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Can We Please Shut the Washington Post Down Today? I Really Can't See It Doing Anybody Any Good... - Grasping Reality with Both Hands

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Grasping Reality with Both Hands The Semi-Daily Journal of Economist J. Bradford DeLong: Fair, Balanced, Reality-Based, and Even-Handed Department of Economics, U.C. Berkeley #3880, Berkeley, CA 94720-3880; 925 708 0467; delong@econ.berkeley.edu.

Economics 210a Weblog Archives DeLong Hot on Google DeLong Hot on Google Blogsearch May 24, 2010

Can We Please Shut the Washington Post Down Today? I Really Can't See It Doing Anybody Any Good... Why oh why can't we have a better press corps? Larry Summers opens his speech at Johns Hopkins today: Reflections on Fiscal Policy and Economic Strategy: [T]he observation that the economy is again ascending does not mean that we are out of a very deep valley.... [W]e are nearly 8 million jobs short of normal... $1 trillion [a year] – or $10,000 per family [per year] – short of the economy’s potential output... recent events in Europe have introduced uncertainty.... Shortfalls in output and employment stunt the economy’s future potential as investment projects are put off and as the skills and work habits of the unemployed atrophy. This last point is especially important... for the first time since the Second World War the typical unemployed worker has already been out of work for more than six months. And behind these statistics lie millions of stories of Americans who have seen the basic foundations of their economic security erode. Beyond the economic projections and equations we economists make lie the struggles of communities devastated by the impact of this recession. Whatever the judgments of groups of economists about the official parameters of the recession and the growing signs of recovery, for millions of Americans the economic emergency grinds on... Writing for the fake newspaper that is the Washington Post, Dana Milbank covers Larry Summers. His opening: Summers needs to take Explaining Econ 101: Millions of Americans are out of work, the budget deficit is in the trillions and Europe is flirting with economic collapse. Fear not, says Larry Summers, the chief economic adviser to President Obama. It is merely a "fluctuation." Summers delivered this dismissive judgment during a speech Monday morning to the Johns Hopkins School of Advanced International Studies. In a Q&A session afterward, a man in the audience asked about the debt crisis in Europe -- and the former Treasury secretary and Harvard president answered in a most curious way. [M]y guess is that most of you, unless prompted, would not mention the move from a G-7 towards the G-20 as one of the most important things that happened last year," Summers said. "But I suspect that when historians look back at this time, after the precise details of this economic fluctuation have been forgotten, the establishment of a global forum that really does embody all the major economies in the world will be remembered as an important aspect of this moment. It was vintage Summers: smart, esoteric -- and utterly unhelpful. Maybe he's correct, in an academic sense, that this era will come to be known not as a period of economic misery and human suffering but as the time when the Group of 20 large economies came to replace the Group of Seven (G-8, actually). Still, is that the message the White House wants to be putting out now? The Summers speech, SAIS Dean Jessica Einhorn told the students in her introduction, was arranged on "short notice" and would be "a most timely presentation." This hinted at big news. What he delivered instead was a lot of econo-speak that could only baffle Americans worried about finding or keeping a job. He spoke of "the multiplier process" and "a range of catalyzing investments." He invoked the "liquidity trap" and "tail risks." He alluded to the "width of the confidence interval" and the need to "achieve the sustainability criterion." It was the language of the PhD thesis: "Conditions for fiscal policy to have an expansionary impact are especially likely to obtain... considerations militating in favor of sustainable budgets... the ultimate consequences of stimulus for indebtedness depend critically on the macroeconomic conditions"... I don't know lots of things. I don't know why Dana Milbank decided to misrepresent what Summers said so egregiously. I don't know why Dana Milbank thinks that an address to the students and faculty of something that calls itself an advanced school cannot use big phrases like "liquidity trap" and "multiplier process" (which are the meat and fish of first-semester freshman macroeconomics) or "confidence interval" (freshman statistics) or "tail risks" (introductory finance). I don't know why Milbank thinks it is offensive every time Summers's vocabulary crosses the twelfth-grade level. (I would give him "a range of catalyzing investments," "achieve the sustainability criterion," and "conditions for fiscal policy to have an expansionary impact are especially likely to obtain... considerations militating in favor of sustainable budgets... the ultimate consequences of stimulus for indebtedness depend critically on the macroeconomic conditions"--if not for the fact that this is an audience of graduate students and their teachers.) I don't know why Stanley Kaplan Test Prep Daily in its current incarnation is still publishing.

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Can We Please Shut the Washington Post Down Today? I Really Can't See It Doing Anybody Any Good... - Grasping Reality with Both Hands

5/25/10 11:31 AM

I do know that over at the real newspaper--the Financial Times--we can find Ed Luce and James Politi covering the same speech: Obama adviser calls for new ‘mini-stimulus’: The Obama administration made a strong plea to Congress on Monday to grit its teeth and pass a new set of spending measures – dubbed the “second stimulus” by some economists – in order to help dig the economy “out of a deep valley”. The call for action, which was made by Lawrence Summers, Barack Obama’s senior economic adviser, who urged Congress to pass up to $200bn (£138.9bn) in spending measures, came at the same time as Mr Obama asked Capitol Hill to grant him powers to cut “unnecessary spending”. The combined announcements was made amid rising concern that centrist Democrats, or those representing marginal districts, might vote against the spending measures, which include more loans for small businesses, an extension of unemployment insurance and aid to states to prevent hundreds of thousands more teachers from being laid off. It also comes at a time when last year’s $787bn stimulus is wearing off. Mr Summers argued that it would be a premature move at this stage in the cycle to move to fiscal discipline. “I cannot agree with those who suggest that it somehow threatens the future to provide truly temporary, high-bang-for-the-buck jobs and growth measures,” he said. “Spurring growth, if we can achieve it, is by far the best way to improve our fiscal position.” Taken together, Mr Summers’s speech and Mr Obama’s announcement show an administration walking a fine line between the need to signal strong medium-term fiscal discipline and not jeopardising what they fear may be a fragile recovery. “The observation that the economy is again ascending does not mean that we are out of a very deep valley,” said Mr Summers... Brad DeLong on May 24, 2010 at 06:37 PM in Economics, Economics: Fiscal Policy, Information: Better Press Corps/Journamalism, Obama Administration | Permalink Favorite

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Comments Richard Green said... Larry Summers needs to reach beyond his audience at Hopkins. As Milbank points out, Obama's policies are working, but the administration is losing the communications battle to right-wing sound bites about socialism. Clinton was brilliant at explaining subtle ideas to a wide audience, and Obama is quite capable of the same thing. But right now, the administration is not doing a good enough job of explaining why it is doing a good job. Pointing out that college freshman should understand confidence intervals is not going to get us where we want to go. Reply May 24, 2010 at 07:05 PM Firionel said... For once I'm not sure I want to blame the press for the messed up explanation. Sure, Summers makes a coherent argument, and Milbank apparently didn't get it. And he may not be the greatest journalist alive, but sure as hell he's smarter than the median voter. So maybe a three-sentence explanation using only short words would be what is called for here. And truth be told, I'm not at all sure I am exaggerating. Unless of course one is willing to assume malice on Milbank's part. In that case, well, screw them. But I'm not ready to go there just yet. Reply May 24, 2010 at 07:09 PM Irregardless said... Firionel and Richard, The issue here is not that Milbank did not get it, the issue is that he completely changed the meaning of what Summers said. What Milbank conveyed at the Washington Post could in no way be derived from Summers speech. The result is so bad that I think Dana knew exactly what he was doing when he penned that column. Furthermore, why is Milbank asking, "Still, is that the message the White House wants to be putting out now?" Isn't Milbanks job to actually present the news to his readers in a simple manner? If Summers were giving a speech to voters or an interview on CNN, I might have a different opinion. This is an academic, giving an academic speech to a bunch of academics in an academic setting. Why cant we have a better press corps? Reply May 24, 2010 at 07:40 PM sfguy said... Irregardless, Larry Summers is not an academic, he's the senior economic member of the Obama economic team, and his comments will be interpreted thusly. Reply May 25, 2010 at 05:59 AM kharris said... While on the topic of Summers, anybody making book on his future at the White House? EP (David Warsh) is speculating that Summers will head back to Harvard before the calendar runs out on his leave. EP is generally very level-headed, though in this case he is playing the DC cocktail game, and that doesn't mix so good with level-headed. http://www.economicprincipals.com/

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Can We Please Shut the Washington Post Down Today? I Really Can't See It Doing Anybody Any Good... - Grasping Reality with Both Hands

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