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Sunday Morning Twitter: Functional Finance/A Better World Is Possible Tweeting...

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Preview of Sunday Morning Twitter Functional Finance A Better World Is Possible Tweeting

A better world—a better twitter—is indeed possible...

Suresh Naidu: I will stake my fancy economics job on this: Nothing in @Ocasio2018's policy program is inconsistent with a 2018 understanding of economics.

Wojtek Kopczuk: I missed it before, by my favorite colleague to disagree with. Congratulations on tenure @snaidunl!

Suresh Naidu: Sigh you drew me out. Tell me which policy is infeasible and not addressing some market failure?

Wojtek Kopczuk: They are inconsistent with the government budget constraint. And her MMT support is definitely inconsistent with mainstream economics.

Suresh Naidu: MMT is totally consistent with lots of mainstream macro when the economy is demand constrained (and fiscal theory of the price level when its not). it is unfortunate its adherents dont see that. And budget constraints are endogenous.

Ivan Werning: What do you have in mind?

Suresh Naidu: Oh crap a real macroeconomist. I think stripped of mysticism, MMT is really boils down to "fiscal mutipliers greater than 1", which could be true in demand constrained economy.

Ivan Werning: Let's not call that MMT.

Arindrajit Dube: Core propositions of MMT seem hard to differentiate from old school (“paleo” Keynesianism) in most likely states is the world ... maybe a difference is whether literally any level of public debt can be sustained at a non-accelerating inflation. Paleo Keynesians may say no.

Brad DeLong: MMT is Abba Lerner's Functional Finance with bells & whistles & some confusions. Manipulate G to stabilize Y & π, manipulate M to get an i to make debt finance sustainable, and rely on π to tell you if your policies are sustainable... If π↑ need G↓

Suresh Naidu: Clearest exposition of MMT in a tweet. Fight me deficit owls!

Ivan Werning: Interesting. I thought idea was broadly to use a feedback rule and push back against fixed doctrines.

Brad DeLong: Yes, but in some ways MMT or FF is the fiscal theory of the price level: if your government debt strategy moves in a long-term unsustainable direction, the FTotPL raises prices now. Hence successful stabilization of Y & π now guarantees no LR debt sustainability problem. Relies a little too heavily on the efficient markets hypothesis in the form of the FTotPL for my taste...

Ivan Werning: Seems wishful. Basically, I can't imagine how it plays out in any of the debt crises scenarios (which is where we should test it!) I know of, but maybe that is very "local" in my thinking.

Brad DeLong: Continuous-time fiscal theory of the price level kinda the wrong model for debt crises. Lots of Gennaioli-Shleifer "Oh f---! Why was I thinking that yesterday? We need to dump our entire portfolio now" phenomena which CT RE & FTotPL do not handle well...

Ivan Werning: Is there any relatively modern rendition of these Lerner ideas you recommend? Dynamics, stable steady states, and all?

Brad DeLong Haven't seen one. In one sense, it is too easy: in the fiscal theory of the price level, every G, T, M, & thus D path that stabilizes π satisfies LR government budget constraint. Add an exp Phillips Curve & Y, u are fine too. 3 instruments, 1 target, 2 policy degrees of freedom

Ivan Werning: People who think these things, have they ever visited latin america, say?

Brad DeLong: big distinction in fiscal running room between reserve currencies with exorbitant privilege, and all others. If MMT or MMT-light applies, applies only to 1st...

Wojtek Kopczuk: The reserve currency status is not given for all eternity

Brad DeLong: touché... if we reelect Trump here, we may find we have some identifying variance on this question...

Arindrajit Dube It’s probably not accidental that US w/ reserve currency exhorbitant privilege is where MMT arose: it’s the easiest to imagine it in this setting. One has to move substantially away from current equilibrium before it seems totally absurd.

Brad DeLong: But MMT does perform the valuable function of reminding people that, for the US (and Germany, and Britain, and Japan), r_{short-safe} < g, in which case government debt as safe asset provision is not a drag on but rather a financing mechanism for substantive government programs.

Brad DeLong: Sunday morning twitter threads like this remind me that we could live in the Republic of Plato rather than the Sewer of Romulus as far as social science and public policy are concerned, and that the internet can be an intellectual force multiplier rather than a hive of scum and villainy... A better world is possible! Toilers of all lands, unite! The full product of labor to the workers by hand and brain, with appropriate deductions for the social welfare function Lagrange multiplier for the temporary scarcity of produced means of production!!

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Peer Review

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Your manuscript "Don't Pay $25 to Access Any of the Articles in this Journal: A Review of Preprint Repositories and Author Willingness to Email PDF Copies for Free" has also been rejected, but nice try.
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popular
57 days ago
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4 public comments
kellyu
52 days ago
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I need to find the black power salute emoji.
Zaphod717
53 days ago
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Relevant to my interests...
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alt_text_bot
57 days ago
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Your manuscript "Don't Pay $25 to Access Any of the Articles in this Journal: A Review of Preprint Repositories and Author Willingness to Email PDF Copies for Free" has also been rejected, but nice try.
alt_text_at_your_service
57 days ago
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Your manuscript "Don't Pay $25 to Access Any of the Articles in this Journal: A Review of Preprint Repositories and Author Willingness to Email PDF Copies for Free" has also been rejected, but nice try.

The Public Sphere and "Civility"

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"Civility" looks very different depending on where you stand...

From here http://crookedtimber.org/2018/05/23/neo-marxism/ I have excerpted three short paragraphs very much worth reading and thinking about:

Andrew Sullivan: "This bloggy exchange Ta-Nehisi and I had in 2009, on the very subject of identity politics and its claims.... there was a civility about it, an actual generosity of spirit, that transcended the boundaries of race and background.... The Atlantic was crammed with ideological opposites then, jostling together in the same office, and our engagement with each other and our readerships was a crackling and productive one. There was much more of that back then, before Twitter swallowed blogging, before identity politics became completely nonnegotiable, before we degenerated into these tribal swarms of snark and loathing. I think of it now as a distant island, appearing now and then, as the waves go up and down. The riptide of tribalism can capture us all in the end, until we drown in it..."

Ta Nehisi Coates: "I got incredibly used to learning from people... quite good at their craft, who I felt, and pardon my language, were fucking racist. And that was just the way the world was. I didn’t really have the luxury of having teachers who I necessarily felt, you know, saw me completely as a human being.... You can go into The Atlantic archives right now, and you can see me arguing with Andrew Sullivan about whether black people are genetically disposed to be dumber than white people. I actually had to take this seriously, you understand? I couldn’t speak in a certain way to Andrew. I couldn’t speak to Andrew on the blog the way I would speak to my wife about what Andrew said on the blog in the morning when it was just us.... I learned how to blog from Andrew. That was who I actually learned from. That was who actually helped me craft my voice. Even recognizing who he was and what he was, you know, I learned from him..."

Henry Farrell: "In juxtaposition, Sullivan’s and Coates’s pieces provide a miniature history of how a certain variety of self-congratulatory openness to inquiry is in actual fact a barbed thicket of power relations. What Sullivan depicts as a 'different time' when 'neither of us denied each other’s good faith or human worth', is, in Coates’ understanding, a time where he was required to 'take seriously' the argument that 'black people are genetically disposed to be dumber than white people' as a price of entry into the rarified heights of conversation at the Atlantic. The 'civility' and 'generosity of spirit' that supported 'human to human' conversation is juxtaposed to Coates’s 'teachers' who didn’t see him 'completely as a human being'. What was open and free spirited debate in Sullivan’s depiction, was to Coates a loaded and poisonous dialogue where he could only participate if he shut up about what he actually believed. Juxtaposing these two gives us a very different understanding of Sullivan’s claim that 'identity politics [have become] completely nonnegotiable', and we are all being pulled down by the 'riptide of tribalism'..."

Finished? Good. Perhaps I should simply say that Henry Farrell has written everything that needs to be written here.

Or perhaps I should note that, back in The Day, it was not us, their adversaries on, say, the 2001 tax cut, who were denying George W. Bush's and Andrew Sullivan's good faith in the debate. It was Andrew Sullivan himself glorying that neither George W. Bush nor he was arguing in good faith:

The fact that Bush has to obfuscate his real goals of reducing spending with the smoke screen of 'compassionate conservatism' shows how uphill the struggle is.... A certain amount of B.S. is necessary for any vaguely successful retrenchment of government power in an insatiable entitlement state.... I just hope the smoke doesn't clear before the spenders get their hands on our wallets again...

Sullivan felt himself under no obligation to be honest or civil back when he thought he was riding high. Rather the reverse. And it was not just Black people—although it was far stronger there. Those of us who thought that, like, arithmetic in the public sphere should be accurate were also not worth engaging in good faith.

Let me venture to generalize: Andrew Sullivan was always an interesting thinker, in that "civility" was something that others needed to extend to him but not that he was under any obligation to extend to anybody else. Most of all, we remember Andrew Sullivan after 911:

The middle part of the country—the great red zone that voted for Bush—is clearly ready for war. The decadent Left in its enclaves on the coasts is not dead—and may well mount what amounts to a fifth column...

and:

We might as well be aware of the enemy within the West itself-a paralyzing, pseudo-clever, morally nihilist fifth column that will surely ramp up its hatred in the days and months ahead...

It was not just Ta-Nehisi Coates but everybody who had doubts about the rush to conquer Iraq who had good reason to think they were regarded by Sullivan as something less than partners in argument and discernment.

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California Rules Coffee a Carcinogen

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California Superior Court Judge Elihu Berle ruled, in accordance with Proposition 65 law, that coffee is a carcinogen and requires a warning label in the state of California. This ruling, however, is not in accord with science and rational medicine.

What went wrong are all the things that can go wrong when trying to assess health risk.

The ruling is based on the presence of acrylamide in coffee. There is evidence that acrylamide is a potential risk factor for certain cancers. This is based mostly on animal and in vitro studies.

How scientists determine that a substance is potentially a cancer risk is a little complex, since we cannot do direct clinical studies. It is unethical to expose a subject to a potential carcinogen to see if they get cancer. So we start with studies on cells and animals.


These types of pre-clinical studies, however, can only tell us about hazard, not risk. A hazardous substance is something which can theoretically cause harm depending on exposure, while risk is actual harm caused by exposure in a certain population to a certain dose over a certain period of time.

Think of it this way – sharks are hazardous, but a shark in a tank poses very little risk. Swimming with sharks in that tank, however, poses a high risk.

So how do we determine the risk to humans of a substance which is potentially hazardous based on pre-clinical studies? For that we rely on epidemiology and observational studies. If we, for example, ask people about their coffee drinking habits, and then track them over time for the development of cancer, we can then make comparisons and see if drinking coffee correlates with increased cancer risk.

There are many shortcomings from this type of data, however, specifically the potential for confounding factors. Drinking more coffee may correlate with more smoking, or consumption of other hazardous products, for example. You can try to control for possible confounding factors, but not the ones you are not aware of. So this limits the utility of such data.

Even still, it is possible to build a robust base of evidence clearly showing risk. If the observational studies all triangulate to only one plausible cause, then we can be highly confident of that interpretation of the correlations. Smoking, for example, correlates with risk of lung cancer every possible way you can look at the data. This is a solid causal link.

The same solid link does not exist for acrylamide in coffee. Therefore coffee is deemed only a probable cause of cancer by the IARC, which is a notoriously cautious body that errs on the side of calling substances “probable” carcinogens. Essentially, if some hazard shows up in pre-clinical studies, but there is no clinical evidence of actual risk, they still call it “probable.”

California law then takes the IARC “probable” and turns that into “coffee causes cancer.” In each step the precautionary principle ratchets up the warning, until we go from no clinical evidence of actual risk, to a required warning label that it does cause cancer.

This approach, however, is not without its own risk, turning the precautionary principle on its head.

As I reported previously on SBM, a 2013 study found that 72% of random ingredients from a cookbook had published data showing that they increased the risk of some cancer. What is the public supposed to do with this information?

There are two real risks here, the first of which is what is called alarm fatigue. If you set your threshold for warning alarms too low, then the alarms will always be going off, and people will learn to ignore them.

Do you think many people will stop drinking coffee because of the warning? I wonder what percentage will give up their daily coffee habit based on this decision. Most people will likely (and correctly) file this away as a manifestation of the overly cautious CYA nanny state and ignore the warnings. But this makes it more likely they will ignore more meaningful warnings about actual risk that they should be listening to.

If everything causes cancer, then perhaps nothing really does, and you should ignore all such warnings. The warnings themselves become useless.

There is also the opposite risk, that some people, in the sincere desire to be healthy or out of anxiety, will try to heed all such warnings. This can lead to what some are calling “orthorexia” (not currently a recognized clinical term), in which people excessively restrict their diet in the hopes of avoiding risky food.

If 72% or so of foods or ingredients can be linked to cancer, and you try to avoid them all, then what will you eat? What are the risks of such a highly restrictive diet? I strongly suspect that if you followed all the warnings about potential risks of foods, there would be net harm from poor nutrition.

There is also an opportunity cost to spending so much time and effort carefully vetting everything you eat for any possible risk. That time could be better spend on more fruitful healthy activities.

There is also an industry of self-help advice turning these public warning into marketable fearmongering. They have essentially been “weaponized” for either marketing or to promote various ideological agendas. The anti-GMO campaign is perhaps the best example.

The state should be trying to mitigate these counterproductive forces, not aid them. If anything they should be a mediating force, putting together panels of experts to create sober and useful bottom-line advice for the public, advice that people can plausibly used, and designed to minimize unintended consequences.

California’s approach, I think, is harmful. In an endeavor to protect the health of their citizens I think they are harming health. They are also potentially undercutting faith in experts an expertise itself, which has further downstream negative consequences.

This is the precautionary principle out of all control.

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jhamill
127 days ago
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TL:DR - California thinks EVERYTHING is a carcinogen. And I mean EVERYTHING. If they could, there would be a label on everything that says something about this could cause cancer.
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HarlandCorbin
127 days ago
I don't live in California. Do electricity bills come with the cancer warning?
jhamill
126 days ago
Yup.
Zaphod717
127 days ago
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"potentially undercutting faith in experts an expertise itself"? That ship has sailed, unfortunately, and in no small part due to the kinds of Dynamics described by Novella.
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MotherHydra
128 days ago
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But, BUT! I love my daily carcinogen intake.
Space City, USA

Adding Sensation to Robotic Limbs

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Recently scientists have managed to stimulate the brain in such a way that approximated some of the sensations of a natural limb in a paralyzed subject. No, they did not regain sensation, but the research is a powerful proof of concept. It shows that it is possible to produce natural-feeling sensation through electrical stimulation of the cortex, an important step for brain-machine interface research.
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Zaphod717
163 days ago
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Just have the robot body ready when my meatbag wears out.
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Hari Kondabolu Calls Out 'The Simpsons' for Dismissing Apu Criticism

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“‘The Simpsons’ response tonight is not a jab at me, but at what many of us consider progress.”



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Zaphod717
165 days ago
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#WhiteTearsMatter
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