The Great Depression from the Perspective of Today, and Today from the Perspective of the Great Depression

The past six years have seen an interesting dual shift in economics and economic history. Six years ago economists were a highly confident, aggressive, and arrogant bunch. We believed that we understood how modern market economies worked. We believed that we knew how to keep them running with both low and stable inflation and at fairly high levels of prosperity, relative to their technological productive potential.

It happened--as it had always happened whenever economics had thought that they had it figured out--we were wrong.

We were wrong, as we have discovered over the past six years as people attempted to do economic policy, that we had misjudged how to reliably keep economies running at a high level of prosperity. And we had misjudged how to reliably keep economies running at a high level of prosperity because we had misjudged what the Great Depression was. The fact that we had a faulty vision of the Great Depression was a cause of the policy errors and macroeconomic disaster of our day, and the fact that following the policy course that we did did not cure the problems of today has led us to revise our view of the Great Depression. Thus we were doubly wrong, but now--we hope--we have it right.

Our demonstrated wrongness means that a substantial amount of what economists like me were teaching, both about the structure of the economy today and about the Great Depression, was wrong. A consequence of the past six years is that we economists need to rip up a substantial part of our lecture notes--both the modern macro lectures on proper policy during business cycles, and also our economic history lectures about the Great Depression.

Six years ago we economists saw the Great Depression as something the Federal Reserve system could, should, and ought to have stopped dead in its tracks at its beginning. But, we would have said six years ago, the Federal Reserve did not understand the situation, and so it did not act properly. But, we would have said years ago, we today know better. Thus, we would have said six years ago, if anything even remotely Great Depression-like comes down the tracks, we can stop it did. You do not need to worry that we will once again, as in The Great Depression, find ourselves in an economy that is not just depressed but profoundly depressed, and depressed not for a year or two but for more than five--and perhaps more than ten.

That was the subtext of one of the large discussions carried on at the Federal Reserve Bank of Kansas City's August 2005 Jackson Hole Conference. Raghuram Rajan--who has just been named the governor of The Bank of India, India’s central bank--argued that recent changes in financial deregulation had created a situation in which there were too many many cowboys on Wall Street doing too many things and creating too many risks. The general response--from Ben Bernanke and Alan Greenspan, from Arminio Fraga and Larry Summers, and from many many others, from practically everyone speaking to the group in the room save Alan Blinder--was: yes, there are cowboys, and the cowboys will lose money, but their actions will not cause any large-scale damage to the economy. Why not? Because we know well how to build firewalls between financial crises on Wall Street and the real economy of spending on currently-produced goods and services, production, and employment.

Because we know well how to build such firewalls, the near-consensus was, even if the systemically-important financial institutions have lost all control over their derivatives books and taken on immense risks they do not understand, there is no danger to the economy as a whole. Moreover, the argument was, there is value in letting the cowboys continue to do their thing. They might find some interesting business models. They will bear risk--and the world economy as a whole is short of risk-bearing capacity in normal times. Their willingness to bear risk might help accelerate technological progress: the dot-com bubble was a disaster for late-stage investors in venture capital and dot-com equities, but a boon for the rest of us as ten years' of experimentation and investment in high-tech was compressed into three.

Big mistake. Big misjudgment.

by Brad DeLong, Longform |  Read more:

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In Praise of Adultery

Marriage as a problem, and as a solution, has always been the central subject for drama, the novel and the cinema, just as it has been at the centre of our lives. Most of us have come from a marriage, and, probably, a divorce, of some sort. And the kind of questions that surround lengthy relationships – what is it to live with another person for a long time? What do we expect? What do we need? What do we want? What is the relation between safety and excitement, for each of us? – are the most important of our lives. Marriage brings together the most serious things: sex, love, children, betrayal, boredom, frustration, and property. (...)

Le Week-End concerns a late middle-aged couple, Nick and Meg, both teachers, who go to Paris to celebrate their 30th wedding anniversary. While there, they discuss the meaning and direction of their marriage now that their children have left home. Time and health are running out for them as they consider their impending old age and wonder what sort of future they might want, either together or apart. They think about how they might die; but this couple also need to talk about how they have lived: the way in which they have brought up their children, and how the family has worked, where it failed, and where there is regret, bitterness and even fury.

The film shows the depredations of time, but also the lability of the past, its different meaning and value for both parties, and how, now that the couple are talking, the past can seem as unstable as the future. They are looking in the same direction, but cannot see the same thing. There is no narrative they can agree on.

Their short sojourn, whatever else it is, will be a time of difficult conversations. What if it occurs to one or other of them that their relationship was a mistake, that it didn't resemble their original hopes at all, and that they could have had a far better life elsewhere? Meanwhile, what have they done to one another? Was there harm? What did they use one another for?  (...)

As Nick and Meg are aware, marriage frees a certain sort of companionable love, if you're lucky. But it domesticates sex. The couple are over-intimate. They know too much about one another. Without obstacles, there can be no fascination. How can you desire what you already have? That's not all: the arrangements that marriage requires to survive – security, duration, reliability, repetition – can seem liberating in their continuity, or stifling, according to your nature. The suburbs suited my father, since he'd come from a more dangerous place, and wanted contentment.

But there was something about living there that could make you want to scream. For some, it would never be sufficient. You might learn, as Nick does in Paris with his wife – whom he still wants and needs – that the problem with desire is not that you cannot get rid of it, but that there is too much of it. It is ever-present, and ever-pressing, however much you want to discount it. You cannot wish it away, and it cannot be replaced by a substitute.

by Hanif Kureishi, Guardian | Read more:

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Your Body, Their Property

Polio ravaged much of the United States during the 20th century, leaving thousands sick, paralyzed, and dead. Those who were not afflicted with the virus were constantly haunted by the terror that their loved ones—particularly children, who were most vulnerable—would awaken one morning unable to walk and destined to a life of leg braces and iron lungs. That is until 1953, when Jonas Salk created a vaccine. There were more than 45,000 total cases of polio in the United States in each of the two years before the vaccine became broadly available. By 1962 there were only 910. Salk’s invention was one of the greatest successes in the history of American public health.

Amidst the adulation and fame that came with saving untold numbers of lives, Salk did something that seems curious if not unwise by today’s standards: he refused to patent the vaccine. During a 1955 interview, Edward R. Murrow asked Salk who owned the patent, leading a seemingly bewildered Salk to respond, “The people, I would say. There is no patent. Could you patent the sun?”

These days, amid a patent-driven biotech boom, it is difficult to imagine a researcher making a similar appeal to the commons. But this sensibility received a crucial endorsement in the Supreme Court’s recent decision in Association for Molecular Pathology v. Myriad Genetics. The Court held that Myriad, a biotech firm in Utah, could not patent naturally occurring objects such as the two cancer-related human genes in question.

The decision upended many aspects of American intellectual property law that emerged in the wake of Diamond v. Chakrabarty (1980), when the Court held that living organisms—specifically, manmade crude–oil bacteria—are patentable subject matter. Chakrabarty inspired a rush to patent not just living things but also a growing array of biological materials, including human genes.

Fast-forward a few decades and almost one-fourth of all human genes had been patented and controlled by private hands. This made it expensive for scientists to do research implicating these genes or to develop tests that examine how certain mutations might affect health outcomes. Until Myriad the sensibility evoked by Salk—that entities beneficial to all humankind should not be patented and privatized—had largely been treated as a distant memory of a bygone era, like the jukebox or rotary telephone.

However, Justice Clarence Thomas eloquently set the record straight in his unanimous opinion for the Court in Myriad by contrasting the company’s patents to those upheld in Chakrabarty: “Myriad did not create anything. . . It found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.” Now, many existing human gene patents are in question.

It is rare that a legal dispute of this importance, technical complexity, and jurisprudential nuance is resolved by the Court with such clarity, conviction, and common sense. Yet even after Myriad, the dispute over who can claim property interests in human biological materials, and in what circumstances, is far from over. Human gene patents are not the only means by which corporations and researchers assert rights to parts of human bodies, and many more legal reforms are needed to ensure that your body remains entirely yours.

by Osagie K. Obasogie, Boston Review | Read more:
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Booster Proud of His Largess and Game-Day Parties

Roy Adams’s two-story brick home is tucked neatly into a middle-class residential street. In the driveway, University of Tennessee and Southeastern Conference flags fly at full staff. On the front door, a poster urges his guests to adhere to a five-drink limit.

Adams may be 75 years old, but his home looks like something dreamed up by teenage fraternity brothers: he has 36 big-screen televisions, five TV viewing rooms, three game rooms, a wet bar and, on a recent afternoon, two tapped kegs.

Adams, a retired restaurant and real estate developer, has been called the Great Gatsby of college sports for his legendary game-day parties, which often include athletes, coaches and politicians mixing with a crowd that can top 100. But he is more than a septuagenarian party animal.

A 1963 graduate of Tennessee, Adams represents the twilight of a college sports booster. For more than 40 years, he cherished his role as a benefactor for players, even if it meant breaking a few rules. If college athletes generally receive gifts in the shadows, Roy Adams is the rare booster who crows about his largess.

He is not remorseful, and now, largely out of the booster game, he says he is proud of his life’s work and the friendships he has made.

“I knew the N.C.A.A. rules,” he said. “I just didn’t care for them.” (...)

Today’s boosters, Adams said, have lost the intimate relationships with players he always sought. From his perspective, the N.C.A.A. rules have tightened drastically. And the players have changed too. “Today you give a kid a Chevrolet, and he wants a Cadillac,” Adams said. “You give them $1,000, they want two or three. It’s not the same as it used to be.”

Adams has been a Tennessee football fan for decades, but now, instead of making trips to Knoxville, he brings the party to his TV rooms — all five of them. On a typical Saturday, guests spill from room to room, passing a shuffleboard table, a stuffed deer head, a signed photograph from the former Tennessee star Peyton Manning.

On one wall a photograph of Adams shaking hands with Nick Saban hangs above a signed picture of Richard Nixon. In the pantry, Adams had a urinal installed. Then there are all the televisions, squeezed together like puzzle pieces around every corner. His friends say there is no better sports bar in Memphis.

by Ben Strauss, NY Times |  Read more:

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You Won’t See This on TV

For the past four semesters I’ve taught a criminal justice–themed freshman composition course at a large public university in the Midwest. Each semester I’m amazed at the level of interest my students have for the topic of criminal justice. They’ve spent hundreds of hours watching Law & Order and CSI, read countless mystery novels and “true crime” stories, and sat through big-screen courtroom dramas galore. And yet each semester I’m also amazed by how little they actually know about how the American system of justice works.

In my previous career as a public defender who served thousands of clients, I tried everything from juvenile delinquency allegations to first-degree murder cases. I'm lucky (or, in certain senses, unlucky) to have a perspective on the American criminal justice system that most will never have. I can tell that my students care deeply about justice but do not have the language or the facts they need to discuss the criminal justice system cogently. They are uninformed because popular media, however it is packaged, is ultimately aimed at entertainment—or the provocation of misdirected outrage—rather than instruction.

Hollywood is always an unwelcome participant in conversations about criminal justice, in my view. Certain scions of criminal justice–themed entertainment argue that they are educating a generation—Dick Wolf, the creator of Law & Order and its spawn, is one prominent example—but the truth is significantly more interesting than scriptwriters’ fiction.

That is why it’s important to help set the record straight. Hopefully these fifteen truths will act as a starting point for those civilians who want to change our criminal justice system but are not sure where to start.

None of what follows should be construed as legal advice. This is merely a bare-bones description of how important sectors of our criminal justice system work. You could learn much of this simply by sitting in the public gallery at a local courthouse for a few weeks, or by reading any trial practice manual intended for working attorneys.

• • •

1) Prosecutors are trained to charge cases using the maximum allowable number of criminal statutes, with preference always given to the statutes with the highest maximum term of imprisonment. The reason for this is that prosecutors know that more than 90 percent of their cases will end with a plea negotiation, so charging what is reasonable rather than what is possible is strategically unwise. The assumption behind what is termed “over-charging” is that some fresh-faced defense attorney will ensure, through zealous plea negotiations sometime in the future, that the final disposition of each case is a fair one. The problem is that with so few public resources devoted to the defense of the indigent in court, poor defendants are often assigned a well-intentioned but overworked attorney. The predictable result is that defendants too often plead to charges that necessitate terms of imprisonment that even prosecutors—were they unbiased observers—would not consider just.

As to why nearly every criminal statute in America is written so broadly that it can be egregiously misused in this way, the answer is simple: politicians enact criminal statutes, and voters’ limited understanding of the criminal justice system means that at the polls they nearly always reward whoever endorses the broadest and most draconian laws. How else to keep our communities safe from the ever-present scourge of violent crime, even when violent offenses are decreasing in number?

By the time you or a loved one of yours has been caught in the trap of an overbroad criminal statute with an outrageous series of penalties attached—often mandatory ones that even an independent-minded judge cannot contravene—it is too late to get wise to how obtuse, inflexible, and nonsensical most of our criminal statutes are.

by Seth Abramson, Boston Review |  Read more:

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A First Rate Girl: The Problem of Female Beauty

I have a friend who dates only exceptionally attractive women. These women aren’t trophy-wife types—they are comparable to him in age, education level, and professional status. They are just really, notably good looking, standouts even in the kind of urban milieu where regular workouts and healthy eating are commonplace and an abundance of disposable income to spend on facials, waxing, straightening, and coloring keeps the average level of female attractiveness unusually high.

My friend is sensitive and intelligent and, in almost every particular, unlike the stereotypical sexist, T & A-obsessed meathead. For years, I assumed that it was just his good fortune that the women he felt an emotional connection with all happened to be so damn hot. Over time, however, I came to realize that my friend, nice as he is, prizes extreme beauty above all the other desiderata that one might seek in a partner.

I have another friend who broke up with a woman because her body, though fit, was the wrong type for him. While he liked her personality, he felt that he’d never be sufficiently attracted to her, and that it was better to end things sooner rather than later.

Some people would say these men are fatally shallow. Others would say they are realistic about their own needs, and that there is no use beating oneself up about one’s preferences: some things cannot be changed. Those in the first camp would probably say that my friends are outliers—uniquely immature men to be avoided. Many in the second camp argue that, in fact, all men would be like the man who dates only beautiful women, if only they enjoyed his ability to snare such knockouts. In my experience, people on both sides are emphatic, and treat their position as if it is obvious and incontrovertible.

To me, these stories highlight the intense and often guilty relationship that many men have with female beauty, a subject with profound repercussions for both men and women.

You’d think it would also be a rich subject for fiction writers—after all, our attitudes about beauty and attraction are tightly bound up with the question of romantic love. But, in fact, many novels fail to meaningfully address the issue of beauty. In a recent essay in New York, the novelist Lionel Shriver argued that “fiction writers’ biggest mistake is to create so many characters who are casually beautiful.” What this amounts to, in practice, is that many male characters have strikingly attractive female love interests who also possess a host of other characteristics that make them appealing. Their good looks are like a convenient afterthought.

This is, unfortunately, sentimental: how we wish life were, rather than how it is. It’s like creating a fictional world in which every deserving orphan ends up inheriting a fortune from a rich uncle. In life, beauty is rarely, if ever, just another quality that a woman possesses, like a knowledge of French. A woman’s beauty tends to play an instrumental role in the courtship process, and its impact rarely ends there.

When a novelist does examine beauty more closely, the results are often startling. Two of my favorite male novelists do not fall into the trap that Shriver delineated. They are clear-sighted and acute chroniclers of the male gaze.

Consider Richard Yates’s “Revolutionary Road,” a novel about a dysfunctional marriage. Frank Wheeler’s love for his wife, April, has everything to do with her good looks: April, whom he first spots across the room at a party, is a “tall ash blonde with a patrician kind of beauty.” Frank’s upbringing was distinctly un-patrician. His father was a lifelong salesman; during the Depression, his parents struggled to hold onto their modest lower-middle-class existence. Then Frank served in the Second World War, which allowed him to attend Columbia on the G.I. Bill. He built a new identity, as a bohemian and an intellectual—an “intense, nicotine-stained, Jean-Paul Sartre sort of man,” in his self-romanticizing account. But he still couldn’t quiet a certain anxiety about his status. Yates writes,

It nagged him, in particular, that none of the girls he’d known so far had given him a sense of unalloyed triumph. One had been very pretty except for unpardonably thick ankles, and one had been intelligent, though possessed of an annoying tendency to mother him, but he had to admit that none had been first-rate. Nor was he ever in doubt about what he meant by a first-rate girl, though he’d never yet come close enough to one to touch her hand.

Enter April, “an exceptionally first-rate girl whose shining hair and splendid legs had drawn him halfway across a roomful of strangers.” Frank, “bolstered by four straight gulps of whiskey … followed the counsel of victory.” He approached her, and “within five minutes, he found he could make April Johnson laugh, that he could not only hold the steady attention of her wide gray eyes but could make their pupils dart up and down and around in little arcs while he talked to her.” So begins one of contemporary literature’s worst relationships.

For Frank, April represents success. April, for her part, likes Frank O.K.—he’s “interesting,” she tells him—but she doesn’t like him well enough that he ever feels secure. To be so close to the woman who represents so much but to also feel her perpetually holding back maddens Frank. When April gets pregnant, she wants to have an illegal abortion, which Frank interprets as a rejection of him. And this is intolerable. Though he doesn’t want a child any more than she does, he is finally able to talk her into getting married and having one. Anything is better than a rejection from the only first-rate girl he’s ever been close to.

It is notable that April’s power over Frank does not lie in the fact that she excites him more than other women sexually—it is, rather, that her cool brand of beauty imbues her, in his mind, with a higher social value than that of his previous lovers. In other words, he is driven, if unconsciously, by an impulse cooler and more calculating than lust.

by Adelle Waldman, New Yorker |  Read more:

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