NBER financials --- not easy to find details, but SourceWatch information looks VERY incomplete.

Thanks to Dave Bacon, the link (available via a few clicks starting at the About menu item on NBER's homepage) to the 2010 financials summary page of their annual report (if you follow the link, go to the bottom of the page and click).  Trying to find the full report online has proven bootless...so far this is what I've turned up.

However as I pointed out in comments on my earlier post, responding to the summary fiscal 2010 financials Dave provided, the vast majority of their money---32.4 million out of revenue of 39 million---is coming from current grants.  Given this, the $10 million from four right-wing foundations over 16 years, detailed by SourceWatch, is extremely unlikely to represent a signficant fraction of their funding during that period although without access to financial statements, who knows.

Since I've gone this far, I suppose I should probably just ask NBER for the info!

Where does the National Bureau of Economic Research get its money?

Annoyed by the fact that the Cambridge, MA based National Bureau of Economic Research (NBER) charges $5 a pop (or requires an institutional subscription) to download its working papers (with some exceptions, such as for journalists, I decided to look into where they (and the people who publish there) get their funding, since I object to publicly funded research being published in venues that are expensive for the public to get access to.   Probably this is well-known to professsional economists (so if any read this thing, feel free to comment)---but the overall situation with NBER working papers seems to be that they are (primarily? entirely?) results of research done as part of NBER programs.  Perhaps that means, the research is NBER-funded as well?  NBER has a contract with the Commerce Department to officially determine when recessions and "stagnations" have begun, and ended.  I found it relatively difficult to figure out where NBER gets its money, since googling "NBER funding", "NBER budget" and the like tends to turn up NBER research on national budgets and general economics, not surprisingly.  I found this link to a page by an organization called SourceWatch interesting, though I don't have a lot of familiarity with the group.  Much of the discussion seems to concern pre-2001 funding, and the introductory paragraphs are confusing.  They consist mostly of quoted material, and it is unclear what is being quoted:  a New York Times article about the NBER or, as seems more likely, an article from an unnamed source, critical of the NYT piece and of the NBER's then-director Martin Feldstein?  In any case, the quoted material seems highly polemical even to someone as leftish on many things as I am.   And sure, Feldstein is too conservative for my taste, but he gets a lot of respect from me for recognizing, at least sometimes, that Keynesian theory can be relevant, and calling for substantial fiscal stimulus on Keynesian grounds early in this recession.  Nevertheless, this claim from SourceWatch is interesting:

"Between 1985 and 2001, the organization received $9,963,301 in 73 grants from only four foundations:

All four of these are characterized (by SourceWatch, at least, in their own descriptions linked in the above quote) as very conservative, small-government/low-regulation foundations.  Actually they say the  Scaife foundation is no longer pushing this ideology since Sarah Mellon Scaife took over, but (I think) during the 1985-2001 period they were.  I wouldn't necessarily trust SourceWatch on this (e.g. they say the Olin Foundation gave $20.5 million to "right-wing think tanks" in 2001, then give a list that includes the Brookings Institution.   I'm fairly confident this is not a mistake, rather a combination of deadpan humor and a genuinely left-wing viewpoint that does see Brookings as part of the right-wing liberal establishment.  But Olin is well known as a conservative foundation, so the characterization of Olin, if not of Brookings, seems reasonable.

I'm still at a loss about the pay-for-working papers policy.  Perhaps this --- especially library subscriptions to it --- is a significant source of income to the NBER?   NBER's working papers are definitely a respected and prestigious series that I see cited a lot (and not just by conservatives--Paul Krugman's blog links them on occasion, as does Brad DeLong's). So they can likely get a significant amount of income that way.  It does seem that the goal of spreading knowledge of the results of NBER (oops, I mean covert promotion of right-wing economic ideology ;-)) might be better served by making them free to the public.

Here's Freakonomics on the NBER and the shift in directorship from Feldstein to Jim Poterba.  (No opinion implied on the quality of Freakonomics books, blogs, or Steven Levitt, though.)  Still, it gives you an idea of the attitude of much of the economics profession toward the NBER.

A weak link from Greg Mankiw on whether to extend the Bush tax cuts

Harvard economist Greg Mankiw says it "might be worth remembering" that 70% of economists who expressed an opinion in a Wall Street Journal poll last month thought that all the Bush tax cuts should be extended, 24% thought they should for households making under $250,000/year, 6% said they should all be allowed to expire.  Of rightish-leaning economists, Mankiw is one whose thoughts are often worth reading, but I'd much rather hear what he thinks on the issue (I suspect he's with the 70%) and why, than what 48 of 53 economists chosen by the right-leaning WSJ have to say.  I have three main points: (1) the Journal quotes four respondents by name---they are from Northern Trust, Standard & Poors, Perna Associates, and Pierpont Securities.  In other words, this is not a poll of academic economists, but of economists working for financial firms.  Maybe they're good at forecasting, maybe not.  I care more what people like Mankiw himself, Paul Krugman, Joe Stiglitz, Robert Barro, Barry Eichengreen, Thomas Sargent, Christina Romer, Laura Tyson, etc... think on these issues.  (2) It's not clear what the basis for the judgment is supposed to be---it thus likely mixes their values regarding inequality, taxes, etc... with issues of the economic effects of tax policy. (3) Much discussion currently centers around whether or not the cuts should be made permanent.  "Extended" is a very different thing; many would support extensions while we are still in a slump, but not necessarily permanent ones.  For example, I'd support (along with Obama and virtually everyone else) an extension for people making under $250,000 a year as providing fiscal stimulus (though government spending, especially direct aid to states and municipalities, would be more effective), but not necessarily a permanent extension for everyone in this group,

Links: on Fed decision not to shrink its balance sheet; to Dallas Fed President Richard Fisher's recent speech. Rant: on the latter.

Jon Hilsenrath article on the Fed's deliberations over the recent decision not to let its balance sheet shrink.

No time now to do a detailed analysis of FOMC member and Dallas Fed president Richard Fisher's speech, which is posted on the Dallas Fed website, though containing the disclaimer "The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System."  Of course there is something in the idea that regulatory and other policy uncertainty can have an inhibiting effect on business investment, but I really, really do not think that is much of what is going on with the recovery here.  Fisher's speech looks to me---after a couple of readings, but not a thorough analysis---like he is peddling the current Republican line on why the economy isn't recovering better, and I think this line is ludicrous.  Yeah, I think the length of the financial reform bill is maybe an issue (but you could probably say this about any serious policy legislation these days, and probably could have said it when the economy was booming,  e.g. during the Clinton presidency).  Business and banks have loads of bigger worries right now than uncertainty over policy reform or future deficits.  Like uncertainty about, and low expectations for, near-term demand for their products.   Fisher worries that the regulatory discretion being given to the Fed creates uncertainty;  you might hope some of the length of the bill is caused by trying to specify things enough to remove some of this uncertainty, and for the rest---well, there isn't really any substitute for well-excecuted regulation in some matters.  Ludicrous to think *this* is the issue in the protraction of the current slump. First mention, though is given to "Fiscal Policy Uncertainty".  Fisher:

By latest accounts, under the least felicitous conditions (what the Congressional Budget Office recently called an “alternative fiscal scenario”), publicly held debt bests the all-time high of 109 percent of GDP around 2025 and reaches a staggering 185 percent of GDP by 2035—more than twice the level of debt at which some economists believe significant crowding-out of private-sector economic activity occurs. This is not the baseline scenario. But the possibility of it occurring, however remote, frightens business operators, for they are uncertain not only about whether fiscal authorities will actually mitigate this risk, but also how they might go about doing so.

Okay, the mechanism of crowding-out in that remote eventuality will be higher interest rates on corporate borrowing, caused by government borrowing having driven up interest rates more generally; but we hardly see the markets anticipating that in long-term government bond rates.   It's true Fisher prefaces this with "Let me turn to what I hear from businesses, the players on the field."  And it's true local Fed branches try to keep in touch with local economic reality, including business sentiment.  But it seems to me pretty likely you might hear many businesspeople, especially right-leaning ones (of which there are a few, I think) parroting whatever blame-the-government line the right-wing media feeds them, and one would hope that a local Fed president would do more, even in a speech to the local business community, than parrot that back.

The issue is uncertainty about --- and perhaps even more, pessimistic expectations about--- demand over the next few years.

When Fisher says:

our political leaders should muster the courage to pull up their socks and strike a better balance between the long-term need to keep government debt low and the short- to medium-term need for an appropriate level of fiscal stimulus.

could this mean he's realizing the need for a higher level of short-term fiscal stimulus, combined with assurances (which the bond markets seem to believe they have) that potential long-term deficit problems will be dealt with soon enough?  Somehow, I don't think so.  The fact that the phrasing is ambigous enough to permit this among other interpretations seems to me to stem from the need to restrain himself, just a bit, from seeming too nakedly partisan, or perhaps just too prescriptive, but the Greater San Antonio Chamber of Commerce can probably read the lightly-coded message just fine, and it ain't that we need more stimulus.

Uncertainty about whether the Bush tax cuts will be continued is cited as another biggie holding back the economy.  Again, somehow I don't think the message is "kill 'em now, so we can stop worrying about what will happen and invest".  Or even "kill 'em now, so we can worry less about future deficits and invest."  I do believe tax cuts can provide fiscal stimulus, and ones targeted at lower income brackets can probably provide more; because the highest income taxpayers have a higher marginal propensity to save, tax cuts primarily benefiting them are one of the least effective fiscal instruments for boosting aggregate demand, and let me say it again, we are in a primarily aggregate-demand-limited situation here.

More than I intended on Fisher; not a full analysis, since I haven't dealt with his comments on the main Fed bailiwick, monetary policy.  But overall: either some decent but in my opinion not central to the current situation, observations on policy uncertainty, plus some mush; or worrisome code for some dubious partisan points.

Nice post by Brad DeLong on the Fed, Bernie Sanders, and Obama

Excellent post, that I agree with, by Brad DeLong on the Fed, Bernie Sanders' amendment to the Dodd financial regulation bill, calling for regular GAO audits of the Feds deliberations and communications related to setting and implementing, and transactions implementing, monetary policy.

Delong writes "...I am willing to defer to President Obama's judgment that the Federal Reserve's desire for a modicum of central banker privilege is worth respecting, and that the Sanders amendment is the wrong treatment for the disease. I am willing to do so, in large part, because I think the problems are not those that detailed routine investigations of staff communications would solve: the staff of the Federal Reserve do, it seems to me, overwhelmingly have a reality-based vision of the economy, conduct thorough and appropriate analyses of risks and scenarios, and understand the Federal Reserve's dual mandate."

The problem according to Brad is rather that "I do not think that the dominant views of monetary policy in the FOMC right now are informed by American values and a reality-based assessment of the state of the economy.  [...] a good many of the people speaking and voting in the FOMC are the wrong people".

And Obama hasn't done enough to fix this, with five of the seven seats on the Fed's Board of Governors that have opened up while he's been president still unfilled (and one filled by reappointing Ben Bernanke, a decent centrist choice who Brad thinks shouldn't be the left wing of the FOMC at this point.

Too much conventional supposedly-conservative "wisdom", in other words, too much coziness with financial institutions and, I guess, too much worry about inflation even in the depths of recession, from this Fed Board.

Weighing on the other side of the Sanders amendment issue, perhaps, is this via Paul Krugman.

Two views of Tim (Geithner, that is)

In the March 8th New Yorker, John Cassidy has a long piece about Tim Geithner.  While presenting various points of view, it gives a lot of space, fairly persuasively, to the view that Geithner and other adminstration officials like Lawrence Summers' policy of not taking over shaky financial institutions was the right way to handle the financial crisis.  The "stress tests", forcing those institutions whose financial position was deemed risky to raise new capital, is said to have been the key component.

Some key points, which I'm not expert enough to evaluate decisively off the cuff, but which need to be singled out, are:

1) Takeovers and restructuring would have imposed huge costs on the economy, outweighing the potential benefits.  Cassidy does cites some who claim that the bailed-out institutions are still "wounded" and slow to lend, slowing the recovery ("wounded" is Bob Kuttner's term; Paul Krugman was using the term "zombie banks" back when he was advocating takeovers), but counterbalancing this are the metaphors like "amputating a limb" (from Lawrence Summers) for the takeover-and-restructuring process.  A detailed cost/benefit analysis is missing here, and would be nice to see.

2) Raghuram Rajam of the University of Chicago's business school is appealed to for the point that bondholders needed to take a hit.  It's claimed that while equityholders would have been wiped out in a takeover, bondholders might not have been hit hard enough.  Why this is isn't fleshed out, but I guess it's because in a bankruptcy proceeding, which probably would have been the legal framework for takeovers, there's a definite order of precedence for creditors, with bondholders coming before equityholders (who are generally last).  However, in a restructuring-style bankruptcy, where the aim might be not to liquidate, but to get an enterprise running again, it's not clear to me that such absolute precedence would hold, especially when the government might have some pretty strong powers of persuasion over some of the bondholders (many of whom were presumably in difficult straits themselves).  Perhaps this mainly boils down to the possibility of protracted legal battles...a "special feature" of our system that might make this option more difficult than in other countries where it's succeeded?

As Cassidy says, "Bondholders are supposed to monitor risk-taking at firms they lend to. If they know they can rely on a government bailout, they have little incentive to do so. "  Just what hit the bondholders took under the bailout as it unfolded, isn't clear in the article, though.

3) Cassidy also recognizes that takeovers would have had the advantage of punishing the executives and shareholders of some of these institutions.  A big question is whether they got off too lightly.  That seems to be the public perception.  It is true that existing shareholders may have been diluted when companies were forced to raise capital under the stress test, if this was done by issuing new stock.  But if they didn't pay a high enough price, the take-home lesson for future financial managers is that this kind of mismanagement is profitable for them.  This is a recipe for repetition, unless strengthened financial regulation can help prevent managers from taking these opportunities to profit by risking the stability of the financial system, next time they present themselves.

In light of all this, one should note that Mike Konczal, guest-blogging on Ezra Klein's blog at the Washington Post, claims that Geithner is arguing hard to keep explicit caps on leverage out of the financial reform bill.   He quotes a January letter from Geithner to Rep. Keith Ellison (cc: The Honorable Ben S. Bernanke) opposing fixed numerical caps.  Konczal's a bit over the top in the spin he puts on some of what he quotes.  Geithner's point that "The statutory leverage constraint and detailed statutory risk-based capital requirements for Fannie Mae and Freddie Mac proved to be inadequate to the task of ensuring the safety and soundness of the firms." should hardly be paraphrased as "If you put this in the bill you will be responsible for another Fannie and Freddie"---rather, a good point that *even* numerical caps can't do the whole job in the absence of a serious, committed, regulatory authority analyzing the actual situation.  But the point that statutory limits can help keep things from getting out of control, even if they're not a guarantee, is a good one.  It puts some weight on the right side of the scales when irrational exuberance about leverage is sweeping the financial markets.

Krugman on Chinese currency policy and purchasing power parity

Since I linked earlier to a post arguing that the Chinese currency seemed not that undervalued based on Balassa-Samuelson considerations involving the relative prices of traded and nontraded goods, thought I should link to Paul Krugman's fairly persuasive counterargument---which is basically, look at their current account surplus: they're exporting savings.  Here's his op-ed on the subject.

Krugman calls out Chile/Chicago-boys spin, and tells us he told us so on Malaysia

For anyone who completely buys the story that the Chicago-boys free market policies did wonders for Chile, Paul Krugman has an interesting twist.  Look at his graph; it really jumps out that citing historical growth rates to make points about the effects of economic policies can be hugely affected by where you choose your endpoints.  As reference points, Socialist Salvador Allende became president of Chile on November 3, 1970, and was killed in a right-wing coup led by Gen. Augusto Pinochet, on September 11th, 1973.  You can see in Krugman's graph that Chilean GDP, which had declined roughly 10% under Allende, continued to drop another 14 percentage points below its 1970 baseline, in the first year after the coup.  After poking above that baseline in 1980 and 1981, it dropped as part of the general Latin American debt and economic crisis (which I view as associated with global effects of the US inflation-fighting tight-money recession induced by the Federal Reserve board and its chair Paul Volcker at the end of the Jimmy Carter years) and didn't reach 1970 levels again until 1988.  In 1988, voters rejected the prospect of eight more years of Pinochet in a plebiscite, leading to negotiations and elections in 1989 resulting in Christian Democrat Patricio Aylwin taking over the presidency.

Perhaps part of the continued (and even greater!) decline of GDP per capita under the first year of the Pinochet dictatorship can be laid to the continuing effects of the chaos of the Allende years (which in turn, some attribute partly to right-wing "economic sabotage" though I'd guess it had more to do with Allende's policies).  But the rapid recovery from the trough reached in 1975 can hardly be viewed primarily as testimony to Chicago-boys-style ultra-free-market policies:  it was probably in large part recovery from an economic crisis, to a point where resources were again fully employed, though presumably having a functioning market economy---whether Friedmanite or just run-of-the-mill-liberal-democratic--played a crucial role.  The whole business of just what the caused of the economic chaos in the second half of the Allende administration is interesting and important, and I'm not an expert here.  I think hugely stimulative monetary policy, leading to inflation, was an important factor.  Capital flight may have been another.

I think the fact that "Chile was hit much worse than the other major players" in the early-1980s Latin American economic crisis is linked to another historical point Krugman recently reminded us of.  Many of us remember the 1996 Asian financial crisis, which I view as having been, let us say, not helped by the Clinton-era crew of economists and Goldman-Sachs-linked financial types promoting financial market liberalization in Asia.  Malaysian dictator Mahathir imposed controls on the flow of capital out of the country, after the crisis hit, and was excoriated for it by many of these same liberalization-promoting types, but they worked and the Malaysian currency and economy weren't hit as badly as predicted, and as many other countries were.  Chile had some of the most liberal capital-flow regulations in Latin America at the time of the early-1980s economic crisis, and I believe this is generally viewed as part of the explanation why it was among the worst hit.  Indeed, I think the episode is one of the things that led the IMF to reconsider its position on capital flow regulation.

Print-On-Demand publishing: will it allow academics to compete with major publishers?

Since I'm thinking of writing a scholarly book or two, I wonder whether print-on-demand publishing houses, combined with outlets like Amazon, allow academics to effectively compete directly with the more usual academic publishers like Springer, Cambridge UP, Oxford UP, etc...?  I've recently noticed that in ordering new books from all three of these publishers, I've frequently been sent what look like print-on-demand editions.  Here's a bit on Springer's POD activities.   To take one recent purchase, Faraut and Koranyi's Analysis on Symmetric Cones, Oxford, is now print-on-demand, and they're still charging $200 for it.  It's adequate, but much less attractive than the original edition which has the trademark Oxford deep-blue cloth-covered boards, with nicely finished paper (perhaps excessively sized, even) and extremely crisp type.  The print-on-demand edition is on paper that's not as nice, an almost inkjet-printed appearance where the edges of the characters are just not crisp enough for my taste, and the boards are thick, covered with something glossy, and more prone to warp outward so the book doesn't quite close firmly.  Springer and Cambridge POD books are similar.  It's a little more like you LaTeX'd something, printed it out two-pages-to-a-sheet, cut the sheets in half and glued them into a binding.  (Except maybe your average laser printer would produce sharper results---I'd need to do a direct comparison.)  This is quite serviceable for the right price, for usable math books, but $200 (I was able to find it for less, but still an outrageously high price) seems ridiculous.  But if academics were able to publish their works this way, sell for $40-65, deduct the cost of printing (about which I'm quite curious), do a little yearly accounting and extra business at tax time, and pocket the rest, it might be a much better deal than publishing through a major house.  I suspect that for a good academic work, reputation developed through citations and online access (one could make the book available chapter-by-chaper for free, if desired) might work almost as well as the publicity provided by an academic or corporate publisher.  The major issue might be library purchases, I'm guessing.  Anybody out there have any experience or ideas with this?

More info:  Amazon's POD printing and distribution unit, Createspace (Springer's US partner) has an expanded distribution plan claimed to wholesale books to libraries and bookstores.  Cambridge has partnered with LightningSource.

Here's a video of the Espresso Book Machine, for producing paperback books at or near the point of sale, in action:

Here's Amazon's "Pro Plan" at their CreateSpace. The combination of the terminology "royalties" for the money you get, and "self-publishing", seems, technically, contradictory.   Royalties are paid by a publisher for the right to publish and sell your book; if you were actually self-publishing, you would be hiring Amazon/Createspace to print your book, and do some of its distribution and sales, but what you keep would be profit, not royalties.  So I'm curious which it actually is, in their case.  Anyway, you seem to get about 43% of the list price on sales through Amazon, 23% on their Expanded Distribution Channel (to libraries, bookstores, and "certified resellers" at, presumably, wholesale prices, although maybe not since Amazon labels the entire difference between your share and list price "Our Share"), and 63% through something called an eStore (which is presumably an outlet at your own website, linked to Amazon; more investigation warranted).   Those are on a $16 book; on a $45, 320 page book with black and white interior, it looks like 30% through the EDC, 50% through Amazon, and 70% through your eStore.  I'm guessing this is for a paperback.

So, quite a bit better than the standard academic press royalty which I believe is something like 7% or so, but still, through the expanded distribution channel, not that hefty.

Smash the power of global agribusiness and its state regulatory servants...

Kokopelli, described as a biodiversity-promoting nonprofit association and seedbank that sells seeds of traditional varieties, loses a suit against a big seed company because their varieties aren't---and perhaps can't be, due to the genetic inhomogeneity associated with traditional varieties and that is part of their contribution to biodiversity---on the EU's official catalogue of seeds that can be sold.  In French at Kokopelli's site here, summarized (read down past the Iraq stuff) in English here.  One can see how this might be in part a case of well-intended regulation gone awry...regulation perhaps even intended in part to keep new technologically developed seed varieties from running amok or genetically influencing other varieties...but one can also imagine that the regulations that big agribusiness is exploiting were likely influenced by them toward such results.  Hopefully over the next few decades this kind of outrage, and similar ones like the "patenting" of existing varieties by agribusiness, will be curbed, but I have my doubts.  Even more hopefully, some resolution will be found by modifying the existing EU regulations, but there too I have my doubts.

Oh yeah, I learned of this at Wine Terroirs.