Here is the link to the storified tweets.

Link to the Column on Quartz

Here is the full text of my 19th Quartz column, Here is a link to my 19th column on Quartz: “Four More Years: The US economy needs a third term of Ben Bernanke,” now brought home to supplysideliberal.com. It was first published on March 22, 2013. Links to all my other columns can be found here.

If you want to mirror the content of this post on another site, that is possible for a limited time if you read the legal notice at this link and include both a link to the original Quartz column and the following copyright notice:

© March 22, 2013: Miles Kimball, as first published on Quartz. Used by permission according to a temporary nonexclusive license expiring June 30, 2014. All rights reserved.

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Ben Bernanke’s second term as chairman of the US Federal Reserve ends at the end of January 2014. Speculation has begun about whether President Obama leans toward reappointing him and whether Ben Bernanke would accept reappointment. At his March 20 press conference, Bernanke said he had spoken to Obama “a bit” about his own future without directly addressing the question of whether he would be willing to serve a third term if asked. But he emphasized that he did not see himself as indispensable, saying “I don’t think that I’m the only person in the world who can manage the exit [strategy]” from the stimulus the Fed has been providing to the economy. Given Bernanke’s reticence, the Wall Street Journal provides an important tea leaf  when it reports that “Many of [Bernanke’s] friends and associates believe he will want to leave after his current term expires.”

Though the stresses Ben Bernanke has faced during his time as chairman of the Fed—and the princely speaker fees and book advances available to former Fed chiefs—would make a desire to retire at the end of his current term understandable, I hope that Obama will ask him to serve a third term and that Ben Bernanke will accept—and that the Senate will confirm him by a wider margin than it did for his second term. Of these decision-makers, the hardest to persuade might be Ben Bernanke himself.

As Bernanke said, if all goes well, and the economy is firmly on the road to full recovery, many possible Fed chiefs could manage a reasonably graceful exit from quantitative easing and interest rates hovering around zero. But I do not think the economy will be out of the woods by January 2014. Many dangers will remain, particularly dangers to the US economy from troubles in the rest of the world and from the difficulties of reining in the US national debt without bringing the US economy to a halt.

Though not by any means a close confidant, I have known Ben Bernanke for a long time from meetings of the Monetary Economics group in the National Bureau of Economic Research. We economists are quick to take the measure of one another, and I have always had the highest respect for Ben Bernanke’s thoughtful approach to economics. Through the news, and from reading David Wessel’s wonderful book about the Fed’s response to the financial crisis, In Fed We Trust, I have studied with interest each official move that Ben Bernanke has made as chairman of the Fed. Instead of Monday morning quarterbacking, I have asked myself at each point what I thought should be done, given what I knew at the time, and compared it to the decisions that Bernanke made at that time. I know I could not have done better than Bernanke. And Greg Mankiw, former chairman of the Council of Economic Advisors, who was on the same short list for appointment as Fed chairman as Bernanke, has similarly said that “he very much agreed with Bernanke’s policy decisions over his tenure.”

I can say with clarity that Bernanke’s biggest failure—not foreseeing the gravity of the coming financial crisis—was a failure of the entire economics profession and hardly his alone.  Economists did see the housing bubble and worried in advance about a collapse in housing prices. But what we didn’t know—in large part because the needed data was not collected from them—is what huge bets the big banks and other big financial firms had taken on the overall level of house prices in the US. So when housing prices fell all across the US, the big banks and other financial firms got into trouble, and dragged the world economy down with them. Ever since, Ben Bernanke has been laboring mightily to get the US economy and the world economy out of the hole that the financial crisis put them in.

In addition to wielding the emergency powers of the Fed to prevent an even worse financial meltdown, Bernanke has played a central role in adding quantitative easing to the standard toolkit of monetary policy in the US. In other words, Bernanke did a lot to help convince his colleagues in the Fed, and some fraction of the public, that when the interest rate on three-month Treasury bills has fallen to zero, the Fed can and should still stimulate the economy by buying other assets instead of three-month Treasury bills.  Bernanke has acted according to the slogan I use in my blog post “Balance Sheet Monetary Policy: A Primer,”

When below natural output: print money and buy assets!

And when one kind of asset already has a zero interest rate, buy some other type of asset. Bernanke has done so, in the face of often-savage criticism. (It is only in the last few years that “End the Fed!” has become a slogan for a substantial minority of the US population—many of whom reliably show up as energetic commentators on websites.) In all of this, the Bernanke Fed has been significantly more vigorous than other major central banks, and as a result, the US has done better economically than Japan, the UK or the euro zone as a whole. (China is a whole different story.)

Although there are a few other economists who might match Bernanke in their monetary policy judgments, through his years at the helm of the Fed, Bernanke has developed an unparalleled skill in explaining and defending controversial monetary policy measures to Congress and to the public. The most important ways in which US monetary policy has fallen short in the last few years are because of the limits Congress has implicitly and explicitly placed on the Fed. Negative interest rates could be much more powerful than quantitative easing, but require a legal differentiation between paper currency and electronic money in bank accounts to avoid massive currency storage that would short-circuit the intended stimulus to the economy. (See my column: “How Paper Currency is Holding the US Recovery Back.”) That would require legislation. Lending directly to households would require legislation. (See my column: “More Muscle than QE3: With an extra $2,000 in their pockets, could Americans restart the US economy?”) And creating a US Sovereign Wealth Fund as a sister institution to the Fed to give the Fed running room and help stabilize the financial system would require legislation. (See my column: “Why the US needs its own sovereign wealth fund” and also: “How to stabilize the financial system and make money for US taxpayers.”)

If we are to have a hope of adding these tools to the monetary policy toolkit—tools that one way or another, we will need someday—we need a Fed chief who not only has the skill that Bernanke has gained at explaining monetary policy to Congress and the public, but also the prestige that will come when we finally get out of the economic mess we are in and people realize that, in important measure, it was Ben Bernanke who got us out of that mess. But the biggest reason we need a third Bernanke term is that nasty economic shocks may not be through with us yet. And no other potential head of the Fed has as much experience in responding to nasty shocks with solidly creative monetary policy as Ben Bernanke.

I join Greg Mankiw, who happened to be my graduate adviser, in calling Ben Bernanke a hero. Though he might be tempted to cut it short, I don’t see any way that Ben Bernanke can complete the hero’s journey that history has appointed him without a third term.

Link to the Column on Quartz

Here is the full text of my 18th Quartz column, “The Stanford economists are so wrong: A tighter budget won’t be accompanied by tighter monetary policy.” I honestly couldn’t think of a good working title of my own before my editor Mitra Kalita gave it the title it has on Quartz. But it finally came to me what I wanted my version of the title to be: the main theme is short-run monetary policy dominance, so my title is “Show Me the Money!”

The heart of this column is a discussion of the paper I wrote with Susanto Basu and John Fernald: “Are Technology Improvements Contractionary?”  It was first published on March 19, 2013. Links to all my other columns can be found here.

If you want to mirror the content of this post on another site, that is possible for a limited time if you read the legal notice at this link and include both a link to the original Quartz column and the following copyright notice:

© March 19, 2013: Miles Kimball, as first published on Quartz. Used by permission according to a temporary nonexclusive license expiring June 30, 2014. All rights reserved.

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Until the election last year, Stanford economics professor John Taylor was one of Mitt Romney’s chief campaign economists. This morning, he joins his Stanford colleague John Cogan in a Wall Street Journal opinion piece, “How the House Budget Would Boost the Economy.” Cogan and Taylor write:

According to our research, the spending restraint and balanced-budget parts of the House Budget Committee plan would boost the economy immediately.

Leaving aside the long-run merits of the House Budget, let’s evaluate Cogan and Taylor’s argument about what its short-run effects would be. The key to any hope that cutting spending would stimulate the economy is that the spending cuts are all in the future—hopefully after the economy has already fully recovered:

The House budget plan keeps total federal outlays at their current level for two years. Thereafter, spending would rise each year, but more slowly than if present policies continue.

If government spending doesn’t change for the next two years, why might the budget being put forward by the US House of Representatives boost the economy now?  Put plainly, their argument is that companies sitting on big piles of cash will invest more and individuals who have money to spend because they have funds in stocks, bonds and bank accounts will spend more now because of reduced concerns about higher future business and personal taxes.

The thing that Cogan and Taylor leave obscure in their argument is that the short-run effect of the House Budget would depend critically on the Federal Reserve’s reaction to it. Let me illustrate the importance of what the Fed does by pointing to the short-run effects of technology shocks. All economists agree that, in the long run, technological progress raises GDP—more than anything else. Yet, in our paper “Are Technology Improvements Contractionary?” which appeared in the scholarly journal American Economic Review, Susanto Basu, John Fernald and I showed that, historically, technology improvements have led to short-run reductions in investment and employment that were enough to prevent any short-run boost to GDP, despite improved productivity. (Independently, using very different methods, many other economists, starting with Jordi Gali, had found the negative short-run effect of technology improvements on how much people work.)

How can something that stimulates the economy in the long run lead people to work and invest less? It is all about the monetary policy reaction. Historically, in the wake of technology improvements, the Fed has cut interest rates somewhat, but has failed to do enough to keep the price level on track and accommodate in the short run the higher level of GDP that eventually follows from a technological improvement in the long run.

So what monetary policy do Cogan and Taylor envision to go along with the House Budget’s proposed cuts in future government spending? Arguing that the results of the House Budget would be even better than predicted by the model they are relying on, Cogan and Taylor write:

Nor does the model account for beneficial changes in monetary policy that could accompany enactment of the budget plan. Lower deficits and national debt would reduce pressure on the Federal Reserve to continue buying long-term Treasury bonds.

To translate, Cogan and Taylor are envisioning tighter monetary policy to go along with the House Budget. But, to the extent that their arguments about the stimulative effects of cutting future government spending have any merit, it would be in conjunction with continued—and likely accelerated–Fed purchases of long-term government bonds and mortgage bonds. As I discussed in an earlier column and at much greater length on my blog, John Taylor is so strongly opposed to even what the Fed is currently doing to support the economy that he is willing to resort to specious arguments to argue for Fed tightening. There is no hope that the House Budget will stimulate the economy as Cogan and Taylor claim unless John Taylor gives up his misguided wish for tighter monetary policy.

Crystal Structure of Quartz

The top 25 posts on supplysideliberal.com listed below are based on Google Analytics pageviews from June 3, 2012 through midday, May 5, 2013. The number of pageviews is shown by each post. Not counting Quartz pageviews and pageviews from some forms of subscription, Google Analytics counts 240,923 pageviews during this period but, for example, 79,445 homepage views could not be categorized by post.  

I have to handle my Quartz columns separately because that pageview data is proprietary. My very most popular pieces have been Quartz columns. Since there are only 22, I have listed them all. You might also find other posts you like in this earlier list of top posts, at this link.

I have some musings on this data after the lists.

All 22 Quartz Columns So Far, in Order of Popularity:

1. An Economist’s Mea Culpa: I Relied on Reinhart and Rogoff
2. Show Me the Money!
3. How Italy and the UK Can Stimulate Their Economies Without Further Damaging Their Credit Ratings
4. Four More Years! The US Economy Needs a Third Term of Ben Bernanke
5. Why the US Needs Its Own Sovereign Wealth Fund
6. Could the UK be the First Country to Adopt Electronic Money?
7. Optimal Monetary Policy: Could the Next Big Idea Come from the Blogosphere?
8. Read His Lips: Why Ben Bernanke Had to Set Firm Targets for the Economy
9. More Muscle than QE3: With an Extra $2000 in their Pockets, Could Americans Restart the U.S. Economy?
10. How Subordinating Paper Money to Electronic Money Can End Recessions and End Inflation
11. Judging the Nations: Wealth and Happiness Are Not Enough
12. Yes, There is an Alternative to Austerity Versus Spending: Reinvigorate America’s Nonprofits
13. John Taylor is Wrong: The Fed is Not Causing Another Recession
14. Why Austerity Budgets Won’t Save Your Economy
15. Monetary Policy and Financial Stability
16. Off the Rails: What the Heck is Happening to the US Economy? How to Get the Recovery Back on Track
17. Obama Could Really Help the US Economy by Pushing for More Legal Immigration
18. Does Ben Bernanke Want to Replace GDP with a Happiness Index?
19. How to Stabilize the Financial System and Make Money for US Taxpayers
20. How the Electronic Deutsche Mark Can Save Europe
21. Al Roth’s Nobel Prize is in Economics, but Doctors Can Thank Him, Too
22. Symbol Wanted: Maybe Europe’s Unity Doesn’t Rest on Its Currency. Joint Mission to Mars, Anyone?
23. (On The Independent, no pageview data) Why George Osborne Should Give Everyone in Britain a New Credit Card

Top 25 Posts on supplysideliberal.com:

1. Dr. Smith and the Asset Bubble   6249
2. Contra John Taylor   6157
3. Scott Adams’s Finest Hour: How to Tax the Rich   4163
4. Balance Sheet Monetary Policy: A Primer   3942
5. Noah Smith Joins My Debate with Paul Krugman: Debt, National Lines of Credit, and Politics 3655
6. Isaac Sorkin: Don’t Be Too Reassured by Small Short-Run Effects    of the Minimum Wage 3482
7. What is a Supply-Side Liberal?   3076
8. The Deep Magic of Money and the Deeper Magic of the Supply Side   2433
9. You Didn’t Build That: America Edition   2177
10. The Logarithmic Harmony of Percent Changes and Growth Rates   2164
11. Trillions and Trillions: Getting Used to Balance Sheet Monetary Policy   2130 
12. The Egocentric Illusion   2072
13. Two Types of Knowledge: Human Capital and Information    1960
14. Books on Economics   1839
15. No Tax Increase Without Recompense    1828
16. Getting the Biggest Bang for the Buck in Fiscal Policy   1792
17. Why I am a Macroeconomist: Increasing Returns and Unemployment   1764
18. Jobs    1661
19. Scrooge and the Ethical Case for Consumption Taxation   1611
20. Let the Wrong Come to Me, For They Will Make Me More Right 1602
21. The Shape of Production: Charles Cobb’s and Paul Douglas’s Boon to Economics   1586
22. Kevin Hassett, Glenn Hubbard, Greg Mankiw and John Taylor Need to Answer This Post of Brad DeLong’s Point by Point   1558
23. Three Goals for Ph.D. Courses in Economics 1510
24. Why Taxes are Bad   1499
25. Is Taxing Capital OK?   1467

Musings: 

• Not surprisingly, controversy breeds pageviews—for both posts and Quartz columns. Also, the titles my editors on Quartz gave to columns likely bring more pageviews than the sometimes tamer, more accurate, permanent titles that I use above. (You can see those titles at the links.) Although I carefully distinguish between my own titles and Quartz’s titles, I do not object to their efforts to bring more pageviews by giving the columns catchier, if less-accurate, titles. 
• There is a clear time trend in the data. Later columns and post have an advantage over earlier columns and posts of equal quality.
• The list of columns and list of posts above is actually quite good at capturing the pieces that I personally think are most important. I also periodically update a list of “save-the-world” posts. There is always a link at my sidebar to the current list. The latest (January 17) list of “save-the-world” posts is given in my posts “The Overton Window” and “Within the Overton Window.” Other than what is in those lists and what is among the posts and columns in the lists above, if you look at “Anat Admati, Martin Hellwig and John Cochrane on Bank Capital Requirements,” Martin Feldstein’s article “It’s Time To Cap Tax Deductions” that I link to, and yesterday’s post “The Ethics of Immigration Reform, Revisited,” you will be up to date on the most important “save-the-world” posts.   
• I am intrigued by the two older posts that have gained ground in the rankings since the last list. Despite the addition of brand-new popular posts making the competition tougher, “The Logarithmic Harmony of Percent Changes and Growth Rates” moved up from rank 15 in February, to rank 10 now. Less remarkably, “Three Goals for Ph.D. Courses in Economics” didn’t make the list of top 25 that came out five days later, but has managed to slide into the number 23 slot now.  

Link to a review of Crossing Borders by Sergio Troncoso

For practical policy debates, the most important ethical principle is that the pain and suffering—and the joy—of each human being is of equal importance, without regard to who that person is.  Treating some human beings and their concerns as being of lesser importance is the root of much evil in the world.

For those who cannot manage to approach the well-being of all human beings on an equal footing (and of course, this includes almost all of us in our personal dealings), let me recommend this:

At least for public policy purposes, 

on the way to treating the concerns of all human beings as of equal value,

let us treat the concerns of those human beings we treat as least important

as being at least one-hundredth as important

as the concerns of those we treat as most  important.

All of that is an introduction for this link to a robust Twitter discussion on the ethics of immigration policy.

Update: I have added a Twitter discussion sparked by this post at the end of the storified tweets from earlier. In that discussion, I call the rule just above, treating foreigners as at least one-hundredth as important as citizens, the tin rule.  

Photo link via 33arquitectures|infiniteinterior| It’s Not Easy Being Brutalist | The Accidental Cootchie Mama)

I have been worrying about how faithful readers will adapt to the imminent demise of Google Reader. Please share your advice for replacements for Google Reader in the comments. 

For following this blog, one possibility you might want to consider is following it directly on Tumblr. When I started supplysideliberal.com, my tech-savvy daughter, dianakimball recommended that I use Tumblr. I have always been glad for that. Tumblr is a blog site designed for visual and multimedia posts. What that means for me in practice is that it looks good. But there are many word-focused bloggers like me on Tumblr as well. 

If you want to follow me directly on Tumblr, just click on the “Join Tumblr” button on the upper right hand of your screen. Tumblr will send you posts it recommends until you follow at least five Tumblogs, but you will find it is easy to find five Tumblogs worth following. I mainly see what is on Tumblr in passing as I write blog posts. I find it a pleasure. Here are the ten I follow, some primarily word-focused and some primarily visual:  

1. dianakimball
2. isomorphismes
3. mills
4. defenestrador
5. 33arquitectures (high volume)
6. liucid
7. newsofthetimes
8. jackcheng
9. lisasanchez
10. bobbieroundstheworld

I would never have seen the accidental architectural frog above if it hadn’t been for the Tumblr reblogging chain that brought it to me through 33arquitectures.

Please share your recommendations for other Tumblogs to follow in the comments.