Should-Read: John Quiggin: What’s left of libertarianism?: “Liberaltarianism… the Niskanen Center…Radley Balko, Jacob Levy, Stephen Teles, Jerry Taylor, Will Wilkinson… an important contribution to left-of-centre thinking… http://crookedtimber.org/2017/08/13/whats-left-of-libertarianism-2/

…The break with the Cato version of libertarianism…. Useful in the liberaltarian perspective is scepticism about the efficacy and beneficence of state action, and particularly detailed regulation as opposed to broadbased structural changes. Similarly… lots… have been impatient with constraints on executive action by the federal government. Liberaltarianism provides a check on this…

Should-Read: Herbert Hovenkamp (2009): THE COASE THEOREM AND ARTHUR CECIL PIGOU: “In ‘The Problem of Social Cost’, Ronald Coase was highly critical of… Pigou… http://www.arizonalawreview.org/pdf/51-3/51arizlrev633.pdf

…presenting him as a radical government interventionist. In later work, Coase’s critique of Pigou became even more strident…. [But] Pigou’s Economics of Welfare created the basic tools, including the transaction costs model, that Coase’s later work employed. Much of what we today characterize as the Coase Theorem was either stated or anticipated in Pigou’s work. Further, Coase’s extreme faith in private bargaining blinded him to the problems of bargaining in two-person markets that Pigou saw quite clearly and that remain with us to this day…

Should-Read: Patti Waldmeir: The gritty truth of life in America’s heartland: “It is hard to see a solution to America’s political crisis until Trump-haters accept that most Trump-lovers are human too… https://www.ft.com/content/b3ec55b0-7dd4-11e7-9108-edda0bcbc928

…Amy Goldstein’s book Janesville: An American Story humanises the suffering of the white working class in America at a time when the country critically needs to understand the angst that helped elect the president. It’s especially important to hear those voices when the White House is in crisis because the president chose not to distance himself from racist-inspired violence in Charlottesville…. Hers is not intended as a book about Donald Trump nor even about those who elected him president (much of the white working class still voted for the Democrats last year). But it is exactly the kind of gritty portrait of job loss, sudden poverty, humiliation and despair that illustrates the cultural revolution that helped land Mr Trump in the White House.

Ms Goldstein’s book is about the ordinary people of Janesville in southern Wisconsin, hometown to House Speaker Paul Ryan, and how they lost their jobs, their pride and their future when General Motors closed its oldest assembly plant there in 2008. Small wonder that Mr Trump has made Wisconsin, which went Republican in 2016 for the first time since Ronald Reagan, a focus of his campaign to shore up grassroots support in the face of the chaos and controversy surrounding his White House. Last month, he claimed the credit when Foxconn, the Taiwanese electronics company, said it would open a $10bn plant and create as many as 13,000 jobs in Wisconsin….

Bridging the gap between the coasts and the middle, the elites and the working class—between the affluent classes and Rust Belt Wisconsin whites—is crucial to how America will emerge from the Trump presidency. Ms Goldstein has done her bit to close the chasm: simply by letting the people of Janesville tell their story.

Should-Read: Ezra Klein (2007): My Honor…Defended!: “I actually watched a bit of [Mickey] Kaus’s Bloggingheads… too petulant to be genuinely offensive… http://ezraklein.typepad.com/blog/2007/03/my_honordefende.html

…But his assault demonstrates something interesting…. His criticisms of me… take two main forms… that I’m on “the far left”… that I’m young. Now, unless your spectrum runs from Al From to Sam Brownback, it’s six types of absurd to place me on the “far left.”… Maybe Mickey is such a firebreathing conservative that advocating for universal health care really does make me a Communist… [but] Mickey’s latest post at Slate is anchored by a gushing encomium to my friend Jon Cohn…. Jon is, if anything, farther left on health policy than I am….

For Kaus, the question is style points. Jon Cohn and I both focus on social policy, both believe approximately the same things, and both are working towards much the same outcome. But I’m the “far-left.” Why? Style. I’m young, I’m partisan, I’m pro-union, I’m insufficiently impressed with Mickey’s years in the trenches of neoliberalism. Temperamentally, I’m the anti-neolib. And that’s enough. Indeed, it’s too much. That’s what’s so fundamentally unimpressive…

Must-Read: Cosma Shalizi (2010): The Bootstrap: “That these [statistical] origin myths invoke various limits is no accident… https://web.archive.org/web/20100518171527/http://www.americanscientist.org:80/issues/pub/2010/3/the-bootstrap/2

The great results of probability theory—the laws of large numbers, the ergodic theorem, the central limit theorem and so on—describe limits in which all stochastic processes in broad classes of models display the same asymptotic behavior. The central limit theorem (CLT), for instance, says that if we average more and more independent random quantities with a common distribution, and if that common distribution is not too pathological, then the distribution of their means approaches a Gaussian. (The non-Gaussian parts of the distribution wash away under averaging, but the average of two Gaussians is another Gaussian.) Typically, as in the CLT, the limits involve taking more and more data from the source, so statisticians use the theorems to find the asymptotic, large-sample distributions of their estimates. We have been especially devoted to rewriting our estimates as averages of independent quantities, so that we can use the CLT to get Gaussian asymptotics. Refinements to such results would consider, say, the rate at which the error of the asymptotic Gaussian approximation shrinks as the sample sizes grow….

The bootstrap approximates the sampling distribution, with three sources of approximation error… [1] using finitely many replications to stand for the full sampling distribution… brute force—just using enough replications—can also make it arbitrarily small… [2] statistical error… the sampling distribution changes with the parameters, and our initial fit is not completely accurate…[but] reduce the statistical error… [by] subtler tricks… specification error…. Here Efron had a second brilliant idea, which is to address specification error by replacing simulation from the model with resampling from the data…. Efron’s “nonparametric bootstrap” treats the original data set as a complete population and draws a new, simulated sample from it, picking each observation with equal probability (allowing repeated values) and then re-running the estimation…. This new method matters here because the Gaussian model is inaccurate….

Although this is more accurate than the Gaussian model, it’s still a really simple problem. Conceivably, some other nice distribution fits the returns better than the Gaussian, and it might even have analytical sampling formulas. The real strength of the bootstrap is that it lets us handle complicated models, and complicated questions, in exactly the same way as this simple case…

Should-Read: George W. Evans, Seppo Honkapohja, and Kaushik Mitra: Expectations, Stagnation and Fiscal Policy: “Persistent stagnation and fiscal policy are examined in a New Keynesian model with adaptive learning determining expectations… http://www.bankofengland.co.uk/research/Documents/conferences/conference03040717/expectationspolicy.pdf

…We impose inflation and consumption lower bounds, which can be relevant when agents are pessimistic. The inflation target is locally but not globally stable un- der learning. Pessimistic initial expectations may sink the economy into steady-state stagnation with deflation. The deflation rate can be near zero for discount factors near one or if credit frictions are present. Following a severe pessimistic expectations shock a large temporary fiscal stimulus is needed to avoid or emerge from stagnation. A modest stimulus is sufficient if implemented early…

Must-Read: Some wishful thinking from Larry Summers. No, it is not true that “the United States does the right thing”, not even “after exhausting the alternatives…” And I am not reassured but horrified by how the “business community, cultural leaders and many congressional Republicans” have responded to Donald Trump as President and what surrounds him:

Larry Summers: Mexico isn’t taking Trump’s threats seriously now: “Relative to my last visit to Mexico in March, leaders have moved from being appalled and alarmed by the Trump administration to being appalled and bemused… https://www.ft.com/content/4b33f856-69fa-3e4d-b3bd-cb8a69648a68

…I suppose this is a kind of progress for the US, if not for the US president. It is not that they find Donald Trump’s rhetoric any more rational…. But they have come to understand that… there is likely to be less connection between his rhetoric and action than they had previously supposed…. Relative to a few months ago, I was asked much less about excessive presidential power or risks to democracy, and much more about impeachment scenarios. I did not know what say when asked whether the president and his team believed what they said about bilateral trade deficits as way of judging trade relationships. I responded by saying that using bilateral trade deficits to diagnose trade barriers was to economics what creationism was to biology, or the idea that the sun revolves around the Earth was to astronomy. Increasingly, I think the president and Wilbur Ross, his commerce secretary, believe what they say, which is an embarrassment to their alma maters.

I left my Mexican friends with a line of Churchill’s in which I have increasing confidence after seeing the response of the business community, cultural leaders and many congressional Republicans to this administration: “The United States does the right thing, but only after exhausting the alternatives.” The exhaustion of alternatives stage in our national life will end, and in my view its end cannot come soon enough.