Links to Consider, 8/14

John Cochrane on Supply Shocks; Freddie deBoer writes a manifesto; The Zvi on happiness research; Which gender gets the most from the welfare state?

John Cochrane writes,

Standard 1970s ISLM analysis, the subject of an eloquent elegy (eulogy?) in Blinder's recent book, does not have a nominal anchor.  The price level today is whatever the price level was yesterday plus whatever supply and demand shocks move it around today. The MV=PY constraint on the overall price level is simply absent. Given Blinder's writing in favor of ISLM and against everything that has happened since, I think this is the basic disagreement in our analysis. 

So you have it: If you think there is a nominal anchor, then you're with me: Supply shocks without more demand (more M, more debt), cannot permanently raise the price level. . .

A second possibility: There is a nominal anchor, but it is passive. . . .The Fed, not wishing to see a recession, "accommodates" this supply shock by printing more M, so the price level goes up.

Another possibility is that there is a nominal anchor, but the rope between the anchor and the ship is very long. The price level can wander quite far from where the “equilibrium” level might be.

I should reiterate my view that inflation has two regimes. In one regime, inflation is low and stable. In the other regime, it is high and variable. Transitions from one regime to another are rare. I think that the pandemic stimulus was finally enough to get us out of the low, stable regime and into the high, variable regime.

Freddie DeBoer writes,

Acting as though the social and personal rules that apply to children should apply to you when you are an adult ensures that you will behave selfishly and hurt others, and the constant celebration of childish behavior in adults has profound negative consequences for all of us

That is just one of many, many points he makes in the essay.

Zvi Mowshowitz writes,

My view continues to be that different people are different. All five interventions make it easy to run the experiment and cheaply gather data on whether it works for you. Nature and socializing in particular seem like things that benefits some people a lot and others little or not at all, for me socializing is iffy and nature mostly doesn’t work. Exercise I am confident is helpful overall but the people who expect it to make you happy directly rather than as a secondary effect of being healthy are highly annoying, that does not work for me or many others I now. Mindfulness I strongly suspect is mostly a scam.

He is commenting on happiness research. If I ever cite a “happiness study,” please slap me with a $100 fine. Nobody knows what the scale means. And as Zvi points out, people have different preferences. Suppose that x percent of people who are married report being happy (again, on a scale that has no clear meaning) and y percent report being unhappy, what does that tell you about whether you will be happy if you get married? Happiness research makes me very unhappy.

Does the welfare state transfer wealth from men to women? Lorenzo Warby asserted so, and he offered this paper on New Zealand by Omar Aziz and co-authors. I am not sure that their method is up to answering the question, and in case it is only for New Zealand. For the U.S. administrative data and tax data could give a clear answer. File this under “questions that are rarely asked.”

substacks referenced above:

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Prologue to an Anti-Therapeutic, Anti-Affirmation Movement

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Monthly Roundup #9: August 2023