Why hasn't the growth rate of Real Potential GDP recovered?

Missionary Work Among Savages blog is authored by 2slugbait, a pseudonym for an econometrician. He recently wrote a post about whether President Reagan's 1981 tax cuts performed as advertised with the perspective of hindsight. I think his motivation was also to assess whether a similar supply-side approach could have been a better alternative to the fiscal stimulus measures implemented by President Obama during the 2008-2010 financial collapse.

Although the recovery during Obama's second term in office was one of the most anemic in U.S. history, 2slugbait's conclusion was that a supply-side effort would not have produced an enduring benefit.

Voodoo economics not so great

Economist Arthur Laffer was known for his Laffer curve. Laffer's recommendations about supply-side measures (rather than demand-side economic stimulus) were referred to as voodoo economics by detractors, most famously by former President George H.W. Bush. 

Voodoo economists in action?

2slugbait demonstrates empirically why supply-side economics was only mildly effective. Specifically, neither of the following worked out the way supply-side economists posited at the time:

1. cutting the top marginal tax rate would encourage greater labor efforts and 
2. more hours worked would have a greater net impact on increased personal savings than increased consumer spending would.

The (infamous?) Laffer curve

Skepticism about David Stockman and Laffer's tax policy recommendations during the Reagan Administration is the less interesting part to me. Tax cuts for middle-income wage earners (not solely those high net worth "job creators" 😕😡 ) CAN provide a modicum of economic stimulus, even though it is not enduring! That was apparent from 2017 to March 2019, as well as the early 1980s.

Something else is much more interesting to me: The long-term decline in Real Potential GDP. 2slugbait noticed this too in his post.

Real Potential Gross Domestic Product

According to 2slugbait,

"If the Reagan tax cuts actually affected the supply side of the macro economy... then we should have observed an unparalleled increase in the growth rate of real potential GDP... 

Yes, real potential GDP did grow at a pretty good clip immediately after the Reagan recession, but it quickly faded... even at its peak it was only barely above the growth rates during the Nixon, Ford, and Carter years and well below rates enjoyed during the LBJ and Clinton years."

Real potential GDP (let's refer to it for convenience in this post as RPGDP) is defined in the Federal Reserve Economic Data repository (FRED) as 

Gold Star of Texas

The state capitol building in Austin, Texas (21 October 2008)

Cupola of the state capitol at Austin

Photograph by TedLandphair via Picasa

Credibility and the Internet: Queuing Theory

This was old news about queues back in the 1990s, yet it was written up as an (Inderscience) journal article, and received coverage as though a new finding in the June 2010 issue of ScienceDaily, an online "new discoveries!" update service owned by Reuters. See footnote #1 for even more.

M/M/1 queues, Kendall notation, and models of balking and reneging behavior are certainly useful. However, the concepts and most models have been well-established for at least forty years.

This Wiley text book, Fundamentals of Queueing Theory, was published in 1998.

An earlier edition was published in 1983, and explains in detail the theory and application of the concepts presented in the journal article summarized by ScienceDaily in 2010.

A little more about M/G/1

Over at Math StackExchange, I noticed a rare inquiry. If you're curious to learn more about queues, go read my answer to this question, Kendall notation's “General distribution”, what does that mean?

I found this comment endearing:

Oh I thought that this stuff wasn't even used in real life jobs... I thought it was merely theoretical, but seems that I'm wrong!

I'm okay with the G general theory [G as the general case when you just don't know what sort of service time distribution to expect] since I'm not required to study it for now (I'm following an academic course), I just wanted to understand what the G meant and you helped me in that. Do you have any experience with multi-class queues too?

Reference

1. Liao et al. "Optimal staffing policy for queueing systems with cyclic demands." International Journal of Services and Operations Management, 2010; 7: 317-332.

Chemical Heritage

This aluminum necklace was on display at the Chemical Heritage Foundation (CHF) in 2010. It was part of the CHF's Chemistry and Fashion: Making Modernity exhibit. A description of the necklace is still available via an unfortunately image-free post about Atomic Age women's jewelry. 

I like the necklace, a lot! Aluminum is very light; I do wonder whether the same necklace could be made of platinum or possibly iridium. If so, how it would it compare--in appearance (e.g. lustre) and weight-- to the aluminum version?

Aluminum necklace circa 1950

I wrote this post in October 2010. Times changed at the Chemical Heritage Museum since then, resulting in many broken links. This is an expanded version of that post, with replacement by valid alternative links for inline URLs. I apologize if I missed any. 

URL persistence hasn't been taken as seriously as the IETF and Internet Society had hoped; URL status, according to a Google Groups thread, as of 2013:

URLs are simply not persistent...from a recent study, about 15% of URLs from a large sample reach a lifetime of 1000 days. It's abysmal. And other studies back it up.

No Moore Chemical Heritage

Sadly, Chemical Heritage was absorbed by the Science History Institute in 2018, including the CHF's 5-story building. Most CHF collections can still be viewed at the museum's original location, at 315 Chestnut Street in Philadelphia, Pennsylvania. I was born in Philadelphia, and attended graduate school there, so I feel an affinity. 

The former CHF building is near Centennial Hall, the Liberty Bell, and adjacent to a nice residential neighborhood called Society Hill. Penn's Landing is a few blocks to the east. That's where William Penn first arrived on the shores of America. 

Gordon E. Moore helped found the Chemical Heritage Foundation, and his generous donations provided much of the initial and sustaining funds.

Moore's Law

Periodic Tabloid: 
Musings on the Molecular

Interested in the legacy of Gordon Moore? A reproduction of his 1966 article, in which he introduced his famous law, is included in Understanding Moore's Law: Four Decades of Innovation. The book also recounts many observations by Moore, his peers, competitors, and others. It was written in order to commemorate the 40th anniversary of Moore's Law. 

Although "Understanding Moore's Law" was published by the now defunct CHF Press, the Science History Institute kindly keeps an electronic version of the full text available as a PDF for online readers.

Heritage of Chemistry: Moore notable, noble chemists

I promise that this heading will be my final pun for today. It is a double pun, the best kind!

When I first wrote this, chemist and materials scientist Andre Geim had recently won the Nobel Prize.  In merely 10 years, he went from the dubious distinction of receiving an IgNoble prize for levitating frogs with magnets to winning the Nobel Prize for producing a one atom-thick material consisting of carbon atoms, arranged in a hexagonal lattice.  Geim named it graphene, and mapped its properties: incredibly thin but still incredibly strong, good heat and electrical conductivity, almost entirely transparent yet very dense.

How To Rob An Online Bank And Get Away With It

Ambitious!

"The subject of our dissection is an online bank robbery. 

Not the all-too-common attack against an online banking user, his computer and his identity, but an attack against the bank itself - or more precisely, against the bank's online banking application.

An online banking attack has four distinct phases:

1. Vulnerability Finding Phase
2. Vulnerability Exploitation Phase
3. Buying Time Phase
4. Extraction Phase..."

via ACROS Security Blog: Anatomy Of An Online Bank Robbery 

AOL Running Man Lives!

The running man created by AOL (American Online) was, and maybe still is, the most iconic representation of Internet dial-up connections for many users from the mid-1990s to 2010.

Apparently, he was still making appearances at tech events as recently as 2009, as seen here in Washington D.C.

Running Man at TECH Cocktail DC 6

Location: Left Bank in Adams Morgan, Washington D.C. on August 27, 2009. Photo by Shawn Duffy, via Flickr.

I wish I knew the context for his appearance! I wish I had had a chance to see Running Man too.

Cartography of Second Life

Surprise! Cartography enthusiast and mapping patron David Rumsey was there too: Viewing Second Life.

Me

I am Ellie Heartsdale. I owned a small corner plot of land on an island sim in the west. I built a little house there, for me and the piggies. I went to the Second Life synagogue, in Nessus, on Friday nights.

Piggies

My father was still alive then. I was working for the State of Arizona, Department of Health Services, Office for Children with Special Health Care Needs, as chief research statistician. That was my title, "Research Statistician, chief".

I was happy, but as usual, didn't realize it at the time.

Maps

Physikalische Typografie

This is a situation where the German language -- not French, nor Italian and certainly not English, really captures the feeling and nuance of a work of art most eloquently. Physikalische Typografie* means "Typography of Physics."

I like that much better than my prosaic versions:

• An Alphabet of Physics Diagrams?
• Creatively Capturing Fonts with Physics
• 26 Physical Letters

This post is about physics-student-turned artist MunnaOnTheRun, and the story of his rather abrupt transition to artiste and graphic designer. The catalyst for his transformation was quite literally the Unified Field Theory of Physics. MunnaOnTheRun, and Wikipedia, refer to it as The Theory of Everything. It is (a yet to be proven theory) linking all known physical phenomena. Albert Einstein was intent on tracking it down in the last decade of his life.

Background

MunnaOnTheRun was an enthusiastic student. Unfortunately he was also a miserable failure in physical science coursework, by his own admission.

World Year of Physics || {Physics + Typography} by Munna

Now, fast forward in time. 2005 was designated World Year of Physics in commemoration of Einstein's Theory of Relativity centennial. MunnaOnTheRun wanted to create a typeface from physics diagrams for the event.

This is the story of his success, in the artist's own words:

After months of research... I finally got hold of 26 diagrams that looked liked the letters of the alphabet. This poster literally transported me into a parallel universe. I sent this around to graphic designers .... With no formal training in art, and nothing to show for except badly drawn doodles, I started believing that I could make art.

Physics changed everything for me.

* The website ILoveGraffiti coined that pithy phrase, Physikalische Typografie.

Cassandra Is Sooooooo Correct

Nihon Cassandra is more of a stock market investor than macroeconomics type. In other words, she isn't really into bonds. In her own charming words,

So long as my distribution is skewed-right, and the tail not overly kurtotic, I am sanguine.

Recently, Cassandra excoriated herself for failing to predict our current global macroeconomic malaise, specifically, the odd lack of self-preserving behavior by those who have the most to lose. I think she is being unnecessarily harsh, as she understands far better than many others do, even now.

It was a close call. From September 2007 through 2010, the masters of financialization escaped ruin by the skin of their teeth. Saving the system, at public risk and expense, was useful to asset holders, e.g. the AIG crowd, Goldman Sachs and friends, Stevie Cohen, Walmart family scions, Icahn, Einhorn, Pritzkers, Koch brothers, Larry Ellison, Larry and Sergei Google, Mark Z, Jeff Bezos, Bill and Melinda, other much less publicly known owners of nation-sized yet privately owned wealth.

If he were a spy

I looked for answers on Quora, a question-and-answer website.

Is Jacob Appelbaum a U.S. government employee?

He gets a huge salary from the Tor Project but mostly jets around the world, more lavishly than celebrities and movie stars. His home is chic, minimalist but opulent according to Rolling Stone. He posed with semi-automatic firearms in Iraq in 2008. He parties ALL the time, based on his flickr photographs. [These photos are no longer visible other than to logged-in flickr users with adult content viewing enabled. I embedded a few as part of my question on the Quora website and question comments.]

Martin Strohmeier

The question doesn't really seem to follow from the details, Ellie?

Ellie Kesselman

Granted, but maybe this will help to explain. Tor is a former US government project. Jacob works, or worked for Tor. I was trying to avoid asking directly whether Jacob were a spy. That would be indiscreet, so I said "US government employee" instead.

Jacob has more fans and cart blanche globally than, well, I don't even know who to compare with him. He is like the Larry Ellison or Eric Schmidt of crypto fandom, but without any visible means of support. I don't see his name on the cryptography research server IACR as an author, nor any ACM nor IEEE scholarly journals, not even the Financial Cryptography conference.

ioerror is, well, to make an analogy, like the subversive version of Google's Jared Cohen. ioerror is the cool kids' hero, so to speak.