Economy Online:
Where to Read
The Tea Leaves

The Internet makes it easy to get the latest data, latest headlines and latest blather about the economy. But also lurking on the Web, if you know where to look, is some trenchant commentary on the most puzzling features of the modern economy.

So here are some sites that one gray-bearded economics reporter checks frequently for thought-provoking takes on what's happening in today's economy and what's shaping tomorrow's. Three are blogs, the electronic musings of those who can't bear to keep their thoughts to themselves. Two are sites where the writers regularly post brief essays. All are free. All the writers are opinionated; that's what makes them worth reading.

Brad DeLong

http://econ161.berkeley.edu/movable_type/¹

An economic historian at the University of California at Berkeley who worked with noted economist (and now Harvard University president) Lawrence Summers both at Harvard and at the U.S. Treasury, Brad DeLong is at his best when putting recent developments in historical context. One particularly sharp posting asked how the U.S. could blow the prospects for a long economic boom and then noted that mid-19th century Britain lost its technological edge by failing to build schools for children of workers migrating to factory towns from the countryside. "By end of the 19th century the lack of a well-schooled work force meant that the post-steam-engine technologies of electricity, metallurgy and chemistry found themselves much more at home in late 19th century Germany -- where investments in schools had been made," he wrote².

Mr. DeLong, who sprinkles his site with trivia about his kids as well as links to whatever he has read recently, is a loyal Clintonite -- except when it comes to the former first lady. "Hillary Rodham Clinton needs to be kept very far away from the White House for the rest of her life," he has written³, citing his close encounter with her during development of the Clinton health plan. His writings on President Bush's economic policies are often shrill, usually entertaining. A running feature on his site is called "Why Oh Why Are We Ruled by These Fools?" He is up to part CCCXXVII⁴.

Mr. DeLong, who says he tries to spend no more than an hour a day on his site, says he sees blogging as "a way to win the contest for intellectual influence."

Stephen Roach

www.morganstanley.com/GEFdata/digests/latest-digest.html⁵

Morgan Stanley has a stable of economists who often disagree with each other. None are more prolific, peripatetic or provocative than Stephen Roach, who styles himself as "the house skeptic with a seemingly chronic case of jetlag." A New York University Ph.D. who has been with the Wall Street firm for more than 20 years, Mr. Roach drew attention in the early 1990s by proclaiming before others the arrival of a new era of growth in productivity, the amount Americans make for each hour of work. (That's big. Productivity growth is the reason we have more than our grandparents did without working longer days.) Around 1994, though, just before the productivity numbers justified his previous optimism, Mr. Roach changed his mind and became a productivity pessimist, a position he still holds. He'll change his mind, he says, only when businesses increase productivity and hiring simultaneously.

While many other economists, even those at Morgan Stanley, are increasingly optimistic, Mr. Roach remains glum. Unable to raise prices, businesses are relentlessly cutting costs and taking advantage of the Internet to erase the disadvantages of distance. That's propelling more work off shore. "The outcome," he warned⁶, "is a new and potentially lasting bias toward jobless recoveries in the high-wage developed world."

Mr. Roach, who often sounds more like a leftist than a Wall Streeter, usually posts essays on Mondays and Fridays on the firm's Global Economic Forum, often writing from a hotel room or airplane. He admits to trying to "zig when others are zagging." After all, he says, "If I write something that's already priced into the market, why would anyone find it interesting?"

Tyler Cowen & Alex Tabarrok

www.marginalrevolution.com⁷

Bloggers Tyler Cowen and his sidekick Alex Taborrok, both conservative economics professors at Virginia's George Mason University, lean toward the "public choice" school of thought that applies economic principles to the study of government.

But their interests are broad, and their blog wide-ranging. Did you know that data going back to 1948 suggest⁸ that a white Christmas is less likely than ever in the East, but more likely in the Rocky Mountain states? Most entries are spurred by something they've read elsewhere -- with links provided, as is the blogging custom -- accompanied by a bit of Talmudic commentary. Occasionally, they challenge each other, as they've done over the wisdom of paying people who donate organs⁹ and of relying more on tolls to finance highways.

One clever computation suggests that the benefits to investors from the recent tax cut on stock dividends just about offset the money that ordinary mutual-fund investors have lost to market timing and other tactics in the current fund-industry scandals.

The site tries to focus about 90% on "important economic ideas and choices we face," says the Harvard-trained Mr. Cowen. "The other 10% we have no core justification for." He and Mr. Tabarrok say they strive to avoid over-exposed subjects that seem to clog the Web, like Arnold Schwarzenegger and Iraq.

John Makin

http://www.aei.org/publications/contentID.2003013109411113/default.asp¹⁰

Unlike other Wall Streeters on the Web, John Makin isn't trying to promote his employer, money manager Caxton Associates LLC. His monthly postings on the Web site of the conservative American Enterprise Institute think tank don't mention his day job. "It's just very good discipline to write stuff down and confront what you were wrong about," he says.

A University of Chicago Ph.D. long interested in government economic policy, Mr. Makin was early to see the risk of deflation and has been a persistent skeptic about Japan's economic policy. His latest essay speculates on how well the U.S. economy will do next year without the help of further cuts in interest rates or taxes. (Not too bad, he concludes tentatively.) Mr. Makin says his commentary doesn't reflect Caxton's investment strategy. "It's often made abundantly clear to me that people [at Caxton] (a) aren't following my advice, and (b) are glad they didn't."

Mr. Makin's corner of the AEI Web site doesn't draw a lot of traffic, but it's clearly noticed. After he criticized Federal Reserve Chairman Alan Greenspan early this year for advising Congress to avoid more tax cuts to jump start the economy, Mr. Makin found himself without his usual invitation to the Federal Reserve Bank of Kansas City's annual conference at Jackson Hole, Wyo. Mr. Makin says he doesn't know why, but Fed insiders say the Kansas City Fed didn't like his attitude.

The Kansas City Fed says more people want to attend the conference than it can accommodate. "It is certainly not our policy or practice to exclude anyone who has been critical of the Federal Reserve System or a Fed official," a spokeswoman said.

Venture Blog

www.ventureblog.com¹¹

A group effort begun by partners in the eight-year-old Silicon Valley venture-capital firm of August Partners¹², this particularly well-organized blog launched in the spring. It offers a useful window into the minds of folks who put their money on technology that may, or may not, change the economy as we know it.

CAPITAL EXCHANGE Reader comments13 -- and David Wessel's answers -- about the Capital column. Published Tuesday mornings. Submit comments to Mr. Wessel at capital@wsj.com14

Unlike many bloggers, the four who write this one usually don't offer comment on what they've read in the morning paper, but instead offer brief, well-written mini-essays. A recent 1,000-word posting by Kevin Laws of PacRim Venture Partners speculates on whether Silicon Valley's engineers will all be outsourced. Silicon Valley won't be the next Detroit, he concludes. It'll be the next Hong Kong. When Hong Kong's factories moved to China where wages were lower, Hong Kong's workers adapted. "They are now coordinating the outsourced manufacturing and doing the design work. Per capita income in Hong Kong is now higher than its former colonial power, Britain," he wrote¹⁵.

The bloggers say they "stay away as much as possible from writing about our own investments" and promise to alert readers whenever mentioning a company in which August is an investor. "VCs writing a blog?" they ask. "Yeah, well our lawyers didn't think it was a good idea either."

Other sites

Most Wall Street firms have economists who post running commentary on the economy, and some open the sites to anyone who cares to look. Among the most consistently interesting are Paul Kasriel at Chicago's Northern Trust Co. at www.northerntrust.com/library/econ_research/weekly/us/¹⁶ and George Magnus of UBS at www.ubs.com/e/about/research/ubs_ib.html¹⁷. In addition to our own WSJ.com, of course, for a daily dose of economy data, see www.freelunch.com¹⁸.

Nearly every think tank with an interest in economics posts economic commentary these days the Heritage Foundation on the right (www.townhall.com¹⁹) to the Economic Policy Institute on the left (www.epinet.org²⁰). John Irons, who works at a government watchdog group called OMB Watch, maintains his own popular economic website at argmax.com²¹. The home page offers links both to his blog and to a "newsbot" that automatically plucks items about the economy from other web sites.

The Federal Reserve Board and its 12 regional Fed banks have web sites of varying quality and user-friendliness from those that simply post speeches and dry press releases to zestier sites aimed at the general public. The Minneapolis Fed's print publications, also posted on its web site, are often interesting. See www.minneapolisfed.org/pubs/fedgaz/²² and www.minneapolisfed.org/pubs/region/²³. (To find Fed web sites, see www.federalreserveonline.org/²⁴) For an antidote to the Fed's party line, see the skeptics at Financial Markets Center at www.fmcenter.org²⁵

The American Economics Association posts links to all sorts of economics websites - from those aimed at academics to those aimed at stock market investors -- at its Internet Resources For Economists site at www.rfe.org²⁶.

Surfing the Economy

Where to look online for thought-provoking takes on what's happening in today's economy and what's shaping tomorrow's

Brad DeLong's Semi-Daily Journal
www.j-bradford-delong.net/movable_type/²⁷
BRIEF DESCRIPTION: A classic blog by an economic historian at the University of California
BEST FEATURE(S): Putting today's economy in historical context and posting fresh material almost every day.
QUIRKS: Unusually wide-ranging from commentary on press coverage of Bush administration and latest work of academics to trivia about his children and his classes at Berkeley. Sometimes takes a long time to load.

Stephen Roach at Morgan Stanley's Global Economic Forum
For most recent essay: www.morganstanley.com/GEFdata/digests/latest-digest.html²⁸
BRIEF DESCRIPTION: Monday and Friday musings by an opinionated Wall Street economist
BEST FEATURE(S): A global perspective that sometimes departs from conventional wisdom.
QUIRKS: Morgan Stanley posts new commentaries by its economists almost daily. To read Roach, check out morganstanley.com/GEFdata/digests/latest- digest.html on Mondays and Fridays or consult calendar-like archive that links to individual essays. Sometimes takes a long time to load.

Tyler Cowen & Alex Tabarrok's Marginal Revolution
www.marginalrevolution.com²⁹
BRIEF DESCRIPTION: A blog by two George Mason University economists
BEST FEATURE(S): Avoiding overdiscussed subjects like Arnold Schwarzenegger.
QUIRKS: Watching the two bloggers argue with each other is like reading someone else's emails.

John Makin's Economic Outlook
www.aei.org/scholars/scholarID.40/scholar.asp³⁰ (Links to recent articles are listed at the bottom of his bio)
BRIEF DESCRIPTION: A money manager who straddles Wall Street and Washington policy wonkdom
BEST FEATURE(S): Looks at the big macro-economic picture.
QUIRKS: Writes only once a month.

Venture Blog
ventureblog.com³¹
BRIEF DESCRIPTION: A group blog by Silicon Valley venture capitalists
BEST FEATURE(S): Mostly original writings. Exceptionally well-organized site.
QUIRKS: No "comment" link or e-mail address provided for readers to respond.

Updated December 4, 2003 3:11 a.m.