Brad DeLong is unhappy that his faction of economists had so little influence on public policy during the Great Recession. But I think he makes a fundamental error:

Alesina and Ardagna and Reinhart and Rogoff each had more influence on what policymakers and journalists thought about the effects of fiscal policy than did Paul Krugman and company, (including me). While the Federal Reserve went full-tilt into quantitative easing (but not stamped money or helicopter money), it did so in the face of considerable know-nothing opposition. And the ECB lagged far behind in terms of even understanding its mission. Why? Because economists Taylor, Boskin, Calomiris, Lucas, Fama, and company had almost as much or even more impact as did Paul Krugman and company.

....The most salient relatively-recent example was provided by Carmen Reinhart and Kenneth Rogoff [who argued that it was risky for a country to have a debt-to-GDP ratio greater than 90 percent]....I think we have by far the better of the argument. There is no tipping point. Indeed, there is barely a correlation, and it is very hard to argue that that correlation reflects causation from high initial debt to slower subsequent growth.

Yet it is very clear that even today Reinhart and Rogoff—and allied points by economists like Alberto Alesina, Francesco Giavazzi, et al., where I also think we have the better of the argument by far—have had a much greater impact on the public debate than my side has.

Brad's error is in thinking that any of these economists influenced public policy. They didn't. Politicians and central bankers wanted to do certain things, so they highlighted research from economists who happened to agree with them. Roughly speaking, when Congress wanted to spend more money, it asked for testimony from the Brad DeLongs of the world. When it wanted to cut spending, it asked for testimony from the Reinharts and Rogoffs. Likewise, central banks have their own models and their own political pressures, and they responded to them. They didn't really care what any academic economists happened to say about it.

This may sound depressing if you're an economist. Who wants to be nothing more than a handy mouthpiece for whichever politician happens to like the policy implications of your particular beliefs? But in fact, the news isn't so bad after all.

Brad's post is titled, "Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?" But they weren't. If we had responded to the 2007-08 financial crisis the same way we did to the 1929-32 financial crisis, we'd still be waiting for a rerun of World War II to pull us back to normal. The reality was far less grim. We might not have responded ideally, but we responded a helluva lot better than we did in 1931. That's why it was a Great Recession, not a Great Depression.

And the reason for that is economists. Over the past 70 years they've had a tremendous impact on public policy. Compared to 1931, even the austerians are basically ultra-liberals who are just a few degrees less ultra-liberal than DeLong and Krugman. For better or worse, economists have enormous influence, but it's influence exercised over the course of decades. On that score, the Keynesians are overwhelming winners who have moved the center of gravity of the profession far to the left. It's only within the current center of gravity that conservatives seemed influential on public policy in 2009-10. But that's almost always the case. Wherever the Overton Window happens to be, the conservative end is usually ascendant. What really matters, though, is where the window is.

It's been previously reported that HHS Secretary Tom Price has made some questionable stock trades that appear to be based on inside information he had as a congressman. But Robert Faturechi reports that there's more:

On the same day the stockbroker for then-Georgia Congressman Tom Price bought him up to $90,000 of stock in six pharmaceutical companies last year, Price arranged to call a top U.S. health official, seeking to scuttle a controversial rule that could have hurt the firms' profits and driven down their share prices, records obtained by ProPublica show.

....On March 17, 2016, Price's broker purchased shares worth between $1,000 and $15,000 each in Eli Lilly, Amgen, Bristol-Meyers Squibb, McKesson, Pfizer and Biogen....The same day as the stock trade, Price's legislative aide, Carla DiBlasio, emailed health officials to follow up on a request she had made to set up a call with Patrick Conway, the agency's chief medical officer. In her earlier emails, DiBlasio said the call would focus on payments for joint replacement procedures. But that day, she mentioned a new issue.

"Chairman Price may briefly bring up ... his concerns about the new Part B drug demo, as well," she wrote. "Congressman Price really appreciates the opportunity to have an open conversation with Dr. Conway, so we really appreciate you keeping the lines of communication open."

The "Part B drug demo" refers to a proposed Obama rule that removed the incentive for doctors to prescribe expensive drugs that don't seem to improve patient outcomes. As it happens, there were plenty of folks in Congress from both parties who opposed this rule, so Price's opposition wasn't unusual. The difference is that all the others didn't buy lots of pharmaceutical stock at the same time they were lobbying to stop a rule that might have eaten into pharmaceutical profits.

So far, the Price affair hasn't attracted all that much attention. There are too many other Trump administration scandals to worry about. But this one has a decent chance of blowing up one of these days.

Germany is upset at new tariffs on carbon and alloy steel cut-to-length plate:

Germany's foreign minister on Friday morning said the Trump administration is taking a “dangerous step” after the Commerce Department announced a tariff on imports of foreign steel, indicating the tax could become a new source of conflict with the powerful U.S. ally and trading partner.

....“The U.S. Government is apparently prepared to provide American companies with unfair competitive advantages over European and other producers, even if such action violates international trade law,” Gabriel's statement read. “I very much fail to comprehend the decision.”

FWIW, none of this is really a Trump thing. The International Trade Commission began investigating dumping claims against Austria, Belgium, Brazil, China, France, Germany, Italy, Japan, Korea, South Africa, Taiwan, and Turkey in early 2016, and finished up its work before Trump took office. The vote determining that these countries were dumping product in the US below cost was unanimous.

I don't know what the Obama or Clinton administrations would have done if they'd had the final decision on this, but my guess is that they would have done the same thing as Trump, and the targets of the tariffs would have complained and threatened to take the case to the WTO. So there's nothing much new here. It's just another steel tariff. Because, you know, all the previous ones over the past four decades have been so successful.

Here's a tidbit from the AP about how President Trump might "seize the reins" of the intelligence community:

Officials have expressed an interest in having more raw intelligence sent to the president for his daily briefings instead of an analysis of information compiled by the agencies, according to current and former U.S. officials. The change would have given his White House advisers more control about the assessments given to him and sidelined some of the conclusions made by intelligence professionals.

Trump seems like the kind of guy who could do his own analysis of raw intelligence. They should give it a try. What could go wrong?

Here is Hilbert in one of his favorite places, up on the patio cover. He is, as usual, puzzled about why one of his servants is constantly pointing some big black thing with a shiny eye in his face.

This is, by the way, the sharpest picture you've ever seen of Hilbert. Here at MoJo, mobile users have outpaced desktop dinosaurs like me for a while, and we're eventually planning to cater more to this crowd by featuring higher resolution photos. I've decided to get a head start and give it a try. For the past few days, all my homemade photos and charts have been displayed in high res.

The upside, of course, is that everything looks better if you're using a high-res device like a smartphone or—especially—a tablet with a retina display. My charts look great! The downside is that high-res images are considerably bigger, so if you're on a slow mobile connection it might take a few more seconds for everything to load. And if you're using a low-res desktop monitor, you won't notice much difference at all. Comments welcome.

It's finally happened. The PCE measure of price inflation has breached the 2 percent barrier:

Over at the Wall Street Journal, Eric Morath comments: "That is a healthy signal for the economy, showing excess capacity and high unemployment that long held inflation near historically low levels have finally abated. Firmer inflation could give Fed policy makers leeway to consider additional interest-rate increases this year."

That's a refreshing change from the usual reaction of "ZOMG! Inflation is nearing 2 percent!" Nonetheless, like a broken record, I'll point out that (a) core inflation is still under 2 percent and barely increasing at all, and (b) 2 percent is not a "target." Not in the sense of something you should never exceed, anyway. It's a target for average inflation, and the average since the end of the Great Recession has been 1.5 percent. More recently, the average over the past two years has been 0.8 percent. It's going to be a while before we make up for so many years of too-low inflation.

Of course, it's also true that the Fed's target probably should be 3-4 percent, but that's a post for another day.

Sarah Kliff reports on the latest from House conservatives:

The House Freedom Caucus laid out two demands on Thursday for a health care bill its members would support: ending Obamacare’s essential health benefits and its “community rating” provisions.

Good for them! I'm serious. The key starting point for any kind of comprehensive health care plan is a ban on turning down customers with pre-existing conditions. But once you do that, you have to control the price insurers can charge (aka "community rating"), or else they'll simply jack up premiums for people with expensive conditions to a million dollars per year, which accomplishes the same thing as turning them down. But if insurers are required to cover anyone who applies, they also need plenty of healthy people to balance out their risk pool. So you end up with an individual mandate. But if you have a mandate, you have to have subsidies for poor people. You can hardly expect to legally require insurance for people who don't have the money to buy it, after all.

At that point, you have the entire edifice of Obamacare. There's no way around it. That's why Paul Ryan's plan looked an awful lot like Obamacare lite.

So if you're a conservative who flatly doesn't want an expensive, comprehensive, government-funded health care program, there's only one way to get there: ditch the pre-existing conditions ban by calling for an end to community rating. This is hugely unpopular, so it takes some guts to tell the truth and propose getting rid of it.

It's also cruel and meanspirited, but that goes with the ultraconservative territory. But at least they're being honest. Compare this to Paul Ryan, who kept the pre-existing conditions ban (via his "continuous coverage" provision), which then forced him to accept all the bells and whistles of Obamacare. His solution was to wave his hands and then keep the funding so low that his program essentially did no good at all. He didn't have the stones to simply admit that what he really wanted to do was repeal Obamacare and then do nothing at all to replace it.

Now, it so happens that Obamacare's pre-existing conditions ban has no direct effect on the federal budget, and therefore can't be repealed via reconciliation. It can only be repealed under regular order, which requires 60 votes in the Senate. So the Freedom Caucus folks are out of luck. But at least they're displaying a bit of honesty.

Peter Holley has this story up today:

The final straw was a little girl using an iPad with the volume on high, a device her parents refused to turn down despite repeated requests from the staff at Caruso’s, an upscale Italian restaurant in Mooresville, N.C....“Finally, we had to ask them to leave,” Nunez told The Washington Post.

“That was the incident that triggered the entire thing.” “The entire thing,” as Nunez puts it, is the restaurant’s strict ban on children under the age of 5. It went into effect in January, drawing passionate applause from some diners online and angry condemnation from others.

So what does everyone think about banning small kids from an upscale restaurant? I am informally forbidden from commenting on stuff like this because I have no children and am therefore assumed to have no understanding of the vast stresses involved in raising kids.1 Fair enough. I'll keep my mouth shut.

Except for this. Thirty years ago, this wouldn't have been an issue. There were places that were appropriate for small children and places that weren't. McDonald's? Appropriate. Denny's? Appropriate. That little Italian place on the corner? Maybe. How well behaved are your kids? Morton's Steakhouse? Inappropriate. It's a grownup place.

This distinction seems to have died out, and I'm not sure why. A lot of people think it has to do with this:

As the number of small children has declined, they all become precious snowflakes who deserve constant attention and only the best things in life. For what it's worth, I don't buy this. I don't have any particular reason. It just doesn't seem right.

And yet, the distinction between places that are appropriate for small children and those that aren't sure seems to have gotten bolloxed up. At the same time that lots of parents take their toddlers to upscale restaurants and R-rated movies, older children are all but banned from walking alone to a nearby park lest some busybody call the cops to report this obviously reckless parental neglect.

I dunno. I'm not a parent, and my cats don't do a damn thing I tell them. What's going on?

1I also have no experience with the vast stresses of running a restaurant, but no one ever seems to care about that.

Over at the Financial Times, Robin Wigglesworth has an interesting chart to show us. It's a little hard to decipher, though, and takes some explaining. First, here's the chart:

The pink line is "hard" economic data: employment rates, GDP growth, etc. The purple line represents "soft" data: things like consumer sentiment, purchasing manager optimism, etc. Roughly speaking, pink is how things are and purple is how people feel.

The fist thing to notice is that the hard data doesn't bounce around very much. It mostly stays in a band between -0.5 and +0.5. (I have no idea what those numbers represent. Some kind of overall index, I imagine.) The animal spirits data, however, is like a kid's yo-yo: it routinely shoots up and down from -1.5 to +2.0.

The second thing to notice is that these indexes mostly move in tandem. When the hard data goes up, the soft data goes way up. When the hard data goes down, the soft data goes way down. People react very strongly to even modest changes in the economy.

And then there's 2016-17. After a modest slump, the hard data has been ambling along at zero for the past year. But starting around the election, the soft data suddenly went sky high. There's nothing in the economic data to support this, but the Trump election seems to have filled the investor class with overwhelming optimism.

So what happens when reality sets in? There's no special reason to think the economy is going to take off anytime soon, and Trump's obvious bumbling will eventually sink in to everyone. At that point, the animal spirits are set to come crashing down.

What will that do to the actual economy? Maybe nothing. Maybe the actual economy really does respond solely to macro phenomena and animal spirits have nothing to do with it. That's certainly been the case as animal spirits have skyrocketed. Then again, maybe the economy does react to animal spirits plummeting. This is not a real-life experiment I'm especially eager to see play out.

Now there are three people involved in revealing classified information to Rep. Devin Nunes:

One of those involved in procuring the documents cited by Nunes has close ties to former national security adviser Michael Flynn. The official, Ezra Cohen, survived a recent attempt to oust him from his White House job by appealing to Trump advisers Jared Kushner and Stephen K. Bannon, the officials said....After assembling reports that showed that Trump campaign officials were mentioned or inadvertently monitored by U.S. spy agencies targeting foreign individuals, Cohen took the matter to the top lawyer for the National Security Council, John Eisenberg.

The third White House official involved was identified as Michael Ellis, a lawyer who previously worked with Nunes on the House Intelligence Committee but joined the Trump administration as an attorney who reports to Eisenberg.

This is an amazingly far-reaching conspiracy considering that the documents don't actually seem to have contained anything very interesting. You'd think that at some point one of these guys would have the common sense to call off this Keystone Cops affair.

And as long as we've mentioned Michael Flynn, here's the latest on him:

Michael T. Flynn, the former national security adviser, has offered to be interviewed by House and Senate investigators who are examining the Trump campaign’s ties to Russia in exchange for immunity from prosecution, according to his lawyer and a congressional official.

I didn't bother mentioning this yesterday because, frankly, I sort of figured that Flynn was hoping for immunity and then wouldn't say anything very interesting. Last night Josh Marshall opined that "you only get immunity if you deliver someone else higher up the ladder," but this morning he seems to have changed his mind:

Flynn's lawyer states rather grandly that his client "has a story to tell and ... very much wants to tell it." But Alex Whiting of Harvard Law School argues pretty convincingly that what we learned last night likely means either that Flynn doesn't have a story prosecutors are willing to barter for or isn't yet willing to tell it.

So probably Flynn doesn't have much to say after all. Which gets us back to the clowns in the White House. What were they doing trawling through highly classified reports anyway? Barton Gellman says this is the key unanswered question so far, and it's related to the allegation that some of the names in the reports had been unmasked, something that happens only if a "customer" asks for it:

If Nunes saw reports that named Trump or his associates, as he said, the initiative for naming names did not come from the originating intelligence agency. That is not how the process works. The names could only have been unmasked if the customers—who seem in this case to have been Trump’s White House appointees—made that request themselves. If anyone breached the president’s privacy, the perpetrators were working down the hall from him. (Okay, probably in the Eisenhower Executive Office Building next door.) It is of course hypocritical, even deceptive, for Nunes to lay that blame at the feet of intelligence officials, but that is not the central concern either.

If events took place as just described, then what exactly were Trump’s appointees doing? I am not talking only about the political chore of ginning up (ostensible) support for the president’s baseless claims about illegal surveillance by President Obama. I mean this: why would a White House lawyer and the top White House intelligence adviser be requesting copies of these surveillance reports in the first place? Why would they go on to ask that the names be unmasked? There is no chance that the FBI would brief them about the substance or progress of its investigation into the Trump campaign’s connections to the Russian government. Were the president’s men using the surveillance assets of the U.S. government to track the FBI investigation from the outside?

That reference at the end to "the president's men" is no coincidence. This whole thing looks more Watergate-ish by the day. Maybe it's time to start calling it Russiagate.