We care about fellow-Americans and not about Indians or Ethiopians because ...?

One of the serious essays that I read after the Costa Rica trip was this essay by Greg Mankiw, in which he lays out his defense of the one-percent.  I am surprised not with his wanting to defend the one-percent--after all, he has always been in the Bush and Romney camps--but with the approach that he took.  Mankiw seemed to offering a kind of unsophisticated moral and political philosophy interpretation that might be expected only from half-baked pseudo-intellectuals like this blogger!

I wouldn't be as harsh as Jonathan Chait, but I am on his side when he writes:

Mankiw — perhaps admirably, or at least bravely — ventures completely outside his area of expertise, economics, into moral philosophy. The result is — well, there’s no other way to put it. It’s an embarrassing piece of ignorant tripe.

Yet, I admire Mankiw for admitting, for acknowledging, that debates and discussions on income distribution in society cannot be simply resolved via econometrics:

fundamentally normative conclusions cannot rest on positive economics alone. 

If only economists would make this clear to the public every single time they convey their research findings.  If only they would stop claiming that economics is a science that can help in public policy decisionmaking! If only Mankiw himself would recite it every time.

And, yes to Mankiw when he makes clear up front:

At the outset, it is worth noting that addressing the issue of rising inequality necessarily involves not just economics but also a healthy dose of political philosophy. We economists  must recognize not only the limits of what we know about inequality’s causes, but also the limits  on the ability of our discipline to prescribe policy responses. Economists who discuss policy  responses to increasing inequality are often playing the role of amateur political philosopher (and, 3 admittedly, I will do so in this essay). Given the topic, that is perhaps inevitable. But it is useful to keep in mind when we are writing as economists and when we are venturing beyond the boundaries of our professional expertise. 

Give the man his due, I say, for stating that loudly and clearly.  We can then at least agree that income distribution discussions come down to how much we are able to persuade the audience.  Can we convince them that our way of thinking about it is correct?  Econometrics is only as good or as bad a tool as simple rhetoric can be.  Yes, I am channeling D. McKloskey here.

Anyway, in that essay, Mankiw writes:

Some of the largest income disparities are observed between nations. If a national system of taxes and transfers is designed to move resources from Palm Beach, Florida, to Detroit, Michigan, shouldn’t a similar  international system move resources from the United States and Western Europe to sub-Saharan  Africa? Many economists do support increased foreign aid, but as far as I know, no one has  proposed marginal tax rates on rich nations as high as the marginal tax rates imposed on rich  individuals. Our reluctance to apply utilitarianism at the global level should give us pause when  applying it at the national level.

Exactly. We are ok with California and New York sending in more dollars to DC in taxes than they get back from Congress.  Alabama or Mississippi are examples at the other end--they get more from DC than they remit as taxes.  Such national-level redistribution is considered acceptable, but not if we extend the courtesy to Ethiopia.  Even though Ethiopians are immensely poorer than the poorest in Alabama.

The tribal behaviors of the past, when humans helped out only their group are understandable.  But, we now live in a world in which people effortlessly seem to take on new identities.  I am an American citizen who came from elsewhere.  This entire country is full of such narratives; if not first-hand, then one only needs to go back a few generations to find out where the people came from--with the exception of the Native Americans, who are now a minority in their original lands.  Yet, we so easily defend not caring about the rest of the world even when we are ok with massive internal income distribution, to individuals and geographic areas alike.

It is so arbitrary a line that we draw, a political boundary. We then defend it with words and with guns. We then even claim that Indians and Chinese are taking away "our" jobs, as if "we" are the only ones entitled to those jobs and incomes.  But, really, do "they" not bleed when pricked? If tickled, do they not laugh?  If poisoned, do they not die?

So, yes, income inequality and redistributing incomes and wealth really does come down to our own versions of moral philosophy and how we justify them.

We use our own yardsticks to continue to define and re-define the tribes to which we belong and we want to make clear the us-versus-them distinctions.  Income inequality is merely one such example in which we demonstrate this tribalism.

We humans are a very strange life form on this planet.

I worry when Mankiw cites Oregon

It is not often that I come across "Oregon" in serious economic policy analysis.  After all, while the state is famous for, among other things, microbreweries, hippies, Nike, it is not any leading light on economic issues.  Unless they are bad examples of economic policies!  Which is how Greg Mankiw uses one example from Oregon, in his detailed essay on the challenge government economists have faced over the past year and a half, and the lessons for the discipline itself.

(The essay is a wonderful illustration of how all the fancy math and jargon is not needed at all, even though at the drop of a hat economists would love to say "as a first approximation" and then scribble a couple of second-degree differential equations! It is a must-read in order to understand the points of departure in the economic recovery ideas debated: government spending versus tax incentives.)

Anyway, in discussing the jobs created or jobs saved claims of the Obama administration, Mankiw presents one of the issues related to this--data reporting errors and false claims (I wonder whether he intentionally chose not to quote Hayek in this context; I recall that Hayek wrote about how in a Soviet system bureaucrats have an incentive to misrepresent numbers):

Some employers, for instance, have counted money used to provide pay raises to existing employees as “creating” jobs. Thus the Wall Street Journal reported last November that the Mid-Willamette Valley Community Action Agency in Oregon had claimed to create 205 jobs with its $397,761 in stimulus money — spending less than $2,000 per “new” job.

Really?

Oil spill, finance mess, and regulation

Ken Rogoff puts it so succinctly (ht):

The parallels between the oil spill and the recent financial crisis are all too painful: the promise of innovation, unfathomable complexity, and lack of transparency (scientists estimate that we know only a very small fraction of what goes on at the oceans’ depths.)  Wealthy and politically powerful lobbies put enormous pressure on even the most robust governance structures.

Well phrased, right?  Rogoff then writes:

If ever there were a wake-up call for Western society to rethink its dependence on ever-accelerating technological innovation for ever-expanding fuel consumption, surely the BP oil spill should be it. Even China, with its “boom now, deal with the environment later” strategy should be taking a hard look at the Gulf of Mexico.
Economics teaches us that when there is huge uncertainty about catastrophic risks, it is dangerous to rely too much on the price mechanism to get incentives right. Unfortunately, economists know much less about how to adapt regulation over time to complex systems with constantly evolving risks, much less how to design regulatory resilient institutions. Until these problems are better understood, we may be doomed to a world of regulation that perpetually overshoots or undershoots its goals.

I am not sure whether regulation will ever be able to get it right.  It is simply the nature of the beast, so to say.  But, here is the question: aren't the global economic crisis and the oil spill posters for it might be better to overshoot through regulation than to undershoot?  After all, Rogoff himself notes:

t is extremely difficult to strike a balance between managing “tail risk” – a very small risk of a very large disaster – and supporting innovation.

Overshooting means precluding that "tail risk" ... a tough call for society.  The recent announcement from Craig Venter is yet another example of how things will only get even more complex ....

What Econ newbies are up to, coast to coast

I wish I knew the answers to all of the following questions from Brad DeLong's midterm exam:

For each of the ten events, tell us (a) when it happened (within a ten year window) and (b) what its relevance is to a course in twentieth century economic history:

1. Launching of first Five Year Plan in the Soviet Union
2. Wall Street stock market crash; start of the Great Depression
3. Gandhi's “Salt March”
4. “The End of the Beginning”: Battles of Midway, Guadalcanal, El Alamein, “Operation Torch”, and—most of all--”Operation Uranus”: Stalingrad
5. George Marshall proposes the “Marshall Plan”
6. Treaty of Rome creates the European Economic Community of “the six”
7. The “Southern Expedition” of Deng Xiaoping
8. Margaret Thatcher becomes Prime Minister of Great Britain
9. William Jennings Bryan [D] loses U.S. election to William McKinley [R]
10. Start of Mexican Revolution

I am confident about my answers to six, and I think I might be right about two more, but have no clue about the other two.  And these are from his freshman course!  Hmmmm .....
Across the continent, Greg Mankiw has these for freshmen :-)

How did economists get it so wrong?

That is the question Paul Krugman discusses here. Before we get to that, this cartoon, via Mankiw, explains what economists do:




Now, this is change I can believe in :-)

More on Krugman v. Mankiw

I blogged about Krugman's comment on Mankiw's column in the NY Times, in which I noted that the Nobel-winner ought not to take the low road, which he did.
Mankiw has also commented on it. He starts with:

In a brief blog post on healthcare, Paul Krugman says that George Will and I are "either remarkably ignorant or simply disingenuous." I cannot speak for George, but I can attest that I am completely ingenuous. So I suppose I must be remarkably ignorant.

The best would have been if Mankiw had not typed the sentence on how he must be remarkably ignorant. But, that is ok. He then discusses the content, with a bunch of hyperlinks--which is exactly how intellectual discussion ought to happen. At the end, Mankiw writes:

On the issue of tone, I again think I understand Paul's point of view. He likely believes that civility is overrated. He seems to think that in the blogosphere, and perhaps in the public debate more generally, you score points simply by insulting your intellectual adversaries. Sadly, I am afraid he may be right.

Yes, that is the unfortunate case. Krugman, too, seems to have fallen into the attack the person style argument. Now, in case one thought that this was a casual blog post where Krugman made such an observation, well, in his published column he charged opponents of climate-change legislation with "treason." That was simply awful. I mean, to go down that Cheney/Bush/Rove road of labelling dissenters as traitors is not kosher at all.

John Cole notes:

There needs to be some form of one of the corollaries to Godwin’s Law that applies to the word treason, in that anyone who accuses someone of treason for non-treasonous behavior automatically loses the argument. Yes, the climate change deniers are, in my opinion, wrong, and yes, they are making all sorts of ridiculous arguments, but after the last eight years, can everyone just knock it off with the accusations of treason? It is just a loaded term and does no good, and I assure you that even though Krugman is arguing for “treason against the planet” (whatever the hell that means), this will be used to justify future right-wing claims of treason because Dick Durbin mentioned Pol Pot and the US Army in the same hour, or some other nonsense like that.

Christ. Just stop it.

And I say this as someone who is hesitant to criticize Krugman, because every time I pop off at the mouth he turns out to be right.

I am a tad super-sensitive about this because I have simply had it with my colleagues whose preferred option was always the ad hominem route. They have succeeded though in completely silencing me. The success of this route is why university faculty use it, and so do newspaper columnists and Nobel-prize winners. And, of course, that is why the Grand Ayatollah uses it in Iran as well.

Healthcare: Krugman v. Mankiw

I prefer the spelling "healthcare" instead of "health care." Why? The OED has it as "healthcare" and somehow this compound word appeals to me way more than a two-word phrase "health care." However, I do agree that if we say "dental care" then shouldn't this be "health care?" To that question I ask, "since when has the English language been logical?" Remember GBS' comment that "ghoti" should be pronounced as "fish?"
The editors of Healthcare Quarterly have this to say to potential authors:

Note, however, that "healthcare" is one word as both an adjective and a noun.

Digressing is easy, I suppose. So, coming back back to the intent of this post, it is great fun watching from the sidelines two economists duking it out. In his business column, Greg Mankiw explained why he did not favor a public health insurance option. Mankiw's bottom line appears to be that government as a monopsony could drive away the incentives that otherwise attract growth and development in the industry:

a monopsony — a buyer without competitors — can reduce the price it pays below the competitive level by reducing the quantity it demands.This lesson applies directly to the market for health care. If the government has a dominant role in buying the services of doctors and other health care providers, it can force prices down.

To which Krugman responds rather nastily. It is nasty because he does not stick to arguing the points of the case (and there is a great case to be made for the public option) but he editorializes and calls names. Unwarranted. Krugman writes:

To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.

A Nobel-prize winning public intellectual ought to be a better role model than this. Oh well!

Recession. Need inflation. Onion to the rescue.

In his column in the NY Times, Harvard's Greg Mankiw argues that inflation can help us out. He writes:

Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.
Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations.

Krugman says that he provided such an argument in the Japanese context a decade ago. In other words, he tells Makiw, "hey, I have a Nobel!" And then Krugman writes that:

Since that was the answer I arrived at for Japan more than a decade ago, I have to say that it makes sense in principle.
But here’s why it won’t work now, at least not yet: we’re talking about making a credible commitment to fairly high inflation over the medium term, yet you still have distinguished central bankers appalled at the Fed’s 2 percent inflation target.

But, you know who has the best answer of all? The Onion. These people have a brilliant idea to add value to the pieces of paper that we refer to as American currency:


Treasury Department Issues Emergency Recall Of All US Dollars

Feb. 25, 1919: Oregon Taxes Gas by the Gallon

Feb. 25, 1919: Oregon Taxes Gas by the Gallon

By Randy Alfred 12 hours ago

Oregon's gasoline tax funded commercial and scenic highways, like the Columbia River Highway. This panoramic view looks east from Crown Point in the Columbia River Gorge.
Image: Oregon State Archives

1919: Oregon passes the nation's first per-gallon tax on gasoline. It's only a penny, and it's only one state, but you know where things go from here.

New York City started collecting registration fees on those new-fangled motor vehicles in 1901, and the state of Missouri took that road two years later. By 1914, every state collected registration fees (.pdf), and approximately 90 percent of the dough was going to road construction and maintenance.

Still, horseless carriages had a greater need for pavement than horses hauling carriages, and the long-distance capabilities of automobiles and trucks suggested a network of well-built intercity highways to rival the railroads. In Oregon, the state highway commission (created in 1913) started a "Get Oregon Out of the Mud" campaign for better roads in 1917.

Republican state legislator Loyal Graham (.pdf) sponsored the measure that made Oregon the first state in the nation to make road users pay at the pump to build and maintain those roads. Early projects included the Pacific Highway from the Washington state line to California and the Columbia River Highway along that mighty river.

The first gasoline tax was one cent a gallon (12 cents in today's money). Gasoline in those days sold for about 25 cents a gallon, which would be a bit more than $3 these days.

Colorado and New Mexico followed Oregon within six weeks to initiate per-gallon taxes. North Dakota followed later in the year. When New York finally joined the procession 10 years later, all 48 states had imposed taxes of 1, 2 or 3 cents per gallon. The federal government levied its first gasoline tax in 1932: a penny a gallon (15 cents today).

Ninety years after its inception, the Oregon gasoline tax is 25 cents imposed by the state, with up to 8 cents more in city and county taxes, and 18.4 cents for the feds. That could add up to 51.4 cents, depending on where you buy. The U.S. average is 45 cents a gallon, including the federal levy.

Oregon is still a leader in new ways to tax vehicle use. It ran a 300-car pilot program from 2006 to 2007 to test the idea of equipping all new vehicles with GPS and then taxing them by miles driven. The idea also been bandied about in Washington state, Idaho, Colorado, Texas, Minnesota, Florida, North Carolina, Ohio, Pennsylvania, Rhode Island, Massachusetts and — until President Obama nixed it last Friday — the federal government.

The future will undoubtedly be interesting.

Source: Wired.com
Thanks to Greg Mankiw

The end of the Reagan/Thatcher revolution?

Thanks to the economic crisis, I hope we won't have to worry about the Reagan/Thatcher philosophy of political economy that resulted in the likes of Grover Nyquist and Tom DeLay. What a national nightmare that DeLay caused! Everything from closing access to Democratic representatives in the House, to personally overseeing mid-Census redistricting in Texas. Simply awful. Whatever intellectual merits the conservatives (not Republicans!) might have had, all we need is a poster of Nyquist and DeLay to make anybody run the other way.

Krugman's Nobel might well be the proverbial final nail. Reading some of the commentaries from the market-fundamentalist economists, including Mankiw himself, it appears that they are hopping mad that Krugman received the prize. My own suspicion is that they know that it will be years before they can regain the influence to shape intellectual fashions in economics. Or in social science, for that matter.

No, I have no false notions that this will lead to some big time leftist political policies. No Hugo Chavez, thank you very much. But, we might make some much needed corrections to the ultra-right approaches that preferred subsidies for the rich and cried against subsidies for the poor.

BTW, a reminder again that this is not a prize that is one of the original Nobel Prizes. In economics, it is an award in Nobel's memory, and the money for it comes not from Nobel's TNT wealth. The official name for the award is: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

Economists disagree on the $700bn bailout

When economic conditions turn sour in Argentina or Indonesia, we give very clear instructions on what to do: balance the budget, cut government employment, maintain free trade and the rule of law, and do not prop up failing enterprises. Opponents of free markets argue that this advice benefits international financiers, not the domestic market. I have always believed (at least since I began to understand economics) that the U.S. approach was correct. But when the U.S. ignores its own advice in this situation, it reduces the credibility of this stance. Rewriting the rules of the game at this stage will therefore have serious ramifications not only for people in this country but for the future of global capitalism.

That was University of Chicago economist Robert Shimer in a lengthy email that Greg Mankiw has posted in his blog.

Brad DeLong has a different thought:

To get get a $500B macroeconomic gain in production and employment, Paulson wants to take on a position with an expected value of -$100B. But the true value of that position could be anywhere between +$200B and -$400B. Looks like a good
bet to me.

These two comments by themselves ought to tell us that economics is far from being a science. It is a discipline in which arguments and debates are the key, and not any indisputable facts and theories. If only economists would recognize that!

Finally, how about this following comment by Shimer:

let me be clear that I agree with your comments about Ben Bernanke. I too know him well from the seven years I spent with him on the faculty at Princeton and I share your respect for his intelligence. I also recognize that he is far better informed about the current situation than I am. This does not, however, mean that he is perfectly informed. Indeed, looking back over the last 13 months, it should be clear that the Fed and Treasury have repeatedly underestimated the extent of the problem. In such an environment, the distributed knowledge of professional economists and other imperfectly-informed observers may be superior to the knowledge of the Fed staff. In other words, you write, "In his capacity as Fed chair, Ben understands the situation, as well as the pros, cons, and feasibility of the alternative policy options, better than any professor sitting alone in his office possibly could." That may be correct, but I am not convinced that he understands the situation better than the collective wisdom of all professors.

Bailout is a "financial coup d'etat"

Earlier I blogged about the economic martial law that is now governing us. Well,:

[Here] is the truly offensive section of an overreaching piece of legislation:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
This puts the Treasury's actions beyond the rule of law. This is a financial coup d'etat, with the only limitation the $700 billion balance sheet figure. The measure already gives the Treasury the authority not simply to buy dud mortgage paper but other assets as it deems fit. There is no accountability beyond a report (contents undefined) to Congress three months into the program and semiannually thereafter. The Treasury could via incompetence or venality grossly overpay for assets and advisory services, and fail to exclude consultants with conflicts of interest, and there would be no recourse. Given the truly appalling track record of this Administration in its outsourcing, this is not an idle worry.
Nouriel Roubini does not think it passes the smell test:
`He's asking for a huge amount of power,'' said Nouriel Roubini, an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy.''

From Naked Capitalism, via Greg Mankiw. Mankiw also points to this one from Luigi Zingales:

The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded?

Saving the People's Bank of China

I referred to Krugman's and Mankiw's comments on the Fannie/Freddie takeover. Well, Daniel Gross provides an entirely different perspective on this: that the takeover was urgent because

the potential victims were central banks and foreign institutions that have
bought their debt by the boatload. It's no accident that the takeover was
announced in the middle of the day on Sunday. (Barry Ritholtz chronicles a slew of
other recent Sunday credit-related announcements.) It was timed to get out
before the Asian markets opened for trading on Monday.

He then ends with:

The bailout of Fannie Mae and Freddie Mac will be sold and marketed as an effort
to shore up the U.S. housing market. Maybe so. But it is mostly meant to shore
up our damaged international financial standing, preserving leadership and
making sure the U.S. Treasury Secretary doesn't get tarred and feathered at the
next G-8 meeting.

Really? And not to protect the interests of the American consumers and taxpayers? it is e e cummings all over again :-(

Krugman is awesome--when he doesn't do politics

In this column, Paul Krugman explains in simple terms the Freddie/Fannie take over by the feds. I liked the following the best:

As the economist Irving Fisher observed way back in 1933, when highly indebted individuals and businesses get into financial trouble, they usually sell assets and use the proceeds to pay down their debt. What Fisher pointed out, however, was that such selloffs are self-defeating when everyone does it: if everyone tries to sell assets at the same time, the resulting plunge in market prices undermines debtors’ financial positions faster than debt can be paid off. So deflation in asset prices can turn into a vicious circle. And one consequence of what he called a “stampede to liquidate” is a severe economic slump.

That’s what’s happening now, with debt deflation made especially ugly by the fact that key financial players are highly leveraged — their assets were mainly bought with borrowed money. As Paul McCulley of Pimco, the bond investor, put it in a recent essay titled “The Paradox of Deleveraging,” lately just about every financial institution has been trying to reduce its leverage — but the plunge in asset values has nonetheless left these institutions with more debt relative to their assets than before.

Greg Mankiw is not too happy with the bailout/takeover. He writes:

The problem is far from over, as the future of these institutions and a large segment of the financial system is still to be determined. The worrisome part is that this future will be determined by a political system that both created the GSEs and failed to provide sufficient oversight, even when many economists suggested reform was needed. To believe that the Congress will do a good job of it would be the triumph of hope over experience.

Guess who will preserve Bush's dividend tax legacy?

On the issue of dividend taxation, Barack Obama may be the candidate with
the best chance of preserving George Bush’s legacy.

That is the bottom-line from Greg Mankiw.

Mankiw writes,

In light of Senator Obama’s stand, the politics of dividend taxation may
take some surprising twists. Senator John McCain wants to maintain the current tax rate of 15 percent on dividends (while cutting the corporate tax), but it is a good bet that if Senator McCain is elected president, while Congress remains Democratic, Congress won’t give the Republican president what he wants. They would instead let the Bush tax cuts expire, returning the dividend tax for high-income taxpayers to about 40 percent.
By contrast, if Mr. Obama is elected, Congressional Democrats will be less likely to balk at his proposed 20 percent dividend tax rate and thus embarrass the new president from their own party.
This leads to one of the great ironies of the political season. On the issue of dividend taxation, Barack Obama may be the candidate with the best chance of preserving George Bush’s legacy.

Diddy on gas prices: oh poor me!

If ever anybody needed one single reason for why gas prices need to rise more, Sean Diddy Combs provided all the arguments in favor. This is so bizarre that I am tempted to conclude it is a satire from The Onion. Unfortunately, it is not. Maybe another piece for Mankiw's Pigou Club?

From CNN: Sean "Diddy" Combs complained about the "... too high" price of gas and pleaded for free oil from his "Saudi Arabia brothers and sisters" in a YouTube video posted Wednesday.
The hip-hop mogul said he is now flying on commercial airlines instead of in private jets, which Combs said had previously cost him $200,000 and up for a roundtrip between New York and Los Angeles.
"I'm actually flying commercial," Diddy said before walking onto an airplane, sitting in a first-class seat and flashing his boarding pass to the camera. "That's how high gas prices are. I'm at the gate right now. This is really happening, proof gas prices are too high. Tell whoever the next president is we need to bring gas prices down."

Divine intervention in market economics

Maybe I should forward this news item to Greg Mankiw so that he can blog about it, because I am sure it will surprise him that god messes up with a fundamental idea that the Harvard prof teaches in his EC10--that price is determined by the supply/demand relationship. This BBC news item reports that a "prayer group in Washington DC is claiming the credit for the recent sharp drop in the US price of petrol". According to the report,
"We were down in Huntsville, Alabama. We finished praying," Mr Twyman said. "Immediately the owners came out and changed the gas prices. They brought it down. We had marvellous success down in St Louis, Missouri."
This week the group returned to the site of their first prayer meeting to celebrate. Singing "We shall overcome," they changed the words of the well-known hymn to "We'll have lower gas prices".
Mr Twyman is sceptical that market forces might be responsible for the lower prices.

Mankiw, your response please?