Vaidas Urba directed me to this tweet from Vitor Constâncio, who’s term as the Vice President of the ECB just ended. Also recall Bernanke’s recent advocacy of level targeting.

Love it!

PS.  Here is the link embedded in the tweet:

https://www.ecb.europa.eu/press/key/date/2018/html/ecb.sp180504.en.html

It seems to me that people are too depressed by Trump.  Yes, he’s far and away the most appalling individual ever to achieve high political office in the US, but that doesn’t mean we can’t get some enjoyment out of the spectacle.  Think about the amusement that Trump provides in a typical day. Just yesterday he said (regarding Kim):

He really wants to do something I think terrific for their country. . .

I do trust him, yeah.

When Bush said something similar about Putin he could be forgiven on several grounds.  First, we hadn’t seen this sort of presidential naiveté toward a Russian leader since the days of FDR. And second, Putin wasn’t yet anywhere near the brutal dictator he is today.

With Trump there’s no such extenuating circumstances to prevent us from falling on the floor laughing.

Then we wake up this morning to find Trump proclaiming that North Korea is no longer a nuclear threat, and Sean Hannity believes him.  How is that not funny?

And this tweet is just to, to, to funny to pass up:

Just to be clear, I’m not one of those grammar snobs.  I think good grammar is overrated and of course I make lots of mistakes here. But while I occasionally mix up ‘to’ and ‘too’, I’ve never done so in a tweet accusing a Hollywood actor of having a low IQ.  Come on Trumpistas, even you guys have to find that a little bit amusing.

I don’t doubt for a moment that David Brooks is a far better person that HL Mencken.  But Mencken was funnier.  You can’t go through your entire life in just one mode, even a wholesome mode.  Sometimes you just have to indulge your inner cynic and enjoy the crazy spectacle.

Yes, it’s appalling to have an ignorant, bigoted, misogynistic president.  But tens of millions of women and Hispanics voted for him and if they can survive 8 years of Trump you should be able to as well.  For some reason that I cannot fathom, God has favored and protected this crazy country for more than 240 years, and I think he’ll do so for 6 more years.  Remember, as bad as Trump is, presidents just don’t have much influence over the course of events.

So relax and enjoy the spectacle.

PS.   And speaking of enjoying life, don’t get too upset about poor Anthony Bourdain.  I miss him as much as any of his other fans, but he packed more into his 61 years than you or I could do in 600 years. Tony would be appalled by all this handwringing in the media. He had a good run.

In a book on Korea, Simon Winchester made this observation:

A sixtieth birthday is a special thing in all those countries that have come under the maternal influence of old China, Korea very much included. The body is then deemed to have passed through the five twelve-year zodiacal cycles — the yukgap, as the sixty-year period is known — that constitute the proper life span of the human being.  Once someone has successfully completed the span — as old mother Hwang had done three years before — then all time beyond is regarded as a marvellous bonus: you retire from active life, take your respected ease as an elder, let your children make you as comfortable as they can, and let filial piety take over the reins of your life.

Don’t be like me, planning to do all sorts of wonderful things when you retire, and then finding out that past age 60 your body and mind are too broken down to do the things you planned to do.  Plan your life as if you will die at age 60.  That’s enough time.

PPS.  While I’m not a grammar snob, if I ever reach the point of my commenters who think that any sentence containing the word “insult” is ipso facto an insult, please tell me to just stop.

Update:  The North Korean state media is now more accurate than the White House:

North Korean state media lauded the summit as a resounding success, saying Trump expressed his intention to halt U.S.-South Korea military exercises, offer security guarantees to the North and lift sanctions against it as relations improve.

Yup, Kim won.

Update:  There is a new podcast online where I’m interviewed on neoliberalism.

Jim Geraghty of the National Review is usually somewhat more sympathetic to Trump than I am, but raised his eyebrows a bit after Trump’s recent antics:

Trump and his fans believe he’s demonstrating “toughness” in ways that previous presidents couldn’t. Perhaps. The question is, what happens after you’ve demonstrated your toughness? Does the other side capitulate, or does the other side dig in? No doubt it’s cathartic to visibly rage at the other side, but does it get you where you want to go?

Trump now interacts with the prime minister of Canada the same way he lashes out at Rosie O’Donnell, Mika Brzezinski, or Attorney General Jeff Sessions, by ripping into him on Twitter: “PM Justin Trudeau of Canada acted so meek and mild during our @g7 meetings only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not b- pushed around.’ Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!”

Trump’s trade adviser, Peter Navarro, raged on Fox News Sunday: “There’s a special place in hell for any foreign leader that engages in bad faith diplomacy with President Donald J. Trump and then tries to stab him in the back on the way out the door . . . that’s what bad faith Justin Trudeau did with that stunt press conference.”

Talk about turning it up to eleven. When U.S. policymakers tell a foreign leader that there’s a special place in hell waiting for him, it’s usually a brutal dictator who’s committed atrocities and human-rights abuses.

[Actually, the Trump administration reserves phrases like “very honorable” for brutal dictators who imprison hundreds of thousands of people in Nazi-like concentration camps, where women are brutally raped, tortured and starved and children born there have to live out their entire lives in prison.  Hell is reserved for Trudeau, who expressed displeasure with US steel tariffs that treat Canada as an enemy, not Kim (or Putin or Duterte or any of the other thugs that Trump likes.)]

It’s not clear to me if Trump is very bad at making deals, or is simply not interested.  Maybe he thinks his fans just want to see 8 years of trolling, with nothing substantive accomplished.  But there is one overlooked side effect of all this—it severely undercuts international Trumpism.  Consider the plight of poor Doug Ford, who had been gaining on Trudeau in recent months:

“We will stand shoulder to shoulder with the prime minister and the people of Canada,” Doug Ford, the Trump-like renegade who was recently elected premier of Ontario, wrote on Twitter.

That’s sort of like if in 2016 Trump had been forced to say he was standing shoulder to shoulder with Obama.  By making the attacks on Canada so over the top and absurd, the Canadian populist right is humiliated, and virtually forced to rally around the despised Trudeau.

When a small country is next to a very big country, the citizens of the small country usually know far more about the big country than vice versa.  Americans may not know that Trump lies about trade with Canada (and even admits doing so), they probably don’t even care.  But I’m pretty sure that a lot of Canadians know that the US runs a trade surplus with Canada, and that Trump is lying when he claims that Canada and the EU have much higher tariff rates than the US, and do care about the attacks.  That’s the nature of small countries.

If your nationalism is based on unfairly demonizing foreigners, then it will inevitably run up against the nationalism of foreign countries.  Thus while leftists like Sanders and Corbyn might view themselves as allies, two similarly placed nationalists will eventually be at each others throats.  People with similar interests often become friends.  But if your similar views are “everyone else is inferior to me”, that’s not much of a basis for friendship, even with someone with similar views.  That’s why global nationalism will burn about, just as the earlier version in the 1930s was eventually discredited.

PS.  Predictions for the Korea summit:

Back in 2016, the Trumpistas told us that the economy was a disaster.  Trump himself talked of economic “carnage” in his inaugural address.  When people pointed out that unemployment had recently fallen from 10% to 4.6%, they said those numbers were meaningless, and that the actual unemployment rate was as high as 30% or more.  We were told that the real issue was the huge trade deficit, which was decimating the American economy.  Those who pointed to “phony unemployment data” and ignored the trade deficit were nothing more than apologists for global neoliberalism.

Today the Trumpistas insist that the economy is in superb shape even though, as Tyler Cowen points out in a recent post, imports are surging and the trade deficit is getting larger.

I actually don’t have any big problem with Trumpistas saying the economy is in good shape, as long as they acknowledge that they have become the loudest apologists for global neoliberalism.  If they aren’t willing to acknowledge that fact, then what basis do they have to insist that the economy is in great shape?  RGDP growth?  It was just as fast around 2014-15.  Unemployment?  It fell from 10% to 4.6% even before Trump was elected.  Stocks?  They soared dramatically higher under Obama.  The big Trump issue is and always has been the trade deficit.  That’s how he wants to be judged, and that’s how I’ll judge him.

So Trumpistas should either take credit for continuing Obama’s policy of selling out to global neoliberalism with a policy of big trade deficits, falling unemployment, and soaring stock prices, or else keep their mouths shut.

PS.  The Financial Times makes the following claim:

Even if Mr Trump were gone tomorrow, nobody today in the US could run for president and win on a “let’s go back to the 1990s” platform. Laissez-faire trade and globalisation in general are under fire in the US (as well as in Europe and any number of developing countries).

Where is the evidence for this claim?  Why can’t we go back to the 1990s?  Polls show that support for free trade agreements is stable over time, and that young people and minorities are far more supportive of free trade than older people.  Why is it assumed that our future is inevitably more protectionist?  Aren’t the young and minorities our future?

Studies suggest that people with higher incomes tend to be happier.  But of course that tells us nothing about causation.  It seems plausible that people who “have their act together” are both happier and richer, for reasons relating to their personal characteristics.  Thus economists are interested in studies of happiness that look at the effect of an exogenous increase in wealth.

Tyler Cowen recently linked to a study of Swedish lottery winners, and summarized the results as follows:

In other words, it is good to have more money.

That’s a plausible interpretation of the study, but not the only one.  After all, it’s not easy to measure “good”.  Here’s how the authors summarize their findings:

We find that the long-run effects of wealth vary depending on the exact dimension of well-being. There is clear evidence that wealth improves people’s evaluations of their lives as a whole. According to our estimate, an after-tax prize of $100,000 improves life satisfaction by 0.037 standard-deviation (SD) units. We find no evidence that the effect varies by years-since-win, suggesting a limited role for hedonic adaptation over the time horizon we analyze. Our results suggest improved financial circumstances is the key mechanism behind the increase in life satisfaction. In contrast, the estimated effects on our measures with a stronger affective component – happiness and an index of mental health – are smaller and not statistically distinguishable from zero.

To explain my reservations, I’m going to have to do a long digression into pop philosophy.  Let’s start with Tyler’s use of the term ‘good’.  I believe ‘good’ to be the most important word in the English language, and indeed in the end is the only thing that matters at all (along with negative good, i.e. bad.)  I define good as positive mental states and bad as negative mental states.  I use the phrase ‘positive mental states’ to incorporate the reservations people have with crude utilitarianism.  Thus a term like ‘happiness’ often connotes hedonism, whereas I have something in mind that also allows for deeper forms of good, such as the satisfaction one gets from doing charity, or writing a great novel, or seeing your child do well.  It also allows for more disreputable forms of “positive mental states”, such as the Nietzschean (or Trumpian) thrill that some people get in exercising power over others.  So in my view, mental states are all that matters.

On the question of whether having money makes people better off, I’m of two minds. Here I am considering middle class people in Sweden or America, I think it quite likely that having more money does make the poor better off.  But would I be happier if I won the lottery?

1. My gut instinct tells me that more money is good.  I’d be pleased if I came across a $100 bill lying on the ground, imagining the fun things I could do with the money.

2.  My philosophical mind is more skeptical.  I don’t see any signs that I have more positive mental states when my income is higher than when it is lower.  I’ve seen other people get a dramatic improvement in their financial well being, and (best as I can tell) they don’t seem to have a more positive mental state than when they had less money.  They seem the same old person, mostly reflecting whether then have an upbeat or downbeat personality.

So I’m currently agnostic on this question; I’d put about a 40% weight on my (pro-money) instincts and about a 60% weight on my skeptical philosophical mind.  Later I’ll discuss the implications of this weighting.

While the Swedish study is certainly consistent with Tyler’s conclusion, I also think it’s consistent with mine.  Thus suppose that for some reason, say evolutionary forces, we are tricked into thinking money makes us better off.  That’s not so far-fetched, as wealth probably does boost the probability of reproductive success, at least back during historical periods when our genes were developing.  Our genes don’t want us to be happy, they want us to have lots of successful children.  Thus it’s not implausible that we would want things that are not good for us, like money, fat and sugar.

Let’s assume that most people think money is a sign of success, but beyond a certain point they don’t actually have more positive mental states when they have more money.  Then when asked about their overall well-being, they might report higher numbers if richer.  They would think to themselves, “Let’s see, I’m a millionaire with a nice house and summer cottage, so I guess I’m doing pretty well.”  But when faced with the happiness question, they think about their recent mental states, and don’t report any improvement over before they won the lottery.

Now we face another conundrum—which measure should count?  Actually two issues; is happiness different from well-being, and is well-being accurately reported in surveys?  I don’t doubt that heroin addicts would report that heroin makes them happy, but most people think that’s a different issue from whether heroin makes them better off.  Partly because ‘happy’ and ‘better off’ may be different concepts, but also because they may even be wrong about happiness, in the long run heroin probably does not make them happy.  Their self-reports are not reliable.

Another way to make my point is that I started by saying that positive mental states might be a more comprehensive concept than mere happiness.  But I’m also suggesting that when people answer the happiness survey, they may actually be describing their overall mental state. In contrast, the answers to questions on overall life satisfaction may not describe mental states.  It’s at least plausible that the Swedish survey is finding nothing more than that money doesn’t make people better off, but that they believe it makes them better off.

Now let’s go back to the probabilities I assigned to each of the two interpretations; 40% for money is good, 60% for the view that it is not.  What are the implications of those probabilities?  It turns out that this means we should assume that money is good, that it does make even middle class people better off.  The expected boost to well-being from having more money is 0.40 times the boost you’d get if Tyler’s straightforward interpretation of the Swedish study is true.  So even though I think it a bit more likely that money does not make us better off, we should act in such a way as if I am wrong, as if it does make us slightly better off.

But there’s another implication of these probabilities.  I am pretty sure that most people assign a higher weight to the likelihood of money being good than I do.  Too high a weight. If so, they put too much weight on getting more money, and not enough on other goals in life.  The biggest mistake I ever made was agreeing to write an economics textbook, where I sacrificed a big chunk of my life on a frustrating project for money that will yield me very little benefit.  So I encourage already affluent people to dial back the expected benefit they’d get from having more money.

If anyone is still reading, let’s dive a bit deeper into epistemology.  The concept of ‘good’ is often considered one of the three transcendentals, along with “true” and “beautiful”.  How should we regard beliefs in those three areas?  In each case, someone might say “most people believe X, but Y is actually the case.” If so, what do they mean?  They might mean one of two things; either that they disagree and think Y is true, or that they predict in the future that most people will come to believe Y.  (Or both).

Unfortunately, ‘actually’ is a misleading term, as all beliefs are provisional.  Thus when you say:

1.  Most scientists believe the universe is largely composed of dark energy, but actually it is not.

2.  Most people believe more money is good, even for the affluent, but actually it is not.

3.  Most people believe Thomas Kinkade’s painting are beautiful, but actually they are not.

You are better thought of as predicting that scientists will later come to believe that some other model better explains the cosmological data, that more money will eventually be seen as useless for the affluent, and that Kinkade’s paintings will eventually be regarded as schlocky.

Some statements about truth, goodness, and beauty are held with more confidence than other beliefs (2+2 = 4, murder is evil, the Taj Mahal is beautiful.)  In those cases, we are highly confident that current conventional wisdom will not later be overturned.  But it’s always a matter of degree; we can never be certain about any belief.  We can never go beyond what we regard to be the case.

PS.  In my view, the three transcendentals are actually just one—goodness.  Truth and beauty are instrumental in achieving goodness.  Only mental states matter. Make them good.