Archive for October 2016


America’s Cultural Revolution: Six degrees of separation from insanity

[After writing this post I discovered a Scott Aaronson post with a similar theme. Needless to say his is 10 times better, and is the one to read if you only have time for one. And if you have time for both . . . well, you should reconsider how you allocate your time.]

The Chinese Cultural Revolution killed roughly 1,000,000 people. America’s version will kill approximately zero. So let’s get that off the table right away. Nonetheless, I’m beginning to understand why so many Chinese-Americans see a parallel between China’s Cultural Revolution and America’s PC insanity.  Here’s J.K. Trotter:

At the same time, most of Altman’s frustration is self-imposed. True, there is a compelling argument to be made that a person should not be fired over their support of a particular political candidate; in the most abstract terms, nobody wants to live in a world where a person’s employment is threatened by their political beliefs, so long as those beliefs do not bear on their job performance. Whether or not this argument holds water for someone of Thiel’s stature and power is open for debate.

That doesn’t sound too unreasonable.  But then it gets worse; he insists that Thiel should be removed from the board despite that high-minded rhetoric about freedom.

And then it gets even worse.  Trotter then says that Sam Altman should resign if Thiel is not removed.

So let’s see.  Not only should Trump be shunned for his appalling political views, an otherwise highly respected Silicon Valley entrepreneur who just happens to support Trump (along with 80 million other Americans) should also be shunned.  And a person who despises Trump and works against him but who defends Thiel’s right to his own political views should also resign.  Does that mean I should be shunned too?  After all, I’m a guy who hates Trump, writing a post that defends a guy who hates Trump, who wrote a post defending a guy’s freedom to support Trump, who in turn supports Trump.  And suppose my mother sticks up for me?  Should she also be shunned?

It’s almost enough to make me vote . . . no, just kidding.

Question for Trotter.  Which people on the left are beyond the pale?  Suppose Thiel had supported Hugo Chavez?  How about Castro?  Mao?  Pol Pot?  Perhaps the degrees of separation could be calibrated to the awfulness of the left-winger:

Chavez:  One degree of separation. (Corbyn, Sean Penn, etc.)

Castro:  Two degrees of separation is still toxic.

Lenin:  Three degrees of separation.

Mao:  Four degrees of separation.

Pol Pot:  Five degrees of separation.

Remember the Monty Python routine where there was a joke so funny that listeners died laughing?  Now there are jokes so toxic that the listener (Billy Bush) gets fired. And in the comment section it gets even worse:

It’s ridiculous to argue that we should all just get along—that nobody can ever choose to stop associating with certain individuals or groups—in the name of some abstract ideal of comity. We should treat each other with respect, obviously, but if our politics doesn’t affect our actual lives, then it’s just an elaborate kind of sport.

So Trotter is saying what?  That you should stop being friends with someone because you don’t like their politics?  As a libertarian, I’d basically have no friends if I followed that rule.  I certainly never dated any libertarians when I was younger.  I have good friends who are borderline Marxists—who regard Hillary as a conservative. It doesn’t make me not want to associate with them.  I recall one colleague who once defended China’s one child policy.  That’s far worse than almost anything Trump’s proposed. (OK, except stealing Iraq’s oil.) I mean seriously, if we followed Trotter’s suggestion then what would it do to our society? And why is “comity” just an abstract ideal?

I would have thought that the belief that one should break up with friends over politics was some sort of shameful secret, like a preference for child pornography. I’m 61 year sold—has our society actually changed to where politics is splitting up friendships?  Are we that immature?

At this point some silly commenter will always bring up the Nazi example. Obviously if your friend is advocating mass murder, that’s not acceptable.  But there are millions of sweet little old ladies who plan to vote for Trump because they are Republicans, and lots of them are nicer people than am.  I’m not going to shun them for having different views from me.  Most people are well intentioned, they just disagree as to the best way of achieving a good society.  Thiel seems very well intentioned, passionate in all the various political causes he engages in. I think Trump is more likely to get us into a nuclear war, but lots of his fans sincerely believe Hillary is more likely.  Opinions differ.

BTW, like politics, religion is also not “a sport”. Should people be shunned for having a different religion?  They often were 100 years ago in America. Haven’t we progressed?  What about conservative Muslims—they believe some awful things. Should they also be shunned?  And if so, how’s that different from Trump?

Liberals used to pride themselves with having more empathy for “the other”.  I think there was even some truth to that claim.  They were more likely to go to an independent film on what it’s like to be a black person in the inner city, or a Palestinian on the West Bank.  But when it comes to politics it’s just the opposite.  I find that right wingers have a much better understanding of why left wingers believe what they do, than vice versa.

19 days to go: When will Trump release his tax plan?

I said tax plan, not tax return.  I know that he lied when he said he’d release his tax return before the election, and then lied again when asked why he changed his mind.  I’m talking about his tax plan, the one that would raise taxes on millions of working class Americans, while he slashes taxes from billionaire property developers from 40% to 15%.

I recall reading that his advisers said this was an oversight, and that their intention was to cut taxes for everyone (how wonderful!)  They said the tax plan would be revised.  Apparently his advisors are too incompetent to even deliver a tax plan that accords with his stump speeches.  So when will we get the new tax plan?

I’m still waiting . . . 19 days to go.

Don’t Americans have a right to know where a candidate stands on taxes, before going into the voting booth?  How long until we get the official tax plan?

I’ve spent so much time trashing Trump that it’s only fair to give him credit when he does the right thing.  Last night he sharply pivoted on trade, and now favors trade deals, indeed even trade deals that result in freer trade than the Obama deals:

Donald Trump — who has built his campaign around a dramatic rollback of American’s multinational trade deals — said Wednesday that under his administration that there would be “more free trade” than there is under President Barack Obama.

“So my plan – we’re going to negotiate trade deals. We’ll have free trade. More free trade than we have right now,” Trump said during the third presidential debate.

Kudos to Trump for finally seeing the light on trade.

(BTW, I don’t think candidates should have to release their tax returns, but if they promise to do so, they should do so.)

Questions for The Donald

Here’s your campaign manager:

she has so many advantages. She has endless money, she has a lot of the media,

Let’s focus on that money advantage.  Hillary plans to spend a billion dollars or so, as far as I can tell.

You’ve said this election is important:

[T]heir agenda is to elect crooked Hillary Clinton at any cost, at any price, no matter how many lives they destroy. For them, it’s a war. And for them, nothing at all is out of bounds. This is a struggle for the survival of our nation, believe me, and this will be our last chance to save it.

Question:  How much does your campaign plan to spend in total?  How much of that will be money raised from donors?

Most importantly:

How much of your $10 billion fortune are you willing to devote to saving your country from ruin, and how much are you setting aside for a possible TV network project after the election?

I’m guessing that you are willing to devote about 1% or 2% of your wealth to saving America.  Is that right?

PS.  Your manager stated that she did not expect widespread voter fraud.  Is she right?

PPS.  Tell me the truth, was this all a secret plot to elect your good friend Hillary, who you used to claim would be a fine president?

PPPS.  Do you still believe in these comments, from 2013:

I’ve long been a believer in the “look at the solution, not the problem” theory. In this case, the solution is clear. We will have to leave borders behind and go for global unity when it comes to financial stability. . . .

The future of Europe, as well as the United States, depends on a cohesive global economy. All of us must work toward together toward that very significant common goal.

Is “leaving borders behind” sorta, kinda, a little bit like open borders?

PPPPS.  I see the latest poll out of Utah shows McMullin at 31%, Trump at 27% and Clinton at 24%.  His odds of winning Utah have surged to 33%.  (Perot came in second in Utah, BTW).  I’m changing my endorsements as follows:

Vote Hillary in Pennsylvania, New Hampshire, Nevada, North Carolina and Florida, McMullin in Utah and Idaho, Johnson in all other states.

If it looks like Hillary will win, vote for a GOP Congress.

HT:  Peter

Ellen Pao should stop helping Donald Trump

There’s good PC and bad PC.  The good PC says you should not go around calling Mexicans “rapists and murders”.  The bad PC is harder to explain, but I tried in this Econlog post.  The real problem is not so much the idea of political correctness, but rather that it is used as a weapon in an ideological war.  More specifically, it’s used by the left to shame the right.  Viewed from this perspective, you could say that if the PC advocates are correct about the need for PC, then it’s actually used far to little. It also needs to be used against the left.  Here’s Pascal-Emmanuel Gobry in The Week:

If there are saints in the church of secular progressivism, the Hollywood Ten are surely among them. These are the individuals who worked in Hollywood and were cited for contempt of Congress for refusing to answer the question, “Are you now or have you ever been a member of the Communist Party?” — thus becoming political martyrs.

In its popular form, the story of the Hollywood blacklist has been distorted somewhat. While the fear of Communist agitators — a fear not wholly removed from fact — working in Hollywood was used by Sen. Joe McCarthy for opportunistic political motives, the movement was originally launched by private individuals genuinely interested in removing Communist influence from Hollywood, and they did this through peaceful, “non-coercive” means: naming and shaming, boycotts, and threats of boycotts.

Several members of the Hollywood Ten actually were members of the Communist Party and had remained members of the Communist Party even after the Stalinist Purges of the 1930s that removed that party’s credibility in America. That is to say, whatever their other beliefs or intentions, they endorsed the end of liberal democracy and the advent of a global totalitarian government ruled by Joseph Stalin or someone like him. And yet, the idea that such people should be blacklisted is regarded as anathema by the contemporary left. So they are seen as progressive saints.

The problem actually goes far beyond the Hollywood Ten. Much of the 20th century left is morally tainted by being soft on communism (just as much of the right was tainted by being soft on fascism).  Even today, many 20th century artists are revered on the left for being “politically conscious”, when in fact they knowingly supported genocidal communist regimes.  Sorry, but that’s not OK.

I point this out because you may have heard that the renowned Silicon Valley investor Peter Thiel, a man whom it is seemingly impossible to refer to without using the word “contrarian,” is a supporter of Donald Trump. After Thiel recently decided to donate $1.25 million to Trump’s campaign, the group Project Include, led by former venture capitalist Ellen Pao, has decided to sever ties, not even with Thiel himself, but with Y Combinator, a renowned Silicon Valley incubator that has named Thiel as a part-time partner.

It seems that on the progressive left, blacklists are only bad when they target a certain group of people.

This helps to explain part of the appeal of Donald Trump.  His supporters see how PCism is used as a cudgel against them, and how large groups of Americans (on the left) are completely exempt from criticism by the cultural elites.  Their resentment pushes them to unfortunate extremes, supporting someone who engages in both the morally justified and morally unacceptable types of political incorrectness.  But it’s entirely predictable that you’d get this sort of backlash.

If the left wants to be taken seriously on political correctness, they need to write an entirely new history of the 20th century.  In this new history, many of their most revered artists will become Leni Riefenstahls.  I don’t think there is anyone on the left that is willing to look history in the eye, in quite that way.  I hope I’m wrong.

PS.  Here’s an example, if you don’t know what I’m talking about.  The 1930 Soviet (Ukrainian) film “Earth” is a fine film on pure aesthetic grounds. (But then the same could be said of Riefenstahl’s films.)  It also has a very sinister subtext, as it portrays kulaks as villains.  Recall that Stalin demonized and murdered them by the millions, just as Hitler demonized and murdered the Jews.  Now let’s consider a typical film review of Earth, this one from “Senses of Cinema” (but you could find another dozen similar ones):

Seen today as the final work in a loose trilogy that also comprises Zvenigora (1928) and Arsenal (1929), Earth is Dovzhenko’s ultimate paean to nature, the land and those who toil on it and whose lives are inextricably bound up with it. The film is literally teeming with grandiose images of the natural world: such as the opening shots of a vast sky and rolling fields, of sunflowers and apples. The farmers collective relationship to this world and its order is immediately established through the juxtaposition of an old man dying (the end of life, of a cycle) and young children (the beginning); the fact that they are eating the apples that lie strewn on the grass further crystallises the sense of a constant, natural cycle of birth, growth and death (as does the justly famous shot of a woman and a sunflower, in which the composition makes them almost graphically contiguous across the frame).

It goes on and on in these glowing terms, with no reference to the sinister implications.  (Imagine the critical response to a typical Nazi-era German film that mocked Jews.)  The humanities in most countries are heavily tainted by their ambiguous relationship with communism.  Lots of people assume that the problem has gone away, now that the Cold War is over.  Not so, it’s as bad as it ever was–indeed getting worse.  Support for communism among millennials is rising fast, with 37% having a favorable view of Che Guevara.  That’s more than for Trump!  You can find posters of Guevara on the walls of faculty offices in many colleges across the country.  Indeed 18% even have a favorable view of Mao.  And liberals can’t imagine how 40% of Americans plan to vote for Trump (some with an unfavorable view of him).

PPS.  My daughter’s high school has a picture of Mao on one of its wall murals.  No picture of Hitler, however.  Seems they don’t care about the feelings of those students whose parents fled communist China.  Maybe Newton, Massachusetts needs a bit more political correctness.

It’s the 1970s, without the inflation

During the fourth quarter of 1980 and the first quarter of 1981, America’s NGDP soared at an annual rate of more than 19%.  And yet unemployment hardly budged, slipping from 7.5% in September 1980 to 7.4% in March 1981.  What went wrong?

I’d like to suggest that the past decade is basically the 1970s without the inflation, at least in one important respect.  Before explaining why, let’s first consider the differences.  The period from 1971 to 1981 saw roughly 11% NGDP growth, which included about 3% real growth and 8% inflation.  That’s a lot more real growth than today.  In addition, labor force participation was rising sharply, whereas in recent decades it has been falling.  On the unemployment front, however, we are doing better today.

Now let’s imagine a policy counterfactual where, beginning in 1965, the Fed keeps inflation close to 2%.  Here are my claims:

1.  Under that monetary policy, we would have had roughly 5% NGDP growth from 1971 to 1981.

2.  Real growth would have still been about 3%, with inflation about 2%.

3.  The unemployment rate in late 1980 and early 1981 would have still been about 7.5%.

All of these predictions are based on the assumption that money is roughly neutral in the long run, that the Natural Rate Hypothesis is roughly (not exactly) true when NGDP growth avoids deep declines.  And most importantly:

4.  In that counterfactual, I believe that economists would have misdiagnosed the unemployment problem, assuming it reflected a sort of secular stagnation, a lack of aggregate demand.

We now know that what actually happened is that the natural rate of unemployment rose by a couple points between the late 1960s and the early 1980s.  We don’t know exactly why (theories includes more women and minorities and young people in the labor force, oil shocks, deindustrialization, environmentalism, more generous benefits for not working, etc.), but clearly the natural rate was increasing.  If 19% NGDP growth isn’t enough to make a dent, it’s fair to say that the high unemployment is not due to a “demand shortfall”.

Today, America is not faced with a higher natural rate of unemployment—it’s probably back around 4.5% to 5%.  Instead, we are faced with a different structural problem—a decline in the labor force participation rate (LFPR). Among men, this rate has been trending lower for at least 5o years.  We don’t know all the causes, but it’s clearly not just the Great Recession.  And once again, people are assuming that a structural problem is due to a lack of demand.

I believe they will once again be disappointed.  Our problems are much deeper than a demand shortfall.  That’s not to say that monetary policy should not be more expansionary.  Perhaps the economy still has a bit of slack, and the inflation rate has recently undershot its 2% target.  I’m making a broader claim.  The broad outlines of the 2016 economy are not going to change substantially with monetary stimulus.  We might get unemployment down to 4.5%, and the LFPR might rise a bit more.  And those would be very good things.  But we are still going to be stuck with a trend rate of RGDP growth of barely over 1%, and a LFPR rate (for men) that is quite disappointing by historical standards.  And that’s not even factoring in the lousy supply-side policies of the next president.

In the 1970s, we discovered the structural nature of the problem more quickly than today, because we had such high NGDP growth.  Our current sub 2% inflation rate has indeed represented a modest demand shortfall, and that is a small part of the problem.  But it doesn’t really come close to explaining the extent to which growth has slowed.  Inflation also averaged about 1.5% during the first half of the 1960s, but growth was fine.  “Lowflation” is a problem because it means the Fed is not hitting its target.  But it explains at most only a small fraction of the very low RGDP growth rate since 2006, as well as the current very low LFPR.

PS.  I believe that the Great Inflation is best described in terms of NGDP growth, not price inflation.  That makes it easier to see that it was a 100% demand-side problem; RGDP growth was fine.  Today I was pleased to see the Financial Times also using that metric:

According to Bank of America Merrill Lynch, the current global recovery is the least inflationary of all time, with nominal GDP (growth plus inflation) growing just 11 per cent in the last seven years.

That’s total!  (Not the annual average.)

That was from an article discussing the new Chinese growth data.  At the same time, there are a few “green shoots” for the global nominal economy.  Chinese NGDP growth is up to 7.8%, from a low of (I think) about 5.8% at the end of last year.  Chinese PPI inflation turned positive for the first time since early 2012, and CPI inflation is up to 1.9%.  The overvaluation of the yuan seems to be ending. Eurozone inflation also has been rising, albeit from a very low level.  I’m most pessimistic about Japan; they need to sharply depreciate the yen if they are serious about their 2% inflation target.  Will they?

Chinese growth is expected to slow to 6% in 2017, as the housing boom cools.  That’s still an excellent figure for a middle-income country with near-zero population growth.  Consumption will lead the way next year, as housing construction slows.  But China is by no means out of the woods. They still face a very tricky transition from a housing construction economy to a services economy.  Lots could still go wrong–just not yet.