MICROBLOGGING: Were I McCarthy, I would move to elect by plurality, & see what happens...

From þe Chat, & of þe Moment...

Brad DeLong

Dec 25, 2022

Roll the Dice, Kevin! (2023-01-05)

If I were Kevin McCarthy, I would make a motion to elect the Speaker by a plurality, and see what happens...

Right Now þe House Is a Zombie (2023-01-04)

Right now the House can only do three things:

Collect nominations for Speaker
Vote on a Speaker
Adjourn until a date and time certain

it’s a strange form of Constitutional Groundhog Day.

Furthermore, at the moment there are no Representatives. There are only Representatives-Elect, who will not become Representatives until they are sworn in, after the election of a Speaker.

Parliamentary Procedure (2023-01-04)

Were I Kevin McCarthy this morning, I would wind up some of my guys and tell the Handmaiden Caucus that, for each one of them who does not vote for me, one of my guys will vote “present“. Thus, if more than eight handmade caucus members do not vote for McCarthy, Hakeem Jeffries becomes Speaker. (The Republicans will then be able, when they do have their ducks in a row, to vote to vacate the chair next week.

Variable “Speaker” = “null” (2023-01-03)

The variable “Speaker” has value “null”…

Variable Lags, Monetary Policy, & þe Inflation Situation (2023-01-03)

Noah Smith writes: The "monetary policy hasn't had time to work yet, therefore inflation is falling all on its own and the Fed is needlessly endangering the economy" line is not credible.

I reply: That argument is for a tighter gearing from short-term rates to spending-relevant rates. The five-year TIPS did not begin to move until mid-December 2021: 6 mos to affect demand and then 6 mos more to affect inflation and… we will start to see its effects this month… pic.twitter.com/zu3zxLAFPF

Distributional & Monetary Models of Inflation (2023-01-03)

There is an interesting debate between David Glasnerhttps://uneasymoney.com/2023/01/01/you-say-potato-i-say-potahto-you-say-tomato-i-say-tomahto-you-say-distribution-i-say-expectation/ and Olivier Blanchard

Olivier Blanchard @ojblanchard1

1/8. A point which is often lost in discussions of inflation and central bank policy. Inflation is fundamentally the outcome of the distributional conflict, between firms, workers, and taxpayers. It stops only when the various players are forced to accept the outcome.

going on.

I think the easiest way to conceptualize what I think of as the major point is to set up a model in which:

The central bank has a target rate of inflation.
The rate of inflation is a constant markdown applied to the rate of nominal wage increase.
The rate of increase of nominal wages that workers are able to demand, and enforce, is a declining function of the unemployment rate and of the real wage.

In this model, there is a warranted rate of nominal wage increase: the central bank’s inflation target, plus the wedge between price inflation and nominal wage increase. In this model, the natural rate of unemployment is the rate at which the actual rate of nominal wage increase is equal to the warranted rate, and thus depends on the level of the real wage—with a lower real wage sustainable only with a higher natural rate of unemployment.

You can understand this as a distributional conflict: total demands for production greater than 100% of supply, and so attaining a feasible equilibrium requires one of:

diminishing other groups’ claims on income and so pushing real wages up enough that nominal wage increases demanded are at the nominal warranted rate of wage increase.
raising the unemployment rate enough that nominal wage increases demanded are at the nominal warranted rate of wage increase.
accepting an inflation rate higher than the central bank’s target, and thus achieving feasibility via the exploitation of workers’ short-run money illusion.

If you take this approach, I think it becomes clear that Blanchard and Glasner are talking past each other, and are not really disagreeing…

My Rapidly Mounting Intellectual-Attention Debt (2023-01-02)

It is only 12 hours into 2023, and already I have read (well, in the case of the first noted—I read it last fall) four things that I really want to re-read again, carefully, and think for a long time about:

Olivier Blanchard: Fiscal Policy under Low Interest Rates <https://mitpress.mit.edu/9780262544870/fiscal-policy-under-low-interest-rates/>
Nick Confessore: The Invention of Elise Stefanik: 'To rise through the Trump-era G.O.P., a young congresswoman gave up her friends, her mentors and her ideals. Will it be enough?... <https://www.nytimes.com/2022/12/31/us/politics/elise-stefanik.html>
Steve M: Today I Learned What Right-Wingers Mean When They Say “Big Mike"“ <https://nomoremister.blogspot.com/2022/12/today-i-learned-what-right-wingers-mean.html>
Noah Smith: The Third Magic: A Meditation on History, Science, & AI <https://noahpinion.substack.com/p/the-third-magic>

Rüdi Dornbusch used to say to us graduate students: They pay me to write the literature, not read the literature.

I still do not know whether or not I should be saddened by this, because if I just read the literature, and do nothing else, I am of no use...

Happy New Year! (2023-01-01)

May your 2023 go as well as humanly possible…

And, now that my book Slouching Towards Utopia <bit.ly/3pP3Krk> is well launched, what do you think I should do with this SubStack Newsletter?

Yours,