published on last weekend’s Politico Magazine, with the title “LBJ’s Ad Men: Here’s How Clinton Can Beat Trump–We talked to two of the geniuses behind the greatest ad campaign in political history. Here’s what they’d do in 2016.”  The interview is by Robert Mann, author of the book Daisy Petals and Mushroom Clouds: LBJ, Barry Goldwater, and the Ad That Changed American Politics.  (The other participant is Sid Myers, former art director at the campaign’s advertising firm.)

Earlier this week Trump was quoted as suggesting that he isn’t having very much fun anymore.  I think this occurred the day after the judge in the Trump U. case ordered the public release of deposition transcripts and other documents from the litigation’s discovery process—information that, at least in my opinion, will be a death blow to his candidacy.

But also within the last two or three days, as Trump has spiraled into undeniable madness, I’ve seen articles such as one today by NYT Supreme Court correspondent Adam Liptak titled “Donald Trump Could Threaten U.S. Rule of Law, Scholars Say.”  That article begins:

WASHINGTON — Donald J. Trump’s blustery attacks on the press, complaints about the judicial system and bold claims of presidential power collectively sketch out a constitutional worldview that shows contempt for the First Amendment, the separation of powers and the rule of law, legal experts across the political spectrum say.

Even as much of the Republican political establishment lines up behind its presumptive nominee, many conservative and libertarian legal scholars warn that electing Mr. Trump is a recipe for a constitutional crisis.

All of the quotes in the article are from libertarian-right law professors.  But clearly, the expectation of blatantly unconstitutional conduct by Trump is hardly limited to that crowd.

Another article I read in the last day or two recounts the many statements Trump has made in the last few months that make clear that he doesn’t know even the basic contours of what each of the three branches of the federal government is charged under the Constitution with doing, and appears not to know that there is a separate of powers among the three branches under the Constitution.

Then there are those private conversations that Paul Ryan mentioned yesterday between him and Trump, which culminated in Ryan’s endorsement of Trump upon the stated ground that Trump would become Ryan’s puppet.  Trump, Ryan said, will support Ryan’s fiscal agenda. And regulatory agenda.  And Legal Movement agenda.  Which is what most large Republican donors care about.  Trump’s made it clear that the federal judiciary will be a branch of Koch Industries.  And that almost certainly is a promise he would keep.

Directly or via succession.  His own.

He’s assured Ryan that the Kochs, the securities and banking industry donors, and the pharmaceutical industry donors will control their respective industry’s administrative agencies, beyond anything that existed even in the Reagan and Bush II administrations. He’s done so publicly about the EPA.  And undoubtedly privately regarding the others.

Ryan doesn’t trust Trump to keep his promises.  But I think he needn’t worry, not because Trump himself actually understands what a promise is—he doesn’t—but because it will be Ryan and the Kochs who choose the vice presidential nominee.  The person who quickly will become the actual or de facto presidential nominee or, if the ticket wins, president within a few months.

I think Democrats need to consider the possibility of this scenario, and start seriously educating the public about the Ryan fiscal and deregulatory juggernaut in store for the country if the Republican ticket wins. And they should recognize that the real ballgame here may be the VP candidate.

If Trump remains the nominee and is elected, how long will he remain in office?

****

I’m not sure whether this is a serious post or not.

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If You Thought 2010 was Recovery Summer, Wait until you see 2016!

Cue the Fed Taking a Dump in the Empty Punch Bowl

In May, the civilian labor force participation rate decreased by 0.2 percentage
point to 62.6 percent. The rate has declined by 0.4 percentage point over the
past 2 months, offsetting gains in the first quarter.

But the headline number is “at full employment,” if you are determined to be stupid or the President of the Boston Fed (which did not used to be redundant).

The only thing that could save Janet Yellen’s reputation now would be if she became impaired or died before the 16th.

Meanwhile, the [ETA: major U.S. money-center] banks remain insolvent.

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A New Model of the Economy Please

Brad DeLong wrote recently concerning the Uncertainty at the Fed

“The heart of the trouble consists in the fact that neither financial-market participants nor, it seems, the Fed itself know the true state of the economy or how best to model it – especially in the wake of the 2008 financial crisis” (link)

It is a fact he says. The Fed and others do not know how best to model the state of the economy.

I stand alone with a new model for an Effective Demand limit as Keynes envisioned it.

The basic concept behind the model is that the percentage that labor receives of national income determines a limit upon the utilization of labor and capital in production. The key idea is that capital income based upon utilizing capital resources is optimized at the effective demand limit. Thus capital does not want to go beyond the limit because it begins to consume its power position in the aggregate. Capital seeks to consume labor income while maximizing its relative strength in the economic flow of money.

So why is my model good? While Brad DeLong points out the confusion from the Fed, my model is not confused.

  • It knows why capacity utilization is dropping and why unemployment stays low.
  • It knows why the output gap has continuously been revised downward, because the output gap was closed years ago in this business cycle.

output gap update

  • It knows why the Fed seems to want to normalize rates. The economy is at the end of the business cycle. Rates are supposed to be close to normalized by now.

So the confusion over where the state of the economy is has led to the uncertainty that Brad DeLong writes about… on both sides, the central banks and the market participants. We see a situation where the market participants see a different economic potential than economists. They have seen limitations in this business cycle. Yet the Fed is still waiting for inflation and demand to pick up, while top line revenue of firms has already topped out in the aggregate.

The Fed still sees that this business cycle will stay alive for another two years.  The disconnect has been severe for many years causing sluggishness in the economy.

The Fed does not want inflation above target because higher inflation causes distortions and slows growth. However, they have entered another situation where there models are misreading the state of the economy and leading to sluggishness anyway.

What is the equation of the effective demand limit?

Effective demand limit upon real GDP = rGDP*e*T/L* (1 – (1 – 1/e)*T/L)

T = capacity utilization * (1 – unemployment rate)
L = an effective demand limit function (Labor share index * 0.76)
e = 3 … coefficient to set maximum of effective demand at the stable equilibrium with production.

Effective labor share (L) determines the limit upon the % utilization of labor and capital in production. The following graph portrays Keynes’ vision of Effective Demand quite well. Let’s bear in mind that Keynes never gave an equation for effective demand. He only described how it seemed to work.

This equation works. The economy has followed this model for as long as we have data for capacity utilization… since 1967 to now.

limit model 4d

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I’m Buried, but This Deserves Another Look

Erik Loomis at LG&M notes that Forbes is attempting to encourage age discrimination (no we’re not; wink, wink, nod, nod).

And it made me think of this post from Lance Mannion, which deserves to be read every day you can:

You get up for a stretch, wander out onto the floor to get a cup of coffee, give people the eye, remind them you’re here, still the boss. Not that they need the reminding. Good people. Hard workers. You hardly have to say a word to some of them. Work their asses off for half the money, which, you know, you’d like to pay them. Business is good, as in ok, but it’s not like you’re making the bucks so fast you can’t find space to put it all, it’s piling up so fast….

Sid. Look at him. Geezus. Five years younger than you and looks like he could be your father. Ok. That’s a bit of an exaggeration. But he’s not looking too good these days, is he? Too bad. He used to be such a dynamo. Worked like a hero. Put in seven days a week if you’d let him. Best you had. Then he turned sixty-five and it was like he hit a wall. Bam. Just knocked him flat and he’s never been able to get up again, not really. Mostly, for the past year, he comes in, goes through the motions. He’s become a real drag on the business. He really should hang it up. But what’s he gonna do? You always paid him a fair chunk of change. Never was going to make him rich, but he got by pretty well. But 2007, 2008. Everybody’s 401(k) took a big hit, then his wife got sick, and their house went under water. He’s going to need to collect full benefits on his Social Security. He needs to stick it out for one more year.

Oh wait. It’s 2020 now, isn’t it? They raised the retirement age for people Sid’s age back in 2011. He can’t collect full benefits until he’s 69. So he’s going to stick around for three more years!

Three?

Think about it. His wife’s health is shaky. Sid’s is none too good. No way he can make up for the difference in medical costs for what the vouchers won’t cover. Sid needs to work here till he drops just for the medical plan, which is no great shakes, it costs you both an arm and a leg, but it’s not like it’s suddenly got cheaper to go the doctor’s. Even a simple check-up dings you, never mind if you need something big taken care of.

No, Sid’s here for life, unless…

Nah, you couldn’t do that to Sid. Not after all the years he’s put in.

Could you?

There are many reasons I say people should hit his tip jar–he’s too good to be one of the people Brad DeLong but this one keeps coming back as one of the best, one of the two best posts ever on the Internet about working.* Read the whole thing. And hit his tip jar if you can.

*The other is Mark Thoma’s description of what it’s like to be downsized in a Company Town and have to look for a new job. Which, as usual, I haven’t been able to find recently.

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