Must-Read: Marvin Goodfriend could have given any one of three answers to account for his rather strident opposition to Ben Bernanke’s monetary policy at the start of the 2010s: (a) that he was right, and that Ben Bernanke was lucky things turned out well and did not go south; (b) that he was wrong, and has rethought his views in such and such a way; or (c) that he was giving his political patrons what they wanted to hear. Any one of the three would have been better than filibustering: Binyamin Appelbaum: Senate Confirms Jerome H. Powell as Fed Chairman: “Brown and other Democrats questioned the qualifications of Marvin Goodfriend… [who] repeatedly predicted after the 2008 financial crisis that the Fed’s actions were about to unleash higher inflation…

…That did not happen…. Goodfriend was flustered by questions about his predictions. He conceded that some had been wrong, but defended others and declined to explain his thinking…. After the crisis, Mr. Goodfriend repeatedly criticized the Fed’s stimulus campaign as likely to generate inflation rather than economic revival. He told Bloomberg in 2012 it was “really doubtful” the Fed could reduce unemployment, which was then hovering above 8 percent, to 7 percent. Furthermore, he said, even if the Fed succeeded in doing so, “it would give rise to rising inflation in the next few years, which would be disastrous for the economy.”…

Mr. Goodfriend has continued to criticize the Fed in recent years. In March, he told a House committee that the Fed’s benchmark interest rate was “too low,” and he endorsed the adoption of a monetary policy rule that would limit the role of human judgment in raising and reducing interest rates. On Tuesday, Mr. Goodfriend said he remained in favor of a policy rule, but he was less critical of current Fed policy, which he described as being “more or less on the right path going forward.”…

Should-Read: Marvin Goodfriend must have been much less impressive in his confirmation hearing than I would have imagined possible. I need to try to figure out why: Paul Krugman: The Durability of Inflation Derp: “What’s striking about the economists who predicted runaway inflation in 2009-2011 is that as far as I can tell none of them has even gotten to step (a), acknowledging their mistake…

…They kept saying the same wrong thing year after year (which is what makes it derp), and even those who eventually stopped saying the same thing never admitted past mistakes. Thus when Bloomberg tried, four years later, to track down economists who signed the infamous open letter to Ben Bernanke insisting that quantitative easing would “debase the dollar,” it couldn’t find a single person to admit that the original warning was wrong.

Why this durability of unrepentant, unprofessional derp? Surely at least part of it is political: predicting doom from money-printing appeals to powerful forces on the right, is indeed a sort of credential that guarantees favor, no matter how wrong the prediction. And let’s face it: the economics profession is essentially craven…. There are no costs to unprofessional behavior that serves right-wing ideology; you’ll still get invited to all the meetings, get treated with respect, even get letters from liberal and moderate colleagues supporting your nomination to high office…. And so today we have Marvin Goodfriend…. Inflation derp endures. In fact, it’s good for your career…

Should-Read: Donald Trump really is not doing the job of president. It is not clear who is: Matthew Yglesias:Trump’s CNBC interview from the Davos World Economic Forum: “President Donald Trump’s first non-Fox television interview in a long time, conducted with CNBC’s Joe Kernen from Davos, Switzerland, is in many respects weirdly devoid of substance…

…And much of the substance that’s there consists of misstatements of fact. But lurking in that is an important insight: Trump is holding the office of president, but he’s not doing the job of president. He seems to have no real idea what’s going on, even with his own signature policy moves. Some of his misstatements have the color of propaganda, but often he seems to be caught up in other people’s propaganda or even to have misunderstood his own talking points…. He can’t even describe his own negotiating positions in the immigration standoff…. Listening to him talk is interesting from an entertainment perspective… but it conveys no information about the world, the American government, or the Trump administration’s policies. If Kernen wanted to help his viewers understand what’s going on, he’d have been better off interviewing someone else…

Should-Read: It looks as though Marvin Goodfriend is a very bad choice for Fed governor—that he will behave like one of those Bush-era regional bank presidents who was a stopped clock, impervious to the news and to argument: Matt O’Brien: Why can’t conservatives just admit they were wrong about inflation?: “Marvin Goodfriend, one of President Trump’s picks for the Federal Reserve, would have been terrible at the job over the past 10 years…

We don’t know is whether he’ll be any better at it now. The early signs, though, are not encouraging…. When a once-in-three-generations financial crisis sends unemployment into the double digits and inflation well below the central bank’s 2 percent target… everybody can agree that the Fed should be doing everything it can to help the economy. Well, everybody but people like Goodfriend…. For years… Goodfriend has insisted that hypothetical inflation is a bigger concern than actual unemployment and that the best thing the Fed can do to promote job growth in the long run is to keep inflation in check…. It’s an ideology of inaction in the face of mass unemployment. And in this, Goodfriend has never wavered….

To be fair, though, to err is to be an economic forecaster. The real question is whether you learn from your mistakes. Goodfriend, unfortunately, hasn’t. Indeed, when Sen. Sherrod Brown (D-Ohio) asked him during his confirmation hearing this week why he had been so “wrong so many times,” Goodfriend said only that low inflation is important. This isn’t exactly the level of self-reflection we would hope for after empirical reality had spent the last 10 years refuting his ideas….

The first mistake Goodfriend made was… he didn’t realize the 1970s were over…. The second mistake… was… he didn’t think the Fed should try to make things better because he didn’t think it could… a faux world-weary philosophy in which not doing enough to stimulate the economy becomes an excuse to do even less of it. That they haven’t been able to get things back to normal so far means that it might simply be impossible to do. Something big must have transformed the economy, right? Because it can’t be their fault….

We were lucky the Fed didn’t believe this during the last economic crisis. Now we’ll just have to hope there isn’t another one…

Should-Read: A very interesting paper by very sharp people. The problem is that I do to know what it means. The post-2000 period has one huge, huge, huge shock in it: 2008-2009. How is the fact that the post-2000 sample has a Great Recession in it and the pre-2000 does not affect their conclusions? I don’t know. And I don’t think they know: Ryan A. Decker, John C. Haltiwanger, Ron S. Jarmin, and Javier Miranda: Changing Business Dynamism and Productivity: Shocks vs. Responsiveness: “The pace of job reallocation has declined in all U.S. sectors since 2000…

…In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on aggregate productivity…

Should-Read: In praise of the truly excellent Tim Jost: Ann Marie Marciarille: Say It Isn’t So, Tim: “Sarah Kliff once noted that Tim Jost was ‘scary fast/good’ with his health law and policy analysis. I could not agree more…

…Tim Jost’s consistently stellar blogging on all things health law and health regulation-related has been a tremendous resource for me and for my students as we work to keep up in a fast-developing area. I wish Tim well in all the spare time he will surely have now that he has decided to end his Health Affairs  ACA-blogging, close to  nine years and over 600 blog posts later. I wonder if some of Tim’s more remarkable posts might not make a fine book of collected essays on health care reform, how the sausage was made. Some of my favorites, for those of you who have not dabbled in this area, include (in no particular order):

• Implementing Health Reform: Essential Benefits and Medical Loss Ratios (Feb. 18, 2012)
• Taking Stock of Health Reform: Where We’ve Been and Where We’re Going (Dec. 6, 2016)
• The Tax Bill and the Individual Mandate: What Happened and What Does It Mean (Dec. 20, 2017)

Tim, you truly are the horse whisperer of ACA regulatory interpretation and policy analysis. Katie Keith is up and running with quality output, I know. You will be missed…

Should-Read: Why hasn’t globalization reduced inequality in emerging markets over the past generation? Jeffrey Frankel wants to say that it is because the HO-SS theory is misleading and unhelpful for inequality issues. I think that is not right. HO-SS says economic integration will reduce inequality if it raises the relative demand for factors of production controlled by the poor. But the most important shift in relative factor abundance has been the ability to plug yourself into the world economy: that is controlled by the rich in emerging markets, and that has become much much scarcer relative to demand: Jeffrey Frankel: Does Trade Fuel Inequality?: “Trade has been among the most powerful drivers of… the convergence between the developed and developing worlds…

…The HO-SS theory, which dominated international economic thinking from the 1950s through 1970s, predicted that international trade would benefit the abundant factor of production (in rich countries, the owners of capital) and hurt the scarce factor of production (in rich countries, unskilled labor)…. Then… Paul Krugman and Elhanan Helpman introduced… imperfect competition and increasing returns… Marc Melitz… shift[ing] resources from low-productivity to high-productivity firms…. Not all of the HO-SS theory’s predictions have come true…. Pinelopi Goldberg and Nina Pavcnik…. “There is overwhelming evidence,” they write, “that less-skilled workers in developing countries “are generally not better off, at least not relative to workers with higher skill or education levels.”… Ten years later, inequality continues to worsen within developing countries, including the so-called BRICS…. This does not mean that the forces described by the HO-SS theory are irrelevant. But there is clearly more to current inequality trends than trade…. Inequality is clearly a serious problem that merits political attention. But focusing on trade is not the way to resolve it…

Should-Read: Ronald Reagan was not up to the job. And he had lots of bad policy ideas and bad policy advisors. But Ronald Reagan was an American: Ronald Reagan: Remarks to Members of the National Association of Minority Contractors: “We’re trying to provide the broadest possible range of opportunities to all Americans without regard to race, creed, color, or sex. And sometimes it makes your day when you hear from people that understand this and agree…”